Music Advocacy Journal Issue #2 : Technical Treatise on Record Piracy – Part 1, Yin & Yang


MAJ 2 pic 1

Some have said, we should just copy each other’s digital music collections. They say that record-sharing technologies like the original Napster should be legal. Where is the harm? Unlimited ‘free’ music is actually ‘free’ promotion for the bands who want people to hear their music, and the bands will just make their money in some other way to put food on their table. Besides, bands don’t make that much money off of a record sale anyway, so people who take records without paying (digitally or otherwise) are kind of like Robin Hoods – getting economic revenge on the ‘corpulent’ major labels.

As with much of the common knowledge in the postmodern era, the previous conclusions are novel ideas based on half-truths, and they are only possible in a vacuum of full awareness. Personally, I wanted to avoid rushing to judgment on record piracy, Napster, and record labels, so I chose years ago to go against the grain – to educate myself on the business of music so that I may discover the truth.

As a huge Music Fan, an accomplished Artist, and an aspiring technology and business guru, I sought to find the answers. I wanted to constantly shift gears to view the problem from the purview of three roles – Music Fan, Artist, and Music Business Professional. I believed that only by understanding the experiences of everyone involved, could I arrive at valid answers to the burgeoning questions on everyone’s minds:

  • Is it wrong for me to take MP3s (or other record formats) and not pay for them?
  • Who does it hurt if I take those records without paying for them?
  • Can the Artists find another way to make money, so they can get paid fairly for their hard work, dedication, and skill?
  • When the practice of taking MP3s without paying becomes more commonplace, how will it affect the music that I get to listen to? Will record companies still be able to offer me the same quality, variety, and choice?
  • How can record labels truly protect their products from piracy? Is Digital Rights Management (DRM) the answer?
  • Free Goods have always been a part of record promotion (estimated at around 10 – 15% of the gross) – so how does a nominal proportion of consumer-forced Free Goods (i.e. piracy) mesh with the historical model?
  • People have been copying records for a while now – the only difference is with tapes, you could only copy a tape so many times before it lost sound quality and the copying process was relatively slow. In contrast, the propagation of digital records is unlimited, fast, high quality, and mostly uncontrollable. So how does unconstrained, illegal record propagation and unfettered catalogue access impact the consumer’s perception of the actual product – a recorded piece of music?

Part One of this treatise simply introduces the questions for you to ponder, and shares an entertaining story from my life concerning music piracy to illuminate conflicting philosophies. Future parts of this treatise will illuminate:

  • DRM’s inevitable crash into oblivion
  • Attempts to thwart music theft from past to present
  • A breakdown of where your money actually goes when you buy an album
  • What can the philosophy of technology and technocracies tell us about the problem of music piracy?
  • Finally, my conclusion on the subject which has guided MYnstrel’s own music retail Research and Development (R&D)
  • Why MYnstrel is the first music organization in the world (yet again) to take these riddles seriously and solve the issues, rather than responding in a reactionary manner

If you ever decided to get involved with a “Napster” conversation, or discussions on MP3 freeloading, or music piracy, you will definitely enjoy this treatise. I would encourage any Artist or Music Business Professional to consider the information that I present here.

With the premise well-established, let’s continue!

Yin and Yang (one more epic light-saber clash, Jedi-style)

MAJ 2 pic 2

Sometime in 2008, I was at lunch with twelve coworkers at a local Indian Restaurant. I happened to get seated next to a guy who immediately gave me an unpleasant vibe. He was tall, thick, balding, almost twice my age, and apparently a decent amateur basketball player for his age. Let’s call him “Johnny” for the sake of anonymity.

Johnny was the kind of guy who could take a normal conversation and destroy it with a single sentence, leaving everyone silent. To some people, he might have imposed an intimidating presence; to me, it was quite the opposite. I’ve had many rewarding experiences in taking on aggressive opponents. The trick is to turn them upside-down on their heads, as if applying verbal judo to the unwieldy girth of their arguments. It’s at that point when age, nor title, nor money, nor heritage seems to matter at all. Big Johnny was about to choose to make himself my next challenger.

Johnny initiated an argument with me about the business of music. Apparently he played basketball with a big shot lawyer from the RIAA. He didn’t have a very high opinion of this lawyer (berating him with various insults), and proceeded to excuse himself from moral wrongdoing for his vast pirated digital music, MP3 collection (which he apparently acquired by posting huge illegal MP3 file shares with his friends at work). After letting him do most of the talking, I just asked him a few questions:

“True, artists make a small percentage from album sales, but what do you know of the total compensation package for artists, and what it costs to make that album, promote, and produce their products?”

He didn’t know.

“What do you tell an artist who you know is talented, but they failed their sales expectations? They might just need some time to become known and make the kind of sales that can subsidize a $50 – $250k expenditure on just the recording. There were many stars that came out of the late 70s who failed on their first 3 albums, only to make it big. Artists today don’t get that shot – and a large part of the judgment to drop them is based on record sales. What do you tell them when you pirate their album? You don’t care if they’re around for a 2nd or 3rd album?”

He didn’t know.

“Would you change your mind if you knew that 95% of artists in 2006 did not even make up the costs that they consumed in getting their music to market, and actually lost money for their labels, and that less than 0.5% of albums accounted for over 50% of all sales for 70,000 albums released? Are you comfortable with that homogeny and disparate stardom?”

He didn’t really know. He thought quickly on his feet, and proposed that 99.5% of the music out there is garbage anyway, so he didn’t think that was a bad deal. I just disagreed with him and moved on. No need to go off on a tangent about good music vs. popular music. I continued:

“You can only sample perhaps 100 albums in one year, if you are an avid listener. Most of what you’ll sample is what’s being put right in front of you by promoters. Since the music you are being spoon-fed has big promotion money behind it, don’t you think there is a chance that some of your favorite music is hiding somewhere, perhaps not even accessible in the record store, just another one of those 70,000 albums per year that you’ll never even know about?”

He had an idea about this one. He said that it’s the same scenario for authors and their books.

I told him that I was not educated on the industry of literature, so I couldn’t disagree with him (although I had a feeling he really wasn’t a scholar of that business either). I retorted:

“Pointing to a similar iniquity in another industry doesn’t negate the severity of the matter at hand for people who care about music. Since we’re talking about music, let’s focus on that. Just because there are challenges in the literature business, doesn’t mean we should just accept similar unfairness in the music business. We’re trying to solve the problems, not excuse them away.”

Now Johnny was very frustrated. He direly wanted to go home and feel like a fantastically moral guy with his immense illegal music collection. I’ll never forget his last words on the topic to me, “You know Tommy, haven’t you ever heard of the ‘starving artist’? They’re supposed to have it rough and live turbulent lives so they can entertain us better.”

You would think he was joking right? But he wasn’t. He was 100% serious. I closed out the conversation with my crane kick, Mr. Miyagi-style. Again, paraphrasing what I told him:

“Well Johnny, I’ll have to agree to disagree with you. Because I’m a passionate musician myself, I deeply want to see music be a viable occupation that is rewarding and stable. I feel terrible for some of my favorite bands that have spent decades of their lives perfecting their craft, only to get sucked up by a broken business system, spit out the other end, and then dropped from their labels after only a few albums. You spent many years of your life perfecting your skills in business to get where you are today; can’t you image what it would be like if those skills were so devalued that someone made a similar comment about guys like you, who pursue your career?

Not only does it break my heart to see this happen to Artists, but also to know that fantastic artistic potential is being crushed, never to be shared throughout our culture again. No, I don’t think you are bankrupting Michael Jackson because you stole some of his MP3s, but without the money to subsidize future gambles on up and coming artists, your piracy may have been part of the financial losses that created the fiscal situation in which one of my favorite new bands couldn’t get a shot at a second album. The money that was lost on piracy could not go to subsidize more losses on struggling bands – which as I’ve stated, is the majority of them.

Don’t get me wrong, there are many broken business processes in the music industry, and piracy isn’t the only variable. And I don’t think that the RIAA suing people is going to be the solution to the problem. It’s a large, multifaceted problem. I’m trying to look at it from everyone’s point of view, and figure out viable solutions to do what I can to help. I think there are a lot of people who want to help make music better, but I don’t see how you’ll be part of the solution with the attitudes you’ve expressed to me.”

And that was it. A few months later, I told Johnny about a death in my family and he never offered condolences. Sometimes you just get a feeling about people. Johnny’s mentality was a great example of an extremist point of view, which made my experience with him interesting. He gave me a great inspiration. I asked myself, “How can I get a guy who thinks like Johnny to support artists, and buy more music products?” You see, in Johnny’s mind, it wasn’t a question of whether or not he wanted to consume the music products, but rather, how much he could get for nothing.

If I could figure out how to get Johnny to pay for the music, I would be able to solve the problem for all Music Fans, Artists, and Music Business Professionals. When we began MYnstrel’s R&D on our revolutionary music retail products, this was the inspiration I gave to my team. Our objective was simple and clear: make Johnny enjoy paying for great recorded music.

Next time…

We’ve laid out some concepts about music piracy in Part One of this treatise. In the next article, Part 2 “Where Does Your CD Money Go?” we’ll establish a robust analytical model to determine where all of your money goes when you buy a single CD. It’s important to know where the money for a CD goes to understand how piracy impacts the workers responsible for getting the album from the artist’s mind and into your hands.

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