p2p news / p2pnet: “Some of the top executives in the music industry have answered your questions about digital music,” says the BBC.

“The BBC News website asked for your queries and gripes about the way new technology is being used – and the eight sharpest, most frequent and most important questions were put to the virtual panel,” it says today.

The piece is seriously unbalanced and wholly one-sided. Even the claim that file sharers “steal” when in fact, no one has taken anything from anyone else, let alone the labels, and no one has been deprived of anything they used to own, is allowed by.

Predictably, the ‘panel’ didn’t feature anyone from the real world of online music – only heavily and obviously vested corporate interests, including Napster, the want-to-be-born-again p2p application which seems once more close to death.

Were the folks running Apple’s iTunes asked to participate, one wonders? And if not why not since it’s the only corporate service supplied by the Big Four record label cartel EMI, Vivendi Universal, Warner Music and Sony BMG, which can be said to be even breaking even?

Meanwhile, the questions asked were:

Q1. Will download prices come down?
Q2. Should iPod users be punished?
Q3. Why buy on the net?
Q4. Downloads aren’t flexible
Q5. What’s the point of DRM?
Q6. Will downloads last?
Q7. How can teenagers be persuaded?
Q8. Have you ever “stolen” music?

‘Answering’ were:

John Kennedy, chairman and chief executive of the Big Four’s IFPI (International Federation of the Phonographic Industry)
Peter Jamieson, executive chairman of the Big Four’s BPI (British Phonographic Industry)
Steve Knott, managing director of HMV UK & Ireland
Brad Duea, president of Napster

Head over to the Beeb site for all the answers. For now, below, mainly for your entertainment and amusement, are the responses to questions 1, 5, 7 and 8.

If you’re drinking something and you’re one of those people who snort liquids through their nose when you’re laughing hard, go no further.

Will the price of tracks or albums be reduced with the more cost-effective digital distribution method? You don’t have to manufacture the CD, package it, send it to the distributor/wholesaler, and finally the shops. Rowan Smith, Exmouth

Kennedy: I think digital is already fantastic value – a track for less than a pound is a great deal for the music fan.

Digital is a great way to enjoy music, but most of the costs of the physical world remain.

It’s a common misconception that the costs involved in making a record equates to the cost of the packaging. The majority of costs incurred by our record companies are for making and marketing the music itself – and these remain the same regardless of how it’s delivered. Artists, composers and all those involved in recording and marketing a track all still need to get paid. Same as when you pay £8 for a cinema ticket, you’re not paying the price of the paper the cinema ticket is printed on.

Jamieson: The costs you lose in manufacturing, packaging and distribution are insignificant in comparison to the major costs in bringing an album to market – namely A&R, business affairs, recording, touring support, radio & TV plugging, marketing, promotion, taxes and all the other business overheads.

There are also new digital costs such as aggregators, the creation, storage and delivery of metadata, payments to credit card companies and additional online marketing and website costs. That said, at around 85p, downloads are still considerably cheaper than CD singles and fantastic value for money.

Knott: Pricing – whether for physical or digital product – to a large extent depends on the wholesale price charged by record companies and distributors to retailers.

While the cost of manufacturing the CD is not that great, this represents only a smaller portion of the overall costs of releasing an album – the main cost of a CD is the investment of the record labels in their artists, recording, marketing and distribution. Hence, even when a song or album is being sold as a download, and thus incurring fewer production overheads, the label still needs to make a reasonable return.

Duea: First, you are correct that with digital distribution the labels have eliminated some of their previous costs associated with physical distribution. However, the labels have incurred some new costs. For example, the costs of encoding the tracks in the various bit rates in which they distribute the songs. Less obvious, however, are the costs the labels have incurred with regard to clearing the online rights for various artists and albums.

Second, in addition to the actual costs associated with the content, Napster also incurs bandwidth costs, storage and other hardware costs, customer service costs, marketing costs and other related costs.

Given that every single digital rights management (DRM)-protected song on the music download networks is still very easily found on any file-sharing network, what has DRM achieved other than alienating legitimate, legal, paying customers? Andrew Livingston, London

Kennedy: Without DRM, the explosion in the availability of music via digital channels would not have been possible. The purpose of DRM is not to alienate music fans, it is actually to improve your access to music.

There are now at least 10 ways in which you can legally enjoy music – the list includes: ringtone, master ringtone, phone download, phone stream, a-la-carte download, disc, subscription, online stream, UMD music for PlayStation, kiosk and video.

Without DRM, these options simply wouldn’t be possible.

Jamieson: DRM is the technology which makes all kinds of exciting new ways of listening to music possible. Certainly portable music subscription services like HMV Digital and Napster To Go wouldn’t exist without it.

Knott: I’m not sure that’s entirely the case, Andrew, and please remember that a lot of illegal content found on file-sharing networks may feature inferior audio or contain viruses. Either way, I still think that it’s right for content owners to protect copyright and manage the distribution of any revenues owed via DRM.

I agree that it may not always be perfect, and can understand frustrations among ‘legitimate, legal, paying customers’, but there is a need to have a system in place to manage this whole process.

Duea: At Napster, while our goal is to make any DRM invisible to the user. The DRM allows us to keep track of what songs are listened to so we can compensate the artists for their work and make sure they keep putting out great music.

While we are trying to make sure Napster music works with as many devices as possible, others – like Apple – do not licence their DRM and are instead electing to create a hardware trap for consumers. Also, the restrictions associated with DRM technologies are sometimes the result of restrictions required by the labels.

Most people in my age group (15) still download all of their music illegally. What action would you take to try to persuade this particular group to buy music? Cole Beler, Bruton, England

Kennedy: To me, if you steal music you can’t be a real music fan.

Think of it this way – apart from potentially landing you a hefty fine, illegal downloading hurts all those whose job it is to create, develop and record music, and who depend on it for their livelihood. How would you feel if you were in a band struggling to break through and no-one paid for your first album? How would you feel when no-one was able to invest in your second album? And as a music fan, how do you think that’ll impact on the variety of new, fresh music that you get to listen to?

The music industry has been working with different organisations to produce guides and online materials to explain to young people why illegal downloading is wrong – see www.pro-music.org/guide, www.childnet-int.org/music and www.pro-music.org.

Jamieson: Music doesn’t come for free, and there’s no reason why the artist who’s spent hours toiling in the studio, or the record label that’s invested millions in the music, shouldn’t be paid for their efforts. File-sharing might not feel like walking out of a shop with a CD under your coat, but it’s the digital equivalent of shoplifting. The fact is that unauthorised file-sharing is illegal. If you do it, you run the risk of legal action.

Knott: Everyone knows about Apple iTunes and, to a lesser extent, Napster, Wippit etc. But last year, both HMV and Virgin launched their own digital services, including the added-option benefit of ’subscription’ elements – so the choice is much greater and expanding all the time. The market for digital music is becoming increasingly more competitive as demand grows, so it’s likely downloaders can expect greater range, including exclusive content, keen pricing and other incentives. In such a context, there are very few reasons why people should not purchase downloads from legal sites.

The music industry is throwing itself wholeheartedly into the prosecution of people it perceives as “stealing” music. Can of the panel place their hands on their hearts and insist, honestly, that they never taped a song off the radio, or from a mate, in their youths? Simon Hayes Budgen, Milton Keynes, UK

Kennedy: You simply aren’t comparing an apple with an apple.

When you use an unauthorised file-sharing service you are effectively acting as a ‘mass distributor’ as whenever you’re online, every other user around the world has the ability to access your hard drive and take what’s on it. Not quite the same as making a compilation for your girlfriend on Valentine’s Day…

As it happens, I never did copy music off the radio – I was lucky enough to have a great record collection thanks to my brothers and sisters.

Jamieson: There is a misconception that p2p file-sharing is somehow similar to home taping, but there is a world of difference between recording the Top 40 onto a C90 and distributing perfect digital copies of songs over the internet to millions of people – and that’s exactly what file-sharing is.

I’ve certainly never risked a legal bill for thousands of pounds by distributing my music collection to millions over the internet – to do so is to rip off artists and everyone involved in making music.

Knott: I’m sure many, if not all, of us have taped a song from the radio or burnt a CD. But that’s fine – and it’s not an issue when people make small numbers of copies for their own use. It’s those people who abuse the process by engaging in serial downloading and particularly ‘uploading’, where they are giving away thousands of tracks that are not theirs to give, that are effectively cheating on everybody else, including other music fans, who possibly have to pay more for their legally acquired music as a result.

Duea: Simon, for years I have made compilations – initially vinyl to cassette and now purely digital. Compilations allow me to create my own personalised playlists for all sorts of events. Also, I used to listen to radio and jump to my stereo to record a hot new song.

Today, technology has made this issue a bit more complex and has turned the recording industry on its head. To address the file-sharing issue, we have been working hard to provide a “carrot” – attempting to attract people from file-sharing networks by providing a better experience.

(Thanks, Michael ; )

Also See:
once more – Is Napster on its death bed?, January 20, 2006
BBC News – Digital music: Industry answers, January 24, 2006

This entry was posted on Wednesday, January 25th, 2006 at 11:03 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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