Original URL: http://www.theregister.co.uk/2005/04/20/future_of_music/

You're going to be taxed for music and love it!

The Future of Music is now

By Ashlee Vance

Posted in Media, 20th April 2005 19:03 GMT

Book review Long before Napster existed, the music industry condemned itself to a broken sales model. It guaranteed piracy, huge online song swaps and declining revenue. Luckily, none of this has much to do with the health of music. Music is thriving like never before. It's the moguls and not the musicians who are hurting.

This is the broad context laid out in The Future of Music by David Kusek and Gerd Leonhard. Their brief manifesto traces a century-long battle in which entertainment professionals have always sought to stifle new technology such as records, the radio, the VCR and now P2P technology. In the case of P2P, the record labels' battle against innovation has never been more comical since it was the mighty moguls that decided to release millions of CDs without any digital rights management (DRM) protection at all. Now the labels want to vacuum up 20 years of unfettered music, stuff it in a vault and pretend this huge oversight never happened.

"Today the industry blames the pirates and the evil file-sharers for its woes, but it can certainly be argued that the industry brought this upon itself by releasing the Red Book-audio CD format, not realizing that in just a few years, advances in home computer technology would make it possible for people to replicate an infinite number of perfect digital copies of every song ever released on CD," Kusek and Leonhard write. "The billions of files that are traded on Kazaa, Morpheus, Grokster, iMesh, Limewire, and other P2P networks are the direct result of the record companies' decision to go with the CD format."

The record labels have gotten off pretty light in the P2P debate by making curious children seem like immoral thugs destined for a life of crime. Downloading that U2 song is the first step toward shoplifting and eventually clubbing grandmothers. It's easy to forget the CD price-fixing, scandalous use of sex, drugs and violence as promotional tools and total disregard for the technology landscape as drivers of the record labels' own failure.

Kusek and Leonhard are far less preachy about all this than, er, some writers. They do expose the ills of the music business and poke the pigopolists. More importantly, however, they present one of the most detailed visions of where the music business is heading with speedy mobile devices and ever-present broadband behind it.

Poolapalooza

While a bit utopian in tone and seduced by still unproven technologies, the authors manage to draft a realistic model for future music consumption. Namely, a model that relies on a compulsory fee - dare we say it, tax - attached to broadband prices or, say, iPods. This license model would without hyperbole free up just about all of the music in the world to consumers . . . forever . . . on any device. It would compensate artists and song writers more efficiently than today's model. It could open up new ways for bands to promote themselves and make money. And, yes, it would make the music labels much less important than they are today.

"Compulsory licensing has been proven necessary in the case of player pianos, cable television, satellite television, digital recording media and Internet radio, and it appears to have served the respective constituents well," the authors write. "Compulsory licenses are used to legally allow music to be played on the radio, in restaurants, stores, elevators and in shipping malls as background music."

The idea of a compulsory license has been backed both directly and indirectly by The Register and other noble institutions such as Harvard University. It's not a terribly new concept. Have a look here, here and most certainly here. All of these articles and The Future of Music discuss different possibilities for tacking on fees to ISP or device charges with developed nations and content hungry consumers likely assuming more of the cost burden than others.*

Where The Future of Music differs from other publications on the subject is its deep, rich look at what such a model would demand of artists, publishers, consumers and record labels. Kusek and Leonhard explore the cultural implications of a world overflowing with music. They also do a fine job of nailing ways that artists could benefit from this model by making money once again from touring and selling new types of "unique" content to consumers.

It's hard to avoid flowery talk when discussing these "pool of music" and "pool of licensing revenue" models, and the authors fall victim to the obvious temptations. They make off-putting remarks about how a world overwhelmed by music will be accompanied by "blossoming" networking applications such as Friendster and LinkedIn.

"In fact, one can foresee a time not too far off when artists and their managers will fish in a huge pond of business connections that are nurtured in virtual and real-life conferences, tradeshows, and ultimately, marketplaces." Let's all pray that the future of music isn't on LinkedIn's back because there has never been a more stagnant, annoying pool of contacts created. And don't people in all businesses already meet each other in "virtual and real-life conferences" where they exchange ideas?

(For pricing information and rating, skip to the end of page two.)

Enter Salesman

For those of you averse to such hyperbolic language, don't fear. The Future of Music has below average utopian garble for a technology book, especially one with "future" in the title.

Instead, you find a lot of concrete goodies. Why do the authors believe CD sales have declined?

"(The) reasons include the significantly reduced number of retail outlets that carry CDs, the by-and-large non-competitive pricing of CDs and digital singles, the labels' unwillingness to experiment and develop really different artists, and the many competing forms of entertainment that exert magnetic power over the disposable dollars of the consumers, including video games, wireless services, and DVDs.

"And, let's not forget to mention that we have finally reached the end of that glorious replacement cycle of vinyl-to-CD that the industry has happily gorged itself on for the past fifteen to twenty years."

So what can musicians do to make money without huge CD sales?

Today, the artist gets 8 percent of the average CD sale with the label taking 49 percent, the retailer taking 30 percent, manufacturing taking 8 percent and shipping taking 5 percent. In this world, labels back a limited number of artists with huge ad campaigns, hoping that one or two acts will sell millions upon millions of CDs and cover losses for all the other acts. In this world, you see the number of record shops and songs dwindle. Wal-Mart now owns the majority of the US CD market and sells a few titles at a loss to bring people into its stores.

In the new model, the artist takes on a bigger role. New artists can float one or two songs on P2P networks or their web sites to see what gets attention. They don't have to pay a record label huge upfront costs for promotion or for recording an entire album. The artists will be required to build up a fan base over time by playing live shows instead of hoping they have the right look for their MTV video.

Bands will be able to sell "premium" content such as web casts of them recording an album or live chats with fans. They will get far more than 8 percent per album sale by moving songs via the web. And, they will be receiving their fair share of the licensing pool - a fairer share than exists today as it's much easier to track digital sales and P2P activity than what bars, radio stations and elevators play.

"Music wants to be mobile and moveable; this has been a sticking point with music fans all along," the authors write. "If we define mobility as the ability to access music from anywhere anytime, as the ability to take it with you without undue burden, and as the ability to exchange music with others, we have the very definition of digital music. The only way this can move is up!"

Instead of looking at P2P users as dissatisfied, disgruntled customers and trying to make life better for them, the record labels saw criminals harming their bottom line. They chose to sue their customers and to lock down already digitized and wild music. The Future of Music explains why this was the worst of all possible reactions and why the record labels simply can't win this fight. ®

Bootnote

* Such a plan could break out as follows according to the authors: "If 50 percent of the world's active Internet users would pay only $2 per month, the industry would collect $500 million per month - $6 billion per year - a whopping 20 percent of the current revenues from CD sales. Other calculations based on a sliding scale might work equally well, where people in developed nations paid $3-4 per month, and other emerging economies paying $1 or $0.50 or $0.25 per month to create a pool of money. And that would just be the beginning."

The Future of Music

Rating

90%

Pros

A solid look at how the music industry is healthy even if the music business is not. One of the best takes today on what a "pool of music" could mean to the artists, record labels and consumers.

Cons

The utopian language can be a turn off. In addition, the academic tone of the book leaves the readers wanting more concretes, although few specific points on how compulsory licensing might work are available due to the labels' reticence to discuss the subject. A good read but certainly not a great read.

Price

You can find US, UK and international sellers here. It's about $12.