Dubious Record Label Insists It Has A ‘Patent-Pending’ Method To Guarantee A Platinum Selling Album

Do you remember Zer01? Two years ago, there was all sorts of buzz around this “mobile VoIP” company that was mostly deflated after a few articles dug into the company, its product and its plan, and questioned whether there was anything real there, or if it was an elaborate multi-level marketing scam designed to part people from their money without delivering any product. The company’s one big accolade, a “Best of Show” award from Laptop Magazine, was rescinded after the details and questions came out suggesting that Zer01 was a pure vaporware company that may have been cashing in on getting multi-level marketers to pay upfront for a product that was never going to be delivered. Despite “true believers” stopping by our comments on some of those posts to insist that Zer01 was real and was going to make them rich, in the end it went nowhere, with the website disappearing and Zer01 losing a $43 million lawsuit to its “multi-level marketing” partner, Global Verge. Of course, it didn’t help that Zer01’s lawyers dropped the company after Zer01’s boastful CEO Ben Piilani, who blamed everyone else for the company’s troubles, “stopped replying to contact” from his lawyers.

So, it was with interest that I learned (from our own Derek Kerton, who helped expose Zer01 along with reporter Nancy Gohring) that Piilani is apparently back in business, with a new company in a totally different space claiming to have created a patent-pending method to guarantee a new album goes platinum. The label, with the horrible name, 5iveSe7en Records (he just loves mixing words and numbers, apparently) makes some pretty out there claims, just like with Zer01:

We have devised a patent pending method and process that will allow us to guarantee platinum recording status to every artist we sign, all while leveraging the power of the Internet and subsequently revitalizing the music industry back into something worth-while, meaningful, and exciting to both the artist and the consumers alike.

5iveSe7en Records will extrapolate the full power of our patent pending methods by leverage the power of the Internet by using readily available proven tools such as social based member networks in the music niche, along with social gaming and digital content distribution to create value amongst music enthusiast and artist alike.

5iveSe7en discovers and gives commercial viability to thousands of underground artists who these days populate the playlists of music enthusiasts. Many start-ups have tried but failed to address this market. That’s where we come in.

5iveSe7en will turn the record industry on its head. Each month we launch a new artist/group that will go “Platinum” out of the gate. Our method has been vetted by the RIAA. Think of us as “American Idol” meets “Facebook.”

Of course, if you look at the company’s website (I won’t link to it from here, as it doesn’t deserve the link bump), it looks like the site hasn’t been updated since the beginning of 2010, which seems like a long time for a company supposedly releasing a new platinum recording every month (vetted by the RIAA!). Also… none of the links on the website appear to work. I tried clicking on the details of its business model, its list of albums and current releases… and it all took me right back to the front page.

The original link to a company “profile” has some more details. It kicks off with a fantasy-land version of what’s happening in the music industry (apparently, since people are downloading music, less music is being made, and now the charts are dominated by crap). Then it explains that they’ll magically build a “million-plus audience” of people who will pay in advance to receive 12 digital albums per year — which the RIAA insists will count towards platinum status. Of course, the plan is basically that a bunch of bands supposedly pay the label to be one of 300 bands that might get included that month, and then people vote (the “American Idol” part) as to which band wins. The “winner” gets a “recording contract,” the release through this system which goes to the subscribers, and a promise of a big fancy launch party. The company already claims to have partnered with Sony Music, Universal Music and EMI (poor Warner Music, left in the cold, I guess).

Of course, all of this requires those million-plus subscribers. Each of whom have to be willing to pay $9.99 per year for 12 albums which they might not even like.

Have no fear, Piilani has figured that out too:

We understand that getting anyone to purchase something not only is a barrier to entry for the consumer, but also affects our dynamic growth potential. In example, FaceBook and Twitter have no problems gaining consumer traction because they give away the memberships. If they charged fifty cents they would not have experienced the growth that they have had, let alone $9.99 like we are attempting to do. So in order to address this we have decided to seek investors to purchase our first 1 million subscribers so that we can give the memberships away. In addition by having our first million subscribers acquired by our investors, we will be able to guarantee Platinum Recording status from the very start. This will also give us a large enough membership base that will appeal to future sponsors and advertisers. We continue this business model by finding corporate sponsors to continue to purchase subscribers from us that they can give away during their own promotions along with the fact that they will gain brand concentration with our membership base and advertising. Eventually we will have enough critical mass that consumers will pay the $9.99 to participate.

Yes, you read that correctly. The plan is that investors will pay for the subscriptions, followed by advertisers, rather than users.

I have to admit that the idea is just ridiculous enough to be brilliant. Of course, the devil’s in the details, and some of the details look pretty questionable for any artists. Obviously, they’re not making much in royalties from that “platinum selling” record, since each album is technically being “sold” for less than $1. Of course, in exchange for widespread publicity, that’s probably worth it. However, the published business plan also suggests that any artists that sign up with the company are also handing over lifetime management rights:

We own the management contract for the artist, so after we create a Platinum Recording Artist we can solicit them to be acquired by larger labels and we will receive 15% of all the artist’s future income.

What artists agree to let the record label that signs them also manage them? That seems like a major conflict of interest. Also, they downplay the fact that artists have to pay to “enter” for the chance to be “signed” to this label. In fact, the details there aren’t mentioned at all, other than in the middle of a long list of “revenue streams” for the company. How many bands are willing to pay for a 1 in 300 chance to maybe get sent to a bunch of people?

The plan also highlights the “qualified management team led by our CEO, Ben Piilani,” whose bio mentions that a technology he worked on “won Best of Show at CTIA in 2009.” Curious that he doesn’t name Zer01 as the company… and appears to totally omit the fact that the “Best of Show” award was rescinded a few months later by Laptop Magazine who clearly regretted the award and stated: “At this time we can only urge extreme caution to those interested in using or selling Zer01’s service.”

I think we’d argue the same thing for anyone looking to invest in 5iveSe7en Records.

Source: Techdirt