Monday, May 08, 2006

Protecting Copyright AND Consumers

Why do record companies think they have the right to guaranteed earnings and profit?

Back in the days of vinyl pressings the record companies had a pretty sweet game going.

There were precious few recording facilities that had the ability to make first rate recordings that would be suitable for pressing and subsequent marketing.

There were limited facilities for actually making the pressings.

There were a limited number of wholesalers and rackers to distribute the products.

The only effective marketing channel was the radio networks and independent stations. And, perhaps some trade magazines and special interest publications to advertise through.

The “Major” labels could and did effectively control the Artists, the Studios, the Recording and Manufacturing process and the Distribution Chain. They had the power to decide what was recorded, what you heard, what you could purchase and how much you ended up paying. In fact the situation resembled a cabal of very powerful special interests that held an effective monopoly over the entire music business.

Good or bad that was just the way it was.

But, digital technology has been a disruptive force for/of change that the “Old School” labels have been struggling with all along. Whether in form the original digital audio tape or DAT or the various other forms digitally recorded media that have been experimented with up to and including the extremely popular and successful CD format, The Labels have been seeking to limit the use of or restrict the ability of users to copy the products since day one of the digital revolution. They have lobbied governments and regulators to mandate that consumer equipment be built to prevent unauthorized copying. They have tried to restrict the sale of equipment and media so as to limit the ability of the consumer public to reproduce the material.

Of course, none of this ever did any good.

Consumers obtained the means to do what they wanted to do which was reproduce, collect, share and even create their music and their passion for the art. This resulted in more widespread awareness of artists that were otherwise ignored and to an extent greater sales across the board because of demand for recordings. Besides providing the ability for consumers to access more music and artists, the artists could create homemade recordings of unprecedented quality and quantity. And, record company earnings continued to increase.

Then - Along Came the Internet which with MP3 encryption and widespread “Broadband” access for households expanded the phenomena of “Sharing” music exponentially.

The record labels have been quick to claim massive losses and have absolutely no compunction about going after their own customers in the process of rectifying the situation as they see it. They have gone back to regulators and governments to get help in the form of legislation to attack users and seek damages from the anyone and everyone they can identify (rightfully or wrongly)!! They claim that the copyright laws are antiquated ( because they do not serve them ) and that laws need to be changed or created to allow them the continued privilege of exclusive and unfettered market control. They claim they need to have the right to seek damages from consumers for the use of the material they claim to “Own”. They seek to have governments entrench their supposed right to hold a monopoly over the business. Some big name artists view this as the way to go while others disagree.

As I see it….They have it completely wrong.

If the record labels want to play in the egalitarian world of global digital connectivity they first need to understand that they have no right to try to control this world. That they are in fact simply facilitators who provide access between artists and their customers.

What they can and should be doing is to become the suppliers of content through the digital medium without regard for who ends up with it.

For instance: If the recording companies would facilitate downloading of licensed recording by selling downloads directly to their customers they could avoid the bulk of all the problems they face.

- They eliminate the cost of manufacturing CD-s

- They eliminate the cost of packaging the physical product

- They eliminate the cost of physical distribution

- They eliminate the “Middle” men of the wholesale/retail chain

By eliminating these processes and costs they can reduce the price to the consumer to the point where almost everyone would choose to purchase a high quality and legal downloaded copy of the artists material. Subscription plans and discounts for quantity purchases would encourage loyalty and improved volume of sales. Its so obvious!

If the record labels insist on trying to maintain the ways of the past they will go the way of the dinosaur. Fighting progress is always the wrong path. Trying to fight the enabling forces of widespread internet access and digital media is just stupid because the artists and the consumers will find their way to make it work for them at the expense of those dinosaurs. We consumers do not have to grant the Record companies or the big name corporate artists the right to control what we listen to.


Anonymous Mac said...

Good points all. The music industry is evolving whether they like it or not. What will they do when independents bypass them completely? It's not far off.

Our copyright laws are woefully inadequate to address the "new" world which has allowed an enormous underground economy, mainly based in China, to exploit our marketplace. The profit margin on copyright infringing products is better than drugs and the criminal penalties are next to meaningless.

5/15/2006 2:26 p.m.  
Blogger PGP said...

Now that is the problem....

5/16/2006 10:49 a.m.  
Anonymous Mac said...

When I was working at Federal Enforcement Section, we tried to interest our administration in enforcing copyright law but they look upon it as being a victimless crime... low priority...

We did manage one investigation which caught national attention. Do you remember the huge seizure of BeyBlades, a spinning top toy, in November 2002? It was THE toy of that Christmas season so China was pumping out huge numbers of knockoffs and shipping them by container load to Canada.

China has different safety standards than ours (ie: they don't have any) and the plastic in the toys contained significant quantities of lead and were prone to disintegrating when used vigorously.

When it went through the courts, the importer (doing business in Canada while on a visitor's visa) got a $15,000 fine. He arrived at court driving a new Escalade. I wonder how much income tax he pays? Lucky crime doesn't pay, eh?

5/16/2006 8:58 p.m.  
Blogger PGP said...

Good example.....
The music business is getting ripped by commercial fraudsters but their approach to the problem is stupid.

5/18/2006 11:38 a.m.  

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