Todo va a cambiar

Chapter 1: Music, Movies, Lies and the Internet

“By treating Napster as the copyright antichrist, the industry is simply insuring that the vector of Internet technological development will move rapidly toward a lawsuit-proof, free-for-all distributed network of file-sharing -- the very outcome the owners of intellectual property wish to avoid. How stupid can you get?

Scott Rosenberg in, 2000

Even if you know very little about computers, you have probably downloaded a song from a P2P network. In fact, the use of the Internet to download music and movies is one of the Net's most common uses. Widely accepted and practiced amongst the population, Internet downloading is undoubtedly one of the most convenient ways to get hold of content quickly. By installing a completely free and easy to use software program, or simply by searching, any user of the Internet can locate and download content quite easily. However, there are still people whom, despite downloading web content regularly, refuse to admit to it in public and others that seek to criminalize one of the most common behaviors in society today. In some countries, such as France or the UK, a basic pillar of democracy such as the privacy of communications is under threat and attempts are underway to force private companies to spy on their customers to report if they are downloading copyrighted works without regard to copyright. For sure, the clash between copyright and the Net is one of the most abrasive and contradictory in contemporary history: the confrontation between companies that exploit those rights and society as a whole is becoming increasingly untenable, and undoubtedly, there are many twists to come. So let us try to look at the issue from the beginning to try, somehow, to establish the facts.

The history of the music industry is closely linked to technology. Music originated in prehistory, in the form of songs accompanied by rhythmic clapping and percussion instruments. Originally, music was an event, something happening related to a particular time and place, but that took place not to be captured or noted down in any way for later replication. Yes there was the chance to repeat, from memory, sequences of sounds, provided that the conditions and the availability of instruments permitted, but each performance was unique: if you were present at the same time and place, you could enjoy it. If not, you had to settle for the memory of those whom were present that could share it with you. The repetition of music was tied to memory, and was extremely fragile: the disappearance of a person could mean the loss of many musical works. With the technology of writing, music went on to be able to transcend time and place: the earliest record of music that remains coded is from the year 800 BC, and is a Sumerian hymn written in Cuneiform that was accidently cooked and so conserved when invaders burned the temple where the clay tablet was stored. In Greece, around the year 700 BC, there appeared the first bards, itinerant musicians playing music who lived in different places: possibly the first historical record of music as a business. A bard could, if he wished, attend The Pythian Games (precursors of the Olympics) and if he won, received a crown of laurel which increased his prestige, and so he was called to play music in more places and could increase his cache.

The first record we have of a famous artist is Pindar, who lived between 522 and 443 B.C. His odes consist of a huge repertoire of seventeen books, among which are hymns, lamentations, victory music, drama and even dance music. The odes of Pindar were paid for by customers wishing to use them for different reasons, and his house was visited by priests, characters of all kinds and even kings like Alexander the Great. From Pindar, music became an increasingly widespread phenomenon and to live off it meant different business models that we can begin to recognize: you could write, and receive, as Pindar, a payment for your works, that could be performed by others. You could perform, traveling from place to place and receive payment for your performance while also contributing to the dissemination of your works. And you could teach the art of playing instruments to others who wanted to learn it and paid you for lessons, in the same way as anyone who teaches a subject.

In 1506, half a century after the popularization of a new technology, the printing press by Johannes Gutenberg, appear historical records of copies of A Lytell Geste of Robyn Hode, the first so-called broadsides or broadsheets, sheets with the words and music of a song. In 1520, an English merchant sold the lavish amount of 190 sheets of a work, leading to another business model: selling copies of music scores. Finally, in 1566, the requirement was enacted for each printer who wished to do a print run, to register this in the Stationers Company of London and, from 1567, pay four pence per song. This is considered the origin of the model we know today as copyright. This model, based on the need to control the printing of creative works, was in effect until 1709, when strong social pressure calling for press freedom became effective. Interestingly, the business model in the golden age of the Stationers Company was different from today, especially in regard to the location of power and division of the margin. Initially developed for books, but also applied to music, the model was where the author sold all the rights to his work in exchange for a fixed price to a printer, which retained the perpetual right of exploitation of the work, even if this proved to be enormously popular. The works were, in fact, registered in the Stationers Company in the name of the editor, not the author.

In 1877, came along another new technology: Thomas Alva Edison produced the phonograph, the first machine capable of recording sound. Edison, known as "the genius of Menlo Park ', is considered the king of the patent. His ability to get an innovation to market went in parallel with the development of the expertise necessary to register a patent, including inventions, like the light bulb that simply were not all his own work. His creation, the phonograph, caused the transfer of the copyright model of sheet music to listening media (first cylinders and later discs.) The maintenance of the copyright model evolved into what we know today, with some slight correction. Record companies were responsible for getting talented artists to undertake the production, manufacture, marketing and distribution of recordings with them, and the artist got 15 % of wholesale price of each copy in respect of copyright. This model is familiar to us, it has become quite complicated with variations such as the systems of recoverable costs, where an artist can, for example, agree not to receive anything until the sales have allowed the record company to recover a large part of their initial investment in production and marketing, and many related models subject to record company/artist negotiation.

Over time and successive generations of technology, record companies came to have really tight control of the whole process: to discover the principles of mass marketing and its ability to manipulate public taste by mechanisms such as repetition, record companies could select the talent under a purely commercialbasis, and send it en masse to the public through the media. In general, more investment in the channel lead to greater popularity, which often generated hit or blockbuster returns.

Selling copies went beyond quality, to represent the metric of success. But the activity of artistic creation is distinct from the economic mechanism involved in its maintenance or viability. Johann Sebastian Bach was undoubtedly a gifted artist of great creative ability. The Duke John Ernest III of Saxe-Weimar (1664-1707) was not, but he played a key role so that Bach could become so. While the former depends on factors such as the ability to create, inspiration and artistic sensibility, the latter depends on the level of idle resources available, the business model or public appreciation. The art is created by the artist, not those who develop the business model to encourage their creation. Naturally, the artist wants to get the most return for their creation, but the process by which this happens is not art, but simply the operation a business model, subject only the vagaries of the free market.

The idea of copyright, or "right to make copies", emerged in 1710 in the UK. The so- called "Statute of Anne" protected the authors against printers who had published the works of these authors without their consent. The idea was, in fact, to enshrine the right of an author to receive compensation whenever someone generated income by selling his work. In 1886, copyright validity gained international recognition and the Berne Convention was signed, last revised in 1989.

The clear separation between the artistic creation and the marketing of the creative work is essential in understanding subsequent developments. For some time now, technology can provide to the artist a way whereby the creative output of an artist ceases to be a unique event linked to the time of interpretation. Technology has invented the ability to capture time and place, to "put the genie in the bottle", to release the work every time you want to enjoy it. Of course, this has impacted on the business model. But artists continued to be the artists: those who made the recordings or handled the marketing did not become artists. These are merely entrepreneurs operating a business model.

Over time, impresarios found also that the model was perfectly manipulable. They could select the artists not for the quality of the work, but those that gave them the most opportunities to enrich themselves by selling copies. They developed an entire system to provide opportunities for an artist who maximized the number of copies sold by convincing customers that the quality of creation depended on the number of people willing to pay for it. Left out of the system are thousands of artists, interested only in where, in exchange for lower production costs (using standardized products etc), their deal would allow them to reach the widest possible market. These impresarios invented fashion and fans, and influenced the popular will through mechanisms such as advertising and payola, two concepts completely unrelated to artistic creation. So what we have is an industrial process for the optimization not of artistic creation, but for the maximization of the business model linked to it. By virtue of that motivation, the recording industry was supporting the development of technology leading to cheaper production costs, but also looking to charge the public higher and higher prices. At its peak, it is estimated that the industry gave access only to 3% of all the artistic creation of History: they were simply not interested in the other 97%. Not that it was not art, but that the margin did not provide them with what they wanted. According to industry metrics, if a song is not likely to be a hit, but is more likely to be a flop, it should not be supported in accordance with the cost structure and marketing requirements of the industry.

But it was this technological progress which proved the undoing of the time of plenty. At the zenith, their industry had become hugely popular with many millions of customers, something that had taken the music industry hundreds of years, depending on where you deem its inception. But suddenly, for some reason, things speeded up: in June 1999, Shawn Fanning, a freshman at Northeastern University, created Napster, a computer program that became one of the fastest pieces of technology to have widespread distribution. In February 2001, less than two years after release, it had already reached more than twenty six million verified users worldwide and is estimated to have reached about ninety million. After many legal battles, the music industry succeeded in closing Napster in 2002 but not before they had issued legal proceedings against more than thirty thousand users for downloading music and with the phenomenon of getting your music from the internet shining more brightly than ever before.

Today, virtually every type of music is available on P2P networks, and users are perfectly free to download according to the laws governing in Spain. The imperfect selection service provided by the industry disappears in a space in which any artist can self-produce at reasonable quality, and come directly to their audience through digital distribution of their works. The value contributed by the manufacturing process of plastic leading to the distribution of the work at a retail outlet disappears, so that the recording industry sales figures have fallen at an alarming rate: the music has been released from its hardware, and now circulates freely on the Internet through sites of all kinds, from payment models to P2P to streaming or through simple searches that lead to direct downloads.

Suddenly, the possibility of making a copy of a work, which was precisely what was supposed to protect copyright, was something available to everyone. With all the stuff out there, it was impossible to protect. Copying on the Internet was as natural as breathing: every time a user clicks on a link, this creates a copy. Copies are the pages we read, the pictures we see and absolutely anything that your browser downloads. Everything on the Internet is an original copy stored on a server. Therefore, protecting the right of the author to remuneration for each copy, when generally there is no economic transaction associated with this copying, becomes absurd and meaningless. And to try to pursue those who make copies is obviously even more so. The range of sites through which a user can obtain a particular song or work is growing, and the practice has been extended so that social acceptance is near to absolute. The reaction of the music industry, which has channeled its economic power into a very strong ability to manipulate politics and laws, has failed at any time to reduce the number of users and volume of downloads and has led also to an entire generation of young people to believe that the laws are a sovereign stupidity that deserves to be ignored and that the record companies or entities of copyright management are little more than the personification of the Black Death.

Today, music is a de facto completely free product that is downloaded at any time and with absolute normality; is exchanged through P2P, Bluetooth, memory cards, instant messaging, emails, direct download pages, etc. A huge range of options, one that is increasing with time and advancing technologies, is putting a hole in the traditional business model that is completely impossible to clog. The evidence that music is obviously a product that takes effort and money to create and produce, should only lead to the search for valid business models which can compete with the ubiquitous availability of free methods. The challenge, of course, is not easy, let alone when it collides with an industry bent on getting the same yield obtained when the Internet did not exist and when the value of their contribution as the only producers of copies was elevated. The current industry outlook of music can be classified, therefore, as extremely confusing. With the industry and the rights

management companies grounded in the defense of an obsolete and meaningless legal framework, it is very difficult to reach a solution that can satisfy all parties involved. However, there are opinions that believe in a gradual slowdown in the use of P2P download platforms: while the traffic caused by their use is still growing, it appears to be due to the incorporation of new users, while the existing users seem to arrive at saturation resulting in an increasingly casual use. On the other hand, with the availability of bandwidth increasing and equipped with a progressive ubiquity seems to lead to a scenario in which streaming-based systems grow at rates well above those enjoyed by those based on P2P downloading. Streaming- based systems are distinguished by accommodating a much simpler model based on pay for play, often with schemes that do not require a payment to the user. On the other hand, the fact that much of the consumers are redirected to streaming formats does not necessarily mean that the music industry will survive: for the moment, the industry has been characterized by difficult streaming initiatives trying to apply the same economic schemes of the previous model, rather to maintain a constructive attitude toward them.

Special mention should be made of the phenomenon of DRM, Digital Rights Management, a generic term used to describe a series of access control technologies developed by manufacturers of hardware, software and content creators to try to impose restriction (detractors call it Digital Restrictions Management ) in the use of certain devices and content. For many years, DRM was considered the “great hope" for an industry that invested billions of dollars in the development and deployment of mechanisms to prevent copying (serial numbers, authentication servers, etc.), which, in practice, have always been conveniently worked around once enough interest has been generated to do so.

The history of DRM reflects one of the most obvious truths about the Internet: the bits are free; their movement can not be restrained, merely hampered only in specific circumstances. In fact, Internet behavior resembles that of an organic body, which reacts to external aggressions through mechanisms of isolation and blockade, “encystment”, in order to maintain its operation: So a restriction on the network is interpreted as aggression, and invariably ends up being "fixed" or "healed", with results that are the opposite to what was intended. Cool developers such as the Norwegian Jon Lech Johansen, the legendary DVD Jon, have become world famous and his exploits have been made into movies because of their ability to reverse engineer and crack open these protection systems.

In the struggle to try to develop a truly functional DRM there have been have all sorts of battles, from millionaire investments that were useless to when they were simply painted with a permanent marker on a particular part of disk, to violations of the privacy of users with discs that installed a hidden program on computers that were propagated and "called home" when his owner played them. As a general rule, you must understand that DRM is restricting the rights of a user when using a product that was purchased legitimately, and that, therefore, creates an incentive precisely in the opposite direction than expected: those who get the product from non licensed sources conveniently with their DRM cracked, go on to have more rights than those who got through the channels that the company considered appropriate. After many years of painful failures, the industry began, from 2008, to move away from DRM as a key strategic commitment. Currently, DRM schemes remain the only bet in the world of music distribution to mobile platforms, only because as these have not been sufficiently homogenized, there is still not sufficient scale for the hackers to go after it for gain or to get enough fame for being first with the crack.

All the elements examined seem to indicate a necessary review of the value chain of the industry: the role of selecting talent is not deemed necessary in a world in which every artist can directly put their work before the eyes and ears of the public. Hardware production and distribution also lose its value so rapidly, leading to the record label to become a kind of service agency that manages the artists’ portfolio. It seems logical that the relative decline in the role of these companies will determine a subsequent downsizing of the same, but will remain in place through innovation in marketing techniques and ways to add value to the creative process. There are a number of possibilities in the hands of the artist from remaining as an individual with completely independent management to comprehensive 360 degrees management- type contracts, with variations depending on the intermediate level of ownership and bargaining power on both sides.

As the available bandwidth increases and with the ubiquity of both the connectivity and the players, customers will start to worry less about the scarcity that leads them to act as "collectors" of works, and use only consumption-based systems via streaming. In these circumstances, after the consolidation from an "economy of abundance", the problem for the user will not be how to get music, but how to choose the music to listen to in a reasonable and simple way: the recommendation and discovery engines are, in this sense, of enormous potential. It could be for the rights management companies to audit and control the playing of the songs when this takes place for profit in order to estimate the payment for rights on the different platforms, and pay it to the rightsholders as appropriate, forming a new balance and new commercial schemes. It is questionable, of course, whether those involved in the music industry will continue in it after it has crashed to earth. Indeed, when the phenomenon of disruption appears, the change happens fast and without the time to react: the whole process from the emergence of Napster until this book reached the shelves of the book store, has taken just ten years.

So therefore, where are we today? At this point, you can download whatever you want at any time. You don’t have to worry or feel guilty about downloading a song or a movie. You cannot be branded a criminal, because the offense simply does not exist as such in the Spanish legal system. The offense would begin, hypothetically, if you make some economic use of the item downloaded: if you used it to play in a bar (which consequently can increase their clientele and financial gain through such works), or to sell to friends or incorporate into another work that made it somehow to the market. The pressures of lobbies and pressure groups of intellectual property to change the meaning of the laws, so far, have failed.

But beyond that established by our legal system, which in fact could change if the very powerful lobbying from industry manage to twist the arm of the politicians in power to legislate for such business rather than for the rights of citizens, think of what is fair and common sense: when you download something from the Net, it is not detrimental to its author: studies to date clearly establish that having their work broadcast on the Net gives these works leads in all cases, an increase of popularity that allows these authors to obtain more money for other concepts, such as income from concerts, merchandising, etc.

In the case of movies, the fact that some people prefer to see them at home on a small screen instead of a trip to the cinema, where they can enjoy an experience with a much higher level of quality tells us only that the vast majority of these people, in any case would not go to the cinema, making the hypothetical "profits" claimed by the film industry known fallacies. No, there is no possible match between the number of downloads and loss of income. Each time you hear this, just laugh.

Nor is there any relationship between the download of material subject to copyright and the physical theft of something to make use of it, such as the tort claim made in many campaigns in countries around the world such as "you would not steal a car" as if you are dealing with a situation of exclusive ownership. While the ownership of physical goods, such as a car or a ham, is exclusive and can not therefore be enjoyed equally by two people at once (if you take my car or eat my ham, I will not have my car or I can not eat the same ham), the person who makes the copy leaves the original in the same place and all that happens is the creation of an identical copy at virtually zero cost. Seek to apply the same consideration to one thing and the other is simply nonsense coming from simplistic minds that are either very weak or extremely biased.

The problem, of course, arises from the very concept of copyright, a legal doctrine that urgently needs to be revised, but revision of which clashes with the interests of one of the most powerful industries in the world. I urge a redefinition that establishes that copyright should be conditioned on the subsequent obtaining of a profit. And for one fundamental reason: otherwise, it can not be protected because it lacks any possibility of control. Even in the now reactionary France, which has sought to oversee the exchange of bits over the Net based on the full delusions of grandeur of L'hyper-président, the downloaders have not shown the slightest sign of weakness.

Downloading, whether liked or not by record labels, producers and politicians is here to stay, and will only fall when there is available a method to obtain the same products in a more convenient and simple way. Which also means that should not be free. It is well established that you can compete with free: it is only necessary to offer a reasonable price and a superior shopping experience. The iTunes store from Apple Inc. is today the largest music retailer in the world, despite charging a price not related to the cost of production of the song, but what record companies, in their clumsy myopia, intend to continue to obtain despite no longer having to print discs, or pay for marketing and distribution. Alternatives such as Spotify, which enable its users to listen to streaming songs have grown rapidly in popularity despite the fact that, again, are weighted by the revenue demands of some absurdly greedy record companies that require the imposition of excessive prices that are justified only by their interest in keeping their balance sheets as afloat as possible.

Despite complaints from record companies falsely claiming that 'music will die ', anyone can see, at a glance that it is not like that. Music, in fact, is now stronger than ever, now that the artificial barriers these labels wanted to impose have been removed. The consensus today is to label the current era as "the golden age of endless music," which turns leads to plaintive cries like, "the music wont last" in solemn stupidity. Music will not die. What will die are those who try to sell copies while living in a world where anyone can make a copy. The data collected between 2004 and 2008 by The Times made it abundantly clear that while the income of record companies descended markedly and steadily, the income earned by artists rose sharply due to concepts such as live music, merchandise and payment of royalties. During 2009, income earned by artists, which was in no way adversely affected by internet downloading, total revenue will exceed the revenue made from the traditional way of record sales. No, downloads are not the problem: the problem is wanting to continue making money selling products in a way that no longer makes sense and by linking success with the numbers of plastic copies that fewer people want.

Today we enjoy more music, of infinite variety, and it comes to us in many more ways than before. Obviously, those who once controlled the limited channels of distribution and the conditions imposed on them are not too happy, and may not be profitable again until a whole generation of managers has gone into retirement and the management of these companies, if any still exist - has passed to their children and grandchildren. But that, to you, is and should be completely irrelevant. Use the Internet to download whatever you want, by whatever method you choose, paid or without payment. If you are called a "pirate", this is not only wrong ("pirates" are people who attack ships at sea and usually abduct their occupants, take their belongings and kill them, absolutely nothing to do with the harmless download of a song), but generally they deserve to get far worse insults back. So ignore "old wives' tales" and enjoy the greatest cultural dissemination tool that humanity has ever had in its hands: the Internet.



(English Translation by Joe Haslam)


and many related models subject to record company/artist negotiation


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