Study: P2P piracy barely hurts music sales

February 19, 2007

The longstanding claim of the RIAA that piracy on peer-to-peer networks is the main cause of declining CD sales has always rung hollow to anybody who thinks seriously about music and technology. Even the RIAA itself appeared to retreat in mid-2006, with CEO Mitch Bainwol suggesting that piracy had been “contained,” being balanced out by growth in legal file downloading.

Now comes a study in an academic economics journal, blurbed here by Ars Technica, suggesting that file-trading has had a statistically insignificant effect on CD sales. The study’s authors suggest that tighter controls on inventory (stores can’t just let huge amounts of CDs sit around on the shelf) and the surge in DVD sales (people buying DVDs instead of CDs) are partly to blame. Microsoft tech reporter Paul Thurott weighs in with a dismissive comment that today’s music just sucks, while Zune team member David Caulton wonders if he’s just getting old.

With no evidence but my own subjective impressions gathered from talking with hundreds of music fans and musicians over the last 10 years, I think the problem is a combination of factors that I would basically sum up as “the MBAs ruined it all.”

1. Radio consolidation. Thanks in part to consolidation allowed by the Telecommunications Act of 1996, there’s less local ownership and competition among radio stations today. That’s how you end up with cookie-cutter stations and very narrow playlists all across the country. With playlists squeezed, there’s less opportunity for people to hear new music from the radio, forcing them to learn about new music from reality TV shows, where entertainment value (looks, funny mistakes) are much more important than the sound of the music.

2. Big label conservatism. Rock music fans in their 20s could almost hear the big labels’ business model change around 1995: instead of investing in acts with proven talent–shown by big local fanbases or lots of underground/college radio play or well-regarded releases on indie labels–the companies started pushing junior-level one-hit-wonder bands like Marcy Playground and Third Eye Blind (actually a great song if you listen to the verses) and Harvey Danger. I think part of it was a reaction to the suicide of Kurt Cobain and antiauthoritarian stance of Pearl Jam–why hassle with these serious artists and their complicated personalities when they could find some clone band who they could push just hard enough to make them some money, then discard? Around the same time, they started marketing prefabricated artists like NSync and Britney to the younger kids.

The result? My generation entered our 30s with no connection to any mainstream acts–all the people who loved rock music dove into niche subgenres like jam bands or college radio. And the 90s teens grew up thinking pop music was disposable crap anyway, and entered their 20s with little interest. Meanwhile, technology progressed to the point where anybody could get music for free. If you’ve spent the last five years showing your audience that music’s a disposable commodity, how are you suddenly going to compete with free?

(I am not a huge hip hop aficionado, but seems to me that hip hop was more vibrant during the mid-90s, and remains more lucrative today, but the same pattern of gradual decay appears to be repeating itself with about a five-year delay.)

3. Competition. The authors of the study are absolutely correct that there’s more competition for consumers’ entertainment dollars today, but it’s not just DVDs: I actually think video games are a huge factor. When I was in college, I stayed up all night waiting in line for Who tickets. Now, kids wait in line for Halo 2.

4. Concert ticket prices. Speaking of waiting in line, you think any college kids are planning on going to The Police reunion tour? When tickets start at $100 and good seats cost $225? I’m starting to see some indie rock acts, like Death Cab for Cutie and The Shins (both of whom bore me within an inch of my life) touring with reasonable ticket prices, but for the most part there’s a huge gap between local club acts, which cost between $5 and $25, and big concerts, which usually cost no less than $60. Going to big shows used to be an important community bonding experience, a shared way of reinforcing the idea that music really matters. By cutting young generations out of this experience, the concert industry (promoters, venue owners, and Ticketbastard as much as the greedy artists) essentially dug its own grave.



February 19, 2007

Despite all of the strategic mistakes Microsoft has made in the digital media space, some of their underlying technology is pretty remarkable. In particular, the Windows Media Audio (WMA) codecs occasionally surprise and impress me.

In this context, a codec is a computer algorithm used to reduce the file size of digital media files for easier transmission over a digital network. In very basic terms, this is done by removing extraneous information from the signal–for example, bits that represent very high or low tones that most listeners cannot hear. The trick is removing the right stuff–sometimes, seemingly inaudible portions of the signal, when summed up, contribute to a particular instrument or voice’s character–remove too much, and the cymbals sound tinny, or the guitar sounds flat, or the singer’s voice sounds thin.

In the best head-to-head test I’ve seen, WMA comes out very well versus its competition.

But more sriking to me was a recent personal example. Diminished Men, for whom I’ve been playing bass, recently finished recording an album. It was done onto 2-inch analog tape, then moved into ProTools (the industry-standard digital mixing tool) for mixing. The tracks have been mixed, but not mastered. Mixing is where you listen to each individual track (bass, guitar, each drum), decide which tracks to use where (for example, we did lots of guitar takes with different tones), equalize the tracks you’re going to use, blend them together at a certain relative volume, re-equalize, re-blend, and so on. Once that’s done, you master each song, which means equalizing the whole song, compressing it, increasing the volume, and so on. This is done to bring out parts that are hidden, add power, and so on. (Mastering is also where you decide song sequence, how much space between tracks, and so on.) There’s a lot of complicated voodoo (and opinion) involved in both parts–for example, an unmastered mix might sound like crap to an untrained ear, but will sound better once the engineer has equalized certain parts up and down or compressed the whole thing.

Anyway…when I converted those mixes from full CD to 320kbps WMA files for my Zune, it actually ended up sounding like a good master. My guess is it eliminated a lot of low-level noise in the midrange (this is an instrumental surf band with lots of guitars and drums with big reverb), bringing out the low and high a bit and making the overall thing sound cleaner and crisper, while still preserving the slightly chaotic tone.

Squrting in the wild

February 12, 2007

Newsweek correspondent and longtime tech journalist Steven Levy spoke at the University Book Store the other night, and because he’d promised to have his Zune there, I took the opportunity to “squirt” him one of my songs. Our brief interaction highlighted the two big flaws with Zune’s wireless sharing feature:

1. The “first man with a telephone problem”–if nobody else has a Zune, who are you going to trade songs with? I’ve been to Microsoft a few times since I got my player, and I always bring it with me and turn on the wireless feature. I’ve never encountered another Zune with the wireless turned on. In fact, this was the first time I’ve ever shared a song wirelessly (outside of the Zune Lounge at CES, which was totally contrived–set up by Microsoft specifically to get people to share).

2. The way Zune applies the 3 plays, 3 days restrictions to all music–even music that the Zuneholder owns the rights to, as was the case with this song. (OK, actually I didn’t write the song, our guitarist did, but I wrote the bass part and played on this recording…and in an unsigned obscure instrumental band it’s not exactly like there’s a lot of contention over who owns what.) This particularly sucks because, as DRM systems go, the Windows Media DRM technology that Zune uses is very flexible–it would have been entirely possible to allow end-users to set their own DRM restrictions on unprotected music. Of course, the record companies wouldn’t allow that because the assumption is that most music on a Zune is ripped from a mainstream CD.

I still think Zune has a chance if Microsoft rethinks the wireless connectivity and lets people do some interesting things with it.

DRM deathwatch, continued

February 6, 2007

Steve Jobs has always struck me as a Zen-styled capitalist charlatan, kind of like Jerry Brown with money. Nonetheless, he has earned my enduring respect with this open letter to the music industry, in which he suggests that DRM-protected music files should be abolished. The nut: “Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy.”

Shows a lot of confidence in the iPod as well–DRM lock-in is one frequently cited reason why users won’t switch. I guess Apple created FairPlay simply because they didn’t want to license another DRM system. For example, using Windows Media DRM would have required them to sell songs in the Windows Media Format, which means the iPod would have to be able to play that format, which means Apple would have had to pay Microsoft royalties on every iPod sold (up to a cap of $1m per year, which is peanuts now but probably seemed like a lot at the time).

Meanwhile, a blogger at 10 layers has looked at current earnings growth and extrapolated into a future where Apple’s revenue surpasses Microsoft’s. I say it won’t happen–it would require iPod growth to continue at its current clip (impossible) or for Apple to have one or more huge hit products (very unlikely) or for Microsoft to stop growing completely (very unlikely). Still, it’s striking that Apple’s revenue is 50% of Microsoft’s today. Unimaginable 10 years ago.