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 From
the Dallas Observer: "On a good day, Mark Cuban
might respond to a journalist's query with a terse, unpunctuated
e-mail that reads like something dashed off by a hostage while his
captors are in the can.
"It's understandable: The man's running the Dallas Mavericks,
investing in movie distribution and exhibition companies, sticking
it to NBA commissioner David Stern about bad officiating, getting
daring 'dos...no, wait. But last week, a missive arrived in the
electronic inbox that measured some 1,500 words -- (maybe he thought
he was getting paid by the word) -- titled "The Music Biz According
to Mark"..
"Cuban said that two years ago, he was approached by
venture capitalists associated with Napster about buying the embattled
peer-to-peer file-sharing service, which once allowed music fans
to swap songs across the Internet like kids trading baseball cards.
"Of course, the deal was never consummated: Napster
instead climbed into the silk sheets with the German media conglomerate
Bertlesmann, which, according to a recent Business
Week article, has spent some $100 million since October
2000 to keep the sickly service on life support. As Cuban said...'I
told them if they did the deal they ended up with, it was like doing
a deal with the devil and they would never recover, which they haven't
and won't...'
"And, yeah, the numbers are down, if you believe RIAA
puppet...pardon, President Hilary Rosen, who told a Senate committee
that in 2001 sales of all recorded music were down  10
percent (or some $600 million), in large part because of the illegal
pirating of music over the Internet. According to Rosen, 23 percent
of music consumers surveyed -- by whom, who knows? -- said they
didn't buy more music last year because they refused to pay for
what they found for free.
"But as Cuban insists, CD sales overall are up some
2 percent, at least according to figures provided by Soundscan,
which tabulates sales at retail outlets. The RIAA's numbers are
down, if that, simply because the labels are releasing fewer cassettes
and CD singles.
"'Let's put this in context,' Cuban writes. 'Imagine a business
where they cut the number of products released; raised the prices
of their products to more than 20 bucks a pop; had a significant
number of their distributors go out of business (Valley Media and
National Record Mart, as examples); reduced the amount of marketing
money spent to promote each product; saw major promotional money
and discounts from the two years of dot-com mania disappear; and
saw complete turnover and management problems at one of their biggest
providers, EMI. Yet in spite of all of these things, [the industry]
sold more CDs and for more total dollars than the previous year.
I would tell you that is a business that has had a great year. The
RIAA has tried to paint the picture that the industry is suffering
because of file sharing. It's not. There is more evidence that it
has benefited from it...'
"Which is why Cuban suggests the labels, major and independent,
create a subscription service available through AOL (which owns
Warner Bros., Elektra and dozens of other labels), Earthlink and
all other Internet service providers and broadband providers, who
would
offer music content the same way, oh, DirecTV provides network programming.
"If you want all the Linkin Park you can stomach, he
says, then simply have your ISP add an extra buck to your monthly
bill. The label would take 25 percent, the ISP would get 25 percent
and the band would take 50 percent -- which, Cuban figures, would
make the band a nice hunk of change, since it eliminates distribution,
the need for promotion, retailer returns and other risky variables...
"'There's nothing to stop' the labels from coming up
with a better model, Cuban says, 'but then there is nothing to stop
the NBA from improving the officiating or Enron from not shredding
docs. Some things just don't happen till after someone gets fired.
"The music industry -- like the telegram industry,
the railroad industry, the word-processing industry -- is trying
to hold on to a model while consumers are looking for another model...Until
then, the books will be written how the RIAA and music industry
killed off thousands of customers in the online music industry,
the streaming industry and the music industry itself through lies
and deceit.'"
Read this entire article in yesterday's Dallas Observer,
or click
here.
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BY DALE SMITH, Cofounder
Cablemusic
As the second webcaster ever to sign an RIAA licensing deal
in the Summer of 1999, Cablemusic
possesses a unique insight to this entire situation. Here are the
facts:
Fact: We entered into negotiations and ultimately signed
a "percentage of revenue" license deal with the RIAA,
because we respect the artists and wanted to work WITH the record
industry.
Fact: We built our entire site, performance tracking technology,
and streaming technology to explicitly comply with the terms of
our license and the DMCA.
 Fact:
When our license came up for renewal, the new terms included the
same percentage of revenue plus NEW terms. (In other words, the
deal got worse! We decided to see arbitration through.)
Fact: We pitched our performance tracking technology to the
RIAA (in the Spring of 2001) which would help them acquire more
licensees (hence more money for artists), AND help webcasters determine
if a "per performance" license or a "percentage of
revenue" license would be a better deal for them. (RIAA simply
told us to "encrypt" our streams?! They entirely missed, or ignored,
the point of our presentation.)
Fact: Our company was in negotiations to be acquired when
the CARP proposed rates went public in February. To say the least,
the rates spooked the potential acquirers and, in part,
caused the deal to never materialize.
Fact: We have turned off our streams until we know that any
rates adopted will not simply kill our industry and create huge
retroactive liabilities for our otherwise stable company.
Fact: We are not generating significant revenues and no one
here is getting a paycheck.
Fact: This in NOT an "empty threat", this is reality!
I am amazed that the record labels do not see our industry
as a huge opportunity to sell, yes SELL, more records. And they
don't even have to schmooze us to play and promote their music.
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"'Carrying
the water' for foreign companies..."
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One point that hasn't been discussed in much detail (as least
as far as I've seen) is the status of the RIAA as a foreign
lobbyist. Of the five companies that make up the operating control
of the RIAA, as well as the vast majority of record sales represented
by that organization, only one (AOL Time Warner) is a U.S. corporation.
All the others are foreign companies.
The RIAA will probably argue that it represents all U.S. recording
companies, but the CARP proceeding itself demonstrated that that's
not true -- a group representing hundreds of smaller labels protested
to the Copyright Office and requested the right to represent its members
in the arbitration, independent of the RIAA.
If the RIAA is, in fact, "carrying the water" for foreign recording
companies, the argument can be made that these foreign companies are
attempting to crush the nascent U.S. webcasting market in
order to enable their Internet oligopoly (Pressplay and MusicNet)
to dominate the market for distribution of recorded music over the
Internet.
In addition, the lobbying rules under which the RIAA plays
would be radically different if it was treated as a foreign lobbyist.
I suspect that if members of Congress realized that a pack of foreign
corporations are colluding in order to attempt to destroy a nascent
American industry, many of them would change their attitudes and support
the position of the webcasting industry.
One final point: The L.A. Times editorial that you reprinted
(here)
is important not only because it represents the position of the biggest
newspaper in the U.S.' second-biggest city, but because it's the newspaper
of record for the home of the U.S. recording industry. This editorial
was a direct statement to Hilary Rosen, et.al., that the L.A. Times
doesn't buy her arguments. She certainly can't blame it on the Times'
unfamiliarity with the recording business.
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"Reasons
to use AOL's offerings..."
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Any speculation as to what Jimmy De Castro (in RAIN
here) will do
to provide consumers with reasons to use more of AOL's offerings -
and ways in which he will monetize it? Great opportunity for a reader
brainstorming session.
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"A
greedy and avaricious demand..."
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I'm absolutely stunned! Now the RIAA is asking that stations
that play longer tracks (like classical music stations) be charged
a penalty for using less of their titles (see RAIN story here).
There is simply no
good excuse for such a greedy and avaricious demand. They say that
it will more fairly bring classical and similar-type stations in line
with the fees paid by other webcasters, and yet this increased money
will actually be split between a lesser number of artists and record
labels - thereby actually increasing the amount each RIAA member receives
per performance significantly. It's unconscionable.
There can only be two reasons for such a demand. Either the
RIAA wants to ensure that the rates are high enough to ensure ALL
webcasters are forced out of business, or there is simply no end to
their greed. It appears that per performance per listener is even
not enough. Now it's been suggested to pay per performance per listener
per minute. Where will it end?
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Kevin
Shively
Beethoven.com |
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"Even
worse than Joel suspected..."
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Joel Willer's note, which was excerpted (here),
incorrectly suggests that religious broadcasters are not-for-profit.
Nothing could be further from the truth.
The NRBMLC is comprised of very
profitable religious broadcasters, the largest of which is Salem Communications.
So the situation in the CARP, with respect to non-profits
being represented (or not), was even worse
than Joel suspected.
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"They
want their monopoly extended..."
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We fully support your efforts - the UK is bad already and will
jump on this very quickly.
However, please remember that if the US is anything like the
UK, it will be those big commercial radio networks who
(behind the scenes)will be pushing in support of CARP. They are all-powerful
for many reasons as we are sure you are aware.
FM stations have been hit hard by NET-ONLY stations in the
UK. A loss of credibility with regard to music & choice. They have
over the past few years tried to compete on the NET by streaming their
output but have failed miserably to compete on a level playing field.
They want their monopoly extended to the NET and will use any 'Dallas'
style methods to get their way.
CARP essentially does it for them & then all those big radio
networks will line-up on the NET replacing all the Independents.
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"On
the same side..."
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Hang tough! RIAA is starting to feel the pain. We all know
that this is truly grassroots and your site is just one piece of that.
Let's be sure that we dont allow RIAA to play broadcasters
against webcasters. The adversary is the RIAA and the companies that
they represent. Webcasters may provide the diversity, but broadcast
stations help bring a lot of folks to the party.
DiMA and broadcasters are on the same side.
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