You see the recording industry and radio as complexly intertwined institutions which follow somewhat different logics. Can you outline that relationship for us and explain why it is key for understanding the current copyright wars?
Radio networks and record labels both evolved as natural “frenemies” in the early 20th Century. This dynamic was partially due to the technological breakthroughs of pioneering inventors like Edison, Tesla and Marconi, but it was also shaped in large part by political and economic forces. For instance, until World War I, most radio transmissions in the US were peer-to-peer, with hundreds of thousands of individual hobbyists sharing their music and commentary freely with any who cared to listen. There was no such thing as a broadcaster or a receiver; every device was capable of both sending and receiving information. This only changed after the federal government began regulating radio in the 1920s, as part of a larger quid-pro-quo deal with commercial interests.
The larger point is, neither radio networks nor record labels were necessary given the affordances of the technologies they use; they developed in contradistinction to one another, and in response to larger social forces. Record labels evolved around a retail model, controlling the distribution of music through material channels, and radio evolved around an advertising model, monopolizing the right to distribute music through intangible channels. Record labels provided royalty-free content to fuel radio listenership, and radio provided free promotion for the goods that labels sold. There were tensions over the years (for instance, periodic “payola” scandals), but this system held for most of the 20th Century, and sustained itself through legal, technological and economic developments that reinforced the initial, largely arbitrary, distinctions between the two sectors.
Given this history, it’s easy to see why the Internet poses such a threat to this complex and delicate media ecology – by altering the technological playing field and challenging longstanding legal and economic norms, it essentially erodes the wall that separated radio from retail throughout the decades. Without tangible records and dedicated broadcasting towers, how can we know whether a song file, consisting of 1s & 0s, zipping from server to client or peer to peer, should be treated more like radio or retail? We’ve developed technological formats, which we call “downloading” and “streaming,” to emulate the limitations of 20th Century distribution platforms, and developed laws, like the Digital Millenium Copyright Act, to enforce these limitations, but without the complex and expensive physical infrastructure of traditional radio and retail, the old media ecology is coming to seem increasingly arbitrary, and impedimental to innovation. To put it simply, the only thing holding the old music industry ecology together at this point is a thin veneer of copyright law, enforced (literally at times) at gunpoint.
Given the history of exploitation they have suffered at the hands of the Labels, you could have imagined the interests of performers/composers and fans/audiences being aligned against the labels as these new systems of production and circulation rolled out. Why have we seen such conflict between the interests of music producers and consumers?
This is a really interesting question, though its premise is a bit reductionist. In point of fact, a great many recording artists have expressed vocal support for increased consumer power, and have embraced technologies and business models that presuppose consumers’ ability to copy and share music at no cost (examples in the book range from seeding P2P networks to crowdfunding campaigns to giving away CDs with the Sunday paper). And, conversely, a great many consumers have expressed support for paying artists, and have put their money where their mouths are, via an ever-expanding range of channels.
Yet, as you point out, there is an increasingly urgent strain of public debate that claims that artists and other creative professionals are being asked to “give away” the fruits of their labor because “consumers demand it.” While this is a mischaracterization of the actual situation, it is based around a grain of truth — namely, that it is unclear whether or how the “new economy” or “sharing economy” can compensate every creator for their work to the degree that it will subsidize the time and resources spent producing the work.
This debate is partially fueled by creative professionals who are genuinely uncertain about their career prospects. They may have developed certain forms of expertise (e.g. playing the cello, composing a photograph) under an old economic model, and perhaps even managed to eke out a living doing creative work under that model (though most did not). Now they are being told their old skills are devalued, and that they are expected to develop new additional ones (e.g. garnering social media followers) to compensate. That’s a very real problem, and should be taken seriously.
On the other hand, a great deal of the most vitriolic debate is being fueled somewhat cynically by the interstitial organizations that used to exploit creative labor in the old economy, from record labels and publishers to performing rights organizations and management companies. These organizations want to protect their cut of the money generated by creative labor, and wave the flag of artist rights in order to do so. Yet, historically, these interstitial organizations soaked up the lion’s share of the wealth, leaving only crumbs for creators – analysis by industry guru Donald Passman, for instance, has shown that for every $1,000 consumers spent on music via traditional retail, recording artists were only paid about $24 on average.
What’s happening now is that, because the shape of the music industry is in flux, not only does every stakeholder want to preserve its historical percentage, each one is also jockeying to increase its piece of the pie. Labels and recording artists want to be paid for radio – a privilege previously enjoyed only by songwriters and publishers. Songwriters and publishers want royalties for retail distribution and subscriptions equivalent to those garnered by recording artists – a far cry from the much smaller cut they previously enjoyed. Online webcasters want to pay the same royalties as terrestrial radio providers (currently their rate is much higher). Everyone wants more, more, more, and somehow it’s the consumers’ fault that they can’t grow the pie fast enough to accommodate all the larger slices. In the meantime, the Internet has drastically expanded the “shelf space” and “air time” available to recording artists, which means that instead of a few dozen or a few hundred musicians sharing the pittance that trickles down to them, now the tens of millions of recording artists available on iTunes, Spotify, Pandora and iHeartRadio each require adequate compensation for their contributions. Is the local niche artist with 1,000 streams per month any less deserving of a percentage than the megastar with millions of streams?
To make matters worse, or at least more complex, some of the new gatekeepers (mostly Google and Apple) are actually making money facilitating the flow of music across digital networks, and all the aggrieved parties count these gains directly against their own perceived losses. Never mind that whatever percentage of the music economy Google garners is minuscule compared to the labels’ and broadcasters’ traditional stake. Never mind that Spotify and Pandora are swimming in red ink from royalty payments and iTunes has always been a break-even business. Never mind that musicians have always been exploited by the very industries posing as their new BFFs, and that being a professional artist was always a risky career choice. It’s much simpler just to blame consumers and tech companies for ruining everything.
One of the key paradoxes for me here is that it is often the same Parent companies — Sony, say — which are selling us the tools to rip and remix music and also going to war to prevent us from using those tools on their own properties. Any insights on how people live with these contradictions within those companies?
The short answer is that large, vertically-integrated companies like Sony are labyrinths of contradiction. Different links in the “distribution chain” are natural competitors, and housing them under a single roof is like having both cats and dogs as pets. To make matters worse, these companies are increasingly beholden to shareholders who want to see immediate financial results (requiring that they privilege short-term tactics over long-term strategy), increasingly ruled by their legal departments (who seek to justify their own existence through litigation), and increasingly prone to executive turnover (partially as a result of the first two factors).
One of the things many of us think we know is that the music industry has suffered enormous losses as a consequence of the rise of digital music sharing. You offer a more complex picture in the book. What are some of the other forces that impacted the music industry during this period and why do they complicate our efforts to understand the impact of “digital piracy”?
For one thing, there isn’t a researcher on the planet who can honestly claim to understand what the “impact of digital piracy” is on music industry economics. Well-researched meta-analyses by scholars who have spent years examining P2P are inconclusive, acknowledging that, despite the significant volume of studies on the subject (including my own, dating back to 2000), there is no consensus. Essentially, the research serves as a kind of Rorschach test, allowing those who want to see a positive effect, those who want to see a negative effect, and those who want to see no effect at all each to cite multiple credible sources to support their preferred positions.
Another factor is that it’s not entirely clear whether and to what degree the music industry – or even the major labels – have suffered financially. Obviously, the overall sales figures are down (although by the recording industry’s own tallies, now conveniently forgotten, this trend began years before Napster). Yet there are multiple other revenue streams that have grown during the same years, from synch licensing to digital performance royalties to live events, all of which add to major label coffers, as well as other growth areas, such as independent and used music sales and device sales, which mostly don’t. And, of course, costs have been cut significantly at the majors, which means that even flat revenues would represent higher profits. As music industry ledgers are notoriously opaque, there’s no way to simply throw back the curtains and let the sunlight clear things up.
Even if we just focus on retail sales of new, major label music, there are multiple factors that have contributed to the economic transformation of the industry over the past 15 years which have nothing to do with online music sharing. These range from economic trends (two recessions, shrinking household incomes) to the transformation of the music retail industry (driven by rising real estate costs and shrinking margins from “big box” underselling) to the eradication of a nationwide price-fixing scheme at the hands of federal and state regulators, to the end of the “CD replacement cycle” which led everyone in the 1990s to replace the cassettes and LPs they already owned with shiny new CDs of the same albums, to the “unbundling” of music, allowing people to buy 99-cent MP3s of their favorite songs without also subsidizing the “filler” content on the albums they belong to. Ultimately, as I discuss in my book, an unprecedented “perfect bubble” for the major labels in the 1980s-’90s was followed by a “perfect storm” in the 2000s. Again, this had nothing to do with online sharing per se, although they share some common contributory factors, such as the digitization of content, and the evolution of consumer music listening habits and tastes.
Aram Sinnreich is an Assistant Professor at Rutgers University, in the Department of Journalism & Media Studies. His work focuses on the intersection of culture, law and technology, with an emphasis on emerging media and music. He is the author of two books, Mashed Up (2010), and The Piracy Crusade (2013), and has written for publications including the New York Times, Billboard and Wired. Prior to Rutgers, Sinnreich served as Director at media innovation lab OMD Ignition Factory, Managing Partner of media/tech consultancy Radar Research, Visiting Professor at NYU Steinhardt, and Senior Analyst at Jupiter
Research. He is also a bassist and composer, and has played with groups and artists including progressive soul band Brave New Girl, dub-and-bass collective Dubistry, Agent 99, King Django, and Ari-Up, lead singer of the Slits. Sinnreich holds a Ph.D. in Communication from the University of Southern California, and a master’s in Journalism from Columbia University.