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File Sharing Is Down? Then No More Blaming The Internet For The Industry's Problems
March 25, 2011
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"The Internet is the first thing that humanity has built that humanity doesn't understand, the largest experiment in anarchy that we have ever had."
-- Eric SchmidtSince last October, when peer-to-peer file-sharing service LimeWire shuttered its service after a federal court found the company liable for copyright infringement, the number of U.S. file-swappers has dropped "precipitously," according to a report from market research firm NPD Group. (You can find the article about that report here: http://tiny.cc/6g0pg )
The report states, "the percentage of the U.S. Internet population using a P2P file-sharing service to download music has fallen from a high of 16% in the fourth quarter (Q4) of 2007 to just 9% in Q4 2010 when LimeWire ceased its file-sharing operations. The average number of music files downloaded from P2P networks also declined from 35 tracks per person in Q4 2007 to just 18 tracks in Q4 2010."
This is indeed good news for the music industry if all the research is accurate, right?
My assumption is the numbers just don't fit into what's really happening in reality.
"If we knew what it was we were doing, it would not be called research, would it?" -- Albert Einstein
First: LimeWire, as big as it was, was not the only P2P file-sharing site/service in existence at the time of its being shuttered. The report states " LimeWire was used by 56% of those using P2P services to download music in Q3 2010, but fell to just 32% in Q4 2010." But, was that 56% using LimeWire only using LimeWire? Dubious. Of course the number of users fell precipitously as those downloading music started reading about LimeWire's problems. But does anyone believe that the 24% of the people not using LimeWire in Q4 2010 simply stopped downloading?
Second: Darknets. I've talked about darknets previously in the newsletter, but for those of not familiar with the term, a darknet as defined on Wikipedi : "A darknet refers to any one type of closed, private group of people communicating; however, since 2002, the term has evolved to more specifically refer to file sharing networks in general, whether that network is private or readily accessible to the public. The phrase "the darknet" is used to refer collectively to all covert communication networks." Translation: These "dark" nets fly under the detection of online radar.
Needless to say, if you could add up all the darknets on college campuses, in high schools, in businesses, all over the globe, you'd have a ton of people doing exactly what they were doing for years on Napster, LimeWire, WinMx, etc. Of course, there is NO way to ever detect just how many people are utilizing darknets, so any report, such as the one NPD has just released, cannot factor in that data because that data cannot be retrieved.
But, let's assume for a minute that the NPD report does accurately reflect a real trend, and less people are stealing music online. If this is the case, are we seeing a resurgence in CD sales? Nope. Are we seeing a corresponding rise in the sales of digital music online? Nope.
So then based on the report, we could assume that: a) less people are stealing music; and b) less people are buying music.
I am of the opinion that less people might be buying less music, but people are not necessarily stealing less.
I think the online theft of music (coupled with counterfeiting around the world) is as rampant as ever. If you have children who spend a few hours each night on their computers in their bedrooms with the doors shut, ask them what they think. They probably won't admit to you they're stealing music, but ask them about trading MP3s with their friends, or burning copies of CDs and sharing those with friends.
But if the music industry believes the research and that illegal downloading has decreased, they can stop blaming the Internet for all their problems. Maybe they actually believe they can shutter all the websites around the world that do what LimeWire once did.
I'm betting those websites and all the darknets will be there a lot longer than the RIAA, and a whole lot of labels. That's a hard pill for many to swallow, but as Bruce Hornsby sang, 'That's Just The Way it Is."
As for the music, it will survive.
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THE 'A-SIDE' - TRACK 2
IF YOU HAVEN'T HEARD OF REBECCA BLACK YET...
I've talked many times in the newsletter how the Internet has enabled artists to expose themselves to a global audience without the help of a major label. Rebecca Black is the latest example.
Rebecca's viral hit "Friday" has been viewed over 34 million times (34 million!) on YouTube and the single has been among the Top 40 best selling tracks on iTunes for nearly a week. "Friday" has become a durable fluke hit and this week Rebecca was even a guest on 'The Tonight Show.'
Read more here: http://tiny.cc/p20z3
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THE 'A-SIDE' - TRACK 3
JUST BECAUSE YOU CAN SELL RECORDS, IT DOESN'T MEAN YOU'RE A CONCERT DRAW
According to the New York Post, ticket sales for Rihanna's Loud tour have been so poor that she is being advised to cancel her dates in the United States.
As of now, the tour is scheduled to begin as planned on June 4th in Baltimore, but it is likely that the scheduled dates will be downgraded to theaters and other smaller venues. The singer has faced problems filling arenas in the past -- dates in Phoenix, Atlanta, Denver, Dallas and Indianapolis on her 2010 were canceled due to low sales.
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THE 'A-SIDE' - TRACK 4
APPLE GROWS EVEN BIGGER
Forrester CEO George Colony tells Bloomberg, citing Apple's 52% sales growth last year, "They'll be bigger than IBM next year, and they'll be bigger than HP the year after that." At the current rates "they're going to be a $200 billion revenue company." Apple sold nearly 15 million iPads in its debut year, and over 90 million iPhones over the past four years. According to analysts surveyed by Bloomberg, Apple's sales may climb 54% to $100.3 billion this fiscal year, which ends in September. Growth, however, may slow to 18% the following year.
Read more here: http://tiny.cc/9ki84
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THE 'A-SIDE' - TRACK 5
AND ANOTHER PROBLEM WITH ONLINE SUBSCRIPTIONS FOR THOSE WHO PUT UP A "PAYWALL"
As The New York Times prepares to launch its metered paywall, the Web is abuzz with alternative for subscription-averse readers. Referring to code that will block cart blanche access to NYTimes.com, Nieman Journalism Lab writes: "Unfortunately for the Times, there are plenty of popular (or popular-among-nerds) tools that tactically remove little bits of CSS and Javascript."
Read more here: http://tiny.cc/5llwq
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THE 'A-SIDE' - TRACK 6
AND ONCE AGAIN THOSE FALLING DVD SALES CAUSE STUDIOS TO TRY SOMETHING ELSE
Shortening the pay-for-view window is already in the works at many studios as they look to generate replacement revenues from falling DVD sales.
Sony thinks maybe offering cheaper download prices on its films will possibly help them recapture some of those revenues.
Read more here: http://tiny.cc/j07o6
And Now For Some News ...
Indie Band Sick Of Sarah Tops 1 Million Free Downloads
TORRENT FREAKWhile the major record labels are doing everything in their power to fight the illicit distribution of "their" music on BitTorrent sites, several indie labels and artists are choosing a different path.
With help from BitTorrent, indie band Sick of Sarah have now joined a seemingly exclusive club of artists whose albums have been downloaded more than a million times. In the process, the girls also set a new record for the most-seeded torrent ever.
Read more about it by clicking here.
Streaming Music Explosion On The Way
CNETAccording to data compiled by ABI Research, music-streaming services are set for rapid expansion in the coming half-decade, and they have mobile phones to thank for it. By the end of this year, ABI said, subscribers to paid music services who access them from a mobile phone will number about 5.9 million worldwide, and by 2016, that figure will grow to more than 161 million subscribers.
Read more about it by clicking here.
Sound Exchange Pays Out $252 Million In Digital Royalties In 2010
SOUND EXCHANGERoyalty payments to artists and copyright holders from a variety of digital streaming services reached $252 million in 2010. The year-end total surpasses any previous year's distribution, and brings SoundExchange's overall distributions during its first decade to more than $600 million. SoundExchange collects these royalties from webcasting, satellite radio, television music channels and similar streaming platforms.
Read more about it by clicking here.
The Supreme Court Won't Hear Eminem Royalty Case
COURTHOUSE NEWS SERVICEEminem's record label failed to convince the Supreme Court to review a ruling that granted producers affiliated with the rapper significantly higher royalties on songs and albums downloaded from Apple's iTunes store.
The ruling could benefit older artists who have been getting a fraction of download income based on contracts they entered long before current technology.
Read more about it by clicking here.
What Do HBO And Blockbuster Video Have In Common?
VIDEONUZE.COMAn interesting analysis of the news that Netflix has confirmed its deal to distribute the new TV series "House of Cards." While most folks were asking, "Could Netflix be the next HBO?" Video Nuse's Will Richmond asked instead, "Could HBO be the next BLOCKBUSTER?"-- meaning, could HBO become increasingly irrelevant in the wake of competition from Netflix, as Blockbuster has?
Richmond thinks the answer to that question is "yes." "Tops on the list of similarities [between HBO and Blockbuster] are distribution and how changing technology can affect entrenched ways of doing business," Richmond writes.
Read more about it by clicking here.
It's Serious: Howard Stern Sues Sirius
WALL STREET JOURNALHoward has always had a problem with his bosses. If you've seen his film "Private Parts," you know about all those battles he fought in the past. Now Howard's production company is suing the satellite radio company Howard works for, Sirius.
Read more about it by clicking here.
SOLO VEDDER:
Eddie Vedder's second solo album, "Ukulele Songs," and a live concert film titled Water on the Road will both be released on May 31st.
CITI SEEKS SUITORS:
Citigroup, which took over control of major record label EMI after its private equity firm owner Terra Firma fell behind on loan repayments, is quietly soliciting bidders for the label group, according to the New York Post.
WARNERS BIDS:
Private equity firm Tamares has submitted a bid for the whole of major record label Warner Music Group, the Financial Times reported.
ELTON & LEON CONTEST ON VEVO:
Elton John and Leon Russell have partnered with Vevo for a contest in which fans are invited to submit their own music video for the duo's new single, "Hey Ahab." Fans will be provided with footage of the two performing the song, as well as high resolution images and the audio track for the song.
MAD MEN WILL COME BACK:
AMC, Lionsgate TV and series creator Matt Weiner are close to a deal that would carry 'MAD MEN' through its sixth season.
AT&T BUYS T-MOBILE:
AT&T has announced that it will acquire fellow mobile network operator T-Mobile USA from parent company Deutsche Telekom, in a deal valued at $39 billion.
BUT VERIZON STILL THE BEST:
Among U.S. wireless carriers, Verizon boasts the fastest and most consistent 4G network coverage, according to a report from mobile testing firm RootMetrics.
ANOTHER LEAK:
David Bowie's "Toy," an album that was originally intended to be released in 2001, has leaked online. A high-quality rip of the full 14-track record surfaced on bit torrent sites on Sunday.
BIGGER IS BETTER:
When it comes to smartphone screens, bigger is better from consumers' standpoint, a new study finds. Mobile users are willing to give up extra room in their pockets and handbags for a better media experience on their handsets, according to market research firm NPD Group.
FREE INDIE FILMS ONLINE:
Film distributor Screen Media Ventures on Monday announced the launch of Popcornflix.com, a site that will offer free, ad-supported streaming of full-length independent feature films.
MUZAK SOLD:
Mood Media, a provider of in-store music and media systems, announced on Thursday that it will acquire Muzak for $345 million. Whether or not this means better "elevator music" is unknown.
PASSING:
Bob Macucci, the discoverer of Frankie Avalon and Fabian, and the inspiration for the 1980 film 'The Idolmaker', died on March 9 in Ontario, CA. He was 81.
PASSING:
Ferlin Husky, the first major Country star to come out of the Bakersfield scene whose 1956 hit "Gone" became the first Country single of the Nashville Sound era to cross over to the pop Top 10, died last Thursday at his home in Hendersonville, Tenn. He was 85.
The Music Industry Past, Present & Future, And The Internet I answer questions on EconTalk
I did an interview about the industry and the Internet at EconTalk with host Russ Roberts. Russ is also a professor of economics at George Mason University, blogs at Cafe Hayek, and has written three novels that teach economics. He's also the co-creator of the Keynes-Hayek rap video. (And if your understanding of the economic meltdown that occurred needs to be enlightened, this video will do it)
In the interview we talk about the evolution of the music industry, the impact of the digital revolution, and I give my reasons for believing in the virtues and potential of the Internet in enhancing the music industry. I point out, as I have many times here in the newsletter, that the internet allows numerous artists to make money from their music and it can enhance revenues from live performances by expanding an artist's base. We also discuss the challenges facing record companies and I suggest that the full potential of the Internet as a distribution channel has yet to be fully exploited. There's a lot of ground covered, but based on the comments already posted of those who have tuned in, they've enjoyed it.
Read more about it by clicking here.
Quotes of the week
"It's every band's right, you shouldn't have to do f***ing 'Glee.' Dude, maybe not everyone loves 'Glee.' Me included. I watched 10 minutes and it wasn't my thing ... The guy who created 'Glee' is so offended that we're not, like, begging to be on his f***ing show. F**k that guy for thinking anybody and everybody should want to do 'Glee'."
-- Foo Fighters' Dave Grohl, 42, in The Hollywood Reporter."I'm actually really obsessed with Bruce Springsteen. My father used to play a lot of Bruce Springsteen records when I was a kid, and he was blue collar America. And in a way, I related to Bruce because I watched my father, a blue collar American citizen, relate to Bruce and I think that in a social way, my fans feel blue collar. They feel like they're the underdogs that will someday be the winners. And I took the influence of Bruce on my father in my life to create this album."
-- Lady GaGa, in an interview at Google HQs for the 'Musicians@Google' series"It's ridiculous. I remember watching CNN once, and on the bottom ticker it said something like, 'Beyoncé no longer wants to be called Bootylicious.'"
-- Scream 4's Neve Campbell, who can think of more weighty issues that deserve news coverage, to Health magazine. Yup, that's where the media is at."The woman that did my hair butchered it. i hate it. thanks for pointing out how much you all hate it, too. helpful."
-- Pink, Tweeting back to her followers who dissed her new haircut"As far as I can see, the appeal of Katy Perry is a pair of tits."
-- Human League lead singer Philip Oakey on Katy Perry"It's like the one time on earth I'm like, 'Thank god Charlie Sheen exists.'"
-- Pete Wentz, grateful for the media storm that overshadowed his split from wife Ashlee Simpson, on Ryan Seacrest's KIIS-FM morning show
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Exhausted Studio Has Done All It Can In Terms Of Building Excitement For 'The Lincoln Lawyer'
LOS ANGELES-"Profoundly fatigued" executives at Lionsgate Films announced Thursday that they are completely out of ideas in terms of how to promote the Matthew McConaughey legal thriller The Lincoln Lawyer, saying they have been working around the clock for the past two months trying to build enthusiasm for the film. "Between fighting to get William H. Macy on Kimmel, booking a CNN.com live chat with Marisa Tomei, and making sure every highway billboard, bus stop, and building has a poster of Mathew McConaughey sitting on the hood of that goddamn Lincoln, we've simply reached a point where people are either going to see The Lincoln Lawyer or they're not," said Lionsgate executive vice president David Spitz, who hasn't seen his wife in nearly three weeks.
Read the rest here and laugh: Click Here.
The Blogs
Check out Jerry Del Colliano's (the founder of INSIDE RADIO) daily blog, by clicking here: http://www.insidemusicmedia.blogspot.comWebsite
Check out attorney Ray Beckerman's website at: http://recordingindustryvspeople.blogspot.com where he prints news about the RIAA's ongoing activities
Smart Marketing Consulting Services
Smart Marketing Consulting Services has been in business sixteen years, and consults clients in the music, entertainment, attraction, media, and technology industry on branding, marketing, online exploitation, maximizing new media, and more.
"And the beat goes on, the beat goes on ... drums keep poundin' rhythm to the brain."
"Work is life, you know, and without it, there's nothing but fear and insecurity." -- John Lennon
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