The time has come for the music industry to get its head out of the sand and start being a proactive participant in the peer-to-peer file sharing world. After reading two articles in Salon and Wired magazine this past month, I asked one of my former high school networking students, Cary E. James (email@example.com, now a freshman at Boston University), to give me his thoughts and the ideal compromise between what his generation wants and what the record companies can deliver. Here is his proposal, after the links to the two articles that inspired him.
“Embrace file-sharing, or die.” Salon Magazine:
“RIP. MIX. BURN.” Wired Magazine:
The best solution is for the music industry to create their own network
of P2P servers and charge a nominal fee (we can debate the amount later)
for the use of this blazingly fast network. This may sound familiar to the
service that Audiogalaxy provides, Rhapsody. However, from the early
reviews Rhapsody lacks the songs that people want. Still, this is as good a
starting point as anything.
This is really the only option remaining for the record companies.
Basically, it is fighting fire with fire. Their service and network will
need better features and be faster and more powerful to trump the
existing P2P services. Remember, my generation has already been through
two waves of free P2P services (Napster and Kazaa, to name the biggest
movers). We will require something even better to make us switch. As
Microsoft has said in the past, embrace and extend.
Okay, we all know we have a problem on our hands. I see the power
struggle on a daily basis every time I download or listen to a song. I
am on one side and they are on the other. One will eventually budge,
and the people I am associated with are pretty stubborn--all 50 million
of them. We all know downloading music from P2P networks is technically
illegal. Yet few of us who download songs regularly give this much of a
second thought. And it isn't a moral dilemma for most of us. Rather, it
is a new way of dealing with an outdated corporate structure. The P2P
networks work. That is why people download and do not care, unless of
course it no longer works (for their advantage and a good user
experience). But litigation isn't the answer. Instead, let's design the
best possible file sharing network, knowing what we now know.
Here's how. First, in order for this new network to work, all musicians
would have to be represented fairly and equally. All music must be
included on this network. Not just from the 'Big 5,' (the five largest
record labels who collectively own 75% of the world's music) but from
all record companies and indie musicians. If an artist wants to put a
song on the network, s/he should be able to submit it to the governing
body that runs the service. The governing body would check and make sure
that this was a legitimate original recording.
Second, the service should incorporate both paid-for and freely
available music, based on the wishes of the individual artists. They can
and should decide to give away their music. I would love to see the
music industry and artists in general give their music away. Because of
the nature of music and the Internet, free distribution of information,
music, and ideas can only be a good attribute. It can only stimulate
sales of other, paid-for songs, while getting the voices of underground
So what will this new service cost and how to charge for the downloads?
That is the big issue. I don't deny that record companies are going to
have a difficult time deciding how to start making money on the
technology that is for the most part free. It is obvious that the music
industry is going to hurt retail chains that sell these physical,
overpriced, mini-frisbees called CDs. Generally speaking, the retail
music industry is dead. In all aspects of life, more transactions take
place without having to go to a physical store, and this is also true
with music. The retail locations that sell CDs have already started
diversifying with DVDs, band merchandise, and paraphernalia. Specialty
items that cannot be transmitted digitally can be great meeting points
for the retail stores and record companies. However, selling music
through retail chains will inevitably die.
So if the record companies are going to succeed at their own P2P
network, they have to offer music at a rate lower than the retail
market. This will move people away from the old way of buying music and
force them into doing it the new way through the simple laws of
economics. But they are saving the costs of moving physical product, so
it is a win-win situation. The record companies have to adjust their
profit projections, however, in order to bring their costs in line with
what people will be willing to pay.
My recommendation is to charge a fee somewhere in the range of $5 to $20
a month for use of the network -- in other words for all you download
and not per song. This is the right price point; about the cost of one
CD in today's market and within the threshold of pain for most members
of my generation. Real Networks has done reasonably well with this price
point for their service offerings (mainly broadcast sports and
entertainment). A monthly billing system also makes the most sense.
Everyone would go ahead and sign up with the service because it was
within a reasonable fixed price that would be easy for anyone who owns a
computer to afford.
What about paying per song rather than per month? While this sounds nice
in theory, the genie is already out of the bottle. My peers and I have
accumulated thousands of songs via P2P sharing. I have more than 4,000
songs that I have downloaded, so even at a quarter per song that means I
owe the record companies $1,000 for the music already on my computer.
This is an obscene amount of money considering I do not listen to every
song on my hard disk. A subscription service is more reasonable.
But my main reason for not wanting a pay-per-song solution is the
question of who decides how much a song is worth. Who decides the
popularity of a song? Should a popular artist receive significantly more
per song or just more downloads than other artists? They may be
overlooked because the service might favor one artist from one label
over another--who decides the fairness? This is why a fixed monthly
rate makes more sense.
Some other points to my proposal: The songs that this service offers
must be complete, clear, and higher than CD audio quality for it to be
worth the investment. This service should also be ad-free. Also, once a
person has paid for a song, and has downloaded it, let them have it
forever. Let's get rid of this whole notion of digital rights management
once and for all. It just isn't workable. Files that "expire" after a
certain period of time are nonsense. This is just fear talking in the
media world; fear that someone will just pass the data stream on to
These fears are groundless if the service provides extras: speed, ease,
and competitively cheap prices. Then the industry should not have to
worry about piracy from the majority. Offering an excellent quality
product at cheap rates, why would someone pirate a second rate product?
It would be too hard to undercut the prices of this service to make
piracy worthwhile. It makes sense to pay the nominal fee, get high
quality music along with the good features that will advance your
listening potential. However, if I send a friend something to listen
to, there is no harm because I am not directly hurting the service. I
am actually advancing it. If s/he likes it, s/he will spread the word
and download more of the same from the service, and inevitably the
listening potential would become exponential. The most powerful, free
tool for becoming 'big' in the music industry is word of mouth. That is
the way my generation operates.
We need to forget the rules of the past. It is time for the music world
to enter the 21st century. Technology has changed so much in the past
decade that the same rules do not apply anymore. Business tactics and
models need to change--else these businesses will fail. The tactics
they employ will need to find equilibrium balancing the needs of the
industry, the artists they support, and the wishes of the consumers. I
believe my model is workable, and all of these stakeholders can come
together. What we are looking for is a solution that will make
financial sense for the record companies, consumers and musicians alike,
for the new system has to be created to do business cheaply and
efficiently. I believe my proposal is one such solution. By employing
already working procedures with modifications and advancements, only the
sky is the limit. As the Salon article says, '50 million Americans can't
be wrong.' It is time for the record industry to start reforming their
ways, instead of attacking the majority of its customers.