Former Google CIO & EMI Digital COO Guy Explains How File Sharing Is Good For Artists

from the oops dept

Tue, Jul 26th 2011 12:38pm — Mike Masnick

In April of 2008, EMI hired Doug Merrill away from his Google CIO position to lead the company's digital efforts. As we noted at the time, this actually seemed like an opportunity for EMI to really embrace what the technology allowed, though we feared whether he'd have any real power at EMI. Indeed, it wasn't too surprising to see him leave less than a year later, without a clear explanation at all. We'd heard some rumors of a bit of a "culture clash," and it appears that Merrill is finally confirming that in a recent speech he gave. What was the culture clash? Well, Merrill, like a typical Googler, decided to actually look at the data and found that it said file sharing could be good for artists and that users of Limewire were their best customers:

Merrill profiled the file sharing behaviour of people who used Limewire against the top iTunes sales and the biggest iTunes buyers were the same as the highest sharing �thieves� on Limewire.

�That's not theft, that's try-before-you-buy marketing and we weren�t even paying for it� so it makes sense to sue them,� he said wryly.

Not surprisingly, as we've noted over and over again, this sort of data and evidence (of which there are now at least half a dozen studies all saying the same thing) is simply not something that the major record labels are willing to hear. They just continue to deny the evidence. And then they wonder why they're flailing... Merrill apparently didn't talk about his departure from EMI, but it's not difficult to read between the lines.

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Filed Under: customers, douglas merrill, music industry, sharing
Companies: emi, google

49 Comments

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DannyB (profile), 26 Jul 2011 @ 12:46pm

Here is another article.

http://www.itworld.com/software/186241/former-google-cio-says-business-misses-key-people -marks

From this one, I liked the quote:

When Merrill left Google he worked at EMI records, which was interesting and enjoyable, but he knew the music industry was "collapsing".

"The RIAA said it isn't that we are making bad music, but the 'dirty file sharing guys' are the problem," he said. "Going to sue customers for file sharing is like trying to sell soap by throwing dirt on your customers."

Merrill profiled the file sharing behaviour of people who used Limewire against the top iTunes sales and the biggest iTunes buyers were the same as the highest sharing "thieves" on Limewire.

It's not a business model problem. It's not that their artificially promoted rich artists suck. It's the pirates. Meanwhile other talented artists are finding success without the dinosaur recording industry.
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tasmot (profile), 26 Jul 2011 @ 12:47pm

ARE YOU CRAZY?
Don't you get it, for movies, music, and now e-books, you must pay your money before you ever get a peak. How on earth are the gatekeepers going to rake in the millions if you have to actually like the content before you buy it? AND, heaven forbid, you should not be allowed to enjoy it if you can't pay for it, that's a lost sale (or maybe 6 or 7 if you are the RIAA or MPAA, they count kinda funny). YOU MUST GIVE THEM MONEY FIRST. Then, you can experience it, but they already have the money so it doesn't matter whether or not you like it. That's why they try to get reviewers that give the item a bad rating fired.
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PaulT (profile), 26 Jul 2011 @ 12:53pm

Wow, in before the trolls for once. Let's see... what will AC claim this time from his small list of objections?

- Will he claim that Merrill is a secret plant, paid to say these things by his former bosses at Google?

- Will he try to claim that Limewire's shutdown led directly to sales and so Merrill is wrong (with no supporting data or studies of course)?

- Or, will he just attack Mike for being a pirate because he can't think of any way to actually defend against the claims?

Place your bets...
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Anonymous Coward, 26 Jul 2011 @ 12:57pm

if you can't control the distribution channels how are you suppose to turn being the cultural gatekeepers into a multi-billion dollar business?

just the same as letting people try before they buy, then they might not buy it cause its not good, 'these artists worked so hardwould you deny them the right to make a living off their enourmous creativity?' why yes I would, because its crap and you don't have a right to get paid for crap just because you 'worked hard' on it or 'invested a lot of time and effort, and money' too bad, make better investments.
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Anonymous Coward, 26 Jul 2011 @ 12:59pm

Re:
he gives us ACs a bad name
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Anonymous Coward, 26 Jul 2011 @ 1:01pm

Re:
He'll say that the pirates are lying about buying music, because they are evil pirates and therefore cannot be trusted (unless they say something he agrees with.)
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Anonymous Coward, 26 Jul 2011 @ 1:13pm

At this point back in 2001, I had a music collection of about 1600 albums. I'd been buying about 100+ albums a year (2 a week on average) for about 15 years. At the time I was a very strong supporter of the RIAA's position on file sharing and copyright issues.

But then Sept 11th happened and I was out of work for three months. Not only did I end up selling most of my cassette (about 850ish) to help make ends meet, but it allowed me a lot of time to do a lot of reading.

Slowly, over the period of a year or so, I began to see the logical fallacies (if not outright lies) of most of the RIAA's arguments and often dishonest business dealings (Sound Exchange, for example, gets to collect money for artist - even if those artists don't want them to - and they get to keep the money unless an artist has a membership, which basically means cutting them a percentage of your money - whether you want to or not - or they get to keep all of it. And THAT is EXACTLY what the copyright clause was intended to prevent).

I've gone from being a strong supporter of the recording industry to one of their biggest critics. I've also gone from being a good customer (2 albums a week) to not having bought a single major label album new (I still get some from secondhand stores occasionally) since mid-2004. The vast majority of the music I've picked up in the last 7 years either comes directly from the artists/bands themselves or independent marketplaces like eMusic (or it did until the major labels bought into it and pretty much ruined it).

And none of the loss of business has anything to do with file sharing.
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Anonymous Coward, 26 Jul 2011 @ 1:15pm

I understand what he is saying, but I think he still fails to address much of the issue:

1. Without this freebie "try before you buy" system, would there be any change in sales (up or down)?

2. Were the users buying what they tried, or buying other material that wasn't what they were downloading? (ie, are they not paying for some, and only paying for others).

3. Could the same effect by granted by giving away samples, shorter versions, or limited / capped versions on the label / artist websites?

4. Would the highest buyer have been the highest buyers anyway, in other words are the "music fans" who would buy anyway?

It's sort of hard to draw conclusions until you have a fuller data set.
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HothMonster, 26 Jul 2011 @ 1:18pm

try before you buy is a real problem if most of your product is shit, so its understandable the industry is reluctant to allow this
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HothMonster, 26 Jul 2011 @ 1:21pm

Re:
yes but rather than allow him to take the idea and experiment with it to learn the answers to these questions they shut him down and drove him out.

That is is the problem the industry refuses to accept that 1) they cant stop piracy 2) maybe piracy isnt ALL bad (possible more good). Since they refuse to accept this they can not experiment with ideas that take advantage of the digital era despite a lot of smaller labels doing fantastically well with small scale experiments
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HothMonster, 26 Jul 2011 @ 1:22pm

Re:
he worked for google, obviously he is part of the problem. Google probably still paid him while he was at EMI to push their secret pirate objectives
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Marcus Carab (profile), 26 Jul 2011 @ 1:23pm

Re:
I understand what you mean, but ultimately, does any of that matter? My responses to your questions would be:

1. Irrelevant because piracy is not going away, so you might as well embrace the fact that pirates are good customers and find ways to maximize that.

2. See 1

3. See 1 and 2

4. See 1, 2 and 3
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Anonymous Coward, 26 Jul 2011 @ 1:24pm

I suspect they'll stay silent on this one. When there are no obvious holes in the evidence that they are so totally wrong, they sometimes just stay away.
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Jay (profile), 26 Jul 2011 @ 1:27pm

Re: Re:
He played his part, and he played his game?
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Anonymous Coward, 26 Jul 2011 @ 1:28pm

Re: Re:
Marcus, you must have worked really hard for that answer. Yet P2P traffic is down, three strikes regimes are kicking into gear, Paypal and other processors are making it harder for pirate sites to get paid, and there are plenty of actions in the US and elsewhere that say that piracy is getting more and more difficult.

So rather than just coming up with a stupid, dismissive post, why not address the issues and the questions? After all, it isn't a question of "piracy or no piracy", but rather if the effects are similar to other methods, or if the pirates are trying X and buying Y.

Can you please add something to the discussion for a change?
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sehlat (profile), 26 Jul 2011 @ 1:28pm

Re:
If most of your product is shit, you must do one of two things:

1. Destroy all possibility of "try before you buy" so the customers don't discover what's on their taste buds before they eat it.

OR

2. Give away a free jug of mouthwash with each sale.

It's pretty obvious which one the MAFIAA are stuck on.
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RD, 26 Jul 2011 @ 1:38pm

Re:
"It's sort of hard to draw conclusions until you have a fuller data set."

Really? And yet the *IAA's seem to require nothing more than a belief in a single point of datum to judge the entire problem and lay it solely at the feet of "piracy" even in light of massive evidence to the contrary.

Your cognitive dissonance is showing.
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Marcus Carab (profile), 26 Jul 2011 @ 1:40pm

Re: Re: Re:
Yeah sorry, I was going to run out and conduct a massive study with thousands of subjects then come back with all the data you asked for, I just haven't had a chance yet.

In any case, I still fail to see the relevance in any of your points. And if you think that music piracy is going to be going down in the long run, I have a DRM'd bridge I'd like to sell you.
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PaulT (profile), 26 Jul 2011 @ 1:43pm

Re:
"I understand what he is saying, but I think he still fails to address much of the issue"

There will undoubtedly be much more than was contained in the small quote.

"1. Without this freebie "try before you buy" system, would there be any change in sales (up or down)?"

It's actually impossible to know, but given the correlation between heavy downloaders and heavy buyers I only see 2 options. Either they are already buying all they can afford and downloading the rest or they are buying simply because they liked the freebie. If either of these scenarios is true, sales would go down.

"2. Were the users buying what they tried, or buying other material that wasn't what they were downloading? (ie, are they not paying for some, and only paying for others)."

Again, impossible to really know without further research (assuming that such research hasn't already been done). it could be that they're buying what they're most interested in then downloading the rest. It could be that they use the downloads to preview and then buy the ones they liked. Anecdotal evidence would suggest either could be true.

"3. Could the same effect by granted by giving away samples, shorter versions, or limited / capped versions on the label / artist websites?"

The limits/caps/short versions are already there (for music at least), and they can be annoyingly useless. 30 seconds to a minute is usually not enough to even get to the "good part" of a song, let alone know if it's worth buying. Free legal services such as Spotify and Grooveshark should help fill the gapos here, but it's early days and they don't have everything licenced to them for playback.

"4. Would the highest buyer have been the highest buyers anyway, in other words are the "music fans" who would buy anyway?"

Again, impossible to really know but I would guess yes. In my experience, the heavier music downloaders always tended to be music obsessives who couldn't afford to buy everything they wanted, or who needed to work out which of the albums they were going to buy on a fixed budget was worth the money.
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Jeremy7600, 26 Jul 2011 @ 1:45pm

Re:
In response to #1: I would suspect sales would go down. Why? With try before you buy, they buy if they like it, they pass if they don't. If they don't like it there is no sale. Without being able to sample the whole work (and not the lame short samples that cut off before the meat of the song or that don't represent the song well), they aren't going to buy. I know from my own experience I've held off buying mp3s from amazon because I couldn't hear enough of the song.

Having tasted the try before you buy model, I'm not so sure people are just going t start buying up albums that they don't have a good feel for.

Its too bad people can't return music they bought that they don't like, but I'm sure it makes used cd stores happy.

And that's another thing.. I'm sure the recording industry doesn't even care that someone may not have liked an album after buying it after all. To them the money is in their pockets. The lack of follow up means they don't have a true way of knowing if people are satisfied and therefor if the product they are selling is any good in the first place.
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PaulT (profile), 26 Jul 2011 @ 1:47pm

Re: Re: Re:
"Yet P2P traffic is down, three strikes regimes are kicking into gear, Paypal and other processors are making it harder for pirate sites to get paid, and there are plenty of actions in the US and elsewhere that say that piracy is getting more and more difficult."

...and what evidence do you have that this is directly down to the attempts made to "combat" piracy rather than the emergence of successful legal alternatives?

"So rather than just coming up with a stupid, dismissive post, why not address the issues and the questions? "

Marcus makes a very good point, which you conveniently ignore: piracy will never be eradicated. It existed before the internet, and it will never be completely shut down. Even if you manage to kick every file sharer offline, they will still copy music illegally.

"if the effects are similar to other methods, or if the pirates are trying X and buying Y."

Which "other methods" are you referring to?

"Can you please add something to the discussion for a change?"

You first.
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Nicedoggy, 26 Jul 2011 @ 1:47pm

Re: Re: Re:
http://www.pptv.com/

Piracy is getting harder LoL
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David Liu (profile), 26 Jul 2011 @ 1:48pm

Re: Re: Re:
What would you like for Marcus to add? You clearly have speculative questions that should be addressed, but it's clear that the RIAA isn't willing to even speculate (see said firing of COO).

You say it's hard to draw conclusions without a fuller data set, but the same can be said to the other side. No one's trying to say that piracy automatically equals good. Mike consistently points out that blindly believing that "piracy = word of mouth = sale" is just as stupid and as bad as "piracy = lost sale". The whole points of these articles are to foster discussion and allow for the possibility that piracy can be harnessed for good. Right now, the RIAA will have none of that, even to the point where they will ignore what might possibly be a better business model.
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MrWilson, 26 Jul 2011 @ 1:49pm

Re: Re: Re:
"Yet P2P traffic is down,"

Possibly in favor of other methods?

"three strikes regimes are kicking into gear,"

Because that will make people buy more music and not resent the entertainment industry for fucking with their internet connection... I'm sure the demand for indie music from groups who freely share their music and use other means of making money in addition to album sales will go down.

"Paypal and other processors are making it harder for pirate sites to get paid,"

What you call piracy has never been about making money.

"and there are plenty of actions in the US and elsewhere that say that piracy is getting more and more difficult."

Until we have some retrospection on the results of these actions, we won't actually know if piracy got more difficult.
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Anonymous Coward, 26 Jul 2011 @ 1:50pm

Re: Re: Re:
It isn't a question of "piracy or no piracy?"

"Without this freebie "try before you buy" system"

Looks like it's a questions of piracy or no piracy to me. We're just supposed to assume prevention is not only possible but cost effective just to answer question 1. The rest of the questions tacitly make this assumption instead of explicitly stating it be it's still there. All of them are couched as 'but what if we had x instead of copyright violation.' Except 2, I guess, but no matter the answer what difference would it make? Say it is true, the legal collections are are entirely unlike the illegal ones. Then what?
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PaulT (profile), 26 Jul 2011 @ 1:51pm

Re: Re: Re: Re:
""if the effects are similar to other methods, or if the pirates are trying X and buying Y."

Which "other methods" are you referring to?"

Ah, I get you now. You mean 30 second previews and the like.

Again, without further study it's impossible to know but consider this: the difference may be irrelevant. Individuals do not have infinite entertainment budgets. If they are already spending all they can afford (which the high level buyers we're referring to may well be doing), then whether they use file sharing to make a choice or bolster their collection is irrelevant.
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Anonymous Coward, 26 Jul 2011 @ 1:56pm

RIAA Business Model Solution:
Establish self as the largest, most diverse, and friendliest source for identifying new albums and artists that are most relevent to you customers.

Now if only there was some executive from a company that was especially successful at executing such a business model... oh, how about this Merrill fella' from Google!

Nah.. forget it, let's just sue those dirty pirates.
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Richard (profile), 26 Jul 2011 @ 2:02pm

I realise that the record labels and the RIAA are virtually indistinguishable from each other, but the thing I find interesting is it is never usually an individual label that is doing the suing, it is the RIAA. So when a top employee of a label tells said label that what the RIAA is doing is wrong and counter-productive, why is the response to trust in the RIAA and not their own over-paid employee?
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Andrew, 26 Jul 2011 @ 2:04pm

Re: Re: Re: Re:
You guys know you're being trolled by this guy right?
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:Lobo Santo (profile), 26 Jul 2011 @ 2:20pm

Re: Re: Re: Re: Logic!
There is a simple method for eliminating all piracy:

Remove all illegality from sharing music/movies/whatnot.

If nobody is doing anything illegal, there is no piracy.

Ta-da, problem solved, 100% piracy free internet.

(Curiously, solution works the same way when applied to the drug problem.)
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Loganpup, 26 Jul 2011 @ 2:29pm

Re:
One illustration I've found for these points in the book business is an author named Mur Lafferty.

1) Her novellas were originally distributed for free: http://www.podiobooks.com/podiobooks/search.php?keyword=the+afterlife+series and funded by donations.

2) As shown by her kickstarter when she wanted to start publishing the series in ebook, people were definitely buying what they had already had in another format: http://www.kickstarter.com/projects/mightymur/the-afterlife-series-heaven-hell-earth-wasteland-w?ref =live
Note $19k with an original goal of $2k.

As for the other points, who knows, but I can see parallels between music/video publishing and book publishing, and I honestly hope that we can soon simply starve the MPAA and RIAA out of business (fools can dream, neh?) with independently created and produced content that can easily match or exceed "professionally published" artists. (See also, Jonathan Coulton for music and to a lesser extent, the series "Sanctuary" for video)
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Anonymous Coward, 26 Jul 2011 @ 2:32pm

Re: Re: Re:
I'm still a pirate. You know who gets my money? An anonymous proxy service. $5 per month gets me a proxy in a secret bunker under the ocean and all the music and movies I can listen to.

I also download schematics for my 3d printer.

Why would I pay for something else when I can listen to, watch, and make anything I want for a few bucks a month plus materials?

In my spare time (between my full time job of pirating) I sell counterfeit medicine, make child porn, and kill toddlers. Babies are tasty.
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Anonymous Coward, 26 Jul 2011 @ 2:34pm

During his stint at EMI, Merrill profiled the behavior of LimeWire users and discovered something rather interesting. Those same file-sharing �thieves� were also iTunes� biggest spenders.

Is there more info on this method of profiling? Why would the COO of EMI have access to Limewire user info and individual iTunes accounts? (Did Limewire even have accounts? Or are they just looking at IP addresses?) I mean, I know he worked for Google and could probably attain access to such info, but how does one conduct a study like this without massively invading people's privacy?
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robin, 26 Jul 2011 @ 2:38pm

Re: Re: Re:
...why not address the issues...

address this proposition:

"piracy" is free market intelligence (i.e. what folks want, how they want it). do you as the seller of music copies embrace what potential customers are telling you, or do you purchase legislation to turn them into criminals?
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PaulT (profile), 26 Jul 2011 @ 3:00pm

Re: Re:
There's illustrations of the points raised here everywhere. They simply get dismissed by the fools in the industry because they "won't work for small acts", "won't work for big acts", won't make people into instant billionaires, they have to give up 2% of their direct control and all sorts of other stupidity...
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The eejit (profile), 26 Jul 2011 @ 3:05pm

Re: Re: Re: Re: Re:
Oh, he's not a troll. Trolls have morals.

He just likes arguing because quantum.
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The eejit (profile), 26 Jul 2011 @ 3:08pm

Re:
They can access general data...including IP address info, hashtags and purchases made, probably through an internal system.
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Anonymous Coward, 26 Jul 2011 @ 3:54pm

Re:
"profiled the file sharing behaviour of people who used Limewire against the top iTunes sales and the biggest iTunes buyers were the same as the highest sharing "thieves" on Limewire."

I don't understand this statement. If he is saying both camps pursued the same music, that would hardly be surprising. But if he is saying that the people that spent the most at itunes were limewire users, my question would be, how could he possibly know such a thing?
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Anonymous Coward, 26 Jul 2011 @ 3:56pm

Re: ARE YOU CRAZY?
The reason they don't want you to hear it first, is because most of the mainstream music......well...kinda sucks!!
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techflaws.org (profile), 26 Jul 2011 @ 10:49pm

Re: Re: Re:
Yet P2P traffic is down

Only natural since people are defecting to cyberlockers in droves. Uploads are being encrypted and renamed to "twd101.rar" or something. Good luck finding infringing material.

three strikes regimes are kicking into gear

And will receive major pushback as soon as enough people that are falsely accused (remember who RIAA sued?) and start fighting back via the courts and against their ISPs.

Paypal and other processors are making it harder for pirate sites to get paid

Which doesn't matter at all since most of the site owners never were in it for the money. They want to share and accept the money to cover server/traffic costs coming out of their pockets. It's just that you and your ilk painted them that way to give the whole debate a moral twist and make dumb/paid politicians act.

It will be funny to see you whine here again in the comments when none of those awesome strategies (that only took you 15 or so years to come up with) will put and end to "piracy". Although, it's much more likely that you'll simply spew insults as another AC and pat yourselves on the back for stopping it since darknets and sneakernets are so damn hard to measure.
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Anonymous Coward, 26 Jul 2011 @ 11:46pm

Re:
Nice positive effect of false flag attack. :)
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Anonymous Someone, 27 Jul 2011 @ 12:54am

Re: Re:
That is why I legally changed my last name.
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Prisoner 201, 27 Jul 2011 @ 1:57am

Re: Re: Re: Re: Re: Re:
It's like tourettes only longer and slightly more civil.
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Yeebok (profile), 27 Jul 2011 @ 5:30am

Re: Re: Re: Re: Re: Re: Re:
Ha, never heard it put that way before.
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Anonymous Coward, 27 Jul 2011 @ 6:04am

Re:
The statement is bs.

It says more about Merrill than EMI.
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PaulT (profile), 27 Jul 2011 @ 6:20am

Re: Re:
Well, thank you for that in depth and insightful analysis. Truly, I am now going to take the word of an AC over the word of the former COO of a major company in the relevant field.
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Rajeev, 28 Jul 2011 @ 5:55am

Try getting a whore for free!!!
And you think you should get music to download free???
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Michael Talpas (profile), 22 Aug 2011 @ 9:35pm

Re: Re: Re: Re: Re: Logic!
Lobo Santo said: (Curiously, solution works the same way when applied to the drug problem.)

No one ever died of a downloaded music overdose.
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AC, 4 Sep 2011 @ 5:24am

Re:
Rajeev,
you get to sample the whore with your sense of sight, hearing and smell before you commit to selecting her/him/it (and then indulging touch and maybe taste). If all whores came in cardboard boxes then you would have an analog to the music industry....
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