The Fall of the CD and the Rise of DMCA

The photo on the right is by Kate Bolin and is used in accordance to her Creative Commons license.

The king really is dead.

Fingers crossed, and barring unforeseen circumstances, an article I wrote for Business Edge should be running in all editions this Friday. It built off of this post about the rise of the MP3 and profiled three independent record stores as they faced off against competition from downloading and online music stores.

One of the people I interviewed was the manager of Boomtown Records in Vancouver. And his interview struck me the most as illustrating the massive change that was filtering through the industry, and how thanks to the MP3 nothing is going to be the same again.

Because Boomtown Records isn’t fighting on. The bricks and mortar store is shutting its doors at the end of the year and heading online instead. And this is significant because of the particular type of store that Boomtown is: Boomtown sells vinyl. Its owners and managers are vinyl enthusiasts. Several are DJs and their work at the store is something they do on the side. But despite their enthusiasm for vinyl, the manager told me that he hadn’t bought a new vinyl record in over a year. Instead, he bought himself a Serato, a device which mixes vinyl records into MP3s. He brings a laptop to his DJing gigs instead of a crate of records. Electronic music has improved to the point where it competes with vinyl well enough in this DJ’s opinion, that the advantage of carting around less stuff is sufficient for him to abandon the records he loves to perform the music he is passionate about.

You can read the full article when it comes online this Friday, but this point illustrated to me more than anything else the dominance of electronic, downloadable music. The people at Boomtown Records were philosophical about closing down a store that had been operating for over twelve years. A medium that had survived the storied onslaught of the CD was now bowing to pressure of a greater enemy, with barely a whimper.

There is considerable debate over the impact downloadable music has had on the music industry. Another interviewee, the owner of Blackbyrd Myoozik of Edmonton, felt that the availability of information and the ease of marketing online was a boon to him, as his customers came to him better informed of the music they wanted. Earlier this year, Industry Canada released a report which disputed the assertion that peer-to-peer downloads of music resulted in fewer people purchasing CDs. Indeed, they found “a strong positive relationship between P2P file sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file sharing increases CD purchases.”

But sales of CDs are dropping precipitously — 35% for the first quarter of 2007 compared to the same period in 2006, according to some studies. And while sales of online music are rising rapidly — tripling in some years — the increase hasn’t offset the loss of CD sales. Worldwide, online music still accounts for only 10% of music sales.

So, what is the discrepancy, here? I suspect that it is the result of people taking the CDs they already own, sticking them into their computers and extracting the tracks into a format that can be played. I have 3150 tracks on iTunes. The majority of those are tracks from CDs I already own. Even selling individual tracks at a bargain $0.99 each, and albums at $9.99, it would cost me over $3000 to replace my CD collection with an MP3 collection.

I’m staggered to think that I’ve spent so much on music over the course of my lifetime, but I’ll be damned if I’m going to spend that much again to switch that collection into electronic format. Nor should I have to. These aren’t tunes downloaded for free from other individuals; this is music that I purchased with my own money. And I didn’t spend that money to collect a shiny disc, a box of plastic and a set of liner notes; I bought this for the music. And if I am enjoying this music on my CD player, or in some other format derived from that CD, then morally as well as legally, I have completed the sale fairly and should be allowed to enjoy my product in peace and without restriction.

Which I suspect irks the large record label corporations no end. They’ve made hundreds of millions of dollars as people have replaced their vinyl collections with CDs, but now that it is possible to take the tracks from CDs (and vinyl) and convert them into MP3s, the revenues are drying up. There is no similar payment to transfer collections from CD to MP3, and so they’ve have no choice but to rely on sales of new music sold on its own merits. And people who currently have large collections of music can be rather selective of the sort of new music they buy.

So I can understand the fear and frustration, here. Change isn’t easy. But I find it arrogant in the extreme when the music industry tries to fight against this by working to limit the rights of consumers to enjoy the product they purchased.

Which brings me to industry minister Jim Prentice and the introduction of revisions to Canada’s copyright act which have been likened to our version of America’s restrictive Digital Millennium Copyright Act (DMCA). The revisions seek to update Canada’s copyright laws, but which has clearly been influenced by lobbying from the North American recording industry. Michael Geist has been following this issue and lists three primary concerns: