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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.
Essentially they operate as a co-operative. On the surface, it is the same as paying a membership fee - but on paper it is a different story (i.e. Snapster would be just like Napster on the surface, but largely different on paper).
Here's a snip from their about page:
..mork
I think the difference would be that the new company would only distribute the music to shareholders. Taken as a whole shareholders are the owners of the company. If they own the company they also own the company's assets, i.e. the music. Thus, the people obtaining the music from the company to some extent share ownership of the music they download.
No such relationship existed at my.mp3.com. The people downloading the software were customers of my.mp3.com, not owners.
This idea is very flawed. A much better idea would be a netflix type CD rental, except they keep the CD in escrow for you and you own it rather than rent it. CDs could be bought or sold on the open 'virtual' market. You only get remote access to it. If you want physical access you pay for shipping. That remote access can be in a number of fomats from ISO,WAV,MP3 etc.
Once you have owned the CD for a day, sell it to someone else and erase your fair use copy. Next time you want to listen to it buy it again and sell it again.
Just like Cringely send some of those IPO shares to http://www.pcast.com.
Brad.
There's a major (future) flaw in this:
If I buy stock in a company (even the one I work for), that doesn't mean that I can freely use any software that they buy from another vendor. Most software comes with per-seat licenses, not per-company. What's to stop music companies from just packaging only a single-user license in a CD? Replace the word 'music' with 'software' in this scheme, and it all falls apart.
I can see it now, Snapster starts up, buys a few CDs, and all of a sudden every new CD that is bought comes with a draconian Microsoft-style license which explictly states that you may not play the CD on more than one audio system at a time, without the express written consent of the RIAA, which comes only comes with an unrealistic royalty fee. If you don't like it, you can return the CD to the record store. Or, not.
Unfortunately, it's going to be a long struggle before the Record Industry is forced to submit to the fact that recorded music is becoming an economic public good -- because of pratically infinite distribution (at the cost of bandwidth and storage), the good has become non-rivalrous. This does not mean music will disappear, but it does mean that it will not be profitable for a music company to distribute CDs.
Once the RIAA is forced to accept that, and takes the huge accompanying profit cut, their real business will be the promotion and distribution of the music itself -- it will lower its overhead by allowing P2P-style downloads (let the consumers give up their bandwidth), and will profit by sponsoring artists tours.
The downside is that record stores will, for the most part, go out of business. Were that there was another way to save our slave-wage friends who are knowledgable, but in every war, there are casualties.
But sorry, Cringely -- Snapster won't work for long. The fight for free music will be much longer than we hope.
It probably (almost certainly, but IANAL) wouldn't work.
Remember, the corporation and its shareholders are legally separate entities. Thus the shareholders don't own the music (or any rights to it, more properly); they own a company which owns the rights to the music. And since it's doubtful that the RIAA grants a right to rent the music (first sale would not cover renting), the corporation doesn't have the ability to give its shareholders its rights.
In theory, you could do something within the confines of first-sale; it could be implemented as follows:
However, there are kinks in that plan; first, it's doubtful that files made by fair-use rights could be incorporated into this (fair-use as it's been understood by the courts only extends to personal copying; as soon as it's transferred, any legitimacy conferred by fair-use is lost). However, files downloaded without taking advantage of fair-use (iTMS for instance) would not have this issue. Then there's the final requirement; in order to qualify for a first-sale defense, the file would have to be deleted from the server after being transferred. This is somewhat difficult to accomplish, even if you could DRM stuff. However, perhaps copying the file which you obtained through this system to another location would be fair-use (and the system might even employ a hash database to prevent further transfers).
Back to the topic. Even if the corporation could rent/sell it to its shareholders, some portion of the actual value of the data would likely be counted as a dividend, or at least income, for the shareholder, who may end up paying taxes on it.
You've never paid taxes, part of which go to fund libraries? Or you've never gotten a library card, which usually has a nominal fee? Gee, if nobody pays for libraries, I wonder where they get the money to build them, staff them, and fill them with copyrighted material...
"Freedom means freedom for everybody" -- Dick Cheney
The ignorance of both business and law displayed in his article is nothing short of breathtaking.
Yeah, I had the same feeling when I read some of his articles about software development. He seemed pretty off-the-wall for a guy who has run development groups charged with very large projects including an entire from-scratch operating system for Apple and the first version of AOL.
But I enjoy his columns anyway, because he has so many risky ideas. I like crazy ideas. Which would you rather read about: "lateral solutions" that fail in interesting ways, or more retreads of "industry = evil, so I'm just gonna grab what I can get"?
I know this will earn me "flaimbait" or "troll" here at Slash, but honestly it's not meant that way. I really don't understand why people do not get that it is just dishonest to copy and distrubute copyrighted works without permission. I know this is the land of "Information Needs To Be Free", but look at it a different way. As a coder, you develope a unique little app. Well you might *like* to give it away, the rent is due. I don't know about you, but I require my employer pay me for my work. So, being in *High Tech* your company allows you to hold the patent (as many do). But then they sell your work to kingdom come and give you nothing... The rent is due, and guess what? You can't pay it because your employer has screwed you, after all, "Information Must Be Free" Bottom line. Music is *for sale* and if you want it, you must pay for it.
Read the RTMark FAQ if you don't instantly grok the above.
Once the corporation has been established no one is going to the lose their shirts, e.g. college kids won't be forced to give up their life savings. All you can lose is whatever the corporation owns. I think the only thing that breaks the corporate shield is worker's comp.
So Cringly is pulling an RTMark, but instead of activist reasons he's using it to trade music (which could be seen as an activist reason too).
Bravo.
Now here's the fun part. Why not live our lives as corporations? People complain about corporate power all the time, so if we can't beat them, lets join them. What if everyone made a corporation in their name and put all their assests into it? From there you can add shareholders (family, friends) then safely and legally swap MP3s, share ownership of just about *anything*, hire people to do your job at a cheaper rate and pocket the difference, wear a world's sexiest CEO t-shirt, take out loans, form off-shore tax havens (why pay tax?), have a great time knowing that whatever you do will be the fault of the corporation not you personally, etc.
Excellent "What is a corporation" primer here.
Damn straight. I'm off to become a corporate entity.
You know, I've wondered about this. As I've understood it -- just listened to Jack Valenti talking about it on the news today -- they claim that there's been a drop of something like 30 percent in sales, which they ascribe to file sharing.
But, I've also seen it said that book sales were down about 30 percent.
It seems as if the least hypothesis is that file sharing, rather than costs the RIAA members zillions, is actually costing them statistically nothing.
The point that noone wants to discuss is that many of the CDs accquired through p2p systems are NOT canabalized CD sales. Many of these people would NEVER accquire this music at the current price point of CDs. You can't say.. "Well, there have been 10,000 copies of this CD copied, so we lost $180,000" because many of those people would simply have not bothered.
:)
I have an example, but first some assumptions... (Yes I know the joke about assumptions)
First: We will assume that there is a lot of profit in an individual CD sale. I've seen enough evidence of this that I believe it to be true.
Second: We will assume that the music industry WANTS to make as much money as possible FOR ITSELF. (As opposed to making lots of money for it's artists)
Anyway, My example/idea/experiment is this... The next time Madonna, or Brittney, or whoever's hot next week, comes out with a new album, sell it for $6.00. Or maybe $6.50. Work out a price that still gives everyone in the distribution chain at least 1/2 the profit they were making on a 'regular' cd. (Except the Label, who's profit margin would be cut to 1/3 what it is right now.)
I predict that two things would happen. First: A lot more people who wouldn't buy an $18 album will be entirely willing to buy 3 (different) $6.00 albums, thus increasing total cash receipts. Since we halved everyone's profit (Except the record labels, which we cut by 2/3'rds) the artist is seeing 50% more money, and the label is making the same money it was on the expensive albums. This would also have the effect of tripling unit sales. Second: People would be more willing to buy an entire album just to get one or two songs. This also means more money coming in. And Third, people who had been entirely priced out of the market (Example: Young Kids) would now be in a position to buy music. All of this means more cash coming in.
(Short Tangent: If they did this, The Electronics arm of Sony would give every Record Label a big wet sloppy kiss as they cranked out more and more mega-CD-changers....)
This kind of pricing has precident. Anyone remember when Taco Bell used to sell it's regular taco's for like $1.79? They decided to swap volume for price, and they are now one of the Big Three Fast Food Chains.
But it won't happen.
Since the record industry makes it's profit after they pay everyone else, it is in their best interest to keep unit sales low, and costs high. Why go to all this trouble just so the ARTISTS can make a few more bucks? The Label doesn't care if the artists album goes Platinum or not. Just as long as they are raking in the bucks.
On a personal note, there are MANY artists who I own SOME albums of, but not all. If CD's were priced like tacos, I'd own the entire catalog of many musicians, just to say I had them all.
Specific examples: They Might Be Giants, Madonna, and The Nylons (Who?
Also! I'd go out tomorrow and buy up the entire back catalog of "Weird Al" Yankovich. I single out Weird Al because I already own all of his music, but much of it is on Vinal and Cassette. I'd have no problem re-purchasing on CD if the price was right. I bet you'd do the same thing.
Nipok Nek
Why choose white shoes?
Message-ID:
.html). I am not a
Date: Fri, 25 Jul 2003 16:26:36 +1000
From: Sam Johnston
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To: bob@cringely.com
Subject: The Business of Music
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Good Afternoon [Robert Cringeley],
A regular reader of your column, I write from Sydney, Australia to
provide some feedback about your 'One Possible Future for a Music
Business That Must Inevitably Change' article
(http://www.pbs.org/cringely/pulpit/pulpi t20030724
lawyer, so I cannot comment on how successful your model would be
although at first glance it seems to be taking advantage of a loophole
that would soon be plugged. Worse still, initiatives like this are
clearly not in the spirit of 'fair use' and may jeapordise the future of
fair use provisions. I believe the test is 'would it replace a sale',
and on that front you're buggered in a similar fashion to mp3.com.
That said, you have correctly identified the (diminishing) role of music
companies. I currently have some guys in my office churning out HDTV
ready broadcast quality footage using a $1,500 Mac, $500 in software and
a $10k DV camera. Admittedly these guys won the 'Best Comedy' section of
Tropfest (http://www.tropfest.com/) using similar technology earlier in
the year, and thus possess some amount of technical and creative
ability, but the point is that they are not requiring hundreds of
thousands or even millions of dollars of equipment to generate content.
I trust the same applies to the music industry.
Now, if new electronic distribution companies were set up which would
allow content creators (note I'm using the generic term, rather than
musicians) to sell their content with a 95/5 split (or thereabouts) in
the creator's favour rather than the current (reversed) situation, and
if the cost of the content was adjusted to maintain similar returns per
sale, I believe we'd all (with the exception of fat record company execs
and content creators who require significant investment - eg hollywood
studios) be much better off. All of a sudden we're paying 90-95% less
for content. Distribution is much cheaper and so the distributors are
still able to make a profit (which is more in line with effort
expended). Content creators still get $x/sale. However, content
consumers are suddenly able to stretch their content budget much
further. Say I spend $300/annum on CDs - that might be worth 20 CDs
which are bulky, inconvenient and prone to damage. Instead, I get
something like 20 times that, and in a format that is convenient. Note
that even if I spend 1/20th of what I spend today, the artists are no
worse off.
Users don't bother sharing it because:
- the distributors have fast, distributed networks as opposed to slow,
intermittent connections that are oh so common on P2P networks
- their files are high quality, and are able to be converted (ideally
'peeled') to lower bitrates for portable devices
- the integrity of the files is guaranteed by checksums and/or digital
signatures
- digital rights management (if any) is transparent and unobtrusive.
an identifier - maybe a watermark if it could be implemented without
quality degradation, or simply a header and digital signature (without
which integrity could not be guaranteed) could be used in cases of
copyright violation.
- i can still be sued by the distributor or industry associations and
the value proposition is simply not worth the risk. this process is self
funded, and without a secure way of ensuring my identity is concealed,
is an effective deterrent.
- significant value is added in the way of being able to download
content at multiple sites, maintaining and sharing playlists, etc.
Not being a lawyer, I found Cringely's idea very imaginative and stimulating. Other readers have mentioned possible legal flaws, but I think the scheme has an even bigger problem: it ignores the fact that we really don't need a music downloading business. Of any kind. The recording industry might need one, but musicians don't need one and the public certainly doesn't. The idea that anybody has to make money distributing individual copies of songs is an artifact we can afford to lose.
In an editorial mentioned on Slashdot a couple days ago, Doc Searls said something about television that I think is highly relevant: that it is a mistake to think of television shows as products and viewers as customers. Searls points out that the television industry makes its money selling eyeballs to advertisers. Shows aren't the product, they are merely bait that converts ordinary people into ad absorbers who might buy products later.
Likewise, from a musician's viewpoint, recordings are a way to convert people into future concert ticket buyers. It's been pointed out abundantly on Slashdot and elsewhere that musicians make money by performing, not by CD sales. What musicians get out of distribution (of any sort) is the fame that generates better gigs. For some reason everybody seems to have a hard time letting go of the idea that somebody has to make money selling copies of songs.
Try looking at it this way. The recording industry is in the position television set manufacturers could have been in if they had thought of building tv's like pay phones, collecting the coins, dictating which shows could be broadcast and demanding most of the rights. If that were the case, television set makers would now be right in the middle of the fray over video file swapping, claiming to be losing money with every download, probably also claiming to be protecting the creative artists who produce the shows (but who get none of the coins), and perhaps suing everybody like the RIAA is doing.
Obviously all that is unnecessary and sounds ridiculous, but it might not seem so if we were used to it. After a century of constantly feeding quarters into televisions, it might well seem like something was morally wrong unless someone was getting paid whenever a show was viewed.
There is in place right now plenty of infrastructure to freely distribute the songs of anybody who wants their songs distributed. What musicians and the public get from this technology is a way to eliminate the filtering imposed by the music business, do the distribution automatically, get the exposure for free and let the public pick the winners. Replacing the recording industry with a different middleman is completely unnecessary.