The Music Industry and the MP3

It didn't have to turn out this way, but the MP3's stunning blitz of the music industry is a case history in how to alienate and politize millions of potential customers. It also shows the dangers of corporate ignorance of the Internet. Next to the TV zapper, the MP3 may be one of the most political, even revolutionary bits of technology ever invited. And the music industry could hardly have been dumber or more clueless in its response. All those geeks out there with playlists as long as their arms are never going to buy CD's again, or give up their new power to choose their own music. No industry ever deserved what it got more than this one.

Perhaps the real irony of the MP3's merciless assault on the fat, greedy, record companies of the world is that the recording industry could have foreseen and forestalled it - it is way too late now -- in the time it took to build a Website like Customdisc.com.

As it turns out, mega-corporations are much better at acquiring the creative work of other people than they are to making anything of their own, one of the several legacies underscored by the MP3.

Although you probably haven't heard of it, Customdisc.com offers a revolutionary way to distribute music, permitting music fans to build their CD mix (and legally) by paying one or two dollars per song. A day or so later, their custom-selected and built CD arrives in the mail.

Making one's own music sounds almost irresistible, especially after years of paying for music you didn't want to get the songs you did. A Custom Disc typically costs between $15 and $25 -- $5.99 for the base manufacturing cost, .99 cents on average per song, plus shipping, handling and tax. Customers find the music they like in Step A, add the songs to their Custom Disc (Step B) and finish their CD and pay (C).

Had record companies grasped the possibilities of digital collection and distribution of music a couple of years ago, they would have blanketed the Net with sites like Custom Disc, or made their music freely available for sale on them.

But they haven't put up a single site like it. Why? Because if you can buy a song for .99 cents you won't spend 15 dollars for the whole album or CD. And if you can construct your own kind of CD, you - not they - will have a say in the selection, promotion and distribution of music.

So the major labels won't sell their music on Customdisc or give up even a slice of their enormous profits or monopolistic control. As a result, customized CD-building sites are limited to new artists, those no longer popular, or local and often unknown acts. But check this site out, if you have any doubts about just how venal or greedy these mega-corporations are, or, for that matter, how dumb.

The recording companies are spending a fortunate in legal fees and promotional costs to wring their hands about revenues lost to copyright violators, especially on the Internet, and to push for government regulation or intervention (Canada enacted legislation last year to tax Canadians to compensate the music industry there for piracy losses) .

The epidemic of digital music piracy is very much a nightmare of the music companies own making, and no industry has ever deserved it more. If they had been willing to open up their catalogues to sites like customdisc.com, most of their piracy problems would have vanished overnight. The generation of people now rapidly acquiring MP3's will probably never pay for CD's again in their lives. This didn't have to be. The attitude of younger people, especially those with computers or attending college, towards purchasing music, is a case study in how corporations can alienate broad swatches of an entire society, and cost of themselves a lot of money as well.

Most people would have been happy to buy cheaper CD's they could have put them together themselves. And they'd have few problems giving recording artists their due if it wasn't so clear the real issue was greed and power, not artistic copyright. ***

Sometimes the most revolutionary technology comes where you least expect it. For nearly a half-century, commercial broadcasting was controlled by three greedy men in New York. TV-watchers could choose from the tepid offerings of three networks, CBS, ABC and NBC, all of whom broadcast more or less the same thing for decades, with the blessing of the federal government and its none-too-demanding regulators. One of the most promising new forms of information technology in the history of the planet became a vehicle for running dumb sitcoms and selling cereal and cars to the enrichment of a handful of companies, Anchor Monsters and gazillionnaire media poobahs.

Then came the zapper, one of the most revolutionary and, at the time, least appreciated, bits of technology ever invented. Viewers suddenly began to take control of the TV back. They didn't have to watch stale newscasts, interminable commercials, or witless programs. They could switch without moving.

Ever since, power has been steadily shifting away from the three moguls who had seized control of TV almost from the second it was invented, and towards the millions of individual people who watch it. Nothing has captured this shift as dramatically as the MP3 player, perhaps a potentially more revolutionary instrument than the switcher.

For years, popular culture and information in America have been run by the few who decided what the many could see, read, hear or see.

The Net has blown that model of information distribution all to hell. The many have more power than ever over what they see, read, hear and buy, and they call also communicate more and more with one another.

The MP3 player, available for free on the Web, is sending the music industry into meltdown. Record executives are enraged that millions of people, until recently completely depend on them for what to buy and how to buy it, are now all music impressarios in their own right.

According to Jupiter Communications, "MP3" is the second most popular search engine query term after "sex." There have been more than five million downloads of the MP3 player from WinAmp's MP3.com site. (For the record, MP3's formal name is MPEG Layer 3. It allows large audio files to be condensed to about one-tenth their size without significantly harming music quality). There are thousands, perhaps even tens of thousands of geeks, college kids and teenagers who have some of the rich and diverse music and song libraries, and who have rarely, if ever, bought a CD, for for whom music piracy is an entrenched cultural, even political ideology. They are the real legacy of the recording industry's ignorant response to the Internet. They ought as well be a powerful warning to other kinds of media companies seeking to maintain their monopolies on information or culture.

Most popular music is in the hands of a few companies - Bertelsmann, EMI-Capitol, Universal, Polygram, Sony Music and Warner Music. Just a few years ago, if you wanted music, you had to go buy a CD at a store or order one online. Now, you can visit countless sites where you can download and trade MP3's in minutes. Before, you could give a CD to friend. Now you can make one available to millions of people in minutes.

If MP3's may make CD's and stereo's obsolete, The Diamond Rio PMP300 personal music player, inspired by the spread of MP3's all over the Net and the Web, may do in the CD Player and the Walkman as well. The MP3 compression formula is the basis for the Rio , sold for about $200 by Diamond, Multimedia. The Rio is the first, and so far, only, MP3 player on the market.

Together, the MP3 and the Rio may completely change the way music is contracted, sold and distributed. They may also offer some of the most significant clues yet as to how digital technology will challenge corporate control of other forms of popular culture and intellectual property.

How has the recording industry responded? They tried unsucessfully to block the sale of the Rio in court, and are looking at other dubious commercial digital solutions, including the development of digital music players - one is being worked on by AT&T -- that essentially encrypt music and keep it from being shared or given away.

Although the record companies are shrieking that their copyrights are being violated, and that recording artists aren't being fairly reimbursed, it's hard to shed many tears for them. The music industry is expected to rake in $40 billion in worldwide sales this year, and to make more than $30 million in digital music sales.

The rise of the MP3's has sparked all sorts of legal and ethical questions. Although many of the songs in college kid's playlists are illegally obtained - under copyright laws, music cannot be distributed without the permission of the artist or his/her company, many are perfectly legal to download or trade, many being songs from unsigned bands that are giving their music away in the hopes of getting more exposure.

As a writer of books, I understand the need for some form of coherent copyright protections, and even depend on them for my livelihood. But music is a political, as well as legal and economic issue. For millions of Americans, music isn't simply entertainment, but one of the most pervasive forms of culture and individual expression. People have the right to have more control over what music is sold, and what they buy and listen to. Just as the zapper gave viewers more control over their TV's, MP3's and the Net are giving people who love music more control over what they acquire and hear. This movement is no longer stoppable.

And there are plenty of far-sighted and popular bands who understand that the broad distribution of their music might lead to more, not less revenue.

The Grateful Dead permitted, even encouraged taping of their music years ago, and encouraged distribution by any method, a cultural parallel to the idea behind Open Source Software; namely, that new information technology is putting control of information technology into the hands of individual people as well as corporations.

Other bands argue that by introducing more people to their music, they will sell more albums, and the growing popularity of some of these open source music groups - Phish, Public Enemy, Leftover Salmon, Widespread Panic, Galactica - among them. Music that is freely distributed doesn't have to be completely free: the bigger issue is cost and choice.

Ignorance about the Internet isn't good business anymore. It's dangerous, even foolish. The young, maligned for years as addicted, ignorant and apathetic, are in control of the most revolutionary and sophisticated information technology ever. Alienating them isn't a prescient business philosophy.

Like many corporate media, the recording industry has been mind-boggingly slow to grasp the potential of Internet distribution, perhaps because there are too many people - agents, manufacturers, retailers - making money off of the present system. Independent labels, pirates, geeks and Webheads are already figuring out how to distribute music on the net (and make tons of money), even if the record companies haven't. Distribution of music on the Web offers potential as well as pitfalls. Digital sales could cut promotion, manufacturing and distribution costs.

Music companies could make their artists and titles available to sites like Customdisc.com, or throw up their own sites, offer their own free software, sell music in smaller, cheaper units, and perhaps even - God forbid - give new, struggling artists a chance to offer their work to music lovers.

From the beginning, many corporations have sensed the enormous potential of the Internet to alter long-standing legal understandings about intellectual content. There are millions of people on the Net and the Web who have been trading, downloading or otherwise acquiring intellectual property for nothing for years now, from computer games to software and upgrades, to music, news and textual material. "I break it down this way," Mike, a geek I met in San Francisco told me last month, "intellectual content on the Web is mine, and I don't believe I should have to pay for it. Material property - milk, cars, TV, furniture is something I have to pay for."

Mike had a playlist that had more than 1,000 songs on it, a digital library he'd been acquiring for nearly a year. "I have many of the songs I really love in my computer now. I spend half the weekends trading and upgrading. If they think I'm going back to buying one CD a month for $15, which is what I can afford, they're not just dumb, they're crazy."

The significance of MP3's goes way beyond the music industry. Technology is not only collecting enormous amounts of graphic and textual material in new, highly compressible ways, it's making it possible for millions of people to access, trade and appreciate that material whenever they want.

The much-invoked but rarely understood hacker battle cry - Information Wants To Be Free - is really an old idea, its rootings going back hundreds of years -- way before computing -- to then radical notions about individual liberty.

The MP3 player, of all things, offers a cautionary tale to the powerful and the greedy in the Digital Age: if you don't want to share, you just might get run over. Information does seem to want to cut itself loose, and the Net is making this ancient fantasy come true.

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