trichordist

The Paradox of Pirate Logic : Music Versus Music Software – Part 1

by Chris Whitten
(Copyright in the Author, Posted with Permission)

The bottom line for many in the often heated piracy debate is this: “Give us a good product at a fair price, make it convenient and easy to obtain and we’ll buy it”.

There is a digital product that ticks most of those boxes. So by comparing two products I wonder if we can learn anything about the chances of reducing music and movie piracy by making it better quality, more affordable and easy to download?

I’m of course talking about music production software.

About 7 years ago I was involved in creating a virtual drum instrument in collaboration with a Swedish music software producer Toontrack. Our product has been critically acclaimed, is a best seller, but is also unfortunately a favourite with software pirates. The pirate’s ‘advice’ to “adapt or die” appears then to ring hollow. As a performance musician I added music software creation to my resume by adapting to new technology, but all that happened was the pirates followed me.

With a foot in each camp, music technology and music performance, I’d like to take a look at the claim that “if you build it they will come.” Let’s see if the available evidence supports that idea.

Straight away we need to acknowledge two things: firstly, no one has ever suggested music software has gone backwards in quality over the last few years. It’s also pretty easy to obtain, including plenty of free alternatives, often offered by new companies trying to build a customer base, or by hobbyist’s happy with the kudos of creating a popular plug-in. Secondly, music software is heavily pirated.

So the signs don’t look good, and the more you look at music software piracy, the more the excuses and arguments made by movie and music pirates seem questionable. Let’s look at a couple of them:

Entertainment pirates claim they are fighting corporate greed. Movies and music need to be liberated from the clutches of billionaires who remain powerful by buying political influence.

This rhetoric may sound compelling, but the reality is that most music software companies are small privately owned businesses, and/or collectives of young innovators and entrepreneurs. Most were founded no earlier than the late 1990’s and still retain the same management and design teams that started the business in the first place. In fact, many music software producers comprise one or two people working from home.

The biggest and longest established names like Spectrasonics and Native Instruments employ between 50 and 270 staff, but those are the exceptions. Even so, we are hardly talking ‘megacorps’ here. For example, one of the hottest names in computer sequencing and recording software, Cockos (producers of Reaper), has a staff of three. Cockos has an instant download demo of Reaper available. They also offer a discounted purchase price of $60 for Reaper, if you declare earnings of less than $20,000 from its commercial use each year. So you could be Donald Trump and buy Reaper for $60 as long as music is your hobby. And yet Reaper appears prominently for free download on piracy sites.

Entertainment pirates claim movies and music are overpriced.

Music software users though have many free options. Apart from the new producers and hobbyists mentioned above, many established software producers offer free products.

For example, Elysia’s Niveau Filter:
https://www.plugin-alliance.com/en/plugins/detail/elysia_niveau_filter.html

And Sonimus’ SonEQ:
http://sonimus.com/site/page/downloads/

One of my own offerings, a sample pack for Toontrack’s EZdrummer, has a retail price of $89.00, but regularly sells for $39.99 from certain online retailers.

To use these software plug-ins you need a computer audio workstation, known as a ‘DAW’. Technology giant Apple give you one free with every computer; Garageband. Audacity is a multi-track audio recorder and editor that is also free. And as mentioned above Reaper is $60. Even the more expensive DAW’s like Logic Studio (Apple) and Live (Ableton) come bundled with a host of free software instruments, fx plug-ins and audio loops – something not dreamed of 10 years ago.

So can we still claim music software is over priced? No, not reasonably so.

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End Part 1.

Coming Up Part 2.

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May 10, 2012May 10, 2012 by trichordist

Larry Lessig is Wrong, and should “Get Over It”

For the uninitiated, Larry Lessig is the outspoken and controversial former Stanford Law School Professor, and current director of Edmond J Safra Foundation Center for Ethics at Harvard, who is a leading voice for opposing artists rights on the Internet as expressed by the protections afforded in copyright law.

The two links below illustrate in painstaking detail just how far Larry Lessig (directly and indirectly) will go to be proven wrong. The first in Eldred v. Ashcroft and then again in Golan v. Holder.

ABA Journal – The Education of Larry Lessig.

From Eldred to Golan: The Traditional Contours Test.

Lessig writes of his public defeat in The Nation:

…the Supreme Court shut the door, finally and firmly, on any opportunity to meaningfully challenge a copyright statute constitutionally.

Read that again, Lessig was arguing on the grounds of the constitutionally of copyright… uhm… good luck with that. Then compare to a recent lecture Lessig gave to a high school class where he told students that he lost Eldred for “silly, stupid reasons” — because anyone who disagrees with him is silly and stupid? Surely he didn’t mean that his “reasons” in Eldred were silly or stupid?

So for those of you keeping score at home that makes it Copyright two, Lessig zero. It’s pretty simple math.

Also ironically it’s Lessig who is against money buying influence in politics but it is his causes that are being funded by a variety of major corporate interests, especially Google and offshore gambling interests. That’s right–the same Google who is spending record money lobbying on capital hill–you know, what Politico calls “ambassadors to the Hill”, at least when it’s a tech company lobbying. Yet another case of “do unto thee, but not unto me.”

But the thing that is most interesting to us, is how Lessig suggests that anyone opposed to his views–especially the hated “Hollywood”–should just “get over it“, but yet he and his Google-financed interest groups seem prepared to outspend anyone on their tireless crusade against artists rights.

We think Larry should buy a guitar and “get over it”, it’s more fun on our side.

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see also : Musicians For An Ethical Internet
https://thetrichordist.wordpress.com/2012/05/03/roll-call-musicians-for-an-ethical-internet/

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[ THE 101 ] [NEW BOSS / OLD BOSS ] [ SPOTIFY ] [GROOVESHARK ] [ LARRY LESSIG ]
[ JOHN PERRY BARLOW ] [ HUMAN RIGHTS OF ARTISTS ] [ INFRINGEMENT IS THEFT ]
[ THE SKY IS RISING : MAGIC BEAVER EDITION ] [SF GATE BLUNDERS PIRACY FACTS ]
[ WHY ARENT MORE MUSICIANS WORKING ] [ ARTISTS FOR AN ETHICAL INTERNET ]

May 8, 2012May 28, 2012 by trichordist

The ‘Music Like Water’ Fallacy (Guest Post)

By Gavin Casleton
(Copyright in the Author, Reposted by Permission)

Stream Gavin Castleton’s most recent albums here: http://www.gavincastleton.com
Follow Gavin Castleton on Facebook: http://www.facebook.com/gavincastletonmusic

In 2002 David Bowie said, “Music itself is going to become like running water or electricity.” In early 2005, Berklee VP David Kusek and “futurist” Gerd Leonhard based their book The Future of Music on the concept of “Music Like Water,” i.e. the transformation of the music industry into one in which music is ubiquitous and subscription-based, paid for and delivered like any other utility service. In 2010 Spotify founder Daniel Ek co-opted the analogy and has brandished it in every interview since. Aside from a few askance sentences buried in various article comment threads, I was hard pressed to find anyone else that found the concept distressing. To date, the only formal counter-argument I’ve seen published was by Andrew Dubber in 2007 (who has been fighting the good fight ever since). I would like to present another.

Here are some observations regarding our relationship with water in the US:
1) We need it to live
2) We use it often
3) We perceive it as free (at least, the youth and non-homeowners often do)
4) We get it on demand
5) We take its abundance for granted
6) We take its purity for granted

As a consumer, all six sound great to me, because my only objective is to get as much as I can, as soon as I can, for the least amount of money and effort. I don’t care if slaves made it, I don’t care if it is spiritually toxic or will lead our culture to a place where music is peripheral; I love a bargain.
As an artist, I like the first two because they raise my value. But numbers 3-5 threaten my value, and number 6 seems invalid. Let’s look closer at those last four points:

1) We perceive it as free

I could assert that a .001-.004/stream royalty rate (that gets split between at least two parties) will never result in sustainable income for a solo artist, let alone a band. I could show you some statistics that suggest no matter how much they dangle the carrot of future adoption and ad revenue in our artist faces, streaming services like Spotify will never pay a workable rate (anyone telling you otherwise is getting paid on a backend deal that will screw their artists like never before). But if enough artists walk, Spotify would most likely arrange an alternate revenue stream to pay the artist a bit more. So I’m not really concerned about the problem of getting artists paid, I’m concerned about consumer perception. When the listener loses her notion of sunk cost in my album, she will value it less. She will make less of an effort to understand it, and subsequently she will most likely enjoy it less. It is not a coincidence that the average shelf-life of an album is tanking, and artists are adopting single-based micro releases in shorter release cycles.

Now I’m well aware that some folks have testified that they have seen an increase in sales since the adoption of streaming sites like Pandora and Spotify, and that may be true. I myself have benefited from discovery sites (though it’s hard to do an actual cost/benefit analysis without a complex tracking system in place). But isn’t it possible that those sales are primarily attributed to older users who grew up paying for music? Do we really expect those sales to continue once the market is comprised entirely of kids raised in the age of free streaming? Remember how our parents paid for long distance calling?

2) We get it on demand

Right now, the sentiment that everything in our lives should be “on-demand” is widespread and with few exceptions, undisputed. Over the last few decades the anthem of consumer empowerment has risen to a deafening roar. At this point, we seem incapable of accepting the notion that the customer may not always be right. What’s more, despite the housing crisis and the insane rise of credit debt, we still uphold the conviction that we should always get what we want, when we want it. Forget for a moment that artists are actually foolish and desperate enough to answer the call for immediate free labor, (in all other industries you actually pay more for expeditiousness) because, in capitalism, the responsibility to assert one’s worth lies upon the laborer. Let’s think about it from the perspective of the average citizen: does this “on-demand” mentality foster repeatable fulfilling experiences, or will it only destroy virtues like attentiveness, contemplativeness, and patience? Entitlement is a symptom of immaturity, and we as a society have a lot of growing up to do.

3) We take its abundance for granted

Spotify is one step further in the march to abolish artists’ last recourse in an intensely over-saturated market: artificial scarcity. You can pretty much split the debate over music monetization into two camps: those that want to re-instate artificial scarcity, and those that want artists to embrace other revenue streams instead. Some artists are dabbling in both, trying to reinstate artificial scarcity momentarily by limiting the content available on streaming networks for a short while so as not to cannibalize sales. Personally, I think either is valid depending on what kind of music career you’re shooting for. But what really bothers me about both Spotify and “piracy” (which are pretty much synonymous) is that both are hell-bent on taking that decision away from the artist. Nothing feels more invasive than having your livelihood reprogrammed by someone you’ve never met. The collapse of the old music industry and the subsequent confusion and job redundancy we’re all dealing with is often dismissed as a simple case of capitalistic evolution, but that is an irresponsible and insensitive synopsis. We mustn’t forget the catalyzing variable in this story: massive unchecked intellectual property rights violation. Grievances and shortcomings with the previous model were not handled within the confines of legal capitalism. This injustice is the reason that we consumers and companies like Spotify should be particularly sympathetic and sensitive to the needs of artists and, dare I say it, music industry folk right now. I know it’s not very hip for me to say that, but I think we should be clear about the behavior that led us here – whether you think it’s an improvement or not.

4) We take its purity for granted

Though I’m sure the proponents of Music Like Water never intended to take the analogy this far, I think this one is important. The reason access to water can be ubiquitous is because of regulation through organizations like the EPA. Without regulation, our irrigation and distribution systems would be nothing more than conduits for disease. In terms of music, what would be the comparable regulating entity? Well, up until a decade ago, the filtering of music was mainly handled by a formal music industry – promoters, labels, distributors, radio, MTV. Now, obviously, the internet has changed that.

When you release the valve without well-tuned filters in place, you get what we have now: muddy waters (not the artist, the metaphor). You have tracks from seasoned artists like Radiohead distributed side by side with garbage (not the band, the metaphor), and you have transferred the burden and blessing of filtering from more official gatekeepers to the consumer. As an artist who has never been favored by the official gatekeepers, I can easily embrace the benefits of that. As a music lover who is interested in progressive works that don’t always have mass appeal, I can also appreciate it. But as a consumer, what at first felt like freedom is beginning to feel arduous and daunting. This is the well documented paradox of choice. Naturally, new aggregators (bloggers, online review sites, app builders, etc.) are rushing in to filter the stream, but now there are so many aggregators, we need aggregators to aggregate the aggregators. I’m not saying I prefer the old top-down filter model (though when almost all new aggregators are adopting the algorithm that sorts results by Most Popular, you tend to end up with the same results), I’m simply pointing out that proponents of the Music Like Water concept have put far more thought into making everything free to the consumer than they have into making sure people can find what they want, and in order for artists and consumers to have a better experience with music, distribution and filtering have to be lockstep.

So, considering these issues, are we sure we want music to be like water?
I’m not. I think both consumers and artists should look more critically at the long-term effects of this model and reconsider. I think artists have to rise to the challenge of asserting their worth, and I think consumers have to rise to the challenge of supporting artists financially even when they don’t have to.

Stream Gavin Castleton’s most recent albums here: http://www.gavincastleton.com
Follow Gavin Castleton on Facebook: http://www.facebook.com/gavincastletonmusic

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May 8, 2012May 28, 2012 by trichordist

SF Gate Blunders Facts about Recording Industry and Piracy

It is with great disappointment that we see such a respected publication as the SF Gate (website for the venerable San Francisco Chronicle) would run a post sourced from Investopedia and ValueClick (an internet advertising sales company) that could have been paid for by the tech lobby.

The entire premise of the post is the kind of highly selective reasoning that can only be explained by bias so extreme as to overlook the obvious. And it looks suspiciously like the disinformation lead sheet cooked up by the “don’t be evil” Computer and Communications Industry Association (CCIA) earlier this spring. The CCIA is a group that makes the RIAA and the MPAA look like Mary Poppins.

The full link to the SF Gate post, “3 Reasons Why Piracy Isn’t Crippling The Recording Industry” is below. Let’s get started.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/02/investopedia80867.DTL#ixzz1twlOpchQ

In late March, the International Federation of the Phonographic Industry (IFPI) released its annual estimates on recorded music industry trends. It detailed that global revenues fell 3% to $16.6 billion. For most industries, negative growth would be seen as extremely disappointing, but the demise of recorded music from stores through the sale of compact discs (CDs) has been on a decline that has lasted the better part of a decade. Overall, the annual declines continue to be less severe and indicate that piracy is no longer crippling the industry as a whole.

Well, they’re actually stating the opposite of the post’s headline. Sales are in fact actually still down. But somehow being down only 3% from the prior year is not “crippling” despite the fact that recorded music sales in the USA have declined by nearly 60% since 1999. As the New York Times correctly points out, the decline is due to the completely obvious proliferation of illegal online piracy.

Back to Investopedia’s lead sheet:

Online Music Continues to Grow

The saving grace in recent years has been the growth in online music revenue from legitimate sources. Pirated music from the Internet has steadily declined as appealing offerings from reputable (and legal) companies have become available. IFPI estimated that global digital revenues grew 8% to $5.23 billion, or nearly a third of total industry revenues. Apple’s iTunes has been a huge driver to online music, but new sources including streaming sites such as Pandora and subscription models including Spotify continue to burst onto the scene.

First, online piracy has continued to grow and there’s no attribution to where this contrary claim has come from, so the SF Gate’s assertion appears to be complete fiction. See this chart by The New York Times from February 4, 2012.

This is followed by yet another fascinating and intentionally misleading claim. Digital music sales may be increasing, but not enough to off set the overall decline in the pie year over year, much less a decade of losses. Further more, Pandora and Spotify represent a fractional percentage of revenue. The overall revenues have been dropping steadily for over a decade dropping from $14.6 Billion in 1999 to $6.3 Billion in 2009, a net loss of $8.3 billion dollars a year in a decade as reported by CNN.

It’s interesting how the tech industry loves to move the goal posts of the argument. There are now so many varied and interesting ways to consume music legally, and yet piracy is still increasing. The argument of “no options” for consumption simply falls flat in the face of Itunes, Amazon Mp3, Spotify, Rhapsody, Pandora and many, many others.

Now comes the miscounting part of the shell game:

Concert Revenue Increased

Though not officially a part of the recorded music industry pie [but they’re going to count it anyway], bands have learned [shocker–who knew?] that hitting the road can be quite lucrative and goes a long way in replacing lost CD sales. Industry trade firm [isn’t an industry firm and a trade firm kind of the same thing?] Pollstar estimated that the 100 largest tours in North America reported $2.3 billion in ticket revenues during 2011, up 6.3% from the previous year. The concert space had a tumultuous couple of years following the credit crisis, but has been a relatively steady and growing source of income for leading bands. The statistics detailed 3.7% international growth of the top 50 acts to just over $3 billion.

Investopedia states, concert revenue is not the recording industry–but don’t let that stop them. This like saying autosales are doing fine because cable subscriptions are up. But it doesn’t really matter because this selective use of stats overlooks the larger picture that concert ticket sales are dropping and have been for at least five years according Digital Music News who reports a 10.4% drop in global attendance since 2007.

And this brings us to the “greedy musician” meme–pretty brassy from venture capitalist wannabes at Investopedia:

Greed Isn’t Good

 The growth of revenue-based online music sources could end up leveling the playing field for the industry, which could help boost total competitiveness [when? 2050?]. Last year, U2 reported nearly $232 million in revenue from touring across the world. Clearly, no one single band really needs to make that much, and the top bands garner a larger proportion of touring and recorded music sales.

Online music makes it possible for smaller bands to reach a wider audience, and also puts into play more obscure or older music that retail stores and concert promoters used to ignore. The concept also applies to movies, books and other media.

This is really funny, “Clearly no single band really needs to make that much.” Really? Does Google really need to have $50 billion in cash reserves? Aren’t venture capitalists in the 1% of the 1%? The hypocrisy of the double standard is amazing.

So Greed isn’t Good unless you are Google or a tech company illegally exploiting artists for profit? Welcome to the “Exploitation Economy.” So it’s greed if artists are successful despite all odds, even when 95% of their work is being consumed illegally, as facilitated by the tech industry and Google?Furthermore, let’s remember Google’s YouTube was built on an a model of intentional and deliberate illegal exploitation of artists work.

As for the benefits to smaller artists, they might want to double check that as well, according to Ted Cohen and Tom Silverman from a talk at Midem, the benefits to unsigned and DIY artists are nearly negligible on an individual basis.

The Bottom Line

 Several years ago, the music industry aggressively pursued consumers that downloaded pirated and other illegal music to their computers. It has finally discovered that creating legitimate, more competitive and appealing services, may have incentivized consumers to again start paying for their music. However, it will never be possible to replicate seeing a band live and in person. Finally, growing emerging markets are creating a new class of consumer that should continue to help the recorded industry climb out of its multi-year funk.

What in the world is he talking about? “Finally, growing emerging markets are creating a new class of consumer that should continue to help the recorded industry climb out of its multi-year funk.” What does that even mean?

The real bottom line is the desperation of the tech industry to continue to rationalize and justify its 13 year war on artists as it gets harder and harder to do so in the face of more and more empirical data that the livelihoods of artists have been catastrophically affected. In fact just this month Salon reported a 45.3% drop in “Musical groups and Arists” from Aug 2002 through Aug 2011 according to The Bureau Of Labor Statistics. This sounds actually pretty crippling to us.

One final thought is that as Investopedia states, “it will never be possible to replicate seeing a band live and in person.” This very statement is an admission by these tech industry advocates that they have failed to innovate any substantive revenue streams for artists online. Touring and merchandise throw musicians back at least seventy years, prior to the ability to sell sound recordings.

There is nothing innovative by illegally exploiting artists to profit corporate interest–an income transfer program at best. The SF Gate, Investopedia and ValueClick only show the shocking arrogance and ignorance of those collaborating in the destruction of professional creatives’ careers.

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see also: Musicians For An Ethical Internet
https://thetrichordist.wordpress.com/2012/05/03/roll-call-musicians-for-an-ethical-internet/

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May 7, 2012May 28, 2012 by trichordist

The Trichordist Random Reader News & Links Sun May 6

Grab the Coffee!

Probably the biggest story of the week is the UK has ordered it’s ISP’s to block access to The Pirate Bay, the BBC reports:
http://www.bbc.co.uk/news/technology-17894176

You may recall that The Pirate Bay lost their final appeal back in February and are headed to jail, Time reports:
http://techland.time.com/2012/02/01/pirate-bay-founders-lose-supreme-court-appeal-going-to-jail/

Here is an insightful editorial from the Boston Phoenix on the new music “Super PAC” model and asks some very interesting questions about Amanda Palmer’s record Kickstarter campaign while giving a shout out to David Lowery’s, “New Boss / Old Boss”. Highly Recommended Reading.
http://blog.thephoenix.com/BLOGS/onthedownload/archive/2012/05/03/the-problem-with-the-future-of-music-amanda-palmer-and-the-rise-of-the-music-biz-super-pac.aspx

Digital Rights Corp will track and remove your titles from Torrent File Sharing sites, Contact them from more info:
http://digitalrightscorp.com/joomla/index.php?option=com_content&view=article&id=74&Itemid=466

Remix without Romance How Free Culture Get’s It Wrong, from Copyhype:
http://www.copyhype.com/2012/04/remix-without-romance-what-free-culture-gets-wrong/

Hypebot reports that Reddit is attempting to “Crowdsource” a hit song… isn’t that what labels have been doing for decades? Bookmark this one…
http://www.hypebot.com/hypebot/2012/04/redditors-seek-to-create-a-top-10-pop-hit.html#comment-6a00d83451b36c69e2016765e67f23970b

Tech contradicts itself (again), “Freemium” no longer viable, must give away valued content, HypeBot reports:
http://www.hypebot.com/hypebot/2012/04/the-problem-with-false-content.html

There was a major dust up this week as Prof. Jonathan Taplin of the USC Annenberg Innovation Lab challenged the tech establishment on artists rights. The tech community’s hatred of artists seems to have come to boiling point. The situation is both disappointing and disrespectful, Fast Company and Tech Dirt report:
http://www.fastcompany.com/1834866/the-bands-ex-tour-manager-blasts-reddit-founder-alexis-ohanian-kim-dotcom-the-kickstarter-be
http://www.techdirt.com/articles/20120423/01452218599/bands-ex-manager-accuses-reddit-profiting-piracy-debate-with-co-founder.shtml

More evidence that Touring is NOT the solution for musicians in the digital age, Digital Music News reports:
http://www.digitalmusicnews.com/permalink/2012/120504easier#fq6yeUXeS0y6-QMrtd6f1Q

Google is watching you, believe it. While Google is spending record amounts of money lobbying, and trying to convince you that the protection of artists rights is a “censorship” issue, they continue to challenge the law by invading your privacy, Ars Technica reports:
http://arstechnica.com/apple/news/2012/05/google-may-face-massive-fine-from-ftc-for-bypassing-safari-privacy-controls.ars

May 5, 2012May 6, 2012 by trichordist

Musicians POV: Jaron Lanier – You Are Not A Gadget [video]

Please enjoy this short and insightful 5 minute video with Jaron Lanier talking about the failure of Web 2.0 and how it has not created a new middle class of creative professionals, as promised or predicted. His book, “You Are Not A Gadget” is essential reading.

We’ll be presenting more videos and commentary from Jaron. Please review the links below to learn more:

http://www.jaronlanier.com/

http://en.wikipedia.org/wiki/Jaron_Lanier

http://www.jaronlanier.com/gadgetwebresources.html

http://www.newyorker.com/reporting/2011/07/11/110711fa_fact_kahn

http://www.slate.com/articles/arts/books/2010/01/the_geek_freaks.html

http://online.wsj.com/article/SB10001424052748703481004574646402192953052.html

http://www.time.com/time/specials/packages/article/0,28804,1984685_1984745_1985490,00.html

http://www.nytimes.com/2012/01/19/opinion/sopa-boycotts-and-the-false-ideals-of-the-web.html

http://www.theatlantic.com/technology/archive/2010/12/the-hazards-of-nerd-supremacy-the-case-of-wikileaks/68217/

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May 3, 2012May 28, 2012 by trichordist

Roll Call : Musicians For An Ethical Internet

The conversation is now clearly about the unethical practices of corporations and companies profiting from the illegal exploitation of artists work without consent or compensation. As the 13 year war against Artists Rights has waged on, more and more artists are recognizing this fundamental truth, and speaking up.

Many artists are expressing the need for an Ethical Internet that should preserve all the rights and freedoms enjoyed in the physical world. Anyone who proposes that one set of rights (privacy, labor & fair compensation) must be sacrificed to protect another set of rights (freedom of speech), should be seriously questioned. Internet and tech companies need to innovate beyond the old model of illegally exploiting artists work as the basis for their unimaginative models and work to create new fair and ethical businesses.

Bono, Elton John, Eminem, Prince and others don’t need anything that Piracy is said to offer such as promotion, which is laughable at best. The Pirate Bay has made, and continues to make MILLIONS OF DOLLARS annually from artists via advertising (from Google) while providing no compensation to the artists what-so-ever. This is truly immoral and unethical, as well as being unacceptable as a legitimate business.

We hope that more artists will continue to speak up in favor of artists rights online in the pursuit of an ethical internet. What follows is a list of previous artists comments, compiled and attributed to their respective sources on the subject.

BONO
“…somebody should fight for fellow artists, because this is madness. Music has become tap water, a utility, where for me it’s a sacred thing, so I’m a little offended. The Internet has emasculated rather than liberated artists…”

LL COOL J
“My first question is this: Do people in the entertainment industry have the same rights as other Americans to fair pay for fair work?”

PATRICK CARNEY / THE BLACK KEYS
“The guy [Sean Parker] has $2.5 billion he made from figuring out ways to steal royalties from artists, and that’s the bottom line.”

ELTON JOHN
“I am of the view that the unchecked proliferation of illegal downloading (even on a “non-commercial” basis) will have a seriously detrimental effect on musicians, and particularly young musicians and those composers who are not performing artists.”

EMINEM
“I think that shit is fucking bullshit. Whoever put my shit on the Internet, I want to meet that motherf***er and beat the shit out of him, because I picture this scrawny little dickhead going ‘I got Eminem’s new CD! I got Eminem’s new CD! I’m going to put it on the Internet.’ I think that anybody who tries to make excuses for that shit is a fucking bitch.”

JOHN MCCREA / CAKE
“The idea of making a living from selling musical recordings is sort of a quaint idea and is no longer really feasible… But I do think that if music is going to be free, then sandwiches should also be free. There should be some consistency and we should learn to cooperate better.”

ZACK HEMSEY
“…piracy is primarily motivated by greed – it’s a business, and apparently a very good one. There’s nothing wrong with someone making money, but if they are making money by commandeering and exploiting my work, and not even sharing any of those earnings with me to boot, then it shouldn’t be controversial to suggest their actions are less than admirable.”

DON HENLEY
“Theft of American products and ideas is no longer the hobby of teenagers with laptops; it’s big business, as the Office of the U.S. Trade Representative warns in a recent report on the world’s most notorious illicit markets. And they’re not just stealing movies and music; they are stealing America’s jobs and future.”

PRINCE
“Nobody’s making money now except phone companies, Apple and Google…It’s like the gold rush out there. Or a carjacking. There’s no boundaries.”

DAVID LOWERY
“I feel that what we artists were promised has not really panned out. Yes in many ways we have more freedom. Artistically this is certainly true. But the music business never transformed into the vibrant marketplace where small stakeholders could compete with multinational conglomerates on an even playing field.”

TRENT REZNOR
“Just because technology exists where you can duplicate something, that doesn’t give you the right to do it. There’s nothing wrong with giving some tracks away or bits of stuff that’s fine. But it’s not everybody’s right. Once I record something, it’s not public domain to give it away freely. And that’s not trying to be the outdated musician who is trying to ‘stop technology. I love technology.”

DAVID DRAIMAN / DISTURBED
“Make no mistake, however, that the culture that has been bred over the course of the last 10+ years of simply thinking that all music should be available for free is wrong, and immoral; plain and simple.This mentality has created an environment where it is more and more difficult for artists, particularly up-and-coming ones, to survive and sustain themselves. We, as artists, love and appreciate our fans more than you know. We know that we could not exist without you, but we don’t steal from you, not in any way, not ever. Wrong is wrong, no matter what color you paint it, or how you try to spin it.”

THE GRATEFUL DEAD
“No commercial gain may be sought by websites offering digital files of our music, whether through advertising, exploiting databases compiled from their traffic, or any other means.”

LOGAN LYNN
“What pisses me off is having over 91 percent of my personal intellectual property stolen, often before it even has the chance to be finished and released to the world. As a professional musician, a lot of time, hard work, and money goes into making a record. As an independent musician, that money comes directly out of my own pocket. ”

RANDY BACHMAN
“Digital online piracy is making it nearly impossible for Canada’s emerging artists to make it”

LUPE FIASCO
“People are trapped in the culture where music needs to be free and you don’t need to pay for it… who are you to have the right to tell me that I shouldn’t demand payment or feel a certain way for seeing people put my music out there like that? If I chose to do that, that’s one thing. But I didn’t choose to do that. That music was stolen.”

LILY ALLEN
“The world over, people are stealing music in its millions in the form of illegal file-sharing. It’s easy to do, and has become accepted by many, but we need people to know that it is destroying people’s livelihoods and suffocating emerging new British artists.”

TAIO CRUZ
“I could have been dropped from my record deal because so much was spent and so much of my album was leaked and not paid for. But luckily my label had great belief in me. File-sharing has had a very, very negative effect on my career, as it has on many others.”

In closing, perhaps this quote from Hemingway is also appropriate as food for thought:
“The individual, the great artist when he comes, uses everything that has been discovered or known about his art up to that point, being able to accept or reject in a time so short it seems that the knowledge was born with him, rather than that he takes instantly what it takes the ordinary man a lifetime to know, and then the great artist goes beyond what has been done or known and makes something of his own.” – Death in the Afternoon

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May 3, 2012May 28, 2012 by trichordist

EFF’s John Perry Barlow is Wrong, says Google’s Chief Economist

What Artificial Scarcity?

John Perry Barlow is the outspoken EFF co-founder who wrote the sophomoric and nonsensical manifesto for the internet. Much of Barlow’s principal talking points regarding his complete disregard for the protection of artists rights in the digital age centers around the idea that “property” especially of the intellectual kind should not exist on the internet.

“Your legal concepts of property, expression, identity, movement, and context do not apply to us. They are all based on matter, and there is no matter here.”- John Perry Barlow

The fact that this is posted on the EFF website should be at the very least alarming, if not completely absurd for a policy group to display publicly as part of its mission.

There is much talk online by freehadist’s that digital bits are worthless and the cost of a copy is zero, therefore all content online has a near zero marginal cost and should be freely available. Of course any rational and reasonable person would know that this is nonsense due to the fixed cost of production on information goods. Hell, even Google’s own Chief Economist Hal A Varian “get’s it” as outlined in his book, Information Rules:

Page 83.

John Perry Barlow asserted that “Intellectual property law cannot be patched, retrofitted, or expanded to contain digitized expression… We will need to develop an entirely new set of methods as befits this entirely new set of circumstances.” Is Barlow right? Is copyright law hopelessly outdated? We think not.

Continued, Page 93.

“Bitlegging” can’t be ignored: there’s no doubt that it can be a significant drag on profits.

Bitleggers have the same problem that any other sellers of contraband material have: they have to pet potential customers know how to find them. But if they advertise their location to potential customers, they also advertise their location to law enforcement authorities. In the contraband business it pays to advertise… but not too much.

This puts a natural limit on the size of for-profit illegal activities: the bigger they get, the more likely they are to get caught. Digital piracy can’t be eliminated, any more than any other kind of illegal activity, but it can be kept under control. All that is required is the political will to enforce intellectual property rights.

Fascinating that Google is so actively involved in exploiting the content that other’s have paid to create in production costs, as Google profits from the marginal costs. Clearly, the value of monetizing content without fixed production costs is not an unknown concept to the company given that their chief economist literally wrote the book on information economies. As a matter of fact, that appears to be a damn good model to build advertising around, who knew?

Also note the emphasis on political will power. In fact, we’ve seen that Google seems to have plenty of that to oppose the protection of artists rights.

[update] Here’s John Perry Barlow, sparring with Bob Weir at SF Music Tech in Feb of 2012. Barlow repeats the same talking point in trying to dismiss Weir’s concern over compensation for artists online. Jump to 5:10 in the video to hear Barlow say, “I think the answer is there, we just have to, we just have to get the property model out of the picture… “

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see also : Musicians For An Ethical Internet
https://thetrichordist.wordpress.com/2012/05/03/roll-call-musicians-for-an-ethical-internet/

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May 1, 2012May 30, 2012 by trichordist

Enemies of Artists Organize on Internet

http://www.guardian.co.uk/commentisfree/cifamerica/2012/apr/27/organising-against-enemies-internet-freedom

Once again the guardian misses the not-so-subtlety of the debate. It’s not Governments and large corporations on one side of the “freedom of the internet” debate and individuals on the other. This is a completely outdated narrative.

The freedom of the internet debate has been totally co-opted. Google and other giant tech companies would have you believe they are fighting for your “freedom” when it’s actually their freedom to exploit us. Further they want to be beyond government control. Recently in The Guardian Sergey Brin was quoted as saying: “If we could wave a magic wand and not be subject to US law, that would be great”.

Personally we’d rather have a democratically controlled elected government regulating the internet, rather than a company like google which isn’t even accountable to it’s own shareholders. (see latest stock split).

Further Google, Facebook and others web 2.0 companies are all built on an “architecture of exploitation”. Or as Stephen Colbert smartly noted in his interview with Lawrence Lessig:

Colbert: Well let’s see (laughing)…so the hybrid economy is where everybody else does the work and Flickr makes all the money?

Wake up people.

Trichordist Editorial.

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April 30, 2012May 28, 2012 by trichordist

Musicians POV: Spotify Isn’t Good for You – Full Post

Mikey’s Not Here

If you remember the old “Life” cereal ads, they featured kids who didn’t want to eat Life cereal because it was “good for you” so who would like that? Test it out on “Mikey”, the hyper critical eater—”Give it to Mikey, he hates everyhing!” And surprise, surprise, Mikey likes it.

So it is with Spotify. Mikey may eat it, Mikey may even proselytize about its wonders of valuation, but Spotify is not only not good for you, it’s actually bad for you. The good news is (maybe) there’s something every artist can do about it. Unless, of course, they listen to “Mikey”.

Here’s the proposition: From a financial point of view, Spotify’s payable royalties are neglibible–marginally better than a pirate site. (See “Streaming Price Index“) Spotify is, of course, a licensed service and it is encouraging to see investment pouring in to its coffers. Make no mistake–we’re happy it exists. The unfortunate thing is that Spotify is another example of reacting to massive piracy with a business model that in the long-term is nearly–although not quite–as unsupportable as the piracy it promised to help fix.

Spotify”s model is essentially a variation on Web 2.0, or as we say around the Trichordist, The Man 2.0. With the usual Web 2.0 company the users provide all the content and the tech oligarchs (or wanna be oligarchs) get all the money. (Like with Facebook, Flickr, YouTube, Google, Wikipedia, Instagram in no particular order.)

Except with Spotify it is the artists (and not the users) who create all the value and get none of the profits. Like other Web 2.0 darlings, the tech oligarchs build the platform, create none of the content and will get the lion’s share of the profits on Liquidity Day. Spotify is just a couple compass points away from oligarch status—call them mini oligarchs. In the meantime, Spotify profits from the artists and pay a laughable royalty in return.

So in the words of a famous revolutionary, what is to be done?

First, consider whether there is any benefit from being a Spotify stockholder. We think we will see that there is not much financial benefit. Then we consider how you can keep your music off of Spotify, even if you are a major label artist. Then we consider how you can force the company to pay a fair rate.

What if Artists Were Stockholders?

So who makes money? First and foremost—Spotify employees starting with Daniel Ek. These guys get a steady paycheck and have equity in a dark future for artists.

Next, venture capitalists who are the 1% of the 1% don’t forget. These VCs, especially Silicon Valley VCs, are some of the richest people in America who nearly single handedly brought you the stock market crash of 2000 when the last tech bubble popped in a frenzy of irrational exuberance.

It is pretty common stuff for these people to personify the long simmering rivalry (largely one-way) between Northern and Southern California. The Internet was a force multiplier that weaponized that hatred. This, of course, results in screwing artists. (See the embarrassing post “Kill Hollywood” by elite VC Paul Graham of Y Combinator, the home of digital chickenfeed: “How do you kill the movie and TV industries? Or more precisely (since at this level, technological progress is probably predetermined) what is going to kill them?” Search for the word “artist”—no matches found.)

And of course, another group of Spotify stockholders are the major labels who extracted equity ownership in the company in return for licensing catalog at ridiculously low royalty rates. The fairly consistent rumor is that the labels own 18% of Spotify, which at its most recent valuation of $4 billion is worth $720,000,000.

Here’s the twist—because the deal with Spotify is for the entire catalog of each label and not of any particular artist, it is doubtful that any artist will ever participate in that 18% equity. If you think of that 18% as being subject to the 50/50 net receipts allocation (the issue in the Eminem case), there’s a very easy fix to this.

Spotify can allocate another 18% of its equity to an artist stock pool. Artists would not need to own that pool, but it could be held in trust for all artists who ever have participated in Spotify and all artists who will participate in Spotify before the “liquidity event” that would turn that stock into cash—an IPO or acquisition, typically. All other terms of stock ownership could be on the same terms as the labels. And, of course—an artist would be appointed to the Spotify board with full voting rights to vote the full 18% block of shares.

These don’t have to be new shares—Daniel Ek and Spotify can hand them over from previously issued stock to give to Spotify’s artist “partners” an incentive to stay with the company.

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Next: Part 2 Could Artists be Stockholders?

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A Billion is Cool

To be clear—no one artist would own any of the shares, but by signing up for Spotify they would have a right to the proceeds from the sale of these shares based on being a participating artist. This is because each artist—particularly new artists—on an ownership basis is as important as any other artist. The artist stockholders would then have a say about royalty rates based on their board seat, a minority voice to be sure, but a voice nonetheless. A seat, by the way, that should be held by an artist, not a manager or lawyer as the “artist representative” but a bona fide artist.

Here’s an example:

Daniel Ek transfers a number of shares equal to 18% of the outstanding shares of the company into an escrow account. The sole purpose of the escrow account is to sell the shares on a liquidity event. When the liquidity even occurs, the proceeds of the sale are received by the escrow agent (such as an unrelated bank) and are distributed to each artist whose tracks were continuously available on Spotify after the date the escrow was created through the date of sale. If artists removed their tracks during the period, they’d lose their right to the escrow funds. All these payments would be made to the artists directly but the artists could not force a sale prior to the liquidity event. (That would likely be too complex from a securities law point of view.)

So if 18% is worth $720,000,000 and the sale occurred today, and assuming there are 200,000 qualifying artists on Spotify, then each artist would be entitled to $3,600 (less some administration fee for the true transaction costs). Even though this money would be paid off contract (a meaningful concept to unrecouped major label artists), it still does not amount to much.

Now—this is not a particularly exciting number. Even if you allocated these funds based on aggregate streams by artist, you would essentially be letting the major labels off the hook with their own artists to share any of these proceeds with them, and even then it is unlikely that this calculation would result in a life-changing amount of money comparable to the return to the venture investors.

So another way that Spotify could do this is to agree to pay out a certain amount of money to each participating artist that would be something in the range of $25,000 to $50,000 each.

Because you know what’s cool? A billion is cool.

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Next: Part 3

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How to Enforce Windowing

Spotify is actually very similar to the old record club model—the labels owned the company and they made significant revenues on hit product sold through the record club at a reduced royalty rate for both artist royalties and a ¾ of ¾ royalty rate for mechanical royalties.

It was common for record companies to agree to give a 90 day hold back on record club sales, meaning 90 days from the U.S. release, and in some cases that date could be pushed out as far as 12 months, or in some cases a “reasonable time”.

There really is very little difference between the functional issue that gave rise to the record club holdback. The record company wanted to sell the artist’s recordings in a way that profited the record company more but paid the artist less, and the way the artist protected themselves from this arbitrage was to create a window where the record company could not cannibalize front line sales.

An artist could also ask for downside protection on streaming services that would require a minimum payment of a penny rate to the artist. This is in part because it is very difficult to get record companies to give the artist the digital service accountings on audit, so at least if there were a per-play minimum, the artist could essentially handle the streaming service in a simple desktop audit of penny rate multiplied by number of reported streams (assuming the artist can even extract that information).

This is, to be clear, an issue for artists negotiating with a label or a distributor, less so for an artist with a digital aggregator.

For example, an artist could ask for a ad-supported service holdback of 12 months from the U.S. release date, and a per play royalty of a minimum of 1¢, going to 2¢ or more if the holdback was violated. This would mean that if the label violated the holdback and allowed the ad-supported service to stream the title during the 12 month holdback, then it would cost the label a penalty.

This of course is something that will only be discovered on audit, so be sure to draft your contracts so that your business manager or accountant can call up the label after receiving an incorrect statement and ask for an adjustment based on unequivocal contract language. (And good luck with that.)

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Next: Part 4

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Fair Play for Artists

Spotify’s business model is actually the kind of extraordinarily short sighted economics that you see from people who don’t understand the business they are in. Take Walmart for example. They drive a hard bargain, but they are not trying to leverage themselves off the back of thieves.

Walmart doesn’t say to its suppliers that Walmart is better than the alternative of being robbed blind, but will only make the benefit so incrementally tiny that the supplier will go out of business at that rate. This is the commoditization rate, or what we call “less than zero” pricing. This sounds just fine to someone whose salary is guaranteed by venture capitalists, but makes no sense for the artists—and they are leaving Spotify in droves.

Walmart knows that they succeed when their suppliers succeed and the consumer succeeds. The pricing that Walmart pays to suppliers is based on buying power and a mission of offering consumers low prices, meaning that everyone in the chain takes a little less and truly does make it up on volume. That method is not for everyone, which is why you don’t see just every brand in Walmart.

Spotify’s valuation is based on a business model that is inherently unfair to artists, producers and songwriters. This accounts for its low conversion ratio—it’s a couple points away from a pure pirate service and has failed miserably in the one thing it had to do to justify its existence: convert free to paid customers.

And even if it did succeed, that would be the worst possible world for artists, because there is little difference in the functionality of a top tier Spotify service and buying a download from iTunes–aside from the price paid to the artists, producers and songwriters, of course. There is even some evidence that suggests that fans who were buying downloads are shifting to Spotify’s free service and substituting away from paying for downloads legally to a free legal service–the exact opposite of how Spotify has sold its service to artists as the “piracy buster”.

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Next: Part 5

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Since it is unlikely that Spotify will give what we have seen will inevitably an unexciting stock opportunity or board seat to an artist, and since the hold back negotiations will likely take a while to get through the deal process to become the standard that the record club holdback became, what can we do right now to affect behavior at Spotify?

1. True-up payment: Given that Spotify has gotten to the point that it can raise more money than it needs and intends to continue on a growth juggernaut based entirely on the value of its artists, Spotify needs to distribute out a kind of dividend to the participating artists.

This should be a significant payment, hundreds of millions. It would acknowledge that Spotify knows that its valuation is based on artists, producers and songwriters and not based on tech oligarchs.

Labels and publishers should allow this payment to flow directly to their artists and writers, i.e., not apply it against unrecouped balances.

2. Increase the royalty rates

Since Spotify is raising money it doesn’t need, Spotify can afford to establish a fair royalty for artists—even something like 1¢ per stream for artists and 1¢ for songwriters. This would reflect the co-equal copyrights of songwriters and artists.

Spotify should also gross up its royalty payments to pay pension, health and welfare to AFTRA and AFM in the US and comparable unions in each territory where it operates.

3. Transparent Royalty Accounting

Spotify should make all of the royalty accounting back up available to each artist and label online. This will make auditing easier for both the labels and publishers auditing Spotify and the artists and songwriters auditing their respective label and publisher.

4. Give Us a Kiss

We like a little affection when we’re getting screwed.

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April 30, 2012May 28, 2012 by trichordist