SMART Letter #42
COURTNEY LOVE EXPLAINS MUSIC BIZ
July 19, 2000
SMART Letter #42 -- July 19, 2000
Copyright 2000 by David S. Isenberg
isen.com -- "Stoning Media Goliaths"
email@example.com -- http://isen.com/ -- 1-888-isen-com
> Quote of Note: Dave Winer
> Courtney Love Explains How the Music Biz Works
> Conferences on my Calendar, Copyright Notice, Administrivia
QUOTE OF NOTE -- Dave Winer
"The mingling of artists and technologists will
revolutionize the technology industry. . . . We will
see products in a new light, as the creative work of
human beings, not the blustery proclamations of
Dave Winer, from DaveNet: The Napster Weblog, July 17, 2000
COURTNEY LOVE EXPLAINS HOW MUSIC BIZ WORKS
[Courtney Love's articulate parable, below, is a front-line story of
war between the media giants of the old economy and the guerilla
creators of new value and new values.
The media-giant version of Video-on-Demand (aka ITV) failed abjectly in
the mid-1990s. Yet today's Audio-on-Demand is the biggest winner-app
since email and web browsing. Why?
The most rapid value creation occurs at the edge. It is no accident
that today's Audio-on-Demand is a chaotic, undefined mix of
independent, disruptive, even illegal forces that threaten the music-
broadcast-entertainment establishment. And despite industry
proclamations to the contrary, today's Audio-on-Demand is more about
sharing, communication and personal interaction than it is about
ownership and broadcast.
Video-on-Demand could be huge, but it would have to follow the model of
today's Audio-on-Demand. Caution! This is a scenario -- it is far
from certain. And it has its enemies. Two preconditions must be met
-- high-bandwidth access and a Stupid Network.
AT&T-TCI-MediaOne, AOL-Time-Warner and ABC-Disney will not wittingly
sow the seeds of disruption of their own incumbent video entertainment
paradigm. AT&T is building access that's orders of magnitude
slower than current technology will support, and it is putting
intelligence -- awareness of content, origin, destination and the
status of 'private commercial arrangements' -- into its access plant.
This distorts the end-to-end architecture that made the Internet such a
Public policy will shape the future as much as will the marketplace.
Do we want a rapidly expanding and chaotic economy (where even the
largest firms are free to fail) or do we want a slowly growing economy
in which protected incumbents re-invent ITV and call it progress?
Courtney Love has a foxhole perspective on a pivotal battle in this
war. When her May 16 speech at Digital Hollywood crossed my screen, I
wanted to put the whole thing in the SMART Letter -- but that'd be a
copyright violation :-). So with much work, I've distilled some
essential points -- this is covered by 'fair use' doctrine. You can
read the whole thing at www.salon.com/tech/feature/2000/06/14/love/
-- David I]
"What is piracy? Piracy is the act of stealing an
artist's work without any intention of paying for
it. I'm not talking about Napster-type software.
I'm talking about major label recording contracts."
"When you look at the legal line on a CD, it says
copyright 1976 Atlantic Records or copyright 1996
RCA Records. When you look at a book, though,
it'll say something like copyright 1999 Susan
Faludi, or David Foster Wallace. Authors own
their books and license them to publishers. When
the contract runs out, writers get their books
back. But record companies own our copyrights
"The system's set up so almost nobody gets paid."
"Last November, a Congressional aide named Mitch
Glazier, with the support of the RIAA, added a
'technical amendment' to a bill that defined
recorded music as 'works for hire' under the 1978
"He did this after all the hearings on the bill
were over. By the time artists found out about
the change, it was too late. The bill was on its
way to the White House for the president's
"That subtle change in copyright law will add
billions of dollars to record company bank
accounts over the next few years -- billions of
dollars that rightfully should have been paid to
artists. A 'work for hire' is now owned in
perpetuity by the record company."
"Writing and recording 'Hey Jude' is now the same
thing as writing an English textbook, writing
standardized tests, translating a novel from one
language to another or making a map. These are
the types of things addressed in the 'work for
"Three months later, the RIAA hired Mr. Glazier to
become its top lobbyist . . . "
"Stealing our copyright reversions in the dead of
night while no one was looking, and with no
hearings held, is piracy.
"It's piracy when the RIAA lobbies to change the
bankruptcy law to make it more difficult for
musicians to declare bankruptcy. Some musicians
have declared bankruptcy to free themselves from
truly evil contracts. TLC declared bankruptcy
after they received less than 2 percent of the
$175 million earned by their CD sales. That was
about 40 times less than the profit that was
divided among their management, production and
"Toni Braxton also declared bankruptcy in 1998.
She sold $188 million worth of CDs, but she was
broke because of a terrible recording contract
that paid her less than 35 cents per album.
Bankruptcy can be an artist's only defense
against a truly horrible deal and the RIAA wants
to take it away.
"Artists want to believe that we can make lots of
money if we're successful. But there are hundreds
of stories about artists in their 60s and 70s who
are broke because they never made a dime from
their hit records. And real success is still a
long shot for a new artist today. Of the 32,000
new releases each year, only 250 sell more than
10,000 copies. And less than 30 go platinum."
"Story after story gets told about artists -- some
of them in their 60s and 70s, some of them
authors of huge successful songs that we all
enjoy, use and sing -- living in total poverty,
never having been paid anything. Not even having
access to a union or to basic health care.
Artists who have generated billions of dollars
for an industry die broke and un-cared for.
"And they're not actors or participators. They're
the rightful owners, originators and performers
of original compositions.
"This is piracy."
"It's not piracy when kids swap music over the
Internet using Napster or Gnutella or Freenet or
iMesh or beaming their CDs into a My.MP3.com or
MyPlay.com music locker. It's piracy when those
guys that run those companies make side deals
with the cartel lawyers and label heads so that
they can be "the labels' friend," and not the
"Recording artists have essentially been giving
their music away for free under the old system,
so new technology that exposes our music to a
larger audience can only be a good thing. Why
aren't these companies working with us to create
"There were a billion music downloads last year,
but music sales are up. Where's the evidence that
downloads hurt business? Downloads are creating
"Why aren't record companies embracing this great
"The present system keeps artists from finding an
audience because it has too many artificial
scarcities: limited radio promotion, limited bin
space in stores and a limited number of spots on
the record company roster.
"The digital world has no scarcities. There are
countless ways to reach an audience. Radio is no
longer the only place to hear a new song. And
tiny mall record stores aren't the only place to
buy a new CD."
"Now artists have options. We don't have to work
with major labels anymore, because the digital
economy is creating new ways to distribute and
"I want to work with people who believe in music
and art and passion. And I'm just the tip of the
iceberg. I'm leaving the major label system and
there are hundreds of artists who are going to
follow me. There's an unbelievable opportunity
for new companies that dare to get it right."
"Since I've basically been giving my music away
for free under the old system, I'm not afraid of
wireless, MP3 files or any of the other threats
to my copyrights. Anything that makes my music
more available to more people is great."
"Let's not call the major labels "labels." Let's
call them by their real names: They are the
distributors. They're the only distributors and
they exist because of scarcity. Artists pay 95
percent of whatever we make to gatekeepers
because we used to need gatekeepers to get our
music heard. Because they have a system, and when
they decide to spend enough money -- all of it
recoupable, all of it owed by me -- they can
occasionally shove things through this system,
depending on a lot of arbitrary factors.
"The corporate filtering system, which is the
system that brought you (in my humble opinion) a
piece of crap like "Mambo No. 5" and didn't let
you hear the brilliant Cat Power record or the
amazing new Sleater Kinney record, obviously
doesn't have good taste anyway. But we've never
paid major label/distributors for their good
taste. They've never been like Yahoo and provided
a filter service."
"And if [the big recording companies] aren't going
to do for me what I can do for myself with my 19-
year-old Webmistress on my own Web site, then
they need to get the hell out of my way. [I will]
allow millions of people to get my music for
nothing if they want and hopefully they'll be
kind enough to leave a tip if they like it."
"A new company that gives artists true equity in
their work can take over the world, kick ass and
make a lot of money. We're inspired by how people
get paid in the new economy. Many visual artists
and software and hardware designers have real
ownership of their work.
"I have a 14-year-old niece. She used to want to
be a rock star. Before that she wanted to be an
actress. As of six months ago, what do you think
she wants to be when she grows up? What's the
glamorous, emancipating career of choice? Of
course, she wants to be a Web designer. It's such
a glamorous business!
"When you people do business with artists, you
have to take a different view of things. We want
to be treated with the respect that now goes to
"I know my place. I'm a waiter. I'm in the service
"I live on tips. Occasionally, I'm going to get
stiffed, but that's OK. If I work hard and I'm
doing good work, I believe that the people who
enjoy it are going to want to come directly to me
and get my music because it sounds better, since
it's mastered and packaged by me personally. I'm
providing an honest, real experience. Period."
"If you like [my music] enough to have it be a part of
your life, I know you'll come to me to get it, as
long as I show you how to get to me, and as long
as you know that it's out.
"Most people don't go into restaurants and stiff
waiters, but record labels represent the
restaurant that forces the waiters to live on,
and sometimes pool, their tips. And they even
fight for a bit of their tips.
"Music is a service to its consumers, not a
product. I live on tips. Giving music away for
free is what artists have been doing naturally
all their lives."
" . . . in a world of total connectivity, record
companies lose that control. With unlimited bin
space and intelligent search engines, fans will
have no trouble finding the music they know they
want. They have to know they want it, and that
needs to be a marketing business that takes a
"If a record company has a reason to exist, it has
to bring an artist's music to more fans and it
has to deliver more and better music to the
audience. You bring me a bigger audience or a
better relationship with my audience or get the
fuck out of my way."
"But don't talk to me about "content."
"I get really freaked out when I meet someone and
they start telling me that I should record 34
songs in the next six months so that we have
enough content for my site. Defining artistic
expression as content is anathema to me.
"What the hell is content? Nobody buys content.
Real people pay money for music because it means
something to them. A great song is not just
something to take up space on a Web site next to
stock market quotes and baseball scores."
"Every single artist who makes records believes
and hopes that they give you something that will
transform your life. If you're really just
interested in data mining or selling banner ads,
stick with those "artists" willing to call
themselves content providers."
"I also feel filthy trying to call my music a
product. It's not a thing that I test market like
toothpaste or a new car. Music is personal and
"Being a "content provider" is prostitution work
that devalues our art and doesn't satisfy our
spirits. Artistic expression has to be
provocative. The problem with artists and the
Internet: Once their art is reduced to content,
they may never have the opportunity to retrieve
"As a user, I love Napster. It carries some risk.
I hear idealistic business people talk about how
people that are musicians would be musicians no
matter what and that we're already doing it for
free, so what about copyright?
"Please. It's incredibly easy not to be a
musician. It's always a struggle and a dangerous
career choice. We are motivated by passion and by
"That's not a dirty little secret. It's a fact.
Take away the incentive for major or minor
financial reward and you dilute the pool of
musicians. I am not saying that only pure artists
will survive. Like a few of the more utopian
people who discuss this, I don't want just pure
artists to survive."
"We suffer as a society and a culture when we
don't pay the true value of goods and services
delivered. We create a lack of production. Less
good music is recorded if we remove the incentive
to create it."
"I'm looking for people to help connect me to more
fans, because I believe fans will leave a tip
based on the enjoyment and service I provide. I'm
not scared of them getting a preview. It really
is going to be a global village where a billion
people have access to one artist and a billion
people can leave a tip if they want to.
"It's a radical democratization. Every artist has
access to every fan and every fan has access to
every artist, and the people who direct fans to
those artists. People that give advice and
technical value are the people we need. People
crowding the distribution pipe and trying to
ignore fans and artists have no value. This is a
"If you're going to start a company that deals
with musicians, please do it because you like
music. Offer some control and equity to the
artists and try to give us some creative
guidance. If music and art and passion are
important to you, there are hundreds of artists
who are ready to rewrite the rules."
[whew . . . ]
CONFERENCES ON MY CALENDAR
September 13-15, 2000. Lake Tahoe CA. TELECOSM. Featuring
George Gilder, Clayton Christensen, yours truly, and a cast of
geniuses, troublemakers, and people who got rich by listening
to George. This thing sells out, folks -- a word to the SMART.
November 5-9, 2000. Rose Hall, Jamaica. Porter Stansberry's
Pirate Investor's Ball, featuring Eric Raymond, Tom Petzinger,
Porter's impressive research director David Lashmet, and yours
truly. Porter is a big-picture guy, a cross between George
Gilder and Tony Robbins, with a nose for leading edge values in
infotech and biotech. Contact Andrea Shaw,
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Copyright 2000 by David S. Isenberg
firstname.lastname@example.org -- http://www.isen.com/ -- 1-888-isen-com
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