Reality Bites Music Industry, Expect Further Denial and Legislative Begging
Reality Bites Music Industry, Expect Further Denial and Legislative Begging
Reality Bites Music Industry, Expect Further Denial and Legislative Begging

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    According to CNET,
    an increasing number of folks in the music biz want to give up on DRM. The music business continues to sell fewer and fewer CDs. Meanwhile, the download business has apparently plateued. If music companies do not change their business model, they will continue to see dwindling profits.

    The article also observes that the music industry is, to some degree (I would say to a great degree), in a mess of its own making. The pathological insistence on maintaining seperate DRM for everything and trying to squeeze maximum revenue out of each song directly has given iTunes a lock on its huge market share (and thus the power to resist new RIAA licensing demands), because DRM gets in the way of potential competitors and limits consumer demand.

    Of course, the music industry is merely one more example of a business built on a “users are mushrooms” (i.e., “they will eat whatever excrement we dump on them”) model that is collapsing in the face of users with real alternatives. The movie industry, the music industry, the radio and television conglomerates, all seemed to have suffered this delusion that they could produce a crappier and crappier product and charge more for it without losing any business. So music producers focused on mass-produced garbage while charging sky-high prices, buying out independent stores that promote independent artists and pushing mass sales of a chosen few mass market CDs through a handful of giant retail chains. Movie producers focused more and more on potential and formuliaic “blockbusters” while jacking up prices and adding commercials to the beginning of movies. Radio consolidated, homogenized and reduced playlists, eliminated local bands, and jacked up commercial time. Television and cable conglomerates did likewise. Similar trends afflicted the book publishing industry, where mass production eliminated the “middle list” of authors in favor of the next potential Nora Roberts or Tom Clancy, following a predefined formula dictated by company research on what “readers want.”

    And so, after years of producing crappier and crapier products, the entertainment industry in its various and integrated forms finds a rebellious audience increasingly happy to look elsewhere for entertainment.

    Alas, none of this signals an end to the demand from these same conglomerates for more regulatory goodies. To the contrary, expect a renewed, desperate push for even more rigorous DRM, continued petitions for a greater right to integrate by relaxing ownership rules, and further insistence on the right to block or degrade web traffic based on source or service. Because however much these megacorps may pretend to worship at the fount of competition and the free market, they really want laws to shore up their business models and MAKE people have to buy their stuff or sit in a corner as the only alternative.

    Passage of such regulation would prove a disaster for the entertainment industry, because users are not mushrooms. Given the choice, increasing numbers of users prefer to create and use content on their own terms rather than on terms dictated by media and entertainment cartels.

    So expect 2007 to be the year in which the entertainment and media industry come begging to Congress to get rescued by regulation from the need to produce good products rather than crap. But we must show the industry “tough love”. A reality intervention is clearly in order here. It does neither the public nor the industry any good to continue to indulge their legislative fantasy of eliminating threats to their outdated business model by regulatory fiat. But, since Congress all too often adopts the overindulgent attitude of the Dursely's to their son Dudley, we will have to show some rather “tough love” to the incoming Congress as well.

    In my experience, corporations go through five stages when confronted with a challenge to their existing business model. 1) Denial (“this will never catch on”); 2) Anger (“How dare they challenge us like this! We will get regulators to squash them like bugs!”); 3) Bargaining (“O.K., instead of banning it, we just want some safeguards to create a 'level playing field' and ensure 'fair' compensation and 'fair' competition”); 4) Acceptance (“we will no longer lobby on this issue”); and 5) Profit seeking (“Hey, this is actually an opportunity for us to make heapin' gobs of money! I'd forgotten what it was like to work for a living.”) The DRM-favoring folks seem perpetually stuck somewhere in stages 2 and 3. Hopefully, they will be able to move through to stage 5 in 2007.