Reykjavík Grapevine - 02.11.2007, Blaðsíða 33
The music industry is facing some troubled wa-
ters. To be precise, the business side of the mu-
sic industry is in trouble; the big publishers and
distributors, who, for the longest time, have con-
trolled artists’ and musicians’ access to the highly
lucrative popular music market. The technological
changes that the internet has brought our society,
coupled with diminishing costs artists face when
recording their music, have put the industry into a
deer-in-the-headlights scenario. A cuddly Bambi
caught in the headlights on a deserted highway
has essentially three choices: he can run away as
fast as possible, he can stand frozen waiting for
the bumper to hit, or, if he’s starring in a Queens
of the Stone Age video, he can plunge at the car,
capture the driver and make him his submissive
slave in his Bambi colony.
This last choice was discussed and debated
at the one day international conference, Who is
in Control, held in Reykjavik the day before the
latest Iceland Airwaves festival kicked off. The
conference was organized by a new government-
sponsored office, Icelandic Music Export (IMX),
whose role is to promote Icelandic music abroad,
to increase the visibility of Icelandic music in the
international sphere and provide an essential
one-stop resource for all interested parties. Key-
note speakers and panel discussion participants
came from various corners of the industry, rang-
ing from representatives from international music
businesses – such as Sony BMG, Mute and Play-
louder – Icelandic digital music online retailer
tonlist.is, Síminn Telecom, Icelandic label Bad
Taste and daily newspaper Morgunblaðið. In total,
there were 22 speakers at the conference and a
complete list can be found at IMX’s website, www.
icelandicmusic.is. Artists and musicians were
conspicuously absent from the list of speakers but
at least some attended, although the hefty 20,000
ISK admission fee probably scared a few of the
more frugal artists away.
Music like Water
The first and most interesting keynote speech
of the conference was by Gerd Leonardh, a self-
appointed Music and Media Futurist. A highly
informative interview with Gerd was published in
Grapevine issue 14 and I suggest that, if you have
any interest in the matters discussed here, you
check that out. Gerd’s speech was titled “Why the
Flat Rate for Music is our Future - and why the End
of Control is a good thing for Artists and Consum-
ers” (it is available at his blog http://gerdleonhard.
typepad.com/).
Gerd’s idea for the future of the music indus-
try is basically this: Music will be everywhere, it
will never be further away from you than three
clicks on whatever device you have handy, your
mobile phone, your computer, your ipod. Every-
one will pay a flat rate fee for access – music will
feel free, just like tap water feels free, but every-
one will be paying. The business model could
be something close to the consumer paying one
Euro a week for unlimited access to music and
the profit would be split between artists, networks
and publishers.
But the cash flow from such a system is just
the tip of the iceberg in Gerd’s view. The real mon-
ey would come from by-products such as advertis-
ing, concerts and sales of various paraphernalia.
Essentially selling a brand, not a physical product
like a CD. The business of selling copies of music
is over; from now on the music industry must sell
access to its content. To put it simply, companies
must monetize on what people are already doing
with music. There is no way that the wheels of
technology can be, or should be, reversed.
File Sharing
The internet has revolutionized the distribution
of music. Easy digitalization of songs and albums
is what is, in the words of the industry, killing it.
Now this is nothing new, technology has attacked
this industry before. The cassette played the role
of the internet in the eighties. The mantra now re-
peated in every media is that file sharing is result-
ing in less music sales and the bottom lines of the
big players in the industry seem to back up this
statement.
The industry has responded to this by crip-
pling the product they are selling, adding various
forms of copy protections to the media they are
selling and criminalizing their customers with law
suits. None of this has worked, every copy-protec-
tion scheme has been broken and for every file-
sharing network shut down another has replaced
it. Just last week the largest BitTorrent community
evolving only around music, www.oink.cd, was
shut down by a police action in Britain and the
Netherlands. Oink’s webpage now points to a list
of 55 other BitTorrent sites where music lovers can
get their fix. In the United States the Recording
Industry of America has been targeting file shar-
ers with law suits with no apparent effect or result
in sight, except a public relations disaster when
12-year-old children face thousands of dollars in
fines for downloading a single Justin Timberlake
single. Clearly this battle is lost if recording com-
panies continue to try these methods on the new
society.
Copyright
The argument for these kinds of actions has been
that file sharing of music and other digital content
is a copyright infringement, much less than a prof-
it drain for record companies. It is probably true
that music sharing is, if not illegal, at least a highly
debatable activity in legal terms. But laws aren’t
set in stone, laws can be amended. Copyright law
has evolved enormously throughout history, often
in response to technological changes, but most
often because of pressure from copyright holders.
For a further discussion of the future of copyright
law, especially regarding the changes the internet
has put into motion I refer to Free Culture, the ex-
cellent book by Stanford law professor Lawrence
Lessig, available free from www.lessig.org.
At the IMX conference, the response to
Gerd’s ideas, at least from representatives of the
big players, was mixed. A few of them shook their
heads vigorously throughout his speech, Alison
Whenam from AIM UK commented that Gerd was
looking at things from the outside and not from
within, reinforcing the feeling that the industry
will approach this problem in their own way and
with their own solutions. Alison mentioned that
a flat-rate fee would call for changes to copyright
law which would take at least 10 years to imple-
ment and the industry simply could not wait that
long. In her words the music industry is looking
down a cliff, the first to be the victim of this new
technology but certainly not the last. There is a
simple solution to the copyright problem though:
simply reduce the barriers the copyright license
puts on the use of music and media. The Creative
Commons license (www.creativecommons.org)
put forward by Lawrence Lessig is a much more
flexible license for digital media, allowing artists
and publishers more ways of controlling the use
of their work. Creative Commons licenses allow
owners of media to license their work somewhere
in between the general “All rights reserved”, where
no use is allowed without permission, and the
“Public Domain”, where all use is free. General
copyright law puts heavy restrictions on all pub-
lished works and leaves no room for an artist or
publisher to allow use of the work without prior
permission. Creative Commons makes that pos-
sible. In today’s world, it can be argued, general
copyright laws are much too restrictive. With a
Creative Commons license a rights owner can give
up these rights if he/she chooses to do so, and so-
ciety, in a way, demands that he/she does so.
The Icelandic Model?
Although not mentioned directly in the IMX
conference agenda, there was an underlying
motif floating around. The first I heard of it was
in the Grapevine interview with Gerd Leonardh
referenced earlier. The idea is this: Iceland will
become a kind of test market for a new business
model for distributing music. Basically, Internet
Service Providers (ISPs) will impose a flat-rate fee
for access to content. This is in compliance with
Gerd’s ideas and one suspects that he has been
instrumental in putting the idea forward. Present
at the conference were representatives of at least
some of the biggest ISPs in Iceland. Judging from
their comments they did not seem too keen on the
idea. Hjálmar Gíslason, Director of Business Devel-
opment for ISP Síminn Telecom, commented that
it would be difficult for ISPs to increase the price
for something users are now getting essentially for
free. Something in that comment rings true, but
it could also be argued that people want to pay a
fair price for their media consumption. Whether
Iceland could be a good test market for a flat-rate
model remains to be seen. A few considerations
come to mind. For example, would certain ISPs
only provide some content, forcing the customer
to pay for multiple subscription models? Would
my desire to download Guns N’ Roses’ forthcom-
ing album, Chinese Democracy, force me to sub-
scribe to the service from Síminn; but if I should
also want Britney Spears’ latest album, Blackout,
would I have to subscribe to Vodafone’s service?
These matters and others are being dis-
cussed somewhere surely and, as stated before,
were mentioned briefly at the conference. There
was, however, no formal debate on an Icelandic
test market and, to my knowledge, none has taken
place in a public forum. But I wouldn’t be sur-
prised if in the coming months we see some kind
of subscription model based on a flat rate from a
joint venture by ISPs and publishers.
The Middleman
In recent months we have seen big artists take
a different route from the usual in getting their
music to their fans. Typically an artist signs with
a label, who then publishes the work, distributes
it and keeps most of the money. It is a harsh truth
that the recording industry must acknowledge
that their PR image isn’t exactly shiny. It is gen-
erally considered true that labels and publishers
screw their artists in every way imaginable. This
was possible because artists and musicians had
no way of entering the market without the help of
a record company. Their expertise and their ac-
cess to funds made them the gatekeepers of the
market, carefully regulating the supply of music.
The internet has now turned this on its head.
There is, in fact, no need for a band to sign
with a label. A band can build a strong fan base
simply by releasing their music online, forging a
close relationship with their fans. Production costs
of CDs and other media have dropped dramatical-
ly. The last big band to do this, of course, is Radio-
head, who released its latest album entirely on the
internet, allowing each fan to choose the amount
to pay. The result: Radiohead pocketed far more
money than they would have if they had signed
with a big label and only sold their CD in stores or
digitally in online stores. What Radiohead essen-
tially did was to cut out the middleman: the busi-
ness side of the music industry. Madonna took a
similar route, not signing with a record label, but
instead with a promotions company, arguing that
concerts and promotional deals were far more
lucrative than CD sales. Prince has given his CDs
away, faithful in the knowledge that people will
come to his concerts, but not necessarily buy his
albums.
Obviously, these artists have already es-
tablished themselves with the help of the music
industry. Not many would have taken notice of Ra-
diohead’s new business model, if not for the fact
that Radiohead is already one of the biggest bands
in the universe. But this is in fact good news for
every band and artist, not just the big ones. The in-
ternet is an extremely efficient tool for musicians
to market their music. The competition is fierce,
of course, but it has always been that way. There
are hundreds of thousands of bands on Myspace
alone so it will be hard to stand out. As Einar Örn,
former member of the Sugarcubes and co-owner
of Bad Taste Records put it at the IMX conference:
“If your songs are shit, then you are fucked”.
So, Who Then is in Control?
What we have is this: the music industry is losing
its stranglehold on the market. There is much less
incentive for artists to sign with a label. It is pos-
sible to build careers without signing a contract
which will probably not be of much value. Mugi-
son, one of Iceland’s most popular musicians,
recently released his album himself, comment-
ing that his debut album, Lonely Mountain, sold
13 thousand copies and his profit from that was
100,000 ISK. Someone somewhere has a fair stack
of money from those sales, but it is not Mugison.
The industry is finally acknowledging this, desper-
ately trying to come up with ways of keeping their
cash cow from starving. Consumers are delighted;
access to music has never been easier.
Control has shifted from the record com-
panies to artists, musicians and their fans. These
are the groups that benefit most from the changes
technology has made to our social fabric. Musi-
cians have a closer relationship with their fans,
more control over their careers, and music lov-
ers have greater access to music at a lower cost.
To simplify in the extreme: If you are in one of
these groups, and not a shark in a suit sitting in
an executive chair at a big record company, then
you are in control. But, knowing the history of the
music industry, that might not be for long. With
power comes responsibility: use it wisely, guard
your newfound position of power. Help build a
fairer world for artists and music lovers. The re-
cord companies are expendable.
Text by Páll Hilmarsson
The Last Days of the Labels
The technological changes that the internet has brought our society, coupled with di-
minishing costs artists face when recording their music, have put the industry into a
deer-in-the-headlights scenario.
Feature | Reykjavík Grapevine | Issue 17 2007 | 17