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What Every Classical Music Lover Needs to Know about MP3

David Sedlock resonances.com

Since you're reading this article, you've probably realized that the Internet is a great place for classical music lovers to get information. Chances are you've already bought CDs from Internet retailers such as Amazon.com and you have welcomed the convenience and low price. By now you know a lot about classical music on the Internet. But you may not be aware of the fact that a revolution is taking place in the record industry, one that will ultimately have consequences for you, the classical music fan. The revolution is MP3.

I run a new breed of record label called Resonances.com. I and many others like me are taking advantage of an entirely new business model in the music world, one which brings the artist and the consumer closer together and cuts out the array of middlemen that have controlled the music business until now.

Recorded music has traditionally been dominated by six big record distributors (WEA, Sony, Polygram, BMG, Uni and CEMA). If an artist wasn't signed to a record label owned by one of these distributors or a handful of "independents" that distribute via them, he or she had little chance of recording music and getting it to consumers. The last decade or so of the 20th century has not been kind to fat companies such as these. But while other industries have trimmed down and tuned into the needs of their consumers, the record industry has reacted by throwing out the artists that supply them with music and depend on them for their living. If an artist hasn't got a track record of CD sales in the hundreds of thousands, he is out on his ear. The situation is particularly bad for classical music, because this was never a big money earner for the industry anyway. Even here in classical music loving Germany we hear reports of venerable artists signed with Deutsche Grammophon losing their contracts.

This is not good news for lovers of classical music. It will inevitably result in fewer recordings, poorer quality and less choice. The industry will tend to concentrate on the proven money earners - that is, the standard classical repertoire. If you like lesser known composers, you'd do well to handle your existing CDs carefully! It is also not good news for performers. Earning a little income from CD sales has always been a reward for their hard work and dedication to a demanding and poorly paid profession.

Enter MP3. MP3 is simply a scheme for encoding music in a compressed, digital format. The five minute piece that normally requires about 50MB of storage requires less than 5MB in the most used MP3 format. Yet the quality loss is, for practical purposes, nil. (MP3 works according to the principle that if a person can't hear a difference, there is no need to store the difference. The inaudible differences are then thrown away, allowing storage and transmission requirements to decrease.)

In itself, MP3 is not a revolution, but the reality of 10x compression with no practical loss in quality, coupled with the capacity and speed of the Internet today, now make it practical to move music files over the Internet and store them on servers in significant numbers. Suddenly a new business model is possible in the music world. MP3.com and its founder, Michael Robertson, pioneered this business model. The model is based on the principle that the artist who makes a recording and the consumer who buys it should transact business directly, without the intervention of the middlemen that have controlled the business and set the price. The result is that the consumer pays a price for a CD that is closer to the nominal cost of recording and manufacturing, while the artist receives a greater share of the sales price, much more than the standard 10% or less that he gets from record companies. A further advantage is that the artist retains the copyright in the recording rather than turning it over to the record company or working for hire. MP3.com is a new kind of record distributor, trimmed down and attuned to the needs of consumers and artists.

The scheme works like this: The artist can upload one or more recordings in MP3 format over the Internet to MP3.com. He gets a website displaying the selections that he chooses to make available. The visitor to the site can download the samples for free, and, if he likes, order a CD online containing the entire recording. The CD is manufactured then and there (not before) and mailed out. Artists set their own price for a CD, but it must be between $6 and $15. They receive 50% of the sales price. MP3.com keeps the other 50% to pay for the manufacturing and operating costs. The CD itself is a normal audio CD that can be played on any CD player. It also has an extra CD-ROM section, suitable for play on a PC, which provides a multimedia presentation containing liner notes, pictures and an MP3 player. MP3.com has one organization of music based on genera, another based on region, and yet another based on charts determined by the number of downloads. There is also a search engine and alphabetical listings of artists and selections, as well as other schemes such as featured songs, featured artists and articles on various subjects. The classical section at MP3.com is growing vigorously. There is already very good material available, and the professionalism of the recordings will increase in step with consumer demand.

The new business model promises to have a profound impact on the classical music consumer. Suddenly control has been wrested away from the big boys and an entirely new economic scale has been introduced. A classical recording distributed over mp3.com does not have to sell hundreds of thousands of copies to succeed financially. A careful production of a work requiring a small instrumentation can recoup its expenses with the sale of only a few thousand CDs. Further sales bring in a modest profit. Choice for the consumer is back again. As a classical music lover, you have a much better chance to have your particular desires satisfied in the new scheme. If you, or you and a group of people in your classical community, have a special request, you could send an email to the musicians who are likely to be able to fulfill it. Or better yet, email a new label like Resonances.com and we'll organize the production for you.

If you find it incredible that a CD that is priced well under the standard price and sells only a few thousand copies can be a financial success, then you have to take into account all the things that are missing from the new business model: There is no warehouse with tens of thousands of CDs waiting to be sold (or not sold as the case may be). In fact there is no warehouse at all: the music remains a string of 0's and 1's on a hard disk somewhere until its physical reality is required. There are no record company executives with expensive life styles to support. There are no legal staff on retainer. There is no office building full of people drawing a salary. There is no advertising. No one is sending out promotional CDs to radio stations and magazines. No record store is pocketing one-third of the retail price of the CD. The music business has been pared down to the absolute essential of what has to be there for it to be a music business: there is the recording, the artist who makes it, and the consumer who enjoys it. In between is a thin, flexible, service-oriented layer.

Now it might be asked what the record industry thinks about all this. The answer is, they are not happy. Publicly their worry is that MP3 and the Internet facilitate piracy. Their first reaction was to confront the movement head on. In 1998 the RIAA brought suit against a company that was marketing a portable MP3 player called the Diamond Rio. It allows people to transfer music in MP3 format from their computer to the player, which is similar to a portable CD player, except that it does not contain a spinning disk that skips when subjected to the slightest movement. This means that music can be listened to in situations where a CD player is unusable. Other features, such as software support for mixing and matching tracks, make for a very appealing product. The player was perceived as a real threat by the record industry, since it promised to open up MP3 to a larger audience than the relatively small number of computer "geeks" that had used it till then. The RIAA maintained that the Diamond Rio violated the Audio Home Recording Act and facilitated illegal copying. They demanded that it and similar devices be banned from the market. Diamond countered with its own anti-trust suit claiming that the record industry was using its monopoly to corner music distribution, effectively shouldering small artists and labels out of the marketplace by denying them the cost-effective means of distribution made possible by the MP3 format and the Internet. The RIAA case was thrown out of court.

(It is important to point out here that MP3.com does not traffic in pirated material, and the connection between the MP3 format and piracy is a fabrication of the record industry. When an artist signs up, he provides a warrenty that the recordings he uploads are his own. In addition, musicologists at MP3.com examine the recordings and, if there is any doubt about their legitimacy, do not allow them on the site until the rights are cleared. In fact, MP3.com is totally against piracy. The whole scheme is based on the artist getting fairly paid for his work.)

The second reaction of the record industry is the so-called Secure Digital Music Initiative or SDMI for short. The idea is to put a digital "watermark" on music files that would serve as a proof of purchase for SDMI-enabled devices. The watermark would not survive copying by SDMI-compliant copying equipment, so piracy would be at an end. Watermarked music would not be playable on non-SDMI devices. The record companies would sell their watermarked music over the Internet and a new generation of SDMI devices would be manufactured and sold to consumers.

Many observers are concerned about SDMI. In addition to pointing out the obvious fact, that SDMI technology and the new SDMI devices will have to be paid for by the consumer (Remember the introduction of CDs? And is it an accident that one of the big players, Sony, also manufactures stereo devices?), they maintain that the industry has a secret agenda in SDMI, which is to slam the door on the little guys  starting to do business in the new model and to secure control of the new Internet distribution channels for the big boys. The observers point out that the SDMI technology, which is proprietary to the record industry, will be an obstacle to artists who want to operate in the new business model. If the record industry succeeds in making SDMI the rule of law, there will certainly be severe consequences for the new movement.

If you are concerned about how SDMI affects classical music, and I think you should be, the best thing you can do is oppose SDMI and support classical artists at mp3.com by buying their CDs. Let me know what I can do for you at Resonances.com. For example, one thing we offer is a "special edition CD". This is a small lot of CDs containing promotional material for a company or organization. We can put your logo on the front cover, add some text of your choosing to the liner notes, or even add a track to the CD containing a promotional message. If your company or organization plans to give Christmas gifts to valued clients, think about the effect that giving a special edition classical CD with fine music from one of our artists would have. We can also organize CD productions of classical music of your choosing for you.

In conclusion, the MP3 revolution is happening, and it will affect you as a classical music lover. The results could be to your advantage, but the outcome depends to a large extent on the choices you make as a consumer. If you ignore the recordings of the people striking out in a new direction, if you roll over to the plan of the established music industry to lock up distribution channels with SDMI, then you will get what you deserve. If you show your support by buying CDs from classical artists putting up fine recordings at MP3.com, you will help to bring about a new era in recorded classical music. See you at MP3.com!

September 1999

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