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The Impact of New Technologies and the Internet on the Music Industry, 1997-2001

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The Impact of New Technologies and the Internet on the Music Industry, 1997-2001 The Impact of New Technologies and the Internet on the Music Industry, 1997-2001 Ian Michael Dobie Institute for Social Research, School of Music Media and Performance University of Salford, Salford, UK Submitted in Partial Fulfilment of the Requirements of the Degree of Doctor of Philosophy, September 2001 Table of Contents Table of Contents ACKNOWLEDGEMENTS I GLOSSARY II ABSTRACT V INTRODUCTION VI CHAPTER ONE: THE WORKINGS OF THE RECORDING INDUSTRY AND ITS POSITION WITHIN THE GLOBAL MARKET 1 PRODUCTION OF MUSIC 1 MARKETING 3 MANUFACTURE AND DISTRIBUTION 3 CONSUMPTION 4 A B RIEF HISTORY OF THE DEVELOPMENT OF THE RECORDING INDUSTRY 4 THE POSITION OF THE MODERN RECORDING INDUSTRY WITHIN THE GLOBAL MARKET 8 INTEGRATION 10 GLOBALIZATION 11 THE EFFECTS OF DOMINANCE IN THE MARKETPLACE 12 CONSUMPTION: UNDER THE INFLUENCE? 15 COPYRIGHT 17 THE DEVELOPMENT OF COPYRIGHT IN THE UK 17 THE REALITY OF COPYRIGHT 19 CHAPTER TWO: MUSIC BECOMES FLUID INFORMATION 25 AUDIO AS DIGITAL DATA 25 COMPRESSION TECHNOLOGIES 28 HOME TAPING WITH NEW TECHNOLOGY 30 FAIR OR UNFAIR?: AUTHORIZED AND UNAUTHORIZED USES OF COPYRIGHTED WORKS 33 PIRACY: OLD AS THE BARBARY COAST, NEW AS THE INTERNET 37 Hard Carrier Piracy 38 Online Piracy 40 CHAPTER THREE: STRATEGIC RESPONSES AND THE CONFLICT OF INTERESTS.. 43 ASSESSING THE OUTCOME OF THE WARRING FACTIONS 43 THE TECHNICAL AND CULTURAL DEVELOPMENT OF THE INTERNET 44 FROM INTELLECTUAL TO ECONOMIC INVESTMENT ON THE NET 48 Table of Contents STRATEGIC RESPONSES TO COUNTER PIRACY 50 1. Education: 50 2. Enforcement: 51 3. Litigation . 51 RIM vs. Diamond Multimedia Systems Inc. 52 A & M Records inc., et al. vs. Napster inc. 57 4. Develop New Technologies: The Secure Digital Music Initiative 65 CORPORATE STRATEGIES FOR CONTROL 69 1. Tightening Control of 1PRs 69 2. Litigation 72 3. Strategic Alliances 73 4. Develop New Technologies 74 Digital Rights Management Systems 74 THE IMPLICATIONS OF TRUSTED SYSTEMS 77 ASSESSING THE POTENTIAL SUCCESS OF TRUSTED SYSTEMS 80 CHAPTER FOUR: THE EFFECTS OF NEW TECHNOLOGIES ON THE ESTABLISHED PRACTICES OF PRODUCTION, PROMOTION, DISTRIBUTION AND CONSUMPTION OF RECORDED MUSIC 83 PRODUCTION 83 PROMOTION 86 MP3.com 88 DISTRIBUTION 92 CONSUMPTION 95 1. CD Mail Order Sites 95 2. Streaming Audio Sites: 96 3. Audio File Download Sites 98 4. File-Sharing Applications 100 CHAPTER FIVE: THE INDEPENDENT ARTIST'S POTENTIAL TO WORK WITH NEW TECHNOLOGIES 102 THE EFFECT THAT CORPORATE STRATEGIES FOR CONTROL HAVE ON ARTISTS 103 1. Lobbying for Legal Reform to Tighten Control of Copyrights 103 2. Enforcing Copyrights 104 THE INDEPENDENT UNSIGNED ARTIST - ENRICO CAPORAIE A.K.A. RIPWRAP 109 THE FEASIBILITY OF BEING AN UNSIGNED DIGITAL ARTIST 112 THE INDEPENDENT ESTABLISHED ARTIST - WWW.DAVIDBOWIE.COM 114 The 'Bowie' Site Menu: 115 OTHER INDEPENDENT ESTABLISHED DIGITAL ARTISTS 119 THE IMPLICATIONS OF DIGITAL DISTRIBUTION FOR DIGITAL ARTISTS 120 THE IMPLICATIONS OF DIGITAL DISTRIBUTION FOR INTERMEDIARIES 124 Table of Contents CHAPTER SIX: CONVERGING TECHNOLOGIES AND THEIR IMPLICATIONS FOR THE FUTURE MUSIC MARKET 127 CONVERGENCE 127 Digital TV: 128 THE HEAVENLY JUKEBOX 130 Stage One: CD Mail Order 131 Stage Two: Digital Downloading 131 Stage Three: Streaming On Demand 134 THE MULTI-CHANNEL FUTURE 135 Passive/Interactive Music Services 135 Centralized/Decentralized Content 137 IMPLICATIONS OF A SERVICE-BASED MODEL FOR THE MUSIC INDUSTRY 142 CHAPTER SEVEN: CONCLUSION AND SUMMARY 148 THE CONFLICTING FORCES 150 BIBLIOGRAPHY 161 BOOKS, ESSAYS AND ARTICLES CONSULTED 161 REPORTS CONSULTED 170 LEGAL CASE FILES CONSULTED 172 A&M Records et al vs Napster 173 RIM vs. Diamond Multimedia Inc. 176 CONFERENCES AND SEMINARS ATTENDED OR AUDITIONED 177 A SELECTION OF WEB SITES CONSULTED 180 Music Industry sites: 180 Independent label sites: 180 Artist sites: 180 Artist-led community sites: 181 Audio Technology sites: 181 Internet Industry sites: 181 Broadcast sites. 182 News & comment sites: 182 Commercial research sites: 183 Academic research & resources sites: 183 Individual research sites: 183 Legal sites: 184 Independent Marketing 184 LIST OF REFERENCES 185 Acknowledgements Acknowledgements Many thanks to all those who have helped me through this project, without whom it would never have been possible. First of all many thanks to those at GEMISIS for providing me with the necessary funding to go ahead with this project. In particular I would like to thank my supervisors Derek Scott, for his scholarly expertise, and Mark Grimshaw for his technical prowess. Also from the Salford crew were Enrico Caporale for his Mediterranean warmth, Phil Brissenden, Andy Greenwood for his genetically modified sense of humour, and Louisa Yong. Perhaps most of all, countless thanks to Jo and Sam and Jack, for an improbable amount of support, and for being there when I came home from a dirty grey city. I would also like to thank those academics who talked with me and shared their work, in particular, Lee Marshall, Martin Kretschmer, Regina Sperlich, and Reebee Garofalo. Thanks also to those from inside the industry: Ron Atkinson, Robert Bauer, Lee Griffiths, and all those still at ZTT, for giving me a deeper insight and some first hand experience. Also thanks to Mo and Paul for the continual rhythmic therapy. And last of all, Martin Moscrop for unwittingly and indirectly persuading me to do it in the first place. I still don't know whether it has been a blessing or a curse. Glossary Glossary A&R: Artist and Repertoire. The 'talent scouts' of the record companies. AARC: Alliance of Artists and Recording Companies. ADSL: Asymmetric Digital Subscriber's Line. AHRA: Audio Home Recording Act (1992). AOL: America Online. The largest ISP in the US. Archived: Files which are saved and stored on a server, where they are made available upon request. ARPA: Advanced Research Projects Association. Military research project which initiated Internet technology ATM: Asynchronous Transfer Mode. Communications system used by cash machines. Bandwidth: A measure of a network's capacity for data transfer per unit time (measured in bps [bits per second]). BBS: Bulletin Board System. A collaborative form of text-based group communication. Caching: A copying and storage mechanism which speeds up use of the Internet. CD: Compact Disc CD-R: Recordable Compact Disc CEMA: Consumer Electronics Manufacturing Association CMS: Copyright Management Systems Compression: Data reduction performed on a file using a mathematical algorithm, usually within a software package. DAT: Digital Audio Tape DCC: Digital Compact Cassette DMCA: Digital Millennium Copyright Act (1998). Downloading: The process of requesting and receiving a copy of a file from a remote computer to a local hard drive. DRM: Digital Rights Management. Technology to enforce usage rules on content. Glossary DSL: Digital Subscriber's Line. Means of high speed data transfer over telecom networks. EFF: Electronic Frontier Foundation Encoding: The process of converting digital data to a predetermined file format. Encryption: The process of scrambling data and restricting the ability to unscramble it. FSF: Free Software Foundation FTP: File Transfer Protocol. Protocol for sending and receiving data between home computer and remote server. Gil: Global Information Infrastructure. A term to describe the communications network around the planet. IFPI: International Federation of the Phonographic Industry IP: Intellectual Property IPR: Intellectual Property Rights, which include copyright, patent, trademark, and design rights. IRC: Internet Relay Chat. Text-based networked chat system. ISDN: Integrated Services Digital Network. Standard for digital transmission over ordinary telephone copper wire. ISP: Internet Service Provider IT: Information Technology IT!: Information Technology Industry ITV: Interactive Television JANet: Joint Academic Network kbps: Kilobits Per Second. Data transfer rate. LAN: Local Area Network Mbit: Megabit MCPS: Mechanical Copyright Protection Society MD: Mini Disc MIDI: Musical Instrument Digital Interface. Protocol for sending and receiving musical note data between keyboards and sequencers. MIT: Massachusetts Institute of Technology MPAA: Motion Picture Association of America MPEG: Motion Picture Expert Group MP3: MPEG 1 Layer 3. The infamous and ubiquitous audio file format. 111 Glossary MS: Microsoft MSP: Music Service Provider NSFNet: National Science Foundation Network Overdubbing: The recording of different instruments on a single piece of music at separate times, as if laying one performance on top of another so that they sound as if they were played at the same time Playlist: A list of each track played by a DJ on a radio station. P2P: Peer to Peer. Decentralized network technology. PC: Personal Computer PD: Portable Device PPL: Phonographic Performance Ltd. PRS: Performing Right Society RIAA: Recording Industry Association of America Ripping: The process of extracting data from an audio CD and encoding it to a predetermined file format. SCMS: Serial Copy Management System. Restrictive mechanism implemented into DAT machines. SDMI: Secure Digital Music Initiative Streaming: The process of sending audio visual data from a remote computer to a home computer, which is played back continually as it is received at the user end. TRIPS: Trade Related aspects of Intellectual Property UMTS: Universal Mobile Telephone Services Uploading: The process of sending a copy of a file from a local hard drive to a remote computer. VCR: Video Cassette Recorder VOD: Video On Demand Watermarking: The addition
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