Warner, Universal Compete to be Worst Label by George Ziemann -- Sept. 25, 2007 Bronfman Eats His Words Then: "We advocate the continued use of DRM. The notion that music does not deserve the same protection as software, film, video games or other intellectual property, simply because there is an unprotected legacy product in the physical world, is completely without logic or merit." Edgar Bronfman -- PC World, February 10, 2007 Now: Edgar Bronfman, Jr., the Warner Music Group chairman, told Goldman Sachs investors in New York last week he was considering removing DRM from Warner's music downloads. "We need some online competition" for Apple's iTunes Music Store, Bronfman said. He conceded the iPod is "the default device" and iTunes the "download model." Wired -- September 25, 2007 Taking Stock of the Industry Reuters reports that Warner Music "is considering ways to reduce its exposure to negative Wall Street sentiment on the music industry." An excellent example of this "negative Wall Street sentiment" comes from the Motley Fool, who surmise that "RIAA's Day In Court Nearly Over" and go on to explain why "it's almost time for socially responsible investors to start looking at music publishers again, after their long industrywide hiatus from research lists." Back to the Reuters article, in which Bronfman offers two perfect quotes to help me illustrate the core problem facing the entire music industry today. "We need to figure out how to deliver value to our shareholders." Translated from bullshit speak, this means "We can't seem to make a profit and we don't know why." Profit is the only "value" stockholders understand, and it damn well better increase every quarter. What they really need to do is figure out how to create more value to the music fan. I don't know, artist development maybe? Improve their dismal success rate? Find new acts that appeal to more than a third of one percent of the country's population? Stop suing people? Fuck no. That's way too much work. Not part of the plan at all. They're going to do it the old-fashioned way -- steal more money from the artists, like take a cut of t-shirt sales and ticket sales. "Right now we're set up to exploit artist rights. We need to be in position to exploit other rights." I stopped buying music to deprive the record labels of income, but am still willing to go to a concert or buy a t-shirt because I know the artist will make some money from it and the record label won't. Bronfman wants to change that dynamic. Meanwhile, in Paris... Vivendi Chief Executive Conehead Jean-Bernard Levy labelled the contract terms between its Universal Music Group and Apple Inc. as "indecent", which is really pretty funny, considering the record labels get 70 cents of the 99 cents per song from each song sold at the iTunes Music store. The indecent part is that the artist only gets 15 or 16 cents. Levy also said that the price of a new release should be higher than the price of a 30-year-old classic. Of course, he's not suggesting dropping the price of the old stuff. They still think you're willing to pay maybe $2.49 a song, which would probably raise the artists' cut to an awe-inspiring 20 cents. The artists would make more money if we could just buy the tunes directly from them for a quarter. More Universal Stupidity This one comes from the Washington Post: "Los Angeles area resident Troy Augusto makes a living by scooping up collectible albums at used-record stores, then selling them for a profit on the eBay online auction site. Many of those compact discs, marked 'for promotional use only,' were originally given away by record companies to radio stations and music publications as a means of promoting the music. "In the case in question, Universal claims that it owns the promotional CDs and that Augusto's practices infringe on its copyright. Augusto 'has illegally sold promotional CDs belonging to major record companies' Universal says in the suit filed in May in U.S. District Court for the Central District of California." I really don't think it's necessary to explain why this is stupid. But let's just run down the facts for fun. Relying on a Wikipedia entry, "The first-sale doctrine is a limitation on copyright that... allows the purchaser to transfer (i.e., sell or give away) a particular lawfully made copy of the copyrighted work without permission once it has been obtained. That means that a copyright holder's rights to control the distribution of a particular copy end once that copy is sold." Augusto buys CDs at used record stores and resells them. Universal didn't send them to him. When I used to do newspaper work, I received quite a few of these promotional CDs. Didn't ask for them. Still have some. I'll do whatever the hell I want with them. I also understand what it's like to be unnecessarily hassled on eBay by the record labels. In addition to the first sale doctrine issue, it would seem that the legal angle to pursue is to examine the financial records. If Universal still owns all the promotional CDs they've "given away", if they still belong to the record companies, then they're certainly on the books as an asset, just like all the artist advances, which live under Accounts Receivable. If they were written off as an expense, but they still "own" them, it would be off the books, and that sounds like the basis of a tax fraud investigation. Motley Fool is right. "...it's almost time for socially responsible investors to start looking at music publishers again..." Personally, I would have left out the word "almost". It's way past time.