Goldberg is general manager of online music sales for Internet giant Yahoo Inc., and his Yahoo Music Service is selling McCartney’s “Right Where You Want Me” without restrictive antipiracy software. If Yahoo can sell more copies of the album than the dominant iTunes Store, run by archrival Apple Computer Inc., it could be the beginning of a transformation in the online music market.

Both companies are selling the album for $9.99. But Yahoo Music won’t try to prevent buyers from passing out copies to friends, or posting the songs on the Internet where friends can download them. Versions of the album sold by Apple and other online retailers will contain the usual “digital rights management” or DRM software, to prevent illegal copying. But Yahoo will issue McCartney’s album in MP3, a generic music format that lets the owner make unlimited copies.

It’s a chance at vindication for Goldberg, who has long argued that DRM is a waste of time and money. He hopes that strong sales of McCartney’s MP3 album will encourage recording industry leaders to turn away from DRM. “They’re not there yet,” Goldberg said. “We’re hoping to get them there. This is a very good test.”

It’s also a chance for Yahoo Music to emerge from Apple’s shadow. Apple is by far the most successful online music store, with nearly 70 percent of the market. Yahoo has only about 1 percent.

Most Yahoo Music files currently use DRM technology. But Goldberg thinks any kind of DRM discourages consumers from buying online music, while doing nothing to halt piracy. DRMs are easily hacked, said Goldberg, so thieves can still get at the music. Besides, nearly all music CDs use an unprotected data format, so they can be easily copied. “There’s no such thing as truly protected music unless you can’t listen to it,” said Goldberg.

DRM makes life difficult for honest music fans. iTunes songs work only on iPods, said Goldberg, and they can’t be moved onto home or automotive stereo systems as digital files; users must copy the songs onto a disc or buy an iPod adapter for the system. In addition, downloaded iTunes songs can be copied to a maximum of five computers, all of which must be registered with Apple before they can play the songs.

Goldberg has long urged music companies to abandon DRM. Earlier this year, he persuaded Sony BMG Music Entertainment to release a single by Jessica Simpson in a DRM-free version. The move caught the attention of officials at McCartney’s label, Hollywood Records.

“We’re a pretty progressive company,” said Hollywood’s senior vice president of marketing Ken Bunt. “We want to make our music available to everybody.” Bunt added that Hollywood isn’t going all MP3, but would use the format on a case-by-case basis.

Apple is likely to remain committed to its DRM system, called FairPlay, because it helps the company retain its vast share of both the player and the music sales markets. Apple’s hugely popular iPod music players are the only kind that can play back FairPlay-protected songs, because Apple has refused to license FairPlay to other companies. Also, Apple has refused to build alternative DRM systems into its iPods, so users will buy all their music through iTunes. “Clearly the dominance that Apple has in the digital music space is entirely a product of DRM,” said Fred von Lohmann, senior staff attorney at the Electronic Frontier Foundation, an Internet civil liberties group.

But even Apple’s iPods will play MP3 files, an international standard for digital music. So a music industry move to MP3 would break Apple’s grip on the online trade. Yahoo and other online music vendors would benefit, as well as electronics firms making alternatives to the iPod.

But because MP3 files are easily copied, the technology has long troubled the music industry. When the first portable MP3 player was introduced in 1998, major recording companies sought to have the device outlawed. When that tactic failed, the music industry worked with software engineers to create digital music formats with DRM features to block piracy.

Ted Cohen, managing partner of TAG Strategic LLC, a digital entertainment advisory firm in Los Angeles, thinks DRM is here to stay. Cohen dismissed Yahoo’s MP3 music sales. “Things like this are digital stunts,” he said. “It’s a one-off.” Cohen said that it might make sense to sell an unprotected album from a new artist like McCartney, whose first album, “Beautiful Soul,” sold 1.5 million copies. But Cohen said the music companies weren’t rushing to issue MP3 albums from their top-selling bands. “If you’re going to put out the new Dave Matthews,” Cohen said, “do you want to take the chance of putting it out without DRM, and finding out that half of your sales have been eviscerated?”

But Goldberg said that online file-swapping is savaging music-industry sales even with DRM. Meanwhile, sales of CDs continue to slump. And even online sales aren’t as robust as they could be. A new report from Jupiter Research found that the average iPod user has purchased just 20 songs from the iTunes Store. “It’s partially because it’s very difficult to justify spending money on music that’s essentially being limited,” said Goldberg, who thinks a switch to MP3 could launch an online music boom.

credit: boston.com

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According to the Wall Street Journal, YouTube has double pinky swore to Warner Brothers that it will implement some kind of technology in order to credit Warner artists will royalties based on music played on its submitted videos. The deal will surely be the first among many the big labels will be inking with the likes of YouTube and Google Video.

Although this isn’t the first time the free transfer of information has been attacked (remember Napster v. Metallica?), it’s ramifications could have a much greater reach among the proliferation of “show me” technologies like the posting of personal videos, pictures and music - many of which include derivative works. (Another issue [art form] which has been unduly and systematically attacked by the majors and the RIAA. Remember DJ Danger Mouse and the Grey Album?)

“The new system will give YouTube users a legitimate way to create videos with soundtracks that use music from Warner artists. (Videos of amateurs’ lip syncing or juggling to popular songs are among the most viewed on video-sharing sites.) YouTube’s system will identify such videos and give Warner a share of the revenue for any ads that appear alongside these videos, if Warner opts for that rather than having the videos removed.”

Although this agreement will give YouTube the permission to use Warner properties in “legal” ways, you can’t help wondering how permissive Warner will be now they have affirmed ownership and will most likely pull any material used in a fashion that they don’t approve - for one reason or another.

But, this isn’t a total indictment of the deal. Even though the agreement sets a dangerous precedent, it can be considered a progressive move by Warner, one of the “big 5″ major record labels. Warner and YouTube will actually share the revenue produced by ads shown in conjunction with music videos.

That fact that the RIAA or anyone else attempted to pull the site down through litigation before this signals that big music is now starting to “get it”, if only a little bit. Only a fool would disregard YouTube’s stellar traffic rankings and the potential as a low cost, MAJOR impact advertising venue.

But sites like YouTube, which are devoid of a solid business model, cannot survive forced royalties to Warner, let alone when the other corporate playa haters come calling - EMI, Universal, Sony, BMG [breath] BMI, ASCAP, SESAC, James Hetfield [breath] Harry Fox. Unfortunately, user-generated content sites may have to switch to a subscription-type of service or “pay to post” site which would undoubtedly ruin their web cred and send eyeballs elsewhere.

In order to get some judgment here we need to determine whether the sky is indeed falling - that is, whether these lawsuits will break down the free exchange of ideas across the internet. Fortunately, the legal maneuverings of big business will only curb (temporarily) this trend towards personal presentation (adaptation) online. As users we are inherently more nimble and can change faster than corporations. In other words, keep adapting, keep changing, keep creating and by all means KEEP SHARING!!!

…and one more thing…

If you have a website featuring streaming video through a Flash movie, you can also prepend these videos with as many ads as you like through a digital graft. We can do it. We have the technology.

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pass it on: http://www.aswarmofangels.com

a swarm of angels = angel investors
ASOA is a truly innovative idea in cinema. Hell, for art. It’s completely collaborative and managable. It’s DRM free and it’s independently financed. I couldn’t possibly do it justice by writing about it myself. From the official site, here’s an excerpt:

Mission

Create a £1 million film and give it away to one million people in one year.
Create a cult media experience, featuring a full-length movie and media offshoots.

* Creator-led content
* Internet funded & distributed
* Freely downloadable & DRM (digital rights management) free (Creative Commons-licenced)
* A new entertainment experience (direct involvement in making a film)
* A collaborative, participative experience
(Wiki script doctoring, voting on select creative & marketing decisions)
* 50,000 people gathering together to make a feature film

…and one more thing…

a swarm of angels = stakeholders = contributors = active endorsers/tastemakers/marketing hubs = exponential growth and awareness!!!

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Media restrictions are unacceptable.

Many of the greatest written works of our times are STILL challenged by overzealous school boards and bible thumpers all over this country. Check out the American Library Association and read about Banned Books Week and what you can do to in your own community to make sure these crazy shits don’t ban “One Flew Over The Cuckoo’s Nest” for encouraging mental illness.

“Intellectual Freedom is the right of every individual to both seek and receive information from all points of view without restriction. It provides for free access to all expressions of ideas through which any and all sides of a question, cause or movement may be explored. Intellectual freedom encompasses the freedom to hold, receive and disseminate ideas.”

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In all of this talk about freeing musical restrictions and the evil-ass record biz, sometimes we forget that we are actually IN this business of music. With that said, always be on the lookout for nuggets of wisdom from the rest of the biz world to help build your enterprise.

A big tip from the Internet marketing world…

BUILD YOUR MAILING LIST and market to it over and over again!!!

Look, about the smartest thing you can do - even before you write the song - is build a list. Your mailing list is THE MOST IMPORTANT tool your band will ever have. Period. Your list knows who likes you. It knows who’s going to your shows. It knows who bought or will buy t-shirts from you. It knows all!!! (If you’re doing it right.)

If you already have a good sized mailing list at your disposal, and you’ve been diligent about building it up at shows then you’re way ahead of the curve on this one. However, even to you guys, I’m going to ask you a few questions that may provoke some thought….

#1 Do you collect the info of everyone you sell a CD to?
#2 Do you collect the info of everyone you give ANYTHING to?
#3 Do you mark down where the info came from?
#4 Do you mark down who bought/took what item?

If you haven’t considering doing any of these, you could be missing a huge opportunity!!!

Now listen because this knowledge is powerful…

You can’t sell anything to anyone unless you know what they want!

Well, how are you going to find out? ASK THEM!!!

This is one of the pillars that the new music business will be built upon and it highlights a major credo that will be adopted by many - Community BEFORE commerce!

Encourage your fans to write in or comment on your website. Ask them what they’d like from you next or what song they think it would be cool for you to cover at your next show. Give them stuff. Incentivize them by giving fans free tickets for getting their friends to sign up for your list. Set up a forum on your website or a blog that fans can sign up to.

The point is to include these people that will sustain your career. Make them feel like they’re part of your family and that you welcome what they have to say. Ignore this at your peril!!! Once you turn your back on them, they will also do in kind. Frankly, if you don’t respect and appreciate your fans, you should probably stay home anyway.

Now you’re well into the process of collecting info and further building your list. Be a good pen-pal and keep in touch, will ya? Communicate with your list at regular intervals (though not TOO often.) and continue to give them things - even if it’s just the inside track on what the group has been up to. But while doing this, always continue to market to them. Offer them exclusive goods and a variety of them at different price ranges. Find out which items sell the best and you’ll know better how to market to the next batch of signups. You can even encourage fans to suggest products they’d be willing to buy from you.

I’m going to tie this off with a few truths you should get hip to very soon.

#1 If you want to earn a living as a musician you will be in the music business.
#2 Marketing is smart - ignore this and you may not make it.
#3 Everyone is a potential mailing list signup. EVERYONE!!!
#4 The music biz is commercial.
#5 MUSIC is not. Give it away.
#6 The music business is also known as the TOURING business.
#7 The music business is not the RECORDING business. Let it go.

…and one more thing…

Make sure you collect physical mailing addresses - direct mail is a great tool for fan contact!

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2006 will go down in history as the year the entertainment industry finally started to take digital content distribution seriously. So far this year we’ve seen television networks and film studios experiment with a surprisingly wide variety of new distribution models, while the recording industry has started to realize that there may be a future in downloadable music. If there’s a downside to the recent explosion of digital content it has to be the entertainment industry’s unhealthy obsession with digital rights management (DRM).

In the past entertainment companies have been hesitate to distribute content digitally due to piracy concerns. Those concerns have apparently been replaced by a complete and total faith in DRM. Or, at the very least, a belief that it will be possible to build viable new business models around DRM protected content.

There’s just one problem — DRM doesn’t work. It’s a futile exercise in artificial scarcity that punishes honest consumers while doing little to slow the tide of piracy.

Here are a few reasons why DRM is an exercise in futility:

• DRM encoded content isn’t secure. This past week we’ve seen both Microsoft’s PlaysForSure and Apple’s FairPlay DRM systems cracked. Those two systems combined protect nearly 100% of the commercially available digital music. While Apple and Microsoft will likely move quickly to patch their security, it’s only a matter of time before these systems are hacked again. It’s not just music that isn’t secure. The DRM scheme protecting commercially available DVDs is also trivial to break.
• DRM restricts fair use. While pirates have the tools to make unlimited copies of commercial content, honest consumers are faced with arbitrary restrictions preventing activities that have traditionally been considered fair use (e.g., copying for personal use).
• DRM frustrates consumers. Most DRM systems are so poorly implemented that they create needless headaches for consumers. We’ve seen countless reports online where consumers were unable to obtain or renew DRM licenses to listen to legitimately obtained content.
• DRM confuses consumers. There’s no such thing as a standardized DRM policy. The iTunes Music Store comes the closest, but only because Steve Jobs has taken the lead as benevolent dictator forcing all of the major labels to comply with Apple’s FairPlay terms. The labels, on the other hand, would like the freedom to define their own terms. If they get their way confusion will undoubtedly prevail. Imagine a world where all of your media products have different usage limitations. The entertainment industry’s dream-come-true will ultimately turn into DRM Hell for consumers.

While it’s true that the Digital Millennium Copyright Act (DMCA) outlaws the circumvention of DRM systems, it’s also true that criminals generally don’t pay much attention to the law. One of the results of the DMCA is that honest consumers are forced to suffer buggy DRM implementations and restricted usability, while criminals continue to make illegal copies of media products. At least a few honest consumers have turned to the dark side and begun using cracking tools in a last ditch effort to make legitimately purchased content work properly.

At some point the entertainment industry needs to realize that DRM is actually bad for business. There’s a very real risk that DRM could damage the market for legitimate digital content.

So what’s the answer? It’s actually very simple. Offer consumers unprotected digital content at a reasonable price. This approach would reward honest consumers by eliminating the DRM nuisance factor.

While it may seem radical, it’s worked quite well for at least one online music service. eMusic has grown to be the second largest digital music store because it provides users with unencrypted digital content. By foregoing DRM, eMusic has eliminated the complexities associated with DRM, and all of the related device compatibility issues. As a result, eMusic is the only major digital music store (besides iTunes) that can offer its users iPod compatible downloads.

While the answer seems clear, something tells me this situation is going to get worse before it gets better. Later this year Microsoft will release the Zune music player. Zune will reportedly use a new DRM scheme that will be incompatible with both PlaysForSure and FairPlay. While consumers may welcome competition in the media player market, the last thing we need is a new DRM system.

credit: Medialoper

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I admit it, Dave Kusek and David Leonhard are my gurus. These guys are the most forward-thinking lot in the industry today. I HIGHLY recommend you check out the website http://www.futureofmusicbook.com/ as well as their corresponding book, “The Future of Music”.

It used to cost a lot of money to record and promote new music. Artists struggled like hell to find a patron to support them (i.e. a label). Everything was controlled and only a few artists became stars. That was the major label system. Most artists learned quickly when the recording advance money ran out that they needed other sources of income like performing, songwriting and the sales of merchandise to survive.

The new artist model says anybody can make and distribute a recording. It is much less expensive to make a record today and recorded music is only going to become less valuable to everyone over time. The real hard part is promotion. The true nemesis of the artist is obscurity. There is a glut of music out there and the situation is only going to get worse. This is the reality of the future of music, abundance and saturation.

Personal connection with a fan base is the hallmark of the masterful entertainer. Truly great artists engage their audience while playing shows by working the room. Today artists can establish meaningful virtual relationships directly with their audience by building an online fan base and answering online posts and comments and taking the time to interact with their fans. The reach of a live show can be magnified with the orbit and power of a networked online community. To be sure, it is a lot of work to monitor the boards and keep up with the postings, but it is a lot easier than touring 250 nights a year, and the payoff can be massive.

This is just like employing street teams to build buzz and selling CDs out of the back of the tour van, both of which are proven tactics to build audience and create direct relationships between artists and fans. Only now the street teams are virtual and the van is open for business in every city across the globe all the time. The name of the game for bands is to know who your audience is and what they like and where they are coming from. You cater to that and you might just have a chance at a career in the new music economy.

Artists, songwriters and producers of the future need to find ways to break through the noise and stand out without significant recording revenue. That model is no longer going to work. Artists of the future are going to need musician businesses built around them that attract audience without relying on recordings to finance the machine. We have already seen how this is possible today, and it is going to become more commonplace over time.

Today lots of small companies are planting the seeds of the future music industry by focusing on artist promotion and creating do-it-yourself tools for bands and their managers. Bandwagon is a clever UK company connecting indie artists and labels with fans through a mix of music and video, ring tones, recommendations and online social networks. This platform is an example of a new way of thinking about the relationships between artists and fans, direct relationships. Another example is Liverpool’s Safesell, a company that helps bands sell digital music directly from their web sites. With the Safesell software, bands can deliver their music online to their fans and keep 70% of the money charged for downloads. This is in contrast to the iTunes model where bands get to keep 6-8% of the download fee.

The recording has lost much of its perceived value and musicians are going to have to struggle with that new reality. Sales of records and CDs will never again be the cash cow the major labels got fat and happy on. But recorded music can play a major part in the promotional strategy of new musician businesses and even make some money.

The future of music distribution is going to be mobile and oriented toward mobile devices. The culture of payment that exists in the mobile space will support transactional and subscription models for music that will capture people’s attention. It is going to become more about having access to music than actually owning it.

Sales of CDs are going to fall off a cliff in the next few years as people find it easier and easier to get music digitally. The value of recorded music is plummeting and not even Apple can make money off of it. About iTunes, Steve Jobs says “Most of the money goes to the music companies, we would like to break even/make a little bit of money but it’s not a money maker.”

The packaging and sales of recorded music is being ripped apart with full albums and CDs being cannibalized by the new digital single track downloads. New bands are going to have to try new formats for recorded music to extract any real recording related profits in the future.

The broadband Internet, 3G mobile phones and MP3 players have fundamentally shifted the balance of power in the music industry forever, especially for the young. Owning CDs is so last century.

The big money for artists is going to come from live performance, sales of merchandise, DVDs, personal appearances, publishing and alternative revenue streams all promoted and supported by the free and nearly free distribution of recorded music. Live performances and t-shirts cannot be digitized at least at the moment, and the experience of being at a live event is going to have to get more appealing, for many bands to survive in the coming years.

In reality, this is the way is has been for most artists for the past 50 years. Only now the tide has turned, and the shifting sands of the music business will form around an entirely new promotional model that puts we, the music fans, at the very center of the circle. It’s going to be entertaining to be sure.

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Record labels don’t get it. The traditional old school music biz doesn’t get it either.

And Rolling Stone? Bullshit.
Rolling Stone hasn’t had an intelligent thing to say about the state of music in years. Why?

They don’t report - they sell ads.

And all of those major label A&R shitheads were tripping over themselves for breaking the Black Eyed Peas. Now, they’re “selling out” at about 50% capacity, according to the latet tour figures. Oh my God! “Why is this happening?”, they say. Because, we don’t care. Not many do.

The days of the pop juggernaut and corporate promotional tie-ins are just about over. (Thank God)
The moral of this post? The entire industry is completely chicken-shit.

Hell, even Dylan is appearing for iTunes. (Sorry, that broke my heart.)

So who’s setting the world on fire these days? (Let’s discuss.)

…and one more thing… 

When musicians stop being musicians and become “celebrities”, that’s when they cease to be relevant as far as I’m concerned. Seriously. Fuck you John Mayer. And fuck you too, Jessica Simpson.

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NEW YORK (Reuters) - Universal Music Group, the world’s biggest record company, is stepping up pressure against popular online sites YouTube and MySpace, accusing them of infringing the copyrights of its artists’ music videos.

Universal chief executive Doug Morris described video site YouTube and News Corp.’s social networking site MySpace as “copyright infringers” during a Merrill Lynch investors’ conference speech on Tuesday that was closed to the press.

“The poster child for (user-generated media) sites are MySpace and YouTube,” said Morris, according to a transcript obtained by Reuters. “We believe these new businesses are copyright infringers and owe us tens of millions of dollars.”

He added, “How we deal with these companies will be revealed shortly.”

“His remarks strongly suggested the company was planning to take legal action in the near-term to either prevent the illegal use of their content on these Web sites or to ensure the company is compensated for the use of its content,” Jessica Reif Cohen, analyst at Merrill Lynch, wrote in a note on Wednesday.

“This could be the first salvo from a content player against business models based on user-generated content, much of which relies on copyrighted material.”

Universal, owned by French media group Vivendi, has been in negotiations with both YouTube and MySpace to offer its artists’ music legally for a fee.

A spokeswoman for YouTube, a two-year-old start-up company that already boasts more than 100 million viewings of short videos uploaded by users, said, “It is our policy not to comment on our business negotiations.”

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The paradigm here isn’t MTV, but Napster.

MTV wasn’t pirating the labels’ wares, building a business without compensation. Hell, at first the labels were eager to give MTV videos. Only after record companies experienced the juggernaut did they demand payment, and they ultimately received it, albeit minimally. By then they’d lost their leverage, not that they really cared, because they were selling boatloads of records.

But now the labels are hurting. They’re turning over every rock looking for found money.

The only problem is twentysomethings and thirtysomethings are turning over the rocks first, and using copyrighted wares to build businesses.

This flummoxes major labels. They used to be in control. They’ve got the law on their side. How did things go so horribly wrong?

Call it the Napster effect. You’ve got to steal the labels’ wares, because you’re never gonna get a license.

Oh, Ted Cohen did some innovative deals at EMI, before he got frustrated and left the company. But his bosses weren’t open to new ideas until years after Napster, after the die had been cast.

Have a good idea for a business employing music? Try to be reasonable and ask for permission? You won’t get it. You’ll spin your wheels, wasting time and money, and eventually be forced to go out of business, or launch on such a limited, hamstrung basis, that you’ll end up with a site/service that no one wants to use.

So act brazenly, steal with impunity. Maybe, like the principals of Hummer Winblad, you’ll be sued personally for your efforts, but you’ll go down in the history books as bringing the future to the people, as pushing the envelope, as doing a good thing.

Without Napster, there’s no iTunes Music Store.

Without the Rio, there’s no iPod.

Don’t ask! Hell, record execs are too busy in marketing meetings figuring out how to get their wares placed in the few existing slots on radio so they don’t get fired to pay attention to your wacky idea until it gets traction.

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