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Posted November 11, 2007

by R. Feldman

Should publishers write off mechanical royalties? With physical sales In a tailspin, increasing P2P usage, and groups like Radiohead virtually giving music away to promote their live concerts - maybe we should !

 Yes, there’s the promise of the “digital revolution” but business models ranging from I-tunes, SpiralFrog, ad supported, Rhapsody, subscription models, to P2P intermediation schemes like SnoCap have not shown they can will replace revenue from lost physical sales. (Even ringtones -  which benefit a relatively small percentage of publishers – could be vulnerable at some point when consumers realize they can make and upload their own ringtone to nearly every phone on the market.)   

 So what’s slowng the digital distribution revolution? Free Music- whether from Limewire, Youtube or your friend who’s more than happy to burn “the gift of music” for you.

So, do we say “Hail Mary” and pray for sync fees and performance royalties? Can we count on these sources of revenue to increase as more and more music creators target film, television and Madison Ave.?

 Maybe there are other solutions worth exploring.

Here are three:

 1.    STOP RIAA LITIGATION: The RIAA should quit suing illegal down-loaders and refund settlement fees they have collected. We need more friends, and fewer enemies. They could save the legal fees for something that might actually change the dynamic (see #3).

 2.         REDUCE PRICES: Reduce the price of a single download to 50 cents and the online price of a CD to $5.00. Critics argue this would irrevocably devalue music – I submit this has already occurred.

 3.      SONGWORM: Unleash the “song-worm” - a song-eating virus encased in an illegal download served over P2P networks that attacks illegally downloaded music. (This may be impractical retroactively, but it might work going forward)   

 Here is the respective logic for each idea:

 1.       RIAA     The deterrent effect of suing illegal down- loaders  is  questionable. I would argue the principal beneficiaries are RIAA lawyers.

 2.       PRICE REDUCTION      The suggested pricing is meant to hit the sweet spot of between the hassle/inferior quality of illegal music and for burning, the hassle of bugging your friend to make you a copy. The price readjustment would quite probably increase sales (music is an elastic commodity) and give new business models a better chance of success.

Note  Physical product pricing would remain the same with the price     differential highlighting the value proposition of owning something      tangible.

 3.    THE SONGWORM      Illegal downloading is not the only culprit, but billions of songs are traded annually. Of course I would never unleash the “Songworm” because that would be a felony under the DMC, but imagine the effect of shuttering P2P sites and taking this case to the Supreme Court arguing publisher’s right to defend property.

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