DIGITAL MUSIC AND THE COPYRIGHT PREDICAMENT

DIGITAL MUSIC AND THE COPYRIGHT PREDICAMENT



     What is music exactly? Merriam-Webster defines it as an agreeable tone. It makes sense when contemplating what music is. Music cannot be defined in words alone. Music conveys emotion, can invoke thought, or just be background noise for peoples’ daily lives. Music means different things for any given person, but it binds everyone and is a part of human nature.

     Music has been around longer than written words and has passed through the generations through communication of emotion. Then, as language evolved, it adapted into music.
“Good artists copy, great ones steal.” – Pablo Picasso

     Music in digital form was meant to be free; this is the way the music industry is moving despite the fact that the major record labels fight technological change at every sign of innovation. Digital music is a valuable commodity that can be marketed and promoted without the need for a traditional record label. The major record labels are stuck in old business models that, in a global internet society, are unprofitable.

     Peer to peer networks are used on the internet to distribute music, movies, electronic books, and also software. The use of these networks has lowered distribution costs to virtually nothing. These networks are an integral part of the internet age, even though they are being fought against from the record labels’ lobbyist arm, the Recording Industry Association of America. It threatens to undermine the very core ideal of the internet: empowering the individual.

     The Digital Millennium Copyright Act was passed into law in 1998. It has extended copyright protection to the internet. It criminalizes the act of breaking digital locks on software, movies, music, etc. even if there was no copyright infringement involved. It also limits the liability ISP’s (internet service providers) take on if they make sure to remove infringing materials when notified by copyright owners.

     The Copyright Term Extension Act was passed into law in 1998. It extends the term limit of copyright from fifty years plus the life of the author, to seventy years plus the life of the author. If it is under corporate authorship, its maximum term limit is one-hundred and twenty years.

     Copyright law of today is undermining the original intent of its creation. It assumes that the originality of content can have a defined ownership and thus can be defined as property (Bollier, 2005).
With the advent of the internet, different technologies are changing the landscape of the music industry. Copyright laws are trying to keep content in control by those same industries without regard to consumers’ rights. These copyright laws give all the power to the content industries, while leaving consumers with very few rights. Technology is always changing, but it only moves as fast as the government allows it (Avalon, 2006).

     The music industries (as well as most other content industries) claim that they are losing money because of MP3 technology and the use of peer to peer networks. Fortunately, no drop in sales can be conclusively linked to technological developments (Langenderfer, 2004). The music industry has fought new technologies for almost a century, yet have benefited from the technologies over time. Today it is almost impossible to limit and control content distribution in a world of computers, digitized information, and broadband penetration (Langenderfer).

     Because of these technologies, copyright law has tried to punish those who use these networks and the MP3 technologies. Unfortunately, it is extremely difficult to discover file-sharers and advances in technology could make it impossible (Langenderfer). The industry has never had to face infringement on such a scale. In the past, it relied on problems with duplication technologies to protect their content. MP3’s create an almost duplicate copy and rivals the sound created on a CD. Because of an MP3’s small size, it can easily be transported on the internet several thousand times. Sanctions against MP3 “crimes” allow record companies to exude power without limit, which has been supported through legal doctrine (Hinduja, 2006).

     As it looks today, the content market will change substantially over the next decade. The industry will have to adapt and accept that file-sharing is common-place and no amount of public education is going to eradicate the habits of internet users who have become used to the fact that they can find music for free. The economic law of supply and demand always supersedes governmental policies (Avalon). Copyright law expert Jessica Litman suggests that “the public’s view on copyright law will eventually make it impossible to police or will make it void.”

     Music piracy became rampant because copyright owners were charging more for their products than they were worth. In order to keep up the monopoly on distribution, copyright owners use the judicial system to quell any sort of competition, especially through the use of the internet. The judicial system uses taxpayer money to fight for the record labels to pursue individuals who most likely are not causing any real harm. The music industry conveys a disproportionate amount of power over the craft of law by using their influence on Congress to enforce their definitions of what is legal (Hinduja).

     MP3 technology was created by individuals who had very little influence in government, but thought of a creative way to distribute music in such a fashion that it would empower the individual and not the corporations who maintained a monopoly. The public took this idea and made it popular because it created more value for consumers who could then listen to many different types of music as well as finding artists that were not under control by the music industry. Under current laws, copying copyrighted files is a violation of intellectual property rights, even though millions of people continue to share music regardless that the law has been broken.

     The Digital Millennium Copyright Act (DMCA) voids previous copyright law in regards to term-limits. It is now possible to control digital content forever in essence (Bollier). The true purpose of the DMCA is to allow content owners control through all parts of the sales process, including the actions taken by the end-user. This means that the music industry can control what consumers do with their music even after they have purchased it. If the same thing happened in any other industry, the government would step into protect the rights of the consumers. Even when the copyright law is clear, it is more of a matter of who can afford the most expensive lawyers that can manipulate the entire system (Bollier).

     The music industry has a long history of taking content from the public domain, which is free for anyone to use as they wish and then claiming it as their own. Langenderfer continues with the hypocrisy of the industry saying, “the music industry, one of the loudest voices decrying digital duplication, owes much of its early success to the fact that recordings initially required no compensation to the songwriter.”

     Disney in the early 1990’s, instigated a large lobbying campaign to retain control over their characters that were set to be in the public domain. They pleaded for twenty more years as well as contributing donations to eighteen of the twenty-five members of Congress who sponsored the legislation (Bollier). A large amount of music publishers have taken music that is free from the public domain, affixed a copyright symbol on a piece and sold it back to the public at large for a one hundred percent profit.

     To put everything into perspective, a January 2004 Harris Interactive Survey found that seventy-five percent of adult Americans agree that downloading and then selling the music is piracy and should be prohibited, but that downloading for personal use is an innocent act that should not be prohibited (Avalon).

     There have been many court cases involving copyright and new technologies. The one that is a paradigm of the digital music revolution is from Sony v. Universal City Studios, which states “A new technology cannot be summarily banned, so long as it is capable of substantial, non-infringing uses” (Bollier). It is ironic to note the fact that both the plaintiff and the defendant in this case are now two of the four major record labels.

     It is certain that the business model the music industry uses currently will not last for much longer (Alexander, 2002). Digital technology empowers consumers and has eroded the control and scarcity content owners possessed, thus rendering their models ineffective. The music industry has always enjoyed technological stability, but have benefited greatly from new technologies. The music industry dealt with the first technological challenge and survived, but with more laws crafted to give them an advantage.

     The industry is not fond of the internet because it disrupts their current business models. Since Napster was introduced into the world, there has been a huge response world-wide that music can be free and file-sharing is that vehicle. Using the internet to distribute free singles has proven to be a great way to promote a new release. The internet has also reduced the cost of distribution of digital goods.

     The industry has embraced radio as a promotional and marketing tool, even though at one time it was considered a threat. When radio first arrived on the scene, copyright owners already had a history of lobbying Congress for more stringent copyright laws and when technology threatened its established business model, they would sue. In 1938, seventy-five percent of homes in America had radios. It was the first time users could listen to “free” music and also had widespread availability.

     The industry for many years has held a monopoly in the supply chain, kept Compact Disc prices high, compensated artists lightly and reaped massive profits from all of its exploits. The problems of space and the distribution model employed are radically different today. Because today is an information age, the industry can not throw money behind so-so talent and expect to continue turning a profit (Avalon). Consumers who download music via the internet use it as a means to sample music and many of those same consumers will go out and buy CD’s if they enjoy that same music.

     MP3 technology has helped grow many online businesses that have become successful. One worthy of noting is iTunes, which is owned by Apple. Unfortunately, businessmen in the music industry have changed from improving existing business models to improving public and government manipulation in order to receive preferential treatment (Hinduja). Since the digital music revolution has broken the record labels outdated business models, they have used the power of the legal system to fight against the individuals who propagated it.

     In addition to the fact that digital music should be free, it is also a valuable source that can be marketed and promoted without the need for a traditional record label. This is the direction the world is moving and not even the law can change this fact.

     A major problem with current copyright is that it links creative incentive with control. The internet proves that creation of content will move forward without compensation (Langenderfer, 2004). The enforcement of copyright is something that the recording industry is keen to extend globally. Alas, copyright law has taken away the principle balance of protection of intellectual property and the publics’ benefit (Bollier). This highlights the fact that the recording industry is exploiting copyright in order to turn a profit. Protecting copyright can get expensive though, so the record labels have turned to the governments for help. It is also expensive for the governments to police copyright as well, so instead governments are pushing copyright policing on Internet Service Providers (ISP’s) (Pfanner, 2009). In the past, limitations concerning technology made it effortless for copyright holders to allow fair use exemptions.

     The legal system has defended the interests of corporations and businesses and imposed harsh penalties on MP3-based companies and individuals (Hinduja). The only way record labels can continue to monopolize the supply chain for music is ultimately dependent on how much they can enforce copyright protection.
“In the battle between copyright control and technology, the advance of science is inevitable, and structures based on control will fail in an age where perfect duplication and nearly free distribution are at the world’s fingertips” (Langenderfer & Kopp, 2004).

     The internet is a medium which focuses on low cost and worldwide distribution. It eliminates the need for physical distribution and retail of products as well as increasing the speed of business transactions and allows consumers improved access to information, services, and products. These tools are available to millions of industry and non-industry citizens.

     Music can and is distributed via the internet legally and illegally. Digitization of music has improved the efficiency of distributing music and has created opportunities to take advantage of the new supply chain (Premkumar, 2003). This modern technology allows anyone to record, create copies and distribute their music for a lot less than previous decades. Distribution through the internet frees music from the physical restrictions of compact disks.

     The value derived from free digital music is the ability to hear almost any song whenever desired (Meisel, 2002). File sharing benefits new and emerging artists because it is a distribution channel that allows marketing and distribution at a low cost. Each “middle-man” between the artist and consumer creates a higher price (Graham, 2004). With music, because it can invoke emotions unlike other physical products, consumers will typically want to sample new bands’ songs before they will make the decision to buy an entire album.
“Companies should try to apply and realize the advantages of new technologies to increase consumers’ benefits instead of resisting change, simply declaring their rights, and imposing the guilt of piracy on consumers” (Shang, Chen, & Chen, 2008).

     The record labels refuse to establish workable online services because it would take money away from their outdated business models. It is also true that file sharing has no major effect on sales (Bach, 2004). Regardless, there is absolutely no technical means to protect or destroy intellectual property on the internet. It would make sense to realize that if transaction costs (costs to distribute, put in retail stores, etc.), that most companies would invest more on developing and marketing artists. This is not true for today’s record labels; instead they would rather litigate to enforce their rights. These labels seem to lack perspective concerning the internet and consumer expectations today (Williamson, 2007).

     The music industry is controlled by five major record labels (EMI, Sony, Universal-Vivendi, Time Warner and Bertelsmann BMG). It is because they have monopolized the supply chain that independent artists in the past were prevented from distributing their material without the help of one of these labels. The supply model the record labels employ have not changed dramatically since they were first used over a century ago (Graham, 2004). If an artist were to use one of these labels in the past they would have had to travel to New York because all of the major record labels have their headquarters or at least a main component there.

     Recently at least thirty-five million Americans have downloaded unauthorized music from the internet (Bach). The music industry is not one single entity, but rather a series of industries. Indeed, the music industry and the recording industry are not the same (Williamson). The recording industry has engaged in anti-competitive practice by controlling the distribution vehicles. On top of the enormous cost associated with the creation of a distribution channel, these were the only two barriers to entry in the industry. The record labels’ business models that have been built around limited access to distribution infrastructure could lose their strategic advantage.

     “If unauthorized copying becomes too much of a problem, the companies should have different prices (Landau, 2001). Taking into account major record labels, an artist that sells an exorbitant amount of records is more profitable than one that sells considerably less. It is because of this that “popular music performances become popular music products substantially as an outcome of a managed business process” (Thompson, Jones, Warhurst, 2007).

     Major record labels scout talent from smaller labels the same way professional sports teams scout colleges for new recruits. They can afford to throw money at talent and if that talent, happens to fail, they move on to the next big thing. Indie labels are recording labels that have no affiliation with the big five record labels, also known as independent labels. Indie labels and the like have to choose their investments more carefully and are likely to be loyal to a smaller act.

     Thompson elaborates on this managed business practice by saying “products of the record industry overwhelmingly fail to sell and sometimes they fail even to be made.” Without a record label, musicians will earn more. Artists signed to major labels typically make nine cents on every CD sold (Avalon). Even so, before they see any return on their music, they usually have to pay back all the debt accumulated to the record label. Artists make a miniscule amount of money on CD sales (Hinduja). Record labels exploit the major source of value, which is the artists’ content. Artists sign over their copyright in order to do business with a major label. As history has shown, record companies exude tremendous power over artists signed with them.
“Artists can also supply their music independent of the control of the record companies” (Lewis, Graham, & Hardaker, 2005).

     Even the Beatles were turned down by a number of record companies before they saw their potential marketability. If the internet had been around during the Beatles era, they would have had no need for a label because they could have done everything themselves and most likely would have succeeded all the same. A musician can write, record, and distribute music without signing a record contract.

     It is because of these new digital technologies that artists are able to bring music to a larger audience, allows abstract artists’ access to a niche market that, without the internet, would otherwise not be available. MP3 technology should be embraced for providing the means and medium to distribute music globally, rather than be litigated against. This technology has allowed thousands upon thousands of artists the exposure they desired, without a marketing department (Hinduja,). Independent artists see MP3’s as a tool they can use to promote their music without having to consider using a record label to do the same things. Touring has become an important part of the music scene. Most performers earn more through live shows than they do with CD sales (Curtin, 2008).

     “At the end of the day, we are not going to stop piracy, so let’s embrace it” declares Ron Berry, the inward investment manager for the Isle of Man government. However, the RIAA does not support the same ideas about digital music that has been set forth. The RIAA is a trade group that represents the recording industry in the United States of America. This group is opposed to internet distribution without fair compensation. They also believe that there should be more copyright laws regulating intellectual property. Another job the RIAA is employed to do is to litigate and lobby congress on behalf of the record labels to promote reform in the copyright laws as well as making them more stringent.

     No industry has faced harsh market environments quite like the music industry (Langenderfer). Copyright owners have always had, to some degree, deal with infringement. Copyright owners have pushed for more laws to protect their property and have sued to enforce their rights, even though “piracy” still runs rampant. Since 1960, Congress has extended copyright term-limits eleven times. The RIAA still feels that everyone will be deprived of creative works if technology (phonographs, radio, VCR, beta-max, CD-r, file-sharing) is allowed to grow. This is the same argument they have made for each new, emerging technology. They have more power and influence in government thanks to their established relationships.

     They claim that ninety-percent of all MP3’s available online are without the copyright owners consent (RIAA, 2009). They feel that P2P technologies pose a threat to the current structure of the music industry by allowing the transfer of digital music over the internet for free. This is indeed true, but only because it effectively disrupts the business models their clients have used for well over a century. Alas, they also claim that music piracy costs the recording industry five billion dollars a year on physical media (RIAA). CD’s represent eighty-percent of the music sold in the United States (RIAA).

     “The courts have consistently ruled that P2P and other unauthorized uploading and downloading inherently amount to copyright infringement and therefore constitute a crime”, alleges the RIAA. In reality, it is a civil matter if it is done without personal gain and therefore is not a crime, although it still possible to come under litigation. They assert that the defendants can be held for thousands of dollars in damages, particularly since the minimum penalty is seven-hundred fifty dollars per song. This is a blatant abuse of the system, as no one song is worth that much, but this is what the RIAA fights for. They fight to protect outdated business models and make an exorbitant amount of money in the process.

     Gene Kan in testimony to the Senate judiciary committee states, “The only way to make music that cannot be copied is to make music that cannot be heard.” To put it differently, music in digital form was meant to be free. Music is not a commodity as anyone who has tried to sell it can attest. Eminem in his song, Sing for the Moment, declares, “Music is a reflection of self.” Music affects people in different ways.

     In a December 5, 2004, Pew Study, it concluded that “thirty-two million Americans consider themselves artists and more than three times as many pursue some sort of artistic endeavors in their lives.” If each of these Americans wanted to release their music, the internet is the vehicle that drives people forward, as it empowers the individuals who create the music, not distribute it. The study also states that eighty-eight percent of the respondents provide free samples of their music online. Further, it said that “Emerging artists were more likely to agree that file sharing services are not bad for artists because they allow them to promote and distribute their music.

     In an interview with a local musician Jimmy Woodward, who is the lead guitarist for his band ROOKA, he states that he supports file sharing because “everyone has power.” He continues saying that the music industry is moving towards having “ringtones becoming the main source of income for future artists.” In regards to copyright law, he articulates “[that] copyright should always belong to the inventor. It is not property.” When asked what he would do to change the music industry, he declares “the same I would do for the government, [I would] get rid of it.”

     Digital music is and will forever be a valuable source for artists and bands to promote and distribute their music worldwide without needing a record label. The record labels of today are stuck in old business models and are unprofitable in a global economy where the laws of one country do not affect those in other countries. Digital music is the future of the music industry and hopefully the record labels will realize this before they become extinct like the dinosaurs.



References
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