WHAT PRICE MUSIC?

13 Aug. 2000

I doubt anyone would argue the statement that the very structure of the recording industry is being tested by the onslaught of illegal music usage on the Internet. MP3 started the trend, and although they have settled with the “majors”, others like Gnutella, Napster, Scour and their ilk have continued the drive to electronically distribute the intellectual property of artists and their record companies free of charge. In my mind, and in the opinion of the courts so far at least, there is little doubt that this type of activity is both legally and morally wrong. And I believe that on this issue the courts will ultimately uphold the concept that intellectual property, like tangible property, has real value and therefore must be paid for when taken or used. Now the crystal ball comes out for the other more problematic issue -- “so what”.

By that I mean that, at least at this point in time, it appears any legal judgement against this type of activity, while possibly enforceable on a specific case basis, will simply be unenforceable if one considers the big picture. Shut down Napster, up comes Snapster, or Bapster or whatever. And remember Napster had a central site that could be shut down. Others like Gnutella are completely de-centralized and really only facilitate the free sharing of files among users. How do you shut down something like that? It appears that legal remedies may not work as well here in the future as they have in the past.

Many of the people who are pushing for free distribution of music on the net have said the record companies are dinosaurs that insist on trying to make an outmoded business model work. In other words, they would like to be paid by the people who use their product. Not cool in the brave new world of Internet distribution, they say. Better to give the music away and get money from advertisers and merchandizing possibilities on the “give away” site.

It’s clear that the record companies are not yet ready for this. On the contrary, it seems that they are ready to fight tooth and nail to sell their music, like it or not, by distributing it on physical media of some sort or delivering it electronically, and getting paid directly. There was a point early on, I think, where the “if you can’t beat’em join’em” approach might have been used. Some deals among the record companies and the free Internet music companies might have been made, and some reasonable business precedents might have been set. That time seems to have passed, due at least in part, some say, to the arrogance of the major entertainment companies.

So what now? Can the surging tide of free data (including music) on the Net be stemmed? Can technology on its own supply the answer? Can any digital rights management system ever work? What would seem to be necessary is the ability to inaudibly and indelibly mark music in such a way as to enable its identification and control no matter what the user does or doesn’t do. On this front, the SDMI group is still trying valiantly to develop a secure architecture in which the traditional business model of sale and payment would work. I’m afraid that’s a bit like trying to climb the proverbial slippery slope. And this particular slope is one on which the business terrain, complicated by multiple industries each pushing its own self-interest, changes by the minute. I have my doubts it can be done, but I sincerely hope they prove me wrong.

Answers? Not surprisingly, there aren’t any easy ones. In my opinion, one possible solution, other than accepting the proposed new “free music” business model, is to offer the consumer something that is so completely new and so great (DVD-Audio?) that he has to have it. And the only way he can have it is to pay for it. There are no player legacy issues here, so at least that’s out of the way. But it has to be a LOT, not just a little, better. That’s at least a possibility on the physical media side, but it requires some assumptions about security.

If music is delivered electronically, it will might well have to be non label-specific because that’s the way things already are, and that’s the way they like it, these new customers. If they pay at all, they aren’t going to pay for a whole album to get the two or three good tunes. Oops, there’s another very basic change. And again it will have to be, as on the physical side, so new, so great that web users will be willing to pay for it instead of waiting a while and simply grabbing it in OK quality for free, unless some security system can prevent it. I don’t think many of them will be dissuaded by fear of the music police. All indications are that it will be very difficult to dislodge the peculiar sort of “snag it for free mentality” that seems to be endemic when it comes to music on the web.

Clearly, this is a very serious problem. It could well be the most serious one ever faced by the recording, or for that matter, the entertainment industry. I personally believe that people have a right to get paid for what they create. Not just collaterally, but directly if they choose. But can this traditional concept be made to work in the brave new world? That’s where the crystal ball gets very, very hazy.