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DDMI EU Coverage: The Illusion Of Control
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2001-04-06
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In his opening keynote at DDMI EU 2001, pho list Founder & overall visionary, Jim Griffin, told the audience how he felt his commitment to the event, and more importantly its 'community', were of such importance that he missed the Senate hearings to be here in London. If you spent the two days at the event, you understood why. Yes, there was too much talk about subscriptions, in my opinion. And yes, much of what was said had been said before. But if you listened and networked carefully, you discovered a series of themes that are likely to mark the debates and influence the next stage of the industry's evolution. This is the first in a series examining those themes and their implications.

Control

If there is one lesson everyone has probably retained from their economics classes (probably the only thing), is that the point where the demand and supply curves intersect is where you will find an equilibrium in quantity and price levels for a good. And so the music industry, like any other industry, has cherished its control over quantity through its distribution channels to manipulate price, and subsequently, profitability. In this context, it becomes obvious that the debate has not really been about piracy or copyright, and certainly not about artists, but about retaining control. The ability to control how music is distributed, acquired and used through all possible mediums: CD, audio DVD, download, streaming, webcast, simulcast...

But control is an illusionary thing. It depends on all involved parties accepting, either willingly or under duress, the relationships of control in a given system. So while the US government would like to believe it is in control of the drug war, the fact that a sizable portion of the population did not accept that control has largely rendered it an illusion. And the same can be said for so many other instances, from OPEC in the late 80s to segregation in the Civil Rights era to Alan Greenspan and the stock markets. You usually need only a sizable minority to at least question if not render irrelevant that control.

It's no surprise that Grateful Dead lyricist & EFF co-Founder, John Perry Barlow, challenged each one of us at the conference to commit acts of civil disobedience and assume "our moral responsibility to take the works of the past and make them available to the generation of the future." However, the call itself seems rather unnecessary, with the 30-60 odd million Napster users (depending on who's stats you cite).

If even the illusion of control has been shattered, one might reasonably ask, what are the labels to do? First, consider that the labels have been giving up control for some time now and it has only made them richer. When you hear the question, "what are the labels good for anyway?," the typical answer is artist development, production, recording, manufacturing, distribution and marketing. Well, that was true at one time, long ago. But since, they've outsourced nearly all of those functions to various third parties, leaving them basically as music distributors.

So now they are once again faced with a question that they've asked themselves quite frequently over the years: "Is it more profitable for us to do it or someone else?" Should they leave music distribution to a new universe of players, relegating themselves to a rights clearinghouse? Then something Jim Griffin said put the question in perspective: "It's more about digital delivery than digital distribution." We'd all been assuming since the dawn of this digital revolution that the Internet was about transforming the distribution of music. When you had observed it's impact on communication in the form of email, it certainly seemed like a reasonable assumption. But the assumption neglects to take into account the full potential of the Internet, it's ability to personalize, contextualize, to be anywhere, anytime. The point is not how music will be distributed, but how it will be delivered, to my inbox, my Napster folder, my watch, my car, my toaster. Now asked properly, "Is it more profitable for us to deliver music or someone else?," the answer becomes much clearer.

My own take on control? I believe that p2p technology has uncovered the underbelly of the beast that we call the Internet. I believe that p2p will shift the relationship of control from the producers in the economic sense to the consumers. By turning a PC into a client /server, p2p transforms each PC owner into a producer and consumer with full and total control over its own distribution node. Yes, it is true, traditional producers do have something we all want, the music we love. But those producers are just now realizing that consumers also have something they need (other than our wallets): the ability to market and distribute that music to a much larger market at a fraction of the cost.


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