Can Music Be Free

Media analyst Henry Jenkins ( Aug 2006) states, “Fans have been and are likely to continue to be the shock troops in this transformation of our culture — highly motivated, passionately committed, and socially networked. They are early adopters of new technologies and willing to experiment with new relationships to culture.”

It is necessary to recognize this before understanding fully the file sharers actions; they could be (and probably are) the early adopters of the future.

Ultimately there are two categories that music consumers fall into. Those that expect to get their music for free with no concern for copyright, and those who are happy to pay for music. Some consumers however may choose to purchase further goods after illegally downloading music, the ‘free’ music effectively promoting itself, a free sample with near zero distribution costs.

It is bridging this gap between the categories that requires monopolizing and this is the basic idea of free music as a business model. The next step is to offer the music as a legal download or audio stream and remove the need for the consumer to act in an illegal manner. The consumer will feel good because they are not breaking the law and at the same time they have been drawn to the bands website where they can potentially shop for other merchandise.

The fan returns to being the collector of merchandise and can enjoy all the feelings experienced by owning something they have sort after. The effect of this is a developing relationship between consumer and artists, this combined with copyright education and, in the future, a more active role by the *Internet Service Providers, the climate necessary for a decrease in piracy and illegal copying should arise.

We may eventually see the single black box that has access to virtually all music, or a service that charges for file sharing; it is a hotly debated topic at the moment with the UK Record Industry predicting a loss of £1 billion over the next five years. The Industry must educate and work with fans to develop fair systems for all.

Economics

There are a number of artists giving their music away with a view to making money from other merchandise. A basic concept of economics is to give away, or charge very little, for non-scarce goods and then charge for the scarce goods that are required to enable the consumer to have a full experience of the product/music artefact. For example the razor that requires expensive razor blade replacements, or the cheap printer that is very expensive to replenish with ink. With this in mind we can study examples of artists that are giving their music away as part of their business model and draw conclusions as to whether the model is effective or not. If done correctly it can increase market sizes considerably, if done incorrectly someone else will do it anyway and the business model will be flawed. Giving away music content has to be part of a complete business model that recognises the realities of the economics.

Sigur Rós

Icelandic band Sigur Rós is a good example whereby diversifying income streams across a number of media channels is proving successful. The website is constantly updated with news and free downloads and interaction with fans is a continuous ongoing process. The following is a time line leading to the “release” of their album með suð in 2008. Using the term “release” is a little misleading, as there was not a single date for the launch of all the products, the process spanned a number of weeks as is shown.

• 3rd June - First time play of a full track from the album played on Radio 1
• 3rd June - Pre-orders taken for the album either as a download, CD or deluxe edition DVD/CD. The deluxe edition is a staggered delivery, a week before the release date an mp3 version is sent, the release day the CD is sent and then mid September the hardback book and DVD will be sent.
• 4th June - Tickets released on pre-order from website for a one-off London gig at an intimate venue, concert is recorded for the deluxe edition DVD/CD.
• 7th June - Small number of images from forthcoming deluxe edition available on website for viewing.
•  8th June - Free audio stream of full album on the website          www.sigur-ros.co.uk and on last.fm.  
• 14th June - Blog of the bands’ South American tour written by the band’s co-manager posted on website.
• 23rd June - Album released in retail outlets.
• 24th June - London gig, Central Halls. Advertising of album and forthcoming tour dates using flyers and posters on the London Underground.
• 26th June - Fans that pre-ordered the deluxe edition DVD would be credited with their name in the book, allowing them to become part of their unique document.
• 28th June - Concert in Reykjavík , Iceland is streamed via worldmusic.nationalgeographic.com.

The deluxe edition of með suð  is a hardback book containing 200 pages of photographs and the DVD containing footage from the album recording, mixing and mastering process.

Deluxe products can also include higher quality audio files, mp3s presently are the most popular audio file format for reasons more to do with memory space rather than audio quality, in this case give away the poorer quality audio stream and charge for the higher quality audio products.

As memory becomes larger and less expensive we may see the re-emergence of 16 bit, 44.1kHz as a standard. Those of us that still want this quality may already have their iTunes import settings set to do this already.

This well planned strategy demonstrates a 360° approach to marketing that has used many different channels including the use of radio broadcast, live performances, flyers and posters, both offline channels as well as online. They are no stranger to the deluxe goods, their documentary Heima, a tour of Iceland has been critically reviewed and named the best documentary of all time on The Internet Movie Database and will be shown on the Sundance Film Channel. The track Hoppipolla from the Album Takk received sync fees as the theme for BBC’s Planet Earth in 2006 and has been used in trailers and other programs.

Particularly impressive though is the pre-order concept allowing the fan to jump queues on concert ticket sales and receive goods ahead of the general record buying or illegal downloading public. This is very effective as it makes non-scarce goods scarce and scarce goods even scarcer.

Developing a relationship that interacts with the fans can help realize a long-term investment; in this case the fans are buying the DVD before it has been made effectively funding the product and perhaps setting budgets for the products development.

The strategy seems to have worked with the album going straight into the US Billboard chart at number 15 and the UK chart at number 5 and they have just recorded their ten millionth visitor to their website.

What is interesting is the majority of channels they have used could be accessible to a fledgling band with limited budgets and self managed, albeit on a smaller scale, many areas of this business model could be replicated. It is the convergence of technology that enables a great deal of this to be done with a PC, software and Internet connection. This knowledge will be invaluable to students that have probably experienced 360º approach to marketing but have not applied it to there own music promotion.

Other bands and their free music business models

A number of bands have recently used free music in their business models in a variety of ways:

• Radiohead – In Rainbows available as ‘pay what you like’ download with a minimum 45p administration charge. An additional option to purchase a physical disc-box version including CD, additional new songs, photographs, artwork, a hardback book and vinyl at £40.  On the first day of sales more people purchased the disc-box set than paid for the download. Interestingly they have refused to make their music available to iTunes as they do not agree with single-track purchases and want their albums sold as complete works.
• Prince – Musicology given away with concert tickets in 2004 and more recently Planet Earth given away free with The Mail On Sunday and with concert tickets for the 21-day, sold out series of shows at the 02 arena. This access to new fans is almost unprecedented, although previous music CDs have been given away with newspapers this is the first new album to do so. In this case Prince received a synchronization fee estimated at £3 million.
• Coldplay – Single Violet Hill released as free download together with release date for album
• Arctic Monkeys – Free audio streaming via Myspace that initially gave the band the fan-base required for record labels to become interested
• Charlatans – Free album download through radio station Xfm with the view to making money on live shows and merchandise.
• The Crimea – Lesser known welsh band financed and released there second album themselves reporting 61,920 downloads and have reported significant increases at live performances and merchandise sales.

Creation Records founder Alan McGee and manager of the Charlatans stated (The Guardian, 02/10/07)  "Whilst live music and merchandise sales are booming, physical sales are steadily decreasing with more and more fans simply burning tracks from friends or free download sites. The band will get paid more by more people coming to the gigs, buying merchandise, publishing and synch fees. I believe it's the future business model."

There are very few bands that do not have a Myspace streaming audio, it has become a place to release new material to fans.

Other areas of the industry are also diversifying with Zavvi, formerly Virgin Megastores, turning to merchandise sales offering T-Shirts and DVDs alongside CD albums. This investment and diversifying demonstrates a continued interest from consumers for merchandise.

Convergence

Convergence of technology has enabled the recording of music through accessible hardware and software, advertising through social networking/specialist music websites and online distribution at virtually zero costs.

Ithiel de Sola Pool’s Technologies of Freedom (1983) was the first book to lay out the concept of convergence as a force that would change the media industries:

“A process called the ‘convergence of modes’ is blurring the lines between media, even between point to point communications, such as the post, telephone and telegraph, and mass communications, such as the press radio and television. A single physical means – be it wires, cables or airwaves – may carry services that in the past were provided in separate ways. Conversely a service that was provided in the past by any one medium – be it broadcasting, the press or telephony – can now be provided in several different ways. So the one to one relationship that used to exist between a medium and it’s use is eroding”.

It is this view that music now needs to adapt to, delivering product across a multitude of diverse channels; Internet (free streaming on social websites such as Myspace and Youtube), mobile phone downloads (Nokia in particular are big players in this market), ringtones, TV adverts, radio and DVDs. This is referred to as launching a product 360°, a buzz word in the industry,

Theory

Media analysts have over the last half-century been studying and trying to predict the impact technology would have on culture and society. Following are some useful views that help to place free music within the context of history.

Jenkins’ View

Henry Jenkins foresees opportunities to direct media content across many channels to open up markets and increase revenue. He states:  “it is the sound that is the medium and the delivery technologies become obsolete and get replaced.” MP3, CDs or, in the past, cassettes are delivery technologies as is the iPod.

 ‘The medium’s content may shift (as occurred when television displaced radio as a storytelling medium, freeing radio to become the primary showcase for rock and roll), its audience may change (as occurs when comics move from a mainstream medium in the 1950s to a niche medium today), and it’s social status might rise or fall, (as occurs when theatre moves from a popular form to an elite form), but once a medium establishes itself as some core human demand, it continues to function within the larger system of communication options.”

Here he has identified what is basically the transition period we are experiencing presently, the arrival of a new medium that delivers content in a different way, the Internet as a means of delivery music to consumers, there may be shifts in listening habits but essentially the content remains as important as before.

“Once recorded sound becomes a possibility, we have continued to develop new and improved means of recording and playing back sound. Printed words did not kill spoken words. Cinema did not kill theatre. Television did not kill radio. Each old medium was forced to coexist with the emerging media.”

This is becoming more apparent as more artists chose to use the Internet as part of their business model; Sigur Rós have embraced these views and demonstrated how new emerging media can exist with old.

 Marshall McLuhan

Marshall McLuhan was a visionary of mass media and his first publication Understanding Media (1964) he focused on the media effects on society and culture and his perception that media is a technological extension of the body. In his book he arguably became a technology determinist suggesting that ‘we shape our tools and thereafter our tools shape us’. From reviewing his own book he himself concluded that four things happen to all media and human artifacts that these things were inevitable and happen simultaneously. These four things were:

• ENHANCE - what does an artifact enhance, is it a solution to a previous problem?
• REVERSE -  the reversal of enhancement and the creation of new problems.
• RETRIEVE – the recovery of something that was once deleted or diminished in some way.
• OBSOLESCENCE – the loss of once significant artifacts.

Whilst this essay is not necessarily agreeing with McLuhan’s deterministic views, his laws can be used as a device to help us understand the situation and the collective response of society, particularly with respect to the ‘rear-view mirror,” a term used to represent the view that as we move into the future our sight is on the past.

McLuhan (1967) wrote:

"Our laws of media are intended to provide a ready means of identifying the properties of and actions exerted upon ourselves by our technologies and media and artefacts. They do not rest on any concept or theory, but are empirical, and form a practical means of perceiving the action and effects of ordinary human tools and services. They apply to all human artefacts, whether hardware or software, whether bulldozers or buttons, or poetic styles or philosophical systems."

This understanding that the present is derived from or guided by experience or experiment is not really a new theory. We all, to a certain extent, use this in our every day lives The thought process involved in using the laws when applied to media however, allows a far greater understanding of how the past can influence the future of media. We can identify what can be taken from the past and used effectively today and in the future, a combination of old and new media.

McLuhan proposed the tetrad as a means of presenting his laws and asked questions based on social and cultural issues using history and knowledge of technology as the basis of questioning.

The relationship between the four elements of the tetrad are as follows:

• Retrieval is to obsolescence as enhancement is to reversal - What is brought back must also render something obsolete; what is enhanced will always do so at the expense of others.

• Retrieval is to enhancement as obsolescence is to reversal - What is retrieved is a natural development of the enhancement. What is obsolesced can create an opportunity for reversal.

From a reversal point of view it would seem that technology has led social change, research commissioned by BMR (British Music Rights) and carried out by the University of Hertfordshire suggests that, for 18 to 24 year olds “home copying remains more popular than file sharing. Out of 1,158 people surveyed two thirds copied five CDs a month from friends and 95% had engaged in some form of copying, 63% illegally download and 48% of tracks on the average MP3 player are not paid for”.

This change, it can be argued, has come about through technology push rather than demand pull, the reasoning behind this is the ease of which a digital copy can be made or downloaded from one of many file sharing websites. This could be seen as a reversal as artist reward disappears and consumers suffer with music overload. It is not all doom and gloom though as it appears the Myspace generation is prepared to pay for music if it presented in a way they feel comfortable with.

Further research by the BMR that suggests 75% of consumers would be interested in a legal file sharing service and would be prepared to pay a reasonable amount of money for the service. As enhancement we see the disappearance of the majority of manufacture and distribution costs providing opportunities for unsigned bands to develop communities of fans, as part of McLuhan’s Global Village.

For record companies however the opposite has occurred and reversal has taken away control of the market as potential music purchases are reduced by illegal downloads as CDs move towards becoming obsolete. This in turn has an impact on retail outlets

The BPI (formerly known as British Phonographic Industry, the body that represents the British recorded music business) have published figures (July 2008) stating there was a 13.8% increase in non-traditional income streams in 2007 that includes merchandise, touring, use of logos, digital products, sponsorship and sync deals. This has demonstrated the 360° music business model is becoming more apparent.  

Enhancement for the consumer is a result of the medium, the present popular delivery method, the mp3 player. This has allowed consumers to have an enormous collection of music always at hand although “random play” suggests that listeners may no long listen to a whole album in one listening session (possibly the demise and obsolete of the concept album as we know it). The medium has certainly affected the way we view or listen to the content.

The technology push has resulted in a demand pull from the audience for free music (perhaps considered an enhancement by hungry music lovers). So much so that it has become more frequent for an artist to give away sound files or audio streaming from a website. Whist the audience spends time at the website the consumer is exposed to advertising of future gigs and deluxe merchandise whilst also registering their email address.  The new model has one eye looking in the rear view mirror the other is fixed on the future market place.

Paul Levinson (Media Analyst)

Paul Levinson, a former student of McLuhan, states “an aspect of the human/technological relationship that says we can do something about our inventions, refine them, guide them, to perform in ways that suit our sensibilities and needs rather than reform them. For what is the point of shocking anyone about the impact of a medium if there is no hope of doing anything about that impact”.

Rather than accepting McLuhan’s depiction of humans in the lap of technology (arguably McLuhan has often been seen as a technology determinist) Levinson considers how we can enhance our control of the future. Whilst agreeing with McLuhan that we shape our tools and thereafter our tools shape us, it is possible to take this theory to the next stage and determine how we can then again shape our tools to our benefit.  

Levinson’s clever quip ‘Caution: objects in mirror may be closer than they appear’ suggests we need to cautiously apply McLuhan’s rear view mirror, using it as more of a device for giving us a measure of the future. McLuhan was more concerned with the past leading up to the present rather than the present leading into the future, Levinson sees the rear view mirror as a device to help guide technology to better uses, in this case allowing our students’  to gain a perspective on the situation and to contextualize it within history and possible future developments. This will enable today’s students as musicians to adapt to a changing market place where the need for 360° delivery of a product will be essential.

Survival of the fittest will continue to rely on what consumers constitute as good content, as it generally has always done. Accessing niche markets will become easier by googling the right websites and posting links to music samples. If it’s good content and presented in the way to appeal it could go viral with links forwarded on to further websites via social networking sites and email.

Marketing music in this way compliments live performances, the website can provide gig information and immediate reviews and potentially audiences can be developed more effectively. Message boards provide an excellent forum for discussion.

Following a survey of sixteen students at Bournemouth & Poole College twelve said they would no longer illegally file share audio files on the internet. Ten of the students however said they continued to copy CDs but all of them said they have and would download free audio files or stream audio from a website. One college band has already begun to give away CDs with an unlock code for a bonus track on their website. The only requirement is to register with an email address. On the site they are selling T-shirts and advertising future gigs that will generate revenue.

This cultural shift will enable the industry to adapt as the CD is increasingly replaced by MP3 players as the delivery method of music for the younger generations.  This has been predicted for some time:

Wider issue (BBC News Nov 2002).

"There's no point in buying a physical CD online when you can download one," said Phil Leigh, an analyst with Raymond James and Associates.

Mr Leigh said the survey highlighted a wider issue - about the future of albums.

"The primary message of the CD burner is the consumer doesn't want to be straight jacketed into buying a pre-packaged CD. I think what we're seeing is not only the death of the physical form factor, but the death of the pre-packaged concept”.

From a band’s perspective making it in the music business may no longer require the elusive record deal.

Copyright in the “Rear View Mirror”

This essay may indirectly address copyright however it does not seek to provide a history of copyright, more a commentary on events that may have affected today’s and future society’s perception of intellectual ownership. Although the idea that music as a free product may suggest otherwise it seems there are large swathes of consumers willing to pay artists for their work albeit in a different way.

Joe Flintham (2008) states “Copyright, they say, is a tool which ensures that those gifted artists are adequately compensated for their work.” 

‘They’ in this sentence referring to the ‘Industry’ however those of us that may have a romantic view of the songwriting musician may hope the economic incentive is not the only reason for people to engage in intellectual production.  It would however seem we are not harking back to the early days of copyright in the USA, a time when Jefferson believed that all intellectual production was for the improvement of society and should be shared accordingly.

Jenkins explains “media delivery systems are only technology and will come and go, but the media itself will persist as layers within an ever more complicated information and entertainment stratum”.

The demand for music will not disappear, the present method that people will pay for it will change, perhaps some of the physical market will remain, vinyl is a good example of this, how it has survived through to today.

Lisa Gitelman (Always Already New: Media, History, and the Data of Culture, 2006) offers a model of media that works on two levels, one “a medium is a technology that enables communication” and two that “a medium is a set of associated “protocols” or social and cultural practices that have grown up around the technology.”

Today we see a number of organizations that embrace this second level: the Wiki freeculture.org and www.creativecommons.org. These organizations cannot do anything more in controlling normal copyright law but they can create specific licenses for those artists that wish to share their product in a variety of ways. These range from limited use, perhaps sampling, to total uncontrolled use whereby making copies and modifications fall within the license.

Conclusion

Whilst writing this essay over an 8 week period my personal views have drastically changed. Initially I knew very little of consumers online music habits other than the belief that everyone was downloading music for free and record labels and artist were losing vast sums of money because of it. I have been pleasantly surprised though to discover that piracy will not destroy the music industry as has been widely reported in the press. I have always been against pirating, as a musician and music composer I have always held the view that copyright is a fair way of rewarding the artist and investors, and that illegal file sharing is stealing the rewards they deserve. I now believe that pirating music is not a wholly conscious decision by consumers to exploit artists, rather the consumer seeking music for enjoyment through means that are freely available to the majority of people; the technology has led this to happen. The act requires so little thought and effort that the pirate has very little concern for copyright.

I believe that adjusting to this mass acceptance of free music product is the way forward for industry and artists and the following information sourced from the BPI (British Phonographic Industry) suggest this.

Album sales have been down consecutively over the last 3 years though there is some optimism to be found in the steadily climbing sales of digital music and an increase in non-traditional income. Digital album sales accounted for 7.8% total sales in the first quarter of 2008 to April, this compares with sales of around 3% sold each week in January and February of 2007.

The amount of money made by record labels through non-traditional income streams (sales outside of music sales) increased by 13.8% in 2007 to £121.6million and non-recording copyright revenues increased by 16.2%, giving evidence to the success a 360º model can provide.

Although album sales in 2008 are to date down 6.9% on 2007 these increases elsewhere signify a relatively small but significant shift away from illegal downloads, particularly the increase in digital music sales. Sync deals, sponsorships, merchandise and digital products are all showing increased income for record labels.

The music industry is clearly an industry trying to find its feet, and by adopting a 360º approach to business it seems to be having some success. Rather than relying on taking a large slice of CD sales they are now taking a smaller slice of everything, and traditionally separate deals such as publishing and management are also falling under control of the labels.

This even surfaced in BBC’s Dragons Den (July 21st 2008) when a band pitched for £75k for recording an album, marketing and distribution in exchange for 20% of royalties for the album. The deal was almost laughed at by the Dragons and in the end the band accepted a deal giving away 40% of everything they own, past and future, and any profit made from non-traditional income streams. The Dragons were very aware of the shift in music related income streams even though they are business people not record label executives.

It 2007, Terra Firma, one of the leading private equity firms, bought out EMI. This made Guy Hands (a man with little recording industry experience) EMI’s chairman, a clear indication that it is the merchandise business and not the copyright retrieval business that recording labels are now addressing.

Essentially record labels will still be investing in new artists, the delivery method may have changed, however connecting the audience with the artist will remain their primary function, and this is the first step in also establishing a connection between audience and merchandise.

The research commissioned by the British Music Rights (BMR) and conducted by the University of Hertfordshire suggested that 75% of young people illegal file sharing would be interested in a legal file sharing service that they could pay for. It is an interesting concept and the sums discussed for this service were described as “a reasonable sum” by the BMR’s CEO Fergal Sharkey. This is perhaps the first encouraging news from this sector of consumers and based on the surveys findings the BMR concluded that models in the future would need to consider access to music through social networking sites and experimentation, something not found on stores such as iTunes.

Will the quality of content be affected by the shift towards free music? I believe not. There will be some exciting changes in certain areas with audiences participating with artists using wikis and other sites to shape projects and music; Web 3.0 has opened doors to world wide music collaborations with new approaches to copyright (Creative Commons and Open Data Licenses that encourage the modification of websites and resources. An acquaintance of mine is presently recording drums for a project based out in California, the audio files take minutes to cross the Atlantic.

We may see many more bands able to make a living from their music through self-management and niche markets; the Internet has provided the means to do this. The band Marillion rose over £100,000 for their 12th album in pre-orders from their 30,000 strong fan base, 5% of the expected world-wide sales. They were then able to return to EMI Records who had agreed to license the album for world-wide marketing and distribution deal.

Referring back to the title of this essay “Can Music Be Free? Maybe a reassuring peak in the rear-view mirror is all we need” the conclusion I would draw is, yes. Consumers will continue to enjoy the merchandise of the artists they follow and are willing to purchase merchandise when it is presented to them in the correct way. In some respects as technology progresses there becomes a growing list of delivery technology to draw upon and increasing market opportunities. The CD will no doubt remain popular for a good number of years yet and may eventually find its niche market as the vinyl record did. The research conducted by the media analysts quoted in this essay have led me to consider how free cultural artifacts, in this case music, can be the vehicles for the flow of ideas and feelings between artist and audience at the same time proving to be the vehicles that will develop non-traditional income streams for musicians. The content remains the message the medium will come and go. The content will continue to be as important even in a society where the physical product may largely disappear. The high definition, touch-screen television set with Hi-Fi quality audio and Internet connectivity may be the next delivery method for the home. However it is in the human nature to collect things of interest and there is very little value in collecting 0s and 1s in respect of them being a collectable product. A new delivery technology may emerge that is not the Apple iPod but a deluxe product that contains video footage, audio, pictures and any thing that will make the product collectable and important to own. The multi-channel delivery cannot be ignored as a means of marketing and distributing music.

Addendum

BBC news reported today that six of the UK’s biggest net providers, in collaboration with the BPI, have agreed on a plan of action to confront net users suspected of illegally sharing music. The measures proposed by the government will see letters of warning sent out to thousands threatening a reduced bandwidth. In conjunction with this the ISPs will be working with record labels to develop legal music services. This is a move away from recent attempts to educate consumers and making scapegoats of the odd individuals.

Although this is a long way from the USA’s Inducing Infringement of Copyright Act of 2004 it still seems a lazy option when the solution lies in creating innovative new business models to capitalize on new technology.

Recently there have been several deals between online free music providers and record labels. Qtrax have a deal with Universal, Sony have a deal with We7 and the big 4 record labels (Universal, Sony BMG, Warners and EMI) have struck a deal with Last.fm making them the world’s biggest free online juke box. This all seems a move in the right direction and ultimately the need to file share will be removed and may end up being negligible, the need to pursue those that file share will become unimportant.

Bibliography

Books

Ithiel de Sola Pool Technologies of Freedom (1983)

Jenkins, H Convergence Culture (2006)

Buckingham, D Media Education (2003)

Levinson, P Digital McLuhan (1999)

Websites

Journals

Music Week