Recording Industry Testing Out New Theory: It Deserves More Money Because It Lets You Transfer Music

from the the-audacity-of-greed dept

William Patry has a long, but fascinating, discussion on the latest trick being used by the recording industry to try to squeeze more money out of you: telling governments that because it’s now willing to let people transfer the music they legally purchased between devices, it deserves extra money for it. To back this up, it’s claiming that there’s obviously value in being able to transfer music around, otherwise why would people want that ability. The audacity of such a statement from the industry shouldn’t be understated. After all, this is the same industry that has, for years, ignored pleas from fans all over the world to get rid of DRM because it would make digital files increase in value. And, now, that the industry has finally been forced to recognize this, it seems to be claiming that all of the value belongs to the industry itself, and it’s the government’s job to hand over that “value.”

The reasoning for this seems to go back to the psychological explanation for why the recording industry keeps getting itself into trouble (and it’s similar to the story we had recently about bloggers worrying about a new aggregator). They assume that all of the “value” needs to be captured by them, and not anyone else. In economics, this is effectively an industry telling the government that it needs to be compensated for all of the positive externalities it created — even if it’s better off at an absolute level. Basically, the industry is so overvaluing its own content, that it assumes that any additional value that people get out of music, even if it’s through no effort of the recording industry itself, should be entirely converted to more revenue for the industry. As an analogy, it’s like your automobile maker demanding an ongoing cut of your salary, since without the automobile, you wouldn’t be able to drive to work. Unfortunately, though, unless you’re a copyright wonk, you might not even notice that the recording industry is trying to do this. Instead, it presents its case in a logical fashion, focusing on how much “value” it’s suddenly creating by “allowing” people to transfer the music they already legally purchased to the device of their choosing.

Filed Under: , , , , ,

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Recording Industry Testing Out New Theory: It Deserves More Money Because It Lets You Transfer Music”

Subscribe: RSS Leave a comment
30 Comments
PaulT (profile) says:

Re: Re: Re: Re:

Ahh… the industry shill. Never bother to give a name, do you?

The industry created the problem because they tried to ignore what the consumer wanted. The consumers got it anyway, so now the industry’s trying to make silly claims to get back some of the money they lost.

The solution is the same as always – give the customer what they want and the consumer will buy it. Just because they’re finally meeting one demand (no DRM), it doesn’t mean they’re doing it all right and doesn’t mean they’re meeting all the consumer demands. Sitting back and going “wah! people are stealing” instead of meeting demand is what got them into this position in the first place.

As for the claims in the article:

“To back this up, it’s claiming that there’s obviously value in being able to transfer music around, otherwise why would people want that ability.”

Yes, that’s right. There’s a definite value. I consider that value when I purchase music. I didn’t buy DRM music because it didn’t offer this value. I consider this ability to be already included in the price when I buy MP3s, just as I consider the resale rights of CDs to be included when I buy CDs.

Taking these rights away from me or trying to charge me extra for them will just result in lower sales as the product becomes less valuable. I really wish it wasn’t so hard for people to understand this.

Nick (profile) says:

In a way, iTunes is already doing this by charging a premium for non-DRM files. Why would the industry need help from government? If they think there is more value, they could just try charging more and let the market decide. Besides, you cannot reset customers beliefs going back 40 years starting with the reel-to-reel, then cassettes, the ill-fated MiniDisc, then CDRs, then MP3s that the ability to copy music you purchased (or have not) is an inherent consumer right.

Brian says:

Re: My 'Value Recognition Strategy'

NO NO NO!!! You might have this a little backwards…

The value of the CD is that the record company is providing you with the ABILITY to play the music in a CD player. The cost is: the price of the CD.

The record company is then trying to argue that because you can now do MORE with the CD (as in copy it somewhere else), you should send them more money over the original price of the CD.

So, to go with the car analogy again: you buy a car for a certain price, then realize you can use the car for more than you originally intended so you should give the car manufacturer more money.

Anonymous Coward says:

So music industry wants to charge me a ‘tax’ for my mp3 player because it allows me to format shift my music? So what if all my music purchases are MP3 to begin with? I have to pay a format shift tax when I haven’t format shifted? Take it the other way, I buy an MP3 song then convert it to CD (stupid, but possible) so where will the music industry collect a format shift tax for that? Or what if I simply convert the MP3 format to another digital format?

Stupid music industry trying to get someone else to earn their revenue for them.

TheDock22 says:

Stupid RIAA

You mean they honestly want to charge me taxes because I may or may not be ripping my files from cds to use on my iPod? That is ridiculous! If the RIAA is actually successful then I WILL start pirating music! I see no reason to have to pay them for taking my legally owned music and transferring it to my iPod! I do not share them. In face my music computer is not even setup with any P2P software. The RIAA needs to quit treating us all like crooks.

Ahmet Ertegun says:

Re: Stupid RIAA

Sorry, they’re already charging you taxes because you may or may not be ripping your files. Maybe not “you” personally, but they’re taxing the cost of blank “music” CD’s, and have always taxed the cost of blank cassettes. Because, of course, nobody might ever want to record something they’ve already paid for the rights to.

comboman says:

This is in the UK folks

The summary doesn’t say so, but this proposal is for the UK, where currently it is not legal to format-shift music that you own (unlike the US/Canada/etc where it is legal for personal use only), though of course people do it anyway and no one has ever been arrested for it that I know of. The UK music industry wants to be compensated for a narrow exemption to copyright law that other countries already have. Further, they want to be compensated by the government rather than by consumers (since it applies to music already sold as well as new music).

The other interesting bit in the article is that most of the UK music industry “losses” are not due to piracy but due to the “unbundling” of CDs into individual digital tracks. In other words, they count the fact that you don’t have to buy a full albums worth of dreck to buy the one good song off iTunes that you wanted as a net loss. Bought one song for $1, didn’t buy the other nine for $9, therefore it’s a loss of $8. Mindbogglingly “creative” accounting.

PaulT (profile) says:

Re: This is in the UK folks

Creative accounting of course, but as ever it shows the recording industry always leaves out one, very important, factor whenever they consider these things – quality.

Unfortunately, there’s no reliable indicator what what would have happened if the internet wasn’t available – e.g. would the people buying the $1 song instead of the $10 album have bought the full album if the single download wasn’t available? the assumption on the industry’s part always seems to be “yes”, I’m not so sure.

Either way, it’s typical that instead of looking at exactly why the other tracks on the album aren’t selling so well (quality probably being a big factor), they instead revert to legal action for “losses”.

Nick (profile) says:

The cold hard truth that the record industry must face is that that the market for music using their old strategy is shrinking. They are going to need to let artists go. They are going to need to lay off employees. Their presidents are going to need receive less compensation. There is no amount of creative accounting or anti-consumer business model shifts that are going to save them. They must die, the sooner the better. Upstarts who understand the new music economy with take their place. It’s innovators dilemma.

Anonymous Coward says:

Not yours anymore

Once you sell your product it is not yours anymore. It belongs to the person who bought it and they can do with it as they please. Why does the RIAA not understand this. Do they really think that they can control a market in which they don’t own the product in anymore. Companies that sell stock don’t get a dime more then their IPO price even though it jumps 200% in the next day. Why does the music industry expect any different. Increased value is a part of the free market and why people buy certain items. If there was no value in the item people would not buy it. So the RIAA should be so lucky that people create value for them so their product is worth something. We should be charging them extra for doing this work for them

Twinrova says:

Re: Not yours anymore

Once you sell your product it is not yours anymore.
Actually, this isn’t true anymore. Many companies are now stating if a consumer alters its products in any way, the consumer is liable.

Take a look at the recent changes Microsoft did to XBox360 modders. If the patch catches anything out of the ordinary, Microsoft effectively shuts the box down.

Sony is also doing this with the PSP and PlayStation 3.

In the software world (and we’ve all seen articles here), if a consumer changes code, there’s trouble on the horizon because of it.

There’s no such thing as true ownership when it comes to “intellectual” property. Companies suing companies and consumers to protect this “property” is a clear sign ownership is long dead.

Even the used CD you own isn’t yours despite any claim to the contrary. Sure, you can sell it or loan it out, but actually taking a copy of the source, converting it, and distributing it to other devices is where the industry wants you, the consumer, to pay for it.

I tend to agree it’s a bad decision by the industry, but they’re going to get their way. Just as they have with DRM, initial pricing, and distribution.

And the sheople will go along with it because they have no alternative.

In order for the system to change, steps must be taken:
1) Recording artists must realize the stupidity of their managers to go along with any practice that makes it difficult for consumers to obtain their music. Any managing unit supporting RIAA should be abandoned by the artist.

2) Consumers must stop buying music until the industry gives in. Sure, it’s nice to have a song to listen to when you want to, but as long as the money continues to flow, the industry won’t change.

3) Consumers must educate themselves to understand the difference between a manager and an artist and how revenues are split between them. Then, and only then, will consumers understand why bands tend to favor managers who can get them radio play. $0.25 of $1.00 (guestimate here, folks) beats $0.00 any time.

As long as people think $24.99 is a cheap price for a distributed product that costs $2.92 to make, the less change will happen.

Enjoy your music, folks. Expect to pay more for it next year.

mwwm says:

This is already happening in many countries.

My example from Finland:

Teosto/NCB AND Gramex ask dj’s/radio stations and such to pay a “mechanization fee” when using their own records in other formats.

Yes, two separate organizations.
http://www.teosto.fi/en/index_en.html
http://www.gramex.fi/

For example, when they’re moving albums from compact discs into their hard disk-based systems.

They are also trying to get all hard disks under taxation, no matter what their use is.

Blank media has already been taxed for ages, including cd/dvd’s, flash ram inside mp3/media players, discs used in PVR’s and such. And of course the fee is raised every year.

Example prices for a DJ:

Gramex:

# of tracks, fee in euros per year
1-300, 200 €
301-500, 220 €
501-700, 240 €
over 700, 1.28euros EACH!
Plus tax, 22%

Teosto:
4% from ticket prices.

+ other fees that apply the restaurant etc.

Wolfger (profile) says:

I don't get it.

There’s no extra fee for playing a record on multiple turntables, a cassette on multiple tape decks, or a CD in my car, my home entertainment center, and in my laptop. Why do they expect to get an extra fee for me using an MP3 on multiple devices? When the MP3 is a higher profit margin than the CD to begin with! There’s thievery going on in the entertainment industry, but it’s not the consumers who are doing it.

Nick (profile) says:

Many companies are now stating if a consumer alters its products in any way, the consumer is liable.

Just because the are saying this does not make it true. The have no legal right to do this. In your example with Microsoft, this is more of a “code is law” thing that Lessig talks about in Code and Code 2.0. But just like the record companies saying that a promo CD is their property simply by printing this on the insert does not make it true.

Glenn.Isaac (user link) says:

People who badmouth and rape people in the music industry are stupid and dishonest.

Why talk so much trash against an industry that has been providing you all the dope music you’ve chosen to use as a soundtrack to your life since it began? People in the music industry have been working to entertain you for a long long time — before it made economic sense to do so. Especially Independent labels. These are real people working hard to provide you a product that you CAN NOT LIVE WITHOUT. People who set up parties that you have to pay to get in to. Rip them off if you want, but stop lying to yourself, saying they deserve it. Nobody deserves being raped like this, guys. People are losing their homes, retirements, and security all because they set out to make music you like (Indie guys, especially). Be honest about your fucking them over, at least.

By the way, I support file sharing, and freely downloading music, and the “infinite goods = zero marginal cost = zero price” truth. I think its because I support the truth. Honesty, people. Honesty. Even if you feel the industry hasn’t been honest with you – it doesn’t matter. Be honest, people. You are fucking up the industry. Embrace it or shut up.

Glenn.Isaac (user link) says:

Either be honest, or shut up - You are stealing.

Why talk so much trash against an industry that has been providing you all the dope music you’ve chosen to use as a soundtrack to your life since it began? People in the music industry have been working to entertain you for a long long time — before it made economic sense to do so. Especially Independent labels. These are real people working hard to provide you a product that you CAN NOT LIVE WITHOUT. People who set up parties that you have to pay to get in to. Rip them off if you want, but stop lying to yourself, saying they deserve it. Nobody deserves being raped like this, guys. People are losing their homes, retirements, and security all because they set out to make music you like (Indie guys, especially). Be honest about your fucking them over, at least.

By the way, I support file sharing, and freely downloading music, and the “infinite goods = zero marginal cost = zero price” truth. I think its because I support the truth. Honesty, people. Honesty. Even if you feel the industry hasn’t been honest with you – it doesn’t matter. Be honest, people. You are fucking up the industry. Embrace it or shut up.

Add Your Comment

Your email address will not be published.

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...