The majority of my posts throughout this weblog have commented upon the music industry. More specifically the distinction between corporate and independent music labels in how they choose to deal with digital file sharing programs and the companies that own and operate them.
It is abundantly clear that mass populations of people utilize these services to illegally trade copyrighted recorded music. According to an article in USA Today, almost 7,000 law suits have been filed since 2003. Despite the risk of prosecution people continue to engage in illegal file swapping via these peer to peer internet services in large numbers. Within the music business there are two ways to approach this dilemma, embrace the new medium as a means of vast distribution, or fight it with everything you’ve got. Most independent labels have chosen the first option, most corporate labels chose the second. As I have commented on in several earlier posts in this weblog, independent labels and bands have been working closely together with these peer to peer services for years now in an attempt to distribute this lesser known music on grander scale than any independent label had previously thought possible.
The argument has been made that many people simply sample music by downloading it, and if they enjoy it, they will purchase the album. After all, the music market is rather saturated with new bands all claiming to be the next Beatles or Nirvana, and personally I would rather hear the album a few times before paying 16 dollars for something I may end up using as a coaster. However, there are also many users who simply use this service as a means of avoiding the cost of purchasing music altogether, supposedly costing the industry millions in lost revenue.
One of the main goals of having a system of legally protected intellectual property is to foster creativity by creating incentives for people to expend their time and resources in researching and developing things that could later be easily reproduced at a much lower price once conceived of and worked out. It takes a great deal of time and money for a band to write and rehearse all the songs they choose to record, and a great deal of money for the label to pay for all the studio time and engineers. Yet digital file sharing allows for near free distribution of such music, costing the label revenue from those who would have otherwise purchased the album.
So what is the industry to do about this copyright dilemma? These people are clearly violating the law, and many are now being charged with civil liability for their actions. Criminal prosecution has some potential for major deterrence, however social outcry may be too much for politicians to handle. "Musical socialism" seems like an attractive alternative at first, but what happens when all consumers become downloaders, how high will the taxes climb on playback devices? Water marking the CDs is another possibility, however, the analog hole and determined hackers could very well undermine this system. The Induce Act had potential to change things by holding these peer to peer services liable despite their lack of certain knowledge as to what end the users are utilizing their programs. This, however, never came to fruition. Things are looking rather dim for the preservation of a rule of law for intellectual property that can be digitized and instantly reproduced as well as distributed.
Looking back again at one of the main goals of copyright protection, to encourage new and innovative works, those who benefit the most from the current system are often not the authors of these great pieces of music. Rather, it is the labels. With the exception of the top selling acts, most musical groups make little to nothing from CD sales. The majority of this revenue is split between the record label, the publishing company, and any other middle men involved in the process. On average a band receives around 10 to 50 cents per album sold. More often than not bands never even see a dime of this money; they are indebted to the label for the cost of production and promotion of their album. This money will be paid back to label via revenues from album sales. Most bands earn a living by touring, playing live shows, and selling merchandise. There is no digital file sharing that can convey the energy and excitement of a live show. So for a majority of bands currently in existence and able to play, the incentive for creating new and innovative music still exists. For many bands who have never broken into the top 40 mainstream of radio and MTV this illegal distribution of their copyrighted music has given a major boost to their fan base. Individuals are now capable of downloading music by lesser known artists instantly and without paying much of a price. They now have access to melodies they would otherwise probably never have heard. These same individuals may become fans, leading them to purchase tickets to shows and/or merchandise from the band. A much larger portion of these revenues go directly to the band, giving them far more financial support. In this sense the dissolution of adherence to our current system of copyright protection has arguably aided in the success of many of these bands. Without such widespread, yet infringing, distribution of their music it is completely possible that these bands would not have as large and diverse of a fan base as they do.
Were we to adopt the idea of "musical socialism," perhaps a surcharge on top of the price of every concert ticket could be collected and added to the pool of revenues collected from the taxes on playback devices. This could help alleviate the heavy tax burden on such devices and ensure that dedicated music fans are paying more into this pool than the occasional listener. But of course implementing this system at all would require a revamping of our entire system as it currently stands, a daunting task.
Should a system of "musical socialism" prove to be simply unworkable, the fact still remains that many bands stand to benefit from the unlicensed distribution of their music through these peer to peer services. I spent the summer of 2004 interning at SideOneDummy Records, a rather successful and rapidly growing independent rock label. In a past post titled "More on An Independent Perspective," I discussed the issue with the head of P.R. and advertising for the label. He is also the lead singer for a band that had some large commercial success in the late nineties, Buck O’ Nine. He acknowledged the fact that these services have caused a bit of a drop in album sales, but they have done wonders for the dissemination of the music created by these bands. This in turn leads to more ticket sales.
The problem that remains here is the capital needed to record a professional album. This can be astoundingly expensive. As I mentioned earlier, this bill is initially paid by the label, they are then reimbursed through album sales. Without the revenue generated by album sales many bands would have no means of recording a fully produced studio album, and therefore no music to distribute digitally in order to build a fan base that would be willing to purchase concert tickets. Should we decide to adopt a system of "musical socialism" labels could be paid through the revenue pool made up of the taxes from playback devices and concert tickets. Or labels may resort to taking a large portion of the revenues from concert tickets in order to make up for all the lost profits due to a lack of CD sales. Again this would likely lead to a rise in the price of such tickets.
These ideas and comments are only applicable to the contemporary music community, where live performance is common and a large portion of the business. Labels would loose large revenues from all their old and retired artists who still sell thousands of albums a year yet are unable or desire not to perform publicly. This method would also be inapplicable to DVDs or any other copyrightable subject matter where live performance by a specific group is not a large part of the industry.