Hard News by Russell Brown

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Hard News: Another nail in the coffin of music DRM

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  • robbery,

    Magically, nobody is able to listen to any music unless they've already paid for it. You can listen to the radio, but unless you've licensed a track already you just get dead air. You can put the TV on, but C4 is scrambled unless you've paid for the specific video that is screening. Your mate can listen to his music all he wants, but if he tries to lend it to you so you can listen to it then it won't play. Music in cafes and bars disappears, because individual people haven't paid to hear it.

    you're confusing private purchase with public broadcast.
    C4, radio stations and cafes have all licensed the right to play music to you free to air.
    When you buy a track or a disc it's for private ownership and use.
    You can play it to your mate but technically you can't give him a copy, he has to buy his own.
    he could copy it by making a 1 generation copy of it, but if you weren't giving your music away to all your mates and they were buying their own copies of what they wanted then prices wouldn't be so high.

    You could keep a cap on profits by making all labels report their income to a central agency, and while you're at it make oil companies and currency traders and all stock market voyeurs do like wise. we'd probably need strict curfews and we'd probably need to move our dress sense in to a more military style of uniform for everyone but there's no reason why those uniforms couldn't be very snazzy.

    too much??

    new zealand • Since May 2007 • 1882 posts Report Reply

  • Damian Christie,

    No, not at all. Much of Real Groovy's and JB HiFi's stock is sourced offshore.

    Which brings us nicely to something I've been itching to point out since I went to JB on Queen St a couple of weeks back... I decided against buying the new Amy Winehouse album (or at least the re-release with bonus CD) at Real Groovy where they were charging $36.99 for it - or $39.99 for what looked to be an 'import' of the same thing...

    ...and a wise decision it was too. $26.99 at JB for the same thing.

    I mean, Real Groovy has been gouging customers for some time, but does everyone actually realise by how much?

    Wellington • Since Nov 2006 • 1164 posts Report Reply

  • Finn Higgins,

    you're confusing private purchase with public broadcast.
    C4, radio stations and cafes have all licensed the right to play music to you free to air.
    When you buy a track or a disc it's for private ownership and use.

    No, you're misunderstanding me. I understand the distinction, I'm just asking you why the distinction is rational when the reality is that the digital download environment is currently identical to a public broadcast environment . People are buying CDs and then transferring the contents over the internet to other people. To manage this in a radio environment we have broadcast licenses. Why not just start offering a legal file-sharing license, coupled with an industry-supported file sharing network? Don't change people's behavior, just provide them with a more usable environment and introduce a revenue scheme to make their actions legal and affordable.

    If we accept that the current situation is closer to unlicensed broadcasting than a transactional model then what are our revenue options? The whole DRM model is stupid, because it's trying to sell people a worse service than they're used to getting for free. Plus it's trying to change people's established behavior in how they relate to music: not only are you trying to stop people sharing files you're also trying to stop them sharing music, full stop. A big part of the reason so many people own CD and DVD writers is to copy entertainment media. Before those existed, the same people owned cassette decks that could copy CDs, LPs and other cassettes. Copying and sharing is how most people alive have grown up relating to music; you're backing a scheme that is both inherently technically flawed and offers nothing to consumers. How on earth do you expect that to ever succeed?

    Wellington • Since Apr 2007 • 209 posts Report Reply

  • robbery,

    Why not just start offering a legal file-sharing license, coupled with an industry-supported file sharing network? Don't change people's behavior, just provide them with a more usable environment and introduce a revenue scheme to make their actions legal and affordable.

    Now that is an interesting concept. nice bit of lateral thinking mr higgins

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    you're backing a scheme that is both inherently technically flawed and offers nothing to consumers. How on earth do you expect that to ever succeed?

    I'm not backing anything. I'm raising issues being swept under the table with the oversimplification of a reasonably complex issue.

    I can see why music creators would want to strive for some semblance of control of their works. I can see that if you poo poo DRM (an attempt to regain some sort of control) without offering any sort of alternative or noting why music creators need that control,
    And demonising some over-hollywoodised image of a large music company and using that myth to justify a wholesale free-for-all regime affecting all the little players,

    all of those things are relevant, but that is an interesting way to look at musicsharing as unlicensed broadcasting.
    I'd be interested in how you envisage administering licensing of the unlicensed, and creating a viable income stream for music creators and investors.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • Finn Higgins,

    Robbery, I can't exactly take credit for it. It's an idea that quite a few people have discussed, but to me it seems the most rational and the most plausible in terms of implementation. It's much easier to issue individual customers with unique, cryptographically-verified identities and then track their sharing/downloading behavior in a centralised file-sharing network (ala Napster, which was easy to take down purely because it had to have everything pass through a central server) than it is to try to invent an unbreakable DRM scheme that doesn't piss people off.

    You'd still have the issue of files shared on the "premium" network leaking onto the illegal/free ones, so that's where you start working with the major ISPs. ISPs have file sharing problems of their own, in that it generates a massive amount of traffic and many places outside NZ don't have data caps to stop people just running peer-to-peer software constantly.

    If the industry plays the right game with the ISPs then they could help them resolve some of those bandwidth/technical issues while providing an incentive to the ISPs to help block copyright infringement going across their networks. From an ISP point of view it'd be nice to just nuke all the traffic in the first place; but they can't because a huge number of their customers have internet connections primarily to share music and video files. If you give them an incentive to reduce/eliminate illegal traffic while still profiting from the legal stuff (i.e: you pay the ISP as part of your distribution chain) then that helps them with their traffic woes while making illegal file sharing more practically difficult for consumers.

    It's a bit of a killer for the whole "net neutrality" idea, and it certainly does come with some obvious downsides - if ISPs just start indiscriminately blocking file sharing content then we have to say bye-bye to the (very useful) ability to download big things like Linux DVD ISOs via BitTorrent. But if your file sharing network uses cryptographic hashing/signing of files to establish whether it is royalty-free or premium content then you could offer people like the Linux distros the opportunity to piggy-back on the legal network without paying for the traffic. That would remove one of the key arguments currently in favour of open file sharing networks - that they're actually useful for legal things.

    An "approved" file sharing network with centralised tracking and allocation of file identities would also probably be a decent help in cutting back the rather shocking amount of unsavory content (child pornography etc) that is all over the illegal networks like eDonkey and BitTorrent.

    Wellington • Since Apr 2007 • 209 posts Report Reply

  • Russell Brown,

    that's a bit of a broad generalisation. some major label acts negotiated very favourable contracts for themselves, and the labels that represent them don't screw them over. others get royally shafted as in any business.

    I've talked to people involved, and sighted some of the contracts and it is my understanding that the major label deals on download revenues are generally markedly worse for the artists than those from independent labels, the difference being as much as 25% vs. 50% of retail revenue.

    The key thing is whether you signed away digital rights at the time of your label contract. If you did, you'll probably be screwed. That's not because people here are bad -- but because the decisions are made overseas.

    And that's leaving out the seriously dodgy charges and deductions that have, in some cases, brought the artist's share down to 4.5 cents in the dollar.

    The New Zealand act that gets the best deal on iTunes is Fat Freddy's Drop, because they've been able to deal more or less directly with iTunes.

    That whole evil major label schtick as a means to justify theft is a little tired and people should know better than to perpetuate it. Its just a diversion from the real issue. one of ownership and the right to control that which they own, be they small time artists or major label wankers.

    I probably see more of the major label managers in NZ than you do, and there are some good people involved: Adam Holt and Mike Bradshaw, for example. But globally, the major label model isn't good, and it's going to change. When Madonna's Warner contract expired in September, she didn't sign with another record label, but with Live Nation (for $120 million!), which will participate in all her revenue streams, including merchandise and live ticketing. They're out hunting for more signings, and they'll get them.

    But I have to take you up on the idea that retail pricing is mostly governed by the level of piracy. I just don't think that's true.

    And not every unpermitted copy is a lost sale. Rob, how many sales does piracy really cost you?

    Auckland • Since Nov 2006 • 22848 posts Report Reply

  • robbery,

    a comment from tom's linked article that says people don't want to pay for music anymore

    Not that I'm in complete support of DRM, but I think consumers have been way off base on this. Since when is it our right to get something for nothing?! I don't think this is good for the industry, but it's obviously where it's headed, making the entry barrier much tougher for new artists.

    If only we could apply the difficult to police criteria to other industries I'd be driving a better car and eating myself into an early grave.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    I've talked to people involved, and sighted some of the contracts and it is my understanding that the major label deals on download revenues are generally markedly worse for the artists than those from independent labels, the difference being as much as 25% vs. 50% of retail revenue.

    you're forgetting that the major label fronts the cash for the venture. indies front the cash for theirs.
    majors are just reclaiming the dosh for their investment, and any poor musician is going to resent that but its the same business practices that apply to all other forms of industry. if you don't like them taking thier money back then pay for it yourself and do all the distribution yourself too, and promotion etc, they don't do nothing for their cut as much as the myth would like us to believe

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    And not every unpermitted copy is a lost sale.

    ????
    what do you mean? unless you're inferring that people fork up the cash for a copied disc at a later date. i'd like to see the figures on that one.

    how many sales does piracy really cost you?

    That I know of,... I have actually been at peoples houses and found dubbed copies of local discs, there isn't the don't copy local loyalty we thought there was.

    but I'm not arguing the points from my perspective, I'm looking at the implications for the big picture, which will trickle down to the smaller players. the justification of piracy based on the majors deserve it ignores the trickle down effect. everyone gets hurt by perpetuating the change of attitude to music is for free, and that no one is hurt by it except evil giants.

    I do know what you're talking about re attending company paid for parties at the expense of the artists that we weren't strictly supposed to be at, but those days are long gone and even then they were the exception rather than the rule. a fun story to tell but if you're basing the future of music business models based on a few wayward exec decisions you can also apply that to japanese businessmen who put their hooker bills on their client entertainment budget. music isn't the only industry to miss use profits.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • Finn Higgins,

    If only we could apply the difficult to police criteria to other industries I'd be driving a better car and eating myself into an early grave.

    But those other industries aren't comparable; they involve producing physical goods. A lost sale of a physical object is just a loss - if somebody has one and didn't pay for it then you've actually lost your investment in creating that object.

    But when it comes to intellectual property the value of the property is actually partially determined by its cultural currency. For example, Microsoft would prefer a new developer to learn to program in their languages, on their free Express versions of Visual Studio than in Java/PHP/Ruby/Python/whatever using free tools like Eclipse or NetBeans. Either way they make no revenue on the sale, but it's still ultimately better for the value of their intellectual property for it to be popularly understood and used.

    Ubiquity of intellectual property has value in and of itself, so matters are innately more blurry. Trying to apply the standards of value for physical goods to intellectual property is as unworkable as the opposite, which is really all your comment above illustrates.

    Wellington • Since Apr 2007 • 209 posts Report Reply

  • Russell Brown,

    you're forgetting that the major label fronts the cash for the venture. indies front the cash for theirs.

    No, I think this is happening on P&D deals: if you signed away digital distribution you're liable to be fscked.

    I know of at least one bedroom recording artist who was treated extremely poorly by his major. And, of course, some of the biggest artist in the world have been taking their labels to court over similar issues. FRom the post by Simon Grigg I linked to above:

    the major record companies on the contrary are often using the digital move as a way of reducing the amount paid to an artist. For example most acts signed to majors have a "new technologies" deduction..which they actually used to try to apply to CDs until a couple (as recall Dire Straits and Simply Red) of acts sued. this can vary between 10% (unusual) to 30%. Which means that the act only get paid on 70% of the wholesale. Then there are packaging deductions which majors apply...20-25%..so the royalty base is now down toabout 45% of wholesale..and there are more. The fact that there is no packaging on a digital download is ignored.

    That's hard to justify.

    Auckland • Since Nov 2006 • 22848 posts Report Reply

  • Simon Grigg,

    I probably see more of the major label managers in NZ than you do, and there are some good people involved: Adam Holt and Mike Bradshaw, for example. But globally, the major label model isn't good, and it's going to change. When Madonna's Warner contract expired in September, she didn't sign with another record label, but with Live Nation (for $120 million!), which will participate in all her revenue streams, including merchandise and live ticketing. They're out hunting for more signings, and they'll get them.

    In my experience New Zealand has been extraordinarily well served by major label MDs over the years...people that actually like and go the extra mile for the non-money making thing that is NZ music often. Adam has put his neck on the line countless times (Dawn Raid and the fact that he was crucial to OMC's international success are just two).

    But the model is changing and I'm not sure if Madonna is the right person to point at. She is an uber-superstar heading towards the tail end of her 30 yr career who could ask almost anything (and if one includes live and merch $120m is not a tall order).

    Rather I think the Radiohead thing is of more interest. Another superstar band, albeit nowhere near Madonna's league in sales or touring revenues, that cut the chain because, they claim (EMI say it was a money issue), they were not offered the control they require.

    Regardless of why they did it, the major point of this is the psychophysical break between the old record company way of doing it (a normal old school record contract regardless of how 360 it is, which is still mostly what is on offer...they still don't get it) and the future. And the impact is not how this plays out for Radiohead (although they claim they have made more money on In Rainbows than the rest of their catalogue combined, and the physical copies have only been around for a week), but how it changes the mindset of bands, managers and agents as they approach a recording career. I think it's massive.

    And its fantastic.

    Just another klong... • Since Nov 2006 • 3283 posts Report Reply

  • robbery,

    No, I think this is happening on P&D deals: if you signed away digital distribution you're liable to be fscked.

    I only know of the sel dub one, and andrew kept himself in a good position on that one.
    The truth is artists don't need to rely on majors anymore so why bring their evilness into the argument to justify the free for all.

    I'm not one to defend majors anyway. my only dealings with them have been unpleasant, paul ellis is a complete arse and I'll never forget the way he acted pre being a celeb asrse, but I'm not going to add to the myth of the faceless evil that justifies no rights for anyone.

    The music I'm interested in doesn't come from majors anyway but it is going to be adversely affected by the perpetuation of the notion of music is for free, a loss leader, make the money from merch and touring, no one is hurt, they should do it cos they love it etc

    from tom's link again

    "Those numbers indicate that very few people want to pay for recorded music these days."

    I think it more points that too many people are willing to steal as more and more people somehow think it's acceptable. It's not.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • Russell Brown,

    But the model is changing and I'm not sure if Madonna is the right person to point at.

    Sure. She was a trophy signing and it seems Live Nation doesn't really expect to make its money back. But it's the next batch of artists it signs that will be interesting.

    In my experience New Zealand has been extraordinarily well served by major label MDs over the years...people that actually like and go the extra mile for the non-money making thing that is NZ music often. Adam has put his neck on the line countless times (Dawn Raid and the fact that he was crucial to OMC's international success are just two).

    You might also add the time he spent on the SJD album, which wasn't going to sell big retail numbers (on the other hand: two big synchronisation deals for TV commercials!). I really appreciated that Adam and Jim came to us to design a campaign for that album. It was cool.

    (BTW, the current internet advertising set-up serves music and other entertainment companies very poorly. I'd quite like to do something about that.)

    And I reckon Mike Bradshaw's view on where record companies will go -- more vertical, more 360 -- is spot-on.

    I think people like that will still be working in the music business in 10 years' time. Just maybe not for the same old companies.

    Auckland • Since Nov 2006 • 22848 posts Report Reply

  • Don Christie,

    That whole evil major label schtick as a means to justify theft is a little tired and people should know better than to perpetuate it. Its just a diversion from the real issue. one of ownership and the right to control that which they own, be they small time artists or major label wankers.

    Is the answer then is to screw the legitimate consumers and further more to remove other choices they might make in terms of software they use, computers they buy and privacy that they have a right to? And all this to protect a lossy, poor fidelity replication of someone's music.

    That I know of,... I have actually been at peoples houses and found dubbed copies of local discs, there isn't the don't copy local loyalty we thought there was.

    Gasp, and did anyone dare pick up a guitar in your presence and perform someone else's "intellectual property"?

    Would you rather 2 people legally listened to your creation or 200 with the possibility that out of those 200 10 might not be free-loaders? Radiohead understand the economics of this hence an entire album and video on Youtube. Lily Allen launched a pretty successful career in a similar way.

    I don't think the Internet has changed the way people do or do not copy music, think back to your old cassette collections if you doubt me. What it has done is place enormous power in the hands of some pretty unsavoury corporates to pry into your affairs.

    But really, this talk on Copyright Regime vs. Civil Liberties captures just about all the attacks made on consumers by the music, film and software industries in the name of preventing piracy.

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • robbery,

    That I know of,... I have actually been at peoples houses and found dubbed copies of local discs, there isn't the don't copy local loyalty we thought there was.

    Gasp, and did anyone dare pick up a guitar in your presence and perform someone else's "intellectual property"?

    there's a little more to it than that don. lets just say its the same as mr grigg attending a party and finding his labels catalogue neatly pirated,

    not that I'm sure he or I particularly gave a shit but the point is the acceptance of piracy is far reaching even amongst friends of friends. make of that what you will.
    its a comment on the acceptability of it, russell was inferring it was minimal even at extreme indie ends, and yes you'd be hard pushed to find many a nz release on file sharing programs but part of drm was to make discs un rippable, failed as that was.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    captures just about all the attacks made on consumers by the music, film and software industries in the name of preventing piracy.

    attacks???
    thats a bit of a misleading term.
    no ones forcing you to watch movies or listen to music,
    there's plenty of other viable things to do with your time, gardening or home renovation are popular I've heard.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    Is the answer then is to screw the legitimate consumers

    who said that? all the points I've made have been to establish a transparent DRM rather than demonize it. no one's trying to screw the legitimate consumer and I think you know that. they're just trying to maintain a hold in the face of technology they can't keep up with.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • Simon Grigg,

    not that I'm sure he or I particularly gave a shit but the point is the acceptance of piracy is far reaching even amongst friends of friends. make of that what you will.

    And I don't really give a damn. I'd rather 5000 people were listening to a pirated album than 25 bought it. It's all about the currency of the act. The music is paramount, and the rest, smartly herded of course, will follow.

    And DRM, Digital, piracy, P2P or whatever excuse you want, that failure to recognise that simple fact is the reason the record industry is fucked right now.

    There is a great book on the history of the Warners Music group which I must re-read, which chronicles the rise of the music driven labels, seat of the pants, risk taking, stuff which made them what they were, and predicts, rather accurately, the stock market / accountancy driven downfall we see now.

    There are no more Mo Ostins, Armet Erteguns, Chris Blackwells or the like sadly, willing to build an artist over 5 albums..at least not in the major labels. That is the real reason they are struggling.

    Just another klong... • Since Nov 2006 • 3283 posts Report Reply

  • Finn Higgins,

    attacks???
    thats a bit of a misleading term.
    no ones forcing you to watch movies or listen to music,
    there's plenty of other viable things to do with your time, gardening or home renovation are popular I've heard.

    And that's about the worst argument I've ever heard in support of an industry. I mean, nobody's forcing you to deal with real estate agents either - that doesn't mean that their business practices are above reproach.

    The music industry's collective problem is that it moved too slow, and when it did move it moved completely the wrong direction. While peer-to-peer technology was providing more and better access to entertainment the industry was trying to develop technologies that offered only more restrictions, worse compatibility and lower quality. And somehow the expectation was that people would want to pay for that. Legitimate customers have always been and still are the second-class citizens of digital music. How the hell do you market that as attractive? I'd feel screwed if I spent money on digital downloads, that's for sure. I still buy CDs - they're not really any more expensive, you get a physical product, they're DRM-free and lossless.

    Wellington • Since Apr 2007 • 209 posts Report Reply

  • Don Christie,

    attacks???
    thats a bit of a misleading term.
    no ones forcing you to watch movies or listen to music,

    But if I do want to listen they are trying to force me to listen in a manner (and time) of their choosing. In doing so they also treat me as a criminal. Just look at the ridiculous restrictions on e-books vs a printed book as an example.

    If I don't choose to listen they still have a side impact on my life. Just check out Peter Gutman's shortest suicide note analysis. I certainly call that approach an "attack" on consumer rights.

    If you are, like me, a Linux user then DRM legislation and technologies impose all sorts of restrictions on what I can and cannot do with my hardware CDs and DVDs.

    Wellington • Since Nov 2006 • 1645 posts Report Reply

  • robbery,

    But if I do want to listen they are trying to force me to listen in a manner (and time) of their choosing.

    well I don't think thats actually the objective, its more the result of not being able to implement the simple act of stopping people giving direct digital copies of the track to all their mates without the hassle. once again, not the idea of drm but the application of it is faulty.

    when you go to a restaurant or a bar you have similar constrictions placed on you. you have to eat the food at the assigned table, drink alcohol bought at the bar etc.

    consumers never had the right to get anything for free.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    And that's about the worst argument I've ever heard in support of an industry.

    really?

    most industries have rules of use.
    do you go into a petrol station, fill up then decide to drive off and not pay.
    do you pick something up from a dairy and walk out the door without paying.
    you probably could get away with it but the risk of getting caught is higher for breaking the rules of those industries at the moment.

    new zealand • Since May 2007 • 1882 posts Report Reply

  • robbery,

    And I don't really give a damn. I'd rather 5000 people were listening to a pirated album than 25 bought it.

    you say that now the label isn't your day job, but casting your mind back to the early eighties there's a hungry record label owner who might answer differently,

    new zealand • Since May 2007 • 1882 posts Report Reply

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