"File Sharing: Innocent Until Proven Guilty"

By Damien Cave

By Salon Staff
Published June 17, 2002 7:30PM (EDT)

[Read the story.]

Interesting that the article about Stan Liebowitz indicated that consumers "like holding these things." As a "boomer" in midlife (more or less), I wouldn't mind not holding quite as much if the manufacturers made it easier to access what I want.

Some time back Blockbuster announced a grand strategy (partnered with IBM, I believe) that would solve the store inventory problem for low-volume items. The idea was that CDs of music (and I thought eventually DVDs of movies, but I could be wrong) would be burned "on demand" in local video stores. So what if the store has 100 copies of 'N Sync or "Dude, Where's My Car?" If I wanted some obscure music or movie (usually from another era), all I had to do was go through an online catalog and get the digital content downloaded on the spot. Better for Blockbuster, better for the studios, and better for me.

So what happened? In retrospect, this idea was probably too expensive for the volume involved (especially for video), but I also suspect the content owners didn't want me deciding what I wanted to buy; they wanted to limit my options to mostly current items (for which they are still trying to recover their investment). This leaves me with what I have today; I go to a small "mom and pop" video place, because the big chains don't always have what I want.

But what I really want is to have a source online that lets me cross-check what I have watched, what I wanted to watch, and what's available. And then I want to be able to go through my list at my own pace. I also want the studio to provide "extras" like recording information, pictures, lyrics, alternate takes, etc. I also want to cross-index reviews, "best of" lists, and lots of other information, so I can keep track of stuff that I was interested in more than six months ago. And I want this for music, video, print, television, whatever. In other words, I want a new experience.

This fixation with forcing me to buy "hard copy" forms of what I want, instead of providing content on demand (and for reasonable rates, not $20 a pop) is the problem. I already have too much content (and in too many different formats); management of it is my issue, and I expect the issue for many others as well.

I know it is easier for the studios to think all this downloading was being done just to get free music; but has anyone at the studios thought that just maybe it really is also about easier management of too much content? Having a couple thousand MP3 files on one hard disk (say five gigabytes' worth) is a hell of a lot easier to manage -- build playlists for, search on keywords, etc. -- than the same content sitting on a shelf.

To me, the need to control this discussion -- and to prevent the loss of content-access control, not the content itself -- is at the bottom of all this. But I still have hope; Disney used to be dead set against any tape or DVD-type version of their content. Now I can barely move in any grocery store without knocking over some Disney content (usually on a rack at the end of an aisle, at a child's eye level).

It may take a few years, but eventually someone is going to figure this out (anyone at Sony reading this?). I don't think this will mean the end to CDs and DVDs; having 20-GB disks in laptops certainly hasn't killed the paper and printer business. But just as I use hard copy and soft copy at the office, so do I want to do the same at home.

And remember -- I'm a boomer -- I still have LPs at home. On the other hand, my kids have just about no tolerance for people trying to make them do things the "old way" just because the new way challenges a business. Millions of like-minded consumers in that prime age group are not going to wait forever for the studios to get this right. If they don't do it soon, someone else will (and more powerful CPUs attached to 100- to 200-GB hard disks will make it that much easier).

-- Terrance Watt

The main problem with the file-sharing debate is that it's industry driven. The industry assumes it controls all worthwhile music, so therefore all file sharing must involve its property and cut into its sales.

'Tain't necessarily so.

Some other uses:

The Grateful Dead, Bruce Springsteen, Bob Dylan, and many, many other artists have fans who record their concerts and share the recordings. For years it's been done by trading tapes, then CDs, and now files over the Internet. These recordings are not the property of the music industry, but they take up a lot of bandwidth ... and a lot of downloads.

Note also that most fans who share unofficial recordings usually own all or most official recordings.

There are also artists, especially non-industry artists like Gaia Consort or Heather Alexander, who make MP3s available on their Web sites. These artists encourage consumers to listen before they buy.

Of course, the advent of file sharing makes it easy for any connected consumer to try before they buy. I know people who've replaced CD buying with file sharing/CD burning. I know others who use file sharing to help them buy smart -- and who buy more CDs now.

Blank CDs are another question mark. They can be used with file sharing to replace CD buying. They can be used with CD buying to make compilation CDs. And they can be used for data backups or computer code distribution. But the music industry only sees the first application, and negates the rest.

Furthermore, on a statistical note, counts of downloads should check completed downloads versus attempted downloads. Even with broadband, not all downloads complete.

-- Jennifer Kilmer

There are I am sure many reasons why you can't simply state why file sharing doesn't hurt CD sales. But the main reasons I think elude industry buzz, or the industry is simply unwilling to talk about them.

First and foremost, I don't believe that the majority of downloads per person involve a whole album. I believe the majority of people that use file sharing are downloading singles from artists that produce mostly shit on the rest of the album or are otherwise outside the listener's tastes. Case in point: There is probably at least one song on every Stones album I like. But that's about it, and I'd never buy an album I won't listen to. This group of people comprises a large group of downloaders that likely would never have bought those albums in the first place. Therefore, no sales lost.

Second, I believe that of the majority of albums downloaded in their entirety, a large number of their listeners end up purchasing the CD once they like it. Nothing guarantees that the user will listen to a downloaded album any more than a purchased one.

While it doesn't exactly justify downloading, it's still morally distasteful that we (as a world) are protected against poorly made products in everything except software and entertainment. I believe that while downloading may be illegal, the only hope that the entertainment industry as a whole has of living on is to provide a quality product, which for the most part it doesn't. Yes, the artist in question is just as much to blame, but I'd be willing to pay for music that I liked rather than having to cough up $16 for an album I've only heard two songs off of.

-- Charles Engasser

It is too much of a hassle to download a whole CD, plus you don't get any artwork. I bought more recordings when I was downloading from Napster. It got me into music again. I could write down my favorites at my computer and have a list to go to the store with. Now my buying habits have fallen off again, I hear music on the radio in my car, but I never recall who it was by, and my enthusiasm to buy it soon recedes.

Downloading should be looked at the same way singles used to be considered, as a teaser, a way to promote the album. Let's face it, it is tedious as hell to stand at the record store and listen to new music on earphones, and the radio is pathetic. The downloads that are provided are those hideous little 30-second bites, the lamest. The music industry, in its ignorant paranoia, has missed out on one of the great marketing opportunities ever. And to think, they used to worry about whole albums being played on radio for fear of taping! Seems quaint now.

-- Cat Lincoln

Something's missing in the logic. The flaw in the reasoning presented is the assumption that each download represents a lost sale. However, the fact is, the vast majority of music downloads comprise songs that the listener just doesn't like enough to buy. There is a lot of music I'd take for free, but would never, ever pay for, at any price.

-- John E. Gulliksen

I think there are some logical explanations for why file sharing isn't hurting CD sales significantly.

1. The market for music is not saturated. I own more than 1,000 CDs, but most people that own CDs have only a few dozen. I think the reason I own so many CDs is because I was exposed to more music, through file sharing (actually cassette copies) in my youth. A CD is an expensive purchase, and consumers are not going to buy if they are not exposed to the music. I think file sharing can therefore increase the demand for CDs. It is possible that CD sales would have declined even more without file sharing.

2. File sharing does not cost the record companies anything because the majority of shared music is already available for free. From what I understand, top 10 hits are what are being shared the most often; but these hits are already available for free from MTV or from the radio. It is conceivable that the people sharing the files, like those watching/listening to the hits, do not buy the CDs because they hear the music often enough for free; they see no need own it.

3. CDs have better sound quality. This is my personal reason for not listening to MP3s. I think most CDs sound lousy, let alone a bit-compressed copy of the music. I think that the record studios and electronics manufacturers should try harder to educate their customers that MP3s played through a computer are a pale imitation of the sound quality that is possible.

The record companies should give up on their attempts to get laws passed to save their current business models, and instead try to compete against shared files. I think they should put more effort into making better-sounding CDs that people can clearly hear are better than the shared version. There are new music formats available (SACD and DVD-A) that have even better sound quality than CDs, and would therefore sound that much worse in a MP3 format. Ironically, the studios will not support these new media without sound-quality-crippling copy protection. Just as in the early days of DVDs or videotapes, companies don't recognize a chance to expand a market when they see it.

Another easy tactic the record companies should try is to lower the prices of CDs. The retail prices of CDs are totally unrelated to the cost of producing the CDs and customers can see that. It is not uncommon to find that the DVD of a movie costs less than the soundtrack CD! Most consumers would judge that the DVD has higher value, yet has a lower cost. If the record companies halved the price of CDs, I think they would find that the increased exposure given by file sharing would translate into much higher sales, especially for the back catalog, where any additional sales are pure profit.

-- Jim Summers

The summer of 2002 was the year that downloading Hollywood movies from the Internet arrived. Digital versions of "Spider-Man" and "Attack of the Clones" were available freely from numerous locations (if you knew where to look), several weeks before their release in the U.S. The quality of these downloadable versions improved dramatically as well, a far cry from the shaky copies, made via smuggled Super-8 cameras, that you could buy from folding tables on the streets of New York City or L.A.

So how did this unprecedented wave of intellectual property violations affect Hollywood's revenues? Why, they had their biggest three-day weekend box office gross ever.

It's certainly within the realm of possibility that downloading movies and music from the Internet might end up destroying those industries, but it doesn't look likely. It's clear that people do like to download products to try them out first, free of charge, but more often than not if they like them, they end up purchasing their own legitimate copy. I know this both anecdotally and personally; the last 20 great CDs I've bought, I've sampled from friends' MP3 collections first. The music and movie industry would do well to take notice of what consumers want to do with the technology that is now available to them, rather than trying to pass unconstitutional laws that let the likes of Viacom and Disney limit what computers are legally allowed to be. They might just find (shock and horror) that consumers can generally be trusted to keep up their end of the bargain if they're not treated like thieves and criminals by the corporations that they want to give their money to.

Of course, the other consequence of this kind of arrangement is that it becomes a lot more difficult to hard sell a decent volume of a CD or movie that's absolute crap, but I can't say that breaks my heart one bit.

-- Michael Handler

The individuals that download music are, in many cases, responding to the overpriced and inferior product that the recording industry is pushing on the public through traditional sales channels. Why has Congress not investigated and done something about the illegal price fixing that the major recording companies have engaged in for the past 20 years?

Every other electronic, technological or mass-produced item except the music CD has improved and fallen in price during the past decade. Ask yourself why you pay the same price or lower for the latest DVD movie release than the latest CD music release. The DVD contains four times the amount of data on it, the blank DVD costs 12 times the amount of a blank CD, and in many cases the DVD movie will be produced in far lower quantities than the music CD. CD-music pricing doesn't make sense when you look at it from this perspective.

While the record companies will bemoan the royalties they have to pay to artists, the artist typically averages less than 50 cents in royalties for each CD sold. The artists make their real money from the bonuses they receive when they sign their initial contract with the record company. Today the majority of an artist's yearly income is from ticket sales and merchandise at concerts, not CD sales!

This unfair working arrangement is exactly the reason why no major rap artists are signed by the major labels. The rap artists formed their own labels and make all the money from their efforts. The non-rap artists, however, are not blameless. They are tied in to recording contracts that require them to produce an album on specified timetables while they have very little financial incentive to do so. The result is oftentimes an album that contains one or two (if we are lucky) good tracks and a dozen or so inferior tracks. That's why greatest-hits albums are among the largest sellers of all time. Give the public quality and they will buy it.

And remember, if everything else that we use daily was priced like the music CD, we would still be paying $1,500 for VCRs, $4,000 for computers, $1,000 for DVD players, $100 for a VHS movie, etc. I think my point is clear. Music companies have taken advantage of the buying public for too long, and they have gotten too comfortable doing it.

-- Mike Milonas

One thing that affects file sharing that I never see brought up is the poor state of radio. Payola is back, and no one is doing anything about it. Since the FCC changed the rules on radio station ownership, two major companies (Clear Channel and Infinity) have gobbled up stations and now control the market. The playlists these stations play are very repetitive and new music is very seldom heard. The only way to hear a lot of new music is to download it from the Internet.

Once people hear a new band or a new song they tend to want to buy the CD. Radio should be the stimulus to CD sales, but they oversaturate the airwaves with the same drivel and people like me have turned to talk radio. The record companies should be going after the radio stations to improve exposure to their artists and drive CD sales.

-- Adrain Barton

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