By Greg Blonder
April 3, 2003, 4:00 AM PT
a copy of a friend's music CD, or grabbing a track from a Napster-like
service on the Internet, is stealing, plain and simple.
Music fans, seeking to justify this casual act of larceny, claim they're
really supporting an economic boycott of a usurious and uncreative music
industry. "Cybershoplifting," reply the record companies, seizing
the opportunity to impose their opaque and onerous copyright schemes on
the listening public.
battle rages on, piling up legal fees and taking the joy out of music,
a simpler solution is on the horizon. The best way to stem this tidal
wave of thievery is to give the music away.
by itself, is not at all that unusual. Broadcast television is "free"--at
least to the viewer--courtesy of ad-supported subsidies, as are radio,
many concerts and sporting events. But even those services commanding
a fee today should become free tomorrow as the economics of music distribution
take radical new shape.
how, we would do well to look at a very different industry, but one with
surprising parallels to music: 19th-century fuel delivery. In the late
1800s, when a tenant sought to warm a cold apartment, she had to buy her
own coal from passing coal wagons and then haul it in coal buckets up
to her fourth-floor kitchen. This apparently straightforward transaction
brought with it considerable challenges for wagon drivers.
endemic. Stories abound of coal wagons stripped of half their load by
street urchins before a first delivery could be made. Various solutions
to improve security were proposed, including various patented coal locks.
The ultimate solution, however, proved to be something quite different:
a new distribution model that made coal theft irrelevant. It was called
sold their product efficiently in one large delivery to apartment landlords,
at the same time removing the incentive for individual tenants to steal.
Landlords could pass a significant part of the savings on to tenants in
their bill for monthly rent. Everyone benefited, even the families of
the coal-stealing urchins.
it is the power of low-cost distribution, combined with subsidized free
services, that will save and transform the music business. Stealing will
become equally irrelevant.
To understand how, consider these statistics: The U.S. music industry
collects $12 billion per year from CD sales to about 50 million active
fans. That means each person spends an average of $250 per year to purchase
around 15 albums a year.
per year is a very interesting number. By next year $250 will buy an MP3
player with a 100GB disk. That disk will hold over 2,000 CDs. Even strapping
on headphones 15 hours a day, a listener would still need over four months
to cruise through every track. For many people, 2,000 CDs is all the classical,
jazz or rock music they will ever care to collect. For others, it's just
about enough to fill a summer vacation with tunes. But it's a lot more
than 15 CDs.
economics, distributing music on flashy plastic disks one album at a time
seems, well, like heating your kitchen with coal. And $250 is not too
high a price for a marketer--even those outside the music business--to
spend acquiring customers, especially those dedicated fans holding an
ad-supported player in their hand 15 hours a day.
possibilities. Buy a new Kia? Get 1,000 albums with every car. Purchase
a lifetime subscription to the Boston Symphony Orchestra? Receive an MP3
player with a library of the world's 2,000 most important classical music
selections. Sign up for a new cellular contract? Get unlimited access
to music from over 30,000 indie bands.
are such that it would take only one leading company to break the music
distribution mold. Among MP3 player makers, Apple Computer, with its pioneering
iPod and remnant counter-culture customers, is one possibility. Sony--rumored
to earn more from player hardware than from its own music division--is
another. Or it might be a local brand in China, with less to lose.
A workable payment plan?
But how will artists and their agents and lawyers get paid? This time
we can turn for answers not to coal distribution, but to an industry much
closer to musicians' homes: the American Society of Composers, Authors
and Publishers. ASCAP licenses, collects and redistributes music royalties
from music performance venues (like radio stations, concert halls and
so on) to the artists. It determines who gets paid what by polling these
venues to see whose music gets played and how often.
reimbursement in an MP3 player world, a small sample of users could be
invited periodically to voluntarily, and anonymously share their listening
history stored in the player. Then, just as in the ASCAP model, payments
collected from the music player distributors (Kia, the BSO and the like)
would be split among the copyright owners. No fuss, no complexity and
no secret CD police.
And we consumers
would finally have the freedom to play music where we want it, when we
want it, how we want it.
This is the
future of music, if anyone is listening.