TURNABOUT: LIMEWIRE SEDUCES TOP DIGITAL DISTRIBUTORS
Have Indies Surrendered to P2P Taliban Or Are They Fulfilling Music’s Destiny?
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Record companies licensing music to a store owned by the number one illegal P2P enabler?Did I miss a memo?!?
It seems everyone these days has a store, so why not LimeWire. But what label in their right mind would license their music to the company who distributes what is arguably a music thief’s software of choice.
How about, The Orchard, CD Baby, IRIS and TuneCore?Four of the most trusted names in the indie music business. Combined, they control the vast majority of digital rights in the indie music space. Now each will be supplying songs to LimeWire.
These companies have long been noted for their support of the little guy.Why have they made LimeWire the de facto largest store for indie music? To find out, I interviewed their Presidents:
Greg Scholl – The Orchard
Jeff Price – TuneCore
Brian Felsen – CD Baby
You may not like what each has to say, but it gives us a great window into the thinking and the fears of some of indie music’s top movers, and the possible future of our industry.
TURNABOUT
What impressed the aggregators?All three started off with similar answers: “LimeWire convinced us that they are trying to turn over a new leaf.” It was a little odd how each used almost the same words with similar inflection, like they’d been to the same Amway seminar.But who cares what I think. Let’s see if you agree with them.
HOW IT WORKS
First we need to take a second to examine exactly how the LimeWire Store promotes the pay versus pilfer philosophy, which is the core of their “new leaf.”
A person looking for a free and illegal song-file on the LimeWire P2P network normally types in some data, like the song’s title. The software searches various networks and finds several sources. Sometimes 100s of them. A user would now pick one and begin the download process– thus committing a crime with penalties raging from $700 to $150,000 per download– if caught.
But, in the new-leaf LimeWire if the title you are searching for matches one in their store’s catalog, the experience changes a bit. A new window will pop up, much like Google advertising, in the right side of the screen.It’s one that offers you a choice: buy the same title, legally, virus-free, without DRM and support the artist. All for just under a buck.
By appealing to the users’ conscience the hope is that, to use Greg Scholl’s eloquent phrase, “We’re turning a file sharing moment into a revenue moment.”
LimeWire takes about 30% for this service. The rest is passed onto the aggregator and then split with the artist as per their contract.(I haven’t yet inquired how third party mechanicals are handled.)
A 30% vig for LimeWire seems more than reasonable considering that they are both the store itself and the marketing vehicle that drives the traffic to the store.By comparison most other on-line stores including iTunes take about 30% and don’t provide any traffic.
So…does it work?
All three aggregators have confirmed revenue from the system.None will talk about how much as yet.Jeff Price told me he has definitely seen a diversion where a P2P moment became one where revenue was created.
LimeWire does not sell music for every client of every aggregator they license with, only those artists who have opted into the system.So far many have.The store claims over 300,000 artists including selected tracks (mostly live) by some crusty heavies like Dr. John, David Byrne, Brian Eno and Willie Nelson.
SLEEPING WITH THE ENEMY?
Okay, so they’re monetizing P2P.That’s the good news.But is it good, in the bigger picture, to help make a company richer who has built their business model on the back of P2P theft?
TuneCore took a practical approach.Before they bought in, TuneCore did a survey of their clients to see who was interested in using LimeWire’s new system.According to Price, the vast majority said yes. “My problem with Lime is personal,” said Price, “But I can not let that affect my desire to offer my clients a choice.Some musicians want it. They believe there is a value in having their music bit torented.”
Although Orchard did not do a survey, their philosophy, according to Scholl, was similar, “[P2P] is not preventable.I feel our job is to work with the system.”
And finally, CD Baby’s new president, Brian Felsen, whose response mixed karmic imperatives with folksy rationale, “I’d like to encourage a company when they do the right thing. Since any song pretty much can be shared on any network anyway, a retail store offering some protections is more important than trying to forever find a way to ‘solve’ DRM.LimeWire thought it out and developed it well. Their store works independently of their P2P software in that they actually provide a way to prevent P2P theft of the purchased files from being shared in a LimeWire software client without onerous DRM.”
What?Back up!A DRM free copy protection that “prevents” un-authorized P2P?!!?And only LimeWire has it? And you can only get if you license to their store?
Some words are coming to mind and they are not, “yeah for the little guy”. This requires more investigation.
THE HOLY GRAIL OF COPY PROTECTION
LimeWire claims that is has developed what many would consider to be the Mecca of music sales security: a technology that is both a DRM-free MP3 file, but yet, somehow has the ability to be filtered out of their P2P application.
Ahh.Forget the “encouragement,” and “choice” BS. This security was a significant selling point to each CEO when they referenced the “new leaf.”And no doubt many independent artists will be attracted to it as well.
Unfortunately, no one at LimeWire will talk about what it is, so we’re a bit short on peer review. “A condition [of our deal with LimeWire],” said Scholl, “was that we not discuss the details of how the anti-theft system works.”(I got the same spiel from Price and Felsen.)
George Searle, CEO of LimeWire refused to answer any of my questions about the security system’s methodology. According to Searle, it would “compromise copyright holders. We can’t discuss how it works because people would then be able to dismantle it.”
Well, concern for copyright holders was a refreshing viewpoint from a LimeWire exec. but his comments had me thinking, is it that easily gamed? I don’t have any special computer skills. Let’s see if even a luddite like me can crack it.
CRACKED LIKE A NUT
My first attempt took less than five minutes. I was able to steal a song from a relatively new artist that was listed on the front page of LimeWire’s store.At no point in the search process did any of the promised ads show up on their P2P interface offering me a choice to buy.
So, this was a bad start for LimeWire’s new leaf, and now I’m gonna be sued by the RIAA to boot.(smiles)
My next attempts worked better.One of the established celebrity tracks available on LimeWire’s store was not accessible through their P2P application, or to be more accurate, they showed up in a search but problems occurred in the download process that would exhaust the patience of all but the most persistent thief.However advertising and a “choice” still were absent.
My last attempts were a bit more successful.With several randomly chosen artists from the LimeWire Store I experienced the same frustrations but this time, ads popped up and I was offered a hot link to their page on the Store.
All-in-all the system worked as advertised about 85% of the time in my tests.
But, a 15% margin is high when dealing with hundreds of thousands of masters.I sought clarity from Searle about this.His response to me in an email: “I strongly suspect the files you located on the Gnutella network were not purchased from the LimeWire Store.”
Maybe, but they had the same titles and were the same recordings.So this explanation is of little solace to the artists who are not getting the revenue and missing out on a key purport of the LimeWire licensing experience–protection.
Searle’s email continued, “We have put in place limited safeguards to prevent songs in the LimeWire Store from being shared by the LimeWire file sharing application, but we don’t have the technological capability to filter songs that already exist and are shared on the Gnutella network.”
Regardless.The practical translation of all the above for you, my reader, who are mostly artists, songwriters, producers and their lawyers/support team, is this: LimeWire can not prevent P2P theft on the Gnutella network. The vast majority of people using LimeWire for illegal P2P, get their songs on the Gnutella network.In other words, even if LimeWire blocks files bought from their store, there could always be a clone-file out there that you can still get with their P2P software.
Bottom line, this mysterious security system, however it works, doesn’t work well enough to be considered a real value added.At least not yet.But 85% is a hell of a start and it’s far better than anyone else’s efforts.
We’ll see what future improvements bring.
If you’re an artist already in the LimeWire store, test your tracks to see if clone versions are available through the P2P software.If they are, I suspect that LimeWire will be happy to address your concerns.You can email them here: partners@limewire.com.
FLOWERS AND CANDY
As for the, “P2P moment turned revenue moment,” concept itself…
Like all cynics, I secretly want to believe that everyone’s intentions are good.And, from an innovation viewpoint LiveWire’s concept of P2P monetizing is very promising, maybe even genius (although it has as ways to go before it reaches Spotify status.), but I’m truly stumped, morally.
On one hand I must concur with the companies I spoke with.They just want to sell more of their client’s music.And I’m all for that. But on the other hand, should you do it through LimeWire, even if they are, as these CEOs think, trying to turn over a new leaf?
Say, for example, you had a young kid on your block giving away illegally made CD compilations to attract people to his lemonade stand.Since he’s getting a lot of customers this way, would you encourage this by letting him sell your CDs on his stand, right next to the ones that he’s giving away?What kind of message does this send:steal from me enough and I’ll let you profit off my work?
Compound this with the fact that the kid is saying, let him sell your work and he’ll make sure NOT to include your music in his illegally made compilations.It starts to sound a bit like the Mafia shaking you down for a protection payment.No?
When I’ve been a bad boy to my gal, I bring flowers and candy to get out of the dog house.I guess I’d like to see a bit more from LimeWire before I’m ready to put aside my skepticism.Where’s their sense of humility about their past activities?Where’s the respect for the backs of the artists they build their model upon? Where’s the peace offering; their new, P2P monetizing– that will make them richer; their secret technology– that will make them richer?I’m not feeling the love yet.
I want artists to see some flowers and candy before they give them their trust.
SEARLE
Searle: “Music consumers have been very clear about what they want in a music service – convenience, access, ownership, compatibility, portability– and that’s exactly what we’re trying to give them with the LimeWire Store.”
This is a fairly common position from those on the technology side and congruently those not experiencing massive revenue dumps because of P2P: give the customer what they want.But record companies don’t believe that this is absolute and it should never mean theft. Yet, it is from this fold that Searle claims he wants to make new allies.
He purports to be in talks with majors, but, so far only several Indies have surrendered their trust, and my guess, despite what Felsen said about “encouraging a company when they do the right thing,” aggregators’ participation thus far is more about business as usual than congeniality.
George Searle claims he wants the future of LimeWire to be part of the solution, not the problem.
God, I want to believe him.
But if LimeWire has this great non-DRM copy protection technology, why not license it to the majors who still control about 75% of the product, or, for that matter, any label who wants it?Why limit it to those few willing to do business with you?And why not work towards creating filters for ALL songs on your network, not just ones that pony up?
Searle thinks I’m being too hard on him.
He wants me and others to put LimeWire’s past behind us and look at their “new leaf.”As an offer of proof Searle said, “We put warnings that infringement is illegal.We make sure that everyuser understands this.”
“True,” I responded, “But isn’t that like a bar posting warnings about drinking to excess and how alcohol leads to birth defects? The law requires it, but the bar still wants you to drink.”
He sighed, a bit drained from our Socratic talk. Normally George had such quaffed, poised and pungent responses.This time he was short, “We’re not a bar.”
This ended our conversation, but I suspect will not be the last time we’ll speak and more will come as the story develops.
Moses Avalon
PS: If you can make sense of Searle’s answer, “We’re not a bar” please post it below along with any other opinions about this.Your voice counts.
64 responses to “TURNABOUT: LIMEWIRE SEDUCES TOP DIGITAL DISTRIBUTORS”
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Great piece Moses. Thanks for going to these 3 for their perspectives on this. I have to say this is a real start in rethinking the entire paradigm of on-line music from 3 of the most significan independent companies in the business. I really hope that after more than a decade of fighting P2P artists and songwriters can now begin to benefit from the monitization of it.
Ritch Esra
Music Business Registry
Thanks again Moses! Great piece!
I have recommended that none of my artists select the LimeWire Store option when they make their selections for digital distribution.
Theives will always steal, but do they need our help? I think not!
30% is way 2 much 4 what any of them do…an old school dist.deal was 19 % and that was w/ physical product….do u mean 2 tell me that lime wire actually exists & admits they allow people 2 steal music & no one has arrested them ….fuc those guyz ..where do they live ? the incompetence of the major labels could & should slow this down …hmmm how u say … simple start their own dig stores only allow say warner product from the warner strore with hold it from all others …then search fot it w/ interns & prosecute the sites that have it illegally …in other words if it is not on the warner site it is illegal ….morons …good work moses
interesting one, once again. good to you went and talked to these 3 guys to get a balanced perspective. not sure what to think of it yet.
“we’re not a bar” – meaning, bars pay for their liquor and snacks, and don’t give it away for free after people pay a cover charge (at least, not routinely – only in special “all you can drink” nights)
Limewire, however, charges for their program and people believe that the charge makes their 80000000 downloads legal.
So Limewire is not a bar, because bars couldn’t survive on their business model.
Well he’s right, they’re not a bar! How dare you compare them to a bar!
Evidently he couldn’t be bothered to parse the implications of the analogy, but even if he did, he’s right, they’re not a bar. They’re more like a backwoods moonshine-running operation that offers to take some legit distribution work along on their hooch runs.
It sounds to me like Limewire is using the “music store” as a bait and switch to drive traffic to their p2p site. If you go to their website it still looks like a file sharing site with the music store link barely noticeable even for those of us looking for it. If they are sincerely turning over a new leaf then get rid of the other and just become a music store. I have done a survey among my 16 year old sons friends and they couldn’t give a shit about doing the “right thing”. They all grew up on stealing music because they learned how to rip songs before they were old enough to even get an allowance much less have access to a credit card or itunes account. The only way to stop it is to make the sites who provide it illegal.
An interesting conundrum. One could just as easily be selling ‘Girls gone wild’ videos off their webpage and possibly sell some music in the process…it appears Limewire is using the concept of ‘stealing’ to market music. It’s certainly niche!
This is a shakedown. It’s the equivalent of walking into a drugstore and seeing all the products for sale in front of you – but should you balk at the prices, the “pharmacist” will slide a curtain revealing a warehouse of free products that you can take– as long as ‘you’ understand the immorality of it…
If this were on the up and up – they would simply not offer the user anything but the legal stuff…
Now if you don’t mind I have to go dig up Aldous Huxley and show him this brave new world.
LimeWire’s “new technology” has been around for nearly a year now. For over a year, LimeWire has used this technology to filter spam out of P2P searches, using something called a SHA1 hash ban. This same exact technology will be repurposed as a “protection” regime for Indie music. LimeWire will create an MP3 file, and it will record its unique identifier (it’s SHA1 hash) and then will use its spam filtering engine to simply ban that hash from appearing in LimeWire searches. Interestingly enough, Limewire could (and probably should have been forced) use this technology to ban ALL illicit copyright infringement on their software, but they choose not to.
Wait a minute.
They can block the titles that are sold in their store but they won’t block ones that aren’t if the copyright owner requests it?
What a crock!
Very good article!!! I have all your books that you wrote and I loved reading the 4th edition of Confessions of a Record Producer.
As always, great stuff!
Personally, I believe the indie community needs to adjust their paradigm to align with the times along with the limes.
In other words, merchandising intellectual content requres a desire for the consumer to “have and hold” & most “illegal” downloaders just want a quick hit & go away.
Providing a “legitimate” alternative alongside free samples makes sense to me ‘cuz there are very few people that I know who subsist on free sample meals alone, & if a free sample generates a true desire, that person (fan) is willing to put out money to have that experience again, & pay to make sure that experience is not going to disappear.
THAT is where alternative REVENUE streams happen, & where marketing needs to focus, using the content (music) to drive the merch, much like terrestrial (free) radio.
It’s working for me!
🙂
Pragmatism gone mad. I believe there is still room for ideologically driven decisions in terms of who and who we don’t do business with. This is a shakedown, and sends a malodorous message to anyone in the market or business…consumer, composer, and distributor. It’s much the same as medical technologies leaping ahead of ethical imperatives. The thinking of these three aggregators is that gathering finance is the only moral concern. It is not. This is a case of the bady guys winning the war…”if you can’t beat ’em, join ’em”. We are so morally compromised by this. Funny, I was thinking about dumping my CD Baby commitment for Nimbit…
That limewire deal smells bad. Have you got Spotify in the U.S. yet? It lets you stream tracks for free with ads played in between, with the ad revenue paying the artists. (Although I asked them just how they pay the artists and they were cagey, saying they couldn’t discuss the deals they had with the labels.) If you right click on the track you are listening to you can opt to buy it and download it from 7digital. Spotify still smells a bit fishy but there is no outright theft as an option.
Hi Moses!
Outstanding job! I’ve ALWAYS been against illegal downloading,and YOU nailed it once again. You’re doing the DYI artist a real service! Eventhough I don’t understand all the “techie” ways that people use to download OUR music, STEALING is still STEALING. I will be forwarding this expose to all my musician friends here in Canada. Keep up the good work! I ALWAYS look forward to your well-thought-out “Dateline” exposures of the thiefs in our industry, and I will be re-thinking my strategies with some of the people you mention in your article.
Regards!
Bill Bogaardt
Brothers Bogaardt
Do you know what ‘pungent’ means?
A sharp smell, but can also mean just sharp, as in quick witted. Which is how I was using it.
Moses, Excellent piece. You have an ability and knack to see through the clutter and explain the hidden nuances and terms.
My skepticism is in line with Moses. Folks, any code can be cracked eventually, by someone. Microsoft cant even keep up with all the hacks out there. I’m all for protecting my songs that I work hard to write, record, and produce and I don’t do it for the exposure (you can die from exposure). I did not sign up for Limewire thru my DD company.
Rick
Thank you so much for always being so involved.
Personally, I’m a huge fan of music file sharing. I believe all music should be freely available… but I am definitely NOT IN FAVOR of artists being broke or never being paid. In the old days of radio, all the music was free when you turn on the radio, and that was mostly where we got it. Now it’s computers. The problem isn’t the sharing to me, it’s the lack of money going to creators.
Do we just pay artists a minimum to create art. I can hear the capitalists screaming…
Or do we force artists to look at the business of selling as an equally creative endeavor.
C’mon dude, hurry up and part the seas. People are waiting!
If this was such a good idea, and so above board, why is it that no one (members) heard about it until AFTER the decision was made? Because they KNOW it is wrong, that’s why.
If it’s such a GREAT deal for members, why aren’t we party to what THEY get, since our minds, hearts, investment, and work are what they use for selling and value to earn? (Well, that, plus we ALSO PAY THEM to allow us to be there…)
This is (still, yet) another SPURIOUS “online music host” act by entities whose word thousands of writers and artists actually trusted; and even sadder, who they entrusted with their work.
I’m so tired of everyone saying that P2P is the only thing that is left for music. Ridiculous.
The “long tail” has been proven NOT to work over the last fifteen years. Who in their right mind believes that if a songwriter “gives it away,” they will earn a living?!
I have seen ONE guy who plays out every night of the week, who gives his stuff away to promo his gigs. He earns from the gigs, so it works for him. ONE guy. And it’s not because he’s giving away his stuff free! It’s BECAUSE he’s PLAYING OUT EVERY NIGHT to a dedicated fan base. When he stops doing that, he stops earning.
It’s a whole different ball game for those creators who do not play out. Not one pair of shoes fits every person nor every event.
The only ones who earn from an entire membership “giving it away” are those who run those services and websites who give it away, so they can chomp on ad dollars and membership costs.
And has anyone noticed? The only people who are encouraging musicians to give their material away are the ones who are earning by simply housing the material? Are they housing for nothing? NO! THEY all know where THEIR END is coming from – the work of their members.
Even worse, those shops you mentioned were set up under the conditions of opting in/out of various programs. CDBaby had an option that one might select to ONLY BE DISTRIBUTED to PRO-licensed sites that paid a royalty. We trusted Derek; we believed him when he said Tony could be trusted. And now?
Maybe you recall when everyone thought Pump was great (because artists thought their music would be used in film and TV), and they signed Pump’s heinous contract (with NO protections nor accountability in it for the artist/writers), and then Pump signed all their catalog to Getty, and now the artist/writer/et.al gets 25% or less of a discounted royalty for their writing AND performance. (Can’t wait until some of my writers show me their Getty checks…do you know anyone who’s actually gotten one? If so, do they know what it was even for, or how/where it was used?)
I’m disgusted. I’m saddened. I’m depressed. How dare these guys cheapen every title in their catalog? How DARE they make these decisions for what’s been entrusted to them, with NO option to sign out BEFORE they make the commitment?
And here’s the BIG question. If giving it away made everyone a star, how the heck do they justify their own businesses existing? Who needs them?
IT DOESN’T COST $35 (or $10 a year) per upload to give your stuff away — oh, that’s right! We ALREADY paid CDBaby $35 to house our files! They already MADE theirs! OH! YES! That’s right – we’re now paying TuneCore 10-15 bucks A YEAR to give our music away for free! (I’d bring the Orchard in here, but they had such a bad rep as a real-world distributor, we never hooked up with them when they transitioned to digital…).
TuneCore asked “their biggest sellers’ opinions?” What, a handful of guys? I’d feel better if I could talk to those people they “asked.” We have sold a couple of tracks a year (literally) of the two works we tested there. But they owe us the courtesy of asking if they can give our stuff away. (NO. I’d rather earn 10.00 than nothing.)
It doesn’t matter to me that some songwriters or artists don’t sell a lot of material, if any at all; it doesn’t matter to me if a musician or writer decides to give their material away for free. WHAT MATTERS TO ME IS CHOICE. THE FREEDOM TO SELL OR TO GIVE SHOULD BE YOUR CHOICE, not some pencil-pusher…er…key striker, who has no interest in the artist’s goals or life, just their own pocket.
And how accurate will the accounting be? 500 people have your song, but only some paid for it (are you sure)?
And how is ASCAP or BMI to know which tracks are to be collected for in specific situations and are to be free in others? They can’t. So all will default to free.
The way the law is now, a writer/artist can collect standard royalties or give their music away. WHY IS IT NECCESSARY TO GIVE AWAY THE STORE? Oh, that’s right! They are not giving away the store, just OUR items in it. Certainly their deal will grease their wheels.
Isn’t there anyone with a budget who can run an honest ship? Isn’t 20% + profit on something THAT COSTS YOU NOTHING enough to earn from? Do you really need 60% + of what comes in, in order to run servers?
It’s never enough for the online community. They feel entitled to be making a fortune for running a database and doing some promo, while they feed on the art of the dedicated.
Enough. This actually made me sick to my stomach. I have to go pull all our stuff now. I can only hope you have the cajones to do the same.
“And has anyone noticed? The only people who are encouraging musicians to give their material away are the ones who are earning by simply housing the material? Are they housing for nothing? NO! THEY all know where THEIR END is coming from – the work of their members. Even worse, those shops you mentioned were set up under the conditions of opting in/out of various programs. CDBaby had an option that one might select to ONLY BE DISTRIBUTED to PRO-licensed sites that paid a royalty. We trusted Derek; we believed him when he said Tony could be trusted. And now?”
To me this is the jewel of your rather long comment/rant. And as my readers know, I never trusted Derek and I believe that if he were still President of CD Baby, he would have embraced this deal with two hands and an open mouth as he did his short-sighted deals with with MySpace, SnoCap, and his bogus Best Buy deal. By contrast Van Veen is a real business man, But Felson has almost complete autonomy of CD Baby. So, I’d address my comments to him personally and not muddy the waters by dragging Tony into it.
“I have seen ONE guy who plays out every night of the week, who gives his stuff away to promo his gigs. He earns from the gigs, so it works for him. ONE guy. And it’s not because he’s giving away his stuff free! It’s BECAUSE he’s PLAYING OUT EVERY NIGHT to a dedicated fan base. When he stops doing that, he stops earning.”
…funny, if I stop going to work every day I also stop earning.
Also, unless I missed something, Moses said that Limewire is actually SELLING these songs, not giving them away.
You might be right, Mo. But Tony has become the poster boy for CDBaby now; we were told (as members) that was where the sceptor was passed. If it’s Felson, fine; are you saying Tony had no input, that he’s just the “face,” not the “hand?” If so, just substitute “Felson” above, where it says “Tony.”
I know I ranted – but it made me sick to read your article (at least you know I mean content, not style). :p
J
It might be more accurate to say that Van Veen is the brain and Felson the heart, eyes, ears and lungs.
You have well documented what is the fundamental tectonic shift in the “business” of music. Rather than value extraction on a coercive basis under the old copyright paradigm, the new market reality, courtesy of P2P, is customer valuation of content and faith in customer integrity as the basis for support of the music being sold and the artist, in service to more being created.
Instead of the rights proprietor controlling the transaction, the customer now ultimately has the proxy and vote to decide what the value is or is not, and whether they choose to indicate their appreciation and support by paying. From the inception of recording technology, the seeds for this were planted. The historic research data indicated that 80% of the folks, even if downloading for free, will purchase if they like; and 20% will always steal it as a matter of principle.
The concept of Limewire selling into what is essentially a different distribution channel – that being the network of P2P users/customers; and, the interviewed labels recognizing that Limewire has the eyeballs, so let’s add the sales they can generate on a classic web joint venture deal basis really transcends the issue of copy protection or DRM.
The fact of the matter is, a sale is a sale, and getting to the most customers in service to artists seeking sales is the primary driver. The DRM ship has sailed and keeps sailing with each new encryption scheme, but the truth is that it is not about coercive or restrictive technologies. It is about defining the value equation to the customer that buying it helps and enables the artist and those in the distribution chain to survive to bring that customer more of same. People will pay for that which they value. And those who steal will steal because that is their moral make-up.
In the end, a sale is a sale, and reaching a bigger market and audience is in the interest of every artist regardless of channel or modality; and if each artist does the work required to get to know and connect with their following, the money and support will follow.
And Moses, were it not for the work you do, there would be no other place for me to express the above, as well as the other commentators above, and for that, I thank you.
Doug… And if not for explaining and simplifying the adroit but outstandingly verbose and complex answers of those in your profession (lawyers) I would be out of a job. Let me see if I can boil this one down: Record companies/aggragators don’t care where a sale comes from, nor should they. It’s not their job to be moral, only to push product any way they can? Close?
I am intrigued at the amount of thought that went into collaborating with the enemy. I have a pit in the bottom of my stomach that reveals pictures of George Bush, the Taliban, Osama and that ugly ass quircky smile Bush had. Indications point to the big 4 being turned to the dark side.
Unsettling? Nah. This is a ‘duh’ moment in music industry history. All Limewire is doing is taking the age-old phenomena of listening to free music on the radio, recording mix tapes from the radio, and becoming a fan and buying the music from Tower. Thing is, it’s all in one place and EASIER for buyers to buy. I see nothing wrong with this model.
What’s on my mind is this:
To buy HQ music files with video has always cost more than the HQ music itself in retail.
Yet YouTube is unchecked as it provides audio and video. What gives? Why go after music file sharers while YouTube broadcasts music and video without much of a comparitive whimper?
Lastly – our 10th Anniversary earBuzz Buzz Show is this Sunday in Philadelphia. Should be great.
One problem is, it’s a file-sharing network. File-sharing networks have been built and maintained by pirates who share non-approved works. To put works there (with or without pay) legitimizes that specific sharing platform.
And do you actually believe, when given a choice of “free” or “pay what you want,” you will earn enough for your next project or even a car payment? That hasn’t worked, even for the former-label-supported-now-doing-it-on-their-own bands.
What’s wrong with opting in for the platform you want? I.E., why didn’t CDBaby or TuneCore give the choice to each member to opt-in or not? Because the value is in being able to use BULK content to make their deals. Most of their more pro artists wouldn’t have opted in. (“S*rew the artists, we’re making a fat deal for ourselves,” is what I hear, yet again.)
Sorry, also, I have had NO proof that I should have “faith in customer integrity.” We occasionally have a donation for one thing or another, but never could we call it “income,” or treat it as reliable.
I haven’t seen the data that supports “The historic research data indicated that 80% of the folks, even if downloading for free, will purchase if they like; and 20% will always steal it as a matter of principl,” and I follow the reports and articles pretty closely on a daily basis. If 80% of the digital audience was buying, few would be complaining.
Building an “earning” situation on the reputation of a “P2P pirate sharing operation,” stinks. To find the same song being shared, as is for sale (on the same network), stinks. To be “opted in” to something you’ve taken an ethical stand against for 15+ years, is unforgivable.
And, to Stephen, great writing and capturing that to media, is also hard work. Playing out is merely ONE form of music work. All forms of music work should have the chance to earn, should the creator choose to try to do so.
Just MHO, of course – best to all in the discussion.
“What’s wrong with opting in for the platform you want? I.E., why didn’t CDBaby or TuneCore give the choice to each member to opt-in or not?”
Janett, I believe that’s what they did. No more cofee for you, buddie.
My experience has always been that the mass market for music is under 25 or so. Typically, those in that age range, especially 12-21 have no extra money, still have not fully formed their “ethical values” and therefore if something is virtually free will rationalize obtaining it even though they know it is illegal. While the major label industry did go overboard in pricing and value through the 80’s and on, the fact that there was no ‘free’ alternative keep the pure recording industry in the black. If anyone remembers the Harvard Coop and other college cooperatives, they sold unbelievable quantity of LPs and cassettes because they had a retail policy of limited or no mark up. The aforementioned age group will always, always migrate to the least expensive means of obtaining the entertainment they desire.
“My experience has always been that the mass market for music is under 25 or so. ”
Well David,, my guess is that you have not read a sales report in a few years. Your statement above stopped being true about 15 years ago. These days, all the “kids” who built the revenue streams of the music business in the 60s and 70s are tuning 50 to the tune of about 10,000 a day. Let me repeat that: 10,000 a day turn 50 in the US according to the US census. They buy records. Lots of them. Roughly half of the nation’s population will be 40 by the year 2010. Right now about 4 million people per year are turning 50. Over 40 million Americans are already over 60. Food for thought.
Moses, you are right. There is a vast market that still buys pure music. The point I was attempting to make is not about who is buying CDs and downloads but rather who is NOT buying but yet is still obtaining that music. If those in the age group of 14-21 years could not obtain their music by illegal downloading, the vast majority of them would buy. Think of all the bands and music that appeal to that age today and not to the over 35 crowd. Volume overall in the US at least, has been continuously dropping. That dropping part is mainly due to illegal downloading i.e. the “lost” sales of new music.
What we need to address is the fact that a kind of “Digital Music Congress” needs to convene in Washington D.C. and figureout something/anything that at least approximates fair. For certain the RIAA and the major labels should NOT be allowed to be dictators on this matteer. But fans should also not be allowed to “steal” music either.
Here is a key “fact”: the majors release BOX SETS of music where the songs comes in METAL boxes and contains dozens of songs where the tunes average out to about 33 cents a song. These things take a lot of money to manaufacture and haul around in MACK trucks to various retail outlets and yet they, the major lables, can sell the selections at a third of what they want to get at ITUNES and still feel they can make a profit.
Something is wrong here. My point is if the labels can sell music that takes a TON of work and costs and can sell them for 33 cents a pop, they should be able to sell music on a music site like ITUNES that costs them NO MONEY for what?? – about three cents?
Every cent AFTER the production costs (here’s another juicy fact – since the internet and music programs like Cuebase, Protools,
Garageband and Acid songs are a fraction as expense to make as they were before) is all BlACK money.
The question is HOW to get everyone who downloads a song to PAY the 3 cents or so per song. And thats just the beginning: How do we get the labels to change the way they cut up the pie for every song thats downloaded. Remember the artists do the Lion’s share of the valuable work. If anyone makes 90 % of the profit for each download its the songwriter and artist, NOT the label who basically doens’t do ANYTHING any more. They used to at least manufacture and distribute the music, now they don’t even do that.
And anyway geared up to ramble on about PROMOTION COSTS bite thy mouth. I have BEEN a promoter; The reason radio has always played music is whats in the grooves. Anyway who can read and talk can promote a song. If you “work” a good record you do good and vice-versa. ITS ALL IN THE GROOVES.
To sum up we need reform in the music business every bit as much as we need it in health care; And the labels are too crooked and, lets face it, STOOPID to design an intelligent marketplace themselves.
I share your skepticism about the utility of this LimeWire licensing scheme but I’m sad to say I am equally skeptical about your hopeful prognosis for retail sales. You persistently trot out sales reports celebrating the prodigious music buying habits of the over 40 crowd to prove that the retail market is alive and well. However, this is cause for optimism only if you assume that the under 20 crowd will mimic their predecessors and suddenly begin to pay for their music when they turn 40. I make no such assumptions.
While the over 40 crowd undoubtedly engages in it’s fair share of piracy, to them it still feels like stealing not to pay for music. Not so for the under 20 crowd. To people who grew up expecting music to be free, it feels perfectly normal not to pay for music. There is no reason to suppose that merely by turning 40, their expectations will change and they will agree to pay for something they previously received for free. In other words, when the revenue stream from the baby boomers dries up, retail sales, in its current configuration dries up as well.
The elusive “paradigm shift” in retail sales whereby a quantifiable royalty stream can be relied upon to compensate artists and songwriters has yet to occur. Unfortunately, in my opinion, this LimeWire licensing idea serves to shift nothing.
To Andrea,,
“You persistently trot out sales reports celebrating the prodigious music buying habits of the over 40 crowd to prove that the retail market is alive and well.”
No I use SoundScan reports to do that. CD sales still represent over 80% of music master sales. That’s true in many countries, not just the US. Last year in the US alone we sold over 535 Million album units. That’s more then we sold in the early 80s and early 90s. So what if it’s less than we sold between 2003-2009. We don’t sell a lot of cars any more either. The point is people still like to own physical product. It’s in our nature. That’s why I have faith in the retail market. History backs me up. I have faith in history.
“The elusive “paradigm shift” in retail sales whereby a quantifiable royalty stream can be relied upon to compensate artists and songwriters has yet to occur.’
Yes, it has. It’s a called subscription service. The ones that iTunes and P2P are trying to kill, and doing a great job of it here in the US. Across the pond subscriptions are making far better progress with the Noika deals.
And this comment:
“To people who grew up expecting music to be free, it feels perfectly normal not to pay for music. There is no reason to suppose that merely by turning 40, their expectations will change and they will agree to pay for something they previously received for free.”
Yes, there is a very good reason. It’s the same reason that we crash on any old sofa when we’re young and buy houses as soon as we can afford them. We mature and when we do, we like to own stuff. It’s as American as Apple pie. Will we like to own CDs in 20 years? I don’t know. We will, if there is still a CD to own. But we will still like to own whatever replaces it. If labels choose to replace it only with an ethereal product, then we will surly see the beginning of the end of the music as a significant art-form. Without physical product of some kind there is no real visceral connection to the public. Music will then become a standard commodity, like soy beans; reduced to a mere garnish of society, instead of an influential leader. That occurrence will surely please certain concretive powers, but it shouldn’t please you. If you value music’s influence on society, don’t pray for this day. Fear it.
I strongly suggest that you lift your gaze outside of the U.S. There are services that at leats seem to work. Check out Spotify.com, developed in Sweden, starting up in the U.S. by the end of this year, beginning of next. They have three different services; streaming of music with advertising, Premium without the advertising, and one where download is possible. You can control the streaming by making your own playlists, and only hear what you want to hear. My two kids are really into this, and it has definitely affected illegal downloads, and bear in mind that this is in Sweden, the home of Pirate Bay, biggest P2P in the world. Pirate Bay founders were just sentenced to 30 million in damages + prison. If you are interested in more details. let me know. I understand that U.S. is a big market and your primary concern, but it is sometime necessary to look outside the box.
Thanks Tomas, I am very aware of Spotify. In fact, I believe I mention them in the article briefly. The jury is still out on them as well, although their PR machinery is certainly working overtime, the model shows great promise.
It’s good when someone honest is involved in helping artists in the music business. To me, it’s looks like the Limewire philosophy is to “let the fox guard the hen house”. If Limewire was on the up and up, they’d only offer a purchase only button–not the choice of a free button to own our music.
Nonetheless, I would like to warn artists to beware and stay away from a phoney promoter named Joseph Nicoletti. He used to operate out of southern California. He ripped me off for $7700 that I did not have to give away. Many other artists have been gilted by him too. As far as I know, he’s still out there doing the same thing over and over and over.
Do you know of any professional organizations that go after crooks like him? If so, please let me know. Thanks.
Ronald G. Turner
Hi Moses, you f–ing dick.
Why don’t you post the whole transcipt of the f–ing interview so we don’t have to wade through your propaganda bullshit.
Regards,
Freddie J. Furrensteuch
I wish I knew which transcript Freddie was talking about. I did several interviews for this article. Every quote was checked with the subject. Oh, Freddie, next time use a real email addy so I can respond to you personally. I have a couple of things I’d really like to share with you. Thanks for the profanity and eloquent use of the “f” word.
Perfect!
Ownership is what I was referencing in my previous response. Maybe not the sound of the music itself, but some tchoke player, medallion, keepsake or soon, playable tattoo to have and hold. People collect things.
Moses – great post.
At first glance, this deal does indeed seem a bit to me like the mafia offering “protection”.
I almost look at P2P and “sales” as two different industries – P2P will get your name heard and more familiar around the blogosphere and facebook and whatnot. And sales will actually keep you in business, on the road, and fed.
That sounds completely cynical, but it’s not meant that way. I’ve sent people tracks for free with the caveat: “if you’re not paying in cash, pay me by telling 5 people”. I’m also a part of Noisetrade, which is the same concept. So I guess was already doing a similar thing – admitting that P2P was not going away, and finding a way to use it for some sort of benefit, rather than just sit back and complain about it, or pretend it didn’t exist.
So while this Limewire deal may not be the be-all and end-all, at least it’s something. And from a side of the industry that has long been “nothing” for we artists … anything seems like an improvement.
If that sounds like compromise, or throwing in a white flag… well, that’s up for interpretation.
To all you record company scumbags. Thanks for killing the music biz by signing shit and looking for the quick buck and not signing real talent.People dont want to pay for a cd with one hit.They want a whole album with quality songs.F.U. I am a musician and i use limewire because the real talent was never paid their fair share by record sales.I will by a cd if I want a superior sound quality to an Mp3.
Moses, I absolutely believe in the integrity of your data and your research methodology. I just happen to disagree with the conclusions you draw from them. You contend that everyone would prefer to possess CDs-a physical object-over digital music because humans “like to own stuff”. But you can’t compare owning a house to owning a CD. I think you think people prefer CDs over digital files because YOU grew up owning CDs. However, the under 20 grew up owning I-Pods, not CDs. It is absolute supposition on your part to assume that as the under 20 crowd “matures” they will switch to your CD configuration preference, especially if they can still get that same music for free. Moses, I hope you are right; I pray you are right. But at this point, it is mere hypothesis.
TO ALL YOU ADVOCATES OF SPOTIFY and various and sundry subscription services:
I ask the following question simply out of curiosity, not contentiousness. How are these working out from an artist income point of view? Do any of you know someone who has received enough royalties to predict whether or not musicians/songwiters can actually make a living off this type of income?
To Andrea and others:
I am not advocating Spotify as a superior or even equal alternative to CD’s or iTune etc. After Pirate Bay was declared illegal, fined and their representatives sentenced to jail, illegal download dropped drastically here. Official statistics (based on actual over-the-counter sales) for first half of 2009 show an increase of digital sales of 57%, now representing 16% of the total turnover. Services such as Spotify has turned my own teenage sons and their friends into legal consumers of music via Spotify. No, you can’t make a living from just streaming, but at least you get something instead of nothing, and I think this is a first step towards a change of consumer-behaviour. This is about changing people’s conception of free downloading as OK, and getting the idea across that this is the same as stealing from your local Hi-Fi or grocery store. This is a bad habit/misconception that has been established during the past 10 years or so, and it will take some time to change.
As a record label, try finding places to put your physical CD! Unless more online stores continue to sell more physical product, (ie: Amazon.,com) whether your soundscan reports are true or not, retail stores ARE dissapearing and will continue to because a soundscan report represents a collection of records sold (ie many stores) and in reality one store has to survive on its own, and cannot. So yes, whilst those soundcsan reports tell us physical Cds are selling, they have to dwindle by law of physics, unless online stores continue to sell more physical product. I for one hope they do because having a backup physical disc is a lot more comforting than relying on hard drive space.
Digital reports are also surging monthly. I suspect this tells us all something too.
“So yes, whilst those soundcsan reports tell us physical Cds are selling, they have to dwindle by law of physics, unless online stores continue to sell more physical product.”
I must have missed the physics class that dealt with dwindling CDs. Was the equation CD = ∞ X ©²? What you may not realize is that ther are more CD venues than ever before: Starrbucks, Kmart, 7-11, etc. Think outside of the box.
Moses,
I see nothing surprising in the deal between these digital aggregators and LimwWire. It is not really seduction because they are so careless of their virtue. Some Digital Aggregators who expect wide rights for long periods(even exclusivity in some cases) pay nothing “up front” for the content they exploit and have invested nothing in its creation and therefore why would they care what happens to it. If record companies who have invested heavily in content seem to be prepared to grant rights in the digital world on terms they would never have considered in the physical world (and that is my experience e.g. iTunes having the right to sell individual tracks rather than albums) how much more likely to do so are these aggregators who are only gambling with someone elses money and hoping to generate sufficient critical mass to sell up. Why do companies license to them?
If a car speeds 60 mph in a 35mph zone, they know they can expect a hidden cop to pull out and flash their lights – with a ticket ranging from 100.00 – 400.00 depending on the mood of the officer. The fact is – people get away with speeding (which endangers lives and property) every day. Until the P2P age, people have had no way to speed except to physically steal from a record store… P2P has given everyone a ferrari on the autobauhn.
Limewire’s idea is good in theory, however there are some crucial points missing:
1. Regular reports (daily, weekly or monthly) to Orchard, CD Baby, IRIS and TuneCore [herein described as the Big 4] that details the activities of the policing software. Findings should be given about offenders directly to the Big 4 for settlement with each offender outside of court if possible. This money should be distributed to their fees to settle, percent given to their overhead, a percentage to the artist who was being lifted and a percentage of the settlement should be distributed evenly among all of their artists.
2. A fee should be derived for flaws in the Limewire logarithm, if not a fee, a schedule of updates to the security built into the software should be scheduled out and approved by the Big 4. Incentive needs to be given that this is getting better, not worse.
3. Mp3 matching software should be run on any uploaded files on Limewire – if the mp3 file matches and existing song file (in majority) on the big 4, it should not be allowed to upload, and a warning of the assessed fees for attempting the action should be introduced to the user.
Maybe I’m dreaming. We have the technology to do all of this… why isn’t it a reality? Why isnt this pushed by the big 4?
The Autobauhn must be changed.
Simple answer: money. These guys don’t have the money to create the infrastructure to do anything meaningful with the data. Notices of infringement would probably pile up and backlog. Jeff, Brian, Greg, plealse respond to tell me I’m wrong.
Thanks for completing the equation with the Mariah post.
Collectable $tuff
Ad revenue$
Licen$ing
Free music still can generate income…IF the material is viable enough for any or all three of these factors.
If it suc…uh, is “less marketable”, then those “artists” should consider not quitting their dayjobs.
🙂
Moses,
I really liked your rebutal, in how you summed up the gloom doom email about the youth today expecting music for free, your response was well stated when you said, “Music will then become a standard commodity, like soy beans; reduced to a mere garnish of society, instead of an influential leader. That occurrence will surely please certain concretive powers, but it shouldn’t please you. Don’t pray for this day. Fear it.”
Well said,
Amanda
Moses,
I agree that people want to own things as they get older and can afford it. The new efforts of labels to offer album artwork with digital album downloads is a step toward that. The mistake is to only obsolete a format (vinyl, cassette, CD, DVD…) in an attempt to resell old catalog at higher prices. New, great releases need to be released so that young music listeners can be brought into the fold as their incomes increase over their lifetimes.
Since the vibrant trends/evolutions in music come from the less affluent, ever more expensive hardware and deluxe formats (Dr. Dre mp3s, etc.) make entry into legally buying music more out of reach for many.
After the Woodstock remastered and Beatles remastered sales bumps end, it will be time to rethink the many post-CSN&Y generations as potential music buyers.
A few precisions about LimeWire:
– It does have a content filter built-in. If copywrong holders request it, their files can be added to the filter.
– The user is offered to enable that filter when he installs the application for the first time. The fact is, almost no coprywrong holder uses it, probably because of political concerns. Too bad for them.
– This feature cannot be forced upon users and be enabled by default, simply because LimeWire is free software (open source). If they decided to do that, the same day someone would strip out this code, recompile the application and release it.
– Gnutella’s specifications are public, there is no such thing as LimeWire’s network just like the Web is not the network of Firefox. Anyone can code a servent (client and server at the same time since it’s a decentralized network) for Gnutella, and many people already have. There are forks of LimeWire (servents based on LimeWire’s source code) and completely independent servents as well.
– LimeWire cannot (in fact nobody can) filter out all illegal content. The SHA1 hash is extremely easy to change, it’s enough to add or modify a singly byte to a file to change its hash completely. They can simply try to do what’s technically possible, which is not that much, in case copywrong holders request it.
– Again, even if LimeWire went out of business, this would change nothing at all: their code is already open under the GNU General Public License (at least they practice what they preach and it works) and there are several other applications. It’s better to have a company with which you can cut a deal instead of only applications developed by the community. Playing Napster’s story again would help no one.
– Now that I learnt that they cripple certain files without the approval of end-users (unlike their usual filter which I actually used), I won’t be using it anymore. The reason for which they won’t the discuss this filter is obvious.
– Besides, not only copying is not stealing, but there is plenty of legit content on Gnutella. That how I got my GNU/Linux distro, instead of hammering FTP servers managed by volunteers.
– Finally, Spotify sucks, it’s worse than DRM. Streaming means giving the control of what you should have on your hard drive to others. Only fools would accept that.
“It does have a content filter built-in. If copywrong holders request it, their files can be added to the filter.”
Some interesting points. I know that several “copywrong” holders, like Sony and UNI did request that their content be filtered. It has not proved effective.
<>
What??? what planet are you on?? As an indie label, (damn even the majors struggle with these stores), try getting your CD in ANY of these stores! Think outside the box yes, but your comments are made from a theorist not a practitioner!
They aren’t trying to just drive traffic to the P2P side. They are using the P2P side as a threat and offering protection (remember – against only their own site) as leverage to get labels to sign onto the store idea. LimeWire wants to get a store off the ground and take in the 30% cut but know that their only value-add to aggregators is to shave the P2P market slightly and bump store sales. Majors will not go for this anytime soon because in doing so it waves a final white flag and it will precipitate their decline as other P2P’s try to follow suit. It is smart from their position if they can pull it off but I guarantee you that each of these aggregators know they just got pinned and are speaking through clenched jaws as they talk of this ‘new leaf’.
I think T is right. Does anyone remember allofmp3? I never used it but visited it once and thought why didn’t the labels just copy/acquire the site 1:1 and put all their stuff there + some special added value. I can’t recall details anymore but at the time it looked very inviting from consumer perspective unlike most of the other music shops I’ve seen. Itunes is really the opposite of inviting because installing it requires making sacrifices such as allowing various buggy hole ridden Apple software on my Windows computer. For years Apple has broken features in the OS and done nothing to fix that.
Good to know there’s some potentially good alternatives springing up but still technically all this could’ve been done 10 years ago. It’s just hilarious to read that the labels knew what internet was about in “LATE 90’s” -that’s just it. Late 90s is just that LATE. MP3 piracy started in 1996-1997 timeframe, there should’ve been “allofmp3” type site run by the majors up in 1997, just like there was amazon.com etc.
[…] P2P theft– if you license the track through their digital Store. Many of you posted some very articulate arguments about this, most siding with me in doubting its sincerity or […]
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