Solutions to the 'mp3 problem' in the world?

[Kevin C]

Something which I have noticed in the past is the hope for a tradeoff between downloading songs on the internet and giving the artists and producers what they deserve. Here i try to present a neutral viewpoint on the mp3 debate ongoing.

Nordlicht, the producer, has recently tried something by offering his tracks for download at for something in the range of EUR0.99 per track. Now, lets look into the problems and benefits of finding a tradeoff shall we?

The benefits of finding a solution

The digital problem would be solved and both parties would be happy in terms of the fact that artists would get paid for their talents and the listeners would have the wealth of music available out there. Some would say: "Is that possible"? And if not, what are we going to do? Will music die?

But with the benefits come the inevitable considerations and problems.

The problems

Before I look at the problems, I have made a key assumption. The assumption that consuming and downloading mp3s via the internet has negative implications for the industry, and that the only way to bring that back is to pay for the hard media.

Firstly, we can analyse the fundamental problems. I would say that many of the listeners are in their teen years, listeners or music lovers who don't have a credit card, who don't have extra cash lying around to spend the equivalent of 16.99 USD on an album or 5.99 on a piece of vinyl. Fair enough, there is the argument that in that case, don't listen to music, but isn't that somewhat depriving and results in less global exposure for music in general? But here is where our problem lies, how can we reach a solution which incorporates numerous factors to a certain degree which will not harm the industry whilst keeping the consumers in mind?

Many labels and artists that music isn't being bought at all in the world, but I can tell you first hand that most of my consumption costs go towards vinyl. Taking a figure of around USD6000 since 1999 on vinyl alone, I personally think that is a decent amount to be contributing to the industry. I am sure that there are many others who spend equally as much as I do, and that online stores such as Juno and HTFR will confirm that they have daily sales across a wide spectrum of locations.

Lets look into the costs from a label perspective of producing a single:
(I have only approximated as I do not know true figures, please forgive me if i have made estimation errors)
Royalties paid to artist from the label for the track: depending on the artist, probably an average of 3000-7000 USD for a production?
Purchases of blank vinyls: i would imagine 3 USD or so? and we estimate 3000 copies of the vinyl shall we?
Mastering, engineering costs: lets give it 1000 USD
marketing and distribution: give it another 1500 USD for a major release
Other costs: lets add another 1500 USD.

As subjective as this is, it helps to analyse the points involved and the costs that labels are putting up with. To give it a more bleak look, we can take a high-high end of USD23000 for the total costs of producing and distributing a single.
Assuming only 2000 is sold, we have a revenue of approximately USD16000, but if things go well, and all 3000 sold, then we come to USD24000. Though the figures may not necessarily be accurate, the represent the difficulties in making a profit in this industry.

This of course is not something we can address as we have no hand in the flow of costs within the production line, but I guess some may argue that perhaps the variable costs can be lowered. Although some parties may not like it, it is for the mutual good for the industry.

Then there is something I recently thought of. The RIAA, the agency put in charge of enforcing piracy in the global music markets, in particular the USA. I personally feel that although the RIAA has done a good job in targeting particular sources of online piracy, I don't feel that their arguments on an overall viewpoint AGAINST downloading music or media is well justified. Don't get me wrong though, the reasons are out there, but the RIAA's reason against "Stealing online" and consumer market reports are not concrete, and they might produce a more better argument if they considered looking a historical evidence further back than their standard 1999 benchmark or the overall results of online media. Just taking an example of "Total copyright industries contributed to approximately 677.9bn USD to the US economy". Now many of you might ask what that means? How is it calculated? How can one measure something as intangible as online media?

The evidence for consumer preferences in the US has been debated, but quantified to reasonable extent, and taking RIAA's figures, "60% of consumers aged between 12 and 54 still find buying CDs a good value". I personally feel that that might be the case for the USA in 1999 as the economy was still in a good state during the technological boom and that spending power was still decent, but have people recognized that the problem may be that the economy is just plain shitty? People don't have as much money to spend on music anymore, and incomes are declining. Does that have something to do with it? Should it be factored into the debate?

My point is that although there are many arguments towards online media, the individuals and groups who have gone against this problem have not made things any better through their methods of brute force and elaborate media reports. I feel that perhaps their time would be better met in devising some form of solution in terms of a longer term means of controling the trade off between music production and music downloads. As they say, "the best way to tackle a problem is not to fight it, but to solve it"..

With the numbers of individuals downloading media easily in the tens of millions if not more across the world, the solution, without the slightest doubt is not in the near term, as there is NO MEANS to control information flow of mp3s or digital media on a global scale. Sure, we can close all the P2P Napster like systems there are in the world, but there will always be a new one; someone out there will suddenly decide one day "oh why not?"

Looking at another aspect, although noone has actually done research on this (as it would be quite difficult), the supporters of online media argue that it provides exposure for them in finding new music that would otherwise not be broadcast on radio and give them a wider reach in terms of different genres across the world. This i agree with, BUT I would also say that many people download and then don't end up purchasing the tracks they like? Sure, I am certain many individuals will do that, but there are definitely some who continually just take and not give so to speak. But is that a minority? or majority? we will never know...

The main jist of the problem is two-fold; firstly, it is the fact that downloaders often don't stand up their end of the bargain (so to speak) in purchasing media, and if they do, the industry doesn't recognize it as being enough. Secondly, the industry does not recognize (ENOUGH) that without online media, their music would probably be bound to their country of production and that overall exposure is limited, but does that affect smaller artists more? or vice versa.

The solutions

Many would argue that the solution is to stop downloading altogether. Is that possible? That would be like stopping a vast majority of the global information flow via some technological method? Or perhaps via moral promotion?

Perhaps the solution doesn't lie within the consumers, but within the industry. Labels sometimes complain that their revenues cannot cover their fixed costs and hence their profit margins are low, or even negative. But how much do you think that vinyls cost?

Alternatives? We devise a media which is already digital, and incorporate a 'digital vinyl' for use in clubs. This is probably where the technology whizzes can come into play and suggest viable solutions to devising a media which is both user friendly for DJs who want the 'feel', friendly in terms of costs to both producers and consumers, and has some intrinsic value to it; by which I mean it has some tangible form and can be bought, distributed, sold, etc.

Just looking at a possible comparison. Perhaps if one considers other industries, for example, the book industry. We have, in recent past seen a strong flow of 'online e-books', many of them provided free of charge, which I am sure took the author a good half a year to write. Taking a good example, I recently came across a Statistics book by 3 authors, ranking in at a good 365 pages long and downloadable at http://www.cs.cmu.edu/~chal/Shreve/shreve.pdf there. The book itself is a superb read and for those of you who MIGHT have come across it will in statistics studies, you will find it highly informative and full of information. Now where, one might argue does the revenue come in for this? I am not quite sure really, but the cost in producing the book comes from all the time costs, research costs, etc etc etc. Probably not the best example, but does the existence of an e-book industry produce less quality for the book industry in general? And yes, I concur that the downloading of e-books is only a small proportion in size to the numbers who download music, but perhaps it is moderate analogy to consider.

Looking into economic reasons, under monopolistic competition, we can consider two parties within the markets; industry labels and the internet. Both parties are, in effect, competing for the same market, except that 1 has little or no fixed costs but no revenue (internet), whereas the industry has higher fixed & variable costs and not enough revenue to cover them. What is a basic law of competition in the economy? Competition brings about higher quality and standards, reduced costs, and overall economies of scale. That is true to a certain respect. And I am not talking about individual labels aiming for high quality and standards (which of course they do), but the industry as a whole, in terms of greater considerations on a mutual level with consumers, and perhaps reduced costs to themselves and to consumers. But I won't go into that.

There are many considerations to be accounted for in finding "THE SOLUTION" to the mp3 problem, and that perhaps both parties (the consumers and the opposers) of mp3 are not helping each other in terms of finding a mutual solution (if there is any).

Imagine the scenarios and the questions they bring

1. No mp3s available online to be download - Implications for the industry? No exposure, bound to local markets, perhaps even poorer profit margins. Implications to consumers? Psychological impact perhaps? Would consumers really go and buy ALL The music they wanted to listen to? Who benefits most?
2. Only Priced mp3s available online to be downloaded - Implications for industry? Perhaps slightly higher sales generated and better profit margins? For consumers? Some with spending power may look into select artists, but what happens to the unknown artists? Who would pay to listen to music they don't know about?
3. Current state - Implications discussed throughout text.

I was not intending on taking either side of the argument here, only to provide some indications that this mp3 problem is not a short term one and that to find a trade off between consuming mp3s and industry costs is going to be one which may not even be possible.

Do you think there is a viable solution? Lets hear some theories.

Enough of my ranting now =)

[Stream]

Well...what can I say...major topic

I don't think it is possible to make everybody happy....I'm pretty sure more labels and record companies will have a hard time the next years...having to close down. The reason is of course lack of sales.

The reason for lack of sales is divided into two main reasons:

People download the mp3-version and enjoys the track without buying it later on

The economical market around the world is having a major downside at the moment, and it will probably last a few more years

For the record industry to blame all lack of sales on mp3-piracy is too easy....they have to look at other aspects too.
Another thing is that the industry in general haven't kept up with the technical development the past years. If they had been facing the mp3-piracy problem a few years ago they would probably have created a secure and reliable standard for selling downloadable tracks several years ago...before mp3's became too popular. Same goes for the film-industry who now finally seems to realize that it is easy to spread complete movies on the internet...
They simply weren't thinking ahead...they all saw the problem coming years ago...but shut the curtain and hoped the problem would disappear...meanwhile they could still live well on pretty good sales because the world-economy was really good at that time.

I think the solution is to master the new market-situation...it will probably take some time until we see a successful concept revolutionizing the industry though...

[RayvinAzn]

Hmmm...I agree, mp3 sharing is approaching the ridiculous stage...many of them are labeled poorly, or even completely wrong, which is bad for the original artist. I think at least a system should be set in place that "limits" mp3 usage. Proper tags, minimal cost for downloading, perhaps embedded code to make sure that the mp3 will always be tagged with the right title? No more free-lance downloading...its become a menace, imo. There is way too much of it! But, by the same token, I probably never would have gotten as heavily into trance (especially European) without downloads, and places like Trance.nu, Ivibes.nu, Digitally Imported, Tranceairwaves, and the like. So...I like the idea of charging for a legitimate download. It makes sense, and it's definately something that should be researched more. Just my 2 cents

[Viceroy]

I don't have a turntable, so I have CDs. CDs are really expensive, and that's a problem.
But the bigger problem is availability. The stores over here just don't stock much trance. I have to go to a big, two floor music store to find one rack of electronic music.
That's where online sellers hep but once again, it costs more for shipping and the product is usually more expensive.
But like Kevin mentioned, there are teens (like me) without credit cards or extra cash, so enjoying music is really hard without downloading.
That's my take on it, anyway.

[Ami]

A very well thought out and constructed essay, was a pleasure to read and to contemplate the points being raised.

If i may i'd like to add my 2 jelly babies to this, i can only hope it is as constructive and concise, and helps to further raise issues and encourages some further reasonable thought on this topic.

under construction,.. ran out of time typing it all.... will be added here soon!