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Politics Apocalypse
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Music IMHO The Fall Of An Evil Empire: Record Companies And Their Business Models Record companies have long clung to an outdated business model of selling physical media (once vinyl now plastic) to retail stores who sell to consumers at an exorbitant amount. Despite high store prices and returns record companies typically rip off artists who have to pay back any investment the record company has made from their 12-16% royalties. As an outdated tradition artists still pay the record company fixed breakage fees originally based on the amount vinyl would be damaged in transit, despite the higher durability of CDs. The information age with the increased interconnectedness of computers and mobile devices has facilitated the easy sharing of information. Consumer electronics (such as mobile phones, PDAs, and dedicated mp3 players) and file sharing networks and protocols (such as bittorrent and gnutella) allows music to be conveniently accessed, played and shared. In response to this situation which threatens their business model which relies on the sale of plastic discs, record companies retaliate by using the RIAA to try to disable the information sharing channels which are used to exchange songs and to sue their customer base. This has included a 83 year old deceased grandma, and an 8 year old girl they contacted directly by pretending to be her grandma. And how do they reward their customers who do buy their plastic discs? In 2005 Sony included on their CDs a rootkit which installed itself automatically without the consent of the user when inserted into Windows computers. A rootkit is a form of malicious software – malware – usually used by black hat hackers to hide malicious activities by altering the operating system. The Sony rootkit hid any file or registry key beginning with “$sys%”. Malware such as worms, Trojan horses and viruses quickly began using the Sony rootkit to hide themselves from detection. In their attempt to control what users can do with the music they purchased Sony also inadvertently left a serious breach in the security of the Windows systems of their customers. Public outrage may have forced Sony to abandon this specific strategy but record companies continue to react by trying to limit what consumers can do with legitimately acquired music. Digital Rights Management (DRM) techniques include inserting small digital scratches onto CDs to make digital copying harder (as a side effect the CD wont play in some older CD players and this makes real scratches more likely to affect the sound), and lowering the sound quality when playing the music on a computer to discourage coping of the music. Although these techniques have been unsuccessful at stopping music from being shared they are pursued with vigour. Some record companies have reluctantly began to sell music online via distributors such as iTunes and Yahoo music. This music sold is typically laden with DRM. Often the songs are also encoded with information about the user who bought the music so that if they do share the music with others the original sharer can be tracked (and sued). Incidentally Microsoft Vista is much slower than other operating systems such as Linux or even Windows XP partially because of the DRM software built into the operating system which encrypts audio and video data between parts of the operating system to stop users from saving to disk the media they are experiencing. Record companies do not represent the best interests of consumers or artists. Rather than develop a distribution method that rivals free services in convenience and usefulness, they attack consumers’ rights. Rather than supporting artists, they remove artistic control and force artists to make most of their money from tours and merchandise. Recently some major high profile artists have abandoned record companies and their business models trying new innovative distribution techniques. Radiohead after leaving their record company, released the album In Rainbows online in mp3 format before a standard physical media release. The online download allowed consumers to choose their own price. This release was a huge success and is estimated to have made the band millions of dollars. How much the success was due to media attention and the bands high profile is still in question. Following this success lower profile hip-hop artist Saul Williams with high profile producer Trent Reznor released the album Niggy Tardust online, giving people the choice of either paying US$5 or nothing for the download. In his blog Trent Reznor recently shared some statistics; he was disappointed that only 1 in 5 people chose to pay for the album. Many have claimed that the number of payments is good for an artist of Saul Williams’ profile, especially since no advertising led to the release. Trent Reznor now free of his record company released his new Nine Inch Nails album Ghosts I-IV online, with a plethora of purchase options. The first quarter of the album is free to download, US$5 buys you a very high quality download, there are three physical media pre-order options including a US$300 limited edition. Any physical media purchase grants access to an immediate online DRM-free download. The limited edition sold out of the 2500 copies in one day, and made US$1.6 million in the first week. So it seams that high profile artists no longer need record companies but the future of low profile artists and their dependence on record companies is still in question. In April independent Perth artists Politics Apocalypse, a political and subversive post-industrial rock project with an interesting mix of classical instruments, guitars, electronic beats, and a dash of Aussie hip-hop, releases an album independently online with a different kind of business model. The album is free to download and share, licensed with creative commons licences even allowing commercial uses of the music, and a name-your-own-price CD is available to buy. Donations are accepted and all statistics involving downloads, CD orders and donations are available online. Anyone interested in the future of the music industry should keep an eye on these statistics. http://www.politicsapocalypse.com IMHO, Cliffe
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