September 11, 2003

File Sharing Wars: Version 2.0 — Contentious Alliance: Music and Technology

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The age-old marriage of the music and technology industries has found itself on the rocks again. Over one hundred years ago, artists protested the proliferation of sheet music because they feared parlor room piano players would steal their art and livelihood. With the invention of the phonograph, one of the first devices to play music carved onto discs, the sheet music industry did everything it could to protect its monopoly on the means of dissemination. Despite their best attempts, the personal record player caught on, and began the century long evolution that eventually culminated in the compact disc. Throughout the process, from records, 8-tracks, tapes, to CDs, the recording industry has most often resisted technological innovation out of fear for falling profit margins. Nevertheless, these fundamental changes in the standard medium have ended up benefiting the industry in the long run, especially when many record collectors re-bought their collection for the CD-changeover. To some extent, the dominant medium for music is decided by the listeners, not the recording industry. Clearly, the will of the people has at times subjugated the top-down control the recording industry has attempted to wield. And so, with scientific developments and changing preference for listening devices (not to mention shifting musical tastes), the recording industry has been forced rapidly to adopt new distribution paradigms over the years. The modern age of digital and Internet technology is no exception to this pattern.

Music listeners today, especially on a college campus, need no explanation of how Napster and like-minded peer-to-peer file sharing networks revolutionized the distribution of music — they were the revolutionaries (or pirates, depending on your point of view) trading MP3s over fat, college ethernet bandwidth. Despite the Recording Industry Association of America crack down on Napster, peer-to-peer networks only seemed to multiply to match the insatiable desire for “free” music. With the availability of MP3s, affordability of CD burning technology, and inflation of CD prices to $18 or higher, the recording industry’s distribution system faced sizeable challenges. Instead of recognizing the staying abililty of the MP3 as the next media mutation, the recording industry scrambled to preserve the flawed distribution system by bolstering CD-based sales. The RIAA quickly tried to fight the new medium in court with a multi-million dollar legal campaign. Now, in retrospect, it would have made more sense for the industry to devote these resources to developing a new, digital-based distribution system, where artists and recording companies are compensated and prices are reasonable. It has taken too much time for industry to readjust as it has squandered the precious few years since the demise of Napster.

Pay-digital music services, like Apple’s iTunes, Real Music’s Rhapsody, or Buymusic.com present the beta-versions (so to speak) of the new distribution paradigm. With more artists allowing their catalog to be purchased on these services, it seems the recording industry is finally making some forward progress. Though CD sales have dropped considerably in the past years, 300 million from 1999 to 2002 according to the RIAA, this slump can only in part be attributed to file-sharing. As a result, it remains essential for recording companies to take aggressive steps toward recapturing profits through such business strategies as Universal’s 24-32% price reduction on their retail prices (to bring the price down from the current $18.98 to $16.98) or the inclusion of bonus DVDs with CDs. The recording industry might have to endure some losses during this period of transition as businesses, artists, and listeners adapt, but in the end, this industry shift opens a new realm of possibilities: improvements in the means through which the listener buys, and the industry sells, music.

Archived article by Andrew Gilman

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