The Real World: Another view of file sharing, the recording industry, and the online community

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For a long time on overclockers.com, only one voice has managed raise itself above the furore regarding the ongoing battle between the recording industry and the online community.

Here’s another one.

The aim of this article is to raise the standard of the debate and to encourage other people with something worthwhile to say to speak up.

I can’t imagine there is anyone in this community who wants to see the government and the recording industry draw up a solution, so it’s about time we accepted what we can and cannot have and started putting forward a reasonable, realistic solution that suits us. In the long term, if we spend our time with our heads in the sand and fail to raise the issues that need to be raised it is we who will suffer the consequences.

One Important Question

Before we go any further, you need to ask yourself a very important question. There is no trick to this question, nor is there a hidden agenda.

Do you believe that musicians should be paid for the music they create?

If you do, then please skip the rest of this paragraph, you don’t need to read it. If you don’t, then you don’t need to read any further either. You need to get off your ass and find yourself a new job that doesn’t pay anything. I can guarantee that if YOU were the musician working long hard days you’d have a sudden change of opinion. If your view of the world is “me, me, me” then you have nothing of any value to offer to this debate.

So We Have To Pay, But How Much?

It seems pretty obvious to me that musicians need to be paid for their creations. It seems just as straightforward to conclude that their pay has to come from those who are listening to their music.

I should also point out that the musicians are not the only people that have to be paid. Among many other examples, some of the members of this audience who work in record stores.

The only sensible conclusion I have reached so far is that we’re going to have to pay something for at least some of the music we listen to. I don’t think this should come as a huge surprise if you’ve thought about the issue carefully.

For those of you that still don’t think that you should pay anything, look at it this way. The governments in both the United States and Europe, and the international music industry think that you should pay, and I would hope you have enough respect for the powers of your governments to acknowledge that they can and will enforce their decisions.

For the doubters among you, take a look at your television, and in particular the country of Iraq. Don’t be the online equivalent of the Iraqi information minister!

Saying that you can’t or wont be stopped isn’t going to help much when the government comes knocking on your door.

Hopefully, this has helped to bring you to your senses, and I can move on to what I really want to say in this article. I am not writing this to lecture to the individuals who haven’t yet realised the obviousness of a need to pay for music. I have written it to criticise the lack of sensible reasonable options being put forward by all of the parties involved: the online community, the recording industry, and the various governments around the world.

I am going to put forward some suggestions of my own and hope that by doing so I can provoke a more productive debate than I have seen taking place so far.

The Recording Industry Isn’t Perfect, Either

It is not only the online community that has failed to present a reasonable position.

The recording industry’s first approach to file sharing was to ignore it. The next approach was to attempt to aggressively shut down file-sharing networks, which partially successful with the closure of Napster. With the appearance of true P2P networks and the court ruling in Grokster, this second approach became unworkable, so now the industry is beginning to pursue those who share the files, the ISPs who give them Internet access, and in general anyone who doesn’t conform to how they want the world to be.

To an extent, this is actually understandable. If someone is breaking the law, and by breaking it they hurt you, the normal thing to do is to take legal action.

I have a problem with this approach. I believe it is using only a stick when a carrot and stick approach is likely to result in a better settlement for everyone.

In the early days of online music piracy, the record industry should have met the challenge head on and provided legitimate alternatives right away instead of turning a blind eye. Only now, with the recent emergence of Apple’s iTunes service, does it seem that a realistic alternative finally does exist.

A large part of the problem the industry faces is that it just keeps repeating “do not share, you must not share, this is illegal”. Do they really expect the people who are currently enjoying free music to go back to paying over the odds without a long hard painful fight? Why not say “please stop sharing or we will have to take action, please give these other services a try?”

Just providing cheap (but not free) alternatives will not work without some active deterrent to people who will continue to acquire their music for free. Both carrot and stick are necessary.

The industry is already being quite successful at polluting the file sharing networks. This makes it harder to find good quality proper versions of the songs users are searching for. Making music harder to find is a very good approach to deterring many less technically savvy users. Remember, the industry doesn’t need to stop file sharing altogether, it just needs to stop it being the mass phenomenon that it is today.{mospagebreak}

Jon Scaife

The Alternative To Piracy

Encouraging sites like iTunes is also an excellent way for the recording industry to strengthen its case. The current approach of all stick and no carrot is likely to alienate many people, like myself, who do buy music. Being in a position to say they have tried all reasonable means to stop piracy before starting legal action gives the industry a much more convincing argument for more draconian measures should they be required.

Another way for the industry to appear to be “the good guy” would be a cut in the price of some music. There are many people out there who seem to believe that the recording industry is far more profitable than it really is. Were you aware that 90% of releases never make a profit? Do you know how much it costs to record, produce and promote a new artist? Do you know how much just one fully equipped recording studio costs to construct, maintain and operate? If you don’t know, then how can you start talking about how much money is involved? There will never be a 50% price cut of music CDs as the industry currently is today simply because the record companies couldn’t remain profitable.

When I talk about a price cut I mean a figure more in the region of 10%. If you think you could sell CD’s significantly cheaper than the existing record labels and still remain profitable, then you should go out and start your own label and become rich from doing so.

The only way I can see for music to become cheaper is through online access to services such as iTunes because savings can be made in manufacturing and distribution. iTunes is already significantly cheaper than high street shops for exactly that reason.

However, for iTunes and similar services to really become popular there are a few issues that still need to be overcome. iTunes is currently only available to Mac owners. There is also the issue of the catalogue of music available, which although very extensive cannot rival any of the record store chains.

I applaud Apple for the creation of iTunes but there is still much work to be done.

My Suggestions

I see no major obstacle to the creation of a new system of music distribution. Many of us listen to the radio for free and the radio broadcasters pay for the right to broadcast music through their advertising revenues. In many cases the record companies actually pay the radio stations to play particular songs to encourage listeners to buy the records in the shops.

I think one possibility worth considering is of file sharing networks operating a similar distribution arrangement, signing licenses with the record companies and paying a fee from their advertising revenues. The quality of the files shared would need to be limited to a quality similar to that of radio broadcasts, but this would actually provide a major advantage because the size of the files being shared would be significantly smaller. Imagine a 32KBit windows media or mp3pro file and the result is a file size below 1Mb for most tracks.

Low quality files distributed by file sharing networks could be complimented by higher quality files provided for a charge by services like iTunes. In particular, if tracks were available for between $0.5 and $1 and were available in a selection of qualities from 128KBit up to 320KBit MP3 equivalent this would allow a listener choice between quality and size. Realistically, some form of DRM would be needed for these files, but if a set of guidelines were drawn up for the limits of this DRM it need not prevent a listener from copying the downloaded music onto other mediums in a similar way to the system in use on iTunes.

Finally, at the top end of the market, CDs and their successors (Super-Audio-CD’s and DVD-Audio discs) could continue to exist and provide a rich, high-quality medium for music distribution. Providing music videos, and other enhanced features on the high-quality discs would provide additional incentive to buy.

A 3 tier system like the one I have suggested above has many benefits, including offering the consumer more choice. It also has many benefits for the record industry. For example it may actually result in savings for the labels because it would allow them to promote new artists using a free medium, rather than paying radio stations to play material, and producing singles, which are usually not very profitable.{mospagebreak}

Jon Scaife

Final Thoughts

I hope many of the ideas I have put forward in this article can be discussed further.

I have tried to emphasise a positive approach but I fear that more of a stick will be needed before people stop using P2P networks to pirate music. If that’s what it takes, then that is what will happen. I’m not saying I want it to happen, I’m just saying it will.

If you want to e-mail me and give me a mouthful about how music should be free then please do so, but in 5 years time (or sooner) when everything has DRM built in and all the big file traders are behind bars I will e-mail you back and say “I told you so”.

Think about it.

Jon Scaife

Ed. note: I suspect some people who read this will say, “See, Ed only puts up articles from people who agree with him!”

That’s not the case. It’s not that I’m unwilling to put up articles that “disagree” with me; it’s that the comments what I see are just so factually incorrect, ignorant of basic truths or worse that they have no redeeming merit or value.

It’s like putting up an article saying, “Why The World Is Flat.” The person writing it may be totally convinced it’s so, but so what?

For instance, if somebody wrote an article saying why MP3s should be legalized, I may well not agree with it, and might comment on it afterwards, but provided the reasons given are factual and somewhat within the bounds of societal acceptability, I would be inclined to put it up.

On the other hand, if somebody wrote an article saying that copying MP3s is legal, I’m not going to put that up because that’s just not true, and I’m not going to let someone spread untruths.

Arguments can be economically untrue, too. If you think a CD costs fifty cents to make, and anything above that is profit for the record company, that’s just not so. If you think you should only pay the manufacturing cost of making the CD and a little to the artist, no business runs like that, they couldn’t. Every place that sells things has to include the cost of running the business in the prices they charge. Where else are they going to get the money to pay for it?

That doesn’t mean you have to agree that current CD prices are a bargain; I wouldn’t even say that, but the truth lies between those two extremes

Finally, if somebody wrote an article saying, “I don’t care what the law says, go away,” that’s a burglar telling the police to leave. That’s someone saying laws don’t apply to him. That’s just criminal, and we’re not going to give that a place here, either.

I very rarely get comments on this issue that would fall into category one. They usually fall into categories two, three or four. That’s why I don’t put them up. It’s not because I won’t put up articles I disagree with; it’s because putting something like that up would be like putting up a flat earth article.

Sometimes, points are made that might prove valid, but the authors aren’t aware of potential difficulties and risks. The “charge a quarter” argument is one of them. If music buying habits remained the same, this would bankrupt the music business. If demand exploded as a result (if the average buyer downloaded, say five hundred songs a year rather than bought five CD), it could work, but that’s a huge “if” (if they only downloaded two hundred songs, it would be a disaster). It would be the biggest gamble the music industry ever made, but the authors don’t seem aware of that.

Not all opinions have equal value. Opinions supported by facts and reason have greater weight than those that don’t.–Ed

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