ABA Journal Highlights How The Music Industry Is Thriving And How Copyright Might Not Be That Important

from the wow dept

Michael Scott points us to one of the best summaries I've seen of the state of the music business today -- published in the ABA Journal. It's an incredibly balanced piece, that really does carefully present both sides of the story on a variety of issues, and presents actual evidence, which suggests the RIAA is blowing smoke on a lot of its claims. The piece kicks off by highlighting that the music industry appears to be thriving, and then noting that it's not the same as the recording industry, which has been struggling.

Much of the piece does present the RIAA's viewpoint on things, such as the idea that the legal strategy the labels have taken has been a "success." However, it follows it up by questioning what kind of success it has been when more people are file sharing and more services are available for those who want to file share. From there it segues into a discussion on "three strikes" and ACTA, which includes the jaw-dropping claim from an RIAA general counsel that "three strikes" was "never even put on the table." I've heard from numerous ISP folks who say that's not true at all. However, the article does a good job (gently) ripping apart the RIAA's claims, with evidence to the contrary, and does a beautiful job digging deep into ACTA to show how the text might not explicitly require three strikes, but is worded in such a way as to make it hard to qualify for safe harbors without implementing three strikes.

The latter part of the article then focuses on how the music industry really is booming, and how more people are making music, and there are lots of opportunities for musicians to do well these days, even without relying on copyright law. The arguments made (and the people and studies quoted) won't be new to regular Techdirt readers, but it really is a very strong piece, targeted at lawyers (many of whom may not have realized some of these details). For example:
If the ultimate goal is to promote the creation of new works, then perhaps it isn't really necessary to take stronger legal actions against illegal file-sharing because the evidence does not suggest that it is hindering the creation of new works by musicians
I certainly don't agree with everything in the article, and there are a few statements from the RIAA folks that could have been challenged more directly. But, on the whole, it's definitely one of the better articles I've seen looking at the music industry from the perspective of the legal profession that doesn't automatically drop into the "but we must protect copyrights!" argument from the outset.

Filed Under: business models, copyright, music, music industry

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  1. icon
    Hephaestus (profile), 29 May 2010 @ 3:43pm


    The Past, The Present, And The Future Of The Man In The Middle
    subtitled : bringing the newbies up to speed on the media distribution industries.

    The reality of it is there are many reasons the corporate and copyrighted media industry is doing poorly. Infringement contributes but is not the only cause.

    All of the corporate media industries, news papers, record labels, TV studios, Movie Studios, Video Games, and software companies have three things in common that affect their profitability. The first is competition from outside and inside their respective industries. The sheer volume of what is available is stagering. The second is a change in peoples habits. That has resulted in less time being spent on any individual sections of corporate media. The third problems is a failure to give the consumer what he wants, at a reasonable price. This is a really big problem with media companies, as they want to sell you the same content over and over at highly inflated prices.

    Newspapers rely on advertising to survive. There are some that rely on subscriptions, but these are specialized, targeted, and normally high cost papers. The local classifieds market has been decimated by Craigs List and its imitators around the world. Newspapers advertising rates are based on the number of newspapers distributed. The profitability of corporate advertising that newspapers rely on has been decimated by a reduction in newspaper sales. This comes from a change in the way people consume, contribute to, and share news. A sizable percentage of peoples reading habits have changed, they now read the specialized news that interests them, general news, and what their friends suggest. People also want to interact more with the news, to comment, to discuss, to point out the problems with a story and make corrections (factual errors, grammar, and spelling Nazi's). Newspapers dont allow for this. Their websites are similar in that they either dont allow comments or the comments are moderated and may not show up. This leads to a lack of interest in participating in that newspapers website and a decline in visitors. The trend for news consumption is towards more personalized and interest targeted news, more interaction (commenting, etc) with the news. There will be less spoon fed, "here is the news, now shut up and read it, we dont care about your opinion, and if we did, we would tell you what that opinion should be", news in the future.

    Record Labels began by selling plastic disks, in the beginning their sales were growing but pretty stagnant. Radio changed that, it allowed the labels to promote their music AT NO COST. Unless you count payola. For decades their growth was limited, records did wear, but rarely to the point of being unuasble, so there were few repeat sales. New artists were added to LP collections. That changed with the creation of portable magnetic media (I am skipping reel 2 reel and DAT as they are inconsequential). It began with 8 track players allowing music to be played in places you normally had a limited choice in what you listened to, the office, the beach, the park, and most importantly in the car. This resulted in a surge of sales as people replaced the records they could only listen to at home with portable use anywhere versions. Eight tracks had several flaws, after 50-100 plays they tended to unwind into the player, if they lasted the sound quality went down as the tape slowly degaussed. This resulted in a repeat sale of the same item. After 8 tracks came cassettes. The record labels fought tooth and nail to prevent the cassette, it allowed people to record things themselves. Little did they know that the cassette tape was more likely to unwind and cause a repeat sale than the 8 track. That copying a cssette reduced the quality. Then the CD was invented. The CD was another opportunity for the labels to sell the same content again. People upgraded from cassette and vinyl to CDs priced at almost twice the price of a cassette. Making the labels an extremely large sum of money. This upgrade didnt happen all at once, the distribution is actually a very long bell curve that began petering out the year the record labels CD sales flat lined. Enter stage left the mp3 format and mp3 player. The mp3 format pretty much did away with the labels , upgrade, and broken content container (degaussed or unwound tapes and scratch CDs), cash cows. People began ripping (format shifting) CDs to mp3 format. This was a huge opportunity for the record labels. Like every other time in the past they did anything the could to stop "the new technology" and delayed using it themselves. This was a ~ten year long span where the labels didnt sell what the consumers wanted, DRM free mp3's. That span was filled by internet technologies (P2P, torrents, websites, e-mail, ftp, etc), and sneakernet. The on going gap in listening to the consumers wants and needs, and not attempting to understand the trends which include free music as a loss leader, dooms the record labels to bankruptcy a couple years after the newspapers.

    TV Studios originally only had competition from two to four competitors in any given market. The stations in most US markets were ABC, CBS, NBC, PBS and a local station or two. In the rest of the industrialized world the situation was similar. The profits of the TV studios have decreased based on increased competition from a variety of sources. Cable appeared on the scene and stations from around the nation and the world began competing for the same advertising dollars as ABC, CBS, and NBC. Over time technology advanced and the number of stations available in any given market increased to around 100. NetFlix, redbox, online distribution of TV shows, YouTube, Hulu, Roku, etc have combined in a way that allows people to cut the cord (cable). About 12-15% of cable customers have cut the cord. The chart of people cutting the cord by age looks like any past implemented disruptive technology. With the reduction in cost of video production equipment, the increased ease of use of edittiing and CGI software, the ease of distribution, you will in the future see more collaboration and competition from independent and amateur production crews. The TV studios will become less and less relevant over time as competition continues to increase and more people find sources for video media online.

    Movie Studios are an interesting subset of the media creation and distribution industries. Seeing a movie is a non-interactive social event, but going to a movie with friends is a social event both before and after. It is the face to face interaction with family and friends that makes it so viable as a survivor in the internet age. In the beginning the studios began showing movies only in theaters, that was the only venue available to them. Then came TV and a new window opened for the studios to sell the content. To the consumer it was free, it was paid for by the advertisers. Then cable happened and they had a new window, pay cable stations like HBO. At about the same time VCRs showed up and another window opened to charge people for content. All of these windows were reselling the same content to the same individuals. These windows are closing. From a consumer sales perspective the Movie Studios are going to be reduced to two windows, the theater, or-and the digital online sale and only if they make it easy and non intrusive.

    Video Games . Truth be told I am skipping this one I have no interest in the video game industry and only follow the general trends and number and dont crunch them. If someone were to create first person, id software game engine based, educational games I might be interested in following this sector. If MS robotics studio was turned into an single player or MMO game with a commerce side, where you compete, design and create robots, build cities using what you have put together, and design manufacturing technologies and factories I might be interested. Just an idea for a collaborative game that would end up creating clanking replicators and change the world. ;)

    Software companies are facing competition from open standards, GNU GPL etc licences, free versions (open office, etc) and internet based applications. The OS sector dominated by Microsoft is facing increasing competition from Linux hence the inclusion of countries going open source software on the USTR 301 report. In the end no amount of political pressure will save closed source software companies. The only thing holding back open source software the lack of a requirement for the creation of manuals, professional instructions on building software, and educational material. If this material was available it would increase the usage of open source software among corporations and governments.

    Copyright is an wholly artificial construct that was created in 1709 by Queen Anne to allow printers and publishers to profit from the works of writers. That is the short version of what is going on. I hope that brings the Newbie up to speed on what is going on in the media creation and distribution industries.

    Did I miss anything???

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