Before diving into the litany of gripes from artists regarding Apple’s Ping social service, it’s worth saying: some critics say they expected better. Many artists want a smarter, more social iTunes. That’s the only reason anyone is spending time talking about the service’s perceived flaws.

Cellist and laptop musician Zoë Keating, an independent artist with collaborations from Imogen Heap to DJ Shadow, reminded me of that via Twitter. Even amidst her own criticisms, she was quick to add:

“But it’s Apple, so good or bad we all want to be invited to the party!”

That sums up not only the most disappointing aspects of Ping, but also why anyone would care in the first place. This isn’t the age of the hit parade, of Ed Sullivan, or even MTV. It’s the era of the Web, and people expect music media to be genuinely participatory. Because of the popularity of iTunes, the introduction of Ping seemed to artists like an opportunity.

Apple has responded to criticism, addressing some user concerns: Forbes’ Philip Elmer-DeWitt, asking “Can Ping be Saved?” last week, updated his article to reflect that issues with spam and forward and back navigation were fixed over the weekend.

The problem is that the fundamental complaints – and those of artists – run deeper. They may or may not be fixable.

Every artist I talked to said the same thing: the problem with Ping is that you’re not invited to the party. Missing from the guest list: independent (or, indeed, almost any) artists, alternative music stores, iTunes listening data, musical genres, and, above all, the World Wide Web.

Artists can’t make their own pages; Apple invites artists. In May, I criticized analysts for describing the iTunes App Store as being curated, a term I felt didn’t fit. This, on the other hand, really is curation: Apple invites a small number of artists at their discretion, which is why Ping makes some curious recommendations. As Keating puts it, “I’ve never bought Lady Gaga or anything remotely similar, but she is the #1 recommendation and I have to see her everytime I log on. That goes for Katy Perry too…I’ve created a world where I can pretend she doesn’t exist, but Apple really wants me to listen to her.”

Here, there’s a perfect contrast between Apple design and Apple curation. Apple design is beloved in the musical community, for the reliability and attention to detail of their hardware, operating system, and software. But Apple as curator, as tastemaker, is another matter. Apple’s (or Jobs’) obsession with artists like John Mayer had been a punchline, not a source of inspiration. For that matter, why should your computer vendor be responsible for musical taste? Would you ask Microsoft what clothes to wear today?

Apple ignores other music sources. When iTunes is criticized for promoting “lock-in” to Apple’s music store, listeners often respond that they rely on other sources for music. Apple may command big statistics when it comes to online sales, but that’s an aggregate of all music styles. For independent artists, everything from free distribution to specialized online stores – and physical CDs, which still rake in billions of dollars in sales annually – can matter more than iTunes.

Here, Apple runs into the tension between iTunes the player and iTunes the store. Ping as an add-on to iTunes the store makes some sense. As a modest feature that tells you what other iTunes shoppers are buying, it’d be unremarkable but also reasonably uncontroversial, at least before Apple hyped it as a new social network.

But iTunes the player demands higher expectations. iTunes is, for many, the virtual jukebox that the tool was when it began its life, before the debut of the integrated music store or even the iPod. I’ve even talked to frequent iTunes users, people who buy a lot of music, who have only purchased tracks from Apple a couple of times. For nearly anyone, iTunes – and by extension, Ping – must catalog all their musical activities, not just stuff they bought from Apple.

Ping is dumber about iTunes data than non-Apple services. Leaving other music stores out of the picture is perhaps unsurprising. But leaving out iTunes itself is more of a puzzler. The beauty of services like Last.fm is their ability to collect data about yourself that you can use. Sharing that data should obviously be a choice, but as Last.fm has demonstrated, the information can be useful to yourself, to fellow listeners, and to artists. It can make sure you see a favorite artist live or discover musicians based on human interactions, without violating privacy. But Ping is an inferior tool for iTunes data, compared to a third-party service like Last.fm. Wiley Wiggins, an Austin-based visual artist, has an extended complaint about Ping.

The killer insight: Ping is “store-centric,” not “user-centric,” says Wiggins. Flaws in genre handling and awkward mechanisms for tracking music and friends “make Ping seem like it is currently designed for users who 1) do not listen to much music, and 2) do not have many friends.”

Ping Feedback Form [Wiley Wiggins Blog]

Apple’s curatorial tendencies don’t make for a social network. Keating argues some of the tension here is philosophical: “Good social networking is chaotic and grassroots,” she says. “Apple is all about top-down control. Not sure this blend of the two works.”

And then there are … the genres. Aside from limiting you, comically, to choosing three genres you like, Apple seems to have lifted its genre categories from a BMG Music Club sign-up form.

It’s all too broken to be social. User interface trainwrecks, hidden “like” buttons, a “lonely” scene devoid of users or artist pages, and a laborious process to add friends made worse by Apple’s row with Facebook mean that getting anything social going is a waste of time. Mario Anima, who has led community efforts for Current and Community Speak Up! sums up the problems in an excellent post. Even with some navigational tweaks, there just isn’t much in the design that works. Even with Apple’s user base, I that could spell doom for the service. If users don’t spend time, the whole thing becomes pretty useless to artists, who are already fatigued by the amount of heavy lifting they have to do to get noticed online as it is. (See more on that below.)

Apple ignores the Web. Wired Magazine infamously ran an inflammatory cover this summer claiming The Web is Dead. That article could have been written about Ping. Ping isn’t visible on a browser; click on a link to a Ping profile, and it looks for an iTunes 10 client. Ping isn’t searchable. Ping is completely disconnected, at least for now, from the rest of the world – no integration with other services, and no public API. (One developer source told me an API is coming, with extensions to be approved by Apple, but I can’t yet confirm that, and that’d still fall short of making this a Web app.)

Ping is more than a walled garden: it’s a room with no windows or doors. It’s a tomb.

If Ping were the future, the Web might be dead – but early indications are that the reality is just the opposite. (Among many retorts to Wired’s “Web is Dead” thesis, The New York Observer is spot-on, and Boing Boing negates the graph they use to open the story, which turns out to say the opposite of what they claim.)

In fact, if anything, the negative reaction to Ping proves that the Web is more important now than ever before. People expect open participation, they expect browser-based interfaces (at least as an option), and they expect open interoperability and data portability in some form.

Browsers and links matter. Even Twitter and Facebook are popular partly as ways of linking back to other sites – I know this personally, because they’re two of this site’s biggest referrers. The Web make these services publicly searchable, connected, and accessible anywhere. They are the Web, and they also make the rest of the Web even more popular. Apple’s iPad and iPhone may focus more on “apps” than the “browser,” for now, but that singular example hasn’t yet been proven elsewhere. Meanwhile, competing browser-based music services have done just fine without an iTunes client.

Oh, yeah – and don’t forget that the lack of an open API also means hackers are shut out. This past weekend, Music Hackday – which I’ll cover separately – again gathered hordes of geeks to create new musical tools. That included things you’ll never see on Ping, like MixCloud on iPad.

Best of all: Brian Whitman of The Echo Nest had a pithy answer to how recommendation services should work. He created The Future of Music, which tells you which music you shouldn’t listen to. And that brings us to the last point:

In the end, maybe recommendation services aren’t everything. Whitman has a strong argument as he describes his tool:

I have a strong aversion to music recommenders and music similarity services. I especially deal with a lot of cognitive dissonance as the company I co-founded makes a lot of $$$$$ (that is 5 dollar signs) selling ordered lists of artists to multinational music streaming conglomerates.
Nonetheless, we recently completed our first live recommender system (to be announced near the Boston Music Hack day in October) and to perhaps get myself more comfortable with a future in which children will no longer ask their cooler older dope-smoking brothers what to listen to in lieu of some HTML table in a UL, I decided to really sign up wholesale to this movement. If we rely on these computer programs to learn about music, well we might as well rely on them to fix the sins of our past and delete the crap we are obviously not meant to listen to anymore.

“Future of Music (2010)” is a Mac OS X app that scans your iTunes library and computes the music you are not supposed to listen to anymore based on your preferences. It then helpfully deletes it from iTunes and your hard drive. Skips the recycle bin.

I don’t think Future of Music will have one million users any time soon. But it does raise the most important point: the actual music has to come first.

Whether or not the general public is fatigued of social networks promising to revolutionize music, you can bet musicians are. Oliver Chesler is the blogger behind “wire to the ear” and, as The Horrorist,” an electronic musician who has topped German charts. He sums it up best:

As a musician the word to describe how I feel about the new Apple Ping social network is: exhausted. Musicians have become the tech industries guinea pigs. Why not? We try anything and work cheap right? After creating and curating profiles on MySpace, Last.fm, Imeem, Facebook and then Facebook Fan Pages and on and on now it’s time for Ping.

For his part, Chesler says he’ll make his own Ping page and promote it, even as “the Lady Gaga’s get all the love.”

Remember why we were all excited about the Internet for music in the first place? It’s a chaotic, level playing field. That can be scary, but given the miraculous, mind-boggling diversity of musical output and taste on planet Earth, it’s perfectly natural. And any business model around music must be built around that reality.

Don’t believe me? Ping may have one million members, but the fastest-growing musical sensation right now is a guy who came to his sister’s aid in an attempted rape and was AutoTuned into… actually, that’s a long story, told neatly by the New York Times. (I couldn’t wrap my head around it at first, either.)

Take a look at his fans. The guy is, literally, a rockstar. How did he get big? He spread on the Web – not on apps, not in any “curated,” walled garden vertically integrated experience. Not in any way, frankly, that makes any logical sense at all. (AttemptedYou know … on the Web.

My guess is, you’ll know Ping (or a competing service) has been fixed when you find Antoine Dodson’s profile. Antoine, if you have music recommendations, we’d love to hear them.

Magic Bonus Addendum!

Broken Social Scene references that fit iTunes Ping! (thanks to the story above)

“Broken Social Scene”
“You Forgot It In People” (or, at least, you forgot people in it)
“Anthems for a Seventeen Year-Old Girl” (Katy Perry? Lady Gaga? Even Coldplay?)

If anyone had listened to the predictions, albums would be irrelevant by now. Instead, finding a way to weave music into a coherent narrative of tracks, and imbuing the object with meaning and value, matters more than ever. Finding time and resources is as much a challenge as ever, but there are some new tools for funding and finding music, even in the age of exploding global population and output.

Auditory Canvas’ record “Fabric of Life” is one of the many gems out there to discover. It’s a sparkling, delicate dreamscape of music, noted by our friend stretta (known for his own lovely music in the monome community). I’m not as fond of the final cuts on the album, personally; the spoken political narrative for me isn’t nearly as evocative as the opening numbers. (It’s nonetheless nice to hear music injected with such a point of view.) But there is a strong sense that creator David of Summer Rain Recordings is traversing a varied and personal musical terrain. It’s the kind of music that could bring you some spring inspiration.

Just as significant, Auditory Canvas made the album possible by crowdsourcing “kickstarter” funding at kickstarter.com. And lest such projects become selfish, by purchasing the album, you generate revenue to go back into the kickstarter system. Album production, after all, is far cheaper than it once was, but it isn’t free. “Fabric of Life” demonstrates what could happen to musical ecology if this kind of micro-lending invested in good, new work. And your purchase becomes a way to turn David into an investor himself in the system, keeping the cycle going.

To make that purchase worthwhile, Auditory Canvas put some thought into the lovely presentation; the limited edition has an almost theatrical approach to packaging, and even comes with a papercraft KORG synth (which I can add to my paper Minimoog from GAS). David writes with a number of talking points:

• Funded via a kickstarter project ( http://www.kickstarter.com/projects/auditorycanvas/be-a-part-of-the-fabric-of-life-album-release-0)
• $1000 from sales going back into other people’s kickstarter projects.
• 10% of sales going to charity (NextAid.org)
• CD packaging produced using recycled plastic, recycled paper, and soy inks
• Released on my own label, Summer Rain Recordings (all artists donate a portion of their royalties to charity, the label matches their donation)
• Limited edition and standard CD and digital available here: http://auditorycanvas.net/store
• Available on all digital retailers 17 May
• More info at: http://auditorycanvas.net or http://summerrainrecordings.net

The interesting thing about the release strategy is, while it does make the album available through digital channels, it provides some big incentives to go straight to the artist. And that kind of self-motivated album release may increasingly become essential. For a stunning visualization of why, look no further than the lovely blog Information is Beautiful. Using data and analysis from The Cynical Musician, it paints a sobering portrait of the harsh realities of digital distribution. Artists would have to get 1.5+ million plays on Last.fm’s streaming service just to make a month’s living wage.

It’s certainly a glass half-empty / half-full situation, though: you’d only need to sell 143 self-pressed CDs. And that should be optimistic: online tools, even those that sell music, are great promotional tools; boutique sales of physical objects (or even of downloads, in situations where the artist gets a bigger cut) are where the revenue is. And even if that doesn’t help you quit your day job, that could be essential in being able to invest in your next record and keep artists productive. (This is also, it seems to me, a great argument for the potential value of torrents and Creative Commons licensing. If the online file is a promotional tool, best to get it far and try to leverage the things that do bring in money than try to get a few extra nickels and dimes.)

It also pretty clearly makes the challenges facing the business of music about format and economies of scale, not piracy (or, at the very least, not piracy alone – not by a long shot, if the “legal” services aren’t generating measurable revenue, either).

HOW MUCH DO MUSIC ARTISTS EARN ONLINE?

Thanks to David for sharing his lovely music. And I expect, whether you’re a great fan of the album or not, this should get some wheels turning about that album you’ve been trying to finish.

The Music Bore – Video 2 from Nicholas Humfrey on Vimeo.

“I’m sorry, Dave, I can’t allow you to listen to Coldplay.”

What would radio be like if playlists were not only robotic, but had robot DJs pulling information from the Interwebs dynamically? That’s the question asked by the winning team at London’s Music Hackday last weekend, which created an epic mashup of data sources to produce a voice-synthesized IRC chatbot that researches and plays music for you.

Music Bore

Music Bore was just one of a number of projects developed in the weekend of musical hacking, some for listening, and at least one (a fantastic and free synth plug-in) for what we really like – production. With some of the world’s top musical coders in attendance, the results were amazing, even if not all projects were entirely finished. (Hey, that’s why they call it hacking.)

You can check out the full list on the wiki, but here are some favorites — and if you were there, do shout out to us as you put more documentation up of the event and projects.

Harmony Box by Dave and Mike is a synth plug-in for Mac (AU/VST) and Windows (VST, thus also Linux) that quickly creates lovely chords. I love the simplicity of the instrument – really lovely work, gents – and I think I may actually use it on a project. They accept donations if you’d like to see this instrument mature. Of course, with everyone else doing Web mash-ups, this didn’t win, but it’s more up our alley. (Web 2.0 – meh, whatever.)

The synth has its own project blog:
http://davenoise.com/blog/

Other winners (in our book, and as recommended by Harmony Box co-creator Dave Gamble):

LonelyHarps by Jamie Hollingworth and David Padbury is a Last.fm-based tool concept that helps you find dates – and choose the right tracks to set the mood – using music for compatibility. And, really, do you really want to date someone who doesn’t have musically compatible tastes? (I’m sure it’s just because they spotted lots of hotties on Last.fm, but…) The only bad news: the app didn’t actually get fully made yet, but we’ll stay tuned, gents. They do have impressive-looking formulas.

Music Zeitgeist by Cristiano Betta visualizes lyrics by decade, such as the 1980s, above. (Yeah, it was all about wanting and karma, the 80s.) Check out the project directly.

Theremag by Jono Cole and Jonty Wareing of Last.fm is actually the app I most want to see, but there’s no documentation yet. It’s a Theremin emulator on the Google Android-based HTC G1, with an unusual sensor — the built-in magnetometer (the one that normally acts as the compass) which was used to pitch-bend Michael Jackson. Once they get documentation up, expect to see it here. (I love that magnet sensor, too. Good fun.)

iPhone Music Visualizer by George J Cook and Matt Biddulph grabs Soundcloud files, analyzes them with Echonest (which recently got an iPhone-friendly Cocoa API), and then plays them back with a visualizer. It looks like a great place to get started if you’re planning on building something similar yourself.

In fact, it’s well worth checking out the wiki not only because some of the projects have (okay, sometimes-sloppy) source code, but point you at the resources you’d need to tackle something like this yourself if you’re a coder. And the event prompted a lot of folks from Last.fm to Echonest and BBC and others to get their APIs together.

It’s a terrific idea, and it sounds like we need another music hackday here. (Press releases, ahem, claimed this was the “first” music hackday, even though we’ve done a global event ourselves, but who cares — let’s do more!)

New York would make a nice base of operations for a similar event because a lot of folks with interesting APIs are here (or in nearby East Coast towns), but I think it’d be great to get more people online and not just in one locale.

What think you, sirs and madames? Tips on how we could make an online event work?

As an addendum to the Last.fm story today, what are the actual royalty rates we’re talking here? They’re not much – precisely the reason musicians will have to get broadcast-style play counts to ever see anything worth counting. For instance, Last.fm makes the comparison with the BBC in the Wired story. The BBC has more hegemony than even a giant US ClearChannel radio station, and I suspect it’d be virtually impossible for an unsigned artist to see that number of plays.

How little? Try $0.0005 per play, as Steve of sighup writes in comments. (I think that’s just radio plays; assuming you get both radio and on-demand plays, you should do a little better – but, still, you might be better off with your CD sales out of your guitar case.) Keep in mind, that’s on top of other revenue, like performance royalties from ASCAP, BMI, and such, but it’s still not much.

Low as that may sound, it’s in the same ballpark as traditional webcasting rates. Prior to the big shake-up over Copyright Royalty Board rates here in the US, its rate was US$0.0008. And that’s only in the US, whereas Last.fm is international – and some of that goes to SoundExchange, and some goes to your label, and … you get the picture.

The CRB and record industry did successfully pass higher rates, up to $0.001 (okay, still not putting your kids through college). Those rates caused an uproar from webcasters, but they were also initially associated with punishing minimum fees, which depending on the definition of what a “channel” is could have driven millions of dollars in fees for some webcasters. Those requirements, not the relatively tiny per-song rate, were what concerned artists and writers, because the new rules threatened to take away important channels for getting their music out there and driving sales to more lucrative enterprises like CD and concert sales.

As it happens, that debate continues as we speak. In the June 5 RAINcast (Radio and Internet Newsletter), Paul Maloney points to reports that Pandora’s chief executive is personally lobbying against these rules, because they’d suck up 70% of that services revenue, for a total US$18 million in royalties. You can do the math: that’s enough to bury Pandora, but not enough so that you’d ever see any of the change. Everyone loses. RAIN also notes that SoundExchange hasn’t actually been enforcing its new rates, so we haven’t yet seen what happens to Internet broadcasting with the new rules – even though they were ratified last summer.

So, Last.fm’s rates, while small, go straight to the artist, they’re transparent, and they’re in the ballpark of webcasting fees in the past. Since they’re set by Last.fm, we can assume CBS isn’t destroying its own business, either. And keeping things in perspective, this is really about Last.fm, not the entire universe of music. That’s the good news. The bad news is, they’re so impossibly small that for most people, it won’t really matter. And, yes, if Last.fm’s main business model is advertising, you have to wonder if artists won’t be more successful directly selling ads. Even Google AdSense could wind up being better for the artist, partly because it’s unclear how much ad exposure Last.fm can cram into its service. In the long run, my guess is you’ll see all of these – given the amount of ad inventory out there, and the rising consumption of music, and new ways of consuming music, I don’t think this is a zero sum game.

But the bottom line: cool as the Last.fm announcement is, even I’ll quickly admit that royalty rates in general are unlikely to make or break most artists’ lives. The real business is elsewhere, at least for now. If Last.fm can massively expand the number of listens, though, the whole game could change – and that means even that fraction of a penny could wind up being an important precedent. Stay tuned.

As music listening takes new forms, that builds new business models. But who calls the shots? Who gets to play, and who reaps the benefits? One immediate danger is that major label deals will dominate as outlets vie for position. Online outlets like MySpace have started to look a bit like the same-old, same-old world of major labels and big deals. “Indie” music sometimes makes an appearance, but nearly always in the form of signed artists and often in the shadow of the majors. Unsigned artists can get onboard, but the playing field often isn’t level – and while majors negotiate lucrative deals for their music, unsigned artists and indies have to give theirs away for free. At the other end of the spectrum, unsigned artists often don’t get paid by services that benefit from their work (like MySpace).

That’s why Last.fm’s announcement yesterday was a potential bombshell. Now fully available after months of development, the Artist Royalty Program will pay artists royalties on plays directly – no label required. Unsigned and independent artists can sign up to earn royalties from on-demand plays and Last.fm’s streaming radio.

Last.fm Artist Royalty Program (last.fm/uploadmusic)

Royalties 101

To fully understand what that means, let’s back up and talk about where royalties come from in on-demand online music. This is entirely separate from downloadable music – that’s pretty straightforward. If you, for instance, sell a track on your band’s website for 50 cents, people pay 50 cents, own the track, and you get 50 cents. If you sell it through another vendor, then you get a slice of the sales pie.

But on-demand, streaming music, via radio stations or elsewhere, works differently. Since the days of radio, broadcasters have wanted broader access to music. Obviously, if they had to negotiate rights individually for each track, they couldn’t exist. So the solution has always been a system of blanket royalties. In the online space, there are two kinds of royalties, coming from two different licenses. Here’s the simplified version (lawyers, feel free to clarify):

1. A license for the recording – the “statutory license.” These fees are set by the Copyright Royalty Board and collected by SoundExchange. It’s called “statutory” because webcasters don’t need your explicit permission to broadcast music. They’re paid to the owner of the recording. If you’re a signed artist, that’s your label.

2. A license for the “performance rights” of the copyrighted work itself. These fees are negotiated with performing rights organizations like ASCAP, BMI, and SESAC.

That sounds odd (Last.fm isn’t “performing”), but it makes more sense if you think about the actual music. There’s the recording of the music, and the “work” itself. So, for instance, you might record a cover of a song. There’s the songwriter, and the artist recording the work; they may not be the same person.

If you’ve written and recorded your own song, you own both of these rights. You might sign with a label and give them the recording rights, but either way, the basis remains the ownership of the recording and the musical work.

So where does ARP fit in?

First, regardless of whether you’re part of ARP or not, you’ll always receive the performing rights if you’re the writer of your musical material. That’s why it makes sense to join an organization like ASCAP if you’ve ever produced anything; unless you do nothing but cover other people’s music, they’re there for you. They’re not the RIAA – they represent writers and publishers. In fact, even if you release your music under a Creative Commons non-commercial license, you are eligible to receive royalty payments collected by these bodies. (That’s the topic of an upcoming article.) If you join ARP, you’ll continue to receive income for this music.

What ARP does is to provide additional income for unsigned artists. A spokesperson for CBS Interactive (parent of Last.fm) tells CDM:

If you participate in the ARP, you should not be signed up with a recording rights society. In effect, Last.fm is cutting out the middle man here by paying the artist directly without going via the collection society. Writers benefit from the publishing rights royalties that Last.fm pays to the publishing rights societies. ARP is for recording rights only.

Who Benefits from ARP?

Here’s where ARP makes a difference. Previously, the system for the artist was to go get a label, and then get that label to collect royalties on the recording. The label, in turn, had to go to SoundExchange, formerly part of the RIAA but now an independent organization, to get the money. Result: fees get set by a board of judges chosen by the Copyright Office (the Copyright Royalty Board), and you’ve got multiple middle … men, actually.

Under the ARP, you go to Last.fm, and Last.fm pays you. You upload the music where you want it to go. And, via Last.fm’s community pages, you actually have some tools for your music:

Last.fm for labels and artists

In addition to royalties, that includes stats, event management, and the ability to connect with fans. And the other thing that’s interesting about this whole system is that both parties essentially have to be happy. Artists have to be getting value from Last.fm’s service, and royalties that make sense for them. Last.fm can then, in turn, build an ad-based revenue model that works for them as a business. That’s a far cry from a giant battle between the recording industry and large performers’ organizations in front of a group of judges. It’s new, so we’ll have to see how it works, but it’s nothing if not appealing.

(See also a similar announcement from imeem, though that one required working through SNOCAP for distribution, and comes from, arguably, a less popular service. I also think some of Last.fm’s unique tools for data collection and fan management make it more interesting than imeem. But this is all the more significant if other sites do the same thing in the future.)

ARP for Labels, Getting Paid

The ARP system isn’t limited to artists, either. New labels could embrace the system. Again, a Last.fm spokesperson clarified for CDM:

A label can participate in the ARP Program IF they own the WORLDWIDE rights to the content and have NOT signed up with any collection societies.  (Basically only startup labels that aren’t collecting any royalties would be interested in participating in the program since they’d only receive revenue from Last.fm in that case)

One other simple upshot of all of this is that people actually get paid. That’s not the case with MySpace. As Eliot Van Buskirk writes for Wired’s Listening Post:

We’ve had a bone to pick with MySpace about this for a while, because it plans to compensate major labels with a share of ad revenue without similarly compensating indie labels, unsigned artists, or possibly even the artists signed to them.

The headline says it all:

Last.fm Compensates Artists, Unlike Some People We Know [Wired.com Listening Post]

It’s well worth the full read. Eliot notes that even Last.fm doesn’t maintain the amount of money will be huge, partly because online streaming is still growing gradually (though I think listening habits will continue to grow). The money is coming from ads that appear with the streams. But Wired notes over 450,000 tracks are available on Last.fm as part of the Artist Royalty Program. And they also observe that, unlike MySpace, indie artists aren’t left in the dark, and unlike almost everyone, payouts are transparent – you can actually monitor what you’re earning.

Ultimately, I think that’s the bottom line: Last.fm is actually paying people. And I don’t mean to make an argument against labels. On the contrary, ARP is a tool many artists will likely use while looking for a label – alongside other useful tools (some arguably more valuable than direct revenue) provided by the service. The one question I do have, though, is whether new upstart labels might forgo the complex recording collection process entirely and start to use services like this directly. That would allow them to continue to fill the business and promotion roles labels have always provided, which artists and writers often can’t handle on their own. But it could be the first glimpse of a new set of models in which music creators, publishers, and labels deal with online business directly, rather than dealing with a middle man.

Update: Labels not so happy

I missed this: Merlin, one of the aforementioned rights bodies representing the labels (12,000 independent labels total, controlling more music than EMI) has protested the ARP license:

Merlin Opposes Last.fm’s Artist Royalty Program [Wired.com Listening Post]

The grounds: no retroactive license fees, a breakdown in negotiations with Merlin, and vague licensing terms. Now, I’m not sure on any of those points – in particular, Merlin’s negotiations should theoretically be independent of ARP to begin with; it explicitly excluded people who have signed with labels who are part of separate negotiations. If you’re an independent artist, it doesn’t really matter what Merlin thinks or even what they deem “illegal” – particularly if you’re uploading and licensing your own music, which is presumed by the ARP deal.

But the main thrust of this argument is that past Last.fm plays were illegal and unlicensed.

Last.fm’s response is, basically, ARP is about indie artists, not Merlin. Merlin’s banner says “representing the rights of independent record labels worldwide,” by which they mean, of course, their members, not necessarily anyone else.

But Does it Add Up to Anything?

The big problem is, streaming rates in general are a tiny fraction of a cent per play. If Last.fm achieves greater volume, that could be good news for artists. Until, then, though, this is largely symbolic. Further discussion:

Fine Print: What Do Royalty Rates Actually Pay?

Part of what was strange about flat fee advocate Jim Griffin’s new proposal for an ISP monthly fee for music is that subscription-based music lives already, from digital radio to music services. Amidst rumors that Apple might add subscriptions, the Zune, Rhapsody, and Napster all have flat-fee subscriptions right now, thank you very much. (I’m even told there are music players aside from iPod, though I don’t know if I believe this.)

I was a big fan of YottaMusic, a friendly Web front-end that connected to Rhapsody, and mourned its passing at the beginning of this year. But here’s good news: you can restore Yotta’s best feature, which was keeping track of music played in a Web browser for the superb Last.FM music community service.

Rhobbler

Rhapsody is clever enough not only to work in Web browsers on multiple platforms (even Linux), but generates an RSS feed of music you’ve been playing. Rhobbler hooks into that RSS feed and uploads to Last.FM. It’s a kludge, certainly — I’d love to see this built into the Rhapsody interface, along with other improvements. But it works: sign up once, and you’re done.

As some commenters noted in regards to the Griffin story, there’s a lot of music out there to keep track of — and a lot of us are listening to more than ever before. But that’s why it’s so nice to have tools like Last.FM. I also find, curiously, that subscription music for me feels like on-demand radio; instead of reducing how much music I buy outright, I just buy music I’m even more excited about.

If you’re not already a member, be sure to join our CDM group on Last.FM:

CreateDigitalMusic @ Last.FM

… and yes, promoting your own music there is encouraged! (Albums at right represent albums heard last week by CDM members. And, uh, dude … the group is all guys at the moment. I know ladies reading the site, and Last.FM has plenty of women, so join in and share your listening tastes!)

So, how do artists get paid? That’s the interesting bit:

• Artists (or whomever the writer / publisher is) continue to collect royalties via collection societies like ASCAP and BMI, as with other services.
• Artists and labels get an additional cut of Last.fm’s ad revenues.
• Last.fm does an excellent job of referring people to digital downloads, via band websites and services like Amazon and iTunes. Those services are increasingly DRM-free (Amazon has the largest DRM-free catalog currently). And you can even go buy a CD if you like.

Beginning to get the picture? The digital age has brought a shift in consumption, but it’s possible it can still bring big revenue opportunities for artists. Connections to live music and merchandise of course can also help, and unlike a service like iTunes, Last.fm’s collections are curated largely by the community of people listening to them — which is good news for artists trying to get discovered.

I’m looking for a catch, but I think the only real catch is seeing whether this will translate into real checks for anyone but the biggest artists. And for that, we’ll just have to see how these services evolve. But by opening the door to full-length plays on Last.fm, that service clears the path for other services to get similar deals, or to connect to Last.fm’s listener data and community for their own service. The business model continues to get better. And for listeners, it’s a dream.

Free the Music [Last.hq, the Last.fm blog]

Webcasters don’t yet have to pay new fees for their broadcast. But they’re still accruing debt — fast. Sort of like our credit card debt.

Webcasters may get a small break on the minimum fee, one that could literally have shut down “personalized” radio services. SoundExchange explains the deal thusly:

Under the new proposal, to be implemented by remand to the CRJs, SoundExchange has offered to cap the $500 per channel minimum fee at $50,000 per year for webcasters who agree to provide more detailed reporting of the music that they play and work to stop users from engaging in “streamripping” – turning Internet radio performances into a digital music library.

Note the big attached “ifs”, which are vaguely worded in the official SoundExchange announcement, and sound all the more threatening given, according to SoundExchange, the previous rates are already in effect. Whichever side you’re on here, you have to give SoundExchange some credit for, erm, negotiating skill. “Hey, so while you’re dangled over this bridge, I wonder if we might … negotiate some small items?”

The one shred of good news: apparently Congress has applied some pressure on SoundExchange to negotiate, meaning public action has actually made some difference. Whatever the ultimate solution, it’d be nice to think some sort of public involvement might push the government to do something effective.

Wired has some good reporting on this:
Net Radio Wins Partial Reprieve as Royalties Loom

Meanwhile, I have a partial vacation to get back to. See you soon.

SoundExchange Tells Congress Webcasters May Keep Streaming [Kurt Hanson / Radio and Internet Newsletter]

A number of SoundExchange’s olive branches have been largely publicity stunts, but this seems real:

1. July 15 is no longer D-Day. SoundExchange promises that, as long as broadcasters are negotiating with them and continue to pay previous rates, they don’t actually have to start coughing up money at the new rates. In other words, instead of the July 15 deadline being the melodramatic “Day the Music Dies,” it’s now more accurately the “Day the Music Tentatively Continues Under a Cloud of Uncertainty While Mysterious Closed-Door Bargaining Sessions Try to Find Some Amicable Solution, or Not, We’re Not Really Sure.”

2. Maybe SoundExchange won’t cripple mega-channel content, after all. The one side of this we hadn’t covered was that the SoundExchange position would require a minimum of US$500 per channel — meaning services like Pandora and Rhapsody would be instantly crippled because they have countless channels, rather than individualized channels in the traditional sense. Think “dog bites off Long Tail.” Supposedly they’re now making headway on this point.

SoundExchange specifically mentioned wanting to protect the interests of college radio and NPR, and anyone else who will keep negotiating with them. And if there’s one thing they love, it seems to be negotiating.

Let’s put it this way: uncertainty is bad for Internet Radio. So even if July 15 isn’t a deadline, after all (yay!), it is absolutely imperative for the business models going forward that SoundExchange and the broadcasters sort this out. As for what this means for musicians, as many of you wisely point out, the majors still dominate music listening and none of this tends to amount to much in the way of actual checks for most music creators. On the other hand, because these services are often looking for ways to monetize content, selling the actual music remains in their best interests, as well. My sense is, somewhere beyond this dark, complex era of negotiations, we may actually start to see a real business ecosystem grow around music listening, one that’s distinct from that of the radio and CD/vinyl album era. In the meantime, negotiations continue.

Hear that? Nothing. No, it’s not silence making a political point, as with the Internet Radio Day of Silence staged last week by web radio to protest punishing new royalty rates by showing what they could cause. This is an even more disturbing silence: as the deadline for new US rates for Net radio approaches, online radio’s supporters seem to be desperate and exhausted.

Here’s the problem: net radio supporters, concerned that new rates (and the backdated royalty rates that would be owed along with them) could kill Internet radio, haven’t exactly gotten a lot of good news lately. They’ve failed to stop the new rules in the courts: the U.S. Court of Appeals denied a “motion to stay” that could further postpone the ticking clock. And, despite overwhelming public support that jammed fax machines and stunned Members of Congress, the U.S. Congress has failed to actually bring a bill to the floor. Members were happy to co-sponsor legislation and say nice things to supporters, but not actually try to pass the legislation itself.

Barring any further action, Net radio is going to have a massive bill sitting on its desk this coming Monday. It’ll cover not only the new rates, but months and months of back-dated rates. With public broadcasting in a dire situation already, and independent music struggling to come into its own via fledgling Web outlets, that seems like really bad news.

Interestingly, one major outlet — one we’re big fans of here at CDM — disagrees. Last.fm argues that this is much ado about nothing, not because they’re a UK-based company (international broadcasters are subject to US rules — sorry, guys), but because they’ve managed to negotiate independently with the labels to get rates that work for them. That’s great — for Last.fm. But I question just how relevant this is to anyone else. Aside from the fact that not every single broadcaster can — or should have to — negotiate independently with labels, there’s also the fact that Last.fm can do its own programming around what it’s able to license. That isn’t the case for, say, a college public radio station doing a webstream of its usual programming. Given the strong material evidence presented by other broadcasters, it would seem that, despite Last.fm’s smug, broad pronouncements (ironic coming from a company owned by CBS), their situation is unique.

That means one thing: it’s time to hit the phones, Americans. (Hello, Rest of the World — while our laws may indeed wind up punishing your radio, too, I’m afraid there’s little you can do, other than call your American buddies and tell them to call.)

Call your Senators (you’ve got two of them) and your Representative (one of those). You can find the information here:

Capwiz.com Townhall Contact Info

And, as I’ve said before, there’s all the reason for independent artists to make this call. The new royalty rates in the Congressional bill aren’t perfect, but they would establish a framework for setting fair rates across media in the future. The idea is not to eliminate royalties; it’s to set it a rate that expanding media outlets can cover. More growth for listeners could ultimately mean more royalty rates. And by protecting independent online outlets, artists have an opportunity to ensure the growth of digital media as a means of promoting their work, which can funnel money into better revenue sources for us, from commissions to album sales to live music ticket sales.

For more on the indie artist perspective, see Independent Artists Fear the Demise of Internet Radio from The Baltimore Sun on (ironically) July 4.

Feel free to let us know how your Congresspeople respond here in comments. And let’s hope that this largely inactive Congress can at least bring this important debate to the floor, rather than remaining silent themselves. Wherever you stand, total inaction is the worst kind of silence of all.