Saving The Music Business

No secret here, the music business is in trouble. One of the biggest reasons is that its product, being digital, is easy to steal, and for many it appears that there is no good reason not to.

I think I have the solution. But to be honest, though I did think of it independently, with a little bit of research I was able to establish that none other than Bill Gates himself proposed a similar concept in his 1995 book, The Road Ahead.

That said, this is 2008, and based on my discussions with folks in the record business, the idea is really not one being looked at, but there don’t appear to be any good reasons why. And so I am proposing it here to try to get the conversation going.

The idea is fairly straightforward. We should not be buying bits when we buy songs, or for that matter, digital content in general. We should be buying lifetime rights to access. So when you buy a song, or album, you can freely re-download it from the cloud, you may stream it to yourself, you can load it on any device you have with full privileges, for the rest of your life.

In this scenario, the cloud manages your ownership. So if you lose your iPod, the cloud knows what songs you own and is ready to re-download them to you. If you don’t have your iPod with you, you can still go to any PC and stream music from your library to yourself.

The point of this is to give long-term value to the purchase of a song. Right now, if you steal a song, once you have stolen it there is not much value difference between having stolen it and having purchased the real thing, other than, perhaps, a clear conscience, which it appears is not enough.

As I see it, a set of managed relationships between artists and labels on the one side, and fans on the other, has great value, to both sides of the equation. As a consumer, this would allow you to opt-in to relationships with artists, fan clubs, discount tickets, notification of concerts you might like in your area etc. It is a way for fans, without going out of their way, to establish a deeper relationship with their favorite artists.

The interesting aspect of this is the politics of it. Who controls what? And there, I think I have a solution that works both technologically and politically.

There would need to be one, or several rights societies, kind of like ASCAP and BMI. They would be non-profit organizations that do one thing. They manage the database that stores the relationships between users and songs. But they would not be responsible for selling anything.

The idea is that all the types of businesses that exist today would service customers including traditional digital music stores, as well as streaming on demand vendors, and online music lockers. So, for example, Rhapsody would still offer an on-demand streaming service as well as the right to play purchased music with the additional privileges that would afford. When you log in, it would ask the central database what songs you have played recently. Essentially, your streamed play history is in the cloud, just the way it is  with Rhapsody today.

But what is interesting with this new model is that you can switch from Rhapsody to Napster, and retain all of your purchases and play history. Or you could go to iTunes and re-download a purchased song you lost. In each case there is probably a service fee of some sort for allowing you to re-download music, perhaps on an annual basis, but those fees would be up to the service provider, and would presumably be driven by competition.

To touch on the details for a bit, the database would be exceedingly simple. It would store two tables. I have outlined them below, and I am sure there are other fields that I have missed. But it does, at least, suggest the framework.

User Table
user ID
last access date/time

Transaction Table
The Song ID or Album ID
user ID
Password or OpenID
the seller ID
transaction date/Time
Unit Type (e.g. single stream or full purchase)

Both the service providers and the record labels would have access to the database. The service providers would have write access, and would only have read access to a given customers history if the customer gave permission for that, which might allow the service provider to use collaborative filtering to make listening suggestions, as well as allowing the user to see what they have played or purchased and when.

The record labels would have access to the database for tallying purchases in order to bill service providers. The labels would not have permission to access individual purchase records, but could pay service providers to send messages to fans of a given artist, presuming the fans have opted in to receiving such messages.

With regard to identity, the central database would have no knowledge of who anyone actually is. Credit card information is held by the service provider, but that information, and actual identity information such as name or address is only kept as needed by the service provider for facilitating transactions, and not in the central database.

Finally, the idea of this is that accounts are not transferable and become inactive after death. But since we don’t know who people really are, we have to guess, and to make it unattractive to use someone else’s account. For this, we employ several tactics.

First, we set time limits. An account may not exist longer than the average human life. This would discourage someone from using an account since it will cut off after a certain time and then all of your personal songs go away.

Second, we say if an account is not used for several years – I am not yet suggesting a particular time frame – it becomes invalid. But most importantly, service providers create such personalized experiences and suggestions that you don’t want to use someone else’s account any more than anyone wants to share a Last.fm account.

From an economic perspective, the rights society would operate based on membership fees from labels and service providers, and it probably would make sense to have several competing rights societies for the consumer to choose from. It probably also makes sense for there to be some nominal annual fee to the consumer, but since I haven’t done any modeling around this I am not sure. The main point is that the organization needs to make enough money to operate successfully given demand.

And so, the reason I am writing this is because I want to see it happen. I have no economic incentive to do so, and am pretty busy doing my own business. But I have begun exploring this as an idea with interested parties to see what people thought.

From what I hear on the label side, they would likely be receptive to such an idea, given the state of things, but the impetus from this must come from the tech side first. This is because the labels are not capable of creating the infrastructure, and without the service providers it won’t work.

For this reason, the labels really need buy-in from Microsoft, Amazon, or some other big player or players. I don’t even suggest Apple here, though they would be the obvious choice, since the concept is a direct threat to iTunes hegemony. This threat, however, is a great reason for every other tech business in consumer facing content delivery to love this idea. It radically changes the status quo.

And so really, at the end of the day, this is a request to the big tech guys to reach out to talk about this idea. Though it may be a bit presumptuous, if I can serve as a midwife in this situation, it would be my pleasure. Because of the competitive interests involved here I do think some kind of neutral third party will be required to grease the wheels.

This article was authored by Hank Williams who is a New York-based entrepreneur who explores the tech marketplace from 10,000 feet at Why Does Everything Suck?.