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JSTOR: The Brookings Review, Vol. 19, No. 1 (Winter, 2001), pp. 35-37

Sherman, Cary. "Music on the Internet: A New World is Waiting." Winter 2001. The Brookings Review. 5 April 2009. <http://www.jstor.org/stable/20080959>.

"Music on the Internet: A New World is Waiting" by Cary Sherman discusses the way that the internet and the recording industry are interacting and how they are being changed by each other. Sherman acknowledges that illegal distribution of audio files on the internet is a "real threat" to the industry but also states that the sites lead consumers to believe that the music was free, just as everything else is on the internet. Therefore, while the consumers are the ones participating in the piracy, there is a possibility that they are not aware that their actions are illegal. In order to combat the possibility that people just do not know that they are pirating the music, the courts and the industry have pursued litigation to make it known that licenses are required in order to use copyrighted material on the internet.
What we can learn from this article by Sherman is that consumers will not pay for something when they can get the same thing for free. Thus, when music is still available for free on the internet, it is difficult to conceive that piracy will be completely eliminated. Additionally, Sherman states that "litigation is not a business strategy" and the best method of combatting piracy would be to come up with a suitable and desirable alternative. Thus, as has been seen in recent years, the proliferation of subscription models and peer-to-peer distribution have allowed consumers more options to access their music. However, although today peer-to-peer file sharing and subscription services may be the best option for downloading and/or purchasing music, this is likely to change quite soon and quite radically as new technologies are developed and new indexes are available for use. As the recording industry continues to evolve alongside technology, we must look out for change on the horizon and keep in mind that adapting to new technologies and industries will allow us to gain the most from our evolving industries.

JSTOR: Notes, Second Series, Vol. 59, No. 3 (Mar., 2003), pp. 521-541

Griscom, Richard. "Distant Music: Delivering Audio over the Internet." March 2003. Music Library Association. 5 April 2009. <http://www.jstor.org/stable/901040>.

    Richard Griscom's article "Distant Music: Delivering Audio over the Internet" discusses how the internet and personal computer have revolutionized the libraries and their abilities to catalogue and store audio materials. Digital music libraries consist of three departments that Griscom describes: infrastructure, collections and staffing. Within infrastructure there is streaming technology, equipment and archiving abilities to take into account. In collections, librarians must consider copyright law, the organization of the materials and how users will access them. Finally, staffing the coding of audio materials and making them digital is both costly and time consuming.
    However, what Griscom questions is whether or not some of these new technologies and the new digital resources made available in libraries is making a student's life too simple. The author also states that the line between preservation and access have become blurred as a result of using the same programs for preservation of materials as are now used to grant access to the recordings. While the development of these preservation and distribution services for academic audio content currently grant users easy access to materials that would otherwise be difficult to acquire, Griscom fears that despite the developments that have been made in digital audio, the formatting of said content will become obsolete and everything will have to be reformatted. However, in the meantime, the digital music libraries benefit students and academics and hopefully in the future will be available to the public.
    Access to digital audio via libraries will be important in the coming years with regards to education and how academic and rare materials are processed and distributed to users. However, if rare and academic digital audio is recorded, what will happen to music that is currently being released? Is there room in the libraries for modern and contemporary music that is currently being released?

JSTOR: Popular Music, Vol. 19, No. 2 (Apr., 2000), pp. 217-230

Jones, Steve. "Music and the Internet." April 2000. Popular Music. Cambridge Univeristy Press. 5 April 2009. < http://www.jstor.org/stable/853669>.

"Music and the Internet" by Steve Jones discusses how the advancements made in media, specifically the Internet and the recording industry, have altered the way that consumers interact with the product. Jones states that digital music consumption is one of the greatest concerns plaguing the industry at the moment. Additionally, Jones wonders, with so much music available to choose from, how does one decide what to listen to? However, Jones' main point in "Music and the Internet" is the idea of media convergence and how different separate media (i.e. computer and telecommunications technology and the recording industry) are combining forces. Computer technologies are now used to create music and even will use computers to combine new and old music to create something different entirely, take for example the Remix culture and artists such as Girltalk. The overlap between these industries, Jones argues, calls for further study of how music production, consumption and distribution are all interconnected and will only become more so in the future.
Finally, the author questions the division between us and them. As scholars (we) further study media convergence and how technologies and the recording industry are developing, we must also consider that when studying the audience, consumers, listeners (them), we are also a part of them. The us - them division is not so finite when we, the "scholars" as those analyzing the media and media consumers, are also avid media consumers as well and are inherently tied to the "them." Jones' point here is interesting, is it possible to objectively study this subject when we, ourselves, are part of the group being studied? Additionally, the movement of music is also a key area of study that Jones mentions. The movement of music currently is an interesting area of study because music is now often not held in a physical manner but rather the transfer and copying of music can be simply done with the click of a mouse. However, with issues such as piracy and copyright infringement becoming more and more prevalent in today's music industry, the format of music both makes things easier and more accessible but also more easily infringed upon.

EBSCOhost: New media effect brings about major changes

Fitz-Gerald, Jane. "New media effect brings about major changes." Music Business International 7.3 (02 June 1997): 26. EBSCO MegaFILE. EBSCO. [Library name], [City], [State abbreviation]. 8 Apr. 2009 .

In "New media effect brings about major changes," by Jane Fitz-Gerald was written in 1997 and discusses how the Taiwanese music market was developing and adapting to changes in the recording industry. It is interesting to read this article looking back at the recording industry over ten years ago and examine how things were changing then and how they were expected to change in the future. Fitz-Gerald states, in the article, that Taiwan is a good example of the Asian music market in transition, but also states that the rate of change is so rapid that it is difficult for them to predict the market. With the government deregulation of cable channels in 1995, the number of cable television channels increased to over 100, which allowed many channels airing music programming to be broadcast. This opened up many new opportunities for artists to reach the public and also opportunities for the public to discover new music.
Finally, Fitz-Gerald states that the domestic (Taiwanese) repertoire market share fell form 70% to 60%, indicating an increase in international music. Thus, with the increase of technological development and most likely also with the increase of the availability of the Internet, the music industry was increasingly globalized for both users and labels. In 1995, the pirate sales totaled $30.4 million, which was the equivalent to 13% of the total market. However, it is likely, that if we were to look at today’s figures the percentage of the market that consists of pirated sales would be significantly higher. On the whole, what is interesting about this article is the indication that, although the market was developing much too fast to be accurately predicted, as it is today, all of the indicators pointed to a more global and more technologically developed industry.

BBC News | SCI/TECH | Why MP3 piracy is much bigger than Napster

BBC News. "Why MP3 piracy is much bigger than Napster." BBC.com 13 February 2001. <http://news.bbc.co.uk/2/hi/science/nature/1168087.stm>.

Written in February of 2001, "Why MP3 piracy is much bigger than Napster" discusses the likelihood of shutting down Napster completely following the February 9, 2001 decision that Napster filesharing does infringe copyright. However, shutting down Napster will have little to no effect on how much music is traded and stored via the internet. Additionally, while the courts stated that the Napster service was infringing copyright the courts decided not to grant the injunction that would shut down the service entirely. The problem with attempting to shut down the entire server is that, while Napster is what allows users to download the music from the internet, Napster itself is simply an index that locates all of the music. The files are, in fact, stored on each of the individual users' computers. Therefore, when downloading a file, a user is not actually downloading from Napster but rather from another user via Napster. Thus, as the article suggests, shutting down Napster would simply force users to use another sort of search engine or index, many of which the article lists as being alternative indexes that could perform the same tasks as Napster. Therefore, the article argues that for Napster to be truly and completely shut down, the courts would have to remove all of the infringing files from the 50 million user computers connected to Napster.
Thus, what we can see from this article is that despite blatant copyright infringement, the courts are unwilling to issue the injunction because it seems as it if would be a bit of a wild goose chase. If the courts were to issue the injunction to shut down the service, the users would inevitably find another way to share files. Thus, as the recording industry and the way that users consume evolve, improving technology also allows users more and more freedom to in their consumption. They are no longer confined to purchases from the record stores and thus, it becomes increasingly difficult for the courts to regulate and control content when the owners of said content are so widespread and unreachable. As the article stated, in order to truly shut down Napster (and other servers of this kind), the courts would have to go into the personal computers of 50 million people and delete all of the infringing content being shared. On the whole, this seem to be unfeasible and should Napster be shut down, it would only follow that other servers and indexes would pop up shortly following.

David Byrne's Survival Strategies for Emerging Artists

Byrne, David. "David Byrne's Survival Strategies for Emerging Artists--and Megastars." Wired. 18 December 2007. <http://www.wired.com/entertainment/music/magazine/16-01/ff_byrne>.

David Byrne's article "Survival Strategies for Emerging Artists - and Megastars" published in December of 2007 discusses the way that the interaction between artists and the labels have changed over time. Byrne argues that the recording industry today is not actually a business about music but a business about business and sales. He states, "at some point it became the business of selling CDs in plastic cases..." The article discusses the progression of the commodification of music and the proliferation of different possible models for distribution of music. Byrne, a former member of The Talking Heads, lists his six possible models for music distribution: equity, standard distribution, license, profit-sharing, manufacturing and distribution, and self-distribution. These range from least artist control over product (equity) to self-distribution, which allows the artist complete control over the product. On the whole, the author advises artists to hold onto the publishing rights to their music as much possible.
This article is relevant to music and new media now because along with the advent of new technology, artists have many more options and avenues to reach consumers. Byrne argues that the traditional label structure is too large and only represent the economic aspect of the industry and no longer foster the artistic interests of the musicians. Servers such as Myspace and new digital technology are transforming the recording industry into something entirely different and are allowing artists more freedom in how they manufacture and market their music as well as how it is released to the consumers. Just as the music industry has changed much over the past century, it is only bound to change more in the future as more digital technologies develop and become available to consumers and the industry.

What's the Future of the Music Industry? A Freakonomics Quorum

Dubner, Stephen J. "What's the Future of the Music Industry? A Freakonomics Quorum." Freakonomics Blog, New York Times. 20 September 2007. <http://freakonomics.blogs.nytimes.com/2007/09/20/whats-the-future-of-the-music-industry-a-freakonomics-quorum/>

This 2007 New York Times blog compiles the opinions of five different experts on the music industry. They are asked to reflect on the "future" of music in the context of the digital revolution. One expert is the author of the previously-referenced "Effects of File-Sharing on Record Sales," three are major music executives, and another is the founder of Engadget and a free, online-only music label. Essentially, they all offer disparate perspectives regarding the way in whcih music consumption is changing.

In a paper meant to argue a particular position about the success of new online music distribution methods, any novice or statistical opinion must be tempered by that of the experts. This New York Times column is a unique and valuable compilation of 5 different expert opinions. Largely, everyone seems to agree that the music industry is undergoing substantial change and that the labels must be open to reinvention. One suggestion undrestood by the labels in 2007, it seems, are advertising-supported models. Most interestingly, in their opinions these experts define exactly why the internet has changed the demand for music so thoroughly: it has affected scarcity. This is a crucial basis of understanding for any marketing or revenue model that follows.

For Radiohead Fans, Does Free + Download = Freeload?

ComScore. “Press Release: For Radiohead Fans, Does “Free” + “Download” = “Freeload”?” 5 November 2007.

This press release details a study of the online sales of Radiohead's "In Rainbows," an album the band released via a pay-what-you-want download model. The statistics obtained demonstrate clearly the presence of a "freeloader market," in which 60-62% of people will download an album for free when confronted with a pay-what-you-want option. The article offers a few different perspectives. Some experts are impressed that 40% of consumers are willing to pay "real money" for something they could get for free. Others question whether this model could be viable for less-established artists. Edward Hunter, a comScore analyst, states that this unique effort is important in that it eliminated a loss of profits due to illegal downloading.

Though these statistics are important, they are more interesting when confronted with data from (countless) other sources, which report that Radiohead's experiment was a likely success. Many different sources report that the profits made by Radiohead on In Rainbows were comparable to what they would have made under normal record-company distribution. Though those opinions and statistics can be found readily, the data regarding freeloaders is more unique to this article, which seems to expose the downside of pay-what-you-want models.

Free Nine Inch Nails albums top 2008 Amazon MP3 sales charts

Anderson, Nate. "Free Nine Inch Nails album tops 2008 Amazon MP3 Sales Charts." Ars Technica. 6 January 2009.

This article summarizes experiemental distribution of Nine Inch Nails's new album and the effects the new online distribution model had on sales. Nine Inch Nails released the album Ghosts I-IV under a Creative Commons license, which allows legal free sharing and remixing. Despite this, the album garnered huge profits; both via digital download on Amazon.com, and perhaps more significantly in limited edition "extras" sets. The Ars Techinca article goes on to pose two questions to Fred Beneson of Creative Commons: Why would fans buy the album when it could be had for free, and would Creative Commons Lisencing work for record labels? Bereson addresses these questions speculatively, with optimism as well as some analysis of the factors necessary for the success achieved by NIN.

This is a major success story for Creative Commons, and an example of a profit-making model that still offers free download and distribution of music. The profits of Ghosts I-IV speak to the appeal for a product that is not available for free download (extras, convenience, or the authenticity of supporting an artist directly). Understanding the presence of this demand is necessary for understanding the way people want to consume music in the digital age. Profits can be achieved via different music products and services.

Google and Big Music Labels Bet on Free Downloads in China

Barboza, David. "Google and Music Labels bet on Downloads in China." The New York Times. 5 April 2009.

This article addresses one of the most recent experiments in new profit models based on digital music: Google's free music search engine in China. Very recently, several of the biggest international record labels partnered with Google and a Chinese company (top100.com) to offer a free music-download service. Because online piracy of music is particularly rampant in China, the success of this model could have lasting implications on policies in the US. The New York Times article offers both critical and supportive opinions on the initiative. Notably, Google will have to struggle to contain the music-downloading to China, employing "legal and technical hurdles."

The partnership of Google with major international music labels represents a new way for record companies to remain profitable without trying to stop free music downloads. This unlimited-download service is supported not through subscription, but by advertisements. Although it is difficult to anticipate the success of such a model, the adoption of this idea certainly reflects a major change in the way that the entertainment industry is approaching its consumers. The willingness of labels (even on this controlled scale) to abandon control over music distribution to this degree is a symptom of their desperation, certainly. However, it is likely also a necessary move towards a new kind of support for music development.

The Challenge of Change: Perspectives on the future for Content Providers

Accenture Media and Entertainment. "The Challenge of Change: Perspectives on the future for Content Providers." Accenture Global Content Study 2008. Accenture: 2008.

This report is the result of a market research firm initiative, in which they surveyed 100 entertainment executives to determine their opinions on the future of revenue models based on digital media. The results of the survey show that the ad-based model is the most popular model for the surveyed executives, as opposed to subscription or iTunes-like services. Though the focus in the report seems to be on forms of entertainment other than music media, it provides a successful context for profit-garnering models in digital entertainment. It also reflects the point of view of those that will ultimately be responsible for shaping the way that media is transferred to the consumer (legally) online.

This report represents yet another perspective on successful provision of internet content (without greater legislation). The importance of advertising on maintaining free content on the internet cannot be understated -- many argue that advertising-based models represent the future of music revenue. Ad-based music models are already being put into place: the music-search engine developed by Google in China, for example. The Accenture report is important, therefore, because it provides data and quotes from industry experts that address the longstanding relationship between advertising and entertainment.

The Long Tail

Anderson, Chris. “The Long Tail.” Wired Magazine Issue 12.10. October 2004. < http://www.wired.com/wired/archive/12.10/tail.html>

Chris Anderson’s article “The Long Tail” (later expanded into a book) introduces the idea of the growing importance of the Long Tail in the way that media is marketed on the internet. It posits that the internet has allowed for a new profitability of the non-“hit” 80% of entertainment product (books, music, DVDs). Ultimately, he argues that the incorporation of the Long Tail into business and marketing models has been advantageous for the entertainment industry, the consumer, and for “culture” as a whole.

The concept of the rising profitability of the Long Tail is a major one in any argument regarding new music marketing on the internet. The Long Tail model is a fundamental example of the way that online consumption of media has changed (and, it is argued, improved) the music industry as a whole. Since 2004, when Anderson first coined his Long Tail idea, we have seen the effects of Amazon, Netflix, and iTunes’s feedback mechanisms for identifying taste and suggesting a focus on less-popular items. Clearly, the exploitation of the Long Tail by these distributors proves the profitability of internet-specific marketing models. Further, I believe that the growth of the Long Tail model has been a taste-making mechanism in the generations that have embraced these internet vendors—not only has the use of the Long Tail shaped marketing initiatives, but it has changed the way the consumer defines their own taste.

IFPI Digital Music Report 2009

International Federation of the Phonographic Industry (IFPI). “IFPI Digital Music Report 2009.” January 2009. <http://www.ifpi.org/content/library/DMR2009.pdf>

This report is a production of the IFPI, a worldwide group for the representation of the recording industry. It offers extremely recent data from 2008 which remarks on the success of different world-wide profit-garnering music revenue models; for example, it reports how much of the international market share iTunes currently holds. It also disucsses the way in which the music industry has already changed in its revenue and marketing structure, and gives statistical evidence regarding the results. The report, dated January 2009, details the way the record industry has seen itself change, and the ways it is looking to maintain its authority.

Clearly, this report is not from an unbiased source like the independently-researched “The Effect of File Sharing on Record Sales.” However, the data is still relevant, and more recent than academic publications. This industry-side discussion demonstrates a contrast to the anti-industry marketing and revenue models that are to be addressed elsewhere. Essentially, it gives an opposing perspective and interesting statistics regarding the effects of file-sharing on international music markests. Finally, it provides some key insights into the ways that the record industry is urgently seeking to maintain control, the ways that intellectual property is viewed by international corporations, and the ways in which they measure success.

The Effect of File Sharing on Record Sales: An Empirical Analysis

Oberholzer-Gee, Felx; Strumpf, Koleman. “The Effect of File Sharing on Record Sales: An Empirical Analysis.” The Journal of Political Economy, Vol. 115, No. 1 (Feb., 2007), pp. 1-42. < www.unc.edu/~cigar/papers/FileSharing_March2004.pdf>

This journal article is a statistical, quantitative analysis of the effects of file sharing on record sales in the United States. It provides a necessary statistical context against which new music initiatives can be explained in terms of new revenue and marketing model development as a result of the digital-music renaissance. It provides data up to 2007 that measures record-sales (online and in stores) as well as expert estimates of file-sharing usage. Additionally, its authors conclude that file-sharing is not primarily responsible for a decline in record sales, a conclusion that has been used in several policy cases regarding the legality of file-sharing.

This article serves several key purposes. First, it provides an empirical background to support the necessary claim that the music industry is changing as a result of online sharing and the proliferation of digital media. Second, its analysis undermines certain assumptions many RIAA proponents maintain regarding the effect of file-sharing on record sales; for example, it is argued that the availability of the “single” online contributes more to the change in revenue structure than P2P networks. Third, it reports digital-music statistics that are important in any argument regarding the business of music on the internet.

Animal Collective is a Band Created By/For/On the Internet

Carles. "Animal Collective is a Band Created By/For/On the Internet." Hipster Runoff. 13 January 2009. <http://www.hipsterrunoff.com/2009/01/animal-collective-is-a-band-created-byforon-the-internet.html>

In this blog post, satirical/ironic blogger "Carles" produces one of the most-discussed theses on Internet music of 2009. He posits that the band Animal Collective's most recent release, Merriweather Post Pavillion, was successful specifically because it catered to the tastes of it's internet-savvy audience. In doing so, Animal Collective has thereby defined what it means to be an "internet band": how to walk the fine line between mainstream and authentic taste; how to produce internet hype without immediate backlash; how to produce revenue despite a full-album leak. Hipster Runoff also references the importance of online-criticism mediums like Pitchfork and meme-production in determining the success and respectability of a band. Ultimately, he concludes that the success of Animal Collective is not only the result of but also a reflection upon the band's internet following: a "symbiotic relationship" uniquely achieved.

This Hipster Runoff post is important in the way that it was reflected on throughout the blogging community; it was taken with unusual sincerity, and both praised and criticized. The story of Animal Collective's new rise to prominence (Merriweather Post Pavillion is their fifth album) tells the story of the new internet marketing machine. This CD epitomizes a particular kind of marketing and revenue model on the internet. The Hipster Runoff post takes this a step further, as it analyzes how and why the internet-branding of Animal Collective was successful, and the way the branding of Animal Collective simultaneously contributes to a branding of self. Animal Collective and the Hipster Runoff analysis is an example of the way that online music critics, independent bloggers, and their music-savvy audience are responding to a particular kind of online music marketing.

EBSCOhost: Do Artists Benefit from Online Music Sharing?

Gopal, Ram D., Sudip Bhattacharjee, and G. Lawrence Sanders. "Do Artists Benefit from Online Music Sharing?." Journal of Business 79.3 (May 2006): 1503-1533. Business Source Premier. EBSCO. University of Pennsylvania Van Pelt Library, Philadelphia, PA. 8 Apr. 2009

The Sanders and Gopal article "Do Artists Benefit from Online Music Sharing?" discusses the economic implications of the internet and music file sharing on the recording industry. As the authors describe, it has become increasingsly simple for users to search and download files from the internet. While proponents of online music state that file sharing expands the market and helps new artists to become known. Additionally, they argue that by downloading music users will often sample the music and then purchase the entire album. On the other hand, however, opponents state that file sharing hurts sales because instead of buying the music, users are just downloading it for free. The challenge, Sanders and Gopal state, is to make it easier and more convenient for users to purchase the music than it is for them to steal the music. The other facet of the issue that the authors debate is the accessability and cost of music sampling. The authors argue that lower sampling costs erodes the phenomenon of superstardom and that more inexpensive and more convenient sampling methods will persuade users to purchase their music rather than downloading files illegally.

This article is relevant to my paper topic because it demonstrates how usage of the internet has influenced both the recording industry and how people consume music. While much of the statistics and math in this article are a little beyond what the average reader can understand. However, the point that the authors are making is quite relevant, especially with regards to the new varied pricing that iTunes has instituted in the last week. As piracy has become so easily accessible to the majority of the public, it is difficult to see how the future of online file sharing will play out and how this will affect the recording industry. What we must consider as these issues are further debated is that if the artists who are creating the music are not compensated, they will no longer make music for the consumers to enjoy. Therefore, perhaps, as the authors suggest, more convenient sampling prices will persuade the consumers to purchase their music rather than download illegally and, perhaps, through some restructuring of the market, we can save the struggling economy of the recording industry.

EBSCOhost: Freston Sees New Media Aiding Music Biz

McClure, Steve. "Freston Sees New Media Aiding Music Biz." Billboard 111.27 (03 July 1999): 57. EBSCO MegaFILE. EBSCO. University of Pennsylvania Van Pelt Library, Philadelphia, PA. 7 Apr. 2009 <https://proxy.library.upenn.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=keh&AN=1973296&site

Steve McClure's article "Freston Sees New Media Aiding Music Biz," published in Billboard in July of 1999, recounts the statements of Tom Freston, then the CEO and Chairman of MTV Networks. Freston stated that the music industry had nothing to fear from the proliferation of the Internet. Using the example of video and radio, playing on The Buggles 1979 song "Video Killed the Radio Star," Freston states that video never really killed the radio star, but rather radio altered itself and exanded to fit the new industry organization. Freston hypothesizes that new media, such as the internet, will only help to expand the music industry rather than rendering older, more traditional, media obselete.
Finally, McClure notes Freston's conception of the four ways that the Internet will affect the music business: more convenience, sense of community, more choice, and more creativity.

It is important to consider, when reading this article, that it was written in July of 1999. Therefore, as the Internet was becoming more widely available and open to new possibilities as well as the general public, the music industry was anticipating vast changes to operations. While Freston was not always correct in his predictions of how the Internet would influence the music business, what is perhaps most important here is the way that Freston argues for the adaptation rather than death of media. While The Buggles said that video killed the radio star, radio adapted for fit the new format, just as radio and video have adapted to the internet via the proliferation of sites such as Pandora, YouTube, Vimeo, Hulu, etc. Just as the Internet revolutionized the music business at the turn of the century, the internet will continue to do so in the future with new media and altered forms of traditional media.

Savenetradio.org

     The SaveNetRadio coalition is a response to the royalty increase in the March 2007 Copyright Royalty Board (CRB) ruling. The coalition consists of artists, labels, listeners, and webcasters that believe another solution must be created in order to prevent internet radio stations from shutting down. The CRB decision will harm millions of music listeners, performers who depend on the internet radio to increase their audience, and webcasters who make a living from streaming music online.
     SaveNetRadio exposes the unreal myths and harsh facts about the cost of webcasting. While the internet radio is the smallest medium within the radio business, it pays the most royalties. Broadcast radio and satellite radio are subject to small or no royalties at all. The predicted combined revenue for internet radio services is $73.6 million, but 58% of that revenue will be used for royalty payments. Internet radio is one of the most important sources for music listeners. About seven million Americans a days use internet radio. Although the popularity of internet radio has increased tremendously, it is still a small, growing industry. Most webcasters do not generate enough revenue to cover the royalties since they do not have enough sponsors or advertisements to sustain them.
     Another myth concerning royalty rates is that artists and record companies were not being fairly compensated for their work prior to the CRB decision. The reality is that if royalties are too high, internet radio will go out of business, and then performers definitely will not be paid for their work. The high royalties will not allow small or large webcasters to survive, and even if large webcasters can afford the royalties, it will not promote competition and diversity in the internet radio services. While the increase in royalties may seem negligible, tripling the per-song royalty rate adds up to an enormous royalty payment. Besides the per-usage rate, webcasters are also subject to a minimum fee per station and have no option to opt for a revenue-based royalty system.
     SaveNetRadio is an important topic in my paper. It demonstrates the outrage of the music community to the CRB decision. The myths and facts of the cost of webcasting clearly describe the toll that increased royalties will have on small and large webcasters. SaveNetRadio.org is an extremely useful and interesting source. I think it is an excellent way to bring music fans together to fight the unfairness in the royalty system for internet radio stations.

Pandora and Internet Radio Royalties

Thesis: The Copyright Royalty Board's decision to increase royalty fees for online music streaming is unfair and will lead to popular internet radio stations, such as Pandora, to go out of business. Paper proposal: I would like to research and write a paper on Pandora in the context of online music streaming. The paper would focus more on the Pandora case, but I would also discuss the copyright issues concerning internet radio stations. My research would include Pandora's background, its terms of use, and its method of dealing with copyright concerns. I would also research the Copyright Royalty Board and other internet radio stations. This research would allow me to analyze and argue that increasing internet radio fees are putting internet radio companies, such as Pandora, in risk of going out of business. The goal of my paper would be to discuss the fairness of the royalty fees for internet radio stations and use Pandora as the main example and focus of this argument.

Giant of Internet Radio Nears Its 'Last Stand' - washingtonpost.com

    Pandora has become one of the nation’s most popular internet radio stations. It has about one million listeners daily and 40,000 new customers a day. Pandora has made it to the top ten most popular applications for Apple’s iphone. Listeners can create their own stations according to their musical tastes. All of Pandora’s success, however, may soon reach an end with the increasing royalty rates.
    Royalty fees are paid to a single agent SoundExchange, Inc. The organization represents performers and record companies, and it supports the higher rates on the basis that musicians deserve a larger fraction of internet radio profits. “Our artists and copyright owners deserve to be fairly compensated for the blood and sweat that forms the core product of these businesses,” said Mike Huppe, general counsel for SoundExchange. The organization also believes that internet radio has not done enough to profit from streaming music.
    Some musicians defend Pandora and other internet radio stations on the other hand. Webcasters argue that internet radio offers a larger range of music than traditional radio and also promotes independent musicians. While traditional radio does not pay royalties and satellite radio pay 6-7% of their revenue, webcasters must pay per song and per listener. With the new royalty decision doubling the per performance rates, Pandora and other webcasters may go out of business. Tim Westergren, founder of Pandora, predicts that royalty fees will amount to $17 million this year, which is 70% of the projected revenue. “We’re funded by venture capital,” [Westergren] said, “They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like it’s headed toward a solution, we’re done.”
    This newspaper article is important for my paper because it portrays the trememdous effect the new royalties will have on Pandora. Westergren repeatedly states that the company will go out of business, and this is important for my paper. Performers will not be paid more for their work if there is no internet radio station that will be in business to pay them. In order to ensure a fair royalty rate, the company must not be threatened to close down. My paper defends another model for determining the royalties and argues against the latest copyright ruling on the royalty rates. This article is important because it not only demonstrates the copyright ruling from Pandora's point of view but also from SoundExchange's perspective.

Testimony of Matt Nathanson

    Matt Nathanson is a songwriter, performer, and recording artist. He is also the most played artist on Pandora.com. In his testimony at the hearing on “Music and Radio in the 21st Century: Assuring Fair Rates and Rules across Platforms,” Nathanson emphasizes the importance of internet music and internet radio. Before iTunes, Amazon, and other internet music sources were available, only a handful of artists succeeded. Nowadays, with internet radio stations, such as Pandora and Yahoo!, people are exposed to a variety of music and different genres. Nathanson relates how his own success was contributed by his exposure on internet radio. Internet radio has given independent artists and labels an opportunity to be heard by the public. Customers buy from a much broader group of artists thanks to internet music.
     Nathanson also discusses the financial concerns behind the royalty debate. “When a song I write is played on broadcast, satellite or Internet radio, they pay me an amount which is reasonably related to their revenue. Higher revenue stations pay a bit more; smaller stations and services pay a bit less. But when a song that I perform is played, broadcast radio pays me nothing; satellite radio pays me a reasonable royalty that when combined with other artist payments effectively equals 6% of its revenue; but Internet radio services pay me and other artists a per-song fee that is unrelated to the revenue of the service, which when combined with other artist payments effectively equals 30 or 40 or 70 percent of their revenue or more.” Nathanson argues that it is wrong for the smallest industry to be paying the highest royalty rates. He reports that internet radio is the most important way for independent artists to be heard. He concludes his testimony asking that the royalties changes be made fair for internet radio and demanding that the board keep in mind the future generation of artists.
     This source provides another perspective of the royalty rate issue for my paper. Nathanson's musical career and success demonstrate the tremendous benefit that internet radio has for the public. His testimony is important for my paper because it is supporting evidence that the copyright ruling is unfair. Nathanson, a musician who receives royalty payments, completely supports Pandora's fight against the increasing royalty rates. His testimony makes a strong case for my paper since he opposes SoundExchange's argument that performers need to be paid more on the basis of fairness.

Why the Monopolies are fighting for their lives in a New Era of Opportunities for Independents

My thesis for this project is that artists and copyright holders are finding it beneficial to waive their copyright in some cases of new technology, even though the industry as a whole tries to take the stance that uses of technology should be restricted. The example of this that I focus on is MP3 blogs, which tend to make available for download unauthorized material, and how major labels are beginning to reach out and even provide such blogs with material in the hope that they will benefit from the promotion. At the same time, however, major labels and the RIAA continue to attack peer-to-peer systems which very similarly, although on a much larger scale, allow users to download unauthorized material. This type of case shows that while the industry states that it wants to restrict use of technology, it is actually finding ways to use the same technology to promote its artists. Many new artists are able to gain exposure and there is opportunity that was never before available to the average person. That is the original intent of copyright law, which is to promote progress and encourage creation, something which excessive copyright on songs, and restrictions on technology such as the anti-device provision in the DMCA impede.

SSRN-MP3 Blogs: A Silver Bullet for the Music Industry or a Smoking Gun for Copyright Infringement? by Andrew Goldstone

This essay describes what an MP3 blog is, and how record labels want to capitalize on the promotion that they provide while fighting file sharing at the same time. The essay discusses the types of copyright infringement and fair use and how they apply to MP3 blogs, as well as the factors that cause the court to view MP3 blogs more favorably than peer-to-peer networks. It discusses law suits against Napster and also by the RIAA against peer-to-peer users. The article explains what establishes liability for infringing use, and the different expansions of the Copyright Act which have been brought by copyright owners in addressing new technologies. It then discusses some of these acts and gives some examples of violators. The next section explains the defense used when copyright owners bring suits, which is fair use, and it lists and describes the four factors in deciding fair use on a case by case basis.

This essay incorporates basically every aspect of my research into why copyright holders are willing to waive certain copyright in cases such as MP3 blogs, while they continue to fight against much of new technology such as peer-to-peer services. It describes what MP3 blogs are and how they are used and different sites that can link to the unauthorized music. It shows what the copyright holder needs to look for in order to bring a suit against infringing users, and also explains how the user of the work can try to use fair use as a defense.

RIAA response--you're dead wrong | Tech News on ZDNet

This article is written by Cary Sherman, president of the RIAA as a response to a speech by Consumer Electronics CEO Gary Shapiro in which Shapiro stated that downloading off the Web is neither illegal nor immoral. Sherman says that statement is wrong and misleading. Shapiro says that legal downloading from record companies and legitimate online music companies is fine but there is a problem with unauthorized downloading of copyrighted material, and sites Title 17 of the United States Code. Sherman writes that the fair use argument employed by Shapiro makes falsely seem as if copyright owners are against fair use, and that the fair use claim is unsupported when it comes to unauthorized use. Sherman argues against Shapiro's claim that downloading is different from taking a tangible property by writing that both owners have been deprived of something of value. Sherman refutes Shapiro's use of the first amendment and also says that companies are in fact aggressively pursuing a more flexible business model that does take advantage of new technology. Shapiro writes that the industry using technology and the internet is beside the point and that the real issue in what Shapiro is saying is that "digital stealing isn't really stealing" and the last thing we need is more polarizing rhetoric.

For my research on why copyright holders are willing to waive copyright in some instances such as MP3 blogs because the new technology has benefits in promotion, this article is a firm example of the view from the record labels about copyright law and internet uses. It is written by the president of the RIAA, Cary Sherman and gives an argument in favor of strong copyright law, and a rebuttal to a speech by the Consumer Electronics CEO Gary Shapiro in favor of weaker copyright law. It provides the viewpoint of the music industry about downloading, but it is interesting in that it does not mention anything about record companies such as Warner who at times chose to solicit certain independent blogs and will send the bloggers music with the hope that the blog will help promote the record label's artist for free.

Speech by CEA P/CEO Gary Shapiro Re Copyright and Technology, 9/17/02.

This is a speech given by Gary Shapiro, the President and CEO of the Consumer Electronics Association about growing tension between copyright owners and new technology. Shapiro speaks about how new reproduction technology and transmission technology has increased the fears of the music and motion picture industries. He draws parallels to new technology in the past such as the VCR, and CD and cassette recording. Today with mass availability of copies of music and movies, the content community has used congress, courts, and the media to challenge new technologies. Shapiro says that he believes that hardware and software companies have an interest in working together to see more products, and that they can misuse source protection and DVD encryption to sell more products while limiting new technologies. Shapiro says that lawsuits have shut down file -sharing services, threaten peer-to-peer networks, challegenged as illegal devices which allow consumers to skip commercials, and has subpoenaed ISPs to identify downloading subscribers. Congress has introduced legislation that will require technology to be shaped by a government-mandated copy protection system. Shapiro comments on the language used by Hollywood and the music industry using words like "piracy" and "stealing" to describe downloading. Shapiro asserts that downloading is neither illegal nor immoral. He says that downloading is not taking away a copy of the product from someone, and in some cases helps promotion. His principles for policymakers to follow ask that a very high amount of evidence be found before restricting technology.

For my research on MP3 blogs and why copyright holders are willing to waive some of their copyrights and allow the blogs to post their music this speech shows a view which is far to the fair-use and weak copyright law. It is clear support for allowing the new technologies and the internet to be created and exist, and for there to be significant evidence of a negative effect on the copyright holder before the technology is restricted. The key line by Shapiro for my project is when he submits that downloading off the Web is neither illegal nor immoral. He sites fair use as being given on a case by case basis and that in many cases of downloading the use has "been shown to be neutral or beneficial to the copyright owners, and have either been tolerated or accepted as fair use." He also discusses how downloading can even lead to further sales, when people buy the whole CD from the song he or she heard on the internet.

Listen. And learn. - The Boston Globe

In this article, the Boston Globe reporter talks to several bloggers and discusses what motivates audiobloggers otherwise known as MP3 bloggers to create sites and post songs. In these blogs, the author finds a song he or she wants to share, and posts it online as an MP3 file along with a commentary or review about the song so that readers can learn about the band and download and listen to the song if they choose. Bloggers will do this for free, as one blogger says "Selfishly, I get validation that people like my music taste... But I want people to find new music that they love." The music industry tends to leave blogs alone because they promote artists for free and are capable of creating "buzz" for an unknown artists and quickly establishing them among a loyal fan base. Litigation is expensive and MP3 blogs are small-scale and some labels have begun supplying blogs with music so there have not been many confrontations between record labels and bloggers. Some bloggers receive "cease and desist" letters from labels and although a code of conduct has not been written, there is a concept of ethical audioblogging. Songs are removed after being posted for typically around one or two weeks, no more than two tracks are posted from each album, and links to sites where readers can buy the albums are provided.

For my research on why copyright owners are willing to waive some of their copyright when it comes to MP3 blogs, this is a useful article in seeing a little bit of the motivation for both bloggers and record labels to coexist. It provides some commentary by the bloggers themselves as to why they put work into blogs and what makes it important for them to exist. It also discusses blog ethics which are part of the reason labels are not against MP3 blogs, and looks at one blogger's idea for a possible future move for the labels which could start their own blogs in order to promote their back catalogues. That provides an interesting comparison between a legal MP3 blog created by a label and an illegal MP3 blog which may have more credibility among the blogging community.

Coming Attraction: YouTube's Business Model

Peter Fader of Wharton called the agreement between Warner Studios and YouTube, which allows Warner music videos to be played on YouTube in return for a portion of the ad revenue, the "single biggest business development deal in the history of digital media". Internet mogul and Dallas Mavericks owner Mark Cuban, on the other hand, believes that YouTube will ultimately have the same fate as Napster and be crushed by copyright lawsuits. The real answer may lie somewhere in the middle.

The article mediates a debate between naysayers, such as Cuban, and optimists, like Fader, over what the fate of YouTube will be. Cuban states that YouTube is "in the same boat as Napster". He argues that although YouTube may do a lot of good things for copyright holders, such as the promotional benefits, it will not be enough to make every single copyright holder happy. Cuban notes that it would only take one successful lawsuit against YouTube to bankrupt the company. Fader, on the other hand, suggests that the Warner deal could lay the groundwork for future deals between YouTube and other major Hollywood studios. His prediction seems to be right on the money. Since this article was published, YouTube has made agreements with CBS, the NHL, NBC, and most notably, Universal Studios, which had previously been YouTube's most outspoken critic.

Also discussed is the significance of the agreement between Warner and YouTube. Fader notes that this agreement represents a sort of paradign shift, mentioning that Warner took a completely opposite stance when it was fighting Napster in court. Also, the agreement sets a trend for other companies to follow suit. This prediction by Fader was also proven true with the new YouTube agreements mentioned earlier. Fader also predicts that these deals will allow YouTube to "call the shots" in the video industry, much the same way Google runs the search industry.

The debate in this article is the fundamental issue regarding YouTube and its legitimacy. It is important for YouTube to secure protection from copyright lawsuits, and they seem to be doing that with recent agreements and their willingness to takedown copyrighted material. However, Cuban's view does hold true that one lawsuit could cripple the company, and that lawsuit could be Tur v. YouTube. The ruling of this case and others like it may ultimately determine YouTube's future.

YouTube copyright project

Prof rips iTunes business model

In this article featured in the Daily Pennsylvanian Marketing Professor Peter Fader blames downloading for the music industry's plummet. He argues that students will always steal music and that new music will always be leaked onto the internet, but that this is not responsible for the drop in sales. In fact, it is the legal dowloading that is responsible for the decreasing album sales.

Missing Article?

The collaborative fulfillment of consumer orders by Internet retailers and wholesalers has proven important in the realization of sustainable levels of online profitability. Concentrating on consumer direct fulfillment (or drop shipping), an empirical simulation model evaluates avenues for improving logistical performance. The empirical simulation model centers on the online music CD retailing industry. It evaluates the effects of emergency transshipments and demand dispersion on inventory and product-release performance, as well as on transportation costs, in consumer direct fulfillment operations. Results show that emergency transshipments improve inventory and product-release performances in these operations. Furthermore, the inventory-performance improvements are maximized when inventory facilities fulfill demand that is uniformly balanced across markets primarily assigned to each facility. Finally, gains in inventory and release performance obtained from emergency transshipments outweigh additional transportation costs incurred from a greater reliance on emergency transshipments for consumer direct fulfillment. [PUBLICATION ABSTRACT]

Facing the Music

This article provides a lot of quantifiable information regarding aggregate online sales, total industry revenues and projects estimates for up to the next three years. The article says that though online distribution has taken the music industry by storm, album sales still account for the majority of record sales. There is still more room for online distribution to increase and CD sales to further decrease. Therefore the article urges the industry to continue to reconsider the way it does business and in addition suggests that "governments will have to think hard about regulatory structures." .

Walk sows harmony among Columbia artists, marketers

This article discusses the ways in which record companies are compensating for their losses through marketing. After the Sony/BMG merge, Columbia Record Executive Charlie Walk, leads the way. He asserts his belief that for the majors to stay in on the game they need to legitimize the online music downloading space and create alliances with consumer-goods companies to make a profit where it is being lost. Thus downloading has changed artist marketing too.

The transformation of the music industry supply chain

This article considers the impact of technology and downloading on the "supply chain" of music. It describes economics of the global music market and the super-power five major record that dominate the entire sound recording industry. It has a positive take on the future for artists and consumers alike, despite the present turmoil.

The Effects of Changing Technology and Government Policy on the Commercialization of Music.

This work seeks to predict the impact of government regulation, in terms of new policy and programs, upon the music field for the future. It raises some ethical questions concerning the direction of technology and tries to account for how technological advancements will influence the national and global economy. The central issue around which the whole work is concerned is the commerce of music.

Taps for Music Retailers

Tower Records is the music store with the most street buzz and star power. It is able to call upon the biggest stars to do in-house performances for album oremiers, yet still this power-house retailer has not been able to escape thewrath of the music download. The article attributes the universal death of the record store to :"decreasing CD sales, the hit from online downloads, and growing competition from the likes of Amazon.com, as well as discounters such as Wal-Mart and Target..."

On the reproduction of the musical economy after the internet

This article critiques the "crisis of reproduction" that confronted the music industry starting in the late 1990's. It explores some of the ways in which the industry is going about re-working its structure to compensate for its losses. Also discusses the roles of the big four- AOL-Time Warner, Sony/BMG, Universal and EMI in the reorganization.