The Telegraph
Since 1st March, 1999
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- A new, web-based system of music promotion is now needed

Berlin is a great city for Western classical music. It has Philharmonie, the ultramodern home of the Berlin Philharmonic Orchestra. It has Schauspielhaus, an 18th-century gem of a theatre which is now devoted to classical music. It has Deutsche Oper, the opera house in West Berlin; and Deutsche Staatsoper, Kaiser Friedrich’s opera house on Unter den Linden. And as if two opera houses were not enough, it has Komische Oper, the little operatic theatre round the corner from the Staatsoper. Apart from which there are dozens of chamber music concerts around the city every week.

But the prices of concert tickets have at least doubled since I was here three years ago. For a small but wealthy section of the Berlin population, going to a concert or an opera was a social ritual. With the music went the dressing up, the smoked salmon sandwiches and champagne, and the promenade during the interval, when one greeted one’s friends and watched what the others were wearing. Now that tradition has become dearer. One of the reasons for the worsening economics of classical music is falling sales of CDs. There is so much free music on the web that no one needs to buy a CD unless one wants a particular rendering. Recordings of Klemperer or Barenboim probably still continue to sell. But the newer conductors of the German Philharmonic Orchestra — Claudio Abbado, Riccardo Muti, and now Sir Simon Rattle — have not become legends in the same class. They may some day; but meanwhile, sales are suffering. Recording companies have raised prices in response to falling sales — and that has not helped sales. The orchestras’ income from recordings has fallen; that is an additional reason why ticket prices have gone up.

This is what is happening in a microcosm of the Western musical world; but by far the biggest chunk of commercial music in the West is popular music. There are some 3,000 recorded groups on a conservative count. The stock of music grows at a snail’s pace in classical music; in pop music, its growth is limited only by the recording companies’ willingness to put out titles. You may have heard of Britney Spears, Kylie Minogue and Jennifer Lopez, but there are also Confuse Derection, Placebo, Incubus, Widespread Panic, Half Man Half Biscuit, Nine Inch Nails, Grand Funk Railroad, Erratic Fools, Bare Naked Ladies, Delirious, Alien Sex Fiend, The Abandoned Nutsack, Backside, Aw Yeah, and Sick of It All. All these make up a $30 billion industry. It has lost a fifth of its sales in the past five years.

The threat first emerged in the form of Napster, which offered free downloads. The recording companies sued it and won. Nowadays, Napster offers unlimited downloads from its 700,000 titles for $9.95 a month. But Napster has been dwarfed by the newcomer Kazaa. Kazaa does not offer music at all. It offers software which will enable its user to locate the music he wants on another user’s server and to download it; this peer-to-peer exchange of music was held legal by a federal judge in the US in 2003. Kazaa offers two services — one which costs $29.95 and contains no advertisements, and another free one financed by advertisements. It mediated 1.37 million downloads in a week in June, and 354 million since it started. Music Download Central, on the other hand, charges 99 cents a month for a year or 75 cents a month for three years. It has over 5 million members, 967 million music files and 238 million movie files being shared. OD2, a British mediator, sells half a million songs a month. There are many other internet sites that offer songs at 75c-$1 each. Napster, Kazaa and the like are simply mediators, like eBay; they are not producers or marketers of music. But they have shown a way to market music which others are taking up. The most daring imitator is Apple. It invented a little 5.6-ounce pocket music carrier called iPod which can carry 10,000 songs — enough to play non-stop for a month, or one new song a day for 27 years. And just in case you fall asleep while listening, it embodies an alarm clock.

This iPod can be loaded for a subscription with songs from Apple’s iTunes site, which offers 700,000 songs. Apple has enrolled five major record companies and 450 smaller independents, which make their music available on iTunes. It offers equipment which enables the music from iPod to be played on one’s home music system, or to relay any of a thousand American radio stations on it. And it offers an encoder which gives CD quality on the iPod.

Thus for the first time in a century, record companies are facing competition they cannot vanquish. They have been an oligopoly throughout; that oligopoly is now threatened. And with it will go their power to make or break music-makers. The few record companies limited the number of music makers in the market. Their power to do so will wither. Is their end the beginning of free competition' It is very likely that before long, thousands of music-makers will begin to offer their music free on the web. Many will make a local reputation. Some will also draw an international audience. But no one can live on appreciation alone; and as the number of music-makers multiplies, appreciation will become more difficult to win. Hence a new, web-based system of music promotion must come into existence. It will differ from the present system in three ways.

First, distribution of music will be largely online, though it may spawn a downstream CD or iPod industry. Its seeds have been sown by iPod. Apple is a pioneer; it will be followed by other online music intermediaries. The record companies will not die; they too will adopt this new model. A new oligopoly will form. But it will be different from the present one. The marginal cost of delivering music to the listener has fallen dramatically.

In the future, music will not be sold by the CD. It will be sold by subscription. Join a club and get your fill of the music you fancy. Second, copyright will become unprotectable, and must fall by the wayside; and with it, the present system of music distributors taking away performers’ copyright and controlling it. Membership of a club will give listeners a right to listen to a player or band or orchestra first; but the rendering cannot be prevented from leaking out to others. Hence there will be no permanent rights; performances will be sold to distributors for a fixed initial price, and there will be no royalties. And finally, if no label or recording lives for too long, the demand for music per unit of time must increase. Music will become transient, but there will be much more of it. And in it lies the chance for new talent. Instead of listening to the same old bores again and again, we will be regaled by youthful hordes whose enthusiasm outruns their competence. It is happening already before our eyes.

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