A month or so ago, a friend started sending me the Pomplamoose videos on YouTube, and now I keep seeing them. It's basically two people -- Nataly Dawn and Jack Conte -- covering famous songs by playing and singing all the parts themselves, and them cutting them together into very well done videos that, in some cases, have millions of views. Quentin Hartman writes in to let us know of a WSJ blog post about the band, noting that despite having been contacted by a bunch of major labels, they're leaning towards staying independent, noting that "We're making a living off our album sales and we don't even have a physical CD." And, yes, this is even though you can watch all the band's music for free, such as their covers of Beyonce's "Single Ladies" or Michael Jackson's "Beat It:
Now, of course, there will be some who will insist that there is nothing creative in covering someone else's songs, and those folks will never be convinced that this is incredibly creative, but for the rest of us, why not enjoy some incredibly creative song making -- and the artists who are making a living even without going down the path of having to deal with fictional royalty statements from a major label.
At Monday's excellent SF Music Tech Summit, there was a really good discussion in the final panel of the day, that crystallized in my mind why it's hogwash when some repeat the refrain that "artists should just be artists" and not worry about business models, connecting with fans or social networking. It's a claim that is made over and over again -- sometimes by musicians themselves. In the past, we've pointed out that this is fine, if artists just want to be artists then they need to do one of two things: either not expect to make much money or partner with someone who can focus on the business model and social networking side of things. Dave Allen, who was on that panel, used his manifesto on why artists needed to stop whining and start taking charge as a kicking off point, and brought up his concept of why all bands needed "a fifth Beatle" to manage that side of their efforts. In many ways, it reminded me of Andrew Dubber's recent manifesto that pointed out that if you wanted to make money as a musician, you had to become a musical entrepreneur.
But, two other comments on the panel made the point even more clear. First was Sebastien Keefe, from the band Family of the Year, who talked about how the band (more his bandmates than himself, actually) did a really good job connecting with fans online, including a special private concert that only Twitter followers found out about, and a cool postcard promotion, where people would pay $5 for a postcard, and the band would send it back to the fans from their tour. When the question came up of artists claiming that they didn't want to spend the time on social networks to connect with fans, he noted first that it wasn't that much time, and second that an artist unwilling to do that was "selling themselves short," in not really building up their audience.
Though, what's really cementing the myth of "artists should just be artists" was Tim Quirk's comment. Quirk, of course, got a lot of publicity recently for revealing how major record label royalty statements are often total works of fiction, using his own royalty statements as an example. On this topic, however, he noted that the people who tell artists that "you should just focus on being an artist" were almost always "feeding them bullshit" in order to gain more control over the artist. That is, it's a line you often hear from record labels or managers who want more control over a musician's business. So all three of those musicians (Allen, Quirk and Keefe) highlighted how the claim that "musicians should just be musicians" isn't just a myth, but it's often used to limit the potential of musicians.
Right after that panel, there was a short (and very sparsely attended) talk given by Stephan Jenkins, of the band Third Eye Blind -- and without realizing it, he put the exclamation point on this particular discussion from the previous panel. While he said he was grateful for his major label experience, he also talked about how being on a major label actually made it harder for the band to really focus on their music and artistic ideals -- because the label started dictating everything that the band should be doing. From that, he felt like the band really got away from the sort of music that it wanted to create, that had helped make the band big in the first place. He talked about how piracy has given the band "a second chance" by letting a new generation of fans discover their original music, and that has resulted in the band's most recent album, which he felt was much more true to the band's musical roots. He noted also that, now that they were out of the major label system, they were making a lot more money, even if they were selling fewer units.
All in all, it really helped solidify the idea that the claim that "artists just need to be artists" and shouldn't be concerned about business models or talking to fans is really just a line used by record labels to try to gain more control over artists, at their own expense. That doesn't mean that artists shouldn't try to find that "5th Beatle," to help them when it becomes necessary, but that they should make sure that whoever that 5th Beatle is, he or she is really aligned with their thinking in where they want to go with their career.
On Monday, I attended and participated in the always excellent twice yearly event, the SF Music Tech Summit. As always, it was a fun time, full of interesting people. While smaller than some of the big music events, pound for pound, I tend to end up in a very high percentage of fascinating chats with people at SF Music Tech. The panel I was on was the first in the morning, and was officially called "meet the press," even though at least two of the five panelists (myself included) don't consider ourselves press. I didn't mean to stir up much controversy (never do), but I apparently got a few vocal folks in the audience riled up on a few points. The one that got some attention on Twitter, was the claim that live music was growing. A few folks started screaming and no one then let me back that up, but the numbers don't lie. A lot of people came up to me afterwards with stories of success by focusing on live music, and I even heard from some folks who are involved in organizing live shows who say that the "complaints" about live shows tend to come from those who focus only on a subset of live venues that have struggled lately -- but that the overall live market is thriving (as the numbers show).
However, there was a second point that I later tried to make that again I never had a chance to follow through on, and wanted to do so here. People were asking about what business models are working for musicians, and I started listing out some examples, and a loud gentleman in the front row yelled out that the business model that had to be at the center was selling music. I responded with what I thought was an important question: "Why?" and again people started yelling. Of course, no one answered the question, and then the panel shifted gears to another topic.
But, the reaction from the crowd on that question cemented for me one of the biggest reasons why some in the industry have struggled to grasp new business models. As I discussed in my NARM presentation a few months ago, selling music is just not a good business model, but it doesn't mean there aren't good, very profitable, music business models. It's just that selling music isn't a very good one. Instead, you need to learn to use the music (which still needs to be good, and is still the central reason why these other business models work) to sell something else -- something scarce, which can't easily be copied. That can be attention, access, time, creative ability, cool physical products, whatever. All of those things are made more valuable the more popular the music is, and you can build all sorts of powerful and immensely profitable businesses once you recognize that.
But if you still think that selling the music or making money directly from the music has to be at the "center" of any music business model, you're shutting yourself off to the largest opportunities out there. But, the thing is, music has always been a product that makes something else more valuable. While there was some disagreement on the panel from someone about how record stores were profitable in the 70s, that's a case where the music was making the vinyl (and later, plastic) more valuable. Today, it makes iPods more valuable. As the big box retailers know, it acts as a loss leader to bring people in to buy higher margin goods. Music is great at selling other, higher margin things. If you ignore that in the music business model, you're missing the big opportunity.
This isn't to downplay the importance of music, or say that the quality of music doesn't matter. It absolutely does. But the music is not the scarcity, and you don't make money off of selling something that's abundant. You use the abundance to figure out what other scarce goods it makes more valuable and you sell those. So, people can complain and shout all they want, but it doesn't change the basic fact that until you recognize that selling music directly just isn't a very good business model, you're limiting your market tremendously.
Back in June, we wrote about an odd lawsuit from a bunch of independent music publishers headed by MCS Music America against Microsoft, Yahoo and RealNetworks claiming that all three failed to secure licenses on the compositions. This seems strange, of course. You would assume that big companies like Microsoft, Yahoo and Real would make sure to secure all the necessary licenses for their music download and streaming operations. However, MCS and the others suggested that the three companies only secured the licenses on the recordings, but not the compositions. What appeared to have happened, was that Microsoft, Yahoo and Real licensed the songs from the major record labels, who also own many publishing operations, and in were told that they had received licenses for both the recording and composition. The problem is that not all of those major labels hold the composition rights. In some cases, those rights are still held by independent music publishers -- and there was a fair amount of confusion over who owned what. It was a perfect example of how ridiculous copyright law is today that even in setting up a big music operation from a major company with the major record labels, no one was exactly sure if all the proper rights were secured.
Either way, Microsoft, Yahoo and Real were quick to ask for the lawsuit to be dismissed and Eric Goldman sent over the rather short ruling from last month that does, in fact, dismiss the case stating (surprisingly) that the music publishers failed to show they hold the copyrights they were arguing over. That's rather incredible, seeing as the original lawsuit went on for pages and pages, claiming to hold various licensing rights. But the court wasn't buying it:
Defendants' Motion to Dismiss All Causes of Action of Plaintiff MCS Music America,
Inc. ("MCS") is granted on the ground Plaintiff MCS has failed to state a legal
claim for copyright infringement. To establish a claim of copyright infringement,
two elements must be satisfied: (1) ownership of a valid copyright, and (2)
unauthorized copying of the original work. Feist Publications, Inc. v. Rural
Telephone Services Co., Inc,. 499 U.S. 340, 111 S.Ct 1282 (1991); Jones v. Blige,
558 F.3d 485 (6th Cir.2009).
MCS has failed to demonstrate ownership of any of the copyrights at issue.
Plaintiffs allege MCS is a licensing administrator and an exclusive licensing
agent of the copyrights at issue, but do not allege MCS to be an owner of such
works. Without demonstrating legal ownership, MCS is not able to plead all of the
necessary elements of copyright infringement.
Plaintiffs ask the court to consider the affidavit of Janice Bane with regard to
MCS's rights. The court will not consider Ms. Bane's affidavit in deciding this
issue. In ruling on a motion to dismiss, a court properly may consider only
evidence contained in or asserted in the pleadings. As a general rule, matters
outside the pleadings may not be considered in ruling on a motion to dismiss
unless the motion is converted to one for summary judgment under Rule 56. Jackson
v. City of Columbus, 194 F.3d 737, 745 (6th Cir.1999). Weiner v. Klais & Co., 108
F.3d 86, 88-89 (6th Cir.1997). Furthermore, even if the court were to consider Ms.
Bane's affidavit, it does not indicate any ownership on the part of MCS, thus
rendering its consideration moot.
Defendants' Motion to Dismiss All Causes of Action of Plaintiff MCS is GRANTED.
On top of that, MCS requested the right to amend the lawsuit, and the court shot them down there as well:
Plaintiffs have moved to amend their complaint a second time. The Federal Rules of
Civil Procedure state "... a party may amend its pleading only with the opposing
party's written consent or the court's leave. The court should freely give leave
when justice so requires." Fed.R.Civ.P. 15(a)(2). However. Plaintiffs have not
demonstrated their amended complaint would show MCS has ownership of any of the
copyrights at issue and would therefore be futile. For that reason, Plaintiff's
Motion to Amend Complaint is DENIED.
So much for that, then. Somewhere along the line, it looks like these publishers got some really poor legal advice, as this case didn't last long at all, and to be tossed out so early is pretty bad.
The major labels and their friends like to throw around huge numbers of "damages" when it comes to copyright infringement. But how about when they're on the receiving end of a copyright infringement lawsuit. Up in Canada, there's a class action lawsuit against the Canadian divisions of all of the major record labels, suggesting that the labels have infringed on the copyrights of artists to the tune of $6 billion (Updated: the original math was off, it's actually $6 billion, not $60). As Michael Geist explains:
The claims arise from a longstanding practice of the recording industry in Canada, described in the lawsuit as "exploit now, pay later if at all." It involves the use of works that are often included in compilation CDs (ie. the top dance tracks of 2009) or live recordings. The record labels create, press, distribute, and sell the CDs, but do not obtain the necessary copyright licences.
Instead, the names of the songs on the CDs are placed on a "pending list", which signifies that approval and payment is pending. The pending list dates back to the late 1980s, when Canada changed its copyright law by replacing a compulsory licence with the need for specific authorization for each use. It is perhaps better characterized as a copyright infringement admission list, however, since for each use of the work, the record label openly admits that it has not obtained copyright permission and not paid any royalty or fee.
Over the years, the size of the pending list has grown dramatically, now containing over 300,000 songs. From Beyonce to Bruce Springsteen, the artists waiting for payment are far from obscure, as thousands of Canadian and foreign artists have seen their copyrights used without permission and payment.
And yet, amazingly, the record labels -- these "strong defenders" of the importance of copyright and paying for every use -- somehow have decided that it makes no sense to pay this bill. The list itself details about $50 million in unpaid royalties that are owed, often to well known musicians who it would be quite easy for the industry to find and pay up. As for the $6 billion number? Well, the class action lawsuit that's been filed seeks statutory damages starting at $20,000 per infringement and going up from there. Given that these same record labels have been defending those same (or, similar, in the US, at least) statutory rates for infringement, you have to wonder how they can realistically claim that those statutory rates shouldn't apply to themselves as well.
Once again, though, we're seeing what's really happening. The record labels are copyright defenders only when they profit unfairly from it. When they can screw over others via ignoring copyright, they have no problem doing so.
Shocklee points us to an odd, totally unsubstantiated article by a University of Southern Illinois professor insisting that "piracy" is creating tremendous harm to West African content industries. This goes against numerous studies, including those by the WTO on how developing nations often should have less stringent intellectual property laws while they're developing. The article is based on some simple conjectures: that even with low budgets, films made in Nigeria are having trouble making money and it's all the fault of piracy -- first from lost sales, but also because people are pirating high budget American films as well. Basically, the argument is that if people can get those high budget films at the same "pirated" cost as local films, of course they'll go for the high budget films, and thus destroy the local film industry.
Of course, that assumes that in the absence of "piracy" prices to see foreign films or to buy their DVDs scale relative to their budget. That's simply not true. Movie tickets and DVD prices do not scale based on the budget of the movie. The professor doesn't seem to mention the fact that most films (especially the low budget kind) struggle to make money in the first place. He just assumes that it's because of piracy. He neglects to mention that there are plenty of business models beyond selling DVDs. He does mention that people seem to prefer local content, but then ignores that in his very next sentence, saying that local content "can't compete." Even though he just said that the market demands local content.
For years we've all heard the stories about how bad the major labels are at accounting for royalties they owe bands. There have certainly been a large number of lawsuits from artists claiming that this rather opaque accounting system is used to hide money from musicians, with various multi-platinum selling musicians claiming they never saw a dime of royalties from their albums, thanks to major label accounting. This is, of course, rather amazing in this day and age where technology allows for amazingly accurate accounting practices -- even for massively complex operations. But, then again, these are the major labels we're talking about, and they're often proud of their technical cluelessness.
Still, it's quite interesting to see a blog post, sent in by Quentin Hartman and written by the singer for the band Too Much Joy, Tim Quirk. Quirk is in an interesting position. Having been a moderately successful major label artist who is now an executive at digital music company Rhapsody, he's seen different sides of the business -- and in his must-read blog post, he details the absolute fiction that is a royalty statement from Warner Music Group -- leading to the flat-out false claim that Too Much Joy earned a grand total of $62.47 in digital royalties over five years across their three Warner albums. You really should read the whole thing, as it's quite detailed about how the major labels view most bands on their roster.
Back to my ridiculous Warner Bros. statement. As I flipped through its ten pages (seriously, it took ten pages to detail the $62.47 of income), I realized that Warner wasn't being evil, just careless and unconcerned -- an impression I confirmed a few days later when I spoke to a guy in their Royalties and Licensing department I am going to call Danny.
I asked Danny why there were no royalties at all listed from iTunes, and he said, "Huh. There are no domestic downloads on here at all. Only streams. And it has international downloads, but no international streams. I have no idea why." I asked Danny why the statement only seemed to list tracks from two of the three albums Warner had released -- an entire album was missing. He said they could only report back what the digital services had provided to them, and the services must not have reported any activity for those other songs. When I suggested that seemed unlikely -- that having every track from two albums listed by over a dozen different services, but zero tracks from a third album listed by any seemed more like an error on Warner's side, he said he'd look into it. As I asked more questions (Why do we get paid 50% of the income from all the tracks on one album, but only 35.7143% of the income from all the tracks on another? Why did 29 plays of a track on the late, lamented MusicMatch earn a total of 63 cents when 1,016 plays of the exact same track on MySpace earned only 23 cents?) he eventually got to the heart of the matter: :"We don't normally do this for unrecouped bands," he said. "But, I was told you'd asked."
As you hopefully know, with a major record label, the band gets an advance to record the album. From then on, the label no longer pays the band anything. Even though the band accrues royalties on albums sold, those royalties simply go towards repaying the advance. Most label bands never fully repay the advance, and are thus considered "unrecouped." This does not mean (as record label defenders will claim) that such bands were money losers for the label. The labels still take their own hefty cut from any album sales. They just also hang onto the tiny fraction of album sales that are officially designated for the actual musicians.
Basically, what Quirk notes, is that whether through malice or indifference (or a combination of both), the general major label attitude towards "unrecouped" bands is that the accounting is meaningless, so they don't even bother. That means they make massive mistakes -- such as the time Warner just happened to make a $10,000 mistake in Warner's favor, and then mocked Quirk for even caring about such a measly sum.
Now, when it came to digital revenue, for most artists, Warner apparently doesn't even bother to tell artists what their digital royalties are. They're unrecouped, so it doesn't matter in the minds of Warner execs. Quirk, by nature of also being an industry exec was able to (thanks to a chance meeting at a conference and 13 months of waiting) get Warner to agree to detail his digital earnings. But, because the band is unlikely to pay off the nearly $400,000 in "unrecouped" advance money, basically Warner did a slipshod job of it all. What this tells you is that Warner either has no serious accounting system to track this sort of thing or has mastered the art of obfuscating everything and purposely acting like their accounting department is run by six-year-olds. I'm not sure which is scarier.
Now, Quirk is reasonably clear that he's just as likely to attribute all of this to a combination of indifference and incompetence than to malice -- and there's nothing to indicate otherwise. But, you do have to ask how seriously anyone can take any of the ridiculous numbers that Warner Music Group or the RIAA toss around concerning the music industry and "losses" due to "piracy" and such, when it can't even put together an accounting system that can track (let alone accurately count) the most basic information that it is contractually obligated to both track and report. It also should highlight, for any bands who still actually think signing a major record label contract makes sense, how little regard major labels like Warner Music Group actually have for most of the artists on their label. As Quirk notes in discussing the $10,000 error:
When I caught this mistake, and brought it to the attention of someone with the power to correct it, he wasn't just befuddled by my anger -- he laughed at it. "$10,000 is nothing!" he chuckled.
If you're like most people -- especially people in unrecouped bands -- "nothing" is not a word you ever use in conjunction with a figure like "$10,000," but he seemed oblivious to that. "It's a rounding error. It happens all the time. Why are you so worked up?"
So, perhaps, the next time that Warner Music claims that it deserves $22,500 for a "pirated" song, someone will point out that according to Warner Music's own accountants, such numbers are really just a "rounding error" and there's no need to pay them. Somehow, I get the feeling that Warner Music will take a different view on such numbers about then.
BullJustin points us to a short NPR piece about four massive failures by the recording industry. If we skip over number 3 (Kevin Federline), the other three are pretty relevant to what we talk about here on a regular basis: the Sony BMG rootkit fiasco that opened up security holes on computers without letting anyone know, the RIAA's lawsuit strategy of suing fans and the record labels' ongoing efforts at payola to get songs played on the radio.
However, BullJustin makes an amusing point in the submission concerning that last one:
It cost the industry untold millions in actual payola, independent promoter fees, and then more than $25 million in settlements, not to mention lawyer fees. If they would have just let people share the music online, the marketing they were looking for could have been free."
It really does make you wonder what goes through the minds of record label strategists. They tossed away millions paying people to get music heard, when they could have just embraced file sharing and made it cheaper and easier to get music heard without running into the legal problems of payola as well. Of course, the problem with that plan is that the labels also lose "control." They've paid to get songs on the radio because they wanted to just focus on a small group of artists who they could squeeze for as much profit as possible, dumping all the rest. File sharing makes it harder and raises the possibility that other artists might also get heard.
Having recently returned from Norway, where I was impressed at the optimism and the willingness to embrace new technologies and services, it's disappointing to read the following story (found via brokep) of a Norwegian band who recently released an album on their own label and decided to put it up on The Pirate Bay themselves, as more and more indie labels are doing. Except... the band members are a part of the Norwegian music collection society TONO, who is among those fighting to have The Pirate Bay blocked in Norway. Since the band has allowed TONO to enforce its copyrights in performance situations, TONO is claiming that it can forbid members from putting their music on sites like The Pirate Bay (translation from the original Norwegian):
The management contract in TONO means that we can not allow the TONO-members post things on your own at some commercial sites.
Once again, examples of these performance rights groups working against the wishes of artists, rather than helping them out.
Last week, I had the pleasure of attending the Nordic Music Week event held in Stavanger, Norway. It was a smaller event, mainly involving those involved in the music industry in the Nordic countries (Norway, Sweden, Finland, Denmark and Iceland), with a heavy emphasis on independent musicians, as there were no major label representatives there. As such, the event was quite different than most of the typical music industry events I go to. There was very little fretting and worrying about "piracy" and such, and most of the discussions were quite forward looking and forward thinking. In fact, I'd say much of the event was downright optimistic about where the music industry was heading. While there were many great discussions (and I liked the fact that much of the event was focused around open table discussions, rather than just presentations), one of the most interesting presentations was by Òlafur Arnalds, an Icelandic musician, who started his presentation off by saying he disagreed with me and my presentation (which had been an updated variation on my NARM presentation), and had adjusted his presentation to be a response of sorts to mine. Except it wasn't. His presentation was yet another great example of a musician who understood exactly what works in the industry, even as he thought he disagreed with me. We later chatted briefly about it, and realized we're actually very much in agreement about where we stand on the industry. The confusion came about because he is really focused on the music, and felt that my presentation focused too much on the money aspect.
And, indeed, my presentation did focus somewhat on how to make money, but that's because if I just focus on the music, people complain that no one will make money and then no one will make music. But, of course, that's ridiculous. None of these models work particularly well if you don't make great music. And Òlafur Arnalds makes great music -- and once we started talking, even he admitted that in order to do what he does, he needs (and wants) to make a living (which he does). And his actual presentation was about how to do just that. It was all about how he closely connected with his fans and gave them a reason to buy (even if he didn't like to think that way). Instead, he noted that he needed to come up with a good story to go with the music, that would help attract his fans, better connect them to him while also giving them a reason to support him monetarily.
So, with that idea (having a story behind the music) as his basis, he came up with a great project called 'Found Songs', where he would write, record and release a new song every single day for seven straight days. He did it all out of his bedroom. His fans then stepped up and created artwork for each song, and in some cases, amazing videos, such as this one below, which is truly beautiful, and within days had thousands upon thousands of views:
You can watch the videos, look at the artwork people created for the songs and even download all the songs for free as mp3s. But, there's also a store where you can buy the beautifully packaged vinyl or CD versions of the album, and some higher quality digital downloads. In other words, it was yet another perfect example of connecting with fans and giving them a reason to buy (and, yes, it involved great music as well -- which is, in fact, key). The importance of having a good story to go along with things, as we've seen with other projects, is a particularly good point. And, again, it shows how an infinite good (a good story) can increase the value of a scarce good (the products you're selling). He also showed how his own fanbase increased massively after doing this project -- much more so than when he was out opening for Sigur Rós. So, in the end, we absolutely agreed, and I found out about some more great music and yet another great story and example to go along with all the others.
Beyond that, I met a bunch of fascinating people doing very interesting and unique things in the music industry in the Nordic region. All of the Nordic countries are working hard to help enable their bands to adapt to a changing music environment, and there are definitely some very creative indie labels, artists and managers who are thinking through and implementing some great ideas that left me quite enthusiastic for what comes next. I also got a chance to meet Moto Boy, who took part in our CwF+RtB experiment, and see him perform live (which was fantastic). Overall, a very encouraging trip.
