Radio & Music

On movement in my view of the "Future of Music"…

As ever, I should probably remind people that unless explicitly stated, the views on this weblog are my own and not those of my employer, the glorious and all-powerful British Broadcasting Corporation. I salute thee, Oh Auntie!

(Oh, and I’m not going to pretend that the post that follows has been particularly well worked-through either. I’m more than aware of its shortcomings so please don’t view it as a complete shiny essay – it’s more like thinking in public.)

A couple of nights ago I downloaded a show from ITConversations on the Future of Music. It featured an interview with two guys who have written a book called something like The Future of Music. I believe they have a weblog too. It’s called The Future of Music. A good name can get you a long way, I guess.

The show was about what kind of shape a future world of music might take. It concentrated on the old staples – how will DRM work (if it will work), where’s the business model, what about P2P, what are the copyright issues etc. There wasn’t an awful lot of ideas in it that I hadn’t heard before – and there wasn’t anything particularly worth disagreeing with. But what was interesting to me was how one of the models that people were proposing a few years ago suddenly started to make more sense to me. The concept – which I think is one that Jim Griffin was particularly associated with (I heard him speak at the Aula Exposure event a few years back) – was to stop paying for the music per se, and instead levy the distribution channel (your broadband connection). Then some kind of organisation or body or group of companies were charged with collecting and redistributing this money to the artists and rights-holders concerned based on the proportion of bandwidth consumed by exchanges of tracks by any given act.

Now people have been trying to persuade me for years that subscription models for music are the best ones – that an individual should pay some kind of monthly fee for access to all the music in the world. There are a number of different models of subscription, but the most common one means that when you stop paying for the service you stop being able to listen to the tracks. This model is a simple extension of the fact that you don’t really own any songs anyway – you’ve only been given the license to play them.

This is not a model that has ever particularly appealed to me, and I suspect it doesn’t sit well with a large proportion of consumers either. I know that many people feel very uncomfortable with the idea of committing to subscription payments – particularly for untried technologies. In the UK this is precisely the reason that pay-as-you-go phones became so huge. In addition, I still have the sneaking suspicion that people like to think of the media that they buy as somehow belonging to them. They’ve confused the physical object with the material stored on it, and now view any attempt to recast that relationship as an attempted coup to steal rights from them.

On the other hand you have the iTunes Music Store model for selling music digitally. This model – that you should pay for a song and that from that moment on you can sort of use it like you could if you owned the CD – is the most familiar to people as it most closely resembles offline models. As such it seems the easiest to sell to people. But of course until Apple came along, it didn’t seem to be catching on at all. Why? My personal opinion is that (again) people felt like the recast relationship around music was a con, that companies were trying to stop people doing things that they thought were perfectly reasonable. People felt that they no longer ‘owned’ the track. Which of course they didn’t. They never had. But the feeling was still very real. The genuis of the Apple approach is to make it seem as much as possible like you own the track by opening up what you can do with it until it’s just a touch wider than most prosumers would expect.

The problem with this approach is that what makes it so attractive has to also be its fundamental long-term flaw – that it’s based on trying to simulate the economics and business practices of very different environment on the internet. This new digital environment operates with files that are easy to pass around, distribute and copy. The survival of this model depends (some argue) on breaking what makes the internet great, rather than trying to build on what should be apparent and fundamental – if new and challenging – foundations.

Now I’m not sure I buy this rhetoric. I’m not sure I’m convinced that the natural conclusion is an internet where data is free and privacy is absolute – but I don’t think the main threat comes from legislation, I think it comes from people pushing for new mechanisms to navigate through the enormous – huge wealth of content and video and audio and stuff that’s coming increasingly online. If you want to read about why I think that, then the next paragraph spells it out in rough detail. If you’re not terribly interested, then skip ahead past the italics.

The question becomes does: will the ever-permeating, ever-present, pervasive and ubiquitously networked world of tomorrow turn into a place in which it’s easy to enforce existing copyright laws, or does it not? The push we hear from copyfighters is that it’s against the very nature of the environment in which we’re operating that the movement of data should be restricted. But actually creating a relationship between one thing and another thing is a core part of pretty much every single system that runs the internet or powers a computer. Which then brooks the question – will people walk willingly into systems that can limit what they can do with their media, or will they look towards free services and P2P to help them find what they want for free? And the answer is in the question – people will indeed walk willingly into systems that limit what they can do with their media in one space if those same systems also open up greater possibilities elsewhere. I speak as an Audioscrobbler user who lets a centralised system record in detail everything I listen to and then expose it to the rest of the world. I speak as the adopted-owner of a Tivo and as a user of Amazon – both of which are continually recording the things I’m buying or like or express any kind of interest in. I walked straight into these environments because telling them things, allowing them to associate objects / property / media with me, allowing them to track me, provides me with enormously poweful ways of discovering new music, finding good television, buying cool new things. People will, in a nutshell, cheerfully sell their rights down the river for some cool new functionality and most of the functionality that is coming depends on being able to maintain a consistent identity online, and letting other systems respond to your behaviour and to compare it to the behaviour and interests and passions of others. My opinion is that the iTunes model that supports conventional copyright could work in the long term – if the discovery functionality, recommendations functionality, engagement and social functionality that surrounds media only works with ‘official’ versions of media. There’s an immense and ever-growing sea of available media appearing all around us. We should never underestimate how hard it’s going to be to navigate and how many areas we’ll leverage to find our way around it.

I believe that traditional concepts of ownership of music could very easily remain in place, and that the iTunes model may not be a dead-end at all. If that’s a place we don’t want to go (and I want to make it clear that I still think there are possibilities down that road), then we have to look to radically different models. I think we’re at a position where we must start thinking about the direction in which want to move, even though it may be ten years before we get a sense of whether it was the right way to go. The choice we have is between useful and functional models that replicate real world limitations and physicality and ownership (but could still facilitate the building of fascinating and novel things), and radically different models which look for money in completely different places – one of which is the levy form. I am unclear which one is more plausible to work in the long term. Perhaps we should choose on principle and hope for the best.

Back to the levy model. You pay for music when you buy a blank tape. You don’t pay as much as you would for a CD, but a certain amount of the cost of each blank tape goes towards the music industry. I believe that they split the revenue according to the proportion of artists who are selling stuff in conventional marketplaces. I imagine it’s managed quite badly. So what if on every broadband subscription (with rates varying on bandwidth) you paid an extra monthly levy. In fact, not just you – everyone would pay the levy. And this money wouldn’t go to subscribe to any specific music service, it would literally just to pay for the right to have complete access to all the music in the world – distributed via the internet, on P2P networks or on promotional websites or given to you by friends or family. And if you don’t pay – if you become nomadic and start between cities – then that doesn’t really matter, all your songs would still work, you’d ‘own’ them as much as you ever did. They wouldn’t vanish. The assumption would be that everyone paid for everyone to have access to as much music as they wanted. Varying the rates on bandwidth would mean that the people who downloaded a lot of heavy media files would pay more for the privelege that people who didn’t.

And what would happen to the money? The aggregated value that everyone contributes towards their access to music would be split among the artists (or their representation) by the proportion of the total bandwidth used to download or distribute their work. The long-tail comes into affect here. Yeah sure, the big artists would still get half or over half of all the revenue. But the long-tail would still get some money, and if tracked correctly you could make it financially profitable to distribute music online even with very limited exposure. Significantly, though, co-existing business models could still function. You can still sell CDs until people see no value in them. You would have to persuade sites like CDDB and Gracenote to accurately identify the tracks that were being distributed in some way, I guess (or you could place digital copies on every CD). And since there’d be no incentive for piracy by individuals, there’s no reason for them to try and break the system. They can play anything anyway.

Other positive aspects of this model – it doesn’t conflict with normal rights stuff. You can still make it so that an advert or TV show or radio has to pay to play your song. You wouldn’t have to centrally host all of the files. It wouldn’t matter who held them in fact, which means that P2P traffic could explode lowering costs for record companies. And because you still get more money the more people download your tracks, there’s still an incentive to pay to develop and artist, there’s still an incentive to market them.

Now I want to make something clear. I’m not necessarily advocating this model, I’m just saying that there has been significant movement in my sense of what’s possible in this area. I’m beginning to realise that there might be ways to take some aspects of the the way the internet operates and actually build new forms of market around non-physical property and digital distribution that are in a completely different direction to markets based on scarcity.

But there are of course, enormous potential problems too – who gets to set the levy (presumably government or some independent, but government affiliated watchdog with a clear process and formula for deciding it), how much to set it at (do you just say that you expect a thousand or ten thousand artists to be able to make a basic living wage from sales alone and then let the curve sort itself out around that?). And then there’s a huge issue of who would collect and redistribute the money. And then there’s the issue of whether it’s against free market principles and doesn’t it all sound a little too communist or something. And that’s before you even get to the technical difficulties – identifiers, tracking file-sizes and bandwidth consumption, how to sample, how to check they’re misassigned, audio fingerprinting etc. etc.

But all of this is kind of irrelevant to me. The core point is that our understanding of the internet, of this weird new world we find ourselves in is slowly reconfiguring our most basic assumptions of what we expect from the world, from the market, from each other. It’s changing how we think about property and about how people relate to things. I would cheerfully burn all of my books and novels and DVDs and photos and CDs right now if I could get good quality digital versions of all of them. And I’d never have said that two years ago. Models that only two years ago seem laughable now only seem impractical. Maybe there’s hope for new models of the future of music after all…

14 replies on “On movement in my view of the "Future of Music"…”

I often think back to how when Sony was sued by the Big Movie companies here in the USA. They thought the VCR would spell the end for the movie industry…. The same is happening here. Once a DRM that allows for cross-manufacturer use of media, the industry will see a huge boom… just like the Big Movie companies did once people started to rent video tapes.

It took a long time for me to finally get persuaded about the subs model for digital content too, but the ‘Channel’ one makes the most sense – a little content-tax on your broadband, mobile or other connection to the internet.
There are two things about this ‘future of music’ that need happen to make this work, but we are really close. One is sorting out a meaningful way to slice pot of cash raised by the channel-levy. A good way would need to be an *anonymous* tracker of what you play and how often, on all the content playback devices that can, that sends this data to a central online organisation. All that stuff is not very far from what Audioscrobbler can do now.
The second excellent thing that happens if you get the first right is that as an artist you no longer need a middle man to get paid (ie. record companies in the longer term become redundant) and that is where our happy Long Tail kicks in bigtime.
We’re talking music, but this could apply equally to most digitisable content including TV. The middle men in TV would be your networks/broadcasters in this case.

I read the book a few weeks back, and it’s definitely moved me a lot closer to being enthusiastic about a subscription model. I think the thing that swayed me was considering how much easier it would be to check out friends’ recommendations and to make recommendations back, and the potential for artists to see a more immediate return on such investigation.
Within the subscription model there’s potential for revenue from content discovery/recommendation services, but I suspect they will have to be built on social roles to really be effective. The other area that I’m interested to see develop more is some sort of seed-funding for artists to replace record label advances. As the authors rightly point out, the overheads of recording have reduced considerably lately, but many of the great albums cost a lot to record because the ideas needed space to develop, and some way of supporting artists devote that time will remain important.

The part that really bothers me about levies and distribution of the collected money is the blunt and centralised nature of it. It’s really very hard to work out what is music, what is a musician and how to get the money back to them. The most likely scenario here is the Canadian one. A government controlled tax on music distribution and playing devices, with a proportion of that paid to large content ownership organisations, and a proportion of that paid to endentured artists according to some rading of their popularity. So where do the independent labels sit in this, and the independent artists who aren’t (yet) signed to a label at all?
I tend to a different view. The cost of producing music (and other forms) is dropping. The barriers to entry are dropping (there’s another debate about “real” drum and orchestral sounds and their cost). The cost of distribution is dropping. The cost of PR and marketing is dropping. And so just like every other business that technology touches the cost of the product ought to drop. Maybe not halving every 18 months, but at least a factor of 10 every 10 years.
So what iTMS and the other services is actually selling is convenience and search. We’re leveraging the cost of digitization, hosting and search across all the buyers instead of doing it at minimum wage ourselves. It’s just plain easier to buy a properly encoded, tagged and named track than it is to either rip it yourself or download from a P2P site.
At which point, I reach the AllOfMp3 model. Let’s have every bit of music ever recorded, available in your choice of codec, without DRM, charged by the Mb of download (because that’s the service’s real cost of sales). Now have a three way sliding scale so that 1st run content is about $1 per track for 3 months. Then $0.5 for 9 months. Then $0.1 per track ever after.
Just Say No To Drm

I wrote some notes from a similar angle a while ago, although you can see that I was only just reaching the point where subscription/levy models become a natural conclusion.

Unencumbered by bizarre and artificial notions of copyright and ownership, the kids will sort it out, I reckon. The people operating in the long tail will have the opportunity to race past artists locked into traditional distribution deals. People I know are already being discovered on sites like myspace, and turning down offers from record companies because they don’t need them – thousands of people already listen to them and download their tracks. Kind of like a load of Sunday-league footballers getting good enough to play in the Premiership but only being offered Conference wages. (They’re not stupid though – make them an offer they can’t refuse and they’ll take it.) Shades of the mass amateurisation of everything? Maybe.

More thoughts: in the UK, wasn’t it once possible to buy a license to record from the radio? Would you buy a downloading license? (If it was registered with ISPs, they could refuse to pass on your details to copyright holders, who would instead have to apply to the licensing authority for compensation).
Is there any doubt that free downloads promote music sales? Why not ask Amazon?
Oh, and why not a levy on players rather than channels? Tax the ipod!

People will always give up some freedom in exchange for convenience and quality from something or someone they trust.
I don’t own physical copies of much of my favourite music.
How long before all the music I have playing in my head – but don’t actually own – can be read from my brain by a chip and then pushed to a portable device!

tax the IPod you say?
They’re going to do that here in the Netherlands.
We’ve got the sort of model described in the post, where you pay a surcharge on blank media and the organisation that controls this is argueing that mp3 players fall under this too, suggesting a surcharge of approx. 4 euro per gigabyte.

Tom, you’re hilarious. I have a question for you regarding my pathetic blog. Although I can’t imagine you’d be willing to entertain newbie questions! But I can’t figure it out, darn it. And yes, I’m Google savvy, just not savvy enough to find the answer I need.
Contact me?
Carla Beth

All of this seems to imply a concept of the internet curiously focused on a publication model – and on a very narrow view of who counts as an originator of valuable content.

Focusing on bandwidth consumption as the variable has some significant problems. It might just work, with considerable unfairness to some individuals, for personal accounts with ISPs. But what about organisational users? I might have an internet connection for the purpose of running a company and needing to move large data files around. It’s not obviously reasonable to levy bandwidth to compensate copyright holders when I already own the copyright on the data I am moving. But I can’t be exempted either – that would just created two classes of connection, and it’s not hard to see possibliities for gaming that system.

If the internet ever does turn into the BBC, some version of the television licence might be as good a way of paying for it as any. But I see no prospect of that happening – and even the BBC is getting less and less like the BBC in this sense.

Even if the problem of setting the scope of the levy could be surmounted (or ignored), the question of dividing up the spoils returns. It is hard to see any basis for doing so which does not at some point have mainly to do with the relatively popularity of artists’ work. That means that it will be necessary to collect data – and that, levy or no levy, is going to get us back to all the problems we have at the moment.

All of that suggests to me that Julian Bond has something closer to a feasible answer in his comment above than a levy-based model can offer.

Levies (ie compulsory licensing) are politically unwieldy in the USA. Artists will never agree to it. (See my preliminary 2003 thoughts on it).
I think a tipping/donation model is viable still, provided that a website can strike a balance of giving individuals the opportunity to tip without banging their head on the idea. The real question is: why don’t artists put tipjars on their websites?

As was pointed out by Julian, Canada taxes blank media storage and tranfers those levies to SOCAN, who somehow distribute it to Canadian artists. They have lost their attempt to have the same arangement with ISPs.
I am not certain that the resistance to subscription models is about the feeling of “owning” the content. A similar subscription approach already exists with Cable TV. We pay for Cable TV on a monthly subscription basis and in return we get access to over 100 channels of programming. It is not a big step to say all music ever created is now available on channel 101 for $9.95 a month.
With movies: Some of us still choose to purchase the ones we like to see over and over again. Music is the same. We have our favorites.
Having Real or Napster or anyone tell me I have 1 million songs at my finger tips for $9.95 is irrelevant. I will never listen to a million or even 100 thousand different songs in my life time. I only have the capacity IF I am lucky to discover 100 new songs that I like and will listen to again this year. A subscription model will cost me about 120 dollars during that year, and once it is over I losr my songs. As a rational person, I would rather pay for the 100 new songs and be able to listen to them year after year. Total cost aabout 100 dollars.

Why Music Subscription Models Fail
This interesting post by Tom Coates is touching on the question I posed earlier and is quite an insightful read if a bit long. However, it touches on what I consider the biggest misconception about why subscription models are failing….

Comments are closed.