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How will technology change the way we make money from music?

Ever since the invention of the gramophone, technology has changed the way composers and musicians are paid for their work. But will composers and musicians still get paid in the future, or will music be free?

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In the early days of recording, manufacturers of gramophones made their own recordings, otherwise there wouldn't have been any records to play.

When independent record companies emerged, laws were passed to ensure that they could record music without having to get permission first (as long as the music had already at least once been recorded and released). This legislation still exists in the US.

Soon, a business model was established that has lasted right up to the present day - make a recording, manufacture it in physical form and sell copies. Whether the copies are on 78 rpm discs, vinyl or CD, the business model is the same.

But now we have downloads without physical presence. You can buy a download that consists of nothing more than a stream of ones and zeroes. It's a new business model that works. People are prepared to pay for downloads.

But there is another business model in music - radio. It works like this - you buy a radio set and listen to music for free. Hey, that sounds good! Well, good for the listener but maybe not so good for composers and musicians.

But radio makes money from advertising (and the BBC licence fee in the UK). A proportion of that money is distributed to the owners of the recordings that are broadcast, and the composers and musicians involved.

The potential problem here though is that people could make recordings of what they hear on the radio. They could keep for free what they would have to pay for as a physical record or a download.

The fact though is that very few people do this. Some do, but not enough to dent either of these standard business models.

But what if it was suddenly made really easy to record from the radio? What if homes came equipped with hard disk storage big enough to record the entire output of your favorite radio station for two years? Yes, you can buy such units right now, but what if they were as standard as the kitchen sink, and as easy to use?

Metadata in the digital radio stream could identify tracks so you wouldn't need to catalog them. Software could split out music from the presenter's patter and store only the stuff you want.

This is all possible. All it needs is to be easy.

But then our two standard business models are in trouble. Suddenly there is no point in buying a physical product, or in paying for a download. Music is just there, in your home to listen to as many times as you want, and you didn't have to pay for it. And of course the commercial breaks have been stripped out.

So what's going to happen? There are two possibilities...

The first is that legislation will be enacted to prevent you doing this. Law-makers love doing this kind of thing - it gives them a sense of purpose. The whole point in having laws is to stop you doing what you want to do. The business of law has its own business model, and they need to make sure their revenue stream is continuously topped up.

The second is that genuinely entrepreneurial people will develop a new business model. They will devise a way to allow you to use music the way you want to, while still being able to generate money for recording owners, composers and musicians.

That's my thought. Over to you - how will technology change the way we make money from music?

By David Mellor Monday May 1, 2006
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