24 posts • joined Thursday 10th January 2008 13:35 GMT
This is completely untrue. I manage a lot of the back end delivery service for UK and US indie labels and almost all of them put their music on all the countries' iTunes and Spotify stores.
Those sales are statistically insignificant. When you can point to an entire class of retail activity and put a value on it in the 100s of $m the 'new emerging DIY label-free recording industry' point becomes valid.
What exactly is an 'open source data solution'?
Under the compulsory licence 45% of the royalties go to the artists and 50% to the producer - usually a record label. Where an artist is self-released they get 95%. The other 5% goes into a fund for session musicians who have no copyrights but nevertheless contribute a lot to a recording. Check my facts but I believe this is true.
The producers have also contributed, usually by funding the recording, and often by applying a lot of expertise, experience, and coordination. It's not stupidity that leads artists to sign deals with labels. Music is so risky that you can't get funding from many other sources, and professional recording is bloody difficult without expert help. And the money advanced for recording, living expenses, and other professional development is - get this - not recoupable out of anything except income, and interest free!
Re: Fails to reach the heart of the matter
I spy a Unicorn in this comment. Have you ever tried to form a contract with 'the Internet" and get money for your creative content? And I suspect there is a good reason why the Bank of England has not yet promised to pay the bearer of a p2p 'internet cash' token.
I started my business in 1991 in what has been branded Tech City because rent was cheap, there was plenty of space, and the area wasn't full of twats. The people who have been here for more than 10 minutes don't need lectures in community spirit from wankers on Government grants.
Re: It might help give children a better model of what a computer is and does
In the context of maths, economics, or the basics of business, or even personal budgeting I would not think anyone should have a problem with children learning the use Excel. But where they are presented with the idea that a computer is a black box that runs Excel and Powerpoint, and given no idea about how those tools could possibly have come into existence, it looks like a missed opportunity to me. I make a connection between booting up to a command line at school, and a cohort of world class developers. I might be wrong of course.
It might help give children a better model of what a computer is and does
As someone who has been horrified to discover that I children were being taught Powerpoint and Excel in their "IT" lessons at what is otherwise a good school, I would hope that a bit of hello world would open up a real world of possibilities for those who get the plot. And that I think is the importance and benefit of it, even if it does mean a few smug journalists getting to pretend to be miners because they put on a hard hat for a day and needed a manicure to reestablish normality.
The lead post on this thread/topic demonstrates one of the many ways that people can exercise power and control on forums - by typing so much that others get pushed way below the fold, giving the impression that this is a platform for monologists rather than debaters.
One way I have solved this in the past is to set an arbitrary post length to display, with the rest available on the click of a more... button. Nobody is told they are typing too much but nobody can push anyone else off the screen.
Levies and ECL
The issue of levies on iPods split the recorded music industry when it was floated (and dismissed) by Gowers, with big labels and the BPI against compensation and smaller labels and AIM for it. Hardly surprising as most collective schemes follow relative popularity rather than market value of tracks, and therefore favour the indies slightly.
One difficulty with the idea itself is that as a private copying exemption it is justified only where the person making the copy has bought the original and is copying it for their own use. I have seen this stretched to the family as the unit of ownership, but it's clearly difficult to encompass broader filesharing or the levy starts to look like a state sponsored iTunes Match. Nothing wrong with that of course, but don't pretend it's a compensated private copying exemption if it's actually a public distribution exemption.
Boosting the indies would of course help the UK as they produce a lot of new music and employ relatively more people per £ of revenue, probably. I wonder if the Government will bother to find out the actual numbers for us before making a decision.
ECL is an answer to a theoretical problem where a single and perhaps insignificant rights holder (sorry - that is not culturally or artistically insignificant - just one which is economically invisible) is able to hold a market to ransom by virtue of the fact that a required licence is either impossible enact or is deliberately withheld. If your business entails enabling people other than the rights holder to make copyright work available, that's a problem.
If rights holders got better at helping distributors know what they were allowed to make available this problem might well go away. Interesting that the Government is enthusiastic about a scheme to do just that, the Digital Copyright Exchange, viewed with some cynicism by the music industry lobbyists who claim to be 'good at databases' but are as yet a long way from managing the sort of EDI that other apparently less tech driven industries managed in the 1980s. Perhaps the threat of mass appropriation will provide an additional incentive.
Like many small business owners I would naturally prefer less Government interference in the market, more Government oversight of the fairness of the market, and lots of incentives for smart new solutions to difficult and therefore potentially lucrative problems. I'd agree this review looks a bit corporate statist, but it has proven impossible to get Government to understand how incentives within the music industry are driving the dysfunction in the first place. More 'tinker and hope' than 'make copyright fit for the 21st Century'.
Bundling and laziness
Leaving aside whether I have been lazy in making these arguments, other sectors are already much more advanced in how they deliver their service than music is. Films for instance already have a broadcast and cable channel, and VoD is significant and growing. Many households already pay on a monthly basis; Sky seems to be offering a bundle including movies at £46 per month. Software and games are partly migrating to a service model - take a look at WoW, or Salesforce for example.
If you want a bit of serious analysis of this I recommend starting with a few papers by Yannis and Brynjolfsson on the economics of information goods. The reason we buy newspapers, and subscriptions, is apparently because both consumers and producers are usually better off, even if some of each class of people will inevitably do worse if the per article or per unit offer is not available.
Thieving Coward: Kylie Minogue's 'Can't Get You Out Of My Head' is a great pop song - worth buying for the next 30 years I'd say. I'm sure there are other pop gems too that will last, the ones that show great arrangement/production quality and have a decent performer up front.
Mark, re Advances: The advance is not a loan; it has no interest rate, no repayment schedule, and no default hazard. It is an advance against earnings from the recordings. If artists could get loans they might be willing to take them instead of advances, but the fact is that record companies have been in the main the only way artists could get funding. Banks, quite rightly, will not touch them, and just about everyone else requires them to be successful BEFORE giving them money.
Steve: re @ Tee Cee / compensating artists
You need to distinguish between advances and royalties when you are discussing the money artists receive from record labels. Advances are cash up front and non-returnable which shifts the risk of a record release firmly onto the label. Few artists would trade their advance for royalties given the choice.
Publishing tends to go to a publisher rather than a label, often for another advance. Public performance carries a remuneration right which can't be waived, and anyway live performance until recently has remained with the artist, though labels are now often trying to do far broader deals in return for their investment.
Arguably if you do end up recouping - paying back the advance - it's just a sign that you did not ask for enough up front, therefore a business failure and time to get a new manager! OK - perhaps a flippant point, but you get the idea; money now at no risk versus a possibly thin and risky revenue stream in 12-18 months time and having to find another way to finance the recording and promotion.
I was writing about recording company strategy - the only strategy record labels had towards AllOfMp3 was to try to get the US Government to put pressure on Moscow to kill it. It might have been a very good model, but neither the company behind it, the local society it claimed to have a licence from, nor the Russian Government did anything to counter the idea that Russia is a lawless zone.
Response to Chris Thornett
Chris: We agree that internet radio needs more competitive licensing, which is why we went our own way and agreed a deal with Pandora on mutually acceptable terms rather than ask PPL to manage the licence for us. It was not state51 which parked that deal.
It might well have been that no-one in the music industry would follow our example, but we never got to find out, as Pandora preferred to negotiate with PPL. Do bear in mind that PPL does not have an exclusive right to license Pandora or any other internet service.
So James Cridland's calculations are at best theoretical and historical on the cost side. On the revenue side it seems that he and you, and many others, have simply taken Pandora's gross revenue figures as valid and fixed, despite the fact that they have not yet attempted to generate revenues in the UK. An impartial commentator would at least allow some uncertainty!
And as for the comparison, I would hope that interactive radio, with its precise targeting to each individual, can deliver a huge improvement in service to its listeners as well as a far better deal for advertisers, stripping out much of the wastage of broadcast and with much better accountability than that provided by RAJAR. That was one of the drivers for me in constructing a deal for interactive radio in the first place. They absolutely do deserve a chance, and we made sure by agreeing terms with Pandora that we did everything we could to allow them to try.
I don't expect to make any new friends by making our case in this forum, but I feel that it is important to ensure that all sides of this situation are heard. Westergren's public statements are open to interpretation, as indeed are mine. I have an incentive and a duty to increase revenue for the labels and artists we represent, which he does not, but I can only do that by continuing to work with Pandora and all the other innovative services to allow them to use music on fair terms.
Response to Chris Thornett
Chris: I did not write this for The Register. I posted it on a mailing list and The Register asked if they could republish it. I can assure you it is correct. If you go back to the article you will see that I say PPL does not represent the music we manage, and that Pandora had agreed terms with us but did not complete the deal. It does surprise me to see that Westergren's figures relating to gross revenue are being taken as the end of the story, and that people seem to want to engage the UK Government to negotiate on Pandora's behalf against UK music businesses.
I'm still very hopeful that internet radio stations will be able to operate in the UK with proper licences for the music they play, and I'm going to carry on working to that end.
And as a footnote, to doublejay1973: Many internet radio stations seem to have shelved the idea of charging. Perhaps they know that people won't pay enough for them to make a valuable business out of it. Your mom is presumably not copying blank CDs in her study. And I think your accusation of greed is misplaced. The situation we are now in represents an inability on the suppliers' side to respond to market conditions, which I describe as a structural deficiency. I felt it was important that Westergren's email should not go entirely unchallenged as it certainly did not describe our experience in attempting to help them license the music we represent.
Coward #3, Schultz, DavidC et al.: We certainly recognise that Pandora is able to help people discover music, and some of them go on to buy it. You can measure this directly, by monitoring the 'buy buttons', and indirectly by analysing sales patterns generally after radio play. What we try to find in all our deals is a balance of benefit to both sides. We are all trying to make money off the hard work and creativity of composers and musicians. If other people make money, for instance by selling advertising in streaming services, it's our job to try to get some of that for the labels and artists. And for the future there are more and more people who listen to interactive radio instead of buying music, because it offers such a good experience at no risk. Part of our job is to figure out how to make sure labels and artists get paid for that too.
Coward #4 (R.I.P Pandora): Creating a career path as an artist is incredibly difficult with the music industry going through such dramatic changes. However I think it is important to set a fair price for your music, which you can then discount if you feel the other benefits are worthwhile. Bear in mind that copyright law gives you a far greater share of public performance royalties that you would normally get from sales.
Coward #2: PPL has a very hard job reconciling the interests of the major labels, the independents, and the performers, and sometimes the gaps are too big. Internet radio needs efficient global licensing and we would happily join any scheme that did not end up damaging our business.
Phil: LastFM do not have a PPL deal, and even if they did it would not include the music we represent. LastFM is owned by CBS, an American broadcasting corporation.
Jerome: Pandora is a potential customer, not a competitor.
Jules: We were ready and willing to get a percentage of something and had agreed terms, but Pandora decided that they would not deal with us.
Andy and Rich: Some people do indeed go on to spend money on music they have discovered, but on average not many and not much money. We weigh up all these factors when we negotiate deals.
Killian: It would be very nice to get money for doing nothing, and if we could we might even be worth the $280m that CBS paid for LastFM! We certainly have tried to be anything but reluctant in getting the music we represent on sale, experimenting with selling MP3s in 1997, and being one of the first independent companies supplying iTunes.
Coward (no. 2?): PRS represents its members, who are composers and publishers, and so they can't issue licences for the sound recordings. We try to make sure that it is simple and efficient to use the music we represent, and many download shops and services seem to manage without too many problems. I do wholeheartedly agree that the music industry should do more to make music easier to license and use, and I spend as much time as I can trying to make that happen.
Responding to points raised....
Dimitris: I am not sure what you are disagreeing with. I too think Pandora is a great discovery tool, and we worked quite hard to get it properly licensed for the recordings we represent. We agreed a deal. They chose not to sign.
Duncan: I'm not sure I understand your point. There are rights in recordings and we try to license them as efficiently as possible.
Knid: I refer you to Dimitris. There are many proxies available for people to circumvent the block Pandora have put on UK customers.
Ian: Again, I spent a lot of time agreeing a deal with Pandora that they then decided not to complete. I want them and everyone else to be able to operate in the UK and the rest of the world.
Coward: Pandora agreed terms, which were not punitive, with us, but then would not finalise the deal. You seem to be remembering some of the discussions about the US compulsory licence, which does not apply in the UK. Sadly listening services such as Pandora do not generate much downstream revenue by pushing their customers to buy albums. And thankfully language is flexible enough for me to use 'progress' as a verb without being misunderstood.
Geoff: Pandora has barred itself, after a long time broadcasting without licences. Hopefully LastFM will manage to sign licences and will continue to offer its service in the UK.
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