Choruss Goes From Vaporware To Nowhere

from the still-waiting-for-our-questions-to-be-answered dept

Well, well. Back in 2008, we noted that Warner Music had hired Jim Griffin to put together a sort of skunkworks project to create what sounded like a mandatory ISP tax to allow file sharing, which was eventually dubbed Choruss. We say "sounded like," because (as you will see), any time we tried to describe the project, we started getting angry emails from Griffin about how we were wrong. Later that year, someone sent us a presentation that Jim was pushing on universities, asking them to sign up for a "voluntary blanket license" that would let students share files. Initially, upon seeing the presentation, my problem was the fact that (from the details presented) this did not sound particularly "voluntary" for the students -- and it felt like yet another situation where the real stakeholders were being left out of the discussion.

We received some upset emails from Warner Music and Jim Griffin over those claims, and so we put together a much more detailed explanation for why such a "music tax" doesn't make much sense. Jim and I then met in Nashville, and he tried to explain the program in more detail, but again everything was unclear. Griffin seemed to only tell us what it was not, rather than what it actually was. The only thing anyone seemed to be able to pin him down on was that it was "an experiment." An experiment with a compulsory license? No. A voluntary license? No. A file sharing system? No. A subscription music program? No. A collection society? No. That last one was confusing, since every presentation where he described Choruss he used the very first collection society as the key example of what he was trying to do -- but when I wrote it, I got an angry email from Jim insisting Choruss was nothing like a collection society. There were no clear answers, and we kept being told that we couldn't criticize it while it was still just an experiment. We had planned to discuss these issues publicly at "The Free Summit," but at the last minute Jim was unable to make it (for perfectly legitimate reasons).

After a few more email exchanges, in May of 2009, Jim Griffin agreed to answer all of our questions about Choruss. So, I posted my list of questions and many of our readers added their own questions as well. A few months went by and there were no answers. I sent him a list of questions via email, and he again promised to answer them. Last I heard from him was about a year ago, when he promised he was ready to answer the questions. But never did. Around that time, reports started surfacing claiming that tens of thousands of students had signed up for Choruss, with a plan to have it start in the fall of 2009. That seemed odd to me, since no one could say what it was. I started asking around for any university student who had "signed up" for Choruss, and not a single one came forward.

Earlier this year, we heard that Choruss had suddenly split from Warner Music, and was changing its focus to "make it faster, easier and simpler to pay for music." Again, we noted our confusion over the whole thing (and still wondered where the tens of thousands of students were).

The latest reports suggest that Choruss is more or less gone. Apparently, the folks from Audiogalaxy, one of the early P2P file sharing apps that was shut down due to legal issues, had "partnered" with Choruss to build a new "legal" Audiogalaxy, but that fell through when Choruss turned out to be the vaporware that many folks had expected all along. Griffin is now admitting that the project is "on hiatus." He is taking the blame for "blowing" the opportunity, but then suggests the real problem was the difficulty in finding the rightsholders to get them to sign up.

So, now, his answer is he thinks politicians need to step in and create compulsory or statutory licenses for file sharing, pointing out that "it's impossible to negotiate with each and every rights holder individually." It is impossible, but that doesn't mean the answer is to have the government step in and break the market again. Perhaps we should just accept that it's impossible and let the market work, as it seems to be doing without such licenses. Musicians are figuring out business models on their own that don't require some big bureaucracy to collect and distribute the cash or requiring the government to step in and set rates out of thin air.

Now, as much as I've clashed with Jim over the past few years (and the man does have a knack for writing incendiary emails), I never doubted his sincerity in trying to "fix" what he saw as the problems in the industry. It's just that all of the evidence suggested he was tackling the wrong problem, which was more about setting up a new middleman bureaucracy, rather than enabling musicians to embrace new business models on their own.

Filed Under: file sharing, jim griffin
Companies: choruss

Choruss Changes Its Tune; Splitting With Warner, But Many Questions Remain

from the but-now-what? dept

I had been meaning to write up this interview with Jim Griffin, of the infamous Choruss, from Knowledge@Wharton, because it caught my eye that he opened the interview by saying: "Warner owns Choruss; it incubated Choruss. Choruss is now becoming an independent company with Warner still involved." That caught my attention because others within the industry had been telling me that the big record labels haven't been impressed by Choruss at all and very few expected it to go anywhere -- in part because of the Warner connection. But it wasn't really clear what that meant. Now, Jon Newton, over at P2Pnet highlights that Griffin is claiming that Choruss' whole strategy is changing. First, he claimed that Choruss was being "re-established" as "an independent entity, neither owned nor operated by any music rights holder." And, from there, suggested the whole thing is different:

Choruss will no longer pursue limited campus experiments; We believe we've learned what we need to know to deploy Choruss. We learned this in negotiations with schools, meetings with teams of students working on Choruss, bargaining with record companies and publishers, meeting with their many associations, arranging for music clearances and much more.

Working with Warner was very helpful. We received priceless advice and legal counsel. We learned that students want to pay for music, but they want that service to traverse network borders, not stop at those borders. We know students want to share and bring live and commercially unreleased music to the public, and we want to help them. We also know that working together on music projects raises competitions concerns, whether real or perceived.

Now, this is all somewhat odd. After all, last summer, Griffin told the press that tens of thousands of students had already signed up for the program -- which confused us, because we couldn't find any of them. A few months ago, we went looking again and still couldn't find them, even as we were told (again) that starting in early 2010, universities would be using Choruss. And now we're being told that the whole university thing is gone? Did it ever actually exist?

On top of that, of course, Griffin promised to answer questions from the Techdirt community last May, and despite multiple promises to come through, we've still received no answers. I guess now that the story's changed, some of those questions don't apply any more. But the whole Choruss thing is looking more and more like a lot of smoke and mirrors -- just as originally predicted. Lots of talk, but if you try to pin Griffin down on details, you get the runaround. Every time we tried to pin down what it was specifically, Griffin would send angry, insulting emails to me, insisting I shouldn't talk about it until the experiments were done. So, now these experiments, which don't appear to have ever happened, are done -- does that mean we can talk about it? Or will we still be told to stay quiet?

Well, either way, I'm going to talk about it... because I'm still confused. "We learned that students want to pay for music?" Really? That's not at all what I've seen. Students are willing to pay for lots of things with scarce value, but I've seen little indication that they want to pay for something that's abundant. Some will, but very few want to.

Choruss' mission is clear: Make it faster, easier and simpler to pay for music. We focus on flat-fee, unlimited download and access models, both for group purchase and for individuals.

This was an idea that may have made sense a decade ago, but I'm not sure it will any more. However, if Choruss can actually make this work, more power to Jim and his team. I just think that boat has sailed. Focusing on getting people to buy music is sort of missing the big opportunity, which is working on having music make other stuff more valuable, and selling that other stuff.

But, of course, the much bigger question is how will Choruss accomplish any of this. Later on he talks about a price point below $5/month, which certainly is good -- if possible. But we've seen subscription services and the industry's demands have always made the price much higher. Will the industry really sign on to an all-you-can-eat music service with no DRM and no limitations for less than $5/month? I'm skeptical.

All in all, this still sounds like a pipedream. There are no details. No official partners. No customers. Just a plan to offer music for cheap. We've heard that before, and none of the record labels were willing to sign on. Why will it change this time?

Filed Under: choruss, jim griffin
Companies: choruss, warner music group

Update On Choruss: Universities Not Talking, Mysterious 10,000 Students Still Nowhere To Be Found

from the still-waiting... dept

We've been pretty big critics of the music tax concept, that was being pushed by Jim Griffin's Choruss along with Warner Music (who had hired Griffin to create this program). Of course, we've only been able to criticize what bits and pieces have leaked out from those who have seen Griffin's presentations. That's because, despite a busy conference schedule, Griffin never seems to publicly describe what Choruss really is. So, every time we hear some new info about Choruss, and explain why it's bad, we get angry emails from Griffin calling me all sorts of insulting names, and insisting that I've mischaracterized Choruss. So, we ask for more details, and we don't get them. Instead, we're given amorphous descriptions about how it's "an experiment." But what is the experiment? Well, it will be lots of things. As soon as we narrow in on an example, however, and explain why it's bad, we're attacked because the plan might not include that particular example. But we haven't yet heard an example that makes sense.

Griffin had agreed (as part of an angry email) to answer questions from the Techdirt community, and we obliged by sending him a long list of questions. Griffin had some personal issues to deal with over the summer, which was totally understandable, but we still haven't heard any answers. I'm beginning to wonder if we ever will.

But the biggest question I had was if he could explain who the "tens of thousands" of students were who Griffin told a conference in June would be using Choruss this fall semester. It seemed odd to find out that so many students had signed up for something when we still weren't being told what it was. As the fall semester started, we asked to hear from students who were using Choruss, and got silence -- which seemed odd. Apparently, it's because those tens of thousands of students hadn't signed up for the fall.

However, as a bunch of you have sent in, now the claim is that six college campuses will be testing Choruss this spring semester, but Griffin won't say who they are and the campuses won't admit to participating. They claim that they're afraid of backlash from folks like us -- but that makes me wonder. If the concept is so good, why not stand up and defend yourself for being a part of the program? If you can't defend the reasons for testing the program, it makes me wonder why you're doing it in the first place.

The article at the Chronicle of Higher Education provides a few new details that don't sound particularly appealing. Rather than (as some had suggested earlier, but since Griffin never made it clear, we just don't know if this was ever true) a system that would let students share files freely under some sort of blanket license, it sounds like "yet another limited music service." It will allow unlimited downloads, but you have to use the Choruss service (again, perhaps the article is wrong, but that's what it says). Similar services have been tried on various campuses and failed, so we're curious to hear what's so special about Choruss that will be different.

It still seems like Choruss is trying to solve a problem that doesn't exist. We're seeing more and more smart musicians put in place business models that work. They work in a way that lets fans choose to send money to the artists they want to support directly, without a big middleman. Choruss appears (from all we've heard) to be an attempt to set up a big middleman that will take big chunks of money and then use some magical process to figure out how to dole it out. But why do we need that overhead? The market is figuring stuff out. It doesn't need another middleman.

Filed Under: jim griffin, music, music tax, universities
Companies: choruss, warner music group

Bad Idea Redux: Revisiting The Music Tax

from the not-this-again dept

I was going to ignore this, but people keep submitting it. A student blogger for ZDnet has decided that he's solved the RIAA's problems: just tax every internet connection at $1 per month. This is, of course, unworkable and unwise for a variety of reasons. First, the recording industry would laugh (and laugh and laugh) at the idea that $1 from every internet connection would come close to covering what it (falsely) considers to be "losses" from file sharing. Remember, this is the same recording industry that's continually trying to raise the price per song downloaded to over $1. But, more importantly, there are so many problems with a music tax idea, that it's taken up multiple posts here.

However, now that the fall semester is starting, we're curious about the "tens of thousands" of students that supposedly had signed up for Jim Griffin's Choruss -- which is an effort to put just such a plan into practice, though on a smaller scale, just on university campuses -- and, as Griffin constantly reminds everyone -- with a variety of experimental business models rather than a single one (despite them all seeming to reflect this sort of "let's create a big pool of money" concept that makes little sense to us). Last we'd heard from Griffin, back in June, he promised to answer all of the questions folks here had asked him about Choruss. I just emailed with him before posting this, and due to some unforeseen -- but perfectly understandable -- circumstances, he has not yet had a chance to go through the questions, but promises to do so soon. In the meantime, it would be great to hear from any students arriving on campus this fall, and finding out they're a Choruss campus. To date, I've heard from students at two schools, both (happily) telling me their campuses had turned down Choruss, but I haven't heard from anyone who's actually seen the program. But, surely, with tens of thousands of students signed up, at least someone here knows one of them. It would be great to find out from their perspective what's happening.

In the meantime, though, I take solace in the fact that nearly every comment on the ZDnet post points out why the idea is a bad one. This is an improvement. A few years ago when people talked up the idea of a music tax, many people seemed to like it -- but these days, it appears that more and more people are recognizing what a bad and unnecessary idea it is.

Filed Under: music tax
Companies: choruss

Tens Of Thousands Of Students Have Signed Up For Choruss... Even Though No One Knows What It Is?

from the am-I-missing-something? dept

A bunch of folks have sent in the story in The Register about Jim Griffin's appearance at the World Copyright Summit, where he apparently told the crowd that "tens of thousands" of students at universities have agreed to voluntarily pay for Choruss. But, unfortunately, nobody seems to know what it is. Plenty of folks have been asking for an actual description of what it is -- and every time we're not told anything other than that it's "an experiment" that we're not to criticize. So, I'm curious who these tens of thousands of students are, and exactly what they've signed up for. If any of them is willing to share with us the details of what they signed, that would be great.

At one time, we were told that Choruss would be mandatory, but lately, Griffin has suggested that it will be voluntary. A voluntary system is much better, so that's definitely a step in the right direction, if that's true. But there are still plenty of other problems with such a system, many of which I've outlined elsewhere. It still seems like the entire program is based on a negative benefit ("you won't get sued") rather than a positive incentive ("here's a reason to give money in exchange for something you want") and a distortionary effect on the market (i.e., inserting unnecessary bureaucracy into a market, such that artists will actually make less). But, the fact that supposedly tens of thousands of students have agreed to pay for this when no details of what "this" is have been offered seems quite odd.

Separately, I should note that in our last post about Choruss, we solicited questions to be sent to Griffin which he has promised to answer. Due to my own hectic travel schedule, I haven't had time to go through the responses yet and whittle the list down to a more reasonable level, but I'm hoping to do that shortly. Alternatively, Griffin is free to answer questions and discuss these issues in the comments, but to date he has preferred not to do so, which is his right, of course. Still, if you have any additional questions for Griffin, feel free to add them in the comments, and I'll include them in the potential list (which will be narrowed down, so as not to overwhelm Griffin).

Filed Under: business models, copyright, jim griffin, licensing, music, questions
Companies: choruss

Ask Jim Griffin Questions About Choruss... Along With My Concerns About It

from the ask-away dept

It's no secret that I think Jim Griffin's plan for Choruss -- to set up a licensing system for P2P -- isn't just grossly flawed, but dangerous in many ways. We discussed at length why the very idea of any sort of licensing (i.e., a "tax") on online music is a bad idea. We've also worried about the apparent bait-and-switch nature of the plan -- in that, while it would grant either "covenants not to sue" or (potentially) "licenses" for any file sharing you do, it wouldn't stop the recording industry from still trying to shut down file sharing apps as illegal.

A few months back, I finally met Jim and was still left with many, many questions about the program -- especially because I felt that when anyone tried to pin him down on any particular bad idea that's been associated with the project, he would cut off the discussion by saying, "we're just experimenting -- so just let us get data before you criticize." And this, in fact, is a part of the problem. Rather than discussing the merits of any particular idea, Griffin keeps suggesting that -- despite evidence, history or theories about how various license programs work -- none of that is relevant to discuss until he's got data on his particular experiment. The way the plan is structured is that different (as yet unnamed) universities and colleges will begin testing Choruss this fall -- and each university will set it up how they see fit, in order to get comparative data. Thus, some could make it compulsory. Some could make it voluntary. Some could charge a lot. Some could bundle it with something else. Some could charge a flat fee. Some could charge a per download fee. Some could charge a per listen fee. But, if you try to dig down into the problems with any of these, Griffin has just said, "well, we're just experimenting, and we don't know if it's a good idea or not." Unfortunately, this avoids allowing us to discuss the details of why the concept is troubling, because we're told repeatedly it's just an experiment.

Jim Griffin to answer questions

That said, in an email exchange, Griffin agreed that if we asked folks at Techdirt what questions they had about the program, he would answer them -- and I hope that we can get more detailed answers. Now, to say our email conversation has been without conflict would be incorrect, and there was a bit of a misunderstanding about the timing of us soliciting questions (I had hoped to do it as a part of The Free Summit, which he was scheduled to attend, but for perfectly legitimate reasons, he was unable to attend at the last minute). But Griffin says he wants to answer whatever questions we have, and I'd like to send him some good ones.

My own concerns

To kick it off though, I'm going to share an edited/updated version of the last email I sent Griffin, after he asked again why I was so against Choruss. In pitching Choruss, Griffin likes to tell the story of the founding of SACEM, the very first collective licensing society. He talks about how since restaurants benefited from the music, they should pay for that benefit -- and how that's the basis of every collection society since: any place/service that benefits from music should pay for that benefit. I have serious qualms about that thinking, and here's why:

My worries about Choruss come from a few different angles. I think any sort of collective/group licensing scheme involving such a third party is an economically inefficient, and unnecessary solution, that ends up doing more harm than good. I know you like to tell the story of SACEM. To me, that's a horror story. It's a story of how to create a system that leads to massive wasted resources, inefficiency, a reliance on a bad (but easy) business model, followed quite quickly by regulatory capture that leads to an ever increasing inefficiency. Look at what SACEM has resulted in, and all I see are massive inefficiencies. The idea of adding to that legacy concerns me. If you look at collections societies, over time they just keep trying to increase how much they collect, and will often lean on the government for help in doing so. The story of PRS in the UK is instructive here.

My concern is specifically that we're seeing other business models that are working tremendously well. I know you were unable to stay for my keynote in Nashville, but I went through examples of many different artists (small, medium and big) who were embracing new business models to tremendous success -- none of which relied on any sort of licensing proposal.

So, then, along comes a licensing plan where I need to pay (and, yes, I know this isn't determined yet and experiments will occur) say... $5/month for Choruss. Now suddenly that's $60/year that I'm paying for music (some of which gets siphoned off by the bureaucracy in the middle, even if it's a non-profit, just for administration) that relies on some magic formula to figure out who it goes to. I'm now less inclined to spend additional money directly with my favorite artists, because I've already spent the money via Choruss. My favorite artists get less money (and I'm reliant on your system to make sure that my favorite artists are actually rewarded). My money is spent less efficiently, and now there's a group in the middle who has every incentive in the world (even as a non-profit) to try to get an ever increasing part of the pie.

That just doesn't make sense to me.

You talk about the two issues: collecting a pool of money and distributing it efficiently. What's wrong with letting the market do that? People are giving money, gladly, to the artists who give them a reason to buy. That's your efficient collection and distribution system all in one. Except it doesn't need a middleman like Choruss.

The problem the recording industry faces isn't that there hasn't been an effective licensing system in the middle. It's that they weren't giving people a reason to buy. A licensing scheme isn't a reason to buy. It's a removal of a threat. That's negative value (we won't sue!), not positive value (here's additional scarce value you want to pay for). The artists I highlighted in my presentation were all giving positive reasons to buy. I'm afraid that focusing on a system like yours focuses on that negative reason to buy (you won't get sued!) rather than the positive reason (check out all the benefits I get).

That's my big concern.

That concern is exacerbated by the fact that every time a direct question is asked about how Choruss will work, your response is "it's just an experiment, so we don't know." I recognize that it is an experiment and you don't know all of the answers, but it feels very much like a dodge. I'm sure it's a fine line, because there are many details you don't know about, but you've been so vague about everything that it's hard to know what to think. A bunch of universities have agreed to it, but who are they? Why would they agree to test something without the details being clear? Who's setting up what those details are? In Nashville, you said some would involve all students, but at the SanFran Music Tech event you were saying they'd all be voluntary for the users. It just has this quantum feel to it. Any time anyone tries to get specific and warn about a certain aspect, you can just claim "well, we might not do that."

My biggest concern, frankly, is that putting in this inefficient, unnecessary bureaucracy in the middle, we take away resources from the new, more efficient, business models that are working. Both times I've seen you speak about Choruss, you've claimed that those business models won't necessarily be harmed, because they can still be built on top of Choruss -- but that goes against fundamental economics. If people have less money due to Choruss, they're a lot less likely to buy into these other business models.

Now, I'll be the first to admit that competing between business models is a good thing, but the very foundation upon which any sort of collective licensing system is built is to basically get everyone to opt-in, somehow or another -- and thus is set up to crowd out more efficient business models. Otherwise it just doesn't work. So you have every incentive to get third parties (universities, ISPs) to put in place policies that either force, or heavily incentivize, their students/subscribers to adopt a much more inefficient plan. The incentives are skewed. You and the universities/ISPs benefit -- but users (and musicians) do not.

So, with that, let's kick off some questions that I have as "starter" questions, and let's see what else you guys can come up with in the comments. Also, feel free to let me know which of the starter questions/user submitted questions you like best. Once we have a good bunch, I'll send them to Griffin and when we get his answers, I'll post them here. Some of these starter questions are the same ones I asked earlier this year, but I've added a few as well:

• Why do we even need such a plan when plenty of musicians are showing that they can craft business models on the open market that work?
• How does adding yet another middleman make the music market any more efficient?
• What's wrong with letting the market mechanism handle the collection and distribution of the funds directly between musicians and fans?
• Will the recording industry promise to stop trying to shut down file sharing systems if this program gets adopted?
• Will the recording industry promise to stop pushing for 3 strikes if this program gets adopted?
• How will the program prevent the gaming opportunities, where artists set up scripts to constantly reload/download their songs?
• Why should music be separated out and subsidized while other industries have to come up with their own business models?
• Why should those who don't listen to much music and aren't interested in giving their money to the recording industry be required to participate if their university or ISP decides to make them?
• Why should we have a business model focused on negative value (you don't get sued), rather than positive value (here's something scarce that's worth buying)?
• The history of collections societies shows that they only tend to expand, and try to capture more rents. Why would Choruss be different?
• If Choruss becomes big, won't lots of other industries want in? Movies will want their own version. Then newspapers. And if newspapers are getting their cut, then why not bloggers too? Or blog commenters? Or just any website? The road this leads down is a bad one, where we end up creating massive bureaucracies to subsidize every form of content, rather than focus on business models where those content providers have to provide a reason to buy their particular product. How do you prevent that?

Filed Under: business models, copyright, jim griffin, licensing, music, questions
Companies: choruss

Jim Griffin Explains Choruss; We're Still Left Wondering Why It's Needed

from the still-don't-see-it dept

Last week, we had a bit of a back and forth with Jim Griffin, who's trying to build Choruss, a recording industry-backed service to have certain gatekeepers (universities initially, then ISPs, then...?) act as gatekeepers, who would effectively pay a per user fee, which they'd likely pass on to users, to allow those users to file share (sorta -- as the record labels would still likely try to shut down file sharing networks and still push for "three strikes" laws). I got to see Griffin present his "vision" for Choruss at the Leadership Music Digital Summit and spent some time chatting with him after (no punches were thrown -- it was quite friendly). That said, having heard from him directly, I'll say I'm still quite skeptical and somewhat worried about where Choruss is heading, and many others I spoke to in attendance felt the same way.

First, Griffin's point is basically this: for the past 150 years or so, any place that "used music to draw a crowd" eventually ended up paying some kind of license for it. It started with restaurants and then moved on to concert halls and radio and movies and television. So, to Griffin, setting up a similar licensing scheme (which he continues to say is voluntary, not compulsory) is simply the next obvious step. He paints himself as a technology supporter -- and I have no doubt that's true. He also points out that "piracy" isn't necessarily the biggest "problem," out there, though he still says it is a problem. He notes that there's a lot more competition for everyone's time and entertainment dollar spend. From his vantage point, the real problem is that all of the different rights holders are sitting around yelling at each other (it's true, it happened on an earlier panel) rather than agreeing to take a dollar and split that dollar. So, while they all fight, that dollar goes somewhere else. So, based on that, the solution is simple: set up a process to get the dollar, and then let everyone fight over that dollar behind the curtain, rather than out front in dealing with consumers directly. I've heard a very similar vision from folks like Fred von Lohmann over at EFF.

While I've been tough on Griffin, I will say that I believe quite strongly that he earnestly believes this is the best solution to the "problems" facing the recording industry. I don't think he's trying to create a pure money grab for the record labels or create what becomes a "music tax." The problem is that that's exactly what such a program is likely to become.

To defend against those claims, Griffin repeatedly says what he said earlier: this is just an experiment! He says that later this year a bunch of universities will launch with Choruss (in fact, he claims that more universities wanted to sign up than they could handle) -- but each may be using a different model. So, one university may require every student to participate. One may be opt-in. One may be opt-out. One may set up their own centralized file sharing server. Even how they measure what files are shared will be a variety of experiments: one may use technology tools. One may simply use self-generated "diaries" (like the old Nielsen/Arbitron systems). Payments may be based on downloads on one system and "plays" on another. The pricing may be different at different universities. Basically, it's just a series of tests, and supposedly we'll all "learn" from it and move on from there. In fact, he's hoping that since these tests will be done at research universities, that professors there will help study the results. So that's why Griffin has been upset about some of the coverage (including ours) that didn't highlight the fact that these are tests that could go in a variety of different directions.

He didn't address any of the questions we raised in that last post, in part because he doesn't have the answers to many of them yet (it's part of what he hopes shakes out from the experiments). However, there are still plenty of reasons to be quite wary of this plan. For all of Griffin's belief that this is the an experiment worth trying, I think it's built on faulty premises and will quickly go down a dangerous road. It's just too tempting to take this concept in exactly the wrong direction.

The faulty premise: that licensing is a way to "handle" the issue (even if he still doesn't want to call this a license). Licenses have always been a way to duct-tape on a temporary solution to a new technology. Adding yet another such license is simply layering on yet another layer when it's simply not needed. Griffin complains that "we cannot tolerate a society where paying for art, culture and knowledge is voluntary," but that's missing the point. It assumes, incorrectly, that paying for the content directly is the only way to make money off of that content. As we've been showing over and over again (and many others at this very event are demonstrating) that's simply not true. There are lots of ways to make money, and many of those are enhanced by having the music be available for free.

Griffin addressed that briefly, suggesting that those other models still work on top of Choruss, whereby Choruss acts as sort of a "basement floor" on top of which those other models can be built. That sounds great, but it sounds to me like a social welfare program, separate from what the market would allow. And once you build such a system, as we've seen over and over again, the folks who control it keep asking for more and more. So even if these are experiments and who knows where the final model will go, given who's backing it, it's not hard to guess: they're going to demand to make it about as close to compulsory as possible. ISPs are going to offer it and will simply add to everyone's bill. The program doesn't work at all if they don't do that -- and that's simply going to piss off a lot of people, just at a time when musicians actually have been showing they can win the trust (and money) from true fans.

Griffin suggests that ISPs won't have to make it mandatory, but will be able to "upsell" people to tiers that include the Choruss tax covenant not to sue license whatever it's called. He uses, as an example, just how difficult AT&T (he didn't name them, but it's clear who he meant) has made it to sign up for naked DSL. He interprets this to mean that the ISPs are good at upselling users. He ignores the fact that AT&T worked hard to hide the option and when that was revealed a rather angry outcry went up among AT&T customers who felt cheated.

When challenged on all this by an audience member -- Dave Allen, member of the UK band Gang of Four, who has now gone on to a second career helping musicians build real business models around their brands -- Griffin used "the cable model" as a way that this all makes sense: i.e., even if you don't like sports, you get ESPN in your basic cable package. Allen smartly shot back the fact that customers hate that and are increasingly looking at alternatives like Hulu and Boxee, that let them get away from such deals. All Griffin could do was insist that such bundling would "come back."

But Allen really got to exactly the heart of the problem with Choruss: it's a plan based on what's best for the existing stakeholders, not the customers. There are plenty of business models out there (and I've been hearing about a bunch more from musicians as I chat to them at this event) that work by creating a true win-win relationship between the musicians and the fans. They're models under which everyone benefits. Choruss doesn't work that way. It seeks to perpetuate the old model, where you have to "get" money out of others in order to "allow" them to do something. It's not about creating win-win models where everyone's happy to take part, making a willing transaction where they feel better off. The examples Griffin gives -- of older licensing models, ISP upsells and cable TV bundling -- are exactly the sorts of things that have always pissed off fans, and it seems likely that Choruss will do the same, no matter how much Griffin hopes to have it avoid that fate.

Instead, there are tons of models that don't involve anyone feeling angry or ripped off -- and those embracing them are finding them to be quite lucrative (in many cases more lucrative than older offerings). Griffin says that Choruss won't interfere with those other models, but that's unlikely (at best). If people feel they're getting ripped off by having to pay a university fee or ISP-fee (tax) for music, they're going to be less willing to participate in these sorts of new business models, already feeling pissed off and that they've "given" already... often under duress. That's not the model on which to build a successful industry.

Filed Under: jim griffin, music tax, universities
Companies: choruss

How Come SoundExchange Is Holding Onto Over $100 Million?

from the questions,-questions,-questions dept

We've talked about the ridiculousness of the various music collections societies being involved in the discussions on new music business models. To them, the answer is always the same: add another license and let us collect it. They're middlemen and they take in tons of money and would only be all too happy to take in more. Some got upset with us in the comments, by noting that some of these collections societies are non-profits. In fact, the new Choruss offering, which we've already explained why it's a bad idea that's more of a bait-and-switch than anything useful, has been described as a similar "non-profit" collections group.

But, as we've noted in the past, supposedly nonprofit collections groups such as SoundExchange (a spinoff of the RIAA) are notorious for not finding artists to pay -- even some of the biggest names in the business. Oh, and did we mention that if the royalties go "unclaimed" the recording industry (via SoundExchange) often gets to keep the money? Given that bit of info, it's perhaps no surprise at all that P2Pnet is noticing that SoundExchange's own tax returns note that the nonprofit was sitting on over $100 million at the end of 2007, a pretty significant leap over previous years, and a somewhat startling sum for a supposed "nonprofit" in charge of both collecting and distributing funds.

It seems like those musicians sure are difficult to find.

The P2Pnet report also points out that it will be interesting to see how much SoundExchange has spent on lobbying efforts. SoundExchange is actually barred from lobbying the government, but has been ignoring that for years by funding musicFIRST, a recording industry lobbying group that's trying to add a new license for radio stations to pay (collected by SoundExchange, of course) by claiming that radio is actually a form of piracy.

So, even if Choruss or these other collections societies seem to be designed with the best intentions in mind (and I'm sure they are), it seems that they're wide open to abuse -- which is yet another reason to be quite worried about simply handing over the entire industry's business model to such an operation.

Filed Under: collections, money
Companies: choruss, soundexchange

Dear Jim Griffin: Let's Have An Open Discussion About Choruss

from the we're-waiting... dept

Yesterday, we wrote a highly critical post concerning the details around Choruss, the recording industry's latest plan to get universities or ISPs to hand over a chunk of money in exchange for "covenants not to sue." On a private email list (which has been forwarded to me by a few members of that list), Mr. Griffin responded by claiming that my "report is factually incorrect in every respect."

I certainly hope that's true!

The points I've raised are that the industry will continue suing file sharing networks, that they'll still pursue three-strikes policies, and that Choruss will be expensive, diverting a chunk of money away from other legitimate business models, which many musicians have been establishing successfully, by adding yet another middleman. Is he saying all of these assertions are false?

Actually, Griffin doesn't address or refute any of these points at all. With respect to the last one, he actually confirms it, by claiming that Choruss will be costly to run.

The only "factual" point he disputes is a rather minor one: concerning whether the program would also cover publishers and songwriters rather than just the labels. He insists that it will, noting that Warner Music owns one of the largest publishers. That's true, but hardly eases the worries. It just suggests, again, that this is a plan for Warner and its subsidiaries, rather than for building a better system for all stakeholders. And he doesn't explain how the system can cover the necessary rights at the price points being discussed. In fact, by noting how costly the program is to run, and how it will lose money at first, it certainly sounds like he's saying "this program will start out cheap, but then we'll jack up the fees."

He claims that Choruss "cannot credibly be claimed to be a money grab -- the costs will exceed the fees," but that's highly misleading on several accounts. First, as noted, it confirms just how expensive the program will be. Second, if it's a pure money loser, than why would anyone be involved with it at all? Obviously the idea, and the whole reason why Warner Music is backing it, is that it expects this to be a money maker, eventually. Claiming that it's costly simply confirms my original point, that inserting yet another costly middleman is the last thing that we need in the process. And this just suggests that any early pricing is, once again... bait and switch. The eventual prices will have to be increased once people are locked in.

That seems to confirm my initial complaints, rather than show how they're "factually incorrect."

Mr. Griffin, (on a private email list), again tries to refute the claim that they haven't included the stakeholders in the process, by noting:

"the calendar is a clear refutation: The coming week has Choruss at SXSW, a music conference in Nashville and the music educator's conference in Boston. We've done appearances and podcasts with Educause, dozens of public meetings at colleges and a keynote at Digital Music Forum."

Yes, after coming up with the plan in back rooms, without input from the actual stakeholders, Griffin has started going out and presenting the plan to others. But there's been no open discussion with those of us worried about the inevitable consequences of his plan. There's been no explanation of why this is actually needed. There's been no attempt to actually respond to the numerous questions that we've raised about the plan and no attempt to bring the actual users into the discussion:

• Why do we even need such a plan when plenty of musicians are showing that they can craft business models on the open market that work?
• How does adding yet another middleman make the music market any more efficient?
• Will the recording industry promise to stop trying to shut down file sharing systems if this program gets adopted?
• Will the recording industry promise to stop pushing for 3 strikes if this program gets adopted?
• How will the program prevent the gaming opportunities, where artists set up scripts to constantly reload/download their songs?
• Why should music be separated out and subsidized while other industries have to come up with their own business models?
• Why should those who don't listen to much music and aren't interested in giving their money to the recording industry be required to participate if their university or ISP decides to make them?

Finally, Mr. Griffin takes a personal swipe at me, saying that no "responsible professional" would write what I've been writing. I've the highest respect for Mr. Griffin, who I do believe is very capable and very smart -- and most certainly has the best of intentions with Choruss. But it's a bad plan and he seems unwilling to address the many, many questions raised about it, other than to brush anyone who disagrees with him aside, and focus on talking to friendlier audiences. If he wants to brush me off as not a "responsible professional," that's fine. I'm willing to let anyone judge me on my work, not on what Griffin says about me. But the very least he could do is actually address the points that I've raised.

To date, his form of "discussion" has been to have Warner Music PR send me a statement saying that it's "premature" to issue any criticism of his plan. That's not discussion and that's not addressing the many, many questions raised by his plan.

But, there's some good news. That "music conference in Nashville" where he'll be presenting about Choruss next week is the Leadership Music Digital Summit... which I happen to be keynoting. So, I'd love to sit down with Griffin and see if he'll actually answer some of these questions, rather than continue brushing us off as being "factually incorrect in every respect," without actually addressing the fundamental questions raised.

Filed Under: bait and switch, covenant not to sue, jim griffin, licensing, music tax, universities
Companies: choruss, riaa, warner music group

Choruss' Music Tax Plan: Bait-And-Switch

from the ah-the-fine-print dept

Back in December, when we revealed how Warner Music, through consultant Jim Griffin and his new organization "Choruss," were quietly pushing a music tax on universities, Warner and Griffin snapped back angrily, telling us it wasn't fair to criticize the plan, because it was still being "discussed." Yet, as we then asked: where is that discussion and why isn't it taking place with the actual stakeholders? To date, the answer has been a near deafening silence. Despite having reached out to both Griffin and Warner Music directly, neither has shown any interest to actually engage in any form of conversation.

Now we're beginning to learn why.

While we discussed, in detail, why any such music tax is problematic, the details coming out make it clear that this is much worse than originally imagined. In fact, it's so bad that it can be described accurately as a bait-and-switch program designed to make people (1) pay lots of money (2) believing they're now free to file share and then find out that (3) file sharing systems will still be sued out of existence and (4) the users themselves, despite paying, will still be liable for massive lawsuits. It's basically a plan to give the record labels tons of money, handed over by universities (so users have no chance to opt-out) without actually changing anything.

After months of silence on what he was working on behind closed doors and in backrooms, Griffin recently gave a prepared speech supposedly revealing some "details" on the plan -- but as IP attorney Bennett Lincoff points out, what Griffin and Choruss are proposing is to pull the wool over universities and the public's eyes. The plan, as we originally pointed out, isn't a license: it's merely a covenant not to sue -- and that leads to all sorts of problems.

First, considering that the RIAA has been cutting back on lawsuits, that's not particularly meaningful. It'll still pushing for 3 strikes policies that will cut users off from the internet, even if they've paid up through Choruss. Furthermore, as was made clear in the speech, the RIAA won't stop trying to shut down file sharing systems. So, people who think this is a good idea because it will let them use The Pirate Bay or Limewire may discover after getting locked into this program that the lawsuits continue and those services keep getting shut down. Next, since it's just a covenant for the labels not to sue, rather than a license, it doesn't cover all of the other rightsholders, such as songwriters and the music publishers -- meaning that those who file share will still be wide open to lawsuits from those parties.

This is quite a scheme that the record labels and Griffin may pull off:

• Convince universities to buy into the program with no input from students. Universities will buy into it because they think they're "helping" deal with the "problem" of file sharing... and to avoid Congress forcing them into such agreements
• Universities pass the cost on to students (of course), so students are forced to pay for this
• Record labels get a big chunk of money for no good reason
• New expensive bureaucracy (Choruss) gets set up to siphon more middleman cash away from musicians
• Record labels don't do anything different, since they already have started moving away from suing individuals (sorta)
• The public thinks that file sharing is now legal
• Record labels continue to sue and shut down favorite file sharing networks, leaving only crappy, limited and expensive "approved" systems
• Individuals who paid up start getting sued by other rightsholders not covered by this agreement and not getting any money from it

And most of the press will eat it up as a revolutionary agreement whereby the record labels "legalize" file sharing.

Now can you understand why Griffin and Warner Music aren't open to any real conversation and will slam anyone who actually offers to take part in a conversation? A real conversation might bring out these issues, and that's the last thing the record labels want. They want everyone to believe they're working to make file sharing legal, when all they're doing is constructing a massive wealth transfer from people to the labels providing almost no benefit to consumers at all.

Filed Under: bait and switch, covenant not to sue, jim griffin, licensing, music tax, universities
Companies: choruss, riaa, warner music group