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Cringely Proposes a Music Sharing Alternative
WEFUNK writes "The I, Cringely 'Pulpit' column at PBS presents an interesting idea for a new business model to take on the RIAA. He suggests that a publicly traded company could legally and profitably buy a single copy of each record which could then be freely copied and listened to by its shareholders under fair use. His 'Snapster' (Son of Napster) proposal is essentially a digital music co-op that would let shareholders/consumers bring copyrighted material into a quasi-public domain. While fair use and the public domain continue to be lost in our courts and congresses, maybe the capital markets will offer an alternative." While a neat idea, it's doubtful that it'll ever be implemented. Still, it's a good read.
They already have a public corporation that allows many users to share ownership of a copyrighted work. It's called a "library".
"Freedom means freedom for everybody" -- Dick Cheney
Yes, but remember that Windows server licenses are owned by a corperation, and you can only use it on one computer.
You know those little "by opening this CD you have agreed to.." things? Think a slight modification, here..
Wouldn't be that hard.
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This can only work assuming:
1. Most people who share music are willing to pay for music.
2. Most people who share music are ethical, and won't give the music to non-shareholders.
I think both assumptions are questionable. (Note: if you share music, I'm not saying you are a freeloader and immoral. But is everyone like you?)
Toronto-area transit rider? Rate your ride.
The ignorance of both business and law displayed in his article is nothing short of breathtaking.
First, he handwaves about going public at $20/share. Maybe in 1999, pal, but not now. You can't just decide to do it, there are significant capitalization requirements, to say nothing of the money the bankers will want for doing the work for you.
But the real guffaw-worthiness of this article is the tremendous misunderstanding of fair use he displays. Number one, it's quite questionable what corporations' fair use rights are - but it's clear that they are less than an individual. Remember mp3.com? They bought 300,000 CDs and made one digital copy of each. That's perfectly legal, under fair use, for you and me. But when a corporation does it for profit (and by definition everything a corporation does is for profit), it's copyright infringement. MP3.com got pwn3ed by the major record labels for this.
Second, and perhaps more importantly, the traditional test of fair use is, "would it replace a sale?" This clearly would. It's legal for you to make a copy of a CD so you can listen to one and home and one at work, since you won't be listening to both simultaneously. If they wanted to build this system so that only one shareholder could listen to a given piece at one time, they MIGHT be able to squeak through. But try this, and they Major Labels will just laugh all the way to the bank.
Napster had 60 million users with a membership price of free (many of which were no doubt duplicates) therefore a service with a membership price of $20 should have an equal number of users? What part of "supply and demand" did you miss, Robert?
"Freedom means freedom for everybody" -- Dick Cheney
Is there any reason why we can't go out and buy a Sony share or a Warner share???
They own the rights to begin with!
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Go canucks, habs, and sens!
Really, people, step back and look at what we're talking about here. Who cares if it is technically legal? Clearly it is a loophole if it is legal, and that hole will quickly be closed by lawmakers.
The other point is, why would you want to do this? Does no one here understand the basic concepts of economics? If people don't pay for music, there won't be any music -- or, at least, there will be very little. It costs money to produce. The artists need to eat. Sure the RIAA is evil, but two wrongs don't make a right. How could anyone seriously consider a plan like this without realizing that it is wrong?
Why do you people believe that you are entitled to free (or absurdly cheap) music? If you're unhappy with the RIAA, don't buy their music, but don't steal it either. You have no right to use something that someone else spent time and money to produce if you are not willing to use it under their terms.
Cringely has always struck me as a moron.
A simple perusal of copyright laws would show anyone with half a brain that what he proposes is illegal.
Fair use allows for the end user to make a copy for PERSONAL use. Not corporate use, not public use, not any other use. Personal, baby.
Survey says....
BZZZT!
Whatever. Considering the average mp3 @ 192kbps
is 4MB x 100,000 mp3's = approximately 390GB served to a large user base. For $100,000.
This guy may have ran his idea by some lawyers, but he didn't ask anyone here...
This may make RIAA extinct, but there's no revenue stream for musicians, and it's worse than Napster/KaZaA as presumably all the titles will be perfectly ripped and organised, thus providing even less incentive for people to go out and buy.
Coupled with the dismissive "Oh, it only takes $500 per hour to do a recording", and with profits being skimmed to support the pyramid scheme, Cringely sounds like one of these guys who think the cost of the average recording looks like this:
1. CD and box, 10 cents
2. ???
$19.90. Profit!!!
2. Not relevant, you're already out of business from 1.
3. "Would it replace a sale" is a shorthand way of saying, "would you normally need to buy it to do what you're doing?" The relevant law is 17 U.S.C. 107, "Limitations on exclusive rights: Fair use":
I'd say his idea is a slam dunk not-fair-use under section four, as (he freely admits) it would "destroy the potential market for...the copyrighted work." Not fair use, not legal, not a good business idea.
None of this, of course, is trying to make any argument about what the law should be. But these questions aren't hard under the law now, and they're very obviously not legal under the law now. Anyone who tries this is going to get eaten for breakfast by the major labels (and the minor ones, too - they sued mp3.com pretty hard as well).
If I own part of a corporation, and that corporation owns a recording, do I not have rights to that recording?
The best way to look at it is that music is similar to software. If you own a copy, you have a right to make a backup. I own a CD, I can back it up to my computer or mp3 player.
Fair use dictates that the copy is for personal use only. I can listen to my stereo, my computer, or my mp3 player, but I only listen to them one at a time. If I copy it to someone else's device so they can listen simultaneously, it goes beyond "fair use."
If I have a copy of Photoshop, I can only use it on one computer at a time. Same for a corporation. Even if all your emplyees were shareholders, you couldn't buy just one copy of Photoshop and copy it to ALL their computers -- even if they all technically "own" it. It's simply NOT legal.
Cringely's scheme is quite lamebrained...
MP3.com owned 300,000 CDs, but the usership of MP3.com was not limited to MP3.com. I'm not saying that Cringely's idea would work, only that the MP3.com involves different legal issues.
The naysayers to this idea forget that the _critical_ component of this plan is that it must IMMEDIATELY go public. It also must limit downloads to owners (shareholders) ONLY. While the cost of going public may be significant, there is not necessarily a need to bring in investment bankers and join the NASDAQ or NYSE... The press would likely provide the marketing for free on the nightly news (due to the sheer audacity of the idea), and the employees of the business could probably sell the shares via telephone. "limit one share per customer"! (or something).
The real problem here is that by sharing the backup or shifted assets of the company among the owners in this way, IF a court later decides the idea is illegal, they (the RIAA) might then seek to recover directly from the owners... Usually by being a corporate entity, this kind of thing is avoided, but since the corporation is distributing it's assets directly to the owners, who can say.
Concerns that users may share their downloads with their non-owner friends are baseless. TODAY, even without this company, people MAY record things from TV and share it with their friends... and TV and radio are legal last I checked.
One final note. In the end, the legality of this plan would not matter. Unless stopped quickly by injunction, Current RIAA distribution methods would become obsolete technically (ok, ok, they are already technically obsolete), and practically. If this became widespread, digital distribution would be the only comercially viable alternative. The distributors would have to change or declare bankruptcy in short order. This company would need to be able to drag out any court proceedings... basically, they'd need to take a page out of Micro$oft'$ playbook. A delay of two to three years is all that is needed...
There will always be a small market for physical distribution, but the days of monopoly-via-artificial-scarsity-of-media would end. And wouldn't that be nice?
Uhhh, no? Otherwise why wouldn't you just buy 1 share of Sony and AOL-Time-Warner, etc.? If that argument held any water at all you'd be legally able to download any song you wanted by a company you had a share in.
Sorry, that doesn't work, either. It's up to the rest of the stockholders to decide whether or not you have access to the corporations assets and secrets. However, what Cringely is talking about is one where the corporation DOES grant these rights. The problem is I don't think the corporation has the power to grant these rights in the first place, so the point is moot.
We don't have a state-run media we have a media-run state.
So tell us, how long have you been involved with Amway?
This is a pyramid scheme. The problem is, it only works as long people are buying into the bottom. While I agree that there are lots of alternative ways to sell music, this isn't one of them.
If I'm Joe Indie, why would I want to let someone else take half the profit for "distributing" my music (which amounts to keeping it on their hard drive and running Kazaa or whatever), when I could do the same thing myself and get all of the profit?
Well, you asked, and after being slashdotted you probably are getting a lot of answers, but I do see a snag or two in your plan. Bear with me... I tried to be concise, but my response ended up being almost as long as your article.
Under the current system, artists depend on a big, evil record company to not only get their albums made, but to get them marketed. Okay, most artists get screwed by this deal, but the most popular acts eventually start making money when the big, evil record company sells enough CD's.
Under your proposal, any artist, with or without a label, would sell exactly one CD to, well, the entire world, because people would be crazy to not participate in "Snapster" if it exists.
So how in the heck does any artist make direct money off an album? A small percentage of 2 Million sales is certainly a better deal than 100% of one sale.
If such a company were to exist, recorded music would be released for the sole purpose of marketing the band, who hopes to make their cash via concerts. (Unless I'm mistaken, Phish pretty much already lives this way, cranking out lots of low-selling albums to drive ticket and t-shirt sales at their shows.)
So long as a CD costs $15, it's folly to think that lots of good albums will continue to be released in such an environment. What will probably happen is albums by established bands, such as U2 or Jewel will suddenly cost $10,000,000 per CD (or more), and albums by bands who are not established will be worth what Snapster is willing to pay (nothing).
Stay with me now, I don't think my conclusions are over-reaching just yet...
The only way to raise the price that Snapster will pay for your albums is by "getting established." The only way most bands will be able to do that is... big shock here... sign a contract with a big, evil record label (now a "marketing service") who is entitled by the contract terms to something like 95% of the sale (not sales, sale) of each CD the band releases under the contract.
Since these big, evil companies will be hungry (something like 40% of their business model is in back-catalog sales, which Snapster will have already erased.) They can then take the following steps to restore as much of their lost profits as they can:
1. Jack up the price of the individual album, including back-catalog disks.
2. Form their own Snapster.
3. Stop selling albums. Completely. If you are not a member of the big, evil labels' version of Snapster, you can't hear the new Avril CD. Instead of being a record sales company, or a music marketing company, they will be in the business of owning content which is not for sale, but is streamed exclusively to their shareholders for a fee.
4. Wait for your Snapster company to die on the vine.
5. Jack up the shareholder download price to the point that it's just as expensive to download as it was to buy CD's.
The only way to stop this would be to claim that Evil Snapster is in violation of anti-trust law. Apart from Standard Oil and Bell, how often does a company lose one of those!? Besides, what politician is going to want to bust up a company when it's partly owned by almost every single American who listens to music?
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