In reply to the Minister responsible for the Digital Bill.

So I wrote to my MP, as did a lot of other constituents, and the minster replied with the usual bullshit from the Government. My reply to him is:

The minister doesn't get it.

1 What is going on in the music business is called "disaggregation" that is the split of supply and customer from previous lines: we don't buy albums and CDs anymore, we buy tracks, we don't buy physical media CDs anymore we download from iTunes.
The same is happening in the newspaper industry, we don't buy newspapers anymore, we read articles on the internet sites. The same is happening in the book publishing market with e-readers... and will this year spread to glossy magazines as full colour tablet PCs arrive on the market.

2 What the music industry does not seem to comprehend, much to their loss is that, of the download business, Apple's iTunes has 70% market share, Amazon has just 8% and the others trail that. Music streamers are just nothing and make no money.
By selling CDs they are just trying to milk a dying cow.

3 Apple may have 70% market download share and more music is available streamed, not on CDs. But the music fidelity of the product goes down and down as you move from CD to Apple iTunes to Amazon MP3 to streaming. In the end all is lost, and the artists who spend lots of time creating high quality music have no channel to deliver this to the consumer. This is why the CD hangs on to sales, not because they are 'creative albums". The music industry does not get it, they need a higher quality download chain to replace the CD.

4 File sharing is one way for people to get hold of CD quality tracks fidelity without buying a complete album on a CD. That is a strong and unfulfilled motivator. So they do it, and will continue to do it until their needs are met.

5 As a not insignificant point: the music labels claim they lose £1.7B in sales as a result of downloading. The ISPs claim it will cost them £500M to monitor the internet. Who pays?
If the music labels want to protect their business, they should pay. Not the customers who use the services of the ISPs.

If they don't want to pay, they should either change their business model or suffer the consequences of a market operating as markets should. Without Government interference.

6 Look at some of the numbers. A CD costs £12.99. Of this the artists gets £1.03! The Government gets more than this as VAT - £2.69 from the sale of the CD and cost of the CD from the label to the distributor.

These charts show the money flow for sales of CDs, look at who earns what!

Now tell me that this supports artists, it does not, they get less than 10% of the CD sales price!

But it does tie them by binding contracts, in which they sign away their copyrights to the label business, which profits entirely from the old fashioned CD sales chain. Many artists today are seeking to break away from this and go independent, and many are successfully promoting themselves through social media (Facebook etc) and selling downloads directly to the public. This trend will only increase unless the labels change their business model. Which they won't if it is supported by the Government through the misguided Digital Bill.

7 It seems to me only time that a new service like Apple's iTunes will start which will take artists music and make it available in high fidelity directly, by-passing the labels... the consequence of a market operating as markets should.

Conclusion

The Government should not interfere with the market, it should let it operate, the labels have the means to combat file sharing if the chose to. They have not yet woken up to the new realities. Artists need a creative outlet not a moribund business model which captures them in its claws.