Blame Game Continues: Now It's Online Streaming That's Killing Music

from the oh-come-on dept

Every new entertainment innovation has resulted in hand-wringing by the existing industry about how it's going to kill the business. Player pianos? Evil. Would destroy the sheet music industry. Recorded music? Would send musicians to the poorhouse and end live music. Radio? Would destroy the recorded music business. Home taping? Killing music. The VCR? The "Boston Strangler" to the movie industry. Notice a pattern? Every single one of them, in actuality, helped grow a market much bigger than that which preceded it. Yet, for some reason, no one in the industry (or, all too often, among the press who repeat their complaints) seems to notice this.

So here we have Business Week -- usually less susceptible to these sorts of claims -- repeating totally unsubstantiated arguments from music industry insiders that it's now legal online streaming services that are killing the music business. The fact that most of these services are really little different than traditional radio (which helped build up the massive recorded music industry) seems to zip right by without mention.

The problem is that the author of the article, and most of those quoted in the article, incorrectly seem to think that the only way the music industry makes money is in the direct sale of music. Thus, the fact that people listen to streams for free (or small royalties) is somehow seen as "bad." The fact that radio works on basically the same principle isn't even touched. The fact that there are tons of other ways for musicians to make money -- and for many of them it helps to have more people listening to their music via these services isn't even the same area code as the article.

Instead, the entire article seems to be based on a complaint from the guy who heads the National Music Publishers' Association , whose business has always been predicated on the house of cards of music licensing. Every time a new technology comes along, the publishers demand a new level of licensing. Right now they're pushing hard for yet another duct tape solution: adding another license for such online streaming services, and Business Week played right into their hands with a non-critical piece describing the "issue" in the exact terms they want people to be thinking about.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    ChurchHatesTucker (profile), Mar 9th, 2009 @ 1:09pm

    Heh.

    Next thing you know, the RIAA will be suing radio stations, in a reverse payolla extortion.

    Oh, wait.

     

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  2.  
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    Ajgajg1134, Mar 9th, 2009 @ 1:34pm

    Wow... fail...

    Sometimes I wonder, "What makes the big executives and large industries so STUPID"

     

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  3.  
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    Ima Fish, Mar 9th, 2009 @ 1:34pm

    "What makes the big executives and large industries so STUPID"

    Greed.

     

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  4.  
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    nzgeek, Mar 9th, 2009 @ 1:37pm

    Preemptive retort to Weird Harold:

    Yes, the artists should be fairly compensated for their creation, but new and innovative techniques are no impediment to that.

    If the streaming radio station is making a profit, a fair portion of that can go to paying the artists, and some money is better than no money. It's also a way for the artists to get heard, which can then lead to other avenues of income (e.g. album sales).

    People need to stop thinking of copyright as an income-generating tool for artists. It is, but only in a limited sense. It is supposed to encourage creative expression by fairly compensating an artist for their work. It is a limited-time monopoly on the reproduction of that work for this reason only. It is not a form of income in perpetuity.

     

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  5.  
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    Gerk, Mar 9th, 2009 @ 1:42pm

    It's the record labels and biz bigwigs that are killing the industry. Their lethargy to adapt to new technologies, their HORRID offerings and their "sue now, work out the details later" approach are all leading towards an imminent collapse of their decades old protection racket. I, for one, can't wait to see them go down in a big ball of flames.

     

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  6.  
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    Ima Fish, Mar 9th, 2009 @ 1:55pm

    Re:

    "If the streaming radio station is making a profit, a fair portion of that can go to paying the artists"

    Why? Some businesses leach off other businesses. Some compliment each other. An example of a leaching company could be the Pirate Bay. The Pirate Bay benefits greatly from the music industry, without content, no one would visit the Pirate Bay, but the music industry hardly benefits at all. (Although some would disagree.)

    An example of companies that compliment each other would be the companies that construct our roads and the manufacturers of automobiles. You cannot drive a car without a road and conversely, the vast numbers of automobiles necessitates that more roads are built and the old roads are continually repaired. So both industries benefit off of each other.

    So it would be ludicrous for the companies which build roads to claim that automobile manufacturers should give them part of their profits, claiming, "Without our roads no one would buy cars. GM, Honda, Toyota have been getting a free ride from us for centuries and it's about time they started paying us."

    In the exact same way, radio provides a huge benefit to the music industry. It's a simple fact that the vast majority of people will not buy a song unless they've first heard the song a sufficient number of times to like it. A song is both content and its own advertising. If the music industry locks up their songs so no one can hear them, it's a simple fact that no one will buy them.

    This is exactly why the music industry has been paying payola to the radio stations since the very beginning. Because while radio benefits from the music industry's music, the music industry benefits from the radio's exposure.

    This is absolutely no different in relation to streamed radio. Once again, internet radio provides the same benefits that broadcast radio does. Thus, the RIAA demanding money from internet radio is simply as asinine as a road construction company suing Honda for a cut.

     

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  7.  
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    deadzone (profile), Mar 9th, 2009 @ 1:56pm

    Seriously

    I wish that they would just die already. It's just embarrassing and boring watching the whole Entertainment Industry die a slow death.

    We should give them everything they demand because then it would hasten the demise of these entities. After their death, we can get back to enjoying music, movies, etc... without being shaken down every step of the way for more money.

    PLEASE JUST DIE ALREADY. I'm begging you.

     

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  8.  
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    Weird Harold, Mar 9th, 2009 @ 2:04pm

    Re:

    Not preemptive at all, in fact I agree with you to some point.

    Online streaming or any other method of narrowcast or broadcast of material needs to produce value for the artist's whos work is used. It isn't a question of profit, it is a question of what needs to be done. Radio stations that lose money still pay artists fees, they don't get to just forward part of their bottom line and call it even. Web based broadcasters need to be in that same position.

    If streaming radio cannot find a business model that lets them do this, then perhaps it is because the model doesn't work well. Perhaps over the air broadcast is still the best way to distribute entertainment.

    "It is supposed to encourage creative expression by fairly compensating an artist for their work. It is a limited-time monopoly on the reproduction of that work for this reason only. It is not a form of income in perpetuity."

    The artists work doesn't lose value at a set point in time. Stairway to Heaven has plenty of value still to this day, where as Ice Ice Baby has long sinced cycled to the trash heap. Nobody is stopping anyone from making a new Escalator to Pleasure, and that is very important to remember. Granting rights to an artist does not stop NEW creative expression, it just puts a price on duplicative or repetitive expression.

     

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  9.  
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    Brendan, Mar 9th, 2009 @ 2:10pm

    ok but what about...

    Here is the problem and why it will never change.

    Labels pissed people off that were illegally downloading music. No, not matter what way you look at it, if you download music and you don't own the CD, and don't ever intend on buying it, it is illegal. But now the whole, well everybody else is doing it, so I will to, makes people feel better about themselves and not look at the fact that they are stealing, so that battle is already lost.

    Now the other issue is that labels need to make money to promote bands, pay for studio time, marketing etc. Bands make most of their money from touring anyway, but the labels still need some way to produce revenue.

    Sure, Radiohead and NIN sold their albums on the internet blah blah blah, but these are already established bands, that because of the labels, have millions of fan worldwide.

    Until a day comes that a band starts out on their own, pays for their own merch, worldwide tour, studio, mastering, artwork, duplication of albums, finds a way for distribution worldwide, music still needs labels.

    So how do we fix this?

     

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  10.  
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    Weird Harold, Mar 9th, 2009 @ 2:18pm

    Re: ok but what about...

    The replacement would be a thing not called a label, but it would do exactly the same jobs. In the end, labels are expensive but they provide the type of facilitation for bands that they cannot have by themselves.

    Anyone who has a band and tried to book themselves without a manager knows the drill. You can do it yourself, but the manager can do it faster, has a long list of contacts, and knows other people with contacts that can expand it from there. Record labels provide that on a vast scale. Can you imagine every band in the universe each having to personally negotiate each concert, each distribution deal for each country, each concert booking, each radio appearance, each itunes release, and all those other things that make it possible for a bands music and image to get in front of millions of people?

    Today we call them record labels. Tomorrow they might be called "artist services" but it comes to the same thing.

    See: Live Nation (which makes a record label look like a pussycat)

     

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  11.  
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    nzgeek, Mar 9th, 2009 @ 2:30pm

    Re: Re:

    My reasoning for radio stations paying royalties is that they are making money off someone else's work. Nobody would listen to a radio station that played ads 24/7. For the vast majority of radio stations, music is the reason that people tune in. If a station is generating enough revenue to cover all of their own costs, why shouldn't they pay the musicians that helped them make that profit?

    The Pirate Bay is probably not the best analogy to use here. Yes, they get some advertising revenue form their site, but they're not directly using third party content to get people in. They act as a general repository of links to third-party content, which may or may not be available.

    Roading isn't a suitable analogy either. Roads exist as a public utility in order to assist transport, and are paid for by taxpayers. Automobile manufacturers can certainly exist without roads - just take 4x4 vehicles as an example. Roads simply make the use of automobiles more convenient.

     

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  12.  
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    Anonymous Coward, Mar 9th, 2009 @ 2:30pm

    Re: Re: ok but what about...

    As an artist who used to tour, we miss Barry Fey. Denver always had the best fans and Red Rocks was amazing. He was one who could bring it all together, make us feel welcome, and get the best, most amazing amazing fans. He did it for the music, and that was his passion, not making a quick buck. When we toured, we'd get burned out by the time we got to Denver, but he re-ignited us and got us through the tour. Hope he makes a comeback. No one wants to do business with Universal.

     

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  13.  
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    Anonymous Coward, Mar 9th, 2009 @ 2:37pm

    #9 Brendan

    No Limit Records did something similar to what you're describing, you can wikipedia it for some relative information, or wiki Master P! And his company is still doing it today I believe..

     

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  14.  
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    Paul, Mar 9th, 2009 @ 2:44pm

    Re: Re: Re:

    "Nobody would listen to a radio station that played ads 24/7"

    Songs on the radio are in fact advertisements for the artists.

     

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  15.  
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    interval, Mar 9th, 2009 @ 2:47pm

    CORRECTION

    Its not that music is dying. Music is alive and well as far as I can hear/tell. Its the labels that are dying. Good riddance to 'em.

     

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  16.  
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    nzgeek, Mar 9th, 2009 @ 3:38pm

    Re: Re:

    "Radio stations that lose money still pay artists fees, they don't get to just forward part of their bottom line and call it even."

    This is fine for terrestrial radio stations, as they require a lot of capital investment that will be lost if they shut down. Online radio stations require little investment, and can close their doors a lot easier.

    I completely disagree that the artists' fees should be fixed. Doing so simply puts a hard barrier on the ability of a streaming radio station to operate. This means that there are fewer stations, and fewer opportunities for music to be heard.

    The only reason for publishers to impose fixed fees is to generate short-term profits. Nobody bothers to look to the mid- or long-term, which is why the music industry is failing so badly.

    "The artists work doesn't lose value at a set point in time."

    This is true, but you do have to put in place some sort of arbitrary cut-off point. Should Beethoven's descendants be making money off his music, just because it's still popular?

    Taking your example of Stairway to Heaven, have Led Zeppelin been fairly compensated for their creation? I would definitely argue that they have. Would they have still created the song if they knew it'd become public domain in 20/30 years? We can't say for certain, but the answer is probably yes.

    Copy right is not, and was never meant to be, a steady life-long income source. If you think that it is, your mind is poisoned and you need to go back and look at the history of copyright. It has only become what it is today because of greed, pure and simple.

     

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  17.  
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    SteveD, Mar 9th, 2009 @ 3:40pm

    If you use our content you pay our fee's

    Ran into an EMI PR Rep in a pub in Islington last weekend; heated discussion followed.

    If I remember his position correctly, it went something like this; Spotify is the future of online music (Pandora and Last.FM not so much). Everyone who uses EMI content needs to pay licence fee's, regardless of if promotional or complimentary or otherwise.

    This includes American radio stations, and he somehow managed to suggest that FM stations in America had for too long gotten away with building businesses on the music industries content, and this was unfair to the poor starving musicians. He suggested only America and Iran and somewhere else got away with not paying the licence fee's, and this would soon change.

    So there you have it. Any business that uses music industry content has to pay a licence, the value of which is determined by the music industry. Anyone who disagree's with this doesn't care for the fact that some of the artists in London earn less then £10k a year.

     

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  18.  
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    Casey, Mar 9th, 2009 @ 3:48pm

    Be Done With It

    Make radio give up its exemption. Then, let the two parties negotiate and we'll soon see rather quickly whether radio needs music more, or whether the music industry needs radio more.

     

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  19.  
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    Ken, Mar 9th, 2009 @ 3:56pm

    An example...

    I used to buy maybe 2 CDs a year, If I could find them under $10. I didn't (and don't) copy or pirate. Now I pay Rhapsody $15 a month (extra 3 buck to put the music on my Sansa), and I still buy 1 or 2 CDs a year.

    So that's $180 a year into the music industry that they didn't have before streaming music.

     

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  20.  
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    Anonymous Coward, Mar 9th, 2009 @ 4:02pm

    Re: Re:

    Harold, you have several word and grammatical errors which are terribly affecting your readability scoring. However, this example puts you at an 8th grade writing level, up from 3th grade a few days ago, which I am benchmarking you against.

    Don't be too down on yourself, your making progress. Bravo! Gold star for you!


    Notable changes that will help your score:
    artist's whos work is used
    - Contrary to popular belief, whos is not a word. Did you mean "whose", "who's", "who", or "woah"?

    It isn't a question of profit,
    - The use of a comma is incorrect. A semicolon may work or you could rewrite the sentence such that you could use the comma.

    Radio stations that lose money still pay artists fees,
    - The use of a comma is incorrect. A semicolon may work or you could rewrite the sentence such that you could use the comma.
    Ice Ice Baby
    - This is a proper noun, it should either be in quotes or italics

    has long sinced cycled to the trash heap
    - "Sinced" is not a word. replacing it with "Since" changes the tense of the sentence. Iteally, the sentence needs to be re-written to

    NEW creative expression,
    - The use of a comma is incorrect. A semicolon may work or you could rewrite the sentence such that you could use the comma.

     

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  21.  
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    I'mSorry, Mar 9th, 2009 @ 4:24pm

    Excuse Me Brandon

    Until a day comes that a band starts out on their own, pays for their own merch, worldwide tour, studio, mastering, artwork, duplication of albums, finds a way for distribution worldwide, music still needs labels.

    but how do explain the popularity of the jam bands? Ie grateful dead, widespread panic, phish, string cheese, karl denson etc they didn't need the studios or music companies to be successful and they gave away their music ie concerts for free all the time. The dead were forced to do studio albums.

     

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  22.  
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    Neverhood, Mar 9th, 2009 @ 4:59pm

    Never gets old

    As long as the word "killing" sells newspapers we will not see the end of these kind of stories.

    God I hate mass media sometimes....

     

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  23.  
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    Vincent Clement, Mar 9th, 2009 @ 6:22pm

    Re: Re: Re:

    My reasoning for radio stations paying royalties is that they are making money off someone else's work ... If a station is generating enough revenue to cover all of their own costs, why shouldn't they pay the musicians that helped them make that profit?

    That is a weak reason and looks at it as a one-way street. Having their music played on radio exposes that music to a wide audience. Shouldn't the musician pay a fee to the radio station for marketing their song?

    Plenty of companies use the 'work' of others to generate a profit. Our work uses Lenovo computers. Should Lenovo get a cut of any profits our company generates? Perhaps GM, Chrysler and Ford should get a percentage of the profits from any business that uses their vehicles to generate profit? Crazy you say? But why?

    If a radio station pays for the CD or song, why should they have to pay a royalty? The artist has already received their share. A royalty is nothing more than extortion.

     

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  24.  
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    Vincent Clement, Mar 9th, 2009 @ 6:33pm

    Re: Excuse Me Brandon

    Or how do you explain that there is more music available today despite the declining importance of the record labels?

     

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  25.  
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    Matthew Dippel, Mar 9th, 2009 @ 7:17pm

    "The fact that radio works on basically the same principle isn't even touched"

    In the area I live I can get almost every major genre of music delivered to me via terrestrial FM radio. And I like a few bands from almost every genre (sans rap).

    The problem is that my choices on the radio are limited to the top 20-30 songs (played over and over again) for that given genre. Sometimes the top 20 has a song or two that I love (remember the first time you heard Creep... or Jeremy? Remeber the most recent time you heard them?) After hearing it 10 times, it gets tiresome.

    Services like Pandora are the things that should scare the radio broadcasting industry, but not the labels. As a direct result of Pandora, I have purchased tracks from Amazon that a "music snob" (or even a pretend music snob like me) would be embarrassed to admit to having as part of their stored collection. This got the labels a sale they would not have, otherwise. I would never tune into a station that plays "that bubblegum pop-star sensation", because the songs they choose from "that group" are the songs I almost always hate.
    Because my perception of "that group" is based on the station that plays songs I hate, I would have never considered listening to a CD or a track from "that group" to decide if I would consider purchasing those tracks.

    I've also purchased many tracks from artists I've never heard of (and that would probably prove more difficult to find on the file sharing sites because of their obscurity). This problem used to be solved by small, independent, family owned music stores filled with folks like those found in the movie "High Fidelity" -- arrogant music snobs that would shovel out a few albums of garbage passed off "great" simply because they were obscure and it's "cool to listen to things that nobody listens to" (I'm alternative, just like him).

    I would pay for a service as good as or better than Pandora for finding music that I can listen to and enjoy out of the ... now massive ... selection of music that is available to me. If paying meant a larger selection of indy tracks cataloged in their "Music Genome" and an increase in the selection and scope of what they offer, they can have my credit card number, tonight.

     

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  26.  
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    Anonymous Coward, Mar 9th, 2009 @ 7:38pm

    The RIAA is killing music, END OF STORY!

    Fuck'em!

     

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  27.  
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    Tukang Nggame, Mar 9th, 2009 @ 8:47pm

    never kill

    online streaming doesn't kill music industry anyway, but the online streaming is the new music business it is.

     

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  28.  
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    Anonymous Coward, Mar 9th, 2009 @ 9:25pm

    Re: ok but what about...

    No, not matter what way you look at it, if you download music and you don't own the CD, and don't ever intend on buying it, it is illegal.

    Hmmm, so it's illegal to download from iTunes, huh? Have you got something authoritative to back that up? Because your say-so just isn't enough. You label people have been complaining about the deal you made with iTunes ever since you made it.

    Bands make most of their money from touring anyway, but the labels still need some way to produce revenue.

    How is that the band's problem? The world doesn't owe the labels an income.

    Sure, Radiohead and NIN sold their albums on the internet blah blah blah, but these are already established bands, that because of the labels, have millions of fan worldwide.

    And there are plenty of less well known artists doing so as well.

    Until a day comes that a band starts out on their own, pays for their own merch, worldwide tour, studio, mastering, artwork, duplication of albums, finds a way for distribution worldwide, music still needs labels.

    That day has long since passed and living in denial won't make it go away.

     

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  29.  
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    Anonymous Coward, Mar 10th, 2009 @ 8:00am

    Re: ok but what about...

    So how do we fix this?

    Make the Lables start working for artists rather than visa versa.

    Lables DO have things they can offer artists, but artists should have a choice and should be customers, not indentured servants. If a band decides they want to pay EMI for promotion or have Sony BMG do their CD mastering, there's a business there. But bands don't need Lables the way they used to, and Lables need to recognize that they don't run the show any more.

     

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  30.  
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    Gerk, Mar 10th, 2009 @ 9:26am

    Re: Excuse Me Brandon

    quote: "Until a day comes that a band starts out on their own, pays for their own merch, worldwide tour, studio, mastering, artwork, duplication of albums, finds a way for distribution worldwide, music still needs labels."

    Umm ... that's the whole point, they can and do this now. Studios are not as expensive as they once were. Mastering, even from someone really good, can be as little as $1000 for 10-12 songs. As for distribution, iTunes, Napster do a pretty good job of the online component. CD manufacturing and distribution on CD's are easily handled by CDBaby, Amazon (and a dozen others).

    What's your point again? :D

     

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  31.  
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    JEDIDIAH, Mar 10th, 2009 @ 12:48pm

    Harlan wants to terminate your future.

    > Granting rights to an artist does not stop NEW creative expression

    Sure it does. EVERYTHING is derivative. Some works are more obviously derivative than others. Some things that may appear original are less so when examined by suitable experts (like the first Led Zeppelin album).

    "ownership" gives greedy bean counters standing to sue.

    A cheesey rap song is a perfect illustration of this problem. Rap tends to be more blatantly/obviously derivative than other forms of music. However, other genres have their moments.

    This is something that you can easily see when authors admit who they are "inspired" by.

    20th Century Fox tried to sue Universal over Battlestar Galactica. So don't try to push the idea that "ownership" of culture doesn't interfere with creativity. There are a number of old TV shows that haven't made it onto DVD or have made it onto DVD in a form other than it's original due to music licensing issues.

    Apparently this was a problem for "Life on Mars" and those songs are a generation out of date already.

    Then there's the whole Ellison nonsense over Terminator. That loser actually thinks that a lousy old Outer Limits episode gives him ownership to a concept he probably didn't even develop himself.

    Yes, Harlan Ellison is why copyright terms need to be rolled back to where they were originally.

     

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  32.  
    identicon
    JEDIDIAH, Mar 10th, 2009 @ 1:00pm

    Re:

    > The RIAA is killing music, END OF STORY!

    Quite simply, the RIAA are not a group of people I
    want to help. They will stick it to me in some manner in
    the end. If it's not bad legislation then it will be some
    form of criminal prosecution or civil suit for doing
    something that I should be free to do with my own property
    (copies of copyrighted works). They abuse the customers and
    their abuse their own artists. The payment/royalty schemes
    for musicians more resemble piracy on the high seas than the
    action of any swapper.

    So, that leads me to not want to buy that album from
    that group that Pandora has recently turned me onto. I
    realize that the RIAA is doing it's best to kill Pandora
    and suck the blood out of the band I've just been turned
    onto. Why do I want to help perpetuate that?

    They want to interfere with my work, they want to
    interfere with my use of their product, they like to
    abuse the creative talent.

     

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  33.  
    identicon
    Charles, Mar 13th, 2009 @ 5:23am

    Re: Re: Re:

    Iteally, people don't care about this

     

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