The record industry should erect a statue in honor of Shawn Fanning

Having overtaken sales of downloads and CD sales, which have dropped dramatically since the beginning of the century, streamed music is now the most important revenue source for the industry in the United States market. And the person the record labels have to thank for all this is none other than Shawn Fanning, who back in 1999 at the age of 18, started a revolution. Somebody should erect a statue to him.

Fanning’s brainchild, Napster, showed that in a hyper-connected internet world, the only way the music industry was going to survive was by creating a magic tap out of which all the music anybody anywhere, anytime, could ever want. After decades of only being able to hear your favorite song on the radio or by owning a physical copy of it, suddenly it was possible to download just about anything from the site and store it on a hard drive. As more and more people started using the internet, music simply became another collection of bits that could be transferred via the web.

It took the music industry many years to discover this, and to be honest, it still hasn’t really grasped the potential. Instead, it has wasted millions of dollars lobbying politicians and governments, in bringing legal action against music fans and web sites, all to try to avoid the inevitable and try to create its own magic tap that Shawn Fanning had understood back in 1999. After a decade and a half of idiocy, deceit, and denial, the music industry now earns most of its money — let me just say that again: earns most of its money — from the internet.

Record execs’ salaries aren’t paid by lawsuits, nor by pathetic lobbyists, nor by tailor-made laws, nor by trying to prosecute music fans or academics like me. They make their money thanks to Spotify, Apple and YouTube, along with other companies that have managed to create a magic tap that allows us to listen to music by tapping in a few words, or even just by asking Siri to put on a bit of jazz when we get in the car. In short, the mortal enemy of 1999 now pays their bills.

But according to them, this still isn’t enough. Because last year, the Recording Industry Association of America, the RIAA, reported that vinyl, which is back in fashion, earned more money than ad-supported streaming. At the same time, the companies even have the gall to point out that despite a huge increase in music consumption, artists’ earnings have not kept up.

That’s because this is still an industry that even though it can no longer justify its generous operating margins, still takes the lion’s share of earnings that by rights should be going to the artists who make the music. The reason? Because it owns the recording rights and has the back catalogue.

What’s more, the industry keeps control over distribution channels, continues to negotiate contracts that give record labels control over artists’ rights, and continues to enjoy the same profit margins it did when it was involved in pressing vinyl or making CDs, as well as distributing them to shops, which it no longer has to.

Moore’s Law, which has allowed for significant reduction in costs, has not been applied to this industry and hasn’t helped artists to get what is legally theirs.

This is because the record labels have systematically stamped out any attempt by musicians and composers to gain access to new distribution channels, either by coopting rebels, or simply by freezing them out.

Let’s be clear about this, Universal, Sony and Warner do not make music. Musicians make music. But here we are, sixteen years on from the Napster wake up call that the industry couldn’t survive unless it embraced change, and it’s still Universal, Sony, and Warner who are complaining because they don’t make enough profit, while the artists are just as badly off, if not worse. Why is it that when musicians complain about how little money they are making from Spotify or YouTube, they never point the finger at their record label that, after negotiating its share, gives them such a small percentage of their true earnings? Where’s all the money that the record company gets and that does not got to the authors, artists and performers? Why do these guys still use such an expensive, inefficient and lousy intermediary?

It’s a mystery to me, just like it’s a mystery that Shawn Fanning, the kid who’s idea now puts money in the pockets of record company execs, is still regarded by them as a villain, when they should club together and erect a statue to him.

(En español, aquí)