Tom Bradley
The Music Industry: Lessons to be learned by
Impact of Digital
• In the physical world, record companies = book publishers
(create, manufacture and distribute product). Only
licensed secondary rights eg K.Tel
• In the physical world, retailers mainly specialists record
and book shops (in the same business)
• Danger of increased reliance on supermarkets in the
physical world eg Tesco in the UK
• Piracy absorbed into the business model eg home taping,
Lost control and influence over Distribution
• Digital distributors not in the music business (unlike vested
interest of bookshops
• iTunes model not good for the industry
(Apple only interested in selling ipods etc)
(pricing per track, album sales undermined)
• Tesco now squeezing margins on physical product as
record shops disappear (? Amazon?)
Easy access to repertoire
• Record companies slow to embrace digital (uncooperative, direct
licensing, slow and difficult due to Fragmentation)
• Napster lost opportunity? (BMG sued by peers)
• Lower price for increased volumes online (fundamentally different model)
• Possibility of parallel markets for physical CD’s and online tracks (not
same consumers)
• Failed to offer a real alternative to the general public (but inexperienced
in B to C)
• Unsatisfied demand for the unavailable – deletions (P2P danger)
Enforcing Copyright
• Major problem (music in public domain) – “free” on radio
• Need to monitor the market in order to protect it
• No one company is big enough/trade association suing
individuals led to negative publicity
• P2P file-sharing and illegal Torrent sites – industry in reactive mode therefore sheer scale of piracy overwhelming
• Cultural expectation that on-line products will be cheaper
Summary – 3 major concerns
– Control over distribution
– Easy access to repertoire
– Enforcing copyright
• Music industry failed to deal with these problems by not
taking a collective/industry approach
• Other industries – airlines (booking systems)
- banks (hole in the wall)
• Google is not the ultimate threat (can talk and negotiate);
Similar scenarios for this industry
• Need a collective solution:
– Industry database real/virtual
– Industry portal to facilitate easy access and
transactional licensing
– Tracking technology to monitor the
marketplace/identify infringements – licence
– Work with ISP’s, not against them – look for
‘added value’
• To be effective, industry solution needs potential
global reach
• Need to work together on a co-operative basis
across borders
• Still possible to compete within a collective
• Primary and secondary rights blurred in digital
• Sheer volume of online activity makes it difficult to regulate secondary
• Direct licensing (non-collective) and collective licensing needs to work
together (as it has over the past 25/30 years in the physical world)
• Digital world has more complicated structures and needs investment for
sophisticated solutions
• Rightsowners need the same protection – but also a menu of other
collective services (avoid disenfranchised)
“The answer to the machine is
inside the machine”
Charles Clark