Different Ways To Pay The Piper

Will owning music go the way of 8-track tapes, Walkman cassette players and 78 rpm records?

For most of the 20th century, music fans were often distinguished by their record collections, and those who found music to be an important part of their lives had shelves upon shelves of vinyl to prove their dedication to the art.

Of course, for many music lovers, vinyl gave way to compact discs, while self-proclaimed "purists" held on to their original platters, claiming CDs never captured the "warmth" of the original recordings.

But despite past vinyl vs. CD debates, it now looks as if the actual collecting and owning of music recordings might end up as a significant pastime of previous generations, the way fedora hats and Cadillac fins have more in common with parents of Baby Boomers than generations X, Y and Z.

"Subscription" is the latest magic word. Record labels are looking at subscription services as a possible solution to ever-declining revenue streams as online piracy continues to gut a once-prosperous industry.

Of course, paying $5, $10 or even $15 per month for all the music you want sounds like a great deal for consumers. And maybe it is. But unlike owning your own music collection, subscription services offer the illusion of ownership. Cancel the subscription and the music stops playing. Take out a new subscription with a different service and it’s back to square one.

But even though music subscription services, such as the services offered by Napster and Real Networks’ Rhapsody, have been around for a few years, there now appears to be a resurgence of interest.

Last month an online item quoting anonymous sources and reporting that Apple was talking to the recording industry about such a service made headlines across the globe.

But Apple wasn’t the only company supposedly touting the subscription meme. Sony BMG chief Rolf Schmidt-Holtz mentioned the subscription concept in an interview with a German newspaper and suddenly a thousand more "subscription music" headlines were born.

To be sure, the labels probably wouldn’t even consider a subscription business model if it wasn’t for peer-to-peer music piracy. Before Shawn Fanning unleashed Napster on an unsuspecting music industry, most online piracy involved placing music files on obscure FTP servers.

But P2P networks, like the original Napster, gave people turnkey solutions for turning their individual computers into FTP servers. And even though the recording industry still makes headlines suing individuals for distributing copyrighted music, the damage is already done. There’s a new generation of music fans in town. A generation that thinks music should be free, or at least cheaper than Wal-Mart prices.

Although current subscription services haven’t made any appreciable impact on piracy estimates, another concept is gaining traction that might actually save the recording industry from the gloom-and-doom future so many predict for it.

Tech blogs often refer to it as an "ISP tax," a charge tacked on to Internet service provider bills, usually described as being anywhere from $5 to $15 per month. The idea is that such a fee will help offset what the music industry is losing through piracy. Furthermore, most fee advocates also say that online music piracy would end because in exchange for that monthly fee, people would be legally allowed to trade, share and download as much music as they want.

Who favors such a plan? Jim Griffin, for one. Griffin, who used to ride herd on all things digital at Geffen, now works for Warner Music Group as a consultant.

Recently in an interview with Conde Nast’s Portfolio, Griffin described the predicament the recording industry is currently in, and ways to fix it.

"Today, it has become purely voluntary to pay for music," Griffin told Portfolio. "If I tell you to go listen to this band, you could pay, or you might not. It’s pretty much up to you. So the music business has become a big tip jar."

Griffin said the recording industry still sees music as a "product" when it should be seeing it as a "service." Griffin likes to refer to the music industry’s problem as "Tarzan" economics.

"We’re still clinging to the vine of music as a product," Griffin said. "But we’re swinging toward the vine of music as a service. We need to get ready to let go and grab the next vine, which is a pool of money and a fair way to split it up, rather than controlling the quantity and destiny of sound recordings."

Griffin envisions a universal database where consumers, in exchange for paying a surcharge attached to their monthly ISP bill, can access any song ever recorded. But unlike current subscription models, Griffin describes such a database as being free of all restrictions. Users could download, upload, share and do whatever they like with the music.

Griffin estimates that a $5 per user ISP charge could result in a yearly amount of approximately $20 billion that would be used for royalties.

But not everyone favors such a payment system. And even those who have suggested some kind of monthly payment system in the past don’t necessarily like the idea of a mandatory fee attached to monthly ISP bills.

Commenting on Griffin’s plans for an ISP fee, Electronic Frontier Foundation senior staff attorney Fred von Lohmann wrote that while EFF has supported similar payment concepts, the organization favors it when the fee is voluntary. That is, voluntary not only for ISP customers, but also for everyone else involved – labels, artists, publishers and songwriters.

"Any collective licensing solution should be voluntary for fans, artists, and ISPs alike," wrote von Lohmann on the EFF’s Web site. "We don’t have a compulsory ‘restaurant tax’ for songwriters – there’s no reason to have a compulsory ‘Internet tax’ for file sharing."

But subscription music and ISP surcharges are just two possible solutions to the recording industry’s predicament of seeing inventories devalued by a marketplace that now places very little monetary value on record company wares. The trick may be at arriving at a value for music that both consumers and labels can agree on. If that’s even possible this late in the game.


Shared Folders and Infringments

The Recording Industry Association of America may have run into a legal problem in its lawsuit strategy against suspected P2P pirates.

It’s all about the legal issues involved when someone places copyrighted material in their "shared" folder. The RIAA has long claimed that doing so means the person is contributing to copyright infringement by making copyrighted works available for others to download.

U.S. District Judge Kenneth Karas recently rejected the trade organization’s argument that placing songs in a shared directory was evidence enough of infringing activities. Instead, the judge told the RIAA it would have to demonstrate that the songs were illicitly copied, according to CNET’s News.com.

"Plaintiffs’ allegations – insofar as plaintiffs wish to hold defendant liable for acts of infringement other than actual downloading and/or distribution – fail to state a claim," Karas wrote.

Karas’ ruling came during the RIAA’s lawsuit proceedings against Tenise Barker. But the judge’s clarification of what constitutes infringing behavior may not be that big of a blow to the RIAA’s litigation strategy against Barker. The organization has already claimed it has evidence of Barker distributing copyrighted music.

The RIAA’s lawsuit against Barker may not be your typical P2P infringement case. Several organizations, including the Motion Picture Association of America, the Electronic Frontier Foundation and the Computer and Communications Industry Association, have filed briefs in the case.

What’s more, even the Bush Administration has gotten into the act. A brief filed by the Justice Department took exception to EFF’s arguments, saying that the World Intellectual Property Organization treaty considers "making available" an infringing activity.