Metered residential bandwidth: wave of the future

Over at Gizmodo, they’ve got something to say about what they think might be a new trend in Internet service pricing.

Meanwhile, I’ve been paying for metered-over-cap bandwidth for quite a while — almost two years for which I can speak from personal experience. My ISP has had metering infrastructure in place far longer than that.

When I asked one of their engineers what the deal was, he pointed out a highly relevant fact: bandwidth usage tends to follow a Pareto curve. In layman’s terms, that means that everyday users wind up subsidizing the leeches — that’s no good.

However, I see something else at work, too: I get the itchy feeling that the ISP’s planning to meter their customers’ bandwidth usage offer video on a different service tier.

Could it be that cable companies are anxious to discourage their customers from partaking of the smorgasbord of video options available from the public Internet? How could it be?!

</snark>

What will the future sound like?

In my previous post, I defined three constituencies in the music business. None of these seem likely to leave it, since two are requisite and the third — the middle-man, of course — can do things well that content creators typically cannot.

I’ve assigned myself the task of speculating on what those three players in the game can do to maximize their benefit, so...

The consumer gets what he wants through recommendations and listening opportunities. The musician gets what he wants through hard work, good luck, patience, and probably too often a dash of bootlicking.

The record companies get what they want through savvy decisions and an inordinately fortunate position of control over the full smash, to which they are desperately clinging.

As it stands the consumer is in the best position over the long term. The production values of newly available music may fall, but not so precipitously as to make it unpalatable.

Musicians need access to, or possession of, marketing expertise in inversely proportional measure to their attractiveness to listeners — expertise they currently gain from their association with recording labels.

Traditional recording companies need to set up Internet-compatible methods of distribution, or die.

One solution capable of preserving the status quo has been screaming in my face...

Use the full capabilities of the network

It is feasible, if not entirely easy, to accurately meter filesharing traffic. It’s no less feasible to work out who got downloaded, with a workable degree of accuracy.

Ultimately, telcos and ISP’s are the ones best suited to figuring out the winners of the game, passing on the fair cost to their customers, and managing the payouts accordingly, but I am mystified as to the excuses for not having tried.

Encryption and spoofing exist as easily implemented methods for zarking the numbers, and widespread attempts to break the system would create a tragedy of the commons. At the same time, the motivations for such an outcome would result only if listeners:

• Genuinely felt entitled to get their music for free, or
• Considered themselves unconscionably abused by the recording industry.

Cogitate on those, kids, because they’re instructive in understanding the current music marketplace.

If the current distro model shatters, whence comes the money?

First, let's not forget that the Compact Disc (or at least optical media) will not go away. Files get clobbered, common formats tend to deliver poor quality even when played through the best amplifiers and speakers, and these days, at least, low-volume pressings are hard to find online.

In addition to this, if we assume that services and tangibles are all that can be obtained at fair value, what can musicians sell from those categories of goods?

Shows

This is a no-brainer, folks, even if it's a total forward-to-the-past item.

High quality collateral items (e.g., liner notes, posters)

For all the advances in consumer-grade printing technologies, few listeners will happily invest in fancy offset printing or screenprinting hardware, but given sufficient capital, musicians can contract someone who has. Of course, this only works if listeners are keen on identifying themselves as afficionadoes of a given artist or ensemble... but judging by the t-shirts I see, this happens pretty often.

Sponsorships

Superstars everywhere get sponsorships that are often worth more than they make at their day jobs. Can’t this scale?

I suppose that in a world of consumer-friendly, recording-industry-hostile distribution channels a premium would be put on the average contribution to these revenue streams that is far greater than what we see today, but I’m not convinced it’s not feasible.

Another thought that occurs to me is that casual CD purchases may well drop in long run as a matter of course, for the same reasons that photography as a profession has taken a beating: background music will become flatly common, leaving the listeners who really care to fund more and better musicians, instead of swallowing recording industry pablum that allows the mediocre-yet-marketable to become superstars.

...And the record companies?

Middlemen are middlemen, so I don’t worry about how they will keep food on the table. The sharp ones will cut through the marketplace, and the dull ones will be ground down to nothing, end of story.

What happens if the recording industry gets the market protections it’s demanding?

To be honest, I don’t see that outcome having much shelf life even if it does arrive, for the same two reasons listeners already have for ripping them off. Technology will escalate; in the worst case the entire Internet population will be composed of petty criminals and their household-mates. How do you sue them all and get away with it?

Have I offered any sure solutions here?

No.

In the process I’ve confirmed the basis of Matt’s prediction, if not its particulars — I believe that the futures of live performance and niche recording have a much broader and more interesting scope than that offered by public-domain chamber music alone. However, that broadness can only come to life if the middlemen stop trying to shove the lowest common denominator down the throats of their entire market.

What does the present sound like?

Matt Haughey wrote today-ish about his “half-assed” take on The Future of the Music Business, and after reading it I realized that the matter could stand more thought.

While I do not approach this subject as a musician aspiring to stardom, I have a number of friends — some of whom I’ve rejected as prospective clients by advising them to start out on MySpace — who are so aspiring. One or two of them have actually come tantalizingly close to notoriety, if not actual fame. (Only in Lawrence, folks.)

I care, and consider myself entitled to share my opinion, because:

• I like music, to the point of its near-omnipresence in my life; and
• I may well be one of the professional cohort who help bring about the form into which modern music marketing morphs.

[Say that last one fast ten times.]

What today looks like, from my perspective

You have these BigCorp entertainment companies who find the most marketable musicians, put them into straitjackets also known as “contracts,” and proceed to leverage the hell out of those same properties by recording, advertising, and distributing their creative product in the ways that maximize their return on investment.

[My choice of language is deliberately sterile here, especially when you consider that I haven’t yet mentioned the unfortunate consumers of this music.]

The end result is that traditional record companies — including indies — have the entire market for traditionally marketed music, between them occupying a vast but slowly shrinking majority of the sales graphs.

When I stop to game this out, I see three constituencies with entirely different (but not mutually exclusive) goals:

• Record companies want to make the greatest possible profit at the smallest possible level of risk.
• Musicians want to make a good living doing something they love, for wildly varying values of “good” and “love.”
• Listeners want to get the greatest possible amount of enjoyable music possible per dollar of expenditure.

The way the system works now, most listeners buy Compact Discs with anywhere between six and twenty-plus tracks on each, amounting to a maximum of seventy four minutes of audio recordings. Of these, it’s typical that only half of them are good.

Musicians often wind up playing what they’re told to, of which half is typically crap they can’t stand.

Record companies, meanwhile, operate in a web of legal and political intricacies, which if navigated well result in receipt of the whole profits.

At least, that's what Steve Albini thinks, and he has no good reason to lie about it.

Meanwhile our three constituencies have devolved in parts to the following:

• “Pirates” sit in one virtual corner, all of them merrily downloading stuff they only pay for as part of their Internet service bills, no portion of which go to the recording industry.
• The recording industry sits in another corner, raising barriers of entry to music broadcasting in order to maintain control over their most important promotional medium apart from word of mouth. Simultaneously they make grossly negative examples of loyal listeners, forcing Internet service providers to spend on discovery what could just as easily have been handed over to the record companies without a ruckus.
• Musicians run the gamut. Some whine and others innovate or experiment. Most just sit tight silently and do what they’re told while they wait for the dust to settle.

From all of this the writing on the wall is clear: the music industry as a whole must adapt to rapidly altering modes of distribution, and until it does, revenues will continue to drop.

In the next entry, I’ll discuss where things might go from here. Some of them might even put the lion’s share of the money where it belongs: in the hands of musicians and writers.