File sharers buy more music

The BBC reports that people who use "illegal" p2p file trading services, are music fans who spend considerably more buying than the average music fan. Specifically, the article says that the average music fan spends £1.27 ($2.21) per month, where as the people who use P2P services spend £5.52 ($9.62) per month.

The key question, I believe, is whether use of P2P by music fans causes them to buy more or less music. This study shows that P2P users are active music buyers, probably forming a core "music intelligentsia" which the music industry should want to win over, since they probably are trend-setters. It may be that P2P functions as "trial-ware" for these people, causing them to evaluate and buy more albums. Or, P2P may be a substitute for buying some number of albums.

The BBC story does mention this issue, with this quote from BPI: "The consensus among independent research is that a third of illegal file-sharers may buy more music and around two thirds buy less. That two-thirds tends to include people who were the heaviest buyers which is why we need to continue our carrot and stick approach to the problem of illegal file-sharing." If this is truly the case, and the 1/3rd who are buying more aren't making up for the 2/3rds who are buying less, then the music industry clearly loses with P2P. But, I also suspect that people are using P2P because of the ease of finding music and (vitally) the lack of DRM.

My own hunch is that music is like other collectible items -- it's hard to have too much of it. And with downloads not using up shelf-space like CDs do, it's easy and desirable to have several thousand albums in your collection. iPod users I've spoken to tend to want a much larger collection of music in their iPods than music fans of a decade ago, because they're **listening to their music more of the time**.

The BBC story refers to a report authored by Paul Brindley, director of "The Leading Question", an music industry research firm. I've met Paul before, as he runs Musically, which publishes an excellent industry newsletter. I was surprised and heartened when I met Paul upon arriving to the UK a year ago, finding him unusually clue-full about the state of the music business and the Internet. Then again, he told me at the time that I was unusually open in disclosing how Magnatune worked, which he found refreshing.

I corresponded privately with Paul Brindley, and he wanted to clarify his position:

"Our point was not that file sharers buy more music than most music fans but
that those file sharers who are buying less CDs than they were before
because of p2p also happen to be spending much more on legitimate digital
music than most music fans." (n.b. - he gave me permission to reproduce this email paragraph in the blog)

Licensing 2005 Trade Show Recap - "Where brand is king, baby!"

I was naive. I thought that a trade show called "License 2005" would be exhibitors with content, and visitors looking to license that content to make products.

What I didn't know is that content is irrelevant to these people. It's all about brand recognition, and nothing else. The product tied to the brand is secondary to the brand itself -- the key is selling more any sort of product by applying a known name or logo to it.

Anything that is recognizable, from Penthouse Pets to Mr Magoo is ready to be placed on any product whatsoever.

Across from our booth, for example, were the Disney Pasta people. Staffing the booth were two surly Italians whose job seemed to be stopping people taking samples of their pasta. I think the real problem is that they were pissed off having to make a traditional italian product into the image of a imperialist cartoon rodent from America. What does an Italian starch product have to do with Mickey mouse, you may ask? Well, nothing, of course. It's just the "Mickey" is a recognizable brand and if it can help move product, then Disney is happy to stick the image on it. In the same vein, 20ft away porno-video gods Vivid Video were more than happy to license the titillating photos of their stars to any product you like. Evidently, brand integrity is irrelevant.

As a small company, we're clearly exhibiting at the wrong show. Licensing is all about public recognition of a logo, name, or face. Without that, you're nothing here. Good music? So what, if the artist's likeness isn't known to move product.

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The real action at the show was at the media companies, such as NBC, Nickelodeon, Paramount, Dreamworks and of course... Disney.

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There is serious, large-scale money in this, and booths were more impressive than anything I've seen in the computer business. The suits arrived in vast quantities:

The marketing often bordered on the surreal:

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In our own bid to get attention, we brought in Magnatune musician William Brooks to play at the booth. Major thanks go to William for having a sense of humor about it, since playing an acoustic guitar in a gigantic warehouse isn't the easiest thing to do. A fabulous couple decided to get into the kitch of it, and danced throughout his set. Eventually, William figured out that his singing was scaring people away from the booth, and he switched to just playing acoustic guitar. Evidently, William did a stint in his early years as a street musician, which is where he perfected his charisma!

That's Teresa Malango, standing inside the booth in these pictures talking to prospects--she is my coworker at Magnatune. She has this "jedi mind trick" ability that she exerts on people as they walk by, seemingly uninterested, and when she whispers "music licensing" in a barely audible voice, they stop in their tracks and come back the 15 feet they've walked away to talk to her. And, it works on both men and women, so it's not a gender thing. It's really uncanny: in my 10 years of doing dozens of trade shows, I've never seen anyone do that. Who knew that she was a natural!

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On the final day, Magnatune classical artists Asteria came by to perform. Unfortunately, it was the last 2 hours of the show, and thus quite empty and few people got to hear their gorgeous music. However, the people in the nearby booths all had big smiles on. My favorite quote, from the marketing booth to the left of us: "it sounded so real, I thought you were playing a CD!" Ah, what a world we live in...

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Once I figured out what the show was about (people who make stuff want no-risk products with other people's brands) I thought that perhaps some of Magnatune's bands could be marketed, packaged and sold in this way. Hey, it's business.

I thought about Asteria, who have a rich visual vocabulary in their artwork, such as the beautiful burgundy-colored velvet and the heart-shaped medieval book on the cover, as well as the way in which they are photographed in such intimate, relaxed ways (as well as the clothing they choose).

When I spoke to Eric (1/2 of Asteria) about my idea, he explained to me that the book on the cover is something they made, by scanning in various medieval manuscripts, isolating and touching up the visual elements in photoshop, then making a new book which they had professionally bound. It turns out that Asteria's visual impact is very much on purpose, the result of much work, and that Eric and Sylvia have built up many visual elements over the years, as part of the "Asteria lifestyle".

For example, below are 3 pictures of Asteria furniture:

as well as some of the marginal illustrations Eric has built:

Besides a furniture maker, we could be licensing these visuals to make diaries and notebooks, dresses, purses, jewelry and other accessories. This could all be part of "The Asteria Look (tm)"

I spoke to a few "licensing agents" at the show -- people and companies who represent other brands in their interests in being licensed for products (most products work through these agents, even very large brands, as this is such a specialized business).

One licensing agent, in particular, was very interested in pursuing this idea. So, I asked Eric to collect everything visual relating to Asteria, and I'm working with this licensing agent to see if we can't pursue this line of thought and get some interest from manufacturers. It's definitely a different area from the "downloads and CDs" that Magnatune has pursued so far, but if it helps the band and Magnatune survive and prosper, without selling our souls, I think it's a good thing.

Video of Keynote Presentation at Red Hat Conference

Red Hat has put up a video of my keynote presentation at their conference a few months ago. The quicktime video can be downloaded, and there's a realvideo stream as well as their page with the other keynotes.

In the first half of my talk, I try to widen the scope of what people think of "open source" by discussing the The Open Source Definition why the OSI has created. What's interesting about the OSI's definition is how politico-philosophical it is, and how little a part "source code visibility" plays in the definition.

The only part of the OSI's definition I disagree with is #6: "No Discrimination Against Fields of Endeavor: The license must not restrict anyone from making use of the program in a specific field of endeavor. For example, it may not restrict the program from being used in a business, or from being used for genetic research. Rationale: The major intention of this clause is to prohibit license traps that prevent open source from being used commercially. We want commercial users to join our community, not feel excluded from it."

The reason I disagree with it is that a long history of "free for non-commercial use, and a reasonable, non-exploitative commercial use fee" exists in the open source community. Magnatune, of course, uses this concept, but so does MySQL, and a dozen other high profile open source projects. Simply put, the commercial use restriction is a way to fund an open source project, effectively underwriting the non-commercial use with commercial use fees.

More importantly, other than charging for modifications, packaging or tech support, I know of no proven business models for a software company to go open source, and actually survive. And, the non-commercial-restriction-as-business-model concept is the most proven and repeatable of the profitable open source business models.

Looking back at this video, I see that I have a lot of energy and excitement during this first half, discussing the open source definition. The 2nd half, where I talk about Magnatune, is less energetic, and to me, less successful. However, after the talk, many people came up to me to tell me how inspirational it was--namely the idea of applying the open source ethos and the lessons learned to another field.

From a public speaking perspective, I'm happy with the first half -- lots of vocal variety, some humor, energy. The 2nd half is drier and my voice is more monotonous. I think I was getting tired (grin).

I used to be a seriously introverted geek, who had trouble talking to 3 people at once. Two years going to a volunteer public speaking group called Toastmasters cured me of that, and gave me what I consider a passable public speaking skill. I really recommend Toastmasters -- there are clubs worldwide, in every language, and the cost is very low (since it's a volunteer organization).

Lisa DeBenedictis Remix Contest Deadline July 31, 2005

It's not too late to enter the Lisa DeBenedictis Remix Contest! There is still time since the remix submission deadline is at 9:00 p.m. on July 31, 2005. Check out contest details at www.ccmixter.org and join now to win a Magnatune recording contract and many other prizes!

Oh, and check out Lisa's albums on Magnatune.

I'm pretty excited by how the contest has been going -- over 7300 people have come to the Magnatune site via the contest, and the quality of the submissions is way better than the average.

The contest is our first attempt to really drive remixing of Magnatune's material, and to get some tangible reuse benefit from the Creative Commons license we use.

Ecto - a Typepad GUI

I'm really impressed with Ecto, which is a helpful GUI program for maintaining your blog (such as this Typepad blog) for both Mac and Windows. Obvious things, such as a preview mode, and a type-as-you-go spell checker are nice, but what really impressed me was how graphics are handled.

I just drop a graphic on the text, it's then replaced with HTML for that graphic. You can change properties of the graphic, but what's nice is that it'll then upload the graphic for you to Typepad, a process which is quite tedious if you use the Typepad web site.

You can edit in rich text mode or HTML. The rich text mode works oddly, so I prefer the "know what I'm getting" html mode, which works fine. A wonderful "url with clipboard" feature automatically HREFs the highlighted text with the URL currently on the clipboard.

P2P Radio technology getting better

Following my previous blog item about p2p radio technology, I thought I'd check out current state of the art.

I was really impressed by the Sourceforge "P2P-Radio" project. It uses the same basic idea that PeerCast does, namely that people want to use their own media player and not a new radio tuner program. To that end, like PeerCast, P2P-Radio runs a miniature Shoutcast server on your own machine, which you then tune into with your regular media player. Since most every program can handle shoutcast (it's what Magnatune uses for its own radio broadcasting) this works well.

What P2P-Radio does better than PeerCast is twofold:

1) the broadcaster interface couldn't be simpler -- P2P-Radio acts as a Shoutcast repeater, simply downloading a live mp3 stream and rebroadcasting it via the P2P-Radio network. This means I can simultaneous run Shoutcast and P2P-Radio, from the same feed, with almost no effort. It also means I can use the excellent shoutcast-based broadcasting software. There's some fancy commercial DJ software that broadcasters can use, though I use the simple linux one, feeding it a text file playlist that my software generates.

2) the listener interface is very, very clean. All you give it is a tcp/ip address, and it launches your player and starts running.

In order to deploy this for Magnatune in a big way, I'd want to simplify the radio player further, so that it doesn't ask (at startup) whether the user is a listener or broadcaster. I would also want to provide a list of Magnatune stations they can pick from, rather than learning to copy/paste a tcp/ip address. Another possible way to deploy this would be embedding the java app into a web page, so that nothing needs to be downloaded. That would likely greatly help user acceptance.

Sony ready to confess to radio payola scheme

As reported by the New York Times today, Sony "is close to a settlement with one of the world's largest record companies to resolve accusations that it used improper tactics to influence radio programmers to play its songs." You would think that this was common knowledge, and in fact I think it is, but evidently it's illegal to give money to pre-programmed massive radio chains to play dreary corporate-created music. Who would have thought?

Perhaps the most interesting part is: "As part of the settlement, Sony BMG is expected to admit to misconduct in its radio promotion practices and agree to changes that would limit attempts to influence airplay, according to people involved in the discussion." I'm not holding my breath that radio stations will suddenly start playing indie music. The real issue is that radio stations largely play pre-existing hit music, the music people already have indicated they want to hear, based on sales figures. So, big money will continue to drive what is heard on radio, radio will be as safe as possible.

The "long tail" shows us that the majority of the market is interested in non-mass market music (see the experiences of Amazon, eMusic, Netflix, Magnatune), and there's no reason to think this wouldn't be the case for the radio market. Thus, once inexpensive radio distribution technology is available (I'm staking my bets on p2p radio broadcasting, of which PeerCast works the best so far, I think) we should see an explosion of radio stations, or at the very least, much greater diversity from a few larger players (Satellite radio being the example of this scenario).

Buckman back from busy time selling his previous company Lyris

The past few months I've been occupied with the sale of the company I founded 11 years ago, namely Lyris Technologies. This is the reason I've been less-than-consistent in keeping this blog up to date, and putting out new features and releases on Magnatune. That should change now that the sale is completed and I can now focus fully on Magnatune.

I do still have a fair amount of IT work to remove all my dependencies on Lyris, so progress will be a little slow for a few months, but in the end, for the best, as I only have one company to worry about now.