Why The Record Labels Are Still Confused: The Difference Between Transformative And Incremental Change

from the the-innovator's-dilemma dept

A few weeks back, I shared my video on the innovator's dilemma (based on Clayton Christensen's work). The key point could be summarized as noting that legacy industries are fine with incremental improvements, but they run into a huge roadblock when it comes to transformative changes -- such as disruptive innovations that change the very way that business is done. It's just really really difficult for legacy businesses to comprehend, let alone adapt, to true transformative (or disruptive) innovation. Musician Steve Lawson recently had a fantastic writeup discussing the difference between transformative and incremental change in the music industry, and why it's been so difficult for many of the "old guard" to understand what's happening. He discusses how previous innovations that the record labels are used to were incremental changes:
The invention of cassettes, and 8-track cartridges was an incremental change - suddenly there were more ways of selling hard copies of recorded music. More places to play them, new machines needed, new possibilities for the length of music that could be issued in a single entity (90 minute cassettes were pretty standard, and some enterprising labels took to reissuing 2 albums as one on cassette, thus breathing new life into back catalogue.)

The same happened again with CDs - more incremental change - the chance to pretend it was higher resolution than vinyl (a lie) that it was indestructable (a lie) and that you could take it anywhere with you (true). CDs were a breath of life to a fairly static industry - suddenly, all the people who were teenagers in the 70s at the dawn of stadium rock were now successful 30-somethings with disposable cash and a deeply fragile sense of self.
But, of course, what we're seeing now is totally different. The internet presents a disruptive or transformative change.
When you take an industry that has 4 big costs - recording, manufacture, distribution, promotion - and remove 3 of them, that changes everything. All of the assumptions about how much it costs to make a record, what infrastructure is needed to make a sales team effective, who needs to own the trucks and delivery guys who take your product to shops - they all disappear. They are all now choices that you make, not assumptions.
The problem for the industry is that it structured its entire business around the idea that those four big costs are a big problem that any musician needs help with -- and they're willing to sign their lives away to get that help. But the transformative change that occurs with the internet is that much of that becomes significantly less expensive, and the need to sign your life away becomes not a need, but a choice -- and the businesses that were built to only work if musicians signed their lives away suddenly find themselves in trouble.

As in the innovator's dilemma, however, the labels still don't recognize this. They can only think in terms of the incremental change of "how can we sell more units of music." That's the only change they've ever really known. They're not prepared for a situation where the selling of music may not even make sense, and the level of control over an artist has changed dramatically. But they still view -- as is often the case in the innovator's dilemma -- as something to be dismissed. The fact that musicians can record for less money... well, it's not as good as having a record label bankroll you hundreds of thousands of dollars. True, but it's pretty damn good and getting better. The fact that you don't have to go through an expensive processing plant to print CDs? Well, it may not look quite as nice, but the technology again gets better and cheaper everyday. The fact that the music can be distributed and promoted for free online? The labels really still don't quite get that part of it, but it's been working great for musicians who know how to use it to their advantage.


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  1.  
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    The Anti-Mike, Dec 21st, 2009 @ 10:10am

    The only true transformative change is that people have learned how to steal (using Trent Reznor's term) music. There is nothing much more to it. A huge percentage of the market is lost not because of any other change than this simple fact.

    The internet for the most part has moved local bands from guys sticking up posters all over town to guys running a myspace page and giving away music that most people will never hear and probably wouldn't want anyway.

    Cheaper recording equipment is a constant factor since the first recordings where made. 30 years ago, it was Roland's mini 4 track portable studio on a cassette tape (all 4 tracks in one direction) that was such a jump that it was suppose to bankrupt the music industry. Now it's PC based digital recording. That really doesn't change the basic facts of music: Good music sells, bad music doesn't. All the recording gear in the hands of low talent no-stars just means that the volume of crap goes up.

    So for the record companies, the move from records to CD to online digital sales is only an incremental move. The widescale piracy of music is transformative, only that an entire generation has been trained to take what they want without paying. I call it Generation Diss, the generation that disrespects everyone.

     

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  2.  
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    Anonymous Coward, Dec 21st, 2009 @ 10:15am

    Re:

    On behalf of Generation Diss, blow it out your ass

     

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  3.  
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    The Anti-Mike, Dec 21st, 2009 @ 10:21am

    Re: Re:

    In the real world of Generation Diss, that would be enough for someone to cap your ass. Welcome to living in the muck and mire you have created.

     

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  4.  
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    Anonymous Coward, Dec 21st, 2009 @ 10:23am

    Re:

    Well, hey, if the entire generation has a "screw the world" attitude, then I guess all you can do is kick back and watch as known society implodes on itself.

    I'll bring the popcorn, you bring the crow.

     

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  5.  
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    Ron, Dec 21st, 2009 @ 10:25am

    Re:

    Man, your remind me of my 16 year old. He goes on about stuff that makes no sense either. But at least he has a brain and will think about stuff when he is told different. You on the other hand just beaks off about everything and says nothing. Do me a favor and STFU, im tired of going through comments and reading your stupidity.

    You obviously work for the Music industry. Your time is over, we dont need your over priced garbage CD's anymore. We broke up with you years ago and your still stalking us, get over it and move on.

    As for the crap factor, I have paid 28 dollars for a CD and got only 1 good song off of it. Im sure im not the only one.

     

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  6.  
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    The Anti-Mike, Dec 21st, 2009 @ 10:27am

    Re: Re:

    No, I don't work for the music industry (or the movie industry for that matter). Sorry.

    Glad to see your 16 year old has such a high IQ. Perhaps you want to make sure he gets into a good university after?

    As for your $28 CD, all I can say is that if you are stupid enough to pay $28 for a CD, you owned yourself.

     

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  7.  
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    jjmsan (profile), Dec 21st, 2009 @ 10:30am

    Re: Nobody obeys the law

    If a "huge percentage" of your market will not buy your product if would seem to be fairly transformative. Would you also like to explain how prohibition was a huge success?

     

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  8.  
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    The Anti-Mike, Dec 21st, 2009 @ 10:38am

    Re: Re: Nobody obeys the law

    Another one attempting to bring in something that isn't exactly a good matching example.

    The market won't buy when they can get it for free without risk. Mike has managed to stay away from the situation in Sweden, where laws that made piracy much more difficult have lead to an 80% increase in online music sales and a near 20% increase in overall music sales. It appears that once the product is no longer easy to get for free without risk, people who value music are shockingly willing to pay for it.

    Mike doesn't want to discuss this, as it pretty much shoots his "FREE!" mantra out the window. People not only value music, but they are more than willing to pay for it when you remove "infringing" as an option. Most people wouldn't shoplift a CD, would they?

    As for prohibition, well, we aren't at all in the same situation, are we? it isn't like there is no music out there, it isn't like all the radio stations and such have been shut down, it isn't like MP3 players have been made illegal. So your example it rather far off base.

     

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    Richard (profile), Dec 21st, 2009 @ 10:38am

    Re:

    The only true transformative change is that people have learned how to steal (using Trent Reznor's term) music. There is nothing much more to it. A huge percentage of the market is lost not because of any other change than this simple fact.

    Whereas in the past only the recording industry knew how to steal music.

    The public only went along with copyright because in the early days they didn't possess the technical ability to copy and later because it was never enforced against them.

    It was a deal between publishers which persisted because it was of mutual benefit.

    If the public don't like the deal they won't accept it. If the government tries to enforce it then eventually the government will be voted out.

    If you want the public to continue to accept a deal (probably not the current one but one that lets you survive) then you need to be nice to them!

     

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    :Lobo Santo (profile), Dec 21st, 2009 @ 10:39am

    Re: Re: Nobody obeys the law

    "Would you also like to explain how prohibition was a huge success?"
    Oooh! I know this one!!
    (Ah-hem)
    It was a huge success for the gray and black markets; by making something illegal it forced law-abiding citizens to stop making money from it and forbade the government from collecting taxes upon it. Thusly, organized crime syndicates found alcohol to be a lucrative, tax-free enterprise which they could readily enforce control over thru violence (as the police could not be called to settle disputes over alcohol industry/ownership claims). For modern examples see: marijuana, cocaine, tobacco (you'll have to wait a few years for that third example, hehe), prostitution, free-thought, free-enterprise, liberty, independence, or any other illegal thing which can be exported from one place to another.

    :D

     

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  11.  
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    :Lobo Santo (profile), Dec 21st, 2009 @ 10:42am

    Re: Re: Re: Nobody obeys the law

    "...but they are more than willing to pay for it when you remove "infringing" as an option."
    I think I see; when one has no choice (see: forced) to buy something which could be distributed at almost no cost; the "choice" to purchase or go without becomes less odious.

    Lesson learned, thank-you, O wise one.

     

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  12.  
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    Ron, Dec 21st, 2009 @ 10:44am

    Re: Re: Re:

    He got it from his Father!!

    28 bucks was around the going price in Canada when CD's first came out. The Music industry told us that the price would go down after the technology was paid for. The only time I saw the price go down was when everyone started downloading music. Too late to get me back. I might have felt bad if they had not been screwing me for years. I now support the true artist, not the middle man.

     

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    Richard (profile), Dec 21st, 2009 @ 10:45am

    Re: Re: Re: Nobody obeys the law

    People not only value music, but they are more than willing to pay for it when you remove "infringing" as an option.

    There is no technical sound way to do that.

    All you can stop are the publicity mechanisms of filesharing. (The bit of the iceberg that is above the water).

    Ironically this doesn't stop filesharing of already popular works (you can get them from your mates) but harms the ability of lesser known acts to spread the word.

     

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  14.  
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    Anonymous Coward, Dec 21st, 2009 @ 10:45am

    Re: Re: Re: Nobody obeys the law

    What Mike ignores is your pipe-dream that infringement can be removed.

     

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    The Anti-Mike, Dec 21st, 2009 @ 11:05am

    Re: Re: Re: Re: Nobody obeys the law

    Nobody is forced to do anything. There is no FORCE here. Nobody is being run through at gunpoint by jackbooted thugs and forced to buy music.

    The choice is simple: If you want music (like if you want a car, a house, or whatever) you can pay the asking price or do without. If enough people don't pay the asking price, that price may change or the product will be removed from the market.

    Nobody is forcing you to buy anything, that is your choice.

    Even your ugly goldfish knows that.

     

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  16.  
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    Esahc (profile), Dec 21st, 2009 @ 11:07am

    Re: Re: Re: Nobody obeys the law

    My rum running grandpa would be proud.

     

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  17.  
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    jjmsan (profile), Dec 21st, 2009 @ 11:12am

    Re: Re: Re: Nobody obeys the law

    Iknow this one too, it is the example is inconvient to my argument so I will pretend it doesn't apply. You should at least have gone the way Lobo Santo went. Since you can't see it I will point it out for you. For public health and moral reasons the government made illegal something the majority of the population wished to do going so far as to amend the constitution. Large amount of money and resources were expended to enforce the law. Currently by your own estimate a huge proportion of the populace is not obeying the law. Enforcement has to be one at a time because it is so easy to break this law anyone can do it. In fact it is likely that everyone enfringes using either Xerox machines, scanners, or copiers. Yet you insist that law will stop it dispite the fact the both alcohol and drug use indicate otherwise. So please explain why it will work this time.

     

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  18.  
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    nasch (profile), Dec 21st, 2009 @ 11:13am

    Re: Re: Re:

    No, I don't work for the music industry (or the movie industry for that matter). Sorry.

    Why are you so heavily in favor of the copyright industries? Not trolling, just honestly curious. I assumed you were employed in one of those industries, but if that is not the case, why do you hold your positions?

     

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  19.  
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    WeDontNeedNoStinkinMusic, Dec 21st, 2009 @ 11:30am

    Re: Re: Re: Re: Re: Nobody obeys the law

    I remember a court case the music monopoly lost a few years back. It had something to do with price fixing, you do remember that dont you. Just in case, here is one of many sites which addressing such: http://www.stereophile.com/news/11461/index.html

    TAM -> "Nobody is forcing you to buy anything, that is your choice."

    There are several reasons why your statement is incorrect. 1) Many countries have levies upon recording material which is then split up amonst the members of the music cartel.
    2) Almost all stores pipe (crappy) music over the PA. They charge the customers in order to cover this (unnecessary) cost.
    3) Most radio and TV is supported by ads which employ music. When you purchase one of those products, you pay.
    4) etc, etc
    5) In the future, this list will include a few more items on the music catels wishlist, like an ISP surcharge for example.

    So, yeah. No one is forcing anyone to purchase anything. I suppose one could live in a wilderness hut and write their manifesto, but I doubt anyone here is that crazy.

    Would it then be correct to say that everyone is strongly encouraged to pay for music?

     

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  20.  
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    Christopher (profile), Dec 21st, 2009 @ 11:37am

    Gunpoint.

    I like Anti-Mike, a good devil's advocate keeps it honest here.

    I'll just point out that consumers have a weapon now, that of infinite copies, to wield against what is reasonably seen as abuse: high-priced content, limited input into radio playlists, domination of the outlets for emerging or aspiring artists.

    I would say only two of the costs have been diminished, manufacturer and distribution. Those have been reduced but not eliminated. Promotion is still a cost, as is recording, and both should remain a focus for a label.

    Driving out the old middlemen was one thing. Now, how do we get access to good music and not screw over the artist? Labels, I could not care less about but assume they have a 10-25% interest in an artist. What's the outline of a solution here? It ain't DRM, and it ain't a time-machine.

    -C

     

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  21.  
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    Richard (profile), Dec 21st, 2009 @ 12:06pm

    Re: Re: Re: Re: Re: Nobody obeys the law

    The choice is simple: If you want music (like if you want a car, a house, or whatever) you can pay the asking price or do without. If enough people don't pay the asking price, that price may change or the product will be removed from the market.

    and economics says that the asking price will be reduced until it is close to the marginal cost of production.

    Since this is now zero the price must reduce to near zero unless there is a cartel operating.

    If some parties are able to make money whilst offering music for free they every one else will have to do likewise or go out of business.

     

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  22.  
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    ECA (profile), Dec 21st, 2009 @ 12:13pm

    RECORDING

    Ok,
    recording your own music, or even making your own dubs has long been happening. so forget that problem, as it will ALWAYS BE THERE..

    On subject.
    The problems with Advancing tech comes with SECURITY on the product.
    Going up to NEW tech and distribution, the Companies want to know that the product is secure. In the companies THOUGHT, they dont want you to TAKE the music off of the device.
    What they NEED to do is MAKE a ORIGINAL that is to HIGH GRADE to copy. that ANY copy that is made can not be played at its TRUE format. unless you have the Proper device or driver to play the format.

    Say you have music on a FLASH card. ON that flash is a Program/driver to PLAY the music on the device. Its a 1 off program and will not work if copied. Its not in a format that a computer/windows will use. Its an independent program. Then the music is a 1 off format, that isnt/cant be used UNLESS this program is used. Even if the music is copied, you would not get the full EFFECTS of the music as played by the INCORPORATED player/driver.

    another trick is to KILL OFF copy protection. THAT alone would drop the prices by 1/2.

     

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  23.  
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    Jon, Dec 21st, 2009 @ 12:33pm

    Re: Re: Re:

    So how do you explain the boom in online sales? What seems clear to me is that:

    1. Many people just want to get music online, and are content to pay for it if they can find what they want.

    2. A lot of people who pirate music will go on to buy that same music if they enjoy it. I bet listening posts at music shops boil your blood, right? How dare they hear music for free!

    3. Some people who steal music would never, ever buy that music. Ever. They would have just "done without", or stolen it by a more conventional means, or whatever. In my day, this same argument was about cassette tapes, which also did not "kill the industry".

    Frankly, when I was younger there'd be a lot of shoplifting of music, which would then be sold directly to some used music store. At least in this modern age, if someone's downloading the music then you can be pretty sure they're at least listening to it, which could mean real sales down the road. Many poor students grow up to be productive members of society, who get the itch to buy up all that great music they listened to when they were young. Ah, nostalgia shopping.

     

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  24.  
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    :), Dec 21st, 2009 @ 12:41pm

    Billions are thieving every day.

    Radio listeners are thieves they don't pay.

    Copyright enforcement doesn't work take Asia for example in south korea they have 3 strikes and some of the most draconian copyright laws in the world still it didn't make piracy any less, in Japan the same thing happens and the laws even take into account moral rights that give artists the right to decide how the world should be displayed still piracy is rampant, yah it works great it doesn't stop people from listening or even buying but stops commercial uses, limits public dissemination of the works by word of mouth and is like a gun pointed at the consumer.

    I hope the industry go crazy and get all they want, it will change nothing in the piracy thing but it will feed an increasing discontent and help build alternatives that can and possibly will force the industry to review their ways.

    If you don't like the industry and are disgusted with it go to places that offer music for free with liberal licenses like CC Commons Sharealike 3.0.

    Just type "open music", "open source music", "CC commons music" and you will find lots of good music for free without restrictions.

    Magnatune, Jamendo, mutopia, miro, and others.

    There is no sense is keep talking about this.
    One camp doesn't wanna to change that is fine, I'm for finding solutions and the solution is to create a strong and vibrant alternative.

     

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  25.  
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    Anonymous Coward, Dec 21st, 2009 @ 12:47pm

    Re: Re: Re: Re: Re: Nobody obeys the law

    "Nobody is forced to do anything. There is no FORCE here. Nobody is being run through at gunpoint by jackbooted thugs and forced to buy music."

    You are wrong.

    Music is something that people need, not something people want. There is no stopping people from getting music, and if some companies attempt to do that (through exorbitant pricing or by limiting access) they get circumvented.

    New releases aside, why is music from 1960 still in their back catalogue and selling for almost as much as their new stuff? THAT is stealing, and THAT is extortion.

    I am not necessarily pro-piracy, but I am pro-what-it-stands-for.

     

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  26.  
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    :), Dec 21st, 2009 @ 12:48pm

    Need free scores?

    International Music Score Library Project

    There you can find a lot of free in the public domain musical scores that you can use GNU lilypond, MuseScore, Denemo or others to play.

     

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  27.  
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    John Fenderson (profile), Dec 21st, 2009 @ 12:50pm

    Re: Gunpoint.

    "I would say only two of the costs have been diminished, manufacturer and distribution."

    Promotion cost is reduced as well, but let's ignore that for now.

    Here's how the economics change in favor of the artist: without a label taking all or nearly all of the money generated by the artist's work (it's not 20-25%, it's more like 90-99%), the artist doesn't need to sell as many copies in order to make the same profit. In fact, the artist can make a better living even when selling an order of magnitude less. Or even less than that.

    In the past, in order for the artist to make above minimum wage by selling music he had to develop a huge audience. Now, it's perfectly easy to make the same amount of money with an audience of a few thousand people.

    If your goal is a few thousand (or, say, a couple tens of thousands in order to make some comparatively serious money -- more than you'll probably ever see through a record deal,) then things are much easier. Assuming your music is good, you can amass that size of an audience yourself with minimal marketing effort (and dollars). People are doing this right now.

    This is the part of the transformation of the industry that excites me. The effect of the record labels has been to homogenize music. They need huge audience sizes and therefor their music tends to be as one-size-fits-all as it can be. With them out of the picture, we can see a truly amazing variety of music. Any given "consumer" of music can develop a library that really fits their personality and tastes and isn't just an approximation, and artists who would never have been commercially viable in the past can actually make a living.

    The death of the traditional label system will be the best thing that has ever happened to commercial music.

     

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  28.  
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    John Fenderson (profile), Dec 21st, 2009 @ 12:53pm

    Re: Gunpoint.

    "What's the outline of a solution here?"

    Oh, I forgot to answer you most important question!

    The short answer is I dunno, it hasnt' been invented yet.

    The long answer is that we can see the clues of the shape it will take in the solutions that currently exist. I find most of my new music through music blogs and recommendations from my friends. Some people use online distributers, and others use "learn your tastes" music search engines.

    The one thing in common is that these are all crowd-like. In the end, people of similar tastes will flock together and share their discoveries. The things that will help are the things that will encourage this.

     

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  29.  
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    :), Dec 21st, 2009 @ 1:06pm

    One real problem is how to pay.

    Has anyone try to pay anything online it is not easy and in many occasions is not even secure.

    You have to have a credit card, international laws make things difficult(see the guy that bought music in Canada), prices are high and people expect the young to pay anything or even adults?

    I could use a preload debit card that would pay and limit my purchases so I know I will not get in debt or have any hidden fees but that is not an option. They do exist but people just don't know about those things and vendors just don't accept them.

    Want to see an explosion of sales?

    Make cards that can be bought at any atm and people will buy like crazy online and make better international treaties that will promote something instead of trying to control everything.

     

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  30.  
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    #46, Dec 21st, 2009 @ 1:09pm

    "the chance to pretend it was higher resolution than vinyl (a lie)"
    Ahem. I'll bet he owns tube amp, too. And $12K/m speaker cords and a main power cord conditioner.

    CD can contain everything humans are able to hear (and a bit more), sound does not degrade with use, and, most important IMHO, media has no sound of its own, no hiss, no "snap, crackle and pop".
    And you don't need to be an electrical engineer to get the most out of a CD.

     

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  31.  
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    chris (profile), Dec 21st, 2009 @ 1:15pm

    Re:

    you sound like the bum from a clockwork orange, right before alex kicks the snot out of him:

    It's a stinking world cause there's no law and order any more. It's a stinking world because it lets the young get on to the old like you've done. Oh, it's no world for an old man any longer. What kind of a world is it at all? Men on the moon and men spinning around the earth and there's not no attention paid to earthly law and order no more.

     

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  32.  
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    hegemon13, Dec 21st, 2009 @ 1:22pm

    Re: RECORDING

    You have just described a system that absolutely no one would put up with. It would be way too much hassle just to hear a song. It sounds like a completely ridiculous, anti-consumer style of DRM, and the average buyer would find it too troublesome to bother with.

    Oh, and here's the best part: the system would be cracked within a few days or weeks. Then, where are you? You have an expensive, difficult-to-use system that is no longer secure, and you've just given your customers that much more reason to bypass it and go for the pirated stuff. Epic fail, sir.

     

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  33.  
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    chris (profile), Dec 21st, 2009 @ 1:31pm

    Re: Re: Re: Nobody obeys the law

    Mike has managed to stay away from the situation in Sweden, where laws that made piracy much more difficult have lead to an 80% increase in online music sales and a near 20% increase in overall music sales.

    i suppose you are talking about the guardian article which has a few problems with it.

    1) it uses IFPI numbers, the european version of the RIAA, the group with the biggest axe to grind against the pirate bay.

    2) it was an 18% increase in revenues, not 80%.

    3) new legal download services like spotify went online in sweden during the same time frame. remember, the RIAA and the like don't just hate TPB, they also hate legal download services as well.

    4) TPB is still up, still serving torrents (and ads), and now offers a vpn service to get around ISP tracking. good job guys, you just made TBP even more profitable.

     

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  34.  
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    Big Al, Dec 21st, 2009 @ 1:35pm

    Re:

    "Good music sells, bad music doesn't. All the recording gear in the hands of low talent no-stars just means that the volume of crap goes up."
    Which is why the record labels find themselves in trouble these days - in the main it's due to the 'quality' they're producing

     

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  35.  
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    ABPT, Dec 21st, 2009 @ 1:36pm

    Re: Re: Re: Re: Nobody obeys the law

    TPB has ads?

     

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  36.  
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    Anonymous Coward, Dec 21st, 2009 @ 1:38pm

    Re: Re: Re: Re: Re: Nobody obeys the law

    >>Nobody is being run through at gunpoint by jackbooted thugs and forced to buy music.

    Please don't give the RIAA any ideas.

     

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  37.  
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    not a hifi snob, Dec 21st, 2009 @ 1:48pm

    Re:

    re: CD and sound qualities.

    You are correct, but those that manipulate the sound prior to recording upon the CD are guilty of what has been called a loudness war which degrades the sound quality to levels that are unacceptable.

    ref: http://en.wikipedia.org/wiki/Loudness_war

     

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  38.  
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    reboog711 (profile), Dec 21st, 2009 @ 1:53pm

    How did the Internet affect the cost of recording?


    ...the internet presents a disruptive or transformative change.

    When you take an industry that has 4 big costs - recording, manufacture, distribution, promotion - and remove 3 of them, that changes everything.


    Although I agree that the Internet has been disruptive to the music business in terms of manufacturer and distribution, I do not agree that the Internet has changed the cost of recording. The cost of recording has changed with the introduction of low cost gear that can be used in your own home; but that is completely independent of the Internet, isn't it?

    I also wonder if that more money has to be spent on promotion / marketing these days due to the vast numbers of acts out there.

     

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  39.  
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    Dark Helmet (profile), Dec 21st, 2009 @ 2:18pm

    Re: Re: Re: Re: Nobody obeys the law

    "For public health and moral reasons the government made illegal something the majority of the population wished to do going so far as to amend the constitution."

    Sorry, sir, but you need to reread your history as to why prohibition was instituted. The vocal minority of the dry purists and temperance movement had always been there. Unfortunately, until the late 1910's the largest income generator for the US Government was alcohol taxes in the form of customs duties. Once that had changed as a result of the income tax, they were free to pander to puritan and temperance voters.

    It was also the result of the biggest lobbyers for alcohol remaining legal were German Americans, they being none too popular at that time in American history....

     

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  40.  
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    Michael Long (profile), Dec 21st, 2009 @ 2:28pm

    Re: Re: Re: Re:

    "The Music industry told us that the price would go down after the technology was paid for. "

    CDs were $30 or more on introduction. Ten years ago it averaged $15-18 a disk. Now WalMart, Target, Amazon, and even my local grocery store sell most of them at $12-15. Or less. There are also the $10 and $5 and even $2 discount bins...

    So prices have in fact decreased over the last twenty years. And they've dropped when the price of nearly everything else has INCREASED due to inflation. (Making a $12 disc about $5 in 1980's dollars.)

    The facts don't back up your rationalization. Prices have dropped. Dramatically.

     

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  41.  
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    Nick Dynice (profile), Dec 21st, 2009 @ 2:40pm

    Re:The Anti-Mike

    I think you mean Tascam's 4 track recorder.

    You must be with one of the old record labels, and your responce proves that you are still confused about the difference, and by saying "an entire generation has been trained to take what they want without paying" is throwing morals into the equation which is a staw-man. It is no different than saying that rock and roll is just noise and the devil's music, and insult to classical music, etc, back in the 60's.

    It is a diss to think that we will need to pay to discover music we might want to own physical versions or see performances of. Stop making assumptions based on your own bias and start asking more questions regarding new consumer behaviors.

     

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  42.  
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    Anonymous Coward, Dec 21st, 2009 @ 3:29pm

    Re: Re: Re: Re: Re:

    Actually, you can get a CD on the internet for $0. That is a dramatic price decrease.

     

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  43.  
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    Anonymous Coward, Dec 21st, 2009 @ 3:33pm

    Re: Re: Re: Re: Nobody obeys the law

    You just have to turn the internet, a many-to-many infrastructure, into something more like television, a one-to-many infrastructure.

    How hard could that be? Presto! No more infringement. At least on the telenetintervision. Infringement will still occur in real life.

     

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  44.  
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    #46, Dec 21st, 2009 @ 3:43pm

    Re: Re:

    True, but Loudness War has nothing to do with technical capabilities of a CD.
    Saying vinyl has better 'resolution' than CD is just ridiculous.

     

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  45.  
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    jjmsan (profile), Dec 21st, 2009 @ 4:20pm

    Re: Re: Re: Re: Re: Nobody obeys the law

    Excuse me how does that conflict with what I said? First of all I had relatives in the movement and they pushed it for health and morals. Secondly, I was using official speak. Please link to copy where it says "the federal government announced today that it would pander to the puritans and introduce a constitutional amendment banning the production, comsumption or possession of alcohol." Will it also contain a passage saying "the senate announced due to the large amount of money they had received from the recording industry they were lengthing the number of years copyrights run again."?

     

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  46.  
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    Alex Eman, Dec 21st, 2009 @ 5:08pm

    Re:

    The only true transformative change is that people have learned how to steal (using Trent Reznor's term) music. There is nothing much more to it. A huge percentage of the market is lost not because of any other change than this simple fact. - The Anti Mike

    You are so so right!

    Some people have developed a culture of theft and selfishness.

    An artist spends his/her life developing their craft and yet people ( as we can see from the threads )still feel they have the right to steal it, just because they can!

    No different from going into a store and shoplifting, only that you haven't been caught - yet.

     

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  47.  
    identicon
    Alex Eman, Dec 21st, 2009 @ 5:08pm

    Re:

    The only true transformative change is that people have learned how to steal (using Trent Reznor's term) music. There is nothing much more to it. A huge percentage of the market is lost not because of any other change than this simple fact. - The Anti Mike

    You are so so right!

    Some people have developed a culture of theft and selfishness.

    An artist spends his/her life developing their craft and yet people ( as we can see from the threads )still feel they have the right to steal it, just because they can!

    No different from going into a store and shoplifting, only that you haven't been caught - yet.

     

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  48.  
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    The Anti-Mike, Dec 21st, 2009 @ 6:11pm

    Re: Re: Re: Re:

    I hold those positions for a number of reasons, and I express them here because I often find that what Mike is pushing here to be somewhere between amusing and horribly misleading much of the time.

    Copyright, patent, and even trademarks are important parts of the large business investment structure. Companies and indivudals can invest in a new idea or expression with the reasonable hope of a return. It has allowed for some very signficant advances in medicine, science, and the arts, with investments of hundreds of millions are more made to create new products that we can all enjoy for reasonable prices.

    We can go see a $300 million movie like Avatar for a $10 ticket price. Without the protections that copyright and trademarks bring to the situation, they may not have been able to justify that type of spending or expense. The ticket sales, the future DVD sales, PPV, and all the related merchandise and tie-ins make the original work possible. (it also allowed for classic movies like Pootie Tang, but hey...)

    Too often when Mike pushes here is a modern day version of Voodoo Economics, in this case it's "if everyone stops paying, we will all get rich". It would be almost comical if he wasn't so serious about it.

    I like the products, I have been a life long consumer of movies, music, and other forms of entertainment, and I would like for that to continue for another 60 or 70 years so I can continue to enjoy it. If you want to rip down something that is working, propose an alternative that works. I haven't seen much here that would work as complete business model from end to end, just fragements of things that might work.

    Good ideas are good ideas, but a practical replacement for the entertainment industry has to have the potential to actually work out without any voodoo.

     

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  49.  
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    The Anti-Mike, Dec 21st, 2009 @ 6:18pm

    Re: Re: Re: Re: Nobody obeys the law

    2) it was an 18% increase in revenues, not 80%.

    The numbers are 18% and 80% - 18% increase in recorded music sales overall, and an 80% increase in sales of music online (downloadable).

    4) TPB is still up, still serving torrents (and ads), and now offers a vpn service to get around ISP tracking. good job guys, you just made TBP even more profitable.

    Actually, TPB has just raised the costs of downloading in Sweden, taking it from zero to whatever they charge per month for VPN. They have in the end shot themselves in the foot, by making it just as reasonable to buy music as it is to give a bunch of pirates your credit card number.

    The Swedish situation is very signficant, it is the first clear indication that diminished piracy increases music sales. Numbers this significant in the other direction would be headline news on this site, but Mike doesn't want to touch it.

     

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  50.  
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    Mike Masnick (profile), Dec 21st, 2009 @ 6:59pm

    Re: Re: Re: Re: Re:

    Copyright, patent, and even trademarks are important parts of the large business investment structure.

    I once believed the same thing. Then I started looking for the evidence. And it doesn't exist. I have asked you in the past to present some evidence. You do not. At best you have shown some weak correlations -- all of which have been explained away in great detail by numerous studies. And yet, when that's pointed out to you, you display an amazing ignorance of basic history, math, economics, statistics and business, stomping your foot and insisting you must be right. It is very childish.

    Companies and indivudals can invest in a new idea or expression with the reasonable hope of a return.

    Indeed. And that return is selling something in the market. What things like copyrights and patents have done is distort the market, in ways that are socially and economically detrimental.

    We can go see a $300 million movie like Avatar for a $10 ticket price. Without the protections that copyright and trademarks bring to the situation, they may not have been able to justify that type of spending or expense

    Right. "May not." Or they might have. We have shown evidence, repeatedly, that large projects can get financed even without artificial protectionism. Your response? We're still waiting...

    Separately, I have never said we should get rid of trademarks. This fits with your typical critique of my position in your comments: you nearly always misstate my position entirely, and make claims that are simply not true (such as claiming I just support everything being "FREE!" or that I wish to get rid of trademarks). When you purposely misstate my position, it is difficult to take you seriously as a critic. Furthermore, when you are factually inaccurate in your statements, and present yourself as being ignorant of basic economics, history, statistics, math or business, it is difficult to take you seriously. Furthermore, when we take the time to explain basic concepts to you -- sometimes repeatedly in hopes that you might understand -- you continue to insist that your position must be correct. I am reminded, of course, of our attempt to explain marginal costs to you, and every time we finished, you went back to talking about average costs, refusing to recognize that the two were in any way different.

    I have no problem with people criticizing incorrect statements on here. But that is not what you do. You purposely misrepresent my position, and speak (obviously on purpose) from a position of near complete ignorance.

    Too often when Mike pushes here is a modern day version of Voodoo Economics, in this case it's "if everyone stops paying, we will all get rich". It would be almost comical if he wasn't so serious about it.

    I have done no such thing. What I have presented is serious economics, backed by hundreds of reports -- both historical and modeled. I have asked you to present *anything* that disproves them, and you have not.

    I am not talking about "Voodoo economics." I'm not talking about new economics. I am merely showing what well accepted economic principles show.

    I like the products, I have been a life long consumer of movies, music, and other forms of entertainment, and I would like for that to continue for another 60 or 70 years so I can continue to enjoy it.

    My position as well. Which is why I am actively working on helping those industries adjust to a changing marketplace -- successfully. Your response has been to pretend that new technologies don't exist and that everything will remain the same.

    In the past, we have asked you how you would help the industry adapt, and your answer is that piracy has to go away. Good luck with that. In the meantime, we keep seeing more and more creators embrace what the technology allows and find themselves much better off than they were before.

    If you want to rip down something that is working, propose an alternative that works.

    And here you misstate everything again. It is not us "ripping down" anything. It is modern technology that ripped down the system a decade ago. We're pointing the way to the next thing. What are you doing? Looking at the past and saying "if only..."

    I haven't seen much here that would work as complete business model from end to end, just fragements of things that might work.


    Your inability to put it all together does not mean it has not been presented. It also does not mean that there are many in the industry who do understand.

    Good ideas are good ideas, but a practical replacement for the entertainment industry has to have the potential to actually work out without any voodoo.

    Indeed. Good thing it is working.

     

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  51.  
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    you still hiding under the bridge?, Dec 21st, 2009 @ 7:04pm

    Re: Re: Re: Re: Re: Nobody obeys the law

    Dont expect the troll to answer any of your points

     

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  52.  
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    Not a hifi snob, Dec 21st, 2009 @ 7:07pm

    Re: Re: Re:

    Are there any CDs which posess this high quality you say they have ? LPs have this by default, you do not need to test them.

     

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  53.  
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    Sneeje (profile), Dec 21st, 2009 @ 7:19pm

    Re: Re: Re: Re: Re:

    "I like the products, I have been a life long consumer of movies, music, and other forms of entertainment, and I would like for that to continue for another 60 or 70 years so I can continue to enjoy it."

    But what you seem unwilling to accept is that so does everyone else--even those who would be considered engaging in piracy. The difference is that the majority of folks (apparently not including you) want to begin consuming this content in a far different manner than previously--meaning they want to be able to access it on any device they wish, share it with anyone they wish, and possibly transform it freely. You can decry this, but you may as well shout into a tornado.

    Paywalls, DRM, and the old method of consumption (CDs, etc.) actively inhibit this and technology and societal desire will continue to chip away at the old methods. Morality and ethics can coexist with the new ideals if the big business will explore the ways forward and work with consumers rather than against them.

    To crassly quote Blade: "Some motherfucker's always trying to ice skate uphill"

     

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  54.  
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    Anonymous Coward, Dec 21st, 2009 @ 8:16pm

    Re: Re:

    Some people have developed a culture of theft and selfishness.

    All people. Welcome to human culture. It's been that way for a long time.

     

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  55.  
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    #46, Dec 22nd, 2009 @ 1:31am

    Re: Re: Re: Re:

    There are plenty of engineers/labels out there that know the perils of dynamic range compression and avoid it like plague.
    Contemporary music issued on vinyl usually contains the same compressed mastering as CD, so you have nothing to gain. Except some surface noise, and a warm fuzzy feeling induced by placebo.

    OTOH, music from before digital recording technology was either never released on a CD, either was sonically compromised by age of master tapes (most recent Beatles) or during re-'mastering' (eg Jimi Hendrix). And only option left is to download well transferred (and de-noised) vinyl-rip and burn it to a CD.

    Again, criminal business practices are not caused by technical superiority of CDs.

     

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  56.  
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    oxana (profile), Dec 22nd, 2009 @ 7:20am

    Give copyright back to the authors

    Actually, copyright law itself is not that complex. The structure behind it is. Collecting societies, music publishers and record companies, who knows what they are doing? Imagine, you’re a small artist who wants to be famous. Sign here, sign here and sign here. Before you know it you don’t have any rights left, including income from gigs and merchandising. It used to be evident that we wanted to reward the creativity of people. Nowadays, it’s not that obvious anymore. My idea is that we should not discuss copyright law, but how to protect the performing, reproduction and any other rights of the music authors. Luckily I’m not the only one who is worried. It can’t be any coincidence that the Featured Artists Coalition was founded. They want the artists to have more control of their music and a much fairer share of the profits it generates in the digital age. But there is also another way. The internet is a promising marketing environment, fit for individual management of copyright and the delivery of rights on demand to users. In these circumstances the music authors are in full control of their rights. And is that not what it used to be all about? Giving the advantages of being creative to such persons? I hope the authors will be more and more aware of the fact that they have a strong legal position.

    Website for D.I.Y music copyright: http://www.villamusicrights.com

     

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  57.  
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    Hephaestus (profile), Dec 22nd, 2009 @ 7:55am

    Wow this one line says it all

    "When you take an industry that has 4 big costs - recording, manufacture, distribution, promotion - and remove 3 of them, that changes everything."

    Someone should put that on a tee shirt ... ;)

     

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  58.  
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    Hephaestus (profile), Dec 22nd, 2009 @ 8:52am

    Re: Re: Re: Re: Re: Re:

    "Morality and ethics can coexist with the new ideals if the big business will explore the ways forward and work with consumers rather than against them."

    EMI under new management tried to find a way forward. Due to contract concerns and constraints they were unable to move forward. The record labels at this point are between a rock and a hard place. Their attempt to create and maintain a monopoly is what will be their undoing in that it is causing what they can do to be severely limited.

    The TV studios and movie studios have the same sort of problem in that they have contracts with TV stations, Cable networks, etc (windows) to maximize profits. In our "I want it now" society people arent willing to wait. In they end as cable companies become more and more last mile providers, media producers (TV movies) will have two windows, plus some revenue coming in from rebroadcasting on tv stations. As tv stations become less relevent even that rebroadcasting revenue will begin drying up.

    As the tools become more available for the general population to produce TV shows and movies they will see increasing competition and a smaller share of the overall market. It will require actually becoming more efficient, down sizing, out sourcing, and people bidding on contracts to work with the entertainment industry. Thats the future they face they just dont see it yet.

     

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  59.  
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    Hephaestus (profile), Dec 22nd, 2009 @ 9:02am

    Re: Re: Re: Re: Re: Nobody obeys the law

    "The numbers are 18% and 80% - 18% increase in recorded music sales overall, and an 80% increase in sales of music online (downloadable)."

    While your numbers are impressive they are from an industry know to pad numbers to impress politicians.

    You forgot to mention how the budget for advertising music increased in the same period. If I wanted statistics that said that, IPRED led to increased music sales and decreased piracy, it is the same thing I would have done. It leads to the fact that the correlation between IPRED leading to an increase in music cant be disproven.

     

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  60.  
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    Hephaestus (profile), Dec 22nd, 2009 @ 9:09am

    Re: Billions are thieving every day.

    "I hope the industry go crazy and get all they want, it will change nothing in the piracy thing but it will feed an increasing discontent and help build alternatives that can and possibly will force the industry to review their ways."

    Dude you so summed up what I have been saying here for over a year now. We should chat, have one of the ops email me your contact info.

     

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  61.  
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    Danny, Dec 22nd, 2009 @ 9:39am

    Re:

    Ok, someone on these comments mentioned that they thought you work for the record industry. I can say without any question that you do not. You actually don't seem to have a clue about how that industry works/rips off the artists. The digital revolution, or, as you called it, a time of "guys running a myspace page and giving away music that most people will never hear and probably wouldn't want anyway."

    So, lets break this up. Would I rather listen to a few amazing local/indie bands that I discovered via the web, or Lady Gaga, Chris Brown's punk ass, and whatever the hell else is popular these days? I'll pick the small band that no-one wants to hear according to you. Popular media isn't good, it's formulaic and non-abrasive. It meets criteria set by major industries trying to sell product. I'm not interested in their process.

    As far as theft of music. First, nothing but respect for Mr. Reznor, but he can blow that out his arse. Tell me he's never made a mixed tape or CD. Tell me that you haven't. People have been sharing music since forever in one form or another, and will continue to do so. It may be occurring at a much higher rate, but there is a much higher volume of music out there as well. Also, it's already been proven that since the introduction of Napster all those "digital decades" ago, music sales have gone up. Way up. What all these labels are pissed about, and people like Mr Reznor, and that drummer from Metallica, Larz, is that they are getting a smaller piece of the pie now. The playing field has been made even. The little guy gets to stand right next to the big guy and sell his product too.

    So, last point to be made, and why I know you have nothing to do with the music industry... Labels treat recording artists like shit. They are like drug pushers/creditors/landlords all rolled up into one. They loan money to artists that they have to pay back through record sales. If they don't, they owe it and end up worst off than they were when they were indie. They usually make less than 10% of record sales and have to use that to pay back the loan for living expenses/recording costs, etc. Most artists only make money (or anything of consequence) through touring. It's a racket and a monopoly that finally is crumbling.

    What you call generation diss, I call generation duh. They just don't know any better. Remember, we should be teaching them. However, I don't see them as a stealing generation. I actually see a higher rate of consumerism now than ever before. With that said, culture is changing buddy, and it's our job to figure out how to change with it, or get left in the dust.

     

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  62.  
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    Mike Masnick (profile), Dec 22nd, 2009 @ 10:22am

    Re: Re:

    Hey Danny, while you make some interesting points about the music industry, I did want to clarify one thing in reference to Trent Reznor's comments. Reznor is not like Lars. Reznor has supported file sharing and making stuff available for free. He has been a member of bittorrent communities and is happy to share his music.

    The reference that "The Anti-Mike" made above was to a statement Reznor made at a conference where he *ironically* told people to "steal" his music. For some reason, TAM does not seem to process irony -- despite it having been explained to him in the past.

    So, Reznor was not complaining about people "stealing" music, like Lars did. Instead, he was encouraging people to share his music, by ironically telling them to "steal" it.

     

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  63.  
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    Danny, Dec 22nd, 2009 @ 12:39pm

    Re: Re: Re:

    That's great to hear. I was not aware. Don't pay that much attention to popular music, haven't for a while.

     

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  64.  
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    Anonymous Coward, Dec 22nd, 2009 @ 2:35pm

    The sheer level of denial at work in the industry never fails to astound me even after all this time. Almost 12 or 13 years ago, the average teenager knew that the game had been completely changed. How the "captains of industry" just let it pass them by is totally beyond me. Anybody with half a brain could see at the dawn of Napster that the internet COULD have been a massive, never ending cash machine for music. They chose to ignore it. Now they want the whole ship stopped, turned around, and brought back to the dock so that they can get on board and dictate the rules. Not gonna happen, sorry. When it comes to the internet and doing business successfully on it, "be quick or be dead" is probably the number one rule you should be following.

     

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  65.  
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    SomeGuy (profile), Dec 23rd, 2009 @ 7:08am

    Re: Re: Re: Re: Nobody obeys the law

    Ironically this doesn't stop filesharing of already popular works (you can get them from your mates) but harms the ability of lesser known acts to spread the word.

    That's not ironic. That benefits the Labels. It used to be that they were the Gatekeepers, and to "make it" you had to be chosen by them and play their game. Anything that makes it harder to self-promote makes the Labels stronger.

     

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  66.  
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    jon_sf (profile), Dec 23rd, 2009 @ 7:11am

    Overall Comment

    The music industry is in a deep economic quagmire and it really needs to pick itself up by recognizing and eradicating its most fundamental flaws. They stem mostly from the past greedy business practices of labels where they successfully manipulated the industry to conform to draconian album pricing. As Mike correctly points out, the industry has reshaped the 4 cost structure and the labels will need to radically adjust their cost structure if they are survive in the coming years. Meanwhile, most people are still 'ripping' music from piracy sites rather than purchasing music from legal sites because they continue to see the pricing (a-la-cart or subscription) as unfair and inconvenient.

    What I think is going to happen in the next few years will depend on the following variables and assumptions:

    - Most people will never pay for music -- they will want to continue to discover new music and shun paying for popular music (i.e. signed artists).
    - Major labels will continue to downsize and focus more on developing more commercially viable artists in most markets (but not all).
    - Smaller labels will emerge with lower cost structure BUT still without the ability to take their artists to 'new levels.'
    - Most artists will continue to struggle to market themselves even with all the online tools and services available on Internet.

    As a result, major labels will end up catering to the mass-market music tastes while smaller labels and online sites will continue to feed new music to those people who have the time and love to discover and enjoy new music.

    Artists will have to decide what kind of artists they want to be. Britney Spears, Bjork, or someone talented and obscure.

     

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  67.  
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    skank (profile), Dec 24th, 2009 @ 12:39pm

    Re: Re: Re: Re: Nobody obeys the law

    Funny how so many here still defend filesharing as if it were not stealing,

    /S

     

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  68.  
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    chris (profile), Dec 28th, 2009 @ 8:02am

    Re: Re: Re: Re: Re: Nobody obeys the law

    The Swedish situation is very signficant, it is the first clear indication that diminished piracy increases music sales.

    and what about point #3?

     

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  69.  
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    Anonymous Coward, Dec 31st, 2009 @ 12:05am

    Re: Re: Re: Re:

    What?

    LPs have a limitation on what sounds the reproduction equipment used with them can reproduce.

    If the sound is too loud for too long the needle will skip, CDs do not have this.

    Also the noise floor on a CD is lower, and pretty much all CD readers (the equivalent of a turntable) are the same, only stuff that comes after the transition to analog can really have any effect on sound quality, where with vinyl the turntable needle and tone arm all have significant effects.

    Further records, because of how stereo works with them, loose fidelity when stuff is all in one channel.

    CDs can record (accuratly) over the entire frequency range that human beings can hear, and while it doesn't cover the same dynamic range your ears can, it does exceed that provided by vinyl. Essentaly any sound you can put on a record can be put on a CD with NO loss. Objectively, in mesurable quantifiable ways CDs are better.

    What all this boils down to is that because of physical properties of the media there are lots of sounds that vinyl simply cannot contain.

    Also now we have things like DVD-Audio with 192kHz/24 bits per sample which is capable of recording any sound your ears can detect, literally there is NOTHING you can hear that you can't record with that. It exceeds the dynamic range of both the human ear and most microphones used, and can record, accuratly, frequencies 4 times higher than any human can hear. The debate over the media used to record is over, at the high end at least. (Reproduction equipment is still fair game...)

     

    reply to this | link to this | view in thread ]

  70.  
    identicon
    Anonymous Coward, Dec 31st, 2009 @ 12:07am

    Re:

    Not quite, CDs don't cover the entire dynamic range (that is the difference between the loudest bit in the recording and the quietest) that human ears do (DVD-Audio CAN), but it does cover a larger dynamic range than vinyl.

     

    reply to this | link to this | view in thread ]

  71.  
    icon
    Marcus Carab (profile), Mar 1st, 2010 @ 8:31am

    Re: Give copyright back to the authors

    "Actually, copyright law itself is not that complex."

    Yeah... I'm totally going to do business with a rights brokerage that believes THAT.

     

    reply to this | link to this | view in thread ]


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