Where next after the Digital Econonmy Bill? (Part 1/3)

Guest Post  from a friend who hasn’t got an wordpress account yet.

So the Third Reading of the Digital Economy Bill came and went and, unsurprisingly, it was rushed through the Commons with low MP turnout and no time for debate. Criticism of the bill has been well publicised and it certainly seems too wide ranging and clumsy to be effective. Allowing the power for copyright holders to get internet connections cut regardless of whether or not the accountholder was responsible for any piracy is excessive, and the government’s ability to block websites which they feel aid passage to hubs of filesharing have riled major players such as Google and Yahoo.

It is full of measures that don’t seem threatening to those that actually fileshare, but are enough to justifiably anger those in fear of losing their internet connection through others actions, including businesses who offer free public WiFi, internet cafés, and parents whose children fileshare on the family computer, as well as those who feel that such monitoring of internet activity breaches their rights.

In actuality, in the case of music, filesharing over the internet is arguably a diminishing issue. While P2P activity drops, internet streaming services like Spotify and Last.fm seem to be incredibly popular, with 31% of teenagers streaming music from these mediums every day. It certainly seems to matter less what’s in your ITunes library when friends are round these days, as any song can be grabbed up from a database.

Besides, P2P filesharing is not the only way in which music is shared, nor is it the most popular. According to a 2009 survey, P2P filesharing actually ranked as the third most popular method of getting music for free, lagging behind Bluetooth transfer on mobile phones and simply swapping CDs between friends. Quite how the government hopes to police these measures, I’m unsure of.

What you can be sure of, however, is that this is a bill that serves the record companies, allowing them to chase down those that they perceive to be filesharing. At some points it seemed that they were writing the bill themselves, seen in the similarity between a BPI letter sent to government and opposition peers suggesting changes to existing copyright law, and amendment 120a of the Digital Economy Bill. This amendment thankfully didn’t make it past the Lords.

What record companies need to accept, however, is that their approach is effectively trying to plug holes in a colander. They would be far better served by trying to adapt to the new technological advances they are faced with, rather than alienating people with their aggressive stance.

To tempt filesharers back into physical purchases, or even legal downloads, they need to attract them with a forward thinking service. Simply arming themselves with a bully boy in the form of the state is not going to hide the fact that the output they champion in the mainstream is becoming increasingly poor, evidenced by the state of our singles chart (a post to come on this later).

Similarly, they need to fully realise that their futures depend on their ability to nurture good music, but their attitude to musicians other than their leading stars leaves something to be desired.

Both of these issues can be highlighted by the aforementioned Spotify. Now this is a service which several companies have equity in, and it has proven increasingly profitable for them. By the start of this year, Spotify had started paying royalties or contributions from the money it receives from subscriptions and ads to those labels that they have licensing agreements with, such as the Universal Group.

However, there are two difficulties with this. Firstly, there is little motivating a Spotify user to subscribe to its premium service. With no cap on how much can be listened to by free users and with only the odd advert to interrupt them – which, while admittedly annoying, is hardly prohibitive – Spotify poses the same question which also runs through the minds of filesharers – why pay for something you can have for free?

This is obviously a problem, with Spotify recently being forced to reintroduce its ‘invite policy’ in the UK, as so many of its users have chosen not to subscribe, it can no longer pay record companies through subscription and ad revenue alone. The sustainability of such a venture is suspect, and the dropping of music on demand by Last.fm this week is hardly encouraging.

Secondly, the service does little to benefit the musicians themselves, as royalties don’t filter down from the record companies. BASCA (the songwriters union which counts the Bee Gees and Paul McCartney among its fellows) came out this week and criticised Spotify for the minimal fees that their members actually receive through royalties and subscription fees. Of course, the BPI and PRS For Music have as yet refused to comment, acting far more slowly against the injustice of others’ losses.

A service like Spotify looks like the way forward – easily accessible with a large database of music and an in built music recommendation function that will help people find the kind of music they like rather than being fed what is an increasingly turgid singles chart (a post on this particular subject later…). However, Spotify, and other similar services around at the moment, do not do enough to satisfy the record companies enough to prevent those aggressive tactics seen in the Digital Economy Bill, or convince that their interests really lie in supporting upcoming music and musicians.

Perhaps closer to the mould is the imminent Mflow, which offers incentives for recommending a track. By signing up, you create a profile which you can use to either follow or be followed, much like Twitter. For every track you persuade a follower to download, you receive credit equivalent to 20% of the track’s price. Therefore, any artists who choose to use the service can make an income by recommending music to their fans.

It also solves the problems of allowing music to be heard for free, as only 30 second chunks are played, unless a song is directly recommended, in which case the track can be heard in its entirety once. Consumers, record labels and artists all catered for. Therefore, it’ll probably bomb. Anyway, if you want to check it out, Zane Lowe has kindly given his invite code (ZANE444) for all to use.