The Brit tabloid, Mail on Sunday, has come under attack from British music retailers over a promotion its running with Prince (TAFKAP). It seems that the retailers have gotten all bent out of shape because the paper, with 2 million weekly readers, was smart enough to sign a deal with the Purple One to give away free copies of his latest CD. Prince, like most artist, makes the majority of his money from shows and will also be giving away copies of the CD to people who purchase tickets to his concert. The Guardian Unlimited has the full story but this is yet another sign of the utter collapse of the traditional music industry value chain.
Last week serial business starter and aging Internet super-star, Michael Robertson, launched the 6th iconoclastic Internet venture in his portfolio of disruptive ventures. The new business, called AnywhereCD, billed itself as an MP3 music vendor with a CD delivery option. And while the business itself is a bit of a yawner, its pricing and sales pitch are at least entertaining.
Explaining the AnywhereCD business model is a bit complex, largely because of how they are trying to market the service. Basically for around $15 bucks you can buy a CD from the site and get it sent to you in the mail. With each CD purchase you also get DRM-free files of songs from the CD int eh MP3 format. This is pretty impressive given the labels resistance to MP3 downloads even when they might make money from it. This is of course where things get kinda wonky. For $3 less than price of both the CD and MP3 files, AnywhereCD will sell you the CD and MP3 files but only give you the MP3 files. Confused?
The CD is clearly the basis of pricing on the site but their sales pitch is fashioned in a way to make it seem that the MP3 files are what’s being sold. The MP3 delivery and all the digital goodness that flows from having a DRM-free digital file is ancillary to the basic transaction of buying a CD for 12 bucks. The sites original pricing model featured two sets of prices one for MP3′s + a CD and the other for just the MP3′s. Thankfully, before anyone really had a chance to ask any questions or point out what was truly being offered, the MP3 album option disappeared.
In less then 12 hours after the sites launch, on April 12th, the MP3 only option was gone from the site. Apparently even the pretense of being able to buy albums exclusively as MP3 files is more then the labels can stomach. Gone is the “MP3 Album + CD” verbiage, replaced by the much safer and probably more truthful CD plus MP3 wording. Thus an interesting, if not truly new, online marketing and sales scheme was killed on the vine by the luddite music business. But wait, there’s more…
On April 20th Reuters reported that AnywhereCD had filed a lawsuit against Warner Music for breach of contract, business defamation and trade libel. Former liquor vendor and current Warner Music topper, Edgar Bronfman Jr., is reported to have said that selling digital music without DRM is illogical, clearly he believes not selling any music at all is the better option.
A couple of weeks ago a little known government body called the Copyright Royalty Board set new rates for webcasters like Pandora, Last.fm and other streaming music services. The new rates made many webcasters and streaming music entrepreneurs apoplectic. Only being tangentially related to the streaming music space I was a bit confused by all the doom and gloom talk that had lots of really intelligent and articulate folks claiming that this was the end of streaming radio. It all sounded so over the top that I sent an email to the ever accommodating Tim Westergren, of Pandora, asking for his take on the controversy. I sent him a series of questions largely based on some projections Michael Robertson posted to the Pho List and one of this responses at the time really shocked me.
“There will be no Internet radio by the end of 2007 if these [new rates] go unchanged.”
At the time I thought there was no way that the music industry would allow the mostly legal and fee paying interactive music services to go under. Services like Pandora and Last.fm have been hailed in the media as the new “it” companies for music promotion and fans across the globe embrace these services for music sampling and discovery. But as of yesterday, influenced by the ever present RIAA in the guise of its bastard child SoundExchange, the CRB denied webcasters like Pandora’s attempts to rehear the case. Effectively putting an end to the nascent interactive radio business.
The survival of Pandora and all of Internet radio is in jeopardy because of a recent decision by the Copyright Royalty Board in Washington, DC to almost triple the licensing fees for Internet radio sites like Pandora. Tim Westergren in letter to Pandora commuity
In what seems like a last ditch effort to make a change to the deadly new rates, Tim Westernger sent a letter to the Pandora community asking people to write their lawmakers for a literal stay of execution. If you’ve enjoyed Pandora and Last.fm you might want to go ahead, sign the petition and get involved. Normally I’d also suggest that you go ahead and enjoy Pandora and Last.fm before they go out of business, but since the rates are being retroactively enforced, they apply to everyone that used the service in 2006 and everyone that uses it now, potentially tripling the fees these services owe copyright holders.