CYBER LAW NOTES (Internet regulation, speech, defamation and digital music)

Regulating online speech

1. Hate speech or harmful speech is any expression (speech, text, images) that
demeans, threatens, or harms members of groups with protected characteristics.
It includes slurs, name-calling, discriminatory and exclusionary speech,
incitement to hatred and violence, harassment. Under the Equality Act 20210 of
the UK, protected characteristics are essentially aspects of a person’s identity
that makes them who they are. These are age, disability, gender reassignment,
marriage and civil partnership, pregnancy and maternity, race, religion or belief,
sex, and sexual orientation. Online communities are a particularly fast way to
spread hate

Hate speech is a criminal offence under EU law whilst the UK has specific laws
prohibiting the expression of hatred and threats towards individuals based on
protected group membership. In the USA, however, First Amendment rights mean
that much harmful speech counts as protected speech .

2. The Challenges of Regulating Online Speech

Bringing the Responsible Actor to Account

The first question is, who is the legally responsible actor for online hate
speech? Is a hateful utterance the responsibility of the individual user who
made it? Or does the platform have the responsibilities of a publisher?
Today social media companies have legal duties to remove harmful content
from their platforms. Enforcement by companies and regulators is patchy –
leading to concerns that filtering all online speech is too burdensome to be
practical. Various countries also have laws holding the individual
responsible. However, enforcement at scale is challenging, particularly if a
criminal offence has to be prosecuted.

There is simply too much speech to regulate by prohibition –

and regulation of individual speech through the criminal courts is an
unwieldy instrument i.e too large or disorganized to function
efficiently. One alternative is to treat clear but less serious breaches of the
law in the way that we deal with minor driving offences such as speeding.
In such a domain, enforcement is largely automated, using a system of
fixed penalty notices and/or penalty points. If there is a persistent
accumulation of penalty points, then loss of service access should ensue .

Impinging on Rights to Speech

 The second question is how to balance the right to free speech with the
desire to limit hate speech. Speech regarded as inoffensive by some may
be regarded as hate speech by others. There is a concern that prohibiting
speech that some find harmful will prevent legitimate political expression
by others. UK libel laws for example, are known to be used in this way,
including their use to prevent investigative journalism.

Should Tax on harmful content be considered?

Tax deterrents could provide an alternative framework to the criminal law

that could ameliorate (improve) rather than eliminate harmful speech at
scale.

Like tax on tobacco and alcohol, service providers who allow and
accelerate the dissemination of harmful speech should pay a tax to
compensate for the harm and thus reduce financial incentives to propagate
that harm.

The principal implementation issue is how to assess the tax due. Tax authorities
could authorize third-party providers to assess the quantity of harmful speech
published according to agreed definitions (deliberated by regulators and
policymakers in new legislation) on a sample basis, with the tax authority as the
customer and the publisher as the billed entity for the assessment service. This
would be a simple and scalable mechanism. It could incentivize social media
entities to reduce the amount of harmful speech they disseminate – without the
complexity of criminal law or the restriction of individual rights to speech, and
place the UK as a global pioneer in confronting harmful content.

3. Online Defamation Law

The Bloggers' FAQ on Online Defamation Law provides an overview of
defamation (libel) law, including a discussion of the constitutional and statutory
privileges that may protect you.

What is defamation?
Generally, defamation is a false and unprivileged statement of fact that is
harmful to someone's reputation, and published "with fault," meaning it is
as a result of negligence or malice. State laws often define defamation in
specific ways. Libel is a written defamation; slander is a spoken
defamation.

What are the elements of a defamation claim?

The elements that must be proved to establish defamation are:

a publication to one other than the person defamed;

a false statement of fact;
that is understood as
 a. being of and concerning the plaintiff; and
b. tending to harm the reputation of plaintiff.
If the plaintiff is a public figure, he or she must also prove actual malice.
Is truth a defense to defamation claims?
Yes. Truth is an absolute defense to a defamation claim. But keep in mind
that the truth may be difficult and expensive to prove. Court cases can mean
to drag longer than expected.

Defamation Act 2013, c. 26 & 8(3)(U.K.)(“any cause of action against the person for
defamation in respect of the subsequent publication is to be treated as havingaccrued
on the date of the first publication”). With respect to websites, the concern that led to the
enactment of section8wasthatpublishers “may cavil at the perpetual risk of suit, and so
renege altogether on maintaining internet archives of past publications.

One of the major differences between English and American defamation law relates to
the governing provisions. In England, a unified body of common law and statutory
principles governs all libel and slander cases . In contrast, in the United States, tort
law is mainly state law, and therefore it differs to some extent throughout the fifty
states and the District of Columbia. Consequently, it is sometimes easier to speak
confidently about the substance of English law than to summarize the content of the
corresponding American principles

Another difference is that English defamation law is in many respects pro

plaintiff, whereas American defamation law is largely pro defendant. This is true
because of a choice of values.

English defamation law places a priority on protecting the reputations of potential

plaintiffs.
That choice is today anchored in the text of the European Convention on Human Rights
(ECHR) and in the United Kingdom’s Human Rights Act. See Article 10.

Can my opinion be defamatory?

No—but merely labeling a statement as your "opinion" does not make it so.
Courts look at whether a reasonable reader or listener could understand the
statement as asserting a statement of verifiable fact. (A verifiable fact is one
capable of being proven true or false.) This is determined in light of the context of
the statement. A few courts have said that statements made in the context of an
Internet bulletin board or chat room are highly likely to be opinions or hyperbole, but
they do look at the remark in context to see if it's likely to be seen as a true, even if
controversial, opinion ("I really hate George Lucas' new movie") rather than an assertion
of fact dressed up as an opinion ("It's my opinion that Trinity is the hacker who broke
into the IRS database").

What is a statement of verifiable fact?

A statement of verifiable fact is a statement that conveys a provably false factual
assertion, such as someone has committed murder or has cheated on his
spouse. To illustrate this point, consider the following excerpt from a court (Vogel v.
Felice) considering the alleged defamatory statement that plaintiffs were the top-ranking
'Dumb Asses' on defendant's list of "Top Ten Dumb Asses":

A statement that the plaintiff is a "Dumb Ass," even first among "Dumb Asses,"
communicates no factual proposition susceptible of proof or refutation. It is true that
"dumb" by itself can convey the relatively concrete meaning "lacking in intelligence."
Even so, depending on context, it may convey a lack less of objectively assayable
mental function than of such imponderable and debatable virtues as judgment or
wisdom. Here defendant did not use "dumb" in isolation, but as part of the idiomatic
phrase, "dumb ass." When applied to a whole human being, the term "ass" is a general
expression of contempt essentially devoid of factual content. Adding the word "dumb"
merely converts "contemptible person" to "contemptible fool." Plaintiffs were justifiably
insulted by this epithet, but they failed entirely to show how it could be found to convey
a provable factual proposition. ... If the meaning conveyed cannot by its nature be
proved false, it cannot support a libel claim.

Is there a difference between reporting on public and private figures?

Yes. A private figure claiming defamation—your neighbor, your roommate, the
guy who walks his dog by your favorite coffee shop—only has to prove you acted
negligently, which is to say that a "reasonable person" would not have published
the defamatory statement.

A public figure must show "actual malice"—that you published with either
knowledge of falsity or in reckless disregard for the truth. This is a difficult
standard for a plaintiff to meet.

Who is a public figure?

A public figure is someone who has actively sought, in a given matter of public
interest, to influence the resolution of the matter. In addition to the obvious public
figures—a government employee, a senator, a presidential candidate—someone
may be a limited-purpose public figure. A limited-purpose public figure is one
who (a) voluntarily participates in a discussion about a public controversy, and
(b) has access to the media to get his or her own view across. One can also be an
involuntary limited-purpose public figure—for example, an air traffic controller on
duty at time of fatal crash was held to be an involuntary, limited-purpose public
figure, due to his role in a major public occurrence .

Examples of public figures:

A former city attorney and an attorney for a corporation organized to recall members of
city counsel
A psychologist who conducted "nude marathon" group therapy
A land developer seeking public approval for housing near a toxic chemical plant
Members of an activist group who spoke with reporters at public events
Corporations are not always public figures. They are judged by the same standards as
individuals.

What are the rules about reporting on a public proceeding?

In some countries, there are legal privileges protecting fair comments about
public proceedings. For example, in Australia, the statutory defence of fair
reporting of public proceedingsis outlined in section 29 of the defamation act
2005. You have a right to make "a fair and true report in, or a communication to, a
public journal, of (A) a judicial, (B) legislative, or (C) other public official
proceeding, or (D) of anything said in the course thereof, or (E) of a verified
charge or complaint made by any person to a public official, upon which
complaint a warrant has been issued.”. In other countries like America, this
provision has been applied to posting on an online message board, Colt v.
Freedom Communications, Inc., and would likely also be applied to blogs. The
California privilege also extends to fair and true reports of public meetings, if the
publication of the matter complained of was for the public benefit.

What is a "fair and true report"?

A report is "fair and true" if it captures the substance, gist, or sting of the
proceeding. The report need not track verbatim the underlying proceeding, but
should not deviate so far as to produce a different effect on the reader.

What if I want to report on a public controversy?

Many jurisdictions recognize a "neutral reportage" privilege, which protects "accurate
and disinterested reporting" about potentially libelous accusations arising in public
controversies. As one court put it, "The public interest in being fully informed about
controversies that often rage around sensitive issues demands that the press be
afforded the freedom to report such charges without assuming responsibility for them."

If I write something defamatory, will a retraction help?

Some jurisdictions have retraction statutes that provide protection from defamation
lawsuits if the publisher retracts the allegedly defamatory statement. For example, in
California, a plaintiff who fails to demand a retraction of a statement made in a
newspaper or radio or television broadcast, or who demands and receives a retraction,
is limited to getting "special damages"—the specific monetary losses caused by the
libelous speech. While few courts have addressed retraction statutes with regard to
online publications, a Georgia court denied punitive damages based on the plaintiff's
failure to request a retraction for something posted on an Internet bulletin board. (See
Mathis v. Cannon)

If you get a reasonable retraction request, it may help you to comply. The retraction
must be "substantially as conspicuous" as the original alleged defamation.

What if I change the person's name?

To state a defamation claim, the person claiming defamation need not be
mentioned by name—the plaintiff only needs to be reasonably identifiable. “I am
talking about that former bush rebel who resides at nakasero”.. So if you defame
the "government executive who makes his home at 1600 Pennsylvania Avenue," it is
still reasonably identifiable as the president.

Do blogs have the same constitutional protections as mainstream media?

Yes. The US Supreme Court has said that "in the context of defamation law, the rights
of the institutional media are no greater and no less than those enjoyed by other
individuals and organizations engaged in the same activities."

What if I republish another person's statement? (i.e. someone comments on your posts)
Generally, anyone who repeats someone else's statements is just as responsible for
their defamatory content as the original speaker—if they knew, or had reason to know,
of the defamation. Recognizing the difficulty this would pose in the online world,
Congress enacted Section 230 of the Communications Decency Act, which provides a
strong protection against liability for Internet "intermediaries" who provide or republish
speech by others. See the Section 230 FAQ for more.

The vast weight of authority has held that Section 230 precludes liability for an
intermediary's distribution of defamation. While one California court had held that the
federal law does not apply to an online distributor's liability in a defamation case, the
case, Barrett v. Rosenthal, was overturned by the California Supreme Court (EFF filed
an amicus brief in this case)

Can I get insurance to cover defamation claims?

Yes. Many insurance companies are now offering media liability insurance policies
designed to cover online libel claims. However, the costs could be steep for small blogs
—The minimum annual premium is generally $2,500 for a $1 million limit, with a
minimum deductible of $5,000. In addition, the insurer will conduct a review of the
publisher, and may insist upon certain standards and qualifications (i.e. procedures to
screen inflammatory/offensive content, procedures to "take down" content after
complaint). The Online Journalism Review has an extensive guide to libel insurance for
online publishers.

Will my homeowner's or renter's insurance policy cover libel lawsuits?

Maybe. Eugene Volokh's the Volokh Conspiracy notes that homeowner's insurance
policies, and possibly also some renter's or umbrella insurance policies, generally cover
libel lawsuits, though they usually exclude punitive damages and liability related to
"business pursuits." (This would generally exclude blogs with any advertising). You
should read your insurance policy carefully to see what coverage it may provide.

What's the statute of limitation on libel?

Most states have a statute of limitations on libel claims, after which point the plaintiff
cannot sue over the statement. For example, in California, the one-year statute of
limitations starts when the statement is first published to the public. In certain
circumstances, such as when the defendant cannot be identified, a plaintiff can have
more time to file a claim. Most courts have rejected claims that publishing online
amounts to "continuous" publication, and start the statute of limitations ticking when the
claimed defamation was first published.

What are some examples of libelous and non-libelous statements?

The following are a couple of examples from California cases; note the law may vary
from state to state. Libelous (when false):

Charging someone with being a communist (in 1959)

Calling an attorney a "crook"
Describing a woman as a call girl
Accusing a minister of unethical conduct
Accusing a father of violating the confidence of son
Not-libelous:

Calling a political foe a "thief" and "liar" in chance encounter (because hyperbole
in context)
Calling a TV show participant a "local loser," and "big skank"
Since libel is considered in context, do not take these examples to be a hard and
fast rule about particular phrases. Generally, the non-libelous examples are
hyperbole or opinion, while the libelous statements are stating a defamatory fact.

How do courts look at the context of a statement?

For a blog, a court would likely start with the general tenor, setting, and format of the
blog, as well as the context of the links through which the user accessed the particular
entry. Next the court would look at the specific context and content of the blog entry,
analyzing the extent of figurative or hyperbolic language used and the reasonable
expectations of the blog's audience.

Context is critical.

What is "Libel Per Se"?

When libel is clear on its face, without the need for any explanatory matter, it is
called libel per se. The following are often found to be libelous per se:

A statement that falsely:

Charges any person with crime, or with having been indicted, convicted, or
punished for crime;
Imputes in him the present existence of an infectious, contagious, or loathsome
disease;
Tends directly to injure him in respect to his office, profession, trade or business,
either by imputing to him general disqualification in those respects that the office
or other occupation peculiarly requires, or by imputing something with reference
to his office, profession, trade, or business that has a natural tendency to lessen
its profits;
Imputes to him impotence or a want of chastity.
Of course, context can still matter. If you respond to a post you don't like by beginning
"Jane, you ignorant slut," it may imply a want of chastity on Jane's part. But you have a
good chance of convincing a court this was mere hyperbole and pop cultural reference,
not a false statement of fact.

What is a "false light" claim?

Some states allow people to sue for damages that arise when others place them
in a false light. Information presented in a "false light" is portrayed as factual, but
creates a false impression about the plaintiff (i.e., a photograph of plaintiffs in an
article about sexual abuse, because it creates the impression that the depicted
persons are victims of sexual abuse). False light claims are subject to the
constitutional protections discussed above.

What is trade libel?

Trade libel is defamation against the goods or services of a company or
business. For example, saying that you found a severed finger in a particular
company's chili (if it isn't true).

The Single-Publication Rule

Under English Common Law, every sale and distribution of a publication was a
separate publication of statements, and a plaintiff could sue for defamation over
any of them. Many states, including Georgia, have statutes that altered this harsh
law in favor of the single-publication rule. Under the rule, a publisher can only be
sued for libel over the original publishing of text, not the subsequent distribution
or additional printings of the same text.

Thus, with the proliferation of the internet, social media and smartphones, the age-old
adage “everyone is a critic” has never rung truer than it does today. While various
state Constitutions grants their citizens the freedom of speech and expression, this right
is qualified by reasonable restrictions which carve out an exception for, amongst
others, defamatory speech. Therefore, this guaranteed freedom of expression is
correlated with a corresponding duty to only publish speech and exercise this right
when it does not impact the rights of others or infringe any applicable laws.

The Indian Delhi High Court on November 7, 2013, in the matter of Khawar Butt vs.
Asif Nazir Mir and Ors. (CS (OS) 290/2010), shed light on the issue above, especially
in the context of a defamatory publication which was widely and generally available in
the public domain for anyone to read.

The United Kingdom, by way of the enactment of the Defamation Act, 2013, has
statutorily overruled the common law Multiple Publication Rule that had been
followed by its courts since 1849. In the Khawar Butt matter, the Delhi High Court
found the Single Publication Rule, rather than the Multiple Publication Rule, to be
more pragmatic and appropriate to follow.

4. Commercial speech
Commercial speech refers to any speech which promotes at least some type
of commerce. It is the advertising of a product or service through printed
materials, broadcast, or the internet. It was necessary for commercial speech to
be defined so as distinguish it from the political speech, which deals with areas
of social interest.

In the European Union (EU), the European Court of Human Rights has held that
commercial speech is protected under Article 10 of the European Convention of
Human Rights (ECHR) on several occasions.

In America, as established in Central Hudson Gas & Electric Corp. v. Public

Service Commission, commercial speech is less protected under the First
Amendment than other forms of speech.

Under the First amendment

"Congress (government) shall make no law regulating an establishment of

religion, or prohibiting the free exercise of religion; or abridging the freedom of
speech, or freedom of the press; or the right of the people peaceably to assemble
(freedom of assembly), and the right to petition the government for a redress of
grievances."

Central Hudson established a four-part test for whether governmental regulation of

commercial speech is constitutional.

First, in order for the commercial speech to be considered protected speech

under the First Amendment, the speech must concern lawful activity and the
speech must not be misleading.
If this step is met and the commercial speech is considered speech, then the court will
use steps 2-4 below to determine whether the government regulation is constitutional
Second, the alleged governmental interest in regulating the speech must be
substantial
Third, the regulation must directly advance the governmental interest asserted
Fourth, the regulation must not be more extensive than is necessary to serve the
interests expressed in step 3
For example, Linmark Associates v. Township of Willingboro established that a
township could not prevent residents from placing “For Sale” / “Sold” signs on their
lawns because preventing the flow of truthful information was more extensive than
necessary to serve the township’s interest of preventing further neighborhood members
from leaving.

(In other words, regulating for the interests of the township on these
circumstances would not be fair as compared to people knowing the truth about
the state of the residents. Thus any regulation preventing residents from telling
the truth would not be constitutional. Thus the First Amendment would protect it.)

In addition to being restricted, commercial speech can also be compelled. In Zauderer

v. Office of Disc. Counsel, the Supreme Court held that a state may situationally compel
commercial speech without violating the advertiser's First Amendment rights.
Specifically, a state may require an advertiser to disclose certain information "as long as
disclosure requirements are reasonably related to the State's interest in preventing
deception of consumers."
5. Digital music and internet
The convergence of music production, creation, distribution, exhibition and presentation
enabled by the digital communications technology has swept through and shaken the
music industry as never before. With a huge push from the digital technology, music is
zipping around the world at the speed of light bringing musicians, fans and cultures
together. Digital technology has played a major role in making different types of
music accessible to fans, listeners, music lovers and downloaders all over the
world. The world of music production, consumption and distribution has changed, and
the shift is placing the power back into the hands of the artists and fans. There are now
solutions available for artists to distribute their music directly to the public while
staying in total control of all the ownership, rights, creative process, pricing,
release dates and more. Geographic distances and national boundaries have
become irrelevant in distribution and dissemination of music. Worldwide presence
and interactivity now allows musicians, music enthusiasts and critics to discuss and
share musical knowledge and actual music files. The vision of musicians and their fans
and music lovers ‘coming together’ without any limitations of time and space,
without any interference from meddling record companies, is being realized
virtually on the Internet.

Musicians have been the first ones to appreciate music of other cultures and to
incorporate them in their own repertoire – John McLaughlin merged Indian classical
music in his fusion band Shakti, George Harrison brought the Indian sitar into pop music
and made Ravi Shankar famous in the West, Led Zeppelin and Sting have infused
Middle-Eastern influences in their music. On the other hand, musicians from the Third
World and traditional cultures have eagerly mixed hiphop, rock, reggae and western pop
music into their indigenous music – Bhangra and Bollywood film music is a good
example; Shakira, the latest queen of pop from Latin America was practising a
Bollywood dance number for a concert on MTV, and this trend could be seen on MTV-
Chi (Chinese version) and MTV-Desi (South Asian version). The new digital
communications technology seems to have accelerated the process of bringing western
music to Asian, African and Latin cultures and in reverse, music from Asia, Africa and
South America to the western consciousness and culture.

The convergent communications technology has upset the apple cart and has
made music production and distribution more democratic and participatory at the
grass roots level. This has happened not just at the national level but
transcended borders to become a global phenomenon.
This has led to creativity from artists and fans alike. The recorded album as we know is
going out of style. The Beatles revolutionized the album with Sgt. Pepper’s Lonely
Hearts Club Band in 1967 by adding a theme and continuity to the songs constituted
within the traditional 12/14 tracks album, and now a few adventurous musicians and
song-writers are doing the same almost four decades later by expanding the range and
potential of the form. Beck, a pioneer in new musical forms, is creating a new path to
think about the LP format. Beck’s Guero was not a static list of 13 songs but a variety of
formats peddled around in the market and on the net. There was an unfinished version
online leaked in 2004, then an official 2005 Interscope CD release, a CD/DVD deluxe
edition complete with seven bonus tracks and an interactive video art, and also many
unauthorized re-mixes and “mashups” of the original floating around on the net. This
reshaping of the album format has shaken up the industry to its core: “…the very
logistics and economics of the music industry are at stake, as one album becomes a
long shelf of songs and products, each carrying its own release date, distribution path,
and price tag. In the end, fans can create their own versions of the album,
stringing fave songs and remixes into one ideal playlist.” Beck the musician is
doing it again by releasing multiple versions, the multimedia experiments and the
audience interactions of his follow up to Guero (Steuer, 2006: 172-173). In Beck’s own
words:

There are so many dimensions to what a record can be these days. Artists can
and should approach making an album as an opportunity To do a series of
releases – one that’s visual, one that has alternate versions, and one that’s
something the listener can participate in or arrange or change. It’s time for the
album to embrace the technology…. Record labels definitely aren’t going to go
away, but it will be really interesting to see how their role changes (Steuer, 2006:
174-175).

This Music industry has evolved from mono to hi-fidelity stereo to Dolby® surround
sound. While storage media technologies evolved from vinyl to audiocassettes to CDs
and mini-discs, replay devices evolved from gramophones to large, in-house stereo
systems to compact and portable audio devices. During these transitions, industry
players either quickly adapted to the changes caused by the newer technologies or
simply disappeared (Millard, 1995). Today, the industry is undergoing major changes
brought on by the rapid evolution of the Internet and the merger of audio and computing
technologies.

The Traditional music industry structure has three major components:

Music and song creation: Musicians, lyricists and recording artists with creativity and
talents create music. Major Labels (Sony Music, BMG, EMI, Time-Warner Music, and
Universal Music) play a major role in all three processes by providing initial capital and
marketing know-how to create, promote and distribute music.
Music marketing: Marketing includes branding, information dissemination and
community building. Major channels for branding and information dissemination are
professional promoters, disk jockeys, dance clubs, television and radio stations. These
channels propagate information about new releases and provide samples of music to
the music lovers and potential customers. They also help develop communities of music
fans with similar tastes.

Music Distribution: Labels, distributors, retailers, DJs/clubs, broadcasters, and others

market and distribute music. Music is normally stored in portable medium such as CDs
and audiocassettes, to store and distribute it. Bricks-and-mortar retailers, such as
WalMart, Borders and Target, and Internet retailers like Amazon.com keep these
"containers" in their stores for the music aficionados (Parikh, 1999).

The music industry structure had evolved over many decades and was relatively
inefficient. It incorporated up to three levels of intermediaries between the artists and
the customers. Each profit-making intermediary added a layer of cost leading to higher
final cost to the customers. Some companies tried to reduce this cost by combining
roles of multiple intermediaries. For example, BMG Music Club and Columbia House
were selling CDs and audiocassettes directly to their club members at lower costs. The
success of this concept showed a need to reduce the cost by increasing transactional
efficiency. On the other hand, one could argue that these intermediaries had economies
of scale and economies of scope to achieve lower costs (Parikh, 1999).

In addition, to reduce the cost of promotion and distribution, music was sold as a
collection in an album of many solo songs or instrumental pieces, forcing artists to
develop several tracks to make their music commercially viable. This practice invariably
led to inclusion of several "not-so-good" songs and/or instrumentals in an album. This
also forced buyers to buy an album in order to get one or two songs or musical pieces
of their choice. Under this structure, the most dominating force in the industry was the
major music labels. Labels command tremendous power by controlling major marketing
and distribution channels and by binding their artists to long-term contracts. Having very
limited access to marketing and distribution channels, most emerging artists cannot
compete on their own. They either end up joining a label or remain small in a niche
market. This allowed music companies to walk away with the lion's share of profit. In
general, labels collected about 85 to 90 percent of the profit from music sales (Parikh,
1999).

The pre-digital technology reinforced the separation between professional artist and the
audience. A successful artist needed not only creativity and skill but also access to the
tools of production – studios, cameras, mixers etc. – and channels for mass distribution.
The music business grew and dominated through the economy of scale.They could
spend millions of dollars to make and market blockbuster hits, to get them played on the
radio and MTV. They also owned the factories that could press vinyl albums and CDs
before home CD burners and MP3 came along (Pareles, 2006).

The last big expansion of the music industry began in the late 1950s when the record
sales grew rapidly throughout the industrialized countries and the phonogram or the
record player became an established medium worldwide. Worldwide record sales rose
from $4.75 billion to $7 billion between 1973 and 1978. The downturn in the industry
began actually in the late ‘70s when the so-called crisis hit the industry after more than
30 years of constant growth (Burnett, 1996: 45). But after that music sales fell by 11% in
the USA and by 20% in Britain, and not until 1984 that the total sales picked up and
moved up to the 1979n level (Frith, 1988).

World sales of recorded music (vinyl records, cassettes & CDs) steadily increased after
the slump in 1979 from approximately $12 billion in 1981 to $29 billion in 1992. But
sales of vinyl albums and singles nose-dived with the introduction of a new format – the
compact disc. The CDs revived consumer interest in music and allowed record labels to
sell their back catalogs and also to increase the price of their products. So for the time
being the CD format saved the music industry. CD sales took off in 1985 and the
immense popularity of the CD could be viewed within the overall transformation of the
music industry at that time. The major music recording companies had by then
established an international business of selling their music worldwide. The continuing
deregulation of national TV and radio services, the increase of cable and satellite
delivery systems, and the spread of VCRs created a huge demand for program
material. And music in different forms proved to be an important source of program
content, empowering the industry to pre-sell program material for the first time (Frith,
1988).

Music industry watchers predicted that the income generated from publishing and
performance rights would constitute an increasing part of record companies’ revenue.
Thus, in the 1990s, the industry moved away from the selling of products to concentrate
on the selling of musical rights and the collecting of royalties (Burnett, 1996: 46). This
was reiterated by Menon, president of the IFPI (International Federation of Phonogram
and Video Producers) in 1990: “ Given the increasing exploitation of sound recordings
by broadcasters, it is clear that in the future, income generated from performance rights
must constitute an equally increasing part of record company revenues” (Burnett, 1996:
47). The unending optimism of the music industry unfortunately did not last very long
with the advent of digital technology.

Digital Technology

The merger of audio technologies with computing technologies converted music

into an information product. Technological innovations changed how music and
songs are bought and consumed today. They provided means to create music at
very low cost (one can produce music at home), to dub and mix music, and
increased the quality of sound by using digital noise filters and balancing that
was non-existent a few years back. Digital technologies such as mp3 has become the
standard for digital music format. Mp3 is the widely accepted format for music
distribution over the Internet and being an open standard (not a patented property of a
company), it is well received by many audio software developers. With such technology
music files can be compressed to a size that is practical to transfer over the Internet.
This ability to compress files has made mp3 very popular among music listeners and
producers. Emergence of the mp3 format has led to innovations in portable audio
devices that can download music from computer hard disks or directly from the Internet.
However, mp3 does not have a provision for a digital signature to identify or stop illegal
music download and distribution worldwide which has allowed music consumers to
freely download and distribute both legal and pirated music over the Internet.

The consequences of digitization of music for musicians, fans and the industry have
been profound especially with the transformation of music production, marketing,
distribution and reception. Music and the music business has mutated into something
totally different than what we knew before. The Internet has opened up the Pandora’s
Box of music for the fans and now millions of songs are now available, either for free or
for sale, legally or illegally. Major record labels are feeling the shock of this tectonic shift
in the business model – they are making less profit out of fewer bands, singers and
musicians than before and they are compensating the loss by indulging in a frenzy of
mergers and other strategic moves (Blow 2009, Pfanner 2009, Szustek 2009).

Declining Sales

Statistics show that the music industry and the major record labels are in a slow
slump. Ever since music sales peaked in 1999, the music industry has been in the
doldrums. There has been a broader shift in media consumption amongst the younger
audiences – they have moved from an acquisition model to an access model. As critics
point out, piracy first gouged out the profits and now streaming music available ‘on
demand’ over the Internet – free and legal – could be the knock-out punch which could
seal the deal. According to a study by the NPD Group, a market research firm for the
entertainment industry, 13 to 17 year olds bought or downloaded 19% less music in
2008 than they did in 2007. CD sales among these teens were down 26% and digital
purchases were down 13%. A survey of British music fans found that that the
percentage of 14 to 18 year olds who regularly shared files dropped by nearly a third
between December 2007 to January 2009, and two-thirds of the same teens now
listened to streaming music “regularly” and a third listened everyday. Another study
done last year showed that of the 13 million songs sold online in 2008, 10 million never
got a single buyer and 80% of all revenue came from about 52,000 songs – less than
1% of all online songs for sale (Blow, 2009).

Sales of CDs have halved since the beginning of the decade. In 2008, some 361 million
CDs were sold, a 20% drop from 2007. Market research firm Gartner reported last year
that record companies shifted their focus toward digital downloads and other online
content, including streaming video clips (Szustek, 2009). Record companies which
relied on CDs for the major portion of their revenues were losing out on CD sales in the
US which dropped more than 20 percent from a peak of $13.4 billion in 2000. Reuters
recently reported that overall sales of units rose by 14% in 2007, with digital sales up by
45%. Recorded music sales dipped 7.6% worldwide in 2003 after previous three years
of decline in sales worldwide but at the same time, pirated music proliferated – global
sales of illegal music discs rose to 35% in 2003 (Coren, 2004: 1). As an industry expert
points out, the market for music is actually thriving especially with the growth of peer-to-
peer networks, the iPod and other digital technologies, and a huge jump in concert
ticket sales since 1999. For fans and consumers of music it has been a boon - there is
music everywhere and the music industry has more channels of revenue like ringtones,
concert tickets, license agreements with TV shows and videogames than ever before
(Howe, 2006: 178).

Fans and consumers of music are making a lot of purchases than ever before but they
are choosing selected tracks over whole albums. The album, a compilation of ‘good’
and ‘bad’ songs has lost that hold over music lovers and it is no longer a primary
product in the digital era. The sales for ‘singles’ (previously available on 45 rpm and
later CDs) in UK, had dropped from 80 million in the late 1990s to a little over 20 million
in 2005. By then Apple’s iTunes, Musicmatch, Yahoo! Music and other legal download
services arrived on the scene, became an instant hit and proved that fans were still
interested in buying single tracks. Now downloads account for about 75% of all singles
sold. More than 26 million songs were downloaded legally in the UK in 2005 from
virtually zero two years earlier. Music impresario Tony Wilson who launched one of the
first legal download websites in the UK called Music 33 in 2000, emphasized that the
industry had been too slow to deal with downloads. There is no doubt that when internet
downloads become the dominant force in the singles chart, the music business is most
likely to face a further dilemma (Youngs, 2004: 1).

The consumers of music had been fed up for a while with the exorbitant amount
they had to pay to buy CDs and the musicians and distributors tapped into the
consumer anger to rewrite the rules of the music business. As Michael Bracy,
lobbyist for the Future of Music Coalition, a non-profit group advocating political and
technological reform of digital technology says: “ There is a major disconnect between
the music industry and the reality of the way most Americans relate to music…There is
an effort to commodify music which is fundamentally impossible to do.” The Recording
Industry Association of America (RIAA) acknowledges that most of its new releases fail.
An example would be a 2.2 million marketing campaign for an Irish singer whose album
sold 378 copies in its first few months (Anderson, 2008).

Much of the ‘free’ and illegal downloading have been flagrant violation of
copyright laws. If the copyright system failed, huge industries could crumble. If it
got too strong, it could strangle future creativity and research. It is repeatedly
drummed in that copyright law is an “engine of free expression” as the Supreme Court
once declared, but more often it is used as an instrument of corporate censorship,
according to Vaidyanathan. Industries that live by copyright such as the music business
continue to encrypt CDs and DVDs so that the consumers cannot play them on
computers or make multiple personal copies, and they monitor and sue consumers who
allow others to share digital materials over the Internet which has turned out to be
counterproductive by alienating consumers and listeners. Yet the media companies
keep growing and expanding across the globe, and they produce more software, books,
music, video games and movies every year. They are not definitely dying even though
revenues in the music business dropped from 2000 to 2003 on the average by 6.8%.
Millions of people in Europe and N. America continue to use their high-speed Internet
connections to download music for free. From Moscow to Mexico City to Manila, music,
movie and video piracy is rampant, yet the music industry has recovered from an early
decline – revenues for major labels in 2004 were up by 3.3% from 2003 and unit sales
were up by 4.4%. Revenues in 2004 were higher than in 1997 and comparable to those
of 1998 – a really good year for recording industry – all this happened while illegal
downloading continued all over the world (Vaidyanathan, 2006).

Major Record Labels

By the mid-1980s CBS, WEA, EMI and Polygram were all claiming in their annual
reports that their international divisions accounted for more than fifty percent of their
sales. The transnational companies mentioned above at that time controlled the biggest
share of the market pie and marketed, manufactured and distributed their own products.
They had the needed technology of pressing and packaging recorded materials, and a
sophisticated marketing, promotion and distribution network worldwide.

The 1990s was a period of consolidation and formation of media conglomerates and the
record companies not surprisingly belonged to the transnational media and electronics
conglomerates. The six biggest firms in the international music industry at that time
were: Warner, Sony, MCA, BMG, EMI and Polygram. All six of the phonogram
transnationals had branch subsidiaries throughout Europe and the Americas. An
oligopoly of the six transnationals basically controlled a major portion of the international
market at that time and the trend was towards more concentration of powers in the
hands of a few. In 1977, a prominent record executive proclaimed that: “One of the key
trends of the next decade will be the increasing concentration of market shares in the
hands of a few large manufacturing/distribution concerns….Soon an oligopoly will exist
in our industry” (Burnett, 1996: 51). Of course he could not see further down the road
into the 21st century as to what changes the new digital technology would bring to the
industry.

Revenues at the four major labels (Warner, Sony BMG, EMI & Universal) have
been on slow decline since the turn of the century. From 2002-2006, the major
labels’ revenue declined by 11% while the movie box office receipts remained constant
and sales of video games grew with a surge in demand (Anderson, 2008). Matters were
quite bad enough that the labels themselves were demanding change even from their
trade groups. EMI recently pushed both the IFPI and RIAA to restructure their
operations, for instance, and all four labels have tried to adjust to a new world by
dropping DRM and launching innovative programs like ‘Comes with music’. Warner
music’s stock in 2007 went down by 70% from it’s IPO price in 2005. And EMI, acquired
by private equity firm Terra Nova, was spending $50 million per year just to destroy CDs
it couldn’t sell, and it planned to lay off as many as 2000 employees (Anderson, 2008).
The decline could not be blamed on just file-swapping only or the inability to compete
with free products. Digital music sales soared in 2007 and the total number of units sold
during the year increased over 2006. In fact, eMusic doubled it’s own projections for the
Christmas season, pushed out 10 million tracks in Dec. 2007, and added 50,000 new
paying customers in the latter half of 2007 (Anderson, 2008).

Despite the bad news, major labels are not fading away as yet. Atlantic, a unit of
Warner Music Group reached a milestone that no other major record label had - more
than half of its music sales in the United States are now from digital products, like
downloads on iTunes and ring tones for cellphones. The Warner Music Group reported
that digital revenue for the full fiscal year rose 39 percent, to $639 million, or 18 percent
of the company’s total revenue. Atlantic, whose artists include the Southern rapper T. I.,
the rock band Death Cab for Cutie and Kid Rock, appears to be the first of the major
labels to claim that most of its revenue is coming from digital sales, and it has done so
without seeing a steep decline in compact disc sales as the rest of the industry. This
performance is sharply at odds with the trends in the music industry overall where data
show that sales of compact discs still account for more than two-thirds of music sales.
With the milestone comes a sobering reality already familiar to newspapers and
television producers. While digital delivery is becoming a bigger slice of the pie, the
overall pie is shrinking fast. Analysts at Forrester Research estimated that music sales
in the United States would decline to $9.2 billion in 2013, from $10.1 billion this year and
$14.6 billion in 1999, according to the Recording Industry Association of America
(Arango 2008).

Apart from the six major international players, hundreds of smaller and independent
record companies existed in the western countries in the ‘80s. The independents
operated less conventionally than the majors through a network of independent but
often short-term contacts and contracts. A key factor in the development of independent
labels (indies as they are called now) was provided by cheaper, more compact and
efficient technologies for recording music which had an ominous premonition and
implication for the established major companies. The indies operated in a space within
the commercial market but with an edge towards innovative music and sounds. The gap
between the transnational and the indies became more pronounced as time went on.
The indies had blossomed on the back of new technology (vinyl records, portable
turntables, 4-track recorders, cassette & CD players) only to be cut down by the
combined effects of acquisition and recession, in addition to the soaring distribution
costs. Distribution of the record/disc was the most expensive part and not the
production and pressing of the records. Thus, some indies concentrated mostly on
dance music (electronic or disco) which could be pushed in discotheques and on the
dance floor by the DJs playing those discs. At times this process established an artist
on special dance music charts which was far less costly than trying to break into the
mainstream charts. Independent labels thus handled specialized styles and new
performers while the major labels got hold of the name brand performers (Pareles,1990:
3).

Online Music Revolution:

Record company executives indicate that there are three kinds of music fans. There are
those who buy music, and those who get a kick out of never paying for it. And
then there are those whom Rob Wells at Universal Music Group calls “dinner
party pirates” - the vast majority of listeners, those who copy music illegally
because it is more convenient than buying it. Over the past year, however, as sales
of CDs have continued to fall and paid-for downloads from services like Apple’s iTunes
have fallen short, record companies have moved to embrace casual file-sharers. Legal
services offering free, unlimited streaming of music, rather than downloads, are
proliferating. According to a survey, unlimited streaming is taking some of the wind out
of the pirates’ sails. “Consumers are doing exactly what we said they would do,” said
Steve Purdham, chief executive of We7, a streaming service that says it has attracted
two million users in Britain in a little more than half a year by offering unlimited access to
millions of songs. The music industry has high hopes that the growth of sites like We7,
whose investors include the former Genesis musician Peter Gabriel, can change the
reputation of Europe as a hive of digital piracy. Similar businesses include Deezer in
France, and Spotify which was started by two Swedish entrepreneurs, has grown
rapidly in Britain and elsewhere. All of them are licensed by the music industry and hope

to make money from advertising. (Pfanner, 2009).

Established bands and musicians had objected vociferously to illegal file sharing
downloads on the Internet which had reached its peak in 2000. At that time Napster had
more than 50 million registered users but after the lawsuits initiated by the five major
music companies for copyright violation, Napster was shutdown. Napster’s website is
now a legitimate subscription based music service. But inspite of the lawsuits, RIAA has
not stemmed the flow of illegal downloads (Coren, 2004: 3). However, a survey by IDC
looked at digital music habits of listeners in 2008, reported that most preferred sources
for music listeners were paid online music services (34.5%) and P2P download services
(28.1%). But streaming audio from social networks (26.7%), online sites of terrestrial
radio stations (26.6%) and artists’ music websites (21.2%) were catching up in
popularity (Buskirk, 2009c). Google is also poised to enter the digital music scene with
Google audio which will become a one-stop shop for music search – “a playable search
service: creating a special box in search results with links to songs to stream and
download”. The service will be powered in part with streaming music from Lala,
recommendations from iLike and also include playable search results from imeem
(Buakirk, 2009b).

Among British teenage music fans, 65 percent said they listened to streamed music at
least once a month, with 31 percent saying they did so every day. Rather than
cannibalizing existing digital businesses, the new services are often attracting people
who previously shared files illegally. According to research by one of the major record
companies, nearly two-thirds of Spotify users say they now engage in less piracy.
Spotify says it has two million registered users in Britain and another two million in
Sweden, Spain and France. In those countries, Spotify would go up against a number of
digital businesses that also offer free music in various ways, including MySpace Music,
imeem, Last.FM, Pandora and others. While Pandora has said it expects to be
profitable by the end of the year, analysts say most other free streaming services are
still losing money. Some advertising-supported free music sites, like SpiralFrog, have
already gone out of business (Pfanner 2009).

Music is getting more interactive to cater to the demanding consumers’ needs and
habits. The Romplr remixable iPhone app is doing exactly that, the first version of which
features three songs from Soulja Boy Tell ‘Em that users can manipulate as they play.
The inexpensive app, developed by Bell Rock & Moderati, allows fans to mute or solo
eight aspects of the songs and pepper playback with seven extra samples, so they can
be played differently each time. You can record your version for later listening and share
it via e-mail, Facebook, or the artists’ websites using an audio stream from the Romplr
site (Buskirk, 2009a). “If you’re looking at our target demo, our consumer for music, I
think kids are going to be more and more interested in doing something interactive,”
said Christian Jorg, Head of Digital at Island Def Jam Music Group, a division of
Universal. “Obviously, they love games, and they love to interact with music. Now
you’ve got an opportunity there with an iPhone app where you can actually do that.
Rather than just listen, which is great, you can also do something with it, and we’d like
to be at the forefront of allowing that for the consumer.” (Buskirk, 2009a).

Democratizing music

Some scholars have argued that the Internet offers individuals an opportunity to
voice their inner thoughts and express their creative urges (Mitra & Watts, 2002).
Internet indeed is a space where individuals are able to speak , voice or even sing
with the hope that many people around the world will listen to them. Unlike other
means of mass communication, speaking, singing or even playing music in
virtual space is a less resource intensive venture and anyone with some
computer access and rudimentary knowledge of using the Internet is able to
voice themselves. This process has definitely had an empowering effect. It has
opened up avenues and channels for individuals who might have been traditionally
powerless and voiceless, to be able to gain a sense of power over the discourses and
texts (including music) that they are able to produce, distribute and circulate on the net.
As one CEO of a music website wrote:

Getting signed, being managed, being able to write, even being able to play an
instrument proficiently are today no longer fundamental prerequisites for artists wanting
to record, release and perform their music. Instead the industry is returning to the most
basic and exciting element of all, the raw ability of an artist to communicate with their
audience on their own merits and not as the subject of colossal media hype. There are
no longer any filters, any arbiters of taste any barriers, only artists and consumers
whose appetite for music today is insatiable (Walsh, 2007).

Technology has always been the bedrock of the music industry, and the digital
technology has transformed the music industry not only in the way music is
consumed but also fundamentally in the way music is recorded and performed.
Today, low cost, high quality recording, processing and mixing solutions have
led to affordable studio time being available all over the nation. Studios are no
longer the expensive and hallowed domain of a small and exclusive clientele of
signed artists. Artists of all colors and hue are using various music websites to
build fan base and to sell their music to the public. There has been a substantial
increase in both the quality and quantity of submissions from aspiring artists to music
hosting websites like GarageBand. At the same time consumers and music afficionados
are discovering, streaming and downloading new ‘unsigned’ artists and their music on
the net, finding out where artists are playing, buying tickets and merchandise promoting
the artists and bands. Some of them are turning out to be hidden gems who would
never have been discovered if it had been left up to the A & R men and women from the
major western record companies. What is so unique about the music websites is that
they provide artists, bands and musicians the tools to sell their music, songs and
soundtracks of film/video at a price they determine without losing control of their rights
and ownership. Some artists have gone a step further and invited fans to determine how
much they would pay for an mp3 track of a song or the complete album. Radiohead
released In Rainbows (2008) initially on the Net without any price attached to it, and
distributed the CD to the stores at a later date.

The music websites like MySpace, GarageBand and others transcend some of the
traditional barriers that the entrenched music industry implemented, consequently
musicians and artists now feel free and unencumbered by institutional constraints.
Artists and bands are now in a position to regain control. Affordable recording and
instrument technology enable artists to create high quality product without record
company sponsorship and the Internet provides a distribution channel that totally
bypasses any product manufacturing costs. The new digital musician in the new digital
ecology no longer needs to pass control of their music to the established record
companies. Today, artists and musicians want an internet service that empowers them
to reach out to the millions, to the global audience. They want to distribute and market
their music on their own terms, including price and in the process maintain control of the
relationship between themselves and their fans. The musicians now have the ability to
manage this relationship to develop their community and ultimately their own success.
Out of this turmoil have arisen Napster, Grokster, Kazaa, Snocap, Mercora, LimeWire,
iTunes, MusicMatch, Yahoo! Music, Real Rhapsody and GarageBand, some legal and
some illegal. GarageBand, once an online community of musicians is now becoming the
Internet’s answer to a record label but giving much of the control to the musicians.
GarageBand uses its community to review each other’s songs and tunes in exchange
for posting their own music with an expectation that the best music will rise to the top
(Coren, 2004:2).

Struggling and unknown musicians find the Internet a great way of promoting
themselves. This is a revolutionary breakthrough for the musicians in terms of
producing, promoting and distributing their original music, bypassing the major
record labels. A report in the New York Times (Heffernan, 2006) about two unknown
guitarists from the most unlikely places in the world came as a huge surprise to many
fans of electric guitar and guitar playing. The guitar virtuoso from Taiwan, Jerry Chang
(Jerry C. as he wants to be known), turned a well known classical piece, Johann
Pachebel’s Canon in D, into a rock aria and posted his video clip including his Canon
Rock music on YouTube. Trying to imitate him and often trying to outdo him, guitarists
from other parts of the world posted their own versions of the same Jerry C’s Canon
Rock. One of them, a shy and modest young man who goes by the pseudonym FunTwo
from South Korea, caught almost every guitar lover’s attention with his phenomenal and
flawless guitar playing, taking Jerry C’s Canon Rock one step further. His video on
YouTube has been seen by more than 65 million viewers (as of Nov. 2009) since it was
posted on YouTube in 2005 (YouTube, 2005). Some even dubbed him the next Jimi
Hendrix and it was no surprise that he went on to play with Joe Satriani on YouTube
Live (YouTube, 2008). It is unthinkable that any of these two unknown guitarists would
have attained any degree of international fame within a period eight months prior to the
availability of digital technology especially the Internet. If the video of Funtwo’s Canon
Rock was on sale, it would have gone platinum long time back.

In small studios, even in homes and garages, artists and bands are busy creating
more music than ever before and releasing them on the Net. Gnarls Barkley,
Arctic Monkeys, and Nizlopi all reached No. 1 in the UK charts proving that large
communities could be established through the Internet and mobilized. The arrival
of Gnarls Barkley at No. 1, purely on download sales, was an unequivocal indication
that artists no longer required physical manufacture and distribution of CDs to achieve
success and be in the spotlight (Walsh, 2007). British rockers like the Arctic Monkeys
and Lilly Allen have built huge fan base by making their music available on MySpace
where bands can post entire songs and video clips. When the Arctic Monkeys released
their first album in 2006, it drew the highest initial sales of any debut in the history of the
British charts (Pareles 2006).

Artists/musicians are moving closer to the center of the power structure. They are
gaining more control over marketing and distribution of the music. More and
more artists are choosing to remain independent and setting up their own web-
sites to promote and distribute their music. Several artists such as Beastie Boys,
Public Enemy and Radiohead have been at the forefront of embracing these
changes in distribution modes and have offered their songs free of charge to the
public using MP3 format. These and other bands and musicians have disrupted the
supply chain and made their copyrighted music freely available on the Internet to win
back their fans. This tactical move broke the stronghold of major music labels on the
distribution channels and opened up a new one for emerging and ‘out-of-favor’ artists.
Even before the advent of the Internet, the rap music industry was fragmented. Music
major labels stayed away from rap music because of the fear of public backlash
regarding profanity and controversial music such as Cop Killer from Ice-T and Bush Killa
from Paris. The Internet soon provided independence, flexibility and swiftness to rap
artists and independent labels allowing them to move into the digital space (Grove,
1999).
British charts (Pareles 2006).

The free-flow self-expression has led to an assault on established notions of

professionalism, a legal chaos and technological remix of the folk and popular culture.
The super-abundance of self-expression has put an end to the archaic gate-keeping
mechanisms of hit-driven recording labels, risk-averse radio stations, ossified movie
studios and trend-seeking media coverage. Creativity seems to be flourishing with the
old obstacles out of the way. Technology soothsayers predicted long ago that worldwide
instantaneous distribution would democratize art as well as other discourses in the
virtual world. The virtual painting galleries, free songs, video blogs, hilarious and
raunchy clips, online novels and so on followed with the rise of the Internet and the
spread of broadband.

Low budget recording and the Internet have handed production and distribution back to
the artists, and the music portals have become the one-stop collection of user
generated music content giving the audiences and fans a chance to find songs and
music. Independent singers and musicians cannot compete with a heavily promoted
major-label artist but collectively they are a formidable competition, and multiplying
choices provide ever more diversity, possibility for innovation and endless opportunity
for aspiring musicians and singers. This has led to an increasingly fragmented audience
base, a trend which the radio and cable formats had already begun, creating a
separation of pop culture into finer and smaller niche markets. The fragmentation is a
problem for the business and it’s a strong possibility that the music business will have to
remake itself with lower and sustainable expectations along the lines of independent
labels. The audiences have a new role of sifting through all the new materials and
finding the next big indie sensation, a job that was earlier done by the A & R department
of big music companies and radio stations. A huge number of amateur, professional and
in-between songs and musical pieces are uploaded everyday on the Internet. The
listener can now spend the rest of his or her life listening to unreleased songs while for
the musicians, the Internet has become a continuous, incessant worldwide public
audition.

Greg Kot, a music critic for Chicago Tribune and co-host of a rock radio talk-show,
described how the music industry evolved in the age of Internet in his recent book
Ripped: How the wired generation revolutionized music. He noted how established
artists like Prince, Nine Inch Nails, Radiohead and Wilco thrived in the digital age and
how emerging new artists like Death Cab for Cutie, Arcade Fire and Conor Oberst used
the Net to their advantage, and provided music to the fans dissatisfied with what was
being served on the radio and at the record store. According to Kot, the music
companies committed “capitalist suicide” because “…the executives couldn’t get their
analog heads around the digital future”. The record companies had been at logger-
heads with music lovers and fans ever since the days of home taping, sampling in hip-
hop music, Napster, iPod and the constant consolidation of music companies eventually
led to the industry’s implosion. To many music industry researchers and watchers,
Ripped was another case study in American industrial arrogance where the record
companies were not quick enough to be agile and flexible. About calling music
customers “thieves’ Kot writes:

“…the moral posturing was a laughable new wrinkle. Here’s an industry that had
instituted payola, routinely manipulated shady contracts to take away publishing from
songwriters, and engaged in questionable accounting practices to deny royalties from
record sales to the vast majority of its’ artists” (Jennings, 2009).

The advent of mp3 and illegal downloads almost a decade ago ultimately helped up and
coming artists as much the same way as did home-taping did earlier. Kot told TIME
magazine: “The biggest problem a band has is getting it’s music heard…” and the digital
downloading has reversed the process by exponentially increasing the number of
platforms and sites for the musicians and songwriters to showcase and promote their
music and songs. For example, Death Cab for Cutie, an indie band playing small clubs
for “beer money”, gained the attention of listeners and TV producers of the show The
O.C. via Internet downloads; today the band has a major recording contract with Atlantic
and recognized worldwide (Szustek, 2009) O.C. via Internet downloads; today the band
has a major recording contract with Atlantic and recognized worldwide (Szustek, 2009).

Conclusion
Digital technology has played a major role in making different types of music
accessible to fans, listeners, music afficionados and downloaders all over the
world. The world of music production, consumption and distribution is no longer
the same, and the shift is placing the power back into the hands of the artists and
fans. There are now solutions available for artists to distribute their music directly to the
public while staying in total control of all the ownership, rights, creative process, pricing,
release dates and more. Gone are the days of artists having little creative control and
making miniscule amount per album sale while waiting months and years for the
payment. The music industry and it’s modus operandi does not support the ‘smaller’
artists significantly, and the industry seems to be having a hard time with the famous
and well-known, large acts as well. While over the past few years these 'smaller'
artists have become empowered like never before by using the Internet, social
networking services and blogging that has enabled them to expand their reach
from the confines of their local venues to anywhere in the world. Signing a
recording contract is beginning to look less and less appealing to more and more artists.
Clearly there are conduits now on the Internet allowing artists and musicians to
distribute and sell their music directly to their fans while remaining in total control of all
aspects. The idea of an independent or 'indie' artist is changing from the 'little guy' to the
maker of the market.

On the other end, music fans and music consumers, especially the young, expect digital
content to be interactive. Music is becoming more interactive and record companies are
releasing tracks by artists that can be customized and manipulated by the fans and
listeners. Not only does this approach give the label something new to sell but it lets
fans customize music the way they seem to customize everything else in their lives. The
Internet has reduced the world into a ‘global village’ of the kind perhaps Marshall
McLuhan had envisioned. Geographic distances and national boundaries have
become irrelevant in distribution and dissemination of music. Worldwide
presence and interactivity now allows musicians, music enthusiasts and critics to
discuss and share musical knowledge and actual music files. The vision of
musicians and their fans and music lovers ‘coming together’ without any limitations of
time and space, without any interference from meddling record companies, is being
realized virtually on the Internet.