I had been through two airports, a nap and pretty much the entire Wall Street Journal by the time I noticed the article on the RIAA's move away from consumer lawsuits (existing lawsuits will move forward). A key excerpt:

After years of suing thousands of people for allegedly stealing music via the Internet, the recording industry is set to drop its legal assault as it searches for more effective ways to combat online music piracy. ...

Instead, the Recording Industry Association of America said it plans to try an approach that relies on the cooperation of Internet-service providers. The trade group said it has hashed out preliminary agreements with major ISPs under which it will send an email to the provider when it finds a provider's customers making music available online for others to take.

This is big news for all sorts of reasons. It marks a move away from the RIAA's fruitless war against file sharers that has harmed the industry's image while doing little -- just how much impact is up for debate -- to keep people from using P2P networks to illegally acquire music.

By using ISPs to help prevent piracy, the RIAA is shifting much of the burden to parties that can have a great impact on consumer behavior. Good for the RIAA, possibly bad for consumers. This brings up questions of whether or not ISPs should be given such a role in oversight and enforcement, especially since US companies have not had the sort of government encouragement and overall discourse that has sparked similar coopoeration in other countries. In this case, New York Attorney General Andrew Cuomo brought together the deal between ISPs and record labels.

I never got the feeling that private industry was moving toward self-regulation in order to stave off a less desirable government intervention. I never got the feeling ISPs felt so threatened by potential record label lawsuits they would be compelled to cooperate rather than litigate. Without the help of Cuomo's office, it seems unlikely that labels could have brokered this deal. Going to Plan B makes sense when Plan A ran its course years ago, but time will tell how this will work out. (It could be a short honeymoon if ISPs tire of playing Music Cop and push back.)

Working with ISPs in this manner seems like a natural precursor to ISP-based music services, or possibly (though I think it's a long shot) a blanket download license offered to broadband customers.

Read about a similar deal between UK lables and ISPs that took place over the summer.

For additional reading, check out Fred von Lohman's post at the EFF blog ("But the news today is not all good," he writes) or any of the 40 or so posts currently listed at the top of Techmeme.

Posted by Glenn at 5:53 PM | Link
|P2P||RIAA|

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|

There's a good deal of news today about the British plan announced today that will see labels work with ISPs to curb piracy. The Independent reported that British ministers are backing proposals to tax ISP subscribers for music sharing. After reading up on the matter, I think The Independent jumped the gun (which led to a misled eruption across the Internet) and included a tax when the Memorandum of Understanding does not contain such a proposal. Billboard.biz has a good article on the anti-piracy plan and doesn't mention a tax. Here's the BPI press release and the IFPI press release.

The Guardian has a transcript of a call with the BPI that has a very good explanation of the plan. In it, BPI chief executive Geoff Taylor said the report of a tax was incorrect. "A widely-applied tax probably isn't the way forward here" and the idea "hasn't ever been tabled," he told reporters on the call.

What the BPI outlined was a five-point plan to educate and warn ISP customers as well as develop "innovative new music services" (the Sky-Universal service was singled out as an example).

Here's how this will shake out. First, ISPs adopt a code of self-regulation to prevent the government from doing it for them. Second, labels will continue with their education campaign to prop up the value of music. Third, ISPs will send out thousands of letters every week to suspected infringers. Fourth, steps will be taken to deal with repeat infringers (note that Britain does not want to take after France's "three strikes" proposal). Fifth, customers will be pointed to legal alternatives, which could be a new generation of music service formed in partnerships between labels and ISPs.

And what will happen If and when steps one through five fail to reach the desired outcome? That's probably when the reported tax comes in. I imagine the parties involved would like to keep the tax as a last ditch effort and let the five-point plan have its chance. In the end, they could end up pushing for a tax. I place little faith in a broader education campaign and a bit more in labels' and ISPs' ability to create viable, legal alternatives. Labels could be content if ISP-based music services ease piracy's sting and if ISPs can adequately convert infringers to their legal, paid services. Then again, I think labels will always have fits knowing that any piracy exists. Digital piracy isn't going away unless its taxed out of existence, so a tax will always be seen by some as a viable tool.

(By the way, the memorandum was signed by the Motion Picture Association as well as the major labels. Labels wouldn't be the only parties after that tax revenue.)

As for the revenue that could be gained if there was a tax, it could plug some holes. The Independent puts the number of broadband subscribers engaged in music piracy at 6.5 million. At a £30 annual tax, that's £195 million in revenue per year. Something in the range of £200 million would get UK recorded music revenues back to its 2003 level of £1.23 billion.

Posted by Glenn at 2:54 PM | Link
|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|

In a first for a music trade group and an ISP, Virgin Media is teaming up with the British Phonographic Industry (BPI) to educate its customers on illegal downloading. The ISP will send to customers it suspects of illegal downloading will be sent information on legal download sources and other information. From the press release:

As part of the campaign, customers whose accounts appear to have been used to distribute music in breach of copyright will receive informative letters, one from Virgin Media and one from the BPI. Accounts will be identified to Virgin Media on the basis of information supplied by the BPI. Both letters will be distributed by Virgin Media, without the need to disclose customer names and addresses to the BPI.

And further on...

Geoff Taylor, chief executive of the BPI added: “Education is absolutely key to reducing the extent of illegal downloading, and we are pleased to be working with Virgin Media on this campaign. We believe that new partnerships with ISPs can help build an internet in which music is properly valued. That will benefit not just musicians, songwriters and labels, but all internet users who love music. This joint campaign with Virgin Media is the first step towards achieving that goal.”

I don't think education is the key to a material decrease in illegal downloading. Perhaps subscribers would get so annoyed by frequent receipt of "informative letters" that they'd change behavior just to avoid getting them. Anyway, I highly doubt this is the sort of partnership the BPI really wants. No, trade groups want filtering and revenue sharing. But "informative letters" are an improvement on the sour relations typically had by these parties.

Posted by Glenn at 12:01 PM | Link
|P2P|

(Update: The BPI says it does not have a deal with Virgin Media to monitor ISP traffic in order to curb illegal file sharing.)

Thank you, United Kingdom, for beating the U.S. to the three-strikes-and-you're-out ISP policing that music trade bodies have demanded for years. You test it out, go through the public firestorm, work out the kinks, and then we'll decide if it's going to be part of the America's scheme to monetize/police music downloading.

How will it work? From The Telegraph:

The trial by the UK's largest residential broadband supplier will go live within months and disconnecting customers who ignore warnings, a sanction favoured by the record BPI, remains an option. The trial will also be open to film and television studios. ...

The BPI has teams of technicians to trace illegal music downloading to individual accounts. It will hand these account numbers over to Virgin Media, which will match them to names and addresses.

One can go back to October 2007 to a commentary by the BPI's Geoff Taylor to see the trade group's approach.

We are confident that the prevalent culture of online copyright theft will be curbed through a combination of consumer education, stricter enforcement by industry and government, new business models and more robust action by ISPs against online copyright theft. Simply put, we have too much to lose as a society, economy and culture if we do not ensure that creators’ efforts are rewarded, and we believe that the internet will become an environment in which creativity can be effectively monetised.

I'm surprised by the momentum this ISP policing scheme has attained in Europe. The difference may be those countries' tendency to treat music as a cultural issue rather than just one of business. (Entertainment companies are probably very good at playing the culture card to protect their interests.) Governments are more likely to step in when the nation's culture is perceived to be at risk. Just a few months ago, in January, most everybody thought U2 manager Paul McGuinness had gone off the deep end when he blamed ISPs for facilitating and profiting from illegal downloading and called for traffic filtering. But the British government warned it would pass legislation unless the ISPs voluntarily reached an agreement with content owners. And here we are.

Posted by Glenn at 12:56 PM | Link
|P2P|

The music industry has for a few months been attacking ISPs from all angles. Check out this article TorrentFreak (which cites this article at Ireland.com) about legal proceedings that have just began in Ireland against an Irish ISP.

Here's a blurb from the Ireland.com article:

Latest figures available, for 2006, indicate that 20 billion music files were illegally downloaded worldwide that year. The music industry estimates that for every single legal downloaded, there are 20 illegal ones.

Due to illegal downloading and other factors, the Irish music industry is experiencing "a dramatic and accelerating decline" in income, with the Irish market suffering a decline in total sales from €146 million in 2001 to €102 million last year, said Willie Kavanagh, managing director of EMI records (Ireland) and chairman of the Irish Recorded Music Association (IRMA).

Mr Kavanagh told the High Court he would attribute a substantial portion of that decline to illegal peer-to-peer downloading services and the increasing availability of broadband internet access.

I'd like Mr. Kavanagh to define "substantial portion" or at least offer a range. I'd ballpark it at 10-30%. Recall the CapGemini study that put piracy's impact on the drop in UK recorded music from 2004 to 2007 at 18%. Gaming and format substitution are silent but more dangerous predators.

Posted by Glenn at 12:09 AM | Link
|P2P|

A panel at Canadian Music Week predicted file trading would be a paid experience within a couple of years (read article at the Toronto Star).

The one thing in the article that just jumped out at me was a quote by David Hughes, senior vice-president of the RIAA's technology division. He foresees ISPs offering a subscription-based service ("as much as $12 a month") that will be charged according to bandwidth used. Wow. Sounds to me like an RIAA exec is predicting an ISP fee that will pay content owners. While his statements were not exactly an explicit stamp of approval, that's about the clearest endorsement of a legal P2P model I can recall hearing from the RIAA. What other subscription plan could he have been talking about? The panel was about future and legit P2P models, not ISP pricing strategies.

A system that increased broadband prices for low-bandwidth consumers, said BigChampagne's Eric Garland, was not a good solution. "Maybe the ISPs will have to find the bandwidth hogs and charge them extra," he said.

Gary Greenstein, who specializes in financing in digital media, sees the lack of ads in P2P applications as lost revenue. Users, he said, are "looking at an empty screen waiting for searches and downloads – that's a huge and untapped opportunity for advertisers." Ah, the SpiralFrog approach. I should point out that when I used SpiralFrog I toggled away from that window and did something else while my files downloaded. I assume others have the same ability to multi-task rather than stare at a screen and watch the download's progress.

Posted by Glenn at 10:22 AM | Link
|Conferences||P2P|

• The UK government is considering proposals that would force ISPs to look for illegal music downloads and cancel the service of repeat offenders. (MacWorld)

• Geoff Taylor, chief executive of the British Phonographic Industry, writes in an op-ed in The Times that telecoms are profiting at the expense of the music industry, and he calls for ISPs to monitor their traffic and sniff out illegal music downloads. (Times Online)

• This looks like a coordinated effort: Here's a report that file-sharing takes up 95% of web traffic at night. (Times Online)

• British ISPs want the music industry to pay for any lawsuits that arise from the suggested policing system. (The Register)

• An upcoming web site called Lovelive Channel, an Internet-delivered TV service for live concerts, has been developed by Beggars Group, Mama Group and Perform Group. Warner Music International will provide video production expertise. Most of the concerts, up to 300 a year, will be free and supported by advertising. Users can pay for an exclusive premium section. (Billboard.biz)

• Jupiter's Mark Mulligan on the MusicStation Max mobile music service: "MSM is a welcome and valuable addition to the digital music landscape. If it and (Nokia's Comes With Music) can get operators and remaining labels on board they have the potential to be critical additions to the digital music mix." (Mark Mulligan's Blog)

• An interview with John Webster of the Music Manager's Forum. "I don’t think the internet differentiates between major and minor or artists. It may well differentiate between well marketed and not." (e-consultancy)

• One of my few posts about the 2008 Grammy Awards: The winners list. (Grammy.com)

Posted by Glenn at 8:49 PM | Link
|P2P|

The International Herald Tribune has a good look at how the record industry is trying to define, offer and monetize "free" music.

Qtrax, a free, ad-supported P2P service that will launch tomorrow (in the U.S., Canada and seven other countries) is a centerpiece of the article. Qtrax, which has signed up all four majors, claims its music will be portable for PC users by February 29 and for iPod users by April 15. PC users will get Qtrax tomorrow but Apple users will have to wait until March 19, according to Qtrax chief executive Allan Klepfisz. (Read more about Qtrax at this Silicon Alley Insider post.)

The most sensible quote from the article is from Jamendo CEO Laurent Krantz: "Free is complementary. Free is not the opposite of pay. We see there is no cannibalization with free."

Update: Universal Music Group and Warner Music Group both deny they have licensed their catalogs for use in Qtrax's service. "Over the weekend, QTrax officials were still trying to convince Warner and UMG to sign on. On Saturday Robin Kent, who handles marketing for the company, allowed that its paperwork with labels might not be up to date." (Silicon Alley Insider)

Posted by Glenn at 1:28 PM | Link
|Online Stores/Services||P2P|

The Washington Post article I posted about yesterday is getting more attention. Journalist Marc Fisher and the RIAA's Cary Sherman were guests on NPR's Talk of the Nation. You can stream the show here.

I still don't agree with Fisher's argument. Regardless of the merits of the RIAA's position, Sherman did a fine job refuting Fisher. Fisher, on the other hand, did nothing more than show he has a bone to pick and is frustrated with how the RIAA has used the courts. Sherman easily picked apart Fisher's thesis and shed a light on his shabby journalism.

Posted by Glenn at 5:49 PM | Link
|P2P||RIAA|

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|

At the blog of Michael Geist, I saw that the back-and-forth about research on P2P's impact on music purchases is still going on (as if it was ever going to stop).

Birgitte Andersen, co-author of a study on P2P funded by Industry Canada, posted reactions to criticism by University of Texas economics professor Stan Liebowitz.

In the comments section to that post came commentary from Zeljka Kozul-Wright, an economist with the United Nations Conference on Trade and Development, who referred to an upcoming paper she is co-authoring titled "Creative Destruction in the Music Industry and the Copyright." She finds fault with Professor Liebowitz's conclusions and calls for

"To hold file sharing uniquely responsible for the decline in record sales i.e., largely unauthorized downloading, is basically erroneous and far too simplistic. Moreover, such an assertion indicates a lack of understanding of the dynamics of the current process of creative destruction and transformation to the digital paradigm in the 'recorded' music industry. The word 'recorded' itself denotes a kind of backward looking perspective, as it may no longer be the primary technological format for the rapidly converging music-ICTs-entertainment-telecommunications industry in the third millennium. ...

Our own research would support the arguments made in the Andersen and Frenz Study, 2007, that indeed there may be a significant positive relationship between file sharing and purchase or greater use of various other formats containing music content (although not necessarily record sales per se). ...

The more recent, healthy overall industry earnings indicate the opposite of Liebowitz' assertion that ...'file-sharing appears to have caused the entire decline in record sales and appears to have vitiated what otherwise would have been a growth in the industry' (Liebowitz, 2007). There is no empirical basis for such a facetious assertion. Additionally, there may be many other reasons for decline in record sales (the white elephant in the room), other than increase in file sharing (e.g., transformation to the digital technological paradigm, excessively high prices of CDs, i.e., excessive mark up, standardized quality, decline in purchasing power for luxury goods, lower degrees of choice and diversity, etc).

File sharing and downloading not only increases market exposure but significantly reduces marketing and advertising costs. File sharing, as the imminent dominant mode of music consumption, is proving to be more 'efficient' than simply purchasing pre-recorded music. Owing to diffusion of technical change, it is far cheaper, as it reduces the costs of intermediation and allows consumers greater choice over listening patterns; facilitating the growth of demand-driven patterns of consumption thereby enabling greater consumer participation, and more interactive modes of consumption. Global consumers as well as new producers can benefit greatly from the new P2P file sharing technologies that should be facilitated and legalised, rather than hindered."

A few comments. First, which "recent, healthy overall industry earnings" is Kozul-Wright referring to? (I know quite a few companies, from recorded music to brick-and-mortar retail to digital distribution, that have found "healthy" earnings -- or any earnings -- to be pretty elusive lately.)

Also, she says file-sharing reduces marketing and advertising costs and increases market exposure. Yes, but in practice it's no panacea (which explains why free music is a difficult proposition). P2P can eliminate some costs (related to physical distribution and point-of-sale promotion) but will be replaced by other costs. (And since some consumers will still desire a physical product, the higher costs will not be removed completely.) Building awareness is still an expensive undertaking even if distribution costs are removed. Since P2P is a search-based technology, awareness must exist before a download can take place. Without awareness, market exposure is just untapped potential.

Anyway, I look forward to reading Kozul-Wright's paper and a continuance of the debate.

Posted by Glenn at 2:46 PM | Link
|P2P|

• French president Sarkozy has introduced an Internet policy plan that will cut off the Internet access of repeat offenders. A new government agency is to be created to demand data on suspected offenders from ISPs. The plan, drawn up by a retail executive, includes a few concessions to consumers: Downloads will be available without DRM, and movies will be released on DVD six months after they are shown in theaters. (The Register)

• The New York Times' Freakonomics blog has a Q&A with singer-songwriter Jonathon Coulton (you may have read about him in the April 2007 Times article on Internet-based musicians). One quote, having to do with the differences between mainstream and niche media, really stood out: "I think the best way to talk about the distinction is to say that Internet buzz has a very direct correlation to traffic and therefore sales, whereas mainstream media love tends to have more long-term benefits." So very true. Internet advertising can offer an immediate return on investment -- which can be falsely reassuring to those who have for years blindly accepted that advertising works -- but the effects can be very short-lived. (Freakonomics, via Digital Audio Insider)

• EMI Music UK is working with Art Vinyl, a designer frame manufacturer, to market its vinyl records along with frames. Art Vinyl frames flip open and allow the user to insert a vinyl record sleeve. (Press release)

• In Australia, PayPal and Warner Music are expected to start selling tickets and mobile concert tickets before the end of the year. (The Age)

• Two music companies made Mashable's list of 2007 turkeys: video site Bolt.com (Universal Music Group is an investor) and the ever-morphing Snocap. On Bolt.com: "Bearing in mind that rival YouTube also turned a blind eye and saw massive growth as a result - while more diligent law abiding startups failed to get any traction - we can put this down to a calculated risk that didn’t pay off this time around." As the old saying goes, First get an audience, then worry about licensing content. (Mashable)

• Record Mart, a Latin music store located in the Times Square subway station in Manhattan, has reopened after being closed for nine years. (NY1.com)

Posted by Glenn at 11:29 AM | Link
|P2P|

The debate over piracy is one that has no end. One one side you have Capgemeni's recent "value gap" study pegged piracy's impact on the U.K. music industry at 18% of its decline from its 2004 level. The majority of the decline, Capgemini estimated, was due to the unbundling of the album, or the substitution of a small number of digital tracks for an album.

But wait. A new Canadian study by academians Birgitte Andersen and Marion Frenz found that online piracy has no impact on CD purchases. (Download a PDF of the report here.) However, in the subset of Canadians who do use P2P services, file-sharing was found to increase CD purchasing (by 0.44 CDs per album download). The study assumes 29% of Canadians are P2P downloaders.

"In the aggregate, we are unable to discover any direct relationship between P2P filesharing and CD purchases in Canada. The analysis of the entire Canadian population does not uncover either a positive or negative relationship between the number of files downloaded from P2P networks and CDs purchased. That is, we find no direct evidence to suggest that the net effect of P2P file-sharing on CD purchasing is either positive or negative for Canada as a whole. ...

However, our analysis of the Canadian P2P file-sharing subpopulation suggests that there is a strong positive relationship between P2P file-sharing and CD purchasing. That is, among Canadians actually engaged in it, P2P file-sharing increases CD purchasing. We estimate that the effect of one additional P2P download per month is to increase music purchasing by 0.44 CDs per year."

Professor Stanley Liebowitz, who has studied the relationship between file-sharing and CD sales, commented on the Canadian study at his website (he refers to the authors as A/F):

"With these seemingly innocuous assumptions, the results of A/F imply that obtaining music illicitly should have increased record sales by 50% (since each illicit album increases sales by half a unit and there are as many illicit albums as legitimate sales). Contrary to the large increase in album sales predicted by A/F, album sales in Canada have fallen considerably since 1999. According to IFPI statistics unit sales were down 30% by 2005 whereas CRIA statistics indicate that unit sales were down by 20%. ...

To believe the results of A/F you must accept that sales have dropped by half in 6 years, due to some factor that no one can identify. Does this seem even remotely plausible? This would be such a steep decline in such a short period of time that it would seem impossible to not have a clearly identified cause. And A/F’s results rule out the possibility of other entertainment activities siphoning off record listeners."

So is online piracy a problem or isn't it? Judging from FCC Commissioner Deborah Tate's speech last week at Vanderbilt University, Washington D.C.'s perception is still that online piracy is a major problem. Commissioner Tate talked almost entirely about piracy -- online and physical -- and laid out numerous examples of piracy's negative impact on the entertainment industry and the economy as a whole. (Of course, Commissioner Tate knows what topic to focus on when in Music City.) Even though most of the figures could be questionable (e.g., sourced from trade groups like the RIAA and the IFPI), it was obvious that Commissioner Tate is dedicated to helping content owners fight online piracy.

Bonus reading: An April 2004 article at the New York Times about the well known Harvard/UNC study that found no link between file-sharing and CD sales.

Posted by Glenn at 8:46 PM | Link
|Academia||P2P|

• Radiohead is reportedly close to signing deals for the physical release of In Rainbows that will circumvent major labels. XL Recordings will handle the album outside of the U.S. while Side One, an offshoot of ATO Records and part of the Coran Capshaw empire (that also includes Red Light Management and Music Today), will have the album domestically. (New York Times)

• Music publisher Primary Wave has inked a deal with television production company Reveille to administer the latter's music publishing rights. (Billboard.biz)

• Word is the Danish branch of the IFPI has "seriously proposed" allowing peer-to-peer downloading in exchange for a small monthly fee charged to all ISP users. (O'Reilly Radar)

• At a Zune party at CMJ, a Microsoft representative hinted that an upcoming Zune feature -- to use its Wifi to allow other people to see what you've been listening to -- could be used to let people see what artists and celebrities are listening to on their Zunes. Not only that, but the representative said the ability to view celebrity song plays would require an invitation (e.g. fan club members or people who bought a special edition CD). First thought: the infamous Beyonce iTunes playlist and the predictable and often boring nature of celebrity playlists. Second thought: This creates a better network effect that does the Zune-to-Zune sharing that requires that two devices be within a short range of each other. Third thought: Lots of free Zunes will have to be given to musicians and celebrities. (Listening Post Blog)

• In this podcast at The Register, we're told the average price paid for Radiohead's In Rainbows is around $5.00, far lower than what people tell pollsters and less than what the band could have made from a major label. (Open Season, via The Open Road)

• Songkick, which launched recently, is a website that offers music fans a database of concerts (in the U.S. and U.K.) by tracking 14 ticketing websites such as Ticketmaster.com and StubHub. One feature lets users search blogs for artists in the Songkick database. (TechCrunch)

• The Canadian Music Creators Coalition, a collection of artists such as Sarah McLachlan and Broken Social Scene, is pushing for copyright reform without suing music downloaders and without using DRM. (The Set List)

Posted by Glenn at 9:19 AM | Link
|P2P||Publishing|

• Napster's free, ad-supported music service has been laid to rest. (Digital Music News)

• Australian music sales fell 13.64% in value in the first half of 2007. CD sales were down 15.72% in units and 17.34% in value. Downloads and ringtones rose by 89.67% in unit value and only 47.48% in dollar value. (Billboard.biz)

• Monday Night Football unveiled its new music features last night. Snippets of a song by Kanye West, who has a new album out today, were played before commercials and during the halftime show. In the coming weeks, MNF will offer a prime-time audience for new releases by Foo Fighters, Matchbox Twenty, Kid Rock, Eddie Vedder (who has a solo album coming) and Irma Thomas & Marsha Ball. (Billboard)

• Another CD Baby post. (Why not? They're good stuff.) This time we have a breakdown of the value of CD Baby digital sales at all services. iTunes has accounted for 67.8% of all sales. iTunes Europe is at 5.5% and iTunes UK is at 4.6%. With its other territories, Apple accounts for 82.8% of total CD Baby digital sales. At number four is the best non-Apple store, Rhapsody, which has 4%. Napster is fifth at 3.6%. Further down the list are eMusic (2.3%, which may seem low but this is dollar value, not unit sales), Sony Connect (0.4%) and Ruckus (0.1%). (CD Baby, via Digital Audio Insider)

• SpiralFrog has had a rough four years but doesn't rule out going public. ZDNet points out the company must begin paying the interest on the $10 million in raised through the sale of secured notes. (ZDNet)

• Qtrax, the legal P2P service that will hopefully launch of these years, has hired a chief technology officer. Qtrax's CEO told Silicon Alley Insider the service would be ready by mid-September. Place your bets. (Silicon Alley Insider)

Posted by Glenn at 10:33 AM | Link
|Napster||P2P|

• Hallmark has launched its "Use Music Summer Tour." The seven-city tour coincides with the launch of 100 new Cards with Sound. In addition, the retail chain now offers iTunes gift cards at most of its stores. (Press release)

• The advocate general for the European Union of Justice said ISPs are not required to identify subscribers in civil copyright infringement cases. Promusicae, Spain's music trade group, had sued Spanish ISP Telefonica to force it to turn over information on subscribers suspected of sharing music via KaZaA. (Ars Technica)

• Blockbuster had its credit facility trimmed by $50 million and is thinking about reducing the footprint of some stores. (Video Business)

• What does Terra Firma have in mind for EMI? The Independent puts forth some good ideas. (The Independent)

• Universal Music Group chairman and CEO, Doug Morris, was elected to the board of directors of Columbia University's National Center on Addiction and Substance Abuse. Morris is a Columbia graduate. (Earth Times)

• The worst prediction of the week comes from Music Week editor Martin Talbor. On Prince's direct marketing campaign he told Time magazine, "If we keep moving down this particular route, companies will only release records that are sure home runs. That means either stuff by established artists or unknown artists doing cover versions. There is the danger that it will no longer be worth it for companies to invest in new, up-and-coming artists. And if record companies don't invest in them, who will." (Time)

• The British press is really eying the opening of a new Rough Trade store. BBC News has another article on the indie retailer's expansion plans. I suppose it is newsworthy given that the new store will have ten times the floor space of the old store, and this comes as so many have written off physical formats. Rough Trade believes the selling of music has been lost. "If anything, the people I talk to appreciate vinyl and CDs more than ever in this digital age. It's just that they've gone off the way it's sold. The High Street has, unfortunately, commoditised music. When you walk into a High Street record, or entertainment, store, it's about three-for-two and the price message is what hits you. And if you're interested in music, it's quite a demeaning, quite demoralising message to hit you." (BBC News)

Posted by Glenn at 7:49 AM | Link
|Brick-And-Mortor Retail||EMI||P2P|

• The European Commission cleared Terra Firma's takeover bid of EMI. Today is the last day of Terra Firma's extended bid period. (Dow Jones)

• The rootkit is back in the news. Sony BMG has sued The Amergence Group (formerly SunnComm), the maker of the anti-piracy technology included in Sony BMG CDs that resulted in public outcry, lawsuits and government investigations. (AP)

• Senator Russ Feingold is checking in with the radio industry to make sure they're complying with the FCC's directive to enforce the ban on payola practices. He sent a letter to executives at Clear Channel, CBS Radio, Citadel and Entercom that asked for information on access the companies have given to artists and labels. "Have you taken any efforts to increase the amount of access provided and to facilitate submissions?" he asked. (Billboard.biz)

• The Wall Street Journal's Sarah McBride has an article on radio stations' analysis of P2P traffic to help create playlists. Clear Channel's Premiere Radio Networks has a venture with BigChampagne that offers traffic data to radio stations. She tells the story of Shop Boyz' "Party Like A Rockstar," which was big with file sharers but wasn't getting requests. Eventually, the requests started to roll in -- especially in text messages from mobile phones -- and track downloads increased as well. (Wall Street Journal)

• Fox and the production company behind "Laguna Beach" and "The Hills" are planning a reality TV series called "Nashville" that will follow musicians trying to make it in Music City. The show will feature Sony BMG artists Chuck Wicks, Matt Jenkins and Mika Combs. (Music Row)

• Just as Kelly Clarkson's My December album dropped 60% in its second week, rumor is that RCA pulled Clarkson's summer TV and print campaigns and are focusing on the upcoming Carrie Underwood album. (Kings of A&R)

• Swiss consumers will have to pay a tax on digital music players and some types of A/V recorders. (SwissInfo)

• Napster unlimited over-the-air download service launched with NTT DoCoMo in Japan. The service is integrated with the PC-based Napster To Go service. Here's a new twist for Napster: Customers have the option of paying for Napster through their DoCoMo bill. Whether or not mobile subscription services will take off is still up in the air, but these are positive steps. I like the billing option a lot. (No link to press release yet.)

• EMI and management company Union Entertainment Group have formed a joint venture record label called Audionest. The label will be distributed by Caroline. UEG manages rock bands Nickelback, Default and Candlebox. (Billboard.biz)

Posted by Glenn at 8:09 AM | Link
|EMI||Napster||P2P||Payola||Sony BMG|

• Telecom company Sprint has become the first company to underwrite a song that is aimed for P2P networks. "According to sources familiar with the deal, Media Defender will push 16 million Plies song files embedded with the Sprint logo onto peer-to-peer networks over a three-month period in return for a "substantial six-figure" fee." (New York Post)

• The fighting over Prince's free giveaway CD has reached comedic levels. Billboard.biz reports that Virgin Megsastores is angry that HMV has decided to sell the Mail on Sunday, with which Price's Planet Earth CD will be bundled. Said a Virgin exec, "Simon Fox [HMV chief executive] labelled the Mail on Sunday deal as 'devaluing music' and 'absolute madness', now they appear to have joined forces to sell more copies of the very same paper. It's not only retailers that suffer; the public will suffer in the long term by restricting choice on the high street. Of course people will take a free CD by a platinum-selling artist like Prince but you only need to look at what's happened to Fopp going into administration to get an idea of the potential long-term impact." Fopp, of course, would be in financial distress whether or not the rare artist gave away his album. With this decision, HMV is showing something that is all too rare in music retail: the ability to adapt. (Billboard.biz)

• Statistics to be announced this week are expected to show that U.K. album sales are down 10% (much better than the 15% drop in the U.S.) while digital sales are expected to almost double. "At Easter, industry bosses forecast a 4-8 per cent decline in revenues, but at least one of the four biggest companies is preparing for an 11 per cent tumble as the shift to digital starts to make its impact felt." (Times Online)

• A Mayoral Forum will be held in Nashville on July 11. The forum will gather 11 organizations such as the AMA, Nashville Opera, Nashville Chamber Orchestra and NSAI. (Music Row)

• The Tennessean's Jenny Song on Christian ringtones: "So far, Christian ringtones occupy only from 3 percent to 5 percent of the ringtone market at most, many in the industry estimate. But while the general ringtone market has flattened out ... sales and optimism for Christian ringtones are on the rise. EMI Christian Music Group of Brentwood, the largest label in the Christian music industry, for example, says daily sales of its ringtones have gone up by more than three times since AT&T separated Christian ringtones into a major category in April. "(The Tennessean)

• The life, times and semantics of indie. (The Guardian)

Posted by Glenn at 7:41 AM | Link
|P2P|

• Only 3.6% of EMI investors accepted Terra Firma's $4.8 billion bid, which led Terra Firm to extend the offer to July 12. (Bloomberg)

• Overall sales were down 1% last week and were 8% below the same week last year. For the year album sales are down 15%. Sales of digital tracks were also down 1% last week, and were 40% ahead of the same week last year. Year to date, sales of digital tracks are up 49%.

• Clive's fears came true: Hannah Montana topped Kelly Clarkson last week. Montana debuted with 326,000 while Clarkson's My December debuted with 291,000.

• A Belgian court has ruled that Internet Service Providers must use the technical means available to stop illegal file-sharing on their networks. The IFPI is, of course, thrilled. (Press release)

• Sony BMG is trying to renegotiate the terms of its music publishing joint venture with Michael Jackson that will allow it to sign songwriters. The current terms of Sony/ATV does not allow Sony to sign competing songwriters. Talks are reportedly at an early stage. (Times Online)

• David Cameron, leader of the Conservative Party, has a deal for the British music industry: Stop with the misogyny, guns and materialism and he will support an extension of copyright to 70 years from 50 years. (Times Online)

• Edna Gundersen writes about Live Earth and "benefit fatigue" that could limit its effectiveness. My fear is that people move on," said Grammy producer Ken Ehrlich. The Pet Shop Boys' Neil Tennant worried about "the idea of rock stars lecturing people as if they know something the rest of us don't." (USA Today)

Posted by Glenn at 7:49 AM | Link
|EMI||P2P||Publishing||Sony BMG|

• Album sales were down 7% last week and were 5% lower than the same week last year. For the year, album sales are down 15%. That's a two-point improvement in just two months. Sales of digital tracks rose 2% for the week and were 44% higher than the same week last year. For the year, digital track sales are up 49%. Two months ago, digital tracks were up 52% for the year. Three months ago the number was 53%. One might find it odd that album sales are improving against last year's pace while digital track sales are worsening against last year's pace. I have two thoughts on that. First, it confirms the popular belief that last year's album release schedule was weak. Second, digital track sales' pace could be the result of slowing digital music player sales (see second-to-last news item below).

• Finally, somebody comes out and admits that the iPhone isn't going to impact the recorded music business (at least in the near term). AP's Alex Veiga is right when he wrote that sideloading still trumps the unfilled promise of ubiquitous, over-the-air download. That means the iPhone is a very expensive version of the iPod...which is already pretty ubiquitous. Forrester's Charles Golvin didn't have to go out on a limb when he said, "I imagine most of the people who'll buy the iPhone will be iPod users already." (AP)

• As part of Universal Music Publishing Group's acquisition of BMG Music Publishing, UMPG is combining its Nashville operations. Pat Higdon has been named EVP and GM of UMPG Nashville and will report to chairman and CEO David Renzer. (Nashville Business Journal)

• Vanessa Carlton has signed with Irv Gotti's The Inc. Her third album, already recorded, was produced by Stephan Jenkins (Third Eye Blind) and includes songs co-penned by Linda Perry. (Billboard.com)

• The Format is giving away for free its "Dog Problems EP" at the band's website. The freebie lasts until July 16th and is happening because the band owns its own publishing and master recordings. "We'd be doomed if we sat around and waited for things like radio play to come around," said singer Nate Reuss. The EP was released through The Vanity Label. (The Format, via Out The Other)

• Here's the next RIAA heart attack: Is Google better than LimeWire for sharing music? One person things so, and has shown how using the search tag "index.of" will lead Google to reveal directories and not actual web pages (view YouTube video). Those directories shows files that people have stores on servers but have not linked to web pages. His website, JimmyR.com, has instructional videos and tips on how to get audio from YouTube videos, how to put a Google MP3 search on your website, and it has its own Google search that simplifies searching for MP3s, albums, torrents, PDFs and ringtones. (Slyck)

• Sanctuary's radio promotion department is closing. (Billboard.biz)

• I missed this on Friday: Digital music player sales are down 20% this year. Analysts are giving two key reasons for the drop: Music-enabled mobile phones and a penetration rate that is approaching saturation. (AP)

• Edison Research says the Internet is approaching television as the "most essential" medium. Among those surveyed, 36% voted for television and 33% voted for Internet. "In almost every category we surveyed, the Internet has doubled or tripled where in consumer's minds it bleeds into all facets of their lives." (Internet News)

Posted by Glenn at 7:09 AM | Link
|Apple||P2P||Publishing||Universal Music Group|

This morning the New York Post's Peter Lauria reported that online music service Qtrax will launch in October of 2007 and has deals with all four major music groups. Brilliant Technologies will merge Qtrax with a company called Flooring Zone so the music service can be traded publicly. The scope of Qtrax's offerings is immense.

" With a full complement of songs from the major labels as well as the esoteric live recordings and personal tracks stemming from users' own collections, Klepfisz estimates Qtrax will have access to between 20 million and 30 million copyrighted songs at launch in October.

At that size the service could not only be considered a legitimate threat to Apple's iTunes, which only features 5 million songs, but also a better economic proposition as well (record labels collect about 70 cents on each iTunes sale)."

The company estimates its initial revenue will be as high as $175 million and as low as $20 million.

Qtrax is what I like to call "fake P2P" because unlicensed content if filtered out and restrictions are placed on the file format. The company calls itself "P2P2A," meaning peer-to-peer-to-artist, and boasts that is the world's first licensed Gnutella client. This April 2007 article at the New York Times is a good introduction to Qtrax and its ad-based business model.

Posted by Glenn at 10:45 AM | Link
|P2P|

• A PriceWatershouseCoopers report predicts a -0.4% compounded annual growth rate through the next five years. The report refers to the "typical" music business of recorded music, not the music publishing or other segments that are part of the entire picture. With music groups getting involved in other revenue streams, those figures will need to be adjusted in the coming years. (Billboard.biz)

• Rolling Stone continues its series on the new music industry, this time laying out five possible outcomes in the future of the business: ad-supported music, legal P2P, endless access points (only generalities were given), different revenue streams and consumers as retailers. Yeah, I know, I've heard it all before, too., but in the era of the 200-word article this is about as "think piece" as Rolling Stone gets. (Rolling Stone)

• Sonos digital home music systems are now available in more than 440 Best Buy stores. The national chain will offer in-store, interactive Sonos displays in all stores offering Sonos products. (The Independent)

• Universal Music Group has joined up with Delivery Agent Inc. to launch a custom online shop for Interscope recording artist Pussycat Dolls. Consumers will be find and purchase clothing products seen on the Pussycat Dolls. The stores will also sell exclusive, branded merch. Check out the "shopisodes," a cross between VH1's "Pop Up Video" and the Home Shopping Network. (Press release)

• Jupiter analyst David Card on Paul McCartney in an iPod commercial: "Boomers need to be more comfortable buying digital music, too, you know...almost 60% of paying downloaders in our survey base were under 35." (David Card's Jupiter Blog)

• Representative Henry Waxman has reportedly grown concerned over the possibility of sensitive personal and government information being inadvertently shared on P2P networks and has sent letters to Limewire and StreamCast Networks executives to inquire what steps they have taken to prevent such sharing. (Hollywood Reporter)

Posted by Glenn at 7:20 AM | Link
|P2P||Research||Universal Music Group|

Sony BMG became the third major to license its tracks to legal P2P system Qtrax (read press release).

The New York Times has an article today on Qtrax. According to Qtrax's president, the company is in talks with Universal Music Group and Merlin, an indie label trade group. News.com reported today that former SpiralFrog CEO Robin Kent is doing consulting work for Qtrax.

To call Qtrax a file-sharing service is misleading. So what if Qtrax uses the Gnutella client? There's no actual sharing of licensed tracks between users, and the protections glued into Qtrax files are nothing like the unprotected files acquired through real P2P. Though the Qtrax site boasts "unlimited free downloads and plays," the Times article said "listeners will be able to hear songs a certain number of times — probably five in the case of most major label acts" -- before they must purchase the song. (And what protected format that does not work with the iPod will users get to purchase?)

The Times' Robert Levine gets it wrong. "From the user’s perspective, Qtrax works much like any file-sharing program," he wrote. That's not true, and because that's not true Qtrax has a very tough hill to climb. I don't have much faith that its initial model will get anything more than a tiny niche of users.

Posted by Glenn at 11:48 AM | Link
|P2P|

NPD Research released some information today on America's P2P usage (read press release). Legal downloads grew considerably in 2006, but those sales are dwarfed by the volume on music acquired on P2P networks. By the end of 2006, NPD counted 47 million "digital music households" in the U.S., of which 15 million took at least one song from a P2P site (and 8% increase over 2005). iTunes users increased almost 66% to 12.6 million.

With that 8% increase in P2P users, though, came a 47% increase in the number of files acquired (5 billion versus 3.4 billion). In a New York Times article, NPD's Russ Crupnick pointed to access to hard drive space as an impetus for heavy P2P usage. "When I talk to people who are involved in a lot of peer to peer, they’re running around with external hard drives," he said.

NPD noted a slowdown in the growth of P2P traffic, which it called "remarkable given the growth in digital music users overall, the emergence of digital video, and the expanded consumer exposure to broadband."

I can imagine news of NPD's report will revive calls to legalize P2P. Last week, former EMI exec Ted Cohen had an op-ed in Billboard magazine that called for a six-month experiment that would monetize existing P2P traffic. The time is right for such an experiment, but labels have other ideas. Earlier today, EMI announced it would drop DRM from its downloads -- showing that is is far easier to simply charge more for DRM-free downloads (and continue to prosecute illegal file sharing) than it is to negotiate the kind of revenue-sharing agreement that would enable legal P2P. Consumers get interoperability, but EMI get to stick to their preferred (more centralized) methods of distribution.

Posted by Glenn at 7:19 PM | Link
|P2P|

Former EMI exec Ted Cohen has a piece in the latest issue of Billboard that is making the rounds (for those of us who do not subscribed and are locked outside the password-protected website). Cohen left EMI to form a consulting group. A few months ago, Reuters reported that Cohen was hired by P2P company Limewire to lobby on its behalf for the type of proposal he had now put in writing, so keep that in mind when reading this opinion piece.

If music is about freedom, Cohen says, then it's time to give it a shot. His short-on-details plan is for a six-month trial period to gauge the effectiveness of a legitimate, revenue-sharing P2P network.

"What I propose is an aggressive six-month trial by a major P2P service (any takers?) that could finally give us clear insight into the behavior of P2P users. Is it about interoperability, community and deep catalog, or is it all about free? We need to know.

Here's how it would work: Leave the service exactly as it is: no filtering, no DRM, no changes to its current offering of unprotected MP3s. The rare tracks, bootlegs-they all stay there. Just charge for each piece of content and split the revenue between the service and the content owners.

Yes, I know. Deals aren't in place with labels and publishers. Some content out there (bootlegs, etc.) isn't 'cleared,' and yes, it might keep some accountants working overtime. But wouldn't it be better to figure out how to allocate all the revenue than not to have it at all? For the 'gray' content, I suggest labels consider a 50/50 percentage share with the artists, obviating arguments on who owns it.

Cohen's idea comes at a good time, and the fact that this piece ran in Billboard and not Wired means his idea will probably gain a lot more traction within the industry. After years of tooth-and-nail litigation, the RIAA has made its point as well as its going to make it. Consumers, through their P2P-loving behavior, have also made their point. Why not try out Cohen's plan? Putting a sunset clause on this kind of experiment gives labels and publishers an exit plan and should cause them to be a lot less squeemish about the whole idea.

Posted by Glenn at 12:01 PM | Link
|P2P|

• 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|

BusinessWeek has a nice article on the music industry's efforts since the Grokster decision to experiment with P2P networks as a distribution channel.

One company in the article is Skyrider, which with $20 million in funding, rose from the ashes of anti-piracy company C-Right to help companies deliver ads with content over P2P networks. Here is a description of how Skyrider works:

"A peer-to-peer user searching for, say, a Barenaked Ladies song [the band is a client] would receive multiple results for the corresponding music video, including one that includes a clickable ad at the base of the video for the band's ringtones, a list of the dates when the band is coming to the specific computer user's area, or a marketer's logo, for example."

BigChampagne's Eric Garland explained that media companies were hesitant to use such services pre-Grokster for fear they would harm their legal position. Post-Grokster, they have been more willing to test services like Skyrider.

Posted by Glenn at 4:03 PM | Link
|P2P|

Jeff Leeds reported recently on a move by Universal Music Group's Suretone Records to put its videos -- free of charge - on popular file-sharing networks. Sort of. Suretone is just being a big tease.

"Unlike the song and music video files that major labels sell at services like iTunes, the video files will not be wrapped in protective software to limit copying, executives say. .... But the files will also be incomplete: users who download them will see perhaps half the video and be directed to watch the complete version at the label's own Web site, which will sell advertising to run alongside its videos."

There are two themes here. The first is the video's transformation from a promotional vehicle to a direct (and indirect in this case) revenue stream. Once given away for free -- in order to sell albums -- videos are now being asked to hold up sagging bottom lines. Suretune is trying to both promote (via seeding) and generate revenue (through advertising). The other theme is that of the label as a direct-to-consumer entity. Traditionally, labels have been at least one degree of separation from the consumer (iTunes and Target, for example, actually sell the music, and there may be a distributor between retailer and label). Recently, labels have pondered how to eliminate the middle man and connect directly with fans. Suretone's model is to both lure (for ad dollars) and entertain (for eventual music sales).

It's the luring aspect that bothers me. (Sorry to use a word with such negative connotations, but it's the proper word here.) Labels should resist the urge to adopt any marketing strategy that can result in additional consumer frustration. With RIAA lawsuits and DRM casting an increasingly black cloud on consumer sentiment, labels would be wise to play nice for the time being. If CD sales were up 20% rather than down 20%, I'd say, "Sure, tease the kids with incomplete videos. Times are good." But they're not good, are they?

Posted by Glenn at 5:51 PM | Link
|P2P||Universal Music Group|

• EMI's restructuring has eliminated an "indefinite number of positions" at EMI Christian Music Group. Regional sales offices in Atlanta and Chicago have been closed. EMI CMG's will continue with its deal with Midas Records, which gives EMI CMG worldwide rights to to general market, Christian and digital distribution of Midas' Christian roster. One of the label's highly touted new acts is Rush of Fools. (Read article at Christian Post)

• Sanctuary Group reported an operating loss of £56.7 million ($111.7 million) for the year ending September 30, 2006. It included £8 million for refinancing and restructuring. Revenue was down to £133.2 million from £148.1 million. That was quite an improvement from the previous year's loss of £136 million. Rough Trade, which is partially owned by Sanctuary, posted a loss for the year. The company said it is considering selling off some assets. Management sees a return to profitability by "2008 or later." (Read article at The Guardian and the press release)

• According to co-founder Chad Hurley, YouTube will start sharing revenue with its users. This applies for videos for which the user owns the copyright. Sounds like a lot of police work to make this happen. (Read article at BBC, via paidContent)

• Must be a lot of paperwork involved: The University of South Carolina has hired a full-time employee to receive the RIAA's copyright complaints. (Read article at The Charlotte Observer)

Posted by Glenn at 7:55 AM | Link
|EMI||Earnings Releases||Indies||P2P||YouTube|

John Kennedy, head of the International Federation for the Phonographic Industry, recently showed interest in a global license fee. Such a fee would be charged by ISPs and would be paid in lieu of royalty payments for music traded online. He was quoted by the Herald Tribune's Victoria Shannon at a press briefing at MIDEM.

"It's a model worth looking at. If the ISPs want to come to us and look for a blanket license for an amount per month, let's engage in that discussion..."

Then Mitch Bainwol of the RIAA interrupted with, "...on a voluntary, commercial basis."

A global license as described in the article would not be tied directly to actual downloads. Instead, it would act like a lump-sum payment to rights holders, much like the "Zune tax" received by Universal Music Group. For the majors, such a global license would be preferable, as their revenue would be based on existing market share and ability to negotiate. My guess is that indies would probably fare better if license revenues were paid according to samples of P2P traffic. The scheme proposed by Peter Jenner would call for a mandatory ISP tax that would pay royalties based on popularity (read interview with Jenner at The Register).

Oddly, Kennedy's openness toward the idea of a global license stands in contrast to comments he made in an interview with Reuters. "Many people around the world tell me that we've handled our problems in an incorrect manner but no one tells me what we should have done," he said. "Free is just impossible to compete with."

If labels have anything to fear about a global license, it is that a flat tax may lead consumers to feel like music is free. With so many labels worried about the perceived value of their catalogs, it would be understandable that they would fear any further erosion of value. And in a way, Kennedy is right. The idea of the global license has been around for years, but nobody has made a compelling enough case that it can and will lead to greater revenues.

Yes, major labels are stuck, to some degree, in an old media mindset. But they're businesses intent on increasing shareholder value. If global licenses can increase shareholder value, the labels will do it. Can somebody prove it can work, or are executives, already on shaky ground, expected to take a leap of faith? Here's another possibility: Labels will be pushed into testing a global license due to digital's inability to offset falling CD sales. It seems silly to undertake a strategy change based on the process of elimination, but labels may soon be down to their least favorite options.

Posted by Glenn at 6:01 AM | Link
|P2P|

• EMI has filed a $100 million lawsuit against ringtone provider Infospace. The suit alleges Infospace and its subsidiaries have miscalculated royalties, sold restricted songs and sold in territories for which they are not licensed. EMI's auditor ran the numbers and found that Infospace had underpaid royalties results from third-party sales at Verizon and US Cellular web sites. The final straw was probably when Infospace touched a restricted, Beatles-related song, John Lennon's "Imagine." (Read article at Hollywood Reporter)

• Spiral Frog, which is almost set to launch its ad-supported P2P business, just sacked CEO Robin Kent. Could this delay yet again the service's launch? (Read post at The Key blog, via paidContent)

• News from MIDEM: The launch of Merlin, the world's first globa new media rights licensing agency. Founded by member groups like Beggars Banquet, K7, Tommy Boy and Naive, Merlin is meant to facilitate licensing to the new generation of websites like YouTube and MySpace. (Read article at Billboard.biz)

• Digital distributor The Orchard inked a deal with digital jukebox company TouchTunes Music. Its The Orchard's first licensing deal with a digital-downloading jukebox company. Basically, that really cool digital jukebox just got better. (Read press release)

• SoundScan International has added over-the-air full-track digital download sales from a number of mobile operators in Europe -- Vodafone in Spain and Ireland, 3 Mobile in Denmark and Sweden, TDC in Denmark and from Telenor in Norway. (Read press release)

Posted by Glenn at 10:45 AM | Link
|Digital Distribution||EMI||Indies||Licensing||P2P|

• EMI named to new top executives yesterday. JF Cecillon will become chairman and chief executive of the newly established EMI Music International unit, which will oversee Asia, Latin America and Australia and New Zealand. Ian Hanson was promoted to to the global role of chief operating officer of EMI Music. Both will report directly to Eric Nicoli, the executive chairman of EMI Group was named CEO of EMI Music. Nicoli seems to want to be very hands on with the underporming U.S. units; North America business will report directly to Nicolo. (Read article at Billboard.biz)

• While we wait for legit P2P service Qtrax to arrive, parent compay Brilliant Technologies has named Andrew Nibley to a newly formed advisory board. Nibley is currently Chairman and CEO of Marsteller and formerly was the head of GetMusic, the online music service founded by BMG and Universal Music Group in 1999. More advisory board members will be announced shortly. (Read press release)

• Hartmut Ostrowski was named CEO of Bertelsmann, parent of BMG Music. Ostrowski follows Thomas Middelhoff. (Read article at BusinessWeek.com)

Posted by Glenn at 10:10 AM | Link
|EMI||P2P||Sony BMG|

• True to its word, Warner Music Group declared another dividend. This was announced on December 29 and was $0.13 per share, or $19.4 million in total. WMG has said it plans to pay quarterly dividends in an amount not exceeding $80 million per year. (Read press release)

• The on-again, on-again talks of a merger of Sirius and XM was the perfect satellite radio article for January 1st. The story rolls over from 2006 and everybody is still waiting for the two to tie the knot. The New York Times' Eric A. Taub took a look at the two companies and their longing for each other. And why shouldn't they want to hook up? Each is much like the other. One analyst said, "Customers cannot tell the difference between the two services." The other message of the article was the two companies' similar cost structures. "Clearly, a merger makes sense from an investor’s point of view to reduce costs, and to have a better return," said the CFO for Sirius. (Read article at New York Times)

• Maybe it's possible to gauge the health of the P2P market by the number of P2P companies willing to advertise at a P2P-friendly, anti-RIAA website. P2Pnet.net founder Jon Newton wrote the site "is one the verge of going offline" as income as dropped 80% through 2006. In case you haven't read the site -- and I would not recommend it -- P2Pnet.net covers the file-sharing market with little objectivity and much passion. (Read article at P2Pnet.net)

Posted by Glenn at 10:43 AM | Link
|P2P||Satellite Radio||Warner Music Group|

If not for Forbe.com's Louis Hau, I would have forgot that ad-supported P2P is going to rear its head in 2007. "Free Music -- Next Year?" catches up with some companies that made headlines in 2006 but have been quiet leading up to their product launches. (Mashboxx's last press release was on July 28, 2006.)

SpiralFrog is running behind schedule, Hau reported, but will launch soon and has signed up more labels. Its December 2006 launch was pushed back and now the company hopes to debut by late January 2007. SpiralFrog just launched its beta and will soon announce partnerships with "about 20" independent labels. Universal Music Group and Koch Records has already signed on with SpiralFrog.

Mashboxx, quiet during 2006, will launch a beta in three to four months, Hau wrote. Company founder Wayne Grosso said Mashboxx expects to secure financing soon from a strategic partner. It has deals with all four major music groups.

Qtrax is also running behind schedule. Its planned debut was the third quarter of 2004. Now the company is aiming for the first quarter of 2007. Qtrax has deals with the four majors as well as The Orchard and TVT Records.

An Equitas analyst report (filed as an Form 8-K last week) predicted Qtrax annual revenues ranging from $20 million to $175 million. The report said Qtrax could be a good acquisition for both search engine companies and media companies like Viacom and Newscorp. Equitas offers some insight into the planned service. Qtrax will offer a two-tier service. The first tier is ad-supported, the second is premium subscription service with more features. Both tiers will filter existing P2P networks and offer protected WMA files. Songs and albums can be purchased outright. In addition, Qtrax will offer an incentive program through point accrual, and will have social networking and music discovery aspects.

(After the jump, thoughts on these services and their strategies.)

Continue reading "Ad-Supported P2P To Finally Appear In 2007" »

Posted by Glenn at 3:56 PM | Link
|P2P|

• Impala, the Independent Music Comapnies Assocation, released a statement on the European Union investigation into Universal Music Group's purchase of BMG Publishing. "Our only request is for a level playing field and market access -- exactly what competition rules are intended to guarantee. In other words, give European music space on the market, let the consumer decide and give European citizens a Europe to be proud of." (Read press release)

• Universal South has hired Fletcher Foster to be its SVP and GM. Foster, previously the marketing chief of Captol Nashville, will start early next month. (Read article at The Tennessean)

• Performing rights organization BMI and Spiral Frog, an ad-supported P2P network, have completed a licensing agreement. Spiral Frog is set to debut in early 2007. It requires users to watch advertisements in return for free -- though rights-protected -- music files. Former BMI president and CEO Frances W. Preston is on Spiral Frog's board of directors, as is Jason Berman, former president of the RIAA and chairman of the IFPI. (Read press release)

• Jason Mraz, who is signed to Atlantic Records, has released a digital-only release through digital distributor Musicane. Selections For Friends, to be priced at $12.95, is a 13-track collection of live recordings. Consumers can purchase the album directly from www.jasonmraz.com. (Via Digital Music News. A week-old press release is here.)

• Artists manager Peter Jenner told The Register CD prices would increase as a result of a blanket license that enables legal file-sharing. The physical market, he figures, will dry up and prices will rise accordingly. I think that's an accurate assessment, though Jenner must know there are powerful retail forces that will fight higher wholesale prices. Prices won't jump wildly, though. Labels are still bullish on the CD format and will stay behind it. The Register sees the CD's longevity; audio quality is one reason for its resilience. (Read article at The Register)

Posted by Glenn at 7:45 AM | Link
|Digital Distribution||P2P||Publishing||Universal Music Group|

• Entercom, which owns over 100 radio stations, reported its results for the quarter ending September 30. Net revenues dropped 1% to $114.3 million. Same station net revenues decreased 2%. (Read SEC filing)

• A Spanish judge has ruled that file-sharing for personal use is permissable. The judge said a guilty verdict would criminalize what has become a "socially accepted and widely practiced behavior." The Spanish music trade group is expected to appeal the decision. (Read AP article, via Digital Music News)

• Legendary record exec Ahmet Ertegun, co-founder of Atlantic Records, was seriously injured after slipping and hitting his head while backstage at a Rolling Stones concert. (Read aritcle at This Is London)

• Will the European Union approve Universal Music Group's purchase of BMG Music Publishing? We'll know on December 8th. (Read AP article)

• Ticketmaster contests a Wall Street Journal op-ed (which I somehow missed) written by a Wharton School professor. Kent Smetters wrote that Ticketmaster is lobbying for legislation that would eliminate secondary ticketing. Ticketmaster denies the charges and company president Sean Moriarty gave his side of the story. (Read article at Pollstar)

• Wind-Up Records act Seether is now managed by The Firm. (Via Kings of A&R)

• Warner Music Group will conduct an earnings call on December 1st. The company will report for the fourth quarter and the fiscal year ending September 20th. (Read press release)

Posted by Glenn at 7:59 AM | Link
|P2P||Radio||Warner Music Group|

Last night the Associated Press reported the music publishing industry has reached an anti-piracy settlement with P2P company Kazaa. The settlement, for a "substantial sum," arose from a class action lawsuit filed by the National Music Publishers' Association. Today's NY Times reported the amount of the settlement was $10 million.

The NMPA released a press release on Monday (missed that one).

The Register: "This brings to an end the music publishers' class suit against Kazaa. And it leaves Kazaa free to resume its latest incarnation as yet another lossmaking legit music service."

Posted by Glenn at 4:17 PM | Link
|P2P||Publishing|

• Seems like forever since I read a Jeff Leeds article. Here's one, "Ads Test Payola Case Settlement," about an Entercom program called "CD Preview." The program allows labels to buy ads in which to showcase their music -- and the plays count as a spin on radio charts. Given the recent payola lawsuits, Eliot Spitzer is certainly taking a look by now. (Read article at New York Times)

• Hmm...an article at a marketing website about the viral campaign for John Legend's upcoming album, Once Again. Not much of it is particularly interesting (been there, done that) except for the mention of Sony's recruitment of "fan advocates" to create a word-of-mouth campaign. That must be the grown-up word for "street team." This stands out because Legend has eight Grammy Awards and 2.6 million in album sales -- more than the usual "word of mouth" artist. Also, street teams are just so old school. Hey, when it works it works. The Internet can't do everything. (Read article at Brand Republic)

• Consumer Reports surveyed its subscribers on digital music habits. It found 60% of first-time MP3 player buyers are listening to more music than they used to, and 50% are listening during activities that were previously music-free (not a shock). Here's a comforting stat for you paranoid types: only 8% responded that the purchase of an MP3 player prompted them to use P2P networks to acquite music. (No word on how many already used P2P networks and store songs on their computers.) (Read article at ConsumerReports.com, via Digital Audio Insider)

• What has former Virgin Records head Matt Serletic been up to lately? Producing the debut album by "American Idol" winner Taylor Hicks. The so-far-untited album is due out December 5th, the same day as the sophomore album by Gwen Stefani. (Read at Hits Rumor Mill)

• Source magazine and its founders are back in the news, this time for the $14.5 million decision in favor of a former editor who filed a sexual discrimination suit. (Read article at NY Post)

Posted by Glenn at 7:56 AM | Link
|Marketing||P2P||Payola||Portable Music Players|

Last week's leak of The Shins' yet-to-be-released album Wincing The Night Away (street date: January 23rd, 2007) has not only received some blog coverage (read posts at Stereogum and Idolator) but highlights a growing problem for labels: How does a label promote an album and keep it off P2P networks?

A standard safety measure has been to watermark the CD, which creates a digital fingerprint unique to the advance CD recipient. But as Idolator explained today, The Shins leak sounds like a transcode, which is a recording of a protected recording. A soundwave from the most copy-protected CD can easily be recorded and converted to digital files.

Labels are frustrated for a few reasons. First, releasing copy-protected CDs before an album's street date doesn't prevent the songs from appearing on the Internet. Second, the person who leaks the songs is like a publicist with bad timing -- the label shouldn't want album coverage to start too soon. Also, it's all but impossible -- especially at the end of a calendar year -- to bump up a street date when worried about the leak's affect on sales.

There aren't many good options. The safest option is to give nobody an advance. But that's not very practical. Until better P2P policing measures are created, labels will have to live with leaks and, if possible, find a way to take advantage of them.

Posted by Glenn at 2:15 PM | Link
|P2P|

Yesterday the Wall Street Journal ran an article on the alliance betweeen Jay-Z and Coca-Cola that puts promotional material in pirated tracks that are passed around P2P networks.

"By inserting promotional material into the decoy files, and then planting those files prominently on file-sharing sites, record labels and other marketers can turn what is now an antipiracy tool into an advertising medium. 'The concept here is making the peer-to-peer networks work for us,' says Jay-Z's attorney, Michael Guido. 'While peer-to-peer users are stealing the intellectual property, they are also the active music audience,' and "this technology allows us to market back to them.'"

This may have people scratching their heads and wondering how labels -- and sponsors -- can use piracy with one hand while they're fighting piracy with the other. Look no further than labels' embrace of -- nay, reliance upon -- (technically illegal) mixtapes to promote their hip hop artists.

It's not just Universal, which did a similar piracy campaign with Ne-Yo. Virgin Records acknowledged it is in talks with MediaDefender "about marketing options. "It's an opportunity that will hopefully lead to a better experience for the artists, the labels and the consumers," said Jason Flom.

Posted by Glenn at 10:13 AM | Link
|EMI||P2P||Piracy||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|

• A little back and forth about the health of Koch. Some say its about to go through major changes, others say it's in good health. (The Velvet Rope)

• Billboard's Brian Garrity created a timeline that tracks OK Go's last album, Oh No, from recording to pre-VMA buzz. It leaves out some recent items, though. There are two important items that are not in the article. First, the album sold over 8,200 last week, almost twice as much as the last week of sales mentioned in the article. Second, over half of last week's Oh No sales were in the digital format. That's incredible, and it was good enough for #9 on the Digital Album chart. That abnormally high digital share may point to a demand that Capitol is not fulfilling at bricks-and-mortar retail. (Billboard)

• Something for the RIAA's files: Sweden's Pirate Party released a manifesto (read here). Music attorney Chris Castle thinks "it's fair to say they cribbed it" from the Marxist manifesto and calls it "either an extraordinary example of political naivete, or the kind of brain rot that sets in when one makes a life of being "neutral." (Music•Technology•Policy)

• The Arab Strap are going to break up after ten years together. Ten Years of Tears, a compilation of b-sides, demos, remixes and new recordings that will be out in early 2007, will signal the end of the Scottish band's time together.

Posted by Glenn at 8:55 PM | Link
|Digital Music||Distribution||OK Go||P2P|

More details on Spiral Frog's file restrictions and up-front payments in a transcript of a KCRW broadcast by industry consultant Celia Hirschman. She adds a dose of disgust to the additonal details. (Bold is mine.)

"Have the major labels finally caved to the notion that illegal downloading cannot be stopped? Is this the beginning of the end of the record business as we know it?

Not at all. Rather, this is classic Record Business. Read the fine print of the Spira lFrog deal, and the hairs on the back of your neck will stand up. First of all, when consumers download the track, they'll be subjected to a 90 second audio advertisement embedded at the beginning of each track. That's 90 seconds of advertising for every song downloaded. And the downloads will only be available to the listener for six months, where upon the song will be erased from their libraries like a Mission Impossible espionage tape."

In addition, Hirschman said the majors each negotiated with Spiral Frog to get a $2 million upfront payment. Previously, News.com reported that Universal's deal "is initially for just one year, though Universal may look to extend it if it proves viable."

(Thanks, Dennis)

Update: Most reports indicate the 90 seconds of advertising for each track must be watched before the track is downloaded. There's no indication the advertisement will be embedded into each file. This Reuters article reports that users "must view a 90-second block of advertising before the download starts." While that's better than enduring 90 seconds of advertising each time the song is played, that's still 15 minutes of advertisements for a ten-song album.

Posted by Glenn at 5:22 PM | Link
|A&R||P2P|

• Between the two of them, XM and Sirius have 11.7 million subscribers and lost almost $1.5 billion last year. There are calls from around the financial world for the two companies to merge and get on the road to profitability. (The Hollywood Reporter)

• Mastodon drummer Bränn Dailor comments on the leaking of his band's Atlantic Records debut by an English journalist. (UltimateGuitar.com)

• If you have noticed, children's music is big, big business. Braincandy, a Seattle-based company that produces DVDs and CDs, has signed a distribution deal with Warner Music Group's Rhino Entertainment. The agreement calls for Rhino to be the exclusive supplier to large retailers like Wal-Mart and Target. (Press Release)

• Absolutely meaningless: iMesh boasts over its re-release of P2P application BearShare, which is now a legal, filtered P2P service that offers a subscription service as well as a la carte downloads. The service's licensed tracks are in PlaysForSure format. (Digital Music News)

Posted by Glenn at 10:11 AM | Link
|P2P||Satellite Radio||Warner Music Group|

• A reader emailed classical music blog On An Overgrown Path and asked for some MP3s from the BBC's Beethoven project, explaining that "they gave me their permission for this." And you know what? The BBC did give the blogger permission to send him the MP3s. But On An Overgrown Path doesn't see how this constitutes personal use, and it wonders "what the difference is between a Thom Yorke file served by Grokster, and a Beethoven file served by On An Overgrown Path?" (On An Overgrown Path)

• Was Google's GTunes a victom of Microsoft's Zune? (Medialoper)

• Attorney Chris Castle on why the Creative Commons license isn't good for professional songwriters. (Music•Technology•Policy)

• The NY Times' Geoff Boucher has a really nice article on Justin Timberlake and his attempted transition from former boy band member to serious musical artist. Timberlake's FutureSex/LoveSounds (Jive) will be out September 12th. (NY Times)

Posted by Glenn at 3:30 PM | Link
|P2P||Zune|

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|

• Bertelsmann closes in on a buyer for BMG Music Publishing. It should have a short list of potential buyers by the end of August. (Billboard Radio Monitor)

• France president Jacques Chirac signed an interoperability law that aims to force Apple to make its iTunes/iPod duo compitable with competitors' hardware and online music stores. Next, let's see if other countries follow France's lead, and let's see if other companies can use interoperability to make inroads into the dominance of the Apple brand. (MacNewsWorld)

• Forty-eight symphonies and their managers have signed an agreement that covers the recordings of live performances. The deal replaces up-front fees to musicians with a revenue-sharing system. Orchestras also retain ownership of the live recordings, which will be licensed out to labels. (NY Times)

• News about Fontana Distribution: Ken Gullic has been upped to SVP of Sales and Marketing, and the distributor has landed Ipecac Recordings, which decided to leave Caroline Distribution. (Hits Rumor Mill)

• P2P start up Skyrider landed $2 million in funding. One of the three projects planned by the company is a keyword search technology that allows advertisers to capitalize on the millions of daily P2P keyword searches. (Press release, via Digital Music News)

• Musicane has introduced Musicane Groups "to enable effective administration of online sales by record labels and video distributors." The first label to take advantage of Content Manager is Koch Records. (Press Release)

• RIP Elisabeth Schwarzkopf, the legendary soprano. (Playbill)

Posted by Glenn at 10:07 AM | Link
|Apple||P2P||Sony BMG||Universal Music Group|

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|

• SOHH reports it appears The Game has left G-Unit/Aftermath and has signed a five-album deal with Geffen that includes a distribution deal for his label, Black Wall Street. (SOHH)

• EMI has agreed to license its North American catalog -- minus The Beatles, one can assume -- to P2P service Mashboxx. (Billboard.biz)

• Rick Rubin rumored to produce the next Velvet Revolver album, Liberated. (MetalUnderground.com)

• RealNetworks announced record revenue of $89.4 million for the second quarter ending June 30th. If income from the Microsoft settlement is adjusted out, earnings drops to $4.8 million. Music revenues rose 21% to $30.1 million. (Press release)

• Download a PDF of the IFPI's 2006 piracy report. (IFPI)

Posted by Glenn at 1:44 PM | Link
|EMI||P2P||Piracy||RealNetworks||Rhapsody|

Coolfer caught wind of a cute way to stop songs from being traded on P2P networks: Cut up each song into nine different tracks.

Publicists are sending out out advance copies of Heavens' Patent Pending, which Epitaph will release on September 12th, that have 11 songs and 99 tracks. Each song consists of 9 seperate, sequential tracks. Imagine the annoyance of grabbing all those tracks on Gnutella, or listening to the CD on shuffle.

Of course, some enterprising person could easily use an audio editor to combine all the tracks. Labels seem resigned to the fact that piracy will endure, but they aren't going to make it easy. As ESPN's Dan Patrick would say, "You can't hope to stop it, you can only hope to contain it."

Posted by Glenn at 2:57 PM | Link
|P2P||The CD|

• MAMA Group, a UK company that owns music and media businesses, has made an offer for Sanctuary Music Group. (MarketWatch)

• Blue Note Records is releasing ringtones taken from the of the label's classic songs and artists. (All About Jazz)

• ADA's distribution deal with Ultra Records has finally been announced. Ultra will be leaving Caroline Distribution at the end of August. Ultra owner Patrick Moxey gave some details on the new deal. "Our new arrangement will also include Ultra's partnering with WMG's Rhino on brand new remix packages of WMG catalogue artists and other initiatives including DRTV." (Press Release)

• GoDigital and Share Media Licensing have a partnership that will seed P2P networks with Weed files of music by Master P and Lil' Romeo. Weed, created by SML and based on the Windows Media format, allows a song to be listened to up to three times before requiring that it be purchased for further listens. (Press Release)

• Basketball player Ron Artest talks to SoundSlam.com about his upcoming album, My World, and the first single, "Get Lo," which features Mike Jones and Nature. He will be Fat Joe's opening act on an 11-day European tour. (SoundSlam)

• Download store Musica360.com has launched a PR company called Ms. Media PR, which company COO Jenny Garcia calls "a natural progression of the philosophies that led us to create Musica360 in the first place." (mi2n.com)

• Country indie label Playback Records is being revived. (Press Release)

• A look at Nashville's successful pop scene: Mat Kearny, Josh Hoge and Landon Pigg have or will release major label albums this year. Sixpence None the Richer's Leigh Nash is going solo. (Tennessean.com)

Posted by Glenn at 12:37 PM | Link
|EMI||Indies||P2P||Ringtones||Warner Music Group|

• Warner Music Group has signed a deal with China Unicom Ltd. to sell its music over the mobile phone operator's network. The Chinese digital music market is estimated to grow to $1.6 billion in 2010 (versus $450 million in 2005). (Reuters)

• Sony BMG Nashville has assigned Allen Brown to a newly created role: Director, Syndicated & Satellite Radio. (Music News Nashville)

• Rock 'n' Roll Soldiers have severed its relationship with Atlantic Records. The Eugene, Oregon-based band has been given the ability by Atlantic to release its shelved album on its on RNRS Records imprint. The band is happy just to have its tapes back after repeatedly being sent back into the studio to re-record songs. (The Reigster-Guard)

• A&R exec John Kalodner is set to retire after 35 years in the business. He is given credit with reviving the careers of Aerosmith and Cher, and he worked with artists ranging from Genesis to Bon Jovi. (Billboard.biz)

• A Dutch website that links to MP3s has been shut down after what has been called a landmark decision. Zoekmp3.com was found to be in violation of the law even though it was not hosting any infringing content. The site claims it warned users not to violate copyright laws, to which the court ruled, "Such a warning ignores the reality that the lion's share of visitors are looking for unauthorised MP3 files." (BBC News)

Posted by Glenn at 8:55 AM | Link
|P2P||Sony BMG||Warner Music Group|

Last week a Sony exec told a panel at the Digital Media Summit in Los Angeles that the music industry was not winning its fight against piracy. Albhy Galuten, VP of Digital Media Technology Strategy at Sony Corporation of America, said he does not believe the industry is making progress.

The industry's trade group, the RIAA, is putting out a different message. Yesterday the USA Today had an article on file-sharing that quoted Mitch Bainwol as saying, "The problem has not been eliminated. ... But we believe digital downloads have emerged into a growing, thriving business, and file-trading is flat."

That's the company line a year after the entertainment industry won a 9-0 decision in the famed Grokster case. Eric Garland, CEO of P2P-tracking company BigChampagne, told the USA Today file-sharing applications are still out there and more people --- 10 million today versus 8.7 million in May of 2005 -- are using file-sharing services.

The RIAA knows it is never going to eliminate file-sharing. It's strategy has been to create an environment that will allow digital sales to grow. Album sales are down a mere 3% in 2006. Given the huge growth in single download sales, combined with increased revenues from ringtones, video sales, subscription services and ad revenue-sharing deals for video and audio streams, it's not hard to imagine overall revenues growing this year -- piracy or no piracy.

Extra credit reading: File-Sharing: Creative Destruction or Just Plain Destructive? by Stan J. Leibowitz, University of Texas at Dallas School of Management.

Posted by Glenn at 2:30 PM | Link
|P2P||Piracy|

The Motley Fool is again commenting on digital music, this one an article by Anders Bylund titled "Entertainment Industry Breaking the Wrong Rules." In it, Bylund writes of how digital piracy busts and digital music stores represent the entertainment industry's digital strategy. The problem is he connects the wrong dots.

Bylund makes the common mistake of confusing the thirst for free music with the desire for a user-friendly music service, and then mistakes taking a fight against piracy as an unwillingness to take digital music seriously.

Taking down an ISP that hosted copyrighted content is an apple. A legitimate store like iTunes is an orange. The fight against piracy doesn't mean entertainment industries are against digital business models, it means they're against giving it away for free and without restrictions. There's a big difference. (It's as big a difference as illegal file sharing and fair use rights for sampling purposes, two issues that too often get lumped together.)

Continue reading "Foolish (Again) on Digital Music" »

Posted by Glenn at 4:45 PM | Link
|Business Writing||Digital Music||P2P|

Qtrax, which was previously a rogue P2P application that owner LTDnetwork, Inc. took off the market to avoid legal problems, has returned as a sanctioned P2P network and has just inked a licensing deal with EMI. Qtrax will use the Gnutella file-sharing network.

Users will be able to play a set number of songs for free (which will be supported by advertising) and then will need to purchase the song(s) for further listening. There may also be a flat fee for tethered downloads, a la Rhapsody To Go.

Sanctioned P2P is a big question mark. With the same pricing and file format as exisiting online music services like Napster, Rhapsody and URGE, Qtrax has no obvious advantage and a tough road ahead. This brings to mind iMesh, whose conversion to a legit network in October of 2005 was met with much fanfare. Anybody heard of iMesh since then? No. It's a mediocre service that is shackled with unpopular WMA files.

Posted by Glenn at 1:09 PM | Link
|P2P|

What does the Gnarls Barkley, the duo of Danger Mouse and Cee-Lo, have to do with the way the Internet has breathed new life into old music? The Times Online thinks easy access to the world's collection of music partly explains the UK success of the group. The combination of styles -- from old soul to new beats -- has reference points that a teenager wouldn't have understood just a few years ago.

From a profile on Gnarls Barkley:

"It works like this. Immersed all day in their music websites, the poor dears are bombarded with messages that wheedle, for example: 'If you like this you’ll also like Long Tall Sally by Little Richard.' Naturally, they don’t know Little Richard from Keith Richards or even Cliff Richard, but the chances are they will try it and perhaps recommend it to their friends. Fashions, eras and genres have become irrelevant.

The result is that savvy teenagers are listening to Jimi Hendrix and back catalogues of the classics from the 1960s and 1970s. The record companies, while petrified by the Internet, can’t believe their luck at this potential windfall."

Goes hand in hand with the explosion of vintage rock shirts.

Posted by Glenn at 2:03 PM | Link
|Internet||P2P|

The Guardian's Charles Arthur points to a blog post by Jupiter analyst Mark Mulligan that questions the value the BPI puts on file sharing's impact on the UK music industry.

The BPI puts the value at 1.1 billion pounds over three years. Mulligan puts the loss at 0.14 billion pounds. Why the big difference? The BPI's numbers, he writes, confuses consumer survey data with national market data, and it overlooks the other reasons sales have declined.

"If, (and this is a highly hypothetical IF) these 3.3 million file sharers are really responsible for 1.1 billion in lost spending, that means that they had to not spend 110 pounds each per year, which puts them above average spending for UK music buyers. If that really is how much they would have otherwise spent, then the music industry has got a bigger problem than it could have imagined – that would mean that all the music aficionados have switched over to file sharing. But of course they haven’t, because that spending simply wasn’t there before file sharing."

The same could be said of the PR trotted out by the RIAA. It has consistently refused to recognize other factors such as competing forms of entertainment and an unhealthy retail climate.

Posted by Glenn at 2:16 PM | Link
|Music Industry||P2P|

• Love's Arthur Lee has been diagnosed with acute lymphoblastic leukemia and has had three weeks of chemotherapy. To help cover his medical expenses, a group of industry folks in Los Angeles are putting together a benefit concert, and are said to be in talks with X, Calexico and Cake so far. A tribute CD is also in the works. A thread at the Love With Arthur Lee website has more information. (Love with Arthur Lee Messageboard)

• On that note, check out this video of Love performing "Message to Pretty" and "My Little Red Book" on "American Bandstand" (Quicktime). Very cool.

• Placebo has one clean, good looking MySpace page.

• If you're in the market for the book "Behind the Beat: Hip Hop Home Studios" you should buy it at DJ Shadow's website by Sunday. Every copy of the 160-page hardcover book ordered before the deadline will be autographed by Shadow. (DJ Shadow Merchandise)

• Talks between Streamcast Inc., the company behind the Morpheus P2P application, and the entertainment industry have failed. Next up: The courtroom. Predicts StreamCast CEO Michael Weiss, "We're not going to lose this." Confidence is an amazing thing sometimes, especially considering Grokster went oh-fer-nine in the Supreme Court last year. (PE.com)

Posted by Glenn at 8:02 PM | Link
|P2P||Weblogs|

The LA Times printed an op-ed titled "Sinking a Music Pirate" from UNC Charlotte student Mickey Borchardt that is a terrible tale of what happens to a student who has to deal with an RIAA lawsuit. After being visited by the FBI, Borchardt hired a lawyer and met with the school's dean.

"The word to describe it is 'shame.' The shame in realizing I'd been monitored for months, with paper logs of my online conversations; the shame of begging my university dean to allow me to remain a student; the shame of continuing to squander such a significant portion of my family's savings on legal fees; the shame of pleading with professors to reschedule tests; the shame of desperately searching for landlords on short notice; and, of course, the shame of knowing I'd stolen the property of others like me who are passionate about the art of music.

The other word is 'fear.' Fear that keeps me awake at night and distracted in class. Fear of my May sentencing date (I pleaded guilty in March) in the same courthouse as Zacarias Moussaoui; fear of the possible prison time I am facing; fear of my job prospects when I graduate college in December with a felony criminal record; and fear for the future I've recklessly damaged.

Borchardt concludes the piece with statements of remorse and regret that are pro-artist and label-friendly, but it could also be used by the anti-RIAA camp as an example of the pain and suffering the lawsuits inflicted on everyday people.

Posted by Glenn at 12:02 PM | Link
|P2P|

The oppostion to DRM continues to grow in membership. Timothy B. Lee, who has written a policy analysis for the Cato Institute titled "Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act," has an op-ed in yesterday's Salt Lake Tribune that's basically a teaser version of the 28-page analysis. Here's a taste:

"The DMCA was billed as an anti-piracy measure. It prohibits anyone from 'circumventing' a copy protection scheme such as that used to scramble songs from the iTunes store, or from creating software to do so. ... But that's not how things have worked out in the real world. After nearly a decade on the books, it's hard to find any evidence that the DMCA has reduced piracy.

Congress may have intended to target copyright infringers, but in practice the DMCA mostly harms paying customers by preventing them from playing legally acquired content on the device of their choice. The Constitution says that the purpose of intellectual property is to 'promote the progress of science and the useful arts.' When a copyright law begins to interfere with peoples' freedom to enjoy the content they have legally purchased, Congress needs to give it another look."

Posted by Glenn at 2:47 PM | Link
|Digital Music||Music Industry||Online Stores/Services||P2P|

• This week the French Minister of Culture will address legal P2P before a special parliamentary session. Digital Music News call this gaining steam, but there's a long way to go before a bill is passed. Ken Fisher's opinion on the proposed compulsary license is worth reading.

"A compulsory license to copyrighted material is questionable in terms of fairness to both users and content owners. 'Everyone pays' sounds great to those who make use of P2P, but those that do not are not thrilled at the prospect of paying fees for others' use. I have no problem paying for the content that I want, or better yet, not paying for the content that I don't want. But a compulsory license is, at the end of the day, little different from a tax, and the idea of sending even more tax money to large corporate interests sits uncomfortably with me."

Coolfer wonders if others will frame the P2P debate in this way. Most monies from a compulsary license would go to the very corporate interests that are so loathed by many in the pro-P2P camp. Rather than bring about much change, it could simply prop up the status quo. And will such a system, one that does not allow content owners to opt out, be viewed as fair to artists?

• The LA Times' Charles Duhigg writes and Rock the Vote and says the activist group is $700,000 in debt and currently has a staff of just two. Poor fundraising is one problem. The lack of a president is another. (LA Times)

• The Arctic Monkeys remain atop the UK album chart. Former Verve singer Richard Ashcroft is the current runner up. (Monsters and Critics)

• SunnComm, Sony BMG's company of choice for CD copy protection, has announced it will begin working on removing security flaws from its software. Future versions will include an un-installer and will allow the user to opt out of installing the SunnComm software when the CD is read by the computer. (CD Freaks)

• New Morrissey tracks have been making their rounds through the Internet. Today Pitchfork reviews "I Will See You in Far Off Places" and gives it a weak star-and-a-half rating.

Posted by Glenn at 8:59 AM | Link
|Music Industry||P2P|

On Friday Nettwerk Music Group made (some) headlines when it announced it was pay the legal fees of a person sued by the RIAA for suspected copyright infringement. (One of the suspected songs on the defendent's computer was by Nettwerk artist MC Lars.)

Digital Music News adds a new wrinkle to the story this morning. Nettwerk CEO Terry McBridge was a host on Bob Lefsetz's radio program on 97.1 KLSX in Los Angeles, it reports, and told the audience he has since been contacted by several executives who would like to join his cause. The end goal, says the post, is to "shame" the RIAA and bring an end to the lawsuits against consumers.

Who these executives are and how public they will be in their opposition is the million dollar question. The unified front is obviously cracking, but who will show their faces?

Read Lefsetz's 1/27 post about Nettwerk and McBride, as well as commentary from producer Bob Ezrin.

Posted by Glenn at 9:36 AM | Link
|Music Industry||P2P|

Yesterday Nettwerk Music Group rose in opposition of the music industry's policies and announced it would support the defense of a man faced with a lawsuit for sharing copyrighted music. A Chicago law office will represent David Greubel, who was sued for having 600 "suspected music files" on his family's computer. In the press release, CEO Terry McBride states, "Suing music fans is not the solution, it's the problem."

When word spread the Internet lit up with conversation. Given the unpopular nature of the lawsuits against file sharers, the mood was one of delight and encouragement. Geek site Slashdot.org had the news early on Friday and the comments section filled up furiously. Boing Boing, a technologist-friendly blog, posted the news a few hours later. Of course the idealogues at p2pnet.net carried the news. "The vast majority of ex-consumers are just not willing to pay $1 and up for a lossy, low-fi digital file," they said.

The news was overlooked by most industry outlets as well as the mainstream press. It was carried by MTV.com, InformationWeek.com, Canada.com, Ars Technica, Digital Copyright Canada and Punknews.org, along with a few others. Only one music industry-related news source, FMBQ, carried the story. Nothing in the New York Times, Los Angeles Times or Washington Post, and nothing carried by AP or UPI.

More thoughts after the jump.

Continue reading "Record Label Supports File Sharer, Parts of the Internet Abuzz" »

Posted by Glenn at 9:48 PM | Link
|Indies||Music Industry||P2P|

Yesterday morning, just after it hit the Internet, Coolfer posted on the story about New York Attorney General Elliot Spitzer's admonishment of Sony BMG. The scourge of Wall Street chided the music group for putting at risk millions of personal computers and for still having copy protected CDs in stock at many New York retailers.

A few months ago a Spitzer attack on a major would have generated a fair amount of press, but yesterday there was a wide range of outlets that carried the story. It goes to show how big the rootkit/copy protection story has become and how closely it is followed by people outside of the industry bubble.

Another story that got a lot of play was the report on the JupiterResearch finding that the young demographic is obtaining music at solely at P2P networks at high rates, and the music industry may be losing an entire generation of paying customers to the habit of downloading for free. CD Freaks posted the story. p2pnet covered the topic with its typical jingoistic flair. SecurityPro News carried the story with the a self-righteousness ("it's tough to have sympathy for the music industry when giants like Sony BMG spread rootkits with their CDs") that's not uncommon in tech articles. British hype mag NME carried the story ("Younger consumers are not prepared to pay," it declared).

What Coolfer can't feel out is why the story was carried by so many outlets. Was it because stories about the possible demise of the music industry is so popular? (We're moving from articles about the death of the CD to articles to the death of a base of paying customers.) Was it because any iPod-related news item just can't be passed up? Are news outlets running anything that will play into the public's loathing of the music industry's anti-piracy tactics? One thing is for sure: File sharing and the plight of the music business are seen as two of this era's most defining topics.

Posted by Glenn at 9:21 AM | Link | Comment (1)
|Music Industry||P2P||Sony BMG|

An Australian judge had originally ordered that P2P company Kazaa had until December to change its software or shut down. Then a blunder by a lawyer for the Australian music industry got Kazaa a three-month reprieve. The court ordered a keyword filter to be installed in Kazaa's software that would filter out specific copyrighted material.

P2P "news" sites Slyck and p2pnet cheered and acted as if it were a victory for Kazaa. Slyck's article called it "an amazing technical blunder by the Australian recording industry" that prevented immediate filtration of the FastTrack network.

The website of the IFPI has a statement that welcomes the court's deadline -- although it speaks of the old December deadline, not the new February deadline.

Posted by Glenn at 10:51 PM | Link
|P2P|

On Sunday the NY Times' Saul Hansell had an article on Shawn Fanning, the creator of Napster and now an entrepreneur in the field of lega file sharing through his company, Snocap. Napster, wrote Hansell, let the genie out of the bottle. Fanning "is now selling a way to put the genie back into the bottle."

The complexity and difficulties faced by Snocap were outlined by Jonathan Spalter, a former Snocap chief executive who "left after differences with Mr. Fanning."

"'They have a shot, but it's a nine-bank billiard shot and they have only one stroke of the cue to get it right,' Mr. Spalter said. 'You need to get consensus from a firmament of major labels, independent labels, the publishers, courts, legislature, the peer-to-peer to companies, retailers and other actors. This is the ultimate, purest form of herding cats.'"

In starting over after the demise of the original Napster, Fanning received the backing of a Silicon Valley investor, and he hired two prominent lawyers to help him persuade record labels to work with Snocap.

An interesting aspect of Snocap is how Fanning wants to encourage trading of the vast number of "grey tracks," songs such as bootleg recordings and other versions that are not the master recordings typically owned by record labels.

More after the jump.

Continue reading "The Times on Fanning, Snocap" »

Posted by Glenn at 8:06 AM | Link | Comment (1)
|P2P|

Reading today's op-ed by Digital Music News' Paul Resnikoff was like a flashback of Coolfer's commentary on P2P since opening shop over two years ago. The editor of the digital news website wrote a level-headed assessment of the realities and dangers of blindly accepting unproven P2P models. It's very easy for an outsider to demand alternative business models, but the suggested models work only in theory, and there's little chance an entire industry is going to stake its future on an unproven model.

Resnikoff quotes from an LA Times editorial that calls for a "meeting the new generation of demand" but, as are all editorials, short on practical alternatives. Everybody wants a new business model, admits Resnikoff, adding,

"But for executives at top labels and studios, moving towards something like a collective licensing scheme is an incredibly tricky proposition. After all, this is an entirely new business, and there is a lot of money at stake here. And if licensing has been a headache for stores like iTunes, imagine how difficult it would be for labels to corral thousands upon thousands of rights holders in a collective revenue distribution model that may or may not pay out. In fact, the challenges of getting the first meeting organized would probably be enough to kill the entire effort."

As for finding a P2P business model that works, there's a great deal more than meets the eye. Consumers and critics are worried only about getting music cheaply, efficiently and without threat of lawsuit, but there are other considerations. Labels and artists want assurance that a newly adopted model won't threaten their core business -- CDs. Rather than sweeping changes, the road to successful P2P will be a series of incremental changes.

He ends with this:

"Yes, this is an industry that is dying, and a bottom is nowhere in site. But a collective licensing scheme involving P2Ps and ISPs presents a major cannibalization threat to an existing and dominant business line. Sure, any outsider can clamor for change, but the downside risk is essentially deep-sixing a core revenue stream. Perhaps a more substantial drop in pre-recorded CD sales will force the issue, but as long as the air is slowly leaking out of the balloon, this is an industry that is unlikely to tackle the difficult details of a radically (and scary) new business model. In the end, embracing P2P is not something that just happens: it will require a fair amount of trial-and-error and an intense redirection of existing resources."

Posted by Glenn at 8:56 AM | Link
|Music Industry||P2P|

Snocap, the digital service company founded by Napster founder Shawn Fanning to enable legal P2P, has signed a deal with Warner Music Group. Now all four majors and some of the larger indies have signed deals with Snocap.

With P2P companies being forced to go legit, Snocap is working to position itself as an enabler of this legitimization process. At this year's Future of Music Summit, Fanning told a panel that he does not believe Snocap represents a shift from his goals with Napster. He said he didn't like Napster's inability to balance breadth of song selection with the need to protect the rights of the content owners. (Getting sued to near-death will do that for an opinion.)

Ironically, Sony BMG's public near-riot over its DRM measures may end up hampering legal P2P's foray. BMG is owned by Bertelsmann, the media giant that invested money in the post-lawsuit Napster before a judge ruled against its acquisition of the company (Napster's assets were eventually acquired by Roxio). Now the public's taste for DRM -- a main component of legal P2P -- has soured so much that Sony BMG may have set back legal P2P a step or two.

Posted by Glenn at 8:20 AM | Link
|P2P||Warner Music Group|

Peer-to-peer company Grokster ceased operations yesterday. The company found itself at the losing end of the landmark Supreme Court case, MGM vs. Grokster, and shut down as a part of a settlement with the RIAA to end litigation.

The message on its home page read:

"The United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal. Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners. There are legal services for downloading music and movies. This service is not one of them."

The news is pretty straightforward. The interesting part is to see how different news outlets covered the news. P2pnet was, well, as biased and anti-RIAA as ever. Slyck mourned that "the file-sharing world has lost yet anotehr commercial P2P application."

News.com poetically called it "The Last Waltz for Grokster" and reported a source close to the company claims Grokster's assets will be purchased by legal P2P company Mashboxx. The NY Times quoted BigChampagne's Eric Garland as saying, "I don't think, practically speaking, we're expecting to see much impact in the peer-to-peer landscape." Red Herring talked to Snocaps Ali Ayder, who said the industry "is ready to find a way to make (new technology and business models) work." Corante's Copyfight links to a post from Bag and Baggage that argues the RIAA scripted the copy that was placed on the Grokster home page "without scrupulous regard to an accurate reading of the Grokster decision."

Billboard.com's headline read, "Grokster Agrees To Shut Down P2P Service," which is a bit misleading given the decentralized nature of the service. The company will no longer distribute its P2P application, but users who already have the software can continue to use it to trade files.

And Digital Music News' Paul Resnikoff characterized today's P2P landscape as a collection of experiments and called the Grokster development a "part of a very uncertain future, despite a resounding Supreme Court mandate."

Mark Cuban has not yet posted about the topic, though he probably will and if so his words will be repeated and praised in the kind of call-and-response manner usually seen only with Steve Jobs and his congregation.

Now Grokster joins iMesh in the legal P2P community. Read Coolfer's thoughts in the iMesh beta, and click for 's screen shots of Grokster's capitulation.

Continue reading "Grokster Is Gone. How Was It Covered?" »

Posted by Glenn at 9:36 AM | Link
|P2P|

Pitchfork's Adam Moerder reviewed Harvery Danger's Little By Little and nowhere in the four paragraphs and 440 words was there a mention that the album is given away free at the band's website. (To be fair, I should note the first two paragraphs gave the band's background.)

He closes by saying, "Little by Little (save two or three tracks) reads like a carbon dating test, displaying the band's decaying sound gradually assimilating with its exhausted surroundings."

Coolfer gave it a listen and thought it was a pretty good album, but anyway, the moral of the story is this: Giving away music -- especially an entire album -- gets a little buzz, gets the attention of Boing Boing and may get a few blog links here and there, but it's still not the cornerstone of a good business plan. It helps people cherry pick those two or three good tracks, though, and it elicits a lot of "Free stuff! Free stuff!" cheers all across the Internet.

(Photo by Ryan Schierling)

Posted by Glenn at 3:20 PM | Link | Comment (1)
|Music||P2P|

P2P application iMesh 6.0 made news this week. It's a beta of the a sanctioned P2P application that has the involvement of the four major music groups. The service is ad-free and will cost $6.95 per month. It's said (as in this AP article) there will be 17 million tracks, 15 million of which will be available without restriction because their owners have not asked iMesh to block them. The remaining two million songs will cost $0.99 per song outside of the monthly fee or will be free with the $6.95 monthly fee. (It's currently free for a month or two, so get in there and download while you can.)

The layout is simple and extremely intuitive, yet much more attractive than I expected. The look recalls iTunes, which is ironic because iMesh's two million sanctioned files come in the Windows Media format (128kps).

My first search was for a band that I new was on an indie and one that is heavily posted at MP3 blogs: The New Pornographers. The search results lead me to the band's first two albums. I clicked on an image of the album cover to the first album, Mass Romantic. At the top of the screen there was a button that read "Download Album." OK, I'll download the entire album. And....? In a few seconds iMesh was downloading the songs, most at about 30KB/s.

Next up was a search for Michael Jackson. Up came a long list of 417 songs. The first was "Man In The Mirror" so I chose that. Then iMesh crashed. When I started up the application again songs continued to download where they left off.

To test the depth of the selection I choose a few names from the "long tail" of my personal collection. "Husker Du" turned up a small group of songs from two of the band's ablums. "Flesh For Lulu" turned up the band's one semi-hit, "I Go Crazy" and none of the songs from the band's few out-of-print albums or vinyl-only releases (I guess nobody has converted their vinyl to digital yet). Then iMesh crashed again. When I was back in a "Donna Regina" search came up empty except for a Donna Summer song. Not quite the same thing.

More after the click...

Continue reading "iMesh: Reviewed" »

Posted by Glenn at 9:02 AM | Link
|P2P|

iMesh has launched a beta version of its legal P2P application. The website claims "the world's fastest downloads with no spyware or adware."

At the Future of Music Summit, the RIAA's Cary Sherman was blown away by a demo of iMesh. (Read Coolfer's post on the panel discussion here.) He liked the social networking aspect of the demo.

More:

• Yesterday Red Herring had an article on the iMesh beta. "Though it’s a few years behind other online music offerings, iMesh has the advantage of an existing user base of about 100 million. It also has a leg up on other lifetime P2P services, which are still mired in legal woes. iMesh is the first major network to convert to a legal service authorized by the major labels."
• Slyck on iMesh: "Today, iMesh has released version 6.0. It marks the first time a once free application transitioned to a pay P2P service. The new iMesh service will have two components. The first is a free element that will connect to the Gnutella network. The other component will download Microsoft DRM (Digital Rights Management) files from a central server and a proprietary P2P network. The service will function much like “Napster to Go” or “Rhapsody to Go.” For $6.95 a month, the user can rent an unlimited amount of music from the iMesh service. Once the subscription runs out or the individual cancels the service, the music magically disappears."

Posted by Glenn at 9:26 AM | Link | Comment (1)
|P2P|

P2P company eDonkey's attempts to survive in a post-Grokster world will be the stuff of books, documentaries and conference panels for years to come. BusinessWeekOnline captures the dilemma faced by Sam Yagan and Jed McCaleb, the P2P company's co-founders. (via Prefixblog). Writer Burt Helm put it this way: "Now (Yagan) is trying to reinvent eDonkey and use its popularity as a foundation for a legitimate business." That means trying to work with the content owners who are sending him cease-and-desist letters.

The article shows a few things. First, Grokster has initiated a sort of scared straight program for P2P companies. To some that points to a "chilling effect" (a negative effect on innovation caused by legal uncertainties) but let's not forget about the innovation from those companies scared straight. The RIAA's Cary Sherman and Snocap's Shawn Fanning predict all sorts of growth and innovation to spring up to support and create new legal P2P companies. Some innovation may be chilled, but there's other innovation that will arise. Over the long term the thing to look at will be the net of the two.

Also, P2P may not be avoidable, but when I read that the president of StreamCast Networks (owner of Morpheus) said, "The [file-sharing] landscape in America is going to be dramatically different just 30 days from now," it's hard to believe that the Surpreme Court ruling will have no impact. It may not impact the innovation of rogue file sharing applications, but it is and will impact the formation of legitimate file sharing. When and if legal P2P will gain traction is another issue.

JupiterResearch's David Carr is skeptical eDonkey can do something about the software that's already out there. "They are going to have to prove that their value is something other than free music," he said.

Related: BitTorrent may have the exact opposite fortunes as eDonkey. Here's an article by Fortune on BitTorrent's creator, Bram Cohen.

Posted by Glenn at 10:01 PM | Link
|Digital Music||P2P|

• Here comes the back slapping: Digital Music News is sharing some tracking data supplied by BigChampagne, and P2P traffic was down 3.5% in August. Compared to traffic at this point last year, though, P2P traffic is in the area of 37% higher. But hey, sales are down and early retirement packages are still looking promising. People will take anything they can get. A drop in traffic is a drop in traffic. Now go find that dusty bottle of champagne and savor the moment!

• The Arkansas Times profiles the state's hip hop scene and some of its artists, notably Young Jeezy and Tyga. The latter, a rapper with 501 Click, has an incubator deal with Universal's Fontana Distribution, "which allows it to sign and develop Arkansas artists, which will then be test marketed in certain urban centers to see how they play." Is Little Rock the next Atlanta, the next Houston? Locals seem to think so, and a few success stories may open up doors for others. Producer Thomas "Big Keys" Booth says, "it’s only a matter of a few months before everything initially hits the fan." You've been warned.

• With nary a tear, Dischord Records told its fans (via email) that its catalog is now available at MSN Music. (You can't search by label, but you can take a look at the site's Fugazi page.) C'mon now, it's not the end of the world. The label's songs have for some time now been available at iTunes and I don't recall seeing any one of the four horsemen ride into town as of late.

Posted by Glenn at 4:24 PM | Link
|Music Industry||Online Stores/Services||P2P|

Here's part of the "chilling effect" people warned of after the Supreme Court's Grokster decision. The baby, so to speak, is going to be thrown out with the bath water. P2P company eDonkey will soon shut its doors. CEO Sam Yagan told a Senate committee yesterday that the company was complying with the cease-and-desist order it received from the RIAA.

Though Yagan believes the company could win a court battle but could not afford the legal battle.

"I am not here as an active participant in the future of P2P, but rather as one who has thrown in his towel and with no interest in replaying past issues. ... I fear that the winners in Grokster will not be the labels and the studios, but rather the offshore, underground, rogue P2P developers who will have just lost half a dozen of their biggest competitors."

P2pnet.net has a transcript of Yagan's testimony.

Posted by Glenn at 8:30 AM | Link
|P2P|

• eMusic has announced a partnership with The Association of Independent Music, a U.K. trade group that represents indie labels and distributors. In store will be "more than 10,000 new tracks from 19 highly regarded UK-based indie labels, including V2, Cherry Red Records and ZTT Records." Coolfer will have to do some research to find out how foreign labels can sell music online in America when American labels would have exclusive rights, or would be seeking to obtain exclusive rights, to sell in this country. Seems like a sticky situation or two could arise. Any readers well versed in such licensing issues are wecome to chime in.

• Dell to introduce new and revamped MP3 players to, of course, compete with Apple. The one feature worth mentioning is the ability to play pre-recorded XM content. (Engadget)

Posted by Glenn at 3:21 PM | Link | Comment (1)
|Digital Music||P2P|