The Essential Mistake of Record Companies

Posted by: Rob Hof on April 22, 2005

Friendster founder Jonathan Abrams, on an AlwaysOn panel yesterday, neatly summed up the basic stupidity of the music industry’s refusal to come up with a workable digital music strategy: “Their businesses are actually based on limiting the number of people who can access their content.” Couldn’t have said it better.

Reader Comments

Pete Rose

April 24, 2005 10:21 PM

Letter I emailed to Cary Sherman of RIAA...

Mr. Cary Sherman:

How much longer are you going to engage in driving away potential customers by suing their pants off for doing what comes naturally, sharing good things with each other? Some things you might want to consider...
1) People who illegally download music probably wouldn't buy the CD anyway, so you haven't really lost anything there.
2) there are some people who download music to see what it sounds like and if they like it will buy the CD, so you gain some there. You know full well that downloaded MP3s are nowhere close to the quality you get from a CD, I think most are probably ripped at around 8 Khz., compared to maybe 20 KHz for a CD. Plus MP3 achieves its remarkable compression ratios by throwing away much of the original information, leading to further loss of sound quality.
3) You're not going to stop P2P sharing with lawsuits. It's too widespread and entrenched, and the more you try to bust it up the more it's going to fragment and diffuse, and all the harder it's going to become to stop it. All you're accomplishing is making people like myself mad. I for one refuse to purchase any CD or recording that has any connection to RIAA. Neither will I illegally download such music, most of it's garbage anyway. I recently cancelled my account with a CD subscription club for this very reason, paying their cancellation fee rather than completing my one required purchase, and forfeiting several free CDs in the process. This is how strongly I feel about RIAA's behavior.

Now why don't you consider the alternative? MAKE IT LEGAL! Consider:
Most P2P software available today to put on your computer is like hooking it up to the business end of a sewer. It is a conduit and an open invitation for others to fill your computer with viruses, worms, backdoor Trojans, adware, spyware and just about every other kind of malware imaginable. Where I work we get computers in almost weekly where somebody has had Kazaa or some other P2P software on it, and they've become so filled with this garbage they're almost non-functional. And sometimes it takes us two or three days, or longer to get all that junk off of there. And in a few cases we've had to format the hard drive because the system had been so badly compromised it was beyond repair. Now just think--if you could provide a secure and legal alternative for a reasonable monthly fee, say $10 a month, and advertise the safety of your sysem vs the dangers of using Kazaa and other P2P software, don't you think people would flock to your system rather than risk having their computer trashed by questionable P2P downloads? And the safety of knowing what they're doing through your system is legal? Seems I have read there are as many as 60 million people using P2P software today. If you could get just half of them to come over to your secure (and legal) system, at $10 a month per user, that would be a third of a BILLION dollars a month you could be taking in. A third of a billion dollars you could be splitting up with artists and composers and amply enough over to pay the cost of administering such a program. Then and only then, also, you would be fully justified in going after those who continue to download your copyrighted music illegally via unlicensed P2P.

Why is it the entertainment industry has fought tooth and nail against every new technology that has come along, from radio and the phonograph to portable MP3 players and peer to peer, instead of embracing and exploiting it to the fullest is a mystery to me. You're cutting off your nose to spite your face!

So now about it? Your antiquated 19th century business mentality is like using a steam engine to power a factory when you could be doing it so much better with electric motors and automated controls. So why not come on into the 21st century and consider what I have proposed? It might just work.

Pete Rose

Dave Howe

April 25, 2005 12:10 PM

If you think that is bad - a limited-circulation disk company who sells cds (well, cd+G but close enough) is currently targetting its own customers, and theatening them with prosecution if they

a) make copies of their disks and play the copies instead of originals (in darkened nightclubs, where such things get easily damaged) or

b) mp3 up and play using a pc instead of a dedicated player (players cost upwards of $1500 for a decent one, while a $700 laptop can play hundreds of disks worth of mp3ed content *and* act as a digital delay meaning a cheaper mixer desk will do.

to quote http://www.sunflykaraoke.co.uk/catalogue/cat5_uk.pdf (threats are on last page, page 51 in the pdf)

"'Back-up' copies of music are totally illegal. Making your own personal CDs of favourite songs or hit lists etc, just in case the
originals get stolen or damaged is totally illegal. Transferring the music from CD, tape, vinyl or any other format including MP3
or on a computer is also totally illegal."

note only legitimate customers get to see this - its in the catalogue after all. so it appears a vital part of their business model is threatening their own loyal customers.....

Bangbus

September 27, 2005 3:52 PM

How much longer are you going to engage in driving away potential customers by suing their pants off for doing what comes naturally, sharing good things with each other? Some things you might want to consider...

Bangbus

October 7, 2005 2:00 AM

It is a conduit and an open invitation for others to fill your computer with viruses, worms, backdoor Trojans, adware, spyware and just about every other kind of malware imaginable. Where I work we get computers in almost weekly where somebody has had Kazaa or some other P2P software on it, and they've become so filled with this garbage they're almost non-functional. And sometimes it takes us two or three days, or longer to get all that junk off of there. And in a few cases we've had to format the hard drive because the system had been so badly compromised it was beyond repair. Now just think--if you could provide a secure and legal alternative for a reasonable monthly fee, say $10 a month, and advertise the safety of your sysem vs the dangers of using Kazaa and other P2P software, don't you think people would flock to your system rather than risk having their computer trashed by questionable P2P downloads? And the safety of knowing what they're doing through your system is legal? Seems I have read there are as many as 60 million people using P2P software today. If you could get just half of them to come over to your secure (and legal) system, at $10 a month per user, that would be a third of a BILLION dollars a month you could be taking in. A third of a billion dollars you could be splitting up with artists and composers and amply enough over to pay the cost of administering such a program. Then and only then, also, you would be fully justified in going after those who continue to download your copyrighted music illegally via unlicensed P2P.

Why is it the entertainment industry has fought tooth and nail against every new technology that has come along, from radio and the phonograph to portable MP3 players and peer to peer, instead of embracing and exploiting it to the fullest is a mystery to me. You're cutting off your nose to spite your face!

So now about it? Your antiquated 19th century business mentality is like using a steam engine to power a factory when you could be doing it so much better with electric motors and automated controls. So why not come on into the 21st century and consider what I have proposed? It might just work.

Ruckus

April 1, 2006 5:04 PM

Jonathan has spoken on topics including entrepreneurship and software technology to audiences such as the UC Berkeley Extension, Stanford University Continuing Studies, the Silicon Valley Association of Startup Entrepreneurs, the CMGI Investors Summit, the Bay Area Regional Technology Alliance, the San Francisco Web Business Mixer, the Silicon Valley WebGuild, the Institute for International Research, the Nortel Next Level 2 Startup Conference, the San Jose State University College of Business, and the YMCA Executive Outreach Luncheon.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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