Music Retailers Beg Recording Industry To Drop DRM

from the who-is-it-helping? dept

We've already seen more and more musicians tells the recording industry to drop DRM policies that hurt the consumer. And, of course, we know that consumers prefer non-DRM'd music (which sorta goes without saying). Now even music retailers are wondering what the recording industry is thinking. A group of UK retailers have banded together to urge the industry to drop DRM altogether in order to help boost holiday sales this year. Of course, in the past, we've seen the recording industry insist DRM was needed to protect both the artists and the retailers -- but it certainly looks like both are finally realizing what many have said all along: the only thing that DRM "protects" (and it does a piss poor job of it) is the obsolete business model of the record labels.

Filed Under: drm, recording industry, retailers

Don't Take Economics Lessons From Gene Simmons

from the kissinomics dept

Gene Simmons made a first career out of being an outrageous rocker behind the band KISS. He's made something of a second career out of making totally ridiculous and outlandish statements and watching the reaction as people go nuts. His latest is no different as he (perhaps on purpose) shows no understanding of basic economics in trashing the concept of using free music as a promotional effort (found via Digg). He starts out by claiming that he told the recording industry bosses that they should have sued more students earlier:

"I called for what it was when college kids first started download music for free -- that they were crooks. I told every record label I spoke with that they just lit the fuse to their own bomb that was going to explode from under them and put them on the street.... The record industry doesn't have a f*cking clue how to make money. It's only their fault for letting foxes get into the henhouse and then wondering why there's no eggs or chickens. Every little college kid, every freshly-scrubbed little kid's face should have been sued off the face of the earth. They should have taken their houses and cars and nipped it right there in the beginning. Those kids are putting 100,000 to a million people out of work."

Of course, this isn't even remotely true, and you'd think that Simmons would know it. Every aspect of the music business other than putting out CDs has been doing better. There are more bands making more music. There are more concerts and bands are making more money than ever before from touring. Tools for making recordings are selling better than ever before. Musical instrument sales are going up as well. More people are making money from music today than ever before. So it's hard to take Simmons' comments on the matter at face value. In fact some would argue that the whole reason that the recording industry is suffering is because they tried to follow Simmons' idea of suing these kids. The interviewer tries to point out the Radiohead and Trent Reznor examples as to why he might be wrong, and he brushes it off:

"That doesn't count. You can't pick on one person as an exception. And that's not a business model that works. I open a store and say "Come on in and pay whatever you want." Are you on f*cking crack? Do you really believe that's a business model that works?"

That's a nice sleight of hand trick there. First he tries to set the parameters by saying that you can't pick an exception... even though he was the one insisting you can't make money with free music -- so an exception is pretty important. Then he says it's not a business model that works, but actually it appears to be working quite well. Finally, he makes an incorrect comparison to a shop selling tangible goods. He never actually explains why using free as a part of your business model doesn't work, he just says it doesn't -- even when presented with examples where it does work. Then, he really goes off the economic rails. When the interviewer suggests that music can be promotional for tours and merchandise, Simmons responds:

"Well therein lies the most stupid mistake anybody can make. The most important part is the music. Without that, why would you care? Even the idea that you're considering giving the music away for free makes it easier to give it away for free. The only reason why gold is expensive is because we all agree that it is. There's no real use for it, except we all agree and abide by the idea that gold costs a certain amount per ounce. As soon as you give people the choice to deviate from it, you have chaos and anarchy. And that's what going on.

Except that... no. First of all, it doesn't matter that the music is the most important part. Breathable air is the most important part of living, but we're not paying for it, because it's abundant. He says "without [music] why would you care?" but no one is saying the music goes anywhere. They're just saying that the music is used to make lots of other stuff more valuable. As for his ridiculous assertions about the price of gold, apparently Simmons doesn't believe in supply and demand, and thinks that economics is all based on shared delusions. That would explain the rest of his comments.

Anyway, the kicker in all of this is that despite Simmons comments, it appears that even he doesn't believe what he's saying. Right in the middle of his tirade about how you can never get paid for putting out music if people can get it for free, he notes that he's coming out with two new boxsets of music. Apparently, despite his complaints, he does think that people will pay him -- and he's probably right about that, despite being wrong about everything else.

Filed Under: gene simmons, music industry, recording industry

You Mean Wall Street Just Realized The Recording Industry Was In Trouble?

from the why-you-don't-trust-wall-street-analysts dept

You didn't have to be particularly insightful to realize a while back that the traditional recording industry was in trouble if it kept traveling down the self-destructive path of suing music fans and shutting down unique and innovative distribution tools. However, it appears that the folks on Wall Street are just starting to figure it out. Apparently, the recent defections of Madonna, Radiohead and other big name acts has Wall Street analysts finally suggesting that the recording industry's future isn't very bright, and thus downgrading the labels' prospects. The thing is, they should have realized that long ago. The big name act defections are simply the end result of a long chain of strategic blunders, despite any number of people presenting more reasonable plans forward. Again, this is focused solely on the record labels, not the overall music industry -- which is thriving. In fact, the record labels have had every opportunity to embrace these new tools and be a big part of online promotions -- but they chose not to. One would hope that with even Wall St. analysts telling them their strategy is wrong the record labels might wake up to the opportunity they've thrown away, but the labels themselves (with the possible exception of EMI -- which was recently taken over by private equity folks who seem to realize what's going on) have given no indication of any significant change in strategy.

Filed Under: downgrades, recording industry, wall street

Downloading Is Correlated With CD Purchases

from the correlation-is-not-causation dept

There's a new study out (via Michael Geist) about the relationship between peer-to-peer downloading and CD purchases in Canada. The authors found a positive relationship between downloading and CD purchasing. That is, those who downloaded more music also tended to purchase more CDs. It's important to keep in mind that correlation does not prove causation. In particular, I suspect that much of what we're observing here is simply the fact that people have varying levels of interest in music, and those who are more interested in music are likely to both download more songs and purchase more CDs. So these results by no means prove that peer-to-peer file-sharing isn't hurting the recording industry. On the other hand, it certainly belies the recording industry's simplistic claim that no one will buy their music if it's available for free on peer-to-peer sites. Clearly, there are a lot of music fans in Canada who have access to peer-to-peer networks and choose to pay money for CDs anyway. That might be because they want the extras that come with the physical CD, because they feel good about supporting their favorite band, or because they expect the audio files on the CD to be higher quality than the music they find online. Whatever the reasons, the recording industry should be figuring out how to capitalize on them, by coming up with new products that offer perks you can't get from a peer-to-peer network.

Filed Under: business models, cds, correlation, downloading, music, p2p, recording industry

Lawsuits Don't Create New Markets

from the kicking-and-screaming dept

The RIAA has apparently been getting a lot of negative publicity for its six-figure judgment against a single mother for file-sharing. RIAA president Cary Sherman has a taken to the Web to defend his organization's actions. Personally, I don't have a great deal of sympathy for Jammie Thomas given the strong evidence against her, but I did think Sherman made a couple of misleading arguments. First, Sherman claims that the lawsuits have "created a legal marketplace" for music. But the primary way you create a "legal marketplace" for your products is to offer better products. The market is growing because services like Apple's iTunes make it convenient for consumers to get the music they want in a convenient and flexible format. But the major labels can hardly take credit for that, since they had to be dragged kicking and screaming into signing on to the iTunes store. Sherman says he'd rather be "helping artists make great music that we can distribute in lots of exciting new ways that music fans want." But for the most part, their approach has been the opposite: doing their best to sue new music technologies out of existence and sharply limiting the ways consumers can listen to the music they want. Secondly, Sherman repeatedly equates copyright infringement with theft, going so far as to say that the jury found Thomas "liable for copyright theft." But of course there's no such thing as "copyright theft." As the Supreme Court and others have pointed out, copyright infringement and theft are two different crimes, and it's misleading to treat them as if they were identical.

Filed Under: business models, cary sherman, lawsuits, markets, recording industry
Companies: riaa

Recording Industry Innovating Like It's 1999

from the deja-vu dept

Two developments this week suggest that the recording industry is finally taking baby steps in the direction of a genuinely competitive online music market, but the progress continues to be painfully slow. First, Apple is cutting prices on DRM-free music in an apparent bid to stay competitive with Amazon's launch of a DRM-free music store last month. This is a particularly interesting development because just last year, the talk was about whether Apple would increase prices on iTunes songs. But now it's looking like further price cuts are more likely to be in the cards. Even Amazon's 89 cent price point is still a lot more expensive than eMusic, which charges around 33 cents per song. Meanwhile, Napster has unveiled a new web-based version of its music store that appears to allow people to listen to their music in their web browsers, including non-Windows PCs. The new Napster will also make it easier for you to embed your favorite music YouTube-style on other websites. Those are great new features, but it appears that the service will still require people to use Microsoft's comically-named (and increasingly irrelevant) PlaysForSure platform if they want to listen to their music on a mobile device, which is quite a handicap in an iPod-dominated market.

Filed Under: innovation, recording industry
Companies: apple, napster, riaa

Sony-BMG Exec Tells Two Whoppers In File-Sharing Trial

from the say-what? dept

Wired's Threat Level blog has been doing some excellent work covering the first RIAA file-sharing case to go to trial, in my home state of Minnesota. In the latest post, reporter David Kravets quotes a couple of whoppers in the testimony of Sony BMG exec Jennifer Pariser. First, Pariser claims that "Selling music is the only way a record company makes money." That's just silly. While record sales are certainly a major source of revenue for record labels, there are lots of other revenue streams out there: concert tickets, merchandise, online subscriptions, endorsement deals, advertising revenue, and so forth. Just yesterday we had an excellent example of a band experimenting with offering name-your-own-price downloads coupled with a premium "discbox." And even some of Pariser's fellow record label execs have begun acknowledging that relying so heavily on music sales is a bad business strategy. At least I can see why Pariser might have thought it was a good legal strategy to pretend that record sales are the only conceivable revenue source for the music industry. Her other claim is even more puzzling: when asked if it's legal to make just one copy of a song you've legally purchased, she apparently said that was "a nice way of saying, 'steals just one copy.'" Not only is that flatly untrue as a matter of law, but saying it also seems like a lousy legal strategy, because (as Kravets points out) some of the jurors probably own MP3 players and won't like being accused of stealing. It's also worth mentioning that this is something the industry keeps flip-flopping on. Sometimes (like when they're arguing before the Supreme Court) they say that of course iPods are legal. Other times they call anyone who rips their CD collections for personal use thieves.

Filed Under: business models, copyright, fair use, file sharing, recording industry
Companies: sony bmg

The 'Ringle,' Or What Passes For Innovation In The Recording Industry

from the something-else-you-won't-want dept

It's no secret that the record labels face a chronic inability to innovate in their business models, choosing instead to continually repackage content and seek ways to force people to buy stuff they don't want in order to get the things they do want. It's this sort of thinking which has brought about the "ringle": a combination of a single and ringtone, and apparently Sony BMG and Universal Music's latest strategy masterstroke. Buyers would get a CD with the full-length track, a B-side or two, and a ringtone for $6-7 -- which doesn't really compare favorably to a 99-cent download and a few bucks for a ringtone (or a download and free homemade ringtone). Is there any real benefit for the consumer here? It's hard to see any, but that's not really surprising. It seems more like an attempt by the record labels to try and deter people from buying single-track downloads, since they don't like the low price and the way they've blown up the album sales model -- which itself is another variation of the "buy stuff you don't want to get the stuff you do" model. It's unlikely that many consumers will fall for it, especially since the CD single is pretty much a dead format. It's probably also worth pointing out that just like the labels try to recycle content, they recycle their innovative ideas as well, since it would appear that Universal tried pretty much the exact same thing in 2004, just calling it the Pocket CD instead of the ringle.

Filed Under: music, music downloads, recording industry, ringtones
Companies: sony, sony bmg, universal music

Canadians Figure Out How To Properly Release A CD

from the maybe-they-read-techdirt dept

There's a really simple strategy for bands who are worried about the "threat" of file sharing: embrace and add value. That means not freaking out about file sharing, recognizing it's going to happen anyway... and then coming up with ways to add value so that fans will want to pay you anyway. Back in July, Canadian band Stars battled the digital leak of its latest album, In Our Bedroom after the War, by releasing the digital version of their album 3 months early, thereby giving their fans a legitimate path to obtain the already leaked album. Rather than fret about how this would "hurt" them, as the actual release date approaches on September 25th, the band decided to give their fans a reason to buy the physical CD -- they're including a limited edition DVD that chronicles the the band's tour. It's fantastic to see glimmers of hope in the music industry -- from Hip Hop Artists to Trent Reznor. Perhaps soon the music industry will wake up and embrace the changes that are happening to them. At least they're trying now.

Filed Under: cd, music, music downloads, recording industry

After Accusing Them Of Being Criminals For Years, Record Labels Want Kids To Shill For Them On MySpace

from the somehow,-I-think-not dept

Do the record labels really not realize how much they've pissed off their best customers for the last decade? It would appear so, because they're now hoping that the kids they've alienated for all these years will become shills for them on MySpace and other social networks, pushing all their friends to buy music as well. That might have worked years ago, but these days it seems like plenty of kids have been so turned off by buying music from record labels that treat them like criminals first, that it seems like an uphill road to convince them to not just start buying music, but shilling for the record labels as well. Especially as reports are coming out that legal purchases have stagnated as unauthorized downloads have continued to grow -- it's hard to believe that the record labels are suddenly going to get everyone over to their side this easily.

Filed Under: music, recording industry, social networks
Companies: myspace, riaa, snocap