The nature of ownership changes as property becomes more intangible

Not all are equal...

Digital music is now 15% of the total music market, or $ 2.9 billion in 2007 – up 40% from 2006; however, the market as a whole has shrunk by 10% to $ 17.6 billion; for every song sold legally, some 20 songs are swapped illegally.

The Warner Music Group (WMG) is well aware of the problem, and also recognises the limitations of the current approach to dealing with illegal file and music sharing. The current approach is that, where file-sharers are identified, they get lawyer’s letters demanding that they pay a fine and license fees. Students around the world have been threatened in this way and the result has been raging animosity.

File-sharing hosts, such as Napster, have been shut down, but file-sharing continues.

WMG is in the process of developing a blanket licensing approach for university campuses. Most of the file-sharing community are students, and so they feel that this will solve a good deal of their problem. “We are undertaking an effort to develop new voluntary business models that seek something other than—and we believe, better than—a litigation-based approach,” says Jim Griffin, a consultant hired by WMG to come up with new approaches to licensing.

The current idea is that universities will charge a flat rate from students who will then have the right to download any amount of music. Market sampling of the student population will allow collation of the artists students are listening to so that appropriate license fees can be paid to the musicians.

This follows on the model developed by Nokia, a cell-phone company, called Comes With Music, where certain of their phones come with unlimited music downloads. The license fees, in this case, are included in the purchase price for the phone itself.

Clearly these are much more complicated business models than the old box-driven sales approach. The nature of property is changing. More and more of what we trade and exchange is now intangible. As that happens, the propensity for property theft becomes easier and easier.

The music industry is suffering the most, with their relatively low-cost product and the expansion of broadband. Film-producers will suffer next, as high-speed broadband becomes even more ubiquitous.

These new licensing models are an innovative approach to solving the difficulty and ensuring that the things people like can still be financially viable.

It also poses the question as to whether or not other forms of property can receive a similar boost from new models of payment and ownership.

Fractional ownership of property has allowed millions to enjoy holiday homes they couldn’t otherwise afford. A similar approach to owning executive jets has reduced the cost to almost that of a regular first-class air ticket and increased the sales of small private jets tremendously.

Municipal taxation is supposed to achieve something similar; allowing communities to share the incredible costs of piped water, sewerage, roads and policing.

It is almost as if music, and telecommunications, are becoming commoditised to the point where they are considered as much a part of everyday life as electricity and water.
However, the danger here is that, if feedback is lost, if consumers lose the ability to influence the product they receive through direct purchasing behaviour, the final product starts to devolve.

A right to electricity, which everyone pays for, becomes an obligation to pay for Eskom irrespective of their incapacity to deliver, and everyone continues to pay.

A world in which music is paid for as an obligation, rather than a choice, is a world filled with cheap synthesised knock-offs and hours-and-hours of some politician’s cousin yodelling along with an accordion.

As new forms of property licensing develop, it is essential that customers continue to be able to hold their service providers to account. Unless, of course, you like accordion music.