Down Boy! TuneCore CEO Frothing at Digital Music News… Again

Last week, we wrote an article about iTunes Connect, which allows direct uploading of content into the iTunes Store.

That system is currently very artist- and user-unfriendly, and even Apple recommends going through a third-party service like TuneCore.  But, the point of the article was that Apple could certainly modify that interface – and create serious problems for middleman companies like TuneCore.

Well, here’s what TuneCore CEO Jeff Price had to say about that (reposted below).  My response is in the comment thread.

-pr.

__________________________

 

This posting is not about me trying to drum up business for TuneCore. Rather, a recent music blog [Digital Music News] ran a factually incorrect and incomplete story about how artists can “go direct” with digital stores like iTunes. It’s frustrating to see wrong information being stated as fact as misinformation can hurt artists. I thought it important to provide a more complete story.

To begin, the article implies that a “submit an application for iTunes” link recently became available.  This is not the case. This link has been live and available since the day iTunes launched.  One of the reasons I started TuneCore is that many digital stores will not do deals directly with most artists, requiring them to go through a middleman. This is not because the digital stores do not like or value artists, it is because of the support, logistics and liability issues that exist around being a digital store.

For example, many of these contracts run over twenty pages and require a physical copy to be signed and mailed back. In the event the digital stores allowed all artists to sign up directly, they would need to physically snail mail out millions of paper contracts and wait for an original signed copy back (a scanned PDF emailed does not suffice). In addition, the signer of the agreement must be over 18 years and have an attorney on their end read it over to avoid any possible legal issues. As many of the companies that run digital stores are publicly traded, they would very much need this procedure followed.

Term Issues

In addition to then having to file millions of contracts, each one would have a different expiration date around the Term – this means that there must be a schedule kept as to when each of these contracts expires. Prior to expiration, they would need to “renew,” and while there could be an auto-renew trigger in the agreements that may address this, the Term still needs to be kept track of in the event the digital store would like to discontinue the relationship.

On top of the Term issue, there is also the amendment issue: for example, since launching, the digital stores have added new provisions, territories and options to each agreement. For each new amendment (i.e. complete my album, DRM free, expansion into another territory, longer preview clip streams, and so on) additional paperwork must be sent out. This paperwork would then need to be physically signed and snail mailed back and attached to the appropriate agreement it is associated with.

Each contract also has a confidentiality clause: in the event any of the contract holders posted any information from the agreements, the digital store would contact the contract holder about a potential material breach of contract (not to mention they now need to police this as well).

Add to this that each time a digital store would like to do a promotion around a free giveaway, a feature, etc., they will also need to reach out to each entity separately and get even more paperwork signed off on and sent back.

Music Issues

On top of the legal issues, with each agreement would also come the additional artist support and issues about how to get music, metadata and art to the digital store.  For example, what is AAC, what is an MP3, how do I get my file to be 44.1 khz, I only have my music as an MP3 how do I make it a lossless AAC, WMA, WAV etc file?  I don’t have a fast net connection and cannot upload.  My net cut out during upload. What is a UPC, what is a song identifier, do I need an ISRC, how do I get them?  How do I make a 600 x 600 300 dpi image? In some cases the digital stores switch formats and have asked for the music to be resent to them in a new codec (for example, please re-deliver your songs to us as 256kb, 44.1 khz, MP3s as opposed to a .Wav)

Then move onto other issues – I uploaded the wrong track, I need to take the release down, I need to change the name of the song, I misspelled the title, I need to add Japan but remove the UK.  I fired my manager but he has the account details and access, please change it to me and so on.

Legal Issues

Then there are the legal issues – many artists do not know the intimacies of copyright law – some infringe on copyright without knowing they are, others infringe well aware they are breaking the law, still others have fraud schemes.  If these artist are going direct, the digital store becomes more directly legally liable to be sued, whereas if the digital store gets the music via a larger “middleman”, that middleman has to warrant and represent the music is free and clear of claims.  In the event the music is infringing on copyright, the middleman takes the liability hit and legal challenge. The middleman also typically has “deeper pockets” and is able to settle the claim.

Now add on top of this the millions of emails and phone calls from each contract holder trying to get feature placement. As a reference point, imagine millions of artists calling Rolling Stone magazine directly to get an album review as opposed to a smaller group of publicists.

And that’s just to get the music in.

Now there are the issues around getting the money out – you need a bank account that can take direct deposit (not that big of a deal for many of us, but there are some that do not have this).  Most of the digital stores do not mail out checks, they do electronic direct deposit as they do not have the infrastructure to physically mail out checks and paperwork to the existing entities they work with. Then there are the challenges of wrong bank account info and bounced EFTs.  How does this money make it out?  The stores need to reach the customer and cannot due to a fictitious email, wrong phone number, transfer of rights and death of the copyright holder or address unknown.

Incomplete Story

Holding onto the money from the sale of the music creates financial and legal liability.  If it remains uncollected, after a period of time, income tax most likely will have to be paid on it by the digital store.

Then there is the customer support around the monthly statements – i.e. “I know I sold a song in January, but it’s not showing it, why?”   Because January sales are reported in March.  “Why did I make less/more than what I expected?” Due to the music selling in Japan at a different rate, being sent to your U.S. bank account and your bank doing a Yen to Dollar conversion.  “How come a % of my money is not being paid to me from Australian sales?” Because there is a tariff imposed by the Australian government due to international trade treaties.  “Why am I losing 25% of my sales income from songs sold in Japan?” Because you have not filed a form required by the Japanese government to eliminate this fee. And this list too goes on and on.

As to why someone would choose to run an incomplete story as fact I can only speculate – either they really did not know (in which case they really did not do any investigation and should run the article with a disclaimer) or they may be trying to run sensational news stories in an attempt to drive chatter, eyeballs and ultimately ad dollars into their pockets.  There is nothing wrong with this, provided the blog states it is an opinion piece. The challenge is when someone creates an “official” sounding name and states something as fact knowing it’s not to make money via web traffic and get the sort of financial exit TechCrunch did.

But more importantly, artists should be provided with as much clear and accurate information as possible to allow them to pursue their goals.  This misinformation only hurts.

[Jeff Price, TuneCore CEO]

12 Responses

  1. JReedy

    Interesting…. so your speculation was misinformation? I read the subject article and you are clearly hypothesizing possible advancements, not claiming them to be fact. What the CEO of Tunecore should have said is that your speculation doesn’t account for various roadblocks (which he then goes on to describe for multiple paragraphs).

    Regarding your “misinformation” of the “recentness” of iTune Connects launch, you admit that it has been around for a long time. The only recent occurrence you claim is that you and your crew stumbled upon it.

    The CEO has great points about the amount of work involved with doing your own distribution and the inherent problems with making the process user-friendly. However, did he have to come down so hard on you for speculating? Accusing a journalist (not the derogatory term blogger) like yourself of misinforming the public is one of the worst accusations he could make. Considering you wrote towards the top of the article that Apple suggest Tunecore, he should have shown some grace. You also didn’t even mention some of their competition, The Orchard. Perhaps you should switch which digital distributor gets the most attention on your news service as retaliation for this disrespect.

  2. presnikoff

    Jeff,

    Let me offer a detailed response to your response. Your comments are in italics, mine immediately follow. I hope others will join the discussion.

    > the article implies that a “submit an application for iTunes” link recently became available.

    Actually, the article does not imply or state this. Rather, it states that we recently discovered iTunes Connect. I quote the article to back my point.

    “Actually, ‘iTunes Connect’ has been sitting there for a while, though keeping quite the low profile. ”

    Does that sound like we’re implying iTunes Connect just launched? I don’t think so.

    > One of the reasons I started TuneCore is that many digital stores will not do deals directly with most artists, requiring them to go through a middleman. This is not because the digital stores do not like or value artists, it is because of the support, logistics and liability issues that exist around being a digital store.

    The focus of the article was iTunes, and we talked to Apple about this issue. Actually, they recommended going to a third-party service like yours for many of these reasons. This is why you have a business.

    In fact, a bulk of your response is dedicated to the complexities of distributing and managing artist content on stores like the iTunes Store. I have no doubt you are one of the top experts in these aspects. In fact, these complexities are reasons for TuneCore’s existence, but I’d argue that they are difficult to protect (ie, low barriers to entry as evidenced by your numerous competitors). In fact, the crux of the article is that Apple could also decide to absorb these roles as well.

    You’d most likely argue otherwise, though these functions are not protected by patent or extreme setup expense as far as I can tell. In other words, a group of smart entrepreneurs and investors can make a TuneCore competitor right now, and the terrain proves this.

    But I view this middle tier and your model as delicate, based on the sheer size of Apple. Apple is a much, much larger company than yours, with capabilities and resources that stretch beyond what you could achieve. In fact, they could even purchase TuneCore or one of your competitors and virtually wipe away this middleman space that you occupy right now.

    > As to why someone would choose to run an incomplete story as fact I can only speculate – either they really did not know (in which case they really did not do any investigation and should run the article with a disclaimer) or they may be trying to run sensational news stories in an attempt to drive chatter, eyeballs and ultimately ad dollars into their pockets. There is nothing wrong with this, provided the blog states it is an opinion piece.

    This has so many misplaced accusations in it, I’m not sure where to begin. The piece is factually correct, and includes opinions and discusses possible business moves by Apple. I’m not sure why I would I would need a disclaimer to run that article.

    It was not a sensational news story, and I think our audience has the intelligence to understand which parts of the article are fact, and which are opinion and analysis.

    >The challenge is when someone creates an “official” sounding name and states something as fact knowing it’s not to make money via web traffic and get the sort of financial exit TechCrunch did.

    Jeff, I think this is going a little overboard. The piece is factual, but I’ll let my readers determine whether we are official or not. And believe me, they are intelligent readers and will call us out if they have an issue with the facts as presented. There’s no pulpit or credibility that comes with an ‘official’ name as you suggest. Those days are long gone.

    And of course, I want to make money, but it’s not through misinformation as you suggest.

    Thanks,

    Paul Resnikoff

    Publisher, Digital Music News

    • Youareyou

      The most interesting thing about Jeff’s article is the fact that you have to mail in a paper contract to end up in a digital storefront. Of course, this is the music industry… #gofigure

  3. Visitor

    Jeff Price:

    you obviously feel threatened by DMN but why look so defensive? please stop being a salesman to dreaming artists for one second! there’s a real discussion to be had here.

    • WILL

      I agree with Visitor. It seems that the likes of Jeff Price and even last week, Ian Rogers get defensive awfully quick and write great chapters on sites like these defending themselves. Price, ultimately DMN is right..Apple could eat you whole in one gulp were it to move into your territory. And it was pitiful reading Ian Rogers last week pleading with two persons who had left comments to call him, or go visit Topspin and see what they’re up to. Jesus! I mean, he had absolutely no idea who they were and what they did. They could be complete nobodies.

  4. PartlyCloudy

    Now Jeffrey, just be happy your little racket has lasted this long. Yours is a late 90’s C.E.O. style. Lots of flash and bullshit, chest-beating, media mongering but not much there. Why someone would invest in you now I’m not sure, I’d be surprised if you make it through without destroying your company.

    • Chris

      Wow Jeff, sounds like somebody pissed you off AGAIN!!

      How many times are you going to go off at people, sounds like the Tommy boy Ceo insident all over again.

      I actually use tunecore, I belive it is a good service, having said that, If apple was to make the process easier for recording artists to join them without a middleman, I would do it in a second.

      Thats nothing personal. Thats just Business.

  5. iTunes??

    Yes, if Apple wanted to, they could easily do away with the Tunecores. But Apple has never been about music. Third party aggregators allow Apple to keep their focus on their core business – selling Macs, iPads, iPhones, apps and iPods.

    Tunecore provides a fantastic service for the $50.00. Their interface is very user friendly and response times to problems very fast. I can’t for the life of me seeing myself chasing down and dealing with all of these digital stores. Oh, and its always nice getting those checks $$.

    I’m with Jeff on this one.

    • Visitor

      I’m with on this one Jeff too.

      Apple’s customer support is not very good. You can only get in touch wiht them via email and while their support staff try, you have to wait a day for someone to get back to you and thne play email tag for days. Apple’s support for all but it’s top-tier partners is exactly the same way. Try doing the same thing with multiple stores and, well, you can see the market need TuneCore et al are serving. If Apple REALLY gave a shit, they’d just BUY TuneCore or a competitor and provide a turnkey solution. But they aren’t interested in the least simple because they can’t make half a billion at it. It’s obvious that TuneCore and its ilk aren’t geared for the 1% that can turn 100,000 units/downloads. But don’t knock them for filling a much needed service.

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