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

Network providers

[MichaelSmith]

TFA:

Indeed, there are better solutions out there - levies tied to network providers make more sense (and are already replicated by cable television levies for retransmission of content) - and there is a need to cover both peer-to-peer and the non-commercial use of content in user-generated content.

So now what? A tax on internet access? Charging per port?

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

[ozphx]

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.

I wish you we're right. I just imagine my mum coming up against these artificial restrictions. I bet she will just assume its a technical limitation. (DVD region coding was "probably something to do with the southern hemisphere" for her - maybe they spin it backwards ;)

Education of all your mates is important - but you run the risk of sounding like a whiney evangalist. Normally when I get asked about some use thwarted by DRM I just say "yeah, mate, your player could do that, but the movie publisher wont let you". Then if they ask I can drop an explanation.

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.

Ah, some are coming around...

[skoaldipper]

EMI sounds like some smart CIO refreshed their memory on the failures of DIVX; introduced in part by Circuit City to negate the early years of an open DVD format. If you wanted to "own" your movie, you just purchased a "silver" status (at more or less the same cost of a DVD) but were only able to view it on your DIVX player (and other hoops to jump through). Sound familiar? You do not need these lock down schemes to part my money from my wallet. Just look at my DVD and CD shelf. Really, you don't need DRM.

Article doesnt mention DE-AACS

[plasmacutter]

AACS was the advertised poster child of "perfected" DRM. Everyone kept holding that up as the end of DRM cracking. It is dead now, and suddenly nobody in the media is mentioning it.

Trusted computing is the last on the table, though I don't really classify it's completed implementation as DRM.

Because the "ideal" trusted computing platform is built to refuse to run unsigned code period, a "trusted computing" compliant computer really cannot be classified as general purpose any more than a box wrench could be classified as a screwdriver.

It's too late for most

[Anonymous Coward]

I just heard an interview with Bob Ezrin. He just did a presentation at the East Coast Music Awards where he basically ripped the industry for being clueless. "It's like they're fighting the atom bomb with muskets and swords." He told the story about talking with an industry executive and asking him where his computer was. The guy said he didn't need one because his secretary opened his email. Ezrin's reaction was something like: "You're so dead." There has been serious carnage in the music industry and it isn't over yet.

From the conference website: "The conference program will include a presentation from legendary producer Bob Ezrin. Having produced, mixed and played on legendary albums by Alice Cooper, Nine Inch Nails, Lou Reed, and KISS, Ezrin is perhaps best known for his production work on Pink Floyd's seminal The Wall. He is currently working with Universal Music Canada on talent development and the creation of a next generation music company."

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:Blank media taxing

[Dunbal]

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?

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:Blank media taxing

[pyro_peter_911]

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

-40 C? I'm an American, you insensitive clod, what's that in degrees Fahrenheit?

Peter

I'll pay for the convenience

[tgibbs]

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?

I buy a newspaper almost every day, although if I wanted to save the 50 cents, I could surely find a discarded newspaper or ask a friend to give me his copy after he's done. Or I could hang out next to a newspaper vending box and piggy-back on somebody else's coin to steal a copy for myself. But the convenience of picking it up from the vendor or the box without having to look around or ask around is worth more to me than the money that I could save.

Re:Greed

[KoshClassic]

RIAA? How about RAAA? (that is, Recording Artists Association of America). If the artists would just get together and form a group like this, *they* could distribute the money to themselves, leaving the labels (at least on the basis of the 'ol "artists should get paid" argument) out in the cold.

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.

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.