What's a record company?

An excellent article in the Sunday Observer Business Section from John Naughton about the failure of the record company's to embrace technology to the advantage of all.

It's the first time I've come across the specific breakdown of how revenue is shared from traditional CD sales (not sure how accurate and whether that is the same whether Amazon or via an HMV store). You don't really have to do the maths to see how compelling the arguments should be for doing the right thing.

My only quibble is "In the end, of course, rationality will prevail..". Well, it's not a quibble it's more a question of when we can expect the "end" to come? Somehow I'm beginning to think it may be a long while.

And then, that's just the music business. What about the video side of things (movies, tv)? Why do these businesses deserve protection from disruptive change when no other industries have had such protection? If it was about protecting the copyright holders, I could perhaps understand it. But in fact, they are perhaps the biggest losers of all (incidentally, I believe that copyright holders actually get LESS of a cut from online sales - a point John doesn't make. Can anyone confirm or correct this?).

When the industry consolidated to 4 big players, it was clear this sort of thing would happen. This is a clear case of a cartel/oligopoly. It will be revisited in countless business case studies in the future. Governments need to intervene to free this market URGENTLY and should be reversing legislation that counters fair use and fair distribution. They could start by freeing the copyright holders from exclusive contracts and ensuring that different channels of distribution (eg CD, Online) are via separate companies.

I'm getting quite pessimistic on this subject and think we'll still be debating this in 5 or more years. Each time we watch/listen to something, we'll be forced to watch/listen to a lecture on pirating (those FACT ads at the start of most DVD's are really starting to grate - it's like seeing those Bacardi ads in the cinema over and over again, only worse).

What is perhaps needed is a revolution. Someone somewhere defines an agreement (eg Creative Commons or GPL-style - but for the consumer - let's call it a Digital Rights Agreement - DRA) that we can sign up to about fair use and non-piracy. An agreement that protects the copyright holder, but one that allows a consumer to use the material they have purchased in a reasonable way. If you sign up to DRA (once, not everytime you buy), you get indemnified against action from the labels unless you have violated the agreement. The labels couldn't afford the lawsuits. And, they would lose because the agreements would be seen as fair. But this means people agreeing to SOME form of a DRM (either active or passive) that allowed the DRA to be adhered to. I don't really have a problem with this, but for some any DRM seems to be a no-no. Would enough people sign up to something like this? Could an agreement cover all the ways in which people could (mis)use the rights? And could it adequately take into account changes in the future which might render the agreement useless? I'm going to give a bit of thought to the rights I think would be reasonable, and revisit this in another post. Open Source changed computing for the better. We need something similar NOW.