Music 2.0 - Exploring Chaos in Digital Music

October 24, 2006

Message to ‘Poor Musician’ - the State of Internet Downloads

Filed under: Music Industry — maths @ 11:19 pm

Now Downloading
Techdirt had an interesting debate going on ‘What Was All That About ‘How Much Internet Downloads And YouTube Hurt Music Sales?’ and in particular, one very concerned Poor Musician is still clutching straws in his blinded hope that internet downloads will simply go away. It is enlightening to hear the heartfelt concerns of the downtrodden and yet rarely heard musician on how the current environment has hurt them in some ways, and yet at the same time, we also have to recognise that bands like OK Go have profited incredibly by working this very same environment. So here is my message for the Poor Musician….

Poor Musician, I do sympathise with your case - you are really getting screwed over from all sides. You just have to realise that it will have to get worse before it gets better. And by then a whole slew of incompetent music industry people will have hopefully lost their jobs and a new set will take over who know how to take advantage of the new economy instead of engaging in the current exercise in futility to preserve old business models.
Even you need to make a paradigm shift - have you noticed how you have kept on focusing on CDs? The CD will die soon, so get real - even the veritable Tower has collapsed….while at the same time the paid online market is not even taking off properly partly as a result of incompatible DRM systems - and no one is even allowed to develop a system that overcomes DRM incompatibility due to the DMCA law in the US.

So the people have spoken and acted by adopting the ubiquitous MP3 as the format of choice for music - no major label has yet to fully license their repertoire in this format which further pushes the average consumer to the many free mp3 sources. The idiocy of labels in being an accessory in leading their customers to free p2p download sites is emphatically demonstrated by their copy-protected CD exercise - consumers unable to rip these CDs into digital formats are thus left with no choice but to trawl p2p networks for the digital versions of these songs, and while doing so, would they not naturally be tempted to download other songs too?….and thus a habit-forming practice is nurtured

To simply blame the woes of the industry on downloaders is too simplistic and in effect regurgitates the drivel propagated by the labels as they attempt to use the artiste/ writer’s well-being as their motivation. A song downloaded for free is NOT equivalent to money lost by the artist as it makes the broad assumption that the downloader would have bought the song otherwise. Also, there are many artistes around the world who are giving away their songs for free for various purposes in order to either get famous for advertising endorsements and sponsorships, sell their ringtones, earn from live shows and appearances etc. cue the OK Go story that we are all familiar with.

Likewise, a song bought online is NOT necesarily equivalent to money gained by the artist for some of the following reasons::

a) There are many online retailers around the world that do not account for their sales properly and revenue allocation back to the label/ publisher/ artist tends to be shady. Especially galling is the fact that many mobile carriers around the world take up to 50% of the retail price for each song/ ringtone sold.

b) There are many labels that do not account for royalties properly and revenue allocation back to the artist is limited. There are many artists who are screwed by their labels on the claims that digital royalties are not covered or are allocated lower royalty shares - read about the Cheap Trick/ Allman Brothers Class Action suit against Sony BMG. Kassia Krozer has done an excellent analysis on this in his article ‘You Say You Wanna Pay The Musicians?’

c) There are record labels that are licensing music to online retailers without clearing proper music publishing rights - and in effect, many music publishers and writers do not earn their rightful revenues. Labels and publishers are still engaging in their own savage civil war over their royalty rates while others plunder the loot. Without this getting settled, online retail store inventory is going to be hamstrung and dwarfed infinitely by those that exist on the p2p networks for free.

d) There exist collection societies around the world that collect money for songs but do not allocate the revenue back to the music publisher/ song writer.

All the above problems are exacerbated in the digital world as there are no physical products or transaction trails. You will never know where the bodies are buried!

So Poor Musician, yes, you are getting royally screwed and it will continue to be this way as long as the huge problem of a lack of proper revenue allocation and royalty distribution is not addressed in order to capture the greater share of revenues.

Only when all of these are sorted out will it lead to a smoother online experience at reasonable prices and fair revenue allocation back to the artist. For all its faults, in a perverse sort of way, allofmp3.com has demonstrated the proof of concept that there exists a sizeable number of consumers that are yet willing to pay for their music as opposed to free.

The old system has to die first along with its payola, low common denominator fare, royalty incongruencies and lack of revenue accountability before the needs of a greater musician pool can be taken care of.

So Poor Musician, be strong, and hope for the demise of the ignorant and self-serving, accompanied by the rise of a more efficient business model - but if you can’t hold out till then, learn another trade. There will be another set of musicians who will take your place who can adapt and survive better in the new economy. That is the harsh reality - note the extinction of the door-to-door encyclopaedia salesman as he got supplanted by Wikipedia…

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