Magic and Lies

Who killed the recorded music industry? In the light of Apple’s veiled threat to shut down iTunes in the face of demands from the music publishing industry for a larger slice of the pie, this question is suddenly a lot more relevant. The central issue is not about Apple, it is about the way that society rewards artists and the failure of the free market to keep up with technology.

Before the gramaphone (ignoring the wax cylinder) there was no recorded music industry. Musicians made a precarious living by playing real instruments, live, in front of real people. Songwriters had a share of the sheet music sales from popular songs. as I said, the living was precarious.

The music industry as we know it, evolved during the sixties - by this I mean the infrastructure of the industry, the distribution channels, the manufacturing, recording and marketing instruments, the fundamental structure of a recording contract that tied an artist into promoting records on tours underwritten by the record companies, ultimately paid for by the royalties on successful records. and by records, I mean the physical vinyl artifact.

This arrangement suited the record companies very well, so well that when CD’s and digital file formats arrived, they completely failed to see the writing on the wall. It was abundantly obvious to anyone with the wit to look, that recorded music would be passed from person to person via computer networks. In one fell swoop, the record companies lost control of the medium and some would say, the industry.

Napster, the peer to peer file sharing service was the first to really get under the record companies skin - hugely successful, the companies invention, a peer to peer music sharing system created a model for a decentralised distribution channel that has proved impossible for the traditional industry to control. It took a federal government to close down Napster, but there are a host of similar enterprises still in semi legal business.

This is why it has been so difficult for the industry to deal with. For each track there is an owner of the sound recording, the record company. There is also a separate work, the musical composition - the song the artist sings. By law, each track of the CD is also considered a reproduction of the musical composition. On a typical CD, there may be 12 sound recordings and 8 separate music publishers. Multiply that times 3,000 record companies in the US, and 25,000 music publishers, times 27,000 new CDs per year. Separate individual negotiations for all these rights are simply not a viable option.

With CD sales falling last year by 20% to ($7.4bn (£4bn)), the record companies now have a major problem. The artists do too, but the good ones are now making up the shortfall by playing live - this has to be good for the long term health of the art. By which i mean that new technology has been seen by the record companies as primarily a means of reducing recording costs - to the detriment of the quality of the product, as the art of songwriting took a back seat to the art of sampling. In the current climate, forcing acts to play live may encourage the use of technology to entertain the audiences again. But it’s not that simple.

Traditionally, the audience / society, pays the piper - prices are hiked and artists, record companies and publishers all live happily ever after. Now however there is a problem. Apple don’t own the medium, they are just the de facto owners of the largest share of the market. Rivals include Sony, who as a record and hardware company themselves, would be very well placed to mount a strong competitive alternative. So Apple will not want the price of recorded music to rise. The record companies, watching their profits dwindle daily are unlikely to want to take the hit, which leaves the publishers and the artists themselves.

Interesting times ahead. Should songwriters be paid for writing songs? Is it reasonable for the record industry to seek to sustain its profit levels when they no longer own the medium? What does the record industry do in these days of digital recording technology, to justify its profit? Should Apple simply raise the price of digital music?

What if the artist retains control of the recording? Is there any point in recording 12 song albums any longer? What are the implications of selling less songs? Would a tour the size of Madonna’s for example be sustainable on the back of the profit gained from a couple of singles? Actually the answer to that one is yes, ditto The Rolling Stones, but what of the middle ranking acts that depend on touring to shift albums?

But back to the central issue - we have an audience, millions of music hungry people with money to burn, who are quite happy to spend it. We have a computer company, Apple, capitalising on the digital format to charge the audience for the music at 99 cents per track. We have a music industry desperate to play ball with Apple because they no longer own the medium. We have a music publishing industry asserting its right to gain a higher percentage of the digital rights - so who loses?

Answers on a postcard please!

• Apple threatens iTunes shutdown over royalty dispute - Wired
  
• iTunes store shutdown feared - BBC