Here's a little song for everyone. Tell me if you recognize it:
Yep, its “A Pirate's Life for Me”. Fitting, isn't it? The digital age is the age of online piracy, with copyright infringement freely and extensively (note the Pirate Bay logo). According to the Recording Industry Association of America's (RIAA) website, the record industry loses something to the tune of $12.5 billion a year to copyright infringement. Really, these blatant acts of piracy should concern me. Frankly though, I am somewhat unsympathetic to the record industry's plight. The times are a-changin', and it is time to embrace these changes, or be dragged kicking and screaming into the new era.
The first problem with modern copyright law is simple: piracy is so easy! All the free music you want is a few simple clicks away; all you need is a BitTorrent client and a Torrent site. The record companies try to shut these sites down, but their efforts are ultimately futile. Case in point is Napster's shutdown in the middle of 2001. Originally a peer-to-peer (P2P) file-sharing site, the company was shut down for massive copyright infringement. Now, you would think that this would serve as a deterrent for other P2P file-sharing networks. It did not. Rather, Napster spawned a large number of similar services, including LimeWire (also now defunct) and The Pirate Bay. Conclusion: court injunctions are not an effective method to stem the tide of piracy. Other sites with better technology and better security will rise from their predecessors' ashes, taking up arms against copyright law once again.
However, this makes me wonder: Do we really even want to stop piracy? File-sharing has many benefits for those artists who harness its potential effectively. A prime example is Trent Reznor, the mastermind behind the band Nine Inch Nails (Masnick). Reznor is a proponent of a very simple, but highly effective business model:
Connect with Fans (CwF) + Reason to Buy (RtB) = Profit
The way Reznor uses this model is almost idiotically simple, but still somehow frighteningly effective. I shall explain: On his website, nin.com, he encourages connection with and between fans through forums, chat rooms, and many other services (the "Connect with Fans" component of our model). In addition, he encourages fans to bring cameras to concerts, and then publicly archives the videos and photos they take on the website. And, most importantly, he provides all the music he's recorded online and for free. Yes, you read correctly.
Free.
Shocking, yes? But you ask: “How can he make a profit from this model?” This is where the second part of our business model comes into play: "Reason to Buy". All his music is free under a creative commons license, but there are paid versions which provide impressive incentives for fans to purchase. For example, Nine Inch Nail's newest album, Ghosts I-IV, has its first nine tracks available for free download. However, for $5, you can download the entire 36 track set; for $10 you can get the entire digital album, plus a hard-copy on two CDs; for $75 you will receive the entire album on two nicely-packaged CDs, plus the digital download, plus a data DVD with all 36 tracks in multi-track format, plus a Blu-Ray disc containing all 36 tracks in Hi-Def digital surround sound. All these options offer an incentive for fans to buy, and Reznor has greatly profited from them, even if he is technically giving his music out for free.
Oh, and one last thing: there is one other option I forgot to mention—a $300 Ultra-Deluxe Limited Edition Package. Only 2,500 of these were made available upon release of the album. Each signed by Reznor himself, containing everything previously mentioned, along with high-quality vinyl records of the four albums, as well as some very nice giclée prints. Here's the kicker: even given the $300 price-tag, it took less than 30 hours to sell out of all 2,500 units, netting Reznor cool $750,000 in just over a day. Impressive, no?
Here's the thing: music copyrights are a thing of the past. Copyrights are inherently restrictive, while music is an inherently public medium. So perhaps it is time that artists change the way they sell music. We support the antagonistic and restrictive record labels, because we believe that they are the only way for artists to actually turn a profit. And yet, when you look at the statistics, artists make an absolute pittance off of digital record sales when compared to the record labels themselves. In all honesty, they might as well give their music away for free. So let's rethink the way we sell music--especially the "sell" part. Times have changed, and restrictive copyrights no longer benefit the artists, or the consumer. The only people they really benefit are the record companies, which many saw already hold far too much power. Reznor has already proven that it is possible to provide free music, and still maintain a healthy profit. Now, it's just a matter of spreading the word.
"For Students Doing Reports." RIAA. Web. 12 Nov. 2010.
Masnick, Mike. "The Future Of Music Business Models (And Those Who Are Already There) Techdirt." Techdirt. 25 Jan. 2010. Web. 12 Nov. 2010. <http://www.techdirt.com/articles/20091119/1634117011.shtml>.
Nin.com [the Official Nine Inch Nails Website]. Web. 12 Nov. 2010. <http://www.nin.com/>.
