A fair chunk of the Slashdot crowd had similar doom and gloom predictions when iTMS went up in the US. They predicted its imminent death because of all the content available for free on the P2P apps, and because the DRM wrapper would surely be cracked (it was -- so what), because there was DRM in the first place, because it didn't have every piece of music ever released including that one where the chickens cluck their way through "Take The A Train",* and because prices were too high.
A year later, iTMS is doing gargantuan business, Apple (and the record labels) are having the last laugh, and now, naturally, imminent death is predicted for the Canadian store.
* I just checked. It's still not available on iTMS.
"Keep in mind a solution that may work for a small number of cases, doesn't necessarily scale to handling a large load."
Then that is Kazaa's problem if the court orders them to take this step. If they did not build in an efficient way to reduce piracy (and why would they, of course -- their business depends on easy availability to pirated material) -- then it's their job to fix it.
If you're not sure what I mean, imagine if Microsoft had some sort of heinous problem with their software which the courts ordered them to fix. If Microsoft complained that it was a difficult task to do so due to mistakes they'd made earlier in the software, it's the same story -- tough shit... fix it. Microsoft has the skills and the money to do so. And I'm sure most Slashdotters would agree.
"In this instance, i agree with you. they setup a service to share files. it's would be like blaming Ginsu Knifes because someone stabbed someone with there knives, and DuPont because they murderer walked on there carpet."
Not in the least. Kazaa was developed, and is operated, with the understanding that 99% of the traffic is piracy. That's the appeal of the service. Their entire business model is based on this, and they're making scads of money. They don't want to eliminate the pirates from the system because they would no longer have a business.
Since Kazaa have a business interest in pretending otherwise, I can see why they'd adopt this laughable position. For the rest of us, it's okay to use our brains and point out the obvious when we see it. It's okay to say "I want Kazaa to win this court battle, but I also understand that their business is built on piracy." No need to play dumb in their defense -- they have lawyers that they pay to do so.
"I fail to see how that matters. Just because something *CAN* and *IS* used for something illegal does not mean that was its original intent."
In the general sense, that is very true, but we are discussing the Kazaa case. The creators of Kazaa knew that it would largely be used for piracy, and the operators of Sharman Networks know that it's used primarily for piracy. Their very business model is based on this, and the business of facilitating piracy has been very, very good to them. The salary of Sharman's president is most likely much larger than the entire salary budgets of many indie record labels.
"
It's a transmission medium just like any other and it should be treated as such. Case closed."
Not correct. The vital difference is the business model of the company running the medium compared to, say, the business model of your local phone company. Remember, this isn't "the record industry vs. P2P," but "the record industry vs. Kazaa."
If you're not sure what I mean, imagine if we waved a magic wand and all the illegal content disappeared off of Kazaa at the same time that your local phone company's lines could no longer be used for illegal content. Your local phone company would barely notice; perhaps that 2% of people who use the phone line solely for illegal content would move elsewhere. Over on Kazaa, however, 98% of the content would be gone, the vast majority would stop using it, they'd no longer be able to get ad revenue, and they'd be gone quite quickly.
"If anything, the *AA could argue Kazaa's business model and marketing strategy are dependent on that illicit use and promote it, but that wouldn't be an argument against the technology itself, just the business."
"And even so, that's a hard argument to make. I'm reasonably sure Shaman has "don't be a criminal" type warnings all over its software, site and promotional materials."
I don't think it's so hard. The fact that Kazaa's business model relies on piracy is something that's immediately obvious to you and me, so it will likely be obvious to many people in that courtoom, too. You've probably seen the phrase "bad actor" used in conjunction with this case... ferreting out bad actors is something the courts have done innumerable times.
If anybody's wondering if a net margin is 12 points is obscenely high, here are some recently reported net margins for various companies near and dear to our hearts:
Microsoft: 21%
Apple Computer: 3%
Creative Labs: 12%
Red Hat: 20%
Sony Corporation: 1.3% (yeah, one point three)
Electronic Arts: 18%
If high profit margins relate to evilness, it looks like the record industry as a whole is more evil than Apple or Sony (which, of course, itself owns a record label), about as evil as Creative Labs, but less evil than EA, Microsoft or Red Hat.
" This is just another classic example of corporate greed."
Remember that Sharman is a greedy corporation, as well. Sharman's executives do very well and they love their money as much as the executives of any given record company. They know that their software is used primarily for piracy, but greed is what encourages them to keep it running rather than, say, shutting it down until they can come up with a system that's fair to the rightsholders.
" So uh, what if I were using a P2P program in a country that didn't recognise copyright. Would it be OK then?"
The thing is, that question can be brought up about any law. The age of sexual consent in Mexico is 12. There's no minimum drinking age in many Asian countries. There's no "separation of church and state" (as US citizens see it) in the UK, nor do their labor laws offer many of the same protections against discrimination in employment. Different areas have different laws, period. If you're arguing for an opinion -- whether it's regarding intellectual property or whether it's okay to have sex with a 12-year-old -- it's what you think that counts, and not what the law might be in another country.
The list of countries that don't recognize International copyright laws -- that is, that are not signatories to the Berne Convention -- is very small: Afghanistan, Bhutan, Ethiopia, Iran, Iraq, Nepal, Oman, San Marino, Tonga and Yemen. If we're going to busy ourselves with the actions of residents of those countries, there are far more important things to discuss -- like human rights and adequate healthcare -- than whether they're downloading MP3s.
"You seem to have the attitude that just because some people believe that IP is real and there are laws, that everyone should hold that view."
Interesting, I didn't get that impression from the parent post. But, I've seen lots of folks around here who are genuinely shocked when they encounter others who do have a problem with violation of intellectual property rights. Not all geeks share the same socio-ethical compass. I appreciate that you understand this; a surprising number of people do not.
" The record company LOANS the artist $$$! Each artist has to pay back the label for all that marketing, engineering, etc."
Sort of. If the record costs $500K to produce and only recoups $300K, the band doesn't owe the record company $200K. The record company takes all the risk here.
"Most bands starting out make NOTHING from their first few albums; the label gets it all!"
You're correct here. It's a raw deal for the band because of the supply-and-demand nature of the business -- there are lots more people who want record contracts than those who have them.
On the other hand, most releases lose money. If the band makes no money, the record company makes no money. They've collected money which has paid the salaries of all the people involved in the production of the record, so the engineer gets to make his rent even if the band gets zero, but this is markedly different than a money-losing record resulting in money ending up in the record company's bank account.
I've already read that piece you've linked to, and I agree with you that the record industry appears to be a pretty unpleasant place at times. Nonetheless, it's not accurate to say that the record company does "NOTHING" in the production of a CD -- that's why record companies still exist. Folks have been claiming that the Internet will replace the record companies for more than five years now, but it's not happening. The Internet is changing the sales and distribution model, as it has done for most industries, but I don't see them going away any time soon.
"Cost of a music CD, about 10 bucks. Cost of a Hollywood movie on DVD, about 15. But making a movie is orders of magnitude more expensive to make and market. Wanna know why?"
Remember, the primary income stream from most films is the box office. The DVD is just the icing on the cake. The record company gets one chance, and one chance only, to make money: when they sell that CD.
Artists get the short end of the stick when they get a recording contract -- no doubt about that. That's what happens when there are many, many more people who want a recording contract than can get one. Similar things happen the IT industry when there are gluts of unemployed IT workers. Yet the recording industry is not a lucrative one. You rarely if ever see record companies on stock analysts' "buy" lists, and record companies must operate on profit margins that are much lower than many other industries that most Slashdotters don't think of as similarly evil. It's also a crowded industry, which is why record companies go out of business every week.
"It is 'sharing' as in sharing your bandwidth. You still pay for the download. Wurld Media gets a cut and so do the labels (and presumaby the artists)."
I've seen nothing to indicate that there wouldn't be plenty of free, authorized content on the service -- ads will surely be a major part of their business model, just as it is with Kazaa. While the labels would be providing some non-free content, it'd be up to you whether you wanted to buy it.
Yes, I expect stuff to be made available on PeerImpact at a lower cost than on the non-P2P sites, for just the reasons you mentioned. This is in addition to all the free content.
"That's like a highway where it's legal to speed, but takes you nowhere. That's like a legal drug, that doesn't get you high. That's like stealing your own stuff! Where's the fun in that?!"
I know you were joking, but Slashdotters commonly point out legitimate, legal uses for P2P. Software developers can release demo versions, open source/creative commons/etc. software can be distributed, and unsigned bands can distribute their own stuff.
Of course, that probably makes up 1% of Kazaa traffic, but nonetheless, these applications are always brought up when making the point that P2P itself is not illegal.
"The whole point to getting music over P2P back in the days of (the original) Napster, was that it was free and there were no other legal ways to purchase individual tracks at the time. With services like iTunes, the current Napster, Wal-Mart, RealAudio, and even the legally questionable AllOfMP3, why would you want the hassle of P2P's unreliability?"
I think you're making the assumption that all the content on PeerImpact would be for sale. I've seen nothing to convince me that there wouldn't be a large amount of free content -- sample tracks release by record companies, game demos, and -- most importantly -- stuff released by the musicians themselves. Many unsigned musicians have made their own demo CDs and use P2P distribution as a marketing tool... in fact, this is often lauded as one of the principle benefits of legal P2P.
So, the benefit of this service would be that you could download free stuff all day knowing that (a) you're not violating somebody's rights (please take my word for it that this is important to many people) and (b) that you're not in danger of being sued because you're violating somebody's rights.
First, as I believe has been mentioned before, Wurld Media is a huge adware vendor. While this alone would prevent me from consider using PeerImpact (I don't want to see adware vendors making any more money), it's a vital clue to their revenue model. This may allow them to offer lower prices on the same content that's available on other authorized download sites, perhaps using a BMI/ASCAP type system where a portion of the ad revenues are distributed to the content creators in proportion to their popularity on the service.
Next, I've seen nothing that has made it clear that there would not be plenty of free content on the site. I think many people here are making the assumption that 100% of the content would be $0.99 a song like iTMS. I see the availability of a large amount of free content as a big possibility due to the ad revenue stream (after all, downloads on Kazaa are free because their business model is based on ad revenue). There are tons of indie musicians who own their own masters and who already use P2P or free web site downloads to get their music out -- and this service might be appealing to them, as well.
Putting that last point another way, I constantly see folks posting that while they're aware that some unauthorized content must be going back and forth on Kazaa, they only use it for *nix distros and trading authorized tracks from unsigned bands. The point they make is that P2P itself is not illegal. This venture can be seen as an attempt to test the there's a viable business model based on that theory. You've asked for it -- and you've got it.
"Pay per cut to use your own bandwith to download a DRMed song. The artist provides the song. The user (and everyone else) provides the bandwidth. The record companies provide NOTHING, yet get the lion's share of the $$!"
Many Slashdotters tend to equate a piece of paper with some lyrics on it, or a musical talent, with a finished recording. To be clear, your claim that the record company provides "NOTHING" isn't a reflection of your intelligence, but of a lack of understanding of what record companies do.
The record company provides the "$$", as you've put it, that converts that talent and that piece of paper with lyrics on it into a finished recording. This means finding and paying for the engineers, producers, studio, equipment, and session musicians -- all the things that take more money (and more than likely a different skillset) than the typical musician has. Then they spend the money to make sure that you've heard of the artist in the first place.
That's precisely why so many musicians want recording contracts -- they simply do not have the cash and the skillset to record, engineer, produce, distribute and market their music on their own.
I agree with a lot of what you said. Surveys can be tough because of the old "tell the survey-taker what they want to hear, or what pushes your own agenda" issue. If I'm a fan of P2P music sharing and, frankly, I don't buy more music as a result of piracy, I might be tempted to tell a survey taker otherwise out of fear that the survey might ultimately be used as a tool to further restrict P2P. On the other hand, the "wouldn't have bought it anyway" (lack of a lost sale) condition can become self-generating: "wouldn't have bought it anyway" is much easier to say once you've P2P'ed your 1,000th track than on your first. The easier it is to get it for free, the less likely one would have bought it anyway.
All I really know for sure is my own behavior and the behavior of those I know well. I've never P2P'ed something as a prelude to buying it, and those people that I know who are massive P2P users do so as an alternative to purchase. But we're such a small set that it's completely irrelevant.
"Must be terrible...the industry is losing $3.5 BILLION a year in revenue? They must just be drowning in the losses! [...] Wait a moment. This industry, suffering these massive, crippling losses from piracy, is doing BETTER than most sectors of the economy?"
That acknowledgement that the US movie industry is growing faster than other segments is probably a tip of the hat to people who believe in the "what's good for business is good for America" theory. Believe it or not, intellectual property (be it software, books, music, or films) is one of the USA's biggest exports and, whether we like it or not, is one of the primary reasons we enjoy the relatively high quality of life we have. They are likely trying to implicitly state that if the industry loses money, then America's economy gets hurt.
Naturally, many people think otherwise. And, for instance, if there were a boom in hiring technology workers in the US (we can only wish), a similar STFU-style retort would be appropriate for complaints that jobs were being outsourced to Bangalore at an accelerating rate.
"But all the studies say otherwise, citing no statistical variance in sales compared to the general economic condition before, during, or after peak Napster use."
Really? I've seen dozens of studies over the years, and they're all over the board. Some studies take the approach you've mentioned (a holistic look at various economic factors) and others make an attempt to observe the behavior of actual downloaders. An analysis that seems to be common is that piracy does create lost sales (duh -- we all know somebody who's downloaded a song as a substitute for buying it) but not nearly as much as the record companies tend to claim.
"The idea with Napster was that Fanning *always* said that he wanted to work with the music labels. The labels (and the RIAA) unfortunately hated his idea so they sued him out of existence. In my opinion, that was a mistake. The oldskool Napster would have been a fantastic method of tracking and eventually reimbursing labels, publishers and musicians. It was the first effective music distribution network. So no: he's never been "pimping himself out to both sides of the fence." The idea was that he always wanted Napster to become the leading legitimate online distribution method."
Do you recall him acting in a friendly manner to the labels? If I recall correctly, he started up the service with the understanding that it would be used primarily for unauthorized distribution of the labels' intellectual property, followed by repeated denials that they were aware of copyrighted information being traded (although it was completely bloody obvious to anybody with a brain), followed up by repeated denials that they could do anything to prevent copyrighted material from being traded. If I recall correctly, the courts had to tell them to take action to remove identified copyrighted works, and then they required the copyright owners to jump through an enormous amount of hoops to do so. In other words, they were stonewalling. Sometimes stonewalling is an appropriate tactic, but it's not something you do when you want to "work with" another party.
If Fanning and company really had good faith intentions of "working with" the labels, they would not have taken these tactics. A more appropriate, and very easy, approach would have been to tell the labels:
You're right. We're sorry. Our service has been used to facilitate the unauthorized copying of your property millions of times over. We'll shut down the service until we can work these issues out. Let's work together on doing so.
But they didn't. They stonewalled every inch of the way.
Business is business. A big part of business is treating the entity with which you wish to do business with just a bit of respect. I've been involved first-hand with deals with Microsoft, Yahoo, and other big names, and common courtesy is rule #1. This is such a huge no-brainer in the business world that I can't fathom why anybody would be shocked that the record labels litigated rather than "working with" them.
If somebody tried to sell me yard care services by taking a shit on my lawn, I would have zero interest in working with them. The record labels took a similarly dim view. What would you do in that situation -- work with the people who shit on your lawn, or the people who treat you with respect?
"Back in the day artists needed the record companies because they provided a medium for distribution of the artists product, in the form of LPs, tapes, CDs, etc."
"The Internet is going to put the record companies out of business as soon as all the artists discover that they can distribute stuff on their own" is a bromide that's been recited on Slashdot and elsewhere for five years. The reality is that iTunes (which is a reseller of the output of the record companies) is doing gangbuster business, and "payment optional" services like Magnatune, while probably the embodiment of many Slashdotters' idea of the future of Internet music distribution, are flailing. How much longer will it be?
"Artists income is primarilly from live performance"
With the huge exception of artists who can't, don't or won't perform live, for whatever reason. But you can add to that public performance, which includes radio airplay, jukeboxes, and the like. The public performance royalties go to the composers and lyricists.
"Now, a medium for distribution (Free P2P networks) exists, and it isn't the recording industry so they're going nuts about it because they don't want to die off. What irks me is that they're winning now! Somehow, artists didn't choose to leave record companies..."
It would be great if more artists eschewed record contracts and instead gave away their stuff for free. It would also be great if more hot women were willing to sleep with me. It would also be great if my job paid me more. But the big factor here is the artists' own free will and self interest. And in the case of those hot women and that employer, they too have their own self-interest in mind, which might not include me. It's easy for us to say "the artists should just be less hung up about money" but artists have the same aspirations that we do: to have a family, to have a nice house, and to enjoy a high quality of life. There are many more musicians who want recording contracts than have recording contracts because many musicians want that quality of life that you do (and -- please -- save the "if they're in it for the money, they're not really artists" line -- Shakespeare and Mozart were in it for the money, too).
If anybody's not sure what I mean, put yourself in the place of the member of a band that's talented and has a great sound. A record company wants to give you a contract which means that they will pay for your studio time, the hiring of a producer and engineer, and market your music, and recoup their investment in you by getting the exclusive rights to sell the recordings that they've paid to have produced. Or, you can go it alone: come up with the thousands or tens of thousands of dollars to get that recording studio, find that engineer and producer, and spend your own time trying to market your music and hoping that people find it on P2P. Meanwhile, your car is breaking down and you and your wife would like to have a baby. What would you do?
To be sure, many musicians have done well for themselves through self-distribution online, and it remains a good venue for the majority of musicians who can't get recording contracts -- provided they have the cash to fund the recording, engineering, producing, and marketing of their music. But it's not a universal solution.
I'm guessing you haven't yet worked in corporate America. When times are tough, layoffs can and do happen. Even if a company manages to avoid layoffs, it often does so by freezing salaries (meaning that nobody gets raises, even for cost of living -- I've had to go through a few years of this) and hiring freezes (meaning that if Mary, Fred or John have been laid off from another company, it's that much harder for them to find new work).
My point stands: if you pirate something rather than buying it, it will ultimately mean less money for somebody in that industry (classic micro economics here), the vast majority of which is made up of people who make the same amount as you and me or less. However, as I said in the GP, you don't owe them a job, so if you want something for free, pirate away.
"But I mean, come off it man. You sound like those silly MPAA trailers before movies."
He's correct. I know it's fun to engage in a little schadenfreude when we read of record companies laying off hundreds of people -- that will teach the greedy bastards for overpricing CDs! -- but while it's enjoyable imagine those hundreds of people to be Mercedes-driving executives with cocaine addictions, the reality is that it's usually Mary in IT or John in promotions or Fred who sweeps the floors.
To be clear, you don't owe Mary or John or Fred a job. It's the record company's job to deal with the effect of piracy. If you want to get that CD on Kazaa, go for it, but if you're doing so to avoid buying it, it will ultimately mean less money for Mary or John or Fred.
"Most of the commenters on this article so far seem to think that the MPAA is going to force the program on people. I think it is more that they are making it available as a free download so that people who aren't sure if they are infringing, or parents who don't want to get sued over what their kids download, can find and delete the stuff. The article says that the data uncovered by the program wouldn't be shared with the MPAA or anyone else. It also says that the program will be made available on a website. That is a far cry from virus behavior."
Thanks for pointing that out. Another major target user is the enterprises that don't want to run the risk of liability for their employee's behavior. The BSA has successfully sued companies countless times because of pirated software on their employee's PCs.
"Not to defend "sony"(i think the whole idea of all of this is bull$hit), but that method only works if "walmart" pays for that "cd" from "sony" before they sell it and not after......"
For what it's worth, resellers such as Wal-Mart buy the product first, and then resell it to the consumer.
Slashdot Mirror
A fair chunk of the Slashdot crowd had similar doom and gloom predictions when iTMS went up in the US. They predicted its imminent death because of all the content available for free on the P2P apps, and because the DRM wrapper would surely be cracked (it was -- so what), because there was DRM in the first place, because it didn't have every piece of music ever released including that one where the chickens cluck their way through "Take The A Train",* and because prices were too high.
A year later, iTMS is doing gargantuan business, Apple (and the record labels) are having the last laugh, and now, naturally, imminent death is predicted for the Canadian store.
* I just checked. It's still not available on iTMS.
"Keep in mind a solution that may work for a small number of cases, doesn't necessarily scale to handling a large load."
Then that is Kazaa's problem if the court orders them to take this step. If they did not build in an efficient way to reduce piracy (and why would they, of course -- their business depends on easy availability to pirated material) -- then it's their job to fix it.
If you're not sure what I mean, imagine if Microsoft had some sort of heinous problem with their software which the courts ordered them to fix. If Microsoft complained that it was a difficult task to do so due to mistakes they'd made earlier in the software, it's the same story -- tough shit... fix it. Microsoft has the skills and the money to do so. And I'm sure most Slashdotters would agree.
"In this instance, i agree with you. they setup a service to share files. it's would be like blaming Ginsu Knifes because someone stabbed someone with there knives, and DuPont because they murderer walked on there carpet."
Not in the least. Kazaa was developed, and is operated, with the understanding that 99% of the traffic is piracy. That's the appeal of the service. Their entire business model is based on this, and they're making scads of money. They don't want to eliminate the pirates from the system because they would no longer have a business.
Since Kazaa have a business interest in pretending otherwise, I can see why they'd adopt this laughable position. For the rest of us, it's okay to use our brains and point out the obvious when we see it. It's okay to say "I want Kazaa to win this court battle, but I also understand that their business is built on piracy." No need to play dumb in their defense -- they have lawyers that they pay to do so.
"I fail to see how that matters. Just because something *CAN* and *IS* used for something illegal does not mean that was its original intent."
In the general sense, that is very true, but we are discussing the Kazaa case. The creators of Kazaa knew that it would largely be used for piracy, and the operators of Sharman Networks know that it's used primarily for piracy. Their very business model is based on this, and the business of facilitating piracy has been very, very good to them. The salary of Sharman's president is most likely much larger than the entire salary budgets of many indie record labels.
" It's a transmission medium just like any other and it should be treated as such. Case closed."
Not correct. The vital difference is the business model of the company running the medium compared to, say, the business model of your local phone company. Remember, this isn't "the record industry vs. P2P," but "the record industry vs. Kazaa."
If you're not sure what I mean, imagine if we waved a magic wand and all the illegal content disappeared off of Kazaa at the same time that your local phone company's lines could no longer be used for illegal content. Your local phone company would barely notice; perhaps that 2% of people who use the phone line solely for illegal content would move elsewhere. Over on Kazaa, however, 98% of the content would be gone, the vast majority would stop using it, they'd no longer be able to get ad revenue, and they'd be gone quite quickly.
"If anything, the *AA could argue Kazaa's business model and marketing strategy are dependent on that illicit use and promote it, but that wouldn't be an argument against the technology itself, just the business."
Precisely. This isn't "the record industry vs. P2P," it's "the record industry vs. Kazaa." Elsewhere, record companies are signing up for A P2P service which is limited only to authorized material.
"And even so, that's a hard argument to make. I'm reasonably sure Shaman has "don't be a criminal" type warnings all over its software, site and promotional materials."
I don't think it's so hard. The fact that Kazaa's business model relies on piracy is something that's immediately obvious to you and me, so it will likely be obvious to many people in that courtoom, too. You've probably seen the phrase "bad actor" used in conjunction with this case... ferreting out bad actors is something the courts have done innumerable times.
"(even though they're still seeing amazing profits)"
Out of curiosity, what is the typical net profit margin in the record industry? In Canada, it was 12 points in 2000, down from 16 points in 1993. Is it higher elsewhere?
If anybody's wondering if a net margin is 12 points is obscenely high, here are some recently reported net margins for various companies near and dear to our hearts:
If high profit margins relate to evilness, it looks like the record industry as a whole is more evil than Apple or Sony (which, of course, itself owns a record label), about as evil as Creative Labs, but less evil than EA, Microsoft or Red Hat.
" This is just another classic example of corporate greed."
Remember that Sharman is a greedy corporation, as well. Sharman's executives do very well and they love their money as much as the executives of any given record company. They know that their software is used primarily for piracy, but greed is what encourages them to keep it running rather than, say, shutting it down until they can come up with a system that's fair to the rightsholders.
" So uh, what if I were using a P2P program in a country that didn't recognise copyright. Would it be OK then?"
The thing is, that question can be brought up about any law. The age of sexual consent in Mexico is 12. There's no minimum drinking age in many Asian countries. There's no "separation of church and state" (as US citizens see it) in the UK, nor do their labor laws offer many of the same protections against discrimination in employment. Different areas have different laws, period. If you're arguing for an opinion -- whether it's regarding intellectual property or whether it's okay to have sex with a 12-year-old -- it's what you think that counts, and not what the law might be in another country.
The list of countries that don't recognize International copyright laws -- that is, that are not signatories to the Berne Convention -- is very small: Afghanistan, Bhutan, Ethiopia, Iran, Iraq, Nepal, Oman, San Marino, Tonga and Yemen. If we're going to busy ourselves with the actions of residents of those countries, there are far more important things to discuss -- like human rights and adequate healthcare -- than whether they're downloading MP3s.
"You seem to have the attitude that just because some people believe that IP is real and there are laws, that everyone should hold that view."
Interesting, I didn't get that impression from the parent post. But, I've seen lots of folks around here who are genuinely shocked when they encounter others who do have a problem with violation of intellectual property rights. Not all geeks share the same socio-ethical compass. I appreciate that you understand this; a surprising number of people do not.
" The record company LOANS the artist $$$! Each artist has to pay back the label for all that marketing, engineering, etc."
Sort of. If the record costs $500K to produce and only recoups $300K, the band doesn't owe the record company $200K. The record company takes all the risk here.
"Most bands starting out make NOTHING from their first few albums; the label gets it all!"
You're correct here. It's a raw deal for the band because of the supply-and-demand nature of the business -- there are lots more people who want record contracts than those who have them.
On the other hand, most releases lose money. If the band makes no money, the record company makes no money. They've collected money which has paid the salaries of all the people involved in the production of the record, so the engineer gets to make his rent even if the band gets zero, but this is markedly different than a money-losing record resulting in money ending up in the record company's bank account.
I've already read that piece you've linked to, and I agree with you that the record industry appears to be a pretty unpleasant place at times. Nonetheless, it's not accurate to say that the record company does "NOTHING" in the production of a CD -- that's why record companies still exist. Folks have been claiming that the Internet will replace the record companies for more than five years now, but it's not happening. The Internet is changing the sales and distribution model, as it has done for most industries, but I don't see them going away any time soon.
"Cost of a music CD, about 10 bucks. Cost of a Hollywood movie on DVD, about 15. But making a movie is orders of magnitude more expensive to make and market. Wanna know why?"
Remember, the primary income stream from most films is the box office. The DVD is just the icing on the cake. The record company gets one chance, and one chance only, to make money: when they sell that CD.
Artists get the short end of the stick when they get a recording contract -- no doubt about that. That's what happens when there are many, many more people who want a recording contract than can get one. Similar things happen the IT industry when there are gluts of unemployed IT workers. Yet the recording industry is not a lucrative one. You rarely if ever see record companies on stock analysts' "buy" lists, and record companies must operate on profit margins that are much lower than many other industries that most Slashdotters don't think of as similarly evil. It's also a crowded industry, which is why record companies go out of business every week.
"It is 'sharing' as in sharing your bandwidth. You still pay for the download. Wurld Media gets a cut and so do the labels (and presumaby the artists)."
I've seen nothing to indicate that there wouldn't be plenty of free, authorized content on the service -- ads will surely be a major part of their business model, just as it is with Kazaa. While the labels would be providing some non-free content, it'd be up to you whether you wanted to buy it.
Yes, I expect stuff to be made available on PeerImpact at a lower cost than on the non-P2P sites, for just the reasons you mentioned. This is in addition to all the free content.
"That's like a highway where it's legal to speed, but takes you nowhere. That's like a legal drug, that doesn't get you high. That's like stealing your own stuff! Where's the fun in that?!"
I know you were joking, but Slashdotters commonly point out legitimate, legal uses for P2P. Software developers can release demo versions, open source/creative commons/etc. software can be distributed, and unsigned bands can distribute their own stuff.
Of course, that probably makes up 1% of Kazaa traffic, but nonetheless, these applications are always brought up when making the point that P2P itself is not illegal.
"The whole point to getting music over P2P back in the days of (the original) Napster, was that it was free and there were no other legal ways to purchase individual tracks at the time. With services like iTunes, the current Napster, Wal-Mart, RealAudio, and even the legally questionable AllOfMP3, why would you want the hassle of P2P's unreliability?"
I think you're making the assumption that all the content on PeerImpact would be for sale. I've seen nothing to convince me that there wouldn't be a large amount of free content -- sample tracks release by record companies, game demos, and -- most importantly -- stuff released by the musicians themselves. Many unsigned musicians have made their own demo CDs and use P2P distribution as a marketing tool... in fact, this is often lauded as one of the principle benefits of legal P2P.
So, the benefit of this service would be that you could download free stuff all day knowing that (a) you're not violating somebody's rights (please take my word for it that this is important to many people) and (b) that you're not in danger of being sued because you're violating somebody's rights.
First, as I believe has been mentioned before, Wurld Media is a huge adware vendor. While this alone would prevent me from consider using PeerImpact (I don't want to see adware vendors making any more money), it's a vital clue to their revenue model. This may allow them to offer lower prices on the same content that's available on other authorized download sites, perhaps using a BMI/ASCAP type system where a portion of the ad revenues are distributed to the content creators in proportion to their popularity on the service.
Next, I've seen nothing that has made it clear that there would not be plenty of free content on the site. I think many people here are making the assumption that 100% of the content would be $0.99 a song like iTMS. I see the availability of a large amount of free content as a big possibility due to the ad revenue stream (after all, downloads on Kazaa are free because their business model is based on ad revenue). There are tons of indie musicians who own their own masters and who already use P2P or free web site downloads to get their music out -- and this service might be appealing to them, as well.
Putting that last point another way, I constantly see folks posting that while they're aware that some unauthorized content must be going back and forth on Kazaa, they only use it for *nix distros and trading authorized tracks from unsigned bands. The point they make is that P2P itself is not illegal. This venture can be seen as an attempt to test the there's a viable business model based on that theory. You've asked for it -- and you've got it.
"Pay per cut to use your own bandwith to download a DRMed song. The artist provides the song. The user (and everyone else) provides the bandwidth. The record companies provide NOTHING, yet get the lion's share of the $$!"
Many Slashdotters tend to equate a piece of paper with some lyrics on it, or a musical talent, with a finished recording. To be clear, your claim that the record company provides "NOTHING" isn't a reflection of your intelligence, but of a lack of understanding of what record companies do.
The record company provides the "$$", as you've put it, that converts that talent and that piece of paper with lyrics on it into a finished recording. This means finding and paying for the engineers, producers, studio, equipment, and session musicians -- all the things that take more money (and more than likely a different skillset) than the typical musician has. Then they spend the money to make sure that you've heard of the artist in the first place.
That's precisely why so many musicians want recording contracts -- they simply do not have the cash and the skillset to record, engineer, produce, distribute and market their music on their own.
I agree with a lot of what you said. Surveys can be tough because of the old "tell the survey-taker what they want to hear, or what pushes your own agenda" issue. If I'm a fan of P2P music sharing and, frankly, I don't buy more music as a result of piracy, I might be tempted to tell a survey taker otherwise out of fear that the survey might ultimately be used as a tool to further restrict P2P. On the other hand, the "wouldn't have bought it anyway" (lack of a lost sale) condition can become self-generating: "wouldn't have bought it anyway" is much easier to say once you've P2P'ed your 1,000th track than on your first. The easier it is to get it for free, the less likely one would have bought it anyway.
All I really know for sure is my own behavior and the behavior of those I know well. I've never P2P'ed something as a prelude to buying it, and those people that I know who are massive P2P users do so as an alternative to purchase. But we're such a small set that it's completely irrelevant.
"Must be terrible...the industry is losing $3.5 BILLION a year in revenue? They must just be drowning in the losses! [...] Wait a moment. This industry, suffering these massive, crippling losses from piracy, is doing BETTER than most sectors of the economy?"
That acknowledgement that the US movie industry is growing faster than other segments is probably a tip of the hat to people who believe in the "what's good for business is good for America" theory. Believe it or not, intellectual property (be it software, books, music, or films) is one of the USA's biggest exports and, whether we like it or not, is one of the primary reasons we enjoy the relatively high quality of life we have. They are likely trying to implicitly state that if the industry loses money, then America's economy gets hurt.
Naturally, many people think otherwise. And, for instance, if there were a boom in hiring technology workers in the US (we can only wish), a similar STFU-style retort would be appropriate for complaints that jobs were being outsourced to Bangalore at an accelerating rate.
"But all the studies say otherwise, citing no statistical variance in sales compared to the general economic condition before, during, or after peak Napster use."
Really? I've seen dozens of studies over the years, and they're all over the board. Some studies take the approach you've mentioned (a holistic look at various economic factors) and others make an attempt to observe the behavior of actual downloaders. An analysis that seems to be common is that piracy does create lost sales (duh -- we all know somebody who's downloaded a song as a substitute for buying it) but not nearly as much as the record companies tend to claim.
"The idea with Napster was that Fanning *always* said that he wanted to work with the music labels. The labels (and the RIAA) unfortunately hated his idea so they sued him out of existence. In my opinion, that was a mistake. The oldskool Napster would have been a fantastic method of tracking and eventually reimbursing labels, publishers and musicians. It was the first effective music distribution network. So no: he's never been "pimping himself out to both sides of the fence." The idea was that he always wanted Napster to become the leading legitimate online distribution method."
Do you recall him acting in a friendly manner to the labels? If I recall correctly, he started up the service with the understanding that it would be used primarily for unauthorized distribution of the labels' intellectual property, followed by repeated denials that they were aware of copyrighted information being traded (although it was completely bloody obvious to anybody with a brain), followed up by repeated denials that they could do anything to prevent copyrighted material from being traded. If I recall correctly, the courts had to tell them to take action to remove identified copyrighted works, and then they required the copyright owners to jump through an enormous amount of hoops to do so. In other words, they were stonewalling. Sometimes stonewalling is an appropriate tactic, but it's not something you do when you want to "work with" another party.
If Fanning and company really had good faith intentions of "working with" the labels, they would not have taken these tactics. A more appropriate, and very easy, approach would have been to tell the labels:
But they didn't. They stonewalled every inch of the way.
Business is business. A big part of business is treating the entity with which you wish to do business with just a bit of respect. I've been involved first-hand with deals with Microsoft, Yahoo, and other big names, and common courtesy is rule #1. This is such a huge no-brainer in the business world that I can't fathom why anybody would be shocked that the record labels litigated rather than "working with" them.
If somebody tried to sell me yard care services by taking a shit on my lawn, I would have zero interest in working with them. The record labels took a similarly dim view. What would you do in that situation -- work with the people who shit on your lawn, or the people who treat you with respect?
"Back in the day artists needed the record companies because they provided a medium for distribution of the artists product, in the form of LPs, tapes, CDs, etc."
"The Internet is going to put the record companies out of business as soon as all the artists discover that they can distribute stuff on their own" is a bromide that's been recited on Slashdot and elsewhere for five years. The reality is that iTunes (which is a reseller of the output of the record companies) is doing gangbuster business, and "payment optional" services like Magnatune, while probably the embodiment of many Slashdotters' idea of the future of Internet music distribution, are flailing. How much longer will it be?
"Artists income is primarilly from live performance"
With the huge exception of artists who can't, don't or won't perform live, for whatever reason. But you can add to that public performance, which includes radio airplay, jukeboxes, and the like. The public performance royalties go to the composers and lyricists.
"Now, a medium for distribution (Free P2P networks) exists, and it isn't the recording industry so they're going nuts about it because they don't want to die off. What irks me is that they're winning now! Somehow, artists didn't choose to leave record companies..."
It would be great if more artists eschewed record contracts and instead gave away their stuff for free. It would also be great if more hot women were willing to sleep with me. It would also be great if my job paid me more. But the big factor here is the artists' own free will and self interest. And in the case of those hot women and that employer, they too have their own self-interest in mind, which might not include me. It's easy for us to say "the artists should just be less hung up about money" but artists have the same aspirations that we do: to have a family, to have a nice house, and to enjoy a high quality of life. There are many more musicians who want recording contracts than have recording contracts because many musicians want that quality of life that you do (and -- please -- save the "if they're in it for the money, they're not really artists" line -- Shakespeare and Mozart were in it for the money, too).
If anybody's not sure what I mean, put yourself in the place of the member of a band that's talented and has a great sound. A record company wants to give you a contract which means that they will pay for your studio time, the hiring of a producer and engineer, and market your music, and recoup their investment in you by getting the exclusive rights to sell the recordings that they've paid to have produced. Or, you can go it alone: come up with the thousands or tens of thousands of dollars to get that recording studio, find that engineer and producer, and spend your own time trying to market your music and hoping that people find it on P2P. Meanwhile, your car is breaking down and you and your wife would like to have a baby. What would you do?
To be sure, many musicians have done well for themselves through self-distribution online, and it remains a good venue for the majority of musicians who can't get recording contracts -- provided they have the cash to fund the recording, engineering, producing, and marketing of their music. But it's not a universal solution.
I'm guessing you haven't yet worked in corporate America. When times are tough, layoffs can and do happen. Even if a company manages to avoid layoffs, it often does so by freezing salaries (meaning that nobody gets raises, even for cost of living -- I've had to go through a few years of this) and hiring freezes (meaning that if Mary, Fred or John have been laid off from another company, it's that much harder for them to find new work).
My point stands: if you pirate something rather than buying it, it will ultimately mean less money for somebody in that industry (classic micro economics here), the vast majority of which is made up of people who make the same amount as you and me or less. However, as I said in the GP, you don't owe them a job, so if you want something for free, pirate away.
"But I mean, come off it man. You sound like those silly MPAA trailers before movies."
He's correct. I know it's fun to engage in a little schadenfreude when we read of record companies laying off hundreds of people -- that will teach the greedy bastards for overpricing CDs! -- but while it's enjoyable imagine those hundreds of people to be Mercedes-driving executives with cocaine addictions, the reality is that it's usually Mary in IT or John in promotions or Fred who sweeps the floors.
To be clear, you don't owe Mary or John or Fred a job. It's the record company's job to deal with the effect of piracy. If you want to get that CD on Kazaa, go for it, but if you're doing so to avoid buying it, it will ultimately mean less money for Mary or John or Fred.
"Most of the commenters on this article so far seem to think that the MPAA is going to force the program on people. I think it is more that they are making it available as a free download so that people who aren't sure if they are infringing, or parents who don't want to get sued over what their kids download, can find and delete the stuff. The article says that the data uncovered by the program wouldn't be shared with the MPAA or anyone else. It also says that the program will be made available on a website. That is a far cry from virus behavior."
Thanks for pointing that out. Another major target user is the enterprises that don't want to run the risk of liability for their employee's behavior. The BSA has successfully sued companies countless times because of pirated software on their employee's PCs.
"Not to defend "sony"(i think the whole idea of all of this is bull$hit), but that method only works if "walmart" pays for that "cd" from "sony" before they sell it and not after......"
For what it's worth, resellers such as Wal-Mart buy the product first, and then resell it to the consumer.