By Jerry Del Colliano
Steve Meyer, who as I have often said is the smartest observer of the record industry, knocked my eyes out in a recent issue of his publicationDisc & DAT (Digital Audio Technology).
Yet another study that exonerates filesharing as the culprit in today’s music industry.
It’s a lack of innovation -- not filesharing – that’s the conclusion.
I’m sure that doesn’t come as a surprise to you, but it may be to the record labels who are acting like it is 1999.
Professor Nico van Eijk of the University of Amsterdam conducted the latest study and his conclusion speaks volumes:
"The entertainment industry will have to work actively towards innovation on all fronts. New models worth developing, for example, are those that seek to achieve commercial diversification or that match supply and end-user needs more closely. In such a context, criminalizing large parts of the population makes no sense. Enforcement should focus on large scale and/or commercial upload activities. . . Introducing new protective measures does not seem the right way to go..."
In other words, filesharers are consuming all media especially concerts, films and games – not just copyrighted music.
I've linked to the 55-page report here.
Let me comment on a few of the findings my friend Steve Meyer highlighted:
“The study concludes (among other things) there "isn't a clear relationship" between the decline in sales and file sharing, while also finding that fear of evolution prevented the recording industry from adequately adapting their business models to the broadband age. While the recording industry is having problems, argues van Eijk, it has less to do with file sharing, and more to do with the fact they've been "abstaining from innovation" -- as the study phrases it”.
Think about it.
The labels could have bought Napster, not annihilated it, thus avoiding creation of the Napster vacuum that was promptly filled by bit torrent sites, etc.
The labels could have innovated along with Steve Jobs when the Apple CEO caught them off guard with his offer to help stop piracy. That offer was the iPod and iTunes store. He played to their fears. They allowed him to become the de facto Big Kahuna of the Record Industry.
They could have laid off streamers and come up with an easy to swallow royalty payment schedule that would have grown music consumption instead of dampened it.
Could have launched its own cloud.
Could have done Pandora itself as an industry consortium – that is, if they could have gotten along together for a minute. Bet Steve Jobs would have loved to own Pandora. Bet he still does.
More from the report:
"Turnover in the recorded music industry is in decline, but only part of this decline can be attributed to file sharing. Conversely, only a small fraction of the content exchanged through file sharing networks comes at the expense of industry turnover. This renders the overall welfare effects of file sharing robustly positive."
Innovation scares the record industry.
God forbid, they had a new idea other than CDs.
If record labels had to run the space program, they would find themselves doing a soft landing in Camden, New Jersey instead of the moon because they cannot figure out which way is up.
Now, record labels really need to know which way is out.
Because Steve Jobs is running their show.
Setting the rates, making the new age “record players” if you will. For all practical purposes, he’s eliminated the album (although you wouldn’t know that by Lady Gaga).
Apple is about ready to launch cloud-based instant access to iPods, iPads and iPhones – while record labels can brag about instant access to – well, suing people. And, by the way, the labels are opposing Apple's iTunes "cloud", too as witnessed by this recent article in The Wall Street Journal.
So expect the RIAA to raise a commotion and argue the latest study that looks at filesharing as the lesser of evils.
The worst being – a lack of music industry innovation.
As Meyer pointed out in his piece, Steve Jobs says "Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations."
That’s a great quote -- not that Jobs ever admits a mistake (like in the current version of Apple TV).
Still wisdom of the quote is right on.
And Steve Meyer wrote this in 2003 when he launched his newsletter:
"Any software programmer will tell you the hard core (ugly) truth is this: anything that can be encoded digitally can be decoded and replicated with a little work. It's time the labels recognize this fact, accept it, and now spend time brainstorming on how new revenue streams can be created within the framework of all the technology at hand."
Okay, so don’t admit to past mistakes. We understand.
But, wake up and look around.
My USC students used to be split about whether filesharing was stealing. They had many excuses – some good (“I use it to preview what to buy”) and some bad (“the money never gets to the artists anyway”). I’ve often wondered about these rationalizations.
But there is no denying that one could also look at filesharing as today’s radio.
A source of music discovery.
And now we have yet another carefully considered report that explains the phenomenon if not the unfortunate response of the record industry.
Yet another study that exonerates filesharing as the culprit in today’s music industry.
It’s a lack of innovation -- not filesharing – that’s the conclusion.
I’m sure that doesn’t come as a surprise to you, but it may be to the record labels who are acting like it is 1999.
Professor Nico van Eijk of the University of Amsterdam conducted the latest study and his conclusion speaks volumes:
"The entertainment industry will have to work actively towards innovation on all fronts. New models worth developing, for example, are those that seek to achieve commercial diversification or that match supply and end-user needs more closely. In such a context, criminalizing large parts of the population makes no sense. Enforcement should focus on large scale and/or commercial upload activities. . . Introducing new protective measures does not seem the right way to go..."
In other words, filesharers are consuming all media especially concerts, films and games – not just copyrighted music.
I've linked to the 55-page report here.
Let me comment on a few of the findings my friend Steve Meyer highlighted:
“The study concludes (among other things) there "isn't a clear relationship" between the decline in sales and file sharing, while also finding that fear of evolution prevented the recording industry from adequately adapting their business models to the broadband age. While the recording industry is having problems, argues van Eijk, it has less to do with file sharing, and more to do with the fact they've been "abstaining from innovation" -- as the study phrases it”.
Think about it.
The labels could have bought Napster, not annihilated it, thus avoiding creation of the Napster vacuum that was promptly filled by bit torrent sites, etc.
The labels could have innovated along with Steve Jobs when the Apple CEO caught them off guard with his offer to help stop piracy. That offer was the iPod and iTunes store. He played to their fears. They allowed him to become the de facto Big Kahuna of the Record Industry.
They could have laid off streamers and come up with an easy to swallow royalty payment schedule that would have grown music consumption instead of dampened it.
Could have launched its own cloud.
Could have done Pandora itself as an industry consortium – that is, if they could have gotten along together for a minute. Bet Steve Jobs would have loved to own Pandora. Bet he still does.
More from the report:
"Turnover in the recorded music industry is in decline, but only part of this decline can be attributed to file sharing. Conversely, only a small fraction of the content exchanged through file sharing networks comes at the expense of industry turnover. This renders the overall welfare effects of file sharing robustly positive."
Innovation scares the record industry.
God forbid, they had a new idea other than CDs.
If record labels had to run the space program, they would find themselves doing a soft landing in Camden, New Jersey instead of the moon because they cannot figure out which way is up.
Now, record labels really need to know which way is out.
Because Steve Jobs is running their show.
Setting the rates, making the new age “record players” if you will. For all practical purposes, he’s eliminated the album (although you wouldn’t know that by Lady Gaga).
Apple is about ready to launch cloud-based instant access to iPods, iPads and iPhones – while record labels can brag about instant access to – well, suing people. And, by the way, the labels are opposing Apple's iTunes "cloud", too as witnessed by this recent article in The Wall Street Journal.
So expect the RIAA to raise a commotion and argue the latest study that looks at filesharing as the lesser of evils.
The worst being – a lack of music industry innovation.
As Meyer pointed out in his piece, Steve Jobs says "Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations."
That’s a great quote -- not that Jobs ever admits a mistake (like in the current version of Apple TV).
Still wisdom of the quote is right on.
And Steve Meyer wrote this in 2003 when he launched his newsletter:
"Any software programmer will tell you the hard core (ugly) truth is this: anything that can be encoded digitally can be decoded and replicated with a little work. It's time the labels recognize this fact, accept it, and now spend time brainstorming on how new revenue streams can be created within the framework of all the technology at hand."
Okay, so don’t admit to past mistakes. We understand.
But, wake up and look around.
My USC students used to be split about whether filesharing was stealing. They had many excuses – some good (“I use it to preview what to buy”) and some bad (“the money never gets to the artists anyway”). I’ve often wondered about these rationalizations.
But there is no denying that one could also look at filesharing as today’s radio.
A source of music discovery.
And now we have yet another carefully considered report that explains the phenomenon if not the unfortunate response of the record industry.
Written by Jerry Del Colliano for Inside Music Media
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