Wednesday, March 9, 2005
An academic at McGill University has a simple plan to stop the plague of unauthorized music downloads on the Internet. But it entails changing the entire music industry as we know it, and Apple Computers, which may have the power to make the change, is listening.
Peering out from under his de rigueur cap, music-industry veteran Sandy Pearlman, a former producer of the Clash and now a visiting scholar at McGill, spoke with a kind of nervous glee while describing his idea at the Canadian Music Week conference in Toronto last week.
Pearlman proposes putting all recorded music on a robust search engine — Google would be an ideal choice, but even iTunes might work — and charging an insignificant fee of, say, five cents a song. In addition, a 1 per cent sales tax would be placed on Internet services and new computers — two industries that many argue have profited enormously from rampant file-sharing, but haven't had to compensate artists.
The assumption is that if songs cost only 5 cents, people would download exponentially more music. Daniel Levitin, a McGill professor also associated with the project, said that a simple computer program, such as those already in use on Internet retail sites, could track people's purchases and help them to dig through what would become a massive repository of music on the Web.
The extra windfall for musicians and those who own the publishing rights to the songs could be in the hundreds of millions of dollars, or more, Pearlman said his study predicts.
It may all sound like a pie-in-the-sky idea, academically elegant but impractical. Or is it?
The head of the British recording industry, who also spoke at the conference, made much the same point: music companies need to get used to the idea of selling more music to more people more often, but for less money. It was a notion repeated often during the conference.
Users of file-sharing services made roughly 25 billion unauthorized downloads last year, dwarfing the legitimate music industry, and it's only getting worse. Some upstart technology companies are trying to figure out ways to profit from file-sharing, but the potential market is limited.
Article comments
1 - Aaman
Interesting approach - any kind of creative solution has to be considered equitably if it means a way out of the current mess of IP torts.
This model can be applied somewhat more easily by using a radio license sort of blanket fee - charged as part of the ISP fees, perhaps, with an opt-out. Actually, that is what the Rhapsody model is really, at a higher price level since there is little competition. So nothing new here, really.
At the same time, Pearlman's idea of the major computer companies buying up the labels is foolhardy and not a solution to this problem - there is no reason to believe that the change of ownership will make any difference to the corporate policy. IT companies are strong protectors of IP (and TCP too:) ), and their own business model depends on it. What they are good at, though, is using innovative and easy licensing models to make money and still enable usage of their products, unlike the music industry - licensing models like shareware, freeware, and even adware can be borrowed by other industries to great benefit.
2 - JR
I thought "Burnin' For You" was produced by Martin Birch.
3 - Triniman
Yes, you're correct. Martin Birch produced 1981's Fire of Unknown Origin which contained Burnin' For You.
4 - Eric Olsen
I have said all along that somewhere around 5-10 cents ($1-2 per album) per song is the price point that would begin to feel like "free" and therefore remove the incentive for file sharing, with its numerous downsides (digital and spiritual). Downloaded songs are not the same as recorded music on a physical medium and should not be priced the same or anywhere near it. The point is to go for volume, to make it as painless as possible, and everyone benefits.
Very important story - thanks T-man!
5 - sean
I give credit to Pearlman for taking a proactive approach here. At least his business plan does not include suing his potential customers to teach them a lesson as its centerpiece
6 - Tre
Guys, I have a fever, and the only cure is MORE COWBELLS!!
7 - Victor Plenty
Doubling from 5 to 10 cents won't double revenue. Not on a luxury item like downloaded music, where every penny of price increase will decrease your customer base by a significant number.
The ideal for the music industry is to charge $2-$3 per song to everybody who will pay that much (buying 10 song new release CDs costing 20-30 dollars), while also charging $1 per song to everybody who will pay that much for the convenience of iTunes, and selling still more bits at $0.69/song (or whatever) to people who end up at Yahoo or Napster or Rhapsody or the other vendors less sexy than iTunes.
Every economist knows revenue is maximized if you can make price levels curve to follow the demand curve. Trouble is, in most businesses that's impossible to do perfectly. But maybe the Internet will make it possible.
I'm sure the record industry wouldn't mind collecting a nickel a song from everybody on the file sharing networks, if they can figure out a way to do it without losing their revenue from CDs and iTunes and elsewhere. But most of them will never publicly admit that, because revealing such ideas defeats the whole purpose of milking customers for as much as they're willing to pay.