New Study Confirms: Internet Is Contributing To Massive Profit Levels At Legacy Entertainment Firms

from the sky-is-rising dept

“We are seeing that digital is very much driving profits now, instead of disrupting it. Companies are figuring out how to monetize the migration of consumers to a variety of digital platforms, and this insatiable demand for content is fueling growth throughout the industry.”

The music sector is driving record growth in profitability from the expansion of licensed digital subscription and streaming services, growth in music publishing and rising smartphone and tablet penetration in emerging markets.

Film and TV production companies are driving their profitability through increasing revenues from digital platforms and investments in franchise-based films and higher-margin television shows.

Filed Under: entertainment industry, hollywood, internet, music industry, profits, recording industry

UK Finally Changes Copyright Law To Allow Private Copies, But Music Industry Says It May Challenge Move In The Courts

from the one-way-street dept

Filed Under: copyright, music industry, private copies, uk
Companies: uk music

Killing The Golden Goose: Copyright Holders Demand More Cash Even As Streaming Music Services Struggle To Be Profitable

from the because-that's-how-it-always-works dept

Spotify, by contrast, needs to negotiate directly with content owners (record labels and publishers) and maintain a huge library to satisfy all of its users’ different tastes, even though a large proportion of those songs are apparently never played. So its royalty costs are fixed at a high proportion of its revenues.

Ultimately, this means Pandora has a much leaner cost base than other services do. It paid out around 50% of its revenue in royalties last year. For Spotify, that figure is closer to 70%.

And yet, Pandora is still not really making money. Since its IPO in mid-2011, the company has eked out a quarterly profit just twice (Wall Street is expecting another small profit when it reports earnings on Thursday, July 24). Over the last two financial years it has racked up more than $75 million in losses. And despite these losses, content owners (record labels and publishing companies), perhaps envious of its growing user base and elevated share price, have been aggressively trying to squeeze more out of it in royalties. For some, this offers evidence of structural flaws in the Pandora business model.

Filed Under: compulsory licenses, cost of goods, golden goose, music industry, overvalue content, profitability, streaming, undervalue service
Companies: pandora, spotify

Fresh Off Being Called Out For Collusion, Legacy Music Industry Players Cite Need For Greater Collusion On Political Front

from the yeah,-that'll-do-it dept

When it comes to the music industry’s lobbying efforts in Washington, it is time for some harmony.

That message has gained momentum among music executives, who worry that squabbling among the various players — record labels, music publishers, artists, songwriters — will undermine broader initiatives to push for new legislation and regulatory reform.

[....]

Music groups are pushing for a range of new laws and regulations that they believe are vital to help their businesses survive in the digital era. But the interests of these parties do not always align.

Filed Under: lobbying, messaging, music industry, sopa

Aussie Security Research Hacks Music Charts, Puts His Own 'Songs' Up Top

from the nothing-to-it dept

Rather than spend years practising an instrument and writing songs, he compiled music from clunky electronic MIDI files and later by applying algorithms that squashed together public domain audio.

He then purchased three Amazon compute instances and wrote a simple bash script to simulate three listeners playing his songs 24 hours a day for a month.

Filed Under: australia, fraud, music industry, peter fillmore, security
Companies: cdbaby, mog, rdio, spotify

Kid Cudi Goes After Universal Again, Wonders Why His Millions Of Video Views Aren't Translating Into Radio Airplay

from the umg-is-still-there-to-take-a-cut-of-whatever's-earned-WITHOUT-its-help dept

"King Wizard 3.4 million views on Vevo, Just What I Am has 4.3 million and my shit is not on regular rotation on radio. Hmmm," Cudi Tweeted from his account, @ducidni.

"Trinidad James got 4.1 million views on his hit (rightfully so), and I hear that jam EVERYWHERE. Wheres my fuckin spins???" the rapper born Scott Mescudi added.

Filed Under: kid cudi, music industry
Companies: universal music

Recording Industry Could Catch More Flies With Honey, But Keeps Betting On Vinegar

from the chasing-8%-at-the-expense-of-the-other-92%-is-just-more-bad-math dept

Of the 5099 people surveyed between May and July this year, 47% weren’t able to distinguish with certainty between legal and illegal services, while only 16% actually admitted to accessing unlicensed content, and only 8% said they relied on illegal sources of music.

When those infringers were asked why they went to unlicensed content sources instead of legitimate sites or services, the most common responses were that the illegal sites were free, convenient and/or quick. Asked what would convince them to stop accessing illegal content, the three most common answers were that they would do so if legal services were cheaper and had all the content they wanted, and if it was clearer what was legal and what was not.

The missing content point is a stronger argument, providing file-sharers relying on it really are trying to access tracks that artists or labels have failed to make available through legit routes. And this is something the music business really ought to have solved by 2012.

[W]hile artists perhaps should have the power to control where their music is distributed, many of the Spotify resisters are acts who have made their millions already, and really should be thinking about the good of the wider music community. Because every artist shunning the streaming services is providing ammunition to the aforementioned self-confessed infringers.

The world has moved on, music consumption has changed, and the Napster generation are now at an age where they should be becoming the music industry’s biggest customers, but that’s not going to happen if the legit services they are embracing are lacking catalogue.

[A]n increasing number of people, when then can’t find an album on their streaming service of choice, will not just fall in line and go buy the record from the three shops that the artist or label has dictated can sell their music.

When I can’t find ‘Red’ by Taylor Swift on Spotify, I don’t think, “Gosh darn it, I’ll just have to go and buy it from Papa John’s pizza parlour“. I think, “Well fuck it, I’ll just not listen to it then, cos I’ve listened to enough sixteen track pop albums lately to know that a good chunk of it will not be very good. Also, Ed Sheeran co-wrote one of the tracks on it”. Meanwhile those others not willing to take the financial risk of being lumbered with a handful of filler tracks will Google ‘Red for free’ and download it off someone else’s hard drive for nothing.

OK, some of the infringers who complained about being confused may be taking the piss again. After all, most people finding content online via a search engine with ‘pirate’ in its name know there’s a very high chance the content they download isn’t legal, even if they plead ignorance. So education probably won’t work with this group. Then again, these are also the people who know how to hide their file-sharing from the three-strikes police, and to circumvent the web-blocks put up in front of The Pirate Bay, so there’s probably not much you can do about them.

But remember, this was only 8% of those surveyed, so I say fuck em. Let’s focus on the 47% who implied that they want to do the right thing, but find the whole thing too confusing. Let’s stop handing over cash to lawyers and technology whizzes who want to go after the 8% and focus on doing some decent education with everyone else. Because if OfCom’s research tells us anything, it’s that the music industry’s current educational initiatives, including the Music Matters programme, which expanded into the US this week, just aren’t working in the slightest.

I suppose Music Matters is better that the American record industry wheeling out millionaire pop stars to complain about how file-sharing is depriving them of record sales, but it still feels decidedly mediocre for an industry that, when it comes to selling artists and albums, is actually pretty good at engaging and enthusing consumers. It’s easy for me to sit here and criticise, and I don’t claim to have the answers. But for a start, perhaps instead of forcing ISPs to send out angry letters to those consumers mistakenly downloading unlicensed music files, the labels could start sending thank you letters to those who inadvertently use a legal store.

Filed Under: customers, infringement, music industry, opportunities, pirates

Ever Wanted To Present At One Of The Music Industry's Key Events?

from the here's-your-chance dept

Filed Under: midem, music industry, presentation, speaking

John Mellencamp: Thou Shalt Not Permit The Internet To Derail Our Gravy Train

from the holy-shit dept

We've written about John Mellencamp's anti-internet rants before, but this latest one doesn't just take the cake, it takes the whole bakery and turns it into a reality show on the Learning Channel, but with more melodrama and an even looser definition of learning. There's almost too much to unpack here, but let's start with the headline—a particularly audacious version of the "copying is theft" fallacy:

Good News! Ten Commandments Reduced Now to Only Nine

Really now, John? Internet behavior doesn't have any more authority over the ten commandments than vice versa. If it did, we'd already have knocked at least a few more over, since websites stay open on Sunday and graven image machines are a hit on Kickstarter. But let's just sail right on past that, as well as the part where he confirms that he does indeed love music, and meet the bee in his bonnet:

I've been doing this a long time and I'm confounded by the apathy of those who have participated in music-related successes and are now witnessing the demise of the entertainment business as it has existed since the beginning of recorded sound and moving pictures. So here I plan to ask some questions and my hope is offer a solution to the problem.

So, he's confounded by the apathy of the entertainment business in the face of piracy. If only they'd air commercials before movies or something. But, he promises a solution—and we'll save that for later, because I don't want to give away the punchline. He continues:

Tell me where, under today's conditions of de facto indentured servitude, will the new artists come from? If I were a young songwriter today, I would definitely be looking for another way to earn a living. The same would go for the young screenwriter or novelist.

Quiz time, John: What does indentured servitude mean? Time's up, because you already used the term in the most ironically wrong way possible. Indentured servitude means working for no wages in order to pay off a debt to your employer for an initial outlay of cash that allowed you to commence the work. Sound familiar? Because to me it sounds like a traditional record label contract, not something new or anything related to piracy or the internet. And, in case you didn't notice, there are countless new artists everywhere. The internet has enabled more artists to share what they create with the world—and to earn money with it—than ever before in history.

But that's not all Mellencamp is worried about:

And what about the guy who only had one or two hit records 10 or 50 years ago? What happens to this guy who depends on that income to support his family if people are stealing those songs now? Tough luck, right?

Well basically, yeah—tough luck. Were we supposed to shed a tear because a musician can't live comfortably forever on the back of "one or two hit records 10 or 50 years ago," and might have to actually produce some new material or else find some other way to earn his living? Copyright is supposed to encourage creativity, not act as welfare for artists.

So what does he have to say about all the artists who have figured out amazing new ways to make lots of money? If you guessed "it's a fluke, plus something at least mildly original and not totally debunked," then you're half-right.

And to all you bloggers who have prophesized that this new way is going to somehow provide sustainable careers? Your prophecies did not and will never come true. If there is the occasional sparkle of success, it usually turns out to be nothing more than a novelty, not a new business model.

So we can add Mellencamp to the list of people who have, apparently, been waiting for someone to tell them what the magic-bullet business model is, while smarter artists are out figuring out what works best for them and their fan bases. Our mystical blogger prophecies that artists can find new ways to make money will never come true, except for all those times that they have, which were flukes. Duh. Of course, these days there are an awful lot of flukes. Like this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one and this one. And that's just a few that I remembered and could easily look up, rather than any sort of representative sample. But they're all flukes.

Why is thievery allowed to continue on the Internet? And why do people think it's so impossible to correct? Right after radio was invented, they played music and sold advertising. Then it dawned on some: "Hey, they're playing our music, and they're selling advertising on our backs; we should get paid." So performing rights organizations like ASCAP and BMI were established with the express intention of protecting the intellectual property of artists who create it.

...

But where are ASCAP and BMI today on the new delivery system -- the Internet? Where are the record companies? Where are the book publishers? Where are the unions to which we pay dues that are supposed to protect actors, writers, songwriters, and producers? And, most importantly, where's the government? Apparently everybody's too busy making excuses and shrugging their shoulders to realize their gravy train has gone up the waterspout.

To provide an answer to John's list of questions: fucking everywhere. All of those organizations are heavily active online, collecting money for creators from a roster of legal services that grows longer every day. And, really, if we're talking about "thievery" on the internet, perhaps we should look at some of those collection societies who seem to be taking money from artists and not giving it back.

And the entertainment industry is most certainly not "shrugging their shoulders" and failing to notice whatever the hell their gravy train is supposedly doing. They love their gravy train, and are fighting tooth and nail to protect it. But, like "indentured servitude", John doesn't seem to know what "gravy train" means, and yet he has accidentally used it in an accurate way. A gravy train is a way of making lots of money with little to no effort (like say living off the profits of decades-old songs) and it's exactly the kind of thing you don't want in a functioning economy. A gravy train is something society resents, and something we try to take away from those who have it. John's right about one thing: the entertainment industry has been riding one for a long time.

If you can believe it, all that was just a preamble to his main point, the promised solution to all the woes of artists and the entertainment business. Turns out it's extremely simple, as facile solutions to complex issues often are: repeal the safe harbor provisions of the DMCA.

[The DMCA] was supposed to bring U.S. copyright law into the digital age but it included something called "Safe Harbor Provisions" that basically says that each artist is responsible for retrieving his own merchandise and shutting down anyone stealing their property, which is kind of a joke.

...

This law now, unintentionally, allows big search engines -- like Google, Yahoo, Bing, etc. -- to be the equivalent of a department store as both provide and sell many services and products. Let's say that Ralph Lauren has his merchandise in Macy's. If someone shop lifts it out of the store, he's told, "Hey Ralph, your stuff's being stolen off of our shelves. You better go try to collect your money for it. It's not our problem or responsibility since all we do is make your stuff available to non-paying customers..." In other words, under the Safe Harbor Provisions, search engines behave like unpoliced department stores where anyone can steal whatever they want with no real threat of significant repercussions.

I could write a whole post about those few sentences, but let's try to run through some of the glaring problems here. Firstly, the vast majority of copyright infringement is a civil issue, not a criminal one—so it has always been the copyright holder's responsibility to bring action against infringers. The DMCA's safe harbors are about liability—they say that you must go after the person who actually infringed on your copyright, not the provider of the tool they used. In other words, you have to hold the correct person responsible. Such protection is the backbone of the internet as we know it—without it, not only would websites be unable to allow user participation, even ISPs would be unable to provide open internet access and protect customer privacy.

But Mellencamp's primary concern is, apparently, search engines. We've heard this one plenty of times before, but perhaps never so ineptly described as it is here. The analogy to a department store is stupid in so many directions that it's like some kind of memetic virus, and I'm getting a headache trying to write a response. For one thing, retailers buy their stock up front and then re-sell it. If it gets stolen, it's their loss, not Ralph Lauren's. Secondly, Google doesn't have "stock" that people can "steal," it's a damn search engine, and the DMCA's safe harbors don't turn it into an "unpoliced department store." In Mellencamp's shoplifting analogy, the DMCA would be the law that says you can't sue the manufacturer of the shoplifter's car, or the company that made his backpack, or any of the other entities that provided tools he used while breaking the law—and that's what he finds unacceptable.

To put it plainly, radio kept track of their playlists, record stores kept track of their sales, each movie theater counted tickets, each bookstore kept track of books sold, and why? Because the law required it and the manufacturers demanded it. And so the same should apply to search engines. They should be governed in the same manner but they're not. The Safe Harbor Provisions allow intellectual property to be stolen because the search engines are not held accountable.

Search engines do not provide content. It's pretty hard to violate copyright while staying on Google—you have to click through to the site that is actually providing the infringing material. The only reason to attempt to pin blame on search engines is that it's convenient for copyright holders (or because someone doesn't understand how the internet works), not because it makes any sense for them to bear liability. And it's not at all clear what Mellencamp is asking search engines to count... the number of people who click on links to sites that contain infringing content? How is Google, or anyone other than the copyright holder, supposed to tell? There's no magic "detect infringement" algorithm—even real live humans struggle with the nuances of the law.

If anti-piracy legislation were the order of the day servers, wherever they may be including the mythical "cloud," could and would be shut down thanks to technologies that have been developed and successfully employed during the fight against terrorism. The means to get this done actually exists; what we're lacking, at the moment, is the will to do it.

Wait, what? Did John Mellencamp just call for drone strikes on the Pirate Bay, or does he think copyright filter technology was an important part of the war on terror? Either way, he needs to learn that taking down sites has proven to be futile, since replacements always pop up in no time. But then we get back to the hilarious premise that is peppered throughout the article: the notion that the entertainment industry is not trying hard enough. It sounds like he slept through the SOPA and PIPA fight, when anti-piracy legislation was very much the "order of the day", and that order was overruled by the people.

For the final paragraph of Mellencamp's rant, let's get granular:

The entertainment business has been criminally assaulted by wrong-headed thinking that says we need to keep up with the Internet.

If by "criminally assaulted" he means it feels like they need to be beaten over the head with it, then I agree. As for keeping up with the internet, maybe he's right—in a previous rant he called the internet "the most dangerous thing invented since the atomic bomb," and look what happened when everyone was worried about keeping up with that. Plus, as War Games taught us, there can only be bad news when the two coincide.

No, search engines need to abide and adhere to the laws that have governed this country for over 200 years.

And what about laws that have governed the country for 16 years? It's odd for John to be so fixated on respecting the law, since his entire premise is that we should stop respecting the DMCA's safe harbors. But maybe he's only interested in laws that have been around for two centuries—so I guess we should return a copyright term of 14 years, applicable only to maps, charts and books. That I can get behind.

It's a moral imperative. Thou shalt not steal. Ring a bell?

Yes, it's the same non-applicable tenet you brought up in the headline. If someone was stealing something, you'd have a point. Since they're not, you don't.

Calling it progress, ol' Hoss, don't make it right.

And calling it wrong doesn't make it disappear.

Filed Under: copyright, dmca, john mellencamp, music industry, ten commandments