“A Brief History of Record Industry Suicide”

Blogger demonbaby has an excellent post on the music industry spurred by the recent demise (and resurrection) of OiNK.

I myself have been having an ongoing debate with my veep regarding all things P2P taking various angles on the subject including legality, piracy, missed opportunities, and the general failure of the music industry to adapt to the digital revolution.

Rob emphasizes a point that I continually come back to in our discussions:

They had a chance to move forward, to evolve with technology and address the changing needs of consumers – and they didn’t. Instead, they panicked – they showed their hand as power-hungry dinosaurs, and they started to demonize their own customers, the people whose love of music had given them massive profits for decades. They used their unfair record contracts – the ones that allowed them to own all the music – and went after children, grandparents, single moms, even deceased great grandmothers – alongside many other common people who did nothing more than download some songs and leave them in a shared folder – something that has become the cultural norm to the iPod generation.

They didn’t jump in when the new technologies were emerging and think, “how can we capitalize on this to ensure that we’re able to stay afloat while providing the customer what they’ve come to expect?” They didn’t band together and create a flat monthly fee for downloading all the music you want. They didn’t respond by drastically lowering the prices of CDs (which have been ludicrously overpriced since day one, and actually increased in price during the ’90’s), or by offering low-cost DRM-free legal MP3 purchases. Their entry into the digital marketplace was too little too late – a precedent of free, high-quality, DRM-free music had already been set.

Of course, this is no excuse for stealing or not rewarding the artists for their work, but it’s clear that it is partially their own error in not creating the market conditions which would have prevented the massive outbreak of illicit P2P file sharing. 

I like to think it all comes back to Rodgers’ and Jobs’ assertion that a large part of the P2P network is enabled and driven by the music industry’s reluctance to adopt “convenience” over “hubris” as the modus operandi.

Rob seems to agree:

Trying to innovate with a major label is like trying to teach your Grandmother how to play Halo 3: frustrating and ultimately futile. The easiest example of this is how much of a fight it’s been to get record companies to sell MP3s DRM-free. You’re trying to explain a new technology to an old guy who made his fortune in the hair metal days. You’re trying to tell him that when someone buys a CD, it has no DRM – people can encode it into their computer as DRM-free MP3s within seconds, and send it to all their friends. So why insult the consumer by making them pay the same price for copy-protected MP3s? It doesn’t make any sense! It just frustrates people and drives them to piracy! They don’t get it: “It’s an MP3, you have to protect it or they’ll copy it.” But they can do the same thing with the CDs you already sell!!

If intellectual property laws didn’t make Oink illegal, the site’s creator would be the new Steve Jobs right now. He would have revolutionized music distribution. Instead, he’s a criminal, simply for finding the best way to fill rising consumer demand. I would have gladly paid a large monthly fee for a legal service as good as Oink – but none existed, because the music industry could never set aside their own greed and corporate bullshit to make it happen.

It’s always puzzling to me when this discussion comes up because my veep is the ultimate entrepenuer.  I tend to believe that a large majority of people obtaining music via P2P networks would gladly pay for music if it were the case that the music came DRM free.  I see the legal assaults by the music labels as a missed opportunity to reinvigorate sales and reinvent the industry instead of waging a righteous battle for capitalism by suing small time thieves.

In the end, what good will the industry have gained by alienating customers and offering an inferior product (DRM’d MP3s)?  Surely, they will have gained the allegiance of a generation of lawyers whose pockets are being lined by an industry too foolhardy to recognize an opportunity when they see one.

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