Radiohead, Big Music, and the Future of the “Record” Industry

Andrew deWaard. The Business of Entertainment. Editor: Robert C Sickels. Volume 2: Popular Music. Westport, CT: Praeger, 2009. 

“What is noise to the old order is harmony to the new.” ~ Jacques Attali

Let me begin with a question: Can you think of any mass-produced, mass-distributed commodity for which you, as the consumer, get to choose the price and assign its value? Possibilities include eBay and other auction-like economies, though these are individual items, not distributed en masse. Minor bartering sometimes occurs over mostly fixed prices, such as automobiles or housing, but this only happens on a per-item basis. The concept of a “suggested donation” and tipping is another possibility, but again, these are not attempted on any mass scale. I do not believe that the option of personally assigning monetary value to a mass-produced commodity exists in the current structure of Western late capitalism. Until now.

On September 30, 2007, infamous British rock band Radiohead posted a new message on their blog, Dead Air Space: “Hello everyone. Well, the new album is finished, and it’s coming out in ten days; we’ve called it In Rainbows. Love from us all. Jonny.” With that simple announcement, a media storm ensued and decades of music tradition was turned on its head. Not only was the world’s biggest band going to self-release its long-awaited new album, bypassing the corporate record industry and its major label dominance, but it was going to release it online for whatever price each consumer felt appropriate. When one logged on to http://InRainbows.com to download the album, instead of a price at the checkout basket, there was a box to fill-in with a question mark beside it. Clicking on the question mark prompted a message: “It’s Up To You.” Clicking again refreshed the screen: “No Really, It’s Up To You.” This included zero dollars, if one was so inclined.

Guitarist Jonny Greenwood describes the strategy as the band wanting “to make people pause for even a few seconds and think about what music is worth now. I thought it was an interesting thing to ask people to do and compare it to whatever else in their lives they value or don’t value.” The press was quick to comment that this was the first major album whose price was determined by the consumer, but to my mind, it is the first major commodity whose price is determined by the consumer. This Radiohead “pay-what-you-want” experiment, then, was not just about the changing nature of the music industry but of late capitalism itself, of our conceptions of commodity value, labor, and intellectual property in the digital age. By putting the onus of value on the consumer, Radiohead allowed the public to vote for an alternative vision of society by way of, increasingly and unfortunately, the only method available: the consumer dollar. The shifting terrain of popular culture and the entertainment market, especially the music industry, is at the forefront of the paradigm shift in social order we are experiencing in the digital revolution.

Music is uniquely equipped for the digital age in terms of production and distribution because of its simplicity and ease of use. Music itself is easily made, compared to the other art forms in popular culture. Unlike the massive collaborative teams needed for filming (cinema and television) and programming (video games), musical creation is available to anyone with a home computer and ever-more-affordable recording equipment/software. While film, television, and video games are able to be shared electronically, they require large file sizes and more advanced computer skills, which will keep the average consumer away until advancements are made in Internet speed and distribution convenience. The mp3, meanwhile, is only a few megabytes per file and is quickly and easily transferred in a variety of manners, including file-sharing networks, instant messaging, hyperlinking, free file-hosting services, mobile phones, and recordable compact disc media. It is also embedded and streamed within a Web page quite easily, a method of distribution that has gained immense popularity with social networking Web sites such as MySpace and Facebook. As a result of these many technologies, music has been extremely destructive in ignoring and appropriating copyright law:

Because music is digital, it can be easily produced, copied, and transferred and it can be easily adapted, modified, and transformed. Any given piece of digital music can quickly be borrowed, mutated, sampled, morphed, and adapted into a new piece, and this practice tests the assumptions that underpin copyright law and the nature of ownership.

As a result, the barriers to production and distribution are now much easier to overcome in the music industry than in any other popular art form, which is why we are seeing such bold innovations occur in its economic structure before other popular forms.

Jacques Attali proclaims that music “is prophetic. It has always been in its essence a herald of times to come.” Noise traces the political economy of music across the history of human culture, expounding how the musical process of structuring noise is also the political process of structuring the social order. Music is both a mirror—it “runs parallel to human society, is structured like it, and changes when it does” —and a prophecy; Attali chronicles a history indicating this ability in previous social orders. The French Revolution, for example, was preceded by the struggle for ownership rights and subsequent liberation of French composers. If “every major social rupture has been preceded by an essential mutation in the codes of music, in its mode of audition, and in its economy,” then what is our music telling us about our impending social order? Attali wrote his treatise in 1977, well before the rise of personal computers, the Internet, and the digital revolution, yet, the progression he identifies is traceable to the current age, as we shall see. “Our music foretells our future. Let us lend it an ear.”

A Broken System, an Industry in Transition

There is no denying that the music industry is currently in a state of flux; a multitude of technological changes—including the steady rise of personal computers and the Internet as well as the recent popularization of file sharing and digital music players—has prompted widespread shifts in the way consumers access music. However, it is important to note that the music industry is in a very healthy state; there is more music available and more people creating and listening to music than at any time in history. It is the record industry that is in dire straits, namely the monopoly maintained by Big Music. Also referred to as the Big Four (technically making it an oligopoly, rather than a monopoly), Big Music is comprised of Universal, Sony-BMG (who merged in 2004), Warner, and EMI, the major labels that collectively control 80-85 percent of global recording sales. Faced with rapidly declining compact disc sales, Big Music and its many lobbying fronts—namely, the Record Industry Association of America (RIAA)—have been very vocal about blaming their financial woes on file sharing. Hiding behind this supposed ethical mistreatment of artists and musicians, Big Music makes moralizing claims about “stealing music” in an attempt to maintain their market hegemony, misconstruing the true impact of file sharing while continuing their long history of exploitation.

I would like to frame this consideration of Radiohead’s “pay-what-you-want” experiment within the battleground that has developed concerning not only the future of music production and access but of popular culture and intellectual property as a whole. As we will see, the “digital music wars” are but the precursor in a vast technological transformation of the entertainment market and the struggle over access and control that will ensue. Crucial to this dispute, popular music has become a central site in popular culture by which we talk about labor and value. In debating the ethics of file sharing and digital music, “supporting the artist” is always of utmost importance, while the impact on the record label (and its corresponding corporation) is inconsequential. However, up until this point, the consumer has always been caught in the middle by having to support Big Music in order to support the artist. By cutting out the middle man, and by directly raising the question of how much we value music in an era where we can easily get it for free, Radiohead cuts to the heart of the problem and strikes a major blow against Big Music. Hyperbolic rhetoric aside, it is not as if Radiohead has created a viable new model for music distribution—nor did they even attempt to do so—but in their subtle, almost poetically simple act, they have reminded us that the media monopoly will not completely control our cultural expression, and they have proved that an alternative is possible.

Attali claims that the “process of aggression [in music] can only succeed if the existing code has already become weak through use.” The corrupt practices of Big Music and their unfair treatment of its artists are well-documented and are becoming more and more well-known. As Eduardo Porter delightfully expresses in an op-ed for The New York Times, part of the reason for the success of Radiohead’s experiment was the “pleasure at being able to bypass the record labels, which many see as only slightly worse than the military-industrial complex.” The industry works hard to earn this reputation, engaging in such draconian tactics as the RIAA suing a single mother of two who makes $36,000 a year to pay $222,000 in damages for having made copyrighted songs available on a file-sharing network. Nowhere else are we so concerned that the individual artist get their due, that is, the worker get paid appropriately for the production of their commodity. “Flush with admiration and gratitude,” Peter C. Baker of The Nation writes concerning his purchase of the album, “I started thinking seriously about my payment. My goal was not to work through the constellation of disputes and options that define today’s music business, just to buy In Rainbows at a price that felt fair and respectful.”

Unlike film, television, and video games, music is a popular art form whereby consumers are able to make a conscious division between the art and the industry. The two are inexplicably entwined—and will be for the foreseeable future—but because music seemingly comes from a comparatively small group of artists (setting aside the important creative input of producers, engineers, technicians, and the like), the consumer continually aligns his or herself with the artist, and the business be damned. As Rodman and Vanderdonckt proclaim:

Musicians are being robbed … but the principal thieves are all those industry suits, rather than the filesharers, and an honest economic analysis of the music business undermines the claim that downloading fans are taking bread out of the mouths of struggling artists.

Even if we set aside its long history of corruption (payola, price fixing, underpaying its artists, widespread mistreatment of minority artists, etc.), the record industry continues to engage in lengthy, unfair recording contracts and devious accounting practices, making the biggest abusers of artists’ rights the record companies themselves. A persistent “honest economic analysis” is required to cut through the mistruths and deceptions of Big Music.

Operating as an economy of scale, Big Music has fostered an industry in which the cost of record sale success has continued to escalate, as album pressing, marketing, music videos, tour managing, packaging costs, studio time, and other services must all be paid back to the label before an artist can receive royalties from their album. The result is a system in which only 10 percent of recordings break even, and the record companies recoup their investment on a mere 5 percent of new artists. Profit is made predominately with “hits,” the massive sellers by folks such as Eminem and Britney Spears, which subsidize all the failed investments. This also means that only a small minority of artists make any money from album sales; the vast majority do not and make their living primarily from touring, merchandising, and licensing. Such an unbalanced arrangement has been justified by the claim that the record labels are assuming all the financial risk. However, this is exactly how Big Music retains such a tight monopoly over the industry, escalating the cost of entry into the business and controlling the means of production and distribution. File sharing has provided an alternative distribution system, but it is not at the heart of the record industry’s woes as they would have you believe.

Big Music is correct in claiming that the decline in “units shipped” and “gross receipts” began at the same time as the early years of file sharing, around the turn of the millennium, but that does not make file sharing the culprit. In fact, a multitude of reasons contribute to the drop in compact disc sales. During that same period, Big Music significantly reduced their rosters of active artists and cut almost 20 percent of their workforce, resulting in far fewer new albums being released. Meanwhile, Big Music actually raised the standard list price of compact discs, despite the decreasing cost of production and negligible economic inflation. While its total units shipped may have fallen, the per-album profit margin appears to have risen as a result of its self-imposed industry shifts.

Outside of internal industrial changes, a number of other reasons contribute to declining CD sales. Competition from other forms of entertainment, including video games and DVDs—ostensibly providing more bang for the entertainment buck—is a crucial factor. Another is the corresponding changes occurring in the radio industry, as consolidation by the likes of Clear Channel Communications and Infinity Broadcasting has resulted in shorter, homogenized playlists. Consider this chilling statement concerning the state of music on the radio from Clear Channel’s CEO Lowry Mays: “We’re not in the business of providing well-research music. We’re simply in the business of selling our customers products.” Furthermore, talk radio has been replacing music-centric radio for some time, while music television (MTV, MuchMusic, etc.) has moved away from music videos toward reality and lifestyle programming.

Another key change in the record industry in recent years, rarely reported or discussed, is the drastic shift in the U.S. retail music channel. The previous coexistence of smaller, specialized shops along with larger, wide-ranging retailers, which fostered diverse selections and sales strategies, has been replaced by the dominance of mass-market, “big-box” retailers such as Wal-Mart, Costco, and Best Buy. These stores, which now account for the vast majority of CD sales, sell a small selection of albums at heavily discounted prices, often below the actual wholesale price. Using compact disc sales as a “loss-leader” to attract consumers to purchase other goods in their stores, these giant retailers have pushed many independent music stores and dedicated music chains (such as Tower Records) out of business, as they cannot compete with the big-box pricing power. Moreover, compact disc sales are of little importance to these retailers, accounting for a minimal percentage of overall revenue; in the case of Wal-Mart, which holds the largest share of the U.S. market, compact disc sales are less than one-tenth of 1 percent of their revenue. “The business strategies of the record labels are no longer aligned with the strategies of their main distribution partners,” explain Kusek and Leonhard, leading them to sarcastically ponder: “Could this be a recipe for disaster?”

Amidst this faltering business strategy, what of the artist? The musician, Attali notes, “is the one who provides the insight into labor-value as the standard for capitalist-exchange.” Currently, music is perhaps the only commodity whereby consumers can respond to what they feel is unfair treatment of labor; many consumers actively engage in “stealing” music online, guilt-free, and support the artists they choose, in the manner they choose (concerts, merchandise, exposure, etc.). The current paradigm—which Big Music is fruitlessly attempting to maintain—of paying 10 to 20 dollars for a physical album that may only contain one or two enjoyable songs is seen by most consumers as, at best, outdated and unfair and, at worst, as a blatant case of price-gouging. “The profit bonanza of an $18 CD? Those days are gone forever.”

Online, music becomes a virtual commodity that can be attained for a nominal fee or free-of-charge. In recent years, the capital required for both the production stage and distribution stage of music has drastically decreased in many respects. Affordable home audio-recording technologies and various online distribution methods have knocked down some of the barriers of entry upheld by Big Music for the last 70 years. While album mastering, international distribution of physical product, and many forms of marketing are still expensive endeavors, there is no denying that a multitude of alternatives to Big Music’s hegemony have arisen. Case in point: Radiohead’s “pay-what-you-want” experiment.

The Act that Launched a Thousand Think-Pieces

Radiohead’s In Rainbows “pay-what-you-want” experiment was a resounding success. Though the band is refusing to release official statistics (to avoid, I suspect, the backlash of revealing the massive profit they earned from their “little” experiment), http://Gigwise.com , citing a source close to the band, reported that the album was downloaded 1.2 million times on its first day alone, and is said to have been “pirated” even more. Industry newsletter Record of the Day conducted a poll revealing that nearly a third chose to pay nothing for the album, but the average price was about $8.00. Another online survey conducted by ComScore estimated the average payment, factoring in free downloads, to be $2.26, though this survey did not include college networks, Radiohead’s prime demographic. The band issued a statement rejecting the accuracy of these figures, calling them “wholly inaccurate” and “exaggerated,” though Thom Yorke, lead vocalist and multi-instrumentalist for the band, did admit in an interview that In Rainbows had passed well over one million downloads.

Nevertheless, with minimal costs for hosting the files on their server maintained by their merchandising company and “cyber-cottage industry” W.A.S.T.E., and subtracting producer fees and the costs of operating their own recording studio, Radiohead is estimated to have made at least $1 million and upwards of $5 million from their experiment. And this is not including the profit from the $80 deluxe mail-order “gift box” version of the album including two compact discs, two vinyl records, and a booklet they offered alongside the download, which is reported to have garnered between 60,000 and 80,000 orders. Unlike major label contracts that would allocate to the artist(s) 15 percent—at best—of revenues earned from album sales after label’s expenses are recouped, Radiohead retains both publishing rights and recording rights of In Rainbows, earning them 100 percent of revenues from the digital release. “In terms of digital income,” Thom Yorke explains, “we’ve made more money out of this record than out of all the other Radiohead albums put together, forever—in terms of anything on the Net.” According to Jon Cohen of Cornerstone Promotion, “it’ll be the most profitable album of this current era.”

On January 1, 2008, In Rainbows was released in traditional compact disc form, licensed to independent label TBD (part of ATO Records) in the United States, boutique label Maple Music/Fontana in Canada, independent label Hostess in Japan, and independent label XL Recordings across the world. It debuted at number one on the U.S. Billboard 200 chart, the U.K. Album Chart, the Canadian Albums Chart, and the United World Chart. The band is sure to have negotiated a much more lucrative deal as free agents with ATO as opposed to the exploitation they would have faced from Big Music. In Rainbows was also the first album the band decided to release on iTunes, requiring it be available in DRM-free “iTunes Plus” format. Despite its availability for free for two months preceding its “official” release, the album still managed to become iTunes’ No. 2 top-selling album in its first week. In Rainbows has continued to succeed in all its various “windows” of release; its stellar critical reception, appearing on the vast majority of critics’ year-end lists, has no doubt buoyed this economic victory.

Equally as impressive as their successful challenge to Big Music’s economic domination was the subsequent media storm they unleashed. Radio-head’s scant 24-word announcement on its Web site triggered a torrent of reports and arguments, running the gamut from blog discussions to vast mainstream press coverage. Critics everywhere were weighing in with what they felt the industry repercussions would be and what it meant for the value of music. Even business sections considered the implications of “pay-what-you-want”; The Economist wondered whether it was “The Day the Music (Industry) Died?” and BusinessWeek pondered “The Big Record Labels’ Not-So-Big Future,” while The Financial Times went on the defensive, claiming “Radiohead MP3 release a tactic to lift CD sales.” MTV.com proclaimed 2007 “The Year The Music Industry Broke,” while The New York Times Magazine named “The Radiohead Payment Model” as one of its 70 big ideas that shaped 2007. Not bad for an idea hatched during a “stoned philosophical conversation about the value of music” between Radiohead’s managers.

While Radiohead’s act was certainly the most high-profile challenge to the music industry in 2007, a slew of major artists defied the norms of the record industry, contributing to a possible artist-led “tipping point” in the economic structure of Big Music. Within days of Radiohead’s announcement, Trent Reznor—known to encourage concert-goers to “steal” his band’s albums online—also made a notable blog post: “Hello everyone. I’ve waited a LONG time to be able to make the following announcement: as of right now Nine Inch Nails is a totally free agent, free of any recording contract with any label … it gives me great pleasure to be able to finally have a direct relationship with the audience as I see fit and appropriate.” Reznor went on to distribute Saul Williams’ latest album, which he produced, in a similar strategy to Radiohead’s “pay-what-you-want” experiment. On October 16, in the midst of the Radiohead publicity storm, Madonna announced that she was dropping from her long-time music label Warner, opting instead for a “global partnership” with concert promoter Live Nation, Inc., a $120 million deal in which she became a shareholder in the company. Responding to the paradigm shift in the record industry, the Material Girl struck a “360 deal” that would encompass a wide range of revenue streams, including album releases, touring, merchandising, licensing, sponsorship, film and TV projects, DVD releases, and her invaluable brand name. Spin would award its 2007 “Story of the Year” to this cluster of challenges to Big Music, aptly naming it “The October Surprise.”

Earlier in the year, Prince sparked controversy in July when he gave away 2.5 million copies of his album Planet Earth for free in the United Kingdom through the newspaper Mail on Sunday, and everyone who attended one of his 21 sold-out shows in London also received a free copy. Always the provocateur, Prince was the first major artist to release an entire album—1997’s Crystal Ball—exclusively on the Internet. In December, the Charlatans released their latest single and album for free through the radio station Xfm, making the shift to complete reliance on touring and merchandise for financial return. The Eagles signed an exclusive deal with WalMart, as well as offering their album on their own Web site, while Joni Mitchell ditched Warner and Paul McCartney abandoned EMI in favor of Starbucks’ new record label, Hear Music. Oasis and Jamiroquai are the latest big-name bands rumored to be considering dropping their major label and considering alternatives upon completion of their contracts.

Artists have long been challenging the hegemony of the record industry, one might trace Radiohead’s “pay-what-you-want” experiment back to the Grateful Dead, who allowed fans to freely distribute recordings of live shows and encouraged a trading system whereby fans could mail one another blank tapes in order to get new “bootleg” recordings of live Dead shows. Public Enemy and its outspoken front man Chuck D have been staunch supporters of digital distribution, first releasing 1999’s There’s a Poison Goin On over the Internet and on zip drives, and 2007’s How to Sell Your Soul To A Soulless People Who Sold Their Soul through ad-supported, online file sharing. The Smashing Pumpkins encouraged fans to share a limited pressing of 2000’sMachina II/The Friends & Enemies of Modern Music online. Wilco’s infamous experience with Warner is another success story. Having been dropped from their Warner subsidiary Reprise Records for recording an “uncommercial” album, the band negotiated ownership of the master tapes and, responding to low-quality leaks of the album, streamed it for free on their official Web site. Garnering much critical praise and Internet buzz, Wilco negotiated an even more lucrative contract with Nonesuch Records, also a Warner subsidiary (in effect paying for the album twice). Yankee Hotel Foxtrot sold more copies than any of Wilco’s previous records. Another example of responding to Internet “leaks,” the Canadian indie band Stars released 2007’s In Our Bedroom After the War for download just 10 days after completing it—and nearly 3 months before its “physical” release date. Countless more examples could be culled from the history of artist-led challenges to Big Music’s hegemony; let us turn to the technologies accelerating these alternatives.

Music in the Age of Digital Distribution

The digital music revolution has been developing slowly ever since the record industry’s imposition of the digital compact disc format in the 1980s, followed by the development of the ISO-MPEG Audio Layer-3 compression/decompression algorithm (mp3) in 1992. Along with the steady increase in broadband access, file sharing gained popularity with Internet relay chat (IRC) and other virtual communities until it hit the mainstream with Napster’s release in 1999. Despite legal victories by the RIAA and intellectual property right enforcement through the Digital Millenium Copyright Act (DMCA) in the United States, peer-to-peer (P2P) networking technologies have continued to evolve with Gnutella, Morpheus, KaZaa, Grokster, LimeWire, and others, leading to the current method-of-choice: BitTorrent.

Estimated to represent 18-30 percent of all Internet traffic, BitTorrent is a P2P protocol that operates with a much more decentralized structure whereby each user supplies pieces of data to newer users, reducing the cost and burden on individual sources and allowing for more effective use of Internet bandwidth. A multitude of Web sites carry the metadata “torrent” files (which contain no copyrighted information) needed to begin downloads, and whenever any such site is shut down by legal injunction, many more arise in its wake. Legal downloading has also increased significantly in recent years, as 2007 saw digital album sales rise 53 percent and legal downloads of individual tracks increase 45 percent. With the popularity and success of Apple’s iTunes and other legal downloading options, Big Music has finally embraced digital music to some extent, but the battleground for the future of the record industry is still being shaped.

With such drastic changes to the music industry occurring so rapidly, it is worth returning to Attali’s suggestion of the predictive nature of the political economy of music. “The hit parade,” Attali claims, “bears a relation to the dream-form of the socialist economy, in which price is no longer the sole determining factor of use/exchange value, in which choice is expressed not only by disposable income but by the democratically expressed preferences of the consumers.” Attali goes on to dispel this fantasy, locating the actual structure of the hit parade from the 1930s to the 1970s in records sales and industry manipulation; but online, with file sharing, the virtual commodity, and limitless choice, do we not see the birth pangs of a socialist economy? As Chuck D of Public Enemy proclaims, “P2P to me means ‘power to the people.’ ” What began as a subcultural “gift economy” has evolved into a vast, decentralized network of digital music distribution.

An influential paper written by employees of Microsoft in 2002, titled “The Darknet and the Future of Content Distribution,” popularized the term Darknet, which refers to a collection of networks and technologies used to share copyright-infringing digital content, such as the P2P file-sharing networks. Peter Biddle and his colleagues suggest that the Darknet forces businesses to compete “on the Darknet’s own terms,” a practice that values “convenience and low cost rather than additional security.” The efficient and convenient sharing of files is at the heart of this issue, not copyright infringement or protection. It is not hard to imagine why consumers would operate in such a manner. Simply put, “copies of digital media proliferate freely in network environments because sharing music is a basic ritual held in common across cultures.” There is more to the story of file sharing than Big Music and its lawyers will acknowledge.

Not only has Big Music ignored the cultural imperative of file sharing, it has ignored the positive impact on music sales that many surveys and studies have indicated. Some conservative studies find a negative impact of P2P on music sales but agree that the impact is low. Conversely, many studies conclude that there is no negative impact but, in fact, a positive one. A 2001 survey by Jupiter Media Metrix found file sharing to be a “net positive-technology,” with 52 percent of experienced file sharers increasing their music purchases. A study of direct data of download activity by Oberholzer-Gee and Strumpf in 2002 found most downloading to be done by younger users who would not have had the disposable income to purchase the album even in the absence of file sharing. Older users, however, were found to use file sharing to “sample” new music, a practice that, like radio, increases sales. A widely cited study for Industry Canada in 2007 that used representative microeconomic data found that there is “no direct evidence to suggest that the net effect of P2P file-sharing on CD purchasing is either positive or negative for Canada as a whole.” Even more surprising was the finding that among the dedicated file-sharing subpopulation, “P2P file-sharing tends to increase rather than decrease music purchasing.” More akin to promotion than piracy, file sharing could have been harnessed by Big Music for greater sales opportunities; instead, they chose to treat their customers as thieves and earned its “image as a ravenous, heartless vampire.” According to Attali, music “explores, much faster than material reality can, the entire range of possibilities in a given code.” As a result, “internal and external noises do violence to the code and to the network.” The digital revolution has made this come true, literally: mp3s are music transformed into binary code, exchanged through the network of the Internet, enacting violence to the traditional structure of the record industry. It is estimated that roughly 20 billion songs are illegally downloaded or swapped each year, by as many as 200 million users worldwide. Clearly, people do not feel overly guilty about this illegal copyright infringement and are more concerned with the convenience and diverse access this new system of distribution allows them. Now that the cat has been let out of the bag, so to speak, there is no going back. Consumers demand the latest technological convenience, and it is quite apparent that technology has outmoded the traditional model of the record industry. The sheer popularity of digital downloads is forcing Big Music to move beyond an infrastructure predicated on the sale of “hard goods” such as compact discs. iPods need to be filled, and mobile phones need new ringtones: What model of distribution is going to meet this demand?

David Kusek and Gerd Leonhard, in The Future of Music: Manifesto for the Digital Music Revolution, propose a “Music Like Water” business model that they foresee as the future of the music industry. Although it is overly idealistic and does not account for some of the harsh economic realities of the entertainment industry, the book provides a useful metaphor for considering the transformation of music when it “imagine[s] a world where music flows all around us, like water, or like electricity, and where access to music becomes a kind of ‘utility.’ ” Freed from the constraints of being treated as merely a product, music becomes a service: “ubiquitous, mobile, shareable, and as pervasive and diverse as the human cultures that create it.” A central concern for Kusek and Leonhard is whether we are leading to a system in which access replaces ownership. If we can access whatever music we want, whenever we want, wherever we want, then “owning” music becomes unnecessary.

In this new musical economy, the traditional model of selling “content” is abandoned in favor of “a very potent liquid pricing system that incorporates subscriptions, bundles of various media types, multi-access deals, and added-value services.” Music has been viewed as “static” for too long; treating it as a more fluid and participatory entertainment experience is more consistent with music’s dynamic nature of continual evolution and change over time and between musicians and cultures. Music as a product, something to be owned, is a relic of the Industrial Age. In the Information Age, access is key. This transition will not come easy and will be a dire time for some people and businesses, but like the invention of the printing press, the automobile, and the television, the chaos the Internet is causing will be followed by tremendous access and diversity.

Attali could not have anticipated the technological transformation that we are now experiencing, but he did accurately predict that there would be a “new status for music” that would not be “a new music, but a new way of making music.” He called this era Composition, and it is not hard to see its presence in our current digital age. “Composition: in which there is no longer any usage, any relation to others, except in the collective production and exchange of transcendence.” Furthermore: “Music is no longer made to be represented or stockpiled, but for participation in collective play, in an ongoing quest for new, immediate communication, without ritual and always unstable.” So, here we have two ingredients for a new social order: collective production and collective play. The Internet, of course, is the ideal facilitator for both of these functions. Open source software (such as Linux and Firefox) and social networking sites (such as Facebook and Flickr) are popular examples of simultaneous collective production and collective play that occur online, but we can find many pertinent examples within the realm of digital music as well.

The proliferation of fan Web sites, message boards, and blogs dedicated to music of all kinds has promoted vibrant and diverse online fan communities. Radiohead is no exception; they are known to have a rabid and obsessive fan base of Internet users. W.A.S.T.E. is Radiohead’s own fan service and has been operating ever since the band began releasing records in the early 1990s. Starting out as letters posted by Radiohead themselves, it has grown along with the band, providing a direct link between the fans and the band, with Web services, ethically sourced merchandise, tickets, and now the digital release of In Rainbows. Radiohead is keenly aware of this cyber dimension to their fan base, maintaining an expansive and oft-updated Web site including frequent personal blog posts and offering unique benefits to its online fans, such as their “thumbs_down” and “Scotch Mist” promotional Webcast performances on radiohead.tv.

In the four-year lead-up to the release of In Rainbows, fan sites documented every new ounce of material, and countless recordings showed up on YouTube, some dating back to the late Nineties. “Nude,” for instance, has been a fan favorite for more than a decade, previously only available in concert (or on YouTube) before being officially recorded for In Rainbows. “Videotape” debuted the previous year as a solo piano ballad on producer Nigel Godrich’s online show From the Basement, then progressed as many different fullinstrumental incarnations in concert, before returning to the stripped-down swan song it now occupies as the final track on In Rainbows. In this way, the collective fan community could witness the development and evolution of the new songs, feeling a part of their growth and maturation. Attesting to this direct relationship with the fans, Thom Yorke concluded the “thumbs_down” Webcast with an appropriate sign-off: “See you on YouTube.”

Radiohead’s online interaction with its fan base is indicative of a large-scale industry trend in which artists are harnessing technology to directly communicate with their fans. The success of Fall Out Boy, for example, is attributed in large part to their very active online presence, building a community with its young, Web-savvy demographic. Bassist/lyricist Pete Wentz went so far as creating his own social networking site, http://FriendsorEnemies.com. Kembrew McLeod argues that file sharing and direct marketing has been a boon to those musicians working outside the major label system. Independent artists and the owners of indie and micro-labels operate on more balanced, profit-sharing models that rely on a small but loyal fan base. It is now possible for a musician to succeed in the industry by selling fewer units but retaining their copyright and disregarding the Big Music strategy of needing to sell a half million records just to break even. As a result, an independent sector of “middle-ground” artists is emerging, founded on the principle of community.

Collective production and collective play online has also resulted in many unique economic approaches to collective music making. http://SellaBand.com, where “you are the record company,” gives music fans the chance to invest in up-and-coming acts and even earn money if they turn out to be a success. Similarly, http://Slicethepie.com aims to “turn every music fan into a record label” and enables artists to raise money directly from their fans to record and release an album. Fans can earn money, too, and a stock market-style “trading exchange” allows investors to gamble on the success of the artists and “help [themselves] to a slice of the music industry.” http://Amazingtunes.com describes itself as a “fair trade” Web site, promising that 70 percent of revenues from all music sales, after bank charges and taxes, go straight to the artists. From mainstream file sharing to Internet-based community labels on the fringe, digital music is parading its prophetic nature and revealing many bold new developments that we will no doubt witness in other factions of culture and politics. As in the eighteenth century, according to Attali, “the monopoly over music was one of the first destroyed by the people, before they tackled the others.”

Not So Fast: Big Music Adapts to the Celestial Jukebox

Before we travel too far with this technologically determinist, “cyberutopian” train of thought, we must account for Big Music’s recent attempts to regain its footing in this new digital paradigm. Though it may have been dragged into the digital age kicking and screaming and litigating, Big Music has also been hedging its bets and investing in new structures and sources of revenue. In a particularly enlightening example, in 2001, BMG was involved in a joint venture with Grokster to establish a model for distributing licensed music through a P2P network while at the same time suing Grokster in the MGM v. Grokster case. The writing on the wall has been visible for quite some time: the Internet, along with mobile and satellite networks, is soon going to be the primary mode of digital media distribution and a crucial site of revenue for the media conglomerates. The outcome for control of the distribution of music is being keenly watched by the entertainment industry as a whole because it paves the way for control of the illustrious “Celestial Jukebox.”

Paul Goldstein popularized the term Celestial Jukebox in 1994 with the publication of Copyright’s Highway: The Law and Lore of Copyright from Gutenberg to the Celestial Jukebox. Imagining it as “a technology-packed satellite,” Goldstein sees the Jukebox as “awaiting a subscriber’s order … to connect him to any number of selections from a vast storehouse … [combining] the power of a television set, radio, CD player, VCR, telephone, fax, and personal computer.” In Digital Music Wars: Ownership and Control of the Celestial Jukebox, Patrick Burkart and Tom McCourt adopt and update the term to describe “the various systems whereby any text, recording, or audiovisual artefact can be made available instantaneously via wired and wireless broadband channels to Internet appliances or home computers.” Unlike the idealistic vision of Kusek and Leonhard’s “Music Like Water” model, Burkart and McCourt trace Big Music’s oppressive control of access and assault on intellectual property rights through the gradual implementation of the Celestial Jukebox.

There are a variety of opinions concerning the outcome and effect of the Celestial Jukebox, according to Burkart and McCourt. Futurists, such as Goldstein as well as Kusek and Leonhard, believe it to herald a technological utopia of open access and abundant choice. Creators of intellectual property hope it provides them the opportunity to avoid industrial barriers to entry and retain copyright on their work. Distributors expect a huge new revenue stream while eliminating overhead costs and geographic constraints. Electronics and technology companies aim to profit from new devices and software, while Internet, telephone, and cable service providers will continue to roll out lucrative broadband access. And consumers expect a “vast intellectual commons” of diverse, immeasurable choice at low cost. Burkart and McCourt advise us to temper these desires, and consider the “technocratic ideology that in fact underlies the infrastructure of the Celestial Jukebox.” While the title of their book suggests a “war” over control of the Jukebox, Burkart and McCourt’s heavy-handed, though insightful analysis indicates their belief that the war has already been won by the corporate media oligopoly, resulting in strict boundaries on intellectual property, pervasive threats to individual privacy, and tight restrictions on access to popular culture and the knowledge-based economy.

A crucial element to this imposition of an oppressive, strictly controlled Celestial Jukebox is the legal underpinning aggressively pursued by the RIAA and other lobbying organizations. In 1998, both the DMCA and the Sonny Bono Copyright Term Extension Act were passed in the United States, furthering the media monopoly’s competitive advantage in the digital media market. Internationally, the International Federation of the Phonographic Industry (IFPI) and the World Intellectual Property Organization (WIPO), a subgroup of the World Trade Organization (WTO), are working to coordinate intellectual property protections across the globe. The 1996 WIPO Copyright Treaty (WCT) was implemented in the United States with the DMCA and in the European Union with the 2001 European directive on copyright. By incorporating criminal sanctions into multilateral trade agreements such as the General Agreement on Tariffs and Trade (GATT), an “intellectual-property enforcement regime” has been established and is steadily gaining momentum throughout the world.

In “Who Are the Pirates? The Politics of Piracy, Poverty, and Greed in a Globalized Music Market,” Jack Bishop composes a convincing argument regarding this global imposition of intellectual property policies and unfair pricing standards by Big Music. Looking at music consumption in Latin America, where music occupies an indispensable role in cultural expression, the vast majority of consumers simply cannot afford the suggested list price of compact discs enforced by the RIAA and IFPI. Compact discs are sold for the same price in Latin America as they are in the United States, yet, comparing Mexico’s gross national product per capita of $4,748 with the $33,933 of the United States “illuminates in dollars and sense the disparity between the social classes of each country.” Bishop is correct in identifying this practice as a form of neocolonialism and economic oppression. In response to this unjust power structure, music pirates are not seen as thieves in these “low-income” societies, but Robin Hoods, offering liberation and freedom of choice with each illegal CD-R. From this viewpoint, it is not hard to see who the real “pirates” are. If Big Music intends to implement the Celestial Jukebox internationally with the same disregard for its global audience as it currently employs, it will likely encounter much opposition.

In the intervening years since the publication of Digital Music Wars, the two technologies Burkart and McCourt identify as central to the implementation of the Celestial Jukebox—customer relationship management (CRM) and digital rights management (DRM)—have continued to develop in curious directions. Customer relationship management refers to personalization systems in which profiles of user attributes and behavior are developed in order to customize content delivery, while also tracking interactions and purchases in order to assemble merchandising dossiers about individual and general consumer tastes and behavior. The information gathered can be used by companies internally, to automate and further specialize marketing, or it can be traded between corporate divisions and sold to outside interests without the customer’s consent. Burkart and McCourt devote comparatively little space to describing CRM’s impact, instead focusing on Big Music’s reliance on DRM. However, as evidenced by the dramatic increase in popularity and market value of Facebook, MySpace, and other social networking sites, as well as customizable portal Web sites such as iGoogle and My Yahoo!, CRM is playing a key role in the digital media landscape and will figure most prominently in any incarnation of the Celestial Jukebox.

Digital rights management, on the other hand, has undergone a serious change in direction, rendering moot much of Burkart and McCourt’s analysis. It refers to access control technologies that limit and regulate usage of digital media, requiring the consumer to access content on the provider’s terms. With regards to audio compact discs, Big Music attempted for many years to severely limit consumers’ ability to make backup copies or “rip” the music on to their computer. Use of malicious software—even crashing the user’s computer and exposing them to security vulnerabilities—led to public outcry and several class-action lawsuits resulting in the eventual abandonment of DRM for audio CDs by Big Music. The use of DRM for downloadable music, however, is still a contentious issue.

In a rare case of actual competition within the record industry, Big Music denied the advent of digital music and staunchly enforced DRM for so long that it unwittingly handed over significant distribution power to a new competitor. With the overwhelming success of the iPod and the iTunes music store, Apple, Inc. has achieved an estimated 80 percent market share of legal downloads, retaining its own proprietary DRM system, FairPlay, which does not allow any of Big Music’s DRM-encoded downloads to be played on the iPod. Its market domination threatened, Big Music’s only chance of competing with Apple was to offer DRM-free downloads so they could still be played on the iPod, the most popular digital music player. Finally embracing the digital future, the Big Four all individually announced, throughout 2007, that they would be experimenting with DRM-free downloads and are now mounting a challenge to Apple’s domination by aggressively supporting Amazon’s new digital music service, as well as other subscription services such as Universal’s “Total Music.” No longer required to uphold an unfair and ineffective system, iTunes now offers higher-quality, DRM-free downloads, fulfilling its promise to abandon DRM in an open letter called “Thoughts on Music,” written by Steve Jobs, CEO of Apple, in February of 2007. Though DRM is not completely dead—WalMart’s service and Real’s Rhapsody continue to protect their files—it has certainly lost precedence. Once a pillar of Big Music’s containment strategy for digital media, DRM has now been all but abandoned by the Big Four, as well as Apple. Though there is no telling how DRM might rear its ugly head in the future, this battlefront of the digital music war appears to be conceded.

It is difficult to predict the future of such a fickle and transitory industry with any accuracy, but it is a pretty safe bet to count on a substantial expansion of the digital music market, leading the way into more digital distribution of film and television as well. The desertion of DRM seems to indicate Big Music’s acceptance that their future is in controlling the access to music through various download and subscription services, rather than the sale of “products.” The media monopoly will continue their attempt to institutionalize and manage the mass proliferation of music and other digital media, artists will continue to seek larger audiences in innovative new ways, and consumers will continue to aggressively demand wider access and greater convenience. Is the cyber-utopian “Music Like Water” model presented by Kusek and Leonhard really that opposed to Burkart and McCourt’s vision of the oppressive, technocratic Celestial Jukebox? Both, in fact, propose that the future of music is as a service and a utility, yet, they disagree on its impact and effect. If we consider each model as occupying an endpoint on the spectrum of the possible future of music and acknowledge the current position as somewhere near the middle, precariously ready to shift in either direction, we are left with a reasonable depiction of what is on the horizon for the music industry.

Conclusion: The Digital Dance

“I know today has been the most perfect day I’ve ever seen.” ~ Videotape, In Rainbows

Important dates in the transformation of the music industry—and the entertainment market as a whole—include the release of the mp3 format in 1992, Napster’s debut in 1999 and shutdown in 2001, and the ever-approaching day when digital sales finally eclipse physical sales (will we continue to use the term record?).Besides these and other industrial markers, the digital release of In Rainbows on October 10, 2007, will go down in history as a symbolic moment in music history when the digital future—with all its messy possibilities and complications—was undeniably here. Radiohead embodies the new (digital) music experience. No longer relegated to the margins of the Darknet, digital music is now front and center in an ongoing debate about the future of digital media; In Rainbows signaled a symbolic alternative in which artists and consumers can both win: culturally, artistically, and economically. The “pay-what-you-want” experiment is no model for the music industry, but it represents a symbolic victory against the media monopoly and the capability of music to predict and impact a paradigm shift. The very fact that Radiohead denies they ever intended to subvert Big Music’s hegemony is further proof of the possibility of innovation in the digital age and the capability of music to uniquely, even unknowingly, subvert social codes while foreshadowing new ones.

We can now append Attali’s central formulation in Noise. Corresponding to the three stages of the historical usage of music by power—ritual power, representative power, and bureaucratic power—Attali succinctly summarizes music’s violent role: “Make people Forget, make them Believe, Silence them.” In precapitalist society, music affirmed that society was possible; it made people forget that normalcy and order had prevailed over carnival and freedom. The rise of spectacle and exchange value led to music’s transformation into a commodity and private ownership. This new paradigm of musical production and consumption made people believe in social order: it “characterize[d] the entire economy of competitive capitalism.” The invention of auditory recording techniques created a new economy of music based on repetitive mass production, the same basis that would soon define all social relations. As individualized accumulation and stockpiling of music is encouraged through consumerism, community and the collective order is silenced. With the digital revolution, we have now entered the era of Composition, and one is tempted to add “Make them Share” to complete Attali’s formulation. However, that would deny the personal agency that is so key to a collective social order.

Instead: Make people Forget, make them Believe, Silence them, Behold them Share. “If representation is tied to printing,” says Attali, “and repetition to recording … composition is tied to the instrument.” Unbeknownst to Attali, this instrument would be the Internet, the ultimate musical instrument for collective production and collective play. The Round Dance—the culmination of 25 centuries of musical struggle Attali anticipates, signaling a postcapitalistic future—occurs in the electronic global village. What happens there, is up to you.