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Why Starting a Legal Online Music Vendor Is Tough
Hodejo1 writes "Former MP3.com CEO Michael Robertson offers commentary at The Register saying any attempts to build a sanctioned digital music site today is doomed from the outset. 'The internet companies I talk to don't mind giving some direct benefit to music companies. What torpedoes that possibility is the big financial requests from labels for "past infringement," plus a hefty fee for future usage. Any company agreeing to these demands is signing their own financial death sentence. The root cause is not the labels — chances are if you were running a label you would make the same demands, since the law permits it."
Just because I'm allowed by law to charge someone whatever I wish for the fruits of my business, this doesn't mean I would, or that I should. I would go out of business very rapidly.
However, if I ran a cartel, controlling a monopoly share of a highly desirable resource... then I guess I understand where they're coming from.
But... wait... aren't monopolies illegal for this very reason?
... but I didn't see the word "iTunes" anywhere in that article.
It is possible to build a profitable, long-lasting, and legal online music business, Mr. Robertson. I'm genuinely sorry you failed to do it, but to pretend that the biggest player in the online music world simply doesn't exist is kind of childish.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
The article doesn't mention a lot of sites, in fact none of the BIG company backed sites are mentioned. And this makes me wonder, how succesful is iTunes on its own as a business? It has long been rumoured that Apple makes its money from iPods not iTunes. If that is the case, and you accept the same from products launched by the likes of Amazon then there is a 5th category, sites that barely break even thanks to the insane costs, that help keep the online music sales at the level the music industry is comfortable with.
Steve Jobs managed to get the labels to accept the famous 99 cent, but it stalled there. 99 cent is still insanely expensive if you consider the huge cost reduction in distribution.
Apple hasn't been able to drive the price lower nor has it been able to get more music online, like getting the labels to open up their entire catelogue.
I would be very intrested to see any real figures showing that iTunes is turning a profit and enough of a profit for a company whose only product is a music store to keep it alive.
Don't forget that Apple is an awful lot like MS, it can afford to throw money at projects, and internet rumor has it that iTunes is just such a project. Not that Apple minds since the iPod is earning them every dollar spend back tenfold.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
But there is one, inescapable truth - Internet piracy is mostly to blame.
It's a common scapegoat, but missing the mark. Percieved value and retail price are an order of magnitude out of place.
Instead of wasting money on a shiney disk with about 45 minutes of stuff along with one good song, I can buy a DVD for half the price.
I can carbonate water at home and add my own flavoring and sugar, but I still purchase fountain drinks for the convience.
CD's are now the oposite of convience for more money. Downloads go right on to an MP3 player. CD's have to be found if still in print, ripped and put on a player.
Online is a-la-carte. CD is a canned package.
Some compainies wanted to make and install in store CD burning kiosks. Guess who killed that in the bud?
For an industry who doesn't listen to their consumers, they sure scream P-P a lot for their lack of adjusting to the market.
If you scream P-P enough, will the death of your scapegoat really fix your root problems?
Some people are offended by my blacklist system.
This would be mostly your best customers. Those who don't listen to music don't buy CD's. Those deeply into music purchases CD's and shares copies of out of print stuff or the one good song on a CD. Blacklisting them is a great way of killing the biggest part of your business. Thanks for providing great evidence the industry doesn't understand the market.
Much of the industry is selling pig in a poke packages. I bought the DC Talk album Supernatural because our church performed Red Letters, and I enjoyed the choir rendition. I hated the album, even the good track. I'm not into acid rock. Needless to say, once burnt, twice shy.
How many times have you bought an album because you only heard one song and then didn't like the rest of the album at all?
P-P expands music horizons. Most of the time when I bought albums, I heard it from friends first. (I quit buying entirely when the industry started dropping the nuke bomb on some unlucky few as a protest.)
My peak buying days was when I was in the military while in my peak piracy days with cassette tapes. The industry doesn't understand their consumers or the market.
The truth shall set you free!
One of the problems here is that the author of the article seems to think the authority to change the situation lies with the court system, when in fact this is a legislative problem that is compounded by a massive mis-interpretation of what the general public thinks it ought to be about.
While I understand that the Register is a UK publication, it reads like it was written by an American (perhaps a personal bias). From an American perspective, the record companies are fighting something even tougher: The U.S. Constitution. More to the point, if the copyright clause of the constitution were to be properly interpreted to understand that the protection was only for a limited time (life + 75 years isn't a "limited time" in spite of what the U.S. Supreme Court claims). Retroactive copyright term extensions make the situation even worse... but I'm barking up the wrong issue here anyway.
The point here is that legislative bodies of the world like Congress, Parliament, and other similar bodies have been dealing with this issue as if the publishing bodies (including recording studios in the case of music) are the only individuals that need to be served when these laws are drafted. Individual consumers as well as the artists/authors/composers/performers need to be strongly considered as well, and the real point of legislation ought to be asking this question:
What can changes in the current copyright legislation do to expand the number of creative works, and "promote the useful arts and sciences"?
This is certainly not something that is being asked by legislators (MPs or Congressmen), and nearly all legislation in the past couple of decades on both sides of the pond works to kill off incentives by individuals to create these kind of artistic works. International agreements, while they do seek to "equalize copyright laws", tend to take the lowest common denominator approach and offer the best possible protection for the publisher as any of the countries in the treaty organization (aka the "Berne Convention"). This question about what can be done to promote the development of these artistic works certainly isn't being asked at these treaty conferences either, nor by the legislative bodies when the treaties are being ratified.
You say at the end the examples from history about product X trying to stop product Y from replacing it and seem to think this applies to the music industry.
You are wrong, for that to work in media it would have to be theather trying to stop movies, movies trying to stop TV. That indeed does not work.
But what is really the case is that the music industry is not being replaced. There is nothing to take over, it still is the same model that existed since recordable music was invented, X performs for Y who records it who sells it to Z who listens to it. As long as X and Y expect payment from Z, the industry will remain roughly the same. Yes, with advances in tech some X can cut out Y, but this has always been the case. Lots of musicians have in the past created their own labels, in fact most labels were started by musicians out of dissatisfaction by the existing labels, until they became big themselves.
For Z having every X be his own seller is also messy, you don't buy books from writers do you? Hell, you don't even buy them from publishers mostly, you buy them from bookstores. Would you really be comfortable giving your credit card details to every artist asking for 10 cents for their latest album? Not that that would work, the credit card companies want bigger fees. Sure there are some small sites that try to be the go between but there you go already, that site is going to want payment, exactly the same as the labels, and the more they advertise their new sign-ups, the more risks they take, the more they want paid on each song they manage to sell.
The entire problem lies in the recording. In theory, this allows a musician to earn an infinite amount of money from a finite and fixed amount of work, this never works. Play around in virtual economies such as found in games for a while to see why not. Usually, the more you want to earn, the more you got to invest. Imagine a simple chart, X is amount of money invested in a concert, Y is the money earned from tickets. Obviously if you want Y to increase you first need to invest in X by renting a bigger arena.
But with recorded music, this doesn't work, the cost of recording a song is relatively straightforward, rental of studio, salery for techies, but the potential earnings can be anything really. With a piece of recorded music, with every tech advance you are getting closer to a product that has an infinite supply for a finite cost. For, lets say 3000 dollars I can get a song, that I could potentially sell an infinite amount of times and with copyright as it is I got a century to do it in.
This is of course very tempting but it only works if I am the sole supplier of that song. If everybody who has a copy can share that, then all I can count on is to sell 1 copy and at 3000 dollars, finding that first punter is going to be tricky.
The music industry can make enormous profits THANKS to the fact that its product is in infinite supply BUT it can only make those profits if it somehow makes that infinite supply finite.
Live music isn't the answer, is a concert ticket really worth 100 dollars or more if EVERYONE could have a front row seat? Well the answer is TV, everyone has good view and you don't pay 100 dollars for a live concert not even if the camera is on stage!
Live music obeys the normal economic rules, recorded entertainment does not.
What can we do about it?
Very little, you could make a law that stays every recording can only be sold an artificial number of times before it must be re-recorded. This would make it a finite supply product obeying the normal rules of the economy, if you want a specific recording, then just bid for it against other intrested parties. It would solve a lot of problems, but I doubt everyone would agree to it, including the buyers.
You could severely limit the amount of time you could sell a recording. It would have to be severe, a period of maybe a couple of years, this would give popular music a short-time to recoup their costs, give them a change to earn
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
And you can't (generally) buy the same song from different entities.
Lennon/McCartney's licensees would beg to differ, as would anyone else who's ever recorded a cover version. I seem to remember seeing at least a dozen different versions of "Macarena" on the old Napster. If there's no cover version of a given song, that's your cue to record one under whatever mechanical license scheme is in effect in your country.
A conflict that is unlikely to be resolved until monopoly rights are restructured as non-exclusive revenue share rights, which simply is unlikely to happen any time soon.
In the case of songs, it has already been so restructured: recording artists share their revenue with composers.
The article clearly states that it is merely an 'Opinion' note the upper left hand corner tag.
Other than that I would offer another view. There's still plenty of opportunity to grow online music.
When the dust settles, many moons from now, the emerging model will be a hybrid between what Napster was and iTunes is. It will probably emerge outside of the US because the morons on Capitol Hill are too quick to appease the idiots at RIAA. But it will emerge. Think Janis Ian and many more like her.
Of course if by some miraculous turn of events RIAA decides to invest in technology instead of lawyers it may start here, but don't hold your breath. Blinded by greed, crippled by stupidity.
Hope is the currency of fools
"Are you... joking?
Or are you a RIAA marketing consultant?"
And the answer is .... B.
Damn story pops up every time an article is posted that is vaguely connected to music and internet. It's just some PR drone connected to the music industry doing his sorry job.
And you had the bad luck to read it before it was modded into oblivion and took it seriously.
---
"The chances of a demonic possession spreading are remote -- relax."
I am a retired lawyer, but back in the day conscious parallelism used to get you in big trouble. With the recent court, I am not sure how this would hold up now(one of the requirements for elevation to the appeals courts or Supreme Court in recent years seems to be that given a choice between a person and a corporation you must never have ruled in favor of the person).
Cut to the chase. Big publishers purchased these bogus laws and are the root cause for all sorts of digital stupidity. Is there anything more anti-social than fighting sharing as a concept? Companies that can't exist in freedom don't deserve to exist.
Friends don't help friends install M$ junk.