The Great Digital Swindle

The recent announcement of Neil Young’s PONO high resolution digital music downloading service and Digital Audio Player (DAP) has become the subject in the industry rags, alternate blogs, Facebook threads, and whatnot. While reading, I noticed that there was nary a mention of (what I believe) a crucial attribute of PONO and its kith and kin – namely, the entire high-resolution downloading backbone that all of these digital players rely upon. The downloading services are the foundation of the “major convenience” and increase in accessibility. They are also the reason why high-resolution music can be distributed so easily. I am not here to talk about that angle, nor about the availability of high resolution music in the first place. I’m here to talk about:

The Great Digital Swindle

I’ve railed on this theme in years past. Amongst friends and family (and other really quite polite people who bit their lips), but with PONO, I’m especially incensed. Perhaps it’s because of the “for the people” approach to a paradigm gifting the music industry moguls another perfect way to swindle the music lover by selling nothing for something.

Allow me to explain: I grew up in the era of the LP record, Cassette Tape, and later – whilst in University – the era of the Compact Disc. Sure, there were other formats around (DAT, Laser Disc, MD, etc) – but these were minor incidental technologies, as I’m sure you’ll agree. In terms of music acquisition, these three physical formats span an era of physical media dominance that dates back to the early shellacs that made their way into mainstream society around the turn of the last century (ca: 1901) through the opening years of the new millennium.

As a kid, I was entranced by LP records: How on earth could the thing work? It seemed magical. As I got older, I would hop on the bicycle and ride up to the local record shop and buy my own records. Aerosmith: Night in the Ruts; Queen: News of the World; Ted Nugent: Scream Dream; Molly Hatchett: Flirtin’ With Disaster; Kiss: Alive I, II,  and the list goes on and on.

Among those on the list was Exile’s Mixed Emotions. For some reason, after hearing “Kiss You All Over” on the radio several times, I thought I needed to have this record. Well, after playing it a few times at home, I decided that – you know what? – Exile was not for me. But, one of my friends loved the record, so I sold it to him. He gave me a less than I paid and I got money in exchange for my unwanted record. As I grew up and started collecting LPs, this scenario played out many times over. As I started to collect CDs, the same thing was happening. I’d decide that I wasn’t fond of this or that and so I’d sell it. Record stores also dealt in used records, and this made the hobby much more accessible and enjoyable. Likewise – used CD stores began to pop up, making the sale or trade-in of CDs possible as well as the acquisition of used CDs possible – typically at a much lower price than retail.

The active, almost bustling market for used music media made the hobby of collecting music — LPs, CDs, tapes, et cetera — much more enjoyable. Just like baseball cards or coins or stamps, the physical media itself is collectible and an aftermarket trade highly active. As the owner/possessor of a particular physical medium, you have the legal right to sell the physical object to someone else in exchange for anything else of value … or possibly nothing at all (i.e. if you wanted to give a record or cd to a younger sibling or a friend as a gift). Pregnant within this is the assumption that, although you do not own the copyrighted material encoded on the medium, you own the medium itself and therefore have the legal right to engage in the transfer of ownership in valuable trade.

This is serious consumer power and it is what makes these collectible things “valuable” in the first place. It also mitigates the risk of acquisition by attaching a portion (sometimes a large portion) of the cost to physical item itself and with a clear ownership and built-in transferable value. Your risk in purchasing a record was mitigated by the fact that the thing itself was worth something and you could sell it.

With the advent of digital downloading via commercial services, as pioneered by Apple’s iTunes, we’ve thrown all of this connection and value to the curb.

Welcome to the age of …

High Risk Music Renting

 

Biz0801-Time.jpgRemember Napster? Of course you do. There were other, similar services out there – Gnutella networks and their progeny – the various “torrents” that exist out there on the wilds of the Internet. When Napster got going, I was a huge fan. I downloaded tons of music. I was also a huge fan of Amazon, and my consumption of music via CDs increased immensely thanks to Napster. I would hear something I liked, maybe check out the rest of the record, next thing you know I’m buying stuff from Eminem and Insane Clown Posse. The stack of CDs in my loft towered as a result of the one-two punch of risk-mitigation (Napster) and extreme convenience of acquisition (Amazon). It was a boon to the industry, despite all the alligator tears that were shed by the record companies.

Further on, once I inevitably discovered that I was not as fond of Eminem and ICP as I thought I might be, I could (and did) take those CDs and many others to the local used CD shop and traded them in – sometimes for cash, other times for trade towards other records.

The interesting thing here is that Napster, as being a kind of a “try-before-you-buy” mitigator of risk, helped make the music-sales ecosystem much more efficient. The problem was that some folks used this as a way to obtain music for free (albeit in ear-cringing resolution). Still, something had alighted in the minds of those who would eventually introduce and unleash the iTunes system. Namely, that people — especially young people — seem to be content with non-physical media so long as it was convenient and portable.

Soon thereafter, the iPod was introduced with iTunes as a management software backbone. All of this as a preamble to the larger intention and design: To create a non-physical media empire that sold virtual property.

That’s the “Nothing” they are selling for “Something”.

If we compare a download to a physical CD (or record, or tape), we find some things that are similar, especially when it comes to the basic costs of creation. Artists and musicians need to be paid, studio time rented, engineers and producers and mastering engineers compensated. All of these fixed up-front costs are common to both downloads and physical media. The real difference with downloads is distribution and production,  because they are a weightless, massless medium that can be replicated infinitely at almost ZERO cost.

And this is not true of physical media, which require materials, factories, processes, teams of trained workers with specialized skills, a distribution network of retail partners (i.e. record stores), not to mention the shipping and handling. Think about all of the costs of doing business that the record labels have managed to sidestep, all of the other people they have cut out of the process, and a neat little picture should be starting to take form: A weightless product, infinitely replicated at incredibly low cost, efficiently distributed through an electrical-signal network that the end user actually pays to access. All of a sudden, the profit margin on distributed music just exploded into another dimension of huge, rainbow-skittle-shitting unicorns made of money. Big Rock Candy Mountain, baby.

And it gets much better (for them, not you, of course). When you “purchase” a download you do not buy anything other than the right to listen to it. That’s it. It’s an extended rental. Did you download Slim Whitman’s Greatest Hits at 3am and decide — after you sobered up the next day — that it was a mistake? Sorry, Charlie. No refunds, no returns. And especially, no trading to others. Ever.

If I buy a hardcover book or a photograph or a painting or an LP and sell it to someone else after I’ve decided that I’m done with it, this is perfectly legal. This is just a trade in goods and goods are transferable for value and other consideration. If I buy a download and sell it to someone else under the same auspices, the law calls this piracy. And it’s a Federal crime. And they are serious about making examples of people.

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Minnesota Woman to Pay $220,000 for 24 Illegally Downloaded Songs

Back in late 2012 an article appeared The Guardian describing a legal mess that Jammie Thomas-Rasset got herself into for downloading songs “illegally” from the internet.

[button color=”red” text=”white” url=”http://media.ca8.uscourts.gov/opndir/12/09/112820P.pdf” window=”_self”]Download Ruling PDF[/button]

The article describes how the RIAA sued more than 18,000 individual people throughout the mid-2000’s for sharing music of networks such as KaZaA, Limewire, and others. Joel Tenenbaum, another individual “caught” sharing 30 songs via Limewire, was sued by the RIAA for $4.5 million.

Weightless, massless, infinitely replicable files distributed over a highly-efficient system of digital networks constitute a double-edged sword. And the record companies love the idea. It’s convenient, low-cost, and incredibly profitable. But, if they don’t strike fear into the hearts of music lovers far and wide, they would be on the losing end of the digital distribution paradigm. And so, the RIAA, acting to protect the rights of the music labels and artists (ordinarily a laudable thing, mind you) came crashing down on the heads of small-time individuals with lawsuits. Like a big, snarling, nasty, toothy dog protecting its owners’ property.

Understandably, in business, you have to protect the thing you sell. And when the thing you sell is digital, it is just as easily converted by others as it is for you to distribute. Even though the labels managed to basically eliminate their distribution costs by selling virtual “stuff”, they really didn’t share those cost savings with the consumer. Further still, they managed to make it a Federal crime to re-distribute that thing you just bought because you bought absolutely nothing besides a PERMISSION TO LISTEN.

And here’s where PONO may continue this swindle, because PONO intends to distribute and sell High Resolution downloads for way more money than ordinary downloads are selling for. According to PONO’s site, the music will sell for between $14.99 and $24.99 per album. By contrast, Jack White’s new album Lazaretto is going to sell for $10.99 on iTunes. If it were to appear in PONO’s store, you might have to pay over 125% more. And in exchange for what? Permission to listen to a higher resolution version (which is of course, far more enjoyable than an MP3). But what happens if you decide that Lazaretto just doesn’t work for you, musically?

I’m a fan of Jack White. He and Meg formed The White Stripes and released some of the most raw and deeply rendered rock n’ roll of the 21st Century. I own all their records. Yes, records. As in vinyl records. Jack White has been a major proponent and promoter of analog music and many of his projects were recorded to magnetic tape and pressed onto vinyl. Lazaretto will also be released, in limited quantities, on vinyl. (His label, Third Man Records, releases a lot of vinyl. Check out the promo HERE)

I decided to buy the vinyl release of Jack’s last album, Blunderbuss, in new condition (still sealed) and I’m probably going to keep it, because I’m a fan. But in the event that I feel the need to move it sideways, I can and will sell it to someone else (a friend, Discogs, local record shop, et cetera). If it happens to increase in value (some first pressings do so quickly), I might even net more than I paid for it. Regardless, I’ll definitely get something for it. And I won’t be a criminal breaking a Federal law when I sell it to a music-lover seeking vinyl satisfaction. My risk is mitigated by the fact that it is completely legal to re-sell.

Never mind the opinion (which I hold) that vinyl sounds more delicious and sumptuous than digital files, that is not the argument here. I listen to digital music, albeit mostly from a CD collection that I’ve ripped to my computer for convenience (and to my iPhone for portability). I like vinyl records, I collect them, and I trade them.

Of primary importance is simply the fact that I can do whatever I want with the LP, because the media is physical.

Downloads, in my opinion, are a swindle because they take away this basic right from the consumer. You’ve ponied up your $9.99 or $24.99 and received nothing other than permission to listen to the record in exchange. What you are actually getting for your money? $24.99 isn’t a terrible price to pay for a physical product you get to keep, collect, trade, or sell, but it’s an incredibly high price to pay for the mere permission to listen to something.

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I’d be happy to fork over the same amount for a Blu-Ray disc with the same files on it. At least it’s a physical property that I can sell, trade, or give away legally. A Blu-Ray disc has about a 25GB capacity – more than enough for an album’s worth of high-resolution files. $24.99 is a lot of money to ask for literally nothing (no-thing) in return. An yet – if they just put together a lovely little package with a Blu-Ray inside with the exact same files at the exact same resolution – problem solved. You could rip the files to your computer and transfer it to your PONO Player (or your other Hi-Res DAP of choice). You won’t miss out on the portability and convenience, but at least you will have something worth paying for. And you will “own” something for your money.

If the entertainment industry can deliver a 3-Disc Blu-Ray set of The Hobbit: The Desolation Of Smaug for $22.99, maybe we should all be asking PONO or HDtracks or iTunes why they can’t deliver one Blu-Ray disc with hi-res music files on it.

 

 

Chris Sommovigo loves music, enjoys audio, designs cables, seeks Truth. Since the mid 1980’s he has been on both sides of the microphone, all sides of the industry, prefers tubes and vinyl, appreciates and respects solid state and digital, and will make great efforts to be present for a wonderful meal.

Aside from this present foray into editorial life, Chris remains a small-scale manufacturer, importer, and specialized retailer and has recently started taking guitar lessons again after a 32-year hiatus.

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