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Simmer Down

by Paul Rapp on December 1, 2011

A few months ago, we talked about how an arm of the Department of Homeland Security was getting judges to sign orders allowing for the seizure of Internet domains that appeared to be trading in counterfeit goods. The legal basis for the seizures was shaky (if it wasn’t, why would we need these hideous new SOPA/ProtectIP laws?), and the effectiveness was questionable (only the domain names were seized, so whoever was behind them could simply register a new name and be back in business in minutes), but hey, it made for good headlines.

This week, Homeland Security (remember, trademark infringers are terrorists) was at it again, seizing a couple hundred domains, most of which appeared to be selling counterfeit clothing and the like. A couple of IP sites are reporting a strange twist—on the seized domains, the Feds have placed an “anti-piracy” video that was produced by NBC/Universal about the evils of the unauthorized downloads of movies. It’s a typically one-sided, oversimplified, stupid little street drama that equates downloading movies with people losing their jobs (“What’s more important, that movie or this human being?”).

Which raises a couple of questions. First, why is the government promoting the propaganda of the film industry? Second, why isn’t the government disclosing that it’s promoting the propaganda of the film industry (the film ends with no credits, only with the badges of DHS and the FBI)? We’ve used the F word about this sort of thing here before. No, the other F word. Third, why are they showing a film about the evils of movie downloading on the seized domains of some goombahs selling stuff like counterfeit golf equipment? And finally, as pointed out on the news site PaidContent, not only is the legal basis for these seizures extremely questionable, but federal law dictates that any seized property must be destroyed or sold. The law doesn’t say anything about using seized property to launch a deceptive PR campaign on behalf of Big Media.

Moving on. There’s more of this anti-Spotify stuff spinning around out there: A bunch of indie labels have pulled their stuff off the music streaming site, claiming that the royalty rates paid are too low, are not fair, and are hurting sales. All of them cite some statistics, that it takes several gazillion “listens” on Spotify to get a royalty payment equal to one sale of a download. Dudes, get a grip. As we’ve discussed before, these numbers are going to go up. Spotify isn’t paying on a per-stream basis, so stop thinking about it that way. Seventy percent of the company’s revenue is paid out to artists, songwriters, record companies and publishers on a pro rata basis. The more money Spotify gets, the more money everybody gets. When our six-month free trials start getting restricted or end, lots of us will happily pony up for the $10 a month subscription, because for lots of us, that’s a bargain. Spotify will get more money and royalties will jump. Don’t believe me? Well then consider this: In Sweden, where Spotify comes from and where the service has been available since 2008, music industry revenues went up more than 10 percent in 2009, largely because of Spotify. And as far as the indies’ claim that Spotify is hurting sales? Are you kidding me? What, are you reading the RIAA’s playbook of nonsense? What would you prefer, one sale and 100 illegal downloads, or one sale and 100 Spotify listens?

What will it take to get Spotify (or a competing streaming service) up to the level where the royalties are at a proper, “fair” level? Heavy promotion would help, and a couple of bundling packages with cable or cellular companies would help, too (Spotify’s success in Sweden is attributed, in part, to a bundling deal with a cable and phone company).

Finally, there have been a couple more “sky-is-falling” articles linked to a study showing that artists selling their music through digital aggregators CD Baby and Tunecore make, on average, just about bubkes. Oh, the humanity! The Long Tail’s a lie! Won’t somebody do something?

For the love of god, please shut up. This is not a bad thing. In fact, it’s exactly what you’d expect with a marketplace that has no barriers to entry, when anybody with a computer and a song in their heart can record a track, and easily get it out for sale through CDBaby and TuneCore. Many, maybe even most of the musicians who have put stuff up for sale through these services are more hobbyists than they are working musicians. Many, I suspect, are thrilled and amazed to see any sales. For those who are working musicians, or if they’re like me, and have a band that had some success in the past, these services drive sales, pay fairly and efficiently, and provide significant revenue where there otherwise would be none.

The sky, my children, is not falling. Au contraire.