Editorials @ Applelust

Knocking on Heaven's Door: Is the World Ready for Buying Music Online?

Following the footsteps of the dishwasher, the electric toothbrush and sliced bread, another great innovation is here to take the world of consumerism by storm: technology enabling you to browse a huge music catalog, buy songs or entire albums from it, and start listening to them right away, without ever having to lift your butt. Feels like heaven, right? Oh, except that the selection is limited. And it's Mac-only. And record companies still get most of the money you would want to give to the artists instead. And the entire gig only works in the U.S. But these nasty drawbacks will disappear, won't they?

Hey, not so fast. Why don't we hold those angel's wings for a minute, and try to put the entire thing into a bit of a perspective. At least, we'll give Apple and its worthy competitors some time to work on those glitches a bit...

It can be argued that many of the advances science has made in the last two centuries or so have been part of an attempt to establish a version of heavenly comfort right here on Earth. Those of us in the Western part of the world have today, on the average, every chance to lead a longer, healthier, wealthier, lazier life than our predecessors did.

But it looks like there is only so much heavenliness this planet can ever hope to achieve. Sci-fi authors writing about the utopistic societies of the future where crime, taxes and death are no more are, well, no more. Today, any movie about the future of mankind will spend most of its budget on pyrotechnics and special effects involving hungry hordes of beastly humans, evil machines, and images of total desolation. That is, of course, a mere extrapolation of the perceived state of affairs today. We all know that the Earth is dying, yet we're holding out in our ivory tower that is Western Civilization, still trying to cobble together our Tinseltown version of an exclusive, nihilistic Heaven where our lifestyles are preserved as though they were the main value of mankind.

There, I've said it all. So let me adjust my vision to the near-sightedness required of us, Hollywood saints, and focus again on downloadable music, the latest tiny bit of heavenly consumerism to hit the market. But as my bloated horizons shrink to accommodate today's topic of choice, let them pause for a while to encompass something slightly bigger: the Digital Lifestyle.

Mice and Men

In the post-industrial society we're working on establishing, technology has a democratizing effect, putting consumers in charge of creative activities that used to be the closely-guarded privileges of professionals. Many tools of many trades have been replaced by software--converted to a series of zeroes and ones--, and are thus much more affordable than the equivalent analog heavy machinery of the past. Computing bridges the gap between your creative dreams and the resulting end products, making Walt Disney's saying more appropriate today than ever: "If you can dream it, you can do it. Always remember this whole thing was started by a mouse." And a keyboard.

Ideas, vision and creativity are, of course, still required (or at least recommended), but many creative processes are not only less labor-intensive today, but also require considerably fewer skills than in the past. Anyone with a capable computer and a generous software budget can attempt to design publication-quality newsletters (even magazines), compose CD-quality music, or edit broadcast-quality motion pictures in the privacy of his or her home. A few decades ago, all three required considerable investment in training and material resources, and were thus not attempted lightly.

So technology democratizes, which is good news for those who have great ideas, great talent, but not enough resources. (Or are pretty lazy.) On the other hand, computers do take away some control from humans, and by reducing both the depth of the knowledge and the scope of the skills required for creative tasks, many argue that today's creative professionals are, on the average, liable to becoming less and less competent in their core fields, and as a result, the quality of their work will suffer. (Of course, there will always be outstanding talents, digital or otherwise. But mediocrity seems to have found a great friend in digital technologies.)

Apart from the loss of quality (which has always been, by the way, one of the things angering and driving Luddites throughout history), there's another important consequence of automatization. If a process becomes less labor-intensive, it will require less labor--and fewer workers too. The advance of DTP has lead to the elimination of typesetting and other positions worldwide, and as we're currently experiencing a shift in the prepress industry from CTF (computer to film) to CTP (computer to plate) technologies, many low-skill jobs will become redundant in printing houses and elsewhere as well.

As labor-intensive work gets automated or eliminated, it usually means the creation of more technology- and computer-related positions for skilled IT experts rather than new jobs for the workers who were laid off in the process. And as digital photography has taught us, pre-information-society companies like Polaroid risk going out of business if they cannot adjust fast enough to new trends. And, of course, any trouble at such corporate giants means thousands of layoffs, affecting the entire economy.

Finally, the more industries undergo the IT treatment, the larger part of a society will be tied to IT, and may end up being controlled by the same corporations--just look at the IBM of the past, or today's Microsoft: hardly democratic. Well, I hope you don't mind being reminded at times that consumer happiness and technical development are often bought at a dear price of unemployment, corporate monopolism and the erosion of traditional crafts and arts.

Record-Breaking Downloads

With the advance of downloadable music, computing is taking over a lot of complicated tasks in the music industry too, cutting out a lot of middlemen. Depending on the scale of the transition, mass layoffs in production and logistics departments could shake the recording industry. If the shift to downloads will be significant enough to cause a noticeable (further) decline in CD sales, music retailers will also need to adjust to the changes by coming up with creative ideas like reinventing themselves as online points of sales, or they would also risk extinction.

This is why I find it strange that everyone seems to take it for granted that this business model will be the future, that it will "save the record business," and that it would very likely supplant the CD as the main medium for selling music: if such a shift is going to happen, it won't be pretty. It will be a road littered with unemployment and the bodies of dead companies. Therefore, it's a road many must be pondering whether or not to avoid.

The continued operation of Apple's iTunes Music Store (iTMS) either as a cross-platform or even as a Mac-only service is far from a done deal. Journalists who complain that the iTMS is Mac-only miss the point completely: if the iTMS worked with Windows, it probably wouldn't even exist, as one important reason why the big five record companies even agreed to licensing their music to it was its confinement to the Mac niche (actually, the even smaller niche of U.S. Mac OS X users).

Few seem to realize that the iTMS's license is only valid for a year. It's time to understand that the iTMS is not a final product: it's an experiment, limited not only in time but also in scope--to a small segment of a huge market. It may be a great thing for Apple and Mac users, but for the big five record companies, it's a mere test. They might have decided to adopt a wait-and-see approach to online music stores, but behind the scenes, they are desperate to come up with a survival strategy, any survival strategy. As their very existence is threatened by dwindling CD sales, they must be looking at several potential solutions, and licensing their songs to third-party online music stores like the iTMS is just one tentative path. They may as well abandon that plan after all, and decide to go back to lobbying for Draconian copyright legislation, shifting exclusively to selling copy-protected CDs, or transitioning to yet another technology.

Make no mistake about it: the big five record companies are very much in the position to pull the plug on iTMS and any similar services, killing them overnight if they wish. They may be dinosaurs, they might be dying--but they still have enough power and momentum to slow down any paradigm shifts in the industry. If they decide today that the iTMS must go away, all they need to do is cancel their Apple contracts--and it's lights out for the brilliant online service: all that great technology means little without any contents to sell. Let's face it: it's the big five that owns the rights to the world's most popular musicians, as well as the music they've released in the past few decades. Would Apple's music store survive today if it only offered songs by independent labels? Maybe it would, as a streamlined, insignificant niche player; one without any serious leverage to drive changes in the industry. That is, unless Apple could convince recording artists to abandon their record labels and sign up with some Apple-friendly ones. But such a slow erosion process, however heroic and commendable, would hardly favor Apple's bottom line, which is what matters the most at the end of the day. In order to survive, Apple needs to make money.

Thus, the iTMS and its competitors need the big five to remain on board. And while it seems obvious to many that the big five have no other choice, I'm not so sure they are that keen on surrendering their previous positions to tech companies. Am I the only one to notice a very remarkable shift in the record labels' attitudes with the launch of the iTMS? The same execs who insist on enforcing copyright laws to the letter (virtually never agreeing to any copying of their music by users) raise no objections at the same time to users' copying their songs all over the place--to three Macs, countless CDs, and an indefinite number of iPods. Previously, record labels have made it clear that you only got "rights" to a piece of plastic when purchasing a CD. Damage it or lose it, and you're in the market for another copy. Make a back-up copy, and there, you've broken the law.

Did you know that even "ripping," "mixing" and "burning" a CD you bought is in breach of the U.S. Copyright Act? That is, unless you were authorized to copy that CD, which you tend not to be unless you're the owner of the copyright to it. Ever since music went digital (i.e. able to be copied without a loss in quality), the interests of consumers and record labels have been diametrically opposite: the former want to take advantage of all the comfort technology allows them, like carrying music with them to PCs, cars and personal stereos, while the latter want to put constraints wherever conceivable. What music labels want is total control of your use of the songs they sell you: I'm sure they would love to be able to charge a fee every time you listen to a song. (After all, that's how it worked back when recording hadn't been invented yet: you had to pay a musician if you wanted to hear some music.) The law is more on the side of the labels (but cannot really keep up with technology), while technology favors the consumers: so now there are laws that cannot be enforced, and there are technologies you are forbidden to use.

Steve Jobs worked magic: those labels have given up the idea of total control, and agreed to a model involving very lax copy protection--all run by Apple, the company easily (though unjustly) viewed as the patron saint of pirates. Apple claims to trust consumers, and doesn't believe in eliciting law-abiding behavior by crippling usability of its products. Licensing songs to Apple's iTMS must have been a step record companies took very reluctantly--or desperately. While digital rights management is part of the iTMS, you can technically--if not legally--copy a song you purchased to your friends' iPods, or burn CDs for them. You wouldn't be able to do that with copy-protected CDs, or other schemes that favor the label over the customer.

But from the record companies' point of view, something else is wrong with the iTMS too. Not only does it favor the consumer over them--it also opens up opportunities to independent labels, or even to individual artists, that threaten their strong grasp of the market! Yes, it's the democratizing effect of technology. While some journalists already complain that artists still don't get a fair cut of the prices consumers pay for their music (well, duh, it's because most of the music is still controlled by the same labels as it was a week ago), that will inevitably change: companies Oasis CD Manufacturing and CD Baby Digital Distribution are offering iTMS-related services for bands, encoding their songs and submitting them to the store (and other "similar" services) for consideration. If Apple approves their album, the band will reach a worldwide audience online with a minimum investment. (Well, make that "Mac using U.S. audience" for now...)

Combine the two possible fears of record labels towards the iTMS (lax copy protection and a challenge to their hegemony), and you'll understand why I feel that there's a chance that the big labels might pull out of the deal. It also needs to be seen (and is probably being heavily researched and studied right now) how big an impact online sales will have on CDs. Will computer-savvy users choose downloads over CDs? Or will they insist on the superior quality of CDs, as well as the cover art? Will the iTMS convert full-blown pirates to paying customers (with some minor piracy still in the cards), or will it cannibalize CD sales instead, leaving piracy intact? Will the CD become a niche product? May the transition end up being thorough enough to turn brick-and-mortar music stores into CD-burning services, accessing the same iTMS (through special deals) as consumers? Should the iTMS also serve CD-quality content for audiophiles and retailers, thus taking care of most of the distribution and production?

These are the questions that need to be answered before we can predict the fate of online music stores, most notably the iTMS. As quality rarely sells to masses, I don't think giving up CD quality would deter too many consumers from switching. Neither do I think we should make predictions based on the digital fate of other media, like books or movies, for the following reasons:

Music, unlike movies or books, can be enjoyed in short segments or pieces. The two-to-ten-minute song, the well-established unit of popular music, has no real equivalent in the world of books or movies: both a movie and a book are (quite large) units by themselves, whereas an album is a much more loose compilation of shorter, independent pieces.
Therefore, watching the movie as a whole or reading the book as a whole are both lengthy tasks, requiring a state of comfort that small gadgets or computers cannot provide. Both media are also primarily visual, and thus any computing equipment attempting to create a digital version of books or movies needs to be easy on the eyes--a much harder and costlier task to achieve than acceptable sound quality.
Both books and movies require quite a lot of attention, and neither can be enjoyed in situations requiring concentration (at work, while driving, or when working out). However, music can be ubiquitous.
Legal issues aside, music is easily duplicated digitally. File sizes are small, and the equipment needed to create duplicates is affordable to just about anyone in the market for music. With a cheap PC, one can duplicate songs, copying them to MP3 players in seconds, and with an inexpensive CD player, the duplication of CD-quality materials is also pretty quick and easy. Burning MP3s to CDs does result in a quality loss, but the end result will be playable on most traditional CD players. Contrast that to the digital duplication of movies (copy-protected DVDs, huge file sizes, relatively expensive equipment and media needed) or books (e-books are hard on the eyes, printing books on laser printers is cumbersome and results in a product that is no match for a book sold at a bookstore).

It looks like music is a remarkable meeting point of what users want and what digital technology can offer. While rampant (and illegal) copying of songs doesn't only hurt the much-maligned record labels but also the artists themselves, I personally think that fighting technology in this case would inevitably become a losing battle.

Unless record labels face their imminent loss of significance, and carefully lay out their plans for surrendering control to consumers, musicians and IT companies, thus ensuring their survival and becoming part of the driving forces behind the transitions, they will enter a downward spiral of diminishing revenues, artists jumping ship in favor of alternative solutions (possibly provided by the likes of Apple or other IT companies), and, in the end, dying lonely and friendless. To put it even more bluntly: if record companies decide to cling on to their old ways, try to keep the control they used to have, and fail to license their songs to services like a full-blown, worldwide, cross-platform iTMS, it won't be long until the same contracts and licenses will be hastily auctioned off to pay off the creditors and shareholders of the bankrupt record giants.

The music industry is facing transition. We need to watch the five giant record labels very closely: the actions they will be taking in the near future are going to determine how many will fall victim to the new paradigm shift. Because there will be casualties. This is a cruel world, after all, where consumer satisfaction is often bought at ungodly prices.

- András Puiz

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