Taipei Times: The music industry claims that peer-to-peer music file sharing infringes their copyrights and is already suing three local P2P enthusiasts. The industry claims that your Web site encourages people to break the law. How do you respond to those charges?
James Chen (
Of course the music labels have their reasons for making these claims. One of these is that revenues from CDs have been very bad and decreasing for the past few years. Between five and 10 years ago the Internet was not as widespread as it is now. I already realized at that time that sales of CDs were down. The most important reason is that consumer entertainment patterns changed. Previously, young people could only go to a record store or a bookstore. But Taiwan's entertainment venues increased at that time.
Now we could go to pubs, discos, Internet cafes - a lot more places, meaning our NT$1,000 had to be divided among many more places. That's the first point. But the second most important point is that technology changed, particularly CD burners. Before the widespread use of the Internet, when a burner cost less than NT$10,000, the music industry was already affected. Now burners cost US$80 to US$100 and are much faster. Both these factors led to the crash of the local music industry. P2P then put more pressure on top of that.
TT: What about the price of CDs? Did that hurt the market?
Chen: I remember cassettes. They cost around NT$170. Why, when content was exactly the same, did CDs cost more than NT$300? The price was almost double for a different delivery package. Consumers didn't have a preference for cassettes or CDs per se, but they realized that CD quality was better. Cassettes slowly disappeared, and now you don't see them anywhere. But by doubling the price, you opened the door to piracy. That's why there are so many pirated disks now.
I've been in the music business a long time - about 15 years - and in that time I've come to realize that today's music industry managers don't understand the big picture. The market can no longer tolerate a controlled channel way of doing business.
In 2000, I discussed music downloads with the managing directors of labels in Asia. At that time they weren't willing to discuss digital music downloads. Their opinion was songs should be packaged in CDs, not sold individually. Now they are slowly realizing that MP3 files can be sold individually, but it's too late as the market has moved way ahead of them yet again.
They have done too little too late. I am sure that within two years, the music labels will be using P2P, but who knows what new technologies or inventions will be around then.
TT: The music industry has approved Apple Computer Inc's iTunes music download Web site which sells each song for US$0.99 of which a portion is royalties. Would you consider following the Apple model?
Chen: I have already discussed this with the music labels. In Taiwan they have no plans to operate this model. The local managing directors also do not have the power to decide this matter. They can only decide for local music content.
I asked them to tell me how they could co-operate with me. If they are not satisfied with my offer of how much to pay them, they should tell me how much would satisfy them. The next problem is how to divide the money, and finally how much copyrighted material we could use, but they didn't reply to me. We had discussions on May 26, June 10 and June 17. The fact that they couldn't come to an agreement with us shows that their aim is not to co-operate with anyone but try to control the market themselves.
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