No More Piracy?

All the talk 5-10 years ago was about the piracy of songs and videos on the internet. The widespread use of programs like Napster, Limewire, Kazaa, and others had youths trading songs and videos with each other for free. For all intensive purposes, no one had to buy CDs any more at all, you could just download a program, type in the name of the song, and download it for free. I can personally say I did not buy a CD past age 10, and I downloaded more than 2,000 songs illegally before I was even in high school.

Then came the period of time where the music companies tried to fight the system. They said they would sue individuals who downloaded illegally. They threatened massive fines. They said there were federal officials watching the download networks. And for the most part, this scared primarily parents, but not the kids. Programs like Napster and Limewire had to disband their illegal operations, and they became pay-by-download programs. They were the predecessors to ITunes.

Eventually, people found new ways around paying for songs. Programs like BitTorrent started, where you could share files over a local network (for example a school dorm network). Kids and students had new ways around it all.

But instead of fighting it, music records and bands began to realize how they could take advantage of this. The days of selling 6 million records were long gone, no one did that any more. People didn't play CDs in their cars, they used their Ipods. Music began to be released for free, and sites began to form launching music for free.

A previous post mentioned GirlTalk, and how he rips music and puts it all together. But he also puts his music online for free. You have a choice of paying for his cd, at which point you get digital tracks, and a cd sent to your house. But you can also download all 3 of his cds for $0....for free. OK GO, a rock band, has released several songs online for free. Websites like whitepanda.com, goodmusicallday.com, and fratmusic.com, all offer songs to download. They are free podiums for new artists to share their music, and where people can go and download songs for free, albums for free. Artists realize that the money is not necessarily in selling CDs, and getting recognized by the public is easier than being signed by a record label.

The music industry is at a turning point. People don't listen to the radio as much as they used to. CD sales are incredibly down. But DJ shows, Rock Tours, and interest in music is higher than ever. Music brings together the generation labeled "millenials" and it will be interesting to see how the industry adapts to cater to their needs.

-Swenson

Opening Day in Baseball

This past week saw the Major League Baseball season start across 15 cities in the United States. For me, like so many individuals across the country, it should be a national holiday. It's a day when you feel like you're 12 years old and on a Little League field again. For college students, it's the day you bring your laptops to class and watch the games online instead of listening to lectures. But unfortunately, for students and many fans, Opening Day has become a tradition they cannot see live any more.

Opening Day ticket prices have soared into the hundreds and thousands just for one ticket and the average person cannot afford this. In fact, tickets for the entire season have been raised to such a level that most people can go to maybe one game a year, if that. Baseball has become a game that only the rich can attend and that the even richer play.

Baseball is the only major sport in the US that does not have a salary cap. It has what's called a "luxury tax," where if teams go over a certain amount, than they have to pay a fee to smaller teams. This is a system that supposedly helps the smaller market teams that cannot compete with New York, Boston, and Los Angeles. But there is no hard salary cap, or ceiling, that teams cannot go over. So for all intents and purposes, a team can have a $500-million salary -- buying up the best player at every position -- and it would just pay a lot of money to the smaller teams at year's end.

What this has done, aside from create a massive inequality in teams in the MLB, is jack up prices across all stadiums. The new Yankee Stadium does not have a ticket for under $100. That means even the worst outfield seat is still about $100. This is absurd for a baseball game. You can no longer grab a friend, get some beers and hot dogs, and watch a game for cheap.

The reason tickets are going up in price so rapidly -- in addition to demand for the game being at an all-time high according to attendance records -- is the increase in payroll. Team presidents and general managers have to raise revenue to pay for the salaries of all their players. The best way to do this is increase ticket prices. And as long as people will continue to go to the games and pay the ticket price, owners will continue to raise prices and pay the players more.

For the new Yankee park, it's been said that there are over a million millionaires on Long Island, so thats a huge market to pay only $100 for a baseball game. But what about all the fathers and sons who want to watch the game as a vacation ticket? The middle class is being phased out of baseball and that's very unfortunate.

The topic of a salary cap will come up soon for Major League Baseball. The inequality in the teams across the league is too great right now and it will ultimately hurt baseball. There needs to be some parity in the league, which a salary cap will help. But a cap will also help fans. It will help reduce ticket prices, increase player loyalty to individual teams, and create an altogether better dynamic for the sport.

--Parker Swenson

Wooo-hooo! Spring break!

By this time next week I will officially be on spring break in Panama City, Fla. after what is sure to be an epic 13 1/2 hour drive (starting at 6 a.m., ew). As someone who has recently been having cash-flow problems -- mainly, I don't have any money -- I started thinking about the economics of spring break.

Spring break can get really expensive, as my roommates and I figured out while trying to figure out where to go. You have to worry about housing, transportation, food/alcohol, and incidental costs. Personally, I will have to spend a lot of money on sunscreen because my skin seems to reject sunlight and a high SPF is really expensive. Do they want me to burn?

However, I digress. We basically decided to go for the bargain spring break, which means cheap hotel (with a kitchen), location that was within driving distance, and -- on a personal level -- plenty of peanut butter and jelly sandwiches.

When we were booking things, I realized that however annoying our extremely late spring break can be occasionally, it does save us money. First, W&L students don't have to go to Mexico, the Caribbean, or somewhere in the deep south to find a warm beach. Second, our break is so off of "SPRIIIIING BREEEEAAAAK!" season but still before summer that we get cheaper hotel rates. (In fact, our hotel was a full 40 bucks more per night during the peak of the season.) W&L's weird schedule saved me a significant amount of money.

Also, we will have the entire beach to ourselves, which I prefer (more room for sandcastles). So anyone in Panama for spring break come and find us. The trick to finding me on the beach is to follow the sounds of "Panama" by Van Halen and to look for the blinding beacon of my paleness. Oh, how I wish parasols were still in style.

--Michelle Hirschfeld

Throw the Book at Them

We’ve tackled music, movies, and TV. We’ve touched on fashion, festivals, and the Final Four. Now it’s time for Econotainment to set its sights on another sector of the entertainment world: books.

Groan.

For months, Apple’s iPad has loomed on the horizon, with retailers drooling to let customers light up the screens of the company’s new tablet device. So far, the response has been mild, as the figures trickle in. The Los Angeles Times reports that the Cupterino, Calif. company sold more than 300,000 iPads on Saturday, the day the device finally saw the light of day. (And this doesn’t even factor in the 1 million apps and 250,000 e-books that have been downloaded since then.) And while some experts say that the response to the iPad has been only lukewarm, there’s no denying what some of the numbers say about the publishers of trade books: they’re in trouble.

From 2004 to 2007, print book sales stalled around $24 billion, according to figures from the Census Bureau. Alternately, the International Digital Publishing Forum shows the e-book sales have grown exponentially during the last five years. And I read on Yahoo! News today that Borders is about ready to call it quits.

Peter Olson, a senior lecturer at Harvard Business School, has heard the groans from these publishers. In an illuminating Q&A on the institution’s Working Knowledge Web site, Olson suggests that in order to keep people reading, publishers ought to embrace technology rather than press their noses in a paperback.

“I think the fundamental issue is not the rate of adoption of the e-reader, or whether publishers will survive in their current form, or what their role will be in the future,” Olson explains. “The fundamental question at the very bottom of this is, will people read books at all?”

That’s a terrifying proposition, and not just because, as an English major, I’ve spent the last four years perfecting the art of reading books (as if such an “art” could ever be perfected). I might not recall the atomic mass of Sodium or what a polynomial is, but I do remember the name of Holden Caulfield’s brother and the words that Sydney Carton speaks at the end of "A Tale of Two Cities" (For the record, he declares, “It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to than I have ever known.”) Reading has opened my eyes and sharpened my mind and, like many people, I’m genuinely afraid of what might happen to it as publishers trade pencils for touch-screens. But I have hope that despite the industry’s suffering, the J.D. Salingers and Charles Dickenses of the future are still typing away somewhere.

And even though my cynicism about Twitter knows no bounds, this is still pretty hilarious.

--Michael Morella

"Lost"-nomics

I gave up on the complexities and time commitment of keeping up with the TV show "Lost" at some point toward the end of its second season. However, I have a couple of roommates that have kept up the "Lost" fanaticism all the way through to the sixth and final season. I can't lie, curiosity will get the best of me and I will probably join them in gathering around the television to watch the show's series finale on May 23.

Advertisers are apparently betting that people like me are common if the price of a 30-second commercial spot is any indication. AdAge reports that available advertising slots during the "Lost" finale are going for a whopping $900,000. The price is well above the current going price of a "Lost" ad of just over $200,000.

The huge increase in price shows how advertisers expect huge numbers of returning viewers who want to find out the end of the mystery, which will make the finale a cultural event. Cultural events are becoming more important to advertisers in our Tivo-DVR-just-watch-it-online viewing attitude. The climactic "Lost" finale will be a rare show many viewers watch in real time, including commercials.

"Lost" viewership is best characterized as rabid and loyal. Many companies and advertisers would love to tap into such a passionate customer base. It's the type of show people talk about and advertisers hope those viewers will carry the conversation over into discussing the commercials.

Comparable Series Finale Prices:

"M.A.S.H." (1983) -- $450,000

"Seinfeld" (1998) -- $1.4 million - $1.8 million

"Friends" (2004) -- $1.5 million - $2.3 million

"Everybody Loves Raymond" (2005) -- $1.3 million

--Michelle Hirschfeld

Girl Talk: Future of the Music Industry?

[Note: Originally published February 14 on Sakai (well, attempted to publish)]

<-------(Girl Talk is the shirtless guy in the middle)

This weekend I joined many Washington and Lee students at the Girl Talk concert. The day after dancing the night away, I realized what makes Girl Talk so much fun in concert also makes him a disaster for his label. Girl Talk makes his music through sampling, which is grabbing snippets of other songs. What makes Girl Talk a controversial artist in the music industry has to do with the industry's business model, whereby it makes money by owning the rights to music use. Any time a person uses a piece of music in a commercial way -- like in a television commercial, in a movie, or by releasing a CD -- he or she is expected to pay whoever whoever owns the music.

So, every time Girl Talk -- whose actual name is Gregg Michael Gillis -- uses clips of other artists, he runs the risk of a lawsuit. Girl Talk does not pay for samples when he makes a mash-ups. He cites the fair-use doctrine, which is a law that allows for the unpaid use of music as long as it does not make up a significant part of a song.

However, when I listen to a Girl Talk CD, ("Night Ripper" is my personal favorite), it is hard to believe that some of the songs are not significant portions of the mix. Luckily, Girl Talk’s music has not been challenged in court, but it is probably only a matter of time. As sampling and other artists like Girl Talk become more popular, the outcome of any Girl Talk lawsuit would be vital to the future of the music industry and the millions of dollars it generates each year.

--Michelle Hirschfeld

"Avatar" the Country?

Unless you've been living under a rock for the past five months, you probably have heard of the latest blockbuster film, "Avatar." Directed by the infamous James Cameron, "Avatar" was a pioneer in the technology and film techniques that were used in filming the movie. Cameron is no stranger to groundbreaking films, as his previous film is the all-time highest grossing movie, "Titanic." However, after waiting more than five years for technology to develop to a level he was content with, Cameron released "Avatar" to more hype and success than could ever be imagined.

"Avatar," which was released in 2D, 3D, and IMAX, has quickly become the all-time highest grossing film, both domestically and internationally. "Avatar" has grossed more than $740 million in United States sales, and another $1.94 billion in international revenue. The film is still in some theaters around the country, although most 3D and IMAX presentations have been pulled due to "Alice in Wonderland." Even with the smaller theater selection, "Avatar" is still bringing guests to the seats, and rumor has it some current showings are featuring more than 40 minutes of additional footage to entice people to come back to the theater.

To put this in perspective, "Avatar" has grossed nearly $2.7 billion in revenue. If the film was a country, this would rank it above 30 other countries. The small countries of Samoa, Liberia, and Sierra Leone would all rank below "Avatar" in GDP. And this is only with "Avatar" being in theatres for less than 5 months. If we were to imagine the total money garnered by this film, it would be unbelievable.

For example, if we assume that the average price of a ticket for "Avatar" is $10, that means about 270 million tickets were sold for the film. Now assume that of those 270 million, half bought popcorn and sodas, which cost about $10 at a typical movie theater. And maybe of all those ticketbuyers, a third of them car-pooled together on the way to the movies. So that's 90 million paying $4 for a gallon or two of gas for the trip to the movies and back. So in addition to the $2.7 billion the movie made by selling tickets alone, it also helped generate this much revenue:

Movie: $2.7 billion

Food: $2.7 billion

Gas: $360 million

Total: $5.76 billion

This is absolutely absurd for one movie to help an economy. And that doesn't take into account the public transportation, the wages for employees, the bar drinks, the candy, and everything else that the movie helped generate. (This also does not include DVD sales, just imagine!) With a GDP of $5.7 billion, that would rank "Avatar" above Niger, the Barbados, and Montenegro.

This movie was the most expensive movie ever made, with a budget of about $500 million. But it was the first movie incorporating this new technology and it widely outgained its costs. Additionally, Cameron has hinted that he would like to make a trilogy based on the main characters' travels to the other moons around Pandora. These are sure to make similar money and threaten to break this new record.

Not too bad for a movie, a 3-hour piece of entertainment.

--Parker Swenson

NCAA Tournament: Basketball competition or huge money machine?

The NCAA tournament has sent brackets into chaos this year. Upset after upset has knocked off clear-cut favorites such as Kansas and Kentucky. But the surprise upsets haven’t been the only madness raging this March. The tournament is the pinnacle of college basketball. It’s about athletic competition and basketball glory. It’s about the players and their dream of hoisting up that NCAA trophy. Oh yeah, and it’s also maybe a little about money.

If you’ve been watching the games these past couple weeks, you might have noticed a lot of Reese’s candy. And not just the ones you’ve been putting in your mouth. With ads on the actual arena floors during conference tournaments and the bottom of the giant scoreboard at Madison Square Garden, the candy maker has taken branding to a new level.

Just in case you can’t afford a pricey ticket ($240.50 on average for a Stubhub ticket, and that’s just for the first and second rounds) to see these logos in person, Reese’s, “an official partner of the NCAA," is coming to your TV. Prying on the grumbling stomachs of TV viewers, the peanut butter and chocolate candy appears in a series of commercials, specialized for each round of the tournament.

Check out a description of all of Reese’s tournament advertising

The cost for the Reese’s invasion? Not cheap. Reese’s deal with the Big East Conference men’s and women’s basketball tournaments alone sits at six figures, according to Street and Smith’s Sports Business Journal.

On the surface, Reese’s candy doesn’t really have a whole lot to do with basketball. But the kind of exposure the NCAA tournament brings is priceless. At least a Reese’s has the same colors as a basketball, right?

We’re used to seeing advertisers spend big money for the national attention brought by major sporting events. Just look at the Super Bowl. But the millions the conferences receive from advertising deals are just a starting point. The conferences that are lucky enough to send teams to the NCAA tournament have the chance to pocket many millions more.

Each tournament game is worth $222,206 to the conference of the winning team. But those winnings are on a per-year basis for six years. So really, over $1 million is on the line for every tournament game. Try thinking about that when you’re shooting free throws with 0.5 seconds left.

The Big East Conference flooded the bracket with eight teams, but it saw its chances for profit drop considerably when three of its teams lost the very first day of the tournament. The price tag for Notre Dame, Marquette, and Georgetown’s losses came in at almost $4 million.

Read about the Big East’s losses

But don’t worry too much about the Big East. The conference guaranteed itself a check of at least $5,332, 944 after West Virginia University secured its spot in the Final Four on Saturday night. So one of the four eager teams remaining in the tournament will take home a fancy ring and all the glory the college basketball world has to offer. But the real winners of March Madness may be the ones who are taking home the checks: the conferences.

--Brooke Sutherland

America's Most Trusted News Source

This "report" from The Onion made me chuckle.

--Michael Morella

Looking South...by Southwest

Disclaimer: I don’t own a BlackBerry, iPhone, or flat-screen TV. I don’t want a Twitter, I don’t need one of those miniature laptops, and I won’t buy a Kindle. I’m just saying.

At the risk of sounding miserly, there are plenty of technological gadgets that I can stomach and I would shell out my proverbial paycheck for. If it’s physically possible, one of my arms is firmly embracing technology while the other is dog-earing the page in a book or looking up the directions on Google Maps, not some newfangled GPS device, like they did in the good old days. But I digress.

The big thing going on in music these days (by “these days,” I literally mean between this weekend and next) is South by Southwest (SXSW), an amalgam of conferences and festivals in Austin, Texas that center on new music, independent film, and emerging technology. Musicians, managers, promoters, labels, artists, journalists, and fans all come out in droves to check out the more than 2,000 musical acts that perform on over 80 stages across the city. Even glancing at a fraction of the lineup has me cursing the way our breaks fall and finding myself having to live vicariously through the photos and videos available on the SXSW Web site and through much-revered indie magazine Pitchfork Media.

But a cool little feature in The Houston Chronicle opened my eyes to just how much more than music is talked about (or listened to) at this festival, which is now in its 24th year. As the article reports, “It’s a chance to get in front of an influential audience of tech taste-makers and trendsetters.” SXSW was even a big launching point for Twitter three years ago, proving that indie music listeners don’t all just wallow in obscurity and pretentiousness. In fact, in a March 24, 2009 article, Advertising Age said, “Often dubbed the Sundance of new media, [SXSW] is the bellwether for what lies ahead for digital culture.”

Full of media presentations, music showcases, film screenings, and conference panel discussions, those who attend SXSW get earfuls, eyefuls, and handfuls of a lot more than just the next Vampire Weekends. Innovation and brainstorming are in full force in Austin next week and it will be interesting to see if more and more marketers head on down to Texas this year to get their products out there to an audience lulled into a trance by the beautiful music.

For those readers lucky enough to make the journey to Austin next week, do mind these rules from Ian Schafer, CEO of marketing agency Deep Focus.

--Michael Morella

Mickey Mouse, Donald Duck, and Friends

Chick flick lovers beware: You might have to find a new source for cheesy romantic comedies and bubbly but predictable endings. People familiar with Walt Disney Co.’s production strategies told The Wall Street Journal that the film giant is moving away from traditional date movies like the recently released “When in Rome” starring Kristen Bell. Disney is heading back to basics. (Check out the Wall Street Journal's article on the Disney production switch here.) The company's upcoming production slate is expected to focus more on creating brand names, similar to the Mickey Mouse face that originally made Disney famous.

It’s not that I don’t like romantic comedies. Sometimes there’s nothing better than a bowl of popcorn and a movie that you know you have to pay very little attention to. Romantic comedies are particularly appealing when their mindless fun is only a click away to the tune of about $1.99. But companies like Disney don’t make money from movies that even their designated audiences (say, a 20-year-old girl like me) only want to see once. DVD sales were way down for the company. And Disney flicks didn’t fare too well at the box office either.

But with its recent purchase of Marvel Entertainment and the acquisition of over 5,000 comic-book characters, including Spider Man and Captain America, Disney is hoping to rework its once titanic empire. And if there’s a movie category that you can bank on for DVD sales, it’s the brand name children’s movies, like Spider Man or the Disney “Princess” movies.

When I was a little girl, I think a princess movie was permanently jammed into my VCR. It really didn't matter what princess movie it was, as long as it had the words “Disney” and “princess” on the cover. I also had my fair share of Disney princess costumes, cups, plates, picture frames, toothbrushes, and basically anything else that could be branded with a princess likeness. These movies bring with them an entire market of merchandise. Just walk into the Disney store at your local mall.

So while Disney’s new strategy may leave a few romantic comedy lovers without a Friday night flick, the emphasis on brand names might just be the right amount of blast from the past the company needs to turn around its profits.

--Brooke Sutherland

Stylish Economics

As the global economy struggles to pick up the pieces from the recession, it’s not just auto companies and investment banks that are looking for stimulus money. The world of $2,000 handbags and $4,000 dresses needs a little help too.

The drop in the economy has taken the demand for luxury goods down with it. Understandably, this demand has been replaced by demand for things like jobs and food. But it means the end of things like Christian Lacroix Couture. Christian Lacroix, known for his whimsical “poof” dresses, is the latest designer to fall victim to the claws of the recession. And he is far from the first. As the effects of economic decline seep into all areas of life, many high-end French designers have had to close their doors.

But if Anna Wintour has her way, no more fashion houses will meet the same fate. In town for Paris Fashion Week, Wintour, the be-all, end-all editor-in-chief of Vogue magazine -- also known as the inspiration for the nasty Miranda Priestly in The Devil Wears Prada -- called for state intervention on behalf of the ailing fashion industry. (See The Wall Street Journal’s Coverage of Wintour’s Fashion Stimulus.)

And her all-powerful hold over the fashion world doesn’t appear to have lost its touch. Last week, industry minister Christian Estrosi announced plans for improving national support of the fashion industry, including lifting 35-hour workweek limits for fashion shows and providing more financial support for new designers.

Poof skirts and shoes seem rather irrelevant in the face of a 10 percent unemployment rate in the United States and a massive federal deficit. Chances are, most unemployed Americans aren’t too concerned about the fact that they may never buy Christian Lacroix Couture again. Chances are, they probably never would have cared to begin with.

But in France, fashion is more than just a luxury; it’s an industry. Fashion is responsible for 125,000 jobs in France. It’s not on the same scale as Walmart, which provides over 10,000 jobs in Oregon alone. But a job is a job. And while I don’t exactly feel sorry for Wintour and the terrible loss she felt at missing out on the hottest item from Christian Lacroix, when the fashion house closed, it took people’s jobs with it. And losing a job designing clothes hurts just as much as losing a job making steel or working in a grocery store.

--Brooke Sutherland

The Fat Lady (Gaga) Sings

To kick this thing off, I’ve decided to nix the predictable -- throwing out my own two cents (or $499 to be exact) on Apple’s new iPad -- and delve into another technologically-affected realm of the entertainment world: the music industry.

The Grammys are tonight and unlike the more than 19 million people who are estimated to tune-in to tonight’s telecast, I won’t be watching. While I like to think of myself as a big music fan, I am also most definitely a music snob, and aside from my not-so-guilty pleasure in loving Taylor Swift, not too much else about the awards show appeals to me. Sure, I can recognize the talent of Beyonce (even without Kanye West) and there are a few bands that I like -- Phoenix, MGMT, Yeah Yeah Yeahs -- hiding amidst the list of nominees. But in this day and age, there’s not really anything about a sticker that reads “Grammy Winner” on a CD jewel case that will make me want to buy that record.

Participating in that somewhat ancient art of “buying records” seems like a thing of the past -- especially for a college student who gets exposed to loads of new music through his local radio station -- and an interesting piece on the back page of the latest Weekend Journal section of The Wall Street Journal makes me feel like I’m not alone in my jaded attitude toward the music industry. While I’m pleased to see that the top-selling vinyl album of 2009 (that’s right, not 1969) was the Beatles’ Abbey Road, some of these other figures are pretty scary: Taylor Swift’s Fearless sold only about a third of what the top-selling record of 1999 did (that one was by the Backstreet Boys, by the way); the average concert-ticket price for 2009 was a staggering $62.57, up a whole lot from $36.84 ten years ago; and 20 percent of album sales in 2009 were digital.

Sure, the days of the album aren’t entirely over and the relatively recent upturn in vinyl sales does reveal that some fans might prefer a physical set of lyrics rather than a digital one, I cannot help but be a little wary about exactly where the mp3 will take us in the next ten years. The signs have been apparent for quite awhile, but it’s still tough to chew on some of these numbers, even if I can count the number of albums I purchased last year on two hands (maybe add my feet too, but nothing more).

So will Grammy categories like “Album of the Year” even exist in 2020? How will smaller artists hang on in these post-MySpace times, where the fateful merger between Live Nation and Ticketmaster is looming just on the horizon? Well, The Wall Street Journal assuages some of these fears by placing its music industry stats alongside a piece called “The Lessons of Lady Gaga.”

I’m not ashamed to admit that I think Gaga’s music is unbelievably catchy and I can at least appreciate the spectacle of her performances. She is opening the Grammys tonight -- with Elton John no less -- which I’m sure will rack up more than a few YouTube visits in the ensuing days. Lady Gaga is never content to simply “take the stage,” but she makes it her own -- even if no one can quite understand what she’s doing. She is innovative and many have embraced her for it (she was, after all, the top-selling digital artist of 2009, according to the WSJ), so perhaps her style will resonate throughout the rest of the music world.

Maybe then more folks will opt for turntables instead of iPads in 2010.

--Michael Morella