I can not believe that it is a week now since I blogged last time. Thanksgiving is a great period of time to relax and to get prepared for the coming pressure. I have a few presentations in two weeks, need to finish and substantiate them as soon as possible.

The RIAA blamed P2P sharing for decreasing sales of CD, CRIA (Canadian Recording Industry Association) is doing the same thing, and here in a Michael Geist’s new article, he shows a few points that there are other things to be blamed too: Big Music p2p stats don’t tally. Michael Geist is the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa.

There seems to be more and more P2P based solutions to sell music these days.
How Do 3 Million Independent Artists Reach 80 Million Music Lovers? Through Their Fans.

As predicted in my paper written in 2002 “Stardom, Peer-to-peer and the Socially Optimal Distribution of Music”, P2P could be potentially integrated in a business strategy for the music industry, and bring in profit.

A lot of news stories below:

P2P Tilts Toward Legitimacy

Weed is offering some way (based on DRM implemented by Microsoft) for people to sample music before they want to buy. Here is a story from Wired News.

Here is a Rollingstone article showing how the industry is shift gears, and if you read my 2002 article, you will see how my idea gets integrated in the new trend.

P2P gets profitable

OutKast, Britney, Destiny’s Child to be offered through new P2P service

Two pioneers of file-sharing — Napster’s Shawn Fanning and Grokster’s Wayne Rosso — are quietly working with the major labels to find ways of making peer-to-peer sites profitable.

Mashboxx, a new P2P site started by Rosso, is expected to launch early next year and incorporate new technology developed by Fanning. Called Snocap, it allows users to share music freely but with a catch: When you attempt to trade a protected song, Snocap will swap it with an authorized file — likely a low-quality version of the song or one that lets you listen just a few times. Mashboxx will then provide the option of buying a CD-quality file of the track with a click of the mouse.

Sony BMG is the first major label to embrace the technology, though others are expected to follow. According to a source familiar with negotiations between Sony BMG, Mashboxx and Snocap, the label will offer most of its catalog — which includes music by Bruce Springsteen, Destiny’s Child, OutKast, Britney Spears, Modest Mouse and Bob Dylan — through the service.

It would mark a new era in the relationship between labels and file-sharing sites — a relationship previously “characterized by fear, anger and a desire to take revenge,” according to Josh Bernoff, an Internet analyst at Forrester Research. The Recording Industry Association of America has long held the position that unauthorized use of P2P technology is the major reason for the decline in music-industry revenues in the past three years. Sony BMG CEO Andrew Lack quipped to the New York Times in September 2003 that “P2P stands for piracy to pornography.” But record-label sources say that since taking over Sony early that same year, Lack has been fascinated with the possibility of using P2P as a new way to distribute music.

Mashboxx is actively seeking deals with other labels, though none have yet signed on. Mashboxx users will still be able to freely trade songs from labels that decline to work with Mashboxx, as well as share bootleg recordings the labels don’t sell.

But some observers suggest that P2P users will likely migrate to other sites where Snocap does not operate. “If people want to get legitimate music, there are a huge number of legitimate distribution services they can get it from,” says Bernoff. “If they want to steal music using P2P, then they aren’t interested in paying for it. I can’t figure out who is supposed to use a service like this.”

BILL WERDE
(Posted Nov 22, 2004)

Had a talk with Carlos, and it seems that Harmonics is a good unit of analysis to figure out the “technicalities” of appeals brought about by music. (seems especially so for hip-hop).

According to a 9th circuit ruling, any derivative music work should get copyright clearance for every note included in the piece before it can be legally published. This creates a huge problem for hip-hop musicians who constantly borrow from previous works. Getting permissions for each and every note could be so cumbersome and ruin the whole hip-hop culture, so a better pricing mechanism is needed for clearing the rights among musicians. Harmonics seems to be a good starting point to study, there is an interesting connection between harmonics and the traditional hedonic model in econometrics. When I have time, I will have a look at this problem, and hopefully, this can evolve into something helpful for the music industry. I will add a few links belows for future research.

The Einstein playing violin picture is taken from Here. It explains the basics of harmonics.
There are a lot of papers about hedonic models:
Developing a Hedonic Regression Model For Camcorders In the U.S. CPI
Here is a PDF article: Hedonic Theory and Econometric Specification

http://www.itic.ca/DIC/music/index.html

ITIC has collected Internet activity data from nearly 81,000 individuals world wide to get a better idea of P2P activity. The stats, collected between January 1st, 2003 and December 31, 2003, paint an interesting demographic picture of the P2P world.
Q1. How many people had been downloading music files in 2003 (any Peer-to-Peer platform)?

A1. 81.5M of people, which corresponds to 4.98% of the Internet users in the World. The best P2P penetration rate was in Spain with 31% of population connected to the Internet. Other top countries were France (xx%), Belgium (26%), Venezuela (25%), Canada (23%), Argentina (22%), Netherlands (21%), Israel (19%), United States (19%), Singapore (13%), Germany (17%), Austria (16%), Morocco (14%), Portugal (12%), Sweden (10%), Mexico (8%), United Kingdom (7%), Australia (6%)…

Q2. In what countries did P2P users download the more?

A2. American P2P users downloaded 4,383,918,151 songs in 2003. Other top countries are: Germany (377M), France (xxxM), Canada (258M), United Kingdom (154M), Netherlands (87M), Japan (59M), Spain (53M), Australia (49M), Belgium (28M)…

Q3. What would best define digital piracy in 2003?

A3. We compared other facts like Software Piracy and Movie Piracy with our own records. This also involved analyzing various economical and statistical data for ~ 90 significant countries. The conclusion was that ONLY a computer with an Internet connection were common to each infringer. Whatever aspect you consider (like unemployment, poverty, literacy, amount of downloads…) will give you a completely different ranking.

Q4. What was the commercial value of digital materials illegally downloaded in 2003?

A4. This is the most sticky part of the analysis. First, remember that most of the infringers would never buy if they had to pay for what they consume. Second, the prices may vary from one country to another. Now if you consider one song to be 0.99 USD, here is an interesting ranking; this is the cumulative commercial value of [ pirated Software (BSA 2003) + pirated music (DIC 2003) ] per Internet connected capita. Russian Federation was #1 with 185 USD per Internet user. For the ~90 countries analyzed, the average Theft / Capita was 42 USD in 2003. Other top countries were Kuwait, Algeria, France, Qatar, Ukraine, Bahrain, Saudi Arabia, Paraguay, Slovenia, Morocco, Belgium, Norway, Switzerland, Nigeria, Netherlands, Hungary, Oman, Finland, Tunisia, Lebanon, Ireland, United States, Denmark, Greece, Germany, United Kingdom, Canada, China, South Africa… But the most interesting result is the value of such a worldwide digital market (excluding Movie piracy) : $ 34.3 billion in 2003.

Also interesting: A Wired interview with Wilco about how they got golden record by releasing music for free on P2P

He that will not apply new remedies must expect new evils; for time is the greatest innovator.