Music: The Coming File Sharing Crackdown

The World Intellectual Property Organization says that 40 billion music files were shared illegally in 2008 – that’s more than in 2007 but not as many as will be shared by the time the present year ends.

That’s a piracy rate of 95%!

No wonder the record labels are beside themselves trying to stop this movement right now.

Of course, they cannot. But if it makes them feel better to sue consumers and beg governments to crack down, then you can fully understand what is hitting its stride in Europe right now.

In Great Britain and France there are legislative measures to halt illegal file sharing that has eviscerated the labels market that is $10 billion a year. It was once a lot more. And there is no sign that this trend will be reversed with or without such legislation.

It’s getting ugly.

And, Britain wants to join France to enact punishments for file sharing that could cause repeat offenders to lose their Internet connections.

There have even been jail terms meted out.

Reuters reports a lawsuit in April where four men behind The Pirate Bay, one of the world's biggest free file-sharing websites, were sentenced to a year in jail and ordered to pay $3.6 million in compensation.

There’s that – the U.S. labels version of the PERP walk (referring to the police practice of intentionally parading an arrested suspect or "perp", short for "perpetrator") through a public place so that the media may observe and record the event.

In the case of the music industry the PERP walk is winning a high profile lawsuit as they did earlier this year in which a student was ordered to pay $675,000 for sharing just 30 songs.

Then there is the new obsession by record labels to support streaming music ventures such as Spotify even though previous and similar attempts such as Rhapsody failed to gain traction.

With all this bad news for the labels nowhere does anyone mention the good news which is that the 40 billion music files that were shared last year shows the voracious appetite by the next generation for music.

It could be worse.

What if young people suddenly stopped listening to music?

Now they have done a workaround for radio stations that continue to utilize corporate playlists. It's discovery through online streaming and then downloading free music files. The old system of radio airplay and then ringing up sales at record stores no longer works. But you can't tell that to label executives.

It’s also noteworthy that as big as the iTunes store is in the legal music business today that total sales are rather insignificant when compared to pirated music. Apple CEO Steve Jobs is not about to quit his day job making hardware to be a full-time music entrepreneur.

I’ve said it before – the new price for music is free. It may not be fair but it is true.

And the labels have a right to be concerned even if they shut down innovative ways to deal with the problem.

Let me lay it out in simple terms.

Online music discovery services that charge or eventually intend to charge monthly fees fail to understand the sociology of the technology that is killing the labels.

The next generation apparently doesn’t want all you can eat.

They want what they want when they want it -- if they are hungry, they'll eat (usually for free).

Certainly this should not be a surprise to media executives, but somehow it is. In other words, to quote Mick Jagger, you can’t always get what you want.

Young people want choice.

They have proven it by demolishing the concept of the record album in favor of searching for, owning or stealing one song at a time – the one they want.

Three thousand tunes cached on a mobile device through Spotify may make label executives foam at the mouth but that concept doesn’t create much of an appetite in the general public. So, if the price of music in effect is now free at worst and 99 cents at best (the higher prices the labels charge for hit music now on iTunes has actually spurred more stealing) then how do you remain in business?

Now that’s a good question.

Maybe you don’t.

Or maybe you sell in bulk – five cents a song something like a text message – so that stealing would be not as attractive. (Actually a text message, according to studies, averages out to about a penny a message).

The labels could make the best audio copy available, all the goodies, liner notes, social networking connections – all for a nickel and no one would ever steal music again. Okay, I’m exaggerating but you get the point.

Then on top of that, make an intuitive site available to hear streamed music for discovery purposes and five-cent purchases for those who want to own it.

Look, if someone took the concept of text messaging to record execs 15 years ago and said we want you to invest in this, it’s going to be big. They would have thrown that someone out on their butts.

The audacity of charging people a few pennies to type “hey” on a mobile device.

Can’t work.

Won’t be enough people willing to pay for such silliness.

And there you have the mentality of label execs who have tried threats, fines, jail and “I got a deal for you that you can’t refuse”.

It’s not that hard to figure out.

You’re out of the manufacturing business and should be in the music discovery business.

You don’t need radio.

You don’t need promotion.

But you do need illegal file sharing – or as I like to call it, the new music radio – for discovery purposes.

Your profit comes when you get out of your own way and make it easy for a fan to sample, buy and become a customer again.

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