Bad Idea: Internet Service Providers Should Assume Most Digital Locker Content Is 'Illegal'

from the slippery-slope dept

In an interesting blog post, James Firth discusses a comment from music industry analyst Mark Mulligan, quoted in a BBC story about the digital locker site Hotfile:

"If the service providers are serious about wanting to heed the industry's concerns then instead of assuming that all of the content is legitimate until found otherwise, they should actually assume that most of the content is illegal and take action.

"Much of the content on these service is very high quality video files -- how many consumers genuinely create large high definition videos of their own and upload them?"

Mulligan clarified his views in an update to Firth's post:

Just to be clear I at no stage questioned anyone's right to create digital content (I myself have a recording studio and create lots of my own music). My point was simply that the vast majority of us do not create feature length high definition videos and that the vast majority of the content on Hotfile is not UGC [user-generated content], rather unlicensed professional content. Just run a google advanced search on the hotfile domain and enter the name of any movie and you'll find it there -- normally multiple different versions.

The comment that "the vast majority of us do not create feature length high definition videos" may be true for the moment, but underestimates the power of Moore's Law. The improved quality of cameras built into smartphones, combined with ever-increasing storage capacities, means that producing such videos won't be the preserve of film studios for long.

Once the technology is available, many people will start creating and uploading such things, just as many already create blogs, or post high-quality pictures to Flickr. Nobody predicted any of these things would happen, because it seemed unlikely that "ordinary" people would write hundreds of articles a year, or share thousands of photos.

As the same thing happens with high-quality video, Mulligan's assumptions about what is and what is not "legal" are likely to become more and more dubious. Meanwhile, switching from that quaint "innocent until proven guilty" thing to the contrary is an incredibly dangerous step to take, since it will add to the presumption of online guilt that is already popular in some circles.

Not only is that likely to chill innovation, since fewer people will be willing to take the risk of creating the next YouTube or Facebook if ISPs just assume people are guilty until proven innocent and "take action", it also plays into the hands of governments looking to repress dissent. Attacking the fundamental principle of "innocent until proven guilty", even in this apparently "minor" way, makes it much easier to start branding people who protest as terrorists, for example, because it forces them to prove a negative.

What's particularly disappointing about Mulligan's view is that he is normally a much more thoughtful commentator in this area, as Techdirt has noted before. His "Music Format Bill Of Rights", for example, is closely aligned with many of things that Techdirt has been advocating for years. And a recent post entitled "When the Media Industries Really Need to Start Worrying About Piracy (and it's not yet)" has the following original and provocative idea:

The nightmare scenario for media companies is that the pirates turn their attentions to developing great user experiences rather than just secure means of acquiring content. What if, for example, a series of open source APIs were built on top of some of the more popular file sharing protocols so that developers can create highly interactive, massively social, rich media apps which transform the purely utilitarian practice of file sharing into something fun and engaging? If you though the paid content market was struggling now imagine how it would fare in the face of that sort of competition.

That's a much more insightful and nuanced comment than unhelpful calls to reverse a crucial legal tradition that has been around for centuries.

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Filed Under: assumptions, copyright, digital lockers, dmca, mark mulligan

The Next Generation Of Music Services Need To Go Beyond Replicating The Analog In The Digital World

from the bingo dept

We've challenged some of Forrester analyst Mark Mulligan's claims in the past -- such as the idea that music can't be free, that the answer to record label problems is to do windowed releases and his recent assertion that digital music has "failed." However, outside of some questionable claims like these, his insights into the music business are generally quite good and valuable. For example, he has an excellent piece up at Mashable highlighting how the next generation of music consumers is coming along and the industry faces a very big challenge in capturing their attention. He notes that the original Napster generation -- defined as "the Millenials," were one thing, but they were mainly taking the analog world they knew and making it digital. It's the next generation -- the "digital natives" who have always lived digitally that are driving things now:

The Digital Natives give us a sneak peak at the future. Millennials looked like the future for a while but their behavior has a finite life span. For example, ripping and burning CDs, even downloading from BitTorrent and iTunes both recreate the analog behavior of getting units of music. This is because they started out in the analog era. They are the transition generation with transitional behaviors.

Digital Natives don't have that analog era baggage. All they’ve known is digital. Online video and mobile are their killer apps. These Digital Natives see music as the pervasive soundtrack to their interactive, immersive, social environments. Ownership matters less. Place of origin matters less. Context and experience is everything. In a world beyond content scarcity, experience is now everything. With "free" infecting everything, the content itself is no longer king. Experience now has the throne.

Exactly (and nice to see we've gotten past the idea that music can't be "free"). Mulligan then comes up with a very consultant-speak version of what new digital products must have, saying they need to be Social, Participative, Accessible, Relevant and Connected. I'd argue that social and participative and connected and accessible are redundancies, but it's still a good general list. Unfortunately, there's little indication that the industry recognizes all of this. In many cases, they're still fighting the last battle against the last generation. In doing so, as Mulligan notes, they're almost certain to screw up their chance to interest the next generation as well.

Filed Under: business models, digital natives, mark mulligan, music

Digital Music Has Only 'Failed' If You're Not Paying Attention

from the think-bigger dept

Apparently Forrester music analyst Mark Mulligan told the press recently that "digital music has failed," which seems like an incredibly short-sighted statement. Mulligan's a smart guy, and while we've disagreed with him in the past, I'm hoping he really said that because it's a good line to feed the press, rather than because he had any actual belief in it. The fact is digital music has been a massive success for those who know how to use it. Digital music has allowed musicians to go from nobodies to stars. Digital music has allowed artists to connect with fans they never would have reached before. Digital music has allowed artists to massively expand their fan bases. Digital music has allowed artists to cut out unhelpful middlemen and route around gatekeepers. Digital music has meant more music is being produced, released and available today than ever before. How you can consider that a "failure" is beyond me.

The only way you can possibly consider it a "failure" is if you think the only purpose of digital music is to sell it and it alone. But that's not the case.

Digital music has allowed many artists to make plenty of money through other means. Ignoring all that and focusing so narrowly just on the sales of digital music alone is like saying that telephone switching technology was a failure because it put phone operators out of work. If that's what you're looking at, you're measuring the wrong thing. Yes, digital music sales haven't replaced the decline in CD sales. But anyone who thought it would was delusional from the beginning. But digital music isn't a failure. Not by a long shot. It's been a huge success for all sorts of folks in the music industry -- and especially for musicians and fans. It may have been a failure for a few big record labels, but mainly because they made the same mistake, in thinking that the answer was to focus solely on digital music sales, rather than the larger picture.

Filed Under: business models, digital music, mark mulligan, music

Yes, Actually, Music Can Be Free

from the if-you-know-a-little-economics,-that-is dept

A few folks have submitted links to a blog post by Mark Mulligan, who is a VP and Director of Research for Forrester. In the post, Mulligan talks about why music can't be free, noting:

Another argument being aired is that the music industry should stop being so hung up on trying to get paid online, indeed one story even referred to "the Music Industry's obsession with copyright". That's like saying "the car industry's obsession with cars". Copyright is the oxygen of the music industry. Without it there is no industry. Sure there may be cases for changing some industry practices but copyright remains the essence of making money from music.

Music cannot just be 'for free' anymore than cars or houses can 'just be for free'. If people aren't paid they don't make the product. Sure music will still exist, but you'll swap nicely programmed download stores and well stocked high street stores for buskers and millions upon millions of artist pages, all clamouring for your attention. Perhaps that sounds appealing? The problem is, most of them would sound a fraction as good as they would if they'd been able to give up their day jobs and been given proper equipment, studio time, mentoring and artist development support. And even those that would still manage to sound ok, would struggle to find their way to your PC or mobile screen as they wouldn't have any marketing support to help them get there.

Mulligan's post is actually in response to the various stories about France's SPPF suing a bunch of file sharing apps. However, it's a bit worrisome that a "research director" at one of the biggest research firms seems to have done so little research on the situation. While Mulligan's post is longer, let's just go through these two paragraphs and explain where Mulligan went wrong.

First of all, copyright is not, has not been and never will be the "oxygen of the music industry." The oxygen of the music industry would be fans, and if you treat your fans as criminals, you can be pretty sure that eventually they cut off that oxygen. Copyright may be an oxygen tank that artificially pumps oxygen into a sick and infirm patient, but it's hardly relevant to a healthy and robust system based on business models that take into account basic economics.

Next up is the claim that "music cannot be 'for free' anymore than cars or houses can 'just be for free.'" You would think that someone working as VP and research director of the second largest analyst firm would at least understand a little basic economics -- including the economics of scarce goods vs. infinite, or non-rivalrous, non-excludable goods. Apparently, not. So, Mulligan is simply wrong here. Yes, music absolutely can be free. Music, by itself, is quite different, fundamentally, than a car or a house, because those are scarce goods. If one person has a particular house, another person cannot. Yet, with music, everyone can have a copy of the same song. And, as we learned in basic economics, price is the intersection of supply and demand, and when supply is infinite, those curves meet at a price of zero. Alternatively, you can attack the same problem from another angle, which again was taught in basic economics: in a competitive market, price gets driven to marginal cost. The marginal cost of making a copy of a song is, once again, zero. Music can and should be priced at $0. That's just basic economics. To claim it "cannot be" without addressing such fundamental economics is troubling.

Even more troubling is that beyond even the "theoretical" aspects of the above paragraph, is the widespread proof that music absolutely can be free -- and that musicians can do quite well when it is free. Yet, instead of recognizing that, Mulligan trots out the tired and widely debunked line that "If people aren't paid they don't make the product." See what he did there? It's common among folks who are entering into such discussions for the first time. They say (a) music can't be free because (b) if people don't get paid, they don't make money. The problem with this statement is that he makes a huge leap that if (a) then (b). If music is free, musicians don't get paid. The problem is, that's false. We've spent over a decade chronicling various business models where people use free something to get paid for something else.

And, of course, this is hardly a "new" or "revolutionary" business model. It's the way the world has worked for ages. The pizza shop down the street from me offers a free soda with two slices of pizza. Yet, according to Mulligan's professional opinion on business models, the pizza shop should go out of business. After all, it's giving away a product for free, thus it's not getting paid. The problem with Mulligan's analysis -- which one would hope is not indicative of Forrester's quality of work -- is that he seems to have focused so narrowly on the market, that he doesn't know what the market actually is. He seems to think that the entirety of the market is selling music -- rather than using the music to sell plenty of other things. Musicians can sell a variety of scarcities, such as concert tickets, merchandise, access to the band, the ability to create new music and many other things.

The rest of Mulligan's argument simply builds on the spurious assertion that musicians wouldn't make any money without copyright. Considering that his underlying assumption is false, the rest of the paragraph makes little to no sense, especially in light of the reality of the music industry -- which is musicians can (and already do) make more money from focusing on selling scarcities.

Yes, we've all seen these arguments in the past -- but they're usually put forth by someone who hasn't thought through these issues, and has simply jumped into one of these debates without taking the time to understand the actual market fundamentals. Yet, here's a case where a top exec and director of research at one of the world's largest analyst firms is making these same very basic rookie mistakes. If your firm happens to be relying on Forrester for advice on such matters, perhaps it's time to consider an alternative.

Filed Under: business models, economics, free, mark mulligan, music
Companies: forrester