On September 8th, Apple unveiled its latest ‘innovation’ to help prop up the recorded music industry – the iTunes LP. For only seven bucks more than a regular digital album, you can get some pretty pictures and liner notes. Facepalm!

But the story doesn’t end there.

Last week, Brian McKinney of Chocolate Lab Records told Gizmodo that Apple was charging record labels $10,000 in production costs to release an album in the iTunes LP format – and indie record labels need not apply. Apple later denied that allegation and said it is working on releasing the specs for the LP format and making them available to all, indie and major labels alike.

Regardless of the outcome of this “he said she said” tempest, it amplifies the silliness of the iTunes LP format itself.

Several web developers have dissected the format to find that it is essentially HTML, Javascript, CSS, and multimedia content – a website. For a little more than the cost of an actual physical CD, you get to save files to your hard drive that largely mirror content you can find online, from the artist’s website itself to Wikipedia, YouTube, and others.

I’ve been unable to find sales figures for albums released as iTunes LPs, but I’m curious to see how successful (or unsuccessful) it has been to date. Until then, the question remains whether Apple’s initiative – jacking up prices to include nicely designed text and album art with digital music files – can connect with fans, especially as consumers are shifting away from the album as a default container for music.

Until Apple opens up the specs to the iTunes LP format, indie artists who wish to bundle additional content with their albums can stick with a tried and true format: the zip archive. For years, netlabels and some independent artists have simply added media and documents to zip files of album tracks and offered the complete package to fans.

Bandcamp (one of the best music hosting/distribution sites out there IMHO) recently began offering this feature to artists on their site. Types of content you can include are limited only by your imagination and file-size concerns – videos, images, pdfs, etc. And with a little web development skill, artists can replicate a centralized user interface for interacting with the album’s content just like the iTunes LP.

Forrester Research recently released a report that lays out a “radical vision” to “save the music industry from the current Media Meltdown it finds itself in.”

While the actual report is only available to Forrester customers, the company’s blog reveals that the plan involves broad “music release windows,” similar to the chart on the right. “Premium” content is released first, followed by a “mainstream” release at a later time, and eventually wide dissemination to free and “feels like free” services.

Judging by comments on the Forrester blog and elsewhere, many scoff at the idea of regaining content scarcity through this staggered release approach. “What about pre-release leaks?” they ask. True, the industry has increasingly bumped up release dates of albums – Jay-Z’s latest came out three days early today – in part to combat the problem of early copies leaking onto the internet. But it’s important to keep in mind that large swaths of music listeners are not running around downloading leaked copies of albums off torrent sites.

It is also counter-intuitive when one looks at the movie industry and how the release cycle of a typical movie – which has been staggered between theatrical release, dvd release, and television release – has shrunk over the last decade or so.

I’m guessing, though, that the example illustrated in the graphic above is just that – an example. Rather than a one-size-fits-all solution, Forrester is suggesting an approach to music that doesn’t revolve around the traditional album release cycle (release an album – tour – repeat next year). They propose shaking off the “strait-jacket” of the album and thinking of all content generated by musicians and bands as product (backstage footage, mobile apps, merchandise) in order to create a “continual artist-fan relationship with artists delivering a steady stream of creative output.”

Sound familiar?

It sounds a lot like what the major labels had been talking about earlier this year at a 2009 NARM panel. And that discussion sounded a lot like what we here at GrindEFX have been saying.

Ditching the album format as the default container for music and releasing smaller blocks of music more often – that’s the 3P concept.

Building a continual artist-fan relationship to make money outside of selling non-scarce recorded music – none other than CwF + RtB = $$$.

So, while not exactly radical, Forrester’s report does indicate the direction the big players in the industry are heading toward, as well as validate what many of us on the sidelines have been saying.

After five years as the Executive VP at Warner Music Group, Kevin Liles has announced he is leaving the company.

Liles joined WMG in 2004 after leaving the role of President at Def Jam and Executive VP at Island Def Jam Music Group. He began his career as an intern at Def Jam in 1991, he was named President in 1998 at 30 years of age. Liles played a big part in the success of artists such as Jay-Z, Ja Rule, DMX, Kanye West, T.I. and LL Cool J.

Kevin also published a book in 2006; Make It Happen: The Hip-Hop Generation Guide to Success.

“In the past couple weeks I’ve made one of the most important decisions of my life,” Liles said in a statement, “to depart the Warner Music Group in order to focus more on new entrepreneurial endeavors in talent management, entertainment media, and my personal philanthropic and political passions.”

According to a written statement Liles will remain in a consulting role at WMG.

First of all, I must apologize for my absence from the site in the last couple of weeks, I’ve been incredibly busy elsewhere and any time I got to put into the site was mostly taken up by “behind-the-scenes work”, hence the lack of activity on my part.

Back to business though and one story that’s been generating a frenzy this month is the new digital album format being developed by the major record labels and Apple (separately). Since rumours have been flying around for a few weeks now you’ve probably read or heard about it somewhere, I just wanted to play catch up though for those that haven’t heard and drop my 2 cents.

A brief overview; Apple announced they were working on a secret project which was given the name “Cocktail”. The idea behind Cocktail is a single file download that would include songs, videos, artwork, lyrics and liner notes for an album. This new format would presumably work very nicely alongside their iPod line and the new Tablet rumoured to be released later this year. Apple apparently reached out to the majors (Sony, Universal, Warner and EMI) for a partnership, however the majors decided instead to team up and develop their own competing format – CMX – which would, again presumably, require its own supporting player.

There are a number of reasons why this post got the Facepalm treatment, let me start by looking at my calendar; it says August 2009, though reading the above paragraph you’d be forgiven for thinking you’d accidentally stumbled into Stewie Griffin’s time-machine and travelled back to 2003. 6 years ago, this would have been a great idea and may have revolutionized the music business… but Apple did that already. Now with 200 million iPods, 20 million iPhones and 8 billion iTunes tracks sold, and over 3/4 of the mp3 player market behind them, the major labels want to wave their arms and say; “hey, we can do that too!”.

Consumers are going to take one look at CMX and do one of two things:

1. Buy the album elsewhere so they can actually listen to it on their iTunes and mp3 player.
2. Pirate the album.

So all they’ve done is further isolate music fans. Since when did people care about liner notes anyway (I’m talking about the mass market, not us music geeks)? And how big are these files going to be? HD images and videos? It’s likely each album will take up over 100mb. Aren’t we living in a world that wants everything faster and smaller?

To me this just sounds like another lame attempt by the major labels to limit access to music (I’m sure the files will be caked in DRM) and squeeze another few pennies out of a dying format (the album), because let’s face it, they don’t know how else to produce and market music. If they actually go through with it, CMX will be an epic fail and the majors will once again be the laughing stock of the music business.

More and more established artists and labels are shying away from releasing albums and concentrating on singles and small song blocks.

Last month, Rhino Entertainment announced that it will be releasing a series of “digital 45s” – a bundle of 2 singles and artwork.

In a recent interview, Thom Yorke of Radiohead told Believer Magazine,

None of us want to go into that creative hoo-ha of a long-play record again. Not straight off. I mean, it’s just become a real drag. It worked with In Rainbows because we had a real fixed idea about where we were going. But we’ve all said that we can’t possibly dive into that again. It’ll kill us…. we need to get away from it a bit.

Even the Big 4 have hinted at a desire to release smaller song blocks more often.

This focus on a small amount of tracks rather than full-length albums is nothing new. In the 1950s and 60s, singles – more accurately, 45’s (the single on one side, a different song on the B-side) – were a significant part of any rock or pop label’s business. Even after the advent of the CD and the collapse of the singles market, many genres continued to see releases in the form of singles and EP’s – EDM, punk, and hip-hop to name a few.

Yet, when someone mentions the “death of the album,” inevitably a few still cry that this means the death of music itself. Or more commonly, independent bands and musicians still see releasing an album as the ultimate goal.

Why is that?

Who hasn’t complained (or heard someone complain) about the fact that you spend X amount of dollars on a full-length CD only to get 2 or 3 good songs?

I’m certainly not saying that there is anything wrong with the full-length album. Many bands have released albums that I listen to from start to finish in one go, and even more have created albums that, while still a collection of songs, form a cohesive vision that becomes greater than the individual tracks.

But in the past several decades, the album has become the default for every musician. The strategy of focusing on albums is primarily a product of the major labels marketing and distribution arms. The introduction of the compact disc further fueled this mindset – with a one-size-fits-all medium that cost the same to manufacture whether it contained 6 minutes of music or 60, it didn’t make sense for the labels or consumers to wait for anything less than an album’s length collection of songs.

And so, many independent musicians have become ingrained in the belief that the album is the hallmark of a legitimate artist.

Independent musicians who haven’t already should challenge this belief. The album-as-the-default is an aberration in the history of recorded music. Digital music and the internet have removed the limitations of physical media. And there are many benefits to concentrating on releasing smaller collections of songs more often.

As Bob Lefsetz explains,

The old paradigm of making a record every three, four or five years and flogging it around the world, making sure Inuits and third world denizens are aware of it before you go back into the studio, is dead.  It’s about placating your core.  And your core does want access, but what it wants most is music.  A huge fan will buy your album the day it’s released (if he doesn’t steal it weeks before, and then buy it in support anyway!) and play it incessantly for…a few weeks?  I’ve played a number of albums for a week straight.  But after that, you know it, you move on, you want something NEW!  So, when radio tells you they’ve got the new track by ___________ your ears used to prick up, until you found it was another album cut that you digested YEARS AGO!

Rather than building to a one time event, keep your audience engaged.  And they might be interested in what you had for lunch and who you’re screwing, but what they want most is music.  Make more music!  In today’s world it doesn’t matter if each track is perfect.  The audience will separate the wheat from the chaff, then you can play the winners in concert and the various iterations can be traded ad infinitum!  The music is alive, it grows and changes, it’s not calcified on wax.

So rather than focusing on a drop date, create a lot along the way, and monetize along the way.

The writers of the New Rockstar Philosophy (I highly recommend checking out their blog and free ebook!) coined a term to describe this strategy – 3P. Instead of releasing a full-length album every year (or every 2 or 3 years…), musicians should look at releasing 3-4 songs every 3-4 months:

I almost wasn’t going to post this, in the couple of weeks we’ve heard so many positive stories of artists finding a business model that works for them, it’s a shame to have to sit and write about record executives still barking up the wrong tree. But my job is to report on the news, good or bad, so that is what I shall do.

Okay so here’s the story; Antonio “L.A.” Reid, CEO of Island Def Jam Music Group, has decided it would be a super idea to plaster ads all over Mariah Carey’s new CD in an attempt to reduce costs. These ads will appear in a 34-page mini magazine, co-produced with Elle, right beside the lyrics and linear notes. The ads are said to reflect Mrs Carey’s image, brands such as Elizabeth Arden, Angel Champagne, Carmen Steffen’s, Le Métier de Beauté and the Bahamas Board of Tourism will make an appearance in the booklet.

“The idea was really simple thinking: ‘We sell millions of records, so you should advertise with us,’” Antonio “L.A.” Reid, chairman, Island Def Jam Music Group told Brandweek. “My artists have substantial circulation—when you sell 2 million, 5 million, 8 million, that’s a lot of eyeballs. Most magazines aren’t as successful as those records.”

Apparently Mr Reid has been in a coma for the last 5 years and isn’t aware that nobody is selling 8 million CDs anymore, much less Def Jam. As far as I’m aware Mariah didn’t manage even 2 million on her last effort.

This whole concept is ridiculous to me, rather than diving into new and exciting business models that could potentially save their ass, major labels are still attempting to eke out every last penny they can from an old, dying business model. Year-to-date album sales were down 13.9 percent for the week ending July 19, 2009, compared with the period last year, according to Nielsen SoundScan (227 million units vs. 195.5 million units).

These ads might cut some manufacturing costs, but at the end of the day, Island Def Jam are still pushing a product that nobody wants. Ads aren’t gonna sell records. Consumers don’t want CDs, what will covering them in advertising do to change that? Nothing. And that’s what major labels should be focusing on right now, trying to find ways to survive for the future. This is a short term solution to a never ending problem, major labels are buying umbrellas for the storm whilst many independent artists are building houses, who’s still gonna be here in the morning?

On Friday, a jury handed Joel Tenenbaum a verdict of $675,000 for illegally downloading 30 songs. This marks the second time in as many months that a jury has ruled in favor of the RIAA.

The verdict – $22,500 per song – is neither surprising nor as large as the one in last month’s trial against Jammie Thomas-Rasset. Ben Sheffner of Copyrights and Campaigns has a detailed post-verdict writeup. Among the highlights:

· Tenenbaum is planning an appeal of the verdict, and possibly declaring bankruptcy if he loses that appeal.

· While the RIAA has stopped filing lawsuits against new filesharers, it is continuing to move forward on currently filed lawsuits. In all, there are over 100 pending lawsuits, with about a dozen actively in litigation.

It remains to be seen how many of those pending lawsuits actually make it to trial. Of the 18 – 35 thousand downloaders the RIAA has sued, this is only the second case to reach a verdict. It also remains to be seen whether the RIAA’s strategy as a whole has resulted in a reducing the growth of P2P filesharing, or deterring internet users from engaging in the same behavior as Tenenbaum.

Rumor has it that Tenenbaum’s attorney, Charles Nesson, is planning on joining forces with Thomas-Rasset’s attorney Kiwi Camara in a class-action suit against the RIAA for its filesharing litigation strategy. The federal judge in Tenenbaum’s trial has announced that she is planning on a post-trial proceeding to determine whether the amount of damages awarded is constitutional.

Volokh Conspiracy’s David Post points out some interesting math in the amount of damages the jury chose to award the RIAA. The minimum statutory damages available for willful copyright infringement is $750. If you multiply that amount by the number of songs at issue in this trial (30), you come up with $22,500 – the amount the jury awarded for each song. He wonders if the jury meant to award the minimum amount but inadvertently awarded what would have been the total in that situation for each song. $22,500 is a rather arbitrary amount, considering the range of damages available is from $750 to $150,000 per work. The amount awarded per song in the Thomas-Rasset case – $80,000 – at least makes some sense, since it is roughly half the maximum award.

Putting a positive spin on things, Pete Cashmore at Mashable notes that, compared to $22,500 for an illegal download, iTune’s 99 cents for a legal mp3 is a damn good bargain.

In other news, a major record label embraced an infringement of one of its copyrights rather than go down the punitive route and made a ton of money.

I leave the question of which approach the music industry should take in the future to you. The latter approach – admit that digital media and internet architecture make it impossible to exert control over ones copyrights and find other ways to monetize content? Or the former approach, illustrated by the Tenenbaum lawsuit?

Image courtesy of Ilken

A second major filesharing trial is getting underway in Boston, MA.

Little over one month has passed since a jury handed Jammie Thomas-Rasset a $2 million verdict. Today, 25-year old grad student Joel Tenenbaum finds himself in court to defend allegations that he used Kazaa to download and distribute 30 songs without permission.

The trial begins at 9AM and is expected to last until 4-5PM EST. The judge hopes to wrap up by July 31st.

For those wishing to stay updated, several commentators and bloggers will be onhand, twittering throughout the proceedings. These include Ben Sheffner, Marc Bourgeois, and the Joel Tenenbaum defense team.

It should prove to be an interesting trial. Both sides have been arguing more substantial points about filesharing in general then what was seen in the Thomas-Rasset trial. And when Harvard law professor Charles Nesson joined the defense team, the pretrial proceedings took on an almost circus-esque tone.

For background and details of what has been going on in the weeks and months prior to the trial, I highly recommend the following sites:

• Copyrights and Campaigns – Tenenbaum posts
• Recording Industry vs. The People
• Joel Fights Back

Copyrights and Campaigns author Ben Sheffner will also be posting daily dispatches of the trial at Ars Technica. Once the trial concludes, I will post up my own thoughts and analysis.