July 16, 2024

New business models in the recording industry

The New York Times Sunday Magazine has a fascinating piece that interviews and discusses Columbia Records’ hiring of Rick Rubin as their new studio chieftain. Rubin has been a well-known music producer (among other things, he orchestrated the famous mash-up of Aerosmith and Run-DMC and worked with Johnny Cash later in his life), and is quoted in the article saying many things that Freedom-to-Tinker readers will find familiar.

For example, on DRM and spyware:

By the time [Columbia executive] Barnett first approached Rubin about coming to Columbia, Rubin had already decided that he would have nothing more to do with Columbia Records. This was because of the company’s handling of the Rubin-produced Neil Diamond record “12 Songs” in 2005. Diamond was a hero of Rubin’s, and he spent two years working on the album, persuading Diamond to record acoustically, something he hadn’t done since the ’60s.

“The CD debuted at No. 4,” Rubin told me at Hugo’s, still sounding upset. “It was the highest debut of Neil’s career, off to a great start. But Columbia — it was some kind of corporate thing — had put spyware on the CD. That kept people from copying it, but it also somehow recorded information about whoever bought the record. The spyware became public knowledge, and people freaked out. There were some lawsuits filed, and the CD was recalled by Columbia. Literally pulled from stores. We came out on a Tuesday, by the following week the CD was not available. Columbia released it again in a month, but we never recovered. Neil was furious, and I vowed never to make another album with Columbia.”

Still, Columbia managed to hire this guy and he’s now pretty much running the show. He thoroughly acknowledges that the music industry’s real problem is that its former business model isn’t going to work in the future and the solution is about completely changing the pricing model to be cheap enough and the quality of service to be good enough that piracy will no longer be rational for consumers.

Rubin has a bigger idea. To combat the devastating impact of file sharing, he, like others in the music business (Doug Morris and Jimmy Iovine at Universal, for instance), says that the future of the industry is a subscription model, much like paid cable on a television set. “You would subscribe to music,” Rubin explained, as he settled on the velvet couch in his library. “You’d pay, say, $19.95 a month, and the music will come anywhere you’d like. In this new world, there will be a virtual library that will be accessible from your car, from your cellphone, from your computer, from your television. Anywhere. The iPod will be obsolete, but there would be a Walkman-like device you could plug into speakers at home. You’ll say, ‘Today I want to listen to … Simon and Garfunkel,’ and there they are. The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now.”

Rubin sees no other solution. “Either all the record companies will get together [for a unified subscription model] or the industry will fall apart and someone like Microsoft will come in and buy one of the companies at wholesale and do what needs to be done,” he said. “The future technology companies will either wait for the record companies to smarten up, or they’ll let them sink until they can buy them for 10 cents on the dollar and own the whole thing.”

I’ve always thought that something like this could be a successful business model. Of course, enforcing such a scheme (i.e., ensuring that the music dries up if you don’t keep spending your cash) requires a DRM strategy, which clearly isn’t going to fly.  Is there an alternative?  How good would a music service have to be that you would have no incentive to store local copies? If I’m totally comfortable keeping my email and calendar “out there” on the Internet, why shouldn’t I be comfortable keeping my CD collection (1500+ and growing) out there as well?

The article goes on to quote other industry experts on the difficulties of getting a subscription model correct, but I have to admire Rubin on his focus:

“I don’t want to waste time,” he said, sounding a little frustrated. “The existing people will either get smart, which is a question mark. Or new people will understand what a resource the music business is and change it without us.” Rubin paused. “I don’t want to watch that happen.”

It’s hard to argue with that. The primary focus of the article was on how Rubin is all about refining and polishing the music, and it’s great to know that somebody like that will help bring out the best in our artists. I just hope they can really sort out this whole business model thing in a technologically feasible fashion. My fear is that yet another new snake-oil company with yet another DRM scheme will promise to “solve” the piracy problem, when we all know that the real solution lies instead in completely rethinking the business model. Make the price cheap enough and the quality of the service compelling enough, and people will prefer it to the hit-or-miss world of piracy.  Let’s hope it can be a hit.  (Until then, I’ll stick with buying CDs.)


  1. give the music away for free on the internet, if the fans want to buy a piece of art, let them pay more for an album where thought has gone into every square inch of packaging so when they have bought that piece of art they actually feel like they own something rather than a piece of plastic and some glossy paper which pass off as art these days. then make money of merch, touring and licencing…if you cant beat the pirates, join them!


  2. In reply to Chris Anderson: “full quality mp3’s”. There is no such thing as a full quality mp3. An mp3 is compressed audio, there is actually audio missing. They sound like shit and I never listen to anything less than a .wav file or an Apple lossless because they are uncompressed 16-bit audio (CD quality).

    Anyway, that is not my point. It just bothers me that mp3’s caught on as the format but eventually hard drive space and bandwidth will not be an issue and music will at least get back to CD quality and hopefully better.

    As for the music industry, I work as an audio engineer in a recording studio and it is tough to make a living right now. Bands don’t have money to record for more than two days unless they are signed to a major label and then when they are on a major label they get screwed artistically and get a bill for staying in a 5 star hotel whether they want it or not.

    I say release a limited number of CD’s in the areas they will sell the most (for sale at shows and around your hometown etc…) and make the album available online through whatever medium you want. Let as many people as possible hear your work and hopefully they will come to see you play live. I don’t know what else to do.

    The labels will eventually tank, even the dumbest of people will know how to get music for free. Technology moves so much faster than it takes a record company to have ten meetings and get a budget for the next quarter to come up with a new way to stop copyright infringement.

  3. Lucas and Spudz both have good points. The way I like to cut through the confusion here is to say you can have your cake and eat it to. Any artist with a lick of sense (and not too much vested interest in the status-quo) knows that to be competitive in the marketplace they must provide free full-quality MP3 downloads of their music at stable URLs.

    When they do this, they are enabling both “in the cloud” and download services. When I’m online, I do most of my listening to mp3s “in the cloud” but when I’m driving home from Seattle tomorrow I’ll be listening to that same music from a flash drive in my pocket.

    “Pay to maintain” subscription services are seeing their life-blood drain away because they can’t compete with freedom to do what you want. I love supporting artists – I do it by recording them mostly for free and going to their shows and buying CDs from their hands. It gives me the heebee-jeebees to financially support organizations who’s business model depends on telling me what I can’t do with the stuff I put in my ears. So I don’t.

  4. “Having to manage downloads has many disadvantages.”

    And one BIG HUGE advantage: you own (you control) your data instead of someone else.

  5. Having to manage downloads has many disadvantages. Few of us do backups regularly. Disks fill up. Collections must be moved from one disk to another. Dead files must be culled. ID3 tags must be corrected and kept in sync with directory names. Collections in one set of directories must be merged with collections in another set of directories.

    And once you accumulate a collection over 20-40 GB, the whole process becomes a real problem.

    Ok, I’m done. This is boring now.

    Thanks for being the host of this conversation, Prof. Felton.

  6. Those who have broadband will always forget those who do not. An something like 50% of the US population does not. I live 10 miles out of town, 30 miles from a major metro area. The only broadband available to me is satellite. And yesterday, due to weather, and the basic unreliability of the platform, it was down all day. This happens several times a month, more in the winter. There would have been no music in my house. There will never be subscription music, because like many people below the median income, we don’t have $20 to buy music every month. Subscription models do not fit my needs–or the needs of the 95% of people with less than six figure incomes.

    You might be interested to know that I wrote a letter to the editor saying that subscription models will always fail in the marketplace because it is not what people want. The NYT Magazine has emailed me that they intend to publish the letter. Look for me in the paper!

  7. Lucas Gonze makes a number of false analogies and arguments.

    First, the search engine. The nature of a search engine is such that it can’t work usefully if the network is down. This is a natural constraint. The nature of listening to music is that it can work if the network is down. Thus it not doing so would be an artificial and gratuitous constraint.

    Second, getting stuff on demand from “the cloud” has several drawbacks over having a copy besides requiring the network to be up at the time:
    * Greater bandwidth use (as you retrieve the same thing more than once)
    * Greater, recurring expense instead of one-off expense
    * Points of failure not under your control

    The *sole* disadvantage of having your own copy under your control is
    * Greater storage space requirements and need to manage copies

    I think that’s worth it to have stuff that still works if the network’s down, that you can take with you even into the back woods, that will survive the collapse of civilization (just in case, we surely want a lot of manuals and other technical information not to evaporate in that eventuality, so it can be rebuilt faster and without a ton of wheel-reinventing), and that you don’t have to pay over and over again for instead of once!

  8. Subscription sounds feasible. We have premium cable — all the channels all the time and as many movies as you can digest. Okay, so they’re not the latest movies, but being the first on the block has never been an issue for us. Nor is owning a copy of anything. No need, everything is repeated again and again, so there’s no point in owning.

    We probably wouldn’t subscribe to music — we have heaps of it on the cable, too, but it isn’t quite “on demand.” We probably wouldn’t subscribe because we don’t really care that much for music. We’re older folk, you see. When we want music, there’s the cable, the radio, and of course, the Internet. I’m listening to Shoutcast right now. Chill-out music. Sweet.


  9. artists need to start thinking of their music as an ad for them — which means they need to find something to sell BESIDES music.

    What you really mean to say is: “they need to find something to sell BESIDES prerecorded music” which they have been selling for a very long time, it’s called ‘performance’, that is a live show.

    The economics for most bands have already shifted to shows being the primary money maker, as opposed to recordings.

    So, they shouldn’t quite their night job!

  10. Ben Finney noted above:

    That’s a crime called “copyright infringement”. It’s misleading and shrill to call it “piracy”, which is an entirely different, violent, physical crime. Please, don’t obfuscate an already-confusing topic.

    Well, I really don’t think it’s a bad term to use. I rather like being in the company of Black Sam Bellamy, for one.

    Besides, thy have a way cool flag!

    The use of this term by the RIAA and, later, the MPAA has actually contributed to the cohesiveness of this group, to wit:




    Swab the deck you scalleywags!

  11. Last week I spent some enjoyable time reading and listening in a place with no connections. (The “no connections” was a side effect, not a deliberate plan.)

    Camping (the form sometimes known as ‘car camping’) often puts you in places which are not a high priority for wireless carriers, or in places where wireless carriers can’t go even if they want to. But while camping, it’s nice to have a little music, or sit by the campfire reading. I likely do more listening and reading in an evening camping than I would do at home!

    That’s at least one situation where the content needs to travel with me, without a connection. Cell phone service in the camp site area was non-existent, and given that provincial parks are extremely low density areas, often unpopulated in the winter, it’s unlikely that will change. Some of the more remote parks have policies that deliberately limit coverage to only within about a mile of highways. There is also no electricity or landline phones, so there is no existing infrastructure to leverage. (That’s why I need “downloaded light and heat”, not “streaming light and heat”.)

    That’s at least one use case where ‘download’ (or something like it) appears necessary. And – since I don’t know ahead of time when I might be in such a situation, I don’t want to commit myself to a subscription service now, only to discover I need something else later on.

    That’s the thing about download – it creates problems that I have to solve, and creates habits in my behaviour. But that control also means that nobody else’s business case or changing business plans (Google Video…) can force me to change my habits. The lack of convenience right now makes for a more consistent model for me in the long run.

  12. Yes, it is good to not have to go to the store and buy a plastic disc. The infrastructure should connect you and the music with the least friction possible.

    Actually having, physically, a collection that will work if the network goes down is only one kind of value. You don’t apply this test to webcasting, right? Or to search engines or social networks or any other kind of continuously flowing media…

    The need to have it downloaded is often though not always in your head. This is just you not yet having made the transition from the old days of record collections to the new days of transient interactions with the cloud. It makes as much sense to have an MP3 collection as it does to save, rather than bookmark, web pages which you want to return to.

  13. “Also, it’s good to just skip over tool-oriented concepts of downloading audio files and go straight to higher level abstractions like “listen to the song.”

    One could as easily say it’s good to skip over the “tool-oriented concepts” of driving to the store and buying a plastic disc.

    Fact is, though, these “tool-oriented concepts” are the price of actually having, physically, a music collection that will still work if the network goes down, that will still work without you paying for it over and over again instead of just once, and so forth.

    The only “subscription” service I can see being at all acceptable is one where continued subscription is required to get new stuff, but not to continue listening to what you already have.

  14. I get the feeling that few if any commenters have really used a subscription streaming service, because they are actually pretty handy despite the (major) drawbacks.

    What’s good about them is the convenience of an integrated and reliable search/play/manage interface. Also, it’s good to just skip over tool-oriented concepts of downloading audio files and go straight to higher level abstractions like “listen to the song.”

  15. they need to find something to sell BESIDES music
    They already do–T-shirts. In fact some bands have stopped selling CDs at shows, because it cuts into T-shirt sales.

    I subscribe to E-Music. $20/mo, 50 song downloads/month. No major labels, no DRM, lots of indie labels, including “indie” classical labels. The movement of a symphony is considered a “song”, so classical music is a particularly good deal, but other stuff is a pretty good deal too. If you lose a track or the download fails you can re-download it at no cost. Basically, everything is set up to be sensible and consumer-friendly.

    The other music service I use is Pandora. All the new music on CD I’ve bought in the last year or two was introduced to me via Pandora. The RIAA has been trying to eliminate this option also, and it will be their loss if they succeed.

    Wouldn’t it be ironic if, after the RIAA and MPAA finally get their DRM into the bowels of Vista, that consumers finally reject DRM completely?

  16. Lots of interesting ideas here!

    Another problem with the subscription model is the change of incentives for record companies. Today, when a company pays for an artist to record a new song or album, and then produces, distributes and markets that song, they get immediate payback. The money invested to make that song available directly turns into revenues and income based on selling copies of that song. Money out leads to (hopefully, more) money in.

    But with a subscription service, this connection becomes far looser and more tenuous. It sounds like new music releases would just be freely available to subscribers. They would not bring in any more money. What is the incentive then for record companies to advertise new releases? It’s money down the drain. And worse, what is the incentive even to pay for the production of new music? The connection to new revenue is largely broken.

    The only incentive would be long term, that if you don’t keep making new music available, sooner or later your subscribers will get fed up and stop paying. But that may take a long time, and if you have an extensive back catalog you may be willing to take the chance that many will never quit. Under these circumstances I think we’d see significant under-investment in new music production.

    A final comment: I generally agree with those who say that in the long run, recorded music cannot continue to be sold within the framework of a business model as we know it. It’s too easy to copy and reproduce essentially for free. The same is true of other static media. However it does seem possible (but not certain) that interactive entertainment may be able to be protected via specialized hardware. A program whose value is that it is different every time you interact with it has a much better chance of being protectable in the future. In the long run, I expect that music and video entertainments will no longer be commercially sold, but will be given away for free as advertising for the one information commodity which is uncopyable and therefore has commercial value: video games and other forms of computer software.

  17. Soooo it comes down to this – in the words of Jerry Garcia (sort of…), when asked why the Grateful Dead did not care if fans taped their shows, “Once we’ve played it, we’re done with it”. The Grateful Dead had the correct model for their music starting in the 60’s. They played live, and made their money playing music, not selling records. That’s not to say that they did not do pretty well selling their music. When they were touring they tended to be in the top 5 money making bands. This lasted for 20 some years. And to support Govt Sjeptic – the Dead sold tickets to their own shows. They proved that you do not need the music industry to make a living playing music. The real problem is that there are not enough bands with enough fans to play music to make their money. Remember when there were no recordings? Well maybe not, but there was a time when musicians actually had to PERFORM or TEACH to make money. Just my .5 cents.

  18. Govt Skeptic has apparently never heard of VR. Ten to twenty years from now you’ll be able to copy a live performance acceptably. 😛

  19. Govt Skeptic says

    I love watching the RIAA execs realize what we’ve known all along.
    So now, in deference to the brilliant Mr. Rubin, I’m going to say it slowly. Maybe in another ten years, he’ll get it.
    Here goes:
    Selling copies of pre-recorded music is a DEAD BUSINESS MODEL. Doesn’t matter how you do it. Doesn’t matter what Mr. Rubin thinks, or what Columbia Records’ next head honcho thinks, or what the entire RIAA thinks, or what legislation they buy. It’s dead.
    Here’s the next tidbit for anyone at the RIAA who’s still listening:
    The only music-related profit-maker in the future is live performance. Why, Mr Rubin asks? Because it can’t be copied. You can’t digitally copy the act of standing in the crowd and watching real performers play their hearts out. You can bootleg it, but that’s just a wispy shadow of the real thing.
    Mr. Rubin, here’s your last clue: In the future, the artists will be elevated back to the superior position. Which is how it should be, because they actually have the talent. Imagine artists, giving away their own music on their own websites, selling their own tickets to their own shows. Sounds good, right?
    RIAA is dead. In just a few short years, even Verizon will see more $ from pre-recorded music, because they’ll charge for the data transfer.
    Hasta la vista, fascist dimwits.

  20. Let moderation in all things be the rule… what brought that on?

  21. Has to be said one more time for good measure, but we don’t actually NEED a business model for the recorded music industry. Humans walked the earth for many thousands of years before there was a recorded music industry, they can do as much afterwards.

    Price is determined by supply and demand. Right now there is a huge oversupply of talented musicians and artists. About 95% of artists earn money from their day job not because they lack talent but because the industry is so stuffed with eager youngsters. Distribution costs (using any media you like) are very low — a few cents per song. Very basic economics says that music should be cheap — much too cheap to make anyone wealthy. This is not the Apocalypse, it is merely the changing fortunes of a free market.

    If the real question is, “What is the future of artwork in an age where anything can be copied?” then I can see:

    [1] Art for art’s sake. Most people in developed nations have time and resources beyond their survival job. Some reasonable percentage will choose to create art because they enjoy it. Go Creative Commons. I might point out that even people in stone-age underdeveloped nations managed to find time to sing, dance and paint (even without Internet or CDs).

    [2] Advertising. Ugly and annoying but advertising art will always make money from now to doomsday (and possibly after that).

    [2a] Political propaganda art. The message is the motive. Make money from suitable kickbacks.

    [2b] Religious propaganda art. Strong track record, always a sturdy performer. If people will go to war or blow themselves up to make God happy then they will surely sing about God while they do it.

    [2c] Bands give away tracks as advertising for themselves and make money on merchandise or by pushing themselves as a brand name.

    [3] Live shows. David Bowe was right, nothing beats the live atmosphere. Makes money for pubs too and slightly more socially inspirational than poker machines. Ticket prices will be determined by free-market supply and demand. Put free “bootleg quality” tracks on the Internet to get people enthused about next time round.

    [4] Art facilitation. Sell guitar lessons, sell guitars, sell blank CDs, become an ISP, invent loony MIDI boxes made out of sawn-up C64s. Combine with [2c] as appropriate.

    [5] After giving away their first album (see [2c] above) they make a statement that they will produce their next album after some total dollars in income. The fans can buy merchandise or just give donations if they want the next installment. Before anyone screams “unfair”, note above that there is an oversupply of talent and also note that most recording industry contracts are WORSE than giving away your first album.

    [6] Art “value add”, provide genre indexing, help people find their ideal track, help new artists get noticed, bring together like-minded people who want to work together, teach “art appreciation” while making yourself out to be an expert. You know, all the things that the current industry pretends to provide.

    I’ll also point out that there isn’t much art left in the present-day popular music/video industry. What you see on MTV and similar is nothing more than soft-core porn with a robotic beat and a few chords (be honest here). All of the above apply to the porn industry too BTW, indeed amateur Internet porn has become so popular that the US government needed to pass laws in an attempt to protect the money-making porn industry (how sad, but true, search it out yourself, this blog is too clean for me to post suitable links). The music industry have produced an ultra-conservative ultra-predictable output for years because corporate boardrooms and shareholder meetings are the wrong environment for creativity.

    I’ll finally point out that the video game industry is growing nicely despite have exactly the same “problem” with copying, and they have done it by experimenting with new ideas — both in the distribution model and (more importantly) in the product itself.

  22. Regarding this comment of Lewis’: “I would be much more receptive to subscription services and even a limited amount of DRM if there were a common playlist standard that would carry over from service to service” ==

    The XSPF playlist format enables this exact functionality. See http://xspf.org/xspf-v1.html#rfc.section.3.4

  23. Subscription-only music is only a matter of time away. Think of it: You’re an indie musician who wants to get a start in the biz, getting more than just the people in your town to listen to your music. On the one hand, you can try to sell your music by yourself, without the support of the music industry. But people are already forking over $19.95 a month to listen to Sony’s entire catalog, so why are those people going to pay you extra for your music? So, you’re left with the other choice – sell your soul to Sony and take your measly cut.

    So much for Internet distribution being the way of the future.

    The subscription model will result in control over music becoming more and more centralized in the hands of a very few companies, even more so than is true now. Once the recording studios realize that, they’ll switch over as soon as the ubiquity of Internet access and/or DRMed music players make it possible. When the major players all adopt the subscription model, their control over the creators’ half of the music industry will finally be re-established, because it just won’t be economically feasible for new musicians to enter the market in any other way.

  24. supercat: I agree that billing by the hour has its own set of issues, but:

    (1) The very same issue exists in thousands of other jobs, and it doesn’t pose much of a problem there. Does paying by the hour encourage electricians to maximize the time spent wiring circuits, or lawyers to maximize the time spent preparing cases, rather than doing the best job possible regardless of time? If so, society seems pretty comfortable with it anyway.

    (2) Paying by the hour isn’t the only possibility, or even the best one. What I envision is per-job pricing, where an artist describes his vision for a project, sets a price and an expected time frame, and looks for buyers. How many takes he needs to nail it is immaterial: the buyers are paying X dollars to have work Y produced by or before date Z, and the seller is free to spend as much or as little time working as he needs to meet that goal.

  25. Jesse: The problem with paying artists for their time is that it encourages artists to maximise the time spent “producing music”, rather than simpyl produce the best music they can no matter how much or how little time it takes. If an artist nails a song perfectly on the first take, should he earn more if he does twenty more takes?

    One major problem with many subscription models is that they assume all music is of equal quality. A virtuoso performer should be able to demand a price premium for his works; a performer who is competant but not stellar should be able to compete in the market place by offering his works at a lower price. Blurring the distinction between different qualities of performers and performances will reduce the incentive for performers to excell.

  26. As others have pointed out, you can subscribe to music already, and subscriptions have significant drawbacks. Subscription isn’t new.

    You want a new business model? Try paying artists for their time — the initial act of writing, recording, performing, etc. — instead of paying for copies of their songs or for the right to listen to those songs. That model *guarantees* that everyone is compensated for whatever they record, because if they aren’t being compensated then they don’t have to record it in the first place. And it keeps things simple for listeners: because the artist has already been paid by the time his recording is released, there’s no need (or justification) to restrict how anyone else can use or share that recording.

    It’s still not completely “new”, in the sense that it’s the same business model used by almost every other industry, but it’s new to today’s music business (although http://www.sellaband.com/ is almost there already).

  27. Lewis Baumstark says

    I’ve been thinking that one of the problems with the subscription model is that you can build a huge customized playlist (what I see as the future equivalent of building a CD library), but that you can’t transfer that playlist to other services. If I went with Rhapsody and built a large collection of music (probably downloaded locally, but with basic DRM that said I could no longer play the music if I ceased paying for the service), then I would lose that playlist if I wanted to change to a competing service. In other words, the value *I* added to the service would not transfer and I would have to re-create it (a very time-consuming process).

    I would be much more receptive to subscription services and even a limited amount of DRM if there were a common playlist standard that would carry over from service to service — something that let me think *my* collection remains intact, regardless of who is managing my account.

  28. I have to chime in here, because I’ve been busy building (all 5000 loc of it) what I think ought to be a perfectly viable alternative to today’s status quo. Grabb.it indexes free-range mp3s and makes it easy for people to listen to them, comment on them, bookmark then, and even download them.

    There’s enough interesting music on the net right now that should we be forced to unlist all RIAA-signed-artist’s materials, we’d still have a site people could enjoy. To me the ideal solution would be a “music subscription” at the ISP-level, which would absolve subscribers of liability for listening to and downloading music (regardless of the file format or source).

    Of course the p2p networks would quickly take up less traffic, as music moved to the Lightnet. The results would include cacheability (good for the ISPs), trackability (good for the rights-holders), and addressability (real URLs for music, oh my!) which would allow users to do with music all the great things we’re used to doing with say, the written word.

    Seems like a win-win for everyone, but it will take a leap of faith on the part of the big rights-holders to get us there. Rick Rubin’s new position at Columbia might be a sign that things are starting to make some sense.

  29. I think that in the end any scheme that remunerates artists by trying to tax distribution is going to fail, including subscription models and compulsory licensing schemes. Underneath it all, trying to tax copying is a denial of a fundamental fact that digital technology has made copying and distribution vastly cheaper.

    I think the solution will be a move to systems where artists are payed up front and the created works are released into the world unencumbered. This is a much bigger change than I think anyone is contemplating and comes with all sorts of difficulties, but gets down to the business of artists and patrons (“consumers”) negotiating the value of the artist’s time.

    The first record company to reinvent itself as an intermediary in a system of this type – providing recording services, investing in new talent, doing publicity, guaranteeing patrons a certain minimum quality of releases, pressing physical media for those that want it – will eat the other alive until they catch on.

  30. > Keep in mind that Ed didn’t post this. I did. (I’m Dan Wallach, your host for this conversation.)

    Thanks for the correction.

    > I don’t object to using the term “piracy” to describe the act of downloading a copy of a song in violation of the artists’ legal right.

    That’s a crime called “copyright infringement”. It’s misleading and shrill to call it “piracy”, which is an entirely different, violent, physical crime. Please, don’t obfuscate an already-confusing topic.

  31. The subscription model won’t work. People want to own and share music. Most “piracy” isn’t done over the internet, it’s done by kids saying “loan [sic] me your new CD” or “the birthday party CD is in your goodie bag”.

    Apple has one good model. Sell the tracks with as little DRM as possible. None is best.

    Another good model would be to sell compilations on CDs in fancy wrappers for parties, as a round of MP3s for your player at the gym, or at song dispensers at clubs, coffee shops, supermarkets and gas stations.

    Another possible revenue model would be to sell “broadcast” licenses so people can legally post music on their blog, use it in online radio broadcasts or as part of a video. Depending on the traffic and the quality level they could sell different kinds of licenses.

    Another possible model would involve band, and genre, supporters who would pay for licenses and subscriptions to promote their favorite artists or creative movements. If you do this right, they’ll even encourage others to buy the license since the know the artists will benefit.

    Any anthropologist would tell you that in our mercantile society, spending money on music is almost as important as listening to music. There are lots of ways to cash in on this.

  32. Um, I have a music COLLECTION. This means a huge body of music that I’ve put together, from Japanese 80s punk through my prized selection of sci fi movie soundtracks. I OWN it. This is what a collection is. I’m going to choose something else when the current system works so well?

  33. @Ben Finney:

    Keep in mind that Ed didn’t post this. I did. (I’m Dan Wallach, your host for this conversation.) I don’t object to using the term “piracy” to describe the act of downloading a copy of a song in violation of the artists’ legal right.


    Precisely. Google’s Gmail and Calendar cost me nothing (until I exceed my quota, but that’s another topic). All they ask me to do is put up with some ads floating on the side of my email. I’ve heard from Gmail engineers that the Gmail product is revenue positive for Google (they wouldn’t say how much, of course, but it’s still a useful data point).

    Other comments:

    There’s something of a chorus of “your model won’t fit my needs” here which can be taken to mean that a one-size-fits-all music consumption thing is unlikely to be the right answer (and that includes the iTunes business model). You can easily imagine a world where multiple services “sell” the same music, in unencumbered formats, based on different sorts of pricing policies. One service might charge you piecewise (as Apple does) while another might give you all-you-can-eat up to some limit (as eMusic does). Somebody else might create “radio stations” where “DJs” publish “playlists” that others then listen to (as Live365 does). The music industry would need to sort out a wholesale pricing scheme that can accommodate such wide variation, and make sure that cashflow finds its way to where it belongs.

    Of course, to accomplish any of that without DRM, the consumer cost needs to be an order of magnitude cheaper than it is today. Otherwise, you’ll just have people building collections and sharing them on burned CDs or whatever else. How do you incentivize a high school kid *not* to burn that CD when there’s no DRM to stop it? How about paying a (small) bounty every time somebody officially downloads something on the kid’s playlist? There’s a lot of room for creative business models, even without DRM. The point of the New York Times article, to me, is that we’re now an important step closer to these kinds of ideas getting real traction.

  34. Ed, if you truly believe that copying digital information is not a harmful act, please stop using the emotionally-laden term “piracy” for that act. If you want to refer to the crime of copyright infringement, do so; but using the other side’s smear-words is a self-defeating act.

  35. “If I’m totally comfortable keeping my email and calendar “out there” on the Internet, why shouldn’t I be comfortable keeping my CD collection (1500+ and growing) out there as well?”

    1.Because Google/Joyent/et al aren’t dedicated to making sure that you wont get access to them if you don’t pay them each time you want to access them in a different way. Even if, say, Google wanted to start charging for POP or IMAP access– you can just switch providers to one that does not wear it’s own head as a hat. I tried to illustrate this point with an “imagine if the record industry ran your email box” scenario, but I got angry. And then i realized I was describing a business model that I do not want to be responsible for unleashing on the world. Seriously, think about it and cower in fear.

    2,Because if google decides,”ok, you must pay” it would be for $19.99; you can then pay for a month, download your inbox and move on to the next free mail&calendar web app. Imagine having to start from scratch with your music collection as many times as you have switched email providers? Nightmarish.

    3,I don’t know about you guys, but i have around 5Gb of “ROIO” type material, where the company (often some guy with a tape machine at a pink floyd concert) doesn’t exist. The subscription model will NEVER address that. I don’t care that Roger Waters thinks the sound quality sucks, he never rocked harder than on “From Oblivion”. I don’t want the content makers telling me who to listen to, thank you very much. I won’t even listen to the radio anymore because of the non-stop hawking, why would i want to put my art collection (thats what this is, right?) in the hands of someone who believes that Avril Lavigne is better than the Residents because she sells more.

    4,Frankly, and this is solely from the eyes of the consumer, the “store locally” paradigm for media storage is just more trustworthy and hassle free. If i can’t listen to my itunes library, it is because my computer or a part of it died. If the music was “out there” there are like, what? 7 million different ways THAT ARE NO ONE’s FAULT can stand between you and your data. I just wanna read a book and listen to music, I don’t care about a switch in omaha that got pooped on by the sysadmin’s shitzu, i don’t care that Universal and the rest of the syndicate are in “talks”(a dreaded term that means the consumer is going to be walking funny), and i don’t care that my ISP shut down access to all sites with a “.” in the url. With the current system, there is no infrastructure, no corporations.

    The RIAA, MPAA an the rest have to realize that any system that throws up further roadblocks than “you need a computer that boots” is doomed to fail. I resent all the crap that those two cartels have foisted on our operating systems (thankfully OSX hasn’t yet been spoiled but i am waiting for the leopard shoe to drop). Technology is solely to make our lives easier, and when it fails that brief, it should be taken out back and shot. Who really wants Fairplay, WMDRM, etc. on their computers?

    I may sound as if I hate the record companies, and i DO. They took an industry of ARTISTS, and made it the most corrupt, bloated, and anti-consumer industry in the world. Listen up RIAA/MPAA/the rest: In a perfect world, we wouldn’t need you. You are nothing but a bunch of middlemen leaching off of true genius and talent. In a perfect world, we wouldn’t need you. Get out of my computer, get off of my radio. In a perfect world, we wouldn’t HAVE you.

  36. The subscription model has potential if its done in a “for $20 per month you get 100 mp3 downloads,” but his vision, although progressive, still lacks technical realism. iTune’s DRM is tolerated because its easily defeated and doesn’t interfere with most users’ day to day activities.

    I think people would still be okay with paying $1 per song, especially if you can by the whole album for significantly cheaper.

    If they were smart, they’d be focusing on two other questions:
    1. How do we sell more music to more people? (Hint: better radio might be a good start.)
    2. How do we make music for cheaper? (Possibly end this game with the $50,000+ music videos.)

    Still, glad to see some progress.

  37. I think we can all agree that DRM is just a bad idea. It only hampers makes legitimate users and doesn’t stop the flow of piracy as Rubin said the industry needs to change the business strategy however a subscription based model doesn’t eactly work for two reasons.

    1. It relies on the internet being EVERYWHERE. When driving through middle of nowhere USA you would not have your if DRm is dead you can only stream your music. They cannot trust you enough to give you a locally stored copy. So when the internet is not there your music disappears too. Remember In some places in this country there isn’t even cell phone service. BUT there is a Wallmart which sells lots music to the people around there. But if there isn’t any more physical or locaclly stored there is no longer music in that area.

    The second issue is that it requires a lot of technology there isn’t there and won’t be there for a while. Sure cell networks are fast but not fast enough. And as I said above they are not everywhere. Sure you could use Satellites to get music to people in cars but Satellites do not necessarily penetrate walls in the house so the companies would need another way to get into the home, which would probably require yet another middle man ie an ISP. But each person is going to have a different ISP. As cable companies move into the phone realm and the phone companies move into the ISP realm it all gets even more fragmented. It creates many different companies that the RIAA has to negotiate with and no one company is going to get all of the big four companies’ music. So then it becomes harder to reach people. Not good for the RIAA or the consumer.

    I think what is really going to happen is that content producers are going to directly reach the people. Instead of subscribing to a catalogue you’d pick your music a’la cart thats iTunes biggest feature. You can get the one song you want and none of the other CRAP. A subscription still makes people get things they don’t really want. Its a marketing gimmick and people are tired of it. Eventually content producers are going to get direct access to the consumer and the current gate keepers become advertisers nothing more.

  38. artists need to start thinking of their music as an ad for them — which means they need to find something to sell BESIDES music. they could turn themselves into a brand, build a social network and sell ads or create a storefront, build a business around touring or selling other merchandise…..but i seriously doubt selling music is the issue — because once you go down that path, DRM becomes more and more appealing, regardless of the details.

  39. David Robarts says

    The subscription model is already out there. Rubin said, “Either all the record companies will get together [for a unified subscription model] or the industry will fall apart and someone like Microsoft will come in and buy one of the companies at wholesale and do what needs to be done,” doesn’t he realize that the subscription model is already a reality? Between the various subscription services and iTunes, a new business model is already in place, the recording industry just has to let go of the old model and position themselves in the new one. Nothing stops the labels from opening their own online store with high-quality DRM free music (with user fingerprints) to compete directly with Apple’s iTunes plus. They also can work together on their own subscription service (or buy out an existing popular one) and compete there. The big point is that they’ve waited long enough that they have to compete for their position…they’ve lost the advantage of being the incumbent.

  40. Well, there are other models out there besides subscription models, and I’d think that having your music collection out there on the internet would be a hassal, and as you’ve noted, if the business model is subscription, then unless your collection is remotely stored, it would imply some kind of DRM.

    So, my vote goes for a business model based on the now-defunct (because the lawyers and American diplomats twisted the arms of the Russian authorities) website allofmp3.com, which provided an extensive catalogue, with reasonable prices. I think the volume that this model would attain would make up for the low prices.

    In any case, there really isn’t any alternative.

    • I think people don’t understand that the RIAA doesnt want to cut prices, they want to keep getting $16 to $20 for an album with 2 good songs. These people are relentless to keep the revenue flowing and don’t give a crap about us.

      Anything computer related is bad according to them. They were even quoted as saying “ripping your own store bought CD’s to your computer is illegal”

      This is precisely why I don’t buy music anymore. I feel better “borrowing” and “sharing” it.

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