Tuesday, 15 July 2008

Free PS3

A quick post just to say 'ha!' to the customer service operative who works for 02 customer retentions.  The Playstation 3 did arrive as part of the mobile phone deal I ordered, despite the scorn and disdain he poured upon me when I asked to cancel my 12 month contract.

Not only did my free PS3 arrive but it came with a free game (Gran Turismo 5 Prologue) and a free Blu-Ray movie (Spiderman 3).  Add that to the two free handsets that came as part of the package and I think I did alright.  I managed to get a cheaper deal with Orange than O2 offered with more texts and more than enough voice minutes for my needs.

The O2 operative also offered me a year's free line rental with my old network just so the company didn't lose a customer.  Result.  That sets me up nicely for the PAYG iPhone 3G in November.  Ha!
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MAC281 essay help

I've been AWOL for a while and this post is mainly for the benefit of my students attempting one of the essay questions I set for MAC281 Cybercultures on the music industry in the age of the Internet, so apologies if it is a little niche. I've just typed a long email response to one of my students and I figured instead of retyping the advice every time someone asks about the question, I'd post the advice here and refer them to it.

The essay question at hand goes like this:
“Illegal file-sharing has been a key factor in the recording industry’s 22% worldwide sales declines between 1999 and 2004 (Source: IFPI), and the halving in size of the British singles market over 1999-2004 (Source: BPI).” To what extent is file-sharing a response to the failings of an industry predicated upon an outdated business model?
For any of my students attempting this question I recommend the following:
  • The first place you should go is to WebCT/SunSpace for MAC281 in 2007-8 sem2 and download my lecture slides just to get an overview of the material and keep it fresh in your mind. (I will upload them to the web publicly later and link to them)
  • The second thing you should do is read the 2 articles I mention in the sessions in order to get a good overview of the major arguments:
  • - Andrew Leyshon, Peter Webb, Shaun French, Nigel Thrifty and Louise Crewe, 2005, ‘On the reproduction of the musical economy after the Internet’ in Media, Culture & Society, Vol. 27 (2): pp 177-209.
  • - Chris Rojek, 2005, ‘P2P Leisure exchange - net banditry and the policing of intellectual property’, in Leisure Studies, 24: 4, 357-367.
  • I also recommend that you visit the websites of the major bodies who act on behalf of the music industry:
  • - IFPI (global)
  • - BPI (UK)
  • - RIAA (US)
  • These sources are useful for getting an idea as to how the music industry functions, and also, how it looks to blame their decline in sales/profitability on the rise of the internet
  • For an alternate perspective to the music industry, it might be worth spending a little time reading some of the reports which appear on the 'pro'-filesharing (I use the term 'pro' loosely) sites like the ones below:
  • - TorrentFreak
  • - Zero Paid
  • - RIAA Radar
Once you've done that then you should have a wealth of material to help build an argument.

Now essentially this question is asking you to think about the way in which the present music industry is organised. My lecture notes cite the BPI which give a very short definition of how it works - 'find, fund, promote,' etc. This is a great starting point. You might want to contextualise the music industry today - its pretty easy to find figures on things like total sales data of things like CDs.

It would be handy if you could identify who the big music labels are and explain how they get their money - think of the typical cost of a new release CD - who gets the biggest cut, how much do artists make etc? With a little background digging you'll find that the music labels and the multinationals they are part of have an active interest in owning the intellectual property of artists, which they can then license to various groups:
  • - The PPL gather revenue from selling licenses to shops, bars, etc so that music can be played there and that the labels/artists get paid
  • - Every CD a consumer purchases is a license to play the music, not to OWN it (the labels OWN it, and they let us have a copy we can listen to - hence it is technically illegal to rip the legit CD to a computer in order to put it on our MP3 players!)
  • - Radio stations (both live and online like Last.FM) have to pay to play
  • - etc
The issue here is on ownership - the music industry is predicated on owning ideas (music) which is then sold as a license to all and sundry. The industry is always looking to make money from these licenses. Artists are lucky if they get a fair deal, but they need the support of big labels in order to get heard (or at least, this is how the old business model used to work)

In recent years, the profitability of music has declined (although some might dispute this - the BPI seem fine at the minute!). However, most of the blame is laid at the door of the internet which has made it very easy to made duplicates of an original copy and share them (as mp3s). What this has done is its effectively undermined the power of the record labels to control the distribution of music, and subsequently removed their powers to set prices for access.

In the past, if someone wanted to buy a CD of an obscure band they'd have to go through a big store like HMV and order it from a parent label and pay a premium. The easy availability of music on the web had radically threatened that situation. Now, if one person rips that CD to mp3 and then shares those files, there is no limit to the amount of times those files can be replicated. Bye bye goes the major label power to charge for access and claim profits.

The internet has transformed the way in which the music industry has to behave. You might argue that it took the industry too long to adapt. It took a computer firm to actually compete with the pirates (Apple's iTunes) by making choice and availability at affordable prices the new model. The majors labels are not very happy with iTunes (they see it as too big and powerful, owning too much of the new digital landscape), but they are attempting to reposition themselves in a new market place. You can now buy mp3s from places like Amazon and Play.com. You can still get music for free from the PirateBay.

The industry has done a few things to play catch up which are worth mentioning:
  • prosecution - it has attempted to catch pirates and make them pay in the courts
  • competition - the labels are looking to sell their music as mp3s in lots of places
  • platform convergence - the music industry is looking for new avenues to promote and sell music (think MySpace, the upcoming Facebook Music, Last.FM, Napster subscription, licensing songs for movies and games like Guitar Hero)
  • alternative distribution - some musicians (Radiohead, Girl Talk, Nine Inch Nails, etc) are even cutting out the major labels and selling direct to fans in order to cut out the major label middleman
All of these points are relevant. You need to ensure that your argument touches on these points. Mainly, you need to argue that the old business model wasn't suited to the new media environment. They are now beginning to realize that people want their music on MP3 as well as/instead of (?) CD. It might be worth mentioning the popularity of the iPod too - there is money in music, it is just a little less obviously hierarchically controlled than it used to be even less than a decade ago.

Friday, 4 July 2008

Virgin says "no" to disconnection

This story is taken from TorrentFreak who are reporting that there is very little chance that they will follow through with the threats to disconnect their customers suspected by the BPI of participating in illegal filesharing. The original source of the admission appears over on the BBC Newsbeat site who claim there is "absolutely no possibility" that Virgin Media will take legal action against their customers.

This comes on the back of stinging criticism against the ISP who have issued 800 letters to customers over the last month warning them not to use "unauthorised peer-to-peer networks" like BitTorrent or Limewire to swap copyright protected files. The BBC have footage of a customer, Will McGree of Cardiff, who has been issued with one of these letters but denies its accuracy (a point I mentioned here yesterday). It seems difficult to reconcile both positions when Virgin Media are clearly bowing to pressure from the BPI, despite a lack of sufficient evidence.

Virgin have claimed they will not hand details of their customers details over to the BPI but it remains to be seen if they can be trusted to keep their word on this matter, especially since their associated business include music interests. Combine this with the fact that many ISPs (Virgin included) have been overselling their subscription capacities (and maximum download speeds) and are desperate to curb excessive bandwidth users and the picture looks less clear.

Disputing claims as to who downloaded what and when will soon become harder to contest if new Deep Packet Inspection (DPI) become the norm in places other than just Sweden. Until recently, the processing power required to inspect data packets has made this prohibitive, especially if they were encrypted (torrent files), as it required computers with massive computational power. Again, TorrentFreak carry the story:
"The other, arguably more sinister usage of DPI, is the growing interest by advertising companies to use deep packet inspection to observe what Internet users are doing. Watching your browsing activity, you can gain all kinds of insights into the user behind the keyboard. Similar to spyware, but on your line not your system, it’s not a good thing, and impossible to remove. Worse, it may be able to tell who is behind the keyboard at the time, by identifying trends in connection behavior."
Irrespective of filesharers, this kind of privacy invasion should have us all worried, especially if it is prone to abuse. It seems like hiding traffic in SSH VPN tunnels is now no longer a feasible alternative. Even our YouTube activity is under threat. The EFF have more info about the move which gives Viacom a lot of data to play around with. If ever the digital rights of the planet were under threat then it's now.

Thursday, 3 July 2008

BT joins Virgin Media in music sharing clampdown

It seems like the stakes have been raised in the cat and mouse game that is the music industry versus the pirates (aka the customers). BT have announced that they are about to go down a similar route to Virgin Media and start to issue warning letters to web users suspected of downloading music files without the permission of the copyright holder.

In the interests of full disclosure, much of this post is comprised of material from 2 articles over at The Register which you can find here and here

An article over at The Register suggests there is an increasing consensus forming between ISPs and the music industry. Geoff Taylor, chief of UK record industry trade body the BPI claims,
"Everyone agrees on where we need to be, and we are working closely with our colleagues across the music community, the more progressive ISPs, and government to get us there."
So how is this processes panning out? In brief, an agent working on behalf of the BPI will search file-sharing networks for files labelled as music and harvest the ISP address of the computer hosting it. They will then time and date stamp the file and contact the ISP responsible for hosting the customer. The ISP will then issue a warning letter or two (one from the BPI and one from the ISP) warning the customer about the illicit nature of the behaviour. One of the letters may hint at a possible disconnection. It would seem that the ISP odes not relay customer details back to the BPI (for now).

TorrentFreak have a host of articles describing the rather dubious nature of the accusatory methodology employed to 'prove' that file-sharing activity is what it seems to be, with some IP addresses that were supposedly participating in piracy were actually attributed to network printers. Hardly fool-proof evidence.

The threat of disconnection is the preferred deterrent of record industry in its battle against the filesharing of music. It has pressed hard for "three strikes" process, and has the support of the UK government, who do not want to interfere directly, to come to a voluntary agreement with ISPs that satisfies both sides. There are similar plans afoot in other European countries (eg France, Netherlands, etc) to implement a "three-strikes" approach despite the MEP Guy Bono report on the Cultural Industries condemning this approach.

In order to make this activity attractive to ISPs, the BPI have been proposing that the music industry comes up with more innovative ways to make money from the sector, by offering better services, which may benefit the ISPs via increasing customer retention. The decision to threaten customers with disconnection seems counter to that ethos but there may be some new ventures ahead.

A recent press release from the BPI suggests that new business models are proving successful:
"record company revenues outside direct sales of music increased by 13.8% to £121.6 million in 2007, from £106.9m in 2006. These additional revenues now account for 11.4% of record companies’ domestic income."
Retail sales are the traditional avenue for income generation but this is clearly changing. Digital sales and licensing are helping the industry, but newer services are also proving attractive. These include generating income from:
  • Synchronisation licence income - associated use of music in games, adverts and films
  • Broadcast and Public Performance Licensing (PPL) - getting income from venues which play music publicly
  • Multiple-rights deals ("360 degree deals") - deals which generate income from merchandising, touring, image rights, sponsorship and digital products like wallpapers for mobile phones
Such practises are believed to have resulted in a 16.2% increase in revenue generation in 2007. These service may soon be complemented by legal file-sharing services in the near future, once complications have been ironed out. It would seem these services could be very different to the types of subscription services ran by Napster in which artists would awarded on the basis of popularity. Music sales have long since been on the decline whilst the popularity of music has remained (see the slide courtesy of The Register).

When the industry introduced the CD format it allowed for the renegotiating of royalties, but with the death of the CD in the face of unlicensed filesharing, the industry is having to look to alternate methods of revenue generation, which may lie in the restructuring of licence deals in as similar vein to the model employed by Last.FM. However, the decision by Warner Bros to pull their content from the service in a dispute over royalties may highlight just how far this matter has yet to go before being resolved.