6 Music Recording, “Sharing” and the Information Economy

“I definitely wanted to earn my freedom. But the primary motivation wasn’t making money, but making an impact.” — Sean Parker, Napster co-founder, Spotify board member and former Facebook president

The Recording Industry as Harbinger of Digital Disruption

By reputation, the recording industry is rife with schmucks and cheats, gangsters and goons. It is also one of the most important cultural industries of all time. Popular music reflects and shapes our culture, provides a soundtrack for our lives and loves, and builds the emotional framework for our best and worst moments. Some music producers have a reputation for being unscrupulous and for caring more about making money than making music. Mob involvement in the industry is well-documented. This is not to say that the industry is completely corrupt; it is true, however, that corruption is an ongoing problem.

Still, most of us have a favorite genre of music and at least a dozen favorite artists. It is rare that you will love a film but hate the soundtrack. It is more rare, perhaps, to find a person who cannot tell you which songs were popular when they were in high school and what kind of music they would like at their wedding reception. For a speed run through the history of popular recorded music, check out this video. The link goes to a YouTube presentation tracking the “Evolution of Popular Music by Year.” The list of performers can be found in this blog post, which notes the gender balance in pop music over the years, as well as a few other brief highlights.

This chapter about recorded music focuses mostly on the changing industry. But as you consider the industry from an academic perspective, don’t lose sight of your relationship with music. What you enjoy is an expression of yourself and of your personal culture. Preserving the emotional impact of music should concern us all, even if we are more or less enthusiastic about preserving the old order of the recording industry and the interests of the Recording Industry Association of America (RIAA).

Recording Industry History

The RIAA built a reputation for suing individual users of file sharing sites for making songs protected under copyright available to other users. A discussion about recorded music in the digital age quickly becomes a discussion about copyright. The RIAA is a trade organization. It was formed to protect record labels and their products. It fought file “sharing” — the free digital distribution of music files, most often in MP3 format — with limited success in the early 2000s. By suing consumers for making music files available online, the Association cracked down on digital music piracy somewhat, but it also angered a generation of music consumers. Around the same time that the RIAA became known for suing users for sharing music, it was sued for alleged antitrust violations related to downloading services the industry had launched. Specifically, record labels were accused of artificially inflating the prices of music downloads on services they had established. Since the U.S. Supreme Court decided to let the case proceed in 2011, it appears from an exhaustive web search that the case is still pending. Music distributors lost a separate $143 million case that found they illegally inflated the price of CDs in the late 1990s. The RIAA is both a staunch protector of artists’ copyright-protected material and a monopolistic trade group.

A Detour Through Disney to Discuss Copyright

View the video below for a unique take on what copyright is and how it currently functions. The film does not argue that the illegal downloading and sharing of music files is fair use, but it does suggest that intellectual property copyright protections might be designed to protect corporate profits over creative endeavors.

There will always be a battle between creators, who value the disruption of previous regimes in favor of developing new products on new platforms that remediate previous works, and original producers, who want to preserve the right to earn money from their creative works. As a reminder, remediation is taking existing media content and concepts and using them in new media platforms. It may include mashups of existing content, sampling, stacking and compiling. Remediation works with many forms of media, but much of the content that cutting-edge creative producers want to use is still under copyright. At issue is under what circumstances is remediation considered fair use of material under copyright and under what circumstances does remediation violate copyright. This text does not offer a simple answer. Please note, however, that this text itself is presented on an open platform with a CCBY copyright license. The author was not paid for creating this text, but if others can rework parts of it into profitable products, that is allowed. This ensures that this text will always be available for all to use, repurpose, build on or subtract from. The author works in a nonprofit academic setting, and the incentive is to earn tenure by publishing this and other works. This form of publishing under a Creative Commons license is growing in popularity, but it cannot be expected of those working in for-profit media industries.

At the root of copyright law is whether a new work hurts the market value of the original work (assuming the original is not yet in the public domain). This question is sometimes settled on a case-by-case basis. Before students as would-be disruptors begin to think the system is unfair, they must remember that their own products will be protected by copyright. Weak copyright law makes it easy for works to be altered slightly and republished with little or no gain going to the creator. Aspiring mass communication professionals often find themselves tied in conceptual knots over how to think about copyright law. A few suggestions: Obey it without letting it stop you from producing works you love. Work around violations and assume your digital work will be open to disruption and copying the moment it is made public.

The film Downloaded directed by Alex Winter (Ted of Bill & Ted fame) documents the battle between the founders of Napster and the RIAA in the first major intellectual property battle of the digital age. The entire recording industry was shaken up by young college students who identified as hackers. The RIAA won the battle against Napster but lost the war against digital music sharing and the formation of digital music platforms. Apple’s iTunes legitimized digital music sharing. Spotify and Pandora created legal means for people to consume mass amounts of digital content for free. For a fee, you can usually access most of the music you want, and you can create playlists from massive music databases that put pre-digital download music collections to shame.

On the other hand, there has been something of a backlash against digital music downloading as a new generation of audiophiles discover the LP record as a means of owning physical copies of the music they love. Records can be owned and cherished, but they are also cumbersome. Digital music is ubiquitous but the sound quality is often lacking, and maintaining a digital library takes effort and often an investment in cloud storage. One way or another, if you want to hold onto recorded music for your own personal use, you are probably going to have to pay. Even if you use YouTube as your own personal music collection, when you search for a specific song you will often pay with your attention by watching pre-roll ads.

The recording industry and many artists would argue that of course music should not be available for free. It costs time and effort to create popular professional music. On the other hand, the recording industry is notorious for not paying artists. Much of the money to be made in professional music comes from live performances and merchandise sales. An option for artists is to release their music for free and use it to garner attention and bring people into live shows where they can sell apparel, artistic LPs and CD box sets to “true” fans for a greater percentage of the profit.

As consumers, you should be aware of where your money goes when you pay for music and who benefits from the attention you pay to advertisers when you do not pay for music. The popularity of Pandora and Spotify helped drive radio broadcasting conglomerates to act more like streaming services. The iHeartRadio app, for example, is a paid app that gives you a digital connection to a host of radio stations. It takes something that was free — over-the-air radio — and makes it a paid service, albeit with added features and convenience.

The broadcast industry will be discussed more in the next chapter. For now, it is enough to understand that in the history of broadcasting in the United States, there is a long tradition of production and distribution companies either directly collaborating or being one and the same. The people who made radio also made recorded music or had close relationships with those who did, and they could determine what music and other programming went over the air. This is different from agenda setting where messages in the mass media can set the bulk of the public’s political agenda. This is a matter of keeping messages off the air that are considered too disruptive or radical. In some countries, the airwaves are directly regulated by the government. In the U.S., closely watched monopolies give the appearance that the government is not censoring music, but in essence, the monopolies do it for them. Before there were Napster “pirates,” there was pirate radio. The freedom for an individual to play the songs they want to play when they want to play them over the airwaves for public consumption has not existed since the very early days of radio. Consider this the next time you build and share a Spotify playlist (or, if you’re old school, make a mixtape).

Music monopolies existed with government support and were justified as being necessary, particularly during times of war when leaders wanted to keep tight control over messages. When political will built up in support of splitting mass media monopolies in favor of protecting the intent of the First Amendment, antitrust laws were used; however, if history shows anything it is that powerful people in media seek to consolidate their power. In other words, we should expect music broadcasters to attempt to form monopolies, even as existing radio broadcasting conglomerates such as iHeart Radio face hard times.

Music, Culture and Lessons of Disruption

The film “Downloaded” is more than just a history of Napster. It briefly traces the transition of the media field from an industrial manufacturing production model to a digital service model. The next few sections of this chapter explore this evolution.

The implications of this shift are difficult to explain in a few passages, but some important details are the social nature of Napster; the rhetoric of “sharing”; the age and sophistication of the innovators in the Napster versus RIAA case; and the response from industry bosses, artists and the public.

The recording industry is one of the first media industries to undergo this dramatic change in their primary focus from producing tangible goods to producing digital media and trying to profit from it at similar levels. It was difficult for the established corporate interests — especially the record labels, record executives and the RIAA — to switch from the industrial production of CDs and other materials to the production of digital music for download and streaming.

The transition was disruptive for the creators of Napster too, who took years to recover after losing to the RIAA in the epic lawsuit covered in the Downloaded film.

The recording industry was not by any means the last industry to be challenged by digital technology. It is necessary to very briefly trace the history that undergirds this discussion for readers to understand what is meant by “manufacturing model” and “digital service model.”

Industrial Production and Media

As referenced in Chapter 4, the industrial manufacturing boom in America and the mass media revolution took place at about the same time.

Before the manufacturing boom of the early 1900s came the early Industrial Revolution. It took approximately half a century to take shape, beginning in the late 1700s and continuing through the early 1800s.

Steam power became viable in the mid-1800s. Electrical power was used in manufacturing in the late 1800s, which further accelerated the revolution. Electricity production and its application increased immensely throughout the 1900s.

The Industrial Revolution was largely made possible by a shift to capitalism. It was often a matter of rapid and dangerous development, but at times, manufacturing growth progressed more steadily. A lack of regulation under capitalism has helped manufacturing to grow quickly in some parts of the world, but unregulated manufacturing takes a toll on people and the environment.

Average incomes increased greatly during the Industrial Revolution, but so did wealth disparity.

One thing media professionals should note is that averages do not always mean much to the average person. If average gains for a group include a small group of very high numbers and a large group of low numbers (a long tail, so to speak), average gains are not really felt by the average person.

At any rate, economies built on manufacturing grew rapidly. Between World War I and the end of World War II in the United States, manufacturing grew incredibly quickly and successfully. Radio’s first major use was not to broadcast music and news but to coordinate ship movements in WWI. After WWI in 1919, the United States helped facilitate the development of the Radio Corporation of America to take control of the industry away from Guglielmo Marconi’s corporation. Marconi, who played a major role in the development of radio broadcast technology, went on to support fascism in Italy. RCA in the USA had a government-protected monopoly, but it must be noted that control over broadcast technologies is about more than commercial interests.

Strategic military interests also depend on advancing communication technologies. Government entities and private corporations are always locked in a dance of control over emerging and developing ICTs. Entrepreneurs can get caught up in the dance or, perhaps worse, be left without a partner and without access.

The Modern Era started with the end of World War II in about 1946. Modern communication technologies from recorded sound to the telephone, radio and television continued to develop in part as military technologies, but the products of recorded music and later on of videotapes were manufactured goods. Prices could be set in a monopolistic environment by the respective industries because owning the music or the movie required someone to purchase a physical copy.

Before the digital revolution, there was a transition to the service economy.

Manufacturing vs. Service

The mindset of the mid-to-late 20th century was one where manufacturing mattered most. In 1960, for example, the split between manufacturing and service jobs in the US was about 40 percent manufacturing and 60 percent service.

This means that 40 percent of the jobs were ones where people made and sold goods. The service economy had more people in it, but manufacturing jobs paid better and provided a base of consumers for the service and manufacturing economies to build on.

As of 2010, the split was about 15-85. That is, only 15 percent of U.S. jobs are currently in manufacturing. The other 85 percent are in the service sector. The globalization of labor and communication has made this possible. Specifically, large multinational corporations can now coordinate multiple levels of manufacturing in many places at once. Communication aids this process. So does the ability to transport materials and finished goods cheaply using oil-based fuels.

The downside of having access to cheap goods is that wages are stagnant in the US. Without good-paying jobs, there is not as much money in the consumer economy as there was. This explains why personal debt is at an all-time high.

With the loss of manufacturing jobs, states do not have the same income tax base that they used to, so they often drastically cut support for colleges and other services. This is part of the reason why college costs more than it used to. The transition to the service economy played a significant role.

Is this text suggesting that you push for a return to manufacturing and give up on the service economy? No. In fact, the service economy as it developed in the late 20th century may be coming to an end.

In the United States, the manufacturing model of media production still holds much power in the recorded music, newspaper, magazine and book industries. It would be foolish to ignore that power, but it would be more foolish to tell you to prepare for those modes of production when your working world may be two evolutions beyond the manufacturing age.

From the Service Economy to the Information Economy

Although it is difficult for people accustomed to a manufacturing economy, the transition to the service economy makes sense in the network society. What is perhaps most difficult to comprehend is that even major service industry sectors are being disrupted by digital technologies.

As a society, we have shifted our focus from making and selling goods to providing services. The service industry includes computers and technology writ large; the health industry; tangible trades such as plumbing and carpentry; the restaurant, tourism and hospitality industries; as well as for-profit education.

Of major concern now is that our society and economy are not yet fully adjusted to a focus on the service economy even as it is being disrupted by digital technologies and the information economy.

This is the point of studying the recording industry at this stage. It was doubly disrupted, if you will. It did not just shift from a focus on providing manufactured CDs to a focus on services. If this had been the case, it might have looked like a renewed focus on live performances and music curation in the form of niche radio broadcasts and even personal music advising. Instead, it is as though the industry skipped a step from the transition to the service economy and shifted directly to the information economy. The information economy is one where manufacturing and services still exist, but they are dependent upon information and communication technologies for strategic planning capabilities, managing transactions, the moving and storage of currency, and, ultimately, for the ability to automate as many tasks as possible. If a task is information-oriented or is simple enough to be broken down into a few automated steps (such as driving a taxi — I mean an Uber), it probably will be.

What will be left for workers? Consider the recording industry. Live performances can make money. The production and sale of merchandise (often specialized or limited in nature) can turn a profit. You can do a complex task with tangible goods or you can learn to manage the systems that automate digital work. In other words, if you can master not only mediated message production but also platform maintenance, you might have a job with growth potential.

You can find work in fields that marry manufacturing to the information economy or that merge the service and information economies well. This is your choice for a job with a future. High school and college guidance counselors may or may not articulate this clearly, but this is what industries that have already been disrupted by the information economy have to teach us.

Get a Jobby-Job

What are some examples of the marriage of the service economy and information economy in the mass media field? Spotify has already been mentioned. Facebook does not produce content. It provides a service where all sorts of content produced elsewhere can be shared.

Facebook is the Napster of news. It often goes unnoticed, though, because news content on Facebook, Twitter and other platforms stand alongside all other types of messages, professionally mediated or not.

The point is that it pays to be a platform rather than a content producer. The experience with the information economy that we have in the mass communication field suggests that the best bets for developing, getting, and holding jobs in the network society is to work in fields providing services of convenience and personalized attention.

Today, people expect personalized products, or better yet, the ability to personalize products or experiences for themselves. If you go to work in a media company, you will likely spend much time looking for a happy medium in which people feel personally attended to but your company does not have to make a new product for every consumer.

Reddit is a good example of a customizable platform that interests individuals and all kinds of social groups. That said, even successful online communication platforms struggle with growth and profitability. A company’s financial success is necessary to pay good wages to a large number of employees; this, in turn, provides for a successful middle class, bolsters the consumer economy, and supports the service, manufacturing and information economies.