“The Death of the Music Industry” in Canada and other Copyright Myths
The following is my column for the Globe and Mail today, with the addition of a few links here and there. I am fully alert to the fact that this is a very, very touchy subject, not least because musicians and artists are at the centre of the debate, but have been, other than a few megastars, the least to benefit financially from either conditions in the past, or those that prevail today.
Those interested in the topic might find my previous two posts of interests in this regard: the first one looks at the ‘methods’ involved in assessing the state of the music industry. It ends with the crucial proviso that we can collect “all the evidence in the world but still be morally stupid because you’ve thrown the artists and musicians amongst us under the bus”. In other words, this is not just about fun and games, but real people trying to make a real living.
That said, however, I am skeptical of the claims typically made on behalf the ‘music industry’, and equally circumspect that the interests of musicians are interchangeable with those of ‘the suits’ in the business. For those who want to hear something similar from somebody ‘inside the biz’, and who really knows his stuff, look at Bob Lefsetz’s newsletter.
Thanks to Bob, I’m listening to two great bands right now: Fleet Foxes and Mumford & Sons. It’s all about the music, being good, nay great, at what you do, and crucially the fans, those who adore your stuff and rave about you to others.
The second of these two posts sets out the idea that the music industry was in many fundamental ways the offspring of rivalry between the telegraph giant Western Union and then snarly upstart Bell Telephone Company in the late-1870s and 1880s. If rivalry between ‘network technologies’ gave birth to the music industry in the late-19th century, I think it is unlikely that ‘network technologies’ like the Internet and P2P are going to lead to their demise in the 21st century. History, in short, may be a useful and sturdy guide for thinking through the issues now in front of us.
Now, I’ll turn to the slightly revised/extended version of my column from today.
For more than a decade, the music industry in Canada, and globally, has been cast as being in dire straits — a portent of things to come for all media in the ‘digital age’, unless copyright laws are updated soon to combat illegal downloading.
The notoriety of file-sharing networks from Napster in the late-1990s, to Pirate Bay and the meting out of stiff punishment to Limewire is legendary. New sites emerge as swiftly as old ones are prosecuted out of business, fueling perceptions that the music industry is under siege.
Many claim this will only get worse as broadband Internet becomes a taken-for-granted fixture of everyday life. Copyright legislation has been proposed three times since 2005 by Conservative and Liberal governments alike.
Last year’s effort, The Copyright Modernization Act (Bill C-32), died when the election was called. It’ll be back. The Conservative’s election manifesto said it would be.
The Canadian Recording Industry Association (CRIA), backed by the Recording Industry Association of America (RIAA) and International Federation of Phonographic Industries (IFPI), argues that legislation delayed is justice denied. While Parliament dithers, they say, musicians and the music industry are getting slaughtered.
According to the IFPI, “overall music sales fell by around 30 per cent between 2004 and 2009” worldwide. The trend in Canada appears even worse, with “recorded music sales” plunging to a third of what they were in 2004, as the following figure shows.
‘Recorded Music Industry’ Revenues in Canada, 1998 – 2010
Source: Statistics Canada; PriceWaterhouseCooper.
But stop the music. What if this image of a beleaguered music industry is badly flawed?
Cont’d on Page 2 . . . . . . . .
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Mediamorphis 
A thought on “piracy” from Neil Young:
“I look at the Internet as the new radio,” Young explained. “I look at radio as gone … Piracy is the new radio, that’s how music gets around.” – Neil Young, February 2012
http://www.digitaltrends.com/mobile/neil-youngs-plan-to-make-digital-music-sound-20-times-better/
If you’re looking for that next Globe and Mail article. Here’s a good story:
http://www.boingboing.net/2011/05/29/canadian-indie-isp-o.html
I currently work in animation, but for many years made my living as a musician; I’m still very involved in the music world. The younger performers/composers/recording-artists I know fit snugly into the current growth trend on the “Total Revenues 1998-2010” line of your graph. Performance revenues have increased for some performers, but more significantly many musicians are self-financing and self-releasing through various digital outlets. Essentially many musicians are forging new work-flows: they initiate most contacts directly, with each other, and with recording engineers, mastering engineers, graphic artists, stage-directors etc., so this current growth is at the expense of the middle management people who used to make those connections, aka “record companies”. Unfortunately for Chris Taylor, the reduction in middle management leads to a reduction in the need for contracts, and thus a reduction in lawyers fees. The revenues shown for the 1998 era were largely driven by re-sales of old catalogues, re-released on CD, which required a lot of legal wrangling. A peak demand for a large portion of entertainment law dried up once that legal wrangling was completed and there were precedents set and models available for future negotiations.
The old “music industry” was largely based on indentured debt. Record companies brokered services or rented facilities to musicians and musicians signed contracts agreeing to take on debts for these services and rentals. These debts were to be repaid through earnings from airplay royalties or sales of albums, concert tickets, and merchandise. Enter the internet:
Ozzy-types aside, many musicians are extremely smart. It is the nature of the beast to be self-educating – musicians read and learn from readily available online sources, track down used copies of old “how to” books, and consolidate this information. Naturally they excel at listening to ideas and enhancing them, which means they share (gasp!) this information readily, and often they share it freely (in every sense of the word). For the time-frame at the beginning of the “Total Revenues” graph, the cost of equipping a reasonable studio was six-figures, moving into seven figures if you really wanted work on high end projects. By the middle of the time frame in the graph, mass production of digital recording tools has reduced cost of studio ownership by several orders of magnitude, and today it is even more easily affordable. The newer digital workflows have removed myriad technical problems from the process, allowing any dedicated musician to readily setup their own facility and avoid diverting cash-flow into studio rentals (or worse yet, loans from record companies for studio rentals) – yet another nail in the “record company” coffin. But Mr. Taylor shouldn’t be too concerned – like everyone else, as musicians become more successful, they are happy to job out some of their work load – sooner or later they’ll need lawyers, even if only to buy a house.
As the “Total Revenues” graph shows, the growth is positive, there has simply been a change in cash-flow. In some ways it is quite analogous to the decline in the number of secretaries that resulted from the introduction of personal computers: the same work is being done, just by other people with different support/cost-flows, and often at considerably lower over-heads.
As you say, copyright reform, absolutely, but making sure reforms benefit the creators and enhance their ability to create new works is far more economically beneficial than entrenching a failing, passé, and irrelevant industrial model.