Newly Independent Pop Band McFly Gives Away Free CD With Newspaper

from the it's-all-in-the-tour dept

Last month we wrote about the British pop band McFly, who had announced that it was ditching its record label, because the label wasn't interested in experimenting with new ways to get music to fans. So now that the band is independent, it's jumped right on the bandwagon of experimentation. In fact, it's following the footsteps of Prince, back before he started freaking out. That is, they've done a deal with a big UK newspaper to distribute copies of their new album for free with the newspaper (thanks to Nick for sending this in). As we've noted in the past, this is a fantastic strategy for both newspapers and musicians. It helps both sides quite a bit, which is exactly what the band sees, noting that they just want to get more fans, and are hoping more will come see them on their latest tour.

Yet, of course, it's not making some happy: specifically those who have based their entire business models around the concept of selling plastic discs. Music retailers flipped out when Prince did this, and it's likely that they'll be upset about McFly as well. But, you don't jump into the next generation by appeasing the old generation. Also, the article quotes a former recording industry exec who complains that if bands keep doing this, record labels will lose money and won't be able to find and promote new bands. That's missing the point, of course. It assumes that it's the record labels skilled hand that is necessary in finding and promoting new bands -- which is not true at all. The same guy also suggests (in a video on the site) that record labels also won't want to give tour support. That's also quite ridiculous. If the band is making so much more money from concerts now, the smart label will still give tour support, after making sure that it gets a cut of the touring revenue as well. And, if the record labels decide not to do it, then have no fear that concert promoters will step in and provide the necessary support in their place.


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  1.  
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    Jake, Jun 27th, 2008 @ 4:16am

    Yes, yes, all very laudable. But McFly are still a bunch of charmless, talentless, metrosexual oiks trying to fill the same niche as the Bay City Rollers. As if I needed any more reason not to buy the Daily Mail.

     

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  2.  
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    Anonymous Coward, Jun 27th, 2008 @ 4:28am

    The "Out of College" Groups

    First off: I'm not trying to troll here ... I've been wondering something and am hoping for a legitimate response, no fights intended!

    I listen to music a lot, and when I find a band I really like, I buy as much of their music as I can (given availability and my budget). However, I very, very rarely go to concerts (no matter how much I like the band), and I never buy stuff like t-shirts, etc. I know a lot of people, in various age groups (but mostly late 20s and up) who are in the same boat. Because of time, etc., going to concerts and buying t-shirts just isn't something these groups do.

    They do, however, buy music (and not just CDs, but digitally as well). Sometimes a lot of it. And even if musicians only personally see a small bit of that, that's still money heading in their direction. (Personally, I think that's an area of the business that does need reform: musicians should see a larger cut given the easier methods for promotion available to musicians and labels.)

    If you advocate that all music should be "free as in beer" (and I'm not saying everyone here advocates that, I'm just addressing that particular view), then you're also accepting that those groups (the late 20s plus groups who go to few concerts and don't buy t-shirts) will, in effect, cease to contribute monetarily to musicians and the music industry. I don't think the numbers we're talking about are small (though I don't have exact figures), and I suspect the numbers are large enough to have a genuine impact.

    How should that be addressed? What's the response here?

     

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  3.  
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    Anonymous Coward, Jun 27th, 2008 @ 4:38am

    Re: The "Out of College" Groups

    I don't think anyone's advocating that music "should" be "free as in beer", just that it will and that doesn't mean artists will starve. In a competitive market, goods are pushed towards their marginal cost; in other words if enough artists give away their music, everyone else will have to.

    In answer to your point about extracting money from that type of consumer, it's about value add - giving them something scarce they want to pay for. See Trent Reznor's example for a specific case I think fits you - I think people would pay extra for the "Collector's Edition" (complete with artwork, lyrics, autographs, whatever) for their few favourite bands to support them and because the extras you get are valuable to them. Lets not forget, either, that just because you don't go to gigs now doesn't mean you won't in future.

     

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  4.  
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    Anonymous Coward, Jun 27th, 2008 @ 4:45am

    Re: Re: The "Out of College" Groups

    I wouldn't pay for a "collector's edition" because I don't want to get "sold" ... I just want music that I like, and think it's completely reasonable and fair to pay a reasonable amount for that music. Everything else is a gimmick, and it offends me as a consumer and a fan.

    I don't want five different "special" editions, I don't want dead trees, etc. I just want the music. And I want it digitally so I can listen on my MP3 player, etc. And I'm willing to pay a bit to support the artist that made the music, because that's a completely reasonable and fair exchange.

    EVERYTHING would tend toward zero if consumers could have their way. That doesn't mean it should.

     

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  5.  
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    Eeqmcsq, Jun 27th, 2008 @ 4:48am

    Re: The

    Then you continue to sell to that market who only buy CDs but not go to concerts or buy other merchandise. But you have to give that market a reason to buy the CD. You do that by making the CD more valuable than the free music downloads. For example, a special boxed CD collector's item.

    Customers are not homogeneous. Some will only buy CDs, some will only go to concerts, some will be a combo of both, and some will be stingy and only download for free or only pick up a free CD. The trick with spreading music for free is to get as many people as possible to know about you. Then it's up to you to have a variety of things you can sell back to them once they know who you are.

     

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  6.  
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    Anonymous Coward, Jun 27th, 2008 @ 4:54am

    Re: Re: The

    Again, what I want to buy is the music (digitally) and nothing more. Most of my friends (people in similar age group, social status, etc.) feel the same: they just want the music, direct to their computers/players ... no dead trees, no "special" tricks, just the music. And most feel that paying a buck for a song or ten buck for an album is a completely reasonable and fair exchange.

    That's why I don't get all the fuss over what already seems a reasonable price to pay for music.

    That's also why I *do* get it when people look at those who just want the music for free (particularly those who will break the law to get it) and call them greedy, selfish, and spoiled.

     

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  7.  
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    Eeqmcsq, Jun 27th, 2008 @ 4:56am

    Re: Re: Re: The

    Hmm, based on your needs to be a paying customer, the artist would need to set up a way for you to download music from their website and pay as much as you want for it. I believe Radiohead's and Trent Reznor's web sites have or had that, but I haven't heard of too many others right now. Maybe this will be standard in the future.

    Does that sound like something that you'd be willing to pay for?

     

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  8.  
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    Eeqmcsq, Jun 27th, 2008 @ 4:57am

    Re: Re: Re: The

    I started composing that before I saw your first response. See my second response. :)

     

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  9.  
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    Anonymous Coward, Jun 27th, 2008 @ 5:01am

    Re: Re: Re: Re: The

    I appreciate your response, but it isn't satisfying (sorry).

    Tip jars devalue the musician, in my opinion, and (from what I understand) don't work very well.

    Again, why do some people find it so unreasonable to ask for an exchange of a small amount of money for something they find enjoyable (the music)?

    I agree completely that DRM, overly-aggressive prosecution, restricting of casual sharing among friends, etc. is wrong, wrong, wrong. But going from that conclusion right to "it should all be free" still is not at all convincing to me.

    Again ... I'm feeling a bit trollish, but that's not my intent. I seriously don't get it.

     

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  10.  
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    Eeqmcsq, Jun 27th, 2008 @ 5:19am

    Re: Re: Re: Re: Re: The

    "why do some people find it so unreasonable to ask for an exchange of a small amount of money for something they find enjoyable"
    Some people like the feeling of getting something for nothing. Digital files cost nothing to create. Some people don't want to pay unless they know what they pay for is worth their money.

    Psychologically speaking, you can reverse the question and ask "why are some people crazy enough to pay for a digital file on a computer that can easily be reproduced?" And of course, those people have their own reasons.

    I think the phrase "it should all be free" comes from the group who thinks the second way. That is, they view music from a product's perspective, not from an enjoyment perspective. And from a product standpoint, since digital files are infinitely reproducible, the cost of this must go to free.

     

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  11.  
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    Anonymous Coward, Jun 27th, 2008 @ 5:27am

    Re: The "Out of College" Groups

    Au contraire.
    I basically never obtain music through legal means. However, I would gladly purchase a t-shirt or poster or ceremonial coffee mug or whatever to support a band I like, and I think there are enough people who agree with me that bands will still be able to support themselves.

     

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  12.  
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    Anonymous Coward, Jun 27th, 2008 @ 5:28am

    Re: Re: Re: Re: Re: Re: The

    First, I think what Mike often talks about "selling" is the "enjoyment of an experience" ... which doesn't seem to fit with what you say here ... ?

    Second, if people are honest with themselves, they must understand that, though the "copy" costs next to nothing, the original creation was likely considerably expensive (funds + time + promotion + talent + etc.), and that the ability for the musician to continue to produce recorded music is, in part, dependent on recovering those expenses. A primary way to do so is through the sale of the music.

    So while I recognize that it costs someone next to nothing to create a copy of the music, it was costly in many ways for the musician to create it in the first place. Since I enjoy the music, and therefore want the musician to be able to focus on the creation of more, I find it completely reasonable and fair to trade a small amount of my money for a copy of his/her/their work.

    So, still seems more than reasonable and fair to me ...

    Thanks again for responding.

     

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  13.  
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    Anonymous Coward, Jun 27th, 2008 @ 5:41am

    Re: Re: The "Out of College" Groups

    So, because you would buy a t-shirt, you think that's justification and generalization enough?

    I'd like you to develop some software for me. I won't pay you anything up front, and I won't pay you for the software itself when it's finished, and I'll distribute it freely to everyone I know ... but I will buy one of your t-shirts.

     

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  14.  
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    Anonymous Coward, Jun 27th, 2008 @ 5:58am

    Re: Re: Re: Re: Re: Re: The

    Ditigal files do cost something to create. That is the biggest fallacy Mike puts on this site. From his perspective they don't, because he looks at it from a economic stand point, but for rest of the world, who tend to run their businesses from an accounting stand point everything costs something.

     

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  15.  
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    Eeqmcsq, Jun 27th, 2008 @ 6:22am

    Re: Re: Re: Re: Re: Re: Re: The

    We're about to run out of screen space on this thread.

    >if people are honest with themselves
    It's not a matter of honesty. It's a matter of consciousness. People aren't always conscious about the things required to create or do something. They only think about the end product. Thus it's very easy for them to think that digital music that is easily duplicatable should be free.

    Those who are conscious are the ones that have a personal interest in the product and are aware of the effort required to create the product, thus have more appreciation. They're the ones who are willing to pay even for a digital music file.

    An analogy is littering. If you're conscious about making the street dirty and look ugly, you're not going to litter. Otherwise, you don't care and you will litter.

     

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  16.  
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    Anonymous Coward, Jun 27th, 2008 @ 6:45am

    Re: Re: Re: The "Out of College" Groups

    EVERYTHING would tend toward zero if consumers could have their way. That doesn't mean it should. Way to misunderstand the argument. I didn't say everything should be free. Here's the step-by-step guide: 1) In a competitive market, prices tend towards marginal cost. If I have something that costs me $1 to produce, and I sell it for $1.50, to beat me you charge $1.49, then I respond with $1.48, lather rinse repeat. 2) The marginal cost of a digital copy of a song is as near zero as makes no difference. It takes me two clicks and no expense to copy a song in Windows, it can be distributed on the internet for bandwidth costs (tiny) and advertised using viral marketing and social networking. Therefore the cost of a song will tend towards 0 given a competitive market (which is what we don't have currently; record labels all agree what price a song should be - it's basically a cartel). The fact you're willing to pay the artist a little is fine - do so. For that, you help support them to produce more content, and the satisfaction of helping them out; if enough people value those then it's a plausible revenue stream. There's also commission-based work, pay-what-you-want, pay-for-artist-access, product endorsement - plenty of other ways to make money out of free content.

     

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  17.  
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    Anonymous Coward, Jun 27th, 2008 @ 6:47am

    Re: Re: Re: Re: Re: Re: Re: The

    Everything costs something, does it? Explain to me how distribution through P2P costs the artist something, please.

     

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  18.  
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    Anonymous Coward, Jun 27th, 2008 @ 6:49am

    Re: Re: Re: The "Out of College" Groups

    You've never seen an open source project then.

    You also assume that you can force someone to develop that software. If they don't like the deal, they won't do it. If you could demonstrate any hard evidence that free-as-in-beer music stops artists creating, your argument might have some merit.

     

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  19.  
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    JB, Jun 27th, 2008 @ 6:56am

    Movie Stars

    Weren't these guys in a movie with Lindsay Lohan?

     

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  20.  
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    Some Other Guy, Jun 27th, 2008 @ 7:26am

    Re:

    I was going to say 'the niche of the Bay City Rollers - what? a retirement home?'

    But when I looked them up, none of them are quite over 60 yet, so wait a few years before you read this.

     

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  21.  
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    Dirk, Jun 27th, 2008 @ 7:38am

    Screw The Record Labels

    They should try SellaBand. Seriously. http://sellaband.com They have a unique approach. Even some successful bands like Electric Eel Shock and Highway 101 are involved.

    And SellaBand gives away free music. 3 songs per album, DRM free. Get some here: http://www.sellaband.com/search/?phase=recorded

    Honestly, I'd like to see some of SellaBand's more talented artists show this kind of ingenuity.

     

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  22.  
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    flesh99, Jun 27th, 2008 @ 8:06am

    Free?

    Some people like the feeling of getting something for nothing. Digital files cost nothing to create. Some people don't want to pay unless they know what they pay for is worth their money.


    This statement is only true if your time has no value. This argument is so faulty it is hard to figure out where to begin.

    1. Professionally produced digital files are produced by someone. This someone is likely on a payroll thereby it is not free to produce them. This someone is also likely in an office complete with of the overhead that goes with it, again, making these files not free to produce.
    2. Digital distribution is by no means free. Storage, bandwidth, etc all cost money.

    While these costs are not nearly as high as producing a plastic disc they still exist and are a non-zero amount. The costs would appear to approach zero, and for practical purposes would hit zero, on a graph if you were to graph the cost of the production against the number of copies made digitally and didn't take into account that costs still exist, however small, for each download of digital media. If you were to calculate the cost for each download you would see much flatter graph.

    While it is true that the cost of an infinite good will always approach zero in a free market it doesn't follow that the initial production of the infinite good will approach zero as well. It is true that digital copies are infinite goods and the cost, much to the chagrin of the media companies holding on to their business models for dear life, it is not true that the production is a zero cost.

    If an artist were to produce only digital media and wasn't using the production already used for physical media you would have to take into account all of the time in the studio, the equipment purchased or leased, and so on. Digital media as an afterthought to physical media has a significantly lower cost than pure digital as masters are already done and so on. Once an artist goes purely digital and drops physical media the actual cost to produce the infinite good becomes much higher.

    For the purposes of this example I will pull numbers out of thin air and make no claim as to them being accurate. Lets say that, after all is said and done, you take bandwidth, storage, sysadmin time to keep the server up, and all of that into account and you come up with the cost of a single download being .0001 USD this is still a cost (and yes we are ignoring initial production costs here) and you give away this download for free.

    At 100 copies downloaded your cost is .001
    At 1000 copies downloaded your cost is .01
    At 10000 copies downloaded your cost is .1
    At 100000 copies downloaded your cost is 1

    Now make it this a 20 track album and you have 20.00 USD in cost. It is not much but it is cost. I suspect if you actually calculated the numbers for a stable web based distribution server on a stable network your cost would exceed .0001 USD per download for digital music encoded at a decent bitrate. I am too lazy to bother with the math for it but at .0001 it is still not free.

    I don't comment a lot but I am getting tired of the "digital is free" argument. It makes no sense, is a logical fallacy, and is ignorant. I will go back to my lurking now and give someone else the soapbox.

     

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  23.  
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    Pete, Jun 27th, 2008 @ 8:18am

    Re:

    So, Jake, you've met these lads. no, didn't think so . Well I have had the pleasure of attending a business meeting with them and I can tell you, they are certainly not any of the things you have called them, nor do they deserve to be labeled in this way. They are both intelligent and shrewd and very likeable boys.
    Tell me, Can you write and perform hit songs, can you make the sort of money they have made at the age of these four lads. I think they need to be applauded and given the credit they deserve.

     

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  24.  
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    SUPPORT THE BAND, NOT THE VAMPIRES, Jun 27th, 2008 @ 8:25am

    LABEL HATER

    LETS SAY THE BANDS CURRENTLY GET ABOUT 10-20% OF REVENUE ON THEIR CD SALES. A CD COSTS ABOUT 10 DOLLARS. SO THE BAND ONLY MAKES 1-2 DOLLARS PER SALE. SCREW THE MIDDLE MAN AND THEY SHOULD SELL DIRECT OFF THEIR WEBSITES FOR THAT SAME AMOUNT. FANS WOULD SUPPORT THIS, THE MUSICIANS WILL MAKE THE SAME IF NOT MORE BECAUSE MANY PEOPLE WOULD CONSIDER PAYING 1-2 DOLLARS TO SUPPORT A BAND THEY LIKE RATHER THAN RISKING ILLEGAL DOWNLOADS. FANS WIN BY PAYING LESS, BANDS WIN BY MAKING THE SAME OR MORE, AND THE MAJOR MONEY GRUBBING ASS HAT RECORD LABELS CAN EAT A D*CK.

     

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  25.  
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    Pete, Jun 27th, 2008 @ 8:28am

    Free music

    I'm sure we all like to get something for free. I think it's great what these lads are doing but one point that cannot be missed is the fact that evrybody has to make a living. If composers and performers can't make money out of their music then there would be no cmposers or performers. The greedy record companies are struggling trying to sell cd's in the conventional way and have stitched up the artists for too long. McFly have taken the brave step of moving on to find a new way of getting their music to the listeners but if they can't sell their music, which is of course their living, then they have to find another way to do what they enjoy and still be able to pay the bills. Good on them and I wish them the very best of luck,

     

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  26.  
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    Anonymous Coward, Jun 27th, 2008 @ 8:49am

    Re: Re: Re: Re: The "Out of College" Groups

    Way to misunderstand the argument.

    I get the argument just fine ... I just don't buy it. The disconnect is your first point. There may be a "marginal cost" to copy, but there is not a "marginal cost" to produce. At some point, as the price moves further down the line, the content producer will no longer be able to sustain production. At that point, the price reduction stops, or the product ceases to exist.

    The content producers (musicians, writers, etc.) need to make enough money to fund their continued production ... because there's only limited time and everyone has to eat, etc.

    While it takes you two clicks, little effort, and little cost to make a copy, that is not the only factor in terms of the "production." So, if you want the content to continue to be produced, the price of the content must be enough to sustain that.

    Argument for models to recover that cost that rely on something other than the digital copy is precisely what I was addressing in my first few posts (i.e., a large part of the market does not buy t-shirts, go to few concerts, and aren't interested in being "sold" limited editions, etc. ... they just want the music).

    My overall argument is that I see no reason to object to a reasonable charge for the copy of digital content that I deem valuable. It is a reasonable and fair trade to give a small amount of money in return for the enjoyment that content brings. I do this in recognition of the initial work the creator put in up front, with no pay, so that he/she/they may continue that work.

    This is different from work-for-hire or other arrangements where the producer is paid in advance of the work.

    So, I get what you're saying, I just don't buy the "content should be free" argument, as my objections above should make clear.

     

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  27.  
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    Anonymous Coward, Jun 27th, 2008 @ 8:50am

    Re: Re: Re: Re: The "Out of College" Groups

    We don't have the ability to demonstrate that, as the current market doesn't allow "free as in beer." Try at your own risk. :)

     

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  28.  
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    Anonymous Coward, Jun 27th, 2008 @ 8:50am

    Re: Re: Re: Re: Re: Re: Re: Re: The

    Already did ... see above.

     

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  29.  
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    Anonymous Coward, Jun 27th, 2008 @ 8:52am

    Re: LABEL HATER

    Well said ... though a bit too loud! ;)

     

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  30.  
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    support the band, not the vampires, Jun 27th, 2008 @ 9:00am

    Re: Re: LABEL HATER

    Sorry, im at work and we have to write in caps with our software ;)

     

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  31.  
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    PaulT (profile), Jun 27th, 2008 @ 9:07am

    Re: Free?

    I think that most intelligent commenters here won't claim that "music is free". However, it's virtually free - even your example above has 100,000 copies of an album (a very big-selling album by today's standards) costing just $20 to distribute. Compare that to the cost of CD pressing and distribution.

    The whole point of most of the economic arguments here are thus: the price of most goods descends towards their marginal cost (not the initial cost associated with production - the marginal cost of distribution). Digital files have a marginal cost approaching zero. Therefore, it's impractical to depend on simply selling the songs as the music industry did for the last few decades. Better to use the music to leverage other avenues.

    That's it in a nutshell. Take the McFly CD mentioned in the article. It's not free. McFly's management will have negotiated a fee for the rights to the CD, anyone who wants it will have to pay around £1.20 for the newspaper. All sides make some money, and the audience gets a cheap deal. Like the Reznor/Radiohead/etc. deals, nobody will get rich from this but it gets the band noticed. It allows them to both explore the musical freedom they didn't get with the traditional model, while maintaining a large audience for live gigs and merchandise.

     

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  32.  
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    unkmar, Jun 27th, 2008 @ 9:21am

    Nearly Obsolete

    Sounds like the record labels are complaining because they are becoming obsolete. Maybe they should change with the times.

     

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  33.  
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    Anonymous Coward, Jun 27th, 2008 @ 10:32am

    Re: Re: Free?

    The whole point of most of the economic arguments here are thus: the price of most goods descends towards their marginal cost (not the initial cost associated with production - the marginal cost of distribution).

    Of course, this doesn't really address the problem, it just ignores it. The problem: the cost of initial production.

    Nor does this address my initial question about the groups for whom "ancillary markets" are not appealing.

    Nor does this address the fact that none of these models introduce anything *new* (i.e., stuff that has already been tried and is still tried). All we're really talking about here is eliminating what is currently considered the "primary market" and settling for the "ancillary market" ... though in "bulked up" form when possible.

    This is the exact problem that the initial introduction of copyright was meant to solve. So, this all seems a bit circular to me.

    Finally, a pondering that may be off base, but maybe not. Initial copyrights were concerned with restricting who could make copies of a work. At the time, the founders felt this was a necessary thing. This was a time when making copies was extremely difficult. Therefore, now that it's even easier to make copies, wouldn't this suggest that the need for such restrictions should *increase* rather than decrease?!

     

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  34.  
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    Eeqmcsq, Jun 27th, 2008 @ 11:20am

    Re: Re: Re: Free?

    >This is the exact problem that the initial introduction of copyright was meant to solve.
    Hmm, I've heard that copyright was originally meant to keep people from copying and selling for their own financial gain, but I'm not 100% sure. In any case, copying is so easy and effortless nowadays that copyright laws can't protect the "primary market".

    >wouldn't this suggest that the need for such restrictions should *increase* rather than decrease?!
    Not if society is evolving into accepting that copying music files from each other is a normal thing to do. It's a bit like the highway speed limit. Let's say it's set for 55 mph. Everyone driving down this stretch drives 65 mph, and no one is driving recklessly. But they're all breaking the law. Should you tighten up the law and lower the speed limit to 45 mph, thus criminalizing everyone even more? Do you think that will cause people to drive slower? How do you think that will make people feel?

     

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  35.  
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    Mike (profile), Jun 27th, 2008 @ 11:38am

    Re: The "Out of College" Groups

    If you advocate that all music should be "free as in beer" (and I'm not saying everyone here advocates that, I'm just addressing that particular view), then you're also accepting that those groups (the late 20s plus groups who go to few concerts and don't buy t-shirts) will, in effect, cease to contribute monetarily to musicians and the music industry.

    There are plenty of business models that can deal with people like you.

    I've discussed a few in the past, but they mostly focus on getting people to pay for the creation of new music, through a subscription type system:

    http://www.techdirt.com/articles/20030912/1032238.shtml

    Basically, the artist gets you to pay for them to create new music -- and it gives you early access directly to the musician and their music.

    Some musicians are putting this in practice:

    http://www.techdirt.com/articles/20071224/163001.shtml
    http://www.techdirt.com/article s/20080115/095022.shtml

    These don't necessarily have anything to do with concerts. But they let you support a band, get value for it, and still allow the music (post creation) to be free.

     

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  36.  
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    Mike (profile), Jun 27th, 2008 @ 11:40am

    Re: Re: Re: Re: Re: Re: Re: The

    Second, if people are honest with themselves, they must understand that, though the "copy" costs next to nothing, the original creation was likely considerably expensive (funds + time + promotion + talent + etc.),

    Indeed. I've made that point multiple times. But it's the difference between fixed costs and marginal costs.

    There are marginal costs in the creation of *new* music -- so you can absolutely charge for that (via the models I describe in my previous comment).

    But once that's created, it's a fixed cost, and the marginal costs for each copy approaches $0.

     

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  37.  
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    Mike (profile), Jun 27th, 2008 @ 11:42am

    Re: Re: Re: Re: Re: Re: Re: The

    Ditigal files do cost something to create. That is the biggest fallacy Mike puts on this site. From his perspective they don't, because he looks at it from a economic stand point, but for rest of the world, who tend to run their businesses from an accounting stand point everything costs something.

    Um, no. That's not a fallacy because I've said no such thing. In fact, I've been explicitly clear that new music costs money to *create*. That's not an accounting viewpoint, that's an economic one.

    So, it's absolutely reasonable to come up with a business model (like Jill Sobule or Kristen Hersh or others, as described) that involves getting people to pay for the *creation* of music.

    But once that music is created, the marginal cost is zero, and price will get pushed to free.

    So, please don't make false assertions about the economics I describe.

     

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  38.  
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    Mike (profile), Jun 27th, 2008 @ 11:44am

    Re: Re: Re: The "Out of College" Groups

    I'd like you to develop some software for me. I won't pay you anything up front, and I won't pay you for the software itself when it's finished, and I'll distribute it freely to everyone I know ... but I will buy one of your t-shirts.

    That's not the model we're advocating, though it makes for a nice strawman.

    As we said, the creation of new content is a scarce good that can be paid for.

     

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  39.  
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    Mike (profile), Jun 27th, 2008 @ 11:47am

    Re: Free?

    1. Professionally produced digital files are produced by someone. This someone is likely on a payroll thereby it is not free to produce them. This someone is also likely in an office complete with of the overhead that goes with it, again, making these files not free to produce.
    2. Digital distribution is by no means free. Storage, bandwidth, etc all cost money.


    Those are both *fixed* costs concerning the copies of the music. The copies still have a zero marginal cost.

    And, like the others above, you seem to be assuming that I never take into account the fact that it costs money to create the music. That is simply untrue. I have said, repeatedly, that there is a cost to creation, and that's a scarce good that can be sold.

    I don't comment a lot but I am getting tired of the "digital is free" argument. It makes no sense, is a logical fallacy, and is ignorant. I will go back to my lurking now and give someone else the soapbox.

    You are arguing against a strawman.

    The creation of new content is a scarce good and absolutely can be charge for. It's the digital copies that are infinite, and the competitive market will push those towards free.

    It makes sense. It's correct. It is not a logical fallacy.

     

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  40.  
    identicon
    Anonymous Coward, Jun 27th, 2008 @ 11:58am

    Re: Re: The "Out of College" Groups

    Seems overly-complex. Also, I'm not going to pay for music before it's created ... because it might not get created, it might be horrible, etc.

    And anyway, something's already in place to address the problem: a nominal charge for the digital content.

     

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  41.  
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    Mike (profile), Jun 27th, 2008 @ 1:58pm

    Re: Re: Re: The "Out of College" Groups

    Seems overly-complex. Also, I'm not going to pay for music before it's created ... because it might not get created, it might be horrible, etc.

    And yet you buy CDs without hearing them. They might be horrible too.

    I don't quite understand where you're coming from. You say you want to support the band, and we discuss multiple ways that you could do so. So what's your complaint?

    And anyway, something's already in place to address the problem: a nominal charge for the digital content.

    Which part of "but that's going away" did you not understand?

    There was a business model in place for buggy whip makers as well, and that worked great until the market changed and it went away.

     

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  42.  
    identicon
    flesh99, Jun 27th, 2008 @ 2:03pm

    Re: Re: Free?

    I see you missed the explanation of digital distribution costing money. I am not arguing against a strawman. The numbers I used in my post were pulled out of thin air to illustrate a point but I see you chose not respond to the actual cost of a digital good being distributed through digital means.

    You are arguing from a single economic principle without taking real world market forces into account. The theory is good but you recite it like a broken record and offer no proof of your assumptions.

    Digital goods cost to store.
    Digital goods cost to copy.
    Digital goods cost to transmit.

    While these costs may be minimal they are still costs. This makes digital goods, at least at this moment in time, a non-infinite good. Of course they are a near infinite good but still non-infinite.

    Ignoring all but the "infinite goods" mantra and repeating it ad nauseum whilst plugging your ears with your fingers and saying "nyah nyah nyah" isn't going to convince anyone.

    I do admire how you skipped the part about digital goods actually having a cost attached though. That was well done. Do you want to continue down how it actually costs the consumer even if the digital good is being offered without any exchange of currency (free)?

     

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  43.  
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    Mike (profile), Jun 27th, 2008 @ 2:44pm

    Re: Re: Re: Free?

    I see you missed the explanation of digital distribution costing money. I am not arguing against a strawman. The numbers I used in my post were pulled out of thin air to illustrate a point but I see you chose not respond to the actual cost of a digital good being distributed through digital means.

    Those are FIXED costs.

    Digital goods cost to store.

    The cost to store one more song is zero.

    Digital goods cost to copy.

    The cost to copy one more song is zero.

    Digital goods cost to transmit.

    The cost to transmit one more song is zero (assuming, as is almost always the case, that you are not charged per byte).

    While these costs may be minimal they are still costs.

    There are *fixed* costs associated with each. Not marginal.

    Ignoring all but the "infinite goods" mantra and repeating it ad nauseum whilst plugging your ears with your fingers and saying "nyah nyah nyah" isn't going to convince anyone.

    Pretending fixed costs are marginal is much worse.

     

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  44.  
    identicon
    flesh99, Jun 27th, 2008 @ 5:35pm

    Re: Re: Re: Re: Free?

    Those are FIXED costs.
    They may be fixed but they are still costs.
    The cost to store one more song is zero
    The cost is not zero. Storage is paid for. Especially storage that is highly available and reliable. This cost does not exist for an artist who has only a simple web presence. And it goes up as you need to store more. A fixed cost does not equal zero. The cost is split up between all of the songs stored. The cost to maintain the storage is also split up as well. These are recurring costs and they are not zero. Your ignorance astounds me. You have become so lost in the "infinite goods" mantra that you have no idea of the costs associated with maintining a highly available, reliable, online distribution method.

    The cost to copy one more song is zero.
    You are once again incorrect. The cost is both to the consumer and the artist at this point. CPUs cost electricity to run. The server in the data center costs cooling. These costs are also spread out across the songs. Likely, again, highly available. A recurring fixed cost that is not, once again, zero and furthermore higher than a simple web presence.

    The cost to transmit one more song is zero (assuming, as is almost always the case, that you are not charged per byte).
    Bandwidth is also a cost. Like it or not. Have it included in your monthly recurring fees or not. It is still recurring fee that is non-zero. A popular artist will pay much more than a starving artist as their music is downloaded more frequently. This is not a non-zero cost.

    Even if the artist uses p2p technology the cost is simply passed on to the consumers via their monthly fees, their consumption of power, and so on. You can try to stick your head in the sand and claim that it is zero but it is not zero.

    Pretending fixed costs are marginal is much worse.
    This argument is complete fallacy. You seem to be under the mistaken impression that a fixed cost is equal to zero. That is the only way your argument makes any sense. It is not true and not even logical. Fixed costs are costs. Even one time costs are costs. Your assumption that fixed costs, recurring or not, do not count is laughable. Also the costs are not fixed. Bandwidth can be purchased in blocks but it is not a fixed cost. If you go over your allotment then you pay more. This is exactly what a fixed cost is not. You defeat your own argument by claiming fixed costs don't count when they so obviously do. They may be marginal but they are all still costs. You cannot prove by any logical means that a fixed cost doesn't count. Thanks for playing.

     

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  45.  
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    Mike (profile), Jun 27th, 2008 @ 7:09pm

    Re: Re: Re: Re: Re: Free?

    They may be fixed but they are still costs.

    Yes, they are *costs* but fixed costs do not play into prices. This is econ 101 stuff here.

    The point that we are making is that when figuring out where the market is heading, you look at the marginal costs, not the fixed costs. You can pretend that you need to look at fixed costs, but you are wrong.

    The cost is not zero. Storage is paid for

    As a FIXED COST, not marginal.

    Please, please, please learn the difference. Otherwise you are making no sense.

    Everything you are saying here shows an ignorance of economics. Yes, fixed costs are costs, but they do not factor into price in a competitive market. You are making a huge economic fallacy.

    Your response to all the rest of my points is incorrect again, because of this same issue. We did not deny that these are fixed costs. We merely pointed out that the MARGINAL cost is zero -- and it's MARGINAL cost that determines price.

    And it goes up as you need to store more. A fixed cost does not equal zero.

    I never said the fixed cost was zero. I said the MARGINAL COST of adding one more song is zero. This is a fact. It's also a fact that it's the marginal cost (not the fixed cost) that determines price.

    You keep saying that I am incorrect, but unfortunately you are incorrect -- and each time you pretend that fixed costs play into price, the more ignorant of basic economics you appear.

    A recurring fixed cost that is not, once again, zero and furthermore higher than a simple web presence.

    Again, I never said the fixed cost is zero. But I said the marginal cost is zero. You call me ignorant, in displaying your own ignorance.

    Fascinating.

    This argument is complete fallacy.

    Economic history proves you wrong. Do you really want to go against two centuries of economic fact?

    You seem to be under the mistaken impression that a fixed cost is equal to zero.

    No. I have said no such thing. It is only you who are displaying a mistaken impression. Fixed costs are most definitely not zero. But it's marginal cost that determines price.

    Fixed costs are costs. Even one time costs are costs. Your assumption that fixed costs, recurring or not, do not count is laughable.

    Tell that to any economist. Learn some economics before you start bashing me.

    Yes, fixed costs are costs, but they do not factor into price. It's marginal costs that determine price.

    Also the costs are not fixed. Bandwidth can be purchased in blocks but it is not a fixed cost. If you go over your allotment then you pay more.

    PLEASE go learn what "fixed cost means." You clearly do not understand. The fact that if you go over it costs more, does not mean that it's not a fixed cost. It's only a marginal cost for that ONE song that goes over. But every song in that "block" has a zero marginal cost.

    You defeat your own argument by claiming fixed costs don't count when they so obviously do.

    Please, go learn some basic economics. You are making yourself look seriously silly.

    They may be marginal but they are all still costs.

    Again, I never denied that fixed costs are costs. I only pointed out that it's marginal costs that determine price. You keep repeating this same false statement.

    You cannot prove by any logical means that a fixed cost doesn't count.

    Other than, you know, reality. And two centuries of well-established economic thought.

    Thanks for playing.

    I'm not playing. This isn't a game. If you want to be taken seriously, please learn at least basic economics before coming here and making a fool of yourself.

     

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  46.  
    identicon
    Anonymous Coward, Jun 28th, 2008 @ 6:54am

    Re: Re: Re: Re: The "Out of College" Groups

    I don't purchase CDs without hearing them. I purchase them after hearing and deciding I like them.

    And nothing's "going away," especially not copyright (in case you haven't been reading the news).

     

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  47.  
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    CeeVee (profile), Jun 28th, 2008 @ 1:52pm

    So if I understand the 'economics' argument presented here. If it costs me 10 zillion dollars to produce the new record and I choose to distribute it electronically then I ought to charge nothing for it because my marginal costs are zero.

    Perhaps I'm being stupid here but why on earth would I spend any money producing music if I couldn't have at least a chance of recovering my investment ?

    I'm not looking for a guaranteed return here, just a plain old capitalist chance of making a profit.

     

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  48.  
    identicon
    Eeqmcsq, Jun 28th, 2008 @ 5:42pm

    Re:

    >then I ought to charge nothing for it because my marginal costs are zero.
    It's not that you ought to charge nothing. It's that if you attempted to charge something for digital files that have a variable cost of zero, competitive forces will drive the price per file down towards zero. That competition comes from EVERYWHERE, as ANYONE can duplicate these files. Websites, p2p, your friends, etc. If you had a choice between paying a small amount for a music file and copying that same file for free from virtually anywhere, which would you choose? Those who are conscious enough to want to support an artist might choose #1, but from a purely analytical perspective, the average customer would choose #2. You have to compete with that, and that drives the price down to zero.

    So it isn't necssarily that you "ought" to charge nothing, it's that you can't rely purely on digital files that ANYONE can reproduce ANYWHERE as your sole source of income. If you have enough people who are willing to pay, then go ahead and charge an amount. Meanwhile, you better have something else you can make money with based on your music.

    >why on earth would I spend any money producing music if I couldn't have at least a chance of recovering my investment ?
    Why do companies spend money on creating commercials, then spend MORE money paying for tv/cable/radio air time? They're not getting any money out of it. The answer is that they're trying to get people aware of their product that they are selling so they can go buy it. In other words, they are spending money on ads and recovering by selling a real product. The more people who hear about a product, the more likely the product will be sold.

    The same can be said of music. Let it spread so more people can know about the artist and pay for other stuff. Mike has been preaching this stuff for months now, and having been forced to think through and compose the replies in this post, Mike's posts makes more sense to me now.

     

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  49.  
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    Mike (profile), Jun 29th, 2008 @ 11:19am

    Re:

    So if I understand the 'economics' argument presented here. If it costs me 10 zillion dollars to produce the new record and I choose to distribute it electronically then I ought to charge nothing for it because my marginal costs are zero.

    Not "ought" to, but will be forced to by the economic reality.

    Perhaps I'm being stupid here but why on earth would I spend any money producing music if I couldn't have at least a chance of recovering my investment ?

    Because you DO have a chance of recovering your investment. You are looking at the "market" too narrowly -- only looking at the market as being that song -- rather than everything else that song makes more valuable (access to the band, the ability to get the band to write new songs, concerts, merchandise, etc. etc. etc.).

    The more you look at the economics, the more you realize that as you look at the music (the infinite good) as a *resource* rather than as a good to be sold, the more you realize that giving it away actually INCREASES your chance of not just recovering your investment but to profit.

     

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  50.  
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    Blaise Alleyne (profile), Jul 1st, 2008 @ 9:47am

    Re: Re: Re: Re: Re: The

    There may be a "marginal cost" to copy, but there is not a "marginal cost" to produce.

    Marginal cost is reproduction, by definition. The price doesn't approach the cost of production, it approaches the marginal cost of reproduction.

    At some point, as the price moves further down the line, the content producer will no longer be able to sustain production. At that point, the price reduction stops, or the product ceases to exist.

    Think about what you're saying for a second. How is it any different if the price is zero? If price approaches marginal cost, and the marginal cost is $100 per unit, there's still no profit if someone isn't able to sell something for more than it costs to make it (again, not even considering the cost of initial production).

    This is not specific to the price of $0.

    How do people make money if the price approaches the cost of marginal reproduction? They do it all the time, unlike your suggestion that content would stop being produced.

    It's done through differentiation based on cost or benefit. If you provide a perceived benefit to consumers, they will be willing to pay more for the product you're selling. That's the demand part of things. You need to either give people a reason to pay above the marginal cost of reproduction (e.g. patronage like the pay-what-you-can model, high-quality audio formats, combination of digital music with scarce goods, etc) or leverage the abundance of digital music to add value to your scarce goods. Or better yet, a combination of both.

     

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  51.  
    identicon
    Nikki, Jul 6th, 2008 @ 5:48pm

    What McFLY are doing is such a great idea. It gives them the chance of getting millions of CDs out to some millions of people whom have never purchased one of their records before. Like someone said on here; they buy most all of their music but not merchandise and concert tickets. Well it's not like McFLY will loose much money either...because you only buy music you like in the first place. If someone saw a McFLY CD in America for instance, no one would pick it up seeing as they don't really know who McFLY are, so that CD would have not gotten sold anyways. But in England, granted, it is a different story. They will probably loose a little money but I along with a lot of other people will get the free CD, but then buy the new CD when it comes out. what McFLY are doing is great. You people should all get lives and quit trying to sound smart. No one hired you as money managers for McFLY.

     

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  52.  
    identicon
    kate, Aug 13th, 2008 @ 2:26am

    Re: Movie Stars

    YEAH, they where in just my luck. the rummer even had a thing goin with her, until she turned gay.

     

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  53.  
    identicon
    Late Responder, Mar 20th, 2009 @ 5:38pm

    Re: Movie Stars

    Yes, they were in a movie with Lindsay Lohan (which I recall as being titled, 'Just My Luck'). The movie was, admittedly, a major flop, and when McFly were in it, they were definitely at the pinaccle of their success.
    Their new album, Radio:ACTIVE, is much better - and shows they have matured. And not only that, but they're very good live.
    I honestly wish people would give them the credit they deserve and stop slagging them off. They're brilliant in their own right, and I'm sure a lot of people would agree if their shows weren't consistently sold out to screaming teenage girls.
    It's not like they're parading around and claiming to have beaten legendary musicians like The Beatles, Elvis or Michael Jackson...

     

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  54.  
    identicon
    Cheers, Mar 20th, 2009 @ 5:45pm

    Re:

    I completely agree with you Nikki!
    People need to cut McFly some slack. They're great musicians in their own rights and sending out their CD for free is a great way to distribute their music to people who never would have considered buying it before. Also, they've said Radio:ACTIVE is their best album yet, so it would really be great to turn up at a concert which has an older demographic (not just those mini teenybopper fans who are accustomed to their original teen-pop sound).
    McFly are great guys, and they have helped out with a lot of great causes. People really need to learn to appreciate that and stop going on about how they're doomed to an incessant life of poverty.
    They're not. Get over it.

     

    reply to this | link to this | view in thread ]


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