A couple weeks ago, we reported how the Performance Rights Act was under negotiations:

The bill primarily aims to (1) amend the Copyright Act by granting equal rights to musicians when receiving compensation from terrestrial broadcasters, and (2) establish a flat rate for non-commercial and public terrestrial stations that make less than $1.25 million a year. Essentially, the bill wants to place the same enforcement on terrestrial radio that already exists on internet and satellite radio." —Performance Rights Act Currently Under Negotiations; Local Radio Freedom Act Gaining Steam

Last Monday, the recording industry called AM-FM broadcasting a "form of piracy":

On Monday, the recording industry sent the National Association of Broadcasters — the trade group representing the $16 billion a year AM-FM broadcasting business — a can of herring to underscore that it believes its arguments against paying royalties are a red herring. The NAB says its members should not pay royalties because AM-FM radio “promotes” the music industry. [...] "It’s a form of piracy, if you will, but not in the classic sense as we think of it," said Martin Machowsky, a musicFirst spokesman. —Recording Industry Decries AM-FM Broadcasting as "A Form of Piracy" (Thanks James K.)

On Thursday, the Performance Rights Act passed a U.S. House subcommittee and is heading to a full Judiciary Committee:

A U.S. House subcommittee passed a bill Thursday that would require radio stations to pay royalties to artists for playing their music. The Performance Rights Act passed on voice vote in the House Judiciary Committee’s Subcommittee on Courts, the Internet, and Intellectual Property. The next step for the bill is a vote by the full Judiciary Committee. —House Subcommittee Votes Yes On Royalty Bill

Next week?

EMI’s owner Guy Hands is a visionary, and he’s been having visions of cutting jobs at least since January, when EMI announced job cuts of roughly 1,500-2,000 (TMT News). In April, word got out that 2,000 more jobs would also get the axe. If in fact this second round of layoffs becomes true — EMI denied the cuts — the company would be reduced to roughly 2,000 jobs. And since Guy Hands and his buyout firm Terra Firma originally purchased EMI with 4,500 employees, that means roughly 56% of the jobs will have been axed by the time the last ex-employee shuffles out the door.

The latest round of layoffs are currently happening (since yesterday), and if you can’t glean my excitement, I’m literally jumping up and down here, smiling from ear to ear. Here’s a bullet-point list courtesy of Hypebot:

 10 are out at Blue Note, mostly in NYC
 Capitol Nashville VP of A&R Larry Willoughby and VP of Sales Bill Kennedy
 Denise Arguijo, a production manager in Nashville
 Capital_records David Pak and a number of others exit from Caroline
 In house art and design staffs suffering severe cuts
 Anything that can be outsourced will be
 Expect more pink slips and details today

EMI will continue to focus on A&R, digital music, and corporate sponsorship, but maybe it should look into outsourcing Mr. Hands’ job. Meanwhile, Coldplay’s Viva La Vida (TMT Review) will top the Billboard charts with 721,000 sold.

Gather ’round young’uns and take a knee. I’ve got stories to tell...

Back in the day, record peddlers bankrupted themselves by driving from town to town, blowing radio DJs in exchange for a little airplay for their label’s latest signings. If you were lucky, sometimes you got a home-cooked meal of a roast rabbit and some sweet cider for your efforts above and beyond (and below). All monies that were accrued from hard-fought sales were shipped off to Dick Clark, who used the cash to brainwash the nation to support the war effort against the commies through images of pogo-ing teenyboppers via a new fangled device called the "television" (ask your parents). The rest he spent on pomade and crow’s feet cream. Between spittin’ and rinsin’ and paying the pimp, there was little time to enjoy ourselves. Every second Friday down at the town hall, we would sockhop ’til the break of 8 PM and whip Kewpie dolls at the squares before going home to look to the skies for UFOs. We would also grab some sody pops and drive our hotrods up and down the same suckin’ street 70 times a night, until our whitewalls were grey from all the Silly Putty, which could be found in the better-built roads of the day...

Sorry, I had an old-fart moment there. Of course, things are different now. The big record companies are having to look outside the box to bump up their revenues and compete, as they evolve from traditional sales businesses to digitally distributed ones. Case in point: EMI — home to highly-original, critically-loved, and well-known acts like 30 Seconds to Mars, The Red Jumpsuit Apparatus, and Alpha Galates respectively — have announced the appointment of former Linden Lab Chief Technology Officer Cory Ondrejka to the company as senior vice-president of digital strategy, presenting him "with a rare opportunity to influence the digital music industry, by helping artists reach their fans in more relevant ways and by allowing fans to find and acquire music through new business models," says the new recruit.

It seems like a perfect fit. Ondrejka discusses his music obsession on his blog thusly:

I neither buy not hear much music. Since 2000, I’ve only purchased 5 albums. Three by Rush (enough of my friends are Rush fans, so somebody reminds me when they release a new album), Pearl Jam’s Pearl Jam (I read a Rolling Stone review in an airport), and R.E.M.’s Accelerate (best Terry Gross interview on "Fresh Air" in months.) [...] I hear lots of new music I like — anything from the first couple seasons of Alias would work — but I never hear new music in the right context to buy it.

Uh huh. Well, there is obviously a good reason why EMI would seek out the geek services of "Three by Rush" Ondrejka. The hiring is, of course, a digital strategic decision, and who better than the co-founder and prime builder of the online virtual world phenomenon Second Life to help EMI through these current troubled industry waters. As Hypebot claims, "In addition to developing the core code and building the company from 4 to 250 people, Ondrejka drove multiple initiatives that generated enormous value from user participation, creation, and collaboration. The ecosystems he helped create led directly to the success of Second Life, as well as the ongoing use of Second Life as a platform for music, education, and business."

EMI, the world’s fourth-largest music group, is taking great strides in establishing itself as a music industry pioneer in regards to digital technology. The Ondrejka announcement comes hot on the heels of hiring the former chief information officer of Google, Douglas Merrill, to the post of President, Digital Business of EMI Music. Merrill piped up on the addition of Ondrejka to the EMI family:

Cory shares my passion for driving technology and innovation in the digital music business. His unique experience building online environments, like Second Life, will be invaluable to EMI Music, as we create new digital communities for fans and artists. Adding Cory to the leadership team of the company continues to reinforce out commitment to the digital market.

That may all be true, but can Ondrejka hula hoop on top of a telephone booth crammed full with zany letterman sweater-wearing high schoolers? Fuck no, Bazooka Joe!

In related news, Rush album sales are soaring.

Remember this? In April, Microsoft announced that all DRM digital downloads purchased from its now-defunct MSN Music store would no longer retain their license keys, which meant that customers essentially lost ownership of the music they had actually paid for. Why? Because Microsoft just didn’t feel like it. Even though consumers did the right thing and actually plunked down the cash for these songs, they still got fucked.

Guess what. People were pissed off. So pissed off, in fact, that Microsoft decided this week it would continue to support DRM files purchased from MSN Music... for now, anyway. According to Microsoft, via Ars Technica:

After careful consideration, Microsoft has decided to continue to support the authorization of new computers and devices, and delivery of new license keys for MSN Music customers through at least the end of 2011. This means you will continue to be able to listen to your purchased music and transfer your music to new PCs and devices beyond the previously announced August 31, 2008 date.

However, the damage is done, because many people are going to think twice about buying DRM music for the Zune now. Blatantly fucking over your customers will make them mad, and hastily reversing a stupid decision in response to backlash makes you look even more asinine. High five, Microsoft. I think it’s time for you to stop complaining about those PC/Mac Guy commercials, because you’ve officially become That Guy.

Last week, the House Judiciary Committee held a hearing about the Performance Rights Act, a bill that critics say will hurt terrestrial, non-commercial radio stations. The bill primarily aims to (1) amend the Copyright Act by granting equal rights to musicians when receiving compensation from terrestrial broadcasters, and (2) establish a flat rate for non-commercial and public terrestrial stations that make less than $1.25 million a year. Essentially, the bill wants to place the same enforcement on terrestrial radio that already exists on internet and satellite radio. (If you’re interested you can keep track of the bill at the excellent OpenCongress.)

Interestingly, the Bush administration, according to FMQB reports, have given their nod of approval to the bill in a letter written by Lilly Fu Claffee, general counsel of Department of Commerce. The letter states:

The [Department of Commerce] believes that the changes contained in the legislation [H.R. 4789, the Performance Rights Act] are justified as a matter of fairness and equity. Granting copyright owners of sound recordings a full performance right coupled with extending an existing statutory license is an appropriate and workable approach to providing compensation to recording artists and record labels for the transmission of their works by over-the-air broadcast stations.

While artists will ostensibly be getting compensation for their work, some of the provisions in this bill are seen as severely flawed and in need of serious revisions before passing. In fact, FMQB is also reporting that the Local Radio Freedom Act, which "takes a stand against the proposed new royalty rates for terrestrial radio," only needs three more representatives to attain house majority. We’ll keep you updated.

EMI is now able to open the BBC’s own Cave of Broadcast Wonders, which gives me the mental image of a huge iron door laboriously wrenched open and Syd Barrett careening out, only to hit the opposite wall. In a deal forged this week, the BBC has agreed to grant unfettered access to EMI in exchange for use of EMI’s artist performances in their programming. EMI plans to use this reservoir of material to create exclusive live DVDs, CDs, and digital download content.

"In the BBC vaults there is a wealth of unreleased and high quality material from EMI artists that we will now be able to bring to fans," says EMI senior VP Pete Duckworth. "At the same time, we can offer new revenue opportunities to our artists that simply weren’t there before."

As mentioned in the headline, some of the hidden treasures include a 1975 Bowie documentary and a 1967 Pink Floyd performance of Piper at the Gates of Dawn. Hey, check it: EMI had a good idea! Devote time to the artists in your catalog that are actually good, and people will probably buy your swag! Oh man, this defies logic. Or follows it. I need to lie down (with David Bowie).

Warner Music Group has yanked itself (and its music) from the free, ad-supported music streaming feature on Last.fm, after they were unable to reach an agreement regarding proper compensation.

Warner Music Group was the first major music group to sign up with Last.fm’s streaming service, but the shit turned sour as Warner Music Group believes that the compensation rates on Last.fm aren’t as good as those offered by competing site IMEEM and the soon-to-be-launched service from MySpace. WMG has also been ticked off about Last.fm’s lack of a music subscription service.

CBS, the owner of Last.fm since May 2007, released a statement claiming that it is currently in negotiations with WMG, so my guess is that WMG will likely be back on Last.fm soon. WMG would be stupid not to put its music back on the site, since Last.fm has become such an important player in the music industry. Not having its music on the site could lead to lost profits for the major, and it wouldn’t want that, would it?

Back in 2004, when the record industry was already having a few "issues," Sony and BMG decided to merge and become even more top-heavy in an effort to boost profits in an era when technology and nimble business models have proved to be the most successful.

Hang on. Something’s not quite clicking there.

Bertelsmann CEO Hartmut Ostrowski, whose company heads up the "BMG" in "Sony BMG," hit the nail right on the head: "The good thing is, more people are listening to music than ever before. The bad thing is, it is not easy to monetize it."

People on the proverbial "inside" say that Bertelsmann has upped its talks with Sony about selling its half of the joint partnership and returning to more ho-hum investments like offset printing. Don’t look now, but the two-headed monster could become significantly less threatening in a very short time, though it will still wear ugly three-piece suits and insist we listen to the new Evanescence album.

Here’s TMT’s irreverent recap of recent Recording Industry Association of America (RIAA) activity:

1. RIAA Ordered to Pay Fees of Accused Pirate

Not long ago we could have reported that the saga between the RIAA and Tanya Andersen and Tanya Andersen and the RIAA was continuing with no end or excitement in sight, but now we have word that this sorry mess may indeed be coming to a long-overdue close. A recommendation for the RIAA to pay Anderson’s lawyer fees and Bill of Cost was approved last October, but in mid-May a U.S. Magistrate Judge recommended the sum to be paid be $107,834. It is not exactly a stiff penalty to the fat cat labels, but the finding is important for future decisions between the RIAA and those accused of illegally downloading its music.

While many accused have settled their file-sharing cases out-of-court, Andersen decided to stand up to legal threats by the RIAA and its questionable bullying collection tactics by countersuing the association under conspiracy laws. While the RIAA claims it is merely trying to take vigorous but appropriate measures in an attempt to curb music piracy (which supposedly costs the U.S. record industry $3.7 billion annually), Andersen’s lawyer, Lionel Hutz, I mean Lory R. Lybeck, says that there are flaws in RIAA’s identification of suspects through their IP addresses and that the cases against those accused are not about money lost but rather "it’s about an extortion campaign" (BusinessWeek, May 5, 2008).

We believe that Andersen has been unfairly targeted by the RIAA, but then again, you never know: the same article in BusinessWeek mentions that Andersen lives with her Maltese-terrier mix, "Tazz." Surely everyone knows that Maltese-terriers are the sneakiest and stealthiest breed of dog. There’s a reason canine circles refer to them as "the illegal file-sharing pirates" of the dog world. And yes, there are canine circles.

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2. RIAA Drops Suit Against AllofMP3

The RIAA is trumpeting its victory against AllofMP3, despite dropping its rather large lawsuit against the Russian-based company. Papers were filed in a Manhattan federal court on May 20 voluntarily withdrawing the suit which was originally sought by the RIAA, Warner Music Group Corp., Vivendi SA, and EMI Group Plc.

Jonathan Lamy, a spokesman for the trade group, says "The site is now defunct and out of business, the result of a successful anti-piracy initiative." According to John Crossman, who represented AllofMP3’s owner MediaServicesLLC said of the dismissal, "[The RIAA, et al] never correctly commenced the proceeding in the first place" before adding, "Maybe [dropping the lawsuit] was a rare triumph of good sense." He then placed his index finger delicately to his lips and looked slyly at the camera like Mr. Roper used to do in Three’s Company. Regardless of legal technicalities and producing proof, I’m not sure the RIAA would have won the damages it was seeking in the case originally filed in December 2006: $150,000 for each of the 11 million songs illegally downloaded from AllofMp3 from June to October 2006!. A bit steep, but when it caught wind that the site was not forwarding any profits to artists and was providing songs for much, much less than every other retail music website, it had to put its foot down.

What it either doesn’t realize or is conveniently neglecting is that the folks who created AllofMP3 have a new site up called Mp3Sparks, which is based on the very same business practices that the RIAA frowned upon when the site was known as AllofMP3.

AllofMP3 had approximately 5.5 million subscribers who paid an average of 10-20¢per song, bringing in $30 million annually to the site. The 411 on the mysterious Mp3Sparks is unknown (hey, if the RIAA doesn’t know about them, how is TMT supposed to?). I’m sure it’s all an oversight by the RIAA, who are probably devising a plan to terminate the site’s operation as you read this. Whether it will be successful in quashing other illegal music sites in Russia, where this kind of activity is more popular than potato vodka, will remain to be seen. "Cpaciba!"

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3. RIAA Doing Other Stuff

 According to TMT’s freelance snitches (our most reliable avenues for news), we have found out that RIAA officials are increasingly taking part in such shady activities as desecrating war heroes graves, milking seniors out of their pensions with social security scams over the telephone, and charging around schoolyards kicking kids in their stomachs right after they have eaten lunch. A spokesman for the RIAA denies the claims, saying "The RIAA has done nothing wrong..." or something like that. Yeah, yeah, we know! You never do anything wrong, do you?

 Danity Kane’s Welcome to the Dollhouse album has hit the "Gold" certification for sales... ALL LEGAL!

File-sharing utopia and invite-only torrent site OiNK.cd was shutdown by the Cleveland and Dutch police back in 2007. Since then, no users, not even the site’s owner, have been charged.

Until now, that is.

The go-to torrent news blog TorrentFreak reports that Cleveland, UK police recently arrested six OiNK users for, according to their sources, “Conspiracy to Defraud the Music Industry.” This essentially means the accused OiNK members were apparently arrested for sharing advance/pre-release albums with ties to the International Federation of the Phonographic Industry (IFPI), an affiliate of the RIAA. (The IFPI mostly parties with the major labels, but judging by its extensive list of member sites, the group also expands its protection to indies.)

The British Phonographic Industry provided the following statement (via The Register):

The BPI and IFPI worked with the police in order to close down the OiNK tracker site last October. The illegal online distribution of music, particularly pre-release, is hugely damaging, and as OiNK was the biggest source for pre-releases at the time we moved to shut it down. We provided the information to assist this investigation, but this is now a police matter and we are unable to comment further at this stage.

At this point, it’s unclear if more arrests are expected and why British police are involved in this particular investigation but not other file-sharing incidents.

Anyway, if you don’t see any news stories from me for more than two weeks from today, then you can safely assume that I’ve either (a) gotten fed up with Mr P’s bullshit or (b) have been caught and incarcerated.

I’m all for option A.