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Making Digital Music Perform Seattle’s Shared Music Licensing Has a Way to Make Buying and Selling Digital Music Pay Off Big, and It’s Growing like a Weed

Is there anyone in Seattle who is NOT selling, streaming, licensing, managing or producing digital music these days? Not, we would gather, from the blizzard of announcements that began accumulating in January faster than a sudden Seattle snowstorm.

The Internet-pitched battle-of-the-bands (and bandwidth) for online music sales has pit Puget Sound brother against brother, RealNetworks vs. Microsoft, Loudeye and Windows Media against Rhapsody, and conventional e-tailers like Amazon vs. new grassroots digital music resellers who are virtual I-Music activists. One such homegrown, electronic music merchant — with mojo — is an enterprising organization called Shared Media Licensing, more widely known by their informal brand name as “Weedshare” or just plain “Weed.” If that sounds counter-revolutionary, well, it just may be by design.

“Weed” is the viral marketing concept of former Microsoft eBooks cybernaut and DRM skeptic John Leighton Beezer. A gregarious musical fellow, Beezer has combined his insights into the licensing issues that confound the recording industry,with his love of music (as an almost famous former Seattle grunge rock bandmate). The prototype is a new online music distribution organization that is, at the same time, a company, a concept and an architecture known as Shared Music Licensing.

It is Beezer’s philosophy and WeedShare’s business model that a fraction of the sale of every digital musical track ought to go to compensate a new breed of online distributor, people like you or perhaps friends of yours who buy and listen to recorded music on their PCs or MP3 players. John believes you can catch more flies (and files for that matter), including those swashbuckling music pirates holed up in college dorm rooms, by offering them a financial incentive for their patronage in the form of a sales commission, rather than threatening them with lawsuits and criminalization.

Beezer’s brainchild came while grappling with the digital rights questions that confronted the marketing of electronic books at Microsoft. “Why don’t we reward young people for distributing music to their friends?” he and partner Tom Lindeman theorized. Microsoft’s Digital Rights Management (DRM) software (v. 7.0) finally made the germ of such a radical marketing concept a reality. Using the DRM software as its virtual gatekeeper, the “Weedshare” system enables a song to be played initially for free a total of three whole times before it requires a payment (that is then revenue-shared) and is permanently activated.

The WeedShare org-chart spreads out like fast climbing ivy. The hub of the grassroots network is Weedshare.com which links to a core group of networked distributor sites. Feeding the system are ICPs or Independent Content Producers, the worker bees who are responsible for getting good content, what the record labels call A&R. The ICPs also clear the rights, which is far from trivial, encode the files and then “Weedify” the music. Oh, and after that comes a little something called promotion.

Seattle24x7.com sat down with John Leighton Beezer, WeedShare’s free-thinking but revenue-focused digital music evangelist, to learn more about the dynamism of an organization that is sprouting and growing every bit like its name.

Seattle24x7: What do you need to be able to engage in the WeedShare experience?
Beezer: If you’re compliant with Windows Media DRM 7.1 you can play our files. That means MediaMatch, Jukebox, and RealPlayer all work beautifully as well as Windows Media Player. To artists who are Mac loyal we would say Weed is a system by which Mac users sell files to PC users (laughs). We hope to be on the Mac soon.

Seattle24x7: Some would say that your application of the Windows DRM is the come-of-age solution to a classic problem?
Beezer: For the most part DRM has been a huge disappointment. There’s been a kind of arc to it. The first six years, from 1992 to 1998, there was an unrealistic optimism about it. Then 1998 was the year that Microsoft announced their brand new, bullet-proof DRM 7.0. It was hacked in beta and made obsolete even before they launched it. Following that, the last great ray of hope for DRM optimists, has been 6 years of pessimism on the subject of DRM. “It’ll never work,” they’ve moaned.

We happen to agree that DRM will never work. Because you can always “analog” it. You can audio tape it or copy it in some roundabout way. Therefore, we believe we are now at the beginning of a third phase in DRM, a “non-punitive” DRM. Our position is basically that DRM is a crappy lock. So let’s not try to lock up Fort Knox with DRM. It’s not going to work. However, DRM is a great system for channeling large numbers of people to cooperate with a system. As long as the system is not one that threatens punishment but instead offers reward, people will be happily channeled in that direction.

Seattle24x7: You developed this idea out of your work on eBooks at Microsoft?
Beezer: Tom Lindemann and I were working with the eBooks group team, a very smart group which eventually became the DRM group. As fate would have it, the DRM being developed at that time became best of breed at Microsoft. But the major book publishers couldn’t get behind it because if wasn’t 100% footproof. Of course, nothing is. One day Tom called me up and said, “Hey, John, I figured out how to make DRM work.” It was an unformed idea at the time. But the gist of it was why don’t we reward young people for distributing music to their friends rather than penalize them? Why don’t we pay them? Of course, you can’t pay someone for sharing a file if they don’t buy it first.

Seattle24x7: What kind of pricing structure did you envision?
Beezer: One model we kept coming back to was this idea that people who get in on something early should make more money than those who don’t. I had this hierarchical, cascading model in mind. We realized that to do this, the price of the file doesn’t have to change. Just the percentage. The people who help originate the music and help get it out don’t pay more, but they are able to make more. Ultimately, we let the artist choose the price. To people that’s radical. But the grocer chooses what to charge for oranges. The car dealer chooses what to charge for the car. What’s so radical about a musician setting the price for their own music? Music is not a commodity. “The Macarena Song” is not worth exactly as much as “Let It Be” by the Beatles.

Seattle24x7: Grammy award-winning Rap artist Sir Mix-A-Lot has released fifteen titles in Weed format. So how are you being perceived by the major labels? Do they view you as a threat in any way?
Beezer: No I don’t think so. I mean we’re not going to wait to get to the next level at Universal and make that one big score. It could be five years if we do that kind of deal and we can’t wait that long.

Seattle24x7: You also feel the studio model is changing?
Beezer: There’s a lot going on outside of the major label system. In fact, I would assert that there are two tectonic trends in music that are changing the way music is produced and distributed. Only one of them is getting a lot of media attention which is the digital distribution/filesharing issue.

The other component is that what used to cost $500,000 to produce in a professional studio can now be done on a Mac or PC with ProTools for a couple thousand dollars, or less, in your garage. The way the studio system used to work was that the upfront costs to produce and press the music were enormous. So the studio system was based on this idea that somebody’s got to cough up a least a million dollars up front. What that did was give the studios a lot of control because they would sign contracts based on advances to artists, many of whom never had a chance of paying it back. The labels dictated the terms on which the industry would operate.

But don’t get me wrong. Those were the economics. We are not anti-label, we are simply pro-artist. The labels aren’t necessarily ready for us right now, nor are we ready for them.

Seattle24x7: There are a galaxy of WeedShare sites sprouting up. How does the network operate ?
Beezer: If you want to get organized and try and sell songs through Weedshare what you need to do is create a Website and put the songs up on the Website so people can download them. We call these either Weed sites or distributor sites.

The hub is Weedshare.com but we don’t want to compete with the distributors so we do not offer music. We do have a Top 10 list on our front page but we always link out to the distributors’ site that’s hosting the files.

Seattle24x7: How does the payment system work?
Beezer: When we began to explore this, we realized that just doing the licensing wasn’t enough. We also had to do micropayments. It’s difficult to do a transaction over the Internet for less than 30 cents. I believe PayPal is 27 cents plus 2-1/2 percent of the sales amount. It’s very hard to get below a quarter in terms of transaction cost. The other problem is liquidity. in order to build a system that is secure and ubiquitous a service that accepts Visa, MasterCard or even PayPal, has to make massive investments in infrastructure and build systems that are redundant and secure. They also need to have some kind of representative or operation on the ground all over the world. We just want to sell you music on the Internet. We’re a lot less like currency and a lot more like a business where you have a pre-paid account.

Seattle24x7: Is there any part of what you are doing that can be unfavorably compared to multi-level marketing?
Beezer: We never tell people that this is going to make them rich. We do not promote the expectation that you buy some file and a million dollars will come to you tomorrow. We never even suggest it’s going to pay for their music.

What we tell people is that the WeedShare system is a gesture of respect. In order to make the system work, we have to put locks on it. We apologize. But if the system works we will share the benefits with you. That’s all we are doing. There may be people who will take it and make businesses out of it and we expect that. It just won’t be everybody. For those people who attempt to set up businesses, it’s a wholly legitimate operation.

I would compare it to a multi-level marketing approach by saying that in the real world, you cannot make infinite copies of a box of soap. In order to make money you’ve got to buy 20 boxes of soap and sell 18 of them first. Some people still have 15 boxes of that soap still sitting in their garage. It’s a lot of money up front and they really never got to the payoff part of it.

Seattle24x7: And then there’s the name — Weed?
Beezer: We toyed with the name IceNine which was from a Kurt Vonnegut novel. But without our bold, symbolic name, we felt we didn’t have a provocative, challenging position anymore. We felt that if we lose touch with that young music fan in the dormroom then we lose touch with why this is a good idea. We decided to keep it our name in spite of the fact that it is a tad controversial. We don’t want to forget who we’re talking to here. We’re not talking to software executives. We’re not talking to entertainment attorneys. We’re talking to kids out there who can download music for free, at will.

Thanks, John. We’ll be keeping tabs on the propagation of WeedShare. [24×7]

Larry Sivitz is the Managing Editor of Seattle24x7.