The Music Industry and the Internet: Losing Control, Finding Innovation

Why Copyright Doesn’t Work on the Internet

The copyright legislation we have today originated with the Berne Convention, an International copyright agreement drafted by the Association Littéraire et Artistique Internationale (International Literary and Art Association) first ratified in 1886; it’s been extended and altered, but the principles are the same.

Berne gave creators certain exclusive rights over their work, most notably the right to reproduce and broadcast. It was seen as essential that authors were able to control the production and distribution of their works, and at the time it was possible because producing records and printing books required expensive equipment, and the right to broadcast on air was regulated.  The centralised nature of production and distribution made it controllable.

Representative bodies took responsibility for control of production and distribution, and from them a copyright industry was born that became influential and lucrative, attracting the interest of the corporate sector, who bought the rights to authors works and began to take control of the industry.

The industry lobbied and pressured governments and legislation was enacted that looked after the interests of a few individuals who controlled the copyright industry, artists’ and the public’s interests were second to corporate stakeholders[1].

The centralised control of the industry held our collective creative works ransom, and then along came the Internet.

The Internet was created as a collaborative space and was therefore made open, distributed and multi-platform[2], this is the principle of Net Neutrality, meaning that all data on the Internet is created equal.

Many believe it is this principle that is responsible for the Internet’s success, in the words of Internet founding father Vint Cerf:

“By placing intelligence at the edges rather than control in the middle…, the Internet has created a platform for innovation” -Vint Cerf in a letter to Congress on Net Nuetrality.

The Internet is not conducive to centralised control and so copyright, as it has traditionally been applied, is incompatible with the online environment.

Social media further complicates the situation, as we share and remix copyrighted works with little concern for copyright legislation, which is infringed on so regularly that prosecution is impossible.

In Remix: Making Art and Commerce Thrive in the Hybrid Economy, Harvard Law professor Lawrence Lessig explains that social media has created its own distinct economy, a social economy, where reputation is valued higher than dollars and attributing a source is enough to satisfy copyright.

A remix culture has been born through social media that encourages the creation of derivative works and sees it as tribute to the original works, if copyright is imposed in this environment it could supress a creative surge:

“Why should it be that just when technology is most encouraging of creativity, the law should be most restrictive?” – Lawrence Lessig in ‘Remix: Making Art and Commerce Thrive in the Hybrid Economy’

The Origins of Music on the Internet

At the turn of the 21st century, as the Internet became a media platform, the music industry epitomised centralised control. Five major labels possessed up to 90% of the market, colluding to maximise their profits by artificially inflating CD prices.

In ‘How Music Got Free’ Stephen Witt tells the story of mp3, an audio compression codec designed by the Fraunhofer Institute, that had missed out on MPEG certification for streaming audio to the technically inferior, but corporate sponsored, mp2 format.

Fraunhofer repackaged mp3 as a new generation music format, creating a DOS-based shareware encoder, L3Enc, and a prototype mp3 player to help market it. They met with a representative from major label BMG, but the music industry, making huge profits off CDs, did not want change.

Fraunhofer had given up on mp3 when downloads of L3Enc suddenly spiked, they discovered that the codec was being used to create unlicensed copies of copyrighted popular music and distribute them online.

As respecters of copyright, Fraunhofer objected to this use of their technology and went to the RIAA with a newly created copy-protectable version of mp3, informing them of the breach and offering a solution.

They were told the industry did not believe in electronically distributing music, and the record industry’s fate was sealed.

In 1999 the peer-to-peer file sharing app Napster, brought pirated mp3 music to the mainstream, and record sales began a long decline.

The RIAA sued Napster, and as it was centrally controlled by a
server which mapped peers it was able to be stopped, and in July 2000, unable to comply with legal requirements, Napster ceased operation, but peer-to-peer file sharing had just begun.

Peer-to-peer file sharing continues to this day; Napster led to Grokster, which led to Kazaa, which led to Bit Torrent, which is decentralised , open source and particularly good at sharing pirated material; proving impossible to stop.

The record industry was devastated, suffering fifteen straight years of revenue decline and a drop in sales of $11.63 billion.

When called on to innovate, the RIAA and the major labels resisted change. They sued everyone they could: file sharers, network operators, websites, software companies[3]; two of the majors didn’t survive, and now three major labels control 60% of the industry.

Innovation From the Edges

The failure of the major labels to alter their approach to the new environment created an opportunity for Independent artists who were willing to innovate.

Independent songstress Amanda Palmer has been hugely successful on social media and outlines why in her memoir, ‘The Art of Asking’.

Amanda takes an open and candid approach to social media; instead of seeking to project a calculated image, she presents herself genuinely, engages regularly, converses with fans and approaches interactions with a mixture of vulnerability and enthusiasm.

She also involves fans on social media; she regularly announces on Twitter that she’ll be putting on a surprise “ninja-gig” in a public place, she regularly thanks fans and constantly responds to their comments, and she also makes requests of fans on Twitter, be it a hot meal before a show, a musician to jam with or a place to stay (she couchsurfed an entire tour earlier in her career, getting a peak into the home lives of her fans).

Amanda claims that artists have a tendency to devalue their work, and by packaging and putting a price tag on it, they insulate themselves from the vulnerability it takes to put out work with the trust that it will be valuable enough to the public for them to respond to a request for support in making more. Commodifying art inherently devalues it:

“Giving away free content, for me, was about the value of the music becoming the connection itself.” – Amanda Palmer

Amanda’s approach is very successful for her; in 2012 she created one of the most successful music Kickstarter campaigns ever, asking for a hundred thousand dollars to create an album and art book and tour, she raised $1.2 million; and she has nearly 12,000 patrons on the Patreon site who give her over $40,000 every time she releases media to them.

Amanda is a wonderful example of the success that can be achieved online with an open and innovative approach.

Streaming Back to the Top

Streaming music services have created a new era for music online, slowly eroding piracy, it fell by 6% last year (and interestingly, pirates have also moved towards streaming, with streaming of pirated content more popular than p2p), and returning the industry to growth, the music industry has undergone two consecutive years of positive revenue movement since 2014.

The major labels have seen an opportunity here and are exploiting it; the revenue distribution methods naturally favour them and they have increased their share by acquiring stakes in the most popular services. Some believe it may return the major labels to industry domination.

Streaming music services create an environment similar to the traditional media environment, existing in an isolated content network that has control as a feature, no wonder the majors are drawn to it.

The control that streaming music gives the majors is isolated, and not centralised like that of traditional media. It also does nothing for their standing in the social economy that is becoming increasingly important in the current media environment, in fact, in the current environment, if they engage in similar anti-competitive behaviours to what they did in the 90s, they may irreparably damage their social capital.

The Internet has forever altered the music industry, invalidating the centralised control that copyright gave it, and whilst there may be hope that streaming media services can usher back that control, it will only ever give it isolated control, because on the Internet control is never central, there is always room for innovation from the edges.