Analysis: Music will survive

Probably the biggest challenges facing the music industry is determining how to compete with the easy availability of free music on the Internet.

Limited bandwidth and the high cost of Internet access in the UK make downloading music, even with simple to use programmes like Napster, inconvenient and expensive for the average user. But the music industry needs to act quickly: unmetered broadband is just around the corner with BT scheduling its rollout of ADSL by June 29 for around £50/month.

Although the music industry is understandably worried by the threat broadband poses, it is convinced that by the time the Internet reaches mass market penetration, a framework will be in place to make the legal online purchase of music the most attractive and viable option.

Sarah Roberts, communications manager for the British Phonographic Industry (BPI), says piracy has always snapped at the heels of the industry, and the advent of technologies such as MP3 certainly does not spell its downfall. "The music industry will survive," she says, "It's evolved so far and it will continue to evolve. Once there is a legitimate framework giving ease of access people will pay for music."

The government has charged the music industry with developing a secure online payment system that will facilitate this ideal framework and to set a timetable for its introduction. Such a system, in allaying the fears of record companies and consumers alike, is likely to lead to an online legal music offering compelling enough to attract consumers away from pirated content. Or at least, that's the hope.

And the battle could be fought on one front successfully, not because of the music itself, rather the content and tangible assets that accompany it. Peter Beverly, managing director of digital rights management company Magex, speaks for many when he explains why consumers would be willing to pay for content as opposed to downloading it for free. "There will always be people who'll want something cheap and don't mind crappy quality. People want content not available through Napster. Things like lyrics, cover art, biographical notes and links to Web sites."

However some seismic shifts will have to occur within the UK music industry before it can face the future with complete confidence.

The unprecedented competition thrown up by the Internet means the industry needs to devise a radically new pricing structure. The days of a £15 CD containing six filler tracks are over, according to Tony Wilson, founder of Factory Records and music industry veteran. His view of what the Internet will throw up does not leave much left for the middleman.

"The Internet removes two thirds of the cost -- music is going to go cheap, so cheap you won't believe it," he says. "The right pricing structure is 33p a track once you remove the record shops. They've had their time and if they suffer now it's their problem."

Indeed, many music industry insiders believe that one of the possible upsides to the digital revolution will be a concentration on quality over quantity in music. Gavin Robertson of the Mechanical Copyright Protection Society (MCPS) says, "the consumer has a problem with CD pricing. This technology gives us the opportunity to start pricing music according to quality. That CDs are all the same price is a strange concept."

Pricing of music is one the areas where the government could act to promote the health of the UK music industry, according to the managing director of online music store Crunch.co.uk, David Philips. He points out that although its report warns of foreign competition, the 17.5 percent VAT imposed by the UK government is one of the biggest selling points for US competitors.

"There is nothing in the report [on VAT] but vague platitudes," he says, "If you can cut out 17 percent on your competitor you're doing very well. The government likes to be seen to favour e-commerce but we need commitment."

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