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< | REWORK IN PROCESS. My original second paper with Eben's comments is here. |
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> | REVISED/REWRITTEN. My original second paper with Eben's comments is here. |
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< | Gold Records and Musical Success |
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> | Filesharing and Artist Incentives for Creating New Music |
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< | -- By ChristopherWlach - 30 Mar 2008 |
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> | -- By ChristopherWlach - 22 May 2008 |
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< | Summary |
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> | I. Introduction |
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< | The RIAA Gold and Platinum Records Program promotes a model of the musically successful record as a monetarily successful record. The criteria for Gold status ensures that the award is reserved for records that fit this model. In the current landscape of music production and distribution, however, the Program will no longer be able to maintain this model of the musically successful record without significant changes. |
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> | Many commentators inside and outside the music industry put forth an argument against filesharing based in artist incentives: filesharing reduces music sales and, by extension, artist royalties; without the financial incentive of royalties, artists create less new music; thus, filesharing results in more music available now, but less new music in the long run. But while some artists may indeed stop creating music because of filesharing, filesharing is not likely to result in less new music overall. First, while filesharing may decrease potential artist royalties, its indirect effects may put money directly in the hands of more artists. Second, even supposing the effects of filesharing indirectly deter some artists from creating new music, filesharing lets an unlimited number of other artists distribute music-—music that would not have been made available without filesharing. |
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< | I. Introduction: The Gold and Platinum Records Program |
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> | II. Fewer Sales ≠ Fewer Financial Incentives for Artists. |
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< | In 1958 the Recording Industry Association of America (the “RIAA”), the trade group for the U.S. recording industry, instituted the Gold and Platinum Records Program (the “Program”). The Program issues awards to records with high domestic sales. Provided the record meets certain qualifying criteria, a record with 500,000 sales is awarded “Gold” status. Other awards are available for records with higher sales: “Platinum” (more than one million sales), “Multi-Platinum” (one million to ten million sales), and “Diamond” (more than ten million sales). * Although “Gold Records” had been awarded in popular music before the Program, the Program standardized the Gold record as a sales award. The RIAA has even registered GOLD and PLATINUM as service marks. |
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> | Filesharing has likely played some role in this decade’s falling music sales, though the extent of its impact is debated. But, despite music industry claims (and the claims of some artists), this doesn’t have to mean fewer financial incentives for artists to create music. In fact, filesharing may ultimately provide more artists with greater financial opportunity than they would have had before filesharing. |
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< | II. The Program Promotes a Model of the Musically Successful Record as a Monetarily Successful Record. |
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> | Most artists don’t become rich from sales-based royalties. The vast majority never even sign with a label. For all but five percent who do, the label never “recoups” its advances—money that needs to be paid back before an artist can begin collecting royalties. The royalties these artists receive typically amount to a few cents per sale—literally, pennies compared to the retail price. The great part of the retail price goes to people other than the artist: retailers, producers, and--most importantly--the label, which uses the money to invest in new artists, pay its employees, and cover numerous other overhead costs. |
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< | Technically, Gold status simply indicates that more than 500,000 units of a record have shipped for sale. This status, however, often connotes musical success, which I use to mean that a large quantity of people actually enjoyed the music on the record. # This connotation likely stems from the historic correlation between record sales and musical success. Before the advent of widespread file-sharing online, purchasing music was one of the few ways that people could regularly listen to a record. High sales were thus a relatively reliable indication that many people had enjoyed the music. The RIAA also markets the Gold award as more than merely a sales award. It declares on its website: “Spanning over 40 years, the GoldŽ, PlatinumŽ, Multi-Platinum™ and now DiamondŽ award programs are the longest-running objective measure of achievement for sound recordings in the United States, and provide an unmatched historical perspective on the success of countless recording artists.” The Program thus promotes a model of the musically successful record as a monetarily successful record. |
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> | Historically, artists had little leverage to change the way they made their money. Record labels had the recording and production equipment, the manufacturing plants, the nationwide distribution networks, the access to media. So not only could labels pay little royalties, they could also demand large shares from other areas of artist revenue, including merchandise sales, live performances, and commercial licenses. Without access to large-scale manufacturing and distribution, artists could earn far less from such areas of revenue. |
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< | The strict criteria for Gold certification ensures that Gold status is available only to such monetarily successful records. Although the award is open to members and non-members of the RIAA, only U.S. firms or corporations “engaged in the legitimate production and sale of sound recordings” may request certification. Before awarding a record Gold status, the RIAA also performs an independent audit to ensure that the record has met the minimum domestic sales requirements. For a full-length album to be certified, the album’s sales must also reach a minimum dollar volume. Through these regulations, the RIAA |
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> | Filesharing has greatly reduced the label’s leverage against artists. Individual listeners supplant the roles of distribution networks and manufacturing plants, putting music in more hands than any label could have with no marginal cost. Along with cheaper recording technology and a more diffuse mass media, this change has greatly reduced the role of the label in creating music. Artist can make money without signing to a label; when they do, they can demand more. |
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< | III. In the Changing Landscape of Music Production and Distribution, the Current Criteria for Gold Status Fails to Capture Many Musically Successful Records. |
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> | Consequently, even if artists receive less royalty-based revenue, they now have access to other forms of revenue. Instead of contracting all their rights to one label, they can enlist one company for merchandising, another for live booking, another for commercial licensing. Artists can thus assign their rights as they deem best, not merely as a cost of large-scale distribution and manufacturing. |
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< | Today, artists can achieve significant musical success without the capital or distribution network of a major label behind them. Inexpensive recording software and equipment allows artists to produce high-quality music at low costs. Through the internet, artists can then make their music available to large audiences at virtually no distribution costs. And because independent artists are not tied to labels, they can price their music as they choose, or even offer it for free. Consequently, many artists have the potential to attain musical success without achieving the same levels of monetary success that Gold status requires. Artists are also able to distribute music online that the RIAA considers illegal, such as music containing unauthorized samples. Although these artists may face legal consequences for making such music, the internet does not initially check the distribution of such works to the same extent that retail stores do. |
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> | So while filesharing may reduce royalty-based revenues, it will likely give more artists better access to other forms of revenue that are potentially more beneficial than royalties. Consumers might also be inclined to spend more money in these areas if they know that a significant portion will go directly to the artists. |
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< | The current criteria for Gold status do not reflect these new pathways to musical success. By limiting Gold certification to corporations or firms, the RIAA makes Gold status unavailable to individuals who distribute their music independently. By requiring a minimum monetary sales volume, the RIAA also fails to count records distributed for free or at prices much lower than those of major labels. Furthermore, by excluding music that it deems not “legitimate” from its audit, it does not account for current artists who make musically successful records containing unauthorized samples. |
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> | III. Even Without Financial Incentives, Artists Will Still Create Music. |
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< | Even with major label artists, record sales are no longer as closely correlated with musical success as they historically have been. The availability of music for free online allows people to enjoy music without purchasing records. Downloads cannot be tracked or audited to the same extent as sales of physical records. While there is no doubt still some link between record sales and musical success, it can no longer be determined as accurately as it once was. |
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> | Even without financial incentives, many artists will still create music. Countless artists already do--no doubt most realize that they have a slim chance of getting rich from their music, but this doesn't mean they'll stop playing. |
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< | IV. Conclusion: If the Criteria for Gold Status Do Not Change, the Program Will Be Unable to Maintain Its Model of Musical Success as Monetary Success. |
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> | But even if the effects of filesharing do deter some artists from creating new music, this does not imply any net decline in the amount of new music available. Historically, only a limited number of artists could achieve widespread distribution. Most importantly, the costs of a label's investment in an artist were high, while artist success rates were low. But other barriers also stood in the way of new artists becoming well-known: limited shelf space at retail stores, limited space in music magazines and other media, FCC airplay regulations, illegal "payola" practices, to name only a few. Filesharing and other technology now makes music-making and distribution available to virtually anyone (itself an incentive to make music). So even if some artists are deterred from making music, there will no doubt be countless other artists who won't. These artists have far greater access to audiences now than they ever could have had. |
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< | The Gold award has always been a sales award first. This is hardly surprising: the RIAA represents companies engaged in the business of selling music. However, as the link between monetary success and musical success becomes more tenuous, the Program will no longer be able to maintain its model of the musically successful record as the monetarily successful record. |
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> | Similarly, there’s little reason to assume musical quality (however determined) will suffer without financial incentives. Not only does filesharing and other technology widen the pool of potential artists, it also allows for music unconstrained by physical limits (e.g., album length) and less constrained by label-constructed limits (e.g., minimum tracks per album, content restrictions). While labels might stray away from "risky" music because of high investment costs and low rates of return, such taste regulation is unnecessary in a world of filesharing. If the music fails, it fails. The cost of distributing it is zero either way. |
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< | _________ |
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> | IV. Conclusion |
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< | FOOTNOTES
* I primarily discuss the Gold Record in this essay, but much of the analysis is relevant to the other awards. Throughout the essay, I use "record" to refer to full-length albums, singles, and authorized digital downloads.
# I am limiting my discussion to popular music in the U.S. Like the RIAA, I am considering musical success in quantitative terms: the number of listeners who enjoy the music on a particular record. |
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> | Not only the RIAA, but also many artists and smaller labels argue against filesharing by pointing to its effects on the financial incentives of artists, who stand to lose royalty revenues. However, the argument overlooks the fact that more artists potentially have more financial incentive to make music in a world of filesharing; it further overlooks the fact that new music will still get made absent financial incentives. |