Thursday, February 21, 2008

Record companies and their Canute moment

A version of this piece was published in Marketing in 2008

The story famously associated with King Canute is most commonly interpreted as an example of hubris. But Canute was in reality smarter than this, attempting to demonstrate to his fawning courtiers that even he as King could not stop the incoming tide.

It seems though that the music industry has no such self-awareness. Like a bunch of people who’ve never heard of King Canute, its struggle continues to hold back the tide of illegal downloading that continues to rise.

Threatening to take single mums to court for their kids’ downloads, suing file-sharing site Napster, pursuing site after site, the business has fought tooth and nail to halt the growth of piracy and the file-sharing sites that feed it.

Despite all this effort, consumers have been voting with their mice – over ten million people sharing files on Pirate Bay (closed by Swedish police earlier this month), 26 million on Napster before it’s shutdown in 2001. Over a third of web traffic is said to be in the form of torrents (typically video files being shared between users), and the appetite for illegal downloads is seemingly insatiable.

And now they’ve dragged the Department of Culture, Media and Sport into building dykes for them to stick their finger into. A draft copy of the forthcoming Green Paper on the creative industries, quoted in the Times, set out the Government’s intention to force Internet Service Providers to “take action on illegal file-sharing”.

In other words, the idea is that ISPs will have to start to monitor not just what types of files are being shared by users, but the actual content (and presumably copyright status) of those files. Many ISPs already discriminate between file types, usually to ensure quality of service for users – data for a phone call has to be prioritised to avoid the sound breaking up, whilst an email arriving half a second later rarely makes any difference to anyone.

But this is quite different, because it will require ISPs firstly to spy on users, and then to punish them for infringing the law, withdrawing service from them and providing evidence to record companies.

The BPI has been lobbying for ages for this. Chief exec Geoff Taylor is quoted on their website calling for ISPs to partner with the music industry to help grow the creative economy, and accusing them of having “built a business on other people’s music”. Ignoring the fact that ISPs (and the internet) have been built on a fair bit more than just music, his proposed partnership is in reality a bit one-sided. ISPs will act as his police force, and he doesn’t propose to pay them for the job.

ISPs argue that like the Post Office and the phone companies, they’re ‘common carriers’ – having no responsibility for what they convey. That responsibility should remain with the user they say. This seems self-evident, but perhaps Mr. Taylor would contend that Tarmac should be held accountable for the development of the getaway car in robberies.

Whilst it’s disappointing that the Government seem to have been suckered into supporting this dummy, it’s perhaps not surprising of the music industry.

Digital represents a huge threat to their existing business model. It’s a threat that’s not going to go away, and a threat that’s only going to grow. But digital also represents an exciting set of opportunities for content owners.

New businesses will be built, new industries created and new fortunes made, and record companies are in a prime position to capitalise on the potential. Perhaps if the music business spent half the time thinking about how to build, create and make these that it devotes to trying to turn back the tide, it might have a chance of succeeding.

To achieve this, it needs to face forwards not backwards. And having an industry body called the British Phonographic Industry isn’t really much of a sign that they’re ready for that.