Label Direct Deals With Digital Broadcasters Are Dire Threat To Artists’ Sound Exchange Royalties

Unlike terrestrial radio,  since 1998 the satellite radio (now mostly SiriusXM), webcasters and other digital broadcasters pay performance royalties to performers and record labels.  “Performers” in this case are both featured artists, and session players (“non featured artists”).  Normally these royalties are paid directly to performers and labels–separately–through the non-profit entity SoundExchange.   SoundExchange pays  45% of these revenues DIRECTLY to featured artists and 5% to union trust funds for non featured artists.

For featured artists this means no recoupment.  No waiting.  No middlemen, no funky accounting and no funny business.  (Other than a big aside with pre-72, which I’ve written about regarding the Turtles landmark law suit.)

And these digital royalties to performers have been growing quite quickly.  They now represent more than 8% of all recorded music revenues. For performers there are few costs to generate these revenues so the artist’s net profit on SoundExchange payments is probably higher than most other income streams.  SoundExchange royalties truly have been a positive story in a decade of otherwise grim news for performers.

Unfortunately, the law also allows record labels to cut “direct deals”  with digital services outside of SoundExchange.   And in the last couple months that is what we’ve seen. We found out that The Orchard (now part of Sony) cut a direct deal with Sirius.  In November, the large independent label licensing consortium Merlin cut a deal with Pandora.  We’re still looking for the artist signed to any label distributed by The Orchard or a Merlin label that got a heads up about these direct deals, much less asked if they wanted to opt out.  In the case of Merlin labels, somebody–presumably Merlin–negotiated lower royalties  in exchange for Pandora “steering” listeners to Merlin artists.  Never mind that this smells like payola, here’s the real problem:

Labels doing direct deals with digital services for SoundExchange royalties could require the service to pay 100% of the revenue to the label and not pay the performer’s share through SoundExchange–that is, require the digital service to pay the artist’s share directly to the label to be applied against any unrecouped balances.  It’s unclear to me what would happen to the union trust fund payments at least for labels that are not “signatories” to the AFM and SAG-AFTRA collective bargaining agreements.  Even if the label is a signatory, it’s unclear to me which would dictate the rules, the Copyright Act or the collective bargaining agreements.

If the labels take the money, artists would probably get paid at their label royalty rates and not 45% of gross revenue.

As far as I can tell, the labels are not obligated under the Copyright Act to pay artists their share of the SoundExchange royalties without recouping.  It’s even less clear whether labels could take away their contributions to the AFM/SAG-AFTRA Intellectual Property Rights Distribution Fund, but it appears that labels are under no obligation to make those payments, either.

None.

Nada.

Zilch.

They may choose to let SoundExchange keep paying artists directly, but when the dust settles they may also choose not to.  And if the labels choose to take the artist’s share directly, the labels can apply it to any unrecouped royalty accounts regardless of whether the accounts pre-date the existence of the sound recording performance royalty.  The Orchard deal with Sirius and the Merlin deal pay the performers’ share through SoundExchange, but as far as I can tell there’s nothing stopping the labels from changing their minds later on.

So far the labels that have publicly disclosed making direct deals say that they will continue to pay the performers their share through SoundExchange.   So that’s good right?   Sort of.   SoundExchange can deduct its costs from royalties it collects (and I have no beef with SoundExchange on their costs–very low.)  The problem with direct deals is that the label’s share of royalties is outside of SoundExchange, but the performer’s share is not.  This forces the performers to bear the administrative cost when labels do not.

Another problem with direct deals is that SoundExchange are unlikely to be able to audit the digital broadcasters on behalf of performers.   And since the performers are not party to the direct deal they wouldn’t have any rights to audit either. Even if performers could audit that’s an enormous burden to transfer to individual performers.

So performers would have to rely on the record labels to do the auditing, and frankly this scares me.  The very fact that labels are cutting payola-like direct deals with digital broadcasters is a sign that they are cozying up.

SoundExchange also has reciprocal agreements with their counterparts in other countries. It’s not clear how performers will then collect their foreign royalties if their labels cut direct deals.  Would they have to collect directly?  Would SoundExchange still be able to collect. There is a good chance that performers might lose some foreign royalties as a result.

Clearly this is not gonna end well for performers.  But frankly I don’t think it’s gonna end well for labels either. Why?  these direct deals are already being used in attempts to lower ALL digital royalties at royalty board hearings.  That hurts the labels as well.

After the streaming math fiasco I’m not optimistic labels are gonna figure out that these deals are  bad for them until it’s too late.  To put it mildly labels do not appear to be engaging in much long-term thinking these days.  And the digital broadcasters have been  playing the labels like a cheap violin.

As usual it looks like it is up to the performers to do the critical thinking and to try set this straight.  We need to fight this. Now.

Perhaps we need to amend the law to prevent labels from direct licensing the performers share of digital broadcast royalties. If labels want to direct license and take a lower rate for their share let them.  But don’t let them get their hands on our royalties.

 Respect Act II? anyone?

 To summarize:

Benefits to performers from SoundExchange:

  • Performers paid directly
  • Not Recoupable
  • Independent performers get same deal as major label performers
  • SoundExchange audits on behalf of all performers
  • Payola-like deals not allowed
  • SoundExchange collects foreign royalties for performers
  • Collective bargaining increases leverage with broadcasters

Dangers to Performers under direct deal.

  • Labels under no obligation to pass through the performers digital royalties.
  • Labels could apply royalties to un-recouped balances
  • Independent performers could get lower rates than major label performers
  • Performers lose ability to audit digital broadcasters
  • Payola type deals shut out independent performers
  • Potential loss of foreign revenue
  • Performers are burdened with entire administrative overhead of compulsory license system.
  • Fragmented bargaining decreases leverage with broadcasters

 

@Billboard is Demonstrably Short on Pandora Payola: Just Read FCC Website

On last Thursday, Billboard wrote again about the  Pandora/Merlin direct deal.  For those of you who don’t know about the deal it basically says:   Merlin accepts lower royalty payments if Pandora plays Merlin songs more often.   We covered this a couple weeks ago after NPR’s Laura Sydell interviewed me about the deal.

Billboard says last week:

[T]he charge that the Merlin deal amounts to payola might be convoluted logic. Payola occurs when labels pay radio to play their music, not the other way around, as what happens in the digital realm. Even if the Merlin deal results in a slight economic benefit to Pandora, payola laws would need to be turned upside down and inside out to apply to this particular situation. Of course, stranger things have happened in the U.S. legal system. 

Unfortunately, that’s not what the FCC website says and I think Ed Christman knows better which is why he left that back door open.  Ed’s one of the best writers Billboard’s had for a long time and has a highly credible track record of getting it right.  But–part of that quote (“Payola occurs when labels pay radio to play their music, not the other way around, as what happens in the digital realm”) is almost word for word what Pandora’s CEO told NPR’s Laura Sydell:

“Payola is where record labels pay radio stations to get airplay,” McAndrews says, “and the opposite is what happens today. As Pandora, we pay the record labels and the artist to allow airplay. So it’s completely different.”

I have to believe that this angle to Billboard’s story came under tremendous pressure from Brian McAndrews and Pandora’s extensive and expensive PR and lobbying team.  But because Ed’s a great reporter, he left the door open with that last statement: “Of course, stranger things have happened in the U.S. legal system.”  I’m sure McAndrews did not like that part one little bit.  Good for Ed.

Here is what the FCC says:

Federal law and FCC rules require that employees of broadcast stations, program producers, program suppliers and others who, in exchange for airing material, have accepted or agreed to receive payments, services or other valuable consideration must disclose this fact.

Here’s what the actual FCC regulations say:

§ 73.1212 Sponsorship identification; list retention; related requirements.

(a) When a broadcast station transmits any matter for which money, service, or other valuable consideration is either directly or indirectly paid or promised to, or charged or accepted by such station, the station, at the time of the broadcast, shall announce:
(1) That such matter is sponsored, paid for, or furnished, either in whole or in part, and
(2) By whom or on whose behalf such consideration was supplied: Provided, however, That “service or other valuable consideration” shall not include any service or property furnished either without or at a nominal charge for use on, or in connection with, a broadcast unless it is so furnished in consideration for an identification of any person, product, service, trademark, or brand name beyond an identification reasonably related to the use of such service or property on the broadcast.
(i) For the purposes of this section, the term “sponsored” shall be deemed to have the same meaning as “paid for.”
(ii) In the case of any television political advertisement concerning candidates for public office, the sponsor shall be identified with letters equal to or greater than four percent of the vertical picture height that air for not less than four seconds.

Assuming the FCC decides that the payola rules apply to Pandora, I think that a big royalty discount is “other valuable consideration” that is “accepted by” Pandora by contract with Merlin and must be “announced” by Pandora “at the time of the broadcast”.  It is Pandora‘s responsibility to disclose that consideration under the payola laws, not Merlin’s.  (Merlin has probably done about all it can to disclose the consideration by discussing it in the press.)

As we previously posted, Pandora’s own high powered Washington DC lawyer, David Oxenford, wrote an article in 2008 about Internet radio and payola that everyone should read:

As Pandora lawyer Mr. Oxenford tells us:

“The payola statute, 47 USC Section 508, applies to radio stations and their employees, so by its terms it does not apply to Internet radio (at least to the extent that Internet Radio is not transmitted by radio waves – we’ll ignore questions of whether Internet radio transmitted by wi-fi, WiMax or cellular technology might be considered a “radio” service for purposes of this statute).  But that does not end the inquiry.  Note that neither the prosecutions brought by Eliot Spitzer in New York state a few years ago nor the prosecution of legendary disc jockey Alan Fried in the 1950s were brought under the payola statute.  Instead, both were based on state law commercial bribery statutes on the theory that improper payments were being received for a commercial advantage.  Such statutes are in no way limited to radio, but can apply to any business.  Thus, Internet radio stations would need to be concerned.”

So as Pandora’s lawyer tells us, if the FCC can’t get  jurisdiction over pureplay webcasters, state attorneys general may be able to under applicable state law commercial bribery statutes.  That’s potentially what’s called a 51 jurisdiction issue (50 states plus federal law).

I don’t think that it will require that “payola laws would need to be turned upside down and inside out to apply to this particular situation”  and I don’t think Pandora’s lawyer does either.  Also Pandora is the only pureplay webcaster with a broadcast radio station so that puts them in a special class and invites an FCC investigation.

Now remember–the law applies to FCC licensed broadcasters who don’t pay the same royalties for terrestrial that webcasters do for digital and never have (that’s what the #irespectmusic campaign is all about).  If broadcasters had paid a terrestrial royalty, do you think that the broadcasters on the receiving end of the “$50 handshake” form of payola would have taken the money and still paid a full performance royalty?  Or any performance royalty?

And if payola only applied to cash money as Pandora’s CEO would like you to believe, would the FCC have looked the other way when broadcasters received the legendary “hookers and blow”?  Vacation trips and clothes?  You know, “other valuable consideration”?  Do we really have to start quoting “Hit Men” or “Stiffed” here?  Morris Levy is laughing his ass off!

I’m just not hearing a credible argument for why getting a below market discount on something–in this case, royalties in exchange for airplay–is not “other valuable consideration.”   Therefore since Pandora is doing everything it can to buy a radio station (and is in front of the FCC right now trying to get their acquisition approved) you’d think they’d want to disclose receiving valuable consideration for playing Merlin artists. And they aren’t.

Billboard and I agree on this:  stranger things have happened in the U.S. legal system.  Far, far stranger things.  The only one who can sort this out is the FCC–and good news!  The FCC has a way to do that as part of its review of Pandora’s license for South Dakota radio station KXMZ that the FCC is reviewing right now.  And until the FCC rules on the payola issue with Pandora, it’s hard to see why Pandora’s lawyer Chris Harrison should be able to use Pandora’s end run around the law to lower everyone else’s rates in the rate hearing in Washington.  Ed Christman did his homework on this part of the story, too and called Pandora lawyer Chris Harrison on the bullshit he pulled while he was at DMX that shafted songwriters and that Harrison is trying to duplicate for Pandora to shaft artists, musicians and vocalists.  Ed got that exactly right.  And won’t it be interesting if it turns out that Chris Harrison filed an illegal contract with the royalty hearing on everyone else’s already putridly low Pandora royalties to try to drive Pandora’s payments even lower.

I encourage everyone to file a complaint with the FCC. Tell the FCC to get off their asses and do their job.  Stop coddling telecommunications firms and protect the consumer for a change.

Here’s the FCC’s “Online Complaint Form”.

http://www.fcc.gov/complaints

Remember “Pandora Is Radio” so select the box for “radio broadcaster” for station KXMZ(FM) in Box Elder, South Dakota.

 

Horrible: Caitlin Dewey, Washington Post Praises Site That Refused Request By Parents to Remove Pictures of Murdered Children.

I’m sorry to do this to you.  But with all the fawning press by technology journalists on the Pirate Bay, someone has to remind the world how horrible the Pirate Bay really was.  The technology press has given them a free pass for years.  The misery they created for thousands of creators is nothing compared to the misery they created for the father of two murdered children after their autopsy photos were distributed on The Pirate Bay.  When the father asked TPB moderators to remove  the photos be removed this was the response: he was  to stop whining and fuck off.

This is the “courage of conviction” you are praising Caitlin Dewey.  How the fuck do you sleep at night?

http://www.washingtonpost.com/news/the-intersect/wp/2014/12/10/you-can-take-down-pirate-bay-but-you-cant-kill-the-internet-it-created/

Oh and why didn’t you mention that the Pirate Bay was originally funded by Neo-Nazi?

That apparently was their  “courage of conviction” as well.   Is this also a conviction you admire?

Do you and  the Washington post normally go around praising organizations funded by Neo-Nazis?

Here is Caitlin Dewey’s twitter handle

@caitlindewey

 

 

 

 

 

 

LA Times Editor Jon Healey’s Ode to Bittorrent: Did he Coordinate Earlier Editorial with Bittorrent?

We’re just asking questions here.  Questions that should be answered. Were these two pieces coordinated with Bittorrent?

Today Jon Healey published this ode to P2P filesharing company Bittorrent.

http://www.latimes.com/business/technology/la-fi-tn-bittorrent-browser-project-maelstrom-20141211-story.html#page=1

Healy a serial piracy apologist,  makes the following highly misleading statement about BitTorrent use in Hollywood’s hometown paper:

“It’s true that BitTorrent is favored by the illegal-downloading crowd; what’s less well known is how widely the protocol is used for legitimate purposes.”

Sure if by “widely used for legitimate purposes” he means “less than 1%” of bittorrent traffic. Well then yes Bittorrent is then “widely used” for legitimate purposes.  Never mind that Bittorrent has a history of monetizing all this illegal traffic with advertising in it’s client software.  That is, directly profiting from from the misery of artists. Healey seems to think this ethically and morally challenged Belorussian/San Francisco company  deserves an advertorial in one of the nation’s largest papers.

But it goes beyond that.  Healey is not a serious and responsible journalist and probably should not be in a position that relies on objectivity and facts. Further there appears to be some sort of coziness between the editor and Bittorrent.   Why do I say this?  Two reasons:  Cox Media (the cable company) and North Korea.

1) Healey as the LA Times editorial board pushed out a very misleading piece about the BMG vs Cox suit, alleging in a mind-bending logical contortion that the suit was trying to create “new law.”  Whereas any impartial reading of the facts would conclude that  BMG is pursuing it’s remedies as proscribed by US law, and Cox has possibly failed to follow the law.  How on earth an attempt to get a large cable company to follow US law could be characterized as creating new law is positively Orwellian. Further the fact that  Healy as the LA Times Editorial board immediately pushed out an editorial on a relatively obscure lawsuit in Maryland brought by a German company is eyebrow-raising to say the least.  I won’t speculate on the appearance of coordination with p2p file-sharing interests, but the follow up puff piece on Bittorrent (the company)  should prompt an internal review by the LA Times.  At least to assure no co-ordination took place.  BTW the Op Ed board at the LA Times rejected my proposal to write an piece corrected their previous misstatements.  So much for objective journalism right?

2) Healey has been quick to spread the laughable and unsubstantiated rumor that North Korea is behind the Sony Hack.  Is this the type of thing the an editor of the LA Times should be doing?  It seems completely irresponsible to me to publicly state that North Korea is behind the hack when there is no evidence (see my twitter conversation with Healey) My suspicion is that his clear sympathies for those who profit from piracy at the expense of creators (Bittorrent and Google) makes him hope that this act of economic sabotage has not been committed by one of his fellow travelers.

Below are my conversations with Healey as well as my letter to the LA times.

+++++++++++++++++++++++

 

davidclowery ‏@davidclowery  Dec 8
@jcahealey how but a different viewpoint on the BMG vs Cox from me?

Jon Healey ‏@jcahealey  Dec 8
@davidclowery You mean a letter to the editor, or do you want more space? We have Blowbacks, but those are online only.
davidcloweryVerified account‏@davidclowery
@jcahealey more space. I think that the LA times Hollywoods hometown paper comes out against Legal action on P2P infringers deserves print.

11:39 AM – 8 Dec 2014

Tweet text
Reply to @jcahealey 

davidclowery ‏@davidclowery  Dec 8
@jcahealey especially after the Sony hack

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Jon Healey ‏@jcahealey  Dec 8
@davidclowery You’ll have to make that case with the op-ed folks, then. But op-ed doesn’t exist to rebut editorials. Separate mission.

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Jon Healey ‏@jcahealey  Dec 8
@davidclowery Because the North Korean regime and Cox have something in common?

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davidclowery ‏@davidclowery  Dec 8
@jcahealey nice snark. How do you think the real economic damage occurs?

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davidclowery ‏@davidclowery  Dec 8
@jcahealey lets not play semantics. you’re smarter than that. You know what I mean. and you know it’s right that you print different view.

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davidclowery ‏@davidclowery  Dec 8
Breaking news LA TIMES editor claims to have established that NORTH KOREA behind Sony Hack. @jcahealey

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davidclowery ‏@davidclowery  Dec 8
@jcahealey I’ve got a bridge to sell you.

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Jon Healey ‏@jcahealey  Dec 8
@davidclowery Send your pitch to oped@latimes.com. The op-ed folks are wholly separate from us, and I’ll keep my nose out of this one.

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Jon Healey ‏@jcahealey  Dec 8
@davidclowery The standard length is 800 words, but they’ve published longer and shorter pieces.

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davidclowery ‏@davidclowery  Dec 8
@jcahealey much appreciated. thanks

 

to oped
I would like to propose an op-ed.  My view on Cox and it’s obligations under the DMCA act.

I am a musician, academic, researcher, entrepreneur and artists rights advocate.

I noticed that LA Times ran this editorial piece.  Aside from the fact that it’s shocking to see Hollywoods hometown paper  implicitly defend p2p file sharing, the opinion piece really mischaracterizes what rights holders like myself  are trying to do when they send notices to ISPs like Cox communications.
The mischaracterization is that  this a as “attempt to turn ISPs into bare-knuckled enforcers.”
Fact: the notices are part of a process proscribed by US LAW!  Read the DMCA act if you think otherwise.  BMG, Digital Rightscorp and individual artists like myself are following the letter of the law.
It is my experience (objectively demonstrable), Cox does not fulfill it’s obligations under the law.  They do not cut off repeat infringers as the DMCA act requires and thus this BMG  lawsuit is necessary.
Further the Copyright Alert System that the LA Times endorses is not a law passed by our democratically elected representatives.  It is an extra-legal agreement between a few corporations. Aside from it being a failure,   it has no legal standing, it doesn’t cut off repeat infringers as required by law.  Yet ISPs (and now LA Times) wants to force rights holders (like music publishers and myself) to treat this extra-legal agreement as a sort of law.
Isn’t this creating new law?  Something to which the LA times is opposed?
Finally it’s amusing to see your paper trot out the old Google generated slogan “Don’t Break the Internet”
 How bout we don’t break the democratic legislative process by allowing corporations to ignore the law and substitute an extra-legal private agreement in it’s place.

Sony/The Orchard Cuts Direct Deal With Sirius So They Can Get Hands On Performers SoundExchange Money.

Digital Music News is reporting that The Orchard (owned by Sony)  has cut a direct deal for digital performer royalties with Sirius/XM.

Read more here.

So now all those poor artists unfortunate enough to have a distribution deal with The Orchard/Sony (which somehow mysteriously includes me and one of my albums!!!?) , will now how have their SoundExchange royalties paid to Sony instead of directly from SoundExchange.

So right about now you are saying “WTF?!!”

Yeah, The Orchard didn’t mention that tiny little detail in their letter did they?   They presented it to you like it was an great improvement.

But this is the entire point of the deal:  THEY GET THEIR HANDS ON YOUR MONEY.

But, hey I’m sure you can totally trust Sony/The Orchard to pay you your royalties without taking any deductions right?  They’d never do that.   They are the most organized distributor ever.

Well….

Let me give you two examples with which I have first hand experience.

1) The Orchard/Sony  can’t even be fucking bothered to return two years of  emails or a phone calls from me.  They are claiming rights to an album of mine for which I do not believe they have rights.   And if they are claiming rights to this album shouldn’t I be getting royalties or at the very least statements?

If my shit is disappearing into a black hole, do you really want to trust them with your non-recoupable SoundExchange royalties?

2) We have been granted access to email conversations and documents between  independent labels and The Orchard/Sony.    These labels reported dramatic drops in revenues when they switched to The Orchard/Sony.  There was never any real explanation from the Orchard and the independent labels eventually left on very bad terms with The Orchard.

Is this a trial balloon for mainstream Sony Artists?   Will all sony artists soon lose their SoundExchange royalties?

Stay tuned.

Country Music Association Study on Streaming a “Kick in the Teeth” to Swift, Borchetta and Aldean. And Why Billboard = Torrent Freak

As the civil war over free vs paid streaming rages within the record labels, we have to note the curiously timed “study” on streaming by the Country Music Association.   The study purports to show that “Streaming drives Sales” at least according Billboard. The study was reportedly  unveiled at a private CMA membership luncheon on Nov 20th.

The timing of the study’s release seemed curious to many in Nashville since it came on the heels of two go CMA’s biggest performers Taylor Swift and Jason Aldean pulling their catalogues from Spotify.  Although it was likely purely coincidental timing one Nashville source called it a “kick in the teeth to Swift, Borchetta and Aldean” and wondered what kind of “damage control was now going on behind the scenes” at the venerable CMA.  (Let’s hope the damage is limited to bruised egos and that this study doesn’t end up in front of the CRB in an attempt to lower our digital royalties.)

I have not seen the study but I will say that it is highly unlikely that the study really shows that “streaming drives sales” as reported by Pravda-oops I mean Billboard.  We all know now that many consumers prefer access over ownership.  By definition this means lower sales, as some consumers will buy less (or nothing) and stream instead.  This has never really been open to debate even by proponents of streaming.  Further the data I’ve personally seen from a multi-year longitudinal survey of students confirms the common sense notion that streaming does reduce sales amongst certain consumers.

The real and honest debate has always been, “by how much does it reduce sales and what should be the rate?”  No one except certain Billboard headline writers seem to actually think it increases sales.

While the timing of the study may be coincidental in regards to the Swift-Spotify debacle, it appears a little more sinister when you note it comes two days after a similar Pandora “study.” Here’s Billboard’s Glenn Peoples dutifully covering the “study” that was conducted in-house by pandora employees!

Pandora will use the in-house employee conducted study to claim it’s service deserves a reduction in royalties from the rate courts and the CRB.  Just watch.  (Remember we were the blog that was right about the dumb-as-fuck Merlin/Pandora deal.  As we predicted, it has now been submitted to the CRB to argue for lower rates.)   Mark my words Pandora will push this study to the rate courts and CRB.

Let’s just hope the Country Music Association isn’t planning to do something similar with their study.  I mean they would’t right?  They are the Country Music Association.  I’m sure they thoroughly vetted the researchers and motivations of those who conducted the study.  right?  Country Music has always been loyal to it’s performers and Songwriters.

Then again The Country Music Association is essentially a broadcaster.   From an accounting viewpoint performers and songwriters are on the expense side of the ledger.

Maybe some Nashville songwriters ought to go over and ask just what in the hell the CMA is up to with this study?

+++++++++++++++++++++++++++++++

UPDATE BREAKING:  BILLBOARD = TORRENT FREAK

PS.  We just noticed that Billboard Senior Editor Glenn Peoples has published a third article on a study streaming increasing sales.   This time-oh man you are not gonna believe this.. are you ready?  I mean are you sitting down? seriously.  I shit you not…  This time he cites an in-house BitTorrent “study” that shows peer to peer filesharing increases sales!

“That’s right! after I download the file for free and it resides on my computer, I go to iTunes and I download a second copy of the file so I have two on my computer”  

He also cites two studies saying similar things that have since been discredited under peer review by actually scientists.  Here is a summary.  

Has Glenn Peoples gone totally pro-piracy?  Citing discredited studies showing P2P files sharing increases sales?  Are you kidding me?  has Billboard.com become Torrent Freak?   Next we’ll start seeing Glenn a the Pirate Party Rallies.   We’re sending him this hat. 

 

 

 

 

Strike Three for Sirius vs The Turtles: Court Denies Appeal

Quoting from todays ruling:

“While the Court is largely unpersuaded and sometimes baffled by Sirius XM’s repetitive or off-point theories about how reasonable jurists might read an unwritten exclusion into § 980(a)(2), the Court will not analyze the potential grounds for difference of opinion because certification of this Order suffers from an even more basic deficiency. At this stage in the litigation and under the operative scheduling order governing the case, certification of the Order for immediate appeal would delay rather than materially advance the termination of the litigation; therefore, the Court denies the motion.”

Ouch.

 

UN to Airlift Calculators, Behavioral Economics Textbooks to Digital Music Industry

Evstafiev-bosnia-sarajevo-un-holds-head

 UN prepares to airlift badly needed calculators and behavioral economics textbooks to Hollywood and Silicon Valley.  Above a A Norwegian UN peacekeeping soldier reacts to details of YouTube Music Key deal. Photo by Русский: Фото: Михаил Евстафьев English: Photo: Mikhail Evstafiev (Mikhail Evstafiev)

If only this story were true.

Yet again we are witnessing a catastrophic failure of mathematics and logic by the music business and their digital music partners:

1). If you offer something for free don’t expect anyone to pay $7.99 a month for the exact same product.  After a healthy debate over the (bad) economics of free streaming courtesy of Taylor Swift, the record labels and YouTube have doubled down on their losing bet on free streaming with the YouTube music service.   Full album streaming will be available on the free service as well as the paid service.  So again no reason to upgrade to paying service.  Well at least we can “opt out” of YouTube.  Right? Can’t we?… I think we can…. (ed note- you can pull your tracks off Spotify but YouTube will hide behind the DMCA act and let their users upload it.)

2.) If you let YouTube have all our music at $7.99 a month how do you tell Spotify and all the other services they have to stay at $9.99 a month?  You can’t blame Daniel Ek for being pissed off about the YouTube deal, now can you?

3) Let’s assume that people defy basic economic principles and pay for something they already get for free.    Let’s assume streaming scales to as many US customers as Netflix.  That’s 36 million subscribers.  At YouTube’s rate of  $7.99  you get 3.4  billion retail. 2.4 billion at wholesale.  The current recorded music business is 7.1 Billion.

4) As the Cynical Musician eloquently notes:   If flat fee streaming services really are the future of music consumption,  at “scale” we end up with a fixed pool of money for ALL recorded music.  This means the pie can never grow and the slices get smaller and smaller as you increase spins and add new albums.  This looks like a death spiral. The only way out is to allow windowing. Oh but wait!  The YouTube deal doesn’t let you do that!

5). Stop saying that $120 a year from each streaming subscriber is greater than the $71 a year per capita music consumption in 1999.  PER CAPITA! Do you know what that means?  Per capita means we are counting every single resident of the USA.  Including infants and your 90 year old great grandparents.  Unless you have a plan to  get $120 a year from infants and 90 year old great grandparents please STFU.