Congratulations: The Music Industry Is Now ‘Napster-Proof’…

It’s a scary question that pops up from time to time…

When’s the next ‘Napster Moment’?

You know, that out-of-the-blue technology that shocks the industry, dismantles our carefully-crafted business models once again, and plunges everything into a second freefall?  Well, the answer may be never, simply because consumers don’t want or need another Napster.  The music has already been devalued beyond repair, the bundle’s been destroyed, and access is already as unfettered as it’s gonna be.

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You see, there aren’t any more fan freedoms to be won.  Napster no.1 did the job, the first time.  So welcome to the extremely scary future — the one you’re living in, right now.

Scary Reality #1.  Kids these days? They don’t even want to steal music anymore.

The older brother downloaded from Napster, Kazaa, BitTorrent.  The younger brother is on YouTube, where it’s all legit.  Some wonder if there’s any difference.

Scary Reality #2.  Everything’s Optional.

This is something Spotify understands extremely well.  It’s the reason why they’ve permanently expanded the limits on free listening, why they’re lobbying for freemium on mobile devices.  Why they refuse to get hobbled by a Rhapsody-style paywall, and why their entire financial model is a house of cards.

Because most consumers won’t pay, simply because don’t have to.  And if they do take the upsell, they’re doing us a favor, in their minds and ours.

And if you don’t pay?  No big deal, you can sit in coach class, on Spotify, YouTube, or iTunes.  The plane still takes off and takes you to your destination.  That’s not true for most other discretionary consumer goods, like lattes, cable, or beer.

Scary Reality #3.  The law ensures that #2 will remain a reality.

If the recording hasn’t been driven down to $0, it’s hovering just above it.  And you can partly thank Congress, copyright law, and an extremely powerful tech lobby for that.  Sure, Universal Music Group just won an important victory in New York State, one that could theoretically dismantle the DMCA as we know it.  And Congress, prodded by Hollywood, is taking a hard look at a very dysfunctional copyright system.

But right now, the law drastically favors companies like Google, while leaving the door open to loophole plays like Grooveshark.  Even the biggest media companies can’t issue enough takedown notices to combat that reality.

Scary Reality #4: A large majority of music listening is free.  And it’s happening on YouTube.

The dominance is shocking (and here’s the proof).  This is the reason why ‘YouTube Music’ — or whatever YouTube’s cleaned-up subscription service will be called — is a massive problem for Spotify, Deezer, Muve, et. al.  Because an unbelievably large percentage of music consumption is already happening on YouTube, often with video ignored.

Scary Reality #5: Spotify, and others like it, are still trying to emulate the original Napster from 1999.

Sean Parker still talks about ‘finishing what he started,’ ie, creating a service that offers every song, remix, and video released.  And, truly gives fans exactly what they want, when they want it.  Because for all the lessons learned from Napster, most of the subsequent changes were forced, not embraced.  But that’s another story, entirely.

Written while listening to araabMUZIK’s latest, For Professional Use Only.  Image by Tilemahos Efthimiadis, licensed under Creative Commons Attribution ShareAlike 2.0 Generic (CC BY-SA 2.0).

 

17 Responses

  1. Esoge
    Esoge

    Hate to break it to you guys, but artists didn’t make money off their music (or very little at least) anyway. The only people hurt by music piracy are the people who spent the last 50 years perfecting the art of fucking the creative talent in this industry out of their money.
    You wanna support an artist? Go see them on tour, buy their merchandise, and give them a 10 spot for makin great music. The industry wants you to think we all need to stop piracy to save the artists when nothing could be further from the truth.

    And just for the immediate backlash this comment will create, I went to school and studied the music industry for four years and now have a B.S. in Music Industry with a minor in Business, and I’m an artist myself.

    Reply
  2. Joda
    Joda

    Right on Paul.
    Kudos for mentioning #4. People don’t really talk about how much music is actually consumed not on services like Spotify & Rdio (which really only cater to a very narrow base of fans, press hype be damned) but more on Youtube. They are the 800lb gorilla in streaming music, but rarely get mentioned in conversation about STREAMING MUSIC! Ha!

    Youtube, iTunes and Vevo (Go Rio!) are the ones to watch in that space.
    Even though the current posterboys got so much hype from an overly eager press, they are all just an iLike/iMeem in comparison.
    I wonder how thats going to work out for thier investors.

    Reply
    • Visitor
      Visitor

      What is also important to mention is a lot of those plays on Youtube are unpaid. If youtube doesn’t detect who the artist is, it treats it like a funny cat video.

      Reply
  3. KOKO 00
    KOKO 00

    And still people discuss, IF piracy hurts music. And still people say “let’s not be so negative”, “let’s look at the brigtht side of things” “everything goes in cycles, it will play itself out”, “I don’t think that’s true, I buy music”..
    And that’s all they do, say these things and acquiesce, keep their silence, while they label people that speak up against the downfall of music “negative”.
    Look where we are now.
    I feel so sorry for the kids these days. When you see them working their cell phones wearing ear buds? They don’t listen to music, they play games on their phones.

    Reply
  4. FarePlay
    FarePlay

    I prefer not to call it game over. People are “consuming” music now as much as ever. I, for one, believe there are ways to improve the current situation for artists, but it will take the artists themselves to bring about the change. Clearly we are in crises mode as the congress prepares to rewrite copyright laws.
    I spoke with someone who recently returned from the Grammy’s on the Hill event. He was surprised by how knowledgeable the legislators were about copyright and the financial challenges artists, musicians in particular, are facing.
    And how SOPA, whatever your opinion, was DOA as a result of a substatial response from tech, i.e. calls, letters, etc., as opposed to hardly a whimper from the artist community. Ultimately, there was no way the legislators could push through a program with such little support.
    A great deal has changed in the 2 plus years since I’ve actively participated in this conversation. I find it amazing that a relatively small band of pro-artist activists, like DMN and others have made so much progress.
    So Paul, pick yourself up off the floor and let’s get back to work.

    Reply
    • Visitor
      Visitor

      Congress has always been strongly pro-copyright. Well what has changed is that even the strongest proponents of copyright in Congress are increasingly using vague language and euphemisms when talking about copyright because they don’t want to attract ire from the increasingly powerful technology lobby. I think the copyright law will end up being a balance between the interests of technologists and artists, but probably favoring technologists more.

      Reply
  5. wallow-T
    wallow-T

    A world in which children are empowered to manufacture and distribute copies is a different place from the world in which companies could monopolize and charge for the manufacture and distribution of copies.

    Reply
  6. hippydog
    hippydog

    Quote “f the recording hasn’t been driven down to $0, it’s hovering just above it. And you can partly thank Congress, copyright law, and an extremely powerful tech lobby for that.”
    1.) napster (when trying to negotiate) offered the labels not only a DRM format of their choice (as long as it allowed the consumer to actually USE the music normally) AND offered monetization (as long as they allowed the entire catalog)..
    2.) the labels could have decided on a digital DRM format that was standardized across all formats and allowed the consumer the same freedom that a CD gave them (yet still somewhat protected the music by being traceable..)
    The labels REJECTED both ideas and stuck with the CD format..
    I have to think the original blam gets laid at the feet of the music industry that actually thought they could keep the shiny discs going forever.. Music should have NEVER been tied to a ‘format’, but if you do decide to tie it to a format, be bloody prepared to update it..

    Reply
    • wallow-T
      wallow-T

      1) When the labels were dependent on physical retailers for approximately 100% of their revenue, it would have been a difficult proposition for the labels to tell retailers that the labels intended to put the retailers out of business.
      2) “The labels could have decided on a digital DRM format that was standardized across all formats and allowed the consumer the same freedom that a CD gave them…” And ponies! There should have been ponies!!
      You don’t have a background in writing software or working on multi-vendor interoperability, do you? 🙂

      Reply
      • hippydog
        hippydog

        Quote “it would have been a difficult proposition for the labels to tell retailers that the labels intended to put the retailers out of business.”
        Difficult, but not impossible.. and having a second standardized format could have helped the retailers compete and stay around longer.. it would at least evened the playing field and gave them more of a fighting chance.. They didnt lose against napster or itunes.. they lost against the mp3.
        Quote “You don’t have a background in writing software or working on multi-vendor interoperability, do you?”
        Actually I do (but not in the music industry) & Judging by your ponies comment, (instead of actually thinking up an educated rebuttal) I am curious what your background is ?

        Reply
        • wallow-T
          wallow-T

          me: elderly network bottlewasher. Long ago I wrote code to mate computers to pre-Internet networks. I have also written code to implement e-mail transfers, in the early days, and I have used packet traces and protocol analyzers to pound networks (with gear from various makers) into submission. As for music, I am only a late baby-boomer fan with a house full of recordings whose wife thinks I spend too much.
          OK, less snarky: “the labels could have decided on a digital DRM format…” Well, who was going to design and implement it for a multi-vendor environment? Microsoft was no slouch, but their WMA DRM had issues (I mentioned in the iTunes Anniversary item). Apple made it work, but at the cost of locking out all other vendors. (Jobs made a good case that the labels’ technical requirements for DRM “revocability” mandated a single-vendor solution.) These are the labels where Doug Morris famously said that he didn’t know enough to hire competent computer people.
          SDMI was an attempt at a across-the-biz solution but it crashed and burned in its early organizing stages.

          Reply
      • hippydog
        hippydog

        QUOTE ( “the labels could have decided on a digital DRM format…” Well, who was going to design and implement it for a multi-vendor environment? )
        The same way other industries do it.. Appoint a 3rd party to oversee and control it with input from vendors, manufacturers and end users.. Format gets patented but all fees are waived as long as manufactures/programmers follow specs..
        Manufacturers were begging for a standardized format, many didnt want to have to choose a format that may not survive 10 years down the road.. so many supported the mp3 simply because it was the most popular..
        QUOTE: “Microsoft was no slouch, but their WMA DRM had issues”
        I think a lot of issues may have been caused by the over restricted needs that the labels imposed on microsoft.. I cant quote from memory but the DRM requirements were a tad insane.. (“revocability” was just one of the silly ideas)
        As you mentioned, Apple made it work, I would say primarily because of the popular Ipod.. They then grew powerful enough where they could then tell the labels to frack off 😉
        Quote “SDMI was an attempt at a across-the-biz solution but it crashed and burned in its early organizing stages.”
        Personally I thought the “watermarking” idea would have been the best solution.. but again, the extra overhead and OVERKILL of the rest of the SDMI “specs” made it completely unworkable..
        I don’t know the EXACT format that would have made everyone happy and ‘on board’ with it, but at least they should have given it a credible try.

        Reply
        • Ritch Esra
          Ritch Esra

          Hey Paul,
          Bravo! This Is so brilliantly incisive and
          articulate that I’m using it in my teaching materials in all of my classes.
          You so magnificently illustrate
          in such a concise way the profound issues facing so much of the music space
          from a cultural, social, and most importantly from a technological point of view
          as Point # 5 so insightfully illustrates – chasing a Paradigm from the past –
          Sound Familiar? Great Piece
          Ritch

          Reply

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