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The recording industry is running in fear, but why? What the music industry needs to do is figure out how to USE these new mediums for distribution, for marketing, for sales. The #1 reason the Internet can be useful is that you have DIRECT feedback from your customers. What do recording industry people really know about the people buying their music? Not much, really.
One scenario for a "small first step" for some recording company to take would be something like a 1st generation proprietary software that will stream the audio to you, and you buy the music online from the music company themselves. the only downside with this is that you probably need an isdn or dsl line (or faster) to really make use of this. Also, you probably don't want to allow "caching" on the local disk for off-line playback.
Make it a $X per year subscription to the service, and something cheap like $1 per song. If they want the whole album, $5, and if they later want to "upgrade" and have the physical cd sent to them, charge another $5 (plus S&H, naturally)
Like the DVD folks, they're crying over spilt milk. Regardless whether they stop the companies, people will continue to do it. Realistically, yes there's lots of pirating going on, but people like my parents, people who are NOT technically savvy, plus people like me who don't want to goto all the bother of onesies-twosies putting an mp3 archive together are the ones who they need to target. Target the people who are not trying to "circumvent the system". Most honest people aren't trying to circumvent the system.
Me, I do have a large mp3 collection, but they're all rip'ed from my collection of original CD's. No, I didn't sell them afterwards. Sure I spent many hours getting the rip'ping to work better, and I can usually get the artist, album title, and track titles from cddb.com, but I don't goto the bother of trying to download mp3's off the net, and trying to figure out how to put them into my collection, as the bitrates are all not what I want, filenames will all different from my scheme, etc.
They need to stop crying over spilt milk, much like the DVD people are.
The genie's out, and there's no getting him back into the bottle.
I've had a few years to think about this, and this certainly does come across as too brash. Yes, the tech is there and it's fundamentally not going to protect your content, but fundamentally, people want to do the right thing. I've come across one "test" where a book was made electronically available for free, and lots of people downloaded it. In a followup survey, few people had passed it on to friends, because they didn't realize that they were allowed to. hm. Of course, the book market may be different than the music market, but fundamentally this feels sound. I pride myself that I own CD's of everything that's in my MP3 collection.
Apple's iTunes also has changed the picture. They've proved that DRM can work. The trick is finding the middle road. Make a system/software that isn't too difficult to use, and reasonably priced, and everyone will be happy to use it. Usability is first and foremost important.
I still feel that the RIAA is crying over spilt milk. They're attacking the very customer base that they want to buy their products. This just strikes me as dumb. In making a product, you want to make what the customer wants, right? well the customers want electronic music. And yet the industry as a whole still isn't giving it to them. Thus, people will find their own ways around the deficiencies in the market. Whether it be iTunes, Kazaa, or BitTorrent, they'll find the thing that works for them, regardless of what the companies try to do.