Wednesday, August 5, 2009

The State of the Music Industry

Clearly, the music industry is changing. Digital sales are up, total sales are down, and the major labels are becoming more dickish all the time. Every time I turn around someone is getting forced to pay $675,000 for downloading 30 tracks illegally. Maybe I should not turn around so much.

Well, these events have been in the news, and I've been thinking about them a lot recently. The entire argument that digital piracy is unethical and should be illegal centers around the concept of "if value, then right." The absurdity of this concept is spelled out nicely here. The recording industry loves to use the word "steal" to describe piracy, because that makes us think of losing something physical. DVDs often start with short propaganda videos equating the theft of purses and cars to ripping DVDs. This is clearly a false comparison. After you steal a car, the owner no longer has it, but piracy is digital copying, not theft. Contrary to what Immanuel Kant may want you to think, not all crimes are created equal.

Fortunately, there are many artists who realize that the internet has changed the way music is distributed, and for better or for worse the industry will have to change with it. David Byrne (of Talking Head fame) has a great article in Wired all about the history of record labels and the challenges / benefits of not using one today. There are many degrees of control that a label may posses over an artist. The article includes some great audio conversation with Merge Records' Mac McCaughan about the differences between independent and major labels. Here's an example of one of those differences:

Most major label deals involve the label owning the tapes of the artist's forever. Naturally, this is restrictive and it seems unjust. Rights can be sold and bought, and you wind up with weird things like Michael Jackson owning Paul McCartney's music. This corporate ownership of someone's art has led to some nasty situations in the past, like John Fogerty being sued for sounding like himself. (He won.)

Now, in Merge's contract with the Arcade Fire, Merge owns those tapes for seven years. After that time the Arcade Fire is free to make whatever decisions they like with regards to music being used in films or commercials, songs being covered, greatest hits, etc. This seems like a much more reasonable agreement, but making albums costs money, and artists go where the money is.

Take for instance, American Idol. Here's a TV show that I've never watched, but I'm told it is popular. Evidently the people who win this show and its British counterpart become immensely successful. But, what is the cost? Here's an article at about the contracts that those contestants have to sign. I expected going into this article that it was going to be bad, but I was still floored. You can read the article for the details about the corporations involved, but here are a few things that caught my eye:

1) The contract literally says that the producer has "unconditional rights throughout the universe" to do just about whatever they involving the contestant.

2) "just about whatever they want" includes the producer revealing things about the contestant that may by "factual and/or fictional."

3) And the kicker. The contestant cannot reveal anything about the contract without being liable "in excess of Five Million Dollars."

Clearly, a lot of people are willing to sign these contracts, and in some cases it works out well. The best situations are probably those that lose, but still get some publicity. Often times American Idol will pass on making records and these people can have successful careers with far fewer strings.

And, speaking of successful careers with very few strings, we have Trent Reznor. As has been widely publicized, Trent has successfully released a lot of music with no label at all. Using the internet to do his advertising, he has made millions more than he would have made with the same number of sales under a record label. Now, I don't care for his music, but I do like his message. Here's fantastic interview of his on the show Sound Opinions. One of the great quotes that he has is:

It's frustrating when, as record labels have fallen on hard times, their only concern is still about their bottom line ... The concept of suing fans for stealing music. You know, they're stealing it not to make money from it. They're stealing it because they love it and they want it.
This seems so obvious, but the record labels don't seem to acknowledge this. I think that phrase, "they're stealing it not to make money from it," really gets at the heart of the false assumptions of the music industry.

I love the way the Reznor has embraced the state of music today. While speaking about his most recent work, and how he put it on his website for free, he said:
Give it away digitally, because it is free anyway ... Don't fight it. Embrace it. And you want people to have your music, you know. I do.

Lastly, while we're on the subject, here is David Byrne writing about the Amazon Kindle. His discussion of this particular e-reader isn't that important, but toward the end, he discusses the parallels between digital music and digital print. There is an inevitable end of books as we know them, and it's probably sooner than most people suspect. I wouldn't be surprised if hardly a college student in America were left buying physical text books in 20 years. It may be fewer. Well, when print becomes digital, it will (and already begins to) face the same challenges that music has. As Byrne says:

Lastly, and scariest for publishers I guess, is that inevitably someone will hack the Kindle (or other formats) — and the books will become shareable… and copiable and infinitely reproducible, just like MP3s. People laughed at the record companies, with their reputations as money squanderers and for their waste and extravagance — but music hasn’t suffered, and writing and magazines might not either, especially if both writers and publishers can learn from the record companies and not pretend that publishing is any different.
Here's hoping they learn.

- Seth

1 comment:

AdamB said...

I certainly agree with the spirit and the attitude, but there are a few points on which I disagree:

1. Copying info (without paying) certainly is stealing. Not from the person you copy from, but from the creators of the content.

Of course, that only holds in any particular situation if you would have otherwise paid for the content. Overall, though, most pirates would have paid for some stuff if they hadn't gotten it for free, and overall that's cash out of someone's pocket.

2. If the contracts are so bad, why are people signing them? Are they too dumb to figure it out, or are there also upsides that balance it out? If those clauses weren't in there, everyone would be saying how wonderful it is, and the companies would be paying much less.

Certainly the Arcade Fire must be getting paid less for their contract than they would if they signed over their content for a longer period.

3. I like Trent Reznor's music, but he's absolutely wrong that people aren't downloading to make money. A penny saved is a penny earned, and nearly all of the music downloaded is available in stores (online or otherwise) at a price. They're downloading to avoid paying, which amounts to the same thing.

4. I'd like to hear someone's vision of the future for how content will be generated. This is a problem more generally with public goods, so there is a place for government to step in here. Research has the same kinds of problems, so it is nearly entirely funded by the govt and charity.

It seems right now like that's working out OK, but there is no good way to know (as far as I can think of) whether research is overfunded or underfunded. Same goes for the military. Other public goods like lighthouses are a little easier to price.

5. Regarding the "if value, then right" theory, it's absolutely true. It's not so much a rights issue, though, as a social optimum issue. Take napkin theft-- if the napkins weren't going to be stolen, Taco Bell would put out much nicer napkins. That also explains why hotel bathrobes are so crappy in otherwise plush hotels.

The author of "20 things I've stolen" might be trying to joke, but the truth is that he did in fact steal them, and the costs are real.

Gotta think about the production of stuff, long-term. If people aren't paid for the value they make, they'll produce somewhat less than they would otherwise. It won't mean that nobody will produce anything, just that it won't be as much as everyone would prefer.

I, for one, would like a way to pay for music again without it just going down the drain. Sure, music's gotten better, but I think it could have been even better than that if we had some workable system of intellectual property rights.

Here's one last way to think about it: how much more or less research work would you do if all research papers had to be published anonymously and nobody could tell that you (or even someone at your institution) had made it? Obviously you wouldn't be getting paid for it, because nobody could verify that you had produced what they paid you for.

Intellectual production is costly just like everything else, and if we don't find a way to pay its producers, it will only get produced by wealthy philanthropists.