Slashdot Mirror
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.
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.
"The most looniest, zaniest, spontaneous, sporadic Impulsive thinker, compulsive drinker, addict"
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.
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...
Yeah, 'cause nobody writes or records music for any reason other than profit.
Maybe if music weren't a multi-billion dollar business, true musicians would again gain prominence.
Quantum materiae materietur marmota monax si marmota monax materiam possit materiari?
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).
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?
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?
Information wants to be anthropomorphized.