Into The Unknown

Ok, these thoughts have been simmering on my brain's back burner for a while now. In preparation for my open letter to the music industry, I thought I'd warm up with a little brainstorming of my own, laid out in public for all to see.

We're hardly short of recent developments in the digital music arena: RealNetworks is launching an MP3 online music store under the Rhapsody brand, teaming up with the music discovery service iLike and US mobile provider Verizon - most likely with an aim to compete against AmazonMP3 and iTunes Plus. Warner Music has finally relinquished and agreed to distribute its music catalogue on Nokia's "Comes With Music" digital platform - less than a year after withholding its content from the same platform due to 'concerns over illegal downloading' (...your guess is as good as mine on this one). The $5-a-month RED music subscription service launched to much fanfare, with the promise of raising money to combat AIDS... And the BPI proudly announced that label revenue, outside of traditional direct music sales, is up 14% this year (t0 £121.6m), which makes a change from the cries of doom and gloom we usually hear.

(Oh, and Prince is suing people again for ludicrous reasons, which just amuses me.)

You might think that this is all well and good, and that things are slowly looking up - but I continue to be disappointed by the lack of progress the industry is making in the online sector. In fact, I think the current situation we have is actually worsening the situation for everyone, and it frustrates me. As a result of this, in my free moments, I've been pondering a solution which I think is quite workable, would benefit all involved in the industry (from labels to artists) and wouldn't be that hard to implement - and I'll explain. In due course.

But first, an overview of the new RealNetworks MP3 service... Their DRM-free platform is a step in the right direction, but I still find myself left wanting. From the DownloadSquad article covering the launch;

The Rhapsody MP3 store has music from all four major labels, with over 5 million tracks available for download. Most songs are priced at 99 cents, and most albums cost $9.99. That's about the same price that Apple charges for DRM-free AAC audio files, but a bit more than Amazon MP3 charges for many songs and albums. All songs will be encoded at 256kbps, and will be playable on any device that can handle MP3 audio. RealNetworks isn't killing off its DRM-restricted music service, but rather, plans to have the two services peacefully coexist. You can pay $12.99 a month to stream unlimited music to your computer, or you can pay per download to save songs that you can play forever.

RealNetworks is also rolling out a service that will let Verizon Wireless customers download music for their handsets. For $15 a month, users will be able to download an unlimited number of songs (with DRM) on a Windows PC and sync those songs with their cellphone. Currently seven handsets are supported, with several more coming soon.

The Rhapsody MP3 store is offering a $10 credit to the first 100,000 customers who purchase an album by July 4th. You need to sign up for an account and fork over your credit card information to qualify. But hey, free music, right?

All four majors... To the rest of us, that's Warner, Universal, SonyBMG and EMI. 'Right, 256kbps MP3 - that's great quality,' you might think, but you'd be wrong. The quality of online offerings is slowly increasing, but at a much slower rate of change than both the storage industry's developments in raw storage capacity and the computing industry's developments in raw computing power. Once again, an industry artificially stymied by the lack of willingness of its participants to move with the times. That said, whilst a 256kbps bitrate isn't ideal, I agree that this higher quality audio is better for both the customer and the industry as a whole (which, aside from a couple of notable exceptions, still seems somewhat reticent to up the quality of its digital music offerings - although there are no downsides to doing so already). But (and it's a big but) anyone who buys an MP3, WMA or iTunes AAC file when the CD is available is an idiot for helping to perpetuate this flawed business model. Why do I yammer on so much about buying CDs? Well, it boils down to quality and ability. Why does the quality matter so much? Because we as consumers need to be future-proofed. Until an online music store offers their music in a truly CD-quality format, the industry is doomed to repeat itself ad nauseum, and we'll never make any real progress in moving our music consumption from the expensive (for everyone) physical world to the higher-profit, digital world.

Why do people still buy CDs? Well, they're one of the only truly future-proofed formats left, as they can be encoded to whatever format is the format du jour. Want to put some of your classic 2004 rock music onto your 2-terabyte, thumbnail-sized digital music player, using the best format around at the time? Sure thing, just rip the tracks from the CD, encode them, and plop them onto your device. Sorted. You have the ability to do so at any time, and the quality of the original is sufficient to do so too. You wouldn't dream of reencoding an MP3 or WMA file - it would sound even worse than it did the first time.


I will not be satisfied with the retail digital music industry until they stop exclusively dealing in lossy audio formats. The general buying public have the herd mentality, unfortunately - they sometimes can't see past their nose, and this has been happening for a few years now. Put simply: Rhapsody is a con. iTunes is a con. AmazonMP3 is a con. We7 is a con. Any and all online digital music stores that don't offer PCM audio or lossless download options are, when push comes to shove, blithely conning their customers. Linn Records is breaking the mould in the classical arena - in some cases offering albums in 24/96 FLAC 'studio master' quality, higher quality than the retail CDs(!) - and they should be both encouraged and heartily congratulated for going against the grain. Similarly, electronica retailer Beatport has offered PCM audio downloads at an acceptable price point for some time now, as have a few niche labels' own web sites - unfortunately nowhere near enough sales to even make a dent on current consumer trends in the digital music retail market.

The Big Four labels, and the major online retailers they sell through, might counter that they are mainly responding to demand for the most popular formats like MP4-AAC, MP3 and WMA with the current online store offerings - but who is going to take that next step and dare to be radically different by offering a service BEFORE the market asks for it? If that step isn't taken, the market will never realise that it's both feasible and reasonable to expect it. We have a classic chicken and egg situation, except knowledgeable people and the labels themselves already know the answer - the labels just seem to want to ignore it for a while. Sticking one's head in the sand was never a bright idea, especially in this day and age.


By the way, if you're wondering what lossless audio is - logically, it's the exact opposite of lossy audio... And MP3, AAC and even Ogg are all lossy formats. (For some info, read this and for an excellent primer - with pictures! - read this ExtremeTech article.) The reason MP3s are so small is because when they are encoded, not all of the original audio information is retained - the codec uses clever techniques to 'recreate' the missing/lost portions of the audio spectrum, and each codec has its own algorithms which result in either increased efficiency under certain circumstances or improved filesizes. Lossless audio formats are formats like FLAC, ALAC and Monkey's Audio, which are still digital music files (just like MP3s in this respect) but which contain ALL of the original audio information from the source, compressed in such a way that none of the information is lost forever. So, if you create a FLAC file of a track you've ripped from a CD, you effectively have an identical, 1:1 copy of that audio in said FLAC file. This would not be so had you made an MP3 instead. If you burn that track to an audio CD from the FLAC file, the track on the CD you've just burnt it will sound absolutely identical to the original because it effectively IS the original. The beauty of digital copying at its simplest (and the root cause of the music industry's past decade of squirming, too).

MP3s, no matter how well they've been encoded and decoded, are never quite the same as the original - they might sound slightly different, the audio spectrum will definitely be different from the original and you will, to put it bluntly, have lost some of the sound. I know this is an oversimplification, but think of an MP3 - even a high quality one - as a fresh tape cassette recording from a CD. You'll never have the track in the same quality you would have if you had the CD in your hands.



So, why am I going on about quality? Well, because I think we still pay far too much for what we get, and the market has a bit of a cartel effect going - there is no way to shop around, like there is for physical CDs. The music labels are pushing mandatory minimum percentages onto the distributors as a final act of desperation, meaning the retailers have to enforce an artificially high price for their music in order to even make a half-decent profit for themselves. As a result of this, barring the few online music stores that work on either a subscription basis (eMusic) or a popularity basis (like the indie-centric Amie.st) there is no disparity in prices between one online music store and another.

Look at the price point for buying an MP3 from one of the panoply of legal download sites. Between 79 and 99 cents? 79p for an iTunes file (99p for iTunes Plus) if you're in the UK? For what... A 'nearly-there' copy of a track? It might sound ok through your crap iPod headphones, but what happens when you want to play it on your good soundsystem at home? What happens if you get one of those nice networked streaming audio devices like a Squeezebox or a Sonos? You want as high quality as possible to get the most from your music, but you're stuck with your awful quality MP3s.

What happens in a couple of years when my precious music collection, which I've paid for of course, becomes complete obsolete - just because it's all been encoded at a low bitrate in a format which is more than a decade old? If I had the CDs, I could just reencode them in a better format. An increasing amount of people, myself included, are buying albums, ripping them and encoding them to lossless audio formats such as FLAC, and then storing away the original purchases to make sure that they don't get scratched / broken / lost. Sites like MP3Tunes offer you secure, private online lockers in which you can archive very high quality audio for streaming to wherever you are at that time, be it work, home or elsewhere. (Incidentally, EMI have once again hilariously misinterpreted MP3Tunes' core concept, and are trying to sue the company out of existence under the misguided assumption that it is intended to aid piracy, instead of promote responsible safeguarding of your own music. Send EMI hatemail until they see sense.)

Companies are marketing devices which store your music in archive quality and make it instantly accessible over your local network, or even over your Internet connection to any device which has web access - this is just the tip of the iceberg. Even my old iRiver H140 MP3 player can play FLACs with a bit of custom firmware - I just load them on via its USB cable as I would do an MP3 or an Ogg file, and I can listen to them straight from its internal hard drive. I can also play them on my PC just like I'd do with MP3s.


Still with me? Good, let's talk shop. Let's work in US dollars for the moment so we can do some comparisons. If we look at the sweet spot for album pricing from a US high street retailer, we can see that the most popular range is between $10 and $14. (this is according to Best Buy's site, which lists the amount of items in each category). Coldplay's new album is on sale for $13.99. (From Amazon.com, it's $9.99, but I'll use the RRP here even though in reality few online retailers actually use it as a guide price). The album has 10 tracks on it, and at $0.99 each, the 256kbps download from Rhapsody clocks in at $9.90. For albums with more than 12 tracks on, buying the physical album can actually be cheaper than buying the same album as a digital download. (11x$0.99 = $11.09). With an increasing amount of stores even offering free delivery on all purchases, many are realising that the instant gratification itch can wait to be scratched for a day or so. But yet, we are still left wanting something... Something a little more flexible, a little more value for money, a way to get the true CD quality without going to the hassle of ordering the CD (or travelling to the store to pick it up). 'Surely it must be possible,' and you'd be right.


The problem with today's digital music stores

If you buy all your music from iTunes - or indeed any online music store locked into a proprietary format, with or without DRM, you're tieing yourself into a locked-down system which mandates that you store your music in a particular format. Unluckily, with some (Apple's iTunes) you're even tied to one manufacturer's device to listen to your music unless you pay a premium on top of the already-expensive regular prices - and the quality isn't even that good for your money. MP3 stores aren't much better, although it's definitely an improvement in terms of being able to move your music to whichever device you happen to own at the time, and you can create (albeit lower quality) CDs to play in your car. The latter also goes for iTunes-purchased music, but it's not an excuse for using a proprietary format (or a lossy one, for that matter).

Amazon MP3, iTunes and a few other providers have absolutely no technical excuse for only offering lossy files - when labels deliver their catalogue to these providers, they have to supply it in lossless format. iTunes Producer rips CDs to PCM audio and uploads it directly to Apple; Amazon MP3 accept CDs in the post, PCM audio or FLAC audio with the appropriate metadata accompanying the files, as do a lot of other providers. Why? Well, so they can reencode the tracks to higher quality... or different formats... should the need arise. If you leave it up to them, you are at their mercy. If you demand the highest quality audio in the first place, you can do as you like when you like. Whatever happened to consumer choice?



So, here's my solution for the digital music retail industry.

Offer all music sold via this new online service in one format, and one format only: FLAC. FLAC is open-source, meaning it's free for everybody to use, and it's cross-platform. The FLAC software and FLAC files are useable on Mac, PC, Unix, Linux and a host of other platforms. No 'vendor tie-in'. The format works on agreed standards too, so both PCs and portable devices can incorporate the standard safe in the knowledge that it won't change in six months' time - so you can get in-car stereos with CDR support and FLAC playback ability! Several albums' worth of music in true CD quality on one data CD which will play in my car and on my PC at home? Excellent.


So, you sell all your music in FLAC format. You also sell the audio for the same price as MP3s are currently sold for: 79-99 cents. You offer whole-album prices. Offer the whole album for a fixed price, which always works out slightly less buying the album's tracks individually and is around the 9-11 dollar mark. However, you still let your customers go a la carte and pay per track. There are a couple of advantages to this: some people might want only a couple of tracks from an album, so that option isn't removed from them. Some people might already have the CD, but they may be trying to encode the album to MP3 for their MP3 player and tracks 2 and 6 might be on a part of the CD which has been too badly scratched (from years of being thrown about in a CD wallet in the car!) - so now the customer can just buy and download FLAC copies of tracks 2 and 6, make their MP3s and make another CDR of the original album for their archive. You get more revenue from an extra, otherwise impossible sale, and the customer has their music in the format they want. Perfect.


You cannot charge a big premium for this service, and the labels will have to come to terms with this. There is, of course no DRM on this service, but DRM is dead, and has been for a long time - it was the great placebo of online digital music retail for too long. Labels might be scared by this - truly CD-quality audio, no DRM... I can already hear the cries of "truly CD quality music available with no protection? All it needs is one person to buy it and share it with everybody else, and we've lost all our revenue!" What do I say to this? Of course they will you idiot - but then, music fans have always done this. Sites like Project Playlist, along with all the existing music blogs, are a magical way to discover new music for yourself (and unfortunately, like any groundbreaking service which dares to be different, the industry can often be found doing its utmost to sue them out of existence).

You only fool yourself if you believe this pattern of usage to be unusual. Almost everyone has either lent or copied a CD of theirs for to a friend, particularly if they are introducing said friend to an artist for the first time. The sharing of purchased music amongst circles of friends is intrinsic to the success of an artist. MP3s made this a whole lot easier, but this practice didn't suddenly start in the 90s.

So, FLACs, no DRM, same price point as current MP3/WMA online offerings.


What is the icing on the cake? Well, you devise a platform which not only provides the digital audio for the core price, you also provide the artwork - and you can charge a little more for this (say, $1/£1) but ideally, it's included in the price of the music so everyone gets it for free. Why? Well, this is the icing on the cake. Let me explain my thought process here.

If I want to buy a new CD, I usually have two options:

1. Go to a shop, buy the CD and go home.
2. Go to a shop's web site, buy the CD and wait for it to be delivered.

Both of these are not particularly efficient ways of getting what I wanted - they involve travel, waiting and cost to both the retailer and myself (travel costs, all the usual costs of running a retail shop and everything else). I might want my audio in as high a quality as I can achieve, but I'm not 100% bothered about the quality of the packaging - it's not like it affects the sound of the music, it's just a bit of pretty artwork. So, you market the service as "bring your own jewel case. We supply the rest."

Here is the killer app: you create your own, pre-scored blank template pages, onto which artwork can be printed and directly placed inside an empty jewel case. You then offer the high quality artwork in a PDF-based file, formatted to the correct size so that it fits exactly inside a jewel case, and you provide it with the audio files at the time of purchase. You write a simple-to-use program for PC, Mac and Linux which streamlines the whole process of printing off the artwork - either the customer can buy some of this custom, blank-template paper, or use their own A4 sheets (and a pair of scissors) - and they print out their own high quality, full colour artwork on their own printer. A few minutes later, and they have the artwork at exactly the right dimensions if they want it. They pop it into their own jewel case, burn the FLAC audio to either FLAC (data) or PCM (audio) CD, and they have an exact copy of the music - just like an old-skool, silk-screened retail CD, with the exception that they've burnt this CD themselves.

Why pursue this method of distribution? The reasons are threefold:

• All of the traditional distribution costs of physical CDs are instantly eliminated; there is no need for minimum pressing runs of a thousand units or so, so less warehouse space is needed for unsold stock. Everybody's carbon footprints reduce - no distribution of stock from manufacturer to distributor to customer is required, no massive energy usage required to manufacture the products in the first place, and even the customer doesn't need to drive to the shop to buy the CD. Given the way the price of petrol is increasing, this could seal the deal on its own.
  
• Tracking of sales, royalties and other monies is far, far simpler. For every purchase you have a detailed audit trail, and a standardised method of logging all this important sales data can be used to ensure that the appropriate information is passed to the appropriate bodies for further meteing out to artists and labels. Mechanicals, a legacy royalty from the days of vinyl pressing (literally, a 'mechanical royalty', paid for each unit you pressed of a record) become far more relevant than they have ever been for current digital sales. A mechanical on an audio file which is exactly equivalent in quality to the original CD audio is quite acceptable, whereas a mechanical fee for an MP3 is almost laughable, yet the industry still enforces it because they can. (a tangible, per-unit fee on an intangible item... you make your own mind up about that)
  
• Distribution is streamlined. The album can go on sale as soon as the master copies of the audio and artwork are uploaded to the central storage point for sale to customers. The traditional delays - manufacturing turnaround times, etc - are gone. Just like that. You might have to wait for your artwork to be finished, but you can always offer that as a later, free download if you want to sell as soon as possible. Oh, and another pleasant side effect of this is that physical items will become much more of a 'special' item, as opposed to a commodity - see the resurgence of the 7" single as a 'limited edition' value-added purchase? The pressed CD could quickly fall into the same category - value added, with the appropriate (moderate) price premium. Of course, something else would have to be offered (exclusive content or goodies inside the jewel case combined with limited edition packaging), so the traditional CD wouldn't die out just yet.

The sensitive topic of job losses is unavoidable at this point. Yes, as a result of these kinds of sweeping changes, some people in both the music and peripheral industries would possibly lose their jobs, notably at companies who supply the traditional music industry - pressing plants, for example, and the printing companies who supply these plants with the finished artwork. But then again, vinyl production has been trickling along for more than a decade since the original rise of the CD, and some genres of music are still based almost entirely around the 12" vinyl as the primary method of distribution. (I happily pay £5 a time for a two-track 12".) Of course, physical production costs might increase again as a result of this move away from pre-manufactured physicals, but this would also be expected. While job cuts are an unfortunate side-effect of a changing industry, this wouldn't be unforeseen, so it wouldn't come as that much of a shock. Change is painful sometimes, but it's for the best.

Nonetheless, this concept is great for the environment, fantastic for the customer and even better for the artists! Treat the customer like a customer, instead of a mere consumer who is lucky to even have access to any kind of digital music, and you foster an attitude between music fans and labels which is far more healthy for the music industry. Give customers what they want and trust them to be adult about it - it's a return to pre-digital mindsets. You buy the music, you get it in a format with which you can do what you like, and you're treated with the maturity and respect a customer deserves. And, in response, you treat the artist with more respect, and you don't set about making copies of the album for every Tom, Dick and Harry who happen to ask for a copy of it. All that I've laid out is with a core aim of revaluing music (as opposed to devaluing), and I believe it could really be very successful.

Why this kind of service has not launched yet is beyond me, and I find it incredibly frustrating. As a knowledgeable fan of both technology and music, this is entirely possible - in fact, it's quite doable with today's technology - and you might as well corner the market niche before other people realise that there is money to be made in catering for people who want that top quality. Unfortunately, I don't think the music industry is ready for this yet - they will be need to be in truly dire straits before they will agree that this kind of service is what's needed to satisfy consumers, and by that time the golden opportunity will have passed. Case in point: AllOfMP3. Instead of squabbling over royalties, legalities and suchlike, they should have taken a step back and analysed the platform. Technologically, it was very different and quite brilliant - the higher the quality file you wanted to download, the more you paid. For 128kbps MP3s, you paid a few pence, and for FLAC, you paid a few times more. Even so, it was still a very good price. You could choose from many different preset and custom formats, Ogg, FLAC, PCM, VBR MP3, CBR MP3, WMA... Whatever you wanted, it was all there. Music industry - why are you tieing yourself down to just a couple of predefined formats when it's clear consumers want more choice?

If I had some Venture Capital funding and could bring a few likeminded people on board to help bring this kind of project to the public, I think I would probably launch this service right now. The market is ripe for this kind of quantum leap, but unfortunately the incumbent labels and online retailers only want to milk every last penny of revenue from the inadequate platforms they currently operate.

Give it 18 months or so, and I bet that a service similar to this will go into development or even launch. Consumers are increasingly aware of the quality of music, and the actual cost versus perceived cost to labels and artists for distributing their music online. They are also increasingly becoming connoiseurs of quality - so to offer this ultimate tier of quality for a reasonable price and instant download is the only feasible way forward. Now then, all that's left to be done is make the labels wake up and smell the coffee. - shouldn't be too hard, right?

... Right?