U2 Manager Still Blaming Everyone Else For Not Giving Him More Money... As U2 Sets Record For Highest Grossing Tour Ever

from the contrast dept

Ah, Paul McGuinness. U2's manager has been on something of a crusade over the past few years. Every few months, he pops up to blame every other industry for not paying musicians enough money. There was Google, ISPs and device makers, governments and, of course, evil bloggers. He's also claimed that free is the enemy. Anyway, he's at it again. In an interview with Sky News, he once again says that tech firms aren't doing enough to give money to musicians:

"I really wish those geniuses who bring us Google, Facebook, Amazon and Spotify would get their act together," he said.

"It's not the downloading that's the problem. It's a bit of ingenuity and generosity that's required from the people who are making money from the internet."

The very next sentence in that article:

Mr McGuinness was speaking after learning that U2's 360 tour, which began in Barcelona in June 2009, has now become the highest grossing of all time.

So, let me get this straight. He wants the people who are making money to "get their act together" and start figuring it out how to share with others because of "generosity." So... um... can I ask, how much of this tour revenue is U2 sharing with other musicians? Just curious. And how much are they sharing it with the internet companies whose services they used to spread the news of the tour and the album? Again... just curious.

Filed Under: blame, music industry, paul mcguinness, u2

Sony Music Hires CEO Who Has Admitted He Doesn't Know How To Run A Modern Record Label

from the that'll-end-well dept

Back in 2007, we wrote about a rather stunning interview with (then) Universal Music CEO Doug Morris, done by Wired Magazine, in which he happily admitted that he was totally clueless on all issues important for running a record label in the modern world. He insisted that offering anything for free meant "someone, somewhere, is taking advantage of you." But the key part of the interview -- the really telling part was the following:

"There's no one in the record company that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person -- anyone with a good bullshit story would have gotten past me." Morris' almost willful cluelessness is telling. "He wasn't prepared for a business that was going to be so totally disrupted by technology," says a longtime industry insider who has worked with Morris. "He just doesn't have that kind of mind."

Think about that for a second. Here is the guy in charge of the largest record label in the world, telling a reporter that not only was he so clueless that he couldn't understand where the market is headed, but on top of that his own level of cluelessness was so entrenched that he wouldn't even know how to hire someone to help him understand where the future is. What shocked me was that he kept his job. I mean, if you were the board of directors of Universal, and the guy in charge of your company not only admitted that he didn't know what to do with the company, but then went on to admit that he didn't even know how to hire the right people to deal with the future, how do you let him keep his job?

Morris did finally step down a few years later, replaced by a guy with a similar philosophy. However, back in January, we heard rumors that Morris was headed to Sony Music -- and now it's official, as Morris has been named CEO of Sony Music.

Once again, I'm left scratching my head. So not only does he keep his job for years, but now another major record label hires the same guy who happily admitted he's not even remotely qualified for the job of running a major label? Nice going Sony.

Filed Under: doug morris, music industry
Companies: sony music, universal music

Leaving A Major Record Label... And Seeing How The Music Business Is Thriving

from the it's-all-good dept

A few years ago, after seeing Ethan Kaplan speak, I had suggested that Warner Music promote him. At the time, Ethan was VP of technology for Warner Bros. Music, one of Warner Music's sub-labels. I'd followed Ethan's writings for a while, but hearing him speak convinced me that he was definitely one of the folks inside a major record label who really understood where things were headed. There definitely are a few such folks mixed in here and there, but they're not always easy to find, and they usually don't get the attention they deserve within those labels. Warner Music didn't promote him until sometime last year, when they moved him up to the parent company, Warner Music Group, but the company's top management still never seemed to recognize quite what they had in Ethan in terms of his ability to recognize where the market was heading and how a major label could (and should) respond to those challenges. So it was disappointing, but of little surprise when he left Warner Music a month ago. I have little doubt he's now in high demand from a variety of forward-looking companies doing technology stuff in the music space, and I imagine he'll pop up somewhere interesting soon.

However, as we wait, he's written a fascinating blog post about his view on the music industry, now that he's out of a major record label and seeing what else is there. The whole thing is so worth reading, I'm having trouble picking a part to excerpt, so here's a tidbit, but you really should read the whole thing:

A lot of the sentiment I've been living under for the past few years has been based on fear. Things slipping through fingers never to be returned. What I found leaving however is that while things slipped through fingers, they didn't fall to the ground. A whole other ecosystem of hands was there to catch it.

The music business didn't die. And it isn't dying. I argue that the human race will have to die before an industry around music fully succumbs. It is changing. Shrinking, contracting and expanding. It is also diversifying and competing for attention and dollars with ecosystems and markets that weren't even imaginable five years ago. Where one dollar might have gone toward a record before, it is now split between entertainment bills, ad-hoc entertainment, subscriptions and the increased cost of providing us the unencumbered connectivity and freedom brought by devices like iPhones.

As I said, there's a lot more in the post, including why he's optimistic and excited about the new ecosystem that's evolving. While we sometimes (if you count the comments, quite frequently) have "music industry" insiders stop by to tell us that we're crazy for saying the music industry is thriving and there's more opportunity than ever before, it's always nice to see someone who's deeply involved on the inside making the same point. I have no idea what Ethan will be doing next, but I'm sure it will be worth paying attention to.

Filed Under: ethan kaplan, music, music industry

Recording Industry Persecution Complex: Claiming EMI's Plight Is Due To File Sharing

from the um,-no dept

Bas points us to a bizarre opinion piece for NME (which is usually a bit better than this) in which recording industry insider Alan McGee posts a near factless diatribe claiming that EMI's recent takeover by Citigroup proves that "downloading has murdered the music business." There's almost nothing accurate in McGee's piece. It's fantasy-world writing where people just make up stuff. Let's dig in a bit:

First things first: EMI is still a great British label. I mean, it owns the Beatles back catalogue! So why is it in the hands of a bank? It’s just economics. Guy Hands bought it in 2007, at the height of the market, when people were paying stupid prices for everything, not just labels.

Ok. So we agree. Guy Hands (well, really his firm Terra Firma) paid way too much for EMI in 2007. Frankly, that's the reason for EMI's plight today. Terra Firma got infatuated with the names on EMI's roster, didn't understand the recording industry at all, and got suckered into paying way over a reasonable price, and then couldn't handle the debt load. It had nothing to do with people paying stupid prices in 2007. People weren't paying stupid prices for record labels -- just Terra Firma. And that's because they didn't really understand what they were buying.

The trouble is, now everyone has woken up to the reality, which is that illegal downloading is murdering the music business.

So much incorrect in such a short sentence. First, I don't think anyone views the industry's situation much different in 2011 as they did in 2007. File sharing was rampant then as it is now. The struggles the recording industry were facing were already quite clear in 2007 (hell, they were clear in 1997 to people paying attention). Second, the only part of the "music business" struggling is the record labels. Nearly every other part of the music business has grown massively over the last decade. Third, there is little to no evidence that "illegal downloading" is the cause of any serious problems. Yes, it does act as a substitution in some cases, but as we've seen over and over again, when musical acts embrace file sharing in conjunction with a smart business model, they end up making more money. So, no, "illegal downloading" is not the cause of EMI's problems. EMI's inability to adapt to a changing market, combined with a massive debt overload was the issue.

I actually think Guy Hands didn’t do a bad job. He was just personally unfortunate. He came along at the wrong time. Shit happens. It was a time of affluence of abundance. Then the world economy turned upside down, Lehman Brothers went broke, and the world changed. The market crashed.

Huh? The market crash had nothing to do with the troubles facing EMI. Nor does McGee show how the two are connected. As with his earlier claims, he just insists it's true with no proof.

EMI's problems should be a wake-up call. How did they get into this mess? It all comes back to the impact of illegal downloading. We have to change the legislation in this country and come down much harder on piracy.

First up, we've already discussed why the impact of unauthorized file sharing was not the problem, but more importantly, countries around the world have been changing legislation plenty over the last decade to come down much harder on "piracy" and it's done nothing to improve the lot of the record labels. Is McGee totally unaware of the Digital Economy Act in the UK? Rather than recognize that such laws have been passed and have not helped the record labels, McGee just wants more protectionism. That old line about the definition of insanity being doing the same thing over and over again and expecting different results may apply...

Otherwise guys in little bands starting out now are never going to be the next Rolling Stones.

Wait, so the only options are failure or the Rolling Stones? And that statement is a ridiculous one either way. What we've seen (and been documenting for years) is that things are much better for bands starting out today than in the past because they don't need to win over the gatekeepers. They can find their own audience. They can create their own business models and make a living -- unlike under the old system, where you either hit it big or you gave up and went back to your day job. As for who will be the next Rolling Stones, I have little fear that the general nature of human psyche will continue to find new acts to turn into superstars.

And, should we even mention just how much money the Rolling Stones make from touring, which is an industry that has actually been helped by unauthorized downloads in building up larger fanbases of various bands?

When you download an album illegally, it's not the record company guys that get fucked -- those people are still on massive salaries -- it's 19-year-old kids, it's guys in bands making £100 a gig.

Wait, what? In this very same paragraph you claimed the totality of EMI's problems were due to unauthorized file sharing, but then just a few sentences later you claim the record labels aren't impacted. Keep it together, McGee. As for the impact on the 19-year-old kids making £100 per gig, they can actually be massively helped by file sharing, because the more people who know and like their music, the more people will be willing to come out to their gigs, so maybe they'll start making more than that £100.

When I came along in the 80s and 90s, I was lucky to be in a market where people bought music. Now If I wanted an album, I could just go on some torrent site and download it. You've got to give bands a chance, let them develop. In the 80s, bands started dodgy, then they got good. The bands I worked with – Primal Scream, My Bloody Valentine, even Oasis -- it took them a few years to go from being OK to being good. These days bands don't get the chance, they just get dropped.

Again these are statements that appear to imply some sort of causal relationship, but fail to show any. What does the fact that people bought CDs have to do with letting a band develop? I mean, if it really takes so much time for a band to develop, then doesn't that mean people shouldn't be buying their early music anyway? And the final line highlights the crux of the problem: it assumes that the only way to succeed today is by signing to some big label. So if that label drops you, you're screwed. And yet, we're seeing over and over again that musical acts are being amazingly successful without a label (since they don't need to make nearly as much money as they have to on a label to make a damn good living). In fact, we're seeing bands celebrate being dropped from their labels, because it means more freedom to develop and the ability to make more money.

There's only one independent label, post-Creation, that's really been phenomenal, and that's Domino. Laurence (Bell, owner) is a genius. He's touched with gold dust. Whether it sells or not, he's got the magic touch.

This is a total non sequitur. What does the fact that there's been a good indie label have to do with file sharing or EMI?!? Furthermore, "whether it sells or not," seemed to be the whole point earlier in the article. Now it doesn't matter? Finally, to say that there's only been one good indie record label suggests a level of ignorance to what's actually going on in the music world today. There are a bunch of fantastic indie labels out there. Perhaps McGee should get out more.

As for me, if I ran EMI, I'd get legislation changed and make a profit by stopping piracy.

Can someone -- anyone -- explain how getting people to stop downloading creates a profit anywhere? Getting people to stop downloading doesn't magically make them start buying. And it's not like EMI hasn't been among the efforts by all the major record labels to get legislation changed for years, and all of that has done absolutely nothing to stop file sharing. It's pure folly to suggest that there's some sort of magical legislative move that will stop unauthorized file sharing and create "profits" at the same time.

What will do that, however, is smarter business models -- something that McGee never even seems to consider. Thankfully, reading through the comments on that article, nearly everyone is pointing out all of these points to McGee, though I doubt he'll ever read any of them.

Filed Under: alan mcgee, failures, music industry
Companies: emi

Music Industry Trying To 'Store An Iceberg In The Sahara'

from the rethinking-copyright dept

Catharina Bethlehem points us to an interesting speech by copyright lawyer Hans Bousie at the Eurosonic Noorderslag Festival in Groningen (Netherlands), in which he suggests that the major labels are trying to "store an iceberg in the Sahara," with their current strategies. He basically argues that thanks to copyright law today, everyone demands their "fair cut," except that the "fair cut" isn't actually all that fair, and it ends up that lots of large entities take out their own giant cuts, leaving little (if any) money for the actual creator. This, he argues, is the fault of the way copyright law today works, and how it's not set up for modern technology.

Imagine all the music in the world as one large iceberg. This iceberg is guarded by the music industry. If you want a chunk out of it, you must buy it. But they made a big mistake; they are desperately trying to store this iceberg in the Sahara and refuse to tow it to a safer place. They might even think that it’s too expensive to tow the iceberg all the way up to the poles. The tragedy is that the industry is not even aware that the iceberg melts, so what they are trying to sell is slipping away and is freely admissible as plain and simple water. So on the Internet music is available like water, entirely free, but, unfortunately, illegal.

He argues, instead, that copyright should be changed, such that it's not considered a "property right," but rather "a right to a creative income." More specifically, he's arguing for low compulsory licensing rates, basically making it easy for innovators to innovate around music without having to negotiate huge and expensive deals, while also guaranteeing that folks actually get paid. While this is definitely better than what we have today, I'm not at all convinced it really makes sense in the long run. When you have compulsory licenses, what you end up with is a regular fight for certain folks to convince whoever controls the compulsory rates to raise them. The market gets thrown out the window for some guy sticking his finger in the air and having it blown on by those who want him to push the rates up. It's a process prone to abuse.

The simple fact is that no one can or should have a "right to an income" from their own works. You merely have the right to put in place a business model and see how the market reacts. That could provide you with a very nice income or it could provide you with none at all. It's the business model that decides, and we shouldn't be having the government randomly deciding just how that business model works.

Filed Under: copyright, hans bousie, music industry

Discussing The Music Industry Comically Speaking, With Mimi & Eunice

from the sorry,-recording-industry dept

Mike's recent post about OK Go is just crying out for some Mimi & Eunice cartoons. Rather than make him go back and edit it, I'll just illustrate it here:

Actually this miniseries began with this strip, which sums up an argument used by many copyright advocates:

There are lots more new Intellectual Pooperty cartoons to see - please copy them freely.

Filed Under: business models, incentives, music industry, ok go

Piracy Is Over Like The Web Is Dead

from the The-Fat-Lady's-A-Mute dept

Attention everyone.  If I could have all of your eyes looking forward please, I have an announcement to make: the pirating of music on the internet has officially ended.  So says Wired's Paul Boutin:

"Mark down the date: The age of stealing music via the Internet is officially over. It’s time for everybody to go legit. The reason: We won. And all you audiophiles and copyfighters, you know who fixed our problems? The record labels and online stores we loved to hate."

That's quite a whopper, isn't it?  Particularly from the same esteemed publication that brought you the news that the web is dead.  You'd have to imagine there would be something pretty substantial in his article to make the claim that the record labels had somehow fixed things so that online infringement no longer should exist, right?  Sadly, not so much.  He starts off by listing out a couple of the problems most folks had with things like DRM, transferring legit purchases to multiple devices, etc.  Then he tells us all why everything is okay now (and for a fun little game, see if you can spot the demeaning slight he sneaks in on music fans):

"Well played, protesters: In January 2009, Apple announced that it would remove the copyright protection wrapper from every song in its store. Today, Amazon and Walmart both sell music encoded as MP3s, which don’t even have hooks for copyright-protection locks. The battle is over, comrades."

So...because, after years of fighting, iTunes finally stood up and removed the DRM, followed by a few retailers, we're supposed to look to the record labels as our saviors?  For not treating us like criminals? And while they're still pushing for new laws and demanding money from ISPs (that will come out of consumers pockets anyway)? That doesn't really pass the smell test.  Paul then goes on to declare the joy audiophiles should feel now that MP3s are being sold with 256 Kbps audio quality, compared to the initial 128 Kbps offering, stating that if anyone wants quality better than that, "you can get a pretty good turntable for around $500" and go spin vinyl.  Oh, and he wants to make sure you know that if you steal vinyl records, that's called shoplifting.  Mmkay.  What else you got, Paul?

"That leaves one last war cry: Music should be free! It’s art! Friends, a song costs a dollar...Most download retailers send about 70 percent of each sale to the record companies that own the music. Artists with 15 percent royalty deals get 15 percent of that 70 percent, or about 10.5 cents per dollar of sales. Those who write their own music and own their own music publishing companies—an increasingly common arrangement—get another 9.1 cents in “mechanical royalties.” Every download sends almost 20 cents straight to the band."

Yup, you read that right.  This, of course, is pure nonsense.  That isn't the way royalties with modern day recording contracts work.  Through the magic of recording label accounting, the average musician makes roughly $23 for every $1000 in music sold -- and that's only if they actually recoup, which is difficult to do, thanks to the way the record labels account for things. For those of you who share my math skills and don't want to reach for a calculator, that's barely 2%.  Some of that result stems from necessary things the bands may need to spend on: managers, lawyers, taxes.  But a good deal of it also comes from neat little, and sometimes recoupable, charges from the record label, things like independent radio promotion, tour support, roughly fifty percent of the music video costs, etc.  Other times, the record labels flatout don't pay the royalties from truly successful albums.  Bottom line is, at the end of the day, record labels make money off of selling music, musicians do not.

And, even if we go with Paul's bogus number of 20 cents on the dollar, is that really that good of a deal? A musician today can use a service like Bandcamp, and get 85% of whatever money they bring in -- and can do so in more creative ways with pay what you want offerings, that can actually bring in much more money. The idea the "record labels" have solved "piracy" by offering musicians 20 cents that they'll never get because they'll never recoup is laughable.

But Paul chooses to ignore those things and instead offers up a pithy conclusion as to why music is still being pirated:

"You're cheap."

Uh huh.  Nuanced arguments would probably be more appreciated from the group of folks you're talking to, who actually spend more money on music than those who do not "pirate".  Funny definition of cheap you're working from...

In the end, there are many reasons why people still file share (and they are still file sharing in droves, which sort of debunks Paul's entire premise), but you don't learn any of that from Paul's article. Since when did Wired switch from thought-provoking analysis to pure trollbait?

Filed Under: hype, music industry, piracy

Who's Who Of Clueless Music Industry Lobbyists Send Angry Letter To Wrong Publisher

from the nice-work-guys dept

Sometimes it just feels like the legacy music industry folks spend their time trying to make it easy for us to call them on their bizarre positions. The latest is a pretty laughable angry letter from a who's who of the organizations, who represent the past of the music industry. Signers to the letter include (among others) the heads of the RIAA, ASCAP, SoundExchange, BMI, SESAC, NMPA, AFTRA, Harry Fox and the Songwriter's Guild. The target of their scorn? Well, officially, it's the CEO of Ziff Davis, publisher of PC Mag, for publishing two articles in the wake of the shutdown of Limewire telling people about "alternatives" to Limewire. The problem? Well, beyond being totally pointless, PC Mag only published one of the articles (the one the letter seems to find less objectionable). The other article that they complained about was published by a totally different publication. Accuracy is not big with the old school music industry, it seems.

Yes, PC Mag published an article highlighting alternatives to LimeWire, just like a ton of other websites did. Anyone who was looking for an alternative to LimeWire didn't need PCMag to find them. In fact, many reports noted a noticeable increase of downloads of those alternatives pretty quickly after LimeWire went down. The lobbyists get pretty worked up about all this, though:

Let's be honest. The vast majority of LimeWire's users were interested in one thing and one thing only: downloading our music for free with the full knowledge that what they were doing was illegal. The harm done to the creative community when people are encouraged to steal our music is immeasurable. Disclaimer or no, when you offer a list of alternative P2P sites to LimeWire -- and include more of the serial offenders -- PC Magazine is slyly encouraging people to steal more music and place at risk the tens of thousands of music industry jobs -- including singers, songwriters, musicians and the technical professionals who put it all together. Even worse is offering a direct link to a "resurrected" Limewire as follows: "I went ahead and downloaded LimeWire Pirate Edition for *ahem* research purposes, and can report that it appears to be working very smoothly. In the event that you, yourself, would like to do some research, you can download the client here (direct link)."

Yes, they're quite upset about that article about the LimeWire Pirate Edition (which we wrote about as well). Only problem? PCMag didn't publish it. Nor did any other Ziff Davis publications. It was actually in PC World, which is published by IDG -- a totally different company than Ziff Davis. Now, it's not hard to confuse PCMag and PC World -- lots of people do. But when sending an angry letter condemning a publisher, you would think that maybe one of these super powerful industry lobbyist/mouthpieces would think to actually check the sources before mouthing off.

Apparently not.

Given this mistake, it should come as little surprise that the rest of the letter is also full of factually ridiculous claims, such as "job loss" numbers due to "piracy" -- numbers that have been widely debunked so many times that it's almost pathological that these groups still cling to them like some talisman. Also, it's kind of funny that they imply the publishing business would feel differently if it had also been decimated by free competition (they call it "piracy," but they mean free competition). Ziff Davis is, in fact, a shell of its former self due to exactly that situation. However, the company has been trying hard to resurrect itself by actually competing in the marketplace -- something the signers of this letter could learn from.

Of course, I'm sort of curious what these groups actually think they're accomplishing with a letter like this. If it's to pressure magazines like PC Mag (or, ahem, PC World) not to publish such stories, that won't stop the info from getting out there. It will only increase the irrelevance of those publications -- especially if they feel brow-beaten by a bunch of dinosaurs, who refuse to adapt no matter how many times it's been shown to them how they can embrace the future successfully. This really feels like the sort of letter that these guys signed onto so they can show their constituency that they're "doing something" by stomping their feet, rather than actually doing something helpful like helping those they represent to adapt and embrace new opportunities. The full amusing letter is included after the jump...

Filed Under: fact checking, journalism, lobbyists, music industry, pc mag, pc world, publishing
Companies: ascap, bmi, idg, nmpa, riaa, sesac, sga, soundexchange, ziff davis

Why Won't Universal Music Let You See The 20/20 Report From 1980 About How The Music Industry Is Dying?

from the the-sky-is-falling! dept

Here's one for the "sky is falling" folks, who insist the music industry is dying. Orin Kerr, at the Volokh Conspiracy points us to an episode of the TV magazine show 20/20 all about how the music industry is in trouble... way back in 1980. What's amusing is that the story is the same. Early on, you see Joe Smith, the President of Elektra-Asylum records making a statement that might sound familiar:

"Records, you don't have to buy to hear music. There's sensational equipment out there. There's great FM radio. There's enormous amounts of music out there, without having to buy a record. Counterfeiting, home-taping, and the failure of major artists to deliver records on some kind of regular basis."

It's really funny to watch. After complaining about companies shutting down, layoffs and fights against counterfeiters, the report points out that the industry is betting on video laser discs to bring back the profits. Now, that's only the first half of the report. I had actually opened both videos up a while ago and had them both open in browser windows, but just as I was writing up this post, I hit reload on the videos... and the second one is now being blocked due to a copyright claim from Universal Music. This is bizarre, for a variety of reasons. First, the video was definitely up and working just last week... and this is a video that was uploaded in 2006. So... um... how come, in the last week, Universal suddenly decided to block what's clearly fair use of the video? Could it be that Universal Music doesn't want you seeing a report that shows how it has overreacted historically to changes in the industry? Hopefully, the guy who uploaded it will file a counternotice...

Filed Under: 20/20, copyright, history, music industry
Companies: universal music