08 October 2007

Musings on digital music formats, and laws regarding same

Wow, the title of this post sound really boring. Sorry. Maybe this post will only be interesting to other people who are following the evolution of digital music rights online.

I got interested because I've been reading a series of posts on TechCrunch (I read Techcrunch for work. Heh, that makes me sound like Homer Simpson, in the episode where he sharpies a face onto his tummy and then makes it talk. One of the kids busts him doing it and he says, "I have to do this for work." But I actually do read TechCrunch for work.) over the past few weeks aout what's happening in the music industry. Michael Arrington preditcs here that music prices are going to continue to fall, because at the wide availability of technological and software resources means that all music consumers are potential producers/distributors. He notes that Radiohead's latest album, In Rainbows, is available for download to anyone who wants it, for whatever price they want to pay. It's an experiment.

Of course, I also remember Steven King's experiment with this, where he asked people to pay $1 before or after they'd read his story, The Plant. Initial rates of payment were pretty high, but fell over tiem, and King went back to a more traditional publishing model. On the other hand, there's never been any kind of Napster for books, so King in different territory than Radiohead. Which is kind of Arrington's point, actually - he postulates that with music sharing so widely available via the internets, the only way the music industry will sustain itself is by charging people for convenience, rather than expecting them to pay $15.99 for a whole new album that you buy in a store.

The economics of recorded music are fairly simple. Marginal production costs are zero: Like software, it doesn’t cost anything to produce another digital copy that is just as good as the original as soon as the first copy exists, and anyone can create those copies (meaning there is perfect competition and zero barriers to entry). Unless effective legal (copyright), technical (DRM) or other artificial impediments to production can be created, simple economic theory dictates that the price of music, like its marginal cost, must also fall to zero as more “competitors” (in this case, listeners who copy) enter the market. The evidence is unmistakable already. In April 2007 the benchmark price for a DRM-free song was $1.29. Today it is $0.89, a drop of 31% in just six months.

P2P networks just exacerbate the problem (or opportunity) further, giving people a way to speed up the process of creating free copies almost to the point of being ridiculous.

I'm not really with him on the April vs. today evidence, I think that might work out to be true but, like the dollar in international markets, the trend could go the other way. However, I think he's right on when he points out that all consumers are potential producers.

The industry, on the other hand, is, let's say, not too excited about embracing this (probably neccesary) change in the way it markets things. Instead it's aggressively pursuing individuals who share files (and let other people upload their music tracks.) Like that woman, Jammie Thomas, that just got fined$220,000 for 24 songs - that's over 9K per song! Jebub. There weren't any precedents in the fees awarded since all the other cases where the music industry have pursued an individual have been settled out of court.

I buy CDs, actually, mostly because I still like experiencing the whole album as the artists meant it to be heard (uh ... and also I know a little too much for my own peace of mind about IP sniffing, while not knowing quite enough about things like IP address anonymizers) but my attitude seems to be a little less usual now, with the prevelance of iTunes and other stores offering single-song downloads. Plus, ya know, my boyfriend is a musician and in a band and I guess I'd be a hypocrite if I asked people to pay for CDs from his bands and then went and downloaded other illegal ones on my own.

I really like Ian Rogers's (of Yahoo! music) take on it: that in order to remain competitive, the music industry is going to have to start offering music etc downloads as a convenince, so that paying for the music is a value-add, rather a must-do. I like this attitude because it recognizes that people are lazy. Here's Rogers's example:

When you compare the experiences on Yahoo! Music, the order of magnitude difference in opportunity shouldn’t be a surprise: Want radio? No problem. Click play, get radio. Want video? Awesome. Click play, get video. Want a track on-demand? Oh have we got a deal for you! If you’re on Windows XP or Vista, and you’re in North America, just download this 20MB application, go through these seven install screens, reboot your computer, go through these five setup screens, these six credit card screens, give us $160 dollars and POW! Now you can hear that song you wanted to hear…if you’re still with us. Yahoo! didn’t want to go through all these steps. The licensing dictated it. It’s a slippery slope from “a little control” to consumer unfriendliness and non-Web-scale products and services.

... heh. His scenario is so right.

Of course, he sort of skips the part where he talks about HOW to monetize it, if you aren't going to make people pay for the music ... which is a big question. I don't have an answer.

And of course, all of this verbiage up above also ignores the fact that your digital music collection is most likely ripped (or downloaded) in a format that's owned by the software vendor that sold you the track or the software to rip it with. In other words, if Apple and the iTunes store went belly-up tomorrow? You'd be SOL if the software ever stopped working. Sony users are in that exact position right now: Sony is closing its Connect digital music store and urging that users burn their existing colelction to CD (or into another format.) Sony doesn't seem to be pointing out to users that transferring music from one compressed, lossy format (such as their proprietary one used in the Connect store) back to CD then re-compressing it into compressed, lossy format such as mp3 is going to sound SHITTY. Even for someone like me - you know how sound mixers have "golden" ears? Mine are wood. But I can still tell the difference; it's like listening to a radio station that's not coming in well, all staticy and jumpy. (Another good reason for me to continue buying CDs, actually - the format's got a little more longevity than a million different versions of software that all does the same thing: compresses the music.) Of course, you can rip your CDs losslessly so you don't run into the compression issue, but that takes up more space on the hard drive. iTunes, outrageously, charges MORE to sell you the uncompressed version of the song compared to the regular one. That is fucking bullshit - you're telling me that if I want a copy of a song I can burn onto a CD and then onto my Windows media player for reasons of my own (maybe they don't allow iTunes downloads at work), I have to pay ten cents more for the priviledge? That's price-gouging, and it's wrong. I really don't think the extra file size eats up a whole 10 cents worth of Apple's bandwidth when the user downloads it.

... Um. Rant over. Where was I? Oh yeah - explaining that even if you personally don't download music illegally online (and I make no value judgements here), the practice is widespread enough that the record industry is quaking in its boots; and you should consider making sure your music collection is in a format that's replicatable (such as uncompressed digital files) or something with longer legs (CDs won't last forever, but they're not a bad investment while the music industry agrees on a standard format for digital music files.)

1 comment:

Anonymous said...

Fanatics of the P2P super power gave birth to the devil.
It is the strongest P2P file sharing system Share NT.
And, Because UDP is used, even the band limiting that the internet service provider does is exceeded.

Share (P2P) - Wikipedia