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The Profit Protection Plan from Purgatory

By BrentN in Op-Ed
Mon Oct 08, 2001 at 09:18:42 PM EST
Tags: Technology (all tags)

We are entering an age where it is easier than it has ever been to produce professional quality audio and video, and get the word out about it. Rather than taking advantage of this to their own and consumers benefit, the music industry and movie industry have chosen to maintain their old, inefficient system by any means possible. This has meant that instead of attempting to improve not only the quality of goods offered, but the way in which they are distributed, the "content industry" is trying to protect their profits through an agenda consisting of legislation and tort.

Through the auspices of soft money, the content industry has been funnelling millions of dollars to legislators, who in turn allow lobbyists to write laws designed to protect the industry. This is nothing new; such tactics have been widespread since the late 1980's. What has changed is that the record companies and movie studios are more desparate, and that desparation has translated into ever more egregious power grabs. Note what has, and hasn't, happened in terms of campaign finance reform since 1996. It is quite clear that neither party is willing to allow reforms such as those proposed by Sen. John McCain (R.-Arizona) and Sen. Russ Feingold (D.-Wisconsin) to make it out of committee. The degree to which both parties are dependent on this funding, a large portion of which is provided by the content industry, makes it possible for their political land grabs to take place.

Change is bad

The advent of not just the Internet but the raw power of the modern personal computer has put the ability to produce professional quality audio and video in to the hands of nearly everyone. Additionally, the music companies have shown that they are unable to adapt to the new conditions the Internet has imposed upon their business model. The Internet has decreased the cost barrier to reach smaller markets with advertising and meta-content, such as reviews. Coupled with the rapid growth in consumer demand for specialized goods during the 1990's, one would logically have expected the music industry to attempt to exploit smaller niche markets. MP3.com was an attempt to do just that, by providing a common place and set of tools for independent artists to gain exposure to a larger, nationwide audience. Instead, the music industry acted as cartel to force the new competitor out of business, and now MP3.com is languishing as Vivendi SA is attempting to kill it through neglect.

These tactics were also used with great success against Napster. While it is clear that a great deal of Napster's usage was done with intent to pirate, the music companies failed to assess any potential gains that the Napster model could have given them. Essentially, no work was done to make payment for the music seem worthwhile, and no effort was spent attempting to determine what sort of users did purchase the music they had previewed on Napster. Instead, a reactionary turf war ensued, designed to protect an old, familiar business model under the guise of protecting copyright. Many less-restrictive interim responses could have been proposed or negotiated, but it is telling that the music industry was interested more in maintaining their control than exploring new possibilities for doing business.

Perhaps one of the most dangerous aspects to the current content cartel is the means by which they attempt to keep the artists in line. In the past, the recording contract has been a necessity for artists. Only the large recording companies have had the resources to wage national marketing and promotional campaigns. The price for the artists has been a increasingly large share of control over their own intellectual property. This, coupled with incredible consolidation in the industry has meant fewer artists being signed, in order to spend resources on the artists guaranteed to produce large profits. This is nothing new or surprising: the book publishing industry went through a similar shakedown in the early 1990's, culminating in the virtual elimination of the mid-list author. All indications are that movie industry is in the throes of a similar cycle. In today's Internet-enabled world, it would seem that the value of a recording contract would be much less, given that it has become feasible to wage a promotional campaign towards small, but national niche markets. The record companies response to this has to been to sue any facility that gives an artist the opportunity to independently produce and promote their own content.

We control the horizontal...

Unless things change, the music industry, along with the content industry in general, will eventually be able to relegate our personal computers to the status of passive entertainment devices, and completely determine what we watch or listen to on them, just as they do with the radio and TV. The way in which our personal computers are tied into content means that in order to consolididate control of distribution of music, movies, and even books, the content companies must have control of what we can and cannot do on a computer. The push for copy-protected CDs, the DMCA, and CPRM are simply manifestations of this attempt for an industry to retain their markets by legislating away any potential competition.

We can expect this trend to continue. In absence of a change in momentum, I expect to see the large record companies and movie studios to push to either explicitly outlaw or artifically inflate cost barriers to entry for independent production of content. This could take many forms: a "tax" on digital media, such as CD-R, DVD-R, and DAT, litigation to prevent the production of "unlicensed" video encoders, or even the purchasing of legislation to make recordable digital media illegal. They will attempt, by lawsuit or legislation, to force hardware and software providers to enforce their will. I expect they will eventually file suits against the developers of WinAmp and similar software. I also expect an attempt to reduce independent artist's ability to promote and distribute their content. Watch for exclusive record store deals, where a record company will insist that a certain percentage of shelf space be dedicated to their products in return for access to hot new titles. This is common in grocery stores, where "shelf space" is a commodity.

There is hope.

The picture painted here is bleak. But there is hope for the future. We know that technology moves faster than bureaucracy; it is entirely possible that the industry will end up continually fighting yesterday's technology, to their own detriment. Additionally, independent labels are beginning to cooperate in order to collectively bargain with retailers, and the quality of independent music is steadily rising. This again has parallels with the book publishing industry. As consolidation swept through book publishing, the market for midlist authors did not disappear, it only became economically infeasible for the lumbering behemoths that remained. As such, smaller publishers began to rise up, especially in the markets with large midlists. Examples include Barefoot Books, in the children's book market, and Meisha Merlin, in the science fiction/fantasy market. So long as small operations are able to continue to provide and market quality content, the industry can remain healthy.

Another positive note is that the threats that the media companies pose to the computer industry are starting to be noticed by the mainstream public. If public outrage outpaces the industry's ability to buy Congressmen, they will have a harder time pushing their legislative agenda. Ripping a CD isn't a geek phenomenon anymore; a great number of people in all walks of life have become used to doing so, even if it is only to be able to make compilation CDs for their car CD player. Apple Computer has made digital media the centerpiece of their business model, as such ads as their "Rip. Mix. Burn." spot demonstrate. It is no secret that Microsoft wants to make Windows XP a "digital hub" as well. The content industry is essentially waging war against the computer industry, and in this battle, both sides have contributed large sums of money to the politcal process. With this factor levelled out, the public interest will become more relevant to politicians.


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The Profit Protection Plan from Purgatory | 35 comments (25 topical, 10 editorial, 0 hidden)
To wit (3.62 / 8) (#1)
by jabber on Mon Oct 08, 2001 at 03:55:46 PM EST


[TINK5C] |"Is K5 my kapusta intellectual teddy bear?"| "Yes"

Uhm, Jabber... (3.00 / 3) (#7)
by Ialdabaoth on Mon Oct 08, 2001 at 06:28:21 PM EST

Next time, would you mind marking the link as "article in The Register" or something?. Whenever I see a "here" link I get goosebumps -- I keep expecting such links to lead to goatse.cx.
"Act upon thy thoughts shall be the whole of the Law."

--paraphrase of Aleister Crowley
[ Parent ]

OT: Goatse.cx (4.00 / 2) (#8)
by greenrd on Mon Oct 08, 2001 at 06:43:37 PM EST

Come on, be rational. Marking the link won't protect you against goatse. The poster could just lie. And nothing except restricting Javascript in your browser will protect you against redirects to it.

"Capitalism is the absurd belief that the worst of men, for the worst of reasons, will somehow work for the benefit of us all." -- John Maynard Keynes
[ Parent ]

You're right... (2.00 / 1) (#10)
by Ialdabaoth on Mon Oct 08, 2001 at 06:49:18 PM EST

...however, let's see you try to be rational after slogging through several pages of undocumented X86 assembler written by a drunken madman -- when the only assembler you ever hacked were college exercises.

As a matter of fact, I have JavaScript disabled, and Opera doesn't talk to the Java VM, so I don't have to disable that either.
"Act upon thy thoughts shall be the whole of the Law."

--paraphrase of Aleister Crowley
[ Parent ]

Hmm.. (3.33 / 3) (#11)
by jabber on Mon Oct 08, 2001 at 06:57:32 PM EST

I s'pose..

My browser shows the referenced URL when I mouseOver the link.. I guess I was being a bigot and assuming everyone elses does too.. Sorry..

But the last time I posted links, where the URL was the link (for the purpose of easy printing), I got my writs slapped for being redundant..

Some days you just can't win. :)

[TINK5C] |"Is K5 my kapusta intellectual teddy bear?"| "Yes"
[ Parent ]

Silly demiurge. No chocolate for you! (3.00 / 2) (#14)
by Ialdabaoth on Mon Oct 08, 2001 at 08:29:41 PM EST

Oops. I forgot about mouseover. Then again, I was using Lynx today to browse K5. It's a quirk of mine; I use several different browsers instead of sticking to a favorite so that I don't become too dependent on one, as I was with Netscape for a while.

However, I won't use IE -- it's evil.
"Act upon thy thoughts shall be the whole of the Law."

--paraphrase of Aleister Crowley
[ Parent ]

Lynx = text (4.00 / 1) (#19)
by The Dark on Mon Oct 08, 2001 at 11:09:20 PM EST

I'm pretty sure you should be safe from goatse when using a text only browser, although there is that ascii art out there...
-- Sig's not here.
[ Parent ]
Blech (4.00 / 1) (#26)
by Ialdabaoth on Tue Oct 09, 2001 at 07:28:50 AM EST

Sorry, but I don't think that ASCII art is really art. After all, if $GEEK can make a picture with ASCII characters and call it art, then what the fuck was Botticelli doing?
"Act upon thy thoughts shall be the whole of the Law."

--paraphrase of Aleister Crowley
[ Parent ]

Wow (2.00 / 1) (#12)
by BlckKnght on Mon Oct 08, 2001 at 07:56:12 PM EST

The linked article is perhaps the most slanted and one sided story I have read on any issue in a long time (and considering all the crap about the WTC around, thats saying something).

While I'm no fan of the Content Industry, the story gets truely silly in pulling so many quotes with such spin to try to make those groups sound so thoroughly evil. The RIAA, MPAA and the rest do have really bad policies and business practices, but they're not stupid. I have no doubt the quotes are terribly out of context and selectively chosen to give a skewed impression of the speakers.

Oh well, we wouldn't know what to do with unbiased reporting if we found some. Ad hominem attacks are so much more fun.

Error: .signature: No such file or directory

[ Parent ]
Unbiased reporting (3.50 / 2) (#15)
by BrentN on Mon Oct 08, 2001 at 09:52:04 PM EST

I wouldn't read The Register expecting unbiased reporting, in any case or situation. :)

Honestly, I hadn't seen the Reg's article until jabber posted the link in the discussion here. The only good thing I can say about it is that right now, the events chronicled in that piece are considered rumor. I hope the rumor turns out to be false, otherwise things are bleaker than I had even considered possible at this point in the game.

[ Parent ]
Slanted? (4.00 / 2) (#16)
by Danse on Mon Oct 08, 2001 at 10:10:05 PM EST

I don't know what you've been reading, but the quotes from the article sound pretty much like the quotes we've heard publicly from people like Hillary Rosen and Jack Valenti. If it seems to portray them in a bad light, perhaps that's because they happen to be exactly what they are being portrayed as. If you can show me any links where they deny such plans or actions, I'd be happy to read those as well. But, to date, I haven't heard anything from the media industry that made me feel even remotely comfortable about what's to come.

An honest debate between Bush and Kerry
[ Parent ]
Oh, I don't disagree with the article (3.00 / 2) (#18)
by BlckKnght on Mon Oct 08, 2001 at 11:01:21 PM EST

I just found the bias disturbing. Phrases like
The music industry and its hired muscle, the Recording Industry Ass. of America
"...ISPs can no longer be shielded from the wrath of the law," shrieked Rosen righteously.
don't exactly impress me with the author's impartiality.

I don't disagree with the article, nor do I think it's impossible or even unlikely that the RIAA and MPAA actually want to do all of the things the story says. But, as slanted as the story is, I'm uneasy trusting the "sources close to the RIAA" who supplied the material.

There are plenty of balanced, well written, and credible reports out there describing what the content industry is doing and why it's bad for consumers. This story is not one of them.

Error: .signature: No such file or directory

[ Parent ]
heh.. (4.00 / 1) (#20)
by Danse on Mon Oct 08, 2001 at 11:15:16 PM EST

"...ISPs can no longer be shielded from the wrath of the law," shrieked Rosen righteously."

Point taken, but have you heard Rosen speak? She can get into something of a tizzy, and she tends to use quite a bit of inflammatory language herself.

An honest debate between Bush and Kerry
[ Parent ]
I'm sorry to disagree (4.00 / 1) (#32)
by gr1sw41d on Wed Oct 10, 2001 at 10:03:09 AM EST

While The Register has its rep, I entirely agree with the tone, and feel that there is reason enough to show the RIAA in that light. Not only does the RIAA feel free to stop unrestricted sharing (with some justification regarding piracy, but with no regard for personal rights), the RIAA is also free to use this power of "protecting media" to significantly reduce the ability for independents to publish.

The internet is rapidly changing from one of the greatest forms of self expression for the ordinary person into just another big media outlet. That just sickens me to no end.

[ Parent ]

Some source links (4.00 / 5) (#4)
by tudlio on Mon Oct 08, 2001 at 05:44:56 PM EST

A couple of relevant links:

insert self-deprecatory humor here
What can we do? (5.00 / 2) (#17)
by BrentN on Mon Oct 08, 2001 at 10:11:07 PM EST

I didn't want to screw up my nice essay outline by adding a "What can we do?" section. The available avenues have been covered pretty much ad nauseum on /. and here on K5.

Boycotts: Terribly ineffective, and potentially play into the RIAA/MPAA's hands. If record sales go down, will Hilary Rosen blame the boycotts, or pirates. I'll let you guess.

Letters to Congressmen: While they do have to keep them on file forever, I suspect that most of them never read the letters. Instead, it is likely that some brain-dead intern or career staffer skims them and writes a weekly report on what topics figured prominently in the mail. Reading letters takes time away from important activities, such as schmoozing for more money.

My feeling is this: do what makes you feel good. I haven't bought a major label CD in almost three years. Through Napster and Shoutcast, I've discovered a lot of independent artists (Clandestine, Full Moon Ensemble, Kilt, Seven Nations, to name a few) and have purchased their CDs directly from their websites. Other people may not find satisfaction in independent music, but love to write long missives to their elected officials. Fine. Just don't be silent; do something.

Talk to your friends about it. Make up a pamphlet for others to distribute. Post informational flyers in record stores. Go vote against the incumbent in the next election: remember, the DMCA passed nearly unanimously. Look at publicintegrity.org's website (Thanks, tudlio!) and see who is on the take, and get the word out about that. And above all, make noise about campaign finance reform. I will be the first to admit McCain-Feingold had bad problems, but at least it was a start.

I'll quit whining now. :)

what we can do - gain understanding (5.00 / 1) (#33)
by yrrej on Wed Oct 10, 2001 at 03:57:44 PM EST

This sequence of events was easily predictable since years, wasn't it?

Looking at the question what it is all about, I investigated in the means of information, expression etc. is (be it art or software - doesn't matter) and how it could be traded. This lead me to consequently distinguish between data and information. Consequentely applied we could have ubiquitous availibility of computing, which can be delivered only, if the same information is handled at multiple locations at the same time and not considered to be different. This resambles much how we understood copyright before the digital age but renders the idea dump that simply copying data would deliver any new value (save for reliability of the same information).

[ Parent ]
Nice write-up. =) (none / 0) (#21)
by Kasreyn on Tue Oct 09, 2001 at 12:20:58 AM EST

Certainly nothing that hasn't been said a lot before, but a good way to say it. I shall recommend this article to friends.


"Extenuating circumstance to be mentioned on Judgement Day:
We never asked to be born in the first place."

R.I.P. Kurt. You will be missed.
Entertainment industry has nothing on insurance (4.00 / 2) (#22)
by br284 on Tue Oct 09, 2001 at 02:52:24 AM EST


I think a thing that has gotten to me more than the RIAA / MPAA was a New York Times article discussing how the insurance agency was using the September 11 attacks as a pretext for a possible future gov't bailout. According to the Times, legislation making taxpayers responsible for the insurance claims is already in the works.

Now, while I have nothing against people getting their claims filled, it makes me wonder what the fuck the insurance industry has been doing with all those monthly payments in the sunny times. Why buy insurance when you'll have to pay later when the insurance companies have squandered your payments and your taxes are raised?

And you think the entertainment industry has badass lobbyists...



PS. http://www.nytimes.com/2001/10/07/business/07INSU.html

True.. but consider this. (5.00 / 1) (#31)
by mindstrm on Tue Oct 09, 2001 at 05:04:34 PM EST

If the insurance companies did mismanage funds, and can't pay up....
You can't get blood from a stone. What's the solution? leave tens of thousands of peopel wihtout the insurance they were RELYING on, or have society at large cover it to keep things rolling smoothly.

If that is the case, it shouldn't really be about bailing out the insurance company, but bailing out the company's customers... the insurance company should be dissolved, and it's directors barred from ever selling insurance again.

[ Parent ]
the question of monopolies (4.00 / 1) (#23)
by crayz on Tue Oct 09, 2001 at 03:53:56 AM EST

I am wondering, in the context of all this, what effect the giant monopolies will have? Specifically I am thinking of AOL/TW and Microsoft, the former being a content industry company getting into computers(AOL, Roadrunner, Netscape, ICQ, etc), and latter being a computer industry company getting into content production(MSNBC, I think they have some deal w/ DirectTV also, not sure what else).

AOL/TW is the one I find most interesting. You have them apparently(according to the Reg) wanting to let content producers sue ISPs whose users are violating copyright law. Well, what happens if someone wants to sue RR or AOL? There's also the question of the extent to which RR can provide good service to consumers, when they are operating as a pawn of a company which is probably not too fond of the idea of giving consumers massive amounts of bandwidth(knowing full well what most people use that bandwidth for). And how about the quote in the article:
I expect they will eventually file suits against the developers of WinAmp and similar software.

I'll give you three guesses as to who it is makes WinAmp...

Think about this though. You've got two companies, one that produces what is by far the most popular OS, and the other which owns the most popular ISP, along with high-speed net access and the most popular MP3 player. These two companies also make about the only web browsers in use today. They also both have a stake in stopping content piracy.

If they both made a concerted effort towards that goal, how much damage could they do?

Not as much as you think. (5.00 / 1) (#30)
by mindstrm on Tue Oct 09, 2001 at 05:01:32 PM EST

Remember, many popular net products these days (winamp, hotmail, etc) are popular because of what they are. If any of them drastically change to cramp the public's style, they will go out of favor quickly.

[ Parent ]
So talk to the _content_creators_ (5.00 / 2) (#27)
by Ami Ganguli on Tue Oct 09, 2001 at 10:31:58 AM EST

None of this will go anywhere unless the content creators are on your side. Since musicians don't have a real voice or organization of their own, big media companies end up speaking for them by default.

Somehow you need to reach artists and give them a way to reach their audiences directly _and_ get paid for it.

There few if any technological barriers to this. The problem is somehow organizing the legions of artists _and_ finding a model that will make them some cash. The recording industry has done this effectively, and that's why they have so much power.

On the plus side, if you eliminate the manufacturing, distribution, and marketing costs associated with getting music to the consumer, it turns out you don't actually need to raise that much money in order to give the artists more than they have today. But while that makes the problem easier, it doesnt' really solve it.

So does anybody have the solution? I'd personally contribute time and technical knowledge to any project that looked like it might succeed, but I don't really know what that project might be. If there are any entertainers here perhaps they can suggest something.

Plenty of projects you can help with. (4.00 / 1) (#34)
by The Great Satan on Thu Oct 11, 2001 at 11:43:39 PM EST


K-3D, because Blender is proprietary.

Aqsis and/or GnuRealistic Shaderman

Broadcast 2000- someone's got to take this over now that Heroine Virtual's wimped out.




I used to work in the "entertainment" industry as a "content provider/whore" and these are the programs I'm most interested in. Gimp is quite good, in some ways better than Photoshop, but it still needs a lot of help. K-3D looks promising, but I haven't installed it because, honestly, open source software is such a bear to work with that I can't handle more than one program at a time.

That last bit can not be emphasized too much. Open Source is for programmers. Linux, as it is, is for programmers. Programmers specialize in programming. A surprisingly large fraction of the human race is specialized in areas other than programming, and can not handle Linux or Open Source.

A few ideas for those calling for a Linux Revolution:


Make? configure? Compile source code?! Joe Sixpack cares not for these things. The correct answer is setup.exe, and no library dependencies.

Thoroughly document how to use your program and make tutorials. Spend time on the gui. Make it look good, and make it work well.

One other thing I'd like to pick on. Compare this to this. One creates the impression of competence and professionalism and the other looks like a hacked-together joke. If you want to be taken seriously, you have to look like you should be taken seriously. Too bad some of the folks representing Linux don't "get it."

Check out my comic at www.shizit.net/alpha. Or take care of your post hardcore music needs at www.shizit.net. Or ignore this lame self-promotional spam.
[ Parent ]
Campaign Finance (none / 0) (#35)
by dennis on Mon Oct 15, 2001 at 04:15:23 PM EST

It's actually the content industries pushing hard for McCain-Feingold. The bill would disallow political nonprofits from saying anything about the candidates within three months of the election, while news organizations of course can say whatever they want. Given the convergence of media corps of all types these days, that would give the content industry a decided advantage. George Will in one column asked, now that Microsoft has MSNBC, does that mean they should have a privileged voice?

My view of campaign finance regulation in general changed when I read about a guy who took heat from the FEC for writing about a candidate on his personal website, on his own server. They counted up what they considered the commercial value of his communication, and it went over the limit for individual contributions. Shouldn't political speech be the most protected under the First Amendment?

The Profit Protection Plan from Purgatory | 35 comments (25 topical, 10 editorial, 0 hidden)
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