In this interview, Brian explains some of the potential miscues that major labels may be taking in order to preserve traditional business models, as well as the technology community’s role in understanding the importance of building business models that also compensate artists.
J = Jenny Toomey
B = Brian Zisk
J: So Brian, what made you want to join the Future of Music Coalition?
B: For a long time it’s been obvious to me that the economics of the commercial music industry have not been beneficial to the great majority of artists who work within that system. Ideally the music industry exists in order to connect the musicians to the people who listen to music and to ultimately compensate the creators of that music for, some would say, for the content they create. I would say that it’s actually more for what they add to the culture. Sadly, however good the industry has been at connecting artists with fans, they have very often been lacking in the areas of compensating the musicians.
In the past, one of the biggest hurdles that artists faced was getting distribution of the music to the consumers because of the expense (and controlled distribution channels) involved in pressing the discs, shipping them to the stores, handling the returns, and dealing with the marketing of the music. Now that we are dealing with this new distribution medium, it is potentially much easier for an artist to connect with their fans and their constituency. A big problem has been that since it is such a new medium, there are few established mechanisms in place for flowing compensation back to the artist.
Mechanisms did exist (however poorly) in the traditional music industry. A small percentage of the sales revenue was flowed back to the artists. Considering that many musicians live on very little money, the mere fact that any money was flowing back to them often seemed satisfactory, or the only potentially successful option possible.
So now that we have these new methods of distribution that give artists the opportunity to begin to step away from the commercial terrestrial distribution structure, it is vitally important to find ways to compensate artists so they can begin to fully take advantage of this new system. If we don’t find a way to compensate artists they will have no reason to leave the existing structure, no matter how inadequate it may be.
J: Being underpaid is better than not being paid at all.
B: Exactly. The technology-savvy fans have found great ways to spread free access to music. The problem is that there is such a small quantity of artists who are also tech-savvy that they have not been able to participate in the discussion and work together with the technologists to develop models where they can both have access to these new forms of distribution as well as the ability to be compensated for their work as musicians.
Just yesterday at the MP3 Summit I had the opportunity to listen to Ian Clarke speak.
(note: Ian Clarke is sort of a controversial character. He is the developer of Freenet, software that will attempt to offer similar file sharing features to Napster while protecting the anonymity of the software users. This makes it more difficult to attempt to prosecute users for “piracy violations” as Metallica was recently threatening to do to certain Napster users that illegaly downloaded Metallica songs. It is easy to read Ian’s model as somewhat reactionary and gleefully disruptive. Personally, I appreciate what these technologies do to unseat the major label distribution monopoly but I worry about that disruption when there has yet to be a replacement structure set up to compensate the musicians. So while the Future of Music doesn’t fully endorse his position, neither do we disregard it. In particular he had some very valuable observations concerning the characteristics of the Internet.)
B: Ian was pointing out that it is much easier in the distributed network environment which has been created to allow people to distribute digital information (i.e., music files) than it is to prevent the distribution of digital information. When you attempt to prevent distribution, it is driven further out of site, which makes it increasingly difficult to track the distribution in case you want to encourage people to pay for what they’ve obtained.
So I felt the need to find ways to come up with alternate business models
that would compensate the musicians. To better understand what Ian and
others like the Gnutella folks are doing, take look at Harvard Professor
Larry Lessig’s book,
A lot of the problems with developing these new models are due to legislative issues and protective measures (encryption/watermarking) that are being implemented by the recording industry. These measures will “theoretically” protect the artist (the record industry’s view being “if you protect the established revenue flow, a decent amount will flow back to the artist”). In reality these folks are more interested in protecting their own interests and preventing new business models from developing which would compete with their oligopoly, thus protecting their established revenue channels.
J: So as well as being a founder, you’re the Director of Technology?
J: Why does the Future of Music Coalition need a Directory of Technology?
B: I definitely believe the technology is there to help implement the new business models, and if we weren’t working to try to get more money to the musicians, there would be no reason to even dabble in the technology side. I even hear from the traditional record labels that the reason they want to put up these legislative and technological barriers is to keep the compensation flowing to the artists.
J: Do you mean to keep the traditional forms of compensation flowing?
B: Well, to keep whatever forms of compensation flowing which they think they’ll be able to control. I’m talking about projects like the SDMI mishegas, which are not attempting to enable the traditional forms of compensation, but a form of compensation where the vast majority of the cash will continue to go to the major record labels. It is very important for us to explain what these technologies can offer and to show it in a way which everyone can understand.
These issues should be discussed by the people who are developing the technology, by the musicians, by the labels, by the consumers and maybe most importantly by the legislature. It is very important that we all understand the full complexity of these technology issues. If this information is not made available in an open, easy to digest manner, we end up with a polarized environment where everyone is being informed through reactionary, biased sources. In situations with controlled information, generally the people with the most money and the most established voices tend to win out.
For example, there are a lot of digital rights management companies who are convincing people that their systems are valuable and good for the artists. A more critical evaluation of the facts might suggest that the people who stand to gain the most from digital rights management aren’t the artists but the people who own the rights to whichever systems are chosen as the standard. It is appealing to individuals at record companies who are not technologically savvy to search for and promote solutions that they feel will protect their revenue and their profit margins. This is only natural.
J: To protect their control of the channels of distribution.
B: So the record industry has felt that it needs to go out and look for a technological solution to fix what they perceive as a technological problem. The people they interface with are largely the marketing and business development people at the digital rights management companies and overall, they have been convinced and believe that there are technologies which exist and work and which will be helpful, whereas in many if not most cases the technologies will not be helpful at all. What we see happening is that a lot of the record companies are buying bills of goods and signing off on technologies which will likely not accomplish what they are hoping for. They are settling on technological “standards” which are not demand driven, and it is very possible that the record companies and musicians will be stuck with expensive solutions that don’t work, or at least don’t fulfill the hype of what people were hoping they would do. It is extremely important for us, or anybody for that matter, to objectively evaluate these technologies based on the evolving business models, not just the established ones, and to communicate what we discover.
This is why one of the main things which I would like to do in the next few months is draw together a group of technology advisers who can help evaluate the work that is being done in this area and make that information available to the different groups, particularly the artists and the legislative bodies that need to be in the discussion. I have a lot of friends at the confluence of the music and technology fields, and there is a general consensus about a lot of these technologies, and it is a different consensus than the one which has been generally reported in the press. It is very important for us to evaluate the purported solutions which exist, and to share our experience as technology developers with musicians so that we can all come up with systems that will work.
Right now there really isn’t a resource where artists can find explicit information about how these technologies might help or hurt them. This leaves an educational vacuum which leads to the common occurrence of musicians leaving these decisions in the hands of the record labels who don’t generally have the artists’ best interests at heart.
J: So those are the theoretical things you plan to do. Can you give me some examples of actions you plan to take in the next six months? What do you see as the first steps that this organization needs to take from a technology standpoint?
B: We clearly need to evaluate various technologies both as classes of technologies (i.e., watermarks) and as individual technologies (i.e., a specific brand of watermark) with specific business plans, and then we need to make those findings available to the music and technology communities for further review.
J: Please give me an example of this.
B: Well, for instance, there are legitimate reasons why some musicians might want to use watermarks and other reasons why some musicians might not want to use watermarks. What we have to do is extend the conversation beyond the knee jerk “we need to ensure that artists get paid and this is the only way to do that” models. Because yes, we do need to ensure that artists will be paid but we need to evaluate all the options that people are putting forth and say, “OK, I understand how this option works, now will this get the artist paid? Will this do anything besides attempting to ensure that the technology and/or record companies get paid?”
We need to ask these questions from an informed artist-friendly/technology-centric viewpoint because as we move forward there are going to be more and more people trying to push more and more technologies right into this breach. It wouldn’t be so bad if we were allowing the market to make the decision of what technologies will become the standards, but what we are seeing are industry organizations and possibly legislative actions attempting to force the entire music industry to use certain technologies, not necessarily because those technologies are the best available options, nor because they are ones which will actually work.
We need to write position papers on digital rights management as well as watermark technologies. For instance, with the watermark technologies, the argument I’ve seen put forth has been along the lines of “to protect the artist we need to enable the labels to maintain control of the digital distribution of music.” But wouldn’t it be better if the artists were in the position to control their distribution without the help of the major labels?
J: So what you are saying is that the standard arguments with regards to watermark technology usually involve a system whereby the major labels or some sort of technology group that works with the major labels attempts to come up with a standardized watermarking technology that everyone will be forced (or coerced) to use, but that a better, more interesting approach would be one that had an open watermark technology so artists could choose to embed the information they wish into their own music files without having to go through a controlling organization?
B: Exactly. One point that’s particularly frustrating about the watermarking question is that representatives of the company, Verance, that is rumored most likely to be picked by SDMI to create the standard watermarking technology have said that due to nondisclosures: a) they can’t let anyone who evaluates the technology talk about it publicly and b) they can’t publicly talk about a potential pricing structure.
So the industry is spending years working on this solution and yet their most likely choice can’t be evaluated openly on a technological level, it can’t be openly evaluated on a business model level, and it can’t be openly evaluated on a social level. I don’t believe that musicians should just blindly buy into “solutions” which will be propagated by the same group of companies and their organizations which have attempted to maintain control and exploit artists in the past; the major music labels and their organizations and initiatives such as the RIAA and SDMI. There needs to be an open process of evaluation, which includes the artists’ and open technologists’ voices.
I tend not to trust closed systems. Systems that say “We know best. We can’t tell you more about what we’re doing, and you can’t fully evaluate the various options, yes it may be true that we have a financial stake in the option that we are supporting, but you should just trust us anyway,” are ones I’ve learned to be skeptical of.
We may (though I doubt it) eventually find ourselves in a situation where we can trust an encryption system but we would obviously first require the means to verify that system’s security. So we need to create that means.
That is part of what I hope to do as the Director of Technology of the Future of Music Coalition. I want us to evaluate the various categories of encryption and watermarking technologies from an objective viewpoint and make those evaluations available so we aren’t all forced to take others words on the products which are being developed. Hopefully we can be looked to as an objective source of information or at least an open source of information.
J: It is important to remember that good ideas will stand up to scrutiny.
J: Another thing to remember is that legislated standards are not necessarily a bad thing. In fact much of the history of publishing and royalties is the result of legislation. So following the example of publishing there may be a reason to legislate watermarking or encryption technology, but that would only follow if either of those forms could be proven to work.
Maybe some technology will be put in place as a standard that people are legally required to adhere to. This could be frustrating to people who have a commitment to open source and who want to have the freedom to not have to adhere to the limits of one legislated technology. But we have to remember that the history of publishing is one of limit and legislation. Someone stood up and set the standard and even said, “I have a financial interest in making sure this money gets collected and distributed to artists.”
Again, established forms of publishing are imperfect. There are always questions about how artists are paid and concerns about whether independent artists are falling through the cracks. So I’m not suggesting that our previous publishing standards are above question or that watermarking or encryption technology will work.
I do believe, however that this is a great opportunity to go back and revisit the established ways that artists have been paid and reapply what we learn from these new technologies to better identify, collect and distribute potential royalties. For example, we are in a good position to evaluate and critique flawed systems like Soundscan and maybe replace them with more accurate means of collecting data.
B: In the past before we had the Internet and all this “openness,” people really believed that you could have security through obscurity as is distilled in a sort of “loose lips sink ships” mentality.
However in this new day and age, security through obscurity does not work. Nowadays almost anything can immediately come under the scrutiny of millions of people. At a moments notice, if something is important, there might be any number of talented people looking at it. So if there are flaws in the security model, hackers will break right through. If you don’t let people examine what you’re putting together, you may be in for a rude awakening when people can eventually take a look at what you’ve built.
In the past, if you kept your information private and out of the press you could largely control the flow of information. Whether you are talking software or music, they are both just collections of digital information. Nowadays you have the Internet and Freenet and all these file sharing technologies. So despite what may appear to hold true for people who have been in the music industry for thirty years, security through obscurity can no longer be assumed to work. If you say “Oh, this is hidden, no one can see what’s inside it,” the first thing these adventurous kids want to do is tell everybody what’s inside and how to get access to it.
We have an industry that is spending hundreds and millions of dollars to try to enact something that is most likely destined to fail and become worthless, as it has not been subject to public testing and scrutiny. This is part of why the whole process of trying to implement something which will work securely has stretched out so long. If you don’t submit a technology to public scrutiny you won’t have many of the flaws pointed out, and as it moves more into the public eye, flaws will be pointed out further along in development, when it is much more difficult to adjust the course than if errors in logic (standard in any programming project) are pointed out early on.
J: So what are you going to do about this in the next six months?
B: First off, we’re going to pull together a technology board. Then we’re going to put together point-counterpoint pieces on various technologies. These essays will cover frequently asked questions about digital rights management, watermarking, file sharing, the Internet as a digital distribution medium, etc. These articles will be created by The Coalition and put up for public scrutiny and improvement by anybody who’s interested in working on them. I believe these open review critiques will be a fantastic resource because there’s no better way to reveal the flaws of an argument than by presenting both the strengths and weaknesses in a public forum. We need to have an open debate that is both vital and solid enough to be distilled down to position papers. We will also attempt to make ourselves available to anyone from the legislature who is looking to pass or vote on artist/technology related legislation but who needs more sophisticated information concerning the possibilities and limits of the technologies.
J: One thing that I would want you to do is work within the technology communities to formalize their responsibility to compensate musicians. It seems that this desire is just under the surface but it is rarely part of the established business plans. So in creating this group there also becomes an impetus to participate in the discussions as a music fan as well as a human with a lot of technical knowledge.
B: It is very interesting because when I talk to some of the people who have written a lot of the software which many would consider the most egregious affronts to musicians or the industry, it is clear that they don’t want to hurt the musicians. Their aim is to help the musicians. They love music, which is largely why they created these technologies in the first place.
In reality, the issue of forcing people to adopt or avoid any of these technologies is going to be incredibly difficult. As Ian Clarke said in an interview, the Internet is an anarchistic technology in that there is nothing in control of it so it makes it very difficult to force anyone to do anything in particular. At the same time, we most definitely need to ensure that structures are set up which encourage the funneling of compensation, and that’s something that I plan to work to encourage.