Posts from the Business School Dropout Category


There’s an article on Digital Music News from yesterday entitled “Happy F%*@ing Birthday, iTunes…” and, as it illustrates so many of the reasons I avoid reading anything on Digital Music News, I thought I’d take a look at it here on my blog.

It opens with a personal attack on Steve Jobs who, if he hadn’t been dead for fifteen months, would surely have been humbled into changing his ways by the brilliant rhetorical device of calling him an asshole on the Internet*. It then launches into what seems to be the central assertion of the piece: that iTunes is “one of the greatest piracy-enabling vehicles the music industry has ever witnessed”.

This surprised me. The occasion for this piece is the 10th anniversary of the iTunes store, which sells music. I worked on the iTunes Store for more than half of the last ten years, and it never seemed like enabling piracy was a high priority for my department. If you’re going to make a claim like this then, naturally, you’re going to have some evidence for it, but we’ll come back to that, because there’s more.

The line “its legacy is a complicated one” dangles the possibility that we might get some meaningful analysis here.

One easy way to make headway through all this complexity would be to look at the winners and losers. The iTunes store made some people very rich, while others did less well. Whole companies sprang up to support the digital supply chain, while some businesses began a steady decline. In some instances the cause-and-effect relationship is quite obvious. One might even choose to divide the music business into “artists”, “audience”, and “people who take their money” and examine what ten years of the iTunes store has done for each of these.

Instead, we get a restatement of the famously positive things about iTunes, along with one other criticism: “the rise of iTunes also meant a fall in control for content owners.  Jobs demanded 99-cents a track, for every track, for years, and refused to entertain bundling tomfoolery like album-only downloads.”

The music business has its fair share of bad deals, but nobody is forced to sign them at gunpoint. To suggest that anybody is compelled to hand over control of their artistic output to a massive corporation (label or retailer), or that they are driven by anything but greed to accept a huge advance in return for their music is to fundamentally misconceive the way the world works.**

After this brief detour into moral outrage on behalf of the poor, defenceless label execs, we’re back to the piracy thing:

“…only a certain percentage of people were actually purchasing paid downloads.  Indeed, the IFPI routinely estimated that 19 out of 20 MP3s were pirated, ie, not purchased from the iTunes Store.  Yet, all of those downloads — free, paid, whatever — were feeding an iPod frenzy, with only limited restrictions on either side of the iTunes+iPod equation.  The source of the content didn’t matter; the consumer experience was everything.”

So there you have it. The iTunes store (which never sold MP3s***) is a bad thing because a different division of the same company sold hardware to people who may have also stolen music****. I sometimes wonder how we sleep at night. But wait. There’s more:

“Because if the iPod could comfortably hold 20,000 songs, the next question was where fans were getting these 20,000 songs.  CD-ripping, sure, but also ol’ favorites like Limewire and BitTorrent.  On the most basic level, no one was paying $20,000 for a digital collection.”

This is just innuendo, and it’s misplaced. I must have been off sick from work the day they called us all into Town Hall and said “So you guys, don’t worry about trying to get people to buy more music. It turns out we’d rather they stole it.” because I  don’t remember that happening. Still, I won’t ask you to take my word for it. Instead, let’s consider for a moment just how foolish this whole “iTunes only exists to sell iPods” argument really is.

The iTunes store looks like it will sell about $5bn worth of music alone this year. That’s a Fortune 500 company, all by itself, and around 4% of Apple’s turnover. Even a 5% profit margin yields a quarter of a billion dollars. I count 129 Fortune 500 companies that didn’t make that much profit last year. When you consider that iTunes had massive growth to finance out of its slim margins, articles about its break-even origins seem rather daft.

But I digress. Digital Music News still has one absurd paragraph left:

“Fast-forward to the present, and Apple is still getting away with mass murder.  Because iCloud and iTunes Match not only ports entire, multi-thousand collections in the sky, it’s also giving every pirated collection a pardon.  And $24.95 a year is all it takes to absolve your sins.”

This is a bit vague but it sounds serious. If you didn’t know better, you could be forgiven for thinking iCloud and iTunes Match made it easy to share your music, and that using iTunes Match would protect your from prosecution for music piracy.

Neither of these things are true. Access restrictions make it difficult to share music with others using iCloud, and iTunes Match will not protect you from prosecution for piracy*****. I don’t know where this rumour came from, but it’s widespread and very much mistaken: it’s the act of piracy that is illegal, not the possession of pirated music. It might not feel this way to users, but that’s an issue that could have been addressed in a bit of intelligent analysis.

I struggle to understand what the point of this whole article was. An enterprise as wildly successful as iTunes would surely have left some people worse off, but after reading this, I’m no wiser as to who those people might be.

If there’s a decision we might make differently after reading it, I can’t imagine what that could be either. If it was intended to inform, then it fails by containing almost no information – mostly just a bunch of bloviating. Indeed since it is, in places, misleading, you could end up knowing less after reading it.

I don’t read much news at all******, but I certainly don’t read Digital Music News any more. It joins the Daily Mail and Norman Lebrecht on the list of sources who seem, consistently, to place page-views above accuracy, creating content for the benefit of advertisers or personal vanity rather than for the benefit of the reader.

There’s space for both daily industry news and sensible analysis in the digital music space. If this is what you’re looking for, though, you’d do well to look somewhere else.*******


* This is the only thing in the whole article to get a citation, to another Digital Music News article about how Steve Jobs was an asshole.

** It’s reasonable to ask who wins and loses under such a deal, but to behave as if they didn’t have a choice is to absolve one party to the deal of responsibility for the outcome. The artists made their choice when they signed away their albums to a label, and the labels made their choice when they signed the deal with iTunes and accepted the billions of dollars they were paid in return. If you want to control how your music gets sold, you can sell it yourself. If you want to control how your catalog is priced, you can start your own shop. Occasionally markets need regulating to prevent monopolies from exploiting people, and it’s reasonable to point out when this needs to happen. Everything else is whining.

*** At least 100% of MP3s were not purchased from the iTunes store. If anybody had bothered to cite a source for this “estimate” we might get a clearer idea of what was being talked about. The closest I can find is this, where the estimate is based upon total downloads, without reference to (1) what percentage of these downloads are substitutes for a purchase or (2) how many, if any, of the illegal downloads are made by iTunes users.

**** The iPod could be filled up with stolen music, in much the same way that a suitcase can be filled with stolen money. We don’t condemn people for making suitcases. This would be dangerously close to the “guns don’t kill people, Americans do” argument, except that killing people (or transporting stolen music) was never the intended function of the iPod, and Apple made common-sense attempts to make piracy difficult. Unlike almost all other popular MP3 players, the iPod made it genuinely difficult for you to copy music off it onto a friend’s computer. It’s closely integrated with the best legal download store ever created and even came with a sticker on the screen that said “don’t steal music”. That’s not to say that no pirated music ended up on them, but I’d be interested to read what other reasonable steps Apple could have done to prevent this without completely hobbling the product.

***** It’s in the terms and conditions. “You hereby agree to use iTunes Match only for lawfully acquired content. Any use for illegitimate content infringes the rights of others and may subject you to civil and criminal penalties, including possible monetary damages, for copyright infringement.”

****** This article in the Guardian covers many of the reasons why I tend to avoid news coverage. I found the article when a friend shared it on Twitter – one several people I know who read it, evidently thought it worth sharing, and then went back to reading and sharing a steady stream of pseudo-news every day.

******* Not here though. Adrian Covert? You’re next.

Some people are worried about the shape of the music industry. Every other day, one of my clients will send me some scary bit of analysis from a newspaper or music industry blog, projecting the end for CDs, labels, streaming, downloads, classical music or for the entire human race.

I’m not worried about this.

You see, my second child was born in November. It’s certainly true that my growing family provides valuable perspective on what’s really important, and I barely have time to sleep, let alone read daft speculative analysis, but there’s another reason these projections don’t scare me.

When baby no. 2 was born, he weighed nine pounds and was 50cm tall.

When he was six weeks old, he weighed twelve pounds and was 62cm tall.

He’s a fairly big boy. I wondered how big he’d get.

Not to scale

Now, there are lots of babies, and a lot of them get weighed and measured so there are lots statistics available on how fast they grow. I could use these to find out how big he’s likely to get, but you know what? Those statistics were gathered by looking at other children, and not mine. My child is unique, and if I want to know what he’ll do, I should look at what he’s done.

I think you’ll agree that it makes total sense to ignore all these statistics because they cover situations that are merely very similar and not exactly the same as the one in which I’m interested. This approach has the added advantage that I don’t need to check or even understand anybody else’s data. This is good because I’m lazy and not very good at statistics or research.

Instead, I opted for a bit of basic arithmetic.

If he puts on three pounds (and twelve centimetres in height) every two months, he’ll be 80 feet tall and weigh just under 613lbs by the time he’s my age.

That seemed pretty big, so I figured I should probably check my working. After all, perhaps his growth is slowing down.

If his growth was indeed linear, he should have weighed 10.5lbs at one month old. If it were more, his growth rate would be slowing. Alarmingly, though, the real figure was less than that. Based on these three observations, I concluded that his growth is exponential.

So if instead his body weight increases by one third every two months and his height increases by 24%, he’ll get even larger. Much, much larger.

By his first birthday, he’ll be about as tall as I am, and will weigh 50lbs. At fifteen months old he’ll be the tallest person who ever lived. He’ll weigh the same as me by the time he’s 19 months old, and by then he’ll be more than twice as tall.

He’ll be heaviest person on record by the time he’s three.

When he starts school, he’s likely to be the only boy in the reception class who weighs more than twelve metric tons, but he won’t be the fat kid. At 839ft tall, he’ll be positively lanky.

Growing boys eat a lot, but I do genuinely worry what we’re going to feed this one. At fourteen and a half, he’ll weigh more than the world’s current population. Then again, at 41,000 miles tall, his arms should be just about long enough to give the planet a bear hug. If he wants to eat something, anything, anywhere, he can get it for himself.

At sixteen, he’ll have to be careful he doesn’t bump his head on the moon.

By the time he’s my age, he will have consumed the entire mass of the Earth, and unless his own gravity has rendered him completely spherical, he’ll be roaming the solar system, looking for planets to snack on.

So what I’m saying is don’t worry too much about the alarming analysis that all so frequently fills the news. It might be based on simplistic mathematical modelling that ignores the vast majority of serious research on the subject.

Even if it isn’t, and the music industry really is doomed, why worry? You’ll have been crushed by a giant toddler long before it becomes a problem.

If you want somebody to proof something carefully, make sure they think they’re the only person who will see it before publication. If you don’t want them to read it at all, include half the company when you ask for their input. There’s plenty of research on this* but the graph says it all.

Latané & Darley, 1968 is the classic study, but you may find the Wikipedia articles on the Bystander Effect, Pluralistic Ignorance and Diffusion of Responsibility give a better overview of the work people have done on this.

I worry that I can’t have a proper music business blog without writing at least one post about Radiohead. This completely useless chart is as close as I’m willing to get.