Memex 1.1

Terrific video by Matt Mayfield, a music teacher who is fed up with the way bands are compressing the dynamic range of recordings.

From his NYT column…

In 1994,… Esther Dyson, made a striking prediction: that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product — software, books, music, movies — the cost of creation would have to be recouped indirectly: businesses would have to “distribute intellectual property free in order to sell services and relationships.”

For example, she described how some software companies gave their product away but earned fees for installation and servicing. But her most compelling illustration of how you can make money by giving stuff away was that of the Grateful Dead, who encouraged people to tape live performances because “enough of the people who copy and listen to Grateful Dead tapes end up paying for hats, T-shirts and performance tickets. In the new era, the ancillary market is the market.”

Indeed, it turns out that the Dead were business pioneers. Rolling Stone recently published an article titled “Rock’s New Economy: Making Money When CDs Don’t Sell.” Downloads are steadily undermining record sales — but today’s rock bands, the magazine reports, are finding other sources of income. Even if record sales are modest, bands can convert airplay and YouTube views into financial success indirectly, making money through “publishing, touring, merchandising and licensing.”

What other creative activities will become mainly ways to promote side businesses? How about writing books?

He goes on to argue that — via Kindle-type devices — much the same will happen to book authoring. Hmmm…

This morning’s Observer column…

To date, three UK ISPs have signed up for the Phorm system: BT, Virgin Media - and TalkTalk. This suggests that Dunstone’s rage against the BPI may have impaired his capacity for joined-up thinking. On the one hand, he declines to monitor his customers’ behaviour at the behest of the music industry; on the other, he seems content to monitor their behaviour in order to take a cut from advertising whose targeting has been improved by such monitoring. It won’t wash, Charlie. Make a clean break and see how it improves your argument.

Update: Rory-Cellan Jones emails to say that Dunstone told him that Talk Talk will make the Phorm snooping something that users have to opt in to. If that’s true then it means the Phorm system is dead — it’s unlikely that BT and Virgin will not also make it opt-in for fear of losing customers to Talk Talk.

Neatly itemised here.

This morning’s Observer column…

The award for Fatuous Statement of the Month goes to Geoffrey Taylor, chief executive of the quaintly named British Phonographic Industry, aka the BPI. (Note for readers under 65: a ‘phonograph’ is an instrument that reproduces sound recorded on a grooved disk.) The winning statement reads: ‘For years, ISPs have built a business on other people’s music.’

Tim Wu has an intriguing piece in Slate Magazine in which he ponders the implications of AT&T’s announcement that it is seriously considering plans to examine all the traffic it carries for potential violations of U.S. intellectual property laws. (A similar idea is about to be foisted on UK ISPs by Gordon Broon & Co.)

“No one knows exactly what AT&T is proposing to build”, he writes. “But if the company means what it says, we’re looking at the beginnings of a private police state. That may sound like hyperbole, but what else do you call a system designed to monitor millions of people’s Internet consumption? That’s not just Orwellian; that’s Orwell.”

That’s just the civil libertarian aspect of the idea. The interesting thing is that the commercial downsides could be catastrophic — for AT&T.

The most serious problems for AT&T may be legal. Since the beginnings of the phone system, carriers have always wanted to avoid liability for what happens on their lines, be it a bank robbery or someone’s divorce. Hence the grand bargain of common carriage: The Bell company carried all conversations equally, and in exchange bore no liability for what people used the phone for. Fair deal.

AT&T’s new strategy reverses that position and exposes it to so much potential liability that adopting it would arguably violate AT&T’s fiduciary duty to its shareholders. Today, in its daily Internet operations, AT&T is shielded by a federal law that provides a powerful immunity to copyright infringement. The Bells know the law well: They wrote and pushed it through Congress in 1998, collectively spending six years and millions of dollars in lobbying fees to make sure there would be no liability for “Transitory Digital Network Communications”—content AT&T carries over the Internet. And that’s why the recording industry sued Napster and Grokster, not AT&T or Verizon, when the great music wars began in the early 2000s.

Here’s the kicker: To maintain that immunity, AT&T must transmit data “without selection of the material by the service provider” and “without modification of its content.” Once AT&T gets in the business of picking and choosing what content travels over its network, while the law is not entirely clear, it runs a serious risk of losing its all-important immunity. An Internet provider voluntarily giving up copyright immunity is like an astronaut on the moon taking off his space suit. As the world’s largest gatekeeper, AT&T would immediately become the world’s largest target for copyright infringement lawsuits….

Tim Wu is a great commentator on this stuff, and this is an especially good piece.

Useful piece in the current issue of the Economist about the woes of the music industry. It opens with a salutary tale:

IN 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realised the game was completely up,” says a person who was there.

In public, of course, music executives continued to talk a good game: recovery was just around the corner, they argued, and digital downloads would rescue the music business. But the results from 2007 confirm what EMI’s focus group showed: that the record industry’s main product, the CD, which in 2006 accounted for over 80% of total global sales, is rapidly fading away. In America, according to Nielsen SoundScan, the volume of physical albums sold dropped by 19% in 2007 from the year before—faster than anyone had expected. For the first half of 2007, sales of music on CD and other physical formats fell by 6% in Britain, by 9% in Japan, France and Spain, by 12% in Italy, 14% in Australia and 21% in Canada. (Sales were flat in Germany.) Paid digital downloads grew rapidly, but did not begin to make up for the loss of revenue from CDs. More worryingly for the industry, the growth of digital downloads appears to be slowing…

From the New York Times

LOS ANGELES (AP) — Album sales in the United States plunged 9.5 percent last year from 2006, as the recording industry had another weak year despite a 45 percent surge in the sale of digital tracks, according to figures released Thursday.

A total of 500.5 million albums in the form of CDs, cassettes, LPs and other formats were purchased last year, down 15 percent from the unit total for 2006, said Nielsen SoundScan, which tracks point-of-purchase sales.

The decline in album sales drops to 9.5 percent when sales of digital singles are counted as 10-track equivalent albums.

The number of digital tracks sold, meanwhile, jumped 45 percent, to 844.2 million, compared with 588.2 million in 2006, with digital album sales accounting for 10 percent of total album purchases.

Overall music purchases, including albums, singles, digital tracks and music videos, rose to 1.35 billion units, up 14 percent from 2006.

Music sales during the last week of 2007 totaled 58.4 million units, the biggest sales week ever recorded by Nielsen SoundScan.

The recording industry has experienced declines in CD album sales for years, in part because of the rise of online file-sharing, but also because consumers have spent more of their leisure dollars on other entertainment, like DVDs and video games…