Two pretty big things happened to the world of music in the last couple of weeks, both concerning the shift towards "the Cloud" (which, incidentally, is my prediction for the buzzword of 2009- which means that, by 2010, it will be as tired and overused as "Web 2.0" is right now.)

One move was to do with Apple, a company that has traditionally been incredibly closed in nature, and the other to do with Google (or more specifically, YouTube), an organisation which has traditionally been very open.

The interesting thing is how they both seem to be moving in the opposite directions to which they are usually associated. But first of all, I want to briefly talk about another part of the music industry that hasn't yet really been able the most of the online world; Radio.

Presumably because of the fear that's been surrounding the internet since Napster and the potential that a radio program broadcast over the internet could be recorded (in much the same way that you can happily record a normal radio broadcast), it's been difficult for radio broadcasts to be distributed online in a way that actually makes the most of the web. Because of these kinds of fears from the music industry, Podcasts are usually stripped of any music- if they do play songs, they are limited to 30 second clips, which obviously turns a music based show into a pale shadow of its broadcast equivalent, as a 3 hour music-based show is usually transformed into a half hour talk show. Live streams (ie. recordings that you can't copy to a portable device and play when you want to) do carry music, but you would have to find your own way of recording them if you wanted to listen to them offline. (Which isn't a challenge for the digitally minded, but isn't made easy or convenient either.)

In other words, radio on the web is not really any different from "normal" digital radio broadcasts. It's failed to take advantage of what the web can offer, such as the ability to download the bits that you like on the device that you want, listen to them when you like, or to make something easy to find or discover. (Or, more accurately, music radio has failed- the talk radio format, in the form of podcasts, works quite well.) Ironically, in the UK at least, there are ongoing battles between radio licence holders and radio stations over the licence requirements to play set quotas of particular genres of music, against the radio stations need to make money through attracting large, mainstream audiences so that they can sell advertising spots. Broadcast media lend themselves to a wide reach, while the "findability" of the web lends itself to nice interests; interests which aren't currently well served.

I'll come back to this point about radio later on, but back to the present and the two recent changes in the world of online music.

The most recent event is YouTube's move to prevent copyrighted music from being used in YouTube videos. As they explain in the official YouTube blog;

Previously, when a music label or other rights owner issued a copyright claim to block audio, the video was automatically taken down. Uploaders had two choices: dispute the claim (in the case of fair use, for example) or use our AudioSwap tool to replace the track with one from our library of pre-cleared music. Now we've added an additional choice. Instead of automatically removing the video from YouTube, we give users the option to modify the video by removing the music subject to the copyright claim and post the new version, and many of them are taking that option.

What it means is that, along with stopping YouTube being used for a number of interesting music-related purposes (such as demonstrations of dancing skills, Guitar Hero prowess, homemade music videos- or even showing videos from parties with music playing), it can't be used to share music- to email someone a link that will let them listen to a song that they might like. (Maybe even one that you think they would like to buy.)

The other event was Apple's move to remove DRM from iTunes. I already put out my theory about where Apple might be heading with iTunes earlier this week, which talks about the other big change; in short, over the last six months or so, Apple have also enabled the iTunes store to be used on the iPhone from anywhere (not just in a WiFi hotspot), enabled podcasts to be delivered directly to the iPhone without having to connect through your computer, and set up a system which tracks what music you own and what you listen to through iTunes.

iPods have massive hard drives- up to 120 Gb. Mobile phones like the iPhone don't- they have much smaller capacities to fit your music, videos, photos, applications etc. into a much, much smaller physical space (as does the iPod Touch and iPod Nano.) With a connection to The Cloud, where your music library lives on Apple's servers, rather than on your portable device, this problem of limited storage disappears. Instead of having access to a few gigabytes (or even a few hundred), you now have access to everything; every record ever made, along with every TV program, film or radio broadcast, is effectively in your pocket.

This could indicate an interesting direction- if Apple let you download music for free that they know you already own, directly to your iPhone, then it would give iTunes a real advantage- not just over other similar online music "retail" services, but even over CDs.

The potential that this would open up is huge and, as far as I can see, Apple simply have to do it. Partly because it's the only way they can keep iTunes on the desktop relevant and competitive in a fast-moving industry (after all, there are already music services like Last.fm and Pandora offering free music already), while also staying competitive on the mobile front as "free" services like Nokia's Comes With Music offer a similar stream of free music. But also because they are the company in the best position to do it; they have the #1 online music channel and the #1 portable music platform. If someone else offers a better service that combines the two (which could be done, for example, by a partnership between Amazon and Last.fm) Apple could lose both top spots, which would no doubt impact on their iPod/iPhone businesses.

It could also give Apple a way to let you listen to music that you don't own- say, listen up to three times, then buy it if you like it. Which would be a much better way to make a judgement than the 30 second preview that they (like radio stations) are currently restricted to providing.

A post by Bob Lefsetz on Apple's move was quite critical, but makes a point that caught my attention.

Why can’t the industry face reality… That most people own a lot of music, most of which they haven’t paid for. The key isn’t to get them to pay more for what they do buy, but to get them to pay for what they’ve stolen. Otherwise, it’s like trying to save Detroit by jacking up the prices for the cars the company DOES manage to sell!

At first glance, this sounded to me like a pretty stupid comment- for what possible reason would Joe Consumer, with a hard drive stuffed full of MP3s go out and buy his records all over again? Well, one reason might be because they won't work with his new portable music player (say, a new mobile phone.) But a new mobile phone that won't play "open" formats like MP3s probably won't be popular. It seems unlikely that this is a reasonable reason; I think Joe Consumer would be more likely to buy a new music player than to buy his stolen music.

Another reason, as I said before, might be if he wanted to be able to listen to everything he buys from wherever he happens to be.

But there's another option that I think makes for a more interesting possibility. Instead of thinking about the music that people "own" (an inappropriate term for copyrighted, licensed recordings), think about the music that people listen to.

The industry’s way out of its crisis is to halt restrictions, license more people who are coming up with solutions. Find a way to make music REALLY CHEAP! But selling it to everybody, in volume, to come up with a grand total. Hell, this pussyfooting, this refusal to play ball, this I’m a master of the universe is working about as well as it did for Lehman Brothers and Bear Stearns. They couldn’t possibly fail. But they did!

Which brings me back to radio; a way that makes music REALLY CHEAP (for the consumer, completely free) that sells to everybody, in volume. That also leads to music sales as it helps people to legally discover new music, which leads them to want to buy it. This is something that digital radio doesn't do very well, because of the lack of a return path- for all its benefits, it's still a broadcast medium- and online radio doesn't do well because of the lack of available and affordable music for those who want to download, and the lack of an easy way to go back and find what you heard if you stream a radio station and later decide you want to go back and buy it.

But there's another "next step" that I don't think Lefsetz has considered; a different way to make people pay for music that has been "stolen" (or rather, which the artist hasn't been paid for), which has nothing to do with illegal downloads.

First, take a look at how musicians make money. Yes, they can record their music, package it up and sell it on; the business which is currently sinking, with CD sales plummeting and the majority of downloads being illegal. Yet, as Nine Inch Nails recently demonstrated, even when music is released for free, where people are allowed to copy and share it, there is still a profitable business to be made from people willing to pay for it, both for the digital version online, or for the physical product.

But they can also make money when their music is played in public; whether that's themselves performing at a concert, their records being played on the radio or on TV, or anywhere their music is played in public; nightclubs, wedding DJs, bars, shops, even offices and factories.

Maybe there's another way; forget about people downloading music for free. Think about people making money who are playing music.

Which brings me to the MCP-PRS Alliance.

As they describe themselves on their website;

After I recently wrote about a study from the MCP-PRS that claimed that the Long Tail theory doesn't work for the music industry, I've been keeping an eye out for more reports on the subject.

Chris Anderson (the author of "The Long Tail") recently posted news of a study from eMusic, which appears to show contradictory evidence about the online music industry (not that the MCP-PRS study appeared to back up the argument they were making.) But it also got me to thinking about the source of the original story- the MCP-PRS Alliance. Why would they want to try to prove that the Long Tail doesn't exist in the world of music? Their figures don't seem to back up their argument (which may be why they haven't been released in full- making the assumption that nobody other than an amateur would bother to do the maths and question them.) So why would they be making the argument in public?

I wondered if, perhaps, it could be a threat to their business model. (I know, a not-for-profit organisation shouldn't have a "business model", but still, there are people out there getting paid for the work that they do...)

What the MCP-PRS do is charge licences for any public performance of music, whether live or recorded, that takes place outside the home and from radio and television broadcasts and online. They then pay these fees (minus a percentage for themselves, of course) to the people who make the music.

What do MCPS and PRS do with the money collected? MCPS and PRS pay money collected to their writer, composer and music publisher members. Both organisations are ‘not for profit’ and only deduct a small admin/commission fee to cover operating costs.

In other words, if I make music that gets played in public and my music gets played in public, then as I'm not a paid-up member of the appropriate organization, someone else would effectively get paid for my work.

I don't know how much it costs to become an MCP-PRS member. Just to find out the cost, I would need to fill out a form that has to include my CAE number. (I don't know what a CAE number is, and there aren't any obvious clues on the website.) Presumably the big artists- those in the "head" of the market- pay publishers to deal with this kind of thing. But you wouldn't get paid anything until the payments due reach a value of £30.

Relating specifically to the music that DJs play (remember, this is supposed to cover any public performance of music, whether live or recorded, that takes place outside the home);

Where does the money come from? Commercial discos, at large clubs and big music pubs. How are royalties calculated? Music researchers are sent to collect performance details direct from performers at statistically valid random sample of venues across the UK. What is the administration rate? We take 24.5% of the royalties collected.

In other words the "head"- that is, the big venues- is the only part of the music market that the MCP-PRS is interested in. If the Long Tail theory really does apply to music, then the MCP-PRS needs to completely overhaul their collection and payment model.

From the FAQs for DJ royalties ("why haven't I been paid?" for someone whose music was played by a DJ);

Was the performance included in our sample? Royalties will only be paid for music included in our sample.

In other words, if your music is played at a hundred commercial discos, clubs and music pubs, but none of them were one of the selected larger venues, you don't get counted so you don't get paid.

If your music is only played as smaller discos, pubs that aren't "music pubs", parties, weddings and so on, then you don't stand a chance. To me (as a believer in the Long Tail theory), that sounds just plain wrong.

To me, there is a better way of approaching the problem; open it up.

Services like Last.fm show the music that an individual plays, and makes that information open. Why not arrange a similar network of places licensed to play music in public?

The public could see whether the venue they went to was on the licensed register, and report it if it wasn't. Licensed venues would be supporting the artists that they played. People who went and heard music they liked could see what was played when they were there, find the tracks they liked and listen to/buy them. People who weren't there (say, people in a different town, or even a different country) could listen to the music that was played (much like a radio station), and find other places that played the music that they like. The licence holder could even work on an affiliate basis, taking a cut for each track they "sell"- popular venues could even make money by signing up. And the administration of collections- physically going to venues and tracking the music played- would be virtually eliminated.

I have no idea how much money this could potentially bring into the MPC-PRS' collection scheme through unregistered "venues", how much it would bring to currently unregistered artists, or what kinds of complications could arise. But the current minimum cost of a licence to play music for 2 years could cover the hardware cost of a basic netbook (or something similar) that would be capable of being set up to both play and report the music being played, and which could also be a music delivery platform (which could be via iTunes, Last.fm or a similar service.) A free music-on-demand subscription service could be a part of what you get for signing up to a licence.

Could this be a way to save the record industry without suing music fans? Am I missing any obvious flaws?