Interview: Jeremy Silver
The battle against file-sharing rumbles on, but a coalition of musicians’ groups has spoken out against record company tactics. Could we be seeing a new chapter in the story of music and the internet?
By Ian Dunt
In many ways, the battle over artist royalties in an age of peer-to-peer file-sharing is a microcosm of what the internet has done to every sphere of life.
Things which no one in the early 90s would imagine living without – newspapers, CDs, televisions – suddenly seem frail and vulnerable. The idea that the newspaper will soon be extinct is approaching something like consensus. The television – all-conquering emperor of most living rooms – is deeply affected by the BBC’s iPlayer and Channel 4’s 4 Catch Up, which features most of the channel’s back-catalogue.
And yet, the music industry is about ten years further down the road. The fight over music file-sharing is being treated by other industries, including the movie industry, as a litmus test for the way in which the world will rearrange itself to deal with the challenges the internet has thrown up.
“What’s fascinating is that here is an industry at the forefront of what the internet can do to industry in general,” Jeremy Silver – entrepreneur, strategic advisor in music and technology, former director of media affairs for Virgin Records, contributor to Lord Carter’s Digital Britain report, and now chief executive of Featured Artists Coalition (FAC) – tells me.
“One day soon we’ll see this for games and printed books. But right now it’s music which is at the advanced stage. The government appears very, very uncertain in the face of that kind of radical disruptive calculation. But artists are forward-looking. That sense of wanting to support the future rather than prop up the past is what this is all about.”
Silver has triggered a small, but potentially very significant, bomb in the world of music. The FAC has rejected plans to fine and block the internet accounts of persistent file-sharers. The move prompted the ire of the record industry, whose representative body, the BPI, immediately fought back. It was the first time light could be seen between the positions of the record labels and the artists themselves.
“I wouldn’t characterise it as a split,” Silver stresses. “Previously it’s been record companies providing the main route to market, now there are multiple different ways. For the artist, the relationship with the fans is everything. It’s direct, emotional and critical, and it applies across a range of products that emerge from the artist, like T-shirts and gigs, as well as the music itself. Very few record companies have that direct relationship with music consumers. When they sue consumers, they’re not directly their customers. They’re their customer’s customers. So there isn’t that direct relationship that the artist has.”
Artists and record labels share a desire to see the creator paid for his or her work, but the new-found love-in between musicians and the businessmen who represent them (and take ownership of their work) is a new development in what has historically been a relationship fraught with tension. As the troubles thrown up by the internet progress through their second decade, other differences between artists and companies are starting to make themselves felt as well. And number one among those differences is money.
“Last year was the first year live revenues exceeded music revenues,” Silver says. “That indicates the way consumer spending is shifting. We’re in a technological environment where file-sharing is prevalent. Record companies get most of their revenue from CD sales. The average company is losing 15 per cent a year off CD sales. The artists continue to see their relationship with fans growing and a vibrant music environment. Record companies are seeing a decline, and they attribute it to one thing only, and that’s file-sharing.
“For them, it’s logical to say ‘let’s do everything we can to stop that happening, no matter what the cost’. They’ve been saying this for 15 years. In the US, for the last six years, they’ve instigated 30,000 lawsuits against consumers. The net effect of this has been negligible.
“Structurally we’re seeing an increasing difference in motivation and commercial imperative between product-orientated businesses and a set of people who have a range of revenue streams of which recordings are one.”
When Lord Mandelson announced the tough new sanctions being put out for consultation several groups were instantly angry. Civil libertarians were concerned about privacy, parents were worried that their child’s activities would end up cutting their internet connection, and file-sharers themselves, who are generally also paid-up consumers in other areas or at other times, felt victimised – as if is they were seeing an awful lot of stick and no carrot. But the breaking away of artists’ groups from the coalition pushing for something to be done leaves the government with few friends to help them get the proposals passed. If they survive consultation, that is.
“For the government to be motivated to intervene, it has to see some kind of market failure,” Silver argues. “What we’re seeing is not a market failure, just a shift in preferences. Is that sufficient motivation for government to intervene?”
The record industry lobbied hard for tough sanctions against file-sharers. Indeed, eyebrows were raised when it emerged Lord Mandelson made the announcement days after returning from his holiday in Corfu – a holiday which saw him meet a leading Hollywood critic of the practice, billionaire David Geffen. But the plans up for consultation now may have gone too far, prompting a split with the ‘talent’ and potentially wrecking the industry’s chance of maintaining a united front.
“We’ve seen a hardening of the position by recording companies. And that’s produced a stronger response from the artists,” Silver points out. “What was there before was a compromise that acknowledged the difficult position we were in. It was complicated but it was better than what we’ve got now.”
So could we be seeing the death of the record industry? Record companies used to have three main functions. A&R (the division responsible for scouting and artist development), marketing, and production and distribution of the final product. But with sites like Pandora suggesting new musical choices to users based on their preferences, and bands like Artic Monkeys building an enormous fanbase on the internet, do record labels have a reason to exist anymore? Perhaps the future will involve consumers and artists cutting out the middle man.
Silver doesn’t take the bait. “I don’t agree with record companies dying. The consumer needs to find stuff and have it filtered for them. In the future the record companies are more likely to do their activities in partnership with the artist. The nature of the relationship will change. Many record company executives recognise this. It’s not that they don’t see the way of the future. It’s that their old model was predicated on a completely different set of assumptions. It still provides them with most of their revenue so they do all they can to sustain the model. And that means taking the sort of hard-line action we’re seeing today. Their emphasis is on preserving the old, not looking to the future.”
And it’s that fact which could see a fascinating new front open in the battle between people who can have things for free and people who don’t want them to. If the arguments begin to consolidate between record companies and musicians, strange and exciting new avenues for music could open up quicker than in the painful and, frankly, illegal manner they have up to now. We’ve been debating the issue of musicians’ rights for a decade now. It looks like recent development could see the terms of that debate change for good.
