The Messy World of the Music Business

The music industry has been experiencing significant tension since the rise of file-sharing software in the late 1990s.  The most famous program, Napster, was perhaps the signature application that brought sharing music online into mainstream awareness, spreading through college dorms and eventually into the public.  Though Napster and similar software would have surely emerged regardless of prior events, the bad taste left in the mouth of consumers after the CD price-fixing allegations and subsequent federal litigation of five major music companies probably contributed to the willingness of normal people to download large quantities of digitized, copyrighted music without paying for any of it.

The music industry has taken a number of approaches to try to stop music piracy, which it claims has had substantial impact on the profits of the music companies and indirectly on the artists themselves.  First, trade groups, namely the Recording Industry Association of America (RIAA) have filed numerous lawsuits against file sharers, some of which have resulted in unbelievable damages.  Second, the music companies themselves have done just about everything to hang on to their twentieth century business model of exercising almost complete control over the distribution and price of music, and it is this stubbornness that I would like to examine.

Let me first preface the discussion with this:  I do not condone downloading copyrighted material illegally.  However, the music industry, until recently, has pretty much been completely clueless about how the digital age works and how it changes their business abilities.  Any person with a CD, computer, appropriate software, and an Internet connection can rip the CD into unprotected mp3s and upload it to anywhere in the world.  This means that someone else can not only get the music for free but also be able to listen to the songs at any time on any device compatible with the mp3 standard.  How did the media conglomerates respond?

The music companies decided that they would put one toe into the pool, so to speak, by offering music online, but the stores have had numerous problems.  First, in order to try to prevent people from distributing the songs to others, the companies introduced digital rights management (DRM) into all the songs.  Perhaps the best example of DRM can be seen with the music subscription services, such as the ones the new Napster and Rhapsody offers.  Basically, a consumer pays a flat fee each month to have access to a large library of songs, featuring popular artists from major record labels.  Typically, consumers can also download these songs to their computers or portable music players, but they can only listen to them for as long as their subscription lasts because the files are protected by a license and will expire if the subscription lapses, though the customer can renew the license and listen to the files once he or she extends the subscription to the music store.  Also, the customer cannot cannot convert the file to another file format.

From the perspective of a music executive, the subscription model laden with DRM is great because it provides a constant revenue stream and limits the choice and abilities of people to do anything with the music, but it is, at best, a wash for the consumer.  I don’t see anything particularly attractive about paying for music that a company can take away from me at a point down the road.  In reality, music subscriptions services merely give a consumer a license to listen to it for a predetermined amount of time; the person does not own the music.

Because of the proliferation of music sharing online, music companies are slowly coming to understand that people resent their greed.  DRM-free stores are becoming more commonplace, such as Amazon’s mp3 store.  iTunes went DRM-free earlier this year, though I feel sorry for anyone who purchased a lot of music from iTunes, considering that, if you want the non-restricted songs, you have to re-buy them for thirty cents per song or thirty percent per album.

The music industry is slowly adapting and offering choices that are more palatable to consumers, and it will be interesting to see if these offerings have any demonstrable effects on music piracy and profits.  The pro-piracy apologizers that seem to inject their rationalizations at every tech site and the industry itself will be watching to see what happens.

If you are interested in free and legal music, check out sites like Jamendo, which has a range of different styles of music.  You can listen to the albums streaming and download them if you like them.  All the music is published under Creative Commons licenses.  I have no affiliation with the site, other than I have enjoyed the music and downloaded albums from the site.