Napster to YouTube:
The beleaguered music
industry in a digital age

YouTube Piracy smaller

I have written before about the “arms race” between banks and hackers. But there are other arms races between other industries and, instead of hackers, everyday consumers.

The current squabble between YouTube and the music industry provides a good example. A Rolling Stone article reports that YouTube has

… become a source of frustration for artists including Taylor Swift, Paul McCartney, Beck, Kings of Leon and others, who recently signed an open letter to Congress calling for reform on the law that allows YouTube to host millions of unauthorized videos. “The artist has no choice—their music is on YouTube even if they don’t want it there,” says Irving Azoff, manager of acts such as the Eagles and Van Halen. Azoff has published a separate letter to YouTube, calling for action on two issues: its relatively small royalty payments to artists, and its inability to efficiently remove content from the site.

Realize it or not, every time you hear a tune over the radio or piped into a store or other venue by companies like Mood Media (formerly Muzak), royalties are doled out. Organizations like BMI (Broadcast Music Inc.) and ASCAP (American Society of Composers, Authors, and Publishers) monitor song use and collect and distribute royalties to member artists.

YouTube poses a trickier problem. With over a billion users, any of whom can upload favorite artists’ work, it’s a gargantuan task for an outside organization to monitor song use in order to collect royalties per play. Yet YouTube has shown that it isn’t powerless when it comes to monitoring its own content. As Azoff argues in the above-referenced article, if YouTube can control porn access as well as access to its original content, certainly it can control access to copyrighted music.

The squabble isn’t new. Bootleg recordings have been around as long as the recording industry itself, but the problem grew to greater proportions in the 1970s. That was when cassette tapes (remember those?) burst upon the recording industry. Cassettes provided an easy way to copy and distribute music from other cassettes and LPs (remember those?). Bootleg organizations popped up almost immediately. As for consumers, most pirated innocently, unaware or unconvinced that they were committing heft. The music industry responded with advertising and PR campaigns blustering about legal penalties, but the threats were largely empty. Tracking down individual consumers was costlier than leaving them to their devices, so to speak.

Fortunately, piracy by cassette was somewhat self-limiting thanks to its poor quality—cassette tapes used analog technology and played at slower speeds than reel-to-reel machines used in studios. But with digital technology, quality loss from an original to a copy is all but indistinguishable to the untrained ear. Not only did underground operations selling bootleg CDs flourish, now consumers also posed a sizable threat in the aggregate. With recordable CDs, they could duplicate their favorite music with good fidelity and distribute it to as many friends as they pleased.

Troublesome as recordable CDs were for the music industry, they proved trivial compared with Napster. For all its bellowing and legal actions against Napster, the music industry was powerless to stop it. Not even a court order shutting down Napster did much good. As an earlier Rolling Stone article put it,

By late 2002, the file-sharing service that had peaked with 80 million users was no longer in business. The Recording Industry Association of America had sued the company successfully for copyright infringement, and the courts forced Napster to shut down. But the power of Napster would live on for years afterward, as more sophisticated, harder-to-kill copycats, from Kazaa to LimeWire to BitTorrent, began to take its place.

It took Steve Jobs to survey the situation and figure out a way to turn Napster-esque technology from foe to friend. Napster, Jobs saw, revealed a market that wanted inexpensive music by the song. The insight led directly to the creation of iTunes, a means by which consumers could have easy access to only the songs they wanted at an eminently reasonable 99 cents apiece. Though iTunes and online music stores that followed didn’t eliminate piracy by file-sharing, they put a serious dent in it. At the same time, they gave the music industry a new way to market its products. Here’s how Nathan Ingraham put it writing for The Verge:

Apple drastically simplified the entire music experience, defying the odds to build a music-retailing dynasty even as file sharing skyrocketed. A decade ago, Apple started to answer what would become an all-important question: how do you get consumers to pay for content again?

With YouTube, the music industry once again finds itself up against consumers who exploit digital technology while leaving copyright holders without a means of collecting for use of their work. Again, the exploitation may in many cases be unwitting, as many consumers may be unaware that music and musical performances are property, the use of which legally and morally entitles artists to compensation. Odds are some sort of legal compromise will be struck. What I’m curious to see is if there’s another Steve Jobs out there who will devise a way to turn the YouTube problem into a profitable industry.

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