The music industry loses money on 98% of the albums it releases in a year.

That, by the way does not take into account their favorite whipping boy since 1998, internet file sharing. According to most industry flacks who tout that number, that’s just the standard cost of doing business. Only 2% of their product will ever make a penny. The rest of it is money tossed down the drain.

If you like, you can blame it on the fact that only so much product can be consumed in a given year. You can also blame it on a fickle public that sometimes seems more obsessed with image than with quality. You could even blame it on a concentration on cookie cutter “product” that promotes general ennui from the public, although the record industry would prefer that you didn’t, as would many of the actually very good bands that are counted in the 98%.

But if you had an industry where 98% of your product lost money, would you stick with the same-ol’ same-ol’, or would you try to refine your production process and create a more consistent earner, even if it meant releasing fewer items?

Consider this There are between 4-6 major labels in the United States. Hal Vogel estimates that those labels release around 11,000 albums a year, excluding classical music releases. That means that their budgets for production, promotion, and touring support (see, Vampire Weekend? Some of us give a damn about an oxford comma) are spent on 220 albums that will actually turn a profit, while 10,780 of them are wasted.

You would think with numbers like that, at least a couple of the labels would consider ratcheting back the volume of releases and spending more of their budget on each individual product in the hopes of capturing a larger share of the market.

But the story goes that industry executives continue to invest millions of dollars a year without ever making it back. Not out of the goodness of their hearts, but because they don’t know what will become popular this year.

Which begs the question—really? They got to the top of their industry without understanding how it works? And they just can’t expect Eminem’s first post-rehab album to sell that many copies? That, um, doesn’t seem like just a sure thing?

Come to think of it, it seems completely unreasonable that 220 albums would completely make up the deficit of 10,780 albums that can’t make their budgets back. So how do these labels continue with a business model that bleeds money at an alarming rate without retooling for a better product?

The answer, as you might expect, is creativeaccounting. Really, by now you should be familiar with the kind of accounting trick the record industry pulls on its artists—they’ve been published everywhere for over a decade now. But this particular trick was a new one on me.

Tim Quirk of Too Much Joy reveals that there’s a difference between not turning a profit and not recouping the expenses of an album. And the difference is that in the second, only the artist gets screwed.

See, the money that is paid out to the artist and on production expenses is considered “recoupable.” This means that the label gives it as a loan to the artist, and the artist pays it back out of their royalties.

The artist makes approximately $23.40 in royalties for every $1,000 in sales. That’s considered a good deal.

So, using round numbers to make the math as easy as possible to understand, let’s say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.

Does the record industry actually lose money on some releases? Of course.

The question is, do they actually lose money on 98% of their albums? Or are many of those albums simply albums that haven’t “recouped?”

It’s prompted cries of derision at the realization that Ke$ha’s “Tik Tok” and Katy Perry’s “California Gurls” were actually written by the same person and… well, they kinda sound like he just stuck new words into the same song.

Of course, nobody is pointing out in all this that he’s just doing the exact same thing folks have been doing for decades.

First, check out Kylie Minogue and one of her early hits on the British pop charts.

Then, check out this Rick Astley song that is not “Never Gonna Give You Up.”

Then, check out this Rick Astley song that is “Never Gonna Give You Up.”

All three songs were written and produced by Stock, Aitken & Waterman. In the 1980’s and 1990’s, the trio – collectively known as SAW – were responsible for more than a hundred UK Top 40 hits.

And they weren’t too shabby about getting on the US charts, either.

It’s common practice, kids. When you find something that works, keep using it until it doesn’t work any more. In music, it’s called the assembly line.

Folks in (or passing through) Arizona! You know the new law is foolish. You know it’s draconian. You know it’s nigh-unenforceable. So have some fun protesting it.

Here are a number of ways you can be of “suspicious” citizenship without actually doing anything prosecutable. Make sure you’re carrying your papers, though.

• Wear Lederhosen! (Women might consider the full St. Pauli Girl as an alternative.)


• Say “Aboot” a lot.


• Begin every question to a police officer with, “M’sieu gendarme.”


• Offer to make somebody a Vegemite sandwich.


• Ask for directions to the underground.


• Carry a book. Any book will do, really (no, a Kindle does not count).


• Sew a Maple leaf flag patch onto your backpack.


• Ask the bartender to tune in to Pakistan v. Sri Lanka – ask if anyone wants to lay a bet on the first innings.


• One-nil to the Arsenal!


• Express shock and dismay that the tea shops actually sell tea and not marijuana.


• Express shock and dismay that the tea shops have the audacity to call this muck “tea.”

That’s the list as it currently stands. Any suggestions? Put them in the comments. If one strikes my fancy, I’ll add it to the list!

Today’s recommendation: Om Shanti Om.

Non-Bollywood viewers may be a little lost with this one, but it’s well worth the viewing. Lush colors, broad comedy, likable actors and a sentimental story that mixes comedy, fantasy, and romance and manages to avoid being sappy (Oh, okay, it’s really sappy. But I like it) make it one of the better movies-about-making-movies that I have ever seen.

Actors interested in improving their comedy could do much worse than to take notes on Shah Rukh Khan, whose dance skills, handsome look, and knack for physical comedy put me in mind of Charlie Chaplin. Directors can get a glimpse of how to use cartoon colors without overusing them. Filmmakers in general will see how to take one of the most boring ideas for a plot ever and spice it up with a few twists on the topic.

Got a Netflix account? they have it for rent.

Shop at Amazon? They have it on DVD. Also at Amazon, third-party sellers offer it on Blu-Ray for less than the cost of the DVD (for those of you who already have the player). The visuals in Om Shanti Omare so significant to the style of the movie, I think it’s worth the HD. Yes, those two are affiliate links. If you buy them from this entry, I make a few pennies.

Found via Daily Funnies.

This paragraph, of course, is where I would quote from the story—but the AP has previously announced they don’t want to be quoted on blogs. More to the point, at least a few words in the final sentence of the above paragraph should have been a link to the story so that you could read it yourself. However, it was part of Murdoch and Curley’s presentations that people online should get used to the idea that they will be charged for linking to a story from now on. So, you’ll probably have to find the story the same way I did—follow a link from a news aggregator to a search-engine sponsored page (that pays a fee to AP for access to their content) and read it there.

That is, if the AP and Newscorp will let you. Unloading on their own dwindling revenue stream with both barrels, their presentations specifically targeted search engines and news aggregators, while also snarking at bloggers (whom they prefer to refer to as “plagiarists”). Along the way, they listed such offenders as Wikipedia, YouTube, and Facebook. All of which allow you to post links to articles on money-making websites so that you can drive your friends to the websites where the AP and Newscorp (and other concerned attendees) can cash in on advertising revenue.

Murdoch even went so far as to call all of these venues and the people using them “content kleptomaniacs” (only two words quoted so far—still well under AP’s 5 word quotation licensing threshold). Apparently, having and sharing an opinion on the news and encouraging people to check the story out for themselves at the original publisher’s website is tantamount to compulsively slipping a stapler and fifteen pencils into your pocket when they aren’t yours to take.

Once upon a time, I thought it would be a good strategy to simply not quote any further AP stories. Given their new agenda, however, I think it’s time to ramp up the strategy.

All people who are reported on by the news media—in particular the AP and Newscorp—who are not being reported on for the commission of a crime should respond to said reporting by demanding a payment for their story. By all rights, any story told in the news media could be sold by its participants for adaptation into a book, television special or series, and/or movie. If search engines and aggregators steal value from news media, then news media steals value from these people’s life stories by pilfering them and publishing them without payment to their originators.

Demand damages for publication of your story without payment. Demand personal image licensing fees before they can take your picture. Sue for copyright infringement when they quote you or your writings without your express written consent. And never accept that simply having your picture in the paper/on TV is “payment enough.”

Further, anybody acquitted of a crime that is reported in the news media should also demand payment. After all, it is only if convicted that the law prohibits you from turning a profit on a crime. If you’re acquitted, you’re perfectly free to make a buck off the story. And who are the news media to go reporting all of the details of your case before you have a chance to profit off of it?

It might shock you to learn this post isn’t about health care. story is not about health care—it’s about prisons.

Debit cards are increasingly popular, so why shouldn’t jail inmates have them. How about a get-out-of-jail prepaid debit card when they’re set free?

They can. (Does this strike anyone else as kind of strange/funny?)

Strange, MSN Money? Yes. Funny? No.

The story is a further sign of how our society is now actively turning our prison facilities and inmates into a potential revenue stream. Incarceration and the actions of the justice system should be a public service. It should exist to see to it that justice (whenever possible) is done, and that those who can be rehabilitated get the help they need to re-integrate into society.

A system like this is full of flaws.

• It builds a private, profit-based monopoly whose market is literally captive.
• Being profit motivated, it is structured find ways (surcharges, service fees, etc) to leech money off of taxpayer funds, as well as from people who genuinely don’t need any more leeching done to them.
• It further underscores the importance of a debit/credit card to a person’s identity in modern society. Now, when children who grew up using pretend credit cards get busted for any number of possible infractions, they can rest assured that they will have a debit card waiting for them, full of their sub-minimum wage earnings—minus the registration, monitoring, fraud protection, and transaction fees.

Perhaps worst of all is that the range of services offered includes a “self-serve kiosk” that permits you to pay bail with a credit card in the event that you’re arrested—or allows your friends and/or family to pay your bail “from the comfort of their own home.”

Streamlining processes and making them easier to handle quickly is a good thing, yes. But putting somebody in a situation where they can swipe their credit card or face a night in lock-up puts them in a situation that immediately drives them into debt. And bear in mind that bail is not always paid by the guilty, meaning anybody stopped by the police can find themselves relying on the Visa or Mastercard to get them out of a jam.

Worst of all about that idea, however, is the fact that it suggests a revolving-door approach to the justice system. Systems like this are only profitable when they have a high flow of customers. Putting in bail kiosks is a blatant expression that in the future, the justice system will be the major cash cow of Wall Street.

Ask yourself this: Do you want to drive—even at the speed limit—past a police officer whose district is controlled not by public service, but by private industry? Do you want to walk down a street patrolled by a police officer whose office can only turn a profit if he meets his daily quota? The profit motive has no place in our judicial system.

That’s like Josef Stalin looking at you and saying, “Dude, you need to crank your intensity down a notch or two.”

First on the block, we have Warner Music Group. Someone on YouTube recently mixed the wildly popular Keyboard Cat meme with a performance by a young Helen Hunt portraying an acid trip, then followed it with a Hall and Oates music video that had Keyboard Cat spliced in as a member of the band. It was cute, it was funny, and it added a new take to an existing meme. As videos like that tend to do, it went viral and got across the web faster than your average porn spam—which is saying something.

Such massive exposure for Hall & Oates’ “You Make My Dreams Come True,” which hasn’t had cultural relevance for a couple of decades now, was certain to grab Warner’s attention. So they quickly responded by demanding YouTube remove the audio from the track. This is a new tack that the RIAA member companies are taking with YouTube. This will encourage users supposedly to swap the audio out with music from YouTube’s licensed library, although that would kind of ruin the joke.

I’d also like to point out at this time that YouTube’s licensed library is only available to you as an after-the-upload option. You have to be willing to swap out the audio on your video for the music in their library. All of the audio. Because that’s so much easier and better for producers than simply letting them access a database that tells them the titles of the songs they can use, letting them build their productions around it.

Of course, this move has drawn a lot of fire for WMG. They took one of the most popular videos online and overnight pulled the plug on it. If they didn’t expect a backlash, then they are either extremely stupid or extremely out of touch. And I haven’t quite ruled out the possibility that they may be both.

Switching gears, DJ Steve Porter created a YouTube phenomenon with “Rap Chop,” a video in which he remixed the infamous Slap Chop infomercial (“You’re gonna love my nuts!”) to a hip-hop beat, autotuning hawker Vince’s voice to fit the new beat and melody. (I am currently converting this to my ringtone. Yes, I know I’m a geek.)

When the powers behind Slap Chop learned that this viral music video was racking up more hits than a hyperactive mafia enforcer, they had a very natural reaction to it.

They licensed it from DJ Steve Porter to air as their new infomercial.

Natural, yes, but also incredibly smart. Rather than step in and be the bad guys who shut down a viral phenomenon, they claimed it and recognized its ability to sell more of their product. Which was pretty brilliant. My father’s reaction to seeing the music video? “It really makes me want one of those!”

What we can see in these two parallel stories is two different approaches old media can adopt toward new media. You can battle it, suppress it, and attempt to sue it out of existence, or you can embrace it and all of the good that it can do for you. The latter gains you new fans and allows your customers to see you as a company (or individual) with a sense of humor who knows a good thing when they see it.

The former makes your customers see you as the bastards who are ruining the internet.

[Note: If you’d like to see the way the new “silencing” tactic destroys internet videos, take a look at “Internet Date”—a video from one of my favorite sketch comedy troupes that had its audio silenced due to a complaint from WMG. Most of the joke is lost as a result.]