Monday, November 14, 2005

The Music Industry: Doomed From the Start?

Below is an article I wrote for another blog I was trying to start. Though some of my friends have already read it, and opined on it, I'm posting it again, so that my friends at Techdirt can syndicate it, and I can get traffic for the ol' blog. It basically covers a few of my thoughts on the nature of the music industry, how its basic institutions have doomed it from the beginning and how p2p fits into the mess that has been created.

Happy Hacking!


1. There is no competition in the music industry:

Take the example of the automotive industry. In America, consider two of the largest automobile manufacturers, Ford and Chevy. Now, consider one portion of the industry (we'll say genre of vehicle to establish my analogy.) The genre is trucks, which appeal to one segment of the population: rednecks*. Now, a redneck that wants to buy a pickup truck from Ford will not buy from Chevy, and vice versa (due to brand loyalty, or pricing issues, whatever). So, the car companies raise quality, and lower prices to try to get him to buy their vehicle.

Now, let us apply this concept to the Music Industry. We have Record Company A (RCA) and Record Company B (RCB). One genre of their product (Pop Music) appeals to one specific segment of the population (Pre-pubescent girls). Now, If a pre-pubescent girl wants to buy a CD, she can choose one from the product line called BackdoorBoys ("sold" by RCA) or the one called N*stink ("sold" by RCB). However when she acquires one of these albums, her perceived "need" to acquire the other as well won't be satiated. Even though the two bands are marketed by different enterprises, they don't competefor listeners. As a matter of fact, it really seems to me that there isn't even competition between labels for the music of a particular artist. I mean, sure, labels recruit new artists every day, but I propose that, in the current state of the world, an artist working at the proverbial diner in hopes of being discovered, will jump at the chance to sign on the dotted line, no matter the terms. (I know I would!) And, once they've signed him, he's theirs, for the rest of his natural born life, or until they tire of his style. So, it can be inferred that the only competition in the music industry is between artists for the chance at being granted the honor of providing their product.

* I myself am a redneck, so I can say that... :-)

2. The market has endured abuse from the supposed "leaders" industry:
As is described here the RIAA has been the defendant of at least one class-action suit for price-fixing. Price-fixing constitutes downright misuse of the nature of the intellectual property market. Doing such things drives away customers and causes mistrust of the industry hurting both present and future innovators.

Now the clincher.
Ordinarily, a market that had been abused by either buyer or seller would, in time, be able to recover after the abusive actions had stopped occurring. How would it do so? In this case, healthy competition for consumers would reduce prices back to fair market value. However, as cited above, the music industry doesn't function through a competition-based model. It seems that, separate from the market, a competitor (which we know as File-Sharing) has evolved, and the RIAA finds itself at odds with a FREE industry. That's where we are today.

So, where do we go from here?
I, for one, believe that p2p is not truly "free". I believe that every p2p user pays a price for downloaded music with his conscience, knowing that there is an artist that, had he bought the CD, would've gotten two-tenths of a cent from that one song he just downloaded. (times 20 songs makes 4 cents a disc, which, from what I understand, is about how much most of them get. Also, notice that my "guilt as a cost" idea here isn't guilt for not paying for the music, it is guilt that the artist didn't get their due.) To sum up, I think that the RIAA should do what every other industry does when they are "losing market share" and lower their damn prices. When the prices get to a fair level, I believe that the consumers will return to the legitimate market, because they know that then, it is the right thing to do.

Looking ahead—an ounce of prevention:
I also have a theory about how to prevent such a situation from arising in the future. By no means is my plan perfect, (I am a Junior in college, for crying out loud!) but I believe the changes entailed would be for the better concerning the music industry. The US should pass a law concerning Intellectual Property, (IP) that when an artist is licensing IP to a company such as a recording company:

1. They must do so one work at a time (i.e.: The norm of a production contract automatically usurping "everything you write" as is common with musicians today would be null and void)
2. That ownership rights to intellectual property may not be sold or transferred in any way except by inheritance. If one has created intellectual property, he may license it to as many parties as he wishes. Any contract stating otherwise is null and void.

My vision for this is that big name artists would be able to sell the exact same album through multiple record labels. After this trial and error, the artist chooses to do business with the one that best satisfies their needs (by making them the most money or selling the most records, etc), but is not contractually bound to do so, and may seek another publisher should the relationship sour. The effect: disc prices drop, only the toolish share music illegaly, and everyone gets along. Also, (and, ironically this is probably the most important effect) I believe it would be a step toward re-establishing content providers (i.e.: musicians) as the industry's merchants, rather as opposed to the indentured servants they are today, at the mercy of what a publisher believes will be "popular".