Tag Archives: ISP

File-sharing, artists and the egregious offenders

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?

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Update on Featured Artists Coalition on the MIDEM blog

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.

File-sharing and Digital Britain – the fall-out

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:

filesharing belief analysis

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 .

Limewire in the limelight

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.

Further thoughts on Broadband TV and Music

The irony of the current parallel engagements of the UK ISPs with both the film and TV industries and the music industries is that their conversations are coming from completely different directions. The ISPs are running to the broadcasters and complaining about the BBC’s iPlayer and the imminent Kangaroo player which will have ITV and Channel 4 content on it as well. The complaint is very clear – you are soaking up all our bandwidth and gaining revenue at our expense. In the case of the BBC – the argument is uniquely British – you are fulfilling your Public Service Charter by reaching more people in the community at the expense of commercial service providers who are having to “subsidise” the additional bandwidth usages. In the case of the commercial broadcasters, the argument could be even simpler, but equally difficult to resolve: you are raising ad revenue through programs transmitted not on your broadcast network but on our broadband network – we want a piece of that.

In the case of the music companies the argument is the exact opposite. The music folk are going to the ISPs and saying – you are making money out of our content. All this p2p activity on your networks is illegal and it’s not yielding us rights owners a penny, while you continue to compete with each other on better bandwidth for your buck packages. We want some of your money.

Seems to me, given the size and health of the respective industry sectors and the general balance of power in the cultural stakes, that the music companies might be a lot better served trying to persuade the p2p folk to go legal and share the ad revenues accordingly – or to try to persuade the ISPs that only legal, ad revenue or subscription revenue bearing schemes should be allowed on their networks and illegal p2p should be closed down – and then negotiating for the right splits.

That would of course require that the music companies be prepared to license a few services to show the ISPs that they mean business. At the moment, they seem very concerned about doing that. Let’s hope that the majors don’t go try to down the usual control and command route and offer some home-brewed service of their own, but act on some of their words and collaborate with some of the new businesses out there that might just add value to the whole sector  – given the right licensing terms.

Perhaps for the first time, the Music industry could be unified enough and easy enough to deal with so that it might make common cause with film and tv – rather than lagging behind them in the commercial stakes. But even so, it will need to back some players – wether they be last.fm or playlouder in the UK – to be the added value providers on top of the network capabilities of the ISPs. That means new players in a new value-chain and margins that might be not end up being all that different from the old distributor and retail cuts…

A whiff of digital optimism?

There seems to be a whiff of optimism in the air, a little hint that somehow progress is being made. Is it in the effort to bring all the music industry’s constituent parts under the single banner of British Music Rights? Is it in the coy first blushes of a dalliance between the recorded music companies and UK Internet Service Providers? Is it in the notion that new models and new experimentation might just yield meaningful financial returns?

When I read back some of my earlier callings for radical change and the appealling but somewhat simplistic view of technology being 100% disruptive of past models, they seem a little naive in the light of what may be beginning to emerge.

A new pluralism? A multivalency of co-existence? Certainly no-one feels comfortable enough in the shoes they’re wearing today in the digital media business as a whole to believe that ongoing change will not be the norm for several years to come.

But, there seems to be a suggestion of a new springyness in the steps of those companies who are creating some of these many new ways of doing music-business.   The persistence of companies like Last.FM or their clone IMeem, the steadfast promotional/transactional evolution of companies like Seven Digital into brand relationship building linking artists and products, the quiet persistence of Playlouder in its music/internet service provider model, chasing the monetising of p2p. All of these are exploring and surviving. It is really hard work to do this. The level of commitment and passion involved is pretty high. And the kicker of the occasional big-cash blip, such as Last.FM enjoyed, certainly adds a frisson to the task, but it doesn’t make it any easier.

Of course, several degrees of murkiness do continue to cloud our little enlightenments.

Even as we all started to feel that the live scene might just be sustaining everything, major rows at Live Nation between Michael Kohl and his aptly named colleague Michael Rapino – which seem to have ended with Kohl’s departure albeit glossed over – would suggest that there is no simple cohesive view of the world going forward in that sector either.

Michael Kohl of course is the doyen of the finely sliced IP right. It was he, in the early nineties with the Rolling Stones, who devised the most sophisticated, regionally segmented, windowed parcelling-out of broadcast, cable, satellite TV, radio, streaming and downloading rights for the Stones’ infamously spectacular tours. And for the Stones, even then, album sales meant very little compared to the value of promotion and marketing that Kohl could “persuade” the label to provide which in turn clearly supported the tour.

Who knows what caused this latest rift, it’s as likely to be personality clash as much as divergence of business strategy. But the notion that, aside from publishing, performance and licensing revenues, ticket sales alone should be an artist’s primary source of revenue still seems a diminished result whichever way you look at it. None of us, it seems, is simply prepared to give up on the value of a recording and walk away from it completely.

This is how LiveNation presented the picture to GoldmanSachs earlier this year:

It’s a great multivalent graphic – but just a tad curious when you come to examine it. Broadcasting appears to have replaced publishing and there’s no mention of the internet at all although digital is a huge part of their business. I wonder when the THEN was and when the NOW is supposed to be?

I had the good fortune earlier this week to chair a public panel of some amazing expertise on the occasion of the Music Publisher’s Association’s Annual General Meeting. Gathered together were Kip Meek of Ingenious Consulting (previously at OfCom and now of the Broadband Stakerholders Group), Conservative MP and media specialist John Whittingdale, Spencer Hyman of Last.FM, Andrew Connell of Nokia as well as Andy Heath – the newly elected chair of British Music Rights and Gary Maclarnan who manages Mr Scruff. Joining us as experts were also Will Page Chief Economist of the MCPS, Andrew Orlovski Editor at Large of the Register and Paul Sanders – philosopher in chief of Playlouder, Consolidated Independent and State51. An august and impressive crew to the last. And it was no coincidence, dare I say more, that Andrew Orlovski’s intriguing article on music industry discussions with the ISPs appeared only two days after this illustrious event?

But none of them was prepared to say the CD is dead completely or that it will ever die. I think that is not collective blindness to technology’s inevitable disruptive power, but a much more sophisticated understanding of how complex our new world is and how pluralistic the models are going to be.

And despite the optimism, there was much more divergence of opinion about how rapidly ISPs and network providers might find common cause with the media and content companies. Kip Meek seemed to suggest that the issues and concerns that the broadband providers have with the broadcasters and film industry are so much more severe than anything that they have to deal with in the music sector (because of the sheer size of film and video files), that the debate will really focus there. As the BBC’s IPlayer mutates into the imminent Kangaroo player – the issues of who pays for bandwidth and how content gets monetised will fly in a very different direction. The extent to which the music folk think a tax on the ISPs fits in with the broadcasters’ ad revenue model remains to be seen. To me, they certainly look like very different directions, but perhaps in one scenario, simple ad-revenue sharing is not completely unattractive. But it was interesting to note how keen both Last.FM and Nokia seem to be on subscription services which so far consumers have consistently ranked as their least favourite option.

The convergence of focus on ISPs is being driven by television in the UK and what we do here may or may not prove a model for other parts of the world.  One thing that is clear is that if it is to compete to be heard and to have a place at the table with the Broadband community, the music industry needs to be more articulate, more subtle and flexible, and more coherent than it has ever managed to be before.

As Andy Heath tries to pull it all together here under the British Music Rights banner, his challenges look steep but the prize looks impressive.