Cartman, that most recognizable face of "South Park" (who would probably grow up to be a '70s promo guy), defined the way to get rich in the new millennium: step one, steal underwear; step two (Cartma
Larry Kenswil is president of Universal Music Group's eLabs.
Cartman, that most recognizable face of "South Park" (who would probably grow up to be a '70s promo guy), defined the way to get rich in the new millennium: step one, steal underwear; step two (Cartman shrugs his shoulders and puts his hands in the air, signifying "who knows?"); step three, profit. Critics of content owners -- that is, everyone who does not own content -- wonder why no one in the business seems to recognize the obvious riches of the Internet. They say those riches would be ours if we'd only give in to it, let it envelop us, let it steal our underwear, and then reap the profits generated by . . . well, by who knows what?
Fred Goldring is the latest to offer his advice in these pages (Billboard, July 16). Unlike many of our critics, Goldring has a real job at which he excels and offers his advice as a friend of the industry, not as one of the "death to the Man" or "the music business is full of idiots" bloggers.
But that doesn't make him right. Goldring reasons that (1) 3 billion MP3s without digital rights management are traded each month on illicit peer-to-peer services (the greatest underwear stealers of all time), but (2) many, many fewer tracks are actually bought in DRM form on iTunes et al., therefore (3) DRM must be the reason legitimate services aren't growing faster. "Support initiatives that will allow unlimited access . . . with no conditions or restrictions," Goldring suggests. Assuming he would agree that one condition we may want to invoke is that the downloaders pay for the music, DRM is the only difference between what he is asking for and the offerings on current subscriptions services and download stores.
After suggesting removing the DRM, Goldring offers no insights into why that would fix the problem, nor does he provide a new business model that would compensate those who own and create content. Like Cartman, he is shrugging his shoulders and putting his hands in the air.
The DRM on iTunes allows you to transfer the songs to an unlimited number of iPods (the limitation to iPods is Apple's choice, not ours) and burn each song as many times as you like to a CD. If you want it in MP3 form, you can re-encode the CD into MP3. These restrictions do one thing only: They stop a fair number of people from sharing the files on P2P services or with their freeloading friends, but only if they don't feel like going through the rip and re-encode process. This is why P2P has more file transfers than iTunes? Or why more people don't use legitimate subscription services? Wow, I thought it had something to do with the fact that getting music for free sure beats having to pay for it.
But let's take Goldring's suggestion to its extreme, as advocated by a few -- some well-meaning folk, some socialists and some copyright-policy exhibitionists. That extreme is the compulsory license for sound recordings. Let the music flow for free over the Internet and levy a per-user fee to be paid to the copyright holders, bringing an end to the copyright "monopoly." The government will decide what is good for the owners to get paid.
A royalty of five bucks a month per Internet household to be paid to sound-recording owners has been proposed by some generous souls. This would add up each month to something like $300 million -- and more as the number of Internet households grows. That's a deal; I'll take it.
But wait, P2P is not just for music anymore. What's the levy for owners of copyrights to the movies, TV shows, games, books, artwork, photos and, of course, pornography being traded? Do they each get their own five bucks? How much are we going to have to pay for Internet access? And what about my mother? All she does is send e-mails and play Snood. She has to pay all these levies because the socialists and the "music's gotta be free" chorus won the day? What happens if artists, like the Beatles, don't want their music online at all? Is it right that the government just order this? And don't try to suggest systems for filtering out that unauthorized stuff. The Internet service providers are on record as saying filters on that scale are technologically impractical.
Compulsory licensing means loss of all control, and not just for big, fat, cigar-chomping types like me who work from the beach on their cell phones. No, it means loss of control for those without record company advances as well. Want to be in a local band that makes a good living selling 50,000 CDs to fans through its Web site? Forget about it. Now you're going to get your pro-rata share of a fixed pool of money based on some actuarial valuation of your tracks compared with the whole. Bet that share won't be 50,000 CDs worth.
Let me be the first to tell you a secret: The legitimate online music business is exploding. There are multiple sources of revenue that are growing by double-digit percentages every month. The public has gone from not knowing wrong from right, to knowing what is wrong and knowing where to get what is right. All of this has been done, despite the propaganda being written, without suing customers-just illegal distributors of music.
The Grokster decision isn't "meaningless." We know it to be a very important decision, not because anyone who works at a record company thinks unauthorized file-sharing will suddenly disappear, and not because anyone is so naive as to think we can sue into oblivion everyone who is illegally downloading. Rather, MGM v. Grokster is a unanimous affirmation that society recognizes that businesses should not be based on theft. The decision, along with the growing realization that stealing -- even if it is "only" music -- is just wrong, will further spur all the legitimate services that already are gaining traction. The Supreme Court has paved the way for all sorts of innovative services, like legitimate P2Ps.
The music business is less similar to Cartman on "South Park" than to his Lazarus-like pal Kenny: You may think we're dead after reading all that is written about us, but we'll turn up alive the next week, looking better than ever.