Thousands of Australians download their music from the Internet, and don't pay for it.
Some say it’s stealing, others say sharing. But who's making money from these downloads?
Have Your Say: Should music be free?
Artists come face to face with the young people who freely download their songs, and Internet industry stakeholders meet performing rights authorities.
The Audreys, Mahalia Barnes, Tim Levinson from the Herd, Jenny Morris and hip hop act Phrase are all concerned music is being devalued. But for young Internet users, downloading free music is acceptable and cool. Some have never bought a CD in their lives.
Australia's music industry claims it's losing $200-million per year as illegal downloading causes CD sales to slump. New media industries and Internet Service Providers (ISPs) say the world has changed, and the music industry must change with it.
Insight asks: How should the music industry respond to new technologies which are making free music easy to access?
Download this track free (with the artist's permission!)
For a limited time only, Tim Levinson – of The Herd and Urthboy fame – is giving Insight viewers the chance to download an exclusive track, Over Before It Began straight from our website.
Over Before It Began
If you just want to listen to this track, click on the link above. To download the track onto your computer, right-click on the link and choose 'Save Link As'.
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MiTunes – Part One
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Paying for music is becoming a bit of a novelty. With so much music free online, thousands of Australians are downloading their favourite tracks without handing over a cent. Some call it stealing, others call it file sharing. Whatever you call it, the music industry has changed forever. Surveys show music and video downloads make up roughly 60% of online traffic. So who is making money from online music and how is the industry fighting back? What's the future for songwriters and artists? Joining Jenny Brockie tonight – musicians, fans, downloaders and executives from the music and online industries.
JENNY BROCKIE: Welcome, everybody, to Insight tonight. I should also make it very clear from the outset that we have been given an assurance by record label chief Stephen Peach, who's sitting right here, no-one will be prosecuted for talking about free downloads. So away you go. Michael Fee, you're a punk and indie music fan – how much music do you download free?
MICHAEL FEE: Um, probably the majority of the music I have on my iPod and stuff.
JENNY BROCKIE: And how much music do you have your iPod?
MICHAEL FEE: 2,000-3,000 songs roughly.
JENNY BROCKIE: Do you ever pay?
MICHAEL FEE: Um, now and then, like if it's a band that I really want to own the case and the disc then I will buy it but, majority of the time, downloading is just easier so I just do that.
JENNY BROCKIE: Jordan, what about you? You're 16 – how much of your music do you download?
JORDAN FROST-HODSON: Roughly around 90%.
JENNY BROCKIE: How many tracks would that be?
JORDAN FROST-HODSON: Um, I don't know – 2,000 – I've got around like 79 days worth of music on my iTunes – so roughly around 90% of that.
JENNY BROCKIE: Do you ever pay?
JORDAN FROST-HODSON: Ah, not usually. Most of the time not, but yeah, I'd rather pay for it.
JENNY BROCKIE: And for the benefit of people watching who might not know how you do it, how do you do it?
JORDAN FROST-HODSON: There's many ways. There's program called LimeWire that is fairly easy to use now. Um, it's – you just download it off the Internet and then it's just a – you install it onto your computer. You open it up and you type in the name, the artist and everything that you want, you click search and it just comes up for you – you just double click on it, it downloads it and it's there.
JENNY BROCKIE: So, easy?
JORDAN FROST-HODSON: Yep.
JENNY BROCKIE: David Torr, what about you? You download a lot of free music too – do you ever feel guilty about it?
DAVID TORR: Well, I don't know. It's hard because sometimes, um, I don't particularly like buying CDs a lot because, um, you get a lot of songs on there that I might not necessarily like. Um, I tend to just like watch, your music shows or something like that and then if I see a song I like I'll write it down or something and next time I'm on I'll just download that particular song.
JENNY BROCKIE: And do you ever think about the artists?
DAVID TORR: Oh, yeah, sometimes do but, um, yeah, not that much. It's just, I don't know – you do it enough you just kind of stop thinking about it, it just becomes habit, yeah I know it is kind of bad.
JENNY BROCKIE: Do you think it’s bad, I mean a lot of people do it, do you really genuinely think there's anything wrong with doing it? I mean how do you weigh it up in your mind, or don't you? It sounds like you don't, really.
DAVID TORR: Yeah, you kind of don't. But I guess the stereotype thing is we just kind of think – and I know it's not necessarily true – but we just assume all music artists are like rich and wealthy and living high and stuff.
JENNY BROCKIE: There are a few people over here laughing. I think the Audreys are having a bit of a smile about that at the moment. Amanda Collinge has been talking to one young musician who's trying to make a living from music.
REPORTER: Amanda Collinge
It's Sunday night at the Annandale Hotel in Sydney and hip-hop artist Phrase is the headline act. He's 26 years old, from Melbourne, and the only hip hop artist in the country to be signed to a major record label. Despite his record deal, live shows are Phrase's main source of income. He says most of his fans download his songs for free and so, he says, he makes almost nothing from CD sales.
PHRASE: I know so many people that have my record or who have heard my music and they've either heard it via MySpace or they've downloaded it for free off LimeWire or what not. But then again do you think well, do I want them to, hate them for stealing $3 off me or do I want to love them for liking the music and coming to the show and telling other people about it.
Like many artists, Phrase has mixed feelings about music downloading. He acknowledges the Internet can be an invaluable promotional tool.
PHRASE: It's hard as an artist because you think well, if 20,000 people download my album then yes, I lose money, but 20,000 people then know about my record and they'll probably tell another 10,000 to 15,000 and then it spreads – do you know what I mean – and hopefully, eventually, those people become diehard fans who will one day go out and purchase something or come to a show or something like that.
Phrase wonders how people can be so passionate about music but not be prepared to pay for it. People spend countless amounts of dollars on therapy and doctors and good food and vitamins and whatever it may be to kind of enrich their life and make them feel better in whatever way it might be but yet they won't spend $20 on an album that somebody poured six months into, do you know what I mean? It's kind of, I don't know. I have the same dream as everybody else. One day I would like to buy a house and have a wife and have a kid but that's not possible if I keep just giving to you guys all the time – I can't just keep giving you music and doing that. Something needs to give and at some point, you know, everybody needs to earn a wage and a salary and have a nest egg for something that they want to do later.
JENNY BROCKIE: So, Phrase, you're not one of those rich musicians.
PHRASE: I wish I was.
JENNY BROCKIE: Do you think downloading's stealing, do you think of it like that or not?
PHRASE: Yeah, I think I mean at the end of the day it is stealing. You're getting something you're suppose to pay for that you're not and it's illegal to download and you know that and you're going on the site and just taking it.
JENNY BROCKIE: But everyone's doing it.
PHRASE: Yeah. Well, it's still stealing though. I mean, if everybody was shoplifting it still wouldn't be OK.
JENNY BROCKIE: Joshua, you're 18, you're a big fan of Phrase's – are you getting his music for free?
JOSHUA MEINRATH: Yeah, I am, sorry, mate. Sorry about that, yeah. Yeah.
JENNY BROCKIE: OK, tell us about that. Tell us about the way you think of it as opposed to that way?
JOSHUA MEINRATH: I mean it is a form of stealing, I suppose, but as you said earlier, it's file sharing as well and I mean, I mean if someone buys a CD and gives it to their mate to borrow, like it's the same sort of thing as like sharing online, only more people can access it. So, yeah, I mean I feel sorry for the artists and stuff but like if it's easy to access it at home then I'll do that.
JENNY BROCKIE: The body language between you two is really interesting. Phrase, you went to Joshua's school to make this clip. Josh is actually in that clip. Did you ask the kids at that school, were there any of them that actually brought your music?
PHRASE: Yeah, it would have been their lunch break – there were a bunch of kids hanging around that I was talking to and I said “Have you guys heard of me or got the record?” and a bunch of them said, “Yeah, yeah, we've got the album, like, we love your music” and I said “Where did you buy it?”, and this is going back a few years and I'm not very download savvy or computer savvy and all these kids were like, “What? Pay for it? What are you talking about? We downloaded it and it's on our iPod.” So that's when I kind of went oh, right, people aren't buying music, and especially you think as an artist who like – it's the teenagers, it's that market that go out and buy records when really it's not those guys buying them at all.
JENNY BROCKIE: It's older people going out and buying CDs now, right?
JENNY BROCKIE: Joshua, I know another one of your favourite bands is the Herd – is that right?
JOSHUA MEINRATH: Yeah.
JENNY BROCKIE: You know what's coming, don't you? Have you downloaded much of their stuff?
JOSHUA MEINRATH: Um, I actually couldn't find the Herd when I went to download it so I got a friend of mine to burn it for me, yeah. Sorry, again, but yeah, that's how I got that.
JENNY BROCKIE: Tim Levinson from the Herd is here. Would you like to say anything to Joshua?
TIM LEVINSON, URTHBOY/THE HERD: Oh, I wouldn't be sort of taking a position of, um, preaching and telling him what to do. When I was growing up a big part of the way that I found out about music was that various friends in our little network, network – I guess just friends – would make mix tapes for each other and copy music and share it and that was a really important way of us finding out about new things.
JENNY BROCKIE: And this is just on a grander scale in your view?
TIM LEVINSON: Yeah, absolutely.
JENNY BROCKIE: Let's have a look at a song that was a big hit for you last year. Can illegal downloads work for you as an artist?
TIM LEVINSON: Absolutely. That's one of the problems with taking a black-and-white attitude towards it, is not acknowledging that in many ways your music is able to get out to a broader section of the community because there's a whole lot of people that aren't going to like it and aren't going to want to spend money on it so therefore they have other ways in which they might come to appreciate your music and some of that may be coming to a gig, paying money to come and see you live, and that's really important.
JENNY BROCKIE: Taasha Coates from the Audreys, how do you feel about this? About downloads, free downloads?
TAASHA COATES, THE AUDREYS: It's such a tricky one, putting the people downloading the music and the artists together – I think it's a strange dynamic.
JENNY BROCKIE: It's very interesting – it's an interesting dynamic because you're all kind of feeling your way round one another and you all like one another, that's what's interesting about it.
TAASHA COATES: Yeah, we're all being very friendly but wait till later. We released our first album a couple of years ago so we sort of didn't – we haven't joined the industry when it's, you know, we didn't start out selling a bunch of records and suddenly we're only selling a third of that amount, so we haven't noticed the change. This is kind of all we know.
JENNY BROCKIE: But how do you feel about it? You know, we've got people sitting here who have got kids, have downloaded their music for free.
TAASHA COATES: Maybe I would have done it when I was a teenager too but that wasn't an option. So I'm really torn. It would be great, you know, like the guys say, if we could make a living from our music, but how do you stop them?
JENNY BROCKIE: Sam McLean, what do you think? You're a big downloader, aren't you?
SAM McLEAN: I am a big downloader. Most of the stuff, I have to say, that I download, is probably out of copyright or old. It's either stuff that's out of copyright, the artist is dead or it's like old jazz records or something or it's from an artist who I don't think really deserves my money, because they're loaded already. I mean if I'm going to download the latest Kanye West album I don't really feel morally compelled to give him my $20 because I know that my $20 – well, besides the fact that $15 of it is going to go to the record industry anyway.
JENNY BROCKIE: This is very interesting, this is very interesting.
SAM McLEAN: He's going to spend the $5 that he gets of my $20 on his new Hummer or some massive piece of bling or something. Like I just I feel no moral – I'm not compelled to give him my money. I mean I've brought Tim's records and I feel absolutely compelled to give Tim all my money 'cause I can see that he's an independent Aussie artist.
JENNY BROCKIE: Poor.
SAM McLEAN: And I really respect him and what he does. Maybe in 10 years when Tim is huge in the States and he's driving a Hummer, I'll change my stance.
JENNY BROCKIE: Now Sam, this is interesting, this is interesting, because you're letting your own moral values – guessing, really, in some cases – determine what you do. You're saying, “I've got my moral code about what I think and I'll determine who's rich and who isn't, and whether I pay or not.” Is that the way it works?
SAM McLEAN: Absolutely.
JENNY BROCKIE: OK, what do other people think of that? Lady here. Yep.
WOMAN: I think it's very important for the artist to be able to spread their word and that's more important than the money that's made. I think with CDs and stuff, yes, they're going out of fashion but what we should do is – well, what the artist should do – is add something that's unique about the CD – what's special that you can get if you buy the CD rather than, yeah.
JENNY BROCKIE: Right, that you can't get with the download.
WOMAN: Yeah, that you can't get with the download. Something unique that you get when you get the CD.
TRISTAN GOODALL, THE AUDREYS: We try and do that. We try and make something very tactile and tangible and fun to play with.
JENNY BROCKIE: Let's look at a bit of Audreys' latest single. How much did you spend on your latest album?
TRISTAN GOODALL: Millions, wasn't it?
TAASHA COATES: No. No. Maybe about 50 grand.
JENNY BROCKIE: 50 grand. OK David, did you know that it cost that much to make an album?
DAVID TORR: No.
JENNY BROCKIE: What about you, Michael – did you know it cost that much?
MICHAEL FEE: Not really – no idea in terms of the money.
JENNY BROCKIE: Does it make any difference?
MICHAEL FEE: I think it does like to us if you tell us that it's kind of like OK, we have that information now but where do we…
JENNY BROCKIE: I hasten to add I'm not trying to give you a hard time about this because you're not doing anything unusual at all.
MICHAEL FEE: That's what I mean – that information isn't what we see. We just see these – not so much with the local artists but with the big ones – like he was saying – Kanye West and stuff – you see this guy in a Hummer with the huge bling and you're like, why do I have to pay $20 when this guy is a hundred times richer that I'll ever be. You don't feel that compelled to do it and it's that easy.
JENNY BROCKIE: Mahalia, you've just released your first solo album this week. Here's a snippet of you with your dad Jimmy. What do you think of free downloads?
MAHALIA BARNES: I think it's a really, you know, as everyone's obviously said, it's a really touchy subject. But as a new artist, you know, for me personally the music that I make is soul music. I mean I have to pay eight session musicians to do my shows. So live touring for me is something that I do love to do and that's where my sort of creativity really lies and where I make my money, but it's a really hard thing to consistently tour with the full band and not compromise my sound and I think that being not able to really release this album that I'm releasing this month and not know whether it will sell or whether it will just, you know, be downloaded illegally or whatever.
JENNY BROCKIE: Or shared around.
MAHALIA BARNES: I mean there's lots of ways to legally download, that's the thing I don't understand. Everyone's saying the argument is it's just easy, it's on my computer. You know, so's iTunes, why not pay $1 for a song?
JENNY BROCKIE: We'll get on to iTunes in a moment. Stephen Peach, you head ARIA and you represent all the labels and you're not prosecuting anybody here tonight.
STEPHEN PEACH, AUST. RECORDING INDUSTRY ASSOC: Absolutely not.
JENNY BROCKIE: As we said before, the horse has bolted for music, hasn't it, in this discussion?
STEPHEN PEACH: No, no, I don't think so. Clearly there's a major problem in that the size of the problem is quite extraordinary. I mean we have probably a billion songs a year, just in Australia, that are illegally downloaded and I think some of the numbers that we've heard tonight would suggest that that may even be a conservative number. People are stealing from artists and songwriters as well as labels and retailers and everyone else.
JENNY BROCKIE: Kate Crawford, your former act, Bifteck, gave away music years ago for promotional purposes. You're now an academic – is there a future for record labels? Has Stephen Peach got a career ahead of him?
STEPHEN PEACH: I hope so.
KATE CRAWFORD, MEDIA RESEARCH CENTRE, UNSW: There's definitely – there's definitely a future for the music industry but it's a radically different terrain and unfortunately there's two ways that the industry can respond to this terrain. It can either go down the 'let's have a war' and find ways to punitively attack consumers, or 'let's find collaborative new ways to embrace these new technologies'. Now unfortunately what we've seen over the 8-10 years is a war, essentially, prosecuted against their best customers – their fan base – and in actual fact what we see is that there are so many different ways they could have embraced these technologies to have really straight-forward, easy-to-use, very cheap download services, but the industry has really resisted those sorts of options and instead gone for very expensive litigation and also things like Digital Rights Management which has introduced things like malware and spyware onto people's computers. So unfortunately I think the industry has been behind the eight-ball but it's got a long way to go to really catch up with where everybody in this room is already sitting.
JENNY BROCKIE: We're going to get on to that in just a moment. We're going to look at whether all these changes do bring with them new opportunities and, if so, who's going to grab those opportunities. We're talking about downloading music online and how free music is affecting artists and the industry. Amanda Collinge has been at an industry event that recognises songwriters.
REPORTER: Amanda Collinge
Two weeks ago in Sydney the music industry gathered to recognise Australian songwriters.
PAUL McDERMOTT, TV HOST AND MUSICIAN: Welcome to the launch of the 2008 APRA Music Awards.
APRA, the Australasian Performing Right Association, announced nominees for their annual music awards which celebrate the work of composers and songwriters.
PAUL McDERMOTT: The nominations for the Most Played Australian Work Light Surrounding You, Evermore – Dann Hume, Jon Hume the writers.
But who knows anymore exactly what is the most played or most performed song? These awards only count what's legally played because they're the only plays that pay royalties to songwriters. Illegal downloads are unauthorised and therefore uncountable.
MATT McMAHON, JAZZ MUSICIAN: I think it's a dangerous time, I think music is now readily, very readily available and I think it's a critical time where we need to really assess the importance of music in our culture.
PAUL McDERMOTT: Pictures, Sneaky Sound System, Angus McDonald and Connie Mitchell.
Most musicians have embraced the Internet and are realistic about downloading but it's a time of massive transition for the industry and songwriters know that at the moment they're losing out.
OHAD REIN, MUSICIAN: It creates a real challenge like a modern challenge to see how you're actually going to make a living out of music in this day and age.
FUZZY, ‘VIDEO HITS’ HOST, CH. 10: Illegal downloading is stealing. It's a big breach of copyright. You are it's like you photocopying the entire contents of a book, let's say – you're not allowed to do it and there are platforms and digital platforms available for you to download legally.
PAUL McDERMOTT: Yes I do consider it stealing but there are some forms of theft I think are OK.
REPORTER: So you consider it stealing but it's OK stealing?
PAUL McDERMOTT: Well, you know, I'm conflicted, I'm conflicted about it. I must admit I have downloaded songs myself so, and I feel conflicted but I quite like the feeling of being conflicted about it.
JENNY BROCKIE: Scot Morris in Rome, you work for APRA, the Australian organisation which represents songwriters and publishers. Can you give some examples of the way free downloads are affecting your members?
SCOTT MORRIS, AUST. PERFORMING RIGHTS ASSOC: We all know that record sales are down and that digital – new digital services have not actually made up in terms of revenues for songwriters. Um, so I think really, in terms of downloading and new ways of consumption of music, yeah, it has changed the industry also for songwriters. For example, you know, Kanye West doesn't write all of his own songs. There are other songwriters involved and their revenues depend on record sales as well for that artist.
JENNY BROCKIE: So all that bling of his is not necessarily being reflected. All that bling everybody's responding to when they're doing free downloads it's not really reflected with the songwriters?
SCOTT MORRIS: That's right – not everybody perhaps wears the bling. There might be a bit of bling for some of them but I think we're concerned about ensuring that there are new models that are able to be developed in the online environment that will ensure that there still is remuneration going back to the creators because that's the most important thing and I think, you know, the issue is very alive here in Europe and there are a lot of discussions here about, you know, the different parties in the value chain, you know, what is the role of ISPs in developing new models.
JENNY BROCKIE: We're going to talk about the role of Internet service providers in a minute but before we do John Butler is a popular independent artist and earlier this year he spoke about the impact that downloading was having on his income.
JOHN BUTLER, MUSICIAN: We sell about 40% less albums as we did three or four years ago because of downloading. So this album is done better than SOS, 'Sunrise Over Sea', as far as everything's concerned, but it's almost sold less because of all the downloading. So it is different, it's a different time.
REPORTER: So you reckon that 40%, you can attribute to people just downloading it?
JOHN BUTLER: Yeah, or just not liking me anymore.
JENNY BROCKIE: Always possible, I suppose. Stephen Peach, John Butler says 40% – how much do you think the whole industry is losing each year because of this?
STEPHEN PEACH: OK, well we have, as I was saying before, we have a billion songs a year illegally downloaded. The research that we've done suggests that about somewhere 1 in 5, 1 in 4 of those would have been bought, but for the fact that they could be obtained illegally. We're talking about there conservatively 200 million tracks maybe – in wholesale terms that's $200 million, about half the size of the industry at the moment.
JENNY BROCKIE: Kate, what do you think of those figures?
KATE CRAWFORD: Well I think those figures are really interesting because they conflict with two major studies that have been done in the last few years. What they found was really surprising which was that there was no direct correlation between retail sales in the US and between downloads.
JENNY BROCKIE: Peter Coroneos, you represent all the Internet service providers, the ISPs that we just heard from Scot about, how much of your traffic is music downloads?
PETER CORONEOS, INTERNET INDUSTRY ASSOCIATION: It's very hard to actually calculate, people have recited figures about the proportion of bit traffic which is one of the main file sharing protocols that is being used, 60% I think you said in your introduction. But as to what proportion of those downloads are legal and not, I would have to defer to Stephen on that. If he sees there's a billion tracks being downloaded in Australia, that may well be right, it may be a figure somewhat less than that. The point that…
JENNY BROCKIE: Can I just stop you there though. So you'd be making quite a bit of money out of that?
PETER CORONEOS: I'm not making any money out of anything.
JENNY BROCKIE: Not you personally, not you personally, but the ISPs, the Internet service providers would be doing quite nicely out of that because every time someone downloads something that goes towards their broadband bill.
PETER CORONEOS: Well, indirectly, but they've got no way of knowing what proportion of their traffic is illegal downloads versus email versus anything else. It is bits across a network. The question here though is one of market failure and we think what's really occurring here is that we're in a period of transition. The Internet comes along, it is a hugely transformative medium such as we've never witnessed before and what is necessarily occurring is that the way that music is now being distributed and consumed is adapting to that technology but what is not adapting or is not yet adapted are the business models by which music is being provided to the users.
The question is value, convenience and choice and were the price of music to drop to let's say a nominal 10 cents a song, for the sake of the argument, that 1 billion songs could translate to $100 million of revenue opportunities.
JENNY BROCKIE: But if you're providing the means for these kids to do the downloading do you have a role in there, in the music industry now? I mean do you have a responsibility in some sense if the Internet service providers are actually providing the pipes through which all this is happening?
PETER CORONEOS: No way no more than Australia Post ought be liable for things that we send through the mail. It is a delivery service but there is no control over end-user activity.
JENNY BROCKIE: Stephen.
STEPHEN PEACH: We absolutely think ISPs have a role to play, both a legal and a moral responsibility, but ultimately we would like to come to some accommodation with the ISP sector.
JENNY BROCKIE: What do you want them to do though?
STEPHEN PEACH: What we want them to do is, we have a proposal that we call notice-and-disconnect, known as three-strike proposals in various other parts in the world, but essentially it's the identification through a private IP address, it's not something that we don't know the name of the person but we can identify through an IP address who is, sharing music, who is involved in downloading and we can study the ISP – whoever was using that IP address on that day at that time was infringing copyright, could you please, in accordance with your own terms and conditions, send them a warning notice saying please stop it and if you don't stop it you might be liable to be disconnected and it's about, you know, some of the research overseas…
JENNY BROCKIE: You will have an awful lot of people being disconnected, I think.
STEPHEN PEACH: No, definitely not. The studies overseas are already showing that one notice – and we're saying three before anything…
JENNY BROCKIE: So three strikes you're out. Peter, how do you feel about that proposal?
PETER CORONEOS: Well, we've already corresponded to Stephen on his proposal.
STEPHEN PEACH: Yes, didn't like it.
JENNY BROCKIE: He doesn't like it, he doesn't like it at all?
PETER CORONEOS: We're saying there are other ways we'd like to explore that talk about new ways, revenue sharing possibilities, more creative ways rather than – 'here is the law, we're going to hit you over the head and we're going to terminate a family's Internet access because of an allegation'.
JENNY BROCKIE: Phrase, yep.
PHRASE: I think a lot of people are under the misconception if you're the artist you can make money off the Internet through music. Like if I start selling my music online and cut out the middle man I'm going to get sued by my record label. I can't do that. I owe them money and there's a process. So there's that and I'm new to this but I'm kind of starting to gather that if there's these ISPs that they're making all the money, like I'm looking at them like well why aren't the bastards giving us any because I never thought of it like that. Also it kind of means to me that it's not even the kids, it's not even you guys that are paying for it. Like your parents are paying, paying for the records that you're stealing and yet I'm still not getting a cent of it. So, you know.
JENNY BROCKIE: Jenny Morris, what do you think? You've been in the music business for 20 years, you're on the APRA board – what do you think of the punitive approach?
JENNY MORRIS: Look I think the problem is twofold. I think one, the technological advances have come so fast that we've been left, you know, flapping in the breeze. I think this is the answer to get into young people's minds at a grass roots level and give them the value, what they're getting when they're getting a piece of music. It can take six months of people's time to put a CD together. Um, it's not only that, but it's the cultural value, it's the intellectual rights value, and I think if people are trained and educated to know the value of music, then they'll be much more willing to pay for it.
JENNY BROCKIE: Is that right, David? If you're a teenager with no money, even if you've got that information, does it make any difference to you when it comes to free downloading if you can get something for free and you haven't got much money?
DAVID TORR: I think you'd feel a lot worse about it because knowing this information about knowing how the Audreys spent on 50 grand on just making that song and you're downloading it for free and they're not getting a cent, you would feel a lot worse. I don't know, some people might still then go on and download it. I have tried the iTunes way where you buy it and still I do that occasionally, it's just I have a problem with when you download off iTunes the clip, it's, you see a little lock symbol at the top and it prevents you from doing anything else with it.
JENNY BROCKIE: So it's too inflexible for you?
DAVID TORR: Yeah, so if there was a way where you download off iTunes and the file isn't locked so you can do things like that where you give your parents mixed CDs or something like that then I'd be happy to download off iTunes.
JENNY BROCKIE: I hope all the people who run these systems are listening to some of this – it's interesting stuff. Scot Morris in Rome, what's happening overseas? Is there any proof there that punitive approaches actually work, change people's behaviour?
SCOTT MORRIS: I think that the current debate that is going on in Europe at the moment, the three-strikes plan actually came up in France and a memorandum of understanding between the record industry, the publishing-music-composer organisations and the government, I think that in France they are still thrashing out the details. Really the key lies in really close cooperation between ISPs and the music industry, there's discussions ongoing. As well as exploring new business models and that's the really important thing as well. You know, we like the idea of revenue sharing. APRA, in terms of its structure and the structure of collecting societies like APRA around the world means that for 150 years we have provided access to all the world's musical repertoire in terms of in exchange for payment. So we're very open to new models and new pricing sensitivities in terms of how music is consumed in the new Internet world. Yes, there are a whole lot of different models that are being experimented with and I think that ISP is, you know, in a good position to cooperate with the record industry, with composer organisations, to ensure that we all benefit.
JENNY BROCKIE: Peter, quick comment from you.
PETER CORONEOS: I agree. I mean, the exploration of new revenue models is clearly where this debate needs to go now. The market is telling us that they will pay as long as the price is reasonable and they can be flexible with how they use the music. So people need to think very clearly about this threats-and-intimidation model threatening to take people off the Internet when in fact other alternatives, subscription models – I've got in my pocket a wrapper, a KitKat wrapper that I bought this year that entitles me to a free download from iTunes. Why aren't we seeing more of these models emerge? Why can't Australians have these options open to them?
JENNY BROCKIE: Stephen, quick response – punitive, not going to work?
STEPHEN PEACH: What we're promoting is not punitive. It's a notice. The punitive is actually running around suing individuals and all those sort of things which we haven't done in Australia and that is what we're hoping to avoid. It's absolutely last-resort from our point of view. We would…
PETER CORONEOS: Yet you would want the ISPs to do your enforcement for you.
STEPHEN PEACH: Indeed and we just say there's a way in which we can get a much bigger change with a light-touch model that is just about sending people a warning. It's not dragging people through courts. I mean Peter would prefer us to take his customers to court.
JENNY BROCKIE: It's not a light touch if you get your Internet cut off, is it?
STEPHEN PEACH: But the thing no, no, but you get to a point where if you get three warnings and if you haven't changed yes, you get your Internet cut off but the research would suggest that 1% of people might ultimately get to that point but most people, as we've already heard tonight, that if there's a threat the family Internet might be disconnected because of their behaviour they will stop it and all the research suggests that one notice – that's enough – that will stop it. That's not punitive, that's just…
PETER CORONEOS: It's a very dangerous precedent in a democracy, Stephen.
KATE CRAWFORD: I have to be honest, the idea of cutting off someone's Internet, just the threat of it, that is the essence of a punitive model and I think what we've heard here today is people are really excited by alternative economic models.
STEPHEN PEACH: We're talking about theft. It's wrong – it's stealing from artists, labels, songwriters, it's, you know, to elevate it to some sort of right that you can do this regardless and have no consequence whatsoever is something that I have a lot of trouble with.
KATE CRAWFORD: I agree with you it's not a right, but it's a reality and the fact is the industry has to engage with this reality and to trying to turn ISPs into copyright cops unfortunately isn't going to solve the issue with you.
TROY BARROTT, HUB MANAGEMENT: I think the industry are engaged in that and I think the ISPs are, you know, being obstructive in a way by the manner of their thinking because I think I'm not hearing what you're hearing, Peter, that people here would pay if music was more affordable, I'm hearing the opposite. I'm hearing that if it's free and it's possible they will take it and so you do I think there is a role for the ISPs to play.
JENNY BROCKIE: Michael, do you want to have the last word in this section?
MICHAEL FEE: The idea that we're willing to pay, it's the thing that comes down to it, is that if it's the same thing as LimeWire, it's the – you get the file but you have to pay for it. So I thing why have I paid even if it's a small amount, why have I paid that when I can go and get the same thing for free. Like what he said, sometimes when you pay for it it's harder to use because you can't manipulate it to how you want to use it.
JENNY BROCKIE: So as long as it's easy and free you're going to use it?
MICHAEL FEE: Yeah, when there's always that option why would you pay for the one even if it's a small amount – it still doesn't make sense.
JENNY BROCKIE: We're talking about online music, whether it should be free and how artists and songwriters can make a living and, Stephen, we were getting into quite an interesting discussion there about your proposal and a fair bit of opposition to this idea of three strikes and you're out and being punitive and cutting off people's Internet if they use free downloads. What about a model like iTunes where people can legally buy music online. Is that the answer from your perspective?
STEPHEN PEACH: That's certainly one of answers. I think the industry, our industry have supported a variety of models, of which iTunes is one of them. There is a per-track download model where you pay for each track you download.
JENNY BROCKIE: And how big is it in terms of the amount of downloads that are happening at the moment? I mean what sort of proportion does it represent?
STEPHEN PEACH: They're a very significant player, there's no doubt about it. Given that most people have iPods as their MP3 player of choice, most of the downloaded music comes from iTunes in Australia.
JENNY BROCKIE: The legally download.
STEPHEN PEACH: Legally download, absolutely.
JENNY BROCKIE: Rebekah Horne, you head MySpace Music which was launched this year where you're offering legal music downloads as well. Why would anyone pay, just like Michael next to you is saying, why would anyone pay when they can get it for free?
REBEKAH HORNE, FOX INTERACTIVE – MYSPACE: I think it's a very complex issue obviously. What MySpace music hopes to do is join the dots between fans of music, musicians, and actually provide access in an affordable but also in a format that these guys want. I think the interesting thing that's coming out of tonight is that there is a lack of awareness, there's a lack of, you know – in essence, do these guys even know that what they're doing is actually stealing?
JENNY BROCKIE: So how much will MySpace be paying the artists and songwriters that it decides to have on the site?
REBEKAH HORNE REBEKAH HORNE: We haven't worked out our model yet and I think the revenue model, and we are in discussions with labels currently, but I think the revenue model is another interesting point in this whole discussion and I think the danger in being punitive about the way we go after illegal downloaders is that it shifts focus away from what the right model is.
JENNY BROCKIE: Independents or majors, what are you going to be representing?
REBEKAH HORNE: All, both, MySpace represents both.
JENNY BROCKIE: Kevin Bermeister, two years ago you were in court over your role in Kazaa, the world's biggest illegal file sharing network. The lawsuit cost your group $115 million, was that right? You've moved on from music piracy now, what are you proposing?
KEVIN BERMEISTER, INTERNET ENTREPRENEUR: Well, look, I've been in this game now for 10 years sometimes I've been the football in the game and the economy of piracy has basically been dissipated into, you know, a number of different parties and many have benefited from it. And what we've looked at is how you ultimately unify all of the parties. I mean everybody in this room has a position and everybody's position can be facilitated by technology.
The question is how you really bring all the parties together in order to facilitate those positions.
JENNY BROCKIE: So how are you proposing that happen?
KEVIN BERMEISTER: The copyright owners want control, the consumers want their content delivered in the most convenient way that they choose and, finally, pay. So we really propose that the methodologies are deployed at points of presence on the Internet – at ISPs – and that the ISPs become participants in the collection of royalties on behalf of copyright owners.
JENNY BROCKIE: How would your model, though, switch people from illegal downloading – free downloading – to legal downloading, which I presume it would have to do, or would it?
KEVIN BERMEISTER: Essentially what really occurs is that, you know, for example, you use LimeWire and LimeWire is a product that is a product of choice of the consumers. So our technology would enable LimeWire and others like it to continue to be used, there should be no attempt to stop LimeWire. It's a great technology, it works and it should continue to be used. So our technology essentially manages the lists of content made available to users, so when a user types in to search for an artist inside LimeWire, the results that they would get back are results that would point that user to the legal file equivalent and not to the illegal file equivalent.
JENNY BROCKIE: So you're redirecting people in a sense?
KEVIN BERMEISTER: Essentially the person would be redirected to download a file that would be an authorised file, a file that would support copyright, a file that would support some form of payment, or not. If the artist chose to give it away for free, that would still be permitted.
JENNY BROCKIE: And where is that proposal up to? Is this just at the moment…
KEVIN BERMEISTER: The proposal's been developed, it's been developed in conjunction with a number of parties in the industry, a number of technology participants.
JENNY BROCKIE: OK, so early days for the proposal. You're going to need the ISPs on board and your old enemy the music industry after your suit with the industry. Stephen Peach, now that you've finished suing Kevin, would you do business with him?
STEPHEN PEACH: We, um, we've put all those issues behind us. I mean we talk to lots of people. There are lots of ideas in this world and I know that Kevin has spoken to quite a few of people in our industry.
JENNY BROCKIE: This is a very noncommittal answer – what do you think of the idea?
STEPHEN PEACH: Look, I think it's an idea that ought to be explored, whether it's Kevin's idea or any number of other variations on a theme. No matter what we do, it's extremely hard to compete with free and unless we have a mechanism to manage that, then all of the revenue models just fall away.
JENNY BROCKIE: So you really do want to hang on to this idea of the three strikes, that's your central…
STEPHEN PEACH: We have to have some form of sanction. We don't think it needs to be massive 'hit over the head', 'drag people through court' action. But for as long as you can get it for free if you choose to do so, I have a lot of trouble seeing why anyone would pay $1, 50 cents, 10 cents, 5 cents if you can get it for free.
JENNY BROCKIE: Peter, what do you think of Kevin's idea?
PETER CORONEOS: I'm not if a position to comment on Kevin's specific business but I think this is where the creative effort needs to go now. Let's explore alternative methods of delivery. I've got to say, Stephen, that historically punishment has never been a good modifier of human behaviour. It's providing the incentive for the market to move that really needs – is what needs to happen here.
JENNY BROCKIE: Where do you think the future is, Kate?
KATE CRAWFORD: Look, I think there's a couple of really interesting models that have come out of the way that this particular sector is changing. One is that you used to go on tour to sell your albums so you go and do shows and hope that people would buy your record at the end of it. But the other model that I think's much more interesting in terms of future, is a model coming out of the States. The way they do it is they have a flat subscription fee so everybody who has a broadband account is spending $10 a month – and that's all it take, $10 a month – to actually reimburse record labels and the artists. They've done all the maths, it actually adds up beautifully, and all you then have to do is digitally watermark the tracks so you can give more money to the artists who get played more. It's actually incredibly simple but it does work. It's these sorts of ideas that I think we need to pursue.
JENNY BROCKIE: So what do you think of that idea, Peter, subscription fee?
PETER CORONEOS: I think these are the models we need to pursue, no question about it. John Butler did mention the record sales were down but he didn't mention how his concert revenues were going and as a huge John Butler fan, and I'll say this – I've been to three of his concerts – I've bought his CDs….
JENNY BROCKIE: Have you downloaded any of his music free?
PETER CORONEOS: Only legally.
JENNY BROCKIE: OK, but you would say that, wouldn't you?
PETER CORONEOS: Our industry's very keen in helping musicians get online. We've issued a new initiative nuturemusic.org where we're trying to help artists understand how they can monetise, how they can explore models, how they can build a fan base, how they can build a profile, how they can get people to their concerts. So the Internet is really the friend of music – it shouldn't be seen as the enemy of music.
JENNY BROCKIE: Taasha, what do you think the future is for a band like yours?
TAASHA COATES: Well, hopefully good. I just wanted to say that touring is actually incredibly healthy in Australia at the moment. A lot of artists are commenting on it.
JENNY BROCKIE: And are you making a lot of your money there from touring?
TAASHA COATES: Definitely more than on sales.
JENNY BROCKIE: Tim, what would you like to see? What sort of model would you prefer as an artist?
TIM LEVINSON: You can't say that by, you know, hitting people, you know, with a stick for downloading is going to improve legitimate sales because people are going to be downloading a whole lot less, but if they have a subscription where it's affordable, which can kind of take into account that a lot of young people, they just simply can't afford that extra expense, if there is still some way of acknowledging the artist well then that's something that's going to be healthy for the independents right up to major artists.
JENNY BROCKIE: Sam, what would you pay for?
SAM McLEAN: I'd pay for Tim because I believe in him and…
JENNY BROCKIE: Is that just because he's here tonight?
SAM McLEAN: Aw, you know. Um, but you know, and I'd pay for a new initiative which gives young people some credit and some trust. One of the great models that have come out of bands is Radiohead's model of releasing their music for free and saying, “Look, pay us what you think it's worth,” and they made tonnes more money off that.
JENNY BROCKIE: They made a lot more money from that than anything else they've done.
MAHALIA BARNES: Well they're in a position where they can afford that sort of risk. I mean the risk is you do put it out for free. And yes, people are always going to go “Oh yeah,” – one person's going to go “Yeah, I feel bad, I should support this artist that I really love,” and put some, you know, token amount forward but it's – majority of people will take it for free.
JENNY BROCKIE: So what model would you like then having heard some of the things thrown around tonight?
MAHALIA BARNES: I think there's definitely – someone has to be responsible for it. I don't think that it's necessarily so that means getting monies from somewhere, whether it is from the Internet providers. I mean I don't see – the radio – it's looked at as a new means of advertising our music, like the radio, like the TV, but the radio stations and the TV stations do pay when they play our songs.
JENNY BROCKIE: Jordan, what would make you pay?
JORDAN FROST-HODSON: First of all, I would just like to say that iTunes and another thing I use called beatport, which is you pay for the money, but the music I listen to is there's not a lot of it on iTunes so I go to beatport, but it's also annoying to pay 'cause you have to use a credit card and for under-18s, I think you can't get a credit card. You have to call up your parents because they have a credit card and stuff so it's incredibly annoying to call up your parents if you can't get on to them, so that's usually why I go.
JENNY BROCKIE: So Clive, Jordan's your son so it's your credit card.
CLIVE FROST-HODSON, SHOCK MUSIC PUBLISHING: “Yeah, I'm sorry, I'll call you back.”
JORDAN FROST-HODSON: Yeah, but that's another thing. It's really annoying because it's dependent on your parents, kind of thing because…
JENNY BROCKIE: So it's made too hard for you, is what you're saying?
JORDAN FROST-HODSON: Yeah, so yeah, that's basically and the reason why…
JENNY BROCKIE: But what will you pay for? What sort of things – outside the actual tracks – I mean do you spend money on music? Do you go to gigs? Do you buy merchandise?
JORDAN FROST-HODSON: Um, yeah, I do, this is the hoodie that I have now is of hard style, that's what I listen to, it's kind of, it's a style of music and it's a shuffling jumper which is a dance style, so yeah.
JENNY BROCKIE: And how much did that cost, just out of interest?
JORDAN FROST-HODSON: $120.
JENNY BROCKIE: OK, so some of that money's going somewhere.
JORDAN FROST-HODSON: Yeah, and I also…
JENNY BROCKIE: The Audreys are getting a really good idea going here I think.
JORDAN FROST-HODSON: And also there's other things, because there's things for shuffling – there's like suspenders and fat pants which are also kind of thing.
JENNY BROCKIE: And have you bought all that?
JORDAN FROST-HODSON: So, I've got suspenders but I don't have fat pants because they cost US$200.
JENNY BROCKIE: So it might not just be about the music?
CLIVE FROST-HODSON: Can I just say I think one of the biggest problems for the record industry is the fact that there is a complete shift from albums to single tracks and what you have is an industry that cannot survive on single track alone. Not everyone's going to like an album, but because the shift has happened where a particular track is what is appealing to that downloader, they will download that track and they really – unless they're introduced by word of mouth – and that's exactly what the Internet is about – the word of mouth – then what we're going to have is this single business happening the whole time. The record industry cannot survive on selling singles. That's the big problem.
KEVIN BERMEISTER: I think the Jordan just mentioned a very, very important point here which is often overlooked and that's where the content industries really need the help of the ISPs because billing models – for example, credit card, which is a very big barrier to entry when you're buying a 99-cent track, have to be accommodated more frequently and ISPs have the ideal position to essentially bill either subscription on a monthly basis to their existing customers, to a household, or even on a per-track model through the bill-to-ISP model, that's something that has to be embraced and it's a real gating effect on the Internet right now.
JENNY BROCKIE: In the meantime, Phrase, how are you going to do deal with your budding music career, do you think, having listened to all this?
PHRASE: Yeah, I reckon that a model that I would like to see would be where you pay $10 per month, or whatever it may be, because I think at the end of the day the reality is that for me, if this second record doesn't sell I'll be dropped from the record label, I can't make music then anymore and that just disappears and that's going to happen to a lot of people and if we all enjoy music so much and we all listen to it every day and it's so deeply involved in everybody's life, then maybe we should just say, “Right, well we all love music.” Internet service providers love John Butler, artists love John Butler, but you know what I mean – we're all listening to it, let's everybody just pay $10. I know I'm making it real simple terms now but you know what I mean – like we're all involved so there's got to be some sort of model that works. Kids are saying that they don't really want to steal it, you know, so I think there's something that can work.
JENNY BROCKIE: And in the meantime, are you going to put out a hoodie?
PHRASE: Yeah, I've got T-shirts but they're 20 bucks – I need to jack the price up.
JENNY BROCKIE: OK, thank you very much for joining us. Thanks everybody, it's been really terrific to talk to you all, and Scot Morris, thanks to you in Rome for joining us – it was good to have you with us as well. The government says it's talking to the various stakeholders and wants to see a consumer culture that respects creativity but there's no policy, as yet.