success of sue em all not good for labels

A comment by Greg on the “Sue Em All Awesome” post:

You’re right about the success of the “sue ’em all” strategy in having achieved the labels’ immediate goals, but the problem is that it has been a pyrrhic victory. Napster was the most effective music discovery and acquisition engine in history, it had an enormous and enthusiastic user base, and the labels killed it in an attempt to preserve their current business model.

Then mp3 blogs arose as a ground-up completely distributed user-driven model for taste publishing and music acquisition. They had a series of early instances of driving wild success of unknown bands (Broken Social Scene, Arctic Monkeys, Clap Your Hands Say Yeah, Arcade Fire, etc), a possibility that was formerly open only to the labels. The labels couldn’t actually sue each blogger — there were simply too many — so they conducted a comprehensive FUD campaign to discourage bloggers from linking to mp3, which has been fairly successful. Simultaneously they have worked to encourage the rise of a small number of highly visible music sites (Pitchfork, et al) which they have worked hard to control via the traditional methods of ad revenue and star access. The result has been the recreation of an online music journalism that looks a lot like its offline counterpart and is hence a relatively poor niche-satisfying discovery engine.

Somewhere in there the iTunes store arose as a very user-friendly interface and captured an enormous portion of the market. It didn’t benefit from any of the network effects of the web, but it did its best to serve users and so it became an incredibly powerful promotion and discovery engine despite its best efforts to the contrary. The labels immediately got scared of Apple’s power over them and so have tried to stand up a whole series of competitors such as the Amazon mp3 store, each their own totally incompatible silo. This has been good for customers in terms of prices and DRM options, but has again eliminated the incredibly powerful networks effects that are what make the web the world’s best tool for getting cultural supply together with demand.

Each of these incidents (and others, such as the Pandora/streaming debacle) has shown the labels choose control and fear of change over the potential distribution, discovery, and money making power of the web. The result has been that while they’ve “won” in the sense that they’ve largely prevented the creation of an online distribution system that would be a competitor for their offline systems, they’ve done it at the cost of utterly poisoning the well: ensuring that music on the web has withered as a market just when so many other digital ecosystems have taken off.

It’s had to argue that an industry that has gone from being enormously profitable to being on the edge of utter bankruptcy in the face of the largest expansion in the consumption of its product in history has done “Awesome”.

As much as I agree with this POV, I don’t think consensus reality is even aware of this bag of issues. Eliminating network effects by ensuring that all internet music is in a silo? Huh? Is that even English? Best not to waste this breath for a couple years.

5 thoughts on “success of sue em all not good for labels

  1. Touché.

    You may be right that this way of thinking is over the heads of the people currently helming the iceberg-ramming fleet known as the record industry. On the other hand, the Boing Boing/Creative Commons/Twitter/Flickr/Social Media crowd finds it is so native as to be boring and cliche. Tonight, I went to Ignite Portland 4, a local in-person gathering of the digital tribes and I bet the people there would find the shortsighted “return on investment” logic that lead to “sue ’em all” just as non-sensical as the record industry types find my talk of “network effects”.

    The real questions are: how did these two groups get so far apart from each other and what can we do to bring them back together? A more partisan way of putting it might be: who’s right? Which of these ways of thinking is leading to more economic advantage and more social influence?

  2. One thing both of these groups have in common is an apocalyptic viewpoint. They both believe that it’s the final battle as far as the current stakeholders are concerned. Obviously they have different perspectives on whether that’s a good thing.

    Something you and I have in common is a belief that where things are going is going to be reached by iterative improvements to web music, making the web hospitable to music and vice versa. But I don’t think a lot of people share that, or even have a conception of what it means.

  3. I guess I’d say that both things are true simultanously: we are seeing a kind of apocalypse and incremental change is the only way forward.

    As I tried to express in my comment on the other post in this thread: http://gonze.com/blog/2008/11/08/bitching-about-sue-em-all-for-newbies/ I think it’s an exceedingly gloomy time in the world of music. The industry simultaneously killed off both web-based innovation and its own economic prospects. However, as you’ve been pointing out recently, people do keep creeping forward. Whether it’s the net labels scrounging together some form of tribal identity for online music producers or the interactive music games inspiring new people to become makers themselves (have you played with r2dj or Bloom?) new incremental changes do keep coming along.

    It’s kind of like Dr. Bloodmoney or one of the other good Phil Dick post-apocalyptic novels: most of civilization may have been destroyed, but some industrious tinkerer out there can probably put together a wood-burning car, the kindly kid in the radio shop turns out to be telekenetic, and the small rodents evolve high intelligence.

    On my optimistic days, I find this state of affairs exciting and stimulating — you never know what weird creature could come along mext — but just as often it seems dreary and near hopeless: there is, after all, a lot to mourn for.

  4. hey greg, I agree – it’s an evolution spiked with revolutionary moments.

    While I’m not as revolutionary as Crosbie (although, stepping back into “consensus reality” it’s a hair split of a difference between me and him) it does seem that taking something away as fundamental as charging per “copy” would be wrenching under the most visionary, forward thinking authority.

    Meanwhile, the death of “my favorite band” seems to me a cultural phenom almost separate from sue-em-all and more a by product of other forces. Kids don’t seem to pin their parental-anxieties on celebrity rocks stars like they did in past generations. I don’t mourn that.

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