EMI Sues Music Site Offering Beatles MP3s

from the no-surprise-there dept

Last last week, a bunch of music blogs started noticing that a previously unknown site called Bluebeat.com was selling MP3s for $0.25, including numerous acts that still haven't officially authorized online sales -- such as The Beatles and AC/DC. There was a lot of headscratching among bloggers and reporters who wondered how this could possibly be legal. The answer, of course, is that it wasn't. The site didn't even make any attempt whatsoever to claim that they had licensed this music. They just said they thought that $0.25 was a better price for music. Not surprisingly, it took just a few days before EMI sued the site, and I'd imagine other lawsuits will quickly follow as well. It's not clear what the folks at Bluebeat were thinking -- other than that they were about to get a ton of publicity in the form of lawsuits, but it's hard to see what good that publicity is if the site is forced out of business.

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Songs Used In Promotions Get A Ton Of Sales... So Why Does The Music Industry Try To Make It Harder?

from the short-term-thinking dept

Ethorad was the first of a few to write in pointing to an article over at the BBC, highlighting how old songs are finding new life and new sales after showing up in a commercial -- or being used on TV during a popular event. In other words, getting your music more widely heard leads to more ways to make money. That, of course, should be obvious. And yet, why is it that so many in the industry are trying to make it so much harder to get music heard by putting up tollbooths at every stop? You have the RIAA/Soundexchange working overtime to put an additional tax on radio play and you have ASCAP/BMI trying to get fees for everything, from the 30 second previews online to ringtones. Of course, the more you put a toll on such things, the less the songs are used, the less they're promoted and the less opportunity there is to increase sales. It's really amazing sometimes that these big organizations don't seem to comprehend the basic idea of a "promotion" and how that helps sales.

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Dear Hollywood: Don't Be Idiots; Don't Delay Movie Rentals

from the seriously dept

Sometimes you just shake your head at ideas that come out of some executives that are just so incredibly dumb, it makes you wonder how anyone ever took them seriously. There have been some hints about this latest one, though. Just last week, in discussing the latest IP Colloquium podcast, we noted (with surprise) that Paramount's top lawyer thought the solution to business model problems in the entertainment industry was "more windows." Windows, of course, are the different time periods in which movies are released solely for different formats/media. So, it starts with the theater (the first window), followed by video, pay per view, cable and network TV -- each representing another window, and another chance to squeeze more money out of the same content.

Yet, with the industry facing some challenges, rather than actually looking at what users want, its top brains seem to think that the answer is more windows. It's hard to explain how incredibly short-sighted this is, because it's so monumentally backwards that it makes you wonder what they're thinking. At best, my guess is that the execs are extrapolating out in the simplest form that with the launch of each "window" they make more money, so the way to make even more money must be to offer more windows. Of course, this assumes two rather basic things that are totally wrong. One, is that these windows won't piss off users and two, that those users have no alternatives.

But, apparently not realizing that, these execs have hit upon a few different attempts to add more windows. First, they've been pushing for the permission to break your TV or DVR with selectable output control barring your ability to tape movies. This way, they can create a new "window" of movies on TV that you can't record, that they can offer before the movies even get out on video. Of course, this will (a) piss people off and (b) drive them to more piracy. Brilliant.

The other attempt, is to get video rental places to stop renting movies when the DVDs first come out. The LA Times had an entire article explaining this plan, whereby the studios would force all rental services, including Netflix and Blockbuster to not rent certain films -- but only offer them for sale. The idea (short-sighted as it is), is that this would somehow force people to buy more DVDs, which gives the studios a higher margin than rentals. We actually heard about this earlier this year with the contract terms that the studios tried to put on Redbox, but it's apparently trying to do the same with Netflix and Blockbuster as well.

This idea is so bad that even the LA Times, who tends to support its hometown industry more often than go against it, put out a separate opinion piece with the original article, calling this new idea "crazy" and "absurd."

In the meantime, what do customers actually want? Well, there's pretty good evidence they prefer choice not being limited by windows. They've been clamoring for so-called "day-and-date" release, whereby all these windows are compressed. If you don't want to see a movie in the theater, why not be able to get the DVD? It's as if the studios don't realize that part of what they're selling is the social experience of "going out" to the theater. Even better, if the DVD comes out at the same time as the theater version of the film, less marketing money needs to be spent to sell more DVDs, and you can do nice tie-ins, like having the ability to buy the DVD as you walk out of the theater. Giving people more value and more choice is what the market is asking for.

Instead, Hollywood execs are trying to take away choice and limit value. Incredible.

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There Are Numbers Less Than 1%

from the reasons-to-buy... dept

I've pointed out in the past, that any time you hear a company talk about their business model in terms of "if we only get 1% of that market... we'll still be huge," you should run away (and, it's even more ridiculous when you hear some talk about 10% or 15% of a market). This is top down thinking, but it's not how businesses work. There's no guarantee of any percent. Instead, any business needs to focus on bottom up reasoning -- explaining why the very first person will buy. Then the second. Then the third, and so on. Taking the top down approach is wishful thinking. It's making a huge assumption that people will just buy. Taking the bottom up approach is actually building a business. It's recognizing who the customer is, what they want and how to best get it to them. It's tempting to do the top down approach, because it looks so tantalizing and easy. But business isn't easy. It's hard work.

I'm reminded of this, with a submission from JohnForDummies about a Derek Sivers blog post, discussing a musician friend who took out an ad in a magazine with 1 million subscribers, repeatedly saying:

"If only one percent of the people reading this magazine buy my CD... that'll be 10,000 copies! And that's only one percent!"

But, as the musician learned there are numbers much smaller than 1%, as he ended up selling just 4 copies of the CD.

This is, in some ways, similar to the give it away and pray business models that we sometimes see people trying. Giving stuff away for free is a good part of a business model, but it's not an entire business model by a longshot. Anyone looking to use free as a part of a business model also needs to go further and do the hard part, the bottom up part, where they figure out how they're going to get anyone (not a percentage, but specific people) to actually find something worth paying for on its own. Because $0 from a million people is still $0. But, reaching 1,000 people with something of value that they want and can't get any other way... that's the start of a business model.

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Court Refuses To Dismiss Allman Bros. Lawsuit Against UMG; iTunes Royalties At Stake

from the a-license-or-a-sale? dept

There have been a number of lawsuits over the past few years from artists who are complaining about how the major record labels account for iTunes sales. The question is whether or not a song sold on iTunes is the same as a CD sale (a tiny tiny royalty) or more like licensing a song for a commercial (more like a 50% royalty). Obviously, the record labels want iTunes treated like a CD. But musicians have a reasonable argument that an iTunes sale may be a lot more like a typical license, as a big part of the reason in the discrepancy in the royalty rates is that there's no (expensive) physical packaging and distribution to handle. The Allman Brothers were one of the first to file lawsuits on this issue suing both Sony Music, and then a couple years later, Universal Music Group (I'm still not clear why they sued the two separately, years apart). Eminem also had sued UMG over this issue and lost, as a jury said iTunes was more like a CD sale.

UMG tried to get the case from the Allmans dismissed, but davebarnes alerts us to the news that the court has refused to dismiss the case, and it will proceed to a full trial. Of course, like Eminem, the Allmans may lose the trial, but it's better than having the case dismissed outright. Of course, if the Allmans win, it will create a bunch of similar lawsuits in short order, as pretty much every artist will be demanding a lot more iTunes revenue.

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The Death Of The Album Has Been Exaggerated

from the if-you-market-properly dept

The common wisdom you hear these days is that the concept of the "album" is dying thanks mainly to the ability to obtain single songs (whether through legal means or not). However, some are beginning to challenge that thinking. Bandcamp, a fantastic service for musicians we've discussed before notes that their sales data bucks the trend: full albums outsell single song downloads on the site. There are a few reasons why:

• Most Bandcamp artists are indie and attract fans more interested in complete works than the average Hannah Montana/Lady Gaga flavor of the moment consumer
• You can listen before you buy via Bandcamp. Not just 30 second samples, but rather the whole album.
• iTunes and others price most CD's at $10. Bandcamp artists have found that name your own price with a $5 minimum is a real sweet spot.
• iTunes and others encourage single track purchases with page layouts, buy buttons and featured tracks

This is definitely interesting. I know that I'm in the camp of folks who never buy single tracks, but always look to buy the full albums of bands I like, so that makes sense. But the really interesting point is the third bullet: if albums were priced closer to $5, people would likely be a lot more interested in buying. Again, this shouldn't be a surprise. When the old Allofmp3.com let people buy albums for sums between $2 and $5, it seemed to be quite popular -- even compared to the ability to just download albums. It certainly adds a lot of credence to the idea that one of the big problems the recording industry faced was really the super high prices of CDs.

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Video Game Companies Still Bitching About Used Game Sales

from the give-it-up dept

This has been discussed before, but apparently one of the big topics at E3 last week was video game publishers again being upset about the fact that they don't get a cut of used game sales. What they never seem to mention, however, is that there's simply no reason for them to get a cut of those sales. When you sell your house, do you get a cut of every sale after that? When you sell a book do you get a cut of every sale after that? Of course not. And for a very good reason. Studies have shown that an active used goods market increases the value of a product. This makes sense. If I know I can resell this widget for $10, I'm more willing to pay $20 for it in the first place. But rather than focus on ways to make it worthwhile for people to buy new video games, the execs want to sit around, complain and scheme for ways to wipe out the used video game market... or at least get a cut of any sale. Once again, we're seeing companies with a sense of entitlement to something they have no rights over.

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Why Would Amazon Want To Block Links From A File Sharing Search Engine?

from the uh...-what? dept

While it's certainly not true for everyone who uses file sharing systems, plenty of people do actually use them as a "try before you buy" system. As such, it certainly makes sense to put links on file sharing systems to take them to sites where they can purchase the digital version if they really want to. Yet, apparently, Amazon doesn't like the idea of converting unauthorized downloaders into authorized purchasers, as it demanded that Coda.fm remove links to the purchase pages on Amazon.com and also killed off Coda.fm's affiliate account. It's difficult to see any rationale for this at all. This was a way to convert people into paying for the files. Why would Amazon want to block that?

Somewhat related to this, it appears that Google is now blocking some custom searches set up by torrent tracker sites to help people find torrents via Google's custom search engine. Given that the response to The Pirate Bay verdict has actually focused a fair amount of attention on Google as being able to "do the same thing," perhaps this is an attempt to try to back away from that. If so, that's rather disappointing. Google claims its goal is "to organize the world's information and make it universally accessible and useful." An awful lot of that information is found via torrents -- and plenty of that is perfectly legit and authorized.

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Despite Piracy Worries, Stardock's Demigod Did Quite Well On The Sales Front

from the not-so-bad... dept

While many people falsely claimed that the server troubles Stardock dealt with recently, due to unauthorized copies of its new game Demigod effectively pinging its servers, showed how Stardock's trusting (no DRM) model doesn't work, that was clearly incorrect. Even throughout the stories last week, the execs at Stardock didn't seem particularly upset or worried about the fact that so many unauthorized copies were out there -- but about getting the servers set up properly to handle the load. And, now, as reader Christopher Chapman points out, Demigod has debuted as the number 3 best selling PC game, suggesting (yet again) that you can get plenty of sales even when you don't treat your customers like criminals.

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PRS Copyright 'Investigators' Actually Sales People

from the no-wonder-they-go-after-horses dept

PRS, the UK's music licensing agency, recently reached out to us after a series of posts we wrote which (to say the least) portrayed their organization negatively. We had a cheerful email exchange that basically left off with us disagreeing on just about everything -- but especially over PRS's tactics, such as demanding a woman running a stable pay for a license because she played music to her horses, just because a few other employees (who didn't listen to the music) occasionally stopped in. Then there's the demands against auto mechanics and police stations because employees were listening to music (in private areas) loud enough that it could be heard in other rooms where the public might visit. Oh, and then there was the demand that a children's charity pay up for singing Christmas carols. And, then there's my personal favorite: calling up small businesses, and if music is heard in the background, demanding the purchase of a license.

If you want to understand the sort of incentives that create such ridiculous and self-defeating PR nightmares, take a look at a recent job posted by PRS (thanks to Kaden for alerting us to this). Officially, the organization is looking for a "copyright investigator," but the actual job is in "sales." These "investigators" have "revenue targets" and can earn a bonus for bringing in excess revenue beyond their targets. That's not creating a situation where these investigators are told to go find violators. It creates a scenario where they're encouraged to find anyway humanly possible to squeeze pretty much anyone for cash.

The PR guy from PRS who contacted us tried to make the case that PRS is just a little non-profit looking out for the best interests of musicians, but when it's setting up its sales people with incentives to come up with any bogus reason to pressure everyone into purchasing a license to listen to music they already legally purchased, something is clearly wrong. This is a group that's effectively been handed a monopoly in the UK and appears to be abusing its power, not as a little harmless non-profit, but as an organization that handles an awful lot of money and has empowered its sales people to threaten small businesses if they don't pay up.

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Early Results On iTunes Price Increase: Sales Down... But Revenue Up

from the interesting... dept

It's still early, but the initial estimates on the impact on iTunes of higher priced songs on iTunes is that songs that got tagged with the $1.29 price saw their overall sales rankings drop. However, the indications were that the sales drop didn't outweigh the higher price. In other words, fewer units, but more overall revenue. It'll certainly be worth watching to see if the trend continues. Of course, the report only looked at the top 100 songs, doesn't factor in other things that may have caused sales to change, and seems to be lacking certain important data. But... still... as an early snapshot of what's happening, it's good to know. In the meantime, if you're a smart up-and-coming musician who recognizes that digital music sales are a tiny fraction of what you can be earning overall in the business, you should be doing everything possible to get your songs out there at the lower price, knowing that it'll help you stand out against the higher priced options, and you'll be able to recoup the difference through the other parts of your business model.

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Wizards Of The Coast Learning That Pissing Off Geeks Isn't Such A Good Idea...

from the be-careful... dept

If there's one group online that it's useful to avoid pissing off, it's "the geeks." And one thing that plenty of geeks love is Dungeons and Dragons. Yet, D&D publisher, Wizards of the Coast, has fans of the game up in arms over the decision to stop a bunch of online retailers from selling PDF versions of its games and books, while also filing eight lawsuits claiming infringement for unauthorized distribution.... and I have to admit, I can't recall a story ever getting this many submissions from readers here (perhaps there's a bit of overlap in our audiences). In some cases, the demand to retailers to remove these PDFs has caused those who legitimately bought them (but hadn't downloaded them yet) to not be able to get the product they had purchased. On top of this, Wizards is apparently also looking at employing some sort of DRM for any future digital releases, which also has plenty of people angry.

What's amazing to watch is the pushback from the games' biggest fans. They're wondering why Wizards is limiting legitimate sales of its products, and looking to make the overall product worse by limiting it with annoying DRM. As people keep pointing out, piracy is going to happen one way or the other -- but rather than trying to lock stuff down (and, one other aspect of this is requiring all resellers to become "authorized internet resellers"), why not focus on ways to use that content to build bigger and better business models that don't require treating all your fans and customers as criminals?

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Despite Declining CD Sales, CD Baby Experiences Growth in 2008

from the not-dead-yet dept

While CD sales dropped 14% overall in 2008, CD Baby -- a popular online music store that lets independent artists sell music directly to fans -- actually saw an increase of 2%. In addition to selling physical discs, CD Baby offers optional digital distribution through iTunes, Amazon MP3, Napster, Rhapsody, eMusic, etc. and directly through their website. Still, almost 30% of albums last year were only offered as physical discs (though, some of these artists probably use other companies for digital distribution). While growth in digital sales was predictably larger (45%), even a small increase in CD sales in the face of the broader crisis is a sign that CD Baby is doing something right.

There are a few reasons why CD Baby could be having better luck with CDs than the rest of the industry. First, a lot of independent artists are discovered through live performances, and the CD has yet to be replaced as the standard format to sell music at shows. The credit card swipers that CD Baby offers artists accounted for $2.4 million worth of revenue last year (though, that includes sales of other merchandise too). Second, CD Baby seems to be taking advantage of the long tail, with minimal setup fees, minimal starting requirements (artists only need to mail in 5 CDs to start selling) and short-run duplication services, though they haven't released enough data to confirm how distributed their sales have been. Lastly, great customer service and a sense of humour can't hurt (e.g. an order confirmation email starts, "your CD has been gently taken from our CD Baby shelves with sterilized contamination-free gloves and placed onto a satin pillow..."). Although it doesn't make any sense to base an entire business model on selling CDs, there's still money to be made for artists and companies using CDs as part of their model.

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

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We're Hiring In Sales

from the brief-programming-note dept

As we continue to evolve and grow our business, we've been looking to hire an experienced sales exec to focus on selling the Insight Community. We've been interviewing a variety of candidates, but wanted to alert the wider Techdirt community, as we know that readers here are most likely to understand what we're trying to achieve. If you're an experienced sales exec and believe in what we're doing here, feel free to contact us. Alternatively, if you know of any good candidates, please feel free to send them the job description.

Putting iPhone Sales In Perspective

from the it's-good,-but... dept

We didn't have much (well, anything) to say about the recent iPhone launch because it certainly seemed as though the rest of the tech press/blogworld had that one... um... thoroughly covered. However, with the glowing reports earlier this week about how amazing it was that Apple had sold 1 million iPhones over the weekend, Carlo Longino has put that into perspective, noting that it's not quite as impressive as most people seem to think. First, as he notes, since the launch was international (rather than the original iPhones US-only launch), it's no surprise that it would sell many more. But, more importantly, he notes that recent stats on mobile handsets shows that 282 million handsets were sold in the first quarter of this year, and that Nokia alone appears to sell approximately 1.28 million handsets per day. So, yes, selling 1 million handsets over the weekend is a nice round milestone -- and certainly other handset makers are probably jealous of the attention it's getting. But, it's not having a huge impact on the overall handset market just yet.

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Despite Winning The HD Format War, Blu-Ray Sales Dropped

from the whoops dept

We've been pretty harsh on the warring camps over the next generation DVD standard, pointing out, frankly, that most people just didn't care, and the longer the two sides battled, the worse the problem would get. However, even given that I wouldn't have expected the latest news that Blu-ray sales have plummeted from January to February, following its eventual win in the standards battle. Research group NPD chalks up the sales drop to the high prices of Blu-ray DVD players... but that doesn't make any sense. The players were already expensive -- so you'd at least expect sales to remain constant, even if selling prices may have bumped up a bit without the HD DVD competition.

My guess is that a few different things may have impacted the decline in sales. First, there's the seasonal aspect of it (and February is a short month). But, perhaps even more important is that the whole standards battle itself turned users off from any form of next generation DVDs. Those who were HD DVD early adopters are pissed off that they bet on the wrong horse, and those who didn't follow the space closely just know that some folks got screwed -- and don't want to take the chance. One other factor may be the widespread stories warning people not to buy Blu-ray, because the player profile is getting updated, and many older players are not upgradeable. Either way, the backers of Blu-ray can't be all that thrilled that the end of the standards battle didn't lead to a jump in sales. Perhaps they should have spent a bit more time coming up with reasons for consumers to buy rather than wasting all that time fighting with HD DVD.

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Suggestion For Mobile Phone Operators: Be Upfront And Honest About Plans

from the and-people-might-actually-like-you dept

It's no secret that many, many people dislike mobile phone operators. Why? Well, beyond the issue of dropped calls, it appears that people are sick and tired of of the way mobile services are pitched to them. The operators hate giving people a clear picture of what they're actually getting. Details of the plans remain hidden or not clearly explained and there are always hidden gotchas -- like how your "unlimited" service isn't really unlimited. So, here's a simple suggestion for mobile operators: Be the first to be totally upfront about your plans and services, remove any high pressure sales techniques, stop making it difficult to compare plans, phones and service and dub yourself as the customer friendly mobile operator. Then see what happens. Of course, some mobile operators have taken steps in this direction over the years. They're a lot more open about where various deadspots are than before and they've tried to be more open about specific features and plans -- but the problem is that this "secretive" mentality exists up and down throughout the organization. If a company makes it clear policy from top to bottom that openness, clarity and customer satisfaction are keys, it would capture the interest of an awful lot of people.

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