Seen this?
Band's Free Web Releases Stoke
Industry's Fears of Piracy Chaos
By EBEN SHAPIRO
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- The Beastie Boys burst onto the pop-music scene in 1986 with the rowdy anthem "Fight for Your Right to Party."
These days, the punk/funk band is embroiled in a fight with far higher stakes. While most of the recording industry is panicking over a technology that could turn the Internet into an infinite trove of free music, the Beastie Boys, led by tech-savvy 33-year-old Mike Diamond -- a k a Mike D -- are happily giving away songs to their fans on the Net.
That hasn't sat well with the band's label, EMI Group PLC's Capitol Records. And because the Beastie Boys are an act with many imitators, other labels in the $12 billion music industry are fretting, too.
Record companies are struggling to contain growing Internet-based piracy, made easier by an audio-compression format that goes by the unassuming name of MP3. With this format -- the one the Beastie Boys have used -- fans can copy their favorite songs from compact disks as MP3 files on their computers and then post them on the Internet. There, the songs can be easily downloaded and played on any number of freely available music-playing software programs. By one recording-industry count, there are 20,000 songs available on MP3 files -- all of them gratis.
In its full-tilt assault on pirated music, the Recording Industry Association of America has already shut down scores of sites offering free downloads, usually by threat of lawsuit. Just this week, the world's major record companies formed a coalition to develop a standard for delivering music over the Internet, one that would protect against unlawful copying.
Kevin Conroy, senior vice president of world-wide marketing for BMG Entertainment, a unit of Bertelsmann AG, says having a major band like the Beastie Boys endorse MP3 files is "disappointing. It makes cleaning up the Net that much more difficult."
Protective Measures
Not that record companies aren't making forays onto the Web. Sony Corp., Time Warner Inc. and others are working with IBM Corp. on the Madison Project, a high-tech system that will allow music to be delivered online without being copied. Seagram Co.'s Geffen Records allowed fans to download the new single from Hole's "Celebrity Skin" two weeks before the record was released; the technology rendered the files inaccessible after 30 days. And last spring, Atlantic Records, to promote singer Tori Amos's latest album, let fans download a cut, "Merman," that wasn't included on the disk.
In all these efforts, the point is control. Music executives warn that if left unfettered, digital distribution will threaten the industry much as subscription TV programming menaced the likes of Time Warner's Home Box Office before they figured out how to scramble their programming. "If everybody stole HBO, it wouldn't exist," says Albhy Galuten, vice president, advanced technology, at Seagram's Universal Music. "Unless we figure out how to protect intellectual property in the digital age, the whole economics of the industry goes away."
The Beastie Boys aren't out to give their music away for the fun of it; after all, record sales make them rich. Significantly, the band authorized the MP3 release of only live versions of its songs, the type of material that would appeal to diehard fans but that isn't likely to dent sales of studio recordings. But while the label makes money only from selling records, it doesn't share in the millions of more dollars that the band makes from touring and merchandise sales -- and the Web has proven highly effective at promoting those operations.
From the Beastie Boys' standpoint, giving away a free single on the Internet will only help album sales. Mr. Diamond says big record companies should start paying more attention to the Net explosion, or they risk being ignored as their young fans gravitate increasingly online. "The record-buying public is more technologically advanced and more involved with the Web than the people at the record labels," he says. "Nobody is going to stop this. It's out there. The kids are using it."
Longer Than the Beatles
The Beastie Boys' emergence as standard-bearers of Internet music distribution comes as a surprise to those who still associate the band with their early brat-boy novelty-act days. But in the fickle music industry, the Beastie Boys have been recording together longer than the Beatles did. The New York Times declared "Hello Nasty," their most recent album, "a testament to good taste."
In fact, the Beastie Boys -- their performance garb of neon-orange body suits aside -- have never quite conformed to the party-animal image they project. Mr. Diamond grew up in New York City's affluent Upper West Side, the son of an art dealer, and attended St. Ann's, an exclusive private school in Brooklyn. His partners are Adam Yauch, known as MCA, and Adam Horovitz, or Ad-Rock, who is the son of playwright Israel Horovitz.
The band has proven adept at sniffing out and then contributing to big shifts in pop-music culture. Though Mr. Diamond and the other band members are white, their 1986 debut album, "Licensed to Ill," helped move rap music -- a mostly urban, African-American genre -- onto the CD players of middle-class suburban kids. In the early 1990s, the band helped pave the way for slacker culture, wearing and then marketing clothes of the floppy fashion favored by skateboarders.
Mr. Diamond, who uses a 1.9-pound Toshiba Libretto notebook computer, has been aggressively tapping into online fans for several years. In 1993, when other bands were going after fan Web sites that were posting copyrighted photographs and lyrics, the Beastie Boys tracked down Ian Rogers, an Indiana University computer-science Ph.D. student running a Beastie Boys site that the band liked. They put him in charge of their online efforts.
Mr. Rogers, who has accompanied the band on its past two tours, helped Mr. Diamond set up a Web-based merchandising operation, selling, among other things, Beastie Boys T-shirts with "please wake me up for meals" written in Japanese for $14.99 and Beastie Boys socks ("Keep the feet dry and stylin' ") for $9.99. Mr. Diamond says the band is "on track to bill over $1 million this year" in merchandise.
That was all fine with Capitol; in fact, the label had already given its tacit assent when the band started promoting its new music and videos on the Web site in early summer. But last August, during a tour stop in Salt Lake City, the Beastie Boys decided to start releasing songs on their Web site in the MP3 format. "We certainly didn't ask anyone for permission," says Mr. Diamond. He approved the songs for digital release while sitting in a cramped makeshift office backstage at Salt Lake City's E-Center auditorium. It was the first time a band of the Beastie Boys' stature had approved such releases. It also violated Capitol rules.
Unfortunate Timing
The band soon heard from its main contact at Capitol, Liz Heller, who feared that the band was setting a dangerous precedent. "We were this big band endorsing this thing the industry was trying to be united against," says Mr. Diamond. Indeed, the Beastie Boys' move came just as the industry was trying to enlist rock stars in a public-relations campaign to speak out against the dangers of digital piracy.
Ms. Heller, an executive vice president at Capitol, says, "We need to be progressive, we want to be part of it, but at the same time, we want to be protected." Last month, Ms. Heller demanded that the files come down. She concedes that Capitol isn't ready to accept digital downloading -- at least not until the company can safeguard against piracy. "This has gone a little ahead of schedule," she says.
In the interest of maintaining good relations with their label, the Beastie Boys complied. "It's tricky," says Mr. Diamond. "We are still in business with them."
But Mr. Diamond abruptly changed his mind during an interview last month. Asked why the band complied with the label's request, Mr. Diamond, in true rock-star fashion, interrupted the interview, made a quick phone call and demanded that the free files go back up on the Web site. The next day, they did. ("You can always count on them to push the envelope," Ms. Heller says now.)
Mr. Diamond says the industry's view is shortsighted and "almost purposefully ignorant" -- not least because downloading goes on with or without a label's endorsement. "It boggles my mind that labels are freaked and afraid instead of really getting involved with what's going on as opposed to co-opting and becoming the source of it."
As an example of the ways they can do that, he points out that when fans download Beastie Boys MP3 files from the Web site, they are asked to submit their e-mail addresses, which are a valuable marketing tool. The band has thus collected more than 100,000 names.
Even before the MP3 impasse, Capitol had misgivings about promoting the launch of "Hello Nasty" on the Web. For one thing, Capitol had an arrangement with MTV, giving the music-video network exclusive rights to the Beastie Boys' new video, in exchange for a guarantee by MTV to "spin" the video a certain number of times. The band, however, wanted to use its Web site to tip off its fans to the new video as soon as it was finished.
"The label was very sensitive to p---ing off MTV," says Mr. Rogers, who recently left his job with the band. "We were tiptoeing around that." They did that by posting a short clip from the video on the Web site, but called it a "preview of an unfinished video." MTV was fine with the move.
Capitol was equally sensitive about violating an agreement to "break" new singles on radio stations, which conflicted with the band's desire to give fans a taste of its first new release in three years. Mr. Rogers danced around the issue by posting 15-second snippets of "Intergalactic," the first single off "Hello Nasty." Every few days, he added another 15 seconds of the song. Tens of thousands of people a week downloaded the clip. In June, when the single "dropped" to radio, the complete version was posted on the Web.
Sharing Information
The Capitol staff gradually relaxed as the video and audio promotions went off smoothly. Capitol's conservative distribution executives began sharing information with Mr. Rogers, who has Chinese characters tattooed on his fingers. Among other things, Capitol provided Mr. Rogers with a list of every record store in the nation that had agreed to stay open until midnight on July 13 to sell the disk just as it was delivered.
In the end, "Hello Nasty" racked up first-week sales of 700,000, among the best in recent years. Sales of the album, named for the phone greeting at the band's publicity firm, Nasty Little Man, have since risen to three million, making it one of the top sellers of the year.
Capitol's Ms. Heller concedes that the Web-based promotions helped, but she reserves most of the credit for the label's traditional sales efforts.
More recently, her fears about the Beastie Boys setting a precedent were realized. Just before the Thanksgiving holiday, she learned that a 16-year-old boy who runs the Web site for Capitol's ska band "Less Than Jake" had posted for free download not just individual songs, but all of the band's albums, including a new release. The band prevailed in having the boy pull the MP3 files from the site, but not before a brief delay. Ms. Heller explains: "He doesn't get home from school until 3 o' clock."
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