Comment by mixmax | Hacker News Reader

Comment by mixmax | Hacker News Reader

Being a businessperson I really don't understand the recording industry's strategy.

They know that their industry is under heavy disrpution and that their old income model is increasingly obsolete. Thus they need to innovate and find new sources of income, while milking their old sources for all they're worth. This much everyone agrees on, including the recording industry.

They have done no innovation, and I can't point to any serious attempts. They must have seen this coming but it took Apple and their Itunes to implement a system that actually worked. Before Itunes there was no easy legal way for me to download music. The recording industry did nothing. At the same time they're using their resources to alienate their customers as much as humanly possible by suing them and harrassing them at every turn. Not a day goes by where I don't see some kind of bad press for the industry, ranging from articles like this to takedown notices on youtube.

Go to the local mall and ask the cool kid who hangs out with the cool girls what he thinks of the recording industry. He'll tell you that they're bloodsucking maggots because he's seen the same articles and takedown notices that I have. And he'll tell you that there's noway he's giving them money, and that you shouldn't either. He's the opinion leader that all industries need to be friendly with.

A whole industry whose best idea of making money is to sue their customers needs to seriously rethink their strategic stance.

In 2009 I dated an actress (musical theatre) who was being approached by the recording industry to do an album. So I went to a lot of parties with Music execs and I'll tell you what they told me.

Their strategy IS to be the bad guy.

Ask any record exec over 35 and they'll tell you people have always hated record companies. Heck, the artists themselves bad mouth the record companies and always have (James Taylor wrote a whole song bashing record execs in the 70s: http://tinyurl.com/49greg6).

So the strategy is to use that. Let iTunes, Pandora, Mog and the rest be the good guys. While the recording industry uses the RIAA to punish anyone who dares pirate with fees outrageous enough to make $10 a month seem like a gift.

One thing record execs realize that most of the general public doesn't: They have an unregulated monopoly. For example the law treats hiphop music like it's all one product and so it's held to the law in that way. As long as there are multiple hiphop record labels there's no anti-trust issues. But that's B#llS#it. If you love Eminem than you want his music and that only comes from one label. And if that label can force you not to pirate than they'll get your money no matter how much you hate them.

Monopoly over what, exactly? A lot of my favorite music is not under the purview of the RIAA.

I'm not sure what Tom was referring to, but for example, SoundExchange (an RIAA spinoff) "is designated by the Librarian of Congress as the sole organization authorized to collect royalties paid by services making ephemeral phonorecords or digital audio transmissions of sound recordings, or both, under the statutory licenses set forth in 17 U.S.C. § 112 and 17 U.S.C. § 114"

http://en.wikipedia.org/wiki/SoundExchange

I think he means a monopoly over the output of any given artist, under the traditional system where artists sign restrictive multi-album contracts.

Okay, then that's not a monopoly, it's merely an onerous contract.

Copyright is the monopoly here. It's an exclusive right to control the distribution of a particular work. The onerous contract is what transfers the monopoly from the artist to the record company.

The problem is the cumulative power that the big four record companies wield, due to the sheer amount of rights they control. It allows then to arbitrarily dictate prices and conditions, because if you don't accept their terms, they can lock you out from their entire catalog. Since they have exclusive rights, no one can start a competing service with more favorable terms or a more economical business model. Which is why these four even have the ability to try to keep their pre-digital business model. If there was any real competition here (not saying I have an answer to how that would work), these companies would have been ground into dust ten years ago. Instead they have manage to either litigate away or drown in fees, any possible successor to their antiquated way of distributing music.

There are of course independent labels, free music, creative commons and so on, but that's competing distribution models for the artist, and offers no possibility for the consumer to "vote with his money". The only choice is to get a different album/song from a different artist, which doesn't make much sense to me. If I want to listen to "The Chronic" by Dr. Dre, I might also want to listen to "Illmatic" by Nas, but they're not interchangeable competing goods in a free market.

Their behavior may be rational if they believe that no new business model can work.

that's an excellent point that i hadn't considered. maybe they realize (correctly or incorrectly) that there's no way to sustain their business at the level to which they're accustomed, so they're just slash-and-burning the whole thing and taking the lumber to build new houses.

Interesting point, but I don't think that's what's happening. If it is then some people need to be fired.

Apple is raking in billions from itunes that could have gone to the recording industry.

The labels are already getting 70% of every sale; it's hard to imagine that getting 80-90% would save the industry.

It may also be rational if they aren't sure what new business model would work and figure it would be too expensive to find out themselves. Or they recognize other business models can work better, but they aren't in a strong position to capitalize on them so they take advantage of what they can while they still have some position of strength.

Not only have they alienated their customers the listeners, they have also taken the shift to digital as an opportunity to alienate their other customers--the artists. They somehow managed to work it so (unless they renegotiate contracts) digital downloads and streaming are an even WORSE deal for artists than CDs were (abysmal).

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