Digital Media

Sony is planning a new online store a la Apple's iTunes, but with a few twists.

Announced at a strategy meeting in Tokyo on Thursday, the new service will hawk music, movies, books, and other downloadable content geared for its various electronics, including TVs, mobile phones, music players, and computers.

The service, which Sony aims to launch next year, will link the company's devices and digital content that it produces--setting it apart from other online stores.

"That's the kind of combination that I think is not seen anywhere else," Kazuo Hirai, Sony executive vice president for networked products and services, said in an interview with the Associated Press. "That I think is where our core competence lies, and that's a differentiator for Sony."

Hirai also spoke about the new service with BusinessWeek, saying that it won't just sell products but also tap into social networking by letting people upload their own photos or videos and connect with each other.

"It's not just access content, stream it, and enjoy," Hirai told BusinessWeek. "What are your friends watching right now? There's a screen that says all the programming that's available. It highlights all the things that your friends are watching, for example. It's a community experience."

Called the Sony Online Service for now, it will model itself after the company's successful PlayStation Network, a free service that has captured 33 million registered users who download movies, access social networks, and grab games for the PS3 and portable PSP console. Hirai said that gamers will be able to access the new online service directly through their PlayStation Network accounts.

Of course, Sony has been down this road before in 2005 with its late Sony Connect music service. The aborted iTunes clone was done in by internal politics and a failure to connect with consumers, forcing the company to shut it down in 2007.

But with a new, more cohesive management team put in place by CEO and president Howard Stringer, Sony is hoping to avoid the in-fighting that helped kill Connect.

Sony needs a shot in the arm at this point. Though the company pioneered the portable music concept 30 years ago with its Walkman, it has struggled to compete in the Digital Age. Continuing a string of quarterly losses, Sony took a $292 million net loss in its recent second quarter. Despite cost cuts and layoffs, the company is projecting a total loss of $1.3 billion for the full fiscal year.

Apple quietly launched a new preview service this week that makes it easier for users to view its iTunes music library from the browser.

Dubbed iTunes Preview, the new feature allows visitors to view iTunes content from their browser without being forced to launch iTunes. Previously, when a Web user received an iTunes link, they needed to open iTunes to view its content.

As part of the launch, Apple has updated links in iTunes to redirect to iTunes Preview. When a user copies a link in the software and pastes it into the browser, they will be brought to the song's individual listing on Apple's Web site. The feature is especially handy for those who don't use iTunes, since they can now view an individual song without being forced to download the software.

Aside from individual music listings, iTunes Preview also allows users to sift through artists and albums based on genre. Each individual listing displays all the songs in an album, the album art associated with it, its cost, and other content typically found in the iTunes store. The page also includes a link to the iTunes store in case the viewer wants to buy it. That said, there aren't any song previews in iTunes Preview; users will still need to go to iTunes to hear them.

iTunes Preview in action.

(Credit: Screenshot by Don Reisinger/CNET)

For now, iTunes Preview features music. There's no telling if Apple will add more content over time. If you want to check it out, copy an iTunes link from within the software and paste it into your browser.

(Via AppleInsider)

(Credit: The Beatles)

No, the digitally remastered Beatles catalog hasn't come to Apple's iTunes. But it has come to an apple-shaped USB device.

Retailing for $279.99, the collection will be released December 8 in North America, three months after the September 9 release of the remastered set of the band's albums (as well as The Beatles: Rock Band video game). The apple shape is in reference to Apple Corps, the Beatles music publisher--which in the past, you may recall, sued tech giant Apple in a trademark dispute.

(Credit: The Official Beatles Shop)

When the release of the remastered Beatles catalog and Rock Band game were announced for September 9, 2009 (the band has a song called "Revolution 9"), speculation arose that a concurrently scheduled Apple Inc. announcement might bring the catalog, still unavailable for digital download on the Web, to iTunes. That didn't happen. But with the release of the USB collection, the albums are available in non-CD digital form for the first time.

In addition to MP3 and FLAC versions of 14 stereo titles, according to a release, the 16GB device contains "all of the remastered CDs' visual elements, including 13 mini-documentary films about the studio albums, replicated original UK album art, rare photos and expanded liner notes."

Correction 10:45 a.m. PST: This story initially misstated the release date. It is December 8 in North America. Also, the type of lawsuit Apple Corps filed against Apple Inc. has been corrected. It was a trademark dispute.

Would you pay $30 a month to watch TV via iTunes?

That's the pitch Apple has been making to TV networks in recent weeks. The company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software, multiple sources tell me.

Apple isn't tying the proposed service to a specific piece of hardware, like its underwhelming Apple TV box, or its long-rumored tablet/slate device. Instead, it is presenting the offer as an extension of its iTunes software and store, which already has 100 million customers.

A so-called "over the top" service could theoretically rival the ones most consumers already buy from cable TV operators--if Apple is able to get enough buy-in from broadcast and cable TV programmers.

That's a big if: Apple has told industry executives it wants to launch the service early next year, but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.

But industry executives believe that if anyone jumps first, it will be Disney, since CEO Bob Iger has shown a willingness to experiment with Apple and iTunes in the past: In 2005, Disney was the first player to sell its programming on iTunes, via a la carte downloads. And Apple CEO Steve Jobs is Disney's largest single shareholder, a result of Disney's 2006 acquisition of Jobs' Pixar animation studio. Apple didn't respond to requests for comment.

Network executives I've talked to are intrigued with the idea--they are eager to find new revenue streams--but are also wary, for multiple reasons.

Story Copyright (c) 2009 AllThingsD. All rights reserved.

Stardust is sprinkled all over music service Spotify.

Steve Jobs built the most successful music service by dealing from a position of strength.

(Credit: CNET)

In recent months, users, reviewers, and even Facebook founder Mark Zuckerberg have heaped praise on the European service, which has yet to launch in the United States. But while Spotify may be a nifty service, it may also be a textbook example of how popularity doesn't mean profits.

CEO Daniel Ek appeared to acknowledge that his company has a long way to go before hitting profitability in a candid note he posted to the site on Thursday. Writing on the anniversary of the site's launch, Ek signaled that the service may be struggling to generate revenues by becoming the latest CEO to complain about music-licensing fees.

Ek began his post by saying he envisions a future where Spotify helps the music industry pocket $50 billion annually and lures people away from illegal file-sharing sites by the truckload. But before this happens, Ek said, the labels must help him help them.

"The new business model in music," Ek argued, "is a mix between ad-supported music, downloads, subscriptions, merchandising, and ticketing where, the user comes first...It can't happen if the industry continues to enforce the per-play fees it has tried so hard to hold on to. The new model is about figuring out how to increase the revenue per user between the different models--not squeeze as much as possible out of every single transaction."

Blaming the labels for an underperforming business model isn't new. Everybody from SpiralFrog to Imeem has claimed that overinflated licensing fees are the cause of their struggles. No doubt, the world would be a better place for consumers, if the labels gave their music away for free. The reality is that they aren't going to do that.

Label chiefs have a number in their heads that they think their songs are worth, and it's higher than Ek's valuation. All the moves of late by the record industry indicate that while they will try to help these sites, to a point, the labels appear determined to hold the line on their overall pricing strategy.

Here are some of things I've learned about the big record companies over the past year:

The labels don't think the failure of ad-supported Web sites will spell their doom. Not by a long shot. Many label honchos were skeptical of the ad-supported model from the start. The performances of these companies haven't raised the confidence level much. Ruckus and SpiralFrog are closed, Imeem barely survived a financial crisis, and no one in the sector has reported profits. In other interviews, Ek has acknowledged that less than 10 percent of the site's users actually fork over any money.

None of the services have shown that their sites appeal very much to advertisers (people listening to music don't look at ads). There's also evidence that instead of promoting song sales, ad-supported sites cannibalize them.

To hear Michael Robertson tell it, the founder of MP3.com says the top labels don't care if Spotify or the other services fail because there are always more "dummies" willing to pay big bucks to partner with the labels. One goes down, another will leap to take its place.

Here's the direction where music industry chiefs appear headed:

First, they are trying to get back control of distribution, and that means plugging the holes.

The industry knows that file sharing isn't going away, but the record companies appear to believe that they can discourage mainstream music fans from pirating music. To do that, the Recording Industry Association of America continues to lobby bandwidth providers to establish a graduated response program, which may include cutting off service to the worst offenders. The RIAA, the trade group representing the four largest music labels, hasn't been very successful so far. Not a single Internet service provider has publicly acknowledged working with the music industry on graduated response.

The next step for the labels is to focus on what works. My music industry sources say the labels, with their shrinking revenues, are backing away from risky digital models. Selling downloads is the only proven way to make money off the Web. The problem for the labels is that downloads are synonymous with iTunes, and that means they are forced to share too much control with Apple. The labels would like to see a world where lots of outlets sell songs online and the industry isn't overly dependent on a single store.

The business model that the labels really want to see succeed is subscriptions. Enticing people to pay a monthly fee to hear all-you-can-eat music wouldn't offer the same fat margins that CDs once did, but it has the potential to deliver consistent revenue and volume. So far, the public has by and large rejected paying monthly fees because they know that as soon as they stop paying, they lose their music.

As for Spotify, Ek wrote that "overnight success takes a long time," and he supported his statement by noting that iTunes "missed its revenue targets in its first year by 30 percent."

What Ek failed to mention was that in its first year--at a time when far fewer people were buying music online--iTunes sold 70 million songs and managed to turn a small profit. Apple forced the music industry to yield to its wishes by creating a wildly popular and self-sustaining business, not by pleading for mercy.

"It would obviously be wrong for me to compare Apple's success with iTunes to Spotify."

On this, Ek is right.

Songwriters, composers, and music publishers are making preparations to one day collect performance fees from Apple and other e-tailers for not just traditional music downloads but for downloads of films and TV shows as well. Those downloads contain music after all.

These groups even want compensation for iTunes' 30-second song samples.

In the future, Apple may be required to pay licensing fees to ASCAP and BMI for the downloads of TV shows and films it sells.

(Credit: Apple)

At a time when many iTunes shoppers are still fuming over Apple's first-ever increase in song prices, the demands by the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Inc. (BMI), and other performing-rights groups, would likely lead to more price hikes at iTunes. For many, this would also undoubtedly confirm their perception that those overseeing the music industry are greedy.

For those reasons, composers and songwriters will struggle to sell their case to the public. But these royalty-collection groups say they're at the bottom of the music-sector food chain and aren't trying to gouge anyone. They say their livelihoods are threatened and wonder why movie studios, big recording companies, TV networks, and online retailers are allowed to profit from their work but they aren't.

"We make 9.1 cents off a song sale and that means a whole lot of pennies have to add up before it becomes a bunch of money," said Rick Carnes, president of the Songwriters' Guild of America. "Yesterday, I received a check for 2 cents. I'm not kidding. People think we're making a fortune off the Web, but it's a tiny amount. We need multiple revenue streams or this isn't going to work."

An Apple spokesman declined to comment.

ASCAP and BMI have their sights set on collecting fees from three main areas: downloads of music; downloads of films and TV shows, and 30-second song samples.

In case you don't know the lingo of music licensing, here are some important definitions. When music is performed in public, say at radio stations, restaurants, or sports stadiums, groups such as ASCAP and BMI collect fees and pass them on to composers and songwriters. This is different than a "mechanical" licensing fee, which is paid for the right to record or distribute a song (ASCAP and BMI don't collect mechanical fees).

"In the U.S. while we do get paid a mechanical (licensing fee) from ITunes, we are not getting any performance income from Apple yet," David Renzer, chairman and CEO of Universal Music Publishing Group, said in interview late last month with entertainment-industry publication, Encore. "(On iTunes) you can stream radio, and you can preview (tracks), things that we should be getting paid performance income for.

"Also, if you download a film or TV show," Renzer continued, "there's no performance (payment) and typically there's no mechanical (payment) either."

Taking their case to Congress
Apparently, the music industry can't obtain the fees through negotiations. They have begun lobbying Congress to pass legislation that would require anyone who sells a download to pay a performance fee, according to David Israelite, president and CEO of the National Music Publishers Association.

"If you watch a TV show on broadcast, cable or satellite TV there is a performance fee collected," Israelite said. "But if that same TV show is downloaded over iTunes, there's not. We're arguing that the law needs to be clarified that regardless of the method by which a consumer watches the show there is a performance right."

Israelite acknowledges that the legislative efforts to this point have produced little. And they won't produce a thing if Jonathan Potter gets his way.

Potter is executive director of the Digital Media Association (DiMA), a trade group that represents Web music services and media companies, such as RealNetworks, Pandora, and Apple.

He stresses two points.

First, publishers, composers and songwriters do get paid for music inserted into TV shows and movies. A production company must pay a "synchronization" fee for the right to include a song in any show or film. Then, once the show airs or the film is screened, the music guys will require a separate payment from TV networks or studios for performing the music publicly. Israelite confirmed this.

Critics argue this is double dipping.

Israelite makes no apologies. He says that synchronization and performance fees cover very different rights. To illustrate the point, he says not all composers receive money from TV and films. Say, for example, a TV show licenses a popular tune from singer Aimee Mann or the rock band The Fray. Those acts would likely be paid both sync and performance fees. But the person who writes the little-known background music heard during a fight scene may not see any sync money. That's because traditionally, composers of this kind of production music gave away sync rights in the hope they would make money from performance fees.

"This is really a fight about the future," Israelite said. "As more and more people watch TV or movies over an Internet line as opposed to cable or broadcast signal, then we're going to lose the income of the performance. For people who do production and background music, that's how they make their living."

Potter says he is very sorry for those people. But if their income is drying up--this was the second major point he wanted to make--their troubles are not the fault of iTunes, Amazon, or consumers.

"These guys are afraid that the business model is shifting away from public performances to a model of private performances," Potter said. "This is a turf battle. They are saying, 'The songwriters aren't getting paid.' Baloney. Songwriters are getting paid. They're paid sync rights and (mechanical) rights. They aren't getting paid for the public performance in a download because there is no public performance in a download."

Downloading count as a performance?
Whether downloading a song from the Web should be considered a performance is much contested. So far, the courts have sided with digital media companies.

In 2005, ASCAP entered into a rate-court proceeding to set licensing fees for the music services of Yahoo, AOL, and RealNetworks. A U.S. district judge for the Southern District of New York delivered a blow to composers and songwriters by ruling that downloading music from a Web store was not a music performance. On the other hand, the judge found that streaming music was subject to a performance fee.

"The songwriter gets a performance fee if the song is streamed without the video," Carnes noted. "But if it is downloaded within an audio-visual work like a movie we don't get a performance fee--same song, no money."

ASCAP has appealed the decision and arguments in the case will be heard later this year.

Of all of the efforts to collect performing-rights fees, few will likely be more controversial than trying to charge for 30-second samples. These are the previews iTunes offers so users can test drive a song and hear what they're buying. According to sources close to the company, iTunes has acquired licenses to offer the previews but hasn't paid anything for them. According to Renzer's comments, music publishers want that to change.

Potter from DiMA argues that copyright law protects Apple and music stores from being charged performance fees for in-store sampling.

"They are picking on Apple because they say Apple is making a bundle of money," Potter said. "But these companies should be thrilled that Apple and the other services are selling music and generating millions, maybe tens of millions, in royalties."

If you were hoping for Apple to announce a subscription-based music service for the iPhone and the iPod Touch on Wednesday like I was, suppress your disappointment: early this morning, Apple approved Rhapsody for iPhone, and it's available in the iTunes Store.

It's the second such service Apple has approved, but the first, Spotify, is not available in the United States. (The Rhapsody application is not showing up in search results quite yet, but it is showing up within iTunes.)

(Credit: Rhapsody)

Rhapsody was a pioneer in subscription-based music, and I'm a big fan of the service; in 2005, it was the first one to turn me on to the thrill of chasing your whims and surfing randomly among genres, which you can't do with per-download services like iTunes.

In my most recent trial late last year (in conjunction with the Sonos multiroom audio system), I wasn't able to find any significant gaps--if anything, there was too much music, including more versions of the novelty song "Kung Fu Fighting" than I ever imagined--and there is some excellent curation and editorial work, particularly for indie rock artists.

The iPhone app is pretty straightforward: you can search for songs, surf genres and chart-toppers, and create queues and playlists. If you're a fan of Pandora, you'll also appreciate the Rhapsody Radio feature, which creates tailor-made stations built around particular artists or genres. As long as you have an active Wi-Fi or 3G connection, the music should keep playing without interruption.

It's a free download, but to use it, you'll need a Rhapsody to Go subscription, which costs $14.99 a month. That's not quite as good a deal as Microsoft's Zune Pass, which costs the same and gives you 10 permanent MP3 downloads a month, but of course that service requires a Zune, which means that it applies only to about 1.1 percent of the MP3 player market (according to a statistic that Apple snarkily included in its presentation Wednesday) and exactly zero mobile phones.

Apple appears to have seen the light, as it is now allowing subscription-based music to come to the iPhone. It makes my phone's 8GB storage size seem a lot less limiting.

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Promotional page for iTunes LP, which appeared in the iTunes Music Store on Wednesday.

(Credit: Screenshot by Matt Rosoff/CNET)

I'm following Apple's "It's Only Rock and Roll" event along with the CNET staff, but even before the event started, I saw that Apple has revealed its new LP format for iTunes.

It's called iTunes LP, and you can access it by clicking the top item on the "More to Explore" box in the left side of the iTunes Store front page. The new format includes more album art, lyrics, writing about the record, video (such as interviews with band members), and perhaps additional songs.

There are only a handful of albums available in the format right now (see screenshot for the six that are advertised on the iTunes LP page), but I'm sure that more are coming.

So far, I haven't been able to download the iTunes 9 software, but it's available in earlier versions as well.

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