Why It Makes Sense For Record Labels To Offer All Music Freely As MP3s

from the the-argument-is-spreading dept

We've been making this sort of argument for many, many years, but it's nice to see that it's catching on in a variety of places, including the more mainstream media. Over in the UK, there's a column in the Telegraph advocating that record labels stop trying technological and legal efforts to fight unauthorized file trading online, and instead give away all their music as free MP3s, and focus on alternative revenue streams. The crux of the argument is the same one that we've made over and over again, namely (1) fighting unauthorized file trading is counterproductive, doesn't work and will never work and (2) once you free up the music, there are all sorts of compelling business models you can adopt that can actually help you make more money. The column is a bit weak on highlighting some of those business models, though there are plenty. But, it's still nice to see the concept getting more attention.


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    Anonymous Coward, Jul 21st, 2010 @ 12:42pm

    Could be a subscription service

    I don't even think it necessarily has to be completely free, there is value to a service that provides unlimited downloads of high quality MP3s, with every release ever from every label (or as close as is possible). I pay for spotify because I can load it on my phone and my computer and listen to whatever I want, but it has its limitations and they can be frustrating, especially when one of your favourite albums just disappears because some licensing deal has expired. I can't be bothered with peer to peer, it is often low quality rips and the more obscure stuff can be hard to find. I would pay for a convenient, easy to use, high quality service, with no meters or DRM. You can actually compete with free, in the same way you can compete with cheaper. You offer higher quality, more convenience and an all round better experience.

     

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    rodjoh, Jul 21st, 2010 @ 12:55pm

    Lets not get far-fetched now. Just because the "fight is hard" doesn't mean they should just give it away. Specially because not all musicians are part of major labels and this would also affect them.

    I agree that an alternate business model should be considered though.

     

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    Hephaestus (profile), Jul 21st, 2010 @ 12:59pm

    Lets face it the record labels are doomed.

     

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      Sam I Am, Jul 21st, 2010 @ 1:34pm

      The record labels are doomed?

      The labels are hardly doomed. As everything moves closer to the MySpace/FaceBook/Twitter (increasingly) level playing field it is becoming littered with millions, perhaps 10's of millions of acts, more every day, all striving to break out. And we're supposed to find them.

      The discredited notion that a musician can do all the tasks that were once handled by managers, coaches, agents and marketing, public relations and booking is sweet but laughable; they have music to write and play, to rehearse, record and perform, the list goes on and on.

      As the playing field levels the game becomes more and more about marketing to break out. Think marketing muscle. Yeah. The labels are doomed. :-)

       

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        jjmsan (profile), Jul 21st, 2010 @ 1:50pm

        Re: The record labels are doomed?

        "The discredited notion" May I ask for a cite here?

         

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          Blatant Coward (profile), Jul 21st, 2010 @ 2:52pm

          Re: Re: The record labels are doomed?

          That citation would be the Interview Lily Allen had with the Times (paywall subscription and or tunnel required) when she stated "I caaaaaan't make posters and stuff, I'm a guuuuuuuurl!" She then took off her shirt, and posted a new mixtape.

           

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        Richard (profile), Jul 21st, 2010 @ 1:52pm

        Re: The record labels are doomed?

        I agree there is a useful job to be done in helping the public to find the music they will like. I also agree that the labels at present employ many of the people with the right skills to do this. The question is whether they are flexible (agile) enough to take the opportunities.

        The situation has a lot in common with the transition from mainframe computers to PCs 30-35 years ago. The incumbents have (in theory) the right skills to do the job - but their internal cost structures are all wrong for the new market. Thus it is likely that their place will be taken by new upstart companies (of course most of these will fail in the medium term).

         

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        Common Sense, Jul 21st, 2010 @ 1:54pm

        Re: The record labels are doomed?

        The labels _As they are today_ are in fact doomed. If they have the sense to turn themselves into marketing muscle firms, then they may be saved, but business as they know it today is in fact doomed.

         

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        Richard (profile), Jul 21st, 2010 @ 1:58pm

        Re: The record labels are doomed?


        The discredited notion that a musician can do all the tasks that were once handled by managers, coaches, agents and marketing, public relations and booking is sweet but laughable; they have music to write and play, to rehearse, record and perform, the list goes on and on.


        I don't think many musicians actually want to do those jobs - a few do but most are doing it themselves because the existing industry isn't providing the right kind of service just now.

         

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        RadialSkid, Jul 21st, 2010 @ 2:01pm

        Re: The record labels are doomed?

        "level playing field it is becoming littered with millions, perhaps 10's of millions of acts, more every day, all striving to break out."

        Break out of *what*, exactly? The mythical millions that major label artists are alleged to make?

        "The discredited notion"

        Keep saying it. Maybe you'll at least convince yourself.

        "that a musician can do all the tasks that were once handled by managers, coaches, agents and marketing, public relations and booking is sweet but laughable;"

        In spite of the numerous musicians who do just that? Musicians can manage themselves, or hire a manager. Same with coaches. Same with booking. Public relations and coaching? If you can't do those yourself, you don't deserve to be heard.

        "they have music to write and play, to rehearse, record and perform, the list goes on and on."

        Then they can get off their lazy butts and do more. Musicians don't play music 24/7.

        "Think marketing muscle."

        And how long are the labels still going to have that? Music thrived before the recording industry, and it will thrive afterwords. Anyone who says differently is simply small-minded.

         

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        Anonymous Coward, Jul 21st, 2010 @ 3:46pm

        Re: The record labels are doomed?

        Well maybe he have choosed his words poorly, but he is right that legacy labels are doomed.

        The new ones like Jamendo are the future.

         

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        PaulT (profile), Jul 22nd, 2010 @ 12:33am

        Re: The record labels are doomed?

        "The discredited notion"

        I'll second the request for a cite here. Who discredited it and when?

        More to the point, who says that the musicians themselves have to do this? The point is that they don't *have* to depend on labels to do this for them, they're quite free to hire someone to do it for them if they wish. It's just no longer necessary to depend on an incumbent gatekeeper.

        "the game becomes more and more about marketing to break out"

        ...and why exactly do you think that only record labels can perform this task?

         

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        Rick, Jul 23rd, 2010 @ 12:52pm

        Re: The record labels are doomed?

        Did you know that MySpace relegates independent musicians to a lower class?

        Take a look at a major label's MySpace page. Next to each song is a convenient 'BUY" link. Click it - see what happens. You can actually BUY their music. They're even paying those artists to stream that music.

        Now, look at an independent musicians page - try to click the BUY link - nothing happens. You can't BUy their music from their PAGE. They are not getting paid for those streams either.

        Now, it is true an independent can sell their music on MySpace and get paid for streams. They go to a middleman like Tunecore.com and upload their music from there. MySpace adds the ALBUM to their profile (NOT THEIR PAGE). Now you can click the hidden little Album link at the bottom of their player and go to an Album page. Here the BUY links work. Here they pay for your streasm. Here you can add your music to your page and thye get paid for those streams too.

        The fact that the EXACT SAME SONG is on their PAGE player (not the album page btw) is irrelevant to MySpace. You still can't get that BUY link on your main page to work and you will not be paid for those streams. They have NO WAY to let you use those middleman provided copies of the EXACT SAME SONG to work on the artists page player.

        The independent musicians is now providing the vast majority of it's fans FREE streams, whcih MySpace runs ads on for PROFIT and is making it incredibly hard to buy those songs they like, so they turn to file sharing to get them for free out of frustration.

        I represent a few artists who have dealt with this situation for years. Tunecore can't get MySpace to budge as MySpace bows to the labels. MySpace won't talk to independents other than via their automated email system.

        It's basically screw you - we're making money off you - tough. There is no level playing field as long as the major labels exist. They still have all the power and influence and will continue to manipulate the market for their benefit alone.

         

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    Brian, Jul 21st, 2010 @ 1:12pm

    Lower the price

    While the idea of the major labels releasing their catalogs for free is appealing, I can certainly understand their reluctance to do so. I do think they could have some success with more low-priced subscription models.

    It seems to me that many people who procure music illegally are likely younger, college-aged, people with limited income. If the labels were to team up with several services to offer inexpensive cloud-based subscription models, I think more people would jump on board.

    Sure, there are services such as Rhapsody and Zune Pass, but those are approximately $9.99 per month. I think this is reasonable, but people might be more willing to join if the price were something like $2.99 per month. As a college student with limited income, this price point is much more attractive.

    The ubiquity of smartphones and tablets (iphone, android, ipad, etc) make these subscription-based revenue streams much more appealing, even at lower price points.

     

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    Anonymous Coward, Jul 21st, 2010 @ 1:36pm

    The RIAA and MPAA get ridiculous laws getting passed that the people do not support. These will, in time, turn average citizens into criminals, make the law and government less respected and relevant, and ultimately lead to anarchy.

    Support Free Culture!

     

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    Anonymous Coward, Jul 21st, 2010 @ 1:45pm

    inb4 the outrage...

    and the shills, and the trolls, and the haters, and the close-minded...

    Congratulations on another controversial post bound to attract dozens of AC's who will repeat tired old arguments against every progressive idea you have just because your name is Mike, and this is techdirt. Or at least, that's the best reason I can come up with for all the crap around here everytime there's a post that even hints at the words "record companies" or "free".

     

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    Anonymous Coward, Jul 21st, 2010 @ 2:13pm

    Fine idea...but use OGG Vorbis insted. Avoids (potential) patent problems.

     

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      techflaws.org (profile), Jul 22nd, 2010 @ 4:07am

      Re:

      Problems such as? The people who encode the MP3s to put them up paid for the use of the encoder. Or do you think they go with LAME? In any case, the end user does not have to be concerned by this and OGG will never become as popular.

       

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    Jay (profile), Jul 21st, 2010 @ 2:44pm

    What's funny is I JUST made a post about this in the JRB thread where we have a copyright defender misinformed on quite a few things...

    Linkage

     

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    Logan2057 (profile), Jul 21st, 2010 @ 3:31pm

    RE: THE RECORD LABELS ARE DOOMED?

    Interesting post from one of the largest RIAA/MPAA Trolls around.All you've managed to say is the same old drivel that you've been repeating for years on how the labels are not dying and the fact that we're all crooks.

    Well, Sam I Am,crawl back under the rock from whence you came. The courts and the people are starting to wake up to your, the labels, creative accounting and just how much BS their monetary loss claims really are and you've still got the gall to try and claim that the labels are hurting?

    The music industry made 15 BILLION, last year, and now your big money execs are starting to shiver in their boots as more and more members of your own organizations are beginning to realize just how big a bunch of crooks are running the RIAA, which according to it's own charter is NOT a lobby group, but IS IN FACT A RECORD RATING SERVICE!!

    Nothing more or less, yet you whine and cry when you are basically too damned stupid to realize that your days are numbered as more and more artists whether on FaceBook or MySpace are sharing their music with others around the world without any greedy managers, promotion companies, or phony contracts that deny them their right to earn a living.

    Other artists some of them big names in the music industry today are using the net to get their music out there and the fans pay a fair price for the albums, plus those artists have more creative control, which means that they can give their fans what they want, albums with more good songs on them instead of the crap the RIAA members force them to turn out with only one or two good songs on the album.

    They can produce, record and distribute their music to a wider audience who respects what they've done and are willing to pay a fair price for the end result.

    Consider that next time before you open your trolling mouth and espouse the same old party line of a dying industry.

     

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    Jeff Rivett (profile), Jul 21st, 2010 @ 3:56pm

    Why the labels will fight to the bitter end

    Because they are publicly-traded companies, which means that management is responsible to the shareholder. They cannot and will not make a change that they know will reduce the company's profit, until such time as there is no other option. Some won't do it even then, and those companies will die.

     

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      Karl (profile), Jul 21st, 2010 @ 4:13pm

      Re: Why the labels will fight to the bitter end

      That's certainly the labels' way of looking at things.

      The ironic part is if they had simply done nothing to try to prevent file sharing, they'd be better off financially than they are now.

      Were I a shareholder, I'd be voting out everyone involved, starting at the top. I have no idea how those executives still have their jobs.

       

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    Karl (profile), Jul 21st, 2010 @ 4:08pm

    Nice

    This is my favorite part of the article:

    Edit, copy. Edit, paste. That’s how you make a copy of something on a computer; you don’t buy a new version of the file. It’s hard-wired into anyone who knows how to use a PC. It doesn’t matter how many lawsuits you file against grandmothers; that understanding doesn’t suddenly stop when the file extension is .mp3 instead of .doc.

     

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    Indy, Jul 21st, 2010 @ 4:37pm

    Amusing Example

    The article gives an amusing example of how Madonna made a profit of $400 million, but not the entire industry. Not everyone can pull numbers like Madonna, so I don't see how the industry as a whole could move to mass concerts and expect large windfalls. In short: the article doesn't show how this revenue source can scale for the industry as a whole.

    All-in-all another Techdirt example of "do this because we say so" without a real alternative to the mass revenue streams these companies already have. THAT is why they cling to old models: they work (for now).

    When techdirt does provide examples, they are laughable. Three content providers charge money alongside their paper versions and make money: the rest fail.

    The internet is much more a destroyer of commercial business opportunities for Media than an enabler. Look at Youtube alone, do you honestly think Youtube pulls in money to rival even the smallest Hollywood studio?

     

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      Anonymous Coward, Jul 21st, 2010 @ 7:40pm

      Re: Amusing Example

      "The internet is much more a destroyer of commercial business opportunities for Media than an enabler."

      Spoken like a true defeatist.

       

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      Mike Masnick (profile), Jul 21st, 2010 @ 11:26pm

      Re: Amusing Example

      Not everyone can pull numbers like Madonna, so I don't see how the industry as a whole could move to mass concerts and expect large windfalls. In short: the article doesn't show how this revenue source can scale for the industry as a whole.

      Man. When I started talking about artist success stories they were all small, and people said "well that works for someone with nothing to lose, but never works for someone big." Then I showed how it works for someone big, and people said "that works for someone big because they can afford it. It will never work for anyone small."

      It's all bullshit. We've given examples big, medium and small of these business models working:

      http://www.techdirt.com/articles/20091119/1634117011.shtml

      All-in-all another Techdirt example of "do this because we say so"

      Huh. Really? So providing the full economic explanation for why these things work, combined with actual data and studies, backed up with real case studies and examples of it working -- and never saying anyone *has* to do it, but suggesting they might be better off doing so is "do this because we say so?"

      Really? Fascinating.


      without a real alternative to the mass revenue streams these companies already have. THAT is why they cling to old models: they work (for now).


      Except, of course, that we've seen those who embrace this tend to make more money than they did prior to it.. but, hey, details. Anyway, we've discussed the whole "we won't switch until the new models equal the old ones." Historically, that's how you die. If that's how you want to go down, have fun with it. Meanwhile, we'll hang with the folks who are actually making money.

      When techdirt does provide examples, they are laughable. Three content providers charge money alongside their paper versions and make money: the rest fail.

      Huh. Which ones are laughable? I'd like to know, because we keep hearing more and more stories of people making more money than they ever did before. I don't find that funny. Perhaps you can enlighten us.

      The internet is much more a destroyer of commercial business opportunities for Media than an enabler.

      Yes, just as the telephone was more a destroyer of communications business opportunities than an enabler.

      Good luck in the world, Indy. You're going to need it badly. Meanwhile, I'll be focusing on those embracing these opportunities and making lots of money while doing so. You should try it. Might open your eyes a bit.

       

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        Anonymous Coward, Jul 22nd, 2010 @ 3:58pm

        Re: Re: Amusing Example

        "We've given examples big, medium and small of these business models working: "

        None of these models scale! Trent reznor? A one trick pony online. Scale it out to 10,000 artists. Do you honestly think 10,000 artists will level the success of Madonna, or even Trent? Or that people eventually won't go, hey, I can get this for free, rather than pay, I think I'll choose free. Where are your stories about the thousands of artists that are good but don't have a voice or distribution?

        "Huh. Really? So providing the full economic explanation for why these things work, combined with actual data and studies, backed up with real case studies and examples of it working -- and never saying anyone *has* to do it, but suggesting they might be better off doing so is "do this because we say so?"

        Really? Fascinating."

        It really is, because you haven't shown how the model SCALES. Sure there are success stories. The trailblazers in this field might be successful, while 1000 fail attempting the same thing. BECAUSE IT DOESN'T SCALE. Why not show me a singular example of a small or medium business that doesn't involve DRM where the vast majority that enter will succeed without fraud?

        "Except, of course, that we've seen those who embrace this tend to make more money than they did prior to it.. but, hey, details."

        Details indeed. It's any wonder why you haven't provided any that scale to large numbers of small or medium businesses?

        "Huh. Which ones are laughable? I'd like to know, because we keep hearing more and more stories of people making more money than they ever did before. I don't find that funny. Perhaps you can enlighten us."
        Consumer Reports, Wall Street Journal, financial times/economist. Again, laughable given the publishing industry has tens of thousands of publications alone employing over 200,000 people. None except these four scale to making money online. And these four still have paper to back them up, and they hold trusted, exclusive information that is incresingly becoming less trusted and more available elsewhere. No project you have listed will work for these companies to make money online.

        "Yes, just as the telephone was more a destroyer of communications business opportunities than an enabler."
        The telephone did not enable the mass copying of data on the fly. The telephone is point to point, while the internet is P2P2P2P2P2P2infinity.

        "Good luck in the world, Indy. You're going to need it badly. Meanwhile, I'll be focusing on those embracing these opportunities and making lots of money while doing so. You should try it. Might open your eyes a bit."

        I imagine you write this tone because of the IP lookup on my account and you know where I write from. Don't take my employment location as an indication that I root for any one particular side. I am simply commenting that techdirt has repeated, observable flaws in their "business" methods. It's all well and good to say industry x should do experiment y, but until experiment y pays 10,000 times more and scales out, it's kind've a joke to propose such schemes.

         

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      Michael, Jul 22nd, 2010 @ 5:33am

      Re: Amusing Example

      "Look at Youtube alone, do you honestly think Youtube pulls in money to rival even the smallest Hollywood studio?"

      That's very interesting. Hollywood is screaming that YouTube is killing them, and you use them as an example of a business that cannot stand up to any Hollywood studio? Your lack of logic is astounding.

      The internet is the savior of the content industries. Hollywood and the record labels have been growing fat on their inefficiencies to the point where it is becoming completely unprofitable to be an artist. Even if you win the golden ticket and get a record deal, the record companies end up with all of the money and all of the rights to your art. It's crazy. The internet comes along and it is suddenly profitable to be an artists again. Just because the big companies that were profiting are losing does not mean the industry is in trouble.

       

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    cram, Jul 22nd, 2010 @ 1:51am

    Mike

    Curious why you addressed all of indy's points, except this:

    "Look at Youtube alone, do you honestly think Youtube pulls in money to rival even the smallest Hollywood studio?"

    Perhaps you should offer us your wisdom on why this is so and if it is so, why free content=more money isn't working for Youtube.

     

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      Michael, Jul 22nd, 2010 @ 5:42am

      Re:

      "Look at Youtube alone, do you honestly think Youtube pulls in money to rival even the smallest Hollywood studio"

      Ok, I'll address this one. You think too small. That's not the YouTube business model. They are not trying to be a big record company that funnels all of the money away from the artists.

      You need to net everything:
      Money has been made by YouTube
      + Money made by the artists and YouTube users
      + Money made from product sales because of YouTube
      + Money made from touring because of YouTube

      The entire industry needs to be compared before and after YouTube. We know that more content is being produced. We also know that when you look at the music industry as a whole, it is bigger than it was before YouTube. YouTube and the rest of the industry is spreading the money out across the industry making it an overall net benefit for everyone except the big record companies that were previously taking a huge chunk of the money.

      Now, if a company wants to be disruptive to an industry by implementing a business model that causes less money to go to one business (or set of businesses) by causing it to be spread out throughout the industry while adding incentive to create more diverse content, what is the problem?

       

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      Anonymous Coward, Jul 22nd, 2010 @ 6:03am

      Re:

      Please look at 2 cases:

      Red vs. Blue.

      It is machinima based on the Xbox game Halo, those guy's started fooling around with home equipment and have grown into a full production house, they even managed to build a remote controlled car so they could trash it, really people without money don't do those things. Microsoft let them use the Halo art work and even buy some things from the little company, it all started on Youtube.

      The Guild.

      Internet phenomenon, is now being fully supported by Microsoft and being hosted on Bing videos, it started on Youtube.

      Youtube may not be making money but a lot of people inside Youtube are or else how you explain the

      http://www.youtube.com/shows

      or the Bing videos.

      http://www.bing.com/videos/browse?FORM=Z9LH5

      Funny thing though, Google is not investing in production of shows but Microsoft is quietly producing their own content and hosting on their servers.

      I think the new channels may be search engines in the future.

       

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    catullusrl, Jul 22nd, 2010 @ 10:36am

    Blind leading the blind

    Of course, Masnick neglects to mention that the author of the column is a technology blogger and clearly knows nothing about the music industry.No wonder Masnick agrees with him.

     

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    fjfonseca (profile), Jul 22nd, 2010 @ 2:52pm

    Enter Creative Commons

    A solution that I have not seen talked about here is recurring to a Creative Commons License to publish your music.

    There are many strong cases to do this one of the most significant, in my opinion, that of German composer Boris Metzga a.k.a. Comfort Fit.

    He releasing his work on netlabels, freely distributing his music while retaining all the rights over it. By using a Creative Commons License by (attribution) nc (only non commercial not for profit use allowed) nd (non-derivatives allowed from the original work) Boris actually retained all rights over his tracks while reaching an wider audience, making money out of live acts and Dj Sessions until he got the attention of some major labels and of Mercedes Benz that invited him to make the sound design for some of their spots.

    Today, by using social media, artists are able to reach a wider non-local audience and for that all they need is to be serious about their work. If they are, and if they have the talent, the need no middle man taking a huge cut of their profits.

     

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