Back when I was in the music business I sat on a couple of the industry boards.

Back then there was a considerable amount of naivete about how to deal with government. The attitudes of the “industry” were totally, “screw the government; they will come around to our thinking if they have any sense…”

I had friends who were bureaucrats who I asked advice from now and again, and they told me, “if you want to get things done, hire a lobbyist”. So I recommended to one of the industry groups where I was a director that we hire a lobbyist. We did. And the industry got the outcome that it wanted.

Now most major industries hire lobbyists to get their points across. I suspect that the content industry as a whole is no different.

The results are really amazing when you think about it.

Because what happens is that the ordinary person in the street has no idea that companies working together present a point of view to a government that is so eminently logical and so helpful to government that they just take it on board and make it policy.

It is only when suddenly the industry splits that the little people get a chance to see what is really happening.

Such was the case recently when the retail booksellers worked to get the legislation on imports of books changed. And it was going to decimate the local publishing industry… At that point, the point of severe difference, suddenly the local authors got motivated and the government decided that it had better move to the sidelines of the debate and let the various groups that form the overall industry fight it out.

The problem of course is that one part of an industry will present itself as the whole industry to get its point across, when the reality is that there is a whole lot more to the ecosystem than may initially meet the eye.

Such is the case with the music industry.

The music industry actually incorporates record companies, publishers, venues, artists, managers, equipment retail and hire, crews, and on and on. It is a really big industry in terms of employment.

But for the most part people think about the record business being the music industry.

Actually the recorded music industry is still quite big and a lot of of it is obscure unless you really think about it.

I would suggest that this part of the industry includes artists, songwriters, music publishers, record companies, recording studios and engineers…. and retailers including online plus…. telcos.

The infrastructure of the music industry got a whole lot more complex during the last ten years.

It also got a whole lot more profitable.

Yes – that's right. In spite of the PR that the record industry rolls out that they are being hurt by piracy, their margins grew by an order of magnitude as a result of online sales. And piracy, as it always has been, was just a cost of doing business. Now that may be an unacceptable cost for some of the people in the record business, but let's face it, how many times have you ever heard of an industry telling everyone how fabulous life is. (Think about the farmers – when it rains they will tell you that they have had floods. When its dry they tell you that there is a drought. Its never right – if it was they wouldn't be able to get the government to keep bailing them out).

The recorded music industry, I would venture to say, has never made so much money from its catalogues. To qualify that, I am talking gross margin here – not necessarily revenue.

The other thing that has happened to the record business is that they have been able to gradually shed staff without any real acrimony, because they have been able to paint the picture of poverty based on the rationale that they have lost so much money because of piracy. Shedding staff means that overheads are managed down and presto, you have even better net profit!

Here is the thing though. We are now getting to a point where the record business is starting to butt heads with the telcos. The telcos may not love P2P any more than the record companies because of the constant need that is driven for infrastructure improvement. But lets face it, all that data traffic that is moving round the network means that people, consumers that is, now totally accept the concept that they need many many gigabytes of data in their monthly plan. That means that they all get to be upsold to bigger better faster plans. And every business loves the upsell.

The telcos don't want the gravy train to stop, and chaos in the marketplace with consumers not understanding the plans they are on is good, just as consumers downloading huge swathes of content is good – good for their profitability that is.

When the record companies and the telcos butt heads about copyright of course the telcos will agree about the prinicples, because they are law abiding corporate citizens just like anyone would expect. But behind the scenes I wonder if they are briefing their lobbyists, setting the scene for a battle royal about how the citizenry need to have more online freedoms…. particularly in a world with an NBN offering much more capacity for big chunks of data to be consumed by more people.

It should be interesting to watch.

And this will be where the citizenry will have the opportunity, if it gets together with one voice, to become quite influential.

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Posted in Main Page by Chris Gilbey No Comments Yet