JPF Home Page Forums General Messages Mentor Questions Forum Newsweek Interview with Michael Laskow

OOPS, Double Post.
What a dork....

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DakLander

[This message has been edited by daklander (edited 03-09-2004).]

Brian, I'm thinking you mis-read or mis-understood my position. I'm of the opinion that the model, even as it is, is better than the existing structure for most of us.
I'm looking at the numbers over all & here's what it's about, in my situation. I have a cd reputedly getting airplay in Europe. I've not seen a dime yet, nor will I ever, in all likely hood, regardless of the number of plays. In the sense that, as a number, I have 10 plays a day now in a viable pay per play situation and get nothing but am in line for 100% of nothing and I get nothing. If the model works anywhere like it should, I'll have 10, 100, 1000 times as much play and have, presumably a 1% return. That's fine because in that sense I'll be generating more income than now by a considerable margin. I can't bitch about that at all.
In another related context, the music I had on mp3.m garnered a whopping quarter of a cent per play so just there I'll quadruple my income in relation.
I'm on the bandwagon. I just think it needs to be looked at real hard and, as Mr. Dunbar suggested, improvements that we can come up with be forwarded to the proper folks for consideration.

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DakLander

Now, another observation in regards the comment about kids essentially needing a push to listen to music. Maybe so with some kids but not mine, not now and not with my 26 year old when he was a young teen. My 15 and 17 year olds at home are the kind that flip stations like a big dog to hear what they want to hear. They also get on the net and jump all over the place. In their case it's probably driven more by peer pressure than a radio station or record label telling THEM what to listen to.
They, due to a proximity effect, hear lots of music that's way out of the ballpark when it comes to the music shoved down their throats by the labels and, not really surprisingly, they like that music and will also search it out. Ain't no major label on the stuff I normally listen to so that don't always fly.

Something else to think about is this;
These kids, at least the ones that really can think for themselves, will listen to what they want. I've seen kids listen to some of the really well produced music, not in their favorite genre & comment on how great a song that was. Lots of these kids may well listen to some really crappy mp3s and cds but will, if a better quality is available, purchase that better product. They ain't as stupid as some folks think.

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DakLander

They ain't stupid at all! And, they think the "crappy" music that they listen to is wonderful, just as we all do. Remember, it is us old farts that think their music is lousy...just as our parents thought OUR music was lousy.

This goes back to my point. I think we are being offered a solution to a problem that exists mostly for those of a "certain age" who are frustrated by the radio, and by the music offered by major labels. The target audience--the kids--are not so frustrated. They have no problem at all finding music they like on the radio.

Truman,

You're right that kids have no problem finding music they want.. but it isn't the radio they're finding it on. It's filesharing and burned CD's of the songs their friends have found on the file sharing networks.

The good news about this is that there's a larger cost to buring file shared songs (i.e. the cost of burnings the CD's) than there is to paying 8-10 bucks a month for access to ALL music ALL the time. The cool thing about on demand is that anyone can make a playlist and share it with a friend. With nothing stopping them from sharing this info, they ALSO become valued "Filters" and when they send their favorite list to their friends, each time those songs are checked out.. another penny goes in the bank for the artist/writer. It's really a beautiful system for everyone.

As for the comments about missing the guy with the platinum records and the sexy assistant, never fear. Whoever is most successful making the songs people want to request and whoever it is that is able to best choose the songs for playlists will still make a LOT of money and still have all the trappings of the Rock and Roll lifestyle psuedo myth we all know and love.

Brian

True, and the most succesful filters will be the ones with the most advertising dollars. Which are the major record lables.

Guscave:

Now this is all making perfect sense. I was hoping I wouldn't have to say bye bye to the major record labels. So it goes like this: 78's to 45's to LP 33 1/3s's to cassettes to CD's to Filters. Same folks running the show, just a new state-of-the-art delivery system.

That begs the question? How will the new model be any more advantageous to JP Folks and Michael Laskow et al than the existing one? Hypothetical answers based on "wouldn't it be nice" seldom cut it in the real world, so where's the beef?

P.E. Knudsen

[This message has been edited by Knute (edited 03-10-2004).]

Knute,

The difference for the indies is that everyone has access to the internet. It's not a closed shop the way radio was. People can move from "filter" to "filter" as they now move from station to station. The big difference is that you or I can be on one of those stations all the time, not just get played a few times a year...we're always available.

As the g.p. moves more to this system and away from radio (which I think will become more news and talk oriented, that's already happening) the indies get to be on the same playing field with the big dogs. Will the big money have an advantage? Always. Only in the future, the indies will at least have a chance. The price of distribution will no longer prohibit the little guy from reaching a large audience.

It reminds me of cable...before cable, Billy Ray Cyrus wouldn't have had a tv show, and Emeril, Bill O'Reilly, or Queer Eye for a Straight Guy would have probably not become popular.

All the Best,
Mike

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Mike Dunbar Music

And that's progress? God help us all!

P.E. Knudsen

They find it on the radio. They take POSSESSION of it via filesharing etc. As I said on an earlier post, the majority of illegal downloads are the big radio hits.

Truman,

You are right. That proves that the old model is in trouble. One half of the symbiotic relationship is diminished.


Mike


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Mike Dunbar Music

That's what my son was doing, Truman..

exactly that.

He was downloading hits....
When he hears "new" music he likes, he goes to the store and buys the CD.

He's 24...
My daughter does the same thing..
She's 38

Bob

I listen to Oldies on a great new AM station WRLL here in Chicago...1690 AM, right next to the Police calls.
Scratchy and noisy...it's only about 5000 watts so you have to strain to hear it sometimes...

Just like the good old days !

Bob

Yep, Mike. I think we all agree the old model is in trouble.

Hi Folks,

Though ALL the details are still not available to the public yet, here's a great interview that blows some of the naysayers out of the water on these issues. The future of this model is basically now. I still can't share everything I know (and there are many things I still don't have all the info on either as they are confidential) here's a very public interview announcing the launch of the technology that makes all of this possible. It's with Zak Zalon, the President of Radio Free Virgin and now the new Virgin Digital. JPF already has a very close relationship with these guys meaning guess which "filter" is going to get a lot more attention on the cutting edge of this techology?

Because I've known about the info in this interview for a while, perhaps you can undertand why people like Ed and his constant "man isn't meant to fly" type of dogma has become tiresome. He's dead wrong. This is the tip of the iceberg. Portable on-demand is already available. As I have said from the start, the missing link is for the major labels to release the remainder of their catalogs for a truly "any song, any time" music world to exist. Virgin Digital is launching with over 700,000 songs. And guess who will be included? Yup. Many of your peers here at JPF.

(Oh, and by the way, the number they are bouncing around for subcriptions? 50,000,000!)

Using Laskows idea of a penny per play, that's a LOT of potential pennies! I am sure that there are other ideas in addition to Laskows that will surface. But regardless, for us, the on demand world has arrived. And we're (JPF) right in the thick of things.

Brian

Today’s guest on Inside Digital Media is Zack Zalon who is the CEO of Virgin Digital which is a new online subsidiary of the Virgin group of companies. Perhaps the most familiar operation of the parent company is the Virgin Megastore CD retailers which are not part of Virgin Digital but are part of the Virgin Group.



Among the questions that we asked Zack are the following:

After so many years of success with brick & mortar retail CD stores, why has Virgin decided to jump vigorously into the online digital music market?
When will your store (Virgin Digital) start operating?
How will the Virgin Digital store be different from the legitimate online stores that are already in operation?
How are you going to tie-in the consumer experience at Virgin Digital with that of a Virgin Megastore?
How will you link-in the experience with your Virgin mobile phone and airline business?
How many tracks are you expecting to launch with in your catalog as compared to the number of tracks at the other legal online music stores?
When will you launch in Europe?
Why have you chosen to commit to the WMA format?
Are you going to have both a subscription and an al a carte download option?
Will subscribers to the monthly service be permitted to transfer any of the tracks in the catalog to portable digital players?
Which ones?
What happens if their monthly subscription lapses?
Why did you think it was important to announce the initiative before you actually launch it?
Owing to your connection to Echo Networks, why have you chosen MusicNet to run the business under the hood?

Today’s interview is audio-only and requires the Real Player in order to hear it. To listen to the show visit www.insidedigitalmedia.com and click on Zack’s interview.

[This message has been edited by Brian Austin Whitney (edited 03-10-2004).]

Brian,
Your statment, The only thing missing is for the Major Labels to release their songs for this to be "any song, any time", streaming.
Unless the Label is also the copyright holder they don't have the right to grant this license. Only the copyright holder can license public preformances thru a PRO. Pro rates at present are 12 cents total payout in the top 25 percent of radio markets and 6 cents in the bottom 75 percent of radio markets. Unless a Publisher has a clause in the Publishing contract, most unlikly, allowing this rate, one penny mentioned by Mr. Laskow, the Publisher would have to negoiate a seperate agreement with the songwriter(s) for this to happen. I know Congress had hearings about download rates but I don't know what the final outcome was.

BMI allows seperate agreements to be made outside the normal collection method as long as they are notified as mentioned in their handbook concerning royalities. Yes it would be nice for the Publisher/Songwriter to collect every time a song is played instead of the system the PRO'S use now.

I always welcome any business model that opens up doors for songwriters and Artist, and I don't think the Mr. Laskow's model will take over the old one (at least not yet), but rather provide an additional option for people to get their music.

The one thing that Mr. Laskow has not touched on nor has it been dicussed here yet (at least not in detail) is how will this eliminate people from continuing to use the free P2P like Kazzaa, Morpheus, etc.

When iTunes first came out I asked some of my daughter and step daughter's friends about it. I asked them if they would stop using the free sites if they could get their music for 99cents? They all said they would probably use it, but not give up the free sites. I then asked them "what if they could get each song for about 1 penny?" Would they stop using the illegal sites? Again they all said "No". They admitted they would use the paid site a bit, but still get most of their music from the free sites as long as they were able to.

The major lables and RIAA have not been able to convince most kids that using these free sites is a serious & illegal problem. So until that mind-set can be changed, I can't see any of these new business models making a big impact other than what the current ones (iTunes, Napster, etc.)are already doing. Although I hope I'm wrong..

...well, that and CD burning. Everyone focuses on file sharing, but burning takes up almost as much market share I bet. Stories I've read is that one kid will buy and cd and then burn 50 for his friends. I mean, everytime I buy a CD my wife likes, she wants to have one for the car or for work, and she says, well, just burn me one. Used to be, she would have to buy another copy - that was the only option. I MAKE her buy another copy, but I'm sure I'm in the minority....

[This message has been edited by Liszt Laughing (edited 03-11-2004).]

Burning and copying isn't new. Remember when blank cassettes came out. Everyone was copying from the radio, and once dual cassette decks became the norm on stereo systems, everyone was making copies for dual purposes. Also I'm not sure copying & burning cuts too deep into the problem, after all the manufacturers of blank tapes & cd have to pay a small percentage to the lables. The t.v. and video industry seemed to cope with this fine.

The problem is when you cut the Artist & songwriter out of the picture completely. But that's a topic for probably another thread.

Liszt,

I may be wrong, but I'm pretty sure that if you buy a cd, it is considered fair use to burn a copy for your car.

Anyone know for certain?

Mike

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Mike Dunbar Music

You are allowed by court precedent to a "personal copy". Nowdays, ya that generally means burning one for the car. There are no hard and fast rules for fair use, the only way to be certain your use is a fair use is for a court to decide. But she wants a copy for work too, or for friends, they play music during surgery. I'm not Mr. Fanatic about the whole thing...but the point is that burning does take away sales, just as file sharing does.

Most of the stuff I buy is indie label or self released stuff. Like most of the music of JPFOLKS members. Ask any of these people if they have ever seen any of the CD manufacture royality money. They haven't. And they won't. And besides, I think that only applies to the specifically music labeled CD's that people are supposed to use for those deck type Philips recorders. Most people don't use those CD's.



[This message has been edited by Liszt Laughing (edited 03-11-2004).]

I listened to the entire interview. I think the system they're proposing could work.

That said, I think Zack Zalon is glossing over a lot of the pain it'll take to get such a system running. I mean, it's good that Virgin Digital is pushing in this direction, but even Zack says that the biggest problem is infrastructure and support in portable devices. I'll be very suprised to see if this launches in any other capacity than the "Virgin Digital Media Player" on Windows XP only by year's end. But it's a start.

It's a pretty exciting idea. Just yesterday I was jonesing to hear an old 80's tune. I didn't want to own it, just listen to it. If such a system as Zalon describes were in place, I could listen to it right then. That would be like liquid crack to me!

I don't get Zalon's beef with Apple iTunes, though. He mentions that Virgin won't be doing anything for the iPod because Apple's locked down in some proprietary format. And yet the first rollout of Virgin Digital is built on top of Microsoft's DRM silliness, which only works on Windows. Excuse me? Who's locking down what here?

Besides, I'm betting that within two years, Apple will be all over this model anyway.

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Scott Andrew and the Walkingbirds
Lo-fi DIY acoustic pop
Hear it: http://www.scottandrew.com/main/music

Hey Gus,

I am curious about your discussion with your kids and their friends. When they told you point blank that they are going to continue stealing music, what was your response? If they had told you they intended to continue shoplifting candy from the local Wal-Mart, would you have given them the same response (or non response) you gave them about file stealing? I don't mean to single you out because you are but one of zillions of parents who happily allow their kids to openly continue these actions. I am just wondering if you, as someone who also creates music, fail to see the irony? I am guessing if they acknowledged stealing candy you'd have a big problem with it.

To Ray: We aren't talking about airplay. Once something has been released for sale and at least 1 copy has been sold, any broadcaster who pays the blanket licensing fees has the right to play it, including internet radio. What we are talking about is selling tracks via downloads like iTunes (and now Virgin Digital and others) and also the on demand system that is a new way to "sell" tracks. In most cases (though not all) the labels (or SR copyright holders) have the rights to control the sales of this music and often also own all or some of the publishing of vast catalogs of music.

I am not sure what legal issues surround the new on demand and subscription models versus the old Radio airplay and brick and mortar sales guidelines. Perhaps someone with direct knowledge of those can fill us in.

Brian

Scott,

The difference is that anyone can use the Windows format (including Apple if they want) but no one but Apple can use their format which is proprietary. It's the same reason that Radio Free Virgin never worked with Macs (unless they used windows software). Apple is still a tiny single digit percentage of the marketplace, and if they continue to keep everyone else out, it will stay that way. But that's another discussion we've had here before. The iPod Players and technology interestingly enough isn't actually made Apple. Another company makes them and Apple licenses them from that company. The device originally DID work with Windows, but Apple asked for that to be disabled so it would ONLY be proprietary for Apple. So all the blame rests solely on Apples shoulders for being uncompatible with the rest of the world.

Brian

Brian,
Let me start by clearing something you obviously missed on my post and your assuming. (1) I DO NOT allow my kids to download music from those sites. Even though they don't live with me, they understand perfectly well how it effects songwriters like their father. As I mentioned on my post the question was asked to friends of theirs at 2 different schools. And yes, I did try to explain to them it's effect, although my intensions were not to change the world single-handedly at that time..lol. Sadly they just didn't get it.

(2) If there is any "irony" is this: My step daughter use to download from Kazaa, and thought nothing about it, until I sat there with her one day and showed her how one of my songs I wrote years ago had been downloaded over 9,000 times without my permission, and without me seeing a penny from it. I'm happy to say she no longer has the software on her pc. But unfortunately I can't sit down at every kids pc.

As for the "zillions" of parents out there that let their kids download from these illegal sites, they don't see it as stealing because what they're taking is not a physical item (CD, cassette etc.) They're stealing intellectual properties and those parents haven't grasped the meaning of that yet.

There are thousands of debate on the net about intellectual properties, and if they're being stolen or not. The mainstream public just doesn't get it, and it's going to be an endless battle until they do.

Gus,

Thanks for the clarification, but your original post included your daughters in the statement that they'd continue.

I also have to make clear again: You don't BUY a track for a penny. That isn't how the model works. Not even close. Please get that idea out of your mind.

The model works (and Digital Virgin is already rolling this out) by paying a monthly fee (8-10 dollars per month) and getting any songs available for no additional cost to you. You can listen to them on demand whenever you want, including taking them with you (i.e. untethered from your computer). If you cancel your subscription, then you no longer can listen, just as when you stop paying for Cable, you can no longer watch The Sopranos.

The "penny" model would come from the companies offering the on demand music to the owners of the recording and the publishing. It would be divided in a monthly statement based on who owns what and likely will be a direct deposit type of situation. That part of the model doesn't exist yet, so it will be interesting to see how the labels are going to compensate everyone for on demand until a model for payment is worked out. So, there isn't a scenario that people are suggesting where someone can "buy" a track for a penny. The penny would be per listen per listener. This is also very different (but a lot more money) than the current radio model where a play for millions of people might produced a few cents and that's it.

Brian

Hi Brian,
I understand the model is not a penny per track. The point that I was trying to make is that as long as there are still illegal free P2P like Kazaa and others out there, how do we convince people to pay a monthly fee?

Don't get me wrong, I really like this model, and I think it will do fine. But have any of the players in this venture discussed how to get people to pay for music again? Both iTunes and Napster have reported some great numbers of download since they started, but it hasn't made a dent on the number of downloads still being produced at those free sites.

Educating the public is one way, but what else, and are we too late?





[This message has been edited by guscave (edited 03-11-2004).]

Brian: So all the blame rests solely on Apples shoulders for being uncompatible with the rest of the world.

I'm not an Apple zealot by any stretch, but if I were, you'd be walkin' on my fightin' side.

I have a 15GB iPod and it works fine with Windows. And there's iTunes for Windows now, so I don't see how Apple is incompatible with everybody. Apple's AAC format is MP4 with some baked-in DRM, which is no more or less "proprietary" than Windows Media format. If Virgin Digital decided not to support Apple's platform because of licensing issues, or because Apple refuses to ship a WinMedia player for Mac OS X ( like this free one ), or if they just went with the OS with the largest installed base, I can understand that. But Zalon's comment jumped out at me and made me wonder.

I don't know if Virgin approached Apple or not for their new venture, but given how hot, hot, hot the iPod is right now, I'd be surprised if they didn't at least try. And I wouldn't be suprised if Apple turned them away, since I'm betting Apple will be offering a similar service within 2 years. Good or bad? Who knows, the market is still birthing.

I don't recall hearing any pricing information during the interview (I might have missed it). Is Laskow's penny-per-listen model going to be enough to pay the copyright holder, plus the costs of bandwidth, storage, upkeep and maintenance on such a huge system like the one Virgin Digital is planning?

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Scott Andrew and the Walkingbirds
Lo-fi DIY acoustic pop
Hear it: http://www.scottandrew.com/main/music

Scott,

iTunes is available for Windows. It acts as a translation from Windows into their proprietary format. iTunes will not output to another player and another service/player cannot port out the files to work on an iPod. Apple chose to remove the windows compatibility within the iPod device so that only they could control, through proprietary means, the stuff that could get onto their iPod using only their software and format. Don't you think all other companies would be happy to make their services available to iPod users if it was possible? Virgin doesn't make a competing player, but I am guessing they WILL soon because of the iPod limitations. It really does ALL fall on Apples lap as to why other services can't work with iPods. They are solely to blame.

I suppose it's a good thing for their hardware business. iTunes is meant to sell iPods.. not music. The music is basically a loss leader. Virgin Digital is approaching it from the opposite direction. What they are offering is a filter. (Actually, a large collection of filters) as well as on demand and great streaming content. For them, it's ALL about the music. It's diametrically opposite of iTunes in that respect.

Brian

Brian

Apple chose to remove the windows compatibility within the iPod device so that only they could control, through proprietary means, the stuff that could get onto their iPod using only their software and format.

Brian, more than half of my iPod content is MP3. That's not an Apple-only format by a long shot. And you can play AAC format files on Windows with a recent version of Quicktime.

Of course, Virgin picked a different totally proprietary format, Windows Media. Every bit as locked down as AAC. To me, that's exactly the same as what you allege Apple is doing. As of today, you need Windows software to play WMA files, and you need Apple software to play AAC.

It seems far more likely to me that Virgin simply picked the format that would reach the most users.

Your point about Apple's complicity in this is well taken, but this argument is pointless. If Virgin Digital is successful - and don't get me wrong, I hope the model does succeed - Apple will have to step up, either by widening the formats it supports, or providing a competing model. The users will decide which format wins out.

[This message has been edited by scottandrew (edited 03-12-2004).]

BTW, here's a press release for the Virgin Digital project:

http://asia.news.yahoo.com/040309/4/1dv3k.html

Virgin's proposed monthly fee for full access is not a penny a play, since you can download a song and then play it lots of times. But the big win I see is that since the whole process is computerized then we will know exactly which tracks are being requested, and all the indie musicians and the people who don't get picked by Clear Channel will start getting their proper PRO fees. The PROs will have no excuse to ignore this new source of information about what people listen to.

The only flaw I see is the part where if you stop paying your monthly subscription then you aren't allowed to listen to the stuff you already have downloaded into your iPod/whatever. How they gonna enforce that?

Just wanted to comment on Harry's statement...Forgive me, but I am admittedly forum-stupid and don't know how to quote, so I am copying/pasting here, and may ultimately post twice in a row after I finish reading the forum..

Harry J said on the 9th..
"I'm not saying the current system is the best, but in the end, the cream is still gonna rise to the top. If Laskows model takes off, then the "filters" will have to do as radio stations do now. That, I believe, is where the problem will compound itself."

What exactly are the radio stations doing now, except accepting big money from big industry to keep indie industry out? There is one hell of a lot of cream out there in the indie market that can't rise to the top. Not saying I'm one - I still suck. But there's still a lot of cream that that's caught in the curds. Radio, on the large scale, isn't doing what you are percieving to be true. It's all part of the illusion.

Posting in good spirit,

Rodney

Okay, after reading this and listening to the interview, what I seem to be picking up that some others aren't is this..

- This penny-per-play thing is what the ARTIST/SONGWRITER gets paid.

- This is NOT what the model would be charging the consumer. So, when asked how the infrastructure, other rights holders, etc. could all be paid from this penny, the answer is that they ARE NOT being paid from the penny. The penny comes out of the 10 bucks a month from each subscriber. The remaining 9.99 is what pays for infrastructure, other rightsholders, overhead and operations, etc. I REPEAT: THE PENNY GOES TO THE ARTIST, NOT WHAT IS BEING CHARGED. It comes from what is being charged.

- Next, this is broadcast, so there is NO WORRY of illegal downloading from this. If you downloaded a file, it is because you BOUGHT AND PAID A SEPARATE FEE FOR THE DOWNLOAD, not to confuse this with the broadcasting. I assume that royalties are paid in a different schedule for the downloads.

- Lastly, who in the heck wants to download when you have on-demand broadcasting? It think it will deliver a huge crush to the illegal downloading and possibly even signify the beginning of music downloadings obsoletion. I say this because who in the heck wants to sit behind the computer and spend hours downloading music and then burning it and paying for all the blank CD's or memory upgrades to capture downloaded files when they can punch a button and hear what they want, as often as they want for 10 bucks a month? 120 bucks a year is the equivalent of buying 180 blank CD's at 20 bucks per 30 blank CD's. That is a lot of time burning your music, not to mention the steps involved in transporting CD's, changing discs, burning all over again when the CD gets scratched or stolen, etc. It really sounds like a small price to pay for infinite convenience.

There's my Just Plain 2 Cents. If I misunderstood something, please correct me. I've been accused of not listening or taking things out of context one other time in my life. 8-)

Cheers,

Rodney

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http://hugheymusic.com

Rod,

You have it right. The only thing that's a bit fuzzy is that we have 2 models being discussed here. One is the theory/idea that Laskow put forward which involves the artist/writer getting a penny per play from the subscription fees collected. That's different than the REALITY of what Virgin Digital is doing. I am not sure what the pay format is for the tracks that people download into their compatible players for the month. What is interesting about the reality of what Virgin Digital is doing is that it proves some of the naysayers earlier in this discussion wrong. They said it would never be possible to do this. It didn't take long to prove that they're already wrong. That said, it's still not a "Cell phone" type of service. You'll still have to get requested tracks into a player to take with you. But the rest of the package is there. On demand. Track at a time purchases. Album purchases and tons and tons of streaming playlists. Just Plain Folks Artists, as selected via our Music Awards process, will get a LOT of attention on this huge service. In fact, I am not sure any other service will give front page converage to indie artists like we'll see with our partnership with Virgin Digital. It's pretty exciting.

Now, we'll have to see if it goes to the Laskow type model or something else to get compensation. But the filter portion of it is already here. JPF is already there.

Brian

I don't see how track-at-a-time purchase maps into penny a play; you don't know how many plays are being performed. So that is two different models. The Virgin scheme seems no different to me than iTunes except for the wider choice of material.

It isn't "on-demand broadcasting". Broadcasting is somebody else (a DJ, etc) picks the songs and when they play and the listener just picks the channel - like satellite radio. On-demand is the listener picks the song and when it plays.

These are two different proposals here. The Virgin one - a traditional download scheme with a fixed subscription rate - is possible with today's technology. The TAXI proposal, involving wireless live delivery, is not.

Figuring out the rates to songwriters is a whole other issue. Penny-a-play is straightforward, and the PROs would be involved since it is a performance. The buy-and-download would suggest that the songwriter is due the "mechanical" rate of 8.whatever cents per track. If as much as 50% of revenues went to songwriters (not likely) then $8/month would let you buy 50 tracks per month, which sounds reasonable. If 10% went to songwriters then it goes to onlly 10 tracks per month.

Unless part of the deal is the songwriters get LESS than the mechanical rate per download, which is starting to sound like what the insurance companies have done to the medical industry. You wanna participate, you get paid less.

This is probably one of the most relevent things you will ever read about the very subject of this thread, about the future of digital music as the Copyright Office sees it, about compulsary licensing, just everything about digital services. And it is hot off the presses (March 11th as a matter of fact). This is NOT just about compulsary licensing, so don't let the title fool you. Straight from the Copyright Office:

http://www.copyright.gov/docs/section115_registers_testimony.html

If the service is streaming/on demand, it appears to me that A) each time a song is played, a mech license fee of the statutory rate or a negotiated rate (stat rate is 8.5 cents now I believe) is due the copyright owner, PLUS B) because it could be considered a public performance, a PRO fee would be due each time the song is played. I didn't have time to look up the amount, but it would probably be whatever the internet radio negotiated settlement amount is (which is much less than the airwaves amount).

To me, it looks like if the service is considered streaming/on demand, at least 8.5 cents + the PRO fee would be due publishers/PRO's each time a song is played, unless they all negotated a lesser rate.

Now, if the service delivers a one-time *SINGLE SONG* DPD (such as ITUNES and all the end-distributor sites CDBABY uses - although some or all of those services make you buy the entire CD, your not allowed to buy just single tracks), then then only the mech fee (8.5 cents or a lower negotiated rate) would be due one time and one-time only, and the end user could play the song an unlimited amount of times. Although the PRO's have argued about this, a true DPD on a closed stream is not publically performed, therefore no PRO fee is due. At least that is mine and some other people's opinion, on that one.

For an entire CD download as a one-time DPD, the mech fees would be 8.5 cents x the number of tracks. Unless of course negotated rates make it lower.

Interesting stuff.


[This message has been edited by Liszt Laughing (edited 03-15-2004).]

And to me - my opinion only - a one-time DPD delivery (which could be the whole CD or a track) that was uploaded to a private on-line locker or user-space - ala the MP3.com model of how if you bought a CD, you could also listen to it immediately online from your private locker - should also be able to avoid the PRO fee because that would be just like if you bought a physical CD and played it at home. PRO fee's are not involved with that.

AND - my opinion again, because all the digital models we are talking about appear to fall under compulsary mech licensing (because the large parties agree and the copyright office appears to go along although they have some reservations about whether the letter of the law says this), this means the stat rate of 8.5 cents is going to be due each and every time. If you pay a subscription fee of $20 a month, just in mech fees alone, this means either 170 single song DPD's or 170 streaming plays would be possible. And that leaves no money for anything else. Bottom line is, it seems to me these digital services *MAY* have to negotate smaller mech rates in order for it to work, or limit plays/downloads per month. This means songwriters MAY have to take a smaller amount for each copy. But the tradeoff is, they MAY be able to churn a higher number of copies than they would in the physical world. I would certainly take the chance anyway.

Actually, more succinctly, of course what Virgin is doing will work, and I'm excited about it because it involves JPF members, but cost wise it *has* to involve one-time DPD deliveries (which would allow unlimited end-user plays without additional fees - just like ITUNES and everybody else is doing), and by law (or more by negotiation), 8.5 cents is due the PA copyright holder with each delivery (unless negotiated lower). And we haven't even discussed the SR copyright holder. So, to me, the number of DPD deliveries a month in a subscription mode has to be limited.



[This message has been edited by Liszt Laughing (edited 03-13-2004).]

PD,

You're talking about 2 separate models. The "penny" model has nothing to do with downloaded purchased tracks. It never has.

To clarify:

The "Penny" model has to do with paying the owners of a track (i.e. everyone with a financial interest) a penny each time a track is played, either by programming, or by request. This would NOT include "ownership" of the track. If you have it in a portable player, that track would become deactivated when the subcription stopped. The best part of this for our community is that the majority of indie artists own most or ALL of their song rights, (SR copyrights and publishing). That means that for many, they get the entire penny without sharing. For major labels using various contracts and where the are publishers involved, they will all be dividing the pennies. Because of this, how long do you think the "label and publisher" roles will continue to exist? The answer will probably be only to the extent that they invest money into promotion in return for their percentage. This model is posed as one workable theory. It is not a reality.

The single song purchase (i.e. such as iTunes) pays on a different standard and in a different way. Most are 79-99 cents a download, and allow those tracks to be burned to CD's and used like a purchase from a store of a CD (though not completely until it is burned.. iTunes has some convoluted limitations to the number of cpus you can put it on, having to use an iPod with it etc..) But once you get it onto a CD, you can put it back on your computer to use (legally, i.e. not to put into filesharing systems) however you want.

Then there is the subscription models. This model is coming with Virgin Digital (as an on demand feature AND streaming, not just streaming like XM radio), and this model is portable (i.e. you can take it with you on a player that is compatible (which will likely be about anything on the planet other than an iPod)). The Laskow model could be put into place on this type of format, but again, his was a theory and suggestion only and has no connection to what Virgin Digital is doing. When I learn how this model will compensate on demand tracks, I will let everyone know (or if anyone else hears it first).

Finally, there is the streaming model. This is already in place at Radio Free Virgin and XM and many other services. It works the same as terrestrial radio with PRO's paying royalties. There's the issue of adding a performance component to this (which Radio doesn't have to pay) and that is part of what all the hand wringing has been about for a couple years in regard to internet radio. I think much of this is still up in the air, and even if a law/rate is passed, appeals and other factors still muddy it all up. RFV (and I imagine the others) pay the PRO fees for airplay. What I haven't been able to verify from anyone is whether the PRO's actually track Internet Radio Play at all or simply carry over their Radio Surveys from terrestrial. I fear that's what they are currently doing, and hopefully they'll change with the times. Tracking on the net has to be far more accurate than survey's of radio stations.

Brian

Liszt,

I am not sure that there's an issue with limiting on demand (though I could be wrong). What you'd do is learn if the average # of requests was still low enough as to allow the unlimited use of the service for anyone, knowing most will request/use far fewer tracks than the top users. If there is a limit financially of 50 tracks a month (just a random number I am throwing out), and some folks download 200 tracks, but the average of all users is 34.. then all is well. It might take some research and tracking to learn the average number, but I think if you looked at HBO, which offers up to 24/7 viewing, you'd learn that the average users watches 1-3 hours a week probably at most on average. See my point?

Brian

Brian,

Yes - I do and that makes sense. The only point I want to make is that if you read the material in that link I provided, it appears to me that the Copyright Office is CONSIDERING going along with what the major players would like, and that is a non-webcast (webcast being radio like streaming - songs picked by a DJ, not by you) streaming on demand model is actually delivering a DPD, which is subject to compulsary license law. Meaning, each song played under a streaming on demand model would rack up 8.5 cents of mech license fees (or a lower negotiated rate). That's each and every time the song is played.

That's why I think the streaming on demand model we are talking about might actually be a one-time DPD delivery to an "online" personal storage locker, and from there you could play it as many times as you want without racking up more fees. At least in theory, that's what MP3.com did (not the BEAM-IT-UP thing, but when they sold a CD).

And about the above paragraph I may be wrong, and you may be absolutely correct they will average it out and then set a monthly fee, but I do think they are going to (actually the SR owner) have to pay a mech fee for each and every time a song is played if it is true streaming on demand. And, a PRO fee, because the PRO's will consider it a public performance.

Hey - I also think there is a button on the RFV player that provides a big clue to something else not discussed in relation to the Virgin thing and JPF. Which is cool

[This message has been edited by Liszt Laughing (edited 03-13-2004).]

Well you know what, after reading more about this, especially section 114 (Copyright Law)where it talks about radio/digital transmissions (and this section is so VERY complicated and things about it are still being decided), I'm not sure what to think. And in that link above, they said the RIAA and HFA came to some sort of agreement on digital mechanical licensing in relation to on-demand streaming (but the RIAA and HFA don't represent everybody). Some of this stuff is still be decided on by the Copyright Office, which was mandated by law to have hearings on this.

So, I say the only way we know for certain is to have someone from Virgin come here and explain the model they are using and explain where all the money goes, after they launch. I still think under any voluntary agreement, streaming on demand involves some per play mech fee, but it may be much less that 8.5 cents per play. And it WILL involve a PRO fee.

As it has been explained to me in theory (not by Virgin, but by someone else involved in this technology who seems to know what they are talking about) the psuedo tethered on demand downloads (i.e. pick any songs you want for your portable played for the length of your subscription) the units will monitor the number of plays for each track. All this info will be compiled for all services (music net, rhapsody, napster etc..) and placed into a big pool to be paid from the overall fund. That fund will come from all the subcription fees. I have no idea the dollars, but it seems that you'll have to have someone representing you (perhaps CDBaby will be that entity for indie artists, though I am not sure about that yet) and they would make sure that the portion their artists got plays were paid fairly and then distributed.

I will say that 8.5 cents per track per listen is not a viable model. If you listened to 3 songs a day for a month, that would be more than what the average subscription service is charging (8-10 dollars). So it has to be a different fee. Just imagine if terrestrial radio had to pay that amount? We'd be talking (if I am doing the math right) $85,000 per song per million listeners... if you had 2 million listeners and you played 12 songs an hour 24/7, that would be 48 million dollars a day in fees. It's absurd. So why put that type of burden on a subscription service, especially when not even a microfraction of that financial payment is made by current radio.

Brian

I agree with you, that is not workable (8.5 cents) as far as streaming/on demand. What Congress envisioned with compulsary law was that a digital phonorecord and a physical phonerecord are one in the same. So delivery of a PERMANANT digital entity (a DPD) that embodies the sound recording and artwork would be the equivalent of a physical recording, and that is what is subject to compulsary law as far as the underlying musical compositions. This is what ITUNES and everyone else is doing right now.

But, from that link above, the Copyright Office seems to be grappling with the request of some factions of the music industry that two other items be considered a DPD 1) Streaming/On Demand Audio 2) Limited Time downloads (they only work for a certain time period, and then you can't listen to them anymore).

As far as item 1), to me that is not what the law says and that's not what Congress invisioned as a DPD. As far as item 2), I'm not sure that law allows for that either, but I'm neutral about that one.

I did wade through section 114 again. Section 106 gives this right:

6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

And then section 114 gives some limitiations of those rights, especially as it applies to radio/digital audio transmissions.

Now, someone can certainly correct me if I'm wrong, but my lay reading of 114 is that it makes it clear that an interactive subscription service (basically - paraphrased - where the user picks what is heard - subject to some limitations) is not subject to the same statutory licensing as a non-interactive web-cast (subscription or otherwise). And an interactive service would not be included in the webcast royality agreements of a few years ago.

That leaves an interactive service (subscription or otherwise) subject to having to obtain license rights with each and every copyright holder independently for the SR, and for the public performance of the underlying compositions (which can be handled by a PRO), and the SR owner (who traditionally handles mech rights) would have to have mech reproduction rights to the underlying compositions, because I can't find anything in any other section, ephemerials, etc, that limits that. An interactive service is creating copy upon digital copy of the underlying musical composition.

Now, I'm totally open to being wrong, that's why I think it would be cool if we could find someone to explain to us the legal workings behind a streaming/on demand service. I think that would be good for songwriters to know.

I don't think the 8.5 cents mech fee would apply at all if the number of plays is being tracked. It is either a purchase or a performance - not both at once.

Tracking plays could be done within the playback device as Brian described and then uploaded to the server the next time it connects. That is how DirecTV does it. Your sat receiver phones home once a month and reports what you bought on PPV that month. (Hackers will probably figure out how to circumvent this, but posession of a hacked iPod would be just as illegal as possesion of a hacked DirecTV authorization card.) If the device doesn't get a chance to "check in" when past your subscription expiration date it would presumably stop playing.

Since it is just performances in that case all payments could be distributed through the PROs which is a good thing because a new mechanism doesn't have to be invented and the PROs are already set up to track all the sub-dollar amounts.

You know, I'd go along with that except why then would the number of plays have to be tracked? If you download a DPD one-time to a device in your home, in a closed stream, then that should be considered just the same as buying a physical CD or a CD single. And then how many times you play it after that is nobody's business. That is the model ITUNES is using now.

If the service downloads, one-time, a DPD on a closed stream, and that DPD only plays for a limited time, the length of a subscription let's say, then it's still nobody's business how many times that DPD is played in your home.

Now, if the service involves delivering a DPD several times, let's say your device only holds so many songs, so sometimes the songs have to be retransmitted back to you during the subscription period, then that is an issue that could be held to mean you've created/distributed another copy of the SR, so 8.5 cents (or a lower negotiated rate) is due. That's some of what the Copyright Office is grappling with. Although, I do think ITUNES and the like have some way of allowing you to backup or otherwise get back a lost file, and that would not be considered a new reproduction.

And to me, true streaming on demand means you are creating and distributing a non-permanent digital copy of the SR each time the song is requested. And again, each play *could* be held to be creating/distributing a new copy of the SR, so 8.5 cents (or a lower negotiated rate) is due for the mechanical reproduction of the underlying composition.

A digital purchase can also be a performance, it just depends on whether the stream is open or closed, and it depends on people's interpretation of it. But section 115 makes clear a digital phonorecord delivery can also be a public performance. Just depends....


[This message has been edited by Liszt Laughing (edited 03-14-2004).]

I just thought of this too, I don't think there is any reason the Copyright Office couldn't set different rates between 1) Streaming/On Demand, 2) Limited Time DPD, and 3) a permanent DPD. So, if they decided the first two were subject to compulsary law like #3, then I think they can set different rates, like a tenth of a cent for #1, 5 cents for #2, and then of course 8.5 for #3. If I remember correctly, the rates for physical CD and a digital CD were at one time different.

Also, I thought of this one too, having the number of plays tracked IS somebody's business if that is what all the parties agreed to as far as licensing and how they are going to get paid for using the SR and underlying PA.

[This message has been edited by Liszt Laughing (edited 03-14-2004).]

...and if the subscriber lets the sub lapse, how does the device 'reconnect' with the service to report the songs ID and number of listens?

If it's a Virgin unit, it's probably a celphone/playback unit (OBTW, ANY delivery which leaves any flavor of copy resident on a playback device IS NOT STREAMING BY DEFINITION, for those of you who are STILL unclear of the concepts and terminology), which will 'phone home' on its own, probably while you're sleeping it off.

If user never hooks the player-only back up to the computer, all tracking data remains unknown, people DON'T GET PAID.

Another issue STILL not addressed: A song gets added to some high-falutin' list. People AUTOMATICALLY HEAR IT (Laskow, Newsweek interview)? Look, even Columbia House gives members the right of refusal before shipping out the 'hype-of-the-month'!

Say the 'filter' sends out a list of 5 songs a day, a manageable block. What if a certain percentage of subs don't have time that day to listen to the block? Does the song get listened to automatically?

And when the sub gets back to the listening thing, what if your song's time has come and gone, and the 'filter' and the listener are on to the next 'big' thing? Did ALL the subs hear your song and the service pay you your pennies? STILL not addressed.

And in the case of 'indie' artists signed to small labels, the SR payment will be subject to standard contract provisions, and the artist will get whatever percentage of that penny set in their label contract. A fraction, maybe one-half cent, maybe.

For SR/PA-holders like JPFs, chances are that IF their product was sufficiently compelling, they'd already BE signed to a label, and if it isn't, some order-of-magnitude-smaller percentage of 10 million subscribers are gonna want to hear it.

Why not just sell your song to the folks who are interested in it in the first place? If they don't know who you are, start sending your song around to internet radio stations that play the style of songs your song fits into? No 'screening' fee, no 'accepting' fee, no 'forwarding' fee, no 'listing' fee. And you can embed your website address into the track metadata, to drive folks to your 'buy page'.

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EdX.iuma.com www.soundclick.com/40LOVE www.soundclick.com/EdX

Another tricky issue with live streaming is that often people don't listen all the way through, especially the first time. I might give a song 15 to 30 seconds before I realize "oops - this wasn't what I was looking for". I know this from looking at the web server reports from my own web site - the streamed byte counts are sometimes less than the file size. (You can derive neat statistics from that, like where in the song do you lose people.)

The download and buy model is a lot easier to understand for all parties concerned, and requires less tracking of expiration dates and play counts, but I think in that case the songwriter is due the 8.5 rate. Unless Congress invents some new lower "digital duplication" rate to help out the music delivery industry at the expense of the songwriter. Sounds like something this Congress would do, but I would support anyone lobbying against it.

this should be some eye-opening reading!

http://www.twice.com/article/CA385544.html?display=News

Excerpt:

XM Details Its Subscriber Growth Results

By Amy Gilroy -- TWICE, 2/23/2004
Sidebars:
XM Q4 Revenue, Subscriber Numbers Soar


WASHINGTON— On the heels of its announcement that it exceeded the 1.5-million subscriber mark earlier this month, XM Satellite Radio held an earnings conference to outline some of the trends in the company's subscriber sales and comment upon rival Sirius Satellite Radio's new deal with EchoStar and RadioShack. (See story on p. 1.)


and from the accompanying sidebar:

The cost to acquire a new subscriber dropped dramatically in the fourth quarter, hitting $125 in the three months, down from $238 in 2002's final period. For the year CPGA reached $137, a 68 percent reduction from 2002, XM noted.

Fourth quarter loss before interest, taxes, depreciation and amortization (EBITDA) edged downward in the period, ended Dec. 31, reaching $95.5 million, from a loss of $97.3 million in the year-ago period. Net loss for the fourth quarter increased to $162.9 million, from $155.9 million in the same three months a year ago.

NOW, XM was the second fastest entertainment product/device/service to reach 1 MILLION units/subs, doing so in 1 year 11 months from market debut, trailing only the DVD player (SpaceDaily, www.spacedaily.com/news/xm-radio-03d.html ).

FASTER THAN: CD players, MP3 players, Radio, Television, DVRs, VCRs, online subscription services (9 YEARS 6 months!!!), cable and satellite TV.

Since satellite radio is the reigning champ untethered alternative to terrestrial radio for seriously motivated listeners, the kind who'll pay 10 bucks a month for select programming; and are unikely to abandon it, AND their hardware investment, for Virgin's or whatever-outfit-tries-on-Laskow's-model's service, WHO ARE THE 10 MILLION SUBS HE FANTASIZES ABOUT? HOW SOON WILL THEY BE DISCOVERED, AND HOW SOON WILL THEY REALIZE THE BENEFIT AND GET ONBOARD?

They're NOT gonna be the first million-and-a-half on XM, and however many more are on Sirius (they don't talk about their numbers)!


More importantly, read the second excerpt, from the sidebar.

Fourth-quarter net loss of ONE-HUNDRED SIXTY-THREE MILLION DOLLARS after three years in business.

Now stop and think a moment: regardless of what they're paying in PRO license fees, all of the higher-ups and key people are taking salaries I won't speculate on, to burn hundreds of millions of dollars of VC funding, getting and cashing GOOD checks, AND NOBODY'S ASKING THEM TO TAKE AND BE HAPPY WITH A PENNY PER ANYTHING!!! How's your checking account feeling this week?

But the only way THEY can EVER hope to turn a profit, i.e. sign and retain enough subs to the point that revenue exceeds expenses, is to CUT TO THE ABSOLUTE MINIMUM their cost for the raw material that attracts people to the service in the first place!

The raw material that YOU, songwriter and artist, DESPITE your work schedules, and family needs, and personal relationships and hardships, CREATE!

The raw material that's so hard to come up with, work out, do well, get right.


Yeah, a penny per listen sounds about right [/sarcasm].

Hard to believe someone who claims to be on the side of just plain songwriters and artists is so anxious to shape everybody's thinking and expectations to their own economic detriment.

Ever tried to raise the price of milk after the cow's out of the barn?


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EdX.iuma.com www.soundclick.com/40LOVE www.soundclick.com/EdX

[This message has been edited by ed323 (edited 03-14-2004).]

All intersesting speculation, but here are some questions I'd really rather see answered.

What can we as JPFers and indie artists do to best utilize this new service for the benefit of our careers?

How do we go about submitting our music for inclusion on these filters?

Will we be able register with multiple filters, such as Taxi, Virgin, and CDBaby?

Is JPF planning to act as an independant filter?

I find these and similar questions of more interest than those about internet law. I'm a musician, not a politician or a lawyer. Of course the laws will affect us, but not as much as the potential of getting in the early stages of something like this. I'm all for using my time and energy to get positioned for inclusion in this unique new business opportunity.

Who has any constructive, concrete ideas as to what we should do to avail ourselves of this venture?

All the Best,
Mike



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Mike Dunbar Music