Legal music and the still-round world

The World is Flat sounds like a fascinating read. It argues (according to the featured review on Amazon):

…the lowering of trade and political barriers and the exponential technical advances of the digital revolution that have made it possible to do business, or almost anything else, instantaneously with billions of other people across the planet.

Sound exciting! The idea of technology liberating entire nations from poverty, or obscurity, or at the very least allowing them to participate in our global society is truly awesome.

And you don’t have to look hard to see this concept in action. Twitter is a global phenomenon, providing a simple and unified soap-box for all who’ll speak to any who’ll listen. Wikipedia is a global encyclopædia, YouTube is a global TV station, iTunes is a global jukebox.

It’s all true, and it’s all awesome.

Except for that last one. iTunes.

It sucks.

Balls.

For the past little while I’ve been on a quest to buy music, legally, online.

If I lived in the US, I would be done by now and relaxing with a nice cup of tea. That flat world of ours though; it’s still round, and it’s still fucking my day.

See, the music industry hates to make money. No, don’t laugh, it’s true. It must be true. Why else would they be shooting themselves in the foot like this?

It must be true, it must be.

I mean, we know that purchasing music online instead of in CD form makes more for the record label than it does for the artists. A lot more:

If your deal with your record company is like The Alman Brothers, then you’re getting something like $315.50 for those same 1,000 songs (83.3 CDs worth). That works out to $0.31 cents per song, instead of the $0.045 on a digital download.

Ouch! It turns out you were being more than kind to that fan by telling him to buy either format he wanted, you’re losing $0.265 cents per song! . If all of your fans bought through iTunes rather than buying CDs at the record store you’d be looking at an overall reduction in income of 85%

We also know that people who buy music prefer to buy it online:

Unsurprisingly, BI [Norwegian School of Management] found that those between 15 and 20 are more likely to buy music via paid download than on a physical CD, though most still purchased at least one CD in the last six months. However, when it comes to P2P, it seems that those who wave the pirate flag are the most click-happy on services like the iTunes Store and Amazon MP3. BI said that those who said they download illegal music for “free” bought ten times as much legal music as those who never download music illegally

Sure, online music costs less per album than CDs, but it’s also costs the label far less. No physical CDs, no shrink rap, no shipping, just cheap, cheap, bandwidth.

We also know (somewhat tangentially I admit) that lower price points can do wonders for your sales:

It’s not just Valve games that see benefits from discounting games on Steam, as Newell also explained that an undisclosed third-party title saw a 36,000 percent jump in sales over a similar weekend.

So obviously, the best way to make money would be to allow any and all, come hell or high water, to be able to purchase the music you, as a label, own, in the simplest, most hassle free, interoperable, stable and long lasting way possible.

Which is how I came to my previous statement, which I’ll solidify now with the help of my friend <strong>: the music industry wants to fail.

If you’re bored, or you’ve got the point, you can stop reading now.

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Still here? Onward then.

Story time: Once upon a time some of my friends and I tried to enter a rather swanky club. I learned later that it was well above my station in life, but we’ll get to that in a moment.

As I walked up to the door, the doorman looked at me with a sort of faux-polite disdain.

I was dressed fine: I had the shoes, the casual-yet-smart pants, the shirt with an actual collar complete with generic non-offensive vertical blues lines imprinted upon it. I even had friggin product in my fairly-recently cut h… wait, no, fairly recently styled hair. I’ll spare you a full recount of my sobbing, crying and pleading, but in the end I was politely denied access.

Well, until my friends convinced the door man I was in a band visiting from Aussie, but that’s another story…

See, I wasn’t good enough for that club. Maybe I didn’t hold myself right, or there were already too many guys in there, or someone in there was wearing the same shirt as me, or something.

For some reason, entirely internal to how that club wishes to operate, I wasn’t good enough for them.

And fair enough. They wish to, as a club, exude a certain feel, a certain style. They want to attract a certain crowd of people, so they must only accept a certain crowd of people.

So what does this have to do with purchasing music online? Well, whenever I navigate to one of these online music stores and attempt to give them my fucking money, I feel just like I did when I walked up to that club.

Unwanted.

Unwelcome.

Cock blocked.

The phrase “N/A Region” and its variations have been, over the course of the last couple of weeks, burned into the backs of my retinas.

This kind of bullshit makes no sense for an online music store. No one has to see me buying music, I don’t affect the landscape for anyone else. All they’re doing is losing money.

I feel like I’m in some kind of fucked up coming of age novel, where I’m the uncool kid just starting out in a new town and a new school, desperately trying to be accepted.

“I’m sorry, loyal customer“, said eMusic with an annoyed frown (and no detectable sense of irony), “as you don’t live in one of the handful of small countries that we support we’re afraid you can go fuck yourself, loyal customer.”

“… what are you doing here?”, Amazon smirked from behind his Kindle. “We’re here for the US. The You. Ess. As in, us, not you.”

“Oh, look, just ignore them”, iTunes implored, putting his arm (a little forcefully) around my shoulder, “They’re always like that around new kids.”

“Yeah, don’t worry about them, we’ll take care of you”, Amie Street said with a sexy smirk. “We’ve got lots of music for you, come check it out!”

“Wow… this looks great!”, I stammer, staring at the giant list of artist names flying by. “The choice is amazing!”

“Yeah, it is isn’t it. You know, it’s DRM-free too!” chimes in iTunes. “Sign in, give it a whirl.”

“Yeah”, winked Amie, “come on, just log on. While the rest of the guys are watching. That’ll show them!

“Oh wow, this is… wait. I just signed in. This is… is different. Where did all the choices go. What is all this ‘region’ stuff? Why are most of the artists I care about greyed out?”

Amazon bursts into an uncontrollable fit of laughter.

“Hahaha… you thought…. ahahahha… you thought that we would actually let you in!? Let you in!?

iTunes and eMusic are laughing now, tears streaming down their faces.

“You’re… ahaha… from NEW ZEALAND!”, iTunes said gleefully. “I’m surprised you even have the Internet!”

As they walk away I shoot a desperate glance at Amie. She’ll understand. She’s an independent, a hippie. Her music starts as free for Christ’s sake, how stuck up can she be?

“What did you expect?”, Amie says with a derisive snort, walking away, holding her copy of Adventures in Foam by Cujo tightly in her hand.

“You’ll never fit in.”

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9 Comments

  1. Posted July 23, 2009 at 1:39 pm | Permalink

    I read up until the bit where you said stop reading. What makes you think it isn’t something simple like contracts / licensing / random legal issues preventing them from selling their catalog here?

  2. SCdF
    Posted July 23, 2009 at 2:56 pm | Permalink

    I read up until the bit where you said stop reading.

    I said can stop reading, but still.

    What makes you think it isn’t something simple like contracts / licensing / random legal issues preventing them from selling their catalog here?

    That’s exactly what it is. What makes it stupid is that those are rules they (they being music labels) have built around themselves. It’s a non-global country-partitioned system that they control, and have the power to change.

    I understand that it’s not eMusic’s fault, or iTunes’ fault, or whatever. I understand that they are just doing what the music labels allow them to do.

    What I fail to understand is how the particular way they (the labels) do business makes them more money than not doing it that way. It’s not like they are legally bound by law to do business this way by the country they operate in, it’s just how they are set up.

    How does not selling me an album make anymore more money? I suppose they think I’ll buy it from a store, meaning that Sony NZ will get money instead of Sony. Which is possibly true.

    Except that people are who pirate music buy more than those that don’t, and those that pirate tend to like buying online music over physical CDs, which labels tend to make more money off.

    Which to me suggests you want to make online distribution as frictionless as possible, lest those people give up and download music illegally.

    Moreover, if they can detect that I’m from NZ, why can’t they just flick the money (or the money sans network costs, or whatever) to Sony NZ instead of Sony.

    I guess the answer to that is that Sony NZ wants to ‘control’ how they sell their product.

    Which is totally their right. But that doesn’t make it a stupid call.

  3. Posted July 23, 2009 at 6:34 pm | Permalink
    I guess the answer to that is that Sony…

    If it’s as simple as you say then I agree it feels a little strange for them to throw away all these potential customers. It does seem like you’re just guessing, though.

    Perhaps if we knew the reason why these restrictions were in place we would be better placed to comment on it. “MAYBE THEY’RE RETARDED” doesn’t feel like particularly useful speculation.

    Don’t let me get in the way of your argumentum ex ridiculous anecdotum though.

  4. Posted July 23, 2009 at 7:23 pm | Permalink

    It does seem like you’re just guessing, though.

    Totally.

    “MAYBE THEY’RE RETARDED”

    While I never went that far, it looks like my attempt at using hyperbole for humor failed. Noted.

    …doesn’t feel like particularly useful speculation.

    I didn’t think there was such a thing as useful speculation.

    Basically, I’m venting. I have no room in my life or my room for CDs, and buying them to just rip them and throw them away seems just a monumentally wasteful thing to do. So I turn to online music, and actively try to give these people my money, only to have ridiculious and archacic excuses about regions thrown in my face.

    Don’t let me get in the way of your argumentum ex ridiculous anecdotum though.

    I’m not entirely sure what that means, but I think it means you read until the end!

  5. pchow
    Posted July 24, 2009 at 1:19 am | Permalink

    So, if you’d be able to purchase/download GTA 4 online, I assume there’d be a different version for people in Australia than there is for people in the US, for various legal/rating reasons. The same thing probably applies to music. The same artists (especially commercially mainstream ones) make different versions of their album for different countries just to increase their sales likeliness. There are some crazy rules in places like Germany/China/Japan.

    Not every artist makes enough revenue in each region for their record label to spend enough overhead costs ensuring that an album is optimized for different region markets, so the less successful artists probably can’t get good enough distribution deals with their labels. The big four don’t want album covers with drowned babies or swastikas to be associated with their company in certain countries.

    Since we’re just speculating here anyway, my guess is that the artists being looked up are not so popular and more likely to have pretty poor (if any) distribution deals for anywhere outside where they’re locally from. If iTunes is stopping Stefan from purchasing tracks off Britney’s latest album, then I really am perplexed.

  6. Posted July 24, 2009 at 2:25 am | Permalink

    come out with us next time, we can get into ANY club.

  7. Posted July 24, 2009 at 9:51 am | Permalink

    The same thing probably applies to music. The same artists (especially commercially mainstream ones) make different versions of their album for different countries just to increase their sales likeliness. There are some crazy rules in places like Germany/China/Japan.

    You may have a point.

    Except that I can buy that music here, in CD form. And while a lot of the examples I’ve looked at are smaller less popular groups, that’s just because that tends to be the kind of thing I listen to.

    A better example would be say, not being able to buy most of Tom Wait’s back catalogue on eMusic (if you managed to get a subscription before they stopped people from NZ signing up at all). He’s not Britney mainstream, but he’s certainly no Birchhill Cat Motel (i.e. very much not mainstream).

    More importantly, I think while ‘optimisation’ as you call it happens for games, I can’t think of a situation when that wasn’t for anything other than legal or rating reasons (no Nazi images in german copies of games, games that make ‘R’ ratings in the US mean that Best Buy doesn’t sell them so no one will buy them).

    And I’ve never seen that with music. No one cares if albums have swear words in them, they still sell in mainstream shops. The only word-changing on music I’m aware of is when it’s on TV. Perhaps nazi images on the cover, but surely that’s a case of simply being aware when they designed the thing that it in face didn’t have Nazi pictures on the cover.

    More importantly, NZ has no rules like that. I’ve never heard of music censorship here and the only censorship of games / movies I’ve seen has been govt. inforced upon import.

  8. Posted July 24, 2009 at 10:00 am | Permalink

    Another thing worth mentioning is that if this is ‘optimisation’ of albums then why couldn’t they simply not optimise.

    If they decided that pre-optimisation it would sell 1000 albums, but with optimisation it would sell 2000, but it costs money to optimise. So wouldn’t you just release it as is– you’d rather sell >0 than 0.

    And having music stores flick the switch for the region costs you (I would imagine, just guessing etc) ticking ‘yes’ instead of ‘no’ when the online store asks where it can sell this particular album.

  9. pchow
    Posted July 24, 2009 at 3:42 pm | Permalink

    The point I’m making about “region optimization” is that it means the labels can’t just distribute music internationally without some sort of overhead cost for each country. This means that all there deals have to be specified on a per-region basis. This affects the kind of distribution deals that less commercially successful artists can get.

    More importantly, NZ has no rules like that. I’ve never heard of music censorship here and the only censorship of games / movies I’ve seen has been govt. inforced upon import.

    Yep, New Zealand’s lack of receiving music is more about how small a market it is. Historically, in terms of music CDs/DVDs, NZ typically gets what AUS gets, because all the major labels offices in NZ are subbranches of their AUS offices. The “versions” of CDs/DVDs we get are actually the Australian version imported over. One of the people I know who used to work for EMI Aus says they used to have roughly 100 staff in Aus, and 10 in NZ (and now it’s more like 60 in AUS/3 in NZ). The bottom right of this chart gives a fairly good idea as to how small the New Zealand market is. Anyway, the business model they had was more of CD/DVD importers than music distributors, so NZ has been fairly reliant on Australia in terms of CDs/DVDs.

    Online distribution is fairly tough, even for the US. When online music stores first came up, record labels couldn’t immediately distribute their entire catalogue; they needed to draw up/renegotiate contracts with the artists. The contract includes:

    • where they can distribute
    • in what formats (cd, online, etc)
    • the royalty rates

    For older artists (like Waits) online distribution can get difficult, because they need to renogotiate existing contracts with the artists, which can get messy, especially given that the labels would sometimes need to get a bunch of people in the same room that probably haven’t worked with each other in a while, and may not get along very well, to argue over royalty rates. So anybody who co-writes a song with Waits (I don’t know how often that happens) on a specific album needs to be involved in the contract for that album as well.

    They also need to agree on rates that the writers/performers/label/distributors will get per country. For smaller markets (like NZ), the overhead costs for CDs/DVDs are relatively higher than their expected revenue, and so the distribution companies are likely to demand higher rates for themselves there. If one of the relevant contributors to the album says “fuck that” to the rate they get in NZ, then NZ just falls off the distribution list (and usually, NZ isn’t on the distribution list to begin with, it’s typically AUS). Ideally, it’d be nice if they could negotiate seperate clause rates for online distribution and other mediums of distribution, since overhead costs are fairly minimal online.

    Old music, in general, is also very hard to contract. E.g, The Beatles (who should be a major seller) were a hassle to get online for the longest time because of the need to get all relevant people represented: George Martin, George Harrison (who might’ve been dying/dead at the time), Yoko Ono (for John Lennon and in some cases, herself), Michael Jackson (who owned some sort of rights to the majority of the Beatles’ body of work), Paul McCartney, who had become a stingy bastard because of Michael Jackson, and other collaborating artists (e.g, Eric Clapton) who may have contributed to some tracks. Music industries generally would only put this much effort in for albums who they think would go platinum in the specified regions.

    So, anyway, the music that you’d find tough in to buy in New Zealand is probably going to be old music bound by old contracts (like Tom Waits back catalogue) that aren’t worth it to the industry to renegotiate much, so they won’t want to bring Warner Bros NZ into the mix. New music, or old music that has a lot of resell value are more likely to have better distribution contracts, because it’s easier or more worthwhile.

    I’m not saying the system is great for everybody, but it’s not (only) the fault of the big record labels or distributors like iTunes; these organizations do want to make as many sales as they can, and the region restrictions/rules aren’t quite as paradoxical or as easy to control as you’re suggesting.