Future of Digital Music in Doubt

mlknowle writes: "NPR has an excellent article about the growing trend of 'real' radio stations abandoning streaming media due to concerns about advertising, royalties, and (you guessed it) the DMCA. Basically, stations are finding that web streaming isn't increasing their listener base, but is increasing their costs. It's a good read (or listen.)" Meanwhile, there's a study circulating saying that people don't and won't purchase heavily restricted music online at higher prices for a less useful item. This is apparently a revelation to the music industry.

Ludacris

I think it's ridiculous that radio stations should be concerned about the DMCA. If they have the rights to broadcast the songs, they should be able to do it on whatever media. People can record things off of the radio onto tapes, and people can record things off of digital radio into mp3 files, that's not the radio station's responsibility.

Re:In what way is it different?

I don't think you read the story. This is, in fact, old news. Idiots like Matt Drudge railed against this months ago.

The problem is that the DMCA has made "normal" media totally different than "analog" media, and given people a lever to get more money. The stations had to bail because they were going to be bled for cash. The DMCA says that commercial actors should get different rates of residuals for over-the-air work and "online" work.

There should be no difference between broadcasting on TCP/IP and over the air, but it is the DMCA and the law which has caused the difference, not the station programmers.

The stations are on their way back right now. A company associated with Broadcast (or is it yahoo?) has come up with ways to remove "over the air" spots and put in properly licensed "online" spots.

So don't blame the broadcasters... they only did what they were forced to do.

Digital Music??

Shouldn't this article be titled something different? AFAIK MP3 is still alive and kicking, and so is the CD, which is certainly digital music. Just because radio stations can't make money streaming doesn't put the future of digital music in doubt.

digital music report on CNN.com

Along these lines, CNN reported about a study that shows a "flat future" for digital music. The story is at [cnn.com]
http://www.cnn.com/2001/TECH/internet/08/30/digi ta l.music/index.html. It was done by Gartner technology research.

The study was of 4000 Internet-using adults. One half of the people surveyed use their PCs to play CDs, but only one quarter have played downloadable music. Only 6 percent, during a study period during the spring, purchased music online (and this seems to be a high figure to me, IMHO).

The study shows that the record company services are a bust, and that people are not likely to pay for services like Napster since they are used to getting it for free.

It looks like, for now, the record companies are successful at killing an entire new industry and business model through lawsuits and other DMCA stupidity. I personally don't think its dead forever, but it certainly is on a downhill trail.

when will they get it?

It amazes me how often "Industry Pundits" refer to the internet as "New Media," and then post dire warnings about the future of the internet when "Old Media" companies discover that their models don't fit.

So old-school internet radio stations aren't going to continue streaming their broadcasts? This is supposed to spell the end of internet radio?

People turn to internet radio to avoid the homogeneous crap that they're stuck with from "old school" radio stations. I don't want to have to choose between the latest mass-produced alternative and pop crap, I want to be able to hear, say, reggae, or ska, or funk, or whatever other type of music, out of the billions out there, that I can't hear on the rregular radio because it has become so streamlined that it must appeal to the lowest common denominator.

Let's face it, radio sucks. Internet radio, on the other hand, with its ability to stream countless different styles of music, holds a lot of promise to me.

So good riddance to the old school. Let them keep propagating their useless, mindless, repetitive crap for the masses, and lets not waste bandwidth on it.

Internet Broadcasting Rights & BBC

Similar things happended when the BBC cut off [savebbc.org] their World Service shortwave stream to North America and Australia a couple of months ago, their reasoning was that with high Internet proliferation people could tune into the net instead, or listen via XM radio etc.

However, the BBC doesn't have the Internet rights to most sporting events, so whilst you could listen to a footy match before on shortwave you just get a "sorry we can't bring you this event...." on the net. This is not my idea of progress.

Classic example...

of why radio stations buy broadcast licenses of music rather than going down to Sam Goody and buying the $15 comsumer version.

They have no reason to fear prosecution from the DMCA unless their current broadcast licenses specifically state the broadcast medium that the license is good for.

Essentially, radio stations couldn't park a Van mini-station at public events and play music to all to hear unless their broadcast license allowed it.

Basically, this tells me that a lot of radio stations need to either hire better lawyers that aren't afraid to exercise their license rights, or they need to negotiate new licenses that include streaming audio as a valid broadcasting medium.

The distribution chain will shake out eventually

My guess is the Net as we know it will end up near the bottom of the staggered release cycle for new products. Just as movies generally go from 1) first run theatres 2) dollar houses 3) pay per view 4) DVD 5) VHS 6) Cable 7) broadcast, and books go from hardcover to paperback, songs as well as movies will end up on the Net after the other, more easily limitable distribution methods are milked. Broadcast radio traditionally hasn't fallen into this because it's used as a promotional tool to sell packages, and streaming music *should* also be used the same way. But it will eventually find its position somewhere.

Put a fork in 'em

I've been saying this ever since the "Big 5" laid out thier plans. Who's going to pay money to "rent" a finite amount of music (lossy compressed at that) for a flat fee each month? Someone did a study (that I can't find right now) showing that the average music fan would pay more to "rent" the music then they would to just buy it on CD. Plus, with a CD I'm free to rip it, make a compilation CD out of it, put it on tape, etc.

The only way digital music will take off is if a) the record companies make it the only avenue of delivery (they're dumb, but they're not that dumb) or b) add value or make it cheaper. Since they're taking away value (compressed, timebombed and player restricted) they better damn well make it cheap.

For the near future I think (legitimate) digital music will only succeed as a promotional item. I.e. free streaming of upcoming albums for a day, free b-sides, etc.

No surprise...

Meanwhile, there's a study circulating saying that people don't and won't purchase heavily restricted music online at higher prices for a less useful item. This is apparently a revelation to the music industry.

This has been understood by the music industry all along. They are just playing dumb to the matter. The music industry is starving off as much online activity as possible and why not? They have an extremely lucrative monopoly on music distribution and broadcast. Any change from the norm, no matter how positive for the consumer, is nothing but a threat to this money machine.

Since IANAMIG (I am not a music industry guru) I sit back and wonder why more independant music isn't free on the Internet. Like free software it may be the best way to get noticed when another product dominates the commercial market eg. Gimp. I don't know if current laws prevent such distribution or if there are too few artists unwilling to give their work away or if I just haven't been looking in the right places. I have to look at the Grateful Dead policy toward recording concerts (you can record and distribute but you can't profit from the music - you can charge for media, shipping etc.) and wonder why this isn't more prevalent. Are most like my musician friends from high school - just waiting to make millions when they are discovered by a big recording label?

Old -vs- New.

Come on. We hear this constantly. The 'Old-world' media and news organizations telling us how the 'New-world' internet has no future, or how (insert threatened business model here) won't work on the internet, blah blah blah.

SO WHAT?

It's not going away; digital music WILL stay, whether the 'old-school' industries like it or not. Same for most other aspects of the net. Just because your old business models don't fit doesn't mean society won't use or accept it.

Tactile response

I just coud never bring myself to pay for online music for one reason: I can't touch it. Music for me is almost a ritual. I love taking the CD out of the case, admiring cover art, and putting it in the player. I take it to the extreme that I don't even want a 5 disc changer as it would erode the ritual. Records are like the Cigars of music.

Mp3's don't sit on your shelf. It's a bit vain, but music defines your personality, and having CDs on your shelf puts your personality on display. No one ever comes to visit and looks through your mp3 collection.

I know that people agree with this, not everyone of course, but in general, people like the ritual of listening to music. I only ever downloaded mp3s because it was free. Rituals are great but free is free. If I liked enough mp3s from an artist, I bought the CD. An mp3 was never a substitute for the Real Thing.

Take all this away from someone, and then restrict it to hell and it just won't work. Mp3s are just not as highly regarded as CDs. How many audiophiles listen to mp3s over CDs? This will fall by the wayside like eBooks for sale. Mp3s will be pirated and the consumers will save their dollars for CDs.

I don't listen to the radio at all anymore

I scrounge Usenet and P2P networks for MP3's. If I find one that's interesting, I download (or even buy , if it's really good) the rest of the album.

Cons: Occasional MP3 distortion from a poorly encoded MP3

Benefits: No FM Station audio 'loudness' compression. Never wait for a song to come on. With my trusty CD-RW, I can listen to a song anywhere... Home, Work, Car. More variety: I had never seriously considered most tencho and electronica before downloading MP3's.

Radio stations, especially those who play top 40, distort music and play what the record companies want to be popular instead of what the listeners like. Most are owned by only a few companies. Hear of Cirrus Broadcasting? Before they deregulated broadcasting, there were several pop and rock stations in Amarillo. Now there is one rock, one pop, one r&b, and about 50 country and Tejano stations. Thanks, but I'll stick to Gnutella and Usenet!

"Don't be alarmed by the tone of my voice. Check out my new weapon, a weapon of choice" - Fatboy Slim.

The Future of Digital Music

The record companies achieved their dominance through the exploitation of solid media, including tapes, records, CD's and eight-tracks. The digitization of music formats has now turned against them, as a copies are no longer second-rate, like a cassette of an LP, but replications of bit-level information with little to no signal degradation.

Even the implementation of schemes to scramble or degrade the signal for copies is ultimately futile. To paraphrase the opinion of Emmanuel Goldstein from his WBAI show, "If you can play it back, it is decoded, and you can copy it." It does not matter what level of encryption is implemented for digital music. The playback necessitates a conversion to an easily copyable form, i.e. sound waves, which can be reencoded in various ways, from placing a microphone next to the playback advice to copying the signal through some kind of analog receiver.

It is a similar situation for e-books. Once the content is viewable, it can be copied, even by retyping or photographing the resultant output. And as soon as a single "pirated" copy is made available, those with access can acquire it for free.

The size and scope of the music industry is a recent phenomenom. Only since the early 1950's were saleable recording considered a lucrative pursuit. The modern behemoths have only existed as such since the late 1960's. Now that they have lost control, we see them flailing about to prevent a loss in market-share and income that will inevitably increase with consumer broadband access and the power of the average desktop computer. After all, who would pay for "intellectual property" when they can receive an exact copy for free over a relatively anonymous file-sharing network?

Copyright and music industry pundits see this trend as an ominous sign of disrespect for music, capitalism, creativity and the hard-work of the creators. Recent trends are likely to improve the situation of the individual artists, who, with cheap, good audio software and fatpipe connections, will be able to distribute directly to consumers and bypass the whole music-industrial complex completely. For a few thousand dollars, a musician can have a decent home studio comprised of professional-level gear, VST audio software and sequencing/sampling packages such as Cubase, ProTools and Logic.

A modern musical group or musician sees something like 10-15% of their profits after all the industry-types take a cut. While some of this is due to the high cost of touring, much of it is for usage of company recording studios, garnering media attention and the production of saleable units such as CD's. Now that each musician or band can be their own cottage industry, we should see an increase in individual musicians' "paychecks" and a decrease in control by corporations. Especially once on-line cash schemes start to proliferate, the market for grassroots types to create their own individual music industries, channels and styles should become easier over time.

I see the current situation as one with vast opportunities. The current "troubles" will be followed by a huge proliferation in both the number and diversity of musical acts eager to distribute their products throughout the world, and I am all for it. If the dominance of the huge mega-bands and stars fades due to copyright-infringement and piracy and a leveling of the current "playing field," so be it. For me, these musical types are more a manifestation of the capitalist and image-oriented facets of popular culture than the expression of any genuine musical artistry or feeling.

The Economics of Streaming

Not enough people have broadband yet. That's why the radio stations aren't seeing the increase in listenership they were expecting. They are giving up on their streams too soon. Come back in 5, 3, maybe 2 years and the economics of this will be completely different. Problem is, this has left them with a bad taste in their mouths and they may be disinclined to try streaming again even though the economics would support it.

AFTRA members deserve a somewhat larger fee when their work is streamed -- but not so much larger that it makes streaming unviable. They are just shooting themselves in the foot in that case. Same goes for the RIAA's streaming fee. What do you want to bet those fees were negotiate near the peak of the dot com bubble? Now that the bubble has burst, they should certainly be renegotiated. Better yet, the fee structure should be made a dynamic function of online listenership, so that streaming remains viable whether the online listenership grows as expected or not.

It's the content stupid!

I'll weep about the DMCA and those additional royalties in a second.

Commercial (and even non-commercial) radio in the United States has an extremely serious problem: It all sounds the same.

Where I live (Seattle) has a few stations which are worth listening to. The classical music station [king.org], The underground/rock music station [kexp.org], The folk music station [ctc.edu], and of course The extremely annoying dance music station. [c895fm.com] (I'm not a big dance music fan, but if you want to feel like you're in a disco, even when you're not, it's a good thing).

The other 30 stations on the dial are utterly, completely interchangable. There's a station which plays all the hits from 1968-1972. Over and over. Just like every other big city in the US. Imagine that! There's three "alternative" music stations which alternate between K0RN, the Beastie Boys, and Shania Twain (there must be something alternative about her, but God knows what). Even NPR, which I wake up to every morning, does not sound a bit different if I listen in NYC, Atlanta, or San Francisco. They have All Things Considered, they have Car Talk on Saturdays, they have a mid-day call in program to talk about local politics. Who woulda thunk it?

So, if I want to listen to K0RN, or Stairway to Heaven (for the 6.02x10^23rd time!), or even listen to Fresh Air, I have this highly sophisticated device to do that. I call it a "radio". There is no imaginable reason why I would waste bandwidth and hassle to get a streaming media connection to do that.

For Internet Radio to be a success, you must first put out product which is different enough to provide value added. In this way, content is just like every other business.

j.

Fighting for a fist full of dollars

Basically it comes down to who gets paided what.
What I really find intresting is in the RIAA's faq (http://www.riaa.com/Licensing-Licen-3a.cfm [riaa.com]) and read the section on "What are the conditions that a webcaster has to meet in order to qualify for the statutory license?".

Makes you wanna go start your own country.

One day RIAA will stop fighting their customers

The RIAA is so scared that they refuse to listen to their customers, whom they also view as criminals and their enemies. All of these digital-music initiatives address only their own concerns, and do not address customer wants/needs. Sony likes to include digital rights management as a "feature" on it's devices -- as if it is something customers want. Sure, its a lovely feature that I can't connect a DVD player to my Sony camcorder.

What do customers want? Ask Napster.

Fast, accurate searching

Comprehensive database of content

Fast download

Fair price -- and only pay for what you use

Compatibility with customer's player of choice

Ease of use

Napster and mp3 set the standard for these things. People often won't pay where a free alternative exists, but they will pay if an alternative is (perceived) better.

You can't have significantly less compatibility than mp3 and expect consumers to embrace it. I'm not going to open Winamp for my personal collection of ripped mp3's and some other player for "secure" music. You can't make it harder to play, where you have to have a key to open, blah, blah. What if I want to play the song somewhere other than my desktop PC? <sarcasm>Oh, it's less portable than mp3 or even a physical CD? Count me in!</sarcasm>

One day, the record companies will start developing a solution around customer needs, not their own. Until then, they'll try to spoon-feed us DivX for music. And fail.

Net media should be more profitable

... at least in some cases.

I live in a small market (Moscow, Idaho/Pullman, WA). Other than Top 40 and Country, it's pretty tough for anything to be profitable. Because of two universities, there are some "alternative" radio stations, but they aren't playing anything I'm interested in.

But I like jazz. And bluegrass. Neither of those gets played on the radio, and it wouldn't make any sense for anyone to do it. I'm just out of the range of a jazz station run by Eastern Washington University in Cheney, WA.

There aren't enough jazz or bluegrass listeners in my area to make for a profitable venture. But on the internet? You better believe it.

The trick, of course, is to come up with a viable revenue model.

Also, I can't listen to internet radio at work, because of "no personal use" rules. That certainly limits my availablity as a customer/listener.

It's a tough market, and there are definitely some obstacles, but the potential is there.

Selling kitty litter online is a better idea

We've all heard of that dumb dotcom that went broke after they found people would not buy kitty litter over the web. Now music is definitely easier to deliver over the internet than a 20 pound bag of kitty litter, which cannot be sent using TCP/IP. With kitty litter, your cat continues to make a mess while the UPS guy leaves little yellow notes on your door after not ringing the doorbell. This is the biggest advantage that online music has over online kitty litter. Is that enough to save online music from suffering the same fate?

Well, maybe. The kitty litter doesn't suddenly refuse to clump up if you move it to another litterbox. It doesn't "lock up" and cease to cover odors if you get a new cat. You can use a batch of kitty litter for about twice the amount of time that you're "supposed" to (if there are no women in your household). And, you can stock up on kitty litter- getting 5 or 6 bags- without having to worry about the last few bags not working by the time you need them because of some stupid preprogrammed time limit that is backed up by the force of law. And you need kitty litter if you have a cat. Nobody really needs Britney Spears.

What makes them think they're going to pull this off?

I'm not going to pay money for anything that is more crippled than an MP3. (And if I find that I've bought a crippled CD, I will return it and give up on buying newly released CDs from then on unless I know it's a real Redbook CD.) I have enough crap to deal with in my life. I don't want to have to worry about timebombs and player restrictions on each of a thousand songs in a collection. Are they nuts? I'd have to hire someone to keep track of my frigging music collection! Can you imagine planning a party, or an outing to the beach, and having to worry about how many players each of your CDs has been played in, and whether or not it will refuse to play in your new Walkman CD player that you just bought? CDs would go the way of the laserdisc if they worked like that.

I predict these greedy bozos will lose billions in their own version of a dotcom meltdown before they realize that people will simply not allow themselves to be sodomized for the privilege of buying music online.