This is part 1 of an overall outlook of what I think needs to change to make the music industry more profitable. This part will look at the digital paradigm as it exists through my eyes, and what I’ve witnessed while observing those in this industry. I’m going to touch up on some issues that are specific to my genre of this industry which Electronic Dance Music. It is my belief that a lot of advancements have been made in this genre that can be interconnected with the rest of this industry. This genre is on the leading edge of technology within how music is created and distributed. As pornography is the leading drive behind new technologies within the video market (HD, VCR’s etc), Electronic Dance Music (EDM) would be that leading technical drive within audio and music creation. Part 2 will focus more on the physical retail aspects of these industries, and how they’ve been impacted and present possible changes there as well. I will not be linking in this blog, or naming names. These are just my observations and recommendations to which I’m certain some of the available market data can be linked to.
Many of the lobby groups claim that with the number of legal sites for the purchase of music up, piracy remains still at a very high level. It’s very surprising to me that the business end of the music industry has yet to ask the question why that is, instead of blaming file sharing. This has gone on for a decade now, and must stop! In order for one to take a close look and see the actual problems, we must look at this logically, and like any logical way of thinking, break down the data. So lets zoom in:
1) Labels blame file sharing and the consumers for the demise of the music industry. Why? Because people are downloading off of P2P networks .
Many of the lobby groups claim that with the number of legal sites for the purchase of music up, piracy remains still at a very high level. It’s very surprising to me that the business end of the music industry has yet to ask the question why that is, instead of blaming file sharing. This has gone on for a decade now, and must stop! In order for one to take a close look and see the actual problems, we must look at this logically, and like any logical way of thinking, break down the data. So lets zoom in:
1) Labels blame file sharing and the consumers for the demise of the music industry. Why? Because people are downloading off of P2P networks .
2) Why are people downloading off of P2P networks? A lot of the reasoning behind this the lobby groups have spilled out is because of free music.
3) Is free music the sole reason behind P2P? Partly yes, but not entirely. Those that are not in this industry are lead to believe that downloading free music off of P2P is a bad thing, when in fact this industry is built around free promotions, and free music and a lot of industry types use P2P networks to their advantage, and are doing business within the P2P aspects, through promotions, and singing of tracks and artists found on P2P networks.
4) So why then are people not buying music? Well in a lot of cases they are. We’re seeing a lot of conflicting data, and that’s because the market is in a flux right now with a newly emerging industry pushing its way through. Retail sales are down, and digital sales are rising. However digital sales could be rising at a rate of 200% per year if not more right now in my view. Until this new industry pushes through we can’t tell or compare ups and downs, there’s nothing to compare it to, and very little understanding of how it works, which is why major labels and lobbyists are fighting for the old system back that they understand which will NOT happen. Any attempts at trying to get that industry back will result in further losses. It no longer exists. Laws must not be put into place that compensate, or inhibit the new emergence from taking place. The emergence can’t be stopped. Those not doing business in this new emergence have been quite clear on the loss of profits and loss of jobs etc, and will continue down a path of destruction and bring talent down with them, while those that have adapted to it will most definitely profit in this new environment.
5) Labels are claiming that file sharing is the cause for the downfall in profits. Is this true? File Sharing is only to blame for forcing this industry to a new platform. There is no evidence what so ever to prove file sharing is responsible for the major decline in profits. The evidence that’s been shown to the public is completely misleading. When one looks at this subjectively, the evidence of lost profits are at the fault of the industry as a whole for not following the market into the digital realm. It really makes me mad to see governments all over the world cave to the pressures of lobbyist without actually understanding what’s happened and why. I will be careful in our next election to make sure I elect someone with some form of intelligence.
Think about this. We are now a connected society, and the consumer is getting very lazy. For the tech savvy, most of us get our news from feeds or blogs we subscribe to, focusing on key words, phrases. Well P2P works in a very similar manner. I upload my podcasts (as a lot of industry DJ’s and labels do now or have someone do it for them) to the P2P channels, which are then picked up on RSS feeds, and spread out all over the world to different sites, blogs etc.
Those downloading off of P2P channels can subscribe to my podcast using the rss feeds most torrent sites use. So if they are looking for my show they can type in the name of that show, or the *Release Group I use to release the show on P2P, which then the torrent client will pick up, and automatically download for them. Very similar to the Itunes with Podcasts, but on a much more massive scale. It may also surprise you that those downloading off of P2P channels seem to be 90% from the good old USA. We Canadians are at the top of the list for piracy? Have these guys even opened up a torrent program at all, and seen the number of USA IP addresses attached to downloader’s Vs. Canadian. 10+US /1 CDN.
A lot of the age group that buys music are between 13 – 25, meaning that the majority of this age group currently does not have a lot buying power for the legal distribution of music globally online. Gift cards are sold at some physical retailers, but they are not servicing the need of that age group, that wants to do business completely online, and on demand. A lot of them don’t own credit cards, and Itunes (the biggest legal distributor) the last time I checked only had PayPal available for US Residents only. Furthermore there has been some problems with Pay Pal, and the way they sell solutions to online merchants.
PayPal has a system in place that is supposed to protect people from “fraud” and is actively pushing those with PayPal merchant accounts to insist on making sure a customer’s address is verified with PayPal to protect these companies, even if an address is not required for delivery of services. PayPal requires customers to use a credit card in the account holders name to make that address verification possible with those using this service outside the US. I personally went through this when I purchased the World of Warcraft game to which I did not want to run to the mall 40 mins away from me every month to pick up a game card. I don’t and won’t use my credit card for Gaming (my credit card is for emergency only and I don’t provide to anyone online), and the bill by phone option Blizzard Entertainment has was only available to US residents (not that I would do that in the first place). That only left Pay Pal, who was requiring my credit card info for address verification. So now I’m stuck with a purchase of a game I can’t play, or be inconvenienced once every so often to go out and purchase some damn gift card, that takes me 40min completely out of my way. No thanks, I’ll just stick with the games I can play that I purchased and don’t use an online subscription to play with other gamers online.
What’s needed is a global debit card for electronic purchases that’s open up to all countries and all banks, and anyone that’s of legal age to withdrawal money from their own bank account. This is not only coming from someone within the music industry, but an analyst involved and trained in e-business solutions and support. This has plagued a lot of the e-business community for a very long time, to come up with solutions that will sell to everyone from everywhere, which is what’s needed within these entertainment industries in order to profit from the full extent of the digital environment.
The other major problem within this industry comes with pre-released music. Giving away free promo’s to DJ’s, radio stations, and industry types, is based on an old model, that a lot of us DJ’s really like. Basically free music sent out by labels and artists to the Dj’s in hopes that the DJ will play it and it will help with the sale of the product. Let alone it is my belief that P2P may work in the same way, and some do use P2P for legitimate purposes around those beliefs. In my experiences I’ve tracked down on behalf of a few music labels, songs that were floating around P2P and file sharing networks trying to find out how they got there, that somewhere down the line the content creator gave the track to a few friends, or previously handed out the tracks on P2P networks to see what type of response it would create before going to a label, and in the process if people like the track and it’s not available for legal download, it’s going to move through the P2P networks. And then these labels and content creators turn around and blame file sharing networks for the problem. Hello? That’s not the problem. In this new industry if you give these tracks out to anyone but labels for contract consideration, then you need to suck up the losses and move on. Pre-releases, and unreleased promo’s are causing huge issues for labels, artists. Anything that is not available through legal channels, should not be given to anyone. If you do then you need to expect that track to make it on the P2P networks. When I go to the casino, I expect to lose the money I go in with. I don't expect to win.
Another problem with pre-released tracks is that DJ’s play them on their shows or podcasts. A lot of DJ’s use P2P, and a lot of them play bootlegged or *white labelled tracks that can’t be found in stores etc, and mostly on P2P channels, labels that have podcasts are included in this group! This includes some of the top ranked DJ’s worldwide and their sponsored labels. Sometimes those bootlegged tracks get released or signed, but it’s too late to benefit from the full effect of the track when it’s released. DJ’s and labels that play unreleased tracks are not helping this industry, in fact they are contributing to lost profits, which is why you see for the most part ID-ID in track listings. Although some of the top players have yet to adopt this policy when playing tracks that are not available through legal distribution channels.
There have been many times where I’ve listened to other top ranked global DJ’s, and right after the show go and look for a lot of the tracks play listed on legal download stores to find out they aren’t available yet, as many of my own audience does as well. My second look for these tracks if I can’t find them legally as a consumer is within P2P networks. In some cases many of these tracks take many months even upwards of a year to be officially released through the labels. By then remixes and other versions of the track can be found on P2P free. This is why during my shows, I make sure 99.9% of my play listed tracks I’ve played over the past 3 years are released and my audience has a chance to purchase them right after the show. I even point a lot of them on where to get them legally. Those DJ’s that are track listing pre-releases are contributing to the decline of that track once it is released. Consumers want tracks as soon as they hear them. If they are not in the legal channels, they will look elsewhere.
Which brings me to my next point. Consumers now a days, want product on demand, with little effort involved in purchasing them. The overall consensus with consumers is they do want to pay for their music, but on their terms. Future business models in the new media industries must adapt to this by offering pooled services. Sell product in bulk, and theme, artist or genre specific. Dj’s often belong to label pools where the labels throw in all new releases for that month for a monthly fee. There are usually quite a few labels involved that throw tracks into a pool, that services the DJ’s. Same thing needs to happen here. The consumer has a need for pooled or packaged services. A lot of DJ’s in the industry now are relying on free artist pools then paid label pools. I’m often sent tracks directly from the content creators, discreetly. It is my belief that the rights holders (labels) have not and are not servicing even the industry pools successfully. Artists have also resorted to pooling free tracks to their fans as well out of desperation for free promo. This is a huge failure of representation within the label community, to not only meet the demand of the consumer, but even the industries they are a part of. Wake up people. Tougher laws are not the answer, this will continue regardless and labels will keep pushing the blame on the P2P communities rather than fixing this major problem, that’s costing a lot of profits.
Digital Cable TV is a prime example of the consumer need right now. You subscribe to a themed package and get that content bundled. So if you are a consumer looking for the latest in top 40 tracks, then there should be a service available that will provide that to you for a bundled monthly subscription fee (without DRM), and sent right your devices automatically without any effort on the consumers part. Extra content like artists podcast can be factored into this as well. This will not only give a major boost to new artists in the music scene these labels are promoting, but also meet the demands of the consumer.
P2P file sharing needs to be used more of an advertising and promo medium to generate interest in the artists, labels, products, or services. Free music is part of this, however it's how one uses this free music to their advantage that can make a significant difference. Artists in my genre (Electronic Dance Music) are also DJ’s and have some up with an incredible solution to use P2P to their advantage by providing release groups, and torrent sites professionally mixed and produced podcasts. This all together supports our community and uses this medium to their advantage. However it is important to note that the full effects (negative or positive) of P2P and file sharing cannot really be measured accurately until the above needs of the consumers are met first. For those that constantly blame file sharing for their problems need to look closely as to where the blame really needs to lie at this point before we can move forward. Because over the past 10 years these needs have not been met, the negative effects of file sharing being the only culprit on these industries is an assumption, and not based on fact. There are not actual facts available, just a lot of industry numbers that suggest a shift in the markets to which these industries for whatever reason are refusing to service properly. I bet my reputation, that once these needs are met, file sharing will represent a very small issue, if an issue at all.
Rather than looking at and putting money into developing solid solutions, a lot of rights holders have spent vast amounts of money lobbying, and tromping on the fundamental rights of society on a claim that they cannot prove with any certainty, but does not have merit, nor is acceptable under the circumstances. I think it's time to change towards a more constructive and positive approach to the issues at hand.
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*Release Groups: Sort of like an underground digital label on p2p networks. Basically people that have made their names as producing the best quality stuff on P2P and are sometimes used legally to push out content by the industry to maximize downloads due to the reputation within the P2P networks, thus maximizing the promotional potential of the material released.
*White Labels: A DJ Term used to describe a recording or remix that has yet to clear or purchase copyrighted samples used in these recordings or remixes for sale, distribution, or radio play.
