File Sharing Blues: Rock And Roll Artists Ask, ‘What’s Wrong With iTunes and Amazon?’

Jennifer Moore and Adam Jones don't have a private jet. Limousines don't pick them up at airports. They don't have an entourage of muscular bodyguards that push away screaming fans.

The Austin-based experimental-pop duo known as Deep Time tour in a gray 1993 Dodge van with a broken A/C. They have a two-burner Coleman camp stove to save money on food as they crisscross America. They're currently on a grueling two-month, 41-show schedule to promote their latest album, which they are selling in CD, digital and LP formats for $10 directly to fans who attend their shows, through their label's website and via iTunes.

Guitarist Moore and Jones, the band's drummer, are two of many music performers that live the real rock and roll lifestyle, not the one romanticized by fans or enjoyed by a relatively small number of platinum-selling pop stars. These artists spend long hours on the road, often have second jobs, lack 401-Ks and health insurance and deal with more than a fair share of annoying drunks.

But perhaps worst of all, Deep Time and its ilk are tirelessly peddling a product that most of their fans have already given dinosaur status, a relic of the pre-Internet age. CDs and vinyl are barely a blip in the music industry anymore. Live performances and licensing for car commercials or computer games are ways to generate cash for some performers. But recorded music is nothing but a loss leader for most acts.

The reason: file sharing.

"We don't make much money," said Jones, whose label, Hardly Art, offers free downloads of some songs in its catalogue in order to help album sales and promote concert tours. "Is it really that much to pay a dollar for a song we worked hard to produce?"

For many music listeners, it is.

The typical music collector today has fully embraced the digital revolution, including frequent visits to renegade file-sharing sites like The Pirate Bay and isoHunt, where entire music libraries are passed back and forth among millions of users. Hundreds of thousands of copyright violations are committed each day on portable memory devices the same way young Americans used to trade 20-track mix tapes and CDs.

"A few copies to friends? Depending on how it's done it's probably protected under the fair use clause," said David Lowery, founder of the popular 1980s band Camper van Beethoven who recently taught a spring semester course on the music business at the University of Georgia. "Thousands of copies? This becomes 'distribution' which is a right reserved for artists."

The impact on song and record sales of this mass migration to file sharing has been explored by numerous academics. And while the precise degree varies, there is clearly a consensus that unauthorized downloads have had a "negative or even highly negative impact" on recorded music sales, according to Peter Tschmuck, a researcher at the University of Music and Performing Arts in Vienna. To arrive at his conclusion, Tschmuck analyzed more than twenty file-sharing studies.  

Among the researchers studied by Tschmuck was University of Texas at Dallas economist Stan Liebowitz, whose latest analysis found that "file-sharing has caused the entire decline in sound recording sales."

That represents a lot of money that music artists have lost.

Since Napster, the now defunct granddaddy of file-sharing sites debuted in 1999, CD sales have plummeted to $3.1 billion last year from $14.6 billion, according to the Recording Industry Association of America. Revenue from digital music sales, such as iTunes, is nowhere near making up for this sales shortfall. The sale of digital albums and individual tracks was only $2.6 billion in 2011.

In this environment, the days of making mega-bucks off of album releases are long gone for most recording artists, says musician and visual artist David Byrne.

"I did in fact see quite a lot from record sales of Talking Heads," Byrne said, referring to the renowned American new wave band he co-founded in 1977. "Artists coming up now, selling CDs at shows and the amount of money they get from Amazon and iTunes -- it's not nothing, but it's not enough to make a living on and finance recording and all the rest."

With less profit coming in from music sales, the relationship between artists and record companies is increasingly tense. Even the smallest labels take half of the revenue generated by album sales and they are the rights-holders to the master recordings. That means that the artists are not allowed to re-distribute and sell the work on their own. Royalties per album can be as little as 6.8 percent after the label recoups its initial investment -- a prospect increasingly handicapped by file-sharing.

In 2009, Trent Reznor of the industrial rock band Nine Inch Nails famously urged all artists to ditch their labels, saying new technologies and services allow for artists to break their traditional relationships with their underwriters. By distributing their music through social networking, online sales through Websites and the growing number of digital music purveyors, artists retain a much larger share of the proceeds. As a result, they could make more money than they would at a label that is unlikely to enthusiastically dispatch its team of promoters to bang the drum too loudly for a mid-tier performer.

In addition, by going it alone, artists keep the rights to their work. And recording the music is not as expensive as it once was. With the shift from analogue to digital equipment, home-studio production is much more cost effective. 

One relatively unknown artist who has found a lucrative niche in what artist she calls the "new music industry" is Zoë Keating. With the help of her sister Laura, the 40-year-old Canadian born, San Francisco-based pop cellist and mother of a 2-year-old sells her music directly to her fan base.

Though she is something less than a boldface name, Keating's 1.2 million Twitter followers know her well, and she's been able to make a decent living as a so-called self-labeled artist. In fact, just how much she has earned is no secret because recently Keating did what most musicians would consider unthinkable: made public her profits from the sale of CDs and digital recordings. Between October and March, Keating earned $91,051.22 on her recordings, most of it from digital downloads on Apple iTunes or through her account with the Web-based music vendor Bandcamp, which offers artists with PayPal accounts an online marketplace.

"If we are going to discuss the ideal structure of the new music industry we need to know how recording artists make a living today," Keating said. "Otherwise we're just spouting hyperbole. In the interest of evolving the discussion, I am putting my sales income in the public realm. I encourage other artists, if they are able, to do the same."

Keating pays anywhere from 12.9 percent to 38 percent for each music sale in distribution and e-commerce expenses, depending on the channel used for the online transaction. For example, if a buyer purchases a digital file directly through her Bandcamp site, Keating gets a return of about 87.1 cents for each dollar - 10 percent goes to Bandcamp and Paypal takes 2.9 percent plus 30 cents per transaction. If the buyer uses iTunes, she receives 71 percent.

 "You can see why I prefer to stay unsigned," she said. "My business is extremely simple: listener buys a song on iTunes, I get 71 cents. Bandcamp is even better: listener buys a song, and I get 90 percent minus Paypal fees.

"The pricing is flexible so someone could pay $10 for a song if they want to, and some people do," she adds, referring to the occasional loyalist who chips in a little extra on top of the price as gesture of support to the artist.

And while Keating's strategy makes more and more sense in the digital music environment, the record companies do have their defenders who point out that anything but perhaps a solo act (without even a backup band) will have a hard time making ends meet following her approach.

"Record labels act as investment banks for the music industry," said Lowery.

That means providing seed money to start-up artists, who are putting together their first repertoire; paying for studio time; managing the bands' e-commerce operations; and rolling out CDs and other merchandise at cost for artists to sell at their performances.

Indeed, people in the recording industry contend that much of the antipathy toward labels these days is driven by file sharing enthusiasts, justifying their copyright infringement by painting the record companies as the enemy of the performers.  

"Much of the cooked-up anti-label stuff is being promoted by the very people doing more damage to artists than labels ever did - the pro-piracy lobby," said Brian McNelis, senior vice president of music and soundtracks at Lakeshore Records, a Los Angeles-based label whose catalogue includes the Grammy nominated albums to the movies "Napoleon Dynamite" and "Little Miss Sunshine."

The record industry, with the help of law-enforcement, has taken pains to stop illegal file-sharing. Recently, seven people linked to two file-sharing sites, including one of the largest, MegaUpload, were arrested in New Zealand and Germany for unlawfully copying and distributing music, movies and other copyrighted content over the Internet. They await extradition to the United States.

In addition, record industry attorneys have asked Internet providers to provide details of the Web-browsing habits of people who visit file-sharing sites. In most cases, ISPs are reluctant to comply. However, when a subpoena is obtained for the online activities of specific individuals at a university, for example, it is sometimes possible to identify a pattern of file sharing. In those cases, cease and desist letters are sent to the people involved and thousands have been sued. The outcome of this litigation varies: some file sharers have been asked to pay substantial fines while other cases have been tossed out.

But no matter how hard the recording industry tries, it's unlikely to stop file sharing to any great degree. Most people who pirate music don't even think about the cost of creating and recording songs because music has become a commodity, freely available on the Internet in audio and video formats, in snippets and full songs. The value that was once attached to a hard to get recording of, say, Ella Fitzgerald performing in Paris or to an album that you could only buy from a local record store barely registers anymore.

And that leaves performers with a difficult dilemma: they have to accept that the world has inexorably changed. For the foreseeable future, artists will need to rely more on live performances and publishing than on the sale of their music.

 "The accessibility of music sometimes makes actually purchasing it seem unnecessary other than to those who have a true understanding of how most artists struggle to make ends meet," said Allan Vest, who co-founded the Norman, Okla.-based pop band Starlight Mints in 2001.