The RIAA has been attempting for several years to
eliminate free online music services such as Napster, Aimster, Kazaa,
etc. The problem is new services have been
cropping up as fast as the RIAA can shut them down.
The problem here is actually twofold.
- How does the music business move from a
physical business (CDs, tapes, etc) to a digital business (MP3s,
- How do you make money in the digital
The first problem is what is currently causing
much consternation in the RIAA and the halls of the big 5 music makers
(Universal, Sony, BMG, EMI, and Warner). The
second problem though is what will have to be solved if music as we
know it will continue.
The Music Industry as spent the last 50 years
getting very good at their current business model.
They control artists through exclusive contracts.
They control production through their wholly owned studios.
They control distribution through both
subsidiaries such as Sam Goody as well as deals with retailers such as
Best Buy. They even control advertising, using
agreements similar to payola with many radio broadcasters to limit
airplay to the songs they wish to have promoted.
In short, the Music Industry has a vested interest in the current
music model, they control it.
“I tip hat to the new revolution…”
It is in spite of this, or perhaps because of it,
that digital music has flourished. In 1999, with
the launch of Napster, the digital music revolution began and the
death knell of the physical music business was sounded.
Disenfranchised by the high and increasing price of CDs, music
listeners and avid fans alike gobbled up this new format.
Quickly competitors arose both in the form of similar services
such as Aimster and Kazaa as well as completely new models such as
Gnutella. The result of this was a swift ascension
to critical mass. Almost before the Music Industry
noticed, these trading services had taken on a life of their own and
had spread to the point where nothing could be done to stop them.
The RIAA has certainly tried to stop these new competitors
using lawsuits, attacks, and legislation in attempts to destroy them
and their business model. The RIAA has failed,
with each successful attack another competitor has sprung up to fill
the void. The RIAA is spending billions of dollars
trying to maintain an untenable position.
Pandora’s Box has been opened and rather than try to keep hope, the
Music Industry is trying to recapture the horrors that have already
“Show Me the Money”
Lest you think it’s
all wine and roses in the digital music camp I’d like to point
something out. No one has yet made a fortune
giving away music for free. Online music swapping
is an idea, not a business model. As most
e-commerce companies of the late 1990’s found out, you don’t make any
money giving away your product for free. Yet the
music swapping industry, and I use that
term loosely, has found out people are not yet willing to pay for what
they can get for free elsewhere. The Music
Industry found this out after launching it’s
own download services (Pressplay
from Universal and Sony;
MusicNet from BMG, EMI and Warner) and
noting that the masses did not beat a path to their door.
A similar fate awaited Napster who, following their court
battles, launched a pay service in an attempt to stay solvent.
Even with Napster’s installed user base they could not get the
subscriptions necessary to stay afloat as a legal pay service.
If Napster, who at one time controlled the music swapping
industry could not go it as a commercial business what hope to the
rest have of ever making money selling music online?
“I’m just standin’ here
Every year the Music Industry spends millions of
dollars on advertising. They do this to promote
new acts, expand the audience of existing acts, and alert existing
fans of new releases. In this way the Music
Industry is no different than any other business.
It is said that you have to spend money to make
money, the only difference with the Music Industry is where the
money is spent. While it is true that they spend a
large portion each year on television and print ads identifying new
releases by their artists that is not their
major expense. New release ads can only target
The “current” best way to reach new fans is via
radio play. Now according to FCC rules radio play
should actually be a profit center for the Music Industry as radio
stations are required to pay a royalty each time a song is played.
In fact the industry is paying many times more than that to get
the songs on the radio at all. Paying money to get
a record played on radio was supposed to be banned
following the Payola scandals in the 1960s
but the simple fact is that similar pay-for-play practices 
continue to this day.
“Where do we go from here?”
So how will the Music Industry proceed?
Will they continue to fight the music swapping industry or will
they face the truth that online music and digital distribution is the
future? Only time will tell.
The Modest Proposal
Make music sharing legal and treat is as free advertising for CD
sales, Concerts, and merchandise.
It is fairly obvious that in the current market
you will not be able to make money selling tracks or subscriptions to
download music so let’s not try. Every year the
music industry spends millions of dollars trying to attract fans and
get the word out to existing fans of new albums.
They are missing a vast resource for getting this information out, the
music sharing industry.
There is precedent for this. Many independent
artists and small labels are already using this as their primary
advertising model. Swapping services such as
MP3.com already provide access to thousands of freely available tracks
and more importantly links to band web sites where CDs and merchandise
can be purchased. This model could and should be
The Simplest solution…ID Tags
- The Music Industry could team up with
the Music Swapping Industry to create a band and song ID tags.
- Download and sharing of songs with these
tags would be legal and encouraged.
- When played through players equipped to
use those tags web sites and custom content could be provided to the
user on the screen such as
- The latest news on the band, upcoming
albums, tours etc.
- A button to click on to order the
album the song is on.
- Tour dates/locations and a convenient
button to buy tickets
- A link to an online store where band
related merchandise could be purchased.
- Perhaps even streaming video of videos
for the song.
- In order to encourage creation of these
players, the creators could get kickbacks from album, ticket, and
- The MP3 format already contains the
ability to include these tags
- This would provide for the Music
Industry another source of revenue for almost no outlay of cash or
- This would legitimize Music Sharing
services and provide them with a way to survive and thrive.
- The Music Industry would have to admit
they were wrong and get into bed with an industry they have been
trying to kill since its inception.
- Clients capable of utilizing these ID
tags would need to be created.
- Being that this would require a central
database of ID tags care would have to be taken to ensure that small
bands and labels would not be excluded from getting their own tags.