Simon Wheeler, Beggars Group

The internet solves more problems for the distribution of media than it creates, to look at these new technologies in any other way than an opportunity means that you will miss the benefits and be more wrapped up in the problems

By not trying to make more of the opportunities, the industry has ceded ground catastrophically to those who want to take advantage of the benefits that digital distribution can bring, without dealing with the rights, or value, that the industry has created. By not licensing the original Napster, the industry lost a massive chance to harness the efficiency of p2p and so pushed it out to be the decentralized world of today, it wouldn’t have been pain free, but it would have likely been less painful that the previous 10 years that we’ve experienced and we would probably would have had a significant revenue stream that would have grown sooner and faster than what we have experienced

P2P downloads are a part of our problems but not the sole cause, file hosting services are a significant issue now for the industry, and indies in particular as we don’t have the resources to address these services effectively, this hurts most in the key pre-release window.

The main cause of the declining revenues in my view is two fold, one is the format shift to digital, turning a £10 purchase into a £0.79 purchase but its coupled with a decline in A&R; where 1 or 2 radio tracks were enough to drive album (CD) sales, that no longer applies in the digital track world, until the talent side of the industry realises that low/no attachment artists are never going to be significant album artists this is going to continue.

People have no stopped buying albums, people have stopped buying albums that only contain 1 or 2 tracks that they want, equally, if you have no emotional attachment to the artist then just grabbing a track from p2p is the most efficient option for a lot of people.

Government intervention in business is usually never desirable for any of the parties involved, but it seems to have become a necessity to get the right people talking, I don’t believe that a fee, or tax, on anyone’s connection bill is going to answer our problems as It doesn’t create any value for anyone in the chain, including the consumer.

I firmly believe that creating value added services based on frictionless movement of music between users is the best solution for the music industry and for ISP’s
Only by bringing ISP’s or Telco’s into the value chain can we develop meaningful music based services that bring in enough revenue to reward the creators and provide a compelling alternative to the blind and dirty (but free) exchange of files that currently exists.

ISP’s and Telco’s are already commodities, even though they rarely will admit that, for them to develop stand out businesses that are not only competing on price they must be part of the content / distribution business. I’m not suggesting that they all start content businesses, as so far we have learnt that they do not generally have the understanding or skills to enable this, but there are now more and more companies who can enable their businesses to create value based on content and differentiate themselves in the marketplace

Its not true to state that the internet doesn’t recognise geographical boundaries, and most online markets that I have experienced have a real local flavour, and we should be acutely aware and celebrate the many and varied cultural differences and not try to put everything in box, although it would be much easier if we could do so, however, the totally fragmented licensing regime is not conducive to scaling a business, Europe is a great but sad example of this fact.

Getting a truly global licensing structure for the industry is probably a pipe dream, a one stop shop for the world is a fantasy, but there does need to be some form of collective to make it easier for users to make the business money.

The first step towards simplicity would be a global repertoire database where it would be possible to find out who owed the rights you wanted to license, or wanted to pay, there’s arguments for making this open, but as long as its not hidden away as private industry property and available for querying for a reasonable fee and with reasonable re-use terms then it could be an extra-ordinarily strong asset to help the industry progress.

While there are some good examples of collectives, unfortunately the history and present of collective licensing has not been transparent for many, in some cases there are personal vested interests, others are cultural vested interests and the usual commercial vested interests, its going to be very tough indeed for a body to handle the collective in a way that is transparent and doesn’t disadvantage one constituency over another. It is this trust and transparency which will be essential to any collective work along with the support of the differing anti-trust regimes that are in place around the world to work collectively to provide an offering that benefits business and the consumer.

Simon is Director of Digital at the Beggars Group and has been licensing digital services since 1997, licensed the original Napster and has since worked with almost every significant entity in digital media. He chairs AIM’s New Media Committee and has spoken at most music conferences around the world, but concentrates on keeping the Beggars Group of labels at the forefront of all new technologies to deliver its award winning roster of artists to the widest possible audience.

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