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They are also being sued by all the major record labels in the US in a case that has been running for two or three years now. Their key defence is “substantially non-infringing uses” ie: there are a lot of really cool things that you can do with our application that are entirely legal and that, gosh, we never thought anyone would use it for filesharing in an unauthorised way that might infringe someone else’s copyright. Oh and by the way – we have absolutely no idea what goes across our client – we simply make the software and hope people will pay us money for the upgrade to our super Pro version – but we really have no idea what people use us for.
Sadly, disingenuous is a word that springs to mind.
But I’m not really interested in giving them a hard time. There are plenty of lawyers paid by dinosaurs out there to do that. After all if it wasn’t them it would be someone else – and they didn’t invent the gnutella network – someone else did that – they’ve just given it a reason to live. The key question is really, having established a user base of 50 million, and having a lawsuit that you would have thought they ought to be able to settle soon, what kind of value-creation can be generated here going forward? How do we avoid a repetition of the wasted experience and potential that was Napster?
In other words, never mind if they’ve been naughty boys (and girls but, actually, mostly it seems boys) in the past, is there anything here of value that can be preserved, learned, expanded upon or taken seriously from a business and creative perspective?
So for the moment, as far asLimewire is concerned, the future, based on my interview with Nathan, would seem sadly to not hold much of value for their experiment. The main problem seems to be that the lawsuit prevents them from either admitting much or developing more interesting features. But they do have about 75 developers so may be they are beavering away as we speak inventing the future in an ingenious fashion. We can only hope so.
Because while they can talk creatively and constructively about contextual advertising and recommendations and discovery, the reality is that they can’t currently be seen to offer either since they profess to have no idea what’s going on across their application or the network is attaches too. Never mind the fact that Eric Garland’s Big Champagne has been monitoring and analysing the flow quite successfully for several years now.
The irony of the current parallel engagements of the UK ISPs with both the film and TV industries and the music industries is that their conversations are coming from completely different directions. The ISPs are running to the broadcasters and complaining about the BBC’s iPlayer and the imminent Kangaroo player which will have ITV and Channel 4 content on it as well. The complaint is very clear – you are soaking up all our bandwidth and gaining revenue at our expense. In the case of the BBC – the argument is uniquely British – you are fulfilling your Public Service Charter by reaching more people in the community at the expense of commercial service providers who are having to “subsidise” the additional bandwidth usages. In the case of the commercial broadcasters, the argument could be even simpler, but equally difficult to resolve: you are raising ad revenue through programs transmitted not on your broadcast network but on our broadband network – we want a piece of that.
In the case of the music companies the argument is the exact opposite. The music folk are going to the ISPs and saying – you are making money out of our content. All this p2p activity on your networks is illegal and it’s not yielding us rights owners a penny, while you continue to compete with each other on better bandwidth for your buck packages. We want some of your money.
Seems to me, given the size and health of the respective industry sectors and the general balance of power in the cultural stakes, that the music companies might be a lot better served trying to persuade the p2p folk to go legal and share the ad revenues accordingly – or to try to persuade the ISPs that only legal, ad revenue or subscription revenue bearing schemes should be allowed on their networks and illegal p2p should be closed down – and then negotiating for the right splits.
That would of course require that the music companies be prepared to license a few services to show the ISPs that they mean business. At the moment, they seem very concerned about doing that. Let’s hope that the majors don’t go try to down the usual control and command route and offer some home-brewed service of their own, but act on some of their words and collaborate with some of the new businesses out there that might just add value to the whole sector – given the right licensing terms.
Perhaps for the first time, the Music industry could be unified enough and easy enough to deal with so that it might make common cause with film and tv – rather than lagging behind them in the commercial stakes. But even so, it will need to back some players – wether they be last.fm or playlouder in the UK – to be the added value providers on top of the network capabilities of the ISPs. That means new players in a new value-chain and margins that might be not end up being all that different from the old distributor and retail cuts…
There seems to be a whiff of optimism in the air, a little hint that somehow progress is being made. Is it in the effort to bring all the music industry’s constituent parts under the single banner of British Music Rights? Is it in the coy first blushes of a dalliance between the recorded music companies and UK Internet Service Providers? Is it in the notion that new models and new experimentation might just yield meaningful financial returns?
When I read back some of my earlier callings for radical change and the appealling but somewhat simplistic view of technology being 100% disruptive of past models, they seem a little naive in the light of what may be beginning to emerge.
A new pluralism? A multivalency of co-existence? Certainly no-one feels comfortable enough in the shoes they’re wearing today in the digital media business as a whole to believe that ongoing change will not be the norm for several years to come.
But, there seems to be a suggestion of a new springyness in the steps of those companies who are creating some of these many new ways of doing music-business. The persistence of companies like Last.FM or their clone IMeem, the steadfast promotional/transactional evolution of companies like Seven Digital into brand relationship building linking artists and products, the quiet persistence of Playlouder in its music/internet service provider model, chasing the monetising of p2p. All of these are exploring and surviving. It is really hard work to do this. The level of commitment and passion involved is pretty high. And the kicker of the occasional big-cash blip, such as Last.FM enjoyed, certainly adds a frisson to the task, but it doesn’t make it any easier.
Of course, several degrees of murkiness do continue to cloud our little enlightenments.
Even as we all started to feel that the live scene might just be sustaining everything, major rows at Live Nation between Michael Kohl and his aptly named colleague Michael Rapino – which seem to have ended with Kohl’s departure albeit glossed over – would suggest that there is no simple cohesive view of the world going forward in that sector either.
Michael Kohl of course is the doyen of the finely sliced IP right. It was he, in the early nineties with the Rolling Stones, who devised the most sophisticated, regionally segmented, windowed parcelling-out of broadcast, cable, satellite TV, radio, streaming and downloading rights for the Stones’ infamously spectacular tours. And for the Stones, even then, album sales meant very little compared to the value of promotion and marketing that Kohl could “persuade” the label to provide which in turn clearly supported the tour.
Who knows what caused this latest rift, it’s as likely to be personality clash as much as divergence of business strategy. But the notion that, aside from publishing, performance and licensing revenues, ticket sales alone should be an artist’s primary source of revenue still seems a diminished result whichever way you look at it. None of us, it seems, is simply prepared to give up on the value of a recording and walk away from it completely.
This is how LiveNation presented the picture to GoldmanSachs earlier this year:
It’s a great multivalent graphic – but just a tad curious when you come to examine it. Broadcasting appears to have replaced publishing and there’s no mention of the internet at all although digital is a huge part of their business. I wonder when the THEN was and when the NOW is supposed to be?
I had the good fortune earlier this week to chair a public panel of some amazing expertise on the occasion of the Music Publisher’s Association’s Annual General Meeting. Gathered together were Kip Meek of Ingenious Consulting (previously at OfCom and now of the Broadband Stakerholders Group), Conservative MP and media specialist John Whittingdale, Spencer Hyman of Last.FM, Andrew Connell of Nokia as well as Andy Heath – the newly elected chair of British Music Rights and Gary Maclarnan who manages Mr Scruff. Joining us as experts were also Will Page Chief Economist of the MCPS, Andrew Orlovski Editor at Large of the Register and Paul Sanders – philosopher in chief of Playlouder, Consolidated Independent and State51. An august and impressive crew to the last. And it was no coincidence, dare I say more, that Andrew Orlovski’s intriguing article on music industry discussions with the ISPs appeared only two days after this illustrious event?
But none of them was prepared to say the CD is dead completely or that it will ever die. I think that is not collective blindness to technology’s inevitable disruptive power, but a much more sophisticated understanding of how complex our new world is and how pluralistic the models are going to be.
And despite the optimism, there was much more divergence of opinion about how rapidly ISPs and network providers might find common cause with the media and content companies. Kip Meek seemed to suggest that the issues and concerns that the broadband providers have with the broadcasters and film industry are so much more severe than anything that they have to deal with in the music sector (because of the sheer size of film and video files), that the debate will really focus there. As the BBC’s IPlayer mutates into the imminent Kangaroo player – the issues of who pays for bandwidth and how content gets monetised will fly in a very different direction. The extent to which the music folk think a tax on the ISPs fits in with the broadcasters’ ad revenue model remains to be seen. To me, they certainly look like very different directions, but perhaps in one scenario, simple ad-revenue sharing is not completely unattractive. But it was interesting to note how keen both Last.FM and Nokia seem to be on subscription services which so far consumers have consistently ranked as their least favourite option.
The convergence of focus on ISPs is being driven by television in the UK and what we do here may or may not prove a model for other parts of the world. One thing that is clear is that if it is to compete to be heard and to have a place at the table with the Broadband community, the music industry needs to be more articulate, more subtle and flexible, and more coherent than it has ever managed to be before.
As Andy Heath tries to pull it all together here under the British Music Rights banner, his challenges look steep but the prize looks impressive.