October 24th: Downloads - Rescue out of the Music Crisis?

Dear Danza y Movimiento friends!

This is finally the mail regarding "Downloads - Rescue out of the Music Crisis?" I've wanted to write for quite a while now. The problem is that we have not a lot of fact but a lot of meanings and several different predictions. All predictions I know are based on meanings. I change my mind regarding downloads all the time and I am trying to watch the market like a hawk.

Already it is clear to see that the market for downloads is growing. A huge part of music will only be available via internet in just a few years. The consumer will have an extensive library on the computer, MP3-Player or mobile phone and can listen to it whenever he wants to. There are not technical problems. Mobile phones will have a 4Gigabyte storage space in just a few months. This is a storage space according to my laptop from the year 2001 I am working with. MP3-Player with 40 Gigabyte are normal today and every computer will have as a standard a 400-Gigabyte storage disc. Digital backup - no problem. You will see how easy this is.

Respectively how easy it could be. After the drops in turnover the big record companies seem to assume that they won't earn any money with music anymore. How to earn money was showed to them by a completely "non-music-company", to be exact the computer company Apple. The boys (-sorry, but I haven't heard anything about a woman there-) have opened the biggest download shops in the whole wide world. They have also sold a few hundred million tracks by now for a flat rate of 99US-Cent per track. They don't earn anything with the music. It is vice versa - they are willing to pay the price for music. Why? The Music is only made for the marketing of a small device that was sold a million times in the meantime, called iPod and have earned a triplication of the annual turnover for the computer company last yar.Smart guys, aren't they?

Of course the people at Sony where filled with enthusiasm. Sony and other companies opened resp.are opening now download shops, where a lot of music datas are storaged and that are - after the consumer has bought them - only playable on the respective company's product. Where this idiotically development will lead and how it will look like in a year... nobody knows. Or were you just planning to buy about several different players in the near future, just to play the wanted tango song you could not find at the Apple store on an Sony player?

But this is not enough! All companies are working hard on DRM, which means Digital Rights Mangment, but better translated with Digtal Restriction Management.A short look in the German shops of AOL, Finetunes or Musicloads makes clear what it is all about! With every downloaded track you purchase some rights. You are allowed to listen to the music. At some downloads you are allowed to listen as often as you want to.This is not obvious at DRM. At some downloads you are just allowed to listen for a few weeks. Really, your won't find the bought track on your computer anymore. It's completely gone. Sometimes it is just forbidden to copy the track more than three times. Without going any further into the technical details - it means you are stipulated what to do with YOUR music.

This stupid try to spoon-feed the customer has a not unimportant background. It's a desperate try to stop the spread of music for free.

Fundamental this intention is right, because the musicians and the people working in the music industry would like to make a living. I doubt that this try to control it through DRM is the right way. The consumer (you!) is unsure and angry. And you are right. DRM and copy protection causes offence and uncertainty. What's the use, if I buy a cd that can only be played in a special player and not on my computer. (I f.e. listen to 90 % music via computer).If we have a copy protected cd we can't even give you sound examples in our webshop and this drops the sales even more. And what is the use of a Tango track bought at Sony Connect that can't be played on my iPod?!

Another subject in connection with downloads brings up the question about the price structure

When Apple put the downloadshop on the market they had and still have the standard price of 0,99 Cent (anyway if you pay in Euros or Dollars). This is too much for some people. Since Mr. Gates will open a shop soon (-it was more than clear that Microsoft would copy the success of another smaller company, because as you all know Microsoft has never had a good creative idea in history) it is quite sure that the 99cent standard won't exist too long in the future. Happy will be the ones that never wanted to pay the 99 Cents and wanted to have everything for free.

Back to the 99 Cents: in Germany the 16 % V.A.T. has to be paid, 83 Cents are left. Next station is the GEMA as the represantative of the publishers and the authors. When we started to investigate some things for a “Danza y Movimiento” Downloadshop a few months ago the GEMA wanted us to pay 25 Cents per each 5 minutes started. They really meant it! Regarding to this I wrote a letter to the GEMA, saying that this is sort of a sales ban. They didn't care. We put our project on ice regarding to this.

The associations negotiated 12 % in the meantime. If we substract the 12 % we have 71 Cents left. Next is the Online Shop. It is realistic to calculate 20 % - 51 Cents left. Next are the fees for money transfers. Some special suppliers for Micropayment take up to 35 % of the retail price. If we only calculate 20 % for our calculation we have 21 Cent left for the record company, the marketing, the musician and the Producer. What's the cost of a cd production was subject in a former newsletter:
http://www.danzaymovimiento.com/news/en/2004-07-24.html Now it's up to you to calculate how many single tracks of an album have to be sold to just earn the costs of a production.

I don't want to go on moaning. There are experts, saying the the price for a download for one single track must be about 1,99 and 2,49 Euros to be profitable. Disadvantage with such prices: Who wants to pay it? Then back to the motto "Internet Trading.....?" Somebody buys the cd and everybody else can copy the wanted tracks - for free of course.

Yes, there are a lot of questions left: Maybe you understand now, why I've waited so long with this newsletter. I wish I could give you some inspiring ideas or answers, but unfortunately I don't have any.

There are some wild discussion about alternates about the whole DRM rubbish. The most popular one is a culture flat rate. This will be a subject in another upcoming newsletter. This one will be due in a few weeks, not because I don't have anything to say about it, but because I have to spend some time with other stuff and because I'd like to wait until I have some information I will get in November.

But don't be afraid, it will always go on. There will always be live music and in the worst case you can travel to Cuba or Argentina to live Tango and Salsa - with us of course.

Go on having fun with us!
Matthias Möbius