Almost exactly three years ago, Mike wrote up a post that discussed Planet Money pulling together five economists with differing political views to see what they could all agree on. The result was several policy ideas that appeared to transcend politics if economics was the driving motivator instead of any kind of partisanship. The whole post is awesome, and has influenced my thoughts on economic policy and taxes to a large degree, but I came away from it with one general concept firmly in mind: tax what you want to discourage, don't tax what you want to encourage, and never tax innovation or the future.
A ruling by Chicago’s Department of Finance allows the city to add an extra nine percent tax onto “electronically delivered amusements” and “nonpossessory computer leases.” In an odd combination, buying a subscription to streaming media, such as Netflix or Spotify, would qualify, as would using a cloud computing platform, such as Amazon Web Services. Each would be subject to 9% tax; Chicago is the first major American city to levy a tax on either streaming services or cloud computing services.
Amusement taxes in and of themselves generally violate the concept I highlighted in the opening. After all, if you're a municipality, taxing fun is essentially saying you want less fun. But what makes this re-write of the amusement tax already on the books silly is that it is purely a money-grab. Here's what happened: the amusement tax in Chicago worked primarily to collect revenue from book stores, music stores and movie rental stores, which are obviously becoming increasingly in short supply as consumers move to online stores and streaming services like Netflix and Spotify and Amazon for all of the above. This is actually a good thing from a public interest standpoint for a variety of reasons: less pollution from physical products, more efficiency in the marketplace, the opening of more creative outlets for members of the city, and more access to more content from more places and devices, meaning a more robust economic marketplace. The future, in other words, although increasingly the present as well. And Chicago wants to tax all this, effectively discouraging its use, in order to collect an additional $12 million a year.
Chicago, mind you, is in the hole for roughly one hundred times that amount.
Cities with amusement taxes have lost revenue as more people forgo book stores, record shops and video rental stores in place of online outlets. But $12 million isn’t going to be much more than a drop of water in the bucket of the city’s $1 billion operating shortfall.
Fighting the future doesn't even yield much of a reward, so why do it at all? Don't tax what you want to encourage and tax what you want to discourage. This makes it look like the city of Chicago really wants a tax policy to make the city operate like it was 1995.
We've written plenty about the mess around pre-1972 sound recordings and online streaming services. Technically, federal copyright law does not apply to sound recordings from before 1972. And while that might make you think they're in the public domain, that's not true at all. First, the compositions are still under copyright and much more importantly, a jumble of state laws did protect some aspects of those sound recordings -- and that's made a huge mess, including locking up some recordings for way, way longer than would be possible under today's federal copyright. On the flip side, however, it meant that certain aspects of federal copyright law that were not covered by state copyright law were fair game -- or so people thought.
This included in music streaming services. It had long been believed that you could publicly perform such pre-1972 songs without a license because, even under the various state and common law copyrights, there was really no concept of a "public performance" right anyway. Thus, services like SiriusXM and Pandora did not need to pay a performance fee to play those songs (for post-1972 recordings, both pay compulsory rates -- which are for different reasons that have to do with lobbying power). This whole mess could be settled by just moving pre-1972 sound recordings under federal copyright law -- which would make them subject to the same compulsory license fees as modern songs, but would also free up those old songs that state copyright law has locked up. It's a tradeoff, but probably the best result. However, the RIAA has fought very hard to block this.
Instead, it wants to have things both ways. It wants to keep those songs locked up for as long as possible, but still wants to get the benefits of federal copyright rights, such as public performance exclusivity. The reason, of course, is that it wants a big weapon -- to force SiriusXM, Pandora and others to pay much larger fees by not allowing them to rely on compulsory rates, but rather to have to come to a negotiated deal.
In order to make this happen there have been a series of lawsuits in different states. In both California and New York, courts ruled against SiriusXM, saying that the state law in California and the common law in NY could be seen to cover performance rights, and thus SiriusXM had to pay up.
However, just a few days ago, a court in Florida went the other way entirely, saying there was no such right in Florida. The state law had nothing and the common law was not established in that area, thus ruling against SiriusXM (and in favor of Flo & Eddie, the organization that brought the suit) would be creating a new right out of thin air (something some copyright experts noted that the other courts had done).
So.... that started to make things interesting. Except... just a few days later, the RIAA and SiriusXM have announced a massive settlement over pre-1972 recordings with SiriusXM agreeing to fork over $210 million. This is going to put enormous pressure on Pandora to come up with a similar settlement. But it's not actually going to answer many of the questions here. First, the settlement only covers the cases brought by the big labels (so not the Flo & Eddie cases...). Second, it only covers through the end of 2017, at which point, it's right back to the negotiating table.
Oh, and in case you're wondering, this line in the Hollywood Reporter story is probably the most important one:
The agreement announced today also doesn't deal with if and how the big record labels will share proceeds with its artists.
The recording is old news. Last century. Dead. The Access versus Ownership debate should have finished 10 years ago, but we're still bickering. Access models (eg. streaming) are not supposed to replace Ownership models. They're supposed to power a new reality, a new age for the Music business, in which the record industry possibly has no place.
"The Music industry" has become synonymous for the recording industry, just as it was synonymous for sheet music publishers prior to the rise of the recording companies. With new technology, come new companies, and the old companies move into the background. The new Music industry will likely not consist of those that depend on the recording (eg. major labels, or even Spotify), but those that apply technology to change what it means to listen to or interact with Music, just as the recording did in the 20th century.
Even the creative process will have to change.
Prior to the invention of the record, Music was far more participative than it has become throughout the age of mass media and mass consumption. Back then, if you wanted to hear your favourite song, you better know how to play an instrument, or have a member of the household who sings well, or you're simply not going to hear it. That sounds extremely restrictive given our current reality, but it also gave Music certain characteristics that made it richer:
Music was participative
Music was mostly a social experience
Music was more intimate
Music sounded a little bit different every time
Music belonged to everyone
I believe these are natural characteristics of Music, that got temporarily pushed into the background in the age of Mass Media and Western individualism. Entertainment and Culture became passive, and the ownership of Culture became less ambiguous, economically. A Creating Class arose, and a Consuming Class. The companies selling the output of the Creating Class benefited from the passiveness of the Consuming Class, because you couldn't consume high margin products while you create.
The KLF's Bill Drummond about Recorded Music
The KLF's Bill Drummond about what the recording took away from Music. From 1:23. Quote below.
"As the technology to record music evolved through the twentieth century, it sucked in and seduced every form of music around the world. They all wanted to become recorded music. They all wanted to become this thing that could be bought and sold. And that narrowed the parameters of what music could do and be. And it took away from music a big part of what can make music powerful, which is about music being about time, place, and occasion."
"Until 100 years ago, every musical event was unique: music was ephemeral and unrepeatable and even classical scoring couldn't guarantee precise duplication. Then came the gramophone record, which captured particular performances and made it possible to hear them identically over and over again. […] I think it's possible that our grandchildren will look at us in wonder and say: "You mean you used to listen to exactly the same thing over and over again?""
The recording is not the end of the line for Music. Every medium is a transition to the next medium.
Most people call performed music "live music" —
some people call recorded music "dead music"
The Media evolved and spawned Computers, the Internet, Video Games. The latter a highly Interactive example of Culture that went on to give birth to MMORPGs, where large Communities of players Interact and define their own Meaning, participatively. A particularly good example of the aforementioned elements coming together is Minecraft, a world-creating game where players work together to build whatever they can dream of. Deadmau5 uses this to enter a digital world of fan art and interact with his fanbase. Imagine what that's going to look like with the unstoppable momentum Virtual Reality currently seems to have. The Consuming Class has become the Creating Class: Consumption and Creation are becoming, in part, synonymous.
Why is Music still static by default?
Why am I not being offered more ways to interact with Music?
Look at the gaming industry. It's a 1,000 times easier to get someone to pay to unlock a 'special ability' than it is to sell them a piece of content.
Intimacy and Immediacy
The old Music industry is not interested in creating Intimacy. It's hard to scale. The dominance of the recording industry's model depends on hundreds of thousands of well-timed sales, and a long-tail that provides income until 70 years after the death of the Creator.
Yet the fact that we carry computers in our pockets that are more powerful than the PCs on our desks a few years ago, and always connected to the Internet, offers amazing opportunities for Intimacy and Immediacy, ones that fans are happy to pay for. It means that Kevin Kelly's theory of a 1,000 True Fans will become increasingly easy to apply for a growing number of Creators.
The rise of Intimacy and Immediacy will benefit those Creators who work with small teams, who are open about their creative process, and involve their fanbase early on in this process. This enables them to secure funds through crowdfunding, as opposed to trying to secure investment from large corporations, whether recording companies or brands.
One can create dynamics of social competition within a fanbase. Who can recruit the most new fans, or active members? Who are the most valuable contributors to the Creator's wiki? Who spend the most money on merch and who have the most complete collection? The ones that rank highest, get access to perks. A weekly 1 hour video chat with the top 10, weekly 10 minute preview of what you're working on for the top 50, 20% discount on merchandise for the top 200, etc.
An app that has a great idea for how to get people to actively discover new Music, engage with it, and feel part of the artist's success is Tradiio. It gamifies Music discovery and lets users invest virtual coins in songs they believe in. This helps artists rise to prominence on the platform and earn rewards. If this platform evolves from a reward-based game, to a real economy where users can purchase coins and artists can cash out, it would be a good example of the type of company the new Music industry will be made up of. Just to mention some other exemplary companies for music's future: look at Smule and Sonic Emotion.
More on Games
The Gaming industry got into the same mess, at the same time, that the Music industry got into, brought about by the fact that what they thought was their product could suddenly be communicated through networks at zero cost. A whole new Gaming industry emerged with the arrival of connected devices: smartphones. Instead of charging money for the game, they made the game free to play and highly social, and instead charged for a limited set of actions.
Treat money-poor, time-rich fans as well as the money-rich, time-poor, because it's the former that provide value for the latter.
Music needs a new format that's feature-oriented, rather than content-focused. The content remains central to the experience, but the interaction around the content is what brings in the money. Likewise, playback of recorded music will remain important in the future, but perhaps not as the part of the industry that rakes in the most important part of Creators' incomes.
There are countless examples of companies pioneering the future of Music. From aforementioned Tradiio, to ones started by game developers, Music business serial entrepreneurs, and artists themselves. First let's start with an example from another part of the entertainment industry.
"The software will read your emotional reactions to the show in real time. Should your mouth turn down a second too long or your eyes squeeze shut in fright, the plot will speed along. But if they grow large and hold your interest, the program will draw out the suspense."
Imagine applying that to music… Some companies are already closing in on that.
Example: Inception, by Hans Zimmer and RjDj
Music producer and film composer Hans Zimmer collaborated on an app for the Inception movie, with RjDj, a company that specializes in Context Aware Music and Augmented music, founded by one of the co-founders of last.fm, Michael Breidenbruecker. Hans Zimmer on the project:
"There's a thing I've been searching for and I've been working on forever now, is a way to get beyond recorded music. To get beyond 'you just download a piece of music and it's just always the same'."
The application they made draws information from the world around the user, and transforms it into fantastic music. It seems as if you're being immersed in dreamlike worlds, as happens in the movie.
They continued their collaboration and made another app for The Dark Knight Rises. RjDj also created a Reactive Music game called Dimensions, which owes its name to the trippy effects of the Augmented Music that make it feel like you've just crossed into another dimension. The game is free-to-play, and offers in-app purchases to unlock new experiences or further augment existing ones.
I asked two of the people behind RjDj whether people are ready for adaptive music. This is what they had to say.
"I think many of them are ready. Apps like Inception or Dark Night Rises show that people are really into this sonic experience. The problem is how this is presented packaged. I can tell you from experience that not many people hear the difference between 5 hours of generative music and 5 hours recorded music. So really... no one cares if your music changes all the time through an algorithm and never sounds the same or if [it] is a preproduced track. Music has to have a reason why it is dynamic and not linear... that's why we sync it to real life."
"I think Inception especially proved that if the experience is delivered in a way that makes sense, perhaps within a bigger conceptual framework, then millions of people can understand it and really like it.
As for people understanding the depths and details of how reactive music changes. It is very very easy to lose a huge part of the audience here. I think its fair to say that only musicologists and very serious music listeners could pick out the ways in which detailed generative music is changing for instance. Making a reactive music experience meaningful requires that the listener can tangibly feel that the change in the music is linked to his / her activity or life in some direct and hopefully emotionally powerful way.
Often making linear music is about manipulating the emotional state of the listener into particular states of mind over time for dramatic effect. Reactive music poses a different set of possibilities - what if the music is manipulated by them / their emotional state? As a composer this is totally different - its like using a sniper rifle instead of a shotgun - you can make your music hit exactly the right spot for the moment."
Adaptive soundtracks are actually quite common in games, where the Music transforms depending on the player's absolute and relative position (it's called Dynamic Music). Some developers are chucking all the other game elements aside to focus fully on that.
Proteus has been described as a non-game. The game (or 'game') was developed by one developer and one sound designer, and places you on a mystical island. There's nothing there to kill, no need to score points, and you can't die. All you have to do is to wander around the island to discover new areas and to enjoy the way objects around you influence the soundtrack. This is the literal embodiment of the phrase 'soundscape'. The changing seasons, different weather conditions, time of day, and varying ecosystems all have an impact on the Music.
I asked David Kanaga, the game's sound designer, whether this is something anyone could do, in order to understand whether this could become a more mainstream medium for Music:
"Yes, anyone could do it. It's maybe even more natural than writing static music in a way. That said, very few people are doing it, and maybe it takes years of UNLEARNING, which maybe means everything needs to be played again, to stop fixating on what's successful and beautiful in recorded music, in Sgt. Peppers and Pet Sounds, to find the play aspect of those and to move on, to stop admiring recordings.. improvise only, this is the tactic that i've been practicing myself to try this unlearning.. no serious learning is needed, really, but the UNLEARNING is totally necessary."
Example: Biophilia, by Björk
In recent years many artists have taken to releasing albums as apps. Björk had a particularly interesting take on it, releasing her album as a 3 dimensional galaxy that can be navigated and interacted with. The app even became part of MoMa’s collection.
Through the use of in-app purchases, the user can unlock new parts of the galaxy, which provide new Music to Interact with.
Example: Don't Be Scared LP, by DJ Vadim
Ninja Tune veteran DJ Vadim released an 'immersive album', which allows users to interact with different elements of the song, recomposing it according to their own wishes. What better way to create a sense of Intimacy between your fans and your Music.
Example: Central Park (Listen to the Light), by BLUEBRAIN
Then there's Bluebrain, a musical duo that produced their own apps, location-aware albums, one of which can only be used in New York's Central Park. In a way it's similar to Proteus, except in this case, the soundscape is mapped to physical locations rather than virtual.
Recently a new music startup by one of the creators of Google Maps started making waves: Weav. Weav's aim is to simply make music elastic. Unlike Spotify's new feature which picks songs that match your tempo while running, songs on Weav's platform will actually adjust to your pace. The team created tools for musicians to create dynamic music: you don't just write the song, you also program rules for it to recompose itself and adjust to different tempos. Co-founder Lars Rasmussen:
"We believe that as our lives become increasingly digital, and as our increasingly powerful mobile devices play greater and greater roles in our lives, having a song that can change and adapt -- in real time -- to what you are doing will become increasingly important. And delightful. This is why we built Weav."
If you're waiting for disruption in the music industry, don't look at the big platforms like iTunes or Spotify. They belong in the Age of the Recording.
Look at platforms that offer actual Interactivity, Immediacy, Intimacy, and Involvement. Now more than ever can Creators help give shape to future formats of Music, and to new ways to connect the listener to the Music.
Imagine Music in the Age of the Internet of Things.
Music may be static, but it doesn't have to be. And the relation between Creator and Fan certainly shouldn't be.
I'm going to do something crazy and generally not advised on the internet: I'm going to try to make a nuanced argument that cannot be summarized just in the title alone. I fully expect that some will not read through the details, but please, just ignore them in the comments and try to focus on the full argument presented here.
Let me start out this post by noting a key thing: from the beginning, it was stupid that Apple had negotiated a deal with record labels in which copyright holders would not be compensated with royalties for the three-month "trial period" of Apple's new streaming music program. It clearly should have agreed to pay the royalties, and it was a really short-sighted move to push for a deal without royalties. It was always going to come back to haunt the company. Second, while I know some people like to attack Swift for a variety of reasons, I actually think she's an incredibly savvy music person, who has built a tremendously successful career, often by maintaining control on her own and not giving it up to the major labels. That's fantastic. But all of that doesn't mean I think what happened this weekend was a good thing (remember: nuanced argument, please read on).
Of course, as you've probably heard, on Sunday, pop star Taylor Swift wrote an "open letter" to Apple on her Tumblr blog about how ridiculous this was, and how she wouldn't allow her latest album to stream on the service because of this -- even though she supports Apple's "no free tier" stance. There's a lot to comment on about her piece but, no matter what, it was effective. Late on Sunday, Apple's Eddy Cue tweeted Apple's capitulation:
And... the internet went kind of wild. The fact that Taylor Swift wrote a blog post that made Apple -- probably the richest and most powerful company in the world -- back down within a day (on a weekend, no less), does have a sort of populist appeal to it. People started jokingly suggesting that Swift should weigh in on politics, the Middle East and much, much more.
Thought pieces were written by-the-dozen about how Swift is the "most powerful woman/person in music/tech." No, really:
And that's just the first ones I found in a quick Google search. There are more.
But here's the problem with all of this: it's hogwash, meaningless blather that doesn't change a thing and will have no lasting impact. If anything, the lasting impact may be negative, not positive for artists. And, remember, I actually agree with the overall point that Apple's original decision was the wrong one, and think the company made the right decision to reverse course.
But there are three big problems with the rush to celebrate Swift as the new savior of the music industry over this. First her arguments for why are misleading and not very helpful. Second the overall impact of this move will be minimal to musicians (and other creative types). Third, it will give a false sense of hope to those who rely on obsolete business models, rather than innovating.
Let's break down all three. First: her arguments are kind of useless. Here's the key one, which got lots of people excited:
This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt. This is about the producer who works tirelessly to innovate and create, just like the innovators and creators at Apple are pioneering in their field…but will not get paid for a quarter of a year’s worth of plays on his or her songs.
It's very touching. And it's almost entirely hogwash for a variety of reasons. First, if your album is a success, there are all sorts of ways to make money beyond the royalties from Apple Music's streaming service. Swift herself kind of admits this in her first sentence in which she notes that she makes a ton of money playing live shows. And why does she make that much money live? Well, as Tom Conrad rightly points out, her career was built on terrestrial radio play -- which is a free service (the kind that Swift has attacked Spotify over) and which doesn't pay the performers anything at all in the US. You can (and many do!) argue that the law in the US should change on this, but it's the way things are today, and Swift is living proof that being a part of a free service that doesn't pay performance royalties certainly doesn't mean that you end up suffering. In fact, it can lead to an immensely successful and profitable career... like Swift's.
But that brings us to the second problem with that paragraph, which is that for most musicians, this doesn't much matter anyway. That's because the industry's biggest secret, which it always tries to hide from these debates, is that the vast majority of musicians basically make absolutely nothing in royalties. This is due to a combination of factors, starting with the fact that if you're signed to a label, the label is likely keeping nearly everything you get from streaming. When Eddy Cue says "Apple will always make sure that artist [sic] are paid" he's lying. They may make sure the copyright holder gets paid, but that's frequently not the artist.
And, related to this, is the other dirty secret: most musicians don't have a big enough fanbase to generate enough revenue. Most musicians don't make a living, period. That has always been the case. The supporters of the old system like to try to slide this fact under the rug and they do some creative counting, where they only look at the stats of those who have made careers out of music, and they leave out the vast majority who fail. The vast, vast, vast majority of musicians don't make a living, because the music business is tough. It's tough to get attention. It's tough to make good music. It's tough to make money. Apple paying for streaming really only addresses a tiny, tiny, tiny bit of that last one. No musician is going to make it or not based on getting paid in this three-month trial. If they're getting enough plays to matter, then they have other ways to make revenue.
Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing. I say this with love, reverence, and admiration for everything else Apple has done. I hope that soon I can join them in the progression towards a streaming model that seems fair to those who create this music. I think this could be the platform that gets it right.
Three months is a long time to go unpaid. But not getting paid by Apple Music does not mean "going unpaid." It just means one small revenue stream is limited while it aims to get up to speed. And, again, Swift herself proves this via the fact that her songs play all the time on the radio — for free, but still helping her get paid. And, even though she can pull it down, she's left her streaming music on YouTube. Furthermore, as others pointed out, Swift herself is a bit of a hypocrite here. She puts ridiculous limits on photographers who are on assignment to photograph her shows, such that it often means they have to put in the work and not get paid -- even as she gets to use their photographs forever. If she's really so concerned about creative types "going unpaid," shouldn't she be paying those photographers for their works?
As for the second point above: the overall impact of this move will be minimal to musicians (and other creative types). As already discussed in point one, for most musicians, this isn't going to move the needle one way or the other. Any musician out there relying on the royalties from Apple Music to make or break their musical career has no musical career. Perhaps it's possible that there are one or two artists at the margin for whom this is helpful, but for the vast majority of artists, this isn't going to make a big difference at all. Additionally, while Apple has said that it will now pay during the trial period, it didn't actually say how much it will pay. Yes, for struggling artists any revenue helps, but trust me, when the first royalty checks from Apple start coming in, I can guarantee there will be musicians complaining online about how little they get. Those stories always get coverage. They'll happen again.
And, of course, for label-affiliated artists, much of it will go to the label anyway, and the artist won't see any of it.
Finally, onto the third, and most concerning point: it will give a false sense of hope to those who rely on obsolete business models, rather than innovating. We're already seeing this in the reverence and adoration being showered on Swift for her blog post, despite its questionable premises -- but more for its impact. And musicians are celebrating this, despite the fact it won't move the needle for them one way or the other. And that's really unfortunate, because here's another chance to do things right by focusing on business models that let them connect directly to fans and give them a reason to buy something. Demanding others pay you money is no substitute for convincing others to willingly pay. One is sustainable, one is not.
But because of this "success," people will still cling to the false notion that the "solution" to content creators' failure to build their own successful business model is to demand that other successful companies give them money. And this goes way beyond music as well. Already, you see people like Jeremy Olshan, Marketwatch's Editor-in-Chief, saying that "journalism needs a Taylor Swift to save content from getting... devalued."
This is wrong on so many levels, but that's another post for another day. But this notion of "a savior" magically swooping in and reviving business models that aren't working any more, based on sheer will, is a myth. And it's a dangerous myth because it gets people focusing on that rather than implementing sustainable business models and creating great content. There is no savior for music. There is no savior for journalism. There is no savior for movies. No talk about "fairness" or "fair compensation" or "ethical compensation" is going to change fundamental economics. Most content creators fail out of making a career of it, and if you're going to succeed, praying for a savior, rather than taking steps to ensure a competent business model, isn't likely to be particularly productive.
To conclude (with nuance baked in): So, again, despite all of this, I think Apple made the wrong move initially, and the right move on Sunday night. However, Taylor Swift's reasoning was silly (even if I think she's a great success story who has built up a tremendous career without ceding much control), and the impact of all this will be basically nil for almost every single artist. But, worst of all, this whole episode reinforces this savior concept, and the false belief that because some companies are successful, while some content creators are not, a savior should just demand "fair compensation" and money will magically rain down upon the creative class. It doesn't work that way. It's never worked that way. And nothing in what happened over the weekend with Swift will change that. If anything, it only serves to distract people from focusing on the business models that do work.
We've been going on about how we're on the cusp of significant change in the way major sports leagues handle digital streaming for quite a while. While I've long made the argument that one of the few strands by which the pay-for-television landscape is grasping onto yesterday is the broadcast rights of professional and college sports, recent announcements from both Major League Baseball and the NFL, when combined with the NBA's new broadcasting deals, seemed like the starting line in the race to cord-cutting. That said, the race is going to be a marathon and not a sprint, peppered with the kinds of babysteps in the most recent announcement concerning the NFL.
The NFL said in a statement Wednesday that Yahoo is its "exclusive partner to deliver the first-ever live stream of an NFL game to a global audience across devices and for free." The October 25 Buffalo Bills-Jacksonville Jaguars game will be groundbreaking because it won't be shown on television in the United States like every other NFL game is. (It will still air in the Bills' and Jaguars' home markets.). It will be available for streaming, with ads attached, all around the world.
Now, before all the football fans in the audience get up in arms over the quality of this particular match, don't bother. If you're a proponent of expanded sports streaming, this is 100% a win, even if watching a Bills vs. Jags game is less enjoyable than pulling metal splinters out of the eyeball of a cute puppy. The NFL is a monster, the best possible partner proponents like me could have hoped for, and even the worst NFL game typically does no worse than decent in terms of ratings. Imagine what it will tell the NFL if the Yahoo stream of this game beats past viewership numbers of its televised counterparts? They're setting the bar low and it will look significant if there's even a modicum of success.
Estimates for the sum Yahoo paid for the right to this broadcast have it anywhere between ten and twenty million dollars, making larger deals with Yahoo, or other players (hi, YouTube!) feasible as broadcast rights replacements to CBS, NBC, Fox and ESPN. Yahoo isn't bullshitting in playing this up.
Yahoo is promoting the event this way: "For the first time in NFL history, anyone with an internet connection can tune in, exclusively on Yahoo, from anywhere to watch a live football game for free. Whether you're on your phone, tablet, laptop, console or connected device -- we've got you covered."
Again, it's a step and not a leap, but as steps go it is closer to the moon landing than dipping a toe in the water.
If you go all the way back to when the RIAA shut down Napster, you may recall that within just a short while, Gnutella launched, providing a more distributed system that became the core of a number of file sharing programs, which ended up growing much, much larger than Napster. It's the classic hydra situation: you cut off one head, and eight more (or even more than that) come back in return. It's a message that has been obvious since the days of Napster... and yet it's one that the legacy entertainment industry and its friendly politicians still can't seem to grasp. It's why we've always said that the industry would have been so much better off looking for ways to embrace and work with the leading providers in the space, rather than shutting them down.
But, clearly, they don't get it. As the Sony email leaks showed, "site blocking" is still considered a top priority for Hollywood, even though it doesn't take a genius to realize that it doesn't work.
Now we can add some more evidence: the European Commission itself decided to do a study looking at what happened after the website kino.to was shut down, and shows that it was a complete failure if the industry was looking to stop people from consuming unauthorized videos. As we've seen before with other site blocking efforts and over-enforcement, there is a very brief impact in decreasing access to infringing works, and a very, very small increase in sending traffic to licensed offerings -- but that only lasts until alternatives come along, usually within weeks.
The overall impact on stopping access to unauthorized videos? Basically none whatsoever. And, by scattering users out to a variety of new sites, it made it even harder for the industry to track what people were doing. In the case of Kino.to, it took all of four weeks for people to find new places to go:
The results from our empirical analysis show that the shutdown of kino.to led to a
significant but short-lived decrease in the usage of unlicensed video streaming websites.
Unsurprisingly, this effect is particularly large for individuals who were using kino.to
previous to its shutdown, with decreases of more than 30% in overall piracy consumption
during the four weeks directly following the intervention. We nevertheless observe that
consumption of pirated content increases again following the fourth week after the shutdown.
This increase is driven both by substitution towards existing alternative unlicensed
platforms and by the entry of new platforms following the shutdown.
You can see how this works pretty easily in the following graph. Yes, there's a very brief decline in unauthorized streaming, but then it goes right back to about the same level... and appears to be generally climbing upward:
As for helping convince the users to suddenly start paying for content? A tiny, tiny effect that also does not seem to last:
Second, we find limited substitution into consumption of licensed offline video content,
proxied by visits to specific types of websites. Our results show that consumers do not
increase their visits to websites of movie theaters or to DVD-related Amazon webpages.
However, we find a small increase in clicks to licensed online video services (such as Maxdome,
Lovefilm, and iTunes) after the shutdown, providing evidence that the intervention
was successful in converting part of kino.to's users toward legitimate video consumption.
Perhaps more importantly, we also find that heavy kino.to users disproportionately
increase their visits to websites of licensed video services. This substitution was nevertheless
undermined by the existence of alternative unlicensed streaming websites, which
allowed consumers to rapidly transfer their consumption of copyright infringing videos
from kino.to to other platforms. In particular, we document a large increase in clicks
to the second-most popular platform - movie2k.to - directly after kino.to disappears.
Only five weeks after the intervention, we also observe the entry of a new platform -
kinoX.to - which manages to quickly appropriate a significant share of the unlicensed
video streaming market at the expense of movie2k.to and the other smaller platforms.
These results reflect both the high elasticity of supply to the shutdown, and the fact that
consumers face little difficulty in switching from one platform to another.
And, the end result is the basic hydra effect, where the audience fragments:
Third, we assess how the shutdown affected the overall structure of the market for unlicensed
video streaming. While the market was largely dominated by kino.to before its
seizure, the intervention triggered an increase in competition between alternative platforms,
ultimately resulting in a much more fragmented market. After the shutdown, the
market was evenly split between movie2k.to (the second largest player at the time of
the shutown), kinoX.to (kino.to's substitute), and a remainder of 12 websites which
cumulatively account for one third of the market. We also observe that concentration
of demand decreases after the shutdown, and that consumers diversify their unlicensed
movie consumption more as opposed to concentrating it on a single platform.
Again, you can see the impact of this hydra effect right here:
Some may argue that this is the intended impact, and that if these sites have a smaller audience it makes them less sustainable, though there's little evidence to support that.
It seems that a much clearer message from this study is what many of us have been saying all along: taking down sites does not change what people want. And if the industry itself is failing to serve the public and music and movie fans in a compelling and convenient manner, then other providers will come in and do it instead, whether or not it's legal. And that's where the audience will go. The more the industry fights against this, the harder it becomes for the legacy industry to figure out ways to work with the leading providers to build a legitimate service. Instead, it just pisses off people and sends them further and further away. That can't be good for business.
Given that, it seems like it would make a hell of a lot more sense for the industry to focus on providing what people want rather than wasting so much time, effort and money into trying to shut down the sites they don't like.
Last week, we wrote about HBO and Showtime teaming up to pre-emptively sue two websites that publicly claimed they were going to live stream video footage of the Floyd Mayweather/Manny Pacquiao boxing match that happened this weekend. As we noted, it seemed odd to sue someone for infringement prior to the copyrighted content even existing, but as some helpfully noted, US copyright law includes a weird provision, 17 USC 411(c), which notes that when you're talking about works where "the first fixation of which is made simultaneously with its transmission," then "the copyright owner may, either before or after such fixation takes place, institute an action for infringement" given a few, pretty basic, conditions. In other words, while rare, the law does allow for just that sort of lawsuit for anticipatory infringement.
Thus, it shouldn't be too surprising that the judge, in fact, granted the request for a temporary restraining order on the two sites in question, boxinghd.net and sportship.org. Frankly, I have no idea if either one of the sites carried through on their promise to stream the fight this weekend, though I imagine it would be fairly dumb of them to have actually done so. From a cursory check, as I type this, it appears both sites are completely offline, so perhaps they both just shut down rather than deal with the threats from HBO and Showtime (or, perhaps, just moved to alternate domains).
Each and every one of the Defendants and their agents, servants,
employees, officers, attorneys, successors, licensees, partners, and assigns and all
those acting in active concert or participation with any of them, including any and all
service providers who receive notice of this Order, are temporarily restrained and
As the EFF points out, this is de facto SOPA -- allowing copyright holders to simply point at a site they don't like, claim they're "bad" and basically order them off of the internet by merely sending a copy of the restraining order:
You may not feel much sympathy for the websites in question. But this kind of site-blocking, without real legal process, is essentially one of the worst parts of the ill-conceived, long-dead Stop Online Piracy Act (SOPA) being brought in through the courtroom back door. HBO got an order to block content against those who act as intermediaries, even though they have nothing to do with the alleged illegality of the sites, are simply providing normal business services, and almost surely had no notice that they were about to be enjoined.
This is not the way our legal system is meant to work, and the good news is that it actually doesn’t. Federal Rules only allow courts to issue injunctions against those who truly are in “active concert or participation” with bad actors. We doubt that those who offer hosting services and video delivery, without more, can properly be considered in “active concert or participation” with the unauthorized streamers.
As the article above points out, it may not seem all that sympathetic considering these kinds of sites, but take it a step further. As we already discussed, whether or not these sites actually streamed any parts of the fight, the fight was widely streamed -- but via Twitter's Periscope service. And, under the terms of this order, if HBO or Showtime had sent this order to Twitter, it could be found to have violated a court order despite not even remotely being a party to the case!
I don't care what you think about those who might have streamed the fight in an unauthorized way, you have to admit that there are clear due process concerns when a court pushes such a broad order, that ties the hands of those who might not even have been aware of the court case at all, let alone that it was legally restricting their ability to operate (in a way that might also be technically impossible). Yes, this may have been convenient for HBO and Showtime, but it's difficult to see how that temporary restraining order is even remotely constitutional (or sensible).
Remember, just last week, when HBO and Showtime were flipping out about a couple of streaming sites promising to broadcast live streams of the big Floyd Mayweather/Manny Pacquiao fight? Apparently, they had the wrong target.
Just a few weeks earlier, we had noted that Hollywood seemed to be losing its mind over the latest round of livestreaming apps. Never mind that livestreaming apps have been around for ages, but because there were two new shiny ones (Periscope, which is owned by Twitter, and Meerkat), suddenly it was a "big deal" again. Especially when it came to sporting events. We'd already discussed the NHL's silly ban on reporters, saying they couldn't use Periscope. All of that came together this weekend in a collective mess.
First, many of the big pay TV providers experienced outages, meaning that people who paid $100 to see just this one fight found themselves completely locked out. Looking for a solution, they turned to Periscope. And they apparently found what they were looking for.
And, it probably didn't help that Twitter (again, owner of Periscope) CEO Dick Costolo tweeted the following, claiming "the winner is... Periscope."
Of course, as some pointed out, he may have really been talking about the fact that HBO itself used Periscope to show inside Pacquiao's dressing room before the fight -- which seems like a pretty good way to use the technology. However, if this ever leads to a lawsuit, expect that tweet to be an exhibit of an out-of-context claim by HBO/Showtime that Twitter was somehow "inducing" infringement on its platform.
Either way, given how popular the bogus storyline is that there's some sort of existential struggle between Silicon Valley and Hollywood, the resulting news story practically writes itself. Once again, we hear of big bad technology completely tearing down pure hearted big copyright holders, and how "something must be done!"
It will be absurd for Twitter to mount the defense that it complies with any takedown notices filed over copyright-infringing content. Because by the time the compliance occurs the livestream is already over, the company is going to need to figure out a better way to combat piracy on the fly. Periscope may require something like Google’s Content ID system, technology capable of identifying forbidden streams in an instant, and maybe even converting them to transactional opportunities for legal alternatives to the content in question.
Wait, it would be absurd for Twitter to say, "Look, we comply with the law, what else do you want us to do?" Why? Why is it Twitter's responsibility here? Why not the promoters of the show to make sure that their partners supplying the paid streams actually have technology infrastructure in place that works? Or why not Showtime and HBO for creating additional reasons for people to sign up for its service, rather than signing on to one of the Periscope streams?
Why, again, does Hollywood always seem to (1) blame the tech industry for its own failures and (2) then demand that the tech industry magically stop what is unstoppable? Why not, instead, recognize that the technology is really useful, that people like it, and look for ways to take advantage of that? Why not offer an official Periscope stream or partner with others who are Periscoping on their own to offer different/better commentary? There are many things that they could do to embrace things rather than complain about it (or threaten to sue).
Technology keeps advancing. Pretending that you can stop that technology is not a productive path towards the future. Hollywood keeps having to relearn this lesson with every new major technological advancement. It tried to stop the radio, the television, cable TV, the photocopier, the VCR, the MP3 player, the DVR, YouTube and more. One day, you'd think they'd learn that this is a bad strategy.
from the giant-pink-mutant-vampire-elephant-in-the-room dept
With the arrival of services like Dish's SlingTV, Sony's Playstation Vue, and looming standalone offerings from HBO and Showtime, 2015 is finally the year that Internet video finally starts gaining some serious traction. As such, we're now seeing oodles of breathless analysis focused on what this means for you and whether now is the time to cut the cord. Usually in these fluffy pieces, there's a heavy emphasis on the fact that once you've subscribed to all of these streaming services, you're probably paying the same as you already paid for traditional cable. Gosh -- it's almost as if the same people responsible for setting absurd cable TV rates are setting streaming video rates!
But there's one recurrent theme among TV sector analysts that has always annoyed and amused the hell out of me in equal measure. Almost all of the "cord cutting" analysis I've read -- whether it's a local news outlet, the Associated Press or a major paper -- goes out of its way to pretend that piracy doesn't exist. As in, when discussing the options available to consumers, piracy isn't even mentioned as a commonplace practice. Since the pay TV sector competes with piracy (even though they've long been loathe to admit it), that always strikes me as immensely myopic.
So it has become a sort of ritualistic entertainment for me to watch writers go miles out of their way not to acknowledge piracy for fear they might be seen as condoning it. And as streaming options increase, stories breathlessly warning consumers that they won't save money with Internet video (if you conveniently ignore that piracy is a real thing) are simply everywhere. It's like they're being built on an assembly line in Topeka.
One specific case in point is a well-circulated bit of analysis over at the Wall Street Journal, where author Geoffrey A. Fowler proudly proclaims that despite recent progress in streaming options, cable TV still "beats the Internet." To prove his point, he offers up this handy graphic explaining that you'll still wind up paying a ton of money if you subscribe to every Internet video service under the sun:
Yes, "what's missing" are all the things millions of people are pirating. But we can't mention that because -- why? We'll be smitten by the gods? It's now standard practice in the media to pretend that piracy doesn't exist, then pretend that none of your readers are smart enough to notice your glaring omission. Seriously, even the barest mention of piracy is mysteriously absent from an ocean of similar stories, all claiming to give viewers a full accounting of the TV viewing options in 2015. There are simply countless examples of this, where authors profess to be asking the hard questions about cord cutting without mentioning the giant orange elephant standing in the corner:
"But there's one whopping big question that nobody's asking: Can you replace cable with streaming Internet TV and get the same experience — and save money? After all, if you can't make the switch without missing your favorite TV shows and saving money, then what's the point?"
Except they can! Through piracy! One gets the sense that media outlets feel like if they so much as even acknowledge that piracy is a real thing -- they'll somehow be taken as advocates for piracy. It's as if piracy is some kind of angry and strange Lovecraftian god, and even mentioning its name will invite unspeakable terror upon the local village. And it's not just the media -- I've seen countless professional firms paid millions to analyze the state of the pay TV sector similarly just pretend that piracy doesn't exist -- in large part because tracking these users can be difficult to impossible. As such, it's best to just pretend piracy doesn't exist and isn't even worth trying to monitor. Nobody will notice, right?
If you were to do an honest analysis of cord cutting options in 2015, you'd note that most cord cutters are doing everything and anything to avoid skyrocketing cable rates. That may involve subscribing to Netflix and Amazon Prime streaming, but it also may include using BitTorrent and a Plex media server to pirate all of their favorite HBO and Showtime shows. I don't advocate this behavior (did I need to say that?), but if you're seriously going to discuss the current state of pay television (and how we can improve it) -- ignoring the standard practice of millions of frustrated, potential customers strikes me as a very peculiar type of willful blindness. It's a form of willful, collective obliviousness that only helps the cable industry pretend that piracy isn't a useful metric in determining just how badly they're failing to meet consumer demand.
Bear witness to the genesis of a new era, fellow sports fans. I've begged and pleaded in the past for the major professional sports leagues to take the harness off of the ability to stream games. Even as the trend of cord-cutting has progressed along nicely, I have always argued that the only dam keeping a flood of cord-cutters at bay has been professional sports broadcast deals. Those deals have almost universally been saddled with local blackout restrictions, making streaming games all but useless for the majority of fans. The past few years, however, have seen inched progress towards wider availabitily for streamed offerings. The NBA's most recent contract went out of its way to make sure streaming is expanded, for instance, not to mention the deal Dish and ESPN made to make the cable channel's broadcasts more accessible for streaming. But those were baby steps, too often leashed by a cable subscription requirement.
On Monday, the NFL announced the Oct. 25 regular season game between Jacksonville and Buffalo will be put up for bid on national digital platforms. The game is being played in London, meaning the broadcast will begin at 9:30 a.m. ET and 6:30 PT. That's not exactly prime time for U.S. fans, or broadcast television, but it is 'prime time' in China, where the NFL is struggling to gain a toehold.
"It's a one game test. We will evaluate fan feedback," NFL spokesman Brian McCarthy said via an email exchange. "It's too early to tell about the future [of streaming games]. Will test this season with the one game and evaluate after."
Separately, the NFL said it's going to drop its so-called blackout rule, which prevents local broadcasts of games if they're not sold out 72 hours before kickoff. NFL media executive Brian Rolapp said the league is "testing alternative ways to distribute games," The NYT reports, and acknowledged the obvious: "The world is changing very quickly."
If this seems like a small step, you don't know how savvy the folks in the NFL's media department are. They absolutely know where the trends have us all heading regarding media consumption and I can promise you they are keenly aware of how many people are currently watching streaming NFL games on illegitimate sites. The most consumed sport in the United States doesn't turn on a dime, but the league also doesn't put up this kind of test balloon without having a fairly certain idea of how it's going to play with its customers. Assuming the quality, cost (free?), and accessibility of this test game is anything remotely comparable to, say, baseball's MLB.TV offering, expect this to end up as an insanely successful test-run. I'd actually say that this test game feels more like the NFL looking for an excuse to jump fully into a streaming offering than some kind of fact-finding mission. After all, you only drop the blackout rule in conjunction with expanding streaming if you expect the locals to run with the offering full-force. And they will, I assure you.
The NFL's DirectTV and network deals mean streaming won't explode immediately, but everyone can see what the NFL is doing to position itself for the future.
Given its agreement with DirecTV and television networks -- the NFL signed $27 billion worth of contracts in 2011 -- the league will be restricted on what it can offer online, at least in the near term. But the NFL is "a master of dicing and splicing content in order to extract the greatest value," [media analyst Walt] Piecyk says. "It's not like they're committing to put a bunch of games [online] but I think they want to get more comfortable so if Google or Apple or Amazon comes down the pike and says 'we want to buy a larger chunk of games' they can get comfortable on tech front."
And speaking of MLB.TV, reports are that professional baseball is due to get its own expanded streaming offering. The MLB.TV service has long been the standard in sports streaming, with no other league offering really even coming close. The problem, however, was that local games were blacked out, so the service was only useful for out-of-town fans or die-hard baseball fans that will watch any MLB game any time it's available (me, for example). If recent reports are to be believed, however, MLB is looking to take a small step to changing the blackout rules for streaming.
Major League Baseball is expected to announce in the next few days a deal with a national distributor, like a wireless provider, to stream local games of every MLB team, a source close to the situation said Thursday.
To stream games of the New York teams, fans would have to be a customer of the distributor and pay for the YES Network or SNY, the regional sports networks (RSNs) that carry Yank and Met games, respectively. The price to stream has not yet been set.
This is an imperfect first step, of course, particularly as it carries with it the anchor of either a cable subscription, a specific wireless device provider, or both, but it's an important step in the right direction. It's something akin, actually, to the DirectTV deal the NFL has, except that it's more mobile and more widely available on a variety of devices. You should also expect any deal MLB signs for this streaming to be less locked in than the NFL/DirectTV deal, because, again, everyone knows where this is all heading. And, if the reports are true, even the television broadcasters are resigning themselves to reality.
Talks between MLB and Fox Sports, which owns 15 RSNs, including YES; Comcast, which owns six, including a minority stake in SNY; and DirecTV, which owns four, have been on-again, off-again for more than a year. The talks have accelerated in the last two weeks, and both sides are optimistic a deal will be reached before Opening Day, April 6. Under that agreement, fans would deal directly with their pay-TV provider.
Is it as perfect a solution as simply working out deals to unleash the local broadcasts on the MLB.TV stream that customers have been watching all the non-local teams on? No, absolutely not, but this first iteration's imperfection will only catalyze MLB to go the correct route in the future. Because the trends are clear: streaming is up and cable subscriptions are down. Even if the NFL and MLB don't get this right the first time, they will absolutely be forced to get it right in the near future.
Either way, one eventual reality is coming ever-closer to fruition: cable television, and perhaps television as a whole, may soon be over.