The usual canned introduction:

The original Napster corporation has been destroyed, its trademarks
now owned by an authorized music retailer which does not use
peer-to-peer technology.  But the Napster paradigm, in which computers
and networks give ordinary people unprecedented control over content,
continues.

This is another quarterly installment in a series of weblog and
discussion about the deconstruction of the music industry and other
copyright industries, with side forays into "intellectual property,
freedom of expression, electronic media, corporate control, and
evolving technology," as polygon once phrased it.

Several years of back items are easily found in the music2, music3
and music4 conferences, covering discussions all the way back to
the initial popularity of the MP3 format.   These items are linked
between the current Agora conference and the Music conference.

55 responses total.

Haven't got time to say much about it, but I wanted to link in a 
news report that the first USA jury trial in a filesharing case
has started in Minnesota.  Here's a link to Wired's coverage today:

http://blog.wired.com/27bstroke6/2007/10/riaa-rips-defen.html

Trial over, defendent found liable.  $220,000 in damages.  News
coverage is everywhere so I won't bother with a link.
 
My view is that the trial turned on two things:
1)  The Kazaa user name reported by the record industry plaintiffs, 
    "tereastarr," matched numerous other online IDs used by the 
    defendant.
2)  The judge, after preparing an initial set of jury instructions
    that "making available" did not constitute infringement --
    the record companies needed to show that a copy had been made
    by a third party.   However, for reasons unknown, the judge
    reversed himself the next day and instructed that "making 
    available" would be sufficient to decide the case.  There is 
    fervent legal speculation that the RIAA got the judge to 
    make this switch by citing, as precedent,  a case which was 
    overturned two weeks ago, which dealt with this same 
    "making available" issue.

I had found a good blog posting summarizing the legal arguments over
"making available" but I lost it.  :(  

So, maybe the story isn't over yet. This certainly seems like grounds
for appeal.

In the mean time, DRM seems to be on its way out in the music industry.
 Amazon.com has announced an online music service that sells tracks
packaged as ordinary 256kbps MP3 files.  And of course iTunes has been
selling some tracks in DRM-free versions for a while now.

Will the movie industry catch on that DRM doesn't prevent piracy and
annoys consumers, or are we in for a decade or so of fun and games
there, as well?  It's already creating difficulty for people who want to
time-shift HDTV programs.

resp:4 - "It's already creating difficulty for people who want to
time-shift HDTV programs."

How so?  Haven't experienced any difficulty with time-shifting HDTV
material.  We have Comcast cable and DVR.

The Motorola 6412?  It's among the better solutions currently available
although it has major issues; the software is notoriously buggy, the
capacity is woefully inadequate and cannot be upgraded, and it won't
work for certain types of content (like OnDemand, which is also pathetic
but for different reasons.)  It's also hard to skip commercials with it
(done on purpose) and the options for configuring recording are kinda
lame.  The only way to get content off it onto another storage medium is
Firewire and it's so irritating as to be barely usable and won't work
for protected content.

All of these problems could be solved by an open architecture and open
source software, but of course that can't be allowed.

This first bit is old news that I wrote up for another forum:

Radiohead announced a new plan for pricing a download of their
upcoming album, released October 10:  Pay what you think it's worth.
The plan is spurring endless discussion online.   Radiohead will
simultaneously release a $80 box set of CD and vinyl, and there will
be a conventional CD release in 2008.

http://thelede.blogs.nytimes.com/2007/10/01/radiohead-album-price-tag-its-u
p-to-you/

(No direct interest in the music for me; my CD of their album "OK
Computer" went to live with the children of a friend years ago.)

You have to dig down into the comments to find the information that
The Artist Formerly Known As Jane Siberry went the same path two years
ago - her website has been offering music on a pay-what-you-feel-is-
appropriate basis.    (She calls herself Issa now, and she's playing
Ann Arbor soon.)

Numerous bloggy reports are that the Radiohead site is buckling under
load.  Hopefully they can get it beefed up where it needs it.

----

OK, so that was the news from a week ago.  Now, the new stuff.
Following on the heels of the Radiohead announcement:

--The Charlatans announced plans to give away their new work online.
--Trent Reznor of Nine Inch Nails announces that he is free of all 
major label contracts and he plans to go it alone.
--Oasis and Jamiroquai (the latter a name I don't really know) 
announce plans to move forward without major label involvement.

Bob Lefsetz lays out a timeline for 2007, the year when the 
economic structure of the recorded music industry, based on the 
control of manufacturing and distribution by the four Big Music 
companies,  looks to be swept away:

http://lefsetz.com/wordpress/index.php/archives/2007/10/09/timeline/
(( there's a lot of inside baseball in Lefsetz' rant...  ))

Re resp:5: You don't have difficulty as long as you accept the cable
company's lock-in.  If you want to use someone else's DVR, you're out of
luck.

Doug Morris of Universal Music, the largest record company, has a new
idea to try to break iTunes' stranglehold on the paid download market.
 
Morris's idea is to get the playback device makers to include a 
prepaid surcharge for music subscription as part of the purchase 
price of device.  Assuming a device lifetime of 18 months (!) x $5
monthly, that gives a music rental surcharge of $90.
 
The idea is to try to get an authorized service that "feels like free."
Technical details such as file formats are not discussed in this
article.

"Universal Music Takes On iTunes"

http://www.businessweek.com/magazine/content/07_43/b4055048.htm

 Another way to read that is:

   Universal Music executive believes Universal Music should get
   $90 per MP3 playback device sold.

 Actually, I'd probably be glad to pay $5 / month for an all-you-
 can-eat music service with decent selection.  But players that
 cost ~50% more in the store shelf are going to be at a substantial
 competitive disadvantage.

Well, Universal is trying to work out a deal with the other 
majors, so Universal wouldn't pocket the whole $90.  As numerous 
other commentators noted, this would seem to leave indie labels
getting, at best, table scraps.

Would the device then self-disable after 18 months, becoming an
expensive paperweight?  I keep my MP3 players a lot longer than a year
and a half.

uhllucky

Three reports -- one financial analyst and two bloggy anecdotes -- 
which suggest that it's just about Game Over for the big recorded 
music companies.

#1)  Bob Lefsetz reports on a recent investment analysis report on 
     Warner Music from Pali Research.  Lefsetz quotes from the report:

> No matter how many people the RIAA sues, no matter how many times 
> music executives. point to the growth of digital music, we believe an 
> increasing majority of worldwide consumers SIMPLY VIEW RECORDED MUSIC 
> AS 'FREE'.  ((emphasis KRJ))
> A new model for music consumption must emerge and that model 
> most likely involves DRM-free downloadable music at no cost to consumers, 
> fully-supported by advertising (within some form of social networking 
> environment that enables consumers to discover/explore music). 
> The music industry is not ready to endorse such a move at this point 
> and even if it was, the economic model transition will be incredibly 
> painful.

...

> Artists make the vast majority of their money on touring and 
> merchandise, not CDs. In turn, it is increasingly logical to believe 
> that artists want to have their music reach the widest possible 
> audience at the lowest possible price.meaning FREE. Yet that puts 
> the music labels in a very difficult position as their recorded music 
> divisions make virtually all their money off of the sale of music. 
> Music labels need to get significantly smaller as the industry shrinks...

The recommendation is to sell Warner Music stock.

http://lefsetz.com/wordpress/index.php/archives/2007/11/02/the-greenfield-r
eport/

The full Pali Research report is available behind a free registration wall.

-----

#2)  Bloggy report from one Jason Mendelson, who comes back to 
     U. Michigan annually as a guest lecturer in economics.
     
     Mendelson reports on his unscientific poll of about 300 UMich
     students:

> 4.  I asked how many of them "bought music legally".  
>     No more that 15-20% indicated that they bought music legally.
> 5.  I asked how many of them "stole music". 100%.  
>     And all but a couple indicated that a majority of their 
>     music was stolen.
> 6.  Biggest concern of stealing music was not getting caught, 
>     it was that they "felt badly" for stealing it.
> 7.  Almost no one buys CDs, but those that do are all into classic rock 
>     and jazz (Led Zeppelin, Lynyrd Skynyrd, AC/DC). ...

http://www.feld.com/blog/archives/2007/10/undergraduate_v.html

-----

#3)  And finally:  Andrew Dubber reports from a UK music trade 
     industry panel, where six teenaged girls were invited to 
     discuss their consumption patterns in a market research inquiry. 

What really frightened the music biz people was not that the girls
download music for free:   they download for free, listen for a while,
and then throw the copies away.  Recorded Music, for this unscientific 
sample of young people, has become completely disposable.  How can the 
record biz hope to charge much money when the product has the lifespan of 
newspaper?

But my point here was that one member of the old-line music industry
tried to put the fear of God and Lawsuits into the girls:

> "So, let's say one of your friends is caught downloading music. 
> And let's say they and their parents go to court. And they're found 
> guilty of breaking the law (which is what you're doing). And they have 
> to pay thousands and thousands of pounds, and so they have to sell 
> house. And they lose everything. Everything. They're poor, and they're 
> miserable. Would that make you act differently and pay for music?"

> Translation: if we're really big and scary, sue everyone, make 
> examples of your friends and ruin people's lives, will you then finally 
> behave in the way we want you to?

...

> Their response was interesting: THEY LAUGHED AT HIM. Honestly. They laughed.
   (( emphasis krj ))

http://newmusicstrategies.com/2007/11/03/hooray-for-the-music-biz/ 

(I recommend this blog for those interested in following the Music Wars.)

Your comment about touring being the big profit center is interesting in light
of Madonna's new deal with Live Nation. The label she dumped? Warner Bros.

re resp:14: Haven't teenagers been buying music, listening for a while,
and then throwing it away (or storing it away and not paying attention
to it for a long time) for decades?  If they were listening to last
year's music, they wouldn't be buying new music.

I see no reason why this would be expected to change just because they
are downloading it for free.  Maybe the music is a little more
disposable when they're not buying CDs for $18 each.  If this
"frightened" music execs, then I'd say they're not too well balanced.  I
would guess it couldn't have surprised any of them, even by the
slightest amount.

http://www.ted.com/talks/view/id/187

This talk by Larry Lessig is a great description of the differences
between creativity in the 1800s, the 1900s, and the 2000s and the
technologies that influence a creative culture.

The sad thing is, the record labels could have avoided reaching this
point if they'd bought into the idea of inexpensive online distribution
to begin with.

When music was only legally available on CD, I often illegally
downloaded it because it was so much more convenient.  Now that I can
buy music a la carte online for about a buck a track from iTunes or
Amazon, I find that much more convenient than trying to find good tracks
on the illegal file sharing systems, so I get it legally.  I suspect I'm
not the only one who has followed this pattern.

Say somebody buys MP3s from Amazon.com and stores them on an ftp server
at their home. The FTP server has no password, just a MOTD with your
standard "Unauthorized use prohibited".

Would the RIAA ever have a leg to stand on trying to get that server
shut down? Like, they couldn't say "we downloaded a few files and found
copyrighted material" because they would be essentially admitting to
fraudulant access to a computer system.

My guess is you'd have to show that you'd made some minimal effort to
secure the system, besides putting up a disclaimer.  But I'm not up on
current case law on that issue.  I know there was a case recently where
someone faced charges for accessing an open wireless network without
authorization, but I didn't hear how it came out.

I wonder if there is a legal obligation to protect copyrighted material
you've licensed. Hmmmm.

 re #19, 21:  That's already been the subject of arguments in some of
 the file-sharing lawsuits.  The record companies have attempted to
 claim that "making available" amounts to punishable behavior.
 The last I knew the issue was still strongly disputed and at least
 some of the courts in which the issue have been raised have been
 unsympathetic to that type of claim but as far as I am aware the
 issue is not settled one way or the other.  Which probably suits
 the record companies for the time being, as it's the *fear* that you
 might be sued, rather than the actual lawsuits themselves, that they
 count on to keep people in line.

All I read was something about Napster being destroyed. Who gives a fuck.

If you keep posting this many short and relatively meaningless things I am
going to stop reading your posts.  Please think before you post.  I am not
trying to be mean, just letting you know the effect that it has when you post
one line in every item but don't really have a lot to say.  It takes a lot
longer to go through agora.

Fuck you, bitch. My opinions are sometimes short. That does not mean they are
MEANINGLESS. I don't mince words. In fact, I am repulsed by talkative people.
Your story about the mouse that entered your house was WAY TOO LONG, for your
information. However, I read it, and responded to it. I'm not very threatened
by the fact that you will "stop reading" my posts. I am entitled to my opinion
and I gave it in a slight few words. I would be very interested in knowing
just what profession you are in that causes you to be so upset about spending
five or ten more minutes reading posts on a (basically worthless) chat site?

tl;dr

That's okay since it wasn't addressed to you anyway. :)

Here comes the Grinch with more Christmas Shopping Cheer!!  

"http://www.reuters.com/article/musicNews/idUSN0132742320071201?sp=true

It's Billboard's coverage of album sales for the week including Black
Friday, the unofficial start to the holiday gift-shopping season.

>> " Merchants reported a comparable-store music sales decline
>> ranging from 15 percent to 25 percent for the weekend that begins 
>> with Black Friday, although they said robust movie and videogame
>> sales helped soften the blow.

>> "Nielsen SoundScan data backs up those merchants' reports. Album
>> sales totaled 13.9 million during the week ended November 25, an 
>> 18 percent decline from the 17 million sold last year during the
>> Thanksgiving weekend." << ENDQUOTE

One number leaps out as especially dire, reflecting the collapse of 
Tower Records plus sizable closures of other chain retailers such as
Virgin Megastore and Transworld/FYE: 

>> "By store type, album sales at chains (including merchants
like Trans World, Best Buy and Barnes & Noble) were down *** 40 ***
percent, indies were down 22.6 percent, and mass merchants were down 6
percent. However, nontraditional outlets were up 17.7 percent." <<

   (Nontraditional merchants are dominated by Amazon;
    Starbucks is also lumped in here.)

Most retailers are blaming a lack of new hit releases.  (Why are there
no new hit releases?)   Wal-Mart did very well with their exclusives
on the Eagles and Garth Brooks.

One small music retailer in Wisconsin said DVD sales were skyrocketing.
>> "At the 10-unit Exclusive Co. in Oshkosh, Wis., for example,
>> general manager Stephanie Huff reported that DVDs were up 216 
>> percent Thanksgiving week. TV shows drove the DVD surge, 
>> she added."

-----

Note that the Nielsen Soundscan number for album sales (digital tracks
sold in an album bunch, and physical CDs) was down 14% Year-To-Date
leading up the Thanksgiving.  To have that number suddenly accelerate
to 18% (week to same week year ago) for the week indicates that there
is no hope of any improvement in sales for holiday season 2007.
I expect physical retailers to go forward with their worst-case
plans for reducing their CD-selling operations in early 2008.  This is
likely to be 30% floorspace reductions and more at the mass merchants
-- how much space does Wal-Mart need to sell its two hit artists? --
and many indie stores will just surrender as lease renewal 
comes around, as they contemplate business prospects over the next
several years.

And I should care if someone else makes a lot of money, why? THe stupid music
industry is RIDICULOUS with how they gouge consumers just to listen to some
music or the movie industry who charge people so much for DVD's that cost them
barely pennies to make (I'm guessing, but I bet I'm right). UH OH! Maybe
SOMEBODY needs to stop paying exhorbitant salaries to d*ckwipes like George
Clooney and other actors. I'm happy. I hope we're starving those rich soulless
"celebrities".

My old homey..
December 3, 2007

BY GRETA GUEST
FREE PRESS BUSINESS WRITER

Record Time in Ferndale will wind down operations after the holidays with a
clearance sale before its owner consolidates operations at his flagship
Roseville store.

The Roseville store opened in 1983, with Ferndale following in 2000. Owner
Mike Himes said his business will focus on the Roseville and eBay stores,
Amazon.com and his e-commerce site.

"We have lasted longer than anyone else has, so we must be doing something
right," Himes said. "I love the vibe here in Ferndale. There just aren't
enough people coming in." 
Ferndale's main shopping area on Nine Mile has declined along with Michigan's
economy. Empty storefronts are becoming more common, particularly since the
Old Navy store at Woodward and Nine Mile closed in the summer. 

But news of the impending closure of another independent music store feels
like Harmony House all over again. Harmony House went out of business in 2002.

"It's kind of a sad thing," said Jonny Victor, 32, who was shopping at Record
Time in Ferndale last week. "I much prefer to shop at an independent music
store. I like to get the actual CDs instead of downloading them." 

The Farmington Hills resident said he had been going to a music store in Novi
until it closed. Then he found Record Time.

A trend winds down

About 1,200 independent music stores have closed since January 2003, said Joel
Oberstein, president of Studio City, Calif.-based Almighty Institute of Music
Retail, which offers marketing and other services to independent record
stores. 

There are still about 2,500 left, Oberstein said. In Michigan, 42 independent
music stores have closed, leaving 63 stores, according to the institute's
figures.

Harmony House closed its remaining 20 stores in 2002. The local chain was
founded in 1947, but the mix of competition from Internet downloads and
mass-market retailers did it in. The chain had 38 stores at its peak in 1999.

"What you are finding now is there is a survival of the fittest mentality in
many of the stores," Oberstein said.

The stores that make it amid double-digit percentage declines in CD sales and
other economic pressures are the ones that diversify by selling other items
in the store, such as T-shirts, and selling online, Oberstein said. 

"You have to do a little bit of everything, I guess," said Mike Rome, co-owner
of Street Corner Music in Beverly Hills.

Putting items online

Rome said he sells records and 45s on eBay and puts CDs that don't sell in
the store on Amazon.

Himes said he expects to start the clearance sale Dec. 29, and it will
continue until he can sublet the 4,400-square-foot store to another business.
He's hoping to close in February.

Sales at the Ferndale store are down 10% to 30% most weeks, Himes said, while
the Roseville store has been holding its own.

"We sell music physically. The east side, being more blue-collar, is less
affected by techology. The west side is more affected by technology and the
iPod age," Himes said. "It feels like I'm selling typewriters or pay phones;
you don't see those anymore." 

Himes also feels frustrated by an industry where all the marketing dollars
are moving toward the digital delivery of music.

Also, exclusive content is first going to venues like iTunes, and the
independents can't get it for 60 days. Big box retailers are also getting
exclusives the little guys can't.

"We're looked at as a last stop, even though we are the people who get bands
started," Himes said. "They say they appreciate what we do, but sometimes
we've got to wonder."

Himes said he will let go about five employees in Ferndale when he transfers
all operations to Roseville.

He has 15 employees at the 9,000-square-foot Roseville store on Gratiot near
I-696.

"We are leaving Ferndale, but we want to make Roseville bigger and better,"
Himes said.

I suppose I should go look at the Roseville store; I've never heard of it.
I had no idea that there were 60 independent stores left in Michigan;
I wonder if that number includes the stores which sell primarily 
used CDs?

Re resp:30: I really feel for Michigan.  The national economy is about
to go into another recession, and Michigan hasn't even recovered from
the previous one yet.

Michigan is fine. We have the Great Lakes. And more. I see nothing for you
to feel negatively about, gull. 

I was in California visiting a sister over Thanksgiving, which meant I had
an opportunity to peruse some of the sale circulars for Black Friday and
the rest of the post-Thanksgiving weekend.

Although I remember the advertisements for Best Buy, Circuit City, Target,
etc, prominently featuring sales on DVDs, I can't remember any of them
devoting a significant amount of space in their sale circulars to music.
In other words chain stores didn't even bother really promoting music sales
this Thanksgiving weekend, either because they knew they didn't have anything
that would draw in customers or because they expected other items (DVDs, etc)
to do better.  Note that most of these chains had advertisments featuring
specials on MP3 players, so it's not that they didn't expect people to spend
money on equipment to listen to music, just not on the music itself..

(There's another possibility, though:  I didn't study the advertisements
closely -- it's possible there *was* some music prominently featured but that
the titles were so forgettable to me that I even forgot about the
advertisement.  I'm not sure that's a brighter scenario from the record
companies' points of view..)

Magazines and CDs are a loser in a storefront.  You can get the info readily
online.

Which I suppose is a blessing and a curse. 

Sure, there's something to be said about the instant gratification of getting
music online, but there are some titles that I want a full-fidelity (issues
about CD level boosting aside) rendition of. 

I don't really care too much about the latest Rhianna song sonding a bit
compressed, but I care a whole lot about losing *anything* in a Kolacny
Brothers recording. 

I used to love going to Harmony House to find more obscure albums... but then
their Novi store became a mega JoAnn Fabrics, followed by their Farmington
store becoming nothing. 

So I found a new home at Record Collector in Livonia, forcing them to promptly
close. 

Repeat the Beat in Plymouth? Gone.

Switched On CD's in Novi? Gone.

Even Borders has switched to mini kiosks of hypercompressed "everything in
the store" samples, instead of legitimate listening stations where you could
hear a full track if you wanted to.

At that rate, it begs the question: Why drive 30 minutes to listen to crappy
mp3 samples of music on headphones of dismal quality and questionable hygiene,
when I can listen to crappy mp3 samples of music on decent speakers on demand,
spend half as much money on the product, and save gas by not driving?

Then again, it also goes back to UScan. Much like I'm doing a cashier's job
at a store with a UScan, I'm doing the production factory's job buying and
burning my discs from iTunes or Amazon. 

Anyway...

Music is broken. 

Well, with broadband speeds being what they are, if there's a
significant demand for non-compressed content out there I'm sure sooner
or later it will be available.  And I don't think the CD is going away
any time soon, but you may have to resort to mail-ordering them.

For me it's not that big a deal because stuff I want is rarely in stock
at music stores anyway.  I figure if I have to wait for it to be shipped
anyway, I might as well just have it shipped to my doorstep.

Unfortunately, the demand for high-quality audio content (or video for
that matter) doesn't seem to be all that great.  The trend is toward
quantity and convenience over quality.

We are DEVO.

- Backtalk version 1.3.30 - Copyright 1996-2006, Jan Wolter and Steve Weiss