Blizzard To Korean Video Game Sports Assocation: How Dare You Promote StarCraft Without Paying Us!

from the entitlement-culture dept

Once again, we get a story of entitlement culture, where a company gets pissed off that someone is promoting their products, without getting a direct cut (not realizing, of course, that they get payoffs in other ways). This one comes to us via Rob, who sends in the story about an ongoing battle in Korea over the broadcasting of professional StarCraft matches. StarCraft has been amazingly popular for quite a long time, and there are professional players in Korea. It's such a big deal that a ruling body called KeSPA was put together, and organized the broadcast of professional StarCraft games on two separate networks. This has, undoubtedly, driven massive sales of StarCraft for many years in Korea. However, with StarCraft II, Blizzard is upset that it doesn't get a cut of the TV revenue and is trying to route around KeSPA. Apparently, as the fight has escalated, KeSPA has asked the gov't for help, and apparently regulators are threatening to rule that StarCraft II is an "Adult" game, which would make it difficult to broadcast on TV in valuable time-slots. You shouldn't bite the hand that promotes you...

Filed Under: korea, promotion, starcraft, tv
Companies: blizzard

Recognizing That 'Infringers' Are Actually Promoters, Why Not Reward Them?

from the smarter-business-models dept

A few years ago, we suggested that the entertainment industry could learn a lot from something that USA Today founder Al Neuharth did in the early years of USA Today: recognizing that the "thieves" taking his product without paying for it were actually his best distributors and promoters. In this case, it really was thieves -- college kids were stealing copies of USA Today. While Neuharth's lawyers suggested suing, Neuharth, instead decided to hire them as distributors, recognizing that this is what they were really doing already.

The same is quite often true with today's "infringers." Copyright law was really written for commercial infringement, and today because of its clumsy nature, it's capturing and punishing people who are really the content's best promoters and distributors. In many ways they should be rewarded rather than punished. And, it appears at least some businesses are trying to leverage that recognition. Jon Healey has the story of a product called Fotoglif that is targeting blogs and small publishers who don't have the money to license news photos. Thus, they either don't offer the photos or they use infringing images. However, Fotoglif tries to create an actual win-win situation for everyone involved, by allowing these sites to use photos for free and to profit from them. That's because the photos (licensed from the big agencies) include some small ads in them as well, with the ad revenue being split between the copyright holder, the publisher and Fotoglif.

Who knows if this particular business succeeds. I have my doubts that it can actually get enough usage or ad rates high enough to actually make it work as an ongoing business. But the general strategy, of recognizing there's a better way to build win-win business models, rather than assuming that all of the value is in the content alone while ignoring the value of so-called "infringers" promoting and distributing the content for free, is definitely a step in the right direction.

Filed Under: business models, economics, fotoglif, infringement, promotion

Why Should Webcasters Pay 25% Of Revenue To Promote Musicians?

from the how-is-this-possibly-good? dept

After years of back and forth negotiating (and more than a couple public spats), it appears that SoundExchange and music webcasters like Pandora have finally worked out an agreement on webcasting rates. If you don't recall, the Copyright Royalty Board assigned absolutely ridiculous royalty rates a few years ago, which seemed to have no bearing on reality (random aside: no one has yet explained why we feel it's okay for a small group of judges to determine what is a "fair rate"). The original rates would almost certainly put most webcasting operations completely out of business. But before delivering that death sentence, SoundExchange, the RIAA-spinoff that gets to collect the money (and has a long history of hanging onto it for longer than necessary and having trouble "finding" the artists it owes money to), thankfully agreed to hold off enforcing the new rates while everyone negotiated.

Since then, there has been a wide variety of back and forth details until the official agreement was put in place today... and even though many of the news stories present this as SoundExchange somehow backing down and "Pandora" winning, the details, frankly, seem so out of touch with reality it's difficult to see how it makes any sense at all. The main issue is performance rights, which radio stations already don't have to pay because radio is helping to promote artists. The idea that webcasters/broadcasters should need to pay artists for the right to promote them to fans just seems bizarre and borderline incomprehensible in the first place.

Also worth noting is that the royalty rates that traditional broadcasters do pay (to composers/songwriters/publishers) averages out between 3 and 4% of revenue. So, if you really had to come up with a reasonable rate to pay performers as well, you might think that it would start around that same 3 or 4%. Even that would be a pure bonus for performers who are used to getting nothing as a royalty (tax) from radio. But... no. The agreement is an astounding 25% of revenue as a bare minimum, with a requirement to kick-in $25,000 just to be a webcaster at all.

Pandora claims they're happy about this because it keeps Pandora in business (and settles a big legal dispute, which hopefully allows them to go raise some money to stay in business). But it's a stunningly large percentage of revenue that will make things prohibitively expensive for most webcasters to really stay in business. You now have to have huge margins to get anywhere in a notoriously competitive business.

Who loses? Well, just about everyone outside of SoundExchange/RIAA. Already, despite being happy about this deal, Pandora has announced that it's sharply curtailing its free service, and if you listen to more than 40 hours per month, you'll need to start paying. Most webcasters now have a huge expense that will make it difficult for many of them to remain in business at all. Musicians are severely harmed as well. While a few top musicians might get a new royalty check from SoundExchange (when and if it gets around to "finding" those artists), most musicians will now get less exposure, making it that much more difficult for them to put in place the successful modern business models needed to succeed today. This basically just rewards the RIAA/SoundExchange and a few large artists who will get an extra royalty check. Everyone else is worse off.

Some might say the NAB and traditional radio stations also make out nicely, in that since these rates may harm webcasters, it takes away some competition, but even if the radio stations are happy in the short-run, it's a bad deal. These rates, certainly, will likely influence any eventual "performance right" that's added to terrestrial radio, and could significantly jack up the cost of running a regular radio station as well.

We're living in an era of amazing technological progress, where it's easy for anyone to go out and promote musicians to others and help get those musicians and a larger audience, and all the RIAA has done, time and time again, is work as diligently as possible to prevent anyone but itself from promoting artists. What a shame. This "deal" does nothing to help up-and-coming artists and will significantly limit their ability to get their music noticed.

Filed Under: performance rates, promotion, royalty rates, webcast
Companies: pandora, riaa, soundexchange

Feds Ask For Jailtime For GNR File Sharer

from the with-fans-like-these... dept

I have to admit that I'm still confused why the FBI was spending time going around arresting the guy who put up Guns 'N Roses' latest album, rather than focusing on issues that really matter these days. The arrest alone actually led to much more downloading than if they had just let it go. Yet, now, following a guilty plea, the feds are demanding a six-month prison term for the guy. For promoting the band. Considering how much downloads picked up after the news of the arrest broke, why isn't anyone demanding that we put the FBI agents who spent taxpayer money on this behind bars for even longer? Sure, unauthorized sharing of files breaks copyright law, but it's difficult to come up with any reasonable explanation for (a) spending taxpayer money on having the FBI track down and arrest the guy and then (b) sending him to jail. Every album that's released gets leaked online -- and plenty of musicians have learned how to use it to their benefit. That should make it clear that getting your music leaked online isn't about any economic loss. It's all about what sort of business model you choose. So, because Axl Rose chooses a bad business model, some guy who was sharing GNR music needs to go to jail and the FBI and the Feds need to be involved? Doesn't something seem wrong with this picture?

Filed Under: copyright, fbi, file sharing, guns n' roses, jailtime, music, promotion

Filmmaker Giving Away Movie Soundtrack For Free To Promote The Movie

from the yet-another-use-of-free-in-a-business-model dept

About a year ago, Mark Cuban had excellent suggestion for helping to promote movies: give away the soundtrack to the movie to everyone who attended the show in the theater. That would help give everyone another reason to pay to go see the movie and provide them something extra. At the same time, it would help promote the musicians involved in the soundtrack. It was such a good idea that, of course, most moviemakers have completely ignored it. But not all. Parker Mason writes in to let us know about Ryan Gielen, an executive producer of a new indie film that's been getting some buzz at various film festivals, called The Graduates. Gielen read Cuban's post too -- and was so inspired by it that he decided to try to use the suggestion, in a slightly modified fashion. Rather than making you go see the movie first, he's releasing one free track a week leading up to the release of the movie. Or, if you want to speed things up, you can buy the entire collection of songs... for $0.99... total.

They're not giving away all the tracks, but at least half of the soundtrack. They worked with a bunch of indie bands for the movie -- and most jumped on the idea pretty quickly, recognizing that the more successful the movie was, the more attention they were likely to get. He admits that bigger bands almost certainly wouldn't go for such a thing (nor would bigger movie studios), but they might be missing out on a lot in fearing the free promotion.

One of the key points Gielen makes is that to get The Graduates attention, they had to do something different because:

We don't compete exclusively with low-budget films. We compete with everyone. So what do we have to offer our potential audience to set us apart? A great film and a great soundtrack isn't enough, we need people to know about it.

Of course, it also helps to have good music, which is why the team working on the movie went out to find indie bands that they actually liked, which they felt would really mesh well with the movie and match well with the tastes of the target audience. But, of course, someone will stop by in the comments to explain why such a thing could never work on a bigger scale.

Filed Under: business models, free, movies, promotion, ryan gielen, soundtrack, the graduates

Guns N' Roses' Lawyer Says Dr. Pepper Giveaway Was Fraud... Even Though Axl Rose Liked It

from the you're-a-pepper-too dept

Ben S. writes in to let us know that the lawyer for Guns N' Roses is now accusing Dr. Pepper of fraud for its well publicized give-away of free bottles of the soft drink along with the release of GNR's Chinese Democracy album. As you're probably aware, the album has been delayed for years, and a Dr. Pepper exec announced earlier this year that if the album actually came out in 2008, the company would give free Dr. Pepper to everyone. The complaint from GNR's lawyer seems to pick up on two points -- which somewhat contradict each other. First, he's upset about the giveaway in that it suggests some sort of endorsement by the band of Dr. Pepper. In some ways, this is similar to the recent dispute between 50 Cent and Taco Bell. Like that case, it's difficult to see the damage done here, as there's no explicit endorsement. However, the second part of the "fraud" complaint seems to be that, given that the promotion went forward, GNR is upset that Dr. Pepper screwed it up. There were apparently problems with the Dr. Pepper website on the day of the promotion, meaning that many people who expected to get a coupon for a free Dr. Pepper might not have gotten one.

The fear, then, is that since Dr. Pepper executed poorly on the giveaway (and people might think that the band was behind the promotion), consumers would be pissed off at the band about not receiving a free Dr. Pepper. I can sort of see the logic, though it's difficult to believe that a GNR fan is suddenly going to hate the band because they didn't get a free can of Dr. Pepper. Also, the claim about GNR being upset about Dr. Pepper's use of GNR in its promotion is undermined by the fact that Axl Rose seemed quite happy by the promotion when it was first announced, writing on the band's site at the time:

"We are surprised and very happy to have the support of Dr. Pepper with our album Chinese Democracy as for us this came totally out of the blue. If there is any involvement with this promotion by our record company or others we are unaware of such at this time. And as some of Buckethead's performances are on our album I'll share my Dr. Pepper with him."

To later claim to be upset that this promotion somehow was a "commercial exploitation" of the bands' rights, seems undermined by that statement.

Filed Under: dr. pepper, guns n' roses, promotion
Companies: dr. pepper

Guns N' Roses Loves Online Music, On Its Own Terms

from the release-it-already dept

It will be great when Guns N' Roses' Chinese Democracy album comes out -- if only because it'll end 14 years of speculation and hype, and maybe we'll stop hearing about it for a while. It's scheduled for release on Sunday (and will be available only at a single chain of stores, thanks to an exclusive agreement), but the band is already streaming the record on its MySpace page. This comes after the band got the FBI to investigate a blogger who posted some songs from the album online a few months ago; the blogger was eventually arrested, and recently plead guilty in a plea bargain. So, like so many people in the music business, it appears that GNR love the power of online music as a promotional tool, as long as it's on their own terms. Having the guy who posted the songs prosecuted did nothing to stem the tide of illegal downloads of GNR songs, while his actions helped to promote the band and their work. Furthermore, what's the real difference between streaming the songs on MySpace, and having them freely available elsewhere online? Those who are so inclined can still find a way to convert the streams into downloaded files, while the streams could just point some users to download the album via BitTorrent, where it's readily available.

Filed Under: copyright, guns n' roses, music, promotion
Companies: myspace

Blogger's Arrest Resulted In Much More Downloading Of GNR Music

from the wrong-approach dept

Last month, of course, there was a big story around the FBI arresting a blogger who was accused of posting the music files from Guns N' Roses latest album. He now faces many years in jail, despite simply being a fan helping to promote GNR. As we pointed out, this was a huge mistake by GNR, as appearing anti-fan is a move that will almost always backfire.

As if to provide even more evidence of that, Bob Lefsetz does a quick email back-and-forth with Eric Garland of BigChampagne, the company that tracks file sharing activity. Garland points out that prior to the arrest, there was almost no file sharing of the album, despite the fact that the leak happened a while back. However, since the arrest, the numbers have shot way up, as the arrest has really only served to alert the public that the album is available for download on BitTorrent.

Now, the cynical among you (you know who you are) may conclude that this is all a marketing ploy by the band, knowing that it would attract a lot more attention for the album, and that's why they did it. Of course, that doesn't explain why the FBI is involved and why a fan of the band may now have to sit in jail for many years for helping to promote the band. If this really is a cynical marketing ploy, it's rather sickening that the FBI is assisting and a big fan of the band may end up in jail for it.

Filed Under: copyright, guns n' roses, music, promotion

You Don't Need To Make Money From Every Person Who Enjoys Your Product

from the it's-called-advertising dept

One of the points of contention we sometimes have with those who disagree with us about the role of free in a business model, is how you deal with the issue of "freeloaders." People often respond to our posts on business models that use free to point out that many people who get the content will never pay, and thus the business model is somehow a failure. Amusingly (and, perhaps, tellingly), most often these sorts of comments come from individuals who insist that they, themselves would never pay -- and basically suggest that copyright and artificial scarcity is necessary to protect artists from folks like themselves. But that's missing the point, entirely. The point isn't to get everyone to pay. In fact, it need not be to get the majority of folks to pay -- it's to build up your audience so that it's big enough that when you offer a scarce good of value, enough people do pay for that good. In such a world, the "freeloaders" aren't a problem -- they're simply providing free advertising.

Another way to think about it is that BMW creates some entertaining advertisements -- and plenty of people enjoy those ads without ever buying a BMW. Yet, those same people don't complain that folks who watch BMW ads without buying a BMW are "freeloading" off of BMW -- despite the fact that they are. Instead, they understand the nature of advertising is that not everyone buys the product that's actually for sale. In fact, a very small number of people may actually buy the product, but that's okay. It's not freeloading, it's just the nature of a promotion.

Cory Doctorow has taken this concept a step further in explaining yet another reason why micropayments aren't the solution for content online:

I don't care about making sure that everyone who gets a copy of my books pays me for them -- what I care about is ensuring that the everyone who would pay me decent money for a book has the opportunity to do so. I don't want to hold 13-year-olds by the ankles and shake them until their allowance falls out of their pockets, but I do want to be sure that when their parents are thinking about a gift for them, the first thing that springs to mind is my latest $20-$25 hardcover.

We've long pointed out plenty of reasons why micropayments aren't a real solution for the "online business model" question surrounding content, with most of the focus being on the mental transaction costs, and the fact that competitors will always beat micropayment solutions by eventually embracing business models using free, but Doctorow makes another good point about the failure of micropayments. Beyond the reasons we've discussed in the past, micropayments also focus too much on shaking the pennies from every passing individual, rather than recognizing the real win is in getting someone else to spend more on a bigger scarce product down the road.

Filed Under: business models, cory doctorow, freeloaders, micropayments, promotion

More Media Companies Realizing That They Can Profit From 'Pirated' Content On YouTube

from the about-freakin'-time dept

Pretty much every day or so, we end up getting into a debate somewhere in the comments here on Techdirt concerning the rather important distinctions between "theft" and "copyright infringement." While there are a bunch (the lack of a "loss" on the part of the owner being a big one), one important one is that you don't see anyone choosing on purpose to allow theft of their own products in order to boost their business -- yet, we see folks purposely choosing to allow copyright infringement to boost their own business models all the time.

In fact, the NY Times notes that a growing number of media companies have stopped sending takedown notices to YouTube, preferring to use the videos on YouTube as a part of their business model. Google has helped them out in this manner by allowing copyright holders to "claim" videos that they did not upload, and choose to share in the revenue created by ads, rather than requiring a takedown. Among those who have stopped doing takedowns entirely are CBS, Universal Music, Lionsgate and Electronic Arts. Universal Music is a bit surprising, given how it's been even more adamant than any of the other major record labels concerning how evil copyright infringement is. The NYT's is surprised by CBS's involvement, given that it's the sister company of Viacom, who is famously suing YouTube for $1 billion. Yet, CBS has always been much more open to YouTube, recognizing that if its shows were being uploaded, that was a sign of having a lot of fans, not something to be shut down.

The president of digital media at Lionsgate makes the point pretty clearly. saying that the company:

“[Doesn't] like the idea of keeping fans of our products from being able to engage with our content. For the most part, people who are uploading videos are fans of our movies. They're not trying to be evil pirates, and they're not trying to get revenue from it."

If only others would recognize this simple fact. Of course, a good starting point would be recognizing that copyright infringement isn't "theft."

Filed Under: copyright, infringement, promotion, videos
Companies: cbs, ea, google, lionsgate, universal music, youtube