The Music Industry

I have been pondering about this topic for quite a while. The music industry as it stands today is undergoing significant changes. The old model is not working anymore. People’s perception of how music is enjoyed, but more importantly: acquired, has changed. My generation is spoilt for choice when it comes to multimedia. I believe never before has any 20 year old had access to so much (freely available) music. Torrent sites like thepiratebay.org flourish. Millions of bits of information are being transferred illegally as we speak.

Before Napster (pre 1999), we used to go to the record shop to buy CD’s. We used to lend them out to our friends, who would either tape them or make a copy for themselves. Audio CD copies. Mp3’s weren’t as popular back in then as they are now. Their quality wasn’t as good either, 128kbs was the norm. Then, in 2001 Napster was shutdown. File sharing didn’t stop there though. Peer to Peer networks sprung up all over the place. Kazaa was immensely popular as well as some other file sharing programs. 2001 also saw the release of the BitTorrent protocol. It has grown to be one of the biggest ways to share music, BitTorrent represents 55% of the upstream traffic on cable companies’ access network.

The point I am trying to make here is that the way we acquire music (media in general) has forever changed. However, some people are less enthusiastic about this change (namely record companies and Lars Ulrich). In their minds, every downloaded album is money out of their pocket. I suppose that is one way of looking at it. However, that doesn’t always apply. People download a lot of music simply because they can. See this last.fm thread. They have massive hard drives and broadband connections. Every download does not equal a CD they would possibly have bought.

Alternate ways to buy music are available but still inferior to getting it illegally. Let’s make a comparison. I’ll take the largest seller of online music, iTunes, as example and leave out the price.

iTunes
• Users can make a maximum of seven CD copies of any particular playlist containing songs purchased from the iTunes store.
• Users can access their purchased songs on a maximum of five computers.
• Format is 128 kbps AAC (better sounding than mp3 at that rate but still inferior to CD’s).
• Plays only on you iPod.

Illegal Torrents
• No DRM. Make as many copies as I want. I “own the music”.
• Format varies but generally you can get mp3’s ranging from 128kbps to 320kbps. A lot of files are also available in FLAC format, which is lossless.

There are also other ways to get music online, such as subscription services. You pay a flat fee of around 15 euro per month and you can access the entire stores catalogue. Sounds cool huh? Think again. You can’t take it with you (perhaps on your portable music player, but not on more than one and definitely not on a different brand) and you never own it. If you stop paying the subscription, you can’t listen to it anymore. So, it is clearly visible that stealing music is still a lot better than buying it and not because of the price. There has been a slight change of heart in the music industry. An open letter by Steve Jobs set a lot of things in motion, resulting in EMI releasing all its music DRM free through iTunes. A good start, but we are still not quite there. You see, why should I pay more for inferior product? They charge 29 cents more and the quality still isn’t what I’d get from a CD.

There are other (better) alternatives out there still. Amiestreet for example. They developed a new and innovative way to distribute music. First, all the available songs are free. Then, as it gains popularity it’s price increases. What’s more, they want to start offering it lossless. Great initiative.
Why are major labels afraid to release DRM free lossless music digitally? Are they afraid that piracy will increase? Chances are it won’t. People are hardly going to pirate more music than they already are, one copy of an album on a torrent tracker site is enough to distribute it to millions and odds are that it will appear online anyway, whether you sell it with or without DRM. Take a look at a list of copy protected albums here and see for yourself. I’d like to think that people would rather be more inclined to buy music if they can get the same quality they get from a CD for the same price (or less) online . It is a crazy world where an inferior product fetches a higher price online compared the same product on a store shelf.

So, who is losing out here? If you listen to what the record companies have to say it is the artists losing money. This doesn’t seem to be true though. A rather old piece written by Courtney Love suggests otherwise. The amount an artist makes off an album is almost negligible compared to how much the record company earns. If we assume that major labels will release their music, DRM free and lossless, will people buy it? I am sure there will be an increase in sales, that’s for sure. However, their target audience has changed into quite a tough one, why would they start paying for music now? After all, I get the feeling it has been the consumer and the artist that has been screwed over a lot longer and it is apparent that when you pirate music you are not really taking wads of money away from the pockets of artist, you are depriving rich major labels of a lot not-so-hard-earned-cash.

How do we approach this whole conundrum then? I am not sure that there is one answer to this. Amiestreet is a great example of how it could be done. What interests me most though is whether the artist can cut out the record label as middleman between the artist and the consumer.