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December 11, 2009 11:52 AM PST

Lala chief could steer iTunes away from downloads

by Greg Sandoval
  • 48 comments

Correction: An earlier version of this story incorrectly identified the digital music format used at Apple's iTunes. Apple uses the AAC format.

Apple was engaged in a bidding war with Google when it acquired music service Lala, The Wall Street Journal (subscription required) reported on Friday. That helps to explain why Apple agreed to pay $85 million, a sum that I (and others) believed was far too much for a down-on-its-luck start-up.

What has surprised some in the music sector, however, is that Apple is considering a plan to create some kind of streaming-music service and is turning to Lala's managers to help oversee the new offering. Sources in the music industry I interviewed Thursday gave varying descriptions of what position Bill Nguyen, Lala's chairman and founder, will occupy at iTunes. But virtually all of them said he and his staff will have plenty of influence over the service should Apple decide to go ahead with the plans.

One of the technology sector's most unlikely rags-to-riches stories may be unfolding before our very eyes.

Consider that Apple--the undaunted music powerhouse that altered the way people buy and listen to music and that will likely generate $2 billion in iTunes sales this year--is now seeking help from a group that cast about the digital-music sector for years, swapped out business models multiple times (without ever finding a profitable one), and basically did little to distinguish themselves.

If you're just looking at Lala's performance in the music sector, this is like the New York Yankees' taking advice from the minor leagues' Lehigh Valley IronPigs.

The big question is what can Lala possibly teach Apple about digital music?

From car sales to tech riches
Apple and Lala representatives aren't talking, but here's the first thing you should know about the deal: Nothing is set in stone yet. The Journal reported that the plans are in the earliest stages and may get altered. My music sources said that Apple has not spoken to any of the four major labels about changing their licensing agreement, which Apple would need to do before launching any new service.

To understand what Google and Apple may see in Lala, one must start with Nguyen, the company's jovial founder.

The son of Vietnamese immigrants, Nguyen (pronounced "win") is charming, wild about surfing and is well known as one of Silicon Valley's smoothest communicators. A so-so student who attended but did not graduate from Houston Baptist University, Nguyen started out selling cars but cashed in big in 1999 when he sold Onebox, an e-mail technology company, for $850 million.

Since then, he has started several other companies in addition to Lala, including Seven, a Wi-Fi software firm.

Eric Schmidt's Google charges were trying to get their hands on Lala, but Apple got the company instead.

(Credit: Greg Sandoval/CNET )

He is very close to Eddy Cue, the revered Apple exec who runs iTunes. What may be most important about Nguyen is that he has long had plans to take down the MP3 format. (In Apple's case, the company uses the unprotected AAC format) He has often said that MP3, the digital audio format embraced by so many music fans, is on its way out. He believes downloads have outlived their usefullness and that in the future, consumers will store their music in the cloud instead of on their hard drives.

"Will you ever (in the future) use an electronic device if it's not connected or doesn't have a browser?" Nguyen asked me a year ago. "You've got to face it, there's nothing you don't do in a browser."

Palo Alto, Calif.-based Lala started as an online marketplace where users arranged to swap CDs with each other. Lala then began streaming music to Web-enabled devices. The company would scan a users' computer hard drive and then enable the person to access the same songs--provided Lala had the rights--via the Web.

According to a report in The New York Times, Lala had concluded that it wouldn't reach profitability anytime soon and approached Apple in the hopes of making a deal.

The end of iTunes downloads?
The natural conclusion to make here is that by acquiring Lala, Apple may be laying the groundwork for a move away from the traditional song download. If this is correct, it would be stunning in that Apple has built a retail empire by selling downloads.

If Apple is preparing such a plan, that would suit the music industry just fine. Plenty of people at the top four labels have long been uncomfortable with unprotected music files. The major recording companies favor formats that protect music from being copied and shared. Label executives have also said that selling individual songs isn't a good business as the profit margins are small and it's a not a model that can't grow. Nguyen's ideas appealed to many at the music labels, particularly those at Warner Music Group, which invested $20 million into the company.

In May, Warner announced that it had to write down about $11 million of the Lala investment.

Some of the music execs I've talked to say they see a world where music buyers will leap at the chance to buy a song for life. In a world where music is stored on the servers of big companies, a consumer never has to worry about losing a song library to a broken hard drive or lost music player.

Of course, consumers would likely pay a premium for this life-time ownership and cloud-based service, but many in the industry feel that the public is ready for that kind of offer.

By all appearances, Nguyen could be the architect of this vision at iTunes.

Regardless of Lala's shortcomings, the company created something good enough to lure Google and Apple, two of technology's most successful companies. That alone isn't a bad resume.

And when you look at the $85 million purchase price, Nguyen engineered by far the best exit in the the battered digital music sector in at least a year.

There's something else to keep in mind about Nguyen; he recovers from spills quickly, usually in time to catch the next big wave. Hang 10, Bill.

Originally posted at Media Maverick
November 18, 2009 9:04 PM PST

MySpace acquired Imeem--now what?

by Greg Sandoval
  • 1 comment

MySpace on Wednesday acquired social-networking site Imeem for an undisclosed sum, but sources with knowledge of the deal say is worth about $8 million.

The News Corp.-owned MySpace has agreed to pay $1 million in cash, but the total figure also includes money for accounts receivable and employee earn outs. Regardless, the price is a big loss for investors who poured upwards of $30 million into the pioneer ad-supported music service.

(Credit: Imeem)

An Imeem spokesman declined to comment.

Imeem will continue to operate as a standalone site, at least initially, according to the sources. One source said that Imeem's brand will unlikely live on as they expect Imeem's assets will be folded into MySpace Music.

At least half of Imeem's staff will likely lose their jobs, according to the sources.

One interesting note is that Imeem was once backed by all four major music labels, but one of the record companies dissolved its position in Imeem weeks ago, the sources said.

Imeem is the fourth ad-supported site either to go bust or sell for peanuts. The sector is starting to look like a graveyard; Ruckus and SpiralFrog shut their doors earlier this year, and iLike was acquired--also by MySpace--for a song.

Backers launched these risky ventures hoping that if the services could attract large enough audiences, ad-money would follow. It hasn't worked that way.

The ad-supported services couldn't generate ad rates high enough to cover the licensing fees the record companies charged--even as in Imeem's case, the labels reduced their fees. Sure, a soft ad market and ailing economy didn't help, but the information that's surfaced about these sites is that they struggled to convince advertisers that streaming music was a good vehicle for delivering ads. It's not.

Internet users don't want ads and don't look at them when listening to songs. That's the dilemma.

Against this backdrop, all eyes should now be on MySpace Music. The question it must answer is how does acquiring Imeem and iLike help turn the lackluster and underachieving site around?

When MySpace Music launched in September 2008, big promises were made. The site was supposed to sell concert tickets and merchandise and branch out overseas. The site hasn't come close to living up to the hype.

While it's difficult to see what Imeem assets might give MySpace an advantage, It might not be a bad idea to tap into the experience of Dalton Caldwell, Imeem's CEO and his top lieutenants.

Sure, they couldn't make Imeem's iffy model work but they know where all the mines are buried. My music industry sources said the labels were always impressed with Caldwell and guys like Ali Aydar, Imeem's chief operator officer as well as Matt Graves, the company's vice president of communications.

They won kudos for helping to keep keep Imeem going when a a cash crunch threatened the company last spring.

Originally posted at Media Maverick
November 17, 2009 7:42 AM PST

Will MySpace save Imeem with acquisition?

by Greg Sandoval
  • 4 comments

Multiple sources are reporting that MySpace is in talks to acquire Imeem, the social-networking music service that has struggled with financial problems for some time.

(Credit: Imeem)

Peter Kafka at All Things Digital is reporting that negotiations are in the late stages and that MySpace is making the deal to acquire some of Imeem's talent and technology. News of the talks was first reported by TechCrunch.

Here's my contribution to the news: two sources with knowledge of Imeem say CEO Dalton Caldwell was in New York recently looking for new investors. Imeem was again running short of cash after coming perilously close to a financial crisis last spring. After Imeem received new funding from some of the music labels, sources told CNET that the money would last only through the end of 2009.

An Imeem representative was unavailable for comment, and a MySpace representative declined to comment.

Nobody has reported the asking price but don't expect it to be very much. One of my sources said that Imeem had been looking for a buyer for a while. Nothing had come of it. But Imeem, which made a name for itself by being among the first to offer ad-supported streaming music and being free to users, is likely to be thrilled by this kind of exit.

A sale is another sign that the ad-supported sector is amid a shakeout.

The truth is the sector is in shambles. Ruckus and SpiralFrog shut down earlier this year. Qtrax, a proposed legal peer-to-peer service hasn't even formally launched yet and has struggled with financial problems.

MySpace purchased iLike in August for a price that was reported to be barely enough for investors to break even.

For a breakdown of the challenges that ad-supported music services face, read "How turf wars and miscues crippled SpiralFrog" and "Plenty of proof that ads don't support Web music."

Update at 9:05 a.m. PST: MySpace representative's statement added.

September 18, 2009 2:25 PM PDT

YouTube, Warner Music feud nearing an end

by Greg Sandoval
  • 9 comments

The disagreement between Warner Music Group and YouTube over music licensing appears to be coming to an end.

(Credit: Warner Music Group)

The two sides have managed to reach terms on most of the major issues and a final deal could be announced within the next few weeks, sources with knowledge of the talks, told CNET News on Friday. What that means is the music and videos from such Warner acts as Green Day, Red Hot Chili Peppers, and the White Stripes may soon be back on the Web's largest video site.

The thaw comes nine months after the prior licensing agreement between the companies expired and negotiations to renew broke down. Warner's music videos were removed from the Google-owned YouTube in December and users were banned from including the label's songs in their clips.

Representatives from both companies declined to comment.

CNET reported in July that the companies had begun a new round of discussions. When the deal is signed, it will mean that YouTube once again can boast agreements with all four of the largest recording companies: Universal Music Group, Sony Music Entertainment, Warner, and EMI.

A Warner partnership will continue YouTube's string of signings with major content companies. In the recent past, YouTube has locked arms with Disney, Sony Pictures, and the U.K.'s Performance Right Society.

September 15, 2009 1:16 PM PDT

Stunned film, music sectors react to Veoh decision

by Greg Sandoval
  • 31 comments

In the cafes along Sunset Boulevard and the high-rises on Fifth Avenue, executives and lawyers at powerful entertainment conglomerates were talking about Veoh on Tuesday morning.

The rooftop pool of The Standard Hotel in Los Angeles.

(Credit: Greg Sandoval/CNET)

They were not joyful discussions. Copyright owners in the film and music sectors were stunned Monday by the news that U.S. District Judge A. Howard Matz ruled that Veoh, an online-video service, is protected by the Digital Millennium Copyright Act's safe-harbor provision and cannot be held liable for acts of copyright infringement committed by users. This was the most significant court victory that the tech sector has won against copyright owners in some time.

Universal Music Group had filed suit against Veoh, but on Friday, the judge tossed the case out. Universal said it will file an appeal soon. While entertainment companies await the appeal, Matz's reading of the DMCA has shaken content producers. Two entertainment attorneys from Los Angeles who asked for anonymity said the ruling "disappointed" many in their industries and absolutely isn't good for Viacom or any other copyright owner. Viacom filed a copyright lawsuit against Google and its YouTube two years ago. Some attorneys believe that Veoh's case is very similar to Viacom's.

Matz's decision isn't binding, but if allowed to stand, it could influence other courts, legal experts said.

What has so spooked the entertainment industry is that Matz would require content creators to play a cat-and-mouse game with those that upload unauthorized copies of films, songs, music videos, and TV shows onto Web sites.

In order to have a piece of content removed from a site such as Veoh or YouTube, they must file what is commonly referred to as take-down notice. If they get one clip pulled, someone could conceivably post the same clip 30 seconds later, and a content owner would have to file yet another notice, says Chris Castle, an attorney and outspoken proponent of artist rights.

"According to some interpretations of this new law, copyright owners--from multinational corporations to independent songwriters--are required to stand at the ready on a 24-7 basis to police the Internet," Castle wrote on his blog. According to Castle, the ruling legitimizes the "catch me if you can" business models that he claims some companies create to avoid paying licensing fees.

Companies such as YouTube and Veoh have filtering technologies in place that help keep infringing materials off the site, and Fred von Lohmann, senior attorney at the Electronic Frontier Foundation, has always said there isn't any way for such services to determine what content is infringing and what isn't. The copyright owners, according to EFF, are in the best position to do that.

As for the content-filtering technologies, they are totally foolproof. In a story in All Things Digital on Tuesday, the blog reported that Viacom had to pay staff to "work through the night on Sunday" to provide YouTube with "reference files" to help remove unauthorized clips from the Video Music Awards. One would go down, and more would show up.

"This is not the way forward for legitimate companies to come together with sustainable innovation in the digital society," Castle wrote.

That's an important point because despite claims by some on the copyright side, this isn't a situation where YouTube is sitting back while users commit piracy on its site. For two years, the company has implemented filtering technologies and created systems designed to help keep pirated material off of its site. Veoh had its own systems in place.

There's no arguing that YouTube was once more defiant and less interested in appeasing content creators than it is now. For the past couple of years, Google, which bought YouTube in 2006 for $1.65 billion, has wooed the film and music industries, and has signed all but one of the four major record labels and such studios as Disney, Sony Pictures, CBS (publisher of CNET News), and MGM.

Those antipiracy systems were an olive branch welcomed by content producers, but that won't cure all the ills. According to Doug Lichtman, a law professor at the University of California at Los Angeles and an attorney working for Viacom, many of the problems will be solved in the boardroom and not the courtroom.

"The most important antipiracy efforts under way these days aren't cases but (rather) business initiatives like Hulu and Redbox," Lichtman said, "where the content community is struggling to figure out how to give consumers what they want, in forms they want, and at reasonable prices."

If that's the case, though, then why don't Google and Viacom send their attorneys home and cut a business deal whereby everyone makes money? Maybe it will still happen.

August 27, 2009 1:18 PM PDT

Legal, financial maelstrom hits Pirate Bay

by CNET News staff
  • 8 comments
Recent days have been tumultuous for the BitTorrent tracker and its would-be buyer, Global Gaming Factory X.

Insiders question label deal for Pirate Bay bidder

Just as the press began eying Global Gaming Factory with suspicion, it came up with funding, a potential record deal and potential buyers. How much of that was real?
(Posted in Digital Media by Greg Sandoval)
August 27, 2009 1:18 PM PDT

Is Pirate Bay sold? Don't believe it

Global Gaming Factory X says its deal to acquire The Pirate Bay will go through, but nothing about this deal seems certain.
(Posted in Digital Media by Greg Sandoval)
August 27, 2009 7:06 AM PDT

File sharers hold vigil for Pirate Bay

The Pirate Bay may be breathing its last breath, but the site revered by file-sharers and reviled by copyright owners has likely given birth to numerous progeny.
(Posted in Digital Media by Greg Sandoval)
August 25, 2009 4:00 AM PDT

Swedish court orders shutdown of The Pirate Bay

Swedish ISP said it was ordered to shut down the BitTorrent tracking site or face penalties. It's unclear when the site will, if ever, come back online.
(Posted in Digital Media by Greg Sandoval)
August 24, 2009 9:36 AM PDT

Pirate Bay founders win debt-collection decision

The official Swedish debt collector rejected entertainment industry claims that Pirate Bay founders have assets in that country.
(Posted in Digital Media by Greg Sandoval)
August 24, 2009 8:19 AM PDT

Pirate Bay bidder loses chairman

Magnus Bergman has filed documents to end his affiliation with Global Gaming Factory X, the company attempting to acquire The Pirate Bay.
(Posted in Digital Media by Greg Sandoval)
August 23, 2009 2:37 AM PDT

Sweden launches criminal probe of Pirate Bay sale

A week before Global Gaming announced it would acquire Pirate Bay, the company's stock shot up. Swedish authorities want to know why.
(Posted in Digital Media by Greg Sandoval)
• Global Gaming CEO says LA Times reporter knows investors
August 22, 2009 1:23 AM PDT

Pirate Bay acquisition appears to be unraveling

Financial questions about the company bidding for the BitTorrent tracker, as well as its CEO, cast doubt on whether a revamped Pirate Bay will launch anytime soon.
(Posted in Digital Media by Greg Sandoval)
• Trading halted in stock of Pirate Bay bidder
August 21, 2009 9:50 AM PDT

Potential Pirate Bay buyer could lose P2P partner

Peerialism was supposed to be a linchpin of the new Pirate Bay, but the company is owed money and hasn't been made privy to vital details. CEO is losing confidence in deal.
(Posted in Digital Media by Greg Sandoval)
August 20, 2009 4:37 PM PDT

August 18, 2009 8:41 AM PDT

iTunes reps 1 in every 4 songs sold in U.S.

by Lance Whitney
  • 45 comments

Faced with heat from iTunes and other digital downloads, the nearly-three-decade-old music CD is slowly melting away.

iTunes-purchased songs now account for 25 percent of the overall music market--both physical and digital--in the U.S., says an NPD Group report released Tuesday. However, CDs are still the most popular format for music lovers, winning a 65 percent slice of the market for the first half of 2009.

An iTunes playlist

(Credit: Screenshot by Lance Whitney)

Digital music downloads have jumped in recent years, said NPD, hitting 35 percent of the overall market for the first half of this year, compared with 30 percent last year and 20 percent in 2007.

For the first half of 2009, iTunes itself snagged a 69 percent share of the overall digital music arena, trailed far behind by Amazon.com with 8 percent.

"The growth of legal digital music downloads, and Apple's success in holding that market, has increased iTunes's overall strength in the retail music category," said Russ Crupnick, entertainment industry analyst for NPD Group.

The CD, though, marches on. Among CD retailers, Wal-Mart leads with a 20 percent chunk of the physical music market, said NPD. Best Buy took a 16 percent share, followed by Target and Amazon at 10 percent each.

Still, the days of the CD seem numbered.

"Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking retail footprint for physical products," said Crupnick. "But with digital music sales growing at 15 to 20 percent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010."

Correction at 3:30 p.m.: The venerable audio CD is actually 27 years old.

Originally posted at Apple
Lance Whitney wears a few different technology hats--journalist, Web developer, and software trainer. He's a contributing editor for Microsoft TechNet Magazine and writes for other computer publications and Web sites. You can follow Lance on Twitter at @lancewhit. Lance is a member of the CNET Blog Network, and he is not an employee of CNET.
June 10, 2009 12:51 PM PDT

Chilirec records Net radio music to your PC

by Mats Lewan
  • 4 comments

It looks like music-playing software, such as iTunes, but it's also a kind of digital recorder.

Just press record and Chilirec grabs music from up to 100 Internet radio stations simultaneously, based on your music preferences, for free and legally.

Chilirec CEO Carina Dreifeldt

Chilirec CEO Carina Dreifeldt

(Credit: Chilirec)

"We have had our law firm verify in detail that this is a recorder which is legally ok," Chilirec CEO and co-founder Carina Dreifeldt told CNET News.

Chilirec is yet another digital music venture from Sweden, where a debate on piracy and copyright issues seems to have inspired alternatives such as Spotify and Tunerec, all offering listening for free.

Tapping into lots of Internet radio stations, Chilirec software records dozens of songs every minute, adding up to thousands of songs on your hard drive in a single day. The legality of this and other similar software such as Ripcast and StationRipper is based on the right to record music and make a few copies for personal use.

"The hitch is that the individual must perform the actual recording," explained Dreifeldt.

This is the reason why Chilirec now launches a software that runs on users' PCs. In October 2007, an earlier test version was launched in a cloud-based model, with a patent filed for the technology.

In the cloud-based model, each user had his or her own disk space on Chilirec's servers and managed the recordings via the Internet with the PC serving as a kind of remote control. The service soon became very popular.

But record companies considered this a service in which Chilirec was making the recordings and thus Chilirec was making copyright-protected material available illegally, since licenses weren't paid.

A similar case regards the U.S. cable provider Cablevision's network-based DVR.

"We could either fight and go to court, or transform the product from a cloud-based model to a personal recorder," Dreifeldt said.

As Chilirec didn't want to go up against the recording industry, the cloud-based model was abandoned at the end of 2008, at least for now. Dreifeldt expressed some disappointment over the industry's standpoint.

"We wanted to cooperate with the record industry. The basic idea was to have a place where you could listen to the world's music, and (then) if you wanted to download a song with better quality and without radio jingles," you could, she said. That would give the record industry more music-selling opportunities.

The new software, a second beta version, was initially released only in Swedish, and the full Web site at Chilirec.com can currently only be reached from Sweden. The software is free to use until the end of August. But eventually, Chilirec plans to offer both a free advertising-based version and a premium version that would cost about one euro a month.

CNET News gave the software a try and loaded our hard drive with a couple thousand songs in a few hours, even after narrowing the genre down to jazz.

Recorded songs are stored as MP3s and quality varies with different radio stations. Sometimes a song starts off with a radio jingle or with the end of another song.

Users can choose from a long list of radio stations and, in addition to genres, can narrow recordings to categories like "most played on radio in the U.K."

It's also possible to copy various top lists on the Internet as playlists, and to explore music already stored on the hard drive.

Chilirec is Java based and runs in the browser. Initially only Windows is supported, but Dreifeldt told Cnet News that versions for Mac and Linux will be coming later.

March 24, 2009 9:53 PM PDT

AT&T first to test RIAA antipiracy plan

by Greg Sandoval
  • 101 comments

Updated Wednesday at 9:00 a.m. PDT to include quotes from AT&T and information about Comcast and Cox.

Updated Wednesday at 10:37 a.m. PDT to include a statement from an AT&T spokeswoman who wished to correct what she had previously said. She says now that the company asserts in the letters that it has the right to terminate a policy. She said, however, the company has no intention of doing so.

Updated Wednesday at 3:40 p.m. PDT: AT&T says that it won't ever terminate service of customers without a court order. To read more updated information about this, go here.

AT&T, one of the nation's largest Internet service providers, confirmed on Tuesday the company is working with the recording industry to combat illegal file sharing.

At a digital music conference in Nashville, Tenn., Jim Cicconi, a senior executive for AT&T, told the audience that the ISP has begun issuing warning notices to people accused of pirating music by the Recording Industry Association of America, according to one music industry insider who was present.

Early Wednesday morning, an AT&T spokeswoman confirmed that Cicconi made the statements.

In December, the RIAA, the lobbying group of the four largest recording companies, announced the group would no longer pursue an antipiracy strategy that focused on suing individuals, but rather would seek the help of broadband providers to stem the flow of pirated content. The RIAA said an undisclosed number of ISPs had agreed to cooperate but declined to name them. In January, CNET News reported that AT&T and Comcast were among the group.

Sources told CNET on Wednesday that a Comcast executive confirmed that the nation's second largest ISP is working with the RIAA. At the same Nashville conference where Cicconi spoke, the Comcast exec said the ISP has sent 2 million warning notices to customers accused of infringement by entertainment companies. The sources have also confirmed that Cox is a member. (You can read more about that here: "Comcast, Cox join RIAA antipiracy campaign.")

Representatives of the RIAA could not be reached for comment.

Cicconi told attendees of the Leadership Music Digital Summit that the notices, which are sent via e-mail, are part of a "trial." AT&T wants to test customer reaction, he said. It was unclear Tuesday evening if AT&T had included any threats to suspend or shut off service.

The RIAA had said that under its "graduated response" plan, repeat offenders faced the possibility of their ISP suspending or terminating service--at least temporarily. There are also other forms of escalating responses, such as the sending of multiple letters. Some of the notices could take a stronger tone or perhaps the ISP might follow-up with a phone call. Managers at the organization have also said they support due process to protect people from being falsely accused. What the due process includes has yet to be determined.

Reached Wednesday morning, Claudia Jones, an AT&T spokeswoman, said the company's letters do include a mention that company retains the right to terminate service. She wanted to make it clear that AT&T has no intention of doing so, however. Jones also said the ISP never shares customers' names or any other personal information. What the company does do is send a "cover letter" to the accused customer along with the letter the ISP received from the RIAA stating that the person's IP address was flagged.

AT&T goes on to tell the accused customer that the problem may be caused by a teenager in the house who may be illegally downloading or that the customer might have an insecure Internet connection and that someone could be using it to steal content.

The ISP also informs the customer that downloading unauthorized copies is illegal and should be prevented. As for chronic offenders, Jones was less specific but said: "We can't assume that people are stealing. All we know is that they are using a lot of bandwidth. We can't be the police or the copyright enforcer...that's up to the content owner."

All the activity going on with AT&T, Comcast, and Cox is likely the first stage in what promises to be a long and drawn out process of using ISPs to help protect copyright material.

ISPs have traditionally tried to stay out of the fray between the big entertainment companies and those who download music illegally. They remain squeamish about the possibility of alienating customers, according to music industry sources. The ISPs also don't like plans that call for them to cut off access and chase away a source of income.

Note to readers: Have you received a warning letter from AT&T or another ISP? If so, e-mail me by clicking on the link in my bio below. Please include your contact information. I won't reveal your name in any story if that's what you prefer.

March 24, 2009 2:35 AM PDT

Is Reznor a digital-music visionary? Ask Lars Ulrich

by Greg Sandoval
  • 21 comments

Sure, rocker Trent Reznor's example has encouraged plenty of music acts to reject the label system and search for a new industry paradigm using the Web.

Lars Ulrich suggests that Metallica may want to dump its label, and he wants Trent Reznor's help to do it.

(Credit: The Los Angeles Times)

But did anyone expect that among Reznor's disciples would be Lars Ulrich?

Ulrich, a member of the rock band Metallica and once one of the leading critics of peer-to-peer sites, said during an interview last week with The Los Angeles Times that Metallica no longer needs the backing of a big record company and suggested that the group may be ready to go independent.

"The primary--not the only, but the primary--function of a record label is to act as a bank," Ulrich told the Times. "When you're fortunate enough to be successful and so on, you don't need to rely on record companies as the banks...We're doing a bunch of shows with Trent this summer in Europe. I look forward to sitting down and talking to him about what's on his radar."

Because of Reznor and efforts by Radiohead, which also dropped its label and has since used the Internet to market itself directly to fans, Ulrich told the Times "there's nothing but possibilities."

What's the significance here? To many music fans Ulrich became the hated symbol of anti-innovation, anti-technology, and heavy-handed copyright owners when he was among those who tried to sue Napster--and indeed file sharing--out of existence.

Now, a decade later, even he wants to sit at the feet of Reznor.

Reznor, leader of the band Nine Inch Nails, has won accolades from digital-music fans for attempting to make music more affordable for the public while helping artists earn a living. He's done this by rejecting the major-label system and distributing music via the Web directly to the public.

Ulrich's nod to Reznor is, at the very least, an acknowledgment that digital distribution is here to stay and that the best way to survive as a music act is to understand it.

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