Digitization has a disruptive effect on a wide range of industries, from music to software to publishing to...you name it. If it can be digitized, it can be disrupted.
It's therefore encouraging to see the music seemingly converging on a cool new-old model: an ASCAP (American Society of Composers, Authors, & Publishers)-like tax from one's Internet service provider that allows unlimited downloading of music.
Gerd Leonhard's recent presentation on the subject is the best I've seen yet, one that I'd recommend you review, even if you never stray from the software world to think about music:
Leonhard argues that digitization has made a control-based music economy impossible, forcing the industry to seek other ways to monetize music--ways that conform to digitization's abundance, rather than to the old idea of scarcity.
In a sign of things to come, the Isle of Man just approved "a single blanket fee (that) will cover unlimited download activity for all 80,000 or so...residents," as Ars Technica reports.
This follows a new trend toward "free" services, in which the music industry hides the cost of the music in the price of a separate service or device. It's oddly similar to trends I'm seeing in software.
This isn't the only model. As the Future of Music blog points out, some musicians, like Corey Smith, are finding that giving away music to drive more concert ticket sales can be a winning recipe. But while $4.2 million last year for Smith is a great return for an individual artist or band, it's not a great way to build an industry. I'd liken it to "lifestyle" software businesses that generate great revenue for their founders but provide little in the way of equity for other participants in the company's success.
So I think the "adoption tax" model is promising. The future is flat-rate: you subscribe, you forget about paying for individual transactions, you enjoy more music than you ever have before.
As reported in Friday's Wall Street Journal, the music industry has apparently given up on suing 13-year olds and dead people in its quest to stem music piracy. Instead, it plans to work with ISPs to identify and notify copyright infringers of the need to come clean:
[T]he Recording Industry Association of America said it plans to try an approach that relies on the cooperation of Internet-service providers. The trade group said it has hashed out preliminary agreements with major ISPs under which it will send an email to the provider when it finds a provider's customers making music available online for others to take.
Depending on the agreement, the ISP will either forward the note to customers, or alert customers that they appear to be uploading music illegally, and ask them to stop. If the customers continue the file-sharing, they will get one or two more emails, perhaps accompanied by slower service from the provider. Finally, the ISP may cut off their access altogether.
Cory Doctorow, among others, has sharply criticized such an ISP partnership in the past, but I see it as a big step up from the industry's current tactics, and one that could lead to other possible solutions like a music tax at the ISP level. TechDirt doesn't like this option, but it's unclear what other (good) options the industry has.
Throttling downloads at their source - i.e., the ISP that provides the bandwidth - is at least the right area in which to target the activity. Whether a tax or some other solution ends up working matters less than that the industry is now focused on the right piece of the piracy puzzle.
ITWire picks apart a report from CCID, a Chinese research firm, suggesting that "Investments in informatization are becoming more cautious, the postponing and cancellations of system construction have led to a drop in Linux shipment[s]."
While no information is provided on Windows or Mac sales to provide a baseline (Is Linux growth slowing more than its competitors?), it's interesting to me that it's slowing at all. I would think that Linux adoption would grow in a downturn, at least in relatively new markets where Windows hasn't completely conditioned businesses and consumers to expect a Windows experience.
It's possible that the drop in Linux shipments stems from publicity over alleged government spying through Red Flag Linux, China's dominant Linux distribution. Maybe the flight from Linux is a flight to safety?
It's more likely, however, that years of Chinese piracy have made entrenched Microsoft's Windows, making it hard for a Linux challenger to keep pace in a spiraling economy. Reuters reports that more and more copies of Windows in China are legitimately bought due to government decree.
Even so, I suspect that the economic downturn is rejuvenating Windows piracy again, to Linux's detriment.
For those struggling musicians worried by rampant piracy and the subsequent difficulties in earning a living, Tim Blanning has news for you: it was ever thus.
Writing in The New Statesman, Blanning traces the history of the music industry, finding "Modern musicians' lot compares very well to that of their predecessors." Indeed, Blanning points out the very bane of modern musicians' existence - the ability to record (and, hence, copy and distribute) music - is also the very reason that musicians have an opportunity to generate outsized returns on their musical investments.
Until music could be recorded, the only revenue available to the musician was from performances of that music. "Not even as great a virtuoso as Paganini or Liszt had a back catalogue."
The result? Today, good-but-not great bands like Coldplay can make tens of millions while the great composer Richard Wagner died a comparative pauper. With all the flaws of the modern system from pirates and ensuing economic uncertainties, we should be cheering the modern system and its digitization of musical content, even when some profit is lost to piracy.
For composers...copyright protection is very much a creation of modern times. Until deep into the 19th century, piracy of the most flagrant kind was the norm....In the course of the 19th century, ever-growing markets, bigger spaces for music and better communications allowed many more performers to make much more money....
...[Even so] for every Bono and his countless millions, there is a host of modestly paid session players, 90 per cent of whom earn less than [$22,500] a year....It will come as no consolation to them to know, if they do not know it already, that it was ever so.
Ever since musicians emerged from the servile but cosy world of aristocratic patronage into the harsh daylight of the public sphere, the musical profession has been a pyramid with a broad base and a sharp top. The new opportunities brought by every major technological shift have also left many casualties among musicians unable or unwilling to adapt.
There are no easy answers for the music industry, but in its quest to capture all possible digital revenue, let's not forget that digitization has introduced dramatically more available revenue than ever before. A little "leakage" hurts, but not nearly as much as it would to go back in time and earn one's keep by performance alone.
Warner Music Group has a proposition for U.S. universities, according to Techdirt: buy a blanket license to music downloads through file-sharing services, or be sued.
Techdirt thinks that this is a bad idea, and I disagree.
Techdirt's criticisms are clear:
It's basically a music tax--allowing the record industry to be lazy. Someone else gets to go out and collect all this money, and hand it over to the industry to distribute (or, actually, not distribute). It effectively sets the business model of the recording industry in stone, and harms better, more innovative business models by inserting the recording industry (and not the musicians) into a role where they don't belong.
But the benefits to such a blanket tax are also clear, as I wrote back in 2003. Consumers want a convenient way to pay for content. A tax levied by the ISP is a highly efficient way to ensure that the music industry gets paid, and that consumers don't get slowed down in their enjoyment of music.
Techdirt has some valid points, but it fails to identify the "better, more innovative business models" that would take the music industry forward, either in this article or in the others to which it refers.
Personally, I pay for my music, movies, and other media. But not everyone does, perhaps because they don't want to use iTunes or a similar service, for whatever reason. A minimal tax added to students' university fees would easily cover this, with little cost to these consumers and great benefit.
No, not every student would end up using the service, but that's the nature of a tax: sometimes you pay for others' benefits, not yours. In fact, that's usually the way it works.
CIO.com offers a sobering reminder as to one potential downside to proprietary licensing: when vendors get desperate for revenue, auditing for "piracy" can help them clean up.
Piracy is illegal and wrong. But sometimes piracy is in the eye of the beholder, and it's a safe bet that if the beholder is Microsoft or some other large enterprise software vendor, it's going to win any dispute over illegitimate licenses. Just ask Ernie Ball, who had the unfortunate pleasure of greeting an unannounced, Business Software Alliance-sponsored raid by U.S. marshals on his office a few years back.
From the CIO.com article:
Companies, individuals, and even government bodies are at risk of being audited. On October 27 the Business Software Alliance (BSA) intensified its crusade against piracy and filed suits against nine individuals in the U.S. and U.K. for selling illegal copies of software over the Internet. The BSA also filed suit against Kiryat Yam, a city in Israel, on behalf of Microsoft for purportedly using unlicensed Windows products on their employee computers.
Thinking it won't happen to you is a naive and risky attitude to take. Even if Microsoft or the BSA don't come knocking on your door right away, Global Anti-Piracy Day could indirectly lead to your organization being investigated. Part of the resellers' audits includes them granting Microsoft access to lists of customers who "purchased" software and this could lead auditors directly to enterprise end-users--not a happy thought for most CIOs.
As a CIO you have at least two choices:
- Stringently enforce internal software auditing policies so as to closely monitor every line of code that makes it onto your company's computers;
- Switch to open source which can offer equivalent or better functionality at significantly lower total cost of ownership (not to mention acquisition cost), plus can rid you of the need to count licenses.
Open source is not a panacea to piracy, of course: commercial open-source vendors expect to get paid for supported software that enterprises deploy. (Red Hat's biggest competitor, according to sources within the company? Unpaid use of its Red Hat Enterprise Linux software.)
But open source is a fantastic way to get the BSA off the CIO's back. In this year when proprietary software vendors will likely becoming increasingly desperate for revenue, the friendly face of open source may be a welcome alternative to the threatening mutterings of the BSA.
Imitation may be the sincerest form of flattery, but movie fans like to show their love for a great movie by stealing it, as data from TorrentFreak on The Dark Knight downloads suggests. With over one million downloads in just a week, The Dark Knight is quickly on its way to earning the dubious honor of being the most pirated movie of 2008.
(Credit:
Warner Brothers)
What a perverse message to send to the movie studios: we love your product so much that we refuse to pay for it. How do we expect the industry to invest in more movies like The Dark Knight if we aren't willing to fund that investment?
Microsoft's Thomas Rubin, chief counsel for Intellectual Property Strategy, recently told the UK Association of Online Publishers that "the 'information wants to be free' approach not only does not work, actually it has been a disaster for almost all newspapers." While Rubin's words were somewhat self-serving, designed as they were to position Microsoft as the "safe" technology partner to the industry, to Google's detriment, he still has a point, and one that correlates to online video.
Yes, many people steal online music and video because they simply want a more convenient way to consume it. Rubin suggests that "It turn(s) out that most people do not want to steal music--they just want convenient online access to it," and I agree with that. Back when Fellowship of the Ring came out, I downloaded the movie from an IRC network and watched it for months before it hit retail. However, I also bought both the standard and extended versions, plus I saw the movie three times in the theaters. New Line Cinema made its money from me, and I got to conveniently watch the movie well before its retail release.
Yet my desire for convenience shouldn't have trumped New Line Cinema's desire for control and profit. I had no right--legal or moral--to pirate the movie to satisfy my own whims. I was wrong, and that wrong could well end up ensuring that fewer "Dark Knights" and "Fellowships" get created.
As consumers, whether of movies, software, or other digital goods, we do ourselves a disservice when we steal. I hate to rely on a Microsoft executive to teach this lesson, but Rubin's comments on the newspaper industry are instructive here:
... Read moreI don't think piracy is the salvation of the entertainment industry, but I think there's an interesting germ of an idea in this TechDirt article about Show of Hands and its dependency on piracy to drive business. As one band member suggests:
You may call this process "piracy" if you wish--for me it is an act of generosity and it both increases our audience size and record sales. And as I always say on the night--if you're going to do it anyway you may as well feel good about it! I believe the official term is "viral marketing," and we depend utterly upon it.
Thom Yorke of Radiohead has questioned whether its "pay-what-you-wish" model would work for small bands, but I've got to think that a small band must depends on piracy (and any other means) to drive revenue. For a small band, or any software company trying to disrupt incumbent vendors, adoption is the first order of business.
Piracy is a way to drive adoption. Obviously, piracy only works if someone cares about your product in the first place--otherwise, why would they bother stealing it? But perhaps it's a compelling strategy for some? It certainly seems to work for Microsoft in emerging markets like China...
There are lots of things in life that I can do, but there is a more constrained number of things that I should do.
This post on Lifehacker about how to steal Wi-Fi access reminded me of one more "can but should not" item to add to the list.
Apparently, someone figured out a way to trick Wi-Fi networks at airports with a "?.jpg" addition to URLs. The access-gaining trick works only on those networks that "allow images to go through without a redirect," but that's not really the point. It's similar to adding Boingo Wireless' URL suffix for free iPhone access on standard connections to get 15 minutes of free Wi-Fi. In both cases, it's theft, plain and simple.
Some will use the rationalization that "Wi-Fi is overpriced and so people should steal it." This reminds me of my old argument that I should be able to download any songs off LimeWire that iTunes didn't allow me to buy. Shame on those artists for not letting me buy songs in a way convenient for and preferable to me!
I've come to see that I was wrong. Yes, I do think all media should be available for purchase online, and at reasonable pricing, just as I think Wi-Fi should be ubiquitous. But somehow, stealing it doesn't seem like the right way to get to that conclusion.
The fact that we can doesn't mean that we should.
Cory Doctorow writes far better op-ed pieces than fiction, and this one in The Guardian is a beautiful eulogy for the music industry. The music industry has struck a Faustian pact with ISPs to monitor copyright infringements, violating privacy and probably doing itself no favors with the public or its shareholders.
What it needs to do is simply work out an all-you-can-eat license for the ISPs that they could pass on to their customers. I'd happily have $10 or more added to my monthly cable Internet bill so that I can freely download songs. I currently buy them "by the drink" on iTunes, but a blanket license would be easier.
It would also return control to the music labels, control that they've ceded to Apple.
Cory writes:
Under the new scheme, the rule of law is replaced by a cosy inter-industry deal. Whereas before, anyone who wanted your ISP to spy on your internet connection would have had to show evidence to a judge and get a court order, now any joker who claims to be an aggrieved copyright holder can do so.
... Read more
