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.

mini-talk at CC Salon tonight

I’ll do a shorty talk at the Creative Commons salon in Silverlake, in LA, tonight. My topic is going to be the role of permissive licensing in the business of internet music. I’ll lay out a map of the industry as a whole and situate copyleft within it.

Flavorpill describes the event this way:

Creative Commons is at the forefront of the progressive copyright movement, seeking arrangements that allow the free flow of artistry and ideas while at the same time protecting intellectual rights and freedoms. A group taking the middle road, its efforts have been invaluable in the face of technology’s rush into the future. At tonight’s salon, Mark “Frosty” McNeil — founder of noted DJ and multimedia collective Dublab — and XSPF developer Lucas Gonze tackle the ramifications and opportunities that could result from current and proposed copyright policies and discuss their larger effect on the music industry.

View Larger Map

duckett on Mixwit via teru

teru put together a fine Mixwit playlist of music on CC Mixter by duckett. I’ve been digging duckett’s stuff lately too, so here’s the Flash widget for the playlist:

MixwitMixwit make a mixtapeMixwit mixtapes

Off-topic: I’m pretty sure that there’s a way to get an XSPF playlist for Mixwit stuff, but they don’t document it and I forget the trick, so if you’re reading this in a context that doesn’t support Flash — like an RSS reader — you’re out of luck with this playlist. If there was XSPF you could render the playlist with the user agent of your choice, including whatever was appropriate to your machine.

site harshing mellow

Mary G emailed to let me know about a gnarly display bug in this blog where the page scrolls down to a couple old items. If you read this in an RSS reader you don’t see it, but if you go to the web site you do.

Fix is on the way.

The fix is in. The issue was that I had an iframe using a URL with a fragment identifier:

<iframe src=""></iframe>

This should work but doesn’t, and since I don’t understand why and the issue isn’t a big deal I did a workaround and removed the #fragment.

bitching about sue em all for newbies

A comment by Victor Stone on the ‘Sue em all Awesome’ post:

Lawsuits have been SOP since at the least the 70’s when I noticed that, all of a sudden, every A&R guy had a law degree. Lawsuit insurance, at that time, was built into recording contracts (at the artist expense of course), replacing budgets for coke and ludes.

The Internet just exposed the ‘sue am all’ thing to everybody outside the industry, but they’ve been doing that all along.

My paraphrase: When the internet developers started working on music applications they were so green that they didn’t know the recording industry runs on lawsuits. It was to be expected for Napster to get the shit kicked out of them, and not just Napster, but the whole long line of tech-focused startups lining up to get knocked down.

The tech companies haven’t been tough enough to survive in the recording industry, in other words, and they have walked into one trap after another. They *keep* doing it, if skepticism over iMeem’s ability to survive its licensing deals is accurate.

copyright don’t ask don’t tell

The other day I emailed a netlabel to ask if I could rehost their album art. They didn’t have a version of it online for me to include using a direct link, and it wasn’t under a permissive license that would permit me to redistribute it.

Then yesterday I emailed a fellow who had put up a sound sample under a license I can’t use to ask if I could have permission to use the sample anyway.

Neither of these people have gotten back to me. That’s not a coincidence – rights holders have an incentive to be cagey. They benefit from saying nothing. I doubt that either of the people I emailed would object to my use. But compare what they get for saying nothing to what they get for saying something:

– If they say no, I don’t help market their works. I represent viral spread to them, and they want it.

– If they say yes, they give up the opportunity to charge me.

– If they say nothing and I do it anyway, they gain both viral marketing and the ability to sue me.

Not giving permission but not saying no is all upside for rights holders.

They don’t even want to be *asked*. Let’s say a rights holder had a web app for infringers to tell on themselves, so that a user of the app would be submitting a statement to tell the rights holder that they were infringing. Wouldn’t this create an obligation for the rights holder to complain? Oh noes! If they didn’t complain they might lose their ability to sue. If they did complain they might lose viral marketing.

So that’s copyright don’t ask don’t tell. Rights holders want you to infringe without either asking them or telling them.

“Sue em all” Awesome

Techies frequently rag on the RIAA “sue em all” campaign, saying that it hasn’t worked and never will. They’re wrong.

As an example of someone saying Sue Em All is not working, this sober analysis by professional economists describes the situation this way:

A catch-all phrase covering letter writing,
bandwidth throttling and legal action against those who upload and
download files. Whilst understandable as a choice given the current
coordination problems, there is little evidence suggesting the costly
process of pushing down on the black market will indeed raise up the
demand for the licensed market for music. Furthermore, there exists the
real risk of a ‘Whack-A-Mole’ game – persistent reappearance of
unlicensed sources for music upon the closure of any source.

pricing P2P’s economic impact” (Will Paige, David Touve, Keith
McMahon; MCPS-PRS Alliance)

It’s true that individuals in private life are just as free to do filesharing as ever, and that the amount of filesharing isn’t going down. However, it’s not true that businesses can incorporate filesharing.

A business that builds on filesharing creates unacceptable risk for its investors. The investors are about return on investment, and they aren’t ok with giant settlements or big ongoing legal bills. Businesses who need music are usually forced by their investors to cut licensing deals, despite the brutal expense.

Google’s settlement of the lawsuit over the book-scanning program is a good example. They had a pretty damn good legal case if they wanted to fight it out, but they stood to gain more by making up. Fighting meant uncertainty over whether the final judgement would vaporize the entire publisher project in the end. Settling now meant putting bounds on the costs.

Standing on principle is not what businesses do. They exist to make money. Making money means controlling risk. Controlling risk means preventing ruinous legal judgements.

And users gravitate towards experiences supported by business, because business support allows for better usability.

Case in point, the Apple silo. Apple makes it very easy to get music onto the iPod by buying at the iTunes music store. If you’re an iPod user, you’re an iTunes user, and if you’re using that software then it’s often easier to buy licensed music from the iTunes store than to download from a filesharing network and import to iTunes.

Not that users *can’t* do filesharing — that would be a ridiculous claim — but that the usability of licensed commercial suppliers is greater.

And usability is a huge factor. People have a hard time operating computers. They have an easier time when businesses devote resources to helping them. When they have an easier time of one thing than another, they do more of the easy thing.

Again, it’s not that lawsuits against private filesharers have caused private filesharing to go away. For an individual engaging in filesharing the calculation is clearly on the side of doing it. Individuals who are rational actors *will do filesharing*.

It’s that the same calculation doesn’t produce the same result when it comes to support businesses.

I hear you say: what about My Favorite Software, which is still around? What about X-Factor-Gee-Whiz-2000? What you don’t know is that the proprietors of those companies almost certainly are having meetings with the labels. They are making the pilgrimage to Santa Monica to kiss the ring and seek absolution. If they’re still doing what they’ve always been doing, the reason is probably that they can’t get a favorable deal.

Open source software is an exception; without investors, it doesn’t need to control risk. Generic software which can be used for filesharing is the other exception. Nobody thinks it might lose a big court case.

As a result of all this, the record labels are busily cutting licensing deals. It’s simply not true that they have scared the customers away. Now, maybe the companies taking out those licenses are going to go out of business, leaving the labels dead in the water in the long run. But the jury is out on that. We won’t know for a few years whether licensees can survive and under what conditions.

What we do know is that the labels have created a customer base by suing it into existence.