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Luddite and paranoid - why the big record labels failed at digital

Martin Mills

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Can't the independent sector go it alone with some kind of licensing deal, with the PlayLouder MSP model of legal P2P?

We already have something like that with eMusic. We find our relationship with them positive and productive, and we like it. Obviously we make less per unit, but we make more per consumer – and that's a trade-off you can live on. They're in a position where people go to them for a restricted musical offering, and they still succeed. And for me that's an encouraging example.

But we're 20 per cent of the market and we can't ignore what the market leaders are doing, and what Universal is doing ultimately determines what the market is. There's no point in denying it.

One of the reasons why at IMPALA we've been so exercised by Universal's dominance is that the market is in the control of one or two parties, and we don't think that's healthy. If the regulators regulated it as we think they should, then it could be avoided for the good of the consumer.

If I had to pick put one dominant theme from Register emails and comments, and it's not representative of everyone I'm sure, is that the value of sound recordings is going down, and the owners should give them away for nothing – and perform or sell T-shirts. Are you optimistic about being able to maintain that value?

I wouldn't say optimistic, but we're certainly working hard towards it. It's very difficult because everybody in the market is driving down the value. We're not just talking about file-sharing and CD burning, but I'm also talking about deals labels are doing with supermarkets and Sunday newspapers. All of which you can understand, but all of which makes it difficult to maintain value.

I think what we have to do is far more flexible about price. The industry has been very bizarre over the years – it's essentially a one price industry. We're looking at releasing some music more cheaply, some music more expensively, but just finding a price that fits the project. Creating special deluxe editions or reducing the cost on others, and selling them more cheaply.

John Kennedy [IFPI chief executive] says he thinks he's 80 per cent of the way there to licensing digital consumption through the network, and there's opportunity there. But he doesn't want to give everybody access to everything at once. Going that last 20 per cent [to a collective license] would destroy physical, he thinks. Do you agree?

Well, I don't want to destroy physical sales either. We find physical and digital are both viable markets that people enjoy using. But clearly, there's an opportunity for music on tap, and as a service, and it's something we should explore. I think we all want to see it come, but we don't want to see it destroy even the new versions of how people enjoy music.

All the talk now is about going after the network operators. But I can't see the carrot for the networks - only a stick. What is it?

The carrot has to be how they can participate in the value chain of music. Unfortunately it's always very difficult going from something that's free to an industry to something that has a cost to the industry. That's not going to be easy.

Technology evangelists for the companies that use copyright material, are very subtle in their rhetoric; much of the "Web 2.0" evangelism is that people should work for free, or very little, for the good of the internet.

OK if you follow that logic, if musicians aren't going to get paid, then they have to work for nothing; and obviously no one can't live on nothing; so the music has to be funded in some other way. The only way I can think of is some kind of sponsorship and branding, which would be an updating of the Florentine patronage model. But if you do that, then you put artists in the position where they're financially dependent on patrons, and whereas that may have worked 400 years ago, it isn't desirable now.

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