Andrew McCracken is paying a price for being honest. Two years in the business of supplying music to entertainment outlets such as pubs, using sophisticated technology, he's under pressure from cowboys who ignore copyright to supply similar services at a much lower cost.
Software, either hacked or down-loaded from the Internet as freeware — as is a lot of music — is part of a story which shows just how clearly piracy can affect legitimate business.
The pubs themselves are far from squeaky clean. Most will go the cheap route, McCracken says, and to hell with the potential consequences. With as much as $100,000 invested in sound systems, some have bought their own CD writers and music. At least one pub franchise has been prosecuted for providing pirated music to 43 pubs in New Zealand and Australia. McCracken says there are two other well-known franchises doing the same out of Auckland.
One has a qualified lawyer among its management, who has said, according to McCracken, "I don't care till we get caught."
A one-time announcer at Tauranga's Coastline FM radio station, McCracken became interested in production and began investigating the copyright implications a few years back. There are two copyright bodies — RIANZ and AMCOS — who license the reproduction of music for total fees of around 25% of any revenue earned, less GST.
"My idea was to put music together for pubs, restaurants and DJs," McCracken says. "Often they couldn't get the music they wanted — particularly local content — and they were prepared to pay twice the normal price."
He formed a company in Wellington with two partners, Cloud Productions, which began making up CDs to order, and leasing them.
Sounds simple, but it is in fact a complex business to run. For a start, Cloud Productions has to keep, for copyright purposes, five times the information a radio station does. It has written its own software — there is no commercial software available — to match things such as reports of track listings against the number of times a track is played and the amount of money it generates.
"However, there are pirate providers supplying some of these businesses, too. RIANZ and AMCOS admit we are being penalised for doing it right but they don't seem to have the money to pursue the pirates.
"We ran into problems after being in business six months because people were buying PCs and CD writers and setting up illegally. They don't pay copyright, and a lot of their software is lifted off the Internet."
More recently, Cloud Productions has spent over $80,000 developing a juke box that is essentially a touch screen with a detachable hard drive. It is waterproof, can be moulded into any bar or wall, and has the capacity to hold over 10,000 songs. It can be run by a DJ, remotely or coin-operated.
"We sell the machine but only lease the music," McCracken says.
"That's why the hard drive is detachable."
There is a modem in the juke box which links to a modem on Cloud Productions' network so new music and advertisements can be downloaded. It is, in a sense, a radio station in a box.
Cloud Productions has 40Gb of compressed music stored using MPEG layer 3 for quality.