It's a Dirty Job, but Does Anyone Have to Do It?

by Richard Vernon recently reported (quoting Webnoize) that peer-to-peer trading of copyrighted music hit an all-time high last month (August 2001) due to the popularity of Napster clones. Meanwhile, in Seoul, World Music Entertainment and Most Best Music won a lawsuit to the tune of about $75,000 against Soribada (a Korean P2P service) for violating copyrights. FastTrack, AudioGalaxy, iMesh and Gnutella are the top four facilitators of file trading.

While gloats for having told us so, I doubt anyone was surprised that the death of Napster did not mean the death of swapping copyrighted material (movies as well as music). Napster catered to the music lover's fantasy. Its ease of use was attractive, but its real appeal was the selection of music that became available as the user community grew. Songs could be found on Napster that could not be found in, or ordered from, any Tower Records store. Sure it was copyrighted, but in many cases you couldn't buy it if you wanted to; if a recording doesn't sell sufficiently well, it goes out of print. Having this kind of access to such a range of music was like getting locked in a toy store after closing. Once people got a taste there was no going back.

I don't know what kind of mark up $16 represents on a CD that costs about $.45 to produce and probably a couple of bucks to distribute and package, but to the general public, it would seem to be a few hundred per cent. I don't think people mind paying for music they love, but the impression of price gouging is strong and incites resentment.

The point is, the service Napster seems to have done (and other P2P systems can potentially do) for the music-loving public is far better than the record industry ever did. They're the guys everyone loves to hate. We've all seen enough of VH1's Behind the Music to know that record labels are the bad guys, and it's no coincidence that every sort of popular support for anti-pirating initiatives are not based on protecting the profits of the recording industry, but those of the artists. The article states that though they're happy to have told us so, they are not happy with the fact that artists are going uncompensated.

We've also heard that the royalties payed to the artist on record sales amounts to a pretty tiny per cent, and out of that come paybacks on advances and some promotional and marketing costs, and that the real money for artists is in concert ticket sales and the sale of artist-related merchandise. These sales are closely related to the artist's exposure--which file sharing (pirating) promotes. Obviously some artists disagree, but many are doing away with the record companies all together and are becoming their own promoters and recorders--using file sharing as a vehicle. (Alex Heizer describes how to set up your own recording studio using your Linux box.)

In case any doubt was left as to the wickedness of the record companies, there's Courtney Love's famous letter to recording artists pointing out further exploitation of artists by the industry, as well as her funny math speech to the Digital Hollywood on-line entertainment conference.

All this makes it easy to see the recording industry as a leech--living off both artists and consumers--a leech that may finally be disposed of by the technology of peer-to-peer file sharing. But is the fantasy of the endless free trading of music by artists still somehow compensated for their work too good to be true?

Back in March of 2001, Miles Copeland wrote a short defense of the record companies. He defends a point that Courtney refers to in her letter--that few records are profitable. He claims the record business is one that operates on narrow profits. The successful records must compensate for the loss incurred by the less successful ones. This loss, added to the costs of production and doing business, eats up all (and sometimes more) of the $16 of a CD sale. And while the public sees the industry as a leech, he hints that it might be a beneficial parasite. He concedes that music piracy might indeed spell death for the record industry, but argues that it is this industry that provides the vast variety and quantity of music available to fans. Its death will alter the music landscape dramatically, as musicians who rely on record sales, rather than concert ticket sales, will largely disappear. He concludes by emphasizing the sanctity of intellectual property and stating that the ability to make money from intellectual property is what will keep developed nations from sharing the ultimate fate of the Romans.

I don't know enough about the recording industry to know how strong his arguments are. For instance, it seems feasible that musicians who don't tour would still be able to distribute their music via cheap PC-based recording studios and the medium of free file sharing that Copeland condemns. But it does seem that the fantasy view of unlimited free music, and both listeners and artists getting everything they want, may be a little naive (for alternative "fantasies" see Doc Searl's Linux for Suits in the October 2000 issue of Linux Journal). Perhaps not unlike the view prevalent among the Open Source community before reality set in--that open-source software would save the world, and the artists could still make money.

It's true that music and music fans existed long before record companies, but does the record industry contribute to the quality of life of a music fan? Is the industry a guardian of artists' intellectual rights? Are these rights necessary to the artists and fans in enriching our collective musical experiences? What will happen if we kill the goose? Is the goose even laying the eggs, or merely stealing them?

Certainly, the problems of intellectual property rights is similar between the software and music worlds. Currently many of those open-source companies that are still in business are struggling to find a business model that can make money and still satisfy the Open Source community--and frequently their plans involve closed-source software. As software users, we must concede, however, that a financially strong open-source software industry had its benefits to users, not the least of which were the money and visibility it brought to the community at large. If the similarities between the music and software worlds go further, we may indeed lose something as listeners with the demise of an industry that has, at least in some ways, facilitated our access to music.

Richard Vernon is Editor in Chief of Linux Journal.

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