Chia Obama: You Can’t Make This Up

Comes in two versions. Happy.

and Determined

Watch the animated version on the site. Mesmerizing.

Cashing In On Not Seeing Michael Jackson

I remember being eight and on vacation the hotel had this pinata. Each kid got a couple of whacks with a baseball bat and when the thing finally broke it was worse than a Who concert. Twenty plus kids rushing a small spot of ground piled with candy. Mayhem doesn’t begin to describe it.

Kinda reminds me of MJ. Everyone rushing to make some bucks before the body is even buried. Sharpton and Jesse and papa Joe and the rest of them in a mad scrimmage for the candy on the ground. After all, it’s just sitting there. Throw a few elbows, bite some arms, and grab it. Doesn’t matter if you don’t know what kind of candy it is. Just grab it before someone else does.

There is a guy who knows… John Branca is the guy with those answers but he ain’t talking. Yet. But there’s money at stake and a legacy that must be shined to remove some of the tarnish that’s built up the past decade of wackiness (and worse).  Yeah, everyone wants their slice of the King of Pop.

And that includes AEG. After all, they’re the ones who took a huge gamble on an (essentially) uninsured and faded star. AEG looked good with all those sold out dates, ridiculous VIP packages, and a media storm guaranteed. And now?

Looking at a bunch of empty dates for their venue during the high season, a chunk of production money down the drain, and one million tickets to refund.

They got some video of rehearsals in the can so they’ll recoup some production and MJ upfront there but it won’t go far enough.

So, how about if people actually pay to NOT see MJ?

I mean, what if AEG could get people to pay for a ticket but AEG doesn’t actually put on the show. No lights. No stage. No dancers or security. And, of course, no Michael. Totally crazy, right?

Well, they’re doing it.

From Billboard…

Fans will be also given the option to receive the concert tickets as souvenirs in lieu of the full refund. The tickets were printed with the lenticular process and were designed by Jackson, according to the release. The offer will be valid through Aug. 14.

Everyone wants their little piece. And AEG is willing to sell it to them.

NY: ticket scalping illegal (for the moment)

When Spitzer de-criminalized ticket scalping in New York State in 2007, it brought out into the light the underground system that had existed for years. After all, plenty of nearby states didn’t have the $2 above face rule and it made no sense for New York to try and stop the underground market. Control and tax is usually a much better system and scalping became legal.

But Monday, the law’s sunset provision hit and for the moment, scalping tickets for more then $2 over face is again illegal in New York.There’s work going on to enact a new law but in the meantime, none of the online ticket brokers should be able to legally sell me a ticket for more than $2 over face value. My credit card and shipping address are both in New York so it’s fairly simple to weed me out.

Sure, one would imagine the smaller guys would ignore the law and try and fly under the rader.

But how about StubHub? Owned by Ebay, a public company? More than willing to bill and ship Madison Square Garden Green Day tickets for well over face to my New York address today.

Or TicketsNow? Owned by public company Ticketmaster, currently under DoJ review for its buyout offer of Live Nation? Yup. Them too. More than willing to sell and ship me Green Day tickets for hundreds of dollars over face value to NYC.

It’s fairly clear. Since Monday, re-selling tickets for more than $2 over face in New York State is against the law. A couple of major public companies don’t seem to care if it’s illegal and it’s interesting how it’s being allowed. After all, catching them is as simple as logging in and buying some tickets.

Be interesting to see how this unravels and how long the flagrant flouting is permitted…

Trent Reznor rocks

Proving once again he gets the new world and has a soul and a heart…from the NIN store.

Total is now over $542,212.

A Letter from Trent:

This is for something important. Eric De La Cruz is dying and needs a heart transplant. He keeps getting turned down for a transplant list because he’s on Nevada Medicaid, and there are no transplant centers in Nevada. We want to get involved and hopefully so do you, so we’re extending a hand. His sister Veronica (former Anchor and Internet Correspondent for CNN) has started a campaign to save his life.

Eric’s situation shines a bright light on a broken health care system, and his particular set of problems are being addressed on the political front, aiming for reform in addition to the need for immediate financial help to keep him alive TODAY. I think we can help with the latter.

Here’s what we’re offering – three options:

If you have a ticket to a NIN/JA show: if you donate $1,000 to this cause, we’ll invite you to come hang out with us before the NIN/JA show of your choice. You and a guest can watch NIN and Street Sweeper Social Club’s soundchecks, eat dinner backstage with us, take pics / get autographs and watch the show from the side of the stage if you’d like.

If you donate $300, you and a friend can join us for NIN and SSSC’s soundchecks and a handshaking / hug session before doors open at the NIN/JA show of your choice.

If you do NOT have a ticket to a NIN/JA show: if you donate $1,200 to this cause, we’ll invite you to come hang out with us before the NIN/ JA show of your choice and provide 2 tickets (best available). You and a guest can watch soundcheck, eat dinner backstage with us, take pics / get autographs and watch the show from the side of the stage if you’d like.

100% of the money collected from this will go directly to Eric’s fund.

I hope you’ll consider helping out with this.

Sincerely, Trent Reznor

Spring Cleaning: ScanSnap S1500M and Yep

The weather has turned, the trees are trying to kill me, and so spring cleaning’s time has come. Stacks of papers: bills, notes, cards, and other assorted pulp based products must be dealt with. So I turn to a new tool, the Fujitsu ScanSnap S1500M scanner.

It’s not as if I don’t have a scanner. I have three.

I have a Nikon CoolScan 5000 for slides and negatives that I picked up after finding a treasure trove of my dad’s. There’s also the scanner built-in to the HP all-in-one printer/fax/scanner but it’s woefully inadequate for big jobs. And there’s an aging Epson flat scanner I use for photographs when I must but it mostly lives in a cabinet. I needed something always there, handy, and ready to go.

So in search of a dedicated, sit-on-a-desk and chew through paper scanner I went. And found. The above mentioned ScanSnap.

The brief review:

This thing rocks. The speed is great. It scans both sides of the page automatically. It handles just about anything including receipts and business cards. And it’s really, really fast. Fujitsu claims 20 ppm and this might not meet the vendor’s promised specs (shock) but it comes damn close.

Paper jams — when they occur — are a quick fix. And this thing is small and even folds up when not in use. And I like scanning into a universal format (PDF).

The hardware is well done. The included software is Adobe Acrobat Pro 8. Not sure why they didn’t include the newer 9.0 for Mac now available but no matter. I scan everything into PDFs. Which means I need a PDF organizer. Otherwise, I’ve turned a jumble of paper into a jumble of PDFs and while digital and less space consuming, it would be not meet my wife’s idea of actually being “organized.” Neater, yes. Organized, no.

For true PDF organization, I’ve settled on Yep. It is, as they say, pretty much like iPhoto for PDFs. Since I have 30,000 photos in iPhoto all tagged — thanks to keyword manager which is a must have — Yep’s interface and organization was a natural fit.

I now have keywords for things like insurance and taxes and health care and all paper that must be kept, referenced, organized, or emailed gets automatically dumped into Yep. I can find all insurance papers or anything else in a flash.

Actually, a scan of a document of any sort will get sucked into Yep and ready for keywords before I’ve even had the time to shred the document. My only real complaint with Yep is that I can’t link to the OCR software and right-click a document for quick round-trip OCR goodness.

I’d love to be able to right-click any PDF in Yep and have the option to “Scan into Searchable PDF.” As it stands now, I have to “reveal in finder” and right click to open with Abby to make a searchable PDF. Not the end of the world but a little thing that would make Yep that much better.

Between the ScanSnap and Yep, my desk is completely paper-free and I’m resolved to keep it that way. Tagging can be slightly tedious but I find it’s a decent method to improve search and organization. Auto-tagging, while worthwhile for basic stuff, only goes so far. I am, however, viewing Hazel with some interest as a way to help keep my digital workplace automatically clutter-free.

Meet The New Boss. Same As The Old Boss.

Bob Lefsetz’s blog is widely read in the music biz. He’s funny, caustic, and never fears to speak his mind or get in a pissing contest. I have him on my RSS reader.

But his piece on the need for artist support for performance royalties for radio digressed into Choruss and he misses the mark:

Like with this Choruss thing.  Sure, the devil is in the details, but I’ve broken bread with Jim Griffin over this topic, the intent of the rights holders isn’t to fuck college students, but to create a legal avenue for music acquisition that generates revenue to purveyors.  Suddenly this is a foul goal?  Music should be free forever more?  There should be no legal alternative to P2P theft?

But if you read the online prognosticators, this is an evil plot by the record companies, to collect names and add heinous college fees.  How this story has gotten so twisted, I do not know.  But I will say that Choruss has done a bad job of telling its story, of getting the facts of its mission across.  Labels have been hated for so long, having sued their customers, consumers no longer give them a pass, they believe if the labels are behind it it’s a rip-off, it’s faulty, it must be stopped.  So a few bloggers take down the entire mission.

I doubt Bob reads my little blog but I am one of those who does think Chorrus is an evil plot by the record companies. Now Bob is right. Music shouldn’t be free forever and a legal alternative to P2p would be a fantastic shift. But I haven’t seen many people argue that music should be free forever. Striking down that straw man arguement doesn’t make the point.

He’s right again that labels are hated, sued their customers and that Choruss has done a lousy job in telling the story. But what he misses — ironically in a piece on how artists should band together — is that the labels have a long history of ripping off the artists. And that Choruss is a label-run entity at its core.

We need look no further than the 2007 settlement with Napster that yielded a few hundred million to the labels. The New York Post had this line that perfectly sums it up:

What’s more, these sources said that after the labels recouped their legal expenses, there wasn’t much left to pass along to the artists.

Typical.

Choruss would have so much more credibility if it came from ASCAP or BMI or any place other than WMG. I don’t get how Bob can believe that Choruss will be transparently set-up when transpancy is the last thing any label wants. Again, who creates the formula for tracking that determines how much each artist is paid? How much does Choruss take for setting up the toll booth? How long will payments take? And why should artists trust the labels when the labels are the same companies that have screwed them for decades, charging for breakage, no payments for music clubs, late or missing payments for digital settlements, etc.?

Maybe Bob is 100% right. The intent isn’t to fuck college students. But the labels will fuck artists. They’ve done nothing but.

I’m not against Choruss as a concept. Yet. I’m against who is in charge. The best idea in the world run by incompetent crooks will not end well. Yes, the labels need to be on board with such a concept but if they really want traction, they’ll step back and let someone else run it.

You don’t put Tony Montana in charge of the drug evidence locker.

Dumb Bully Redux

The story is trickling out. Larry Lessig has a few words on his blog about the issue:

Received a notice that Warner Music had objected to its being posted on copyright grounds. Apparently, YouTube’s content-ID algorithm had found music in the video that they claimed ownership to. The organization is apparently responding by disputing the claim. I’ll report back when I hear more.

This isn’t a DMCA takedown notice or a WMG initiated action — except indirectly. This is YouTube’s content algorithm system put into place by terms of agreements with the major labels. For the best analysis I’ve seen of how the system works, go here. Evidently, it’s fairly good but with a few truck sized holes. Like the one where the system needs the first 30 seconds of the song.

Last December 2008, WMG dissolved its agreement with YouTube and pulled all its music videos from the site. So any WMG content flagged by the system becomes a problem for YouTube. Hence the notice. WMG is still the bully, it just got YouTube’s content system doing the punching.

Dumb Bully

The choice of target is paramount for a bully. The last thing a bully wants is someone who can and will fight back. Prey on the weak, the timid, and the poor and your career as a bully will be long and fruitful.

Someone over at Warner Music forgot the rules of Bullying 101 and sent a takedown notice to Larry Lessig. Whoops.

From LL’s twitter:

Warner Music has issued a takedown of one of my presos on YouTube. Someone send them a copy of §107 (”fair use”).

Dylan and ballparks

Bob Dylan announced the US summer  leg of his tour today. Minor league ball parks. Mostly General Admission. Under $70 ticket price. Kids are free. The Bob Dylan Show. Gotta love it.

Along with fellow troubadour Willie Nelson, this summer The Bob Dylan Show will also feature John Mellencamp, marking just the second time in the past 24 years that these three performers have shared the concert stage.

bobdylan.com is happy to offer pre-sale tickets for all ballpark shows to its visitors. At each venue, the gates will open 30 minutes early for holders of tickets purchased during the bobdylan.com pre-sale.

Visit this page for pre-sale passwords, which will be posted in the table below before each pre-sale begins.

All concert tickets are priced at $67.50 and most shows are general admission, allowing fans to grab a seat in the stands or find a place to watch from the field. Children 14 and under get in free with each adult ticket holder.

Showtime is 5:30pm and gates open at 5:00. Gates will open at 4:30 for holders of bobdylan.com pre-sale tickets.

Unleavened Bread

With the fleeing from Eqypt holiday approaching, I have no time to leaven the bread. These little matzoh bites will need to suffice.

• iPod near saturation point. According to Piper Jaffray’s annual round-up. No big surprise there. iPhone and applications will be growth driver. Check out Lose it! and iFitness after the big holiday meal.

• Zappos, the uber-consumer friendly internet shoe bazaar, has an excellent Google Maps mash-up showing sales on the US map. Now if I can only figure out how to make it my iTunes visualizer for the newly released Hartford 77 GD show…

• Such the irony as the major labels impose a new pricing scheme and Apple plays along — see iPod saturation point above — and at the same time, the major labels offer 350,000 tracks for free to the Chinese through Google. So why do I feel like that $0.29 price hike is going to subsidize some Bon Jovi fan in China? We get a price increase, they get it for free, and the RIAA is still bitching about piracy? Oh Vey!

• If you want to feel like even more of a second-class citizen, go watch the Spotify review on You Tube. Again, not available in the USA.

• And if anyone can possibly explain to me what Chuck — I can announce three press releases per day every day – Schumer is even talking about with this new ticket reseller bill, I would be very grateful. Is it like a 48 hour waiting period on buying a gun? Ticket brokers must wait 48 hours? Basic economics should tell Chuck this won’t effect the pricing curve but hey, it must be a consumer-friendly bill because the head of Ticketmaster supports it! That alone should be enough to bury this misguided and useless piece of legislation. Noise for its own sake…

“I am very happy to support Sen. Schumer’s thoughtful proposal and leadership on this issue,” said Ticketmaster CEO Irving Azoff.

• Q1 2009 had precisely zero albums released that made it to platinum status. And U2’s new album sold a paltry 35,000 units last week in the USA. Strong international sales will help but it looks like a hard climb to get to even 1.5 million US. Halfway there and the little engine is running out of steam.

• Beatles re-mastered? All of the UK albums? Hell yes!

Metallica’s Label Exit Coming?

Lars Ulrich, drummer for uber-band, Metallic, sat with the LA Times for an interview. Lars has been an outspoken critic of P2p and file-sharing. And he’s a self-admitted Luddite. Wrong side of the past decade to be on.

But as I noted a few months ago, Metallica’s record deal is soon up and Lars is correctly saying that Metallica doesn’t really have a need for a major label anymore:

“The primary — not the only, but the primary — function of a record label is to act as a bank. When you’re fortunate enough to be successful and so on, you don’t need to rely on record companies as the banks. . . .”

I read Lars saying “bank” to mean “venture capital firm.” He’s Danish so I give him the ESL room in the quote — but he’s right. A&R is like venture capital. Signing a bunch of bands and paying for their records — an up-front against future royalties — is a lot like making a bunch of VC investments in fledgling companies. Most will fail but the few that make it will repay the risk with fat rewards.

But Metallica isn’t the first successful band. After all, The Rolling Stones and U2 and other massive bands stayed with their labels well after “success” was a given in a stratospheric career. If a major was just about being a VC firm, post the first deal those bands would have left their majors. They didn’t. They got more money. They got a bigger piece of the pie. But they stayed with a major. Until recently.

Now we can point to guys like Trent and Paul McCartney and Radiohead ditching the major label machine. If it’s not about the VC, what’s different.

It’s about the marketing and distribution.

No longer does radio and MTV rule. And one needed a label to get any kind of play on either.

No longer does physical distribution — with all that logisitics and fixed costs — matter. I can’t even find a record store near me — if I even wanted to.

Lars and Metallica can leave Warner because Warner doesn’t control marketing or distribution anymore. The bank part? Not important to Metallica.

But that doesn’t solve the whole problem. The new world of marketing and promotion independent of a major is still evolving. There are a bunch of service companies stepping in to try and fill the space but everyone is still groping in the dark. The dollars are smaller, the background noise is louder, and the possibility of screwing it up is bigger.

Sure, going back to a debt-laden major which spends all its time suing your fans and pissing them off as the world marches by the window isn’t the brightest move. Unless they’re offering a huge guarantee which is hard for them these days — see debt loads. But wandering out the door into the wilderness and saying, “I can do this myself” is a pretty crazy tact too. Plan carefully, hire smart people, triple-check the technology. Then go.

Back in SF, Lars used to bring a friend of mine that dark, salty Danish licorice she missed so much. He was really nice about it. He’s not a bad guy. He got caught on the wrong end of the P2P arguement because he didn’t understand what it all meant.

It’ll be an interesting to see what Metallica ends up doing. My guess? Another nail in the major label coffin…

Douglas Merrill Out At EMI

He didn’t even last a year. By all accounts, Douglas is a tech-savvy, smart, and engaging guy. Clearly those things are wrong for EMI. The announcement came today

EMI Music has announced a restructure that’ll see its digital unit merged back into the main company. Former Googler Douglas Merrill is stepping down from his role as president of digital and chief operating officer of EMI’s New Music unit, while senior VP of digital strategy Cory Ondrejka is being promoted to the new post of executive vice president of digital marketing.

Yup. That’s right. The top spot now goes to Cory.

He who co-founded the disastrous, money-sucking, flailing, hyped up virtual place to have sex with a sheep, Linden Labs aka Second Life.

He who thought iTunes’ music store was too complicated. Meanwhile hundreds of millions of people have purchased over 6 billion songs on it.

He who said, ““I neither buy nor hear much new music.”

With Guy Hands stepping out of the spotlight and, it appears, leaving it to Elio to run things, this has got to be one of those moments that a year from now Elio will look back on and wish it went a different way.

I wish Douglas well on his next endeavor.

Guy Hands Steps Down

It looks like Guy Hands has stepped down as CEO of Terra Firma. Tim Pryce, a co-founder, will be stepping up to the number one slot.

EMI will undoubtedly look much different a year from now than it does today.

The Honorable Thief Redux

Two years ago, I wrote as part of an overly-long missive: “But IP doesn’t have the same characteristics of hard goods. Not only do they need to stop me from stealing the product, they also need me to actually buy it. They need to turn the thief honorable.”

And from today’s Swedish Pirate Bay trial:

Laughter filled The Pirate Bay trial here Wednesday when John Kennedy, the chief executive of the International Federation of Phonographic Industries, testified that people would have purchased every music track they got free file sharing.

Kennedy answered an affirmative “Yes” to Pirate Bay defense attorneys when asked whether that was true. Bursting laughter could be heard from the audio room beside the courtroom where the trial’s sound was being broadcast.

I still don’t believe in the honorable thief demand curve. Stopping piracy will not result in a sudden and massive influx of revenue for the content rights holders and until they understand that key and basic truism, they will spend their time, energy, and resources trying to capture ghost revenues that will never ever materialize.

As scary as John Kennedy’s court room testimony is, it’s scarier that there are content company executives who may actually believe it.

Columbia Lion Pride

While Harvard has graduated five US presidents, Princeton and Yale each three, Columbia University can only now boast of its first grad to be a US President — Obama is class of 1983. That’s not to say Columbia hasn’t had its share of famous alumna: Jack Kerouac, John Jay, Georgia O’Keeffe, and Warren Buffet have all attended in one form or another.

I went to Columbia University for both undergrad and business school, finishing them both in one shot in four years and saving a boatload in tuition in the process. It’s not the ideal way to experience college, no doubt, but it worked for me. My one and only real regret in that time is that I never went to a school game of any sort. Not one.

Columbia isn’t known for its athletics. Like all Ivy League schools, Columbia has no sports scholarships, which pretty much limits the programs. Throw in that it is the smallest of the Ivys with only 4,000 or so undergrads, and the picture becomes more clear. Columbia even holds the dubiously prestigious rank of #4 on ESPN’s Worst College Football Teams of All Time. From 1983 to 1988, CU’s Lions failed to win a single game racking up a whopping 44 losses in a row.

Yikes.

So it’s with a touch of pride that I discovered yesterday that none other than Lou Gehrig was Columbia College class of 1925.

The Iron Horse. The Greatest First Baseman of all time. A Columbia grad.

It makes me want to truck uptown and actually go to a game…

John Wesley Harding’s Ultimate Price Tier

I met John briefly back in 1992. He was playing with a friend, Mare Winningham, and the bill included The Bare Naked Ladies. Great time.

JWH’s got his first new rock album since 2004, “Who was Changed and Who was Dead,” coming out next month. Besides being excited to hear the new album, I’m pretty intrigued by the pricing tiers on his site. They look like this:

• BASIC: $15.98

Download, CD, and bonus live disk

• BASIC PLUS: $29.98

Everything above plus T-Shirt

• FANCY: $49.98

Everything above plus limited edition DVD

• SUPERFANCY: $79.98

Everything above plus handsigned artwork (hand numbered, limited to 100 units) by John and the artist

• CRAZY DELUXE & PERSONAL: $5,000

Everything above plus JWH comes to your house to play. Seriously.

John Wesley Harding will come and perform at your house, for you and your friends, on a mutually agreeable date. NO JOKE! If it’s near, he’ll even pay the transport; though if it’s far, you’ll have to pay

Why I really like this?

Although I think JWH could have benefited from a lower price, digital only package — start the supply curve as close to $0 as possible — the rest of the tiers offer something special at each step. $80 for the handsigned artwork in a limited 100 edition is a real value to a JWH fan. The $5,000 package is, of course, the doozy. The, “I’ll come to your house and play” is the ultimate artist privilage and a dream come true for a rabid fan. It’s not desparate or kitch. It’s a direct connection.

No, it won’t work for U2 or The Fireman. Well, it does work, just not at published prices you’d ever see on a website.

JWH should make some good revenue from this, more than the just offering the usual CDs for sale. Hopefully a lucky fan or two will take him up on the Ultimate package and will get the memories of a lifetime.

And there will be more of these, more packages, more experimentation, more direct connections between artists and fans. The product/price monopoly of the record labels is over. We’re in the imagination phase now where things will be tried and some will work and some will not. Next comes the evaluation and honing phase where the art becomes more of a science and revenue maximization gets serious.

Randy Phillips of AEG: “We are, at heart, a real estate company”

Randy Phillips, head of AEG, granted a small interview with Forbes. Read it.

In 2009 and 2010, our biggest challenge is the economy. I’m waiting for the other shoe to drop…at some point this massive unemployment is going to bite us. I think it’s going to happen around June or July, when we start to put tickets on sale for the summer.

My biggest concern honestly past the economy is where the headliners of tomorrow are going to come from. That’s scary.

U2 Tries To Optimize the Supply Curve For Music

U2’s Grammy opening performence is over and legions of fans await the new album in March. It’s been announced that the album will be available in five different configurations. Six if one includes the inevitable digital download.

Price differentiation isn’t new. Even after the introduction of the long-playing record, the single continued to thrive for years. But in a declining revenue world, there’s a new push to expand the supply curve to different products with different price points.

Now there’s little doubt the new album will sell well. How to Dismantle An Atomic Bomb sold over 9 million worldwide. But it’s been over four years since then and the recorded music world has changed dramatically since November 2004. In an era of lower sales, it’s the right move to capture as much revenue as possible – without screwing over the fans. Not that easy. It’s even harder as a clear demand curve for music hasn’t truly been pinned down.

Yet even without a hard-coded data set, it seems that U2 has missed the mark by a mile. But that isn’t necessarily a bad thing.

Dividing Up The Fans

I often divide music fans into two groups: listeners and collectors.

Listeners don’t need album art or know the bios of each band member. They may not even know the names of most of the albums. But they do know a few songs and put those in  digital rotation on their iPods.

Collectors are the ones who need to own every album, who treasure owning the physical product, who display their music collections like fine art.

It’s an overly simplistic view that slashes a much more detailed continuum in half but it serves the general purpose. These two groups could not differ more, from their consumption of music to their price elasticity, they are polar opposites.

First Class

A frugal traveler can find a coach round-trip ticket from New York to Sydney, Australia for just under $998. Upgrading the same trip to the flat reclining seats of first class costs just over 1000% more at $10,599. On a cost basis, it doesn’t cost the airline 10x for the person in First. Even assuming that four coach seats would fit in the same space and a little extra for the free booze and upgraded meals, it would be generous to allocate a 5x in supply cost. So where does the extra $5,000 come from?

The demand curve. The airline knows that for some people, paying 10x for the luxury of stretching their legs on the 21 hour journey to the other side of the world is worth the price. Sure, some of the tickets are expense accounts and flying First on someone else’s dime is always the easier decision, but a good portion of the seats are leisure travelers paying their own bills. Knowing price elasticity is a wonderful thing.

The airlines aren’t pricing First Class by cost but by very complicated demand curve analysis. Lessons hard learned from decades of business and the miracle of on-the-fly pricing systems capable of analyzing multiple variables in real time.It’s especially important with perishable goods. After all, if that seat doesn’t sell, once the plane pushes back from the gate, that revenue is lost forever.

So what’s behind the U2 pricing schema on the chart? I’m sure someone, somewhere tried to look at demand curve data but in the end, I would wager, it’s a compromise between the band’s desires and some wild ass guesses (WAGs).

Smarter WAGs

It’s not hard to see how U2 most likely missed the mark with the pricing WAGs for the new album. While one could argue about specific price points and product offerings, I’ve got three rules that govern my WAGs on what products to offer and where to price them:

1. Start the Supply slope as close to zero as possible

Both Radiohead and NiN did this well. Radiohead offered In Rainbows on a name your own price basis. Beyond the one-time marketing coup that resulted in enough free press to choke a horse, it showed a willingness to get their music out there, to hit the casual listeners. NiN offered a free download. Getting heard in a world without radio/MTV dominance is almost impossible. The only thing that comes close to universal saturation is an iTunes TV spot with iTunes storefront prominance. Barring that, you’re in the wilderness and most casual listeners won’t even know you have a new album let alone hear it. Offer a very, very cheap download. Offer free songs. Start the supply curve as clsoe to zero as possible.

The Fireman, shown in the chart below, starts digital at $8.99. A bow to iTunes, no doubt, but a veritable fortune for a casual listener to spend. At just $3 more for the CD as well as the digital, it seems that the CD is being denigrated, de-valued, disparaged. After all, not all collectors are wealthy and for the more egalitarian of them, the CD will be the displayed product.

Minimal cost is good. Free is better. Whichever, the supply curve should not start at $9. Less than $5 or the digital masses will ignore you.

2. Keep the Supply slope steep

Once the casual listeners can hear the music, the next group to focus on is the collectors, the uber-loyal fans who buy everything. Charge them for First Class but also offer them First Class. U2’s $96 Box Set isn’t First. It’s more like Business light. NiN’s $300 collector’s edition in limited quantities with an autograph is First Class. That’s the roomy seats with the freshly baked chocolate chip cookies. And limited is good. Collectors are a small group and treating them as such is the way to keep them happy. The rest of the supply curve gets filled in from there. The CD pricing is fairly standard. I like the Fireman’s vinyl edition at 2-3x CD more than NiN’s 7X but those WAGs are what real world sales data is for.

But take a closer look at the NiN and Fireman offerings above. The high-bit rate version download is $5 for NiN and $8.99 for the Fireman. The CD prices are somewhat in-line but they diverge from there.

NiN’s ultra-deluxe 2,500 unit limited edition run at $300 brought in $750,000 of revenue from that price point alone. The Fireman would have to sell almost 100,000 units of the deluxe box set to generate the same revenue.

It’s not just about maximizing the revenue. Ripping off your loyal collectors does no one any good. NiN’s unit limit, autograph, and care and design in the packaging is what creates the value for the purchaser, not just pricing it at 30x the cost of the CD. After all, crappy seats and stale cookies aren’t going to keep First Class passengers coming back for more.

3. Go outside the product mix parameters

All three supply curves, from U2 and NiN and the Fireman, are based purely on differentiated product mixes. While products are the most obvious way to move along the curve, it isn’t the only way.

No Line On the Horizon is available now on iTunes for pre-order. $9.99 for the rgular and $17.99 for the deluxe. Amazon has the CD pre-order for $8.99 But no one is offering me a discount to pre-order versus what it will cost later. Time differentiation is an excellent tool. Offering a discount while collecting pre-orders can help with supply chain management on the production side and it rewards loyal customers. But time based demand curve tweaks need not be just price based. A special perk can be included as well.

For those who correctly point out that it’s merely discounting to the loyal audience who would buy at the non-discount price anyway, you’re right. But the $10 CD isn’t going to be the massive revenue generator anyway. U2’s 2005 Tour in support of Atom Bomb raked in $260 million. Compared to the 9 million sold albums, a few buck discount isn’t going to hurt. But it does let fans know you care if they pre-order.

The Race To Optimize

The world of free digital music has wrecked havoc on the price-fixed world of CD sales. Now, artists are scrambling to experiment with different supply curves, trying to capture more revenue, offer more products, connect with fans in different ways. It’s a mirror of the live music business as auctions and third-party ticket sales companies have optimized the pricing system. And much more optimization will come. Ticketmaster will offer more than the dozen or so seat-price differentiations they do know.

Recorded music is behind the curve. That’s what decades of price fixing will do. And artists are now finally trying to create supply curves that match an ever elusive demand curve, something to maximize revenue as total units continue to decline. Before it was about getting as many people as possible to buy the CD. That’s as gone as are the days of 10 million selling albums.

Now it’s a different game that requires a little smarts, finesse, and thought; not the blunt rock of radio and MTV that the labels used to bang consumers over the head with to generate sales. It’s not a one product world anymore.

I may believe U2’s supply curve misses the mark, that it doesn’t start cheap enough, doesn’t slope steep enough, and doesn’t reward fans enough. But they’re thinking in the right way. Same with NiN and Radiohead and The Fireman.

The first step, to bastardize Bill W’s line, is to admit you have a problem

The fixes, the solutions won’t present themselves nor will them come quickly. The guts to experiment is the way. Only through trial and error can the demand curve even possibly be partially understood. Consumers’ music habits are shifting ever more quickly and whatever data sets are collected will only be of limited use anyway. The labels’ focus has been on punishing not innovating. U2’s pricing scheme may not seem that original but this will be the biggest selling album to date to try so many different products at so many different price points. I may disagree with the WAGs used to create the demand curve but I applaud the seismic shift.

Toys of our Times: The Playmobile Security Checkpoint

While $55 may seem like a lot of money to teach the wee ones to throw away their liquids, remove their shoes, and place their laptop in a tray, the lessons taught them will certainly be priceless.

Don’t forget to read the Amazon comments…

The RIAA Embraces Change: Pay Absolution Or Lose Your Net

It’s a new year, a new President, even a dramatically redesigned whitehouse.gov complete with a blog. And while Larry Lesig’s Obama endorsement may have given some hope of a shift to a a better prioritized policy on IP theft, think again.

The RIAA got one of their pitbulls high in the revamped Justice Department; Tom Perrelli is the new Deputy Attorney General. Perrelli has represented the RIAA in more than a handful of high profile cases over the years including suing Verizon to force them to cough up some names behind some IP addresses. He eventually lost that one.

But the RIAA isn’t crowing over its administration victory. Instead it’s embracing  Obama fever by adopting the Change mantra. Media Sentry, the quasi-legal company employed by the RIAA to sit on P2P networks all day long and capture infringing users, has reportedly been fired. And the RIAA is backing away from suing alleged copyright infringers in their John Doe suits. A kindler, gentler RIAA? Not a chance. Just a shift in tactics.

Similar to the IP Rights Act where the RIAA tried to get the DOJ to do its dirty work for it — those provisions were stripped out prior to passage — the new game plan involves incentivizing ISPs with cash to go after alleged infringers. Here’s how it works:

The way the new enforcement system will work is that the RIAA will alert an ISP that a customer appears to be file sharing. The ISP will then notify the person that he or she appears to be file sharing. If the behavior by the customer doesn’t change, then more e-mails will be sent. If the customer ignores these e-mails, then the ISP may choose to suspend the person’s service. If all else fails, they can choose to discontinue service.

There’s even this snazzy new website smugly titled “Get Amensty” that allows those served with the threatening letters to pony up a credit card number and purchase absolution. No courts, no lawsuits, just pay a small fee to ensure your place in Heaven.

Similar to Choruss, the new plan is at a minimum an admission that the past seven years of filing lawsuits has done nothing. It’s an attempt to find a business plan behind the madness. Unfortunately, like Choruss, it’s an extortion plan. It delays the long necessary and difficult inward view that must be embraced.

The tangle of rights and payments per download and per stream is a rat’s nest that should be streamlined. The IFPI 2009 Digital Music Report indicates that music consumption continues to rise and digital revenue did increase last year. Would cheaper access to more DRM-free music increase revenues? It’s impossible to tell right now as the nest of payments makes it impossible to try except illegally — see the former and once very popular allofmp3.com which sold music by the megabyte with prices around $3 per album.

So 2009 will see more artists leave the major labels.

Metallica, Beck, 50 Cent, and Ryan Adams have or will satisfy their current major label deals and could become free agents this year joining Paul McCartney, Radiohead, NiN, and The Eagles on the new road of independence. The majors will further see their erosion of control as Live Nation continues its march to its make-over complete with an in-house ticketing system.

It’s almost impressive how many ways the RIAA can find to try and squeeze the same stone. Whether it sues the labels’ own customers, gets the DoJ to do it, or gets ISPs to make them an offer they can’t refuse, it’s still all the same thing: punish bad behavior but do nothing to make music cheaper or easier to access.

With an ally in the DoJ and desperation in the halls of the major labels, the RIAA is putting a new dress on an old scarecrow. It won’t work. And in a year there will be another new try. Without actually bringing the mechanical owners, the publishers, the labels, and the artists together to alter and simplify the payments behind the rights, the RIAA will be saddled with a product locked into an inflexible pricing system.

The key is unlocking that system. Flexibility in pricing — and I don’t mean charging more on iTunes for new releases — is the only possibility for salvation. And artists are finding that out for themselves with self-releases that capture different points along the demand curve. Bringing that same concept to the catalogs is key. But the RIAA is ignoring the trend and instead selling absolution at the end of an ISP gun.

Do you know why you bang your head against the wall? Because it feels so good when you stop.