Damien Miller forwarded Peter Gutman's cryptography@wasabisystems.com and cypherpunks@lne.com quote of a KPMG report "The Digital Challenge: Are You Prepared?" http://www.kpmg.com/news/index.asp?cid=660 . Responses indicate that the media industry has yet to find its footing in the digital age. Rather than embracing the Internet as an inexpensive means of delivering top-quality creative content to the consumer in a highly customized format, industry executives remain mesmerized by the destructive potential of online piracy. Rather than go on the offensive, the industry has hunkered down in a defensive stance. . . . the industry has shown a deficit of creativity and innovation in rolling out products and services that can compete with the pirates. I think this is an accurate analysis of a really sad situation. Like King Canute, the record companies are devoting most of their thinking and resources to holding back the tide. The industry needs to conduct itself so that people *feel like* paying to purchase recordings rather than muck around find non-licenced copies. So the legitimate music needs to be very easy and rewarding to find and pay for, very easy to download, and unencumbered by encryption, watermarks etc. 7 years ago I wrote that record companies had to make distinctions between various kinds of copying, because some is very positive for the companies and the artists. Some copying is the best form of marketing they could hope for, and other copying is simply the purchaser deriving full value from their purchase. I wrote that that artists and record companies needed to make material available on the Net and make full use of the many new possibilities for discovery, different forms of "packaging" (why have an "album" when musicians may be producing music continually, and while some fans will buy a dozen different versions of the one song?), and far-reaching ability for listeners to interact with the artists and each other. http://www.firstpr.com.au/musicmar/ One use of the artist's web site is for listeners to subscribe on a monthly and annual basis to all the artist's output. This has no parallel in the physical pre-recorded disc model. Also, listeners who pay for the artist's music can be visible on the web site, by their real name or nom-de-Net - so enabling the possibility of peer pressure to encourage people to pay for the music they are keen about. Net-based discovery and delivery eliminates time-delays, capital expenses and most of the risk in the old system. It also makes advertising less vital, since it would be possible for news of good music from an new artist to spread rapidly and globally, by "word-of-mouth" on discussion forums, without cost to the artist or record company. The most prominent aspects of the record industry are addicted to big-selling, mass-market, releases - that is the only way they know how to make money. But the Net means that money can be made from the start, on a modest scale, if the artist's costs in producing the music are relatively low. While radio is surely going to remain an important discovery method, the Net has vast potential for discovery of the music, related material and for purchasing music 24 hours a day from the comfort of home, without the intrusive, noisy, distraction of a record store which is almost certainly playing Muddy Waters on the speakers when you are in the mood to purchase Steve Reich and vice-versa. The mainstream, big-company, recorded music industry is clearly unwilling to face reality, and prefers to paint illusory pictures in their collective mind, and to try to convince others that these illusions are real. The industry - as distinct from the artists - is made up of a few ex-musicians and lots of percent-men, who muscle into a niche between a small set of creative people and a larger number of people who want, or can be induced, into purchasing the artist's creative output. In the prior era of almost entirely radio-based discovery (how often do you hear something you liked and bought in a record shop?) and music delivery entirely on pre-pressed plastic discs, there are huge barriers to be surmounted between creating music and selling it to the potentially millions of people who want to hear it. My page has diagrams which depict these bridges for discovery, distribution and sale. The record industry, with its only half-willing accomplice, commercial radio, has grown strong by bridging this gap. But like fashion clothing, it has found that the only way to make substantial profit is to have big-selling hits, which are intensively promoted and sold for a few months before the next hit is wheeled into the spotlight. This creates an enormous barrier to the widespread discovery and development of new music, because the record companies won't press it or push it on radio unless they think they can sell large quantities, and radio won't play it if it is too riotous, too minimal, too instrumental or too long to support advertising. Consequently the whole history of popular music has been continually skewed to music which sounds like, or is at least compatible, with increasingly crass commercial radio advertising. The musicians hate the record companies, but need them - at least to ship large volumes of music on pre-pressed disks. The managers have an uneasy relationship with the artists and the record companies. Record companies and artists are almost utterly dependent on radio as the initial form of discovery, so they want radio to play whatever new CD they have just released this month. But radio sees the music industry as an almost free source of stuff to entice listeners with - and only a subset of listeners who are valuable from an advertising perspective are interested in listening to whatever the record industry is pushing this month. So, since about the 1930s, a complex, risk- and capital-intensive set of bridges has been built by the record industry between artists and listeners - with radio a crucial and only marginally willing participant. Now the Net, in principle (if it wasn't for speed and cost restrictions, and the fact that it is usually not as easy to access in mobile situations such as when AM/FM radio is perfectly convenient), enables a *direct* discovery, feedback and purchasing link to be made between artists and listeners. Even if the artists don't run their own web site, whoever runs their sites for them faces minimal costs and risks compared to the old system. This is 24 hours a day, irrespective of radio propagation limitations, two-way, enabled for commerce and browsing. It completely bypasses everything the record company has built. However, I still think that if someone is going to sell a million copies of their music, then pre-pressed discs will be a significant part of that, and only record companies know how to do this on such large scales. The new system does not rely on commercial-radio compatibility, or even the listener having the same language as the artist. There are no stylistic biases as bedevil the current situation with older record company and radio people trying to anticipate the next trend in young people's music fashion. The new system has nothing to do with fashion or gatekeepers at all. If the record companies were smart, they would dive into this - after recognising their old game is made partially or largely irrelevant. If they were smart, they would aggressively pursue Net-based discovery and sale of all their artist's music, recognising that this is a low-cost way (compared to pre-pressing and distributing disks, advertising and payola) to develop and modestly profit from the zillions of artists who are developing their music and who are outside the spotlight of whatever is currently "fashionable". To some extent, with a few freebie MP3s, I guess the record companies have done this. But the record companies first have to get over their immense fear of people copying music. Its going to happen, and the best way to reduce the damaging copying is to build trust and respect with potential purchasers to minimise copying which is bad for the artist and maximise that which is good. Unfortunately, since all these issues became apparent around 7 years ago (although I did not anticipate MP3 compression ratios - that was about 5 years ago) the mainstream record industry has obstinately clung to the notion that it must make digital music impossible or impractical to copy. But it is easily shown that this is impossible: If the music is to be delivered, in full fidelity, to the consumer - the consumer can copy it. All attempts at encryption, weirdo file formats etc. are useless to stop this - because the output of the system can be recorded. The other approach is "digital fingerprinting / watermarking". There's a lot of crap written about this by various proponents. If you can hear the watermark, people won't buy the music. If you can't hear the watermark, then perceptual compression systems such as MP3 will strip it out or weaken it without affecting the music. What use is the watermark anyway? Are record companies really going to prosecute purchasers? That would be madness, the best way of destroying trust and the desire to purchase - but it could happen. I wrote about the folly of watermarks in 1997: http://www.cni.org/Hforums/cni-copyright/1997-02/1005.html - Robin http://www.firstpr.com.au http://fondlyandfirmly.com --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to majordomo@wasabisystems.com