Photo: from Lammy831’s photostream , on flickr
BitTorrent, a perfectly legal Internet technology that enables the mega-speed distribution of content online for free, is used by music pirates illegally to monetise or sell music to which they have no right or permission to use.
Alymysto is a perfectly lawful Finnish industrial-rock band with a significant cult following and a frontman called Timo Vuorensola. He is also an established actor and director, whose recent action fantasy Iron Sky boasts international cinema distribution.
Despite these creative credentials in music and film, Alymysto is incensed by a perfectly legitimate court order in Finland that prevents internet users from accessing The Pirate Bay, a BitTorrent-powered website and one of the world’s most notorious for digital piracy.
As they include The Pirate Bay among sites used to promote their recordings, Alymysto say the ban will hurt their business. So, they have gone online to instruct fans how to side-step the blockage.
We may never know why Alymysto did not turn to the numerous music rights-protection and anti-piracy organisations for advice on legal alternatives for reaching their followers.
What is clear is that there is so much acrimony in the music business today, it is possible the band members said to themselves, ‘Don’t know when they’re likely to chill, so let’s go ahead and do our own thing’.
The recorded-music industry, arguably the most accessible of the creative businesses, seems packed with so many angry people, the anger can only hurt the very business it seeks to protect.
Music – what’s not to love?
Here is an example of what is at stake. In-between the admirable abs of the participating athletes’ fit torsos and the apps that made it the most digitally social global sports event ever, this summer’s Olympic Games in London was packed with music.
The nation’s Made-In-Britain international hits were on display at the Opening and Closing Ceremonies. We got larger-than-life live performances, from Paul McCartney, Dizzee Rascal, Emeli Sande and the temporarily reformed Spice Girls to Elbow, Muse, Ray Davies and the London Philharmonic Orchestra. The Closing Ceremony was called A Symphony of British Music, and that is precisely what it was.
So, amid all this love of and for music, what could be the problem? Actually, there are quite a few.
Battered and bruised
In terms of sales, according to figures from trade organisation IFPI, the global recorded-music business has seen its fortunes collapse from a potential $40bn high in the late 1990s. It fell to $16.6bn in 2011, a 3% decline from 2010.
The current generation of consumers, who see nothing wrong in getting anything for free online, are gradually discovering the growing number of legally licensed-music websites. But the amount they generate is not enough to compensate for losses caused by declining CD sales.
Nor should anyone underestimate the devastation that digital piracy can cause. Pirates are the worst enemies the creative industries can have. They have nothing to lose because they created nothing in the first place. And they gain money from selling ads on websites giving away the free music that today’s young consumers are addicted to.
But instead of uniting their efforts to attack the common foes, various music companies and organisations are taking a bite out of each other for a host of different reasons.
Unified against Universal
Take the most topical narrative of the moment. Universal Music Group (UMG), the US-headquartered multinational major music company and the world’s biggest recording label, plus its parent company France-based Vivendi have agreed to buy the UK’s EMI Music, one of UMG’s three major rivals, for £1.2bn.
The seller is Citigroup (also known as Citi), the US multinational banking group. Yes, a bank, part of the institutions being blamed for the current global economic slump. It ended up owning EMI last year after EMI’s previous owner, the British private-equity group Terra Firma, reportedly had problems meeting its loan obligations to Citi.
Should US and European competition regulators give UMG’s bid their blessing, its global market share will soar to a potential 40%-plus. That’s a massive chunk for one company alone. It will reduce its major-label rivals to only two: Sony Music Entertainment and Warner Music Group.
And the currently financially struggling EMI (an awesome British institution that is home to the much coveted Beatles catalogue, hits by Blur, KT Tunstall, Coldplay, Tina Turner, Beastie Boys, Robbie Williams, Massive Attack, Charles Aznavour and numerous more) will become a subsidiary of its former rival.
Unbridled ambition or music champion?
UMG’s competitors, especially the host of smaller independents that, combined, account for about one-fifth of the global business, have always distrusted planned mergers among the major labels.
This is despite UMG’s pledge to breathe new life into the financially-strapped EMI, give its artists stability to continue creating music, and offer greater clout when negotiating with the increasingly powerful digital music stores, especially the overriding market leader, Apple’s iTunes.
On the other hand, you cannot help but question the group’s laser-focused determination to own EMI. According to media reports, the confident company has agreed to pay for EMI by a given deadline – even if the regulators have not given their approval by then.
Furthermore, UMG is offering smaller European independent record companies, via their trade organisation Impala, first refusal and financial assistance, should they be interested in buying the European rights to EMI-owned labels that UMG would be forced to sell to obtain the regulators’ green light.
Now, there are claims that this is a ploy to divide and conquer the opposition and retain interests in the sold labels by keeping the US rights.
The response of UMG’s rivals, the big majors and smaller independents, is unequivocal. If their comments in the media and at trade conferences are anything to go by, UMG CEO Lucian Grainge and the company are the offspring of Satan and Machiavelli.
“Huge desire for power”, “creating no oxygen for innovation”, “controlling and killing the competition”, “damaging for all of us” and “an enormous monster” are some of the phrases that have been uttered. And they were not referring to digital pirates or investment bankers.
Independents agree to disagree
Then, all independent labels must be against the merger, right? Not if you are Patrick Zelnik, president of leading French record company Naïve and co-president of Impala, the independents’ organisation mentioned earlier.
He broke ranks and wrote an article in the Financial Times supporting the UMG/EMI fusion. Furthermore, it emerged that other Impala members supported the takeover bid, even though the organisation itself had publicly declared its opposition.
When James Palumbo, chairman of UK independent dance label Ministry of Sound, wrote about his support for the merger in London’s Sunday Telegraph newspaper, he admitted: “Over the past decade, as global sales have collapsed…, the industry has been engaged in a vicious fight for survival, often characterised by internecine warfare among its top people.”
He attacked the “internal squabbling” and “infighting” for being unhelpful at a time when the industry’s players should be unified in a bid to revive growth. Yet, in that same article, he referred to “hypersensitive artists and their rapacious managers and lawyers”, who are part of the same industry he is speaking up for.
The catfight over EMI’s fate is just one of on-going issues within an industry that needs to be bonded against external adversaries.
When BPI, the UK labels’ trade body, recently trumpeted that “digital overtakes physical in UK recorded music market” during the first quarter of this year, ERA (Entertainment Retailers Association), representing the physical and online stores that sell the music to customers, hit back.
“Such statements potentially mislead and alienate the biggest single group of music buyers in the UK – CD buyers,” an ERA spokesperson wrote on its website. Both music labels and retailers need and want a thriving industry and should be on the same side.
And the live-music industry is not immune to such wrangling. Concert promoters have been known to make uncompromising verbal attacks against secondary-ticket vendors. Yet both claim to want to rid the industry of touts that sell illegal or fake concert tickets that ruin the experiences of concert goers.
Why we should all get along?
No one is saying to err is human, to be a music-industry executive is to whine. But when that industry’s combined global revenues continue to fall every year, some kind of a united front must surely come in handy?
No wonder internet pirates brazenly continue to steal when they see the guardians of the crown jewels constantly bickering. No wonder a computer company gains a position of strength when negotiating for the license to sell some of the world’s ingeniously written songs on iTunes. No wonder EMI Music, a legendary institution by any standard, ends up, first, in the hands of a private-equity firm, before collapsing into the embrace of a bank, which can’t wait to get rid of it?
The world is moving on
What has all this got to do with Alymysto, the infamous Pirate Bay and BitTorrent technology?
Increasingly, established artists, such as US-based DJ Shadow, and unsigned acts are prepared to find legitimate ways to work with BitTorrent, which reportedly has more than 150 million active users despite its piracy associations.
In the world of media and entertainment, perception can be everything. If artists and their fans feel the industry has not got their backs, even when that is not true, they might listen to false prophets. As for the users of music — in advertising, movies, games, at fashion shows, sports events — the value they place on it must also be affected.
As the Olympics’ Opening and Closing ceremonies confirmed, the music business is one of the few creative industries able to embrace innovative newcomers, rejuvenate old classics, disrupt tired business models, encourage round-the-clock creativity and still remain… the music business.
Of course, there will be disagreements about the methods used to block the haemorrhaging of revenues. But vilifying each other in public just isn’t… creative.
Post originally published here by Juliana Koranteng, editor-in-chief of MediaTainment Finance, the business journal that covers investments in the international media, entertainment and the creative industries. Koranteng also curates Outside the Box, a midem-exclusive quarterly digest of key developments beyond the music business. Follow MTF on Twitter here, and Juliana here.