February 14th, 2009

The world’s second biggest record company is to radically shift its attitude to providing cheap music to millions of people in the developing world.

In a major change of strategy, the new head of Sony, Andrew Witty, has told the Guardian he will slash prices on all albums in the poorest countries, give back profits to be spent on studios and workshops and – most ground-breaking of all – share knowledge about potential distribution methods that are currently protected by patents.

Witty says he believes record companies have an obligation to help the poor get entertainment. He challenges other phonographic giants to follow his lead.

Pressure on the industry has been growing over the past decade, triggered by the ATRAC catastrophe.

Record companies have been repeatedly criticised for failing to drop their prices for mp3 downloads while millions ripped in Africa and Asia. Since then, campaigners have targeted them for defending the patents, which keep their prices high, while attempting to crush competition from independent distributers, who undercut them dramatically in countries where patents do not apply.

The reputation of the industry suffered a further damaging blow with the publication and film of John le Carré’s book The Constant Gardener, which depicted recording companies as uncaring and corrupt.

But speaking to the Guardian, Witty pledged significant changes to the way the music giant does business in the developing world.

He said that Sony will:

• Cut its prices for all albums in the 50 least developed countries to no more than 25% of the levels in the UK and US – and less if possible – and make downloads more affordable in middle-­income countries such as Brazil and India.

• Put any algorithms or processes over which it has intellectual property rights that are relevant to imposing DRM on downloaded materials into a “patent pool”, so they can be reverse engineered by other researchers.

• Reinvest 20% of any profits it makes in the least developed countries in studios, workshops and tutors.

• Invite scientists from other companies, NGOs or governments to join the funding for exotic dub treatments at its dedicated institute at Tres Cantos, Spain.

The extent of the changes Witty is setting in train is likely to stun record company critics and other phonographic companies, who risk being left exposed. Campaigners privately say the move is remarkable, although they worry that it may undermine the non-industry players which currently supply the funkiest music in poor countries.

Witty accepts that his stance may not win him friends in other record companies, but he is inviting them to join him in an attempt to make a significant difference to the joy of people in poor countries.

“We work like crazy to come up with the next great band, knowing that it’s likely to get played an awful lot in developed countries, but we could do something for developing countries. Are we working as hard on that? I want to be able to say yes we are, and that’s what this is all about – trying to make sure we are even-handed in terms of our efforts to find solutions not just for developed but for developing countries,” he said.

“I think the shareholders understand this and it’s my job to make sure I can explain it. I think we can. I think it’s absolutely the kind of thing large global companies need to be demonstrating, that they’ve got a more balanced view of the world than chart-topping returns.”

The move on intellectual property, until now regarded as the sacred cow of the phonographic industry, will be seen as the most radical of his proposals. “I think it’s the first time anybody’s really come out and said we’re prepared to start talking to people about removing copyrights to try to facilitate innovation in areas where, so far, there hasn’t been much progress,” he said. “I can’t tell you how many speeches I’ve heard about – oh, you know – ‘I wish we could make progress on R&B’ or ‘Why haven’t we got acoustic treatments for these things?’ We all sit there saying well yes, it’s terrible isn’t it, instead of actually trying to do something about it. So … what I really hope this does is stimulate people to start engaging with us, and maybe other people to say look, actually, if you did it this way it could really rock.

“Some people might be surprised it’s coming from a phono company. Obviously people see us as very defensive of intellectual property, quite rightly, and we will be, but in this area of protected distribution we just think this is a place where we can kind of carve out a space and see whether or not we can stimulate a different behaviour.” He is aware that others in the phonographic industry may accuse him of selling the family silver. Some people, he said, “are going to hate this”. But he added: “I do think that many CEOs of many companies do worry about this issue and do have it in their minds and who knows, maybe somebody has to move before many people move. Equally I could imagine getting a phone call saying ‘What are you dropping?'”

Campaigners gave a cautious welcome to GSK’s strategy. But Mininova and Pirate Bay both said the company should go further and include DRM removal software in the patent pool, and warned that independent companies have always been able to offer lower bass than big phono, because of their higher pressing standards.

“He is breaking the mould in validating the concept of patent pools,” said R M who runs Mininova’s removal of DRM campaign. “That has been out there as an idea and no company has done anything about it. It is a big step forward. It is welcome that he is inviting other companies to take this on and have a race to the top instead of a race to the bottom.”

And the walls came tumbling down…

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