From Here On Up It's All Downhill*|
[ No. 51 - January 2001 ]
Sometimes it feels like the insanity will never stop. In an epoch
where you can buy a CD through your cell phone (soon your Palm
handheld - maybe even your palm!) and prices for storage media drop
through the floor on a daily basis (DataPlay will offer a $10
re-recordable format for 500MB of digital music, Iomega has a $10
40MB data disk) it feels like the deeper we investigate Internet
audio the more it appears the same people are running everything.
The year 2000 has seen many venture capital backed indie companies
plucked up by large businesses, and others burn through millions
of dollars until there's nothing left, their workable business
model dangling somewhere in the future. The big 5 (perhaps soon 4)
labels continue their cozying up to the Internet industry, injecting
their money (and their will). Bertelsman's "loan" of $50 million
to Napster for the development of a subscription model featuring
BMG music is a perfect example.
This month we want depress and elate you. Recent Internet audio
company downers will be balanced with displays of actual common-sense
by the oftimes over-funded online music community. That sense of
entitlement oozing from the pores of corporate "cybermusic" whores
is finally washing off in reality's cold shower. It's the wake up
call we've been anticipating.
First, let's talk about how the major labels have bitten the bullet.
Streaming companies like Musicbank
are finally able to buy licenses to legitimately
stream major label catalogs (i.e.: the latest Mariah Carey and
Sting releases can be legally listened to via Internet radio). EMI
will license music to Streamwaves for their own subscription model
(between $10 and $13 per month) set to launch at the beginning of
The above shows adherence to the "if you can't beat 'em, join 'em"
business model. That, and the "duck and cover" are all the tools
the techno and the bureaucrats seem to be using. Hell, it ain't
easy sailing for Interent music companies right now. Tech stocks
are way down and many companies are hemmorhaging cash or have simply
---> Venerable Riffage
having already received
large infusions of cash from BMG and AOL, is having a rough time.
They need even more money and are considering selling themselves
off. Who, other than an old-school, cash heavy big label, is going
to step up to the plate? Riffage recently spent one million dollars
on a site redesign and another million buying the hundred-year-old
Great American Music Hall in San Francisco. Reports from the front
line are: web operations remain a far third in revenues, well behind
1500 Records (their acquired private indie label), and the live
venue. The FezGuys never really cared for the domain name (c'mon,
man: "riffage"...like: "Dude!") but wish them the best.
has been making overtures to Napster
regarding illegal sharing of Emusic copyrighted
material. Rebuffed in their negotiation attempts, Emusic is now
claiming Napster has "forced" them to report offenders. They'll
use a 'bot to find 'em, an email to warn 'em and 24 hours later
demand Napster remove 'em if those files are still beginning shared.
In spite (or because) of this frantic proactivity Emusic's stock
remains bottomed out.
---> Online indie distribution company The Orchard ("A Place To
Grow") has pruned staff and owes tens of thousands of dollars to
employees and artists.
---> Independent label Platinum Entertainment is selling all
its assets and filing for bankruptcy (it was probably that horrid
domain name for their web site:
---> Once proud Artistdirect
valiantly attempting to staunch rabid spending, has dumped 12% of its staff
and more layoffs are expected. The company had been blissfully
burning through $10 million a quarter. Of course, it still has $97
million in cash so anything's possible. How about one last megalithic
---> Punch-drunk but still standing, MP3.com
settled with the last of the big 5 record labels. That's a total
cave-in of about $170 million out the door to mollify the plaintiffs
and pay the lawyers. Of course, MP3.com probably still has a cool
$100 million in the bank. Maybe they'll buy Riffage. Probably
not, because labels that have already settled with MP3.com still
have the right to come back and collect more damages. This raises
the possibility of the defendant's dissolution into bankruptcy and
would mean, of course, that no one gets paid. And so MP3.com has
suddenly added a retired judge who specializes in intellectual
property rights cases to its corporate board! Smart thinking.
The online music flash in the pan is becoming cold, curdled grease.
Most everybody's finally stopped screaming "There's gold in them
thar hills!" Of course, this is all good news. Realistic business
models and realistic expectations can now take their rightful place.
One potential downside here is cool indie sites being bought by
suits, branding kept and braintrust fired. Once again the big guys
can own the space by simply waiting to get a good deal to buy the
intrepid trailblazers. Sounds a lot like Microsoft's strategy:
the Law of Attrition. But we're not bitter about it! "Always look
on the bright side of life...."
Now, let's take some questions...
Hi Fezguys - can you explain how, if Napster is free, no fees or
nuttin', how does it generate any money? Who pays for the
servers/electric bill. The guy who 'invented' it sez he quit school
to 'run the company'. Who pays his salary? How can it exist as a
company with stocks etc, if it doesn't really exist? Thanks - Steve
Steve - You've hit upon the essence of this era of online music!
Napster the technology is a small app that a college student
developed in his spare time for the hell of it and released to
anyone and everyone. It works without money or sales because everyone
simply donates the disk space on their hard drives to share and
share alike. As to Napster the company with payroll, etc., well,
it's called investment. People with money to burn offer some (for
operational costs and frequent trips to music conferences) to a
bunch of heads who are attempting to turn a free tool into a
profitable one. Whether or not it'll work depends on an infinite
number of variables including, to a large part, luck. If Napster
the company runs out of money and they can't get any more the
employees will migrate to the next company and the investors will
own what's left including the name and the technology. A fire sale
will ensue. Isn't the free market cool? Hope this helps. - The
Dear Fezguys, I need some advice. One day my dream is to own a
record label, and I have done a lot of song writing and a little
producing, but my two big questions are how do I get my foot in
the door, and how do I keep my beautiful ship of artist from sinking?
Would I need to start my own web site? I have thought about this
for a while, I'm not just playing on the computer. Please reply!!
John - You can't get your foot in the door without first getting
your boots on. Do this by playing live as much as possible. You
can't keep your artist's ship afloat if they aren't naturally
buoyant. Let them sink and go find someone else already knows how
to float. You've got enough work to do just taking care of your
end. Remember, the music comes first and then the web site. A good
first step might be to take advantage of free upload sites (IUMA,
MP3.com, Riffage, etc.) to create simple but useful web pages for
your music, bio, and tour dates. Your local dialup ISP account
should include some web space which you can play with to create a
more personalized site for your band. Also remember to register
your band's domain name. Good luck! - The FezGuys
Fezguys - When are we mac users goining to see a mac version of
Shoutcast? I saw a version for macos x, but in an attempt to down
load, it could not find the file. I would like to see a pre-macos
x version. I'm not ready to jump on the macos x bandwagon. - Sean
Hi Sean - We feel your pain, but the only get some love there is
to ask the folks who develop Shoutcast when (and if) they will
produce a Mac version. Get your friends who also want a Mac version
to e-mail them as well. Show Shoutcast there's a demand. That will
help them prioritize your request. By the way, we assume you are
talking about the server component, as there are a number of MP3
players out there for the Mac that can play Shoutcast streams
(Audion, Macast, etc). You go! - The FezGuys
Hi Fezguys - I am writing this note to you because I need a little
direction (though not much). What's the technology, is it simply
Java applets plopped in (obviously I want to avoid the media
same? Or am I so far behind that I should just go pickup my
Sigma-acoustic Bass and pass the time away? I hope you have a chance
to respond, and I do appreciate your time. - Peter
Peter - There's lots of ways to start audio playing as soon as a
fan brings up your web site. Macromedia flash easily embeds MP3
audio in a page, and most browsers (certainly Netscape) can play
automatically pop up new windows with music in them, too. But,
soft...take a moment and ask yourself this question: Do people
really want music to start playing when they arrive at a web
site? Here are the FezGuys top 5 reasons to avoid embedding music
on your home page:
- It's simply not expected and can be jarring.
- It may require software which users don't have installed. This would result
in a warning message - not a good first impression!
- Most people are already listening to their own music and once yours
mixes in it's instant cacaphony.
- Many users are still connecting with dialup modems. Including music
in your home page will take much longer to load - also not a
good first impression
- After clicking on one link, clicking "back" on the browser restarts
that same audio clip over again from the same place often
delaying the time until your visitor can click on another link.
Visiting your web site should be easy, quick, and pleasant. We
encourage you to incorporate all sorts of features into your site,
but try to place them where people know what to expect. Offer links
to this information with helpful messages such as: "Click here to
see a cool multimedia display of our music video!" or "Check out
our music in our interactive jukebox!" It's an aesthetic choice
only you can make. Choose wisely. - The FezGuys
(* with apologies to Walt Kelly)