Carly Simon Sues Starbucks For Not Promoting Her Album Enough

from the hello-old-way-of-thinking... dept

Starbucks got plenty of attention a few years back for trying to start its own music label. We had hoped that maybe the company would try to do something unique and different with it, but, instead, it basically just tried to set up a conventional music label that was going to rely on selling CDs via Starbucks. Doing things the conventional way at a time when an industry is in upheaval makes little sense, and it didn't take long for Starbucks to dump the label. However, one of the last CDs it put out was by well known singer Carly Simon -- and Simon is now suing Starbucks for $5 to $10 million, using famed power lawyer David Boies.

While it does seem pretty clear that Starbucks didn't do all that much to promote the album after deciding to get out of the music label business, it's hard to feel particularly sympathetic to Simon. The same thing could have happened with any record label -- and given how many are struggling these days, it certainly could have happened. Furthermore, nothing in the article above suggests that Simon did anything to help promote the album herself or work on any aspect of the business model. It sounds like she just sat back and expected Starbucks to do everything and just start sending her checks. On top of that, the deal still included a huge advance (while she says not all of it was paid, the official advance was $575,000 -- hardly a small sum). And, again, her complaints of losing some money in the stock market, and owing money on one house in fancy Martha's Vineyard while being unable to sell her apartment in Greenwich Village (not exactly the low rent district) doesn't make her the most sympathetic of characters.

On top of all this she still sold 124,000 copies of the album.

Considering that only about 100 albums last year were able to sell more than 250,000 CDs, it seems like Simon should be thankful she was able to sell as many as she did -- especially given the fact that she seems to think Starbucks had the total responsibility for selling the album. This whole lawsuit seems to be a very old school recording industry artist mindset -- where the artist isn't expected to get involved at all, but just expects to sit back and get handed millions of dollars. Sorry, the market doesn't work that way any more, even if Starbucks is involved.

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BPI Unhappy With Techdirt, Seeks To Correct The Record... But Still Gets It Wrong

from the sorry,-that's-just-not-accurate dept

So, we recently wrote about how Geoff Taylor, head of BPI (the UK's equivalent of the RIAA) seemed to be going after British Telecom (BT) with a variety of highly questionable claims about how BT had some sort of obligation to stop file sharing on its network, and that BT was using unauthorized file sharing to prop up its own business model. Both claims are flat out ridiculous, but BPI apparently was quite upset with us pointing that out. Of course, rather than actually respond in the comments where we might have a conversation about it, they've been sending us a series of emails, taking issue with our statements and laying out their claims in more detail. In the interest of an open debate, I'll post BPI's comments here, with my responses mixed in (but of course):

It's unfortunate that in a piece which wrongly charges BPI with making things up, you have misrepresented what our Chief Executive said. He did not say that "BT broke the law in not stopping file sharing", as you assert.

Hmm. Let's look at what he did say: "If you operate a commercial service and know it is being used to break the law, taking steps to ensure it is used legally is a cost of doing business." Perhaps there's a way to interpret that, which doesn't imply that BT is breaking the law in not stopping illegal activity, but it seems like that is the rather clear implication of his statement. But, BPI goes on to say they actually just meant BT has a "social responsibility" to stop the illegal activity. Ah.

BT fosters a reputation as a socially responsible company. BPI has questioned whether it's appropriate for such a company to do nothing about 100,000 instances "a small sample" of the illegal behaviour that BT knows is occurring on its network. BT knows about this activity because BPI provides detailed weekly notifications enabling BT to verify each and every infringement. BPI's notifications are based upon robust copyright infringement detection techniques which have been accepted by the UK High Court in over 150 cases.

I see. Would that be the same "robust copyright infringement detection system" that a recent study in the UK found was accusing elderly couples of downloading gay porn, along with a significant number of other "false positives"? Furthermore, there's quite a difference between knowing that there is illegal activity on the network and being able to stop it. As we noted in one of our original posts, in a land with due process (the UK has that, right?), people aren't guilty upon accusation. It appears that BPI has leapfrogged beyond even the draconian "three strikes" proposals and is looking for something of a "one strike."

But this is a serious question for BPI: really, what would you have BT do? You are informing them of activity you claim is infringing, but BT has no way of verifying that is a fact. Secondly, by the time you've informed BT, the activity is over. So what is BT to do at that point? Finally, how is BT to determine what ongoing actions are actually legitimate? Plenty of smart content creators choose to give away their works on purpose. Plenty of the record labels represented by BPI, even, have long histories of sending out mp3s themselves for promotional purposes. BT has no way of knowing which content is legit and which is not. Pretending that BT can wave its magic wand and suddenly be all-knowing is just silly.

Oh yeah, as for the claim that BT "fosters a reputation as a socially responsible company," I would think that such would include not violating the civil liberties of its customers by spying on what they do online in an effort to prop up someone's obsolete business model. Wouldn't you?

We understand that BT employs very sophisticated traffic and network analysis technologies that allows it to see the proportion of network traffic that is P2P. We have never said that all P2P traffic is illegal, because not all of it is. But the weekly notifications we send to BT relate solely to music files which we know are being shared illegally.

Again, BPI assumes that BT can magically tell which content is infringing and which is not. Just recently, we pointed out that EMI -- in the UK -- was happily distributing infringing mixtapes from Lily Allen off of an EMI owned website. If someone is downloading such content, should BT stop them? How could it possibly know which content in real time is authorized and which is not? And, more importantly, why should that be BT's responsibility? Just because the folks at the labels that make up BPI haven't been able to adapt? If BPI believes that individuals are breaking the law, why is it not going after those individuals? Obviously, because it knows that it would be a public relations nightmare. But just because BPI has a PR issue, it doesn't mean that BT should have to spend a ton of money trying to fix BPI members' broken business models.

Since 2003, annual UK broadband revenues have increased from £0.6 billion to £2.7 billion (2008). Recorded music revenues have fallen every year in the same period, principally due to illegal filesharing. It is therefore not difficult to see that the growth of BT's consumer broadband business has been assisted by the increase in illegal filesharing.

Wow. I mean... wow. Talk about a logical somersault. Seriously? First off, just because one industry's revenue falls and another's grows, it does not mean the two are causal. I mean, this is really, really basic stuff. Correlation, causation, blah blah blah. But, even then, the link is so tenuous as to be laughable. First, the claim that recorded music revenue is falling. Well... be careful. As we've been pointing out, PRS in the UK has admitted that the music industry is actually growing, not shrinking. Apparently, the folks at BPI don't read the PRS economic reports. If they did, they'd know that the study found that the overall industry is growing, with a big shift in money going from recorded music to live music.

BPI, you're blaming the wrong culprit! It ain't the ISPs, it's the live venues! And those bands playing live shows! Why aren't you demanding that they cut it out! After all, wouldn't it be the "socially responsible" thing for them to stop gigging so that people would go back to buying CDs?

And, of course, the whole claim that the decline in recorded music sales is "principally due to illegal filesharing" is also flat out, ridiculously, laughably wrong. Study after study has shown that file sharers tend to buy more. Isn't it a lot more likely that the decline in recorded music revenues is due to a shift in the marketplace due to technology? That technology has taken away the monopoly on distribution that BPI members used to have. Whenever you lose a monopoly on distribution, it's to be expected that you lose monopoly rents and your revenue goes down. That's Econ 101 (or maybe 201, if we're talking monopoly rents... depends on your econ prof).

Besides, we spend a lot of time here working with and talking to and about musicians who have embraced file sharing, and put in place smart business models to take advantage of it. And, you know what? They're doing better than they did in the past. The problem isn't "illegal filesharing." It's bad and obsolete business models. Those who are embracing file sharing in combination with a good business model are doing better than in the past. That rules out "file sharing" as the problem, and suggests the real problem is BPI's resistance to smarter business models.

Other ISPs are recognising that it is not sustainable in the long-term for a high percentage of ISPs revenues to be based on the transmission of illegal data, and that in future they need to share in revenues from providing high quality entertainment services for their customers

This is again ridiculous. ISP revenues are not "based on the transmission of illegal data." ISP revenues are based on the fact that pretty much everyone needs an internet connection these days just to function. It's how people communicate, you know? Claiming that BT is making any more revenue because people file share is laughable. People are using the internet because it's useful for all sorts of things. Hell, we keep hearing ISPs saying that they need to break net neutrality because all this file sharing is filling up their network and costing them too much in network upgrades. How can they be making so much money off of file sharing if it's costing them so much?

Once again, this is typical entertainment industry drivel. They totally overestimate how much their own stuff is "worth" to the wider ecosystem, and then demand that everyone just pay up. Except... that's not the way the world works. The world works by having smart people with smart business models figuring out ways to make people want to give you money, not by sitting back and demanding others just hand over money.

So, thanks for the emails, BPI, but at least work on making your statements a little more believable next time. And, as always, our comments are wide open for you to reply to and interact directly with people here.

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Label That Embraces BitTorrent Upset About Lawsuits Against Useful Services

from the shutting-down-the-tools dept

The freakbits guys have a nice interview up with Dutch indie record label Beep! Beep! that has all the music from all of its artists available via BitTorrent, with help from Mininova. In the interview, the guy from the label says that giving away music for free is no impediment to getting paid for it, as you're getting exposed to a much larger audience, many of whom are happy to pay for stuff. Two interesting points (though, neither is that surprising):

• They seem a bit frustrated that distributors shun them. Apparently plenty of distributors are worried that by giving away their music for free no one will buy. Of course, plenty of bands have seen the opposite is true, but some myths are hard to dispel.
• They're quite worried about the recent ruling demanding that Mininova block content, as it may harm their ability to get content out via Mininova:

  But now they have this new thing, where they are taking off all the illegal content on Mininova. For example if Universal comes in and says, "You have to take off this show" they do it immediately. And that is different between what the Pirate Bay does. It's a shame because I'm afraid it might be the end of Mininova.
  
  Pirate Bay provides everything, so why go to Mininova when you can already get everything from the Pirate Bay. Even if the Pirate Bay will be shut down then there will always be another torrent site, someone will come along and fill the gap.

It's an interesting point that I hadn't really thought much about. As the entertainment industry keeps trying to wac that mole, it's really quite annoying for those who legitimately embraced these tools for distribution, as they're forced to move around as well.

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EMI's CEO Admits Company 'Lost Touch' But Doesn't Seem To Know How To Fix It

from the perhaps-by-not-suing-everyone dept

Well, this is rather incredible. EMI was one of the major labels that, for a brief period of time, seemed like it might actually have figured stuff out. You see, it got taken over by some folks from outside the recording industry, and they talked about how they needed to pay attention to experiments like Radiohead's and learn how to better respond to customer desires like that. That was two years ago. The company was also the first of the major labels to dump DRM. It then pulled back on its support for the RIAA and IFPI (after threatening to withdraw completely), saying that the strategy of suing fans was a dead end. On top of all that, it hired some Silicon Valley techies. For a while, we actually thought EMI might be the most interesting of the major record labels to follow.

But... old habits die really hard, apparently. The company has been suing pretty much every innovative startup that comes along, often targeting execs personally in attempts to bankrupt them. Sometimes it's been going after hobbyists or investors beyond just the actual companies. Often times, the company seems to be negotiating with innovators on the one hand, while filing unexpected lawsuits at the same time. One of the key techies it hired, Doug Merrill from Google, left after less than a year. More recently, the company refused to agree to more reasonable (but still high) streaming rates to get music back on YouTube in the UK.

Basically, it appears that EMI said it wanted to do something new, but couldn't resist doing everything it could to snuff out innovation. It takes more than words to actually convince both consumers and musicians that you're really adapting. Is it any wonder that people aren't fans? EMI's CEO is now admitting that the company "lost touch" with consumers:

"Music is in demand and the demand is growing all the time, but we've clearly lost touch with our consumers. I passionately believe that if we listen to our consumers, this gap will become our opportunity."

Ok, so start listening! STOP SUING INNOVATORS. Stop suing executives and investors in those innovators. Stop using lawsuits as a negotiation tactic. Start focusing on giving fans what they want. Start focusing on enabling new business models that work for artists. Stop thinking about getting a transaction on every piece of music played, but start looking at ways to use the music to create additional products people want to buy. Stop trying to limit users and limit musicians. Enable them both. Also, over a year ago, Topspin's Ian Rogers wrote a brilliant open letter to EMI execs suggesting a rather smart way it could leverage its existing artist relationships. It doesn't seem like EMI listened at all.

If EMI wants help in listening, why not contact some of us who have been presenting solutions and showing what works? We're not that hard to reach, and I'm sure plenty of folks in our community would be more than willing to provide some incredibly useful suggestions.

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Former RIAA Boss States The Obvious: The Record Labels Screwed Up... And Continue To Screw Up

from the again-and-again-and-again dept

Hilary Rosen was the head of the RIAA for many years, and led the RIAA's attack on Napster and other early file sharing systems. She resigned in 2003, just before the RIAA began its campaign of suing individuals for file sharing, though long after the strategy had been decided upon and put in place. Since she left the RIAA, she surprised people by saying a lot of things that seemed to go against her former views -- including throwing some support behind Creative Commons, admitting that music interoperability was important (something the labels fought against for a long time) and then came her rather surprising admission that she believed suing file sharing platforms was a dead end strategy and that she hated DRM -- and then even admitting that this has always really been a business model issue, rather than a legal issue. Of course, what she ignored is that she helped make that so.

Billboard is now running an interview with Hilary Rosen to discuss "10 years since the Napster decision" and she's equally forthright, complaining about the many, many mistakes that the industry has made:

The one lesson the industry did not learn after Napster was speed. When you're talking about technology, you have to move quickly on opportunities. The constant refrain is 'there's no money in these opportunities. There's no advances. We don't see the pay off.' But the thing you have to keep pushing back on is 'what are you comparing it to?' If you're comparing it to physical sales or comparing it to an iTunes download, then you're right, it's going to be hard. But what you really need to compare to is how else fans are getting the music, which is free. The lessons of Napster, of rapid fire adoption, have been too quickly forgotten. The industry has moved a little too slow and have not benefited as much as they might have by the benefits of technology.

She does a little to defend the RIAA by noting, accurately, that:

I think the RIAA became the central organizing vehicle for people's anger. But they don't work for the consumers. They work for the industry. It's the business leaders in the industry that are calling the shots there.

That's absolutely true, of course. But it leaves out the fact that the RIAA itself has always promoted the idea that it does represent the best interests of music itself, including for the consumer. And that was true when Rosen was there as well. So whenever politicians or the press want to understand what's happening in the music world, they look for a quote from the RIAA, not recognizing that it's a very twisted view -- one focused on protecting a business model used by a single set of companies in the industry.

Either way, it's a worthwhile read, though it reminds you how little the industry did back when it actually could have embraced the future.

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Indie Record Label Sponsors isoHunt BitTorrent Tracker Site

from the more-labels-that-get-it dept

While the major record labels keep insisting that BitTorrent and tracker sites are somehow evil and need to be shut down, more and more indie artists and labels are recognizing that they actually are quite useful promotion and distribution platforms. We've pointed to some in the past, but the latest is a label called Honor Roll Music, which is promoting one of its popular acts by buying ads on isoHunt, the popular BitTorrent site. The ad links to a torrent file so people can easily download the music of the band, Awesome New Republic. Of course, if the major record labels had their way, these creative promotion techniques wouldn't be allowed. Sometimes when we talk about innovative business models, defenders of the old system say that those are fine, but there's no reason to change copyright or stop these lawsuits because those models still work. Yet, this shows how that's not true at all. If the entertainment industry successfully shuts down these sites, it precludes these types of models and promotions. Once again, we see how this is really all about stomping out innovation rather than any legal issue.

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So Much For MySpace Music Revolutionizing The Business

from the it's-what-now? dept

Last year, we found it amusing that some in the press were claiming that MySpace Music was going to be "the most significant rollout of a digital-music service since Apple's iTunes." As we noted at the time, the whole concept behind MySpace Music seemed destined to fail, because no one seemed willing to admit that they had to compete with piracy. So rather than design a better product, they made yet another totally lame "official" online music service. And, like pretty much every other such service, users have almost entirely ignored it. Even the folks running MySpace Music are now admitting that the product sucks:

"It was plumbing and a playlist. But it wasn't overly social, it wasn't deep enough, and we didn't really empower the users to do what they wanted to do."

That's from Courtney Holt -- the guy who's now in charge, but who wasn't hired until after the launch. But, of course, the company has already blown the ability to get a lot of attention with a big launch. It totally overplayed that hand (though, many mainstream reporters bought into the hype totally). While Holt has plans for a total redo of the service, it's going to become increasingly difficult to dig themselves out of the ditch from being "the most significant rollout of digital-music service" that almost no one cared about.

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Perhaps The Major Record Labels Will Discover Twitter In 2015

from the a-bit-slow-on-the-uptake dept

Wired's Epicenter blog notes that a division of EMI has announced the first major record label blog. While it does appear to be true that this is the first such blog, the very fact that it's only happening now is somewhat stunning. What's even more amazing, really, is that EMI is promoting the fact that they're so far behind the times. Yes, they beat the other three major record labels, but just starting to blog now isn't exactly something to hype up. In fact, prior to this, I'd never even thought about the fact that the labels had no blogs -- but in calling that fact out, it simply reminds everyone how the major record labels are so far behind in embracing any type of modern technology. It's sort of like a horse and buggy manufacturer putting out a press release that it had installed telephones in its office decades after such things were common.

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Indie Label That Gets It: Sell Things People Want, Not Just What They Hear

from the creative-destruction dept

We've been talking a lot about various musicians that seem to have adapted to the changing marketplace, and have adjusted their business models in ways that work well, but it's good to point out the record labels that have done the same as well. There's a myth out there that folks like us hate the record labels and want them to go away. That's not true at all. We think there's a great place for the record labels: to be the business arm of the musicians, to let the musicians focus on the music. But, those labels need to learn to embrace the marketplace as well. We've certainly seen a few who seem to have figured it out, such as Terry McBride's Nettwerk, Martin Thornkvist's Songs I Wish I Had Written, JY Park's JYP Entertainment (in that same link), Open Your Eyes Records and a few others as well.

Bruce Houghton, over at Hypebot, now has a great interview with the indie label Asthmatic Kitty, where they explain "what is working" today, and it hits on a bunch of the points we often highlight around here:

I operate under the conviction that people buy records because they want to own them, not because they want to hear them. It is too easy these days to hear a record without having to buy it. I don't resent that fact, rather I feel we at Asthmatic Kitty embrace it through streaming albums and offering several free mp3s (even whole free albums). And why do they want to own it? They want it to illustrate to others their taste and identify who they are as a person. I also believe they want to be part of something bigger than themselves, they want to belong.

Our job is no longer to sell folks things they want to hear. They want an experience and to identify themselves as part of a community. Ownership then becomes a way of them supporting your community through investing in that community. Fostering that in an honest, transparent and "non-gross" way takes a combination of gracefulness, creativity and not taking oneself too seriously, while still taking art and music seriously.

And meanwhile, we still have the major record labels whining about how there are no business models because of "piracy"?

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Another Reason For Record Labels' Interest In A Music Tax: To Screw Apple

from the don't-think-it's-not-in-their-minds... dept

Despite early resistance, in the past few years, the record labels have warmed to the idea of a "music tax" put on ISPs. There are numerous reasons why this is a terrible idea, but you can bet there's one big reason why the record labels love it that they won't talk about: it would (they think, incorrectly) harm Apple. The recording industry has been amazingly jealous of Apple's success over the past few years -- even though its own demands for DRM caused much of the problem. It locked Apple in as the dominant provider and gave it tremendous market leverage -- such that no big record label risks rocking the boat and getting thrown out of iTunes.

And, despite the recent agreement to dump DRM and allow some form of variable pricing, the NY Times notes that the big record labels still have a strong hatred for Apple. While the article doesn't discuss it at all, you can bet that a big part of the desire to come up with a music tax/collective license/whatever they want to call it these days to make it sound palatable is that it will harm the iTunes lock on the market. That might be true, but the record labels may find it's more difficult to get rid of Apple than they believe. Apple's real profits are in the iPod, not the music -- so if they can suddenly offer music for "free" via iTunes as well, that would likely help sell more iPods, which would actually increase the use of iTunes as the dominant interface for interacting with the iPod.

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Record Labels Kill Off 'Legal P2P' Before It Even Gets A Chance

from the another-shot-in-the-foot dept

One of the big discussion points at MidemNet, this year, was the idea that ISPs might start offering "legalized" file sharing offerings, where for a certain fee, you would be able to file share without worry of a lawsuit. Depending how this is implemented it could be quite problematic, but structured in a voluntary way, it would at least be an interesting experiment to watch. And, in fact, at MidemNet, folks like Feargal Sharkey suggested that it would only be a matter of weeks until we heard about such offerings in the UK. That may not be the case. The Register is reporting that UK broadband provider Virgin has killed off plans for just such a service that it was just about set to announce... due to ridiculous demands from at least two of the record labels involved. Despite the fact that the plan was to create a "legal" P2P offering that would track file sharing using deep packet inspection (ick), Sony Music and Universal Music supposedly demanded that Virgin agree to block file uploads and downloads from users' PCs.

That really doesn't make much sense -- as the whole point of P2P (legal or not) is that it involves people uploading and downloading from their computers. Still, this also explains part of why Virgin was so willing to jump on the recording industry's bandwagon for sending warning notices to customers and threatening to kick them offline. It was apparently step one in a negotiation to see about working out a deal for a "legalized" P2P solution. While I still don't believe such a solution is the best way to do things, it at least seems like a step in a more reasonable direction... so, of course, the big record labels were quick to kill it off.

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A Record Label That Embraces BitTorrent

from the good-for-them dept

While the major record labels still insist that BitTorrent and any sort of file sharing is evil and needs to be wiped out, it's great to see some indie record labels fully embracing how BitTorrent is actually a much cheaper and much more efficient distribution and marketing tool. Take, for example, Open Your Eyes Records, who not only embraces BitTorrent, but has now teamed up with one BitTorrent tracker, What.cd, to distribute all new tracks that way. Even though for many readers here this doesn't need to be repeated, this is (once again) more evidence that BitTorrent and BitTorrent trackers have plenty of legitimate purposes -- and the efforts to shut them down completely are quite short sighted.

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Is MySpace Music For Big Record Labels Only?

from the that-would-be-a-mistake... dept

We've already questioned the strategy for MySpace Music, and now even more concerns are popping up, as various independent labels claim they're being blocked out of the offering altogether. While it's true that most of the focus for MySpace Music has been with the majors, MySpace's success in the music world came out of its usefulness for independent or unsigned acts, who used the site to build up a community. To ignore that side of the market, or even to treat indies as second-class citizens in the endeavor seems like a huge mistake.

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Bands Avoiding iTunes For The Wrong Reasons

from the it's-not-going-to-make-people-buy-the-album dept

This is hardly a new phenomenon, but the Wall Street Journal is noting that some bands and some record labels are avoiding putting music on iTunes (or in some cases, pulling music off iTunes) in an effort to force people to buy the full album, rather than just a few tracks. There are plenty of reasons to dislike iTunes, but it seems hard to believe that this does anything positive for the bands in question. The article quotes Kid Rock's manager, who compares apples to oranges, by pointing out that people who are on iTunes sell more single songs than albums, but that's rather meaningless in comparing to an artist (like Kid Rock) who's not on iTunes at all. Not putting your music where people want it is only going to piss them off.

Hell, even record industry execs are getting frustrated by bands not having their singles anywhere that can be downloaded legally. And, yet, the sister record label to the one that employs the annoyed exec above is experimenting with an even more annoying proposition: pulling popular songs from iTunes after they've become popular, to see if it gets more people to buy the CD.

Honestly, is it really that hard to understand the concept of providing the customer what they want in a convenient manner?

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Don't Overreact To EMI Losing The Rolling Stones

from the weeding-out-the-old dept

The news that The Rolling Stones have ditched EMI for rival Universal Music is being painted in the press as the latest blow to EMI since it was taken over by a private equity firm. It's already lost Radiohead and Paul McCartney, and other artists like Coldplay have complained about the direction that EMI is moving in. However, before people bury EMI, perhaps it's worth looking at the upside for EMI here. The Rolling Stones, from the sound of things, were looking for a hugely lucrative deal, knowing that they were a premium brand. But EMI is in the process of trying to reinvent itself for the next generation of music. Getting tied into a hugely expensive deal with a legacy band would make that much more difficult. Yes, losing an old school big name band is a blow to the EMI brand, but the next generation may be a lot more interested in being represented by a label that actually understands the market, rather than one that is actively trying to fight where the industry is heading.

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EMI Hires Another Techie Into Senior Management; Co-Founder Of Second Life Joins The Team

from the stepping-in-the-right-direction dept

Normally, I tend to think of big media companies hiring a "Chief Digital Officer" as being severely misguided. That's because thinking "digitally" isn't a separate job function or a separate department these days. It should permeate across the business -- and assigning it to one exec pretty much guarantees that the rest of the company now thinks that it isn't their problem to think about how new technologies impact their business strategy. However, record label EMI is making some news lately, and has now hired Second Life co-founder Cory Ondrejka to be its VP of digital strategy. Combined with the fact that EMI also recently hired Google's former CIO Doug Merrill, it makes you wonder if the company really is taking the importance of technology seriously in establishing its business strategy. It remains to be seen if the company really is taking the time to understand these concepts across its business, or if it's pigeonholing "the tech guys" into limited roles. No matter what, it's worth watching to see if a major record label really can evolve and adapt to the changing market.

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When Even Pop Boy Bands Don't Need Record Labels...

from the ...-the-record-labels-are-in-trouble dept

We've been pointing out why record labels should still have a place in the modern music landscape, if they're willing to change their business models to meet with the new marketplace reality. However, if they keep doing stupid stuff, they're not going to get very far. Reader SteveD writes in to point out that, McFly, a popular British pop boy band -- the type of band that you would think is one of the few that still fits into the sweet spot of the major label marketing machine -- has ditched their label and is considering "pulling a Radiohead" in letting their fans set the price. I'd encourage them to pull a Reznor instead, as the Nine Inch Nails experiments are much more well thought out in terms of the business model.

Either way, the key sentence in the article explaining why the band split from the label:

The band felt that their old label wasn't embracing those changes and are keen to experiment with new ways of getting music to fans. Tom said: "There's not a set way of doing things anymore. Now, especially with stuff like downloads, or giving music away, there's so many options for what you can do."

If that's not an indication of a record label shooting itself in the foot, it's hard to see what is. This is the type of band that could use a big label's help in distributing the music in the most effective manner, and the label is refusing to help. No wonder the record labels are struggling. In this case, by the way, the label was Island, a subsidiary of Universal Music, which has been one of the most proudly thick headed labels in trying to understand the new digital landscape.

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How A Big Record Label Could Make Itself Useful: Act As The Filter

from the bring-the-audience dept

For a while now, we've been pointing out why there is still a space in the new music landscape for record labels -- but it's just that they need to adapt in significant ways. Last week, we wrote about some of what Warner Brothers Records was working on (even as its parent company seems to be working overtime to kill any goodwill). Now, Ian Rogers, the former GM of Yahoo Music who has written provocative posts about the industry before, has written an open letter to EMI's boss, Guy Hands, with some suggestions on how EMI can save itself as a record label.

Rogers starts out by making the key point: in the past musicians went to record labels to get money, distribution and marketing. However, these days, money is less important thanks to cheaper and cheaper recording tools, distribution help is less important thanks to the internet and even marketing help is less important (again thanks to the internet). Rogers suggests that the first two are basically meaningless to artists now, so all that really matters is if a label can help them market themselves better than they could on their own. And, on that front, he has a simple suggestion: affinity labels. Put together various mini-labels under which similar types of bands are associated. And, include on those labels a few of the "big name" EMI artists. Thus, for all the fans who are fans of some huge artist, by creating these affinity labels, it will help drive the fans of the big name artist to those other bands as well, knowing that they all have a similar sound or musical philosophy.

What Rogers is really pointing out is that thanks to the vast explosion of music available these days, bands don't need help getting "out there" any more -- they need help standing out from the clutter. Fans, on the other side, need a better filter to figure out what's worth listening to, and that's something that an affinity label could stand for. It plays the role of the filter, and allows the major label (like EMI) to leverage its connections with big name bands, to drive additional interest to lesser known bands by associating the names on the same affinity label. It's an idea that makes plenty of sense (in fact, there are a few small independent labels that already live via this concept -- within certain niches, you can find people who will buy nearly every album released on a specific label).

So would EMI go for it? Lucky for Ian (and for EMI), Guy Hands isn't a long-term music industry guy stuck to the old ways. He's a private equity guy who seems to recognize that the industry needs to change -- which has meant pushing back against the RIAA and the IFPI and even hiring a Google guy to run the digital strategy at EMI (though, hopefully, he won't be pigeonholed as "the digital guy").

While I agree with almost all of Ian's post -- there is one thing that I disagree with. I think that a label can certainly help beyond just the marketing -- and that's in managing some of the new business models that are coming out these days. We keep hearing people complain that musicians don't want to manage these new business models, and a smart music label could (and should) be helping on that front as well.

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Time For Warner Music To Fire The Lawyers And Promote Ethan Kaplan

from the just-a-suggestion dept

I'm at the Mesh Conference in Toronto this week, where I'm scheduled to give a talk on the economics of abundance tomorrow. The keynote today was an interview of Ethan Kaplan by Mathew Ingram. Kaplan, as many of you probably know, is the VP of technology for Warner Bros. Music. He's a smart guy, whose blog has been worth following for years. If you've followed his writings, it's been clear for quite some time that he deeply understands what's going on in the music industry, and how that relates to the changing marketplace. It seems so rare to hear a recording industry exec say things that make sense and that don't seem anti-consumer, that it really stands out when one does so. Specifically, he talked a lot about how a modern record label really should be focused on how to help use modern technologies to better let musicians connect with fans in useful and meaningful ways. And a record label has the resources and (should have) the skills to do that while allowing the musicians to focus on the music. As he noted, it really is all about cultivating the community of fans and helping that community come together and connect with both each other and the band. From that, multiple (lucrative) business models easily follow.

This fits in with a variety of themes we've touched on, from the role that is clearly still available for a smart record label, to the importance of concept of better connecting with your true fans. Kaplan seems to be very focused on positioning Warner Music to be able to enable that for every band the company works with. That's fantastic and very exciting (though, it's years later than it should have happened).

Unfortunately, though, it appears (at least in practice) that Warner Music focuses on using Kaplan's expertise solely on the technology side, rather than on the business side. Warner has been one of the more aggressive record labels in suing fans and suing any service out there that does help fans better connect with each other and the musicians. Warner still seems to be of the mindset that it absolutely needs to get a cut from any such service, even if allowing the service to promote its artists would help everyone long term. Warner is also run by Edgar Bronfman Jr., who (when he was head of Universal Music) kicked off the industry's plan to sue everyone, though he's since rewritten history to say that the industry went into a mistaken "inadvertent war" with consumers (it wasn't inadvertent at all -- Bronfman himself talked specifically about "armies of lawyers").

If Warner Music really wanted to shift its position, it should rein in its lawyers, stop worrying about "protecting" everything and focus on adding value and enabling new business models to flow from its stable of top musicians. Give Kaplan more control over the business side as well and see what radical new ideas come forth. Unfortunately, that seems unlikely to happen any time soon. It reminds me, tragically, of the story we wrote a few years back about MTV. The company had been lauded in the press for hiring a "chief digital officer," as if that showed that the company "got" new media. The problem is that thinking digitally isn't a separate job function. It needs to pervade the entire company. It needs to inform the thinking of everyone in the entertainment industry these days. And, indeed, just a few months after the press talked up the "CDO" of MTV, the guy was out of the job. It's great that Kaplan is inside Warner Music, helping to inform their overall strategy -- but he shouldn't be just a "tech geek" (even at the VP level). The digital marketplace is the marketplace for music these days, and Kaplan's insights into that overall space shouldn't be pigeonholed as "the tech stuff." It should be part of any music label's overall business strategy.

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Wal-Mart Ditches DRM... And Lots Of Major Label Music With It

from the so-long,-goodbye dept

Over the last few months, the meme has taken hold that the big record labels had finally come to terms with the fact that DRM didn't help and only frustrated users -- and was finally okay with getting rid of it entirely. That sounds good, but it appears that the labels are still having trouble letting go. Wal-Mart's online download store has finally abandoned selling any DRM'd tracks, but with it, it's lost almost all music from major labels like Sony/BMG and Warner Music. Considering that some really major acts appear on both labels, this seems like a rather huge limitation of the Wal-Mart online store which should be trying to present a rather strong front against iTunes. It's unclear who's at fault here. Wired blames Wal-Mart for launching the DRM-free store before it was really ready, but there's an equal chance that the fault is on the part of the record labels who still don't seem completely comfortable with finally killing off DRM.

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