Tide turns against record industry

May be good news for artists

By David James

Despite the best attempts of record companies to prompt sympathy for their ailing businesses, a recent case of music piracy against two Sydney University students did not result in the recalcitrants' going to jail. Record company executives derived some vindication from the magistrate's handing down an 18 month sentence, but registered disappointment that the sentence was suspended, no doubt because they would not be able to visit the young pirates in jail to divine their opinions on latest product releases.

With world-wide CD sales falling by about a quarter over the last year - a death rattle for any industry -- the ability of the majors to shape the market has sharply diminished. Many are advising that CD prices should drop to $US5, which would mean record companies would no longer have the financial power to dominate distribution, marketing and airtime (all of which the five majors essentially purchase). Music is perhaps an exception. Record companies are legendary for paying scant attention to the rights of artists while displaying exceptional skill at protecting their own interests. But as industry executives do an impersonation of someone trying to hold back the tide using a plastic shovel with both hands tied behind his back, it is hard to escape the impression that the industry is facing challenges that it will struggle to manage.

The rot in the recording industry is occurring from within. In a recent, anonymous survey of 200 artists, managers and record company staff found that three-quarters owned CD burners. Almost half used them to illegally create copies.

The music industry sells a product whose value is intangible - the ability to capture attention and seduce listeners. In the last three decades, they have mostly concentrated on the tangible framework around the product: distribution, marketing infrastructure, the digitization of production, the mechanics of paying for, and controlling airtime. But as their market fades, it becomes evident they have not managed their principal "knowledge workers" (artists) well enough to stimulate sufficient new demand. Neither have they interpreted the implications of the new technologies. Worse, they have invested heavily in the tangible frameworks in the belief that this is the "business". It is not. And investing so heavily in these areas has led to creation of a cost structure that is unsustainable. The business is, finally, content based - music that grabs attention.

The lesson is that knowledge workers are in possession of the means of production (their own minds and creativity). As Jonas Ridderstrale, co-author of "Funky Business" observes, this is almost a Marxist situation. Some of that "mind" can be retained by the business, but it can never be owned (barring slavery). This is a common business problem; it is just that the music industry has not really been run as a conventional business. Many managers are facing business conditions that are turbulent, knowledge industries in which they are required to align their workers and customers more closely, to ensure a mutual benefit. Instead of being controllers, the aim is to become more effective intermediaries between staff and consumers. But this is largely beyond executives in the music industry because their habit is one of exploitation: creating a metamorphosis in which musical intellectual property, in the hands of musicians, is held to be largely worthless, but, in the hands of the record company, is extremely valuable and must be protected at all costs. Small wonder that the loss of that intellectual property through on-line piracy is not provoking much sympathy.

More tellingly, the music industry, unaccustomed to the usual rigors of business, is failing to adapt to the new conditions in a business-like fashion. Instead of responding to the new environment, they are trying to maintain the old conditions, a doomed endeavour. Yet there is a new "market" (albeit one of mostly free transactions) which is resulting in billions sharing music. To tap into this activity it is necessary to find the right price points (probably a few cents per file) and to find new ways of adding value -- conventional business problems. Trouble is, the music industry is not really run by business people. Unless they find new ways of fashioning their business, the currently mooted mergers between the top five global companies will simply result in their shifting two sets of unsustainable cost bases into one set of unsustainable cost bases. The music industry has managed to ignore the implications of the Internet, now that failure to act is catching up with them. Expect the most serious upheaval in music we have seen for decades.

David James writes for BRW and is a damn fine alto flautist.

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'Tis almost midnight. I have been vomiting, rumbling and farting, and no longer have any need for a god. I tried porridge, then soup and finally a small tub of yoghurt that teetered dangerously on the edge of putridity. I thought it would find a curdling companion within my tummy, which it has.

Cigarettes are my only reliable fuel, and they only serve to further discombobulate me and feed my lethargy, whilst at the same time giving my frayed edges a teeth-clenching whiteness that lends me a fractured and unstable strength.

A bug wormed itself into my gut, stagnated awhile and then blossomed, twisting and wrenching my innards this way and that, and making ever-increasingly successful attempts to erupt its way out whichever end it pleased. Yesterday the bug repeatedly attempted to expel anything it could get its vile tentacles on, using my oesophagus and mouth as its chosen exit-ramp. Today it has been pleased to wreak havoc on my intestines and bottom. The back roads, I guess, but certainly not the easy way out (notwithstanding the ease with which it finally came out, enough said).

Why this vermicious little bug should expect more fun in the toilet I'll never know. Surely the fabulous, gurgling playground of the human digestive/bowel system has a myriad of opportunities compared to the septic tank? Stupid bug.

But whereowhere is this going, one might ask? And the reeking answer is: probably nowhere. "Nowhere" in the sense that to travel hopefully is better than to arrive. And "probably"? Well, who am I (or you, dear reader, for that matter) to presume that a jolly ramble through my bowels isn't a great psychological (biological even) leap forward? A single bug created and destroyed a civilisation in there! Nothing ever really goes "nowhere". Welcome to The Clinker Fields. Where nowhere is our goal and destination, and the nothingness of the everyday is a field to frolic in. That field could be a sparkling meadow, or a waste treatment facility. Isn't it always? 'Tis after midnight, and after all, the next day, that is no longer tomorrow. Confused? Queasy? Well, good morning then!

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