¶ 3 Leave a comment on paragraph 3 0 In the prologue to the book, I recount my role as an expert witness in several lawsuits related to intellectual property and file sharing, including MGM v. Grokster, which was decided by the U.S. Supreme Court in 2005. I also discuss my role as a consultant to both major labels and digital music startups throughout the last 15 years, and recount my first-hand experience talking about digital music with executives, policymakers and artists.
¶ 5 Leave a comment on paragraph 5 0 The first section of the book (Chapters 1-3) describes the growth and structure of the traditional music industry in the 20thCentury, and explores the origins of “music piracy” in its pre-digital days, from “fake books” to Soviet magnitizdat. It argues that the industry was built according to a rigid set of technological assumptions and a monopolistic business ethic, and that today’s digital music crisis can be understood as a direct result of this inflexibility.
¶ 7 Leave a comment on paragraph 7 0 In this chapter, I discuss the ways in which the music industry itself took form over the course of the 20th Century. The industry not only took liberties with others’ intellectual property, it continually sought to rewrite copyright laws in its own image, essentially stacking the deck in favor of the status quo and “major” labels, against competitors, consumers, and artists themselves. As a result of these changes, music’s traditional role as a form of interpersonal and group communication was supplanted by a new status as an “entertainment” commodity.
¶ 8 Leave a comment on paragraph 8 0 I also demonstrate how, in the second half of the 20th Century, the music industry developed its entire economic and structural system – from laws to licenses to corporate org charts – around the analog-era technological distinction between music retail and broadcasting. This short-sighted practice paved the way for a major industry crisis as new digital technologies undermined that distinction at the outset of the 21st Century.
¶ 10 Leave a comment on paragraph 10 0 In this chapter, I investigate the ways in which the music industry has always treated new technologies as both threats and opportunities, seeking to capitalize on their potential for extending markets while mitigating their potential to destabilize established business practices and revenue sources.
¶ 11 Leave a comment on paragraph 11 0 Specifically, I discuss the evolution of recording formats from wax cylinders to cloud services, and the evolution of music broadcasting technology, from the early days of radio to today’s digital satellite transmissions. This process of ongoing technological innovation is typically described as a quest for greater fidelity or accessibility. Yet it has also served the industry’s bottom line by requiring consumers to continually “upgrade” their music collections, and has been an ongoing site of contestation, as increasingly sophisticated technologies have threatened to give consumers and “pirates” the upper hand, undermining the industry’s top-down control over distribution.
¶ 12 Leave a comment on paragraph 12 0 I also address the music industry’s ongoing fascination with technology beyond storage and transmission, such as the increasing reliance on state-of-the-art production tools like autotune and compression, and the use of computerized “hit-picking” software within marketing and A&R departments. The use of these new technologies can be understood as a kind of sonic “arms race,” which gives major labels short-term tactical market advantages, but ultimately deprives them of long-term strategic power based on the unique skills of their performers and executives.
¶ 14 Leave a comment on paragraph 14 0 In this chapter, I challenge the commonly held notion that the Internet revolution took the music industry by surprise. I demonstrate the industry’s ongoing involvement in digital product development, and review prescient words of warning about imminent change from those within and without the music industry (including myself), dating back to the early 1990s.
¶ 15 Leave a comment on paragraph 15 0 I also review some of the industry’s ruinous efforts to turn a blind eye to the true potential of digital music for musicians and fans, rejecting efforts by innovators, artists and fans to create a “celestial jukebox.” Instead, the industry fought to artificially reproduce the limitations of 20th Century music technology in a digital environment, solely for the sake of preserving an outmoded business model that no longer made sense for anyone but vested stakeholders.
¶ 17 Leave a comment on paragraph 17 0 This section of the book (Chapters 4-7) takes on the popular myth that “digital piracy killed the music industry.” In it, I analyze the many factors leading to the decline in music sales revenues, explore the potential benefits of peer-to-peer file sharing, and review the many ways in which free digital music is transforming industry and culture. I also discuss the music industry’s role in its own misfortunes, exploring the strategic missteps it’s taken throughout the digital era.
¶ 19 Leave a comment on paragraph 19 0 Digital music “piracy” exists in many forms, but if there’s one such technology that’s captured the imaginations of the music industry and the world at large, it’s peer-to-peer (P2P) file sharing. Beginning with the launch of Napster in 1999, through present-day services like BitTorrent and ShakesPeer, P2P has been a favorite whipping boy for industry execs and observers seeking to place blame for the industry’s misfortunes.
¶ 20 Leave a comment on paragraph 20 0 In this chapter, I challenge this characterization, showing that file sharing has as many positive effects on the music industry as negative ones, providing a vital channel for “viral marketing” and deepening the relationship between artists and fans in an increasingly attention-challenged culture. In addition to reviewing many economic and market studies on the subject (including reports I published in 2000 and 2002), I also relate dozens of quotes from artists, executives and even major record label heads acknowledging the benefits of P2P. Finally, I review some successful emerging business models and revenue strategies that acknowledge and even rely upon P2P, including groundbreaking experiments by artists including Prince, Nine Inch Nails, and Radiohead.
¶ 22 Leave a comment on paragraph 22 0 In this chapter, I take a close look at the recent downturn in the music economy, and identify a range of factors that have played a more significant role than piracy. I chronicle the meteoric rise in the industry’s fortunes during the 1980s and 1990s, and explore the causes of this “bubble” including price fixing, the death of singles, and the rise of music mega-stores. I then discuss the “perfect storm” that led to the deflation of this bubble, with factors ranging from the real estate boom to the rise of the DVD to a series of crippling recessions. While many of these factors may seem counterintuitive at first, closer inspection provides compelling evidence of their effects, and reveals an intricate web of interconnections between them.
¶ 23 Leave a comment on paragraph 23 0 Although this chapter will include more data, in the form of charts and graphs, than the rest of the book, it will read just as anecdotally and accessibly as the other chapters. To put it another way, the data will serve the narrative, not vice versa.
¶ 25 Leave a comment on paragraph 25 0 Back in the 20th Century, the music industry was based on controlling scarcity. Because it was expensive to copy and distribute music, there wasn’t enough to go around, and business models hinged on the ability of a company to get the right piece of music into the right listener’s hands, and to restrict access to everyone else. Today, music is beyond plentiful. It surrounds us in a raging torrent of 1s and 0s, whether we choose to listen or not. Thus, the rules of the game have changed. Instead of charging for access to a desert oasis, today’s successful companies help consumers by finding just the right drop in the ocean. This means that conventional notions of “piracy,” which are based on the assumption of scarcity, no longer hold water.
¶ 26 Leave a comment on paragraph 26 0 In this chapter, I review many of the myriad ways in which consumers now gain access to free music – legally, illegally, and everything in between. As I will show, the major labels themselves have contributed directly to many of these channels, pouring free music onto services like YouTube, Vevo, Spotify and even the occasional P2P network.
¶ 27 Leave a comment on paragraph 27 0 Finally, I discuss how, as a result of this digital deluge, music is reverting from its 20th Century role as an entertainment commodity back to its original role as a form of interpersonal and group communication. But now we’re using recordings themselves as part of our musical language, sampling, sharing and posting pop songs into our blogs, tweets and Facebook updates.
¶ 29 Leave a comment on paragraph 29 0 In this chapter, I investigate the music industry’s ongoing propaganda efforts in its crusade against digital music piracy, and contrast them to earlier industry panics over emerging technologies. I also review the many strategic errors the industry has committed over the last few decades, from suing tens of thousands of their own customers to creating a fierce and fearsome “frenemy” in the form of Apple, which today controls an unprecedented 30% of the music retail market.
¶ 31 Leave a comment on paragraph 31 0 The final section of the book (Chapters 8-10) describes the considerable costs of the crusade against digital music piracy – not just in lost revenue for the music industry, but also in terms of cultural and technological innovation, civil liberties, and free speech. I review a range of promising businesses and technologies that have failed due to industry intransigence, and discuss more than a dozen recent laws, policies, rulings and international treaties that have systematically restricted free speech and undermined privacy in the name of combating online piracy. I also consider the consequences of the piracy crusade’s spread beyond the music industry, into fields such as movies, books, software, and murkier realms such as personal data management.
¶ 33 Leave a comment on paragraph 33 0 In this chapter, I review many cases in which promising innovations in digital music distribution have stumbled or fallen by the wayside, often due to the music industry’s concern about their potential for piracy. The chapter contains several interview-supported case studies of now-defunct digital music companies including MP3.com, Muxtape, and iMeem, each of which introduced consumers to new ways of thinking about, listening to, and paying for music.
¶ 34 Leave a comment on paragraph 34 0 I also discuss common anticompetitive music industry practices including “negotiation through litigation” and “death by acquisition.” Finally, I discuss the chilling effects of these business practices, discussing the many features and innovations (such as social listening, mobile music tagging and mashups) that have been excluded from commercial music services despite their technical ease and obvious appeal to artists and fans.
¶ 36 Leave a comment on paragraph 36 0 The greatest threat posed by the piracy crusade is the danger of undermining civil liberties, free speech, and democratic society, both in the US and abroad. In this chapter, I review the dozens of laws, treaties, judicial rulings and regulatory policies that have been proposed or enacted in the name of combating digital piracy over the past two decades, and describe the myriad ways in which they challenge our fundamental rights. These range from the recently-introduced PROTECT IP act, which would give the federal government the power to force ISPs to censor entire domains from American internet users, to HADOPI, a French law that revokes a citizen’s access to the Internet after they’ve been accused of violating copyright three times. In an age when access to the internet is acknowledged as a basic human right by the United Nations, the revocation of this right, especially without due process, is a serious cause for concern.
¶ 37 Leave a comment on paragraph 37 0 Although today there are many compelling rationales (e.g. terrorism, human trafficking, identity theft) for cracking down on cyberliberties, piracy remains one of the chief among them. And arguably, piracy was the first – the “patient zero” in today’s epidemic of digital surveillance and censorship.
¶ 39 Leave a comment on paragraph 39 0 In the final chapter of this book, I look beyond the fields of music and entertainment, and consider the consequences of the piracy crusade for civil society at large. As an ever greater range of human expression is claimed as private intellectual property, and as digital communications become increasingly central to culture and politics, we run the risk of painting ourselves into a corner: nearly every aspect of our lives, public and private, will be subject to censorship and surveillance, all in the name of protecting the bottom line for a handful of multinational content owners. At a certain point, we will need to confront this apparent conflict in our society’s value system: do we protect civil liberties, or profitability? Although it may be possible to do both, draconian antipiracy measures may prevent us from doing either.
¶ 41 Leave a comment on paragraph 41 0 In the book’s conclusion, I look forward, and assess the range of options before us. How long can we maintain an intellectual property system based on the social and technological assumptions of the 20th Century? Despite the barrage of new laws and treaties intended to hold it in place, this fragile system is already breaking down in the wake of “configurable culture” (a term I coined in my first book, to describe the blurring of the lines between cultural production and consumption). There are two likely scenarios: either the piracy crusade will continue until we are locked in a massive information war between private citizens and corporate interests, with governmental institutions stuck between the two, or we can untie this Gordian knot by cutting it open, and reboot our laws, policies and business practices to suit the needs of the emerging global digital culture. Either way, the policies we choose to adopt in the music industry today will paint the way forward.