Music Like Water – Forbes Article Reprised
People should pay for their music the way they pay for gas or electricity.
More people are consuming music today than ever before, yet very few of them are paying for it. The music recording industry blames file sharing for a downturn in CD sales and, with the publishing companies, has tried its best to litigate this behavior out of existence, rather than try to monetize the conduct of music fans. These efforts are fingers in a dike that is about to burst. Digital media are interactive, and people want music that they can burn to CDs, share and use as they wish. The music industry should instead look at turning this consumer phenomenon into a steady stream of cash–lots of it.
The industry ought to establish a “music utility” approach to the distribution and marketing of interactive digital music, modeled after the water, gas and electricity utility systems. It should be done voluntarily to work best for all parties, or it may eventually be legislated through a compulsory license provision.
Under a plan colleague Gerd Leonhard and I propose, consumers would pay a flat music licensing fee of $3 to $5 a month as part of a subscription to an Internet service provider, cellular network, digital cable service wireless carrier or other digital network provider. This fee would let people download and listen to as much music as they care to, from a vast library of files available across the networks.
These fees would result in a huge river of money. With approximately 200 million people connected to a digital network in the U.S., the potential annual revenue stream for a music utility model could be somewhere between $7 billion and $12 billion for the basic service. That is already comparable in size to the existing U.S. recorded music market, which in 2003 was $12 billion at retail, according to the Recording Industry Association of America. This basic service would be augmented with various opportunities, including packages of premium content, live concerts, new releases, artist channels, custom compilations and more. The revenue potential of these premium sources is enormous, too.
How would this money be divvied up? We propose that the industry voluntarily establish a “music utility license” for the interactive use of digital music. This license would compensate all rights holders, including the record labels and artists (for the master recording) as well as publishers and composers (for the underlying composition), with the license fee to be split in half between the owners of the sound recording and the owners of the composition, after deducting a percentage for the digital network providers. This license would be available to anyone willing to implement its terms. The digital network companies would be required to track and report which music had been used, by employing existing digital identification and tracking technologies.
There is already precedence for such a flat-fee system in cable television and in the utility-like models of public broadcasting in Europe. Streaming digital music is already provided in basic cable plans. Cable television itself at first resisted this model, but its economics eventually led to a larger market, providing more consumer choice and more revenue streams overall. Old media almost never die. Cable television did not replace broadcast television; instead, it expanded the market dramatically, by letting video flow like water into new revenue streams–instead of down the drain.
Certainly a music utility would be a radical and complex undertaking, and there are many important details to negotiate, such as the exact nature of the license, how the funds would be administered, the specific tracking method, what collection of technologies would be employed and others. Yet there are inventors and technologists outside the mainstream music business hard at work trying to figure out how to make this happen. It’s time for the main players in the music business today, namely the large record publishers, to cooperate with the inventors and jointly create a future for music where the money really flows and the global market for music can grow from $32 billion to as much as $100 billion.
Originally published in Forbes on January 31, 2005.
Danish company launches PLAY………a music like water service.
http://tdc.com/publish.php?id=16268
Danish company launches PLAY………a music like water service.
http://tdc.com/publish.php?id=16268
Danish company launches PLAY………a music like water service.
http://tdc.com/publish.php?id=16268
The idea is great, but it fails against the two main tendencies of the digital age:
1. Anything that can be digitized will be;
2. Anything that is digitized will, sooner or later, become public domain.
CDs were first, now it’s DVDs. Television and movie industries must have seen it coming, so they came up with High-Definition technologies such as Blu-Ray discs that are less efficiently digitized and, therefore, impractical for sharing in the current state of the Internet.
I don’t have the answer to saving the music industry and, as a musician, it bothers me. But this “music like water” idea is unlikely to work because, much like in 3rd world countries, the water lines will be rerouted to the slums — and we’ll be having this discussion again.
The idea is great, but it fails against the two main tendencies of the digital age:
1. Anything that can be digitized will be;
2. Anything that is digitized will, sooner or later, become public domain.
CDs were first, now it’s DVDs. Television and movie industries must have seen it coming, so they came up with High-Definition technologies such as Blu-Ray discs that are less efficiently digitized and, therefore, impractical for sharing in the current state of the Internet.
I don’t have the answer to saving the music industry and, as a musician, it bothers me. But this “music like water” idea is unlikely to work because, much like in 3rd world countries, the water lines will be rerouted to the slums — and we’ll be having this discussion again.
I like this idea but the big four would have to jointly develop a standard “pipeline” with protected/proprietary media formats and feed all their assets from present day to future into this system and nowhere else. Otherwise they leave the door open to P2P.
I can’t believe you guys would support such a terrible concept. A complete sell out; I used to be your biggest fan. By nature, the music utility model kills any hope for music as an artform to continue to evolve. This is simply a bail out for the record labels – no different from the current Bear Stearns mortgage bail out situation. Just like the banking world this would make the industry nothing short of organized crime. This utility will go up year after year giving labels a guaranteed and ridiculous hoard of cash which they’ll use to continue to promote unoriginal ‘machine’ music. Whatever happened to real entrepreneurship which means taking a risk. Cowards. A simple calculation would give labels 3 times the best revenue year that they’ve ever seen and thereby will kill any incentive to try and aggressively discover and develop real and new talent. Geez, they’d could practically do nothing by living off this guranteed revenue with just the library of content from their old artists. Why would they ever consider all the overhead incurred by developing, producing, marketing, fronting a new act under this proposal. Im dumbfounded. COMPLETE BLASPHEMY!
Here’s What They’re Really Planning:
The tax will not, in fact, be mandatory. But that is misleading – it won’t be mandatory for ISPs who provide Internet access to actual users. But if ISPs join the scheme, it will apply to all of their customers and be added to their bill as a surcharge.
Why will ISP’s agree to this? Mainly to avoid liability. The core of the plan is a covenant not to sue anyone who pays the fee. Griffin touched on this in the article, saying ISPs will want to “discharge their risk” around file sharing that occurs over their networks.
The rollout plan will hit colleges and universities first, who will simply add the fee to tuition bills so they won’t have to worry about getting dragged into lawsuits. Then Griffin will approach consumer ISPs. If an ISP joins, their users will not have the option of not paying, even if they don’t download music from the Internet. So, basically, the tax is only voluntary if you define avoiding it as not going to college, or using the Internet.
The advertising-supported option is likely a red herring to satisfy critics, and would be dumped before the project launches. It just isn’t feasibly to try to aim advertising at users who are downloading music from BitTorrent and putting it on their iPod. There’s no touch point to force advertising down their throat.
So the plan essentially comes down to telling ISPs that they can avoid any copyright infringement liability if they pay the fee on behalf of customers. And while the government wouldn’t be directly involved, the willingness of law enforcement agencies and the judicial system to enforce civil and criminal copyright infringement laws is the stick by which Griffin will convince ISPs to jump on board. It’s government endorsed extortion, nothing more and nothing less.
The effects on innovation in music would be disastrous if such a scheme were ever to become reality. It’s clearly good for the music labels, who are facing their imminent extinction. For everyone else, though, this is the worst possible thing that could happen.
Here’s What They’re Really Planning:
The tax will not, in fact, be mandatory. But that is misleading – it won’t be mandatory for ISPs who provide Internet access to actual users. But if ISPs join the scheme, it will apply to all of their customers and be added to their bill as a surcharge.
Why will ISP’s agree to this? Mainly to avoid liability. The core of the plan is a covenant not to sue anyone who pays the fee. Griffin touched on this in the article, saying ISPs will want to “discharge their risk” around file sharing that occurs over their networks.
The rollout plan will hit colleges and universities first, who will simply add the fee to tuition bills so they won’t have to worry about getting dragged into lawsuits. Then Griffin will approach consumer ISPs. If an ISP joins, their users will not have the option of not paying, even if they don’t download music from the Internet. So, basically, the tax is only voluntary if you define avoiding it as not going to college, or using the Internet.
The advertising-supported option is likely a red herring to satisfy critics, and would be dumped before the project launches. It just isn’t feasibly to try to aim advertising at users who are downloading music from BitTorrent and putting it on their iPod. There’s no touch point to force advertising down their throat.
So the plan essentially comes down to telling ISPs that they can avoid any copyright infringement liability if they pay the fee on behalf of customers. And while the government wouldn’t be directly involved, the willingness of law enforcement agencies and the judicial system to enforce civil and criminal copyright infringement laws is the stick by which Griffin will convince ISPs to jump on board. It’s government endorsed extortion, nothing more and nothing less.
The effects on innovation in music would be disastrous if such a scheme were ever to become reality. It’s clearly good for the music labels, who are facing their imminent extinction. For everyone else, though, this is the worst possible thing that could happen.
I’m an independent artist from Germany. I get publishing royalties from GEMA, as well as recording rights licenses from GVL for airplay.
I know how difficult it is to track actual plays / downloads. If a radio station is only small, these companies don’t track the single plays; rather an overall fee is paid and then distributed among all artist in relation to their overall income.
That simple means, that independent artist that are present on small stations won’t get paid. The money goes to the big names in the business.
It would need an excellent system to really pay all artists for their actual plays / downloads.
The experience with former mp3.com (does anybody remember?)shows that such a system attracts the cheaters. As mp3.com paid artists for their amount of plays / downloads, tricky people developed robots that generated huge amounts of plays / downloads. This finally destroyed that system.
I wouldn’t mind a “music utility” if it would be good for independent artists as well.
But who will control the system? I fear it will be controlled by the music industry.
That would be the worst that could happen – monopoly.
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