Peter Jenner:

Payment for recorded music has become voluntary, and it will become ever more so as time goes on.

Music is an essential aspect of our human existence, virtually a human right in that when we see people deprived of music, oppression is usually not far removed.

Traditionally accessed via concerts and performances, radio, jukebox, and hard carriers bearing recordings, music has historically been relatively easy to control even when the means of reproduction have challenged the existing music business. Player pianos, electricity, radio and the changes in physical sound carriers have all forced radical changes, but essential music business structures have managed to adjust after the adoption of new business models and the passage of some time.

The digital technologies that became ubiquitous in the early 21st century however, have made the recorded music industry descend into panic.

The digital revolution has fundamentally transformed all the processes of the traditional recorded music value chain. These technologies have made recording easier and cheaper, and made the distribution and manufacture of those recordings cost almost nothing. Promotion and marketing has morphed as well, creating the possibility that we have entered a business environment dominated by a mass of international niche markets, rather than a world of national mass markets (though the mass market will probably survive, but as a smaller proportion of the total market).

Radio, film, video and TV are all also going into flux, along with the newspaper/magazine industry, advertising, and all the other industries which have been based on the monopoly rent derived from copyright and intellectual property laws.

Maybe the most interesting question is: what remains the same?

Clearly the two essentials for a music market remain the same, the creators and the audience (though they are starting to blend into each other with the rise of user generated content). What certainly has changed is the way that recorded music gets from the creator to the audience, and how it is paid for. This fundamental change is affecting the whole structure of the traditional value chain, and the consequent distribution of revenue between all the various parties who make up the industry.

Music-related businesses need to actively pursue new opportunities for growing both their own businesses and those of the new players in the modern global economy.

The fundamental nature of the new technology – the replication of digital files cheaply and easily - cannot be controlled in the same ways as the traditional music business was controlled. Trying to control these activities will have no other effect than to thwart creativity, entrepreneurialism and cultural diversity, and worst of all delay the development of new business models that work with the technology rather than against it.

The music industry of today can, perhaps, best be described as a three-dimensional chess game where multiple strategies are simultaneously unfolding between creators, consumers, investors in music (record labels, publishers, etc), residential and wholesale broadband companies, mobile phone networks and a variety of other entities that populate the supply and distribution chains of the music business.

All of these old and new groups are trying to cope with licensing regimes and customs that are totally unfit for the new reality. The arcane and complex rights issues on which the whole industry has built itself make no sense to the new players. The historical antipathy and baggage that all the sectors carry around with them, combined with their desire to protect their existing businesses, has had the affect of completely frustrating anyone in the new digital distribution business trying to build a new 21st century business legally.

How can we rebuild the supply chain of the music industry?

A solution based on actual consumer behaviour is needed, one that allows access to music in a way that addresses how people engage with music today.
A seemingly reasonable solution looks to be a system where each customer with a broadband subscription, whether at home or via their mobile phone, would pay a small monthly fee to compensate creators and rights-holders for any unauthorised use of music that might occur via their subscription. This Access to Music Charge could be an indemnity, for networks and customers, against being sued for the unauthorised accessing of copyright protected music.

Excerpts from http://midemnetblog.typepad.com/midemnet_blog/2008/01/peter-jenner-th.html