A NEW BUSINESS MODEL FOR THE RECORD INDUSTRY
Entertaining. Exciting. Arrogant. Opinionated. Brilliant. Maddening. This only begins to sum up Dave Adelson. With two decades of experience from deep within the promotional machine of the old school record business, he's quite comfortable facing the new reality of today's digitized record industry.
Currently a Music Producer at E! Entertainment Television and Executive Editor of HITS Magazine, Adelson is a collector of clues about the industry, constantly clipping news items, talking to a wide variety of informed sources, and culling passages from tell-all books about behind-the-scenes deals in the entertainment business.
Behaving a bit like a street-smart police lieutenant hyped-up on caffeine, Adelson laid out the evidence, discussed the facts, acknowledged prevailing theories, and then put forth his own vision of what is in the immediate future for record labels, managers, attorneys, artists, distributors, retailers, and just about everyone else in the record industry.
The World Has Changed.
"What we had before is over," he said. "The world has changed." Prior to the advent of digital distribution, the record industry controlled the way consumers found and bought music. Adelson introduced the big five labels (Universal Vivendi, BMG, Sony, EMI, and Warner Music Group), referring to them as "they" or "the majors" throughout the evening. "They dictated the form, content, method of consumption and price" of music available to the public. "But not any more. Digital distribution and peer-to-peer file sharing have changed all that."
As presented by Adelson, the raw numbers for peer-to-
peer (P2P) file sharing are staggering:
Noting continued job losses throughout the record industry, and contrasting that with the awesome numbers of filesharers, Adelson said, "The five majors may be going downhill, but music consumption is at an all-time high."
The Audience Gets Involved.
At this point, the questions began and continued through the event. True to his freewheeling nature, Adelson took on all comers. Queries ranged from the theoretical to the technical and dealt with money, morality, and more. Disagreements abounded, yet there was an obvious shared desire to continue the discussion, especially since Adelson hinted that a possible solution to the current economic situation would be presented at the end of the evening.
On the subject of P2P, he asked rhetorically, "Is it thievery? Is it stealing? You decide, but it is reality and it is only going to get bigger. And wait 'til it gets to the film business." Technology continually advances, allowing bandwidth and speed to increase, so that very soon, "films will become as easily downloaded as songs."
Tess Taylor, President of the National Association of Record Industry Professionals (NARIP) which hosted the event, presented some counter arguments, garnering applause when she said, "You can't dismiss the law with a moral denial argument. If millions of people do something wrong, it is still wrong. People have been seduced by self-interest into believing that theft is OK if you can get away with it. They act as if it's an entitlement to get art and entertainment for nothing. It isn't. And characterizing theft as consumer demand is a false argument. Consumer demand applies when people consume products they have to pay for. Music is not a staple of life, and if you want to own it, you have to pay for it."
Later Taylor chimed in again, "I don't oppose technology - I support some controls - and there's a big difference. No creator who insists on being paid for his creations is advocating the obliteration of digital technology. They simply want to be paid fairly for it."
Bill Siddons, one of the legends in the personal management business (Crosby, Stills & Nash; The Doors) and now heading Core Entertainment (Jerry Cantrell), offered so many insights about the current state of the business that he was invited to the stage for a mini-presentation of his own. Pointing out that "the $18 cost of a CD was the result of all the fat" in the budgets at the major labels, Siddons outlined several of the positive and negative aspects of digital distribution. And again, there was a hint of a possible solution that would be revealed shortly.
Digital Rights Management?
"There is no such thing as digital rights management," Adelson stated. While it is possible to make things more difficult for P2P, "it cannot be stopped because any system can be hacked." Security experts have long acknowledged this fact: the only truly secure system is one that prevents everyone from accessing the data, at which point the whole reason for having the data is negated.
Adelson played a clip of an impromptu interview he conducted with BMG chairman Clive Davis at the showbiz legend's most recent Grammy party. On the recording, Davis confidently predicts a change in the prevailing trends involving P2P. Adelson disagrees and says he has the facts to prove it.
Adelson often referred to copious handouts (49 pages were made available to attendees) and to several online sources, including Slyck and Eric Garland's Big Champagne, which provides information on such download networks as Limewire, Bearshare, Kazaa, Morpheus, and hundreds of others. Another source Adelson quoted was "Not On My Watch: Hollywood vs. The Future" by Peter Dekom and Peter Sealey, a book that has every motion picture distributor quaking in his boots.
Two Possible Solutions?
Adelson delivered the promised answers to the digital distribution dilemma with two proposals. One, "Voluntary Collective Licensing," was greeted with groans and dismay, not so much because of the plan itself, but because it is proposed by the Electronic Frontier Foundation, which many in the audience dismiss as disingenuous because it is backed by consumer electronics manufacturers yet is not forthcoming about this fact. Instead, the EFF is self- described as "a nonprofit group of passionate people - lawyers, volunteers, and visionaries - working to protect your digital rights" and operates under the guise of "defending freedom in the digital world." Those I spoke with feel the EFF is supported by people in whose financial interest it is to see that intellectual property is disrespected - as long as it is not theirs.
The alternative solution is some form of compulsory licensing system. According to William Fischer, writing on CNET, "The creator of a recording would register it with the U.S. Copyright Office" and "receive a unique file name, which would be used to track Internet transmissions of the work." (Big Champagne is already engaged in this.) ISPs (Internet Service Providers) and the makers of media and hardware used in filesharing would then be charged accordingly. These firms would, in turn, charge their users. Some say this is analogous to the way you are now charged only for the amount of water that flows out of your tap. Use more, pay more; use less, pay less.
Of course, there is the possibility that there might not be a one-to-one ratio between downloading and fees. Recording artist Asha Corpas, an event attendee, likened it to the now-accepted payments most households make to cable television providers. "You receive 500 channels, but you don't watch all of them, yet the fee includes the cost of providing all of the programming."
The Debate Continues.
Perhaps the most important aspect of Dave Adelson's presentation is the ongoing debate it stimulated. Here is just one example of dozens of conversations and e- mails that immediately followed NARIP's Dave Adelson Show:
"I attended the Napster trial in San Francisco and saw a generational alignment regarding digital downloading of music," noted entertainment attorney Susan Rabin. "Half the courtroom cheered for Napster. The younger half. Even - to my horror - law students. The computer generation will not likely accept that the intellectual property (music, for example) that is flowing through their cyberspace turf is private property. The other half of the Napster courtroom should create an effective compulsory license for ISPs so that we do not have to hunt down the downloaders," Rabin added.
What Do You Think?
Provided by G Man Music