IODA Cautions Independents About Making Deals With Certain Online Music Services
As a digital distributor and champion of independent musicians and record labels, IODA is always watching out for the rights of the little guy (or gal). I'm not too familiar with their business structure, but it would seem that they empower independents by banding together into a unified force that is capable of competing in the same arena as the big record companies. I envision the shark being chased off by a swarm of fish who have organized into a bigger and stronger creature.
Kevin Arnold, Founder/CEO of IODA, pretty much confirmed this metaphor in a letter that IODA sent to its clients this week. It said, "Please remember that it is the collective bargaining power of the entire IODA catalog that gives us the ability to negotiate better deals that benefit all of us. A single label, even one with thousands of titles, cannot match what we can accomplish together, representing more than a million tracks of independent music."So when hypebot spread the news earlier this week about this letter from IODA to its clients, warning them about conducting business deals with certain online music services, I sensed the little fish were forming a defensive strategy. The letter (which is reprinted below) cautions independents against the unsavory licensing offers that are offered by services like imeem, lala.com and others. As the letter states, "Everyone at IODA strongly believes that recorded music has value, and that the future is bright for independent music in the digital space." Kevin Arnold, signee of the letter, goes on to describe how the music services in question are major forces on the internet who stream an extensive amount of music for free. IODA acknowledges that this is a great way to gain new fans and thus, they're in negotiations with many of the music services, trying to find a deal that provides fair compensation to the artist/label for the content used. The letter breaks down the payment structure that 2 of the services currently offer: imeem and lala.com:
Kevin Arnold, Founder/CEO of IODA, pretty much confirmed this metaphor in a letter that IODA sent to its clients this week. It said, "Please remember that it is the collective bargaining power of the entire IODA catalog that gives us the ability to negotiate better deals that benefit all of us. A single label, even one with thousands of titles, cannot match what we can accomplish together, representing more than a million tracks of independent music."So when hypebot spread the news earlier this week about this letter from IODA to its clients, warning them about conducting business deals with certain online music services, I sensed the little fish were forming a defensive strategy. The letter (which is reprinted below) cautions independents against the unsavory licensing offers that are offered by services like imeem, lala.com and others. As the letter states, "Everyone at IODA strongly believes that recorded music has value, and that the future is bright for independent music in the digital space." Kevin Arnold, signee of the letter, goes on to describe how the music services in question are major forces on the internet who stream an extensive amount of music for free. IODA acknowledges that this is a great way to gain new fans and thus, they're in negotiations with many of the music services, trying to find a deal that provides fair compensation to the artist/label for the content used. The letter breaks down the payment structure that 2 of the services currently offer: imeem and lala.com:imeem proposes to pay out a percentage of advertising revenue from its site, but will not thus far commit to a base per-stream floor rate, which is common in the industry for this type of use, and in contrast to the deals many of the majors received according to many media reports (see WSJ article dated Dec 10, 2007 for details). Under this structure, the imeem royalty rate could end up lower than the compulsory DMCA rate paid by non-interactive internet radio webcasters (just $0.0014 per performance), far below the standard rates paid for full-song on-demand streaming in services like Rhapsody and Napster.Lala's intention is to stream full songs for free on its' site in the hope that these streams will result in sales of downloads and CDs. They have proposed a complex payment structure for these streams that includes caps on streaming payments which would result in rates uncomfortably below the levels paid by other streaming services. It remains to be seen the degree to which free streams will result in sales, and we'd like to see more protection in the event that a user streams content, but doesn't go on to make a purchase.The letter also mentions deals being offered by Grooveshark and Amie Street, but without specifics. Arnold followed up the letter to its clients with a letter to hypebot (who published the letter), clarifying IODA's perspective and motives. It sounds like IODA felt a bit red in the face at having their laundry aired, even if it is as fresh as an Irish Spring:
The intention of this confidential note to our clients was to let them know our concerns about some unresolved issues we're working on and to ask them to hang tight as we resolve them, rather than entertain approaches for direct licensing. IODA's labels are free to work directly with services if they choose, but we believe we're all better served if we stick together towards a common resolution.If you aren't already an IODA member and you have some role in producing music for consumption, you might want to check them out. They have all kinds of cool features for web 2.0 music marketing. http://iodalliance.com/First report on hypebot, including full text of letter from IODAFollow-up on hypebot
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