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CNN Live Sunday
Digital Music Business A Mess, Says Marc Geiger
Aired September 21, 2003 - 16:29 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: Well if you think MP3 has something to do with military police or mashed potatoes you're outdated. As any teen is going to tell you, MP3 is a digital music playing system for tunes downloaded from the Internet.
The dilemma, consumers want that music for free. Well, suppliers naturally want to charge for it. What is the future of music distribution. Let's turn to an expert in Los Angeles. His name is Marc Geiger. He is with the William Morris Talent Agency and was the head of a music company called Artist Direct.
Hi there. Thanks for joining us this afternoon.
MARC GEIGER, WILLIAM MORRIS TALENT AGENCY: You're most welcome.
LIN: Well, we heard about the threat of lawsuits by the music company. People under the threat of arrest. Is there a way to legally download music from the Internet.
GEIGER: There is now. You can buy a file for a dollar or 79 cents from a couple of places. Listen.com, Apple's iTunes store, Buy.com and some others. We're in a transitional phase where we'll be able to buy both songs on a file by file basis, but more important, over the next few years consumers will be able to subscribe to music much like they subscribe to Direct TV or cable or an ISP.
And you have to remember, we're in a very weird time where the suppliers don't know how to stop the consumers because they're in front of the suppliers for one of the rare times in history.
LIN: Do you think, Mark, that one of the problems is that there's no one uniform way to legally distribute music over the Internet? Because the rules keep changing every month.
GEIGER: No, I think the problem is more on the suppliers' side, that they are not comfortable with giving up the idea of unit price. You know, when we were watching movies 20 years ago and we had to go to the movie theater before VHS, before Showtime and HBO, before videocassettes and DVDs, the studios had the same problems pricing. If you remember, they tried to sue the VHS and the VCR out of existence, and they lost.
The record companies have won in the courts. So they're not forced to look at a new pricing model, which is really what this is about. They have to adjust their contracts with the artists and the publishers, everybody on the supply side, because the consumers have spoken. They've said I want access to a large library of music and I want to do with it what I want.
And they will pay for it, but the suppliers are stuck on saying, OK, you have to pay for every single time that you consume a piece of music. It's the equivalent to paying every time you turn on the water or turning on a light switch or turning on your television and watching a program, and that's where this disconnect is happening.
LIN: Well, do you disagree with the notion that really you're talking about a generation of people out there who think that everything on the Internet should be free?
GEIGER: You know, it's not really true. Everybody is paying $20 plus a month pretty much to get onto the Internet. So they're paying an on ramp. If you look at the consumer today, they've bought an iPod for $300 to $500. They bought a CD burner for $100 to $300. They're buying blank CDs in buckets of 100. They're paying $60 a month for enhanced band width.
So the way I look at it, a consumer's spent more money on music or the ability to get music in this digital library fashion than they ever did before. What's happened is they don't have a good choice on how to buy the actual guts, the stuff, the oil. It would be as if to watch your program on CNN today I'd have to pay a dollar. Now, that doesn't make sense to us because we're used to the fact that we pay our, you know, cable or Direct TV bill and we have access to CNN.
Also, if you go online today, even though you say everything's free, if I want to read the "Wall Street Journal" I have to pay whatever, $49 a month. And that's going to happen more and more and more on the Internet.
LIN: So what do you think is going -- what do you think the bottom line, what do you think is going to happen in the short term that would satisfy the suppliers and also fill the needs of the consumer?
GEIGER: I think the bottom line is it's a mess right now in the short term and that there is a battle between consumers and suppliers and the suppliers just have to get over it. They have to suffer enough pain, which the consumers are doing well by taking music because it is available, to change their business models. The good news is by the fact that everything's free on a peer to peer network for consumers is making them adjust to a digital music lifestyle much faster than if they had to pay to get it.
So they're all warmed up and ready to go when the offering is proper. So I think the next two to three years you're going to see a mess and, you know, three to five years you're going to start to see consumers be charged on a monthly basis for subscriptions.
Now, there will be penalties. What the RIAA is doing today in terms of charging or trying to prosecute consumers will not go away, but think of it more like a carpool lane or a bootleg cable box or a parking ticket. There should be, once there is a very good service in place or several very good services, the ability to fine a consumer and say hey, here's a great service, before you didn't have one, it's a $100 fine if you're going to go steal the stuff.
But they have to take out the reason for people to steal. And that's not there yet.
LIN: All right. Thanks so much, Mark Geiger, for clearing things up.
GEIGER: You're most welcome.
LIN: We will see what happens. Mark Geiger, former vice chair of Artist Direct.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired September 21, 2003 - 16:29 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: Well if you think MP3 has something to do with military police or mashed potatoes you're outdated. As any teen is going to tell you, MP3 is a digital music playing system for tunes downloaded from the Internet.
The dilemma, consumers want that music for free. Well, suppliers naturally want to charge for it. What is the future of music distribution. Let's turn to an expert in Los Angeles. His name is Marc Geiger. He is with the William Morris Talent Agency and was the head of a music company called Artist Direct.
Hi there. Thanks for joining us this afternoon.
MARC GEIGER, WILLIAM MORRIS TALENT AGENCY: You're most welcome.
LIN: Well, we heard about the threat of lawsuits by the music company. People under the threat of arrest. Is there a way to legally download music from the Internet.
GEIGER: There is now. You can buy a file for a dollar or 79 cents from a couple of places. Listen.com, Apple's iTunes store, Buy.com and some others. We're in a transitional phase where we'll be able to buy both songs on a file by file basis, but more important, over the next few years consumers will be able to subscribe to music much like they subscribe to Direct TV or cable or an ISP.
And you have to remember, we're in a very weird time where the suppliers don't know how to stop the consumers because they're in front of the suppliers for one of the rare times in history.
LIN: Do you think, Mark, that one of the problems is that there's no one uniform way to legally distribute music over the Internet? Because the rules keep changing every month.
GEIGER: No, I think the problem is more on the suppliers' side, that they are not comfortable with giving up the idea of unit price. You know, when we were watching movies 20 years ago and we had to go to the movie theater before VHS, before Showtime and HBO, before videocassettes and DVDs, the studios had the same problems pricing. If you remember, they tried to sue the VHS and the VCR out of existence, and they lost.
The record companies have won in the courts. So they're not forced to look at a new pricing model, which is really what this is about. They have to adjust their contracts with the artists and the publishers, everybody on the supply side, because the consumers have spoken. They've said I want access to a large library of music and I want to do with it what I want.
And they will pay for it, but the suppliers are stuck on saying, OK, you have to pay for every single time that you consume a piece of music. It's the equivalent to paying every time you turn on the water or turning on a light switch or turning on your television and watching a program, and that's where this disconnect is happening.
LIN: Well, do you disagree with the notion that really you're talking about a generation of people out there who think that everything on the Internet should be free?
GEIGER: You know, it's not really true. Everybody is paying $20 plus a month pretty much to get onto the Internet. So they're paying an on ramp. If you look at the consumer today, they've bought an iPod for $300 to $500. They bought a CD burner for $100 to $300. They're buying blank CDs in buckets of 100. They're paying $60 a month for enhanced band width.
So the way I look at it, a consumer's spent more money on music or the ability to get music in this digital library fashion than they ever did before. What's happened is they don't have a good choice on how to buy the actual guts, the stuff, the oil. It would be as if to watch your program on CNN today I'd have to pay a dollar. Now, that doesn't make sense to us because we're used to the fact that we pay our, you know, cable or Direct TV bill and we have access to CNN.
Also, if you go online today, even though you say everything's free, if I want to read the "Wall Street Journal" I have to pay whatever, $49 a month. And that's going to happen more and more and more on the Internet.
LIN: So what do you think is going -- what do you think the bottom line, what do you think is going to happen in the short term that would satisfy the suppliers and also fill the needs of the consumer?
GEIGER: I think the bottom line is it's a mess right now in the short term and that there is a battle between consumers and suppliers and the suppliers just have to get over it. They have to suffer enough pain, which the consumers are doing well by taking music because it is available, to change their business models. The good news is by the fact that everything's free on a peer to peer network for consumers is making them adjust to a digital music lifestyle much faster than if they had to pay to get it.
So they're all warmed up and ready to go when the offering is proper. So I think the next two to three years you're going to see a mess and, you know, three to five years you're going to start to see consumers be charged on a monthly basis for subscriptions.
Now, there will be penalties. What the RIAA is doing today in terms of charging or trying to prosecute consumers will not go away, but think of it more like a carpool lane or a bootleg cable box or a parking ticket. There should be, once there is a very good service in place or several very good services, the ability to fine a consumer and say hey, here's a great service, before you didn't have one, it's a $100 fine if you're going to go steal the stuff.
But they have to take out the reason for people to steal. And that's not there yet.
LIN: All right. Thanks so much, Mark Geiger, for clearing things up.
GEIGER: You're most welcome.
LIN: We will see what happens. Mark Geiger, former vice chair of Artist Direct.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
