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The MP3 Revolution
Is what's bad for music companies bad for music?

October 5, 1999
Web posted at 9 a.m. Hong Kong time, 9 p.m. EDT

Yesterday, after reading about them for a year in U.K. and U.S. magazines, I glimpsed my first portable MP3 player. Pried from the clutches of a guy in the elevator at my office, it looked and sounded great--a view not shared, I hear, by major record companies.

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Basically, MP3 means any musician can make and sell CD quality tracks without any traditional wholesaler or retailer (or, for that matter, an A&R guy). Distant rumblings from the U.S. and Europe say that MP3, which delivers digital sound files at an acceptable speed via the Internet, is combining with home CD burners to revolutionize the music industry. It's certainly no dinner party for the $40-billion plus industry's global food chain. But is that a bad thing?

The IFPI (or International Federation of Phonographic Industries) now says MP3 (which stands for Motion Picture Expert Group-1/Audio Layer 3) files are being downloaded up to 3 million times a day. The majority, it says, are pirate. Looming on the horizon for Asia's record companies: staying relevant in a world where a large portion of their traditional added value floats away like a shark's corpse removed from its tureen-bound fin.

The irony is that the prime engine that refashioned the music business from a mid-60s cottage industry into the global giant we know today has been format change, implemented roughly once a decade. It's interesting to note that the same companies crying foul at MP3 professed to care for our listening pleasure a great deal more when introducing newer, costlier formats over the years, from vinyl LPs, short-lived 8-track magazines and recordable cassettes, and, most notoriously, compact discs.

Forrester Research predicts that MP3 and other online music sales will reach 7% of all music retail sales by 2003. As yet Asia claims a fraction of that. But look at the structural problems major record companies have met growing the region's music business--couple it with ambitious Internet user projections in markets like China--and it's not unlikely that MP3 will soon rock the boat here, too.

In more established pop markets, artists ranging from the outspokenly Bolshevist music collective Chumbawumba to TAFKA Prince espouse Utopian scenarios for the MP3 revolution. First, records will be composed, recorded, produced and mixed on home PCs. (One example: Massive Attack cut its latest, "Mezzanine", on a Macintosh G3 similar to the one I'm typing on right now, employing software such as CuBase and Pro Tools for the traditional role of an expensive recording studio.

Songs and entire albums compressed, uploaded and even to an extent marketed via the Internet are now being distributed globally at the speed of light, then downloaded and burned onto a CD by the listener. Oops, where's the record company?

In Asia, where content often takes a distant second to packaging and marketing the artist--television, showcase appearances, branding mobile phones--a revolution of that sort could be a long time coming. But record companies here are now as aggressive (as they are late) in implementing their own downloadable music formats.

So just why have the majors been reluctant to embrace web-based technologies like MP3? Well, for starters because the established profit areas from the sale of recorded music will be decimated.

For one thing, major record companies are famous size queens. More than ever, the bloated sound production standards set by '70s album rock (Emerson Lake & Palmer conduct the Edmonton Philharmonic!) and the easy listening school--for years slavishly mirrored in Japanese bubblegum and Cantopop--spiral ever onwards towards a velvet vanishing point of slick, homogenized radio-friendliness. Nowhere is this more prevalent--and ripe for an Internet-led Change--than Asia. One look at an artist's contract will tell you why. The tab at a recording studio is a cost fully recoupable against an advance paid the artist. In Asia, this is often a facility owned within the group which signed the artist in the first place. And where entertainment law is in its infancy and interchangeable stars are deeply beholden to the label "family", the artist's cut is likewise limited by the group's structure. Distribution of music is tightly limited and often greatly exaggerated to boost a featured artist, and musicians and songwriters themselves are marginalized on the sidelines with little power to penetrate the manufactured star system. Hardly an environment that rewards creativity.

The same can be said of many other costs associated with recording, printing, packaging and delivering the product. The compact disc itself, the printing of the insert material, the box it comes in, the shipping and distribution, all generate profits set to vanish in a world made safe for MP3.

The bottom line: Music companies aren't championing the MP3 format for the simple reason that it removes so much fat from their balance sheets.

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