[wordup] The Internet Debacle - An Alternative View

[Adam Shand]

This is really good stuff.  Go get them kids.

Adam.

Via: The Eristocracy <Eristocracy at merrymeet.com>
From: http://www.janisian.com/article-internet_debacle.html

THE INTERNET DEBACLE - AN ALTERNATIVE VIEW

Originally written for Performing Songwriter Magazine

* Shortly after this article was turned in, Michael Greene resigned as
president of NARAS.

"The Internet, and downloading, are here to stay... Anyone who thinks
otherwise should prepare themselves to end up on the slagheap of history."
(Janis Ian during a live European radio interview, 9-1-98)*Please see
author's note at end!

When I research an article, I normally send 30 or so emails to friends and
acquaintances asking for opinions and anecdotes. I usually receive 10-20 in
reply. But not so on this subject!

I sent 36 emails requesting opinions and facts on free music downloading
from the Net. I stated that I planned to adopt the viewpoint of devil's
advocate: free Internet downloads are good for the music industry and its
artists. 

I've received, to date, over 300 replies, every single one from someone
legitimately "in the music business."

What's more interesting than the emails are the phone calls. I don't know
anyone at NARAS (home of the Grammy Awards), and I know Hilary Rosen (head
of rhe Recording Industry Association of America, or RIAA) only vaguely. Yet
within 24 hours of sending my original email, I'd received two messages from
Rosen and four from NARAS requesting that I call to "discuss the article."

Huh. Didn't know I was that widely read.

Ms. Rosen, to be fair, stressed that she was only interested in presenting
RIAA's side of the issue, and was kind enough to send me a fair amount of
statistics and documentation, including a number of focus group studies RIAA
had run on the matter.

However, the problem with focus groups is the same problem anthropologists
have when studying peoples in the field - the moment the anthropologist's
presence is known, everything changes. Hundreds of scientific studies have
shown that any experimental group wants to please the examiner. For focus
groups, this is particularly true. Coffee and donuts are the least of the
pay-offs. 

The NARAS people were a bit more pushy. They told me downloads were
"destroying sales", "ruining the music industry", and "costing you money".

Costing me money? I don't pretend to be an expert on intellectual property
law, but I do know one thing. If a music industry executive claims I should
agree with their agenda because it will make me more money, I put my hand on
my walletŠand check it after they leave, just to make sure nothing's
missing. 

Am I suspicious of all this hysteria? You bet. Do I think the issue has been
badly handled? Absolutely. Am I concerned about losing friends,
opportunities, my 10th Grammy nomination by publishing this article? Yeah. I
am. But sometimes things are just wrong, and when they're that wrong, they
have to be addressed.

The premise of all this ballyhoo is that the industry (and its artists) are
being harmed by free downloading.

Nonsense. Let's take it from my personal experience. My site
(www.janisian.com ) gets an average of 75,000 hits a year. Not bad for
someone whose last hit record was in 1975. When Napster was running
full-tilt, we received about 100 hits a month from people who'd downloaded
Society's Child or At Seventeen for free, then decided they wanted more
information. Of those 100 people (and these are only the ones who let us
know how they'd found the site), 15 bought CDs. Not huge sales, right? No
record company is interested in 180 extra sales a year. ButŠ that translates
into $2700, which is a lot of money in my book. And that doesn't include the
ones who bought the CDs in stores, or who came to my shows.

Or take author Mercedes Lackey, who occupies entire shelves in stores and
libraries. 15 years ago she published a series of books with "Arrows" in the
title; she's been getting royalties ever since. However, she recently put
the first "Arrow" book on Eric Flint's "Baen Free Library" site, and one
royalty period after, she received over triple the normal royalty.* In fact,
payment on all her old titles increased, suddenly and significantly, with
the only change being the availability of that one free book. I don't know
about you, but as an artist with an in-print record catalogue that dates
back to 1965, I'd be thrilled to see sales on my old catalogue rise.

Lackey says "It's what I'd expect to happen if a steady line of people who'd
never read my stuff encountered it for freeŠthey started to work through my
backlist." I've found that to be true over and over again. Every time we
make a few songs available on my website, sales of all the CDs go up. A lot.

Now, RIAA and NARAS, as well as most of the entrenched music industry, are
arguing that free downloads hurt sales. (More than hurt - they're saying
it's destroying the industry.)

Alas, the music industry needs no outside help to destroy itself. We're
doing a very adequate job of that on our own, thank you.

Here are a few statements from the RIAA's website:

1.    "Analysts report that just one of the many peer-to-peer systems in
operation is responsible for over 1.8 billion unauthorized downloads per
month". (Hilary B. Rosen letter to the Honorable Rick Boucher, Congressman,
February 28, 2002)

2.    "Sales of blank CD-R discs haveŠgrown nearly 2 1Ž2 times in the last
two yearsŠif just half the blank discs sold in 2001 were used to copy music,
the number of burned CDs worldwide is about the same as the number of CDs
sold at retail." (Hilary B. Rosen letter to the Honorable Rick Boucher,
Congressman, February 28, 2002)

3.    "Music sales are already suffering from the impactŠin the United
States, sales decreased by more than 10% in 2001."(Hilary B. Rosen letter to
the Honorable Rick Boucher, Congressman, February 28, 2002)

4.    "In a recent survey of music consumers, 23%Šsaid they are not buying
more music because they are downloading or copying their music for
free."(Hilary B. Rosen letter to the Honorable Rick Boucher, Congressman,
February 28, 2002)


Let's take these points one by one, but before that, let me remind you of
something: the music industry had exactly the same response to the advent of
reel-to-reel home tape recorders, cassettes, DATs, minidiscs, VHS, BETA,
music videos ("Why buy the record when you can tape it?"), MTV, and a host
of other technological advances designed to make the consumer's life easier
and better. I know because I was there.

The only reason they didn't react that way publicly to the advent of CDs was
because they believed CD's were uncopyable. I was told this personally by a
former head of Sony marketing, when they asked me to license Between the
Lines in CD format at a reduced royalty rate. ("Because it's a brand new
technology.") 

1.    Who's to say that any of those people would have bought the CD's if
the songs weren't available for free? I can't find a single study on this,
one where a reputable surveyor such as Gallup actually asks people that
question. I think no one's run one because everyone is afraid of the truth -
most of the downloads are people who want to try an artist out.
And if a percentage of that 1.8 billion is because people are downloading a
current hit by Britney or In Sync, who's to say it really hurt their sales?
Soft statistics are easily manipulated. How many of those people went out
and bought an album that had been over-played at radio for months, just
because they downloaded a portion of it?

2.    Sales of blank CDs have grown? You bet. I bought a new Vaio in
December, and now back up all my files onto CD. I go through 7-15 CD's a
week that way, or about 500 a year. Most new PC's come with XP, which makes
backing up to CD painless; how many people are doing what I'm doing?
Additionally, when I buy a new CD, I make a copy for my car, a copy for
upstairs, and a copy for my partner. That's three blank discs per CD. So I
alone account for around 750 blank CDs yearly.

3.    I'm sure the sales decrease had nothing to do with the economy's
decrease, or a steady downward spiral in the music industry, or the garbage
being pushed by record companies. Aren't you? There were 32,000 new titles
released in this country in 2001, and that's not including re-issues, DIY's,
or smaller labels that don't report to SoundScan. A conservative estimate
would place the number of "newly available" CD's per year at 100,000. That's
an awful lot of releases for an industry that's being destroyed. And to make
matters worse, we hear music everywhere, whether we want to or not; stores,
amusement parks, highway rest stops. The original concept of Muzak (to be
played in elevators so quietly that its soothing effect would be subliminal)
has run amok. Why buy records when you can learn the entire Top 40 just by
going shopping for groceries?

4.    Which music consumers? College kids who can't afford to buy 10 new CDs
a month, but want to hear their favorite groups? When I bought my nephews a
new Backstreet Boys CD, I asked why they hadn't downloaded it instead. They
patiently explained to their senile aunt that the download wouldn't give
them the cool artwork, and more important, the video they could see only on
the CD.


Realistically, why do most people download music? To hear new music. Not to
avoid paying $5 at the local used CD store, or taping it off the radio, but
to hear music they can't find anywhere else. Face it - most people can't
afford to spend $15.99 to experiment. That's why listening booths (which
labels fought against, too) are such a success.

You can't hear new music on radio these days; I live in Nashville, "Music
City USA", and we have exactly one station willing to play a non-top-40
format. On a clear day, I can even tune it in. The situation's not much
better in Los Angeles or New York. College stations are sometimes bolder,
but their wattage is so low that most of us can't get them.

One other major point: in the hysteria of the moment, everyone is forgetting
the main way an artist becomes successful - exposure. Without exposure, no
one comes to shows, no one buys CDs, no one enables you to earn a living
doing what you love. Again, from personal experience: in 37 years as a
recording artist, I've created 25+ albums for major labels, and I've never
once received a royalty check that didn't show I owed them money. So I make
the bulk of my living from live touring, playing for 80-1500 people a night,
doing my own show. I spend hours each week doing press, writing articles,
making sure my website tour information is up to date. Why? Because all of
that gives me exposure to an audience that might not come otherwise. So when
someone writes and tells me they came to my show because they'd downloaded a
song and gotten curious, I am thrilled!

Who gets hurt by free downloads? Save a handful of super-successes like
Celine Dion, none of us. We only get helped.

But not to hear Congress tell it. Senator Fritz Hollings, chairman of the
Senate Commerce Committee studying this, said "When Congress sits idly by in
the face of these [file-sharing] activities, we essentially sanction the
Internet as a haven for thievery", then went on to charge "over 10 million
people" with stealing. [Steven Levy, Newsweek 3/11/02]. That's what we think
of consumers - they're thieves, out to get something for nothing.

Baloney. Most consumers have no problem paying for entertainment. One has
only to look at the success of Fictionwise.com and the few other websites
offering books and music at reasonable prices to understand that. If the
music industry had a shred of sense, they'd have addressed this problem 15
years ago, when people with websites were trying to obtain legitimate
licenses for music online. Instead, the industry-wide attitude was It'll go
away. That's the same attitude CBS Records had about rock 'n' roll when
Mitch Miller was head of A&R. (And you wondered why they passed on The
Beatles and The Rolling Stones.)

I don't blame the RIAA for Holling's attitude. They are, after all, the
Recording Industry Association of America, formed so the labels would have a
lobbying group in Washington. (In other words, they're permitted to make
contributions to politicians and their parties.) But given that our
industry's success is based on communication, the industry response to the
Internet has been abysmal. Statements like the one above do nothing to help
the cause. 

Of course, communication has always been the artist's job, not the
executives. That's why it's so scary when people like current NARAS
president Michael Greene begin using shows like the Grammy Awards to drive
their point home. 

Grammy viewership hit a six-year low in 2002. Personally, I found the
program so scintillating that it made me long for Rob Lowe dancing with Snow
White, which at least was so bad that it was entertaining. Moves like the
ridiculous Elton John-Eminem duet did little to make people want to watch
again the next year. And we're not going to go into the Los Angeles Times'
Pulitzer Prize-winning series on Greene and NARAS, where they pointed out
that MusiCares has spent less than 10% of its revenue on disbursing
emergency funds for people in the music industry (its primary purpose), or
that Greene recorded his own album, pitched it to record executives while
discussing Grammy business, then negotiated a $250,000 contract with Mercury
Records for it (later withdrawn after the public flap). Or that NARAS
quietly paid out at least $650,000 to settle a sexual harassment suit
against him, a portion of which the non-profit Academy paid. Or that he's
paid two million dollars a year, along with "perks" like his million-dollar
country club membership and Mercedes. (Though it does make one wonder when
he last entered a record store and bought something with his own hard-earned
money.) 

Let's just note that in his speech he told the viewing audience that NARAS
and RIAA were, in large part, taking their stance to protect artists. He
hired three teenagers to spend a couple of days doing nothing but
downloading, and they managed to download "6,000 songs". Come on. For free
"front-row seats" at the Grammys and an appearance on national TV, I'd
download twice that amount! ButŠwho's got time to download that many songs?
Does Greene really think people out there are spending twelve hours a day
downloading our music? If they are, they must be starving to death, because
they're not making a living or going to school.

This sort of thing is indicative of the way statistics and information are
being tossed around. It's dreadful to think that consumers are being asked
to take responsibility for the industry's problems, which have been around
far longer than the Internet. It's even worse to think that the consumer is
being told they are charged with protecting us, the artists, when our own
industry squanders the dollars we earn on waste and personal vendettas.

Greene went on to say that "Many of the nominees here tonight, especially
the new, less-established artists, are in immediate danger of being
marginalized out of our business." Right. Any "new" artist who manages to
make the Grammys has millions of dollars in record company money behind
them. The "real" new artists aren't people you're going to see on national
TV, or hear on most radio. They're people you'll hear because someone gave
you a disc, or they opened at a show you attended, or were lucky enough to
be featured on NPR or another program still open to playing records that
aren't already hits.

As to artists being "marginalized out of our business", the only people
being marginalized out are the employees of our Enron-minded record
companies, who are being fired in droves because the higher-ups are
incompetent. 

And it's difficult to convince an educated audience that artists and record
labels are about to go down the drain because they, the consumer, are
downloading music. Particularly when they're paying $50-$125 apiece for
concert tickets, and $15.99 for a new CD they know costs less than a dollar
to manufacture and distribute.

I suspect Greene thinks of downloaders as the equivalent of an old-style
television drug dealer, lurking next to playgrounds, wearing big coats and
whipping them open for wide-eyed children who then purchase black market
CD's at generous prices.

What's the new industry byword? Encryption. They're going to make sure no
one can copy CDs or download them for free. Brilliant, except that it
flaunts the Bill of rights. And it pisses people off.

How many of you know that car makers are now manufacturing all their CD
players to also play DVD's? or that part of the encryption record companies
are using doesn't allow your store-bought CD to be played on a DVD player,
because that's the same technology as your computer? And if you've had
trouble playing your own self-recorded copy of O Brother Where Art Thou in
the car, it's because of this lunacy.

The industry's answer is to put on the label: "This audio CD is protected
against unauthorized copying. It is designed to play in standard audio CD
players and computers running Windows O/S; however, playback problems may be
experienced. If you experience such problems, return this disc for a
refund." 

Now I ask you. After three or four experiences like that, shlepping to the
store to buy it, then shlepping back to return it (and you still don't have
your music), who's going to bother buying CD's?

The industry has been complaining for years about the stranglehold the
middle-man has on their dollars, yet they wish to do nothing to offend those
middle-men. (BMG has a strict policy for artists buying their own CDs to
sell at concerts - $11 per CD. They know very well that most of us lose
money if we have to pay that much; the point is to keep the big record
stores happy by ensuring sales go to them. What actually happens is no sales
to us or the stores.) NARAS and RIAA are moaning about the little mom & pop
stores being shoved out of business; no one worked harder to shove them out
than our own industry, which greeted every new Tower or mega-music store
with glee, and offered steep discounts to Target and WalMart et al for
stocking CDs. The Internet has zero to do with stores closing and lowered
sales. 

And for those of us with major label contracts who want some of our music
available for free downloadingŠ well, the record companies own our masters,
our outtakes, even our demos, and they won't allow it. Furthermore, they own
our voices for the duration of the contract, so we can't even post a live
track for downloading!

If you think about it, the music industry should be rejoicing at this new
technological advance! Here's a fool-proof way to deliver music to millions
who might otherwise would never purchase a CD in a store. The
cross-marketing opportunities are unbelievable. It's instantaneous, costs
are minimal, shipping non-existantŠa staggering vehicle for higher earnings
and lower costs. Instead, they're running around like chickens with their
heads cut off, bleeding on everyone and making no sense. As an alternative
to encrypting everything, and tying up money for years (potentially decades)
fighting consumer suits demanding their first amendment rights be protected
(which have always gone to the consumer, as witness the availability of
blank and unencrypted VHS tapes and casettes), why not take a tip from book
publishers and writers?

Baen Free Library is one success story. SFWA is another. The SFWA site is
one of the best out there for hands-on advice to writers, featuring in depth
articles about everything from agent and publisher scams, to a continuously
updated series of reports on various intellectual property issues. More
important, many of the science fiction writers it represents have, by and
large, been heavily involved in the Internet since its inception. Each year,
when the science fiction community votes for the Hugo and Nebula Awards
(their equivalent of the Grammys), most of the works nominated are put on
the site in their entirety, allowing voters and non-voters the opportunity
to peruse them. Free. If you are a member or associate (at a nominal fee),
you have access to even more works. The site is also full of links to
members' own web pages and on-line stories, even when they aren't nominated
for anything. Reading this material, again for free, allows browsers to
figure out which writers they want to find more of - and buy their books.
Wouldn't it be nice if all the records nominated for awards each year were
available for free downloading, even if it were only the winners? People who
hadn't bought the albums might actually listen to the singles, then go out
and purchase the records.

I have no objection to Greene et al trying to protect the record labels, who
are the ones fomenting this hysteria. RIAA is funded by them. NARAS is
supported by them. However, I object violently to the pretense that they are
in any way doing this for our benefit. If they really wanted to do something
for the great majority of artists, who eke out a living against all odds,
they could tackle some of the real issues facing us:

*    The normal industry contract is for seven albums, with no end date,
which would be considered at best indentured servitude (and at worst
slavery) in any other business. In fact, it would be illegal.

*    A label can shelve your project, then extend your contract by one more
album because what you turned in was "commercially or artistically
unacceptable". They alone determine that criteria.

*    Singer-songwriters have to accept the "Controlled Composition Clause"
(which dictates that they'll be paid only 75% of the rates set by Congress
in publishing royalties) for any major or subsidiary label recording
contract, or lose the contract. Simply put, the clause demanded by the
labels provides that a) if you write your own songs, you will only be paid
3/4 of what Congress has told the record companies they must pay you, and b)
if you co-write, you will use your "best efforts" to ensure that other
songwriters accept the 75% rate as well. If they refuse, you must agree to
make up the difference out of your share.

*    Congressionally set writer/publisher royalties have risen from their
1960's high (2 cents per side) to a munificent 8 cents.

*    Many of us began in the 50's and 60's; our records are still in
release, and we're still being paid royalty rates of 2% (if anything) on
them.

*    If we're not songwriters, and not hugely successful commercially (as in
platinum-plus), we don't make a dime off our recordings. Recording industry
accounting procedures are right up there with films.

*    Worse yet, when records go out-of-print, we don't get them back! We
can't even take them to another company. Careers have been deliberately
killed in this manner, with the record company refusing to release product
or allow the artist to take it somewhere else.

*    And because a record label "owns" your voice for the duration of the
contract, you can't go somewhere else and re-record those same songs they
turned down.

*    And because of the re-record provision, even after your contract is
over, you can't record those songs for someone else for years, and sometimes
decades.

*    Last but not least, America is the only country I am aware of that pays
no live performance royalties to songwriters. In Europe, Japan, Australia,
when you finish a show, you turn your set list in to the promoter, who files
it with the appropriate organization, and then pays a small royalty per song
to the writer. It costs the singer nothing, the rates are based on venue
size, and it ensures that writers whose songs no longer get airplay, but are
still performed widely, can continue receiving the benefit from those songs.


Additionally, we should be speaking up, and Congress should be listening. At
this point they're only hearing from multi-platinum acts. What about someone
like Ani Difranco, one of the most trusted voices in college entertainment
today? What about those of us who live most of our lives outside the big
corporate system, and who might have very different views on the subject?

There is zero evidence that material available for free online downloading
is financially harming anyone. In fact, most of the hard evidence is to the
contrary. 

Greene and the RIAA are correct in one thing - these are times of great
change in our industry. But at a time when there are arguably only four
record labels left in America (Sony, AOL/Time/Warner, Universal, BMG - and
where is the RICO act when we need it?)Š when entire genres are glorifying
the gangster mentality and losing their biggest voices to violenceŠwhen
executives change positions as often as Zsa Zsa Gabor changed clothes, and
"A&R" has become a euphemism for "Absent & Redundant"Š well, we have other
things to worry about.

It's absurd for us, as artists, to sanction - or countenance - the shutting
down of something like this. It's sheer stupidity to rejoice at the Napster
decision. Short-sighted, and ignorant.

Free exposure is practically a thing of the past for entertainers. Getting
your record played at radio costs more money than most of us dream of ever
earning. Free downloading gives a chance to every do-it-yourselfer out
there. Every act that can't get signed to a major, for whatever reason, can
reach literally millions of new listeners, enticing them to buy the CD and
come to the concerts. Where else can a new act, or one that doesn't have a
label deal, get that kind of exposure?

We'll turn into Microsoft if we're not careful, insisting that any household
wanting a copy for the car, or the kids, or the portable CD player, has to
go out and "license" multiple copies.

As artists, we have the ear of the masses. We have the trust of the masses.
By speaking out in our concerts and in the press, we can do a great deal to
damp this hysteria, and put the blame for the sad state of our industry
right back where it belongs - in the laps of record companies, radio
programmers, and our own apparent inability to organize ourselves in order
to better our own lives - and those of our fans. If we don't take the reins,
no one will. 

Sources:
Baenbooks.com, BMG Records, Chicago Tribune, CNN.com, Congressional Record,
Eonline.com, Grammy.com, LATimes.com, Newsweek, Radiocrow.com, RIAA.org,
personal communications

* for more information on the Free Library, go to www.baen.com/library.

* to read Eric Flint's entire article, go to www.janisian.com.

Author's note: You are welcome to post this article on any cooperating
website, or in any print magazine, although we request you include a link
directed to
http://www.janisian.com and writer's credit!

Additionally, we're going to be putting our money where my mouth is,
starting in a couple of weeks. We'll be offering one to two songs every two
weeks in mp3 format for free downloading. These are songs I owns and control
both the copyright and master to; you are welcome to share these files with
your friends. We'd appreciate your showing your support of this service by
signing up for our email list at
janisian-announce-subscribe at yahoogroups.com. We won't bother you very often!
Beyond Yahoo! requirements, we do not rent, sell, or lend our email list.
All you will receive is notification when a new album is released, and an
occasional tour schedule. Thank you for your support!
 

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