Monday, November 06, 2006

Life After AllofMP3

Well, it seems that the rumors are true. AllofMP3 has been banned by Mastercard and Visa, which claim that they will not tolerate their services being used in the service of illegal infringement of copyright. Since these companies have no problem providing their services to people who download pornography that would be illegal in the US from foreign websites and indeed still allow Americans to participate in online gambling offered on overseas websites, I can't help but think that some government goon is putting pressure on them. The US government is, after all, on record saying that the existence of AllofMP3 could threaten Russia's chances for admission to the WTO. Probably because of similar pressure, Russia has also recently updated its copyright laws.

The way I understand it, copyright law in Russia works like this. There is a governmental organization called ROMS that "manages" copyright licenses. This organization has issued a license to AllofMP3 to do what it does, and that makes it all kosher over there. There is apparently some dispute about whether ROMS actually needs the permission of a copyright owner to manage his license on his behalf (presumably the record companies in this case) - and the updated law (that went into effect on 1 September this year) was in part meant to address this issue.

I'm not a lawyer, and even if I were I doubt I could wade my way through the murk that is international copyright law (especially as regards nations like Russia where the laws still aren't completely settled). I am, however, pretty sure that AllofMP3 will eventually turn out to be illegal in the US. My understanding at present is that it is not - that there have been no clarifications of US law sufficient to convince anyone that the police can actually arrest you for using it. But the legal machinery to put one into effect fairly quickly probably exists. Other nations have had made some troubling decisions on the matter. In Denmark, for example, an ISP has been told that it is guilty of piracy if it processes transfers from AllofMP3 (because the transfers themselves are "copies").

What's frustrating to me about all this is that the AllofMP3 model is clearly superior - from the point of view of customers and artists - to the current distribution system. Most of the price of a CD is eaten up by the record company. A good bit of this goes to the physical CD itself - but a not inconsequential portion is eaten up by profit.

The obnoxious thing about the whole setup is that the physical CD is obsolete for most recordings. True, online formatting is nowhere near up to the quality specs of CD sound in any real physical sense - but in terms of what the listener actually hears, it's really hard to tell the difference. For some recordings and especially for some people mp3 et al are insufficient. But for most of us, just playing music while we work, or at parties or in the car or whatever, there's no real sense in buying a CD. Not only can we not really hear the difference, CDs clutter the room, are not as portable, etc.

None of this stops Apple iTunes Music Store from charging full CD price for a download, of course - which is beyond maddening. Well, OK, to be fair: "slightly less." But "slightly less" doesn't really cut it considering the hugely expanded profit margin that comes from not having to actually press the damn thing. It took me, I am ashamed to admit, about 5 downloads before I realized what a rip the iTunes Music Store is. Might as well just buy the CD and load it into iTunes yourself, right? You can, after all, resell the CD and recoup part of your loss - or else you have it around as backup, or for those times when you need the superior quality, or whatever.

Now - here's the thing. I like Metal and Classical a lot - and I listen to my fair share of music. I love listening to new stuff - but I don't have $15 for every new CD that hits the shelves that I wanna hear. If I'm going to put down that much cash for a new CD, I need to be pretty damn certain I like it very well already. At AllofMP3 prices, though, I wouldn't really have this inhibition. $2 for an album? Well, sure I'd take a risk on something for that!

What I'm getting at is that I suspect that a lot more music would trade hands if the price of downloads from (more) legitimate download sources were in about this price range - or even slightly higher. That would, in theory, mean more profits for record companies and artists. It doesn't take a trained economist to certify that goods move faster when they're cheaper - and with profits margins this huge, there's no reason they can't be cheaper. Not only that - but mp3 encoding allows albums to stay "in print" forever at negligible cost to the distributor, increasing potential for sales and reducing the financial risk (it takes a cash outlay to produce the CDs, after all) involved with lesser-known releases. So why doesn't the RIAA like AllofMP3 (or, rather, I get that - but why don't they allow similar, legitimate services in the US?), and why is the US Government threatening to block Russia's WTO bid over it? Why don't the record companies just let iTunes Music Store compete with them on price level?

I'm going to go out on a limb and say that it's because it opens a Pandora's box the RIAA doesn't want opened. That's that the RIAA is actually already obsolete, knows it, and is just treading water. Home recording equipment is getting better. It's getting affordable for bands of random people to get together and record stuff on their own that sounds every bit as good as what comes out of the big studios. And with the Internet and digital encoding, the distribution problem is solved. The only thing that anyone really needs the RIAA for anymore is promotion. You can't be a kazillionaire without big studios pushing your albums on the radio, hyping your tour, etc. But for the vast majority of artists, it might be that more profits are to be had with a less centralized distribution system - like a (more) "legitimate" version of AllofMP3, plus internet radio, etc.

It seems like it's only a matter of time before all this comes crashing down. I just wish there were some way to jumpstart the process. Who the hell needs mainstream pop music anyway? Or U2? Or even Metallica('s new stuff)? Why do people pay attention to things like the Grammies? I don't really get it. But then, all that stuff really is to me is something annoying they play in the background while I'm at the gym.

The lesson here - well, there isn't a lesson. I'm not everyone else, and I get constant reminders of this. I guess as long as people read celebrity pages, there will be millionaire pop stars. And that's kind of a shame.

Not that that should stop legitimately good artists from cutting the strings and releasing on their own.

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