The much-debated Digital Economy Bill was yesterday ratified by the House Of Lords, to squeals of dissaproval from those worst hit by the bill’s contents. The “3 strikes” proposal at the centre of the bill will mean that repeated copyright infringers will have their internet connection disabled or slowed down, but other sections, such as Clause 17, which would have given ministers power to tear up current UK copyright law, have had their range diminished by the Lords.
ISP TalkTalk were among those to protest the ratification of the bill; their Director of Strategy and Regulation, Andrew Heaney said in the Guardian:
“The digital economy bill proposals create a new and unfair duty on broadband customers… It asks them to implement complex and expensive security measures on their connections to make it more difficult for their neighbours and others to use their connection for copyright infringement. The bill reverses the core principles of natural justice by requiring customers to prove their innocence.”
The bill will not pass into UK law until it has been passed by both the House Of Commons [who will doubtless chew it up a bit more before it hits the real world] and Her Majesty Queen Elizabeth – whose approval is usually a matter of protocol, but who knows; she might be a big fan of bit torrent sites… Her Navy is bigger than any pirate’s.
TechCrunch reports an offer from Dimensional to buy all outstanding stock of our digital music distribution competitor The Orchard, whose operation currently has offices in 25 countries, and is losing $17.5 million dollars a year. The purchase offer is for $2.05 per share of common stock, valuing the company at $12.8 million, about 28% of their annual revenue of $45 million. Rumours also abound of a merger between The Orchard and eMusic, which would see the vertical value chain completed, from artist to store – seemingly a simple and sensible synergy, but since eMusic is also rumoured to be for sale predicting where the chips will fall may be difficult. Private owners of The Orchard will have a lot of cost cutting to do whatever the case, so look to see a lot of those international offices closed down, and a consolidation of revenue streams and staffing before long.
Everything Laura Marling touches seems to turn to gold. Her past romantic liasons have both preceded breakthrough musical success, first for ex-boyfriend Charlie Fink and Noah and the Whale, and then for current beau Marcus Mumford of the eponymous Mumford and Sons. She was also [ahem] instrumental in the rise of Emmy the Great, and modest initial success for her debut album ‘Alas I Cannot Swim’ has built into a devoted critical following and a growing fanbase. She’s now just days away from releasing a second album, and because she’s a smart cookie, she’s previewing it through the Times’ website here. If you like what you hear, you can pre-order ‘I Speak Because I Can’ on Amazon here. Imagine a young, less squeaky Joni Mitchell who could give Feist a decent bout in the song-writing ring and you’re pretty much there…
The RIAA have loosed another volley against the filesharing contingent that they believe are bleeding the profitability out of the music industry. The arguments are pretty solid: those who choose to download music illegally instead of paying for it through legal physical and digital channels are not enjoying the fruits of the people working in the industry without contributing to their livelihood. Bad people, right? Not proper music fans, right? Theft is insupportable, but there are questions of degree to be considered… From the RIAA’s press release:
According to SoundScan, the top 10 albums in 2009 sold a total of 21 million copies, and the top 10 tracks totaled 36 million paid downloads. But the top 10 albums in 1999 totaled 55 million in sales. Even with digital track sales factored in, those top sellers fell by more than 50%. In the last 10 years, the major record labels’ direct employment in the United States fell from about 25,000 people in 1999 to less than 10,000 today – a drastic reduction of over 60% in people who enable the creation and development of new music.
In the music industry, it takes the investment of many peoples’ money, effort, and time to create the songs and albums we all get to choose from and enjoy. Since most acts never even reach the breakeven point in sales, music labels need to operate like venture capitalists and count on the successes to subsidize the continued development of many artists and releases that may never break out of the red. And it’s easy to ignore the harm being done when you’re only stealing one copy.
Stealing music is wrong. This is undeniable, but there is something about what the RIAA say – it’s easy for a punter to ignore the criminality of nicking one album at a time ‘just to hear it’, and so the solution to the problem has to be slightly more nuanced than cutting off the consumer’s internet connection, or suing individuals for vast damages in high profile cases. Legal, profitable channels of consumption have got to compete directly with the illegal, risky, but free-to-consume-unless-you-get-caught methods like filesharing and illegal streaming.
Picking on individuals makes the recording industry look like the aggressor rather than the victim, which they are not; they’re just trying to safeguard their sources of income, and their jobs. It’s hard to think of Edgar Bronfman’s kids going hungry, or Puff Daddy having to sell his jet to make the mortgage payments, but there are real people doing good work whose livelihoods are on the line. That said, progress is inevitable (see the video at the tail of the post), and the music industry has got to roll with the punches and capitalise on the massive innovation that’s happening in the digital sector if it is to thrive as it has in the past.
Another thing to consider is how much this piracy actually costs the industry. If the pirates couldn’t get hold of the music easily and for free, would they bother getting hold of it at all? Does the money not spent on records all get spent on eyepatches, stuffed parrots and WOW subscriptions, or does some of it come back to the music industry in other ways? Concert revenues are certainly up over the last few years, and some artists are making money against the trend of decline by using clever andnon-traditionalmarketing methods, selling coolphysicalproducts, and using new outlets like Spotify and eMusic (to whom RouteNote will happily distribute your music, by the way) to boost waning physical revenues. Is it better then, for the industry to put a death-grip on sometime pirates who may also be gig-goers and box-set-buyers, and look backwards at the fantastic success they had with physical formats, or to look forward to an era when everything is digital and try to maximise it’s readiness and thus it’s profitability? Perhaps we’ll see things go full circle, and recorded music sales will tail off completely as we all go back to being regular concert goers, just like in the 1800’s…
Pink Floyd have been in court with EMI, their record label of 43 years, over what level of royalties they should be paid for digital sales of their music, and as to whether tracks from their concept albums can be sold as singles. The Times reports that Pink Floyd have won their case on both counts, and now recover the right to package their music as they see fit, and to be paid a higher rate for online sales, although exactly how much hasn’t been disclosed. This exclusive, music first approach is typical of the band, and totally at odds with EMI’s cash-hungry stance at the moment; obviously the boys don’t need the money as much as the label does at the moment…
A report from business analysis firm Ovum says they think UK based Internet Service Providers (ISP’s) could bundle a silver bullet with their broadband contracts by adding a digital music service to their offerings. They argue that this would increase customer loyalty (Ovum call it reducing consumer churn), generate additional revenue per customer, reduce online music piracy and increase music industry revenue. They estimate (and they don’t say how they arrived at the figure) that direct revenues from selling music-inclusive deals could be around £103 million by 2013, representing 41% of 2009’s market.
Commenting on the report earlier this week the BPI’s Geoff Taylor said “It’s increasingly clear that it isn’t smart to be a ‘dumb pipe’. This report shows that the revenue potential of digital music services alone makes sound economic sense for ISPs.”
Fair enough. But take note that Universal Music Group sponsored the report, the same UMG that are desperately worried about the collapse of their revenues, and the same UMG that are invested in Spotify, a music service that could very easily sell premium subscriptions bundled with an ISP package. This is by all indications a great idea, and would go a long way to helping the ISP community appease big music – who are accusing it if not of complicity then at least negligence in the article of stopping access to copyright infringing sites and torrent trackers like the infamous Pirate Bay – but an awareness of possible bias might encourage conservatism when looking at Ovum’s estimated numbers. There are a lot of solutions vying for the fast growing digital music dollar, it’s a market in which we’re currently diversity and innovation, and a big move like the one the BPI are advocating could seal the future of music online.
In 2007, the UK border agency decided that Cordozar Calvin Broadus Jr. should be denied entry to the country, denying him the ability to tour in the country. The decision stemmed from an incident at Heathrow Airport in April 2006, for which the Snoopy dee oh double jazzle was arrested. Some back and forth between legal agencies later (the taxman stands to gain from Snoop’s touring activities, but the Home Office think he’ll pose a danger to the public) and the border authorities ruling has been overturned, meaning that Snoop can apply for a UK visa again.
It has been reported that Pink Floyd is currently in a contractual dispute with EMI. Members of Floyd are disputing a number of analog-to-digital extensions. “It was unclear whether record companies would be selling direct to the consumer or through retailers,” attorney Robert Howe noted, while also noting that the iTunes Store had not yet arrived at the time of the contract.
Howe is contesting moves by EMI to ‘unbundle’ music into a-la-carte singles, dismissing claims that de-coupling only applied to physical formats. Also under dispute is what royalty percentages should be assigned to new, digital formats. The case is being heard by the High Court in London.
The Oxfam-chic has been abandoned in favour of boiler suits in their latest web outing – a huge Heath Robinson (OK, since they’re from Chicago, Rube Goldberg) contraption to rival the one in Honda’s Cog advert. Ironically, given the fuss they’ve been making about revenues from embedding their previous treadmill viral super-hit, the video wasn’t embeddable, but sponsorship from a certain insurance company means that we can now save you the trouble of clicking all the way over to YouTube for this little beauty:
Can music streaming ever be a viable alternative to hard copy and download music sales? WMG’s Edgar Bronfman has his doubts, and looking at some of the figures being published in the media they might seem reasonable. Increases in the number of users on services that provide on-demand music streaming (where you pick the track you want to hear like MOG, Spotify, and Grooveshark) correspond to decreases in music sales, while increases in use of radio’ streaming services [Last.fm, Pandora] seemed to drive more sales. There doesn’t seem to be any mystery as to why this might be; Spotify’s and MOG’s users no longer have any reason to buy music from other sources once they’re signed up (particularly as they can put their playlists on their iPods and other mobile devices if they buy a premium account), while Pandora and Last.fm’s customers have no guarantee of getting a particular track on their playlist again, so they have to buy it to hear it whenever they want. This might seem to be an open and shut case for the record labels; one service drives sales, while another cuts revenue – but it’s not quite as simple as that. Spotify has massive customer appeal, as the hordes that try and sign up every time they re-open user registration prove, and it also drives a lot of interaction with listeners; according to Spotify’s own figures the average use playlists around 15,000 tracks. The vast majority of Spotify’s users might be on the free-to-listen ad supported plan, with only single figure percentages signed up to their £10 a month premium package, but it’s clear that the proposition is incredibly attractive to consumers. The premium users represent a healthy annual income for the record labels to share with the platform; £120 a year is not an insignificant spend, and the potential for fledgling on demand platforms to increase their advertising revenue so that even the non-paying customers are generating profits for the record labels is proportional to the platforms’ desirability and popularity,
On demand services are what the consumer wants, and are proven to reduce the incidence of file sharing and online music piracy, something that unequivocally costs the music industry. Cutting off support for such services would surely drive a proportion of users back to illegal, non-revenue-generating, methods of consumption. Assessing the profitability of on demand against radio streaming will have to be done over the coming years as the platforms mature and adjust their business models, but it seems unlikely that killing off the most eagerly recieved of the net’s music biz babies just as they’re getting established would be a rational strategy for the industry.
For our part, we’re seeing tangible revenues come back for our artists from on demand services, and we’re happy to be able to help independent artists get music up on Spotify and in other online stores.
The much-debated Digital Economy Bill was yesterday ratified by the House Of Lords, to squeals of dissaproval from those worst hit by the bill’s contents. The “3 strikes” proposal at the centre of the bill will mean that repeated copyright infringers will have their internet connection disabled or slowed down, but other sections, such as Clause 17, which would have given ministers power to tear up current UK copyright law, have had their range diminished by the Lords.
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