The entertainment industry has a chance to move into the digital age. Peter Cochrane looks at the main issues and asks why it seems more intent on clinging to old ways and lining lawyers� pockets?
MP3 music and P2P file sharing networks appear to be slowly dragging down the music industry a track at a time. Despite the closing down of Napster and many other file-sharing services, this black economy continues to grow unchecked and billions are visibly disappearing from the bottom line of the recording companies.
In this continuing war between the customer and supplier the Recording Industry Association of America (RIAA) has moved on from a head-on attack of file-sharing companies to a direct attack on the music listeners – the customers. Their latest move is to try to identify the big users and P2P file swappers, issue subpoenas, get them into court and then sue them one at a time.
In the US it is reckoned that there are some 60 million big P2P/MP3 file swappers. At a rate of around 60 subpoenas a day it would take approximately one million days, or 2,739 years, to get all these folks into court. Clearly this has to be a scare tactic rather than a practical strategy.
So what might the RIAA reasonably do? They could go for a 10 per cent hit rate (about six million customers) over a 274-year period. It might just work and scare enough people to make some impact and reverse the draining fortunes of the music industry. But can you imagine the technological changes over that period? And the music industry would have long been bled to death by this time anyway.
So how about 600,000 over 27.4 years? This would be a customer risk of approximately one per cent - an insignificant threat, and new technology will have replaced the CD by that time anyway. Like all previous strategies this one appears to be foolish.
The bad news for the RIAA is that they appear to be on a hiding to nothing with well over 100 million file swappers outside the jurisdiction of the US, and the 60 million plus in the US becoming ever more inventive and incentivised. The more the industry attacks, the more new and novel solutions are dreamt up by the user community. As a friend of mine wryly observed: If a thief steals your property it is a police problem but if all your customers steal your property then it is a marketing problem.
Many youngsters have gigabyte drives full of music tracks – which they never burn onto CDs, as cited by the RIAA, by the way - and why would they? While I can in no way condone what they do, I can understand it. Like me they resent being ripped off by being made to buy 15 crap tracks to get the two or three they really like and want. In effect having to pay $21/3 = $7 a track is a bit excessive, especially when a CD with 18 tracks plus printed sleeve and plastic case costs less than $2 to get onto the store shelves.
After several abortive launches of MP3 pay sites it looks like one that sells at $1/track has it right. And the music industrys notion that we would pay more for online copies than in store CDs and accept a limit on the number of copies we can make has failed miserably. No great surprises there.
So what happens next? In a leap of unparalleled madness the music industry is now trying to twist the arms of ISPs, universities and colleges in an effort to get at the identities of the biggest MP3 file-sharing individuals. Fortunately the US has a more than adequate supply of lawyers and the counter actions and claims are frustrating all such efforts.
Even better, the Senate is getting in the loop along with trade commissions, electronic frontier foundations, civil rights groups. What a wonderful combination of forces to confound an industry dragging its technological feet out of the 19th century!
If ever there was a case for a new and novel business case in an industry this has to be it. The customers are not only telling them, they are showing them too. It wouldnt take a lot of imagination for the music industry to come up with an online alternative, reasonably priced, packaged and presented to seduce customers back. And if they had have done this on day one instead of attacking Napster et al, the war would have been over before it had started. But it has actually created a raft of new and young customers who have no intention of ever paying for any music. These guys are going to be really difficult, if not impossible, to dislodge.
For those putting their faith in the encryption, coding and/or watermarking of music tracks, I can only say this – start praying. Similarly, for all those efforts to control the design and production of PCs, CD copiers and similar technologies - forget it. Your efforts are dead before you start. No matter how clever, no matter how smart, you will be defeated by the ingenuity of just a few of the more than 160 million customers ranged against you.
And of course the next industry on the list is Hollywood. The spread of broadband is only just opening up a whole new raft of possibilities.
My final conundrum: Like many other people I choose to employ an open Wi-Fi network free to visitors. So if one of them chooses to camp outside my home and download gigabytes of music and movies and my ISP releases my identity and the RIAA takes me to court, what do I say? How do I establish my innocence? How do I prove it was not me? I think this has all got way more complex than anyone ever contemplated.
And how will they find the new P2P networks of people on foot carrying their laptops, PDAs and MP3 players? A new business model has to be easier. Doesnt it?
This column was typed during a break in my fly fishing on Rutland Water and despatched to silicon.com from a free Wi-Fi site provided by some kind person very close to a pub where I am enjoying a really nice, but late, lunch.
Peter Cochrane is a co-founder of ConceptLabs CA, where he acts as a mentor, advisor, consultant and business angel to a wide range of companies. He is the former CTO and Head of Research at BT, as part of a career at the telco spanning 38 years. He holds a number of prominent posts as a technologist, entrepreneur, writer and humanist, and is the UK’s first Professor for the Public Understanding of Science and Technology. For more about Peter, see: www.cochrane.org.uk. For all Peter’s columns for silicon.com, see: www.silicon.com/petercochrane.