How Pirates Will Change The Entertainment Industry
The Internet is in its infancy. Electronic information still travels along copper wires left over from the industrial revolution, but the information age is about to hit puberty. Fiber optic cables are sprouting in unexpected places. The piracy and chaos we are collectively experiencing is growing pains.
For a few awkward years, the situation is only going to get worse. But soon enough the labels, studios and every other paranoid media owner will have to stop acting like petulant teenagers. The time has come to address piracy with some real, sustainable solutions that consumers will support. The time has come for the entertainment industry to grow up.
ACT I: THE SET-UP
Current system is shot to hell. Heads buried firmly in sand.
A few months ago, the writer and NYU professor Clay Shirky told me he thought DRM was a “nostalgic” idea. Nostalgic is the best adjective I’ve heard to describe how most large entertainment companies think about controlling their content in a digital era. Big media continue to view the situation through rose-tinted spectacles while consumers see red. When being a pirate is the easiest way for people to access the content they want in the format they want it in, then something has gone very, very wrong.
There isn’t a moral defense for stealing in most cases. But there isn’t a moral defense for invading people’s privacy and imposing draconian laws to protect outdated, crumbling business models either. Music and movie piracy is rampant because over the last ten years, the market has utterly failed to provide a wide range of preferable legitimate solutions. If this continues as bandwidth increases and download speeds accelerate, the entertainment industry will be left in ruins. Many think that needs to happen for new business models to form. I think those currently in power simply need to grow a set and confront the reality of the situation.
So far the search for new revenue streams by the big labels and studios has only turned up one that they seem to be comfortable with: the legal department. It’s impossibly difficult and expensive for the average consumer to use music legally in podcasts, on websites, in remixes, or in public speeches for example. But if you do decide to use music illegally, it’s entirely possible that a huge team of lawyers will come at you like a troop of rabid spider-monkeys. Instead of looking at real solutions, all the labels seem to be doing is exacerbating their problems.
Pretending the current laws or legitimate options for consuming movies and music online are in some way going to stop piracy from turning the entire entertainment business into a giant anarchic swap-meet is like pretending recycling plastic water bottles will single-handedly end global warming. The problem is the entertainment business doesn’t recognize the giant anarchic swap-meet for what it really is; a great way for them to make a ton of money.
ACT II: CONFRONTATION
Licenses replace sales. Labels accept reality, or die.
CD sales are in freefall, (the arrival of the Mac Book Air this week was perhaps the final death knell for the format) and the legal department is clearly not a viable long-term revenue stream. A more efficient way to monetize how we consume music online (and other goods with zero marginal production costs) is not to think about monetizing them in terms of sales, but instead in terms of licenses.
This is already beginning to happen. Deals like the “Comes With Music” partnership struck between Universal and Nokia last month may feel like “one step forward, two steps back”, but at least we’re finally heading in the right direction. And the fact that all the majors are starting to work with legitimate file-sharing models like iMeem is encouraging.
The solution we are slowly moving towards is a voluntary collective license for music, which consumers could choose to pay, or not. It needs to work all over the world. National boundaries don’t apply to this kind of information anymore. To pretend they do is as nostalgic a notion as DRM.
Organizations such as ASCAP or the BMI could fulfill this role. This system wouldn’t be a tax; there would be no cap on the amount of money an artist or label could earn, innovation would not be stifled. Bennet Lincoff wrote a paper this time last year which I believe could be the answer. The EFF is also supportive of a similar solution, which they outlined in a 2004 paper:
“The concept is simple: the music industry forms a collecting society, which then offers file-sharing music fans the opportunity to “get legit” in exchange for a reasonable regular payment, say $5 per month. So long as they pay, the fans are free to keep doing what they are going to do anyway—share the music they love using whatever software they like on whatever computer platform they prefer—without fear of lawsuits. The money collected gets divided among rights-holders based on the popularity of their music.
“In exchange, file-sharing music fans will be free to download whatever they like, using whatever software works best for them. The more people share, the more money goes to rights-holders. The more competition in applications, the more rapid the innovation and improvement. The more freedom to fans to publish what they care about, the deeper the catalog.”
Under this system, the internet would work exactly as broadcast radio does. As the EFF proposal points out, “songwriters originally viewed radio exactly the way the music industry today views KaZaA users—as pirates. After trying to sue radio out of existence, the songwriters ultimately got together to form ASCAP (and later BMI and SESAC). Radio stations interested in broadcasting music stepped up, paid a fee, and in return got to play whatever music they liked, using whatever equipment worked best.”
We have a system where infringement by many pirates affects the ability of rights holders to license music legally to the few media companies that can afford it. What we need is a model where infringement by a few pirates will not affect the ability for rights holders to license music to the many law abiding broadcasters who want to use it.
Sure, there is good money in making it very difficult to license music, and charging a few people a lot for the privilege. But it’s likely there is a lot more money in making it very easy to license music to a lot of people for very little.
This wouldn’t just allow individual users to share songs legally - it would create new opportunities for a lot of sites to start selling music, which is a good thing. The entertainment industry has made it very clear it would prefer not to be beholden to a small handful of stores like iTunes, an anti-competitive situation which isn’t great for consumers either. It’s a monumental task, but it would create jobs and wealth and probably a lot of opportunities we can’t even see yet.
ACT III: RESOLUTION
A viable entertainment industry unfolds. New revenue streams spring forth.
The truth is we still need middlemen in the entertainment business. It’s just they stopped doing their jobs properly, so we decided to stop paying them. But if the industry embraces the way millions of people have been consuming their products for the last decade, there will be no longer be a reason for consumers to defend piracy. There will be more money for artists. There will be more commercial opportunities to distribute wider varieties of content. Publishing will grow. There will be a larger entertainment industry with more revenue streams, making more money than it does now. Once the benefits of sharing content in a more liberal fashion are widely understood, our definition of fair use will likely change as well, meaning a wealth of new non-profit driven content and culture will be created at the same time. I think that definition will look something like Tim Wu’s: “It is time to recognize a simpler principle for fair use: work that adds to the value of the original, as opposed to substituting for the original, is fair use. In my view that’s a principle already behind the traditional lines.”
Confronting the reality of where the traditional lines really are, and where the new ones have been drawn by the consumers (the people who really make the rules) is the only long-term solution to the pirate’s dilemma the entertainment industry faces. It is, in this instance, the only way the industry will ever stop piracy. It is the right thing to do, and it will force the rest of us to start doing the right thing too. When the entertainment industry decides to grow up about file sharing, the rest of us will have no choice but to do the same.
For those who are interested, my book: “The Pirate’s Dilemma: How Youth Culture Is Reinventing Capitalism” is out now through Free Press, and probably soon on a BitTorrent tracker near you ;).
Previously: European Politicians Launch Pro-Filesharing Campaign
Next: Music Industry Got An Injunction Against Rapidshare in 2007, Site Not Shut Down
74 Responses (Add yours or TrackBack)
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nice article :)
very interesting concept… but the problem remains the remenent of the previous business model.. as long as they are still in control of the industry it will be very hard to change the relationship between the producers and the consumers of the music
There’s so many holes in those ideas that I’m not even gonna start.Usually I’d write a long ass response shooting down every idea you have, but right now I’m tired and high (but if this was written by Ernesto I’d take them time to kill it).
I’m just gonna say this; there’s a big difference between radio stations and people on the internet and for everyone I know, the thousands of miles that seperate them and that gang of lawyers gives them enough security that they are gonna keep “pirating” until the day they die.
The structure you’ve suggested will work great at first, but just like the structure of today, eventually record labels will start raping us for license fees and hunting down people who don’t pay them.
People don’t seem to see, history repeats itself; at different intervals due to different mediums and different situations, but the repetition is still there. We just have to accept this and stay 3 steps ahead of newcomer that we know will eventually turn against us.
Real piracy is not about distributing copyrighted data… It’s about showing that you’re better than someone else (and in this case, the only way we can find to show we’re better than the media giants is to distribute their data free of charge). And people will always like to be better, and as such, piracy will never die… It will only get better!
no i think you are too tired and high to think properly. this is exactly what is happening…in this country. people who have money have to much
people without don’t have enough
so we steal what we will and we share
…not because we are better than….but only so we can better ourselves…when i can i will buy its only right. come on you still know what right and wrong is. you don’t take the roach unless your the only one without weed…and thats ONLY because those greedy bastards weren’t right enough to give it to you.
You say that users can choose to pay a five dollar fee to “get legit”. You also say that a user can choose whether or not to pay this “get legit” fee. The problem is, you don’t say what a user would gain by “getting legit”.
The fact of the matter is, NOBODY is going to pay for something if they can get it free. At least I wouldn’t. Why would I? To be a nice guy and help someone out? Fuck ‘em. It’s a dog eat dog world baby. You gotta get yours but I gots ta get mine. I’ve always said “get it while the gettin’ is good”.
If you or anyone else thinks that someone is going to pay for something when they can get it free then you’re on the pipe homeboy. Let me put it this way, if you were in a mall and there were two identical stores side by side selling the exact same products. The only difference is that one of the stores is giving everything away free and the other is still charging but when you go into the store that charges money and you actually pay them for what you want they’ll say thank you, shake your hand and pat you on the back. Which store do you think everyone will be going to? 99.99999999 percent of people will be going where everything is free and saying fuck that other store.
The way I see it is this, piracy only hurts the makers of the movie, music, software, etc. when the person pirating it would have actually bought it had they not been able to get it free. That’s why I don’t feel guilty about pirating anything because pretty much anything I download I wouldn’t have bought anyway so in effect my actions in no way hurt any of the publishers.
If i could actually afford half the music i pirate i would pay for it. But most of the time i like 3 songs a cd. Normally i will pay for those 3 songs that i do download. I refuse to pay 19.95 for a movie I’ll probably watch ONCE. If i really like the movie i will take my kids to see it in the theater.
I personally think tv should be free on the internet. Google thinks cell phones could be free with advertising. Just put every channel on its own website instead of the stupid “you can watch 5 of the season” and pay for it with advertising. It would cost me probably 500 a month to do what i do with torrents. Several of my shows are on at the same time. I’d have to have 3-4 dvrs. (Unless there is some way to record on like dish 3 shows on at once.) I know we’d get surcharged for having all that. Plus if i miss a show i can just download it later. Instead of having to rearrange my life. Its kind of like what was said about oink. You can’t find that kind of selection in ANY store at all ever.
You probably won’t find it anytime soon either.
this is a great editorial. and so true. Yet we’d be relying on the creativity of the same executives to create new revenue streams… which i’m not entirely sure they’d want to do until the older ones are dry.
Then I guess it’s lucky that only the first morally indefensible position is relevant to file sharing.
How gay would you have to be to complain someone has violated your privacy by accessing the P2P content you were sharing?
And of course our old friend the “draconian law”. Latin for “in lieu of any other arguement against this law”.
Tell us Matt, if the mere existance of enforcable intellectual property rights amounts to a “draconian law”, what on earth wouldn’t be ?
If artists having any legal claim to be compensated for the pirating of copies of their retail works is unacceptable and antiquated in 2008, what’s not ?
And while we are at it, do you think you could possibly find laws that are more frequently violated and less frequently used to seek damages that you could bitch and moan about ?
Littering fines perhaps. How draconian they are, just because 1 in a billion times somebody gets fined and it happens to be a law you like to violate.
I might add, do you think if you found a pro-pedophile website that their argument against child protection laws would sound any more convincing than this does ?
What a fkn suprise it would be too. That the law we like violating (for reasons which have no bearing on the law’s validity) is draconian and violates our privacy for unspecified reasons. What other outcome could there be ?
“The solution we are slowly moving towards is a voluntary collective license for music, which consumers could choose to pay, or not. … The money collected gets divided among rights-holders based on the popularity of their music.”
This won’t work, Matt.
1. How do you accurately measure popularity? So much music is shared over private file transfers between friends. And soon a lot of that will be encrypted.
2. Even if you measure popularity accurately, it won’t seem fair. If I’m listening to Cordell Klier, Manufactura, and Black Lung, why should my five bucks a month enrich Britney Spears and Linkin Park instead? Why pitch in when most of it goes to artists I don’t like?
Here’s what I’ve suggested before and suggest again. A Last.fm-like site (Last.fm itself probably doesn’t have the balls to do this) tracks your listening habits, gives recommendations and so on. You can “subscribe” to the site at a monthly price you choose ($2, $50, whatever), and half that money goes to artists based on how much YOU listen to them in that month.
This kicks your proposal’s ass because:
1. Measures actual LISTENING, not how many people have a copy of the music. I’ve both downloaded and bought so much shit I never play.
2. My money only goes to artists I LIKE. Not artists the majority like, that are marketed well, or whatever the fuck.
3. Artists whose fans care do well. As for artists who only get listened to because they’re there? They suffer. Rightly fucking so.
To make it even better, have the Last.fm-clone site offer torrent downloads too. Only tracks their users are legally allowed to share count towards the artist payments. This isn’t necessary for the idea to work, but it would free the music even faster.
Could this actually happen? Yes. There’s tons of netlabel music that’s legal to share already. If this existed, I would sign up today.
Download movies from Web can be easy, legal:
http://www.usatoday.com/tech/columnist/kimkomando/2004-09-27-komando_x.htm
Legal Music Sites:
http://www.riaa.com/toolsforparents.php?content_selector=legal_music_sites
¿Where is my little monkey?
I’m just not paying, ever.
Music should be free. This keeps artists who are in the market for profit away. What you will have left are artists who create for the love of it. They will likely be people who have bought gear themselves and know how to operate it. They will be better able to translate what’s in their head to their workspace and workflow. So I feel the landscape should change in that respect. If you want to make money from music and I don’t want to pay you for it, what are you gonna do? I have downloaded stuff I didn’t like before. And I have purchased stuff I didn’t like, as well. You can’t take that shit back. They think you copied it. Why would I endorse a system like that?
If someone were to poison the coke supply to the western world, this metamorphosis would be accelerated greatly.
@14
How’s the musician supposed to pay for the equipment? Get a job right? Then they ain’t making music. Musicians like to be rewarded for their efforts as much as the next person.
Maybe the musicians should just share the music amongst themselves and cut people like you out of the loop.
[quote comment="267880"]@14
How’s the musician supposed to pay for the equipment? Get a job right?
[/quote]
I had to work to buy my stuff, noone just gave it to me.
http://www.jamendo.com
Yeah, oneplusone’s idea isn’t really that great. That requires all musicians (who aren’t independently wealthy) to have a day job, which, regardless of whether they like that or not, means less time making music. Sorry, I reject that utopia.
I don’t believe musicians should be paid for sitting on their asses while albums they made years ago sell over and over again — that’s not the right model. But they should be paid for the service of writing, recording, producing, and performing music.
Currently, the most conservative way of doing that involves the music being made intentionally scarce, and tolls charged in order to access it. That’s clearly unacceptable, and we should explore better ways. See my comment above for one suggestion that improves upon Matt’s.
[quote comment="267880"]@14
How’s the musician supposed to pay for the equipment? Get a job right? Then they ain’t making music. Musicians like to be rewarded for their efforts as much as the next person.
Maybe the musicians should just share the music amongst themselves and cut people like you out of the loop.[/quote]
I AM a musician, Wadsworth. Fuck you and yes, GET A JOB. I did. I have the pending neck surg to prove it. You missed the point Lazyboy.
[quote comment="267907"]Yeah, oneplusone’s idea isn’t really that great. That requires all musicians (who aren’t independently wealthy) to have a day job, which, regardless of whether they like that or not, means less time making music. Sorry, I reject that utopia.
I don’t believe musicians should be paid for sitting on their asses while albums they made years ago sell over and over again — that’s not the right model. But they should be paid for the service of writing, recording, producing, and performing music.
Currently, the most conservative way of doing that involves the music being made intentionally scarce, and tolls charged in order to access it. That’s clearly unacceptable, and we should explore better ways. See my comment above for one suggestion that improves upon Matt’s.[/quote]
Again, LIFE IS HARD, dood.
Boo hoo, I don’t like work. I like making music and eat nothing but red jelly beans. Who cares?
People who want to live off another person’s love of music and sound, that’s who. And people who aspire to acquire the cachet of the traditional ‘rock-star’ or ‘artiste’.
I endeavour to please myself firstly, musically speaking. If someone else likes what I do, so be it. It’s no big whoop. Why should money change hands? And as for gear, what do you need that’s SO expensive? Looks like yer on the web, so you got half the battle won,– you have a computer.
Never before has it been so easy and inexpensive to create your own music. Any argument to the contrary could only be due to poseur-ism and/or an incomplete knowledge base regarding technology. Go find out how easy it is to do and come back and beak off.
[quote comment="267899"]www.jamendo.com[/quote]
Yeah, it’s AWESOME.
@The “Industry”:
Music CDs, Movie DVDs and computer games are FREE PROMOTIONAL TOOLS to get people into concerts, cinemas or online games where they MIGHT spend SOME money. But only if you offer QUALITY.
The times of multimillionaire “artists” and easy riches through overpriced “products” for the entertainment industry are OVER.
Learn to deal with it and get used to go to work every day to make a decent *drugfree* living just like most other persons.
Exellent article !
Congratz!
CD’s and DVD’s wont disappear just because some new Mac laptop doesn’t have a CD/DVD drive. This is a major flaw in logic. CD’s (for audio) and DVD’s (for films) main target is not a laptop, but stereo’s/discmans/dvdplayers. One can not simply compare this with floppy drives. Other uses for CD’s and DVD’s however, computerrelated ones, will probably cease to exist.
I believe audio CD’s, are here to stay. It’s a nice format, not too big (LP) to handle, nor too small (minidisc), but nice in the middle. It’s perfectly handable, and booklets are effective.
You must know that vinyl and tapes are still being produced, and sold, especially in the underground music scenes. Many people are surprised by that fact, but it’s true, even though they are ‘outdated’ technologies (LP tends to have a warmer sound).
There is so much wrong with the statement that no CD/DVD drives in computers cause the demise of those formats as a whole. I just started with some points.
Piracy will still remain in all cases, i think one thing to look at is that serious sharers are willing to pay for rapidshapre or usenet.
Those two services would not be necessary for piracy if there was a legitimate service priced the same that offered the high quality rips people can get atm at great speed.
You know I think this could be the greatest thing ever, if bands/acts no longer rely upon cd sales to pay them it may be the rebirth of live acts around the world.Consequently the number of appalling studio bands will decline… I think we can call this win win for the consumers :)
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