Matter, Energy, and Life of Michaela A. Castello.

How to Save the Music Industry

I first started getting interested in “copyfight” and issues related to filesharing in college, where I was introduced to a local network where resident students across the university campus could connect and share what they loved on- and offline. As the music industry continued to ratchet up their anti-sharing campaigns, I thought that the iTunes Music Store, the EFF’s Voluntary Collective Licensing plan and later, Warner Music’s Choruss were effective ways to “monetize” widespread music trading. While at least the EFF’s idea isn’t horrible, I’ve more recently realized that creating “digital storefronts” that are essentially retooled versions of the record store are terribly lacking strategies for benefiting from 21st century technology.

Two competing ideas

As I’ve followed the copyfight in its various incarnations across the web, I repeatedly see two seemingly oppositional statements. First, that filesharers are simply people who “just want to get everything for free,” and second, that filesharers want to pay for music and are simply looking for the right place to do it. The latter idea has been the driving force behind systems like the iTunes music store and RealNetworks’ Rhapsody, where people pay for access to digital files. Many people currently believe that if all of the restrictions on these stores were lifted so they were selling lossless, no-strings-attached files, music fans would readily hand over their cash. Schemes like Voluntary Collective Licensing involve users paying a monthly fee for unlimited access to the entire catalog of recorded music: an “all you can eat” music buffet. While I don’t doubt that if a truly open system was set up, many people would happily sign up, this school of thought sees the rest of the sharers who don’t go for such a plan as being lost. As the thinking goes, these people “just want things for free” and wouldn’t pay for anything. This idea is correct – if you restrict your discussion to selling digital files, copies, of recorded music.

The world’s largest record store

In fact, if the music industry had jumped on this idea back in 1999, setting up their own subscription-style version of, it might have caught on for a while. But inevitably, people would begin to realize what the ever-growing community of filesharers is realizing now: digital files are an infinite resource. A distribution nirvana, every copy of a digital file is indistinguishable from the original and can be traded literally around the world for next to zero cost. When anybody with a computer and an internet connection can both distribute and receive digital music, and copying only increases the “amount” available for everyone, the monetary value of those files drops to zero. Although there will almost always be people out there who would prefer to obtain files directly from a store, a rapidly increasing number of individuals are realizing that they have instant access to the world’s largest record store simply by signing online. This leads to a conclusion that is difficult for many people to accept: in the long-term, there is little to no money to be made in selling digital files. Does this mean there is no money to be made in music? Not at all.

Sell music, not copies

Anybody who wants to continue making money in music needs to stop trying to defeat or even “monetize” filesharing. Instead, they must make filesharing work for them by shifting their model to something summarized by TechDirt’s Mike Masnick as “connect with fans and give them a reason to buy.” It requires only a small shift in thinking: if we accept the reality that digital files are free and sharable, we have a potential audience as large as the world. Each person who gets a file for free is a potential fan; the ingenuity lies in giving those new fans a reason to give their money to you. This involves selling what I like to call unique experiences, things that have a personal value to the fan and thus are worth their money. Ranging from t-shirts, concert tickets and signed albums to time spent playing an online game with a band member, these things have monetary value because they are scarce, unlike infinitely reproducible digital files. Most of all, the creation of new music has value to fans who want to hear more from their favorite artist – so sell the work itself. Many fans would willingly support the creation of new recordings in exchange for things as simple as a shoutout in the liner notes or the simple knowledge that there will be more music available to share and use in YouTube videos, on iPods, or in blog posts.

Taking what’s free, buying what’s valuable

The position of the people who “just want things for free” is better characterized as wanting worthless things for free. These same people are just as likely, if not more likely, to spend money on music itself. The copies in and of themselves are worthless. But as a promotional vehicle that can quickly spread across the entire world, connecting with thousands of people who five years ago would never have heard of it, those files are priceless. As the fanbase grows, constantly providing them with scarce, valuable things to spend their money on is a business model that remains robust moving forward. The musical artists who understand this now will continue making money from their creative efforts in the years to come, pleasing fans and contributing to our shared culture in the process.


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9 responses to “How to Save the Music Industry”

  1. Drew K Avatar

    Some nice ideas here Michael. Only concern here is that the sale of unique experiences may not scale in the way required for today’s music industry – I cannot imagine Anthony Kiedis trying to engage with his entire fan base in way or attempt to provide shout-outs to them all either.
    This may be more successful when the fan base of a given artist is smaller or more localized which I would suggest is a great outcome for everyone anyway – more artists with moderate success rather than today’s few with mass success …

    1. SteelWolf Avatar

      People like Anthony Kiedis can already sell out 30,000-seat stadium for $100 a ticket. For people who are already established and looking to continue earning in the 21st century, this is one way to go. It’s always about having different tiers of “reasons to buy.” Being more famous with thousands of fans just means there is more room for tiers on the upper end. Think about how much a lifelong Kiedis fan would pay for an album signed personally to him.

  2. Henry Emrich Avatar
    Henry Emrich

    What everybody forgets in debates like this, is that even with current copyright laws, there’s still a huge “secondary market” where the copyright-holder doesn’t get paid. Every time I buy something “used”, nobody but the person I bought it from gets paid.

    This is especially important to realize, given the fact that if an album has been out for any length of time, it’s going to end up “competing” against “used” copies of itself.

    Does any of that actually make sense?

    Another thing that needs to be asked in regard to major-label musicians complaining about p2p is: How can you be multi-millionaires and *still* be strapped financially to the point where you need to complain about the (illusory) specter of going broke because of p2p? Should’ve invested better. For my part, the *lower* one is on the socioeconomic ladder, the more legitimate financial complaints become.

    Y’know how Keidis (for example) could “connect with his fan-base?
    After the 60-dollar a ticket arena show, rent out a local bar or something, and have a “meet-and-greet” for the really hardcore fans. That way, you’re not just getting the guy’s signature, but you’re getting the opportunity to hang out with him.

    Because ultimately, Michael Jackson and other big-name celebrities AREN’T connecting with their fan-bases in any meaningful sense of the word, no matter how many CD’s or downloads they sell.

    That’s one of the best aspects of the p2p revolution — the opportunity to re-evaluate “fame”, and how we relate to “celebrities” as a culture.

  3. SteelWolf Avatar

    Y’know how Keidis (for example) could “connect with his fan-base?
    After the 60-dollar a ticket arena show, rent out a local bar or something, and have a “meet-and-greet” for the really hardcore fans. That way, you’re not just getting the guy’s signature, but you’re getting the opportunity to hang out with him.

    Brilliance right there.

  4. […] could connect and share what they loved on- and offline,” writes Michael Castello on his mistypedURL […]

  5. Polprav Avatar

    Hello from Russia!
    Can I quote a post in your blog with the link to you?

  6. […] true way to build a successful business model in a sharing-centric culture is to market unique, non-replicable things to fans.  To move forward in the long-term is to stop marginalizing […]

  7. […] another sector, Michael Castello on mistypedURL has written a really interesting post on how we could save the music industry in the age of the download and peer-to-peer data […]

  8. […] a bold move because most news, comment, opinion on the net is free. It does raise the issue about what content is valuable, and what […]

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