WHEN BUSINESS MODELS GO BAD: THE MUSIC INDUSTRY’S
FUTURE
Erik Wilde
Swiss Federal Institute of Technology (ETH)
Z
¨
urich, Switzerland
Jacqueline Schwerzmann
Swiss National Television (SFDRS)
Z
¨
urich, Switzerland
Keywords:
File Sharing, P2P, RIAA, IFPI, DMCA
Abstract:
The music industry is an interesting example for how business models from the pre-Internet area can get into
trouble in the new Internet-based economy. Since 2000, the music industry has suffered declining sales, and
very often this is attributed to the advent of the Internet-based peer-to-peer file sharing programs. We argue
that this explanation is only one of several possible explanations, and that the general decrease in the economic
indicators is a more reasonable way to explain the declining sales.
Whatever the reason for the declining sales may be, the question remains what the music industry could
and should do to stop the decline in revenue. The current strategy of the music industry is centered around
protecting their traditional business model through technical measures and in parallel working towards legally
protecting the technical measures. It remains to be seen whether this approach is successful, and whether the
resulting landscape of tightly controlled digital content distribution is technically feasible and accepted by the
consumers. We argue that the search for new business models is the better way to go, even though it may take
some time and effort to identify these business models.
1 INTRODUCTION
Since its invention in the early 1990’s, the Web has
changed many things. It is the first global informa-
tion system with a user base counting in hundreds
of millions, and in many industrialized countries, the
user base covers 50% of the population or more. This
means that the Web is a medium that can fundamen-
tally change businesses, in particular when the busi-
nesses are dealing with immaterial goods (i.e., ideally
suited for electronic distribution) rather than physical
products. Among others, the music industry has been
seriously affected by the Web, and in this paper we de-
scribe the observable facts, their interpretation of the
music industry, some interesting alternative interpre-
tations, and conclude with some remarks about more
appropriate and promising ways to act and react in a
rapidly changing world.
A detailed and insightful study of the music indus-
try has recently been published by (Phillips and John-
son, 2004). For the purpose of this paper, the fol-
lowing players and concepts are most important: The
Recording Industry Association of America (RIAA) is
the biggest national music industry association, and
thus the most important player in the field of mu-
sic industry associations. However, the national bod-
ies in this field are united under the roof of the In-
ternational Federation of the Phonographic Industry
(IFPI), which is the world-wide organization of cur-
rently 46 national members.
With regard to legislatory action, the 1998 U.S.
Digital Millennium Copyright Act (DMCA) has been
the most thoroughly discussed law for regulating in-
tellectual property rights and their technical imple-
mentation. The DMCA prohibits the circumvention
of technical measures intended to protect the rights of
copyright owners in addition to the legal protection of
the content itself. Furthermore, removal or alteration
of copyright management information are prohibited.
However, the DMCA has not been an initiative of
U.S. legislation. It simply is a national implemen-
tation of the international WIPO Copyright Treaty
(WCT), which in 1996 had been created by the World
Intellectual Property Organization (WIPO), a UN-
funded organization. Other countries or political enti-
ties are following the path of the DMCA, for example
in 2001 the EU published the EU Copyright Direc-
tive, and EU countries are now transforming the EU
directive into national law, for example Germany in
2003.
48
Wilde E. and Schwerzmann J. (2004).
WHEN BUSINESS MODELS GO BAD: THE MUSIC INDUSTRY’S FUTURE.
In Proceedings of the First International Conference on E-Business and Telecommunication Networks, pages 48-54
DOI: 10.5220/0001397800480054
Copyright
c
SciTePress
2 HISTORIC PERSPECTIVE
The invention of new devices or ways of recording,
storing, playing, and distributing media has always
been the source of huge changes in the media market.
For the music market, inventions such as the radio,
the phonograph, the magnetic tape, the compact cas-
sette, the Compact Disc (CD), and then even digital
recording media such as Digital Audio Tape (DAT) or
the MiniDisc have been turning points in the way the
industry worked. Whenever new inventions changed
the landscape of the music industry, many companies
claimed that these inventions would ruin their busi-
ness. For the most inflexible companies, this some-
times turned out to be true, but the majority of com-
panies managed to adapt to the new reality and sur-
vived, and often even thrived because of new business
opportunities that had opened up.
For a very long time now, since the invention of
the phonograph in the late 19th century, the music in-
dustry was centered around physical products, even
though the actual products changed. For the first time
now, the industry faces a shift away from physical
products, since computer networks and efficient au-
dio compression methods have enabled users to treat
music as simple data. And since data is most powerful
when it is as loosely coupled with physical media as
possible, people are doing exactly this, copying their
music from one CD to another, from a CD to their
computer or their portable audio device, or vice versa.
Users are expecting this kind of freedom because
they are used to so-called fair use. Fair use is what
enables users to use copyrighted material to a certain
extent, so that they can create private copies of their
CDs, even give these away to their friends, without
doing anything illegal. Since for a very long time, all
this fair use required the use of blank media (such as
empty cassettes), Europe’s music industry managed
to collect a share from every sold blank media, based
on the assumption that a substantial fraction of them
would be used to record copyrighted material. With
the recent development of treating everything as data,
it becomes difficult to downright impossible to con-
tinue along this road, because blank media are no
longer specific to the media type, and a blank DVD
may be used to record one possibly copyrighted film
or days worth of music.
So the challenge the music industry is facing is that
they are essentially moving away from their niche of a
specialized business in a specialized hardware world,
but are simply becoming content providers. The cur-
rent tactics of the music industry is to protect their
niche through technical and legislative actions, and
the interesting question is whether this will succeed
technically, and whether it will succeed culturally,
when long-standing rights such as the fair use prac-
tice are essentially taken away from the consumers.
3 TECHNICAL DEVELOPMENT
All file sharing tools use Peer to Peer (P2P) tech-
nology, meaning that the actual files are always ex-
changed between individual users. This is a departure
from the more traditional client/server-model, where
service providers offer a particular service (such as
the pages of a Web site), and clients use this service by
connecting to the server. P2P is an architecture where
participants dynamically can be server and/or clients,
which makes the overall architecture much more flex-
ible. Furthermore, for large amounts of data, trans-
ferring them in a grid of cross-connected computers
is much more scalable then a centralized architecture,
where a central server would turn into a bottleneck if
too many clients were using it.
While P2P architectures are still an active field of
research, first approaches and implementations were
available in the early days of the Web. However, it
was not until Napster arrived that P2P became pop-
ular. Napster combined a user-friendly interface de-
sign and a focus on music, which quickly attracted
a large number of users. Before Napster, file sharing
was only practiced in rather small circles of people us-
ing technology that was much less user-friendly. As
a result, the supply of available music was limited.
Napster attracted enough users to make virtually ev-
erything available, which again attracted more users
and thus helped Napster to succeed as it did.
3.1 Centralized P2P Directory
Napster was the first file sharing application that used
the Internet for distributing files. Napster’s approach
was to implement the actual file transmission as a
P2P transaction, but the directory and search services
were hosted centrally. This centralized architecture
made the system an easy target to attack (both techni-
cally and/or legally), and Napster was shut down (by
a court decision made in San Francisco) in 2000.
Since this was the proof that centralized systems
would be the targeted legally, no other centralized sys-
tem or service appeared. Furthermore, P2P technol-
ogy had already advanced past the centralized archi-
tecture and developed new architectures, which did
not have any centralized host.
3.2 Distributed P2P Directory
After Napster’s shutdown, applications such as Kazaa
and Grokster (using FastTrack) and Morpheus (based
on StreamCast and the open Gnutella protocol) ap-
peared, and they are still in use today. These P2P
applications do not have a central host, but instead
continually exchange directory and search informa-
tion. Thus, a dynamic network of participating users
WHEN BUSINESS MODELS GO BAD: THE MUSIC INDUSTRY'S FUTURE
49
is formed, which cannot be easily targeted legally or
technically. A newer application in this area is eDon-
key, which improves the search mechanisms and im-
proves download performance by splitting files into
pieces and distributing the pieces.
However, the recent aggressive RIAA campaign in
the United States proves that given sufficient legisla-
tive support, even systems as volatile and seemingly
anonymous as distributed P2P applications can be tar-
geted legally. The RIAA intercepts protocol messages
from these applications, concludes that a user is ille-
gally sharing copyrighted material, and then uses the
DMCA to force ISPs to disclose the identity of the
individual user. This practice has been rejected by a
D.C. district court order in December 2003, requiring
a formal lawsuit to get the information from the ISPs.
Even though the legal battle will continue, it is clear
that the music industry is targeting users instead of the
makers of P2P software
1
. The weak point that is ex-
ploited by the RIAA is the directory information that
is made available by the P2P clients. To address this
issue, new forms of P2P file sharing have been devel-
oped, which do not require any directory information
to be transmitted over the P2P network at all.
3.3 Directory-less P2P
The BitTorrent application introduced a new concept
into the P2P file sharing world: Directory information
is no longer part of the P2P application, but handled
individually. In practice, BitTorrent is based on Web
servers which list available files, and these lists are
regular Web pages which can be accessed with any
Web browser. As soon as a user selects one of the files
to download, the request is handled by a local Bit-
Torrent client, which starts the download as a highly
optimized P2P activity, thereby sharing the data with
other users downloading this particular file.
The disadvantage of this approach is the fact that
the Web servers again are an easy target for techni-
cal and/or legal measures, but since they do not need
any specialized software, it is rather easy to move the
contents between different servers, and at the time of
writing, there is an ongoing hide-and-seek game be-
tween groups of individuals hosting the Web pages,
and institutions claiming that the Web pages aid the
illegal distribution of copyrighted content.
Another interesting facet of BitTorrent (as well as
some modern applications using the distributed P2P
directory approach) is that the P2P principle is ex-
tended to encompass all users interested in a certain
file. Consequently, if there are 20 users exchanging a
file, it is never completely transmitted from one user
1
In a L.A. court decision from April 2003, it was de-
cided that the P2P itself is not illegal, but the exchange of
copyrighted material using this software could be.
to another user. Instead, every users provides frag-
ments of the file to others, and receives fragments of
the file from others, so that there is no single, eas-
ily identifiable interaction where to users actually ex-
changed a complete file. This makes legislation more
difficult, since it is much harder to identify complete
transactions.
4 ONLINE MUSIC SHARING
STATISTICS
One of the most important tools for carrying opinions
are statistics. Since the music industry’s goal is to in-
fluence legislation, there must be some data support-
ing the claims made by the music industry. History,
as discussed in the previous section, does not pro-
vide any evidence that technological revolutions had
a negative influence on the music industry. The music
industry thus claims that this specific technological
revolution is completely different than the previous
ones, because it enables perfect copies, and facilitates
worldwide distribution for everyone. To back this
claim, the music industry presents statistics, which
are very interesting to look at.
The problem with file sharing is that the evolu-
tion of file sharing tools (as described in Section 3)
has continually reduced the possibility to measure
the number of shared files. In order to overcome
this problem, many statistics presented are based on
highly questionable numbers, which euphemistically
could be described as upper bounds of the (unknown)
real numbers:
Software downloads: Commercially oriented com-
panies such as Kazaa and Morpheus often report
the number of times a software has been down-
loaded in order to show the popularity of their ser-
vice. Naturally, this number is of some signifi-
cance, again constituting an upper bound of users
(if installation files are not further distributed).
However, the number of actual users heavily de-
pends on the quality of the software (if the soft-
ware is unstable and hard to use, many people will
stop using it) and the utility of using it (many com-
mercial P2P products are notorious for containing
a variety of Adware and Spyware add-ons). Thus,
the number of software downloads may be interest-
ing, but is a number of very low significance when
measuring the usage of a service.
Shared files: P2P clients using directory informa-
tion make it possible to plug into the P2P network
and get information about the shared files. How-
ever, the number of files shared is no indication of
how many of them are copyrighted material, how
many of them are duplicates, and how many of
ICETE 2004 - GLOBAL COMMUNICATION INFORMATION SYSTEMS AND SERVICES
50
them can be retrieved successfully. Even though
a file is appearing in the directory service does not
mean that is has or will ever be shared. Many will
not be shared because the users have disabled or re-
duced uploading speed, and many others are never
successfully shared because transfers stop before
the complete file is transmitted.
For directory-less P2P clients, it is principally im-
possible to even measure something like the num-
ber of shared files, so for these clients this number
cannot be given or even estimated. To summarize,
the measurement of shared files is a number that
may be interesting (and often is used by commer-
cial P2P software vendors to lure new customers),
but is of very low significance. To make things even
less meaningful, since April 2003 the RIAA has be-
gun to systematically flood various P2P networks
with fake files.
Sales of recordable media: Since many users
archive media files on digital media (mostly CD-
R, with an increasing share of DVD-R), the sales of
recordable media are taken as a direct measurement
of illegally copied content. The measurements are
based on user polls which in many cases involve a
rather small number of users, so that (1) the signif-
icance of these polls is limited. It is (2) also un-
clear how much of the media being used for music
recording are used for fair use copies of legally ac-
quired music. And it is (3) assumed that each media
that is recorded is counted as a CD that otherwise
would have been bought. This claim seems to be
bold to make.
What makes things even more irritating is that the
music industry receives money for each recordable
media being sold, through long-standing agree-
ments which in the past had been designed to cover
fair use. Since file sharing is not regarded as fair
use, the music industry claims that all the record-
able are filled with illegally acquired content, but
still collects money for the media. And in an effort
to compensate the revenue losses of the last years,
the music industry wants to increase the amount
of money that users pay for each empty record-
able medium, and maybe even introduce charges
on recording equipment.
2
Even though there certainly is some correlation be-
tween file sharing and the measurements presented
above, it is highly questionable whether the methods
employed by the music industry do more than provid-
ing an upper bound (which may be very far away from
the real numbers). The error margins in the individual
statistical numbers are very large and get even larger
when these numbers are used in combination.
2
With the lucrative side-effect that since music is simply
data, every computer is considered to be recording equip-
ment and would thus be an additional source of income.
Even if it were possible to reliably measure the
number of shared files, the simple technique of mul-
tiplying this number with the normal sales prize of
music media is, again euphemistically speaking, an
upper bound of the loss of revenue. The simple rea-
son is that P2P users collect far more music then they
would ever buy. Even though the per capita expendi-
ture for (mainly) immaterial goods is constantly ris-
ing, there is still a limit to how much people are going
to pay for their immaterial possessions (such as music
or literature).
It is interesting to look at some of the numbers pre-
sented by the music industry. These numbers are very
important, because only a negative impact of new
ways to use music enabled by computers and net-
works will convince legislators to change the law in
the favor of content distributors. Legislation always
has been friendly to content distributors (for exam-
ple by expanding the time period for copyright pro-
tection), but some serious statistic sort of justification
is required for changing the law.
Figure 1: Total Sales U.S. Music Market 1990-2002
In Figure 1 (Figures 1, 2, and 3 are reprinted from
http://www.azoz.com/riaa/news/logic.html), the sales
for different formats of music media is shown. The
“Hi-End” category summarizes music videos, DVD
Music Video, and DVD Audio, but even together with
the single market, which almost disappeared, does
not constitute a relevant segment of the market. The
“Full-length” market comprises vinyl LPs, cassettes,
and CDs, and is the only relevant market. As can be
seen from the figure, the sales numbers have declined
since 1999, and Napster went online in 2000.
Thus, this figure could be used to point out that
“sales declined since the first P2P application became
popular”. This is certainly true and is a correlation
that can be easily observed, but as every statistician
knows, a correlation is not a proof for a cause/effect-
relationship. It may be an indication, and further re-
search or experiments must be conducted to prove or
disprove that there is an cause/effect-relationship. In
WHEN BUSINESS MODELS GO BAD: THE MUSIC INDUSTRY'S FUTURE
51
the case of P2P file sharing, it is hard to make any ad-
ditional analyses, since the invention of P2P file shar-
ing was a singular event and cannot be repeated or
simulated in a controlled environment.
However, in search for reasons for the decline of
sales since 1999, it may be interesting to look at the
general economic development, particularly in case
of a product such as music, which can be considered
a luxury good which people will only spend money
for if they have additional money to spend.
Figure 2: Music Market vs. Dow Jones 1990-2002
Figure 2 shows a comparison of the various full
length media (vinyl LP, cassette, and CD) and the
Dow Jones Industrial Average (DJIA). The DJIA is
a reliable and generally accepted indicator of the gen-
eral strength of the economy, and suffered a steep de-
cline since the beginning of 2000, when the so-called
Internet Bubble (Perkins and Perkins, 1999) burst.
There is an interesting correlation between the DJIA
and the music industry sales figures in general, and in
particular since 1999.
Looking at this picture, the industry’s claims that
Napster and the following music sharing tools caused
the decline of the music industry sales appear in a dif-
ferent light. To make this alternative interpretation of
the music industry sales even more interesting, Fig-
ure 3 shows the development of the retail prices (sug-
gested list price and actual retail price) between 1997
and 2002.
As can be seen, the retail prices for media increased
constantly over the period of time shown in the fig-
ure. In a slow economy, constantly rising prices for
luxury goods will not help sales. The combination of
the economic situation and the pricing strategy of the
music industry is another way to explain the shrink-
ing sales since 1999. However, this interpretation is
rarely heard or seen, even though it is probably at least
as convincing as the Napster-based explanation.
Figure 3: Average Retail Prices 1997-2002
As a result of this bias towards one interpretation,
politicians tend to favor the music industry in their
legislation. The reason for this is two-fold:
Statistics are convincing: Only few people in leg-
islation know the fundamental difference between
correlation and cause/effect-relationships, and pre-
sented with the statistics and the Napster-based ex-
planation, they are easily convinced that the music
industry is in danger, and that this is caused by file
sharing.
Unorganized users: While industry associations
have a lot of money which they can invest in lob-
bying, lawyers, and studies backing their claims,
users do not have a voice that is easily heard or
powerful enough to influence legislation.
Recent legislation such as the DMCA and the EU
Copyright Directive are only implementations of the
WCT, but they are also examples for the extent to
which legislation is influenced by associations. At
present, it seems certain that WCT-influenced laws
will become the normal state of legislation.
It will be interesting to observe the reaction of the
general public when the right for fair use is taken
away from them, at least for certain forms of con-
tent. Even though this is a logical consequence when
moving from buying content by buying some physi-
cal media, to acquiring a license to use some data, the
cultural consequences remain to be seen. For more
than hundred years people have been used to the idea
of “their books” and “their recordings” (and the right
to do with these whatever they like, including copy-
ing, lending, and selling), and it will take some time to
move away from this when eBooks and online music
become the rule rather than the exception.
ICETE 2004 - GLOBAL COMMUNICATION INFORMATION SYSTEMS AND SERVICES
52
5 CONSEQUENCES
The consequences of the Web so far have left the mu-
sic industry rather helpless. The reaction to the new
reality of music as data flowing freely through the
available data channels has been to attempt to stop
this flow through technical measures and legislation.
The alternative, adaptation to the new world, so far
has found amazingly little consideration. In the fol-
lowing two sections we look at these two strategies.
A third way, which would involve more philosophical
than commercial action, is discussed in Section 6, and
it is more a vision and ideal than a realistic course of
action for the current music industry, given its current
focus and way of working.
5.1 Copy Protection
In order to stop or at least reduce the sharing of mu-
sic, various Digital Rights Management (DRM) tech-
nologies have become the focus of attention. Rather
primitive ways are copy-prevention technologies for
CDs as described by (Halderman, 2002). However,
these technologies have been met with some reluc-
tance by users, because many of them mandate violat-
ing the CD standard, so that, technically speaking, the
CDs that users are buying are no longer CDs. Apart
from the principal question whether such a hasty de-
parture from a proven, trusted, and widely accepted
standard such as the CD is a smart thing to do, CD
copy-prevention technologies also reduce the ways in
which a user can use the CDs (after all, this is the one
and only purpose of these technologies).
While the wide-scale distribution of copy-protected
CDs in Europe has been met with only little criticism
and publicity, record companies are still reluctant to
do the same on the American market, because Ameri-
can consumers are generally known to be less tolerant
and complain more when they get what they consider
as an inferior product.
Going beyond simple copy-prevention technolo-
gies for CDs, true DRM technologies including cryp-
tographic methods and licensing, are also slowly
catching on. However, the required infrastructure
for these technologies still make them very heavy-
weight, and from the perspective of a user, they are
much less user-friendly than traditional CDs. (Haber
et al., 2003) argue that even if piracy is identified as
the most important problem for the music industry,
it is questionable whether DRM technologies are the
solution to this problem. They argue that even though
DRM may handle the authorization of copy-protected
content, there will always be a significant amount of
unprotected content available (obtained by dissociat-
ing the content from the DRM information), which
then is distributed to interested consumers.
5.2 Adapting to a New World
While the music industry is mainly concerned with
protecting their traditional sources of income, the
record sales, other companies concentrate on new
business models. Apple’s iTunes was the first online
music distributor to become rather popular, and one
of the reasons is that the concept is modelled around
user-friendliness rather than the goal to protect old
business models. The online distribution on music
still is in its infancy, but it seems to be able to sup-
port a business, given the business is designed to work
within the new world rather than against it. Users are
willing to pay for a real alternative to P2P, if they can
choose among titles of major labels, in user-friendly
formats, without copy protection and for Windows
and Apple platforms. Business models with copy re-
strictions or proprietary formats are less attractive and
less successful.
(Fetscherin, 2003) describes the three major chal-
lenges that content providers are facing in the fu-
ture, which are (1) competing against pirated copies
of their own products, (2) viewing the Internet as a
new distribution channel with fundamentally differ-
ent properties, and (3) learning to observe user accep-
tance of controls and limitations that are imposed on
users. While it seems that the first points are already
included in the music industry’s new business plans,
the third point is largely ignored.
It will be interesting to see how content providers
as well as users adapt to a new world of licensing and
pure data. For example, for an eBook, the perceived
value for a user may be higher or lower than for a tra-
ditional book. For a novel, it may be more convenient
to have a paperback which can be easily handled and
is less fragile than an eBook reader. For a technical
manual, however, it may be very valuable to have it
in eBook form thus providing sophisticated indexing
and searching facilities. For music, there may be sim-
ilar categories, and unless the content providers have
not invested more effort into finding out what people
want and how much they are willing to pay for it, the
adaptation process to the new world of content distri-
bution will remain more difficult than necessary.
6 ALTERNATIVES
While the previous sections described ways how the
music industry could and might be able to make
the transition into a new area, the question remains
whether the whole idea of a completely product-based
view of music is desirable. To phrase this approach
differently: While there maybe companies (even big
ones) that have made their living from viewing and
selling music as a product, it is questionable whether
WHEN BUSINESS MODELS GO BAD: THE MUSIC INDUSTRY'S FUTURE
53
this view of the world should be endorsed by legally
protecting it. Legislators in the U.S. and Europe pro-
tect digital content by enacting stronger intellectual
property law, based on the WIPO treaties. The high
price for a legal framework with such excessive copy-
right restriction will be loss of fair use and anonymity
for the user. Law combined with increasing techni-
cal control shifts the balance between the interests of
users and copyright owners towards the latter.
The WCT and resulting national laws are simply
protecting the interests of traditionally working indus-
tries in a new world, and the price for this often is pri-
vacy. The RIAAs recent actions against users of file
sharing programs not only have shown that the new
legislation is criminalizing significant fragments of
the population, but also that many privacy issues have
been treated rather lightly when introducing the new
legislation. As an alternative, the Electronic Fron-
tier Foundation (EFF) has suggested to let users of
P2P file sharing services pay a voluntary monthly fee,
which would then be collected and distributed simi-
larly to the European fee on blank media. A similar
approach is letting Internet Service Providers (ISPs)
collect the fee as described by (Sobel, 2003).
As a radical alternative for content providers, the
Creative Commons concepts developed by (Lessig,
1999; Lessig, 2001) is an interesting solution. It is
based on the assumption that all cultural work is inter-
connected and thus cannot be regarded and marketed
as an individual product. This concept is mainly tar-
geted at content providers with no commercial moti-
vation, which want to make sure that their content is
available and can be used by interested parties.
7 CONCLUSIONS
While we argue that the music industry in general
could benefit from concentrating on new business
models rather then protecting the old ones, we do
not deny that commercial music piracy (such as pro-
ducing and selling counterfeit CDs) is a problem and
should be prosecuted. However, the current trend
to criminalize a substantial fraction of the consumer
base is probably counterproductive and will definitely
not help to increase the speed of adaptation to the
new reality of music as data. While large-scale on-
line sharing of copyrighted material is illegal, P2P
applications are not illegal by nature, and could also
serve as a foundation for a new way of making money
with music. Additionally, new studies such as (Ober-
holzer and Strumpf, 2004) indicate that the actual loss
of sales is much smaller than usually claimed.
The current copyright law (before the
WCT/DMCA legislation) is sufficient to protect
copyrighted material, and the attempts to legally pro-
tect the technical protection mechanisms for content
show that the resulting architecture will probably
result in more restrictions for users. The statistics that
are used to convince legislators to accept this kind of
legislation are highly questionable, starting from the
business figures and ending with the user counts and
the concluded loss of revenue. Only the complete
absence of effective user interest lobbying makes the
current legislation possible.
Promising new business models such as iTunes
show that it is possible to make money on the Inter-
net, and that users can be offered a service that is not
overly restrictive but still effective enough to avoid
large-scale exploitation. While we cannot present a
business model that will successfully move the music
industry into the area of the Internet, we are confi-
dent that the current complaints will disappear once
the thinking has moved from protecting the old ways
to discovering and using the new ways.
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