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Study Suggests Music Industry Embrace Piracy
unassimilatible writes to tell us that according to the Financial Times, the music industry should embrace illegal file-sharing websites. A recent study of the recent Radiohead album release found that huge numbers of illegal downloads actually helped the band's popularity and, by extension, concert ticket sales. "Radiohead's release of In Rainbows on a pay-what-you-want basis last October generated enormous traffic to the band's own website and intense speculation about how much fans had paid. He urged record companies to study the outcome and accept that file-sharing sites were here to stay. 'It's time to stop swimming against the tide of what people want,' he said." Update 19:46 GMT by SM: Several readers (including the original author) have written in to mention that it isn't stressed enough that this study was engaged by the music industry itself, making the findings that much more interesting. Take that as you will.
Not saying that there might be some merit here, but this was hardly a scientific study. Someone simply looked at the number of downloads of a single album, by a single band and said "downloads == good." Sure, you can make statistics say whatever you want them to say, but this isn't even trying.
Secondly, it's no longer "pirating" if it's condoned by the copyright holder, eh? So, we're now expecting labels to just let everyone freely copy music? The problem here is that labels own the copyright and make their money from album sales. Merchandising and concert revenue, on the other hand, typically go into the bands' pockets. So of course there are bands out there that would love to use albums as a loss leader for their concerts. This kinda screws the labels though since the only reason so many people attend the concerts or buy the t-shirts is due to a heavy promotional investment by the labels.
I can't actually believe that I'm spending a few minutes of my life to defend major record labels, but we do need a bit of intellectual honesty and middle ground in this discussion.
Entrepreneur : (noun), French for "unemployed"
... though it might be good if they are constantly reminded that they are hurting themselves by going against consumers rather than with them.
Gotta go support the music industry and make comcast hate my guts.
Not very many people know this, but the RIAA almost went bankrupt in the 30s with Radio, because they didn't have any licensing fees or "royalties" associated with it. And people stopped buying records because they could listen to it on the radio.
The RIAA should embrace technology. Because that is where the world is headed. Any idiot can see this. So instead of fighting, go with the flow, because you cannot change people. No matter how much you sue, how much fucking money you waste trying to convince people they are stealing if they think of the song in their head.
I hereby kick the RIAA in the nuts.
The article is making the (increasingly realistic) argument, albeit in a round-about fashion, that the recording industry needs to adapt or die. They've got just about zero chance of regaining the revenue streams they had pre-napster, and so its time to think outside the box. Not a newsflash by any stretch of the imagination.
It's a choice between figuring out how to continue to make money (redesigning your business model) or making none (continually declining revenues for major labels until they can't afford to pay anyone in any case).
Y'know though, the labels and record companies are really just middlemen and the artists make their money from concert tours and very little from actual CD sales.
So why are we paying for the middleman?
My submission was completely rewritten by the admin.
So was the pay-what-you-want part illegal? Is there a law that requires you to charge for music? Damn..
I think the point is that Radiohead wanted you to register with a credit card and get it from their site. I might be remembering incorrectly, but I think they wanted a minimum of 1 cent.
Regardless, just because a copyright holder doesn't charge money doesn't mean they cannot control other aspects of a work's use and distribution. Or have you not heard of a "GPL?"
Slashdot "libertarians": Small government for me, big government for those I disagree with. -1, I disagree with you
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People want *everything* for free.
Not really. It's barely worth my time trying to dig up enough iron, aluminum and other metals, as well as finding the oil and manufacturing the plastics, in order to build my own automobile. I would spend my lifetime doing this, and would nowhere near approach the quality of car available on the market today. I have other things to do.
However the perceived cost of a "song" - especially in the information age where anything digital can be copied an amazing number of times for virtually no cost - is very close to zero. Therefore that's exactly what I am willing to pay for it. Sure, the band had to spend a few weeks writing the thing, and a lifetime learning to play their instruments properly - that's why they get to charge willing customers for concert performances. Just like I get to charge my patients for the skills I have honed over the decades. However I don't become an overnight multi-millionaire just because I made a successful diagnosis with a single patient. It takes work, you know? The "entertainment" industry is long overdue for a "correction".
Seven puppies were harmed during the making of this post.
It helps their artists (and them as well), but it also helps artists who are not uinder contract with its members.
The RIAA has radio and empty-v to advertise its wares, as well as internet radio and P2P. Their competetion (the independants) only has internet radio and P2P. Killing internet radio and P2P is a blow against the indies, and since the RIAA has radio and empty-v, they can do without the internet. Their competetion can't.
What they are doing is blatantly illegal, but the government is their pawn. We, the People, are defenseless.
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest
I know the knee-jerk reaction thing is a bit heavy around here but to proclaim that the RIAA hates concert sales because artists make money from them is a bit far fetched.
And as for bands who pump out multi-platinum albums who don't make a dime? I'd really like to see the books in that case. If it's true than there is so swamp land I want to offer these people. If you really have a serious fan base and you're not smart enough to go in and say "I sell records, I want a cut or you won't get any more recordings out of me" than you deserve whatever you get.
Do you honestly think that established artists who pre-sell in the hundreds of thousands of albums don't have negotiating power? Please. Now, there are cases where bands foot their own production costs and the band loses because they went over budget but even that is a rarity and somewhat of an unlikeliness today given the great reduction in costs as far as recording and mixing.
Dedicated Cthulhu Cultist since 4523 BC.
As an idealistic independent musician, I dream of staying indie, making free music for the fans and having the fans support me out of the goodness of their hearts. And maybe it can happen.
On the other hand, I just recorded an album (not released yet), and I value the producer/engineer's work tremendously. I would also be ecstatic to have someone take over many of my business/marketing tasks for me. It would be worth it to me to pay those people - not 90% of my income, but definitely some.
Assuming fans will continue to be willing to support the music they love, I can see the industry moving from "labels employ artists" to "artists employ a business staff." Those people would cease to be middlemen, but they wouldn't cease to be needed.
People want *everything* for free.
I don't want everything for free. In fact I have very little pirated content in my music collection - there is some, but it's gotta be less than 10%, maybe less than 5%.
Much of my music collection was bought years ago, before downloading MP3 was even an option. These days, I only really "follow" a handful of mainstream artists and buy CDs when new ones are released. I do this only grudgingly, especially in those cases where the artist releases under a RIAA label. My preference is to buy indie music, preferably at a gig where the artist is playing and I can literally hand cash to them and tell them how much I enjoyed the show.
In general, my response to the RIAAs tactics - even though I'm not a "downloader" - has been to shun them and the bands they work with.
If libertarians are so opposed to effective government, why don't they all move to Somalia?
The music industry (and the movie industry) has a business model where they control the conduit between the "talent" and the "customer." They make their money by controlling that conduit ... we have a number of laws that outline the dirty tricks used by these folks to control the distribution conduit, right up to the control interface on your wallet. The Canadian blank-media tax basically siphons cash out of your wallet regardless of your music/entertainment purchases, and gives the lion's share of the funds to ... wait for it ... the distribution cartels. They have a plan for distributions to artists, but that's after they've taken their cut.
Any proposal that lessens their ability to control the market will be opposed quite vigorously. They already know they're obsolete. What makes you think they're going to give up voluntarily?
The industry needs to realize that a person not buying their products is not their customer, whether it is a subsistence farmer on the African countryside or a frequent visitor to the Piratebay and that ilk. So they need to start focusing on the real customers to actually make money.
The difference is that the visitor to Piratebay is MORE likely to actually turn into a customer. So why chase him away through litigation? The fantasy that they are losing money (i.e. has money taken away) is a fallacy, there is just potential income that is less than if they had bought the album. So you want them to do just that.
Turning into a fricking monster is not the solution.
The OP was being sarcastic in the first paragraph.
I hope.
The problem here is that labels own the copyright and make their money from album sales. Merchandising and concert revenue, on the other hand, typically go into the bands' pockets. So of course there are bands out there that would love to use albums as a loss leader for their concerts.
Okay, but I think the most important implication of this post is that perhaps there is absolutely no need for there to be record labels anymore.
Recording studios aren't even a hundredth as expensive as they used to be. Many bands - Radiohead included - have their own.
So if enough people are inclined to listen to music without having it on plastic disks in physical stores - why bother with the labels at all?
Sure, a band needs to be promoted, but the logical solution is for them to hire a PR guy - not for their PR guy to hire them.
"Beware he who would deny you access to information, for in his heart he deems himself your master."
You get to charge a lot of money for your skills not because they took so long to develop, but because the years of development means that your skills are rare.
Musicians, on the other hand, are a dime a dozen. The world is full of skilled musicians. It's even full of skilled musicians who can put on a good show, though stagecraft is rarer than people think.
The real skill on that side is in getting people to all want one particular song. The record companies used to be pretty good at that, through a combination of skilled production, skilled marketing, and collusion with radio stations. Nobody listens to the radio any more, and skilled production comes free with an iMac.
Marketing is still a wide-open field. Maybe somebody will figure it out.
Don't forget the "Hollywood accounting" principals that say if you don't show any profit, you don't get taxed. That check for $500,000 the band got was for "unreimbursed expenses" and such. No, there isn't any profit here, none at all. Check Mr. IRS Man, and you will see all our books are clean. No profit.
Are there bands that make lots for their manager, agent and record company without ever getting a dime themselves? Sure, they spent their entire advance (and then some) and finished with less than steller sales. Does this happen often? Absolutely. Want a bowlfull of caviar before every concert? Sure. Someone will get paid for it in the end.
At the same time there are so many ways to hide income (ala "profits") that it would make your head swim. Anyone with a lick of financial sense hides as much income as they can, because the alternative is to losing it. It also isn't the sort of thing you tell the fans about because it might get around to the IRS Man and that would just ruin everything.
...would be:
Rights holders would create copies of their movies/music/etc. using a standard program that "imprints" it with a demo indicator. For video, this would mean a message appearing at the start, end and in the middle of the screen every 20 minutes or so saying this was an unlicensed copy and to license it, go to this website. For music, it would take the form of an audio announcement along the same lines at the beginning, middle, and end of the song.
When you go to that website, you can download an app for your particular platform. The app would be fairly simple, so there's really no excuse for not supporting Windows, Mac, Linux, and maybe even BSD. This app is like iTunes Music Store in that it lets you whip out a credit card and pay money for the music/movie. It then downloads from the server the diff that would take those announcement bits out and replace them with the normal audio/video. It also tack on to the beginning and end of any video the purchaser's name, with a short (less than 5 second) screen saying that the following movie was the licensed property of (purchaser's name). For audio files, it would probably be best just to have that put in the tags. Hopefully some place it would be obvious on playback/browsing.
And that's it. No more DRM. No phoning home, no device lock in for the stuff you already purchased. Just a simple screen to prevent casual copying (who wants to give other people stuff with their name and maybe city/state on it). The knowledgeable crowd will know how to fix that, but there's no point in trying to stop them, anyway. They'll always figure out a way around and you can save yourself millions of dollars in creating elaborate DRM schemes and lost sales because people don't like elaborate DRM schemes.
You charge VERY low rates for these files. We're talking 10 cents - 50 cents a song and around $1-$2 a movie. You make up for the price in volume, especially on the movies because now you can really give the movie rental places a run for their money. You not only stop trying to squash bittorrent, you embrace it. You get your imprinted copies on every decent tracker and you help seed them. You make it as easy to download your imprinted copy as it is to get a pirate one.
If you've got the money for development/bandwidth, you can also create your own iTunes-like store where they can directly download from you. But you keep putting it on the torrent sites, too, because this is all about making paying for content as close to as easy as not paying for it and only slightly more expensive. If you're a smaller player, you team up and do package deals. This would narrow down the number of sites that have activation apps that you'd have to download. I figure each of the big music labels would want to do their own (BMG, Universal, etc.) and then you'd get indie collectives.
The payment method could also be abstracted so that you never give your financial information directly to the companies but only get sent through other payment systems like paypal, Amazon, etc. Heck, maybe even the activation apps could come from these "trusted" third parties. The content owners could keep them in line (keep them from trying to take a big piece of the pie) due to the competition between payment systems.
The companies could keep a record of the media you own, so that you could get a new copy activated if your old one got deleted. This would be low traffic on their site if they want because you can get the imprinted media from a torrent.
Note: If doing the diff thing is too difficult (because of the way various codecs work), you can also just create a file where you take out 10% of the information required to play it, basically in a worm-like fashion throughout the file. Enough to swiss cheese it. And you include a standard bit at the beginning of the file that tells you how to "activate" it. Basically like the above but without the free preview.
So, any thoughts? Crazy enough to work? Content sellers just keep trying to build a
The problems with the Radiohead album have been multifold. First, there was a lot of publicity regarding "free" distribution. At release, the Radiohead website was generally considered cumbersome and difficult to use, and was suffering from outages.
The problems downloading the album from the Radiohead site drove many to download the files from peer to peer networks, with the media-driven misconception that this album was "free". Unfortunately, the extent to which the album was "free" was greatly over-exaggerated by the media, as it was not free for redistribution. This is a fact that likely eluded the average consumer not intimately familiar with copyright law.
Above all, a user will take the path of least resistance, legal or not. For some users, they find resistance in prices they cannot afford, but that is not the only reason for piracy. Other reasons include empty store shelves, DRM (digital rights management), and uncooperative websites (as with 'In Rainbows'). All of these barriers to legal ownership result in piracy.
Almost unfortunately, record companies have already realized this. Yet, they have decided to implement these ideas backwards. They are attempting to reduce the relative barriers to legal ownership by increasing the barriers to illegal ownership. This has been done via the legal system, with their infamous lawsuits.
I agree with the general idea of that record companies must adapt and embrace free downloads through peer-to-peer networks, as NiN has done with their release of Ghosts. NiN has released their Ghosts album free for download and redistribution under Creative Commons.
Generally speaking, record labels never get a cent of concert revenues and bands rarely make money from record sales.
The concert revenues go almost entirely to the band and their team (manager, lawyer, roadies, etc.). They also typically keep money made from non-musical merchandise like t-shirts, hats, posters, stickers, etc. The band can profit greatly from wide exposure (like you might get from being popular on P2P).
The record label, on the other hand, usually doesn't get any merchandise revenue or revenue from touring at all. They have to make all of their money from sales of recordings. What happens in practice is that the label will give the band an "advance" so the band can make a recording. This advance might be $200,000 for an entry-level band and the band must use the money to create a suitable recording and buy food, clothing and shelter until it's time to make the next album--and the contract dictates a minimum time frame for this, typically 6 months or a year. The record label is usually entitled to 85% or more of revenues from the sale of record and under no obligation to release the album or spend any money promoting it. Before the band makes another dime off record sales, this entire amount (and any additional expenses the label might incur in getting the record to market) must be recouped from record sales. It almost never is because the label will bill things like air conditioning, coffee, dinners with friends, parties, etc. and because the record label has to pay to have the album pressed and distributed which can be quite expensive. My old record label was making something like $2 off every $10 record sold in a store because the store wanted a cut, the distributor (V2 records) took a huge cut and had to pay their sales team to place it in stores, etc. I think we were entitled to something like 25 cents per $10 record sold according to the terms of our contract. Try paying off $200,000 at that rate.
Given that most bands don't ever see a dime from sales of music recordings, I would imagine that P2P seems like a great option for them. Conversely, record labels are going to hate it because it means giving their product away for free or for optional compensation. It is possible to build a business on optional compensation but I wouldn't want to do it.
I see this helping bands in the long term because it means free distribution of records. I also see it hurting bands because record labels are whithering away - where is that $200,000 advance going to come from? You might see a lot of cheap-to-produce music (like house, rap, or punk) coming out of this situation, but you won't see records like Dark Side of the Moon (which took like 2 years to make) or Pet Sounds coming out of this situation. What you will see is an increasingly splintered industry with gazillions of bands and incredible variety. You'll also see the prefabricated, talentless stars like Miley Cyrus making boatloads in this scheme.
The situation is not totally gloomy because you don't need anywhere near $200,000 to record a good record today. You can get protools or logic for cheap. You can also whore yourself out to some rich patron for the big bucks to do a truly awesome recording if you don't mind a lifetime of indentured servitude which is basically the old way of doing things.
I guess they're missing the point that I bet several people downloaded the torrent, and donated. Not saying all of them did, but a lot of people, knowing that P2P is efficient and helpful, chose the different download method. Why do you think lots of companies use that as a distribution method?
If every artist followed the Radiohead model, or alternately released their songs for free at a reduced bitrate, then Radiohead wouldn't be unique. For one, they would no longer enjoy a price advantage over similar artists when competing for music consumers' dollars. But they would also suffer in a "public relations" sense. Radiohead's gesture generated a significant amount of goodwill toward the band. Among their fans, sure, but also among non-fans who just happen to want music to be free. Many of these non-fans or marginal fans may have downloaded the Radiohead album simply to reward Radiohead for taking a chance on the new distribution model.
I'm curious whether the apparent success Radiohead enjoyed is not so much due to the distribution model itself, but the fact that they're one of the few big acts to use that model.
It should also be noted that among the pantheon of artists out there, Radiohead's fan base is likely more 1) wired, 2) wealthy and 3) interested in the "politics" of music distribution than the fan base of, say, 50 cent or Carrie Underwood. If true, this would further boost the effectiveness of Radiohead's experiment beyond what an arbitrary artist could expect.
Because the album is NOT the product. The live performances are the product. Albums are advertising. Record labels are not needed any more - they don't need to produce any physical media any more. That can be done in any fab place that will stamp CDs. Record labels turned the album into a product simply so they can make money off of the artists. Their business model is not sustainable, as it is going to bring about their own end.