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4/30/2006

I'm a thief!

The_Thief

Why I Download: Confessions of a Music Junkie

by Mike Prevatt

I am a thief because I acquire music from the Internet. Habitually. Gleefully. Unapologetically.

I download, I stream, I burn, I rip and I glow. I shuffle through playlists, scour file sharing engines, peruse Web sites for music video selections and compile songs for mixes I make for my friends with less tune-hunting time than I have.

I do it all to find The Song. The One that elevates me when I'm down or, conversely, compliments the hurt after a rough day. The One that makes my adrenaline surge, my serotonin flood, my blood rush to my head. The One that connects me to another person. The One that connects me to the artist who authored it. The One that connects me to myself.

And yet, I'm told that by doing so, I am conducting burglary. I am accused of being unlawful. Unethical. Unloyal to musicians, even.

Unloyal?

I spend thousands of dollars on prerecorded music every year; I spend hundreds on concert tickets; and I even spend $13 a month on satellite radio service. I stomach MTV and broadcast radio. DVDs? I have almost as many music titles as I do cinematic ones. Singles? Still buy 'em. Imports? Worth the extra dough. I've even dabbled with vinyl and I don't even own a turntable.

You could never convince the music business that it's enough. Hell, you couldn't even convince me that it's enough. I'm listless and perpetually unfulfilled when it comes to music.

As a rabid fan, I am always craving music -- new, old and current. I want to know what people were listening to back in the day, what they're listening to now and what they'll be listening to in the future.

I'm not an addict. I just love music. I'm willing to do anything to get more of it. And in all likelihood, so are you.

You Say You Want a Digital Music Revolution

People like me have been listening to music on the Internet for more than eight years now. In the mid-'90s, you could find burgeoning Web sites that featured some sort of musical demonstration. Some songs played as soon as the homepage came up. Some could be streamed, where a temporary file is "forgotten" as soon as it was over (like a radio broadcast online). And some were available for download, meaning you could save them in your computer. The song files were typically primitive, but it was another way to experience music.

Along came the Moving Picture Experts Group, Audio Layer III, or MP3 for short. In 1997 or so, a couple of college students got a whiff of the compressed file that could playback songs a couple notches below compact disc quality, but better than that of streaming audio. They also discovered an "Amp" engine that could play the files. They threw a Windows interface on the Amp, called it WinAmp and began to distribute it on the Net. That's when it all went downhill. Or uphill, depending on how you look at it.

In 1998, university students armed with dormitory broadband (non-dial-up, high-speed) Net access, along with tech-suave geeks and music fans worldwide, began to acquire copyrighted music online for their personal WinAmp players. Within one year, MP3 became the standard format for listening to songs on the Internet, and their distribution over thousands and thousands of unregulated web sites meant that virtually any song ever recorded was available. Portable devices, spearheaded by RioPort, allowed the songs to move from desktop to a mechanism the size of a pack of cigarettes. People could store their new files on blank discs, to be read in other people's computers -- or better, they could decompress the files, save them and play them in certain CD players. One Web site, MP3.com, a massive community of artists and computer users willing to share their music, developed virtual storage lockers for fans and their music.

But that was just the start of what people were already calling the digital music revolution. In 1999, Shawn Fanning, an 18-year-old Northwestern University dropout, wondered if there was a way for computer users to easily swap song files online. He created Napster -- and in early 2000, the file-sharing, peer-to-peer service revolutionized the music industry forever. A year after its release, 60 million people downloaded the free software and adopted it as their one-stop music warehouse.

A kid in Tokyo could have the same music library as one in Omaha, Neb., with just a few clicks.

This, predictably, didn't sit well with the Big Five labels:

and in 2001 their lobbying arm, the Recording Industry Association of America (RIAA), convinced a federal judge to shut Napster down. The problem? Artists, labels and publishers were not being compensated by the free trade of song files over the Internet. Sure, there were several ways to obtain music on the Net -- even other song-swapping programs like Napster. The inventors of MP3 had made it easy for people to develop programs and software for it; there was no regulation or encryption that would hinder the advancement or potential of the technology. But no single entity had popularized the free distribution of music like Napster. By temporarily disabling the company/service, now being swallowed up by BMG, there would be less peer-to-peer downloading, less copyright infringement and less money loss in the music business. Right?

Wrong. Bustling during and after Napster's reign were file-trading services like Gnutella, Grokster, Morpheus, Aimster, Limewire and KaZaA (which currently boasts 91 million handouts of its program on CNET's Download.com) -- among others, providing easy-to-download, easy-to-use technology by which music fans could swap songs. Though the RIAA has sued nearly all of the companies behind the aforementioned services, most of them have done nothing but increase the amount of free music downloading on the Internet. In 2001 alone, nearly 8 billion song files were reportedly traded online.

With a number that huge, it's extremely likely either you or someone close to you obtained a recording online at no cost.

Too Little, Too Late

While music mavens were gobbling up digital music to our hearts' content, the music industry literally sat and did nothing. Not understanding the technology, the impact of an intangible format such as MP3, the distribution potential online or its own customers, the Big Five failed to develop their own mechanisms for marketing and selling music on the web -- and paid for it big time.

During this year's South By Southwest conference in Austin, Texas, the head-hung-low industry revealed how the digital music revolution not only snuck right past it, but robbed it. Last year, the top 10 bestselling albums -- the bread and butter of the business, many say -- sold 25 percent less than the year before. Sales overall were down between 5 and 10 percent, depending on which statistic you read. And no single album sold more than 5 million copies.

To add insult to injury, recordable compact discs -- which many digital music fans use to store MP3s and burned or recorded music -- outsold prerecorded albums 3-to-1.

Why? The industry refused to give consumers what they wanted.

For eons, the industry conducted business on its own terms, and people had to go along with it. This recently included CDs with a suggested retail price of $18.98, and very little in the way of digital alternatives. Now that consumers have found a way around the standard CD format -- and its high cost -- the labels are scurrying to catch up.

Universal and Sony teamed in 2001 to create Pressplay, which is one of two high-profile subscription services offering legal downloads. EMI also joined the service. In addition, MusicNet (or RealOne) was launched last year by Warner, BMG and EMI -- in conjunction with RealNetworks -- as another subscription-based function. These two services took the master recordings of the labels' music and made them available to computer users. Both services, which cost about $10 a month, claim that they offer high-quality music and that the artists get compensated. A no-lose situation, right?

Wrong. There are several problems with Pressplay and MusicNet -- and it's the music consumers who pay.

First, the Big Five failed to agree on a single service that would allow all of their music -- 85 percent of the recorded music out there -- to be accessed. (Big surprise -- they can't agree on much of anything, really.) So now, music fans must know the label that released the song they desire in order to download it, or subscribe to both services. Someone seeking rocker Tom Petty's "Wildflowers" won't find the song on Pressplay, as he is signed to Warner; it is only available on MusicNet. Conversely, you won't spot rapper Jay-Z's recent material on MusicNet, as he has been linked with Universal since 1997.

Second, the songs are not in MP3 format. You must use their players to hear the songs. Many of the songs are in streams, which often come out of speakers in a faded, echoey manner. And if you download a song, it can never be a permanent part of your collection. Once you quit the service, the files go along with your subscription.

Third, there is no unlimited amount of downloads for either service. In some instances, you can only download two songs from the same artist during one month. To accrue more download opportunities, you need to subscribe to premium plans, which come at a higher monthly rate.

Other ventures, such as Streamwaves, EMusic and Listen.com, are making inroads with the Big Five to make more music legitimately available. Listen.com, in fact, recently became the only service to offer music from all five labels. Sony and Universal are also facilitating the direct purchase of songs and albums online, from 49 cents a single to $9.99 an album -- clearly a step in the right direction.

The major flaw with these efforts is they offer no incentive to the music devotee to pony up the dough. If I've been downloading some or all of my music for the past year for free, why should I start paying now?

Been Caught Stealing

Even a hardcore music fan like me knows that downloading music from KaZaA and the likes is pretty much illegal. Then again, so are smoking pot and speeding, and some of us think nothing of committing those crimes. But there's a conscience to acknowledge when it comes to freely swapping songs online, and it pertains to the creator of the music. Without the download option, we might normally buy the physical recording in the store or through e-commerce means. Then, the artist could theoretically be compensated for his work.

Downloaders take the musician and his work for granted, but God forbid anyone should raise hell about the subject. Hard rock act Metallica tattled on 300,000 Napster users who traded its songs, and it subsequently suffered massive backlash from its fans and the media. Michael Greene, president of the Recording Academy, launched into an outrageous diatribe during this year's Grammy Awards that called file sharing "the most insidious virus in our midst" and a "life-and-death issue." The widely ridiculed speech was rumored to be one reason behind his forced resignation in April.

Still, one can't ignore the idea of an artist and his need to make a living.

"I think there's a terrible perception that artists shouldn't do anything for themselves," says Don Henley, pop musician and staunch critic of free file trading. "It's almost like there's a guilt factor that we didn't earn any of this, unlike other professions. [Some people think] music should be free, and the people who make it are not supposed to really be in the business for themselves, or looking out for themselves. They are just supposed to be providing free entertainment for the rest of the world."

The arguments among peer-to-peer advocates and users range from the fair use of recorded material (VHS taping) and the innocence of KaZaA and the likes in facilitating piracy, to the notion that users will ultimately support artists they download financially by purchasing their CDs and attending their concerts. But many in the industry aren't buying it. They use the decreasing sales numbers as evidence of their plight. They also point to mislabeled files, poor recording quality and unreliable service as reasons to forgo file trading services and opt for label-sanctioned services like Pressplay, MusicNet, MP3.com (now owned by Universal) and Listen.com.

The RIAA has long used litigious intimidation to counter what it sees as widespread piracy. Now, it may seek to punish the real perpetrators: you and me. Recent developments suggest the labels are discussing ways to sue file traders -- in particular, those distributing the highest volume of copyrighted material -- a tactic they have previously shunned. The threat is clear: Play by our rules or we'll take your ass to court.

The Defense

For a music fan, the web is a limitless supply of tunes and resources -- legit or otherwise. In eight minutes, with high-speed Internet access, you can download KaZaA, figure out how to work it, and then download -- say -- Dirty Vegas' "Days Go By." You can visit Launch at Yahoo and watch hundreds of music videos on authorized streams. You can hear snippets of songs at Amazon.com, to see if buying a particular album seems worthwhile. You can preview the yet-to-be-released Flaming Lips album on MusicNet or a new Red Hot Chili Peppers song on AOL. Or you can choose a song off Limewire (one of the few Macintosh-friendly peer-to-peer services), look at whose copy you're downloading and see if that user has any other selections you might be interested in.

This phenomenon has commercially aided artists more than the record labels would like to admit. A few examples:

* In 2000, Brit rock act Radiohead's Kid A was already being downloaded from the file swapping services, before it was released in October. This, despite concerted attempts from the band's label (Capitol) to keep it out of the public's hands before release. No matter -- the album, considered to be the band's most un-mainstream work, sold 200,000 copies in one week, landing Radiohead its first No. 1 effort and eventually going platinum.

* Rock band Wilco, after being dumped by Reprise Records in 2001, streams its new work, Yankee Foxtrot Hotel, online before it finds a distributor. In April, Nonesuch releases it on CD, and the critically hailed work is on pace to be the band's most commercially successful album to date.

* Punk-oriented group the Offspring had the most illegally downloaded song of 1999 with "Pretty Fly For a White Guy," and still sold more than 4 million copies of its Americana album. Pretty fab for an oft-downloaded band.

Why We Do It

We download because we are tired of radio either not featuring enough variety or playing too many advertisements. Thanks to the narrow playlist of media conglomerates like Clear Channel, the majority of broadcast radio no longer caters to anyone but fans of top 40. Online we can hear countless unsigned and unbroken artists; it is there they thrive beyond their hometowns.

We download because MTV and VH1 rarely play videos anymore, and when they do it's the same label-hyped artists over and over again. MTV2 has sought to focus on videos and not programming, but it is not available to the majority of cable subscribers. Going to Launch, Sputnik7.com or even the artists' web sites can allow us to see the visual accompaniment of songs from all genres.

We download because we will not pay $20 for albums that typically feature one or two songs of quality or appeal. Even with Best Buy, Wal-Mart and Target pricing albums below $14, and sometimes as low as $6, there is no way to obtain a fraction of the music being marketed relentlessly by major labels. And forget about being offered a decent array of singles, forcing us to fork over the $20 for the full-length.

It is increasingly hard to find music worth that amount of money, and the industry is reluctant to accept that.

We download because it is difficult to sympathize with a business that claims its artists are losing money to the file sharing phenomenon, and then typically pays them last -- after the label, the managers, the lawyers, the label's promotion department and everyone else involved in making and promoting the record. Artists make little, if any, money from albums unless they are megasellers. It is through touring and merchandise sales -- and maybe publishing royalties -- where artists have any hope of recouping the costs of making an album and earning a living. Downloads can't infringe upon concerts, radio play and T-shirts.

We download because the government -- largely uneducated on the issue of copyright infringement on the Net -- has been slow to legislate whether we're actually stealing or not, and intervene on the issue of proper licensing payment.

We download because we love music. We want unlimited music, which we can use in any way we want, for the least amount of money. The Internet, right or wrong, provides us with the means to accomplish that. The white label versions, rarities, hard-to-find b-sides, out-of-print titles, live performances, hard-to-find remixes -- they're all floating in the cyber ether, within grasp at any moment. How do you convince a music junkie to ignore that?

And we download because for the first time in years, after the price-gouging and marginalization of the art form we love most by the music industry, we have something to be excited about. And it wasn't started by the Big Five -- it was started by music fans and computer users. We changed the music experience forever.

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4/29/2006

File sharing: Innocent until proven guilty

filesharing_image

An economist says music piracy should be hurting the recording industry,
but it isn't -- and he doesn't know why.


by Damien Cave

Stan Liebowitz first began to attract public attention as a debunker of the idea that "network effects" could lock in winners in specific markets. The networks effects theory posits that once a certain product gets critical mass, such as, say, the VHS format or the QWERTY keyboard, it will remain supreme, even if other products might be demonstrably superior (such as, some would argue, the Betamax format or the Dvorak keyboard.) If everybody buys VHS tapes, then the studios will only release VHS tapes, and everybody will have to buy only VHS tapes, and so on.

Liebowitz, a professor of managerial economics at the University of Texas at Dallas, argued, along with his coauthor Stephen Margolis, that neither the examples nor the theory held water. Their critique had significant implications, especially when brought to bear on the Microsoft antitrust trial, since one argument put forth by the Justice Department was that "network effects" ensured Microsoft monopoly power.

Liebowitz has consistently criticized the attempt to punish Microsoft for supposed abuses of monopoly power. Two years ago, for example, he wrote a 36-page analysis concluding that a breakup of the software giant would cost U.S. consumers $50 billion over three years. Higher prices, he argued -- charged by the new companies, and by other competitors -- would be the result of regulatory intervention.

Now Liebowitz has turned his attention to another hot-button issue where law and economics intersect: file sharing. It's a logical step for the professor. He's been following copyright law and its effects since the 1970s, when audiotapes were being denounced by the recording industry as tools for theft. On May 15, the Cato Institute published a new paper by Liebowitz, "Policing Pirates in the Networked Age," that takes a comprehensive look at the history of the recording industry's battle with piracy.

In the paper, Liebowitz argues persuasively that record industry experts failed to prove their assertion that Napster was gutting industry revenues. But he also argues that eventually, digital downloading will be a serious threat to those revenues. Both topics will be part of his upcoming book, "Rethinking the Networked Economy," due to be published in August. But the specifics of those arguments may be somewhat altered from their form in the Cato paper, because when Salon caught up with Liebowitz, he was reexamining his data and wondering, Why isn't the record industry hurting more, already?

You point out in your Cato Institute article that throughout history, new technologies are always seen as a threat to copyright, but that the fears are always unfounded. Copiers actually improved the academic journal business; VCRs increased Hollywood's revenues. Yet, you maintain that peer-to-peer file sharing will severely damage the record industry. Why are you so sure that this will happen?

Actually, I'm not sure. It took six months to get [the Cato piece] out. Now I'm stepping back a bit. In the Cato piece, what I said was that [file sharing] seems like it should be causing a lot of harm. But we're not seeing it. The explanation I gave was that maybe there weren't enough people who owned CD writers during that period. In order for downloading to really have an impact on CD sales, it needs to be a substitute for CDs. If file sharing is not a good substitute, then you can download all you want and it may be a new form of listening but it may not hurt CD sales.

The problem is that the number of downloads appears to be larger than the total number of CDs purchased. Worldwide annual downloads, according to estimates from places like Webnoize, would indicate that the number of downloads -- if you assume there are 10 songs on a CD -- is something like five times the total number of CDs sold in the U.S. in a year, and one-and-a-half times the worldwide sales. That's so large that you have to say: Look, if downloads are substitutes [for CDs] in any significant way, we should see really big declines -- unless there's something else going on.

The reason I gave in the paper is that maybe people aren't shifting their music [from MP3s to CDs]. But I've also seen some recent numbers on households that have CD writers, and it's something approaching 30 percent. We should see an impact. There's a 5 percent decline in CD sales this year, but that's what you might expect in a recession. So we're still not seeing much. And what I'm beginning to suggest now is that perhaps people aren't going to replace the purchase of CDs with these MP3s.

Why not?

There are a bunch of potential reasons. It may wind up that people just like to purchase because it's the honest thing to do. There's another possible explanation though, which is something that I'm trying to get harder data on. If we had a degree of copying [now] not that different from in the past, and it's just switched from audiotapes to downloads, then we may not notice an impact on CD sales.

But then, there should have been a noticeable impact in the 1970s, when audiocassettes came along. And one of the reasons why no one has been able to do a good study on that -- the Office of Technology Assessment tried to do a study on it but they based it on surveys of users, which are not very useful -- is that it's very hard to get hard data on CD and record sales. No one was doing studies like that back then. I've seen some numbers, and I'm going to go back and take a look, but if there wasn't a major impact in the 1970s, it may just be that were not going to see much. It may just be another case of crying wolf.

It sounds like you've changed your mind ...

I try to let data tell me what's actually happening in the world. And when the theory says one thing and things don't work that way, then I say something's missing in the theory. A priori, I had a belief that [file sharing] was different and it was likely to cause real harm. That's what the Cato piece was about.

But if a year from now, when the economy picks up, we still don't see a decline of 15 to 20 percent at least, then file sharing is having a very small impact, considering how massive the downloading is. It's not that say, 10 percent of record sales is a trivial amount of money, but it's not going to be the death of the record industry.

Are you basing your shift in opinion solely on the lack of evidence showing damage to sales or is there other empirical evidence that supports the claim that downloading won't destroy the industry?

It's mainly the sales. That's where you would look, that's where there should be clear evidence. If downloading was 10 percent of CD sales, you can imagine it would be hard to notice because lots of things buffet the CD market. Is there someone who has a really hot CD this year? Have tastes changed? Things come and go and take up people's attention.

But with the amount of downloading as large as it is, if it's really going to have an impact, it should be pretty obvious. We have more downloads than legitimate sales; that's a very big market. You don't need sophisticated analysis to see a 30 percent drop in CD sales and to say that it wouldn't be due to a minor recession. And that's the kind of thing you should see if there's a massive amount of pirating that's much greater than what existed before.

So far, why do you think people are both purchasing music and downloading it?

It may be the cost of putting these collections of songs together. Even though it seems low, it's more effort than the typical person is willing to go through. That may be what the salvation of the record industry is -- that it's simply too hard to do on your own what they do for you.

Do you think that this new download use is likely to become a new revenue stream, just as videotapes were for Hollywood?

I believe it's more efficient to download music than to go to a record store. I think that digital products should be sold over the Net and they're likely to be successful. So I expect that the buying of records will eventually cease. But the tastes of consumers are a hard thing to know for sure. They like holding these things.

What do you make of the subscription services that have been popping up -- the vast majority of which don't allow for much flexibility? Are these viable alternatives to the unofficial file-sharing networks?

Certainly, if they're going to sell music that you can't make copies of, people aren't likely to pay as much for it. I don't know that the record companies really understand that. I think the pricing that they have for these services doesn't make any sense.

But again, you have to remember that what seems to take a long time while it's happening, in a historical context can occur very quickly. Videotapes when they first came out were totally mispriced. They used to sell them for about $100 because the idea was, no one really wants to have a library of videotapes. Why would you watch a movie more than once? The video rental places were going to be the ones to buy the videotapes, and since they were going to rent it over and over again, a very high price should be charged. It was only by accident that the movie industry discovered that gee, it's a much more elastic demand than we had thought.

They had a special on one of the big holidays where I think "E.T." was dropped down to $25 -- no one had ever done anything like that -- and the sales were just enormous, way beyond expectations. That's where they learned that if you lower the price, you can sell a ton of these. And now the revenues from videotape sales -- not rentals -- are larger than the revenues from theatrical releases.

Looking back, it appears that it happened quite quickly. But at the time, there were a couple years where videotape people were mispricing videotapes. So it wouldn't be surprising if we had mispricing here as well. They're learning what to do.

There's one other thing that makes it difficult for these services -- the big retailers. Stores like Best Buy should be dead set against the major record companies allowing inexpensive downloads. And it's still the case that almost all the business that the labels have will be through retailers. So they have the retailers pushing really hard -- they don't want the major companies to have affordable downloads and the labels don't want to alienate the retailers.

So if one of these companies, say PressPlay, really lowered its price, I presume that some of the major retailers would say, look, if you're going to charge such low prices, then we're going to push the other labels who aren't charging such low prices. We're going to put their CDs in more prominent locations. It will take a while for retailers to lose their power, and for legitimate downloading to get big enough. So there are some things going on that make me think it's going to be while -- maybe a decade -- before we get to reasonable pricing on downloaded music. But it should clearly be the way to do it.

At what point does the industry accept the facts that you're pointing out, and move on?

My experience with the industry is that they'll never accept it because they never accepted it with any of the other copying technologies ... I don't think they're going to back off. I'm not sure they'd believe it if you told them there wasn't any damage, even if you told them there was a statistical study that indicates no decrease in sales. What they'd say is, even if there isn't, let's just be safe.

What would it take for change to occur? Could the artists be a force for change?

If a couple years go by and the massive copying still continues while the artists see that it doesn't have a negative impact on sales -- if that turns out to be the case -- then I suspect that the level of concern will go down. They'll still talk, the record industry, but they won't be manic about it. They were concerned about audiotaping but after a while, they seemed to realize that it wasn't that bad. But it took them a long time.

Is their energy in fighting file sharing far more intense than what was expended to fight previous copying technology?

Yes, and you have to remember it's coming from multiple sources now. In the past, it was really just music. There wasn't a major concern about videotapes being copied. Now there's a concern even though it takes forever to download, that you're going to have movie file sharing. So you have the studios falling in line. And a lot of artists, in film and music, are more concerned than they used to be.

And to be honest, it looks like [file sharing] should really cause problems. I honestly believed it too. If you look at the logic of it, then you say this one is real, this one should really do damage. And I'm not willing to say that it's not going to. But I'm just saying it's beginning to look like a lie.

You also argue that the industry shouldn't have sued Napster. What should they have done?

They should have tried to negotiate with Napster to try to change the rules a bit. Number 1, they could have kept a bit of control over what was happening. They could have done a few things, like saying in order to download something you have to upload something. That would more likely make people want to buy originals. It's a more controllable form than the pure peer-to-peer without the central server.

Let's talk about digital rights management [DRM]. The idea behind DRM is that entertainment content will be delivered in a form that includes copy protection and a payment mechanism. In your paper, you identify DRM as a possible solution to the online copyright battle. Do you still stand by that?

Yes, it should still work. I got a lot of hostility to that idea from people who would normally agree with me. I got a nasty letter from someone, who said he took a videotape of his brother's wedding, and then he tried to transfer the sound to the digital audiotape that he had, and it wouldn't do it. He blamed DRM for that.

I wrote him back and said, look, be mad at the Digital Home Recording Act. That's what said you can't record from a digital source onto a digital audiotape. It has nothing to do with DRM.

DRM, as I see it, is merely the protection in the software, on a CD or whatever, that would allow micro-payments. It doesn't do this yet, but in principle it could. That's what I view as closer to ideal. They can let you do a lot and you pay a higher price, or let you do only a little in which case you'd be paying a lower price. It solves a lot of peculiar economic problems that arise when you're dealing with intellectual property. If it stopped copying, if it was fairly effective -- it will never stop all the hardcore crackers -- then the copyright owners will get a reasonably good deal and users will get a reasonably good deal.

The micro-payments idea has been floating around for years and it's never happened. Why do you think it would work and why hasn't it worked so far?

I have to believe the computer people who think that DRM is viable. The micro-payment part is the harder part because the credit card companies won't accept payments as small as micro-payments would need to be. If someone can come along who is able to accept small micro-payments -- one of the credit-card type companies -- then it could be viable. Right now, that's probably the biggest impediment: There's a fixed cost for using a credit card that's bigger than what a lot of these payments would be.

The idea has caused a fair amount of hysteria in the academic community, because they think fair use is going to disappear. I think that's totally not true. Fair use is still there. DRM can't keep you from reading the material, as long as you pay the price. Some say, Well, how can you take a paragraph and copy it anymore? That's what we normally consider to be fair use. But the fact is, you can still do that. You might not be able to cut and paste but as long as you can read it, you can type it.

But essentially, you're being forced to pay a company for a right that's protected in the Constitution ...

That's right. You might have to pay something. But you can always go to someone that has a legitimate version, or to a library or something like that. So I don't think it's really changing fair use. It's what fair use was before the copier. We certainly had fair use then, so this doesn't kill fair use. It's just not as easy as it could be but it's not any harder than it was 30 years ago.

But doesn't DRM limit the incentive to create, by making it harder for people to create works that derive from copyrighted creations?

I don't think that all that many people are going to use very much less. So you pay a little bit of money, which is all it should cost to get a copy. Academics mainly cite academic stuff and this usually goes at low prices. Everyone's putting up copies of their paper before publication for free downloads anyway. When you talk about quoting people's work, you see a lot more of that on the academic side. And they're the ones who are upset about it. There aren't that many novelists who are quoting other people.

Larry Lessig, Pam Samuelson and other legal scholars argue that the copyright balance has been shifting in favor of corporations for decades, with the extension of copyright law's term, the DMCA and other legislation. They think the balance has been upset so every issue becomes a vital opportunity to tip the scales back in the public's favor. Do you think these scholars are misreading recent copyright history?

While it's true that there's always been a balance, we don't know if it's been a particularly good or even balance. We really don't know. There's no empirical work that can tell you whether copyright is good or bad. It's one of the great problems with this area of law. And yes, copyright law has changed tremendously.

But I think there's a bit of hysteria there and part of it is self-serving. Academics have gotten a bit spoiled. These days they can copy things easily for free. If they had to pay some small amount, which is really all we're talking about, they get upset. I don't see the costs as a major problem.

I view the DMCA as draconian. I'm really quite unhappy about it. But I'm not unhappy with digital rights management, narrowly defined to software that keeps you from making copies; that doesn't extend the length of copyright; and certainly doesn't get rid of fair use.

What makes you so sure that DRM won't turn off consumers and make them focus on the rogue file-sharing services?

If it turns off consumers, they'll have to remove it or lower the price. The people selling these things want to make money, which means they want to give people whatever it is that they want to pay the most for. They want to maximize profits and if they change their product and no one wants to buy it, they'll change it back in a heartbeat. That's the beauty of the market. That's why it can't get too far afield. If they get every consumer mad at them, they'll be in big trouble.

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4/28/2006

Music in the Age of Free Distribution

Free Distribution

MP3 and Society by Kostas Kasaras

This essay is an attempt to present and critically discuss the phenomenon of music piracy on the World Wide Web. The main arguments in this paper will try to approach the phenomenon from two directions. The first one attempts to present the MP3 phenomenon as a part of the challenges that the music industry had to face. It is argued that in the past several technological developments have already challenged the music industry's status quo in similar ways. The second direction, is attempting to situate the MP3 phenomenon in its general technological, economical and political framework. In other words, the MP3 phenomenon should be examined as a part of the cultural transformation that the Internet 'explosion' produces on a global scale.

Contents:

Introduction
The New Technology
What is the RIAA?
The Uses of Technology: A Brief Genealogy of the Mechanically Reproduced Sound
Analysing the MP3 Phenomenon
Conclusion

 

Introduction

"The cool thing about Napster is that it encourages enthusiasm for music in a way that the music industry has long forgotten to do"
Thom Yorke (Radiohead), 10 September 2000.

The topic of this essay is the contemporary phenomenon of music piracy on Internet. The new computing technologies have provided to the Net users the opportunity to download to their personal computers and distribute to the Web, free musical pieces of art in digital format. This is a result of a file-compressing technology called MP3, which has made the transportation of music in the Net very easy.

This piratical distribution of digital music has produced a great number of arguments around issues related to how art should be distributed and consumed and the implications that a change can have to the music industry and the art creation process. In addition, the MP3 phenomenon is a part of the contemporary discussions about the ethnographies of the Net and in general about the impacts that the Internet experience has in modern societies.

The ways that this essay presents the topic is firstly by explaining what an MP3 file is and by presenting the story of the two most popular MP3 sites (Napster and mp3.com) and secondly by following two directions of arguments about the implications of the phenomenon. The first direction is related to a presentation of the historical development of the music industry as a result of several technological inventions (phonograph, radio, transistor, vinyl, cassette, and MTV). The main intention behind this presentation is to show the ways that these new technological developments have shocked the music industry's existing system of their time, and how they were incorporated by it. In that sense, one can understand that the MP3 piratical phenomenon is not the first challenge that the music industry has experienced; many previous technological developments have challenged its status quo before.

The second direction of arguments is mostly related to a critical presentation of the implications of MP3 for the modern musical industry and society in general. Therefore, this essay is an attempt to present the structure of the first MP3 communities (although we still do not know much about them), their musical consumption (as a social phenomenon), and the implications that these have to music industry. Moreover, this essay is attempting to present the impacts that the MP3 phenomenon has on artists and on the art creation process. Finally, the last chapter of this essay examines the political implications of this phenomenon, as a subversive political action.

 

The New Technology

What is MP3?

Before explaining what an MP3 is, a clarification of modern music technology is useful. Music CDs, tapes, and vinyl discs reproduce sound through a 'so called' analogue format. This means - simply - that various devices can play music by reading physical bumps or grooves of the surface of the media. In contrast, computers reproduce music by using a digital format. This is a technology that converts these bumps or grooves into number combinations, called algorithms, which the computer translates into sound waves (called WAV files). These algorithmic files have the disadvantage that they take a large amount of space, making storage and transfer difficult. The solution to these problems has come in the creation of MP3.

The acronym MP3 is derived from the group that discovered it. The Moving Picture Experts Group was based in the Fraunhofer Institute for Integrated Circuits in Germany and its purpose, which started in 1987, was to create a high quality, low memory music file. They knew that the human ear cannot hear all the frequencies that a WAV file has, so they decided to eliminate all those sound frequencies that a human ear fails to pick up, thus reducing file size. A WAV can be compressed to 1/22nd the size of the original by using MP3; as a consequence it can be transferable and easier to store. Does this reduction in size affect the quality of a MP3 sound file?

A MP3 file is a satisfactory reproduction of a WAV file as long as it is not reduced to its minimum of 1/22nd its original size. In this case it loses a noticeable amount of sound quality. By reducing the file only to one-tenth of its original size, the resultant sound quality appears to be unaffected. Consequently, an MP3 file is what researchers were looking for, since it requires less storage and memory, is an easy transferable file and has the sound quality of a full WAV file. In other words, as Jon Cooper and Daniel M. Harrison note,

"a telephone modem (56K) can transfer one 4,8-minute song in about 11 minutes, a cable modem can transfer one in 48 seconds, and faster links make transfer time almost a non issue entirely ... [while] with the rise of commodity hard drives, storing huge amounts of MP3 files is extremely efficient and affordable".

In addition, the most important advantage is that the change from a WAV to MP3 is completely inexpensive.

Internet users adopted this new technology and started using MP3 for their favourite music files. Thousands of personal MP3 Web pages have been developed during the last three years and the amounts of Web searches for "MP3" have exploded into unbelievable numbers.

"One company that keeps track of cyber-traffic reports that MP3 has just surpassed the word 'sex' as the most popular search category on the Internet".

Anyone, anywhere in the world with access to the Internet can log on the World Wide Web, visit respective Web sites and download for free into their personal computer music they like. Moreover, with the appropriate devices - CD recorders or MP3 players - they can transform these digital files to 'real' analogue ones.

One could argue that apart from changes in music distribution, MP3 has also produced a change in the ways that modern fans of music perceive a musical piece of art. As noted earlier, the digital reproduction of music transforms analogue formats to algorithms that are translated to sound. In other words, physical objects (CDs, tapes and vinyl) are replaced by computer bits that are stored in the storage devices of music fans, who seem to experience a different 'first approach' to musical expression. The lack of physical contact with an 'original' copy creates new ways of understanding music and new types of relationships between the consumer and the product. Similar to the change that music fans experienced when compact discs replaced vinyl, MP3 has changed concepts of ownership and even the idea of the musical piece of art as a whole. Consumers once upon a time had a sensation of "physically" owning music after every purchase, owning a container in which they they valued features of the physical container like an album cover and its artwork. These experiences are changing with MP3, and are characterised possibly by a more direct relationship with the sound experience than ever before. One could claim that the notion of originality has been replaced by the need for affluence with digital music.

Consequently, one could argue that this new technology, and generally the facilities that computers provide, produce several new conditions for the 'music world' related to distribution, consumption, copyright and art creation. But the new computing achievements - which some call a 'digital revolution' - are not only affecting the 'music world' but also many other part of modern society and everyday life. Perhaps we should regard the MP3 phenomenon as just one example of this 'digital revolution', which has made a strong impact on just one part of modern society - the 'music world'.

Taking everything into account, one could claim that MP3 technology shocked the traditional 'music world'. This aspect of the 'digital revolution' was unanticipated by the music industry. Changes in music consuming behaviour were not the result of the appearance of personal sites and the exchange of MP3 files as attachments in e-mail. Everything changed after the development of MP3 sites based in the idea of 'file sharing', like Napster and mp3.com.

The Story of Napster and mp3.com

In 1999, Shawn Fanning, a student at Northeastern University, created a MP3 Web site that was unlike all other existing sites at the time. It did not provide access to music files to download, but instead was a file sharing system. His server used a software program, called Napster, which allowed visitors to access music by using a direct file transfer. Any visitor could obtain the Napster software by visiting his site, and then see what kinds of music was available by typing in a song title or thename of an artist. The server would then link one Napster user to another Napster user who actually has a specific song on their computer.

For the traditional music industry, Napster made music piracy on the Web a mass phenomenon, for in just a few months Napster acquired an astonishing number of users.

"Napster has unleashed the music nerd in a supposed 65 million users. With an incredible 300,000 new users signing on everyday, Napster became the biggest single user-community the Internet has ever seen in its sort and surprising life".

Music fans became excited by this new way of music distribution, because most popular music was readily available and "using Napster was easier than going to record store, and easier than ordering records on-line".

Another popular MP3 site, with a different function than Napster, is mp3.com. Created by 31-year-old Michael Robertson, it "works for a higher purpose [...] We are providing artists with an option besides the traditional industry route-an avenue in which they have control of their destiny and keep ownership of their work". In mp3.com when artists sign up, they agree to give a free download of their work for visitors to the site. When Web visitors decide to purchase an entire CD, mp3.com delivers it to their homes. "The artist sets the price of the CD, gets 50% of the retail price on every sale, and keeps full control of the master recording. Thanks to the free songs, Robertson has built one of the most popular sites on the Web, with 250,000 visitors a day".

Apart from its alternative solution for music distribution to artists and music fans, mp3.com also had another function for successful artists. If visitors could prove that they own the album of a specific artist, by putting a specific compact disc in their CD-ROM drive, they could download any song they liked from this album. This might sounds pointless, but anyone could borrow the relative album and then download it for free; and many took advantage of this opportunity. This was one of the best ways for Michael Robertson to advertise his site's artists, since he promoted them by taking advantage of the fame of other artists. Therefore, if any visitor wanted to download songs from say the new Pink Floyd album, they could also download for free the samplers of artists that belonged to mp3.com.

The incredible number of Napster and mp3.com users and the creation of many similar sites resulted in an immediate reaction by the music industry. Their fear that customers would stop purchasing compact discs, because their content was free on the Web, united the five major companies in the music business - Sony, Universal, EMI, Warner, and BMG - under the same goal: to legally fight against piratical musical distribution and especially against Napster and mp3.com. Toward this legal action many popular artists were supportive - like Metallica or Elton John and Madonna - while many others were against the legal fight - for example, Radiohead, Public Enemy, U2, Prince and Neil Young. Metallica in fact started legal proceedings while in contrast Radiohead, Public Enemy and Prince were among the first popular artists that elected to distribute their new albums on the Web.

The legal action against Napster and mp3.com, started at the end of 1999 by Metallica and the Recording Industry Association of America (RIAA). Nearly two years later, the music industry and music fans all around the globe are still waiting for the end of the story. Reactions to the legal battles during this period were many and varied. Some demonstrated their disapproval towards restrictions on Napster by hacking into several American governmental Web pages or by sending thousands of e-mails to several American Senators. Also, many Web sites - like BoycottMetallica.com or PayLars.com - were created by MP3 fans to ridicule those artists that fought Napster and mp3.com. Moreover, the MP3 'hysteria' also led to political reactions after the German government discovered some Nazi tracks that were exchanged on the Web . Another example is the sudden police invasion into the homes of MP3 users in Belgium. Significantly, the 'Napster and mp3.com case' was one of the questions addressed to the two American presidential candidates, Al Gore and George Bush, during their pre-electoral political debates. "Orrin Hatch, the usually staid, conservative senator from the Mormon homeland of Utah, suddenly got Napster fever and began to make appearances with the golden boy (Shawn Fanning)" certainly indicates the popularity of the MP3 phenomenon. Much of the academic world and famous institutions - like MIT, Stanford and the University of South California - placed themselves against restrictions by allowing their students to download and exchange MP3 filess until (at least) the end of legal action.

In spite of the legal actions, the music industry is facing a new reality that is difficult to control, challenging many of the principles of the existing system. The 'MP3 storm' has already produced a major crisis related to producing, reproducing and distributing music. As Clay Shirky noted:

"The economics of the Internet are pressing with irresistible force not just against business models that treat music as intellectual property but against the legal structure of intellectual property itself. The big question is not whether Napster will win or lose on appeal. It is whether the current legal structure regarding copyright will hold".

It is obvious that the MP3 reality is testing the entire system, including artists, the music industry, consumers and their relations. But - as history has shown - this is not the first time that technology is changing or threatening these relationships. We will now try to make a brief genealogy of the ways in which new technologies 'shocked' traditional relationships, confronting existing systems and influencing notions of intellectual property.

Edited from the website Consumers against the RIAA

Please note that this story was written by Consumers against the RIAA and was not written by chazzsongs and the views and opinions expressed in this story may not necessarily be shared, nor endorsed, by chazzsongs.
See »»  Disclaimer

What is the RIAA and what does it stand for?

The Recording Industry Association of America is an oligopoly of the five biggest record companies in the world. These companies are Universal Music, Sony Music, Warner Music, EMI Music, and BMG Music. If you've ever purchased a pre-recorded cassette tape or CD, chances are 99 to 1 it was released by one of these five companies under one of their hundreds of record labels. See »»»   here

The RIAA is similar to a killer octopus whose tentacles are always reaching out for prey. The prey would be us, the music fans, and even the recording artists themselves. The RIAA is committed to preventing any independent label from gaining a foothold in the industry. This is how they can team up with music retailers to fix the artificially high price of CDs. It also allows them to maintain a chokehold on the songs that get on radio stations' play lists. They pretty much decide which CDs are heavily promoted in retail stores and which music videos go in heavy rotation on the video music TV channels. In other words, the RIAA have taken it upon themselves to decide what type of music we listen to and buy.

How are artists and consumers victimized by the RIAA?

The RIAA is similar to any other business in that its main objective is to make a profit, but something went really wrong with the music retail business, especially after the vinyl format was abandoned and replaced by compact discs. CDs are more durable than vinyl and they cost significantly less to produce, so why then has the price of record albums almost doubled since the switch to CDs was made? The RIAA claims operation costs such as production, marketing and shipping add significantly to the cost of the end product.

This does not seem correct, because record companies do not pay much in out of pocket expenses at all. If you're an unknown artist, you usually get a pretty bad recording contract, one that earns you about 35 cents for each CD sold. A big-name act can use their name and former sales record as leverage to negotiate a better deal for about $1.00 to maybe $2.00 per CD sold. Retailers tag on their inventory/overhead costs which is maybe $2.00 to $3.00 per CD. A mass manufactured CD costs only about 30 to 40 cents. What then happens to the rest of the money you pay when you buy a CD?

Just about all of it goes into the record companies' pockets as profit!

A big chunk of it pays the enormous salaries of record company executives. These people are well-known in New York and LA for their bleached-teeth smiles and $100,000 cars even though they contribute zero to the creative process. And they don't care much about promoting the careers of the artists because as soon as the CD sales drop off they dump the artist and begin searching for the next big act or single hit.

Nearly all the promotions costs are deducted from the artist's royalty checks. These include the cost of touring, the cost of costumes, makeup, and photography; the cost of studio time, the cost of the studio engineers, the musicians' salaries, the cost of making music videos, the cost of background dancers, the cost of the stage crew, the cost of the sound techs, the cost of the clean-up crew... The artistes collect only what's left over after everybody else has been paid. That's how the music business works. Many new artists don't fully understand this and that's how some of them end up near broke even after selling hundreds of thousands or millions of CDs. Remember the story about the female hit group, TLC? After all their hit singles, they were broke.

Music buyers also get screwed in that most CDs cost between $17.00 and $20.00 although they contain only one or two good songs and a bunch of filler songs.

The RIAA's strict copyright policy

No one rips off the artists more than the record companies. The RIAA has a strict policy on the ownership of copyright music. This means once they release an artiste's music on one of their labels, they automatically become the copyright owners of the recorded masters. Years from the date of the original release they can re-release the tracks or license them for use in advertisements or for other purposes, and although the composers receive chump change royalties the original musicians and vocalists never see another penny. In other words, again, nearly all the profit goes to the record company.

The advent of peer-to-peer file sharing.

Technology is truly a wonderful thing, because it brought us a new way to get the music we want without taking out a second mortgage on the house. It caught the RIAA's attention because, for the first time in history, technology threatened to make the RIAA a redundant organization. Music fans can upload and download MP3 files without any interference or control from the RIAA, and this really threatens the record companies' future.

Napster was the biggest and most successful place to do this on the Internet, but naturally, the RIAA shut it down. The really good thing about Napster is it proves the recording industry to be obsolete!

Also think about this, you don't get to sample the songs on a music CD before you buy it. And, if after you buy it and take it home you find that most of the songs are garbage, good luck to you for trying to get your money back. Retailers have an RIAA-backed policy that they will exchange opened CDs only if they are physically defective, and they will only exchange the title you bought for another CD of the exact same title. The reason they claim is that once the package is opened they can't guarantee that you didn't make a copy of it so it's a protection for them. What this really means is that once you hand over your money for a CD, if you open it and play it and find that you don't like the songs you're stuck with it anyway. Once the RIAA collects your money, they will not give it back, and there's not one thing you can do about it.

End of report from Consumers against the RIAA

 

The Uses of Technology: A Brief Genealogy of the Mechanically Reproduced Sound

The Beginning of a New Industry

The evolution of the music industry has been deeply influenced by the developments in technology. One could argue that technology has been many times a challenge for existing modes of cultural production, its economic relationships, and the law. New technologies often find existing relationships unprepared for changes, so technology becomes the vehicle for transformation and further development of existing relations. Uusually the first reaction is an attempt to incorporate new developments into an existing framework and then to use them for profitable purposes. For example, look at the impact of Johann Gutenberg's invention in the 15th century.

Gutenberg's movable type created in one sense the foundation for the modern music industry. As Russell Sanjek argues, the "[c]ontrol of the duplicating process had moved from the hands of church into those of the entrepreneur. Literature was becoming secularised to meet the demands of its new audience, and music too, would soon be laicised as its principal patron, the church was replaced by the public consumer". The development of typography altered social relations of the time, and led to new ways of distributing knowledge and arts. As Garofalo writes:

"In the mercantile economy, the dependency of feudal relations and the elitism of the patronage system were gradually replaced by the relative democracy of the marketplace ... Slowly a pan-European body of literary and musical works appeared. As the financial interests of merchant bookseller-publishers expanded, they began to join forces to lobby for legal protection".

Therefore, the development of the market economy created new economic interests and new ethics about the value of a work of art and the protection of intellectual property.

Britain created one of earliest copyright laws in 1710, the Statute of Anne, which became the basis of every intellectual law that followed in England and in international level. Since this beginning, legal issues have addressed the division of profit between artist and distributor. As Garofalo argues, despite that "the law included an author's copyright and protections for consumers (by limiting the term of copyright and creating a 'public domain'), it clearly favoured the stationer's guild ... In this reciprocal arrangement, booksellers fared considerably better than authors or composers". These fundamental policies continue even today, protecting the artist by ensuring at least a minimum payment for his work.

Mechanical reproductions of art and information challenged existing systems and their economic interests. After Gutenberg, a number of inventions followed, each in their own 'shocking' traditions of producing and distributing knowledge and art. With the first International agreement on copyright in 1886 (known as the Berne Convention), existing system for the organization and distribution of information organised the means to protect their interests at an international level. Therefore, every subsequent 'invention' faced a well organised system that fought changes in the status quo, often by amendments to the Berne Convention or by legal actions at various levels in different states.

One indeed could argue that the technological achievements of the last 100 years ultimately did little to challenge existing systems, but instead only reinforced them. The invention of sound recordings, for example the phonograph, created the music industry, as we know it. The response of the music industry over time to new technologies supports the notion that technologies reinforce, rather than radically alter, existing systems of information creation and distribution.

The Gramophone and the First Steps of the Music Industry

Thomas Edison's phonograph - or 'talking machine' - was simply a new device for the office that could provide assistance with stenography, teaching elocution, and other mundane chores. Edison used musicians and singers in public demonstrations, but never envisioned an industry based solely on music. He always claimed that his phonograph was just "a mere toy, which had no commercial value".

It was the gramophone, not the phonograph, that brought the music industry into existence. Invented by Emile Berliner, he immediately realised the possibilities for a new niche. "At its first demonstration in 1888, Berliner prophesied the ability to make an unlimited number of copies from a single master, the development of a mass-scale home-entertainment market for recorded music, and a system of royalty payments to artists derived from the sale of disks". Berliner's company - the Talking Machine Company - in 1901 became a leading force in the music business in the United States and a threat to the traditional entertainment business. As Martin explains, "the threat that this [recording industry] posed was soon apparent to piano-makers and retailers, music teachers, sheet music publishers, music hall and vaudeville artists, proprietors and so on".

Berliner's business plan was based on growth in two areas. First, on the practical side, the basic technology had to evolve to be easy to use and inexpensive to the consumer and profitable to the Company. Second, new musicians and music had to be discovered, and demand for that music had to be generated to sell gramophones and related technologies. Emile Berliner managed to succeed in both. He created the 78 RPM discs that were the industry standard until 1948 (the 33-1/3 RPM disc appeared in 1948, and the 45 RPM disc was first available in 1949). Berliner hired Fred Gaisberg to find new talent and make them more widely known through the recording medium. Consequently, Berliner's plans paid off, and soon the music industry expanded, since many others followed his strategy. From this point and afterwards, the recording industry has continued 'using' recording directors and talent scouts (like Berliner did when he hired Fred Gaisberg) to promote its business and has also started producing both the music hardware (in this case the phonograph) and the software (the gramophone records). Until the new directions that Berliner created, the record-making activities were just an aspect of their marketing of record players and not a separate commodity.

It is interesting to note that since its very beginning the main source of income for the recording industry was derived from popular music rather than classical music. As Garofalo claims, "the record companies were slow to learn the cultural lesson that while the European classics brought prestige to their labels, the steady income - indeed, the future of the recording industry - was tied more to popular appetites".

One could argue that, like every other successful business, the music industry had to follow and at the same time reinforce the public's tastes. However, a new (for the time) technological development - radio - would prevent this market from expanding and it would force the recording industry into its first decline. In the same way that recording techniques threatened the entertainment business of the nineteenth century, they were themselves challenged by the development of radio and its consequences.

The 'Magic' of Radio

The early years

The historical development of radio is of great importance in modern history. Beginning in the last decade of the nineteenth century, as "one of those developments that clearly resulted from an international process of shared knowledge", radio became one of the most important ways for national and international information and communication. Radio's connection to politics and governmental decisions was very strong - even in the U.S. (where most of radio stations were private) and in Britain (the BBC was in principle independent. Radio was very important politically from its very beginning, and until the growth of television as a popular medium, it had probably the most dominant position in modern society.

Although the first years after the First World War were characterised by a steady growth of the music industry, the late years of the 1920s and the early 1930s brought a decline. The main reasons were the economic crash of 1929 and the development of radio. On the one hand, the economic crisis had a deep impact on consumer's attitudes, especially a new product. Radio made music reproduction available in homes at a much lower cost so as a consequence radios replaced record players. People could listen to music in their private spaces without having to purchase it. At this point the consuming custom of 'possessing music' - owning a recording - was 'immature' so the market declined. Radio was also not yet tied to the kinds of products that the music industry was marketing. As Simon Frith argues:

"By 1926 RCA was networking shows via its National Broadcasting Company. There was, too, an early broadcasting emphasis on 'potted palm music' (to attract relatively affluent and respectable listeners) which meant that while radio did 'kill' record sales it also left pockets of taste unsatisfied. Early radio stations were not interested in lav audiences, for example, and so the market for jazz and blacks records became, relatively, much more significant".

However, new marketing efforts were responsible for change in the music industry in the late 1930s. The installation of jukeboxes in thousands of bars and saloons became one of the best ways for the industry to promote and advertise its commodities and mold tastes. The second practice was related to what was called the 'star system'. As Simon Frith writes, "companies became less concerned to exploit big stage names [film stars], and more interested in building stars from scratch, as recording stars. They became less concerned to service an existing public taste than to create new tastes, to manipulate demand". In addition, radio and the industry tried to coordinate their efforts, with radio continuously promoting music 'stars' and their albums.

Changes in the copyright laws

At the same time, copyright changed to prevent illegal public performances. The impressive popularity of radio and jukeboxes became another profitable source of income for the music industry, thanks to royalties for every public performance of music. Garofalo notes that:

"While both the USA and British revisions added mechanically rights to already existing performing rights, enabling publishers to extend their reach to the new medium, the British law also included language that was later used to argue for an additional right, referred to somewhat confusingly as 'performance right'…The performance right allows the record company to recover a royalty when the record is used for a public performance, as in a juke-box or the radio".

The music industry grew and became more profitable than ever as radio was becoming increasingly popular. Several new radio shows were very important commercially like Your Hit Parade on NBC, which tapped into audience responses for programming decisions. This system was very crucial for marketing decisions in the music industry.

This 'well-balanced' system experienced a 'shock' with new technological developments - long-play records (33 and 45 RPM), television, transistor radios, and tape - that in turn promoted new cultural realities, rock and roll.

Music industry and radio: the long-play records (33-rpm and 45-rpm) and the transistor

Two of the most important inventions in the music industry were the transistor and the 'long-playing' 33 and 45 RPM (LP) records. Both were developed in 1948, and changed the musical experience of their time completely.

The transistor was introduced by U.S.-based Bell Telephone. It was a 'revolutionary' machine in its time, because it could reproduce an improved quality of sound compared to older, tube-based radios and it was much smaller, required less power, and was more durable. Moreover, its cheap price made it extremely popular and as a consequence promoted music in astonishing ways. Consequently, it was a matter of time before the old technology was replaced by mechanically reproduced music - because of the invention of the transistor - to create new realities for the music industry.

The invention of the gramophone made it possible for consumers to own recordings but they were still expensive and fragile. Early tape recordings were not easily marketable because they were also very expensive. So, when a team of scientists at CBS labs invented 'high fidelity' or 'long-playing' 33 and 45 RPM (LP) records, it was an incredible breakthrough, because of their lower cost, great durability, and improved sound quality.

The combination of the transistor and the long-playing records was the greatest achievement in the history of the musical industry, because music as a commodity could easily enter anyone's home. Thse new developments were met with great enthusiasm and the music industry experienced unprecedented expansion. In addition, musicians were profiting from these changes, since their music was reaching ever growing audiences. The music industry was safe from any type of piracy, since there was no other way to reproduce music, except via radio. But challenges were on the horizon for this profitable situation.

The Music industry in danger: cassettes, tapes and MTV

The introduction of cassette-tape brought many new consumers to the music industry. It was an invention that was aimed at bringing music into one of the places that consumers spent many hours - the car. But the consumer was not just seeking music for private consumption; comsumers were also looking for the least expensive way to acquire a product.

As Garofalo argues, the cassette technology may have enabled the transnational music industry to penetrate remote corners of the globe, but it was also responsible for the industry's two main financial headaches of the 1980's - piracy and home-taping. Tape technology is portable and recordable, and is one of the easiest ways to duplicate, produce and distribute music. This technology emerged as a major threat to the music industry. The industry responded by finding a way to profit from this technological development.

As Clay Shirky argues in the review of Sonic Boom: MP3, Napster and the New Pioneers of Music, the fight over Napster is not just about revenues and profits. It is also about control and the resistance of some labels resistance to outsiders. The development of music videos and the creation of MTV in the 1980s cemented this attitude by the major labels. MTV provided music with direct influence of the top recording companies and was extremely popular and profitable. In addition, "MTV's dominance forced the music companies to shoulder the expense of video production and then pay MTV to air the videos". The music industry was determined to never let anything like that ever happen again to their business.

 

Analysing the MP3 Phenomenon

An Internet experience

The MP3 phenomenon - as a crucial contemporary issue for the music industry - is an example of the effect of the World Wide Web on the structure of global society. To understand and analyse the challenges of MP3, it is really important to 'place' this reality in its technological and social framework. As a beginning it is important to place MP3 in the context of the Internet phenomenon, its political consequences and its capabilities as medium.

The World Wide Web, was developed and achieved its popularity in the last decade of the twentieth century in a specific ideologically structured historical moment. As Jon Stratton notes, the World Wide Web is an ideologically constructed 'tool' for modern economies and politics, born from an idea that the Internet provides fast - almost immediate - exchange of goods - capital, information, products - with a minimum of barriers. Therefore, new media are more related to the circulation of goods as well as information:

"The reification of money, like that of information, leads us back to the reconstitution of communication media as transport systems. These new commodities are being transported through a hyperspace in which distance does not exist, and place and extension are replaced by pure movement".

This new direction of modern capitalism was certainly anticipated. David Harvey, for example, imagined the qualitative transformation of modern capitalism thanks in part to global communicational systems and global markets. So we can view the Internet as a modern sophisticated system - created in a strong ideological framework - that transcends national borders and accelerates cultural and economical globalisation.

The global response to the Internet has been remarkable. What has made this technological transformation so different from all previous technological "revolutions" is the Internet's fundamental provision of interactivity. This interactivity allows for the free expression of ideas and opinions which at times are in conflict with more traditional views.

Hence the Internet supports open access and free communication but as a result there may be conflicts with the social and moral beliefs of some of its users. For example:

"As the text currently stands, it is impossible that a school student in one country downloading music files from a server located in a second country could be extradited - at the request of a third country - and thrown into jail. A French citizen resident in the United Kingdom has already spent several months in prison for having commercially hosted, on a server run by an American company, pornographic images that were legal in both France and the USA but illegal in Britain".

To put it another way, if copyright laws are ignored in one place in the globe by freely distributing MP3 music in a state where laws regarding piracy are not well formed or not strictly enforced, it is difficult for parties in other states to stop this sort of distribution. In addition, the large volume of traffic on the Internet makes it exceedlingly difficult to track messages and files over time and space.

Given that there are thousands of MP3 sites around the world, with a vast array of musical resources, visited by millions, there is a new social reality of individuals organising themselves - and their musical passions - by developing relationships in different MP3 communities.

MP3 communities

These MP3 communities are virtual communities but what is exactly a 'virtual community'? Derek Foster explains:

"The Internet, for our purposes, provides a technological infrastructure for computer-mediated communication (CMC) across both time and space. The conceptual space in which this communication occurs is referred to as cyberspace, an environment in which face-to-face communication is impossible. A form of virtual co-presence, however, is established as a result of individuals' electronic interactions not being restricted by traditional boundaries of time and space: this is the basis of what is commonly referred to as 'virtual community'".

This social interaction is personal yet physically distant. Traditional sources of identity - like those of the 'neighbourhood', local communities, and the nation-state - are transformed into new intermediated social groups. MP3 communities are like other virtual communities, with a focus on music. Millions of sites are dedicated to specific artists or music styles, with fans from every part of the globe. The Internet provides a vehicle for music lovers with the same cultural capital to 'meet' each other, organise themselves into specific communities and exchange their favourite songs.

These communities use several new technologies to communicate and have their own language and terminology (in English). This language is evident in chat rooms:

"Serves as the focal point for the audio piracy subculture. It is the electronic common ground to which all pirates return, and in which primary contacts are made and relationships formed. Each user selects a nickname (or 'nick') such as '_sub-bass', 'niceGuy' or 'BiGFiSH' to signify themselves. By selecting and joining a 'channel' from a larger set of alternative channels with varying access rituals, audio pirates come to be categorised by musical genre, type of computer connection, sort of pirate group and other social attributes".

Within these communities, status is affected by a variety of factors, such as connectivity, size and relevance of personal archives of music, behaviour, and tenure. But the most important characteristic of these communities is their attitude towards copyright. For many, copyright is simply irrelevant:

"Copyright law does not interest me. It does not pertain to my existence in any way, because it never could affect me. I buy the software I use for business and steal the software I use for pleasure. I buy CDs that I want to listen to, but I download MP3 files of music that I do not think is worth buying or that I can not find in reasonable price. It is not like I can get caught, so why not?.

These communities are new social-virtual phenomena. Even though they have only existed for a short period of time, further analysis would prove fruitful.

Has the music industry really lost out?

The music industry today is an 'oligarchical' organised business with over 70 percent of the global market controlled by five major corporations. The possibilities for newcomers in the business are few. MP3 was so undesirable because it represented an application of technology unanticipated by the industry. Given the industry's history of taking advantage of new technologies, how will it use the Internet?

The future of the business is closely related to computer technology and the World Wide Web. The Internet provides opportunities to expand markets, transport goods more easily and hence increase sales, and consequently provide for more profitable results. New computing developments and environments will make the consumption of music easier than ever while at the same providing products of a much higher quality:

"Systems are being put in place in stores to allow music (be it entire albums or individuals songs) to be downloaded and burned to CD, DVD or minidisk. Sony, for instance, is making nearly 4,000 titles from its back catalogue available in this fashion, including many out-of-print titles ... Sony's agreement with Digital-On-Demand provides a means by which entire albums or individual songs can be downloaded and burned onto a 'custom' CD for the consumer in a retail store ... We may witness a change in development of albums, as a result, and potentially a resurgence in the notion of a 'single', insofar as consumers may choose to purchase individual songs on a custom 'mix' CD of their own making".

Certainly MP3 and especially Napster shocked the music industry by producing new ways of distributing and consuming music. But this shock provided the industry with a new direction and new purpose, to make new products available in ways that there undreamed of a decade ago. EMI executive Ted Cohen recognized this:

"Napster is a pretty cool thing ... I think it is one of the coolest things to come around. I also thought the moment I show it 'My God! This could destroy the whole business' ... How do you take something like this and turn it into something that the industry really could use?".

Napster forced the music industry to rethink its marketing policies - improving its views of consumers, their consumption patterns and their use of free time:

"Marked differentiations such as those of A and B films, or of stories in magazines in different price ranges, depend not so much on subject matter as on classifying, organising, and labelling consumers ... The public is catered for with a hierarchical range of mass produced products of varying quality, thus advancing the rule of complete quantification ... Consumers appear as statistics on research organisation charts, and are divided by income groups into red, green, and black areas; the technique is that used for any type of propaganda".

The use of a Napster-like program could potentially provide this sort of information in great detail. Beyond marketing and data collection, one could argue that the greatest contribution of Napster was as a new form of advertising for the music industry. Napster 'functioned' in many cases as the first, easily accessible album sampler for the consumer. In terms of political economy, Napster became a way of increasing overall demand for music. In turn, increasing demand usually lowers prices when the producer has the capability to do so. In this case, the music industry can take advantage of technologies to lower the cost per unit impressively.

Napster induced major changes in the musical industry, such as the invention of sites like MusicNet.com and PressPlay.com. It had little negative effect on record sales. Napster was not directly connected to a loss of profits; instead it was an 'ethical' issue for the music industry. Could music really be free?

Consuming digital music

The astonishing popularity of a number of MP3 sites indicates that popular music has experienced a fascinating change in demand and consumption. What has changed? Technology? Economics? or something else?

If we agree that advertising creates new needs, we can view MP3 as a special kind of advertising on a global scale for the music industry. It created many new consumers and convinced existing ones to purchased music in traditional formats. MP3 consumers download music with an educational purpose, to learn about recent developments in music, in order to evaluate products and make appropriate consuming decisions. eventually buy the original albums. As Wilfred Dolfsma argued "as long as traditional record companies are able to supply physical goods with authentic appeal, sales will not dwindle because digital music will not completely substitute traditional forms". The fetish character of the original continues to exist for consumers; digital copies are not immediate replacements for it.

We also need to consider the new kinds of interpersonal roles that are evolving on the Internet. Virtual interaction provides opportunities for many to re-assert their entity into a space with different rules than the 'real world'. The anonymity of this interactivity provides weapons for one to masquerade, to ridicule, or to develop subversive behaviour. Some become music pirates just to do something illegal, something different. So we could argue that new forms of consumption have been created that have different characteristics; they are based on interaction and this means that they are dialectical, non-passive, and complex. Yet, little objective information is available about these new forms of consumption.

Artists

Technological developments have radically changed the entire process of creating music. Artists today can record their music in high quality digital audio, press their CDs and print colour inserts, all inside their own home. They can also work with other musicians from around the globe just by using the Web.

Probably the most important effect of new technologies has been, and will continue to be, in music distribution. Artists are increasingly taking control of the distribution of their own music, rather than turn over their music and rights to the industry The artist now has the opportunity to account for profits without 'middleman' costs. Most importantly, the artist is free of restrictions that the music industry often set, and consequently become more creative. It is - in other words - what Dave Steward of the band 'Eurythmics' claimed, "[Napster] makes artists ask why they are not in control of what they are doing. Artists of any worth of strength will rise up and take control of the situation".

New technologies provide the 'weapons' for artists to fight and regain creative control over the content. This freedom also allows artists to control their own intellectual properties rather than surrender them for marketing and distribution costs. The Internet provides a vast platform for an artist to distribute and develop direct relations with audiences, avoiding, abhorrent record deals and policies of the industry.

However there are disadvantages. The same technology that makes it possible for an artist to reach a global audience can be used to create illegal copies freely distributed. The industry also has the funds to support extended tours, and few artists are financially able to take these sorts of risks.

Music piracy as a political behaviour

As mentioned earlier, the World Wide Web is a product of a specific historical and ideological period, and is thought to be a very useful 'tool' for economic expansion and capital transportation. Consequently, according to the traditional liberal philosophy, any type of intervention - governmental or private - in a free economy, is undesirable. The market should be free of interventions, as should the free market tools, such as today's Internet. However, in the past there has been a need for control under specific circumstances, such as period after the great crash of 1929. These changes in economical policies offer opportunities for different levels of intervention.

With the World Wide Web, there are two main arguments for changing the existing juridical framework towards more intervening policies. The first arguments is based on the moral principles of modern societies, attempting to control, for example, pornography on the Internet. In the second category we find copyright and intellectual property issues as well as forms of political behaviour.

Hence one could argue that digital music piracy is a political action. Despite the personal motives of those that create file-sharing Web sites or of those that consume free music, the fact that their actions offend the oligarchical music industry makes their behaviour political. Their actions are political - in terms of ideology - because they subvert the existing economic structure of profit with new ways of distributing a commodity, based usually on the principle of an ideal non-profitable equality.

Artists using this technology are also making a political statement. It is a de facto political action because it offends the organisation of the musical industry, and emancipates artists to develop their music without constraints. Artists in turn are free to follow their own distribution philosophies, to develop their own political and economic attitudes towards their audiences.

Hence digitally distributed music - regardless of its subject - is a priori political. Music in the age of the digital distribution cannot be autonomous, without political implications, as l'art pour l'art.

Walter Benjamin argues that mechanically reproduced art destroys the sense of authenticity, and dissolves the rituality that has been historically attached to traditional arts:

"Originally the contextual integration of art in tradition found its expression in the cult. We know that the earliest art works originated in the service of a ritual - first the magical, then the religious kind…but the instant the criterion of authenticity ceases to be applicable to artistic reproduction, the total function of art is reversed. Instead of being based on ritual, it begins to be based on another practice - politics".
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The mechanical reproduction of art in modern societies produces the desire to bring things closer spatially and humanly. So human-sensory perception is changing and so is the social function of art. People have learnt to search for the copy, to be satisfied with the copy, and moreover to be possessive of the copy - 'realities' that could never happen without the technologies of mechanical reproduction.

It should be emphasised that this situation results in a qualitative transformation of works of art. The emphasis on the exhibition value of a work of art concludes in changing the very meaning of art. The mechanical reproduction produces the semblance of an autonomic art and its theories - "l'art pour l'art" - disappears forever. The politicisation of art as a result of mechanically reproduced art forms (to which both audience and artists have been familiarised), has radically changed its meaning and has overpowered - de facto - ideas that might claim its autonomy. The autonomy of arts is not the issue anymore. The issue is use and use must be political. Therefore, for Benjamin, modern art is politics and the new (in his age) arts of film technology and photography are political by nature.

If we apply Benjamin's arguments to digital music, we could argue that the new digital age is changing the behaviour and the choices of both audiences and artists into political practices and (intervening) actions towards the structure of the music industry. In addition, despite the fact that the industry is still very profitable and gradually will incorporate technological breakthroughs into its practices, change has occurred. Consumers and artists are far more interactive and independent in the history of recorded music.

These realities will generate new ways of viewing art. The conversion of physical bumps or grooves on a medium into algorithms, which the computer translates into sound waves (WAV files), has created new ways of understanding music. Now there is a lack of physical contact because music exists solely as bytes. This could result in a less fetishised 'relationship' with the digital copy, which is immaterial and insubstantial.

Artists could also become victims of the practices of their fans. Apart from the economical consequences, the fact that the consumption of digital music has become extremely easy and fast can also affect the educational, political and artistic role of music. In other words, it is possible that many will continue downloading music in an obsessive manner, without identifying with it or experiencing a passionate attachment. An audience that is only consuming can create an artistic and political disaster for an artist.

Changes introduced by new technologies have only begun to have an effect on the uses of music on a global scale. With rapid advances in technology and with the growing technological skills of consumers, artists and the industry, it is perhaps too early to draw any conclusions about long-term effects on music and its use.

 

Conclusion

The general aim of this essay was to approach and critically assess the consumption of digital music on the World Wide Web and examine its social consequences. This phenomenon needs to be analysed as a part of a larger historical, political and economical framework. Therefore, this phenomenon can only be seen as just one side of the digitisation of culture as a whole, and the reality of the newly born ethnographies of the Internet. Moreover, the impacts of new multimedia have to be analysed as parts of the economical and political organisation of modern societies. Consequently, phenomena like digital piracy - that belong to the larger context of 'e-criminality' - cannot be analysed without defining the word 'criminality' in its social context. In societies like ours the idea of property is thought as an unalienated human right that has to be protected; any action against it is illegal. Similarly, every piratical behaviour towards intellectual property is thought to be criminal action. Hence digital piracy - as well as other Web phenomena - cannot be analysed without presenting the philosophical and ideological framework in which they were created.

This essay analysed the MP3 phenomenon by examining how technological developments in the past challenged and produced changes in the musical industry. This contect helps us understand how the industry is approaching new technologies, adapting them for their own purposes. MP3 is probably just the beginning of technological changes that will impact society. A close analysis of this phenomenon might provide lessons on the impact of future technologies on society.

 

About the Author

Kostas Kassaras studied Political Science and Public Administration at the University of Athens (Greece), and recently graduated from the MA course on the "Sociology of Contemporary Culture" at the University of York. He is interested in theories of everyday life and the ways in which popular culture is related to subversive political behaviors.

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