May 18, 2009

To Pay or Not To Pay: The Internet’s Most Intricate Crisis

Posted in Business & technology tagged , , , , , , , at 10:24 am by Maggie Clark

Within two months after Last.fm, a music streaming service, signed into partnership with four major record labels, Amazon.com saw a 119 percent increase in online music sales. Through an ad-based revenue model Last.fm was able to offer free access to a database of songs numbering in the millions, and to group them into “stations” wherein your tastes would yield similar artists or songs in that vein. The catch was that after three iterations of one song, Last.fm would display an advertisement directing listeners to affiliate partners selling the tune. All in all, it was a sweet deal: We got free music, the big labels got paid, the small labels got exposure, and contrary to popular wisdom about downloaders detracting from music profits, online sales were through the roof.

So, of course, Last.fm switched to a subscription model on April 22, 2009: Now International Users have to pay “three” every month — three euros, three dollars: whatever is regionally appropriate. And honestly? This makes tremendous business sense: Last.fm has to pay for every track you listen to from a major label, and when it can’t negotiate adequate terms for payment with a label, sometimes that label just cuts out.

Nonetheless, as part of the Napster generation I can’t help but note how, the more things change online, the more they’ve ultimately stayed the same. From Napster to Pandora to Muxtape to Seeqpod and, of course, a slew of others, the introduction of free big-label music under any number of guises has always, invariably ended in a curtailing of services (at best), or else a complete redirection of the site’s aims and/or bankruptcy.

Notice anything funny there? Take a look at how this cycle begins: With the desire to give something away for free. Not to make a profit on it; just to scrape by — and only when profit margins drop deep into the red, to impose fees on the consumers. Yeah, you might say, it’s easy not to try to make money on something you didn’t create (the music). But… if history serves us well, it’s not. People just don’t pass up the opportunity to exploit the work of others for their own profit. So how is it that models like the ones listed above ever existed in the first place?

The answer perhaps lies in our generation’s unique conditioning: if as individuals we still demanded that our own creative output be viewable solely through a pay system (as Amazon is proposing in blog subscriptions for Kindle), we’d be hypocrites to demand free content from others. But growth on the internet has proven instead too nuanced for such hypocrisy: while some services have always tried to charge for content, the blogosphere, YouTube, GoogleVideo, MySpace, DeviantArt, Flickr, news aggregates, and other such websites have always run on a free viewing model. In short, by now we’re more than used to posting a piece of writing, a photo, a video, or a song online and expecting nothing monetary from it. Art and entertainment have entered into a free-for-all creation domain, and while this doesn’t mean we don’t still hold in high regard those artists and entertainers who dedicate the whole of their lives to such work, it certainly means we have different expectations for our engagement with them.

As such, the story of those aforementioned music services means just what seems to mean: That our first push out into the world of the internet is just as likely to be in the pursuit of free access as it is to be about exploitation — and thus, that we as consumers can forever expect to find ourselves latching on to free content, taking it for granted, and having subsequent power plays or business models then wrest that freedom away. A cry of foul will emerge, we’ll flood a comments page with angry protests… and then most of us will clear off, find a new free music service, and repeat.

Rest assured, this isn’t as hard to stomach as it sounds: we’re already quite used to learning to pay for goods we’d always taken for granted — how else can you explain bottled tap water? But the story of free music is a fast-paced tale that also speaks volumes about deeper, more complex payment issues at work on the internet.

Because while the struggle for survival of music streaming services cater to our more immediate fears about The Man, there is a longer, more drawn-out battle being waged in turn for the whole of the internet. Yes, I’m talking about the attempts of Internet Service Providers to make heavy internet users pay more, or divest the whole medium of its equal playing field by allowing some companies to pay for prioritized access, effectively shutting small companies and websites out of the mass market. Or what about Bell Canada, which last year found an ally in the CRTC when the Canadian Association of Internet Providers complained that Bell was “throttling” access for peer-to-peer applications — a direct challenge to net neutrality? When the CRTC sided with Bell in the case, they likewise permitted, and set precedent for, the legality of an ISP interfering with an individual’s use of the service he’s paid for, through “traffic-shaping.”

And then, of course, there is the anti-piracy bill passed by the French National Assembly on May 12, 2009: anyone caught downloading or sharing copyrighted files three times can now be suspended from the internet for two months to a year on that third notice. Chillingly, the law would not require a trial or court order: All the ISPs need do is send you your warnings, making this a huge win for corporate control of the medium.

This, then, is the real conflict of the internet — an on-going negotiation being fought in a much more protracted, expansive way than any music streaming service need fear: but a negotiation, nonetheless, that will shape the future of the internet for us and those to come.

For now we take our freedoms and equality online for granted — just as we do our free music moment by moment. The question is, if the lesson of music streaming services has taught us anything, what can we really say about how free or equal the internet as a whole will be just ten years down the line?

And what, right now, can we do about it?

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