Long tail wagging a dog?

The popular belief in the the long tail might be a bit of a myth, reckons a couple of new surveys.

The idea, of course, is that the value of digital sales lays in everything selling a little, rather than a few big hits. But is that what's happening?

UK music royalty collector MCPS-PRS says only 173,000 albums were bought through 2007 from a total of 1.23 million available; that means only 14 percent ever got a sale.

This, though, misses the obvious: one of the great joys of digital sales is that you don't have to buy entire albums, as you're free to abandon the concept of bundles of tracks and just buy the songs you want. Offering the lack of old albums as proof that the long tail doesn't work is like suggesting failure to sell cans of baked beans shows that restaurants don't have success at selling food.

This is a small update (via Times Online) to a study the organisation’s economist Will Page presented in November, which found, in the singles market, only about three million of 13 million available were bought, and 80 percent of sales came from 52,000 tracks.

That presentation and subsequent interviews is worth a close look. Page claims he was inspired by Chris Anderson's original theory, but with a but:

Given the clear relevance of collecting societies to the ‘long tail’ debate, I was surprised to see so little mention of them in Chris’s book - or the blogs that followed. For example, our US equivalents’ ASCAP and BMI don’t appear once in the book’s index.

Can you hear the wounded pride there? Even although there's no earthly reason why the collection societies should have appeared in the book - it's like the manager of Watford Gap services moaning that they didn't get a look-in in a Department Of Transport green paper.

Indeed, it's arguable that it was better for the collection agencies to be left out of the book - as a world in which the shape of music sales is very different probably requires a very different sort of royalty collection system than one designed to cope with a few radio stations and physical records being sold clustered around Top 40 releases. In fact, it would be perfect for those old-world collection agencies if they could pour cold water on the very idea of a long tail...

I was pleased to see The Register picked up on the role of a collecting society, an institution that receives surprisingly little coverage in Long Tail debate, yet has pioneered the creation of long tail markets for musical copyright through patent pooling and blanket licensing for almost a century.

... or at least try and pretend that it's always been doing the long tail thing.

Will Page offers some statistical 'evidence':

For example, we found that only 20% of tracks in our sample were ‘active’, that is to say they sold at least one copy, and hence, 80% of the tracks sold nothing at all. Moreover, approximately 80% of sales revenue came from around 3% of the active tracks. Factor in the dormant tail and you’re looking at a 80/0.38% rule for all the inventory on the digital shelf.

That would seem to remove the long tail as surely as Owl removed Eeyore's. Having said that, though, there's a question of methodology, and expectation? What period was Page looking at? What market? No proponent of the long tail would suggest that everything would be purchased by someone in the UK in any given period, and it would be pretty easy to disprove (or prove) the existence of the long tail by setting the parameters carefully.

That's not to say Page is wrong. Indeed, on his own terms, he's right. He just might be looking at the wrong things, or the right things the wrong way. First rule of any numbers dragged from the internet is that they almost certainly won't be counting the things that anyone you share them with will assume they're counting.

One thing that does make me nervous about Page's figures is that he also claims that peer to peer filesharing is equally built on hits rather than long tail - using the large number of 'illegal' downloads of In Rainbows as evidence:

My hunch, based on the evidence we presented in that paper (pointing out the 2.3 million illegal downloads of Raidohead’s new album when it was also available ‘for free’ on their own website), is that the black market is even more hit-centric.

Actually, that proves nothing more than (as I've argued before) 'if you tell people they can get an album for free, people who might not normally use an "illegal" route to obtain music will feel comfortable hitting the torrents. Building a theory about online activity on the basis of the performance of an anomalous release is a curious route.

So: is there a long tail? The clue is in the name - we won't know until we've had the experience of a long run.

A snapshot of that new world

Big Champagne - who have been counting torrent downloaders since the days when people still used to ring up their mate who was good with computers to do it for them - have issued some interesting stats about Radiohead's In Rainbows, which PaidContent see as some sort of sign that we're all doomed:

Some 2.3 million people skanked Radiohead's latest album from BitTorrent sources during the two months it was legally available for free. A research paper from P2P monitor Big Champagne and the UK's MCPS-PRS royalty collection society said the "staggering" number "far exceeds what outsiders have reported as the estimated download total from the bands official website, regardless of whether those downloaders paid or not".

See? Even if you try to give people something nice, they'll still rob it! Doom! Darkness!

Maybe so many people are already downloading the rest of their albums from torrents, they simply couldn't be arsed to type inrainbows.com in their browser. The bottom line is that legal free was trumped by illegal free.

But is this really doom? Isn't this news quite cheery for the music industry? Scroll down the report a little:

In Rainbows torrent downloads peaked on the first day data was collected, October 27, at 400,000 - what Page and Garland call "a bloody big number". How big? More than double the top torrent through March and May (Panic At The Disco's Pretty Odd) got in a whole week (ie. 10 times Panic's daily average).

So, what we're talking about here is not large numbers of people habitually pinching albums. What we're talking about is a spike in free downloading of an album that was available for nothing.

So, while the MCPS scare about for sky-falling reasons...:

The report's "venue hypothesis" posits net users have simply become accutomed to using technologies like Gnutella, BitTorrent and trackers like Mininova. What's more, "an off-limits venue may be even more appealing" to the core youth market. So illegal is now entrenched, it's habitual and the business faces an uphill struggle to change that.

... isn't the evidence telling us that people do have the ability to download stuff from the torrents, but mostly aren't using that ability; and that they only did when they had reason to believe it was okay to do so. Because can anyone explain to me the actual, real "illegality" of downloading for free something from one place that one can legally download for free from another? I don't mean the letter-of-the-law difference, but the moral difference? And, even if you can, isn't it just possible that the nicety was lost on the great masses who heard Radiohead were making an album available for free (as was repeatedly, erroneously, reported at the time) and didn't see there was a problem in where they didn't pay for it?

Why internet radio will be throttled by rights holders

In light of the decision by Pandora to pull out of Britain, James Cridland has done the math on the "reasonable" demands of PPL/MCPS/PRS:

Paidcontent.co.uk reports that MCPS/PRS was asking for 0.085p per song per listener - which also appears on this PDF file on the MCPS/PRS website. PPL, in a press release about the Pandora closure, says they would charge 0.0561p 0.0773p per song per listener (the interactive radio rate). Pandora plays around 15 songs per hour.

Vordermanned out, this comes to:

Total music rights payments: 2.434p per listener, per hour.

Cridland then considers the established radio industry:

The latest figures from the UK’s Radio Advertising Bureau says that the commercial radio sector as a whole brought in £593m in 2007. The latest RAJAR figures show that commercial radio is listened-to for 441m total hours every week, or alternatively 23,018m total hours a year.

So… 23,018m total hours brings in £593m. Divide one by the other, and we find that, as a total industry average, commercial radio makes 2.57p per listener, per hour. And the revenue figures also include non-radio activity, like websites.

In other words: the rights holders want Pandora to be paying sums just shy of the established operators' entire turnover, just for rights. Never mind the other costs facing Pandora.

No wonder Pandora felt it couldn't afford to continue. It's up to you to decide if PRS-PPL-MCPS are shortsighted, greedy, or just hoping to screw as much cash out of the internet as they can before they're dumped and replaced with an organisation more suited to the new music world.

[Thanks to Alan C for the link]

Pandora boxed

"Rutger Hauer" has shared with us an email he's just received from Pandora, the streaming music service based on the Music Genome Project. It's been entertaining listeners with a choice of music that reflects their tastes. Up until now, at least:

As you probably know, in July of 2007 we had to block usage of Pandora outside the U.S. because of the lack of a viable license structure for Internet radio streaming in other countries. It was a terrible day. We did however hold out some hope that a solution might exist for the UK, so we left it unblocked as we worked diligently with the rights organizations to negotiate an economically workable license fee. After over a year of trying, this has proved impossible. Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded per track performance minima rates which are far too high to allow ad supported radio to operate and so, hugely disappointing and depressing to us as it is, we have to block the last territory outside of the US.

Based upon the IP address from which you recently visited Pandora, it appears that you are listening from the UK. If you are, in fact, listening from the US, and are denied access from Pandora on or after January 15th please contact Pandora Support: pandora-support@pandora.com.

It continues to astound me and the rest of the team here that the industry is not working more constructively to support the growth of services that introduce listeners to new music and that are totally supportive of paying fair royalties to the creators of music. I don't often say such things, but the course being charted by the labels and publishers and their representative organizations is nothing short of disastrous for artists whom they purport to represent - and by that I mean both well known and indie artists. The only consequence of failing to support companies like Pandora that are attempting to build a sustainable radio business for the future will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans. As a former working musician myself, I find it very troubling.

We have been told to sign these totally unworkable license rates or switch off, non-negotiable...so that is what we are doing. Streaming illegally is just not in our DNA, and we have to take the threats of legal action seriously. Lest you think this is solely an international problem, you should know that we are also fighting for our survival here in the US, in the face of a crushing increase in web radio royalty rates, which if left unchanged, would mean the end of Pandora.

We know what an epicenter of musical creativity and fan support the UK has always been, which makes the prospect of not being able to launch there and having to block our first listeners all the more upsetting for us.

We know there is a lot of support from listeners and artists in the UK for Pandora and remain hopeful that at some point we'll get beyond this. We're going to keep fighting for a fair and workable rate structure that will allow us to bring Pandora back to you. We'll be sure to let you know if Pandora becomes available in the UK. There may well come a day when we need to make a direct appeal for your support to move for governmental intervention as we have in the US. In the meantime, we have no choice but to turn off service to the UK.

Pandora will stop streaming to the UK as of January 15th, 2008.

Again, on behalf of all of us at Pandora, I'm very, very sorry.

So another innovative service bringing new music to audiences is axed - and not even due to the greed of the labels, but down to the increasingly-inflexible collection agencies. It's difficult to understand why bodies which supposedly are there to represent the interests of musicians is forcing closure of services which are building their audiencess and offering to make fair payments for the music.

The irony, of course, is that by shuttering services which set out to do the right thing and pay what they can, the MCPS/PPL are merely encouraging the emergence of models which sidestep the legal structure altogether.

The labels - slowly, too late - are starting to realise their strategies are failing; it looks like we're going to have to wait an age for the change of mind to filter through to their front organisations.