Uncontrollable Illegal downloading, legally free music, and 360 deals: Good or Bad?

In my previous posts I have explained my grievances with illegally downloading music as well as possible solutions for the problem. In this post I explain how now that music is available for free, people will not willingly start to pay for it. When solutions for tracking Internet piracy are presented people just come up with a way to get around getting caught. While the music industry wants the climate of their business to be different they have started to realize that they need to embrace the situation and start to change the plan of their business to generate income in different ways. The importance of changing their way of collecting money became more crucial this week when an Internet organization announced the release of software that will leave no trace of illegal downloading when used by downloader’s. Now it is more important than ever for the music industry to change their business model in order to compensate for the possibility that they will never be able to collect money from lawsuits regarding Internet piracy.

Illegal downloading of music is inevitable. It is a shame that artists are getting robbed of their products over the Internet, but there is nothing record labels, artists, or law enforcement can really do to stop individuals from around the world from bootlegging music. An organization called “The Pirate Bay” announced that they are launching the beta testing phase of their virtual private network (VPN) software, which would enable users to use the Swedish BitTorrent tracker without leaving a data trail for only a small monthly fee of about seven dollars a month. "Surfing the Internet leaves a trail of "cookies" – messages web servers send to your browser when you visit internet sites." What does it mean to have no data trail? Let me tell you…

When you hear stories about people getting arrested for illegally downloading copyrighted material or just making it available such as music, movies, or software; or even doing unlawful things over the Internet it is not because they tracked down by the FBI or Interpol going door to door looking for them, these people get arrested because of their data trail, otherwise known as their digital footprints, on the Internet. If there is no trail to follow, these people cannot be arrested. Therefore, the release of The Pirate Bay’s VPN software will be not only detrimental for the music industry, but for all industries affected by Internet piracy. This software is the equivalent of a tool or something professional thieves could use, if it existed, that would erase all traces of their crime with the push of a button. Evidence of outrage towards The Pirate Bay organization is even prevalent on their website, but interestingly they almost like how much corporations hate them. Legal threats have been made by companies from around the world towards The Pirate Bay from Microsoft, DreamWorks, EA, SEGA, Warner Music, Apple, Warner Bros, and the MPAA, just to name a few.

The VPN that The Pirate Bay is going to launch is going to be called IPREDator, “named after IPRED,” which stands for Intellectual Property Rights Enforcement Directive a measure made by the European Union aimed at preventing Interent piracy as well as other forms of copyright infringment made over the Internet. IPRED is set to launch in Sweden on April first. IPRED is the main reason the VPN IPREDator is being launched by The Pirate Bay. It is a response to the regulation set forth by the European Union. As evidenced by the statement “0 torrents has been removed, and 0 torrents will ever be removed” from The Pirate Bay, illegal downloading is now a part of everyday life around the world, while corporations mostly wish to stop internet piracy, this is not necessarily the case for the music industry. Music industry CEO’s and musicians may wish things were different, but things are getting set in motion to make the best out of the situation.

Victoria Shannon, an author for the International Herald Tribune, explains that “the mainstream music industry is coming to recognize a price for digital songs that might be good enough to compete with the underground exchange of tunes on the Internet: free.” This acceptance of an illegal practice came swiftly since sales have been dropping faster than imaginable. The catch to getting this free music is exposure to advertisements. A website that has joined the ad-supported free-music business is called Qtrax. The business model for Qtrax is stressing the point that they are the “first free and legal peer-to-peer music service.” The great thing about Qtrax is that all the major record labels are signed on to have their music on the service totaling about twenty-five million tracks, which is only an estimate from other peer-to-peer networks. Another great quality about the Qtrax service is that the downloads will be virus and spyware free as well as clear of any technical obstacles that other peer-to-peer networks are recognized for. Qtrax is not the only interface available that allows music to be downloaded legally. There are other programs such as Rhapsody that allows users to legally download music over the Internet for free or very small monthly/yearly fees.

Hopefully, despite The Pirate Bay’s VPN software, people will choose legal ways of obtaining music over the Internet. People are obviously at work in the music industry to compensate for losses resulting from Internet copyright infringement now that they realize that there is not much they can do to stop people from downloading. While people might enjoy aspects of free and legal music there are however ways that artists could be hurt if record companies decide to move to advertisement based revenue. No doubt, it will most likely be able keep the music industry afloat, but this aspect of this business plan could cripple artist’s income from their music being free instead of sold. Also, in addition to musicians making less money from album sales their deals with record labels might include the record companies taking a cut of merchandise and tour revenue, which are currently the main ways artists are making money. This type of deal is also known as a 360 deal which means that artists will "give labels their standard cut of CD and digital download sales, but also give them a percentage of event ticket profits, merchandise sales, endorsement deals and anything else that uses the artist’s brand or music." These deals are becoming more common these days, and will soon be mandatory as labels prepare for the free music business plan.

Paramore, a popular rock band has had great success under the contract of their 360 deal. There are definitely some perks to bands signing this type of arrangement because "in return for that bigger share, labels might give artists more money up front and in many cases touring subsidies that otherwise would not be offered. More important, perhaps, artists might be allowed more time to develop the chops needed to build a long career. And the label’s ability to crossmarket items like CD's, ring tones, V.I.P. concert packages and merchandise might make for a bigger overall pie." There are however, some serious drawbacks to the terms of a 360 deal. "The industry’s hunger for 360 deals might also subtly shift the ways labels view the scouting and cultivation of talent, a process known as A&R, or artist and repertory, development." This means that rather than officials working for record labels looking for new talent, developing a bands image and sound, they are going to be looking for the complete package - bands that are already have a look and material ready for radio play and touring. This will make it very difficult for emerging acts to get signed.

Whatever happens in the music industry those responsible for this situation are the people illegally downloading copyrighted songs. Executives and CEO's are always going to be alright, but the musicians who just want to pursue a career they are passionate about, a career that entertains millions of people every day may end up suffering. The Pirate Bay's VPN and other services that allow music to be downloaded illegally only make the situation worse, but hopefully the music industry is going to flip the current condition on its head and make the climate of the music industry better for both the executives and the artists.

Two Sides of Music: New Downloading Ideas and Some Tips For Musicians

This week I decided to do some more research on internet downloading. Coolfer had a great post titled "Choruss Keynote at Digital Music Forum East" about a new peer-to-peer (P2P) file sharing program called Choruss. Starting off as an experiment on college campuses, Choruss will hopefully revolutionize the way music is paid for; or rather make music get paid for. You can read the Keynote speech by clicking the picture of Jim Griffin, the creator of Choruss, below and to the right. I also did some research on some new ways musicians can help their careers. I stumbled upon a post on Buzzsonic called "Keeping Every Fan Happy Through Communication" which outlines some great ways for musicians to acquire fans and keep their fans. I found the author of this post provides some insight to very useful tools that all original artists should be aware of. The author goes over some new programs and widgets available on the Internet that can open new lines of communication between artists and fans, and even goes over strategies for keeping fans that require using more than one of these advantageous programs. I actually called one of my current gigs immediately after reading this post because I had to tell him about the new knowledge I obtained. Below you can see the comments I made on these two posts from the blogosphere.

"Choruss Keynote at Digital Music Forum East"
Comment

Choruss is definitely a great idea. Making those who download music pay fees for the music would obviously be a great leap forward for musicians of all levels of fame in addition to the music industry as a whole. The fees collected from the ideas presented by Choruss could rekindle the music industry, put money in the pockets of artists and labels who are desperately needing it, and also help independent bands break. As Jim Griffin, Choruss’ founder pointed out “According to their industry associations – and indie music has proven especially supportive of Choruss – independent artists fare better on digital networks, and Choruss is committed to fairness.” If his experiment proves to be successful I do see some issues with the Choruss implementation on campuses. While all of Griffin’s ideas are sound he has clearly forgotten some facts about college students that are very pertinent in regards to today’s music downloading community. Even if students are required to have the Choruss software on their computers it does not mean that they will use, even if the software has to be purchased by them. College students, who likely have monthly allowances given to them by their parents, in addition to the possibility that they probably are unemployed or do not make much money at their day job, are very unlikely to be willing to pay for P2P downloads: especially if they are charged by the file size or by the song. Students at universities are well aware of the software available to them on the Internet that can get them all the music in the world for free, asking them to pay for it will not go over well when they have other things they could spend their money on. I see the only way for something like Choruss to be successful on the college campus level is to have some sort of access restrictions to using the Internet on campus. Something like If the server on campus detects illegal file sharing software on an individual’s computer then they cannot use the internet on campus until it is deleted would be an effective measure to ensure the Choruss software is used by students, even if it is only while they are at school. I really like the ideas presented by Jim Griffin, I hope Choruss gets launched soon.

"Keeping Every Fan Happy Through Communication"
Comment

Hey Greg, this post really hit home for me. I am one of those musicians that you are talking about who has to juggle time between school, a day job, recording sessions, and gigs for multiple bands. Your assessment that fans must be kept happy since in this day and age “there is no excuse, no communication gaps or barriers stopping you from developing relationships with every fan that wants one” could not be more accurate. There is no doubt that only the most successful bands open lines of communication with their fans. Interaction is a key factor in getting crowds to shows as well as enticing people to listen to your music constantly. As you said, “If you can listen to your fans, you are well on your way to keeping them happy.” If people do not feel like they know about a bands members and their personalities they can only care about buying your music and showing up to gigs so much. Personally, it has not been my responsibility to promote the bands that I play for (I am a sideman), but from my experience responding to fans MySpace messages or e-mails is the absolute least you can do. The Canned Response feature from G-Mail is something I am going to tell my current gigs and all my future ones about. The fact that fans feel attended to after they send you without you, the time crunched indie-musician, having to spend the time to write them a personal message is awesome. Also, your point about directing your fans to interact with you in specific ways like meeting from 7-9 on Twitter is an excellent way to grab attention. Then combining your automated response from Canned Responses or messages you have saved to guide fans to interact with you tells the fans that as an artist you care about them. This way even though they may know that the response is automated, at least fans are informed of ways they can get in touch with you in a more intimate environment. This is a great post to help bands begin to learn the art of promotion and keep fans interested in the music you are creating.

I Know It's Only Rock N' Roll, But I Like it: Can I Afford it?

 Talk has been occurring throughout February over the merger between the ticket broker service Ticketmaster and the giant national concert promoter Live Nation. This week deliberation over the merger of Ticketmaster and Live Nation heated in Washington D.C. The contemplation is partly due to the possible violation of the Sherman Anti Trust Act, which was created to “prohibit abusive monopolies.” According to the Rule of Reason in the Sherman Anti Trust Act, this merger would be using tactics that are illegal to maintain power in the music industry because Ticketmaster/Live Nation would be in control of too many facets involved with artists booking shows, prices for tickets, music distrubution, etc. If this merger occurs it could mean that “too much power over the U.S. and global live music industry [would be] in the hands of just one company,” according to the Reuters MediaFile blog. Interestingly, some artists have expressed that they are in favor of the Ticketmaster/Live Nation merger. This unification given the current state of the economy could actually be terrible for artists and their tours. Artists who have already achieved fame are in favor of this merger because the company it would result in would provide them with great services in addition to a rather large signing bonus. With so much control of the market, the amalgamation of these two companies could mean very high ticket prices, and end the "golden age of concerts."

The proposed merger is clearly a bad idea. Currently economic geniuses like Warren Buffet predict that the economy is doomed at least for this year and possibly for years to come. Buffet stated that “the economy will be in shambles throughout 2009–and for that matter, probably well beyond” in his annual letter to Berkshire Hathaway shareholders just last week. With the music industry in such turmoil for the last few years, this merger could be traumatizing for the concert aspect associated with it. I've already explained how illegal downloading is killing the music industry, but some say "the age of downloading could be turning into a golden one for the concert business." This golden age of concerts could be over very quickly if this merger goes through when considering that right now people have less money to spend in general. Therefore, the odds of an average American being willing to pay for expensive tickets accompanied with surcharges is getting smaller every day. Now consider rock star Alanis Morissette's manager who explains "only 10 percent of artists make money on record sales; the rest go on tour." If people cannot afford to go to a concert, how are artists going to make a living? I am not talking about already successful acts like Seal, Journey, Van Halen and Shakira careers dying. I am talking about new artists trying to make it. Some of the aforementioned acts already signed a $70 million multiple rights deal with Live Nation last year, I doubt up and coming acts will be offered such generous deals. Thus, artists and consumers/concert goers are going to suffer from the amalgamation of Ticketmaster/Live Nation because of the monopoly it would create. New artists will have a much more difficult time getting deals similar, or even close, to acts like Van Halen. 

U.S. Senator Charles Schumer slammed the deal ahead of its formal announcement, calling for a federal probe into Ticketmaster, the top U.S. ticket vendor. Schumer proclaims that "this merger would give a giant, new entity unrivaled power over concert-goers and the prices they pay to see their favorite artists and bands. It must be viewed skeptically and scrutinized." I have no choice but to agree with Schumer. In the article "Live Nation to Buy Ticketmaster," author Yinka Adegoke explains that the merged company would have more than 140 concert

 venues around the world resulting in the newly merged company selling over 140 million tickets during the year. They would be selling the tickets for 22,000 concerts a year, and additionally, Ticketmaster/Live Nation would manage a client roster that included acts like Madonna, Jay-Z, Miley Cyrus, and the Eagles. With the U.S. economy in such turmoil this could possibly be catastrophic, and could be the final blow to the already dying music industry. Rock star Seal stated in his letter which was mentioned in the Reuters blog that “The record business is not what it used to be” as a reason for his support of the merger, but this is exactly why the unification of these two huge companies should not be supported. James Love, a writer for the Huffington Post, explains that “the merger would reduce competition in the core business areas of both companies, it would likely lead to high ticket prices, while making small independent booking venues and artists both more vulnerable in business dealings with the new giant.” There are already expenses associated with using Ticketmaster and Live Nation when purchasing concert tickets such as surcharges. There are processing fees and consumers even have to pay just to obtain the privilege of printing a purchased ticket at home some times adding up to ridiculous sums. Pearl Jam actually canceled part of one of their tours because of these surcharges and the control it had of the ticket market in 1994, but ended up giving into using Ticketmaster's services a year later. Fred Moody, from the "Seattle Weekly" sheds light onto the dispute between Ticketmaster and Pearl Jam. According to their manager, the band "objected to Ticketmaster's service charges on two grounds. Ranging from $4 to $8 from venue

 to venue for the same $18 ticket, the charges clearly bore no relationship to the ticket price, and appeared to have no relationship to the cost of the service provided. And even at their lowest level, the service charges seemed unreasonably high." 

Just for fun I decided to see how horrendous these charges are by going to Ticketmaster’s website to do some investigating. I pretended to “buy” tickets for the 80’s cover band Steel Panther, who plays every Monday night at the Key Club in Los Angeles. The price for the ticket was eighteen dollars, and then they tack on another two and a half dollars if you want to print your ticket. However, there is the option of picking up your ticket at the venue before the event. To do this Ticketmaster charges customers a dollar when they already have to use gas and time to get to the venue. The only way Ticketmaster's services are free is if event goers want to pick up their tickets the evening of the event they are attending. Now, I agree that $2.50 or $1.00 is not an insane amount of cash, but when buying a ticket for hundreds of dollars it seems quite unnecessary to tack on a couple extra dollars when Ticketmaster already owns about 70% of ticket distribution nationwide. Combine this 70% ownership of the market with Live Nation moving from concert promotion to making record deals, all of a sudden two companies merge together creating a monopoly. If these two companies unite there would be no incentive for Ticketmaster/Live Nation to sell tickets at their face value since almost all their competition would cease to exist, causing consumers to go to less concerts since tickets will become so expensive.

While this deal might appeal to some artists on paper, it is not as it good as it looks at first glance. If concerts are not selling out then the artists and the other parts of the music industry, even Ticketmaster/Live Nation are going to lose money. These two companies possess too much power in the concert circuit and music industry without their fusion, when combined the drawbacks of the merger would be severe. Concert ticket prices would sky rocket causing concert attendance to decrease, which would mean that artists would lose one of the last ways that they make their living. Also, the merger is only going to make it harder for new artists to achieve success since so much would depend on how the officials at Ticketmaster/LiveNation feel about them. Hopefully this merger is prevented so people can still go to concerts for decent prices, and also so there is still hope for new and up and coming artists. If people cannot afford to go to concerts how are artists going to make a living in the music industry given its current environment?