In Going Free, London Evening Standard Doubles Circulation While Slashing Costs

from the but-free-doesn't-work!! dept

In October, we wrote about how, just as Rupert Murdoch and crew look to put up paywalls for online content, the operators of the London Evening Standard were going in the other direction and making their physical paper free. So, how's that been working out? mowgs alerts us to the news that the paper has doubled its circulation in just a month. Not bad. But what's more interesting is that it's also slashed its distribution costs massively. It used to cost about 30p, and now it's just 4p per paper.

This actually brings up a point that's rarely talked about in the free vs. paid debate. Charging can be expensive. It takes quite a bit of effort to charge, to take money, to manage the money, to set up the accounting and bureaucracy for managing each transaction. And, even worse, if you're working with third party distributors, like news agents, then you have to handle financial relationships with them as well. Getting rid of the per paper price changes the economics not just on the revenue side, but on the cost side as well -- something that's rarely discussed at all. And, yes, this impacts online news orgs too. Putting up a paywall is going to prove a lot more expensive than most people think on the cost side.

26 Comments | Leave a Comment..

Musician Making A Living With Forty Committed True Fans

from the imagine-what-he-can-do-with-1,000 dept

A year and a half ago, we wrote about Kevin Kelly's theory that to be a success as a content creator, you just need 1,000 "true fans." These were the ultra-committed fans. The fans who would follow you to the end of the world and purchase whatever you came out with. And -- more importantly -- they'll help bring more fans into the fold. The point isn't that these are your only fans, but the most committed. At the time, I wasn't sure if the 1,000 number was really accurate, but certainly agreed with the idea of more closely connecting with your biggest fans. My guess was that 1,000 wasn't really enough. But, perhaps I was off in the wrong direction? Ariel Hyatt has been blogging about the concept of 1,000 True Fans and has an interview with musician Matthew Ebel, an up-and-coming musician who makes a living from his music, and breaks down the details -- including pointing out that he makes 26.3% of his net income from just 40 hard-core fans.

Music Sales:

• CD Sales - 4.1%
• Digital Music Sales - 13.9%
• Subscription Site - 36.9%
• Live Shows - 18.1%
• Cover Gig Fees/Cover - 9.8%
• Original Gig Fees/Cover - 6.2%
• Tips (Including UStream) - 2.1%
• Works For Hire & Voiceovers - 8.2%
• Affiliate Sales (typically for my own albums/tracks) - 1.1%
• Licensing - 13.2%
• Independent Film - 6.6%
• Internet - 6.6%
• Web Design - 4.6% (I include this because I'm doing a website for a friend... it's something I choose to do, but it is part of my income this year.)

Now, first thing I'll point out is that I'm still not sure the numbers fully add up. Matthew doesn't give a total amount earned, but in a comment says:

Suffice it to say that I'm renting a house in Wellesley, MA with a couple of room mates... I'm not starving, I can still eat sushi from time to time, and my car (neither a Pinto nor a Bentley) is paid off.

So, he's making a living wage, but not raking it in, which is to be expected (and is certainly a hell of a lot better than many musicians). Now, of course, the other number that stands out above is the "subscription site" with the single largest percentage of his revenue. That would be his MatthewEbel.net site, where he offers a $5/month subscription offering. It actually looks quite a lot like the music business model I suggested back in 2003, so it's nice to see someone making it work directly. Basically, it's people paying for access to Matthew (he even admits that in the description, saying it's like a permanent "backstage pass"). While subscribers will get regular access to new music as soon as he creates it, the selling point is special invitations and access to the artist.

And, of course, Ebel seems to certainly recognize the CwF (connect with fans) part that has to go along with this RtB (reason to buy). In the interview, he discusses the importance of really connecting with those fans. First, he notes that one of the nice side effects of his "subscription" offering is that he promises fans two new songs and one live concert recording every month, and that keeps him top of mind:

Little did I realize that new releases every two weeks would be better than any good album reviews or press coverage. Giving my fans something new to talk about every two weeks meant exactly that: they talk about me every two weeks. They're not buying an album, raving about it, and losing interest after a few months, they're constantly spreading my name to their Twitter followers, coworkers, pets, etc. Regular delivery of quality material is damn near my one-step panacea for the whole industry.

And, of course, he uses social media to connect as much as possible:

Good music is barely enough to get fans to hand out 99¢ anymore; they have to be emotionally invested in the artist if that artist wants their loyalty. Don't get me wrong, there can still be a "fourth wall" during a live concert or video, but real, meaningful connection with the fans is what keeps me in their heads after the show's over (heck, even your "character" can interact with fans in-character). I chat with my fans via Twitter, Facebook, matthewebel.com and matthewebel.net, and as many other channels as possible. The more I interact with them between performances, the more I stay fresh in their minds and the more inspiration I draw from them.

Yet another musicians showing how CwF+RtB works. Now, I'm sure some will complain that this isn't a "real" success because he's not selling out stadiums or something (of course, those are the same people who would say that those selling out stadiums don't count because they can afford to do crazy experiments). But given how many musicians we're hearing about these days making exactly these types of things work to the point where they can make a living doing it, you have to begin to realize that something's working.

73 Comments | Leave a Comment..

And Here Come Another Round Of Yawn-Inducing Music Subscription Services

from the too-little-control dept

Well here we go again. There have been numerous attempts at music subscription services, and none have really done all that well. While some people do love their Rhapsody or Napster accounts -- neither has been a runaway success, and both struggle to get much attention these days. Yet, so many entrepreneurs believe it's a holy grail. So, here we go again. With plenty of people waiting for Spotify to enter the US market, the NY Times reports on two other new entrants; one from Mog -- who seems to have blasted press releases to everyone, with the general reaction being a big yawn and one from the founders of Kazaa and Skype, called Rdio. Neither sounds particularly compelling.

The problem with all of these subscription services is that they inherently need to have limits. You have to keep paying, you can't really share music with others, you may be able to take some of your music on the go, but it's usually a convoluted process. And that's a problem. Because people understand how mp3s work -- and that's without restrictions. Trying to get people to pay for a music experience with restrictions, that offers less than what they know can be done, is a recipe for failure. It's time to stop thinking of trying to "sell music" and start realizing how you can use music to sell something better.

41 Comments | Leave a Comment..

DRM Doesn't Enable Business Models; Blind Fear Disables Business Models

from the get-over-it dept

A bunch of folks have asked if I had any comment on analyst Michael Gartenberg post over at Engadget claiming that DRM has been demonized too far, and for all the "bad" things about DRM, most people really don't mind it, and we should be happy that it "enables new business models." I've discussed this before, but not in a while, so it seems worth revisiting.

First, it's a lie that DRM "enables new business models." Gartenberg doesn't realize it, but he admits it in his post, when he suggests that DRM made all-you-can-eat subscription models possible, while immediately countering that point by admitting the real factors are elsewhere:

Take subscription services for example. Sure, I'd love a service that would allow me to download unlimited content in high bitrate MP3 format for a reasonable fee every month. Except economics and greed will never let that happen.

Notice what he says here. The DRM isn't what enabled the business model. It's fear of how people will use such a service that does. It's fear that people will actually use what's been given to them -- leading to the claim of "economics and greed" stopping such a service from ever coming about. But, that makes no sense. People already have access to pretty much every song ever recorded with no DRM at all. Claiming that they need DRM to enable such a service makes no sense. It's already there -- just not legally. So what does the DRM stop in such a service? Absolutely nothing. If the fear is that someone takes a song and shares it online... too late. It's already happened. The only thing that DRM does in that situation is put up a restriction on a legitimate, paying customer. That makes no economic sense at all.

And that's my real problem with DRM. It cannot enable a new business model economically. That's because it's only purpose is to limit behavior. There are no business models that are based solely on limiting behavior. It may be the case that some companies may be too afraid to implement a business model without this faux "protection," but that's entirely different than saying DRM enables the business model. DRM takes an economic resource and artificially restricts it. It takes away options, it does not enable them. DRM hasn't been "demonized." It's a pointless solution that prevents no unauthorized sharing and only serves to hinder the activities of legitimate customers.

50 Comments | Leave a Comment..

Homeland Security Cuts Newspaper/Magazine Subscriptions; Says To Use The Web

from the seems-smart dept

BullJustin writes in to alert us to the news that the Department of Homeland Security is cutting subscriptions to paper newspapers and magazines, cutting $47,160 from the budget over the next two years. Of course, for Homeland Security that's a tiny drop in the bucket (hell, it's not even that big). But, the writeup (somewhat tongue in cheek) suggests that this is unfair to newspapers who are "hurting enough financially" already. Of course, on the flip side, I'd think most people agree that not wasting taxpayer money on content that people are probably reading for free online anyway, is a good thing...

12 Comments | Leave a Comment..

Jack White The Latest Musician To Experiment With Smart New Business Models

from the another-exception? dept

Every time we discuss musicians or smaller labels that seem to be figuring out how to embrace modern business models by connecting with fans and giving them a reason to buy, we're told that the model doesn't really work beyond a few small "exceptions." Yet, pretty much every day we keep getting sent more and more examples of these "exceptions." At some point we have to wonder what it will take for the disbelievers to recognize that it's not the exception at all. It is the rule.

The latest comes to us care of GrindEFX, who notes that Jack White (of The White Strpies and the Raconteurs) and his own label, Third Man Records, is offering a nice two tiered subscription service, where fans get extra benefits for being members. To be honest, this sounds an awful lot like the business model that we discussed way back in 2003 (and were told it would never work). It's interesting to see this done at the "label" level, where you get benefits from multiple bands on the label. That could definitely work for a label with a lot of bands that have similar sounds that fans are likely to enjoy across the board.

Anyway, we await the explanations in the comments for why this, too, is an exception and why this business model will never work for others.

14 Comments | Leave a Comment..

Sirius XM Passing Music Royalty Rates On To Subscribers, Raising Lots Of Questions

from the disparity dept

Beginning at the end of July, Sirius XM satellite radio subscribers will see an extra charge of about $2 per month on their bill, as the company will begin passing along the music royalty rates it must pay to subscribers. We've written a lot about music royalties and licenses, particularly about how they serve to stifle the very innovation the music industry needs to survive, in favor of upfront demands for cash -- money which seems to have a hard time making its way to artists. This news from Sirius XM not only is likely to raise the hackles of its subscribers, but also raises some questions about the royalty system, and how it affects consumers.

First, the royalty rate for Sirius XM was set by the CRB at 6.5% of gross revenues for 2009, increasing by half a percent per year over the following three years. So why, then, is Sirius XM charging a $1.98 fee -- or 15.2% -- on its $12.95 monthly subscription fee? That seems like much more than "passing along" the royalty rate. As part of the governmental approval for the merger of Sirius and XM, certain conditions were placed on the company, including a three-year price freeze. The company has gotten around this before by separating out services, like online listening, that used to be included in the general subscription fee, then requiring an additional charge for them. Now it looks to be getting a boost by "recovering" a significantly higher percentage of its subscription fees than it must pay out in royalties. The FCC's merger conditions allow the company to pass the royalty fee on to consumers -- but why would they let the company pass on a fee almost three times as high as the actual royalty rate? Mobile phone companies have used similar "fees" to pad their revenues for some time, and the FCC apparently doesn't mind that, either.

Second, and perhaps more importantly, this situation highlights the disparity in how the music royalty rates are applied. Terrestrial radio broadcasters, unlike satellite broadcasters, don't have to pay musicians (or, rather, their labels) royalties. Satellite radio was presumably, an easier target for the likes of the RIAA, given its relative lack of lobbying strength, so the industry cartel defined it as an "interactive" service -- industry-speak for "pay us more money." It's hard to see how satellite radio is really any different than terrestrial radio, except for a different business model, albeit one with the same end, so it's also hard to understand why the two should be treated differently from a royalty perspective. The RIAA and its cronies have been working to change this -- by trying to force terrestrial broadcasters to pay up as well. They call radio "a kind of piracy", again ignoring the fact that radio, whether it's satellite or terrestrial, promotes their products. The National Association of Broadcasters, which represents traditional broadcasters, likely doesn't really mind the fact that Sirius XM has to pay royalties, given its well-documented disdain for the company. But by standing idly by while Sirius XM gets hit with the royalty mandate, it weakens its own argument against its members having to pay royalties. The equitable solution here isn't really to force terrestrial broadcasters to pay up, to level the proverbial playing field. It's to eliminate the royalties that are hamstringing new services and promoting music. Sooner or later, the industry will figure this out -- but at this point, it looks like that realization will come only after it's run itself into the ground.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

47 Comments | Leave a Comment..

Did No One At eMusic Think About PR Impact Of Raising Prices At The Same Time Sony Signed?

from the braindead-PR dept

eMusic is a rather successful indie music e-commerce player (reports put it at the 2nd largest music store), that has focused on charging people a subscription that lets them download a limited number of songs each month. It also supported DRM-free MP3 files long before others finally came around. I have many friends who love the convenience that eMusic provides (I tried it, and didn't find enough of the music I liked to stick around) and are willing to pay for the convenience alone. However, it's almost hard to believe that no one on the PR/marketing side of eMusic failed to predict what would happen this week when the company made two announcements: that it had signed its first major label, Sony, and that it was raising prices. The reaction was quick and almost universally negative.

The complaints hit on a number of points, but the two big ones (obviously) are the price increase and the fact that many people signed up with eMusic because of its indie music focus, and related to that: their dislike of major record labels. What's stunning is that eMusic couldn't foresee what a negative reaction this would bring. The company has raised prices in the past, which also created some level of anger -- but people had to know that announcing both the Sony deal and the price raise at the same time, was going to be a PR nightmare. What I can't understand is why they didn't separate out the announcements. They may have felt it was a "pulling the bandaid off quickly" sort of moment, where they could take flak for both announcements at the same time, but they didn't seem to consider the fact that the two issues are completely linked in users' minds. It's not "eMusic had to raise prices" and "eMusic added Sony music." It's become: "eMusic had to raise prices to get Sony Music's catalog into the system."

That makes both eMusic and Sony Music look dreadful -- because here's a major record label, whose music many eMusic subscribers didn't want in the first place, now being seen as having made life worse (and more expensive) for everyone. By connecting the two issues, it seems like both eMusic and Sony Music are getting hit a lot harder than if the announcements had been separated.

63 Comments | Leave a Comment..

Newspapers Betting On The Past May Find Themselves In Trouble In The Future

from the that's-how-it-works dept

One of the "examples" held up by newspaper folks, who think that charging online is the answer, is the "success" of the Arkansas Democrat-Gazette. However, Jay Rosen points us to Mark Potts excellent analysis of what's happening at the Democrat-Gazette and the conclusion is that the "success" is a lot more questionable than many who highlight it might believe.

First, the online subscription process hasn't really been a success in terms of getting online subscriptions. They've only signed up 3,400 subscribers in six whole years -- bringing in a whopping $200,000 in revenue. That's not paying for very much. What the subscription process has done, is slowed down the number of folks ditching their paper subscriptions. Of course, that still might get some newspaper folks excited -- but, again, Potts pours some cold water on that, by suggesting some reasons why this might be unique, including the fact that the population is older, there's little competition (but it's rapidly increasing) and the paper already held a really strong market position. But the key point is that the paper is betting on print -- not the web. The business model isn't driving significant new web revenue, it's trying to cling to the past as long as possible. That's a really dangerous position to be in if someone else in your market figures out how to make the online revenue side of things work out -- because it really isn't that easy to turn on a dime.

3 Comments | Leave a Comment..

Investors Back Out Of InDenver Times After They Can Barely Get 3,000 People To Subscribe

from the people-don't-pay-for-news dept

We pointed out last week that it was no surprise that the new InDenver Times operation, that sprang forth from reporters from the defunct Rocky Mountain News, was unable to meet its target of 50,000 subscribers before launching. However, it turns out that they only got around 3,000 subscribers, or around 6% of their goal. Not surprisingly, the folks who originally wanted to finance the operation have now backed out, over disagreements over how many people to employ. As some are noting, the reporters seem to think that you can just recreate a fully staffed newsroom from scratch, rather than building it up organically like a startup. Sure, there's obviously a feeling of bringing along a team from the old Rocky, but the idea is to get it right where that paper failed as a business -- and you don't do that by setting up the same bad cost structure (or... by trying to charge for subscriptions online).

9 Comments | Leave a Comment..

Never Be Surprised At What People Will Pay For

from the up-next:-chicken-of-the-month-club dept

The subscription model is a tried-and-true stalwart of the business world, whether it's applied to something like magazines, Netflix, cable TV channels, or bacon. Now those of us in the US can join our European brethren in adding black socks to the list of subscription-delivered goods with the stateside launch of Blacksocks.com. Blacksocks will send you 3 pairs of black socks at intervals you determine: for instance, if you want 3 pair every 4 months, it'll cost you $89 for a year's "sockscription." Laugh if you will, but the company claims to have accumulated 40,000 subscribers since it launched in Europe 10 years ago. Who says innovation is dead?

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

22 Comments | Leave a Comment..

Ruckus Music Service -- Which Was Supposed To Save The Industry -- Now Dead

from the how-about-that dept

Remember Ruckus? That was the attempt by a former recording industry guy and a former Napster employee to create an online music service that colleges would pay for, but which students could use for "free" (free in the sense that students wouldn't be paying for it directly). When we pointed out how lame the service was, we actually got angry emails from some folks who insisted that it really had revolutionized the campuses who had bought into it. In fact, the recording industry used this argument in its big push to force universities to sign up for Ruckus.

Apparently the revolution was short-lived -- and without government help to force colleges to subscribe, Ruckus has shut down. For some of those who got their music from Ruckus, the DRM on the tracks means that the music will be unplayable. Some tracks are still playable, but will apparently die once they hit their "renew date" and can't find a DRM server to renew. Yet another recording industry backed solution to the "piracy problem" that wasn't. At what point does the industry finally realize that piracy isn't the problem at all?

20 Comments | Leave a Comment..

Dumb Criminal Series: When Newspaper Subscriptions Jump From 65 To 2,781 Someone May Get Suspicious

from the no-one-will-notice dept

Romenesko points us to a good one for the "dumb criminal" series. A NY Times delivery carrier has been accused of defrauding the paper of over $300k by sending in fake newspaper subscriptions with the "bill me later" option checked. Apparently, he got paid based on the number of papers delivered, so he took the quick route to increasing his income. In a matter of months, his daily subscriptions jumped from 65 to 2,781 and his Sunday subscriptions went from 103 to 2,818 (seems that nearly everyone of the fake subbers signed up for Sunday deliver as well!).

It makes you wonder how he thought he could get away with such a scam, though his "defense" gives some suggestion. He says he had someone else doing the deliveries for him, and says it must be that guy's fault. Though, as the newspaper noted, when the NY Times grew suspicious and informed him that they were canceling thousands of subscriptions, he "did not seem upset and said it would not affect his workload." Oh yes, also there was the fact that the guy's recycling bins were filled to the brim with copies of the newspaper -- often still wrapped in their delivery bundles.

16 Comments | Leave a Comment..

Warner Music Latest To Jump On The Music Tax Bandwagon

from the please,-gov't,-save-our-business-model! dept

Remember earlier this month how there was a story about a guy going around pitching a required tax on ISPs for music sharing as a good idea? Well the main guy who was pushing that proposal has now been hired by Warner Brothers to make it a reality. While the idea is gaining some momentum, it doesn't change the extremely questionable nature of this proposal. It's a proposal based on the laziness of industry execs, who want others to go out and collect money for them, which they'll then get to "distribute" (by which we mean not actually distribute) to musicians.

The fact is that there is simply no reason for this proposal to go ahead. It treats everyone as a criminal first. In the article, one supporter of the plan even admits this:

"At this point, 96 percent of the population is guilty of some sort of infringement, whether they're streaming or downloading or sharing. What we have here is the widespread use of technology that declares all of the population to be illegal."

While that 96% number is made up and pure bunk, it's a bizarre world in which someone claims that nearly everyone is breaking the law and therefore we should punish everyone, rather than get rid of the law. Considering that more and more musicians are showing that there are perfectly good business models that don't require treating everyone as a criminal, can someone explain why this "music tax" should be put in place? And can they then explain what will happen when every other industry wants its own "you're a criminal" tax included on internet connectivity?

36 Comments | Leave a Comment..

Steve Jobs Back To Being A Fan Of DRM In iPhone 'Bundle'?

from the let's-pretend-we're-bundling-music... dept

This has been rumored for some time, but the Financial Times is reporting that Apple is trying to negotiate with the record labels for a new offering that would provide access to music as a bundle with an iPhone. The idea is that you could buy the iPhone and get "unlimited" access to music, either in a lump sum or with a subscription fee. Of course, there are some rather important caveats. While this would get a lot of attention, you only get access to the music for the lifetime of the device or subscription (if you didn't pay a lump sum). While there's a small concession that you'd get to keep 40 to 50 songs after the device died or the subscription ended, you'd lose the rest of the songs. In other words, despite Steve Jobs' supposed dislike for DRM, this music would be quite DRM'd. Limited subscription plans have been around for ages and they've never gone very far because of those limitations. People know better by now, and so should Steve Jobs.

21 Comments | Leave a Comment..

Yahoo Finally Dumps The Music Service It Never Really Liked

from the why-do-it-in-the-first-place dept

A few years back when Yahoo launched its music service, it was pretty clearly designed to fail. Yet, Yahoo kept it going for a while, despite the fact that the executives who ran the program clearly were not fans of the company's own offerings. Thus, it should come as no surprise that Yahoo has simply moved all of its subscribers over to RealNetworks' Rhapsody service, which is having its own problems adjusting to a changing music market place. One could hope that Yahoo's ditching of the music service is a sign that it's actually going to do something more interesting, but given this little merger the company may be involved in, it may be difficult to do very much that's unique or innovative.

13 Comments | Leave a Comment..

MPAA Explains Why It's Okay To Tie Federal Funds To Blocking File Sharing

from the because-we-say-so,-dammit dept

While Congress' new bill on education funding may not be as bad as some are making it out to be, it still seems quite questionable that Congress appears to be regulating the idea that universities need to do the kind of marketing and educational campaigns that the recording industry cannot. We've asked supporters of the bill to explain how it could possibly make sense to mandate such things, and the MPAA's top lawyer, Fritz Attaway, has given his answer, claiming that it's because the internet is "used primarily to allow college students to traffic in infringing content," while being subsidized by gov't funds. It would be nice if Attaway or someone else at the MPAA could actually back up the claim that the primary use of the internet by students is infringement. While I wouldn't doubt that it's a popular use, to say that it's the primary use is hard to believe -- unless you count things like visiting Facebook pages, using Google and sending emails as "infringement." At the same time, this doesn't seem to support the reasons for this bill. After all, many kids on college campuses own cars -- and I'd imagine that most of those students break the speed limit frequently enough. Yet, we don't see any bills being proposed in Congress that would prevent financial aid funding unless universities start handing out more speeding tickets and put in place plans to offer public transportation. So why should they do that for copyright infringement?

33 Comments | Leave a Comment..

Congress Moves Forward With Required University Subsidies To Napster, Ruckus

from the business-as-usual dept

Earlier this week, we wrote about how Congress had slipped a provision into the Higher Education Act that would require universities to put in place a plan to have published policies on unauthorized file sharing and to also "develop a plan" to offer "legal alternatives" such as Napster or Ruckus. Of course, some would point out that many file sharing systems, by themselves are legal. It's just that some people are using them for things that break the law. Really, what this bill represents is a gov't backed subsidy for Napster and Ruckus, forcing colleges to offer them even if their students don't want it. It's not clear, at all, why Congress should be in the business of demanding a particular type of music delivery system be offered on college campuses. The announcement of the bill resulted in plenty of attention, leading the House committee that was debating the Act to distribute a "fact sheet" that is anything but factual. It accused those criticizing the bill of being "supporters of intellectual property theft." That is not the case at all. In fact, it's rather insulting that Congress would automatically assume that anyone who questions why Congress is forcing universities to pay for commercial music distribution systems is a "supporter of intellectual property theft."

Of course, when the committee is calling anyone who opposes such a plan as being a supporter of theft, it's no surprise that they wouldn't take any of the criticisms seriously and moved forward with the bill without any changes to the controversial section. They also dismissed the claims that universities who don't sign up for Napster or Ruckus would lose financial aid funding, though, that's clearly what the bill allows to happen -- and you know that the RIAA and MPAA (and Napster and Ruckus, for that matter) will push to make it a viable threat.

Either way, it would be nice for Congressional supporters to answer this simple question: Why is it any part of Congress's business to mandate that universities sign up for a commercial music distribution service?

22 Comments | Leave a Comment..

Would Congress Withhold Financial Aid From Colleges That Don't Offer A Subscription To Napster?

from the slippery,-slippery-slopes dept

It looks like the media companies are making good on the strategy they floated in June (and seems to have been mulling since at least March). A relatively well-buried section of this year's amendment and extension of the Higher Education Act places new requirements on schools whose students receive federal student aid — requirements that oblige them to lend Hollywood and the record companies a helping hand in their fight against P2P piracy. Needless to say, this is ridiculous. As Carlo's post argues, there's no reason why schools ought to be conscripted into propping up a troubled industry's business model.

As you might expect, the copyfighters are incensed by the idea. Fortunately, it doesn't look like the bill (pdf) is quite as bad as they're making it out to be: though the idea may be detestable, its execution in this case is less-than-complete. An affected institution is only required to "make publicly available to their students and employees the policies and procedures related to the illegal downloading and distribution of copyrighted materials" and to "develop a plan for offering alternatives to illegal downloading or peer-to-peer distribution of intellectual property as well as a plan to explore technology-based deterrents to prevent such illegal activity" — and only to do so "to the extent practicable". It sure sounds like these provisions could be easily satisfied: posting regulations and drawing up a plan (but not necessarily implementing it) simply isn't that much of a regulatory burden. Is it a bad idea? Yes. Is it going to result in swarms of penniless scholars trudging, broken-hearted, away from the academy and toward a lifetime of menial toil? It seems unlikely.

Still, it would be a mistake to ignore the inappropriateness of the requirements, or the slipperiness of the slope we're presently on. This is, after all, an industry that's perfected the art of regulatory capture to such an extent that it could now be better described as regulatory taxidermy. If congress can be convinced to repeatedly hand our copyright system over to industry, there's little reason to doubt that it's willing to throw in the education system, too.

Tom Lee is an expert at the Insight Community. To get insight and analysis from Tom Lee and other experts on challenges your company faces, click here.

15 Comments | Leave a Comment..

Universal Music's Plan To Take On iTunes: Bring Back PressPlay And MusicNow!

from the wait,-that-sounds-familiar... dept

Business Week has the story that Universal Music's Doug Morris is planning to take on iTunes by bringing together the major record labels and having them set up their own music subscription service, and then having ISPs and mobile operators force customers to opt in. First of all, it should be pointed out that this same story broke a month ago about Universal Music's plans for a subscription service by the site Digital Music News. It just that this is from a more established publication. When the initial report came out a month ago, we detailed why it wouldn't work, and there's no indication that anything's changed. Doug Morris has shown repeatedly that he doesn't understand the economics at play, and is simply looking to squeeze as much money as possible in the short term, without any kind of long term strategy.

However, what's most amusing about this is that it looks like it's going to merely be an update of the last time the record labels tried and failed to do something similar. The big labels all teamed up to create the services MusicNow and PressPlay, which became better known as MusicNot and PressPause. That's because they were created by companies who were too scared of cannibalizing their existing business. It took Apple to come along and show them how a music service could be done. While you can hope that they've learned something, Morris's repeated statements on the economics of music suggest he still hasn't figured it out. He might want to talk to his bosses at Vivendi, who seem to understand that selling music isn't the business model the company should be in. In the meantime, as was noted a month ago, there's still not the slightest shred of evidence that ISPs or mobile phone operators are willing to force all their customers to opt into a $5/month charge for music subscriptions.

17 Comments | Leave a Comment..