April 11, 2005

Something Else From firstmonday [10:09 am]

Computer-aided music distribution: The future of selection, retrieval and transmission

A common criticism of the recording industry’s methods is that they are alienating customers and such a strategy can only come to grief. Trade in recorded music is completely dysfunctional: suppliers are suing customers; some labels have colluded to fix prices; and, consumers are foiling the suppliers’ distribution systems wherever possible. Various industry commentators have suggested that the music industry’s business model is obsolete. We suggest that not only is the model for pricing and distribution outdated, but the industry’s understanding of its product, even of its business, is as flawed as its customer relations practices.

A business model should optimize a firm’s functioning in its current market environment in order to provide products or services that are in demand and competitive. This requires a clear understanding of the nature of the product and the characteristics of the market. The challenge to the music industry arises from the fact that over the past five years the World Wide Web has radically changed the market’s perception of the nature of music itself and the services it demands. While the industry’s lobby group, the Recording Industry Association of America, struggles to limit behaviors enabled by the Web, it is hard to imagine that that genie will ever go back in the bottle. As Michael Porter notes, “the winners will be those that view the Internet as a complement to, not a cannibal of, traditional ways of competing.”

Discovering a successful business model for the music industry may require going “back to basics,” or to primary principles. Before we can propose updated sales or delivery constructs, we must clarify the product definitions and service expectations among music consumers. In the case of music, primary principles underlying the product definition and market characteristics may be assessed through two elementary questions: (a) As a product, what characterizes music, and what are people willing to pay for? And, (b) why do we choose to listen to music in different ways (on the radio, live performance vs. pre-recorded music)? Once we have examined these questions, we look at the role that compression, data storage, and transmission technologies have played in altering the conceptualization of music as a product. We then look at how retrieval and selection technologies can help consumers obtain access to the music that they want to hear. This paper concludes with some observations about the role of technology in creating value for consumers.

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Michael Geist on P2P in firstmonday [10:05 am]

Piercing the peer%u2013to%u2013peer myths: An examination of the Canadian experience

Abstract

Canada is in the midst of a contentious copyright reform with advocates for stronger copyright protection maintaining that the Internet has led to widespread infringement that has harmed the economic interests of Canadian artists. The Canadian Recording Industry Association (CRIA) has emerged as the leading proponent of copyright reform, claiming that peer-to-peer file sharing has led to billions in lost sales in Canada.

This article examines CRIA’s claims by conducting an analysis of industry figures. It concludes that loss claims have been greatly exaggerated and challenges the contention that recent sales declines are primarily attributable to file-sharing activities. Moreover, the article assesses the financial impact of declining sales on Canadian artists, concluding that revenue collected through a private copying levy system already adequately compensates Canadian artists for the private copying that occurs on peer-to-peer networks.

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Sharing as a Strategy [9:21 am]

I.B.M. Hopes to Profit by Making Patents Available Free

So why has I.B.M. shifted course recently, giving away some of the fruits of its research instead of charging others to use it? The answer is self-interest.

Diverging from conventional wisdom, the company has calculated that sharing technology can sometimes be more profitable than jealously guarding its property rights on patents, copyrights and trade secrets. The moves by I.B.M., the world’s largest supplier of information technology services and computers, are being closely watched throughout the business world.

[...] “The business world today is engaged in a huge experiment in figuring out what different parts of intellectual property should be open and closed,” said Steven Weber, director of the Institute of International Studies at the University of California, Berkeley. “The fate of many companies, and the strength of national economies, will depend on how the experiment turns out.”

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Drew Clark on Grokster [8:26 am]

The Battle Between Tinseltown and Techville [pdf]

Creativity and innovation aren’t qualities you’d ordinarily expect to be at war with one another. Both involve a type of inventiveness, a vision of something new, a stepping outside of mental boundaries. Yet in America’s courts, the companies that rely most on creativity and innovation are at each other’s throats.

It’s a battle of culture as much as law. It’s Tinseltown vs. Techville, the glamour people vs. the geeks, those who admire their finished products and those who never finish tinkering. And for each one, an important principle is at stake.

[...] [H]owever, the entertainment industry will press forward, striving to extend the scope of copyright further into the digital world. No matter how the Supreme Court rules, we can expect the dispute to be back before Congress. When it is, Congress shouldn’t forget that acting in the name of creativity could have dire consequences for innovation.

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Experimenting with OA Journal Business Models [8:03 am]

Open-Access Journals Flourish

“It’s very exciting that publishers the world over are recognizing the benefits of open access and are conducting their own experiments,” said Gavin Yamey, senior editor of PLOS Medicine, one of two flagship journals published by the Public Library of Science, which helped spearhead the concept of providing free online access.

Not everyone is thrilled, however. With some exceptions, journals have done things the old-fashioned way — charging for subscriptions and accepting advertising — for as long as anyone can remember. Many of the biggest names in the journal industry are sticking with the traditional model, and some of their editors say they have major doubts about their new competitors, especially considering the financial pressures they face to stay afloat.

Many of the open-access journals make money by charging researchers who want to have their papers published. At PLOS Medicine and PLOS Biology, for example, authors pay $1,500 each, unless they can’t afford it. (PLOS began with $9 million in grant money, but the funds don’t defray author fees.) Three new PLOS journals scheduled to debut later this year — covering pathogens, genetics and computational biology — will also charge $1,500 an article.

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