Hunziker Like the Wolf
At the beginning of the 20th century, broadcast radio as we know it today was on the brink of oblivion. The problem facing it should sound familiar: Songwriters and music industry officials widely considered the new medium to be a serious threat not only to their revenues but to the viability of the music business and intellectual property rights themselves.
Within a couple decades however, you couldn't find a Hooverville in all of the United States without a Firestone Air Chief\ (racially insensitive radio models were very popular during the Art Deco period) and an Orson Welles-conducted newscast had thousands fleeing their homes in confused anticipation of some kind of Nazi/Martian invasion. The difference was a simple reevaluation of copyright law that turned the music industry's perceived enemy into its valued ally, providing a steady source of artist royalties and advertising.
Less than a century later the music industry may be on the verge of a similar shift, and when and if it comes, it will be long overdue. While the big record labels' claim that file-sharing is destroying their business is doubtful at best (many experts claim the opposite: downloading helps sales), what is clear is that the recording industry is in a financial jam, claiming annual losses in the billions.
Experts blame the music business' predicament on its own inefficient business model, the search for an alternative has intensified, and in recent years a study of history has produced the most promising candidate: collective licensing. The idea comes from the radio and cable television industries, which have both relied on it from the beginning. An agency representing artists collects fees whenever a copyrighted work is played and passes them along to the creators. With radio, advertising generates the revenue to pay royalties. Cable TV combines this with a subscription fee.
A collectively licensed music industry, as the Electronic Frontier Foundation has proposed it, would be funded entirely by subscription.
Similar to cable, users would pay a monthly fee for access. In return they'd be able to legally share music on any person-to-person network for no additional cost. The money generated by the subscription fees would be divided up among artists based on the popularity of their music.
The advantages to both consumers and artists are numerous. First off, the lack of middlemen means that a relatively low subscription fee would be enough to keep the industry afloat. The EFF (estimating 60 million users) proposes $5 a month, which over a year would add up to the cost of about 3 or 4 albums per user (2.5 at Sam Goody). Second, consumers would have easy access to a virtually unlimited amount of music. For the artist, this means much more freedom in dealing with labels—no more concerns about distribution or airplay.
Of course, even assuming that it would be economically viable, this idea presents a number of problems. Since the amount of money taken in would be set by the number of subscribers, artists would be competing for an absolutely limited sum of cash. If the total number of bands increased but the number of subscribers did not, then artists would all essentially suffer a loss of income.
Practically speaking, switching voluntarily to collective licensing would also likely mean big music labels signing their own death warrants, as the convoluted system of distributors, radio promoters and marketers that maintain their dominance would be weakened, if not completely finished.
On this note, collective licensing requires a change of attitude for consumers as well. An easy, new source of income for artists would mean less reason to continue with the costly business of manufacturing and distributing albums. If the legitimate center of the music business moves online, not only the record store but the album format itself may become things of the past. Still, the fact that this would reduce the risk of having to suffer through another Nickelback CD might just make it worth the chance. Never again.
Contact Matt at hunziker@wisc.edu and tell him to stop outsourcing jobs.
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