A key claim by those who support Article 13 is that it's necessary to get "fair compensation" for artists on the internet. Whenever more specifics are needed, supporters almost always point to musicians, and talk about "the value gap" and how internet companies are taking all the money and recorded music has been destroyed by the internet and all of that. And, of course, if you've followed the rhetoric in the last 20 years since the introduction of Napster, you'd believe that the recorded music business is in a never-ending death spiral. Of course, as we've pointed out, the "recorded music business" is just one segment of the larger music business, and nearly all other aspects of it (especially live music) have continued to grow pretty consistently each year.
But, a funny thing has happened in the past few years that undermines the doom and gloom message: the recorded music business has been growing. Rapidly. And it's entirely due to the internet and all of the various services that the RIAA had been slamming for years. Indeed, it did seem notable when the RIAA put out its latest revenue numbers for 2018, showing the incredibly rabid growth over the past four years of the recorded music business. So I started taking an even closer look at what's happened over the past decade. Thankfully, the RIAA actually makes all of the data available, and so I put together this handy chart:
So, yes, things sort of bumbled along for the first few years of the past decade, but the last few years are ones of massive and incredibly rapid growth due to online streaming. The US recorded music business is right at about $10 billion (if you're interested, the live music business in the US is about the same, counting both ticket sales and sponsorship).
Now, you might say, well that's just the US, and Article 13 is about Europe. Thankfully, IFPI puts out similar numbers (counted slightly differently, unfortunately, so it's not an exact comparison). IFPI has not yet released its 2018 numbers, but looking at the report from last year you see that the global numbers show a pretty similar change, again, with things bottoming out a few years back, and then showing new growth, almost entirely from the rapid increase in streaming services. I expect when IFPI releases its 2018 numbers, we'll see just as dramatic a bump up as we see with the RIAA's US numbers:
So, it certainly looks like the internet (as some of us predicted...) has absolutely been the savior to the music business -- it just took the legacy companies hellishly long to embrace it.
But, again, I'm left wondering why is it that we need Article 13 again? To hear Axel Voss and other supporters talk about it, the recording industry is in a death spiral without it. Yet, the actual stats show things are going quite well and growing like gangbusters.
We've talked a lot in the past about the concept of soft corruption. These are the kinds of practices that are most likely legal, and possibly even common among the political class, but which absolutely stink of corruption to the average American. And that's a huge problem, not just because of the general ethical questions raised by such soft corruption, but because it creates a cynical American public that does not trust politicians to adequately represent their interests.
Here's just one example. It appears that a bunch of industry lobbyists have been receiving the following email:
If you can't read it, it says the following:
Subject: Chairman Jeffries Grammy Weekend Feb 8-10
Good afternoon!
Chairman Hakeem Jeffries and Ranking Member Nadler will be splitting a box for the upcoming Grammy Awards Feb 8-10. The room block is at the newly renovated Sheraton Grand Los Angeles, which is a short walk from the Staples Center. To access the invite and registration form, please CLICK HERE
Tickets are $5,000 each. If you need a second ticket then please let me know and I will put you in touch with Yuichi Miyamoto from Ranking Member Nadler's team.
Please let me know as soon as possible if you want to attend since we have a limited number of spots. We also request that you use the room block for the stay.
Thanks again!
The link then takes people to an official invite to hang out with Reps. Jeffries and Nadler at the Grammies. Just $5 grand a pop. They'll even book your hotel for you! What a deal! What a steal!
Jeffries and Nadler are both bigshots in Congress. Jeffries (who originally ran for Congress stating: "Washington is broken. Congress is dysfunctional.... We deserve more") was just elected to be the chair of the Democratic Caucus, which makes him an incredibly powerful Congressman. Nadler is the current "Ranking Member" on the powerful Judciary Committee, and once the new Congress begins, will become the Chair of the Judiciary Committee -- the very committee in Congress that is in charge of copyright law. Nadler has a long history of pushing horrific anti-public copyright bills. Back in 2012, he proposed what I jokingly referred to as the RIAA Bailout Act of 2012, as the entire point of the bill was to drastically increase the rates internet radio would have to pay the record labels. He's also mocked digital rights activists, by calling the idea that "you bought it, you own it" was "an extreme digital view."
So, it certainly does seem notable that both of these Congressional Reps (1) have "a box" at the Grammies and (2) they're actively asking industry lobbyists to give them $5,000 per ticket to hang out with the Congressmen at the Grammies.
Again, some may suggest that this is "how fundraising is done" in Congress (though, frankly, it's usually a bit less blatant). But, even so, is this how it should be done? Doesn't anyone in Jeffries' or Nadler's office think that going to a key recording industry event and asking the industry's biggest companies to pay them $5k to spend some time with them... looks really, really bad? And, relatedly, how the hell can we trust that the various copyright bills that are certain to be under Nadler's control over the next two years (at least) are actually written for the benefit of the public, as per the Constitutional requirement, rather than the benefit of his $5,000 paying "friends" who hang out with him at the biggest celebration of the industry over which Nadler gets to set key rules?
In the past, there have been ethical questions raised by Congressional Representatives hosting fundraisers targeting industries they have jurisdiction over regulating, but these things tend to get swept under the rug in Congress as part of "the way things are done."
But, it certainly stinks of the kind of "soft corruption" that makes the public distrust the government. Indeed, it's the kind of thing that makes people say: "Washington is broken. Congress is dysfunctional.... We deserve more."
Every electronic device capable of storing data is just another tool in the pirate's chest. If you think your phone or mp3 player or hard drive is just something for storing data and perhaps even purchased software, movies, and music, think again. The simple fact you've decided to purchase any of these devices pretty much ensures content creators everywhere will go bankrupt.
According to documents released under the Access to Information Act, the collective arrived with a startling demand, asking the federal government to pay $160 million over the next four years to compensate for music copying.
The demand, which now forms part of the platform of demands from the Canadian music industry, is based on a $40 million annual handout. While the industry has not provided details on how it arrived at its figure, notes (likely from Graham Flack) reveal the basis of the demand.
This apparently breaks down to $3.50 a device, according to the cocktail napkin math handed in by the industry.
But the industry isn't willing to wait around for devices to be sold. The CPCC (Canadian Private Copying Collective) wants the government to just hand it $40 million a year and assume it all adds up in the end. So, it's a much broader "you must be a pirate tax" that calls all Canadians pirates, whether or not they've actually purchased a new piratephone during the fiscal year.
What's more, the document [PDF] makes it clear the CPCC wants a new revenue stream just because an old one has vanished. It points out revenues from "pirate" taxes have dropped from a high of $38 million back in the heyday of blank media to an expected $2 million in 2017. It also notes that streaming services are replacing music sales, accelerating this decline in "pirate" taxes.
However, the report carefully does not point out revenues from streaming services have increased from $3.4 million in 2013 to $49.3 million in 2017. It also ignores the fact that much less copying -- authorized or unauthorized -- is taking place.
The business model this "pirate" tax depended on -- copying of music to media or devices -- is slowly being eliminated. That doesn't mean taxpayers owe CPCC a living. It just means sales are being replaced with "rentals." If the CPCC failed to capitalize on the shift to streaming, it shouldn't be allowed to make up its "lost" revenue by taxing smartphones just because that's where most music streaming takes place. It makes as much sense as envelope manufacturers demanding a per-device tax because email and instant messaging has replaced snail mail as a means of communication.
As much conversation as gets logged on the topic of copyright infringement, or piracy, you may not have noticed that there are not that many arguments against piracy. Certainly there's a volume of voices, particularly those coming from the entertainment industry, but those voices are typically making only one of two claims. The first claim is that piracy is morally wrong. This claim typically devolves into something along the lines of "but piracy is theft", and relies on the intuitive notion that downloading, say, a song hurts the creator of that song by depriving them of income. If there was no income deprivation, there would be no moral wrong. The second claim skips the first part of that equation and simply asserts that piracy harms the entertainment or content industries, depriving them of the income they need in order to create more content. You will notice that, ultimately, there is actually only one argument against piracy: its effect on the income of the content producers.
With as much as entertainment advocacy groups like to pantomime Chicken Little on this topic, you might be surprised to learn that the RIAA recently came out with its 2017 Year-End industry report, in which it gleefully notes both how much money the music industry is making and, importantly, how that revenue is growing rather than shrinking.
In 2017 revenues from recorded music in the United States increased 16.5% at estimated retail value to $8.7 billion, continuing the growth from the previous year. At wholesale, revenues grew 12.6% to $5.9 billion. These increases were driven by more than 35 million paid subscriptions, a 56% growth year-over-year. This is the first time since 1999 that U.S. music revenues grew materially for two years in a row, while gaps in core rights continue to distort the marketplace and deprive recording artists and songwriters of the royalties they deserve.
So, we have two years of growth in music industry revenue in America, even as the RIAA is also still complaining about market distortions and artists not getting enough royalties. The full report notes that streaming revenue is way up, digital downloads are down, and physical product purchase revenue has been mostly flat. Note that this is all for the American market. Nowhere in the full report does it flesh out exactly what the RIAA's complaints about artist compensation are based on, although piracy/infringement is almost certainly the answer.
The problem for that argument, which is again the only real argument for focusing on piracy as some great evil, is that another report just came out from MUSO, a group that tracks piracy, indicating that piracy is more popular in the public right now than it ever has been.
Piracy tracking outfit MUSO has documented the piracy landscape with data from tens of thousands of the largest global piracy sites. In its latest report, the company recorded more than 300 billion visits to pirate sites last year alone. This is an increase of 1.6 percent compared to 2016.
More than half of all these visits (53%) are going to streaming sites, making that the most popular piracy tool. Torrent sites and direct download portals still have a significant user base, but follow at a respectable distance. Most of the pirate visits came from the United States, followed by India and Brazil. Despite the various pirate site blockades, the UK also secured a spot in the top ten, ranked at the bottom with nine billion visits.
A couple of things to note in the report's details. Again, America had the highest instances of piracy by far, nearly twice as much as India, which came in third. Also note that, while streaming sites for television was the most popular method of piracy in the public, pirating music came in second. So, we have two data points. The RIAA says that the American music industry revenue has risen two years running. MUSO says that Americans pirate more than anyone else, that they often pirate music, and that piracy levels are at the zenith and rising.
The "piracy hurts the music industry" mantra just took a credibility hit, no?
The explanation for this isn't difficult to understand. Those that pirate music also buy music, go to concerts, and support the bands and music industry through all kinds of other purchases. They also likely subscribe to streaming services and pirate what they can't find there, or what they discover there. The point is that music pirates are often fans of music and may purchase along with pirating.
In other words, the simplistic attack mantras from the RIAA don't make a great deal of sense alongside the RIAA reporting that the music industry is making gobs of money, and increasingly so.
For many, many, many years, we've talked about how the legacy entertainment industry will seek to kill the Golden Goose by strangling basically any innovation that is helping it adapt to new innovations. We saw the same pattern over and over and over again. The simple version of it goes like this: the legacy entertainment industry sits around and whines about how awful the internet is because it's undermining its gatekeeper business model that extracts massive monopoly rents, but does nothing to actually adapt. Eventually, companies come along and innovate and create a service (a) people want that (b) actually is legal and pays the legacy companies lots of money. This should be seen as a win-win for everyone.
But the legacy companies get jealous of the success of the innovator who did the actual work. They start to overvalue the content and undervalue the innovative service. The short version of this tends to pop up when a legacy entertainment exec says something like "why is innovative company x making so much money when all it's doing is making use of our content?" Of course, if the service part was so obvious, so easy, and so devoid of value, then the legacy entertainment companies would have done it themselves. But they didn't. So with the jealousy comes the inevitable demand for more cash from the innovator. And, usually, demands for equity too, which the innovator has basically no ability to resist, because they need to have a "good" relationship with the content companies. But the demands for more (and the jealousy) never go away.
The end result, of course, is that tons of innovative businesses that created amazing services that people liked get crushed. Completely. Venture capitalist David Pakman (who founded one of the companies, which I used way back in the day, that was eventually crushed, called MyPlay) detailed how the legacy recording industry used this strategy to bury more than 150 companies over the past two decades. It's the same story over and over again. Any company becomes too successful and the legacy copyright holders squeeze them to death, whining the whole time about how they don't pay enough. As Pakman wrote:
The music industry complains loudly about the “leverage” these giants have over them. First they criticized Apple iTunes for not agreeing to raise prices above $0.99, then they went after Pandora and other webcasters by insisting webcasting rates were too low, then they attacked Spotify for not paying them enough, then they insisted Apple Music pay them more than Spotify did, and now, just as the YouTube licensing agreements are coming up for renewal, they complain YouTube doesn’t pay them as much as Spotify.
But this is a “crisis” of their own making. Many of us argued for years that it was in the industry’s best interest to create a healthy ecosystem of hundreds or thousands of successful companies, all enjoying successful businesses around music. But those arguments fell on deaf ears, and instead the industry fought repeatedly to raise royalty rates over and over again, despite evidence that not a single company ever achieved profitability.
In my mind, it would have been in the best long-term interests of the recorded music business to enable the widespread success of thousands of companies, each paying fair but not bone-crushing royalties back to labels, artists and publishers. But the high royalty rates imposed upon startups, even after clear signs over the past 19 years that the strategy killed companies, has prevented a healthy ecosystem from emerging. It’s a bed the music industry made for itself, and now it is left to lie in it.
Not only does this crush lots of interesting companies, the history of this sort of destruction has served as a giant warning sign to entrepreneurs. Years back we wrote about entrepreneur Tyler Crowley explaining how this kind of history makes entrepreneurs steer clear of doing anything with music. His original post is sadly gone from the internet, but we've still got some quotes that highlight the key points. His argument was that there are different options for entrepreneurs, which he describes as "islands" with different rules and conditions to "dock" at those islands:
For tech folks, from the 35,000' view, there are islands of opportunity. There's Apple Island, Facebook Island, Microsoft Island, among many others and yes there's Music Biz Island. Now, we as tech folks have many friends who have sailed to Apple Island and we know that it's $99/year to doc your boat and if you build anything Apple Island will tax you at 30%. Many of our friends are partying their asses off on Apple Island while making millions (and in some recent cases billions) and that sure sounds like a nice place to build a business.
And what about "Music Biz Island"? Well, the labels have made it clear you don't want to dock there.
Now, we also know of Music Biz Island which is where the natives start firing cannons as you approach, and if not stuck at sea, one must negotiate with the chiefs for 9 months before given permission to dock. Those who do go ashore are slowly eaten alive by the native cannibals. As a result, all the tugboats and lighthouses (investors, advisors) warn to stay far away from Music Biz Island, as nobody has ever gotten off alive. If that wasn't bad enough, while Apple and Facebook Island are built with sea walls to protect from the rising oceans, Music Biz Island is already 5 ft under and the educated locals are fleeing....
That doesn't seem healthy for music. And that brings us around, of course, to Spotify. The music streaming giant has filed to go public, and Ben Thompson over at Stratechery has done a bang up job highlighting why even this hugely "successful" music platform looks like a disaster from a standard internet investment perspective. Its margins suck. Its margins suck so bad it's still unclear if Spotify can ever make money. Because it's the same old story that we described above, where the labels (who own a large chunk of Spotify -- remember the equity demands?) are crushing the company in a way that is unlike basically every other successful internet company. Internet companies are built on the idea of huge margins, because the marginal of one more customer is minimal.
But not with Spotify. Spotify has to give over so much of its revenue to the labels that it's nearly impossible for it to ever be a viable business. Ben points out that the revenue and costs numbers show that Spotify operates like any "well-managed SaaS company." But it has a "marginal cost problem" in that the label deals (even ones that were restructured recently) guarantee that nearly all of the money that Spotify gets... goes right out the door to the labels.
Spotify’s margins are completely at the mercy of the record labels, and even after the rate change, the company is not just unprofitable, its losses are growing, at least in absolute euro terms:
Ben has all this laid out in his usual nice charts and graphs and such that are worth checking out.
But, what this all comes down to, yet again, is the stranglehold of a messed up copyright system. The fact that the labels can kill the golden goose over and over and over again is because of one simple reason: the artificial monopoly handed to them by the copyright system, and the power it bestows. It's a market distortion. This isn't to say that there shouldn't be any copyright (let's see if our usual trolls make it this far in the post or if they've already dashed off a comment about how I want no copyright at all...). But it certainly demonstrates how the copyright system is so weighted to favor the copyright holder that they can strangle basically any business that touches on copyright, and make those markets entirely different from basically any similar business that isn't encumbered with copyrights and legacy businesses who, having failed to adapt themselves, now demand a king's ransom from the companies that did all the adapting for them.
Last week, we wrote about the ridiculous suggestion from the former Newspaper Association of America (now called the News Media Alliance) that President Donald Trump should scale back fair use because newspapers still don't like Google. As we noted, at a time when Trump has been strongly endorsing censoring newspapers, for those very newspapers to tell Trump to undermine a key cog in protecting free speech was absolutely ridiculous.
And, of course, now we can add the legacy recording industry to this same "shoot foot" brigade. Upon hearing about Trump's meeting with the heads of a bunch of top tech companies, the RIAA and a bunch of related recording industry associations (including ASCAP, BMI, A2IM, NMPA, SoundExchange and more... ) have sent a letter to Trump (found via Variety), asking him to force the internet companies to nerd harder to find better ways to censor the internet. This is fairly incredible, seeing as the traditional recording industry wasn't exactly a major Trump supporter. For them to now reach out to Trump and urge him to increase censorship of the internet is fairly astounding and sickening. Basically, to the RIAA and friends, hatred of Google and the internet is more important than concepts like free expression or holding our elected officials accountable.
Of course, the legacy recording industry doesn't come out and directly say "censor the internet," but that's exactly what they're asking for here (though watch the blog posts from defenders of the industry howl about me making this intent obvious):
Surely the world’s most sophisticated technology corporations can do better – by helping to prevent
illegal access and paying fair market value for music with prices set by or based on the free market.
Strong protection for intellectual property rights will assure growth in both creativity and technology,
benefiting the American economy as a whole.
We hope you will lead the effort to assure American creativity is encouraged, invested in, protected and
fairly compensated in a manner that carries out the exclusive rights guaranteed in the Constitution to
those who, with the genius of their mind, form the cultural identity of our great nation.
The call for censorship is in "preventing access" which means blocking what you can do online. The hilarious part is the "prices set based on the free market" because that's exactly what the industry is protesting. The whole "value gap" bullshit is basically the industry saying "we do not like what price the free market is setting, and therefore we need the government to artificially inflate prices through monopolies.
Just to be clear, if you're whining about not getting "fair compensation" you're clearly saying "I'm upset about the price the free market has set."
But the bigger issue here is the censorship piece. I shouldn't have to detail here how many times we've shown that copyright is abused for censorship purposes (including by governments). The call to hold platforms more accountable and putting the onus on them to "nerd harder" is a call to ramp up tools for censorship-via-copyright. This is pretty ridiculous -- and one hopes that musicians who have spoken out against Trump will also speak out against this demand to give him and his friends more power to censor parts of the internet.
Okay. I've heard lots of crazy arguments from the record labels, but I may have found the craziest. We've discussed how ridiculous it is that the TPP includes a provision saying that every country that signs on must make sure the minimum copyright term is life plus 70 years. This will impact many of the countries that negotiated the agreement, which currently have terms set at life plus 50. This was a key point that the recording industry and Hollywood fought hard for. When even the Copyright Office recognizes that life plus 70 is too long in many cases, the legacy industries recognized that getting copyright term extension through Congress in the US might be difficult -- so why not lock stuff in via international agreements?
And, of course, the USTR was fine with this, because the USTR goes along with basically everything that Hollywood asks for. But here's the crazy part: having gotten such a ridiculous thing, the recording industry is whining about its own victory. As Kimberlee Weatherall points out, the recording industry in New Zealand is bitching about the fact that the change doesn't go into effect immediately because it's "too costly" for copyright holders.
That's because the TPP has a "phase-in period" that allows countries to adjust and gradually move copyright terms upwards. But the record labels are having none of that:
Meeting before a parliamentary committee this week, Recorded Music chief executive Damian Vaughan said his advocacy group supports an article in the TPP deal that standardizes the terms of protection of a work to the life of an author plus 70 years. (New Zealand is one of several participating nations that currently has a term of 50 years after death.) However, Vaughan thinks a proposed phase-in period for nations upgrading to 70 years is unnecessary and a costly burden for rights holders.
"It's not making copyright simple or easy to understand to the music user or the public whatsoever," he said, according to RadioNZ. "It is making the process significantly more complicated, and it's the rights organizations and the copyright holders who will be forced to administer this… We note the cost we incur will be far higher than any perceived cost savings."
Now, think about what Vaughan is really saying here. Let's be clear: copyright term extension is deliberately removing these works from the public domain. When they were created, a deal was struck between the public and the content creator. That deal said "this work goes into the public domain, but to give you incentive to create it in the first place, we'll give you some limited exclusive rights for this amount of time." That's the deal that was struck. But, now, with copyright term extension, that deal gets thrown out, screwing over the public. They don't get anything back despite the fact that material that was destined for the public no longer is. So there's a massive cost to the public and no payment whatsoever. That's problematic alone.
And to make things even more obnoxious, Mr. Vaughan is whining that not being able to fuck over the public fast enough is unfair because it puts too much "cost" on the record labels? REALLY? Boo fucking hoo. You were the ones who pushed for extending copyright terms, and now you want to whine that it might be too costly to administer the process? Fine, fuck it. Let's just toss out the extension and maybe consider decreasing copyright terms overall. That'll give the record labels a lot less to administer, saving them lots and lots of money. Oh, and also giving the public what they were promised. Seems like a good deal all around.
The legacy recording industry just has a way with attacking any new technology service that helps it adapt, doesn't it? Whether it's ringtones or video games or YouTube or iTunes, the industry always takes the same basic approach: denounce the new offering as evil. Threaten and/or sue. Maybe take some equity as a way to "settle" the legal threats/suits. And then squeeze the companies for more and more money until they're dead. It's happened over and over again, and we're now witnessing the same thing again in streaming music -- even as it's turning into a major cash cow. For whatever reason, to make this work, the industry wants to turn this cash cow into an enemy.
In its earnings statement, the RIAA noted that when all types of streaming are combined (subscription, ad-supported on-demand and SoundExchange), it constitutes $2.4 billion in revenue for 2015—a rise of 29 percent over the previous year.
While today’s data is encouraging, the challenges facing us are significant. The consumption of music is skyrocketing, but revenues for creators have not kept pace. In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meager — far less than other kinds of music services.
So, revenue from streaming services is growing at a one-third clip over previous years, but that's just not enough. And this statement is made even as the RIAA and some of its member artists do everything possible to hamper, block, and outright shut down the streaming services that are producing this revenue for them.
And then there's this bit of pure bullshit:
Need further proof that some fundamental market distortions are at play? Last year, 17 million vinyl albums, a legacy format enjoying a bit of a resurgence, generated more revenues than billions and billions of on-demand free streams: $416 million compared to $385 million for on-demand free streams.
Want to talk about "market distortions," Cary? How about the fact that you're being blatantly dishonest in presenting these numbers, taking the gross "retail value" on vinyl, but for free streams talking about the wholesale net value to you. You're leaving out a ton of relevant details: First, retail value isn't actual revenue, as it ignores the reality of discounts and other pricing differences. Second, and more importantly, you're leaving out the fact that much of the money from retail value doesn't go to the labels, but to the retailers, distributors and to cover production costs of the actual records. Third, with free streaming, you have none of those costs, and the contracts you have with streaming companies mean a much greater percentage of the revenue actually goes to the labels. Fourth, free streaming does two useful things that you ignore: (1) moves people away from infringement, where you earn nothing and (2) moves many people up the chain to paid streaming.
But, I guess if someone is going to be familiar with "market distortions" and how to misrepresent reality, it would be the RIAA.
Beyond that, the claim here is that artists aren't making as much as was made in the old vinyl and CD eras. First, I don't even know if that's true, but even if we accept that claim...so what? Streaming, by the RIAA's own data, is now the majority revenue producer in the music industry. In other words, that's the direction the market is going. But there is nothing promised in business and if the new model means revenues aren't equal to the old model, that doesn't mean there something wrong with the model. It may certainly mean that there's something wrong with the RIAA's model, but not the one so heavily in demand by consumers and generating the majority of RIAA revenue.
And there is certainly nothing in this to suggest that streaming is harming music as an art form. Far from it, actually. As Cary Sherman notes, music consumption is up, up, up. Does Sherman really mean to suggest either that streaming services aren't contributing to that rise, or that wider music consumption isn't ripe to be monetized by any number of forward thinking business models?
Last month, we wrote about an initial decision by the UK High Court to take away the private copying right that allowed people to rip their own CDs. This change in law had been sought by the public for so long that by the time it finally came into practice it didn't really matter because (1) who the hell still buys CDs and (2) everyone who did already assumed that ripping those CDs was perfectly legal, because that's the only sensible way of thinking about it.
Yet, last month, the UK High Court ruled that the government had somehow erred in putting a private copying right into law because the government didn't believe the fanciful made up "losses" of the recording industry. However, it still left open the possibility that the law could be left in place if the government could come up with a good enough reason to keep the law in place. But, on Friday, it stomped out that hope, issuing a final ruling that makes it clear that the 3 UK citizens who still buy CDs cannot rip them into MP3s because the recording industry will die, or something along those lines.
As for why? Well, it appears that the UK government itself sided with the record labels and said "sure, get rid of the law that Parliament passed."
The Secretary of State has accepted the position that the Regulations should be quashed. He states as follows:
“The Secretary of State welcomes the guidance which the Court has provided as to the correct approach to be adopted as a matter of law when considering the introduction of a private copying exception, and as to the scope and nature of the factual enquiries which are necessary. He will now take the opportunity to reflect further and in due course take a view as to whether, and in what form, any further factual enquiries should be carried out and whether a new private copying exception should be introduced. The Secretary of State has not decided on any specific course at this stage and wishes to take time to reflect before making any further decisions. He would not wish to create any uncertainty in the law by submitting that the Regulations remain in force while further policy decisions are made.
Given that the Secretary of State submits that a quashing order is appropriate at this stage, there is no necessity for a reference to the CJEU. As is made clear in the body of the Judgment, the Judge’s conclusion leading to the ruling that the decision was unlawful did not depend on his conclusions on issues of EU law, in particular as to the meaning of “harm” (the issue identified by the Judge is a matter for a potential reference)”.
There is a separate question of whether all those CDs that were ripped in the past few months created newly infringing files or if those somehow get grandfathered in. Here, the court has decided that... it won't bother answering that question and will punt and leave it for a future lawsuit to decide. Really. It goes on for a few pages weighing the two arguments and then says "meh, I'll let someone else decide":
I am not prepared to rule upon the position ex tunc. It seems to me that the declaration sought raises potentially complex and far reaching issues which it is appropriate to address in the circumstances of private law litigation between a specific rightholder and an alleged infringer. It will be for a defendant in future proceedings to explore and raise this issue, including whether the effect of the fact that they relied at the time upon Section 28B creates some species of estoppel, legitimate expectation or fair use defence in private law and whether, if such exists, this goes to the cause of action or the remedy or both.
One hopes that the record labels aren't so stupid as to actually go after someone for this, but this is the record labels we're talking about and "suing fans" is about the only thing they know how to do these days.
The recording is old news. Last century. Dead. The Access versus Ownership debate should have finished 10 years ago, but we're still bickering. Access models (eg. streaming) are not supposed to replace Ownership models. They're supposed to power a new reality, a new age for the Music business, in which the record industry possibly has no place.
"The Music industry" has become synonymous for the recording industry, just as it was synonymous for sheet music publishers prior to the rise of the recording companies. With new technology, come new companies, and the old companies move into the background. The new Music industry will likely not consist of those that depend on the recording (eg. major labels, or even Spotify), but those that apply technology to change what it means to listen to or interact with Music, just as the recording did in the 20th century.
Even the creative process will have to change.
Interactivity
Prior to the invention of the record, Music was far more participative than it has become throughout the age of mass media and mass consumption. Back then, if you wanted to hear your favourite song, you better know how to play an instrument, or have a member of the household who sings well, or you're simply not going to hear it. That sounds extremely restrictive given our current reality, but it also gave Music certain characteristics that made it richer:
Music was participative
Music was mostly a social experience
Music was more intimate
Music sounded a little bit different every time
Music belonged to everyone
I believe these are natural characteristics of Music, that got temporarily pushed into the background in the age of Mass Media and Western individualism. Entertainment and Culture became passive, and the ownership of Culture became less ambiguous, economically. A Creating Class arose, and a Consuming Class. The companies selling the output of the Creating Class benefited from the passiveness of the Consuming Class, because you couldn't consume high margin products while you create.
The KLF's Bill Drummond about Recorded Music
The KLF's Bill Drummond about what the recording took away from Music. From 1:23. Quote below.
"As the technology to record music evolved through the twentieth century, it sucked in and seduced every form of music around the world. They all wanted to become recorded music. They all wanted to become this thing that could be bought and sold. And that narrowed the parameters of what music could do and be. And it took away from music a big part of what can make music powerful, which is about music being about time, place, and occasion."
"Until 100 years ago, every musical event was unique: music was ephemeral and unrepeatable and even classical scoring couldn't guarantee precise duplication. Then came the gramophone record, which captured particular performances and made it possible to hear them identically over and over again. […] I think it's possible that our grandchildren will look at us in wonder and say: "You mean you used to listen to exactly the same thing over and over again?""
Introducing Interactivity
The recording is not the end of the line for Music. Every medium is a transition to the next medium.
Most people call performed music "live music" —
some people call recorded music "dead music"
The Media evolved and spawned Computers, the Internet, Video Games. The latter a highly Interactive example of Culture that went on to give birth to MMORPGs, where large Communities of players Interact and define their own Meaning, participatively. A particularly good example of the aforementioned elements coming together is Minecraft, a world-creating game where players work together to build whatever they can dream of. Deadmau5 uses this to enter a digital world of fan art and interact with his fanbase. Imagine what that's going to look like with the unstoppable momentum Virtual Reality currently seems to have. The Consuming Class has become the Creating Class: Consumption and Creation are becoming, in part, synonymous.
Why is Music still static by default?
Why am I not being offered more ways to interact with Music?
Look at the gaming industry. It's a 1,000 times easier to get someone to pay to unlock a 'special ability' than it is to sell them a piece of content.
Intimacy and Immediacy
The old Music industry is not interested in creating Intimacy. It's hard to scale. The dominance of the recording industry's model depends on hundreds of thousands of well-timed sales, and a long-tail that provides income until 70 years after the death of the Creator.
Yet the fact that we carry computers in our pockets that are more powerful than the PCs on our desks a few years ago, and always connected to the Internet, offers amazing opportunities for Intimacy and Immediacy, ones that fans are happy to pay for. It means that Kevin Kelly's theory of a 1,000 True Fans will become increasingly easy to apply for a growing number of Creators.
The rise of Intimacy and Immediacy will benefit those Creators who work with small teams, who are open about their creative process, and involve their fanbase early on in this process. This enables them to secure funds through crowdfunding, as opposed to trying to secure investment from large corporations, whether recording companies or brands.
One can create dynamics of social competition within a fanbase. Who can recruit the most new fans, or active members? Who are the most valuable contributors to the Creator's wiki? Who spend the most money on merch and who have the most complete collection? The ones that rank highest, get access to perks. A weekly 1 hour video chat with the top 10, weekly 10 minute preview of what you're working on for the top 50, 20% discount on merchandise for the top 200, etc.
An app that has a great idea for how to get people to actively discover new Music, engage with it, and feel part of the artist's success is Tradiio. It gamifies Music discovery and lets users invest virtual coins in songs they believe in. This helps artists rise to prominence on the platform and earn rewards. If this platform evolves from a reward-based game, to a real economy where users can purchase coins and artists can cash out, it would be a good example of the type of company the new Music industry will be made up of. Just to mention some other exemplary companies for music's future: look at Smule and Sonic Emotion.
More on Games
The Gaming industry got into the same mess, at the same time, that the Music industry got into, brought about by the fact that what they thought was their product could suddenly be communicated through networks at zero cost. A whole new Gaming industry emerged with the arrival of connected devices: smartphones. Instead of charging money for the game, they made the game free to play and highly social, and instead charged for a limited set of actions.
Treat money-poor, time-rich fans as well as the money-rich, time-poor, because it's the former that provide value for the latter.
Music needs a new format that's feature-oriented, rather than content-focused. The content remains central to the experience, but the interaction around the content is what brings in the money. Likewise, playback of recorded music will remain important in the future, but perhaps not as the part of the industry that rakes in the most important part of Creators' incomes.
Examples
There are countless examples of companies pioneering the future of Music. From aforementioned Tradiio, to ones started by game developers, Music business serial entrepreneurs, and artists themselves. First let's start with an example from another part of the entertainment industry.
Example: Affectiva & Portal Entertainment
The former is an emotion analysis startup spun out of MIT Media Lab in 2009. The latter is a studio which produces 'movies' for interactive devices. According to a recent article on Wired, using Affectiva's software, Portal Entertainment is creating a horror series that's "exactly as scary as you want it to be":
"The software will read your emotional reactions to the show in real time. Should your mouth turn down a second too long or your eyes squeeze shut in fright, the plot will speed along. But if they grow large and hold your interest, the program will draw out the suspense."
Imagine applying that to music… Some companies are already closing in on that.
Example: Inception, by Hans Zimmer and RjDj
Music producer and film composer Hans Zimmer collaborated on an app for the Inception movie, with RjDj, a company that specializes in Context Aware Music and Augmented music, founded by one of the co-founders of last.fm, Michael Breidenbruecker. Hans Zimmer on the project:
"There's a thing I've been searching for and I've been working on forever now, is a way to get beyond recorded music. To get beyond 'you just download a piece of music and it's just always the same'."
The application they made draws information from the world around the user, and transforms it into fantastic music. It seems as if you're being immersed in dreamlike worlds, as happens in the movie.
They continued their collaboration and made another app for The Dark Knight Rises. RjDj also created a Reactive Music game called Dimensions, which owes its name to the trippy effects of the Augmented Music that make it feel like you've just crossed into another dimension. The game is free-to-play, and offers in-app purchases to unlock new experiences or further augment existing ones.
I asked two of the people behind RjDj whether people are ready for adaptive music. This is what they had to say.
Michael Breidenbruecker:
"I think many of them are ready. Apps like Inception or Dark Night Rises show that people are really into this sonic experience. The problem is how this is presented packaged. I can tell you from experience that not many people hear the difference between 5 hours of generative music and 5 hours recorded music. So really... no one cares if your music changes all the time through an algorithm and never sounds the same or if [it] is a preproduced track. Music has to have a reason why it is dynamic and not linear... that's why we sync it to real life."
Robert Thomas:
"I think Inception especially proved that if the experience is delivered in a way that makes sense, perhaps within a bigger conceptual framework, then millions of people can understand it and really like it.
As for people understanding the depths and details of how reactive music changes. It is very very easy to lose a huge part of the audience here. I think its fair to say that only musicologists and very serious music listeners could pick out the ways in which detailed generative music is changing for instance. Making a reactive music experience meaningful requires that the listener can tangibly feel that the change in the music is linked to his / her activity or life in some direct and hopefully emotionally powerful way.
Often making linear music is about manipulating the emotional state of the listener into particular states of mind over time for dramatic effect. Reactive music poses a different set of possibilities - what if the music is manipulated by them / their emotional state? As a composer this is totally different - its like using a sniper rifle instead of a shotgun - you can make your music hit exactly the right spot for the moment."
Adaptive soundtracks are actually quite common in games, where the Music transforms depending on the player's absolute and relative position (it's called Dynamic Music). Some developers are chucking all the other game elements aside to focus fully on that.
Example: Proteus
Proteus has been described as a non-game. The game (or 'game') was developed by one developer and one sound designer, and places you on a mystical island. There's nothing there to kill, no need to score points, and you can't die. All you have to do is to wander around the island to discover new areas and to enjoy the way objects around you influence the soundtrack. This is the literal embodiment of the phrase 'soundscape'. The changing seasons, different weather conditions, time of day, and varying ecosystems all have an impact on the Music.
I asked David Kanaga, the game's sound designer, whether this is something anyone could do, in order to understand whether this could become a more mainstream medium for Music:
"Yes, anyone could do it. It's maybe even more natural than writing static music in a way. That said, very few people are doing it, and maybe it takes years of UNLEARNING, which maybe means everything needs to be played again, to stop fixating on what's successful and beautiful in recorded music, in Sgt. Peppers and Pet Sounds, to find the play aspect of those and to move on, to stop admiring recordings.. improvise only, this is the tactic that i've been practicing myself to try this unlearning.. no serious learning is needed, really, but the UNLEARNING is totally necessary."
Example: Biophilia, by Björk
In recent years many artists have taken to releasing albums as apps. Björk had a particularly interesting take on it, releasing her album as a 3 dimensional galaxy that can be navigated and interacted with. The app even became part of MoMa’s collection.
Through the use of in-app purchases, the user can unlock new parts of the galaxy, which provide new Music to Interact with.
Example: Don't Be Scared LP, by DJ Vadim
Ninja Tune veteran DJ Vadim released an 'immersive album', which allows users to interact with different elements of the song, recomposing it according to their own wishes. What better way to create a sense of Intimacy between your fans and your Music.
Example: Central Park (Listen to the Light), by BLUEBRAIN
Then there's Bluebrain, a musical duo that produced their own apps, location-aware albums, one of which can only be used in New York's Central Park. In a way it's similar to Proteus, except in this case, the soundscape is mapped to physical locations rather than virtual.
Example: Weav
Recently a new music startup by one of the creators of Google Maps started making waves: Weav. Weav's aim is to simply make music elastic. Unlike Spotify's new feature which picks songs that match your tempo while running, songs on Weav's platform will actually adjust to your pace. The team created tools for musicians to create dynamic music: you don't just write the song, you also program rules for it to recompose itself and adjust to different tempos. Co-founder Lars Rasmussen:
"We believe that as our lives become increasingly digital, and as our increasingly powerful mobile devices play greater and greater roles in our lives, having a song that can change and adapt -- in real time -- to what you are doing will become increasingly important. And delightful. This is why we built Weav."
Conclusion
If you're waiting for disruption in the music industry, don't look at the big platforms like iTunes or Spotify. They belong in the Age of the Recording.
Look at platforms that offer actual Interactivity, Immediacy, Intimacy, and Involvement. Now more than ever can Creators help give shape to future formats of Music, and to new ways to connect the listener to the Music.
Imagine Music in the Age of the Internet of Things.
Music may be static, but it doesn't have to be. And the relation between Creator and Fan certainly shouldn't be.
Bas Grasmayer (@basgras) is a music startup consultant, and former Product Lead of Zvooq, the leading music streaming service in Russia & CIS. He’s best known for his thesis The Answer is the Ecosystem: Marketing Music through Non-Linear Communication and has previously spoken at conferences such as Amsterdam Dance Event, European Lab, Midem and Sochi Winter Music Conference.
