8tracks, the “legal Muxtape” that allows users to build playlists consisting of eight tracks and share them with friends, has launched a number of new improvements designed to flesh out the site beyond basic music playback. Users will now be able to use a Twitter-like “Follow” system to receive alerts when their favorite DJs post a new mix, and will also be able to see all comments across all of their playlists aggregated to a single page.
8tracks is very similar to Muxtape, a popular site with a very basic interface that let users swap playlists with each other. After skyrocketing to popularity earlier this year, Muxtape was shut down in August because of legal issues with the RIAA (in September it announced its return, but much of the site’s functionality has been altered).
8tracks keeps on the right side of the law by making use of a DMCA loophole that allows it to operate as a small online radio station, which have lower licensing fees for the music they stream. Each playlist mimics a miniature radio station: while users are free to share their playlists with friends, the site doesn’t actually show what songs are in the playlist – you have to listen to find out. 8tracks CEO David Porter says that this isn’t really a loophole, but does acknowledge that the cheaper licensing fees are what has kept the site in operation. He also notes that if the site continues to expand it may face falling into another bracket with much higher licensing fees.
To counter these fees, Porter says that 8Tracks will try to forge agreements with indie label aggregators like The Orchard and IODA which are more willing to offer a discount in exchange for the exposure the site will provide. He (and many other music sites) also harbors hope that royalty fees may be relaxed in the future (negotiations are currently in the works).
Also check out Favtape, a Muxtape on steroids that is powered by Seeqpod.
Hmm.. it’s smart of 8tracks to be leveraging on DMCA (Digital Millenium Copyright Act). They can can stream any music they want as long as they pay a royalty
What about Grooveshark’s playlist launch yesterday?
http://tinycomb...able-playlists/
Jason, just looking at the Grooveshark embed, their problem is going to be that they’re offering on-demand streaming which is a headache in terms of licensing. If they don’t license the content though, they can be shut down whenever the RIAA wants them to.
That’s the advantage of 8tracks which is very careful to stay legal http://8tracks.com/legal
Everyone seems to forget that even though 8tracks is covered under the DMCA radio rates, these are the same rates that are threatening to put everyone else (e.g. Pandora) out of business. I applaud that they are a legal alternative, but it still doesn’t mean it has a viable business model.
Hi Me,
This is a good point. The “large webcaster” rate for radio-style streaming of a sound recording (which covers Pandora, Last.fm, Live365, Finetune, AOL, Yahoo and eventually 8tracks, among others) is onerous, nearly double the already-expensive rate of $0.00762 from a couple of years ago, and is slated to increase even further next year.
Given an average track length of 4 min, the current rate of $0.0014 translates to 2.1 cents per hour, thus requiring a $21 CPM from some combination of text, display, audio and video ads during the course of that hour just to cover the sound recording royalty. However, this doesn’t even consider royalties paid for musical composition, bandwidth, overhead and, well, profit.
What’s really needed is some reasonable %-of-revenue rate (subject to a minimum, perhaps on an annual basis); this is common to all other forms of radio (i.e. satellite, cable and terrestrial outside of the US) and the other basic type of royalties paid for radio (musical composition).
In contrast, however, the sound recording royalty rates paid for on-demand services like Rhapsody, Napster, imeem, Lala, Myspace Music and Last.fm’s new service are rumored to be between $0.0050 and $0.0100 – that is, some 3.5X to 7X what Pandora and other webcasters currently have to pay.
I think that promotional, radio-style services will be viable (and beneficial for all parties) under a primarily ad-based model if there’s a change in the basic rate structure to a %-of-revenue calculation, even if not cheap on that basis by historical standards or comps. I’m skeptical that substitutional, on-demand services have much hope of profitability under a primarily ad-based model.
David Porter
Heh. I predict that 8tracks will be sued both by the RIAA for vicarious/contributory copyright infringement and by Fedora Project for trademark infringement.
I predict another law suit by red hat