Beyond Copyright and the Evolution of Digital Music Services
Hyojung Sun
Ph.D. Candidate
Science, Technology and Innovation Studies
University of Edinburgh
H.Sun-8@sms.ed.ac.uk
Prezi Presentation
https://prezi.com/lblgmnlolhft/beyond-copyright-and-the-evolution-of-digitalmusic-services/
Abstract
This paper aims to provide a new perspective on the relationship between copyright and
technological innovation in the music industry. Despite the popularity of the subject,
most attention has been drawn to copyright’s direct impact on the music business or filesharing activity. However, the process of technological innovation is imbued with
uncertainty, contingency and complexity, therefore, owes an elaboration on the interplay
of the heterogeneous actors who have differing power and interests. Through a
qualitative data analysis of interviews with a wide range of music entrepreneurs and an
in-depth case study of Spotify, this paper provides three key findings on the factors
contributed to the evolution of digital music services. First, the sociotechnical factors, as
well as the legal allegations, influenced the decline of P2P networks. Second, in the form
of negotiation of licensing deals with digital music service providers, Copyright
contributed to a resurgence of market control. Third, the process of firms’ discovering
and matching users’ demands highlights the crucial role users play in technological
innovation in the digital music industry. Moving beyond the linear understanding of
copyright’s impact on the technological development, this paper provides a much more
complex and nuanced process of technological innovation in the music industry.
Introduction
The debut of Napster, the first successful digital music service based on Peer-To-Peer
(“P2P”) technology, suggested the possibility of an imminent and radical transformation
within the music industry. After sixteen years of trials and errors since Napster, the music
industry is entering a new phase in which consumers are attracted more to legitimate
digital music services than free, and often illegal, options. Central to this change is the
growth of the freemium-based streaming music business service spurred Spotify.
Spotify’s allegedly “legal and superior quality” of music service than P2P service, as well
as the huge number of legal catalogues, have proved enticing enough to stir up 10 million
people’s willingness to pay. The recent changes in the music industry, such as newly
adjusted rights and services suitable for digital formats, and the diversification of revenue
streams prompted some commentators to proclaim that technological innovation has
been achieved in the music industry (Roberts 2011; Preston and Rogers 2011). Indeed,
streaming services have been perceived to be an answer for the industry’s quagmires:
how to reduce piracy and how to make people pay for music.
To what extent, however, has the contemporary digital music industry tapped into the
great potential that the digital technology initially suggested? Is the growth of the digital
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music business a response to digital innovation or an outcome of restrictive copyright
regime?
In this conference, I will demonstrate how digital music services evolved since Napster.
To apprehend the detailed and comprehensive dynamics of the music industry, I
employed a multi-level approach. The influence of copyright was understood at a macrolevel, the interactions between the organisations at a meso-level, and more specific
learning process of innovation of the business models was investigated at the micro-level.
I have chosen five digital music firms, iTunes, Last.fm, YouTube, Grooveshark, and
Spotify, and extrapolated the crucial factors influencing the shaping of the digital music
business. This research employed a qualitative data analysis of interviews with a wide
range of music entrepreneurs and an in-depth case study of Spotify. In this conference, I
will share three key findings on an expanded view of copyright and the evolution of
digital music services.
Key Findings
(1) Neglected Niche for P2P technology
Many scholars emphasized the significance of creating a niche, or a protected space, for
radical ideas to materialize in the market (Rip and Kemp 1997; Abernathy and Clark
1985). That is, ‘an incubation rooms’ is required for radical novelties could grow into
innovations through learning with users, regulations, infrastructure and production
systems. Despite the hyperbole account of the digital revolution in the music industry,
there is a considerable lack of attention to this aspect. In reality, P2P technology could
hardly achieve any of the potential as initially suggested. P2P technology designers have
preoccupied themselves with designing the system so as to be liability resilient. In the
long run, P2P networks failed to evolve into a platform that is compatible with the
industrial model of music distribution and promotion.
In addition, people’s changed perception toward P2P technology contributed to the
decline of P2P file-sharing networks. As the legal allegations intensified, P2P file-sharing
networks carried the connotation of illegality. It made it difficult for P2P file-sharing
companies to attract advertising companies, which is the source of revenue for these
services. Reliance on pornographic companies for advertising, record labels’ spoofing,
the risk of malware made the service increasingly unappealing. What once was a
fashionable activity turned into an undesirable and ill-favoured behaviour. The users’
increasing attraction to legitimate digital music services contributed to forming a notion
of paying consumers being more serious music fans, and dampening the social practice
of file-sharing.
(2) Copyright and the Market Control in the Digital Era
Numerous studies have indicated the significant role copyright has historically played in
the institutionalized commodification of cultural products (Frith 1987; Towse 2010;
Kretschmer 2000). In this conference, I will demonstrate how copyright has been an
important means through which major labels flexed their muscles and determined the
services to survive or not. In the course of diverse firms’ struggles to develop digital
music services, licensing deals with the major labels proved to be a formidable challenge
to make the business sustainable. For example, Last.fm could not live up to consumers’
demands when faced with the hefty licensing fee. While YouTube survived the legal
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battle with major labels by agreeing to pay the license fees, Grooveshark, despite its
similar business model, eventually shut down its business as it failed to obtain licenses.
Spotify's acclamation as a service superior to P2P but ‘legal,’ would not have been
complete, had it not been for the Spotify’s licensing deals traded with the company’s
equity at a paltry amount from the labels before its official launch.
(3) Users’ determinant role in shaping digital music services
The importance of users’ role in the music industry has largely been neglected in
understanding the technological innovation of the music industry. Although users’
unpredictable taste created uncertainty in songs’ popularity, the music industry has long
managed to keep it under control to a certain degree. Indeed, the recording industry
decided what music they can listen to and how much they have to pay. In the digital age,
things have changed. This research demonstrates three important roles users played in
the evolution of the digital music services.
(1) The Free music genie
Users exerted a formidable power over what is accepted in the market. The free music
access genie enabled users to have the weapon of (un)willingness to pay. The recording
industry had to struggle to find a way to open consumers’ wallet.
(2) Free is not all that matters
It indeed was a hard task to fight against a ‘free’ service. As the increasing number of
consumers subscribed to the non-free services has shown, ‘free’ albeit important, was not
all the users were looking for. It took more than a decade for the recording industry to
figure out the four important factors to get users’ hearts.
(3) Tyranny of Choice
Users, unless actively search out for diverse music, were under the control of what's
available in the market. The prediction that users' ability to access diverse music will
bring diverse of music is predicated on the idea that users would want to appreciate the
diverse choices. Unlike this prediction, the sheer abundance of choice yielded ‘Tyranny
of Choice (Mulligan 2014),’ in which the majority of consumers cannot decide between
the 300 million tracks available in the world. That is, most consumers do not tap into the
great potential of the Great Library of the Alexandrian music catalogue. They instead
need and want their choices dictated to them by established tastemakers and media. This
dilemma brings back the industry’s long-established practice: filtering.
Conclusion
By providing a broadened view of copyright, this paper demonstrates that sociotechnical
factors played as much of a crucial role as legal impacts in shaping digital music services.
Through a much more complex and nuanced process of technological innovation in the
digital music industry, my research aims to move beyond the dichotomy of utopian and
dystopian understanding of technological innovation in the digital music industry and
contributes to a correct anticipation about technological development.
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