June 6, 2005

Movie Economics and Digital Distribution [11:55 pm]

Dumb Money

Since then, however, the digital revolution has radically changed the movie business. The video rental market, which had been the studios’ cash cow as late as 2000, is rapidly disappearing. It’s been replaced by the business of selling DVDs in which a handful of mass retailers, such as Wal-Mart, account for most of the studios’ revenues. Unlike the video chains that rented videos, the big retailers don’t simply peg their orders to a film’s box-office results. Instead, they view DVDs as traffic-builders: The stores use them to lure in the relatively well-heeled, plasma-screen-purchasing customers—who are usually not the so-called LICs (or low-income consumers) who are recruited by ads for movie openings. As a rueful Sony marketing executive pointed out, “Unfortunately, our teens are not always who they want.”

[...] Does Hollywood need to remain so out of synch with reality? At present, the studio marketing arms have become exceedingly efficient at stampeding weekly herds of teens to multiplexes and producing impressive numbers. But if that amazing trick turns out to be not worth its average $34.8 million price tag, studios will have to consider different strategies. The most obvious one would be to eliminate the long interval between a film’s opening and its release on DVD. Also, if the studios aimed at the much larger and more profitable DVD audience, they would not need to spend so much on the teen herd. In this regard, Mark Cuban and Todd Wagner, who own the Landmark Theatres chain, the distributor Magnolia Films, and the high-definition cable channel HDNet, have announced just such a radical strategy. They will finance six movies directed by Steven Soderbergh and release each one simultaneously in movie theaters, pay-TV, and on DVD. To follow suit, the Hollywood studios might also need a different class of movies.

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Another Approach in the Hit Song Science Market [11:16 pm]

Sensing what sounds sell - this one aimed at the retailers and their suggestions to customers

In a computer-crammed space at Savage Beast Technologies, divergent melodies seep softly from headphones worn by young men and women who listen to music with the intensity of submarine sonar operators.

Their job is to discern and define attributes in tunes by artists as diverse as teen diva Hilary Duff and jazz legend Miles Davis.

The listeners classify hundreds of characteristics about each song, including beat, melody, lyrics, tonal palette and dynamics, then plug the data into a music recommendation engine — software designed to find songs that share similar traits.

The goal is to help retailers suggest new music to consumers based on what they already like.

Hit Song Science posts: Artistic Creativity and Popularity

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DVD Decrypter Takedown Order [11:05 pm]

DVD Decrypter - Gone, Forever! [via Slashdot's DVD Decrypter Author Served With Take-Down Order]

Ok so it has taken a while (almost 2 years), but eventually “a certain company” has decided they don”t like what I”m doing (circumventing their protection) and have come at me like a pack of wolves. I”ve no choice but to cease everything to do with DVD Decrypter.I realise this is going to be one of those “that sucks - fight them!” kinda things, but at the end of the day, it”s my life and I”m not about to throw it all away (before it has even really started) attempting to fight a battle I can”t possibly win.

If 321 Studios can”t do it with millions, what chance do I have with £50?! As I”m sure most of you have already noticed, the site has been down for a few days. That surprised me as much as the next person (slight breakdown in communication), or I would have issued this statement on it directly.

So anyway, from this point forward, I”m no longer permitted to provide any sort of assistance with anything that helps people infringe the rights of “a certain company”.That means, no more emails, no more forum posts, no PM”s, no nothing! END OF STORY.The domain name will be transferred over to the company by the end of the week (9th June, according to the undertakings I have to sign) so don”t email it thinking “Oh, I”ll just ask LIGHTNING UK! for support on this”. You”ll not be getting the intended recipient and could be landing yourself in sh1t!

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Creepy Story for Digital Photographers [6:24 pm]

The technology giveth, and Walmart (because of copyright “education”) taketh away — sound familiar? Snap judgments [pdf]

One of the benefits of digital photography - the fact that amateurs can take better-looking photos and doctor them using photo-editing software - is also becoming a bane. Photofinishing labs increasingly are refusing to print professional-looking photographs taken by amateurs.

The reason: Photofinishers are afraid of infringing on professional photographers’ copyrights.

[...] There are a growing number of stories of amateur photographers being turned away by photofinishers for having photos that looked, at least in the eyes of a store clerk, too good to have been taken by anyone other than a professional.

Their photos have become collateral damage in the war on digital copyright infringement.

[...] The Professional Photographers of America sees education of consumers and photofinishers as key to preventing unauthorized copying.

The trade group sent a wake-up call to the photofinishing industry when, in 1999, it sued Kmart Corp., alleging that the discount store violated federal copyright law by copying images without the permission of the copyright owners.

In 2000, Kmart settled the case by paying $100,000 and agreeing to implement procedures to guard against the unlawful copying of professional photos.

[...] Wal-Mart has one of the toughest policies.

Spokeswoman Jackie Young said Wal-Mart is “a littler tougher than the copyright law dictates.”

“We want to protect professional photographers’ rights,” Young said. “We will not copy a photograph if it appears to be taken by a professional photographer or studio.”

Wendy Seltzer’s Copyfight post: A Photofinish for Copyright’s Unintended Consequences, which includes information about Gallery’s legal problems as well (a tool that I use here on my WWW site)

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BBC’s Thompson Experiences Lock-In [5:46 pm]

Architecture in action: Caught in the Windows to Mac rift

n a rational world Microsoft would provide me with a tool to do the conversion. And in fact it has released a program that will convert PST files into the format used by their new Macintosh mail program, Entourage.

Entourage is not so bad, and I could probably learn to live with it. Except that it will only read PST files that were originally created on a Mac, so it is no use for anyone like me who is trying to migrate from Windows.

Anyone with a suspicious mind would think that Microsoft wanted to make it hard for users to make the switch from Windows to Mac OS, and because they own the PST format they have decided to do this by failing to provide a migration tool.

Thunderbird and other tools have to work by reverse-engineering, figuring out how PST files work by examining them carefully, because the format is not published. And this makes it hard to get things to work.

Microsoft benefits, even if the reason for the lack of migration tools is simply that the PST files are too complicated and messy to be easily converted to industry-standard mail files that can be read by other programs.

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Lexmark DMCA Games Dead [2:35 pm]

Supreme Court Rejects Lexmark’s DMCA Appeal (Note - I can’t find it listed in the June 6 Order List, but I may just be losing it) Here’s the SCC press release, anyway

Later, Slashdot - US Supreme Court Refuses to Hear Lexmark Case; even later - Lexmark rebuffed by Supreme Court in toner cartridge fight

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My Goodness!! [2:05 pm]

It *is* going to be an Apple transition to Intel, if the notes from the MacRumors on the WWDC 2005 Keynote coverage are to be believed!!

11:02 am lots of great power pc products in pipeline

11:02 am

will continue with 3rd transition - will make best machines we know how to make

will not happen overnight

11:02 am

“we know transitions”

11:02 am

great time to start building for the future

11:01 am

important story with a very happy ending

11:01 am

“together at last”

11:01 am

brings together skills and opportunities of two great companies

play on respective strengths

Apple legendary in innovation of OS & Hardware design

Intel - legendary in delivering great processors - relentless persuit of better processors

11:00 am

Catch up - not every app will be easy to convert, so translate PowerPC code inline into tel - dynamic binary translator. Photoshop plugins for PPC binary translate without a hitch. Developer transition kit - 3.64Ghz P4, for select and premier developers only $999.

11:00 am

so happy the world’s most innovative computer company and world’s most innovative chip company have finally teamed up

One other note:

10:57 am Catch up - two major challenges - making OS X think on intel procs. Every release of OS has been compiled for intel x86 for the last 5 years - cross platform by design. All demos up to this point have been done on an intel proc.

Suddenly, the DRM question looks pertinent, despite Intel’s protestations to the contrary - (later: Ed Felten disagrees - MacIntel: It’s Not About DRM

Slashdot discussion: Apple Switching to Intel

Related: see Ernest’s (now quite relevant) post from Sunday - Apple + Intel: Where’s the Lawsuit Against C|Net?

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Geist on the State of Canadian File Sharing Law [1:44 pm]

The State of File Sharing and Canadian Copyright Law (preceding article: File Sharing Decision States the Case for Privacy)

Although the court declined to articulate definitive conclusions on important copyright issues associated with file sharing, its decision will undeniably have a major impact on copyright policy. This impact is best addressed by analyzing three questions - can CRIA sue file sharers? Can it win such suits? And what legal reverberations might ensue if it does win?

The answer to the first question is relatively straight forward. CRIA can sue file sharers in Canada and it has indeed asserted that the decision provides a blueprint for future suits.

[...] The answer to the second question — whether CRIA can win file sharing suits — is open to debate, particularly with respect to suits filed against individuals that solely download music from peer-to-peer networks. The complicating factor is the effect of Canada’s private copying system, which establishes a levy on blank media such as recordable CDs. [...]

The third question - what might follow if CRIA is successful in its suits - raises the prospect for copyright reform. When the federal government established the private copying right in the late 1990s, it also created a statutory damages system. This enables a copyright holder to obtain specified damages of between $500 and $20,000 per infringement without the need to prove actual damages. There is, however, a saving provision that allows a court to order damages well below the statutory minimums if the total award is “grossly out of proportion to the infringement.”

[...] The net result of current Canadian law is that file sharing suits are a risky strategy from both a privacy and copyright perspective. The Federal Court of Appeal may have provided a roadmap for such suits, but it is apparent that traveling down that road raises many more questions than it answers.

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OT: Time To Fix Federal Narcotics Laws [11:01 am]

Or to reclassify marijuana — U.S. Supreme Court Rules Against Use of Medical Marijuana

The U.S. Supreme Court dealt a setback to the medical marijuana movement, ruling that federal narcotics laws make it a crime to grow and use the drug even when it never crosses state lines and is used only to relieve pain or nausea.

The justices today said Congress’s power over interstate commerce is broad enough to let it ban locally grown and used medical marijuana. The 6-3 ruling, issued in Washington, overturns a lower court decision that had let two California women use cannabis to treat pain, nausea and other symptoms.

California and nine other states exempt seriously ill people from laws banning cultivation and use of marijuana. Today’s ruling means people in those states nonetheless will face the risk of federal prosecution if they use or distribute marijuana.

The case is Ashcroft v. Raich, 03-1454.

(Note, it’s actually Gonzales v. Raich)

Also, High Court Allows Prosecution of Medical Marijuana Users; Lawrence Solum’s Gonzales v. Raich; Part II - Gonzales v. Raich, Part II: An Analysis of the Decision

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Closed Source and FL Jurisprudence [10:12 am]

DUI Defendants Skip Charge By Asking How Test Works [Via Slashdot's Closed Source -> Charges Dismissed?] [pdf] (a more elaborate story - Technicality springs DUI defendants [pdf])

Hundreds of cases involving breath-alcohol tests have been thrown out by Seminole County judges in the past five months because the test’s manufacturer will not disclose how the machines work.

All four of Seminole County’s criminal judges have been using a standard that if a DUI defendant asks for a key piece of information about how the machine works - its software source code, for instance - and the state cannot provide it, the breath test is rejected, the Orlando Sentinel reported Wednesday.

Prosecutors have said they do not know how many drunken drivers have been acquitted as a result. But Gino Feliciani, the misdemeanor division chief in the Seminole County State Attorney’s Office, said the conviction rate has dropped to 50 percent or less.

[...] Judges in other counties have said the opposite: The state cannot turn over something it does not possess, and the manufacturer should not have to turn over trade secrets.

The opinion - State of Florida v. Timothy Muldowny and William E. Pitts

Also, from the Sentinel article:

The Intoxilyzer 5000 is perfectly reliable if properly maintained and operated, said Laura Barfield, manager of alcohol testing for the Florida Department of Law Enforcement, the agency that oversees all breath-alcohol testing in Florida.

But FDLE’s word is not good enough for defense attorneys.

CMI has changed the unit’s software and some parts during the years, so it’s no longer the same machine the FDLE approved in 1993, according to Stuart Hyman, an Orlando lawyer who makes his living defending DUI defendants.

“They’ve put different parts and pieces in it,” he said.

Those changes were substantial, he said. The machine may no longer be as accurate as it was, he said.

[...] Attacks on the Intoxilyzer are not new. Through much of 2002, 2003 and early 2004, hundreds of breath-test results were thrown out because the state refused to turn over trade secrets it did possess — the machine’s operating manual.

Then, as now, the state claimed the information was the private property of the manufacturer.

That battle ended last year when the 5th District Court of Appeal ruled the state had to turn them over.

That is where this latest skirmish may land, as well, Feliciani said. The issue is on appeal in the 18th Judicial Circuit, one step below the 5th DCA.

Much later: Florida DUI Law and Open Source

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Concerns About Record Industry Direction [10:05 am]

Hoping to Energize CD Sales [pdf]

The emphasis on first-week album sales echoes Hollywood’s infatuation with opening weekend grosses. More and more in recent years, large music retailers have come to rely on the hype that accompanies a new release to lure shoppers who, in turn, frequently buy other products.

“There’s a real desire among retailers to have ‘event weeks’ that create traffic and excitement,” said Jeff Pollack, one of the nation’s leading radio industry consultants.

[...] But some music business leaders caution that this short-term measure of success diverts attention from the business’ enduring financial problems.

As digital purchases of singles displace more lucrative album sales, for example, labels are seeing their profits shrink. Last year, music fans downloaded 141 million tracks from pay Internet sites such as iTunes, a 734% increase over 2003. Many of those tracks were priced at $1 or less — rates that industry executives say border on the unprofitable.

“Everybody is trying to be a cheerleader right now, cheering about first-week sales to hide that they are all in denial,” said Andy Gershon, president of V2 Records, which distributes the White Stripes. “The big retailers want a first-week buzz to pull in customers. But what really matters is how an album sells over six months, not six days.”

[...] Meanwhile, some say it’s not distraction EMI should be worrying about, but the perception of failure that inflated expectations can bring.

“If Coldplay sells fewer than 400,000 albums in the first week, everyone will talk about how it’s a huge disappointment and that EMI is faltering,” said a music executive at a rival company who only spoke on the condition of anonymity. “But that’s crazy. 400,000 in one week is great.”

Opening week mania has another downside, label employees say: the slashed prices that big retailers use to attract customers make it more difficult for the companies to turn a profit.

[...] Todd Clifford, owner of Sea Level Records, an independent music store in Echo Park, knows just what Gershon means. He says that to save money, even he will probably be heading for a big retailer Tuesday to buy the new White Stripes album, “Get Behind Me Satan.”

“Chances are I’m buying it at Best Buy,” said Clifford. “It’s cheaper there than what I have to pay in wholesale.”

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UK To Extend Copyright Term [9:57 am]

Long-playing plans for music copyright ownership [via Michael Geist]

POP songs will receive longer protection under new plans to extend copyright laws.

It will mean Beatles classics such as Love Me Do and Please, Please Me, released in 1963, will not automatically lose their copyright in 2013.

The Rolling Stones may also benefit, with songs such as (I Can’t Get No) Satisfaction having their copyright extended beyond 2015.

United States copyright law protects songs for 95 years and UK government ministers are reported to be considering a similar length of time for British products.

[...] The move follows an uproar after early Elvis Presley tracks including That’s All Right, Mama came out of copyright in Europe at the end of 2004.

Slashdot: Extending Pop Music Copyrights; later, related EU Record Companies Push to Extend Copyright

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Ah, Irony [9:45 am]

Federal Anti-Municipal Wi-Fi Bill Introduced

Dubbed by the Author, Representative Pet Sessions (R-Texas), the Preserving Innovation in Telecom Act of 2005, the bill prohibits state and local governments from providing any telecommunications or information service that is “substantially similar” to services provided by private companies.

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Business Week on MySpace [8:54 am]

Hey, Come To This Site Often? [pdf]

Thanks to its addictive appeal, MySpace has become one of the hottest properties on the Web. Only 20 months old, it already has 14 million unique visitors a month, according to market researcher comScore Media Metrix. That makes it far and away the most popular of what are known as social-networking Web sites. Friendster Inc., started three years ago and at one time the clear leader, has a mere 1 million unique monthly visitors. “We’re crushing it,” says MySpace Chief Executive Chris DeWolfe, 39.

The draw? It started with music. DeWolfe’s co-founder is president Tom Anderson, a 29-year-old musician and entrepreneur, and from the beginning the site has catered to musicians. Bands can create home pages, with photos, tour dates, and as many as four songs — all for free. Marquee names like the Black-Eyed Peas, My Chemical Romance, and ex-Smashing Pumpkins leader Billy Corgan joined. That pulled in fans and their friends, who all found that MySpace offered loads of options that other sites lacked. Now, MySpace has become something akin to the hottest bar in town, teeming with musicians and models.

[...] So effective is the site at connecting with fans that some musicians think MySpace and sites like it could change the dynamics of their industry. Record labels have been essential because they know how to market and promote their artists. But these days, why should bands bother with the middleman? They can post their tour dates on MySpace, put up music samples, and correspond via e-mail directly with fans. “Now that MySpace is here, bands don’t necessarily need a label to be heard,” says Corgan. Labels could end up pursuing musicians, rather than the other way around. In fact, Britain’s Engineer Records tracked down and signed The Moirai specifically because of their popularity on MySpace.

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Architecture, Product Development and Business Models [8:49 am]

$29.95 one-time-use video cameras ready [pdf]

The new camera, from San Francisco-based start-up Pure Digital Technologies, doesn’t use videotape. It saves images to internal memory — like the video mode of a digital camera.

[...] Consumers will have to pay an additional $12.95 for processing the 20 minutes of footage onto DVDs. There’s no other way to watch — the camera can’t be plugged into a TV.

Viewing functions are also limited: Only the last clip recorded can be seen on the back of the camera.

Later: Slashdot’s Disposable Camcorder discusses the implications/opportunities for hacking

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Game Music Controls [8:27 am]

Music Muffled in Star Wars Game

The massively multiplayer online game, Star Wars Galaxies, gives gamers a chance to build their own weapons and armor, fly spacecraft, build cities and even train to become Jedis.

But in this world of make-believe, composing music is forbidden.

[...] [M]usicians are not permitted to actually make music — except a handful of canned tunes — because of copyright violation fears.

Never mind that the characters play pretend, virtual instruments like the slitherhorn, ommni box or the nalargon. Concerns that musicians would re-create music copyrighted in the physical world is one of the legal nightmares envisioned by lawyers at Sony Online Entertainment and LucasArts.

“If we allowed someone to play anything they want, they could play a song by Madonna and then we’d have licensing issues,” said Julio Torres, a producer for Star Wars Galaxies at LucasArts.

In the game, musicians can play only 10 pre-recorded songs and add flourishes. Torres said if composing original music were allowed, players could violate copyright — even if there were rules against it.

Unsurprisingly, seems that Ed Felten has interesting friends.

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Wired News’ Speculation On Apple/Intel Rumors - It’s All About DRM [8:19 am]

Hollywood Orders: Apple Wed Intel

I guess Apple will move to Intel, and they’re relying on a fast, seamless emulator to do it.

But it’s really about Hollywood: Apple’s looking to transform the movie industry the same way the iPod and iTunes changed the music business.

[some nonsense about emulation here]

[...] But why would Apple do this? Because Apple wants Intel’s new Pentium D chips.

Released just few days ago, the dual-core chips include a hardware copy protection scheme that prevents “unauthorized copying and distribution of copyrighted materials from the motherboard,” according to PC World.

Apple — or rather, Hollywood — wants the Pentium D to secure an online movie store (iFlicks if you will), that will allow consumers to buy or rent new movies on demand, over the internet.

[...] And that’s why the whole Mac platform has to shift to Intel. Consumers will want to move content from one device to another — or one computer to another — and Intel’s DRM scheme will keep it all nicely locked down.

Presumably, Jobs used his Pixar moxie to persuade Hollywood to get onboard, and they did so because the Mac platform is seen as small and isolated — just as it was when the record labels first licensed music to iTunes. The new Mac/Intel platform will be a relatively isolated test bed for the digital distribution of movies and video.

Will current Mac users like this new locked-down platform? I doubt it, which I guess is why it’s going into consumer devices first.

The Register is notably more sanguine: Apple shifts to Intel: what is all the fuss about?

Slashdot’s rundown of the rumors and dubunkers - Apple/Intel Speculation Running Rampant

Donna’s take

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Thoughts on .xxx [8:16 am]

Be careful what you ask for - The politics of .xxx

If .xxx remains truly voluntary, that’s one thing. But what happens if politicians make it mandatory? What if controversial material like information on homosexuality, abortion and sex education comes under pressure to move to a virtual area that can be easily blocked?

[...] Then politicians began to ratchet up the pressure. At a hearing a few months later, Rep. Fred Upton, R-Mich., demanded to know why ICANN didn’t approve .xxx “as a means of protecting our kids from the awful, awful filth which is sometimes widespread on the Internet.” Sen. Joseph Lieberman, D-Conn., complained to a federal commission that .xxx was necessary to force adult Webmasters to “abide by the same standard as the proprietor of an X-rated movie theater.”

[...] Months from now, after .xxx domains become available and popular, expect these same politicians to suggest that adult Webmasters should be forced to permanently relocate from .com.

[...] “You’re definitely going to find some pressure on sex sites to move there,” predicts David Greene, director of the First Amendment Project in Oakland, Calif.

What’s more, the existence of an .xxx suffix will make it more difficult to challenge such a law in court. U.S. Supreme Court Justice Sandra Day O’Connor has suggested that the presence of “adult zones” on the Internet would make a future Communications Decency Act more likely to be regarded as constitutional.

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When More Is Less [8:00 am]

The perils of pricing 3G services: In Japan, Prices Go Down as Web Service Speeds Up

“With my old phone, talking was the focus,” said Mr. Wakabayashi, who uses the latest handset from NEC to browse the Web on his train commute to work. “Now, using the phone to talk seems like a waste because e-mailing and Web browsing are so much easier.”

Mr. Wakabayashi’s enthusiasm should be welcome news to DoCoMo and Japan’s other mobile carriers. The companies have spent billions of dollars since 2001 to introduce so-called third generation, or 3G, services capable of transmitting data at speeds up to 40 times as fast as the previous generation of digital mobile voice networks. (In the industry’s lingo, the analog cellular networks of the 1980’s are the first generation, while the second generation are the digital voice networks of the 1990’s.)

These new networks were built to expand capacity for voice calls and allow for high-speed data services that were supposed to generate new revenues to offset declines from standard voice calls. But that has not happened.

[...] [T]he deals have lowered total customer spending. Because talking is more expensive than sending data, Mr. Wakabayashi now spends about $30 less a month than he did with his older, slower service because 3G makes it easier to send e-mail messages to friends instead of calling.

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More Indications that Consolidation Is Tough To Implement [7:48 am]

The Trick of Making a Hot Ticket Pay

Clear Channel, which controls many of the nation’s big live-music venues, including the amphitheater at Jones Beach on Long Island and the Shoreline Theater near San Francisco, had hoped to exploit synergies between radio and concerts through advertising and tour sponsorships.

Those extra advantages never materialized. But in an effort to control a larger part of the concert business, Clear Channel aggressively raised advance payments to artists, which sometimes pushed acts into inappropriately large houses and drove up ticket prices for an already fickle audience.

“Clear Channel acted like it had to dominate the marketplace and in order to buy everything, it had to pay,” said Alex Hodges, executive vice president of House of Blues Concerts, the promotion division of House of Blues Entertainment, a competitor to Clear Channel in the live-music business.

Since then, the company has changed course. A few weeks ago, it announced that it would spin off the Clear Channel Music Group as a separate company, apparently giving up its vision of synergy but also removing some of the pressure to increase its market share at any cost.

And look at the economics of a typical concert contract:

Concert-ticket revenue is split between the performer and the promoter, with the performer receiving most of the money, customarily around 85 percent. To book talent, the promoter pays an artist or his agent an advance against that share - a guarantee, in industry parlance - in the belief that enough tickets can be sold to make the performer’s price worthwhile.

This amounts to a high-stakes bet. “The promoter gets 15 percent of the upside and 100 percent of the downside,” said Marc Geiger, head of contemporary music at the William Morris Agency. “The same way an airline may have too many flights to one city, there was too much incorrect guessing on what amount of tickets would get sold.”

Promoters, led by Clear Channel, bet too big too often.

“The agents loved this - all they had to say is, ‘Someone else might do the show,’ and the bidding escalated,” Mr. Hodges of the House of Blues said. “With the increase in the cost of talent, we increased ticket prices. And when fewer people show up, we can lose money on what otherwise would be a great show.”

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