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THE INDUSTRY STANDARD'S
B E A T S H E E T
A Weekly Report on the Convergence of Music and the Net
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| http://www.thestandard.com |
Tuesday, April 4, 2000
TOP STORY:
* Big bucks or big whoop?
Is there a viable market for live music on the Internet?
NET NOISE:
* All that jazz at Bluenote.com
UPBEAT:
* No Joy in CDNow-ville
The beleaguered company gets stomped by Arthur Andersen
* ArtistDirect Goes Directly to the Doghouse
Buyback of shares from investors and artists could slash recent IPO
proceeds
* Farmclub Gets on Base
The Internet label cedes Web rights to its first signed band
*"Son of Napster" Hits the Net
New file-sharing utility likely to face recording industry's wrath
SOUND OFF:
* Do you listen to Internet radio at work? If so, does the boss know,
or care?
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TOP STORY:
~~~~~~~~~~
Big bucks or big whoop?
Is there a viable market for live music on the Internet?
By Julene Snyder
Way back in the dark ages - 1996 - some people had a vision to create
an online music festival. They called it Webstock, and it had big
names like Michael Stipe and Cindy Crawford involved, along with
lesser luminaries like Andrew Shue (Billy from "Melrose Place"). The
hype was there, the bands were there, and the press was there, but
after it was over, few spectators could remember what seemed so
exciting about the concept of watching tiny, jerky video online.
Fast forward to present day. In this brave new world, who is finding a
way to put live concerts online in a fashion that is pleasing to fans?
For those who reside in places where bands with buzz never go, even
tiny, jerky online video is better than nothing. Luckily for those out
of luck when it comes to decent venues, there are more options every
day for catching a live show on the Web.
Just this week, Lou Reed played three sold-out dates at The Knitting
Factory in New York; the final night was Webcast live on the venue's
Web site. Guy Compton, Knitting Factory's director of marketing and
media relations, says the venue was the first club in the world to do
a live Webcast. "Regular Webcasting to us is now small potatoes. In
January, we opened our fully-wired Web studio where we present
original interactive Web programming."
Other players of note in the live Webcasting game include
Rollingstone.com, with near-nightly offerings from artists ranging
from Tonic to Third Eye Blind to a bunch of unfamiliar but no doubt
on-the-verge acts. House of Blues (hob.com) has a wildly eclectic
roster of pay-per-view concerts coming up, including prog-rock icons
Yes, seminal hip-hop legends Public Enemy and pseudo-hippies Mother
Hips. Broadcast.com has a few intriguing-looking shows from yesteryear
at its site (Sonic Youth in Portland in 1993, a 1991 show featuring
the Butthole Surfers, Fugazi et al) and Yahoo does a good job of
cataloguing live music online.
One company that plans to be a leader in the live Webcast niche is
Digital Club Network (www.digitalclubnetwork.com). The site currently
has exclusive contracts with more than 40 mostly-smallish venues to
Webcast live concerts. Right now, users access the concerts for free,
but eventually the company plans to charge for concerts, and expects
to profit from its archives.
"What might have been an innocuous performance one year might be
viewed as a very important event down the road," says Andrew Rasiej,
DCN's cofounder, CEO and president. "There are hundreds of examples of
this in the music industry, such as when Nine Inch Nails put out their
first record on TVT, and their second record went platinum on
Interscope and everybody went back and made TVT Records rich from the
first record. Our archive will grow in value, and as it does, we share
the royalty with the club because they were the ground on which that
archive was created."
The sticky part, of course, is persuading users to pay for music
online. Rasiej isn't deterred. "People steal music on the Internet
because it costs $16 or $17," says Rasiej, who founded New York's
Irving Plaza musical venue, which he sold in 1998. "If music was
available for $3 or $4 I don't think they'd steal it; they'd go to the
source for the original. I don't think the American public is
interested in ripping off artists, they're just looking for access to
music."
Of course, along with access to music, access to a fast Internet
connection is vital for Webcasting to be anything more than a novelty.
Even with the dizzying speed of technological advances, there's still
no way for a 28.8Kbps modem to make watching a video anything but an
exercise in sheer frustration. But with more people getting access to
wider Internet pipes - either at work or at home - the time is coming
when concert Webcasts might draw large audiences. At least at your
computer, no one's likely to spill a drink, step on your foot or blow
smoke in your face. But you've got to admit that you'll look mighty
silly sitting there pumping your fist in the air and yelling
"Freebird!"
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NET NOISE:
~~~~~~~~~~
All That Jazz at Bluenote.com
Indigo and black are the primary colors of venerable jazz label Blue
Note's homepage, which skips technological bells and whistles in favor
of smooth design and straightforward delivery. Founded in 1939, Blue
Note, an offshoot of Capitol Records, still keeps a foot in decades
past while offering up tasty treats from current artists. There's
nothing startling or flashy on the site, just easy access to a roster
of artists that ranges from 1940s legend Billy Eckstine to Miles Davis
to the contemporary group Us3. Tune in to the jukebox if you'd like a
little jazz along with your morning cuppa joe, find out who's touring
and chat with other aficionados on the lively bulletin boards. Sure,
there are threads with a hipper-than-thou tinge (see "Honks and
squeals = lack of ideas" and "Name your favorite 'classic' albums that
no one else knows or recognizes"), but that's always been part of the
nature of the jazz beast.
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UPBEAT:
~~~~~~~
No Joy in CDnow-ville
The beleaguered company gets stomped while stock continues to drop
Just last week, CDnow president Jason Olim told me that "crisis mode"
was too harsh a way to describe his mind-set in the wake of a recent
Barron's article that put CDnow near the top of a list of companies
rapidly running out of cash. Olim said his company had cash on hand to
run another six months. The next day, CDnow's independent public
accountant, Arthur Andersen, publicly expressed "substantial doubt"
that the company was going to last through the end of the year. The
annual report filed late Tuesday with the SEC conceded that CDnow
could only meet payment obligations until the end of September (aka
about six months). Since that news hit the wires, articles with titles
like "The Dot-Com Death Spiral" and "CDnow Burning Out of Cash" have
chronicled the company's prospects, and the stock is trading at under
$4 a share, down from a 52-week high of $23.25. Hmmm. Looks like a
crisis, smells likes a crisis.
ArtistDirect Goes Directly to the Doghouse
Buyback of shares from investors and artists could slash recent IPO
proceeds
What do brat-rapper Eminem, ethereal songstress Tori Amos and old men
of rock Tom Petty and Mick Jagger have in common? They've all got
official Web sites at ArtistDirect.com and thus have at least been
offered the chance to participate in the company's Artist Option Plan,
which, it turns out, was a bit more ambitious than is strictly legal.
It seems the company violated SEC rules by offering options to too
many "consultants" in return for merchandising agreements. D'oh! Now
ArtistDirect is required to at least offer to buy back 7.3 million
shares from the so-called consultants at a price that could
potentially cost $27 million. That's nearly half of the $60 million
that the company's IPO raised. The shares started out at $12 a pop. At
press time, they were trading at $7.69, which was, at least, up from a
low of $6.
Farmclub Gets on Base
The Internet label cedes Web rights to its first signed band
The ever-on-top-of-all-things-relating-to-digital-music scribe Mark
Lewis of LiveDaily news was again early on the scene with a story last
week reporting that Universal's Farmclub label "has given Los Angeles
pop duo Fisher control of its Web site and the right to renegotiate
royalties when downloads become more prevalent." Lewis summed up the
thoughts of manager/music attorney Elliot Cahn on the revamped deal as
having "elements of a standard major label contract, but (with) better
provisions on hot-button Internet issues." The story quotes players
like Farmclub's Andy Schuon and includes a provocative statement from
"a senior new media executive at EMI" who said that artists' royalties
"maxxed out a decade ago." Lewis also reports that some in the
recording industry contend that download costs are higher than CD
costs, citing "new expenses from online marketing," along with "server
storage costs, telecommunications charges, software licenses and,
eventually, telephone help-desk costs (which) justify the current
retail price of albums and artist royalty structure." To which the
rest of us say, "yeah, right."
"Son of Napster" Hits the Net
New file-sharing utility likely to face recording industry's wrath
The barn door is open, the horse is long gone and there's no going
back in time to lock that wide-open portal. Santa Monica, Calif.-based
Scour.net made its new product, Scour Exchange, available over the
weekend, hopping onto the file-exchange bandwagon with gusto. Unlike
Napster - which deals exclusively with MP3s - Scour Exchange lets
users swap any files, including MP3s, photos and videos. Word is that
the Recording Industry Association of America was busy trying to
reach company executives to discuss potential legal action late
Monday, which leads to an amusing image of the Scour folks with their
fingers in their collective ears pretending they don't hear the phone
ringing off the hook.
http://www.thestandard.com/article/display/0,1151,13672,00.html
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SOUND OFF:
~~~~~~~~~~
This Week's Question: Do you listen to Internet radio at work? If so,
does the boss know or care?
E-mail your opinions to julene@well.com with "sound off" in the
subject line, and we'll print a selection of the responses in next
week's newsletter. Letters may be edited for clarity and length, so
keep them short and include your name and affiliation, if any.
Last Week's Question: If music is free, does that mean it's not worth
anything?
"In a monetary sense, yes. Music is too often tied to the format that
it is delivered in. A CD costs $15, a tape is $8.99, radio is free,
MP3 is all over the place ... but music exists on paper first
(theoretically) when someone writes it. It's entirely up to that
individual to protect themselves, be it copyrighting or making sure it
isn't distributed without consent. If music is free, it needs to be
protected up front, if that is indeed a concern. With all the
developing formats (CD's, MP3 et al), royalties are harder and harder
to pin down. Somehow, artists and the executives that manage them have
eked out a living despite the piracy that has accompanied music from
day one. If I were an artist, I would worry more about actually owning
the song than getting my cut of a 99 cent download."
- Matt Wells
"Worth is proportional to desirability. Reward is a function of
satisfaction. What does this tell us in regards to the relationship
between desirability and satisfaction of labeled music? Is the quality
of music today such that it's worth perpetuating its current devices
for reward? Eric Hoffer wrote that "Those who lack the capacity to
achieve much in an atmosphere of freedom will clamor for power." What
is masked as the reward of artistic worth is in fact a subsidy of
power over consumer freedom. So in retort to the question: Is consumer
freedom worth nothing?"
- Isaac Fain
"The Internet is great for musicians who want the world to hear their
music! A listener has a limited amount of 'recreational time' to
listen to music. Most people like things free, so they will go to
sites that have free downloads. Unfortunately, a ton of uninspired
composing and badly engineered music is showing up on these sites. It
will become harder and harder for artists who professionally produce
their songs to get the listeners' attention amid the 'sea of
mediocrity.'"
- Benjamin Day
Artist, Producer, CEO
BMDmusic, Inc.
"Music has financial value if and only if the listener cannot find a
way to obtain it for free. Music has spiritual value if it causes the
listener to experience pleasure. The demand for music is and always
will be fundamentally caused by its spiritual value. Financial value
is merely a material metric of value. Only the spiritually lost in
today's society equate material value with spiritual value. Music will
never be worthless as long as it makes someone smile."
- Jay Brancazio
STAFF
~~~~~
Written by Julene Snyder. Send newstips and press releases to
julene@well.com.
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