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Sounding Off: Online Music

Daniel James By Daniel James
Published September 2004

Are we missing an opportunity to make audio distribution a better deal for musicians?

The legal download services prove one thing — music lovers really are willing to pay for songs that they could get elsewhere for free. The iTunes Music Store claims to have sold over 70 million tracks in its first year alone, with the reborn Napster and other clones hoping to emulate Apple's success. Assuming for a moment that this isn't just due to avoidance of the RIAA's civil lawsuits, we would hope that this means the people who appreciate music can also appreciate that it costs money to make good recordings, and this has to be recovered somehow.

Sounding Off: Online MusicFor many years, artists with an eye on their record label's accounts have dreamt up plans to replace the expensive and wasteful distribution of physical media. Frank Zappa once proposed to a firm of venture capitalists a service based around cable TV delivery and blank digital tapes, but perhaps it was just too far ahead of its time to get off the ground. Now the technology does exist, and portable hard disk players have proved a viable target platform, but the financial deal doesn't appear to have changed for many of the people who actually create the music.

Just as in the early days of Compact Disc when artists were still being charged for shellac breakage and yet received a lower royalty rate for CDs than for vinyl (because CDs were 'new technology' and supposedly expensive to make), the sums could still be tilted against artists. So far, it looks like the benefits of network distribution aren't always being passed back down the chain. The cost savings involved are considerable — there's no packaging to print, there are no unsold returns or shipping costs. There are no boxes of unlistened-to promo copies waiting in the attic of supposed 'reviewers' for the right time to be flogged on eBay.

Arguably, labels need a significant cut to allow them to underwrite recordings that may not be a commercial success. But as the real cost of recording equipment has fallen to its lowest level ever — with a lot of music created purely inside the computer — this role may not be as important as it once was. The primary functions of a label may become promotion and quality control, selecting the best artists and tracks in a particular genre. And is there any justification for an online retailer to keep a third or more of the sale price for the simple act of automatically processing a transaction on a web server?

One straightforward solution would be to base royalties for paid downloads on licensing rates, not those for sales of physical CDs. These can be much more generous to artists, but naturally we would expect this step to be resisted by the major labels with large numbers of musicians under contract.

If you don't have a major label record deal (yet), why should you care? Because if the industry doesn't take the opportunity to correct the perception that it rips off artists, then it risks undermining public support for paid downloads. According to the music activist site Downhill Battle (, if you divide the number of tracks sold via iTunes by the number of iPods sold, it works out at about 21 songs per machine. Given that iPods can store thousands of tracks, it seems that the argument about paying for online music hasn't been won yet.

Even if you believe that CDs will still be around for a few years, it seems few people doubt that some form of network audio is the future of the industry. Labels may have to become leaner operations to survive; perhaps the multi-million advances, the marketing largesse and subsidised hotel-wrecking benders were just quirks of the way music was distributed and sold in the 20th century. It's hard to imagine that a young Led Zeppelin today would be able to fund a private jet from a small cut on 99 cent downloads.

Warp Records' 'Bleep' site ( provides an example of how legal downloads should be done. Firstly, the label is also the retailer, so there's more to pay the artist with from the start. The download files are high bit-rate MP3s averaging over 200kbps, without annoying DRM features — the format that people actually want. Warp are also considering offering newer formats like Ogg Vorbis and the lossless FLAC; since they're not a hardware manufacturer they don't need to tie their customers to any particular technology. But best of all, after bandwidth and running costs have been covered, they split the income from the downloads 50/50 with the artist. Let's hope that Warp can get the support they need from the listening public.

About The Author

Daniel James is a freelance technology writer specialising in Linux and audio. He runs a small studio on the edge of a cliff.

Published September 2004