If It's an Issue With Kid's, It's an Issue With Me

I read an article in the Daily Trojan, USC’s student community newspaper, this week that brought to light an issue about the use of illegal peer-to-peer websites and other sources for music. The article itself highlighted many of the reasons why students have started downloading, and will continue to download for a long time: the ease of use, the portability (when transferred to digital audio player), and most importantly, the price. Since Shawn Fanning (some may even ask, Shawn who?) first made it possible in a dorm room, students and many other age groups have desired to have the music they want for free.

As the debate has progressed (or has barely even budged), and the major label continue to suffer, newer developments have brought to light not only the reasons why it is difficult to establish a system in which users can access all the music they want at any time under the all heralded “name here model,” but also a new reason for users to hate the major labels and their inseparable umbilical chord to the “way it used to work.” While their most recent approach has been “to litigate rather than license their catalogues,” supposedly, many within the machine have said that things will soon be different (Orlowski par 2). Universal Music Group’s very own digital chief, Larry Kenswil, proclaimed in January that “We have to license […] and think like the publishers” (Orlowski par 3). In other words, he is speaking on behalf of the labels when he realizes that the traditional model for sales is no longer working and that new revenue streams must be created.

Now this is no surprise, as it has been said for who knows how many years and has only become more commonly pointed out in the past few months a newer and better social networking platforms are beginning to fill the chasm between consumer and label. Even the “litigation before licensing” strategy is something that consumers will always detest, but have learned to either deal with, or avoid. The newest addition in a string of many attempts to destroy the industry they call their own is in the way they approached a possible solution to the very problem they have been trying to solve. Imeem, an Internet startup that is half social networking platform, half music and media player, attempted to strike a deal with major labels in which the website would be able to offer free music downloads, assuming they negotiated and paid for all the appropriate licenses. The company was structured to make a profit from ads as it expected its website to be a very high traffic area with many users often staying on the website for extended periods of time. The part that is most disturbing is what happened after a lawsuit between Imeem and UMG, in which “Imeem has settled a lawsuit with UMG on terms that ensure it will never make money” (Orlowski par 6). The licensing costs are so high, as set by the label, that "A financial analysis of a royalties plus operational costs reveals that Imeem cannot ever turn a profit with this financial structure […] Setting aside the large prepayments, online advertising revenues will not even cover the one penny-per-play song, much less the operational costs of running a net company, such as servers, personnel and bandwidth” (Orlowski par 8). So with all things being equal, which they actually aren’t, then any similar service could provide music for free with the same underlying economics, as long as they got the initial stamp of approval… right?

In the Daily Trojan article, written by what I assume to be a fairly clued-in student, a new service called Ruckus works under much the same concept. The difference here is that only students with a valid .edu email address can access the music for free. But as the writer Stephanie Lau discovered, free music available to be listened on the computer may not be the entire solution. During the article, it is pointed out that there are still many obstacles that students must navigate to actually receive the music they want. Sure, they can listen from their desk on their computer while they have an Internet connection (which even that can be iffy at best), but only PC users have the benefit of this access. The service is not compatible with Macs, maybe just a slight oversight on a college campus, where Macs rule and PCs are those pieces of junk your parents struggle with on a daily basis (why?). As the article describes: “Additionally, music cannot be coped or burned to CDs with the free service. The song selection numbers at 3 million compared to the 6 million iTunes offers. And because of Digital Rights Management, song files have licenses that must be renewed every 30 days” (Lau 2). Sounds like a lot of restrictions to me, and some major ones that would prevent almost every single music listener I know from bothering with the service at all. A student interviewed in the article put it best when he said that “the reason people download is because they want to own music for free. They want the functionality of carrying around music, and Ruckus isn’t the solution for that… The ideal site would have a good business model to pay the artists while allowing students to download the music and port it anywhere… how that site would work, I’m not sure” (2). And of course he’s right, because he is the voice of his generation: kids want to see their favorite artists get paid for their work, and they even demonstrate this by going to shows and buying merch. But due more to the economics of the Internet (see The Long Tail), developing technologies, and plain negligence of the major players in the market, kids have taken it into to their own hands to get what they want until someone offers how they truly would like it to be presented.

Meet Last.fm. This web service was already widely known in most music-centered groups as the one that tracks all of your plays from your computers hard drive it, catalogues it in a database, and presents it in the form of a profile that can be viewed and shared by friends. A true hybrid between Facebook and iTunes, it can either generate recommendations based on the songs you log in its system, based on suggestions from users with similar tastes, or by allowing users to share through the old fashioned ways of direct communication (if two screens and a wire is direct or not is up to you). In an attempt to expand, the company has now begun plans to begin creating a music library that will eventually rival iTunes: “The total number of songs available now is 3.5 million, but the company is aggressively adding content, and Stiksel said it will never stop adding music. ‘The mission is to have every track available,’ said Last.fm co-founder Martin Stiksel” (Buskirk par 4). In addition to allowing non-registered users to access the content for free, much as if it were a free store, the company has come up with a new way to make sure that writers and artists will continue to be paid fairly. Said Co-founder Alex Miller, “We're overlaying the content on top of the already very active community. When I buy a CD, the artist gets paid once [...] What we're doing with the model we're proposing today for Last.fm is that playback gets monetized [...] If I clock 100 plays, this means the artist gets paid 100 times the money” (par 9). And how with the artists get paid? Through more directed adds that can be generated based on the users listening patterns. Will this affect the user’s experience? Fortunately for us, “the ads' volume will default to the mute position” (par 11). Sounds good to me (get it?), but in the mean time, finer details are still being worked out, but hopefully this type of service will be the one to carry us into the future, for now.

In the end, it can once again be blamed on the major labels and their partners in crime for slowing the industry down to a deathly slow crawl. It seems to me that as long as they know they are going down, they are trying to take everyone with them, which is certainly no way to run a business. To the labels: preventing consumers from getting what they want most, your music, is not going to help you. You will not be able to snap your figures when you are ready and convert everyone to your new website or service that will fix everything, because once you have finally asked your intern to do the site for you, everyone will be paying attention somewhere else, and you won’t matter. “But let's just say it's a pity that in order to maintain control, the major labels insist on shooting themselves in the foot. As the chief of the indie label alliance AIM, Alison Wenham, said earlier this year: ‘You can fight piracy valiantly on the beaches and in the trenches, but you can't win it. The average file sharer has as much chance of being caught as they have of being hit by a meteorite. We need to monetize the usage of our music - whether or not we delivered it in the first place’” (Orlowski par 14, 16). Well said Alison, well said.

Buskirk, Eliot Van. "All Labels to Stream Free Music on Last.fm." Wired: Blog Network 23 Jan 2008 24 Jan 2008 .

Lau, Stephanie. "Congress addresses illegal media downloads." Daily Trojan Vol. 163 No. 22. 15 Feb 2008: 1-2.

Orlowski, Andrew. "Digital music: Go legal, get screwed." The Register 20 Dec 2007 20 Dec 2007 .

Music for the 9-Year-Old Generation

A lot of people, including the “executives” that work at the major labels, have said that downloading music without paying is part of a generational shift. The older generations that grew up with vinyl and later saw the transition to other mediums have always paid, and will continue to pay for music, as they feel as if it is their responsibility to pay. They have trouble understanding how the younger generations can justify downloading music for free without paying the artists and the companies behind the artist their dues. But when it comes to the younger generations’ point of view, this logic is reversed: “Why would I pay for music when I can download it for free? Sure, I don’t pay for the music I download, but then I go to see my favorite artist play shows, so I pay for a ticket and a T-shirt.” Or even more discouraging for the businesses behind the music, “Why would I pay for the recordings when only a small portion actually goes to the artist anyway?” As the industry stands right now, both points of view, the simple logic of the older generations as well as the ever-prevailing self-righteousness of the younger generations must be reconciled in a way that makes sense for both sides. Or, the labels could just act as the airlines do, and charge their customers on a variable pricing scale that would depend on the use of the music or where the music is being purchased from (shh, I don’t want them to illegally download my idea). Either way, there is a clear disconnect between the mentality of not only the different generations of consumers, but between the younger consumers and the labels, and instead of complaining about the loss of sales do to illegal downloading, or whatever the RIAA would like to claim next, there are ways that the labels can continue to profit while allowing the consumers to obtain music in any way they choose.

More often than I’d care to hear, I’ve read about how CD sales are plummeting, as people no longer feel it’s necessary to pay for music. While this may be true, I tend to feel as if the suffering much of industry is experiencing is as much, if not more so their own fault than it is the consumers’. In any industry, the tastes and preferences of the consumers change, and it is the job of the firms, or at least the ones that plan to survive, to adapt quickly and find new ways to continue to make a profit. As CBS and Viacom Executive Chairman Sumner Redstone put it in a keynote address at the Media and Money Conference, “The more platforms our content is on, the more numerous our revenue streams,” and as more forms of distribution begin to take shape, “professionally produced content only increases in value as digital platforms multiply” (Weisenthal par 2). By this standard, labels and content providers should not and can no longer depend on just a few forms of revenue, especially forms that are outdated, but must begin to expand their business models to more and newer revenue sources. As many have suggested before, it has become increasingly evident that content providers alone can no longer monetize what they offer, but will need to enlist the help of other businesses. The most commonly suggested strategy would be to enlist the help of ISPs and media device makers. In other words, allow the companies that provide the access to charge additional “media fees” included in the consumer subscriptions fees, collect this money in a large pot, and distribute it to the content providers. Though this idea is not original, it has become one of the more popular solutions as writers like Dave Kusek and Gerd Leonhard continue to preach the “music like water” solution: or paying for music as if it were a free flowing utility that everyone assumes must be paid on a monthly basis.

Another model that has been explored, and is currently being embraced by many of the up and coming independent labels and social networking sites, is the ad-supported music model. Though there are many creative and new ways to allow advertising to pay for the use of music so that users can listen to it for free, the more current issue at hand is how the larger companies will begin to embrace this new model. As the smaller labels continue to find new ways to reach their listeners through either as supported tours, ad supported websites, or user-filtered social networking sites, their content will be more noticed simply because of how often users will be interacting with the music. A great example of this increased interaction was demonstrated in a recent article in which a 9-year-old file sharer was interview for the popular digital media blog, TorrentFreak. In the article, when she was asked if it was okay if to copy music for free she cited a specific example involving her cousin. In this case she decided that “yes it’s ok because she only does it to make her [MySpace] page better” (Enigmax). The major labels continue to miss out on these opportunities as they only seek ways to sell their music online that are traditional in the sense that it is still a music store, just available on the computer. Instead of embracing these new outlets, they often shun them and refuse to take part with the assumption that they are just a passing fad. As Sumner put it, “It seems fairly clear that advertising will for the most part pay the way on the Internet, just as it has on traditional media platforms. [...] I think in all the public clamor in all the doomed fortunes of traditional media, people miss the greater trends at work” (Weisenthal par 3). The reality is that people will never again revisit the traditional forms of acquiring music, and in order continue to monetize the use of music, record companies will have to expand their horizons and find new ways to derive value from their content.

In the same article that Hannah was interviewed in, it was made obvious that a split between generations exists. But it also seems to be obvious that if a 9 year old can reveal a similar business model as stated above, then record labels should be ashamed of being so far behind. As the young girl, named Hannah, described how she obtains music from places like LimeWire and YouTube, the article’s author asked her simply, “what was cool about it [downloading music from the internet]? Her response: “Because you can put anything in and it will come up and you don’t actually pay for it. Well you have to pay for the Internet and LimeWire comes with the Internet but you have to pay for that so LimeWire isn’t really free.” Not only did she put it together that if she paid for access to the Internet, than by right, she should be allowed to download music, but she even went as far as claiming that by paying for the Internet, the music wasn’t “really free” after all! Smart girl. But the reality is that record companies “need to make it easy for consumers to attain our content in a legal manner” (Weisenthal par 4). In order to be successful at monetizing use, the consumers must have access where and when they want it: a freedom that was first explored with the use of free downloading, and a value that many avid listeners feel is their legal right. After all, as Hannah put it, “Why would they put [music] on the Internet and invent mp3 players if it was against the law?” Amen.

Enigmax, "Inside the Mind of a 9 Year Old File-Sharer." Torrent Freak 21 Oct 2007 30 Oct 2007 .

Weisenthal, Joseph. "CBS and Viacom Executive Chairman Hip to Digital Trends." nytimes.com 08 Nov 2007 08 Nov 2007 .