Vinyl is back

Somewhat surprising news about vinyl from The Guardian:

The format was supposed to have been badly wounded by the introduction of CDs and killed off completely by the ipod-generation that bought music online.

But in a rare case of cheerful news for the record labels, the latest phenomenon in a notoriously fickle industry is one nobody dared predict: a vinyl revival. Latest figures show a big jump in vinyl sales in the first half of this year, confirming the anecdotal evidence from specialist shops throughout the UK.

It comes as sales of CD singles continue to slide - and it is not being driven by technophobic middle-aged consumers. Teenagers and students are developing a taste for records and are turning away from the clinical method of downloading music on to an MP3 player.

The data, released by the UK's industry group BPI, shows that 7in vinyl sales were up 13% in the first half, with the White Stripes' Icky Thump the best seller.

Two-thirds of all singles in the UK now come out on in the 7in format, with sales topping 1m. Though still a far cry from vinyl's heyday in 1979, when Art Garfunkel's Bright Eyes alone sold that number and the total vinyl singles market was 89m, the latest sales are still up more than fivefold in five years.

Bright Eyes?  No! 

I wouldn't have thought most people would have a record deck.  Apparently that isn't a problem:

Retailers and record labels put the rising vinyl sales down to bands rediscovering the format and to music fans' enduring desire to collect. It's not unusual for fans to buy a 7in but have nothing to play it on, says Paul Williams at industry magazine Music Week. "It's about the kind of acts that have very loyal fan bases that want everything to do with that act," he says. "They maybe will buy the download to listen to, but they get the vinyl to own. It's looked at like artwork."

HMV agrees that vinyl is back from the brink, and the chain has been rapidly expanding its record racks to meet rising demand. The group's Gennaro Castaldo cites the huge popularity of "indie" bands, such as Franz Ferdinand and Arctic Monkeys, which enjoy loyal followings among teenagers and students, especially during the summer festival season.

"Labels have realised that it's cool for bands to release their music on vinyl, especially in limited edition form, which makes it highly collectible," he says.

Is this another example of the way that artists can make money in the brave new world of downloads?


Giving it all away

Rather bizarrely, The Mail on Sunday (a UK newspaper) is giving away Prince's new CD today.  I can see that it makes sense financially - Prince will get more from the newspaper than he would as an advance from a record company - but I find it hard to believe that MoS readers would be big fans of Prince (or vice versa).

It therefore seems likely that a lot of the CDs will be thrown away unplayed, and that a lot of copies of the newpaper will be discarded unread.

Apart from the environmental issue, music retailers in the UK are not happy:

Paul Quirk, co-chairman of the Entertainment Retailers Association, said the decision "beggars belief".

"The Artist formerly known as Prince should know that with behaviour like this he will soon be the Artist Formerly Available in Record Stores," said Mr Quirk, referring to a period in the 1990s when Prince famously stopped using his name in favour of a symbol.

"It is an insult to all those record stores who have supported Prince throughout his career.  It is yet another example of the damaging covermount culture which is destroying any perception of value around recorded music."

Hmmm..  I wonder how many copies of this album would have been sold in UK record stores.  Not very many, I venture to suggest. 

Anyway, after initially criticizing the move, HMV have decided that they will stock the newspaper:

HMV's move was attacked today by rival Virgin Megastores, which "expressed disbelief" at the company's decision.

"We're stunned that HMV has decided to take what appears to be a complete U-turn on their stance towards covermounts and particularly in this case, as only a week ago they were so vocal about the damage it will cause," said Simon Douglas, Virgin Retail managing director.

"Simon Fox [HMV chief executive] labelled the Mail on Sunday deal as 'devaluing music' and 'absolute madness', now they appear to have joined forces to sell more copies of the very same paper," Mr Douglas added.

"It's not only retailers that suffer; the public will suffer in the long term by restricting choice on the high street. Of course people will take a free CD by a platinum-selling artist like Prince but you only need to look at what's happened to Fopp going into administration to get an idea of the potential long-term impact

There are two issues here, I think.  The first is rather specific to the UK, where newspapers give away DVDs, CDs, posters, etc. in an effort to boost circulation - though usually the DVDs and CDs are either very old or rather obscure.  I doubt that it really does the newspapers any good, and it probably reduces the perceived value of CDs and DVDs.  So I do think that HMV are taking a risk here (though maybe they are right that some people will buy some CDs along with their 3 day old Mail on Sunday).

The second and universal issue is that CDs and DVDs are on their way out, and shops such as HMV and Virgin Megastores are just going to having to come to terms with that.  If you can download music and video, why bother going to a shop to buy physical product?  It also means that artists need to find other ways to earn money (see Free doesn't mean worthless), and so I happen to think that Prince is being pretty smart here.    


On the high seas

Sunday's SCMP had a story about CD Wow (subscription required):

A group of British record companies is suing a Hong Kong firm for £41.13 million (HK$638 million) in royalties it was ordered to pay by an English court.

The companies are asking for the enforcement of a settlement agreement with Music Trading Online (HK), which runs an online mail-order music business called CD-Wow. Music Trading lists a Kwun Tong address as its head office. Customers of CD-Wow in the UK would order CDs and DVDs which would be sent to them from Hong Kong.

The 2004 settlement agreement came about as a result of legal action brought against Music Trading by Indepeniente, XL Recordings, Wildstar Records, Mercury Records, EMI Records and Sony Music Entertainment and its United Kingdom subsidiary.

In all, 15 firms took issue with Music Trading's activities, and the seven record companies listed on Friday's writ in the High Court are representing the interests of the others.

The companies alleged Music Trading infringed their UK copyright by providing parallel imports of CDs manufactured outside the European Economic Area without paying the appropriate royalties. Under UK copyright law at the time, it was illegal to import an item without the copyright owner's express permission if its manufacture in Britain would have incurred royalty payments there.

The issue had been set to go to court, but the settlement was arrived at before trial. However, last November, the companies successfully sued Music Trading for breaching certain conditions of the agreement. The English High Court ruled the firms could individually sue the company for damages over those alleged breaches. Those damages would be in addition to the sum claimed in Friday's writ.

The writ seeks payment of the settlement amount, interest and costs.

I also found another (more detailed and freely available) story on the same subject:

The BPI has also come under fire from an unexpected source – the organisation's ex-director of anti-piracy David Martin, who retired last year. He suggests that artists are not losing out on any royalties if the CDs were genuine.

“Whether you sell a CD in Hong Kong or wherever, ultimately the royalties of that sale, if it is a genuine CD, will go to the record company and the creator of the work," Martin said.

“In my point of view the efforts should be expended against the people committing 'real' crimes such as counterfeiting and piracy.”

Well, yes indeed. 

Striking another blow are market analysts, who also reject the BPI's assertions that CDs are not too expensive in the UK. Mark Mulligan of Jupiter Research said: “Sometimes the music industry just doesn't help itself. With music sales plummeting there has never been a better time for the record labels to start garnering a little sympathy. But then they go and do something like this.

“With music sales declining the labels need to be doing everything they can to foment sales. CDs are still too expensive. If the labels insist on trying to maintain CD prices then they'll lose sales and force many consumers into choosing between either not buying or going to a file-sharing network.”

But the BPI insists that pricing schemes have to be different for each market due to several factors, not least of all the average income of locals.

“The British record business accrues British costs employing British workers to develop British artists. Record labels therefore set British prices that allow them to cover those costs to stay in business,” said the BPI spokesman.

“Average incomes are much lower in South-East Asia, and record companies have a choice of surrendering the market entirely to piracy and not sell there at all, or reduce the price to a level that the market can support.”

CD Wow has pledged to continue providing consumers "the cheapest possible music" and intends to continue to "fight the laws that are in place to help record industry bosses rip off music lovers" but whether its prices will stay low remains to be seen.

I had thought that CD Wow were simply avoiding VAT by shipping from Hong Kong, and I hadn't realized that there were other issues with the way they operate.  For me, the biggest advantage is that they don't charge for shipping (worldwide, not just from Kwun Tong to the New Territories).  Every time I order from Amazon I resent the cost of delivery.


Deeply, deeply sorry

Go to Pandora, and you will be greeted with this rather depressing message:

Dear Pandora Visitor,

We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for most listeners located outside of the U.S. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.

We believe that you are in Hong Kong

Well, yes, I am.

Pandora say that they will try to offer their service in more countries, but it seems safe to assume that Hong Kong will not be the first one they get to.  Or the second, or the third. Negotiating with record companies in each country is going to be a long, painful, process, and Hong Kong is just too small a market for them to even try.

A few ago I wrote about DVD region codes and this prompted a debate between Spike and myself about whether I should be allowed to buy imported DVDs when there is a local distributor who owns the rights for Hong Kong.  My view is that if I buy a genuine/legal DVD then the producers of the film will get their cut, which they wouldn't do if I download it or buy a pirate disc - and frankly I don't care too much whether the local distributor gets his cut or not. 

Clearly the same principles apply to recorded music, and so when the RIAA argued that Pandora should not be offering their service outside the USA there was no legal defence - and Pandora have been forced to stop them offering this service (BBC news).  I am tempted to point out the irony here, in that the members of the RIAA were getting money from Pandora in respect of listeners outside the United States, but the reality is that the record industry don't approve of Pandora (and similar services) and so they will do anything they can to make it difficult for them to operate.  Apparently they believe that if they stop people listening to music for free, they will pay for it instead.  Yeah, right... 

I have cancelled my subscription for emusic because if I can't listen to music then I am not going to buy.  Yes, I know that I could probably use a proxy service to get access to Pandora, or use another service such as last.fm, but I think I've got the message that the record industry doesn't want my money.   


Not listening

I knew this would happen.  I started using Pandora, and now it seems that it's under threat, as the BBC reports:

US webcasters will face sharp rises in royalty fees that could be "fatal" to the nascent industry, a coalition of web broadcasters has claimed.

The increases will start on 15 May and will eventually charge royalties every time an online listener hears a song. The decision to impose the fees was made by a panel of judges who threw out requests to overturn an earlier ruling.

Public and commercial broadcasters claim it will force cuts to services used by an estimated 50 million people.

"If these rates stand... I believe we'll see a virtual shutdown all of US webcasting," wrote Kurt Hanson, CEO of AccuRadio, on the SaveInternetRadio.org blog.

I think that link should be SaveNetRadio.org/blog

These rates are much higher than for satellite radio, and of course normal terrestrial broadcast radio stations in the States don't pay any royalties at all.

I can see that there is an argument for charging more because many of these "radio stations" are highly customisable by the user, but it looks like another short-sighted decision by the record industry.  Isn't it obvious that if you deny people the chance to listen to music they are unlikely to buy it? 

Pandora has links to both Amazon and iTunes to help people buy music, and someone pointed out in a comment here that there is an unofficial Pandora/emusic "mash-up" that (sorta) helps you to find a song you have heard on Pandora and then download it from emusic.  Well, up to a point, because it doesn't always work very well - if an artist is not available on emusic they sometimes come up with very strange alternatives - but it's a useful service nonetheless.

If I can't listen to music on Pandora (or something similar), I'll surely stop subscribing to emusic and probably buy even fewer cds.  Is that what they want?


Free doesn't mean worthless

I found this article (The Importance Of Zero In Destroying The Scarcity Myth Of Economics) and the subsequent debate about how to earn revenue from recorded music, quite fascinating:

So, for example, basic economics tells you that a free market will push prices towards their marginal costs. If their marginal costs are zero (as is the case with digital goods and intellectual property), then it says that price will get pushed towards zero. However, this makes people upset, and makes them suggest the model is broken when a zero is applied. They see a result where there is no scarcity, and it doesn't make sense to them since they've always understood economics in the context of scarcity.

However, the point is that if you understand the zero, there's nothing to worry about and the model works perfectly. It just requires a recognition that the scarcity doesn't exist. Instead, you have abundance. You can have as much content as you need -- and in that world, it makes perfect sense that there's no costs, because without scarcity there need not be a cost. Supply is infinite, and price is zero. That does not mean, however, that there's no business. Instead, it just means you need to flip the equation and use the zero to your advantage.

What struck me about many of the comments is that people seem unable to distinguish between cost and value.  The fact that the cost of distributing music (or video) via the Internet is close to zero does not mean that this content has no value. 

What about shareware?  People pay for that voluntarily. Or National Public Radio in the States, which is distributed free of charge, and funded in part by donations.  In other words, people are willing to pay for a service which they could get for free. 

If this works, the record companies really could become redundant.  You have to ask what value they are adding if artists can promote themselves on MySpace and elsewhere and then make music available for download.  Of course those big companies won't give up without a fight, and DRM is one weapon they will use. but perhaps they are just putting off the inevitable.    

Continue reading "Free doesn't mean worthless" »


Playing fair

Steve Jobs has suggested that record companies should drop DRM (Digital Rights Management) and simply sell downloaded music in an unprotected form.  This would allow users of iPods to download from anywhere, and also users of other MP3 players to buy from the iTunes store (which still hasn't launched in Hong Kong).

I am using emusic, who operate in exactly this way, but only have deals with so-called 'independent' record labels.  They offer a number of subscription plans, and any music you download is free of all DRM and can be played or copied without restriction.

To find music, I use Pandora, who allow you to set up your own 'radio station', based on one or more artists or songs, and then refine the selection by giving a 'thumbs up' or 'thumbs down' to the songs they play you.  You need a US zip code to register, but that's not a problem.  So far, so good, and unlike Musicmatch they haven't played me a single Bjork song.

What I need now is a link from Pandora to emusic so that I can buy songs I like.  Currently they only have links to iTunes and Amazon, and presumably they earn something if you buy after clicking on the link. 

Continue reading "Playing fair" »


Not in Hong Kong

Buy an iPod? No, not me, they're over-priced and not really that much better than any other MP3 player. That was my view, so about a year ago I bought a small Creative MP3 player. Nothing much wrong with it, but it's not exactly user-friendly.

So now I have an iPod Nano. The GUI is user-friendly, and iTunes is easy-to-use. The problems so far are that if I am half way through listening to a podcast when I synchronize it disappears (because it thinks I have listened to it), and it 'freezes up' a bit too often for my liking (though it does make a full recovery after a reset). Apart from that it's very good. I think I am convinced,

However, the iTunes Music Store is STILL not available in Hong Kong, which means that I'm still looking for somewhere legal to download music. The latest possibility is eMusic - the plus point is that there's no copy protection, the negatives are that they don't have deals with the major labels (so their selection is quite limited - even more so for Hong Kong residents), the previews are far too brief and you have to subscribe for a set number of downloads each month. So far, I'm struggling to find enough songs to download to justify the monthly fee.

I think they could help by making the site easier to navigate (such as allowing you to view all tracks by an artist rather than forcing you to select an album first), having a track rating system (enabling them to make better recommendations), and (ideally) offer full previews rather than limiting them to 30 seconds. Actually, I think what I really want is Musicmatch, but that isn't available in Hong Kong.    

On the subject of iTunes, it was reported recently that sales at the iTunes Music Store were down by 65%:

Forrester said it got its figures by analysing 2,791 US iTunes debit and credit card purchases conducted by members of its consumer panel.

While overall US sales at the iTunes Music Store were down 65%, the number of monthly transactions had declined 58%, while the average size per purchase had fallen 17%, Forrester said.

Except that Forrestor now say that their report was misunderstood by Reuters, and reading the summary on their website this does seem to be the case. The report led to a fall in Apple's share price, which is even weirder when you consider that their profits mainly come from selling iPods, not selling music.  Apple say the report is wrong, but have not elaborated any further, and probably have no need to do so because the point of the Music Store is to boost sales of iPods (which they do announce, and which are still going up).

And still no news of the iTunes Music Store coming to Hong Kong.


Daft

The SCMP had a story (War on piracy recruits 200,000 youthful spies - registration required) on Tuesday about children being encouraged to report illegal download sites.  Which is all very well, but where are the legal alternatives? 

If you have a phone or PDA with a built-in MP3 player is there any legal way to acquire music?  Even copying music from a CD you have purchased is not legal, so what are you supposed to do? 

Yes, there is EOLAsia, but they only offer music in WMA format - and with Digital Right Management to make it even less useful. 

I do have an MP3 player that does have all the DRM nonsense, and the only thing I've tried to download was the Ricky Gervais podcast.  I had numerous problems with the Audible software that is supposed to download the podcasts and transfer them to the MP3 player, and eventually it told me that I had to contact Audible because I had "exceeded the allowed number of devices" (whatever that means).  Needless to say, I only have one device, and as Audible don't answer their emails I don't have a solution.

Well, I do - I can download it to iTunes, burn a CD and then convert that to MP3, and copy it to the MP3 player.  Which means I have wasted my time and defeated their attempt to protect the content.  Ridiculous...


That makes sense

As I've mentioned before, I have almost given up buying music.  If you live in Hong Kong it seems to be impossible to buy music from services such as iTunes and Musicmatch, and I've heard so much about copy protection and CDs that cannot be played in computers that I take fright if I see any wording on any CD about what it might not be able to do on a PC.

This story from The Guardian explains something that I had not realized - this obsession with copy protection has not yet spread across the Atlantic, so CDs from UK record companies are likely to be OK.  If you're wondering why, here's an explanation:

Though hardly immune to physical piracy - the BPI estimates the volume of counterfeit CDs in the UK increased threefold between 2000 and 2004 - [the UK] CD album market, excluding compilations, has proved remarkably buoyant.

In 2003, for instance, the volume of albums sold in the UK actually increased by 7.6%. In 2004 there was a further 3% increase and although overall album sales - both artist and compilations - dropped by 1.2% last year, sales of artist albums were up 1.4%. Even with supermarkets and online retailers driving prices down, the UK appeared to buck global trends.

As a result, while the UK majors retain an open attitude towards copy protection, at least publicly, some employees are highly sceptical about the cost and effectiveness of such initiatives. One Sony BMG UK representative says the US XCP fiasco was met with evident relief.

At Jupiter, Mulligan explains: "You might put off some of the casual copiers but you're not going to cut out the sort of person who's doing it on a serial basis. So you're not penalising the hardcore criminals, the mass pirates - you're penalising the average consumer."

Indeed.  It's not difficult to defeat copy protection (the simplest way is to use a standalone CD player and an audio card), so why inconvenience millions of customers in this way?  Stupidity, I guess.