November 3, 2003, 3:40 PM PT
(Reuters) Even as entertainment companies remain locked in legal battles against file-sharing services, some are quietly experimenting with ways to use the networks to their advantage.
One company, called BigChampagne, is tracking music downloads for radio giant Clear Channel. Another, Jun Group, is deliberately releasing music to Web file sharers in order to generate buzz.
Jun Group’s Mitchell Reichgut, a former advertising executive, said his service provides record labels with the means to transform their decades-old model for selling music.
“Basically, the labels have a choice. They can fight and continue losing money or try to tweak this 100-year-old model and get immediate results for artists, consumers and sponsors,” Reichgut said.
Jun Group recently reached agreements with a songwriter, a beverage company and a TV network–entities that would normally be very careful to protect their products–to release their content onto peer-to-peer networks.
BigChampagne also tracks song-swapping networks such as Kazaa and Morpheus for record labels, which in turn use the data to persuade radio stations to play their songs.
Tracking downloading activity can predict a hit before a song gets radio airplay. If a particular song is heavily downloaded, a record label could use that as a selling point to ask radio stations to put the song in a heavier rotation.
“At any particular moment, we’re working with most of the labels. This is an industry that relies on immediate data on consumer reaction,” said Eric Garland, BigChampagne’s chief executive officer.
Label executives say BigChampagne provides both a gauge of consumer tastes and an indication of piracy trends.
“We’re definitely using it as a tool. It’s just part of a bigger trend of the labels using real data to figure out marketing plans–as opposed to radio charts that are not tied directly to consumer information,” said Jeremy Welt, head of new media at Maverick Records, a Time Warner label.
Undercutting the legal battle
Many labels are hesitant to admit that they are talking with Jun Group or using BigChampagne, due to the industry’s antipiracy fight. The industry’s argument in court battles against file sharing hinges in large part on the argument that file-sharing networks serve no purpose other than to foster copyright infringement.
Record labels’ use of file-sharing networks for market research or promotion purposes could undercut that legal claim.
“It’s remarkable, the disparity between the labels’ legal battle and their understanding that product is moving online and a desire to be at the fore of the movement,” Garland said.
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