The band is using Culture Jam’s custom Twitter application to manage the Twitter whuffie track exchange, so retrieving your free copy of the live recording is a simple-three step automated process.

Click the “Connect to Twitter” button on the application landing page, grant the application access to your Twitter account and tweet as instructed. You can then redeem your music download using the provided iTunes gift code and the I-scratch-your-back-you-scratch-mine deal is complete. Should you also want to take home one of 15 White Vinyl LP editions of the Backspacer album, you can enter to win that as well.

Pearl Jam’s Twitter giveaway is by no means unique, but it does signify that giving away free tracks via the microblogging site is a trend that here’s to stay. Obviously more and more artists are realizing the power of a message spread through Twitter’s real-time digital airways.

via The Price of Pearl Jam’s New Single: One Tweet.

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CBS should be pleased with its choice to allow Microsoft to sync Xbox LIVE to Last.fm, as the partnership has already netted the streaming music service nearly a million new subscribers. Last.fm went live on Xbox last Tuesday, and both companies are already hyping the deal as a success in terms of the numbers. CBS (NYSE: CBS) says it broke a record for the number of new profiles created in a 24-hour period, and that Xbox LIVE users had already streamed more than 120 million minutes worth of music.

Less clear is whether there is money changing hands: neither company would comment on whether Microsoft (NSDQ: MSFT) is paying CBS a rev-share, since only Gold (paying) Xbox LIVE subscribers get access to Last.fm.

Aside from a potential rev-share from Microsoft, the million new subscribers can still add to CBS’ bottom line, as they’ve instantly increased the reach (and targetability) for the ad-supported Last.fm service. In a statement, CBS Interactive Music Group President David Goodman said the company was looking forward to the next “big opportunity” to “expose new users” to the Last.fm brand, a hint that similar partnerships with other device-makers could be coming down the pike.

Meanwhile, Microsoft talked up the other new features that it launched for Xbox LIVE: Twitter and Facebook integration, as well as a new Zune-branded content download store. The company said nearly two million people—or roughly a tenth of the total user base—had logged into their Facebook accounts through Xbox LIVE in less than a week. No hard stats on Twitter, though Microsoft spokesman David Dennis told CNET that there had been “tweets from nearly every market” that the Xbox LIVE service was available. As for the Zune marketplace, the comany said 1.7 million members visited in less than a week, though it didn’t say how many actually purchased content.

Related

• As Last.fm, Facebook And Zune Go Live On Xbox, Sony Preps Social Features For PS3
• Last.fm To Take Over CBS HD Broadcast Stations In Four Markets
• Last.fm Founders Quit, CBS’ Goodman GM For Now; But Why?

via Pair Plan Venture to Sell Music Subscriptions – NYTimes.com.

The idea of selling monthly subscriptions to a vast catalog of online music has met with only limited success. That isn’t stopping a new batch of entrepreneurs from trying to make it work.

The latest and perhaps most surprising entrants to the field are the European entrepreneurs Niklas Zennstrom and Janus Friis. In 2001, they created and financed Kazaa, one of the original peer-to-peer file-sharing services that hurt the music industry. The two have created and financed a secretive start-up called Rdio, with offices in Los Angeles and San Francisco.

Rdio and similar start-ups are reinventing a concept pioneered earlier this decade by Rhapsody, a service majority-owned by RealNetworks, and the tamed version of Napster, now owned by Best Buy. A few hundred thousand Rhapsody and Napster subscribers pay monthly fees of around $15 for the right to stream an unlimited number of songs, at any time, from their PCs and mobile devices.

But with modest membership growth at best, neither service has managed to challenge iTunes, with its many millions of users — or enticed music lovers from pirating music. Moreover, Yahoo, AOL and MTV Networks have abandoned their own music subscription efforts.

But as CD sales continue to plummet, and the music industry searches for a profitable future, entrepreneurs with various approaches say they believe they can finally make music subscriptions work. Rdio is hoping to introduce a music subscription service by early next year that offers seamless access to music from both PCs and cellphones. The big challenge will be to get licenses from the major music labels, which have not viewed past digital music efforts by Mr. Zennstrom and Mr. Friis favorably.

“The ironies are very interesting,” said Drew Larner, Rdio’s chief executive, who says talks with music labels are continuing and confidential.

Since they started and sold Kazaa years ago, the founders “have shown they understand content and they have always been up front with the labels about what they are trying to do.”

Mark Piibe, the head of digital business development at the EMI music label, confirmed that talks were under way with Rdio and said there was no reluctance to deal with the pair. “They’re businessmen with a real track record of innovation,” he said. “They are bringing a lot of new ideas to music distribution and there is no reason why we wouldn’t talk to them seriously.”

Related articles by Zemanta

• Joost founders building music service (guardian.co.uk)
• Skype founders to launch Rdio while Joost UK goes into administration (telegraph.co.uk)

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MCPS-PRS, the U.K. music publishing licensing and collecting organization, recently released a proposal suggesting that new digital media companies that want to license their copyrights should provide equity in their fledgling companies in exchange for the license.

They cited as some of the reasons behind this proposal:

1. Start-up firms present an undeniable headache for music rights entities. At incorporation, emerging firms tend to lack the financial resources, both in terms of cash holdings and cash revenues, to pay otherwise standard fees for music rights.

2. Emerging firms are not stable entities, in terms of their chances for success and the nature of their business models.

…and…

3. Nascent firms tend to operate at, or far beyond, the edge of the envelope that is offering music to the general public according to previously understood, acceptable and agreed upon terms for a license.

Therefore the music companies are taking a large portion of the risk in entering into a licensing relationship.

They go on to state that these companies are created principally for the benefit of the founders who will build the business and flip it for unknown rewards. The rewards, they contend, do not in any way benefit the music entity which helped make the transaction possible. Therefore the music companies should have a stake in that potential upside.

Before I offer some alternative proposals, there are a number of issues to consider here:

1. What experience does the society have in determining valuation vs. investment? These deals are highly speculative. I envision that after a few failed companies blemish the society’s investment record, the societies will charge valuation to investment ratios at unacceptable levels to hedge their bets. This would end up defeating the purpose of the proposal and bring us full circle to where we are now.

2. Would the company that operates on a multinational basis be required to give up equity in each territory? The process of getting licensed in multiple territories is complicated enough without having each society and label as equity partners. Rates vary by territory, so why wouldn’t the equity valuation and complications vary also?

3. How do the proceeds of an equity liquidation event get distributed to the members of the society? I’ve always been confused by the distribution calculations from public performances, which are mostly undocumented (restaurants, retail outlets) — will these calculations be the basis for distributing a windfall?

4. Finally, what level of control will the societies and labels demand or have over the direction and operation of the invested company? Do they get board seats? These organizations are strapped for personnel to handle the levels of digital media business development they have now. How do they expect to manage all of these investments? And how do you prioritize two companies competing in the same or similar markets with whom you have equity investments?

While I applaud the writers of this report for their efforts in coming up with a proposed solution for this evolutionary challenge, I think it misses the mark and raises many more questions and concerns than it answers.

I offer two alternate high-level solutions to the MCPS proposal.

1. Develop an experimental license fee program that will help companies of certain funding levels “get off the ground.” Many companies have an interesting idea that they think will “revolutionize” the music business. The problem is that unless they try out the idea in the public marketplace, no one will know if it works. Give them six months to one year from launch to develop the business at extremely reduced rates — the solid companies will rise to the top and become viable businesses from which the societies and labels can extract their revenue.

2. Maintain the status quo because the marketplace will take care of the issue itself. Much to the chagrin of many an idealistic entrepreneur, until music copyrights truly become part of the open source revolution, there has to be a price to pay to use these valuable assets. I don’t understand how companies can take the position that because the owners of copyrights charge what they think is too much for the use, they can just use these assets without permission. Music licensing is a right given by the owner, not an obligation (aside from the statutory mechanical rates). Those that build businesses on the backs of these copyrights without permission tread at their own risk.

In the end, I vote for #1. It’s going to take a lot of new ideas to revive this business. Given the way music sales decrease year after year, it would benefit the societies and labels to allow entrepreneurs to experiment in the hopes that together they can help the music business find a new footing.

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I actually like the idea to a point. I’ve been a Rhapsody subscriber for years and find great value in the subscription model. The underlying question I have in the Warner plan is if the music is freely shared all around the net, how do they account and pay to the artists who work so hard to produce the music in the first place.

Let me know what you think.

—–

The Music Industry’s Extortion Scheme by Reihan Salam

The record labels want you to pay a tax on music. It’s not as horrible as it sounds.

What would you do if a bully—let’s call him “Joey Giggles”—kept snatching your ice-cream cone? OK, now what if Joey Giggles then told you, “If you pay me five bucks a month, I’ll stop snatching your ice cream.” Depending on how much you hate getting beaten up, and how much you love ice-cream cones, you might decide that caving in is the way to go. This is what’s called a protection racket. It’s also potentially the new model for how we’ll buy and listen to music.

Let’s back up for a second. Four companies (Universal Music Group, Warner Music Group, Sony BMG, and EMI) control a staggering 90 percent of all record sales in the United States, and they’re hopping mad. CD sales are in free fall, and the recording industry’s revenues have shrunk from $15 billion to $10 billion in less than a decade. Instead of blaming themselves for failing to embrace the Internet soon enough, Big Music has pointed the finger at piracy, shaking down scofflaw MP3 downloaders with capricious, multimillion-dollar lawsuits. This has not strengthened the record companies’ position—at this point, they’re losing money and everybody hates them.

Now Big Music is mulling the Joey Giggles approach. Warner Music Group is trying to rally the rest of the industry behind a plan to charge Internet service providers $5 per customer per month, an amount that would be added to your Internet bill. In exchange, music lovers would get all the online tunes they want, meaning that anyone who spends more than $60 a year on music will come out way ahead. Download whatever you want and pay nothing! No more DRM! Swap files to your heart’s content—we promise, we won’t sue you (or snatch your ice-cream cone)! More

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A message by Gerd Leonhard, Co-Founder & CEO

As a consequence of a the unworkable music licensing situation and the resulting lack of solid revenue modeling Sonific’s founders and investors have decided to temporarily take Sonific.com and Sonific.net offline.  While we are looking for other ways to realize our vision we are also open to talking to any interested party that may have use for Sonific’s user base, content relationships, technologies or distribution network (please contact us anytime to find out more). Together with some other partners, we may also investigate the concept of making Sonific a paid-for service that is provided to artists, record labels and other content providers on a white-label basis.

Here are some background details on our decision:

1) There are countless startups providing access to any and all music streams without any license whatsoever. However, when we approached the major record label decision makers in order to obtain licenses for some of the music in their catalogs we have routinely faced demands for very large cash advances and fixed per-stream minimum payments, pressure to give them ‘free’ company equity, and requirements of utterly bizarre usage restrictions. It seems that the industry’s major stakeholders still prefer this turf to remain unlicensed rather than to allow real-life, workable and market-based solutions to emerge by working with new companies such as Sonific. This is not the way forward.

2) We therefore had to realize that a company that wants to provide interactive streaming music services must either a) risk the constant complaints of their users, due to the lack of hit content  b) proceed to use any and all music (this is routinely done by allowing users to upload their own MP3s) without the required licenses, and therefore be at the total mercy of the record labels at some point in time, and c) build a huge audience very quickly, based on having the content available – permission or not -, and then very quickly sell themselves to a large company that will take care of placating the labels while the money is plenty and the pockets are deep.

Unfortunately we don’t like any of these choices.

The bottom line is that this industry is certifiably dysfunctional and that we do not see a plausible path to take at this time. We neither want to engage in so-called copyright infringement nor do we have millions of dollars available to buy our way in when it is abundantly clear that doing business under the existing rules of the major labels will simply amount to economic suicide.

Almost a billion people now use music to stream on their blogs, social network pages, home-pages and user profiles – this is indeed a veritable gold mine for music marketing and selling, and it can make serious money for artists and composers. Yet, the established players in the music industry are still looking to simply squeeze ‘permission fees’ from companies that want to serve this market, instead of building new opportunities together. Maybe, just like Radio over 100 years ago, a plausible conclusion may just be that this must apparently be done without permission while the industry catches up – but we shall leave this for others to explore this theme.

We want to thank all our partners and the many artists, independent record labels as well as the few major label new media people that dared to try us anyway, and the leading music aggregators that have provided the over 200.000 songs that Sonific has offered until now.  We also want to thank our faithful users that played our music every day, and the over 80.000 people hat have signed up for our service, and we apologize for having to pull the plug on you. We hope to return in a different incarnation; please stay tuned via our blog.

Gerd Leonhard

Co-Founder & CEO

A few more things:

FOR OUR USERS

• If you want to comment on this announcement please email us go the SonificBlog
• If you are a Sonific user, please note that you need to remove the widget code from your sites and blog posts asap otherwise there will be empty spots on your pages when we turn the streaming off on May 1, 2008
• If you want to keep on playing music on your website, here (below) are a few great resources you can go to and pick whatever works for you (please note that we don’t make any representations on the legal status of any of the offerings listed here):

1049 Facebook Music Apps

Mashable List of Music2.0 providers

FOR OUR SONIFIC.NET MUSIC PROVIDERS

If you have provided your own music to Sonific.net we very much apologize for the trouble but we cannot continue to provide this service for you.

Please take a look at this list to see if they can offer similar services.

Reverbnation

Rcrdlbl

We7

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A known secret of the music industry: the labels, though becoming open to new business models from startups, are asking for a hefty upfront advances for licensing music and in some cases a substantial equity stake in the company, and Billboard explores the practice. Someone like Universal Music Group is making the equity stake standard in any deal, our sources say.

Among the examples: troubled online ad-supported music service SpiralFrog has given more than $3 million in upfront advances to UMG alone before it even went live, and has paid additional millions in licensing fees since the original term expired. Imeem is said to have paid major advances and gave labels equity in the company, the story says. We reported on the Buzznet-UMG deal last week, which involved equity as well.

Rev share was the norm till a year or so ago, but according to former EMI digital executive Ted Cohen, labels soon soured on that model as services began gaming the system so that labels ended up with nothing. Not that these music services were making any major money in the first place anyway.

“What was once considered a major advance—$500,000 or $1 million—is becoming a $2 million or $5 million advance and really over-the-top requests for equity…If you raise $15 million to start a business, and have to spend $12 million just to pay off the content companies, that leaves you with $3 million to run a company. I don’t know anybody able to do that,” said Cohen.

Is this the cost of doing business, or the new cost of openness?

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By David Gales

Music Purchase vs. Subscription

The Big Idea behind music subscription plans is that they may be an idea whose time has come. The debate over the benefits of music subscriptions vs. music purchases has heated up lately. A number of subscription services have been in the market for a time, including Rhapsody, Napster among others. iTunes, the world’s second largest music retailer, is said to be looking at the idea, in a bundling format with the iPod. Among music companies, there is some concern that subscriptions would be so popular they would hasten the demise of the CD, still an important profit center for music labels.

AT ISSUE: Can music subscriptions provide enough economic fuel for the music industry to replace the revenue lost by un-paid consumption of music?

BIG IDEAS VIEW: For purposes of this discussion, consumers are defined as those who listen to music on radio, online and other promotional media, and customers are those who pay to own or listen to music. There are dozens of issues around this topic, but key to our thoughts are the following.

On the customer side, the issue is choice. That is part of the value for which they are willing to pay. Some would prefer to purchase music one track at a time, while older buyers still feel a connection to full albums. Others prefer to have access to any music at anytime. Still others, the consumers, prefer not to pay for the music they consume at any level. On the creative and business side, there are artists who feel strongly that their music is meant to be listened to as a body of work; that listening to a single song, whether for sale or subscription, is like reading a single chapter of a book then moving on. The overriding issue for music labels, publishers, artists managers, songwriters and others in the business matrix is how to continue to create and market music as a profitable and sustainable product.

Leaving aside those who rationalize stealing music, it’s time for the industry to recognize that while it can exercise some control over the use of music by consumers, it cannot dictate the desires of its customers, who want choice and vote with their wallets. That choice may be the key to converting (or reverting) more consumers into customers.

The still dominant retail music sales model is in decline. The acceptance of music subscriptions is gaining ground. Major labels are contemplating several variations on subscription models, from bundle deals with digital music devices to online social network services. That’s a very good thing. Without choice, there are fewer customers and more consumers. And without customers, there is no music industry, just music consumption.

• • • The Big Ideas Report separates the real issues (Big Ideas) from the noise, so that it’s possible to move forward with confidence or simply converse intelligently with others. We identify issues that have a material impact on your business, define them succinctly and suggest a position, so you can get going. Part fact, part opinion, part alchemy, that’s The Big Ideas Report.

©2008 The Gales Network LLC • 615-646-4683 • galesnetwork.com Comments welcome BIR@galesnetwork.com

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Reselling tickets, once viewed as illegal and a rip-off of consumers, is now being legitimized. Over the past few months there have been a number of large acquisitions of “ticket resellers” made by leading e-commerce companies in an effort to take advantage of this lucrative secondary ticket market. eBay purchased Stubhub for $365 million; last month Ticketmaster purchased TicketsNow for $265 million. Many of the tickets that are re-sold on these secondary marketplaces are initially purchased from the Ticketmasters of the world.

The new combined business model aims to cut in the venue owners and promoters. Ticketmaster President and Chief Executive Sean Moriarty said, “Clients who five years ago were not willing to allow a ticket to be resold now want a piece of it.”

The size of the secondary ticket market is hard to judge, but estimates range from $2.5 billion to $5 billion a year in the U.S. So it’s no surprise that new companies are popping up looking to enhance the experience and take a slice of the pie.

The New Breed of Online Ticket Sellers

Pittsburgh-based ShowClix.com has a novel approach to the online ticket market. Launched in 2007, the company uses online social media tools to offer artists, musicians and promoters a platform to reach their fans, promote shows and sell their tickets completely free.

Users of the website can share, track and promote shows, as well as keep real-time tabs on the shows they like via RSS feed. An advanced search feature also allows them to find shows in their local areas. Additionally, they have enabled embeddable show listings that can be posted to pages on other social networks and web pages.

Imagine being in Chicago for the weekend and looking for a local show. You don’t know the newspapers there, and you don’t know the venues. Look in ShowClix and 150 shows come up. The site also tags the popularity of the show, so you get a better sense of which bands are most interesting.

They recently expanded the live music search engine to allow music venues, concert promoters and musicians from around the world to promote their international tour dates on ShowClix.com free of charge. The database has more than tripled in size since it launched, and now offers information on more than 18,000 concerts taking place in over 2,000 cities around the world.

“In addition to focusing on our global launch, our team has been working hard to continue to develop tools to help musicians promote their live music,” said ShowClix President Joshua Dziabiak.

The service will be expanding in the coming months to include an updated ticketing platform and a developer’s network that will promote users’ upcoming shows on music-related websites around the world.

http://www.showclix.com
http://www.ticketsnow.com
http://www.stubhub.com

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Not long ago, people had few choices for finding new music. These included listening to the radio, hanging out in their friend’s bedroom listening to their collection, or subscribing to a music magazine. All three were really limiting.

Radio limited the music they played to the hits; you were limited by the number of your friends’ record collections, which were limited by their budget … and the same with magazine subscriptions.

Over the last 10 years the barriers have come down. The web has provided many new ways to create, promote, find, share and talk about music. Digital music became a reality; applications such as Napster and Rhapsody came online and the magazines went digital. Then the online self-publishing craze called blogging started and the first music blogs were created.

At first there were but a handful of blogs posting reviews and offering streams or downloads of the music with names like Music for Robots, Said the Gramophone and FluxBlog. But, search for “Music Blog” on Google today and you’ll find over 73 million results.

Just over three years ago, 19-year-old Anthony Volodkin was studying computer science at Hunter College in New York. He had grown tired of the music he and his friends owned. He was disillusioned by the offerings of commercial radio and found traditional music magazines to not be an objective source of information.

Having reached his limit, he turned to the Net to look for new music and there he found music blogs. It soon became a bit of an obsession. He would spend late nights getting lost in the many blogs and the music they wrote about and shared.

Realizing he was spending a lot of time hopping from blog to blog, he imagined that there were other music enthusiasts who may not have the time to spend seeking them out, but were just as voracious about new music. So he decided to build a site that would aggregate the posts from a number of blogs into one site.

In April of 2005, he launched The Hype Machine to provide a snapshot of what was going on in music blogging and make it easier to search through recently posted mp3s.

He sent the link around to some of the blogs and others in the online music space, and they passed the word about this new way to discover music. By creating a cross-promotional relationship with music bloggers around the world, The Hype Machine quickly became one of the hottest resources for discovering new music.

The site is set up for optimal music discovery. Content is sorted by recent postings to the participating blogs. The Popular page includes popular tracks that visitors have listened to over the past three days and the Spy page tracks what people have been doing on the site for the last 90 seconds or so – what they have been searching or what they clicked on.

Volodkin says blogs and The Hype Machine are…”all part of a bigger web ecosystem of music which include Last FM, YouTube, Pandora and other services that create a really compelling experience for music online, that competes very strongly with radio.”

He said a lot of people are spending a lot more time on the blogs, getting more and more of their music and news online and reading less magazines. He expects the online market to only increase.

What started as side project and a distraction to school is, now that he has graduated, Volodkin’s sole focus. He’s intent on turning it into a business that exposes music blog activity in the way Google news exposes what the newspapers are talking about. In the last year, he increased his staff to four people, redesigned the site to enhance the user experience and advertising potential.

He also spent some time pursuing venture capital. Quickly he found out that the VCs were concerned by the volatile attitude of the music industry towards ventures that are using music online in some way.

Undaunted, Volodkin and his team refocused themselves on making the product better, scaling the platform and growing the audience. The new focus is on letting members discover people through some interaction they have had with the music.

They continually update and tweak the site based on user feedback and suggestions, but always with, as he says, “a clear vision of creating new directions to communicate the idea of people discovering interesting music as a result of the activity of others, in some valuable way.” Also, they made the site more personal and interactive by adding member profiles and allowing members to see what other members are doing on the site.

Last month The Hype Machine topped 800,000 unique visitors. In addition to the music fans, the music industry itself has found value in music blogs … and The Hype Zone in particular.

Label A&R departments, artist management firms, music magazines and even radio stations frequent the sites looking for new talent. The Hype Zone’s “Most Popular” section is a great place to instantly find music that is making an impact on the community.

Today at 22, Volodkin says he’s learned a lot about business and about himself since starting the site. Most enlightening to him is how important, yet difficult it is creating a healthy mix of interactions with the users, the feedback and responses they provide balanced with leading and creating something you think should exist.

The Hype Machine http://www.hypem.com

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