Sunday, September 21, 2008

Mi Tunes

I was fortunate to borrow from my library a copy of the SBS Insights program recently which aired earlier this year on Australia’s SBS Television. The program consulted an audience of consumers, representatives of the recording and publishing industries, internet service providers, technology developers, digital music stores, major label and independent artists and academics, on the issue of illegal downloads.

Three young male consumers discussed their downloading habits and openly acknowledged that the majority of the tracks they downloaded were illegal. The reasons behind this varied and included: perceptions that many artists were already rich enough and do not deserve extra money from album sales, a tendency to download out of habit rather than really think through the implications of their behaviour, that getting music out to people and their message across is more important than recouping money, that the limitations imposed on the use and reuse of tracks by legal download sites were an impediment and their limited access to credit card facilities prevented them from using services such as iTunes.

Recording Industry
Stephen Peach from the Australian Recording Industry Association refuted suggestions that the horse has bolted for the music industry but did recognise the size of the problem – he suggested that around 1 billion songs a year are illegally downloaded in Australia. Research conducted by ARIA indicated that of these 1 in 5 or 1 in 4 songs would have been purchased which equates to around 200 million songs or $200 million in wholesale revenues that the industry is loosing each year – around half the size of the industry today.

He strongly supports the introduction of a three strikes enforcement model in which user accounts are terminated after a series of warnings sent on behalf of the music industry by ISPs. He challenged suggestions that this was a punitive approach suggesting that it was a light touch compared with individual lawsuits for copyright infringement.

He also strongly supported the iTunes per track download model and suggested that without an approach such as the three strikes policy, which challenges free downloading, all other revenue models are simply unable to compete with free.

Scott Morris from the Australian Performing Rights Association stated that record sales are down and new digital services have not made up for the shortfall and that this has changed the industry for songwriters who depend on record sales as well as recording artists. He noted that many of the major label stars do not write all of their own music and that composers are also missing out when people download illegally. He suggested that APRA would be happy to consider new revenue models that ensure that money goes back to creators. As a collection agency APRA would be pleased to participate and engage with new models.

Jenny Morris who is a former recording artist and member of the APRA board also suggested that educating consumers is important and that this would help to overcome the culture of free downloads.

Clive Hudson of Shock Music Publishing however, suggested that file sharing was essential given that the per track legal downloads model has created an industry dependent on single sales. He suggested that the word of mouth that the internet provides, assists the industry by encouraging people to buy albums rather than single tracks. It was his opinion that the industry could not survive on single track sales alone.

Internet Industry Association
Peter Coroneos was quick to make the point that ISPs cant not tell what files are being transferred and cannot know what portion of their services are being used fort illegal vs legal downloading. He also noted that the internet is a hugely transformative communications method and that this is a period of transition in which business models have not yet adapted. He suggested that this was a case of market failure as the old structures of the music industry are not able to deliver the value convenience and choice that consumers desire.

He suggested that while ISPs are interested in revenue sharing models, they should not be held responsible or liable any more than Australia Post should be for what is sent through the mail as the role of ISPs is simply to act as independent carriers.

He indicated that Australian ISPs are not keen to participate in a three strikes policy and suggested that this is the wrong way to resolve illegal downloads and considered that terminating families internet accounts to be a punitive approach which sets a dangerous precedent in a democracy.

He considers that the better approach is to explore new business models which focus on alternative sources of revenue such as concerts and subscriptions and that the industry needs to create incentives for the market to move rather than attempt to force it to participate in what the industry considers to be the acceptable form of delivery.

The IIA have recently started a new website - nuturemusic .org – which seeks to help artists negotiate the digital terrain.

Technology Developers
Kevin Burmeister of Altnet and formerly associated with Kazaa who were sued for providing file sharing software and settled with the recording industry for $115 million in damages, was of the opinion that technology could be developed that would assist all parties in the downloading of music in a legal way. His product which has not been endorsed as yet by the recording industry operates in conjunction with existing file sharing software to redirect users to legitimate files rather than illegal files.

Digital Music Stores
Rebekah Horne of MySpace Music suggested that while this was a complex issue, punitive models have the added danger of distracting participants from the real solutions and tend to take the focus away from working out the long term sustainability of the music industry.

A number of major label and independent artist also discussed their sentiments regarding illegal downloads. Most indicated that they were torn on this issue.

Phrase is the only hip hop artist signed to a major recording label in Australia. He began the show by suggesting that he was concerned by the number of people who downloaded his music rather than paying for it suggesting that he would be dropped from his label and that this would mean that he would be unable to continue making music. His main source of income is from live shows and he said that he makes next to nothing from CD sales.

He questioned why it is that people spend lots of money on their lifestyle like food and clothes but wont spend $20 on an album that takes six months to make. He said that it is not possible for him to keep giving music away all the time and that at some point he needs to earn a wage.

He was also concerned about the fact that it appears as though ISPs are making money from internet users but they are not giving any of the money to the artists. Later in the show however he was very supportive of a flat monthly fee paid by consumers with the funds being divided up and given to artists.

Mahalia Barnes (daughter of Jimmy Barnes) who released her debut album earlier this year further noted that it takes eight session musicians for her to play live and that it is very difficult for her to make money from live performances. In response to comments relating to recent business models employed by bands such as Radiohead, she stated that new artists are not in the same position to take risks which other more established acts can.

Tim Levinson from the independent band The Herd noted that they way he and his friends used to find out about music was by making mixed tapes and sharing them and agreed that this was simply a much more efficient way of doing the same thing. He suggested that this was not a black and white issue with some benefit coming from getting their music out to a broader section of the community. He also acknowledged that many young consumers simply do not have the money to spend on albums.

Similarly, Taasha Coates of The Audreys wondered whether she would have downloaded if it had been available when she was younger and suggested that touring bands are doing reasonably well in Australia.

There was also a brief clip of an interview with John Butler of the John Butler Trio where he suggested that he was selling around 40% less albums. He stated that his new album appears to be doing better than his earlier CDs but that it has sold nearly less than the last. Peter Coroneos later commented that he questioned whether there had been a significant change in the number of people attending the bands concerts and implied that this may offset the loss in CD sales.

Kate Crawford from the Media Research Centre at UNSW suggested that there is definitely a future for the music industry but that it is radically different from what it was in the past. She said that there are essentially two options for the recording industry – either they can wage war on their best customers as they have done over the past 8-10 years or they can collaborate to embrace new technologies.

She suggested that turning ISPs into copyright cops is not the answer and commented that downloading is part of the new reality for the music industry that must be engaged with, noting that flat monthly fee structures with the use of watermarking to track the number of times a song is played is a preferable option to punitive approaches.

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Overall this was a very interesting program and although for me it didn’t really raise anything new it did attempt to cover the field and discuss many of the main issues relating to illegal downloads and the future of the music industry. I found it informative but was a little annoyed with the repetition of phrases that directly correlated downloads to stealing.

The show closed by noting that the Australian government is keen to support a culture in which music is paid for but that no formal policy is yet in place. Let’s hope they can see past the idea of a three strikes policy and encourage the industry to take a more imaginative and effective approach.

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