Stardate 20020212.2218

(On Screen): Brian Tiemann responds to my post from a couple of days ago about changes in the music industry. Before I get into details, I want to make clear that I'm not rendering an ethical judgement on music copying by users. I'm not trying to justify piracy. (And I myself don't do it; I have exactly one MP3 and that one only because it has special meaning to me.)

In terms of what I'm talking about, it doesn't matter whether it is wrong. What is important is that it can't be prevented. It is inevitable. Even assuming that it is wrong, if the music industry continues to try to prevent it, then the only result will be commercial disaster.

But if the solution is for the music and software industries to 'create its own equivalent of "cable TV"'-- to stop being old-school, ultra-conservative content vendors and become innovators in content delivery to a degree that hackers can't match, then it's effectively suggesting that the music and software industries will have to be completely torn down and replaced with something so different as to be unrecognizable. Pay-for-play (or tip-for-play) Napster? Ads embedded in Word? If the product is free, the only way for the producers to make any money is through the consumers' good will-- and I don't think any consumers will be willing to cough up thousands of dollars to support the development of software like Final Cut Pro or Maya

Actually, the computer software business has already made the transition I'm talking about. Software development houses don't have the poisoned attitude towards copy protection and piracy that the music industry has. The software industry simply assumes that a certain percentage of the copies of their software which is in use will be stolen, and includes that in their marketing plan. Certainly they don't like it. But they have also realized that there are ways of making it so that a substantial number of users do pay, and as a result it is possible to run a profitable business developing software even in the face of software piracy.

The problem the music industry has is "zero tolerance". They are attempting to eliminate copying entirely, and that can't be done. But the attempt can anger the customers.

When I said that a new concept, a new model was needed, that doesn't necessarily mean that all the existing companies have to go out of business and be replaced with new ones. My point about cable TV was that the economic structure is different than for the big networks. Everything is tuned to a lower price point, and in fact cable TV is flourishing. However, some of the big networks are actually major players in cable.

What the music industry needs to do is to stop thinking of themselves as being the equivalent of selling books, and start thinking of themselves as selling magazines. In other words, they need to accept the fact that their product is perishable. It will have a limited commercial life after which its value will fade down badly. The idea therefore is to try to sell as much as possible during that short window, and accept that long term sales will be unimportant. Overall sales will be less, but the current system where a popular album may sell steadily for years will fail, if that is required for commercial viability of the business.

Yes, it means that total revenues will not be what the music industry wishes they were. It means that the whole system will have to be retuned to a lower price point if it is to be economically viable. It means that some of where the money is going now will have to stop. Some fat paychecks are going to get trimmed. The system will have to be streamlined.

But the companies that accept this and retune their business models will flourish. Those that don't, will die.

Are there ways to encourage people to buy original albums instead of doing downloads? Sure. Ironically, one of the best was lost in the transition from LP to CD: album art. There still is album art, but it isn't possible to do it well in 25 square inches. The old 12" album, especially if it had foldouts or multiple pages, could carry a lot of excess material over and above the material on the record itself. Two examples from the golden age of album art: Thick as a Brick, and Yessongs. But there may be other ways, such as holograms on the CDs.

What's needed is creativity and rolling-with-the-punch. What isn't possible is turning back the clock.

Update 20020213: Brian responds.

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