Just As Record Labels Resented Apple For Dragging Them Into The Internet Age, Movie Studios Resenting Netflix

from the amazing dept

It's been about five years since we posted a story about how the record labels were pissed off at Steve Jobs and Apple for building such a successful online music store in iTunes. The whole thing sounded counterintuitive. Prior to iTunes, the record labels had tried a series of dreadfully awful online music stores with horrible selection, crippling limitations, and ridiculous prices. While iTunes still isn't the savior that some in the industry think, it did drag the industry forward. And... for that, the labels resented Apple. It was basically because Apple had become the gatekeeper -- the position they were used to holding.

These days, it sounds like the movie studios are going through the same sort of experience with Netflix. A recent story highlighted how the heads of major studios are getting upset about how successful Netflix has been with its online streaming offering. They literally are complaining that Netflix has been too good at getting customers to use online streaming:

"The problem is that Netflix is not the company we thought it was when we started doing these deals a few years ago. It has changed," said a studio executive who requested anonymity because the studio's discussions were confidential.

Of course, as was the case with the labels and Apple, what's really going on is that the studios want a bigger cut. It's a case of overvaluing the content, and undervaluing the service. What the studio bosses refuse to admit is that it's the service that is working. There have been many attempts at offering streaming or download movies, and none of them did well, because they all sucked. They had the same content (or, in some cases better content), but since the services were so bad, no one used them. That seems like pretty clear evidence that it's the service that made this a success -- but they can't bring themselves to admit that. So, instead, they rag on Netflix and talk about how "unfair" it is that Netflix isn't paying them enough. And these are the same execs who complain about customers having an "entitlement mentality"?

Filed Under: internet, movies, resentment, streaming
Companies: netflix

Apple Trash Talking Spotify As It Prepares Its Competitor

from the all's-fair-in-love-and-competing-with-steve-jobs dept

There's yet another rumor going around that Apple is getting ready to launch a subscription music service. That's been rumored for ages, and it would be surprising if the company didn't do it. In fact, many were surprised that after Apple shut down music locker Lala that it didn't immediately launch a cloud based subscription offering. But, perhaps more interesting, is the fact that Apple has also been spending time trash-talking Spotify to music industry execs. We had mentioned, when Apple shut down Lala, that it would be a good time for Spotify to figure out how to launch in the US. The company has been trying for quite some time now, and the record label demands are basically impossible to meet. And it sounds like Apple is encouraging that. As Greg Sandoval reports:

In meetings in Los Angeles recently, Apple executives told their music industry counterparts that they had serious doubts about whether Spotify's business model could ever generate significant revenues or profits, according to two sources with knowledge of the discussions.

But Apple executives worried about the effects of a free music service might have on the rest of the market. They noted that it's tough to sell something that someone else is giving away, the sources said. One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.

Ah, the amazing ridiculousness of confused short-term thinking. While I also have questions about Spotify's ability to generate significant revenues long-term, the recording industry is making a huge mistake if it buys into the idea that Spotify is likely to cannibalize digital sales. If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading. Yes, there are a bunch of reports that suggest Spotify gets people away from The Pirate Bay and into a system that at least gets the labels some money.

Filed Under: cloud, music, streaming
Companies: apple, spotify

Canadian Recording Industry Demands 45% Of Revenue; Then Blames 'Pirates' For No Streaming Music Services

from the wow dept

Ah, the recording industry. We've already discussed how ridiculously complex it is for a music startup to obtain the licenses it needs. Combine that with the ridiculously high rates demanded by the record labels and the fact that they demand licensing for things that shouldn't need additional licenses, and you understand why it's so difficult for music startups to survive, and why the market is so fragmented.

You hear it all the time. Spotify isn't available in the US. Pandora isn't available outside the US. And so on. Name the startup and there are serious restrictions on it. Things in Canada are pretty bad, where they basically don't have any of these music services, and it's because the Canadian recording industry is apparently demanding absolutely, positively insane fees -- such as 45% of gross revenue. Yes, gross revenues. If you know anything about the finances of these kinds of businesses, that's laughable. As Pandora's Tim Westergren notes, Canadian radio stations pay approximately 2.1% of gross revenue to the recording industry.

As I read the article, what struck me about it is that, for all the complaints about how Canada was supposed to be some evil "pirate haven," here was a clear case of how its ridiculous copyright situation was keeping new music services out. If copyright were really so weak in Canada, you wouldn't have this issue at all. And then I got to the end of the article, where the Canadian Recording Industry Association boss, Graham Henderson, made the following guffaw-inducing statement:

The music industry, meanwhile, says its fees are not the problem. It says music-related businesses are reluctant to enter Canada because of the country's reputation as a file-sharing haven where music fans can download songs illicitly without fear of penalty.

"Why would you spend a lot of money trying to build a service in Canada when Canadians take so much without paying for it?" said Graham Henderson, president of the Canadian Recording Industry Association, which represents major record labels.

"[Canadians] just seem to have no appetite for a legal marketplace."

This comes after 26 paragraphs discussing all the different music services that want to enter the Canadian market, but can't because of the ridiculous rates that the recording industry wants to charge. It always shocks me that folks like Henderson can make such blatantly false statements like this and people don't call him on it. He gets away with it because no one points out that his statements make no sense.

Filed Under: canada, graham henderson, licensing, rates, streaming
Companies: cria

Why Are The Record Labels Demanding Money To Let People Stream Legally Purchased Music?

from the isn't-that-music-that-I'm-free-to-listen-to? dept

Lately, I've been playing around with various music locker services, just to get a better understanding of how they work and to be able to access my (legally purchased) music collection on various machines and devices. So far, they're all a bit limited, but it shouldn't be long until they get better. However, the industry has always hated music locker services, and insisted that they somehow violate their copyright, even when the lockers simply allow individuals to place shift their own legal music. There's an ongoing lawsuit over Michael Robertson's MP3Tunes for which a decision is expected shortly. At the same time, Apple has been trying to quietly enter the market without disturbing the record labels.

Why? Because the labels have this bizarre theory of copyright that says that even if you have a music locker with entirely legal and authorized music, you still need to pay license fees to stream the music from the locker. It's difficult to understand how that makes any sense at all, either from a common sense or legal standpoint, and the labels may have a difficult time getting such a concept to stand up in court. But I'm reminded of the issue again as reports are leaking of Google's proposed music service, which would include a music locker component. Apparently a big stumbling block, however, is that Google wants to charge $25/year for it, and do a 50/50 split with the labels.

The labels, of course, are quite upset at such a proposal, claiming it's ridiculous, both in terms of the total amount and the revenue share. But I'm wondering what their complaint is here. If the music is legally purchased (or is given away in an authorized manner for free), then how can they possibly demand such exorbitant rates for streaming that very same music? This is going to backfire on the labels in a big way. Their constant refrain of "pay us every time you use," is looking more and more desperate.

Filed Under: lockers, music, streaming
Companies: google

Is Apple Willing To Challenge Label's Claims That Streaming Purchased Music Needs A License?

from the that-would-be-nice dept

For well over a decade, the major record labels have done everything possible to fight the concept of personal music lockers. This never made much sense to me, as these lockers were designed to give people who actually had purchased music more ways to listen to that music. That is, it made the label's music more valuable. You would, normally, think that this is a good thing that the labels would encourage. But, these are the major record labels we're talking about here. All they seemed concerned with is making sure that any time you get more value out of music, that you pay more. They claim, with somewhat dubious legal logic, that streaming music that someone has legally purchased still requires a separate license. That is, if you use a music locker to store MP3 files that you actually paid for from an authorized source like iTunes or Amazon, and then put them into a music locker and stream them, the labels want to get paid again.

Michael Robertson, who runs just such a music locker company, MP3Tunes, notes that Apple appears to be quietly enabling this feature without making a big deal of it, perhaps because of ongoing negotiations with music labels over the widely rumored "iTunes-in-the-cloud" service. The newly enabled offering isn't iTunes-in-the-clouds, but does allow some basic music streaming functionality for users who have music files stored on an iDisk account. This seems perfectly reasonable, of course. It's your music, and your storage locker -- why shouldn't you be able to stream it without involving the record label?

The labels, particularly Universal Music, apparently disagree:

One company sure to be miffed at this new capability is Universal Music Group (UMG) the world's largest music company. They have told net companies who have inquired about offering personal cloud music services that backing up and downloading music files is OK with limitations, but streaming music files requires entering into a license and paying a per stream fee. Apple's service allows unlimited sharing (no username or password required) and now background streaming - all without a license from the record labels.

As Robertson notes, this is Apple "testing the limits" of what they can do before the labels freak out (expect that shortly). However, the question really is how far will Apple go to fight this issue with the labels. In the past, Apple has seemed perfectly willing to cave to certain aspects of record label demands in an attempt to harm Apple's own competitors -- and I could see the same thing happening here as well. Even if Apple doesn't want to pay per-stream fees to the labels for previously purchased music, it might realize that it's still better situated than competitors. Unfortunately, Apple doesn't have much of a reason to fight for consumer rights in this scenario, even if it's testing the boundaries quietly.

Filed Under: itunes, music, rights, streaming
Companies: apple, universal music group

Time For Sports Leagues To Embrace, Not Fight, Free Online Streams

from the don't-make-the-same-mistake... dept

We've noted recently the new focus on how online streaming is causing problems for sports leagues, who have gone running to politicians and the courts to demand they "do something." Over in The Guardian, Seth Freedman is pointing out that, as with many other parts of the entertainment industry, fighting against streaming is bound to fail, and a better solution is to get your content out there yourself in a way that you can actually monetize:

Sport, like music and mainstream media beforehand, has a stark choice before its governing bodies. If they remain resolute in their determination to follow old-school methods of disseminating their product, they will quickly drown under the deluge of fraudsters and pirates all too eager to capitalise on their mistakes. On the other hand, if they realise that they have to adapt to financially survive, they need to move fast to prevent a potentially catastrophic loss of income.

He notes that at least some leagues have figured this out:

The Indian Premier League (IPL) cricket games are broadcast live and free via YouTube, effectively heading off at the pass any rogue broadcasters seeking to steal their feed for themselves. The IPL authorities have a guaranteed income from their YouTube deal and, with a dedicated millions-strong audience subscribing to their feed, advertisers know how many people they can reach via the stream and how much each commercial slot is worth.

But, of course, others have not:

Yet with all the signs pointing to a brave new world of online broadcasting, the industry dinosaurs continue plodding along the road to extinction. Premier League enforcers boast of their success in shutting down a handful of illegal feeds, but most online sports piracy goes unpunished. With mobile phones providing yet another alternative to television in the race for audiences, there is even more pressure on rights owners to be proactive rather than simply shut the stable door behind the bolting horse.

In the end, it's difficult to see how any sports league thinks it makes sense to spend all this effort trying to fight against giving people what they want, when there are plenty of easy and lucrative ways to monetize such demand directly. It's too bad that so many leagues are slow to realize this.

Filed Under: business models, online, sports, streaming

Spanish Sports Streaming Site Declared Legal

from the expect-more-anti-Spanish-sentiment dept

We've already covered how Spain has extremely reasonable copyright laws -- which recognize that you should not blame someone just for pointing to copyrighted material, and which allows for non-commercial copying. Of course, this has greatly upset the entertainment industry, with both the recording industry and the movie industry making random threats against Spain, leading to efforts to change copyright laws in Spain to make those industries happy -- even as an economic analysis of the changes suggest they would be a mistake.

Giving more ammunition to the industry folks, though, Chris alerts us to the news that an appeals court in Spain has upheld a lower court decision protecting a website that indexes downloads and streams of sporting events. Once again, the court points out that the site itself doesn't host any of the material itself, and thus is not infringing on copyrights. I'm not familiar with how the Spanish judicial system works, but apparently this ruling cannot be appealed.

But, of course, with the efforts to change copyright law well under way, I imagine this ruling will just be used as another reason to change the law, rather than another example of a reasonable ruling that focuses on not blaming those who just point elsewhere. Still, this ruling reminds me of the Israeli court ruling from last year that found that watching sports streams online was fair use and not copyright infringement. But, of course, if ACTA gets approved, thanks to US lobbyists, such interpretations of copyright law will quickly get stamped out...

Filed Under: copyright, spain, streaming

Apple Bought Lala To Shut It Down?

from the can't-have-competition... dept

I've been a pretty harsh critic of Lala over the years. The company was long on hype and short on substance with its ever changing business model. First it was a CD swapping service. Then it was a free streaming music service. Then it was an iTunes-in-the-cloud. Still, the final product was decent, and with a bit of work could take on Spotify in the market. When Apple swooped in and bought Lala late last year, many people got excited over the possibility of Apple creating its own streaming music service that really could be seamless.

Instead, it looks like Apple bought Lala to shut it down. Just five months or so after purchasing it, Apple has announced that Lala will be closing at the end of May, pissing off lots of users. Now, it's entirely possible (or even likely) that Apple is timing the shutdown with a launch of a totally new streaming iTunes-in-the-cloud type service, but it does seem weird to buy a company and shut it down so quickly, and raises questions of whether or not the purchase was really about building out Apple's offerings, or about shutting down a nascent competitor just before Apple launched its own version. Also, if the plan is to launch its own version, why "shut down" Lala? Why not just transfer them over to the new service?

In the meantime, Spotify still hasn't launched in the US, but you would think that now might be a good time to step in and sign up disgruntled Lala listeners -- before Apple really enters the market...

Filed Under: cloud, itunes, lala, music, streaming
Companies: apple, lala, spotify

MGMT Album Leaks... Band Wants To Give Official Version For Free, But Denied

from the so-much-for-that dept

It's pretty common these days for musical releases from big name bands to leak early, followed by the band pushing up the release date. In the latest such case (sent in by reader Matthew), the band MGMT had its latest album leaked early, and then responded by putting up a free streaming version of the entire album. They're not the first band to do this, but what's interesting is the note on the band's website, where they claim they wanted to actually make the whole thing downloadable, but were told that wasn't allowed:

Hey everybody, the album leaked, and we wanted you to be able to hear it from us. We wanted to offer it as a free download but that didn't make sense to anyone but us

Well, actually, it makes sense to lots of us, but we're not running Sony Music. It's great that the band was able to put out a streaming version, and doesn't seem to mind that the album itself leaked, but not putting up an official downloadable version means that people will still be getting the unofficial version, and MGMT and Sony miss out on an opportunity to actually connect with the fans (such as by asking for an email address or giving people additional reasons to buy as they download).

Filed Under: free, leak, mgmt, music, streaming
Companies: sony music

Record Labels Put Out Misleading Study Trying To Get ISPs To Setup Broken Music Streaming Services

from the neutrality? dept

The record labels have been trying out all sorts of schemes for a while now to try to get ISPs over to its side in propping up their old business models, and the latest is pretty laughable. BPI at the behest of Universal Music, commissioned a study which suggests that ISPs can make a lot of money by offering music services to their users. No doubt. But that leaves out some rather pertinent details. For example: many ISPs have very much wanted to offer such music services, but have been blocked by the likes of (uh oh...) Universal Music and BPI. Funny how that works.

The problem, of course, is that the ISPs want to offer music services that people would actually use, and the record labels want to handicap the services to the point at which they're completely lame. So there's a bit of a stalemate there.

But the bigger issue is (reading between the lines here) what the record labels are really saying to ISPs here is: break net neutrality. That's because they're not talking about just any music service. After all, there are lots of music services out there that people can sign up for no matter who their ISP is. But what the labels seems to be suggesting here is that ISPs specify one special music service that locks in customers. That's why the report highlights that a music service can "reduce churn." Of course, the only way it does that is if it's locked to that single ISP -- and if your music is limited to you only as long as you're with that ISP. In other words: locking it down so that it's lame.

As if to make the point even stronger, though, BPI blatantly tells ISPs to break neutrality:

"It's increasingly clear that it isn't smart to be a 'dumb pipe'. This report shows that the revenue potential of digital music services alone makes sound economic sense for ISPs," said BPI Chief Executive, Geoff Taylor.

Being a "dumb pipe" of course is a well-known code-word in the internet world for a neutral network. So, really what the labels seem to be suggesting here is that ISPs break network neutrality for the purpose of serving up a preferred music service that locks you into that ISP. Apparently, no one who put together the study contemplated the fact that this might piss people off and make them look for ISPs that don't lock them in. Thankfully, it appears that some ISPs aren't biting:

"TalkTalk thanks the BPI for its strategic business advice. Though some may question the value of such insight from an industry which has failed to acknowledge the impact of new technology on its own business models and is pressing the Government to criminalise its biggest customers," a spokesperson told TorrentFreak.

Exactly. If the record labels were really serious about helping ISPs offer up music services, they wouldn't be blocking them at every turn. This report is a typical red herring.

Filed Under: isps, labels, lockdown, music, streaming
Companies: bpi, universal music