EMI's Ex-Google Merrill Clueless Out of Gate, Offers Platitudes, Panders to Pirates

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Piracy bad, file-sharing okay. The industry's fight against piracy just got harder now that EMI is on record stating that it all depends on how you look at it:

"I'm passionate about data," Merrill said during a phone interview Wednesday with CNET News.com. "For example, there's a set of data that shows that file sharing is actually good for artists. Not bad for artists. So maybe we shouldn't be stopping it all the time. I don't know...I am generally speaking (against suing fans). Obviously, there is piracy that is quite destructive but again I think the data shows that in some cases file sharing might be okay. What we need to do is understand when is it good, when it is not good...Suing fans doesn't feel like a winning strategy."

Try anything and see what sticks - never mind how long this is going to take to deploy (and quantify) and that we might run out of cash first:

More specifically, Merrill said he would see whether a Google ad model will work for music. But he's willing to try music subscriptions and even an ISP fee. Certainly, what came across about what strategies Merrill intends to use is that he's not married to any one idea.

We've already witnessed ten years of failed experimentation, with the looting worse now then ever - systemic and virtually unfettered - yet EMI is keen to embark on a costly super-complication of the distribution of otherwise free content:

"I think there is going to be a lot of different models," Merrill said. "Those are two (subscriptions and ISP fees) you can imagine. I'm not sure that either one of those will be the most dominant model. But they are both interesting. We should try them and see what the data says. Other options will be things like you can imagine supporting music through relevant targeted ads, the Google model. There is a dozen of other things...we should try them all. We should see what the data says and whatever it says, we should follow the data, and follow our users and let them help guide us. We should engage in a broad conversation about art."

Spoken like a true geek department; or, now might be a good time to study the history of Motown, Atlantic, etc.:

"I think it's important to figure out where can record labels add value," Merrill said. "I don't know the answer."

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Ambulance Chasing

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If Trent Reznor (or anyone else) wants to do it the right honest way, he or she should support piracy and/or condemn the music industry in such a way that provides no opportunity for personal financial gain while doing so. Otherwise, all you have is self-interested, populist bullshit contrived to make money via capitalizing on the hype of the moment - all the while (wittingly or otherwise) selling their brethren down the river.

New Music Model for Suckers

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Where once ten or twelve bucks bought as many tunes, thanks to new 'models' we now have the $300 elite collection and/or multi-thousand dollar package including a personal appearance. Offers that unfortunately bilk those most loyal fans while allowing everyone else a free ride - on their generosity.

Why Advertising Supported Free-Music Ain't Gonna Happen

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Lots of hype and bluster about ad supported free-music solutions lately. Well, it ain't gonna happen, and here's why:

Two ways to offer ad subsidized music: streaming and downloads.

The problem with downloads is that once the track is downloaded, the ad is no longer attached; unless the ad is audio and embedded in the tune - which would kill the idea.

Which brings us to DRM. DRM protected tracks with proprietary players would allow ads to be served while tracks are played. But again, limiting the use of tracks to certain players would kill the concept.

Streaming on dedicated players that serve ads is not a bad idea, but limited in application as a live internet connection is required to stream in real time. Thus, ad-supported streaming is DOA.

Remember, the industry is competing with free, unfettered mp3 downloading and listening (albeit illegally).

Beyond all this is the amount paid to the content providers.

For downloads, Amazon and Apple are charging .80 to .99 per track and netting back 70 cents or so to the labels. There is no way ads can generate anywhere near as much.

Now, why would the industry accept mere cents on the dollar when they are already receiving 70 cents per track for paid downloads?

Why then would the industry voluntarily kill the remaining CD business and developing paid download business - for a fraction of the music's market value?

Then there's the precedent. Should the industry allow music to be free - subsidized via anything else - it would be nearly impossible to return (if so desired) to charging for downloads.

Hence, for free-music subsidized via advertising to work, the industry would:

1.) have to accept much less than the market value of music.
2.) hasten the decline of its remaining CD business.
3.) render obsolete its burgeoning paid download business.
4.) have to accept sharing fractional revenue with third parties (portals).
5.) once and for all, establish that recorded music no longer has any intrinsic value in the marketplace.

Humbug.

In the interim however, should a tech player offer millions of dollars for the rights to stream (no downloads) content under an ad supported platform (imeem, for example), the labels will rightly take the money and run.

For Which Team is Lefsetz Cheerleading?

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There is no way to compete with free, and the proof is that no one has been able to figure out how to do so in the last decade - and there's been plenty of incentive in the form of boatloads of money waiting for whoever could put it together.

Yet, Mr. Platitudes continues with the straw man argument that the majors need to find a solution to music piracy that accommodates the pirates.

Lefsetz's allegiance is obviously with the tech crowd as he is clearly a spokesperson for their goals with regard to IP content - a shill for the geeks.

Have a look at this recent statement from his blog regarding ISP filtering:

DO NOT FOLLOW PAUL MCGUINNESS! DO NOT WASTE ANOTHER DECADE IN A FUTILE ATTEMPT TO GO BACK TO THE NINETIES! ACCEPT REALITY AND DEAL WITH IT!

This is a guy that appears quite desperate here.

(Lefsetz also goes out of his way to unnecessarily trash U2 and McGuinness; as well, he again resorts to utilizing hackneyed pro-piracy rhetoric throughout the post. Talk about going back to the nineties - he himself should accept "reality" and knock off this aged and condescending populism.)

Lefsetz - now clearly - is not only anti-label, but anti-artist and anti-music.

More Hack Journalism Courtesy Chicago Tribune

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Amazing that virtually no one in journalism is willing to stand up and support artists and the industry against piracy.

Greg Kot of Chicago Tribune writes:

In the last few years, the music industry has combated tumbling revenue by suing costumers (sic), decimating artist rosters and laying off thousands of employees.

Tumbling revenue is employed here as a euphemism for piracy; and as usual, customers is used to describe music pirates.

But in the last few days, one important segment of the music industry actually came up with a rescue strategy that didn’t smack of panic, malice or desperation.

The Songwriters Association of Canada is proposing a $5-a-month licensing fee on every wireless and Internet account in the country, in exchange for unlimited access to all recorded music.

Bad idea and I'm not about to waste my time explaining why, as no one ever bothers to explain the opposite when proffering such nostrums.

Personally, I think it's a terrible idea to ask everyone to pay for those that refuse to; however, the industry and its artists have no other choice. Writing about the looting that is occurring but blaming the providers for it while obfuscating its immorality and direct consequences - for fear of alienating those engaged - is simply reprehensible.

Cost of Piracy

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Guy Dixon, in his article Music: A New Era of Selling Out for Globe and Mail takes a shot at EMI for seeking corporate sponsorship to help underwrite the development of its artists:

Guy Hands, who is now chairman of EMI after his London-based investment Terra Firma bought the company and its many sublabels ranging from Virgin to Parlophone last year, said yesterday that artists may be in for a new era of selling out, with his suggestion that bands could be sponsored like British sports teams: "Football teams have very distinct corporate sponsorship. Why shouldn't some of the leading bands have the same sort of relationships?" the Financial Times quoted Hands as saying.

Unfortunately - and as usual - nowhere is it mentioned that piracy has contributed greatly to this development, as well as the loss of thousands of jobs and the cratering of record company valuations.

Mr. Dixon writes as though these things are occurring in a vacuum.

With regard to fans being jaded; perhaps artists are becoming a little fed up with the notion of playing minstrels to an audience consisting in large part of spoiled brats that hold them in contempt and consider their work worthless.

Motley Fool Trolls for Music Pirate Traffic With Hack Business Sense

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Want easy traffic? Publish some pro-piracy dreck.

(Of course, no media outfit online is going to defend artists and the industry against piracy because that would result in the loss of the free-music advocate portion of their readership via boycott.)

"RIAA Blasts Its Customers, Again"

Let's get this straight once and for all, music pirates aren't customers.

Common sense dictates that should the RIAA cease going after people for piracy, the result would be that music would be considered free to download - greatly accelerating the decline in CD sales - and the industry would face imminent bankruptcy.

Representing the fight against piracy as resistance to technological innovation is ridiculous.

Motley Fool publishes this populist anti-RIAA nonsense for one reason - to lure traffic. However, it comes at the expense of their reputation for sound business and investment advice.

WMG Rebounding on Heavy Volume

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WMG appears to have run into resistance last Wednesday at ~4.60, with buying into very heavy (4x) volume following on Thursday and Friday in an otherwise bearish market. Up another 2.7% this morning to 5.26.

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Apple Label Speculation

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Should Apple launch a record company, would the rest of the music industry continue to license content to iTunes - which would then represent a direct competitor's captive retail outlet?

Unlikely.

Such a move makes sense however, if Apple anticipates eventually losing some or all of its current agreements and/or working relationships with the majors.

Actually, Apple buying WMG might make considerable sense in that case.

Imeem Deal Vindicates Music Industry

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Ironically, last month's Shmoo turns out to be this week's shark, as Doug Morris (having held out until Universal was the last in line) reportedly negotiated a royalty for each stream originating from imeem, in addition to a standard share of advertising revenue.

Correction: WSJ got it wrong, UMG will receive streaming payments only in the event that ad revenue falls short of the contractual amount.

This move also goes a long way towards silencing industry critics who after having had a field day two weeks ago chastising the majors for being technology ignorant on the heels of the Morris interview, find themselves with much less basis to do so today; as well, proponents of file-sharing are now short one "obstinate industry" justification.

So far, bloggers have indeed had little to say about this new development, yet the few that have spoken up are attempting to spin the deal as equivalent to the legalization of file-sharing - even though downloading is not facilitated by the service (of course, there are ways to capture streams, but there's little incentive for anyone to do so in this case) and the content owners and artists are actually paid under this system.

Looking back at the series of events that took place over the last two weeks: Morris appears to have played possum in the Wired interview, UMG then truncated streaming on MySpace, and today imeem gets the last piece of the content puzzle. Imeem now has industry-wide unrestricted content to compete directly with MySpace - and four powerful partners.

However, the question remains: how well can imeem monetize music? YouTube, if any indication, has been criticized for not adequately monetizing video; yet on the other hand, from Barron's:

"Greenfield writes that MySpace is now generating “in excess of $30 million” a month in revenue, with about $24 million in domestic revenue and $6 million internationally. He adds that monthly revenues should more than double over the next 12 months, and “at very high incremental revenue margins.” So in 12 months, he’s saying, MySpace should be doing more than $60 million a month in revenue, for an annual run rate in the neighborhood of $750 million a year. Not too shabby."

(Unfortunately, parent company News Corp. has not disclosed bottom-line revenue.)

For streaming to really take off, it must be accessible from any location and device (that's going to take a while) and for this reason, the advertising model may not become standardized, for phones and players won't accommodate the delivery of ads very well - if at all; unless the ads are in audio, which would ruin the experience. Therefore, it doesn't appear a stretch to imagine a subscription platform eventually emerging - perhaps on several services.

In any event, at least this is the first streaming service that appears to offer complete catalogs from all 4 majors - which is of course, a prerequisite to any comprehensive solution - and this alone should suffice to sign up a ton of folks. Moreover, moving beyond the download to pure streams potentially solves the problems of DRM, RIAA lawsuits, and piracy.

It's indeterminable at this time how artists might be compensated by labels; however imeem entered an agreement with SNOCAP earlier this year indicating that at least some royalties will be paid to artists by the service itself.

In closing; Universal Music Group, Sony BMG, Warner Music Group, EMI, and imeem have taken a big collective step today.

50 Cent: Piracy Hurting My Label, Artists, Music

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50 Cent gave an interview shortly before a performance in Oslo, Norway recently from which the following statement regarding music piracy got a lot of play on P2P blogs:

“What is important for the music industry to understand is that this really doesn't hurt the artists.”

However, the rest of what 50 Cent had to say in the interview actually contradicted that statement:

When asked “How are G-Unit Records doing in these times of file-sharing?" his answer was, “Not so good. The advances in technology impacts everyone, and we all must adapt. Most of all hip-hop, a style of music dependent upon a youthful audience. This market consists of individuals embracing innovations faster than the fans of classical and jazz music.”

Apparently not realizing that piracy-catalyzed 360 deals are actually recouped directly out of the artist's pocket, he went on to offer the following when addressing the issue of lost recorded-music sales revenue, “The concerts are crowded and the industry must understand that they have to manage all the 360 degrees around an artist. They, (the industry), have to maximize their income from concerts and merchandise. It is the only way they can get their marketing money back.”

Further expounding on the negative effects of piracy, he offered, “The main problem is that the artists are not getting as much help developing as before file-sharing. They are now learning to peddle ringtones, not records. They don’t understand the value of a perfect piece of art.”

Biting the Hand That Feeds

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Seems Josh Homme picked up a bad case of anti-label-itis from his close contact with Trent Reznor, and expressed as much through a meandering rant in a recent Antiquiet interview. Likewise, Reznor took a shot at the Grammys on his site yesterday:

While the music industry is doing everything they possibly can to go out of business, can we all make sure to rid ourselves of the Grammys, too? Out of touch old men jacking each other off. ENOUGH! Have a nice day.

I'm sorry, but didn't both of these guys make their bones through the support of the same industry they now collectively seek to browbeat into oblivion with wishful-thinking populist rhetoric?

I mean, aren't both Homme and Reznor taking a risk here in that their efforts might be construed as no more than taking advantage of the current anti-industry climate (by stoking the fires of the free-music constituency) in an effort to further their own popularity - ironically at the expense of those future artists that will find it much harder to earn a living under the continually deteriorating market conditions they are in fact proselytizing?

Unfortunately, after having basked in the green glow of the capitalist machine for years, these guys have apparently just come to the realization that art and commerce don't go together - right, and I suppose that the premise of Rage Against The Machine was not rendered oxymoronic the moment they signed to Epic.

In any event, there's nothing stopping anyone from circumventing the label system - now that the Internet has broken their monopolies over distribution and promotion. So, gentlemen; please kill the self-righteous rhetorical hypocrisy and let things take their natural course.

New Music Model Experiment: Amie Street

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This is part 3 of a 3 part series on new music models. Part 1, Part 2.

I placed a couple of tracks on 3 different sites to get a handle on how these services work and how well they might help artists promote themselves and/or sell their music.

The Music:

The tracks used for the test were produced, engineered, recorded and written by professionals. Now, I'm not saying that the tracks are anything special; however, they are most certainly competitive with the bulk of offerings I have found available from these services.

Self-Promotion:

There is literally zero artist self-promotion. The tracks are to live or die based solely on the service itself. There are no artist websites, and the acts and songs are - for all practical purposes - unknown.

Amie Street:

Free service. Free streaming for purchased tracks, 60 second streams otherwise. Price per song determined by number of sales - from free to a maximum of 98 cents.

By far the best system of the three I tried, Amie Street does appear to afford at least an initial level of visibility for artists.

Signing up is free and setting up a page is very easy.

After uploading a couple of tunes about 10 days ago, and another track about 3 days later, in total they have received about 150 listens and 50 sales.

The charts are very comprehensive and facilitate the visibility of tracks for several days.

The most interesting aspect of Amie Street is the "rec" system. Recs are recommendations by listeners which entitle them to credit should the song they rec increase in value. Rather than get into the particulars, it appears that there may be a "crew" or otherwise core group of listeners that are responsible for the recommendations of quite a lot of content. What does this mean? Possibly that some of the rec activity is not from disinterested parties. In any event, in my experience this network of listeners help keep new music visible in the charts for a few days.

Interestingly, recs appear to cease at about 50 for any particular song - this seems to indicate that the diminshing potential return in credit for a rec eventually causes listeners to refrain from recommending more expensive (popular) songs. This phenomenon unfortunately betrays the integrity of the rec system in so far as its value as a guide to the best music - for artists with over 100,000 listens still only receive around 50 recs per song. In other words, recs appear to be more like "bets" on particular songs to increase in value, rather than genuine reviews on the material.

However, from a visibilty standpoint, the rec system works well; and in combination with the demand-pricing model for the sale of songs, Amie Street provides a reasonably good system.

Summary:

As with the other services reviewed, the ability to self-promote would increase the chances of success here, although the capacity to do so would render Amie Street, as well as the other services reviewed, superflous.

As far as income from the sale of songs, the recoupable storage fee of $5 per song means that before an artist sees the 70% of sale proceeds, each song must first sell over 100 times, with income commencing only after that point. So, while 70 cents per sale is great, to get to this point is not easy. Whether the Amie Street community is large enough to generate significant sales alone (without self-promotion driving additional traffic) is unknown.

Overall, in my estimation, Amie Street is a worthwhile service, and much better than BitTorrent or GarageBand.

Pepsi/Amazon Mp3 Giveaway Not So Super?

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It seems that for quite a few Digg users, the proposed Pepsi/Amazon one-billion Mp3 Superbowl giveaway isn't such a big deal. Critical comments posted to an article regarding the promotion ranged from the need to buy 5 bottles of the soft drink to receive just one song, the likelihood of advertising-laden redemption pages, that a similar promotion in 2004 was a bust, that the offer is more trouble than its worth; in addition to the mention that the program appears to betray the value of a digital downloads in relation to recent court rulings against piracy, and an overarching opinion that mp3s are already free.

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New Music Model Experiment: GarageBand

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This is part 2 of a 3 part series on new music models. Part 1 is here.

I placed a couple of tracks on 3 different sites to get a handle on how these services work and how well they might help artists promote themselves and/or sell their music.

The Music:

The tracks used for the test were produced, engineered, recorded and written by professionals. Now, I'm not saying that the tracks are anything special; however, they are most certainly competitive with the bulk of offerings I have found available from these services.Self-

Self-Promotion:

There is literally zero artist self-promotion. The tracks are to live or die based solely on the service itself. There are no artist websites, and the acts and songs are - for all practical purposes - unknown.

GarageBand:

(Free storage, free streaming and downloads. CD sales)

After signing up and uploading a couple of tunes, I was prompted to enter each in the "contest" in order for my songs to be ranked in the charts and be reviewed (otherwise I assume they would be essentially invisible to visitors). At a cost of $20 bucks, I entered one song.

That was over 2 weeks ago. Since then, nothing has happened; no reviews, no rank, and the track is still at the bottom of the charts.

GarageBand maintains that should I chose to review other's songs - 15 pairs of them actually - I could forgo the $20 charge; moreover should I write a text review I would see my track go to the top of the pecking order for its review. However, after reading another member's account of the hour-long process (to review all the songs comprehensively) I decided to let it ride with just the contest entry for $20.

While searching for stats on how many listens my songs have received so far, I learned that to gain access to those stats, I would have to pay $99. Although this "gold" program includes a few other ups and extras, I decided to do without.

Interestingly, reviewers themselves are reviewed and scored, and from what I gather people get pretty angry with each other here; for essentially what appears to be happening is that a bunch of musicians are reviewing each other's material. Good grief.

With regard to artists selling music, GarageBand integrates CD Baby facilitating the sale of CDs.

Summary:

GarageBand appears to be a place where you will get absolutely nowhere without either paying or providing free labor in the form of reviewing tunes yourself. As for visibility, I'm still waiting for my first song to be reviewed (in the 1st round of 5 rounds, all with multiple reviews) so it could be quite a while that I turn into a skeleton before I can answer that question. Moreover, whether or not the community consists of anyone other than musicians is unknown, and as such the value of visibility in such an environment is questionable.

Overall, as with any other new-music model I've seen, without the ability of artists to successfully self-promote (which largely negates the need for such services anyway) the chances of getting anywhere on the service alone appear very slim.

As an industry friend remarked, "it looks like GarageBand is the only one making any money here."

Next up: Amie St

Open Season: Doug Morris

Label chiefs really should avoid the press altogether, for what invariably happens of late is that their quotes are selectively reprinted elsewhere - by opportunists bent on chastising the music industry for failing to solve the insolvable - so as to make them appear fools. For after all, no one wants to alienate the file-sharing portion of their readership - rather the opposite; hence, the end result is further justification for piracy due to renewed populism facilitated by the spinning of isolated remarks.

In the following interview, it appears Morris was set-up from the onset; for every positive move for which he and Universal are credited, the author attempts to negate in a tit-for-tat fashion via largely anecdotal references designed to make Morris appear the buffoon. The quote below highlights several of the company's constructive efforts, prior to being called into question.

From Seth Mnookin, Wired:

In spite of Morris' early resistance to digital music, in August Blender magazine ranked him fourth on its Powergeek 25, a list of what the publication calls "the rockingest nerds on the Net." Morris is the only record exec on the list, and he was placed above such digital pioneers as the founders of Last.fm, the head of technology at LimeWire, and the VP of music programming at Rhapsody.

Morris' ranking is recognition of the fact that Universal has been aggressively muscling new digital initiatives onto the market. In addition to the licensing deals with Yahoo and YouTube and the dollar-a-Zune deal with Microsoft, the company has had undeniable success in selling mastertones, high-quality ringtones made directly from the original song recordings. Akon, a Universal artist, holds the current all-time mastertone sales record at 11 million copies. 50 Cent, also with Universal, held the previous record with 10.5 million. Last year, while the largest portion of Universal's digital sales came from iTunes, the second-, third-, and fourth-biggest digital revenue generators were all cell phone companies.

Universal is also experimenting with the subscription-based plans that many — including the new cohead of Columbia Records, Rick Rubin — see as the wave of the future. The idea is to charge customers a fixed monthly fee (which could get tacked onto their cell phone, cable, or Internet bill) in return for access to unlimited music from a given label and, say, the opportunity to hear new recordings a week before their general release. Morris is currently championing a version called Total Music.

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Platitudes and Piracy

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Some interesting posts at Velvet Rope highlighting how the music industry is typically (and falsely) accused of being slow to adapt. Of course, record companies can't adapt to piracy, as there is no way to successfully compete with free. After all, it's been eight years since Napster - a period where anyone could have entered the music business with a new-model solution - yet no one has successfully done so.

Might as well chastise the majors for their failure to devise a viable perpetual-motion machine.

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New Music Model Experiment: BitTorrent

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I placed a couple of tracks on 3 different sites to get a handle on how these services work and how well they might help artists promote themselves and/or sell their music.

The Music:

The tracks used for the test were produced, engineered, recorded and written by professionals. Now, I'm not saying that the tracks are anything special; however, they are most certainly competitive with the bulk of offerings I have found available from these services.

Self-Promotion:

There is literally zero artist self-promotion. The tracks are to live or die based solely on the service itself. There are no artist websites, and the acts and songs are - for all practical purposes - unknown.

BitTorrent:

(Free service, songs placed are generally free of charge.)

After uploading one track (and once it cleared the review process) my song appeared at the top of the "just added" list for a couple of days, during which it was downloaded around 3 times.

Later I uploaded a second track that stayed at the top of the same list for about a week, during which it was downloaded about 20 times.

To date (1 month) each song has been downloaded about 50 times.

There have been no comments or reviews.

As my tracks continue to slide down the "just added" list (displaced by new entries) it follows that the reduction in visibility will lead to fewer downloads and ultimately, stagnation.

Overall, it appears that the great majority of BitTorrent users (150+ million) rarely check the site for new music.

(It should be mentioned that BitTorrent features no preview capability, so there is no way for a user to discern the quality of a track before downloading. In other words, a bad song has just as much chance as a good one to be downloaded.)

Summary:

BitTorrent really doesn't afford much to the independent artist other than a storage/download platform with a little initial visibility to a small audience that happens to check the site. Therefore, without achieving placement among the longer-lived new-music lists, tracks are essentially doomed to fade from visibility over time with little action.

Moreover, depending on the timing of an upload, the visible life on the "just added" list could be anywhere from a few minutes to a couple of days. There is also a possibility that at any time someone else might add 3 or 4 pages of new material, consequently burying all that preceded it.

Due to the lack of interest in new music at the site level, BitTorrent offers little potential for viral propagation for the volume of downloads prior to virtual invisibility is small. As such, BitTorrent, in my experience, is of little value to relatively unknown artists seeking exposure; and of zero value with regard to selling music.

Next up: GarageBand and Amie St.

No Good Download Goes Unpunished

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It appears that unrestricted, 256k full-length concert downloads for only $10 (with all concerned getting their fair share of the proceeds) is still not good enough for some; for according to a few posters at the Wolfgang's Vault forum, even desk-mixes from thirty-year-old concerts (most likely to be played back on iPods and listened to with earbuds) should be offered in lossless audio, and as such the mp3 format is no longer worth paying for.

Not hard to imagine this argument as the next in defense of piracy should DRM come to an end.

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