How Pirates Will Change The Entertainment Industry
Written by Matt Mason on January 19, 2008The 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 But there isn’t a moral defense for invading people’s privacy and imposing draconian laws to protect outdated, crumbling business models either.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
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b I think you and I are pretty much in agreement - but I’m not suggesting one agency - I’m suggesting a system where many can co-exist and compete, the way publishing companies do in other cases. I think there is so much potential with downloads to be counted in much more accurate ways than radio play is, which we haven’t even begun to experiment with yet. And @ 50 - this goes without saying - kill files are not the answer to ending piracy.
[quote comment="267888"][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.[/quote]
And if no one pays for your music, you better keep that job.
Matt, rule one: If people can get it for free, they will.
Anti-piracy companies and lawyers would still have to exist in your model because people would still get music/videos from the “legit” sources and then distrbute them illegally.
In other words, you wrote a long pointless nothing.
Rule one? Says who? Again - bottled water, but also, lots of other goods people believe to be in some way ‘better’ than free or cheaper substitutes. I call bullsh*t on rule one and your short pointless nothing.
You didn’t read the article or the proposals I linked to - under this system people would share music DRM free - it wouldn’t be legal, and artists would get paid depending on how much their music was used/shared.
And as I said, I don’t think this will eradicate *all* piracy, but I do think it will make it difficult to justify for most consumers, so I agree, we will still need lawyers etc.
whoops - 2nd para - *would* be legal.
If I download a album, there is a chance that a copy-right holder may take legal actions against me for depriving the copy-right holders income. Is this credit potential or absolute? I’m sure that many copy-right holders would argue that it is absolute, however I have never purchased a CD. I believe if the internet did not exist I wouldn’t be playing my fave’ tunes.
Just a thought.
ummm… who gives a fuck about the over-priced mac book air? over 90% of the pcs nowadays are windows computers anyway and not bundling in a disc drive is fucking stupid once you need to reformat.
Besides, I believe that fans [even if they pirate] spend way more than 5 dollars a month on their favorite bands/movies/games anyway, concerts included.
Now and Before any one All The Newest RapidShare Premium Accounts working and Tested.
http://rapidshare.com/files/58796285/All_The_Newest_PremiumAccounts_For_RapidShare.rar
Well I’m all for paying artists for their work but the reality is that you’re paying like 90% of that $19.95 to the record company. Traditionally they justified it as a cost for putting the music on disks, promoting it, distributing it. With internet revolution there’s NO JUSTIFICATION for charging that amount that’s why I simply refuse to pay that.
iTunes charging $1 for a digital download is insane. It costs them LESS to distribute it digitally and the quality is inferior to the cd, yet they charge the same amount. Prices around 10-15c a song is what I can easily live with, which is what allofmp3 is charging - I actually bought music for the first time in my life from the cuz it’s easy to access and price is reasonable. Right now what they are doing is probably not benefiting artists because of the whole royalties fiasco but there’s no reason record companies can’t adapt the same model. And yes, record companies’ fat asses will have to be trimmed a bit. Ripping off artists by keeping most of the profit to themselves gig is up and it’s about time they face the music and adopt a model where they can’t hold the entire industry hostage.
[quote]
How’s the musician supposed to pay for the equipment? Get a job right?
[/quote]
Do live shows maybe? They do generate money you know….
This whole idea is like ultimate manifestation of capitalism. There will be huge companies that will “promote” some bs to get money from it. If now they try to hunt people who share music, then they will try hunt people who don`t pay the “fee”.
My idea is that artists should get money from live shows, donations and from selling merchandise (like t-shirts and other stuff)
PS “Music INDUSTRY” is complete abomination in my opinion. Music is form of art, industry can`t be art in anyway. Art is here forever, industry only for period when it is profitable.
PPS there is only 1 good point in whole article: current system must die.
Erm, it could easily work. There’s an analogous system with TV licensing in the UK. Sure you COULD watch TV with no licence, but then you run the risk of a detector van catching you. You pay the licence, you get to watch all the (non subscription) channels you want.
Of course, there’s also nothing to stop bands selling tracks either. In that case, you have a choice. use the licence to DL from wherever, or get the track direct from the band, with out having to find a good torrent or the like.
For example, Jonathan Coulton and other CC-licenced artists. I have several of his songs. I bought them legally, but I can also distribute them legally. So, I could have gone looking for a copy, but hey, I could get them off his send, and send him a tip at the same time.
Matt, if you get to this I just wanted to let you know how much I enjoyed reading, and considering, your ideas. Too often the dominate themes on these kind of discussions are presented by people who have clearly little to no idea of what life is actually about. College students? AOL users? State workers (sic)?
I am the first to admit that I steal. None of this stupid “pirate” crap as if pirates were ever something worth emulating. Pirates stole, killed, raped, and brutalized anyone and everyone who got in their way. Maybe a little less time spent on courses like “Defining One’s Inner Self” and a bit more on history, sociology, and economics could benefit a few people. Or maybe hacking into their accounts, finding out where they live, and then stealing THEIR possessions and watching what happeens.
You are right on the mark that we are passing through a time of massive transformations of how we access any number of things and how we will pay for them. Both your commune in Vermount and the complete utter failures of Communism/Socialism throughout the world prove that when no one is rewarded for output then output ceases to happen. There has to be some mechanism that provides the creator of a product with recognition for his/her work. And at this stage in technology it is still unrealistic to assume that there can be a direct and instantaneous connection between creator and user.
Would I pay a monthly fee for content? Sure. I pay for cable TV and Internet right now and, while I may not like the current pricing, I certainly don’t have hissy fits because it is not free. What I want is content that is transferable to wherever I may be and in multi formats. I don’t want any kind of spam/protection/etc included. If it eventually becomes 100% streaming then that’s less hardware that I have to carry around.
Anyway, thanks Matt, and some others here also, who manage to rise above the level of immaturity that usually predominates. You well conceived thoughts make me confident that the future will arrive in time with something that we can all live with. Most of us anyway. :)
[quote comment="267620"]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[/quote]
People will pirate if the risk is low. The risk will only get lower for two reasons:
1) More people are introduced to high-speed internet connections, so more people will pirate. The crowd will be large, the chances of you getting caught will be statistically negligible.
2) Even now, bittorrent has RC4 encryption that protects the piraters from passive surveillance. Encryption technologies will only improve.
More people will pirate in the future. No business model will change this fact.
I’m sorry to sound defeatist (or optimist to some!), but the music industry (I am counting your model as an industry, Matt) is doomed without the enforcement of some serious privacy invasion.
A time will come when people will choose between the right of personal privacy or the right of intellectual property (limited to digitalized manifestations). I have confidence that at least the United States government will choose the former.
“Give me liberty or give me death!”
You cant say that you should put down the price of the cd’s, u buy your music because u like the band or group or whatever. And It’s not the companies fault that downloading is happening, it’s US, if people just bought the cd’s at the price (which even isn’t that expensive). And it wouldn’t change a thing if the price was lowered, because a lot of people would still think it’s to Fuckin expensive..
Great article!
Meanwhile if you’re looking to license music legally for commercial use, try http://www.youlicense.com it’s good.
I had the awesome chance to interview Matt Mason, author of The Pirates Dilemma, for my little blog. It is a 15-minute interview available as an mp3 download.
In this interview Matt and I discuss how the book’s been received, the future of the music industry and some exciting news about Matt’s upcoming projects.
Link is here: http://mymediamusings.com/2008/03/12/my-interview-with-matt-mason/
Thought some of your readers might be interested in checking it out.
Thanks,
David
The customer is always right!
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