This post however will not be about the ethics of 'selling out' or using music for advertising and branding etc - but instead focus on a much simpler question: that of rectifying the misunderstanding that has led to Spotify having to pull the campaign from its service after a bizarre snowball effect wherein a mistaken reading of a song's lyrics have caused a furore...

Here's what happened;

1. The latest of these adverts featured a cover of hit single from the infamous Californian punks, The Dead Kennedys. The song is called 'too drunk to f**k'.
2. Alcohol industry advertising watchdogs received complaints about the fact that this song allegedly promotes binge drinking, and thus campaigned to have the ad pulled from popular music service Spotify.
3. Spotify was forced to oblige, and the episode has been reported somewhat in mainstream press (such as The Guardian newspaper amongst others).

What prompted me to write a post on the episode is simply wanting to set the record straight and point out a key piece of info which nobody seems to have thought sensible to include at any stage in this process (neither Spotify, nor - even more bizarrely - The Guardian in its reporting). This info is simply that the song does not actually represent an 'ode to a misspent evening' as the original complainers thought, or as the Guardian now wrongly describes it, but rather is the exact opposite.

The track is indeed a vicious critique of US youth binge drinking culture, which like most songs written by the Dead Kennedys has caused (and continues to cause by the looks of things) a mass amount of misunderstanding when taken out of context and listened to by people who are not familiar with the original band or with lyricist/singer, Jello Biafra's style, who was one of the first in the punk movement to develop such a heavily ironic and satirical approach to complex social and political issues by writing from within the issue in question (i.e. not as a third-party commentator condemning this or that - but from the first person viewpoint of one who part of the problem so to speak).

This resulted very commonly in the band sometimes attracting the very crowd that they were seeking to ridicule and oppose, since often these people were unable to detect the heavy cynical sneering judgement which Jello Biafra's portrayal of them contained within it. Take these lines from the controversial aforementioned song:

Went to a party
I danced all night
I drank 16 beers
And I started up a fight

But now I am jaded
You're out of luck
I'm rolling down the stairs
Too drunk to f**k

I like your stories
I love your gun
Shooting out truck tires
Sounds like loads and loads of fun

The character who shares these thoughts is clearly evocative of the US high-school jock alpha male stereotype - which those who are even slightly familiar with Jello Biafra realise immediately is a million miles away from his own identity and persona. Secondly, the portrayal of the sheer idiocy of such alcohol inspired activities as shooting truck tires or starting fights in the song should indicate to any intelligent or attentive listener that we do not here have an 'ode to a misspent evening' but instead a portrayal of a binge-drinking culture as the ultimate manifestation of an aggressive and idiotic alpha male culture.

Needless to say however, many of the people whom this song initially sought to portray negatively were too stupid to realise that they were being mocked - and thus considered the band to be celebrating their identities and culture. This was no surprise - nor is it any great surprise to hear that some people are still capable of misunderstanding this song's lyrics, though it is rather shocking that mainstream professional sources such as The Guardian have fallen for it as well...

(One recalls George Bush's famous use of the Springsteen song 'Born in the USA' for his campaign, wrongly believing it to be a celebration of American patriotism - when in fact the title and chorus represented an ironic condemnation of the poor treatment by the political establishment of returning maimed Vietnam vets who had been forced by the draft to give life and limb for that cynical war...)

N.B. For the record, some of the Dead Kennedy's other song titles included 'I Kill Children', 'Holiday in Cambodia', 'California Uber Alles' and 'Kill the Poor'. They attracted all manner of scum to Dead Kennedys gigs who felt that the lyrics represented a celebration of their various scummy viewpoints - including even neo-fascists and so on. They also attracted a vast majority of others who saw the lyrics for what they actually were; an intelligent and unique attempt to expose the horror, arrogance and hypocrisy at the heart of various aspects of US society in the 1980's.

This included a damning expose of Ronald Reagan's neo-conservative destruction of US welfare systems in favour of his free market reforms which saw wealth disparity on the increase for the first time in the US since WWII ('Kill the poor'), or the crypto-fascism at the heart of then Californian governor, Jerry Brown's, policies in 'California Uber Alles', and so on.

Anyway, I suspect the decision to even participate in the beer advertising campaign was taken by the other members of the band who sadly had a major falling out with lyricist and singer Jello Biafra over royalties, and now continue to milk the legacy of the Dead Kennedys for every cent against the wishes of Biafra. In any case, I'm sure Jello would be proud to see that his lyrics still continue to draw unwitting fools into mistaking his first-person satires for the celebrations of corruption, idiocy and greed that they most certainly aren't. Maybe if someone had made this argument at an earlier stage, Spotify wouldn't have been forced to pull the recent ad featuring 'too drunk to f**k'.

In any case, it is I think important to stress the fact that this whole scandal about the song and its presence in an ad campaign on Spotify has arisen out of a misunderstanding of its meaning - one which has also been perpetuated in most of the coverage on the episode.

The story of how they got to be in such a position, and where they plan to go next can be found in a very nice slide presentation from a Spotify engineer, Gunnar Kreitz, re-posted on Techcrunch today. The key mantra of the presentation, and indeed the obvious reason why Spotify became such a success, is the rather simple dictum - 'easier than piracy'.

As a big fan of Spotify, I've recently considered (and worried) that, with the recent changes to the service's free account options, this key dictum might no longer hold true. In other words, the limiting of free accounts to 10 hours playback a month and individual tracks to 5 listens before they become locked, will probably mean that piracy once more becomes the easier option for at least some users.

Anyway, I won't get into that debate again here - I simply wanted to highlight Kreitz's slide presentation as an invaluable insight into the workings and organisation of one of the web's most impressive success stories in recent years. It's not always you get such an in depth and informative look at how other people run their organisations (especially when they are up coming hot properties), so in that respect the presentation is fascinating - as well as being a good lowdown on how to actually make money out of media entertainment online (MySpace take note!).

It's not a great surprise that this has happened - we've known for sometime that Spotify's unpaid account options did not really represent a viable revenue model either for artists or record companies, though it was pretty superb for users (especially those early-birds who got a Free account while they were available). It all seemed like the perfect solution to the great piracy debate and a timely alternative to legal services which former pirates found unattractive (such as iTunes).

Reading the comments posted below Spotify's recent announcement of the changes on their blog, there is a clear divide between those who value the service enough to accept that paying for it represents decent value for money and those who  simply intend to return to piracy once the changes take effect. This, essentially, is the problem with online music distribution - there are sections of music consumers who simply won't pay (with cash at least) for the music they consume. If a free-to-user model which operates on an advertising basis (or some other alternative) can hook them in, then is a huge proven user base for this - as Spotify's user figures have shown. Otherwise it's illegal downloading all the way...

For the future though it seems that Spotify now knows exactly what it will be - and that is NOT the solution to end all illegal music downloading. Instead it will offer the unpaid account option as a 6 month trial/advert for its paid services - the latter of which is where they would ideally like to see all users. For a while now the company has ran both the paid and unpaid model as equal alternatives - which supported eachother - but essentially remained equals in terms of how the company was presented to the public. Now the unpaid model will function as a 'lite' sort of taster option, ultimately harnessed as a stepping stone to build the user base for the two paid services.

This should increase revenue significantly (judging by the aforementioned blog comments, there's more than a few users who will happily pay for something they enjoy using) but it effectively ends any hope that Spotify might be the answer to illegal downloading. Whether that would ever have been an economically viable route to take is something we won't know ever for sure (unless Spotify's execs share much more of the numerical data than they ever will) but in any case the option has been rejected; Spotify, from here on in, is an excellent music service if you wish to pay for it - if not, then it will now only satisfy only the most casual of users who wish to use it for a few minutes here and there - the rest, I suspect, will already be back on the torrent search sites.

(N.B.Techcrunch has broken some news this morning that Spotify is on the verge of launching a major movie service - though  this has been denied by the company - for now at least. If it does turn out to be true than it would only further confirm that Spotify essentially sees itself as a media entertainment delivery platform destined to offer digital access to paid-up subscribers: an on-demand film and music service for your computer/smart-phone not the magic solution to end music piracy online).

So, aside from providing yet another example of just how quickly social networks can reach a 'mature' price (if not necessarily a fully mature service - Spotify for example still remains available only in some parts of the EU), this latest round of investment - and, crucially, the valuation it seems to be based upon, further evidences just how desperate a situation the recorded music industry was (and continues to be) in before Spotify came along.

That is not to say that Spotify somehow magically reversed a declining market in order to build its business, thus heralding a return to the old days when larger record companies had generally excellent prospects - only now with digital being the format of choice (where previously vinyl, then cassette, and then CD's had been).

This is a key distinction which generally tends not to be made as strongly as perhaps it should be - that digital is not simply the latest format in an ever changing line of technological development for music formats. Of course at a basic and superficial level this is true - but, perhaps importantly, things are more complex at the level of business and economics. Here there is often a clear distinction between analogue/hard formats (8-track, vinyl, cassette, CD, mini-disc etc) and the digital formats (illegal downloads, legal streaming services, and digital download sales).

First of all, even if every single consumer of music who made the switch from analogue to digital was both prepared and able to pay for 100% of the music they consumed, revenues would still be falling for the simple reason that it is far cheaper to produce and distribute digital music than CD's for example. There are no physical pressing costs for the CD's, no printing of artwork, no physical distribution or storage costs - meaning that generally the price of music would naturally fall, if competition works as in theory it should, or even if it didn't (i.e. some kind of cartel scenario) demand would decline as consumers become reluctant to pay what used to be full price for a CD for a digital download.

Yes, there is the argument that with cheaper music we consume more - but this only holds up to a certain saturation point; if albums cost $0.01 we still wouldn't buy 100 of them every time we went to the store (nobody has 200 hours in a day to listen to infinite tracks...)

So, this is the first reality of the market - it will never again be worth what it once was as the technological underpinnings which made it so will never again return, thus it is not possible for digital sales to ever return revenues to their former levels - which previously could (and did) happen with each new format (vinyl gave way to cassette, and in turn to CD's, each time maintaining fairly consistent total revenues).

Secondly, digital consumption is increasingly a 'disposable' sort of consumption in the sense that, owing to its accessibility (both in terms of being cheap and mobile) music now features where previously it didn't, and often in situations where its function is not one we'd be likely to pay for.

For instance many people enjoy a few tracks through their iPod/mobile phone on the way to and from work on the bus or the train. Now here the level of engagement and appreciation with the music is often not such that you'd pay a lot for the music you're listening to - compare for example the vinyl collector who receives a new release and plays it at home on an expensive home stereo system: which one do you think is more likely to part with $15 for an album (let alone have the cash in the first place)? Even if they represented the same person at different points during the day/week I would venture that the digital tracks would still be valued by the consumer at a lot less than the ones enjoyed in a setting where the music takes 'centre-stage' so to speak.

Again it is true that previously many people bought Walkmen and listened to cd's or cassettes on the move (some still do) but they have gone from representing 100% of the the people listening to music on the move, to just some far smaller fraction (5%, 15%? I'll do a rough count next time I make a journey on public transport). As long as the digital remains disconnected from the analogue systems of playback which many music fans love (and have invested financially in), the market will not benefit from their considerable willingness to open their wallets for the thing they love (instead we are seeing a vinyl revival as collectors - i.e. the really big per-capita spenders - find it to better meet their high standards regarding artwork, sound quality and so on).

So the second point is that the accessibility of digital media has fundamentally devalued our willingness to pay for it (though this does vary massively across the age spectrum) and in turn led to the prominence of music (and other media) in a context where we simply don't value it enough to pay for it.

With these two issues in mind, here are the 3 key points which I alluded to in the title, and which (along with Spotify's current funding activities) give us a good idea of how recorded music might work as a business sector in the future:

1. 10 years ago the average American spent 3 times as much on recorded music as they do today. (And almost 5 times as much on CD's as today). 26 years ago the figure was twice as much as today - in other words, even allowing for ups and downs, this is a noteworthy and crucial decline (not simply a 'dip' as formats change over - in fact the introduction of new formats has at points in the past generally led to a mini-surge in total revenue).

2. Smaller revenues means that someone is going to get squeezed - and generally it seems to be the smaller labels and independent artists who have something of a raw deal with current streaming services. If these artists feel sufficiently disaffected by what Spotify and iTunes are offering, there will surely be a gap in the market for some alternative model of digital distribution for them (especially now Myspace seems likely to flop its way to insignificance over coming months/years).

3. Spotify is adding 28 new listeners a minute (half of whom are in the UK). However, the overwhelming majority of these are choosing the free account options (with ads and limited monthly streaming), suggesting that it might be this revenue model that represents the real way forward (and not the premium service which, though excellent for mobile users, also cost 120 euros/pounds annually, and is thus much more expensive than buying an iPod and loading it with illegally downloaded mp3s yourself).

All in all, the coming year(s) for the recorded music industry probably look a little like this:

1. The revenue from digital music sales will continue to grow steadily, but will not come close to arresting the decline in total revenues from recorded music. This is because

2. More high-street retailers will close as CD sales really bottom out. In the UK for example, HMV which is one of the biggest high-street chains is closing 60 stores this year (roughly 10% of total). However, it's not all bad news as

3. The vinyl revival will continue to surge impressively, albeit on an altogether different scale than the ones on which CD and digital are moving (sales of vinyl rose by 5% in 2009 in the UK, albeit from a very low base).

That'll do for now I think, though with publishing and content delivery looking like being a major web topic for the coming months (not just by way of Spotify's valuations, or last week's sale of the Huffington Post to AOL, but also Google and Apple's current movements in the field) I expect we'll be revisiting this again fairly soon.

It is for this reason that the concept of the music-based social network has arisen - as a way of maintaining these dynamics of sharing things you like with like-minded people. As life goes on we often lose contact with people that we shared interests and hobbies with - people move around, work full time, have families, live far away etc - but this doesn't mean that the process of discovering exciting new things must suffer.

That is the central premise behind a new music-focused social network, Let's Loop, designed to help you stay connected to the people who know you best and whom you know best (as well as for meeting others who share your interests and tastes). This way you can always maintain that precious circle of personalised recommendations that is so valuable for continuing to nourish your desire for stimulating new music. (The site is live now, with all design and development by etonDIGITAL).

After all, if you think about it, no automated service can truly compete with the recommendation of a friend who knows you not simply as a customer with a history (which is how Amazon recommendations generate tips for example) but as a real person. If I look back over the music which has meant the most to me over the past decade or so, it has always tended to come as a recommendation from a close friend (not to say that these automated suggestions generate only useless results - just that they can never quite compete with the word-of-mouth tip of a close friend who shares your passion for music).

This is something that the team behind Let's Loop understands - the website must be a way of facilitating that valuable interpersonal contact which enables people to discover new things and share info, rather than an attempt to supersede this with a recommendation-generating algorithm. Moreover, while it might not be the first example of music-sharing platform with social network dynamics (Last.fm and Spotify also offer some overlapping functions), it does nonetheless have a few very attractive features even at this early stage in its life.

Basically, you make a simple profile (with as much or as little personal detail as you like) and then find some of your friends with whom you wish to share recommendations for bands, songs, albums, web links and so on. The main point of contact on the network is a Facebook-style news feed which displays the details of what your friends are sharing and recommending (or everyone on the network if you wish - the choice is yours, you can even toggle to see group input around a particular artist for example). Above this main feed you have six buttons through which the main interactions of Let's Loop are structured: chat, recommend, listening to, link, concerts, and polls. This allows you to quickly publish something to the feed or check out chart-style lists of top songs or artists that users/friends are listening to and recommending for instance.

The nice thing about all this is that, unlike simply using Facebook's 'like' button to try and do similar functions of general sharing, Let's Loop is built specifically for music. So, when someone recommends a track, you have both a 'listen' and a 'buy' button right there in the feed. In essence new users could think of it as a 'like' function which is designed to operate only for music-related 'likes', and therefore offers a range of added functionality around this. Another example of this is that Let's Loop can generate charts based on what people are sharing, since it involves only one type of thing - music.

Lest we forget, Facebook's 'like' button is simply the evidence of the network trying to make sharing and recommending things to your friends easier. However, as general networks like this are so broad in their uses, it can sometimes provide a bit of an inadequate service for people who wish to focus on one particular thing in a bit more depth. For something like this, I would instead certainly recommend Let's Loop - it's highly intuitive and easy to use, free, and, perhaps most importantly, I've already found out about a few new interesting bands to check out from using it.

Anyway click over to the original Techcrunch post for a link to watch the full ceremony live - I won't spoil the other results for you here, apart from one which I think deserves a special mention: Spotify (which won the 'best international' award). A fantastic service of which I'm a big fan, and perhaps even more crucially - possibly the thing that can finally end all the ceaseless online music piracy debates by finally reconciling free music into a legal and financially workable model... we shall see.

Regardless, nice one to Techcrunch for making the whole ceremony available in video for those that couldn't be there - i'm already looking forward to next year :)

Dejan Levi

Now, my view on introducing any kind of policy which actually threatens to decrease the general level of web access and connectedness in this country is pretty simple: it's stupid, from most perspectives - including the economic one that supposedly justifies it ('we must protect the creative industry' etc).

Firstly since the 'creative industry' basically means recording companies - who themselves don't really 'look after' artists as much as their own profits, we are not really discussing depriving a penniless singer-songwriter of a few quid, but the record labels who typically pass on only a few pence from each CD sold to him/her. Hence maybe if the labels actually shared profits a little more fairly with artists, they wouldn't be so vulnerable - even when considered fairly successful after a few albums.

Secondly, we all know that more people online is good for the economy as a whole - in every sense (more ad spend, more marketable job skills, etc): therefore to sacrifice wider general aspects such as this for the sake of protecting the profits of one particular set of industry players is bewildering to say the least (for more on this see our previous blog post on the 'disconnection' topic).

But ultimately what it boils down to for me is that, while Lilly Allen, George Michael and co. all cling to some impossible and repressive solution to this problem, there are others out there whose thinking reveals a far more evolved level of understanding of the internet, technology, music fans' habits - and indeed the wider issue as a whole.

Take for example the people behind the immensely successful Spotify service, which allows users to listen to music on demand on the web for free (and have a few short ads in between tunes every now and then) or to pay for the premium, ad-less version. The basic tenets behind this concept are what Lilly Allen and others should really try to understand:

1. Music fans don't actually care about 'possessing' the files required to listen to a track they like (in fact most of us would prefer not to have to constantly expand hard disk space to accommodate music libraries). Instead all users want is the ability to be able to listen to what they want - when they want it. Previously only downloading files made this possible (or buying them on CD) - but now broadband connectivity has rendered on-demand streaming perfectly feasable.

2.  Most music fans who download tracks ALSO spend money that finds its way to artists/record companies. In fact the whole model of calculating losses from downloading is slightly flawed (x, y, z downloaded 3 million times - therefore cost of piracy=3m times cost-of-cd-album).

The fact is that without downloading (i.e. trying for free) an album - we'd often never take the risk to find out if we might like a band in the first place: who's gonna pay £8 or £9 for an album by a band they've never heard, simply out of curiosity? It is important hence to have a means of testing if one might like a particular artist, without having to pay for the privilege. Whatsmore - every third, or fourth (depends on how picky you are) times someone downloads an album they'll discover a new favourite band - and then go see them live, buy a t-shirt etc and basically spend money on things other than the music itself.

3. Moreover, since broadband connectivity is ever-increasing, there will soon be a time when everyone who listens to music on a pc - will have the means to use Spotify. Similarly with the increase in iPhone style music and phone/internet handheld devices, we can say the same of people who predominantly listen to music on the move.

Therefore - and this is crucial - in five or ten years time (in the UK at least) - there'll be very few people who actually want to download music. Instead we'll be using on-demand services like Spotify, while Lilly Allen and Metallica sit and wonder what happened, and how they could've misunderstood the whole issue to such an extent in the first place.

Finally, as someone who has downloaded music in the past, I have recently noticed that since Spotify was launched (and while i've been using it) - I haven't downloaded a single album via torrent at all. What all the moaning artists and record chiefs couldn't ever do, clever tech types like the Spotify gang have single-handedly made a reality. It wouldn't be a bad idea for the FAC gang to hop on board that bandwagon somehow rather than continuing to pursue their short-sighted campaigns...

Dejan Levi

(P.S. It's not fair that Lilly Allen should take all the stick for flawed ideas on the issue - she is simply one of many who hold such a view, but unfortunately she also chooses to very vocally promote her position leading to a few embarrassing episodes already. See Techdirt here, and here, for more on this).