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U2 manager blames ISPs

Paul McGuinness blames ISPs for the precipitous fall in sales of recorded music and proposes a mandatory filtering system.

In a speech at the Midem music trade show, U2 manager Paul McGuinness claims that Internet service providers bear a portion of responsibility for the sales decline in recorded music. It's so laughable on so many levels that I can't let it pass without comment:

1. File trading's not the sole cause of lower sales. McGuinness, like the RIAA and IFPI and other recording industry bodies, assumes that piracy on P2P networks is the main driver of the decline in music sales. This ignores several studies that have shown that heavy P2P users are also the heaviest music buyers (although those studies themselves are controversial). More to the point, this argument ignores other ways users are getting music for free. I'd guess that friends ripping CDs and swapping music on flash drives account for a fairly large proportion of purchase-replacements--I'm not going to buy a whole record for a song that I heard once on the radio if my friend's already got it and I can just rip it from him. And that's the other big problem: radio. It used to play new music and break new acts. But consolidation has led to exceptionally narrow, lowest-common-denominator playlists, and radio's become irrelevant to hard-core music fans, who drive popularity of new acts.

2. Net neutrality and safe harbor. As Mathew Ingram of The Globe and Mail argued very eloquently, it's absurd and unreasonable to expect ISPs to monitor all traffic traveling their networks for pirated content. Safe-harbor laws ensure that an ISP's not held responsible every time somebody uses their pipe for something illegal--imagine if victims of traffic accidents caused by drunk drivers could sue the state for building roads, or if victims of telephone scams could sue the phone companies. And monitoring is uncomfortably close to giving preferential treatment to content providers in exchange for an extra fee.

An aside: he shows his misunderstanding of the entire situation when he says: "There are many other examples that prove the ability of ISPs to switch off selectively activity they have a problem with: Google excluded BMW from their search engine when BMW started to play games." How is Google an ISP?

3. Broadband demand isn't driven by P2P. McGuinness' assumption that the main driver of ISP fees is P2P music shows the music industry's myopia. As he puts it, "Kids don't pay $25 a month for broadband just to share their photos, do their homework, and e-mail their pals." True, kids don't. Their parents pay the bill--and have been paying since long before P2P music networks became mainstream. People do a lot of things on the Intertubes--read, shop (eBay? Amazon?), blog, send IMs--and all of those things are much faster and more convenient with a broadband account.

4. The hippies cashed out long ago. The funniest and weirdest part of the speech is when he blames counterculture values coming from the West Coast of America for the tacit assumption that music should be free. He may be right that a lot of early techies came out of that community--Steve Jobs attended Reed College, and we all know that Stewart Brand deserves some credit for early online community The WELL--but Silicon Valley's been driven by the profit motive almost since its inception. And it's not like the Grateful Dead was ever a charity organization.

The thing is, I actually agree with his overall thesis: the best future business model for the recorded music industry I can think of is adding a few bucks to ISP fees, watermarking content, then splitting that revenue among rights holders based on how often a particular piece of content is played. The problem is that mandatory fees are unfair to those who couldn't care less about music and might not be legal, while voluntary fees work only if you have some sort of policing mechanism. But these interesting ideas deserve a spokesperson who's a little more familiar with the underlying technology.

(One last dose of vinegar: I can't dispute that U2 has had a lucrative career as a live band, but I saw them on the Zoo Station tour in 1992 and say with confidence that their live show is the weakest part of their act. Great props, great singer, but little variation. Even the ancient Stones swap songs frequently and occasionally stretch out a jam. Flame away.)