With the phenomenal growth of the Internet, buying, selling and trading music online was only a matter of time.
Two outcomes should have come as no surprise. If cultural developments have taught us anything it is that choice (and freebies) drives most markets, so it seemed likely that a Napster-type creation would fill the demand for trading copy-written material online. The second no-brainer was the music industry’s reaction to the Internet. The entertainment industry as a whole has been impressive in its inability to adopt to new technology. Decades ago the recording industry complained that radio was the enemy. Those who listened to the radio would not buy records. That inanity was disproved rather quickly.
Then came the movie industry with fears about VCR use hurting theatre sales. Record box office receipts over the past few decades have dispelled that myth.
In both cases the entertainment industry looked at technological innovations from a business perspective rather than a cultural one, and twice they were wrong.
A recent survey and report by IDC Canada points to the likelihood of another missed boat.
The survey of 400 Napster-using Canadian adults, from a random sampling of 2000, pointed to choice as being a primary Napster user’s motivation.
“One of the most interesting things was the emphasis on choice rather than price,” said Michael O’Neil, country manager of IDC Canada in Toronto and co-author of the report.
The Recording Industry Association of America’s message has been about theft of intellectual property, the cost to the industry and people getting something for free, he said.
“And yet we are not seeing that…we are seeing a fairly substantial user community that is willing to pay for choice,” O’Neil said.
“Music has fairly universal appeal and people will find a way to get at it.”
The survey results found that only 10 per cent of Napster users turned to the service in order to replace buying music. In fact, the majority are willing to pay record companies to download music, though not surprisingly, far more are willing to pay the artist.
With lawsuits and public relations campaigns successfully propelling Napster’s demise, the big five record companies (Universal, Sony, EMI, BMG and Warner) have finally decided to make music content available online.
“It is not a matter of [online music] being stopped, and I think the music industry finally understands that,” said Lesley Ellen Harris a copyright lawyer and author of Canadian Copyright Law.
“[The industry] is just being way too slow. It has to get some new business models, like, yesterday,” she added.
Industry insiders claim that the intention to put content online was always there and that Napster had little to do with it. The delay was more technical, they said.
The compression technology was not good enough three years ago when the record industry was ready to move forward, according to Brian Robertson, president of the Canadian Recording Industry Association in Toronto.
“They set up a consulting process three years ago to bring music online…It caught everybody by surprise how quickly that (compression) process moved forward,” he said.
solution will fail
The big five have divided themselves into two camps. pressplay (Sony and Universal) and MusicNet (EMI, BMG and Warner) will have services launched later in the year, where music lovers will be able to download songs for a fee.
ComputerWorld Canada tried, without success, to get comments from the record companies. pressplay sent CWC an e-mail stating that the price of the service and the specifics of the offering would be announced later.
Regardless, O’Neil said the attempts to get users on their own terms will fail.
“There is not a chance in hell that this is going to work,” he said. “They want to stuff the genie back in the bottle.
“They don’t like the look of the current environment where users and not the big five record companies determine how and where and when and in what format and what price point music gets distributed,” he said.
“They are going to get killed, not only to their own detriment, which isn’t going to bother anybody,…[but also] to the detriment of both artists and music lovers.”
A quick perusal of MusicNet’s offerings show purely mainstream bands and singers destined to attract the young.
This young pop music lover is also the one initially to be avoided, O’Neil said.
“pressplay and MusicNet are slanted at exactly the wrong audience with the wrong content…[they] are aiming at the group…who are avoiding cost, and they will use technology to get around artificial constraints on choice,” he said.
“Their response it completely, totally, abysmally inadequate,” he said, adding that “it doesn’t respect choice and as a result it is not going to work.”
Choice, Choice, Choice
The IDC survey results show there are a large portion of Napster users who use it because they could find hard-to-find music in genres that the two online solutions will not immediately provide.
And it is this group which is willing to pay to find the rare and unique songs and albums they want such as bootlegs, radio concerts and alternative and foreign releases.
Frank Koblun, vice-president of consumer e-commerce and corporate technology at HMV Canada Inc. in Toronto, agrees with the niche market assessment.
“Some (albums) are so obscure that it takes the record label forever to actually print them once we order them but in the digital world you don’t even worry about printing them,” he said.
“I think that will be a significant portion of the business.”
Regardless, true online musical content is in its infancy, he said.
“As far as I am concerned it is really still in its embryonic stage,” he said. “At this stage there is not a business (case) there but HMV believes that going forward it is going to represent significant revenue.”
But there are some hurdles.
“The first point, as it always has been, is the content owners, i.e. the record labels, freeing up the content,” he explained.
And that may take years. Rare albums, with limited wide appeal may never see the light of day on a music portal.
“The industry could not have screwed this up worse if they had tried,” O’Neil said.