Universal Music Claims Piracy Justifies Monopoly, Wants The Power To Control Digital Music Services

from the say-what-now? dept

Fri, Mar 30th 2012 8:38am — Mike Masnick

In a short article discussing how European antitrust officials don't appear to be too keen on Universal Music buying up EMI, and turning Universal Music (already the largest music label) into a truly dominant player in the market, there's this little tidbit:

Unnamed sources at Universal have briefed journalists that the competitive threat of digital piracy means consolidation should be permitted. Critics have pointed out that the merged entity's 40+ per cent market share would make it the king-maker for digital music services – and that no service would then survive without Universal's catalogue.

We were just discussing how the labels were looking to turn the screws on Spotify to try to wrench even greater profits out of the still unprofitable company. But really, when you put these two sentences side-by-side, it just shows how ridiculous the major labels -- and particularly Universal Music -- are today. Because of "piracy," it needs to be able to merge to create an even larger aggregator of back catalog music... to restrict that same music from appearing on new and innovative digital music platforms, unless those platforms pay more than is reasonable.

Get it? Universal Music's response to piracy is to create more piracy and limit innovation. The geniuses at the company (and, remember, this is the company whose former CEO once admitted that he was too clueless to even hire someone who might explain how modern digital technology worked -- and who not only didn't get fired for this admission, but was able to leverage his cluelessness into a new job running Sony Music last year) are basically saying that the only way they can compete with "piracy" is to so dominate the market that any company offering a music service has to do a deal on their terms, or not include its catalog. In other words, it wants veto power (and the power to extract ridiculous and unsupportable rents) on music service innovations.

Of course, that's a really stupid plan for a bunch of reasons, but let's call out the two big ones. First, the company's problems are not caused by "piracy", but by a stubborn unwillingness to adapt to a changing market. Second, restricting innovation in the digital music space will actually increase the amount of infringement, by (1) making it unprofitable for most companies to be in that space and (2) limiting true innovation and the necessary competition among services that leads to the kind of new innovations that consumers want. Instead, it'll just drive them to go back to what works: open infringement.

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Filed Under: digital music services, monopolies, music, recording industry
Companies: emi, universal music

62 Comments

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Hephaestus (profile), 30 Mar 2012 @ 8:39am

All companies wish to be monopolies.
Last year I commented about this very thing. I say that the EU should allow UMG to buy EMI's catalog, it will speed along the failure of all the record labels. The larger corporations become, the more difficult it is for them to adapt to a rapidly changing market place. Also after any merger, there is a period of chaos organizationally, making them less competitive.

Since there are only 3 labels left after this merger, it creates a scenario for the perfect storm. UMG will not be allowed to purchase the next label that fails (SME or WMG). Both Sony and Warner are incapable of purchasing the other without causing their own financial collapse. It reduces the time remaining for the labels from 4-5 years to about 2-3 years.
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jupiterkansas (profile), 30 Mar 2012 @ 8:51am

Re: All companies wish to be monopolies.
So what happens to all the music when all three die?
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Anonymous Coward, 30 Mar 2012 @ 8:54am

Re: Re: All companies wish to be monopolies.
we shall have Culture again.
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Torg (profile), 30 Mar 2012 @ 8:55am

Re: Re: All companies wish to be monopolies.
The pirates will still have it.
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That One Guy (profile), 30 Mar 2012 @ 9:11am

Sounds like UM is just taking notes from the government in how to justify their actions.

Step 1: Create a situation in which all reasonable options are illegal, justify it by pointing to those breaking the law*.

*Note that actual lawbreaking isn't needed, all that is required is to make your claims massive, and rely on the Big Lie(1) principle to get the claim accepted.

Step 2: Now that all reasonable options are illegal, point to those breaking the new laws as justification that your actions are needed, and use said actions to justify even more extreme measures.

Step 3: Lather, rinse, repeat.

(1)http://en.wikipedia.org/wiki/Big_lie
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Anonymous Coward, 30 Mar 2012 @ 9:12am

Re: Re: All companies wish to be monopolies.
The music dies.
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Anonymous Coward, 30 Mar 2012 @ 9:12am

Protecting back catalogs != Promoting progress
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Anonymous Coward, 30 Mar 2012 @ 9:13am

Re: Re: All companies wish to be monopolies.
When the music's over, turn out the lights?
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Anonymous Coward, 30 Mar 2012 @ 9:14am

Re: All companies wish to be monopolies.
Personally, I think we should start a kickstarter program to buy EMI's catalog and release it to the public domain.
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Anonymous Coward, 30 Mar 2012 @ 9:16am

Mike, you're no better than the record labels. You are saying if they proceed with their plans it will lead consumers to "opne infringement" (aka CONTENT THEFT). That sounds like a threat. Something along the lines of play by my rules or consumers will just steal your stuff.

What would Spotify be WITHOUT music from the major labels? I don't even think it would exist.
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Anonymous Coward, 30 Mar 2012 @ 9:19am

Re: All companies wish to be monopolies.
I certainly hope you're right. I look forward, eagerly, to the total destruction of these companies. It'd be one of the very best possible outcomes for musicians and the music industry.
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Josef Anvil (profile), 30 Mar 2012 @ 9:20am

YAWN
The biggest labels want to control all facets of digital distribution is hardly news.

It's kind of like reporting that the Humans want to breathe air.
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Anonymous Coward, 30 Mar 2012 @ 9:21am

"Unnamed sources"

Sounds like Marcus has been moonlighting.
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That Anonymous Coward (profile), 30 Mar 2012 @ 9:24am

Re:
Mike is stating what has happened historically everytime one of the cartel tries to crank up their control, more slips between their greedy fingers. It sounds like a threat to you because your scared of the truth and need to make Mike look bad no matter the cost.

Spotify is barely making any money, because the cartel has been demanding rates not actually grounded in reality. They feel their product is worth X, and it doesn't matter that Spotify lowers piracy and encourages people to buy more... the cartel will have their 2 pounds of flesh. A platform willing to pay them, and helps them sell more and they are determined to undermine any gains it might make them by trying to kill the goose.

UMG might end up controlling all the music, but it will do them no good without platforms to reach the people.
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Zakida Paul (profile), 30 Mar 2012 @ 9:24am

This whole thing makes my head hurt. Monopoly by it's very definition stifles creativity and innovation. Take music, when was the last time you saw real creativity in the charts? It's because the big labels monopolise the creation of new music. For true creativity you must look at independent stuff.
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PlagueSD (profile), 30 Mar 2012 @ 9:26am

Re: Re: All companies wish to be monopolies.
All the crap music that's out there now will go away. Artists will be able to create real music without the record companies pushing for the next auto-tuned big hit.

win-win for everyone except the record companies.
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Colin, 30 Mar 2012 @ 9:27am

Re:
Or it's, you know, reality.
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Zakida Paul (profile), 30 Mar 2012 @ 9:31am

Re: Re:
That's what annoys me about these companies. Surely they must realise that more people buying at lower, fairer prices means more revenue than far fewer people buying at higher, unfair prices? It's basic economics.
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Anonymous Coward, 30 Mar 2012 @ 9:36am

In my opinion, the real problem is that people still give money to these companies. We can argue all we want about how evil those companies are, killing innovative technologies that have many useful and legal purposes, taking away culture (i.e. weakening fair use and the public domain), but as long as people pay money, Universal and the others aren't going away.

It's nice to complain, but if you can't boycott a product to protest it's poor quality or the behavior of the company that sells it, then you deserve the crap that you are being sold.

Techdirt should be calling much more for a boycott. We know the facts now. Well, there's always new stuff coming up and it's good that Techdirt keeps us informed, I would not want to be less informed, but if Techdirt could add a few more articles a week to remind people of the importance to boycott the MAFIAA, then we might get somewhere.

Or maybe, like I said, people just don't have the willpower to boycott the MAFIAA for a long time, in which case they deserve what they get.
Personally I've been boycotting for a few years now. Haven't bought a single album, DVD or other products from any major publishers. The only media I buy is media created and sold directly by the artists. Universal and others don't get a cent of my money. I also make sure to only buy from artists who don't try to take away my rights to protect their profits.
It's not that hard to do, and people who really care about this issue should be doing the same thing.

But maybe people just like to complain and are too lazy to really do anything about their problems.
It's like the controversy with the TSA: the NRA folk have been claiming for years that guns are needed to control the government. Yet, none of them have even dared to punch a TSA agent for molesting their wife and kids.
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Vic, 30 Mar 2012 @ 9:37am

Talk about the eggs and the chicken! "Piracy justifies monopoly" - that's sweet! So, what justified monopoly when there were no computers? Oh, I've got it - the pirates of the Caribbean! The real "arrgh" type ones from 17th century. That is why copyright was introduced in the first place, right?!

Seems to me that the logic here was inverted just a tad. Looks like the monopoly actually caused the piracy in the first place (not sure about "justified", but why not to claim it, Universal does claim whatever it wants to).
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Zakida Paul (profile), 30 Mar 2012 @ 9:41am

Re:
Piracy justifies monopoly - monopoly causes piracy. It's a never ending cycle.
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The Logician (profile), 30 Mar 2012 @ 9:45am

Re:
A boycott will not work unless hundreds of millions of people become involved in a simultaneous, coordinated effort. This is because these are multi-billion dollar companies we are opposing, and to bring them down, billions of dollars worth of damage must be done to them. Hundreds of millions of people not purchasing any of their products for an extended period of time will do that. Organizing such an effort, however, will not be easy. However, I do believe it is worth attempting.
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Tim K (profile), 30 Mar 2012 @ 9:47am

Re:
That's funny, you clearly don't know what logic is. Mike is not threatening anyone. It is a clear and well known fact that when they remove alternatives piracy will increase. Anyone with even a little common sense can understand it. A large number of consumers stopped pirating because of these alternatives, you take them away and you think they are not going to go back to pirating things? And it's not play by my rules, it's play by your customers rules, or you lose them
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Anonymous Coward, 30 Mar 2012 @ 9:54am

Re: Re:
Reality has a well-known pirate bias.
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Hephaestus (profile), 30 Mar 2012 @ 9:56am

Re: Re: All companies wish to be monopolies.
Personally, if Justin, or Britney's music were lost forever I wouldn't mind at all. The rights will probably be sold for pennies on the dollar as people realize these are toxic assets. Hopefully to a couple tech companies that use them as loss leaders.
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Hephaestus (profile), 30 Mar 2012 @ 9:59am

Re: Re: All companies wish to be monopolies.
You can't do that. You have to think of the artists rights and contracts, or their children's, children's, ... children's rights. Don't you love how screwed up this copyright system is when you try to do something good and 100+ year copyright gets in the way.
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Anonymous Coward, 30 Mar 2012 @ 10:02am

Re:
People want to consume media they've paid for in given ways. If they feel they "should" be allowed to consume media in that given way then they are unlikely to agree with laws that restrict them from doing so. This is some what personified by the mind boggling mess that is anti-circumvention laws.

We live in a world where we can legally rip a CD we brought to our computer for our own use... well unless that CD had some form, how ever weak, of lock on it to stop us doing so. Actually putting the music on our computer is legal but breaking the lock is not. I've yet to meet some one who is not happy to break those anti-circumvention laws in order to consume that media they paid for in a way they can other wise legally do.

Of course anti-circumvention law is not really about stopping individual users from doing so (it's about the industry having a veto on new tech, stick a lock on something that breaks a new way of doing things and that new way of doing things is then illegal) but the point remains that people are willing to break laws to consume media they paid for in the way they wish to consume it.

This can also be seen in the fact that I know many people who will crack games they legally own to remove restrictive DRM.

You are then in essence mistaking consumers wishing for fair treatment with people who treating to throw their toys out of the pram. Which I'm pretty sure is exactly what you intended to do in an attempt to cloud the issue at hand.

What Mike is talking about as I think you very clearly know is that as that the industry has a very clear patten of expanding control at the expense of what most consumers see as fair use of their media. They have already very clearly crossed a line with the anti-circumvention laws that directly turn consumers who just want to do what they are other wise legally allowed to do in to law breakers and pirates.

That trend will continue, more and more consumers will find that to use media in a way they see as fair they will be illegal and as you start to push those limits more and more people then will be call pirates for doing nothing other than what I think even you will currently be saying is fair.

And at some point people will break. When a system has no interest in them other than to make them criminal people will have no interest in that system. That either leads to disengagement or acceptance of the label being forced on them. So a number of people who where other wise be happily paying for their media will turn to piracy.

This is not a treat but a reality of the market. What you have to remember is that the industry is nothing with out it's consumers and one of the basic foundations of how that relationship is meant to work is that the industry is the result of the market for it. Not the other way around. The industry should be adapting or creating new markets not seeking ways to enshrine in law a way of doing things that the market no longer wants.
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Hephaestus (profile), 30 Mar 2012 @ 10:09am

Re: Re: All companies wish to be monopolies.
We know they artificially inflate market prices, use unfair business practices, cheat their artists, use threats and intimidation, and collude like they are currently doing to XM radio.

The really neat thing is, when they fail the collection agencies will have to deal directly with the artists and the people that buy the back catalogs. If it is a high tech company that purchases the catalogs. Look for a very rapid failure of the collection agencies. Think true accounting, think reporting a criminal enterprise to the authorities, think of all the fun

/grabs a bag of microwave popcorn (to support the corn farmers) and sits back.
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Hephaestus (profile), 30 Mar 2012 @ 10:17am

Re: Re: Re:
"It's basic economics."

Since its the record labels, it is called "Sound Economics" which has nothing to do with any economic theory founded in reality.
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BentFranklin (profile), 30 Mar 2012 @ 10:18am

If piracy justifies monopoly, then monopoly justifies piracy.
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Ninja (profile), 30 Mar 2012 @ 10:19am

I wonder when they'll start putting shackles (physically speaking) to their signed artists and start using children slaves to produce their outdated plastic discs and then justify their actions saying that piracy makes it necessary. I mean, they already try to impose all sorts of censorship using piracy as a justification...

So much for a failed, not necessary business model...
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gorehound (profile), 30 Mar 2012 @ 10:44am

Re: All companies wish to be monopolies.
I don't care much myself.I will never let these guys into my Wallet and have "CENSORED" the RIAA & MPAA a way into my money.They will never ever see a dime.
I will support cool INDIE Art,Films, and Music and that is where my wallet will go.
MAFIAA You are going Down !!!
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Anonymous Coward, 30 Mar 2012 @ 10:45am

Re:
How does a single journalist have the power to tell millions of people what to do? It's about as much a threat as an economist saying, "If you do this, you're gonna tank the economy." The economist isn't controlling the economy as a threat, just saying what's most likely going to happen.
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Anonymous Coward, 30 Mar 2012 @ 10:48am

Re: Re: Re: All companies wish to be monopolies.
They were disposable by design in the first place.
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Anonymous Coward, 30 Mar 2012 @ 11:00am

Consolidation has one benefit...
One enemy less enemy to defeat.
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John Fenderson (profile), 30 Mar 2012 @ 11:05am

Re:
You are saying if they proceed with their plans it will lead consumers to "opne infringement" (aka CONTENT THEFT). That sounds like a threat.

You do know that a person who is telling you that the path you're on leads to a tall cliff is not telling you they want you to fall off the cliff, right?
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Anonymous Coward, 30 Mar 2012 @ 11:05am

Re:
Not the infringement is theft thing again. The courts ruled on that in Dowling. You lost. Get over it.
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Anonymous Coward, 30 Mar 2012 @ 11:22am

UMG greed knows no bounds. and how many more things is 'piracy' gonna be blamed for or used as an excuse to get something?
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asd, 30 Mar 2012 @ 11:23am

Re:
Or, you know... it's a reasonable outcome given the current situation and public stance.
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slopoke (profile), 30 Mar 2012 @ 11:50am

Re: Consolidation has one benefit...
You guys seem to be missing the major thrust by UMG here. If UMG owns ALL the music then anything they haven't licensed is pirated by definition. Shouldn't need a court or any of that type of nuisance to be able to take down everything they haven't got an explicite license on.
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Anonymous Coward, 30 Mar 2012 @ 11:58am

Re: Re: Consolidation has one benefit...
They can't own all music because others who refuse to do business with them will still make music.
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A Guy (profile), 30 Mar 2012 @ 12:21pm

OUCH!!!
The... stupidity... hurts...
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TtfnJohn (profile), 30 Mar 2012 @ 12:38pm

Re:
Mike is merely stating the truth. I can tell you don't like it, as usual, but that's what will happen.

And if you haven't got it yet infringement isn't theft. It's infringement. The label hasn't lost the masters or any of that sort of thing that would make it theft and leave the song(s) in my and only my possession if I'm the one doing the infringement. You cannot steal what doesn't exist. And future anticipated sales don't exist. They're a promoter's fantasy at best. Before the money rolls in, should it ever, there's no theft. Label still has the song, I have the song and maybe a few others thanks to the infamous villain Google have the song. Oh, and TPB has the song. Cash is real. Anticipated cash is fantasy. Just ask anyone over their heads on credit card debt.

They, like you, dealt in fantasy. A fantasy that never came true and may never have.

Now take your fantasies to someone who might listen, please.
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TtfnJohn (profile), 30 Mar 2012 @ 12:39pm

Re: YAWN
We'd have to pay for air if the major labels controlled the atmosphere, you know.
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Boy Howdy, 30 Mar 2012 @ 12:57pm

Message for Universal:
Just fuck off and die sooner, OK?
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Anonymous Coward, 30 Mar 2012 @ 1:30pm

Re: Re:
Not to mention that every time record sales go down they blame piracy. The more people who don't buy their music the more they complain that we are just pirating it.

In their minds their content is a nessecity and everyone just has to have it. So if we didn't buy it we took it, no way we could just live without it. And somehow they convince lawmakers this is true as well.

It's a catch 22. If we buy it they have more money, if we don't buy it they blame the lack of money on piracy.
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Anonymous Coward, 30 Mar 2012 @ 1:31pm

Re:
Yes and piracy increases so do their monopoly controls. (and vice-versa)
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The Infamous Joe (profile), 30 Mar 2012 @ 1:40pm

Re: Re: Re: All companies wish to be monopolies.
Interesting idea, though. Does EMI have the power to release the copyrighted works they control into the public domain? What about the artist's ability to reclaim copyrights after a certain amount of time?
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Anonymous Coward, 30 Mar 2012 @ 2:23pm

Re: Re: Re: Re: All companies wish to be monopolies.
Hmmmm just curious. Are any of the labels publicly traded? Just wondering if a hostile takeover might be a possible play.
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Anonymous Coward, 30 Mar 2012 @ 2:25pm

Re: Re: Re:
As is the following...

Pirates have a well-known reality bias.
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Suja (profile), 30 Mar 2012 @ 4:16pm

Re: Re: All companies wish to be monopolies.
I think we should start a kickstarter program to but ALL copyrighted works & their industries and everything, release it all to the public domain, abolish copyright & get that whole disgusting mess over with
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That Anonymous Coward (profile), 31 Mar 2012 @ 1:20am

Re: Re: Re:
No all they can see is lower rates.
They are sure it means they will make less money, and lead to EVERYONE feeling music is worth less.
They are trying to artificially keep their prices high to ensure the same "profits" they used to get.
This is why they claim every download is costing them kajillions (a made up word for make up damages), the truth is they absolutely hate people are only willing to pay 99 cents a track. It is the price the market will bear, but they think it HAS to be worth more.
They are hung up in keeping music expensive and in their control.
In the end a Ferrari is still a car. (ignoring it has more bells and whistles and is hand built for the moment.)
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PaulT (profile), 31 Mar 2012 @ 4:24am

Re:
"Something along the lines of play by my rules or consumers will just steal your stuff."

Actually, "offer the market what they want to buy in the way they wish to buy it, else there will be a pirate who supplies it instead". You know, the very thing that already happens?

It's always obvious when you people are desperate. When you have to lie about what Mike says and feel that pointing out reality is some kind of threat, it's because you don't have a real argument.
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JMT (profile), 31 Mar 2012 @ 4:45am

Re:
"That sounds like a threat."

It's not a threat, it's a promise.
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Michael, 31 Mar 2012 @ 6:36am

"The geniuses at the company ... are basically saying that the only way they can compete with 'piracy' is to so dominate the market that any company offering a music service has to do a deal on their terms, or not include its catalog. In other words, it wants veto power (and the power to extract ridiculous and unsupportable rents) on music service innovations."

You give the labels way too much credibility, Mike, in that their back catalog of music were somehow prerequisite to an online music service. You ought to encourage music services to abstain from anything to do with the labels and their affiliates.
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Jesse (profile), 31 Mar 2012 @ 8:04am

Can we just say that Universal and the like are endorsing piracy by refusing to offer anything else?
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Anonymous Coward, 31 Mar 2012 @ 8:11am

Re:
Heaven forbid a company be beholden to its customers for once...
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Anonymous Coward, 31 Mar 2012 @ 10:05am

Re:
Actually, Mike is better than the record labels. Why? Because he acknowledges reality and attempts to find ways for everyone to win, rather than a select few and without the need or want of trampling on the rights of others in the process.

He isn't making any threats, he's merely stating a fact. If you take away or start limiting legal options to access content, what is left? Nothing/illegal ones. If people want something and you aren't letting them have it, they'll find another way to get it. In this case, through "open infringement". Is it legal? No. Will it happen? Yes. Nothing that can be done about it, oh wait... you can GIVE PEOPLE MORE LEGAL OPTIONS.

Nor is Mike making any rules or issuing ultimatums, which is what you're trying to paint his words as being.

Spotify WITHOUT the music would be nothing. But you seem to overlook the fact that without Spotify, the labels would have one LESS source of revenue. I.e. Their product will have no outlet, as such it will generate no income. (Or at least in regards to the streaming market better said.)

The labels, who you seem to love defending, are just shooting themselves in the foot. They want all the control, they want all the profits, yet they don't want to let others help them nor do they want to do any of the work to create such innovative services in the first place.

Stop shilling/trolling. Or if you're going to keep doing it, at least try and get better at it.

You're the kind of person who has a really bad attitude and who goes around trying to twist people's words and eventually someone will say "Man, I'm surprised no one's taken a swing at you yet, but one day I'm sure someone will." And you immediately spin that to "YOU JUST THREATENED ME!!!" Take a chill pill and realize the reality of the situation as I've already explained. People will get what they want one way or another, you can either legally give it to them and profit or you can not give it to them and they'll acquire it illegally (in which case you haven't lost because you weren't offering your product at all).
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That Anonymous Coward (profile), 31 Mar 2012 @ 7:46pm

Re: Re:
The problem is, according to them they are bleeding billions of dollars everytime Suzy downloads a song.
If only this were actually true.

Why is it one of the elephants in the room is never paid attention to?

While an all out boycott of their content would be a very good way to hurt them, the downside is the effect we see in elections. Some people talk about it, but do not follow through.
Someone else will take care of it, there were 5000 of us at that rally. And only 5 of them will show up when its time to vote. Because its a "bother" to actually participate in the system.

That and all they have to do is push Biebers new album out sooner, and they are making money again.
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Spaceman Spiff (profile), 1 Apr 2012 @ 10:13am

Lawyers + corruption
Do corporate lawyers have a requirement to be corrupt and violate their oaths taken when they were admitted to the Bar? These dipwads should have their licenses to practice law revoked on grounds that they have violated their sworn code of ethics!
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Jamie, 1 Apr 2012 @ 5:37pm

"Unnamed sources at Universal have briefed journalists that the competitive threat of digital piracy means consolidation should be permitted."

Is this Universal admitting digital piracy is fair competition?
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Another Anonymous Coward, 26 Jul 2016 @ 1:48am

Re: Re: All companies wish to be monopolies.
Agreed! Evil and greedy.
I hope these companies die a natural death.
If I was into music, I would steal from them happily and would view it as justified under current laws.
Some laws need to be changed and the first one would be the fair use law and the second one would be the duration of copyright after the death of the artist and writer.
Lucky I am not into music. I just hate unnecessary greed.
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