The Recording Industry's Failed Digital Strategy

An anonymous reader sends us a link to the Toronto Star, where Michael Geist has a terrific article on how the record labels got the Internet completely wrong. While somewhat specific to Canada, the article' arguments are more broadly applicable. The article links together the misplaced reliance on DRM and the Canadian industry's advocacy for increasing levies on blank media to demonstrate just how wrong-headed this strategy has turned out to be.

Comments

DRM is on the way out

[ravenspear]

Anyone can see it. If EMI is preparing to offer DRM free downloads, and everyone but the other majors want to do away with it, it's only a matter of time before it's eliminated. As much as the content industry might hate it, consumer demand is more powerful than their distribution policy. If they think they can force draconian DRM on people who won't accept it, then their sales will just decline further and they will not fix any of their current problems.

It took them years to allow internet distribution in any format. It might take a few more before they will allow it in a format which will gain wide acceptance, but ultimately it's in their best interest as well as the consumers'.

Re:DRM is on the way out

[AusIV]

DRM may be on the way out, but watermarking will be on the way in.

Personally, I'd love to see watermarking replace DRM. There will be no artificial limitations on what people can do with their media - I could copy all my DVDs to my computer (and play them on Linux) and have a great media center without having to worry about violating the DMCA, yet the media companies would still have a way of pursuing actual copyright violators. I think it's quite reasonable for the media industry to want to protect their investment, and water marking allows them to do just that while allowing the consumer to use their media the way they want it.

Re:DRM is on the way out

[innocent_white_lamb]

you can do whatever you want with the file, but there is a digitial hash somewhere in the file that uniquely identifies you, so don't share it, else we will sue.
 
If I buy the product in a store for cash, who gets identified in this digital hash? The clerk who sold it to me?

RIAA's entire business model has evaporated

[viking2000]

I know RIAA is enemy #1 here on /., but please realize that their entire business model has evaporated, and they are evaporating too. The treatment here on /. is like whipping a dying horse.

Music and song were thriving for thousands of years before the recording industry.

The only thing that brought the music industry to life was the ability to control distribution due to -cost of equipment- (recording studio, vinyl production, radio stations)

with technology advances, this control has gone away, and their entire business model has evaporated.

They really have no choice but to try to artificially create a business model based on DRM and legislation, but obviously, these measures are bound to fail.

Can anyone here at /. come up with a different solution for them?

Re:RIAA's entire business model has evaporated

[fucksl4shd0t]

Why should we? And while we're at it, why can't we whip back? After the bullshit they've put us and our friends and family through, why should we just walk away? It's not good enough that their business model has evaporated, the coke-snorting abusive record label executives need to hold up cardboard signs saying "Will work for food" before justice will be satisfied.

Re:RIAA's entire business model has evaporated

[ewhac]

Can anyone here at /. come up with a different solution for them?

Reputation management. Which is pretty much what they do today.

They think their business is selling little round plastic discs. It's not. It's selecting and marketing artists, and there will always be a market for that.

See, here's the thing: If we postulate that all music become free for the copying, how do you select what you want to hear? Consider the 500 channels of crap you already have on your cable TV feed -- an embarrassment of riches to be sure, but how much of it do you actually watch? How much can you watch? How do you decide what to watch? The explosion of available content is not going to slow down (absent a global disaster), and you're going to need intermediaries to help you sift through it all.

Consider American Idol. Just one viewing of the early episodes of any given season will reveal to you the true depth of horrifyingly self-deluded suckage out there. And there, through it all, sits Simon Cowell, the show's creator. He sits through the crap so you don't have to. You may argue that what he lets through is still crap but, honestly, the stuff he's pruned out is much, much, much worse.

This is the primary service the RIAA members still provide, and still can. They could position themselves as P2P search engines and filters, picking through songs available on the various P2P networks, and rating music based on their evaluations and your preferences. Note that they're not offering up the tunes themselves. The tunes they're listing are out there somewhere on the Net; Google would find them, too, if you typed in the right filename. All the label's search site would do is present what they warrant to be quality music that you're likely to enjoy. This would, of course, be a subscription service -- say USD$7.95/month. What you'd be paying for is not the music, but the recommendations.

This would leave the RIAA members with the ability to present a "portal" they control, so promotion opportunities for new performers would still be possible. Streaming music would allow the label to feature "celebrity DJs" pushing a mix of their featured tunes -- just like the old payola days, only without the middlemen. And they could also earn money on the back-end by offering "promotional services" to new artists who want to boost their position in the search results. Each label could open multiple "fronts" on the Web, each purporting to specialize in particular music genres, or optimizing for particular aspects you feel are important (and billing for each separately).

...Basically, the philosophical antithesis of Google. Except that everyone would know that going in. You'd know your music filter service would be a heavily biased party, which is why you'd subscribe to two or three of them to try and even things out. This would probably be a really great idea right up to the point ClearChannel took over all of them.

Schwab

Re:RIAA's entire business model has evaporated

[TropicalCoder]

As the man said "Music and song were thriving for thousands of years before the recording industry." ...and now - it's totally corrupt. Just think about it - how the record industry created these "Big Stars" - just like Hollywood and the National League [of your favourite sport here]. What fools we have all been to elevate these people to the status of gods! Of course, we have been manipulated by the mightiest marketing machine history has never known, but still, we bear the responsibility for our own actions in the end.

It's totally absurd that in this world where a quarter of the world's population suffers famine and we have so many other problems and priorities, that a few "stars" earn millions, and their promoters earn billions. And who are these people? For the most part, they are not musical geniuses; rather, they are icons of a corrupt pop-culture. They are stand-in symbols for whatever the current generation wants - anti-authority figures - 'sex, drugs, and Rock n' Roll'.

Centuries ago, art and music served as a form of worship, reaching for the highest ideals and aspirations that Man could strive for. Bach wrote his Fugues. Michelangelo painted the ceiling of the Sistine Chapel. Shakespeare wrote his plays, Byron, Shelley, Keats wrote poetry, Handel wrote his choral works, Beethoven, Vivaldi, Mozart composed their symphonies, the list goes on and on. Did any of these people, whose works have endured for centuries, ever earn millions of dollars? And did someone acting as their agent or producer earn many times more?

What has this world come to? I just typed "Greatest artists of all time" into Google and what do I get? Michelangelo? Leonardo da Vinci? Rembrandt? No, though that is exactly what I was looking for. Get this: According to Google, it's 1. The Beatles, 2. The Rolling Stones, 3. Jimi Hendrix, 4. Led Zeppelin, 5. Bob Dylan, 6. James Brown, 7. David Bowie, 8. Elvis Presley, 9. The Who, 10. The Police, 11. Stevie Wonder, 12. Ray Charles, 13. The Beach Boys, 14. Marvin Gaye, 15. Eric Clapton. Isn't there something wrong here?

Give me a break! "Greatest artists of all time" - how many of these people will even be remembered a century from now? I would only call one of these people an artist - Bob Dylan, and many of the rest are monster pop-icons created by the music industry back in the good ol' payola days. (Well, I have to admit, I too liked their music - most of them anyhow - what can I say? But that doesn't make them the "Greatest artists of all time". It's a matter of proportion, isn't it? What kind of a narrow view do we have, as reflected by Google?

Now, please don't get me wrong. I love contemporary music as much as anybody. I probably don't know any more about Classical Music, Fine Art, or Great Literature than you, and there certainly were times in my life when I would have liked nothing better than sex, drugs, and Rock n' Roll if/when I could get it.

My thesis is that record companies grew to be giant multinationals by catering to the worst within us, corrupting us with there greed, polluting our values, hijacking our culture for thier own monetary gain. Let them go back to Hell where they came from. It's time for this bullshit to end.

Re:RIAA's entire business model has evaporated

[ewhac]

So, then would it become illegal to tell your friend about a band that you learned about through the RIAA's website?

No; don't be silly. You can tell other people about facts you got out of the Encyclopaedia Britannica. This isn't substantially different.

Could I legally post a list of my favorite bands, even if that list just happened to coincide heavily with the RIAA's?

You're free to post recommendations of as many artists and tunes as you want. What you can't do is wholesale copy the recommendation database, or you run afoul of compilation copyrights. And, depending on how you architect the search and filter engines, copying the "database" may be impossible, anyway. The "database" is the sum total of all tunes on all the P2P networks. The label's site just applies their own sorting algorithm to the data. That algorithm remains on their servers, a trade secret.

As for hosting your own site, you're perfectly welcome to do so. But the labels will start out with more capital and market clout than you. They can buy more bandwidth and more server iron, thereby giving themselves an advantage. This is exactly how they like things, and such an arrangement will likely make them quite happy. And if you happen to tune in to the zeitgeist rather well and garner a sizable following of your own, don't be surprised if the labels come knocking to offer you a stack of cash and merge your Web property into theirs.

Schwab

Re:Network providers

[ozphx]

Not entirely without precedent if you consider British TV licences on "free to air" TV.

Of course it raises the question whether an industry association should be responsible for delivering this "tax" (or likely a small fraction) back to it's members. Kindof assuming they represent all copyright holders.

Perhaps a tie in with the Office of Film and Literature [and Music] Classification to distribute these taxed royalties back on "registered works". Not entirely convinced a government department would be any fairer than an industry association - and would probably be strongly influenced by the industry associations.

Re:I sort of agree...

[rts008]

Your solution would effectively cut out the distributer/label with the current model. Any other effective model would require a complete paradigm shift in the distribution/control aspect; this is what the RIAA and MPAA are worried about- distribution rights as a business model, and they have lots of cash to throw at our lawmakers to help keep that outmoded business model viable.

I completely agree with you, but until the money involved changes drastically, this is what we are stuck with.

Some things can be done, as in supporting indie's from their direct sales (thus bypassing the RIAA), supporting inie filmakers that put their stuff up for download, make your own, etc.
Admittedly, this is a limited option, but keep in mind how quick youtube.com, google.com, etc. grew.

The 'people' or John Q. Public can be a powerful force occasionally.

Re:Blank media taxing

[ozphx]

Oh an a decent temperature - it was bloody 40 degrees C last weekend :(

You'll trade that for -40 C? You aussies are nuts, eh?

-40C plus (3 * pairs of thermal underwear) equals comfortable temperature.

40C minus all clothes equals still hot and a public indecency charge :(

Re:Sure, Increase the Levy

[teknomage1]

I suppose you don't use cd's or dvds for archival data or just plain sneakernet style data transfer? The number of DVDs I've burned that included video data combined with the number of cds I've burned containing music is dwarfed by the amount of data cds I've burned by at least an order of magnitude. Why should I have to pay a levy on my data because YOU don't want to deal with the copyright storm troopers?

Comical

[Jerry Coffin]

It's truly comical to see how completely music company executives ignore reality. Watch MTV for an hour or two, and it quickly becomes apparent that music simply doesn't matter much to its primary target demographic. Based on how little air time it now gets, sales should be down much further than they are. Somehow the executives blithely ignore this, however, and blame their troubles entirely on file sharing, p2p, and so on.

They need to concentrate on finding some real talent. Right now they seem to concentrate primarily on finding second-rate wannabe-models, and then try to cover their complete lack of talent with lousy recording, lots of digital processing and when that doesn't work, attempt to distract from the mediocrity with synchronized dancing.

Once they've found some talent, they need to do a good (not over-produced) job of recording them, and sell the recording at a reasonably fair price. Here again, they've fallen down badly -- at one time, the amount of work and machinery raised enough barrier to entry that prices are recordings were at least partially justified. That's just no longer the case. Photocopiers haven't hurt the book market noticeably, simply because most people prefer a nicely printed and bound book to a photocopy, and a photocopy generally doesn't save much (if any) money anyway. The recording labels don't want to compete similarly because it would cut their profit margins -- but it's the only route that has any chance of being truly viable in the long term.

The fact is, if you want to sell something, you have to start by providing something that people actually want. Then you have to set a price that people will accept. These are simple facts the record companies have to face. Until they do, neither DRM nor lawsuits will improve their situation -- or even noticeably slow the rate at which it deteriorates.

So easy to poke holes

[c0d3h4x0r]

It's so easy to poke holes in how awful the industry's current strategy is... but I haven't heard anyone convincingly lay out a better strategy. It's truly harder to come up with a good original idea than to rip other people's ideas to shreds.

I will just say this: I think the industry's paranoid, DRM-pushing strategy is based on them hugely misinterpreting the data of recent years.

"Piracy is increasing!"
"Our sales are declining!"

Flawed conclusion: Sales are declining due to increased piracy!
Flawed course of action: Get more strict about stopping piracy!

Reality: Very few instances of piracy are lost sales; most people pirate just because they can, but if they couldn't, they sure as hell wouldn't go out and buy legitimate copies of everything they've pirated. People will pirate anything regardless of quality, but most people won't pay for content that sucks and just keeps getting worse. Also, you can't expect people to keep paying $18 for a pre-pressed audio CD when they know damn well it only costs $2 to make (since they can do it themselves at home on a PC and know what's involved).

Correct conclusion: Sales are declining due to decreasing value proposition (overpriced sucky content on increasingly cheap media).
Correct course of action: Aggresively seek out (or create!) better content and promote it; stop promoting crap; drop price-per-unit.

Re:Sure, Increase the Levy

[Anonymous Coward]

Not to mention unsigned acts that OWN the works they are burning to the media. Do they get their levy back?

Re:havent RTFA, but..

[drsmithy]

But will this new strategy really keep piracy at low levels? If I know that one of my friends has a hot new track that he downloaded from a site that lets the users download MP3s, it would seem stupid(in my opinion) for someone to fork over a dollar for the track. If I can get a good from free(from the friend), why in the world would I pay for it?

Convenience.

We (at least in the first world) are living in an age of unprecented personal wealth and great laziness. People are lining up to throw away their disposable incomes on things like mobile phone ringtones, bottled water and therapists. Of course they'll be happy to spend money to buy songs online if it's quicker, easier and safer than pirating them.

DRM has slashed my consumption of music

[Anonymous Coward]

I have a collection of about 500 cds mostly purchased at full price from chain stores. You do the math as to what that put in the pockets of the RIAA.
Most of these were purchased before DRM existed and include numerous full-catalogue purchases. I have no ripped-off material.
I have about 3 or 4 DRM'd cds. They SUCK. They all give me problems on older players that I have, or refuse to play on my PC through the speakers. That's not trying to copy them or anything fancy, they just don't F'n work on sub-optimal equipment, where everything else does.
End. I don't buy music anymore. Not if it has a DRM logo on it. Neither do I steal it BTW, I just don't consume music anymore, except for some local homegrown bands who cut their own slugs, sell direct and pocket the income.
Goodbye RIAA.

Re:havent RTFA, but..

[Technician]

But will this new strategy really keep piracy at low levels? If I know that one of my friends has a hot new track that he downloaded from a site that lets the users download MP3s, it would seem stupid(in my opinion) for someone to fork over a dollar for the track. If I can get a good from free(from the friend), why in the world would I pay for it? Would it not become even easier to share copyrighted content?

Rewind back to the 1970's with LP sales and easy access to cassette tape recoders. Fast forward to the 1980's and Cable TV and VHS and Betamax VCR's. Why would anybody subscribe to cable TV when someone gets something off HBO and passes the tape arround. Fast forward to today with portable MP3 recorders and Sirrus radio. How can they sell subscriptions?

New content without DRM in a reasonable format at a reasonable price is more convienent. Only overpriced content gets pirated in mass. Most people buy their own DVD's instead of copy them on VHS or DIVX. Most people who listen to subscription radio do so with their own subscription. Most people who watch pay tv have their own subscription instead of passing along the latest HVS tape.

But will this new strategy really keep piracy at low levels? Good question. How does Blockbuster and Hollywood video manage when people can just go online and download it for free? Good price, convience, and high quality....

DRM-free content with the same parameters will sell. Good price, Convience, and High Quality.. Don't forget it. It's called Value Someday, the RIAA will get it.... Maybe.

Re:Sure, Increase the Levy

[Anonymous Coward]

Doesn't it seem like having a levy to compensate for potential infringement is analogous to extortion.

Imagine you go into a store to purchase a crowbar. The cashier pushes the buttons to tally the cost.

1. Crowbar
2. Sales Tax
3. Crowbar Levy

You ask what that crowbar levy item is. The clerk replies: "Oh, that extra 10% ensures that I don't start yelling thief at the top of my voice. You might be, you know. This is a crowbar."

watermarking unsolved problem

[Baki]

what happens if my ipod is stolen with all watermarked (i.e. linked to me) songs? the thieve publishes to some p2p networks, and I am liable for millions of copies (i.e. billions of dollars)?

watermarks solve nothing, you cannot sue anyone for being robbed.

Re:Sure, Increase the Levy

[Opportunist]

Nonono, the correct parallel would be Nike getting a shoe tax and you getting zip for it in return.

Re:Network providers

[Simon Brooke]

If I download a track from my favourite band, then I see that I morally ought to be making a payment to that specific band. I don't see that the RIAA, or any recording company, come into the deal at all. I don't see why they should. They're anachronisms. Same with movies. If I download a movie, I need to make a payment to the people who made it. I don't see why I need to make a payment to MPAA, or any other similar body.