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TNT-Audio Editor's corner - September 2003

Before You Blame (File Sharing) Take a Look at Yourself

Author: Nels Ferré - TNT USA

Last month, it was announced that the Recording Industry Association of America (RIAA) is planning to sue people who are the worst offenders in the Association's anti file sharing campaign. They claim that file sharing is costing the record companies millions. And it is, but there is a bigger evil that record companies refuse to acknowledge.

Let's get this out of the way now: file sharing, in most circumstances, is theft, pure and simple. I have no sympathy for what the American judicial system may do to people prosecuted under the latest action by the RIAA. On the other hand, I have no sympathy for the record companies either.
My concern is the artist. Every time a file is downloaded and shared, the artist becomes a victim of theft of intellectual property (i.e. the music.) I do not work for free, and I suspect you don't either. It is wrong to expect the artists to create music and pay for studio time as well as the myriad of other expenses involved in making an album, just to lose it to people with a high speed Internet connection and a CD burner. There are exceptions. Some bands encourage file sharing to expand their popularity. (Phish and The Grateful Dead come to mind.) File sharing without permission is wrong.

I've read Geoff's July editorial, and I have to say, I'm stunned. Geoff is a very intelligent individual. Of that, there's no doubt in my mind. I find his logic to be more than a bit flawed, however. He states that file sharing will force more bands to tour more often to support themselves. I've got no argument with that. The artists are being robbed of royalties by file sharing; they are going to have to make up the difference somewhere. To support his argument, he comes up with "The Beatles would have to come off drugs long enough to continue touring, but would that have been such a bad thing?" This would have been horrible. First, their heavy drug use (I'm not talking marijuana here, which brings up another totally unrelated argument) didn't start until after they quit touring in 1966. But with Geoff's argument, Sgt. Pepper's Lonely Heart's Club Band may not have ever been made. The Beatles would have been too busy playing 30 minute sets to screaming girls who couldn't hear them anyway. Let's use another example, the Grateful Dead. They probably toured more than any other band in history. I was fortunate enough to see them live a handful of times. I enjoyed the shows, but don't own many of their albums, because most just really weren't that good. They had some wonderful albums: "Workingman's Dead," "American Beauty," and "From the Mars Hotel." Ok, "Europe '72" was great too, but out of dozens of releases, I've come up with only a handful. There are a few more good ones, but not many. Why? They had to rush through the recording process to get back out on the road. This kind of logic, in my mind, kills creativity that flourishes when musicians aren't being herded about like farm animals.

He also asks if home copying is killing music. No, he states. Huh? Don't get me wrong, I copy myself, using my CD recorder. I use it to make A/B copies for reviews, burn vinyl copies for listening in my car, and make an occasional copy so that my wife and I aren't fighting over a disc. This isn't the kind of copying we are talking about here, and I really see no problem with it. I paid for the originals. Nor are we talkng about small bands who encourage sharing to increase popularity. The issue here is if I decide to share music with millions of my "closest friends" without permission. Yes, Geoff is right when he says "More people are listening to more music." The fact that they are stealing it somehow gets overlooked. The record companies need to stay profitable so that good music can reach a much wider audience than will be available without them, even taking the Internet into account.

Both my wife and I work stressful jobs. I work in the sales department of a major ISP, my wife is a paralegal. Sometimes, we don't feel like cooking when we come home from work. Using Geoff's argument about offering music over the internet to get people to attend live shows, I say we never cook again. We will go out every night from here on out. We will be enjoying a wider variety of food. I encourage everyone to join us. Let's not pay for it though. Restaurant owners will just have to find another source of income. Maybe they can sell T shirts or bumper stickers. Of course this won't work, any more than Geoff's idea. Although shows can be great fun, many people will keep and listen to the free CD and never attend a show. It's file sharing with permission, nothing more.

The file sharing arguments are masking the root of the problem: price and quality. The root of the problem here does not lie with the downloader, but the record companies. When the Compact Disc was introduced in Japan and Europe in the fall of 1982, and the United States in spring of 1983, CDs were priced between $15 and $20. This was expensive, considering LPs and cassettes were approximately half the cost. Consumers were told that the CD represented "perfect sound forever" so it still seemed like a good buy. The initial high cost of CDs made sense.
Record companies had to buy new equipment, not only to make the discs, but to package them as well. They also assisted in the promotion of the new format. Record stores had to fit new storage bins. This all cost money, and they needed to make a profit at the same time. That made sense to me, and I understood.
That was twenty years ago, now CD pricing is a rip off. The investments made by the record companies into the new format have long paid for themselves, but the consumer has seen little respite from high CD costs. Sure, there are "midline" releases, as well as releases from smaller record companies, discontinued discs, etc. However, today, the cost of a new release, in most stores, is the same as what it was in 1983. Prices online are even creeping upwards.

Let's take a trip down memory lane. In 1970, unless you were wealthy, it was impossible to buy all the albums you wanted, there were so many high quality releases every week. Record companies would sign new acts, and nurture them. If the first album did well, then that was great, but they didn't expect it. Some bands were hot right out of the chute; others needed time (and a few albums) to mature. Creativity was at a very high level, and the consumer was rewarded with a vast selection of quality music from which to choose. Record companies were financially rewarded by the money spent by happy consumers. It was a win-win situation for everybody involved.

Nurturing has fallen by the wayside in the record industry. The record companies seem to want instant hits. I can't blame them for that. If I were the head of a record company, I'd want the same thing. Unfortunately along the way, they seemed to forget how to work. EMI Virgin recently bought Mariah Carey out of her recording contract for millions of dollars, right after they paid millions to get her in the first place. The reason? Disappointing sales. The real reason? If you've heard one Mariah Carey album, you've heard them all, and consumers didn't bite. They could have spent that money developing new artists, but instead, chose instant gratification. The consumer lost three ways. First, we were subjected to another Mariah Carey album. Second, we have no idea what kind of talent that was turned away because the record company was appropriating funds towards their latest "quick fix" scheme. And finally, we the consumers will bear the cost of the record company's debacle in the form of the continued inflation of CD pricing.

According to the Miriam Webster Dictionary, the word "homogenize" means "to blend into uniform mixture, to reduce particles into small size and distribute evenly." That's what the record companies have done to the music. Britney Spears or Jennifer Lopez? The Backstreet Boys or O Town? Can you tell the difference? Do you really care? The record companies are looking for the "magic elixir" of record sales and think it is the homogenized garbage they are attempting to feed us. They are trying to feed us crap, and are wondering why we aren't running to the dinner table, fork in hand. They place the blame on others, when the problem is actually them. There is no "magic elixir", there never was. It is called work, and offering the consumer what the consumer wants, not what the record company wants them to want.

My wife and I went to our local warehouse club over the weekend to do our monthly grocery shopping. While I was there, I thumbed through their small selection of CDs. I ended up buying the latest releases from Jewel and Steely Dan, for $12.49 each. I've championed Jewel's music in my reviews many times. In fact, I own her first two albums on both CD and LP. On the way home, I slid her new CD into the car deck, and was assaulted by the sound of Britney Spears. No, the CD wasn't mislabeled, it was Jewel, but it certainly didn't sound like her. Damn, I got homogenized. I don't want or expect an artist not to grow. I do however expect to get what I paid for. If I buy a Paul McCartney album, I don't want "Paul does Michael Jackson impersonations." The new "Jewel" CD is finding its way to the local used CD hut pronto. I doubt it will be the only copy there. At least I didn't pay full price. The new Steely Dan CD is a winner though.

I'm not saying there isn't good music out there; you just have to search for it. My latest find is a band out of California, called The Waybacks. They play folk music, but they aren't a folk band. Jazz but not. They have some definite bluegrass influences, but I wouldn't call them bluegrass, either. Nor are they acoustic blues band, but the influence is definitely there. What they are is fresh, new, and very talented. I heard these guys (via small MP3 clips on their website) and totally flipped. I also bought all 3 of their releases, as well as a T shirt. The CD's were $15 each. I can deal with that. They are independent, and their manufacturing cost per unit is higher. A major label probably wouldn't know what to do with them anyway. They definitely don't fit the cookie cutter mold of today's record industry. The shame is that these guys deserve the promotion that a big record company can offer them.

The prices I paid bring up another point. The record company made a profit when they sold the CDs to the distributor. The distributor made a profit when they sold the CDs to the warehouse club, who in turn made a profit when they sold the CDs to me, at $12.49 each. If they can do it, why can't everyone? Why CDs are still priced at $14.99 and above is beyond me. Certainly, poor choices and waste by the record companies are a factor. Or, just maybe, it's a combination of greed and stupidity.

The record companies' own data which can be seen here actually supports my argument if you look past the smoke and mirrors. They claim that they have lost $4.6 billion dollars in sales to CD bootleggers. If one examines the countries where bootleg CDs are prevalent, one will see that they are generally poor countries. According to the article, the top 10 problem countries were led by China, where a whopping 90% of CDs sold are bootlegs. Why? The people cannot afford to buy them at the prices the record companies want. So, the record companies are screaming about lost sales instead of lowering prices to gain market share. I don't know about you, but I'd rather make one dollar than no dollar at all.

I've thought for years that the record industry is totally out of touch with reality. This article by NPD, a consumer marketing firm, proves it. The music industry is clueless. The largest decline in sales is in the group of "consumers 36 and older." Excuse me, but that isn't the file sharing group, the majority which are younger. The article goes on to say "Often the older consumer is looking for deep catalog items like Paul McCartney, Bruce Springsteen, Santana, and the Rolling Stones." Basically this implies that "older consumers" don't want new music, just reissues. They are only going to sell so many reissues before that market is tapped out. If they gave is music worth buying, we would buy it. The article also states that "this group of mature buyers represents almost 45% of CD sales….nearly half report purchasing fewer CDs because there's less music they're interested in buying." Also notable is the fact that less than 10% of the group reported purchasing less music due to downloading.

Like it or not, I believe file sharing is here to stay. Record companies will need to change their business model to stay competitive. Many other industries have realized that the web can be an excellent marketing and sales tool and have flourished. There is a solution that will bolster profits for record companies by increasing sales. They don't even need to find new artists.
There is an untapped market that will take relatively little effort on the part of the record companies to realize. Open the vaults. There are loads and loads of albums that are long out of print on vinyl that will never see the light of day on CD. The record companies could launch their own websites or share resources and sell downloads of these albums, along with currently available releases. Apple Computers has been successful thus far selling downloads of singles at just under a dollar. Sell full album downloads for under $10 in uncompressed lossless WAV format, so buyers can burn their own discs. This is a win-win situation for everyone. Record companies will be making profits from albums that they aren't presently generating any income, no factory needed. Buyers will be able to find that long lusted after rare recording that they have been unable to find. Sure, it's a reissue, but it gives consumers choices that are, at present, unavailable to them.

The solution is right in front the record companies' eyes, but they refuse to acknowledge it. Lower costs and more quality choices will motivate buyers, not threatening a relatively small group with legal action. They need to pay attention to what 45% of their market wants. Their present tactics will only aggravate the problem. Consumers will feel alienated, and still have little music that interests them. The lawyers will get rich, and profits will continue to erode.

The real world is now in the 21st century. Maybe the record companies should join us.

© Copyright 2003 Nels Ferré - www.tnt-audio.com

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