Wednesday, October 24, 2007

The Requiescat of

Early on the morning of October 23rd, 2007, the second largest private BitTorrent tracker, was shut down by the International Federation of the Phonographic Industry (IFPI). The site's owner was arrested when IFPI, in conjunction with the British Phonographic Industry (BPI) and both the British and Dutch police, raided the admin's home and seized the site's servers.

It drives me mad to really think about this in depth. I harken back to the heyday of Napster and all it's rampant success. However, when the RIAA caught on, did they take a step back and say, "Hm, is there some way we can turn this into profit?" No, of course not. They just shut it down. They came down like tyrants and did everything in their power to crush it.

However, like in old cartoons where the dog would get a big lump on his head, so he'd hammer it down, only to find that it caused a larger lump to appear elsewhere on his bruised scalp, the end-result of shutting down Napster was the increased growth of and research into new peer-to-peer technologies to take it's place. We all know about Kazaa, LimeWire, Gnutella, WinMX, the list goes on. The RIAA crushed Napster, but the illegal downloading didn't stop.

When Diamond Multimedia released their "Rio" MP3 player, again the music industry didn't attempt to find a way to turn the device into profit; instead they tried to crush it. That lawsuit failed miserably, which gave rise to the portable digital music player and these days iPod sales far exceed CD sales by staggering figures.

The RIAA, IFPI, and all the other organizations collectively known as "The Record Industry" continually prove their sheer ignorance and lack of understanding of the current situation even eight long years after the launch of Napster and the birth of P2P file-sharing.

Fast forward to 2003 with the launch of the iTunes store. Here we see a business model that is reporting exponential growth each fiscal quarter. Apple, the company has been seeing immense returns from the iPod, iPhone, and iTunes music store ever since their respective launches and it doesn't really look like it's going to slow down any time soon.

BUT WAIT, in the same year, Napster (or the name at least) returned after a multi-million dollar acquisition by Roxio as a pay-service which, in 2007, reported earnings of over $111 million.

Go back to when the RIAA tried to crush Napster. Doesn't it seem, now, that the smart thing for them to have done would have been to say, as I mentioned earlier, "How can we turn this into a profit"? Had the RIAA approached Napster back in 1999 and said, "Listen, what you're doing here is illegal. No questions about it. However, we're willing to make a deal that will benefit all of us in the end." They wouldn't be running around with their tails between their legs over the 20% decline (between 2006 and 2007 ALONE) in CD sales. They would have launched the Napster store four years before iTunes ever had a chance to see the light of day and Steve Jobs wouldn't be the ire of the recording industry. Instead, they would be claiming those $111 million profits and leading the way in digital distribution.

The same principles can be applied to OiNK. Here you have a site with an immense library of songs. Practically every album you could possibly think of at your fingertips. Not just at your fingertips, but DRM free, and available in every format from high-quality MP3's to AAC's to OGG's and FLAC's. The devout membership, coupled with the need to maintain a ratio requirement guaranteed reliable download speeds, and an incredible community to discuss music with and get recommendations from. I was floored at the Music forums on OiNK. I could make a thread asking for a type of music similar to artists x, y, and z and they would give me a, b, c, d, e, f, and g. Not only that, but I was right there on OiNK. All I had to do was download the albums. No risk, no hassle. If I didn't like it, I could just delete it, or hell, keep it for seeding purposes. Either way, I pretty much won.

The issue with the record industry is what I usually refer to as, "old man syndrome". These companies are comprised of crotchety old men who remember a time when the only thing they had to do to make a million bucks was wake up in the morning. It's easy to understand the industry's reaction when you examine where they were before all this happened. They had a very simple business model:

1. Sign band
2. Record album
3. Promote album
4. Sell Album
5. Profit

Granted, this worked, on average, 10% of the time, but that 10% made more than enough to cover for the other 90%. And this model worked for decades on end. From as early as the late 50's (even earlier in some cases) on through the mid 90's, this model worked very well for the record labels. It's easy to see why such a massive threat like "free music" would cause them to react so...violently. Let's face it, you can't compete with free, bottom line.

Unfortunately for the industry, the tides are changing. The people have spoken, and they don't like the old model anymore. What the record industry needs now is a new model. I can think of a few ways right off the top of my head how one could easily take a site of OiNK's capacity and turn it into a profit-churning machine. Why these labels can't do the same is utterly baffling. Their first instinct is to crush the threat as if to say that it's within their grasp to "beat the internet into submission" and make a return to the days of yore when CD sales were the norm and no one had free music.

Truly mind-boggling: the arrogance of spoiled old men.

"It came out magical; out from blown speakers."

1 comment:

Anonymous said...

Good words.