My involvement with QTrax - Mike talks the talk

In June of last year, I flew to Sydney with three senior executives from the Singwell International / Qtrax organisation to meet with representatives from APRA (Australasian Performing Right Association), to discuss a ground-breaking experimental agreement, which would see revenues generated from (free) music downloads using Qtrax software returned as royalties to the composers per APRA.
At the time, the mood for such an agreement seemed positive, and, with APRA’s blessing, it was decided to take the message of the impending agreeement and spread it to the Asian market via interviews with CNBC in Singapore and CNN in Hong Kong.
Just a few weeks later I found myself on a plane with my manager, Jenny Klepfisz, her husband, Allan Klepfisz, (CEO of LTD Network), QTrax publicist Deborah Grey, and Chai Ong, Singwell financial advisor.
I have to say I was more than slightly trepidatious about being interviewed on a subject I could only speak lucidly on for about 15 seconds – and heaven forbid I was asked a technical question - but Allan and Deb assured me that I could, and would, be coached thoroughly on the subject so that I could pass as a competent interviewee. So, whenever the opportunity arose, I listened attentively to Allan on the frequent occasions he launched forth in his impassioned and articulate fashion on the subject, and soon began to pick up a pattern I thought I could follow.
My first interview was with a Singapore newspaper, the Straits Times, and thankfully Allan did most of the talking. The article duly came out the next day with an alluring shot of Kylie Minogue as the hook, and all of Allan’s quotes attributed to me, making me sound quite knowledgable.
I was then taken to CNBC for my first solo TV interview. It seemed to go OK, and I apparently managed to look calm and collected, even though I was churning inside. It’s so different talking in front of a TV camera without an audience or band to bounce off and a guitar to hold on to.
Then, on to Honkers, and a very different atmosphere; for instance, English is aggressively being replaced with Mandarin in conversation and signage, and there’s little of the consideration shown to tourists as in Singapore.
I talked to a local computer magazine journo called 'Maverick' at some length about the QTrax software, (Allan again filled in the technical details, much to my relief) but it turned out that Maverick had lived in Melbourne in his student days and was very keen to talk about the skiing - one of the few sports in which I have no interest at all. His dubious sexuality and softly spoken Hong Kong English made the interview quite a strain - although Allan later triumphantly produced a copy of the magazine replete with the interview (in Mandarin of course!).
The highlight of the visit was to be an interview that evening on Star TV, but we had a radio interview at RTHK 3 in Kowloon in the afternoon with Natalie Haughton as a warm-up. As it turned out, Natalie was as smart as she was charming, and although she knew nothing of the technicalities of the subject, I felt rather nervous when we ventured into areas I was quite uncertain about.

The much anticipated interview on Star TV was something else again. Admittedly, we left a little late to get to the studio. Well, the whole party had to go, and this meant taking two taxis. Two taxis in rush hour, and our taxi driver could barely speak English. And it turned out he didn’t know his way round Kowloon either, so he took us to the Kowloon taxi rank and dumped us. The driver in the next taxi we boarded couldn’t speak English at all, but by now it was so late we couldn’t turn back. Allan called Chai in the other taxi and got him to speak Cantonese to our driver, with only the faintest notion if we were headed in the right direction.
I don’t know how we did it, but we got there, and with only minutes to spare I was bundled into the studio and interrogated by a cheerful Indian-Australian expat in front of an audience of some 24 million!
We had a slap-up meal that night on the mountain ridge overlooking Hong Kong, but I was so shaken by the evening’s experience I couldn’t really enjoy the meal.
The next day we went to CNN and I did an interview with the lankily attractive Kristie Lu Stout on the issues of free downloading and music piracy, which is somewhat of a bigger problem in Hong Kong and Asia in general. With any luck,* you'll be able to check out the interview - it gives a concise overview of the situation as it was then, and pretty much still is now. (*This is an enormous file - if you don't have cable you should find something else to do for half an hour..)
When we got back to Australia, we discovered that APRA had decided not to go ahead with the agreement. Allan’s resolve wasn’t shaken – in fact, he determined to take his idea to the US, and talk to some movers and shakers in the music industry, as well as APRA affiliates BMI and ASCAP.
Over the past six months or so he's done just that, and with some very interesting results. Watch this website for a pivotal announcement -coming soon!

What happens to copyright when the downloads are free?

Until today, software companies such as Kazaa, Morpheus etc.that facilitate free music downloads for a generation of music consumers, have not paid a cent to the originators of the copyright.
The major record companies have uniformly rejected the concept of free music downloads and have tried to first ignore it, then crush it, then buy it out (e.g. BMG and Napster), and now they’re moving to legislate against it, with rhetoric achingly reminiscent of the impotent copyright warnings you see on your rented videos. (Interestingly, the movie studios have just begun a US-wide campaign against downloading movies from the Internet).
In the meantime, a large section of the youth market, the very market the major record companies feel the need to concentrate on, is turning its back on the industry and gutting sales of the latest hit songs by downloading and burning them onto their own personalised CDs.
Music artists themselves are divided over the ethics of free music downloads. Janis Ian wrote a famous open letter (and an equally famous follow-up) to the record industry in favour of the principle of free downloads a year or so back, and other popular recording artists have spoken out in its defence, even the befuddled Michael Jackson. Equally, there are other artists who support the record industry position (see the Laura Holson article) and it’s true to say that the issue of copyright in general is generating much interest and discussion – and passion.
There is a growing body of opinion within the record industry that the major record companies might be better advised to accept the reality of free downloads and to see where they might learn, and perhaps benefit, from it.
As we all know, failure to adapt leads inevitably to extinction, but the signs are that the recording industry as a whole, once inextricably identified with youth and vigour, now seems unwilling to heed the portents and shift with the times.
In the meantime, the peer-to-peer downloading scene is evolving daily. Microsoft is now offering P2P tools on its latest versions of Windows XP and Amazon offers a free music download service with the emphasis on sampling new artists. And, perhaps most significantly, Apple started a service in April (available exclusively to Mac users and from an initially modest repertoire) with high audio quality tracks (comparable to CD quality apparently) available to download for ninety-nine cents each.
While proving there are people out there who want to do the right thing, the fundamental issue cannot be avoided – namely, there is a generation of music consumers out there that has never paid for music on-line, and, despite all the predictions (i.e. indifferent quality wouild drive them back to the fold) without some sort of inducement, it probably never will. (See 'The Empire strikes back' for accommodating shifts in recording industry policy).
The issue of copyright is at a very interesting, if not crucial, stage. That the issue has reached the proportions it has can be attributed in large part to the initial lack of response from the industry/industries, and subsequent negative, and even malevolent, reactions through the American courts.
I suspect that somewhere along the line there’s going to have to be a concession by all the ‘legtimate’ players that there is another player in the market and it’s not going to go away. The sooner this enfant terrible is accommodated, the better it’s going to be for everybody.
The signs are that conspicuous success in the music and movie business is ultimately going to have to be scaled down. I don’t think this is necessarily a bad thing; there’s nothing more embarrassing than a millionaire musician trying to maintain street cred with one eye on the stock market.
Mike Rudd

Artists Fight Music File-Sharing - Laura M. Holson Sept. 2002

WHEN it comes to musical styles, Britney Spears, Luciano Pavarotti and Sean Combs, lately known as P. Diddy, do not appear to have much in common. But in a series of advertisements that begin running today, they are joining with 86 other recording artists to speak out against unauthorized music file-sharing, claiming it threatens the livelihood of everyone from recording artists and writers to sound engineers and record-store clerks.
"Would you go into a CD store and steal a CD?" asks Ms. Spears in one commercial to be shown in coming weeks. "It's the exact same thing, so why do it?"
In a print ad, Shakira, the hip-swiveling Latin pop star, urges the public to just "Say no to piracy." And Mr. Combs — in a statement released by the Recording Industry Association of America, which is largely financing the multimillion-dollar campaign — pleads with consumers to "Put yourself in our shoes!"
The new campaign, which officially runs under the auspices of a coalition of music professionals called Music United for Strong Internet Copyright, was developed by Amster Yard, a division of the IPG Sports and Entertainment Group, which also represents the Recording Industry Association of America. It comes at a difficult time for the recording industry. Sales of CD's fell nearly 7 percent during the first half of this year, largely, the industry claims, because of Internet piracy and file-sharing.
The campaign breaks the same day as the House of Representatives Subcommittee on Courts, the Internet and Intellectual Property begins hearings on piracy and the Internet. The recording industry has long been criticized for failing to assuage disillusioned consumers who want cheaper and more accessible music over the Internet. The Department of Justice, meanwhile, is investigating whether the paid on-line music sites developed by the record labels violate antitrust provisions by hampering smaller competitors.
The recording industry, too, has been criticized by artist rights groups, who complain that the industry's accounting rules favor the labels and that the standard seven-year recording contract is akin to indentured servitude. On Tuesday, in fact, representatives of the Recording Artists Coalition, which include the former Eagles singer Don Henley who is not included in the new campaign, were at a California State Senate hearing testifying about the industry's accounting practices. But mutual interests have brought them together for this campaign against file-swapping.
What will be interesting to watch, industry executives say, is whether consumers are alienated by a campaign that speaks of the travails of wealthy artists like Mr. Combs, who has some fans who are hard pressed to afford not only his shoes but also the suits and jackets he sells under his Sean John clothing line.
"This is not a campaign created to engender sympathy," said Hilary Rosen, chief executive of the Recording Industry Association of America. "We are saying there is a significant problem and it is affecting us and it is illegal."
David Munns, the vice chairman of EMI Recorded Music, added, "There is a whole generation of people that don't know illegally swapping files is stealing."
Not everyone agrees that the most pressing problem facing the industry is theft. In a study released yesterday by KPMG, the tax and financial accounting firm, media companies were chided for spending too much time combating pirates instead of tackling the more difficult issue of finding new ways to profit by distributing music and movies online. And other critics say that the industry's poor performance in finding new artists that appeal to consumers is more responsible for the malaise than any threat from the Internet.

Marketers try to turn Web pirates Into customers - Amy Harmon, NY Times Nov.

A growing group of online marketers have a new name for the millions of people who use Internet file-trading software to steal music: "customers."
The ranks of these marketers include independent bands with little to lose and established companies like Microsoft. What they have in common is that they are starting to view the masses of Internet pirates as a possible source of revenue. They have begun to experiment with promoting their wares on file-trading services, which are typically used to obtain unauthorized copies of music, movies or software.
Some entertainment industry officials condemn those marketing efforts as giving support to services that encourage the theft of other people's intellectual property. But the organizations promoting file-traders see it as a way to lure people away from piracy by providing them with authorized material to download — and, in some cases, asking them to pay for it.
"We're going to find that people labeled as hackers, thieves and pirates will convert and change patterns to pay for content," said Kevin Bermeister, chief executive of Altnet, which acts as an intermediary for KaZaA, the most popular file-trading software, and organizations that want to distribute legitimate materials.
Under the deal with Sharman Networks, KaZaA's distributor, Altnet's Software is automatically installed whenever someone installs KaZaA on a PC. Companies and artists seeking to market music, software or other material to KaZaA users pay Altnet to place their material at the top of the results of searches. AltNet shares the revenue with Sharman.
Users who type in "Dave Matthews Band," for instance, will get a list of the artist's tracks on the screen. By clicking on a blue icon, they can download the music free. But now, Dave Matthews fans are also likely to see, at the top of the list, gold icons offering alternative acoustic rock from the Jay Quinn Band of Dallas. That is because Mr. Quinn's manager, Cornerband, is paying Altnet to have his music appear in KaZaA listings when someone searches for music by Dave Matthews, Moby, Beck and David Gray, among others.
Cornerband, in turn, charges artists to distribute songs in a technology wrapper, supplied by Microsoft, that can prompt users to pay for a track or buy a CD when they try to play the music after a preset time period. Since about three million people are typically using KaZaA at any time, the audience that has been exposed to Mr. Quinn's music since the promotion began in September surpasses the number who have ever seen him play in local Dallas clubs.
For Cornerband, the KaZaA technology is attractive not just because of the large, interested audience using it, but because Cornerband does not incur the transmission expense of distributing music from its own Web site. With KaZaA's peer-to-peer system, users download music or other material from each other, rather than from a central site.
The 29 entertainment companies that are suing KaZaA's distributor, Sharman, and other file-sharing companies, are more focused on what the mass audience is generally looking for: unauthorized copies of popular music and movies that they can get without paying. The mainstream entertainment companies take a dim view of those who are supporting the use of the technology, albeit for a legitimate use.
"At a time when the public is especially hungry for good corporate citizens," said Carey Sherman, a lawyer for the Recording Industry
Association of America, "it's surprising that any legitimate interest would consider giving financial support to a pirate service like KaZaA that illegally traffics in the copyrighted works of others."
One executive at a major record company said that he and many colleagues would like to use a service like Altnet to distribute their material but that their lawyers would not allow it. Some entertainment industry lawyers fear that if Sharman can prove that KaZaA has legitimate uses, it will be harder to shut it down. Others, however, say that by displaying some material more prominently than others, Altnet's service helps to prove their point that KaZaA could block all copyright material from appearing in its search results. Sharman has maintained that it has no way to control what files users chose to use the KaZaA software.
Robert Schwartz, a lawyer for some of the studios and record companies,
compared Altnet's role to that of people who hand out fliers at swap meets organized to trade bootlegged copies of movies and music. "It may or may not be illegal," Mr. Schwartz said, "but it seems like a crummy way to make a buck."
Microsoft, for instance, paid Altnet $5,000 to list the trailer for a Lions Gate film, "The Rules of Attraction," at the top of certain searches for 30 days when the film was released last month.
Lions Gate, an independent studio, wanted to reach KaZaA's large audience of college students because it thought that many would be interested in the film. Microsoft wanted to showcase its Windows Media software, which lets entertainment companies distribute material securely over the Internet with high-quality sound and video. When users download the trailer video, they are prompted to upgrade to the new version of the Microsoft software.
"We'll never spend as much as Sony, but this is one way we can compete with the big boys," said Tom Deluca, vice president for new media at Lions Gate, who added that after his trailer promotion, he had received several expressions of support, tinged with envy, from counterparts at Hollywood studios.
Microsoft also paid Altnet $12,500 last month for a 60-day promotion of a video for Tony Hawk's "Boom Boom HuckJam," a multimedia punk-rock tour. By Hollywood standards, the promotions were small, and Microsoft executives maintained that there was nothing inherently wrong with peer-to-peer technology like KaZaA's.
"Microsoft clearly does not promote or support piracy of any kind," said Erin Cullen, product manager for Microsoft's digital media division. "But in terms of looking at new ways to reach an audience in a secure way, this may be an avenue that will become useful."
It is far from clear whether people who come to a site intending to get free stuff can be induced to pay with a gold icon that promises a high-quality file, and the numbers so far are probably too small to draw a firm conclusion.
But AtomShockwave, an independent film and software distributor, said that 400 people had bought its PhotoJam software in the last month as a direct result of its promotion on KaZaA. The firm distributes a free version on the network; people can buy it for $35 to get more features.
Trymedia Systems distributes the first few levels of some video games over KaZaA and Gnutella, another peer-to-peer system, and prompts users to buy the software if they want to finish the game. The company says that with some products, like Beach Head 2002, a shooting game, as many as 10 percent of those who download the hobbled version from peer-to-peer networks go on to buy the software.
Of the three independent artists — Barrington Levy, Brooke Allison and
Johnny Virgil — promoted by Altnet in search results in the last threeweeks, about 20 people a day are paying 49 cents for a song when they are prompted to after a week of listening to it free. Soon, Altnet said, it will allow people to pay via their phone bills or with prepaid telephone cards.
Unless Hollywood companies begin paying to distribute mainstream material, analysts say it is difficult to imagine people turning to KaZaA primarily to buy digital media, rather than getting copyright works for free. And if a court orders that the software begin blocking copyright works, the market for legitimate material may quickly evaporate.
For now, however, the two continue to coexist. A recent search on KaZaA for Lions Gate's "Rules of Attraction" found several copies of the trailer available for downloading — as well as the full movie, which is still playing in theaters.

Universal to permit downloading - July 2002

The Universal Music Group said yesterday that it planned to permit Internet users to download songs and make homemade compact discs from music contained in roughly 1,000 albums in its catalog.
This is one of the first instances of a record company's making a large
catalog of music available in the MP3 format, a popular file type that has become controversial because files can easily be shared via e-mail. Under the deal announced yesterday, the music will be available through emusic.com, a start-up company acquired last year by Vivendi Universal, which owns Universal; unlimited access will cost $120 a year. The music available will be drawn from the company's back catalog.
Matt Richtel (NYT)

Earthlink to run music service - Andrew Zipern (NYT)

EarthLink, the third-largest Internet service provider, released an Internet music service yesterday that is intended to provide an alternative to illegal file-swapping services. The new service, EarthLink Digital Music — unveiled with the privately held subscription service FullAudio — will let users download up to 50 songs a month for $9.95, or 100 a month for $17.95. FullAudio offers music from BMG, EMI Recorded Music, the Warner Music Group and the Universal Music Group. The service may face an uphill battle, however, as few pay services for digital music delivery have done well.