A few legislative notes:

Yesterday (the very day the CMA Awards were hosted in Nashville) Tennessee Gov. Phil Bredesen signed into law SB 3794, a bill that requires all public and private universities and colleges in the state to take proper steps to assure that their networks are not being used to illegally trade copyrighted material. It also requires each school to develop and enforce a policy for computer usage, network usage and ethics.

The House IP subcommittee was abolished and will be bumped up to a full Judiciary committee.

Posted by Glenn at 5:42 PM | Link
|Legal|

There are a couple of key items in the mistrial of Capital Records vs. Jammie Thomas. Both are explained by the EFF (which also has a PDF of the 44-page decision). First, the judge ruled against the industry's "making available" claim. (In May the judge admitted he made an error when he instructed the jury that "making available" a music file constitutes illegal distribution.)

The Court’s examination of the use of the term “distribution” in other provisions of the Copyright Act, as well as the evolution of liability for offers to sell in the analogous Patent Act, lead to the conclusion that the plain meaning of the term “distribution” does not including making available and, instead, requires actual dissemination.

In addition, the judge suggested that Congress consider changes to copyright law.

While the Copyright Act was intended to permit statutory damages that are larger than the simple cost of the infringed works in order to make infringing a far less attractive alternative than legitimately purchasing the songs, surely damages that are more than one hundred times the cost of the works would serve as a sufficient deterrent.

The Wall Street Journal's Law Blog has a good recap. And the blog of Ray Beckerman, lawyer for Jammie Thomas, is a good source for coverage and opinion.

The Star-Tribune talked to Thomas after the judge's decision was made public. "Anyone willing to do that pretty much tells you what kind of person they are," she said of the judge's recognition of his error. "He's being more than fair. He's reading the law the way it's supposed to be read."

In June, Threat Level blog talked to lawyers with the MPAA about their interpretation of "making available" and their argument that only indirect proof of distribution is required. "What we're saying, by having a copy of a copyrighted work in a shared folder, you are distributing it under the copyright law," explained one lawyer.

Neither the RIAA or MPAA has yet issued a statement on the mistrial.

Posted by Glenn at 11:14 AM | Link
|Legal|

Far better than my puny blurb about the file-sharing provisions in the Higher Education Act is William Patry's post on the subject. To whet your appetite:

This raises one of the features of Washington DC that rightly baffles those outside the Beltway: how is that a trade association gets an issue so wrong, but then still manages to get legislation passed that addresses a non-problem that the association deliberately concocted? The answer, supplied by Mr. Glickman, is: leadership.

MPAA’s initial efforts were defeated fortunately, and the history of the bill during late 2007 and early 2008 is recounted in a series of very informative posts by Anne Broache for Cnet here, here, and here. Congress, in the bill that just passed, instead of mandating filtering and bad boy lists, mandated various requirements for educators to undertake, all of which involve spouting MPAA and RIAA’s propaganda.

Posted by Glenn at 1:30 PM | Link
|Legal||P2P|

Wired's Threat Level has a good article on its interview with two lawyers from the MPAA. The blog was one of many that covered the MPAA's "making available" position in the Thomas P2P case. Said one lawyer, "It is a distribution by putting works in a shared folder. You can deem that copies are being made. That goes for the indirect proof. Having it in a shared folder is indirect proof of actual copying of another user."

The Progress and Freedom Foundation (see list of sponsors on its Wikipedia page) comes in on the side of the RIAA. You can read a post here.

Extra reading:

• Patry Copyright Blog on an amicus brief filed by the Progress and Freedom Foundation. "That’s one reason the RIAA should lose: it has no proof there was ever a distribution of a physical object, a copy. Forget policy arguments; that’s what the statute says. Everything else (including many of the amicus briefs) are irrelevant."
• "More on the Metaphysics of Making-Available" at the Silicon Valley Media Law blog.

Posted by Glenn at 4:13 PM | Link
|Legal||P2P|

Lawyers and copyright enthusiasts, here's a post for you.

IP lawyer Joshua Wattles has a guest post at the Patry Copyright Blog about compulsory licensing and its need for reform. He feels the Copyright Act needs more participation, not streamlining.

First, if you are going to throw in the towel on making an open, free market deal and use the government to impose one, then the government should be a continuing party in interest and not just a rental hall where the negotiation takes place. The DOJ should be in every compulsory license proceeding with the brief to protect the commercial fairness of the outcome. Second, the people should be openly invited too. Of course, it’s so crushingly boring the public would never come, so the FTC should be in every proceeding as well with the brief of representing the interests of end-use consumers.

Wattles goes on to explain why and how the DOJ and FTC should be part of the hearing process. The FTC, he writes, should be there to represent consumer groups who cannot be expected to organize for emerging markets. The presence of the DOJ, he argues, would help mitigate a process that is "by definition anti-competitive in origin," among other reasons.

More reading on collective licensing:

• A January 2008 article at Ars Technica that recaps a Consumer Electronics Show panel discussion on copyright reform.
• A March 2005 Billboard op-ed by Les Watkins from Music Reports, Inc. "A wiser move by the indie music publishers would be to lobby for the authorization of one or more agencies in addition to HFA to bring the benefits of competition to Section 115 royalty collection."
• A June 2005 post at the Legislating IP blog with a good discussion (and links to more blog discussion) on the statutory compulsory license for making and distributing phonorecords of non-dramatic musical works.
• The US Copyright Office's page for Mechanical and Digital Phonorecords Delivery Compulsory License.

Posted by Glenn at 2:33 PM | Link
|Legal|

Universal Music Group lost its lawsuit against an eBay vendor who sold promo CDs. I will link to a post by the EFF's Fred von Lohmann, one of the lawyers that represented the defendant. Here's an excerpt:

In an important victory for the first sale doctrine, a federal district court today ruled that selling "promo CDs" on eBay does not infringe copyright. The court threw out a lawsuit by Universal Music Group (UMG), which had argued that the "promotional use only" labels affixed to these CDs somehow conveyed eternal ownership on UMG, making it illegal to resell the CDs (or even throw them away). ...

In its ruling, the district court found that the initial recipients of "promo CDs" own them, notwithstanding "not for resale" labels. The court rejected the notion that these labels create a "license," concluding that the CDs are gifts. According to the opinion, "UMG gives the Promo CDs to music industry insiders, never to be returned. ... Nor does the licensing label require the recipient to provide UMG with any benefit to retain possession." (The court also found that federal postal laws relating to "unordered merchandise" establish that promo CDs are gifts to their recipients.)

Posted by Glenn at 2:38 PM | Link
|Legal||Universal Music Group|

The 360 deal is a bit late in showing up in Nashville, but lawyers, executives and managers are talking about it and anticipating its arrival. Here's an excerpt from a piece on 360 deals from Music Row magazine (the print version, so no hyperlink). The article is by W. Michael Milom from Milom Joyce Horsnell Crow, PLC. (Thanks to Music Row publisher David Ross for bringing a few copies to a recent 360 deal panel discussion at Vanderbilt's law school.) As Milom writes, the 360 deal has both potential and potential pitfalls.

As long as one doesn't get hung up on such subjective concepts as fairness and equity, new artists can find relative comfort in the new multiple rights or 360 deals if they are careful to avoid giving up substantial portions of hard earned touring, merchandise and brand licensing revenue for illusory promises of higher record royalties, greater tour support and greater security during the development period of their career. One of the great challenges in negotiating such deals from the artist's perspective is that the participation requested by the label in the artist non-traditional revenue streams are easily quantifiable (e.g., "Artist shall pay to Company 10% of Net Touring Revenue as herein defined.") However, the benefits offered by the label (e.g., "Company will provide promotional support for Artist's tours during the Term") in exchange for such participation are usually much more difficult to measure or enforce. ... Absent careful negotiation and drafting, a promised partnership between the label and artist in the artist's career can become a relationship in which the traditional elements of partnership such as operational transparency, equal access to information, equal participation in key decisions and similar elements are virtually non-existent.

Posted by Glenn at 12:45 PM | Link
|Legal|

This just hit the wires: A judge has thrown out an antitrust lawsuit filed by P2P client maker LimeWire against the four major music groups. From the AP:

"Lime Group had claimed the record labels sought to monopolize the online distribution of music and refused to license their works to the company in an effort to put it out of business.

The firm contended it sought to reach an agreement with the labels so that it could field a licensed music service, but the record labels refused to broker a deal, insisting it use a filtering system approved by the labels or reach an agreement with iMesh Inc., a rival file-sharing service that has been operating with the blessing of record labels since settling a copyright infringement case in 2004.

(Judge) Lynch concluded Lime Group didn't show any facts to suggest the record companies' actions were 'anything other than independent decision-making by each company to refrain from doing business' with Lime Wire. ...

Lynch also rejected claims by Lime Group that the record labels had engaged in unfair business practices, including hacking the firm's file-sharing network and claiming it promotes child pornography, on the grounds that the alleged actions were not anticompetitive."

Bonus reading: An article on LimeWire's October 2006 countersuit. "LimeWire’s complaint stated it was extremely difficult to negotiate with the music industry, which LimeWire felt took an uncooperative position. If LimeWire wanted to comply, it would have to conform to a standard similar to iMesh – which in LimeWire’s opinion is and was uncompetitive. Indeed, LimeWire’s counterclaim becomes hostile against iMesh, claiming it has an unusually close working relationship with the RIAA."

Posted by Glenn at 9:37 PM | Link
|Legal||P2P|

Rep. Howard Berman, the chairs the House Judiciary Subcommittee on Intellectual Property, the Courts, and the Internet, said last week he plans to introduce legislation that will grant artists and copyright holders a performance right in broadcast radio. He plans to grant special accommodations to small and religious stations so they will not be burdened by the new payments.

"I recognize that granting artists and sound recording copyright owners the right to be compensated for music played on the radio presents a change. But current law presents an inequity that is neither fair nor right. Artists deserve compensation for the use of their music and this gap in the law must be addressed. ...

“I am confident that we can do this in a way that is sensitive to the legitimate concerns and economic realities of broadcasters. My intention is to ensure that small and religious stations – and, indeed, all stations – will not be unduly burdened and that any new payment requirement will not be excessive. In fact, under the legislation that we are crafting, a large majority of all radio stations will receive special accommodations. This is the right thing to do."

While Internet radio stations pay the owners of the sound recording as well as the composers, terrestrial radio stations pay only the royalties related to the performance of the underlying composition. (Performing rights organizations like ASCAP, BMI and SESAC represent songwriters and collect royalties on behalf of their members.) This new sound recording royalty would be paid by terrestrial radio stations in addition to the royalties they currently pay. This would correct the "inequity" (to use Berman's term) that exists between the regulations placed on the two types of radio stations.

The reaction of the radio industry is predictably negative. ICBC Broadcast Holdings President/COO Charles Warfield predicted it "would be a shift of seismic proportions."

Other reading:

• A September 2007 interview with Rep. Berman at the San Fernando Valley Business Journal. "Anybody who is transmitting radio digitally has to pay but over-the-air terrestrial is the one platform that is exempt. They have what I think of as an unfair competitive advantage."
• A good recap of recent House Judiciary Committee hearings at Broadcast Law Blog. "Congressman Berman indicated that the royalty that he was seeking to impose would cover only broadcasters - and not be extended to commercial establishments like bars, restaurants and retail stores, which also currently pay a performance royalty to the composers of music."

Posted by Glenn at 1:20 PM | Link
|Legal||Radio|

• Related Companies will purchase the 11 North American Virgin Megastores from Virgin Entertainment Group. Not familiar with Related? The company develops, finances and owns real estate properties around the country. It developed the Time Warner Center in Manhattan as well as numerous residential properties in California, Florida and the Midwest. Related owns the Equinox chain of fitness clubs, is part of the investor group that took resort & hotel chain Kerzner International Limited private, and manages the high rise residential building at Astor Place in Manhattan. (Press release)

• Eighties pop band Dodo and the Dodos won its distribution rights case against Sony BMG in a Danish court. The ruling stops Sony BMG from selling the band's music downloads without the band's consent. The ruling's greater impact is yet to be determined. (The Copenhagen Post)

• The Russel Simmons-backed GlobalGrind, a hip hop-oriented start page, has received about $4 million in funding. (paidContent)

• News.com's article on artists' lawsuits against online music stores, such as the copyright infringement lawsuits filed by Eminem's publishing units. "Don't expect these lawsuits to go very far. To start, Apple is likely indemnified against such lawsuits, according to copyright attorney Jay Rosenthal. But Rosenthal speculates that the real target of the lawsuits isn't Apple or iTunes. What the musicians and writers really want is to challenge the claim by record labels that they have the right to negotiate Internet sales on their behalf." (News.com)

• Here's an article on the greening of the music industry. Much of it has come on the touring end. Said Neal Turley of Sustainable Waves, which builds eco-friendly concert equipment, "It's really amazing in the last three years where this has come. When we were trying to make this happen 10 years ago, it was a pretty tough sell. Five years ago, it was starting to turn the corner, and now it's just amazing." (McClatchy Newspapers)

• In Tony Sach's post about Matador Records' "Buy Now, Get Early" early bird offering, this line really stands out and explains why such a program can work for an indie and might fail for a major: "The New Pornographers' fan base is a lot smaller than, say, Rihanna's or Daughtry's, but it's also a lot deeper. New Pornos fans want those B-sides and other ephemera that the 'Buy Early Get Now' program is offering, and they're happy to pay to get them. Most major label acts, however, live and die by their latest single; their fan base is wide but shallow." (The Huffington Post)

• An analyst believes a judged block of the FTC's attempted block of a merger of Whole Foods and Wild Oats is a good sign for Sirius and XM and beyond. "While mergers are very fact-specific and the judge's opinion has not yet been made public, we suspect the Whole Foods decision will give XM-Sirius and Google-DoubleClick some new legal ammo to argue for defining their relevant markets broadly, which could reduce antitrust concerns about potential anti-competitive effects. At a minimum, it gives the reviewing agencies some food for thought." (Radio Ink)

• Dove Award-winning band Switchfoot has left Columbia Records and plans to put out future releases independently. (Breathcast)

Posted by Glenn at 9:23 AM | Link
|Brick-And-Mortor Retail||Legal||Publishing|

• Album sales rose 4% last week but were 10% lower than the same week last year. For the year, album sales are down 14%. Digital track sales rose 1% last week and were 42% higher than the same week last year. For the year, digital tracks are up 48%. Last week, digital albums comprised about 11% of all albums sold.

• For the first time since 1997, consumers spent less time with media in 2006 than they did in the prior year. Veronis Suhler Stevenson, a private equity firm that specializes in media and communications, found that media usage per person declined 0.5% to 3,530 hours "due to changing consumer behaviors and digital media efficiencies." Part of the drop is explained by a shift toward digital alternatives for news and entertainment (online clips are shorter than broadcast shows). In addition, consumers are migrating toward consumer-supported platforms (like video games and cable TV) and away from ad-supported platforms (like broadcast TV and newspapers). (Radio Ink)

• Yowza. The first leg of The Police tour grossed $107 million. That number does not include Bonnaroo or last weekend's V Fest. (Billboard.biz)

• 1720 Entertainment inked an exclusive physical and digital distribution agreement with Koch Entertainment. (Music Row)

• The EFF is backing an eBay seller who has been sued by Universal Music Group for selling promo CDs. UMG, as do all labels that send out promos, claims the CD is for promotional use only and remains the property of UMG. With CD sales plunging, I assume labels are more worried than ever that sales of promo CDs are cannibalizing sales of new CDs. The practice of selling promo CDs -- and promo cassettes back in the day -- is very common, though, and has been for years. Rare is the used bin without some kind of promo CD. (EFF, via Digital Music News)

• MyLifeBrand, a social networking site, has partnered with Delicious Vinyl to create artist-specific communities. (Press release)

• The RIAA spent $685,000 lobbying the federal government in the first half of 2007. That might sound like a lot of money -- probably part of the reason it was reported in the first place -- but the insurance lobby spent $893 million last year, according to OpenSecrets.org. Check out the dollars spent by the Internet and telecom industries in 2006. eBay went in for almost $2 million and Cingular spent $4.7 million. Time Warner spent nearly $3.8 million in 2006. (AP)

• David at Digital Audio Insider has a post on sending out promo CDs, shipping costs and the value of online alternatives. "I don't -- in any way -- want to disparage the influence of college radio or the DJs and music directors ... But I'm starting to wonder if a blurb and a link on a well-read mp3 blog is more valuable to small indie band than modest airplay on a small- or mid-size college station. Ideally, you'd want both, but these new postal rates make me slightly less inclined to send out 400 copies of our next album to college radio." (Digital Audio Insider)

• Thank you to all who have donated during Coolfer's August pledge drive. We might just make the goal of 100 donations by the end of the month. Here's more information on what difference levels of donations will get you.

Posted by Glenn at 10:34 PM | Link
|Legal||RIAA||Universal Music Group|

• The National Music Publishers' Association has joined a class action lawsuit against Google and its YouTube division. The suit, originally brought in May by English soccer's The Football Association Premier League Ltd, contends YouTube facilitates copyright infringement of music videos and live footage. (Wall Street Journal)

• It's the year of the widget boom: Pandora has launched a Facebook widget. Users can log in with an existing Pandora account and the widget will contain previous user information like favorite artists and radio stations. (Listening Post)

• Microsoft's DRM lives on: Nokia's S60 mobile operating system will use the PlayReady DRM that will allow users to share music, videos and games. PlayReady was unveiled in February. It requires users to register different devices under a domain, and PlayReady content can be played under each user's domain. (Billboard.biz)

• A profile on Anywhere.FM, an online music service that does the usual online music storage locker and music discovery stuff. It has 3,700 registered users in just five days and is part of the Y Combinator start-up incubator program. (John Cook's Venture Blog)

• A U.S. judge overturned a $1.75 billion ruling against Microsoft that dealt with the company's use of a disputed MP3 technology. Fraunhofer-Gesellschaft, the creator of the MP3 format and now owned by Lucent, had argued that Microsoft infringed on two of its patents. (The Age)

• Music attorney Chris Castle asks, Why does the EFF hate artists so much? "The issue is not whether society needs copyright to have a creative community, I would suggest that society needs copyright to protect the creative community from von Lohman of the EFF’s fellow travelers at the National Association of Broadcasters and the Consumer Electronics Association who would free ride on our backs." (Music Technology Policy)

• Commodore (remember that brand?) has released an digital media player. The Gravel C200 won't win any design awards, that's for sure. (Engadget)

Posted by Glenn at 8:23 AM | Link
|DRM||Legal||Music 2.0||Portable Music Players|

• According to Digital Music News, Universal Music Group is "actively discussing" DRM-free downloads with Apple. (Digital Music News)

• Music, book and video distributor Baker & Taylor has signed a long-term lease for a 500,000-foot warehouse in Indianapolis. (Inside Indiana Business)

• Sony BMG Nashville has sent a cease-and-desist letter to radio stations demanding that they stop playing the album cut of Tracy Lawrence's "Find Out Who Your Friends Are." The album version features vocals by BNA (and Sony BMG) artist Kenny Chesney and Tim McGraw while the single version has only Lawrence. Sony BMG's SVP of legal and business affairs claims the company did not grant singles rights to Lawrence's label. In response, one program director said, "I'm not a legal expert, but I don't think anybody can tell us what album cut we can or cannot play. It's available out there for public consumption, and if I choose to play cut nine off an album that I think is going to work for our radio station, I'm going to play it." (Billboard.biz)

• Some feel stripping DRM and improving audio quality is going to create a classic download boom. For as long as recorded sound has been in existence," said Mark Forlow, the vice president of EMI Classics US, "the people who buy classical music like to have the best sound." (Christian Science Monitor)

• A recap of a hearing before the House Committee on Science and Technology. University officials are divided on how to combat campus piracy -- social versus technological means -- while the committee's chairman believes technology "will be the first line of defense." Read the hearing's charter here. Click here for the webcast. (Ars Technica)

Posted by Glenn at 7:55 AM | Link
|Legal||Sony BMG|

• Reuters reports that Warner Music Group is "likely" to offer an increased bid to top the $4.73 billion bid for rival EMI submitted by private equity firm Terra Firma. Could be worth it if Coldplay plans to release an album any time soon. (Reuters)

• At the urging of a House Judiciary Subcommittee, SoundExchange has offered small webcasters break in royalties. (Billboard.biz)

• In a lawsuit similar to Cheap Trick's complaint against Sony BMG, FBT Productions and Em2M have sued Aftermath Records and Interscope Records over digital royalties. The plaintiffs allege they have been underpaid and should have received half of net receipts from ringtones and downloads. (Billboard.biz)

• Defend Distribution has teamed up with former Caroline Distribution GM Rick Williams, who will act as a consultant, to expand its label roster and increase its label services. Good thing Defend now goes through Ryko. (CMJ.com)

• A profile of Sonos founder John MacFarlane. He's a big believer in the subscription model. "As broadband connectivity becomes ubiquitous, MacFarlane sees an inexorable shift to the music dial-tone model -- which is more conducive to a raft of innovations, such as social networking and recommendation engines, that are currently unfolding." (Business 2.0)

• An IFPI investigation has resulted in a shut down of a voucher system for Russian download site allofmp3.com run by a London-based agent. (PC Pro UK)

• Here's a video of the unboxing of a Halo 3 edition of a Zune portable media player. The player's design isn't much, but it shows the kinds of cross-promotions that Microsoft can utilize to help its Zune player get marketshare. (Zune Insider)

Posted by Glenn at 12:04 PM | Link
|Distribution||EMI WMG Merger Talk||Legal||Webcasting||Zune|

• Warner Music has sued social networking site imeem for copyright infringement. According to the lawsuit, "Imeem itself directly engages in much of the infringing conduct by duplicating, adapting, distributing and performing plaintiff's works through Imeem's own servers." Indeed. Take a look at the top songs at imeem and count the number that have the proper license for on-demand streaming (somewhere around zero I would imagine). (Wall Street Journal)

• The UK Parliament Committee has called for an extension on copyrights on sound recordings from 70 years from the existing 50 years. (BBC News)

• The Los Angeles Times' Jon Healey was a good article on the sometimes perplexing variation of CD price points. A theme of the article echoes some of my recent arguments about differences in price elasticities, that "there are two price thresholds: one for fans and one for the merely curious." (Los Angeles Times)

• Motorola has inked a partnership with Napster to provide subscription services to the handset manufacturer. The Motorola ROKR and Z6m will be the first phones able to download and play tracks from the $14.95-per-month Napster To Go service. Motorola buyers will be offered the first month at no charge. (PC Pro)

• Great marketing: Blue Note will sponsor an air-conditioned jazz tent at this summer's Bonnaroo Music Festival. Blue Note artists such as Ravi Coltrane and Stefon Harris will perform. (AP)

Posted by Glenn at 11:22 AM | Link
|Legal||Marketing||Mobile Music||Music 2.0||Napster||Warner Music Group|

• Hip hop magazine The Source has filed for Chapter 11 bankruptcy. (SOHH)

• The NARM website has a link to NPD Group's PowerPoint presentation at the NARM conference a few days ago. "Digital has created new opportunities for discovery and commerce but it may have a dark side," says slide 30 of the presentation. One result is said to be "over stimulated consumers with less need to buy, or delayed buying." (Consumers and Music Discovery)

• Musician Peter Gabriel is one of the financial backers of ad-supported, DRM-free music service We7. Ads will be put right into the music files. The one song I downloaded had only a brief We7 ad at the beginning. (Digital Media Wire)

• "We are essentially a technophobic business," said Atlantic Records Group's Andy Karp at the Musexpo in Hollywood. Jokester Jason Flom of Capital Music Group put free in perspective. "The whole competing with free thing is tricky, it works well in the water business but it's hard everywhere else." (Digital Music News)

• There have been positive reviews, but when the newspaper with the nation's second-highest circulation talks about the Sansa Connect music player, it's worth taking note. Wrote Katherine Boehret for The Mossberg Solution column, "It forced me to look at my portable player as an evolving, untethered device that introduced me to lots of songs. When it wasn't connected to Wi-Fi, I was disappointed to not be downloading new songs. My iPod suddenly seemed old-fashioned." (Wall Street Journal)

• Sirius Satellite Radio cut its Q1 loss to $144 million from $458 million last year. Revenue grew 61% on revenue of $204 million. (Press release)

• An industry blog to add to your blogroll: TALENTfilter, one of those rare music-related blogs actually written by someone closely involved with the music industry.

Posted by Glenn at 10:16 AM | Link
|Legal||Online Stores/Services||Portable Music Players||Weblogs|

• More talk that Wal-Mart will cut its CD stock unless the release schedule picks up. That move would certainly compound labels' sales problems. (Digital Music News)

• A jury found that Yahoo!'s Launchcast is not liable to Sony BMG for copyright infringement. The heart of the lawsuit was whether or not Launchcast is an interactive service. An interactive service requires a negotiated licensing agreement. A non-interactive service can be covered by a compulsory license. (Billboard.biz)

• EMI's Sparrow signed a deal with Amy Grant that will include the singer's catalog. Sparrow gets all digital and mobile rights. Many of the albums to be reissued have not yet been made available in digital format. (Press release)

• After being dropped by Warner Music, The Crimea self-financed its sophomore album and will give it away for free as a digital download and hopes to make up the difference through touring, merchandise sales and licensing revenue. (The band is selling copies of the CD version.) I find it especially interesting that the publicists, marketers and radio promoters who will work the album have waived their fees in return for a share of future revenue. Secrets Of The Witching Hour will be released May 13th. (The Guardian)

• Hurt by lower orders by labels, CD manufacturer Cinram is looking to high-definition DVDs and video games. (The Times-Tribune)

• A profile on world music label Putumayo, whose growth is in contrast to the industry's slump. Maybe its sales strategy has something to do with it. Roughly 65% of the labels sales come from non-traditional retailers like Whole Foods and Bath & Body Works. (New York Post)

Posted by Glenn at 3:26 AM | Link
|Brick-And-Mortor Retail||EMI||Legal||Sony BMG|

• An Amazon.com acquisition of eMusic is not going to happen, sources told Digital Music News. Said one source on Amazon.com's digital strategy, "They are unsure of their plans, and very confused." (Digital Music News)

• The U.S. government will filed two complaints against China at the World Trade Organization that aim to stop piracy of copyrighted movies, music, games and books. The RIAA's Mitch Bainwol was quick with the quote: "This failure to abide by international standards and obligations is in no one's interest -- least of all China's, whose cultural and economic opportunities are completely stifled by the quagmire of piracy." (Billboard.biz)

• Now that EMI has pushed interoperability closer to a reality, it's time to think about digital kiosks. Some feel the segment's time already came and went. Some, like Mix & Burn (which has partnered with Trans World), are optimistic. The price of kiosks probably needs to come down, and interaction with portable devices is going to be more important than the ability to burn to CD. (Self Service)

• Cracker Barrel Old Country Store has formed a partnership with country musician Josh Turner. The chain will sponsor Turner's summer tour and will get an exclusive live CD that will be recorded on April 19th at the Ryman in Nashville. (Press release)

• It's that time of the year...time for Circuit City's "Best of Class" awards that honor vendors "who put customers first while demonstrating 'best in class' performance." Universal Music Group was one of the winners in the Merchandising Vendor category and was the only music company to take home an award. (Press release)

• A pricing expert talks about iTunes' pricing system. (Blogging Stocks)

Posted by Glenn at 8:34 AM | Link
|Digital Distribution||Legal||iTunes|

• An Enders Analysis report claims the recorded music market "could" stabilize by 2009. Lower CD sales are one reason why music publisher revenue is expected to have a cumulative annual growth rate of only 2.2% through 2012. (Enders Analysis)

• To celebrate his 80th birthday, EMI is offering 11 currently unavailable Rostropovich albums -- two of which have never been issued on CD -- at iTunes. (Playbill)

• The RIAA on its legal battle against P2P company Limewire: "They respond. We respond. They respond, etc. Then discovery. These things take a long time." (Digital Music News)

• The FCC approved Citadel's acquisition of 24 ABC radio stations. Commissioner Copps said the transaction is "narrowly" in the public interest. (Radio Ink)

• Jupiter analyst David Card on album sales: "The industry has to spread artist development risk more efficiently. That means that radio probably does have to pay, or share revenues. And artists have to get paid at the back end, not in advance. It's not just the labels who'll die if this continues." He's right, but as is always the case in a convoluted industry, it's easier said than done. (David Card's Jupiter Blog)

Posted by Glenn at 4:29 PM | Link
|Digital Distribution||Digital Music||EMI||Legal||P2P||Publishing|

• MySpace artist Tila Tequila removed her Hoooka widget after MySpace told her it violated her user agreement, which brought to the nation's attention the competition between third-party widgets at social networking sites. (New York Times)

• More Tequila: Her "modest" iTunes sales are a blow to her MySpace-based business model. (Digital Music News)

• Jersey City, New Jersey police made a drug bust at Block Royal Records yesterday. Twenty-three people were arrested and two pounds of cocaine and heroin were confiscated. (NJ.com)

• Douglas Lichtman, a lawyer on Viacom's legal team that has sued Google, has an opinion piece in today's Los Angeles Times. "Providers of a new technology will often be tempted to attract a customer base by allowing copyright infringement. ... To counteract this, the law must demand reasonable precautions both at the design and operational stages of a technology." (Los Angeles Times)

Posted by Glenn at 9:11 AM | Link
|Legal||MySpace||YouTube|

• Video site Bolt.com is nearing a settlement with Universal Music Group for "several million dollars." Additionally, Bolt.com will agree to pay UMG royalties in the future. The company is working on similar royalty agreements with other majors. (New York Times)

• SpiralFrog inked licensing deals with Click Record Productions and distributor Kudos Records Ltd. (International Business Times)

• More reaction to Jobs' open letter: SanDisk CEO Eli Harari calls for an end to proprietary formats. (Digital Music News)

• An article on some f.y.e. stores that have replaced former Tower locations. Different product mix, digital kiosk test and a partnership with Great American Country. (The Tennessean)

• How do you merge two companies and prevent a culture war? Capitol Music Group's sales staff will be comprised of the former Virgin Records staff. Capitol Records' sales staff was let go. (Billboard.biz)

• Plug Award winners include Band of Horses, Neko Case, Sufjan Stevens, J Dilla and Brooklyn Vegan. (Plug Awards)

Posted by Glenn at 7:58 AM | Link
|DRM||Legal||Online Stores/Services||Universal Music Group|

Today a U.S. District Court judge ruled the major labels' lawsuit against XM Satellite Radio can proceed (read AP article).

Background: Atlantic Recording, BMG Music, Capitol Records and other music companies sued XM for allowing songs to be recorded and store on portable XM receivers. The labels argue they have licensed their content only for broadcast, and that the creation of a digital copy makes XM a distributor as well as a broadcaster.

The judge on the the justification for the lawsuit:

"The record companies sufficiently allege that serving as a music distributor to XM + MP3 users gives XM added commercial benefit as a satellite radio broadcaster."

The judge on XM's claim it is protected by the Audio Home Recording Act of 1992, which allows individuals to record music played on broadcast radio:

""It is manifestly apparent that the use of a radio-cassette player to record songs played over free radio does not threaten the market for copyrighted works as does the use of a recorder which stores songs from private radio broadcasts on a subscription fee basis."

Additional reading:

• The EFF's analysis of the lawsuit
• Washington Post: "A Music Player Only the RIAA Can't Love." A look at the Inno, the device at the heart of the lawsuit.
• BusinessWeek.com: "Copyrights And Wrongs." I disagree with the main thrust of the article. This lawsuit isn't "part of the futile effort by entertainment companies to control how customers use their products." Different uses of content require different licenses. Broadcasting and distributing are different activities with different values to the end user.

Posted by Glenn at 4:43 PM | Link
|Legal||Satellite Radio||XM|

• Vivendi's chief executive, Jean-Bernard Lévy, underscored his company's focus on media over telecom. "In telecoms, the opportunities are rare, and there are no real cross-border advantages." He said the company will seek future growth from Universal Music Group, Vivendi games (online gaming), and programming created by Canal Plus. (Read article at International Herald Tribune)

• The Equal Employment Opportunity Commission has found that Sony BMG discriminated against black employees when it "overwhelmingly" targeted black employees in a series of 2004, post-merger layoffs at a Manhattan office. Later this week, a lawyer for one of the former employees will file a suit against Sony BMG. (Read article at New York Post)

• The Los Angeles Times' Randy Lewis combined concert grosses an album sales to arrive at the Ultimate Top Ten. They are, in order, The Rolling Stones, Tim McGraw & Faith Hill, Rascal Flatts, Kenny Chesney, Madonna, Barbra Streisand, Celine Dionne, Red Hot Chili Peppers, Bon Jovi, Nickelback (Read article at Los Angeles Times)

• Toshiba has partnered with MTV's URGE digital music service. Nothing of substance is mentioned in the press release, though. No details of the partnership. No info on collaborative branding efforts. Nothing. (Read press release)

• Shane Allen, formerly a national director of promotion at Universal South, has been hired as VP of radio strategies and field marketing at Capitol Nashville. (Read article at Billboard.biz)

Posted by Glenn at 7:30 AM | Link
|Legal||Sony BMG||Touring||Universal Music Group|

• Nielsen Soundscan announced a slew of top tens lists for 2006 (through December 10). The top album of 2006 was the High School Musical soundtrack with 3,480,000 units sold, followed by Rascal Flatts' Me and My Gang (3,060,000) and Carrie Underwood's Some Hearts (2,460,000). The top digital download of the year is Daniel Powter's "Bad Day," which sold 1,880,000 units. Gnarls Barkley's "Crazy" was second with 1,525,000 and Sean Paul's "Temperature" was third with 1,460,000. (Read press release)

• French musician Johnny Hallyday lost his final legal battle against Universal Music Group over control of his catalog. France's highest court denied Hallyday ownership of his master tapes recorded between 1961 and 2004. The music industry looked to the case as possibly setting a precedent that would allow artists more rights. (Read article at Reuters)

• A group of record labels have filed suit in New York against Russian music download site AllOfMP3.com. The move comes after Mastercard and Visa have refused to accept transactions from the controversial site. Earlier this year, the IFPI filed suit against AllOfMP3.com in Britain. Among the labels filing suit are Arista Records, Capitol Records and UMG Recordings. (Read AP article)

• The Dutch government will exclude digital music players from copyright levys. Such levys are imposed to compensate artists and labels for personal copying of music. Electronics manufacturers oppose such levys, saying consumers who buy music should not have to pay again to transfer it to a device. Music industry executives tend to challenge the idea that all consumers have actually paid the first levy -- by purchasing the music -- in the first place. (Read AP article)

Posted by Glenn at 8:26 AM | Link
|Legal||Online Stores/Services||Universal Music Group|

• There's a report that Amazon.com has begun the paperwork for a music download store. The store, said to be slated for an early 2007 launch, will reported offer (1) only MP3s and (2) variable pricing. This would be another -- and strictly indie -- download store to offer MP3s. Yahoo! Music has convinced a few majors to make small MP3 experiments, but currently MP3s are the domain of indie-leaning sites and thus are kept at arm's length from mainstream consumers. (Read post at Hypebot)

• Several rock legends -- Grateful Dead Producgtions, Carlos Santana, members of Led Zeppelin and The Doors -- have sued online music memoribilia retailer Wolfgang's Vault. Wolfgang's Vault operator William Sagan purchased an archive of live recordings from the late Bill Graham. The plaintiffs allege the site streams live performances to generate sales of other items. Said Bob Weird in a statement, "We have never given permission for our images and material to be used in this way. What Sagan is doing is stealing. He is stealing what is most important to us -- our work, our images and our music -- and is profiting from the good will of our fans." Recently, Norton LLC, the owner of Wolfgang's Vault, obtained the Tower.com domain as well as the retailer's 33rd Street Records and Pulse magazine. (Read article at Billboard.biz, Hollywood Reporter and Variety)

• Los Angeles mourns the news that Go Boy Records in Redondo Beach will close its doors the day after Christmas. "Six months ago it seemed that everyone at once decided to stop buying CDs," said owner Scott Dallavo. "It's almost like someone flipped a switch." (Read article at The Daily Breeze)

• Billboard magazine's Brian Garrity has a top ten list...the top ten music industry stories of 2006. Topping the list are Universal Music Group's buck-a-Zune royalty, the hardline positions of UMG's Doug Morris and Tower Records' fall. Garrity didn't mention the year's biggest non-story: The inability of EMI and Warner Music Group to figure out how to merge or acquire the other. (Read article at Billboard.biz)

Posted by Glenn at 7:40 AM | Link
|Brick-And-Mortor Retail||Legal||Online Stores/Services|

In the wake of the Andrew Gowers' report on intellectual property -- which recommends that UK copyright on recorded music and performers' rights remain at 50 years -- The Guardian hosts commentary by two prominant names in British music: Mick Hucknall of Simply Red and Alac McGee, label owner and artist manager.

Hucknell called arguments against an extension "retrogressive and misconceived." Copyright, he wrote, "is not a monopoly restricting the free flow of ideas." He dismissed the idea that the transfer of a song to the public domain creates a public asset, "it represents a massive destruction of UK wealth, and a significant loss to the UK taxpayer as exploitation moves offshore or into the grey market."

McGee took the other side of the debate. "To me, the 50 years, during which both company and artists have had full opportunity to reap the lucrative benefits of their work," he wrote, pointing to the "spread of influence" of early blues and country when it passed into the public domain. Near the end, he posed a question: "Why should the legacy of The Beatles be treated as some sacred cash cow and held at arm's length from those that gave and continue to give The Beatles their success - the fans?"

Last week, celebrities such as Sir Paul McCartney (no surprise), U2 and Eric Clapton took out a full-page ad in the Financial Times that called for "fair play for musicians," meaning they would prefer an extension on copyrights on sound recordings.

• Extra credit: An interview with Gowers at openDemocracy.

Posted by Glenn at 5:26 PM | Link
|Legal|

Coolfer doesn't spend too much time with Google's copyright issues. There are a hundred and one other blogs for that. Today's Wall Street Journal op-ed, "Google Serach: 'Copyright'," is worth quoting, though. Google is now a major part in the music industry's hopes to nuture new revenue streams. That fact, combined with the influence of the WSJ, makes this worth mentioning.

Here are the middle paragraphs of the piece. It is preceded by an explanation of Google's position on fair use.

"But whether Google produced economic benefit to the copyright owner is for the owner to decide, not Google. Google claims 'a legal safe harbor' from copyright infringement under the 1998 Digital Millennium Copyright Act, which allows Internet firms to provide a thumbnail of copyrighted material. The firm also asserts a right to reproduce and distribute intellectual property without permission as long as it promptly stos the trespass if the copyright owner objects. That's like saying you have the legal right to hop over your neighbor's fence and swim in their pool -- unless they complain.

Google and YouTube claim it's impossible for them to chase down permission from tens of millions of video and printed-word copyright owners. Hey, this was their idea; it seems like a $150 billion, smarter-than-everyone company should be able to figure out how to police its Web site."

The WSJ's advice to Google is to "steer clear of this expensive legal thicket" and accellerate its deal making with content owners.

Posted by Glenn at 3:52 PM | Link
|Legal|

• "American Idol" contestant Jennifer Hudson has signed with J Records. The singer will start recording her debut in January of 2007. (Read post at Access Hollywood)

• The Game's business partner, John Abbey, was arrested last Friday for allegedly laundering money from gansters. Abbey and The Game are partners in the label Black Wall Street East recording studio. The Game was not indicted. (Read article at Baller Status)

• Record labels lost their case against Chinese search engine Baidu.com. A court found that use of the search engine did not contitute an infringement because the music files -- which was found via searches at Baidu.com -- were hosted on third party servers. The IFPI said it would support the labels if they chose to appear the decision. (Read article at BBC News)

• Digital Music Group has added four more labels to its roster: Hacienda Records, Evangeline Recorded Works, Brilliant Classics and The Loser's Lounge. (Read article at Sacramento Business Journal)

• An article on the legal battles surrounding a $15 million bid for Jimi Hendrix's songs. (Read article at Law.com)

Posted by Glenn at 8:30 AM | Link
|Digital Distribution||Legal|

• Later this month, eMusic will lower the number of downloads for each of its subscription packages. The $10 plan will drop to 30 from 40. The $15 plan goes to 50 from 65. Existing customers are not subject to the change. The new prices will take effect November 21th. Given eMusic's revenue-sharing model, artists and labels like it when the denominator decreases. Consumers end up paying more per download -- but it's still a great value. (Read article at The Register, via Digital Music News)

• Unavision Communications Inc. has acquired the remaining 50% of Mexico-based Disa Records and Edminosa Publishing. Disa will remain with Universal Music Group. Edminosa will fall under Univision Music Publishing. (Read press release)

• Ludacris announced a development deal with The N Network that will make the rapper executive producer of a television series called "Halls of Fame." (Read article at SOHH.com)

• A rumor that Steve Greenberg may be looking to relaunch S-Curve Records. (Read post at Hits Rumor Mill)

• NPR has a story on Mitch Koulouris, a former Tower Records manager who started Digital Music Group. (Listen to interview at NPR.com)

• The Department of Justice dropped its investigation into Entercom purchases after the company agreed to sell three stations in the Rochester area. Post-sale, Entercom will have about 40% of the Rochester market's radio ad revenue. Before the sale of the three stations, the company would have had over 57% of the market. (Read article at FMBQ)

• A clarification on a post about Snocap's recent deal to put music on MySpace pages. Snocap's publicist informs me this is separate from the Linx web development toolkit. The Snocap MySpace store, I'm told, is an HTML widget that plugs the storefront into existing websites.

Posted by Glenn at 9:03 AM | Link
|Legal||Mobile Music||Radio||Universal Music Group||XM||eMusic|

• Yoko Ono has sued Capitol Records for $10 million plus interest for "willfully and knowingly underreporting royalties." EMI calls it "understandable given the complex nature of recording contracts." (Read AP article)

• paidContent.org is almost a week late with its redesign, but it looks great. Earlier this year the digital technology blog received an investment from Greycroft Partners. Yes, blogs are real businesses.

• Finally, Guns N' Roses buzz that's actually related to an actual new song. The band's "Better" is being used in a 30-second Harley-Davidson ad. (It's not yet on the Harley website.) Here's the entire song at YouTube (while it lasts).

• New York magazine gets some quotes from New York music legends on the demise of Tower Records. Glenn Branca called later-era Tower "a bad supermarket that only sold food that had no nutrients." Moby described post-downloading Tower as "a few forlorn employees and tumbleweeds blowing by the dust-covered CDs." Check the picture of the 4th and Broadway Tower at the top of the page -- it was the place to be in 1981. (Read article at New York Magazine)

• A discussion for you musicologists: De La Soul's use of Hall and Oates' "Say No Go" wasn't "ironic distance." The group just liked the song. (Read post at Dial "M" For Musicology)

Posted by Glenn at 11:28 AM | Link
|Apple||EMI||Legal||Weblogs|

• A judge dismissed Hawthorne Heights' suit against Victory Records and called the band's claim to terminate its agreement "absurd." (Read Hits post at The Velvet Rope)

• Super distributor Handleman hired Robert E. Kirby to be its new president and CEO. (Read press release)

• Former Village Voice critic Robert Christgau has joined NPR's All Things Considered. Yesterday he reviewed the new album by The Hold Steady.

• Warner Music Group exec on Asia: "At Warner, we consider Asia to be the world's incubator not just for technology but for how people use technology." (Read article at Taipei Times)

Posted by Glenn at 12:54 PM | Link
|Distribution||Indies||Legal||Warner Music Group|

• Another 8,000 lawsuits were filed against file-sharers in 17 countries. Will it stop file-sharing? Not by a longshot. Will the trade groups stop suing file-sharers? Not a chance. Talk against piracy is cheap. Trade groups know they have to act. (Read Reuters article at CNNMoney)

• A judge dismissed Entercom Communications' motion for dismissel in a payola lawsuit. This lawsuit was Eliot Spitzer's first against a radio company. It now moves to the discovery phase. (Read article at Billboard.biz)

• Universal Music Group moved 250,000 units of 3,000 digital tracks that were released from the company's archives. The press is really eating this up. What if they did the math? I'll rephrase: Universal Music Group sold an average of 8.33 units each of a group of digital songs it released from its archives. Doesn't sound so spectular does it? And that was over seven months. That's just over one download per track per month. On an aggreggate level it's fine, but individual royalty checks won't change much. I've said it before: The Long Tail wil benefit aggreggators, not individuals. (Read article at News.com)

• Used CD 2.0 website Lala.com is currently selling all its CDs at wholesale cost. (Yes, Lala.com does sell brand new CDs in addition to facilitating the trading of used CDs.) It's been a while since Coolfer wrote about Lala.com. A revisit post is forthcoming.

Posted by Glenn at 7:36 AM | Link
|Legal||Long Tail||Payola||Universal Music Group|

eDonkey is the latest to settle with the majors over claims of copyright infringement. Here's the meat of the article at Billboard.biz:

"As part of the consent judgment, the owners agreed to the court issuing a permanent injunction covering eDonkey, eDonkey 2000 and Overnet, the search software distributed to locate eDonkey files. The injunction requires MetaMachine, Yagan and McCaleb to disable and prevent users from copying or sharing any of the labels' music through software, servers or Web sites owned or controlled by the settling defendants. According to sources close to the litigation, the Web sites are expected to be shut down following entry of the judgment."

The industry's lawsuits against Limewire is pending.

Posted by Glenn at 6:05 PM | Link
|Legal||P2P|

• WEA Corp, Warner Music Group's distribution arm, inked a deal with Latin label Union Records. WEA will "market and distribute select music titles" from the label's roster, which includes Juan Fernando Velasco and Danilo Parra. (Press Release)

• Digital Music Group has acquired the Digital Rights Agency for $3.2 million in cash and 420,000 shares of DMG stock. (Digital Music News)

• EMI and T-Mobile UK are testing an ad-supported music video service for mobile phone subscribers. (Forbes.com)

• Speaking of EMI, Lehman Brothers has downgraded its stock on fears of weak first half sales. (Sharecast)

• Disney's "The Cheetah Girls 2" soundtrack cashes in on the same tweeners that made "High School Musical" such a huge hit. (LA Times)

• The Boston Globe's Joan Anderman highlights four upcoming albums "that -- with a little luck -- could take the world by storm." The four artists are Lupe Fiasco, Sting, Lady Sovereign and missFlag. (Boston Globe)

• A 16-year-old girl has sued Atlantic Records over a sexually explicit video that was taken at a Buckcherry concert in October of 2005. The band wasn't signed to Atlantic until the following May, and the label says it edited the video and took out the underage girl. The Internet being the Internet, versions of the original edit can still be found. (LA Times)

• Where did the payola settlement money go? Some of it ended up funding for summer artst festivals like the Hudson Valley Bluegrass Festival. (Poughkeepsie Journal)

Posted by Glenn at 9:14 AM | Link
|Digital Distribution||EMI||Legal||Mobile Music||Payola||Warner Music Group|

• According to the NY Times, the final three bidders for BMG Music Publishing are Warner Music Group, Viacom and Univesal Music Group. The bids are said to be in the $1.8 billion oto $2.1 billion range. Sony Music and EMI (teamed with a private equity firm) did not submit bids. (NY Times)

• It's really obvious but it merits an article: Television exposure sells music. There you have it. "American Idol" can really move the units. (Billboard. Also, see Coolfer's post from January about the impact TV and big screen have on Amazon.com's top sellers list.)

• BMI, in conjunction with Volunteer Music for the Arts, presents The Legal Series every Wednesday in September in New York City. The free events, to be held from 6:30pm to 8:30pm at Pianos, will offer "a behind the scenes look at the legal side of music" by some of New York's leading music attorneys. (Press Release)

• Denver retailer Twist & Shout will close two of its locations and move everything into a new location in "the new cultural retail complex at the former Lowenstein Theatre." (Denver Post)

Posted by Glenn at 8:16 AM | Link
|Brick-And-Mortor Retail||Legal||Publishing||Television|

• The bidding for BMG Music Publishing has narrowed down to 12-15 bidders. Sony Corp is not one of the finalists. EMI, Warner Music Group and Universal Music Group are beilieved to still be in the running. (Billboard.biz)

• The Songwriters Guild of America puts itself on the side of the RIAA in its legal fight with XM Satellite Radio over portable devices that record songs broadcast on XM. (Digital Music News)

• Warner Music Group announced a quarterly cash dividend of $19.3 million, which turns out to be $0.13 per share of common stock. (Press Release)

• Kevin Federline has inked a deal with Sony BMG. His album Playing With Fire will be released on October 31st on his own Federation Records. No, he's not managed by Nettwerk and Terry McBride. (AllHipHop.com)

• WOXY is going off the (Internet) air on September 15th. (WOXY.com)

• Warner Music Group's Kevin Liles on P. Diddy: "Our expectation when we did the deal with Bad Boy was to break one new artist every 18 months and to reintroduce P. Diddy. He's broken three new artists this year so it's over our expectation, but still under what we know he can do." (Reuters)

• Legendary music critic Robert Christgau was among eight Village Voice employees fired yesterday. Gakwer's post has an email from Christgau to friends. (Gawker)

• The Global Media and Entertainment Summit will be held on December 9th and 10th in New York City. (GlobalEntertainmentNetwork.com)

Posted by Glenn at 9:58 AM | Link
|A&R||Firings||Legal||Publishing||Warner Music Group|

• It's working down under: The Australian music market rose 5.6% in the first half of 2006. (Billboard.biz)

• Microsoft has released a patch to to prevent FairPlay4WM from stripping the DRM from tracks protected by Windows Media 10 and 11. (ZDNet)

• An analyst at Banc of America Securities advises, "We continue to recommend the XMSR/SIRI pair." (Radio Ink)

• AOL Music has expanded to include a la carte downloads, and videos as a part of the subscription service. Unfortunately it requires Internet Explorer for downloading and syncing. (macnn)

• A judge determines the Beatles may move ahead with their decades-old lawsuit agsinst EMI. (Bloomberg)

• Nonesuch has donated $1 million to Habitat for Humanit to aid Gulf Coast hurricane victims. The money comes from sales of Our New Orleans, a benefit released last December. (Press Release)

• There's a problem with this article on Universal's licensing deal with ad-based P2P site Spiral Frog: It assumes lawsuits and experimentation with different business models are mutually exclusive events. That's poor logic. Don't expect the RIAA's lawyers to lighten up. If anything, such licensing deals deepens the line they've been drawing in the sand for years. (Forbes.com)

Posted by Glenn at 10:17 AM | Link
|DRM||EMI||Legal||Satellite Radio|

• Bertelsmann is worried about regulatory scrutiny over the impending sale of its music publishing division. This could put major music groups at a disadvantage and favor private equity groups. (Financial Times)

• The Who's deal with Universal Republic and the street date of the band's album, Endless Wire, were officially announced...though I'm sure you already noticed the album listed on Coolfer's master list of upcoming albums, right? The band's -- duo's -- new album will be out October 31st. (Billboard.biz)

• The RIAA quickly dropped a case in Oklahoma in which the defendent called the group's tactics "extortion." (Recording Industry vs The People)

• See the tech community fall in love with Nettwerk's Terry McBride. (Wired)

Posted by Glenn at 11:36 AM | Link
|Legal||Publishing|

• Here's a link for lawyers, law students and people like me who try -- with varying degrees of success -- to follow these kinds of things: William Patry uses Dimension Music Publishing, LLC v. Kersey to explain the connection between the disco era and the 1992 Automatic Renewal Act. (The Patry Copyright Blog)

• Coolfer noticed an ad for the upcoming ABC series "Brothers & Sisters," which stars Calista Flockhart. A main character on the show is played by Balthazar Getty, known to music folks as one half of Ringside (Getty programmed the beats for the Flawless/Geffen self-titled album). Guess Getty won't be concentrating too much on Ringside any time soon...though the band is playing The Viper Room on August 17th.

• Songs found around the www. today: A Nelly Furtado-meets-Ratatat mash-up at Gorilla vs. Bear, a catchy early '80s-styled song by The Gray Kid at In Flight At Night and Beyonce's new single "Ring The Alarm" at Bum Squad DJz.

• The Guardian calls Jose Gonzalez (known best for the cover of The Knife's "Heartbeats" that was used in a Sony Bravia commercial) "this summer's 'Mr Festival'." He's appeared at more British festivals in 2006 than anybody else. Ironically, Jose says doesn't like playing festivals. (The Guardian)

Posted by Glenn at 9:27 PM | Link
|Downloads||Legal|

What a fascinating turn of events. In March of this year Victory Records was chest-thumping all the way to a a #3 and controversial debut on the album chart with Hawthorne Heights' album If Only You Were Lonely. Now, as reported by Billboard.com, Hawthorne Heights has sued Victory Records and label head Tony Brummel, claiming Brummel and Victory of "taking advantage" of the band and "severely damaging the band's reputation and relationship with its fans."

One aspect of the complaint is that Brummel's battle with Ne-Yo, which was undertaken in the name of Hawthorne Heights, resulted in the band being labeled as racist. That should be much more difficult to litigate than its claims of "egregiously fraudulent accounting practices." The band's debt to Victory, according to Billboard.com, is over $1 million even though the label has generated over $10 million dollars in sales of Hawthorne Heights music, videos and merchandise. (If Only You Were Lonely has sold 396,000 to date. Nearly one third of that came in the first week.)

The complaint specifies alleged fraudulent royalty statements such as a failure to pay mechanical royalties for digital downloads, ringtones and foreign sales and licensing. Hawthorne Heights also alleges Victory failed to pay public performance royalties, charged the band 100% of coop advertising rather than the agreed-upon 50% and improperly accounted for mechanical royalties.

For all the fun allegations, read a PDF of the complaint, found via a thread at The Velvet Rope.

Posted by Glenn at 11:45 AM | Link
|Indies||Legal|

The campaign continues: Labels that are part of the four majors have sued Lime Group LLC, the company behind P2P application LimeWire.

According to the AP article by Alex Veiga, the labels are seeking compensatory and punitive damages totalling $150,000 per infringement. The complaint states that Lime Group "not only have known of the infringement, but have promoted and relied upon it to build their business," which is the argument that has been used in lawsuits against other file trading companies.

Last week Kazaa settled its lawsuit with the industry. For thoughts on the RIAA's strategy and how it has done not stopped piracy but has encouraged investment, read this post from earlier this week.

Posted by Glenn at 3:50 PM | Link
|Legal||P2P||RIAA|

Last week peer-to-peer company Kazaa agreed to settle its lawsuit with the recording industry and will pay $115 million to the four majors and also an amount to motion picture companies. The development started the usual debate about the industry's legal strategies. Most agree that lawsuits will not stop file sharing. It's just too uncontrolable. But the industry has used to lawsuits for another reason: To help nuture legitimate digital stores.

Kazaa has agreed to make changes to its software, such as incorporating filters and develop a legal distirbution model. Those changes would effectively mean Kazaa is no longer in the P2P business. (And as Ray Beckerman pointed out at his blog at Digital Music News, the settlement does not let Kazaa users off the hook if they've been sued by the RIAA.)

Some quickly pointed out that P2P traffic has risen over the years and since the Grokster decision. "It's a battle you can't win," they say, "so just accept P2P." Many, including the EFF, have continuously called for an end to the lawsuits and have proposed models that would legalize P2P and compensate labels and artists. Music industry commentator Bob Lefsetz wants to see an across-the-board ISP tax to pay for legal P2P.

But the industry still has no plans to embrace P2P, and the fight against piracy continues. The IFPI's John Kennedy savored the victory but admitted the Kazaa settlement is not a cure all. "We are under no illusion that this solves everything. But this is very encouraging."

Why is this seen as encouraging?

Continue reading "Kazaa Settles With Recording Industry. What Does It Mean?" »

Posted by Glenn at 2:36 PM | Link
|Legal||P2P||RIAA|

• Entertainment lawyer Chris Castle has as thorough post on the RIAA's lawsuit against XM over its Inno receiver/player. He thinks the Consumer Electronics Association believes that if Pioneer, which manufactures the Inno, pays the Audio Home Recording Act levy then that qualifies as a kind of content license. "Sorry guys," he writes, "but that is an absurd position." It's a long post but absolutely worth reading in its entirity. A little blog mention can't do it justice. (Music•Technology•Policy)

• The Guillemots' Through The Windowpane (Fantastic Plastic) has a Metacritic average score of 79 through five reviews. Stylus gave it an A rating ("one of the most creative, musical and genuinely moving records to come from these shores in an age") while The Guardian , from the band's home turf, gave it a mediocre three out of five stars ("A microcosm of a debut that, frustratingly, juggles promise and excess.") (Metacritic)

• Folks at The Velvet Rope are thinking Ryko Distribution will get folded into ADA. Makes sense. Given its parent company, Warner Music Group, is on the cost efficiencies warpath, there seems to be too much overlap to not combine to two distributors. (The Velvet Rope)

Posted by Glenn at 10:00 PM | Link
|Distribution||Legal||RIAA||Satellite Radio|

• You may have read about the EFF's opposition to SIRA (Section 115 Reform Act). Here's a different view. Read this post by music attorney Chris Castle at Kings of A&R that explains the parts of the bill that are likely to remain while the bill is being negotiated. Highly recommended. (Kings of A&R)

• Sleater-Kinney is on "indefinite hiatus," which as all you who are familiar with the Stephen Malkmus Rules of Disengagement Lexicon means the band is pretty much gone. (The Portland Mercury, via Stereogum)

• Through Hits Rumor Mill Coolfer found a video of a performance by The Panic Channel, a new band featuring former Jane's Addiction members Dave Navarro and Stephen Perkins that is signed to Capitol Records. Two reasons not to pay attention: there's Flash and registration is required. Thanks for ignoring the blogosphere, Rehearsals.com. Maybe you'll learn someday. (Hits Rumor Mill)

Posted by Glenn at 7:30 PM | Link
|Legal||Publishing|

The Guardian's technology blog explains why Apple Computer won the lawsuit brought by Apple Corps.

Apple Computer, the court ruled, is in the data transmission business. It's not in the business of selling music.

(Now at this point you should hear a chorus of cackles and laughs from the old school music biz crowd for who digital music is a rather soulless, geek-driven business.)

The Guardian poses a question:

"Simple question: does Computer package, sell or distribute any physical music materials? That's the crux of the whole argument. And the answer has to be no. When the iTunes Music Store tells the hard drive on your computer to rearrange some of its bits, there's nothing physical being passed. Just instructions. In theory, (Apple) Computer could sell songs by having semaphore teams and someone standing by your computer, adjusting the 0s and 1s on the platter in just the right way to create a copy of the song that's at the Store."

Before you ask about the different between digital and physical music --- as in, "Isn't music music?" -- here's a quote The Guardian lifted from the Apple/Apple 1991 agreement:

"The computer giant agreed that although it may be involved in digital music, it would not package, sell or distribute any physical music materials, such as CDs."

Could it be that Apple Corps didn't anticipate the rise of digital music? In 1991, the act of selling music was selling CDs, cassettes and LPs. In 2006 it includes those three plus digital downloads -- which are "just instructions" between computers that a pre-Internet, protectionist company simply couldn't have foreseen.

Posted by Glenn at 8:14 PM | Link
|Apple||Legal|

Attorney Steve Gordon has a post at Digital Music News about the Cheap Trick/Allman Brothers lawsuit against Sony BMG that claims underpayment for digital sales. The lawsuit hinges upon the type of sale that is derived from the purchase of a digital download. Sony BMG calls it a sale, the plaintiffs call it licensing.

"The plaintiffs maintain that the artists should get half of that amount. But instead, the complaint alleges, Sony treats downloads as record sales even though the label does not sell anything to the digital download services including iTunes. Rather, the complaint alleges, Sony is “licensing” their masters, including those by Cheap Trick and the Allman Brothers, to download services in exchange for a royalty of 70 cents."

What's at stake here? Only the continued belief that digital downloads will help cover the loss from CD sales' slide. If labels' digital sales all of a sudden start contributing less to the bottom line, everybody -- from execs to investors, but certainly not artists -- will lose some interest in digital music.

To listen to a broadcast on this particular topic, go to Steve Gordon's The Future of Music page at MyRealBroadcast.com and click on "Recent Shows - Press Here."

Posted by Glenn at 12:36 PM | Link
|Legal||Sony BMG Royalties Lawsuit|

On the heels of Cheap Trick and the Allman Brothers' lawsuit against Sony BMG that alleges they've been shortchanged on royalties for digital sales, Coolfer received this note from Elmo Shropshire of Laughing Stock Records.

Two years ago, when Sony first received digital payments from a 3rd party called Zingy; instead of paying me 50% as called for in my contract, they treated the downloads as physical CD's sold individually by Sony. Sony deducted 15% for "net sales," 30% for packaging, 50% for new configuration and "audiophile recordings."

The 15% "net sales" does not apply in digital since the digital downloads are not broken or returned. The 50% configuration - my recording was not an "audiophile" recording, and a digital "configuration" costs nothing as compared to a physical CD which cost at least 60 cents to produce.

When Sony received $1.12 for a ringtone, they paid me 6 cents instead of the 56 cents my Sony contract allowed me. In the past two years, Chuck Fleckenstein, at Sony has not answered any of my requests to review the situation.

Keeping my fingers crossed that Sony will live up to their contract.

Posted by Glenn at 2:04 PM | Link
|Digital Daily||Legal||Sony BMG|

Additional information is now available on the lawsuit that pits Cheap Trick and Allman Brothers against Sony BMG. At the hear of the lawsuit is how royalties are handled for digital sales.

Digital Music News has an informative post and a copy of the complaint (PDF), which alleges Sony BMG has paid the artists and producers "only a miniscule percentage of royalties owed for licensing of the recordings" to various online music stores. For each 99-cent download, the plaintiffs say they receive about 4.5 cents.

The complaint claims Sony BMG wrongly treats digital sales the same as physical sales and underreports sales, takes unauthorized deductions (that are typical for physical sales, such as packaging and container deductions). It also takes issue with Sony BMG's withholding reserves, which is a necessary part of physical sales due to product returns. Obviously, there are no returns in digital sales.

For 1,000 downloads, the current method gives the artist $45.05 in royalties. It includes the following deductions: 15% for net sales deduction, a 20% container (packaging) deduction and a 50% audiophile deduction.

The "correct" method,claims the complaint, would result in royalties owed in the amount of $315.50.

Posted by Glenn at 11:47 AM | Link
|Legal||Sony BMG|

Wondering what the hullabaloo is about in the Senate hearings on "Parity, Platforms and Protection: The Future of the Music Industry in the Digital Radio Revolution"? The music industry seems worried that it isn't being properly compensated -- so what's new? -- and wants to settle the tab. Red Herring summed it up well:

"The hearings struggled to define what constitutes music performance versus music distribution in a rapidly changing market."

What's at stake here is additional revenue that would be paid to labels for the digital copies of songs broadcast on satellite radio (stations already pay for performance rights, which covers only the broadcast). Warner Music Group's digital guru, Edgar Bronfman, Jr., thinks it's not fair to allow satellite radio "to turn performances into distributions without paying distribution licenses."

And then there's the PERFORM Act, which stands for Platform Equality and Remedies for Rights Holders in Music Act of 2006. At a post at the Public Knowledge blog, Gigi Sohn quotes copyright lawyer Bob Schwartz's take on the the PERFORM Act:

"The PERFORM Act is the latest 'sky is falling' bill pushed by the recording industry. This bill would prevent satellite radio subscribers from recording and listening to programming that they have paid for, unless they pay an additional license 'tax' to the record labels on a song-by-song basis (which, in addition to cost, would severely limit the repertory that could be offered to the public)."

Public Knowledge's page on the hearings is a great resource for information relating to the PPP bill.

View of PDF of the PERFORM Act here.

Posted by Glenn at 4:05 PM | Link
|Legal||Satellite Radio|

• Lawmakers have introduced a bill that would require satellite radio companies to compensate record labels for downloads that arise from their services. The goal, says the RIAA's Mitch Bainwol, is parity among platforms. Satellite radio, he says, should be looked at no differently than an on-demand store. "If someone gets a distribution right without paying for it, that blows a hole in the digital marketplace." XM chairman Gary Parsons calls it "a new tax being imposed on our subscribers." (Reuters)

• Based on one-day sales, Hits predicts Godsmack will top next week's album chart with over 200,000 in sales. Springsteen's We Shall Overcome will be helped by strong sales at iTunes and Starbucks and is on track to do about 100,000. (Hits Rumor Mill)

• Baller Status interviews Draze, who is about to debut something the website calls "he latest concept in buzz creation for an unsigned artist": the mixtape movie. The first is a cover of "Trading Places" with Draze playing Dan Akroyd's character and Jay-Z playing Eddie Murphy's character. (Baller Status) The movie can be seen at Draze's MySpace page.

• If you don't get your fill of Doomsday-for-the-music industry pronouncements from Bob Lefsetz's radio show, this summer you can listen to Marc Cuban on his weekly Sirius radio show. (Seattle P-I)

• It's off to a decent though quiet start, but Sergio Mendes' Timeless (Concord/Starbucks) should finally get a boost and get in the public's eye. Mendes and the Black Eyed Peas (whose Will.I.Am produced the album) will perform on "The Tonight Show" on May 9th. They recently shot a video for the song "Mas Que Nada," and the song will be featurd in Nike commercials during The World Cup.

Posted by Glenn at 9:00 AM | Link
|Legal||Music Industry|

In a lawsuit over Bertelsmann's investment and involvement in Napster, two rulings may give the Justice Department a better case in its investigation into digital music pricing. The LA Times' Joseph Menn detailed the judge's findings in an article today. One ruling had to do with which documents would be turned over by two majors music groups:

"But the Justice Department's decision was influenced by two detailed 'white papers' — one submitted by EMI Group and MusicNet, the other by Universal Music Group and Pressplay. In a ruling made public Friday, U.S. District Judge Marilyn Hall Patel found that those papers were 'deliberately misleading.'"

The other dealt with Bertelsmann's $50 million loan to Napster and the revealing of an "unwritten deal allowing $10 million to be used for the legal defense of the old system." Bertelsmann did not disclose to the court that $10 million legal fund.

The Wall Street Journal quotes Bertelsmann's lawyer, Ken Steinthal, as saying, "There's no impact on the merit of the claims."

Posted by Glenn at 6:25 PM | Link
|EMI||Legal||Music Industry||Online Stores/Services||Universal Music Group|

A judge has halted sales of Notorious B.I.G.'s Ready to Die album because one of its songs was found to use a part of the Ohio Players' song "Singing in the Morning" without permission. The late rapper is the cornerstone of Bad Boy Entertainment, the sliding label run by jack-of-all-trades celebrity Sean Combs. Warner Music Group paid $30 million for half of Bad Boy, an amount that comes mainly from the value of Notorious B.I.G.'s catalog and not the label's recent sales history and (lack of) success in developing new talent.

Related: Combs discovery Fonzworth Bentley won't be releasing his album on Bad Boy, reports Fox News' Roger Friedman, although the label could use a hit or four. Fonzworth's record will be released by Kanye West's Sony BMG-distributed GOOD Music. West and Andre 3000 of Outkast are guests on the album, which is slated for a June release.

Somewhat related: Los Angeles police detectives are again looking at the unsolved case of Notorious B.I.G.'s 1997 murder.

Posted by Glenn at 11:38 AM | Link
|Legal|