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« Rock The Biz - Chapter 1: The Music Crisis | Main | Podcast Franchising For Indie Labels »
Tuesday
Mar022010

Is the RIAA to blame for reinforcing music piracy? 

I want to be completely upfront before you continue reading. This is my first post, and i do want to share a new technology that we launched today of which i am a co-founder. I do promise one thing, if you continue reading you will form your own opinion (whether you agree with me or disagree). However, i believe i have a radical alternative to piracy which we have been developing for the last 2 years. I believe being transparent comes first & foremost, that’s why right now, or forever hold your peace, i offer anyone not interested in reading about our new website, Webceleb.com- the opportunity to stop reading. If you’ve decided to continue reading, great. Let’s begin…  I want to make it very clear, this blog post does not touch on everything, otherwise it would be a thesis.  This is a quick deconstruction and reconstruction of how the RIAA brought down the self-inflicting hammer upon itself!

First, let’s deconstruct Music Piracy.

Napster, Limewire and many similar file sharing applications came to fruition in the late 90’s early 2000’s. Like addicts to their drug of choice, we were all instantly intoxicated.  I bet Shawn Fanning, a college student at Northwestern, had no idea that the mega-monster he was building would be a quintessential cornerstone in the fabric that has become the history of music piracy.  Or perhaps he was well aware? Metallica sure were well aware, remember that f@#$ing farce? Well, unless we’ve all forgotten, or been living under a rock, Napster met it’s unfortunate demise at the hands of the RIAA (Recording Industry Association of America)- through you guessed it, negative reinforcement in July 2001 when it shut down to comply with the injunction.  After the RIAA filed a series of infringement law suits against the dorm-room mega mogul the seed was planted and the infection grew. The publicity sent millions of rampant college students into a manic-Napster frenzy.  Napster had to pay a lot of money to execs already driving 6 figure cars and blah blah blah- along came this subscription model.  (subscription models are yet another perfectly competitive debate… for another time)

Napster was brilliantly ahead of it’s time for a few simple, convenient reasons.  Spending hours in a CD store trying to recall your favorite artists was a cumbersome task and a dying breed.  That’s the nature of business.  Competition brings about innovation.  Well, that’s not exactly the case within the music industry.  They would much rather keep the enterprise a closed nut.  The obvious was out in the open, the damage was done, Napster was the easier way to browse, share, discover and at the end of the day acquire- music.  Even if the music was being stolen, the technology and process was far superior and therefore genius.  By essentially turning Napster into a martyr, the music industry ensured its inevitable fate- declining product sales.  The cat was already out of the bag, people knew what they wanted.  Spending hours, day-dreaming about discovering that new hit album by that unknown group in retail location cesspools of thousands of options was an unpleasant smorgasbord soon to be chewed up, spit out, and left to spoil.  We could debate many other plausible solutions, outcomes or alternatives at this point in the story, but this is history.  Moving on…

The introduction of brilliant game changing technologies- Amazon marketplace & Apple’s iTunes

Jezz Bezos founded Amazon.com, Inc in 1994 and launched it online in 1995.  It started as an online bookstore, but quickly and intelligently recognized its market was much, much larger.  By diversifying their product lines to VHS, DVDs, CDs and MP3s (as well as a shit load of other gadgets and thing-a-majigs) Amazon rapidly became the online oligopoly we all know and love to hate, today. (of course, many deadpooled competitors have risen and fallen trying to tackle this giant- another story or debate).  Point being, Amazon is a gigantic fish in a pond where people are very well versed in its brand.  Amazon became, akin to Napster, a more convenient and user friendly way to acquire music online.  Further distancing people from retail locations where the big 4 labels could push their products and maximize their margins.

In steps the beloved, or abominable (depending which team you’re batting for) Steveie Jobs and the iTunes music tsunami.  Now, iTunes doesn’t need much elaboration.  They own what, 70% market share to couple with their 10 gazillinth download on Feb 24th 2010 (numbers not to scale ;)… Something insane like that anyways.  The point is, the music industry was now taking a back seat in their distribution which was being dictated by the monster brewing in Cuppertino- Apple, inc.

Let’s reconstruct what we know…

Napster opened pandora’s box in 1999 - 2001. People everywhere were addicted like junkies.  The music industry did nothing to offer a real alternative but start throwing around money and suing the beejesus out of anyone they could.  The people were screaming for innovation and in stepped the competition or kind of allies, Amazon and Apple.  (I know i left out Myspace, and everyone else… so sue me)  But as the years go by, torrents are becoming a pain in the ass and the convenience of pirating music is not as luxurious as it used to be.  Obvious exceptions aside (limewire, xtorrent, etc etc)…

But, ok, so what has really changed to provide an alternative to piracy?

I would argue, nothing.  Subscription models are great, stream all the music you want.  But that’s the thing, you stream.  Ad-supported, well shoot, don’t even get me started.  Traditional download models, well those are great Apple and Amazon rule the roost.  So what’s next?  Well, in steps the little guy.  We’re Webceleb.com and here’s the radical case i’m trying to make… What if we dropped punishment all together?  Screw it, come on already, it clearly isn’t working 95% of the people online still steal music. Am i the only person who realizes this?  I know i’m not that smart… Sometimes i even question my level of intelligence, so that being said, let’s make a change in the right direction.  It’s Pysch 101, Fanning would probably have known all about this had he not been skipping class to build such a beautiful piece of technological innovation.  Negative reinforcement only perpetuates a problem, positive reinforcement, now that’s something entirely different…

The music industry is about to change. (or, “hurry up and get to the point, already, dammit”)

Webceleb is the next generation of social music stores. We let everyone make money when music is downloaded.  Hear me out… By allowing fans and musicians to make money together, we believe we can create a positive global impact through a community that embraces legal downloading.  Instead of punishing, or threatening to punish people, Webceleb financially rewards those who purchase music.  Fans and musicians can now join forces, form partnerships if you will, and make money together.  Here’s how it works, when you buy a song for $1, you also receive 1 Slice from that artist.  Fifty percent goes to the musician; 40 percent goes back to the fans that own Slices from purchasing music; and 10 percent goes to Webceleb. Within 7 purchases the first person makes their full $1 back.  We believe musicians will be able to build legitimate, vested marking teams of fans.  I mean after all, as a fan you are spreading the word for free.  Now at Webceleb, you join the artist’s journey and are further incentivized to help market the musicians you discover… Or don’t if you don’t want to.  You can still make money.

The music industry is about to change, only at Webceleb.com. Are you up for trying something new?

Reader Comments (9)

Right on man. Looks like you've nailed it! No one is looking out for the "little guys." We are always fighting and scratching to make ends meet only to find that the next step isn't any better. Sounds like you have a credible solution, FINALLY. Thanks for the speaking an honest voice. I will be checking out you site very soon.

What you have here is an interesting concept; I wish you well navigating the mine field of licensing and in getting widespread participation.

In the meantime, however, I feel compelled to point out that The New York Times article you cite did not say that 95 percent of people online steal music. It said that "95 percent of the music downloaded via the Internet is pirated." That seems to me a big difference. Also, the statistic comes from a recording industry report the intent of which was to sound a huge alarm about the rate of piracy going on. Calmer heads have wisely questioned the validity of the "95 percent of all music is pirated" claim in the first place.

Jeremy-

True, i can see where you're going with this. It's a valid point. Regardless, i think we have to agree that far more music is being stolen then it is being legally downloaded. The fact still remains, the time is now to try something new to benefit artists and possibly invoke a change in the industry. I just feel that without a drastic change, nothing improves.

Thanks for you comment,
-=scott=-

March 3 | Unregistered CommenterScott Fetters

I like the idea of your site, it is somewhere between Slice-the-pie or sell-a-band with it's Fan-funded ideas and TheSixtyOne.com with its fan collected meta-data on attention and reputation.

Some questions though

#1 Who does the $0.40 cents that is paid to the slice owners from the first purchase go to?

#2 It says that "40% is split equally between every slice that has been received in the past 30 days" does this mean that you only get paid on the slice you own that month?

#3 Ever notice how sites that do this sort of thing are filled with music so bad that people need to be paid to listen to it?

March 3 | Unregistered CommenterFoster Hagey

Foster-

Thanks for taking the time to check out our site. I would be happy to address your questions.

1- The first 40¢ is a one-time only approval fee, as we must approve the artist to be entered into the marketplace to ensure they own the rights to their music.

2- As for your comment about Slice expiration- Yes, you only have your Slice for 30 days. However, we have a measure in place worth mentioning. For the first 100 sales, no Slices expire. We believe the first 100 people are loyal fans and sometimes it takes a little while for music to catch on.

Slices expire because we want fans to maximize the financial reward they make from buying music. For example, if you bought a song and received the 1000th Slice, the % you make is rather small. However, if 999 Slices disappear and you move up to #1. Now you receive a larger reward. This prevents the process from becoming stale.

3- As for your comment about sites full of bad music. You are most definitely entitled to your opinion. I would have to argue that some of the leaders in the industry such as iTunes, Myspace, iLike, Ourstage, Mog, Spotify, etc are also full of music that people like and dislike. Music is art, what you prefer is all relative. I think that's kind of the enjoyment, finding your style and figuring our why it speaks to you and so many other people too. Also, one quick correction to your comment. It is completely free to listen to music on Webceleb. We only financially reward people who support musicians enough to purchase their music as we think this process will further strengthen the relationship musicians have with their fans.

March 3 | Unregistered Commenterscott fetters

I don't mean to be negative, but you might want to look into what happened to Burn Lounge (same basic idea, but eventually deemed an illegal pyramid scheme & shut down) & Weedshare (I don't remember what happened to that one actually, but same basic profit sharing model) to see what you can learn from their errors.

They always say if you want to know where technology is headed in media, to look at what they're doing in the porn industry. So what's their answer been? I hear they generally go for the subscription model & downloads cheap enough to make piracy less lucrative. Anyone know for sure?

Brian-

Thanks for your feedback! Honestly, i don't think you sound negative at all. You are simply stating your opinion and substantiating it with clear evidence. I think you've brought up some very intelligent references, which i would like to address and share my perspective as an appreciation for you taking the time to respond. BTW, i thought your porn reference was profoundly hysterical. Right on :) If only we could all make digital media as popular as porn...

As for your two comparisons, here's why i think Burn Lounge and Weedshare are similar and different-

Similar because-
They were both innovators. They both tried to bring about an alternative sales method that they felt would benefit musicians and encourage fans to get involved. Webceleb wants to do something similar to this in that we want to help both fans and musicians join forces because we truly believe in the strength in numbers. Marketing strength that is.

Different because-
Unfortunately for Weedshare and Burn Lounge, you are 100% correct, they are indeed both pyramid models. They require you to recruit people into the system to increase the percentage you earn. That's the inherent problem with MLM. You are subjected to recruiting people to benefit. One key distinguishing difference between Webceleb and Weedshare / Burn Lounge, that i would like to highlight, has to do with recruiting. We do not require you to recruit anyone. When you buy a slice, you buy a piece of the fan's revenue that is equally shared with all Slice holders. You can invite people to better your chances of making money, or you can simply be a passive music lover who buys music you enjoy while still making money from each additional purchase. Unlike a pyramid, where you must recruit X number of people into your network (and then profit proportionately to whom you have pulled in) Webceleb is more akin to a pie where you share the fan portion with everyone. We did not want to build a system that required you to push something aggressively onto others as we felt the psychology was wrong. We wanted to build an entertainment network that rewards people for supporting the musicians they discover and making the pro-active choice to purchase music.

Again, thanks for your comments and feedback. If anyone decides to join Webceleb, please reach out to me at webceleb.com/scottish as i would love to continue any conversation, or show people around the community.

Cheers,

March 4 | Registered Commenterscott fetters

Without getting into the financial model, I think the problem you will have is that the premise of your site is that there is a demand for a site whereby people can go and discover "New Music" and I would have thought that would be a very small market if it even exists at all.

Maybe I am unique but I have never gone out to find "New Music" However, I do stumble across music that is new to me constantly whether it is on the radio, youtube, recommended by a friend, in a bar, out on the street or some other way, but I can not recall an occasion where I went to a web site specifically to find a new piece of music and I don't think the prospect of a slice of pie would change that.

If itunes were to adopt your financial model I am sure they would make a lot of fans very happy and that there would be a big surge in sales at the start of the month :-)

Anyway, those are my thoughts on the subject but, I do wish you well.

March 5 | Registered CommenterNeil Abrey

Neil-

Thanks for responding, and for your wishes that we do well!! It means a lot. As far as iTunes is concerned, let's work together to make this model attractive enough and then change the world by letting every other music store adopt it too :-) Music lovers everywhere will then join the journey of whatever artist they like and purchase music from. That's our dream, i would love it to become reality...

Regarding your other comments, i completely agree. People like yourself will never see Webceleb as a worthwhile resource since you don't go out to find new music. We completely understand that. Webceleb will not be for everyone and that's entirely ok. However, for all the other ways that you discover music- radio, youtube, recommendations, overhearing people talk at bars, or on the street - all of those people will benefit tremendously from using our site.

We will work hard to continue to evolve our product, and who knows, maybe i'll even see you join the community one day ;-)

Cheers,

March 5 | Registered Commenterscott fetters

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