Why iTunes Won't Stop File Sharing

from the well,-duh... dept

The title of this one is pretty obvious, of course, but Apple is pitching iTunes as if it will get people to stop file sharing, but plenty of people are skeptical, including the folks at BigChampagne, who track file sharing usage. They say that iTunes downloads are a very tiny drop in the bucket compared to the among of music sharing on Kazaa. While Apple is hoping to sell 100 million songs on iTunes by next April, at any one time, there are an average of 700 million files being shared on Kazaa – with the majority of them being music. They describe things like iTunes as a “niche” or “premium” market. They don’t say that it won’t be successful, but all the rhetoric about it wiping out file sharing is just a lot of talk. Ever since iTunes launched, I’ve wondered what so special about it. While it does make getting legal downloadable music easier, it completely misses the benefits of music sharing across a distributed network (at both ends of the system). It’s well designed and it’s nice that it’s there, but it’s anything but revolutionary. The only way to stop file sharing from being a “problem” is to embrace it and figure out a way to use it to the industry’s advantage, rather than fighting against it.

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Comments on “Why iTunes Won't Stop File Sharing”

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Beck says:

Different Markets

This assumes that Apple and Kazaa are in competition for the same customers, but I don’t think they are. In my opinion people are not choosing between downloading for free or buying the song. I think they are choosing between downloading for free or not obtaining the song at all.

If Kazaa did not exist, how many people would buy the songs instead of downloading for free?

To say that Apple is a niche player is to imply that all songs downloaded from Kazaa would have been purchased anyway. Apple has cornered the market, the market being people who are willing to pay for the ability to download music.

Anonymous Coward says:

No Subject Given

Mike, I know that the file sharing thing is near and dear to your heart but your statement that ‘the industry’ should quit fighting it and embrace it doesn’t make a lot of sense … least not to the industry. Some of the following statements would follow your logic of ‘can’t win so make it work’ thesis … and yes some are over the top but the logic is the same.

1) Can’t stop people from illegally copying software so we should just have them bring it to a nearby dealer, have them copy it and figure out how to make a buck .. have you seen microsofts licensing nightmare ?

2) Can’t stop drugs so just legalize them … this ones been going on for decades now.

3) People are going to die so let’s help them make it easier. Always loved the movie soylent Green where Edgar G. Robinson is ‘put to sleep’.

4) Can’t stop people from getting hand guns and using them so let’s figure out a way to get one in everyone’s hands … NRA NRA NRA.

Like I said, over the top but they all get back to the same thing: While the user/consumer may like the solution, the promoter/government/company/etc doesn’t.

You’re continuely calling for the record companies to embrace sharing but until you or someone else comes up with a way for them (them = companies, artists, etc) to continue to make the same amount of money they currently make, it ain’t going to happen. I think I would agree with you that it would be beneficial for a number of artists but probably extremely detrimental to a larger number. At least in the current state of the music industry.

When you have complete control of a industry, you do not let that business slip away simply because a disruptive technology or start up company comes knocking at your door. Think about oil companies, Microsoft, Railroad companies, etc. Eventually the government had to step in to stop them.

The music industry is using the law to fight file sharing and until the law is changed, they can and will effectively use this to maintain the status quo.

So until file sharing can be presented to the record industry in such a way that it will make them as much money as they currently make or more, they will grind it under their collective heels.

Too bring that last thought to the front, remember the industry is getting ready with a second set of law suits against file sharers? I’m willing to bet a number of file sharers figured the first round of suits would be the only one as a scare tactic. Think they (the music industry) are trying to send a clear message. WE ARE NOT GOING AWAY. It will cost them lots of money to pursue these law suits, but I’m sure they’ve done a risk analysis and have determined that letting the sharing continue unabated will cost them more.

I’m NOT an RIAA hit man or even a proponent of what they are doing. I like the idea of file sharing and understand what it could mean to me as an end user. However, I’m also a capitalist, and until I see a clear cut way for a business to make money, I do not see any advantage to letting file sharing continue.

Show them how to make MORE money than they are making now and they’ll pour money into it.

Mike (profile) says:

Re: No Subject Given

Ah, you miss the point.

The point isn’t that the industry needs to make the same amount of money it is today. The point is that, if they don’t embrace file sharing, they won’t be around to make any money in the future.

The old way of doing business is dying, and if they stick by it, it’s going to be swept out from under them. If they want to remain in business at all, they will need to embrace file sharing.

You may think the lawsuits are working, but I think that’s naive. If anything, it will just drive file sharing further underground, and will open up more opportunities for new companies that embrace file sharing to wipe out the old line companies.

And, I honestly believe that by opening up the music, and getting MORE music out there to MORE customers, you actually do have a MUCH BIGGER opportunity to make much more money… just like going from the screen to video tape and DVD has allowed the industry to make much more money. Just because the current industry doesn’t see the opportunity, doesn’t mean it isn’t there.

Anonymous Coward says:

Re: Re: No Subject Given

Nope, still got the point but you made the same argument I’m trying to make by using the DVD and Tape analogy. It was the movie industry that profitted from and more importantly, CONTROLS this.

File sharing by it’s nature takes away control from the industry and they simply can’t abide that. Without the ability to push the ‘gee whiz’ artist they would actually have to spend more money as the public decide. They couldn’t control budgets and marketing as they do now … does anyone really think that Brittany Spears and Shirika are really any good without the industry behind them ?

It’s the ‘sharing’ word that’s not working for the industry. Perhaps if they built their own network and software clients, they might embrace it … but that would cost money … lots of it .. and then you would lose the ‘sharing’ aspect of it and you’d just see a new distribution model with the same results.

I still understand why consumers want sharing … hell, it is free music …. and most people have not intention of paying for it or in attending these groups concerts or buying their marketing materials. As a businessman, I can not find a way to make the sharing model work for me. IF (big IF) I was a struggling artist, I’d jump on this horse in a second but then again, if no one bought my music … I’d still be struggling for the most part or have to play night in and night out to make a buck.

The old way of business isn’t dying … I think that’s the same line the software business used when they claimed the pirates were wiping them out. Didn’t happen and same thing is true of the file sharing. Yeah, it’s hurting them but it’s more like a small scratch than uncontrolled bleeding as they’d have you believe.

The only industry that should be worrying, currently, is the media distribution part of the equation. The businesses have recognized that distributing a digital file is cheaper than producing a CD and it’s associated liner notes. Yeah, a CD costs less than a dollar to produce, but a digital file after the first one, is measured in tenths of a cent. Now THAT I understand as being GOOD for my business.

I’m sure will still be having this debate a few years from now … should be interesting to see what, if any, progress is made during that time.

CryBaby says:

Re: Re: Re: No Subject Given

An ex-director of marketing for Warner Bros. who I recently worked with on a project stated explicitly that the old way of business in the music industry is indeed dying, and fast. Their business model relies on a tight vertical monopoly of A&R, production, promotion and distribution. That control is slipping out from under them via file sharing, internet radio and PC-based recording studios, and there really isn’t a whole hell of a lot they can do about it.

While your position is logical and well stated, I think you are making a fundamental mistake in assuming that the music industry has a choice vis a vis accepting file sharing as part of their business model. The truth is that many of the services they offer are quickly being supplanted by far more efficient mechanisms, as I mentioned above.

As far as the effects of a capitalist economy are concerned, if your business can’t compete with cheaper, more efficient and more attractive ways of offering the same service or product, well, then you’re out of business. It happens all the time and I don’t see why the major labels are any exception. It’s important to remember that record labels are not really the source of the product they sell. They do not make music (although they admittedly own quite a bit of music which does and will continue for some time to give them deep resources). Besides, using capitalist theory to defend the music labels is disingenuous. Remember that these companies have been found guilty (to the tune of about $500 million) of deliberately circumventing the natural path of a free capitalist economy via the MAP pricing scam.

If you break it down, they really only provide one service that cannot be easily replaced by superior technology-based solutions (e.g. production, “manufacturing”, and distribution) or equally effective independent service providers (e.g. lawyers, accountants and producers in the musical sense) at this time. Namely, promotion on a mass scale. The only reason they can provide promotional services superior to the competition (i.e. independent labels and artists) is because they have more money to spend. They do not own the means to promote, they simply have the financial dominance to squeeze out others’ access to promotional service providers (e.g. MTV, radio, magazines, etc.), and that financial dominance will disappear as their traditional sources of revenue dry up.

Mike (profile) says:

Re: Re: Re: No Subject Given

I think we’re basically in agreement, though I do think that the old line of business is dying (and I include software in that). I think the businesses that are still making money are an artifact of an obsolete business model. I actually think that both IBM and Microsoft realize this and are making subtle shifts in their strategy so that they’re not actually in the software business any more (it’s more obvious with IBM, but look at how Microsoft has been changing their offering and you’ll notice that they’re beginning to realize they’re not really a software company, but a service company).

It may seem like a fine line distinction, but selling digital goods is simply not a sustainable business model any more. Selling a service around digital goods, however, has tremendous potential.

The very fact that you see how starving artists and fans benefit from the system, but can’t see how to make money off of that, suggests to me that you should look a little closer. If you can provide something that people want (from both the producer and the consumer end of things, even) and can’t figure out how to make money, then I have to ask how good a business person you really are…

Anonymous Coward says:

Re: Re: No Subject Given

> The point isn’t that the industry needs to make the same amount of money it is today. The point is that, if they don’t embrace file sharing, they won’t be around to make any money in the future.

Nail, Head, Bang!

I have discovered lately that I absolutely can not stand to listen to commerical radio. I mean once you find the right PeerCast streams or personal internet broadcasts or the 100s to 1000s of creative remixes that absolutely saterize what the recording industry machine pumps out, there’s really no turning back.

It would be like attempting to replace CSI with the three stooges during prime time.

It has reached the point where I don’t even bother to buy CDs any longer. I mean what’s the fscking point… I’m going to get sued regardless of wether I puchased the music or am just sharing shared music. Even if I buy the music, I’m not helping the artists; their fscked either way for having sold their soles to the company store. The chances of getting sued are dimished if I don’t feed the monster that is going to eat me.

About 6 months back, I got an mp3 player for my vehicles and I have not bothered to tune into the radio since. The only thing I’m waiting for is ubiquitous wireless internet and at that point, I will replace my in dash MP3 players with internet connected computers and listen to live streams of what *I* want to hear (perhaps even my own station).

That not-particuarly-gradual metamorphasis is happening NOW! …to me and I’m not a particularly early adopter.

Anonymous Coward says:

File Sharing is Sooo Pase'...

I’ve already come to the realization that File Sharing will eventually become a tool used by the recording industry to herd its sheep/consumers in much the same way that they manufacture “popular” music today. Thing is, I don’t think the recording industry understands this yet.

As for me, I don’t pull my music from file sharing networks so much any more. Instead, I listen a growing variety of personal, custom streams and rip from those. Good luck finding me RIAA. Traditional P2P is much more about pulling software for evaluation than obtaining music.

Two words for those who want a better experience in obtaining music: PeerCast and StreamRipper.

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