Last week, well-known artists went up against the Pandora to debate over the Internet Radio Fairness Act. And the RIAA reacted to statistics that show illegal downloaders buy more music than other listeners. Also, BandPage announced a new tool for artists, which helps them better manage their online presence across platforms.

Pandora’s Royalty Complaints Criticized by Artists

On Wednesday, over 100 artists spoke out by signing an open letter criticizing Pandora Media and its Internet Radio Fairness Act, which, if passed, would change the way royalty rates are set for many online radio services. Artists have, until now, remained relatively silent about their opinions about Internet radio royalties as the debate among broadcasters, technology and major music companies and record labels has raged, according to a blog post on The New York Times website.

The letter was signed by many stars and music legends, including Billy Joel, Jackson Browne, Rihanna, Sheryl Crow, CeeLo Green and Don Henley. It pointed out that all those who work with artists are partners in their careers and should treat them accordingly:  “Pandora’s principal asset is the music … Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s not how partners work together.”

Music industry group representing record companies, a major musicians’ union and others, the MusicFirst Coaltion first published the letter. It will also appear as an ad – paid for by MusicFirst and SoundExchange – in the next issue of Billboard.

Pandora’s founder Tim Westergren responded to the artists’ letter, saying that in order for the Internet radio industry to continue, a “permanent fix” needs to be implemented. Pandora has been complaining about royalties since 2007, when the Copyright Royalty Board set new rates, then agreed to a temporary discount for the company, which will be good until 2015.

Westergren added, “Passage of the I.R.F.A. will mean more jobs in a sustainable industry, more choices for listeners, and more opportunities and revenue for working artists and their record labels … When the digital music sector is allowed to grow and innovate, everybody wins.”

The N.A.A.C.P. sent a similar letter to members of Congress earlier in November, which put public pressure on Pandora to make right with the music industry. Until the letter sent this past week, Pandora – which has 175 million users – has enjoyed an amicable relationship with musicians. Even the letter starts with the statements, “We are big fans of Pandora. That’s why we helped give the company a discount on rates for the past decade.”

However, the I.R.F.A. has divided the music industry. As the letter points out, the industry feels the current rates enjoyed are fair and that Congress should not be asked to intervene. Pandora contests this idea, stating the rate-setting process is overly complicated, and that licensing fees are more damaging to Internet radio than other companies.

The House Judiciary Committee will hold hearings on this royalties issue at the end of the month.

Are Music Pirates the Most Rabid Fans?

Illegal file sharers spend more money on music than those who abide by Copyright Law, according to a recent study conducted by the American Assembly, associated with Columbia University. Researchers discovered that U.S. file sharers buy 30% more music than those who purchase it solely through legal channels.

The RIAA responded to these findings by saying that the news reports are “misleading” and that there is a very simple reason why P2P users buy more:  They are better engaged music fans than regular music consumers. And the organization decided to bring in the research firm NPD to prove its assessment, said TorrentFreak. NPD’s Russ Crupnick found that there were many different variables involved in the “30 percent” statistic.

RIAA’s VP of Research and Strategic Analysis Joshua Friedlander announced earlier this week in the RIAA blog that music pirates do not buy more music because they download music illegally and showed readers how to “properly” analyze metrics:  “Some commentary has misleadingly reported that people who use P2P services like BitTorrent buy more music than non-users, implying that there’s some sort of causation.” And he added that the numbers simply prove that music pirates are just more interested and engaged than average music consumers:  “In reality, the comparison is unfair – what it’s comparing is people who are interested in music with people who might not be interested at all. Of course people interested in music buy more.”

The RIAA also attempted to back up this conclusion by linking to data from NPD, who uncovered that those age 18-35 who use P2P spend 40% more than those who don’t share. Music pirates spent $267 per capita, while non-sharers spent $191. NPD concluded, “What it says is that the people who download music illegally are generally more engaged in music, so they go to shows and they wear their favorite artists on their shirts.”

This conclusion is the same that BitTorrent arrived at when analyzing the original study conducted by American Assembly:  “A likely explanation for these results is that true music enthusiasts simply want to consume, sample and discover as much new music as they possibly can, and the most straightforward and convenient way to do this is through file-sharing networks.”

However the NPD study disagrees about the link between engagement and file sharing. NPD and the RIAA characterize it as a “one way street;” they claim it is ridiculous to argue that people go to more shows because they discovered artists through file sharing. Crupnick said, “Are we saying that P2P file sharing promotes T-shirt sales, or show attendance? Of course not; that would be silly.”
However, TorrentFreak argues that this idea might not be that ridiculous:  It might be that some file sharers become more rabid music fans because they get music they would not normally be able to afford, and that they might go to a particular concert for a band they would not have discovered if not for illegal downloading.

And when the NPD stated that piracy is likely the reason for dwindling revenues, because a typical P2P user spends $42 on music in 2012, compared to $90 in 2004, their statement is misleading. Because today, most P2P users are actually sharing video; the percentage of music buyers in the P2P-users category is much lower than it once was.

Regardless of the study examined, results from both indicate that the music industry should take a closer look at why illegal downloaders use file-sharing networks to find out how they can better satisfy them, rather than simply dismissing them as “thieves.” TorrentFreak explains, “… [T]hese people are also the music industry’s most engaged customers, and there’s nothing misleading about that.”

BandPage’s BandPage Connect Helping Artists Engage and Market Music

BandPage’s new tool, BandPage Connect will help power musician profiles across the Web and create better brand management capabilities by expanding all the platforms on which artists can manage their presence. The tool allows musicians to instantly integrate their BandPage profiles into all the major social and music platforms across the Internet, free of charge. Launch partners include WordPress, Guitar Center, Midem Music Festival, PledgeMusic, Conduit Mobile, Earbits, StoryAmp, Tixie, Music XRay, Local Music Vibe, WeDemand and The Social Radio. The BandPage Connect API is also open to all developers, so they can sign up and use it immediately through the BandPage Developer Portal.

BandPage also launched BandPage Everywhere in early 2012, a service that lets musicians update content from one location and publish to their website and blogs. BandPage Connect expands this offering by making it easy for musicians to implement all their content from any online or mobile platform. For example, if a band adds a new tour date, profile picture or updates a bio, the change is automatically reflected on every site to which their BandPage profile is connected.

Digital Manager for Maroon 5, Sara Bareilles, Gavin DeGraw and Eve 6, Ryan Kavontrka said, “There are a lot of platforms out there that have our bio, photos and videos, but the info they have about us is out of date and we don’t have a way to change it. [BandPage Connect] makes it so any member of a band or their manager/label can update the content, not just the guy who knows HTML.”

BandPage Founder and CEO J. Sider shared, “There’s a need for a better infrastructure for musicians across the Web and we’re laying the pipes to do it … With BandPage Connect, external sites win because they get up-to-date rich content from musicians, and musicians win because it takes a fragmented ecosystem of sites to manage and pulls it all together.”

Artists can explore BandPage Connect and all its functionalities at the BandPage Connect Center.

This past week, BandPage freed itself from Facebook, offering a new tool for over 500,000 artists. Also, a long-standing battle between retailers and record labels surrounding the timing of new major releases continues in the UK as brick-and-mortar record shops struggle to stay afloat. And a leaked IFPI report reveals a detailed global anti-piracy strategy.

BandPage Everywhere Providing Artists with Freedom from Facebook

BandPage unveiled the new “BandPage Everywhere” for artists on July 24, a new tool that will help musicians build websites outside Facebook and give them more options when working with music-based Facebook fan page apps. Founded in 2009, BandPage  began with the intent of helping musicians build their presence on Facebook after MySpace began to wane. Now, the 500,000 musicians served by the product can upload streaming music, photos, videos or tour dates once and have them pushed to all their social media sites.

At the company’s inception, there were no native music features on Facebook, though it was becoming the best way to connect personally with fans. However, just as BandPage started to gain steam – a year following its January, 2011 investment in improving its offering on Facebook – and expand outside one social networking site, Facbeook’s move to the “Timeline” design, which involved all music pages, limited BandPage’s visibility and caused the company to lose 90% of its traffic, which fell from 32.1 million monthly active users and 1.5 million daily users, to 3.3 million monthly users and 130,000 daily users.

According to BandPage Founder  and CEO J. Sider, ”Timeline hit and obviously it affected our traffic, but we really looked at Facebook as a starting point. We knew that change was coming. We never expected [Facebook] to stay the same. Facebook has its own initiatives it has to go after. The sooner you understand that and don’t hope it will change back, the better off you are building a strong, independent company.”

Now, thanks to $19 million in funding, BandPage is launching BandPage everywhere to help decrease its dependence on Facebook and improve its offering for artists. With BandPage Everywhere, users can create a professional-grade site in just a few minutes by choosing a template and tabs, theme colors and adding their own background image. BandPage Extensions widgets for photos, videos, bio, tour dates, mailing list and streaming music can be manipulated to fit into an artist’s desired web page style. All the new features will be free, as ever, but users can still opt-in for $2 to get advanced social media features to incorporate into their websites. While BandPage does not currently have ecommerce solutions, the company is fully-integratable with TopSpin.

Sider  has always focused heavily on listening  closely to user feedback and paying close attention to the online music marketplace in order to improve his product, grow and adapt. He said, “When we built BandPage on Facebook, our users asked if they could ‘take it with them’ to their Website and blog … So, we created BandPage Extensions so musicians could take any section of their BandPage with them to their existing website or blog. If they want a brand new website, then they can use the Website Extension to create one in a few clicks. The best thing is that once you have BandPage products on your different online properties, you just update it from one place and it updates across the Web in real-time.”

The company has also released both a product overview of BandPage Everywhere as well as a product instructional video to help bands navigate the new tools.

Music Shops in the UK:  “Only Adele Can Save Us”

A six-year-long battle between record labels and retailers in the UK rages on as labels continue to condense major album releases into a few months instead of spreading them out throughout the year. And this year will be the most tightly-scheduled thus far, with releases by Muse, The Killers, Mumford & Sons, Will.i.am, The xx and The PetShop Boys all coming within the same week, two in the same day. Retailers wonder how they will be able to stay afloat, with physical sales in decline.

An article in The Independent stated that a lack of new in-demand albums during a lot of the year has many record store owners analyzing what they see as the misinformed marketing strategies of labels. Major British retailer HMV stated last week that the “barren” release schedules at the start of the year – offering only a small number of albums by in-demand artists – might be good for labels looking to make a profit, but ultimately hurts retailers trying to make sales. HMV’s music manager John Hirst said, “For six years we’ve been pushing the message to record labels [to spreadout their releases], but this is the worst example we’ve ever had.”

And when big releases are too clustered, sales are lower for stores, because fans do not typically purchase several albums in just one week, especially not in today’s economic environment:  “In the current climate, people aren’t going to buy three albums in one day. You end up cannibalizing sales. Probably four of these albums should do 100,000 sales [in the first week], but one of them will probably sell 100,000 and the rest will underperform.” Three factors in particular come into play as music businesses are marketing and planning releases in the UK:  the festival season; The X Factor and Christmas shoppers. Retailers feel that music labels need to look to Adele’s strategy when determining artist release dates; she releases her album in January, which makes it stand out because she is one of a very few musicians releasing during that time and has little competition.

The September cluster of releases  the second quarter is showing album sales significantly down. In the second quarter of 2012, no album had sold beyond 200,000. Paul Williams, head of business analysis for the trade publication Music Week stated, “The result of this flawed strategy [by music companies] is a second quarter this year in which not a single artist album sold more than 200,000 copies across the three months and sales of the weekly No 1 sometimes dropped below 20,000 sales, the kind of chart-topping tally that not so long ago would not have even happened at the height of summer when the market virtually shuts down.”

Still, companies like Warner Bros Records said that they do not follow any specific marketing strategy, simply releasing albums based on artists’ schedules. The British Phonographic Industry (BPI) offered no comment.

Wide-Sweeping Anti-Piracy Strategy Featured in Leaked IFPI Report

A confidential report intended for internal use was accidentally released by the IFPI last week. TorrentFreak claimed that the report from April was created by the Head of Internet Anti-piracy Operations, Mo Ali and shows the organization’s strategy for major record labels regarding combating worldwide piracy. Details provided point to targeting everything from torrent sites, to cyberlockers and outlines exactly what the IFPI expects from Internet service providers, how effective they believe site blocking is and an analysis of the different ways copyright infringers are getting unreleased music from industry insiders.

The report is 30 pages and offers a global view of what it refers to as IFPI’s “problems,” “current and future threats” and how the industry has and should respond to them. IFPI offers up five solutions to suspected infringements: take down; disruption; investigation; lobbying; litigation. The document closely investigates the following digital music piracy issues and provides details about what the IFPI has already done and will do in the future to address them:

• Peer-to-Peer (P2P)
• Central hosting/cyberlockers
• Hacking and phishing attacks
• The rise of mobile data and applications
• Illegal pay MP3 sites
• Advertisers and payment processors
• Managing Internet service providers
• Site blocking

The IFPI also names specific individuals and organizations that they believe to be engaging in and perpetrating illegal behavior.

The report concludes that the IFPI believes site blocking will eventually provide the industry with a perfect anti-infringement solution, in spite of extensive studies that are proving that this is not the most effective solution for discouraging piracy:  “The effectiveness of such a ‘block’ will depend on the determination of the ISP subscriber
and the content/website provider to maintain access to each other and to use circumvention techniques to bypass blocking techniques.”

The report ends with a declaration that “co-operation, partnerships and information exchange” and strong relationships with law enforcement, judges and legal bodies will be the key to taking solid action.