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« The unprecedented shift from multiplication to division. | Main | So now you get it, but do you really? »
Tuesday
Dec012009

9 out of 10 dentists

I’ve read two very interesting related articles this week. The first suggested that people who download music via peer-to-peer services spend more money on music than their non-filesharing peers. The second insisted that the net drop in CD and download sales overall has increased concurrent with, and as a result of filesharing.

It’s difficult to argue with either, since they’re both backed by respectable-seeming research and surveys - and yet they can’t possibly both be true. Until you realise the fundamental logical flaws in both positions: the presupposition that unauthorised downloading of music has a causal effect - indeed, is the only causal factor - on the fortunes of the music business.

Clearly, as soon as you take a step back and think about it logically, so-called ‘piracy’ cannot possibly be anything more than one of a whole range of factors affecting the music industry as a whole, simply because the world is a complicated place and people are complex and interesting. There are political, economic, social, cultural and technological factors all influencing the industry’s affairs - and it stands to reason that different influencing factors are pulling in all sorts of different directions.

To blame piracy for the decline of music revenues - or to single out pirates as the main source of income - overlooks that complexity, and merely provides a PR sideshow to the main story (that almost never gets covered in the mainstream press), which is that the entire ecosystem of music business is changing.

In the print age, sheet music was the main way in which we consumed music, and new technology threatened that orthodoxy. In the electric age, it was recorded music. We’re now in the digital age, and while recordings are still a significant driver of music business revenue, it is (as sheet music did before it) rapidly losing its hold as the main source of music business income.

But just as the music industry as a whole didn’t suffer (in fact, it boomed) when sheet music gave way to the recorded music business (though it’s worth reiterating that you can still buy sheet music, and some businesses do very well out of producing it), I suspect that the music business as a whole will figure out a way of surviving and thriving when it grasps the opportunities inherent in the new technological environment.

In fact, there’s evidence to suggest that’s already happening.

Chief Economist for the UK’s PRS For Music, Will Page has declared that overall revenue of the British music industry is up nearly 5%. Not the record industry, mind you - the music business. Those two things are not synonyms.

And while it’s easy to find scapegoats and heroes in this story, that’s never going to be the full picture. Peer to Peer filesharing platforms may well have an important role to play in this narrative, but it’s a complex and interesting one - and not the simplistic black hat / white hat melodrama playing out in the pages of the mainstream media.

Reader Comments (36)

Really Andrew, I'm surprised that you find these suppositions inconsistent - especially since so much has already been written to explain it. There's a very good reason why both views are probably true.

In short: there are two kinds of people - those who care about music enough to buy it and those that don't. The latter are probably the majority - you know, the kind that listen to their radio while driving to work and have little other interaction with music. As far as those people are concerned, file-sharing is a non-question. They simply do not have enough interest in music to infringe. They're not spending much on music either.

File-sharing is an activity undertaken primarily by those that are passionate about music. Previously, they'd be the heavy buyers. These days, they'll still buy some stuff, but more than a few of them will be fleshing out their collections through less than legal means.

So - despite the fact that the file-sharers buy more music than the everyman - they are buying less music if it wasn't so damn easy to get it for free.

That said, there are other reasons why recorded music revenues have dropped - one only has to consider the loss of revenue associated with the format shift to MP3s or the fact that some folks are switching to services like Spotify. These will all affect the value of spending on legal music acquistion. Nevertheless, it's likely that, absent prolific and easy file-sharing, the music fans would be spending more (perhaps considerably more) than they are at present - especially since many of the lower-cost legal alternatives have been around for a much shorter time than file-sharing (and the decline of recording revenue, which seems eerily correlated).

QED

It is a very nice and good post. Keep up the good work.

November 9 | Unregistered CommenterKid Music

Three cheers for Dubber! Hip Hip Hurrah!

Yes, it's true that this whole file-sharing + piracy she-bang has been over-rated. Probably is so as an agenda of the big businesses to shape the people's paradigm to be slightly cautious towards digital technology (online technology), so they don't lose control over their established physical copy distribution channels! Well, the people - that is the music consumers - will determine the final music landscape in the end, and as stake holders we either learn to accept the change and come up with appropriate business models or risk extinction with the big dinosaurs.

Another three cheers for Dubber!

P.S: Did I mention? I think the title that suits you the most is:
"Andrew Dubber - Professional Music Consumer" :-)

Cheers,
Endy

November 9 | Registered CommenterEndy Daniyanto

In reply to Krzysztof:

You say "So - despite the fact that the file-sharers buy more music than the everyman - they are buying less music if it wasn't so damn easy to get it for free."

I think that's a dangerous assumption to make? It's difficult to point that out as a fact, since it's an opinion based on a possibility, not actual data.

Unless you have or can show data that shows these file-sharers would buy more music if they heard less music for free?

Wouldn't that be the same as saying people who listen less to the radio would buy more music than people who do?

Cheers,
Endy

November 9 | Registered CommenterEndy Daniyanto

"I suspect that the music business as a whole will figure out a way of surviving and thriving when it grasps the opportunities inherent in the new technological environment."

Bit of a shameless plug but in all honesty its the only way i can respond to what you say above.

Myself and my musical partner Kal have just embarked on a very ambitious project called Mubla 2.0 in which we aim to demystify the recording of an album. From day one with just a few song ideas, through the development of these songs, the recording stage and then finally having them as finished articles ready for inclusion on an album we are documenting the everything in the form of audio, video, blogs, podcasts and photos. The whole process is designed to be interactive with people being able to comment on the songs and blogs at every stage of their development. The project very much relies on the new technological environment you refer to which until now (web 2.0 age) hasn't really been possible. It's still very early days but we believe quite strongly that this is the kind of revolutionary direction the industry needs to take to reignite itself.

Be interested to hear your thoughts.


Rob

Rob and Kal
http://www.robandkal.com

November 9 | Unregistered CommenterRob Martin

It surprises me a little that we're still having this conversation, Krzysztof:

If only things were different. If only people weren't downloading music. If only we could stop filesharers and prevent them from hearing music unless they paid money.

Really? Still?

As you know, my position's always been 'Given the facts about the way the world is, how can we be smart, innovative and enterprising about making money from (or because of) music?'

Yours seems stuck in 'We used to make money when the world was different, but change has happened and that's bad. What we need to do is force people to behave differently, and the problem will go away' - which, frankly, is absurd, reductionist, naive and actually kind of counter-productive.

I used to think you were playing devil's advocate, but I see now that's not the case. You genuinely seem to believe that there is a natural right for the recording industry to make an ever-increasing profit (despite competing entertainment alternatives and a complete disconnect between the economic model of the 'star' system and the growing diversification of audience tastes), and that the purpose of music fans is to ensure that this happens.

You seem convinced that the fact this is not the case is an aberration, and that natural order needs to be restored so that a rightful regime can resume.

I beg to differ.

But just for a minute, let's just say you're right. That piracy is killing the record business, and that this is wrong, unjust and against the natural order of things.

Even so... surely 'how can we profitably meet consumer's wants and needs in a changing environment?' is a better question for the boardroom than 'how can we stop time?'.

November 9 | Registered CommenterAndrew Dubber

^^ That was great. I can't wait for the response..

-Bruce

November 9 | Registered CommenterBruce Warila

What's so reductionnist about wanting to get paid for something you offer?

Despite anyway you turn it, the fact remains that taking something illegally for free is theft, and yes, it is bad.

"What we need to do is force people to behave differently, and the problem will go away"

That's exactly why we have laws in society or everything would be chaotic. Yes the industry has other problems but once people stop paying for something, it can't be good news for that industry. Maybe I'm naive in thinking we have to fight illegal downloading but so are you thinking its only a matter of evolution, that we just need to adapt. There is no adaptation possible to counter theft!!!

Artists must do their part, the industry must do a BIG part, but fans TOO, and if they don't want to, we need to force them.

November 9 | Unregistered CommenterFebreze

Wanting to be paid for something you offer isn't absurd, but insisting on only offering things people won't pay for certainly is. I'm not sure what you think reductionist means.

And let's not push the silly propagandist 'downloading is theft' thing. It isn't theft any more than photocopying a book from the library and then returning the book is theft.

There are legal definitional differences between copyright infringement and stealing for a reason.

'Copyright infringement is theft' is a statement of hysteria - not fact.

November 9 | Registered CommenterAndrew Dubber

Attempts to force behaviour are counter productive and doomed to fail. Why not explore new more acceptable ways of distribution? Building sustainable relationships and creating scarce, added-value products that interested fans are happy to pay for - some new, demonstrably successful methods used today.

November 9 | Unregistered CommenterJessie Scoullar

I met a stranger from an ancient land, who said:

"I was a roof thatcher, one of a large number of thatchers, who earned a worthy, satisfying living putting thatches on the roofs of houses. The thatching we did gave us an excellent living; householders were happy to pay silver for our work. The houses in the country were most handsome, and all was well...

...until the wicked tilers came, with their low quality, quickly assembled and cheap roof tiles.

Before long, most of the roofs of our land were tiled, and most of the thatchers learned new trades. There are now perhaps only ten thatchers remaining in the whole land. If only we could have outlawed the nasty and wicked tilers; then all our problems would have been solved."

Next week, the sad story of the noble typewriter and the evil word processors...

November 9 | Unregistered CommenterMike Pailthorpe

Devil's advocacy aside - and I own up to doing a fair share of that - I am speaking mainly as an economist. And we economists have a habit of looking at market issues from an economic perspective.

Before I go on my typical, long-winded response, let me just point out that I was merely commenting on the inconsistencies perceived by you in the two situations reflected in independent studies. I made no propositions of remedy and kept my views on the matter to myself (but you already know what they are, so no avail).

Since, however, we picked the subject up, what do I read into it as an economist? It's a supply-side problem that should be tackled by supply-side means. Why? Because I think we all agree that the demand for music hasn't diminished at all. People want music as much as they ever have (perhaps more so).

The primary problem with file-sharing is that it has created an alternative supply that has skewed the marketplace and is putting pressure on the legitimate suppliers. This is fine and dandy, so long as money can be found to continue producing music.

Frankly, you could lay off the "natural right for the recording industry to make an ever-increasing profit" party line, because it really isn't helping anyone. The truth of the matter is that the recording industry is for the most part responsible for the fact that there are any songs to share and the products of the recording industry form the vast majority of music both bought and stolen. I do not see this changing in the forseeable future. Why shouldn't they be making a profit, if they're giving the people a product they want (and if they don't, then why the are they downloading it)?

If I were to be equally snide, I'd infer that your proposals dealing with scope and duration of copyright are indicative of your distaste with the notion that creators should be paid anything. It's all "culture" after all. However, I suspect that you've nothing of the sort in mind. In the end, I believe that we share a common goal, but our opinions on how it is best achieved differ.

In the end, it boils down to one thing - from the boardroom perspective - either making recordings is a viable business, or it isn't. If it isn't, people will stop investing in it - that's good business sense. Right now, the economic viability of making recordings is being challenged (by a combination of factors, if you prefer) - if it wasn't, we wouldn't be having this discussion. EIther we find some solution to the problem or there will be far reaching implications for the future of music in general - remember that recording artists have been setting the trends for over half-a-century.

I've said it before, but it bears repeating - giving recordings away for free is bad business. Just ask Spotify. The money to finance them has to come from someplace. From your perspective as an academic, this may be an interesting topic for independent thought. From my perspective as a musician and recording artist, it's a question of my future. That's why the acid tests I apply to revolutionary new ideas are so stringent, especially if the people proposing them aren't themselves in the business of making recordings.

I'm not enamoured of the recording industry as it stands, but I've yet to see a remotely sensible alternative. Call it the Churchill Democracy Principle.

For the indie musician, piracy is a misdirection, and worrying about it is and always has been a waste of time.

I propose a New Rule: no independent artist is permitted to complain about piracy until they can demonstrate they've built significant demand for their music.

Not "music" in the general sense. YOUR music.

Seriously. Got 5K-10K email subscribers? Go ahead and complain, although I'll bet most indie artists reading this have nowhere near that number, and the ones that do are too busy cultivating that base to complain much.

November 9 | Unregistered Commenterscottandrew

@Kryztzofzf:

I'm not enamoured of the recording industry as it stands, but I've yet to see a remotely sensible alternative.

That's because you keep telling Bruce he's "wrong" when he tries to explain it to you. The alternative has been happening right in front of you for 10 years now. There's dozens if not hundreds of articles outlining it right here on this very site.

November 9 | Unregistered CommenterJustin Boland

At the risk of opening a can of worms...

@Krzysztof (obviously) Your points are interesting, coming as they do from an economist's perspective but I don't understand what appears to be your point about a supply side solution necessarily meaning legal recourse. A supply side solution should be about what and how to supply, rather than focusing on how to change the behaviour of the market.

Your take on my copyright scope and duration proposals remains baffling. I suggest indefinite copyright terms (on a rolling 5 year basis) for any works that are being commercially exploited. That's LONGER than anyone else out there is suggesting. It's just in smaller pieces.

My problem is with mandating blanket extensions where they are not appropriate, and with the loss to culture of works that are locked away, decaying in vaults because they are not commercially viable to release, but are not made accessible to the public (or the artist) simply because it's not expedient for the corporation to do so.

Blanket extensions are applied for the benefit of the minority of works, not for the majority of artists - and certainly not for the benefit of society at large (ostensibly the reason we have copyright at all).

Having a use-it-or-lose-it clause ensures that works that are not being commercially exploited are not lost to history. But it is not contrary to artists making a living.

Also - you seem to imply that Spotify is/has a problem. What do you think that problem is exactly?

Finally, my issue with ever-expanding corporatism, and the complex challenges to that orthodoxy that the digital environment brings notwithstanding, there is still a sense of what is 'right and natural' according to the laws of market capitalism in what you say. And I dispute that.

The simple fact is (and it is another economist - Will Page - that verifies this) the music industry is expanding, not declining. The profit margins for major record labels may be shrinking, but let's not overlook the fact that those organisations are still actually profitable. Their profits are just not expanding at the rate they enjoyed in the mid 90s.

The world you refer to is based on a high fixed costs, low marginal costs proposition, which tends directly to maximising profits based on the sale of many copies of few items. Hence, the star system. But the music business rightly makes money (as does any business) by responding to human needs and wants. And those change.

The environment is different. People's tastes are different (from each other's more than ever before - not simply from what they were). The market has changed. The environment has changed. The competition has changed. The opportunities for the independent artists, independent music businesses and online music startups who lie outside of the major label system have changed. The only thing that hasn't changed is the approach that corporate late market capitalists of the electric age take to the production, distribution and enforcement of control over intellectual property.

Piracy is, if anything, a symptom of that phenomenon, rather than a direct cause of it.

November 9 | Registered CommenterAndrew Dubber

interesting discussion going on here, but might I add a few more ideas into the mix? It seems as though the pro-downloading arguments tend to assume that behind every recording there is a big evil recording company only intent on making money and exploiting artists, and that that big evil company deserves to be punished by accessing recordings for free. This is not an economic argument, it a social and moral one. There also seems to be an assumption among people that I have spoken to that all signed artists are rolling in money and therefore do not deserve to be paid for their recordings which justifies their illegal downloading. Well there are many artists that self-fund their recordings which get caught up in all of this too.
I would argue that another factor in whole downloading debate is the wider issue of the western world's sense of entitlement. We feel as though we are entitled to whatever we want whenever we want regardless of the cost to others.
Use the fairtrade example. The fact that sugar is grown a long way away, by people who don't look like us and don't speak our language makes it easy to justify paying poverty prices for what they produce and I think the internet can often give the same sense of distance, and lack of reciprocity, thus reducing the need for fairness.
There are moral issues beyond "downloading is theft/oh no it isn't debate. I personally think that artists should have the right to decide when and how their music is distributed and that that right should be respected. They may well decide to put everything up for free download, fair enough, they may decide not to release any of it for free. That may upset people, but still, it should be their right to do so and people should realise that no one has an automatic entitlement to it.
Working as a musician, it often occurs to me that there is very little real understanding of the business of it from non-musicians. There is an assumption that we all have well paid day jobs/millionaire partners, that music is either something you can do, or something you cannot and therefore if you can, you don't deserve to be paid for it. I have lost count of the times when my group ( a costumed period trio) are expected to turn up in costumes that we have spent months making, with expensive period instruments, using skills that we have invested many years and many thousands of pounds in developing, and all for free! Some people get very offended at the idea of us asking for money in fact. They do not care about our needs, simple as that. I would say that many people who download music regardless of the wishes of the artist, are employing the same thinking and until we tackle that simple lack of respect, musicians will continue to live in poverty. I am not really concerned with what happens to big record companies etc, but that fundamental lack of repect is of concern to everyone trying to to make a living as a musician.

November 10 | Unregistered CommenterAbi

Working as a musician, it often occurs to me that there is very little real understanding of the business of it from non-musicians.

If your audience thinks you're already rich, with no need of money, that's a serious image/transparency problem. We need to educate them. People aren't stupid. They may not care for labels, but fans generally want to see their favorite artists succeed, and are smart enough to comprehend the rich celebrity/starving artist divide.

The problem for a lot of artists is they don't want to be seen as poor and needing support.

If your needs are not being respected, you aren't communicating your needs clearly. Spell it out. If people are truly offended at the idea that you require money, you're talking to the wrong people in the wrong way.

There are PLENTY of people in the world; don't be afraid to ignore a few thousand of them on your way to finding an audience that really gets what you do. There are more ways than ever for an artist to communicate exactly what they do, what they need (in terms of support) to do it, and why.

November 10 | Unregistered Commenterscottandrew

Okay. This might ruffle feathers. So be it.

1. Musicians deserve more money than they get. Most train harder and for longer than brain surgeons in order to do what they do, and then they earn less than checkout operators for what they do. I strongly believe that more money should go to more musicians more often than it does.

AND

2. Musicians (including the above commenter Abi, who I know personally, and have nothing but respect and admiration for) are some of my favourite people on the planet, and I want nothing but good things for them. Really. My heart breaks for all of my musician friends who find this a tough world, and just want to make great music that connects with people, and to be allowed to do that in a way that helps them support their family and put food on the table.

BUT

3. Making music is not (usually) a job of work. It is a creative act. You don't have the RIGHT to make money from your music. You only have the opportunity.

If you make music speculatively - that is, you create it in the hopes of making money from it, then you are a music entrepreneur. As such, entrepreneurship rules apply.

You may invest a good deal of energy, effort and expense in your creative ideas. You may make a lot of money. You will probably make none. But nobody OWES you money just because you put the work in.

If your business model is to grow and sell oranges, then it's no good picking the oranges, then leaving them on the footpath outside your house with a price tag on each one. It doesn't matter how great your oranges are, or how hard you've toiled in your garden. Someone WILL take your oranges. Some will get kicked to the side of the road. Some will get stepped on. But it's not because people are immoral and don't understand or appreciate fruit properly.

If you wish to be reliably rewarded for your music, then get employed to make music as your job.

If you want to make the music that moves you, that will hopefully create meaning for people, and that will perhaps earn you a sustainable living, then you have chosen risk, and you will have to be as smart with the entrepreneurship as you are with the music if you want to survive and thrive.

The odds are stacked against you. History is littered with musicians who are disillusioned, embittered and broke. This was true before the internet just as it's true now. The internet is neither your saviour, nor your enemy.

Let me make that bit clear: prior to the internet, most people spent NO money on music. If they bought a record in a year, it was a gift for a nephew (and it was usually rubbish). Some people spent a lot of money on music, because it was tied up with cultural things like identity that they were really invested in.

Back when you needed a record label to just be heard, it was a lottery. The odds were bad, the lottery tickets were expensive, and most of the prizes - if you did happen to win - were just awful. Now you don't need to play that game - but you need to be smart and you need to understand what the rules of the new game are.

You CAN, of course, get signed to a record label (and that lottery is still in play) but you can also be an enterpreneur. I recommend the latter - but not because it guarantees you money.

But the simple fact is that you don't become a successful entrepreneur by making things that people will not pay for, insisting that they should, and then complaining that their morals are to blame. They may not share your morals, but that's not even the point.

It's not their job to understand your needs. It's your job to understand theirs.

You become a successful entrepreneur by meeting people's needs and wants, solving a problem for them and doing it in a way that allows you to make money.

I've said it before and I'll say it again. Even if it was true that all the people you wish to target with your art are immoral thieves who you would never invite into your home - why would you insist on trying to change their behaviour as part of your business strategy?

You may make great and interesting music, and put on an amazing show with amazing costumes (and I happen to know that's exactly what Abi does). But decrying a sense of entitlement among those who won't pay you for what you insist on doing is back to front.

The people with the weird sense of entitlement are the ones who stamp their feet and say 'look at all this hard work I put in - where's my money?'

November 10 | Registered CommenterAndrew Dubber

Well said! And I am an indie musician.

November 10 | Unregistered CommenterHelen Austin

@Abi

Just checked out your site. Dude, that is some seriously elaborate costumes you've got going on there! Sure does bring in a real "Jane Austen" vibe :-)

@Dubber

Yes, you've ruffled my feathers, but in a good way. I've been feeling more and more that musicians today do need to take control of their entrepreneurial efforts - or what I like to call artist independence. But I think the idea of being an "art" person and also a "business" person still makes most artists frown - it seems that they still want to keep that "rock star" charisma.

Personally, I like the organic human approach, like Amanda Palmer who stays hours after shows and connects with as many of her fans as possible (even though her image is "punk rock cabaret" - you'd think she'd need to be mysterious). I do see more musicians leaving their pedestals and embracing this approach.

Cheers,

November 10 | Registered CommenterEndy Daniyanto

@ Andrew Dubber's last post November 10

All of what you say is well and good, and I agree with much of it. However, currently, and for the foreseeable future, the 'rules of the game' are that the vast majority of recorded music - what is for many musician's their primary method of communication - is taken for free, and the last people in any position to change this, to monetise the wholesale sharing of recorded music, are those musicians you suggest simply need to become successful entrepreneurs. Generally they are skint, more often than not uncreditworthy, and busy either trying to write/record/perform the music they create. They are in absolutely no position to change this status quo.

I am well aware of many of the realities of the music/record (recording) business, and am aware that entrepreneurship on the part of 'artists' is much more common than some might suspect. However almost without exception the most talented musician's/'artists'/composers I have worked with (amongst 100's as either a musician or recording engineer on major labels, indie labels, and no label) are wholly unsuited to the entrepreneurship you suggest.


Short (better) version: Most of the best/most interesting musicians/'artists'/composers are useless entrepreneurs. They couldn't run a business to save their life. With respect, your post simply states the obvious. Your solution (be an entrepreneur) will lead to a national cultural life dictated by the small businessmen who are able to exploit business opportunities they see. Great.

November 11 | Unregistered CommenterAaron G

You're absolutely right, Aaron. Which is why I say to musicians over and over again:

"Assemble your team."

Of COURSE there are things you're not good at. There are people who can't do what you do. But if you're serious about making money out of music (rather than simply serious about making music) then you can't expect to just do it by yourself.

Entrepreneurship is not the world of salespeople, accountants and lawyers you seem to think it is. It's what happens when people with skills and creative ideas team up with the people with money skills and business expertise. Complementary skills.

In other words - there should probably be people in your band who don't play music.

Honestly, I'm not terribly worried about a national cultural life dictated by small businessmen who team up with creative artists in order to make them all some money by meeting a need or filling a gap. I'm far too busy being concerned with corporations bleeding artists dry while trying to squeeze every last drop of cash out of the ownership and exploitation of culture, while coopting the public policy process with their powerful lobbying groups, criminalising the general population and acting solely on the logic of profit maximisation. It's a matter of perspective.

I mean - the entertainment industry may be losing some ground in the digital age, but let's get a grip here: they're still the third biggest business in the world after guns and drugs.

I'm not painting a picture of a utopia here, and nor am I trying to save the world. I'm a pragmatist. Just saying - you want to make money? Either learn some money making skills, or recruit someone who has them and get them on your team.

If you make great and interesting music, then you have an unprecedented opportunity to bring that to an audience and make a sustainable living at it. And unlike any other period during the past 100 years - the greater and more interesting your music is, the better the chances of that happening. But it's not a given - and demanding it should happen won't make it happen.

November 11 | Registered CommenterAndrew Dubber

Hi Andrew,
Again I think I agree with much of what you say. I suppose in my last post and this I am articulating what is my legitimate, slightly different perspective.

Although it is a complete waste of time trying to stop filesharing, I don't see why it is unreasonable for a musician to say "Ok if you want my music for free, if I can have the fruits of your labour free". And it isn't just musicians. It is recording studios, hire companies, cab/bike companies etc etc etc etc who all suffering for the music businesses failure to monetise sharing music files, and it is extremely easy to monetise it.

Many people have floated the suggestion of a 'digital media license' (for want of a better name - that one fits pretty good to me) taken at the point of the isp, and distributed amongst those whose works are shared. This approach is essential. It is reasonable for musicians to expect equitable remuneration for the enjoyment of their works. Without it there is no income stream for what I believe the musician's primary vehicle - recorded music - and to lose that will be sad.

November 11 | Unregistered CommenterAaron G

"Ok, if you want my music for free, if I can have the fruits of your labor for free" Um, how many people outside of the recording industry get paid for passing on and promoting music? I don't hold with illegal downloading, but do I play my CDs for a large group of friends (could be considered public performance) and then lend them to friends who may copy the music to their computers (illegal file-sharing)? Yes. Because on the basis of that sharing, I help recruit new fans. Some of these people will never buy a CD or go to a show, but out of ten, the three who have reliable home Internet may search out the artist's website. One will go to the show with me and buy a CD from the merch table. Out of the remaining seven, one will be interested enough to ask for more music, which I will buy for a birthday/Christmas/graduation/divorce present (as applicable). Within a year, two more will have bought CDs online, one to give as presents to someone outside of the original ten. Nobody paid me to play it for my friends. Nobody paid me (or my friends) for the work done on behalf of the artist. Nobody paid us the PayPal-type transaction fees, or distribution fees (which are paid through, and usually to, record companies).
For me, that means that I've just put in some unpaid work for which the cost hasn't come out of the artist's pockets, and I'm okay with that. In fact, I find a lot of great music through unpaid promotion like word-of-mouth, blogs, and artists' comments on blogs (Abi and Helen, I'll be checking out your work asic). Am I part of the problem, part of the solution, or symptomatic of the current state of the music industry?

November 11 | Unregistered CommenterEllen S

It's a good question - and I would answer, but it's not in my job description. ;)

November 12 | Registered CommenterAndrew Dubber

Ok, this is going to be a long one:

@Andrew:
1. What do I mean by "supply-side problem" and why use legislative means?

My take on the situation is that demand for any piece of music (or other digitizeable creative work) can be fulfilled in two ways: legally, by the owner of the copyright in question or illegally by anyone who is able to upload the work in question and enable it to be downloaded.

The owner of copyright will have already accrued some cost with regards to obtaining the work - either through the cost of origination or through purchasing a license or assignment of copyright. If the owner considers this cost a business investment, she will attempt to extract the best price possible under existing market conditions (determined primarily by the demand for the work).

The infringer on the other hand has much smaller costs to cope with - at most, the cost of purchasing the track or the CD on which it was published, possibly nothing if the work was itself obtained through an act of infringement. He may well be inclined to then re-publish the work pro bono for everyone else to enjoy without having to pay for it.

Back to our prospective fan. She is looking for a song or album that she wants. She has a choice of either paying what the legal owner of copyright charges or getting it for free from an infringer. Objectively, the second alternative is much more attractive and only moral and legal implications stand in the way.

Which gets us to copyright. The cost of creating copies is essentially the same for both the legitimate owner and the infringer (for the sake of argument, let's assume that it is zero in the Internet age). However, because the infringer pays little or no costs of obtaining the work, the infringer is always in a privileged position with regards to the price he can charge. The infringer stands in a position to crowd out the legitimate supplier, because in terms of value offered an mp3 file from iTunes is no different from one downloaded from BitTorrent. The economic aspect of copyright recognizes the above and is supposed to protect legitimate suppliers by making infringement punishable by law.

The problem I see with copyright at the moment is that it is ineffective. I don't believe that targeting individual file-sharers is the key - rather I think the middle-men that enable file-sharing (and make a pretty penny doing so) should be forced to implement screening for copyrighted works or face the legal consequences. By middle-men I mean torrent trackers, file-hosting sites and the like. Some, like the Pirate Bay, make no pretense of having any legitimate purpose in mind. Others include copyright protection provisions in their Terms of Service, but do little to implement these. They should be made responsible for how their services are used. They will of course vehemently oppose such suggestions, because infringement constitutes most of their traffic. Nonetheless, until this is done our laws will remain a joke.

Just to counter the typical argument against this - no one is forcing anyone to engage in a particular business. The gun merchant is expected to conform with all regulations that are to ensure that his wares aren't used for illegal purposes. It's no secret that file-sharing technology is extensively used in an illegal manner, so anyone setting up to provide such technology should have effective measures in place to prevent this (except, of course, his service won't be so attractive if you can't get the latest season of House from it).

2. Extendable copyright

From my experience, introducing additional hoops to jump through (including additional costs) will negatively impact the small players. If your intention is to free up works mouldering in vaults, you may find yourself defeated by your own strategy.

The copyright hoarders - mainly the big business - can easily circumvent any attempts to deprive them of their copyright assets. They have the resources to secure extensions in perpetuity, if so allowed.

On the other hand, the individual creators will probably find themselves hard-pressed to keep up with the legal requirements involved, especially if their works aren't earning them a sizeable wad of cash (because their entrepreneurial ability is, shall we say, lacking).

Permit me to suggest a new job profile under such a regime: copyright hunter. Such people would make it their business to look for promising, but under-performing works that are about to lose copyright protection. If the current owner does not secure an extension, they would then snap up the work and publish it at no additional cost. Even if their right is non-exclusive, it is unlikely the creator would be able to compete with them effectively. Furthermore, there would be little incentive for other businesses to partner with him, since he has nothing to offer that isn't already available to them (namely, the right to publish his work).

Presently, the creator receives automatic protection from unscrupulous businesses that would make money from his works without compensating him. Your proposed regime would essentially remove this protection.

3. Spotify's problem

It's no secret that Spotify is bleeding money. The conversion from free to paid has only recently jumped up a bit, mostly because of mobile subscriptions, but even so it is nothing to brag about. Ad revenue isn't all that great either.

The problem is that Spotify has built a business out of offering a great service to their customers for free. If the majority are satisfied with the free option, why should they pay? However, this service isn't free to provide.

Already we've had Daniel Ek asking the labels for a break on the licensing fees. But what's in it for the record labels? Why should they be supporting someone else's business at the expense of their own?

As I see it, the licensing costs should be the first item on any business plan involving distribution of copyrighted content. If Spotify neglected to consider how they were going to generate enough revenue to cover these, then obviously their business model is flawed. Sometimes I wonder if the dot-com bubble ever happened, when looking at how many of these businesses operate.

No, Spotify's problem isn't that the labels are asking too much. The labels are free to ask whatever they want - we call that "free enterprise". Spotify's problem is that they haven't given enough thought to how their business is supposed to be profitable.

4. Will Page's study

An economist quickly learns that aggregate figures don't usually reflect the detail very well. For instance, GDP figures don't necessarily reflect the affluence of the society. It's a pity that you didn't link to the actual study, but to an obviously biased interpretation of it. No fear - here is the actual document.

The music business has grown, true, but the devil's in the details. Permit me to point some out:

a. Just over 25% of the revenue is business to business - primarily licensing.
b. Business-to-business is the main growth sector - 10% v. 3% for business-to-consumer.
c. Live music revenue which accounted for all growth in the business-to-consumer sector is primarily driven by what the report refers to as 'heritage acts'
d. The report alerts us to the growing gap between the 'heritage acts' and hits in general in both the live performance and digital recordings sectors (further data with regards to the latter is available in the - oft-quoted by me - target="_blank">Long Tail of P2P study).

The report goes on to point out that investment in new talent is centered primarily in the recording sector, which is consistently decreasing and poses the question: "who’s going to
invest in the career development of artists to create the heritage acts
of tomorrow?"

To the above I'd like to add the observation that business to business spending is probably also skewed towards the hits and the heritage acts, since they are the most attractive product for the business buyer.


So we see that the picture isn't at all rosy. The growth in the music business sector is centered on extracting more from existing capital, as opposed to developing new artists and works.

Which is what I've been saying all along.

Furthermore, if business-to-business becomes the chief revenue generator (which is possible if present trends continue), then the consumers are likely to lose out, since what they want will matter less and less to the music business. (Incidentally, this is another mantra I've been repeating for quite some time now.)

5. The changing environment

I'm down with a lot of the changes that have happened and I'm sure the sentiment is similar among most people in the music business. The one we find objectionable is the emergence of a competing parasitic supply source of our products. We can wrangle over semantics with regards to labeling this phenomenon, but you cannot dispute the fact that file-sharing is impossible unless one has files to share. These are created, at considerable expense, by the record industry in order to make a profit. Illegal file-sharers are sawing off the branch that both they and the record industry sit on, because once the number of releases dries up, there'll be nothing left to share.

(Aside: The only people who aren't particularly threatened by file-sharing are those who don't have any success to speak of. As soon as they have a popular release, however, they will be.)

Ceterum censo...

Yes, I believe there are some 'right and natural' laws governing how to do things. One of them is that you cannot spend more than you have (that's including your credit). Another is that when someone gets something for free, it means someone else is paying for it. Yet another is that if you aren't making money doing something, you'll generally find yourself devoting your time to doing things that do earn you money (or, more generally, income). I also believe that reality generally trumps wishful thinking (ooh, I can see the replies to that now) and that any model that doesn't stand up to basic economic examination shouldn't even be considered for real-world testing. (This comes from having experienced one such model first-hand here in Poland.)

@Justin:

The only reason I keep telling Bruce that he's wrong is that he so often is. (Sorry, Bruce.) I've spilt much digital ink to show exactly why this is so. I might have got it wrong, but I hardly see many people (yourself included) debating with me on the merits on the matter (by which I mean challenging me either on logic or on fact).

Yes, there are tons of articles. I've even read quite a number of them. They're the primary reason why I bother to speak up at all. I find that the vast majority of them can be usefully classified as one of the following:

a. Wishful thinking,
b. Magicking reality (e.g. the Long Tail),
c. Selling the author's brand of snake oil, and my personal favourite
d. Flat-earth economics (quoting WIll Page in the context of this debate without checking what the findings and conclusions actually were is an example).

Needless to say that neither of these actually improve the reader's situation to any great extent when acted upon, but no fear - another wonderful 'new music strategy' (sorry, Andrew) is probably just around the corner.

Krzysztof,

As I have suggested in the past, whittle your points down to the 5 to 10 things you believe now, plus some reasonable predictions for the near future. Make your points digestible / easily readable. You can publish your 'manifesto' right here on MTT and we will all debate it. This is essentially what I do each week. It's all in good fun and for the purpose of learning.

For the record, I predicted Spotify (the strong arrival of streaming) and the importance of packaged apps (iPhone apps for example) more than two years ago (I even have patents pending on this), and I am telling you now that recommendation (probably not what you think it is) and music information retrieval will lay waste to the promotion landscape as we know it now within the next two - three years. Artists will make music, it will be found if appropriate (once the plumbing is installed), and artists will sell streams and high-margin digital products that nobody will steal. Moreover, companies will actually bid for the rights to service artists based upon their risk/reward profiles. With some variations (details and timing), it doesn't get any simpler (as an explanation) than that.

Krzysztof, what is your vision? Can you explain it to us in simple terms so we can all debate it?

Cheers,

Bruce

November 12 | Unregistered CommenterBruce Warila

@ Andrew Dubber

I'm afraid this is gonna have to be shorter than I would like as my (paid) work (as a musician) is calling!

If people don't like what I do and don't want to engage with it, that's fine, it's not everyone's bag. What I am talking about are the people that do want to engage with it (and I am mostly talking about live performances here) but do not want to pay! I am talking about a culture in which it is perfectly acceptable to orgaise an event, budget for the caterers, budget for the DJ, the venue, the decorations, and then expect the musicians to do it for free. And they then expect to make a profit on the door too!

Of course the music that I make with my group is speculative, it wouldn't be half as much fun if it wasn't and I'm not saying that having put the work in, I expect to be paid regardless of whether anyone likes it or not. But I do expect that if people ask me to perform, that time and effort has to be paid for, and some people seem appalled by that.

My basic point really was that we, as a society, can become very unthinking of the consequences of our actions when we don't see those consquences at close quarters, or even understand the sheer amount of work that goes into creating.

Now this attitude is not shared with many other cultures. I have spoken about this cultural norm of begrudging musicians a fee with Amran (for those of you that don't know him, check out his group Ashiq al Rasul) and he couldn't believe it as it's totally different in Islamic culture, where it is expected that musician's will be paid and paid well. And, actually, I don't think it's too much to expect that people will understand that I have a need to eat and keep a roof over my head etc.

I am not so naive as to believe that everyone who downloads a copy of my music is evil. And I wasn't necessarily talking about my own situation, simply drawing examples from my own experience. I simply wanted to add an idea to the discussion to see whether other people thought that it may be a factor (among the many) that is at work here.

Coming back to the issue of speculation, it often seems that the traffic is very one-way for the artist. If we want people to create, and not spend all their time teaching or performing cover versions, then there need to be a mechanism (s) by which they can expect to be rewarded for it, should (and that's a big should) it prove to be something that people want.

Let's look at the practicalities. In order to make a living, many musicians will have to spend much of their working life doing something to bring in the money, whether that be teaching, session work, playing in a tribute act, or working in an unrelated field. So far so good. But then add in a family, add in a social life, add in all the things that people generally take for granted. And this is the one that is so often forgotten about...practice! Many musicians have to PRACTISE for many hours in a day in order to maintain and improve their skills. They may have to come to the decision that creating quality original music is simply a luxury that cannot be afforded. And I personally, think that would be a real shame. At an extreme, it will mean that the only people who can afford to create will be those without responsibilities (which at present includes myself), or with private wealth. Again, I think that would be a real loss.

Now the disclaimer: I am not just talking about myself, my opinions have been drawn from my observations of many muscians in many varied situations, plus a little speculative thought :-) Actually I already do a lot of what tends to be suggested as a musician/entrpreneur which is why I know how time-consuming it all is, and how hard it is to do in the practical day to day of a musician's life.

Please people, discuss!

(that ended up being quite a long comment, didn't it?)

November 13 | Unregistered CommenterAbi

And, while I think about it, it's not wrong to wish to change people's behaviour and attitudes for the better. We do it with people all the time, that is, if we want them to grow into well-mannered and respectful members of society.

November 13 | Unregistered CommenterAbi

^Chairman Mao would DEFINITELY agree with you and that should give you pause. That's the "left hand path" and never works out very well.

"Attempts to exert control lead to an escalation of chaos"

November 13 | Unregistered CommenterJustin Boland

Big Snip and then:

"... but fans TOO, and if they don't want to, we need to force them.."

Oh, fuck off! Seriously... I rarely read something that makes me this angry (I avoid The Daily Mail!). Because forcing people always works... schyeah, right!

November 13 | Unregistered CommenterDarren Goldsmith

This is a very interesting conversation, but the bottom line is that we now live in an age where musicians have to take control of their own destinies - and this is a good thing! We don't need the "star" system that Dubber talks about anymore. WE get to decide what it means to be successful and how to achieve that success.

And ultimately, people hearing my music is a better alternative to people not hearing my music. That's all we can ask for, really, is that people give a listen. After that, it is our job to identify those people who enjoyed the listening experience and figure out how to turn them into paying customers. That is the job of the indie musician these days.

And frankly, if you are producing good music nowadays, there are SO many ways to get that music into the ears of potential fans. The opportunities are staggering! And if the music is good and you can find your audience, it's not that hard to get them to pay for it. Fans WANT to support their favorite artists. That's why artists have always been able to sell t-shirts, stickers, trading cards, etc.

True fans will support us. Our job is to find them and get the music into their ears. I'll take that challenge anyday over trying to convince some suit at a record label that MY music will make THEM rich.

Jason Parker
http://oneworkingmusician.com

November 13 | Unregistered CommenterJason Parker

@Andrew Dubber:
Prior to the internet, most people spent NO money on music. If they bought a record in a year, it was a gift for a nephew (and it was usually rubbish).

Where are the same people asking Krzysztof to back up his assertions with facts on that one?

As much as the folks accusing those with a moral objection to file sharing of living in the past as opposed to seeking a solution, I don't see anything resembling a solution being proposed.

November 24 | Unregistered CommenterStephen

http://www.emarketer.com/Article.aspx?R=1005348
might be the data you're looking for.
From 1980 through to 1990 just 20% US citizens bought any music at all.

December 4 | Unregistered Commentermike pailthorpe

I have been reading the comments here and feel like I have just seen a great movie. You are such interesting people, and very good debaters.

I don't expect to make much (if any) money from selling my band's music, but I hope that our recordings will be used as a promotion tool for other revenue streams for myself and the band I'm in. It seems that nowadays the live performance leg of the industry is the most successful part of the music business.

In my personal view recordings are not a product you can count on anymore to make a great profit. This is very problematic for the record industry - mostly record companies, but also recording studios and other business and services related to the record industry. Recording studios will still have a place, and so will engineers. But the main clients may not be the record labels like they used to be. Recordings are still a very valuable tool for musicians. They are a focal point in an artist's PR efforts. An entrepreneur looking to make money in today's business has to open up to other revenue streams.

I would love to live in a world where only the music I choose to share will be free, and the music that I want to sell would have to be paid for. This way we could have all the pros of digital marketing without the cons of illegal downloading. But I cannot begin to imagine this scenario becoming a reality. As artists, we will always want to continue producing and recording music. It is not a waste of our time and money as music business entrepreneurs either, but we need to expect to use the recordings to make a return on the investment from other places. Of course, I'm not there yet, so...

January 24 | Unregistered CommenterMor M

In my personal view recordings are not a product you can count on anymore to make a great profit. This is very problematic for the record industry - mostly record companies, but also recording studios and other business and services related to the record industry. Recording studios will still have a place, and so will engineers. But the main clients may not be the record labels like they used to be. Recordings are still a very valuable tool for musicians. They are a focal point in an artist's PR efforts. An entrepreneur looking to make money in today's business has to open up to other revenue streams.

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