Much ado about Nothing (at MIDEM)
Nothing much to report, except that as always, randomness ran riot. I loved stumbling onto people accidentally, those I really wanted to meet, or needed to meet and didn’t even know it. But the digital entertainment industry is very, very ill. Don’t know what it will take to revive it.
The much touted Spiral Frog is already dead (but the emergency rescue team is still trying to revive it). Last week we read about how the entire management team was sacked. Guess who showed up as the replacement speaker on the panel at MidemNet? Their lawyer. The entire panel was to be dedicated to the great white hope, this very Spiral Frog! The title of the panel was “Sounds Like Free --Ad Supported Music.” Those of you who know me know that I thought their business model was terribly flawed from the moment I heard about it. For those of you who don’t know what it was, here is a brief recap:
They meant to appeal to young people and those who are hooked on free (read p2p), those who can’t afford to purchase tracks. We all know that the people who have money have no time. And the people who have no money usually have plenty of time. But if they can get it for free, why waste 90 seconds on an ad for expiring content when they can have it forever if they get it from Limewire? Another $10 million dollars up in smoke. But the chairman still won’t admit it. I think that is one of the stages of grief, DENIAL. They have replaced the management team because the company is morphing into something related TV. But someone needs to come up with a more creative ad-supported music model than this!
More smoke (and mirrors) were swirling on the panel entitled: The New Deal of Licensing. I can’t believe I paid to sit through a discussion by representatives of NMPA, MCPS-PRS Alliance and SACEM (I won't name and shame them here; they know who they are) who sat there and told the audience that they hadn’t yet set a rate for streaming music (on MySpace and others like them) but not to worry, they are collecting money in advance from digital service providers anyway. And when they figure out a rate in a couple of years time then they’ll sort it out. I smell more death, or slow strangulation of the budding digital music business. I timidly raised my hand at the end of the discussion, thinking that perhaps I’d missed something, that maybe my ears are starting to go due to listening to too much music on my iPod (just kidding): “Do you mean to say that digital service providers who want to legitimately stream full length tracks and want to pay royalty payments have to accept having an unlimited liability in the future, that you are going to come back to them at some indefinite date and ask for some unknown sum of money?” That just about killed any plans I had for launching a legitimate competitor to MySpace.
More un-news. Apparently there is a new 5th major record label. Merlin. It was announced at Midem so it must be true. But… well, I was confused. Another major label? I guess even the press had a hard time getting their head around it. But then corrections to the mis-labeling were published later. What we now have learned is that Merlin was indeed launched at Midem. And our current understanding is that it is an initiative between AIM (a non-profit-making trade organisation for independent record companies and distributors in the UK) and IMPALA (a European Trade Association representing Independent Record Companies and Music Publishers set up four years ago with a view to defending interests of the independent music sector). But, I confused. And I would suggest that perhaps Merlin is confused as well.
The focus of the press release was that Merlin is here to save the day; finally someone will stand up for independent music. Thousands of independent labels can now sell their music on sites like MySpace and YouTube. And it seems this new representative of the ‘people’ (artists and songwriters) will go to the bargaining table with majors to get independent music’s fair share of the downloading dollar (or pound of flesh). That’s just great! But this is not the battle that needs to be waged. Sure, maybe iTunes gives more to major labels than to independents. And maybe there is just cause to be concerned about the new Snocap/MySpace digital downloading store. But Merlin is fighting on the wrong front! Why haven’t they launched a suit against MySpace for all of the millions and millions of tracks being streamed that are in direct copyright infringement!
Posted at 08:08AM Jan 30, 2007 by shelley in Music | Comments[3]
Merlin, is a "trade organization" for indepdent labels; however, they have seemed to not address the issue of how publishers will get paid. This is likely to create the same situation as iTunes where record labels were paid and publishers had to receive payment from the labels. This is why publishers were not paid for several years from iTunes. This is a bad model to follow.
Posted by Sindee Levin on January 30, 2007 at 11:25 AM GMT+00:00 #
I was quite looking forward to your take on the majors-considering-mp3-without-DRM issue. I hope you plan to blog about that, too.
And don't give up on the Myspace competitor thing yet. Myspace still sucks as bad as ever :-)
Posted by FB2 on January 30, 2007 at 11:30 AM GMT+00:00 #
I, too, was at MIDEM this year and I agree that there is nothing really to report. I estimate that attendance was down by about a third and there was talk amongst the attendees about changing the conference from 5 days to 2 or 3.
And yes, there are significant untruths being told about the state of the digital music industry. Everyone except Billboard, who reported a 33% percent increase in download sales, all attributable (according to them) to Fergie and her "Fergalicious" single, reported that download sales had fallen by about 16% and that no one has made up the gap from losses in sales of hard product or CD's. I understand that Billboard's editorial board might believe they're doing us all a service by putting a positive spin on things but isn't that very "spin" the thing that's making it impossible for anyone to navigate the digital landscape in a realistic way?
And what about the DRM debate? After years of developing these so called piracy protection systems, the industry is now on the verge of scrapping DRM alltogether. That would be a death knoll to subscription services that can only exist by using some sort of DRM to control the subscriptions they are selling. In my opinion, subscription services are a huge bargain for the consumer and are the best way to ensure that royalties will actually get paid to artists and copyright holders. This is an area that is truly being controlled by the tech industry that makes these devices since the simple solution is to adopt a standard DRM that would work with all players allowing consumers to subscribe safely to any service that carries content they might be interested in.
Instead, the industry would rather give its precious content away for free. Universal agreed to get paid for the content they were providing to Microsoft to be used on their new Zune player off of the sales of the players themselves (they'll receive about $1 for each device sold) and to give 50% of those monies back to the copyright holders. That means that Microsoft can give away as much of that content as they want for free. I'm sure Apple will enter into similar deals since they have made it quite clear that they make their money off of the sales of iPods and not from selling downloads on iTunes.
Independent labels and independent artists are not helping matters much. There are still some label owners out there (yes...I just spoke to them a MIDEM) who have not decided what to do about selling their content in the digital world. And artists, particularly new, developing artists, believe that the only way they can get attention for themselves is to give their content away for free in the hopes that they will get a significant amount of web traffic which will allow them to entice a sponsor or advertiser. This is horribly short sighted given that the only thing any artist ever owns is their copyrighted and recorded materials. If content is simply given away it is devalued to the point that it is valueless except to the sponsor who gives it away to sell their soap or liquor or cigarettes.
So as revolutions go, the digital one was pretty poor. I can honestly say that I must have blinked and missed it. The only thing I've noticed is that the old major label monopoly has been replaced by a new monopoly that has even less interest in the music industry and the people that work incredibly hard to keep it alive than the old regime did.
What's gone wrong?
Posted by Paul A. Czech on January 30, 2007 at 02:52 PM GMT+00:00 #