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Great article, Kyle. I'm a big fan of Grooveshark and a lot of what you're saying about user behavior makes a lot of sense. The law is just really confusing - the DMCA is a piece of shit. Grooveshark definitely SHOULD exist, with the cooperation of the labels, because of all of the things you say. The labels should not be afraid of the service, and should not make licensing agreements so tough on them. (To a previous commenter's point, there is a lot of inconsistency in the quality of tracks and even meta-data, so it doesn't threaten my willingness to buy songs on iTunes or amazon, or even cancel my subscription to However, Grooveshark's website is 100% legal, even if the activity that takes place among its users is not. This is what my problem is. The DMCA protects a site like Grooveshark, even when the vast majority of behavior on that site is technically illegal. This is a major problem with online content, and it's tough to see a resolution. It's kind of like the way that Republicans probably want to pass the 9-11 responders bill, but to do so would mean that Democrats did something good, so they block it. Grooveshark did something good, and it has a lot of value, but because they didn't play by the label's rules, they're going to try and shut them down.
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This could be a great case study in artist development and cost containment. I want to know what marketing and promotion expenses were incurred, what the production budget was, and the distribution of revenues by channel. A success story like this, given they were at all profitable, would be an extremely valuable contribution to the industry.
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Great article! I am vehemently pro-copyright protection, but even the RIAA can't deny that there are extremely valuable learnings from digital piracy - marketing, distribution, social music discovery, etc. The easiest analog in business is the R&D arm. R&D is a cost center - doesn't create any profits for the company, but allows the business to find out information about its customers and develop technology to capitalize on an evolving market strategy. However, piracy is more like a community R&D arm that no one has control over. And it's not a cost center in the sense that businesses don't pay for these learnings, but pay by the cannibalization (to whatever degree, we can argue) of their revenues. I still feel that piracy has thrived in the new digital environment solely because record labels failed to move quickly enough in the late 90s AND more importantly, because government regulation is lagging desperately behind technological innovation, but if we're going to make lemonade out of these lemons, we should be pouring resources into understanding how access to free content changes consumption patterns and what we can learn about how we market and distribute music. And, shameless plug: if you pirate something that you like and are going to continue to listen to, don't be a dick: BUY IT. Going to the show doesn't justify it. Buying a shirt doesn't justify it. Those verticals all have separate costs of goods, separate value chains with other people's hands taking out large percentages and royalties. If you like something and want that artist to make more music, YOU HAVE TO BUY IT!!!
Toggle Commented Nov 12, 2010 on Why Piracy Is Good For Innovation at hypebot
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great article Kyle
Toggle Commented Nov 3, 2010 on The Limits Of Delocalized Music Culture at hypebot
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here's some constructive suggestions. the RIAA needs to continue to focus on upholding copyright by supporting legislative actions that make it possible to shut down websites that don't police illegal infringement themselves. how does a website like stay in existence? baffling. 2nd. to anonymous. my advice would be to enjoy the contemporary ease with which piracy exists today, because it won't exist forever. it will move from head of the distribution to the tails when regulation is enacted. we'll never be rid of piracy, but as long as it's relegated to the tails, we'll leave it alone. 3rd. regarding capitalism. not perfect by any means. lobby activities are poisonous for the social good. HOWEVER, reducing lobby influence on political processes is a long process, for a good reason. all this intelligence and effort should be going to constructive political action and awareness so we can use our broken democracy to fix as much about our capitalist democracy as we can.
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I would like to draw some attention to the more basic elements of the RIAA's existence. Guess what, everyone, we actually do live in a capitalist society, one where lobby activity is a primary vehicle to effect regulatory change in an otherwise stale legislative process. With a new digital economy enacted in the last decade, how does the music industry protect its interests in a capitalist economy? News flash - capitalism requires lobbyists, as shitty as it is for consumers. Don't blame the RIAA, blame capitalism. But while you're blaming capitalism, you might want to toss that apple computer you're using, the programming language that was developed in an entrepreneurial organization funded by a venture capitalist, and the freedom to whine about this kind of thing in general. I remind you that aggregate revenues went from $15 billion in '99 to $6 billion in '09. Part was from the un-bundling of the album, part was from the recession(s) and part is from competition with other forms of entertainment, but it's a little silly to argue the fact that the MAJORITY of this loss is from competition with free on a level never before seen with tapes or CD-R's. In a physical world, we as a society have agreed that we will respect the laws against theft and copyright, and if we try to steal a CD at Best Buy, we're pretty ok with a security guard catching us and Best Buy prosecuting us to the full extent of the law. However, in a digital world, no such protection exists. And we seem to have rationalized to ourselves that, no, it's different. Electric pulses transmitted to me through the wall enabling me to listen to music is different from putting a piece of plastic into a player plugged into my wall, fundamentally. So, no, sorry, the "social contract" doesn't apply to the internet. Bullshit. IT HAS NOT BEEN LEGISLATED YET. Pirates have to know that there is a massive legislative gap between regulation and technology, and as cyber crime becomes a major threat with more than just a single $15 billion industry at stake, we WILL have something analogous to police and security guards in a digital world. It is part of our social contract and our capitalist society. Now, how does a record label engage in a capitalist economy and protect its industry? By lobbying in Washington. And with a problem as grave as a 60% decline in THE ENTIRE INDUSTRY over a decade, you'd better be paying your lobby market prices to get the best bang for your buck. What has come out of these lobbying efforts? Not much you can shake a finger at - but we have no way to know what the landscape would look like without these lobby efforts. So has the RIAA made all the right moves as the lobbying arm of recorded music? Probably not. Is it trying to do a massive job with a tiny budget? Yes. (Add up the lobbying of AT&T, Comcast and Google - you can probably fund 500,000 RIAA's) And most importantly, should the RIAA exist to represent the interests of recorded musicians? Not to answer in the affirmative is to sound the death knell of the industry immediately. Do we know any businesses that will willingly put themselves out of business? Not really. Ok. We've just justified the existence of the RIAA. The ignorance of an organization like Anonymous baffles me. The main problems they whine about in the music industry have to do with capitalism and rule of law, not with musicians, record labels, or industry mechanics. Copyright and capitalism are synonymous. Taking down Limewire is a right given to copyright holders by our laws, the foundation of how we do business in America. It's not the "fault" of copyright holders, it's their right. Don't hate the player, hate the game. Or is Anonymous too self-absorbed to extricate itself from its myopic and confusing moral code. Aiming to take down capitalism seems a little silly, especially if you start with the music industry. Let's punish our creative industries to attack fundamental capitalist tenets, right? Fucking idiots. As if there aren't more valid targets than Gene Simmons. With all the bullshit that goes on anyway in capitalism, it seems to me really lazy to attack the people who are actually liberal, creative, and provide joy for most of the people they do business with. Why don't you look at finance, government or health care? That looks a little more dangerous, though, right? Probably a little too spooky for these guys. I'd like to think about a world where copyright doesn't hold any water and any art that I produce lacks any economic incentive. Then everyone gets free cancer treatment, textbooks, and Lady Gaga CDs. Wait, what? Oh yeah, that's right, I've heard this before. Let's abolish a citizen's right to private property. Then we'll all do tasks for the collective good, right? So Kyle makes my shoes, Constantine cuts my hair, and I'll make some music for all of us. Yup, this will WORK! This is good! Workers of the world unite!!!!!!
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