The Thirtieth "Napsterization" Item

Oct 3 16:11 UTC 2007

The usual canned introduction:

The original Napster corporation has been destroyed, its trademarks
now owned by an authorized music retailer which does not use
peer-to-peer technology.  But the Napster paradigm, in which computers
and networks give ordinary people unprecedented control over content,
continues.

This is another quarterly installment in a series of weblog and
discussion about the deconstruction of the music industry and other
copyright industries, with side forays into "intellectual property,
freedom of expression, electronic media, corporate control, and
evolving technology," as polygon once phrased it.

Several years of back items are easily found in the music2, music3
and music4 conferences, covering discussions all the way back to
the initial popularity of the MP3 format.   These items are linked
between the current Agora conference and the Music conference.

response 2 of 55:

Oct 7 04:39 UTC 2007

Trial over, defendent found liable.  $220,000 in damages.  News
coverage is everywhere so I won't bother with a link.
 
My view is that the trial turned on two things:
1)  The Kazaa user name reported by the record industry plaintiffs, 
    "tereastarr," matched numerous other online IDs used by the 
    defendant.
2)  The judge, after preparing an initial set of jury instructions
    that "making available" did not constitute infringement --
    the record companies needed to show that a copy had been made
    by a third party.   However, for reasons unknown, the judge
    reversed himself the next day and instructed that "making 
    available" would be sufficient to decide the case.  There is 
    fervent legal speculation that the RIAA got the judge to 
    make this switch by citing, as precedent,  a case which was 
    overturned two weeks ago, which dealt with this same 
    "making available" issue.

I had found a good blog posting summarizing the legal arguments over
"making available" but I lost it.  :(  

response 4 of 55:

Oct 8 23:09 UTC 2007

In the mean time, DRM seems to be on its way out in the music industry.
 Amazon.com has announced an online music service that sells tracks
packaged as ordinary 256kbps MP3 files.  And of course iTunes has been
selling some tracks in DRM-free versions for a while now.

Will the movie industry catch on that DRM doesn't prevent piracy and
annoys consumers, or are we in for a decade or so of fun and games
there, as well?  It's already creating difficulty for people who want to
time-shift HDTV programs.

response 6 of 55:

Oct 9 15:39 UTC 2007

The Motorola 6412?  It's among the better solutions currently available
although it has major issues; the software is notoriously buggy, the
capacity is woefully inadequate and cannot be upgraded, and it won't
work for certain types of content (like OnDemand, which is also pathetic
but for different reasons.)  It's also hard to skip commercials with it
(done on purpose) and the options for configuring recording are kinda
lame.  The only way to get content off it onto another storage medium is
Firewire and it's so irritating as to be barely usable and won't work
for protected content.

All of these problems could be solved by an open architecture and open
source software, but of course that can't be allowed.

response 8 of 55:

Oct 9 18:07 UTC 2007

Re resp:5: You don't have difficulty as long as you accept the cable
company's lock-in.  If you want to use someone else's DVR, you're out of
luck.

response 10 of 55:

Oct 12 19:53 UTC 2007

 Another way to read that is:

   Universal Music executive believes Universal Music should get
   $90 per MP3 playback device sold.

 Actually, I'd probably be glad to pay $5 / month for an all-you-
 can-eat music service with decent selection.  But players that
 cost ~50% more in the store shelf are going to be at a substantial
 competitive disadvantage.

response 12 of 55:

Oct 12 22:55 UTC 2007

Would the device then self-disable after 18 months, becoming an
expensive paperweight?  I keep my MP3 players a lot longer than a year
and a half.

response 14 of 55:

Nov 7 00:56 UTC 2007

Three reports -- one financial analyst and two bloggy anecdotes -- 
which suggest that it's just about Game Over for the big recorded 
music companies.

#1)  Bob Lefsetz reports on a recent investment analysis report on 
     Warner Music from Pali Research.  Lefsetz quotes from the report:

> No matter how many people the RIAA sues, no matter how many times 
> music executives. point to the growth of digital music, we believe an 
> increasing majority of worldwide consumers SIMPLY VIEW RECORDED MUSIC 
> AS 'FREE'.  ((emphasis KRJ))
> A new model for music consumption must emerge and that model 
> most likely involves DRM-free downloadable music at no cost to consumers, 
> fully-supported by advertising (within some form of social networking 
> environment that enables consumers to discover/explore music). 
> The music industry is not ready to endorse such a move at this point 
> and even if it was, the economic model transition will be incredibly 
> painful.

...

> Artists make the vast majority of their money on touring and 
> merchandise, not CDs. In turn, it is increasingly logical to believe 
> that artists want to have their music reach the widest possible 
> audience at the lowest possible price.meaning FREE. Yet that puts 
> the music labels in a very difficult position as their recorded music 
> divisions make virtually all their money off of the sale of music. 
> Music labels need to get significantly smaller as the industry shrinks...

The recommendation is to sell Warner Music stock.

http://lefsetz.com/wordpress/index.php/archives/2007/11/02/the-greenfield-r
eport/

The full Pali Research report is available behind a free registration wall.

-----

#2)  Bloggy report from one Jason Mendelson, who comes back to 
     U. Michigan annually as a guest lecturer in economics.
     
     Mendelson reports on his unscientific poll of about 300 UMich
     students:

> 4.  I asked how many of them "bought music legally".  
>     No more that 15-20% indicated that they bought music legally.
> 5.  I asked how many of them "stole music". 100%.  
>     And all but a couple indicated that a majority of their 
>     music was stolen.
> 6.  Biggest concern of stealing music was not getting caught, 
>     it was that they "felt badly" for stealing it.
> 7.  Almost no one buys CDs, but those that do are all into classic rock 
>     and jazz (Led Zeppelin, Lynyrd Skynyrd, AC/DC). ...

http://www.feld.com/blog/archives/2007/10/undergraduate_v.html

-----

#3)  And finally:  Andrew Dubber reports from a UK music trade 
     industry panel, where six teenaged girls were invited to 
     discuss their consumption patterns in a market research inquiry. 

What really frightened the music biz people was not that the girls
download music for free:   they download for free, listen for a while,
and then throw the copies away.  Recorded Music, for this unscientific 
sample of young people, has become completely disposable.  How can the 
record biz hope to charge much money when the product has the lifespan of 
newspaper?

But my point here was that one member of the old-line music industry
tried to put the fear of God and Lawsuits into the girls:

> "So, let's say one of your friends is caught downloading music. 
> And let's say they and their parents go to court. And they're found 
> guilty of breaking the law (which is what you're doing). And they have 
> to pay thousands and thousands of pounds, and so they have to sell 
> house. And they lose everything. Everything. They're poor, and they're 
> miserable. Would that make you act differently and pay for music?"

> Translation: if we're really big and scary, sue everyone, make 
> examples of your friends and ruin people's lives, will you then finally 
> behave in the way we want you to?

...

> Their response was interesting: THEY LAUGHED AT HIM. Honestly. They laughed.
   (( emphasis krj ))

http://newmusicstrategies.com/2007/11/03/hooray-for-the-music-biz/ 

(I recommend this blog for those interested in following the Music Wars.)