Tunes of change

Society has too much to lose if we don't ensure that talent is rewarded, writes BPI's chief executiv

By Geoff Taylor Published 06 November 2007

There is no doubt that the recording industry is going through a period of unprecedented change. The very foundation upon which our business is built - the ability to generate income from the artists of today to invest in the artists of tomorrow - is being threatened by widespread copyright theft.

Operations such as that against the illegal OiNK service represent just one part of how our industry is successfully managing the challenges of the digital age. There is no magic bullet to eradicate copyright theft and no single anti-piracy action or business model will change the world. Even so, our mission is to turn more of the growing number of streams, copies and downloads into pounds and pence to share across the value chain.

Some have suggested that a larger issue for industry is the ability of artists such as Radiohead to seek alternative distribution channels. But there is in fact nothing new in established artists setting up their own record label - Prince, Simply Red, Oasis, The Beatles, and Led Zeppelin have done the same thing in the past.

But what the new distribution models recently adopted by the Charlatans, Madonna, Prince and others have in common is that they generate revenue streams that are far less vulnerable to copyright theft: with recordings being used to drive the sales of concert tickets in the case of Madonna, or as a promotional vehicle to claim a share of newspaper income in the case of Prince. And models such as these are only practical for well-known artists who have built up large fanbases after years of marketing and investment by record labels.

The bottom line is that no-one is offering an alternative to the core business model of a record label - investing in unknown artists on the basis that they will generate income in the future. To cover their investments in new music, record labels are seeking to earn income from a wider range of artists' revenue streams.

Lines are blurring between the traditional record label and other music companies. While opportunities arise for others to enter the record business, record labels are developing broader business models to generate income from revenue streams outside recorded music.

The many services that a record label offers to an artist have become more important as media channels proliferate. In addition to their traditional expertise in international physical distribution and marketing, labels have networks of relationships to collect licensing income globally to remunerate artists, music publishers and other rightsholders.

The back catalogues and broad portfolios of larger record companies give them negotiating power in striking deals that can benefit all the artists on their roster, while digital channels are opening up many new opportunities arise to promote acts across a multiplicity of online channels and exploit catalogue more effectively than has been possible through physical retail.

Labels are also well-placed to generate new income from brand partnerships and synchronisation. These capabilities are essential for artists trying to build a long-term career.

The BPI is at the forefront of the industry’s efforts to ensure that there is a fair financial return for artists and those who invest in creating new music. We believe the prevalent culture of online copyright theft will be curbed through a combination of consumer education, new business models, more robust action by ISPs against online copyright theft and stricter enforcement by industry and government.

We believe that the internet will become an environment in which creativity can be effectively monetised, as our society, economy and culture has too much to lose if we do not ensure that creators are rewarded.

We do not need to convince anyone of the emotional value of the music they love, but if the record industry is to reach its potential online, we must succeed in our mission to convince new industry partners, policy makers and consumers that an online and mobile ecosystem in which music is respected and valued is in the interest of everyone.

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View the discussion thread.

8 comments

Tue, 2007-11-06 23:35 — baccarolle

I have been following the developments in the OiNK case. This article does not help me to understand the legal position. The BPI refers to the "illegal OiNK service" - how does it respond to the claim that the site was no more illegal than Google?
Referring to the paragraph:
We do not need to convince anyone of the emotional value of the music they love, but if the record industry is to reach its potential online, we must succeed in our mission to convince new industry partners, policy makers and consumers that an online and mobile ecosystem in which music is respected and valued is in the interest of everyone.
The record industry will not reach its potential online until it can offer a quality alternative to OiNK?

Wed, 2007-11-07 15:40 — phuqertrfc

gorgone,

I would just like to respond to your comments, but firstly some background.
I agree with you about downloading music for free is theft, and I also thought that sites such as Oink were illegal.
I was intrigued by the goings on with the Oink website as my friend was a member and I have spent a lot of time over the last couple of weeks researching into this.

Firstly I would like to correct a point you made about the guy who ran Oink making significant amounts of money from his site. If you look deeper into the propaganda that you read in the newspapers and see on the news, it becomes clear that the people who ran Oink did not do so for profit. The donations which have been widely reported as profit were simply to help pay for server costs and the cost of running such a site. This was a site ran by a man who held a full time job and did this in his spare time for his passion of music.
After reading up on the site and speaking to ex members of Oink it has become clear that this was not a website like you or I would have normal dealings with. This was a community of music lovers who were all happy to contribute towards the server costs in order to keep a site that they were passionate about up and running.
As for the Google comparison, I initially held the same views as you, but again once I learned about how this website worked I realised how wrong my opinions were.
Google is a search engine. Non of the websites or files you find via google are held on google servers. Google simply points you in the right direction.
Oink too was a search engine, but it only dealt in music. Just like Google, Oink only allowed users to type in something they wanted to search for and it provided a number of results which were links to torrents. The music they downloaded was on individual users hard drives.
I have tried to find an argument against Oink in this respect but I can't. This site was a music search engine. If it is illegal to have a search engine that can link to illegal material then Google is also an illegal website as I could find far more illegal material on Google than any member of Oink could find on their site.
So coming away from the Oink issue now and on to the whole theft issue.
I now find myself in a grey area regarding this.
Yes it is theft to download music that you haven't paid for but when I read further into this I am leaning more and more towards the side of the downloaders.

Who loses out when an album is downloaded for free?
The artist or the record industry?
From what i have read, it seems that it is only the record industry that loses out as they make the majority of the money from CD sales.
The artist if anything actually makes money from downloading as their payday comes from tours and merchandise. In a world were the record industries choose to create their own throwaway pop acts to make easy money as opposed to supporting up and coming bands, these struggling bands now have an ocean of listeners who become fans and spend money on concert tickets and merchandise. With the record industry concentrating on talentless good looking models to cover songs from years ago these bands would not have a chance without sites such as Oink.

Lets make up a scenario. A new band called BandA have written some songs and made a CD.
In a world without Oink they are relying on the record industry. The industries passion is making money so if they have a choice between BandA and their own manufactured band who can cover well known songs that are guaranteed to sell, they go with their band and BandA struggle to get their album heard.
In a world with Oink, someone who saw BandA in concert and bought their album sticks a link to the download on the site with an explanation of why he loved them and a review of the album. Suddenly a community of 180,000 users have access to BandA. this is an ocean of listeners that BandA could never have reached without Oink.
So anyway 5000 people download the album for free.
1000 people don't like it and delete it
1000 people like it but not enough to buy it
1000 people like it and order the original on CD
1000 people love it but don't buy it because they want it for free
1000 people love it and buy rhe original on CD

So 1000 people didn't like it and deleted the album. No worries because they wouldn't have bought it anyway.
2000 people either liked it or loved it but don't buy it. This is stealing yes, but a lot of these people would have just copied the CD off their friend if downloading wasn't available.
2000 loved the album and bought it. That is 2000 sales they would not have got without Oink.

However even if no-one bought the album, they have 4000 people who listened and liked the album and that is potentially 4000 people who will see them in concert and buy merchandise. 4000 people that would never have heard of BandA without Oink.

So in my eyes now, I see the downloader as someone who downloads music because they love music and are potential fans of the bands and it is the fans who make or break the bands careers.

I see the record industry as a money making tool using music to make profit. They have not created anything, they have no talent other than to make money. There was a time when they supported the small up and coming bands but not anymore. They can't because they have to compete with the other record companies who are making millions from all these clone bands and artists who are sold via their image.

So anyway, rant over.
What was my point???
Well Oink wasn't a profit making website despite what the record industry would like you to believe.

Oink was just a search engine in a similar way that Google is.

And as for the recording industry, well if anyone is holding artists back and stopping them from having a payday for their creative talents it is them and not the downloaders.
The downloaders are increasingly allowing smaller bands with real talent to make a living from their art.

Further more I do believe that this was always going to happen in a world were the recording industry are increasingly ignoring smaller bands and concentrating solely on their pop idols and x factor artists. The real music lovers out there will always try to find real music and the internet gives them more options than they have ever had.

Illegal MP3 downloads mean that artsists such as Britney Spears and Girls Aloud only make £10,000,000 each a year instead of £50,000,000 and the rest of it is spread out amongst other talent in the long run.
Only the record industry and their corporate bands lose out and that to me seems a lot fairer than the current legal system.

I will not start downloading illegal music for fear of prosecution, however after researchng into all of this I am now supporting the downloaders and their passion for music and I am against the industry and their passion for money.

Wed, 2007-11-07 19:30 — NicG

Geoff is absolutely correct in highlighting the issue that few advocates of the free music industry ever seem to talk about: who makes the investment in turning unknowns into stars and what's the basis for that investment? On the on hand, what percentage of Apple's vast iPod profits have been reinvested in artistic creativity? On theother, how do you sift through the millions of music hopefuls littering services like MySpace? You can't replace a Clive Davis, a Doug Morris or an Ahmet Ertegun with an algorithm.

On the other side, the reference to public education is misplaced. Radiohead just proved that consumers will take whatever they can on the best term available. I'd also liked to have seen some reference to the music indusry investing on a common basis in the key technologies e.g.watermarking that will provide a basis for its enterprise going forward.

Wed, 2007-11-07 21:59 — musicfan2007

NicG:

www.last.fmis how you sift through the millions of music hopefuls. The site tracks the music users are listening to through their actual media player on their computer and provides users with links to similar artists and/or songs that other people are enjoying.

With an Alexa rank of 280 (http://www.alexa.com/data/details/traffic_details/www.last.fm/) , the numbers show that people are starting to discover new music that fits their tastes using this service rather than depending on single product, consumer-oriented business models such as packaged optical media products or pay-for-download music - which from itunes is usually more expensive than buying the album itself.

Great band's like Death Cab built their fan following through legitimate hard work and talent over years of performances and grass roots marketing.

And new bands can benefit from the business models lthat madonna, Saul Williams and Radio Head are using by doing what bands like Death Cab for Cutie have done to build their brand name and fan base- worked hard, reached out to fans through touring and, of course, making great music.

Fri, 2007-11-09 13:46 — gorgone

phuqertrfc - some good points. And I should declare an interest - I work in the music industry and while the majors are at the coalface I can tell you that everyone in music suffers from illegal downloading. The stats are obvious, sales have declined hugely even though music is still popular - and loads of creative people from all walks of life are losing jobs because of theft and, to cite Andrew Keen, "the cult of the amateur".

Generally speaking it's the well-known acts who have their music stolen most, and yes, by virtue of them being well-known (largely because of labels investing in them for years) they are often better off than most and can arguably forego a few royalty cheques (even if they shouldn't have to). But ethics apart they (and songwriters, who everyone forgets) still lose out in the short term and even more in the long term.

If labels can't recoup their investment in new artists by selling music, the people who lose out first are the employees at the larger labels who put in the work to put the records out - and smaller companies who are finding it even harder to make ends meet as piracy (and other factors) drive down the industry's value.

Losing the infrastructure that supports new bands isn't good for artists. Who cares if the oink bloke is a music fan? Even if he is, by facilitating the service he was biting the hand that feeds him. Geoff is right that labels have changed - but changed or not the music industry does need better protection if it's going to survive.

Mon, 2007-11-12 14:14 — phuqertrfc

gorgone - I agree with a lot of the points you are making but I would just like to pick up on one of the points you made regarding the decline of CD sales. It seems to me that the downloaders are being made scapegoats for the obvious music industries failings.

I'll try to explain my thought process for you.
Before mp3's and music downloads millions and millions of people got music without buying it. When I was 14 years old I had no money and yet I was getting about 5 new albums a week by lending them off my mates and copying them on to cassette. Them same mates had copied the said albums from their mates etc etc and so on.

So without the aid of mp3's and the internet, millions of people were getting albums for free.
There was never any uproar though about CD's sales.

Over recent years the industry has started to support and release more and more tripe than ever before.
CD sales have always been related to the charts.
People hear bands on the radio and go out and buy the music, but over recent years the charts have become so full of the same cloned boy bands and girl bands and talentless popstars that the charts have become less and less popular.

The industry gives us the listener no credit though and blames all this on other factors.
Reality check: we the listeners are aware of what is good and what is bad, and if the top 40 is filled with the same song repeated 40 times we will stop listening!!!!
The radio stations have playlists so they are forced to play all this rubbish also, so therfore the charts are failing.
It all makes sense to everyone but the people who are the closest involved.
If you release a load of rubbish and then force the radio stations to only play that rubbish, then the people who buy singles from hearing new songs on the radio will only be aware of the rubbish, therfore the chart fills up with rubbish and eventually everyone stops listening/buying etc.

Now I haven't read anywhere, anyone from the industry saying that the steady fall in CD sales over the last few years may be down to the fact that it also coincides with the industry releasing a lot more souless, fake, plastic pop stars.

The same kind of thing happens everywhere.
I remember the american government blaming Marilyn Manson for the columbine school shootings a few years back because the lad involved was a fan of his music.
At no point did they try to look at their own failings and how in modern day America children are bullied everyday in school and the government are failing to deal with it.
No, why take any responsibility when there is a scapegoat readily available.

I had a conversation about 5 years a go with a friend of mine who works in the music industry and I predicted that over the next few years the sales of music would drop. This was before I was even aware of torrents and illegal downloading etc.
I could see that this was coming because of the drop in quality of the new music being released.

I'd just like to add a conversation I had with my mum only last night when I went to visit her.
Now my mum is as I see it, the prime target of the modern day music industry, and it made me laugh yesterday when we were talking about what she would like for christmas off me. For the last few years one of the gifts I have bought for her has been the new Il Divo album which is always released every year in time for christmas.
I asked if she knew if they had a new album out and if she would like it. She replied that she didn't see the point as the last 2 albums were virtually the same as each other and there was no point buying a third.

It made me laugh because I feel that someone who knows very little about music summed up the music industry so well.

So whilst i am still not advocating illegally downloading music, I do think that the music industry have got a nerve to spend years making easy money from releasing music by talentless nobodies covering the same songs over and over again and then wondering why the sales of music are falling!!!!

It is very easy for them to blame the people getting music for free, but people have always got music for free long before downloading, so please don't try to get me to buy the propaganda they come out with about torrent sites being the cause of this.

If they start making the effort and put money into long term bands with real talent, then they will eventually start to see their sales growing. If they insist on the easy route of aiming at the young teenagers and their mothers for their market then the sales will continue to drop.

Mon, 2007-11-12 14:24 — phuqertrfc

Musicfan2007 - With regards to your comments about lastfm.
As a lastfm user I used this same argument with my friend.
The problem is that if you are using lastfm to try out new music before buying, you need to have plenty of time on your hands to sit at your PC.
Perfect for students but not for people with full time jobs and other responsibilities.
The only time I really get to listen to music these days is whilst commuting to and from work, so lastfm isn't much use to me anymore.

Also, as my friend pointed out, the quality of themusic on lastfm is not CD quality, wheras when downloading music you can choose your quality.

Wed, 2007-11-07 13:22 — gorgone

baccarolle,
From the label point of view, the OiNK service was an illegal torrent indexing service that made the guy running it significant amounts of money by facilitating the mass theft of music. Google is a search engine. Best leave the lawyers to explain the legal difference between the two, but they do do different things.

Record labels are businesses that need a return on their investments to fund new bands. Even the UK's most sucecssful retailer - Tesco - couldn't compete with a supermarket next door that gave food away for free and didn't pay anyone. The real world doesn't work like that.

Record labels and retailers need the BPI and police to stop the shoplifting so they can get on with their job of investing in new music, and retailers can get on with their job of selling it.

It's naive to think that new business models can develop without some protection against theft.