The Times’ Freakonomics Blog Discussion on The Music Industry

Whats the Future of the Music Industry? A Freakonomics Quorum

But the music industry of today looks almost nothing like the music industry of 20 years ago. There are a ton of reasons, most of them having to do with digital technology. If you are a young journalist starting out today, you may still aspire to get a big publisher to give you an advance and widely publish your book; but if you are a young musician starting out today, do you want to get a big record advance or do you want to sell the music yourself, like these folks do, and like Jane Siberry does? If you are a record label, what do you do about illegal downloads, and do you keep putting out “albums” that nobody buys or do you instead try to release only individual songs, as many people seem to prefer?

It strikes me as ironic that a new technology (digital music) may have accidentally forced record labels to abandon the status quo (releasing albums) and return to the past (selling singles). I sometimes think that the biggest mistake the record industry ever made was abandoning the pop single in the first place. Customers were forced to buy albums to get the one or two songs they loved; how many albums can you say that you truly love, or love even 50% of the songs — 10? 20? But now the people have spoken: they want one song at a time, digitally please, maybe even free (yikes: big can of worms, which is addressed ably below).

So what really happened to the music industry, and what will it look like in five or ten years?

See also Amazon Digital Music Store Goes Online and Amazon Launches a Music Store, Not a Service

A Look At LA’s Public WiFi Project (update)

Will Wi-Fi connect in L.A.?pdf

During the last six months, the prospects for delivering free high-speed wireless Internet service throughout metropolitan areas went from a sure bet to a sucker bet.

Even as Los Angeles explores building a free or low-cost citywide Wi-Fi system, cities such as San Francisco, Chicago and Houston are delaying or pulling the plug on similar plans.

[…] But don’t expect cities to pull out completely, industry analysts said.

With more Wi-Fi products coming on the scene — such as T-Mobile USA’s Wi-Fi cellphones and Apple Inc.’s iPhone and new iPod Touch — demand for citywide wireless broadband connections should grow. Wi-Fi networks are much faster, more efficient and cheaper to build and operate than cellular systems.

“We’ve gone from one end of the hype meter to the other,” said Craig Settles, an Oakland-based author and communications industry consultant. “We’ll balance this out sooner or later.”

Los Angeles may well become the city to watch as it goes through a laborious process to determine whether a wireless broadband network is needed — and how the service would pay for itself.

Later: Tim Wu, in Slate, explains why it’s been so problematic — Where’s My Free Wi-Fi?

The basic idea of offering Internet access as a public service is sound. The problem is that cities haven’t thought of the Internet as a form of public infrastructure that—like subway lines, sewers, or roads—must be paid for. Instead, cities have labored under the illusion that, somehow, everything could be built easily and for free by private parties. That illusion has run straight into the ancient economics of infrastructure and natural monopoly. The bottom line: City dwellers won’t be able to get high-quality wireless Internet access for free. If they want it, collectively, they’ll have to pay for it.

[…] The lesson here is an old one about the function of government. When it comes to communications, the United States relies on a privateer system: We depend on private companies to perform public callings. That works up to a point, but private industry will build only so much. Real public infrastructure costs real public money. We already know that, in the real world, if you’re not willing to invest in infrastructure, you get what we have: crumbling airports, collapsing bridges, and broken levees. Why did we think that the wireless Internet would be any different?

More Looking Over Your Shoulder Coming

Microsoft Takes Aim at Google’s Ad Supremacy – New York Times

[AQuantive’s Brian] McAndrews has a long-term strategy that boils down to divorcing online advertising from Internet searches. The two have been viewed as a couple, because so many people use portals and search engines as their home base on the Web, but Mr. McAndrews says that model shortchanges advertisers and Web publishers.

Mr. McAndrews’s proposed system, called “conversion attribution,” would track all of the online places where consumers see ads and give advertisers a fuller picture of the various ways that consumers reach them. Tracking is important, because the site that gets credit for prompting a user’s visit is the one that gets paid for it.

Mr. McAndrews contends that search engines, which long have claimed credit for sending people to companies’ Web sites, do not deserve it all.

Are You The Algorithm? Or Is The Algorithm You?

An Oracle for Our Time, Part Man, Part Machine

It was the Internet that stripped the word of its innocence. Algorithms, as closely guarded as state secrets, buy and sell stocks and mortgage-backed securities, sometimes with a dispassionate zeal that crashes markets. Algorithms promise to find the news that fits you, and even your perfect mate. You can’t visit Amazon.com without being confronted with a list of books and other products that the Great Algoritmi recommends.

Its intuitions, of course, are just calculations — given enough time they could be carried out with stones. But when so much data is processed so rapidly, the effect is oracular and almost opaque. Even with a peek at the cybernetic trade secrets, you probably couldn’t unwind the computations. As you sit with your eHarmony spouse watching the movies Netflix prescribes, you might as well be an avatar in Second Life. You have been absorbed into the operating system.

[…] In his 1950 paper “Computing Machinery and Intelligence,” Alan Turing foresaw a day when it would be hard to tell the difference between the responses of a computer and a human being. What he may not have envisioned is how thoroughly the boundary would blur.

For example, who really thinks about what’s being offered here? Have we really gotten “past privacy?” Company Will Monitor Phone Calls to Tailor Ads

Promotion, and Picking The Right Fight

Don’t want to win a case against the Girl Scouts, for example: Disney Tolerates a Rap Parody of Its Critters. But Why?

Nickelodeon, part of Viacom, sees the humorous videos as fair use of its copyrighted content. “Our audiences can creatively mash video from our content as much and as often as they like,” said Dan Martinsen, a Nickelodeon spokesman. “By the way,” he added, “that was a very nice edit job by whoever did the SpongeBob mash.” (That laissez-faire reaction, it should be noted, comes from a company whose corporate parent has a $1 billion piracy lawsuit pending against Google, the owner of YouTube.)

Disney’s view is starkly different: any unauthorized use of Disney property is stealing. Still, the company picks its battles carefully. While it closely monitors the Web for infractions, Disney will not discuss how it evaluates potential cases of copyright infringement and declined to comment on the “Crank That” videos.

The fact that the postings have not been removed — YouTube regularly yanks videos that media companies identify as pirated material — highlights the situation mash-ups pose for media companies: are these videos parodies of cultural icons and thus protected under copyright law, or do they trample on intellectual property?

The DVD Burner Comes of Age?

The DVDCCA blinks? We’ll have to see, but I doubt it. In particular, the only way that I can imagine that copies can’t be made is by “stamping” the copies with something unique to a particular player — meaning that you might end up keeping a LOT of DVD players around to keep accessing what you paid to download. It will be interesting to see whether the equipment manufacturers got them to give them a way around that, because otherwise the rate of turnover of DVD players among movie downloaders is going to fall dramatically: Downloads of movies get a boostpdf

The organization that licenses DVD security software cleared the way Thursday for movies bought over the Internet to be burned onto a DVD that can play on any machine — a move that could dramatically change the way movies are sold.

Industry executives hailed the decision by the DVD Copy Control Assn. to license software designed to allow content to be burned to one disc but not copied to others.

This Should Be Interesting (updated)

So, will NBC’s “free” be more valuable than the iTunes distribution channel? As the NYTimes seems to have found, it’s not as far-fetched as it might seem. On the other hand, isn’t it still better to have multiple delivery channels? Or does NBC really believe that they can out-play Apple in this market? NBC to allow free downloading of its TV showspdf (also NBC to Offer Downloads of Its Shows)

NBC will start offering limited free downloads of shows such as “Heroes” and “The Office” as part of its bid to expand the digital distribution of its programs and compete with Apple Inc.’s iTunes Store, the network announced Wednesday.

The new service, dubbed NBC Direct, will allow users to download episodes to computers running Microsoft Windows software for up to a week after the show has aired on television. The file will contain embedded advertising that cannot be skipped.

Seven days after the episode’s TV debut, the digital file will expire.

So, they’re going to sacrifice the media-hungry Mac market, rely upon a locked playback tool *and* count on a set of DRM timebombs? Good luck with that!

Related: CBS aims to be the talk of the Webpdf

Until recently, CBS.com had consisted of what one CBS executive described as “regurgitated television” — full-length streams of shows and scheduling information.

The new, less cluttered website, launched in tandem with the fall season, focuses on attracting communities of fans who want to gab about such CBS shows as “How I Met Your Mother” or “Kid Nation.”

It devotes less space to TV Guide-like programming information and instead provides a forum where viewers can express their views — good and bad — about shows.

“The key lesson from Silicon Valley is respect for the audience,” said Jonathan Barzilay, senior vice president and general manager of entertainment at CBS Interactive.

We’ll see who gets the message

Update: Rupert Murdoch didn’t get to where he is by being foolish: Fox tries new lure for iPod crowdpdf

Beginning this week, season premiere episodes of seven Fox Broadcasting programs will be made available for free through Apple’s iTunes store, a move that highlights the TV industry’s race to harness the Internet and try out potential business partners.

[…] The deal underscores the television networks’ predicament: They are trying to protect their lucrative businesses at a time when more viewers are catching their favorite shows when they want, thanks to TiVo and digital video recorders.

MediaDefender Not Meeting The Challenge

Of course, how could anyone? Leaked e-mails reveal MediaDefender’s antipiracy woes

“We’re still not seeing you guys perform well on Soulseek (peer-to-peer file-sharing community),” a Sony executive said in an e-mail that was viewed by CNET News.com. “Can you please investigate the problem and actually solve it (going on months now). In my most recent search I selected Beyonce(‘s) “Beautiful Liar” and was able to download almost everything.

“If you can’t provide a good solution,” continued the Sony executive, “we will either have to request serious credits or pull this network from your services. As it stands right now it’s a waste of our resources at this level of protection.”

So how did the file-sharing hunter become the hunted, apparently attacked by a group calling itself the MediaDefender-Defenders? Give credit (or blame) to a technology battle in which widely scattered file sharers are outmaneuvering entertainment conglomerates.

The Shoe Drops (updated)

The Times has come to see that being the authority is worth more to them than the TimesSelect subscription revenue: Times to Stop Charging for Parts of Its Web Site

The Times said the project had met expectations, drawing 227,000 paying subscribers — out of 787,000 over all — and generating about $10 million a year in revenue.

“But our projections for growth on that paid subscriber base were low, compared to the growth of online advertising,” said Vivian L. Schiller, senior vice president and general manager of the site, NYTimes.com.

And others get ideas: Murdoch makes case for free WSJ onlinepdf