Monthly Archives: April 2007

Transparency? Not in Spain, thanks

Two recent events in Spain sadly prove that Spain has a long way to go before incorporating transparency in politics and business life.

In the on-going trial of a group of suspects of the March 11th train bombings in Madrid, the former director general of the Spanish police (and current MP of Spain’s Popular Party in the E.U. parliament), Agustín Díaz de Mera, gave testimony for a statement he made in a radio interview. He claimed to know of documents linking ETA to the March 11th train bombings. However, he refused to reveal his sources.

His claims, if true, are very important to investigate further, and for this reason he must reveal his sources. Sadly, his refusal to do so only help to suspect he is merely lying and that such documents may not even exist. In the interest of the investigation, he should bring transparency to his own statements.

The second incident is related to a soap-opera style financial-political operation in Spain starred by several energy companies aiming to acquire Spanish leader Endesa. The president of the Spanish securities and exchange commission (CNMV), Manuel Conthe, is resigning following the final episode of the soap opera.

He has requested to appear before congress to explain and present his resignation. All political groups in congress have agreed, save the socialist party in Government. The Government has even called Mr. Conthe‘s intentions “outrageous blackmailing”. Blackmailing? Why? What does the Government have to hide or to fear from Mr. Conthe‘s presentation before congress?

It smells like yet another instance of the Government of Mr. Rodríguez Zapatero hiding its obscure dealings. On this occasion, its dealings in the purchase of Endesa by other companies (both national and foreign). Blocking the appearance of Conthe before congress shows how transparency is, once more, lacking.

The recording industry will change

Sound recording was not possible before 1878. Until then, there was no industry build around the sale of sound recordings. Years after recording was invented, businesses started to emerge to distribute and sell music and voice recordings.

Buyers of recorded music were interested in the music, not specifically in the physical support needed to record music on (wax cylinders in the beginning, vinyl discs later on, and cassette tapes or compact discs more recently). However, in order to obtain a copy of that music, they needed to acquire the wax cylinder.

Such business model was based on the need to use physical media to distribute music, which could only be made using a complex and expensive process not available to a music buyer.

And so the recording industry grew, built on selling pieces of wax, plastic and magnetic tape.

However, the very raison-d’être of this industry has now disappeared: it is no longer necessary to use a physical media to distribute music. The scientific advancements that led to the invention of sound recordings have now evolved further, and allow for copies of sound recordings to be made at almost no cost.

New physical media, starting with the compact disc, began using digital storage of the sound data. Digital representation of information was designed to make information easy and cheap to copy, as it was meant to transfer information accurately, reliably and efficiently.

To the recording industry, this means the end of its business model: The physical recording media is no longer a necessary channel to distribute sound recordings; it is still valid, but is not the only way that it used to be.

Therefore, the industry built around the sale of recorded physical media (recording labels, street shops, etc…) will necessarily see their business altered by the changed environment. While I think there’s plenty of market for the traditional sale of CDs and albums, the industry must also accept the inevitable fact that copies cannot be avoided; it is no longer possible to be the exclusive owner of the distribution channel.

In fact, the recording industry exploits a second business model: The management of the copyrights over the actual recordings, charging for public broadcasting of recorded music, for live performances of music, for the use of music in advertising, in movies, etc. Recorded physical media is sold exclusively for private use, and the rights over any use other than private listening of the recorded music are retained by the recording label.

Together with the recording industry, associations of copyright holders have successfully convinced governments in Spain to introduce legislation that require a fee is payed by manufacturers or distributors of electronic equipment that can be used to make copies of music, to compensate authors of music (and other intellectual property) for the income they cease to receive from the copies that people will make using that very equipment.

In other words: computer hard disks, blank CDs, DVDs, memory storage units for photographic cameras, music players, etc… will be overcharged with a fee, introduced by law to pre-judge the buyer of such equipment as guilty of illegal copying of copyrighted material. People are being treated as sure-to-be criminals, because the association of authors and the recording labels intend to maintain alive a business model that is irrevocably destined to disappear. The business model of physical media based recordings sales cannot hold any longer: the environment of the business model has changed, forcing it to change or die.

Forcing customers to pay for music they were not going to buy is simply robbery; it is the desire by a few to make a living by doing nothing; it is a tax to support a small group of people who see their life threatened by the natural turn of events; it is resistance to change. Change happens. To resist it is unnatural. Or, in the wise words of a Vogon guard, “Resistance is useless!”.