Why make a trillion when we could make... billions?

Google is offering billion dollar checks to labels for blanket rights to their entire catalogs, according to highly placed digital music sources.

According to one source,  ”Google has offered at least one label over a billion dollars for all the rights in every country for every piece of music and for every platform.” This means that Google could potentially be writing checks for a total of well over $5 billion, if they’re crazy enough to actually go through with it. By comparison, according to the International Federation of the Phonographic Industry’s (IFPI), total revenue generated by the global recorded music industry in 2011 was $16.6 billion.

What, one may ask, is Google thinking? “Who knows,” said the source. “It really doesn’t matter because they would screw it up anyway (referring to the fact that Google’s music service has been less than dazzling). Evidently they have a big content group and they have to have something to do to justify their existence.”

So how have the labels responded? “They’re just shrugging and stringing Google along, trying to keep milking cash out of them”, says the source. “They want the money but on the other hand they hate Google. It really sticks in their craw that Google continues to present links to pirated content at the top of their search results.”

Last year blogger Glyn Moody opined in a blog post why Google should buy the music industry. “That would solve its licensing problems at a stroke”, he writes, but would also bring anti-trust problems. He then goes on to ask what “if a consortium of leading Internet companies – Google, Microsoft, Yahoo, Baidu, Amazon etc. – jointly bought the entire music industry, and promised to license its content to anyone on a non-discriminatory basis? At the very least, the idea ought to send a shiver down the spine of the fat-cats currently running the record labels, and encourage them to stop whining so much just in case they make the thought of firing them all too attractive to the people whose lives they are currently making an utter misery….”

I wonder if the Capitol Tower could be moved to Silicon Valley?

© 2012, Wayne Rosso. All rights reserved.

"Sylvia, my little bialy. Meet me at the Tour Eiffel and we'll make audacious music together."

audacious

intrepidly daring : adventurous ; recklessly bold : rash 

contemptuous of law, religion, or decorum : insolent; marked by originality and verve 

–Merriam-Webster Dictionary

In the case of Sylvia Rhone’s new Sony-financed label, it’s certainly daring and recklessly bold but far from original. Rhone has named her new venture Audacious Music. Sounds…very audacious! However Grammy-nominated producer & DJ Dave Audé might think differently. Audé has done remixes for the likes of U2, Madonna, Sting, Lady Gaga, Katy Perry, Ke$ha, One Republic, Puff Daddy, Rihanna, Jennifer Lopez, Selena Gomez, LeAnn Rimes, Kelly Clarkson, Britney Spears, Depeche Mode, Coldplay, Pussycat Dolls, Beyoncé, tATu, Nelly Furtado, Donna Summer, and Korn. He’s had 79 Number One’s on the Billboard Dance Charts, some on his own label that he formed in 2008—Audacious Records.

“This is just Sylvia’s first boneheaded move of many more to come,” said a former Rhone co-worker. “[Sony Music septuagenarian CEO] Doug Morris had better keep a very close eye on her. She must have something on him because she’s incredibly inept.”

Sources with knowledge of Rhone’s label deal say that although it is fully financed by Morris, her staff will be limited and will have a small A&R team. She’ll be reliant on a lot of services from L.A. Reid’s Epic Record Group. However there is evidently no love lost between the two. According to a well-informed source, a number of Epic execs went into Reid’s office complaining about having to work with Sylvia. Reid’s response was to tell the execs to forget about doing anything for Rhone or her label.

According to my Epic Records sources, people there were stunned to discover that within ten days of starting at Sony, Rhone made her first major business decision for the label: a trip to Paris where hopefully she at least met with the head of Sony France between visits to Vuitton, Chanel and Louboutin.

Thus far no one seems to be very impressed with Sylvia or Audacious’ prospects. “The only way she has ever had any semblance of success is through joint ventures,” claims a former Rhone confidant. “She’s got tin ears and she won’t have deep enough pockets to get back into the joint venture game.”

“For some reason Doug is very loyal to her.” says the source. But another highly placed exec thinks that the Sylvia deal “will be Doug’s Waterloo.” Others say that Morris is merely “throwing her a bone and will not be sinking a ton of cash into the label.”

Either way Sylvia Rhone will still be riding in her limo to work every day and taking company-paid shopping trips to Paris, but she may have to start staying on the Left Bank now to show that she’s cost conscious.

© 2012, Wayne Rosso. All rights reserved.

Recently, some of Lucian’s new executive team have locked horns with Zach and that might have factored into the move. Insiders say the writing was on the wall for Zach the moment that Barry Weiss brought his crony Ivan Gavin over from Sony. The rumors are that Gavin, who evidently has no respect whatsoever for Horowitz, thought nothing of undercutting Zach at every turn. According to one source, “There’s just no room for both Zach and Ivan in the music group”.

Conventional wisdom asks how Zach has survived for so long given the many top management upheavals he seems to have weathered. “He must have something on somebody”, claims one source familiar with the company.

The Torquemada of the music business, Zach had been the hatchet man for septuagenarian former UMG CEO Doug Morris for years. Prior to that Zach had been general counsel at MCA Records during the period when the US Justice Department was probing MCA Records’ connection with Sal Pisello, a known mob figure. The government notified Zach that they intended to subpoena him in the inquiry, but he responded that if he were not granted full immunity from prosecution he would take the Fifth Amendment. It’s the Justice Department’s policy not to put a person on the stand if he says in writing that he intends to take the Fifth.

At the time, investigative reporter Dan Moldea wrote: “Interviews with industry sources and law enforcement officials, court documents, and MCA’s own records indicate that there’s an unusual relationship between the Mafia figure and the Fortune 500 company — a relationship that seems to be just the sort of thing that the Justice Department is supposed to investigate.

At the end of 1987, when Justice Department officials ended the probe of MCA, they knew the following:

* Pisello is an active participant in the world of organized crime. His name appears on numerous federal reports, where he is identified as a high-ranking soldier of the Carlo Gambino crime family in New York (which was then headed by mobster John Gotti) and as an alleged narcotics trafficker with links to drug dealers in Mexico, Italy, and Panama.* Pisello had close business ties with several hoods more powerful than he; some of them had recently been indicted for trying to infiltrate the record industry.

* MCA started to work with Pisello in 1983, although he had no previous experience in the record business.

* MCA lost money on every deal it made through Pisello. The company appears to have lost as much as $ 3 million on these deals, while Pisello made at least $ 600,000.

* MCA executives may have made false and misleading statements to federal officials who were investigating the Pisello case.

* At least six executives of MCA Records were subpoenaed to testify before a federal grand jury in Los Angeles. Five of them refused to cooperate unless they were granted immunity from prosecution.

* An argument erupted over the relationship between MCA Records and Pisello at an MCA board meeting in 1985. Howard Baker, who was then a board member, demanded that the executives who were involved with Pisello either cooperate with federal officials or be fired. Several of these officials subsequently received raises and promotions.

* MCA continued to deal with Pisello after his underworld ties were made public and he was convicted of tax evasion in 1985.”

The investigation was ultimately dropped after then MCA CEO Lew Wasserman, who was Ronald Regan’s agent and friend for 22 years, made a few phone calls. Coincidentally on May 19, 1986, within three months after the grand jury investigation began, Wasserman became the largest individual contributor to the Ronald Reagan Presidential Foundation, donating $ 517,969 for the construction of the Reagan library.

Thus Zach Horowitz launched his career into the upper echelons of the record industry. He sure must know in which end zone all the bodies are buried.

© 2012, Wayne Rosso. All rights reserved.

The King of "Free" Music Services, Australian "entrepreneur" Allan Klepfisz. Don't expect to be buying shares in Qtrax anytime soon.

The  US Securities and Exchange Commission today announced a temporary suspension of trading for shares of Brilliant Technologies Corporation, the parent company of the controversial and the failed Qtrax music service.

The order states that “Brilliant Technologies Corporation (“BLLN”) (CIK No. 1054825) is a delinquent Delaware corporation located in New York, New York with a class of securities registered with the Commission pursuant to Exchange Act Section 12(g). BLLN is delinquent in its periodic filings with the Commission, having not filed any periodic reports since it filed a Form 10-QSB for the period ended March 31, 2007, which reported a net loss of $1,255,936 for the prior three months.”

The SEC says that  the “Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters.”

Brilliant has ten days from the date of service to file an answer. A hearing date will be set by an Administrative  Law Judge.

By now most people in the digital music business not only know about the ongoing joke that is known as Qtrax and its fearless leader, Australian carney Allan Klepfisz. Many investors on the BLLN bulletin board on iHub have been up in arms about Klepfisz’s reported shenanigans for years. The latest reports have placed Klepfisz and his mini-me Number 2, Lance Ford, in Simcoe, Ontario, a small Canadian town, pitching local investors. According to the reports, Klepsfisz was pitching shares in Qtrax for $0.02 each. However shares in the parent company were selling on the OTC market for less than a penny. This leads to speculation that Qtrax, Brilliant Technologies’ only asset, was being sold from under the shareholders’ noses.

Obviously something was going on and Klepfisz just didn’t want to have to disclose whatever it was in those pesky SEC filings. So he just didn’t bother filing anything.

The government sure does move slowly and I’m sure that Klepfisz may have figured that the SEC has bigger fish to fry. But it certainly looks as though the long arm of the law may have caught up with Klepfisz, that is if they can find him.

© 2012, Wayne Rosso. All rights reserved.

It's unlikely that Mog's investors will get all of their money back

For the last few weeks the digital rumor mill has been buzzing about an imminent sale of the Mog music service. CEO David Hyman told Reuters “We’re not actively trying to sell this business…The Facebook integration has been fantastic for us but as we’re not yet profitable we’re always engaged in conversations with our shareholders about all possible options.” A non-denial denial at best. (Note to Hyman: never lie to reporters. Look what happened to Richard Nixon.)

Since then AllThingsD’s Peter Kafka broke the story that Beats will be buying the struggling servce, and a few days ago GigaOm reported that the sales price is rumored to be around $14 million. CNET’s Greg Sandoval reported that Beats intends to use Mog as the platform for an expansive online store that would include headphone sales and related merchandise.

Taking a close look at Mog, or at least what we can reasonably surmise, the service only has 500,000 active users, according to what Hyman told Reuters. Utilizing a rule of thumb conversion rate of 10%, that would leave Mog with somewhere in the neighborhood of 50,000 paying customers. Some of those subscribers pay $5 a month (for the pc-only service) and others pay $10 a month to have mobile access. So logically that would mean that Mog would take in an average $80 per year per subscriber. But we don’t know how many people subscribe for pc-only and how many for mobile, so let’s be generous and say that Mog averages $100 per year per subscriber.

That sounds great, but is it? If true, that would bring Mog’s total annual sales to a paltry $5 million, and of that approximately 70% goes to the content owners. That leaves $1,5 million gross profit for Mog to pay for their expenses. Even if we added another million for affiliate fees, any advertising revenue, etc., it’s still a money pit. Mog has raised about $25 million in venture capital and you can imagine that the investors have been screaming at Hyman to get them out. Rumor has it that Mog’s last round of financing was a down round, with the company only getting a $10 million valuation. So if you look at the Mog music subscription service alone, you would think that they would jump at a typical offer of 3-5 times turnover, or $15 to $25 million. My guess is that it’s closer to the low end of that.

From the get-go Mog had a lame offering. As opposed to the freemium model pioneered by Spotify, Mog offered a very short free trial to lure new subscribers. The problem with that was that the trial period just wasn’t long enough to get a user truly hooked on a service. This is one reason of many reasons why Spotify, in spite of harsh resistance from record labels, has wiped out the competition and is valued at nearly $4 billion.

What exactly is Beats buying anyway? This is a question that was posed by one of many digital music executives I spoke with. The answer seems to be…nothing, aside from a very small subscriber base and a UI. As one exec reminded me, Mog doesn’t even own its own technology. They outsource that to MediaNet. You could say that the personnel have value, but they haven’t done such a great job so far and even with Beats’ deep pockets, what makes you think that they would suddenly become geniuses? They do have an ad network that reportedly brings in about $8 million a year, but it’s not clear if that is part of the deal.

So that leaves the obvious–the content licenses. HTC evidently has found that building a music service from scratch isn’t so easy. The licensing takes about 2 years to complete and costs many millions. With Mog they get a service that is at least licensed and up and running.

As usual, though, there’s always a snake in the grass when you’re dealing with record companies. Here’s the kicker: as the licenses typically have a clause that require any new owner of the service get approval from the licensor, the label. Which means that a label could, if they want to, hold up Beats for a ton of cash, especially when they see HTC’s deep pockets behind the venture.

Obviously Jimmy Iovine won’t have any issues with his UMG deal, as he now has a part-time gig with them running Interscope/Geffen Records. Besides, as one label source told me, “It’s just not Universal’s MO.” Naturally EMI won’t be a problem since they’ll be owned by UMG. Sony, of course, wouldn’t think twice about screwing with anyone, but Jimmy is tight with Sony Music’s septuagenarian CEO Doug Morris and you can bet that nothing will happen there. So that leaves my friends at Warner Music. Hmmm. They wouldn’t try to stick up Beats, would they?

I was talking with some reporter pals about Warner Music and why they always seem to be the last to the party, and in the case of Google Music, no-shows. I certainly know from personal experience how difficult they are when it come to licensing, and everyone knows how Junior Bronfman personally tortured the Spotify guys. That’s just scratching the surface. So the conversation led to the question, “what is Warner Music’s digital strategy anyway?” I posed that to a very highly placed digital music exec and he said, “Their digital strategy is to make sure they increase Lyor’s net worth.”

I couldn’t have said it better myself.

Although Warner has always been very aggressive in promoting themselves as THE leaders in digital music they just fall way short of the competition. By comparison, a full 70% of Island/Def Jam’s total sales are digital as opposed to WMG’s 29.7% (as of fourth quarter 2011). Warner has historically slammed the door on new business models, opting to force new services to comply to their ideas. They also are known for wanting as much in advance money as UMG or Sony, despite the fact that they have less than half of the market share of either of those labels. Universal, on the other hand, has laid out the welcome mat and is willing to license almost any new model out there–a marked departure from the good old days when septuagenarian CEO Doug Morris and “Mr. Personality”, his henchman Zach Horowitz (paint gets bored watching him dry!), called all the shots.

Another question is who is really calling the shots at Warner Music now? Sources say that there’s a very interesting dynamic going on now between new owner Len Blavatnik, CEO Stephen Cooper and Lyor Cohen. My sources say that Len and Cooper are laying back right now, giving Lyor some leeway. There is evidently a scenario set that could erupt in fireworks at any time.

I wonder how that would effect Lyor’s net worth?

© 2012, Wayne Rosso. All rights reserved.

Users have voted on Google Music and the results aren't good so far.

Last week CNET’s top digital music reporter Greg Sandoval reported that Google Music is not living up to expectations, noting that “Google’s managers have told counterparts at the labels that customer adoption and revenue are below what they expected.”

It’s actually worse than that. According to a highly placed digital music executive, Google Music has actually been losing customers week over week–consistently–since it’s launch last November. “I’ve never seen anything like it”, the source said.”It’s astounding. It’s hard to believe that with an install base of over 200 million Android handsets they’re actually losing customers.”

Evidently some label execs are very concerned that things are so bad at Google Music that the mothership might just decide to pull the plug on the whole service, except for the geniuses at Warner Music who have refused to license it. The thinking is that the industry needs for Google Music to be successful so that the whole sector prospers. A failure of Google Music would be perceived as a setback and, of course, a loss of much-needed revenue for the labels.

According to Sandoval’s reporting, Google’s execs say that they’re not worried since the search giant has yet to really throw it’s marketing muscle behind Google Music and that the service will get a big shot in the arm once Google implements its hardware strategy of building an Apple-style array of digital consumer devices. As example, two weeks ago The Wall Street Journal reported that Google is building a wireless entertainment system that will stream music throughout the home. Good luck with that. Once you start going downhill it’s very difficult to turn the tide.

The other players in the US digital music space, Apple iTunes, Amazon, Rhapsody, Rdio, Mog, and Spotify are now left to fight it out amongst themselves. In the download model, Apple and Amazon are the only significant services with Apple, of course, dominating the entire digital music sector. That leaves the four streaming services. Rhapsody, which has been around the longest, boasts of more than a million paid subscribers, but at least half of those were acquired through the company’s purchase of Napster last year. However there just isn’t any buzz in the marketplace about Rhapsody and its growth potential seems rather limited.

Reports have surfaced that Mog has put itself up for sale, though these reports have been denied by the company. CEO David Hyman told Reuters that the service had 500,000 active users, which means that their paid subscriber base is most likely in the neighborhood of 50,000, a pretty pathetic figure. Hyman may be right after all—nobody’s going to pay good money to buy Mog with that kind of subscriber base anyway. Sounds like a fire sale to me.

Industry experts agree that Rdio is in no better shape than Mog and probably a little worse.

All of this, however, pales in comparison to the sensational growth of Spotify. The service has taken every country it operates in by storm. They’ve demonstrated exceptional steady growth worldwide and are approaching 4 million paid subscribers, with well over a million in the US, and many millions more active users. Why? Because the user experience is the best, hands down. Plus the Spotify guys are just smarter than the competition.

This leaves two models and two companies standing to duke it out, Apple and Spotify. Apple never even gave a second thought to Google Music. Spotify is the only service that Apple views as competition, and they’ll stop at nothing to undermine the Swedish up-start, as is Apple’s usual MO. Rumors have circulated that the real reason that Spotify took so long to launch in the US was because Apple threw up every roadblock possible, including threatening the record labels if they licensed Spotify. But Spotify execs persevered and finally launched in the US. Since then at least 2 of the major labels (UMG and Sony) have publicly stated that the evidence shows Spotify does not cut into album sales but, in fact, supplements them. The fact is that Spotify is a lot like radio in that regard. The more a song gets played, the more money the artist makes. The more a song gets played, the more demand is created to own the song–just like radio.

Keep your eye on this space. It will be interesting to see what Apple does to try and torpedo Spotify in the future.

© 2012, Wayne Rosso. All rights reserved.

"I owe you how much?"

There have been numerous media reports since her untimely death that Whitney Houston passed away “dead” broke. In January a Whitney insider told Radar Online “Whitney’s fortune is gone. Music industry heavy hitters are supporting her and her label is fronting her cash against her next album, but no one knows when that will be released. She might be homeless if not for people saving her…She is broke as a joke. She called someone to ask for $100. It is so sad. She should have Mariah Carey money, and she’s flat broke.” Stories in the mainstream media claiming she died near bankruptcy continued to appear in spite of reports that insisted Whitney had made $36 million from her last tour a couple of years ago and, of course, her huge new $100 million dollar record deal with Sony Music in 2002.

How in God’s name could she, or anyone, have blown through that much dough?

The answer is simple, according to one source who was close to Whitney. “It takes a lot of money to maintain that lifestyle”.

Then again, Sony never wrote out a check for $100 million either.

According to a very highly placed industry source who is very familiar with the Whitney situation, the deal most likely looks like every major superstar recording contract these days. The deal would be something like this: 4 studio albums and 2 compilation album (Greatest Hits, Number One’s, something like that) with a $25 million advance for the first album (Just Whitney) and a $10 million advance for the second album (I Look To You). Tacked on to that advance would be the costs of the music videos at approximately $500,000 each (there was a total of 6 music videos produced under the new deal which would total approximately $3 million in costs). That would bring the total amount of money that Whitney Houston would owe Sony to approximately $38 million. Maybe more. Her royalty rate was most likely $4 per album, and the new deal would have reset all future royalty payments on past catalog. Any deficits in her royalty account up to that point were more than likely wiped out, according to the source, basically giving Houston a fresh start. This means that Whitney would have to sell at least  9.5 million albums to repay here advances and start to get royalty checks.

Now we have to look at what she has sold. The first album under the new deal,  2002′s Just Whitney, has sold 763,188 in the US. The second album, I Look To You from 2009, sold 992,904. That’s a total of  1,756, 092. Let’s round it off at 1.76  million. Now let’s double it to account for foreign sales. That brings the total to approximately 3.51 million. Now let’s add in her Christmas album from 2003, One Wish: The Holiday Album, which sold 490,00 units. That brings here total sales to around 4 million units under her last deal.

Now, according to Billboard Magazine, ”The late Whitney Houston has two of the three biggest jumps on the Billboard 200 this week. Her “The Preacher’s Wife” soundtrack runs 183-90 (up 93 slots) and “I Look To You” flies 118-65 (up 53 positions). “The Preacher’s Wife” sold 7,000 (up 46%), while “I Look To You” did 9,000 (up 81%). Houston, who died on Feb. 11, sold a collected 247,000 albums last week (ending Feb. 19) — the first full sales week after her death. Her biggest seller was “Whitney: the Greatest Hits,” with 175,000 (up 174%). Overall, Houston’s albums earned a 144% sales increase in the week ending Feb. 19, compared to the 101,000 sold in the week ending Feb. 12.” Clearly that sales pace will slow considerably. But let’s add the sales of the last 2 weeks, even though the Soundscan figures quoted above for Just Whitney and I look To You have already been factored in. That would come to 348,000. That brings her total album sales under the 2001 $100 million deal to approximately 4.35 million units.

Let’s now subtract the 4.35 million albums she’s sold since 2001 from the 9.5 million albums she would have to sell for Sony to recoup its investment, and that leaves us with over 5 million. Let’s assume that going forward Whitney: the Greatest Hits will be the biggest seller as it has been since her death. It sold 175,000 units at the peak of the Whitney buying surge. If that could continue, which it certainly won’t, Whitney would most likely occupy the Number One position on the Billboard album charts every week for the next six months! As one label executive familiar with Sony’s accounting said, “That ain’t going to happen. The reality is that her estate probably won’t see a royalty check from Sony in our lifetime…at least”.

On top of the millions of advances, one of my insiders says that throughout her career Whitney consistently took out loans from the label with Clive Davis’ assistance. The last big loan was reportedly from Clive for $1.2 million, though everyone knows it came from Sony and not from Clive. “No way Clive would ever reach into his own pocket for anyone’” said one former label employee.

Let’s not forget that Whitney didn’t write any of her own songs nor produce her own records, thus excluding many millions more in royalties. Also she didn’t have a lot of endorsements or ongoing revenue streams like a Beats by Dr. Dre.

One Whitney insider said that there’s yet a bigger problem. Evidently the Whitney estate doesn’t have the brain trust that Michael Jackson’s has. “They just don’t have a smart guy like John Branca who would have marched into Sony the day after Whitney died and renegotiated the deal,” he said. “You can bet that the estate doesn’t even have coupling rights, and that’s something a guy like Branca would have gotten right away.” Another Whitney loyalist said that since she broke with her manager/father John Houston, there has been no other industry professional looking after het career–no one on a day-in-day-out basis to exploit any revenue opportunities or even coordinate with agents, the label, marketing departments, etc.  ”Do you have any idea how much she could have gotten for her sync rights? Nobody ever even thought about it”, he said.

If Whitney did die broke, as so many reports claim, many people assumed that her heirs would be well off from her record royalties alone. That’s just not the case. Not for a while, at least. She’ll be in hock to Sony for quite a long time. It’s almost like instead of a “death tax” Whitney will be paying a “Sony tax”.

© 2012, Wayne Rosso. All rights reserved.

Winners:

Whitney Houston–The big winner of the night. Sales have gone through the roof. Another big winner is her record company Sony, who has reportedly raised the prices of all of Whitney’s CD’s overnight.

Adele–Proves that you don’t have to be some fake pop superstar to be good and win awards. At least she’s genuine.

Rick Rubin gets credit

Rick Rubin–Actually gets credit for Adele from Adele. Score one for the Ewoks.

Bruno Mars–The ghosts of James Brown and Jackie Wilson converge for the best performance of the night. Plus he has the hair to match.

Neil Portnow–NARAS CEO and Billboard Magazine’s 56th most powerful man in the music industry is getting better at delivering the mandatory annual propaganda speech justifying NARAS’ existence and is hands down more likable than his smarmy predecessor. Keep this up and he could be hosting a game show sometime in the future. But Neil, crowbarring in a plea for “eqitable compensation” to an audience of rich pop superstars? What about the 99%? Sounds a little Romneyesque.

Taylor Swift–Milquetoast country singer looked great and gave a surprisingly strong performance. Who knew the banjo could be sexy?

The Band Perry & The Civi Wars–This year’s Mumford & Sons

Foo Fighters–Finally, a real rock group. The Who of the 21st century.

Lucian Grainge–The new President of Show Business, Grainge is channeling Swifty Lazaar, forgoing the usual post-ceremony extravaganza by hosting a Grammy viewing party at his home for 150 close personal friends and acquaintances.

Did Clive also discover Muddy Waters?

Clive Davis (pre-show Honorable Mention)–In the face of tragedy, after delivering a heartfelt eulogy to Whitney Houston written by his PR people, Clive stood up and bravely looked death and television news cameras directly in the eye and declared “Let the music begin!”

 Losers:

Gone fishing?

Lady Gaga–Shut out of every award, Gaga looked like she had been caught in a Japanese tuna fishing net.

Where can you get a glass of Metamucil in this joint?

Beach Boys/Glen Campbell–”Good Vibrations” was fun to hear, but they all looked like the members of the audience. After “Vibrations” The Beach Boys looked like they didn’t know where they were, but at least Glen Campbell didn’t forget the lyrics to “Rhinestone Cowboy”.

Tony Bennett–Enough of the duets. Next he’ll be singing “Return To Sender” in a duet with the UPS man.

LL Cool J–What a barrel of laughs.

Coldplay–Not The Who of the 21st century. More like the Ambrosia of the 21st century.

David Guetta--The Staples Center audience appreciated the extra-long bathroom break.

Pissed off and screaming about it

Katy Perry–Is it my imagination or is she always screaming? Or was that just for Russell?

Get the poison out!

Nicki Minaj–What the hell was that all about? Now I’m beginning to understand why the Roman Empire fell.

Scooby dooby doo

Paul McCartney–”My Valentine”? Would he have done that if John Lennon were still alive? Almost makes you long for “Back To The Egg”. But at least he finished strong, proving the old show biz adage, “give the audience what they want”.

© 2012, Wayne Rosso. All rights reserved.

If Megaupload founder Kim Dotcom were really smart, this is where he would be today: a beach somewhere with no extradition treaty. Who keeps their clothes on at the beach anyway?

Yesterday Digital Music News ran a post titled “What Really Killed MegaUpload? MegaBox, That’s What…” promulgating a conspiracy theory essentially claiming that Kim Dotcom’s new music platform so intimidated the record industry that they conspired with the government to shut down a foreign entity, Megaupload, in order to save its own ass. The post stated that Megabox was “being positioned as a major stab at major labels, particularly MegaUpload nemesis Universal Music Group.  ‘They don’t understand that the rip-off days are over,’ Kim Dotcom told Torrentfreak.  ‘Artists are more educated than ever about how they are getting ripped off and how the big labels only look after themselves’.”

The truth, according to a highly placed source who asked to remain anonymous, is that Megabox was most likely not even a dream when this investigation began. Anyone who took the time to actually read the indictment would see that the government clearly states “On or about June 24, 2010, members of the Mega Conspiracy were informed, pursuant to a criminal search warrant from the U.S. District Court for the Eastern District of Virginia, that thirty-nine infringing copies of copyrighted motion pictures were present on their leased servers at Carpathia Hosting, a hosting company headquartered in the Eastern District of Virginia.  A member of the Mega Conspiracy informed several of his co-conspirators at that time that he located the named files using internal searches of their systems.  As of November 18, 2011, more than a year later, thirty-six of the thirty-nine infringing motion pictures were still being stored on the servers controlled by the Mega Conspiracy.”

There it is in black and white. The investigation was about movies and began years ago. So it stands to reason that former senator and current MPAA head Chris Dodd must have been in the Justice Department’s grill about initiating the investigation in the first place, except that Dodd didn’t start at the MPAA until March of 2011. The government subpoena was served nearly nine months prior to Dodd’s appointment and it becomes clear that the investigation had gone on for at least a year prior to the issuing of the subpoena. In light of the government’s investigation, this Megabox “conspiracy theory”  is starting to look more like Paul is dead or the moon landing was faked. Besides, DMN makes the leap of logic that the record industry is smart enough to conspire about anything! They couldn’t agree on where to have lunch let alone figure out how pull off a bust of this magnitude. Come on…we’re talking about record guys here!

Additionally, according to one of my sources, the recording industry knew nothing because “the Justice Department is extremely tight-lipped about its investigations. There’s no way they would discuss it with us. Are you kidding me?”

So how was the US government able to shut down a foreign registered company? Because these idiots kept infringing files on servers in the US, the domain is registered with a US registrar, they used Paypal to transmit monetary rewards to users in the US who uploaded the most popular movies, music, games, books and software, and they were in clear violation of Grokster while doing it!

To further negate this conspiracy theory, the indictment provides excerpts from email communications amongst the Megaupload Conspiracy that reveals various strategies on dealing with the investigation, including moving the company and going legit. “On or about November 1, 2010, (note—this is five months after the criminal search warrant served on Dotcom as noted above) ECHTERNACH forwarded an e-mail from a Universal Music Group (“UMG”) executive to DOTCOM and ORTMANN, which discussed requirements that UMG would require of Megaupload before they could discuss licensing for MegaBox. Included in the list of requirements was “proactive fingerprint filtering to ensure that there is no infringing music content hosted on its service; proactive text filtering for pre-release titles that may not appear in fingerprint databases at an early stage; terminate the accounts of users that repeatedly infringe copyright; limit the number of possible downloads from each file; process right holder take down notices faster and more efficiently”, the indictment reads. In other words, Dotcom’s archenemy Universal Music was willing to talk terms with Megaupload, and speaking from experience, I think UMG was being pretty damned decent. Had I been in Dotcom’s shoes, I would have jumped on that offer. Clearly UMG’s goal is to convert bad actors into legitimate players. More evidence that UMG digital chief  Rob Wells is the most progressive label guy in the business. (note to Lucian Grainge: don’t be a schmuck.Give this guy whatever he wants!)

One has to wonder why Dotcom and company didn’t just pick up their marbles and split once they learned they were under investigation. I sure would have. After all, they had taken in around $175 million in cash, according to the indictment, and could have easily shut down and moved to a nice beach somewhere with no extradition treaty with the US and lived like kings. But Dotcom decided to double-down instead. He just figured that he could tell the US government to fuck off, and anybody who has ever had to deal with the IRS knows that doesn’t work.

To me this is simply a case of a guy having too much money to think straight.

© 2012, Wayne Rosso. All rights reserved.