This interview is fascinating on so many levels and deserving of it’s own in depth post to explore Sunde’s comments. Here is just a teaser…
What is it exactly that you have given up?
Well, I have given up the idea that we can win this fight for the internet.
The situation is not going to be any different, because apparently that is something people are not interested in fixing. Or we can’t get people to care enough. Maybe it’s a mixture, but this is kind of the situation we are in, so its useless to do anything about it.
We have become somehow the Black Knight from Monty Python’s Holy Grail. We have maybe half of our head left and we are still fighting, we still think we have a chance of winning this battle.
Watch and learn… We can’t make this up. Seriously you have to watch this video.
If we had a nickle for every YouTuber or Tech Journalist that advised musicians that “YouTube” was the SOLUTION TO PIRACY we’d be rich. Really rich. I mean, really, really, really rich. We we’re told YouTube was “promotion” and “exposure” to make money other ways.
We were told how if you just “made stuff people wanted” and “connected with fans” then they would reward you with loyalty and support. Musicians were told they were “whining” about piracy and that they should “adapt and evolve” to the “new way” and just embrace all of this “awesome internet empowered promotion”.
Funny how it is when the shoe is on the other foot. See here’s the thing. All of these YouTuber’s make money from the advertising that runs on their YouTube videos. But when those videos are ripped from YouTube by fans and uploaded to Facebook guess who doesn’t get paid? Yup, you guessed it… the YouTuber’s are getting stiffed and they don’t like it.
Where is Larry Lessig to help these folks out? Remember kids, don’t break the internet! It’s “sharing economy” afterall. You do the work and silicon valley shares the profits.
Soooo… when a musician’s work is pirated on Napster, Grockster, Kazaa, Limewire, The Pirate Bay, oh and YouTube… Musicians should “get over it”. But when a YouTuber’s work, labor and creative output is devalued, or worse monetized by a third party (Facebook) who doesn’t pay them anything, well then, you know, that’s “bad”.
This quote from the AdWeek story above kind of says it all…
But then they ran into a problem known as “freebooting,” which entails republishing videos on social sites without the consent of the folks who made the clips. In essence, it’s a practice of intellectual-property theft that’s plagued Facebook more than other digital platforms—PR-wise, at least—in recent months thanks to a few whistle-blowers.
They go on…
“I spent roughly a week issuing take downs on Facebook—a convoluted process,” Neistat told Adweek. “I crowdsourced the process of finding the freebooters because there is no way to search Facebook. In all, I took down well over 50 different posts—[which was] not nearly all of them. I simply gave up after a while. I anecdotally kept track of the view counts—over 20 million views on the videos I took down.”
According to a recent report from Ogilvy and Tubular Labs, of the 1000 most popular Facebook videos of Q1 2015, 725 were stolen re-uploads. Just these 725 “freebooted” videos were responsible for around 17 BILLION views last quarter. This is not insignificant, it’s the vast majority of Facebook’s high volume traffic. And no wonder, when embedding a YouTube video on your company’s Facebook page is a sure way to see it die a sudden death, we shouldn’t be surprised when they rip it off YouTube and upload it natively.
• On July 19, Chen wrote to Hurley and Karim: “Jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from from other sites and trying to get everyone to see it.” Four days later, Karim sent a link to the other founders, and Hurley told him that if they rejected it, they needed to reject all copyrighted material. Karim’s reply: “I say we reject this one but not the others. This one is totally blatant.”
• A July 29 email conversation about competing video sites laid out the importance to YouTube of continuing to use the copyrighted material. “Steal it!” Chen said , and got a reply from Hurley, “hmmm, steal the movies?” Chen’s answer: “we have to keep in mind that we need to attract traffic. how much traffic will we get from personal videos? remember, the only reason our traffic surged was due to a video of this type.”
Yup, Karma meets irony… How very interwebs… Ok, Ok, Ok… Sorry, just one more…
Everyone’s creativity deserves to be protected. All creators should be united against the illegal, infringing and exploitative uses of their work (especially for profit) without consent or compensation.
Today’s younger consumers who missed the glory days of the record store as a cultural hub will probably have little awareness of the cut-out bin. The cut-out bin was dreaded by artists and labels alike, but it served an important function in the ecosystem and economy of record sales. This was the rack in the record store where over manufactured titles made their last stop before the trash bin.
The cut-out bin was the last stop for an album, not the first stop. This is a very important consideration in today’s digital music economy. Artists, you deserve better service from your labels, management and partners.
Having your record appear in “the cut-outs” didn’t mean the album wasn’t successful, to the contrary, many of the records in cut-out bins were by well known name artists. Many of these records contained hit songs and singles. However, for whatever reason the quantities manufactured exceeded the markets ability to absorb those units into sales. At some point the decision was made to either monetize the overstock, or destroy the overstock.
The net result of the cut-out bin was that full length albums were often priced below the cost of a current 45 rpm single. However, this pricing distinction occurred at least a year or more after the initial release of the album. An album was “cut-out”after all of the front line sales, traditional discounts and higher margin retail channels had long been exhausted. Cut-out supplies were also limited and inconsistent. In other words, it was only the most patient and adventurous consumer who benefited from this deep discount.
Honestly, who would buy an album at full price if the same exact product (sans for the cut off top right corner) could be had for less than the price of current single?
So here we are a decade and a half into the new millennium and the best “new business model” for artists and rights holders in the 21st Century Digital Economy is to start at the last stop on the value chain? You’re kidding us, right? We wish.
So how did we get here? Well, in three words “Ad Funded Piracy.” The lowest price for a product or service sets the price floor for all other comparable products. In the case of music that price has been set at about zero for over a decade and a half. But that’s not say there’s no money being made in the distribution of music online. No, there’s actually a lot of money being made by the Internet Advertising Networks supplying the advertising that fuels the corporate profits to over half a million infringing pirate sites.
It should also be noted that the CEO of the leading ad-funded, free to consumer streaming service was also the creator of the most successful ad-funded, bit-torrent client, u-torrent. Yup, that’s none other than Spotify’s Daniel Ek. Shocker, right?
Obviously, pirates and thieves are going to pirate and steal. These people should not be the first concern of business executives seeking to expand their profits on digital platforms. Enterprise level piracy requires the political will to enforce the law against egregious digital robber barons. Anti-Piracy is an “in addition to” action, not an “instead of” action. The future of the music business must be rooted in both innovation and advocacy.
Windows work. Period.
Business decisions need to developed through common sense, innovation and time tested principles of basic economics. We’ll repeat our previous suggestion for an industry wide, consistent windowing platform strategy below.
Windowing works better when there is a reasonable amount of consistency. Our friends in the film business have been highly effective at windowing for decades and there’s no reason why it can’t work similarly well for the record business.
Every new release should have the option to determine the release windows when the record is being set up. For example the default could be 0,30,60,90 day option for transactional sales, followed by 0,30,60,90 day option for Subscription Streaming prior to being available for Free Streaming.
Windowing is not new for the record business. The industry has never had pricing ubiquity across all releases, genres and catalogs. There has always been strategic and flexible pricing strategies to differentiate developing artists, hits, mid-line catalog, and deep catalog. An industry wide initiative to re-allign time proven price elasticity is the key to growing the business and developing a broad based sustainable ecosystem for more artists.
Windowing allows for Free Streaming to exist as a strategic price point.
Windowing allows for Subscription Streaming to exist as a strategic price point.
Windowing allows for Transactional Downloads to exist as a strategic price point.
Windowing allows for artists and rights holders to determine the best and most mutually beneficial way to engage with their fans.
Windowing is the key (as it always has been) in rebuilding a sustainable and robust professional middle class that will inevitably lead to more artists ascending to the ranks of stars. Some will become superstars and legends capable of creating the types of sales and revenues currently achieved by Adele, Taylor Swift and Beyonce’. To get there however we need to abandon Stockholm Syndrome and embrace windowing that works for everyone.
YouTube will pay copyright court costs for a few users–not because it’s right–but to protect Google’s bottom line
According to a story in today’s NY Times, the folks at YouTube are ready to pony up cash to support some of its users “fair use” claims in court.
“YouTube said on Thursday that it would pick up the legal costs of a handful of video creators that the company thinks are the targets of unfair takedown demands. It said the creators it chose legally use third-party content under “fair use” provisions carved out for commentary, criticism, news and parody.”
You’ve probably read a lot about “fair use” lately. It’s the Electronic Frontier Foundation’s mantra and if the folks there had their way, pretty much everything and anything would be considered “fair use.” Fair use an important legal doctrine and when applied properly (criticism, comment, news reporting, teaching, scholarship, or research) is not an infringement of copyright. However, these days, too often is used as a disingenuous defense for copyright theft.
In fact, when the lawsuit was first announced, The Trichordist rather humorously (though not at all facetiously) announced an “office betting pool” as to how soon the Electronic Frontier Foundation would file an amicus brief on behalf of Aurous. And while no serious IP attorney may reasonably defend Aurous against the infringement claims, that hasn’t stopped the EFF from repeating the latest mantra of Internet industry defenders: That [insert plaintiff here] is behaving as though SOPA became law. Although the EFF has not filed an amicus brief or anything so official on behalf of Aurous, here’s the tweet they sent out, as Ellen Seidler reports on Vox Indie:
Once again, @RIAA asks a court to order the entire world to block & filter an app they don’t like. https://t.co/Qwg138pFPB#SOPApower
While, all this SOPA chatter may be pretty good spin—and a great way to belabor the narrative that rights holders are just insidious, draconian, evildoers hating on freedom—the references to SOPA are entirely specious. I mean not even close.
Bottom Line: Aurous is a Domestic Business
SOPA/PIPA were exclusively written to target foreign-based piracy sites that are beyond the reach of U.S. jurisdiction for criminal proceedings, with the objective of starving these sites of both U.S. traffic and U.S. revenue.
There’s a romanticism about vinyl, and we share that enthusiasm of the format for obvious reasons. However it should be noted that the romanticism that surrounds vinyl, is largely that- romanticism. Below we’ve assembled a number of recent editorials and reports about the state of vinyl production to shed some light and much needed perspective on this subject.
There several important take-a-ways from our friends who are on the front lines of vinyl production that are also noted in the reports below.
1) Vinyl revenues are grossing more than free streaming receivables. This sounds impressive at first but said another way it means that free streaming is just not generating a lot of revenue in the aggregate of the total business (not a surprise, free streaming is a big problem).
Second, and more sadly is the fact that vinyl production is very expensive and miscalculations on selecting a title or the pressing quantity almost certainly will create a loss in thousands of dollars (if not tens of thousands) per title. In other words NET PROFITS on vinyl are pretty small in relationship to the GROSS REVENUE generated at retail due to the excessively high manufacturing costs.
2) Turn around times to make vinyl have been pushed out in excess of six to nine months on most indie label titles. If the major labels want to dominate the presses then they should invest in helping to create more pressing plants and overall pressing volume. There are only so many titles that can survive a demand curve that extends more than half a year from when there was initial excitement. This means titles that could have sold through their pressings often end up as excess inventory.
3) Good test pressings are fewer and farther between. Many test discs are often inferior and unlistenable. Problems range from pops and clicks, and surface noise to outright skipping. Getting an acceptable pressing can often mean rejecting two or three test pressings before all sides of an album are approved. A CD length vinyl release requires four vinyl LP sides that must be approved before the album can be commercially pressed. Each rejected side adds four to six weeks to the overall production timeline.
4) Colored novelty vinyl sucks as a listening experience. So much of the custom vinyl being released on colored vinyl and specialty blends sound completely horrible. These are purchased by consumers more or less as merchandise (we hope) more than they are audio products. There are a lot of not great sounding new vinyl releases, but hey if it’s on rainbow splatter glow in the dark vinyl who cares, right?
All of this is to say that if anyone thinks that vinyl is the solution to the economic exploitation artists are facing from free streaming models, then they just don’t understand the mechanics of the contemporary vinyl marketplace.
Read on…
Pressed to the Edge: Why vinyl hype is destroying the record | FACT “There are only two companies worldwide that produce lacquers. One of these companies is a one-man operation in Japan run by an old man who produces the lacquers in his garage. It’s excellent quality, but who knows how much longer he can and especially will want to continue to do this. When we are in contact with him, we attempt to order as many lacquers as we can in order to stock up as much as possible. You don’t really know when you will reach him again. The other company is in the USA and serves a large portion of the market. It is practically a monopoly. This is not good for business.”
How Independent Artists and Labels Are Getting Squeezed Out by the “Vinyl Revival” | Noisey – Vice “But the law of supply and demand is not necessarily applicable in this case, as within the same time frame, the number of facilities producing vinyl has remained static, at roughly 20 active pressing plants nationwide. These facilities can in no way meet the current demand for vinyl. “ … “I currently have a release at United [pressing plant] and it’s been over two months, and I still don’t even have a test pressing yet. I put in a re-order [a re-pressing of a previously pressed album, usually necessitating less turnaround time than a new release due to fewer steps in the production process to create the vinyl] for back catalog releases and I was told it would be at least 16 weeks. Sixteen weeks! Four months for a re-order!”
No, vinyl sales have not overtaken music streaming revenues | Telegraph UK “A mid-year report from the Recording Industry Association of America (RIAA) found that US consumers spent $226m (£149m) on vinyl albums and singles in the first half of the year, surpassing $162.7m in revenues from ad-supported streaming. … What that means is that the amount Americans were willing to spend on vinyl records was higher than the amount the music industry made from the streaming services those consumers weren’t willing to pay for, such as Spotify’s free service and YouTube. “
“It’s unfortunate, but it seems like every year our vinyl schedule gets delayed by months for some *limited* Dave Grohl or Jack White single.“
Have We Reached Peak Vinyl? | Stereogum “Stewart Anderson has had enough. The frontman for noise-pop veterans Boyracer and head of likeminded label 555 Recordings has been releasing music on vinyl since 1991. But the well-documented manufacturing delays that have gone hand in hand with the format’s unlikely resurgence have finally pushed the artist/entrepreneur to the point of wanting to break it off with analog discs.
“This whole thing about freemium, it’s a shell game. These companies are building an audience on the back of the artist, and it really bugs me.”
On YouTube and music
“Here’s a little statistic … they are 40% of consumption of music and 4% of the revenue. That’s a problem! … They know that doesn’t work. But do they care? I have no idea.”
Uh oh… Is internet advertising just a house of cards?
Late that year he and a half-dozen or so colleagues gathered in a New York conference room for a presentation on the performance of the online ads. They were stunned. Digital’s return on investment was around 2 to 1, a $2 increase in revenue for every $1 of ad spending, compared with at least 6 to 1 for TV. The most startling finding: Only 20 percent of the campaign’s “ad impressions”—ads that appear on a computer or smartphone screen—were even seen by actual people.
“The room basically stopped,” Amram recalls. The team was concerned about their jobs; someone asked, “Can they do that? Is it legal?” But mostly it was disbelief and outrage. “It was like we’d been throwing our money to the mob,” Amram says. “As an advertiser we were paying for eyeballs and thought that we were buying views. But in the digital world, you’re just paying for the ad to be served, and there’s no guarantee who will see it, or whether a human will see it at all.”
Who Benefits from the DMCA?
The ISPs (Internet Service Providers) who are facilitating all this trafficking of stolen material are completely off the hook because of the safe harbor provision. Imagine a company that helped people tap into the water system of your town. On the surface, they are simply selling plumbing and faucets. “Hey, we’re not making money from stealing water,” they might say, “we’re making money on sink fixtures; we can’t help it if the water people run through those fixtures is stolen.”
Yet that is essentially what Title II of the DMCA allows to occur, but with intellectual property instead of water. And by letting corporations profit from services that promote the stealing of copyrights, we send a powerful message to everyone: theft is acceptable if you can get a law passed that exempts you from prosecution.
So screwed up is Title II of the DMCA that even a corporate tool like Kravets owns up to the problem. He writes that the safe harbor provision “…provides ISPs, hosting companies and interactive services near blanket immunity for the intellectual property violations of their users.” In other words, pilfering from the pockets of songwriters and their children is just fine.
But here’s the thing… it’s not just us. Music Business Worldwide is asking the same question:
YouTube Music Key starts charging subscriptions… oh wait, no it doesn’t | Music Business Worldwide
You can see why suspicions are growing out there amongst the more cynical minds in the music biz that YouTube won’t ever charge for Music Key.
YouTube struck a number of megabucks, multi-year licensing deals with rights-holders last year, largely on the basis of launching a subscription platform.
Deals done, labels are now scratching their heads as to why Music Key isn’t earning them any money, almost a year after it was announced.
The Trichordist 
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