The House of
Lords has just approved the Digital Economy Bill. It has caused ripples across
the technology world, most notably because of its proposals regarding the
suspension of repeat file sharers’ internet connections, and gives the courts
power to issue injunctions against websites accused of hosting
copyright-infringing material. Internet freedom campaigners have reacted with
dismay. Jim Killock, from the Open Rights Group, stated that: "This would
open the door to a massive imbalance of power in favour of large copyright
holding companies," he warned. "Individuals and small businesses
would be open to massive ‘copyright attacks’ that could shut them down, just by
the threat of action." (Telegraph 16 March 2010)
There’s no doubt that the music industry is in crisis. According to the
International Federation of the Phonographic Industry (IFPI), global music
sales dropped 25% from $38 billion in 1999 to $29 billion in 2007. Since 2001
the total European music market has lost 22% of its value, according to the
British Phonographic Industry (BPI). This dramatic decline in revenue has
caused large-scale layoffs inside the industry, and has driven music retailers,
such as Tower Records, out of business. The question is: what kind of crisis is
this; what are the real causes; and what should be done?
Monopolies at play
The recent
government legislation is largely based on file sharing statistics presented by
industry associations that, for the most part, represent the interests of the
world’s big four: EMI, Warner, SonyBMG and Universal. Collectively they control
over 71% of the music market (IFPI 2005). But many argue that their piracy
statistics are based on highly questionable figures, which could be described,
at best, as upper bands of the unknown. For a start, piracy is not the same as
theft. File-sharers download much more music than they would ever buy. The IFPI
estimates over 40 billion files were illegally file-shared in 2008, but the
nature of file-sharing technology makes it almost impossible to work out how
many shared files are copyrighted material. Surveys often involve very small
sections of the population. Entertainment Music Research published figures
claiming that “39% of music fans download songs from illegal sites” – but they
only surveyed 1,500 people. The monopolies also claim that sales began to dip
exactly around the time the first music file-sharing site, Napster, was set up
in 2000. The Recording Industry Association of America (RIAA) claimed that
Napster was responsible for a 30% decline in sales, and filed a successful
lawsuit that had Napster shutdown. However, if we study the Dow Jones
Industrial Average (DJIA) we see that the US economy
also declined sharply during the same period.
At the same
time, average retail prices for CDs increased from $13 in 1997 to $17 in 2002
(RIAA). The combination of the recession and the industry’s high pricing
strategy is another way to explain the shrinking sales since 1999.
Labels under attack
So are we
buying less music? No, total consumption in the US rose by one third between
2003 and 2007 (IFPI). While physical CD singles plunged 43% in 2008, single track digital downloads rose
24% to 1.4 billion units globally. The UK saw the biggest increase in digital
sales in 2008, up by 45% (BPI). Consumers are buying music – just not from the
monopolies. The truth is
that the technological revolution has shifted power away from big business in
favour of many small labels, artistic teams and consumers. Many musicians no
longer see a "record deal" as an integral part of their business
plan. Inexpensive recording hardware and software has made it possible to
create high quality music in a bedroom and distribute it over the internet to a
worldwide audience at little or no cost. In 2006, the UK band Shikari sold out
at the Astoria, one of London’s best known venues, after generating a fan base
of around 40,000 on the networking site, MySpace. The unsigned pop group Koopa
made it into the top 40 in 2007 with a self-released, download-only single
(Independent Feb 2007).
In a desperate
attempt to claw back profit, the ageing music monopolies have responded by
attacking consumers. As of 2001, IFPI’s priority has become “fighting music
piracy,” and it invited governments to join the fight. The monopolies have
carried out a series of threats, litigations and lawsuits against thousands of
individuals. They have also tried to sabotage file-sharing sites by uploading
fake files. And, they have developed watermark technology to prevent media from
copying, known as DRM.
These
aggressive tactics have pushed many consumers even further towards
alternatives. Who wants to spend money on media they cannot copy for a friend?
Also, a recent survey by Ipsos Mori found that people who illegally download
music also spend more money on music than anyone else, suggesting that
government plans to punish core customers could further harm the industry.
Music Piracy
But isn’t
piracy bad? How are musicians to make a living? The reality is that most
musicians never manage to make a living under capitalism. Only a fraction ever
get offered contracts with major labels. Those that do are usually
contractually obliged to sell up to 500,000 copies of their recording in order
to recover advances and production costs (Fisher 2004). Most bands will never
sell more than a few thousand copies, and therefore never see any royalties,
and will often earn less in total than a supermarket worker.
The Internet
can provide us with an unlimited supply of songs, yet the music industry
insists we still pay CD prices. Online music stores, such as iTunes, Amazon and
Microsoft, all charge between 69p and £1.29 per song. iTunes alone has sold
over six billion songs, yet, the artists continue to get only a tiny percentage
of that money. The conditions for piracy to develop are created by the profit
driven system – capitalism creates piracy. No wonder people are challenging the
monopolies, showing that they can’t stop progress forever. Here a few
interesting examples:
Free: In
some cases, music could be given away for free, as a loss leader, with the
intention of promoting associated products, such as concert tickets and
merchandise. This is what the artist Prince did with his recent album – a
decision that infuriated the music monopolies. The UK arm of SonyBMG withdrew
from Prince’s global deal, and HMV called the move “absolute madness.” This
model would probably better suit established artists.
Pay what you want: Websites, such as Magnatune, offer music on a ‘pay what
you want’ basis. Interestingly, according to Magnatune, consumers are spending
more on average than if there was a fixed $8 price. Those who choose to pay
less per item, often end up spending more in total. 50% of the sale goes
directly to the artist (still too low in my opinion).
Pay by popularity: Some sites, such as Amie Street, have variable pricing
based on demand. Songs start free, or cheap, and rise in price as they become
more popular. This gives new artists exposure, whilst creating an incentive to
produce better quality music in order to increase popularity, and thus increase
the price of your songs. Here, 70% of the sale goes to the artist – that’s many
times more than from the music monopolies.
Subscription:
A subscription model might allow the consumer to download as much music as they
like from a particular online store, and keep it, for a monthly fee. Consumers
could also choose where their money goes. For example, they might choose for a
larger proportion of their subs money to be sent to small artists, or a single
artist they really love. Alternatively, the consumer could subscribe directly
to the artist; the latter would then receive 100% of the sales money.
Tax the Internet: This is not a new idea. In fact, the music industry has
been taxing blank media, such as tapes and CDs, for many years, in order to
‘compensate’ the monopolies for ‘losses’ made when, for example, you copy an
album and give it to a mate. Tax is the least progressive model. It would
increase the cost of using the Internet, and would reduce the incentive for
record labels to release new music.
Many of the
models listed above have great potential, and would cut out the parasitic
middle-men, allowing much more money to go to the artistic teams. The question
is, though, will they survive under capitalism? History shows us that big
business will eventually dominate. Corporate propaganda is already succeeding
in manipulating governments into passing restrictive laws, which are likely to
hinder creative people and consumers. The competitive forces of the market will
gives rise to market leaders, like iTunes and Amazon, which are likely to snuff
out competition. New socialised economic models are unlikely to survive unless
the economy as a whole is socialised. Public ownership and democratic control
of industry is the best way guarantee prosperity for all.
The question of ownership
A publicly
owned national, or international, music distribution website could be
established, where all musicians and consumers could be brought together –
imagine, one website containing all the world’s music; all downloadable for
little or no cost. Publicly owned recording studios could provide easy access
to equipment, giving equal opportunities for artists from poor backgrounds,
diversifying music.
In a socialist
economy, the cost of living would be drastically reduced, thus artists would
find it much easier to survive financially. The working week would be much
shorter, freeing up time for creative activity. What about all the lost jobs?
If we had a planned economy, we could relocate workers from areas of economic
decline, such as the ageing major record labels, and move them into areas of
growth, like the growing live music scene. Under capitalism, unfortunately, few
of these things are possible.
New technology
has made it virtually costless to pass on ideas, including music. The giant
corporations have lost their monopoly, and are desperately trying to sustain
their profits by criminalising consumers and making the public pay. This is
another clear example that shows that capitalism has become a fetter on
society.
