So much of today's music is plagiarized, no wonder no one wants to buy it

[This is a response to Bob Lefsetz' blog post yesterday, “Today’s Music Business Paradigm.”]

The reason that records can't be sold is that popular music (rock, r&B, rap, country) is in a stylistic rut or may be just a spent genre.  So even today's originals are essentially cover versions. "Standing on the shoulders of giants" ... yeah, and ripping the giant's flesh off.  That's ok for the live set because there are young folks who want to see young people full of energy doing that music (rather than the original act which is by now old/fat/bald/out of tune .. or dead).  But the *song*, as a commodity, is valueless, and even the young buyer knows that.

But longterm ... for someone who is not just plagiarizing someone else's act ... and has music that other people truly value ...  the recordings themselves must be bought and sold just like the old days.  (As you know, we have a way to do that: Registration + Verification + Immobilization = Monetization.  www.Thedce.com )

In the 60s and 70s there were a ton of cover bands in every city, making an OK-living as local heroes and playing sock-hops etc.  They might have even attempted one or two originals -- that were thinly-veiled homages to the Beatles, Kinks, Zeppelin or whomever they were covering.  But, notice, they didn’t independently release their crap and they sure didn’t get signed.  Because they didn’t have the technology to make cheap recordings and shelf-space in record stores was limited.  Transported to today, all that stuff gets released, and it's 95% cover versions ... but it's just as valueless as it was in the 60s.

But you get me one song that is truly original and saying something .. a song for which there is no substitute, then,  there's no amount of money I won't pay to have a legal copy that I get to own and keep, wherever I move, live or have my being (e.g. Michael Sport Murphy's "The Night Surrounds" on Kill Rock Stars.)  And I think everybody is that way about at least a few records in their life.  Young musicians just need to make those kinds of records (and push their indie record companies into adopting universal registration, of course).

The Beatles on iTunes and the folly of The 'Music Rebuy' Strategy

Have you gone out and rebought all your Beatles collection on iTunes yet?

I didn't think so. (-:

There is already a lot of Beatles material in mp3 form. Some of the mp3s are legal, and tons are illegal.

We make the illegal MP3s less valuable. Paul, Ringo and Yoko should thank us. Apple (the computer company!) should thank us.

But if you buy a Beatles download today, will you be able to sell it, lend it to a friend or leave it to your heirs? You should be able to do it. But just try it! If you are not a member of the Digital Content Exchange, you can't do it. There is no mechanism to do it. If you are not a member of the Exchange you are wiser to buy the physical CD or vinyl, and ripping that, than going to the iTunes store, because then you can have full ownership rights. (Membership in the Exchange is free, by the way).

You can already see why the failure to secure ownership rights in cyberspace encourages piracy. If my choice is between one digital download that I can't sell, lend or bequeath which costs $1.29, and one digital download that I can't sell, lend or bequeath which is free, which one am I tempted to choose?

The Solution, then, is for those who want to exercise full ownership rights over their lawfully bought music, in cyberspace, to register those purchases with the Exchange. You register your music with the Exchange by letting the Exchange a) verify what you own, and b) immobilize it so that only one person at a time can use it (no "file sharing").

Among the legal Beatle mp3s, some originated as rips from vinyl and some originated from rips of CDs. Now legal downloads join the mix. Welcome to them! All three types of legal mp3s can be verified and immobilized through the DCE.  No illegal mp3s need apply!

*p.s. In law, leaving something to your heirs is called "bequeathing", whether it's by a Will or simply by your children taking possession of that record collection in the living room after you pass on.

R.I.P. Limewire. Long live: millions of mp3s

So Limewire has complied with a shutdown order from a judge. That appears to be the final nail in the coffin as a file sharing service. But if you think that Limewire is "over", think again. What happens to all the counterfeit files that Limewire users downloaded? They live on, stronger than ever, courtesy of software that helps you do state-of-the-art stuff with your music and doesn't bother to distinguish between stuff you lawfully purchased and bogus stuff.

State-of-the-art stuff like:
• Organize it
• Provide album art for it
• Upload it to neat mobile players and phones
• Stream it (and in some cases download it) back to you from the cloud.

Software like:
• iTunes software
• mp3tunes
• mSpot
• Simplify Media
• Soundcloud
• Audiobox
• drop.io

Since Limewire launched over ten years ago, that's got to be millions of mp3s out there. Diluting the stock tremendously. If I go to Amazon and look at the market for a recent best-selling CD and see dozens of CDs available for a penny one more time I am going to barf.

The Digital Content Exchange is a system for online verification of the valid ownership of music, books and videos without the use of DRM, scanning a person's hard-drive, invading a user's privacy or violating net neutrality. And it is completely voluntary. When will the content industries turn to it?

Update 11/19: RIAA wants revived LimeWire dead and buried. Good job, record industry. Now, what about the millions of mp3s that Limewire provided illegally? Gettin' around to that?? And what will the next Limewire be, and what will the RIAA do with all those counterfeit mp3s that will have flooded the market. In other words, when are we going to stop playing Whac-a-Mole and move to a registry system for music?

The RIAA today

We had an hour-long discussion today with one of the Vice-Presidents at the RIAA.

(If you are wondering why we are talking to the RIAA, or why we talk to anybody, please see this early blog post. In short, we talk to everybody who has a stake in music, videos or books. The RIAA certainly has a stake. There are no winners or losers when the Digital Content Exchange is implemented. This is because it is just a better way of doing things, period.)

The discussion was initially quite rocky. There is a "mind set" about what works and what "can't work", which was fully on display. (Of course, the definition of what "can't work" in the music business is everything-they've-tried-for-the-last-fifteen-years.)

To their credit, however, the RIAA veep worked through that mind-set, we ended up having a good exchange of views and they have requested a further round of discussions.

One of the reasons that it is so hard for folks in the music business to "get it" (myself included*) is that the DCE involves Outside Know-how. Understanding the DCE invention requires the setting aside, momentarily, of everything you know or think you know about the music businesses. The DCE employs novel and non-obvious aspects from other industries/fields that are not thought to be directly related to music. These industries/fields include financial securities, commodities trading, escrow, banking, depositary institutions, currency (medium of exchange) and the use of Registries in either law or voluntary arrangements. These industries/fields have all faced a problem similar to the one presently faced by the music industry. In our analysis, the problem can be summed up quite handily as a counterfeiting problem. (More precise than the word “pirating”). Among the solutions we borrow from these other situations are: verification, immobilization, registration, digitization and ‘recognition of fungibility’.

Then, we talk with the IFPI tomorrow.

* I am what is known as an entertainment lawyer, though most of my current work involves what I call meta-entertainment. Once the DCE restores the music business to profitability, I can go back to being an entertainment lawyer full-time (because I love it).

The 'Out of St. Louis' Theory

People pay less attention to where you are located than they used to in business. Sometimes, they don't even know where someone is emailing or calling from, and don't care. But it wouldn't take more than a few seconds to Google the fact that the Digital Content Exchange is from St. Louis. Then, you would have to decide if it's likely that the solution to the Whole Digital Music Mess can come out of a city ranked only 18th in the US for population and equidistantly far from L.A., San Francisco and New York.  And would you pick up the phone if it was someone from St. Louis calling with that solution?

But it happened before, when St. Louis' Bridge Data Company provided the innovation needed for the financial securities industry to thrive and prosper under the new digital landscape of the 1970s. The technology developed by Bridge was sold for 40 times its original investment, purchased by Thomson Reuters, and aids in the buying and selling of stocks to this very day. The developer of Bridge's technology, James M. Yates, has been working exclusively on the media industry's digital problem since 2002 and filed US patent no. 10591416 (priority date March 4, 2004.)

I'll spare you all the theories about folks in NY and LA not being able to see the forest for the trees, about St. Louis being the crossroads like ancient Phoenicia, and that since St. Louis was started as a fur exchange that exchanges of fungible commodities are in our blood. But the music industry needs an Exchange and the know-how to create one is here, in 18th-ranked St. Louis, with Jim Yates and his tiny team of programmers. A good start would be for the entertainment and book industries to realize that they have a fungible commodity on their hands, and what that might mean.

I admit, I might not even pick up a call from Cincinnati or Des Moines. But I ought to.

New Way for Artists to Monetize?: Get Paid to Stop Playing

A Seattle man has offered the band Weezer $10 million to retire. He believes the band should not be still performing, "15 years after they’ve [stopped being] musically relevant".

My only question is, how long before the "music should be free" chorus includes this in their list of the multifarious ways that you can monetize music without selling CDs or downloads?

Meeting with IPFI Postponed

At the last minute, the meeting we had scheduled for yesterday with the IPFI (representing the worldwide recording industry) was postponed for two weeks by the IFPI. They have looked at our links and apparently want to talk to us. What about, we still do not know.

We want to be as open as possible about who we are meeting with and when. We do not want anybody to say, "Oh, they were having secret meetings with the record companies back in October 2010. They are in the record companies' back pocket" We will meet with anybody. This is because we are the solution for everybody. Not just record companies (though they need us pretty bad right now because their business model seems to be directly affected by the "incoherence" of digital space, which we resolve.)

We are the solution for listeners, watchers, readers and students. We are also the solution for artists, authors and filmmakers. We are the solution for music publishers, video manufacturers, retail stores, Netflix, Blockbuster, public libraries, universities trying to control the costs of education, Amazon and Kindle. All these trades will thrive and prosper under a Digital Content Exchange. In fact we are the solution for everybody, except the pirate. Him, we put out of business.

Counterfeit: A Fresh Way Of Looking at the Phenomenon of 'Illegal Downloading'

The music phenomenon of “file sharing” can profitably be analyzed under the concept of “counterfeiting”.

Let us take the example of a digital download purchased through iTunes by Al. This is a legal purchase. Think of a dollar bill legally pressed by the mint. Now if Al takes that song and copies it for Bob, there are now two “bills” in circulation: one counterfeit and one legal. Note also that the real item loses value because of the higher quantity/availability. There is a reduction in value of all outstanding bills issued, because of the counterfeit.

If Bob puts that same song into his iTunes account or … worse yet … loads it onto his iPod, Apple is helping him “use” his counterfeit item, just like someone went to a bar which advertised “we take counterfeit currency.” This is the case for any player that does not check the ownership of the track, which is all of them because there is no way for them currently to accomplish this task.

Even worse, if Bob (the one with the illegal copy) takes the download and with his favorite music locker service has the cloud service copy the item into the cloud, there are now *three* copies, one legal and two counterfeit.  That locker service has given the illegal user even more power over what he gained illegally.

The music industry’s problem, of trying to stop illegal downloading, is much the same as the U.S. Mint’s problem of stopping counterfeiting of currency. But there is no secret lair to “bust” where the bad guys are sitting at the printing press counterfeiting bills. The printing press, in this case, is billions (potentially) of personal computers worldwide. So, forget about the printing press, you have to fight counterfeiting at the user end, i.e. the bar or restaurant where the counterfeit “bills” are being accepted. (Which is a strategy used by money counterfeiting enforcement also.)

A bar or restaurant might scan every bill and upload it to a central FBI database that checks for counterfeit. Banks do this now with most cash deposits. iTunes, and the other places which accept counterfeit “bills” indiscriminately with real ones, can quite easily check with the Digital Content Exchange to see if the user’s song is counterfeit or not.

It takes less than a second.  But it's not being done. Why?

The answers are legion.  But the bottom line is, music listening services are trying to compete against a system that does nothing to reject counterfeits.   No wonder they're not paying the artist very much. And those who don't trust music listening services to always be there, are keeping an illegal copy on their hard drives, because the companies that maintain music files, and allow them to be played, refused to distinguish between a paid for copy and an illegal copy.

The same problem applies to movies, books and games.

Edited October 22, 2015.

Hype vs. Innovation: Music Startup 'Beyond Oblivion' Highlights the Age-Old Battle

I naturally recoil from hype like “Music Liberation” and gimmicks like a “Countdown to Insurrection” (currently "12 days 14 hours 46 minutes and 17 seconds"). Even the name itself, Beyond Oblivion, is over the top.

It’s natural to be proud of your invention. But anybody hyping that much makes me think immediately the Emperor has no clothes. We have been working on the Digital Content Exchange (boring name isn't it?) for 8 years. That is a good sign that we're on the right track because a problem as big as piracy (a better way to put it: artists not being able to control the use of their creations in digital space) is a big problem that takes a thoughtful solution.

The key thing to recognize is that it is not a legal problem, it is a technological problem. Solved the same way we solve everything else in society since the Cotton Gin (and of course loo-o-o-ng before that): innovation. What has set the industry on the wrong road IMO is too much chasing of hype without innovation. Not having the patience or taking the time to assess new ideas and innovation. The music industry has adopted the same policy for music start-ups that they used for artists in the 1990s and 2000s: look for the buzz, and then sign it to a contract. That may be okay for a pet food website ("How many users do you have? Sold!") but it is not a mature way to go about solving a technological problem of this magnitude.

We don’t need hype, we need a solution. I guess when it comes to solving this problem, we are asking the music industry to go back to 1970s style A&R: listening to demos quietly and thoughtfully and deciding, "Is this the right stuff?".

Newscorp has invested in BO. I hope this time they got it right.

Update 1/4/2012: gone before launch.

(Thanks to James Erik Abels for the news tip. Check James out at tmmnews.com)

Biting the Hand That Fed: 'Mere Changes in Delivery Mode' of Content Are Seldom That

Thinkers such as Chris Anderson, Bob Lefsetz, and Seth Godin, whose ideas I consider indispensable to the debate, often lapse into championing new ways of delivering books, music, and video. But many of the delivery modes suggested change the very essence of what made books, music, and video popular in the first place.

The lack of reflection over jettisoning this essence to open Pandora's Box is understandable. These thinkers understand (correctly) that the current delivery system is broken. But they assume it cannot be fixed. So they are anxious for the industry to get on to something that at least might deliver some music to some people.

The essence we’re talking about is ownership. The empires of books, records and DVDs were built on it. The DCE is, of course, "the fix".

I don't usually put much stock in aphorisms, but when three sayings at once readily apply to a situation, I sit up and take notice

1. Don't bite the hand that feeds

2. Dance with the guy/girl you came to the dance with

3. A bird in the hand is worth two in the bush.

Statement of Purpose

Or, in other words, "Why are we here?"

We have the solution to an extremely vexing problem. In this blog, we would like to begin chronicling our daily efforts to bring the solution to light.

What is the solution?

It's called the Digital Content Exchange. A working prototype is over at Thedce.com. (You can even help us beta test. )

What is the problem?

Piracy, as it is commonly called. Music piracy, from my perspective, is not really too close to the image of men with eye patches, red bandannas and knives clenched between their teeth. It is better-described as the inability of artists to be able to control the use of their creations in digital space. But however you look at it, it is a huge problem, especially in music (and more and more in books and movies.) And, yes, the people who take music without having paid for it are breaking the law.

Our invention creates an unprecedented inducement to users to stop breaking the law (velvet glove) and makes it harder for them to do so (iron glove).

The key thing to recognize is that piracy it is not a legal problem it is a technological problem. The technological solution has not been tried. Or, rather, it has been tried, it works(!), but it is just awaiting the participation of the content-owners. Or Google. Or Apple. (We're not picky). Can we do it without the content-owners, Google or Apple? Yes, we can. It will just be a lot slower.

So, what I would like to do here is chronicle our daily efforts to bring the Content Exchange up to scale. And to comment on the passing parade of wrong-headed measures. This will include naming names of whom we talked to about the DCE and what they said (or if they didn’t call us back!) If they had objections to the DCE, we will discuss those objections. (We love criticism!).

And if we are in the middle of actively talking to someone who is thinking about partnering with us, we will let you know about it here. Why not? Someday, just about everyone will have an Exchange account, just as if someone might have predicted in 1991 that someday everyone would have an email address. Each record label, book publisher, or video producer will have their own account (or "seat" at the exchange). So just because we might be talking to one content-creator this week, it does not mean that we will discriminate against their competitors. It's just that that content-creator, if it joins us, can start making money for itself sooner.

Now, for some links about the Digital Content Exchange to help get you acquainted. Feel free to jump in at the deep end or the shallow end.

Here is a Scribd White Paper we wrote and circulated in May, Toward a Digital Content Exchange for Copyrighted Works.

Feel free to “have at” the website. Note that the website is a completely functional demo of our invention for music (n.b. not books or videos yet). But it is not meant to be the ideal iteration. A significant upgrade will be along soon. (It is worth underscoring that although we want the book, video and music industries to cooperate with us, their contribution is not necessary. Although once we are up and running there is no Earthly reason they would not want to participate. But you, the User, can start now and get your music where you want it and how you want it.)

If you want the quickie "look and feel" and user experience, the following two youtube videos, both 6:10 in length, were produced late summer:

How to Create Your Own Streaming Music Library with the DCE

How To Add Your Vinyl Records, CDs and iTunes Purchases To Your DCE Library .

If you are interested in hearing our solution to the Google Book Case and/or want an analysis of the legal underpinnings of the DCE, take a look at our Amicus Curiae brief here:

Our next white paper is in development and will approach the Content Exchange from the point of view of a registry rather than as a digital media application: How To Institute a System of Voluntary Registration of Music, Video and Book Ownership That Will Stem Piracy.