Lefsetz Says Losing Value is Progress

From time to time, one encounters an editorial that so deftly weaves the offensive with the inaccurate that it leaves the reader stammering.  I suppose this was the goal of the latest OpEd from digital futurist Bob Lefsetz, which appeared in Variety last week under the title “Film Biz Can Learn a Few Things From the Music Industry When It Comes to Piracy.”  I quote:

Thank God we’re in the music business. We’ve already been through the transition; we’ve already been pushed back to zero. We’re in an era of rebirth so strong that if you think the music business is in trouble, you’re not in it. Blockbuster acts make more money than ever before. Piracy has been eviscerated, killed by YouTube and legal streaming services, and from here on, it’s only up.

If we strip away the tone of Lefsetz’s article, which conjures a notion of fiddling while Rome burns, and just mine it for its didactic elements, he appears to be asserting this:  that the music industry, after being forced finally to understand the digital age, is now on the leading edge of a financial renaissance, embracing and learning to coexist with technological reality that has transformed consumer demand.  Despite the underlying, economic reality that the music industry is worth about fifty percent of what it was fifteen years ago, Lefsetz could not be more sanguine about its future, and he challenges the film industry to learn quickly from music’s example in order to spare itself some pain.

Central to Lefsetz’s ebullience is the continued well being of what he calls the superstars.  He offers the following:

Superstar talent may make less money off recordings than in the past, but the live business far exceeds the money it once made. And then there’s sponsorships/endorsements and privates and sync and so many avenues of remuneration that no one who is a superstar is bitching.

Never mind that what Leftsetz is saying here just ain’t true or even mathematically possible, the elitism inherent in his proclamation is a direct contradiction of those democratizing promises made by his kindred techno-utopians in the first place.  Because what he’s saying is, “If you’re good, you’ll make money,” but by “good,” he means a blockbuster performer like, say, Lady Gaga.  But what if you’re good like Tom Waits or Rufus Wainwright?  Are these musical geniuses, who do not have screaming hordes of teenage fans or, heaven forbid, endorsements from Doritos, not good enough to make it in the brave new world Lefsetz foresees?  And I like Lady Gaga; I think she’s fun, funny, and talented, but I certainly think we need to keep fostering a more diverse library than artists like her are going to produce.  Unfortunately, in Lefsetz’s future the Gagas make a living (and we’ll get to what kind of living in a moment), while the fledgling Wainwrights remain hobbyists.  Not only is that unfortunate for culture, it’s unfortunate for the subsidiary jobs that won’t be supported by that next Wainwright not going pro.  And for all the exuberance, the data are clear that the disruptive technologies we’re talking about are not replacing those jobs.

As for cinema, we’ll set aside the apples-to-oranges flaw predicated on what I assume to be a void in Lefsetz’s knowledge about filmmaking and just stick to the macro view of the market he’s projecting.  If we apply his same “superstar” rationale to the film business, what we conclude is that the Marvel Comics franchise will be fine — and I have nothing against it — because those kind of films can always sell Happy Meals, but the next Wes Anderson, John Sayles, or Marjane Satrapi can expect to see the Spotification of their earning potential as summarized in a recent tweet by Bette Midler stating that 4.1 million plays on Spotify earned a whopping $114.  If you’re an indie filmmaker, try selling that kind of model to a prospective investor.  See, the part where Bob is just flat out lying about the future is that, if you’re good (i.e. make something people want), you will be presented with a choice between being pirated and earning nothing or streamed legally and earning next to nothing.

Finally, Lefsetz says something so inscrutable toward the end of the article, that I can only conclude he actually hates successful creators.  He says the superstars will still make good money, but of course not as much as techies or bankers.  It’s one of those short, stupid statements that act like a fragmentary grenade in the mind because it’s just some arbitrary opinion presuming to set a value on something people actually still demand in large volume.  An uber-wealthy banker is practically synonymous with criminal  to many people these days, so why not say, “Superstar musicians will never make as much as drug kingpins?”  It makes as much sense.  And which “techies” is Lefsetz talking about?  Because unless they’re saving lives, who decided their contributions are worth so damn much?  Okay, the market did, but only sorta.  I mean Zuckerberg is a billionaire, but that’s valuation based on speculation by investors, which more or less sums up the economic roulette game that is Silicon Valley.  Is Lefsetz really saying that Zuck’s real-dollar value is greater than, I don’t know, Bono’s in a consumer-based market?  Let Facebook charge for accounts, and we’ll find out.  No, what Bob is saying is that Bono is a big enough star to comfortably survive the devaluation of music caused by technology, and then he’s arrogantly suggesting that what we’re seeing is a rational market.  The part he’s leaving out is the next Bono you’ve never heard of, and quite possibly never will.

I think the film biz can learn one thing from the music industry with regard to piracy:  kill it as soon as possible.

© 2014, David Newhoff. All rights reserved.

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44 comments

  • We shouldn’t be too harsh on Bob. I thought it was common currency that the man is utterly clueless.

    Upon a time I undertook to find out just who Bob Lefsetz is and what has he done that’s so great. Turns out his experience with the music biz consists, essentially, of getting sacked from Sanctuary Artist Management – within a year of getting the job – ages ago.

    Since he proved such a capable hand at running a major management company’s U.S. division, he’s been spamming people’s mailboxes, telling them how they should run their business ever since.

    To be fair, there’s demand for huckster “consultants” in management circles – and the consultant doesn’t necessarily have to demonstrate any achievements. Hell, people take me seriosuly. However, we shouldn’t be blind to the fact that Lefsetz has done nothing but write a newsletter for the past thirty years (take a couple). His experience with the reality of any business as it stands today is nil.

    In other words, the appropriate response to Lefsetz is to ignore him. He lives in his own private world, so it should not surprise us that his reality does not intersect with ours. Still, I believe Kim Kardashian could probably deliver more accurate analyses of showbusiness today, provided we asked the right questions.

  • For the life of me, I can’t figure out why anybody pays any attention to Lefsetz. Seriously, what has he done that qualifies him to lecture anyone about anything?

    Has he sold any records? Has he sold ONE record?

    Has he managed an artist? Has he produced? Engineered? Has he financed a recording? Has he brought a music product, any product, to market? Run a venue? Booked bands? Sold instruments? Has he even worked in the business at all? The only experience he seems to have is one single year working for an artist management firm in the ’80s, where he was fired.

    Wait, let me guess, I bet he was once a musician who never made it and blames “The Industry” for his failure? That’s also a common thread running through a lot of Silicon Valley people. Is all this industrial animosity really nothing more than sour grapes?

    His letters exhibit no thread of sensibility or continuity if you read them for any amount of time. I guarantee that whatever he writes this week, he will write something in complete contradiction within three months.

    I’ve never even known him to be accurate in his analysis in any way. He’s always several months behind what everybody in the industry already knows. Let me guess, he’s still writing about how the music industry needs to follow the movie industry’s lead with something like Netflix… oh wait! No! Now it’s that the movie industry should take cues from the music industry. Sheesh.

    He is one of the most blaring examples of the inanity of “internet knowledge” that I have come across. He is the mold for armchair experts who opine about industries they’ve never worked in, and who only have second or third-hand knowledge about. For god’s sake, he was made a fool of by Gene Simmons! Let me make that clear, a millionaire who spent most of his adult life dressing up as a comic book clown-monster and playing a battle axe-shaped guitar in a band for teenagers seems to have a more lucid grip on reality in the music industry than Lefsetz. That’s saying something.

    I have to assume that Lefsetz’s clout comes from his appeal to people who want to believe they’re in the music industry, but who are in fact delusional dilettantes. The only other people I’ve heard take him seriously are successful musicians who are not exactly known for their business acumen (ahem, Courtney Love), but, and this is telling, it’s never those artists’ managers.

    • Ha! Faza beat me to it. I wonder if he had to clear all the profanity out of his reply before posting. Lefsetz pushes all the wrong buttons for me.

    • Wow the sour grapes REALLY come out.

      No one is selling buggy whips… People WANT recorded music.
      They just seem okay with paying through the nose to the guy who delivers the buggy whip rather than the makers.

      Record companies ripped off artistes?
      Not to anywhere NEAR the extent that the tech companies are.
      What is the argument?
      “The record company screwed you so now it’s okay of I do”????
      Seriously?

      Maybe that should be MY choice as a record maker.

      They ‘came after napster’?
      Yes. So did the napster guys walk away with tens of millions ? Or are they in jail? I must have missed it.

    • Of course BL has sold records, made records…
      as soon as he reviews something it gets a sales spike and we see it a coupla weeks later in every starbux in the world

  • David, David, David…where to start…
    Just like you want to put down Bob Lefsetz for speaking the truth as he sees it, so I feel that you are doing the same thing. You are speaking the truth as you see it…it’s just that you are both favoring different sets of facts….I would prefer the conversation be about some facts we can all agree on:
    Fact 1. The world has changed. You can’t turn the clock back or put the genie back in the bottle.
    Fact 2. You can’t compete with free. You can however, provide alternatives that are convenient for people to use…and then they will use them. I submit iTunes as an example. I submit Netflix streaming as an example.
    Fact 3. The audience has historically favored spectacle over content. If you object to this, educate the audience to favor content. Good luck with that. Do I want the Marvel Universe to dictate the movies I will get to watch? No…so I won’t go to those movies. Do not argue that studios, record companies, producers, etc. all cater to the lowest common denominator. They always have, they always will…that’s why they call it show BUSINESS…Joni Mitchell, Carole King, Laura Nyro used to sell massive product. Today there are hundreds, if not thousands of wannabe singer-songwriters, filled with angst, imploring us to listen to their songs, songs that do not take us to a new place but sound like the inner monologue that they should be spewing to their therapist. Let them learn to write a hook. They do not deserve a career if they can’t.
    Fact 4. The most obvious way to fix what you perceive as the “problem” is to have government subsidies for artists. I hate the very idea of this because it will likely result in “art by committee”, which will really dumb things down. Can you imagine Thelonius Monk creating to please a government committee? This is the reason that not much comes out of Europe that’s unique rather than merely good. It will allow people like Rufus Wainwright to survive. But the NEXT Rufus Wainwright will likely go into tech (as Lefsetz says) since he will rightly perceive that the music business has become less lucrative. I think that’s fine. There’s no guarantee that the arts will get you paid. Nor should there be.

    I have been saying for years that I believe we are in a shaking-out period. Eventually all the bad contracts with Spotify, Pandora, etc will be over and everyone can choose to do with their music what they want. The real problem (as you have noted) is compulsory licensing, and that is where we should be putting our efforts, but the same companies that are fighting “piracy” are the same media companies who will fight our efforts to repeal compulsory licenses. In the meantime, musicians are still making money. The ones that can figure out where the cracks in the system are will (as in any real free-market) fill those cracks and make a few bucks.

    • David Newhoff

      Overviper:

      Fact 1&2: Putting the genie back in the bottle is not the same thing as saying that treating a black market like a legitimate market is economic folly. Legitimate alternatives like iTunes and Netflix are great models, but piracy has actually increased overall concurrent with the expansion of these models. What Lefsetz and others forget is that in order for a service like Netflix to be legal, all the deals have to be made with all the stakeholders — an obstacle that is not an issue for a Popcorn Time that will simply steal the content from the stakeholders. It’s easy to talk about “Hollywood should…” but all those films on the illegal site aren’t the property of one entity that can just say, “Yeah, let’s put our whole library up there next week.” Additionally, Lefsetz is saying iTunes is dead for music, that musicians and eventually filmmakers should abandon the idea of selling products themselves because YouTube is the model. I think YouTube is a model, but that creators shouldn’t be forced to accept it with a gun to their heads while people call that gun “innovation.”

      Fact 3: I made it clear in the post that I have nothing against “spectacle.” I expect Gagas to make more money than Wainwrights; they always have and always will. I’m also not talking about the fact that technology is helping a lot of untalented people delude themselves right now. I’m criticizing Lefsetz’s elitism.

      Fact 4: I don’t know any reason why government subsidies should be on the table in this conversation. One of the things that amazes me is that we’re talking about a pretty pure form of capitalism. Producer makes something market wants, and market pays for it, or used to until technology allowed thieves to hijack the value chain. I don’t know if you read my post on Singapore, but what people seem to forget when they’re saying piracy is a reaction to the industry’s failure to respond to change is that piracy will be a big reason the industry can’t or won’t change. Nobody will invest in expanding robust, legal alternatives in markets where piracy is out of control; they’ll write them off, the legitimate markets will shrink, and there will be less new stuff and less value created over the coming years. Lefsetz predicts the opposite but not based on anything economically sound — just a lot of cheerleading the same live-performance/tee shirt gibberish that’s been said before. You may think I’m inventing my own set of facts, but as of today, the music industry is worth less by half than it was pre-Napster. I’m not inventing that economic loss (regardless whatever labels one might hate), and Lefsetz is standing on the rubble saying it’s all so rosy without proposing a single idea or fact to make the case that economic loss will be recouped. In fact, he says it won’t, which is okay because artists don’t deserve to make too much anyway.

      • David;
        Facts 1& 2 – Hollywood will only do that which makes it money…so if someone comes along and creates a pathway for producers to put their product on a site that people can use easily and they get paid by ads (or some other method), they won’t care as long as they get paid.
        Fact # 3 – Bob may be elitist, and he loves to hear himself talk. It doesn’t mean that he’s wrong. The world has changed, and the rate of change is moving faster than anyone ever believed it could as little as 5 years ago. The future will belong to those who embrace it, those who embrace the past will lose out.
        Fact #4 – I went to government subsidies because this seems to me to be where it may wind up going. Music IS being devalued. Musicians will have a harder time than ever (except for the Lady Gagas of the world) making a decent living. I did read your piece on Singapore, but I don’t know if I agree with your conclusions. iTunes, Netflix…they came after Napster, they came after the world of Bit Torrent.

        We are talking about a pretty pure form of Capitalism here. I agree with that. I’m just not sure that there is the same marketplace for the product that there was 20 years ago. If a guy keeps making buggy whips after people are driving cars and then complains that no one buys his product, we don’t feel real sorry for him. Markets expand and contract. Maybe this is just another cycle and when it all shakes out, people will love music again and be willing to pay for it. That’s why I see the real enemy as compulsory licenses. If I can control my own product, I may stand a chance.

      • Fact 1 – Hollywood is not a single entity, and people need to stop pretending it is. Which of the hundreds of producers of which of the thousands of films are we talking about? Or are we talking about catalogs belonging to the older studios? All businesses need to make money and will make deals that work for them, but your generalization doesn’t begin to scratch the surface of anything substantive to do with the industry.

        Fact 3 – Speaking of generalizations, I don’t know what you mean other than the future is inevitable, and those who refuse to accept the inevitable will suffer. Okay. That reminds me that I should probably stockpile canned goods and shotguns given the climate model predictions, which are also the result of technological advancement.

        Fact 4 – iTunes and Netflix came after BitTorrent…and? iTunes came after Napster partly because the music industry was stuck in an old mindset and partly because it’s harder to structure a legal model than an illegal one. This should be obvious to anyone. The film industry had some luxury in watching the market and adapting to a model like Netflix for the simple reason that streaming video at any quality simply wasn’t possible for the first ten years the music industry was getting hammered by piracy.

        I agree that compulsory licensing is a problem, but the buggy whip analogy doesn’t hold up. People do want music; they don’t want buggy whips. The lack of willingness to pay for it is a cultural psychosis and should be treated as one instead of all this other gibberish that’s said about the phenomenon. In a very simple model, pretend there are big, corporate labels (all greedy cheats pumping out pop stuff), and there are innovative, indie labels (all fair to artists developing interesting new talent). Now, add piracy and keep promoting it as a legitimate market dynamic. Now, add the Spotify model and the lousy royalty structure. Who do think goes out of business first? You don’t need to guess. We already have the evidence all around us.

    • Define ‘free’.
      Your internet access and now your mobile/cellular internet data access, isn’t ‘free’.
      So you think it’s fair to pay (a lot) for the pipeline but not for the ‘content’ that makes you WANT the pipeline.
      It’s not FREE.
      it’s just a matter of WHO should make the money.

      What if your iphone data plan were ‘free’ but you paid for each song and each movie at a higher rate?

      Obviously it’s in the interest of the ISPs and tech companies to push for ‘free content’.
      But they’re not the ones expected to create the next new gotta have it film or record; for no expected return on investment.

      • If you look at the telecom industry, it’s becoming apparent that soon the pipeline will cost a lot more as the few companies in the ISP business try to consolidate to become even fewer companies. If Time Warner is allowed to be eaten by Comcast, it will not…despite what they say…benefit you and me.

        That being said, at a certain point the consumer is very likely to say something to the effect of, “Piss off.” In Los Angeles (where I live) the Dodgers sold the broadcast rights to their games to Time Warner cable, who turned around and tried to stick it to Direct TV, Dish, etc. so they could carry the games. Those companies want to pass that along to their customers…

        Guess what…? Very few seem to want to pay for the games…

        What can we learn from that? It seems to me that a business model where the content was given free and supported by advertising was one that worked for many, many years…and it was only when the parties concerned got greedy that there was a backlash.

        If you own the rights to your own material and can make your own deals, you can probably make money if enough other people are doing the same thing…the scarcity of quality music will create a demand for it. This will take time, but eventually….after everyone has heard the same tunes for years…they will want something different.

        At that point, the people who create the content will stand a much better chance for a square deal.

      • Not so. There is more quality music out there then you have ever heard, or are ever likely to hear. My music tastes where formed in the late 60s, 70s and early 80s. I’ve still not heard all of it. There are some 1200 ECM albums I’ve not hear yet. The back catalogs are extensive and what I’m seeing is many of the current youth returning to the 70s and 80s groups.

  • Let’s see nothing much of importance came out of Europe. Well there were the Beatles, Led Zep, the Who, Radiohead. The entire interest in world music. The Balkan Brass bands, the Finnish folk revival. Then there’s Arvo Part Benjamin Britten, and Bela Bartok. And Django Reinhardt and Jan Garbarek and Terje Rypdal. No, definitely, not much that can compare with Tommy James and the Shondells, or Brittany Spears.
    Laura Nyro sold tons of product? Hardly. Her songs, but not her own recordings.
    One of the many problems with Uncle Bob is that he never seems to know whether he worships superstars or artists. And anyone over 50, except for himself, is irrelevant.

    • Not one of the Europeans you mention ever had any government support. The British rock bands…influenced by American R & B. Django, Jan Garbarek…roots in American jazz. Bela Bartok, Britten…Balkan music…very original. What are they doing since the governments over there started putting them on the dole? I haven’t heard much. And I’m over 50, and I’m not Bob. But I like what he has to say, just as I find what’s in this blog interesting.

    • Right on, Sam…

      All other things being equal, people will pay for music if it is presented to them the right way. One of the biggest problems (as Sam pointed out) is that the people in between the artist and the audience (the record company, promoter, etc.) skim off the cream and the artist usually winds up with very little. Music I like (which is mostly old or obscure) is not being sold to me, so I can’t buy it. I should be part of the biggest market going…baby boomer, lots of disposable income…no one seems to want to try to sell me anything interesting.

      But people put things that are out of print, unreleased, unobtainable elsewhere, up on torrent sites. George Gershwin is dead, so recordings of him playing the piano aren’t making him any money…same with Cole Porter. But there are companies that will fight tooth and nail to squeeze every nickel out of those catalogs. Warner Music collected for years on “Happy Birthday” and charged a fortune to use it in a movie…turns out they probably didn’t own it all along. All I’m saying is that you could get my money if you sold me the right product. What they try to sell me is EDM, Gaga, Brittany…I could care less.

      I WANT to spend money for music, I just can’t get my fix…

      • All things are more equal than ever. We have affordable streaming, affordable downloads, indie artists experimenting with pay-what-you-want models, indie labels, and a variety of ways to legally access many forms of media; and piracy continues to increase. And most of what’s being pirated in volume is not the hard-to-find stuff; it’s the same popular media being produced by evil labels and sinister studios. (I am of course referring to the American market)

        I can’t comment on your personal tastes and why you can’t find what you want. Big media has been marketing to the 14-24 demographic forever because, as I say in the Singapore post, they’re the ones with more time on their hands. Plus, you’re making two different complaints; you’re saying you can’t access what you like and simultaneously complaining that owners of older works want to charge for them. I can only conclude this means you’d like copyright to have shorter terms so that Cole Porter will be more easily accessible in legal forms, which is a reasonable conversation but has nothing to do with anything Lefsetz is saying and, thus, nothing to do with this thread of discussion.

      • @ Overviper

        It’s more complicated then you suggest with European bands and government funding, at least when it comes to the UK. There was no formal funding, but throughout the 70’s a lot of bands were benefiting from the dole while they tried to break it big. In the 80’s, you had a fair few on Thatcher’s Enterprise Allowance Scheme (one of the few worthwhile things the old witch ever did). That’s without even getting into musicians who were promoted by our terrestrial television channels, all of which are publicly owned. It’s true that’s no longer the case. It’s also true that the music scene is increasingly dominated by stage school kids and trust fund types. Not great, especially considering that music used to be one of the ways for working class kids to make it.

        With obscure bands, try emailing them? If they’re not on a label, they’ll almost certainly be selling to people directly. In terms of selling you the “right music” it’s out there. You’re just going to have to seek it out these days. Tell me a bit of what you’re listening to in terms of old stuff and I’m pretty sure I’ll be able to give you three bands to look into.

        Look, we’re both obviously hostile to the big three. Personally, I’d like to see them made obsolete. But we need to hit piracy to do so. (I’ve said previously that trying to stop advertising on pirate sites is a move almost everyone should feel able to support). At the moment, it’s actually distorting the playing field. Not only that, but it’s causing some of the faint-hearted types to crawl back to the old system.

        Resolve or at least lessen commercial scale piracy and it gives us new fronts to open up in the war. At the moment, things are too stagnant to do so and piracy is a big factor in that.

        This old Oatmeal comic is one of the things those of us who want a new, better music industry should be using as a starting point. But it’s aspirational, we’re currently stuck at stage 3 and have been for some time. We’re not going to get to the last stage without actively pushing for it.

    • Oh please… could you get some new buzz-words, Overviper? You all have been repeating the same lame buzz words for the last 16 years, and they are no truer today than they were then.
      Buggy whips? really? when is the last time you heard of someone looking for a new whip? When is the last time someone seached for a song? I rest my case… .music has never been so popular… it’s just that the money is being siphoned off to people that have zero right to it, and you come here repeating these very people’s rhetoric. So please, spare us the bullshit.

      • I should just start insulting people like you instead actually trying to have a conversation. Because people like you are the problem AudioNomics. If you bothered paying attention to what people are saying instead of trying to jump on them because you think they may disagree with you, you might learn something. But that isn’t likely to happen. The money IS being siphoned off by people who have no right to it, but it’s the SAME people that it’s always been. Record labels, managers, promoters…all the people that have exploited musicians since there’s been a music business. “Piracy” is only making a bad situation worse…you’re pissed off because you think that somehow you deserve to make a living in this industry because you can play thru a couple of changes.

        I have news for you…it’s NEVER been that way. So spare ME the bullshit.

      • Don’t pretend you know me or my motivations. You are the one throwing out insults like it was 2001.
        And i’m the problem how? Because i pointed out your unoriginal word-for-word repeats of Big Tech talking points from over a decade ago?
        Get a grip.
        Lol, on second thought, Since you want to speculate my motivations how about this: you’re probably mr. Lefsetz himself. too cowardly to stand up for your article using your own name. Because somewhere deep down, in that place you repressed long ago, you know your argument is BS,… but you just want to seem “hip” to the younger crowd.
        You obviously don’t work in this industry. Promoters, labels, managers can all be fired and replaced if they aren’t working up to their agreements… Good luck firing Google and Grooveshark…

  • Sam Flintlock

    People still care about Lefsetz? Crikey. (In the interests of full disclosure I subscribed to his newsletter for about a month and was bored of it after a week). At least Albini has the experience and, far more importantly, actually writes well.

    Few points.

    The idea that artists are having to have day jobs as well as making music isn’t new. Real example, although I won’t name them for obvious reasons. There was a major label alternative rock band in the UK, late 90’s-early 00’s. Relatively successful. We aren’t talking superstar status. But front cover of the Melody Maker and other music press coverage, top 40 album & two top 40 singles, festival bookings, that kind of thing. For the entire existence of the band, the lead singer was working at British Gas to pay the bills. (I know that because he was a good mate of mine, back in the day). So let’s not kid ourselves that musicians even ones doing alright, were always financially sustainable under the old system. Certainly, somebody was making money. But not necessarily the people making music.

    Somewhere I’m going to disagree with Lefsetz and most people on here on is that I don’t think the superstar model was ever good artistically. I hope it dies.

    I assume you’re using the RIAA figures on revenue lost since Napster? If so, some corrections. It’s specifically US revenues, not global. For global, I can only find the data from 2005 onwards, but from that point to 2012, it’s dropped from 20.7 billion to 16.5 billion. (Source: IFPI). Obviously, that’s a significant drop, but it’s not less than half of revenue. From what I know, Japan and Russia are both growth markets or at least they were. Those RIAA figures are solely also about music sales. According to the RIAA, revenues as a whole in that period have seen a drop from “nearly $15 billion annually to $8.5 billion.” That’s a big drop, but not quite as much as you’re suggesting.

    More importantly, you seem to be implying that loss is reducible to piracy, which isn’t the case. Not even the RIAA are claiming otherwise now. We do now have enough data from the research to pretty confidently say that there is not just correlation but causation between piracy and loss of music industry revenues. That loss is significant, not negligible. However, it isn’t the only issue.

    Which makes seeing the only lesson that can be learnt from the music industry as being to kill piracy as soon as possible is a mistake. There’s other things that can be learnt from the music industry as well. Steve Knopper’s Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age should be required reading for anybody in the creative industry. Knopper is in no way pro pirate and actually conclusively shows that the breakdown of talks between Napster and the music industry was at least as much Napster’s fault as the record labels. But he also makes a very strong case for some of the other factors that also played a part. At the very least, I’d hope we can all agree that “don’t install malware on your customer’s computers” is a lesson worth heeding. (Well done for that one, Sony).

    Really though, I think there’s a lesson that can be learnt on piracy specifically. “The battle is primarily for hearts and minds, not a legal fight”. I’m not going to pretend I know much about the economics of the film industry; that’s your field. But from what I can tell, you guys are actually in a much stronger position here then the music industry were. You often engage with your fans in a way they never did and you certainly haven’t treated them with contempt in the same way. On the latter, here’s a more specific lesson. By promoting DRM and stopping customers doing things like using CDs on their computers, it made people feel like they no longer owned what they were buying. If you’re looking at why the idea of buying music is being pushed out by streaming, start there. The record labels devalued the concept of owning music. Treat people like crap and it will come back to haunt you…

    • David Newhoff

      Thanks, Sam. I’m crazy busy, but the quick responses are 1) Yes, I’m being American-centric in this one, as I believe is Lefsetz. 2) I never think piracy is the sole reason for devaluation. Leftsetz oversimplifies in his piece, and I’m responding in kind. The premise that piracy is nothing but a reaction to industry failure to adapt is false, and the American market proves this best. Americans have access to friggin everything; and many pirate anyway because free is better than paying anything and because they’ve been spoon fed this philosophical bullshit for fifteen years

    • Piracy isn’t the sole reason, but it is -by far- the biggest. The next things down the line (such as horrid streaming rates, devaluations, lack of investment, etc.) can all be tied to piracy as well. There is no sense in fixing the roof of the house when a landslide deposited the home on the bottom of the ocean.
      And yes, yesterday’s music industry wasn’t perfect, but that is what we have for comparison. otherwise we’re basing facts and figures on unicorns and Tinkerbell. At least there was massive investment jn artist development and such.. we now expect musicians to be professional promoters/publishers/engineers/investors/managers/producers/publicists/etc. while being experts in HTML and twitter and social media…and beyond… all of which pushes out time for actually creating, and honing one’s craft. Wonder why this generation doesn’t have their own new genre? i’ll give you three guesses… & the first two don’t count!

  • I agree that piracy is a big component, although whether it’s the “biggest” is arguable. That’s possibly academic though, if we both agree it’s an issue and needs sorting.

    I would say that there are some other major factors that have contributed to the decline of the music industry that are in no way reducible or even tied to piracy.

    The phasing out of the single was a mistake and had nothing to do with piracy. Giving preferential rates to the big box retailers over record stores was a far bigger mistake and had nothing to do with piracy. If, as you say, we need to use the past as a point of comparison, then one lesson comes through again and again. The major labels cannot be trusted.

    Equally, to suggest that streaming rates are linked to piracy runs the risk of letting the majors off the hook. There is no logical reason why piracy would lead to a Spotify deal that benefits the majors (and Merlin labels to a much lesser extent) at the expense of everyone else. They made it of their own free will.

    I’d agree we need to look at yesterday’s music industry to an extent, but let’s be cautious. The industry is not how it was in ’72. By the early 90’s they were still signing the mavericks, but time for development was no longer being given. These days, they don’t even do that. New Model Army would not get a record deal if they were starting today. We can also look at both the DIY scene and the indie scene of the past, not just the majors.

    We do have points of comparison today anyway. Zoe Keating is worth studying as is Moshpit Tragedy Records. Even if we’re in the realm of informed speculation in some cases, that’s necessary. Because we live in a very different world. And someone always has to take the first step.

    There are modern genres- steampunk and drill say. They’re not that widespread, but neither was punk if you look at the charts from the time.

    Agree with you on the issue with bands having to do lots of stuff now. Some adapt to it like a duck to water and all power to them. But I want to find a place for extremely shy geniuses with no promotional skills as well. What I suspect and hope will happen is that we’re going to see more and more bands working directly with PR companies and/or a rise in labels that just act as loan companies.

    • Love the Oatmeal…it’s exactly right. I keep saying (hopefully someone is listening) that one day soon all these deals (Spotify, Pandora, whatever…) will be over and artists can control their own music and make their own deals. That’s a gamechanger. If you extrapolate the capitalist model, at that point a few clever people will see a need to fill and realize that there’s money to made if the artist is a participant instead of a target. The iTunes/Netflix model shows that it’s possible for everyone to make money. Maybe not as much as 20 years ago, but that may change as well as a real global market opens up.

      Piracy isn’t going away any time soon, but so far all the fixes seem to me like a cure worse than the disease. DRM, the DMCA, RIAA, MPAA…they all can’t wait to exert more and more control for themselves…and none of them are looking out for any artist, filmmaker or musician…but rather are looking out for the interests of the same corporate entities that have exploited us for years.

      • Overviper, while I share some of your sentiments and some of your faith that many of these conflicts will be resolved based on mutual self-interests, I think your view even of organizations like RIAA and MPAA is oversimple and naive. I’ve been exposed to the workings of maybe as many as a hundred companies or organizations in my life, and my observation is that most organizations tend to foster a culture that can be a bit homogenous, trending toward blindness at times; but they are not terminally monolithic. And motivations among the people within the organizations are rarely what they are perceived to be by people from the outside. I’ve met people in the MPAA and RIAA, and believe it or not, they don’t drink the blood of newborns every morning. I don’t say this by way of defending everything they or any other corporation or organization has ever done, but only to point out that the brighter and fairer future you’re envisioning is not going to be free of the fundamental challenges that arise when competing interests are involved. As long as there’s a buy side and a sell side, there will be a negotiation. And all the technology in the world may not change the fact that the sellers in this case may still benefit from some form of collective bargaining, and that means organizations charged with looking out for an industry’s interests.

      • That’s not an unfair thing to say. One of my best friends works for one of those entities…she’s a reasonable person. The unreasonable thing to do is to try to pass legislation that’s restrictive rather than inclusive. The fact that the organizations we’re talking about are funded by corporate entities who have historically exploited the crap out of the same creative community that they rely on…that’s very suspicious on its face. I know that if I could have made a dollar a record instead of 12 cents, I might still be in that business.

        To me, the real question is…”How can we move to solutions instead of just complaining?” I think there hasn’t been enough effort made to figure out how people really use music. I’ve heard all kinds of assumptions made about it, but if you take Spotify for example…it’s cheap, and I would gladly pay twice as much for the service if I felt that they were paying the money forward to the music creators.

        Since streaming has become such a big deal, I’ve noticed that people are not only listening to music on their phones, but watching movies, TV programming, etc. as well. Does this mean that Hollywood will find that making expensive movies will become unprofitable? It’s hard to know. People like to go to movie theaters. How about in another 10 years? Will they still like to go?

        The one thing we do know is that this technology moves very fast and that the world is changing very fast. My read of history tells me that it’s all ultimately Darwinian. If you can find a way to adapt, you can survive.

      • It comes down to the fact that copyright is falling apart in front of our eyes.

        Copyright is suppose to be an industrial regulation, a law that only concerned the actions of publishers and print houses. It was for most of it’s history, simply a industrial regulation. Easy to enforce, largely uncontroversial.

        But the Internet and computers in general has increased its scope massively. It no longer an industrial regulation. But a law that regulates the private dealings between individuals.

        Therein lies the problem.

        Short of reversing technological progress to a world before the Internet and personal computers, you will never get copyright as it once was.

      • It would be nice if songwriters had some say over streaming deals. Because of the consent decree they don’t.

  • David,

    I see one of the patterns here with the last sentence of your post. The idea that copyright needs to be enforced is repeated regularly here and elsewhere. Nothing wrong with that idea at a plain level, it’s a totally legitimate idea for an industry who relies on the existence of copyright to try to kill piracy. Let me say that it’s fucking obvious, actually!

    But what is missing (and it’s nearly always missing) is any suggestions on how to actually you know… enforce copyright.

    What I mean is I’m not aware of any time where you actually tackled the issue of copyright enforcement. It’s important to me, because I’ve come to the conclusion long ago that there is no legitimate way to enforce copyright in the information age. That copyright enforcement and the information age are fundamentally at odds with one another.

    That’s entirely where my opposition to copyright comes from – by the way. That enforcing it in our increasingly connected world is unworkable or dangerous. My opposition to copyright does not come from copyright itself, from copyright as an abstract concept. If one has studied it without the modern enforcement implications.

    Copyright taken by itself is actually, quite rational, a good, near perfect system compensating content creation. But this is only true in a world where copying content is an industrial activity, which was largely the case before the mid-90s. It’s only when you push in the information age and push in attempts to enforce it in such a world, that copyright falls apart in my view.

    What’s a bit frustrating, is actually want to see some opposing views, views that show it is in fact possible to an Internet where the free flow of information and privacy is preserved alongside copyright. But nobody feels the need to help me “correct” my viewpoint, because copyright enforcement ideas are rarely discussed. I believe this because free communication and expression in the information age and copyright are fundamentally contrary to one another, that they are impossible to reconcile.

    The few times I’ve seen copyright enforcement ideas discussed the ideas have either holes you can drive a train through, are provably controversial or unworkable, or even go beyond that and have scary draconian implications or dispose of the idea of free communication entirely. But I’d be interested in reading your view on the problem.

    • M –

      I think I have talked about enforcement in different contexts, and this may feel repetitive, but here goes…

      Assuming we have a shared goal but different points of view as to how to achieve that goal (which, by the way, is not the case with content creators and the internet industry), we would have to agree as to how we define terms, and we’d have to agree that we’re analyzing the same problem that needs solving. You ask how one enforces copyright in the digital age without resorting to draconian measures. Already, we need to define “enforce” in what context, and what do we mean by “draconian.” I suspect that if we were sitting down to debate this in real life, we’d already be at an impasse here, but I like a good thought exercise.

      It’s tough to generalize because there are different kinds of infringement for the various media and different remedies for each, but to keep things sorta simple, let’s think about the present market in terms of small, medium, and large rights holders.

      Small would be a photographer whose image winds up in a real estate ad or something. His remedies exist right now, and they work fairly well up to the point where he’s being ripped off at a volume with which he cannot contend. He contacts the for-profit infringer and either demands removal or removal and a penalty fee; and a lot of times, this actually works. If he finds the same photo on some not-for-profit blog, he may choose to let it go or to contact the blogger and ask that it be removed. The photographer could demand a fee of the blogger, but you’ll find that most would not do so in most situations. So, that’s rudimentary enforcement happening right now, and it was happening before the Internet, and I don’t think civil liberties have suffered as a result.

      A medium case would be an independent film that isn’t big enough to be a major release, but is popular enough to wind up streamed or downloaded via pirate sites in significant numbers. This rights holder is, in the present landscape, completely hosed. Her film project is in the red despite the fact that several million people have seen it because the option of free access was provided by for-profit thieves based in foreign countries. Her remedies are presently non-existent. Even if she had the option, she would not choose to go after the individuals who did the downloading and streaming (this is how most artists actually feel), but she has exactly zero recourse with foreign-based traffickers in illegal media. Her only hope is the demise or reduction of piracy, which means her only hope is aligned with…

      The large copyright holders and their wealth of resources. In order to stick to your question, we can’t stray off into feelings about studios and the MPAA/RIAA because that’s getting into the implication that they don’t have a right to enforce. The question is whether or not enforcement is possible and to what extent. I can say without equivocation that the goal at this point in history is not to end all infringement everywhere or to go after individuals, but it is to end or severely cripple a multi-million-dollar black market. If this were achieved, it would also help that indie filmmaker described above. And you know how you go after large-scale, for-profit infringers in foreign countries without harming civil liberties? A bill like SOPA. Yeah, I know, you just did a spit take, but that’s why I think your question becomes disingenuous at a point. Because one rational answer to mass, for-profit infringement is to craft a mechanism that starves the foreign, illegal sites of revenue, while leaving pretty much everyone else alone. That was the purpose of SOPA, and the internet industry didn’t kill a “bad bill” so much as they killed the whole conversation about its purpose and mechanisms; and they outright lied that there is a shared interest in stopping piracy. Even the current suggestion that there might be voluntary collaboration between media producers and internet companies to mitigate piracy gets labeled by pundits as SOPA II, III, IV, and so on.

      So, if it sounds to an extent like I’m answering you by refuting your premise, I admit that I am. Is enforcement possible to the extent that copyright holders would reasonably hope to see? I think it is. Is it possible to devise common-sense mechanisms that don’t get grossly distorted by the PR apparatus of vested interests in the tech industry? No, it appears that it is not. But that problem is not technological, legal, or even one of civil liberties; the problem is marketing and the fact that people are easily duped by ridiculous narratives. And in this I refer to my own friends who actually believed a bill like SOPA enabled summary takedowns of sites without due process because the MPAA wants to rule the world. Admittedly, I tend to err on the side of “that many people can’t be right,” but that might just be my contrarian nature.

      As to Overviper’s mentioning copyright trolls in this context, it’s worth keeping in mind that these trolls are a byproduct of the digital age itself; and it isn’t reasonable to blame legitimate copyright supporters for those bad actors. Ambulance chasers are not a new phenomenon in the legal profession, and serious copyright professionals probably hate these trolls more than the kids over at Techdirt because those unscrupulous practices give the business a bad name. Regardless, does copyright trolling even belong in a serious discussion about enforcement anymore than actual ambulance-chasing belongs in a discussion about healthcare tort reform? Just because there are unscrupulous lawyers out there, shall we universally limit the right to sue in a legitimate malpractice case? Personally, I think these are distinct issues that should remain compartmentalized. Mitigating abuse of the law is one subject, while preserving the individual’s or entity’s right to remedy a wrong is another. Likewise, copyright terms is a completely separate subject from enforcement.

      I welcome what I expect to be a lengthy response, but my schedule may not allow me to keep responding in kind.

      • David –
        This is probably a correct view, and it’s certainly reasonable…if only it wasn’t for that pesky thing known as human nature, which enables some people to be greedy bastards and always try to game the system. If you have no moral core and no common sense, it’s easy to become a patent or copyright troll.

        But I think you’re right to try to limit the discussion to what seem to be practical solutions. Small steps may not frighten people as much as things like SOPA, even tho you feel it may be well-intentioned. I do not…well, OK…we’re having a discussion. In my view there is a profound lack of trust of entities like the MPAA, RIAA, etc.

        I think a more workable solution might be based around methods of limiting piracy rather than trying to stomp it out. If you take a movie like Zeitgeist for example, it was made freely available with a caveat…”Send me some money if you like it”. I watched it, I didn’t love it, but I thought it was worth sending 5 bucks to the author. I understand he made quite a bit of money. At any rate, he got to make a few more movies, and I think he’s built a following. I’m sure people watched the movie and sent him nothing…does that matter?

        We do seem to be mixing up a lot of this conversation into one place and into a one-size-fits-all methodology. That probably will not work. As people have noted in this thread, you can make cases for and against almost all the remedies that have been suggested. One thing I agree with Lefsetz about is the fact that intellectual property has become devalued. It isn’t that I particularly like that idea, but it is just a fact of life these days.

        One of the spin-offs of this conversation is that in the future, there just may not be a viable way for musicians (rather than entertainers – a different animal, as we all know) to make a living. Again, a sad fact of life, but a fact nonetheless. So then I have to ask, “Did lack of financial success cause Vincent Van Gogh to stop painting?” It didn’t, and as we also all know, the history of the arts has many examples of people who could never achieve commercial success, but still achieved greatness. An artist practices their art because they have to. I don’t believe that anything else matters. And I’ve seen that. That has been my experience. Maybe the business is different now. Maybe people have a different expectation today.

        I recently started to play music again after almost 20 years. I have no expectation of making a dime. If I do, I’ll be pleasantly surprised. But playing music is its own reward. If someone starts to steal what I do, I’ll be really pissed. What will I do about it? I’m not sure. I may move my opinions over to your side of the road. Maybe I’ll just be pissed off and do nothing. The business has always been filled with unfairness on so many levels…I hope I won’t spend that much time thinking about it. I hope I’ll just be grateful to be playing music again. Ultimately, there’s nothing else like it.

      • Amen, Man. Keep playing. I don’t think anything I advocate here refutes the idea of making art for art’s sake. To the contrary, this is how anything worthwhile gets done. What I think is cool is that copyright and the First Amendment give people the ability to become entrepreneurs with that endeavor and even seed companies that become whole industries. And yeah, people screw one another over money, over credit, over ego; but that isn’t reason enough for me to want to throw out the whole system. Van Gogh is certainly one of the most extreme examples of the artist who creates because he has to, and I wholeheartedly agree with your sentiment. But the artist who creates something nobody wants in his lifetime is a slightly different matter in terms of commerce than artists creating something people do want (even if you and I think it’s crap). Copyright, like any civil liberty, should apply universally, independent of a discussion about great art or popular art, etc.

        As for Zeitgeist, it’s one of a handful of these types of experiments. Maybe that model will emerge as something significant. Hard to say.

        Keep making music.

      • So as I understand it, your solution to copyright enforcement on the Internet is SOPA? There is so many levels of problems with that.

        I’m going to describe a level where SOPA fatally fails. Then I will just completely ignore what I described.

        I will simply assume SOPA DOESN’T fail because of that. I will assume a world that SOPA doesn’t fatal fail because of that.

        But I will still find ways that SOPA still fatally fails in these increasingly “ideal worlds”. What I mean, is SOPA fails so hard, it fails even in ideal situations of ideal situations. Don’t worry, there is definitely a world where copyright will start working again. It will work as well as it used to even. But you might not like it.

        Fatality Level #1. SOPA today.

        SOPA was incredibly controversial. I’m not going to go into great detail on why it was incredibly controversial, because A LOT has been written on that. It’s easy to brush this off as a giant conspiracy, but the fact is, you had a bill that had nearly unanimous Congressional support at one point. The Internet community wouldn’t have it. We protested at a level never seen before. And the general public wouldn’t have it. They literally shut down Congress’s communications infrastructure with the amount of protest sent in their direction. Good with getting SOPA back.

        Fatality Level #2. Now assuming SOPA magically became uncontroversial and you can get it to pass as is.

        It would do little to stop piracy. There is a lot written about this, so again, I won’t go into great detail. Here is an example from me on this topic. It’s not directed at SOPA specifically, but the idea behind it, the idea that taking down an entire web site is any different of a whack a mole then taking down a single file. It’s not. Websites are files. You take down my website, I can put it back up without about the same difficulty of putting back a file on a cyberlocker. This is literally true for my own blog, I mean I have a backup on my hard drive. This is why countries who give governments wide authority to take down or censor entire websites still struggle with piracy.

        Fatality Level #3. Even if you somehow magically made websites hard to create (thus, altering the fundamental character of the Internet, which is strictly required for this).

        There is so much more to contend with. You have magnet links, encryption, polymorphic code, freenets and darknets, breaking copy protection. Just a small sampling. I mean, the toolset of piracy is massive. If one method of filesharing becomes hard, another one takes it place. Time and time again. No, if you really want to solve piracy, you have to totally change how the Internet works at a very, very deep level.

        Fatality Level #4. Fuck it, lets turn the Internet into cable TV and maybe figure out a way to only allow 100-200 websites that are heavily moderated on the Internet. And we are going to eliminate P2P communications mediums like e-mail. And we are going to ban encryption, and fuck it, let’s just make the Internet another form of easily monitored mass media.

        So we will have killed the Internet pretty much. Now it’s no longer avenue of free communication, but rather, a strictly moderated “online service”. It’s worth noting that even consumer level online services predating the commercial Internet (eg: Compuserve) were never this restrictive, and thus piracy did in fact flourish on them too. You really have to turn the network into a mass media network, and largely eliminate or moderate private participation.

        Just to throw down everything: I will ignore how the Internet came to be to begin with (ie. it’s just a mesh of many thousands of random private networks that decided to link to each other). I will be ignoring the problem of the darknet, stuff like P2P mesh networks and what not. We’ll hire an army of informants and have harsh penalties for anyone who dares run a network not approved by the government. We took back control of the Internet and networking in general. We made the global network a network that entirely serves the interests of copyright holders. It’s done. Solved!

        Great, we solved piracy on the Internet. Let’s pop the champagne. But wait!!!! There is more!!!

        Now we have offline piracy to contend with. RIAA admits that offline piracy the biggest avenue for music piracy. Not surprising because offline piracy is faster, easier, cheaper and safer then Internet piracy is today. And you can do it at a mass scale, transferring a library full of books or a record store full of music to someone else takes minutes with today’s technology. And the tools for offline piracy only get better as computers can store more data and transfer data quicker. Scary, isn’t it?

        It’s not good enough to get rid of the Internet. Sorry. To get back to the good old days: we have to get rid of the idea of a personal computer as well. The capabilities of the computer as a copy machine, even without the aid of a network, simply evolved too far in the last few decades.

        So Now We Have The Solution To the Piracy Problem
        What did we do? We reversed 20+ years of technological development.

        Which is exactly what needs to be done to get to how the world used to be. Nothing less.

        But really. Is it somehow surprising that to get back to the 90s you literally have to get back to the 90s? Hmm?

      • Aw M, you took the bait. You answered as expected, but I’d hoped you might not. It’s a subtle distinction, but notice that I said a bill like SOPA in order to express its intended purpose. Its original design was about stopping money flowing to certain sites, not taking down sites; and your logical leap to winnowing the Internet down to a few hundred sites and reversing history to a time before computers is raw sensationalism. The fact that the bill was controversial has no bearing on whether or not it was a good idea because the controversy was overblown like death panels and the ACA, but that’s off the subject. Your answer to enforcement against mass piracy is that it cannot possibly be done without breaking the whole internet. Maybe you’re right, but that sounds like a lack of imagination to me, especially coming from a world of innovators. Would it be reasonable to say that we could never stop human trafficking without shutting down global transportation? Call me a whimsical optimist, but I’m not ready to throw in the towel on that one.

      • Now David. I don’t think it’s impossible to have a creative industry in the information age. I think well, we have to be a little more creative then trying to reuse the business models that mode us money before the information age.

      • Maybe you’re right, but that sounds like a lack of imagination to me, especially coming from a world of innovators. Would it be reasonable to say that we could never stop human trafficking without shutting down global transportation? Call me a whimsical optimist, but I’m not ready to throw in the towel on that one.

        Yeah I have solutions. It’s provable that if you give people a reasonable price for legal pirate service (which means, unlimited access to the whole universe of content), they will largely stop pirating and start paying. Happened in Sweden for instance with Spotify.

        But you can’t half ass it. If they go on Spotify or Netflix and search for something and the service is like “nope”, people will go elsewhere. And it’s probably not to “buy” the content like it was a discrete unit of product. Tell me, do you think it is surprising that some of the most pirated shows in the US also happen to be shows that are unavailable on Netflix or Amazon Prime?

        Few in the younger generation accept that psychological inconstancy anymore, the idea that content which can and is copied without limit ought to be limited and sold like a bag of Dorritos is. I’ll tell you what they can accept though: paying a flat monthly fee for access to content.

        So ultimately, reasonable statutory licensing for music and movies would solve this. The phasing of of the “right to copy” of copyright, and converting it into a system of “right to get paid for copies”. That’s the way the law needs to go.

      • Exactly. Try to navigate the youtube ‘take down’ process. They treat you the songwriter or producer like you are the potential criminal. But to POST something without any rights or permission? THAT is instant and unchallenged. Clearly it’s not in google’s model to enforce copyright beyond a cosmetic superficial level.

  • M…
    I think you make a very good point. My opinion is that copyright is way too long and there is real value in things going into public domain. But as you say, the enforcement of it can get out of hand. Who ever heard of patent trolls 30 years ago? I come down on your side of this, but I was a musician for many years and also a member of ASCAP, so I understand how artists need to make money. But the road ahead is likely to be a rocky one.

  • Here’s what I consider to be an interesting factoid that no one seems to be talking about…the limits of copyright. So, if I own a vinyl record (I do, I have many…have had for years) and I digitize a track from it, am I breaking the law? Probably not. How about if I burn it to a CD? Still probably not, but how about if I give that CD to a friend? At that point, there are many who will say I have broken a law that is punishable by a very, very steep fine. And yet, it is my understanding that every piece of blank media since the days of tape have a built-in cost that is paid to various rights organizations to deal with the idea that people will naturally tend to do this. So the public is already paying money that is supposed to move thru the chain to content creators.

    I’ve been in ASCAP for many years. I have collected a fair amount of money for content I have created over the years. I have NEVER seen anything in any statement I have ever received that would indicate that any such monies were ever sent in my direction. Possibly the Michael Jacksons and Beyonces of the world rake it all off before it gets to me…

    What seems obvious is that unlicensed copyrighted material used in broadcast programming is much easier to track than if it is used online. Broadcast programs are fairly well regulated, made (usually) by production companies that need to pay out many other fees…to unions, actors, writers, etc. Now that there is much programming being made specifically for online, why shouldn’t those content creators be made part of a similar deal? The answer will be that, since the audience is much smaller, the cost of keeping track will be more than it’s worth. That may be true right now…in the future that’s likely to change. But if you use something without a license that goes out over the airwaves, chances are you can collect big money if you own the copyright. As online gets more viewers, there may be some spillover here because it will be harder to be a fly-by-night company.

    I know that some people have made their own deals regarding online, but it seems to be piecemeal and does not seem to be at all organized. Possibly this should be a focal point for negotiating deals in what may prove to be the (or a) new playing field. Getting in on the ground floor while it’s still possible may put a few bucks in everyone’s pockets. Possibly, since it all runs off of servers, it might be reasonable to tax hard drives, iPods, MP3 players, SDHC cards in the same way we tax blank media.

    • The one thing I’ll say, Overviper, is that the line between broadcast and online is rapidly blurring to invisible. Convergence is here. What’s the difference between watching House of Cards on Netflix, Game of Thrones on HBO, or an original film on YouTube, Vimeo, or through iTunes? I can watch any of these right now without leaving my couch or firing up a computer. All these lines of distribution are exciting for both viewers and producers. The question is what business models will be sustainable, and it’s my personal belief that many fundamentals will remain intact as winners and losers manifest in the transforming market. The bottom line is that there are only two sources of revenue for creative works — consumers or sponsors. Consumers can pay a subscription fee or buy their entertainment in units; or sponsors can support the production of these works. Seems to me that’s the same as it ever was (© David Byrne).

    • The fee on blank recording media
      was instituted in the late 80s or early 90s as a response to cassette ‘sharing’. No further back than that.
      And it is distributed to recording artistes.

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