“Can Music Be Free?” week: P2P veteran Wayne Rosso on the importance of ownership
With years of experience as a music industry publicist, Wayne Rosso came to the digital music world’s attention as boss of unlicensed filesharing service Grokster. Then he attempted to pioneer a legal p2p model with Mashboxx, before more recently becoming associated with a failed attempt to buy The Pirate Bay and legitimise it.
We talked to Rosso for a feature in the latest Music Ally Report, which subscribers can read here – while non-subscribers cansign up for a free trial. Find the Q&A after the jump.
Q: Why hasn’t anyone cracked the ad-supported free model yet?
A: It boils down to the labels and their fees for streaming. Clearly it’s not going to happen if they don’t want it to happen and, based on their fees, they don’t want it to happen.
We cut a deal at a penny per play and I think we were on the right track five years ago. Even then the record labels wanted us to put in voiceovers to make copying the tracks less enticing but we were finally able to talk them out of it. Record companies have never cared about user experience, they care about money and that’s fine.
If you’re an entrepreneur building a service you’ve got to think about user experience. For Spotify it’s just not profitable to launch a free service in the US and the reason is the rates. There’s no way in this market at this time and for the foreseeable future that it could be supported advertising wise. I’m not an ad agency guy, I’m just a simple bigmouth but the reality is tough.
Q: Surely this comes down to the fact that fans want free streaming and labels have to find a way to make the model economically viable?
A: If you’d have asked me five or six months ago or more if downloading is necessary now that you can stream on demand I’d say that downloading no longer makes sense. However in the light of the research that’s come out on pirates spending more money on CDs, that tells me that people still want to own.
You may argue well Spotify has an Android or iPhone app but there are many more iPods out there that don’t have access to streaming. Let’s face it you’re not going to stream in your car, you can’t stream on the tube…you can’t stream in your gym unless they have an open wi-fi connection.
Streaming is great but people want to own so in my view streaming is just like radio. You use it to promote your product. They don’t look at radio as a profit centre. It’s still a sampling service and the whole idea is to sell the file.
Q: But isn’t it dangerous to set up a situation in which you give music away and hope to make up the loss somewhere else…?
A: There’s a fear of cannibalisation. The labels will say ‘our best customers spend $80-$100 a year on CDs and we don’t want to lose that’ so in their minds a streaming service will cut into profits.
But I don’t look at streaming as giving music away. These companies that say they’re going to give free downloads? Bulls**t. Based on what I’ve seen – and I’m sure they have something worthwhile – the only way you’re going to get free downloads is if you pay for the downloads upfront and then the record company doesn’t give a sh*t what you do with it. You could stand in Trafalgar Square and give it out for all they care.
Q: How would you tackle the gap between free and paid, then?
A: Record labels should look on these streaming services as sampling services. What they should look at is what they can do to upsell. Whether it be a Spotify or a Rhapsody or Napster it’s all in the upsell and that’s the difficult part..
A free streaming service is a promotional tool to sell a more robust product. The only reason to put advertising in it is to cover the cost of the content and you’re still going to lose money. If the ultimate goal is to grow the market you’ve got to come out and be creative.
One of the ways you can do that is quality, another is added value – and you’ve got to throw open the door to the candy store. Labels have to shift from a unit sales frame in mind to a per user mentality. They want to get 40-60 dollars a year from a user when there’s only 40 or 60 cents that’s there. You have to struggle to pay just part of the content with free.
Q: How do you feel about the piracy situation now?
A: It’s interesting that even though the p2p the piracy market seems to have levelled out it’s not experiencing the growth by leaps and bounds it did. Now the growth is in the legal sector so we’ve realised that people like the all-you-can-eat experience and DRM doesn’t work. If you give them what they want they’ll pay for it. It’s duplicating the p2p environment and you’re just selling them insurance. You want them to feel like they’re pirating the music, they can grab as much as they like, but paying the fee is like an insurance premium.
The piracy issue won’t go away. It’s here with us. You’ve got to compete with free.
Q: What do you make of Guvera, the latest free ad-supported contender?
A: It’s a very bad advertising environment right now and advertisers are very picky about advertising with music and associating with the right kind of music. You just can’t go around and start selling advertising that’s directly attached. Let’s imagine one of these sites sells something to Chevrolet and wraps all their Sting tracks in Chevrolet branding. Sting may have a deal with Jaguar so you can’t have another brand in a sense own that content. I don’t know how you can go from artist to artist trying to get permission for this stuff.
Q: Do you think Spotify could become as big a hit in the US as it is in the UK?
A: Will Spotify work in the US? I don’t know. The labels care less about the UK and Europe than they do about the US. None of us has a crystal ball and these people at Spotify aren’t stupid so I’m not going to say it doesn’t work. But the truth is that it’s difficult for anyone to try and crack this space no matter how big you are. Case in point Amazon – they barely make a dent in iTunes and they have just as much money – it’s hard no matter what.
Tags: grokster, mashboxx, P2P, wayne rosso
December 1st, 2009 at 10:43 am
[...] This post was mentioned on Twitter by eMusic Talk, Ace the Time. Ace the Time said: RT @DIY_Musicians: “Can Music Be Free?” week: P2P veteran Wayne Rosso on the importance of ownership: http://bit.ly/70yjNQ via @MusicAlly [...]
December 1st, 2009 at 11:59 am
[...] dinero”, indicó Rosso. El artículo completo se encuentra disponible en inglés en este artículo en el blog de Music Ally. 1 / 12 / [...]
December 2nd, 2009 at 8:04 pm
Free music, eh ?
With that lack of logic, let’s just make ALL art free. Paintings, sculptures, books, – all free.
Why not ? – Because it’s unfair to the creators. It would eliminate incentive to create. The best artists could not support themselves and be forced to get other jobs, and their best work might never be made.
Sorry Wayne,,,,free music is a stupid idea.
December 2nd, 2009 at 9:32 pm
Wayne’s FREE MUSIC idea is idiotic.
Society’s artists deserve to be compensated, moreso than Wayne’s parasite business. Wayne’s Grokster co. was STEALING from artists. Now Wayne wants to legalize the piracy.
Wayne is merely a freeloader.
December 9th, 2009 at 7:43 am
If all of you commenters would just READ the article above, before you voice your pre-set minds, that would help enormously in a discussion. Piracy and easy copying on and offline is a fact of life with the current digital environment. Life and business change constantly, you either adapt or die. It’s that simple.
Wayne here is outlining options: free, paid and paid for music.(ads)
Besides, are all you musicians also so concerned about your sculptor friend? The one that merely selected a material for his art not so easy to copy? Like stone or marble? He cuts a sculpting out of marble/stone that takes a month or a year to finish, if he’s lucky, he sells it …once! (say to a museum.. even luckier) Does he get a fee for every person looking at his sculpting in the museum (like your song on the radio)? Don’t think so!
Just play your music like you always did, the music is your marketing tool now for you (better paid) performances! The easy cashing by mass copying and selling is over! Face it! (and btw most was done not by the artist, but the record labels) but i tunes and radioplay gains are still good . better than your Sculptor friend so quit whining and adept!
December 9th, 2009 at 4:58 pm
I couldn’t agree more; for the majors, it’s about protectionism and not cannibalizing cd sales. But that shortsightedness is going to do more damage than good in the long run. If the majors helped entrepreneurs by creating licensing/fee structures that enabled innovation, then consumers would have choice and a big, fresh, new, sustainable model would emerge. That’s how it works.
My company, VerveLife (http://vervelife.com), offers the music industry a “brand-sponsored” model, where a custom music-centric experience is conceived and distributed on-pack by an individual consumer brand. In this model, everyone knows what they’re going to make before the campaign goes live, and the downstream (upsell) opportunities are massive.