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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, September 12, 2000
TOP STORY:
* After the Lawsuits: MP3.com and That Whole Future Thing
NET NOISE:
* Starpolish.com
BEATS:
* The RIAA and friends say Napster needs a spanking. Or at the very
least, to be shut down right this minute.
* Dot Dot Dot
Lars Ulrich, funnyman ... Napster ad nauseum ... Warner does downloads
SOUND OFF:
* Is it possible for a major-label boycott to actually make a
difference in corporate policy?
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TOP STORY
~~~~~~~~~
After the Lawsuits: MP3.com and That Whole Future Thing
By Julene Snyder
Judge Jed Rakoff's ruling last week that MP3.com willfully violated
the copyrights of Universal Records - the last of the so-called "Big
Five" labels not to settle regarding licensing for the firm's
My.MP3.com service - set the digital-music community buzzing with
speculation and doomsday scenarios for the beleaguered San Diego-based
company.
The court set the per-CD statutory damages at $25,000 per CD.
According to MP3.com CEO Michael Robertson, Universal has submitted
4,720 copyright certificates to the court, which would put the damages
in the ballpark of $118 million. While that's a big chunk of change,
cash-rich MP3.com could pay those damages - along with the estimated
$80 million already paid out to settle with the remaining four major
labels - and still have about $100 million left in the kitty.
Of course, the bulging kitty isn't all that matters for this public
company. The firm's stock prices have been on a steadily downward
spiral since last Wednesday's court ruling, ranging from a high of
about $8 per share before trading was suspended that afternoon to
press-time's price of just over $5 a share at yesterday's close.
Despite this fairly significant setback, Robertson remains
irrepressibly upbeat. Monday morning, he sounded game for whatever
challenges the company might still face. "Things are crazy," he said
with a laugh. "Bad things happen when you get a big, whopping
judgement against you."
He confirms that settlement talks are continuing with Universal
despite the judgment. The company is going full-speed ahead with plans
to re-launch the My.MP3.com service in the next couple of weeks,
obviously without content by Universal artists. This time out, there
will be a money-making component to the service: Both free and
subscription versions will be available, and if you don't want to
listen to ads in between songs, you'll need to pay for the privilege.
Robertson said he's yet to determine an amount.
Robertson also said he doesn't know why Universal chose not to settle.
One digital-music follower who does have an opinion is William "Shawn"
Yeager, president and CEO of Soundom.com. "I think Universal wanted to
make a statement," he says. "The statement is, 'Don't screw with our
copyrights. Because we're bigger, we're badder, we're meaner - and
even though you think you have $300 million to fight us - we can sink
you. So you'd better play nice.' "
Playing the heavy didn't go over so well with Kevin Carmony, president
of TrueVerse Records. He sent an e-mail Sunday to friends calling for
a boycott of Universal artists and ventures. Within 24 hours, it had
been dubbed a press release by the Music Industry News Network (Mi2N)
and forwarded to hundreds of industry insiders.
It's easy to see why Mi2N made the leap. While the tiny TrueVerse
label has just three artists on its roster, Carmony's message is
hugely inflammatory: "It's time that Universal realized how powerful
the Internet can be and how THEY do NOT in fact control the rights to
consumers to listen to the music they have legally purchased. It's
time to show Universal just how powerful the lines of communication on
the Internet are. MP3.com has been one of the most positive forces in
music today! They have helped over 75,000 artists find a voice for
their music, and I'm sure Universal would love nothing more than to
see these lesser-known artists stopped so they can continue to spoon
feed us what THEY are selling."
At the end of the manifesto, a long list of artists is provided, with
instructions to boycott musicians ranging from Aerosmith to Hole to
Nirvana to Rob Zombie, since "Everytime you do, you only put money in
the legal coffers of Universal to try and stomp out your rights!"
MP3.com's Robertson has only vague knowledge of the proposed boycott.
"I've gotten a couple of e-mails," he says. Robertson's not advocating
a full-on consumer revolt, possibly because those settlement talks
with Universal are continuing. He does, however, think that
battlelines are getting clearer: "I think that some consumers
understand that we're talking about their own right to listen to their
own music online. If we don't get that right, negotiated or through a
legal tug-of-war, consumers are going to have to re-buy all of their
music."
Robertson continues to put on a brave face for the situation. With
"Michael's Minute" - the occasional editorials Robertson posts on
MP3.com - he says emphatically that the court battles have had "no
effect on the focus of our day-to-day business," and that the
company's "technology infrastructure drives multiple applications that
contribute to a variety of our business initiatives."
While Yeager is a fan of MP3.com's back-end infrastructure and
innovative thinking, he sees another problem on the horizon: "As cruel
as it sounds, an old friend of mine from law school called me up and
said, 'You know, we could do a nice class-action on behalf of the
artists and really just blow (MP3.com) out of the water.' In essence,
they have to worry about each of these individual publishers coming
back to them and suing them, and you could be looking at a judgement
that's at least as large as Universal's."
That's a development that may happen sooner rather than later. Zomba
Recording in New York, the owner of Jive Records, has filed suit for
"willful copyright infringement" in relation to the My.MP3.com
service. The label counts Britney Spears, the Backstreet Boys and
NSYNC among its artists.
Those who think this will all play out according to who can put forth
the most compelling vision of the future may want to talk to Yeager.
His take? "It will all come down to who has the best lawyers."
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NET NOISE
~~~~~~~~~
Starpolish.com
In the increasingly crowded online star-making niche, enter
Starpolish.com. Here, we've got a lot of the usual rhetoric,
"dedicated to educating and empowering artists, with an emphasis on
artist advocacy and artist development," along with cash rewards for
"the most hard-working and deserving artists." What's refreshing is
the advisory boards: Mike Watt (Minutemen, fIREHOSE), Tom Morello
(Rage Against the Machine guitarist) and apparently all of the Mighty
Mighty Bosstones are on the artists advisory board, while big guns
such as Danny Goldberg are on the industry advisory board. Crisp
design and easy navigation are pluses, as is the ultra-inclusive
artist advice section, which offers tips on everything from choosing a
band name to making a video to generating that all-important "heat."
The cash rewards are billed as developmental grants, to be distributed
by the site's nonprofit arm, Starpolish Foundation, at a cool $25,000
each. Other monetary incentives for artists to drop by include a deal
that promises 80 percent of CD sales to go directly to the artists,
and big chunks of change for those who sell the most CDs online
through the site. Other reasons to drop by include monthly editorials
by industry insiders. The current issue is penned by the always
acerbic Dave Marsh, who isn't known for pulling punches. ("It has
never occurred to the record companies that their own image is that of
rapacious, gouging, Luddite cheats," he says.) Come on, Dave. Tell us
how you really feel.
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BEATS
~~~~~
The RIAA and friends say Napster needs a spanking. Or at the very
least, to be shut down right this minute.
The Recording Industry Association of America, which seems to never
take a day off, spent last Friday urging a federal appeals court to
uphold a ruling that would effectively shut down Napster's
file-sharing service. Meanwhile, friend-of-the-court briefs were filed
by the Motion Picture Association of America, the U.S. government and
the Business Software Alliance, all supporting the recording
industry's case. The point is to sway the opinion of the appeals
court, which next convenes Oct. 2 to decide the fate of Napster. While
Napster's brief - filed way back on Aug. 18 - denies the charges
against it, the company's got to be reeling from the news that the
U.S. Copyright Office weighed in and said that file-sharing is not
protected by the Home Recording Act of 1992. I've said it before and
I'll doubtless say it again: It's certainly a good time to be an
attorney specializing in entertainment law and/or copyright.
Read more at
http://www.thestandard.com/article/display/0,1151,18407,00.html?nl=bts
Dot Dot Dot
Lars Ulrich, funnyman ... Napster ad nauseum ... Warner does downloads
While the MTV Video Music Awards already feel like really old news,
they actually took place just last Thursday. (Perhaps it's the endless
reruns that give them that not-so-fresh feeling.) In any case, it's
hard to resist commenting on the quote-unquote funny gag that
Metallica's Lars Ulrich took part in, where he ransacked a
quote-unquote fan's dorm room and spat, "Sharing's only fun when it's
someone else's stuff." Don't quit your day job, Lars. ... In other
wacky shenanigans, Napster lawyer Howard King sent out letters to
nearly a dozen big-name universities late last week, asking that they
restrict student access to the nefarious file-sharing service, citing
that schools have a "moral, ethical and legal obligation to take
appropriate steps to assure that (they are) not a willing participant
in and an enabler of the theft of intellectual property through
Napster." Not to mention that time spent nabbing free music is time
taken away from the serious business of actually getting an education.
... A prolific hacker who goes by the handle "pimpshiz" is taking
credit for dozens of hacked sites ranging from NASA to the
Communications Workers of America, according to CNET's John Borland.
Pimpshiz is mad at the RIAA apparently, who, he says (gasp!),
"represents rich record executives." ... Last but not least, Warner
Bros. Records has announced that it will (finally) be jumping into the
digital download fray, offering up Internet-only tracks from groups
including Matchbox Twenty, Barenaked Ladies and Collective Soul
beginning in November. We're assured that over 1,000 albums and
singles will eventually be offered from actual big names like R.E.M.,
Madonna and Tori Amos.
SOUND OFF
~~~~~~~~~
This week's question: Is it possible for a major-label boycott to
actually make a difference in corporate policy?
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: Why haven't any bands or recording artists made
it big on the Internet?
This question completely misses the point. "Breaking" an artist is
what the mass media are all about: the celebrity game. The Internet is
about the middle ground, opening the game up to a huge number of new
players, none of whom have to become widely visible to break even and
make a living. Breaking is the old-model criterion of fame, not the
criterion of success on the Net, which is "right-sizing" your market
penetration. Even if the Net reaches its fullest potential, the number
of acts that break will be just as scarce as they are now in the old
model if not scarcer. But many more along the way will find a balance
without having to go home and get a "real" job instead. The total
number who break (including both traditional and new media) will
probably not change much, but the number of lesser-knowns who can make
a living ought to increase substantially. That's what really counts
here.
- Dan Krimm
Ask the thousands of bands with major-label recording contracts whose
records never see the light of day whether simply getting a deal or
having a "hitmaker" listen to you means Casey Kasem will have your
name on his lips next week. Massive success a la Britney Spears and N
Sync is still mainly driven by radio and MTV airplay - a process that,
unfortunately, the major labels still own.
- Harris Cohen
Account Executive, Ruder Finn
The real question is: What does "make it big" really mean? If it means
getting a "$250,000 recording contract" (which is so oft mentioned as
the "first-place prize" in your columns), it doesn't mean much. This
happens all the time, though you will probably never hear of the bands
that are making those deals. Most sell no more than a few thousand
albums, if they even make it to the record bins. Internet music co.'s
don't have the $$$ or the promotion/distribution machinery to put into
any band. So, my guess is that no band will "make it big" because that
doesn't really exist outside of the music industry myths of hype and
cool, and the Internet music industry hasn't quite figured out how to
become a protagonist in these myths.
- Scott Barksdale, formerly signed to A&M/Interscope Records
Weston, Conn.
In the regular music biz "big" is made, not born. Most of the
music-buying public has no clue which CD to buy without being
force-fed by an industry based on revenue and cronyism. What has
demonstrated this phenomenon better than a place where some guy in a
basement can be more influential than Jimmy Iovine (power to the
people, right?)? Farmclub, RIAA, etc. are desperate to crossbreed the
Web with the music industry - what they can't appropriate will be
regulated. Just like radio. And why would an aspiring musician waste
time with the Internet if the ultimate destination is a major label
anyway? Face it guys, you're old school and class hasn't even begun.
- Joel Bergstrom
Retail Clerk
I believe the reason the Internet hasn't made anyone a "star" yet is
because the big-record labels still control the mechanisms that confer
stardom on a performer. I think the idea that the Net is just a better
way to troll for talent is wrong. There is plenty of talent out there,
but only room for so many in the hit machinery, and that machinery is
still controlled by the same old gang. I suggest that Britney Spears
and Christina Aguilera did not get where they are because they are the
most musically talented of their age group. There are lots of others
who could have substituted for them, but without the marketing,
videos, magazine publications, talk show appearances, etc. (all of
which is directly controlled by you know who), there's no hope of
breaking into the public consciousness. The Internet can provide a
means by which talented artists can make their creations more
generally available. And there are lots of people out there who
appreciate real talent and like the way the net facilitates this. But
there are many more who are more intrigued by flash, glitter, and
stardom, and the Net cannot confer that on someone. Maybe someday, but
not now.
- Bob Colwell
STAFF
~~~~~
Written by Julene Snyder (julene@well.com).
Editor: Steven Zeitchik (szeitchik@thestandard.com).
Deputy Editor: Michele Keller (mkeller@thestandard.com).
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