Digital Noise: Music and Tech

For the last year or so, it's become clear that the economics of ad-supported streaming music services are not good for their creators or investors. As CNET's Greg Sandoval reported last week, the acquisition of streaming service Imeem by MySpace Music for pennies on the dollar is the latest bad news for the sector, following the bankruptcies of SpiralFrog and Ruckus and the similar fire sale of iLike to MySpace.

Offering your music via Spotify might help you fill up your piggybank.

Who's left? In the U.S., we've still got LaLa, which has the blessing of the major labels and seems to be enjoying dramatically increased traffic (as measured by Alexa) thanks to its recent deal with Google, and Grooveshark, which has kept a low profile. Neither of these services is purely ad-supported--particularly LaLa, which hopes to charge customers for downloads and "permanent" streams once they surpass a quota of 50 free streams a month.

But the service most often cited as the future of online music is Spotify. It's only available in Europe right now, but it seems like everybody who tries it loves it, myself included. Spotify offers a premium service as well, which offers portability and higher-quality streams, but the free service offers unlimited ad-supported streams, and that's the service that has everybody so excited.

But there's one small problem with the Spotify-as-savior story: it doesn't pay artists very well. According to this story in a Swedish publication, as translated and explained by the TorrentFreak blog, Spotify delivered more than one million streams of Lady Gaga's hit single "Poker Face" over five months. From these streams, she reportedly earned about 1,150 Swedish kronor--about $167--from the Swedish agency responsible for paying royalties. That's not even enough to cover the cost of four tickets to her upcoming concert in San Francisco.

If this story's true, why would any artist agree to make songs available on Spotify? With these kinds of payouts, it looks like music business expert Donald Passman is right--advertising is never going to support an online music service.

If you work in the music business, you probably already know the name Donald Passman. For the uninitiated, his book "All You Need to Know About the Music Business," which was first released in 1991 and comes out in a seventh edition today, is the book on how the music industry works. If you ever wanted to know how major and indie label deals are structured, the different types of royalties that musicians can earn and how they're calculated, what a personal manager does for a band, how much money artists make on tour, where your ticket fees go, or any of countless other nitty-gritty details, this is the book. Music industry people sometimes call it the bible, and they're not joking.

The seventh edition contains numerous updates since the last release in 2006, including the final resolution of the battle over Internet radio royalties, details of how royalties are calculated for iTunes and YouTube, and the latest developments in label deals. I had a chance to talk to Passman on the phone on Tuesday morning about the changes he sees in the music industry and where he thinks it's going.

Q: Since the last edition of the book was published in 2006, what's the biggest change to the industry?
Donald Passman: 360 deals [in which record labels get a cut of the artist's revenue from touring, merchandise, and other sources apart from record sales] are a tectonic shift in the way record deals get done. There was a smattering of them three years ago, but now it's become the norm. Early deals with Madonna and other established artists were really banking deals, where everybody knew the artist's track record and they were making a bet on what the future would be. Deals with new artists are quite different. The labels are saying that they're the only ones really willing to spend money on a new artist's career, and they can no longer make money just in the record business, so they need a cut of this other income.

We're also starting to see some industry patterns in how royalties and payments are calculated for digital music. So far, none of the business models have made a lot of money. Even iTunes doesn't make a huge profit. But part of the problem three years ago was that if you started a streaming music service, you had no idea what you were paying. Now we're starting to see industry patterns.

Do you still think it's worth an artist's time to pay or find funding for a professionally recorded demo in a big studio? Or would you recommend that artists invest that time and money in buying a computer and other home recording gear and learning how to record themselves?
Passman: There's no one-size-fits-all answer. The software that's available now is better than what professional studios used to be like 10 years ago. You can create an extraordinarily good demo in your house. The key is to create a demo that sounds like a hit so they don't have to use their imagination to hear it. People will tell you they can hear a diamond in the rough; they can't.

Do you think the rise of do-it-yourself online services like CDBaby, Tunecore, and Sonicbids will lead to a new thriving "middle class" of musicians--folks that aren't signed to a label, but spend most of their time recording and touring and make a decent living doing it?
Passman: It's a reality today. If you're a niche-type artist and you don't mind staying in your niche, you can make a perfectly good middle-class living that way. If you're more mainstream, you can use those techniques to build buzz and attract a label. Nobody's yet had a major career without a label behind them. I'm certain that's going to change, but for bands that want to be truly international and mainstream, they still need a label.

In your book, you mention that you favor unlimited music-streaming--the "celestial jukebox"--as the most likely future business model to succeed. Do you think ad-supported free services (like Imeem or Grooveshark) will ever be viable?
Passman: I'm skeptical that ad-supported music services will work in a major way. People have had a hard time monetizing music to advertisers because the music is so diverse. Advertisers don't know what type of music they're going to be associated with, so it's hard for these services to get high enough CPMs [impression-based advertising rates]. YouTube's had the same problem: you don't know what kind of video's going to pop up next to your advertisement. Free services will probably be a model, but I don't think they'll be the model.

Why do you think subscription-based services (such as Rhapsody) haven't really taken off?
Passman: They're not convenient enough, they're not truly cross-platform. For me, the ultimate would be anytime-anywhere access to any music for one subscription. On my computer, in my car, on a connected device, whether it's an iPod or something else, on an airplane when I don't have an Internet connection. Not just tied to one or two devices. I'm personally a believer in subscription services. People don't think twice about paying for cable, and when you stop paying it goes away. But with music, there's a kneejerk reaction because we're used to owning it.

We hear a lot of doom and gloom about the death of the music industry. Are you still optimistic?
Passman: I'm optimistic in the longer term. Not for the next few years. I think it'll probably get a little worse, and then we'll bump along the bottom for a while. I don't think we've hit bottom, and that's because I see the trends that are happening now. CD sales are declining and will eventually disappear, and retailers are making it happen. They're cutting back the floor space they devote to CDs, which means less CD sales, which makes them cut back more.

But the digital opportunity is huge. We can sell music to people who've never gone into a record store, people who never listen to music because they stopped listening to the radio at a certain age will now have access. Unfortunately, we're not there, technically or legally. The more pain the industry feels, the easier the legal side gets. The better the technology gets, the closer we get to delivering an experience people want.

Wolfgang's Vault, which offers high-quality digital recordings of rock concerts, has been trickling out updates since I wrote about its new iPhone app last month. On Tuesday, the site will begin to offer a new optional membership model where $48 a year gets you $50 worth of merchandise, plus discounted downloads and other benefits.

Wolfgang's Vault offers free streams, and downloads that cost up to $12, of professionally recorded concerts, in various formats up to and including lossless FLAC files. The Vault got its start by buying the recorded archives from San Francisco concert promotion company Bill Graham Presents, and added to that with the King Biscuit Flower Hour, a live concert radio show popular in the 1970s and '80s. That means the vault is pretty heavy on music from the classic rock era. However, the same company also owns Daytrotter, which invites touring bands into a studio in Illinois to record a session, which adds nearly 800 sessions from modern, mostly independent acts to the archive.

Starting last week, the company began releasing hundreds of new recordings under a promotion called Cracking the Vault. It expects to add more than 1,000 new concerts over the next three months, including 150 shows by the Grateful Dead that have never been officially released. (Although, knowing the Dead, bootlegs probably exist.)

The new membership model allows true fans of the site to show their colors and become WVIPs. It's strictly optional--this isn't a new subscription service, but more of a fan club. An annual fee of $48 nets you $50 in merchandise (including posters, T-shirts, and other memorabilia) from the Vault Store, plus 10 percent off on all merchandise (you can take the 10 percent before you reach $50), 30 percent off on all downloads, unlimited streaming access from the iPhone app (non-members are limited to 10 hours a month), special offers, and exclusive download packages. Perhaps most interesting: if you're ever in San Francisco, you can arrange a tour of Wolfgang's Vault headquarters, which the company claims contains the world's largest collection of concert memorabilia.

Whenever the band Phish plays on Halloween, they pretend to be another famous rock band and do an entire album by that band. This year, they did one of my all-time favorite records, "Exile on Main Street" by the Rolling Stones. It's a double album, 18 songs worth of blues boogie, and I was very curious to hear whether they pulled it off.

Friday morning, a relative who knows of my fixation with that record sent me a link to the show, but the link--as is so often the case--wasn't working. Of course I could have purchased the entire set for 99 cents a song from the LivePhish.com site, but the samples on that site are only 30 seconds long, and I wanted to try it out before committing with a credit card. So I did a little hunting on my own. Lala didn't have it. Imeem didn't have it. I couldn't find it on a Google search.

I used Grooveshark's playlist feature to arrange the songs from Phish's cover of "Exile" in order.

So I turned to old reliable Grooveshark. Sure enough, a search on "Phish Ventilator Blues" (one of the song names from "Exile") turned up a hit. From that result, I saw that the name in the "Album" column included the date, 2009/10/31. I ran another search, "Phish 2009/10/31" and there it was, the entire show. I took all the songs from "Exile" and arranged them in order on my playlist, and soon I was enjoying the band's faithfulness to the original recording, down to the horn parts and backup gospel singers, mixed with some very extended jam sections. The bit between "Ventilator Blues" and "Just Want to See His Face" is miraculous.

One of my complaints about Phish is that they often sound too perfect and clean, especially the singing. But in this particular case, it was great because Phish obviously studied the lyrics very carefully, and I could finally understand whole lyrical sections ("there's fever in the forecast now") that I've never been able to figure out despite hundreds of listens. (Mick mumbles, and he's buried pretty deeply in the mix on the original.)

I have no idea whether the recording was posted with the permission of the band. Probably not. But the beauty of Grooveshark is that users post the content themselves, in a similar fashion to YouTube, so you're not reliant on content owners.

Correction 2:22 p.m. PDT, Nov. 13: This post mischaracterized how Grooveshark gets content. All content on Grooveshark is uploaded by users. Grooveshark says it complies with the Digital Millennium Copyright Act, and pays appropriate royalties for live and other types of recordings.

Tuesday's post on using Craigslist to buy secondhand concert tickets drew a response from a company called FanSnap, which uses live feeds to aggregate ticket listings from online marketplaces and broker sites (such as StubHub and TicketNetwork) and eBay auctions.

FanSnap would argue Craigslist is fine for price-sensitive fans who don't need to go to a particular show and who are willing to meet and negotiate with other individuals, pay cash where necessary, and run the risk of buying a fake ticket. (Although the only time I've ever seen a fake concert ticket was in 1989 on the streets of Manhattan, when I bought a very realistic counterfeit to a Jane's Addiction show at the Ritz.)

Fans who want a slightly more convenient buying experience might go with eBay, where they can use PayPal and rely on seller ratings, while fans who absolutely need a guaranteed ticket can go with a marketplace like StubHub, which offers a toll-free customer service line, money-back guarantee, and other benefits. FanSnap operates on an affiliate-oriented revenue model, so it gets a commission from sites on which sales are made.

FanSnap shows you where tickets are located in a seating chart of the venue.

I ran a search on FanSnap for Pixies tickets, and it found more than 70 listings for the sold-out show this Friday, compared with about 30 listings on Craigslist. (The Craigslist screenshot in Tuesday's post showed only listings that had been added on that day.) Prices were similar to Craigslist--lower in a few cases--and the site has some great design touches, like a seating chart of the venue that maps tickets to particular locations. Craigslist, of course, is purposely and resolutely lo-fi. I still think there's something refreshing about dealing with a real fan, face to face, but I can see reasons why others wouldn't want to.

Correction at 8:00 a.m. PDT, Nov. 12: This post mischaracterized how FanSnap aggregates ticket listings. The site uses live feeds from its sources, which allows ticket listings to be updated immediately as prices change.

Here's what I suggested for the word "volcano."

Internet memes travel in waves. A fun site can lie dormant for years before suddenly being rediscovered.

The latest example I've found is Let Them Sing It For You, which has been around for years, but has been drawing new attention on blogs in the last couple of weeks. On Tuesday, I received my first personalized message through the service.

Created in 2003 by Eric Bunger, Let Them Sing It For You is a simple but fun Web application that lets you enter a text message, then translates the words into audio. The catch: it uses popular song snippets for each word.

So, for example, if your message contains the word "creep," it gathers that song from the Radiohead tune of the same name. "Fire" gets you Jim Morrison yelling the last line of "Light My Fire," and "love" has Robert Plant's holler from the swirly psychedelic middle of "Whole Lotta Love." If the app doesn't know a word, it tries to stitch together a phonetic approximation from multiple songs, and also asks you to suggest a source for later use. Once you're done, you can e-mail the finished message to your friends. Try it out here.

Last week, a music site called BlueBeat made headlines by offering Beatles songs as free streams and 25 cent downloads. The Beatles are known for not making their songs legally available on iTunes or any other online forum, so observers rightly asked "how are they doing this legally?"

EMI, the record label that owns The Beatles' recordings, has a simple response: they're not doing this legally. But here's where the story gets very strange.

The legal reasoning in this case is straight out of "Alice in Wonderland."

(Credit: Wikimedia Commons (public domain illustration))

BlueBeat is owned by a company called Media Rights Technologies, which specializes in digital rights management technology. DRM is supposed to be used to prevent copyright infringement. But according to a 2007 blog post on HuffingtonPost.com by the company's founder, Hank Risan, MRT backed into this business after being--get this--targeted by the RIAA for copyright infringement.

As Risan explains in his post, he and a partner had posted a bunch of streaming-audio files to a Web site about the history of music. The RIAA issued a takedown notice, and the site took the streams down.

The streams had been protected by Windows Media DRM, but according to Risan, an update to the Media Player broke the DRM. In response to this flaw, Risan created MRT and built his own DRM system, which he claimed would be far more robust than the systems on the market at that time. Then, in 2007, MRT sent cease-and-desist letters to Microsoft, Apple, Adobe, and RealNetworks, ordering them to use MRT's DRM technology instead of their own, on threat of legal action.

The legal reasoning was twisted--basically, MRT argued that the Digital Millennium Copyright Act should force these companies to use the most robust DRM technology available, even if that technology was created by somebody else. Predictably, nothing ever came of this demand.

MRT's legal reasoning is equally funny this time around, as Ars Technica reports. According to the report, MRT claims that it didn't post the exact Beatles recordings. Instead, it posted "psychoacoustic simulations," then added simple video content to them. This constitutes a new audiovisual work, and isn't covered by the existing copyrights, MRT argues. In fact, MRT even went so far as to apply for copyrights on the "new" works!

Perhaps this is all some kind of metacommentary on the frustrating inconsistency of U.S. copyright law, but I predict that MRT is going to be laughed out of court. In the meantime, if you want your Beatles music online, it's still available on BlueBeat as of the time I posted this. I didn't want to give the company a credit card to test the whether the downloads work, but the streams sound pretty close to perfect...especially considering that they're only psychoacoustic simulations.

I had a quick conversation with Lala co-founder Bill Nguyen this afternoon, and he filled me in on some of the company's plans to expand its presence in Google's new music search feature. Today, when you search for an artist's name, Google uses mathematical algorithms to determine which songs to display--no editor is involved. But eventually, artists will be able to use Lala's platform to ensure that specific content, such as a new song, shows up in the music search results at Google.

An example of Google's embedded Lala player, which appears on a search for "Joy Division."

Artists and labels will also be able to work with Lala to sell products other than MP3 downloads through Google's search results. For example, Lala is working on a deal with Rhino Records where users will be able to buy vinyl Joy Division records directly from Lala. Eventually, the offer will appear within Google search results on queries like "Joy Division" as well.

For Rhino, this kind of deal is a no-brainer: they're suddenly getting free placement for a relatively high-priced physical product in Google's search results. But it's also beneficial to users: if they buy through Lala, not only will they get the records, but they'll also get all the digital tracks on the LP immediately added to their Lala locker, which lets them listen to those tracks from any PC with an Internet connection. (I've been using Lala's excellent locker service for about a year. Basically, it uploads your entire music collection to the Web, then lets you add additional songs for only $0.10 apiece.) And if users like the deal, then they're more likely to use Google for future music searches. Wins all around.

And that gets me to the most exciting Lala announcement of all: The company has submitted its iPhone app to Apple and hopes to have it approved some time in November. The app will allow users to stream any song in their online Lala locker to their iPhone, over both 3G and Wi-Fi connections. Conceptually, it's similar to iPhone apps from Spotify (in Europe) and Rhapsody, but without the subscription fee; any song you've uploaded to your music locker will be available on your iPhone. And of course, you'll still be able to buy streaming-only versions of new songs for $0.10 a piece. (Lala might charge something like $5 for the app itself, but the company hasn't decided.) I'm getting an early look some time in the next few days. I'll try it and report back on how it works.

How far we've come in such a short time. When I began this blog in 2007, finding a particular song online was an exercise in frustration. You could subscribe to an all-you-can-eat service like Rhapsody, but cheapskates and occasional music listeners either had to dig deep, engage with a questionably legal file-trading service, or settle for 30-second previews from iTunes or one of its Web-based competitors.

Search results for "U2 Beautiful Day" earlier today. The box at the upper-right is an embedded version of the Lala player, which let me play the complete song multiple times.

Since then, as readers of this blog know, dozens of sites offering free streaming music have emerged, from the dead-simple like Songerize and its successor Songite (enter a song title to play it now) to the fiendishly complicated Imeem (whose original user interface gave me a headache, although it's since gotten much better).

But, let's face it, most people don't read this blog. Again and again, nontechnical music fans are blown away when I show them a site like Grooveshark, which lets you play any song, any time, and even arrange songs in queues and playlists. "Is that legal?" they often ask. (Answer: it depends.)

Today, that all changes. Google announced the integration of playable songs into its search results yesterday, and is slowly rolling the feature out to U.S. searchers. I finally saw the feature in action this afternoon, when I ran a search on "U2 Beautiful Day." (You can test it here.)

To an experienced online music listener, the feature seems a little bit random because Google is using both iLike (recently acquired by MySpace) and Lala to power playable results, and the two offer different experiences. For my first search, Google randomly chose iLike as the default player, and iLike only let me play the song once, then relegated me to a 30-second sample. When I cleared my cookies and tried again, Google made Lala my default player, and I was able to play the full song as many times as I liked. (The experience will also vary by song and artist, depending on what the copyright holders dictate--Led Zeppelin, for example, is available only in 30-second samples on iLike, and most of its songs are completely missing from Lala.)

Some searches also give you links to Imeem, Rhapsody, and Pandora, each of which offers yet another experience--Rhapsody lets you play up to 25 songs per month for free, Imeem is best for finding unusual versions of popular songs (like live takes), and Pandora requires you to create a virtual radio station based on a particular artist or song, which can be useful for discovering other music you might like, but doesn't give you an instant fix.

Whatever. For the average Internet user, this distinction doesn't matter. What matters: when users go to Google to search for an artist's name, song name, album name, or even a snippet of lyrics, they won't just get random text links or YouTube videos. Instead, the first set of links will be to the audio recording itself--in many cases, the entire song. Everybody knows that there's free music available on the Internet, but most casual listeners don't bother to find it. Now, the most-visited site on the Internet will put it right in front of their faces. As awareness spreads, it'll be another nail in the coffin of traditional music media--why listen to the radio?--and a boon for the five companies who signed this deal with Google. Artists and record labels might also get a shot in the arm, as users discover new music for free and perhaps eventually buy a copy to keep.

As for the rest of the online music start-ups out there? They better be on the phone right now, looking for a benefactor.