#967201 - 07/16/01 10:46 PM
The Online Music Debacle
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Anderton
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Registered: 01/28/00
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The following is copyright 2001 by Robert Scott Lefsetz and is reprinted with the permission of the author. It's a long post that covers a lot of topics, but I thought you'd find one record industry person's perspective on the subject interesting...comment away! - Craig
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The consumer wants:
1. MP3s.
2. All recorded music available. At least the stuff in print. Preferably also the stuff that's OUT OF PRINT and that which was NEVER IN PRINT (i.e. unreleased/bootlegs).
3. The ability to transfer said MP3s to a hand-held device (i.e. Rio). And to burn CDs.
If the above is offered to the consumer, he will pay a reasonable price for it. However, record companies are planning on offering NONE OF THE ABOVE!!!
Let's start with MP3s. Microsoft is trying to replace the MP3 with Windows Media Audio. This looks advantageous to some record companies. After all, WMA offers copy protection. Yet, copy protection messes with number three above. Usability.
But, Microsoft isn't just LOBBYING for a change to WMA, they're taking behind the scenes steps to insure it. They told AOL to replace RealPlayer with Windows Media Player. They want Windows Media Player to be the DEFAULT! This takes CHUTZPAH! For AOL is in business with RealNetworks. But forget that. First, of all, one must realize the default ends up being the standard. One of the reasons Internet Explorer replaced Netscape as the market leader was that it was the AOL default. Oh, you can use Netscape with AOL, but most consumers don't even know this, never mind how. But it gets worse! Microsoft told AOL in their negotiations that they can't guarantee RealPlayer will work with Windows XP. This is bullying, and also unnecessary. Compatibility would be no issue if they sent the specs in a reasonable time period to RealNetworks and didn't build incompatibilities into the system. But, forgetting ALL of the previous, the new version of Windows Media Player, to be shipped this fall as part of Windows XP, DOES NOT COME MP3 READY! You see, in order to support MP3, Microsoft must pay a royalty to Thomson. They don't want to do this. (And they also don't want to do anything that will help MP3 in its war with WMA.) So the ability to rip MP3s has been left out. Oh, you can PURCHASE AND DOWNLOAD an MP3 plug-in. At least they made that deal with third parties last week. But, when will they really be available? And will they work? And will the average person pay for, download and install these plug-ins??? NO WAY!!! Oh, Windows users could avoid Windows Media completely, and use a competing package that has full MP3 compatibility, but we're back to the download, install and possibly paying route. Doesn't look good. So, while Napster is down, and everybody thinks things are on hold, Microsoft is working like busy beavers to make sure they rule in the future. If only the record companies took this approach...
Read the press. The MusicNet and PressPlay record companies have no intention of cross-licensing. Therefore, INHERENTLY, everything won't be available. This is a deal killer. How you gonna keep 'em down on the farm after they've seen Paree? On Napster, the music of all labels was available. Along with all kinds of stuff that was previously UNAVAILABLE! So, customers are going to PAY MONEY for a FRACTION of what they used to get for free? NO WAY!!
There's an authentication procedure in Windows XP. You may not be aware of this. Here's the concept, every copy of Windows XP is machine specific. Doesn't sound like a big deal, right? Today most people don't upgrade. They buy a machine with the operating system installed, and when it's time to upgrade to a new operating system, they buy a new computer. However, if you upgrade some of the parts in your computer, adding a board, stuff like that, there's a good chance that your operating system won't authenticate. You see it communicates with Microsoft servers in the background. Validating the fact that you're an authorized user. Oh, if it's their fault, if you did nothing wrong, if there's just a fuck-up, then you call Microsoft. And they give you a FORTY FOUR DIGIT NUMBER over the phone. Are you getting that?? FORTY FOUR DIGITS! 44!!! Talk about a pain in the ass. And, until you get this 44 digit number and enter it, your computer is brain dead. Kaput. Doesn't work.
But forget all that. Let's say you're a typical American family. And you own two plus computers. Not that unusual. Between Mom and Dad's work desktop, their laptop, the kids' computer... And let's say they're all recent machines, and somebody in the family is an expert and can upgrade them. Well, with this new scheme, you've got to buy A COPY OF WINDOWS XP FOR EACH!! Yup, you can't use the same disk to upgrade each machine. Let's say you've got three machines. Then, you've got to buy three copies of Windows XP, for approximately $100 apiece. If so few people didn't upgrade their computers, there'd be a fucking REVOLUTION! I mean, that would be like saying if I bought a Destiny's Child CD, I could only play it in the living room. I couldn't burn a CD for myself. Couldn't make a copy for my little sister. I'd have to buy multiple copies. No, no you say, that's twisting logic. That's not what's intended. But, that's what IS intended with MusicNet and PressPlay. Yup, you've got a subscription and the music can only reside on that one computer. Can't move it to another. Can't burn a CD. Your sister's gonna have to get her OWN subscription. Oh, maybe there will be a way to use the same subscription on two machines (don't bet on it), but you'll have to download the stuff twice. And if you only have one computer in the house, that's where all your listening's gonna be done. Even though you might desire to listen in your bedroom, or on the patio, or in the living room, or in your car, or ANYWHERE else you might go. So, analyzing the usability of the two systems coming online, you see they don't meet the public's demands.
But wait a minute you say. WHO GIVES A FUCK WHAT THE PUBLIC WANTS!! We own the copyrights. They're just gonna have to wait. Didn't we shut down Napster? Isn't everything hunky-dory?
Well, er, no.
It's kind of like Amsterdam. With the dikes. You see there's all this pressure. But in this case, it's not water, it's people. And Napster used to be a big hole, but then it got smaller and smaller and the pressure built up. But the wall was holding. Then, Napster was shut down completely. And the wall broke in A WHOLE BUNCH OF NEW PLACES!!!
As long as Napster was open, people avoided going elsewhere. But now that Napster is completely offline, and it's a well-known fact that if and when it returns, it will not resemble its old self whatsoever, the public has finally migrated to new services. Log on to KaZaA right now. Or Morpheus. Or one of the open source Gnutella services. You'll find most of what you're looking for.
Well, can't we shut them down???
Well, maybe KaZaA. And Morpheus. But not the open source Gnutella clients. Not unless you sue the individual users. And it's been clearly established that the labels are NOT going to do that.
The record companies fucked up. Again. I think maybe we should send the execs to West Point instead of the House of Blues. To learn the art of combat. It's not about winning the battle, it's about winning the WAR!!! And the labels are doing a shitty job of fighting the war. The record companies DON'T want online music. Let's just make that clear. So, fearful that Congress will force them to license their wares, they formed MusicNet and PressPlay. We've seen above, that these services don't fit mesh with consumer needs. But, even more importantly, THEY'RE NOT AVAILABLE!!!
Just wait until the kids go back to school. Some colleges will be in session within a month. Every college student gets a screamingly fast connection as part of his dorm room fee. And college students want music. And they're going to FLOCK to these new services. The services are in EXISTENCE! Just now, they're reaching critical mass. But, certainly, sometime in the fall, one or two of them will have MILLIONS of users. And it will be like Napster. Everything you want will be available. But, you say, they don't have the RIGHTS! RIGHTS SCHMIGHTS!!! It's like in the legal business. With contracts. You explain to clients. Someone might not have the RIGHT to breach a contract, but that doesn't mean they can't DO IT! One's only remedy is in court. Maybe you can get a temporary restraining order in a brief period of time. Then again, it took over a year to get an injunction in the Napster case. Never mind collect damages. And if the client/distribution system is open source, and there's no company to sue, that means you've got to sue the individual. And how much in damages are you going to get from an individual? Oh, you'll get a JUDGMENT! YEARS down the line. But just try collecting it.
Ah, that's the problem with big time lawyers. They tell you what your legal rights are, they just don't give you PRACTICAL SOLUTIONS!!
Napster needed to be sued to establish rights issues. But that war's been won. The future battles are not LEGAL ones, rather they're BUSINESS ones. The key is to create a service consumers want and then SELL it to them. Not that different from running a record company. You sign talent you think consumers want to purchase the work of, then you create said work and market the hell out of it. Advertise, make videos, hype. If one used this same formula re online music, you'd NEVER come up with MusicNet and PressPlay. Web history is LITTERED with products/services that were nifty that the public rejected.
So what should the labels do???
1. Cross-license.
Might as well make the deals now. On the terms you prefer. For Mario Monti's going to force you to cross-license to anybody and everybody in the future.
2. Forget streaming. To say it doesn't work well is a gross understatement. Just focus on downloads. MP3s.
3. FORGET SECURITY!!!
Record companies fail to realize. As much security as they build into their online systems, the underlying CDs are STILL UNPROTECTED!! Yup, no SDMI schemes were ever approved. So, somebody can go to the store, and purchase a CD, rip it into MP3s in a matter of minutes, and then distribute it via one of the aforementioned services, or one yet to be devised. Copy protection in online distribution schemes is like using a condom after you're pregnant. It's SUPERFLUOUS! The damage has been done.
4. Establish services IMMEDIATELY at a relatively cheap flat rate.
These alternative online distribution schemes. They take effort. Not every MP3 is pristine. They're imperfect systems. People use them because yes, they are free, but also because there's no alternative system! AOL raised their rates two dollars. Did everybody abandon the service and jump to EarthLink and MSN? ABSOLUTELY NOT!! People will pay a premium for quality service and peace of mind. Will they pay double the price? No. What's a fair price for an online subscription? Well, announce one week at twenty five dollars per month. See what happens. Keep lowering it until the price point is reached. Or start at somewhere between ten and twenty dollars, which is perceived all over the Net as a fair price range.
Or, do nothing.
But, as seen with these new burgeoning systems, the labels are never going to win. Because they DON'T WANT to win. They just want to keep the consumers down. But, it's like trying to keep down a starving mob. When you can't get food, you're not worried about the law. FURTHERMORE, the law says you can make multiple copies of CDs you purchase for personal use. Therefore, the services that are going to be launched are REDUCING consumers' rights.
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#967202 - 07/16/01 11:25 PM
Re: The Online Music Debacle
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Curve Dominant
MP Hall of Fame Member
Registered: 10/29/00
Posts: 4223
Loc: Philadelphia USA
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Interesting, Craig.
My question is: will any of this affect Macintosh users?
E
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#967203 - 07/17/01 12:53 AM
Re: The Online Music Debacle
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Anonymous
Anonymous
Unregistered
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Craig -
This article is a refreshing dose of reality. It should be required reading for the label bean counters...
Thanks for taking the trouble to post it.
- Philbo
Tangent Music
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#967204 - 07/17/01 03:38 AM
Re: The Online Music Debacle
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Anderton
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Registered: 01/28/00
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<>
As much as it will affect Windows users. Microsoft has a Windows Media Player for the Macintosh, so you can play back their files right now on either platform. And I have to admit they've come up with a killer compression scheme for both audio and video -- it just smokes anything else for a given file size. But Apple has really promoted their MP3-based iTunes concept; it would be ironic indeed if Apple was stuck with the older, klunkier standard while Windows had something better.
BTW Lefsetz is a dyed-in-the-wool Mac guy. But he knows the market share figures, too...
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#967205 - 07/17/01 03:01 PM
Re: The Online Music Debacle
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Gregg Seibert
Senior Member
Registered: 09/15/00
Posts: 102
Loc: Louisville,KY,UNITED STATES
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Music has finally become software. It is interesting that the online music distrubition discussion is finally using software copy protection as a comparison. It takes on many of the same arguements as the open source versus "shared source" issue. Also, there is a lawsuit from a company called E-data that claims a patent on the concept of dowloadable software. It is suggested that if this company wins, it will become more wealthy that Microsoft. Could this patent apply to downloadable music as well? The open source software business model generates money from support and documentation and convenience. The key to the music issue may be the convenience factor, as the original author suggests. We all know that software copy protection only aggravates the legitmate user and does little to stop software piracy. Online music copy proection will only accomplish the same thing. Thanks for the bandwidth, but very interesting issues for all creative people.
Gregg Seibert
_________________________
Gregg
Without music, life would be a mistake - Nietzche
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