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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[ 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 ]


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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[ 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 ]

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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[ 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 ]

You Can’t Have A Have A Healthy Market Economy Without Property Rights. Why Do So Many In Tech Blogosphere Want To Abolish Cyber Property Rights And Cripple The Cyber-Economy?- Part 2 of 2

You Can’t Have A Have A Healthy Market Economy Without Property Rights. Why Do So Many In Tech Blogosphere Want To Abolish Cyber Property Rights And Cripple The Cyber-Economy?- Part 2 of 2

By David Lowery

So why do so many in the tech blogosphere advocate the complete abolition of intellectual property rights?

The short answer is most don’t. Most of those in the tech blogosphere advocating abolition are knowing pawns in a cynical short term strategy to protect the profits of web and technology companies. There are many web and tech companies that have built their businesses on the intellectual property of others. They are afraid they may have to share some of their new found tech wealth with the“dinosaurs” that created the content that drives their traffic. It’s a handy distraction.

I believe most of these bloggers (and many of their readers) know that abolishing all intellectual property would cripple Silicon Valley and the tech industry. For example abolishing all intellectual property would allow Foxconn and others to just make their own identical versions of the iPhone and iPad.

When someone like myself points out the effect this would have on Silicon Valley these same bloggers begin to tie themselves in Gordian knots trying to protect some Intellectual Property rights while abolishing others. These people are fakes. They don’t really believe what they themselves write so I’m not gonna bother with them.

I’m more interested in the true believers. People like John Perry Barlow and Lawrence Lessig. These are not some isolated unknown radicals. These are are two of the most highly regarded voices on the web about the web. Often called visionaries or philosophers by their followers, Lessig is a former Harvard University Law professor and John Perry Barlow is the Co-Founder of the Electronic Frontier Foundation (and former Grateful Dead lyricist).

Barlow is very straightforward. Given the chance he will pound the table and shout “Intellectual Property is Not Property!”. At least he is honest about it. He doesn’t pretend that he is trying to “save” copyright from the “copyright maximalists” (apostates). Nevertheless he is a hypocrite in other ways. Barlow made his fortune from his intellectual property, his co-writes with the the Grateful Dead. If Barlow really believes that Intellectual Property is so terrible he should give away his earnings and relinquish all rights to these songs. This looks like another case of “Do as I say not as I do”.

Lessig is more complex. I could spend a week blogging about Lessig. He is a member of “The Internet is Different” faction and leader of one of the quasi religious factions (See his “Code is Law”). He’s also the philosophical leader of the Web 2.0 industry. For those of you who don’t know what is meant by Web 2.0 and what I find so sinister about it here’s Lessig’s appearance on The Colbert Report:

http://www.colbertnation.com/the-colbert-report-videos/215454/january-08-2009/lawrence-lessig

Watch from 0:44 to 1:25.

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

Lessig: (Mock voice and hand gestures) Don’t tell anybody! Don’t tell anybody!

The great thing about this exchange is that it appears that Lessig is genuinely surprised by Colbert’s one sentence smackdown of Web 2.0 companies. He didn’t have a ready answer to such an obvious observation. Like it has never occurred to him that the Web 2.0 is an “Architecture of Exploitation” as Danish internet theorist Søren Mørk Petersen describes it. Apparently Lessig lives in one of those internet genius bubbles with only occasional visits from Web 2.0 sycophants. No real criticism has ever reached this man. He’s never had to think through the IMMEDIATE moral and ethical consequences of his crackpot theories.

Lessig’s writings in sum total are contradictory and incoherent. He loves to be on both sides of an issue.  At one panel he angrily demanded that a critic name one time he “lauded the appropriation of intellectual property.”  This was after he wrote an essay entitled “In defense of Piracy.”  Like a true lawyer Lessig has a depends-what-the-definition-of-is-is defense at the ready.   Turns out his definition of piracy is different.

Some people point to Lessig’s political flexibility as a sign that he’s operating on a higher level than the rest of us. He was a clerk to Anton “corporations are people” Scalia and he works with Occupy Wall Street. He proposes a second constitutional convention (oh I’m sure that would never get hijacked by pro-corporate interests and oligarchs). When you dig into his pseudo philosophical tomes like “Code is Law” or “The Hybrid Economy” you realize they don’t say anything. They are empty slogans with a book surrounding them. His seemingly complexity is really just political opportunism.

What is absolutely clear is that Lessig wants to specifically screw entertainers and artists. He proposes limiting copyrights to as little as  5 years. Given that a copyright for a song begins when the lyrics are written down or hummed into your iPhone voice memo app, many copyrights would expire before the artist could commercially exploit the song. But that’s not even the worst of it. He would weaken copyright in ways that in practice would not be copyright at all and it would tilt the playing field towards giant internet corporate interests. Artists would not be able to commercially exploit their works anyway in Lessig’s world. So even those 5 years are meaningless. So Lessig is an abolish IP radical he just doesn’t have the balls to come out and say it. At least the cattle rancher Barlow is a man about it.

But the reason Lessig get’s my vote for most likely to be the manchurian candidate 2012?  He  is virtually silent when it comes to a web or tech company abusing the rights of an artist. He is supposedly all for the little guy and endlessly rails about corporate corruption yet strangely silent when it’s an Ellen Siedler vs Google. You’d think someone concerned with copyright AND the internet would have something to say on subjects like this.

I’ve tried with this guy. I’ve tried to read his stuff. I’ve tried to find some decent semi coherent vision here.  I’ve tried to see him as a visionary that stands for something.  This is the best I can muster:

“The internet is cool, Web/Tech corporations are people, Songwriters are serfs and Power to the people.”

I’m not the only one confused by what exactly this web visionary is envisioning. I urge you to check out his wikipedia entry. It seems that even his Web 2.0 biographers are confused by what he is for and against.

And now the rumor is this guy has political aspirations. God help us all.

**********************************************************

While Lessig et al espouse a pseudo-socialistic view towards intellectual property in Cyberspace a lot of the push to collectivize intellectual property is driven by those on the right that claim a fake Libertarian ideology. An ideology I like to distinguish from real Libertarianism by calling it Li-BRAT-arianism.

Li-Brat-arians are those who think that there are absolutely no limits to personal freedom. If you can do it, it is acceptable. To prevent someone from doing something even if it violates other’s rights is a dangerous throttling of “freedom”. They miss the more nuanced perspective of long time Libertarian thinkers who look at everyone’s individual freedoms and measure the kind and net loss of freedoms.

Take for instance industrial-scale-for-profit unlicensed file-sharing by the likes of MegaUpload or Mp3Tunes. Li-Brat-arians argue while it’s not cool to violate the rights of others to control and exploit their songs. While it’s not cool to expropriate and exploit songs without performers and writers permission, any attempts to stop a for-profit corporation from doing this is a dangerous infringement of the right to free speech. This ignores the violations of others private property rights and it is simply a bratty argument. Something I’d expect to hear from my pre-teens not fully grown college educated adults writing for a national Magazine.

Li-BRAT-arians need to go back and read Bastiat, (the father of all Liberalism, Libertarianism and Anarcho-Capitalism.) Bastiat argued clearly and convincingly that the protection of private property rights are a necessary condition of liberty. Even his rival the Left Anarchist Proudhon eventually modified his “Property is Theft” to “Property is Freedom” because he believed that workers had a right to the product of their labor as expressed in private property. Further he believed this was the very expression of freedom. He also made it clear that his “Property is theft” slogan was a little bit of bomb throwing.

In my first memorandum, in a frontal assault upon the established order, I said things like, Property is theft! The intention was to lodge a protest, to highlight, so to speak, the inanity of our institutions. At the time, that was my sole concern.

So Li-Brat-arians are more radical than either Proudhon and Bastiat. Li-Brat-arians are actually arguing the Communist point of view!

(Proudhon and Bastiat are both quite enlightening on the subject of how freedom, liberty and private property interact. Especially Proudhon’s distinction between his views and socialism. Contrary to the uniformed opinion of Proudhon he is very much in favor of private property.  I don’t do them justice here.  But I urge you to read both of them.)

In an attempt to avoid the whole property issue there is a related and overlapping group of fake legal scholars that make the mentally and morally challenged argument that because copying files leaves the original intact and hence nothing has “gone missing” that in fact no “theft” has occurred. This is a semantic distinction, a narrow technical argument. An argument that you expect to come from someone paid to be morally and ethically flexible like a criminal defense attorney. But not, as it was recently argued, by Rutgers law professor Seth Green in a guest Op Ed for the NY Times.

Okay I’ll take the bait. Let’s pretend this is a semantic argument that needs urgent resolution before we can all start behaving like decent human beings. Let’s pretend this argument is truly a four alarm semantic emergency that it requires New York Times Op Eds and stands in the way of us protecting our fellow citizens rights. Then indeed let’s come up with a new word!

Indeed, let’s re-classify this violation of personal property rights, constitutional rights and human rights (artist copyrights are spelled out in all major international human rights agreements), let’s re-classify these violations as artist rape or if you find this too honest I would also accept artist trafficking.

You Can’t Have A Healthy Market Economy Without Property Rights. Why Do So Many In Tech Blogosphere Want To Abolish Cyber Property Rights And Cripple The Cyber-Economy?- Part 1 of 2

You Can’t Have A Have A Healthy Market Economy Without Property Rights. Why Do So Many In Tech Blogosphere Want To Abolish Cyber Property Rights And Cripple The Cyber-Economy?- Part 1 of 2

By David Lowery

Can you imagine the outrage if leading voices in Corporate America started advocating that we abolish all individual private property rights? Citizens could no longer own any property. All property would be collectivized. Citizens could no longer profit by creating and owning things. Further what if these same corporate voices used the justification that private property rights were hindering their ability to innovate?

We’d all laugh. Or man the barricades. This would never happen, right?

Well it is happening. This is exactly what many in the tech blogosphere are arguing we should do in the cyber-economy. These faux revolutionaries are arguing that Intellectual Property and the Internet are incompatible so in the name of “freedom” Intellectual Property must go. In the cyber economy ALL property is intellectual property. This means these folks are advocating for no private property in cyberspace. What does that sound like? Depending on your political leanings this is either some sort of corporate feudalism or a radical form of socialism.

Humans have had a lot of experience with both systems. Feudalism and radical forms of socialism have been practiced in many countries all over the world. Neither of these systems fostered democracy, free speech or anything anyone would regard as freedom. But more importantly these two systems stifled innovation and crippled the economies of the countries that were subjected to these political systems. Generally in order to encourage innovation and wealth creation an economic system must reward and incentivize everyone involved in the process. For example you can’t just reward the distributors of a product and neglect to reward the manufacturer of the product. You would not build a system that incentivized and rewarded innovation in the distribution and servicing of cars but refused to allocate any revenue to the manufacturer of cars.* There would be nothing for the distributors to sell. The only way the system might work is if the distributors managed to steal cars from the innovative neighboring economy that incentivizes and rewards the car creators. BTW this is exactly how YouTube and File-sharing sites manage to survive.

Now I’ve read enough mystical pseudo revolutionary garbage about the web to know what the responses will be to what i’ve just said. They generally fall into three categories:

“The Internet is different”

“Old Economic laws do not apply to the cyber-economy”

“A magic beaver lives in a spaceship under the Googleplex”

The Internet is different than what? This is never satisfactorily explained. Seems like a funny point but no one has ever been able to convince me (or themselves ) once I press this point.

Old economic laws do not apply to the cyber-economy? Yes they do. There is nothing different or new about the cyber-economy. Goods with near zero marginal costs? We have those in regular-space. We’ve had them for hundreds of years. The list goes on and on. If it makes any difference Google’s Chief economist Hal Varian also thinks the old economic laws apply.

While it’s entirely possible that a magic beaver lives in a spaceship under the Googleplex other pseudo religious and mystical properties assigned to the technology industry and in particular the web are just not true. I will bet anyone $1,000 dollars that 5 years from today The Technological Singularity has not occurred.  The Technological Singularity is a Nerd reverse creation myth. Abolishing intellectual property is not gonna turn the web into a super intelligent being and usher in a new age of peace, prosperity and enlightenment.

There are many more quasi religious narratives about the web. Some milder and some stranger. I don’t mean to single out this one. They all need to be debunked and challenged. For all they do is empower demagogues and commence hunts for Apostates.

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

I realize that what I am saying about robust property rights and healthy economies is nothing new. It’s a rather elementary and banal critique of the Copyleft’s proposed cyber-economy. What is more interesting is why there are so few other voices out there challenging these wackjobs? Why is it left to the singer of a moderately successful cult rock band to challenge this nonsense? That’s the real story here. Where are the grown-ups?

It think it has something to do with those quasi religious narratives about the web. It encourages fanatics, nut jobs and unreasoned discussion. I mentioned last week that there is a mathematical argument to be made that the internet is making us stupider. Well there is also a very good argument to be made that the web is actually stifling free speech. It is certainly not always the place for reasoned discussion. It’s a land balkanized by ossified opinions and guarded by trolls.

The web is a place where people go to hear their own deeply held opinions parroted by others. There are few places that you may have a fair and balanced discussion. And If you say the wrong thing in the wrong neighborhood you find yourself in trouble. That’s why their are few “grown-ups” on the web. Most are not willing to endure the stream of hate mail, nasty Facebook comments, angry tweets and out-and-out threats that the tech blogosphere DELIGHTS in unleashing on anyone with which they disagree. That is why this rather radical idea of abolishing all intellectual property has taken hold. The grown-ups don’t wanna be called names by generation gimme.

Tomorrow Part 2. I examine specific individuals advocating for the abolition of private property in Cyberspace.

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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[ 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 ]

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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See also “Streaming Price Index: Pay Rates as of 12/31/11″

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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See also “Streaming Price Index: Pay Rates as of 12/31/11″

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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See also “Streaming Price Index: Pay Rates as of 12/31/11″

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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See also “Streaming Price Index: Pay Rates as of 12/31/11″

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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[ 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 ]

The Trichordist Random Reader News & Links Sun Apr 29

Grab the coffee!

Google stops charging for advertising, moves to t-shirts and merchandise model instead (just like bands should)…
http://themusicaldisconnect.blogspot.com/2012/01/google-announces-ads-free-just-buy-tee.html

Class war on creatives; Salon reports astounding labor stats of 45.3% drop in “Musical groups and artists” from Aug 2002 – Aug 2011…
http://www.salon.com/2012/04/22/no_sympathy_for_the_creative_class/singleton/

Spotify to introduce “Pandora” like internet radio. This allows Spotify access to all music, as no artists or labels can opt out and royalties are set as stat rate. Will be interesting to see if the Major Labels have direct licenses that redirect the artist share to the labels.
http://www.hypebot.com/hypebot/2012/04/spotify-readies-pandora-like-radio-service.html

This week was Grammy’s On The Hill, support artists rights, call your representative…
http://capwiz.com/grammy/callalert/index.tt?alertid=61243176

In case you were wondering, traditional terrestrial radio airplay is still the number one influence in music purchasing “60 percent of musically active consumers citing it as a top influence.” We love social media but don’t believe the hype…
http://www.hypebot.com/hypebot/2011/12/active-vs-passive-fans-why-radio-tv-still-rank-tops-for-music-discovery-best-of-hypebot.html
https://www.npd.com/wps/portal/npd/us/news/pressreleases/pr_111110

If you disagree with Sergey Brin it’s only because you aren’t smart enough to understand that he doesn’t want to ask your permission to exploit you or your work so that Google can make more money…
http://copyrightblog.co.uk/2012/04/20/a-sergey-update-we-misunderstood-him/

Can’t make this up, Pirate Politician Says Party ‘Rising as Fast as Nazis’…
http://www.spiegel.de/international/germany/0,1518,829166,00.html

Hacker collective Anonymous to create pirate streaming music search engine so that music “can be free.”
http://www.slashgear.com/anonymous-targets-music-industry-with-anontune-20223840/
However, there is some interesting skepticism online.
http://www.geek.com/articles/news/anonymous-launches-anontune-streaming-music-service-20120419/

Larry Lessig explains why Hollywood (ie, “the copyright industry”) needs to accept that there’s no point in protecting copyright. This is the origins of the “break the internet” rhetoric. Uploaded by the Pirate Party to YouTube on Aug 27, 2009…

Musicians POV: Spotify Isn’t Good For You (Part 5 of 5)

This is Part 5 of a 5 part post read Part 1 here, Part 2 here , Part 3 here and Part 4 here.

See also “Streaming Price Index: Pay Rates as of 12/31/11″

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.

Musicians POV: Spotify Isn’t Good for You (Part 4 of 5)

This is Part 4 of a 5 part post read Part 1 here, Part 2 here and Part 3 here

See also “Streaming Price Index: Pay Rates as of 12/31/11″

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”.

Next: Part 5

See Part 1 here, Part 2 here and Part 3 here