In the appeal of the CRB's decision, the parties have now filed their papers concerning whether the decision should be "stayed" while the appeal goes on. (Recall that if the court grants a stay, the present system would remain in place during the appeal; if they deny the stay the rates set out by the CRB's decision would come into effect on July 15 even as those rates are being appealed.)
Among other things, the CRB's ruling would impose a $500 minimum annual fee per channel. This would be a heavy burden to internet radio stations that offer multiple channels, and many of those stations have pointed to this provision as particularly damaging. It now appears that RIAA may be signalling some flexibility on this point in their court filing opposing the stay.
SoundExchange opposed the stay, because RIAA wants the new rates to come into effect immediately. But SoundExchange's opposition also said that should the court grant a stay:
...any stay should be limited to the minimum fee provision and should allow pre-existing minimum fee requirements ($500 per channel, capped at $2500 per licensee) to remain in place pending appeal.
This could be very important. It shows that RIAA is afraid of the Internet Radio Equality Act, and it may be a signal that RIAA is willing to be flexible.
While this is encouraging news, it would be far better if the court granted a stay of the entire CRB ruling.
Showing posts with label RIAA. Show all posts
Showing posts with label RIAA. Show all posts
Friday, June 29, 2007
Thursday, June 21, 2007
Department of Justice Opposes Stay
On Monday, the Department of Justice filed papers opposing the stay that DiMA (and others) sought in the DC Circuit. Why is the Department of Justice getting involved in this case?
First a quick recap. As we’ve noted earlier, the decision of the Copyright Royalty Board has been appealed to the United States Court of Appeals for the District of Columbia. Several parties have indicated that they will appeal, but the process will be a slow one. In the meantime, they have asked the DC Circuit to “stay” the CRB’s ruling while the appeal goes on. This would preserve the status quo: internet radio stations would continue to pay the same royalties during the appeal.
The Department of Justice represents the various agencies of the federal government in court. In this case, the Feds are acting as lawyers for the CRB, defending the CRB’s decision. The DOJ will not be the only people to oppose a stay. We can probably expect SoundExchange, an arm of RIAA, to file papers opposing it as well.
The court will probably act relatively quickly. As of today, July 15 is only three and a half weeks away...
First a quick recap. As we’ve noted earlier, the decision of the Copyright Royalty Board has been appealed to the United States Court of Appeals for the District of Columbia. Several parties have indicated that they will appeal, but the process will be a slow one. In the meantime, they have asked the DC Circuit to “stay” the CRB’s ruling while the appeal goes on. This would preserve the status quo: internet radio stations would continue to pay the same royalties during the appeal.
The Department of Justice represents the various agencies of the federal government in court. In this case, the Feds are acting as lawyers for the CRB, defending the CRB’s decision. The DOJ will not be the only people to oppose a stay. We can probably expect SoundExchange, an arm of RIAA, to file papers opposing it as well.
The court will probably act relatively quickly. As of today, July 15 is only three and a half weeks away...
Wednesday, May 2, 2007
Those who do not remember the past are doomed to repeat it
Today we have another post by Roy Smith - co-founder of Turtle Beach Systems. Thanks Roy!
The battle of record industry versus their customers is eerily similar to a battle that was fought and lost before many of today’s music lovers were born. The issues were quite similar and the results of that battle shed light on the likely outcome of this one.
Back in the early days of the PC in the early 1980’s, software was a very new concept. There had never been a product that could be replicated at will by the customer. And replicate they did: “Oh, you want a copy of WordStar? Here you go.”
Like RIAA in the '90’s, the software developers got legislation passed to identify and protect their intellectual property rights, but in practice these new laws were almost unenforceable. Most developers of high dollar value applications then moved to an early form of DRM called “copy protection”.
Just like DRM for music today, copy protection used a variety of crafty methods to prevent users from making multiple copies of programs. Some systems required a hardware key that had to be installed in the computer, others used specially prepared diskettes with known errors that disk copy programs could not duplicate.
The hacker community responded rather quickly. (Sound familiar?) Patches soon appeared online to unlock all popular copy protected applications.
Unfortunately, copy protection had two unintended effects on the legal purchasers of software. The first was that many legal users encountered problems with their legal copies because of the copy protection and publishers were forced to spend great amounts of effort to make their product work through the DRM issues.
The second unintended effect was that legal customers developed an adversarial attitude because they were indirectly being accused of being thieves. Even when it worked, the DRM was still an annoyance that didn’t provide value.
In the end, the honest people who were not likely to copy and distribute the software were inconvenienced and angry about it, and the dishonest people who were inclined to copy the software were still able to do so. (Again, sound familiar?)
Eventually the software industry abandoned copy protection in favor of installation keys and online registration ala Microsoft's genuine Windows testing and those 30 digit install codes.
The PC Software industry didn't fall apart when it dropped copy protection. As we all know, it has flourished.
Yes, there is piracy. Every business has theft, fraud, shrinkage, and bad debts. The point is that DRM is one solution of many for these problems. Will the music industry learn anything from the battles lost by the software industry of the '80’s? Time will tell.
The battle of record industry versus their customers is eerily similar to a battle that was fought and lost before many of today’s music lovers were born. The issues were quite similar and the results of that battle shed light on the likely outcome of this one.
Back in the early days of the PC in the early 1980’s, software was a very new concept. There had never been a product that could be replicated at will by the customer. And replicate they did: “Oh, you want a copy of WordStar? Here you go.”
Like RIAA in the '90’s, the software developers got legislation passed to identify and protect their intellectual property rights, but in practice these new laws were almost unenforceable. Most developers of high dollar value applications then moved to an early form of DRM called “copy protection”.
Just like DRM for music today, copy protection used a variety of crafty methods to prevent users from making multiple copies of programs. Some systems required a hardware key that had to be installed in the computer, others used specially prepared diskettes with known errors that disk copy programs could not duplicate.
The hacker community responded rather quickly. (Sound familiar?) Patches soon appeared online to unlock all popular copy protected applications.
Unfortunately, copy protection had two unintended effects on the legal purchasers of software. The first was that many legal users encountered problems with their legal copies because of the copy protection and publishers were forced to spend great amounts of effort to make their product work through the DRM issues.
The second unintended effect was that legal customers developed an adversarial attitude because they were indirectly being accused of being thieves. Even when it worked, the DRM was still an annoyance that didn’t provide value.
In the end, the honest people who were not likely to copy and distribute the software were inconvenienced and angry about it, and the dishonest people who were inclined to copy the software were still able to do so. (Again, sound familiar?)
Eventually the software industry abandoned copy protection in favor of installation keys and online registration ala Microsoft's genuine Windows testing and those 30 digit install codes.
The PC Software industry didn't fall apart when it dropped copy protection. As we all know, it has flourished.
Yes, there is piracy. Every business has theft, fraud, shrinkage, and bad debts. The point is that DRM is one solution of many for these problems. Will the music industry learn anything from the battles lost by the software industry of the '80’s? Time will tell.
Friday, January 12, 2007
What’s That Sound? THWAP goes the long tail! – Part II
How “Sampling” Will Save RIAA
Sampling is an industry term for users listening to new music in order to find music they like. Broadcast radio is probably still the primary means of sampling music for most people. However, with people starting to express more varied tastes traditional radio formats are less and less effective because they try to cater to the broadest set of tastes and ignore niche tastes. So, to summarize so far, RIAA makes less money off of each individual artist and therefore spending more on any one artist is a bad investment. On the other hand, there is no effective way for them to spend less but expect the good artists to organically rise to the top and spark more sales. The answer, of course, is better sampling.
The Economics of Sampling
As I’ve said before, I have two main beliefs about why RIAA is making less money these days: 1) the product (music) is relatively less compelling than DVDs and games as each passing day goes by; 2) people have fixed budgets and RIAA is losing share to other markets.
You might be thinking that sampling doesn’t make music more compelling and therefore it can’t alter the purchasing choices of individuals – and I think that’s right. However, sampling does have two incredibly powerful economic aspects in its favor:
1) it reduces marketing costs dramatically thereby increasing profit;
2) it brings a new set of pocket books into play – advertisers!
The first point about reducing costs is self-explanatory so let’s get right into the advertising opportunity. You may not realize this but every time you listen to a song on the radio, RIAA gets paid. The more you listen the more money they make. Stated differently, the more you sample the more money they make. Who pays for all of this? Every other industry except the music industry – that’s who! While advertisers try and reach you to sell everything from sneakers to bubble gum, RIAA gets a slice of the pie when you sample music off of broadcast sources. Nice, right?
Listen And Love It
I’m sure you’ve figured this out by now, but we view BroadClip as the ultimate sampling tool. We view these changes as the natural progression of the radio market to match what’s happening in other markets. Fifteen years ago there was only one way marketing – print ads, broadcast TV, billboards etc.. Today we live in an interactive age of clickthroughs and targeting. That trend hasn’t caught up to radio yet.
When you time-shift/place-shift radio that you like, you discover new music in the process. Everybody wins – you get to listen to targeted radio without spending countless hours sifting through stuff you won’t like, RIAA makes more money, and internet radio stations have a viable business model because we can clear ad dollars to them (think along the lines of what Google does for bloggers and other content sites). Now that’s free love!
Sampling is an industry term for users listening to new music in order to find music they like. Broadcast radio is probably still the primary means of sampling music for most people. However, with people starting to express more varied tastes traditional radio formats are less and less effective because they try to cater to the broadest set of tastes and ignore niche tastes. So, to summarize so far, RIAA makes less money off of each individual artist and therefore spending more on any one artist is a bad investment. On the other hand, there is no effective way for them to spend less but expect the good artists to organically rise to the top and spark more sales. The answer, of course, is better sampling.
The Economics of Sampling
As I’ve said before, I have two main beliefs about why RIAA is making less money these days: 1) the product (music) is relatively less compelling than DVDs and games as each passing day goes by; 2) people have fixed budgets and RIAA is losing share to other markets.
You might be thinking that sampling doesn’t make music more compelling and therefore it can’t alter the purchasing choices of individuals – and I think that’s right. However, sampling does have two incredibly powerful economic aspects in its favor:
1) it reduces marketing costs dramatically thereby increasing profit;
2) it brings a new set of pocket books into play – advertisers!
The first point about reducing costs is self-explanatory so let’s get right into the advertising opportunity. You may not realize this but every time you listen to a song on the radio, RIAA gets paid. The more you listen the more money they make. Stated differently, the more you sample the more money they make. Who pays for all of this? Every other industry except the music industry – that’s who! While advertisers try and reach you to sell everything from sneakers to bubble gum, RIAA gets a slice of the pie when you sample music off of broadcast sources. Nice, right?
Listen And Love It
I’m sure you’ve figured this out by now, but we view BroadClip as the ultimate sampling tool. We view these changes as the natural progression of the radio market to match what’s happening in other markets. Fifteen years ago there was only one way marketing – print ads, broadcast TV, billboards etc.. Today we live in an interactive age of clickthroughs and targeting. That trend hasn’t caught up to radio yet.
When you time-shift/place-shift radio that you like, you discover new music in the process. Everybody wins – you get to listen to targeted radio without spending countless hours sifting through stuff you won’t like, RIAA makes more money, and internet radio stations have a viable business model because we can clear ad dollars to them (think along the lines of what Google does for bloggers and other content sites). Now that’s free love!
Wednesday, January 10, 2007
What’s That Sound? THWAP goes the long tail! – Part I
Nielsen’s numbers for 2006 music sales are out and to quote the article that summarized the report RIAA, “can’t stem the bleeding.” Given my last post I don’t find that all too interesting. What I do find interesting is the shift in the kinds of music being sold. What seems to be happening is that the big artists are selling less and small artists are selling more.
Hindsight is 80/20
For a long time in the video-on-demand industry I tried to convince people that the vaunted “80/20” rule of retail – that 80% of the sales come from only 20% of the SKUs - was an artifact of limited inventory selection. You see, my first job in that industry was to figure out how to maximize the effective use of digital storage. I think the facts are starting to bear out my earlier argument. Most people in the industry believed that the 80/20 rule would hold true when users had tens of thousands of titles to choose from. I don’t think I had any particularly bright insight since in my eyes Amazon had already disproved the 80/20 myth, but, as they say, hindsight is ….
It’s Catch 22, All Over Again
If you read my blog regularly, the exercise of “putting on your RIAA” cap is getting a little worn so today I’ll just cut to the chase. If you’re a label trying to figure out whether to invest marketing dollars into your favorite talent, you’ve got a real catch-22 on your hands. 1) Invest more dollars and possibly not get as much money back because the stars don’t sell as many copies; or, 2) Spread out your money on more artists with the knowledge that you may not be spending enough to move the needle of public opinion on any one artist.
Unfortunately for the music industry the option of “don’t spend at all” doesn’t make sense because “sampling” hasn’t found a better form of expression. That last sentence might have sounded like gobbletygook and I think it deserves its own post – stay tuned for Part II.
Hindsight is 80/20
For a long time in the video-on-demand industry I tried to convince people that the vaunted “80/20” rule of retail – that 80% of the sales come from only 20% of the SKUs - was an artifact of limited inventory selection. You see, my first job in that industry was to figure out how to maximize the effective use of digital storage. I think the facts are starting to bear out my earlier argument. Most people in the industry believed that the 80/20 rule would hold true when users had tens of thousands of titles to choose from. I don’t think I had any particularly bright insight since in my eyes Amazon had already disproved the 80/20 myth, but, as they say, hindsight is ….
It’s Catch 22, All Over Again
If you read my blog regularly, the exercise of “putting on your RIAA” cap is getting a little worn so today I’ll just cut to the chase. If you’re a label trying to figure out whether to invest marketing dollars into your favorite talent, you’ve got a real catch-22 on your hands. 1) Invest more dollars and possibly not get as much money back because the stars don’t sell as many copies; or, 2) Spread out your money on more artists with the knowledge that you may not be spending enough to move the needle of public opinion on any one artist.
Unfortunately for the music industry the option of “don’t spend at all” doesn’t make sense because “sampling” hasn’t found a better form of expression. That last sentence might have sounded like gobbletygook and I think it deserves its own post – stay tuned for Part II.
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