http://songbytoad.com/2010/02/owning-information-and-terminating-debate/#comment-41555
I help run an independent label, so I'm writing from that perspective.
We really don't have a problem with bloggers writing and sharing individual tracks on a release, as long as they use the "covermount" track we provide to everyone for free, or get permission from us to use another track. We do have a problem with bloggers posting entire albums and we file complaints against them with their hosting service provider.
We have our own semi-automated system (which I wrote myself) to deal with the actual takedown notices. It's more expensive to do things this way, but using the automatic systems the IFPI and others have developed comes at a cost in terms of the relationship artists and labels have with the fans. I think the industry organisations like the IFPI and its members the BPI and RIAA are far too heavy-handed with fans and people, like bloggers, who have less traditional roles in the music business. Educating people about the difference between what a normal independent artist earns from their music, and what a major-label-manufactured "act" makes seems like the right approach. Let's just say that almost of the artists on our label won't be quitting their day jobs any time soon.
Over the past 15 years, a new generation of music fans has developed in an environment where music is omnipresent and seemingly free. Music is not given the same value that previous generations might have attributed to it, and it is now difficult to explain how those 15 years of "free" were actually paid for by the people who produce music.
Of course there are "bloggers" who produce no original content and share entire releases, often ahead of the official release date. I don't think these bloggers are motivated by any (or much) genuine love of the music. I think their motivation is similar to that of the pirate/cracker BBS community in the computer software world--prestige and bragging rights--but these bloggers can't even claim to be particularly clever since ripping a CD is not even remotely as difficult as overcoming copy protection on software.
]]>It's hard to get statistics about how much illegal downloading actually takes place, but since they linked to our image, our server faithfully kept track of how many times someone loaded that image on the blog. In the month of October, that image was downloaded 31,000 times and so far in November, it's at 12,300 hits. That's a lot of hits for one release on a small independent label.
As an aside, I've since taken steps to make sure that hotlinking on our site doesn't work very well. I'm sure they'll be surprised to see the images have changed.
]]>Some artists choose to sell their copyright to labels in exchange for the money necessary to make a recording (an "advance") and an ongoing share of the sales of that recording after the label earns enough in profits to cover the advance, production and marketing of the release. This is called "recouping". Among independent labels, the artists share is often half and sometimes even more. Major labels generally do deals where the artist gets a much larger advance and a smaller share of the sales, with the assumption that the sales will be much higher due to the investment the major label can make into getting the recording into the public eye.
In the world of physical releases, the label will take the final master recording and have it made into a physical product, or several, based on sales projections it has made. The product is then shipped to distributors, and then on to retailers, who put the release out for sale.
Where digital distribution is concerned, the label may choose to deliver directly to retailers or to use a so-called "aggregator", which is simply a digital distributor. Regardless of who actually does the work, they take a copy of the master recording and convert it into one or many file formats that the retailers need to "ingest" the release into their system, then they add all the information retailers need to have about the recording--the "metadata". The metadata is almost never just the titles and names on the recording, but also the right holders for the recording and the artwork, the territories in which the release may be sold (yes, even on the internet), the release dates, and some guide information for pricing the release. All of this is then packaged up in an agreed format and sent to the retailer, who puts the product up in its online shop.
From this description, you can see that the people who profit from this supply-driven system include songwriters, performers, record companies, distributors and retailers. Each step along the music supply chain is dependent on the premise that the artist has the right to sell their music and that there is someone willing to pay to listen to it.
Who benefits from illegal file sharing?
How illegal downloading of music works is probably easier to explain if you follow back the supply chain from the consumer. Of course, there are also more philosophical implications from looking at things this way, and it does appear as though the illegal system is, in large part, demand-driven.
The basic scenario involves someone who is looking for music to download for free--an obvious benefit over having to pay for the music. The downloader has quite a few options for getting new music, such as using software to connect to a peer-to-peer (P2P) network, file sharing forums, browsing blogs, searching on "pirate" sites, and simply asking for something via instant messaging (IM). The supplier may change, but the thing that does remain constant is that all the downloads go via a connection that is provided by the the downloader's internet service provider (ISP).
On the other end, there may be someone connecting via their own ISP, or a site that is on the network of a hosting company (HC). Regardless of whether the download is located on a dedicated web server or on a number (often a large number) of personal computers connected via a file sharing protocol, there is one more commonality in the illegal download supply chain--the uploader.
What exactly motivates uploaders depends on the means of distribution. For example, the BitTorrent P2P protocol (which is also widely used for perfectly legal downloads) discourages "leeching" by throttling their download speed according to how much they upload to others for a given file--helping make sure the download remains available. Thus, motivation is built in. With blogs and file sharing forums, often it is a feeling of prestige that motivates uploaders. With forums in particular, members can earn "kudos" from other members for uploading files. With so-called "pirate" sites, uploaders are often members of groups who compete with each other to provide the best / most popular material the quickest, analogous to the groups that crack the copy protection on computer games.
The owners of these sites can also benefit financially through advertising revenues. Nothing is quite as appealing as "free", so these sites often have very high traffic, making them attractive to advertisers. You will frequently see advertisements from perfectly legitimate companies in places where illegal activities are taking place. In addition to paying a site owner, advertising revenues are used to pay for the costs of maintaining the site, such as hosting fees (from hosting companies willing to host such sites), and so these HCs also benefit from illegal downloads.
It is the ISPs who remain the common denominator in this entire system. While stopping short of actively encouraging illegal activities, many ISP customers consider the ability to download music for free as part of the package of services the ISP offers. Of course downloading music isn't really free, since you have to pay an ISP for a connection to the internet. And thus the ISP also benefits from illegal downloading, with customers buying faster services with fewer download restrictions in order to be able to access more "free" content.
The Shadow Economy
We have seen that the parties who profit directly or indirectly from illegal file sharing are the downloaders, the site owners, the advertisers, some hosting companies and the internet service providers. The fact that many advertisers, HCs and ISPs profit from illegal activities has created a shadow economy which, on the face of it, is legal, but which isn't particularly ethical. In fact, the fact that these companies benefit from illegal activities encourages a kind of wilful ignorance of those activities.
This shadow economy has external power, as well. Governments don't like to involve themselves in matters that can end up being very messy, so are loathe to take on anything without a clear legal mandate. Solutions have been suggested and experiments have been carried out, such as the recent UK-wide letter-sending scheme in which ISPs sent out letters to their customers who were caught by (major label) record industry organisations while distributing illegal downloads.
I doubt whether such measures will have any effect without the threat of access termination. This was just about the only point on which I agreed with the BPI and IFPI at a recent talk I attended where the spirit of the discussion indicated the move from scaring 15 year-olds with legal action to sticking it to them using technical means. Unfortunately, BPI research from the beginning of March this year indicates that abstract warnings do not appear to affect the average illegal downloader.
Monetise It
My personal preference for addressing the problem is a monetisation scheme in which ISPs monitor customer downloads and the customer is charged for the download. There are a couple of problems with the idea, though, not the least of which is a privacy issue. One could argue that any right of privacy ends when the activity becomes illegal, but I personally would not feel comfortable knowing my ISP is actively monitoring my every move regardless of any legal issues. Another problem with the monetisation scheme is how to charge the customer. Do you add the price of anything the customer downloads to their monthly bill? How do you determine the price? In a perfect world, the artist or label would set the price, but in the digital world, nearly all retailers reserve the right to set the price at what they think the market will bear. What it all boils down to is this: Should ISPs be treated differently to retailers where recovering money for artists and labels is concerned?
]]>The second explanation is about compatibility and storage capacity. Audio device manufacturers only support certain formats. I think it's safe to say that most devices on the market today support MP3, which is the de facto standard. And since MP3s don't take up much space, the audio device manufacturers don't need to make devices with a lot of storage. However, if this is the case, why haven't more manufacturers opted for Ogg support, since Ogg files sound better and are smaller at the same bitrate? And as storage decreases in price, will there be more interest in promoting lossless formats.
And what about Apple promoting its own proprietary formats? Why does ALAC exist when FLAC does the job better?
My last theory involves planned obsolescence. What if retailers are offering products in a low quality because they know it means that they can sell it to you again when the devices improve to the point that it becomes apparent to most consumers that the sound quality of their MP3s is horrible.
]]>It is with great sadness that we are reporting some major changes here at Touch and Go Records. Many of you may not be aware, but for nearly 2 decades, Touch and Go has provided manufacturing and distribution services for a select yet diverse group of other important independent record labels. Titles from these other labels populate the shelves of our warehouse alongside the titles on our own two labels, Touch and Go Records, and Quarterstick Records.
Unfortunately, as much as we love all of these labels, the current state of the economy has reached the point where we can no longer afford to continue this lesser known, yet important part of Touch and Go's operations. Over the years, these labels have become part of our family, and it pains us to see them go. We wish them all the very best and we will be doing everything we can to help make the transition as easy as possible.
Touch and Go will be returning to its roots and focusing solely on being an independent record label. We'll be busy for a few months working closely with the departing labels and scaling our company to an appropriate smaller size after their departure. It is the end of a grand chapter in Touch and Go's history, but we also know that good things can come from new beginnings.
(Corey Rusk, quoted in [1])If this has happened to Touch & Go, it could happen to almost any independent label. I hope this news isn't a prelude to a rash of other closures. I really feel that mid-size independents have been hit much harder by the changes in the music market that have led to a large overall drop in sales across the industry. The tiny labels have no overheads and few staff, if any, and the majors can live off the fat of the land. But with the mid-sized independents like T&G, there isn't any fat to begin with, and it's incredibly hard to find anywhere to cut. And what does get cut are the vacations, the evenings and weekends at home and any sense of optimism about the future of the music business.
Of course you have to ask yourself whether having your catalogue available in every little digital retailer is important to you. As of 2005, Apple was said to have 70% of the digital retail market share. This is probably lower now, with all the competition from other retailers that have entered the market, e.g. Amazon MP3, but you can probably cover 90% of the market with just a few retailers, especially if your label's genre is well-represented by a certain site, e.g. Juno for dance music.
At one point, Apple was actively looking for labels to submit their music to iTunes via iTunes Producer, an application that looks and acts much like iTunes. iTunes Producer is supposed to make it easy to send Apple your content and controls the ripping, metadata entry and upload phases of content delivery to iTunes.
Another business model is that used by Consolidated Independent (CI) in London. If you negotiate a contract with a digital retailer, they can do delivery for you. The main advantage to this is that once your catalogue is submitted, you still retain control over it. This contrasts with digital distributors who still retain control over your catalogue because the retailer has no direct agreement with you. If you change your digital distributor, your catalogue has to be taken down and re-submitted.
As far as I know, none of the other retailers is really interested in dealing with smaller catalogues because it is simply too much trouble for too little gain.
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Industry rule number four thousand and eighty
Record company people are shady
So kids watch your back
Because I think they smoke crack
I don't doubt it
Look at how they act."
A Tribe Called Quest
"Check The Rhime" from Low End Theory