The changing face of media - Part 1

Use of Peer-to-Peer networks (P2P) is a bit like sex before marriage. You’re not allowed to do it, but everyone is anyway. P2P networks have been around for a long time in one form or another, but took off when Shawn Fanning developed Napster. Napsters allowed people to share and swap their files (namely music files) that are stored on their hard drive across the internet via a central server.

This of course has drawn the wrath of the record industry, which has spent millions on shutting down the likes of Napster for distributing copyrighted material. They have also spent vast sums suing people who have downloaded music from P2P. Unfortunately, it’s a bit like keeping the ocean at bay with a broom. Every time a Napster is closed down, more spring up. At stake is a music industry trying to protect a distribution model that’s been around seemingly forever: a distribution model that has failed to move with the times.

The music industry today resembles the horse and buggy companies and the telegraph companies at the beginning of the 1900s. Both spent huge amounts trying to stave off the newcomers - cars and phones. Rather than seeing opportunities, they fought to maintain the status quo and lost. And they lost big time.

Today, most P2P applications such as Morpheus, eDonkey, Limewire and Gnucleus, use the Gnutella protocol (invented by Nullsoft, a subsidiary of America Online). One of the more interesting developments in the P2P world is the emergence of BitTorrent. One of the problems with P2P programs such as Napster is that if you wanted to download a file, you accessed it from a cental server. This is not a problem until you have a lot of people trying to download the same program at once.

BitTorrent solved this problem by allowing you to download the file from a number of sources. You got a bit from here and a bit from there. The more places the file is located for sharing, the easier it is to download. Also, as you are downloading, what you have downloaded is immediately available for someone else to download. You are downloading and uploading at the same time. It is a bit like a group effort in putting a jig-saw puzzle together. Some one would come along and put some pieces together. The next person would add other pieces not already there. You on the other hand could take a copy of the pieces you have and place them on someone else’s puzzle board. This approach has really annoyed the record industry, as it is now harder to catch the person who put the file up for sharing in the first place (known as the seed file).

The current copyright laws within Australia make it illegal to download songs from the internet even though you may legally have purchased the song on another medium, such as the old vinyl record. It is also illegal to transfer your songs from a legally bought CD to another medium, such as your computer, or a portable player, such as an iPod. It is also illegal to convert your old vinyl records to digital format. However, the law seems to turn a blind eye if the copying is for personal use.

Most people are unaware of these restrictions placed on them by the current copyright laws. It is reasonable to assume that once you have purchased a piece of music whether on CD or vinyl, you should be allowed to listen to that piece of music however you want. But the music industry does not want this, as they are more interested in selling the medium rather than the content.

People are downloading music for a number of reasons, either they have the song on vinyl and want an electronic version, the song is not available for purchase or simply because it is available to download. Another reason is that music is very expensive when considering entertainment value. Music works out at around 40 cents a minute whereas a boxed DVD TV show works out at around 6 cents a minute*.

Another reason for downloading music via P2P is that there are too many restrictions placed on legally purchased downloaded music. There are music download stores, which only allow you to download the song in a format (such as Windows Media Audio (WMA) format) that is not industry standard. The industry standard is MP3. They will only allow you to load the songs onto approved portable listening devices. You can only play the song on your PC using a specific piece of software such as Microsoft Windows Media Player. You can only play the song on the PC you download it to. So on and so on. What happens when you buy a new computer? What happens if your computer fails or is stolen. What happens when the format of the downloaded song is no longer supported? No wonder people are downloading via P2P.

One of the problems with P2P is that you cannot guarantee the quality of the file you are downloading. I believe that there are great opportunities for the entertainment industry in P2P. Having a legitimate place to download quality music could provide enormous new revenue streams. However, the cost needs to come drastically down. Also, current restrictions placed on downloads will not wash with the public either. These restrictions currently placed are the result of copyright laws that were formulated well before the digital age.

So how will P2P change the music industry? First, the music store that you know today will disappear. You will see video stores, bookshops and record stores merge. You will walk into one of these stores, which will have banks of computer servers where you will select the music, movie or text you want and transfer it to the medium you want. This will be the same for online stores. Today is the age of the personal play list. The cost of music will dramatically come down as a bloated music industry’s distribution infrastructure becomes rationalised. There will be a lot of music executives looking for a career change.

Second, we will see a change in the quality of music presented to us. Most albums today have one or two good songs, with the rest classified as fillers. As consumers become more interested in only accessing the songs they want, then artists will spend less time on composing filler songs and more time on making their good songs better.

Musicians will also start to bypass the recording industry and go directly to their audience. This is already happening. The cost of producing a song and distributing it has come down dramatically in recent years. These musicians will have their own websites and agreements with P2P networks to distribute their music.

In the next article I will discuss what P2P is now doing to film and TV shows.

*Music CD playing time of 60 minutes at a cost of $25 - $0.42
*Boxed DVD TV playing time of 960 minutes at a cost of $60 - $0.06