Wednesday, December 13, 2006

A call for justice

This Monday, I was summoned to the Swedish Department of Justice to participate in an inquiry on the copyright laws and their application to the Internet (e.g. file sharing), and the current situation for legal alternatives for music downloads.

The inquiry is aiming to find out what the government in Sweden could do to help the growth of user-friendly legal alternatives to illegal downloading of copyrighted materials off of the Internet.

I was there as a representative for and among the other participants were representatives for different media companies more or less involved in offering downloads of music and film.

What really struck me, was that about half of the participants, had really only one concrete suggestion on how the government could help growing legal download sites:

"Go after the file sharers! Sharpen the law and give legal possibilities for the police to obtain the identity of the file sharers from the ISP's!"

This radical and ingenious proposition, they repeated over and over.

Something was holding back their sales, it must be the evil kids with their P2P apps!

Let me explain my view the phenomenon of file sharing. If we hadn't had all the kids discovering the P2P technology in the mid and late 90's, we would have no such things as MP3 files, let alone MP3 players. Nor would those who adopted the habits of downloading music would have developed the custom to consume arts (music, media, literature) in front of the computer.

In other words, if it wasn't for file sharing, we, the providers of legal downloads, would have no market whatsoever. Today, those who grew up with Napster and Kazaa etc, have grown up to be a large part of our potential customer base.

Now, sending the police on our potential customers, maybe wouldn't be the smartest move...

But where does this, among certain people, rather compact grudge with file sharing stem from?

Let's look at some common propaganda claims often heard in discussions about file sharing:

Downloading is stealing from the artists.

Well, the laws forbidding downloading of copyrighted materials deal with, yep you guessed it, the copyright of the work being downloaded. Now, who has the copyright of say, the music on a CD? In most cases, the copyright belongs to the record label. So who is getting stolen from here? The artists or the labels?

This certainly applies to the majors. They own the copyright, and the contract with the artists stipulate what royalties should be paid in terms of sold units.

For some references, see for instance Steve Albini's article or Courtney Love's or Steve Vai's and read about how much an artist earns from record sales and how much the record labels earn.

But doesn't reduced record sales have a negative impact on the artists regardless of that, so that downloading illegally indirectly rips off the artist?

It might if there was any proof for file sharing actually reducing record sales. On the contrary, studies have showed that heavy downloaders on the P2P networks are among those most willing to also pay for digital downloads. And let's not forget that the Internet is an excellent channel for marketing music.

I agree that it's better that the artists get something for there music than nothing but that is morally so and has, in my opinion little to do with the problem at hands. It is not sure that the downloader would have purchased the music if there was no P2P so it's not exactly a lost sale.

Also, research has shown that
drops in record sales does not correlate to increase of file sharing in all countries [PDF MusicLessons].

And take the band Arctic Monkeys, for instance. They got known through free downloads of MP3's, and when they released their first album it was a success. I have no idea of what kind of deal they have with their record label and how much they earn from CD sales, but I think they agree that Internet can be a great marketing channel.

If we accept that copyright is owned by the record labels, artists don't necessarily get ripped off by downloading illegally, and that downloading illegally don't necessarily effect record sales, then we might also suspect that the cries for action against file sharers stems from the record companies (I am broadly generalizing here, I am referring firstly to the major multinational labels). And on false assumptions too. They simply need to blame something for their dropping sales of CD's.

Regardless of whether you take my word for it or not, let's not forget what got us where we are today. Without P2P, I repeat, there would be no market for MP3 or any music file sales.

N.b. I am not encouraging file sharing of copyrighted material, it is against the law and morally questionable. I'm merely saying that it's not proved that it has any negative effect on us who offer the legal alternative.

So, if I don't think sending in the SWAT teams to hit down on the file sharers, what recipe do I have for competing with the free but nowadays illegal downloading via P2P?

I look at it this way:

What we sell is not primarily a file of music. The files themselves have not much value to us as a company. What we sell is a service. We put much effort in catalogizing our music so that it is searchable on many different keys. We also want to present the music with as much information as possible. And the files must be in mint condition, and if they aren't we must respond and fix that timely. The files must have good and standardized meta data included, so that they display correctly when played back, and also are sortable.

We also have to write about the music, composers and performers. And, as whenever computers are involved, we must assist the customers whenever they encounter any type of technical problems.

This, combined with reasonable pricing, is what makes legal music better than P2P, and is the way forward if you want to compete.

Also, and this is paramount, since we sell a service, that service must be open to everybody. We can't limit our service to users of certain operating systems or web browsers. Why this has slipped the collective minds of many of those who at the hearing ask for repression of file sharing, really blows my mind.

They want to sell a product on the Internet, but they fail miserably in understanding how the web works. They limit their stores to people running Windows, Internet Explorer and Windows Media Player. According to some sources, as many as 20% of the Swedish surfers use a different browser than IE. What's their plan? They don't want to sell to everybody? Or they simply want to dictate what browser and operating system their customers should use (pretty much as they dictate that they shouldn't run any P2P applications)?

Then we have the choice of file format. The dominant file format for music files has always been MP3 (with the upcoming Ogg Vorbis and even FLAC recently).

Never ever have I heard about P2P downloading of files with DRM (digital rights management, copy protection). DRM imposes restrictions on how the customer is free to use his music. It limits the consumer in so many ways. It dictates what players, both software and portable gadgets, the customer must use in order to play back the music. It limits how and sometimes even if the customer can burn audio CD's from the music files. It limits how many copies the consumer can make of the files and on what hardware to put them.

This is crazy, I tell you. It is contrary to what makes digital music great. Files are great just because they are possible to reproduce without any degradation.

And putting DRM on the music is also telling the customer who even haven't dreamed about file sharing, that you think that that is exactly what you expect your customer to do.

And, yes, DRM is futile to. There is not yet one DRM scheme that hasn't been cracked and circumvented. So it hinders the honest customers (potentially also offending them), and does not hinder those who would want to remove it for whatever purpose.

It takes time for a dinosaur to turn around (just take in regard the ridiculously long tail and relatively small brain). Likewise, the music industry has taken quite long time to take advantage of the Internet and the benefits of digital music. What it has come up with so far, is in many cases something much inferior to what the file sharers are using.

And the only practical solution to poor sales they can formulate is to shun and persecute the music consumers who use what they know works for them: file sharing.

I firmly believe that it is possible to profit from selling digital music. As mentioned this has to be done by offering what the file sharers want, and doing it better than the P2P communities.

In fact, is profitable, and we get a lot of positive customer feedback confirming that we are on the right track.

We too want that people should use legal services before P2P, but we are not so sure that laws and police officers are the right way to convert people.

Other than, here are some other sites that understand what is going on and what to do about it:

The opinions expressed in this entry is my personal, and not necessarily those of

Rikard Froberg

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