Bono's friends: How to save the music industry

This should be interesting. Paul McGuinness, manager of Dutch-for-tax-purposes band U2, has decided to tell us, via the medium of GQ, how to save the music industry.

Let's not dismiss him out of hand, eh? Let's listen to what the man has to say.

How to save the Music Industry
By Paul McGuinness

Actually, you know what. Let's do a spot of dismissing out of hand. Because that heading is just packed-full of assumptions, isn't it? It assumes that there's a Music Industry which needs saving. That's worth saving. That what McGuinness thinks of as the Music Industry - which must include filing tax returns in a way that reduces your contribution to society to the minimum; filling trucks full of equipment and driving them to sports stadia; a record an album, tour an album structure - is desirable and sustainable and in some how "saveable".

Sorry. You were saying, Paul?

Even after three decades managing the world's biggest rock band...

Wow. I think I know a thing or two about music, and I had no idea that Paul McGuinness managed The Rolling Stones as well as U2.

Oh. Really? He meant... Oh.

I have a lifetime hero as far from the world of U2 as you could ever get.

Thinking, thinking. Someone humble and who didn't collapse into lucrative self-parody after the third album?

Or do you mean that person who had Bono's trousers? Presumably, after the court case and all, they're quite estranged.

He was a feisty 19th-century composer of light orchestral music. His name was Ernest Bourget.

Oh. Midmarket composer whose music mostly worked as background and who is remembered nowadays for kicking up a fuss about copyright. McGuinness fills in the tale:

It was Bourget who in 1847, while enjoying a meal in a Paris restaurant, suddenly heard the orchestra playing one of his own compositions. He was startled - of course he had not been paid or asked permission for this. So he resolved the problem himself: he walked out of the restaurant without paying his bill.

Aha. So doing a runner from a restaurant is a noble act - providing it's done in the name of copyright reform. Never mind that - in this story - Bourget hasn't actually ended up financially worse off, at worst losing potential earnings, but he has eaten real food, bought by the restaurant, cooked by people, served by people. All of those have made an actual loss.

Even when talking about 1847, the current music industry can't understand the vital difference between stealing a thing and an unlicensed performance.

Bourget was in the same financial position as when he went into the restaurant; the restaurant wasn't.

Paul McGuinness' big hero is a highly strung thief.

Bourget's action was a milestone in the history of copyright law. The legal wrangling that followed led to the establishment of the first revenue-collection system for composers and musicians. The modern music industry has a lot to thank him for.

While the rest of us might have a few issues.

Interestingly, you'll hear from the upper floors of record labels and collection agencies the claim that if there's no copyright law, there will be no music. And yet, as McGuinness has just demonstrated, there was music before there was copyright law, and some people were doing well enough to dine out on their earnings.

Assuming Bourget wasn't always going to do a runner. Maybe as he was flouncing out the door, he was thinking "that's a bit of luck, I was going to have to do the 'there's a pubic hair in my gravy' routine if they'd not played my song."

I was thinking of Ernest Bourget on a January day two years ago when, in front of some of the world's best-known music managers gathered in a conference hall in the seafront Palais de Festivals in Cannes, I plunged into the raging debate about internet piracy and the future of music.

An industry which has its gatherings in the South Of France while pleading impending poverty might be considered to be taking the piss a little.

I had been invited to speak by the organisers of the Midem Music Convention - the "Davos" of the music industry - where, along the corridors, in the cafes and under the palm trees, the music industry's great and good debated the Big Question that dominates our business today: how are we going to fund its future?

Here's a clue: don't waste your money sending executives on expensive beanos; try investing in bands instead.

Just as a sidebar, the only thing more sickening than someone using the phrase "the great and the good" is when that person is describing a group of which he is a member.

My message was quite simple - and remains so today.

Oh, good. I was afraid it might have been in Latin.

We are living in an era when "free" is decimating the music industry and is starting to do the same to film, TV and books.

Decimating, you say? Just removing one-tenth of the industry, then? That's pretty good news, as a lot of people were predicting it might do some major damage.

Unless you don't actually know what "decimate" means.

Yet for the world's internet service providers, bloated by years of broadband growth, "free music" has become a multi-billion dollar bonanza.

No it hasn't, as their business is hooking people up to the internet. Indeed, the more people download more 'free music' (or paid for, actually), the worse it is for them, as increased traffic costs them.

McGuinness could be suggesting that without the chance to get unlicensed music, nobody would have bothered to get an internet connection, and thus it's this bonanza which has created their customer base.

I'm sure he isn't just assuming this to be the case, and has weighed all the other possible drivers - the iPlayer, YouTube videos of how to cook cakes, the ability to surf while making a phone call, broadband allowing more than one person to check their email at once in a household, working from home, doing school projects, Skype and eBay and Amazon and iTunes and blogging and remotely watching Old Faithful blow - and decided that, nope, if there was no unlicensed music on the net, nobody would bother.

What has gone so wrong?

Well, firstly, Paul, you've made the classic mistake of assuming what matters to you is the vital part of the puzzle, then you've started to tell us your industry has been undermined while telling us about your expense-account jaunt to France... oh, you didn't mean that, did you?

And what can be done now to put it to right?

I'm sure in the original version, 'put it right' did appear correctly as 'cling to the status quo that a very few of us have been doing nicely out of'.

Paul tells us that he was "amazed" when the speech was picked up and bounced around the world. Why does he think that happened?

Well-known artists very seldom speak out on piracy. There are several reasons for this. It isn't seen as cool or attractive to their fans - Lars Ulrich from Metallica was savaged when he criticised Napster. Other famous artists sometimes understandably feel too rich and too successful to be able to speak out on the issue without being embarrassed.

Or perhaps they thought "well, it's been a nice run, but clearly it was never going to go on forever."

But McGuinness thinks there might be another problem: Badgers.

Oh, sorry, bloggers. Not badgers:

Then there is the backlash from the bloggers - those anonymous gremlins who wait to send off their next salvo of bilious four-letter abuse whenever a well-known artist sticks their head above the parapet. When Lily Allen recently posted some thoughtful comments about how illegal file-sharing is hurting new developing acts, she was ravaged by the online mob and withdrew from the debate.

Sure, there are some people online who behave like utter arses - although, here's a funny thing, Paul, most bloggers also suffer from the abuse brigands. Because what you've done there is lazily characterise everyone who writes and engages online as being boorish louts.

The thing that drove Lily Allen to withdraw was not mindless abuse, but the sudden swamping of her simplistic viewpoints by mostly well-reasoned argument.

Likewise, most of the reactions I saw to your simplistic bout of special pleading were measured and, while mocking, an attempt to engage and debate.

Jesus, it must have been a very, very long time since anyone ever told you they disagreed with you if your reaction is to just bellow 'look at these BLOGGERS with their TIRADES'.

Of course, then Bono stepped in:

he wrote an op-ed piece in the New York Times in January and he pulled no punches. "A decade's worth of music file sharing and swiping has made clear the people it hurts are the creators... and the people this reverse Robin-Hooding benefits are rich service providers, whose swollen profits perfectly mirror the lost receipts of the music business." Bono is a guy who, when he decides to support a cause, does so with enormous passion. But even he was amazed by the backlash when he was mauled by the online crowd.

Yes, there he was writing something that is controversial - he must have known that the 'look, we're getting nowhere chasing people who own computers, so let's harry the people who own the telegraph poles' line was controversial, right? - Bono's being controversial, and he's amazed that people responded?

Note, by the way, the characterisation of 'disagreement' as a 'backlash'. To be an actual backlash, you'd have had to have had a frontlash, and I don't recall anyone ever saying 'that Bono has the right idea about filesharing' in the front place.

The reaction might have been a lashing, but simply because people are telling you you're wrong doesn't make them wrong.

Something a lot of people are interested in generating a noisy debate online. And Bono and Paul are surprised.

These people really, really don't understand the internet at all, do they?

In fact, it's almost as if they're willfully reveling in their ignorance:

You have to ask how these inchoate, abusive voices are helping shape the debate about the future of music.

You might also ask how a bunch of out-of-touch, middle-aged (mainly) men swilling back cocktails on the shareholders' pound in the South Of France, dismissing any attempt at debate as "incohate" and "abusive" are doing that, too.

I rarely do news interviews but when I spoke to the influential technology news site CNET last autumn I was set on by a horde of bloggers.

You were not "set on", you silly boy. If you go on CNET, you will be responded to. The bloggers weren't setting themselves on you, they were trying to engage with you.

Except I think you mean commenters, rather than bloggers, but - hey - they're on the end of a computer, so they're all the same thing, right?

One of them was called "Anonymous Coward."

Um... Paul...

I'm not worried about criticism from Anonymous Coward.

Um... you do know that nobody is actually called Anonymous Coward, don't you? You're really not smirkingly pointing at Anonymous Coward and snickering that 'hey, even he himself admits what he is'?

Perhaps when McGuinness sees a letter in the paper from 'Name And Address Supplied' he really thinks there's a Mr. Supplied who has shared his views with the paper.

Still, you're not afraid of a placeholder name. So what's the problem?

But I am worried about how many politicians may be influenced by his rantings.

But you said they were incohate and abusive. What politician would be influenced by "rantings" that were obviously so? Unless, you know, they're not ranting at all, and were actually counter-arguments.

And there are a lot of them saying you're wrong, aren't there? It'd be terrible if politicians started to listen to the majority viewpoint rather than the rich one, wouldn't it. No wonder Mr. A. Coward worries you so.

The level of abuse and sheer nastiness of it was extraordinary. Without Anonymous Coward and his blogosphere friends, I think many artists and musicians would be more upfront about the industry's current predicament.

Really? You don't think that most artists - the vast majority - have been so screwed over by record labels nickel and dime-ing them through recoupment, getting them to sign rotten contracts that only a successful few can ever challenge, dumping them after one album, that perhaps they don't speak up because they'll shed no tears for the people who did them down?

Do you really think that artists are afraid of these incohate bloggers?

They might tell the world what they really feel about people who steal their music.

You're telling us - with a straight face - that musicians are worried sick that their livelihoods are going to disappear, but not saying anything in case someone posts a 'you greedy bastard' on their MySpace page?

You may or may not think everyone blogging is a petty bully, but you clearly think that everyone else is as stupid as a burlap sack shoved full of unsold Cactus World News CDs.

Quite a few musicians do make their views known; others make their opposing views known. Many - knowing that even if some cash is raked off the internet it'll go straight back to Warners head offices - probably don't care much either way.

Still, Paul has identified this cowering massive, and has decided to wade in on their behalf.

It is two years on from my Cannes speech. Some things are better in the music world, but unfortunately the main problem is still just as bad as it ever was. Artists cannot get record deals. Revenues are plummeting. Efforts to provide legal and viable ways of making money from music are being stymied by piracy. The latest figures from the International Federation of the Phonographic Industry (IFPI) shown that 95 per cent of all music downloaded is illegally obtained and unpaid for.

Those two categories aren't the same thing, are they? It is possible to pay for something while still obtaining it without licence, and there are a gazillion ways for a legally-owned track to have become yours without changing hands.

You'll also note that McGuinness doesn't offer any further explanation about this eye-catching figure; probably because it's all guesswork. The actual figure of 95% is for "unauthorized" obtaining of music; the same report paints a balancing, sunny picture of increasing digital sales and a healthy $3.7billion digital market worldwide. Odd that McGuinness leaves that bit out.

Indigenous music industries from Spain to Brazil are collapsing.

Well, if by "indigenous music industries" you mean the bits owned by international conglomerates, the same companies which have buggered up their English-language businesses now getting it wrong in Spanish and Portuguese too. (Of course, the dumping of their English-language acts into foreign territories have also helped this struggle by "indigenous" industries.

An independent study endorsed by trade unions says Europe's creative industries could lose more than a million jobs in the next five years.

Interesting - by which I mean sloppy - that McGuinness didn't actually say what this survey was.

It was Building a Digital Economy: The Importance of Saving Jobs in the EU's Creative Industries and, far from being independent, was put together by a consultant group, Tera, for the International Chambers Of Commerce. The ICC are a self-appointed body who spend most of their time trying to shape legislation to favour their business members around the world. For such a group to publish a 'something must be done, probably with laws' report is about as independent as a news report on Myanmar Tonight.

Maybe the message is finally getting through that this isn't just about fewer limos for rich rock stars.

Yes. It's about multinational corporations. We've always understood that.

Of course this isn't crippling bands like U2 and it would be dishonest to claim it was. I've always believed artists and musicians need to take their business as seriously as their music. U2 understood this. They have carefully pursued careers as performers and songwriters, signed good deals and kept control over their life's work.

Also, U2 make a large chunk of their money from property development anyway. So they're good.

Today, control over their work is exactly what young and developing performers are losing. It is not their fault. It is because of piracy and the way the internet has totally devalued their work.

Funny thing is, there's a lot of artists who love the internet because it allows them to keep control over their work - they don't need to do massive deals with record labels; they're not being forced to sell a million copies and are happy being able to sell a few thousand, and organise gigs and sell their own merchandise which keeps them in funds. Rather than seeing the internet as 'devaluing' their work - how crap is an artist who can only find value when their work is in a pocketbook - it's giving them a chance to change their relationship with their audience.

They don't want saving, and they certainly don't want to be taken back into a time when four international businesses would hold sway over who would be heard, and who would be successful.

By now, McGuinness is only down to the end of page one. He decides it's now time for a bit of history. How did we get here?

It is facile to blame record companies.

Yes, can you think of anything more facile than blaming a business for its own failure?

Whoever those old Canutes were, the executives who wanted to defend an old business model rather than embrace a new one, they left the business long ago.

Really?

Let's take, at random, Universal.

Their CEO is Doug Morris, who has held the top spot since 1995. To be fair, Morris is stepping down next year; his replacement will be Lucian Grainge. He's been the CEO of Universal in the UK since 2001.

Over at Sony, Rolf Schmidt-Holtz has held senior positions in the company since the last decade of the old century.

It's funny, that with so many of the comfiest seats in the Music Industry being held by bottoms which sat in place during the Napster wars, that it turns out all the Canutes have "long since left the industry".

(By the way, Paul - Canute wasn't trying to turn the waves back, he was trying to show his acolytes that he couldn't. If the Canutes have left the music industry, it would be the ones who tried to tell their boards there was no way to stop the digital tide coming in, and failed.)

Last year, more than a quarter of all the music purchased globally was sold via the internet and mobile phones. The record companies know they have to monetise the internet or they will not survive.

Yes. I think we remember how excited all the labels were at the prospect of selling online.

Perhaps Paul doesn't realise that the internet has old articles on it? Maybe he thinks we can't check.

He then suggests "free" is the problem:

Today, "free" is still the creative industries' biggest problem.
In America there are no more Tower Records or Virgin records stores and many independent stores are just about hanging on. Consumers now buy CDs in a bookstore such as Barnes & Noble or Borders.

Eh? Surely the decline of the bricks and mortar stores isn't anything to do with free - or not so much - as the undercutting by businesses like Target and Tesco, and online stores like Amazon. Plus a couple of terrible business deals on location and financing of their businesses.

And did he just suggest that Barnes And Noble's lovingly presented racks of CD are a problem rather than an opportunity? "No wonder we're in trouble, people bought our product in a new location." What?

Things are changing, though, says Paul:

Today we take a far more sober view as we see what damage "free" has done to the creative industries, above all to music.

Yes, you won't get anyone like the music company Downtown launching a service like RCRDLBL which gives away free music from across the majors, what with free being so bad and all.

Oh.

Governments around the world today, led by Britain and France are now passing laws that, if effectively implemented, would dramatically limit the traffic of free music, films and TV programmes.

I think - though I'm guessing - that McGuinness is talking about various bits of three strikes legislation. I'm not sure his confidence that they'll be ever effectively used is any more misplaced than the belief that other governments are going to follow Britain and France. Given that many governments are quite happy to let their nationals issue homemade DVDs of shakily-filmed copies of Piranha 3D, I wouldn't be holding my breath.

Numerous commercial strategies have tried to deal with "free." Today, many believe music subscription is the Holy Grail that will bring money flowing back into the business. I agree with them. A per-household monthly payment to Spotify for all the music you want seems to me a great deal. I like the idea of the subscription packages from Sky Songs too. These surely point the way to the future where music is bundled or streamed and paid for by usage rather than by units sold. Why should the price paid not correspond to the number of times the music is "consumed"?

Well, here's an idea: because consumers like to buy things, not rent them. I have a mug on my desk with an amusing picture of a cow on it. Had I been expected to pay a royalty everytime I slurped out of it, it would have remained in the store. I've got a subscription to The Guardian, and would no more expect them to bill me if I read the Sports section one day than I would demand a refund if I didn't get round to the op-ed pages one day.

The greedy little glint in your eye at the thought of not allowing us to own our music, but have to pay a toll every time we want to hear a song marks out the difference between someone who cares about The Industry and someone who cares about music. Having got a copyright law which effectively means you get paid for your days' work over and over again, you're now trying to concoct a situation where your over-extended paydays multiply a thousand times over.

I know you don't like being abused, but I really can't think of a phrase more apt than "you really are a chiseling little yamstain, aren't you?". But that isn't incohate abused. That's abuse that has been thought through. It's raging abuse, but it isn't ranting.

Here's a surprise, though: McGuinness then turns his fire on Rupert Murdoch for being nowhere near gung-ho enough:

Newspapers and magazines are trying to reinvent their businesses to deal with "free." It started with a honeymoon while mainstream titles opened up websites and attracted vast numbers of online readers, dwarfing their physical subscriptions. But the honeymoon has come to a miserable end. Newspaper circulation and advertising revenues have fallen sharply. Rupert Murdoch has re-introduced the "paywall" for some of his flagship newspaper titles such as the Times and the Sunday Times. Murdoch has great influence - his empire straddles all the businesses with stakes in the debate -- from the social network MySpace to the Wall Street Journal to Fox Movie Studios and the broadcaster Sky. I'm disappointed that he didn't take a closer look at the music industry's experience and see the dark side of "free" earlier.

But Murdoch's free stuff was stuff he was happily giving away. And remind me, how much does MySpace charge for sign-ups right now? It's... oh... what's the word again? Oh, free, isn't it?

I love the idea that McGuinness thinks that somehow the music industry is leading Murdoch into a world of paywalls, too.

(Again, just a little fact-check, Paul: newspaper circulations have been falling for decades, and advertising revenues have been tanking because of the recession. You might have heard about that, it was in the papers. Both the free ones, and the paid-for ones.)

McGuinness then dismisses the idea of lawsuits - he never supported them, and they're terrible PR. But, hush, we're finally getting to the point:

So what's the answer to "free"? It starts by challenging a myth - the one that says free content is an inexorable fact of life brought on by the unstoppable advance of technology. It is not. It is in fact part of the commercial agenda of powerful technology and telecoms industries.

This is such a stupid claim that it's hard to believe anyone at GQ let it appear in the magazine.

He's effectively saying that AOL and BT willed Napster into existence.

Yes.

Go on, Paul. AOL - itself a content provider, and once part of a movies-to-TV organisation - and the other ISPs want consumers to steal things. Do explain:

Look at the figures as free music helped drive an explosion of broadband revenues in the past decade. Revenues from the "internet access" (fixed line and mobile) business quadrupled from 2004 to 2009 to $226bn. Passing them on the way down, music industry revenues fell in the same time period from $25bn to $16bn. Free content has helped fuel the vast profits of the technology and telecoms industries.

There's absolutely no way at all those are two totally unrelated facts. During the same period, McDonalds opened 1,000 restuarants, and that must have been fuelled by free music, too, right?

But you'll have some statistics as to actual usage which will prove this, right?

Do people want more bandwidth to speed up their e-mails or to download music and films as rapidly as possible?

Oh. You don't.

It's probably a bit of both, Paul. But watching Hollyoaks on 4OD isn't harming anyone's business. It is actually part of Channel 4's business.

I'm sure the people running ISPs are big music fans. But their free-music bonanza has got to stop. That will happen in two ways: by commercial partnership, with deals such as Sky Songs' unlimited-streaming subscription service; and by ISPs taking proportionate responsible steps to stop customers illegally file sharing on their networks.

Hang about, though: you've been smudging the idea of unlicensed and licensed free stuff - Murdoch had the right to give away the Sunday Times when he was doing so - and yet now, all of a sudden, the idea of record labels and artists sharing for free has vanished from your mix altogether. Where does that fit in? Or have you not thought that bit through yet?

What's that word for a not fully thought through argument? Inchoate, isn't it?

But, hey, Paul's been thinking:

I've done a lot of debating on this issue in the past two years. I have walked the corridors of Brussels, learned about the vast resources of the telecoms industry's lobbying machinery and encountered truly frightening naivety about the basics of copyright and intellectual property rights from politicians who should know better. More than once I have heard elected representatives describe paying for music as a "tax."

Well, if you have no choice but to pay it, then that would be near the right word, wouldn't it? You pay for a record; if you have to pay a portion of your broadband fee to the music industry, that'd be a tax. It could be a flat-rate licence if you'd rather it work that way. But, yes, that would be what it is.

I am convinced that ISPs are not going to help the music and film industry voluntarily.

Why exactly should they? They're also not doing anything to help the battle to save the high street bakers. Besides your unproven claim that people must be using their connections for evil, why would any company be obliged to help another? You're part of the capitalist society, Paul. That's what capitalism is.

Some things have got to come with the force of legislation. President Sarkozy understood that point when he became the first head of state to champion laws to require ISPs to reduce piracy in France. In Britain, the major political parties have understood it, too. Following the passing of new anti-piracy laws in April's Digital Economy Act, Britain and France now have some of the world's best legal environments for rebuilding our battered music business.

But it won't work, Paul. For a man trumpeting his head off about how he knew suing consumers would be a failure a few lines back, why have you suddenly become convinced that a piece of legislation - however appalling - that says 'it's still not on to take music without paying, like what that other law says' is going to make any difference? All it means is the ISPs will also be wasting their time and money in partnership with the record labels.

If your roof is leaking and getting your bed wet, putting another duvet on top of the wet one isn't fixing the roof.

At the heart of the approach France and Britain are taking is the so-called "Graduated Response" by which ISPs would be required to issue warnings to serious offenders to stop illegal file sharing. This is the most sensible legislation to emerge in the past decade to deal with "free." It is immeasurably better than the ugly alternative of suing hundreds of thousands of individuals.

Ah yes, how much less ugly to have the prospect of headlines like 'Unable to revise - because her brother downloaded a U2 song'; 'Grandmother thrown off internet after neighbour hijacked her wi-fi - "I can't talk to my grandkids in Australia" sobs 92 year-old' and all the rest.

At least suing has some sort of court overlooking what's going on.

McGuinness ends with a positive future - every song available all the time on any device, higher quality sound files ("MP3 files sound terrible" he reveals; they don't, of course, as most people are quite happy with them, and those who really care don't use them anyway) and a world where music companies are in the vanguard:

The mindset regarding free music is changing. Managers and artists I meet take the issue far more seriously than they did before. Newspaper editors no longer think the problems of music are from another world - they actually ask our advice on how to address them.

Seriously? Jesus, if you're asking EMI how to cope in the internet age you must be in the quicksands. It's like calling Alan Carr for beauty tips.

It may be that the crisis for music has now got so bad that the issue of "free" is really being properly understood for the first time.

Or rather, what you've done is a desperate bid to try and recast the argument in slightly different terms but still ignored the fundamental issue here.

You can't stop people passing tracks about. You can't stop people taping off the radio, or its 21st century equivalent. You can't do anything to alter the basic fact that the supply of a specific digital track is virtually unlimited, and that the logic of that is that the end user unit price is almost nothing.

And you can applaud Sarkozy until your hands bleed, and stalk the corridors of power forever; you can peer at AT&T's profits and mutter how it isn't fair. But it doesn't change the basic truth.

You're not selling individual packages of music to consumers any more. That business has gone, and every day you spend trying to bring it back is a day wasted, a day further away from the reinvention your business needs.

Embracing Spotify and the likes is good, and positive - you shouldn't try to pretend that it's a music business initiative, because liars aren't attractive, but it's great that you're finally not just hitting every new idea on its head.

But please: stop trying to talk up the idea that we can still be the 1960s; stop trying to create a Presbyterian-style campaign around the idea that most people will not pay for some of their music as being a moral ill. It just makes you sound ridiculous.

Oh, and by the way: while typing this, I've been listening to all the lovely free music on offer on Island Records' website. I think you might know a couple of people down there, Paul - do you want to go and give them your little lecture on how free music devalues everyone and how the music industry is so against it?