From Piracy to Profits, Part 2: A Radical Suggestion For Rebuilding the Music Industry.

From Piracy to Profits Part 2:

A Radical Suggestion For Rebuilding the Music Industry.

(Exert from ‘This Open Business Of Music’ - By Max Gaines)

As Machiavelli once said: “It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to management than the creation of a new system. For the initiator has the enmity of all would profit by the preservation of the old institutions and merely lukewarm defenders in those who gain by the new ones.

What gives something value? Is it the set price? Is it the quality? Is it the content?

When people began sharing MP3’s and changed the way the music business does business once again – they created a better distribution system. iTunes and Prince’s NPG Music Club were the first attempts at making major steps towards legitimizing this business model.  

As Steve Job puts it: “If you want to stop piracy – the way to stop it is by competing with it” Today selling of plastic discs only accounts for a quarter of what we consider to be the music business. Piracy was a market signal. 3

CD sales in 2009 have dropped nearly 55% since their peak tin 1999 –including digital album sales.

When something is given away for free, the conventional wisdom is that it hold no value – it makes no money. But this might be wrong. What gives something value? Is it the set price? Is it the quality? Is it the content?

Paulo Coelho wrote a book called The Alchemist. It was released in the late 80’s and has become a worldwide best seller – until they reached Russia. For one reason or another his publishers couldn’t figure out why this book, which is loved everywhere else, wasn’t selling in Russia. So behind his publishers back Coelho started a blog called the Pirate Coelho – and started posting links to where fans could get pirated e-books of The Alchemist for free. 3

The Alchemist went from selling 1000 copies a year to 100,000 copies a year in Russia? Coelho realized that the free e-book was information and the hard copy was property – he used one to sell the other.

The same is true for cable network AMC’s recent hit series The Walking Dead. Not only did this television series break ratings records for the network, but also it was the most pirated television series of 2010. 7 Piracy didn’t hurt the series – it enhanced it. It allowed the message of the show to spread without borders or restrictions thus adding to its popularity. 7 Freely consumed content through piracy acted as information – information that increased the popularity of the series which is the property.

Popular British sketch comedy series Monty Python was televised from 1969 to 1975. In recent years Monty Python decided to launch a “crazy” campaign which included posting all of their Monty Python content on youtube, for free. They asked, in return, that those who view consider buying the actual DVD through a provided link. And you know what? It worked. Python’s DVD’s climbed to No. 2 on Amazon’s Movies & TV bestsellers list in 2009, with increased sales of 23,000 percent. 10 The freely distributed content on their youtube channel acted as information – the property in the form of DVD’s was helped. 10

 Just as commercial industries are under like the music industry are in a state a chaos – so to is the role of a designer within these industries. We no longer pay attention.  Bad advertising is no longer working. You now have a choice as to whether you engage with traditional advertising. Traditional roles for designer include crafted forms of communication – that are becoming less and less relevant to people’s lives. People are now able to filter out the crap. It doesn’t how big you make your logo or your price point, we can filter it out and our brains will just ignore it.

Chicago ad agency BBDO Energy came to the same conclusion in a study done in 2005. “Consumers are no longer buying what everyone else is selling,” they announced. “What happened? For starters, being ‘different’ is no longer a difference for a brand. And being disruptive no longer gets consumers attention. After years of being of being told what to buy, consumers have changed their minds. They view brands as less relevant, they say they feel disconnected and unimportant – bystanders rather than participants.” 3 So many ads shout at us all the time, one on its own is about as relevant as a single scribbled tag in a train car full of them. We simple tune them out like white noise.

As we spread this world with complex technical systems – on top of the natural and social systems already here – old style, top down, outside in design simple won’t work.

Since 2000 the music industry and their political platform the Recording Industry of America (RIAA) have spent over $90 million in lobbying policy makers in the United States alone for copyright protection and to maintain the status quo. It is clear that any effort to bring about change in the business of music will require change copyright laws - change that will actually reflect how a growing section of the population consume content.

Many content creators who have copyright available to them clearly don’t value that copyright very much. A huge percentage of content creators simply chose not to renew their copyrights, because they knew there was little or no value in the copyright itself. Only 35% is ever renewed. In fact, the only type of work that had a renewal rate higher than 50% was movies, which came in at 74%. 9

The content creator clearly is no longer getting any benefit out of the copyright at that stage, and thus reverting the work to the public domain makes the most sense. 9

Music is content that can and should be available to make the public domain more fruitful and to enable new creative works — and yet it gets locked up anyway, even though the very people copyright law is supposed to protect clearly don’t value what copyright gives them. So why do we still automatically give them copyrights, thereby harming the public domain, while adding little to no benefit to the content creators themselves?  9

 What is called for is a counter to the lobbying efforts by the RIAA and change the course of the music industry. 

A collective platform modeled after political lobbyists and think tanks  for the formulation and promotion of the structural reinvention of the way content (popular music) is distributed and consumed.

This platform will take its message directly to policy makers and individuals alike by pushing for:  

(1) The decentralization of the music industry  

(2) Copyright reform to reflect how content is currently consumed that will free up content from its current restrictions.  

(3) The systemic design necessary for a legal, open and free form of file sharing for the creation, sharing and distribution of popular music.  

(4) Realization that such reforms and such will equal a viable economic model.

Parenthetically, the aim of such a platform will not be to destroy the music industry, but rather to save it. We will not call for the abandonment of physical music (in whatever form it may take) but rather a new system for its enchantment.

Tomorrow’s business of music will not just be about open source, or free distribution or copyright reform – but rather it will be about the people over the process; about responding to change not following a plan; about collaboration over laws and negotiations; and about designing a business and system for the sharing of popular music that is actionable and relatable in peoples daily lives.

Such a file sharing system will rely on the principles of open source technology. That is to say:   

(1) The system must be freely available or it can be part of a package that is sold.  

(2) Any artist (content maker) must be allowed to add to (or modify to) with content individually or as part of a package. Modified versions can be redistributed.   

(3) And fans must be allowed to freely access (take) and share (put in) all content.

What the Music Industry represents with centralization of ownership and means of production is not the free market at work, but rather an extension of Feudalism. It is the enemy of freedom. Systems based on open source technology work like the youth the youth cultures that dreamed them up, open environments that can infect people with the passion of those who built them and become self-perpetuating, growing sustainable and often substantially. In essence, they are the free-ist of free market capitalism. 

Successful open source based projects are driven by the passions of their audience. Open source projects inspire people with new ideas and will gain support because there is nothing else like it. The same is true for such an existing system like Wikipedia whose cause is amassing all out knowledge in one place, for free, is a worthy one. The lawyers who contribute to open source projects such as Lawunderground.org do so for the same reasons Hip Hop DJ’s promoted obscure music in the 1980’s for very little pay: they believed in carving out a different way of doing things.

A business model based on an open free file sharing system will strike a balance between encouraging innovation and creation without giving away so much that you cannot sustain the model. For example, using freely distributed music as information and using the physical form and content. The information helps give fans a reason to buy the content.

Some would also argue that what is proposed is actually digital communication. But this is wrong. In fact is exactly the opposite. What an open and free form of file sharing system for the distribution of popular music will accomplish is the laying of a foundation for new ecosystems of private enterprise that will reinvigorate competition and break inefficient conglomerates.

Works Cited

 1) Generation Y-Pay refuses to pay for downloads, Carrie Ann Skinner, 7 September 2009, http://www.networkworld.com/news/2009/090709-generation-y-pay-refuses-to-pay.html, 4 October 2010

2) It’s All Free! Lev Grossman, 5 May 2003, http://www.time.com/time/magazine/article/0,9171,1101030505-447204,00.html, 1 October 2010.

3) Matt Mason, The Pirates Dilemma: How Youth Culture is Reinventing Capitalism (New York: Free Press, 2008) 174-176, 142

4) John Thackara, In The Bubble: Designing In A Complex World (MIT Press, 2006) 7

5) Peter Mason, The Rough Guide to Hip-Hop (Rough Guides, 2005) 332-333

6) Piracy Fight Shuts Down Music Blogs , Ben Sisario, 13 December 2010, http://www.nytimes.com/2010/12/14/business/media/14music.html?_r=2&ref=technology&pagewanted=print, 13 December 2010

7) The Walking Dead Currently The Most Pirated Series, Mitch Michaels , 12 December 2010, http://www.411mania.com/movies/news/165075/%5BTV%5D-The-Walking-Dead-Currently-The-Most-Pirated-Series.htm, 13 December 2010

8) Special Report: Music Industry’s Lavish Lobby Campaign For Digital Rights, Bruce Gain for Intellectual Property Watch, 16 January 2011, http://www.ip-watch.org/weblog/2011/01/06/special-report-music-industrys-lavish-lobby-campaign-for-digital-rights/ 20 January 2011

9) If Artists Don’t Value Copyright On Their Works, Why Do We Force It On Them? Mike Masnick, 8 February 2011, http://www.techdirt.com/articles/20110207/02222612989/if-artists-dont-value-copyright-their-works-why-do-we-force-it-them.shtml, 9 Febuary 2011

10) Can Free Content Boost Your Sales? Yes, It Can, Stan Shroeder, 22 January 2009, http://mashable.com/2009/01/22/youtube-boost-sales/, 9 February 2011

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