An Open Letter to Paul McGuinness (and everyone else)

U2’s manager Paul McGuinness’ recent article (‘How to save the music industry’ for GQ) is well-reasoned, well-informed and commendable in its aims – though it’s crazily short-sighted.
It falls at the last hurdle when envisioning future solutions to the problems file sharing causes for the music industry, and is filled with logical blind-spots on the current state of the business.
He’s got the numbers right, but the headspace is all wrong.
To his credit Mr McGuinness is here wading into an argument that, as he notes, often involves untold abuse for those willing to stick their oar in. Furthermore, it’s one that doesn’t affect his untouchably profitable bread-and-butter, U2.
So who am I to gainsay him?
Last year my band Gama Bomb released their third album free of cost as a download with the permission of our record company, Earache Records. This, to my knowledge, makes us the first signed band ever to do so.
We took this step because we personally consume music in this way and were aware our previous albums were largely being consumed as shared files. To release another CD in the traditional way seemed futile.
Also, as a band playing a niche form of music on a small budget, we were aware of the potential PR power of such a move. The label agreed, we did it, and that’s why I feel qualified to dust off my soap box on this one.

To keep this sweet, Mr McGuinness’ argument can be summarised in five points:

1. The ‘problem’ of ‘free’ content is the biggest issue facing the music industry
2. ISPs are profiting from widening bandwidth associated with filesharing
3. this has caused the music industry’s profit shrink, therefore
4. tackling the ISPs is the key to saving the music industry
5. To this end, governments should legislate to make ISPs punish consumers who infringe copyright, encouraging them to use legal, paid, approved means of consuming music.

Two things stunned me as I read the article. First was Paul’s own emphasis on the negative nature of prosecuting consumers for file sharing, though the ‘graduated response’ or ‘three strikes’ legislation he champions offers no less a persecution to the very people artists rely on.
Second was this quotation.
“In recent years the music business has tried to "fight free with free," seeking revenues from advertising, merchandising, sponsorship...these efforts have achieved little success.”
This is rather brash given that 360 degree contracts (where labels share in merch, licensing, royalties and live performance fees) have been common currency in the industry for more than 10 years, with all the majors buying over merchandise production companies in order to best profit from their bands’ deals. It seems his own industry are quite keen on it.
It’s also startling because U2 signed a 12-year deal with Live Nation in 2008, giving control of the band’s merchandise and web presence to the concert promoter in sure recognition of those being vital cogs in the machine. And as for the rest? The band famously synergised corporate sponsorship and high-end merchandising in the form of the U2 iPod in 2004. Textbook new-industry pathfinding.
But Paul skips over these new revenue streams like they’re a footnote, when they are in fact the lifelines of the music industry right now.
His band signing to a concert promoter and Lady Gaga hawking Wonder Bread in her videos is a sure indication of their worth.
Mr McGuinness sees the new anti-file sharing legislation as ensuring the future of the music industry, though he admits the labels will have to adapt to the new digital age yet.
I think he’s dreaming. I think he’ll be looking to a new, final hope in six months time, and another six months after that.
The only way to fix things is to sweep the decks clean, overturn the idea of file sharing as ‘theft’ and rethink how to profit from it. Industries world wide have done this time and again in the face of social and technological advancements.
There came a day when the log roller guy had to start making wheels, right?

If Paul’s argument has five points, maybe it’d be neat for me to present five of my own in counter.

1. It is impossible to police the internet effectively.
2. Technology savvy evaders of new legislation will simplify technology to allow access to those below them. This is a constant stream. File sharing can’t be stopped.
3. The old model of record labels being the only career-former for bands is obsolete. Brian Message’s proposed Polyphonic label is a good example of alternatives.
4. Endorsing the idea of free content is the route to profit, creating a ‘goodwill’ industry.
5. Usenet groups currently charge users around £18 per month to download unlimited material. This is the best model for the future, with corporate tie-ins and advertising monetizing the interactive space in which people will swap material.

I’m not here to call Paul McGuinness a hypocrite or an old-guard bulldog or anything of the sort. On the contrary, I want to praise his passion for rock music and ask him to get on side with championing free content and encouraging the music industry to re-tool to take advantage of it. That’s a big leap, and may feel like an irrational one since that way lies the death of all that built the towers of the rock and roll biz in the past – but it has to be done.
The coming war between the labels and the ISPs is where this new approach will be forged, though I believe punishing the consumer for being ahead of the curve is simply wrong.
As Mr McGuinness suggests, the great minds behind Facebook, Google and Apple - and yes, behind the rock colossus that is U2 - will need to cooperate to establish the future of the music industry. But that future will not lie in restricting content, throttling bandwidth, or playing an exhausting eternal game whack-a-mole with non-conforming websites.
By the way, when my band released their third album for free last year, we managed to sell an equal number of physical CDs as we did the prior album when it finally hit shelves. Not a spectacular result, but an interesting one.
More importantly, we’ve seen a groundswell in our fanbase and now get paid more for playing gigs and sell more merchandise than before. On the balance I think we won out, because we gave people what they wanted; a quality album and a bit of credit.
File sharing works for indie bands. And as for the big boys? Let’s look at the case in point. Bono’s back notwithstanding, U2 are bigger than ever, making over 130 million dollars in the last year, much of it from touring.
The freely distributed album is the path to record tour profits, as the industry knows well, as well as they know consumers’ money is still there - it's just being exchanged for different services. What Paul needs to tell the labels is, if you're not willing to change the column titles on your spreadsheet, you don't deserve to be in business.

There are not enough fingers to stick in this dyke Mr McGuinness. Isn’t it better to just let the levee break and become the richest swimsuit salesman in town?

Get in touch,

Philip