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Beggars Group on AmieStreet

Amie_street_logo_3 I've long been intrigued by AmieStreet.com's approach to music retailing. It's the Skybus of online music: the first buyers get the lowest price (which, in AmieStreet's case, is free). The more people who buy a track, the higher the price goes until it reaches the maximum of 98 cents. This flips traditional retailing, which tries to collect a premium from the most eager buyers, on its head. But it makes sense in music; for every buyer who wants to be ahead of the crowd, there are probably 20 or 30 who want reassurance from their peers or other consumers before parting with their money.

The site's biggest shortcoming to date has been the absence of content from recognizable artists, aside from the occasional post-major-label one (e.g., Dolly Parton). It goes without saying that the major labels don't sell music there -- they typically offer music to retailers at a single wholesale price, and AmieStreet doesn't work that way. Earlier this week, though, the site landed its biggest fish yet: Beggars Group (home of 4AD, Matador and XL, among other labels) and Polyvinyl Recording Co. The deal brings such indie faves as Radiohead's Thom Yorke, Belle and Sebastian and Of Montreal to AmieStreet. Prices for some of the hotter new releases have already hit the maximum, but there are plenty of bargains to be found. As I flipped through the selection, I was struck by how close the prices were for most tracks on the albums I saw. That suggests the site's customers like to buy whole albums, not just one or two tracks. Who says the album is dead, or that most tracks on a record are filler?

Quarterlife loses one

Quarterlife_logo*Updated* Silicon Valley Insider is reporting that quarterlife, the video series that jumped from MySpace to NBC, is heading to cable after one disastrous broadcast. The show's fate is a reminder of how tough it is to take programming from the Web to broadcast TV, and how illusory it is to view the Internet as the TV networks' D-league.

You might say the series creators -- Ed Zwick and Marshall Herskovitz, the team behind "thirtysomething" and "My So-Called Life" -- hit for the cycle (to use a different sports cliche). The project started off with a successful pitch to ABC, which ordered a pilot episode but then declined to pick up the series. Then Zwick and Herskovitz decided to carve up the hour-long episodes into create a new pilot and follow-up episodes, which they posted as 8-minute chunks on MySpace and quarterlife.com, a social network built around the show. (Thanks, Kelly!) Less than a week after the segments began running there, Zwick and Herskovitz struck a deal with NBC to air the program there (back in its original, hour-long format). That brings us to today's development, which, now that I think about it, makes the show's path look more like a sine wave than a trip around a baseball diamond.

Continue reading Quarterlife loses one »

HBO, penniless on YouTube

Hbo_logo_2 HBO's announcement Monday that it was putting full-length episodes of "In Treatment" onto a new YouTube channel made me wonder why there were no ads on the network's YouTube pages. I can see why HBO might not want to throw pre-rolls and interstitials into the videos themselves, given that the programs air on TV without commercials (except those for other HBO programs). But what about all that real estate around the video window?

Continue reading HBO, penniless on YouTube »

Apple's iTunes: We're No. 2!

Itunes_7Apple boasted today that it has surpassed Best Buy to become the second-largest music retailer in the U.S.. It trails only Wal-Mart, which, like Best Buy, does most of its sales in a very different market (packaged CDs). That's not a knock on Apple, which chose the part of the music market that actually has a future. Granted, Wal-Mart has an online music store, but it's not in Apple's league in terms of sales or mindshare.

The major record companies have a testy relationship with Apple, so its rise through the ranks of music retailers hardly comes as welcome news. But what should really disturb them is the other data included in the release. Sales at the iTunes Store passed the 4 billion milestone about seven months after they hit 3 billion. Similarly, it took the store about seven months to sell the previous billion tracks. It's safe to assume that the store has more customers now (over 50 million, according to the latest release) than it did seven months ago. That means customers are buying less on average than they used to. And the not-so-pleasant implication is that digital sales have been growing mainly because of new customers coming into the fold, not because the average customer is buying more songs year over year. At some point you run out of new customers, and then what?

Giving Warner Music its due

Warner Music Group announced today that its head of digital strategy, Alejandro Zubillaga, is stepping down to (as he put it) "get back to my entrepreneurial roots." In other words, he's still mulling his next move. Warner took some grief four years ago when it named music-industry novice Zubillaga -- a former telecom exec in Venezuela and venture capitalist whose firm, Lexa Partners, was part of the group that took Warner private -- to lead the all-important work of developing new digital revenue streams. The appointment had a patina of nepotism, given that Zubillaga's brother-in-law, Edgar Bronfman Jr., led the Warner buyout and became the company's chairman. But his leadership led Warner to make what strikes me as the flagship deal for the entertainment industry going forward: a pioneering agreement with YouTube to share advertising revenue.

Continue reading Giving Warner Music its due »

Mobile Internet devices

Intel has been racking up the press clips in recent weeks for new chip designs aimed at cheap laptops and handheld devices (e.g., the Wall Street Journal today, Business Week last week, Engadget last month). The downsized chips promise to bring desktop computing power (albeit from a couple of desktop generations ago) to a new type of mass-market mobile Internet device -- something like an iPhone at half the price or less. This is another sign of the pieces falling into place for ubiquitous connectivity, that is, people being connected to the Net wherever they go. And when that happens, the Internet will probably change everything again.

Continue reading Mobile Internet devices »

More on campus attitudes

Jonathan Lamy, a spokesman for the RIAA, responded to my previous post with a chart showing a sharp decline in the number of infringement notices sent to college campuses that had been piracy hotbeds in 2006-07. Contrary to the highly unscientific sample I cited, these numbers suggest that the RIAA's enforcement efforts have made an impact on campus. Of course, students may have simply gotten better at concealing their file-sharing from The Man, found an alternative source of free music to replace Bit Torrent and Limewire, or put off their downloading until after Spring Break. But here's Jonathan's explanation of the data, followed by the chart (which you can download here) after the jump:

This is a ranking of schools receiving the most DMCA notices a year ago. We think the notices are a pretty good indicator of the extent of piracy on a campus: completely objective -- we are simply crawling the Internet and whatever we find, a notice is sent to the school.  Because of these notices, because of the pre-lawsuit letters, because of the focus of Congress on these issues, many schools taken rigorous steps to discourage students from visiting illegal sites.  Look at the notice reduction column during the past year.  That means that many fewer incidences of piracy found on those campus networks, which used to have the most prolific incidences of piracy. That, I think, is pretty compelling and a different way of looking at the impact of our collective efforts.

Continue reading More on campus attitudes »

Campus attitudes: a microsample

Riaa_logo I was chatting with someone today about a column that explored whether unauthorized downloading was "theft" when he offered a tidbit of insight into the feeling on college campuses. My source (I'm being vague here to protect his students' anonymity) teaches a college class on new media business models, and he surveys each new group about their media consumption and attitudes. Bear in mind, this is a group of students interested in the media business. So you'd think there would be some degree of sensitivity toward copyrights. Nevertheless, this year's respondents said they download music regularly through file-sharing networks and other unauthorized sources, while buying music from iTunes intermittently (64% said they did so 1-4 times per month, with 5% saying more than 5 times). They were also asked to rate on a scale of 1 to 7 how nervous they were about being punished for illegal downloading, with 1 being "not concerned" and 7 being "extremely concerned." Two-thirds answered with a 1 (43%) or a 2 (24%). Only 4% put down a 5 or 6, and none went all the way to 7.

Given the frequency with which the students admitted to using file-sharing networks, these results can safely be interpreted as a nose-thumb to the RIAA. This isn't too surprising -- reporters have been writing anecdotal pieces for several years questioning the deterrent value of the major record companies' lawsuit campaign against file-sharers. The numbers, after all, aren't on the RIAA's side. Even though thousands have been sued since 2003, the targets represent a tiny fraction of the people downloading illegally. If these students are truly representative of those preparing to enter the media industry -- the ones who should be most aware of the labels' anti-piracy efforts -- you have to wonder what return the RIAA is getting on campus from its investment in attorney fees.

The RIAA logo is courtesy of the Recording Industry Assn. of America.

Donita Sparks sells out

Donita_sparks_transmiticate In 1967 the Who released The Who Sell Out, mocking the notion of artistic integrity by sprinkling fake commercials for household products amid its tracks. It's a fabulous collection of pop-rock gems (as is Petra Haden's a capella version from 2005) that, either through prescience or coincidence, anticipated how eager labels and bands would become to tie their songs to consumer goods. I'll leave to Bob Lefsetz the question of whether musicians hurt themselves by farming out their songs to commercial interests; I tend to be forgiving on that front because, with CD sales melting away, musicians really do need to find new revenue streams.

Which brings me to Donita Sparks, who's taking the licensing business in a whole new direction. As part of the CASH Music initiative she launched with singer-songwriter Kristin Hersh, Sparks is selling the rights to half the revenue she makes from licensing her song "He's Got the Honey" to commercials, TV shows and movies (and given the track's bluesy fuzz-rock feel, it's more likely to wind up in a beer commercial than "Toy Story 3"). Up to 100 investors can buy .5% shares of the sync licensing revenue for $100 each. If she sells all 100 shares, she'll raise $10,000.

Continue reading Donita Sparks sells out »

File "sharing" or "stealing"?

Meezheadshot100x100"Invoking the metaphor is a shield against thinking," William Patry, the chief copyright counsel for Google, wrote on his blog a couple of years ago. The topic was "technical protection measures," but he's argued that bad metaphors are also behind the entertainment industry's rhetoric that unauthorized downloaders are thieves. I give my own take today on the question of whether infringement should be viewed as a form of theft in a latimes.com column, which you can read here. I'm not completely in sync with Patry on this issue, so you should take my views with more than the usual grain of salt.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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