Rough Trade

Little Johnny and Big-Biz Music Duke It Out Over Peer-to-Peer Software

The peer-to-peer companies tend to be disingenuous about what they're offering. Their disclaimers bring to mind the "novelty tobacco pipe" labels on bongs: Users have to agree not to infringe copyrights, so if something illegal happens, it's not the company's problem. Still, it's pretty indisputable that the essence of their business—typing in a song title, finding it on somebody else's computer, and downloading it without paying—is here to stay. Labels can complain about it; they can sue the companies that profit from peer-to-peer programs or services; they can demand that hardware be larded with copy-protection schemes, as in the Security Systems Standards and Certification Act that Senator Fritz Hollings has been drafting. But they can't stop it. If you can hear a song, you can copy it. Connect a cable from your stereo to your computer, run a sound-capture program, and you've got a perfectly good MP3. The technology is out in the world, and it's not going away.

Record labels can frame this situation in a couple of ways. One interpretation is to consider unauthorized file trading as straight-up theft; the other is to treat it as a cheap and easy promotional tool—and the gateway to a new market.

Smaller labels are generally gravitating toward the latter interpretation, and figuring out ways to capitalize on it. Ben Lebovitz of the small New York label Ace Fu—which promotes its bands, including Pinback and Ex Models, through Napster—is bitter about the major labels' attitude toward file trading. "They think pressplay and MusicNet are going to compete with KaZaA and WinMX? It's insane to think they're going to make any money off of it," he says. "The majors had one chance, and they could've made money off Napster if they hadn't killed it, but they didn't have the foresight to see that. The RIAA took away a very effective means of promoting my label—it does us way more good than harm to get our music out there to people who wouldn't have heard it."

New York's sovereign independent label Matador, meanwhile, offers songs from its catalog through a handful of licensed download services, including pressplay and emusic, a site that offers unlimited MP3 downloads from 900 indie labels for a flat monthly fee. Matador general manager Patrick Amory says, "Once it became apparent that [our titles were] going to be available free anyway, the philosophy was (1) Why not get some money out of it and (2) Get some promotion out of it."

Larger labels, though, are freaking out: They're faced with a significant new technology that's all but completely out of their control, and feeling an economic crunch from all directions. Overall record sales declined last year for the first time in two decades. (Of course, everyone had a bad year in 2001, and a close look at the figures reveals something curious: 2001's sales dropped by 22.3 million discs, or about 3 percent, but 2001's top 10 albums sold, in aggregate, 20.3 million fewer copies than 2000's top 10. Hybrid Theory was no No Strings Attached, Shaggy was no Eminem, and there's your difference right there.) The neo-payola "independent promotion" scam—in which labels pay radio stations' exclusive agents every time a song is added to their playlists—has gotten so exhausting and expensive that the RIAA has asked the FCC to investigate the business and make stricter rules. And high-profile artists' lawsuits (Dixie Chicks, Courtney Love), flameouts (Mariah Carey), and public gripes about the industry's standard contracts (led by the Recording Artists Coalition, whose several hundred members include Bruce Springsteen, Fred Durst, and Beck) have put the majors on the defensive.

It doesn't help that their own online services are arriving far too late, and causing problems of their own. MusicNet and pressplay are legitimate in the sense that the record companies get paid for their use—though the artists barely do. A recent article in The New York Times suggested that artists on pressplay get a fraction of a cent per download; according to the Los Angeles Times, managers of bands including Korn and No Doubt claim they haven't given their consent to appear on the system at all. The two major-label services also, as the Napster case's Judge Marilyn Patel put it, raised "the specter of possible antitrust violations"—they imply a monopoly on digital distribution, since the majors haven't been willing to license their catalogs to other companies.

Matt Goyer created Fairtunes.com, a site where file sharers can send money to their favorite musicians directly; he keeps tabs on the latest developments in file trading on his weblog, Blog.mattgoyer.com. Goyer calls the record business's copyright-protection lawsuits "a whack-a-mole game"—as soon as they get rid of one company, another one springs up. "The industry is trying to buy time to find a solution," he says. "But if you go to pressplay or MusicNet, you can't transfer what they're selling onto your iPod. Consumers don't want that! Consumers want MP3s! Give us what we want, and we will pay for it." Matador's Amory agrees: "You've got to use MP3s—you've got to use what people are going to play."

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