COMMENTARY--In order to survive, the IT industry has gone through some big changes in the last few years. by contrast, the music industry still doesn't get it.
The IT industry in the past few years hasn't been smooth sailing. IT spending went down, the dot.com crash forced companies to come up with new business models, and increasing commoditisation of hardware made it difficult to sustain a business based on selling products. In our case, the past two years has been a process of transforming from a product-led approach to one based on services and managed services.
It's not just a reflection of economic factors, buying behaviours have also changed. Companies are more capable of doing things by themselves--in the network integration space, reduced demand for services and a steady (or increasing) supply of engineers means organisations can meet some, or all, of their networking requirements in-house. People expect a higher level of transparency when they transact--from individuals checking the status of orders online to businesses implementing supply chain solutions.
So businesses adapt. Business models are modified. Processes are updated. New products and services are created to meet changing customer requirements. Or they go out of business.
So it's with some fascination that I observe the music industry struggling with similar changes. Piracy, the industry claims, is the reason, as well as free downloads and DVDs. Since 2001, these factors have been held responsible for falling, or flat, sales of recorded music. It's now a "pandemic". In July, the Australia Record Industry Association (ARIA) suggested over 3.5 million Australians illegally burnt a CD in the past six months, and a similar number downloaded music files.
For over two years we've heard similar refrains about the threat to the industry. Rather than acknowledging that times are a-changing and a new model is required, the industry has been fighting to hold onto a business model it's comfortable with.
| Rather than acknowledging that times are a-changing and a new model is required, the industry has been fighting to hold onto a business model it's comfortable with. |
First was legal action. Napster was firmly in the cross-hairs of the Recording Industry Association of America (RIAA), having attracted over 60 million users at its peak and in some ways starting the revolution in online music. It eventually collapsed from the cost of the legal battle. However, it was quickly replaced by new peer-to-peer networks with no central index server, therefore virtually impossible to shut down. Despite these obstacles, the RIAA filed lawsuits against four students for illegal downloading. Initially seeking damages of US$150 billion (that's AU$150,000 for each of the one million songs held on the server), the case was settled for around US$15,000 per student. Intended to send a strong message, it hasn't made a great impact on either file sharing services or CD sales.
Another angle being pursued in Australia is a levy on blank CD and DVD media (a similar attempt to implement a levy on blank cassette tapes was rejected by the High Court). This levy, between three and five percent, presumes that most CDs are used for the purpose of copying copyrighted material, but enables buyers to obtain a refund if used for a legitimate purpose. The Federal Government is considering this. Over 40 countries have similar schemes. You can be sure the music industry is applying some pressure for this to happen.
Copy protection has also been attempted, most notably by Sony. Unfortunately, as well as not playing in PCs, the CDs wouldn't play in many car and portable players. Plus, it didn't take long for users to find ways of circumventing the protection (using a high-tech felt-tipped marker). Earlier this year, Universal Music introduced copy protection for its audio CDs. It works on some drives, but not others. Meanwhile, a group of audio enthusiasts is considering a class action suit against Universal.
I can e-mail digital photos to my local lab to get prints. I can buy software online and download the application immediately. I could (illegally) download MP3 files from various file-swapping utilities. But I still can't legally pay for and download a song or album, or put together my own CD online. Until the music industry changes how it does business and treats consumers--as many other industries have had to do--we'll keep on hearing about the decline in CD sales for a while.
Oliver Descoeudres is marketing manager at network IP/Internet network infrastructure builder and solutions provider NetStar Australia. He can be contacted at marketing@netstarnetworks.com or on 02 9805 9759.
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About the "40 countries" who already have a levy on blank medias (mainly European countries). An important difference is that in these countries (at least most of them), people have a right to do copies of protected material for their own use (aka "home copying"). The levy does not cover for illegal copying, they represent a compensation for this legal copying.
Now, it looks like the Music industry in Australia would like to have his cake and eat it: a levy on blank medias, and no right for private copying !
This would be hard to swallow...