A new idea has surfaced in the music business this year: giving away tons of free CDs. First Prince did it through UK newspapers, causing quite a stir in the industry. Now Big Head Todd and the Monsters are giving away 500,000 copies of their new album to radio stations and fans, splitting the cost with radio to get the copies out there. The albums will be available as giveaways from radio stations, and on the band’s site. The album is available as a free download for fans, and according to the BHTM site, the physical album is “Available SOON from our merchandise store for just $5 or FREE with any merchandise purchase of $15 or more.”

At first glance this appears to be another groundbreaking model for the industry. BHTM used to be on a major label, and has the industry recognition and viability as a touring outfit (they are preparing for a 60 city US tour as we speak) that comes with major label artist development and promotion.

Looking closer, even at dirt cheap prices (including postage), the investment here would be a minimum of $200,000. Apparently, fans are jumping at the bit to get the free album, a testament to the credibility of BHTM. But what does this action say for the rest of us in the industry? Although not as widely recognized as Prince or Radiohead (and few artists are), BHTM has the credibility and resources to launch this kind of campaign. For the rest of us who have not had major label development, access to create a quarter million in investment, tons of willing radio contacts, and the ability to book a viable 60 date US tour, this tactic may not be fruitful in the short term.

Based on the flopping CD sales over the holiday season, CDs are set to lose major amounts of retail shelf space next year, except in major retail outlets like Wal-Mart and Target. Consider that without retail shelf space, physical distributors will rapidly become obsolete. These days, selling 100,000 copies of a CD gets you high up on the charts. Give the sorry state of CD sales, it appears that musicians will need to have some kind of sure money maker (like touring) to buffer this kind of massive promo giveaway, unless one is willing to invest tens of thousands of dollars and ‘see what happens’.

So what about the horde of mid level musicians that don’t have the clout to give away half a million (or even ten thousand) CDs? It’s a brilliant marketing ploy, but without the ability to book a viable tour with sweet guarantees and juicy crowds or the guarantee of radio play it becomes a major loss leader in an industry that is rapidly losing revenue streams.

Giving away albums to generate buzz has become the modern equivalent of the single. Let the fans hear the music, and give them the opportunity to support the band live, or by buying merch or CDs. This tactic will drastically undercut the Big Four’s ability to set prices and control music distribution over 2008.

Bottom Line: It is beginning to appear that the only way to transform the music business is to devalue music and start again with a whole new model, where art is free and the money comes from something else.

In the wake of the announcement that Universal and SonyBMG are uniting to start a new download service to compete with iTunes (which will offer 75% of all music sold in the US), Doug Morris, Universal Music Group’s CEO, was profiled in Wired Magazine the other day.

Let’s start with my favorite quote from the article: “There’s no one in the record company that’s a technologist, That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?” (quoted from Wired article).

Answer: I would find a veterinarian. The head of the world’s largest record company claims ignorance of the fundamental shift in the entertainment industry over the last decade. I find it interesting that the largest music company on the planet was unable to prepare for the digital revolution. Ignorance may be bliss, but you’re still dead when the falling piano you don’t see hits you.

As if that isn’t ironic enough, Morris goes on to say “We didn’t know who to hire… I wouldn’t be able to recognize a good technology person, anyone with a good bullshit story would have gotten past me.”

Perhaps this is why you have twenty VPs, Mr. Morris. What good is an army of executives if they are incapable of determining who to hire and what to do? Mr. Morris makes it obvious how major labels have destroyed their business model and viability.

For years, Doug Morris has been railing for stringent enforcement of copyrights (the ones his company has been taking form artists for decades), and he was at the source of Universal attacking Yahoo, YouTube, and Myspace for their flippant distribution of corporately owned content. This powerful industry insider has the pull to force companies to give him what he wants: licensing fees, commission on Zune sales; the most powerful man in the music industry calls the shots. And now he’s changing his tune, embracing digital technology. It isn’t for the benefit or convenience of audiences though, it’s an attempt to consolidate the digital realm.

The article discusses how iTunes pulled the wool over Morris’ eyes. Since Universal could not find anyone with a technology background to advise them, they (and Morris) never saw the power Apple’s iPod would have to control the industry. Considering how much music is sold on iTunes, that can only be played in iTunes and iPods, this is probably the first time anyone successfully put the Big Four on the defensive. Major labels had free reign to do whatever they wanted and completely controlled the market, one day they woke up and realized out they weren’t in control anymore. It was a conscious choice not to hire anyone who knew about the internet, and not to adapt to a shifting industry. Controlling massive catalogs and marketing muscle isn’t enough. They want every penny, and they don’t care if we know it.

Here’s another great quote: “It was only a couple of years ago that we said…an album that someone worked on for two years, is that worth only $9, $10…?” People never really understand what’s happening to the artists. All the sharing of the music…Is it correct that people…fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? ….That’s what happened to the record business.” (quoted from the Wired article).

While this is a noble sentiment, in reality artists are not making a ton of money off of these deals, at least to compared to what the record companies reap. While we all want to support hard working artists, it’s difficult to find compassion for a seven billion dollar a year company. Sometimes audiences forget that artists are human beings when faced with the behemoth of major labels squeezing us for every penny they can. It’s even more difficult to feel sorry for these companies that own and control the rights to artists like Jimi Hendrix, Bob Marley, Pink Floyd, Miles Davis, and timeless artists that sell with or without marketing.

Doug Morris started out as a producer and a songwriter. Considering his roots, it’s surprising that he has such scorn for the future of music, and the satisfaction of audiences.

If the CEO of the largest record company on the planet is only interested in a fast buck, and is indifferent to the long term future of the music industry, what hope do the Big Four have?

The article concludes with a picture of Doug Morris’ frustration. Hhe considers his job to be developing new talent, not providing convenience for audiences, or adapting his company to the current environment. The CEO of Universal Music Group doesn’t want to be bothered with the transformation of the music industry. And that is the culture of major record labels. They don’t care whether we enjoy the music we have, or that it’s delivered to us in a format that works. They are merely interested in a fiscal bottom line for this quarter, and controlling the media we have access to.

Now that the Big Four can’t even count on multi-platinum talent to stay with them, the end is near. I’m not sure why Doug Morris allowed himself to be profiled. This article is a clear picture of how major labels have destroyed their own credibility, their business model, and their future.

A special thank you is in order to Wired Magazine and Seth Mnookin for this fantastic article. You have allowed us see the man behind the curtain, and he’s everything we’d expect him to be.

Capgemini? recently broke down album sales in Britain since 2004.? While the report is still confidential, The Register reported on a few details.? And what is the reported main source of lost revenue in the British recording industry?? Album Unbundling.? (Files sharing came in at 18% of the projection).

The iTunes music store was originally launched with the blessing and backing of the four major record labels, who thought unbundling albums would be a boon to business.? it wasn’t until the major labels unbundled their catalogs that the idea was popularized. In unbundling albums, audiences have lost the incentive to buy a whole musical work.

Considering that the major labels are upset over their falling revenue, it doesn’t seem like a shining moment when they devalued the recordings in their catalogs.

Would you buy part of a painting?? As Jim Griffin pointed out in 2004, would you unbundle books of poetry?

It is valid that many albums only have a couple of good tracks, and are mostly filler.? However, most albums are created and put together as a total piece.? Ciccone Youth released an album quite a while back titled “The Whitey Album”.? The second track is “Silence”, and consisted of a little over a minute of… silence.? Admittedly, this is not the first track of its kind (the band joked that the track was a speeded up version of John Cage’s 4:44).? This track sold for 99 cents on the iTunes store, until stories started popping up in the media.? Artistic visions are undermined through unbundling, and shorter or more experimental tracks are not always as valuable as stand alone.

What do fans lose from unbundled albums?? When I think of some of my favorite albums, I can see that I would miss some gems through album unbundling.? Polyvibe artist Zoltan Dobi has several tracks of under a minute each.? Many Pink Floyd albums are meant to be listened to as a continuous piece.? Primus‘ (Primus’s?) early albums contain many short interludes that I love, but wouldn’t buy as a single.? What about artists that put experimental ramblings or noise tracks in their albums?? Clearly these tracks are intended to be part of those musical experiences.

Does it serve artists to have their musical works picked apart?? While the single is still a viable format, it has a specific design.? A track meant to generate interest in an album, and often the best track (sometimes colloquially referred to as the “money track”).? By unbundling albums, all tracks become singles, and fans often miss the gold in favor of a single serving mentality.? Radiohead’s In Rainbows is not available on iTunes for this very reason.? The album can only be obtained the way it was created: as an album.

I’m a proponent of freedom of choice, and I believe that audiences have the right to buy the music they want, and how they want it. I’m a believer that if a song is a hit, don’t withhold the single.? When you buy your tracks in single servings, the overall cost is higher.? It costs between $2,000-$10,000 to fill a 40GB iPod, depending on whether you buy the music as albums or singles.

However, as an artist, I want my vision to be experienced.? When my albums are split apart, listeners do not get the full scope of my musical vision.? As as a lesser-known artist, the incentive for people to buy a single track over the album is apparent.? While it’s an honor to have people tune in at all, is there an incentive in creating a full album if people only buy one or two tracks?

The Bottom Line:? Album unbundling has the potential to eliminate the art of the album entirely, although it does provide an opportunity for fans to expand their musical tastes in low cost increments.

Many artists that experience high volumes of downloads on p2p networks also experience brisk sales. The days of mega-platinum albums are pretty much at an end, so I’m defining brisk sales as between 50,000 to 7 million units sold. This is abroad spectrum, as it includes middle tier artists as well. The future of music will most like include far more middle tier artists, making a decent living, and fewer multi million dollar pop sensations.

The actions of Radiohead, Nine Inch Nails, and Saul Williams are not meant to devalue music to nothing. These artists want people to buy their music. They pay their mortgages, buy their gas, and feed their kids off music sales and gigs. The intention behind these artists’ actions are to move forward a major shift in the music business. The sooner major labels are out of the picture, the sooner our culture can have a conversation about the value of music. It;s great that people can choose how much they want to pay to support artists. At the same time, all of us in the middle or lower tiers of the industry cannot sustain a vibrant career without revenue. Digital music sales are expanding rapidly; obviously people are buying music.

Consider that people can get almost any music they want for free. With a small amount of effort, any album can be found, downloaded, and added to a collection as an MP3. So when people do buy music, what does it measure?

The Love of the Music

Album and track sales measure artist support, and appreciation of the music itself. When major albums are leaked well in advance of release dates and still sell well, it’s clear that the people buying it don’t have to. Why would people buy something they can get for free? It’s not consistent with a capitalist mentality.

Music is in a post capitalist environment, and totally uncharted territory for any commodity. There is no scarcity of music, and the supply outstrips the demand by miles. When people buy an album, they are saying “I like this music or artist enough to support them. I want them to continue to make great music, and I am moved and touched by what they create.”

Sales dynamics and trends for non-major label releases follow a completely different set of rules than mainstream music sales do. Mega-Artists that are joining the ranks of independent musicians aren’t breaking new ground as much as they are creating a public awareness of the way the music business works for most of the artists in it. For those of us in the trenches of our careers, they are putting a spotlight on how we do business.

Free downloads from major artists are simply a proving ground that in the post major label era of music, people will still buy music they support. The only difference between downloading an album for free on an artist site or off Bit Torrent is the amount of effort one has to put in (i.e. clicking a link instead of typing a name into a search prompt).

Although accurate sales totals for In Rainbows won’t be available till the end of the year, it’s clear people are willing to pay for music when they are not forced to. Now that big time acts are involved in the independent music world, there’s no denying that people buy music they love, even if it’s free. The only thing that has changed with In Rainbows is the kind of market analysis we are seeing in major media publications. Major labels can’t whitewash entertainment news about the reality of the business anymore.

When people have access to the music they want for free, and without being treated like criminals, supporting the artist is a natural action to take. it’s when we are treated like criminals, or asked to pay large sums of money for long dead artists, that the public begins to resent buying music.

The Bottom Line: Album sales no longer measure marketing ability or brand placement, they measure people’s love of the music.

What do you think?

What do album sales measure?

Are Radiohead/Saul Williams/NIN breaking new ground, are are they amplifying a message that most of us already hear?

This fantastic editorial by Tony Long is a powerful and accurate assessment of the fallout of the lawsuit against Jammie Thomas.? His analysis is so good that I have little to add.

Peep it for yourself.

Good show, Tony!

Folks, this has gone too far! $222,000 for 24 songs? Please read this article:

*****

By David Kravets | October 04, 2007
(Repost from WIRED Magazine)

DULUTH, Minnesota — Jammie Thomas, a single mother of two, was found liable Thursday for copyright infringement in the nation’s first file-sharing case to go before a jury.

Twelve jurors here said the Minnesota woman must pay $9,250 for each of 24 shared songs that were the subject of the lawsuit, amounting to $222,000 in penalties.

They could have dinged her for up to $3.6 million in damages, or awarded as little as $18,000. She was found liable for infringing songs from bands such as Journey, Green Day, Aerosmith and others.

After the verdict was read, Thomas and her attorney left the courthouse without comment. The jurors also declined to talk to reporters.

The verdict, coming after two days of testimony and about five hours of deliberations, was a mixed victory for the RIAA, which has brought more than 20,000 lawsuits in the last four years as part of its zero-tolerance policy against pirating. The outcome is likely to embolden the RIAA, which began targeting individuals in lawsuits after concluding the legal system could not keep pace with the ever growing number of file-sharing sites and services.

“This is what can happen if you don’t settle,” RIAA attorney Richard Gabriel told reporters outside the courthouse. “I think we have sent a message we are willing to go to trial.”

Still, it’s unlikely the RIAA’s courtroom victory will translate into a financial windfall or stop piracy, which the industry claims costs it billions in lost sales. Despite the thousands of lawsuits — the majority of them settling while others have been dismissed or are pending — the RIAA’s litigation war on internet piracy has neither dented illegal, peer-to-peer file sharing or put much fear in the hearts of music swappers.

According to BigChampagne, an online measuring service, the number of peer-to-peer users unlawfully trading goods has nearly tripled since 2003, when the RIAA began legal onslaught targeting individuals.

At the time, BigChampagne says, there were about 3.8 million file sharers trading over the internet at a given moment. Now, the group has measured a record 9 million users trading at the same time. Roughly 70 percent of trading involves digital music, according to BigChampagne.

The case, however, did set legal precedents favoring the industry.

In proving liability, the industry did not have to demonstrate that the defendant’s computer had a file-sharing program installed at the time that they inspected her hard drive. And the RIAA did not have to show that the defendant was at the keyboard when RIAA investigators accessed Thomas’ share folder.

Also, the judge in the case ruled that jurors may find copyright infringement liability against somebody solely for sharing files on the internet. The RIAA did not have to prove that others downloaded the files. That was a big bone of contention that U.S. District Judge Michael Davis settled in favor of the industry.

Thomas, 30, maintained that she was not the Kazaa user “Tereastarr,” whose files were detected by RIAA’s investigators. Her attorney speculated to jurors that she could have been the victim of a spoof, cracker, zombie, drone and other attacks.

The jury found her liable after receiving evidence her internet protocol address and cable modem identifier were used to share some 1,700 files. The hard drive linked to Kazaa on Feb. 21, 2005 — the evening in question — did not become evidence in the case.

According to testimony, Thomas replaced her hard drive weeks after RIAA investigators accessed her share file and discovered 1,702 files. The industry sued on just 24 of those files.

(Courtroom sketch: Wired News/ Cate Whittemore)

*****
Ok, now lets be honest. Songs have always been “free” on the radio. This is because you are forced to listen to advertisements which undoubtedly sway a percentage of the captive audience to go buy the products represented in said advertising.

The idea that downloading hurts CD sales has been disproven. In Fact, there have even been several cases where a song breaks on the internet and causes a landslide of physical sales. Shitty music is hurting physical sales. Ask anyone on the street, Mr. RIAA. What we are witnessing here is a truly EVIL organization that is not operating in the best interests of the people it was designed to protect.

Let’s go back to this quote: “This is what can happen if you don’t settle.” That is a direct threat from the RIAA, telling us to conform to their standard, or else be disciplined by their heavily funded hand. I have a response for you, Mr. RIAA Lawyer Prick…

…This is what happens when you don’t Settle:

The revolution, the birth of a free nation, the creation of epic works of art, the birth of new technologies and the absolute free and unfettered exchange of information.

RIAA, your #1 client base is who you are attacking. Everyone is watching you, and thinks you are stupid. You will NEVER stop the free trading of music on the internet. You do not control the flow of information, nor are you operating in the best interests of those you claim to represent

Black markets flourish when consumer demands arent met by governments or corporations (look at prostitution or the war on drugs). We will always share music! We used to do it with cassette tapes, we used to do it with burned CD’s, We will do it by singing at each other if we have to.

This is for everyone:
STEAL MY MUSIC.
SHARE IT.
ENJOY IT.

After all, I wrote it for you.
-r

You probably already know that the US Copyright Royalty Board is finalizing royalty rates for internet radio for the period 2006-2010. The premise seems noble: Raise royalty rates on the internet, so artists can make more money. The practical result of this royalty hike is most small internet radio broadcasters will be pushed to bankruptcy, leaving only the largest (and mostly consolidated) broadcasters left. Before we take a look at how this has gone down, here’s my take on this:

This is not about royalty money. Money is one of the most powerful tools of distraction in our society. The issue here is who will have the power to broadcast on the internet. Deregulation of media ownership is moving online, and by limiting who will have the legal right to broadcast music, the RIAA is attempting to control our tastes, and therefore protect their flopping sales.

According to the Copyright Royalty Board’s Final Determination – Docket No. 2005-1 CRB DTRA, Page 71, “SoundExchange was…an unincorporated division of the Recording Industry Association of America.” SoundExchange’s argument during these proceedings: “it would be inefficient for the Copyright Royalty Judges to select more than one agent to receive and distribute royalties.” “Only one party in this proceeding, SoundExchange, proposes that Noncommercial Webcasters should be subject to a rate structure incorporating a revenue-based metric… SoundExchange specifically proposes that Noncommercial Webcasters pay according to the same structure and rates applicable to Commercial Webcasters.”

SoundExchange has a summary of this ruling on their site. On page 4, it states, “Upon review of the evidence…the CRJs concluded that ‘selection of a single Collective represents the most economically and administratively efficient system for collecting royalties…’ The CRJs also found ‘no credible evidence that demonstrates that copyright owners and performers suffer increased costs from a system with a single Collective.’” (Check out this summary to see all the great reasons for establishing a monopoly).

In the songwriting realm, we have freedom of choice with Collection Societies, mainly ASCAP, BMI, or SESAC. This competition allows artists to have leverage in how they are treated, and the rates they pay. So why would the CRB rule in favor of a single royalty collection entity for internet broadcasting? And why choose an entity that started as an extension of the RIAA?

Back in 2004, The Register reported that thousands of artists unclaimed royalties would be kept by the RIAA unless claimed by the end of the year. Here’s a couple of articles from Techdirt, Slashdot, and Daily Kos from late April ’07 dissecting the CRB ruling. it turns out that SoundExchange is actually the recipient of all internet royalty payments, whether RIAA members or not.

Here’s a quote from the SoundExchange Site:
“What about webcasting? The recent U.S. Copyright Office ruling regarding webcasting designated SoundExchange to collect and distribute to all nonmembers as well as its members. The Librarian of Congress issued his decision with rates and terms to govern the compulsory license for webcasters (Internet-only radio) and simulcastors (retransmissions).”

Let’s take the Polyvibe team as our example. We are not affiliated with the RIAA in any way. Our first priority is having the music heard, royalties or not. We are required to register with SoundExchange and pay their fees to get our royalties. We haven’t made their unpaid label list yet.

If they know who they are collecting money for, and they have a meticulously cataloged list of unpaid labels and artists, isn’t it easy to send out a form letter? Here’s a recent post from Wired’s blog, “SoundExchange Distributed Only 60% of Collected Royalties in Q1 2006” (SoundExchange is only required to keep records for three years, ain’t that a kicker).

The most recent ruling by the CRB is in the Federal Register on May 1 (The ruling was March 2). Our last hope is HR 2060, which will overrule the CRB ruling. The bill is sponsored by Don Manzullo and Jay Inslee.

Free the Airwaves!
Save Net Radio!

Have you ever heard of Pretexting? It’s a manipulation technique often used to fool organizations into disclosing private information. In December of 2006, a California Law was proposed: “…any person…obtaining or attempting to obtain…personal information about a customer or employee contained in the records of a business …by making false, fictitious, or fraudulent statements or representations…”. Although the bill was unanimously endorsed by members of the CA Senate, the MPAA stepped in and had the bill killed (see Wired Magazine, “MPAA Kills Anti-Pretexting Bill”, 12/1/06). To put it simply, the MPAA and RIAA demand the right to lie to us in the name of Copyright Protection.

It seems the RIAA and MPAA are willing to allow privacy laws to deteriorate for all of us to protect their profit margins. The question on my mind is: Why should the MPAA and RIAA get special freedoms to prosecute people for file sharing?

Back in 2003, the MPAA and RIAA filed for a permanent Antitrust exemption. The bill was sponsored by Sen. Orrin Hatch. It contains a revision to The Copyright Laws of the US in Title 17 of the US Code. Here’s the revised copyright law of the US according this (thankfully non-passed) bill by Sen. Hatch (the revision is underlined):

For purposes of this chapter … any reference to copyright shall be deemed to include the rights conferred by section 106A(a) except that the court in its discretion may determine that such parts are separate works if the court concludes that they are distinct works having independent economic value.

These are the tactics of the MPAA and RIAA are using to transform entertainment. Creating exceptions to copyright laws and the having legal permissions to lie, cheat, and sue us into buying media for the prices they set, and in the forms they dictate.

21st century entertainment is not based on mafia style coercion by transnational media conglomerates. An outdated business model cannot survive by excusing themselves form laws the rest of us have to follow. Corporations are legally recognized as people. People cannot have laws rewritten for their personal benefit.

Polyvibe Records‘ response is our forward thinking business model. We do not take our artists’ copyrights. Our prices are set by the perceived value of our audience. Our digital albums are 100% MP3. And best of all, we make sure our artists’ are taken care of financially and personally. Taking copyrights from artists, then prosecuting others for sharing them is in the past. The future is ours.