I decided to use my blog for the essay development and general notes on the subject of copyright & piracy. For some reason, I take lots of notes on paper but don’t often look at them later (especially when I need them), so I’ll be collecting my notes regarding the audio essay here, and transferring the ones from paper in digital form. After all, the essay is meant to be written on a computer, so it’s not such a bad idea to have all my notes in digital. This post will probably be updated on a daily / weekly basis, or maybe I will just add new ones. Ideally, it will help me get my head around the task and my response to it.
I’ve chosen Question e. from our Assignment:
Choosing one case study around ‘Piracy’ or ‘Copyright’ (such as a particular website) analyse the social, cultural, political and historical contexts that have impacted upon it.
I think a more focused and specific theme (ie. a particular case study) would allow me to better understand and work on the assignment; what is more, choosing one particular subject makes it easier to decide what and how I would draw examples from other case studies if needed. After all, things don’t happen in vacuum (plus, the assignment itself requires focusing on context), so it will be more than great to draw similar examples from other case studies, but always try and keep it concise and to the point.
At the time of starting this post, my initial intention is to write about Grooveshark – how they are dealing with copyright (it’s a website with free /ad-supported/ and paid subscriptions for unlimited access to music), what advantages and disadvantages their business model has, how the different contexts that they operate in complicate the situation, and how they are targeting these issues. There are some ‘grey areas’ around Grooveshark and the way they operate, especially in terms of copyright, and I intend to educate myself about them, and hopefully form a deeper understanding of the copyright issues in the music distribution world, as a result of this assignment.
Grooveshark is a service I use pretty much on a daily basis, and am a strong supporter for. It is an independent company (not part of any of the big media conglomerates), which are trying to make the best out of the current situation with online content, access to music and paywalls, while keeping music lovers and record labels happy, and make a legitimate profit in the meantime. I’ve been a user and part of the Grooveshark community for more than two years now, and have been helping out the team. About a year and a half ago, I wrote them a feedback note, to which I then received a reply in Bulgarian – turned out one of the guys in the support team was Bulgarian. Since then, I’ve been helping out with translating the Bulgarian version of the website, giving them feedback and comments about the website and its user experience, commenting on future functionalities etc. In return, the Grooveshark team has given me a free subscription to the premium service, and that’s pretty much the only ‘affiliation’ I have to the company (thought I’d put a disclaimer here, just in case). I’m curious to find out and conduct a focused research about their ways of operation, what problems they had when starting out, what problems they are still dealing with, etc. I’m still not sure if I’d be talking to anyone in the company, or I will just rely on publications by and about them. What I know is that I am generally interested in online businesses and online content distribution, especially when it comes to music, so it will be interesting and useful for me to work on this.
So, my initial notes:
When first introduced to the assignment and the lecture on copyright, here’s what I was thinking about:
Media projects – use with permission and CreativeCommons
- For my boss’ website, I’m using photographs from Flickr to illustrate some blog posts and articles; these are all photos that have been ‘labeled for reuse’ (quoting from Google Images’ Advanced Search options), and I’ve made sure I am linking back to the original Flickr pages & quoting the photographers’ names when needed. The photos were all labeled with CreativeCommonslicenses at the point of uploading on Flickr by their authors, and since we’re not using them as the main content (or product), and just for illustration, I think we’re doing the legal thing here.
- My own recent video productions include free for private use and / or CreativeCommons music. In my ‘Meanwhile in Coventry’ video, I used a track by Monokle & Galun, which I found on Vimeo’s MusicStore, downloaded from there, and credited properly. My other recent video, ‘Juxt’, was made with a soundtrack by Moby, downloaded and licensed from Moby’s website for filmmakers, mobygratis.com. I actually went through the licensing process (it takes around a day), where I requested and was granted a license to use the track for my non-commercial project.
My personal examples of using music without permission
- An old remixI created using some of Linkin Park’s tracks. I was thinking it was a good example of a mix that might be used in promoting their album, in a 30-second / 1-minute radio clip with release dates etc. Used without permission.
- Our recent 4-week project where it was decided for our group’s production to use José González’ track ‘just because it’s good’. It was credited, but used without permission.
While in the lecture, listening all about England and its take on copyright, I was wondering: OK, but that’s just England. What about all the other countries in the world? I come from Bulgaria, so I went on to check what relevant dates and events I could find around copyright protection back home.
It turns out there is no adequate sources online to quote about the history of copyright in Bulgaria. The articles I was able to find only refer to the legal part of the concept, and I’ve found pretty much no information about the concept and / or history of copyright protection. Here is what I *did* find, after all:
In an article about ‘where copyrights come from’, it is cited which parts of which legal documents in the Bulgarian legislation suggest copyright protection. The main document, Закон за авторското право и сродните му права (Copyright and Related Rights Act – ЗАПСП) dates from 1993 – it’s the first and main legal document that deals with the concept of copyright protection in Bulgaria after 1989. One source I found (a law resources website, probably created by law students, plus there was no proper date of publication, so I can’t really rely on it too much) also lists the relevant legislation in dealing with copyright claims. In the same document, I found out that one of the first (or the first) time Bulgarian law had to deal with regulating copyright was when the Parliament had to ratify the Berne Convention for the Protection of Literary and Artistic Works (here’s the Paris Text from 1971), which was originally signed on 09.09.1886 in Berne (then amended a few times throughout the years), and ratified in Bulgaria on 26.06.1974. Another convention that was relevant to Bulgaria’s legislation was the Universal Copyright Convention, signed in 1952 in Geneve, plus a few more specific documents.
The main Copyright and Related Rights Act – ЗАПСП was signed in Bulgaria in 1993 and it is the document still used today (of course, amended a few times), for the needs of copyright protection.
(Source: http://www.bg-pravo.com/2010/10/1_4514.html Източници на авторското право, in Bulgarian, not quite sure how reliable the source is as it lacks proper reference to authors, dates and / or sources)
http://www.law.cornell.edu/treaties/berne/overview.html (Berne Convention, Paris Text from 1971)
http://merlin.obs.coe.int/iris/2010/7/article9.en.html (Draft Amendments to the Copyright Act in Bulgaria)
http://www.ejc.net/magazine/article/a_brief_history_of_copyright_on_the_web_part_one/ (A brief history of copyright on the web: Part one)
http://www.avtorskopravo.com/ (Списание Авторско Право – a magazine dedicated to copyright and intellectual property protection in Bulgaria; in Bulgarian)
Right. Back to my notes.
I liked the quote ‘Standing on the shoulders of giants’ – used to imply all new ideas draw upon old ones.
I was very much impressed by the (now seemingly obvious) statement that remixing (and citing) someone else’s audiovisual work is the same as citing someone’s statement in your own text. Most of literary and academic content relies on this principle, and it’s not only allowed but absolutely vital for any argumentation to draw upon someone else’s ideas and concepts. Nothing we create or say exists in vacuum, so it is absolutely necessary to have the existing culture, or what copyright advocates prefer to call ‘content’, free of basic use constraints.
In my opinion, the economic grounds for paying for media artifacts should be based on the material means of distribution; on the medium that is used to distribute the content. I think content should just be the starting point for the experience that you pay for.
For example, you get the electronic version of the book / music piece / video for free, because you could argue electronic distribution is so cheap that we could also say it has a zero marginal cost. Then, if you want to have a physical, printed version of the book, you pay one price. If you want a signed printed copy of the book, you pay even more – it’s the added value of the experience that you’re happy to pay for. Also, it suggests that the market regulates the price and the book (book as a form) costs as much as the client is prepared to pay for. But the knowledge, the ‘content’ of the book should remain free. Of course, the (exclusive or non-exclusive) rights of the author to print / make available as audiobook / make a live reading etc., could be rented to one particular entity where the author can outsource the material form distribution of his work (or he can do it himself), but the content itself should remain free to use, reference, and remix – as long as the author is recognised as one, and is appropriately attributed. Of course, that is only relevant to non-commercial use and reuse.
Another example, a music piece. The content itself, you could argue, is just words and notes mixed in a specific way. So the content is available for free access and use in its most basic form (for example online), but then all the ‘premium’ ways of physically experiencing the content will have a price. You pay for the CD copy / concert ticket etc. and that is the physical experience. But the content itself is free for basic use, reuse and reference.
Same for films: you have a basic, free option where the content is in a quality enough to be recognised as *this* film and not any other, but then all the premium ways to experience it have a price tag – for example, 3D / 4D / interactive / I-don’t-know-what-more cinema experience vs. the basic edition you can watch by yourself at home.
One of the links we were given as a starting point is quite relevant here:
In this TED talk, Larry Lessig argues that audiovisual culture for the people today is what folklore and literary culture used to be for the people in previous generations. Another quote by him (from RIP: A Remix Manifesto): it’s ‘writing in the 21st century’. Also, if you think about the very origins of today’s culture, they date back to the times of folklore – where there was no concept of ‘authorship’ – no one was recognised as an author of the basic myths and tales; even today, only particular interpretations of the stories are subject to copyright (think the Snow White story and its Disney interpretation – here’s an article showing the Disney Corporation owns the rights to the dwarfs’ names, because they invented them, but the story itself is not copyrighted)
It’d be interesting to stop and think for a moment, what would have 20th century culture looked like, if the ideas and concepts remained in the public domain and only specific interpretations were copyrighted? What if every character ever invented, stayed with its author in its basic form, but was freely available to be developed by everyone that got inspired?
Some more assorted notes and thoughts:
- I need to check out more of TED’s talks about copyright and piracy for relevant examples for my argument
- revisit Chris Anderson’s book ‘FREE: The Future of a Radical Price’for ideas; also: The Long Tail and the pricing of single tracks on iTunes and the likes (digital distribution of MP3) – the single track pricing is still based on the ‘full album’ price which in turn is based on the price of a single CD. A CD is a physical object, so basing the prices of digital, non-physical goods on the price of physical goods (with better quality as well! Think about the CD (uncompressed) vs. MP3 (compressed) quality) is not economically logical.
- iTunes vs Grooveshark – paying for the MP3s vs paying for *access* to online streaming; central distribution vs. central repository; also: where do you get high quality FLAC / WAV / AIFF files if you want to pay for them online?
- List of films in the public domain in the United States – http://en.wikipedia.org/wiki/List_of_films_in_the_public_domain_in_the_United_States
- An interesting mention in the lecture: the Hollywood studios were founded by artists and filmmakers who wanted to escape the restrictive copyright rules & monopoly of the Motion Picture Patents Company in New York – the Hollywood studios were founded on the grounds of piracy – using the MPPC’s patents without valid licenses; creativity, however, flourished. (another relevant link here http://www.filmreference.com/encyclopedia/Independent-Film-Road-Movies/Independent-Film-INDEPENDENCE-IN-EARLY-AND-SILENT-AMERICAN-CINEMA.html)
- Freesound.org, Jamendo, The Free Music Archive, Last.fm, Bandcamp and similar sites for legally sharing and downloading music and sounds that are free for private and non-commercial use
- Similar to Girl Talk, my favourite remixer: Pogo;
- a question worth asking: how do bands / artists react to remixes? We’ve seen the labels’ reactions – but they’re just salesmen. It’d be interesting to see what the actual creators of the music think.
- Another thought: culture is a reflection of the basic human needs and rights of information, communication, expression and emotion; it’s enabling people to *be*. Any restrictions and criminalisations of the execution of these rights are unnatural and repressive.
- (Not yet considered) Pharmacy (case study: Brazil); software (case study: Microsoft; Mozilla?); Monsanto?
- The song ‘Happy Birthday’ is copyrighted (!?)
http://www.snopes.com/music/songs/birthday.asp (sources at the end)
- Piracy (selling / not selling) vs. remix (saying)
- Do artists care (about copyright infringement)?
- Jonathan Worth & Phonar – the concept of reliability? http://www.professionalphotographer.co.uk/Magazine/The-Business/Turn-on-tune-in-drop-in-to-Phonar
- http://www.extremetech.com/computing/105437-riaa-claims-you-do-not-own-your-itunes-music-purchases RIAA claims you do not own your iTunes music purchases
If “piracy” means using the creative property of others without their permission—if “if value, then right” is true—then the history of the content industry is a history of piracy. Every important sector of “big media” today—film, records, radio, and cable TV—was born of a kind of piracy so defined. The consistent story is how last generation’s pirates join this generation’s country club—until now.
(Lessig, Free Culture (p. 67 in the PDF version)) – to further read & research; also – YouTube’s case – starting off as a place for pirated video content?
- Grooveshark – founded on the borderline with piracy (to check!); advertising model?
- http://techcrunch.com/2008/04/15/grooveshark-launches-web-media-player/ (interesting comments)
- as YouTube etc. – it stays online until someone raises a DMCA claim?
- http://www.mediainstitute.org/new_site/IPI/2010/090110.php – EMI heavily in debt; whack a mole approach
- EMI sale: http://www.reuters.com/article/2011/11/11/us-vivendi-idUSTRE7AA35J20111111
- http://www.thecmuwebsite.com/article/universal-sues-grooveshark-again-with-evidence-senior-groovesharkers-themselves-upload/ VERY NEW AND RELEVANT
- Reddit thread: http://www.reddit.com/r/technology/comments/mi1o8/grooveshark_bosses_uploaded_music_say_universal/
- Basic company information: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=45837115
- The Boat That Rocked (film) – how close was it to reality and does it have any relation to piracy (apart from the emotional bit?); where did the term ‘pirate’ come from?
- Grooveshark, Last.fm, Vimeo, Spotify, YouTube (YouTube – taking care of music licenses, but what about video?), iTunes, Rhapsody, Pandora? – similar case studies
- To check out: http://groovesharkblacklist.tumblr.com/
- CD Baby?
- check out the sources on Grooveshark’s Wiki page https://en.wikipedia.org/wiki/Grooveshark
- Found out if and how the company generates profit! http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=45837115
- Funding: http://www.quora.com/How-much-funding-has-Grooveshark-raised
- Grooveshark album promotions – Beady Eye, Massive Attack, etc.
- http://blogcritics.org/music/article/musicians-find-fans-at-grooveshark-artists/page-2/ – success story – artists exposure on Grooveshark & online sales
- Old model: http://www.clarkhoward.com/news/clark-howard/family-lifestyle/spiralfrog-is-dead-long-live-grooveshark/nDd5/
- Content distribution – different tracks available ‘online only’, some available for mobile devices, others not (especially true for YouTube – geographically and platform restricted)
- NEW: Sun Records http://www.prnewswire.com/news-releases/grooveshark-signs-licensing-deal-with-sun-records-130717218.html
- The case with Pink Floyd’s music online?
Grooveshark vs. Majors
- http://news.cnet.com/8301-17939_109-10070510-2.html (deals with SESAC, ASCAP and BMI)
- Grooveshark using P2P technology for file distribution and clearing licenses only http://www.forbes.com/2008/08/11/napster-grokster-grooveshark-ent-tech-cx_kw_0811whartonfilesharing.html
- Grooveshark launching Press release: http://arstechnica.com/old/content/2007/09/get-your-grooveshark-on-new-p2p-service-will-give-users-a-cut-of-the-sales.ars
- http://www.digitalmusicnews.com/stories/041811grooveshark Get Ready: Grooveshark Promises a Fight to the Finish…
- http://news.cnet.com/8301-13526_3-20017633-27.html !!
- http://www.cnet.com/8301-19709_1-9793028-10.html?tag=txt;title – Interview with Sam – CEO of Grooveshark
- DMCA (Wired) http://www.wired.com/threatlevel/2008/10/ten-years-later/
Quotes from an article on DRM rights ‘Don’tThinkTwice, It’s All Right: Music Piracy and Pricing in a DRMFree Environment’
However, it is also possible that cumbersome restrictions imposed by DRM have contributed to the slow growth in digital music sales. Because DRM-encoded music files limit many aspects of a consumer’s ability to listen to music, it should not be surprising if DRM also limits the market for such products.
Based on two studies of more than 2000 college students, the results suggest that despite the potential advantages offered by some DRM restrictions, on balance, the elimination of DRM has a net positive impact on both producer
profits and consumer welfare. The reasons for these surprising results are twofold: (1) a decrease in the propensity to pirate due to the removal of DRM, which, as we explain subsequently, is because DRM removal results in
some hardcore pirates converting to paying customers, and (2) an increase in market participation by low-value consumers due to the impact of an increase in their utility and WTP.
*WTP – willingness to pay
DRM definition from the article:
Digital rights management, or DRM, is a term used to refer to the technical systems and technologies that digital publishers and copyright holders use to exert control over how consumers may use digital works.
It was not until viable DRM-protected music services, such as Apple’s iTunes, were launched that consumers had a brand-name outlet to purchase music for download from the major music publishers. Digital rights management can also offer consumers new ways to purchase music, such as Microsoft’s Zune Pass, which offers unlimited music downloads for $14.99 per month (Microsoft Corporation 2007). Without DRM, music publishers would be unlikely to allow retailers such as Microsoft to offer services like these.
These restrictions may limit the utility consumers realize when purchasing music that has DRM controls. For example, while fair-use legislation may allow consumers to create a private copy, DRM can take away that ability. In this way, DRM can impose many restrictions that consumers might find unfair or inconsistent with their desired ability to use purchased music. Finally, DRM also raises the issue of data privacy, given that some types of DRM controls have the ability to track individual consumer usage of music files (Cohen 2003).
There appear to be three main requirements for a sustainable business model if the absence of DRM restrictions on music files increases file-sharing activities. First, there should not exist any significant, negative impact of
file sharing on the sales of alternative music formats from which the industry derives substantial revenues (e.g., CDs primarily, but also vinyl records and music videos). Second, file sharing should enhance the demand for complementary, revenue-generating goods and services, such as other digital songs and concerts. Third, lifting DRM restrictions should enhance consumers’ utility and increase overall sales of digital music files. This may be achieved with files that are more flexible (transportable, customizable, playable, shareable with friends) and by converting a certain segment of nonpurchasers or pirates into paying customers.
the empirical relationship between piracy and declining album sales has not been clearly established.
Thus, on balance, it is difficult to argue that DRM removal has a significant, negative effect on CD sales. Plausible alternative explanations for the observed decline in CD sales include variable economic cycles and the increasing competition from other forms of entertainment, such as digital games, movies, television shows, concert DVDs, and so forth (Oberholzer and Strumpf 2009). Second, regarding the increased sales of complementary goods as a result of file sharing, recent evidence from the economics literature shows that as DRM restrictions are lifted and music availability increases, the price of complementary goods (e.g., concerts) also increases, thus enhancing “sales” and revenues for many artists (Krueger 2005; Mortimer and Sorensen 2005; Schulz 2009).
Desai, Purohit, and Vernik (2009) state that the most limiting restriction for consumers was the requirement of limiting songs to only one device and that this lowered utility for all consumers.
Because many digital goods are often experiential goods, digital copies may also act as product samples, allowing consumers to find out which products fit their own preferences more closely (Chellappa and Shivendu 2005).
Previous research has shown that the value of possessing products resides not only in the direct utility and enjoyment that consumers derive from their use but also in their importance in forming social relationships and their role in expressing the sense of self (Richins 1994).
An influential study by Salganik, Dodds, and Watts (2006) demonstrates that the success of digital songs depends to a large extent on
the knowledge of what other customers are downloading. Thus, removing restrictions on the ability to share files with friends may increase the social network effects of music consumption, thus increasing consumers’ WTP for legal downloads.
Indirect appropriability (Liebowitz 1985) refers to the notion that the ability to copy increases the value that purchasers place on originals, thus increasing their WTP and allowing sellers of originals to incorporate and capture the value of these copies while pricing originals.
(my notes: price people are willing to pay vs. value they place in the product / service – sharing music with friends – the friend now possesses the file, but if they don’t put the same value as the friend that initially bought the track, that’s not really a customer lost)
We initially make these calculations under the assumption of a zero marginal cost of production (so that revenues are equivalent to producer surplus) because the music industry’s cost structure is characterized by high fixed costs
and low marginal costs. For example, marketing a potential hit song may cost more than $100,000 (Vogel 2007). In contrast, the variable costs of distributing and selling an additional copy tend to be very low. According to industry executives, the manufacturing and distribution costs of a CD amount to approximately $1.00 (10% of the price to retailers), which corresponds to approximately $.10 per song. With digital music, such costs are much lower because digital files can be produced and distributed over the Internet with virtually zero incremental costs.
[…] Thus, our research provides strong preliminary evidence that a simultaneous strategy of DRM removal and price reduction is beneficial for both music consumers and producers.
According to our estimates, only a marginal cost above $.30 would justify a $.99 price.
The estimated positive impact of eliminating DRM suggests that the potential benefits we discussed previously (particularly the benefits from social network effects) play an important role in the market for digital music. This value
enhancement process can also be complemented by the elimination of a psychological phenomenon known as reactance. Reactance theory (Brehm 1966) considers how people react when their personal freedoms are reduced, threatened, or eliminated (Clee and Wicklund 1980; Lessne and Venkatesan 2006; Thomas, Donnell, and Buboltz 2001). Reactance often manifests through direct engagement in behaviors that are prohibited or curtailed and the
exhibition of aggression toward the offending agents (Thomas, Donnell, and Buboltz 2001). […] Thus, it is reasonable to hypothesize that DRM restrictions have the dual effect of reducing consumers’ utility for legally bought music and increasing reactance among consumers who value the social network benefits of sharing music, leading many of them to develop negative attitudes toward the industry and possibly also engaging in exactly the type of behavior that DRM tries to prevent (i.e., piracy).
Of the sample, 38% signaled a “reactance mode” by choosing the option “Once I purchase music I should be free to do what I wish with it, including sharing it with my friends” instead of “Being able to share my favorite music with my friends gives me pleasure.”
The lack of this second-order effect also suggests that under certain circumstances, many consumers will prefer to pay for a product they can sometimes get for free. There are some theoretical explanations for such a phenomenon, including evidence from the economics literature that people take fairness and reciprocity considerations into account rather than just pursuing their own material self-interest (Bolton and Ockenfels 2000; Fehr and Schmidt 1999; Rabin 1993).
Tristan Nitot, the president of Mozilla Europe, expressed the following sentiment regarding consumers and digital music: “So if it becomes more painful for a legitimate customer to use a product than it is for the pirates, then that’s a problem” (Butcher 2007).
Specifically, we find that the recent trend toward reducing DRM controls may actually increase overall revenues for digital music while reducing the number of consumers that might be classified as hardcore pirates.
In addition, according to the RIAA, students were the worst offenders: “We know that piracy is most acute on campuses. Students have high-speed access, and have more time than money” (Clark 2007). This is echoed by Oberholzer and Strumpf (2007), who believe that most downloading is done over peer-to-peer networks by teenagers and college students, groups that are “money poor but time rich.” To provide additional support for the existing notion that piracy may not be a major issue outside the college student population, we use evidence from data we had collected previously from a small sample of 141 music consumers in an executive-MBA class. These consumers were midlevel executives, and our hardcore piracy estimate for this sample (for a DRM-encoded song) was only 1.2%.
- Quotes from the Discussion Paper An Economic Analysis of Online Streaming: How the Music Industry Can Generate Revenues from Cloud Computing
This work intends to provide a theoretical analysis of a business model which offers the requested music as a so called stream to potential customers. The origin of such model is a conception which allows for consumption of music without physical possession of the music file. Therefore music will be stored on a server and can be listened on demand by consumers. Such a business model is generally funded through two sources. On the one hand, customers who made a subscription are allowed for legal free of charge listening. Funds are generated through commercial breaks between the particular songs (analogous to free TV). On the other hand, ’flat-rate contracts’ are offered to customers allowing for unlimited and ad-free access to the musical content after the payment of a monthly blanket fee.
By imposing a two-sided market model on the one hand combined with a direct transaction between the streaming service and its flat-rate subscribers on the other hand, the investigation shows that it can be highly profitable to launch a business which is free-of-charge for subscribers if advertising imposes a weak nuisance to music consumers.
(P2P sharing platforms & downloads) Although this proceeding is illegal, the mass of offered platforms and transactions on it makes it impossible for owners of the respective artwork to enforce their copyrights.
Technical progress and growing availability of online services let recently upcoming business models, which provide a service allowing for listening to streaming music on the internet, enormously gain in importance.
*In 2009 Eric Daugan, Senior Vice President, Commercial Strategy, Warner Music International EMEA, enunciated the future of selling music as ’a vision that music is available everywhere, at any time and in any place, but the biggest question is how do we monetise it in an environment of widespread piracy?’ (see: IFPI (2010)).
The underlying idea consists in inducing music consumers to listen on demand to music from the so called ”cloud” on the internet instead of possessing this music physically in the form of digitalized files.
*Long way before the launch of streaming business models, namely in 2005, the Indicare project, which investigates consumer issues of Digital Rights Management, published a survey within 51 percent of the
surveyed music consumers respond that listening of music is of higher importance for them than storing (see: Indicare (2005)).
The importance of the enormously growing streaming business is supported by having a closer look on the development of the digital music database Spotify which was launched in Sweden in 2006.
Despite the versatile criticism, it seems that major labels invest hope in streaming business models as a future source of income. In the case of Spotify, licensing agreements with all the four important major record labels (Universal, Sony BMG, EMI and Warner) were made. Moreover, all these four big record labels have been reportedly invested in Spotify.
*See: ”Behind the music: The real reason why the major labels love Spotify” by Helienne Lindvall (http://www.guardian.co.uk/music/musicblog/2009/aug/17/major-labels-spotify, August 17, 2009; last consulted on February 26, 2011).
It seems that streaming music business models are gaining in importance for music labels which search for alternative forms of funding.
Despite the promising launch of Spotify or Simfy it is currently inevitable that one has to assess that streaming services still do not earn enough revenues to compensate artists sufficiently.
*One million plays of Lady Gaga’s song ”Poker Face” earned the artist $ 167 (See: ”Spotify rejects claims that it ’rips off artists’” by Emma Barnett (http://www.telegraph.co.uk/technology/7590782/Spotifyrejects-
claims-that-it-rips-off-artists.html), April 14, 2010; last consulted on March 9, 2011)
The trend is towards that musicians are increasingly forced to gain revenues from complementary products and services to their music. This includes ticket sales for live performances* as well as merchandising.
*This development is supported by Krueger (2005) who surveys that from 2000 to 2003 ticket prices for live performances sharply increased compared to the growth of inflation.
Gayer and Shy (2006) develop such a model and show that free-of-charge provision of music increases popularity of an artist and therefore increases the demand for complementary products and services to the artist’s
music. In addition to an increase in the sales of complementary goods, free-of-charge music listening can lead to a positive effect on revenues due to sampling. The idea behind is that music consumers can use free-of-charge music in order to prescreen the variety of music they are interested in, and then they are assumed to be willing to pay for the original material if they find a perfect match between the music and their preferences.
In recent years advertising on media platforms attracted a lot of attention. Most of the literature deals with media platforms competing for customers in advertising as well as in content.
- Other possibly relevant papers: The Public and Private Meanings of Possessions; IFPI Digital Music Report 2010: Music how, when, where you want it; The Economics of Real Superstars: The Market for Rock Concerts in the Material World (2005);
- Live Performance, Copyright, and the Future of the Music Business (2009)
This article considers whether the emergence of business models based on free digital delivery of music and other content have rendered copyright protection less necessary or justifiable. Falling production and distribution costs have led many scholars and popular commentators to conclude that creators can and should embrace free distribution models for copyrighted works. In particular, many contend that the recording industry can survive and prosper by producing and freely distributing recordings as a form of advertising for the concert business. Some have further concluded that copyright law may need to change to reflect this new reality.
Blog posts from Grooveshark, some semi-related
Some notes / attempts at writing the actual essay
Grooveshark.com and its attempts to redefine digital music piracy as a sustainable business model
Groove is in the heart, business is in the mind
Grooveshark.com claims to be ‘the world’s largest on-demand and music discovery service’. It is the main business of Escape Media Group, founded in March 2006 by Sam Tarantino, Josh Greenberg and Andres Barreto, and based in Gainesville, Florida.
Grooveshark operates on the borderline between legal music distribution and copyright infringement.
Inbetween the traditional model and a new one, having the law on their side at the moment…
The Business & Management Dictionary defines ‘piracy’ in its 2007 edition as the ‘illegal copying of a product such as software or music’.
‘We are the market, we know what we want’
Josh Greenberg, Co-founder of Grooveshark, as quoted on startupquote.com
Where does music come from? Not so long ago, music was only possible when someone was singing – or had a musical instrument and was playing it. Each time music ‘happened’, it was a different and unique experience. This started to change in 1877 when Thomas Edison invented and patented the first technology that could record and reproduce music – the phonograph.
Since then, various media and technical means have been used to record and reproduce music – among them the phonograph cylinder, the gramophone disc, the vinyl microgroove record, magnetic tapes, compact discs, and most recently – digital files.
However, while the recording and storage media kept changing and evolving, the distribution models for music stayed pretty much the same. Irrespective of the storage medium, be it analogue or digital, music could only be distributed in a physical form – compact discs, cassette tapes and vinyl records being the most popular forms.