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The Great LimeWire Pizza Robbery

An Indie Label's Run In With LimeWire

The staff of New Your City indie label Dovecote usually spends Wednasday's evenings hanging out at The Music Box, a usually quiet joint where the often often gives away free pizza to help bring in a crowd. On a recent Wednesday they walked in to find the place far busier than usual. When a friend told them the free pizza had arrived, Pal and Kosuke from the label went to grab a slice and....

Woman: “Who the FUCK are you?  And why are you eating our pizza?”

<Long pause>  Kosuke and Paul look confused.

Kosuke: "Are you joking?  Is this a joke?"

Woman:  "No this is definitely NOT a joke.  I want to know who you are and why you’re eating our pizza."

Kosuke: "Well our friend came in and told us there was free pizza at the bar.  We are.  So.  Sorry. It was a misunderstanding."

Woman: (with unbridled entitlement) "This is a company party our CEO is here and you STOLE our pizza.  Are you from out of town?  Because let me tell you, NOTHING is free in New York City.  Nothing is free… well maybe except for the condoms in Times Square."

It's Official: Sony Invests In IODA

This time the rumor mill proved correct. Sony Music Entertainment has entered into a global partnership with IODA which includes an investment in the digital distributor.  IODA will now provide digital services for Sony's RED indie label arm, as well as, offer expanded overseas opportunities. In return, IODA can now offer its labels physical distribution and the stability of a corporate partner with deep pockets.

How Will Independent Labels React?

The exact details of how the two companies will work together are still being worked out. But if as Thomas Hess, Sony Music's President of Global Digital Business, U.S. Sales and Corporate Strategy told Billboard, IODA will be "joined at the hip" with the major, it is unclear how an often firecely independent label community will react.

Lime Wire Adds CD Baby's 240K Indie Artists

  

Lime Wire is adding CD Baby's catalog of 240,000 independent artists to its digital the LimeWire Store. The CD Baby catalog includes topsellers from Regina Spektor, Gary Jules, Joe Purdy, Ingrid Michaelson, Melissa Ferrick, Charlotte Martin, Colin Hay and Stan Ridgway, and this deal brings the total number of licensed tracks on Lime Wire to 3.5 million.  

Pirate Bay Sold To Global Gaming Factory

(UPDATED) News began to trickle out in the wee hours this morning that The Pirate Bay has been sold to Global Gaming Factory X AB for $4 US million in cash plus an equal amount in stock. GGF develops gaming software and operates internet cafes and gaming centers in Scandinavia.  Details are vague, but the original team will still stay involved and promise to keep the site much the same.

Ownership of the Pirate Bay had been transferred away from the individuals being sued in 2006 according to an interview (translation via Techdirt) with co-founder Peter Sunde conducted on Twitter. Neither Sunde or his fellow pirates are the beneficiaries of the sale according to a PirateBay blog post, but rather  "into a foundation that is going to help with projects about freedom of speech, freedom of information and the openness of the nets."

Also: Pirate Bay Readies Launch Of The Video Bay

The Michael Jackson Effect: An Unprecedented Spike In Sales

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Once again new media trumped old with AOL's TMZ breaking the Michael Jackson story an hour before other news and gossip gatherers. But in addition to the predictable spike in online interest, Friday's death also led to an unprecedented spike in sale.

As of Monday morning,  Michael Jackson held 8 of the top 10 slots on iTunes with 20+ more tracks sprinkled throughout the top 100. At Amazon wait times for most of his CD's and DVD's had jumped to 11-14 days for the usually instant-ship retailer. See real time iTunes singles sales data above and the iTunes album chart after the jump.

1 illegal download = 3 1/3 dead relatives

Click on image to enlarge. From @iker via @dubber

Moby Says Disband The RIAA

From Moby's website:

the riaa have sued Jammie Thomas-Rasset of minnesota for $2,000,000 for illegally downloading music.

argh. what utter nonsense. this is how the record companies want to protect themselves? suing suburban moms for listening to music? charging $80,000 per song?

punishing people for listening to music is exactly the wrong way to protect the music business.

New Album Releases Hit Hard By Sales Downturn

A Nielsen study presented last week at NARM (link to full presentation after the jump) contained some particularly bad news for artists and labels releasing new albums. As steep as the overall sales decline has been, the drop for new releases has been been sharper and the chance of breaking through even more difficult.

• 105,575 albums released in '08
• Less than 1% of all releases or just 950 albums sold more than 25,000 copies
• Those 950 accounted for 82% of all new releases sold
• New release album sales fell 18% to 149 million
• That's half the new release sales generated in '01
• 50,000 digital only albums accounted for 1.8% of all new release album sales

It's possible to be critical of the figures and methodology....

A Roundup Of Reaction To Digital Britain Report

• Anti-piracymeasures are "digital dithering." (MusicWeek)
• "Too soft on pirates." (Telegraph UK)
• UK "calls for pirate-free universal broadband." (ars)
• We7: “Digital Britain is a missed opportunity” (Music Ally)
• Industry experts react. (BBC)
• A review of the key points. (FT)
• HYPEBOT:  The report gets points for being realisitic. Because it not go so far as to suggest the full implementation of 3 strikes and your off the net, the music industry will not be happy. But given the reality of the evolving array of cloaks and workarounds available to any serious file sharer, what would the point have been of going farther? Overall, Ditigal Britain seems a somewhat pointless excerise.
• More and a link to the full Digita Britain report.

Fleet Foxes Thank Piracy For Success, Pledge To Stay Indie

One of the breakout indie bands of 2008 was Sub Pop's Fleet Foxes, and the band openly credits online piracy for providing both inspiration and a promotional boost for its 200K+ selling debut album.

As much music as musicians can hear, that will only make music richer as an art form," singer Robin Pecknold told the BBC. "I think we're seeing that now with tons of new bands that are amazing, and are doing way better music now than was being made pre-Napster."

"I've downloaded hundreds and hundreds of records - why would I care if somebody downloads ours? That's such a petty thing to care about," says Pecknold. "I mean, how much money does one person need? I think it's disgusting when people complain about that, personally."

On recent rumors that the band was signing to Virgin, Pecknold wrote in a blog post:

Report Says Music Sales 83% Digital By 2013

US sales of recorded music will drop to $5.52 billion in 2013 according to the new eMarketer report Digital Entertainment Meets Social Media. This downward trajectory will extend a pattern that began in 2000, when physical sales started to decline after rising dramatically during the heyday of the CD.

eMusic CEO Blames Indie Labels For Price Increase

When eMusic recently added major label Sony to its previously indie only music subscription service, it also increased prices per download.  Still cheaper than iTunes and others, the reaction from many eMusic fans was strong and negative.

Since the initial announcement, the company has been on a bit of a campaign to clarify why the price hikes happened; and in an interview with Wired's Eliot Van Buskirk, eMusic CEO Danny Stein said that it was the independent record labels and not a deal with the big bad Sony that forced the price increases:

"Our existing labels, for the most part, have been asking us to raise prices for a long time. What I told the New York Times is that we were looking for a “catalyzing event” to do it. And really, the catalyzing event is adding catalog, adding more content. We used this as an opportunity to do it, but we didn’t do it because of Sony...

Virgin Media & Universal Launch Unlimited Download Service, But...

ISP Virgin Media will begin offering a monthly subscription service that gives UK broadband customers the ability both stream and download unlimited tracks from Universal Music's catalog . A lower priced tier will offer streaming and a more limited number of downloads.

Downloaded music is portable and will be the users to keep on any MP3 compatible device. Virgin is also negotiating with other major and independent labels and publishers and anticipates a more complete catalog when the service is launches later this year.

But this juicy carrot comes with a fairly ugly stick. The two companies will also be "aworking together to protect Universal Music's intellectual property and drive a material reduction in the unauthorized distribution of its repertoire".  This will involve implementing a range of strategies to "educate file sharers about online piracy" and "raise awareness of legal alternatives". 

ANALYSIS:

Free To iTunes Distributor WaTunes Adds Video To VIP Service

WaTunes, the recently launched music distribution service, got some skeptical reactions (including from me) when it said it wouldn't charge bands to sell on iTunes. How could such a model be sustainable? 

The plan for the service's future profitability apparently includes upselling those uploading to iTunes some paid VIP services including placement on Amazon, Rhapsody, Zune, Wal-Mart, Amie Street, FYE and HMV along with iTunes trending reports and promotional services for $29.95 a year. Now VIP customers can also deliver unlimited music videos to  iTunes, AT&T, T-Mobile, Verizon, Sprint, and the new video streaming service VidZone. I'm still skeptical, but it's a tempting combination

Class Action Suit Seeks To Reclaim $100M RIAA "Stole" From Fans

Harvard law professor Charles Nesson is joining forces with MInnesota attorney Kiwi Camera to file a class action suit demanding that the RIAA pay back the "$100M+" that the RIAA "stole" with its many lawsuits against downloaders.

Their case is based on two legal issues. First, that MediaSentry who reportedly gathered most of the evidence of alleged  illegal file sharing, was not a licensed investigator in many of the states that it was working.  Second, that "to prove copyright infringement, the RIAA needs evidence of that infringement, of course, but it also needs to prove it owns the copyrights in question. If it can't establish that fact, the case also falls apart," Camera told ars technica. "They basically committed a technicall screw-up". He claims that RIAA lawyers provided the court with copies of their copyright registrations, bu they weren't "certified copies" required under federal rules of evidence.

Do you think that the RIAA should be forced to return the fines it's collected?

A Look Inside Topspin's Premium Offerings

Deluxe and limited editions are one of the new tools in the artist monetization Toolkit that seems to be working. Think of it as music's version of retail up-selling ("Do you want fries with that 99 cent burger?")  Nine Inch Nails was one of the first to use it effectively offering versions of a new release from for free to $5, $15, $75 and even $300.  Whatever your level of income of interest; there was a product for you.

Topspin is helping to refine the concept of premium music offers with a series of deluxe and limited edition packages, and Topspin's lead guru Ian Rogers has been recording the unboxing of several of them.  These clips aren't going to win awards at Sundance, but they provide some insights into this effective marketing and monetization strategy.

And if you're thinking that your band is not "big enough" to start charging fans a premium, then maybe your not thinking enough out of the box about what you'd put into your deluxe box to make it worth buying.

Metric's Fantasies Deluxe Edition

eMusic Explains Sony Deal, Suggests More Changes

Perhaps to quell the strong criticism of eMusic's addition of Sony and subsequent price increases, the subscription services has created a special FAQ. Some answers offer a glimpse inside the deal and the motivations behind it. 

According to the new document,  Sony product will only be available to US subscribers, but they may add the UK, EU and Canada in the future. "We don’t currently have a timetable for when this will happen..." says eMusic. But despite the lack of new product, new non-US subscribers are getting a price increase and current members are not. "We’re doing this for two reasons: To help attract new labels and bring back those we all miss and keep us where we need to be as a business."

Hip Digital Offers Downloads To Non-Music Retailers

Hip Digital has launched the "Hip Digital Music Engine" for the integration of digital music sales and pin code redemption into any website. The Hip Digital Music Engine allows companies to offer a catalog of digital music through their web sites even if they are not a store and do not currently have ecommerce or promotional capabilities.

Hypebot Readers React To eMusic's Sony Addition

Hypebot readers added their voices to strong reaction from eMusic users after the formerly all-indie subscription service added catalog from Sony along with raising its prices and lowering monthly download limits.

"Simply put, I don't know who this serves as the most passionate eMusic subscribers are there for the indies and the people who would be most interested in this deal aren't going to subscribe to get this music. Despite how they are spinning it, the addition of the biggest of the majors will change the identity of eMusic and I don't think it's going to be for the better." - Captain Wrong

"I love the eMusic model - it has long been my favorite way to buy music online, and I've been there since the beginning. I really don't care one way or another about Sony being added - it's a nice affirmation that the eMusic model can work with the majors, but what is truly disappointing is the scope of the download package changes." - Jordon Pastepunk

Longer, Higher Quality Music Samples Lead To More Sales, Study Finds

A report to be published in the International Journal of Internet Marketing and Advertising says that longer, higher quality free music samples engage more listeners and reduce the number of "free riders".

Ask any food manufacturer, free product samples give consumers the opportunity to try before they buy. This marketing model works well for products as diverse as shampoo and washing powder, instant coffee and bubble gum. But in the digital age these free offerings to often aren't provided at full quality. Music files are usually compressed or shortened to 30 seconds, for example.

Yanbin Tu in the Department of Marketing at Robert Morris University and Min Lu in the Department of Finance and Economics, have studied digital music samples.

Walmart Shutting Down DRM Download Servers

Walmart.com's music download store went DRM free in February of 2008; and now the retail giant is telling customers that they'll no longer support the DRM laden downloads that they sold them prior to the transition.

According to an email sent to customers, on  October 9th the company will shut its servers that "that supports protected songs and albums purchased from our site".  Unless you back up your files by burning them to CD,  you will "no longer be able to transfer your songs to other computers or access your songs after changing or reinstalling your operating system or in the event of a system crash". (Full text of the email after the jump.)

iTunes offered an paid upgrade to mp3's after it made the DRM-free transition and still supports the tracks it sold with DRM. Other download services like Napster and Rhapsody were forced to extend their transitions after complaints from consumers.

A Quick Look At The New $5 Napster

What Do You Think Of The New Napster?

I've spent some time on the new Napster service over the last few days, and aside from a less than intuitive interface, I can't find much to dislike.  At just $5 a month for unlimited streaming of a deep catalog along with 5 mp3's monthly, the service is effectively free.  And if I'm in Napster previewing a track or album (and since they've already got my credit card), why not just buy it there instead of jumping over to Amazon or iTunes?

Reports are that Napster got a special deal on streaming licenses from the labels...

Zune Adds HD Radio & Video, Xbox Compatibility

Microsoft announced that it will open its Zune video service to the Xbox LIVE this Fall. Microsoft also unvieled its newest portable media player, the Zune HD. Designed to compete with the popular iPod Touch, the Zune HD combines built-in an mp3 and video players, an HD radio receiver, HD video output, an OLED touch screen, Wi-Fi and an internet browser.

More details:

FileTwt Brings Filesharing To Twitter

It had to happen. Filesharing has finally made it to Twitter. On the new site FileTwr.com users can upload a file and then Tweet about it to zillions of others at no cost. Now that "leak" of  Jay-Z's new  bangin' umixed track that no one has ever heard can reach millions faster than Mrs. Beyonce Z can spell R...I...double..A. 

Farkie Turns Any Stream Into A Download

From The "It's Futile To Resist" Department:

Website Farkie bills itself as "the ultimate online application" for downloading YouTube videos, MySpace playlists, movies, audio, images, javascript, ajax, objects, applications, flash, links and "many other things". Usrs can use Farkie to:

• Download YouTube videos in video or audio format
• Download MySpace songs in mp3 format
• Download scripts and pictures from a website
• Download flash games from a website

How to download a YouTube video with Farkie:

RoyaltyShare Pulls Out Of Digital Music Distribution

Music royalty and sales services provider RoyaltyShare is pulling out of the digital distribution business.  Just a year after adding low cost digital distribution, the company is no longer soliciting new labels and is working to find new homes for existing clients.

Company spokesman Mike Kelly told paidContent that the economy had forced RoyaltyShare to de-emphasize distribution and lay-off two of its 30 staffers. Other employees are moving to the company's other operations.

Digital distribution is increasingly as commodity business with ongoing downward price pressure.  Full service digital distributors like The Orchard, IODA and INgrooves are responding by adding new services like marketing and brick and mortar distribution to justify their fees.

Napster: $5 Monthly Streaming With 5 Downloads

Napster is adding a new hybrid tier to its music subscription service that includes unlimited computer only streaming plus 5 free downloads for $5 monthly.  While compatible with most web connected music devices, there is no mobile component to the new offering.

The $5 monthly tier will be promoted primarily in Best Buy stores via signage an prepaid cards.  When compared to similarly priced cards from iTunes and Amazon, the inclusion of unlimited streaming could prove attractive to consumers.

Introduction of the new tier just days before the 10th anniversary of Napster...

Usenet Site Sues Dutch RIAA

Believing that the best defense is an offense,  usenet site FTD.nu is suing BREIN, the Dutch equivelant of record label trade group the RIAA. 

Like other usenet services, FTD's platform enables its 450,000 members to trade copyrighted  files. "“BREIN’s claims are built on legal quicksand,” says FTD lawyer Arnoud Engelfriet. "FTD only facilitates communication between people who quite legally download from Usenet. FTD does not facilitate or carry out any upload and therefore can not be held liable.”

The lawsuit asks the court to confirm that downloading is not an illegal activity in the Netherlands and clarification on these 5 points:

Wilco Stops Trying To Plug Leaks And Posts Full Advance Album Stream

Is there any way to stop pre-release leaks? Wilco smartly decided to stop trying. In an email to fans, the band wrote:

"Well, we made it nearly a month with copies of Wilco (the album) floating around out there before it leaked. Pretty impressive restraint in this day and age. But the inevitable happened last night. Since we know you’re curious and probably have better things to do than scour the internet for a download (though we do understand the attraction of the illicit), we’ve posted a stream of the full album at http://wilcoworld.net/records/thealbum/. Feel free to refer to it as “wilco (the stream)” if you must."

The Orchards Reports 16.5% Revenue Increase Despite Tough Marketplace

Music distributor The Orchard posted a 16.5% increase in revenues compared to the previous quarter last year.  For the first quarter of 2009, revenues were $15.3 million, compared to $13.2 million in '08. Net cash provided by operations also increased to $2 million from $0.6 million for the first quarter of last year . Cash and cash equivalents were $5.4 million at the close of the quarter, and the company had no debt.

LOSSES CONTINUE
Net losses for the quarter matched the previous year at $1.1 million and gross profit margins remained flat at 27.7%.  Operating expenses increased 20.3% from $5.7 million for the first quarter of 2009 compared to $4.7 million for the first quarter of 2008.

Part of the increase comes from ramping up a physical distribution division that has recently helped The Orchard land more major clients like jazz legend Wynton Marsalis who want keep their record output business under a songle roof.  But brick and mortar distribution is ultimately still a sinking sector and The Orchard's core digital distribution business is facing downward price pressure from competitors.

But commenting on the first quarter results, Greg Scholl...