Andy Lykens

Innovating and operating through growth

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Can VEVO be a thorough solution?

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Following Glenn Peoples on Twitter is really a great move if you’re in the music industry, or affected by it…or even just interested in it. Yesterday he posted about UMG’s new site VEVO which launches tonight. In case you’re unfamiliar you can read the full VEVO press release here. To sum it up for you though, VEVO is a premium video content website founded by UMG and Google who are hoping to derive ad revenue and boost retail sales before splitting the profits.

Glenn makes some really interesting points about whether or not this experiment will ultimately generate the dollars UMG and the rest of the industry have been so desperately seeking to attract in the past 10 years. But while the idea of controlling the content and limiting it to one site while not wasting loads of cash on software investment is more sound than other failed industry endeavors, I remain more wary than Mr. Peoples about whether or not this enterprise will be a success.

What labels should most be worried about is their business model. Why are they still not focusing on business practices and processes, especially after the Tim Quirk fiasco? I don’t sincerely believe that an industry that cannot use the tools its provided to keep track of the little business it does do, and honestly account for that business, can ever generate money. What little ingenuity is left in the music industry should focus on some sort of comprehensive royalty/licensing database and tracking program, not how to better harness streaming video. What about a better way to aggregate amateur content for A&R review? It only starts there, I could go on all day.

This harkens back to the same argument I posted about Spotify: if streaming video is so great and ad revenue is the way to generate dollars with music content, why hasn’t it been already done?

Glenn makes a great point when he talks about labels being great at finding, nurturing, and promoting artists – what they’re not good at is exploiting those copyrights in a way that benefits both the artist and the company that worked so at development. How is streaming video and tightly controlling that streamed video going to improve their situation? Napster already proved that the industry can’t control it’s copyrights tightly enough…then limewire did it…then YouTube…why does the platform make any difference? You may think that a music video is different than an mp3, but it’s not. The content is still focused on the artist and his or her music. The video has very little to do with it.

I’m afraid if the music industry’s best idea at this time is to hope to increase CPM’s for ad revenue then my job security may very well be in jeopardy…unless of course I go to law school as I imagine we’ll see a whole slew of lawsuits after this VEVO ordeal. Too bad I have no interest in punishing people for money, I’d rather just keep exploiting copyrights – it really isn’t that hard after all.

Great thoughts on Net Neutrality

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The Future of Music Coalition continues to impress me with its thoughts on music copyright and the issues that affect it. I wanted to post the following comments that Jean Cook, Interim Executive Director gave.

Nov 20 2009
Testimony of

Jean Cook

Interim Executive Director,
Future of Music Coalition

New York City Council Committee
on Technology in Government
Hearing on Net Neutrality

November 20, 2009

Members of the Committee and fellow speakers, it’s a privilege to appear here today to talk about net neutrality, which is an issue that has enormous bearing on those in the creative community.

My name is Jean Cook. I’m a musician, and also the Interim Executive Director of Future of Music Coalition, a national non-profit education, research and advocacy organization for musicians. FMC works to ensure that artists are able to develop audiences through platforms like radio and the internet. We also care deeply about developing appropriate compensation structures for artists as we continue this rocky transition to a largely digital environment for music.

When the original Napster appeared nearly a decade ago, the traditional music industry was confronted with a troublesome new reality: reproduction and distribution was no longer something exclusive to the big labels and their industry partners – it was now in the hands of the masses. Clearly, this had major implications for copyright and intellectual property, but as FMC said at the time, the only viable alternative to an illegal Napster is a legal one. Since then, we’ve advocated for a legitimate digital music marketplace that fairly compensates artists and allows for innovative ways for discovering music.

In the remainder of the decade we’ve seen remarkable examples of using the open internet to connect with audiences and advance their careers on their own terms. Musicians are collaborating, selling merchandise, booking tours and building fanbases via the web. OK Go’s homemade YouTube video became an international sensation and led to the band winning a Grammy for best short video. Erin McKeown holds “virtual concerts” around her house that her fans can watch live online from all over the world. Even though she lives in a remote island off the coast of Washington State, composer Alex Shapiro makes a living off of commissions from her myspace page. Meanwhile, there are now countless legal services such as Rhapsody, Pandora, iTunes, eMusic, MOG and Lala that make it incredibly easy for listeners to seek out music. And niche music discovery sites such as Kalabash or Arkiv Music make it possible to delve deep into catalogues of music from around the world, and classical music is now on the same playing field as the most mainstream services.

These successes are models for a new industry, and they would not have been possible without open internet structures. Net neutrality gives essentially everyone a license to innovate, and we see the results from the artists whose creativity is fueling “music 2.0” as well as the technologists who are designing amazing new ways to experience music.

In the emerging digital marketplace, there are far fewer middlemen or gatekeepers that are holding artists back or imposing conditions on them in exchange for access to listeners. As the digital music marketplace matures, we are keenly aware of the dangers facing the independent and niche music communities if new gatekeepers such as the telecommunications companies were to be given control over what you can experience on the internet.

Although artists have thus far had the benefit of open internet structures that gives them access to the same essential technology as the best-funded companies, there have been troubling instances where telecommunications companies have behaved in a manner that raises serious concerns for artists’ ability to not only reach potential audiences, but also enjoy their right to expression.

One example of the latter came in 2007, when the band Pearl Jam performed at Lollapalooza. AT&T had the exclusive right to the online broadcast of the concert, and during an improvised segment, singer Eddie Vedder made statements critical about then-president George W. Bush. AT&T censored this portion of the broadcast, leaving viewers at home wondering what he was saying. Although this isn’t necessarily a perfect example of non-net neutrality, it does illustrate what can happen when one ISP has sole control over the distribution of content and is allowed to make its own calls about what is or isn’t “acceptable” speech.

Another telling incident also occurred in 2007 when Comcast was discovered to be interfering with the delivery of internet data using the BitTorrent protocol. While there are clearly those who use torrent technology to illegally share copyrighted material, the technology itself is perfectly legal, and is in fact used by fully licensed audio-visual companies like Vuze (as well as other mainstream providers) as an efficient way to deliver content. An AP reporter attempted to send a copy of the King James Bible – which is in the public domain – via BitTorrent, but Comcast interrupted the transfer, thereby confirming the ISP’s “throttling” of BitTorrent traffic. Ultimately, the FCC ruled that Comcast had violated its net neutrality principles, but the order has been appealed by Comcast and is awaiting judgment.

With new FCC Commissioners in place it finally appears that expanded net neutrality principles will become part of the “rules of the road” for the internet. The transparent process the Commission launched with its October 22 Notice of Proposed Rulemaking rightfully recognizes that there are a great number of stakeholders, including creators and the public, whose voices must be considered as the FCC goes about crafting net neutrality policies. We’re also pleased to see two new principles added to the Commissions draft rules – one that would not allow ISPs to prevent their customers from using legal devices, applications and services of their choosing, and a “non-discrimination” principle that would keep ISPs from unnecessary blocking or throttling of data, and would compel them to publicly disclose their network management techniques.

It is important to remember that these proposed rules apply only to lawful content, sites and services, which leaves room for discussion about ways to prevent the unlawful sharing of content. This is an important distinction. Ensuring compensation for rightsholders is hardly incompatible with net neutrality. There are currently conversations about possible technological solutions to the illegal transfer of copyrighted content, but such discussions need not compromise the goal of establishing clear and transparent rules for net neutrality. In fact, net neutrality is critical to continue to nurture and support innovation and legal, licensed services as an alternative to piracy. In our quest to ensure proper compensation for creators and rightsholders, we must be careful not to compromise what makes the internet such an incredible platform for innovation, expression and entrepreneurship.

On behalf of Future of Music Coalition, I am pleased that the Committee is giving this matter the attention it deserves as the FCC undertakes a thorough and open process that will hopefully ensure that the internet remains an unprecedented space for creativity, commerce and the exchange of ideas. Thank you.

Labels turning to spotify could be swimming upstream.

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After perusing FMC’s web site I recently came across an article touting the impending greatness of cloud computing’s effect on the music industry namely in the form of Spotify.

While the article notes “streaming of music from the cloud could be one of the missing puzzle pieces for which the music industry has been so desperately searching” and highlights some great positives of streaming services like Spotify, I’d like to point an obvious fact: streaming has been around for years.

If streaming were the answer to all of the music industry’s problems, quite frankly it would have already solved them. While Spotify is definitely a convenient way to listen to music on computers, phones, and media devices equipped to access content over the internet, it is still limited despite claims of having your music anywhere, anytime, on any device. What if you’re on a plane? What if you’re on the subway? What if you have AT&T and get terrible 3G reception despite having an awesome, more-than-capable device like the iphone? (SLAM!)

It’s also a fallacy to say the problem with the music business model can be solved by fixing its distribution method – this isn’t the case. Labels are still trying to grasp hold of sales to a broad consumer base and ultimately this doesn’t work. Ideally labels need to focus on licensing (publishing) and using the music as a promotional tool to drive concert and merchandise revenue. Spotify does NOT change anything about the music industry itself. It merely offers another, quite similar, not totally accessible platform for the consumer.

What should be kept in mind by everyone trying to revitalize the monetization of music is the value of the music no longer has anything to do with the format on which its presented, but in the experience and association the music provides the listener. Thus the thinking should be: Who is a more profitable consumer and how do I reach them?

Finally, who is the streaming method good for at this point in time? For the consumer its decent unless you’re traveling by plane, subway, or generally don’t get a good wireless connection. For labels it could go either way but historically labels have not taken advantage of technology and furthermore have spent large amounts of cash to either avoid it, or even exploit it, with little to no success either way.

It’s great for Spotify…

What about independent artists? As far as I know there isn’t much in place that helps out the little guy – though I could be wrong as I’m not able to use Spotify here in the US. Device manufacturers will probably see it as just another tool to use to get people to buy or use their devices – not terribly powerful, but not harmful either.

Ultimately Spotify, while a great service, is probably not the answer to the music industry’s woes. As wireless becomes faster and more prevalent, and as the music industry begins to bend and re-shape itself, the opportunity is definitely there and I could be chowing down on these very words in the near future. So perhaps something better than another paid subscription service or ad-revenue model will present itself as a result of Spotify’s efforts, but both Spotify and the music industry still have a long way to go.