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the price of music Why it doesn’t just cost a quarter to make a music CD and how technology is reshaping the music industry

Written and illustrated by: Dan Alcala


Part 1 : What really goes into making a CD A musician(s) records their songs and they send them out to stores right? Well, sort of, but there are many steps and elements that put it all together. There are also many expenses too. While it may not even cost 25 cents for a blank disk, it’s a mistake to think that’s the price of producing a CD. It is much more complicated than that. Some argue that many of the expenses are unnecessary and in the end, no matter how many sales, the creators of the music are exploited and left with almost nothing. There are also many financial risks taken in producing an album as very few are truly successful. The process of making a record can differ greatly due to the artist, label, experience, budget, and numerous other factors. We are going to follow an upcoming band on their journey to stardom. The numbers presented are accurate and based on essays written by Steve Albini (producer of Nirvana’s In Utero), Professor James Shearer (author of Jazz Basics) and John Gantz and Jack B. Rocherster (authors of Pirates of the Digital Millennium.) Text highlighted in green represents income while red text signifies expenses.


Meet The Pawns, a hot young band from the suburbs with a refreshing new sound. From their humble beginnings of middle school band to current rocking of city’s top nightclubs, they’ve always seemed destined to make it big. They released two albums on a moderately sized independent label that were static for a while but have recently been getting lots of buzz and increased sales at shows. Word of mouth and heavy college radio play has really helped stir things up. They feel they’re ready to push forward and want to make the leap to a major label and get more exposure so they find a manager. They figure its only 15% of what they make and if he can help get them signed its money well spent. Their manager is a real cool guy with lots of connections. More gigs start rolling in and the crowds are growing too. After a few more shows, an A&R scout from a big label meets with them and wants to work a deal out with them. They talk things over for a few days and are offered a contract that looks pretty good. They get a lawyer to go over it and fix some of the bugs. Its worked out so they will get 13% royalty on CD sales and they have to pay $50,000 to their

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old label for compensation left on their contract together. They sign with the new label for 4 years for a total that will be over $1 million! The first year advance alone is $250,000. A quarter of a million dollars just for being a band! Everyone is thrilled and agrees it all looks great. Their dreams look like they are about to come true.


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1. Developing music The first step of making a CD is pretty obvious. The artist(s) develops their music. They spend a large portion of their creative energy on song writing and composing music. Or they work with producers and A&R execs to find songs from great writers.

It could take just a few minutes or a few years. It is impossible to put a price tag on creativity. Total cost = Invaluable

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How a CD gets made Studio fee = $52,500 (Can range from $75 – $200 and up. Sound engineer’s mastering = $10,000 Producer’s advance = $50,000 (Producers normally ask for money up front in addition to a percentage of sales profit referred to as points.) Technical experts = $3,000 (Technicians who come in and tweak the instruments to make them sound their best for recording). Equipment rental = $5,000 Misc. expenses = $5,000 (tape copies, reference CDs, shipping tapes, catering).

Total recording cost = $125,500 2. Recording Once songs are composed it’s time to go into the studio and record. This is a costly process that can add up quickly due to the staff of producers, sound engineers and renting the studio space. These costs are negotiated and shared between the label and artist, however the label covers the majority.

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After the music is finished and recorded it needs to be marketed and promoted. These days, it’s becoming the most expensive part of the business. It takes a lot of time and money to get people aware of a new release. Especially when the artist(s) are not well known. The label takes care of these expenses.

3. Marketing Strategy

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A. Music video and/or video clips

In the past, video was a luxury for the privileged pop stars. Today, videos are essential tools for generating recognition. Prices can range from a few thousand (if you’re clever) to a couple of million (if you’re Michael Jackson.) $8,000 = Cameras $5,000 = Crew $3,000 = Processing & transfers $3,000 = Stage and/or construction $1,000 = Catering $5,000 = Editing & production $5,000 = Director’s fee $30,000 = Total cost

B. Promotional photo shoot and duplication = $3,000

C. Artwork (package design, posters and store displays) = $7,000

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D. Media promotion

(radio, TV, internet & website) = $4,000

F. General public relations

(setting up interviews, in store appearances, coordination personnel) = $8,000

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E. Product placement

(It costs to have a CD placed at the end of an aisle or at a listening station in music stores). = $2,000

G. Merchandising

T-shirts sell big at concerts. A T-shirt company will offer the band a contract to create and sell their shirts. The band doesn’t have to do anything except give the company the right to use their name. What a deal! The Pawns get a $20,000 advance on sales. They have to give $3,000 to their manager and $1,000 to the lawyer though.

Total marketing cost = $24,000

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4. Tour Support Concert tours are crucial for promoting new releases. Touring not only helps sell CDs, but is the main income for the artists. The band has to put a majority of the money into the costs.

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5-week tour Costs

Profits

$25,000 = Bus rental

Tour Income gross =

$7,500 = Crew of 3

20 Shows @ $5,000 per show = $100,000

$7,875 = Food

$15,000 (agent’s cut)

$3,000 = Fuel

$15,000 (manager’s cut)

$1,000 = Wardrobe

$44,375 = Total cost

Total tour profit = $25,625

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Wholesale consists of the sale of goods to retailers, to industrial, commercial, institutional, or other professional business users or to other wholesalers.

Retail consists of the sale of goods for personal or household consumption from a fixed location (a store). A retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public.

5. Distribution & Sales Finally the CDs have to be distributed and sold to stores. The distribution companies buy CDs in bulk, where they pay a reduced wholesale price. They arrange delivery to record stores or anywhere else music is sold. Distributors and record stores make a profit by selling the CDs (individually) for a few dollars more than what they purchased them at.

The record labels sell their CDs to distributors at a wholesale price which is usually between $4 – $8. The distributors do the same to retail sellers (any place that sells music) selling anywhere from $5 – $12 per CD. Finally, once the stores have it they sell the music to you (the consumers) where the prices average around $12–$17. So it really isn’t the labels making $14 of the $15 of what you pay for a CD but rather distribution and sales resulting in the increased final price.

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Breakdown of CD costs

According to the ASCAP (American Society of Composers, Artists and Publishers.

$17.00 CD retail rate

16%

25% Packaging deduction ($ 4.25 in this case) = $12.75

Artist royalty rate ($2.04 in this case) for every CD sold.

Average royalty rate = 16% (Can be from 10–25%) So if it sells a million, that’s $2,040,000.

How a CD was made As we can see, there are many factors involved in making an album. Lets see how The Pawns did. Their release didn’t change the music world, but it was unquestionably a success. They sold a quarter of a million copies, which is much better than most bands. Especially compared to most albums these days! All the time in the studio, writing and traveling looks like it paid off. Or did it?

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Records sales for the band $250,000 copies @ $12 (retail) a CD = $3 million Gross retail revenue royalty of The Pawns = 13% of 90%* of retail sales ($2,700,000) = $351,000 + $20,000 publishing advance from the record label.

Wow! That’s a lot of money even when you split it 4 ways. Well, think again. Remember that $250,000 advance they got for “just being in a band?” Well, they have to pay them back. They also have to pay their producer his points. Before they made the record, he was paid his advancement of $50,000 but now he has to be paid his percentage of retail sales as stated in the contract. They had agreed on 1.5%, which didn’t seem like much at the time but now he is getting 1.5% of $3,000,000, which is $45,000. D’oh! Remember The Pawns old label? The ones that gave them their first big break and helped them release their other two albums. The Pawns needs to pay back their old label for ending their contract early. There’s another $50,000 but at least they don’t need to pay a percentage of sales, which happens often. Ouch. After all that hard work on their album all they get is $6,500 each! Even guys at McDonalds get more than that. Thank god for the tour. Maybe that’s where all their money is? They made $25,625 on tour and they received $16,000 for their merchandising advance but haven’t seen anything else from the shirt sales. Looks like they should have bargained for a percentage of sales.

*90% because 10% goes to packaging deduction.

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= $371,000 = $121,000 = $76,000 = $26,000


$400,000

$26,000 final profit

$350,000 $300,000 $250,000

$45,000 producer % $50,000 old label

$200,000 $150,000 $100,000 $50,000

$250,000 label repay

$371,000 CD profits

0

The totals $26,000 CDs $25,625 Tour $16,000 Merchandise (t-shirts)

= $67,625 Split 4 ways = $16,906.25 A little under $17,000 for each to live on. And this is before taxes.

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Records sales for the label $250,000 copies @ $12 (retail) a CD = $3 million Total gross income = 250,000 copies @ $6.50 (wholesale) a CD =

$1,750,000 - $351,000 Artist royalties - $550,000 Manufacturing and packaging @ $ 2.20 per CD - $125,500 Studio costs total - $30,000 Video costs total - $24,000 Promotional costs total

$1,077,000 = Total costs Total profit = $ 1,750,000 - $ 1,077,000 =

$673,000

The label is left with over half a million. The Pawns still have 3 years left on their contract. They’ve made the industry $ 3 million richer but have made less than they would have working at 7-Eleven. Their dreams came true though. They got to play in front of huge crowds, hear themselves on the radio and TV, and party on a tour bus for a month. How many 7-Eleven guys can say that? The next album will be about the same. They have to stick with their contract for 3 more years and have no leverage over the label so they basically have to oblige. Not the most honorable system in the world is it?

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How much each player got paid at the end of the game.

$7,500 = Agent $12,000 = Lawyer $16,906 = Band member $16,906 = Band member $16,906 = Band member $16,906 = Band member $50,000 = Former label $51,000 = Manager $52,500 = Studio $95,000 = Producer $673,000 = Record label

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Of the 32,000 new album releases each year,

1 in 10 albums is considered “financially successful.�

1 in 128 albums sells over ten thousand copies.

1 in 1,066 albums sells over a million copies.

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The music industry system has been operating this way for the past few decades. It’s far from efficient and many question its existence. Why can’t they just give more to the artists? Why are they so greedy? These pleas are understandable but the problem we have to remember is that only 1 in 10 CDs is considered “successful financially.” The other 9 end up in the half priced bins at stores or collecting dust in warehouses and the record labels are stuck with the tab. Still though, it is hard to have any sympathy for the labels (especially when you’re the artist). The industry is very much in the midst of a complete transformation in how it operates now. Technology, it seems, has given fans a choice of any songs they want at the click of a button. The problem is that this technology does not seem to be improving sales and could jeopardize the quality and quantity of music in the future. The second part of this article looks into consequences of what is happening and what could happen.

“How can anyone defend the current system when it fails to deliver to so many potential fans? That only expects a 5% success rate per year of itself? Music is a service to its consumers, not a product. Giving music away for free is what artists have been doing naturally all their lives.” – Courtney Love, lead singer of the band Hole.

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?


Part 2 : The times they are a-changin’ The music industry system as we know it is in turbulence right now due to a variety of reasons. In particular, the MP3 has changed the music business, the Internet and (by extension) the world. Music is no longer tied to physical objects. Programs have enabled users to send MP3s to each other in a matter of minutes. Millions of songs are instantly accessible to anyone with a computer and Internet. The problem is no one is paying for them. This has caused in outburst among many record companies and musicians. Today, some 7 years later after the debut of P2P networks, the battle is still raging on and the big record labels along with the RIAA (Recording Industry Association of America) are still upset over poor sales and really don’t know what to do next. Besides the financial aspects of illegal digital music, there are also many issues about ethics. The Internet, MP3s and the P2P networks have made us question our thoughts on intellectual and nonphysical (digital) property and what it means for the future of how the music business will function.


How music gets online and shared For some (especially young people) this process might be painfully obvious and for others (probably older people) not so clear. In fact, some young people seem to assume that music just comes from Internet and has no physical source. The process begins when a CD is ripped (the process of copying audio from a CD to a computer’s hard drive.) The user can then connect to the Internet and share these files in a multitude of ways with a multitude of people. Once a file is on the Internet it can branch out to millions of people in a matter of minutes.

MP3 (MPEG-1 Audio Layer 3) is a popular digital audio encoding and lossy compression format invented and standardized in 1991 by a team of engineers directed by the Fraunhofer Society in Germany. It was designed to greatly reduce the amount of data required to represent audio, yet still sound like a faithful reproduction of the original uncompressed audio to most listeners. In popular usage, MP3 also refers to files of sound or music recordings stored in the MP3 format on computers.

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P2P (Peer-to-peer) computer network A network that relies on the computing power and bandwidth of the participants in the network rather than concentrating it in a servers. P2P networks are useful for many purposes. Sharing content files, containing audio, video, data or anything in digital format is very common, and realtime data, such as telephony traffic, is also passed using P2P technology.


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Connected to the P2P network The users are like buyers and sellers at an enormous swap meet, sharing their files with each other. Except nothing is bought or sold, no money changes hands, and there are no terms or conditions to the transactions. Instead you copy files from others connected to that network, while permitting others to upload (share) files from you at the same time.

Over 60 million people download copyrighted media regularly.

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A new venue

Indie music riding the digital surge

We are all used to being able to preview loads of musicians on a multitude of sites on the web. Before digital music this was not so. Musicians would have to send their tapes out through mail and would usually only bother to do so if it was someone you thought could help you with your career. Today, anyone who’s curious can have a listen. The Internet has allowed us to discover artists, songs, albums and genres that we would not have heard before and would have had a hard time finding without it.

Independent musicians are augmenting traditional promotional methods such as touring, word of mouth, fan clubs and posters with Web sites, e-mail lists and blogs. Listener recommendations, online preview clips and samples, shared playlists and other grassroots Web tools are also changing the music landscape.

The radio and record stores no longer dictate what you choose to listen to. With a little browsing of online sites or reviews (professional or fan sites), one can find an artist or genre they could never have accessed through the radio such as underground rock, hip hop or electronic. Message boards, where fans discuss what new music they enjoy (or don’t), have become great places where fans or haters from anywhere in the world converse their opinions on artists and new releases as well.

These tools are bringing more knowledge and choice to consumers than ever before. That trend could one day reduce the percentage of music sales currently controlled by a handful of heavily promoted acts and boost recognition for a greater number of less-popular artists. Despite all the new distribution capability, independent musicians still face their oldest problem, however: How to get noticed in a market where potential listeners now have as many as 700,000 songs at their iTunes-browsing fingertips. The most popular artists in today’s download services, and on the biggest Internet radio stations, are still Britney Spears, Outkast and other superstars from the offline world.

Thanks to the Internet millions of people are listening to a more diverse collection of music.

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A brief chronicle of copyright infringement Copying has been around almost as long as music itself, but has come in various forms. The first known copy pirate was an Irish monk. In 557 C.E., he traveled to a nearby monastery and copied (without permission) the Abbot’s book of Psalms. They later found out what he did and ordered him to return the copy. Later on in history, music sheets were copied and sold on the streets of London for a fraction of the regular price. And much like today, the owners of the original versions were furious that others were getting music without their permission or payment. Move forward to the 1980s when cassettes made it possible to duplicate or record off the radio. This had little effect on the music industry as it was for personal use (perfectly legal) or to share with a few friends (not quite legal, but okay in small numbers). The sound quality was sub par as well (especially radio recordings). In the 90s, CDs were well onto their way in replacing cassette tapes and at the same time PCs started to include CD drives. It didn’t take people long to realize they could copy CD to CD and make perfect duplicates quickly with no loss in sound quality. You could also take a CD and “rip it” onto your computer as MP3 files. Shortly after, small communities of cybergeeks were sending and receiving files across the Web. P2P websites like Napster and Kazza sprang up and the small group turned into millions of users acquiring billions of tracks. Anybody could find, download and share music (as well as video, programs, etc…) as easy as ordering from a restaurant. And this restaurant really served free lunches!

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MP3 players (like the iPod), CD burners and blank media arose shortly after this boom and eventually grew to become larger than the entire market for music CDs. Some wonder if all the money lost from people not buying CDs may have made up through these accessories. The record companies fought the growing P2P networks. First, they sued the organizers and companies that ran the sites. But each time one shut down, two more took their spot. Then, in 2003, they adopted a new strategy by launching a major offensive against digital pirates. They brought cases on numerous “criminals”, mostly teenagers. This proved to be a huge publicity disaster that increased the notion that big music labels and the RIAA were tyrants that had little respect for their target audience.


“Large industries are slow to embrace change. Telephone companies let the Internet get always, as did the post office with e-mail and Polaroid with digital photography. All industries instinctively try to defend themselves from obsolescence. Usually at the point when they are already obsolete.” – Michael Wolff, New York Metro

“Every illegal download can’t be seen as the final answer to the problem either. “The music industry seems to make the mistake in assuming that every album downloaded off the net is a lost sale. A large portion would never have downloaded the album anyway. Downloading is introducing them to something that would never have considered paying for. The industry should look at it as a marketing opportunity.” – 19 year old student, London, UK.

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Down and out? Numbers don’t lie and there is no question that sales are down. A total of 618.9 million CD albums were sold during 2005, sharply down from the 762.8 million sold in 2001, according to Nielsen Soundscan. The music industry estimates it loses at least over $4 billion a year from piracy and downloads. They are losing money and need to find a way to win people back. Piracy isn’t going away anymore than globalization is. To the vast majority of music-loving citizens, the RIAA (whose six members control 70 percent of the music business) are worse than cartoon supervillains. If music fans hadn’t figured out a way to use the Internet to trade music online, it could have taken the labels years to start selling. Large scale “piracy” showed the industry we want music online one way or another. Labels have been slow to react but seem to be catching on. The music industry has actually produced fewer CDs while raising prices over the last half decade. Even before Napster’s debut in 1999, the music industry was raising prices (about $2 a CD from 1997 to 2000), and since then it has been releasing fewer CDs (down 14 percent from 1999 to 2002). This is a main argument of those who blame the record industry, not pirates, for falling CD sales. In 2003, the music industry began lowering prices, some went as low as a 30 percent discount, but this did not hack it for the general public that thinks if it’s on the Internet, it’s free and if you buy a CD, you still pay for a lot of filler tracks you don’t want.

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“Here it is, twenty years (since the CD was introduced) and prices haven’t come down. The record companies dish up crappy artists like Britney Spears… and then get the radio stations to play the same crappy songs over and over again. For those three reasons– they’re screwing us, they’re screwing the artists and they’re giving us a crap solution– that’s why people pirate. They think, “You don’t care about us, so why should we care about you?” - Anonymous college student from a focus group on the music industry and illegal downloading.

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A thousand polled fans can’t be wrong Music executives love to blame illegal downloading for their industry’s woes but, based on the results of a nationwide poll, they might want to look in the mirror.

80%

74%

80% of the respondents consider it stealing to download music for free without the copyright holder’s permission

74% of music fans say compact discs are too expensive.

49%

Many fans also say they just don’t like what they’re hearing. 49% of music fans ages 18-to-34 (the target audience for the music business) say music in general is getting worse.

29% Entertainment competition 71% 15%

Music getting worse

Illegal downloads The poll found that 71% of music fans say they believe that a 99-cent download of a song is a fair price or outright bargain.

Digital sales of music and ring tones hasn’t exactly become widespread - only 15% say they have done it . There appears to be a growing acceptance of this type of transaction though.

21%

33% 13%

CDs are too expensive. Overall, music fans were split on why music sales have been declining for the past five years: 33% said it was because of illegal downloads, 29% said it was because of competition from other forms of entertainment, 21% blamed it on the quality of music getting worse and 13% said it was because CDs are too expensive.

The survey information comes from a poll of 1,000 adults, including 963 music listeners, from all states except Alaska and Hawaii. It was conducted Jan. 23-25, 2006 for the AP and Rolling Stone magazine by the international polling firm Ipsos. The poll has a margin of sampling error of plus or minus 3 percentage points. The figures originally appear in the article Memo to the music industry by David Bauder. The polling was directed by Mike Mokrzycki of the Associated Press.

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Survey says... When you get down to it, the decision to pirate is a personal one. In a survey of 1,000+ people of all walks of life, income level, and age the average conclusion was: a. They knew pirating is wrong. b. They did it anyway. These people participated in focus groups and were asked to rank the values of acts that are illegal, unethical, or socially frowned upon, yet commonly occur in daily life. The nine acts given:

Most wrong 1. Buying a term paper on the Net and passing it off as your own. 2. Stealing a CD from a record store. 3. Downloading a copyrighted song from KaZaA. 4. Speeding 20 mph over the limit on the freeway. 5. Buying a pair of obvious knock-off Oakley sunglasses from a street vendor. 6. Copying from someone during a midterm exam. 7. Using a fake ID to get into a bar. 8. Buying a six-pack of beer and selling it some 13-year-olds. 9. Smoking one marijuana cigarette (joint).

Not shown in the chart is the consistency among respondents as to the relative unimportance of downloading on the list of sins presented to them. The majority surveyed simply did not think that downloading, or sharing, music and movies was unethical. They did not feel it was that wrong–certainly not wrong enough to warrant not doing it. Say what you will about digital piracy being an insignificant crime, not even as bad as shoplifting. No matter what rationalizations or justifications you can make it all comes back to

Giving beer to 13-year-olds. Shoplifting a CD. Passing in another paper off as your own. Copying during a midterm. Using a fake ID. Smoking a joint. Speeding 20 mph over the speed limit. Downloading from KaZaA. Buying knock-off sunglasses.

Least wrong

an issue about ethics. Is it okay to download? Is it okay to use copyrighted material you haven’t paid for? Which little creature on your shoulder decides if it is okay or not? Technology has made digital piracy incredibly easy and getting the genie back in the bottle will be tough. Based on this research, educating the populace that it’s illegal to copy or download copyrighted media is going to be a long, hard sell. Changing people’s mindset will be a longterm proposition.

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Ethics & Morality The devil on our shoulder is saying it is okay to download. The chances of getting caught are very low. Today’s technology abundance (MP3 players, CD burners, etc…) acts like a megaphone for our little digital devil. Take Apple’s iPod, the world’s most successful portable MP3 player. They have sold millions and have helped resurrect Apple computers. Even though they have done a noble job by creating the largest digital music store (iTunes) to sell legal music, who knows how many people are loading up their iPods with illicitly obtained MP3s? Nowhere in the iPod instruction manual is the legal or ethical behavior of downloading copyrighted content mentioned. Yes, there is a plethora of faults with the music industry as we have seen. But does that make it all right to take someone else’s intellectual property? The reasons for why people download are complicated. They include culture, attitudes towards big business, laziness, convenience, sense of fair play, and that everelusive sense of right and wrong.

If “they” don’t want me to download, then why do I have the software and hardware with which to do it? They must want us to pirate, since “they” sell us MP3 players and CD burners. You have all own knives. Does that mean you have to use it to kill someone? The truth is software, hardware, and media industries have multiple motivations. They all want you to buy their products, even when one product violates the law and rights of another product. Downloaders know that just because you own an iPod it isn’t legal to download copyrighted material.

Most CDs are boring and cost too much. I only want a few songs not the whole album. Try iTunes, Napster and many more. Their catalogs are growing and the price is reasonable. If underground music is your thing, there are many sites specializing in nonmainstream genres too.

I bought a CD and I can make copies for myself if I want to. That’s right, you can. You’re entitled to that and even give a song or CD to a friend–no one will mind. Just don’t go into mass distribution, either on the Internet or anywhere else.

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Bands don’t really make any money on their CDs; they earn their living touring, so it doesn’t really matter that much if I download their tunes. If bands want you to download their music for free, they’ll put it on their website for you. Even if they don’t make much (or any) money on their CDs, that’s none of your business and not an excuse for them to make even less money. How would you feel if something you worked so hard on and put so much effort into was given away for free without your knowledge or approval? Or what if your favorite band can’t tour because their label says their CD doesn’t sell well enough to sponsor them.

I only listen to music on my PC Some people only listen to music in the car, or at the gym or when they have parties. This doesn’t change the fact that you are still obtaining music illegally.

Everyone else does it! That excuse never worked with your parents and it doesn’t work here. This again, comes back to morals.

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What can the industry do? 1. Create new distribution channels

3. Educate the educators

Suppliers need to create alternatives to pirated content that are better, easier to use and have more content to choose from. For example, an iTunes store that specifically sells old, out-of-print tunes or a site that makes finding, previewing and buying music simpler and quicker than any illegal P2P network. It would also help to give listeners higher quality sounding music since many MP3s from P2P networks have low bit rates and sound flat compared to CD quality music.

Prosecuting and fining youth that download is wasted energy. The music (as well as other media) industries need to enlist the support of high school and college educators in explaining the ethical consequences of their actions to casual pirates. The amount of time most digital pirates have spent thinking about the ethics of what they’re doing is infinitesimal. They need to know that piracy is not a victimless crime. They may still decide to pirate, but if so, they do it with eyes wide open. It should be treated like drug or sex education for youth. Give people information and let them make an informed decision.

2. Develop new business models The music business needs to look outside their own industry to find new ways to do commerce. Think about promotions, such as getting a free T-shirt with each album or certain number of downloads. Maybe offer a free unreleased track or remix with every purchase. Music DVDs are also becoming more popular and an alternate form of presenting music.

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4. Be nice When youth read that the head of a billion dollar record label says, “it’s grand larceny,” they are not likely to be intimidated into submission. In fact, they’re likely to download more with a vengeance.


What’s next? The future possibilities of what could happen next are shrouded in mystery. If technology makes digital piracy as easy as the click of the mouse, it can also wrap digital content in locked containers. The iTunes store and other music stores have embraced FairPlay technology which limits the amount of times a song can be burned onto CD as well as how many computers can listen to it. Most people have a very vague sense of value when it comes to digital media. It’s always been a tough sell that a software program made by Microsoft Windows or Adobe Photoshop is worth hundreds of dollars. Computer programs, like music, involve many groups of people working together to deliver a product. It’s not just about a Madonna or a Bill Gates but about the programmers, the store clerks, the sound technicians, the truck drivers and hundreds more whose living depends on this. Will people ever stop downloading, copying, and file-sharing? Probably not.

Times are changing fast. The music industry must face up to the fact that it’s insane to keep serving up the same goods and terms and expecting customers to go merrily along. Today it’s all about personalization: my media, my way; what I want, when I want it, in the format I prefer, and only the content I desire. No matter what you think or do, at the end of the day someone has to pay and someone has to be paid for that media you use. Even unestablished artists, singing their hearts out in hole-in-the wall bars put a hat out for contributions. If we all simply download and nobody pays, all the artists simply go out of business. Somebody’s got to pay, and it’s often with his or her livelihood. And sometimes that’s “us”, not “them”. Is that a price with which you’re comfortable? It’s unrealistic and unreasonable to expect to get all your media for free. You owe it to yourself and the forthcoming flow of media product to pay for some of it, some of the time. If you don’t, you lose. We all lose.

The truth is technology is moving so rapidly that any short-term prognostications given could be hopelessly passé by the time you read this.

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Potential outcomes Content publishers will turn to technology fixes to protect content even while admitting that for every content-locking technology there will be hackers poised to crack it and distribute the keys on the Internet–probably in a few hours or less. A concept, that many seem to support, proposes that everyone pay a flat fee, say $5 a month, on your ISP Internet provider to download whatever you want. The fee is divided up and parceled out to the various media companies. The new Napster program actually offers a service along the same lines where you pay a monthly fee and have unlimited access to millions of songs. The catch is you can only listen to them while online, if you really want to buy and have them permanently on your computer/MP3 player you still have to pay for them individually. This is a great step forward by offering a great service at a reasonable price.

Courtney Love, controversial musician and widow to the late rock legend, Kurt Cobain, envisions a future where the labels grip on artists is loosened. “Record companies stand between artists and their fans. We signed terrible deals with them because they controlled our access to the public. If a record company has a reason to exist, it has to bring an artist’s music to more fans and it has to deliver more and better music to the audience. You bring me a bigger audience or a better relationship with my audience or get the f*ck out of my way. We’ll still have to use radio and traditional CD distribution. Record stores aren’t going away any time soon and radio is still the most important part of record promotion. Major labels are freaking out because they have no control in this new world. Artists can sell CDs directly to fans. We can make direct deals with thousands of other Web sites and promote our music to millions of people that old record companies never touch.”

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Give a little As we can see, this subject has many levels and is all very gray. There are so many sides to it and everyone can argue their feelings on the matter. All we can hope for in the future is that everyone gives a little and does their part to change things for the better. The music industry needs to lower prices on CDs and legal digital music and hope that it will mean more sales. It’s simple case of supply and demand. Lower the prices and more people will buy. The labels should remember they are only in the business to promote and sell an artist’s work.

They should not own the artist. The artist doesn’t work for them. They also need to show more respect to fans and musicians (giving them a larger slice of profits). New business models are essential as well. Almost all pre-Napster stratagies are obsolete at this point. Musicians need to continue to push the envelope and create more meaningful memorable tracks. Take more risks and don’t feed us the cookie cutter rubbish you think will make the most money. Fans need to be less greedy about downloading and support the artists they feel are giving them something that makes them happy and they can enjoy.

If you like it, buy it Support good music Respect copyright

Be more creative, innovate don’t immitate Help the labels to fight piracy Give more to supportive fans

Lower prices Show more appreciation to fans Give artists a greater percentage of profits Develop new business models

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the price of music


Afterword I can never really tell anyone that illegally downloading copyrighted music is immoral and should never be done as that would be quite hypocritical. As you might be able to tell, this subject really hits home to me. I guess you could say I started on the “wrong side of the tracks” with music because, for me, Napster was what brought me into it. I had never had an interest in music before using Napster. All my friends thought I was crazy growing up. Nothing ever caught my ear. But when I was 17, a friend told me about this program where you could get music for free and right on your computer. My Dad had just bought a new computer with a CD burner and I thought, “what a cool new thing this was”. There was something about being able to get just what you wanted, instantly, that applied to me so much. I started getting all the big rap and rock songs of the moment and one happened to be by an artist named BT. The song was an intense break beat dance track with a catchy chorus and heavy guitar riffs called “Never Gonna Come Back Down.” It was different and I really liked it so I downloaded more BT songs and to my surprise this guy made electronic dance music, and only had two or three rock songs. Well, one thing lead to another and in no time I became obsessed with this “trance” music and even actually went out and actually bought CDs. Here I am some 6 years later and I have a collection of hundreds of records, CDs, MP3s and music equipment. I got into DJing when I came to college and I’ve been fortunate

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enough to play in some of Boston’s most exclusive nightclubs. People have actually paid to hear me play music! I’ve even started making my own songs. If someone had told me I’d be doing this when I was in high school I would have laughed. I never saw myself taking music this far. Never. Napster wasn’t just about getting free music. It was about getting music you didn’t hear on the radio or that was out of print. And I was too young to go to clubs so this was really the only way for a kid like me to be exposed to underground music. For me, Napster was the only way I could get music at the time. Before I started researching this project, I thought the Internet, MP3s and P2P networks were the saviors of music and maybe years from now we could say they are. I also heard horror stories from musician friends on how unfair “the industry” operated. After seeing how record labels chew artists up and spit them out I had little respect for music industry executives. But then after more research and talking with others my view began to transform. Seeing how so many friends and peers didn’t see anything wrong with downloading music, TV shows, videogames and movies began to bother me. When I download a song I know I can buy somewhere, I know it is wrong and I want other people to admit the same. I wish everyone who downloads a copyrighted song (or any media) would spend at least as much time as it takes for the download to think about whether what he or she is doing is right or wrong.


Now I have more sympathy for the music industry; they are in the middle of a complete 180 in their way of business and should be forgiven for not handling the situation perfectly. They have lost billions and feel like they are on the brink of collapse. As we have seen, there is a lot of effort put into the product they release and shouldn’t they be compensated for the work they put in? As I’ve mentioned throughout this article, digital music is very much a gray area. Solutions will present themselves as time moves on. What’s most important at the moment is that all the parties involved work together and compromise on what will satisfy everyone. Everyone needs to remember too that in the end, it’s all about the music. It deserves respect. No matter what format.

Dan Alcala

Selected bibliography Gantz, John and Rochester, Jack B, Pirates of the Digital Milennium, New York: Prentice Hall, 2005. Albini, Steve, The Problem With Music, January 2006. <www.Negativeland.com/albini.html> Bauder, David, Memo to the music industry, February 4, 2006. <news.enquirer.com/entertainment> Shearer, James L., Jazz Basics: A Brief Overview with Historical Documents and Recordings, New York: Kendall/Hunt Publishing Company, 2002. Cost of a CD (from riaa.com), 2003. <www.riaa.com/news/marketingdata/cost.asp> Love, Courney, Speech to the Digital Hollywood online entertainment conference, New York , May 16, 2002. < www.jdray.com/Daviews/courtney.html>

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the price of music