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Musicnet Fails to Impress Customers

mcwop writes "A Wall Street Journal story carried on MSNBC chronicles MusicNet's failure as a service before it even gets started. The story contains some funny quotes such as: 'The first offering was too clunky and too consumer unfriendly to hold much hope for its success, says Richard Parsons, AOL Time Warner's incoming chief executive. So we are going to go back, and we will come out with a 2.0 product which will be more consumer friendly, easy to use. ... This is a business of trial and error.' Any consumer could have informed the music titans that their business plan was flawed. Unfortunately, version 2.0 won't be any better unless the music industry is willing to take some risks. One of the more interesting aspects to the story is how the major music companies could hardly be present in the same room for fear that antitrust laws may be broken." A good business-oriented review of Musicnet's operations. With the artists making a quarter-cent per downloaded song, they're probably just as happy to see it fail.

25 of 239 comments (clear)

  1. "Quarter cent per song" by delta407 · · Score: 5, Interesting

    There's an article entitled "Courtney Love does the math" that talks about why Napster isn't the problem; rather, the record companies are screwing the artists. (Worth a read.)

    This applies to the above "quarter cent per song" -- which may actually be more than what they get making CDs.

    1. Re:"Quarter cent per song" by Anenga · · Score: 3, Interesting

      Exactly. I came here to post something similar, guess you beat me to it :P

      I found this post on Google Groups. And it goes on saying that your base royality for a CD is 12%. So, for a $16.98 CD (sold in US), they get $2.04. However, after reductions such as "container,"
      "free goods," and a "CD adjustment," you'll be left with a mere 97 per CD.

      Unless artists start they're own label, they lose. There was something like this on Dateline (NBC) once - I think it analyzed the Dixie Chicks. They said that they earn pennies from CD's, but what they earn money from is Concerts.

      So if you want to support your favorite artist, go to a Concert. I really believe that most artists don't mind their fans downloading their songs off the Internet. I think most of them want their music to be heard and remembered more than earning billions off of it. (well, not all :P)

      Go ahead and use MusicNet or just download off Gnutella. Maybe after they start paying the artists more, or lower the prices for the consumer... they'll learn. There is a huge flaw in the music market. (It would be nice to download a single song, instead of an entire album for it - or maybe adding something special for online purchases? Like the ability to keep all your songs you bought to be able to download from an online site - so you can load them in your iPod wherever you are just from going to the site? Searching, Buying, and Downloading off your MP3 player? I'd pay for that!) It's not our job to figure out a way how to repair it. Keep hitting the music companies by downloading off Gnutella, maybe they'll find a solution faster.

    2. Re:"Quarter cent per song" by Rogerborg · · Score: 5, Insightful
      • There's an article entitled "Courtney Love does the math" that talks about why Napster isn't the problem

      The big eye opener for me is this line: "It's not piracy when kids swap music over the Internet using Napster or Gnutella or Freenet or iMesh or beaming their CDs into a My.MP3.com or MyPlay.com music locker. It's piracy when those guys that run those companies make side deals with the cartel lawyers and label heads so that they can be "the labels' friend," and not the artists'."

      Napster, uh, yeah, I remember them. The guys who tried to move up to the Big League with the labels, right? Didn't they used to run a P2P service? ;-)

      That's not to say she's completely getting it though. She's a bit confused about the ability of (e.g.) Gnutella to control the content that's being shared; girlie, there's no point exhorting a bunch of P2P developers to work with you. My god, Limewire (the most professional gnutella client development team that I know of) has six code monkeys and a web guy working on it. How can they negotiate deals with tens of thousands of artists? And that's just one solitary client running the gnutella protocol.

      And the horrible thing is, Courtney is still stuck in litigation with Universal. See Hole's web site for the latest news. And notice that despite good intentions, Courtney is still not offering us what we want. You can download 60-some 128 bit MP3's right off the site (all live recordings rather than studio recordings, because lest we forget, the studio owns all rights to the music, and Courtney only owns limited rights to her performances of it), and you can click on a link to buy albums from CDNOW or Amazon. But you can't pay money for the MP3's, or pay for better quality ones. It's frustrating when even the champions of the e-distribution campaign don't give us the chance to show how lucrative sales of uncrippled, high quality, correctly labelled, untruncated, non-radio edit mp3's could be - if they were only given a chance.

      --
      If you were blocking sigs, you wouldn't have to read this.
    3. Re:"Quarter cent per song" by anthony_dipierro · · Score: 3, Insightful

      Artists don't start their own because they either don't have the time/experience to start a business beyond their group, and because if they *do* go with a big label, they have a chance at britney-spearshood

      So they're not getting screwed over at all.

      The solution is for them to come up with their own cooperative to compete with the RIAA. Of course then not only will they have to pay for the recording and promotion themselves, they will get the ire of napster users directly.

    4. Re:"Quarter cent per song" by dswensen · · Score: 3, Interesting

      I see it as a problem, because Vivendi, along with Universal, Sony, BMG, and a bunch of other big labels, essentially sued mp3.com out of existence. Mp3.com owed hundreds of millions of dollars to the big labels after a judge ruled that they were in copyright violation. Their choice was either to be bought up, or cease to exist.

      So Universal gobbled up mp3.com, cut payment to the artists, and turned it into a house organ for Universal's signed artists. Hardly a victory for the little guy.

  2. Gimme a break... by Danse · · Score: 5, Insightful

    Early last December, three of the world's biggest music companies launched a counterattack against the rampant digital piracy that has gnawed at their sales in recent years.

    I would love to see their evidence for this. I assume it would be the same crap they've been whining about for months, which is that their sales are slightly less record-breaking than they'd hoped. Whooptee... it's a recession. Guess what kind of stuff is the first to get cut from people's budget? Yep, overpriced crappy music.

    --
    It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
  3. Re:more than.... by Danse · · Score: 3, Interesting

    Prove it. Most people I know actually buy the cds from the artists that they discover on P2P services. They just aren't buying the cds that the record industry is hyping the most. Maybe that's why they have their panties in a wad.

    --
    It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
  4. what a suprise :). by Abnormal+Coward · · Score: 3, Insightful

    The qoute from the article: "It didn't allow consumers to keep downloaded songs permanently."
    pretty much sums why its was doomed for failure.

    Lets see.. advantages of buying a CD, I can rip it to mp3/ogg and Ccpy it to my PC for listening to (and upload it to my protable mp3 player). And very importantly, I get to put the CD on my shelf with the rest of my collection.

    Oh but wait that make me a priate so I will go spend my money on music that I don't actually get to own... sounds logical to me :).

  5. Re:more than.... by TheViffer · · Score: 4, Insightful

    more than they got from napster or any of the current junk out there!

    Bull *blank*

    When napster was in full swing, Many people used it as a music trial service, kind of like our own personal listening booth. Try and buy.

    Let us not forget that music sales dropped 9% after Napster took a dirt nap. Many people blame it on economics. I blame it on the fact that exposure was removed from the mainstream.

    A quarter of a cent or 9% increase in overall sales. You decide.

    And do the math. 1 million sales is a MASSIVE $2500 for the artists. I make more then that in two weeks.

    --
    -- Knowing too much can get you killed, but knowing who knows too much can make you rich.
  6. Not a flame, but a correction ... by TheViffer · · Score: 4, Informative

    its a quarter of a CENT .. not a quarter (like they deserve)

    4 dls = ~$0.01
    8 dls = ~$0.02
    1,000,000 dls = ~$2,500.00

    sad .. isn't it.

    --
    -- Knowing too much can get you killed, but knowing who knows too much can make you rich.
  7. Re:Another distribution method by gclef · · Score: 4, Informative

    The real problem here is that record companies are more than just distribution chains. They're also advertising agencies. They're good at making folks want to buy the stuff they're selling (and at going the other way: making what they're selling what folks want to buy...cf Nirvana).

    It's the advertising element that makes artists famous. That's also a part of why they sign up. (No fame == no sales. No sales == no money. Plenty of folks are presently distributing music for free online....but you never hear about them since they don't have the advertising budget of the major labels.

    Personally, I'd love to see a label split into two parts: a distribution channel and an advertising agency. But it'll never happen. The distribution chain only works because the advertising makes the demand. If there wasn't the advertising-created demand, the distribution chains would be worthless.

  8. WRONG, WRONG, WRONG!!! by Fig,+formerly+A.C. · · Score: 4, Informative

    The recording industry tells the radio stations what songs to play. They make their own stars, and use the radio to advertise them. They know exactly how well their "artists" are doing, since they decided it in advance. You are correct though in that the radio stations do pay for the privelege of advertising for the RIAA.

    --
    Murphy was an optimist.
  9. Do you ever play a CD... by dpbsmith · · Score: 3, Funny

    ...with more than one person in the room?

    What will happen when the music executives find out about THIS? Oh, those clever, wicked teenagers... they buy ONE copy of a CD, but TWO people get to listen to it!

    If they play it on a boom box on the subway, the number of illegal listeners can climb even higher! It's theft, that's what it is! It's just like shoplifting--no, bank robbery!

    We need a law requiring every CD player to include a little IR scanner that counts the number of people in the room and shuts down if you haven't purchased the right number of licenses (or charges them to your credit card). This is in our own interest as consumers, because if this isn't done, there won't be any profit in music any more and then there won't be any music. Nope, none at all. How would we like THAT?

    (P.S. It's irony, folks)

  10. Re:more than.... by Anonymous Coward · · Score: 4, Insightful

    Yeah, there are gigs of music I have that I might never purchase. At the same time, when I used Napster, my CD purchases were 100x what they were before...

    Regardless of the legality of those mp3s that I won't buy, I put far more money into buying CDs than I otherwise would have... to the point where I physically COULDN'T spend more money because I ran out. I bought a lot of the best of what I downloaded.

    This, to varying degrees, is a definite trend among people who download music. Regardless of the fact that SOME didn't get purchased, much more money went to the artists than under normal circumstances. This doesn't change the legality of it in itself, but it does point toward different motives on behalf of the music company that have more to do with maintaining a monopoly rather than recouping lost sales.

    After all, if more money goes TO the labels, it shouldn't matter how much music goes to me, because it cost the labels nothing to put out (please note the difference in what I'm saying from the lame leeching kiddies... I don't think that because the music costs nothing to transmit that it is worth paying nothing for... just that there are no disadvantages to this scenario for the music companies other than the loss of control... I'm more than happy to shell out cash for good music.)

  11. Here's what I want in a music service by Basilius · · Score: 5, Interesting

    And, most likely, what I'll never see.

    1. Cheap downloads of decent quality (160 or 192) MP3s. Maybe US$0.25-$0.30/song. Give me a printable receipt. These are true MP3s, no time sensitivity or DRM. If you want to encode the receipt number into the MP3, I think I can deal with that. Just let me copy it onto my laptop, MP3 player, etc. and keep it for perpetuity.

    2. Now, since I've paid less for a lesser quality product, I'd like an upgrade path. Let me use that receipt as a discount coupon on the album I've downloaded. Usable anywhere.

    This way, I can legally sample albums for about a buck. If I like it, I'm not out that dollar, It was just a down payment on the stuff I like.

    3. (Since I'm already shooting for the moon, why not...) Let me order custom-mixed CDs of MP3s I've purchased. With or without the aforementioned discount. That part I don't care about. If there's 10 or 12 songs I like where the rest of the album's trash (i.e. just about everything released these days) then let me just buy those songs.

    4. Access to _every_ label's material, not just two or three.

    5. A shopping cart style interface. Something like Amazon will do nicely.

    I can't imagine I'm the only person out there that thinks something like this would work.

    How the royalties get distributed would naturally need some thinking. It's got to be better then a quarter of a cent per song, though.

  12. Re:more than.... by ergo98 · · Score: 5, Insightful

    How does a song that you don't know, from a band that you've never heard, expose itself to you on any of the P2P programs? The reality, of course, is that it doesn't: The only most people ever hear it is if they pulled a fast one and labelled it "Britney Spears duo with Christina Aguilara.mp3". The P2P networks are all built around searching, meaning that you hear a song on the radio, or in a movie, and you think "Hey! Remind me to download that from Gnutella later!".

  13. Not to be a broken record, but check out emusic by wundabread · · Score: 4, Informative

    Then you should check out emusic.com. The trial is free.

    1.)$10/month for a year subscription. $15/month for 3 month subscription.
    2.)All-you-can-download, one click album downloads.
    3.)MP3 format.
    4.)You own it.
    5.)Artists get paid.
    6.)Tons of great bands you have and haven't heard of.

    The only downside is that the bitrate is a bit low (128). But for my $10 I've gotten about 15-20 albums this month. All nicely organized and ID3 tagged, downloaded in one click. They use .rmp song list downloading files and mention linux specifically as being able to use the "one click album downloading" via FreeAmp. I use Tafkar on my Mac.

    I know I've posted about this a lot, but it seems to address many of the issues that slashdotters have with Musicnet and the new Napster.

    This is the best money I've ever spent on music.

    Even though I've never heard of many of the artists, emusic's "Picks" tend to be pretty damn good. And if they aren't I just delete them.

    --wundabread

    P.S. Check out all of Mogwai's stuff, Taking Back Sunday's album "Tell All Your Friends", Firewater's album "Psycoparmacolgy", and Ursula 1000's track "Beat Box Cha-Cha" track.

    None of which I had ever heard, nor likely ever would have heard without my subscription.

  14. And they say that MusicNet is secure by Anonymous Coward · · Score: 5, Informative

    how NOT true. You can record the music which they offer there WITHOUT even hacking anything in windows..

    Here are few steps which you can do (if you have some linux programming skills, a VMWare [any version] or Win4Lin..)

    Instructions are pretty easy - and I'll put it as generic as possible (who knows who reads this...)

    You start VMWare with windows as a guest (or win4lin with your windows) and install the client and subscribe to musicNet. Now you're installing their client and making sure that everything works, and that you can hear your music well (with VMWare you might need to play a bit with "renice" command)..

    Now - the Linux part. You'll need to write/steal/beg-someone-to write a small wrapper program which simply "records" whats going into /dev/dsp. You can use KDE's aRTs or ESD, and play with it, but remember - both VMWare and win4lin (not sure about win4lin) run as setuid root, which means you'll need to run ESD or aRTs as root...

    Now the fun parts begins - with your new program, start recording whatever comes out of /dev/dsp and press the "play" button on the MusicNet player. When the music ends - stop your /dev/dsp grabber.

    Now you have a big WAV file. You can use a simple editor to cut some empty sound seconds, and viola! you got a WAV file ready to be converted into mp3/ogg/wma/whatever - which you can now trade, put in your player, etc...

    Enjoy..

  15. A Few Comments by Sir+Elton+John · · Score: 3, Insightful
    As a professional in the popular music industry, I thought I might offer my impressions.

    Once upon a time, it seems that the phonograph must have threatened the music industry. After all, performers of the time would have made their living from live performances, so the concept of people being able to hear the music without attending a physical performance must have been very scary indeed. But of course, the availability of records just made music more popular and more in the mainstream.

    Then when music radio came along, it must have shaken up the music industry of that time. All of a sudden, people didn't even need to buy records to hear the music: they could hear it for free on the radio! But, once again, this just increased the public's love for music.

    And here we are again, playing out the same farce. Don't believe it, Internet friends: pop music is in no danger. The artists are as excited about the new frontier of music as the fans are. Let's just try to get through the painful transition period in one piece.

    --
    "I'm a rocket man / Rocket man burning out his fuse up here alone." - Sir Elton John
  16. Re:Courtney's Math by arkanes · · Score: 4, Interesting

    Important: They don't actually get money up front, and living expenses aren't covered - it's all a loan, and it's all taken out of their (small)share of the profits. Basically, unless you manage to impress someone at the record companies enough that they will actively promote you (and not just half-assed promote you), you WILL NOT make money by signing with a label. Period. If you DO get heavy promotion, you still have only even odds, because you end up paying for all this promotion. If it weren't for that fact that all the promotion paths are covered by the industry, artists could (theoretically) get bank loans or whatever, on much better terms, and do everything themselves, or with independent managment, but because theres such a tightly held, vertically integrated cartel, there's little or no chance for anyone.

  17. Better example: emusic! by startled · · Score: 4, Interesting

    emusic.com has stayed out of the spotlight this whole time. This may be intentional-- if they actually got popular, their business wouldn't make any sense compared to other offerings out there (not sure how it does now).

    They charge 10 bucks a month. With that, you get unlimited downloads in mp3 format. That's right-- you can download that Haujobb CD 8 times if you want. I downloaded 20 CDs in my first three days.

    How the hell does it work? How do they make any money (after they pay half to the labels)? I have no idea. On the label side, they don't get the big names. Their biggest are people like TMBG, but most bands are significantly smaller. And if you're looking for cool small, unsigned bands, you won't find 'em either. So it's not the only service you'll need. But at 10 bucks a month, it's a hell of a start on your collection. And it makes MusicNet look downright stupid (well, like that was hard).

    P.S. On the antitrust note (how they could hardly be in the same room): well, duh. It's a big fat antitrust violation already, and they're just observing the technicalities to avoid a prosecution. Let's see-- they all collaborate to wipe the other online music services off the face of the planet. Then, they get together and start one of their own. They're a music mafia, but they aren't allowed to get all the families in one room together. No big deal, there are plenty of other ways to communicate.

  18. The real reason CD sales are falling by joshv · · Score: 3, Insightful

    The real reason is that CDs no longer good value for your entertainment dollar, in a world where a 2 hour DVD can be had for $15-$20 and I can listening to streaming audio (legally) all day long for free.

    Try as they might to change the crumbling economics of their situation, technology has moved on and there are better, cheaper options to the CD. The music industry must get over the fact that the goose that laid the golden egg has been slaughtered, and they are never going to be able to make as much money as they once did.

    -josh

  19. Not then only example of bias by drew_kime · · Score: 5, Insightful

    You quoted:

    Early last December, three of the world's biggest music companies launched a counterattack against the rampant digital piracy that has gnawed at their sales in recent years.

    But you missed this one:

    And there are the problematic relationships between the record companies and the rest of the music industry, which make it difficult for MusicNet to offer as much music as the illegal services do.

    And this one:

    The struggle to create a legitimate commercial online music service goes back years, before there even was a Napster.

    And this one:

    Yet the industry still feared that creating a legitimate market for music downloads would cut into sales of compact discs.

    And this one:

    But now, music fans were racing to outlaws such as Napster.

    And many others, but you get the point: Not only are we accepting on faith -- and against reams of evidence to the contrary -- that online trading actually hurts sales; but also that any services that aren't set up by the studios are "illegal services," "outlaws" or, at the least, not "legitimate."

    --
    Nope, no sig
  20. It's because up until recently, nobody KNEW... by Svartalf · · Score: 4, Insightful

    That's right. Until recently, nobody except the people being screwed knew anything about it. And most of the people being reamed didn't think that it could be any other way so they kept quiet about it.

    Nowadays, technology has come to the point that the producers of art (for music and literature, at least for now) don't need these parasites to get their stuff out to their customers. They might need someone to play filter/promoter, but they don't need the labels as they currently are to do that- anyone can play that role, incl. independant labels, etc.

    --
    I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
  21. Okay, Try These Numbers by virg_mattes · · Score: 3, Insightful

    All right, then let's try a slightly different approach. Let's say the recording contract is written up, and the artist makes a record, and the record does fairly well. In fact, let's assume it went gold! The record company spends 5.4 million dollars, and the record pulls in about 7 million. That's a win all around, right? Not quite. See, according to the nicest recording contracts, the artist gets a small percentage of the gross. From that percentage the artist must pay back the record company for the cost of production and promotion, while the huge percentage the company gets is just considered gravy. So, while the artist pays back the 5.4 million, he doesn't get a dime. The artist's cut of the 7 million doesn't begin to cover the 5.4 million dollars he owes. So, now that he's mildly popular and 5.1 MILLION DOLLARS in debt, he either:

    1.) goes on tour and pays the debt back over the next several years, or

    2.) declares bankruptcy and dissolves the band.

    The problem with number one is he can't pay the rent during those touring years, and the problem with number two is that once he declares bankruptcy he's not legally allowed to perform or record under the now-popular name, so the hard-won fame vaporizes. Now, let's do that math:

    Original investment: $5.4 million
    Profit: $7 million
    Amount to artist: $0.00
    Amount to record company: $7 million
    Value of artist in the market: $0.00

    So, in exchange for that one year of fun, he's got no real property, ten years of not being able to get a credit card, and he's got to go back to the 7-11 job, or do the whole thing again. Maybe it's just me, but that doesn't seem to qualify as "a heck of a lot further ahead than he was". This is one of the major contributors to the "one hit wonder" phenomenon, and even the major players have difficulties with it. Glen Campbell has twenty gold records, and he has said that he lost money making every album he recorded.

    Virg