The Power of Definitions

This is a post about the words we choose to define abstract concepts with and how they have great influence over the way we consider them.  Certainly this isn’t a new concept, as George Orwell described newspeak in his book Nineteen Eighty Four.  But in the realm of copyright, not to mention politics, definitions frequently are used to manipulate particular thoughts and impressions on the listener/reader.  A discussion might be helpful in further discussion of the issues involved.

Intellectual Property – When discussing intellectual works, many people refer to copyright protected material as “intellectual property”.  While I too have used that term, I have come to loathe the perversion it represents.  “Intellectual property” evokes the idea that copyright protection is an absolute right, rather than a balancing of competitive interests.  Absent the human creation of copyright law, published creations freely reside in the public domain.  Using the term property eliminates the consideration of intellectual works as this balance of rights, since our ownership society understands the bounds of property much more clearly than abstract copyright law.

Consumer – It’s disconcerting that terms like Citizen, Public, customer, or client have been lumped into the term “consumer”.  The word has a passive connotation, simply a person who uses or buys goods.  Calling the same person a customer or client gives them more credibility, since we know that customers can be discerning and have the luxury of choice.  Citizen and Public are the most powerful descriptions of the same persons.  These terms evoke responsibility and awareness, because our actions as citizens are larger than just for our narrow self-interests.

Creators – As a music industry vet, this is a term that I’m particularly aware of.  Whenever a controversy erupts in the realm of copyright, “creators” are invariably trotted out as a sympathy ploy.  Unfortunately copyright law does not enrich creators nearly as much as publishers, so the creator ends up being a patsy.  Think Lars Ulrich from Metallica when the music labels were reeling from Napster, or Disney’s using Mickey Mouse for copyright extension efforts.  Whereas the public may not believe that the music industry needs more restrictive laws to govern music usage, they may be supportive of Metallica’s loss of sales; similarly copyright extensions above and beyond “life of creator” only benefits ageless corporations like Disney, at the expense of the public’s unfettered usage of Mickey.

Therefore we must be vigilant when discussing issues revolving around copyright.  Lawyers and public relations companies resort to using innocuous terms for controversial subjects because it quells disagreement.  We should be careful not to adopt the loaded terms, or our arguments for balance will not be heard on their merits.

Grinding Gears of War

Windows game enthusiasts were unable to launch Gears of War for their PCs this week as a security certificate expired on their systems.  While I haven’t seen actual proof that an anti-circumvention system is responsible, Ars Technica and Wired both are faulting DRM for the snag.  Since gamers using No-CD patches are apparently unaffected, I’d wager they are right.

It is unfortunate that paying customers pay the brunt of content industry’s piracy fixation.  Pirated content is a cost of doing the business of content, much like retailers must rely on asset protection/loss prevention.  The difference is that retailers cannot assume all customers are potential thieves.  If Walmart began frisking every customer upon entrance, they would lose customers faster than the music industry.

Unfortunately DRM providers have promised unprecedented control over digital works.  Thus far those promises have not materialized, and many technologists like myself think they never will.  Copyright was never intended to be a closed pot, but rather a sieve.  Since the public has always enjoyed unfettered private use of copyrighted work, DRM systems are a new regulation mechanism in which the public wasn’t considered.  Therefore the backlash results from situations like this Gears of War lockout.

Publishers inevitably trot out the same arguments about protecting their assets, but they treat their customers with contempt when they say this.  It’s one thing to require the media when playing, but Gears of War relied on a certificate in order to launch the game.  Certificates are time limited by nature, so it begs the question about what unauthorized usage was the publisher intending to limit?  Unless a game is sold on a subscription basis, there shouldn’t be an expiration date on the DRM.

A New Focus

For anyone who may have visited in the past, this blog used to be called the Hard Rock Blog, based on my interest as a sysadmin for a recording label.  I have used the space intermittently to describe my feelings on the state of the music business.  Since I have left that position, I decided to rebrand this space into a more general intellectual works discussion.  The old posts remain for posterity but moving forward this space will be called the Intellectual Works Blog.  Since the issues of copyright include a larger array of works like movies, software, and books, it seems appropriate to expand my initial mission statement into these other areas too.

Thanks for coming by!

Reflections on the Music Biz 2007

So the final numbers aren’t tallied, but it looks like another bad year for the music business. After all, we’ve had yet another year of double-digit sales skids without any real savior in sight. However, this year has finally produced some changes worth building upon, despite the voice in my head saying “too little, but hopefully not too late.” In this entry, I’d like to pick out a few notable events and how they might shape 2008’s music business.

Apple Inc. has continued to dominate online sales this year, earning the scorn of the entertainment business for their staunch control over iTunes and iPods. Labels, unhappy with the revenue totals derived by per-song downloads, began airing their displeasure in public late last year. Apple CEO Steve Jobs didn’t earn too many music industry friends when he responded in an open letter rant against DRM. But shortly after, EMI introduced DRM free songs on iTunes. This ultimately drove Universal to test the waters announcing DRM free MP3 files through Amazon.com, snubbing Apple and restricting Mac support to full album downloads only in the process.

Though the transition continues to be lethargic and bumpy, this year will be remembered as the first time unrestricted digital files were legally available from major labels. To me this is a huge acknowledgment that we will start to appreciate in the coming years. The loss of control over digital files is a scary step for the music execs but ultimately it’s a realization that we need to be more customer focused in order to survive.

The continuing problems at the labels has also resulted in notable artist forays into distribution and sales. Prince gave away his latest disc in the Daily Mail newspaper, Eagles partnered with Wal-Mart to exclusively sell their latest album, Madonna signed a $100+ million deal with a concert promoter Live Nation, and of course Radiohead went direct to fans with a name-your-price plan. Then there’s the continuation of Trent Reznor’s critique of the label system, but one clear result emerges: top-line artists used the disarray of 2007 to good financial and PR advantage.

But two things strike me about this exodus: only the brand name artists are succeeding in the new world and they are leaving labels because they see how we’ve failed them most acutely. If you’re not a well known entity, however, you still need some help. And even if the recorded music business stinks, the labels still have power in getting you good tour billings, A&R development, and promotion. These advantages are borne out by BigChampagne’s charts showing a lot of similarity to traditional charting. So another observation I will note is that we have a problem in sales, but signs of health in other areas.

This is a big problem to conquer, of course, but as I’ve said in other posts, our pulse is still intact. And as the sales declines accelerate, the sales/distribution problems will have a higher sense of urgency to resolve. To me the good news is that 2008 looks like it will be a year where experimentation will be cultivated and this will help in righting the course of the music business.

It should be exciting…

New EMI Boss Questioning Trade Orgs Value

Apparently Guy Hands has reportedly called into question the heavy commitments the music industry has incurred in reference to the major trade organizations of IFPI, BPI, and RIAA.  According to this article in Billboard.biz, the industry spends $250 million annually between these groups.

Since Mr. Hands has been pouring over company financials, it appears to me that he is questioning whether the money is well spent.  I have long been critical of the RIAA’s lawsuit campaign, which doesn’t effectively stop file sharing but manages to aggravate the very people we need to sell music to.  If EMI is looking into this measure, perhaps there’s reform to be had.  The lawyering has not been a positive solution, and perhaps Mr. Hands’s fresh eyes are seeing things in a new perspective.

With all the leaks coming from EMI lately, 2008 is shaping up to be an interesting one…

Music Label 2.0

So after the CD industry collapses, we will have a new recording business. It’s pessimistic to assume otherwise. The masses now have access to high quality audio production via personal computer technology, so recorded music has a vibrant future. The form it takes will largely depend on how the legacy business falls, but I believe that commercial interests will eventually prevail. I mean, this is America, right?

While there is constant chatter on the failings of this industry, I’d like to enumerate what I think its strengths are. I find too much energy around the office is drained by the uncertainty and much of it is the negativity regarding online sales efforts. But we have a lot to be proud of and a lot to offer musicians in their efforts to become successful.

The first is our ability to recruit top talent. Even though the market place is screwed up, the majors still can find and develop the best artists. The file sharing networks see the most traffic with the same artists that are on the top of Billboard. So the industry is still healthy in bringing compelling artists to the public.

The second is our infrastructure to promote and market the roster. This is probably not a view shared by a lot of people out there. But the fact is that our traditional sales channels are changing as fast as the promotion outlets we’ve relied on. Radio still is the most important piece of selling music, but online promotions are completely underused. There are lots of radio promotion people in the business, but not too many online promotions (new media) people. As we get more facile with online activities, the promotion department will adapt and find new outlets. It might be painful, but the realizations are slowly coming.

The third leg of my optimism is the fact that specialization is the natural progress of things. The reason musicians are doing it all is because the label has not adapted to the times and a lot of trust has been lost. But if the industry works towards fixing the difficult problems, artists can go back to what is best for all us music fans: play music. There is no better path towards greatness than being able to practice, gig out, and record full time.

No doubt there’s much to do and a lot of uncertainty, but music will survive. And the roughed up, pessimistic labels still have a lot to offer if we got out of the box.

Entertainment Business Remade in Silicon Valley’s Image

I just came across an interesting post by Netscape founder Marc Andreessen about the writer’s guild strike. In the post, Mr. Andreessen considers how in Hollywood the ideas are owned by the studios and the talent that produces those ideas are merely hired guns. This runs counter to the system in Silicon Valley where the venture capitalists fund the ideas but leave ownership with the talent. This has resulted in a very profitable system over time for startups in the Valley.

It’s an interesting take which could also be replicated in the music business. The concept is sound for technology and my instinct tells me the idea has merit for music too. Sadly such radical thinking is coming from external sources because too many insiders are addicted to owning the copyrights themselves.

Nonetheless there are some important reasons why this idea would have legs, though. Firstly, the music business has long lost all sympathy with the general public who largely believe that labels take advantage of artists. It’s a complex issue for sure, but giving the band ownership over their own body of work would be an interesting way to restore good relations with our potential customers. Secondly, artists may find such a change an attractive reason to stay within the label system. Since established artists like Eagles, Radiohead, Madonna and Prince have eschewed the label system, such a change could help slow the exodus of other top line artists.

While the traditional thinking is a difficult obstacle to overcome, technology companies have a good system on their hands. If the recorded music business takes a look at tech’s successes and strengths, we might transform the music business back into a growing business.

Out of Touch CEO

Reading this Wired interview with Universal chief Doug Morris really brought the point home that the industry’s top brass have no idea how to bring the industry into the digital age.  It would be sad to watch if it wasn’t so maddening to witness.  The quote that really hit home for me:

There’s no one in the record company that’s a technologist. That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?

Perhaps Mr. Morris should take a walk over to his IT department to find all the technologists who have been completely ignored throughout the industry’s collapse. Unfortunately the tech guys aren’t considered a strategic part of the business, and Mr. Morris’s comments underscore the fact that the executives are so scared of technology that they don’t engage that part of the staff.  And the industry continues making bonehead choices and complaining that there’s nobody to help give them good advice.

Instead they invite snake oil salesmen who cater to every wish the execs come up with: protect the content, get us paid for any possible use, or find a way to save the disc. But snake oil is always worthless, no matter how it’s spun to marketing types who don’t grasp the underlying tech. Even worse, when these types of initiatives hit the market place, the industry further alienates paying customers while not meeting their own objectives. Unfortunately, this Wired piece does nothing to make Mr. Morris look enlightened in the face of change, despite Universal’s new approaches this year.

And to be honest, the new approaches aren’t enlightened by any real degree. As Wired notes, DRM-free downloads are being used to try and bludgeon the iTunes hegemony rather than capitulating to demand.  Wired further mentions Mr. Morris’s Total Music initiative, which essentially would create any alternative ecosystem to the iPod+iTunes where the key difference is music rental rather than file ownership.  In the chance that Total Music does take off, how many people really believe Amazon’s MP3 store will continue?

Jermaine Dupri: Another iPod Generation Hater

Wow, it must be nice to live in a world that doesn’t intersect with reality. Jermaine Dupri wrote a post on HuffPo yesterday talking about Jay-Z and how iTunes is destroying the biz. He reasons that Jay-Z should be lauded a hero for refusing to sell single downloads and has proven the iTunes model wrong by virtue of 425k first week CD sales.

Mr. Dupri further comments: “If anything, WE made iTunes. It’s like how we spent $300,000 to $500,000 each on our videos and MTV and BET went ahead and built an entire video television industry off of our backs. We can’t let that happen again.”

It’s a great line, but there’s revisionist memory here. Does anyone really believe the record business threw that kind of money into videos with no payoff in mind? MTV, at the time Mr. Dupri describes, was directly fueling millions of record sales which behooved such lavish productions for music videos. Music videos, until recent memory, were regarded strictly as promotional material and music industry myopia truly allowed companies like MTV to flourish.

Looking back to the music landscape in 2003 when iTunes Music Store was born, Apple was the digital music hero. For the first time, the industry saw revenue from digital files but considered it nothing more than gravy. But iTMS continued growing at double digit percentages, and now the industry has decided to consider Apple the new enemy. Mr. Dupri makes the mistake that many other industry commentators have made: that Apple needs the iTMS for the iPod’s success.

Quite simply, that’s wishful thinking. Apple saw the opportunity to upsell their profitable iPod customers with legitimate music files, and built a platform that made it easy to do so. But if content creators abandon iTMS, Apple is unlikely to lose iPod sales whereas the millions of music industry revenue would dry up. Where’s the upside when no other download stores have proven successful? I could see the industry collectively doing something like this, but the old saying about cutting your nose immediately comes to mind.

The Ol’ Music Biz

The music biz has been an interesting ride for the 5 years I’ve been around it. I think it’s an exciting time for music, since I’m starting to finally feel the waves of change. There’s no firm footing in the online space, and this has lots of record label people terrified. All they see is the year over year declines in unit sales and unabated piracy, with no light at tunnel’s end.

Compound the CD sales problems with retailers who are starting to reduce floor space, further compounding problems. Now you’ll only be able to find marketing priorities at the store, rather than a fuller catalog.

But I have other confidences that this business seems to lack. We sell a cool “product” and it isn’t the compact disc. It’s music, an intangible item that touches the deepest portions of us. There has never been higher demand for music, despite the all-too-common statement “there’s only 1 good track on a CD”. Millions of P2P users sharing billions of songs each year belie such a comment.

If there was absolutely no demand for music, I’d be concerned for the future. But Apple proves that music is still chic, even though the industry has decided to demonize them. Music is the fuel that helped drive broadband growth, even though the business hasn’t found any benefits to that. So the problem isn’t in the demand, but how to make a profitable business out of it.

But many of the business managers tell you how difficult it is. They’ve been used to selling music a certain way, and an entire edifice was constructed around it. So they list all the roadblocks you will be stopped by. They’ll tell you about publishing issues, royalties complications, territory rights limitations, or even artist reticence.

But it’s all based on music as a physical good. And the march of progress will soon relegate the music CD into niche status. The greater public has already moved on, and those business problems will soon be moot.

So we can’t be so hindered by our past responsibilities. It’s not that I’m unsympathetic to these concerns, but these cannot prevent us from nurturing and creating the new music business. The secret, in the larger picture, is that the new business isn’t all that different from the old one.

But more on that in another post…