Business 2.0 article on Creative Commons and Magnatune

A new article in Business 2.0 magazine discusses the Creative Commons, and uses Magnatune in particular as an example. Read it here:
http://www.business2.com/b2/web/articles/print/0,17925,608619,00.html

or here:
http://magnatune.com/info/press/

I spent a long time on the phone with the author of this article so it was gratifying to me to see him write a well-informed article (you never know what mistakes they'll make)

Allan Vilhan (Cargo Cult) one of our top Magnatune artists, gets tons of coverage in the article, with a photo on the magazine's table of contents, and again another full page photo in the article body.

I suspect the reason Magnatune features so prominently in the article as that few other successful businesses exist which use the Creative Commons at their core. The other main examples I can think of are Doctorow's and Lessig's books. As it happens, I was introduced to Cory Doctorow by reading Down and out in the Magic Kingdom for free on my palm device, became a fan, and bought the print edition of the rest of his books (I really like his short stories). So the Creative Commons approach worked on me too, creating a new fan and purchaser.

-john

Record sales up, shows Soundscan, RIAA playing with stats?

Moses Avalon's email newsletter of music industry news today has a
fascinating insight into the "fact" that record industry sales are in
decline.

What Avalon found is that the RIAA tracks sales as units shipped to
stores, whereas Soundscan tracks sales as scanned bar-codes sold at a cash
register.

The RIAA's numbers show that albums shipped to stores has been decreasing
but Soundscan's numbers show about a 9% *increase* in sales over last year.

Yes, that's right, tracking actual sales at stores shows record sales as increasing.

The cause, Avalon supposes, is that record stores are managing inventory
better, moving to an "just-in-time" system where only a few weeks of
inventory is held, resulting in fewer CDs "ordered but not sold" (eventually
returned to the distributor). Simply put, stores are better at ordering what
they're going to sell, so that overall, they over-order less often while
selling more overall. In fact, this efficiency increase should be a
great boon to record companies, as it means fewer returns, less shipping
costs, and fewer units manufactured that end up not being sold.

Then again, I've seen reports that the major labels *like* this phenomena
where stores over-order, because it creates cash-flow problems (when there
are big returns), which stess smaller labels, deepening business cycle downturns
and generally making smaller players go out of business. The founder of
Magnatune's band "Electric Frankenstein", Sal Canzionieri told me
that he's been working with a US congressional inquiry into the topic of whether
distributors purposely over-order from smaller labels, store the CDs in a warehouse, and
return them almost at the end of the return-period, in order to bankrupt smaller labels,
getting kick-backs from majors (usually via jobs) in the process. He told me there
he had strong evidence that this was the case. Anyhow.. back onto the topic of this article...

Another interesting point Avalon makes is that International vs USA
domestic numbers are used at different times, when a different effect is
needed upon the audience, and that it appears that the USA domestic market
is growing overall, and that International numbers are used to find declining statistics.

Avalon's web archive of his newsletter doesn't have his excellent article, so I'm including it below.

-john

NIELSEN RATING SYSTEM AT ODDS WITH RIAA'S CLAIM OF "LOST SALES"
RIAA says sales are down. Soundscan says "Wha..?" Who should you believe?
=====================================================
April 21st - Los Angeles

When speaking this month to a representative from Soundscan, the company
that provides much of the data for the Billboard Top 200 Chart, I learned
things that would contradict reported statements by the RIAA. Mainly that
US labels have had a significant reduction in sales over the past three
years. Cary Sherman, president of the RIAA, responded personally, put his
rebuttals on the record and in the process exposed intriguing insight into
the way the RIAA calculates "losses."

Soundscan is a service owned by Nielsen, the company that computes TV
ratings. Soundscan uses the barcodes on CDs to register sales at record
stores. The correlated data contributes to the Billboard chart listings,
as well as much of the market research that record companies use to
determine which artists are worth keeping under contract.

My original reason for speaking to Soundscan was to determine if the "free"
barcode many CD Replicators provide with a substantial order is a real
added value to the indie artist, or just a bogus premium that sounds more
intriguing than it really is. Replicators claim that with the barcode they
give one can track indie sales on Soundscan. I have my doubts.

The answer will be revealed in my Keyboard article over the next few
months, so I'm not going to spoil the punch here. Through my interview with
the Soundscan rep, however, I learned the following:

--For the first quarter of 2003 Soundscan registered 147,000,000 records sold.

--For the 1st quarter of 2004 Soundscan will report 160,000,000 records sold.

That's 13,000,000 more units, almost a 10% increase in sales since last
year. He also confessed that 1st quarter "album sales" (as opposed to
overall sales) had increased 9.4% since 2003.

What gives? Didn't Cary Sherman recently attest to the "fact" that there
was a "7% decrease in revenue since last year." (This quote was taken from
Mr. Sherman's speech to Financial Times Media at a Broadcasting Conference
in London.) And didn't he name piracy/file-sharing as the main
reason? Yes, according to more than one source.
(http://musicdish.com/mag/index.php3?id=9338)

So, I asked the Soundscan rep, who would only speak to me if I didn't use
his name, "Would you disagree with what the RIAA is implying?"

"I would NEVER disagree with the RIAA," he said.

Of course he wouldn't; the RIAA is, after all, arguably Soundscan's biggest
sycophant. But he did do the most amazing thing; he proceeded to explain
the rational that would allow both of these seemingly inconsistent
realities to exist in the same universe, "The RIAA reports a sale as a unit
SHIPPED to record stores. Whereas Soundscan reports units sold [to the
consumer] at the point of purchase. So, you're talking about apples and
oranges."

Really!?! I fact-checked this with Cary Sherman, who confirmed, "He is
correct," and added, regarding RIAA and Soundscan data, that "The two sets
of numbers tend to be similar, but because of timing differences, they're
usually a little different at any point in time."

Similar?!?! How is a 10% increase for first quarter of 2004 similar to, or
a premonition of, a 7% decrease for the entire year of 2004?

THE SECRET: "SHIPMENTS" = "SALES"

Now armed with the secret decoder formula, I went back and read the RIAA
and International Federation of the Phonographic Industry (IFPI) Web sites
more adroitly. Sure enough, every time the RIAA complains of large drops
in "unit sales" it includes international sales, not strictly
domestic. Every time it speaks to domestic "losses" it is speaking ONLY of
"units shipped in the US" to record stores. It seemed obvious that if the
RIAA confined their revenue statistics to the US market alone they may not
be able to publish ANY losses in REVENUE at all.

But what about Sherman's statement of 7% "losses" at the London conference?
He answered, "I was speaking to an international audience, [and] thought
they'd want worldwide figures, rather than just US."

Sherman's statements hinged on a statistic published by the IFPI. "Surveys
in all major markets prove [file-sharing] is a major factor in the fall in
world music sales, down 7% in 2003, and down 14% in three years." (Their
Web site, which claims to "represent the industry worldwide," but, oddly
enough, doesn't readily explain what the anachronism, IFPI, means, has a
"fact sheet" at http://www.ifpi.org/site-content/press/20040330c.html.) But
the RIAA's website chart claims only a 7.1% drop in units
SHIPPED. http://www.riaa.com/news/newsletter/pdf/2003yearEnd.pdf)

There is only one logical integration of all these statistics with the
recent Soundscan data: even though actual point-of-purchase sales are up by
about 9% in the US--and the industry sold over 13,000,000 more units in
2004 (1st quarter) than in 2003 (1st quarter)--the Industry is still
claiming a loss of 7% because RIAA members shipped 7% fewer records than in
2003.

Forget the confusing percentages, here's an oversimplified example: I
shipped 1000 units last year and sold 700 of them. This year I sold 770
units but shipped only 930 units. I shipped 10% less units this year. And
this is what the RIAA wants the public to accept as "a loss."

I'll go a step further. This fact, that Sherman seems to confirm, should
logically mean a smaller percentage of returns. But, shouldn't fewer
returns mean higher profit margins and faster turnaround; and shouldn't
that be good for both the retail and wholesale side of the
industry? "Sure," admits Sherman today, "but I have no idea what US
shipments looked like in the first quarter." Then how can he claim
world-wide "losses" in his March speech to Financial Times New Media?

Roger Goff, an Entertainment lawyer in Los Angeles confirms that, indeed,
retail has reacted this way in the Post-Napster era. "Retail used to buy 10
weeks-worth [of records] and now they realize, in most cases, they don't
have to carry more than two weeks-worth." In other words, retail has
adapted to more of an "on demand" model (similar to the Internet) as
opposed to the, accepting-tons-of-product-shoved-down-the-pipeline model
record companies imposed on them in the past.

I misplaced my MBA this morning, but my mental math assures me that fewer
returns and shorter reserves should mean an INCREASE in record company
profits and artists' royalties. If this is true, and file-sharing is
responsible, one could conclude that "on-line piracy" has been the single
greatest factor in increasing profits, because it forces record companies
to keep a tighter lid on mass-production and costs.

Sherman's response is pithy, "Managing shipment and returns better is
obviously a good thing. But to credit file-sharing is silly. That's like
saying if enough thieves were holding up delivery trucks and causing
massive losses to the industry, the thieves should be thanked for forcing
record companies to keep a tighter lid on mass production."

My pithy rebuttal: No, it's like acknowledging what most retail industries
have been doing for the past ten centuries; theft (even by employees) needs
to be built into the cost of doing business, and file-sharing has forced
the record sales side of the industry to finally adjust to that
dynamic. Should we thank the "thieves?" No, but we shouldn't let off the
hook those who blame others for "losses," only to ask Congress to legislate
fix-its due to their own mismanagement.

SO ARE THERE REAL LOSSES?

Maybe, but "we, the people" will never be able to figure them out due to
this confusion, deliberate or not. Regardless, it's certainly been a great
excuse for majors to clean house of over-paid executives. But as for a US
major label's bottom line, the effect could never rise to the RIAA's/IFPI's
claim that file-sharing is the "major factor" of revenue loss for labels,
and certainly not for artists.

Nope. My analysis suggests that the number one reason for the loss of jobs
in the industry is self-perpetuating major label PR, and that the number
one cause of loss of unit sales revenue for artists is STILL record label
accounting practices.

Janis Ian articles on the music industry

Today I read two articles by musician Janis Ian, which evidently have caused quite a furor at the RIAA and NARAS. Much of the content is similar to other annoyed-with-the-industry articles written by musicians (which are popping up with more regular frequency) but I never get tired of hearing this rant, as it's much the same as my rant.

Here are the articles:

http://janisian.com/article-internet_debacle.html
http://janisian.com/article-fallout.html

And here are the juicy bits I particularly liked:

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.

And for those of us with major label contracts who want some of our music available for free downloading as 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!

Getting your record played on the 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?

"So why are the record labels taking such a hard line? My guess is that it's all about protecting their internet-challenged business model. Their profit comes from blockbuster artists. If the industry moved to a more varied ecology, independent labels and artists would thrive - to the detriment of the labels"

Many thanks to Chris Palmer (see http://www.kineticworld.com/ and http://www.ctpdesign.com/The_Stuff/) who brought this article to my attention over an amazing luncheon at Berkeley's La Rose (incidentally, my favorite Berkeley restaurant)

XML/CSV data feeds from Magnatune

For a while now, I've been getting requests for official data feeds describing the music at Magnatune. I've now added an "API" section to the "Info" section at Magnatune, with XML and CSV data feeds:

http://magnatune.com/info/api

What I'm hoping to do with all this is to encourage 3rd parties to write interesting applications which know about Magnatune's music. These feeds could be used by stores such as netmusic, collaborative sites such such as webjay or iRate, or implemented as music-collection players in xmms, winamp, or other players.

I made two different XML versions of the song-by-song feed, as traditional XML is not much fun to parse, if you have to write a parser from scratch

<Track>
<artist>Arthur Yoria</artist>
<albumname>I'll Be Here Awake</albumname>
<tracknum>1</tracknum>
<year>2004</year>
<mp3genre>Rock</mp3genre>
etc...

vs:

<Track artist="Arthur Yoria" album="I'll Be Here Awake" title="I'll Be Here Awake" tracknum="1" year="2004" etc..

this 2nd version is easier to write a quick-and-dirty parser for, but isn't what XML parser usually like, which is why I also made the 1st format.

I also made a more hierarchical XML format, which adds the concept of an album, and tracks inside an album, like so:

<Album>
<artist>Arthur Yoria</artist>
<albumname>I'll Be Here Awake</albumname>
<year>2004</year>
<mp3genre>Rock</mp3genre>
<home>http://magnatune.com/artists/yoria</home>
<buy>https://magnatune.com/artists/buy_album?artist=Arthur+Yoria&album=Ill+Be+Here+Awake&magnatunegenres=Rock</buy>
<magnatunegenres>Rock Wakeup Singing</magnatunegenres>
<Track>
<artist>Arthur Yoria</artist>
<albumname>I'll Be Here Awake</albumname>
<tracknum>1</tracknum>
etc...

and finally, to make it REALLY easy to work with Magnatune's music, I made a CSV format, which can be dropped into any relational/sql db, or Microsoft Excel.

Of course, in making such a feed, I found a number of problems with my meta-data. A lot of albums didn't have "track length" id3 tags, so I used mp3info to calculate this, and id3v2 to put the data into id3v2 tags inside the mp3 file. A small number of albums were/are missing year or genre id3 data, so I need to go back and re-rip them so that the data is really clean. So part of this process of telling people what's at Magnatune is writing a meta-data "lint" program (which I've done now) and then <sigh> fixing all data that cause metadata-lint warnings.

I've been meeting more people trying wacky redo-the-music-business ideas on the web, such as http://www.mediagora.com/ and http://www.opsound.com/ -- the easier I can make it for these other people to use Magnatune in their business plans, the more visibility Magnatune's music will get!

Peer-to-Peer networks and Magnatune

Today, someone asked me to clarify Magnatune's position on sharing our music on peer-to-peer networks:

Is my understanding correct that the 128bit mp3s can distributed in any way,
including peer-to-peer as long as the license information is intact?

Here's what I said:

Yes, the 128k mp3s can be legally distributed.

However, I ask that you not upload our mp3s to p2p networks (such as Kazaa) as I feel that Kazaa (and most other p2p clients) are not ethically run businesses and I don't want to be part of their camp.

I **really** don't like the ad-ware and spy-ware Kazaa (and most other p2p clients) install, as it shows a fundamental disrespect for their audience. After installing Kazaa, and several other clients on my machine, my system was effectively unusable and it took me hours of work to remove the virus-like advertising popups that had been installed on my computer. Kazaa really is evil, and my experience with most other p2p clients has been just as bad -- I just don't understand how a executives at a company can sleep well at night, knowing their company is disabling millions of user's desktops with crippling amounts of pop up advertising, spying on their every move, and selling that private data to third parties.

So basically, I want nothing to do with the p2p industry as it exists today.

I do aggressively use the Creative Commons license on Magnatune's to share the music with causes I believe in.

For instance, this week I uploaded all of Magnatune's music to http://www.webjay.org/ -- a shared playlist/radio site I really enjoy (after reading Jon Udell's blog article on Webjay), and am currently submitting Magnatune's music to iRate as well.

I have no problem with p2p as a technology, and will soon be offering Alluvium p2p audio broadcasting. I find bittorrent interesting as well, mainly as a way to share previously-broadcast television, or for non-profit net-labels to distribute their gigabyte-sized catalogs.

So please, for now, don't upload Magnatune's music to p2p networks, as it's not a cause I want to support.

However, if you see cool *ethical* sites and uses for Magnatune's music, please do point them at Magnatune and let me know about it.

Drop Trio Concert from Texas

I've put up a complete video recording of the Drop Trio concert my wife and I saw while at the South-by-Southwest music show. It's an incredibly energetic performance of the funky, groove-oriented jazz-thang they do.

I recorded the whole thing on my puny little Sony Clie, which is a Palm-based device with a built-in camera. The video is low resolution (160x120) but the sound is suprisingly good. The Sony makes MPEG4 files that seem to only play (today) on reasonable new version of Quicktime.

The video is definitely watchable, and great fun. I love the part (at 13 minutes into the 2nd video) where Ian Varley stands up and starts bouncing up and down like a crazed hamster as he pounds out an amazing organ improv on the basic riff of the song.

The video is at the bottom of the Drop Trio page at
http://magnatune.com/artists/drop_trio

Why allow derivative works?

A musician today asked me if Magnatune would consider having music where derivative works were only allowed by permission. Here is what they wrote and replied with:

> How about this though: http://creativecommons.org/licenses/by-nc-nd/2.0/deed-music > I'm curious, would you consider this one instead?

No, all Magnatune music must follow the same CC, first to make it easy for users, and second, because it's my philosophy behind the site. The "Music Sharing License" you linked to above is about putting music on peer to peer networks, which isn't what Magnatune's about.

> I'd like someone to ask permission to me before sampling or > re-interpreting "directly" from the work.

Magnatune's not for you then. As an artist who has had to go through the "asking permission" system I know that "ask permission" ends up being "don't use it". I really believe that artists today have a responsibility to future artists to allow their works to be an inspiration to other artists in the future.

I've also benefited too much from GNU and Berkeley-style licensed software, which is essentially a "derivative works allowed with attribution" license, to be so selfish as to not contribute works to that style of licensing.

If you want to require permission for derivative works, that's fine, it's your opinion, but Magnatune isn't for you.