Dear Bev Oda,

in response of an article in the Telegraph Journal by C.W.Moore I picked up the "pen, aehm keyboard, and write you this quick note about what I think about "copyright reform".


First of all, the music industry and the film industry are different. They have fundamentally different products based on the technology involved (audio vs. video) as well as their production value in dollar terms (10-100M vs 100k-1M) is orders of magnitude different. This fact does not seem to enter the current debate but is a very important distinguishing factor. Therefore, I will discuss the music industry in this email only and treat it as a separate issue. I strongly believe it should be treated in the copyright debate independently from film as much as possible.

As for the current "MP3 debate", the "value" of music is in my view the crux of the matter:

- The music industry (everyone involved in profiting from music) believes that music is a very highly valued (in dollar terms) product. As a business, they this sector seems to try to protect its "assets" at all cost. I attended the "Syndicate '05" conference in NY and heard a presentation of the record industry association claiming the right of infinite copyright (through renewals) of the recording (not the song). Open discussions about the publishing contracts that the industry makes with the artists can only affirm this observation. Furthermore the music industry has not been able to create "additional" value for their product - it is essentially the same thing (i.e. the CD) as it was 30 years ago.

- On the other hand, the audience (everyone else) believes that is essentially a commodity. Music is everpresent (commercial free music channels on cable or satellite services, over the air radio, snappy TV commercials, Mall background music, etc.) and typically FREE (commercial free music channels on cable or satellite services, over the air radio, snappy TV commercials, Mall background music. Thus the only value people perceive in music is when it is: (1) current, (2) rare, (3) matching the desires of the listener exceptionally well. The Internet is just one more channel that seems to affirm the listeners believe of music being "free" (or at least "cheap") because it a song is nothing more than an download of 5M of data - the same as a typical digital camera picture send to grandma by email.

These observations can explain why there is such a great "perceived value-gradient" between the producers and the consumers. When makes profits by leveraging highly valued music products there is no gradient - new releases are "OK" to cost more. But when products are aging, usage spreads and they essentially become commodities, we expect to pay less. Every other industry essentially works like this ... and when it does not happen, the consumer balances the gradient by - well "sharing".

Many people have also practiced the recording and duplication (sharing) of music for decades. In the record-era, the physical medium was durable and widely shared. I remember borrowing whole stacks of LPs in exchange for returning the same favor by lending my stack of LPs. During the tape-era, most of my music was recorded from radio (I still have boxes of tapes - which unfortunately cannot be played anymore in my car) or I recorded from the shared records of above friends. The CD era just shifted the source medium from LPs to CDs and did away with the crackling noise of the LP. Recording still took the same about of time.

- The recording industry made huge profits as it obsoleted one technology (records, tapes) and replaced it with another (CDs). The audience paid for it, because there was a valid value proposition going to the CD. It is interesting to note, that the industry played a role in the development of the playback standards.

In the Internet era, the source medium shifts again to MP3 files downloaded from the net and stored initially on a harddisk. But more fundamentally the players are now all digital as well. Again the technology is made obsolete and the industry COULD capitalize on the shift in technology. But what happens is:

- The recording industry has heavy losses as it holds on to the medium CD and a medium. If I go into a music store today, there is: no HD-CD, no Interactive-CD, no keep-forever-CD, no 32bit-CD. There is no new format.
- The recording industry misses the boat on paid Internet download services. instead, Apple takes the crown with iTunes.
- The recording industry also does not play a role in the definition of playback devices and formats. They are now defined by computer hardware and software manufacturers such as CreativeLabs and Microsoft.
- The music industry struggle across the board (this includes retailers) to come up with innovative ways to project "more-bang-for-the-buck" to keep sales up.

Facing huge losses, I believe the music industry dug in and are now trying to get the help from the governments to protect their business, seek assistance in a bailout of poor decisions of the past and in general trying to maintain the status-quo. The copyright law is an important "asset" for the industry.

I am a practical person, so here are some of my suggestion to the industry:

- Face the fact that music - at least the way we used to experience it - is now a cheap commodity. We'd be looking at 10cents a song, $1 a CD - nothing more. It's not different to when I sold my 100 LP strong record collection (valued at probably $3K) for $20 to a collector. Or that I allow my CD collection to be scratched up by my kids these days. The industry has to take it as it is: the old stuff and ways are s Write-Off!

- Phase out the traditional media in favor of something new. Skip the iTunes music download. Don't jump on the Microsoft DRM bandwaggon. Reinvent the medium including the player technology. My tip: ultra-high quality playback (hint hint: 7.1 surround sound that PC games could produce since about 2005).

- Add more value to the product. Here me: I want VALUE, VALUE, VALUE.

Here are some make-more-value ideas for the product "music".

(1) With a product purchase, give me access the artists. Let me write him/her an email, chat, etc. - the Internet connects anyone to anyone else for nothing. Use it!
(2) Add value beyond music: how about a set of 20 digital images, a cool interactive game, a discount for a concert, a nicer case, a poster, ...
(2b) Add even more value: Enter a purchase into a lottery to let them win a trip to NY to dine with my artists for 2 hours.
(3) Let me OWN it. I bought it, so I own it. Don't tell people they don't own it (as the film industry does with their DVDs). Its music, its in my head, let me have it. Forever!.
(3b) How about a "legitimate music owners registry" where I can sign my purchases in and - in case of a loss of media during a house-fire, I get it all back for a nominal recovery fee.
(3c) Or even a better - when I purchase a music device (think of a car with build in music player for example), the player comes already PRELOADED with all my legitimately purchased music. How cool would that be? Technically, its a 15min secured download through the Internet ... and lot's of people would pay for it.

These are just a few simple ideas to get the point across. I have more - feel free to pass on my email to your industry contacts if they need help.

Having said all this, what does this have to do with the politics of copyright reform? Well, let's face it - for above reasons, I think many people don't feel bad about their "P2P theft" of songs. Therefore a draconian policy on copyright is out of touch with what people believe.

Thus implementing a tough copyright policy policy which will likely let industry get away with their "old ways" has these effects in my view:
- government is seen as siding with the wrong group by the majority of the population
- innovation into an out-of-date industry is suppressed
- the possibility of creating something with a better value is lost and progress does not happen
+ stabilize the industry and the jobs that they provide
+ help some (but not all) artists

On the other hand letting the current internet-sharing continue unchanged will:
- make us some enemies south of the border
- affirm the people's believe that music is free (which it isn't)
- set a precendence for the video-sharing that has already started and will follow soon
+ drive a much needed "reinvention" of the music industry and their products
+ help some (but probably only a few smaller) artists
+ generate profits for broadband Internet providers, a few Taiwanese manufacturers of MP3 players and CD-Rs, and software makers

So in the end, the best endresult in my view is a balancing act for you and the policy makers and I hope you will see to it that the government will make an informed and good decision that serves us all in the long run.


With best regards
Andreas Schiffler