zeruch (zè-rook)

…whereas I simply call for a mandatory connection of a functioning brainmass to Paul McGuinness’ mouth.

In a bloviating, clueless tantrum suitable to someone who works for one of the most bloviating, self-inflated bands on Earth (U2)*, McGuinness exhibited a level of crass stupidity that made me wonder if he had not conducted a seance to channel the spirit of Jack Valenti and of a long dead villiage idiot in a fourth world country from the 17th Century in order to prepare for his public display of stuffed venality.

vinyl remix: war by ^zeruch on deviantART

I apologize for the rather caustic nature of this post, but there reaches a point when exasperation sets in as people who should know better (or can afford to figure it out if they actually bothered)

The contents of the speech given at MIDEM is at U2s site (which I refuse to give them a link to), and I will excerpt liberally to showcase the amazing hubris and stupidity in play:

We’ve been used to bands who wrote their own material since the Beatles, but the mechanical royalties that sustain songwriters are drying up.

Who is we? I am sure that writing royalties were important before then. That being aid, as Seth Godin asked, why does a business model have to work in perpetuity? That is correct, it does not. There is no rule that says it has to. ‘

‘Good afternoon and thank you for giving me this opportunity. I don’t make many speeches

Given what seems to come out when you do make them, maybe its better if you don’t in the future.

and this is an important and imposing occasion for me. What I’m trying do here today is identify a course of action that will benefit all: artists, labels, writers and publishers.

Actually I am willing to bet what you are really doing is much akin to when you moved U2 as a corporate entity from Ireland to the Netherlands to escape Irish taxation rates; a shameless attempt to shore up your personal cash cow.

At the beginning U2’s live appearances were loss making and tour support from our record label was essential for us to tour and that paid off for the label as U2’s records went to No.1 in nearly every international territory starting in the mid 80s and I’m happy to say that continues to the present day. They have sold about 150 million records to date and the last album went to No.1 in 27 territories.

Yet you come here to complain so plaintively.

U2 own all their masters but these are licensed long term to Universal with whom we enjoy an excellent relationship. With a couple of minor exceptions they also own all their copyrights, which are also licensed to Universal. U2 always understood that it would be pathetic to be good at the music and bad at the business, and have always been prepared to invest in their own future.

So you also enjoy arrangements that most artists would fall over face forward into a cactus patch to have, and you have windfall profits, but somehow you are under mortal threat from kids on the interwebs?

What U2 and I also understood instinctively from the start was that they had 2 parallel careers first as recording and song writing artists, and second as live performers. They’ve been phenomenally successful at both. The Vertigo Tour in 2005/2006 grossed $355m and played to 4.6m people in 26 countries.

And once again: $355m USD.

But I’m not here to brag.

No, you are clearly here to brag, and then whine like a petulant toddler.

I’m here to ask some serious questions and to point the finger at the forces at work that are destroying the recorded music industry.

Let me help. Hold up a mirror to yourself Paul. The cadres of utterly corrupt business practices by record labels and management (i.e. you) have created a series of conditions that had an apex in the 80s of cocaine and payola and such obscene extravagence, that you now all feel entitled to maintain that regardless of any changing conditions elsewhere in the universe. This is because you are the problem; not the ISPs, not college students on P2P networks. You. You and often your clients.

People all over the world are going to more gigs than ever. The experience for the audience is better than ever. This is proved by the upward trend in ticket prices, generally unresisted.

Did it not dawn on you that maybe it is escalating prices that are one of the factors that have driven people to downloading? After 20 dollars for a mildly interesting cd, 25 for a poorly manufactured t-shirt, to then cough up triple digits to see bands in edifices that are just shy of arcologies in size is one way to define an experience. Others might call it a racket.

The live business is for the most part healthy and profitable.

Assuming a band tours. You are masking your own personal agenda behind a faux general statement that has no real citation of merit to back it up.

More people are listening to music than ever before through many more media than ever before. Part of the problem is that the record companies,

On this we agree.

through lack of foresight and poor planning, allowed an entire collection of digital industries to arise that enabled the consumer to steal with impunity the very recorded music that had previously been paid for.

On this we do not. The record industry has typically shown an alarming risk aversion to technology. That has been its own habitual fault. It is also not in charge of every other industry that may or may not affect it, so its choice to react akin to a Luddite is its own and carries its own consequences.

I think that’s been a cultural problem for the record industry – it has generally been inclined to rely for staff on poorly paid enthusiasts rather than developing the kind of enterprise culture of Silicon Valley where nearly every employee is a shareholder.

Well, if that were the case, you would likely still not be employed Paul, as the infinite layers of middlemen would not survive in an efficient industry. A&R men and the like have typically been turned from enthusiasts to soulless and broken men jamming contract shivs into the backs of any artist the label thinks they can squeeze a few units out of.

The problem in the record industry is that unlike in Silicon Valley, the enterprise culture is largely driven BY enthusiasts and innovates rapidly. Linus Torvalds, Wozniak/Jobs, Bill Joy, the list is long. The record industry had a few stars of its own, but they have either retired, been driven out, or passed on. I would argue the idea of a major record executive as true enthusiast died with Ahmet Ertegun. Once again, the fault is yours. On top of that, there has been little innovation in the industry itself, and almost all effort has been to fortify label and middleman advantage over artists and consumers in any way possible. This is not hyperbole, this is well documented fact.

SDMI, and similar attempts at cooperation by record companies,

…were ridiculous at their face. DRM in general is. And it was not cooperation. You and yours attempted to ramrod it down consumer and industry throats, a tendency you seem to keep through every subsequent attempt at keeping your entitlements flowing and your sinking extortion model afloat.

have partly been thwarted by competition rules. The US government has sometimes been overzealous in protecting the public from cartel-like behaviour.

Really? Have you seen the DMCA? The Pro-IP Act? Do you even realize how transparent your desire for record industry collusion practices to continue appear?

There is technology now, that the worldwide industry could adopt, which enables content owners to track every legitimate digital download transaction, wholesale and retail.

Let me guess, it is something you have invested in, in the hopes you can make money off the latest attempt to shore up your old business model? By they way, it is likely a variant of DRM, ergo destined to spectacular failure.

This system is already in use here in Cannes by the MIDEM organisation and is called SIMRAN. Throughout this conference you will see contact details and information. I recommend you look at it. I should disclose that I’m one of their investors.

Well, you are an investor, and it is DRM.

Meanwhile in the revolution that has hit music distribution, quality seems to have been forgotten.

One only has to listen to the last decade of U2 albums to figure that out.

Remarkably, these new digital forms of distribution deliver a far poorer standard of sound than previous formats. There are signs of a consumer backlash and an online audiophile P2P movement called “lossless” with expanded and better spectrum that is starting to make itself heard.

Paul, you have now caught up to 2003 or so. You have another half-decade of tehcnology and consumer trends to absorb before you meet up with the Joneses.

This seems to be a missed opportunity for the record industry shouldn’t we be catering to people who want to hear music through big speakers rather than ear buds?

Today, there is a frenetic search for new business models that will return the record business to growth. The record companies are exploring many new such models – some of the may work, some of them may not.

And yet you seem to only be advocating things which maintain the old model, by any means necessary. Maybe you should read David Byrne’s latest missive on business models for musicians.

Sadly, the recent innovative Radiohead release of a download priced on the honesty box principle seems to have backfired to some extent. It seems that the majority of downloads were through illegal P2P download services like BitTorrent and LimeWire

Neither service is inherently illegal. BitTorrent itself partners with industry firms to help deliver content efficiently.

even though the album was available for nothing through the official band site. Notwithstanding the promotional noise, even Radiohead’s honesty box principle showed that if not constrained, the customer will steal music.

This fails not only to take into account that what Radiohead offered for download was of the lower audio quality you mentioned, but that Radiohead could have just as well offered it via BitTorrent (they do after all, do content distribution as stated above) and it might have done better. The exercise was an experiment, and there is still no real statistics to show whether it was a successful one or not.

There is some excitement about advertising-funded deals. But the record companies must gain our trust to share fairly the revenues they will gain from advertising. Historically they have not been good at transparency. Let’s never forget the great CD scam of the 80s when the majors tried to halve the royalties of records released on CD claiming that they needed this extra margin to develop the new technology even as they were entering the great boom years that the CD delivered. It’s ironic that at a time when the majors are asking the artists to trust them to share advertising revenue they are also pushing the dreadful 360 model.

There is a level of irony here that just teeters into a kind of numbing inanity.

As Allen Grubman, the well-known New York attorney said to me recently…

“God forbid that one of these acts in a 360 deal has success. The next thing that will happen is the manager gets fired and the lawyer gets sued for malpractice.”

Maybe it would help if they were to offer to cancel those deals when they repair their main revenue model and the industry recovers, as I believe it will.

So with these two statements it is unclear if McGuinness is being contrarian to his previous complaint about the recording industry, or if he is hoping this is what occurs to secure his continued employment as administrator and receiver of largesse.

But that’s an issue for the future, when we’re out of the crisis. Today, there’s a bigger issue and it’s about the whole relationship between the music and the technology business. Network operators, in particular, have for too long had a free ride on music – on our clients’ content. It’s time for a new approach – time for ISPs to start taking responsibility for the content they’ve profited from for years.

This is the kind of hyperbole that just makes Mr, McGuinness look like a buffoonish clown.

And it’s time for some visionary new thinking about how the music and technology sectors can work as partners instead of adversaries, leading to a revival of recorded music instead of its destruction.

In other words “do what we tell you, so that we ourselves do not have to change”.

It’s interesting to look at the character of the individuals who built the industries that resulted from the arrival of the microprocessor. Most of them came out of the so-called counterculture on the west coast of America. Their values were hippy values.

I have no idea where he is going with this, given his own big client and their rather interesting hypocrisy of leftist political rambling coupled with inveterate avarice.

And embedded deep down in the brilliance of those entrepreneurial, hippy values seems to be a disregard for the true value of music.

What is the true value of music Mr. McGuinness? Is it the same as when there was no compact discs? Vinyl records? Player pianos? You seem to imply that the music has some kind of inherent value that has never changed, but all that really appears to come out is a desperate grab to maintain a status quo that was never guaranteed to start with, and that history shows is entirely unlikley to continue.

Mr. McGuinness then goes on to aimlessly digress about Abbie Hoffman, Silicon Valleys technologists as a bunch of political liberals making “burglary kits” (never mind now inane that sounds)

I call on them today to start doing two things: first, taking responsibility for protecting the music they are distributing; and second, by commercial agreements, sharing their enormous revenues with the content makers and owners.

Most artists are still waiting for managers and labels to share their enourmous revenues with them. I also notice you make a distinction between content creators and owners. This is quite telling, as I think it is the latter that really concerns you. Couching your speech in a form that is sympathetic to artists is a nice ploy, but as with the rest of your speech, largely transparent.

I want those technology entrepreneurs to share their ingenuity and skill as well.

They often do. Your industry has simply been very poor to receive it.

I have met Steve Jobs…I wish he would bring his remarkable set of skills to bear on the problems of recorded music….He probably doesn’t realize it but the collapse of the old financial model for recorded music will also mean the end of the songwriter.

Rubbish. He probably is one of the people who realizes that no such demise of the songwriter is coming.

If anything, digital content distribution has increased avenues for songwriters to be heard. Dare I even ask Mr. McGuinness, what you think of things like the efforts of collaborative composition that goes on with Creative Commons (i.e. ccMixter) or with bands that have openly used P2P to disseminate their music because the record industry has done a lousy job of distribution?

For ISPs in general, the days of prevaricating over their responsibilities for helping protect music must end. The ISP lobbyists who say they should not have to “police the internet” are living in the past – relying on outdated excuses from an earlier technological age.

More irony. It is you Mr. McGuinness, who is refusing to move from an outdated model that has no right to be subsidized, not the other way around.

And as it turned, the “Safe Harbour” concept was really a Thieves’ Charter. The legal precedent that device-makers and pipe and network owners should not be held accountable for any criminal activity enabled by their devices and services has been enormously damaging to content owners and developing artists.

Indeed, it is the same principle that says if someone is killed by a drunken driver, the responsibility lay with the driver, not the carmaker.

Why does all this matter so much? Because the truth is that whatever business model you are building, you cannot compete with billions of illegal files free on P2P networks.

Then explain why your own client has been so successful? So mindnumbingly boring, yet immensely financially successful? And they are not alone. We are reaching a point where there is more than just anecdotal evidence that P2P traffic denotes what sells.

I think the failure of ISPs to engage in the fight against piracy, to date, has been the single biggest failure in the digital music market.

And I think its has been the failure of the recording industry and its periphery of middlemen to evolve that has been the failure. .

ISPs could implement a policy of disconnection in very quick time. Filtering is also feasible. When last June the Belgian courts made a precedent-setting ruling obliging an ISP to remove illegal music from its network, they identified no fewer than 6 technologies which make it possible for this to be done. No more excuses please. ISPs can quickly enough to block pornography when that becomes a public concern.

Once again, a man who clearly has his own vested interests is rambling about technology he appears to not even remotely understand.

When the volume of illegal movie and music P2P activity was slowing down their network for legitimate users recently in California, Comcast were able to isolate and close down BitTorrent temporarily without difficulty.

And what a hailstorm of issues that has caused for the carrier. It also does not take into account the fact that a lot of legitimate BT activity occurs and that it is in turn impacted by such blanket measures. I get my CentOS and cAOS images via BT. They are legitimate, and were I with Comcast, likely problematic. That -like your speech- Mr. McGuinness, is largely stupid and counterproductive.

Another show of power was Google’s acceptance of the Chinese Governments censorship conditions.

More irony, given that your biggest client would likely find supporting anything that justifies the repressive behavior of the Chinese Politburo repugnant. But I suppose for convenience, you will use whatever works.

Let’s spare no effort to push the ISPs into taking responsibility. But that’s only one part of the story. There’s a huge commercial partnership opportunity there as well. For me, the business model of the future is one where music is bundled into an ISP or other subscription service and the revenues are shared between the distributor and the content owners.

Of course, now it all becomes clear. All you are really concerned with is setting up the environment so you can make another windfall deal. Spoken like a true old-guard record industry thug. Yes, Mr. McGuinness, thug. You are basically asking for an environment that caters to a particular form of extortion amenable to you.

These are obviously commercial deals driven by self-interest.

As if you could claim otherwise.

But there is a moral aspect to this too. The partnership between music and technology needs to be fair and reasonable. ISPs, Telcos and tech companies have enjoyed a bonanza in the last few years off the back of recorded music content. It is time for them to share that with artists and content owners.

Fine, then let the artists drop their labels, drop their managers, and cut deals directly with the ISPs.

A government cannot set the price of music well any more than a rock band can run a government. The market has to decide.

Wait, you spend however long to ramble about forcing controls on ISPs via a method that would require legislation (some kind of statute would likely be needed to establish ground rules) but now want the market to decide? The market decided it does not want to pay extortion rates for music and band merchandise. You are now reaping what you have sown, and that is no ones fault but your own.

So, to conclude – Who’s got our money and what can we do?

I think that about sums up your real concern, and it also shows the limitations in your field ofview and in your ability to grasp the full spread of what is actually going on.

I suggest we shift the focus of moral pressure away from the individual P2P file thief and on to the multi billion dollar industries that benefit from these countless tiny crimes – The ISPs, the telcos, the device makers. Let’s appeal to those fine minds at Stanford University and Silicon Valley, Apple, Google, Nokia, HP, China Mobile, Vodafone, Comcast, Intel, Ericsson, Facebook, iLike, Oracle, Microsoft, AOL, Yahoo, Tiscali etc, and the bankers, engineers, private equity funds, and venture capitalists who service them and feed off them to apply their genius to cooperating with us to save the recorded music industry, not only on the basis of reluctantly sharing advertising revenue but collecting revenue for the use and sale of our content.

How about no. Is no a good answer Mr. McGuinness, because most of thosepeople are smart enough to know that they have more to gain if content creation gets excised from record industry fossils, that their ability to cut multi-layered deals that are more economically sane to all parties is higher in the long term.

You offer no reasonable counter to that, and that is why you will fail. And should fail. As the aforementioned Seth Godin said, past performance is no guarantee of future success.

They have built multi billion dollar industries on the back of our content without paying for it.

Except in bandwidth, buildout of infrastructure, maintenance, and in the resources required to do things like comply with DMCA provisions, which currently is exactly what happens, and is not free.

There’s more exciting music being made and more listened to than at any time in history. Cheap technology has made it easy to start a band and make music. This is a gathering of managers; our talented clients deserve better than the shoddy, careless and downright dishonest way they have been treated in the digital age

Wait, didn’t you just say a few minutes ago that the death of the songwriter was looming?

In short, imy opinion is that Mr. McGuinness is an entirely self-serving, technologically daft, rapacious blowhard who tried to effectively pitch his own investments (past and present) by fomenting the conditions for his own personal largesse to increase, at the expense of artists and consumers. His statements were ironic when they weren’t outright ignorant and cynical. Tnd the result is that the man who referred to the rational concept of safe harbor as “a thieve’s charter” has gotten a well deserved drubbing in the press for it. John Perry Barlow said it best,

Best of all, think of how much more money there will be for the truly creative when the truly cynical have been dealt out of the game.

* ^{Sorry to all of you mindless U2 drones (and yes, that includes you, Trae) U2 as a band have recorded the same album at least 4 times in a row now, with different names and a different set of oversized sunglasses for frontman Bono. They are trite, they are ridiculously overrated, and are about due for Vegas by now.}