When it's not music to the ears
Andy Ho, Senior Writer
The Straits Times

HEARING that the police had raided the homes of seven Singaporeans for allegedly downloading digital music they did not pay for, my neighbour ordered his children to stop immediately. He didn't want them to be next, he said.

In addition to the seven, in February two persons who illegally distributed hundreds of MP3 music files were jailed three and four months respectively. A third was let off with a warning, as he was only 16 years old at the time. The recent raids were the first against individuals who download digital music for their own use.

My neighbour, a business professor, told me that he admonished his kids not because he thought downloading music was wrong. He just didn't want them to risk being saddled with a criminal record, or be himself hit with a lawsuit as their parent.

He noted that in Canada, music file-sharing is legal. Moreover, you can record music off the radio without violating copyright law. What's more, he continued, music stores have listening stations where you can preview CDs before buying. Downloading a song to preview it is arguably doing the same thing - without having to use 'headphones glazed with the ear wax of hundreds of preceding patrons', as one US court graphically put it.

Music downloading is already entrenched in online culture, my neighbour said, but the recording industry wanted him to tell his kids it was wrong just because (it said) it was losing revenue.

This, he said, may not even be true. According to a recent study by Harvard and the University of North Carolina, he pointed out, file-sharing had no ill effect on music sales. Instead, the study he cited found that 'for every 150 downloads of a song from those albums, sales increased by a copy'.

And since most downloading is done by young people who have little money to buy music, their downloads can hardly be equated to lost sales. In fact, illegal downloading may even help sell CDs to an older niche market - working young adults who download a song or two and then buy the full CD if they like what they hear.

The music industry is a rapacious one, my indignant neighbour continued. It alleges that file-sharing robs songwriters and musicians of their livelihoods and threatens the jobs of tens of thousands. In fact, he said, 95 per cent of the price of a CD goes to the recording company.

Fed up with this disparity, some big names like David Bowie and Prince are releasing songs for free on the Internet, using this to promote their concerts. This worries the industry as it makes the big bucks from the big names.

The bottom line is that MP3 music file-sharing threatens to invert the parties' respective positions of negotiating power, which seems to be the reason why the industry is fighting tooth and nail.

But why can't the industry learn from its own history? In the late 1970s, sales of vinyl records and eight-tracks plummeted with the advent of cassette tapes. Then, in the 1980s, CDs began replacing cassettes. Yet both replacements did not have a net impact on album sales because the industry kept up with the times.

Now, CD sales may have plummeted, but the industry responds by resorting to the criminal justice system in an attempt to save its current business model. That is, it is trying to stop the technology from progressing by shutting down file-sharing services and going after individuals for copyright infringement.

The recent raids were prompted by the Record Industry Association of Singapore (Rias), which provided police with the downloaders' Internet Protocol, or IP, addresses, a means of online identification. The police would then have used those addresses to trace the users to their respective Internet service providers.

Consumers have every right to be upset with the Internet service providers for releasing the identities - and Rias for instigating the whole thing.

Moreover, such actions aren't likely to dampen people's enthusiasm for downloads if a 2005 Singapore Polytechnic study is any indication. It found that 60 per cent of people here aged 15 to 29 downloaded MP3s and didn't feel bad about it, even though they knew it was a criminal offence. Indeed, online forums and blogs have raged against the latest raids.

The experience in the US, where the Recording Industry Association of America has sued thousands of individuals, has been similar. And there, file-sharing is as popular as ever.

Infamously, the industry group also sued at least one dead individual, which shows why going after people based on their IP addresses is flawed. For example, families and roommates often share a computer, so it may be unclear if the IP address can be assumed to correspond to a particular individual. The IP address represents a machine, not necessarily a person.

Also, a hacker can make his computer appear to be another computer by faking its IP address. And then again, if you leave your home wireless network unsecured, others can tap into the Internet through your network. But as the owner of the Internet account, you would presumably be held liable by Rias for any downloading on that account. Clearly, going after individual consumers can only be bad for customer relations.

However, the industry may be resorting to the courts from force of habit. In the US, in the earlier part of the 20th century, the industry went after radio until it worked out a licensing scheme with broadcasters. In the 1980s, it nearly sued the VCR dead. Now, it is suing individuals on whom it has been foisting overpriced albums for decades.

Sure, the law is on its side. People who distribute MP3s illegally can be jailed for up to five years and fined up to $100,000. Those who download for personal use can be jailed for six months and fined up to $20,000. With these legal weapons in hand, Rias clearly hopes that by going after individual file-sharers - and educating the public about the penalties - it can eventually ride out this challenge.

But with the sheer numbers of people involved, going after individuals is like trying to plug a leaking dam with a couple of fingers. The industry is expending so much energy fighting this fire it hasn't thought deeper about co-opting the technology to build a more efficient business model for itself instead.

After all, MP3s offer the record companies a cheap way to distribute music with almost no delivery costs. If it sells only downloadable MP3s instead of CDs, a recording company won't be saddled with unsold inventory of CDs ever again.

Of course, the recording industry would have to live with the new competitive terrain and won't be able to charge for its services as it does now. Perhaps that's why it prefers to believe that it is a knockdown argument that, surely, no one can compete with free music. Yet people pay for bottled water and Starbucks cuppas when there's free water on the tap and free coffee at the office. The trick is to value-add.

There are many possible ways for the recording industry to monetise music downloading through various forms of licensing, ad revenue-sharing and so on. But getting consumers like my neighbour upset with its 'shock and awe' tactics shouldn't be one of them.