Thursday, July 24, 2008

Record Industry Business Model Flawed?

The net has, obvioulsy, changed the business models of many businesses forever, however some old dinosaurs hang on to the belief that they can combat the Internet with legal threats.

I am talking specifically about the music industry, of course. This is on news that Britain's six largest ISP's have agreed to send tens of thousands of letters to users who have been identified as persistant file sharers.

The British Phonographic Industry (BPI) is expected to claim the deal is a victory in its war on filesharing, which has dented CD sales and severely damaged the music industry.

The six internet companies are BT, BSkyB, Virgin Media, Orange, Tiscali and Carphone Warehouse, which sells broadband access under the AOL and Talk Talk brands.

It is an interesting subject for me particularly as I am in two minds whether the Net is evil or good. I hate the fact that anonymity protects people from the long arm of the law when they are abusing people online, or worse, targetting the innocent for more henous crimes. I love the fact that the Internet has opened up the possibilities for commerce and social interaction on an unprecedented scale.

Something like the file sharing issue is odd to me, because I just think the music industry's business model has gone. I cannot remember the last time I bought a CD, it must have been 5 years ago. Everything now is dowloaded from iTunes and put on a CD to go into my car.

The thing is young people (those under the age of 24 - seen as the biggest number of file shareres) do exactly what we did when we were kids. When I was young I taped the songs I liked from the top forty, we swapped albums to tape on those double tape decks and as for video file sharing, when the VCR came in they were shared everywhere.

The only difference these days is that the dowloading of files can be tracked and, therfore, prosectued, well... the parents will be prosecuted:

"The parents of teenagers are the music industry's best target by a long shot," said Mark Mulligan of Jupiter Research. "Either they won't know what has been happening and be shocked, or will have been turning a blind eye and suddenly decide they have to do something."

Sure.. musicians rights to their music should be protected, but it seems to me that musicians and the record companies need to realise there just isn't the money in it that there was anymore. Protectionist policies like the record industry is relying on can only last so long and I will tell you why.

If I buy a CD and I loan it to my freind, have I broken the law? I don't think so. If he loans it to his freind, has he broken the law? No. If he copies it he has, but how would the record industry know?

Technoligical developements in this space are rampant, someone somewhere will develope a system that does not technically break the copyright laws and they will win a court case... after that.. it is all over.

The music industry should wake up and smell the coffee, their industry has changed and they need to start developing business models that reflect that change.

I am sure you can still buy the Encyclopedia Britannica, but when Wikipedia came along their days were numbered, if the music industry keeps the blinkers on they will go the same way.

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