This is What Monopoly Looks Like When You Round Up to Zero: Google Play’s Tone Deaf Advertising Campaign “25 Million songs for the price of an album”
YouTube’s Director of Artist Relations Vivian Lewit appeared on a SXSW panel this year moderated by Tom Silverman. I asked the panel a simple question from the audience as did a couple other audience members. My question was how much per stream does your service pay to artists? YouTube’s Ms. Lewit was the only one who dodged the question, but after a couple follow ups she confirmed it was less than a penny. Given the NDA culture surrounding Google, I was amazed to get that much out of her in a public forum.
Now I understand why.
In case you were wondering why IMPALA filed a complaint with the European Commission on Google’s monopolist tactics in licensing the new YouTube service, the Google Play messaging says it all. It’s a horrible deal for everyone except Google, just like YouTube. But the real reason its not a bad deal for Google has more to do with the non display uses of the music that these artists are helping to promote–very likely without their knowledge.
Non-display uses are the ways that Google profits from services that you don’t see–data mining is the biggest example of that. Just like Gmail allows Google to mine data from the contents of email, file attachments to the email and files stored in the same folder as the files that are attached to the message being scanned, Google Play will use music as a honey pot to draw users to the data mining machines.
And what is really insidious about the way Google uses music for data mining is that it attracts kids. As Money recently reported:
Google is working on versions of its services, such as YouTube and Gmail, that are specifically outfitted for children….Some privacy advocates are not particularly thrilled by the prospect of more children making Google accounts. Jeff Chester, executive director for the Center for Digital Democracy, told theJournal the new services could threaten the privacy of millions of children, and that his organization had already shared its concerns with the Federal Trade Commission.
Google Play (which is a rather whimsical brand to begin with) extends Google’s kid-targeted enterprise to hook them young on Google products–another reason to make it cheap for parents.
Of course, as we’ve shown previously, the “safety mode” on YouTube doesn’t keep out informercials for products like SeekingArrangement.com, the sugar baby/sugar daddy site implicated in the murder of a Google executive.
How much does Google Play’s slogan mean for artists? If you assume a digital album has a $5.00 wholesale price or thereabouts, that’s $0.0000002 per track as a royalty base price (before you apply the artist’s royalty rate). As Ms. Lewit said, that’s less than a penny. And since most royalty systems were not built to deal with $2E-7 as an monetary input, the system will probably round up to zero.
Now do you understand the reasoning behind non recoupable payments?
Of course you have to look at Google on a systemwide basis to understand the point of this. Google makes far more money selling advertising on pirate sites than it ever will make from Google Play. It makes far more money from data mining that it uses on all of its advertising platforms than it ever will make from YouTube. So this leads you to ask why do they have YouTube and Google Play?
Why did Don Corleone have the Genco Pura Olive Oil Company?
After our post yesterday about how Google drives traffic to pirate sites through Google Alerts (also supported by Facebook and Twitter), I got a chance to speak to Blake Morgan of ECR Music Group. (MTP readers will remember Blake from the #IRespectMusic campaign, still going strong.)
Blake had the same experience with his label mate Janita (whom we interviewed about her experiences in Washington, DC supporting the #IRespectMusic campaign).
The point of this is that Google knows how many DMCA takedown notices it has received for certain sites. Janita’s record was also pirated by myfreemp3 a site for which Google has received over 4,000,000 takedown notices just for Google search links. How do we know this? Google publishes the information in its “Transparency Report” (and for those who read this slide yesterday, that’s right, in one day the total number of notices Google received in 30 days increased by 141,467):
Janita’s record showed up in a Google Alert:
If you click on the link for “Janita” you are taken immediately to myfreemp3:
This pop up is still inside of the Google Alert email and has a link directly to the Janita page on the pirate site:
myfreemp3 even has the brass to scrape Janita’s Billboard Magazine album review:
There’s little doubt that myfreemp3 is a pirate site–Google alone has received over 4,000,000 DMCA notices for the site:
Here’s the point–if Google is told 4,000,000 times that myfreemp3 is stealing, why do they promote the site in Google Alerts that are indiscriminately emailed to hundreds of millions of recipients?
Blake Morgan had this to say:
Blake: Every single day. We get hundreds and hundreds per month, for all of our artists and each of our imprints.
Blake: Oh yeah, that’s the same one. It’s a Russian site that promotes the streaming and downloading––for free––of most, if not all, of our recordings. Our life’s work as artists is being stolen, right in front of us, and that theft is being promoted in turn, via Google alerts.
MTP: You often hear that there’s promotional value to these illegal sites. What do you think of that?
According to Kent Walker, he likes the trial court decision in Viacom v. YouTube, the massive copyright infringement case brought by Viacom, the Premier League and a number of other copyright owners. Why?
[T]he court has decided that YouTube is protected by the safe harbor of the Digital Millennium Copyright Act (DMCA) against claims of copyright infringement. The decision follows established judicial consensus that online services like YouTube are protected when they work cooperatively with copyright holders to help them manage their rights online.
This is an important victory not just for us, but also for the billions of people around the world who use the web to communicate and share experiences with each other. We’re excited about this decision and look forward to renewing our focus on supporting the incredible variety of ideas and expression that billions of people post and watch on YouTube every day around…
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tautology: needless repetition of an idea, especially in words other than those of the immediate context, without imparting additional force or clearness, as in “widow woman.”
Imagine you are trying to get a club promoter to book your band somewhere outside of your home base, perhaps somewhere you have never performed before. Remember–the promoter isn’t calling you, rather you are calling the promoter, club owner, talent buyer, whoever makes the booking decision in the venue you’ve never been to before.
Since the assumption is that you’ve never been to the club before, indulge my fantasy another step–you are able to get the promoter to take your call or respond to your email. A big fantasy, I know, but let’s go with it. Those who toil in this particular vineyard will know that what’s far more likely is that (A) if they’ve never heard of you, then (B) they don’t care about you in that ontological sense that only club promoters truly understand. But indulge me. (And be sure you also indulge the various streaming services such as Pandora that are selling this “data” snake oil.)
And indulge me one step further–assume that the real value of your “data”–i.e., the consumer behavioral data relating to your fans that you drive to the streaming services by promoting your record–is not more valuable to the streaming service in the aggregate than it will ever be to you individually. Thanks for that indulgence because that is a really big assumption.
Now imagine telling the club owner that the reason she should give a slot to you on her stage–and pay you for it–is because Pandora says that 50, or 500, or 5,000, or 50,000 users in the town streamed your tracks.
If the club owner takes pity on your mortal soul, she won’t just hang up on you right there. And if she doesn’t just hang up on you, what do you think she might say next?
She will probably be looking for some kind of real world confirmation that those streams mean anything. What might that be? A verifiable data point like you scanned x number of records in her town. Or that your offer of work is conditioned upon your pre selling y number of tickets–more likely that your ability to get paid anything will depend on you selling those tickets. Or that a local band that does well in the venue is willing to have you support them in their own show in the venue.
But do you really think that any club owner–and I’m not talking about house concerts here, I mean someone with a a liquor license and overhead, you know, a nightclub–would risk their own capital or opportunity cost because some company they didn’t know said that you got a few streams or views in the town? More likely in the zip code if they can even pin it down that far down the verifiable data chain?
Speaking of verify, how do you know that this information is correct? Because Pandora says so? Because Spotify says so? Absent any of these conversion factors like sales of tracks verified by an independent third party, presales or a local guarantor, why would the club owner take a chance?
And if they require these conversion factors in order to take a chance, why would they need the Pandora “data”?
If you deal in the physical world of vinyl or CD sales at retail or what’s left of it–like if you are a record company for example–substitute the club owner for the inventory manager or buyer for a local record store. You know how you would get shelf space, price and positioning in their store in the same circumstances? Because Pandora said so?
Not so much. You’d get into the store by reducing their inventory risk which almost always means adjusting the price for the vinyl or CDs to zero or near zero, or salting the full price wholesale inventory with free goods. For example, you could offer the store 5 or 10 CDs for free if they promised to put them on listening posts.
If you had a local street team, you might be able to wriggle past this standoff point by swarming the club owner or record store. In the case of the club owner that is probably going to require a bunch of street teamers who are old enough to get into the club, etc., but it could be done in theory.
Again–you can do that without the streaming data if you manage your fan communications.
We have some real questions about how clean this data is, how granular it is, and how it is derived.
Here’s where I think it ends up: What Pandora’s “data”–based on how much your tracks are being streamed on Pandora–tells you is how much your tracks are being streamed on Pandora.
Absent something that provides that conversion factor, those additional real world acts that involve more effort than just letting Pandora create a channel for you based on some other artist, this is just more Internet snake oil.
If this data is so valuable, what is Pandora doing with all the data it currently collects? Well, let’s see. Who handles all of Pandora’s advertising now? Pandora uses Google’s Doubleclick affiliate for its advertising sales. That would be the same Google that is a member of DiMA, the CCIA, the Internet Association and the Consumer Electronics Association and is actively screwing indie labels through it’s YouTube affiliate. That Google.
Pandora acknowledges to its investors that its agreement with Doubleclick exerts considerable influence on Pandora’s business. “We rely upon an agreement with DoubleClick, which is owned by Google, for delivering and monitoring our ads. Failure to renew the agreement on favorable terms, or termination of the agreement, could adversely affect our business.” I’d be very interested to know who gets that data now–is it already sold or bartered to Google through Doubleclick?
I’d love to be wrong about this, but I’m still waiting to hear exactly how this data is collected and collated to understand why it is not just another tautology from another Internet company that does not understand how to sell records, put butts in seats, or as we say around here, has no one who has ever humped a trap case.
What is far more likely than this mystery “data” being valuable to you, is that it is valuable to them–particularly in the aggregate. And since collecting this data is nowhere permitted in the terms of the compulsory license available to Pandora, it’s unclear who has the right to the data much less who has the right to sell it back to the artist who created it in the first place. Unlike compulsory licenses, interactive licenses have an entire negotiation about who owns the consumer data and it should be owned by the label or copyright owner doing the licensing at no additional cost.
This all comes down to the same thing: If streaming services can prove they are driving the sale of another good, that will be great. What we do know is that streaming appears to be a substitute for and is not driving record sales. Does streaming drive some aspect of the t-shirt economy? It’s hard to see how these services even do that much.
Thank you @jannarden: AMP Radio hears artist voices, does the right thing and drops the QuickHitz format! #irespectmusic
MTP readers will recall Jann Arden and the many artists who stood up to the challenge to artist rights from the “QuickHitz” radio format at a Calgary radio station. “QuickHitz” advertises itself as broadcasting “Twice the Music”–and gets over the space-time continuum by cutting in half the already short singles edits of popular music. (Full disclosure: I got to know and respect Jann Arden when I worked at A&M Records in Hollywood back in the day. Jann’s a real treasure and makes compelling records.)
That’s right–AMP plays more music by playing less. Dare I say it: Less is More. But let’s not rub it in–the station has seen the light after Canadian and American artists rallied behind Jann Arden to make their voices heard. It’s important to understand just how much chutzpa this takes–the stick that broadcasters have held over artists challenging radio for decades has been that silent threat to stop playing your music which helps to explain why U.S. radio doesn’t pay artists for radio play and why Pandora can routinely stiff pre-72 artists for even the statutory royalty that is paid.
So for Jann Arden, Ladies of the Canyon and many others in Canada to raise their voices as well as Blake Morgan, David Lowery, The Trichordist and many others in the U.S. to back their fellow artists does take real courage. And before you start complaining about artists whining (and yes, Bill, you know who you are), understand that this time it had nothing to do with money.
After a couple weeks of this, I saw this tweet appear:
According to the station’s management:
“It just came to a point where we said it isn’t worth risking the relationships with all of our content providers, the various artists that we play, at our radio station.”
It’s important to note that risking relationships with content providers is not something that seems to bother Pandora, Sirius or their friends at the National Association of Broadcasters, the Digital Media Association, the Consumer Electronics Association or the Computer and Communications Industry Association. Not surprising when you consider that the fluctuations in the stock float of the members of all these lobbying groups on a brisk trading day probably exceeds the market valuation of the entire worldwide music industry.
But the really great news is that AMP Radio heard the concerns of artists and did the right thing–they dropped the problematic QuickHitz format. AMP is to be commended for changing formats–one should not underestimate the costliness of this move by AMP. Rebranding a radio station is a costly enterprise and it really shows good faith on the part of AMP that they would be willing to make the move.
Great news indeed and AMP Radio is to be commended.
But the real lesson of this encounter is that the artists united will never be defeated and we have Jann Arden to thank for that teachable moment.