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RIAA Record Label Founder Says Internet Not Music’s Enemy

Drew Wilson — Sat, 28 Aug 2010 22:18:36 +0000

Just shortly after Stevie Nicks said that the Internet has destroyed rock, the founder of Elektra Records, an RIAA record label according to RIAA Radar, says that music has a bright future and the internet is not the enemy.

There's a fascinating article over on CNet which shows that Jac Holzman, founder of Elektra Records and helped bring you artists such as The Doors, has had some positive things to say about the digital age. He helped push the record industry to adopt the CD and was quoted as saying "I think the music industry has a bright future" when discussing the internet. Here's two excerpts from the article:

In music, Holzman saw the rise of the LP, 8-track tape, DAT, compact disc, MP3, and BitTorrent. After all that, new technologies don't spook him. On the contrary, he says many of these technologies helped make a lot of artists and industry people rich. When it comes to the Internet and digital distribution, Holzman is confident music labels can capitalize on them too. He says they really don't have a choice. "I was having lunch with a very dear friend of mine [in the record business] sometime around 2000," Holzman said during an interview this week with CNET. "We met right around the time when Napster came together, and I said 'There are opportunities and there are potholes. How are you preparing for a digital future?' He said to me, 'Jac, I just want it to go away.' Well, you can't continue that conversation."

Holzman suggested that the big labels goofed when they sued Napster out of existence. At that point, the rise of the CD had left the industry without an effective way to sell individual songs. Before the CD, the 45-rpm vinyl disc was the perfect singles vehicle. The costs of manufacturing CDs, however, made that format more suited to selling full albums, according to Holzman. "With Napster, it would have been easy to proliferate singles," Holzman said. "You would have had no manufacturing costs. You would still have the value of the single as a calling card for albums and you could have sold [songs] for something like 79 cents, made it affordable. You would have had ability to count because all of the transactions went through a central server at Napster, unlike peer-to-peer where you bypassed servers. Now, would P2P still have happened? Yes it would. But we would have established a principle of being paid for digital music."

Holzman also sees positive things when it comes to the re-use of copyrighted works through fair use. Additionally, he thinks that suing music fans is a mistake and that ISPs should share some profits from the music that has been flowing through their networks. All this comes after Stevie Nicks, in spite of the evidence that suggests otherwise, blamed the internet for destroying rock as well as John Mellencamp saying that the internet is the most dangerous invention since the A-bomb. So where does this leaves the mainstream American music industry? I think it shows that everyone in the RIAA ranks don't universally have the opinion that the internet is destroying music. Even within the RIAA, there are opposing views with the digital age and how it affects music. It's a lot like the misconceptions of those who support digital rights. Those who support a loosening copyright laws don't necessarily all say that copyright laws should be abolished and that everything should be free. In fact, many who support a more liberal copyright law even say that they are more than happy to pay for copyrighted material. In the ranks of the RIAA, not everyone is of the extreme point of view that the internet should just be dismantled. Do such people exist? Yes. Are they all of the same opinion? No. That doesn't mean that the debate hasn't shown signs of polarity. I think it's the extreme points of view that do have this affect though. If one person says that the internet should be abolished, a large number of people with various points of view will rally against a call like that. Overall, it's very refreshing to see something like this surface. Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

Swedish Copyright Collective – Technology Is Killing the Blank Disc Star

Drew Wilson — Mon, 19 Jul 2010 07:28:21 +0000

When was the last time you burned a CD or a DVD? If you haven't done that in a while, you aren't alone according to a copyright collective that collects royalties on blank discs. With slumping blank disc sales, the royalty collecting agency is scrambling to find the next thing to tax to keep revenue money flowing.

The music industry has, for years, pointed to falling physical album sales - even though sometimes those statistics have been questionable - as a reason to ratchet up copyright laws in various countries. So how hard is it getting to sell a physical album when its hard enough to sell blank discs? According to The Local, lowering blank disc sales including CDs and DVDs are worrying Copyswede, an organization that helps get royalty money from blank disc sales and forwarding them to rights holders. From the article:

Income generated from a copy fee built in to the price of recordable CDs and DVDs – and shared among artists and copyright holders – has almost halved over the last two years. In 2007, sales of blank discs generated 200 million kronor ($28 million) for artists, compared to just 113 million kronor in 2009.

“We’re seeing a technology shift whereby the discs in themselves are no longer of interest. File sharers and others have started using different technologies. Things can instead be stored on people’s computer hard drives or their telephones,” Copyswede’s managing director Mattias Åkerlind told news agency TT.

That certainly rings true. When blank discs were all the rage, hard drives were rarely above the 100GB mark which helped to fuel the need for blank discs. Now, hard drives are creeping up to the half a terabyte mark in laptops and climbing up to the 1TB mark on external back-ups and desktop computers. Much harder to run out of space on a 1TB hard drive than it is to fill up an 80GB hard drive to say the least. If there is a need to back up a computer hard drive, one larger external drive does the trick now. No need to rely on DVDrs with a measly 4GB in it when you can pick up a 1TB external hard drive now. Maybe the positive way one can look at this is the fact that there are less of these discs that will ultimately end up in a landfill since it is probably more environmentally friendly to have 1 external hard drive end up in a landfill compared to hundreds of CD-r's. Any way to reduce e-Waste is a benefit to the environment considering the toxins that can come out of some of that e-waste. In any event, the copyright collective is trying to put a new levy on newer technology such as cell phones:

Copyswede’s proposed fee would add around 100 kronor to the cost of a mobile phone with 32 gigabytes of memory. But negotiations have stalled of late, with the organisation enjoying scant support from electronics retailers opposed to price hikes on goods like telephones and hard disks.

The crazy thing is knowing how many organizations (SAC, EFF, etc.) have recommended putting a levy on ISPs and allowing file-sharing to continue unabated, yet rights holders refuse to budge on that even though it would put money in artists hands, give people far fewer headaches over legal threats and reduce the legal bills of rights holders. Maybe the elephant in the room is being ignored because rights holders want to have their cake and eat it too (tax consumers and sue them too). Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

New Band Signs on to Major Record Label – Where Does All the Money Go?

Drew Wilson — Wed, 14 Jul 2010 00:21:15 +0000

If you've been around the copyright debate for a while, chances are, you've heard the labels in the debate argue over and over that the artists deserve to be paid. Really, though, if you look at the numbers of where money goes in a major record label when it comes to album sales, maybe the major labels should take that advice and actually pay their artists a decent amount of money for a change.

It's been the dream for a lot of artists in the 90s and earlier - get the big break so you can be signed on to a major record label and make it big. There's that image that artists that get signed on to major record labels are living the life of luxury. To this day, there are still a large number of artists out there that still believe that this is how the music business works even after a large number of cautionary tales and artists going bankrupt shortly after signing on to that major label have surfaced over the years. Unfortunately, the much more common story seems to be that a band signs on to a major record label, tours for a few years, then winds up going bankrupt. How does this happen? The artist seems to be selling tens or even hundreds of thousands of albums. The artist signed on to a major label. The artist is even heard in radio seemingly around the clock. Unfortunately, for a vast majority of artists, being signed on to a major label isn't exactly a road paved with gold. There's some new numbers that tells the story about when a consumer buys a CD from an artist, where that money actually goes - and the picture isn't all that pretty. Such stories like this isn't entirely new. CIPPIC (Canadian Internet Policy and Public Interest Clinic) ran similar numbers a few years ago. In the US, Courtney Love had a similar story about where money for music CDs goes. The topic of paying artists isn't exactly a topic major record labels like to talk about. The only time they like talking about paying artists is when they're on another anti-file sharing campaign, but otherwise, the topic seems to just drop off the radar. One reason might be that the labels really want to pay the artist as little as possible. Just look at 2008 when the labels were in court to reduce artist royalties they have to pay out to name one example. So what do these latest figures say about money earned by music sales? According to the statistics, 63% of the money earned on album sales goes straight to the label. Another 24% goes to distributors. The remaining 13% actually gets split between the artists, band management, producers, lawyers, personal managers and whatever other costs are incurred along the way that may not be mentioned in the graph being provided: The Root also points to a Nielson Soundscan report which suggested that "Only 2,050 of 2009’s New Albums Sold Over 5,000 Units". Unfortunately, that doesn't tell the whole story since digital music sales are going up. When it comes to where the money goes in digital sales, though, the picture is probably the same as physical album sales. There's often an argument that the reason music quality is in decline is because of file-sharing. Somehow, it's not because artists see all of their hard earned cash going straight to the labels. In fact, a number of deals demand the artist to make additional albums as well. One of the main reasons that is a raw deal for artists is that if the artist's first album is a huge hit, the record company makes a huge profit and forces the artist to make an additional number of albums. The label can then court a new artist by fanning out cash in front of their eyes while still chiseling out whatever profits are being made from the last "deal". We can illustrate just how bad this whole deal is with an example of a six album deal. The first album goes big and the artists music is on the radio 24/7. After a while, music fans get tired of that music to the point of getting tired of that style sometimes. So the artist makes a second album a year or so down the road and there might be a few fans left over to buy that album. The music makes brief appearances on the radio, but things die out quickly. A third album is made, but only hardcore fans are able to still stomach the music thanks to market saturation. If there's enough money and will left over, a fourth album might be made, but after that, most artists are done for at that point. By the time an artist gets to that sixth album, chances are, they cannot sustain any profits and operate at a loss. The artist goes bankrupt, and the label is off fanning money at the next artist while enjoying all the profits that were made from the previous deal. One could easily argue that the labels are outright parasitic for artists. Ironically, these labels have the audacity to call file-sharers thieves. I think there are lessons from this here. For consumers, if you buy the album from a major record label owned artist thinking you are supporting the artist, you're not. You are supporting a system that has screwed over hundreds or thousands of artists and allowing this system to continue. For artists, signing on to a major record label is not a one way ticket to success, it's actually more than likely a one way ticket to throwing your career away because the system will make sure of your failure either immediately or somewhere down the road. There is, however, a good point that needs to be made and it was a sentiment I got when talking to independent radio. Yes, major labels do this, but smaller independent labels usually have a more honest relationship with their artists. Incidentally, a large number of independent labals in Canada are opposed to major record labels position in Canada (i.e. the bigger ones leaving CRIA due to differences in view regarding copyright laws a few years back to name one example) So while the message being made through these numbers isn't entirely new, it is nice to have that reminder every once in a while. [Via Techdirt] Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

Damage of CRIAs $6 Billion Lawsuit Felt in Anti-Piracy Operation

Drew Wilson — Thu, 17 Dec 2009 00:56:23 +0000

Last weeks lawsuit against CRIA for commercial copyright infringement sent shock waves throughout the industry as a whole as well as throughout the media and has left some wondering if it’s a case CRIA can recover from both financially and morally. Recently, there was clear evidence that the lawsuit has had an impact on anti-piracy efforts.

The Ottawa Sun is reporting that a record store owner felt that he had to plead guilty for copyright infringement after possessing just under 300 unauthorized CDs. It was a case lead by the RCMP with non other than CRIA acting as an expert witness in the case.

While the case has more to do with laws surrounding the importing of CDs, the interesting part was found in the following:

Nolan will receive a conditional discharge if he makes a $1,000 charitable donation within three months.

Lawyer Mark Lazarovitz said it was outrageous that his client is being prosecuted when CRIA members, including such names as Sony, EMI and Universal, are the target of a class action lawsuit worth up to $6 billion for allegedly infringing artists’ copyright.

“Yet my client is before the court,” Lazarovitz said.

Nolan said the 100 CDs represent a tiny fraction of the hundreds of thousands of recordings in his collection and that the discs at issue are mostly imports.

This may be the first known case where CRIA being sued for billions for commercial distribution of pirated material has had a very visible effect on any anti-piracy operations CRIA is involved in. It’s not hard to imagine that this would be the last either. How can CRIA have the power to convict anyone for copyright infringement when they themselves have allegedly headed off the biggest commercial piracy operation in Canadian history?

It would appear that it’s extremely easy to make any piracy operation seem like a hollow victory for the major record labels thanks to this lawsuit against CRIA. It makes anti-piracy operations seem more like pirates busting pirates more than anything else and seriously puts into question to whom the law serves. Legitimate and otherwise morally acceptable anti-piracy cases for many – namely busting commercial bootleggers – has been put into serious moral jeopardy for many. It doesn’t really matter whether or not they are completely separate cases at this point.

In the case in question here, some of the imported CDs didn’t contain UPC bar codes. While BoingBoing had their own choice words for the case, one commenter suggested that not every independently produced CD has a UPC bar code to begin with.

“I worked at several independent record stores that brought in foreign copies of records on American labels that were unavailable in the states all the time. Back then,” scifijazznik commented, “there were entire artists’ catalogs the majors in the states didn’t seem to think there was a market for: Bootsy Collins, Julie London, Graham Central Station, tons of classic Blue Note records, etc., that were available out of Japan or Germany. If they were available in the states, both we and our customers would gladly pay less for them. But they were not and we had a loyal following of collectors more than willing to pay for $30 for Japanese imports of CDs that should have been available at reissue prices.”

The commenter added, “There was mention of “live CDs” and some “without bar codes.” Bootlegs are one thing. There are laws against that and the owner’s use of the word “pirated” is likely chosen carefully to address that. But I run an independent label and on our last CD, the manufacturer forgot to print the bar code on the cover. Some perfectly legit labels don’t use bar codes at all, though I imagine that’s not as common as it used to be.”

It’s interesting that there is word that not every single CD in existent that is legitimately sold has a bar code as mentioned in the original story. Whether or not the owner of the recently busted store is being totally honest is another story since there isn’t much evidence being offered publicly at this time through the Sun. What is clear is that the moral standing of the major record labels has fallen off a cliff in the publics eyes and CRIA in the defence of a $6 Billion lawsuit will prove to be a point that keeps biting them in the end whether or not the anti-piracy operation they partake in is clear cut.

Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

NPD Group Study Shows Increase in Online Download Sales

Drew Wilson — Thu, 20 Aug 2009 01:19:18 +0000

When it comes to the ratio between physical album sales and digital download sales, digital download sales have increased at the expense of physical CD sales. That’s not to say that CD sales are falling out of existence, but there seems to be a trend where sales are gradually going online even though most sales are physical CD sales. All this is according to a recently released NPD Group study.

One can’t help but note the interesting timing of this study. It should be noted though, that the study is showing what is happening in the United States. So the connection between Canada and the United States is purely hypothetical from looking at the numbers presented in this particular study (although countless studies have shown Canadian digital sales growth outperforming growth in the United States) but if there is a similar trend happening in Canada, no wonder the primary concerns from Canadians have to do with fair dealings and digital locks. We’re witnessing an industry who is pointing at their paying customers and screaming “illegal pirates!”

The NPD group study also suggests that Apple’s iTunes has a 25% market share in the digital music sales as well.

In fact, many who point to the digital revolution and say that it’s the future may find the comments by a vice president surprising as well.

“Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products,” said Russ Crupnick, vice president of entertainment industry analysis “But with digital music sales growing at 15 to 20 percent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010.”

The trend of moving from physical to digital is particularly evident, even if digital music buyers are still the minority:

CDs comprised 65 percent of all music sold in the first half of 2009 compared to paid digital downloads, which comprised 35 percent of music sales. By comparison, paid digital music downloads comprised just 20 percent of sales in 2007 – growing to 30 percent of the music market last year.

“The growth of legal digital music downloads, and Apple’s success in holding that market, has increased iTunes’s overall strength in the retail music category,” said Russ Crupnick, entertainment industry analyst for The NPD Group. “But the importance of the big box retailers shouldn’t be dismissed, as long as the majority of music consumers continue to buy CDs.”

Still, if in 2007, digital sales accounts for 20% of all sales, then in 2008, it accounts for 30%, then in 2009, it accounts for 35%, one wonders what the market will look like in, say, 2019. If the percentage goes up by 5% every year from now till then, that means 80% of music sold would be online download sales. Who knows what technology would bring us by then on top of it all provided copyright law doesn’t continue to prohibit innovation as seen in the RealDVD case.

Perhaps one of the concerns that record labels should address is how to market sales online to the public. Clearly physical sales is dominant, but it’s a very real possibility that this market domination of the physical CD won’t last forever if this study is anything to go by.

Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

India Report – There’s Not Enough Pirate Courts Here

Jorge Gonzalez — Mon, 04 Aug 2008 07:15:14 +0000

Sometimes, there is the odd report coming from Asia about a massive piracy bust with reportedly millions of CDs and DVDs being confiscated, but the aftermath of a major raid sometimes goes unnoticed.

There’s an interesting report from The times of India where there is a problem – there’s not enough piracy courts to deal with the load of busted pirates.

Of course, for the average North American, the concept of a “piracy court” is pretty much unheard of. Generally speaking, when someone gets sued for copyright infringement, they go through a regular court system just like any other case. Judging by what this report suggests, there is a court set aside in India to deal specifically with alleged pirates.

It may seem like overkill, but not only is there a court specifically set aside for piracy cases, the court is bogged down by the sheer volume of cases it has to deal with. The cases are “bailable” but people caught up in the system, it’s been extremely difficult. From the report:

Take the case of Madala Krishna Prasad who was arrested on charges of video piracy in Ongole on July 22, 2008.

He was remanded in judicial custody the next day. But when the bail petition was moved by his counsel, the judge expressed his helplessness as the case did not fall under his jurisdiction.

Then the counsel, K Venkata Reddy, moved another bail petition before the additional chief metropolitan magistrate court, which is the designated court for such offences. He rejected to hear the petition because the remand was in a different court.

Then the counsel moved a lunch motion in the high court on Friday. Justice P Swarup Reddy granted bail to the accused in this case. Now the counsel has to go to the Ongole court again to submit the bail documents to secure freedom for the accused . In all the accused will be in jail for more than 12 days for an offence that is bailable. “We have heard of similar cases in Anantapur and elsewhere in the state in this type of offences,” he said.

It’s not entirely clear what the report is specifically referring to when it says ‘video piracy’ and a Google search of the persons name only refers to the above article. Whether it means videos being sold on bootleg DVDs or videos being downloaded online is unclear. One might hope that resorting to courts being set aside in North America won’t be necessary.

France Poised to Change Blank Media Levy Calculating System

Jorge Gonzalez — Tue, 15 Jul 2008 09:10:51 +0000

Burning a CD or a DVD may be an extraordinary convenience for many, but the very way royalties are calculated before being collected in France may change – and it won’t be based on alleged piracy.

There are a number of countries that have implemented a blank media levy on portable media. The idea, when one boils it down, seems simple and straight forward. There are those that record or burn copyrighted material without authorization, therefore copyright holders should have a system of compensation.

In Canada, for instance, royalties collected on CDs are collected by an organization known as the CPCC. The CPCC takes the money that was collected through the levy on CDs and redistributes it to copyright holders. It’s a system that has been under appreciated by the major copyright industry when discussing things such as copyright reform mainly because it has undermined their typical argument that their profits have dropped (though there are pieces of evidence to suggest otherwise) While Canada and France are two completely separate countries on two separate continents, the underlying principle seems, at least, fairly similar.

Like in Canada, there has been opposition towards the levy, but now new developments as pointed to on French news site 01Net (Google translation) suggest that the underlying principle has been overturned – thus prompting a rethinking of the blank media levy.

The French courts seem to have annulled decision “No. 7″ From the report (Google translation):

To calculate the amount of the fee levied on such equipment and returned to the rightful claimants, the commission had taken into account, wrongly, of damages resulting from unauthorized copies of video or phonograms, “justifies the Council. That is to say that piracy for the Council of State, should not be considered to determine the scales. In summary, this fee (5 to 50 euros) no longer be in the state.

Judging by that paragraph alone, this could prompt a major legal, civil, and business headache. If the blank media can’t be based off of supposed piracy going on through, among other things, private copying, then how does one base royalty calculations to keep the major copyright industry in France happy?

Obviously, going back to simply outlawing things like CDs won’t be a feasible option since burning CDs and DVDs is simply a common occurrence these days – whether it’s making a simple mix of your favorite tunes or losing nearly half the population of Britain in the mail, things like CD burning is just commonplace at this point in time – and people suggest the internet genie is out of the bottle.

What will be fascinating to watch is what France comes up with now that the method of calculation based off piracy has been overruled. It may be something all sides of the copyright debate may want to keep an eye on.

EMI reviewing CD content protection technology

Jared Moya — Tue, 09 Jan 2007 18:09:56 +0000

EMI Group Plc said on Monday it was reviewing its use of the controversial content protection technology used on CDs, known as digital rights management (DRM), but has not scrapped it altogether.

Music companies launched DRM in a bid to curb piracy but the software means that the discs are incompatible with the iPod, the market-leading digital music player made by Apple Computer Inc.

Critics also argue that the system has not worked as consumers could be driven to illegal sites to download music to the popular iPod instead.

A spokeswoman for EMI said it had not manufactured any new disks with DRM, which restricts consumers from making copies of songs and films they have purchased legally, for the last few months.

Companies probe possible high-def DVD hack

Jared Moya — Sun, 31 Dec 2006 00:35:48 +0000

The companies behind an encryption system for high-definition DVDs are looking into a hacker’s claim that he has cracked the code protecting the new discs from piracy, a spokesman for one of the companies said Thursday.

A hacker known as Muslix64 posted on the Internet details of how he unlocked the encryption, known as the Advanced Access Content System, which prevents high-definition discs from illegal copying by restricting which devices can play them.

The AACS system was developed by companies including Walt Disney, Intel, Microsoft, Toshiba and Sony to protect high-definition formats, including Toshiba’s HD DVD and Sony’s Blu-ray.

Muslix64 posted a video and decryption codes showing how to copy several films, including Warner Bros’ Full Metal Jacket and Universal Studios’ Van Helsing, on a popular hacker Internet blog and a video-sharing site.

The hacker also promised to post more source code on Tuesday that will allow users to copy a wider range of titles.

Copying Own CDs Still Not Legal

Mon, 30 Oct 2006 23:47:42 +0000

The Institute for Public Policy Research (IPPR) has called for outdated copyright laws to be changed and modernized. Currently it is illegal to copy music CDs and then place them in your MP3 player for listening. Making copies of CDs and DVDs does not impact the copyright holders and this law should change, so IPPR is arguing the issue.

They feel copyright issues have been steered too much by the music industry in the past and that should change. IPPR deputy directory Dr. Ian Kearns feels “it is not the music industry’s job to decide what rights consumers have that is the job of the government.”

Intellectual property laws are currently being looked at by government in Britain, but changes certainly need to be made to laws such as this that keep someone from utilizing the music they bought. Now that we are in a digital age, intellectual property laws could change to reflect personal use.

DRM has taken such a hold on the music industry that libraries and other archive systems are having a hard time making things available that before were no issue. Digital Rights Management technologies, which restrict the sharing of music or other intellectual property, are bashing attempts to preserve electronic content.

When attention is called to these matters in the US, maybe the music industry will realize there are some issues to take into account when considering DRM and other like-services. We are moving fast with technology and the laws need to move just as fast to keep up.