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Music Media

Cringely Proposes a Music Sharing Alternative 730

Posted by CowboyNeal
from the buying-the-power-back dept.
WEFUNK writes "The I, Cringely 'Pulpit' column at PBS presents an interesting idea for a new business model to take on the RIAA. He suggests that a publicly traded company could legally and profitably buy a single copy of each record which could then be freely copied and listened to by its shareholders under fair use. His 'Snapster' (Son of Napster) proposal is essentially a digital music co-op that would let shareholders/consumers bring copyrighted material into a quasi-public domain. While fair use and the public domain continue to be lost in our courts and congresses, maybe the capital markets will offer an alternative." While a neat idea, it's doubtful that it'll ever be implemented. Still, it's a good read.
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Cringely Proposes a Music Sharing Alternative

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  • There is no such thing as fair use. Just ask the RIAA.
    • by whiteranger99x (235024) on Thursday July 24, 2003 @08:48PM (#6528341) Journal
      There is no such thing as fair use. Just ask the RIAA.

      You got that right, they definitely put the "F-U" in Fair Use! ;)
      • by Golias (176380) on Friday July 25, 2003 @03:34AM (#6530155)
        Well, Cringley asked what we thought, so here is the e-mail I sent him:

        Well, you asked, and after being slashdotted you probably are getting a lot of answers, but I do see a snag or two in your plan. Bear with me... I tried to be concise, but my response ended up being almost as long as your article.

        Under the current system, artists depend on a big, evil record company to not only get their albums made, but to get them marketed. Okay, most artists get screwed by this deal, but the most popular acts eventually start making money when the big, evil record company sells enough CD's.

        Under your proposal, any artist, with or without a label, would sell exactly one CD to, well, the entire world, because people would be crazy to not participate in "Snapster" if it exists.

        So how in the heck does any artist make direct money off an album? A small percentage of 2 Million sales is certainly a better deal than 100% of one sale.

        If such a company were to exist, recorded music would be released for the sole purpose of marketing the band, who hopes to make their cash via concerts. (Unless I'm mistaken, Phish pretty much already lives this way, cranking out lots of low-selling albums to drive ticket and t-shirt sales at their shows.)

        So long as a CD costs $15, it's folly to think that lots of good albums will continue to be released in such an environment. What will probably happen is albums by established bands, such as U2 or Jewel will suddenly cost $10,000,000 per CD (or more), and albums by bands who are not established will be worth what Snapster is willing to pay (nothing).

        Stay with me now, I don't think my conclusions are over-reaching just yet...

        The only way to raise the price that Snapster will pay for your albums is by "getting established." The only way most bands will be able to do that is... big shock here... sign a contract with a big, evil record label (now a "marketing service") who is entitled by the contract terms to something like 95% of the sale (not sales, sale) of each CD the band releases under the contract.

        Since these big, evil companies will be hungry (something like 40% of their business model is in back-catalog sales, which Snapster will have already erased.) They can then take the following steps to restore as much of their lost profits as they can:

        1. Jack up the price of the individual album, including back-catalog disks.

        2. Form their own Snapster.

        3. Stop selling albums. Completely. If you are not a member of the big, evil labels' version of Snapster, you can't hear the new Avril CD. Instead of being a record sales company, or a music marketing company, they will be in the business of owning content which is not for sale, but is streamed exclusively to their shareholders for a fee.

        4. Wait for your Snapster company to die on the vine.

        5. Jack up the shareholder download price to the point that it's just as expensive to download as it was to buy CD's.

        The only way to stop this would be to claim that Evil Snapster is in violation of anti-trust law. Apart from Standard Oil and Bell, how often does a company lose one of those!? Besides, what politician is going to want to bust up a company when it's partly owned by almost every single American who listens to music?

        • Fallacy (Score:3, Insightful)

          by geekoid (135745)
          "Under your proposal, any artist, with or without a label, would sell exactly one CD to, well, the entire world, because people would be crazy to not participate in "Snapster" if it exists."

          Based on Napster, Kazza, etc . . . that does not seem to be the case. emmnemm had probably the most downloaded album ever, yet he still went platinum.

          "The only way to raise the price that Snapster will pay for your albums is by "getting established." The only way most bands will be able to do that is... big shock her
        • by Gonarat (177568) * on Friday July 25, 2003 @10:43AM (#6532464)

          Very, very good point, and something that Cringely misses in his article. On possible solution :

          Cringely states : "Each share also carries the right to download backup or media-shifting copies for $0.05 per song or $0.50 per CD, that download coming from a separate company we'll call Snapster Download that is 100 percent owned by Snapster."

          Why not double this to $0.10 per song, $1.00 per CD and split half with Snapster and half with the artist. Snapster would still have the revenue needed to run, and the artists would make more than they do now. Databases could be built to also make sure that song and lyric writers get a cut. Since each successful download would be logged, each artist would get what they actually earned instead of going by popularity ala ASCAP. Britney would only get what she earned while the independent band who cut a CD and got it on Snapster would actually get a check! This would keep the production of new music viable, and perhaps even more profitable for Musicians, while reducing the end price of music -- a win/win situation.


    • I know this will earn me "flaimbait" or "troll" here at Slash, but honestly it's not meant that way. I really don't understand why people do not get that it is just dishonest to copy and distrubute copyrighted works without permission. I know this is the land of "Information Needs To Be Free", but look at it a different way. As a coder, you develope a unique little app. Well you might *like* to give it away, the rent is due. I don't know about you, but I require my employer pay me for my work. So, being i
      • by Anonymous Coward

        Music is *for sale* and if you want it, you must pay for it.

        No I don't. I can acquire music that is in the public domain, I can listen to free live performances, and I can create my own. The RIAA wants you to believe that you have no alternative but to pay for music.

        The reason everybody is so riled up about this is that it flips the burden of proof onto the accused. The RIAA can subpeona anyone they want, then file a lawsuit against that person. That person will probably be contacted by the RIAA pr

      • >Bottom line. Music is *for sale* and if you want
        >it, you must pay for it.

        No, there are many ways to get or listen to music without paying (and yes, I am talking about music that still has a copyright on them). I can for example go to a friends home and listen to his music. I can turn on the radio and listen to the music. I can record music of the radio. I can (at least in Sweden), get a copy of music from a friend (since such music is allowed according to our copyright law, at least for now) and so
    • While the "stealing" of music is illegal and violates copyright laws, why is the RIAA using so much time and resources to elimate this? Is the pirating of mp3's an immediate threat to national security? I would really like to see an UNBIASED source of information regarding exacly how much revenue the artists and record labels are losing as a result of music pirating. In my opinion, this is only giving more reason for people to come up with better/faster/more secure ways around the system...
      • by crmartin (98227) on Thursday July 24, 2003 @11:17PM (#6529265)
        You know, I've wondered about this. As I've understood it -- just listened to Jack Valenti talking about it on the news today -- they claim that there's been a drop of something like 30 percent in sales, which they ascribe to file sharing.

        But, I've also seen it said that book sales were down about 30 percent.

        It seems as if the least hypothesis is that file sharing, rather than costs the RIAA members zillions, is actually costing them statistically nothing.
  • by trudyscousin (258684) on Thursday July 24, 2003 @08:41PM (#6528290)
    ...the retail price of a CD jumps from $18.99 to $1899.
  • Uh no. (Score:4, Insightful)

    by glrotate (300695) on Thursday July 24, 2003 @08:44PM (#6528310) Homepage
    I think most dl'ers are just going to continue stealing it.
  • one word: my.mp3.com (Score:5, Informative)

    by interiot (50685) on Thursday July 24, 2003 @08:44PM (#6528314) Homepage
    Didn't my.mp3.com get in trouble even though they owned one CD of all the albums they were electronically distributing? And the judge still declared that illegal...
    • by modecx (130548) on Thursday July 24, 2003 @08:47PM (#6528338)
      Right. But the people they distributed to were not shareholders of the company. That's the point here.

      It's a funny idea, but ultimately it's a silly one. It's the surest cause for the legislators to take away fair use, or change it so it's not so fair.
    • by Anonymous Coward
      I think the difference would be that the new company would only distribute the music to shareholders. Taken as a whole shareholders are the owners of the company. If they own the company they also own the company's assets, i.e. the music. Thus, the people obtaining the music from the company to some extent share ownership of the music they download.

      No such relationship existed at my.mp3.com. The people downloading the software were customers of my.mp3.com, not owners.
      • Taken as a whole shareholders are the owners of the company. If they own the company they also own the company's assets, i.e. the music. Thus, the people obtaining the music from the company to some extent share ownership of the music they download.

        However, there is still a distinction between the assets of the corporation and the assets of the shareholders. The assets of the corporation do not become the assets of the shareholders until the corporation liquidates, and then the shareholders are last i

        • by gilroy (155262) on Thursday July 24, 2003 @09:53PM (#6528755) Homepage Journal
          Blockquoth the poster:

          However, there is still a distinction between the assets of the corporation and the assets of the shareholders

          Strictly speaking, this is only if the corporation is that modern beast of commerce, the Limited Liability Corporation. You can certainly have -- and indeed, prior to the railroads, often did have -- wholly owned companies which were not LLCs. Of course, no sane investor would ever buy into Snapster if it weren't an LLC, since then the RIAA would be able to sue for that investor's personal wealth as well as that of the company.


          Hmmm. I wonder if that could be a way around the ridiculous lawsuits? Incorporate yourself, then file-share as the corporation. Then.... profit! :)

    • by starcraftsicko (647070) on Thursday July 24, 2003 @09:52PM (#6528751)
      MP3.com owned 300,000 CDs, but the usership of MP3.com was not limited to MP3.com. I'm not saying that Cringely's idea would work, only that the MP3.com involves different legal issues.

      The naysayers to this idea forget that the _critical_ component of this plan is that it must IMMEDIATELY go public. It also must limit downloads to owners (shareholders) ONLY. While the cost of going public may be significant, there is not necessarily a need to bring in investment bankers and join the NASDAQ or NYSE... The press would likely provide the marketing for free on the nightly news (due to the sheer audacity of the idea), and the employees of the business could probably sell the shares via telephone. "limit one share per customer"! (or something).

      The real problem here is that by sharing the backup or shifted assets of the company among the owners in this way, IF a court later decides the idea is illegal, they (the RIAA) might then seek to recover directly from the owners... Usually by being a corporate entity, this kind of thing is avoided, but since the corporation is distributing it's assets directly to the owners, who can say.

      Concerns that users may share their downloads with their non-owner friends are baseless. TODAY, even without this company, people MAY record things from TV and share it with their friends... and TV and radio are legal last I checked.

      One final note. In the end, the legality of this plan would not matter. Unless stopped quickly by injunction, Current RIAA distribution methods would become obsolete technically (ok, ok, they are already technically obsolete), and practically. If this became widespread, digital distribution would be the only comercially viable alternative. The distributors would have to change or declare bankruptcy in short order. This company would need to be able to drag out any court proceedings... basically, they'd need to take a page out of Micro$oft'$ playbook. A delay of two to three years is all that is needed...

      There will always be a small market for physical distribution, but the days of monopoly-via-artificial-scarsity-of-media would end. And wouldn't that be nice?
  • by doowy (241688) on Thursday July 24, 2003 @08:46PM (#6528328) Homepage
    CleanFilms.com and others like it lost-out when MPAA said it was illegal for them to edit the copyrighted material and distribute it (by rental or sale) to 'customers'. They've since operated by not 'distributing to customers' but by 'sharing with co-owners'.

    Essentially they operate as a co-operative. On the surface, it is the same as paying a membership fee - but on paper it is a different story (i.e. Snapster would be just like Napster on the surface, but largely different on paper).

    Here's a snip from their about page [cleanfilms.com]:

    is it legal to edit movies?
    Yes. CleanFilms is a Co-operative rental club. All subscribers to our service become members of the Co-op. The Co-op collectively purchases original, unedited DVD movies then has them edited - always maintaining a 1 to 1 ratio of edited and non-edited originals.

    As owners of the original, unedited movies, the Co-op has the right to edit out content that is objectionable to its members - similar to how you might press mute to avoid hearing objectionable language today. Accordingly, you must subscribe as a member of the rental club before you can rent edited movies.
    • by Minna Kirai (624281) on Thursday July 24, 2003 @11:34PM (#6529345)
      The critical difference between CleanFilms and Cringley's stupid idea is that CleanFilms has that 1 to 1 ratio thing going.

      For each movie they give to a customer/"co-owner", they've purchased one DVD from the publisher.

      Cringley's plan is to somehow achieve a 1:200000 ratio. Buy one copy of each CD, and somehow let multiple shareholders play several of them at the same time.

      That's just illegal. One entity (single person, or a corporation) is allowed to buy a CD and make backup copies. But if you play more than 1 of those at a time, you're breaking the law- because playing it isn't a "backup" use.

      Cringley's idea is as dumb as suggesting Merril Lynch can buy one copy of Microsoft(tm) Windows XP(r) and install it on 9000 PCs, because they're all property of 1 corporation.
  • It's been done (Score:5, Insightful)

    by El (94934) on Thursday July 24, 2003 @08:46PM (#6528329)
    They already have a public corporation that allows many users to share ownership of a copyrighted work. It's called a "library".
    • Re:It's been done (Score:3, Insightful)

      by NeoSkandranon (515696)
      I never paid to get into a library. Nor do i have the illusion that I own anything inside of one. Being able to borrow books to read is different than everyone being entitled to a free copy. Namely, in that in a library there is STILL only X number of books, so *everyone* still can't have one
      • Re:It's been done (Score:5, Interesting)

        by El (94934) on Thursday July 24, 2003 @09:00PM (#6528428)
        I never paid to get into a library.


        You've never paid taxes, part of which go to fund libraries? Or you've never gotten a library card, which usually has a nominal fee? Gee, if nobody pays for libraries, I wonder where they get the money to build them, staff them, and fill them with copyrighted material...

  • Say WHAT? (Score:3, Informative)

    by binaryDigit (557647) on Thursday July 24, 2003 @08:48PM (#6528346)
    How can this even come close to working? If the corp purchases the cd, the corp, which is considered an entity in and of itself, is bound by the copyright. The shareholders of that corp have absolutely no rights to the cd's at all (except maybe at liquidation time). Just like having shares in IBM doesn't mean I can take advantage of ANY of their assets. This idea, while an interesting fancy, is just that.
    • Re:Say WHAT? (Score:3, Interesting)

      by meta-monkey (321000)
      While I agree that this idea is flawed on many levels, I think you're missing one point. No, I can't buy stock in IBM, and then have access to all of IBM's secrets by virtue of being a stockholder. However, IBM could most certainly choose to release all its secrets to the stockholders. Here, the music co-op would choose to share its rights to the music. The question, though, is what rights does the corporation have in this regard?
  • Assumptions (Score:5, Insightful)

    by s20451 (410424) on Thursday July 24, 2003 @08:49PM (#6528349) Journal
    This can only work assuming:

    1. Most people who share music are willing to pay for music.

    2. Most people who share music are ethical, and won't give the music to non-shareholders.

    I think both assumptions are questionable. (Note: if you share music, I'm not saying you are a freeloader and immoral. But is everyone like you?)
  • by AntiOrganic (650691) on Thursday July 24, 2003 @08:50PM (#6528356) Homepage
    United States copyright law allows you to make one backup copy of the work, for private use. So if someone downloads it, they'd have to be the only person downloading it, and once it's downloaded, it would have to be deleted off of the servers. I don't seem to recall anything about group owners being able to make an unlimited number of backup copies.
  • by bradintheusa (458969) <bradintheusa@hot[ ]l.com ['mai' in gap]> on Thursday July 24, 2003 @08:51PM (#6528358)
    This idea is very flawed. A much better idea would be a netflix type CD rental, except they keep the CD in escrow for you and you own it rather than rent it. CDs could be bought or sold on the open 'virtual' market. You only get remote access to it. If you want physical access you pay for shipping. That remote access can be in a number of fomats from ISO,WAV,MP3 etc.

    Once you have owned the CD for a day, sell it to someone else and erase your fair use copy. Next time you want to listen to it buy it again and sell it again.

    Just like Cringely send some of those IPO shares to http://www.pcast.com.

    Brad.
  • this is nonsense (Score:3, Insightful)

    by Timesprout (579035) on Thursday July 24, 2003 @08:51PM (#6528363)
    The immediate disclaimers prevent this under personal use under federal regualaltion yaday etc,
  • by YllabianBitPipe (647462) on Thursday July 24, 2003 @08:51PM (#6528367)

    While on the surface it seems amusing enough there's some things I don't totally get, maybe someone else can explain where I'm wrong...

    First off, owning company stock is not necesarially the same thing as wanting to own the company's product. I might want to own the product but not take on any of the risk of owningthe stock. Likewise, there are plenty of companies I'd own the stock for only for the point of making money, not because I want to personally want to use their products (stock in a pharmecutical company comes to mind)

    related to this is the idea that there will be tons of people who want to own tons of stock for the point of being rich, namely the insiders or the investment bankers that want to make money off the IPO. Typically a large amount of shares of any company is held by institutions, not individuals. This idea sounds like he wants stock to be held by all the customers which totally goes against the way investments are usually held. I don't think the institutions would like this idea one bit.

    Then, what happens to people who own shares of the stock via a mutual fund? People who own the stock that don't even know about the service? Or people who want to download the music but don't have any means of getting shares of stock because they can't open a brokerage for whatever reason (bad credit)?

    Lastly, what happens at the shareholder meeting?

    Maybe I just don't get this idea, but to sum up, the product / service a company provides is (and should be) totally separate from its stock.

  • Licenses (Score:3, Interesting)

    by PiGuy (531424) <squirrel AT wpi DOT edu> on Thursday July 24, 2003 @08:52PM (#6528369) Homepage
    There's a major (future) flaw in this:

    If I buy stock in a company (even the one I work for), that doesn't mean that I can freely use any software that they buy from another vendor. Most software comes with per-seat licenses, not per-company. What's to stop music companies from just packaging only a single-user license in a CD? Replace the word 'music' with 'software' in this scheme, and it all falls apart.
  • by El (94934) on Thursday July 24, 2003 @08:53PM (#6528379)
    Napster had 60 million users with a membership price of free (many of which were no doubt duplicates) therefore a service with a membership price of $20 should have an equal number of users? What part of "supply and demand" did you miss, Robert?
  • by Goalie_Ca (584234) on Thursday July 24, 2003 @08:53PM (#6528380)
    Is there any reason why we can't go out and buy a Sony share or a Warner share???

    They own the rights to begin with!
  • by themaddone (180841) on Thursday July 24, 2003 @08:54PM (#6528383)
    I can see it now, Snapster starts up, buys a few CDs, and all of a sudden every new CD that is bought comes with a draconian Microsoft-style license which explictly states that you may not play the CD on more than one audio system at a time, without the express written consent of the RIAA, which comes only comes with an unrealistic royalty fee. If you don't like it, you can return the CD to the record store. Or, not.

    Unfortunately, it's going to be a long struggle before the Record Industry is forced to submit to the fact that recorded music is becoming an economic public good -- because of pratically infinite distribution (at the cost of bandwidth and storage), the good has become non-rivalrous. This does not mean music will disappear, but it does mean that it will not be profitable for a music company to distribute CDs.

    Once the RIAA is forced to accept that, and takes the huge accompanying profit cut, their real business will be the promotion and distribution of the music itself -- it will lower its overhead by allowing P2P-style downloads (let the consumers give up their bandwidth), and will profit by sponsoring artists tours.

    The downside is that record stores will, for the most part, go out of business. Were that there was another way to save our slave-wage friends who are knowledgable, but in every war, there are casualties.

    But sorry, Cringely -- Snapster won't work for long. The fight for free music will be much longer than we hope.

  • This is absurd (Score:4, Insightful)

    by Temporal (96070) on Thursday July 24, 2003 @08:56PM (#6528393) Journal
    Really, people, step back and look at what we're talking about here. Who cares if it is technically legal? Clearly it is a loophole if it is legal, and that hole will quickly be closed by lawmakers.

    The other point is, why would you want to do this? Does no one here understand the basic concepts of economics? If people don't pay for music, there won't be any music -- or, at least, there will be very little. It costs money to produce. The artists need to eat. Sure the RIAA is evil, but two wrongs don't make a right. How could anyone seriously consider a plan like this without realizing that it is wrong?

    Why do you people believe that you are entitled to free (or absurdly cheap) music? If you're unhappy with the RIAA, don't buy their music, but don't steal it either. You have no right to use something that someone else spent time and money to produce if you are not willing to use it under their terms.
  • Not Fair Use (Score:5, Informative)

    by Laur (673497) on Thursday July 24, 2003 @08:58PM (#6528415)
    I'm surpirsed he said that his lawyer friends found no problem with this. From the earlier /. interview with the DOJ IP Lawyers, Question #7:

    The doctrine of fair use was originally adopted by judges ruling in early copyright cases. Ultimately, Congress incorporated the doctrine into the Copyright Act of 1976, where fair use is now codified at Section 107 of Title 17 of the U.S. Code. In creating section 107, Congress listed four factors to be considered in determining whether a use is fair or not:

    (1) the purpose and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes;

    (2) the nature of the copyrighted work;

    (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

    (4) the effect of the use upon the potential market for or value of the copyrighted work.

    These factors are essentially the same factors that had been used over the years by judges, and Congress's stated intent was to preserve the fair use doctrine as it had evolved. However, as many courts have pointed out over the years, whether something constitutes fair use is very fact-specific. It is difficult to craft a clear, bright-line rule that explains which particular uses of a work are fair use and which are infringement. In short, the exact parameters of fair use are often determined based on the facts of specific cases.

    Just from a quick look Cringely's idea, while novel, seems to violate several of the 4 criteria. This would be copyright infringement for comercial gain on a massive scale. No way any judge would believe that this falls under the intent of fair use.

  • What a bozo (Score:5, Insightful)

    by curtlewis (662976) on Thursday July 24, 2003 @08:59PM (#6528416)
    Cringely has always struck me as a moron.

    A simple perusal of copyright laws would show anyone with half a brain that what he proposes is illegal.

    Fair use allows for the end user to make a copy for PERSONAL use. Not corporate use, not public use, not any other use. Personal, baby.

    Survey says....

    BZZZT!

    • Re:What a bozo (Score:3, Insightful)

      by blakestah (91866)
      Fair use allows for the end user to make a copy for PERSONAL use. Not corporate use, not public use, not any other use. Personal, baby.

      He is not proposing to exploit any loophole in fair use. He is proposing to exploit a loophole in co-operative ownership. If you and I pool our money and buy a CD together, can we each listen to a copy of it at the same time?

      Now expand that concept to everyone in the "company" buying the single CD together, and listening to it whenever we feel like downloading it. That i
  • Wheres the beef? (Score:5, Insightful)

    by Sogol (43574) on Thursday July 24, 2003 @08:59PM (#6528419) Journal
    "Figure $100,000 for the download system"

    Whatever. Considering the average mp3 @ 192kbps
    is 4MB x 100,000 mp3's = approximately 390GB served to a large user base. For $100,000.

    This guy may have ran his idea by some lawyers, but he didn't ask anyone here...

  • error-Fair use (Score:3, Redundant)

    by linuxislandsucks (461335) on Thursday July 24, 2003 @09:01PM (#6528430) Homepage Journal
    People you forget Fair Use only applies if you do not in any way make money off of the copy..

    So Cringely is quite wrong in this concept..

    Now a non profit org that gives a used music cd for someone to use in exchange for another music cd fromtha tperson..would probably be very legal..:)
  • by meta-monkey (321000) on Thursday July 24, 2003 @09:12PM (#6528495) Journal
    What's our goal here? I mean, do we really want all information freely downloadable and available anytime, no fees, no copyrights, no nothing?

    We have two extremes here.

    • 1) The Disney worldview, where everything is closed and controlled forever. You will be paying royalties everytime you whistle "It's a Small World" until the year 3029.
    • 2) The "Everything I can copy is free" worldview, like what Cringely describes in this article. One copy is made, and then anybody is free to copy it forever.

    Do you really think #2 is the right answer? Don't give me the standard lines about "music sharing increases record sales." Sure, it might, right now, in the limited sense it's going on. Okay, what if copying anything you want is legal. /.'ers have told me before that they think it's ridiculous that somebody can own a pattern of bits. Don't argue semantics about "ownership." I'm talking about control here. How something is used, how it is reproduced, etc. So, nobody can control an idea, nobody can control a piece of music, nobody can control a movie.

    A studio spends $100 million dollars making a great movie. Last night I watched Gangs of New York. Fantastic...amazing...Scorsese is a fucking genius. I don't know how much it cost to make, but I'd imagine a shit-ton of money. So, they spend all this money, use all this talent, and equipment, and employ all of these people. The master copy is made. Immediately, somebody gets their hands on it, makes a copy, and puts it on the Internet. Everybody and their brother downloads it. Somebody copies it onto DVDs and sells it for $3 + shipping. How does the studio make money?

    Don't tell me it's off ticket sales because people want to see it on the big screen...unless they own all the theaters, it won't do any good. I'll open up a theatre, buy the DVD for $3, and charge $4 for a ticket to see it on the big screen, then charge $8 for popcorn.

    Is this the world we want? How will artists make money? Will it all be ads and product placements? Should Daniel Day Lewis have to say "Drink Pepsi" after every stabbing?

    There should be a happy medium between options 1 and 2. So, what is it? Should there simply not be big-budget movies anymore, because the idea of "owning the bit pattern on the DVD is nonsensical?"
  • by janda (572221) <janda@kali-tai.net> on Thursday July 24, 2003 @09:21PM (#6528556) Homepage

    The US Supreme Court has already ruled (I can't find the link at the moment, try "supreme court wordperfect" or something similar) that it is legal for you to buy one (1) copy of (say) MS-Office, and install it on all 3,000 workstations at your company.

    The trick here is that since you only have one (1) license, only one (1) copy of the software can be active at any time.

    A similar thing already exists in the physical world, it's called "loaning a book to a friend".

  • by KNicolson (147698) on Thursday July 24, 2003 @09:21PM (#6528557) Homepage
    This may make RIAA extinct, but there's no revenue stream for musicians, and it's worse than Napster/KaZaA as presumably all the titles will be perfectly ripped and organised, thus providing even less incentive for people to go out and buy.

    Coupled with the dismissive "Oh, it only takes $500 per hour to do a recording", and with profits being skimmed to support the pyramid scheme, Cringely sounds like one of these guys who think the cost of the average recording looks like this:

    1. CD and box, 10 cents
    2. ???
    $19.90. Profit!!!
  • by Logic Bomb (122875) on Thursday July 24, 2003 @09:25PM (#6528585)
    According to today's earlier interview answers [slashdot.org] from the DOJ lawyers, this seems to totally violate the Fair Use doctrine. Quote from their answers:
    The doctrine of fair use was originally adopted by judges ruling in early copyright cases. Ultimately, Congress incorporated the doctrine into the Copyright Act of 1976, where fair use is now codified at Section 107 of Title 17 of the U.S. Code. In creating section 107, Congress listed four factors to be considered in determining whether a use is fair or not: (1) the purpose and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.
    It seems pretty obvious that this proposal would have a massive effect on items 3 and 4. The point of this use is to get around copyright law on a massive scale just to get people almost-free access to protected material.

    Fair Use is law of spirit more than of letter -- there is no bright line distinguishing what exactly it is. I don't think you'd find a judge that would let this proposal weasel through.

  • Idiotic (Score:3, Insightful)

    by panaceaa (205396) on Thursday July 24, 2003 @09:30PM (#6528616) Homepage Journal
    If such a concept was possible, every company would just buy one copy of software for all their employees. The software is bought by the company, and the employees are agents of the company. In addition, in the tech industry employees usually own stock in the company. But there's a pretty large amount of case law showing that each employee needs their own license for the software they use at work.

    The same would go for music.
  • by Petronius (515525) on Thursday July 24, 2003 @09:40PM (#6528679)
    of this wonderful company? in particular, what happens when they become a majority stockholder?
  • by gotan (60103) on Thursday July 24, 2003 @09:47PM (#6528725) Homepage
    The idea is brilliant, it might even be legal, but the sad truth is, that the whole business would be probably tied up in the courts for 2-3 years with noone being able to hear any of those purchased records, the price of the shares falling to a few cents, a lot of wasted money and disappointed shareholders who don't want to hear anymore about it after the first year of legal troubles. The problem is not the idea itself, it is the fscked up legal system that allows to drag out the proceedings endlessly and bleed out anyone who hasn't got a few million dollars in his bank accounts.

    That is not to say i wouldn't buy a share or even a few shares when it starts. Even betting on the off chance that something good results from this is better than just sitting around watching the RIAA turn back the wheel until we're back at feudalism. And at least it will tie up some of their lawyers in the courts. Yes, by now i'm so pissed off with the record industry that i'm willing to give away money if it hurts them in any way.
  • by frovingslosh (582462) on Thursday July 24, 2003 @09:56PM (#6528768)
    No, your Honor. I did not pay this woman for sex. I bought a share into the corporation that she is married to.
  • Why not... (Score:3, Interesting)

    by rsilvergun (571051) on Thursday July 24, 2003 @10:05PM (#6528814)
    just force the RIAA to allow music sharing with a small (as in 5 cents a song) fee for each download.

    Frankly, I don't see why the current system of copyright is tolerated. It benefits only a very small number of people while harming tens of millions. Times and technology have changed, and the cost of distribution is now effectively nil. In that sense information _is_ free.

    Yes, I know there are other costs asociatated with producing a work, but even those costs are dwarfed by the economies of scale involved here. If every america downloaded just one album a month at 5 cents a song, that'd be around $150 million a month. Plenty to keep the industry going, I should say. I understand that in Napster's heyday, the volume of downloads was much larger than this.

    Furthermore, I don't see any reason why violations for copyright infringement should be punished with anything more than requiring the person charged to pay for each item at the going rate. Copyright violations are _not_ stealing. It's copying. That's why it's called copyright. If I steal your car, you have one less car. If I copy a song, you don't have one less song. You've lost a sale, nothing more. The degree of damage is much less.

    Not that this'll ever come to pass. Something I figured out a while ago is that just about everyone is secretly hoping to be the guy to stike it rich with copyrights/patents/whatever. So even though they probably never will profit from the system, and will probably end up being screwed over by it, they'll defend it to the death forever looking forward to the day they get to be the ones doing the screwing over.
  • by UrGeek (577204) on Thursday July 24, 2003 @10:15PM (#6528863)
    Think about it. We rent video all of the time. But no one rent audio CD's. What is that?

    As film director, Richard Linkletter said once, "I thought the film industry was run like a Mafia until I had to deal with the music industry!" He was trying to get rights to a certain song for a film. But my point is the RIAA are not reasonable people. They are Special People with Special Powers. It appears that there was a Secret Admendment to the Constitution pass when we were looking and They would never allow this.

    I would just like my DVD rental service to have the right to backup out of print DVD's so they would have a spare when one breaks! And the public domain return to us - 28 years was plenty!

  • NO!!!!!! (Score:3, Funny)

    by Jafafa Hots (580169) on Thursday July 24, 2003 @10:28PM (#6528982) Homepage Journal
    This is not right!!! What, production being owned by the PEOPLE? For the people? By god, thats COMMUNISM!!!!!! Cringely is a terrorist!!
  • by akiaki007 (148804) <aa316@@@nyu...edu> on Thursday July 24, 2003 @11:37PM (#6529365)
    OK. I've read through what people have been writing and well, the moderators just like to +1 people that can write intelligently. That's the bottom line. I don't think most of the people that refute his idea know what they are talking about.

    Several points. You can IPO at whatever the fuck price you want to. Don't give me that, oh, you can't do that because of ..., or because of.... Your IPO (Initial Public Offering) is determing by YOU!

    Robert's idea is simply brilliant. To put it simply. I work in the world where money matters, and law matters, and his idea is awesome. I see nothing wrong with it. But he is also correct with the fact that this is a small loophole which can be fixed by a quick lobby to Congress. Someone that works for the RIAA (read: intern) is reading this article, and tomorrow they will be reporting this to their supervisor and ni about 2 months this "law" will be lobbied.

    I'm sorry to all the people that simply just say that this article is a bunch of horse-shit. This is one of the most comprehensive and simple (to-the-point) articles I've read recently. He's got everything covered (basics) and it is enough for "just about" anyone here to get it started. Just takes a little know how and in order to get it done before the "law" takes hold, just a few connections. I'm sure Robert (Cringley) could get you started...for a small fee of shared ;).

    Anyway, the point of this post was to say that all the people that got +5 for saying that this isn't possible. Wake up! Read something relevant. No, Wall Street Journal does NOT count. This is reality, and this is absolutely brilliant. This should go side-by-side with his "I use Linux to play DVD's" article.
  • by DavidBrown (177261) on Friday July 25, 2003 @12:06AM (#6529490) Journal
    Why? What's fair use? Corporations aren't allowed to buy just one copy of commerical computer software for use on all of their machines. Why should they be allowed to buy one copy of a piece of music for simultaenous use by all.

    One copy = one user at a time. And "fair use" doesn't mean you can make a copy of music and allow multiple people to access that copy at any one time.

    Fair use? A library is fair use, but libraries don't photocopy their books for each person carrying a library card.

  • Beyond Stupid (Score:3, Insightful)

    by salesgeek (263995) on Friday July 25, 2003 @12:13AM (#6529513) Homepage
    People, copyrights exist to control copying. Like it or not, just because you buy a CD, that doesn't make you the owner of the song, and fair use doesn't allow for wholesale copying of songs or albums or whatever.

    Cringly's idea is really bad. Instead of trying to find loopholes, let's get to the three issues that matter with RIAA:

    * Because of the degree of control over distribution, competition in the music industry, at least as far as price goes don't exist.
    * Unfair contracts to artists.
    * There's no incentive for innovation or new material for derivative work because old stuff doesn't ever move to the public domain.
  • Different Markets (Score:3, Interesting)

    by Nipok Nek (87328) * on Friday July 25, 2003 @01:08AM (#6529740)
    The point that noone wants to discuss is that many of the CDs accquired through p2p systems are NOT canabalized CD sales. Many of these people would NEVER accquire this music at the current price point of CDs. You can't say.. "Well, there have been 10,000 copies of this CD copied, so we lost $180,000" because many of those people would simply have not bothered.

    I have an example, but first some assumptions... (Yes I know the joke about assumptions)

    First: We will assume that there is a lot of profit in an individual CD sale. I've seen enough evidence of this that I believe it to be true.

    Second: We will assume that the music industry WANTS to make as much money as possible FOR ITSELF. (As opposed to making lots of money for it's artists)

    Anyway, My example/idea/experiment is this... The next time Madonna, or Brittney, or whoever's hot next week, comes out with a new album, sell it for $6.00. Or maybe $6.50. Work out a price that still gives everyone in the distribution chain at least 1/2 the profit they were making on a 'regular' cd. (Except the Label, who's profit margin would be cut to 1/3 what it is right now.)

    I predict that two things would happen. First: A lot more people who wouldn't buy an $18 album will be entirely willing to buy 3 (different) $6.00 albums, thus increasing total cash receipts. Since we halved everyone's profit (Except the record labels, which we cut by 2/3'rds) the artist is seeing 50% more money, and the label is making the same money it was on the expensive albums. This would also have the effect of tripling unit sales. Second: People would be more willing to buy an entire album just to get one or two songs. This also means more money coming in. And Third, people who had been entirely priced out of the market (Example: Young Kids) would now be in a position to buy music. All of this means more cash coming in.

    (Short Tangent: If they did this, The Electronics arm of Sony would give every Record Label a big wet sloppy kiss as they cranked out more and more mega-CD-changers....)

    This kind of pricing has precident. Anyone remember when Taco Bell used to sell it's regular taco's for like $1.79? They decided to swap volume for price, and they are now one of the Big Three Fast Food Chains.

    But it won't happen.

    Since the record industry makes it's profit after they pay everyone else, it is in their best interest to keep unit sales low, and costs high. Why go to all this trouble just so the ARTISTS can make a few more bucks? The Label doesn't care if the artists album goes Platinum or not. Just as long as they are raking in the bucks.

    On a personal note, there are MANY artists who I own SOME albums of, but not all. If CD's were priced like tacos, I'd own the entire catalog of many musicians, just to say I had them all.

    Specific examples: They Might Be Giants, Madonna, and The Nylons (Who? :)

    Also! I'd go out tomorrow and buy up the entire back catalog of "Weird Al" Yankovich. I single out Weird Al because I already own all of his music, but much of it is on Vinal and Cassette. I'd have no problem re-purchasing on CD if the price was right. I bet you'd do the same thing.

    Nipok Nek
  • by samj (115984) * <samj@samj.net> on Friday July 25, 2003 @01:28AM (#6529821) Homepage
    Message-ID:
    Date: Fri, 25 Jul 2003 16:26:36 +1000
    From: Sam Johnston
    User-Agent: Mozilla/5.0 (Windows; U; Windows NT 5.2; en-US; rv:1.5a) Gecko/20030718
    X-Accept-Language: en-us, en
    MIME-Version: 1.0
    To: bob@cringely.com
    Subject: The Business of Music
    Content-Type: text/plain; charset=us-ascii; format=flowed
    Content-Transfer-Encoding: 7bit

    Good Afternoon [Robert Cringeley],

    A regular reader of your column, I write from Sydney, Australia to
    provide some feedback about your 'One Possible Future for a Music
    Business That Must Inevitably Change' article
    (http://www.pbs.org/cringely/pulpit/pulpi t20030724 .html). I am not a
    lawyer, so I cannot comment on how successful your model would be
    although at first glance it seems to be taking advantage of a loophole
    that would soon be plugged. Worse still, initiatives like this are
    clearly not in the spirit of 'fair use' and may jeapordise the future of
    fair use provisions. I believe the test is 'would it replace a sale',
    and on that front you're buggered in a similar fashion to mp3.com.

    That said, you have correctly identified the (diminishing) role of music
    companies. I currently have some guys in my office churning out HDTV
    ready broadcast quality footage using a $1,500 Mac, $500 in software and
    a $10k DV camera. Admittedly these guys won the 'Best Comedy' section of
    Tropfest (http://www.tropfest.com/) using similar technology earlier in
    the year, and thus possess some amount of technical and creative
    ability, but the point is that they are not requiring hundreds of
    thousands or even millions of dollars of equipment to generate content.
    I trust the same applies to the music industry.

    Now, if new electronic distribution companies were set up which would
    allow content creators (note I'm using the generic term, rather than
    musicians) to sell their content with a 95/5 split (or thereabouts) in
    the creator's favour rather than the current (reversed) situation, and
    if the cost of the content was adjusted to maintain similar returns per
    sale, I believe we'd all (with the exception of fat record company execs
    and content creators who require significant investment - eg hollywood
    studios) be much better off. All of a sudden we're paying 90-95% less
    for content. Distribution is much cheaper and so the distributors are
    still able to make a profit (which is more in line with effort
    expended). Content creators still get $x/sale. However, content
    consumers are suddenly able to stretch their content budget much
    further. Say I spend $300/annum on CDs - that might be worth 20 CDs
    which are bulky, inconvenient and prone to damage. Instead, I get
    something like 20 times that, and in a format that is convenient. Note
    that even if I spend 1/20th of what I spend today, the artists are no
    worse off.

    Users don't bother sharing it because:

    - the distributors have fast, distributed networks as opposed to slow,
    intermittent connections that are oh so common on P2P networks
    - their files are high quality, and are able to be converted (ideally
    'peeled') to lower bitrates for portable devices
    - the integrity of the files is guaranteed by checksums and/or digital
    signatures
    - digital rights management (if any) is transparent and unobtrusive.
    an identifier - maybe a watermark if it could be implemented without
    quality degradation, or simply a header and digital signature (without
    which integrity could not be guaranteed) could be used in cases of
    copyright violation.
    - i can still be sued by the distributor or industry associations and
    the value proposition is simply not worth the risk. this process is self
    funded, and without a secure way of ensuring my identity is concealed,
    is an effective deterrent.
    - significant value is added in the way of being able to download
    content at multiple sites, maintaining and sharing playlists, etc.
  • Not being a lawyer, I found Cringely's idea very imaginative and stimulating. Other readers have mentioned possible legal flaws, but I think the scheme has an even bigger problem: it ignores the fact that we really don't need a music downloading business. Of any kind. The recording industry might need one, but musicians don't need one and the public certainly doesn't. The idea that anybody has to make money distributing individual copies of songs is an artifact we can afford to lose.

    In an editorial mentioned on Slashdot [slashdot.org] a couple days ago, Doc Searls said something about television that I think is highly relevant: that it is a mistake to think of television shows as products and viewers as customers. Searls points out that the television industry makes its money selling eyeballs to advertisers. Shows aren't the product, they are merely bait that converts ordinary people into ad absorbers who might buy products later.

    Likewise, from a musician's viewpoint, recordings are a way to convert people into future concert ticket buyers. It's been pointed out abundantly on Slashdot and elsewhere that musicians make money by performing, not by CD sales. What musicians get out of distribution (of any sort) is the fame that generates better gigs. For some reason everybody seems to have a hard time letting go of the idea that somebody has to make money selling copies of songs.

    Try looking at it this way. The recording industry is in the position television set manufacturers could have been in if they had thought of building tv's like pay phones, collecting the coins, dictating which shows could be broadcast and demanding most of the rights. If that were the case, television set makers would now be right in the middle of the fray over video file swapping, claiming to be losing money with every download, probably also claiming to be protecting the creative artists who produce the shows (but who get none of the coins), and perhaps suing everybody like the RIAA is doing.

    Obviously all that is unnecessary and sounds ridiculous, but it might not seem so if we were used to it. After a century of constantly feeding quarters into televisions, it might well seem like something was morally wrong unless someone was getting paid whenever a show was viewed.

    There is in place right now plenty of infrastructure to freely distribute the songs of anybody who wants their songs distributed. What musicians and the public get from this technology is a way to eliminate the filtering imposed by the music business, do the distribution automatically, get the exposure for free and let the public pick the winners. Replacing the recording industry with a different middleman is completely unnecessary.
  • by frode (82655) on Friday July 25, 2003 @09:10AM (#6531577) Homepage
    Let's say you and a friend go to the store to buy CDs. Getting there both of you discover that neither one has enough money alone to buy the CD they want, so you pool your money to buy the CD.

    Now who has ownership of the CD? I'd say you now have shared ownership of the property. Could both of you make a copy for backup, probably. Could both of you transfer the music to MP3, yes, however my understanding of the law would say that the mp3 copies of the song could not be used at the same time. There is the problem.
    Otherwise Blockbuster could make DVD copies of all there VHS tapes and form a a mini-partership which would allow all parterns to have unfettered access to the material.

    I think Cringley is onto something though, morph his idea into a music rental system, similar to Blockbuster. Form a company, buy CDs (you'll need multiple copies of popular CDs) and offer streaming access to that music though a subscription service.

    However the max amount of people who can listen to the same song at the same time is limited to the number of copies of the song that have been purchased. Example you buy 10 copies of CD "X" you can now offer out 10 streams of each song on CD "X", if an 11th person wanted to listen to that song they would need to be queued.

    Would probably be legaly viable now would it be practical from a business view.

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