The future is here but is the music biz in it?
By Graeme Philipson | theage.com.au | 12 February
The music industry is in big trouble. It may not be an exaggeration to say it is dying. CD sales are way down, and both legal and illegal music downloads are way up.
The concept of the album is disappearing. The Economist magazine, in a story on the phenomenon in an article last month, recounts an interesting little tale from 2006.
Music company EMI, keen to hear the views of some of its customers, invited a group of teenagers into its London headquarters to ask them about their music consumption habits. At the end they were thanked and asked to help themselves to a big pile of EMI CDs on the table.
None of the teenagers took any. They didn't want them. "That's when we realised the game was up," says one of the EMI executives.
The game is indeed up, though many in the music industry don't realise it. Years of price gouging, market manipulation and the artificial creation of "hits" and "artists" have come finally caught up with them. Digital technology and the internet have brought them undone.
Their business models, their industry structures, their very reason for being, are as anachronistic as slide rules and telegrams and other technologies made redundant by the triumph of digital computation and digital communications.
Stop for a moment and think why the music is even an "industry". First, what exactly is an "industry"? The Macquarie Dictionary's first definition is "a particular branch of trade or manufacture". That will do.
The music industry's problem is that its monopoly on both trade and manufacture has disappeared.
Anybody with a few thousand dollars' worth of equipment can record and mix music of equal quality to that which once needed an expensive recording studio. And anybody with an internet connection can promote and distribute the stuff.
The music industry made (past tense) its money by finding musicians, recording them, promoting them, and distributing the product - records and, in latter years, CDs. They managed (past tense) every phase of the cycle.
They could (past tense) control every one of these phases. It was (past tense) impossible for a musical artist to find an audience big enough to provide an income without the music industry. To be "discovered" and awarded a recording contract was the dream for every struggling young artist.
That model has changed so much in recent years that it is already unrecognisable. Every link in the chain has been broken. People can record themselves, publicise themselves and distribute their output with no input from the music industry.
The final distribution phase has been under attack for years, ever since people discovered the power of the internet for peer-to-peer sharing and music downloading. Now artists are going direct to consumers, reverting to the same sort of pay-for-performance model that existed before the perversions of copyright law changed the natural process.
The music industry's response to these changes is to resort to bastardised technologies such as so-called digital rights management (DRM), which prevents people from transferring music from one medium to another. Or suing individuals for downloading or sharing music (in one case in the US last year, a woman was fined $US220,00 ($A245,500) for downloading and sharing 24 songs).
As many are coming to realise, such actions are doomed to failure. One does not adapt to the future by shoring up the past. A couple of years ago, when I wrote about the inevitable death of copyright, I received a barrage of emails from people who worried about their livelihoods under the new regime.
They needed to adapt, I told them. A few of them said that I, as a journalist, was benefiting from the very regime I was criticising. Not true, said I, as a freelancer I write once, get paid (once) by the word, and move on - the time-honoured and natural pay-for-performance model.
In Cannes last month, at a major music-industry conference, a company called Qtrax announced a free online music-sharing system from all major music studios. It was forced into an embarrassing backdown when the record companies said that no deals had been done.
Qtrax jumped the gun. It's pretty obvious that agreements had been reached but were torpedoed by senior management. It will happen soon.
Now, here's another thought.
Everything I have said above about the music industry also applies to the film industry.
It's harder to make films than it is to record music and the content is a lot bulkier in terms of storage capacity. But the principles are the same. And the film industry is putting up the same outdated arguments, employing the same self-defeating bullying tactics and being just as myopic as the music industry.
Something has to give. The absurd star system, under which a few select individuals are paid an enormous proportion of the movie's production costs, is doomed. Corner video shops will not be around a decade from now (the chains are already looking at how they can get into the download business).
The music industry and the film industry have atrocious track records when it comes to understanding the future and the way technology changes business models. They are inherently conservative. They try to hold on to the past, rather than look for ways they can use changing technology to embrace the future.
Quite simply, they refuse to evolve. As Darwin taught us, that is a recipe for extinction.
First published by TheAge.com.au on February 12 2008
Visit theage.com.au for the latest news updated throughout the day
