The Music Never Stopped

They’re a band beyond description

Like Jehovah’s favorite choir People joining hand in hand While the music plays the band Lord they’re setting us on fire Crazy rooster crowing midnight Balls of lightning roll along Old men sing about their dreams Women laugh and children scream And the band keeps playing on Keep on dancing through to daylight Greet the morning air with song

No one’s noticed but the band’s all packed and gone

Was it ever here at all?

But they kept on dancing

Come on children, come on children

Come on clap your hands

Well the cool breeze came on Tuesday

And the corn’s a bumper crop And the fields are full of dancing Full of singing and romancing The music never stopped.³

Let’s back up a bit, to a time when the music business seemed lucrative and the perils of digitization appeared to be far in the future.

The music business has been around for a long time. It’s in the Bible, in Greek mythology, and in just about every aboriginal culture that we’ve ever uncovered. Throughout most of its history, though, the underlying business model was pretty simple. Most musicians played for handouts. A few performers would get together to play, a handful of patrons would gather to listen, and if they liked what they heard they’d offer the players coins or food or sex or something else of value. Then everyone would pack up and go home, and there would be no more music until someone else decided to perform. A few musicians may have been lucky enough to secure steady work, serving as temple trumpeters or singers, court musicians, or some such important role. While they may have performed for a salary, the model was essentially the same: they played, people listened, and then everyone went home.

That began to change when someone figured out how to transcribe musical compositions. These “music writers” encoded notes and into­nations; anyone who saw what they had written and knew how to read their musical language could recreate a performance. Their handwritten code created an entirely new “thing.” It certainly wasn’t music—it didn’t require performers, and you couldn’t listen to it. Instead, it was a set of instructions that explained to people how to produce a reasonably reli­able reproduction of some earlier musical performance. In other words, it was information about music, the first step toward converting music into an information industry.

But these handwritten music codes did more than that. They opened up new business models. Suddenly, people could compose “records” of what music was supposed to sound like. “Distributors” could move those records around, and multiple performers could learn to translate a composer’s conception into actual music. Patrons, fans, and listeners continued to pay performers under the two old models but new people could also get into the act. After all, composition was a value-added skill—and thus warranted compensation. So, for that matter, were transcription and distribution.

This new industry grew around specialized talents. Some folks com­posed, others transcribed multiple copies of the compositions, and still others distributed those copies. Way down at the opposite ends of this chain lay the two original—and still the only two indispensable— members of the music community, the performers and the listeners. Now, I don’t know precisely how the composers, transcribers, distributors, and performers split the revenues from this new business, and in truth I don’t much care. What I do care about is that two parallel “music businesses” developed; one converted music into information and distributed it as information, while the second converted that information back into music. Those are, in fact, distinct businesses that require distinct busi­ness models, though some folks undoubtedly contributed to both, and some of the revenue models may have integrated them into a single operation.

Both parts of the industry improved over time. Instruments got better, performers spent more time training, and published music improved to help standardize that training. Meanwhile, the printing press replaced transcription and distribution became easier and more lucrative. Of course, not everyone could enter this lucrative business. To begin with, it required owning a printing press—a fairly significant capital invest­ment beyond the reach of most consumers. But even that expense came down over time; by the nineteenth century a fair number of printing presses were in operation. The nineteenth century is a good place to pick up the story because it brings us into the era of American commerce and lets us consider the country’s music businesses, and it lands us at a junc­ture where technology was poised to take another great leap forward.

By that time, entrants into the music-publishing business also had to contend with IP rights. Congress presumably had decided that it could promote musical innovation by granting composers time-limited copy­rights on their compositions. Music publishers had to pay for those rights to distribute those compositions as sheet music. Consumers could thus choose between published sheet music of “old” unprotected composi­tions or “new” protected compositions, which likely sold at a premium. Publishers could justify this premium in two ways. First, their costs were higher—after all, they had to pay the composer. Second, because they owned the rights to the composition, they were its exclusive publishers. The market for old sheet music was much more competitive; anyone with a printing press and a distribution network could enter.

Then technological innovation added a new complication. Someone invented a mechanical device that could play music all by itself! For the first time in the history of music, a consumer could go out, buy a “box,” install it at home, and flip a switch to hear music. No publication, no circulation, no performers.

These middlemen whose businesses relied upon printing and distrib­uting copies of music encoded as information turned to Congress for help. After a bit of tinkering with the copyright laws, and the addition of a few special rules governing musical IP rights, Congress found a way to allow both the traditional distributors and their new competitors to make money selling music. So Congress, acting pursuant to its powers under the IP clause, made the world safe for the player piano. The world of music would never be the same.

The player piano was but the first of many technological innovations to alter the music industry. Player pianos were really primitive musical computers. To play music, they required a piano roll, which looked more than a bit like the punch cards used in computer rooms into the 1980s. These rolls of paper held coded music, not in some written form, but rather in the binary language of “paper and holes.” This language, which bore little resemblance to anything that human would recognize as music, told a piano-shaped input/output device how to decode them into music.

Voila! Music was now entirely within the information sector. Of course, the rest of the music business kept on going. Player pianos were hardly the cheapest devices on the planet, and entering the piano-roll business still required a respectable capital investment. Equipment and distribution limited competition, kept prices at levels capable of gener­ating profits, and overall made for a nice little business. At the same time, the fidelity of music reproduced by player pianos was less than stellar. While adequate for saloons, it was hardly up to symphonic standards.

The player piano marked the beginning of the modern expansion of IP rights.⁴ Every few decades, a new technology threatens the business model of music distribution—and a familiar pattern follows. The scions of music information appeal to Congress for stronger IP protection. The promoters of the new technology and a handful of early-adopting con­sumers oppose them. Congress listens to both sides, tells them to work out a compromise, and then buys into whatever deal they work out. Invariably, that deal contains something for the music information business, something for the new technologists, something for the early adopters, and (SURPRISE!) nothing for everyone not sitting at the table.

So far, no one in Congress has ever bothered to ask whether any of these new deals were consistent with the Constitutional charge to promote innovation. By and large, any bill that’s supported by every vocal group, that’s likely to hurt only those who aren’t paying attention to it, and whose damage is likely to be long-term and diffuse, will win overwhelming majorities of both the House and the Senate. And so, the IP rights protecting music—and often the IP rights protecting many other industries, as well—grow stronger and longer with time, without any explicit analysis of either their costs to society or their benefits in promoting innovation. And with each such increase, the Jeremiahs grow more numerous and their lamentations grow louder—until, as we learned in chapter 2, the Supreme Court agreed to let Larry Lessig argue that they had gone too far. But his arguments proved unconvincing. Justice Ginsburg, writing for a 7-2 majority of the Court, explained to him—and to us—in no uncertain terms that Congress can pretty much do whatever it damn pleases to strengthen IP rights, and even to strengthen them retroactively.⁵ Despite a pointed challenge by Justice Stevens, she never told us whether Congress retained the same unfettered discretion to weaken rights retroactively.⁶

But I digress.

The Supreme Court refused. The Court agreed that the Betamax cer­tainly gave consumers the ability to make unauthorized copies, but noted that not all uses of those copies necessarily infringed the studios’ rights.⁷ Copyright law contains a provision known as “fair use,” which shows that we never gave copyright owners absolute or unfettered rights over their creations. Now, no one knows exactly what constitutes a fair use and what doesn’t, or where to draw the line between them. So every now and then, we have to go to court to see what’s fair and what isn’t. For example, we’ve learned that it’s “fair” for a teacher to copy a couple of pages from a book—including this one—and give them to her students. But it’s not fair for her to copy the entire book and to sell it to her stu­dents.⁸ The Supreme Court told the studios that the same was true with TV programs. It’s “fair” for me to tape Sex and the City, watch it later (“time shifting”), rewind it, and review key passages to gain insights into contemporary sociology. But I cannot “fairly” show that tape later on a big screen TV in a bar, charge admission, and turn it into a public per­formance. And so, the Supreme Court reasoned that since consumers had legitimate noninfringing reasons to want VCR technology, they were entitled to own it. If some users decided to misuse the technology by infringing the studios’ rights, that wasn’t Sony’s fault—or problem. Once again, technology opened new alternatives, the law explained which of these alternatives would actually become inexpensive, and economic incentives motivated the studios to devise new business models consis­tent with technology and law. The studios responded, and Hollywood recovered.

More and more of the entertainment business came to hinge on infor- mation—and no part of entertainment made the transition faster than music. This transition happened in several stages, but each stage followed a common pattern. First someone figured out how to convert entertain­ment into finer gradations of information. Next, someone else devised a way to record and to transmit that information using expensive tech- nology—and the folks who owned that technology learned how to profit from transmission or distribution. Then the cost of manipulating that information plummeted and widespread entry became easy. Rampant competition (at times from consumers in their own homes) drove down distribution prices. The distributors needed some way to keep their profits up, so they turned to IP law. Sometimes they got what they wanted; other times they had to change their business models.

Yet somehow, through it all, the middlemen known as the record com­panies and the movie studios persevered. In stage after stage, facing tech­nology after technology, the record companies have used their talent scouts to find exciting new performers, their expensive equipment to enhance and to capture the performances, and their distribution net­works to spread these recordings among the performer’s fan base—and somehow, no matter what technology threw in their path, the music never stopped. Nor, for that matter, did the profits.