From customer to pirate. How the recording industry is turning its customers and artists into pirates

Linden Farrer ( Linden@NOSPAMriseup.net)

Not so many years ago, people saved up for weeks so that they could buy the vinyl record they had heard at a friend’s house, a concert, or on the radio. Nowadays people simply log onto a peer-to-peer (P2P) file-sharing network using a computer, and download whatever it is that they want for free. Although this has its risks to downloaders in terms of attracting the attention of people who police ‘intellectual property’, it has proven a hugely popular way to acquire music and has been a thorn in the side of the recording industry ever since the late 1990s. But Radiohead's recent announcement that their new album, In Rainbows, was to be made available via their website on a donation only basis1 resulted in the entire industry experiencing a convulsion, with one insider complaining that "this feels like yet another death knell...If the best band in the world doesn't want a part of us, I'm not sure what's left for this business”2.

Coming from an industry that has consistently claimed that it is being killed-off, you might be forgiven for ignoring this latest gasp for breath. Indeed, industry whinings in the 1980s that “home taping is killing music”3 did very little to lend credibility to the recording industry as a whole. A series of conditions have now emerged, however, that really do indicate an unprecedented threat to the recording industry: a threat that undermines its control over production, distribution and marketing, and could result in an end to the industry as we know it.

Death throes of an industry (or yet another imagined visit from the Grim Reaper?)

The development of the internet has always been a potential threat to the recording industry, but it is only now becoming clear just how much of a threat it really is. Replicating (copying) data such as an MP3 music file costs next to nothing using a computer, and what's more, if that computer is connected to the internet then it can share files with a potential 1 billion other computers4. With internet connection speeds rapidly increasing, it has become so convenient that in 2005 20 billion songs were shared by over 9 million people5. The number of people sharing music in this way is on the increase according to market research firm NDP Group, who reported that ‘illegal’6 music downloads jumped 47% between 2005 and 20067. File sharing is reckoned to amount to about 37% of all of the data that travels around the internet every day, with email amounting to a meagre 2% in comparison.

Industry associations such as the British Polyphonic Industry (BPI) and the Recording Industry Association of America (RIAA) claim that $4.2 billion per year is lost to 'piracy', pointing to figures showing a 22% decline in world sales of CDs from 1999 to 2004, and a halving of the size of the British singles market in the same period as proof of the damage done to it by unauthorised file sharing8. Others have a quite different take on such figures. I spoke to Andrew Bridge of the Brighton based electro-horror band Freudstein: “record buyers have been fleeced artistically and monetarily by the recording industry for years. Fact. Let's take the CD for instance. From its outset the CD format was sold on the false premise of sonic superiority and indestructibility…I'll shed no tears to see the CD fade into obscurity and become a future cultural curiosity because people just aren’t prepared to buy a CD for extortionate amounts”.

The potential costs have not only decreased for those wanting to obtain music; those creating music are also benefiting from technological advances that make it possible for them to burden the costs of recording and mastering their music using inexpensive (or free) software, and then distribute it to mass audiences using websites, blogs, and P2P networks. The net result is that the traditional roles and services provided by the recording industry are quickly becoming an irrelevance, encouraging a series of established artists to try out new models of promotion and distribution for themselves. The Charlatans, for example, released their latest single for free via the internet, Britpop artist Ash announced that they will no longer produce albums and will concentrate instead on releasing single tracks to the internet as part of a new era of “spontaneity and creativity”, and the Crimea, who were dropped by their label despite a popular first album, decided to self-finance their second album and give this away to their fans online.

Viewed against developments such as these, Radiohead's announcement doesn't seem particularly surprising. Indeed, it has had so much more attention simply because the band is so popular. Nevertheless, it is a rude awakening to an industry that still thought itself able to survive living by the old model. This model, which involved almost total control over output, enabling the manufacture of 'cutting-edge' trends designed to keep shareholders happy, is now rapidly disappearing. The emerging situation – not really a model as such yet – is one where the costs of production and distribution are within a band’s reach, eroding much of the control that the industry previously enjoyed.

This is a recipe that tastes really bad to music executives who have spent far too long sipping their Pina Coladas on a Caribbean island, gazing idly at pirate ships emerging over the horizon. Andrew Bridge put it to me as follows: “traditionally it has been concert tickets and t-shirt sales that have provided revenue to the musicians themselves. This original model is becoming true once again as people download music and listening becomes democratised. Ultimately, good music has a greater opportunity of being heard irrespective of the marketing campaign behind it. We will be heard and will no longer be drowned out by the huge corporate roar of mainstream advertising. The playing field is being well and truly levelled”. Industry insiders agree. Alan McGee, who ran Creation Records and now manages the Charlatans states “it is definitely the beginning of the end of the old model. Trying to fight against these initiatives is like trying to close the stable door once the horse has bolted”9.

How to lose friends and influence them to turn ‘pirate’

The response of the industry as a whole has been two-fold, encompassing a kind of carrot and stick approach. On the one hand they have set up their own ‘pay as you download’ services, and on the other they have pursued file-sharers through the courts. The legitimate services they have set up, such as I-Tunes, TescoDownload and (the new) Napster, compete with P2P networks such as bit torrent, eDonkey, Soulseek, WinMX, and DC Connect. Initially they did pretty well, attracting customers deterred by the dangers of downloading but who welcomed the convenience of buying music from their desktops and music fans who, for whatever reason, didn’t go to record shops.

Growth in these services is now slowing as the P2P networks are becoming more popular. One of the possible reasons behind this has been the use of digital rights management (DRM) for CDs and download services that designs limitations and defects into files so that their use can be strictly controlled. This means that music files can often be listened to only on devices produced by one manufacturer, or copied between devices a limited number of times. The industry embraced the technology because it gave them a false sense of control over distribution of their product – in line with their old model of business. However, computer experts believe the technology can never work. Jeremy Alison, for example, writes on his blog that “engineers know that DRM doesn't work, that it can't possibly work...[but] they can't seem to help producing ever more complicated versions of the same broken system”10. A series of fiascos followed widespread use of DRM. The first of these was the discovery that CDs sold by Sony contained a piece of software that attempted to stop customers copying their CDs using techniques usually associated with viruses. This left customers computers infected with the software and vulnerable to attack11. A more recent nightmare befell Virgin download customers who found out that Virgin planned to shut the service down, rendering all of the DRM-ed music purchased unplayable12.

Authorised download services fare little better when it comes to sound quality too. While users of P2P networks have pioneered the use of high-bitrate MP3s and lossless (CD-quality) formats such as ACE and FLAC, authorised services have usually sold MP3s of an inferior quality. And in terms of cost – and perhaps this is most crucial ingredient in the mix that creates a second-rate way to obtain music online – the price is often around a dollar (50 pence) a track. This is ludicrous given that digital data costs next to nothing to replicate and is made even more so because the actual CDs can be obtained for the same price. It isn’t just consumers who fare badly out of these download services: not content with selling data that costs nothing to replicate for the same price as something that is tangible, some record labels charge artists a 'packaging fee' to make their tracks available online. Russian download services selling MP3s for much cheaper than their ’western’ counterparts have faced all all sorts of accusations and threats, demonstrating the lengths that the recording industry will go to prevent anyone else from having a look in on the treasure chest13.

All of this must leave users of authorised download services with the distinct feeling that they are being taken for a ride: sold low quality, defective files for the price of a normal CD when unauthorised P2P networks offer the same or better for free. With research showing that ‘illegal’ downloaders “are often hardcore fans who are extremely enthusiastic about adopting paid-for services as long as they are suitably compelling”14, one can only conclude that the authorised services have not been nearly compelling enough. And anyway, who can compete with free?

With the incentive part of this approach looking like little more than a mouldy carrot, the recording industry’s second approach spearheaded by the RIAA and copied by other industry associations around the world, has resembled more of a flame-thrower than a stick. It involves taking file-sharers to court if they refuse to pay up damages to the music industry when they are suspected of sharing copyright material. Criticised as 'spamigation' by the Electronic Frontier Foundation and decried as intimidation, the RIAA took action against 20,000 individuals between 2003 and 2006 urged on by an army of lawyers anxious to increase their own salaries. With litigation taken against infants, children, the deceased, and people without internet connections, the policy has been a controversial one from the start. And from the standpoint of public relations it has been a complete disaster - a case study of how to lose customers - not simply because of the scale of action and kinds of tactics employed, but because music fans who break 'intellectual property' laws or infringe copyright (depending on their location and alleged activities,) are often the recording industry’s most valuable customers15. Equating their habits with theft and pretending that they are in some way supporting terrorists16 is hardly likely to have helped. And neither will absurd assertions by industry lawyers that copying CD that a customer has legally purchased is “stealing”17.

The leaked emails of MediaDefender, a company which monitors P2P networks for the recording industry, and which describes itself as “the leading provider of anti-piracy solutions”18, can only have rubbed salt into the wounds of the industry’s already battered consumer base. These reveal, amongst much else, that while the recording industry has been busy trying to stamp-out unauthorised file-sharing, record labels have simultaneously been monitoring those same networks to decide which albums to market and promote19. Even more damning to the entire lawsuit campaign is the response of the chief executive of MediaDefender to an email sent by Universal Music enquiring if there was any evidence that lawsuits by the industry were leading to decreased file-sharing in educational institutions in the US. The chief exec forwarded the email to five employees with the note: “Take a moment to laugh to yourselves". Conversely, plenty of evidence exists that the industry is pissing off it's customers and artists. Just do a search for RIAA on a search engine to find some of the hundreds of anti-RIAA websites and articles in existence, or listen to what successful artists, such as Stone Roses singer Ian Brown, who supports Radiohead’s decision to give away their album on the basis that “anything that can break the music industry up, I’m supporting it”20.

Distribution and politics – the ways of the high seas

Literally thousands of bands have been distributing and promoting themselves using the internet on sites such as MySpace and Zebox ever since the middle of the 1990s. Others have gone one step further and distributed their creative output using the methods of the pirates. Brighton based electro-industrial band Swarf21 released their latest EP through the Demonoid bit torrent site that has over 1 million visitors per day22. I asked Chris Kiefer, one of the members of the band about how they got away with it. He explained: “we were in a lucky position that we could put stuff up on Demonoid legally, as we bought some of our old back catalogue off our old label, so it's ours to do what we want with. The whole concept of free music appeals so much because it means we can get our music out to so many people…Our first album probably sold maybe 1500 copies, but we've had 22,000 downloads on Demonoid”. Given that they have decided to do it this way, I asked if they felt there was a future for music labels: “they're still important for a band in terms of contacts, gigs, general moral support, and the other many dimensions of the music business/scene…However, you just can't stand against the tidal-wave of digital copying, I think bands need to find out other ways of making cash out of music, and maybe labels need to move towards a more management style of deal”.

Freudstein followed their lead and released their album Dissected and Resurrected to the same site, resulting in more than 10,000 people downloading it in two months. David, a member of the band stated “never before has an unsigned band had the opportunity to be heard world-wide for no financial outlay at all”. He explained how Freudstein sought to broaden its audience with their website and bespoke MP3 digital downloads site23. They considered doing things through I-Tunes but decided that “I-Tunes are simply filling a gap as a replacement for fading record labels and third party distribution and will in the near future be abandoned as artists seek to handle sales directly, without incurring a fee for the transaction. Surely this is the point and ultimate aim. Soon all bands will be doing everything 100% themselves”.

Nine Inch Nails (NIN) are also using the methods of the pirates to distribute their music. They must have known that releasing their tracks to The Pirate Bay (TPB) would irritate the industry because TPB is the most popular bit torrent site on the internet, with over 2 million visitors a day. It has brought itself to the attention of the US State Department not only because of its sheer size, but also because of its antagonistic and overtly pro-file-sharing stance, setting up, for example, a torrent site specifically designed to point visitors in the direction of Oscar Nominated films24! Despite attempts by the US State Department to put pressure on Swedish authorities to have it shut down, it is still going strong25. By releasing their tracks to TPB, NIN pointed the recording industry’s customer base towards - and effectively promoted - unauthorised file sharing.

Other artists have turned their guns on the industry itself in an even more obvious way. I spoke to James Fog of Fuck the Industry Productions, who explained that his experience of being signed to a UK based metal label involved his band being sent on long tours around Europe while the label kept all of the money for itself: “At the end of the day, either the band wises up, moves to a different label who will do the same thing to varying degrees, split up, or go on by themselves”. A visit to the Death to Music Productions website shows that the entire back-catalogue has been “re-claimed” from the label and is available for download26; the impression you get from the site is rather anti-capitalist, anti-war in nature, with the latest album, The Bombs of Enduring Freedom, being released for free with limited edition CDs available only by purchase direct27.

Digital commons vs. digital slavery

A fault-line between two very different camps emerges. On one side we have advocates of (and pirates for) a digital commonwealth. This includes various Pirate Parties around the world bringing 'pirate' issues to elections28, those developing new means of control over cultural works such as Creative Commons29, programmers of free and open source software such as Linux and OpenOffice30, teams of people monitoring the internet addresses used by the recording industry to track down unauthorised file sharers so that they can be made public and blocked31, and hackers that break into anti-file-sharing organisations and release their information to the masses32. The natural allies of this group are the generation of people for whom buying a CD from a shop is an alien activity.

On the other side we have the status-quo, which includes the recording, entertainment, and software corporation interests who fight against the digital commonwealth defending a business model that is well and truly past its sell-by date. Making use of power and influence through lobbyists, patronage, and sheer reach of voice in a mainstream media that they often own, defenders of ‘intellectual property’ encourage national and international governments to pursue tighter controls on what can and can't be accessed online, pass legislation to make it illegal to circumvent or to even research circumvention of DRM, and demand an increase in censorship in the name of profit using the fictional though self-creating ‘war on terror’33 as an excuse.

Fortunately, defending against technological advances seems to be a costly business: while the recording industry has been suing – and losing – its most valued customers, Microsoft has yielded to the demands of supporters of intellectual property (of which, it should be noted, it is a key protagonist itself,) and designed limitations into its new operating system, Vista, that have been described as “an astonishingly short-sighted piece of engineering, concentrating entirely on content protection with no consideration given to the enormous repercussions of the measures employed”34. Discussions on internet message sites attest to just how many people vow to avoid Vista for this very reason. Never has defending against the inevitable seemed more like shooting oneself in the foot.

The recording industry's current woes are facing many other sectors of the capitalist economy, including the film industry, the TV industry, publishers, advertisers, and others who have current control over dominant forms of culture and are trying to digitally package it up so that it is fenced away and treated as property. The question is, will the capitalist economy adapt to a new era of free data transfer by learning from the pirates, or will it continue moving in the direction of self-defeating technologies, censorship, and limitations on the freedom of speech in a feeble, King Canute-like attempt to hold back the digital tide.

Notes

1  http://www.inrainbows.com. The band plan to have a CD version produced and sold on high streets in December 2007.
2  http://www.time.com/time/arts/article/0,8599,1666973,00.html.
3  http://en.wikipedia.org/wiki/Home_Taping_Is_Killing_Music.
4  http://www.internetworldstats.com/stats.htm.
5  http://www.slyck.com/news.php?story=1085.
6 Although the industry likes to paint downloading as a criminal offence, this varies from country to country. In most countries downloading music is considered a civil offence while in others it is not even that.
7  http://www.slyck.com/forums/viewtopic.php?f=39&t=34903
8  http://www.bpi.co.uk/.
9  http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/07/ccmusic107.xml&page=1.
10  http://news.zdnet.com/2100-9588_22-6189011.html.
11  http://www.schneier.com/blog/archives/2005/11/sonys_drm_rootk.html
12  http://www.reghardware.co.uk/2007/09/24/virgin_digital_closes/. Apparently this can be circumvented if an audio-CD is burnt using the music file and ripped again using an MP3 ripper. Needless to say, the experience of the industry as a whole has been such a disaster that much of it is now jettisoning DRM en masse.
13  http://www.slyck.com/news.php?story=1212.
14 Paul Brindley, of The Leading Question, as reported in  http://arts.guardian.co.uk/netmusic/story/0,,1536887,00.html.
15  http://arts.guardian.co.uk/netmusic/story/0,,1536887,00.html
16  http://www.ifpi.org/content/library/enforcement-bulletin-19.pdf and government backed report  http://www.uspto.gov/web/offices/dcom/olia/copyright/oir_report_on_inadvertent_sharing_v1012.pdf.
17  http://arstechnica.com/news.ars/post/20071002-sony-bmgs-chief-anti-piracy-lawyer-copying-music-you-own-is-stealing.html.
18  http://www.mediadefender-defenders.com/.
19  http://arstechnica.com/news.ars/post/20071002-sony-bmgs-chief-anti-piracy-lawyer-copying-music-you-own-is-stealing.html.
20  http://news.bbc.co.uk/1/hi/entertainment/7034320.stm.
21  http://www.swarf.info, and  http://myspace.com/swarf.
22  http://www.demonoid.com.
23  http://www.freudstein.co.uk/.
24  http://oscartorrents.com/.
25  http://www.zeropaid.com/news/6485/%22US+government+behind+Pirate+Bay+raid%22.
26  http://www.deathtomusic.com
27  http://www.thebombsofenduringfreedom.com/.
28 For example, the United States Pirate Party at  http://pirate-party.us/ has links to other national Pirate Parties.
29  http://creativecommons.org/.
30  http://www.openoffice.org/.
31  http://www.bluetack.co.uk/.
32  http://www.slyck.com/forums/viewtopic.php?f=2&p=433106.
33 See for example Adam Curtis’ Power of Nightmares, at  http://www.imdb.com/title/tt0430484, Noam Chomsky’s critiques of the ‘war on terror’; info at  http://www.pressaction.com/news/weblog/full_article/spinoza09112003/, and Project for a New American Century – Rebuilding Americas Defences (2000) at  http://www.newamericancentury.org/RebuildingAmericasDefenses.pdf
34 Peter Gutmann – A Cost Analysis of Windows Vista Content Management (2007) available from  http://www.cs.auckland.ac.nz/~pgut001/pubs/vista_cost.html.