How long until there's enough unfettered new music, tunes the creators control as opposed to the fat cats, that someone from the outside can roll up these rights and create a viable alternative to the established game?
This I think is the key question, since I agree with Lefsetz that industry incumbents are extremely unlikely to innovate, and long copyright terms, existing contracts and statutory licensing arrangements, and political battles over compensation (e.g., regarding performance royalties for terrestrial radio) will slow down if not halt altogether any major revamp of business arrangements for existing works. In particular I doubt we’ll soon see Lefsetz’s preferred all you can eat for one monthly price scheme for legalizing P2P downloads of major label content—a skepticism shared by others.
Thus the only remaining possibility is as Lefsetz outlines: Wait until there is a critical mass of commercially viable new works controlled by artists and corporations willing to play by new business rules. My guess is that we’re talking about a 5-15 year timeframe for this to happen, because this will likely require a combination of the following:
The emergence of lots of popular new artists who have grown up in the new world of digital distribution, social networking, etc., and are prepared to exploit it to the hilt. If you believe in the 10,000 hour rule popularized by Malcom Gladwell and its application to popular musical artists, this could well take 5-10 years (assuming that we’re starting basically from zero). However note that the rule does not necessarily apply to talented people helping to create new genres, which leads to our next factor.
Generational, demographic, and geographic shifts that help foster new commercially successful musical genres, with an accompanying new group of key managers, promoters, and (to the extent they still exist) labels associated with those genres. Again, if we’re starting from scratch (i.e., these new genres don’t yet exist, except perhaps in embryonic form) this could take a fair amount of time. Compare the 10-15 years from the emergence of rock and roll in the early 50s to the mass success of the Beatles and other British invasion bands in the mid-60s, or the 10-15 years between the early days of hip-hop in the late 70s and the mass commercial success of rap in the 90s.
Maturation of the business and technological environment around digital music distribution. The Internet took 25 years from its invention to when it became a major phenomenon (early 70s to late 90s). At this point we are only 10 years past Napster, and are still some ways away from a fully-changed music industry. After a couple more generations of iPhones and similar devices, plus accompanying advances in wireless networks, the music player of choice will be a smartphone with sufficient storage to hold all but the most fanatic listener’s music library and always-on high-speed network connectivity suitable for paid downloads, jukebox in the sky-style streaming, and/or P2P networking. The current generation of rights holders will of course try to restrict how users access music, as will wireless operators (trying to assume the role of radio as a chokepoint), so as in the past changes in technology will outpace changes in the business environment. Music and wireless industry incumbents will ultimately be foiled by the emergence of a new generation of music industry players and increased competition in the wireless market respectively, but again this might take as long as 10 years or more.
So, my prediction: Lefsetz will possibly see his hoped-for revolution within the next ten years, but definitely not within the next five. We’ll see if I’m right.