Wednesday, January 30, 2008

Music Recording Industry Crisis, blah blah blah.

Just finished reading a long and silly speech by Paul McGuinness, manager for the band U2.

As with all news of the recording industry's panic-stricken uproar, I want to say only one thing:

Making a digital copy is not stealing.

No, seriously, it isn't. Some of the things that can be done with digital copies (like forgery, embezzlement, etc) are crimes, but the act of making a digital copy of something is not stealing. Some countries have made the act of making a digital copy of media into a crime, but please understand, this is not stealing.

Once you realize that, it changes everything. Words like "piracy" and "theft" no longer make sense, and the recording industry is freed to try and fix their problems with a much wider array of solutions. Instead of wasting money and time trying to catch people making digital copies of media, the music industry can pay people to do more productive and creative things, like, I don't know, make good music.

The problem with the entertainment industry is quite simple, actually. For decades, the industry has made profits from artificially restricting the supply of media. Now that media can be digitally copied infinitely, there is no longer a supply-side restriction. This is something like DeBeers becoming upset when cheap, high quality artificial diamonds flooded the market. The only way to tell these cheap artificial diamonds apart from mined diamonds is that the artificial ones don't have as many flaws. DeBeers responded by mounting a marketing campaign that said, in essence, "You don't want those artificial diamonds. They aren't natural!"

In general, the industry that dominates the market through artificial restrictions on supply is
doomed to fail eventually. The only way for the old industry companies to compete is for them to offer value-added options that cannot be offered by the cheaper competition. The movie industry still has an advantage in that they have a network of very large screens with high-quality audio systems. But even that advantage is fading in the new era of HD home theatre systems. In most of North America, movie theatres aren't allowed to sell beer, like sports venues.

Wake up call to the entertainment industry: It is too late, the market is flooded with cheap or free copies of your precious media. The horse is out; don't waste money trying to close the door or chase the horse all over the countryside. To continue the metaphor, your money would be better spent determining what tasty treats you can offer the horse to tempt it to come back to you on its own.

McGuinness actually acknowledges this; he admits that the live music sector is doing very well, mainly because going to a concert is an experience that adds value to the music, and people are still willing to pay money for that. In fact, they are willing to pay very well, and McGuinness grudgingly admits that too. So, Mr. McGuinness, you know what to do, you just don't want to admit it, because it means more work for you. It's easier to tell everyone else to try to stop digital copying, rather than trying to think of ways to repackage your products so that people will start paying for them again. How about a marketing campaign; "You don't want digital copies of music. They're not natural!" Oh wait, you're already doing that, when you call your customers thieves.

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