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Group listening rooms turn up volume on Web music

The recent surge in online group listening services is an indication that the future of the music lies somewhere in the cloud.
The recent surge in online group listening services is an indication that the future of the music lies somewhere in the cloud.
STORY HIGHLIGHTS
  • Online services offer place for people to gather and take turns playing music
  • Sites pay blanket royalty fees to cover what they owe artists, labels, songwriters, etc.
  • SoundExchange has about $40 million in unclaimed funds for artists
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(WIRED) -- The club was dead. I'd almost forgotten I was there until someone started talking to me. But then the DJ played a new song and soon three people I knew were chatting amongst themselves, even though I'd never introduced any of them to each other.

This didn't happen in some dingy meatspace dance club -- it happened on Turntable.fm, in an online listening room created by urban omnivore service Foodspotting.

One of the people I ran into was a lawyer and blogger friend, the other a former colleague, and the third was Fiona Tang, the head of outreach for Foodspotting.

The music floated from Janet Jackson (my choice) to a Toro Y Moi remix, and the conversation included lamentations on how none of us were actually getting any work done.

"I think every time we've used it, we've ran into people we know," Tang said later in an e-mail to Wired.com. "It's gone viral within the startup community and appealed to so many people. Our team used to just play music on our laptops, taking turns to DJ manually, going around the office one by one, but now we love that it's automated via Turntable.fm. It's a good way to re-energize the team during the afternoon lull."

The recent surge in online group listening services is just the latest indication that the future of the music industry lies somewhere in the cloud.

In their still-nascent forms, they all offer roughly the same service -- a place for people to gather online and take turns playing music for each other -- but like underground dance clubs in the real world, each offers a variation on the theme, transforming the act of music discovery into a uniquely social experience.

Turntable.fm turns your browser into a virtual dance club where users swap turns at the DJ tables and rate songs "awesome" or "lame" (Rolling.fm is almost identical). Listening Room offers a simpler UI with just a column for users to play tracks along with a chat window (MuMu Player and Outloud.fm are set up similarly to Listening Room).

"I think it's an idea whose time has come," Listening Room founder Abe Fettig said in an interview with Wired.com. "I think if the concept is good then we'll need multiple successful mutations.... It's a matter of taste."

So far, Turntable.fm seems to be attracting the most attention. But even that service, which showed up in June, is still in its very early stages. When contacted, Turntable.fm founder Billy Chasen said in an e-mail that he didn't want to be interviewed until the service opened up its private beta, which he claimed would only be possible once he thought the site could handle the influx of new traffic.

Still, the service is already so popular that Kanye West and Lady Gaga have reportedly chipped in for Turntable.fm's recent $7.5 million financing round.

We thought it’d be cool if there was a service that made real-time sharing of music easy and fun."
--Outloud.fm co-founder Steven Huynh

The concept of listening to music with friends online is so simple it's amazing these services didn't pop up sooner. In some ways, these small services automate what has been happening in back channels among music heads for years (e-mailing links to tracks, swapping mix CDs, etc.).

Yet they do it with a savvy that's definitely part of the post-Napster era. (That said, the creators of some of the group listening sites note that one of the main reasons such services didn't exist previously was simply because the technology and bandwidth didn't exist to support them.)

Outloud.fm, for example, grew out of a "for fun" project by co-creator Mike O'Brien to build an MP3 server.

"Mike and I worked together at Meetup, where we spent large parts of the day sharing links to YouTube music videos and we thought it'd be cool if there was a service that made the real-time sharing of music easy and fun," Outloud.fm co-founder Steven Huynh said in an e-mail to Wired.com. (A recently added feature lets Google+ users throw YouTube-fueled listening parties.)

Whether they have the 2-D disco vibe of Turntable.fm, the That '70s Show basement feel of Listening Room or the "is-this-Slacker?" feel of Outloud.fm, they all offer ostensibly the same experience -- log on, upload music, listen, chat.

Since all the services allow users to upload almost any track they want from their hard drives (or in the cases of Turntable.fm and Outloud.fm, tracks from MediaNet and SoundCloud, respectively) there's a seemingly endless amount of music that can show up in any given room.

Users can jockey to one-up each other by playing one hot track after another -- something for which Turntable.fm awards points. With the right group of people, the sites can prove addictive.

"We've been using [Turntable.fm] at the office a whole lot," Chris, a 22-year-old web production artist from the Chicago area who asked that his last name be withheld, said in an e-mail to Wired.com. "The company I work for has offices in several different cities throughout the U.S., so it's been great to connect with co-workers and hear their different tastes in music."

With that much music floating around in online listening rooms, there's a lot of potential royalties that artists and record companies could come looking for, which begs the inevitable question: "Are these things legal?"

In a word, yes. Or at least they can be legal if they follow the right protocol. Generally speaking, group-listening services in the United States could be seen as webcasters, operating under the same terms as large streaming service like Pandora. Webcasters are, for legal purposes, more like radio stations because they don't play songs on demand like on YouTube.

Being in that category means they can pay blanket royalty fees to cover what they owe artists, labels, songwriters and publishers, but they then have to keep track of what music is played on their sites and how often.

Revenues and royalties

As webcasters, group-listening services can obtain statutory licensing for their music through SoundExchange, a nonprofit organization entrusted by the Copyright Royalty Board to collect and distribute royalties to artists and record companies.

WIRED: Listening Room offers mellow alternative to Turntable.fm

To stay aboveboard, the sites must submit a monthly statement to SoundExchange logging the songs played. SoundExchange will then collect a fee from the site -- Listening Room, for example, pays 10 percent to 12 percent of its revenues -- and distribute those fees to rights-holders.

To pay songwriters and publishers, the sites have to make similar deals individually with performing rights organizations BMI, ASCAP, EMI Music Publishing and SESAC, which together represent most of the songwriters and publishers in the United States.

It's unclear if all the sites have made all the necessary arrangements, but most are at least on the right track. Listening Room and Turntable.fm are paying SoundExchange and the performing rights organizations for their usage (or are currently working out deals to do so), and Huynh said Outloud.fm has "been in touch with a number of legal professionals" and is working out the legalities.

Reps for BMI and ASCAP confirmed that Listening Room and Turntable.fm have rights agreements in place.

Reps for SESAC and EMI said they couldn't comment on what sites have agreements with the rights organizations. (MuMu is based in Denmark and thus beholden to that country's laws.)

Our experience has been that the vast majority of people want to comply with the law."
--SoundExchange director Laura Anderson

The sites' operators seem to want to play by the rules; even if they're not currently in full compliance, it's hard to blame them for not knowing all the intricacies of copyright law.

"Our experience has been that the vast majority of people want to comply with the law. If you bring their attention to it they'll say, 'Oh, I never really read that part of the Copyright Act,'" said Laura Anderson, communications director for Washington, D.C.-based SoundExchange, in an interview with Wired.com. "[It's not a] big surprise. Most people don't."

Not only do some people not know they need to be paying SoundExchange, many don't know they're owed money by SoundExchange. The organization currently has about $40 million in unclaimed funds for tens of thousands of artists who don't know, or don't believe, the service has been collecting cash for them.

It's loot SoundExchange can't keep as a nonprofit, but in many cases the organization has a hard time determining who to pay.

"You would not believe the amount of money we have sitting here waiting for a group called Various Artists for their hit single 'Track 1,'" Anderson said with a rueful laugh.

In the long run, record companies and rights holders should want to play along with this new category of online music service. Not only do some of the sites offer baked-in opportunities to sell tracks, or plans to develop such functionality, the sites also have the ability to generate new interest in back-catalog songs (and bring retrophiles into the modern era) as users turn each other on to their favorite jams.

WIRED: Can Turntable.fm survive its popularity?

Turntable.fm, for example, posts links on each currently playing song to purchase it on iTunes or Amazon.com -- a feature San Francisco computer programmer John Markos O'Neill said he used Monday to pick up new tracks from Ellie Goulding and Crystal Castles.

"It's an unintrusive way to discover new music during the day while doing other things," O'Neill said in an e-mail to Wired.com. "I came of age in the '80s, so my own collection tends towards rock from the '80s and '90s, whereas many of my colleagues like newer electronic dance music. I enjoy their DJ picks, but they're pretty much all new to me."

So where does that leave all those bobbing heads on Turntable.fm dance floors and spinning records in Listening Rooms? Fine for now.

If the services work out the right deals they shouldn't get shut down; if they hammer out successful business models, they will be able to pay for their streams (nearly all of the sites report that they're working on ways to monetize what they do).

If the sites remain popular -- especially at I-heard-Diplo-played-here-last-night levels of popular -- they should be able to find some way to make money... if they can keep from growing so fast that they set the roof on fire.

"It's mainly me developing MuMu," the site's owner Esben Milan said in an e-mail to Wired.com. "I have some sweet friends helping me and MuMu is also looking for an investor so we can get more coders, speed up development and handle more users. It's a fast game."

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Copyright 2011 Wired.com.

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