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
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!