This Week In News

We usually post these on Friday afternoons. So we're either late or early, depending on how you think about it. . .

Can 1,000 fans replace the music business?
Kevin Kelly thinks so. He argues that a musician can make a perfectly good living with just $1,000 “True Fans” who are truly dedicated. He assumes that each is willing to spend $100 a year, netting the artist a nifty upper-middle class salary even without being immensely popular. And “Lesser Fans” who will pay out less still add to the income.
Kevin Kelly, The Technium

Economist Will Page disagrees. He points out that it’s difficult to get fans to pay the artist directly. The revenue would most likely come through iTunes, record companies, merchandise printers, etc. So the artist would end up with only a fraction of that $100,000. He points out that everything the artist creates would have a cost, so the profit margin would be significantly lower than the full amount. Additionally, he questions whether most fans are OCD enough to spend their entire yearly music budget on a single band.

Reznor vs. Radiohead: Innovation Smackdown
We’ve covered Trent Reznor and Radiohead's experiments in alternative methods of releasing albums. Now, Wired gives you the chance to vote for the experiment you like better.
Eliot Van Buskirk, Wired

BMI Eyes Ringback Tones For Mobile Growth
BMI expects ringback tone sales to jump by 50% this year to $210 million. For those who are not hip to cell phone jargon, ringbacks are the ringing heard by the caller as they wait for a call to be answered. Ringtone sales, however, are expected to slips 7% to $510 million.
Anthony Bruno, Billboard

Report Buyer: New Report Highlights how Music is a Key Drive in the Mobile Phone Market
A new report indicates that cell phone sales far exceeded personal music players like iPods, 941 million to 300 million in 2007. Interestingly, half of the cell phones were considered “music phones”—that is, phones with enough memory that the user can use them as music players. This is driving an increase in mobile sales of whole tracks and streaming audio. In all, mobile music sales are expected to hit $6 billion in 2008.
London Business Wire; Broadcast Newsroom

"Letter" in the Post

Here’s a fun one: Today’s Washington Post features a profile of music business renegade Bob Lefsetz, whose ongoing screed (or tirade, depending on your opinion), The Lefsetz Letter, is read by both working-class musicians and high-level industry types.

Lefsetz, who is fond of using ALL CAPS when making a point, often comes across a curmudgeonly uncle, but his no-holds-barred take on the music business can be a refreshing alternative to drier trade rag reporting.

But it’s not all bluster. Lefsetz has seen some of the industry from the inside, and usually sides with the art, not the business. And it’s amusing to know that a younger generation is learning about the machinations of the major labels from a guy whose idea of hot new music is the latest disc by the Eagles.

The Post does a pretty good job at capturing the essence of Lefsetz:

A writer notorious for abusing his CAPS LOCK key, Lefsetz, 54, comments daily -- and sometimes, it seems, hourly -- on whatever topics pique his interest: diminishing album sales, Steve Jobs, the meltdown of the major-label system, skiing, the monetary value of music, favorite songs of 1971, overeating, Wal-Mart, the greatness of Regina Spektor, seventh-grade crushes, the overrated legacy of Patti Smith, the unremarkable wardrobe of Kenny Chesney.

We at FMC read a lot of blogs on a daily basis, including Coolfer, Digital Music News, Digital Audio Insider, BitPlayer, Ars Technica, CNET, Arts Journal, Idolator and Listening Post. What do you read?

Last Week In News

A full version of This Week in News will be out on Friday, but here are a few highlights from last week.

Should musicians be paid by social network sites?
After AOL bought social networking site Bebo for $850 million, songwriter Billy Bragg wonders why artists don’t receive royalties. He reasons that musicians help attract users, and the sale of the website for such a staggering sum clearly indicates that these users have significant monetary value.
New York Times, March 22nd

UPDATE: Here's a piece from e-consultancy.com which doesn't agree with all of Bragg's points, but still makes a strong case for why musicians deserve to be paid for recorded works. The author also debunks some of the pervasive myths among the "music should be free" crowd.

Fans take "wiki" over MySpace for music info
A new survey indicates that fans looking for information about a band turn to Wikipedia more often than MySpace or the band’s official website. Promoters and artists focus on the latter two sources, but consumers are twice as likely to click the Wikipedia entry as the band’s MySpace page. Musicians, take note.
Yahoo, March 22nd

Music Industry Proposes a Piracy Surcharge on ISPs
This idea has been floated before, but now it’s being taken seriously by the RIAA. Record labels are beginning to warm to a plan to charge a flat fee ($5 a month is the usual suggestion) to allow internet users to download music for free legally. The money would, in theory, go to the artists. Skeptics contend that charging everyone assumes that all people are criminals, and would even cost people who have no interest in music.
Wired, March 13th

Musicians seek extra ways to connect with fans, build market
Faced with rapidly declining sales, more and more artists are cramming their CDs with extras, like studio or concert footage or bonus tracks. Singer Ann Murray says that it was odd to have cameras in the recording studio, and “making of” features immediate bring to mind the depressing “Let It Be” movie. But these extras can help mitigate the drop in CD sales.
The Canadian Press, March 21st

"What's the Future for Musicians?" — New York State Music Education Seminars

We've been meaning to make mention of a series of exciting (and free) events we're co-hosting in New York State throughout the month of April. But we've been so busy planning that we almost forgot to blog about them. Here's the official skinny:

Today’s music landscape is filled with both excitement and foreboding. With so many new technologies and ways to promote and distribute music, how do performers, composers, songwriters and independent labels know how to participate, who to trust and what is most effective?

FMC is partnering with American Federation of Musicians locals and other artist organizations around New York State to host free, daylong forums in Buffalo, Syracuse and Albany throughout April 2008.

These free seminars are designed educate musicians and label owners from a range of genres – classical, jazz, rock, folk and hip-hop – about the critical issues at the intersection of music, law, technology and policy, with the goal of better preparing musicians to participate in the issues that affect their livelihood.

The first of these events takes place in Buffalo on Wednesday April 2, at Livingston Hall (inside Kleinhans Music Hall). Click here for more information, and to RSVP.

Visit the main website to check out dates and programming for all of the events.

Hope to see you there!

Radio Robots to Help Indie Artists Get Airplay?

We found an interesting article in the latest edition of Wired about a new system for indie acts to deliver tracks to radio stations that rely on automation to manage their playlists. Well, it's not a new system, exactly — major labels and commercial radio have been using it for years.

As Wired scribe Eliot Van Buskirk writes, "indie musicians have been at a disadvantage when it comes to delivering music to larger stations. . . because the major labels use something called Digital Media Distribution System (DMDS) to send new tracks to stations digitally and securely (to minimize leaks)."

That's not the only reason indie musicians have had difficulty getting on the corporate airwaves. Payola, both institutional and in-your-face, has made it near-impossible for anyone but the best financed (and ethically compromised) musicians and labels to breach the commercial radio wall. Even when compelled by the FCC to air independent acts, massive radio conglomerates have tried to require artists to sign away their rights to digital royalties in exchange for airplay consideration. FMC exposed such behavior by Clear Channel in a series of blog posts last year.

According to Wired, a company called Yangaroo (which also services major labels) is now offering an indie-centric version of its DMDS technology. The general understanding is that most folks at commercial radio are loathe to open padded brown envelopes, so digital delivery could result in more spins for the indies.

That's the theory anyway.

FMC is working on a Payola Education Guide that will help musicians understand the historical context of this disingenuous practice, and offer advice about what can be done about it. We're also busy tracking playlists in order to determine which stations are playing indie music and how often. So stay, um, tuned.

Bye-Bye, South By!

FMC staff just got back from several whirlwind days in Austin where we experienced the music and madness of South By Southwest.

We had a blast, and even managed to accomplish a few things in between the rocking and partying.

FMC's Michael Bracy moderated the panel "Selling Music as a Service," which featured experts like Matthew Adell of Napster, Vicki Nauman of Sonos, David Pakman of eMusic and Tim Quirk of Rhapsody.

The panel sparked discussion about how difficult it is to get rights cleared for digital streams/downloads, and the differing license requirements from service to service and country to country. Also addressed was the conceptual leap consumers have to make between "owning" versus "renting" digital music, with Rhapsody’s Tim Quirk emphasizing that subscription services give listeners access to all the music they can listen to, whenever they want to, for one price. For real music fans, access to millions of tracks means all they have to spend is their time. In contrast, users of eMusic and Napster currently have universal portability because their content is downloaded rather than streamed. Fascinating stuff that inspired extended discussion on what the future of musical discovery might be.

FMC co-founder and "serial entrepreneur" Brian Zisk moderated the lively "Resolving Webcasting Fees" panel, which saw John Simson of digital royalty distribution organization SoundExchange discuss the pros and cons of percentage vs. fixed webcasting royalty rates with smaller online broadcasters. Nothing really got resolved, but the conversation remained civil and, dare we say, hopeful.

Meanwhile, FMC's Health Insurance Navigation Tool (or HINT) worked the convention center like Lucy from the Peanuts, staking out a table and talking to all passers-by. Our resident health insurance expert (and musician) Alex Maiolo was on hand to raise awareness about the importance of health insurance for musicians, and conducted dozens of free, one-on-one consultations with artists about their options.

Deputy Director Jean Cook pulled double duty as an FMC representative and a performing artist. Jean played several gigs in Austin, including sets with the Waco Brothers, Jon Langford and a special guest appearance with Langford alongside the Sadies. She was probably pretty beat by the end of the weekend, but busy is good, right?

Communications Director Casey Rae-Hunter ran around to various showcases and tried to sneak Rock the Net materials on merch tables. Well, first he asked politely. Thanks to the bands (including Boston's Pretty & Nice) who cleared some space in support of net neutrality.

Events organizer Chhaya Kapadia attended lots of panels and performances, and got to reunite with musicians who attended our annual Artist Activism Camp, including Patrick Hallahan and Jim James of My Morning Jacket. Other AAC alumni were in Austin as well — Tom Morello and Kimya Dawson played the "Body of War" show, and Mike Mills rocked with R.E.M. at Stubb's on Wednesday night. Mills supposedly namedropped FMC in an on-site radio interview, but we can't seem to find the archived audio. Can anyone assist?

Finally, FMC advisory board members Sandy Pearlman, Peter Jenner and Jim Griffin appeared on the well-attended "Mobility, Ubiquity and Monetizing Music" panel, which discussed, among other things, how rights holders can get paid in the brave new digital world. Our newest board member, Bryan Calhoun, did his best to keep things reined in as moderator. FMC’s Kristin Thomson remembers being one of about twelve attendees at a panel during SXSW 2003, Sandy Pearlman first started promoting this idea.. Now, with five years of germination, the concept of monetizing the millions of music transactions has finally gained some momentum and a much higher profile, though a workable solution has yet to be reached.

Here's a link to some pics Chhaya took of the action.

Thanks, Austin. See you next year. . .

OK Go on the Hill. . . Again!

Currently, we’re several thousand feet in the air, jetting to Austin for South By Southwest. Which gives us time to whip up a blog post about all the exciting stuff that’s happened over the last couple of days.

On Monday and Tuesday, Ok Go’s Damian Kulash and Andy Ross took a break from writing material for their next album to come to Washington, D.C. and hobnob with members of Congress in support of Net Neutrality. Kulash also testified before the House Judiciary Committee about the importance of the open Internet to musicians and fans. Perfect timing, too, considering FMC’s Rock the Net campaign turns a year old this month.

A Hill briefing and meet-and-greet took place on Monday afternoon, with Kulash and Ross telling their band’s story to a room full of reporters, net neutrality advocates and Congressional staffers. Senator Byron Dorgan even popped by to say hi to the boys and talk a little about how net neutrality fosters innovation and freedom of expression, artistic and otherwise.

Then Kulash and Ross grabbed a pair of acoustic guitars, propped themselves on a Senate witness table and rocked two songs, including their Internet hit, “Here it Goes Again.” It was one of the oddest things you’d ever see, but they sounded awesome, and the “crowd” ate it up. You get the impression this isn’t an everyday occurrence in the august halls of Government.

The following day, Kulash, Ross and FMC Policy Director Michael Bracy swung by Rep. Ed Markey’s office to talk about Net Neutrality for a possible segment in a documentary about the subject. Markey recently introduced a bill which broadly outlines what needs to be done to protect net neutrality. (have a look at it here.) He and the boys discussed how a hard working band like OK Go benefited from posting a homemade video on the internet and watching it take off — all due to open web structures. Jokes were told and hands were shook, then it was off to the HJC hearing room for Damian’s testimony.

Kulash delivered a “slam dunk,” describing his band’s climb to success (aided tremendously by the Internet.) He also presented three video clips, played straight off the web, to shore up his claims. Members seemed impressed that the video for “Here it Goes Again” has received more than 35 million views since it was first posted.

"If people wonder whether the music industry will benefit from Net Neutrality they can look no further than us," Kulash said. "There is a real consensus with us that Net Neutrality is good for music. I'm here to ask Congress today to preserve Net Neutrality and the future of the Internet."

Also testifying were Net Neutrality advocates from the American Civil Liberties Union and the Christian Coalition of America.

We’ll post a link to even more photos from OK Go’s Hill tour as soon as we can upload ’em to Flickr, which should be soon. In the meantime, feel free to make this one your new wallpaper.

Check out the whole hearing by clicking this link.

This Week In News

Trent Reznor’s Experiment, One Day Later
Following up a story we posted about a few days ago, Andrew Orlowski reports that Trent Reznor’s new Nine Inch Nails album is being downloaded furiously over BitTorrent, despite the low cost. Orlowski calculates that Reznor lost $160,000 in the first day from people refusing to pay $5 for the full album. He blames “freetards” who actively want to hurt the music business. But perhaps the problem is simply download speed: Reznor’s overloaded website downloads at 10 kb/s, while BitTorrent can be as fast as 500 kb/s. Perhaps that’s why many people are downloading the free version from BitTorrent instead of Reznor’s site?
The Register, March 4th, 2008

But apparently not all fans are unwilling to pay. Digital Music News reports that the $300 premium package sold out overnight, all 2500 copies. So Reznor has made $750,000, at least.
Digital Music News, March 4th, 2008

Study Confirms: Piracy Is Better Than The Real Thing
A British study shows that pirated content is actually easier to use and of higher quality than paid content. Some highlights: 70% of users claim that “legal d/l sites don’t have the range of illegal ones;” 68% claim that with piracy they “can get what they want a lot faster compared to legal sites;” but (they “would pay for legal d/ls if they had what they wanted.”
Mashable, March 5th, 2008

Musicians still waiting on a YouTube payday
Clients of the four largest record labels haven’t seen any money from partnerships the labels signed with YouTube over the past 18 months. Some managers blame YouTube’s poor accounting system, which apparently struggles to determine how many times each artist’s videos are played. YouTube, which is owned by Google, counters that it has acted in good faith and the videos haven’t generated much revenue. One record label, Warner Music Group, claims that it has paid its artists, but music attorney Chris Castle says the he hasn’t heard of any artist getting paid.
CNet, March 6th, 2008

Clive Davis urges singers to stop writing songs
Clive Davis, a mogul who has worked with stars from Whitney Houston to Kelly Clarkson, says that singers shouldn’t feel that they have to write their own songs. Clarkson, for example, sold 11 million copies of her second album, made up of songs written by professional hitmakers; her third album, on which she co-wrote all of the songs, has sold just over 750,000 copies. Davis says that talented singers may not be the best songwriters, and shouldn’t be afraid to sing the best songs they can find, regardless of who wrote them.
Yahoo, March 6th, 2008

RIAA plays both sides of the street in music royalty debate
Nate Anderson writes that the RIAA is taking an inconsistent stand on music royalty rates. The organization is pushing for flat rates for royalty fees from webcasters and for consistency in radio royalties. But the RIAA wants to pay artists a percentage rate instead of the current flat rate.
Ars Technica, March 2nd, 2008

Millennial malaise
This week is Canadian Music Week, and Canadian music industry experts met to discuss the changing music market. The hot topic was how to reach the internet-saturated generation they call “Millenials,” people born from 1982 through 2000 (man, I hope that label doesn’t stick).

For relatively dry coverage, check out The Canadian Press’ take at Jam! Music.

For snarkier but more detailed coverage, head over to Eye Weekly.

Full Power Series #3: Church of Radio

Religious broadcasters have a reputation in noncommercial media for being well-prepared and ready to pounce on any opportunity to launch new stations. So it was no surprise last fall that many of the applicants for new, full-power noncommercial stations were religious—60 percent, by one count.

But last October's licensing window saw a new force in religious non-coms. There were more applications from Catholic organizations this time around. And that was no accident.

Hundreds of stations currently preach Protestant beliefs over the airwaves, but historically, there have been few Catholic voices ringing in the holy chorus. Dissatisfied with the gap, the Catholic Radio Association mounted a coordinated effort to boost applications from Catholic groups during the recent window. It set an ambitious goal: to triple the number of Catholic stations on the air.

Today, 153 Catholic stations are broadcasting, according to CRA President Steve Gajdosik, compared to about 1,700 Protestant stations. Why the gap? Protestants realized early on the value of radio to spread their teachings, Gajdosik says. Meanwhile, the Catholic Church—accustomed to spreading information through its infrastructure of parishes, dioceses and internal publications—overlooked the importance of radio.

As this 2006 Associated Press article states, Catholic leaders in the 1970s focused their attention on television rather than radio, which set a precedent. A lack of national coordination thwarted their attempts to start a broadcast network encompassing both mediums.

When it came to radio, "our Protestant brothers and sisters were far more visionary than we were," Gajdosik says.

So when word started to spread that the FCC would soon accept applications for full-power noncommercial stations, "it was a no-brainer," Gajdosik says. CRA's bylaws prevent it from owning or operating any stations. So the association garnered support from its board of directors and, in national mailings, promoted the opportunity to its members. One how-to flier (PDF) turned the acronym for "noncommercial educational" (NCE) into "New Catholic Evangelization."

CRA arranged discounted engineering services and assistance from Catholic lawyers who had previously worked with the organization. In the end, CRA recruited about 160 Catholic organizations who filed a total of 227 applications.

Since many of these applicants don't currently operate any stations—an attribute that will earn them credits under the FCC's point system for awarding applications—Gajdosik believes that they stand a fair chance of prevailing over their competitors and receiving permits. He estimates that 70 percent of the applicants will succeed, roughly doubling the number of Catholic stations on the air. "Which is still not bad," Gajdosik says, "but wasn't quite our goal."

The stations built by successful applicants are likely to air local programming mixed with content from Catholic satellite networks such as Relevant Radio, Ave Maria and what Gajdosik calls "the proverbial 800-pound gorilla on the block," EWTN Global Catholic Radio.

One Catholic broadcaster suggests that CRA has put the cart before the horse by focusing on stations rather than programming. "While it is possible this is a winning formula for Catholic radio since it is a micro-niche product, it is definitely counter to movement of the rest of media," writes Michael Kreidler on his blog.

Regardless of what these stations air, if Gajdosik's predictions hold true, the sound of Christian radio could shift in coming years—though Protestant stations are likely to remain the true 800-pound gorilla.

Mike Janssen served as Project Manager on FMC's Full Power Initiative, recruiting arts and cultural groups to apply for noncommercial stations and assisting applicants throughout the process. He is a freelance writer, editor and leader of media workshops in the Washington, D.C., area. Visit his website at mikejanssen.net.

FMC at SXSW

A small delegation of Future of Music Coalition staffers will be descending upon Austin next week for the city's annual South By Southwest festival. If you're not already familiar with "South By," you're probably reading the wrong blog. Let's just say it's where the indie music world comes together to rock, party and participate in panels. We'll be doing a little of all three.

On Thursday, March 13, FMC Policy Director Michael Bracy will moderate a panel called "Selling Music as a Service." The discussion also features Matthew Adell of Napster, Vicki Nauman of Sonos, David Pakman of eMusic and Tim Quirk of Rhapsody. Later that night, Michael will be roaming around the Misra Records showcase at Friends.

FMC's Health Insurance Navigation Tool (HINT) will be in full effect, with musician and health insurance expert Alex Maiolo hanging out at the Convention Center to set up free consultations about health insurance options. If you want to schedule something in advance, shoot an e-mail to hint@futureofmusic.org.

A few FMC staffers will attend meetings with managers to talk about issues including artist activism and future music structures. We're also planning to reconnect with the musicians who have been part of our annual Artist Activism Camps in New Orleans.

Look for us at the Bloodshot Records BBQ at Yard Dog on Friday, March 14. We'll be raising awareness about our Rock the Net campaign as we generally "pig" out. Communications Director Casey Rae-Hunter and Events Organizer Chhaya Kapadia will also be hitting select showcases and passing out RTN schwag — if you want us to swing by your gig, drop an e-mail to casey@futureofmusic.org, and we'll try to work something out.

FMC Deputy Director Jean Cook will lend her musical talents to various performers throughout the festival. We'll tell you who, exactly, once we find out.

It's looking like we'll be pretty tired the following Monday.

More "Free" Stuff.

Nine Inch Nails mastermind Trent Reznor released the band’s (OK, his) new album this week in suitably experimental fashion. Theorizing that fans would be willing to pay extra for additional content, Reznor made the record, Ghosts I-IV, available in several varieties via his website.

The basic package is free: nine songs from the album in a DRM-free MP3 format. For $5, fans get the full album in a handful of unrestricted formats, including two lossless options (that’s CD quality, kids). For $10, you get actual hard copies of the album spread over two discs. A $75 “pledge” scores you a Blu-Ray disc with a slideshow and stereo mix, while super-fans who shell out 300 bucks receive a deluxe vinyl version and three hardback books.

This isn’t Reznor’s first foray into unconventional release formats. Last year, he put portions of the last NIN album on USB flash-drives, which were hidden in public restrooms for fans to find and distribute through file-sharing sites. And he produced Saul Williams’ The Inevitable Rise and Liberation of Niggy Tardust, which was released for free or for $5 in a higher-quality format.

Although sales figures aren’t available yet, the servers were swamped when we tried to download the $5 version. When we finally did manage to get through, there was some trouble with the .zip file. So the system still has a few kinks, but we’re sure Reznor has his best geeks on it.

It remains to be seen whether NIN can match the success of Radiohead’s In Rainbows venture. The “pay-or-not” model didn’t work out particularly well for Saul Williams, as only 18% of the 150,000 people who downloaded the album paid for it. Reznor even went on record with his disappointment over sales.

Unconventional releases like this seem to work best for big-name bands with loyal followings. Fans can typically count on quality product (or at least the comfort of the familiar), so there’s less risk in shelling out money for what might already be available on illegal peer-to-peer sites. There’s some serious doubt whether this model would work for a lesser-known band with a smaller fanbase. As interesting as these experiments are, they probably tell us more about mass popularity than the future of the music business.

What do you think?