NEWS With the film and music industries at last ready to consider the idea of using the internet to deliver content, the question is - how to make money off it?
The need for new business models was expressed by many speakers at this week's Westminster Media Forum on intellectual property in London, though no consensus was reached on just what that model would be.
The record labels are arguably more ready than their movie-making counterparts to accept downloading as a broadcast medium, if only because music files are smaller than video and therefore more suitable for even today's broadband speeds. But they've made their share of mistakes - especially in taking so long to accept new technologies.
Andy Heath, managing director of 4AD, said at the conference: "If the record labels had embraced the original Napster, we may not be here... but they didn't and we are."
Given the current situation, Heath added: "It's incumbent on the music industry to allow customers to download [music] but to find a way to make money from it."
Legal online sales are seen to be growing rapidly, with PricewaterhouseCoopers predicting they'll make up 11 per cent of the global market by 2008.
As for how music will be sold in the future, Heath and other speakers agreed the practice of paying for content at the 'point of delivery' will likely go away, with music delivered on-demand to a number of devices, including mobile phones.
Yinka Adegoke, deputy editor of New Media Age, proposed a new model whereby "funds from music [sales] could be put into one pot that's shared by telcos, ISPs and music makers".
Anthony Lilly, managing director of Magic Lantern Productions, stressed the need for content developers to create business models "where we add value" and thus give consumers an incentive to pay.
Digital rights management (DRM) systems are looked to as the technology that will facilitate for-pay online content, as they allow content owners to control the use of their music or video and make sure copyrights are not infringed.
Stephen Gale, CTO of BT Rich Media, named the benefits of online content delivery with DRM, including the increased amount of content available particularly in niche areas, increased control over content and close one-to-one relationships between the publisher and the consumer.
Yet several speakers shot down the idea that these systems were the be-all-end-all solution for online content.
Fran Nevrkla, executive chairman at Phonographic Performance, said: "Good DRM is not the answer because as soon as you develop [a system] some smart alec [devises a way around it.]"
Andy Cox, open source developer at Red Hat, added: "DRM will always be buggy and will always be compromised."
Others, including John Higgins, director general of IT industry group Intellect, see DRM purely as a facilitator which should not be confused with the politics surrounding copyright law and business issues.
"Technology is just a set of tools to support business objectives," he said.
Piracy, of course, is the thorn in the side of digital content businesses. Though not a huge problem in the UK - making up about 10 per cent of the market, according PricewaterhouseCoopers - it is a major concern in Eastern Europe and Asia.
The prevailing theme among content publishers and creators at the forum for how to deal with IP infringers was to temper the "policeman mentality" - as Robert Boyle, partner at PricewaterhouseCoopers, put it - displayed by the music industry thus far and look for fair solutions amenable to all parties.
Magic Lantern's Lilly said content producers need "to appeal to people's self-interest" instead of slapping them for violating copyright laws.
4AD's Heath added the best way to change copyright law would be to find something which respects consumers and therefore which they will comply with voluntarily.
BT's Gale pointed out the need for new content types as well as business models for online delivery to take off, saying that "if we clamp down too much [with IP laws] we could stamp out industry before it's started."
Comments
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1. Charles Wood
The music industry's main problem is capitalism itself: they want to profit from their sales, hugely. The problem with all download systems is that they seem not to be worth much to the user... the percieved value is low. It does not matter what you do unless this issue is fixed, and that ends anything but direct delivery to the user as a means of sales, because the margins are too low.
So, however you view it we will see music and "film" companies as we know them dissappear. Especially when us "new boys" start using the same technology to collect and deliver content worth watching, from wherever we live.
Cuba, maybe, has it right: they even tell viewers when to download the latest video or song (with a countdown). They assign a portion of GDP to such artists and as a consequence support the arts far better then we do in the UK.
2. Frank smith
RE charles's comment
This would seem to be the way all our new business's will go over time.
Huge profits from point of sale and large marketing will die of, leaving small targeted systems with a lower distribution cost and more choice for the consumer not the industry. (real capitalism!)
Cheers
Frank
3. Charles Wood
I wish low cost to the consumer was the end result of the reality of capitalism, but it is not a social process, more a law of physics. It has no relationship to the needs of people involved.
Currently our NHS service and roads and railtrack are examples of services run by the state because no one can make a profit running them. yet we ALL need this service.
In Africa, the exchange of music at zero cost and payment rapidly destroyed their indiginous music industry. This was because people could NOT afford it, as is the case in Cuba (100th per capita income of the UK). Ay least Cuba partly recognises the value of their own culture, to everyone.
So another solution is needed, before it falls apart worldwide. Already many lesser known musicians are ignored by big companies and fail on the net because they are treated as if they are a big company and not paid for their work.(it feels right socially....?!)
Copyright only solves the problem for those that can afford to enforce it. What is needed is a social method of recognising and rewarding value, even if it is within a capitalist economy. I am not trying to argue here that Cuba does it best, just that there are alternative solutions which work.
Who would deny that Cuba's music is excellent?
An automated regstration system with a unique code per musical item, run at cost by an oganisation by MCPS, for everyone, freely, could solve this dilema in an equitable manner. Unfortunately they are a company trying to make a profit so are unlikley to do this without the state stepping in and funding the process.
The music industry as we know it definitely dissappear with this system and so they will not only not fund it, but will oppose the concept.
So if you are a musician, I suggest you get a paying job (maybe in tesco's selling music from the 70's)...now.
4. andrew casey
my personal belief is that the music industry has an ingrained fear of the download market now facing them,
unfortunatly when it comes to "buying" music downloads the masses appears to have two trains of thought:
firstly: because they do not recive a shiny piece of plastic with a case to keep it safe, printed track titles and of course the destinctive artwork found on todays recordings, many consumers feel that value for money is rather lacking
secondly: the ever so much more common comparison to popular literature, comparing the cost of production and more importantly the creators investment in time, a book has greater "consumer" value
the fear of loosing control of there own industry, being dictated to by the giants of multimedia technology, becoming the disposable middle men of music and the resulting transfer of profits to the tech industrys have prevented the embrace of a newer better system not seen since betamax
instead the music industry operates in a realm of its own,
with no real sense of competition, a never ending conveyer of publicity, well timed release dates and poor attempts at piracy solutions
will they continue doing as they please ? steered by imaginative managment concepts such as "dont change anything and no one will notice"
Q: why do we put up with it ?
A: because we love music
i wonder if itunes has "status quo"