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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, November 7, 2000
TOP STORY:
* Talkin' 'Bout Napster: The Players, the Media, the Madness
NET NOISE:
* Brunching.com
BEATS:
* Tonos Raises $10 Million
* Dot Dot Dot
Listen.com buys Scour assets ... Cher panties for
sale! ... Gore wins online
SOUND OFF:
* Should other major labels make a deal with Napster?
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TOP STORY
~~~~~~~~~
Talkin' 'Bout Napster: The Players, the Media, the Madness
By Julene Snyder
On Halloween morn, we left-coasters were just rubbing the sleep from
our eyes and gulping our first cup of joe when the news that
Bertelsmann had formed an alliance with Napster hit the wires via a
press release. By day's end, the media had jumped on the story with
rabid glee - and even though no one knows how things will shake down
in the long-term, that hasn't stopped everyone with a computer from
weighing in.
In honor of the most unlikely alliance since World War II, we selected
some snippets from both players and media analysts.
First, the Players ...
* The New York Times gave us the news that Thomas Middelhoff and Shawn
Fanning embraced, "a move seemingly unthinkable a few months ago."
Napster CEO Hank Barry is said to have suggested a $4.95 monthly fee
for file-sharing. (Personally, my favorite bit was the photo that
everybody ran from Tuesday's press conference showing Middelhoff
holding up a Napster T-shirt alongside Shawn Fanning, who
uncharacteristically wore a suit.)
*The Recording Industry Association of America's Hilary Rosen said
that although the court case against the company will continue, the
deal proves that "Napster has come to the same conclusion we have been
urging from the start: that it is better to work with the creative
community than against it," adding somewhat ominously, "It is
important for everyone - Napster included - that the ground rules of
the Internet music business be established once and for all."
* Artists Against Piracy executive director Noah Stone said that
although the alliance is a "very encouraging sign that Napster is
actively pursuing a business model that will seek to provide payment
to rights holders," AAP is concerned "that any strategic alliances
that are formed to take advantage of new technologies will serve to
improve the artists' situation and not simply preserve the status
quo."
The Analysts...
* Wired News' Brad King must have worked his butt off getting his
meaty story examining the financial and legal implications of the
deal, "Digital Music's Nasty Little War," up on the site by 11:00 a.m.
the day the Napster story broke. It's a behemoth at 2,350 words,
chock-full of analysis and experts discussing the premise that labels
are doing whatever it takes to force struggling digital-music
companies to partner with them. One anonymous exec told King, "This
isn't about competition and the consumers. I don't want to go
'X-Files,' but come on."
* Perhaps the best reading about the deal came from Hits Daily Double,
which continues to offer wonderfully punchy subheads like, "The day
after, companies suddenly feel self-conscious, eat together in
silence." The story, penned by Simon Glickman, points out that there
has been an onslaught of media scrutiny, "even under the cluttered
desks of sleazy music-news Web sites."
* Surprisingly - given the proximity to the election - the deal was
the subject of the lead editorial at the New York Times on Thursday.
Pertinent quotes: "The deal deserves praise." "Offers long-term
benefits to consumers, although they will lose their free ride." "A
voluntary solution is best." Ditto the placement at the Los Angeles
Times' editorial page; here we're told the alliance is "a good idea,"
and that five bucks a month "might be low enough to take the fun out
of stealing."
* CNN came out with a story that quoted music company execs at the
other major labels as being surprised by the deal as they "questioned
Bertelsmann's motives." Reading between the lines, it's possible to
detect a bit of glee from those execs, who said stuff like, "It will
be interesting to see how they'll implement this. It sort of levels
the playing field."
* The Register printed a strongly worded story with the provocative
title "BMG, Napster Deal Damned by Universal" that cut to the chase:
"The response so far has not been good. Universal, for one, is
sticking to its guns - it wants Napster shut down."
* Sonic Net's Brian Hiatt led with the unsurprising news that the
lawyer representing Metallica and Dr. Dre says nothing has changed in
the two artists' pursuit of payment for "past infringements," no
matter who allies with whom.
* Comedy is hard. Digital Music Daily's Michael Grebb penned a piece
built on the premise of a "march on Washington to demand that our
representatives amend the U.S. Constitution, which mistakenly left out
our right to free music," before segueing into an equally unfunny rant
about how disgruntled Napster users can raise an extra $5 a month by
pet-napping or harvesting alligator eggs.
And the Epilogue ...
Just when you think, "Hey! It's the weekend! It's safe to have a life,
go outside, walk away from the computer," you're proven wrong. On
Sunday, word came down that the two highest-ranking music execs at
Bertelsmann, Strauss Zelnick and Michael Dornemann, have resigned and
will step down at year's end. Word from Hits Daily Double is that
Zelnick will walk away with a chunk of change that could reach $50
million, that there have been rumors of "an increasingly strained
relationship" between the pair and Middelhoff, and that the Napster
deal "may have been the final straw." The piece ends with the tidbit
that "BMG is looking to merge its music unit with EMI."
Inside.com weighed in with details about the "power struggle" that led
to the resignations and puts Zelnick's possible walking money at
between $30 million and $40 million. On Monday, the New York Times
said the timing "reflects internal discord at Bertelsmann" over the
Napster deal, although a quote from Middelhoff says it's all about
reorganization, and the timing is "nothing but a coincidence." The
piece points out that Zelnick has been a longtime Napster critic who
once said, "If you walk out of a store with my CD under your arm, we
are going to throw you in jail." By day's end, the news came that
Zelnick hasn't let any dust settle on him; he's taken a position as
"non-exclusive chairman" of broadband application service provider
On2.com beginning Jan. 1.
To read more (and we do mean more), click here:
http://www.thestandard.com/article/display/0,1151,17173,00.html
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NET NOISE
~~~~~~~~~
Brunching.com
Just who are these Brunching Shuttlecocks? I have no idea, but there's
enough marginally music-related stuff on their site to let me get away
with urging you to trot on over and check it out. Just try not to spew
coffee all over your monitor while hunkering down to peruse the wealth
of truly funny offerings archived here. Perhaps you'd like to take the
"Pompitous of Love" quiz? I did and learned a bit about my inner self:
"You are a Midnight Toker. You're a grinner and a picker, but not much
of a lover or a sinner. You rarely get your loving, and when you do,
it's not on the run." (Sad but, sigh, true.) Fun runs rampant, what
with the Alanis Morissette Lyrics Generator allowing me to feel as
though I've come up with something original with the line "I think
idiots will eventually be the downfall of civilization" in my newly
penned masterpiece, "Blame it on SUVs." For up-to-the-minute political
fun, try the Campaign Scandal Generator, with the option to "Drudgify"
the headlines. In these dizzyingly tense times of ever-changing
digital-music paradigms and neck-and-neck presidential races, a little
hilarity is sorely needed. Go, shuttlecocks, go.
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BEATS
~~~~~
Tonos Raises $10 Million
Yesterday, talent-search site Tonos Network announced it had completed
a $10 million round of funding. Although that once would have sounded
like relatively small potatoes, the recent rash of shutdowns and
layoffs in the online music space (SpinRecords.com, Atomic Pop, et.
al.) seemed to indicate that the cash cow had all but keeled over.
Tonos was founded by Carol Bayer Sager, David Foster and Kenneth
"Babyface" Edmunds; the company vows to use the funds to "launch the
first, easy to use online music creation/collaboration platform in
January 2001, which will change the way music is created and
discovered online, as well as provide a unique networking database for
musicians of all levels of expertise." Among those participating in
this round of financing are Bob Daly, chairman of the Los Angeles
Dodgers and former chairman and CEO of Warner Brothers and the Warner
Music Group, Bob Lessin, chairman and CEO of Wit SoundView and Bo
Peabody, founder of community site Tripod.
To read more, click here:
http://www.thestandard.com/article/display/0,1151,19976,00.html
Dot Dot Dot
Listen.com buys Scour assets ... Cher panties for sale! ... Gore wins
online
Last week's announcement that Listen.com would buy the assets of Scour
- but not, God forbid, its legal bills - got a bit eclipsed by the
Napster/Bertelsmann announcement. Word is that once the bankruptcy
court approves the deal, and if no one steps in with a bigger bid,
Listen will get Scour's technology, not to mention some really nice
meeting room tables. ... Looking for the perfect gift for that special
someone? ArtistDirect suggests you think about an 'NSync rhinestone
bandanna or a Cher tank/panty set. The site will begin offering artist
merchandise for the holidays on Nov. 13. ... Of course you've already
voted, being the good citizen that you are, but you might still find
it interesting that visitors at PickTheHits.com chose Al Gore for
president by more than 10 percentage points. In a month-long poll,
visitors were asked to choose which song best described each candidate
- Beck's "Loser" or 'NSync's "It's Gonna Be Me." As of this morning,
Gore had 58 percent compared with George W. Bush's 42 percent in the
"It's Gonna Be Me" camp. Glad that's settled.
SOUND OFF
~~~~~~~~~
This week's question: Should other major labels make a deal with
Napster?
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: What are the implications of the
Bertelsmann-Napster deal?
The Napster and Bertelsmann thing will be good for all the people in
their houses to enjoy and to love the music together, therefore loving
each other and getting closer to world peace. The kind John Lennon
sang about. I just wish Kurt Cobain, Tupac Shakur, Carl Perkins and
Louis Armstrong were here to know this beautiful occurrence has
happened. Their music enriches the lives of the future generations
while they don't make a single penny. See, it makes for a better
tomorrow.
- Josef Robey (kid jar)
In regards to the Napster "bombshell," I am shocked that anyone is
surprised by this. Did anyone really think that Napster's "free music
duuuuude" posturing was for real? The company was backed by a group of
salivating venture capitalists who were waiting for the big payoff. It
had a press agent that kept Sean Fanning in ALL of our faces (MTV
VMA's, Time magazine's, Newsweek's, etc.). The "let's destroy the big,
evil record companies" attitude was nothing more than a marketing ploy
created by a group of savvy businessmen (Fanning included) whose goal
all along was to jump in bed with the big boys they claimed to be
against. What does it mean? No more free music ... for a little while.
Somewhere right now there's another kid hammering away at his computer
creating the next Napster. Don't worry though kid, your payday is
coming.
- Patrick Cerria
MusicProbe.com
Did anyone who follows the space seriously doubt that the Big Five
would come to terms with Napster? I'm an avid Napster user, and I'm
glad that BMG decided to break the ice. We'll look back and consider
this to be one of the "big moments" in the early history of online
music. But let's not lose sight of reality: In the grand scheme of
things, Napster is only an interim solution. P-to-p is not the optimal
way for the average consumer to obtain digital music. While there are
those of us who enjoy a hands-on tool such as Napster, the average
person is far more lazy and wants things done for them. For this
reason, I think that My.MP3.com and other streaming services, such as
Music Bank (what a lousy name by the way ... is Alan Greenspan its VP
of marketing?), will eclipse Napster in the years to come. Anything,
anywhere, anytime streaming lends itself to the wants of the
mainstream music consumer who isn't interested in having to know the
name of an artist or song title in order to listen to music. Nor does
the average consumer want to sift through lousy encoding jobs to get
the track she or he wants. Hence, while those of us who consider
ourselves to be "online music pundits" may have had cause to celebrate
today, I don't think the BMG-Napster announcement struck an equal
chord with Jane and Joe Sixpack.
- R. Hunter Hendrickson
My first reaction to the news of this union was, who is Andreas
Schmidt, who does not work for BMG Entertainment but for a division of
Bertelsmann corporate, to promise access to a music catalog he does
not control? It's up to the labels and the artists to decide if they
want to play along with Napster. It would be a tough sell for Kevin
Conroy at BMG Entertainment to make to the labels, but nearly
impossible for Schmidt to deliver. My general feeling on the topic is,
monetizing Napster is a great idea that many, many people would love
to have (I think it was Hank Barry who said at the NY Jupiter
conference, "I think everyone in this room has a new business plan for
Napster.") but actually pulling it off will be another thing entirely.
If Napster users can get the unlimited catalog for free now, why would
they pay for limited access? The software is strong, but its audience
is not the right one for the subscription model.
- Karen Pattani-Hason
Independent music consultant and former BMG Entertainment employee
The Bertelsmann/Napster "deal" leaves so many unanswered questions
that it's hard to know what to make of it - perhaps it is nothing more
than a publicity ploy for both sides. While Napster's "free"-dom
loving users might call it a sellout, it makes good business sense for
Napster, for PR purposes if nothing else, and may help fend off the
impending doom of a legal death sentence. BMG will be able to take
advantage of the great sampling applications that Napster provides for
new music and might be able to stimulate offline CD sales for its
artists. This will only be short-term gain, however, as downloadable
music will continue to make greater inroads as a music-delivery method
and CDs start to disappear from store shelves in a few years. Of
course, many artists, publishers and copyright holders will have
difficulty with Napster in any way shape or form. A slew of lawsuits
will likely continue against the company as more and more popular
artists begin to retain exclusive rights to their music.
- Roland Goity
Founder
OnlineRock
Why would people pay Napster to download popular songs? Here are the
issues:
1. Half of the songs you download cut off before the end of the song.
2. The quality of the recordings suck (people do not know how to
record a quality MP3, no matter what the bit rate is - it depends on
levels, ripper used, etc.).
3. If I'm paying for the song, I want it from the source. Not Joe
Blow's computer on the other side of the world.
Let's face it, you never know what you're going to get off of Napster.
You get noise one time, buzzing the next, bass boost out the roof on
some, etc. The deal would have to be that if I downloaded a song, I
would have to approve it after download; otherwise, I wouldn't want to
pay for it. If they're going to keep Napster open the way it is (and
make it a subscription service), they'll have to come up with a better
way to get quality songs.
- Brent Jackson
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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