Comparing File Sharing To Payola: Could Have Had That Promotion For Free

from the failure-to-engage dept

BullJustin points us to a short NPR piece about four massive failures by the recording industry. If we skip over number 3 (Kevin Federline), the other three are pretty relevant to what we talk about here on a regular basis: the Sony BMG rootkit fiasco that opened up security holes on computers without letting anyone know, the RIAA's lawsuit strategy of suing fans and the record labels' ongoing efforts at payola to get songs played on the radio.

However, BullJustin makes an amusing point in the submission concerning that last one:
It cost the industry untold millions in actual payola, independent promoter fees, and then more than $25 million in settlements, not to mention lawyer fees. If they would have just let people share the music online, the marketing they were looking for could have been free."
It really does make you wonder what goes through the minds of record label strategists. They tossed away millions paying people to get music heard, when they could have just embraced file sharing and made it cheaper and easier to get music heard without running into the legal problems of payola as well. Of course, the problem with that plan is that the labels also lose "control." They've paid to get songs on the radio because they wanted to just focus on a small group of artists who they could squeeze for as much profit as possible, dumping all the rest. File sharing makes it harder and raises the possibility that other artists might also get heard.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    radio vs internet, Nov 24th, 2009 @ 3:28pm

    radio vs internet

    i turn on radio i hear free music
    what is real differance between that and streaming it free or downloading it

    ( like say i dunno recording it on a tape player didnt we say all this 20 years ago and LOOK WHOSE STILL AROUND !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!)

     

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      Marcus Carab (profile), Nov 24th, 2009 @ 3:41pm

      Re: radio vs internet

      Well, the supposed difference is that none of those situations are quite like digital files in the internet era, where everyone has access to everything and can play it on a huge array of devices, and share it infinitely with no quality loss.

      And to be fair, that is a difference. It's just not entirely clear how any of it could possibly be considered bad.

       

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      Doctor Strange, Nov 24th, 2009 @ 3:57pm

      Re: radio vs internet

      The real difference is that on the radio, you get to hear the music when the radio station wants you to. You can't say "gee, I don't like this song...play that other one again." If you have a CD or digital copy of the song, you can do that. Streaming is somewhere in between, but at least with streaming the copyright holder or their agent can limit how many times you play a song, withdraw it from availability, or limit where you can play it.

      Taping songs is indeed a threat but much less of one. It takes time and effort to copy a tape...much more than dropping an MP3 in your shared folder. There are also issues of quality degradation in tape copying as well as the fact that it's difficult to make more than one copy at a time.

      I don't see why Mike is so flummoxed about why the radio is an attractive medium and why record companies would pay for their songs to be played. He cites half the answer in his post (it's a medium that lets you retain substantial control). The other half of the answer is that the radio
      is good advertising for the product: it pushes the product to listeners in a way that makes them more apt to buy. The goal is not to get the artist widely heard, it's to get the album widely bought. The Internet does not push product. The product just sits there. You can push product ON the Internet, but just sticking your product out there without actually advertising it is not a really awesome marketing strategy.

      When record companies are doing something other than selling music, their behavior may change. That is the nature of the 360 deal. In the old deal the artist paid for fame with their music, and got to keep the profits from fame (touring and merchandise dollars) mostly to themselves. Since the music is rapidly becoming un-monetizable, the artists will instead pay for fame out of their pockets.

       

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        dorp, Nov 24th, 2009 @ 4:09pm

        Re: Re: radio vs internet

        The other half of the answer is that the radio is good advertising for the product: it pushes the product to listeners in a way that makes them more apt to buy.

        That is not a statement of fact, that's just your theory and you did nothing to even try to provide examples, let alone proof.

         

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        Marcus Carab (profile), Nov 24th, 2009 @ 4:10pm

        Re: Re: radio vs internet

        The Internet does not push product. The product just sits there. You can push product ON the Internet, but just sticking your product out there without actually advertising it is not a really awesome marketing strategy.

        I'm not entirely sure what you're saying here, but I don't think you're right about what goes on with content online. No, the internet doesn't push product, people push product, which was always the end-goal with radio as well: to get people talking about an artist and telling their friends about them.

        The internet has shown that it does "push product". A lot. Things get popular just by virtue of being discovered online, and they become phenomenons overnight. Besides, nobody is suggesting that the marketers shouldn't push their artists online with ads and twitter feeds and less traditional ideas if they have them - that's absolutely what they should be doing. But they're not - or, they are, but people don't pay that much attention. Because people are more interested in what their music-loving friends send them, and their friends (often enough) are filesharing, not going to the Myspace top songs page.

         

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        Anonymous Coward, Nov 24th, 2009 @ 4:23pm

        Re: Re: radio vs internet

        Well, for one, recording songs directly off the radio has been a practice for decades. Radio was never free from piracy ever since it was possible to buy personal recording devices.

        Secondly, as many indie bands can attest, giving away music does not replace the buying of music entirely, and if it's completely free to market something, you drastically cut back on costs.

        Thirdly, if the entertainment industry had actually used its head and invested in the "internet", then they could probably have created their own free streaming services. I hope I don't have to Rick Roll anyone to prove how YouTube can boost music sales.

        And finally, even though many services allow for streaming of music and videos without ANY costs to the marketing companies, like the aforementioned YouTube, many companies still choose to lock down their product and file takedown notices. Rather than allowing the free (for them) advertising that streaming services, fan-made videos, etc. provide for their products, they choose to spend millions of dollars on commercials and ad spots.

         

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        Derek Reed (profile), Nov 24th, 2009 @ 4:36pm

        Re: Re: radio vs internet

        The other half of the answer is that the radio is good advertising for the product: it pushes the product to listeners in a way that makes them more apt to buy. The goal is not to get the artist widely heard, it's to get the album widely bought. The Internet does not push product. The product just sits there. (emphasis mine)

        The Internet does not push product? Yes it requires some effort to get the fire started, but The Internet (by which I mean the billion people on the internet) most certainly does push stuff around, especially when said stuff is easy to push around (unrestricted by DRM and easy/encouraged to send to a friend). Good music spreads, the less friction you put on it the better. And when people are listening to that and like it, they find out who you are. Then, then, you have an opportunity to give them a reason to buy (a very, very good opportunity).

        Yes, just sticking it one place and then doing nothing, ever, is a bad strategy, but to say that the internet can't be utilized to push product is just silly.

         

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          Doctor Strange, Nov 24th, 2009 @ 9:53pm

          Re: Re: Re: radio vs internet

          but to say that the internet can't be utilized to push product is just silly.

          Actually, if you had extended your excerpt of my post one more line, you would have seen where it said:

          You can push product ON the Internet

          The original post asks why the record companies might risk payola fines and scandal when they could have simply given the music away and gotten the same (or a better) result:

          If they would have just let people share the music online, the marketing they were looking for could have been free.

          This is bogus.

          As I pointed out (and then you accused me of not pointing out, and then pointed out again), the Internet does not magically market things for free. People market things. Marketing does work. Marketing costs money (or money-equivalents, like time).

          For whatever reason, occasionally a large number of people will choose to market something on the Internet really well for free. Tay Zonday's "Chocolate Rain," for example. But the catch is, it's either very hard or impossible to engineer this. You think every marketing person in the universe hasn't thought "gee, what if we could just get millions of people to market our stuff FOR us?" Of course they have. The problem is that the 'wisdom' of the crowd is capricious, and is an emergent behavior. Emergent behaviors are notoriously difficult, if not impossible, to engineer. How many efforts a year do you think are undertaken, with budgets of all shapes and sizes, to engineer viral marketing campaigns? How many do you think create another "Chocolate Rain?"

          Marketing works. Do you seriously think if I shut down Top 40 radio tomorrow and put all those songs for free on Myspace, with no Internet marketing (remember: marketing on the Internet is free according to the article), that they would be as popular as they are?

          Do you think that if I went and plucked an obscure semi-decent song with a hook off Myspace tomorrow and put it in the main rotation on Top 40 radio, playing four times an hour all day long with fake "call-in requests" and the whole works that the popularity for that band wouldn't skyrocket?

          The reason you want your song on the radio is because radio PUSHES PRODUCT. Listeners get a pure Hobson's choice: take it or leave it. Listen to the station or don't. Once they choose to listen, the radio station, not the listener, is in control of what the listener hears, how often, with what patter surrounding it, etc. Yes, this influences buying decisions. The Internet can emulate this model, but the "free" default (just stick it out there and pray it goes viral) is an utter crapshoot.

          Worse, you not only have to hope the product goes viral, but you have to hope that the product ALSO somehow makes people want to buy something else that is somehow related to the product. If you are the one investing in making this artist popular, then you need a piece of this ancillary action to recoup your investment, i.e., a 360 deal.

           

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            identicon
            Anonymous Coward, Nov 24th, 2009 @ 10:25pm

            Re: Re: Re: Re: radio vs internet

            Hint: Allowing sharing of music online != throwing the music online for free and then doing nothing.

            I know, I know, you suck at reading comprehension, sorry.

             

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              identicon
              Doctor Strange, Nov 24th, 2009 @ 10:34pm

              Re: Re: Re: Re: Re: radio vs internet

              Allowing sharing of music online != throwing the music online for free and then doing nothing.

              Actually no it's not. Now if you're talking about MARKETING your music online, then that's different, but we're not talking about marketing the music. We're talking about just making it free and hoping it goes viral:

              If they would have just let people share the music online, the marketing they were looking for could have been free."

              See, if you market the music, then the marketing isn't free, now is it? The article posited that the alternative was FREE.

              Here's a question: you're a basically unknown band. I will give you a choice:

              1) I will get your music in the main rotation on national Top 40 radio tomorrow.
              2) You can distribute MP3s to whomever you want, but you don't get any radio airplay.

              Which would you pick?

               

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                Anonymous Coward, Nov 25th, 2009 @ 12:34am

                Re: Re: Re: Re: Re: Re: radio vs internet

                The second choice would be the painfully obvious one. To whomever I want? I choose everybody. Not everybody listens to the radio.

                I win.

                 

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            identicon
            dorp, Nov 25th, 2009 @ 7:41am

            Re: Re: Re: Re: radio vs internet

            The reason you want your song on the radio is because radio PUSHES PRODUCT

            That's as dumb of a statement now as it was before. I am listing to 103.9. At the same time, 92.3 is playing some song. Guess what, only one of those is "pushing" anything. Exactly the same as online. Except that online I have the ability to find out what that song is and get it right away, while the radio won't even tell me the name of the song.

            You are continuously making up fake scenarios just to make a non-existent point.

             

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            chris (profile), Nov 25th, 2009 @ 8:46am

            Re: Re: Re: Re: radio vs internet

            Marketing works. Do you seriously think if I shut down Top 40 radio tomorrow and put all those songs for free on Myspace, with no Internet marketing (remember: marketing on the Internet is free according to the article), that they would be as popular as they are?

            i think you have confused a few things.

            promotion is not the same thing as marketing, just like social networking isn't the same thing as the internet.

            marketing is way more than promotion: it concerns the product itself, the packaging, placement, and pricing as well as promotion. taking a product engineered for radio and sticking online, without revising it for the new medium would naturally be a failure. promotion online is free, distribution online is free. the rest of the marketing process... not so much.

            mass market music is a great example. millions are invested making sure it appeals to a broad audience, so it gets downloaded en masse and there is no way to recoup all of the money invested. the problem isn't the fact that the music was downloaded -there is no way on earth to stop something from being downloaded- the problem is that you spent to much making and marketing it.

            The Internet can emulate this model, but the "free" default (just stick it out there and pray it goes viral) is an utter crapshoot.

            the internet isn't radio with a "buy" button. radio is a closed system controlled by a few players. this means that getting past the barrier of entry costs big bucks and the crap you put on it has to have the broadest possible appeal.

            the internet is a whole new medium, with a whole new set of rules. because anyone can make anything, and publishing, distribution and promotion are essentially free, there are sub-cultures within sub-cultures that have media experts and sociologists alike scratching their heads. the old radio/TV model of limited access and controlled distribution just doesn't make sense anymore, therefore, your product doesn't make sense either. trying to apply the old formulas to this new medium is a waste of time and money.

             

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      •  
        identicon
        Anonymous Coward, Nov 24th, 2009 @ 4:58pm

        Re: Re: radio vs internet

        "The goal is not to get the artist widely heard, it's to get the album widely bought."

        I don't mean to alarm you but no one is really buying albums. I know plenty of folks who just purchase the single. Much cheaper in this recession.

        I also know plenty of folks who download music for free off of artist's own sites. You know, the independant ones. They don't get much radio play, as radio is set up for only the majors to succeed.

         

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        Nick Coghlan (profile), Nov 24th, 2009 @ 6:04pm

        Re: Re: radio vs internet

        Radio is a good format for encouraging people to buy? WTF?

        I hear a song on the radio: I don't know who it's by, I don't know what it's called, I don't know where I can buy it, I can't go back and listen to the whole thing if I came in partway through, and even if I find those things out I'd have to remember to go buy it later.

        I hear a song on the internet: Ooh, look, metadata letting me know the name of the song and the artist. In some contexts, even a direct link to the artist's page where I can buy their stuff. All in a context that makes impulse buying very easy (since you can do it right now without going anywhere)

        Yes, one of these is a much better medium for encouraging people to buy your stuff, but it sure as hell ain't radio.

         

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          identicon
          Anonymous Coward, Nov 25th, 2009 @ 5:58am

          Re: Re: Re: radio vs internet

          Nick, you just proved you have the attention span of a flea. In radio, they have this amazing thing called "back calling" where this guy comes on and tells you what just played (maybe back a couple of songs). Most people who listen to music aren't aggressive information foragers, they just want to listen to some good music.

          Radio is a great medium for encouraging people to buy new music. It has worked for a remarkable amount of time.

           

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          •  
            identicon
            dorp, Nov 25th, 2009 @ 8:42am

            Re: Re: Re: Re: radio vs internet

            In radio, they have this amazing thing called "back calling" where this guy comes on and tells you what just played (maybe back a couple of songs).

            Most radio stations no longer have that for all the songs. At best, they do a preview of the next song in a 12-18 song sequence and at the end call out a couple of the last ones. Get with times yo, radio DJs have been marginalized and outsourced to lowest bidders, they do the least possible.


            Most people who listen to music aren't aggressive information foragers, they just want to listen to some good music.

            Exactly, which is why internet is easier to use than radio, since you don't have to be "information forager" unlike with the radio where you are at the mercy of a DJ from another city to let you know what song you just listened to

            Radio is a great medium for encouraging people to buy new music. It has worked for a remarkable amount of time.
            Obviously it's not true anymore. Get with times, pops.

             

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        isthisthingon (profile), Nov 29th, 2009 @ 1:34pm

        Re: Re: radio vs internet

        >In the old deal the artist paid for fame with their music, and got to keep the profits from fame (touring and merchandise dollars) mostly to themselves.

        Wrong. The record company "deal" hasn't changed and still involves surrendering the rights to your own creative works for a very small portion of the proceeds.

        >Since the music is rapidly becoming un-monetizable,

        You might want to brush up on your business basics. Truly the only real looser with Internet based music is the massive distribution companies who we no longer need. Think about it, their main purpose was to promote and distribute creative works. Why in the world should we continue to pay them for distributing anything that is instantly available in digital format? One reason - they are huge, powerful, already exist and plan to maintain their dominance - as any self respecting public company should.

        Trust a public company to attempt to maximize their own profits. When technology renders a company useless, trust them to use legal and other means to continue to bring dollars in. We have to be the ones to wake up and realize a service no longer has any real value.

         

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    Richard (profile), Nov 24th, 2009 @ 3:50pm

    They hurt the thing that helps them...

    As a slight simplification consider that songs are divided into two categories

    1 Well known songs

    2 Songs known only to a few people

    Now consider the effect of internet filesharing and private filesharing (by personal contact) on each category.

    Internet filesharing is not necessary for class 1 since you can probably find someone who has a copy within your circle of friends. Such songs are mostly copied privately and so the losses sustained by the recording industry (if you believe in such things) are mostly if not entirely the result of private copying.

    Private copying is not relevant for type 2 since you probably don't know anyone who has them. Internet filesharing on the other hand may give you a copy without paying but since you wouldn't have heard about it otherwise there is a net gain to the publisher/artist from those people who decide to buy a paid download/ CD or attend a concert afterwards.

    So there we have it. The industry is impotent to do anything about private copying - which arguably may give rise to a loss to them - and instead pursues internet filesharing - which is probably a net gain.

    As a side effect they tend to force internet filesharing to become more like private copying - and therefore less likely to deliver its positive effects!

     

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    another mike (profile), Nov 24th, 2009 @ 4:23pm

    free is only bad if you're not getting it

    Copyright "piracy" is the result of your fans reaching you despite your best efforts to drive them away. There are always "piracy-proof" business models available for the companies that want to stay in business.

     

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      Derek Reed (profile), Nov 24th, 2009 @ 4:49pm

      Re: free is only bad if you're not getting it

      Copyright "piracy" is the result of your fans reaching you despite your best efforts to drive them away

      Well said. This is something that's too infrequently recognized by those failing to grasp all this. The ones that are pirating your music are people that want to listen to your music. They are not enemy combatants in a global war, they are people that for some damn reason like your music, and maybe even you. They are not nameless pirates and evildoers plotting to steal your cattle, they are fans trying to listen to you.

       

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        Hephaestus (profile), Nov 25th, 2009 @ 7:09am

        Re: Re: free is only bad if you're not getting it

        "They are not nameless pirates and evildoers plotting to steal your cattle, they are fans trying to listen to you."

        From the perspective of the Artists this is true.

        From the perspective of the record labels... not so much, they are only in it to make money.

         

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  •  
    identicon
    Anonymous Coward, Nov 24th, 2009 @ 4:34pm

    I think it would be a good clarification to point out that the article linked is an opinion piece, a blog, and not a news story in any sense. Just one guy's opinion.

     

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      Nick Coghlan (profile), Nov 24th, 2009 @ 6:15pm

      Re:

      Uh, most interesting conversations include a large degree of opinion. When the facts are clear and everybody understands and accepts them and agrees on what to do in response, there really isn't much to talk about.

      When the facts are unclear, or when the best course of action in responding to clear facts is less than obvious, or when cognitive biases prevent people from acknowledging the facts, that's when a meaningful discussion can take place.

       

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  •  
    identicon
    hank, Nov 24th, 2009 @ 5:49pm

    same reason for the net tax

    control the playlists, and you control the cash registers-- thats why there is this streaming tax for net radio -- keep the alternative artists away from consumers ears so they can't grow up and appreciate anything else. This is the entire history of FM radio, I used to work in AOR (album oriented rock) radio promotion for Polygram/Mercury and have witnessed it firsthand.

     

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    Fred McTaker (profile), Nov 24th, 2009 @ 8:25pm

    Monopoly begets more monopolies

    Label monopolies like encouraging other audio monopolies, like radio. They want to control your ears and air waves any way they can, so they can keep charging you their monopoly rents.

     

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    identicon
    Anonymous Coward, Nov 24th, 2009 @ 9:26pm

    neighbor

    One of my neighbors was the CEO of Sony Records, before that, he was the president of RCA Records. (they merged). He showed me the paperwork of back in the 90's, he wanted to put computers in the music stores with burners on there, so that people could buy what they wanted. But everyone told him it was a horrible idea, and no body would of wanted it. So he backed down on it. I told him, had he of done that, piracy would never be to the levels it is now.

     

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      identicon
      Valkor, Nov 25th, 2009 @ 11:01am

      Re: neighbor

      Wow, that would have been horrible. People wouldn't have paid for whole crappy albums to get two good songs. Instead they would have paid $.99 each for things they actually liked!

      When people told you neighbor "nobody" they meant "nobody in this record label office". They, being the gatekeepers of music, obviously knew what people wanted better than the consumers themselves.

      Welcome to the future, Sony.

       

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  •  
    identicon
    cc, Nov 25th, 2009 @ 3:46am

    In this post you've finally made a point that I believe was neglected earlier.

    "They've paid to get songs on the radio because they wanted to just focus on a small group of artists who they could squeeze for as much profit as possible, dumping all the rest. File sharing makes it harder and raises the possibility that other artists might also get heard."

    Record companies are the ones who make new artists' lives difficult. Without their record company's massive endorsement, many mainstream artists of today wouldn't be where they are (because they plain suck) and other, smaller artists would have a better chance of making it based on their merits.

    On the internet, good music becomes "viral", bad music fades into oblivion. The money goes where it deserves to go, not where some execs think it should go.

     

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    identicon
    Vincent Clement, Nov 25th, 2009 @ 5:47am

    Record Companies Are Stupid

    I was a user of MusicMatch Jukebox well before Yahoo purchased it, bloated it and then killed it. You could purchase MMJB Radio as an add on. You could stream generic radio stations or create a stream based on the artists you selected. It wasn't expensive so I subscribed.

    It was wonderful.

    Then the record companies started enforcing various international licencing agreements. I was located in Canada. I got a notice that my radio account would not be renewed because I was outside of the US. At the time there were no reliable or similar streaming music providers in Canada. I gave up on streaming music.

    By enforcing their licensing agreements, the record companies lost me as a PAYING customer.

    Nice one.

     

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      Hephaestus (profile), Nov 25th, 2009 @ 7:20am

      Re: Record Companies Are Stupid

      There is a saying ....

      "The chinese are their own worst enemy"

      Well ....

      "RIAA is there own worst enemy"

       

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      •  
        identicon
        Anonymous Coward, Nov 26th, 2009 @ 3:49am

        Re: Re: Record Companies Are Stupid

        Except for one simple problem: The Chinese are doing better than the rest of us.

        Hmmm.

         

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        •  
          identicon
          Anonymous Coward, Nov 26th, 2009 @ 11:24am

          Re: Re: Re: Record Companies Are Stupid

          Better than the rest of us at, what? Pollution? Communistic democracy? Manufacturing?

          That last one is painfully true.

           

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