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U2's manager says the 'free' ride for music via the Internet is over* [UPDATE]

U2-Paul McGuinness

As far as solving the music industry’s financial woes, U2 manager Paul McGuinness still hasn’t found what he’s looking for. But he's not about to stop beating the drum.

The new issue of Rolling Stone has an abridged version of a piece McGuinness wrote for the UK edition of GQ addressing the file-sharing and piracy issues that he believes are largely the source of the meltdown of the music business in recent years. It’s an update and expansion on ideas he put forth at the international MIDEM music conference in Cannes two years ago, an event at which I spoke with him at length about some very specific recommendations on how to address those issues.

Now, as then, he holds Internet service providers — and the giant telecommunications corporations that control the vast majority of ISPs — responsible, arguing that they’ve built their industry to a large extent by providing free content, often irrespective of the intellectual property rights of musicians and other creative types responsible for that content.

When I sat down with him in Cannes, he noted that ISPs have no qualms about promptly shutting down the accounts of users who don’t pay their ISP bills; they should do the same for those who illegally share copyrighted Web content like music.


More than two years later, he writes that little has changed in that regard.

“For the world’s Internet Service Providers, bloated by years of broadband growth, ‘free music’ has been a multi-billion dollar bonanza,” McGuinness writes. "Unfortunately, the main problem is still just as bad as it ever was.

“Artists cannot get record deals. Revenues are plummeting. Efforts to provide legal and viable ways of making money from muse are being stymied by piracy. The latest industry figures, from IFPI [the International Federation of the Phonographic Industry], show that 95% of all the music downloaded is illegally obtained and unpaid for….A study endorsed by trade unions says Europe’s creative industries could lose more than a million jobs in the next five years.

“Finally,” he adds, “maybe the message is getting through that this isn’t just about fewer limos for rich rock stars.”

Many of those rock stars have been reluctant to go on the offensive, because the problem is often cast in precisely those terms: millionaire musicians whining that they aren’t making even more money.

McGuinness still thinks, as he did back in early 2008, that music subscription services should be the way of the future and that ISPs should be sharing their windfall profits with the artists and labels that have helped them pull in that money. If they don’t do so voluntarily, government intervention should be the next step. He points to laws passed in France, England, South Korea, Taiwan and New Zealand aimed at tipping the scales back toward equity for musicians. But that still leaves much of the world without any such protections.

“I think we are coming to understand that ‘free’ comes with a price,” McGuinness writes, “and in my business that means less investment in talent, and fewer artists making a living from music.”

The $64-billion question is: How many musicians, managers, record company executives or even ISP bigwigs will be willing to get behind McGuinness?

[*Update at 3:57 p.m.: A hyperlink to McGuinness' original article in GQ for the UK was added.] 

— Randy Lewis

Photo: U2 with manager Paul McGuinness, right. Credit: U2.com

 
Comments () | Archives (71)

I'm not so sure that I can fully agree with what he's saying. Sure, an artist should see some types of profit from the music they've created...but many of us "Independent" artists are doing just that. We've just chosen to keep ourselves afloat by cutting out the big labels. If you're not hyped up about being the next "BIG" pop star, there are several outlets that can provide opportunities to keep the music alive...internet/college/independent radio, song placements in commercials/tv shows/movies/etc, touring, merchandise...the list goes on. Even a few major label acts have caught on to this and left their respective labels.

More now than ever, if an artist is willing to spend a little time learning the business, he/she can make something of themselves without waiting around for the "A&R Fairy" to show up and whisk them away in a magical limo. I've worked with a few labels myself and in the end, I found myself asking them, "What are you doing for me that I can't do for myself?"

Hey, if the right label came knocking at my door, I'd definitely listen...but in the meantime, I'll stick to sharing the music with the people who keep me out here writing and performing it...after all, what good is music if it's not being listened to?

reverbnation.com/daveowens

After reading his quotes from MIDEM two yrs ago - I thought to myself, "He's setting himself up for attack from people who will use the accusation - what, U2 isn't rich enough?" He just looked like someone out-of-touch with reality.

Now, as more and more music people lose their jobs and fewer bands make a living and historic venues like the Troubadour go dark three nights a week - I wonder if he's right. How else will artists and the industry monetize music again? An entire generation of youth have decided to download music for free. Once the gratis floodgates have opened - can you go back to the way it used to be?

How you get the AT&T's of the world to cough up money to music artists - I don't know. It will take legislative intervention at the very least. Maybe Paul will send Bono to start lobbying Capitol Hill on this issue.

It would be a brave move for U2 to lead the charge on this. They would be taking the flak and criticism so that new bands today and the industry itself can make a living in the future. Maybe that's the price and burden they pay in return for a lifetime of wealth and success.

Sharing music has been around since the tape recorder. Consumers react to file sharing because music execs have been screwing everyone INCLUDING the artists forever.

U2 has made 100's of millions in the concerts and rightfully so. They are a top live act and people want to see them. For the groups that are not good live acts, that's everything you need to know right there- just a fabricated audio creation that can't be replicated on stage.

In the "old days' a band would have to grind out night clubbing for years to get a following- ask Springsteen and Aerosmith. Now they just need to be "created" before they become anything and everyone will just flock to the hype.

So glad I have all the music I want and don't have to worry about the next "big thing".

The music industry is something evil and needs to die! With today's tech a smart artist does not need a company behind them. McGuinness is just another non-musician who's scared their artists will soon wake up and kick him to the curb.

"McGuinness still thinks, as he did back in early 2008, that music subscription services should be the way of the future and that ISPs should be sharing their windfall profits with the artists and labels that have helped them pull in that money."
Oh, you mean the proposed legal Napster model? That the record companies rejected and buried in favor of overpriced CDs? Thus creating the whole free music download scene? That model?
Home taping - I mean, "illegal" downloading did not kill the record companies. They killed themselves.
Time for the artsts and their managers (see Radiohead, OK Go, et al) to change their models and expectations.
I imagine that's quite hard for the those inured to the new limos for rich rock stars model.

This Can not just be a music subscription services alone.
What if someone got a deal with all the people who are in the food chain and added value to the product ie detail data on who wrote and sang on a song and detail history of the recording which would enclude producer tracking engineer and so on.

We might find that the added value to the products along with a differant quality value price points.

Also make LoFi lossie ver (mp3) for the people who can not tell or care about the quality of the recording and charge more for a 24/96 bit stream in aflac for those of us who have the sound gear to play back a hi quality audio.
But are thease people being riped off, YES it has been alowed to go on for to long.

Having said that I remember when cd first came out some record co just roled the tape one more time with out any thought to the quality of the products.

We have come a log way from the 16/44 redbook spec.
Lesten to the quality of the tracks on HD.COM, it is very good.

Why on Earth would the ISPs be responsible for policing the content of users' data? Enforcement and tracking cost money - why should ISPs (or even the taxpayer) be burdened with the responsibility of protecting someone else's intellectual property? If the music industry wants to pay for some sort of watchdog system, then they should shoulder the expense.

Even if you consider unauthorized downloading and file-sharing stealing and fencing, you don't go basically stealing (ie, redistributing) some other company's profits because your industry failed to protect itself.

This would be like charging the owner of a private toll road for the cost of every stolen car driven on their pavement. Or landlords for stolen property housed by their tenants.

Just for fun I just downloaded all of U2 music to my Ipod even though I dont listen to them

Yes, great idea Paul. That's like saying that its UPS's fault that people are shipping (insert item here) or that its the Caltrans responsibility to police what people put inside their cars.

Music is a commodity. Labels are simply not valuable enough anymore to take such a large cut of the profits. Music is almost free to make, free to distribute and therefore needs to be priced accordingly.

There is no need for lawyers, business execs and other people in high rises to make millions of the process. The days of a record label mattering are gone.

Deal with it... you sell buggy whips. Its time to evolve. Isnt that U2's motto? Evolution?

Nothing can be further from the truth. Musician's should be able to profit and make a living off of their creative efforts. This isn't about that. I still contend that this is whining over fewer limos. Bands such as U2 enjoy the success they do not because of the number of records they've sold, but because of the content of those records. Musicians being forced to put out quality is good for the industry. I feel like I've bought too many albums for one hit single.

The music industry is in the toilet because of the crap that they put out.

Radio stations play it safe recycling the same songs over and over, not giving new bands a chance to breakthrough.

Don't blame the internet, blame a faulty business model.

Good music will make it out, it just won't be through the music industry.

My dad once pointed out that the coal companies really didn't like the idea of gas becoming readily available...times have changed, technology is (or should) make the old way of comsuming music irrelavent. This is the biz now; you're not likely to be Bono rich as a rockstar anymore so you better either really like being a musician or do us all a favor and shut up.

What's really silly is, as far as I know, McGuiness has been U2's manager for all their 30 year career where they went from psuedo-punks in Dublin to all owning palaces in the exlusive part of Southern France. How bad does anyone really feel stealing from this guy? That, say, Tune-Yards or Tokyo Police Club need to struggle to make money at this gig is something I'm kind of sympathetic to but, as far as I know, they ain't complainin'!

I understand that there's no such thing as enough money to Paul McGuiness and Lars Ulrich but listening to them whine that they're losing a few million off the top of the tens of millions they bank is a bit much for the trying to pay the mortgage crowd, no?

The music business took advantage of musicians for a generation and now wants to claim they're on musicians' side? They tried to monopolize all the media outlets so the only way to get heard was to go through them, then made sure lawyers, businessmen, advertisers, etc all got paid before the artists. The music biz was never good for artists and so it's death is not bad for artists. Pirating and social networking has broken their stranglehold and now musicians can get their music to fans without any of those suit and ties making us sign away our music to them. Rest in pieces you parasites.


I think you can't have this debate without talking about the outrageous prices that concerts AND Ticketmaster adds to the expense of going to see live music. 25 years ago ticket fees probably averaged under 10% of the total ticket price. Today it's easily 3 times that.

"that means less investment in talent, and fewer artists making a living from music"
does that mean hiedi montag won't be able to become a big star now.

Doesn't sound like U-2 is getting much sympathy. The book publishers are about the same... big names make money. So many good writers have said to heck with the big publishers, I'm heading to Lulu.com. The same is happening with the music industry. Some of the best music is out there free of charge by the bands or performers themselves. All you get from the big record companies is recycled c&@p. Pop singers put out song after song each one nearly identical to the one before. Sometimes I doubt they even have to lay down the back tracks... just sing a new melody and new words on the old band track. So what wrecked the music industry? Greed.

un-freaking-believable. So McGuinness no longer wants people to own music, just rent it? Pay a set fee per month rather than outright own the music? And that 95% figure is just bunk. I will have to look at that report, but I am guessing that the IFPI study counts as "piracy" when someone has the audacity to take a recording of music that s/he has already PAID for and transfer it to a different device. I have paid for every bit of music and video I own, and I am not going to put more money in the record industry's pocket just because I want to listen to "Sunday Bloody Sunday" on my iPod or laptop instead of off of an album or CD that I ALREADY BOUGHT!

DRM is evil. Forcing people to rent instead of own music is evil. The only people that will be hurt, McGuinness, are the honest people. Pirates will never have a problem stealing music, but honest people will have to become pirates in order to listen to their own music. If you want to revive the industry, McGuinness, Lars, and anyone else, stop trying to shove the latest and greatest artist down our throat with multi-million dollar ad campaigns. And tell Disney and Nickelodeon that just because they have hacked together a show that tweens will watch does not mean that any of those "stars" deserves a record promotion deal.

Yes we need one of the richest managers in the world to tell everyone the free ride is over. Paul, say hi to Lars Ulrich. Your names will forever be linked.

Haha! I love everyone's comments and I agree with everyone! The mainstream music industry sounds like a bunch of whiny babies who refuse to accept the truth and let go of the past.

I am always amazed at how people who defend the "free music" argument don't seem to explain how artists are suppose to make a living. It's always something like "a smart artist uses the internet to..." It reminds me of the underwear gnome episode from SouthPark. Their plan for success was simple: Step 1. get the underpants Step 2 ... Step 3 Profit.
Here too is the same issue, somehow magically artists will make money because people will what? Pay for concerts? Pay for merchandise? I know several people who download music for free and they always give me the same stupid excuse "it's the damn record companies!, if I could give the money directly to he artist, I would!!" Well, they all got their chance to pay the artist when Radiohead released their last album. Do you know what the total amount of cash the 5 paid? $5 total (and that was just one person), the other 4 didn't pay. Respect the artist, pay for the music. Even if it's only $1 going to the artist, you are still making it that much harder for them to make a living.

It seems that many of those advocating free music blame the greedy music "industry" for high prices. Here's a simple solution for those people: for every song you've downloaded, send money directly to the artists. That way, they can pay artists directly for the music they enjoy and bypass the evil music industry.

But I doubt that will ever happen. People who want free music will find any number of ways to justify their actions.

Definitive Jux, Rhymesayers, and SFR all seem to be doing quite well as independent companies with their own distributors.
Maybe MSMusic is just going downhill.

If all of you folks that disagree with what Paul McGuinness is saying spent more time reading the Wall Street Journal as opposed to downloading "free" music, movies, and playing video games - then you would know that Los Angeles' unemployment rate is close to 13% now. Think about it - a room with a hundred of your friends (if you have friends other than the virtual ones you've created for yourself online) were all in a room - then 13 would be jobless. And probably some of those would have been laid off by one the big entertainment companies that have lost billions due to piracy (STOLEN intellectual property).

What people like Paul and Gabriel (from this thread) fail to realize is that the current business model for the music industry is fast becoming outmoded. Napster and digital music changed music forever ten years ago. Why have the labels still not come up with a new way to monetize their content? It's simple: labels have grown so fat through years and years of selling overpriced tapes, records and CDs that labels and established artists have grown accustomed to making billions in sales. Sure, artists deserve something for their creation, but the old model ain't the way to do it.

Napster helped usher in the market correction the music industry so desperately needed, yet the labels are still lagging behind the times. Indie labels are smarter, leaner, more agile and, as a result, are making money right now (check the Times piece from a few weeks ago concerning indie labels in LA for proof). Sure, it's not the millions that big labels are used to getting, but that's the new reality. Labels and artists simply won't be able to make the money they made in the past.

As far as subscription models, some version of that might work, but it's a tough sell trying to convince someone to license Eminem's new album versus buying it outright or just downloading it from the web for free, which is what most people who own the album did before it was even released.

Because of how readily available illegally downloaded music is, it's impossible to put the genie back in the bottle. The high-powered conglomerates that own the handful of labels that pretty much control all popular music have had almost ten years to figure out how to monetize their content, yet they've done close to nothing.

The same battle is brewing in the world of television, but somehow, the networks are moving much faster than the record labels did once their business model came under fire. They took a lesson from the music industry and decided to move with the times rather than get stuck in the past.

Oh yeah, leave the ISPs outta this. Good luck trying to get them to cough up any dough to labels. The music industry has been raping consumers for years and would've continued to do so if not for Napster. Don't expect a ton of sympathy.

There are no easy answers, but however well-intentioned Paul is, his ideas are misguided.

Let's face it, great music is not made by millionaires in their ivory tower. No, great works of art are made by musicians who are hungry. When an art form becomes a very lucrative business, suddenly you get art that's manufactured. Not created. And that seems to be the entirety of major label music these days.

I'm not saying artist shouldn't be paid for their work, but the music industry really needs to find a way to make their product both interesting and valuable again. Give me music that's not over-produced and the vocals auto-tuned to death. Nurture new bands. Give me a something that's substantially different than the MP3's I can download for free.

 
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