Last week was the first of a 4-week hearing from the Copyright Royalty Board to determine new mechanical royalty rates. The National Music Publishers Association proposes a royalty increase for physical music, from 9.1 cents to 12.5, and a digital rate of 15 cents per track. And in the other corner are the RIAA and DiMA. The RIAA proposes a cut to 6 cents per physical track, while both groups support a digital royalty under 5 cents. Someone slept through economics.

It seems every week there is a new story about some legacy artist leaving the label that made them famous to blaze their own trail. Most famously, Radiohead, who took a couple baby steps and sent the industry into a frenzy. Giving albums away for free is relatively commonplace for lesser-known artists but due to their stardom, it was treated in the media like some kind of revolution. And after going e-platinum, perhaps it was. But Radiohead isn’t the story so much as how people acquired it. There was a piece in Forbes a few months ago that said more than 500,000 people downloaded Radiohead’s new album via BitTorrent in the span of a couple days. Radiohead’s FREE album that they were offering on their website. That is not so surprising. Radiohead’s website did not move fast enough. They would have been better off simply taking the music to where people go- BitTorrent and p2p.

At Napster’s peak, it clocked about 1.6 million simultaneous users. Today, BitTorrent tracker, The Pirate Bay, is pulling in nearly 10 times as many users. Legality aside, there are two very important things the music industry can learn from the popularity of BitTorrent- functionality and efficiency are king, and you simply cannot stop people from sharing files. Despite all the prating about shutting down The Pirate Bay, there is little that can actually be done to stop it. Even if they were removed from the web, they are merely an indexing site. They host no content. Additionally, there are hundreds of other BitTorrent sites, with more popping up everyday. Demand will always find the most efficient route to supply, and right now the labels aren’t even competing.

Ranking above The Pirate Bay in traffic stats, aside from the 30 different “friend networks,” are a number of “streaming” sites. These are interesting because while they are also illegal, they could be closer to what the future holds as far as media acquisition goes. These sites are essentially free rental sites, like YouTube, but offer full-length television episodes and films, free of charge and without installing any programs. What’s even more interesting is television’s response to their existence. Networks may not like their content leaking all over the net uncontrollably, but at least they respected the innovation enough to begin streaming higher quality LEGAL versions on their own websites.

This is where the music and television industries differ. It’s been about a decade since Napster happened but the labels have yet to present their own legal version of p2p or some alternative to pirating. Outside innovation has given some kids a way to purchase legally, the way they want to, but it isn’t a perfect system and it’s still rooted in technology, not music or even sales. I believe the music industry can come up with something better for music. Now, I am hardly saying television networks have it together. When networks began streaming their own content on their own sites, they of course included advertising. Just because it’s free doesn’t mean you can’t make money off it. Unfortunately, as we all know, the companies didn’t want to share this new revenue stream with the minds behind the shows people were tuning into and they are now hemorrhaging millions as a result of the WGA strike. Is the music industry begging for the same kind of uprising from its content creators by cutting royalties? Or is the rebellion already happening in its own passive-aggressive way?

The industry has relied very much on the illusion of scarcity to succeed. They own all the good music. Anyone who wants to be a professional musician has to go through them. However, the internet shattered that illusion and it has become extremely clear to everyone that music is (frustratingly) abundant, and accessible. Water, water everywhere. The economics of unlimited goods apply. 70% of this planet is covered in water, and yet the bottling of it spawned a multi-billion dollar industry. Is music really any different when it comes to digital sales? Could labels right themselves by ‘bottling up’ a higher quality product and leaving the suckers to drink from the unfiltered tap? Even if that’s not the case, majors cannot rely on outside sources to solve their problems. No amount of legislation will change the fact that the labels have nothing to offer, and scaling back royalties won’t make up for how much they’ve lost waiting for a savior.

-by Angela ‘AJ’ Jenson