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Music labels tune in to file-sharing information

By DAWN C. CHMIELEWSKI

Knight Ridder Newspapers

Posted: April 10, 2004

It was one of those sunglasses-required summer days in Los Angeles when Eric Garland, a leading expert on music downloading, arrived for his meeting with a senior media company executive. Rather than talking in the company's air-conditioned offices, the executive led Garland and his partner through a fetid back alley to a secluded courtyard.

Only then did the executive ask his question: Which songs, exactly, are the millions of Napster users illegally downloading? "I just thought, this is crazy," recalled Garland, who had to prop his laptop on a dumpster to give his presentation.

The reason for the cloak-and-dagger theatrics, which continue even today: While the music industry publicly flays Kazaa and other file-swapping services for aiding piracy, those same services provide an excellent view of what's really popular with fans.

Record-label executives discreetly use Garland's research firm, BigChampagne, and other services to track which songs are traded online and help pick which new singles to release. They increasingly use such file-sharing data to convince radio stations and MTV to give new songs a spin or boost airplay for those that are popular with downloaders.

Some labels even monitor what people do with their music after they download it to better structure deals with licensed downloading services. The ultimate goal is what it always has been in the record business: Sell more music.

"I know of a case where an artist had obviously gone with the wrong single, and everyone loved this other song they had on their record," said Guy Oseary, Madonna's business partner and head of her label, Maverick Records. "In the world of what we do, it's always good to have real information from real fans."

Tracking, persuading

Maverick used BigChampagne's 100-city breakdown of popularly downloaded songs to convince radio stations to start playing a new band, Story of the Year, during prime daytime listening hours instead of at night.

The online data revealed that despite Story of the Year's lunar rotation, its single "Until the Day I Die" ranked among the top 20 most popular downloads, alongside tracks from Blink-182, Audioslave and Hoobastank that received significantly more airplay. And when the band performed in a city, "we didn't necessarily see the phones blowing up at radio, but we saw download requests for the song skyrocket as they went through," said Jeremy Welt, Maverick's head of new media.

Armed with this data, Maverick fought for more airtime at radio stations, which translated into more CD sales. Story of the Year's album, "Page Avenue," just went gold, selling more than half a million copies.

"I definitely don't like to spin it that piracy is OK because we get to look at the data. It's too bad that people are stealing so much music," said Welt. "That said, we would be very foolish if we didn't look and pay attention to what's going on."

It's not an isolated example.

Garland said Warner Bros. followed a similar promotional strategy with "Headstrong," the single from the Los Gatos, Calif., rock band Trapt. Indeed, nearly all the labels work with BigChampagne on a project or subscription basis, he said.

Some promoters at the major labels have gone a step further, using advertising agencies or other intermediaries to place ads on popular file-swapping networks to promote new acts.

Before the music industry effectively shut down AudioGalaxy in 2002, the labels would pay the file-swapping service to sponsor search terms to direct fans looking to download songs from, say, Radiohead, to an emerging band with a similar style.

"We'd promote it to you right there," said AudioGalaxy founder Michael Merhej, whose account was confirmed by two independent sources. "The link took you to a third-party Web site done by the label, but you couldn't tell it was done by the label. . . . This went on for a long time."

Joining the enemy

None of the major labels has been as bold as Artemis Records, a New York-based independent label with such mainstream acts as Lisa Loeb, Rickie Lee Jones and Steve Earle. In March it began distributing paid versions of these artists' songs on Kazaa and other file-swapping networks. Using technology developed by Kazaa's business partner, Altnet, the first listen is free. After that, downloaders must pay 99 cents to buy the song, as they would on licensed services such as Apple's iTunes Music Store.

"My feeling is there's a promotional value to exposure," said Artemis Records chairman Danny Goldberg, an influential industry player who previously headed Mercury Records, now part of giant Universal Music. "Give something away for free, and hope they fall in love."

While the smaller labels are willing to discuss the value of file-swapping information in promoting their artists, the legal crusade by the industry's giants to shut down Kazaa and two other file-swapping services, Morpheus and Grokster, makes it difficult for them to admit that they, too, want to know what's being downloaded.

Indeed, all but one of the Big Five labels refused to discuss how they use data from the file-swapping services, which are also known as peer-to-peer services because the files are technically exchanged between individual computer users.

A spokesman for Warner said he'd been advised against granting an interview, for fear of undermining the company's legal arguments that such services have no significant legitimate uses.

The one executive who spoke on the record said the download data provides a glaring look at the obvious.

"Kids in the neighborhood, they get the track they want because they heard the track on the radio or at a friend's house," said Ted Cohen, a senior vice president at EMI. "I don't think you're going to see this great undiscovered artist discovered on peer-to-peer. The ones getting the biggest numbers are getting the biggest play."

Nevertheless, EMI pays researcher NPD MusicWatch Digital to watch everything NPD's panel of 40,000 computer users do with the songs they download from file-swapping networks or purchase or transfer from CDs. EMI plans to use the information to shape artist promotions and craft terms for future digital distribution deals.

Wayne Rosso, chief executive of Optisoft, said file-swapping services like OptiSoft's Blubster and Piolet have helped the record companies, not hurt them.

"It's a great marketing vehicle," Rosso said. "In fact, they should be paying us."

http://www.jsonline.com/onwisconsin/music/apr04/221199.asp

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A spokesman for Warner said he'd been advised against granting an interview, for fear of undermining the company's legal arguments that such services have no significant legitimate uses.

The one executive who spoke on the record said the download data provides a glaring look at the obvious.

"Kids in the neighborhood, they get the track they want because they heard the track on the radio or at a friend's house," said Ted Cohen, a senior vice president at EMI. "I don't think you're going to see this great undiscovered artist discovered on peer-to-peer. The ones getting the biggest numbers are getting the biggest play."

Nevertheless, EMI pays researcher NPD MusicWatch Digital to watch everything NPD's panel of 40,000 computer users do with the songs they download from file-swapping networks or purchase or transfer from CDs. EMI plans to use the information to shape artist promotions and craft terms for future digital distribution deals.

Wayne Rosso, chief executive of Optisoft, said file-swapping services like OptiSoft's Blubster and Piolet have helped the record companies, not hurt them.

"It's a great marketing vehicle," Rosso said. "In fact, they should be paying us."

Of course the RIAA benefits from P2P, though they would never publically admit it.

P2P provides a great deal of statistical data on popular music trends and what music fans are listening to.

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