Terry McBride: Songs Are Not Copyright. Songs Are Emotions

from the getting-there... dept

Last year we wrote about a fascinating interview with Terry McBride, the CEO of Nettwerk Music, a Canadian record label that has proven to be quite innovative with its business models (and quite successful). He's really focused on helping musicians build up valuable brands, and then being able to make money off of those brands by being consumer-friendly, rather than consumer-antagonistic. One of the examples mentioned in that interview was a new album coming out where before the album was even released, the raw files were put online for fans to download and mix themselves. As he said, it wasn't "remixing," it was "premixing." And, the plan is to take the best of those and release the actual album in two formats: the official mix and the best fan mixes.

There's now another interview with McBride at the Future of Music site where he talks more about his vision of a music future where people effectively pay not for the music, but for the convenience of a "music valet" that does a better job organizing and finding the music you want when you want it. I'm still not convinced this is how things eventually work out, but it's certainly worth thinking about.

However, there are few statements McBride makes that are worth highlighting. First are two statements I agree with, and then one I don't:

People have always been sharing music. Why would I want to stop them? Why would I want to tell them what to do? The way to win was to get them to support my artists, not to force them to do it a certain way. I know I wouldn't like anyone telling me that.

This is a huge point that is so often missed by those in the industry who are focused on "protecting" and "control" rather than recognizing how people want to interact with musicians. The thing that I find most ridiculous from those complaining about file sharing is that they always make some statement along the lines of, "people who are sharing my files aren't fans, because real fans spend money." Of course, if that's true, what's the problem? The people who aren't fans aren't paying and (based on that statement) the real fans will pay. So, there's no problem at all...

Songs are not copyright. Songs are emotions.

Indeed. And that's the point. Do people pay for emotions? No. However, emotions will impact what people will pay for. However, despite agreeing with McBride on so much, I think he goes a bit off-track with the following:

Out of all of the sharing of music, who's making an economic return? Whoever is should then share that with all the people that allowed it to happen, creating a nice alignment of interests to grow any business. A lot of the providers have viewed music as free content, while at the same time paying for the cable content to grow their networks. They've been making money off the backs of the artists without any compensation for the artists at all. I think that's fundamentally wrong. I've also said it's fundamentally wrong to go after the consumers that are using that opportunity. That's not the right approach either. The phone companies and the cable providers have gotten away with murder in this whole situation.

This is the blame game and it's missing the point. The ISPs haven't "gotten away with murder." They've simply put in place a reasonable business model based on fundamental economics -- and there's nothing stopping plenty of others in the music business from doing the same. Demanding those who have figured out how to make money share with those who haven't isn't the answer either. There are business models that work just fine for those creating the music that don't require demanding anyone else share their profits. You just focus on coming up with real scarcities that give people or companies real reasons to buy and there are tons of business models that work.

Filed Under: business models, labels, music, terry mcbride
Companies: nettwerk

Will Newspapers Start Selling Special Printers Now?

from the desperation-sets-in dept

Reader Cannen alerts us to the fact that MediaNews wants to experiment with the idea of letting people create custom newspapers and print them out at home via a special printer. The idea is interesting at a first pass, but the more you think about it, the less it makes sense. Who wants to get a special printer just to print out their newspaper? If they really wanted to offer this, what's wrong with letting people use the printers they already have? Or are these newspapers hoping to make more money by selling printers? Perhaps they're jealous of the ridiculous margins found in printer ink these days -- and they're hoping to cash in on selling special ink that you can only buy from them to print your paper. While I'm sure there are some people who might like this option, just so they can still read their news on paper each day, it seems like a pretty narrow market.

Filed Under: business models, newspapers, print, printers
Companies: medianews

How Not To 'Save' The Music Industry: Ask The Folks Who Benefited From Old Inefficiencies

from the oh-come-on dept

There's a group in the UK called "MusicTank," which is supposed to represent something of a "think tank" around the music industry. It was the head of MusicTank, back at Midem, who "joked" about how everyone there could solve the industry's problems, because all the stakeholders were present, "except the consumers, since they can't afford to be here." That should give you an idea of one of the main reasons why the industry is in so much trouble. It never really considers the folks who actually listen to the music to be a serious constituent.

That's become obvious again, as MusicTank is out pushing its new whitepaper, called "Let's Sell Recorded Music!", which is based on a series of talks that the group held. But reading through the actual paper, three things quickly become clear:

1. The group started with the wrong premise: how to sell recorded music. What they should have been looking at was how to make money from recorded music. The two things are quite different, and starting with the wrong premise entirely will lead you down the wrong road.
2. While this paper does consider the "consumer viewpoint" and does make some decent points about consumers and music, it never looks at how consumers interact with music beyond buying or downloading. It doesn't look at the many ways that a fan might support a band.
3. Most importantly, the paper spends a lot of time getting the perspective of the various collections societies. This gets to the root of the problem. These collections societies are middlemen who profit off of the inefficiencies of the old system. Asking them how to fix the system is always going to get the same answer: just create yet another licensing right and let us handle the collecting of it.

It's that last issue that is clearly the big problem with the music industry moving forward. You're never going to get an industry to move forward when you think that (a) the consumer (i.e., the demand side) isn't a major constituent and (b) you're asking those who profit from the inefficient system to define how the new more efficient system will work. The whole process of collective licensing is a joke that needs to be done away with. The collections societies not constituents -- they're the parasites feeding off an old system that doesn't need them anymore.

Filed Under: business models, music, rights groups, royalties, selling music
Companies: music tank

There Is No New Business Model For Music?

from the say-what-now? dept

Nick Fitzsimons points us to a blog post by journalist/musician Rhodri Marsden complaining about everyone who keeps telling the music industry it needs to "find a new business model." According to Marsden, the people who say this do so without ever suggesting what that alternative business model might be. That is totally wrong, of course. It may be true of some, but plenty of us have spent years and years not just the explaining how such new business models work, but showing example after example after example after example of it working in practice. So, I'm sorry, but I find it rather silly to claim that such business models don't exist or that those of us who "smugly" claim the industry needs to find a new business model never suggest any.

Marsden then notes: "The fact that we're sitting here watching the music industry rapidly decline is a fairly big hint that no such model exists." But, of course, he's wrong about that as well. The music industry hasn't been rapidly declining at all. Every single aspect of the business is way up -- except for the part that's about selling plastic discs. The plastic discs with music on them business is in decline, but that's not "the music business." More music is being produced today than ever before in history. More people are making money from music today than ever before in history. The concert business has been setting records every year, despite the supposed "decline" in the industry. Even instrument sales have been going up. Sales of devices to listen to music, such as iPods, continue to rise as well. Basically every single part of the music business is doing fantastically well -- record levels -- except for the business of selling plastic discs.

So, sorry Mr. Marsden, but it very much is a business model problem. And, yes, there are tons of business models that work -- and many, many folks have been both laying out the fundamentals of those business models, as well as making them work. That you want to ignore them and pretend they don't exist or don't work is your problem, but don't claim that it's not happening. Open your eyes and look around at what's actually happening.

Filed Under: business models, music, rhodri marsden

Blame Game Continues: Now It's Online Streaming That's Killing Music

from the oh-come-on dept

Every new entertainment innovation has resulted in hand-wringing by the existing industry about how it's going to kill the business. Player pianos? Evil. Would destroy the sheet music industry. Recorded music? Would send musicians to the poorhouse and end live music. Radio? Would destroy the recorded music business. Home taping? Killing music. The VCR? The "Boston Strangler" to the movie industry. Notice a pattern? Every single one of them, in actuality, helped grow a market much bigger than that which preceded it. Yet, for some reason, no one in the industry (or, all too often, among the press who repeat their complaints) seems to notice this.

So here we have Business Week -- usually less susceptible to these sorts of claims -- repeating totally unsubstantiated arguments from music industry insiders that it's now legal online streaming services that are killing the music business. The fact that most of these services are really little different than traditional radio (which helped build up the massive recorded music industry) seems to zip right by without mention.

The problem is that the author of the article, and most of those quoted in the article, incorrectly seem to think that the only way the music industry makes money is in the direct sale of music. Thus, the fact that people listen to streams for free (or small royalties) is somehow seen as "bad." The fact that radio works on basically the same principle isn't even touched. The fact that there are tons of other ways for musicians to make money -- and for many of them it helps to have more people listening to their music via these services isn't even the same area code as the article.

Instead, the entire article seems to be based on a complaint from the guy who heads the National Music Publishers' Association , whose business has always been predicated on the house of cards of music licensing. Every time a new technology comes along, the publishers demand a new level of licensing. Right now they're pushing hard for yet another duct tape solution: adding another license for such online streaming services, and Business Week played right into their hands with a non-critical piece describing the "issue" in the exact terms they want people to be thinking about.

Filed Under: business models, licenses, music, recording industry, streaming

The Cure's Robert Smith Continues To Claim Free Doesn't Work

from the um.-but-it-does? dept

We recently pointed out the statements made by The Cure's Robert Smith, insisting that business models involving giving away music for free, such as the one used by Radiohead, couldn't work. This seemed rather odd, given that not only did it work fantastically well for Radiohead, we've been seeing it work for a lot of different bands for many years. So, to claim that it simply can't work was blatantly false and easily proven as wrong. Given that... you might think Robert Smith would recognize the fallacy of his logic, admit he was wrong and maybe learn a little. Or not...

An anonymous reader points us to Smith's blog post in response to the criticism of his statements where he digs in to repeat the original, easily proven as false, claim and calls those who disagree with him "cretins." Or, rather, "CRETINS" since he uses the CAPS LOCK button to full effect (though, appears to have a faulty space bar at times). Oddly, to get around the fact that the model did, in fact, work for Radiohead, he pretends he didn't say that it couldn't work for Radiohead (though, that's exactly what he did say), but claims he actually meant that it couldn't work for everyone else. Then he brushes off Radiohead's success by noting:

ANY FAMOUS ARTIST WITH A HUGE AND DEVOTED FAN BASE(OFTEN ARRIVED AT WITH A LITTLE HELP FROM A WEALTHY AND POWERFUL 'PATRON' ORTWO?) CAN AFFORD TO DO WHAT HE, SHE OR IT WANTS... INCLUDING GIVING THEIR ART AWAY AS SOME KIND OF 'LOSSLEADER' TO HELP 'BUILD THE BRAND'

Masnick's law, anyone? Even that statement is somewhat self-contradictory. If the band is "famous" with a "huge and devoted fan base" then... um... why do they need to "build the brand"?

And, then, of course, he falls into that old fallacy that we see way too often:

IF THIS 'ART FOR FREE' IDEA BECOMES THE CULTURAL NORM THEN HOW DO ARTISTS EARN THEIR LIVING?

It really does amaze me how people's brains seem to stop as soon as "free" enters the picture. But, once again, for you first timers, just because you give one thing away for free, it does not mean you give everything away for free, and thus you earn your living selling those other things. But, of course, apparently anyone who uses logic and understands actual business models doesn't count:

AND QUITE HONESTLY

AS ANYONE THAT DISAGREES WITH THIS POINT

IS UNLIKELY TO BE AN ARTIST

I DONT REALLY CARE TOO MUCH WHAT THEY THINK... !!!

Fair enough. But when plenty of actual artists are understanding this and making plenty of money in doing so, it seems rather silly to ignore the points they're making, doesn't it. Or... wait, is Radiohead not an artist? And, then, there's the final sign off:

I WONDER HOW MANY OF THE PROFESSIONAL APOLOGISTS OUTTHERE WRITE THEIR SHIT FOR FREE?

Well, I don't get paid anything specifically to write this blog. But I do get paid, in part thanks to giving away all this content for free. Just as Smith could get paid by embracing a business model where he gives his music away for free...

Filed Under: business models, free, music, radiohead, robert smith, the cure

Recording Industry, Once Again, Stomps Out Optimism

from the it's-what-they-do-best dept

My initial summary of my trip to the Midem music industry event in January was that it was about turning "optimism into denial." There was a tremendous sense of optimism from all sorts of upstarts: musicians and companies who were really innovating and creating wonderful success stories over and over again. And then... the old school industry guys showed up. They spoke about the optimism and the success stories... and said a few things that made it sound like the got it. They talked about ending this "war" with consumers, and focusing on solutions that worked. But, then the clouds would descend, and they'd immediately start angrily saying that even with these great new business models and innovations, "we need to stomp out piracy." In doing so, they demonstrated how severely they missed the point -- and it's now showing in their actions. We've been seeing more braindead maneuvers over the last month with highly questionable lawsuits, and licensing decisions that only serve to piss off users.

It seems that my initial read is (unfortunately) the same conclusion others are coming to as well. Two of the "industry insiders" I got to meet at the event -- who both came down on the "optimistic" side at the event have each written up blog posts for the MidemNet blog, complaining about the very same thing. That initial sense of optimism that was seen at the event has pretty much gone away -- crushed by dumb moves within the industry. Ted Cohen, who helped moderate much of the event, diplomatically points out that for all the talk of collaboration at the event, the chaos isn't over, and he wonders when we'll actually get down to business. Meanwhile, Bruce Houghton (of the excellent Hypebot blog) more specifically fears that all the talk of a more collaborative approach was nothing more than talk -- and there is no intention to really collaborate.

This is a pretty big problem -- and I obviously won't speak for either Bruce or Ted, who I'm pretty sure would disagree with this assessment -- but, it won't change until the old system and the old structures and the "old guard" are finally pushed out. There are tons of success stories -- but those are in spite of the industry, not because of it. It's time to wipe out the house of cards that the industry has built in terms of Rube Goldbergian copyright licensing schemes, and start fresh. There are business models that work great for everyone -- but the current system is designed to allow bystanders and middlemen to profit at the expense of the musicians and the public. Get rid of the old system, and everyone but those middlemen will benefit.

Filed Under: bruce houghton, business models, collaboration, midem, music, optimism, ted cohen

Those Who Don't Understand The Value Of Free Information Are Doomed To Fail

from the creative-destruction,-romer-style dept

I've obviously been writing quite a bit about both the music industry and the news industry lately -- as there are tremendous similarities between the two industries -- a point highlighted by Tim Lee, who (at the same time) notes that the one difference is that "piracy" isn't a problem for the news business (though, those who incorrectly blame Google for the downfall of journalism might argue otherwise). Tim's point (and it's one I agree with) is that the basic factors hitting both industries are really the same, and the "piracy" excuse is something of a near total red herring. It's actually the overall dynamics of a changing market when the main output becomes digital.

Lee's piece is a response to James DeLong's article decrying the death of newspapers which pins it on all of us fools who claim that "information wants to be free." DeLong, you may recall, was a bigshot at the Progress & Freedom Foundation -- a DC think tank that has long advocated ever more draconian copyright measures. And, he's effectively doing the same thing here: saying that newspapers will only survive if they charge for every little thing. This is, once again, the same incredibly wrong advice that he spewed out to the entertainment industry for years -- and look where that got them?

The similarities actually remind me of the one time that I actually got to meet DeLong, nearly three years ago, at a Cato Institute symposium on copyright, where I first laid out the details of why "free" isn't a problem in economics, and how it should be a part of the business model, if you follow through on the basic economics. It was actually on the flight to that event, reading a book about the history of the number zero that I realized just how difficult it was for many to get past the zero. It was as if, the second they came across zero, their brain popped out an error and they stopped thinking. It leads to ridiculous claims like "if I give it away for free, I won't make any money!" That's not true if you look at the larger economic ecosystem, understand the economics of information or infinite goods, and recognize how they can play into the overall economic model.

While DeLong was there that day and heard me speak on this, it's pretty clear that he didn't get the message. Instead, he's continuing to focus on how to implement artificial scarcity, believing that markets only work when everything has its price -- and that price isn't zero. But this is a huge mistake from a business perspective. If you understand where the zero fits into the business model, then there are plenty of business models that work great. The problem with the recording industry is that they've never believed the zero fit anywhere. The problem with the newspaper industry is that it recognized the zero, but forgot to figure out where the rest of the business model fit. Instead of figuring that out, reactionaries like DeLong are moving backwards and trying to just ignore the zero again. Unfortunately that's what breaks the model even worse. Ignoring the reality of where a zero fits into a business model is a simple recipe for failure as it tries to go against fundamental economics.

No one has ever said that "everything must be free" (though, angry copyright system defenders repeatedly pretend that's what we are saying). All we've said all along is that it's important to recognize that in the information economy, it makes plenty of economic sense for certain things (i.e., "infinite goods") to be free (that's where the zero goes) and then the scarce goods are what you charge for. The trick is enabling a business model where the infinite goods make the scarce goods you control more valuable. This is absolutely possible for any business -- and, in fact, failing to understand how you do this will most likely doom your overall business.

We'll be talking about this and much more at the Free! Summit in a couple months, and we hope you can join us. However, we have to admit that early interest in the event has been overwhelming, so we've already had to shut down the open registration and opened up a waiting list. We're working hard to see if there are ways we can accommodate a much larger audience (if you have any ideas, let us know -- or if you're interested in sponsoring a live web feed, please let us know), but if you were thinking of going, at least get on the waiting list early.

Filed Under: business models, copyright, economics, free, jim delong, music, newspapers

No Doubt: Buy A Concert Ticket, Download All Our Songs

from the the-music-is-free.... dept

Slowly, but surely, more bands are starting to figure it out: the music is free. Whether they want to believe it or not, the actual music is free, so you might as well get it out there and then focus on selling scarcities. The latest example (which a ton of you have sent in), is the band No Doubt, who is giving away their entire catalog of music as a download, for folks who buy certain concert tickets. Now, obviously, if someone wants, they could go download all that music already, but effectively the band is admitting that the music is free, and the money is in the scarcity of concert tickets: so if you're going to pay for that scarcity, why not make sure that the fan knows all your music?

Filed Under: business models, concerts, downloads, music, no doubt

A Tale Of Two Studies On File Sharing...

from the guess-who-paid-for-the-terrorism-one? dept

I've recently come across two separate studies concerning file sharing -- that seem to come to vastly different conclusions. The first, as pointed out by Michael Scott, is a very long (128 pages), but very thorough research report analyzing pretty much everything having to do with file sharing in the Netherlands, commissioned by the government. It studies the economic angles, the legal angles, the cultural angles -- and then compares the local results to international results. While you might quibble with some of the methodology here or there, the overall conclusions of the report are pretty strong and clear: file sharing is not a problem for the overall industry. File sharing has, in fact, created a net benefit to the economy and society in both the short and long term, and that will likely continue. The direct impact on sales of file sharing is minimal (though it depends on the category). In fact, the only areas actually in trouble right now may be the sale of plastic discs (CDs and DVDs), but much of the damage has nothing to do with file sharing, and there are indications that the "lost" money can be made up in other ways. The report recommends moving away from criminalizing user activities, and focusing instead on encouraging new business model development. A quick excerpt from the conclusions:

The short-term net welfare effects of file sharing are strongly positive given that it is practised by consumers whose demand is driven by a lack of purchasing power. To the extent that file sharing results in a decline in sales, we see a transfer of welfare from operators/producers to consumers, with no net welfare effect.

The market for CDs and the market for DVD/VHS rentals are the only sectors of the entertainment industry that are suffering from a slump in sales. Whereas this may be attributed in part to file-sharing activity, file sharing is not solely to blame for the decline. The markets for DVDs and console games continued grow impressively after P2P services were introduced, and the cinema market showed sustained growth between 1999 and 2007. The total entertainment market has remained more or less constant, suggesting budget competition among the various products.

As long as the markets for games and films are on the rise or remain stable, there is little reason for concern that the diversity and accessibility of content is at stake. File sharing has significantly enhanced access to a wide and diverse range of products, albeit that access tends not to have the approval of the copyright holders.

In other words, pretty much everything that plenty of folks around here have been saying for a better part of a decade is pretty much true. File sharing isn't damaging -- and, in fact, can represent a net economic improvement, and the business troubles faced by a few small parts of the industry are really business model challenges, rather than legal ones. The report makes it clear that focusing on legal solutions to dealing with file sharing is a big mistake that tends to only backfire and seems to be totally misdirected.

So, what's the other study? It's also quite long, but is full of fear mongering about piracy. It just so happens to be funded by the movie studios claiming that piracy is helping to promote terrorism -- and because of that, the US government needs to devote stunning levels of new resources to stopping piracy at all costs. So what does this report recommend?

• Fully funding and implementing the PRO-IP Act (PL 110-403), which toughens civil and criminal laws against counterfeiting and piracy, provides enhanced IP enforcement and prosecutorial resources, and improves IP coordination within the executive branch.
• Supporting the introduction, passage and enactment of a Customs and Border Protection Reauthorization bill to better address trafficking in illicit goods.
• Supporting the Baucus-Hatch legislative improvements to the USTR's Special 301 process to help deal with other countries that fail to live up to their international IP obligations.
• Concluding negotiations for a substantive and enforceable Anti-Counterfeiting Trade Agreement (ACTA) with major trading partners.
• Pursuing trade agreements with strong global IP protections.
• Expanding U.S. leadership on IP protection within the G8, the Security and Prosperity Partnership for North America, and other bilateral and multilateral frameworks.
• Building coalitions in favor of strong IP protections at international organizations, such as the World Health Organization, World Intellectual Property Organization, and U.N. Framework Convention on Climate Change (UNFCCC).
• Engaging Beijing to improve China's IP legal and regulatory regimes through the implementation of new patent, trademark and copyright laws.
• Pursuing reforms on data exclusivity, incremental innovation and optical discs legislation in India.
• Working towards improved retail and copyright enforcement in Russia, as well as the successful implementation of IP reform through Part IV of its Civil Code. 

Which of the two reports is more credible? Which do you think will have more impact on government policy in the next year or so? The answers to both questions are unfortunately obvious and extremely disappointing.

Filed Under: business models, economics, file sharing, impact, netherlands, research, studies, terrorism