Despite their legal blitzkrieg to stop online song-swapping, many music labels are benefiting from — and paying for — intelligence on the latest trends in Internet trading.

It's a rich digital trove these recording executives are mining. By following the buzz online, they can determine where geographically to market specific artists for maximum profitability.

"The record industry has always been more about vibe and hype," said Jeremy Welt, head of new media for Maverick Records in Los Angeles. "For the first time, we're making decisions based on what consumers are doing and saying as opposed to just looking at radio charts."

One company, Beverly Hills-based BigChampagne, began mining such data from popular peer-to-peer networks in 2000 and has built a thriving business selling it to recording labels.

The company — which takes its name from the Peter Tosh song lyric, "You drink your big champagne and laugh" — taps directly into file-sharing networks like Kazaa's FastTrack. It checks on how often its clients' artists show up in searches or how frequently their songs are downloaded. The data can be sorted by market or geographical region.

BigChampagne also has a "TopSwaps" chart that ranks the most shared songs. Rapper Eminem (news - web sites) was first in a recent scan, his songs downloaded more than 8.6 million times in one day.

"Our hope was that we could take the technology revolution that Napster (news - web sites) made popular and create tools for the benefit of copyright holders," said Eric Garland, BigChampagne's chief executive.

The bountiful market research is gleaned from behavior for which the music industry otherwise shows no tolerance. Hurt by a three-year decline in music sales, the industry has sued the major file-sharing networks, along with individuals who have used them.

"It wouldn't be very smart if we weren't looking at what they're doing," Welt said.

The file-sharing companies are also taking notice. This week, Altnet threatened legal action against nine companies, including BigChampagne, that it accused of violating patents on file-identifying technology. BigChampagne denies using the Altnet technology or playing any role in helping recording companies identify users for lawsuits.

BigChampagne has certainly done well by file-swapping. It formed in July 2000, just as the Internet boom was beginning to bust, and now counts Maverick, DreamWorks, Warner Bros., Disney and Atlantic Records among its clients. All the major labels have worked with BigChampagne "in one capacity or another," Garland said.

Traditionally, labels had relied for market research largely on commercial radio, MTV and music store sales.

Label executives waited weeks to get feedback based on limited audience sampling — typically by randomly calling listeners and asking if they recognized a song after hearing a snippet.

Only after several weeks would they begin to get a picture of whether a single was getting heard. And until Soundscan began electronically tracking album sales in the 1990s, the industry relied only on a survey of music retailers to gauge fan interest.

The emergence of free online trading, beginning in the late 1990s with MP3.com and the original Napster, suddenly made it technologically feasible to track music consumption in a whole new way.

"It's the most vast and scaleable sample audience that the world has ever seen," Garland said.

BigChampagne data are essentially a tally of what millions of music fans are doing every hour.

Peer-to-peer systems function by sending search queries and file transfers across a network of several computer users. Every time someone searches Kazaa for a song, that query is passed along the network. BigChampagne taps in as if it were a regular user and compiles the traffic flows in a database it later sorts.

"What we do in effect is act like a superuser who demands access to the network in its entirety," Garland said.

BigChampagne doesn't identify individuals or gather usernames, Garland said. But by analyzing users' numeric Internet addresses, BigChampagne can still pinpoint location and give clients a sense of where an artist is most popular.

By using BigChampagne, labels can release a song to radio and, if there are signs demand is brewing on the song-swapping networks, immediately make the single available on online retailers like Apple's iTunes Music Store, Welt said.

The music industry's appetite for data is only growing as online sales begin to replace CDs.

Earlier this year, BigChampagne granted a sales and licensing agreement to Premier Radio Networks, whose Mediabase service tracks radio airplay. The deal fuses Mediabase's tracking data with BigChampagne's, giving subscribers a way to see whether airplay or radio promotions spur online music downloads or sales, Garland said.

Sales data from iTunes and other licensed music services can, of course, be in and of themselves excellent indicators of a song's popularity.

"When someone plops down 99 cents to buy a single, that shows a higher level of interest than just getting it for free," Welt said.

Article courtesy of ALEX VEIGA, AP Business Writer

In short, sue us, but still profit from our illegal activity, what a crock of shit...

nothing i didnt know..=) sheep i tell you

and you're surprised?

Hypocrisy is the RIAA's middle name.

Besides, and this has been mentioned by others before me on this site, The RIAA doesn't care what tactics it uses, or whether they're legal or not. In its own mind, the RIAA and the big 5 are the only entities allowed to share files, whether that sharing is infringing or not, and only the RIAA is allowed to bully others and make their own rules. Everyone else is just dog food.

Hey RIAA... eat my crusty shorts!
~zippy.

riaa, radio play, blah blah blah. It's all crap anyway. Who cares?

I'm a MetalHead. A true MetalHead loves guitar solos. Nu-Metal (the riaa's interpretation of Heavy Metal) has no guitar solos (most of it). That is being played on the radio. Other radio stations are playing Heavy Metal from the 80's. WHY wasn't 80's Metal played IN THE 80's? They just want to control our music lives. Indie groups still play guitar solos, they are much more talented, and their songs have staying power. Like Operatic Metal? Try Nightwish (Century Media). BTW, Century Media's web site is awesome. Check out what the employees have to say about the riaa's crap. They also tell you what they are listening to. It's a great place to begin if you want to get band names who are independent. Ooops, starting to rant again....sorry.

I'm not surprised, we all for the most part knew that they where and are spying on our activities. hehe, more RIAA spy bots to keep off of the Gramps networks, heh

"For the first time, we're making decisions based on what consumers are doing and saying..."

Lawsuit targeting decisions?
Pricing decisions?
What color shoes to wear?

"BigChampagne also has a "TopSwaps" chart that ranks the most shared songs. Rapper Eminem (news - web sites) was first in a recent scan, his songs downloaded more than 8.6 million times in one day."

I smell bullshit! That's more people that has ever been on any one network!

I doubt even if all the p2ps were added together that 90% of the people wanted to download his crap.

Must be some idiots somewhere downloading the same stuff over and over just to skew the curve!

Well, you know how they like to inflate their numbers.. remember the (equivalent to) 400 or so CD burners they seized??

Isn't this Welt cat the same jagoff that was at the open mic night on TechTV? The one that Bill went to? If so, then I just have to say that he's STILL not impressive. He's doing the same thing in the interviews for this article that he did live.. acting stupid and saying stupid things. He couldn't (or wouldn't ) answer a LOT of questions when it came to file sharing and what was being done about it, and I"m sure this (re the post) was something that was going on even then. So... that DOES explain his lack of gonads at the show, and it also proves that the riaa, no matter how they appear, are NOT EVER going to be on the side of the consumer.
ttmmm

Yep Remye, Jeremy Welt, the weasel.
You nailed it..the most obnoxious person on Music Wars...toeing the party line.

Right on target!

The other day while we were at Wal-Mart there was not one person in the Music section when it use to be full of people! ROFLMAO I spoke also to friends and told them not to buy CD's for their kids at Christmas! So they aren't going to do that Keep boycotting we're gonna bring those suckers down! We know the truth, they really know the truth too that people aren't buying their crap! I have to let you all know that when Eminem came out with that stupid song My Name Is it truely made me sick, litterally I would hear it in my kids bedroom playing and go throw up! I'd have to turn their TV off from MTV! If I'd hear it while I was out I would leave the inside of the establishment till it was over! That kid ain't got any talent at all! I still can't listen to his crap!

"For the first time, we're making decisions based on what consumers are doing and saying as opposed to just looking at radio charts." -Jeremy Welt..

No you're not Jeremy, if you were,
you, Cary Sue,Mitch B., and Hack Valenti would be committing ritual Seppuku right now!