billboard.com –

A renewed focus on the value of music comes as a transition point for the record business. Rob Wells, Universal Music Group’s president of digital who brokered deals with “freemium” services like Spotify, left the company in late February. Now the company is rethinking the value of unlimited free streaming, according to a label source. At the same time, Apple’s upcoming subscription service, slated for a June launch according to an industry source and media reports, will forego the freemium model for a paid-only approach. It’s an approach Beats Music co-founder Jimmy Iovine, an executive at Apple since the acquisition of Beats Electronics, has consistently favored.

Negotiatons for Apple’s upcoming subscription service are evidence labels are standing firm on pricing. Industry sources say Apple has backed down from its effort to lower monthly pricing for its subscription service to $7.99 from $9.99. Apple would have to absorb the loss if it sets a price lower than the standard $9.99.

Few specifics about Apple’s subscription service are known at this time. It is widely believed that Apple will replace the Beats Music name with the iTunes brand. Label insiders say Apple has not revealed features or given demos. There is no indication if Apple will integrate iTunes Radio with a subscription service. But these insiders believe Apple is confident it can create a service that stands out from competitors and delivers enough value that consumers will pay the full price.

Apple is said to be talking to labels and artists about exclusives for its upcoming subscription service. An industry source dismisses rumors that Apple will be able to outmaneuver and outbid its competitors on exclusives for most key releases. “Apple is one of the biggest companies in the world. If they want exclusive content, they’re going to have to get out the checkbook.”

The music industry eagerly awaits Apple’s reboot of Beats Music, and the timing couldn’t be more perfect. The showdown between Apple’s pay-only business model and Spotify’s freemium model could change how people think about using free music to get paid music.

Industry sentiment about free music is years in the making. The previous decade was marked by brutal declines in revenue that reshaped companies — and the entire structure of the music business. iTunes provided a helpful transition to digital formats. Fives years later, services like Spotify won labels’ over, with a pitch to both generate revenue and reduce piracy. Now there are dozens of other streaming services with licensed content.

There has been a frenzy of licensing activity as labels became more flexible in their terms with digital services. “The last two or three years has been about stopping the [sales] decline and creating as many platforms and as many services and opportunities to capture money,” Universal Music Group chief Lucian Grainge said last year at a Wall Street Journal conference.

Now the smoke is clearing and different attitudes are forming. Some labels feel Spotify should have more than 15 million subscribers, sources tell Billboard. Apple’s pay-only service could be a turning point. If Apple is successful in attracting large numbers of subscribers without unlimited, or at least significant, free listening, Spotify’s business model could fall under more scrutiny. “Spotify is good at giving it away for free, but it’s bad at getting people to pay for it,” says an industry source.

The complaints from artists have grown louder. Artists have been vocal about streaming services’ royalties and the lack of transparency in the licensing terms. The freemium model itself has come under fire. Taylor Swift and Bjork have recently expressed their unwillingness to make music available to a subscription service’s ad-supported tier. “This streaming thing just does not feel right. I don’t know why, but it just seems insane,” Bjork told Fast Company last month.

Prompted by the public sparring between Taylor Swift and Spotify, Warner Music Group CEO Stephen Cooper brought up the topic in an earnings call in December. He voiced support for ad-supported streaming but warned that services with a “freemium” model — the object of Swift’s scorn — must clearly differentiate the benefits of the paid and ad-supported tiers.

Spotify has long taken the positioon it ad-supported tier is an effective way to acquire customers. Four in five subscribers comes from the ad-supported service, says Jonathan Prince, Spotify’s global head of communications and public policy.

Indeed, Spotify’s freemium approach has allowed the company to scale far better than its competitors. Second place Deezer’s 6 million subscribers and 16 million monthly listeners are well behind Spotify’s 15 million and 60 million, respectively. Rhapsody, which has a paid-only model, reached 2.5 million subscriber last month.

Prince also argues Spotify brings in consumers who hadn’t previously paid for music. As for the worry that Spotify is eating into download sales, Prince says Spotify’s internal research shows only 12% of former iTunes users use Spotify. “We’re on the same page as the labels in wanting to rebuild the music industry,” he says.

One option is to implement listening caps. Spotify had listening caps in place in Europe until January 2014 and had various restrictions in place in various countries. (For example, until March 2013 free users in the U.K. could play an individual song up to 5 times.) Sources say labels believe listening caps would help differentiate between free and paid services.

But labels are also realistic about the need to provide a free service. “People don’t think you can just turn it off,” says a label source. As Cooper said in December, a free tier can be an effective conduit to subscriptions. And free streaming has undoubtedly helped reduce the number of people that turn to illegal channels. There is ample research — some by Spotify — that shows music piracy has declined in many countries.

There’s also an element of geopolitics at play. A weakened Spotify could help create a more powerful Apple subscription service. That would remove the comfortable, valuable counterweight to Apple that labels don’t have in the digital download space. There’s even some doubt that Apple is out to beat Spotify rather than grow the music subscription marketplace. “If they’re out to kill Spotify, it’s news to us,” says an industry source. “And it’s the last thing we want. We want Spotify to be a strong competitor.”

Read more at billboard.com – 

gigaom.com –

The music business has been screwed up for a hopelessly long time, but change is afoot: Congress, courts and the Justice Department are all poised in coming months to shake up how companies and consumers pay for music. The big question, though, is whether this flurry of activity will produce a rational royalty system — or just make the existing rathole even deeper.

Here’s what to watch for in a year that could change the rules of the game for performers, Pandora and everyone else with a stake in music.

The last month has seen the return of two proposed bills in Congress. One is the Local Radio Freedom Act, which would ensure that traditional AM/FM stations don’t have to start paying performance royalties on top of the songwriter fees they currently pay. The other is called the Songwriter Equity Act, which would tweak the way so-called “rate courts” calculate how much people who write songs should get paid.

Both bills have appeared before in one guise or another, but never passed. This time, the outcome will be determined in part by whether Congress takes up the issues at stake on its own, or as part of a larger royalty reform effort.

Meanwhile, industry attention is turning to the Justice Department, which is holding a hearing on March 10 over so-called consent decrees. These are antitrust orders that apply to ASCAP and BMI, two giant outfits that license songs on behalf of music publishers, and require them to license song rights at a fixed price to all comers. The antitrust orders have been to a boon to everyone from cover bands to bars to radio stations because they provide an easy, efficient way to clear copyrights. But music publishers say they are getting short-changed and want the orders, which date from the 1940’s, to be changed or abolished outright.

Finally, some high stakes court cases increase the chances this will be a year of reckoning for the music industry.

Digital on trial

The most contentious of these cases involve an aggressive series of class action lawsuits, brought by record labels and former members of the band The Turtles. In courts from California to New York to Florida, the labels are claiming that Pandora, Sirius-XM and other digital music services have failed to pay for performances that date from prior to 1972.

The legal theory appears far-fetched, but it’s gained traction before some judges. If the cases go any further, they will have huge financial and legal implications not just for Pandora, but for any other service that plays old music on the internet. (The labels also pushed the issue last year through a proposed law, The Respect Act; look for that bill to return if the labels strike out in court).

And, if all that’s not enough to keep track of, there’s also a court clash between Pandora and BMI. This one is about royalty rates, but also about whether publishers who use BMI to license their songs can pull the digital portion of their catalogues or if they must instead be, in the words of one judge, “all in or all out.”

A ruling in favor of BMI could cripple digital radio services, but that appears unlikely given that ASCAP lost a similar case last year.

What the fight’s really all about

All of these disputes are bitter and complicated, but the source of them can be summed up in a sentence: the music royalty pie has shrunk significantly, and what’s left of it is being distributed unequally. As an RIAA report in 2013 revealed, digital sales may be growing, but not fast enough to offset the long-term loss of CD sales. Professor Peter Tschmuck, as part of an analysis of the U.S. music industry, put the RIAA’s data into a chart last year:

These larger forces are why many of the measures now floating around — the songwriter law, the consent decrees, the court cases — won’t do much to change the game. Such piecemeal fixes also do little to acknowledge the current royalty system is broken because it’s built on assumptions of the analog era.

The proper way to approach the problem is instead to require the music industry to recalibrate the entire copyright collection process from the ground up and, especially, to fix two major imbalances in how money is collected and paid. The first imbalance involves a seemingly irrational distinction in how the law treats AM/FM stations and digital radio.

Pandora, for instance, is a favorite punching bag of the industry, but the company also spends the bulk of its revenue paying performers — even as traditional radio stations pay nothing at all. The reason for this, Washington insiders suggest, is that members of Congress are eager to make nice with local stations on which they rely heavily during election campaigns. This is why they are happy to let them pay nothing to performers, while at the same time throwing the likes of Pandora and Sirius-XM under the bus when it comes to royalty rates. But for musicians and for consumers, there’s really no reason why digital and AM/FM should be treated so differently.

The other big imbalance when it comes to royalties is between songwriters and performers. Many people will be surprised to know that when performers do get paid, which is the case when a song is played on digital radio, the rates can be up to ten times higher than what the songwriters (and their publishers) get.

The reason for the imbalance in this case, though, is the consent decrees that set the rates at which publishers get paid. The Justice Department could address this by lifting the decrees, and allowing publishers through ASCAP and BMI to charge what they like. But this could lead songwriter rates to go through the roof, and fatally wound digital radio services once and for all (recall Pandora is already on the ropes). It would also create new licensing headaches for restaurants, bars and other places that play music.

That’s why any solution that looks to pay songwriters more will also have to consider when it is appropriate to pay record labels, which represent the performers, less.

As for the dispute over pre-1972 recordings, the court cases (and the now-dormant Respect Act) appear to be no more than a cash grab through copyright expansion. Judges and law-makers should blanche at the idea of handing out windfalls, at the expense of consumers, for music that is already 50 years old. Such a gift would be a boondoggle akin to ethanol subsidies or the Bridge to Nowhere.

Change is coming.. but for better or worse?

All of this comes at a time when musicians are having a harder time than ever. The record industry that once nurtured them has shrunk dramatically, CD sales are drying up rapidly, and internet royalties are not making up the difference. But on the bright side, the internet has introduced new efficiencies that make it easier to track song sales and distribute payments (which helps explain ASCAP’s surprising $1 billion year.)

A solution from courts or Congress is in order. The danger, though, is that a partial solution will protect parochial interests such as FM stations or labels that own 1960’s recordings without creating a sustainable system for royalties in the digital age. There’s also a risk that changes to the law will simply scapegoat companies like Pandora and Spotify, which represent the future of music, or even kill them off altogether.

In any event, watch closely. This is the year that a lot of long-time log-jams in the music industry appear set to move.

Read more on gigaom.com –

musicweek.com –

Washington, DC — Songwriters and publishers have applauded the March 4 initiative by a bi-partisan group of members of US Congress to introduce the Songwriter Equity Act that would “allow songwriters to receive compensation based on the fair market value of their songs.”

The bill – which was first proposed in May 2014 – aims at modernising sections 114 and 115 of the US Copyright Act. and, according to their sponsors, “would amend federal law to allow songwriters to receive market-based compensation and would remove government price controls.”

businessinsider.com –

Google doesn’t like liars.

Google has worked out a way to quash lying on the internet. The New Scientist reports that Google is interested in the idea of ranking websites based on facts, not merely the prevalence of incoming links.

Basically, researchers at the company believe they can clean up the internet and make veracity a rankable priority in search terms. After all, the web is full of falsehoods. Here is a list of some of them.

And BuzzFeed has a list of 35 “news” stories from 2014 that got serious clicks, but weren’t true at all.

And BuzzFeed has a list of 35 “news” stories from 2014 that got serious clicks, but weren’t true at all. You’ll no doubt remember a few of them.

Sometimes fake facts on the internet are harmless fun — entertainment that is liked and shared simply because it’s entertaining. However, there are instances where websites climb the rankings that shouldn’t. This anti-vaccination website is one of the top search results for “vaccination,” for instance, even though it is full of information that is either wrong or harmful to children. (And the fact that Business Insider just linked to it has only compounded its superior ranking within Google’s results.)

At its core, Google ranks web pages based on the number of incoming links they receive. The assumption is that the more links a page has, the more important it must be on the web. The algorithm has been adjusted and modified hundreds or thousands of times over the years, of course, but incoming links are still a huge part of what determines any site’s ranking in a search. Google’s engineers adjust the algorithm periodically in hopes of making sure it returns the highest quality searches, not simply the most popular sites.

To weed out popular lies, Google has devised a method/model that measures the “truthfulness” of a web page instead of its online reach. A post on a blog might have a big reputation, but that doesn’t always mean it’s factual. As NS explains, instead of counting incoming links (a measure of its reach) Google’s new system could count the number of “facts” in the page. Each source is then analysed for how many lies it has and scored on that using something called a “Knowledge-Based Trust” score.

Google used its “Knowledge Vault” to qualify the information. That’s the company’s giant database of information, vetted facts and research.

Google’s lie detector isn’t live. At this point is simply “research,” the company tells us. “We don’t have any specific plans to implement it in our products. We publish hundreds of research papers every year,” Google said in an email to BI.

It was, however, published by Cornell University and is called “Knowledge-Based Trust: Estimating the Trustworthiness of Web Sources.”

Read more: http://www.businessinsider.com/google-has-figured-out-how-to-stop-people-lying-on-the-internet-2015-3#ixzz3TQxeVKEm

BusinessInsider.com –

Courtesy Photo

Mark Zuckerberg gave a keynote speech at Mobile World Congress in Barcelona on Monday, but it was so boring that many people either fell asleep in their seats or walked out midway through.
Zuckerberg was in Barcelona to talk about Internet.org, Facebook’s effort to co-ordinate mobile carriers to bring the internet to the developing world. That’s actually interesting, and people mostly paid attention when Zuckerberg was talking about that.

But the problems came when three carrier partners came on stage to talk about how they’re working with Facebook. They spoke about technical things, like how working with Facebook is affecting their bottom lines. Most people in the audience weren’t interested.

Read more: http://www.businessinsider.com/mark-zuckerbergs-boring-speech-at-mwc-2015-3#ixzz3TK2Xv6xh