New at Reason

July 10, 2007

Jeff Taylor investigates the killing of Internet radio.

Comments

|7.10.07 @ 1:51PM|#

forgive my naivete concerning economics...but it seems to me that the recording industry has just stepped out of the supply-demand model. with nearly ubiquitous digital technology the practical costs associated with copying music makes for an unlimited supply. i mean to say that any scarcity associated with recorded music has to be artificially produced by the recording industry.

maybe we have come full circle...performers used to only be able to charge for performances as there was no way to make recordings. that changed with the phonograph and the recording industry was born. I have heard that the artists themselves make very little on cd sales compared to live concerts (unless you buy the cd at the show) and that cds are more for getting the music out as to increase ticket sales. So with nearly perfect reproduction at nearly no cost, will the recording industry go away and we go back to only paying for performances and not copies?

just a musing from someone not in the field,

mike

ed|7.10.07 @ 1:53PM|#

I know plenty of independent artists who support the new fee structure, as it means more cash in their pockets, in theory. I know many more who willingly waive their royalties in order to have their music featured on indie internet sites. The vast majority of indie sites in my experience abide by this structure, so the royalty issue is a moot point for them. Not that the compromised fee structure is not unfair to internet-only enterprises (how's that for a triple negative?) who play the same old crap that the FM stations play. There's a bit of poetic justice in that, if not simple irony.

|7.10.07 @ 1:57PM|#

Reason # 23,756 to do away with copyright

Anonymous Bastart|7.10.07 @ 2:05PM|#

Why aren't prices negotiated between the copyright holders and the radio stations? Why is the US Gov't involved in setting prices??

|7.10.07 @ 2:07PM|#

AnonBast: The U.S. Gov't is the entity that created the artificial scarcity, and hence the market, in the first place.

Anoynmous Bastard|7.10.07 @ 2:10PM|#

The official scarcity you refer to is the copyright? But that is merely the logical extension of patents. And the government doesn't set the price for patented goods, so why need it set the price for copyrighted goods?

|7.10.07 @ 2:16PM|#

Huh? If the constitution didn't create IP for the purpose of subsidizing an industry, there would be no scarcity of creative works. Of course, the argument can be made that if the government didn't create an artificial market, nobody would ever make music or write books.

|7.10.07 @ 2:19PM|#

maybe we have come full circle...performers used to only be able to charge for performances as there was no way to make recordings. that changed with the phonograph and the recording industry was born. I have heard that the artists themselves make very little on cd sales compared to live concerts (unless you buy the cd at the show) and that cds are more for getting the music out as to increase ticket sales. So with nearly perfect reproduction at nearly no cost, will the recording industry go away and we go back to only paying for performances and not copies?

As a musician, this is why I've always supported net radio and music sharing. When the money's taken out of album sales, the focus will return to live performance, where (I think) it belongs.

The idea of musicians becoming rich and famous is a radical departure from the rest of human history and was never meant to last long anyway.

Anoynmous Bastard|7.10.07 @ 2:26PM|#

I just fail to see the problem with extending intellectual property from the patent system, which covers inventions, to other forms of intellectual property such as creative works and art. Wasn't this already done in the long-long-ago, when people like Chopin and Beethoven made money writing music? Their written music was sold, just as books were sold.

I don't see why libertarians should want to do away with copyright altogether. Rather, we should seek to have the pricing system deregulated. That seems to be the problem here: inflexible pricing is dictated by the government instead of negotiated between owner and user.

Saul Zaentz|7.10.07 @ 2:49PM|#

zach wins the thread.

ed|7.10.07 @ 2:55PM|#

anon,

Good points, but one of the proper functions of limited government is the protection of property (and the crucial rights associated with it). The debate here is how far the government has gone in allegedly (over)protecting the rights of the creators and owners at the (alleged) expense of the (alleged) rights of the listener.

zach doesn't win anything, unless you think recorded music was anything less than a boon to artists and music-lovers alike. 30 people may see zach in a bar, but 30,000 or 30,000,000 may buy his records. Where's the victim?

Paul|7.10.07 @ 3:11PM|#

I've said it before, I'll say it again, never underestimate the power of government to regulate or ban something via sheer force of will. There are legislators sitting in their offices, right now as we jawbone on this board, thinking of ways to regulate, and stuff to ban.

For instance, here is one of the most unintentionally funny news stories I've read in a long time. Somewhere, a legislator is working on this problem.

|7.10.07 @ 3:20PM|#

"one of the proper functions of limited government is the protection of property"

And one of the biggest controversies is the definition of property. Advocates of strong IP believe that copyrights are fundamentally the same as traditional property (real and personal), while I see the creation of IP as a practical tool to subsidize creative industries. There is little need to continue to provide growth incentives to the industry. I guess I'm just expanding on your points to anon.

Kap|7.10.07 @ 3:53PM|#

As a DAT-taper (of nature, not bootlegged concerts) I can attest to the recording-industry-tax BS. DAT audio tapes are the same as DDS computer data backup tapes, most DAT decks won't even perceive a difference.

A 120 minute (60 meter) DAT "audio" tape? $8.41

The same thing as a "computer" DDS tape, same retailer? $2.33

Rent-seeking rendered highly visible.

They tried the same crap with "audio" vs "data" CD-Rs, but nobody bought the more expensive ones.

Note also that DDS tapes come in longer lengths than typical DAT audio tapes, some Sony DAT decks detect this and refuse to function with them.

|7.10.07 @ 4:10PM|#

zach doesn't win anything, unless you think recorded music was anything less than a boon to artists and music-lovers alike. 30 people may see zach in a bar, but 30,000 or 30,000,000 may buy his records. Where's the victim?

This is missing the point. The victims in this situation are the 30,000,000 (right...) people who are paying for my music when they don't need to be. And from an artistic point of view, (and this was my point), everyone, if I'm watering down the music to make it more accessible, or if I'm sitting at home waiting for my royalty checks rather than playing shows.

Kap|7.10.07 @ 4:11PM|#

Speaking more to the economics of the situation...

40-odd years ago when the Beatles recorded Sgt Pepper's this required $1M of studio equipment and access to an orchestra and suitable performance space. Reproducing and promoting the finished work required access to an industrial manufacturing facility (disks, jackets, posters), a graphic art department (artwork for said jackets and posters), a publicity department (to schmooze the DJs and John Cusac/Jack Black/et al.) and a logistics operation to ship the crap all around the world.

This was major capitol investment and overhead costs, far beyond the resources of even the '67 Beatles, let alone the '63 Beatles.

The economic purpose of the recording industry was to provide these services and amortize them over a roster of acts.

Contrast that with, say, Moby recording "Play" 35 years later. He did the whole thing in his bedroom studio on his PC, and presented it to his record company as a fait accompli. They handled promo and distribution.

Fast forward another 5 years to today, where a typical band does its on promo on MySpace.

Technology has obsoleted the recording industries business model, as they understood it 35 years ago.

What is particularly pathetic in their case is that there is a good business model for them to grow into, but they seem totally unwilling to try. The successful businesses on the internet are what you could call "needle in a haystack finding services": ebay, dating sites, search engines, news aggregators, watering holes for those of sadly obscure political beliefs, etc.

The music industry could evolve into some kind of MySpace/ebay/Cafe Press/Earthlink hybrid that serves as a forum for bands to be found, to publicize themselves and cultivate their communities, to sell t-shirst (handling manufacturing/shipping/payment processing), and to handle the tech of keeping a website up. They could make billions doing this, but they'd rather use the state to beat the marketplace back into their business model.

|7.10.07 @ 4:14PM|#

To clarify, yes recorded music is a great thing and I never said otherwise.

New World Dan|7.10.07 @ 5:14PM|#

I think it's funny that Reason is up in arms over this. There's nothing to prevent artists from offering their music for broadcast (net or otherwise) at better rates. If anything, this should be applauded in that the artist has more lattitude to establish their own fee schedule. Let's just dump this stupid arbitrary compulsary licensing regime and put the market back to work.

Now, when you want to talk about copyright comming back down to earth and more reasonable term lengths, then I'll be happy to jump on that bandwagon. In the world we live in, with instant nearly unlimted productions, I don't see how anyone needs more than a 20 year copyright (and really, probably much less than that).

Rhywun|7.10.07 @ 5:54PM|#

My only quibble with the article is Mr. Taylor's assumption that compressed audio isn't good enough. I submit that the vast majority of people can't tell the difference between a 128-bit AAC from iTunes and a CD. I sure can't. None of this justifies the monstrous IP apparatus that we're getting, which attacks the "problem" from the wrong angle. As others have pointed out, the middle man simply isn't necessary any more and the high fees they're demanding are unsupportable. It's not a case of the IP owners and hangers on not getting enough money, it's that they don't deserve it any more.

An Asshole|7.10.07 @ 6:05PM|#

May I just point out that this article could use some proofreading? Thanks.

spur|7.10.07 @ 7:58PM|#

I'm gonna miss soma.fm...

|7.10.07 @ 9:32PM|#

The whole issue is at the behest of the major radio companies, such as ClearChannel.

Thus, the day my favorite Live365 stations go silent, I will begin calling every ClearChannel station in town, demanding that they play such songs as "Ikaw Pa Rin" and "I Miss You, My Hawaii" -- I have a LONG list of songs that I like, which are not on broadcast radio anywhere within 1000 miles of me.

Of course, the REAL solution is to put the net radio servers in the Philippines, Taiwan, South Korea or Japan -- someplace with the technology, but out of reach of the US Copyright Office.

The Philippines gets my vote, they can use the money, English is a primary language there, and they have the trained support people.