Ousted EMI boss: pirates are our best customers, suing is bad for business

Douglas C Merrill, who left his job as Google's CIO to be EMI's Chief Operating Officer of New Music and President of Digital Business has given a speech in which he claims that EMI's own research confirmed that P2P music downloaders were the label's best customers. Merrill, who was one of many tech executives to be recruited by EMI in recent years (one friend of mine left after a few months, visibly shaken, claiming that it was impossible to get the business to see reason), was keynoting the CA Expo in Sydney when he said that LimeWire users were the biggest iTunes customers, and that the record industry's strategy of suing downloaders "is like trying to sell soap by throwing dirt on your customers."

“For example, there’s a set of data that shows that file sharing is actually good for artists. Not bad for artists. So maybe we shouldn’t be stopping it all the time. I don’t know,” Merrill said.

“Obviously, there is piracy that is quite destructive but again I think the data shows that in some cases file sharing might be okay. What we need to do is understand when is it good, when it is not good…Suing fans doesn’t feel like a winning strategy,” he concluded.

Former Google CIO: LimeWire Pirates Were iTunes’ Best Customers

(Image: Dowload this song., a Creative Commons Attribution Share-Alike (2.0) image from freeflyer09's photostream)

• [Simon Johnny]

  anyone remember mix tapes? yeah enough said.

  • [pizzicato]

    No ones forgotten them, in fact there’s a resurgence! Google spotify playlist… Mixtape 2.0

• [Bruce Landwaster]

  I used to own a 200 disc cd changer. It was full of non-pirated cds. I had afew binders full of purchased cds, and a binder of dvds. I bought something like 1-2 cd a month, and 1 dvd every 1-2 months.

  Then the RIAA started suing people. I’ve bought less than a handful since then, and only as gifts. One can argue that I am doing mental acrobatics to justify my piracy until they are blue in the face, but the reality is that I have made my choice based on the RIAA suing children, single moms, and the like, and for them making the claim that piracy is the same as theft.

  Those “you wouldnt steal a car” spots byt hat complete douche bag kid rock… he needs kicked in the teeth for being an idiot. Metallica and napster… you sing about evil and then cry because someone pirates your music? Piracy is how you became famous, douche. F them, in the doodoo hole with a chedder cheese log with almonds. (carlinism there).

  That said, I will be buying the chili peppers lastest CD for myself. I refuse to pay for lossy DRM music on line unless its a novelty.

• [Tricia Drake Finley]

  I stopped buying music for two reasons – the lawsuits and the rocking arrogance that was in full effect when those f*ckers started loading ROOT KITS on their CDs.  The clean up in corporate offices where legit music cds were allowed on machines so that users could listen to music while they work was an absolute nightmare.

• [Helgi Már]

  Since those companies started locking the DVDs so I can not fast forward through the FBI warnings I’ve ripped every single DVD thus equiped and keep the movies on a hard drive. I’ve almost stopped buying CDs because they are simply boring these days, the few good talented artists left are overwhelmed by overadvertised crap on publisher owned radiostations, thus kept out of sight. I’m actually surprised that CDs and DVDs keep on selling because there is so much competition these days for the consumers money. Teenagers who were/are the music industries best customers now also have to spend their, hard to get, money on phonebills and video games.

• [Mordicai]

  Piracy & file sharing sure is a confusing soup.  Not to mention– what is true for music might not be true for video might not be true for ebooks, etc.  I wish there was a voice of neutrality I could actually trust or look to.  Anecdotes like this are pretty compelling, but I am very suspect of everything everyone says about the subject.  Anyhow, I’ve always felt that the best way to combat piracy was to make it EASIER to get your stuff through legit channels.  Why bother torrenting something if it is on NetFlix instant?  Why scour Limewire (or whatever) for a song when you can impulse buy it for a dollar with one click?

• [BuzzCoastin]

  Thanks to the aggressiveness of the RIAA and the record companies like WMG, I no longer listen to music from major labels and would never pay for music from a major label ever again. Same goes for movies. 

  • [willow mouse]

    I think that goes some way to showing how important music is to you if you let the business of it guide your taste.

• [professor]

  I used to buy exactly as Douglas Merrill said, sample a whole bunch of stuff from Limewire, then a couple of times a month go to a music shop, plonk down a wad of cash and buy a bunch of CDs. Once the big labels and RIAA etc started acting like ass-hats I stopped. Completely. Now it’s independents only. Even for bands I used to really enjoy like Pink Floyd, AC/DC etc, I no longer buy their music… maybe once they go the indie route I’ll buy again.
    On the plus-side of all this ass-hattery, there’s some really good indie bands out there and it’s nice to know that most of the money I pay actually goes to the musicians

• [HubrisSonic]

  >music downloaders were the label’s best customers

  duh.

• [AGC]

  I think most people now just watch music videos, using YouTube, instead of downloading.  

• [Daniel]

  This would have been a respectable statement had it been said nearly 10 years ago. Now, it just feels like he’s a late comer to the game.

• [Jellodyne]

  Record sales have been in a free fall since (the real) Napster was shut down. Just to be safe, until I see more data I’m going to assume cell phones cause cancer.

  • [AnthonyC]

    No, you’ve got it backwards!
    http://xkcd.com/925/
    :-)

    • [Jellodyne]

      Which is what I was attempting to quote, of course, and my mind wouldn’t allow me to reverse those two terms as I intended.

• [riorico]

  Piracy is boarding and plundering a vessel and (often) physically harming its occupants. File-sharing is not piracy. Labeling it as such does not make it so. Even if you call a tail a leg, a dog still has only four legs, as Mark Twain said.

  For an industry, attacking your customer base is suicidal. WHY are RIAA members suicidal? What brainworms crawled in their ears and set them on this self-destructive path? Let me guess: Lawyers. A business run by its producers is on-track. A business run by accountants is lost. And a business run by lawyers is toxic. This industry is eating arsenic.

  And this industry is poisoning the world, not just with felonious root-kits, but mainly with acidic legislation that corrodes expression, communication, privacy, honesty. Turning customers into criminals is insane; unleashing ubiquitous surveillance is fascistic. And it’s still suicidal.

• [Rob Beschizza]

  “trying to sell soap by throwing dirt on your customers”

  I bet a dollar the original formulation of this quip was a little more colorful.

  • [CastanhasDoPara]

    Makes me think of this story/joke…

    Kid trying to sell toothbrushes on the street but has bad luck with it has a bright idea. Offer free chips and dip. This works a little better but is still not good enough so he changes the gimmick.

    Kid to customer: “Hey mister! Want some chips and dip?”

    Customer: “Sure.” *tries the chips and dip, spits it out* “This dip tastes like shit!”

    Kid: “It is. Wanna buy a toothbrush?”

    Somewhere, sometime, the music industry got a bright idea too and while it’s not exactly the same as the above it’s close and it does taste like shit. They just haven’t figured out how to sell toothbrushes yet.

  • [AnthonyC]

    Still brown, I’d imagine.

• [CastanhasDoPara]

  Too bad he couldn’t have done anything about the foolishness when he worked there. Then again, I can imagine this position being the reason he left/was fired.

  It has to be one of life’s most frustrating positions to be in that one knows what is right and everybody else just sticks their fingers in their ears and closes their eyes while doing the ‘nya-nya-nya-I-can’t-hear-you’ thing.

  It’s one reason why I don’t buy big music any more. The other one being that all they put out now seems to be utter horse-crap.

• [bocomo]

  i think dynamic range compression (for radio play) is far worse than lossy compression (at a high bit rate)

  i always used Napster/Limewire/Whatever to get old music i had on tape or had lost and also to check out new artists and THEN GO BUY THEIR FRIGGIN MUSIC

  i think major music labels are some of the most ass-backwards, self-defeating, moronic companies out there today

• [Emo Pinata]

  They’re really just butt-hurt they cannot charge $25 for a CD like in the 90s. Back when every top 40 record sold more than the platinum records of today, and TRL was so popular is made Carson Daily (of all people) famous. I’m surprised they don’t try and sue all the artist-owned labels that grew from advances in technology.

• [m1kesa1m0ns]

  It’s interesting, now that the RIAA are being such huge dicks about it, I support the independent artists I like even more than I did before. I’ll do everything I can to support them. But my purchase of major label releases has dropped to zero. Weird how that happens.

• [greengestalt]

  Ever thought that maybe, instead of (just) being stupid top-down outhouse Corporate AmeriKa they might actually be TRYING to make sure the “Music Industry” is dominated by disposable SH-t One-Hit Wonder acts?  That they fear a “Mega Star” that lasts more than a few years?  That they want crud, stupid, dumb music not worth anything without digital editing and a media machine telling people it’s “Cool”?

  IMO they fear “Downloading” and an open internet for the simple reason that they produce crud, sh-t, trash for the public and want it the ONLY choice.  The problem is, the internet now gives more distribution to an “Independant” artist who if he/she is good can earn more on a “Tip Economy” than they actually pay most of their  own “Artists” and with no ability to control their work or personal/public life.

• [Jupiter12]

  Help me understand. If somebody can download a recording for free, what’s the incentive to then go out and spend money to buy that exact same recording that already exists on their hard drive or iPod? I’m not trolling, it’s a serious question. If my brother lets me borrow a CD and I load it onto my iTunes program, I no longer have a reason to buy it anywhere, do I?

  • [fnc]

    How about, because you enjoyed it? 

    If you want to live in a world where everything you do is governed solely by what you’re forced to do, by all means go forth and inhabit such a world. And feel free to treat someone’s artistic work commensurate with the value you place on it. But I do have to ask why you are spending your time acquiring and listening to music that’s worth nothing to you. 

    When I consider the way that listening to a song I love can make me feel, a buck to hear it as many times as I want is one of the best deals around.

    • [Spriggan_Prime]

      Maybe they value the dollar more. A deal’s a deal. It costs 16 euro (if memory serves) to get into the Louvre. But if you tell me they’ll let me in free tomorrow, well I might just enjoy the Mona Lisa for free tomorrow. But maybe it’s more convenient to just pay the euros today while I’m here.

      Ethics, taste and healthy business aside sometimes people just want something cheap, and if they can get it for free all the better. For them atleast.

      We’re in a technological/cultural/business model transition period. Remember Lamplighters used to have a pretty tidy business going until Edison came along.

  • [Jellodyne]

    Jupiter12, you may not buy that album your brother loaned you, but you may be aware of a band you were not aware of before. And when their next album comes out, your brother may not be around.

    As Cory D. says, for most artists the problem is not piracy but obscurity. Piracy helps alleviate obscurity. Piracy creates fans where none existed previously. Fans sometimes buy albums. People who never heard of you never buy albums.

  • [William]

    If somebody can download a recording for free, there may not be an incentive to
    then go out and spend money to buy that exact same recording, but there may be the creation of a fan of a new genre of music, or the creation of a fan of that artist, who may then buy some other recordings from the artist’s catalog. I imagine it is the discovery of new genres that fuels most of the subsequent sales.

    • [Jupiter12]

      Makes sense. Your response made me think of how services like Pandora allow me to listen to a variety of bands and genres without having to buy the music first. I suppose downloading new music can serve the same purpose. Thanks to you and Jellodyne for your replies.

  • [wingo shackleford]

    But, they have now made a new fan in you (presumably). Whereas you may have *never* purchased anything by that artist or from that label, there is a chance you will then go searching seeking their back-catalog and/or attending shows. If you don’t necessarily enjoy the CD your brother has tried to turn you on to, then no loss to them. The main thing the labels are losing are you getting tricked into making a shitty album purchase after only hearing one song or being seduced by the cover art.

    Remember when there were record stores in the ’90s that had all of the CD stations, where you could stand there and look like a dork in the headphones and ‘test-drive’ an album?  This is just the modern version. If I download (hate the BS term ‘pirate’) an album in an ‘illicit’ manner, it’s generally just for test-drive purchases and almost always leads me down a rabbit hole of other things to seek out.  And generally through those types of channels you don’t always get the best quality or things that are wholly complete.  Though I may or may not have been guilty of the crime of ‘illegal’ downloading, I spend just as much money on monthly basis downloading legit digital music now as I did on CDs in the ’90s, which is a fair amount.

    I heard Ben Folds on a podcast recently, and a listener questioned him about his take on ‘piracy’. Essentially he said he thought Napster was the most rock & roll thing to happen to rock & roll in ages. Sticking it to the man (labels), etc.  He said the industry had gotten out of control, and artists were getting mostly screwed anyway, and things needed a shake up.  And as far as he could tell, it got them a lot of new fans.  He said he happily signs home-burned CDs after his shows all of the time.  I dig it. 

  • [Grady Booth]

    Excellent question Jupiter12!  Unfortunately, thinking that an unpaid copy equals a loss is as common as confusing correlation with causation.  Let me give you an example.  Recently I have taken to exploring everything Van Morrison has ever recorded, because he is a music god.  But I cannot get a copy of Hymns to the Silence.  Anywhere.  So I will buy it, even though I will almost never buy music.  Also, now I will start to save for the next concert he gives in Canada.  And anybody that visits me will hear Van playing at my house and will get hooked, just as I am hooked.  And they will have to buy Hymns to the Silence, too. And they will want to see his concert, too.  If I could not have gotten any free Van at all, none of this would be true.

    • [CastanhasDoPara]

      ‘It’s like a lattice of coincidence that lays on top of everything.’ Van Morrison is indeed a god and I just remembered last week how awesome his stuff is. So I DLed everything I could find. Sadly not everything but happily a lot of live stuff (which of course would rarely see the shelves). And here you are mentioning that he will perform in Canada soon, which peeks my interest and if he comes a little further south I would totally find the time to attend such a show. Which brings up a good point. There are many artists I would love to see perform and gladly fork over hard earned cash for the entertainment/experience. With that in mind, being exposed to good music urges me to support it by going to shows but buying overpriced tracks from greedy RIAA affiliated weasels is not something I am interested in.

  • [whatebahw]

    Incentive #1: You want to support the artist/label
    Incentive #2: As a Gift  (i.e. you really enjoy the cd and want to share w your mom (I also like sharing with your mom))

    Really all the gains from sharing don’t just come from sales to the persons who shared the music. Sharing music lets people hear music that they might not ordinarily hear. In other words it creates new fans.  (Say my friends hear me listening to shared music ….they like it ….they….buy it…their friends hear it and maybe buy  it…..they attend concerts and buy t-shirts)

    These are just a couple of examples but hopefully you get the point without further “spelling it out”
    If you look at it like the labels and their lackeys do it does seem like the music disappears as soon as it is shared. That’s because the labels and their lackeys only see a perceived lost profit. In reality the music still exists and is being shared, promoted, enjoyed, and spread to new fans in ways unimaginable to adamant execs used to looking at the bottom line.

  • [Gary]

    A lot of people stopped buying cd’s when the started suing people, myself included. So suing their customers just pushed more peaple into the bad habit of not buying the cd.

• [howaboutthisdangit]

  Chalk me up as one more bit of evidence in support of that former exec’s theory.  I do not pirate movies or music, not do I buy much of it anymore.  Why should I grossly overpay for a cheaply manufactured CD (more often than not lately with only one or two good songs) or DVD, just to see the profits go to a no-talent suit instead of to the real artist(s)?

  Don’t even get me started on downloads.  If I’m paying for it, then I get to choose the format and quality or I’m not interested.  If it has DRM, you can’t even pay me to waste my time on it.

  If everyone stops supporting them, maybe they’ll just go belly up.  Then we can have a few good years before the cycle of lawyer-driven corporate greed starts all over again.

• [redstarr]

  Spotify will kill that good kind of piracy.  Which is awesome.  It will pave the way for sensible laws that will curb the folks that really are ripping off the industry and really are doing the kind of piracy that  most folks aren’t too supportive of.  We’ll be able prosecute or sue the folks that are selling crappy bootleg copies of albums and movies on the street for a profit.  But we’ll be able to leave alone the folks that want to sample things before they make the decision to pay to own them forever.  We’ll be able to stop the folks that want media but don’t want to ever contribute anything to support it.  But well be able to leave alone the folks that want quick easy access to things that aren’t at their local stores.

  As it was before good free legal streaming service like Spotify, a lot of us who aren’t complete free loaders were still stuck with not-so-legal ways to do things conveniently.  Lots of people who didn’t want to be infringers found themselves doing it often.  Spotify will fix the things those people who would like to be customers and would rather not be infringers need. 

• [wingo shackleford]

  Looks like William and  Jellodyne essentially said the same thing I did.  Still getting a grasp on the reply/threading thing here.

• [arvash]

  You know the industry is doing something wrong when you feel like a good person because you’re not buying Cds and Movies. 

• [masamunecyrus]

  There are a lot of reasons piracy is very frequently bad. But those reason never justify punishing the pirate unless they are literally what a pirate used to be — someone making bootlegs and selling them for a profit. All people downloading for personal consumption should be considered lost customers and companies should work to encourage them to purchase their games. Valve with Steam, as well as the entire anime industry understand this.

• [Jonathan Wilson]

  Its not really about piracy, its about CONTROL. Specifically the control that the RIAA and the record companies had for most of the 20th century. The control that new distribution methods like P2P threaten to take away.

  Both control over what music gets distributed and what doesn’t AND what music gets the most promotion.

• [phaedral]

  Murder. Rape. Arson. Making and sharing unauthorized copies.

  One of these things is not like the other, and we lost the fight decades ago when we accepted as legitimate the rhetoric of “piracy”.

• [Paulo A Ferreira]

  New machines are arriving without a CD or DVD player. I don’t have any DVD player connected to the TV and I’m not going to buy one. I’ve got a media player. So… Please tell me why do I need to buy a DVD please ? Where can I buy a movie to download or watch it ? NOWHERE! (I’m not in US)

  • [Inner Space Tourist]

    I use Voddler for that.