As Chris just reported, the Nine Inch Nails album released independently via download has garnered $750,000 so far. A similarly released Radiohead album made about $10 million recently. The recording industry is unsure what to do, but thus far has mostly seemed to ignore these successes and continued to focus on music piracy, which they blame for loss of profit. To combat piracy, they’ve taken measures such as encrypting CDs with Digital Rights Management (DRM) software, which in Sony’s case included a rootkit, which presented serious computer security issues to users. However, as of last year, all major record labels had dropped DRM due to its cost and ineffectiveness at preventing piracy. Why the record labels are on their way down, after the jump.
The DRM fiasco, not to mention the well-publicized lawsuits against file-sharing college kids, show the full lack of a clue that the RIAA has with regard to the Internet. They seem to believe that information and digital media can be regulated, that the Internet will eventually bow to corporate demands, lawsuits, or legislation. One glance at popular BitTorrent website The Pirate Bay’s legal threats page is enough to show that the old techniques of copyright protection no longer work. Even if the Pirate Bay’s Swedish servers are shut down, file-sharing sites will pop up in even less regulated countries.
The RIAA claims that downloading music is the same as stealing (according to those ads we’ve all seen, it’s apparently the same as stealing a car) and should be prosecuted by the law. When, where, and under what circumstances that’s actually true is debatable, but in the end it doesn’t matter whether or not it’s illegal. Music is no longer simply a product. It’s not something that can be created, polished, marketed, sold, and merchandised by a handful of corporate executives. The minute any sort of digital media is released, it’s available for download via BitTorrent and other file-sharing services. Even if the corporate lawyers somehow manage to shut these down, something new will pop up. Remember how the RIAA was all happy when the first iteration of Napster got shut down, thinking they had gotten rid of illegal file-sharing forever? Yeah, not so much. Unless they can shut down the entire Internet, file-sharing will never stop. Now that the cat’s out of the bag, and people realize that there’s no reason to pay $18 for an overproduced CD when they could just get the music for free, the days of traditional CD releases are numbered.
So what can the record companies do, given this new environment? The short answer: Pretty much nothing. The longer answer: their only shot is to attempt to adapt to the Internet. It used to be that all they had to do was find, polish, and market an artist that the market research indicated would be successful. This stifled creativity; when success in the music business relies on an artist being similar to one that’s already successful, it’s no surprise that nearly everything released on a major label sounded the same as something else released on a different major label. They could print and package CD’s, deliver them, and make obscene profits on what is basically a piece of plastic with digital information etched onto it. Now that’s changed. Music itself is no longer (or at least, will soon no longer be) a profitable product. The record companies now have two choices: They can adapt–perhaps giving the CD away free or giving a download code with the purchase of merchandise, in order to encourage a profitable fan base that is willing to purchase actual physical products in lieu of spending exorbitant amounts to something that’s available for free with a couple clicks–or they can die out. Unfortunately for them, they all seem to be stuck about twenty years back, thinking that releasing a Torrent is somehow akin to, and as localized as, making a copy of a tape and giving it to friends. In all likelihood, the executives won’t bother trying to change until it’s far too late–which it may already be, given that bands like Radiohead and Nine Inch Nails have shown that even major artists can cut out what is essentially an expensive and domineering middleman–and they will fold.
However, this is actually good news for consumers. We will be able to return to an equal playing field where musicians are judged on talent rather than on their ad campaigns. In addition to allowing consumers to download music for free, it allows us to easily find new artists that suit our tastes, purchase concert tickets, and buy merchandise. No-talent ass clowns like Ashlee Simpson or Nickelback will see an end to their corporate-sponsored careers, and for the first time since the development of record companies, the free market, talent, and consumer taste will dictate successful acts, instead of some executive’s market research. I for one welcome the new order.