P2P In Review


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Everyone Suing Everyone Else

It looks like the RIAA lawsuit plan is largely a geographical one. The first round seemed to be New York-based; the next seems to center around St. Louis.

Who is next? Who knows, but the pattern is likely to continue. It guarantees at least local media coverage, and maximizes the impression made in a particular locale.

Some ISPs are going to court to quash subpoenas, but that’s mostly a public relations operation. They could get lucky in court, but even if they don’t, their actions tell their customers, “We’re on your side.”

You have flurries of lawsuits by P2P software makers and vice versa, but what’s interesting about those is that the P2P software folks seem to be getting increasingly desperate to establish some sort of legitimate relationship with the record companies.

Considering that the RIAA and Company rather understandably finds theft enablers who can’t even get a large proportion of their users to accept their advertising less than suitable business partners, so far, they’ve said, “Hell, no.”

It’s hard to see how the U.S. legal system in the long run given current laws could make them (though some wacky judge might make such a ruling).

Opening up competition is a political matter. If this is going to be opened up, it will be Congress that will do so.

New Myths of Our Time…

Getting Paid For Record Sales…

Alternatives To The Record Companies?…

Magnatunes and CDBaby.

The deal is:

You’re on your own to record the music. Submit it to the place, and if they like it, they’ll sell it for you. Promotion is either through Internet radio stations (Magnatunes) or simple webpages, search engine listings (CDBaby) and streaming audio.

Sales are either through downloads (Magnatunes) or sale of CDs that you make for the company (CDBaby).

What do they get out of the deal? Half of sales revenue (Magnatunes) or $4 a CD (CDBaby). The act gets the rest. (CDBaby will also act as your agent to sell digital downloads to others like iTunes.)

How much do they charge per album? Magnatunes suggests $8 an album, though it will let you pay as little as $5 or as much as $18. Moat of CDBaby’s albums cost $10 or more (and if it’s selling well, rather more than $10).

Paradox On Top Of Paradox

On the one hand, you can’t expect to ever make very much money from these companies. They just don’t do very much for you.

On the other hand, the amount you do make may well be a lot more than what you’d get from the established record companies. Maybe. Remember, no money up front for signing, no advances to pay for anything. This is just a cash-and-carry business.

Grow a third hand, and while it seems that these companies are getting paid an awful lot for doing very little, they’ll probably not make money simply because of the low volume of sales they can expect from each act. There’s no economy of scale here.

Mutate a fourth hand, and that means prices stay high for the consumer. Magnatudes is trying to pass the savings from digital distribution along, but 50% of $5 is only $2.50. That may well be better than you’d get from RIAA and Company, but in return, you pay all the expenses of the album upfront, and you’re the one out of pocket if the royalties don’t meet the expenses.

With CDBaby, you set your price, which means more money per album, but again, you take all the risk, and $10 per album isn’t too good if you only sell 23 albums.

Chickens And Golden Eggs…

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