Music Industry

by Bas Grasmayer

Filed Under:
business models, innovation


Can Innovation Through Business 'Solve' Issues That Legal Repression Can't?

from the making-music-worth-paying-for dept

If you follow music industry news, you probably didn't miss Spotify's launch in the US last week. Prior to this launch, a Swedish music executive was interviewed about what to expect when Spotify launches in the US. One part of the interview stood out in particular:
[Spotify] has eradicated music piracy almost on its own. Sweden was the home of Pirate Bay. They even had their own political party and made the prime minister in national television declare "Off (sic) course the youth shall be able to download music for free".

Three years later, The Pirate Bay is not mentioned by anyone anymore. Spotify is, on the other hand, mentioned by almost everyone - including the old Pirate bay fans.

This did not happen because some new radical law or brutal police force were implemented. Neither because a confused prime minister changed his mind again and embraced the music industry. It all happened simply because the users found a new legal service that they actually thought was much better than the old Piracy one.
What is interesting here is that innovation through business helped reduce 'unauthorized consumption' of music, while many a record label exec prefers to invest in legal changes that have not really made all that much impact so far. Personally, I think the recording industry missed a huge opportunity 10 to 15 years ago. Instead of using the legal system to fight Napster and the wave of peer-to-peer filesharing that followed, innovation through business would probably have been more worthwhile (and a lot less costly). Besides that, legal changes on the scale some of the folks in the recording industry envision would create a market that's even more broken than it already is, preventing other business (like Spotify) from driving innovation and competing in their industry, and would be threatening to civil rights (the rights to free speech and privacy in particular). Enforcing the interests of one group or industry by sacrificing innovation and civil rights surely must be one of the most undesirable things we as a society face today.

Even though Spotify displays a good model for success, it does have its drawbacks. One rights organization highlights an important issue with Spotify: the inability to port data.
Because streaming customers do not own their music, they cannot take it with them. Should they decide to try another service (or if a service goes under), users should be able to easily export titles of songs in playlists they created or a list of favorite music, etc. Users should also be able to choose independent add-ons that make the service more valuable, such as alternative means of organizing their music "collections." Without this kind of functionality, users are going to be disappointed, and we are unlikely to see the real competition that helps drive innovation.
The content industry is a volatile industry. Only two years ago MySpace bought imeem (the first platform in the US licensed by all 4 major labels) and shut it down the same day, replacing all playlists with ads. For this reason owning copies of music, whether through legal downloads or unauthorized alternatives, will stay attractive. As a matter of fact, according to the music exec mentioned above, digital sales in Sweden were up 17% last year compared to a mere 3% growth in the US.

We're only just entering the digital age. Blocking innovation with legislation and lawsuits is a shortsighted approach, especially with innovation proving to solve issues that legal changes can't. If the recording industry doesn't live up to their responsibility to innovate and service their fans, others will.

That's how business works.

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  1. icon
    Hephaestus (profile), 19 Jul 2011 @ 8:26pm

    "Can Innovation Through Business 'Solve' Issues That Legal Repression Can't?"

    Yes, what is needed is for one group, or company, or person to buy a single big 4 record label. Cut it down to nothing more than the catalog and an online company. Then undersell the others with 30 cent itune songs, reduced fee's on web broadcasting, etc. Open up the catalog in a smart way. Boom the rest fail because they can not shed the fat quick enough.

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