How The Record Labels Screwed Up The Music Industry, And The Tech Industry Saved Them

from the start-thinking-about-the-customers dept

If you've been following how much the record labels stumbled around the internet for the past couple of decades, then you know the basics here. But time has a way of erasing some of the nuances of history, and I find it incredible to watch the RIAA and the record labels these days walking around proudly acting as if they were the ones who "saved" the music industry by embracing streaming services that now make up the bulk of the recording industry's revenues. Indeed, as we've pointed out for years, the recording industry has a very long history of overvaluing the music and undervaluing the services that people want. They've spent so long insisting that the music is the sole source of the value of what they produce, that they always downplay (or entirely erase) the rest of the equation: getting the music to fans in a manner that is convenient, reasonable, and non-burdensome. Instead, they always focus on killing the golden goose -- insisting that any successful music tech service pay them more and more until they're squeezed dry.

Over at Motherboard, Ernie Smith, has a good history of how the recording industry screwed up streaming in the early days (unfortunately he does what most people do and refers to what's really the "recording industry" as the "music industry" -- and also simplifies the history to be just one round of mistakes, rather than many, many mistakes leaving a graveyard of dead tech companies in its wake -- but the overall article is still excellent). It's a very instructive piece in detailing exactly how the record label bosses were so focused on making sure that they had control and limits, that they didn't care at all about providing a service that people actually wanted. Much of it focuses on the two idiotic music label-approved streaming services that the industry tried to launch MusicNet and PressPlay (which we dubbed MusicNot and PressPause way back in 2001). Smith details how both services were built entirely focused on "how do we protect our revenue stream" rather than "how do we serve the customer." Thus, you had lots of DRM and lots of stupid limits:

Their offerings were slightly different—for a $9.95-per-month fee MusicNet allowed for 100 temporary downloads and 100 on-demand streams at launch, according to Billboard, while Pressplay allowed for 300 streams and 30 downloads and offered limited CD-burning capabilities at higher price points—but the tissue tying the two approaches together was DRM.

It certainly wasn’t music, as the services made no effort to collaborate with one another. In the post-Napster era, the combination of limited libraries and competition from peer-to-peer file sharing services put the companies at a major disadvantage.

Incredibly, inside the industry, executives so believed their own bullshit that they really thought these consumer-unfriendly services would win over piracy:

Stephen Witt, in his 2015 book How Music Got Free, portrayed Universal Music’s then-CEO, Doug Morris, as being overly excited about PressPlay, to the point where Recording Industry Association of America President Hilary Rosen, frequently portrayed as an “enemy combatant” of the Napster era during this time, had a hard time talking him off the ledge. (Rosen, it should be said, was simply sharing the company line because it was her job.)

“On several occasions he told Rosen to stop talking to Napster, to stop negotiating with the Fannings, to stop worrying so much, because he had something that would ‘make it all go away,’” Witt wrote. “In later years, PressPlay would be a reliable starting point for listicles of the ‘Top All-Time Tech Busts.’”

If you don't remember Doug Morris, he was the guy who, back in 2007, gave a stunning interview where he insisted that the reason why the labels missed the boat on the internet was... because they didn't know anyone who understood technology and then blatantly admitted that he didn't know how to hire someone who would have understood technology. To me, that seemed like evidence for why the board should have fired him and brought in someone who actually understood the market. For Morris it just meant he remained a revered leader of the recording industry.

But really the thing that screams out through Smith's piece is the same old thing: the record labels seem to believe that the only thing that matters -- the only thing that provides any value at all -- is the music (which, coincidentally, is the one thing they have some element of control over thanks to copyright). And thus, the idea that the technology or service matters, or that making a service that people actually want is considered barely even worth considering.

Indeed, reading through the article, it basically shows how the tech industry -- in the form of Apple and Spotify -- more or less rescued the recording industry from their own incompetence. And the incredible thing today is that the record labels still whine and complain that the tech industry that saved them is "taking advantage" of them, rather than showing them the way forward.


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  • identicon
    Anonymous Coward, 18 May 2018 @ 11:19am

    I don't know why but this article reminded me of the music subscription services offered over the years. We'd get flyers in the mail or magazines that offered "30 albums for just 1 penny!" in the hopes that you'd forget to cancel after receiving your music. I don't recall how many times I sent them a penny with my list of albums and cancelled immediately.

    The music/recording industry is chock full of brilliant ideas that net them zero profit and, indeed, often a loss instead.

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

    • icon
      That One Guy (profile), 18 May 2018 @ 11:28am

      Re:

      The music/recording industry is chock full of what they believe are brilliant ideas that net them zero profit and, indeed, often a loss instead.

      Their problem(one of them anyway) is that the think they're much smarter than everyone else and that, as noted in the article, the only part of the equation they put any value in is the part they control.

      Between thinking they can dictate what people want and dismissing as irrelevant anything they don't control as insignificant it's hardly surprising that they basically had to be dragged kicking and screaming into a more modern market.

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

    • identicon
      Anonymous Coward, 18 May 2018 @ 11:37am

      Re:

      I don't recall how many times I sent them a penny with my list of albums and cancelled immediately.

      I didn't know one could cancel without sending more money. Anyway, a modern example might be MoviePass. You pay them them $10/month, and they'll give a theater ~$9 cash every time you see a movie. You could see one per day originally.

      You might wonder how the economics of this work out. Nobody's figured that out so far. They lost $30 million last quarter; but don't worry, the CEO says their $300 million line of credit will keep them solvent.

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

    • identicon
      Anonymous Coward, 18 May 2018 @ 1:29pm

      Re:

      Tidal is certainly making waves. If they aren't inflating the numbers for certain artists or they are several months behind on paying the big music companies, there is certainly some rock and roll going on. If it is "fake news" as they claim or the start of the broken hotel rooms peaking out is too early to say.

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

  • icon
    Ninja (profile), 18 May 2018 @ 11:31am

    If we listened to the copyright morons every time we'd still be discussing if the [player piano](https://en.wikipedia.org/wiki/Player_piano) should be allowed and how it would spawn the musical apocalypse.

    Good articles (both this and the original). We should be reminding them every time how bad they are at every opportunity. And we should ask both politicians and the people "do we really want to live in an underdeveloped past forever or do we want to have a thriving music market where everybody has their opportunities to make money?" before bowing to the pressure of such morons.

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

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 18 May 2018 @ 11:58am

    "making sure that had control and limits" OTHERWISE NO INCOME!

    You always talk up gadgets and how stupid industry people are, while omit the basic FACT that without legal and technical protections the industry would get ZERO.

    Actually, reason industry was slow to learn is that they simply didn't foresee how "technology" in hands of ordinary people, as encouraged by Ivy League Pirate Mike telling them that "sharing" was okay and even legal, would lead to such widespread piracy. -- In other words, people who make stuff have outlook that expect other people are decent and will reward them for products: they don't expect them to be criminals.

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

    • identicon
      Anonymous Coward, 18 May 2018 @ 12:17pm

      Re: "making sure that had control and limits" OTHERWISE NO INCOME!

      you ---->
      <---- point

      You missed it.

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

    • identicon
      Anonymous Coward, 18 May 2018 @ 12:30pm

      Re: "making sure that had control and limits" OTHERWISE NO INCOME!

      Wow, who knew that Techdirt had such reach as to entirely change the music industry because of something (you imagined) Mike said.

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

      • icon
        Ninja (profile), 18 May 2018 @ 12:35pm

        Re: Re: "making sure that had control and limits" OTHERWISE NO INCOME!

        Mike is the Pirate of the Universe haven't you heard? He has been pillaging humanity since the era of the great naval expeditions.

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

    • icon
      Ninja (profile), 18 May 2018 @ 12:33pm

      Re: "making sure that had control and limits" OTHERWISE NO INCOME!

      I also expect to be able to buy stuff for reasonable prices. So when the industry either refuses to offer that content to me or charges extortion level prices I'll feel absolutely no remorse in getting what I want via other means. If we were talking about goods like cars I'd simply buy from the competition. But since copyright is a monopoly then I'll go piracy thank you. And if I can and it's worth I will throw money at the creator, not some shitty middleman.

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

    • identicon
      Anonymous Coward, 18 May 2018 @ 12:33pm

      Re: "making sure that had control and limits" OTHERWISE NO INCOME!

      When people freely share what other people offer for free they are not pirates.

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

    • icon
      Stephen T. Stone (profile), 18 May 2018 @ 2:04pm

      Re:

      In which article or comment written by Mike Masnick did he say, explicitly and without any potential for misinterpretation, that all forms of sharing content is legal?

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

    • identicon
      You're funny, but looks aren't everything, 18 May 2018 @ 5:23pm

      Re: ivy league pirate Mike....

      Oh fucking please, you make like Mike has an influence on people pirating. You must realize that the pirate community had been around long before this website. You wreak of bitter grapes, what's your beef?

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

  • identicon
    Anonymous Coward, 18 May 2018 @ 1:15pm

    dont be so ridiculous! just ask the music industries if you want to know what really happened and who saved who!!

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

  • This comment has been flagged by the community. Click here to show it
    identicon
    Anonymous Coward, 18 May 2018 @ 1:15pm

    LOL

    Desperate for clicks again, eh Masnick?

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

  • identicon
    Anonymous Coward, 18 May 2018 @ 4:08pm

    If Copyright trolls on this site were right even half the time.

    By their own logic wouldn't the doomsday about the end of music and entertainment have happened in the 15+ years they've posted here?

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

    • identicon
      Anonymous Coward, 18 May 2018 @ 7:07pm

      Re: If Copyright trolls on this site were right even half the time.

      It really should have. The problem is that the government has consistently given them the benefit of the doubt to the point where the respective industries can simultaneously claim that they're raking in money during recession years, and be unable to pay their technicians, artists and caterers a reasonable wage.

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

      • icon
        That One Guy (profile), 19 May 2018 @ 4:25pm

        "But we've always got money for THEM..."

        The problem is that the government has consistently given them the benefit of the doubt to the point where the respective industries can simultaneously claim that they're raking in money during recession years, and be unable to pay their technicians, artists and caterers a reasonable wage.

        I suspect it's less giving them the benefit of the doubt, and more ignoring the conflict due to it being profitable to do so. Those 'struggling studios' may be unable to pay the small people, but they always, always have money when it comes to paying politicians.

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

  • identicon
    Anonymous Coward, 18 May 2018 @ 9:01pm

    How copyright screwed culture and access to knowledge.

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

  • icon
    frank87 (profile), 19 May 2018 @ 12:08am

    copyright needs copying

    They keep forgetting that without copying, copyright is nothing.

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


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