An interview with the Flashbulb about his recent calamity with iTunes, and putting his album up on BitTorrent. It turns out iTunes is selling his albums without permission, and not paying royalties.

The Flashbulb (Benn Jordan) has been releasing albums for 14 years, the last 5 have included various commercial endeavors. The label deal he has is a 50/50 split, but he hasn’t been seeing the money. Benn says he has no agreement with iTunes to sell his music, and many of his fans have told him they bought his music there. When he investigated the issue further, his label asked him to drop it, and his calls went unreturned.

Here’s a great quote from Benn: “Who’s the pirate I should go after? A kid who downloads my album because it isn’t available in non-DRM format and costs $30 on Amazon? Or a huge multi-billion dollar corporation that has been selling thousands of dollars worth of my music and not even acknowledging it?”

Benn is being labeled in the press as pro-piracy, but his true stand is that people buy what they like. “What I’m promoting is the artist’s freedom to choose what can and can’t be done with his/her music, and more importantly, the listener’s freedom to do what he/she wants with their own computer, MP3 player, or internet connection.”

Benn makes a poignant case that the RIAA has spent so long dictating people’s taste and choices that they are now threatened by the opportunity for people to choose the music they want. He suggests that “music will be judged by it’s content again and will be subjected to it’s own Darwinism.”

Bottom Line: Where are all those billions in album sales really going?

Ghosts is a variation on a theme created by Radiohead. The latest NIN album is part free, part paid, part digital, and part traditional. And a broad range of consumer preferences and budgets are accommodated by the initiative.

Reznor and Radiohead are important market-movers and fearless risk-takers. But are these experiments really relevant to the broader music industry?

The problem is that only part of the consumer population is going to play along. Radiohead found that a disproportionate number of fans downloaded In Rainbows for free, an offered option. But an even larger number of fans downloaded the album for free outside of the Radiohead page, on BitTorrent, P2P, and other sharing protocols.

These fans wanted the album on their turf, not Radiohead’s. And that has been the bigger story for the recording industry for the past ten years. Sure, the iTunes Store has sold 4 billion downloads, but that is just a tiny fraction of the free downloads obtained from other channels.

Outlets like Limewire offer instant, on-demand bulk downloads and comprehensive recording catalogs for free. The iTunes Store offers a cleaner copy, but for a price that makes collection volume difficult to achieve.

Now, Trent Reznor is about to learn a similar lesson. Most likely, fans will grab the first, free volume of the album in heavy numbers, and a smaller percentage will pay for the expanded collection.

But that is only part of the story. Outside of that sandbox, volumes II-IV will quickly creep onto Gnutella, BitTorrent, and IM. Sure, Reznor seeded the first volume onto BitTorrent. But who are we kidding? Fans are in charge of this channel, not Reznor.

That means far lower volumes for NIN, or any other established artist, compared to the 90s. Other factors are also sapping energy, including an increasingly-fragmented media market, and the lowered attention spans that come with it.

Then again, who needs 90s volumes when the major label is suddenly optional? After all, Reznor can now keep the revenues (almost) all to himself, and achieve robust revenues on far smaller volumes.

The math is alluring, and a major disincentive for signing with a label. Marketing specialist Seth Godin urges artists to cultivate targeted, niche audiences, and any business school graduate will lecture you on the value of consumer targeting. Why not translate those principles and percentages into a healthy, more controllable career?

The question is becoming less and less academic, and artists like Trent Reznor are putting the possibilities into motion. But it remains unclear if artists can healthily sustain themselves using this philosophy, at least in scalable numbers.

And smaller artists will have difficulty applying the Radiohead model, at least until their recognition grows. Why? The reason is that most lesser-known artists have trouble getting people to download their content for free, much less pay for it. Why pay for something blind? That is a game for pre-2000 consumers.

In contrast, Reznor and Radiohead have established names, thanks to a massive, major label publicity machine. That tailwind is a critical component of the current models – and a major reason why media outlets are focusing heavily on their initiatives.

In the middle are artists like Saul Williams, a poet and rapper that exists outside of the mainstream. Reznor actually helped Williams create a Radiohead-like model with the help of Musicane, and the results were mixed. Less than 20 percent opted to pay $5 for the album – a total of nearly 28,000. Then again, that translates into roughly $142,000, a revenue total that easily pays the bills.

And any starving artist knows that six-figures is a goldmine for a life in the arts. A major would drop Williams in a heartbeat after a performance like that. But sailing solo, Williams could command a decent and consistent payout.

So is the Radiohead model relevant? For more established, post-label artists, the concept probably maximizes recording profits, and creates momentum for other revenue generators. And the results are boosted if the recordings are dispersed across a broad number of sales outlets, including the artist page, iTunes, Amazon MP3, and even traditional brick-n-mortar.

Sure, the result is smaller than 90s recording sales potentials, but it is something nonetheless. And if the consumer elects to pay, they have the opportunity to do so.
What about everyone else? For mid-size artists, the concept can translate into meaningful revenues, and for smaller artists, the idea is probably premature ahead of broader audience awareness. But more than ever, artists have the potential to reach super-targeted audiences, and that greatly increases the chances of a paid transaction.

This article looks at the impact that huge MP3 collections has on our perception and enjoyment of music, and really got me thinking.

Music has value because it moves us. That special album that takes us back to some magic moment, or the songs we love to dance to. What has people by albums us the love of the music.

MP3 collecting is similar to collecting baseball cards. Grab an artist’s entire discography, and trade among your peers. Our music collections expand almost as fast as the national debt, and often music sits on our hard drives unlistened, unappreciated, and unacknowledged. We become overwhelmed with the amount of music we have to listen to, and start to lose our love for the music that touches us.

When music is downloaded and listened to only once or twice, it becomes a single serving item, like a hamburger. The joy of music is in the artistic expression, and the way we are moved when we hear something we love.

Could the current frenzy of MP3 downloading (both legal and illegal) be eliminating our love for music? There’s a phenomenon known as information overload. One way to look at the current consumption of MP3s is that music is in an information overload stage.

With so much music to choose from, both free and bought, and huge MP3 collections, the line between having music we love and having music because its there is getting blurred.

Most of the time, we relate to this in terms of album sales, and the music industry. What if we looked it as a shift in the perception of music? While music is always special, it’s apparent that we are now starting to view it as a thing to have. What effect this will have on our appreciation of music is anybody’s guess. Based on the habits of the general public, music is losing it’s intrinsic value as art, and becoming more like a piece of furniture.

Bottom line: We used to buy CDs because we loved the music. It is starting to appear that we now collect MP3s because they’re accessible.

Here are some of tasty quotes :

“it’s always very difficult going from something that’s free to an industry to something that has a cost to the industry.”

“I think what we have to do is far more flexible about price. The industry has been very bizarre over the years – it’s essentially a one price industry.”

“I don’t want to destroy physical sales … We find physical and digital are both viable markets that people enjoy using. But clearly, there’s an opportunity for music on tap, and as a service, and it’s something we should explore.”

“I would like to see copyright modernized in 2008, with people enabled to do what they want to do, and those who profit from it allowing the practice [third parties] to be monetized. I’d like to see barriers taken away from the enjoyment of music.”

“I think P2P does have a discovery element to it, and it you may discover something on P2P that makes you buy a product. CD burning is much more domestic piracy, and is much more somebody avoiding paying for something.”

“I think the whole “DRM as a policeman” policy was doomed to failure – the independent companies never supported it to any extent whatsoever. We have never believed in putting obstacles into what the consumer wants to do.”

“We inhabit a mature industry that’s grown on a multi-territorial basis. And, frankly ,if you were reinventing it today you’d reinvent it way differently. It would be global, not territorial.”

“…[T]he market is in the control of one or two parties, and we don’t think that’s healthy.”

“The patrons are going to be largely commercial so brands that see an advantage to a certain kind of artist, and that is putting art far to close to commerce. That would mean marginal music wouldn’t exist, you’d only have music that had a commercial upside for sponsors. That’s a world none of us really want to see.”

“Music publishers, the record labels and digital music distribution outlets began a three-way legal wrestling match Monday over just how much songwriters and the publishing houses should get paid for digitally delivered music.”

At stake in this debate is mechanical royalties for internet streams. Major labels, Apple, and Yahoo want the royalty rate for artists to be lowered. The big publishing houses are currently promised nine cents a song, a figure that often gets negotiated lower, and the consortium against them wants that rate moved to 8%. Apparently, publishing revenues are up, while major label revenues are down. The Digital Media Association is upping the ante, pushing for the royalty rate to be dropped to 4%.

On the other side of the fence, the National Music Publishers Association wants the rates raised to 12.5%.

The driving concern here is the financial ‘burden’ that paying these royalties puts on the large companies that offer music. The claim is that streaming media should be treated like terrestrial radio.

Bottom Line: Without content, there is nothing to stream.

The RIAA’s head, Cary Sherman, wants to put encryption on our computer that will force us to decrypt music before listening to it. In other words, the filter will scan all your incoming data and then either allow or deny your ability to listen to it. since this idea likely won’t be popular (who’s going to willingly put a filter on their computer that blocks the files they are downloading?), the next suggestion is to put the filters in our modems.

Despite the predictable public backlash against these tactics (in an environment where the RIAA already has public approval that rivals the US Congress), some ISPs are moving ahead with these filters. The technical specifics are a bit thick, suffice it to say that various file encryptions can bypass these filters unless entire protocols are blocked.

Here’s a video of Mr. Sherman lauding the glories of filtering:

Bottom Line: Being out of touch with your consumers’ needs does not improve your financial picture, or your credibility.

Here’s something novel:

Dependent Records recently uploaded their entire catalog on Pirate Bay (Dependent specializes in aggrotech, electro-industrial and futurepop). Well, sort of. Apparently a group pretending to be Dependent posted the albums on the p2p site.

The quote from label head Stefan Herwig – well, an impersonator – is “I closed down my record label Dependent Records for good. But since I want my music to be heard by the people out there, everything I have ever published is now available on The Pirate Bay.”

While artists are turning to file sharing networks for promotion, it;s unusual to see a label do this (although there are some net labels giving away music, such as Kikapu and Lacedmilk).

Herwig (or his imposter) feels that p2p technologies are killing labels, not boosting sales. However, this article claims file sharing is a boon for new music. Perhaps availability adds to desirability.

Do you think file sharing is boosting or dropping album sales?

By the late 90s, investors, entrepreneurs, and even music industry executives sensed a profound shift ahead. The early days of the internet witnessed a massive stock bubble, and the creation of instant millionaires, billionaires, and outrageous valuations.

Of course, that bubble popped, though society, communications, entertainment, and relationships have all experienced incredible shifts over the past ten years. And those born into a world saturated with the internet, mobile phones, and iPods represent an entirely different demographic. Plenty of older people are tech-savvy and facile on the internet, but teenagers are digital natives, and the vanguard of a completely different consumer class.

That was the focus of a recent Frontline special called “Growing Up Online,” which aired on PBS last week. “It’s been said that the internet represents the greatest generation gap since the advent of rock n’ roll,” the program asserts, hardly an overstatement for anyone connected to teenagers today.

“Growing Up” focused heavily on social networking, IM, mobile devices, and online video, all cornerstones of a “virtual society … largely hidden from parents and teachers”. Well-known names like MySpace and Facebook dominated the discussion, while older players like Yahoo, AOL, and MSN received scant attention.

According to Frontline, approximately 90 percent of teenagers in the United States are online, a figure that continues to grow. “This is the first generation to come of age immersed in a virtual world, outside the reach of their parents,” the program asserted.

For the music industry, that “society” is roiling once-solid physical and album-based models. Frontline did not focus on music-related topics, though the implications of an always-on, ultra-savvy class of internet consumers are already being felt. “It’s hard not to wonder whether a generation that uses the internet to ‘learn’ about the world for ‘free’ … will be willing to pay for content online (whether that be music, television, movies, etc…),” blogged Richard Greenfield of Pali Research.

Kicking and screaming, traditional media conglomerates have been forced to adapt to that reality, with mixed success. Of course, teenagers are only one part of a massive digital disruption, though “Growing Up Online” offers a lucid look into a quickly-changing consumer class.

Review by Paul Resnikoff.

“Growing Up Online” is available online here.

The RIAA wants to expand copyright law, with the apparent intention of having more technicalities to prosecute.? The new law on the table is for album compilations.? Specifically, having each track count as separate count of infringement.

Goggle’s top copyright lawyer was quoted saying the parties pushing this bill have an “unslakable lust for more and more rights, longer terms of protection, draconian criminal provisions, and civil damages that bear no resemblance to the damages suffered”.

Bottom Line: Fining someone upward of $9,000 for a track with a value of a dollar may not be fair, but lawmakers still seem to align themselves with this kind of enforcement.

This number is likely slightly lower than reality. There is no information to measure how many people downloaded the album for free then went back and bought it. CNET interviewed both Trent Reznor and Saul Williams, and their opinions are quite different.

The album has been out for two months, and the major campaign of videos and touring begins in the next few weeks. The album sold almost 30,000 downloads and gave away another 120,000 with almost no marketing campaign, and no publicist. Although the album hasn’t gone digitally platinum, this experiment is a positive sign. Williams’ music does not neatly fit into a pigeonhole. While the sales model is similar to Radiohead’s In Rainbows (which is no longer available as a free download), these two artists are not in the same position, and the IRLNT test will be a gauge of what mid level artist can expect from this model, at least for this year.
Having 20% of your listeners buy your album may not seem like a large amount, but it’s hard to measure who they are, how they know Saul Williams, and whether they were pre-existing fans or not. Consider that an album’s life span is long – upwards of two years, and over the next eight to ten months we will see how this model works when promotions are put into play.
Bottom Line: Whether or not this model of selling albums works is still unclear. As time passes, and more artists try this model, we will see whether audiences will pay for something they can get for free.