Internet piracy

The European Commission published a report this year which concluded that consumers in the new EU member states are unfairly blocked from accessing online music legally, even though demand is increasing.

To find a solution, the Commission took on the record labels and has neared a pan-European licensing deal that could pull down the barriers dividing it.

The European Multimedia Forum's Executive Director, Phillipe Wacker, believes freeing up the market is long overdue. "To some extent the fact that our markets reflect our cultural diversity, and are therefore fragmented, is not necessarily bad," he concedes.

"What you don't want to have, on the other hand, is markets that remain artificially fragmented, beyond what is necessary."

A missed chance

Experts argue the lack of a single online music market has damaged Europe's online business potential, and that it may no longer be possible to regain that ground.

Wacker spearheaded efforts to create an online market for the music industry in the mid-90s, but encountered a deep reluctance to embrace new technologies. He says this conservatism led to Europe's failure to come up with innovative business models that delivered the consumers exactly what they want.

"The so-called content industries don't look at technologies as an ally, but essentially as a threat," Wacker says. "Technologies are always disruptive for them, they don't integrate them into their business models."

Legalizing piracy

It is often argued that the music industry's tight grip on copyright gave birth to piracy and illegal downloading, a black market which experts estimate far outweighs legal online business.

The Pirate Party was founded in Sweden mainly on a platform of keeping the internet out of the clutches of big business. Christian Engstrom, a Pirate Party Member of the European Parliament, says he does not want to do away with copyright completely, but that it should reflect reality, and be restricted to commercial use.

"The purpose of copyright was to encourage the creation and dissemination of new works," Engstrom argues. "But unfortunately copyright has evolved into something that's an obstacle to cultural production, and even more, an obstacle to giving people access to these works."

The Pirate Party also wants to protect human rights in digital society - a hot-button issue which Engstrom believes won his party 7.1 percent of the Swedish vote in June's European elections.

"In order to maintain the current copyright regime, the only way to stop file-sharing, or limit file-sharing, is to monitor everything that everybody does on the net," he says. "And that's simply not an acceptable price."

But if file-sharing were de-criminalized and no longer monitored, some argue it would be impossible to get people to pay for any digital content.

Engstrom says that complaint ignores the real issue, which is that record companies are becoming increasingly irrelevant.

"The record companies are supplying a service that is probably not needed anymore," he says. "It's perfectly natural, it's called a market economy, and there is nothing wrong with that."

Solving the problem of the generation gap

Some believe that the long-term issue is that record companies must start finding better ways to reach young customers. Joe McNamee of the European Digital Rights (EDRI) organization, which works to defend civil rights in the age of digital information, says the music industry simply does not understand its younger customers.

"Someone who is 22 now will have grown up wanting to access music electronically, and is being faced with the baffling resistance of the music industry to provide them with the content they want," he says. "You can't change a culture simply by punishment. A new way of thinking about online music needs to develop, both for users and the music industry."

Rights-holders argue they have lost years of royalties through piracy and free content distribution that can never be reclaimed. By all accounts the current business model, dominated by the black-market, is simply not sustainable, but at the moment the problem is only being addressed with accusations.

Some blame the Internet Service Providers for not taking their legal responsibilities seriously enough. The Secretary-General of the European Grouping of Societies of Authors and Composers, Veronique Desbrosses, says: "It's a business model where you have two very happy parts: the consumers, who get everything for free, and the ISPs who charge very high subscriptions. The poor part of this business is certainly the rights-holders."

Risk is the key

The challenge facing the music business is not insuperable, but it is large enough. It is clear that the problem cannot be solved without content providers - artists, record companies, publishers, composers, collecting societies, and EU regulators - all on board.

For Philippe Wacker, the music industry remains the biggest hindrance to a mutually agreeable solution, and there is little sign its attitude is about to change.

"At one point the music industry made a deal with Apple," he explains. "Apple took the risks, Apple is now successful, but the music industry is still sitting around waiting for some miracle to happen."

Among experts there is a consensus that although a pan-European licensing agreement will help a great deal, new business models where consumers are prepared to pay for getting the music they want legally, is the only long-term solution.

Reporter: Nina Maria Potts, Brussels (bk)
Editor: Sam Edmonds