Blogger Who Uploaded GNR Album Pleads Guilty, Accepts Deal

from the still-ridiculous dept

The blogger who uploaded the latest Guns N' Roses album, Chinese Democracy, and who was then arrested has apparently agreed to a plea bargain in the case. Prosecutors had already dropped the charges from a felony to a misdemeanor, and the plea deal probably means he'll get off without too much punishment -- but the whole thing still seems fairly ridiculous. It's not at all clear why the FBI wasted taxpayer money chasing down a fan who simply helped promote the music. In the end, it seems like GNR basically got tax-payer funded promotion for its latest album, while causing significant stress in the life of the guy who was in the middle of all of this. What a joke.

Filed Under: guilty, guns n' roses, music, uploads

Band Incorporates As A Company And Raises Money, Rather Than Signing With A Label

from the smart-move dept

Reader Mike Z. points us to an interesting experiment by the band Francis and the Lights. Rather than going out and signing a record label deal, where the record label basically gets near total control over the band and its works, the band has incorporated itself into a company and raised $100,000 from The Normative Music Company as an investment. As the folks at Normative note, this structure is much more like a startup going out and raising angel or venture capital. It also makes a lot more sense. The label structure often takes way too much control away from a band. A model more similar to the venture capital model has some very compelling aspects to it. What's unclear from the article, though, is how the investment is structured. Unlike a startup, it seems unlikely that the band will be acquired (or go public). I'm guessing there must be some sort of "dividend" structure, where the band is expected to pay out a percentage of earnings to the investor. Who knows if it will work for this particular band, but it definitely seems like a model worth watching. Hopefully we'll see some more bands test it out as well.

Filed Under: business models, incorporate, investment, music

Trent Reznor's Latest Trick: Reward High Scorers In NIN iPhone Game

from the keep-evolving dept

One of the things to understand when we talk about various business model innovations that companies can use, is the idea that successful implementation of these business models doesn't mean merely copying what someone else did, but continuing to come up with new ideas and new innovations. One of the common retorts to this, often found in our comments, is that if everyone's doing x then it loses all value. But, of course, that shows a fundamental misunderstanding of what we're advocating. The whole point is that everyone doesn't do x, but they keep innovating and doing different things. And, for those who claim that there really are only so many things you can do, I'll point you to the words of economist Paul Romer:

Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding: possibilities do not merely add up; they multiply.

Or, even better, I'll just point you to the example of Trent Reznor, who, despite being quite far ahead of the pack on many attempted business models, doesn't seem to want to rest on his laurels. Instead, he just keeps innovating. We've covered many of the business model innovations made by Trent Reznor over the last few years (and I'm actually preparing a presentation on the topic for a music industry conference next year -- which I'll be talking about more in the future). His latest is to embrace the iPhone game Tapulous, which is sort of a rather simplified iPhone version of any "push a button to the beat" music game, a la Guitar Hero or Rock Band today (or Dance Dance Revolution in the past).

Now, the easy (boring) thing to do would have been to just create a Nine Inch Nails version of the game, which is now available. You can now play Tapulous to various songs from NiN's recent albums (whose releases we've discussed previously). However, much more interesting is tying the game even further to the band, such that those who score a certain level of points can submit the score back to Tapulous, and get entered into a contest to win floor tickets to see NiN perform or, for one lucky winner, a Les Paul guitar signed by Trent Reznor.

Despite the fact that many would say that Reznor has done much more innovating than many other musicians these days, the important thing to note is that he keeps on trying new stuff -- and each time gets more attention and wins over more fans with his actions. And the folks who complain that no new business model will work because everyone will be doing it? They're not getting much attention at all.

Filed Under: business models, contests, games, iphone, music, nine inch nails, trent reznor
Companies: tapulous

Weird Al File Sharing Censorship Was To Mock MTV

from the it's-all-explained dept

Last week we broke the story of Weird Al Yankovic's "Don't Download This Song" video being bleeped on MTV when the names of file sharing apps were mentioned. The NY Times thankfully got to the bottom of the story after a conversation with Weird Al himself. Apparently, MTV had told him two years ago (when the video was released) that they would not play it on TV without the file sharing names taken out. Yankovic himself added the beeps and tried to make them as extreme as possible to highlight the ridiculousness of it all:

Instead of subtly removing or obscuring the words in the track, I made the creative decision to bleep them out as obnoxiously as possible, so that there would be no mistake I was being censored.

He doesn't know if the video ever actually aired on TV, so it's likely no one even saw the bleeped video until MTV launched their online video site. He points out, as we noted, that the uncensored version is available on YouTube, but doesn't explain why embedding that video is forbidden as well.

Filed Under: bleeps, music, videos, weird al
Companies: mtv

Prince: So Close, Yet So Far

from the so-right,-but-so-wrong dept

The musician Prince has been quite fascinating to follow over the years from a business model perspective. He has aggressively experimented, and for a while seemed to be the perfect example of a musician who understood how to embrace new business models allowed by the internet. He was creating tons of new music, some of which he was giving away free in order to promote scarce aspects of his business model, such as concerts (he sold out 21 straight concerts in London after giving away his latest CD totally free), while also embracing the idea of getting people to pay him upfront to create music. He also experimented with things like having companies sponsor him, setting up a subscription fan club and even owning a dance club in Vegas where he would perform regularly. All were perfect examples of the sorts of business models that we talk about all the time. And the model was clearly quite successful for Prince, helping him to earn quite a bit of money off of those scarcities.

Yet, about a year ago, we all began to realize that, as successful as Prince had been in embracing these new business models, he had yet to realize why they worked, and started to attack the very tools that made them so successful. For example, he sued YouTube, eBay and The Pirate Bay. Then he went after fan sites and even a bunch of musicians who made a tribute album for his birthday. And, of course, he famously was involved in a few cases of demanding people take down YouTube videos that just happen to have Prince music playing in the background.

The problem is that he while he's benefited from these tools that made various scarcities (the creation of new music, concerts, etc.) more valuable, he seems to overvalue the content and undervalue (extremely) those tools. Thus, he seems totally against the idea of anyone else being able to profit from the music, even if it means he profits more from it. It's a common mistake, but Prince seems to have taken it to extremes. He's benefited so much from these models -- and in misunderstanding them, he risks destroying his legacy. He could have been a pioneer adored by fans, like Trent Reznor -- but, instead, he's been taking a very anti-fan approach. While there are still plenty of diehards, his views have turned off many former fans.

It's tragic, too, because you read interviews like one he just did where he expresses his disdain for the internet these days, and you just wish he would make the connection. He's right about music, by itself, not being a good product to sell online, but then misses the point that this isn't a bad thing if you use it (as he himself has done repeatedly) to drive more business to other parts of your business model:

"Today, it's not realistic to expect to put out new music and profit from it. There's no point in trying to put new music out there and keep it from being (exploited)."

And that's why you build business models (again, as he himself has done) where the musician benefits from that "exploitation."

It's really too bad that such a pioneer doesn't even realize how he was a pioneer, and is now trashing part of what made him so successful.

Filed Under: business models, copyright, internet, music, prince

Is Web 2.0 About Exploitation Or Empowerment?

from the an-academic-look dept

Earlier this year, at the Mesh Conference in Toronto, I had the pleasure of meeting Nancy Baym, a professor of communications at the University of Kansas. She's been doing tremendous research into questions concerning online "fan" communities around musicians. She's just posted her latest paper, with Robert Burnett from Karlstad University in Sweden, examining the question of whether or not Web 2.0 "fan communities" are really about exploitation or empowerment. This is a question we've addressed before, given that web 2.0 critics, such as Nicholas Carr, like to ignore that there are non-monetary benefits in the economy, and thus assume that any activity done for reasons other than money are exploitation.

The paper takes a balanced look at the Swedish independent music scene, which relies heavily on fan communities to act as filters and promoters of the music. The record labels don't focus so much on "selling music" so much as building up attention that can then be monetized in many different ways. Thus, they encourage fans to share and promote their music for them. So, is this use of fans exploitation?

The paper shows that, contrary to the "exploitation" view, the fans often get plenty of value out of the whole process, if not directly in monetary terms. As the paper notes, the concept of "exploitation" suggests a cost to the participant, but if they get more out of participating than they give up, then it hardly seems like exploitation. Instead, it's a reasonable choice in a non-monetary market, where they get more value than they put in. Plus, the paper notes that some of the fan participants eventually do make some money out of their efforts as well. That shouldn't come as much of a surprise. There are plenty of folks who became highly involved in a hobby and are eventually able to turn that into a business.

But the bigger issue for many fans, is simply being able to build relationships with the musicians they love -- and with other fans. To them, that's worth a lot more than money, and it's hard to see how building strong relationships and friendships can be seen as exploitation.

On top of that, the paper notes that the fans also make use of certain strategies to make sure -- implicitly or explicitly -- that they're not being exploited. In other words, whether they realize it or not, they're aware at some level of the possibility of being exploited by the situation, and they make certain choices to protect against that possibility. Overall, a very interesting paper that's worth reading, and I look forward to more research on this topic.

Filed Under: communities, exploitation, music, nancy baym, research, sweden

Details Released On The Radiohead Experiment Results: A Tremendous Success

from the good-for-them dept

While Trent Reznor has been very open in discussing the results of his various business model experiments, Radiohead has been notoriously quiet about it -- leading some to falsely assume that the experiment was a failure. CNN even called it one of the dumbest moments in business last year. That seemed ridiculous on its face, as it was quite clear that the experiment was a huge success for Radiohead, even if the band was quiet about the numbers. However, Radiohead's publisher has now come out and revealed some of the numbers and debunked the myth that the experiment was a failure (thanks to SteveD for sending this over). Instead, it turns out that Radiohead made much more money from this experiment than from their previous album. The band's music was spread much more widely than previous albums, with over 1.75 million physical albums sold (and that's not counting all of the paid downloads) -- as compared to its previous albums, which all sold in the hundreds of thousands. About the only downside to the experiment was that the band found itself talking about the experiment more than the music.

Now, of course, some will point out that this experiment isn't very representative, because Radiohead got a huge boost by being the first high profile band to do this. And that's absolutely true. But that doesn't mean the business model doesn't work at a more reasonable level. Obviously, Radiohead got a big boost from doing something unique and different, but that just gives other bands reasons to look at not just copying Radiohead, but adding more unique offerings themselves. That's how business models innovate, by trying out new stuff and trying to attract attention. Unfortunately, though, we still have big record labels who think business model innovation is having Congress protect your old business model.

Filed Under: business models, free music, music, publicity stunts, radiohead

How Music Licensing Rights Can Hurt Music Sales

from the you-don't-need-to-charge-for-every-little-thing dept

One of our regular readers, Rose M. Welch wrote in with an interesting story that reminds me of the mess concerning the show WKRP in Cincinnati. As you may know, the massively successful sitcom used popular music as part of its storyline about a radio station and its employees. Yet, the music itself was only licensed for the broadcast on TV, since in those days no one thought about any after market. So now, when DVDs and syndication of TV shows are popular, the show couldn't actually use the original music, and had to dub in some crappy replacement music, harming the overall quality of the show. It's ridiculous too, since it only harms the bands who have been "cut" from the show, and makes the show a lot less interesting.

Welch's story isn't quite at the same level but does a good job demonstrating how bands that focus on licensing their music and getting every penny for every use may be making a big mistake:

'House' is a very popular television show in America and the UK. I first started watching the show at the beginning of the summer. One of the things that I really liked was the beat of the into music. I did a search for it and found out that it was 'Teardrop' by Massive Attack. I found it on Amazon.com and purchased it. Woot!

After a few days, I went back and purchased more of their music, and some of the suggested music from groups like Thievery Corporation. I'm a rocker at heart, so this kind of music was really a change for me. I've probably spent about forty bucks on this kind of music in the last two months. I'm pretty into it and so is my hubby so I plan on buying more. Not to mention the people who have heard it in my home or vehicle and liked it.

So the new season of House has just began and it has a different but equally compelling theme song. I went to try and find it to purchase it. It turns out that it's not a full song. It's just a short clip called 'House' by composers Scott Donaldson and Richard Nolan, written specifically for the show.

Apparently, they'd had an awful time trying to license 'Teardrop' in the UK and said screw it. They made their own. It's now the theme for the US and the UK. And the next person to go searching for that neat genre will be disappointed because you can't purchase that clip and that clip doesn't lead you to any similar music. Not to mention the loss any of funds they would have received for the US show.

So, in attempting to make sure the musician got every penny for every use, the band has been cut out entirely, and replaced with a homemade snippet that isn't leading anyone to actually purchase new music or go see a concert or anything like that.

Filed Under: house, licensing, music, royalties, wkrp

Universal Music CEO Still Doesn't Believe In The Promotional Value Of Music

from the how-does-this-guy-stay-in-charge? dept

A year ago, we were fairly shocked at an interview with Universal Music CEO Doug Morris. The guy gleefully explained how clueless he was about technology, and said that he didn't even know enough to hire people who could properly guide him to understanding how technology was impacting the music industry. Furthermore, he displayed an ignorance of basic economics and basic finance at the same time by insisting that any sort of promotion that might pay back tenfold at a later date was bad business because it meant someone was "taking advantage of you." Yes, apparently, the idea of spending a dollar today to make back ten next year makes no sense to the CEO of a large company. We wondered how Universal's shareholders could possibly let someone so gleefully clueless continue to run the company.

Apparently, he's still at it, and still not afraid to open his mouth and expose his ignorance. In Morris' latest interview he insists that the company doesn't believe in promotions, but wants to get paid for every single use of its music:

"We don't look at anything as promotion. Take a look at MTV. It turned out to be a disaster for us. We sold some records, but they built this huge company and we gave them our (music) for nothing, and what did we get?"

If this sounds familiar, it's probably because fellow big record label boss, Edgar Bronfman recently used the same fallacious logic in claiming that video games like Guitar Hero and Rock Band were getting all the benefits from Warner Music's bands, without giving anything in return. In both cases, you have content providers who are significantly overvaluing the content, while significantly undervaluing the way that content is used. In this case, notice that Morris is admitting that MTV actually did help Universal sell more records. So what's the "disaster"? It's that another company, MTV, also got big. As we recently explained, this psychological phenomenon is seen throughout the big record labels. They care less about their own absolute success than they do about their relative success compared to others. They would prefer that they actually bring in less money for shareholders, as long as it means other companies do even worse.

I guess I can understand that, as a record label boss, you might overvalue the content, but to insist that there's no value in promotions -- even when there's increasing economic evidence that such promotions can greatly expand your market (at a time when your old strategy has resulted in a rapidly diminishing market) screams of corporate malfeasance. It makes you wonder what Universal Music's parent company, Vivendi is thinking. Are Morris' bosses just so impressed with the fact that Morris once wrote the song "Sweet Talk Guy" that they let him sweet talk them into letting him continue to run the company into the ground?

Filed Under: doug morris, music, promotional value, relative thinking, short-term thinking
Companies: universal music

Record Label Gives Fans A Reason To Buy

from the targeting-the-collectors dept

Yet another example of a small indie record label that actually understands the importance of giving fans a reason to buy, rather than just assuming that if they put out music, people should just buy. This example, sent in by reader Fitte Prins, involves a small heavy metal record label in Chicago that puts out a variety of limited edition vinyl records in beautiful packaging, with the idea of attracting collectors who like the vinyl artwork almost as much as the music itself. It certainly wouldn't work for all record labels, but it's a recognition that there's a lot more to offer than just the songs.

Filed Under: fans, music, reason to buy, record label, vinyl