Great article by The Telegraph from the other day:

Record labels should make MP3s free, and freely shareable

I strongly agree with a lot of the points this article makes, but I don’t totally agree with the article’s main point - that giving away music for free is the answer.  Yes, record labels should stop suing their customers, that’s a given, and giving away some music for free is good business, but I think subscription streaming services are the answer that the industry has been looking for all these years.  

Record labels should be licensing ALL of the music in their catalogues to these services.  Like today.  Now.  Yesterday.  It’s not that this will instantly eradicate file sharing networks (those are never going away), but I think subscription services will get a lot of people to start spending money on music again, and some money is better than no money.  As the Telegraph says:

Piracy cannot be eradicated. It doesn’t matter if every BitTorrent tracker is shut down, every server hosting every torrent directory seized. Determined pirates will just switch to a new type of technology – such as streaming via sites like RapidShare – and the mainstream will eventually follow. (It’s already happening in France, where streaming is the new file-sharing.)

You can’t stop the activity of free file sharing itself so there’s no point in suing people to try to discourage that behavior.  Instead, you need to give people a better option - a “free” file sharing product that’s drastically more convenient that consumers are actually willing to pay for.  

In my view, giving music away for free is only part of the answer.  It’s not that the music itself is worthless as that implies.  What really needs to happen is for the price of music to be adjusted, and that’s exactly what subscription streaming services do (since you’re paying what you used to pay for a single album - about $10 - for monthly all you can eat access).  The Telegraph acknowledges this, but I think the point deserves greater emphasis.

I personally believe that subscription services are the future now that technology has advanced to such a point as to make these services very user-friendly and convenient (the iPhone, iOS4, Android, apps that play in the background, and downloads for offline listening).  Using rdio for the last month has convinced me of this, and the popularity of Spotify overseas further supports this idea.  Subscription services are just a lot more convenient than file sharing networks in a lot of ways.  And the good ones, like rdio, have discovery and social features that make them very engaging, which gets even casual music fans listening to more music (and a greater variety of music).  So people will pay for these services because they’re more convenient than file sharing networks, and some revenue is better than zero revenue for record labels.  Also, if these services don’t have to worry as much about licensing, they’ll be free to innovate and make their services even more engaging over time, further discouraging the use of file sharing networks.

I don’t think it’s wrong to ask people to pay for the music itself - the music itself has tremendous value - it’s just that the pricing is currently way too high.  Subscription services offer a way to adjust the price of music to be more inline with market forces, to turn previously chunky expenditures on music into recurring revenue streams, and to get people engaged with artists so they’ll spend their music dollars on other products (such as vinyl, DVDs / videos, merch, and concert tickets).

I’m not saying that record labels shouldn’t also give away a lot of music for free.  They totally should - bands should tweet free MP3 downloads to get people to come to their websites, record labels should put out free music samplers, etc.  But they should also make all this music available on subscription services - like as soon as the record’s released.  People consume music in a lot of different ways (and this isn’t going to change anytime soon) so the music should be in as many places as possible so it’s being discovered by more people.  Record labels should be licensing their music to just about every subscription service there is, or at least the good ones, like rdio, MOG, Spotify, Google Music when it launches, and whatever Apple’s been working on since it acquired Lala.  Now that the industry has established price points that everyone more or less agrees on ($5 / month for all you can eat browser-based streaming, and $10 / month for mobile access), I think we’re going to see subscription services start to take off.

In fact, in my experience, subscription services almost feel free.  If you’re used to buying multiple $8-10 albums in a given month, than $10 a month is nothing - you’re saving a ton of money by subscribing (I already have).  And even if you don’t spend a lot of money on music, the $10 gets charged to your credit card each month automatically so you don’t even think about it.  $10 is nothing in the context of your monthly spending - that’s like two drinks at the bar on Thursday (if you’re lucky / don’t live in New York).

So there’s just no point in fighting it anymore.  It’s going to happen.  Not quickly, but over time.  The point is, record labels and bands should be both giving away their music for free (for promotional purposes) AND licensing it to subscription services (where they’ll get paid something).  Together, these two strategies will go a long way towards reducing “illegal” file sharing and allow record labels to once again benefit from pure music consumption, either promotionally or monetarily.