appetite for self-destruction

In his new book Appetite For Self Destruction: The Spectacular Crash Of The Record Industry In The Digital Age, Rolling Stone business reporter Steve Knopper frames the last 30 years of digital music against a backdrop of fear, ignorance and big bucks, to present a compelling narrative. We caught up with him to find out more.Music Ally: In your book you investigate a series of mistakes in the history of digital music, but what was the industry’s biggest error?SK: I think it was the industry’s reaction to Napster in the late 90s. It decided it would sue Napster out of existence and adopted a very offensive and defensive strategy for dealing with this, and I think that to an extent that was appropriate.But I do believe the next step the record industry – in the form of the major labels – completely missed was viewing internet downloads and internet distribution of music as an opportunity, and that really bit them in the butt.MA: Why do you think the industry was so unprepared for the internet and digital music?SK: The record industry has had a resistance to new technology going way back. Traditionally, the people who run record labels are not technology guys, they’re music guys.And, with the advent of the cassette tape in the 70s there were some prominent bootlegging rings that were a legitimate threat to the industry that continued in the 80s and 90s…so when Napster came along they only saw it through the lens of copyright infringement and theft.But there was another reason too. They were making lots of money the old way. You’ve got these old guys by the late 90s running record labels who were already in their 60s and…it’s my theory that none of these guys really had an economic incentive to change the model.You’re making $10m a year in 1999 and somebody comes to you and says you should completely change your business model to internet distribution…you’d probably say ‘forget it. I’ll carry on making my $10m a year off CDs and make it last as long as I can and when I have to retire I’ll just move to the Cayman Islands’.These golden parachutes don’t really push people who are at the top to innovate and I think there are blind spots because of that.MA: So you found the problem has been structural as well as a cultural. Was this a common consensus with your interviewees?SK: I interviewed 230 people so it’s impossible to say there was a unified consensus, but yes, it did start to emerge. Certainly over the last two or three years people have really begun to realise their mistakes.But you didn’t hear it from the current record label people because they had to put their own spin on it.When I went to talk to the retired people, like Joe Smith (Warners) and Howie Klein (Reprise) they would say ‘wow, the people in charge are really screwing this up’.So I started to hear these credible people make really scathing criticisms of the last ten years in the record industry and that gave me a body of evidence to rest my thesis on.MA: So how do you think the culture in the industry and the old mechanisms are changing?SK: They’ve already changed, and the labels are taking all this on board, maybe too little too late though. When you talk to the top people, almost universally they say things like ‘we’re trying lots of new things’.They say digital is the future and they are in the process of moving from a physical medium to a digital one. They’re flailing around doing all sorts of experimental things just to get a collection of tiny revenue streams coming in.MA: So there are some new revenue streams in place, but do you really think the culture has changed?SK: I think the culture has changed to an extent, but they haven’t gone all the way. No one really offers a free download system. In the United States there’s not really even a free streaming system other than MySpace Music, which has its limitations.There is definitely progress being made but I don’t think that it will completely rescue the industry or turn it into the booming industry it was in the 80s and 90s.MA: So do you think the way forward is free downloads with value added extra features making the money?SK: Yes, absolutely. I would say the model that most speaks to me is giving something away for free and then selling something slightly more expensive to fans later.Radiohead spoke to that, with In Rainbows. Bruce Springsteen did that on a smaller scale when he gave away music through Amazon and his own websiteSo you’re seeing more free things as a way of generating publicity and marketing. I think generally speaking, that’s a good model, and there are a lot of companies who are well positioned to take advantage of that model.Unfortunately for the record labels, they’re not best placed to do that. Some have done a better job than others of trying to reinvent themselves as touring companies or merchandising companies, but really, these companies were not built that way.MA: Have you been following the Pirate Bay case?SK: Yeah. I think it’s inevitable they would be shot down even though they’re based in Sweden where the laws are different than the US or England.Is this a huge victory for the RIAA and the record industry? Sort of – it was one of the bigger pirate services so it was a good thing they shot them down – but I don’t think that it’s going to move the needle at all on piracy and the number of files people share every day.MA: But it raises awareness about the issues of piracy and copyright, right?SK: Yes. But you always hear from the record labels, ‘let’s get legislation and congress to help us fix these problems’. And one thing you hear prominently is ‘let’s get ISPs to give us a cut’.I am dubious about having governments come in and completely fix this problem in favour of the record labels. I think the record labels who are waiting for Congress and the courts to solve all their problems, well, I don’t think that’s going to happen. I think that’s a bit of a na

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