Ok, so... like, I'm not much of a blogger, per se, but for Paul, I'll do it. I am sure that once I get used to my newly acquired soap box powers, that I will never shut up and he will have to turn me off anyway, but for now, here are my humble thoughts on this year's Jupiter. I was generally glad to see Jupiter come out and rain on the parade of digital music jubilation… after a half-decade of irrational exuberance, I believe this kind of “you better check yo’ self” introspection is not only appropriate, but necessary for the survival of our industry. We all, myself more than included, tend to get caught up in our own future-perfect paradigms of digital bliss only to look around and realize that no one else really cares, because its too hard to use, too expensive, or otherwise free. An old engineer friend of mine used to say “open always wins… unless closed works better”, and he’s right… in our space, so far, Apple has proved him right as well. The lack of discussion about P2P made me feel weird… like there was a 10 ton purple brontosaurus in the room dancing with an iPod. The very panel I spoke was rife with giddy “ring-tones is going to be huge” mantras – all the while, the purple brontosaurus looked on with disbelief. What… people aren’t going to figure out how to get around labels and the carriers when a ring tone is $2.45? What if I already bought the song for $.99 (or … gasp, the whole CD)… I don’t get the ring-tone for free? Is this not fair use? Xingtones and Snip ‘n Send are simply paid versions of what someone will create for free. I’m certainly not advocating going around rights holders… all I’m saying is didn’t everyone learn the hard way the first time around?

Time to discuss an intriguing idea -- Shared Media Licensing’s Weedshare music service (at weedshare.com).

Weedshare allows users to distribute songs through Superdistribution in a manner that resembles P2P. However, all songs distributed by Weedshare are licensed from rights owners and protected by Microsoft DRM technology to stop unauthorized reproductions.

Network users on Weedshare can download tunes from Weedshare for a standard download fee, say $0.99. With rights to Superdistribute, users may then create blogs and websites to recommend and maintain their favorite music tunes to others. A distributor receives a commission for each track sold from her blog or website. Each distributor also receives payments for subsequent distributions of their tracks made by others. For any track sold, the artist gets paid 50 percent, the service 15 percent, and the distributor(s) 35 percent.

Let's take an example of how Weedshare.works. Suppose a user purchases a track from Weedshare for $1.00. The artist and the Weedshare service split the payment 50/50. If the primary track is resold at $1.00, the artist gets paid another 50 cents, the service 15 cents, and the initiating distributor 35 cents. If the track is distributed by any subsequent recipient, the initiating and secondary distributors split the commission 15 cents/20 cents. If the track is distributed yet a third time, the three distributors split the commission 5 cents /10 cents/20 cents. Artists evidently benefit from the word of mouth.

Weedshare now distributes the music of some 6,000 artists, though no major labels. Rights owners can choose the prices of their individual tracks, and may modify the price for any new tracks at any time.

The big gain? The service develops interlocking strata of tastemakers; i.e., intermediaries who provide information to searching music fans. Once fans learn to trust a particular blog or website, their return traffic rewards the investment in passing new information on, and creates an incentive for more engagement. The Weedshare system then provides a means of cutting through the fog and clutter of countless releases with no filtering system -- a considerable difficulty in digital distribution. Moreover, the bottleneck of radio and retail is broken as users and artists interact through channels that are independent of each.

Final point. Consider how much better this is than KaZaa or BitTorrent, where no financial incentives for intermediation exists. Now consider how harmful KaZaa and BitTorrent are to this innovative model; potential users are diverted to an inferior distribution model that promises only a zero price made possible by infringing copyright.

According to Eric Garland of BigChampagne, two billion songs are traded monthly on peer-to-peer services. It seems that all the record industry's efforts at clamping down on this activity with lawsuits and spoofing has not significantly slowed the traffic.

But in a recent article in Wired magazine called "Toe-to-Toe Over Peer-to-Peer", there are signs that the industry may finally be taking a new tack in regard to this powerful new way of distributing music.

Michael Grebb reports that "Amid the recent collapse of talks over the Induce Act in Congress, record labels are closing in on deals to enable several new peer-to-peer services to emerge -- with the sanction of major record labels that have so far derided P2P as a haven for piracy. At least one record industry representative predicted that such sanctioned P2P services will start to proliferate in the next several months.”

"We are going to see three or four of these in the very, very near future," said Mitch Glazier, senior vice president of government relations and legislative counsel at the Recording Industry Association of America. Glazier said the new services will be consumer-friendly and enable the portability that digital music consumers demand, all without running afoul of copyright law. "P2P technology is great," Glazier said. "It can be harnessed for good or harnessed for bad."

I asked former President of Grokster, Wayne Rosso, if Glazier's comments signaled a shift in policy on the part of the recording industry towards P2P.

Wayne replied: "Let's face it. The RIAA is losing the battle. They HAVE to start changing their tune. P2P is here. There's no way to kill it off. The challenge is to
legitimize it. And that will take some forward thinking record company
CEO's. Fortunately there is one out there who is progressive and wants
to break the mold and try to create a new marketplace through
leveraging P2P traffic. That day will come very soon.”

In fact, the dynamic already looks to be changing. Continues Rosso, “The future is going to be an amalgamation of several different licensed schemes that each P2P will bet their futures on. But the problem is
that even though the opportunities are starting to arise now and the
record companies are reaching out, many of my colleagues are backing
off, afraid that if they play ball they'll lose their traffic. I happen
to think that after you've been screaming to the high heavens for years
claiming that you want to work with the labels if they would only
license p2p, and when presented with the opportunity many p2p players
then only want the licenses on their terms, is totally dishonest. You
can't change things unless you're in the room with the top guys. You
have to start somewhere. And let's face it: copyright owners deserve to
be paid for their content. I've always maintained that.”

I've been tinkering around a bit with Grokster Radio, which is powered by Mercora. The service allows the listener to stream collections from other user hard drives, essentially creating endless radio stations based on individual mp3 collections.

I haven't tried Mercora in a while, and it is nice to see some improvements happening since my last visit. The community aspect is being worked on - with easier to use chat features and more neatly organized profile information. There is still some work to be done, but it is not a bad experience by any stretch. I can see this model evolving, layering in Friendster-type connection building based on similar music tastes (actually, mperia already has the beginnings of something like this online).

To me, P2P Radio is very compelling, because of the "realness" of the entire experience. Many stations on Mercora veer wildly from genre to genre, from Nickelback to DMX to CCR. You'd never hear that sort of randomness from other outlets, whether terrestrial, satellite or more standard online radio stations. Even Live365 has more tightly controlled lists, mainly because the stations are run by deejays that want to create experiences based on specific genres - just like in a club. Of course, there is nothing wrong with that, and the last thing I want to hear on a trip-hop channel is Vivaldi.

But with Mercora (and the co-branded Grokster Radio), the random quality is what makes it so fun! Think about the last time someone visited your place for the first time. They probably took a look at your CD collection. And more than likely, your collection contains many different genres - in fact, I cannot think of one person that has a collection that is limited to one type of music. And, the last time you threw a party, you probably played music representing several different styles.

The reason for this is that most people like music from all sorts of genres - that is why we flip radio stations, buy a rap and metal CD in the same shopping trip, and make mix CDs that are all over the map. I think many people are even unaware of what genres they actually like and dislike – I’ve heard people say that they hate rap, but think 50 Cent is okay. In the end, it is kind of a blur.

But there is something more about Mercora - it has this human quality that really works. If I am on iTunes listening to a radio station, I feel a distance from the source, even if it is a stream from a small college radio station or a deejay I've heard of. With Mercora, it is much closer - someone just like you, with a collection online.

Who knows what happens to the P2P radio model, how it evolves, etc. I'm the last to hype the Friendster revolution, but I do recognize the bonding power that music represents. This novel P2P radio thing could be one to watch…

Billboard is hosting the 4th Annual Music & Money Symposium on March 3rd in NYC. Although the one-day conference features a series of panels with top industry executives, perhaps the most interesting session will be Billboard Co-Executive Editor Tamara Conniff’s Q&A with Shawn Fanning. What will the enfant terrible / creator of the Napster P2P revolution have to say to a high-level executive audience? Well, Fanning is now heading up SnoCap, one of the first authorized peer-to-peer services. In fact, as previously reported in Digital Music News, Universal Music has already agreed to license their catalogue to SnoCap, and EMI and Sony BMG are in active negotiations. But exactly how it will work is not exactly clear and the service is not fully operational. However, it is clear that in order to use Fanning’s new service, peer-to-peer companies such as eDonkey and Kazaa would have to agree to keep unauthorized music out --something such large networks that support millions of users might be loathe to do. Perhaps we will get some insights from Fanning himself, and also from Andy Lack. Loeb & Loeb’s John Frankenheimer will conduct a “candid interview” with the CEO of Sony BMG Music Entertainment.

Industry sources say they hope that authorized peer-to-peer will successfully compete with the popular but unauthorized P2P services such as Kazaa and Grokster. But cynics think that the industry flirtation with SnoCap is simply a ploy for the labels to argue that they are actually pro-technology, and only against illegal P2P file-sharing. These cynics continue by saying that the industry is using SnoCap so it can advance this argument to the U.S. Supreme Court in the upcoming oral arguments of the appeal of MGM vs. Grokster next month.

The Ninth Circuit found that Grokster did not violate copyright law because their software could be used to trade legal as well as unauthorized content and that Grokster could not control which files were transferred. The Supreme Court is now set to review that decision. One of the defense’s arguments is that a ruling against Grokster could impede the evolution of technology. But now, the labels can point to their deal with SnoCap to counter-argue that they just want to close down illicit P2P, not kill P2P altogether.

For those who can afford the $950 registration fee, the Music & Money symposium may be worth the trip. Other panelists include Marty Bandier (Chairman & CEO, EMI Music Publishing), Dave Goldberg (VP/GM of Music, Yahoo), and Harold Vogel (President, Vogel Capital Management.) It’s a one day event, and usually a good education.

The battle lines are being drawn for the Grokster case that the SCOTUS will hear at the end of this month. People are making a big deal about the fact that some high profile artists are breaking ranks with the rest of the industry when it comes to file sharing. So much has been written on file sharing, and this case will be all about the precedent that the Sony-Betamax set in the 80's -- stuff like what constitutes a "substantial non-infringing use" that is often the test for a technology and legitimate business uses of it, of which there are plenty with respect to p2p file distribution. I'll try to articulate my position as succintly as possible:

-The SCOTUS should strongly re-affirm the Sony-Betamax outcome. Doing otherwise would stifle innovation.

-From what I understand, p2p services can filter their results and can do things to limit the amount of copyrighted material that can be found.

-p2p file sharing is a method of distributing bits. p2p is not a panacea. The most prevalent use case is when someone searches for an artist or track and then downloads the file. In these cases, p2p is saving the artist/website on bandwidth fees since they don't have to serve out all of the files themselves. It does not expose the artist to new users or otherwise serve as a marketing tool. Back in the Napster "Hotlist" days, the use case of browsing the files shared by someone was effectively a recommendation tool, and thus had marketing value to (especially lesser known) artists.

-If I were a lesser known artist, I'd be secretly hoping that RIAA is successful in removing most of the files from the major labels. Why? Would you rather have your business listing be 1 out of 1,000 or 1 out of a million in the phone book? In the former, I'd still benefit from the cheap distribution of p2p and stand a better chance of being noticed and heard. The caveat is that no one would use the phone book if there weren't enough good listings in it (i.e. it would be all "tail" with little "head", which is sub-optimal); but you'd still get the benefit of cheap distribution for serving promo tracks to your audience.

[Cross-posted from www.ragsgupt.com. Legal Disclaimer: The views above reflect my personal views and not necessarily that of my company or any other entity that I may represent]

When I hear pundits declare the inevitability of legal P2P services, I think to myself, “but what about the customer experience?” They say that the economics of P2P music distribution means that P2P wins. If you’re talking about free music, maybe. But when it comes to paying for music, I’ll take a centralized music service any day, where music files are hosted and managed by the service provider. I want my music when I want it, and I don’t want my experience interrupted because someone in Des Moines turned off their computer. I like knowing that the quality of the file will be consistent, and that I’ll have ready access to music information, message boards, and the other things that make a good music service satisfying to use. I am paying for it, after all.

Remember the excitement over e-books? Here was another technology that made things easier for the distributor but not for the customer. The publisher gets around the nuisance of printing books and fighting for shelf space, while the customer gets to worry about reading devices, laptop battery life, etc. When it comes to consumer experience, the print book wins hands down. So it is with music services. Unless P2P services can match the customer experience of the best online music services, they will be anything but inevitable.