Dean Speaks Out on Napster/MP3.com Imbroglio

Volume 4, Issue 7 - August 8, 2000 


The Friedman Report - In which Dean gripes about the ongoing online music imbroglio.

But first...


DEAN UK GIG REMINDER: Dean Friedman - In Concert - UK gigs

Saturday, Sept. 9th [9pm] - Cambridge - The Boat Race - 01223-508533 10 ORDER TICKETS
Sunday, Sept. 17th [8pm] - London - The Spitz, Spitalfield Market - 15 (info line c/o Stuart 
Lyon) 0207-351-2938 ORDER TICKETS

[ Credit Card orders by phone for Spitz/London gig now available on Ticketweb 020 7771 2000 ]

Click here to ORDER TICKETS (see GIG section for more info on the Spitz venue)

To order via regular (snail) mail, send a cheque or m.o. payable to 'Dean Friedman'
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These are the only scheduled UK gigs this year.


So, anyway, the topic for today...

[PLEASE NOTE: I've just reread this entire email and feel I ought to warn you all that this is a  totally impassioned rant.]

Dean gripes about the ongoing online music imbroglio.

No, I'm not referring to Natalie Imbruglio, the sexy Australian pop star - although the subject certainly impacts on her as a recording artist and songwriter. I refer, instead, to the ongoing, much publicized battle between the major record labels against a new breed of online music internet sites such as Napster.com and MP3.com which offer visitors the ability to download digital copies of music for - now get this - free!

Yes, free. As you can imagine the concept of giving away music tracks for free has the record labels up in arms, although, I'm not entirely sure why this should be - after all, the whole record industry is based on promoting records by letting people hear them repeatedly for 'free' on radio and tv frequently enough that people are eventually persuaded to run to record shops to buy up CD's with their hard earned cash. Then there are the music publishers, the biggest of which are owned or affiliated with labels, who are happy for radio/TV outlets to offer their songs to consumers for free because the radio/TV outlets eventually pay them royalty fees for permission to use those songs, with money they generate from ad revenue, which comes from companies that sell products, which comes from the consumers that buy those products with their hard earned cash which they earned while listening to so called 'free' music on the radio! (got that?)

So, the label argument that you shouldn't give away music for free is nonsense - music has always been offered for free, as a sample, as an enticement for people to then purchase associated product, whether it's a single, a CD album, or a concert ticket ORDER TICKETS, or a box of dishwashing detergent they saw advertised on TV commercial.

As for other media, until the advent of cable, the TV industry (at least in America) has always offered its product for free, employing an ad revenue model. (For the American contingent, it may surprise some of you to learn - if I haven't mentioned it already - that the BBC charges for a TV license and has no advertising (they're pretty anal about this policy - they don't even allow pseudo-advertising like, say, if some songwriter were to inadvertently make a lyrical reference to the fact that a girl worked at the local McDonalds hamburger joint...)

Anyway, the entertainment industry has been using a 'free sample' enticement model since its inception. Picture a circus parade with elephants marching down the town square, or a streetwalker showing a bit of leg, or a streetwalker elephant showing... you get the idea. The real question is: who gets to pocket the cash when the consumer finally pays up for what they might have imagined was free.

Up until now, the labels were the only source for the fully packaged music product or complete album, and thus they were the only possible recipients for that music revenue. (With the exception of concert tickets, referred to above ORDER TICKETS, in that the artists have always  retained some control over their live performance revenue, notwithstanding crooked club-owners, agents, managers and the IRS. This is why such a high number of musicians have lost their lives in cars and planes; traveling was the only way they could make a living, seeing as their labels never paid them their fair share of royalties, if any.)

So the label complaint that consumers shouldn't get free music is not the real issue; their problem is that they don't want any one else getting a piece of the revenue pie which is eventually generated as a result of that free exposure.

Their other complaint is that if people have the ability to download copies of other people's legally purchased music for free (ala Napster/myMP3.com), it will spell the death knell of recorded music as no one will ever pay money again for a commercial CD.

The labels made a similar argument a few decades ago when digital audio tape was first introduced. 'Heavens', they insisted, 'everyone will illegally tape recordings and the record industry will die. We must stop this dangerous new technology!'. The TV and Film industry had the same hysterics earlier over videotape. What actually happened? All three industries simply got larger - exponentially, evolving into multi-billion, multi-national conglomerates. What copying does occur, it turns out, simply serves to perpetuate interest in the content itself, which eventually leads to consumer purchasing.

Here's the funny thing about the 'illegal tape' scare. When digital cassette tape was first introduced the record labels actually got the US Congress to force digital tape and cassette machine manufacturers to pay record companies a royalty on tape and tape deck sales to compensate the labels for loss of revenue due to bootlegging. This amounts to millions of dollars every year paid by the consumer to digital tape and cassette machine manufacturers who pay royalties to the major labels who then pay a fair portion of those royalties to the hardworking recording artists who are responsible for the music content in the first place. Oops, I was just kidding about the last part; actually, the record labels keep their 'tape' windfall and don't give a penny of it to the recording artists who's precious rights they were supposedly defending. I'm not familiar with the European situation but this continues to this day in the US and I've never heard a major or minor recording artist make a peep about it. Most of them aren't even aware that it has been going on for years.

The most obscene thing about this controversy is that the record labels have attempted to justify their struggle by continually touting their heartfelt concern for protecting the rights of their precious 'artists' - ah, yes, those fragile creative creatures the labels profess to nourish and protect. What's intensely humorous about this pretense is the fact that it is the record labels, themselves, who are guilty of the most gross acts - of abuse, theft, subjugation and exploitation - against their beloved 'artists'. The industry is entirely based on the abusive exploitation of artists. The labels aren't concerned with protecting anyone's interest but their own.

It's clear that the real reason the labels are in such a tizzy about this new evolution in music exposure and distribution is that for the first time in the history of recorded music the record labels are losing their stranglehold over the artists and the consumers. Because of that, they are justifiably scared.

Because of their size and access to promotional broadcasting channels, they still control what music and which artists are exposed to mass media - with rare exception (I was one), it takes a multimillion dollar budget to introduce a new artists or promote a new album into the market place and popular radio and tv outlets only provide access to artists receiving a major label push. (Sorry if this comes as a shock and surprise.) Most independent artists can't compete with those numbers. But it costs less than $100 a month (free, if you don't mind running other people's ads) for an artist to maintain a website from which they can communicate with their audience and market CD's. This terrifies record labels - the idea of artists selling their own product independently. Yikes! Major labels are still necessary to promote new product, but, thanks to the internet, they no longer exercise exclusive control over distribution or the ability to communicate with an existing audience.

Consider this: After selling in excess of 1 million records around the world and scoring consecutive chart successes in the US, Europe and Australia, I spent 15 whole years entirely shut out by the industry, completely unable to communicate with my audience - or vice versa - unable to notify them of concerts, or the availability of old or new CD's. The fact is, most of you didn't even know if I was still alive! (you wouldn't believe some of wacky theories as to what was responsible for my 'mysterious' disappearance' - alien abduction being the most reasonable.) It was only with the advent of the internet that I was gradually able to reconnect with my existing and still growing audience (that's you, folks) a fact which is continually gratifying, but seemed implausible only a few years ago.

The point is, the internet is taking away some of the monopolistic power the record labels have enjoyed for more than half a century. They're naturally upset about this. Awww...

So, record companies aside, how do I, as an artist, feel about other websites exploiting my music online, generating revenue from advertisers and not compensating me for my work?

Well... it depends.

If a site exploiting my music is generating new activity which leads to visits to my website and subsequent revenue (ORDER TICKETS), it would probably make sense for me to consent to their activity - 'consent' being the operative word here. Artists aspire to have some control over the exploitation of their work, even if it's still rarely the case.

However, if a site is simply generating revenues by exploiting my work without benefiting me, even indirectly, I would have a problem with that. In that respect, I share the opinion of the labels, but only under certain conditions, not the current one - because my initial impression of both MP3.com and Napster.com is that - at this point in time - they both serve as a promotional resource and, as such, do me no harm. But that could change.

Don't get me wrong. I like getting compensated for my work. The only real money I've ever made in the music business was from airplay which is paid direct by the collection societies to the artist - no record label, no middlemen. I do agree with the labels that as time goes on, the exploitation of music on the internet may exceed conventional modes. That being the case, there should be a per track/song tracking system designed (the labels are still argueing over which) to compensate both the artist and the label separately. Unfortunately, today's system relies on the goodwill of the record label to fairly compensate the artist after collecting revenue from the consumer - of course, record company goodwill is something of an oxymoron.

So who should pay that per track/song royalty? Consumers come to mind, right off the bat (another idiomatic American Baseball expression). One thing that's got the labels in such a panic is the realization that consumers have now become accustom to accessing music online for free - a habit some believe will be difficult, if not impossible, to break. (the labels, of course, have no one to blame but themselves, for taking so long implementing their own pay-per-track online download protocol). As both a consumer and artist I'm of two minds on the topic (I love that phrase) - as a consumer, I like being able to download a certain amount of product for free, but as an artist/indylabel, I also realize that I can't survive as a musician unless I receive some kind of support from my audience.

On my own site I go with the time honored 'free sample' approach, offering RealAudio versions of featured tracks from each album. These RealAudio clips are decent sound quality but not CD-quality. The reasoning is that anyone that really wants to hear the original track will purchase the CD.

I benefit from a slightly different model on my MP3.com artist page (http://mp3.com/deanfriedman) where I actually receive a tiny (very tiny... miniscule, actually.) per song-download royalty from mp3.com. This is still an unproven model, however. These modest royalty payments come, theoretically, from ad revenue, but for the moment, the only reason mp3.com has this much cash to throw around is due to the extremely high stock valuation that mp3.com still enjoys on Wall Street. It's still a little too early to know if this particular revenue model will survive. I personally believe it will, although in some modified hybrid form.

The main question remains: where's the money going to come from to support music production?

The answer? The same place it's always come from, ultimately - the consumer. The issue is simply how and when they pay and who do you make your check out to.

Even if all music is eventually given away online for 'free' as a kind of 'loss leader', ala free TV, to grab the attention of consumers who are then persuaded to purchase merchandise, consumers are still, indirectly, footing the bill. This is the ad revenue model.

The other popular formula is a subscription based revenue model in which the consumer, again, pays a monthly fee entitling them to download tracks and other goodies. (you're not seriously considering this are you, Dean? Dean?! uh, hmmm.....)

A per-track fee revenue model is another viable option.

Here's the curious thing though: In just the last year we've witness corporate mergers of unprecedented scale and dimension; entertainment companies merging with online service 
companies merging with cable companies merging with phone companies merging with power companies into one really big interactive power, communications, content company (not to 
mention the government taking its cut in all this). And yet, amazingly, even though we're dealing with essentially one big company, they've managed to cleverly disguise that fact by continuing to send us SEPARATE BILLS! (And overcharging us to boot!) No wonder John and Jane Q. Public feels perfectly entitled to download free music tracks every now and then.

The truth is, as arms of multinational entertainment conglomerates, major record labels will live on for ever even if they have to give start giving all their music content away. They'll simply turn into a promotional tool for selling other product of the parent company.

What is clear is that, regardless of what happens to the majors, independent musicians will have to evolve a non-traditional means of earning a living in order to survive and the internet is already facilitating just that.

I'm not a typical case in that I readily acknowledge that my existing audience (you guys) evolved from my initial success in the traditional system, even though my ongoing survival as a musician is contingent on the new order.

But even though a portion of my income is still derived from traditional industry sources, I salute mp3.com and napster.com in their efforts to break the stranglehold that the multi-national record industry has on recording artists and the creation of music.

I believe in greater access and opportunities for all musicians and an environment that supports and promotes variety and non-exclusivity.

Ad revenue, subscriptions, per-track download fees, sponsorships, on-line CD sales and ancillary on-line merchandising (ie. concert tickets, T-shirts, posters, etc...), rich relatives, armored car heists; these are just some of the potential internet commerce formulas that will allow independent music to survive.

I'm still trying to figure it all out. So is everybody else. What to do? ORDER TICKETS That's why the labels are in such a quandary. But, next time I hear some record company executive cry their eyes out about how the internet is a dire threat to the survival of 'their' industry, I'll be clicking away in my browser, smiling contentedly, and downloading a 'free' mp3.

Please send all comments and rebukes to:

Dean - you good-for-nothing musician - Friedman
dean@deanfriedman.com
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