The Lack Of A 'Golden Ticket' Business Model Doesn't Mean You Give Up And Go Home

from the how-do-these-people-keep-their-jobs? dept

This one is a bit surprising. Following the recent nutty statements from Prince, Kara Swisher has decided to take the contrarian position to explain why Prince might not be so crazy after all. Her reasoning is that she's spent several days down in LA talking to entertainment industry execs (her first mistake), and they seem to agree with Prince that the internet is a darned problem. Of course, to some extent, that's like asking the leading buggy whip makers their feelings on automobiles. Just because they haven't figured out a way to thrive doesn't mean that the automobile revolution is "over."

After spending several days here in Los Angeles this week, talking to execs, talent and others who toil in the entertainment industry--I can't say what I am hearing is that much different in terms of the continuing frustration with the lack of decent business models to replace the ones that have worked for so long and been so lucrative for the entertainment and media industry.

This is how disruptive business models work. The disrupted whine and complain about how the disruptors haven't shown them how to continue making the same monopoly rents they made in the past. But that, of course, ignores the nature of disruption. Disruption doesn't work by having someone come along and show the legacy players how to exactly replicate their old profits. It's the exact opposite of that. Disruption is when others figure out how to break down the barriers to do something more efficiently, and undercut the old business model. But that doesn't mean that there's anything wrong for the underlying benefit that people get.

More entertainment content -- movies, music, books -- are being made today than ever before. Anyone bitching and complaining about how the internet is "destroying" the industry isn't paying attention. What they should be focused on are all of the massive new opportunities created by this sudden glut of content, combined with massively more efficient (and often free) methods for content creation, distribution and promotion.

From music to movies to television, the biggest minds here still sound perplexed as to what will finally be the golden ticket to carry them through to the inevitable next era of digital distribution.

That single sentence basically describes the problem. These guys are sitting back and waiting for someone to hand them a golden ticket that replicates the old ways of doing things. That's not how it works. No one gave the buggy whip makers a golden ticket that let them keep their old lines of business going.

But the lack of a golden ticket most certainly does not mean there are no business models. Those who are embracing new business models are finding plenty of opportunity to do amazingly well (in fact, better than they did before). But, for the most part, it involves hard work and multiple streams of revenue. It's not the old "sit back and let the cash roll in" model that the industry is used to. But, some of us think that's a good thing.

"Why is the consumer always right?" said one exec to me this week in a typical statement. "You can't have a business if there is no business model."

It's a good thing the exec who said that did so anonymously, because otherwise his or her board of directors should be calling for him to be fired. The consumer is always right in a competitive marketplace because if you don't serve them, your competitors will. That there are still entertainment industry execs who don't get this is scary. And, saying there are "no business models" is so wrong that it again seems troubling that this exec still has a job in the industry. We spend a lot of time pointing to all sorts of working business models every day. They may not be the "golden ticket" that this exec wants where he gets to sit back and relax and see the cash flow in, but they can actually bring in a lot more money by leveraging a more efficient system, connecting better with fans, and giving them a real (scarce) reason to buy, rather than trying to bully them into paying through artificial scarcities.

From there, Swisher reverts back to Prince's statements:

If you remove the sillier parts of his quote that preceded it, such a statement is not unreasonable from an artist who wants to be paid for his creative efforts.

Thus, instead of mocking that sentiment, perhaps it is time for tech leaders to figure out a way to keep talent from being dragged into the future without so much kicking and screaming.

The role of the disruptor is not to make life easy for the disrupted. Swisher and these execs seem to be confusing the role of certain folks in the legacy industry with the overall entertainment industry itself. As noted, the entertainment industry is thriving. More movies, music and books are being created. More money is being spent. It's just that it's going to different players. There's no reason to "figure out a way to keep talent from being dragged into the future." The opportunities and wide open path are there. The problem isn't that tech leaders haven't made it easy for them. They have. It's that these guys are so myopically focused on the way they used to make money they don't realize that the new opportunities are already there and have been embraced widely by others.

Filed Under: business models, disruption, entertainment industry, prince

Prince: No Music On The Internet; The Internet Is Over

from the maybe-if-we-made-the-internet-purple dept

Remember back in the day when it seemed like Prince was the musician who really had figured out these new digital-era business models? He had done all these interesting experiments, many of which focused on selling new and unique scarcities, and not worrying so much about the infinite goods in the music. Honestly, it seemed like he was the first real "rock star" to be willing not to just experiment, but to embrace the digital era. But all that came crashing down really, really quickly when a few things became apparent. First, while he loved to experiment with new business models, he didn't seem to actually pay attention to the results. In fact, it became evident that he had little follow through ability at all. He would just throw stuff out there, with promises to his fans, and then not follow through at all.

Second, when it came to Prince and his music, he is all about control. Control is everything to him. And one thing that does not work in this new digital era is being ridiculously anal about controlling how others access or listen to your music. So, he went somewhat ballistic, suing various internet sites for copyright infringement, including YouTube and eBay, which were both odd choices. Since then, he's walled himself off further and further from the internet. Rather than embrace it, he seems to want to deny it exists all together.

And, it appears, he's now taking that to a new extreme.

Jeremy2020 points us to a recent interview with Prince by the Mirror out of the UK. Most of the interview just highlights the bizzaro "Prince World" that Prince lives in. On that subject, if you have never seen Kevin Smith's brilliant and hilarious half-hour discussion of his brief time in "Prince World," it's totally worth your time. Having seen that, the interview itself doesn't seem quite so bizarre, but does seem like "Prince-as-usual."

But, within the interview, Prince notes that his new album will only be released on CD, and not online. In fact, it looks like he's doing the exact same CD release strategy he's done before: release the album with a newspaper. If you subscribe to the newspaper, you get a free copy of the CD. The newspaper pays Prince a huge upfront, so he gets tons of guaranteed cash, and it helps the newspaper keep subscriptions. I actually think that part's pretty creative, even though he's done it before. But you would think that fits well with an internet strategy. Not according to Prince:

He explains that he decided the album will be released in CD format only in the Mirror. There'll be no downloads anywhere in the world because of his ongoing battles against internet abuses.

Unlike most other rock stars, he has banned YouTube and iTunes from using any of his music and has even closed down his own official website.

He says: "The internet's completely over. I don't see why I should give my new music to iTunes or anyone else. They won't pay me an advance for it and then they get angry when they can't get it.

"The internet's like MTV. At one time MTV was hip and suddenly it became outdated. Anyway, all these computers and digital gadgets are no good.

"They just fill your head with numbers and that can't be good for you."

Of course, this won't keep Prince's music offline. The music will be online in no time at all, and it'll be everywhere, except that Prince won't have any control or say in it whatsoever. But, of course, if he thinks it's over and outdated and no good at all, he won't notice that because he won't be online.

Filed Under: business models, internet, music, prince

Prince Discovers That If You Charge People To Connect With You, You Actually Have To Connect

from the well-that-didn't-work dept

If you've never seen Kevin Smith's long, but quite funny, explanation of his week of making a documentary for Prince, it's quite worth watching -- just to get a sense of "Prince World" and the way Prince will have big ideas that he starts, but never does much to follow through on. With that as background, it's really not surprising to read about the absolute disaster that his recent "fan club" business model experiment became:

The result, LotusFlow3r.com, resembled a galactic aquarium, featuring doodads like a rotating orb that played videos. The promise: fans who ponied up $77 for a year-long membership would receive the three new albums, plus an ensuing flow of exclusive content, like unreleased tracks and archival videos.

A year later, LotusFlow3r has gone dark, thousands of Prince's fans are very annoyed and Clay has been dismissed from Prince's kingdom almost as abruptly as he was invited in.

The mess got a lot more attention lately when a supposed "glitch" (uh, ok...) started automatically charging fans credit cards for membership renewals, despite the fact that the site had gone dormant and people had specifically asked not to have their membership renewed.

There was a point, a few years back, where it looked like Prince would be the first rockstar to really embrace these sorts of new business models. He definitely was doing all kinds of experiments that involved getting people to pay for scarcities, often while giving the music away for free. And many of the experiments looked like they were done in a way to better connect with fans. But it quickly became apparent that Prince was missing a big element in all of this, in that while he wanted to connect with fans and give them a reason to buy, he also wanted to be massively controlling about it.

The one thing that artists who are successfully embracing these models are discovering is that, in part, you have to go with the flow, and see where your fans take you. Part of the connecting is listening to the fans, rather than just telling them how they must enjoy your works. Prince has never been particularly good at that aspect of the fan relationship. We've talked about the value of improvisational business modeling, where you do regular experiments -- and Prince certainly does that, but at no point does he seem to pay attention to how the fans react to the improvisations.

In the end, he seems entirely focused on his own whims, and while that may be entertaining for himself, it appears to be pissing off an awful lot of fans. If you're Prince, and you've got fans to spare, perhaps that's fine. But it's hardly a model worth emulating.

But there's a bigger point here as well. If you're trying to use a CwF+RtB-style business model, you have to actually connect with fans in some manner. You can't just leave them high and dry. Is that difficult? Sure. Does it take work? Absolutely. But isn't that part of the point? The value that's built up from genuine connections is what makes these business models work. Taking people's money and then leaving them feeling empty handed may be the way the recording industry used to work, but it's not the path forward.

Filed Under: cwf+rtb, kevin smith, prince

Should Copyright Holders Pay For Bogus DMCA Takedowns?

from the seems-reasonable,-doesn't-it? dept

A few years ago, you may recall that Universal Music issued a takedown for a 29-second video involving a little kid dancing to a Prince song playing on the radio in the background. While the woman issued a counternotice and had the video put back online, the EFF sued Universal Music, claiming that it had filed a false DMCA takedown, since it did not take fair use into account. Universal Music tried to claim that it it shouldn't have to consider fair use, since fair use is just a defense, not a right. While the court eventually did (much to many people's surprise) say that copyright holders do need to take fair use into account, it's not really clear what sort of punishment there is for those who do not. In fact, we've seen that it's quite difficult to get any actual punishment for those who file bogus DMCA takedowns.

With that in mind, it's interesting to see that the EFF is now trying to recover its legal fees in the case, claiming that Universal's actions violated section (f) of the DMCA, and thus it should be liable for attorneys fees. Universal claims that there is already a "remedy," which is the counternotice process. But if that were the only remedy, then why does the law allow for legal fee recovery. Furthermore, if the only remedy is a counternotice process, there is nothing to really stop the filing of bogus DMCA notices, since there is no punishment for such activity.

In the linked article, Bennett Haselton argues that paying legal fees like this might not actually make sense, and worries about the legitimate content holder who accidentally files an incorrect DMCA getting hit with a big legal bill. But, again, I'm not sure how that applies. Shouldn't we be just as worried about the completely innocent individual hit with a DMCA takedown and the process they need to go through to get their legal content back online? Given how massive the damage awards can be for simple (even incidental or accidental) copyright infringement, the fact that there is barely any real punishment for bogus copyright claims seems incredibly one-sided and unfair.

Filed Under: dmca, eff, legal fees, prince
Companies: universal music

Prince: So Close, Yet So Far

from the so-right,-but-so-wrong dept

The musician Prince has been quite fascinating to follow over the years from a business model perspective. He has aggressively experimented, and for a while seemed to be the perfect example of a musician who understood how to embrace new business models allowed by the internet. He was creating tons of new music, some of which he was giving away free in order to promote scarce aspects of his business model, such as concerts (he sold out 21 straight concerts in London after giving away his latest CD totally free), while also embracing the idea of getting people to pay him upfront to create music. He also experimented with things like having companies sponsor him, setting up a subscription fan club and even owning a dance club in Vegas where he would perform regularly. All were perfect examples of the sorts of business models that we talk about all the time. And the model was clearly quite successful for Prince, helping him to earn quite a bit of money off of those scarcities.

Yet, about a year ago, we all began to realize that, as successful as Prince had been in embracing these new business models, he had yet to realize why they worked, and started to attack the very tools that made them so successful. For example, he sued YouTube, eBay and The Pirate Bay. Then he went after fan sites and even a bunch of musicians who made a tribute album for his birthday. And, of course, he famously was involved in a few cases of demanding people take down YouTube videos that just happen to have Prince music playing in the background.

The problem is that he while he's benefited from these tools that made various scarcities (the creation of new music, concerts, etc.) more valuable, he seems to overvalue the content and undervalue (extremely) those tools. Thus, he seems totally against the idea of anyone else being able to profit from the music, even if it means he profits more from it. It's a common mistake, but Prince seems to have taken it to extremes. He's benefited so much from these models -- and in misunderstanding them, he risks destroying his legacy. He could have been a pioneer adored by fans, like Trent Reznor -- but, instead, he's been taking a very anti-fan approach. While there are still plenty of diehards, his views have turned off many former fans.

It's tragic, too, because you read interviews like one he just did where he expresses his disdain for the internet these days, and you just wish he would make the connection. He's right about music, by itself, not being a good product to sell online, but then misses the point that this isn't a bad thing if you use it (as he himself has done repeatedly) to drive more business to other parts of your business model:

"Today, it's not realistic to expect to put out new music and profit from it. There's no point in trying to put new music out there and keep it from being (exploited)."

And that's why you build business models (again, as he himself has done) where the musician benefits from that "exploitation."

It's really too bad that such a pioneer doesn't even realize how he was a pioneer, and is now trashing part of what made him so successful.

Filed Under: business models, copyright, internet, music, prince

Judge Says Copyright Holders Must Consider Fair Use Before Sending DMCA Takedowns

from the this-isn't-over-just-yet... dept

Strong copyright system supporters have always tried to push aside fair use. Sometimes they pretend it doesn't actually exist. Sometimes, they claim that it stifles creativity. However, in the last few years, they've pretty much aligned their talking points on fair use. You'll hear it repeated again and again: fair use is "just a defense, not a right." This is a bit of semantics that basically tries to minimize what fair use represents and what it's designed to allow. The argument, effectively, is that there's no "right" to fair use, and there's no clear cut meaning for fair use. Instead, it can and should only be brought up as a defense in court. In other words, fair use does not exist until a court says it exists.

This is misleading and not entirely correct. The reason fair use is allowed as a defense is because there is a right to make use of certain types of content in certain types of ways that constitute "fair use" without first needing to receive permission from the copyright holder. But, it was still this argument that Universal Music recently used to defend itself against a lawsuit from the EFF, concerning the now infamous 29-second video of a little kid dancing, with some music from Prince playing in the background. Everyone now agrees that this video was fair use. Universal Music let the video go back online and did not sue. The DMCA has a clause that allows damages to be sought against a falsely filed takedown notice -- which was basically designed to punish those who send a DMCA takedown claiming copyright over something for which they do not actually hold the copyright. In this case, the EFF claims that since this is obvious fair use, then the DMCA notice was falsely filed. Universal, on the other hand, asked the court to dismiss the case, saying it need not consider fair use when filing a DMCA takedown notice -- mainly because fair use is just a defense, not a right.

The judge handed the EFF something of a victory, though, allowing the case to move forward and noting that copyright owners should consider fair use before sending out takedown notices. To be honest, I'm a bit surprised by the decision. While I agree that it makes sense, it wasn't at all clear that the law actually meant for fair use to be taken into account. In fact, I rather doubt that this sort of scenario was even considered by those who wrote and debated the DMCA. Universal will likely appeal on this point, and so we're pretty far from establishing definitively if fair use needs to be taken into account. However, if this ruling stands, the claim that "fair use is a defense, not a right" loses a lot of its bite. The court effectively said the opposite:

Even if Universal is correct that fair use only excuses infringement, the fact remains that fair use is a lawful use of a copyright. Accordingly, in order for a copyright owner to proceed under the DMCA with 'a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law,' the owner must evaluate whether the material makes fair use of the copyright.

The judge also noted that it wasn't any sort of onerous burden to expect the copyright holder to make a fair use determination, since it has to review the content to make sure it's infringing in the first place:

Undoubtedly, some evaluations of fair use will be more complicated than others. But in the majority of cases, a consideration of fair use prior to issuing a takedown notice will not be so complicated as to jeopardize a copyright owner's ability to respond rapidly to potential infringements. The DMCA already requires copyright owners to make an initial review of the potentially infringing material prior to sending a takedown notice; indeed, it would be impossible to meet any of the requirements of Section 512(c) without doing so. A consideration of the applicability of the fair use doctrine simply is part of that initial review.

All in all, this is a definite win for supporters of fair use -- and a definite loss for those who trot out the "defense, not a right" line. As for the rest of this particular case, though, the judge indicated that the EFF may have a difficult time winning, noting that even if the copyright holder takes fair use into account, the specifics would have to be pretty extreme to then decide that it used "bad faith" in sending the takedown. In other words, the judge is saying that Universal should take fair use into account, but that doesn't mean that sending the takedown was done in bad faith.

Filed Under: dancing baby, defense, dmca, fair use, prince, right
Companies: eff, universal music

Universal Says It Can Ignore Fair Use In DMCA Takedowns

from the and-it-might-be-right dept

Last year, we wrote about the case where Universal Music sent a takedown notice to YouTube when a woman posted a short (29-second) video of her toddler running around with a Prince song (barely audible) in the background. Universal backed down when challenged on the takedown notice, but the woman (with the help of the EFF) hit back and have sued Universal Music for a false takedown.

The DMCA has provisions for a copyright holder to assert ownership, at which point the service provider needs to takedown the content. Whoever posted the content can protest that the content was legally posted -- which is exactly what happened in this case. However, the DMCA also says that filing a false DMCA notice opens one up to damages from those whose content was taken down. This was in an effort to discourage false DMCA notices. This provision was used last year against Viacom for its false takedowns on satirical clips of the Colbert Report.

The question then, is whether or not filing a takedown notice on content that is used in a way consistent with "fair use" is a misuse or not. Universal Music's claim is that it is not reasonable for the copyright holder to take fair use into consideration before sending a takedown notice. At a first pass, it sounds like the judge agrees.

As ridiculous as this whole situation is, the judge and Universal Music may be correct under the existing law. There isn't anything in the law that says the copyright holder needs to take into account the user's defenses. It just says they need to be the legitimate copyright holder (which Universal Music is).

The real problem, then, in this story isn't Universal Music's actions (though Universal was acting in a rather heavy handed manner in getting the video taken down), but with the DMCA itself that forces a takedown before the user gets to respond with a defense. It's this "notice and takedown" provision that's a problem. If, instead, we had a "notice and notice" provision that allowed the user to respond before the takedown occurred, it would be a lot more reasonable and would avoid ridiculous situations such as this one.

Filed Under: copyright, dmca, fair use, prince, takedown notice
Companies: eff, universal music

Prince Sues Musicians For Making A Tribute Album For His Birthday

from the happy-birthday! dept

It's been really disappointing watching how Prince has squandered what had been seen as a enlightened view of how music works in this day and age. Instead of continuing to embrace that, and use it to his advantage, Prince has become fantastically anti-fan, and day-by-day seems to be destroying his reputation. It started with threatening fan sites, quickly followed up by lawsuits against YouTube, eBay and the Pirate Bay, and more recently has involved a bizarre and ill-advised strategy of taking down YouTube videos that he probably had no right to take down.

The latest case involves fifty Norwegian musicians, who teamed up with a Norwegian record label to create what they thought was a nice 50th birthday present for Prince: a "tribute" album with 81 covers of Prince songs. They figured that it would be a nice gesture to send Prince a copy, and contacted his representatives to figure out where to send a copy. What they didn't expect was for Prince, instead, to turn around and sue the label and all fifty musicians. He's also demanding that all copies of the album be destroyed.

There is a question of compulsory licenses here -- as Norway requires about $0.10/song, and with 81 songs, that's about $8 per album. The label (potentially incorrectly) believed that since it wasn't making any money on the album, it didn't need to pay. Even if the album ran afoul of copyright laws, this response from Prince is just dumb. Here are a group of musicians who are paying tribute to him, and he sues them. What better way to piss off a group of truly devoted fans?

Filed Under: birthday, copyright, music, norway, prince, tribute album

Even Lawyers Are Confused About What's Legal Or Not In The Prince/Radiohead Spat

from the wait-a-second... dept

We were just discussing how copyright has been stretched and twisted so many times that it really just isn't designed properly to handle internet communications -- and a good case in point may be the funny little spat we covered a few weeks back between Prince and Radiohead. If you don't recall, Prince performed a cover of a Radiohead song at a concert. Someone in the audience videotaped it and put the video on YouTube. Prince's representatives demanded that the content be taken down under a DMCA request -- raising all sorts of questions. After all, Prince didn't own the copyright on the song. That's owned by Radiohead, whose lead singer wanted the video back online. Prince didn't own the copyright to the video either, since he didn't take it. So how could he use the DMCA to take down the video?

But, it's not that simple, apparently. As Ethan Ackerman details, as lawyers began to think about the situation, the more confused they got, noting that maybe there was a right under anti-bootlegging laws. Only, then things got more confusing, because it turns out that anti-bootlegging laws aren't actually a part of the copyright act (though it does fall under the same "title" just to add to the confusion), and the DMCA (under which the takedown occurred) only applies to copyright law.

However, again, we're left in a situation where the "law" is hardly clear at all, and even those who follow the space were somewhat confused over whether or not Prince had any sort of legal standing here. A law is not useful if the boundaries of that law are not clear, and if someone has no clue if their actions go against the law. In the internet era, copyright certainly falls under that category of laws in which it is no longer clear what is and is not legal -- and that should be seen as a problem.

Filed Under: confusion, copyright, prince, radiohead

Prince And Radiohead Fight Over YouTube Song

from the this-is-what-it's-come-to? dept

For years, Prince was the poster child for "getting" the internet and new media distribution opportunities. He experimented with a variety of different creative business models that suggested he got how the economics of music worked these days. It was working too -- with his efforts to give away his music helping him sell out concert after concert around the world. But then something changed, and Prince went ballistic, suing YouTube, The Pirate Bay and eBay and even threatening fan sites while demanding that even videos with tiny snippets of Prince music in the background get taken offline. The whole thing is quite surprising, and if he keeps this up, he's risking taking all that goodwill he built up for years, and turning himself into another Metallica. Becoming anti-fan is never a good idea.

The latest story, though, has a twist. Prince apparently did a cover of a Radiohead song at a recent concert. Someone filmed it and put the video on YouTube. Given his newfound hatred for YouTube, Prince demanded that the song be taken down. And here's where it gets interesting: Radiohead's Thom Yorke is demanding that it be put back online, noting that he owns the copyright on the song: "Really? He's blocked it?... Well, tell him to unblock it. It's our ... song." Of course, as that LA Times report notes, in true Streisand Effect fashion, the effort to take down the song has only driven much more interest in people trying to find the song. If Prince weren't suing so many people, you might even think he was canny enough to have done this on purpose as a marketing campaign.

Filed Under: copyright, cover songs, prince, radiohead, videos
Companies: youtube