Stardate 20020210.1323

(On Screen): An analysis has now shown that the music industry's attempt to put the MP3 genie back in the bottle has failed. I bet we're all massively surprised at that. However, it goes further and says the unsayable: it isn't possible for the music industry (or, ultimately, for any content industry) to totally prevent piracy of their product, and the right response for them is to restructure their business model to survive even in the face of that, rather than to try to go to massive lengths to prevent it.

Which is true, and should have been obvious to the industry years ago. Their old model is as obsolete as kerosene lamps; they cannot survive by trying to turn back the clock. Half-hearted attempts at copy protection will fail, and the only way that a full-blown attempt at copy protection can work is by getting draconian laws passed. There is already backlash about the laws they have already managed to sneak past, and those are themselves not sufficient to fully protect their content.

The music industry defeated Napster in court, but the Napster system had a single point of failure (their central server). The response by music traders was to create distributed information-trading systems which have no single point to attack.

The music industry also tried to deal with free music trading by creating their own paid online music distribution services, but the result was unsatisfactory. The price in many cases is not unreasonable, but the product itself is distributed with enough copy protection features built in as to be seen by the customers as an inferior product. If the paid product had been seen as being superior, I think it would have succeeded, but that isn't what happened. Given a choice between paying for a bad product or getting the same material for free without those limitations, it is natural that the majority of users have gone with the free route.

So the report says that paid music downloads are a commercial flop. Sales will probably grow but in its current form it will never displace free music trading.

As long as music can be reduced to audio, it can be redigitized and converted into an unprotected MP3 which can be distributed online. No amount of digital protection can prevent that. So far most pirated music is digitally converted mostly because that is still easy. But if it is made impossible technologically, an analog redigitization won't be enough worse in quality to affect this. And any computer with a sound card sold in the last ten years is capable of doing this.

The music industry must go through a psychology change. The problem now is that they see pirated copies as representing lost revenue. They count up each copy as one they were not paid for.

The customers don't view it that way. To the customers when they buy the material, they also think of themselves as buying the ability to make some copies of it. They want to be able to play in on their stereo, but they also want to be able to make compilations of the music in the order they like, and they want to be able to copy their favorite tracks or even whole albums onto portable players. This is not viewed by the customers as being piracy; it's considered a value-add for the product itself. It is part of what they think they are buying.

As long as the industry doesn't see it from that point of view, they will continue to try to fight the future. No industry can ultimately survive if it thinks of its customers as enemies; ultimately the industry has to adopt the point of view of its customers and cater to their desires.

You cannot sell someone what you want them to have. You have to sell them what they want to buy.

The industry has to start thinking of the glass as half full. The copies stolen are not lost revenue; what they are is copies of ones where were bought. If the pirated copies did not exist then the purchased ones would not have been sold. The pirated copies are actually an indirect source of revenue.

That does mean that the gravy years are over. The music industry is going to have to restructure its pricing and costing to reflect the new reality. Big, rich music conglomerates are just as obsolete as the big television networks; the music industry needs to create its own equivalent of "cable TV". But to do that, they have to accept that the old reality is really history, something they seem loath to do.

There is no technical or technological solution to this, and also no legal one. When 50 million people break a law, it is the law itself which is suspect.