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Tag Archives: access to music
It has been a tumultuous few weeks in the Compatible World – a raging debate about file-sharing has got a lot of people very emotional. It’s mostly been in the music world, but all sorts of creators and creatives in different sectors have been watching with breath held trying to see which way this argument goes. There is nothing like a threat of regulation and legislation to sharpen a debate. There is nothing like a recession, loss of jobs and incomes, to make it emotional. After all, file-sharing is at least ten years old now, but this has only served to amplify the arguments.
On the one side, the libertarian argument – on the other, the conservative view – there’s been little middle ground. On the one hand those that argue there is much promotional value to be had in file-sharing – on the other, those that argue it is totally destructive and leads to an inevitable decline in sales.
With regard to new business models – everyone argues that we need them – even the labels agree. But the conservative argument is that as long as file-sharing persists it hampers the launching of new products and therefore file-sharing must be suppressed. The libertarians argue that file-sharing cannot be suppressed and that the new models need to be encouraged as quickly as possible and that the labels are preventing them by not licensing more innovative models. But, even as one label tries to innovate, another holds back – afraid of cannibalising with a new model the only digital revenues they already have (iTunes).
The new proposal from Lord Peter Mandelson for the UK to adopt a policy of broadband account suspension to be applied to the heaviest sharers, the now famous “egregious offenders” has sparked the new row. The Featured Artists Coalition voiced strong opposition to this and fuelled a heated internal argument inside the music industry. Lily Allen piped up in a strong voice – unexpectedly putting the conservative argument and saying “it’s not alright” to file-share. As a result the labels got very excited and did everything they could to “help” her and a huge amount of abuse came down on her head from the online community.
But Lily did speak out in a significant way. Her intervention highlighted the conflicted feelings of many musicians and artists. On the one hand they recognise the incredible potential and value of the net – on the other hand they can’t feel entirely comfortable knowing that their ability to make a living from their own creativity is being reduced by the actions of millions of people who consume without valuing their work – because they can.
So on Thursday night last week we gathered together at Air Studios in Hampstead, north west London, a group of about eighty recording artists – some well known – some more obscure – to try to explore the issues and where artists stood. Members from all sorts of bands like Pink Floyd, Radiohead, Blur, Travis, Keane, Marillion were there, Billy Bragg who is as impassioned and politically savvy as they come, David Arnold who writes the Bond music, Mike Batt who is an artist and the vice-chairman of the BPI all sat there together – ready for a ding dong. In an upstairs room, with his ear to the wall, George Michael was getting reports of the proceedings. Annie Lennox had her digital representative relaying events by phone. We sat in the round, in the studio’s cosy wood back-room with the old church stained-glass windows looking down on us, the paraphernalia of recording equipment shoved back to the walls and a couple of microphones to give people something to hold on to when they talked. About fifteen minutes or so after the discussion began, a timid and tearful Lily Allen came into the room, crouching behind the back row at first. She was encouraged forward and applauded for attending – and was quickly given a seat on the front row to take part in the debate which I had the dubious honour to be chairing. She was tearful, she was angry, she was foul-mouthed and she was eloquent. The whole debate didn’t entirely revolve around her, but she and Billy Bragg became the respective voices of the opposing positions.
The arguments swung back and forth. The conservative view is as strong among many artists as is the libertarian position. There was no particular rationale to which artists adopted which position and for an hour or so the debate simply swung back and forth. One guy from the Long Pigs, got very angry and walked out, saying something about how he “couldn’t understand why you’re being so soft on them – they need to be told”. Billy Bragg delivered an incredible, rowsing speech to huge applause about the need to be nurturing fans and the relationship that an artist has with them is the only one that counts. As the clock reached towards nine pm, I tried to push the room towards a vote. I thought that perhaps while they wouldn’t get agreement on the key issue of suspending peoples’ accounts, maybe we could all agree on the long term educational, cultural change that was needed and that new models were now critically required, perhaps we could conclude by emphasising the positive stuff we do all share.
But then something remarkable happened. As I pushed them to close, they wanted to argue on and the energy in the room suddenly lifted. Someone suggested that perhaps not suspension but bandwidth slowing could be a solution. Perhaps the ability to use email and basic web-serving could be preserved but the high bandwidth needed to make file-sharing worthwhile could be reduced. The room leapt on this compromise with a speed and a degree of excitement that we hadn’t seen all evening. No matter that it would cost the ISPs more to do this than to cut people off. No matter that people could still file-share just more slowly. No matter that squeezing might require as much of an invasion of privacy as suspension – a compromise position was in the air – and everyone leapt on it.
I called for a show of hands and about sixty percent of them went up, including Lily’s and Billy’s in favour of bandwidth squeezing. A significant minority voted against – mostly because they were libertarian, but a few who strongly insisted that hanging and flogging was too good for file sharers. There was a feeling of elation. Euphoria was in the air. Never mind the fine detail, much more importantly, the artist community had become united. Talking face to face, not through the distorting lenses of the media but in privacy with no reporters and no photographers in the room – the artists found common cause and we all celebrated that.
And so the meeting ended with a feverish capturing of the sentiment in a brief statement that was put out to the waiting media. And, as the hour neared midnight, the crowd drifted away with a sense that something important, even historic had just happened; something greater than reaching a consensus on a view about what to do about file-sharing to give to the government. Everyone had the feeling that the power of the artists’ community could be more powerful in this story going forward and that together they could work out solutions that might actually satisfy everyone – and that they were capable of practical deal making – more effectively than some of the other participants in the debate. Argue? of course they did! Compromise? Hell yeah! Who said tearful, emotional, angry artists – couldn’t also occasionally surprise themselves and act more like adults than the corporate grown ups could?
I was asked to contribute a few words following Ed O’Brien from Radiohead’s announcement of a keynote interview at Midem next year. I contributed a brief update on the progress and perspective of the FAC.
The excited reporting in the FT today of Spotify’s most recent fund-raising round raises the question of whether the upstart freemium subscription service might actually represent a challenge to the mighty iTunes.
The question is no doubt weighing heavily in the minds of the Apple executives who are to make a decision whether to accept the Spotify iPhone app into the hallowed portal of the iPhone App store.
Having raised the ire of the FTC earlier this week by rejecting Google’s talk app – which would enable voice over ip on the iPhone and threaten Apple Telco partners AT&T’s business model, they now have to ask themselves which is the greater risk – stopping Spotify and possibly incurring further Federal Trade wrath or letting in a possible competitor to the mighty lynchpin of their own content sales effort?
Of course, arguably the value of iTunes as a sales channel is much less than its role as the cement between the user and the i-devices that sell for lots of money, but recurrent revenue from content over time has got to be attractive – particularly with the new high priced codename “cocktail” service sitting in the wings alongside new devices which, if the rumour mill is to be believed include: a souped up ipod touch with microphone and a new tablet netbook.
So are the aptly named Li Ka Shing Foundation, simply Kashing in (sorry!) on the success to date of Spotify, are Wellington partners to enjoy a Waterloo at Apple’s expense? Will the US of A adopt Spotify with open arms? The opportunities are exciting, the platform is subtly sophisticated with its simple interface and its powerful backend p2p infrastructure. And the move into neighbouring verticals of film, tv and even games are all so alluring to the beady eyed investor. But of course, Spotify still has to raise enough advertising revenue to interfere with its free service just enough to give people the incentive to upgrade to the paid subscription service – no easy shout in a recession where ad spending has been sliding over the cliff. So this is an exciting company – but now it’s not all down to execution – it’s also about how Apple chooses to respond to the invitation to joust.
Watch this space.
As he stood in the Royal Society of Arts’ Great Room, adorned by James Barry’s celebrated paintings The Progress of Human Knowledge and Culture on the upper walls, I wondered whether Stephen Carter’s work had afforded us any real progress in either knowledge or culture. The final Digital Britain report feels more like the usual mangled series of ongoing compromises that has lost the pioneering innovation edge that the debate around the interim report suggested it might at one point have aspired to. The news of his imminent departure from government doesn’t do much to encourage confidence.
One of the key messages coming out of the final Digital Britain report was that Lord Carter would like to see Ofcom given further powers to implement technical means to reduce file-sharing and prevent online piracy. There are a number of serious concerns about this which need to be addressed.
Carter’s views on an approach to file-sharing are worth exploring. At one point during the launch, he explained that he saw a spectrum of views on file-sharing which he described as having, at one end, the “nay sayers who believe that nothing can be done about it and so let’s just move on and those that believed it is morally wrong and who want something done to prevent it.” Carter positions himself firmly at the latter end. But, and I quote Carter again “let’s try to be rational about this as opposed to irrational which is so often the British way.” Indeed.
The spectrum Carter depicted is a confused one. There is a moral spectrum which at one end has liberatarians and others who believe in a highly extended version of “fair use” and a notion that file-sharing without remuneration is acceptable – and at the other end those that think that file sharing is morally wrong and should not be allowed. Of course, if a creator says “share my files freely – I don’t mind” then there can be no moral wrong. If he or she is silent on this matter which mostly they are because they’re all as confused about this as the rest of us, then we enter the terrain of debate.
The moral question is quite separate from the technical one which has its own spectrum of belief. At one end sit those who say “copying of digital media may be slowed but never prevented” and at the other end of the spectrum are those who say “it must be stopped and we will find stringent technical means to do so.” But of course the more morally outraged you are, the more you are prepared to invest in seeking technical solutions and going head to head with rational scientists who say it can’t be done.
There is a third spectrum of opinion to line up here too – the commercial spectrum. At one end of this spectrum sit those who say “file-sharing is really helpful, it is promotional and people who file-share often spend more on digital media than those who don’t”. Their motivation to seek preventative measures is clearly quite low. At the other of the commercial spectrum are those who say: “This is theft and it is damaging our business because file-sharing is substituting for sales and therefore must be stopped.” Their motivation is quite high.
I’ve tried to express this debate in a simple graphic:
I’m more than happy to have anyone who wants to elaborate on this. I have tried to maintain its simplicity for the sake of clarity, but really I ran out of dimensions. After all, you may well believe, as I do, that file-sharing is immoral but not believe that it damages businesses particularly badly or that preventative measures are technically feasible. Equally, you might feel as many kids do today that it’s not morally wrong, it does no-one any harm and there’s nothing you can do about it anyway.
Lord Carter’s high moral belief in this is of course in tune with the times. We are entering a new era of economic austerity, but also of high moral outrage brought on in the UK by both our bankers and our members of parliament. Illegal file-sharing sits on the other side of the table from the bankers and MPs’ scandals. Here is a proud and venerable industry, which would never dream of engaging in any kind of behaviour contractual or otherwise that people might think of as “immoral”, which has suffered unwarranted and crippling blows arising from the “wrong and immoral” behaviour of hundreds of thousands of consumers. The music industry maintains proudly that illegal file-sharing is 95% of the activity out there and that is why they have lost so much value. The fact that hard disc sharing, blue tooth sideloading, and simple e-mailing of mp3’s is likely to equal if not exceed the amount of material that is file-shared does not enter the argument. The moral argument is in tune with the zeitgeist but it ignores its own complexity. What do we say of the student who downloads 15 albums but doesn’t listen to any of them? What of the student that downloads two albums and then goes and buys the CDs afterwards?
When the Digital Britain report refers to the prevention of “egregious offenders”, what does it mean and how will we know an “egregious offender” when we see one?
I have two concerns about the proposed provision of further powers to Ofcom. The first is about privacy and the second is about the consequences of these actions.
In relation to privacy we are facing some of the most complex tensions of opportunity and challenge. The capabilities of companies like Detica to carry out deep packet inspection (DPI) and see almost anything that they want flying across a network are troublesome to civil liberties and privacy. This kind of company is employed by our national security services to spy on potential militants, agitators and forces of evil intent. Should we feel comfortable that such powerful probes should be deployed against consumers and fans of music or TV shows too? If you’ve done nothing wrong you have nothing to fear comes the old reply – but if in the dystopia of Orwell’s 1984 it didn’t make Winston Smith feel too comfortable – why should we feel any different? At the same time, of course, the power and sophistication of data processing and analysis could have immense benefits for contextual advertising and content discovery. If only Phorm hadn’t screwed up their opt in opt out procedures so badly we might all be feeling better about this end of the spectrum.
The second concern is about consequences. The folk at Pirate Bay have allegedly already launched their encrypted paid for service which will enable all their users for a small fee, to render all their transactions anonymous and impenetrable. That suddenly places teenagers and students in a far more dangerous kind of environment where much more seditious material is likely to be flying around and showing up unexpectedly in search results, etc. It’s precisely the kind of environment we would really have considerable social and security concerns about, but it would be much less easy to control or supress.
So we do live in a troubled time where the positions on these different axes do not point to clear or simple solutions. Many artists feel highly conflicted in discussions of this kind. They do not wish to see the very fans with whom they are trying to develop longterm relationships, turned into criminals for listening to their music. At the same time, they feel very strongly that work they have produced should not be exploited for profit by anyone who is not contracted to them in some way.
My personal belief is more carrot and less stick. The development of businesses that can attract customers with delightful services that are a pleasure to use will be the real way to win this struggle, not by giving more government agencies even more draconian powers to spend tax payers money on technical measures that will only serve to divide us further from each other and send our children into deeper darker undergrounds. We need to continue lobbying against the recommendations in Digital Britain – a lot more balanced thinking is required here about how to encourage the true potential of digital UK .
In Brighton at The Great Escape festival, I had the interesting opportunity to interview Nathan Lovejoy from Limewire Networks Inc in New York. Limewire, as you know, has 50 million users, is one of the longest running filesharing clients and sits on top of the opens source gnutella network.
They are also being sued by all the major record labels in the US in a case that has been running for two or three years now. Their key defence is “substantially non-infringing uses” ie: there are a lot of really cool things that you can do with our application that are entirely legal and that, gosh, we never thought anyone would use it for filesharing in an unauthorised way that might infringe someone else’s copyright. Oh and by the way – we have absolutely no idea what goes across our client – we simply make the software and hope people will pay us money for the upgrade to our super Pro version – but we really have no idea what people use us for.
Now Nathan Lovejoy, as his name suggests, is a very nice, smart and engaging gentleman. However, he is also not totally unaware of the British TV series of that name featuring, as Wikipedia puts it “a British antiques dealer based in East Anglia whose scruples are not always the highest”.
Sadly, disingenuous is a word that springs to mind.
But I’m not really interested in giving them a hard time. There are plenty of lawyers paid by dinosaurs out there to do that. After all if it wasn’t them it would be someone else – and they didn’t invent the gnutella network – someone else did that – they’ve just given it a reason to live. The key question is really, having established a user base of 50 million, and having a lawsuit that you would have thought they ought to be able to settle soon, what kind of value-creation can be generated here going forward? How do we avoid a repetition of the wasted experience and potential that was Napster?
In other words, never mind if they’ve been naughty boys (and girls but, actually, mostly it seems boys) in the past, is there anything here of value that can be preserved, learned, expanded upon or taken seriously from a business and creative perspective?
Now some would argue that they are the perfect interface to place over a network to which you had applied a blanket licence. So all the music could be freed up by the ISP having charged a small monthly licence fee – and then for the users Limewire could continue to feel like free. And this might be ok – if we could believe that ontop of that real money could then be made with so-called value added services – like recommendation, discovery, bundling etc. I want to be convinced of this, but so far I have yet to see anyone produce the economic model or financial case study to prove it.
So for the moment, as far asLimewire is concerned, the future, based on my interview with Nathan, would seem sadly to not hold much of value for their experiment. The main problem seems to be that the lawsuit prevents them from either admitting much or developing more interesting features. But they do have about 75 developers so may be they are beavering away as we speak inventing the future in an ingenious fashion. We can only hope so.
Because while they can talk creatively and constructively about contextual advertising and recommendations and discovery, the reality is that they can’t currently be seen to offer either since they profess to have no idea what’s going on across their application or the network is attaches too. Never mind the fact that Eric Garland’s Big Champagne has been monitoring and analysing the flow quite successfully for several years now.
So, nice and simple though the interface is, Limewire is going to have get its act together techicallly, legally and commercially pretty fast if it’s going to convince any of us that it has some means of leading us all into a more enlightened and profitable future by monetising the behaviour, interests and passion of its 50 million music lover users.
At the Digital Britian Summit last week, both content owners and telco network operators complained that consumer behaviour is killing their business and making it more and more difficult to make money. “We’re right and the consumers are wrong”, they say. What’s wrong with this picture? Willing seller, willing buyer is a concept used in law, as far as I understand it (which may not be far), to try and ensure notions of fairness in trading and in contracts. What seems to be happening today is that the buyers are willing because the service looks great – content in the clear that you can move around and do loads of things with, bandwidth that costs a fixed fee but I can use as much or as little as I like. Seems like a good offer – only one problem – the companies involved seem less and less willing to offer their products and services that way because they can’t make money. Well that would be their problem then wouldn’t it?
So everyone wants new models – and there are no silver bullets.
Since the dawn of the web back in 1993, we have been experimenting. We have all been trying to figure out new models. And our learning has been evolving quite slowly. It’s not that surprising perhaps because plenty of those who appear to be leading the charge to help innovation are actually just busy turning the investment risks of others into revenue streams for themselves. Since new models for music have been largely dependent upon unlocking the coffers of major content holders, it’s hardly surprising that the price of a key has remained high. It’s a great model for them. Appear to encourage innovation and experimentation, drain the resources of those who try and make minimal investments of your own but only into things that you think you can control. The old command and control mentality of music moguls is live and well and making money from the internet – just in a hurry up and slow down kind of a way.
We have all struggled to get our heads around business models, ideas or solutions that go beyond mere per unit transactions or advertising revenues. And as the recession has taken hold and ad spend has declined, the solution for some has been to throw up their hands and say: “blanket license, flat rate charging for access to music set against pro-rata payments to rights owners” – is the only solution. Others have been quick to query the nominal levels of revenue that would flow from this kind of solution and therefore how small the music industry would become and how little would be left to “invest” in artists. The flat rate or Access to Music folk respond by saying, ah but the flat rate is only the beginning, on top of that there are lots of value added services to be created that would make up more than the difference and return the industry to a new and golden age – made glorious by my old mate Pete Jenner. He is the lion at the heart of this argument and has been vociferous in promoting in a style that only he can get away with. Which is basically tell everyone they’re up the creek without a paddle and that his solution is the only that will work. And tell everyone the same thing whether they care to listen or not.
I’m only partly in agreement with Pete. I do think that the idea of a flat rate is compelling and could be made to work within walled gardens of networks, but I don’t think it’s the only solution and I think it may be problematic because of the kind of comprehensive coverage it requires. But the key thing about it is that no one has seen it in action. Pete was trying to make it happen on the Isle of Man – obscure but possible. Now these folk appear a little tainted by their unfashionable tax-haven status. Away on the campuses of American universities, another old friend, the indominatable Mr Jim Griffin is hammering away with his Warner Music Group sponsored effort called Choruss which is an effort to bring the flat rate idea to reality in various forms in the ivy-clad self-contained networks of US colleges.
Experimentation around these kinds of idea is crucially important and we need it now. But there are two gating items: one is the availability of the content itself and the other is a level of transparency and intelligence in the networks themselves. If we could envisage an internet in which the free movement of content aorund networks was encouraged because the more it moved and the more it was consumed the more value it created, we could abandon expensive and fruitless anti-piracy efforts, encourage new and interactive modes of music consumption and stop sueing people who have proved themselves to be the best distributors in the world. Instead of worrying about how to compete with free, we could start to derive value from the patterns of sharing, the clustering of content, the relationships between different groups of content, the geographic spread of content, the different platforms upon which it was most consumed, etc. In other words, a whole a battery of new and so far invisible ways in which value could be created from content which are hard to envisage today and even more difficult to place a value on.
And they need to be prepared to remove some of the barriers that their current models require in order to discover what the future might look like. It’s not reasonable to expect start up companies or the (un)venture community to subsidise that effort when the power is in the hands of the incumbents.The only way to find out is to try some experiments at real scale with real consumers and real content. We need to create the conditions in which the content could be made available for pilot projects that would benefit both the content owners and the network operators. Over in the world of teleco’s, the network operators and wholesalers are trying to figure out how to build next generation networks. The Digital Britain report and debate has been full of the breathless excitement at the benefits that higher speed access will create.
My view is that we need smarter pipes not just faster ones. We need to be thinking about the software environments that will be at play on next generation networks that can be much more intimately bound up with the behaviour of content on the networks.
I believe that it’s time for the major record and film companies to participate in some real field trials with some real technology partners, declare a Royalties Amnesty for these trials and explore some radical new ways to create revenues and profits in conjunction with the network operators. And from their side, for the purposes of these trials, the network operators need to be allowed by law to give up their “mere conduit” exoneration of liability over knowledge of the content on their networks – and take the opposite approach and become actively involved in sharing ways of monetising that knowledge. Of course, we have to be very careful of Phorm-like invasions of privacy. The protection of personal privacy is paramount as we move forward with these kinds of ideas and the levels of permission that consumers must be offered needs to become more sophisticated.
Around the UK right now, there are a nine or ten “next generation access trials” taking place for high speed networks – perfect places for pilot schemes of this kind to be run – safely self-contained, but large enough to produce meaningful results.
In the frenzy of the last few weeks of the economic crisis, there has been much that is familiar to the recorded music industry in the performance of the global economy. The markets of the world are in crisis over value. Albeit for very different reasons, the recorded music industry has been on a quest to arrest evaporating value for the last ten years.
The recorded music industry has long attempted to blind both paying fans and creative artists with complex explanations of the enormous risks and costs in the industry. The regular practice has been to create contracts in which the true mechanics became opaque and to offer perverse pricing structures which seemed to ignore intrinsic value. The sophisticated segmentation of intellectual property rights in music where no physical good ever existed, and a questionable belief system of trading those rights looks a lot like the house of cards complexities of the broader capital markets. What’s happened in music is comparable to the very sophisticated financial instruments which have sought to conjure profits from counter-intuitive commercial outcomes (hedging that you will ship silver and return sub-prime platinum) and from the parcelling out of debt so that risk averse investors could no longer see what it was that they were putting money into (invest in my label, I’ll do the A&R).
Ironic, given that the one investment mantra that financial wizards repeat with consistent banality is “know your market”, understand what you’re investing in. Yet, what we have witnessed is the detachment of value from substance. It used to be that we thought it was only in creative industries that this kind of crisis could occur, where technology (recording and distribution) has enabled us to invest in and ascribe value to a cultural good. Technology has also undermined that ability and insists that we create a new means of adding value. The value of the music has long been separated from the cost of plastic in the CD but consumer journalists still even occasionally today want to ask how could labels charge £15 for a piece of plastic that only cost 50p? Today though, consumers have already moved on. The majority of music consumers now happily pays for music as a service while the recorded music industry still tries to sell it as a product. In the volatility of the world’s stock markets over the last few weeks, what we have seen is this same critical separation of value from price. It would seem that once the cultural, pyschological and technological underpinnings of value are rendered opaque or anachronistic, then any price is as meaningful as any other and none is low enough – until it looks like a bargain and then you can buy like crazy!
But there is a very broad spectrum that goes from Damien Hirst’s £10.3m Golden Calf to the Volkswagen share price spike which confounded the hedge-funds. Hirst’s prices seem as if were achieved by manipulation and propping up of value, Volkswagen’s price spike appeared to derive from an unexpected realisation of and faith in the management team behind the business. And it is the Porsche team that brought back the confidence with a reputation for design, innovation – and making very fast cars!
Blinded by bling or putting faith in management and the quality of innovation?
As we look towards 2009, the characteristics that we will see coming to the fore are going to be all about transparency, quality, and experience in innovation. We will see a move away from the most technically dazzling and a preference for good execution on more tried-and-tested ways to innovate. But there can be no deviation from innovation – that is still be a requirement to grow markets by responding to technological change and by racing to take advantage of what it has to offer. And in the current climate the best way to do that is to temper the risks by a greater depth of experience in innovation itself.