Music Industry's Future Foretold in China? 398
sapphire writes "An article today in the International Herald Tribune provides a look at music piracy from the point-of-view of pop stars in China. China is a country forced to deal with the reality of unchecked piracy of digital media products. Will their experience lead to new business models for the world-wide recording industry?"
China's artists not receiving royalties (Score:5, Interesting)
In China (Score:2, Interesting)
Down with the RIAA!
Who pays? (Score:5, Interesting)
This is certainly a different business model than the one in Europe and the US. Is it better? Perhaps: the artists still get paid and consumers get free or very cheap music. But it may have a downside. Instead of the economic power being in the hands of the people who want the music it is transfered to large corporations.
Are we just trading one set of large corporate interests (the RIAA) for another (corporate sponsors)?
Music as marketing (Score:4, Interesting)
The worring thing is the vision of a future of excessivly maketed pop drones designed to build a valuble brand...oh, wait...
Re:China's artists not receiving royalties (Score:4, Interesting)
While major label artists may make a small amount per CD, you have to factor in the large number of sales of those albums.
For example, I've often heard the figure of 80 cents being a standard royalty per disc. If a million of those albums sell (not a big stretch for a star IMO), that's $800,000, or a nice chunk of change for each of four or five band members.
This is really telling (Score:2, Interesting)
''Stars need to look elsewhere to finance the rock-star lifestyle.''
Everyone who claims that they are pirating music "because its good for the artists" had better consider carefully the consequences. Sure, the extravagance of some pop stars may lead some with a Marxist bent to argue that they don't "deserve" their wealth, but the fact is that in a market economy, merit is rewarded with wealth, and the motive for any person to work hard is the possibility of this reward. This article is very clear: Unchecked and tolerated copyright violation destroys most of the market for recording music.
People who constantly argue that "record companies should adapt their business model to piracy" are missing the point. They shouldn't have to: It's their intellectual property, not yours, and they have every right to dictate the terms of its distribution under existing law in every civilized country, even in Red China. Right now Americans enjoy much more freedom to innovate and achieve their own dreams then those in Communist China, and mainly it is because of impartial and fair laws which promote respect for private property, including intellectual property, and allow markets to function. But if we allow these laws to be desecrated, we could fast backslide into a world like that envisioned by the Soviet commisars, where wealth is stolen from those who are capable and worthy and forcibly redistributed to the benefity of the lazy and dishonest.
Re:The article. (Score:5, Interesting)
There was a group in the 80's (Sigue Sigue Sputnik [sputnikworld.com]) that sold the space between the tracks of their album to Revlon and other advertisers.
I guess this is the next step.
Examination of piracy in general (Score:5, Interesting)
This article deals mainly with music theft, but in reality, all manner of digital information is finding ways to slip through industry fingers as media becomes cheaper and the internet becomes popular.
I once spoke to a Russian programmer on Odigo who claimed that he had never met anyone in Russia who had paid for windows; according to him, all copies he had ever seen were pirated.
Though I don't have anyone to bear testimony, a similar trend seems to be occuring in China as well. Not too long ago I remember an article posted right here on /. about Microsoft offering the Chinese government large sums of money to use Microsoft products (primarily in eduction, I believe) as well as attempt to crack down on high levels of piracy. Did China ever accept that money; was the deal even real? Though I never heard the end of that tale, the "Chinese government officially adopts linux" announcement came, ironically, shortly thereafter.
The bottom line is that people just won't pay for something if they can get it for free, be it software, music, or what have you. While piracy is not as blatant in America (ie you can't just walk into your local supermarket and buy pirated Windows CDs), the problem continues to escalate.
However, there is economic light being shed on the subject. As the article points out, it isn't destroying musicians, but just changing the way they operate. As record sales decline, artists need new sources for revenue (god forbid anyone should have to go out and actually play their music).
In software, there have always been little tricks to combat piracy, but they don't always work as well as intended. I believe that the software industry will be hurt by, and therefore change more drastically as a result of, piracy more so than the music industry.
The real question is, what changes are going to come about as a result of this fact? To me, only time will reveal the answer.
... aaah, you're breaking my heart! (Score:5, Interesting)
I think your point is excellent! It's the very same thing that leads to the bancrupty of NHL teams (too high salaries, tickets too expensive, etc.): the league is getting out of touch with the market. Who can afford 4*$100 tickets + parking and burgers to bring the family to a hockey-game? This might seem off-topic, but my point is this: a "rock-star lifestyle" is ridiculous any way you look at it. Also, why on EARTH do the Friends "actors" make ~$1M per episode?? This is what I'm talking about: overpay. Get real and be happy with a couple of hundred thousand dollars a year. That's many times more than what most of us make.
Re:Examination of piracy in general (Score:4, Interesting)
You only read what you wanted to. The article explicitly states, that piracy is in fact destroying musicians. According to this very article no more than twenty albums are professionally produced in China per year. One of the artists interviewed for this article states, that he was only able to 'make' it because he has a rich and famous mother helping him to produce and promote his first album.
It is true that some artists make their living, because they can use their popularity to secure corporate sponsorship deals. Their only other source of possible income is to tour all year, or to quote from the article: "In China, we have to give so many concerts that we do not have time to rest our voices."
The problem is, that new artist have no way to get their music to any kind of big audience. They can't get an album produced, therefore they can't get on the radio and therefore they can't get the popularity needed to register on the radar of corporations. If that is the future of music I'm starting to feel sick.
Information Devaluation (Score:5, Interesting)
Basically, the scenario is diminishing returns where grubby knockoff businessmen with better promotional/distribution networks get to make money off the creative people... which is pretty much exactly the same situation witht the RIAA here, except that here it's legitimized in restrictive contracts that forbid competition.
What's the main difference? With the RIAA, they have an incentive to take care of their master works (master tapes, for film, master negatives) in order to profit from them in the future. The grubby merchant on the corner could give a rat's ass about preserving art/information - he's just out to make a buck, just like those bootleg T-shirt merchants you find at sporting events, and in downtowns everywhere.
In the end, what does this mean? It means that monopolies as we know them would be broken under the Chinese scenario. It also means that the focus would be on production, rather than milking assets. It also means that assets would be worth less than they would under the current system, which might make licensing information easier (faced with making something vs. making nothing, and losing control of the material anyways, I'd think they'd choose making something.)
This poses problems in that a devaluation in the asset means you can't borrow against it (one way companies expand is to leverage their existing library to buy other properties.) If your star dies (ie, Elvis), you can't bank on that property, because of all the ripoffs that will devalue any records/products you put out. This means a big shakeout in terms of overhead - no longer can you support lawyers on staff, etc.
It also depreciates intellectual capital - if you can't bank on the performance of a particular group, then they're worth less to begin with. Instead of getting $250,000 to do a deal, they get $25,000 to do a gig. I can't decide if this means that they'll use more or less marketing to sell product in the face of all that piracy... I'd say at a certain point, they'll just cut back and go local. If that's the case, then they have nothing to lose by opening up their back catalogs, because that material is no longer competing with their big acts, because there won't be any big acts anymore.
Arrgh. Basically, if the Chinese model happens here, a shitload of people will be laid off (some for the better - ie, bloodsucking lawyers and parasitic promo/marketing people, some for the worse - ie, recording engineers and packaging people.) For that reason alone, expect both artists and the existing business interests do whatever it takes to make sure widespread COMMERCIAL piracy stays illegal. As for widespread downloading, that's another issue entirely...
Amen! (Score:2, Interesting)
Recording is ultra cheap now with PC-based studios. Record your stuff, put it out on the net and make money charging for seats at a show. Let the masses decide to make you big instead of a label with deep pockets for payola.
Cheap shot (Score:4, Interesting)
This is a pretty cheap shot and consistent with the music industries tendency to blame all their woes on downloaded music. Personally, I often "download a song for free" but if I like it, I buy it (although I know not everyone does). I doubt very much the Chinese buying pirated CDs then go and buy the genuine CD.
Great quote in article (Score:2, Interesting)
Still, I wonder about the 'intensive persnal appearances' this artist mentions. (Insert your own Natalie Portman jokes about the 'pirate my body' part).
"For Wang Lee Hom, that involved advertising campaigns and an intensive series of personal appearances.
"Until they pirate my body, I can rely on personal appearances," Wang said. "I am forced to view albums only as a promotional tool."
Re:Oh what a horrible future... (Score:2, Interesting)
However, the best way for different, original music to be promoted is the use of music-sharing over the internet. I mean, new bands can't just produce a CD and if they can use the internet to promote their band they have a better chance of being noticed.
What I would like to see is a regulated form of internet file-sharing where people can easily find new bands and try out their music. I mean, I am more likely to buy a CD if I know what the rest of the CD is like.
potential differences (Score:5, Interesting)
Chinese people might be free to copy and share music they enjoy with their friends? Unless it's political, then they shoot you and the band. Here they just put you in jail. How's that for killed dead?
Someone in China was complaining about having to work so hard? Say it ain't so! ''In China, we have to give so many concerts that we do not have time to rest our voices.'' It must be true.
My fingers are sore, and so are my sides.
In Debt? (Score:4, Interesting)
Not completely. The magic word is "recoupable." The record label gives you X amount of dollars to record your album, to hire outside players, to live on while you dedicate your life to music, etc. Usually they will say that this money is "recoupable." Recoupable how? Through record sales, mostly. Basically, whenever a record sells, the record companies takes your cut and puts it back toward your "debt."
However, this debt is not like a loan from the bank. If you end up never making enough money to pay back the full costs that you owe through record sales and the ilk, then that's it. Some guy in dark shades won't show up on your door asking you for more money, no bankruptcy, etc. The company eats the loss.
The real debt comes with long term deals. Let's say Band A records album 1. The album costs $20K to make. The band ends up making a cut of $15K on record sales. They're $5K in the hole. The record label could drop the band and just eat the $5K loss, but they tell the band that they want to do a second album (generally, the label has the option to force the band into another album or drop them at their free will). However, this time, since the band did ok last time, the label decides to spend a bigger budget on the band with hopes of a bigger return. Even though it has to eventually come out of the band's pocket, the record label will have a lot of say in how much gets spent. So Album 2 has a budget of $50K. The album goes out, the band recoups $30K back in record sales. So that's another $20K in the hole.
Since the company took an option for the second album, now they have to do a third album (options often come in pairs). They say "We're not wasting anymore money on this band than we have to since they're not recouping." They make a back-to-the-roots Album 3 with a $10K budget. The album is technically a hit. The band recoups $40K in record sales. But guess what? You still owe $5K from the first album, and $20K from Album 2. From your first hit record, you get a grand total of $5K. And now that you're a hit, the record label may not let you leave...
This starts a vicious perpetual cycle in which an artist can potentially NEVER see cash back from selling albums. If I had to personally say that there was a way to fix this system, I would say: spend less money on albums. Only sign naturally gifted talent and cultivate grassroots appeal rather than hiring talentless hack pairs-of-breasts and spending millions on their production fees. I'll bet John Mayer, who writes his own stuff and performs fairly simple music, saw some profits from his MTV hits, though I can't say for sure.
BTW, performance royalties for getting your song on the radio or performing live can never be used to recoup expenses for the album, partly because these are paid out by a different organization. This is why musicians usually need to perform to see any money for themselves. It's quite possible for a musician to make a half-decent living playing music while the label is losing money on him. If you walk up to a musician and tell him you paid to see his gig because you downloaded his music off the net, he may not be too peeved at you.
Re:Musical Diversity (Score:3, Interesting)
-a
Re:China's artists not receiving royalties (Score:2, Interesting)
Keyword rockstar lifestyle. If you really think about it, it is probably about time the economy stoped rewarding stupidity, and start giving money to better things like technological development and not people who snort lines of ants and sing. Just my 2 cents.
So who's read Idoru? (Score:5, Interesting)
Of all the record companies out there, do any of them have the wherewithal to really skirt the problem? Specifically, do you think anyone will actually start to work towards a virtual star?
It's certainly not inconceivable now. You hire (on salary) an actor to provide a body-motion template for the mocap; you also hire (salaried) vocalists and songwriters to provide the music. Never let any of these people meet, keep their contracts separate. Real human backing bands are easy enough to hire. Also get yourself a floor full of Dicreet Logic stuff, and a fully outfitted music video soundstage, and you could basically render yourself a rock star.
It's funny - we talk about how backwards and tech-challenged the record companies are, because they cannot deal with the likes of P2P... it's almost inconceivable to imagine one of them taking the initiative like this. Well, one of the old ones, anyways....
Re:Information Devaluation (Score:5, Interesting)
From the CIA World Factbook 2002 - China [cia.gov]:
GDP - per capita: purchasing power parity - $4,300 (2001 est.)
To me, that says that piracy is probably as prevalent as it is because people simply cannot afford music at the prices they'd be with a legitimate album sales market in place. Perhaps I'm wrong - it could very well just be a social issue, stemming form differing cultures.
Here in the US, though, there are probably a number of factors for music piracy.
Price may be an issue for some. As a college student, I can't really afford to spend $20 a pop on CDs when my school is sucking me dry.
For others, downloading music may simply be a way to preview music. The radio stations play nothing but top 40 crap unless an artist pays the station to get their stuff on air. Sometimes the only way to expose yourself to new music is find it online and download it.
Still others pirate music because of a philosophical disagreement with the industry's treatment of artists - money from albums goes almost entirely to the labels. If we want to support our favorite bands, we would be better off going to concerts.
On top of this, typical record contracts state that the label owns the music. To me, this is a travesty, and totally contradictory of the whole point of intellectual property and copyright. Who was the most successful band in history? The Beatles. Who owns the rights to all the music produced by The Beatles? The Beatles? No. Why not? Their contract gave the rights to their label, and when the copyright came up for renewal, someone else (Michael Jackson) renewed it. Personally, this part bothers me the most.
Many artists get stuck in contracts that give ownership of their music to their label, and if they wish to perform their music after their contract expires, they have to pay their old label to do it(assuming the label even allows them to play it). However, this isn't limited to the music industry, and the rant is best saved for a "why copyright law needs to be gutted and rewritten" topic.
Other people dislike how the record labels treat music consumers. Price fixing, filler music, bogus copy protection schemes, DMCA, DRM, and to top it all off, big, rich executives telling me how, when, and where I can listen to music I bought... doesn't make me think fondly upon the prospect of supporting the music industry. It seems that with every RIAA-related press release, I find myself more determined never to buy CDs again.
In spite of all this, though... I genuinely want to pay for the music I have, so long as I could guarantee that the artists get a decent share of the money. I like the feel of owning things, and I like the feel of giving money to people who make things I like to use. I would imagine many people feel like I do. As a result, I can't really see the Chinese model happening here. There's a certain pride embedded in the idea of owning something in our particular culture. Instead of seeing pirate booths lining the streets, I can forsee labels finally getting the clue and changing how they sell their music or the artists breaking free of labels and finding a better way to distribute music...
...that, or the RIAA/MPAA will successfully lobby Congress to enact further legislation that effectively limits our consumption of intellectual property to what the RIAA and MPAA want us to consume. If (when) that happens, I'll start practicing my "eh?" and move north.
The Grateful Dead Model (Score:4, Interesting)
Re:Musical Diversity (Score:3, Interesting)
Being different in China is a liability. Few youth subcultures around, and even the ones that do exist (the Beijing rock scene springs to mind) are all different in exactly the same way (and suck in the same way. Seriously.). "Let's all be individuals by doing the same thing!" is the cry going out across the continent.
And meanwhile in Japan this year, hoards of teenagers are dying their hair bright orange and wearing all orange clothes, all trying to rebel by doing the same thing at the same time. Fucking hopeless.
Re:In Communist China... (Score:4, Interesting)
-a
Re:The article. (Score:3, Interesting)
Re:Rome and greece had a simmilar system (Score:4, Interesting)
Many seem to fear that a model like what is happening in China strengthens Corporatism because they would likely be the most common patrons. So we would end up with all 5 girl groups called "Mei Mei" performing songs which extoll the virtues of M&M candy. But don't we already have that? Look at Britney Spears and the Pepsi commercials. But patronage isn't the only way to make money under a free distribution system. Endorsements would be another way. Michael Jordan and Tiger Woods didn't get rich by being sponsered to play sports. In the same way, popular musical artists could become fabulously wealthy.
I think true artists, even the starving ones, can survive under such a system but they need something in return for the loose distribution of their works, if nothing else then at least name recognition. What if an electronic signature could be worked into the data format not to use for restriction but for positive identification. If free distribution were allowed then consumers would have no reason to strip that information off. This header could contain copyright, license, and contact info, the date of the performance, and the names of the patrons who paid for the performance thus freeing it for everyone.
PS. In regards to your sig, in Fascism the government controls industry but in Corporatism government is controlled by industry.
Re:so what? (Score:3, Interesting)
Actually, as someone who dropped out of high-school and does earn over 100k a year, I'd consider educators to be superfluous to enabling people to get jobs. As far as I can tell, the only people who are getting jobs out of education are the people who sell education.
Now I'm sure that people could try and argue that without overpaid entertainers, western business would collapse and there would be no jobs anywhere, but we all know that's not the case.
Ditto for educators, I'm sure. But you're putting words in my mouth. I never tried to make the case that the economy would collapse without highly paid entertainers. I was responding to your whine about entertainers being more highly paid than you are.
But the point here is, why should performers think they're entitled to make hundreds of thousands, or millions of dollars a year? Because of their "ART"? Give me a break.
Objectively, they don't get paid for their art. Believe me, you can sing all day long and not get paid for it. Brittney Spears actually gets paid for helping record companies make money for selling little plastic discs with music on them and for helping theaters fill their seats with paying customers. In other words, she gets paid because she creates value. Effectively, she's being paid as a sales rep for record companies and venue owners. Whether or not her singing is "art" or not is irrelevant. She still sell lots of product for her employers. "Entitlement" has nothing to do with it.
Sure there's lots of jobs created from their work, but a lot of jobs result from MY work.
I know. Teacher's jobs, principal's jobs, administrator's jobs, politician's jobs, etc. My tax bill tells the tale.
Sure I'd like to get paid more, but I'm under no illusions that my work is worth millions a year, why should they think that their work is? Probably just based on history.
Has nothing to do with history. When you're generating as much revenue for your employers as Brittney generates for hers, come back and tell me about it.
And that's the problem with the music industry - they want to hold on to the past - themselves as the only distribution outlet, and of course, the performers want to hold onto their multi-million dollar contracts.
Of course they do. You would, too. But as more efficient and lower cost distribution channels are created, the older ones will be obsoleted. Which is exactly the way markets are supposed to work.
Times are changing, and in the end, performers and record labels may not (as pointed out in the article about China) be able to count on historical revenues and lifestyles when planning their careers these days.
Actually, it isn't historical. The 20th century was an aberation in that regard. Before performers had the technological means to mass produce and distribute their work, they only got paid per performance. Now that they're losing their single point of control over the distribution, I expect they'll have to go back to that model. But if you're popular enough to fill the seats of a large venue, your still going to be able to make plenty of money.