I had a fascinating conversation with MediaNet CEO Alan McGlade on Friday morning. Unless you're deeply involved in online music, you probably don't know MediaNet, but it's the back end powering a lot of music services you might have used, including MOG's subscription service that launched earlier this week, as well as Microsoft's excellent Zune Pass subscription service and iLike's online music marketplace. (MySpace acquired iLike in August, and in November, links to iLike's service began appearing directly in music-related search results on Google.)
Fox Interactive used MediaNet's technology to embed this list of Aerosmith songs in a story about the band. Readers could then listen to a sample or buy the song.
(Credit: MediaNet)They've also got more history in online music than just about anyone. The company started off as MusicNet, with part-ownership by three of the then-Big Five major labels: BMG, EMI, and Warner. They powered RealNetworks' music initiatives before RealNetworks bought Rhapsody. They powered Yahoo Music. They powered MTV's online music store.
These early stores went nowhere. Content owners insisted on digital rights management (DRM) restrictions, which meant that content from these stores had restricted use rights and couldn't be played on every device--including, in most cases, Apple's iconic iPod. Setting up a store using MediaNet's platform often took 18 months and significant technical expertise. In the meantime, Apple focused on a dedicated online store for its own devices, and completely dominated the market for music downloads.
But the landscape has changed. Labels don't want to be beholden to Apple. They no longer insist on DRM for single-song downloads, and have realized that the more outlets there are for their digital music, the more customers they'll reach, and the more sales they'll have. (Amazing it took this long to figure out.) MediaNet is, in my opinion, incredibly well positioned to take advantage of this sea change.
In October, the company released a set of technologies called MN Open that make it almost trivially simple for companies to add a wide variety of music consumption options to their Web sites. Sure, companies can still use MediaNet to build an end-to-end service like MOG.
But say you're Fox Interactive and want to make a story about Aerosmith more engaging. Using a MediaNet component, Fox created a link for the first mention of the word Aerosmith that took users to a page with more information about the band, and links to play and buy some of their popular songs. Fox also posted Aerosmith songs in a box directly on the story page.
MediaNet handled all the heavy lifting: licensing the music, streaming the samples, and fulfilling the transaction. Fox kept its brand and design throughout the process, and users didn't have to leave the site to buy the song. Best of all for Fox, it didn't have to make any up-front payment to use MediaNet's technology. Instead, MediaNet takes the customary cut of any song purchased through the site (about 30 percent, if it's anything like Apple). The model's the same for sites that offer free ad-supported streams or subscriptions--MediaNet takes a portion of each transaction, then handles payment to the content owners.
Now imagine this kind of integration on sites for radio stations, record labels, or your favorite bands. Imagine your ISP or cell phone carrier offering you a music subscription service bundled with your Internet service or smartphone. In this world, users won't have to go to iTunes or Amazon MP3, or subscribe to Rhapsody (or MOG for that matter). Music will be available for consumption everywhere. And content owners will get paid regardless of where users buy it.
According to McGlade, it's already happening--he said MediaNet is adding about one new distributor per day, and has already got about 50 customers using the MN Open platform. One site, GetPlaylists.com, was able to add playable song samples and downloads-for-sale in only two days with MN Open, according to McGlade.
Thanks to this upsurge, the company--which is owned by a private equity firm and no longer has any direct ownership affiliation with the major labels--has recently crossed over into profitability. A rare situation indeed in today's online music landscape.
It's a great vision, and something that Microsoft, the original platform company, could have done. But Microsoft spent years pushing the Windows Media Platform, which made heavy use of Microsoft codecs and file wrappers (instead of MP3s, which were becoming the industry standard). Microsoft also spent a lot of effort trying to enable the labels' DRM demands--for example, by building a platform to enable subscription-based downloads to be transferred to portable devices. Then, just as the labels were getting ready to abandon DRM, Microsoft basically gave up pushing Windows Media as a general-purpose platform for distributors and device makers, and instead started trying to mimic Apple's end-to-end software+service+device with the Zune strategy.
Talk about an opportunity lost! Instead of struggling along with something like 2 percent of the digital media player market, Microsoft could have ended up powering the music technology on thousands of Web sites.
Another aside: while MusicNet offers a lot of flexibility for distributors--downloads, samples, free streams, or subscriptions are all supported--McGlade is most bullish on subscriptions as the digital business model of the future. He admits that old fogeys accustomed to CDs and vinyl will have a hard time giving up the concept of ownership, but suggests that today's teenagers don't care--they want music on demand from any device, any time, in any location, and don't need to have the files physically present. McGlade thinks that subscriptions will have the best chance of taking off if they're bundled with some other product, like ISP service.
Scoff all you want about subscriptions, but the concept keeps coming up: music industry expert Donald Passman also believes they're the best chance for the music industry to thrive in the future. Even Apple finally seems to be bending to the idea of streaming music with its acquisition of Lala, although Lala isn't a straight subscription service, but more of an online music locker with some free streams, plus fee-based individual streams.
Last week, a music site called BlueBeat made headlines by offering Beatles songs as free streams and 25 cent downloads. The Beatles are known for not making their songs legally available on iTunes or any other online forum, so observers rightly asked "how are they doing this legally?"
EMI, the record label that owns The Beatles' recordings, has a simple response: they're not doing this legally. But here's where the story gets very strange.
The legal reasoning in this case is straight out of "Alice in Wonderland."
(Credit: Wikimedia Commons (public domain illustration))BlueBeat is owned by a company called Media Rights Technologies, which specializes in digital rights management technology. DRM is supposed to be used to prevent copyright infringement. But according to a 2007 blog post on HuffingtonPost.com by the company's founder, Hank Risan, MRT backed into this business after being--get this--targeted by the RIAA for copyright infringement.
As Risan explains in his post, he and a partner had posted a bunch of streaming-audio files to a Web site about the history of music. The RIAA issued a takedown notice, and the site took the streams down.
The streams had been protected by Windows Media DRM, but according to Risan, an update to the Media Player broke the DRM. In response to this flaw, Risan created MRT and built his own DRM system, which he claimed would be far more robust than the systems on the market at that time. Then, in 2007, MRT sent cease-and-desist letters to Microsoft, Apple, Adobe, and RealNetworks, ordering them to use MRT's DRM technology instead of their own, on threat of legal action.
The legal reasoning was twisted--basically, MRT argued that the Digital Millennium Copyright Act should force these companies to use the most robust DRM technology available, even if that technology was created by somebody else. Predictably, nothing ever came of this demand.
MRT's legal reasoning is equally funny this time around, as Ars Technica reports. According to the report, MRT claims that it didn't post the exact Beatles recordings. Instead, it posted "psychoacoustic simulations," then added simple video content to them. This constitutes a new audiovisual work, and isn't covered by the existing copyrights, MRT argues. In fact, MRT even went so far as to apply for copyrights on the "new" works!
Perhaps this is all some kind of metacommentary on the frustrating inconsistency of U.S. copyright law, but I predict that MRT is going to be laughed out of court. In the meantime, if you want your Beatles music online, it's still available on BlueBeat as of the time I posted this. I didn't want to give the company a credit card to test the whether the downloads work, but the streams sound pretty close to perfect...especially considering that they're only psychoacoustic simulations.
Free All Media, an Atlanta-based start-up, is the latest company to propose an ad-supported music downloading service. The company, which just announced its first seed round of funding Wednesday and expects to begin public beta testing by December, hopes to differentiate itself from flameouts like SpiralFrog with a unique advertising model that asks users to participate more directly in choosing the ads they'll see.
The company's CEO, Richard Nailling, explained how the company's Web site, Free All Music, will work. Users will select an MP3 they want to download and a sponsor they'd like to "buy" that MP3 for them. They will then watch a video advertisement, between 15 and 18 seconds in length, from that advertiser. Once the ad is completed, they'll be free to download the file, a 256kbps MP3 with no copy restrictions. No further advertisements will be served for that download.
But here's the unique part--Free All Music will then use the downloader's handle in other banner ads for that sponsor, which Free All Music will place around the Web using an (as yet undisclosed) third-party ad network, as well as through its own ad network, which will focus on music-oriented sites. In other words, you might be visiting CNET and see "MattR just downloaded 'Angry Chair' by Alice in Chains...sponsored by Converse." In this way, Free All Music will be able to sell multiple ads per download and perhaps earn enough money to cover the license fee for each song.
There's a catch, of course: users will only be able to download as many songs as Free All Music can sell sponsorships for. At launch, the company is aiming for what Nailling calls "typical iTunes behavior," which is 15 songs per month, spread over three sessions. If the site takes off and advertisers buy more space, the song allowance will increase.
The key to success will be whether the company can get all four major labels and enough indies on board to make for a competitive selection of music. So far, the company claims it's signed up one major label (unnamed), and is aiming for the "full digital catalog" from each label, giving it full parity with iTunes and sites like Amazon MP3.
Would you be willing to sit through an 18-second video ad in exchange for a perfectly legal and guaranteed legitimate MP3? Or will you stick with file-trading networks?
Correction at 7:13 a.m. PDT October 1: This post incorrectly stated the number of free songs that Free All Music aims to offer at launch. The site plans to offer 15 free downloads per month, spread over three sessions.
When Dada.net, a music site run by a joint venture between major label Sony BMG and Italian mobile-entertainment company Dada, first launched, $9.99 got you 15 "tokens" that could be redeemed for ringtones or MP3s.
Unfortunately, it offered only songs from Sony BMG, as other download services with a much larger selection--notably Amazon.com and Apple's iTunes--began to offer DRM-free downloads for a buck or less.
Despite some big holes, Dada.net does offer a complete selection by some artists, including Radiohead.
The service now has a free tier that offers unlimited streaming, and unlike other free streaming services such as Grooveshark or Spotify, you also get three free MP3 downloads per month. I tested it with a download of Beck's "Bolero", and everything seems legit--you do have to register with a valid e-mail address, but you aren't forced to give a credit card number to get your free service, as with eMusic.
The selection still has some gaping holes--no Led Zeppelin or Beatles, for example--but some non-Sony artists like Pink Floyd and Radiohead (the bulk of whose recordings are owned by EMI) are represented with a full complement of recordings, including obscure live albums and EPs. And, of course, Sony artists like Kings of Leon are fully represented. The free tier is definitely worth checking out, if you can't find a song you're looking for at one of the other free streaming services.
As far as the paid tier goes, I still think that it's a bad deal, at $9.99 a month, for 15 free MP3s (the first month, you get 25). You can get DRM-free downloads for about the same price, with no monthly subscription fee, from many other sources. Another possible deterrent: Dada has been accused of using questionable tactics to attract and retain subscribers. I haven't experienced any problems, and the most recent complaints date from 2006, but the reports are common enough that I have to suggest caution.
According to a report in Forbes, phone giant Nokia has delayed the U.S. launch of its Comes With Music service until 2010.
Nokia first announced Comes With Music back in December 2007, then revealed more details almost a year later as the service launched in the U.K. Under the plan, cell phone buyers pay some extra money up front and, in exchange, get the right to download as many songs as they want from Nokia's music store for one year. Those downloads don't expire when the user's cell phone contract ends, but they are copy-protected, limiting usage to the phone and one computer that's registered with the service. Still, it seemed like a reasonable deal if Nokia could convince cellular carriers to subsidize some of the cost, and early reviews from the U.K. were mostly positive. I even suggested that Microsoft follow Nokia's lead whenever it launches its next-generation consumer-focused smartphones.
I thought the launch of the Nokia 5800 Xpress Music phone in the U.S. would be accompanied by the launch of the service in the U.S. as well, but it wasn't. So what's the problem? My guess is that Nokia's facing the same licensing economics that are limiting free download service Spotify to the European market only. Nokia may also be waiting for a more fundamental transition: the company has said that it's considering removing digital rights management limits from future iterations of the service, allowing the downloads to be played and shared between an unlimited number of devices. (In fact, the Comes With Music DRM scheme was bypassed almost immediately, proving for the umpteenth time that the concept is flawed.) It's only a matter of time: three years ago, nobody envisioned the content owners abandoning DRM on single-song downloads. Now, there's not a per-song download service that still uses it.
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Hear that popping sound? It's the sound of executives in the music and movie industries taking an extra dose of heart medicine. Wednesday, a new site called Zookz began public beta-testing a service that will let users download an unlimited number of MP3 music files for a single monthly fee of $9.95. Users can also download an unlimited number of MP4 movies for the same price, or both music and movies for $17.95 per month. Those are unprotected, DRM-free downloads that can be transferred to any device or shared an unlimited number of times.
Of course there are a few catches. Currently, the site only has about 50,000 tracks--a paltry selection compared with iTunes, Amazon MP3, and other services, although the company promises to add 5,000 tracks per week. In its current early beta state, there's no browsing among titles--you have to search, which requires you to know exactly what you want, and then hope it's in the (currently tiny) Zookz database. (I didn't test it for movies, as the focus of this blog--and my main personal interest--is music, but the selection's even smaller there: only 1,500 titles.)
How can Zookz possibly get away with this when the only other subscription music-download service I know of, eMusic, charges more for a limited number of monthly downloads? Simple. According to its FAQ, Zookz is based in the Caribbean nation of Antigua, and isn't subject to U.S. jurisdiction, including copyright law. The company claims it's operating in line with a 2007 World Trade Organization agreement between Antigua and the U.S., a claim I have absolutely no qualifications to evaluate one way or the other.
If you're willing to trust Zookz with your credit card information, you can fill your hard drive and all your portable music players with music for a very, very low price. Get it while it lasts....
Yes, it's that simple. (For the record, I already own this album on vinyl, but have been too lazy to rip it.)
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Today, U.K. Internet service provider Virgin Media announced plans to begin offering unlimited song downloads for a monthly subscription fee. The songs will be DRM-free MP3 files, which means they will never expire, even if the user switches ISPs. Universal, the largest record label in the world, is so far the only label to sign on, but the other majors will probably follow.
The deal was announced along with a threat to crack down on illegal downloaders (perhaps through some sort of BitTorrent monitoring, although Virgin claims it won't be doing the monitoring itself), but the companies left the most important question unanswered: how much will it cost?
The labels won't want to settle for less than they're getting through iTunes and other download stores, so Virgin will have to guess how many songs will be downloaded per month, then divide that number by the number of subscribers. After some initial heavy usage, I can imagine users downloading about two albums per month. So I could imagine a rate of about $40 per month. That seems fair compared with subscription-based streaming services like Rhapsody, which starts at $12.99 a month.
But what's fair to the industry may not seem fair to users, who have been downloading free music for almost a decade now. People have proven willing to pay for downloads when they get some other tangible benefit--in the case of iTunes, it's the ease of transferring purchased songs to their iPod or iPhone. When the only extra benefit is a clear conscience and less chance of being sued, I think a lot of users will take the risk and stick with free.
Would you pay a monthly fee for unlimited downloads? If so, how much?
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The idea of a digital music kiosk, where customers can walk up, press a few buttons on a screen, and download music to some sort of portable storage medium (disc, phone, flash card), has been around for a few years now. Starbucks ended a two-year experiment with in-store CD burners back in 2006, and U.K. music retailer HMV began offering free downloads to USB drives from in-store kiosks in 2007.
Even if the trend hasn't exactly taken off, companies continue to try them out. Earlier this week, Seattle-based start-up MOD Systems entered the fray, announcing that it had signed deals with all four major labels, allowing it to package more than 5 million DRM-free songs for digital distribution via in-store kiosks.
There's a bit of irony in the announcement, as MOD co-founder Anthony Bay used to lead Microsoft's Windows Media Division, whose business model relied heavily on DRM (digital rights management). Microsoft hoped to convince content owners that it had a robust DRM system so they'd use Windows Media technologies to encode and host their content. But that was almost 10 years ago, and now that the recording industry has come around to the idea of selling DRM-free tracks on iTunes, Amazon, and countless other online stores, there's no reason to restrict retail kiosks from doing the same.
So is there any future for digital music kiosks? It's hard to imagine shopping at a digital-only record store when it's so much easier to buy MP3s over the Web on my home computer--which is where I store them anyway--or over the air from a phone or wireless-connected player. But kiosks might find a place in multipurpose retailers and big-box stores, where they'd take up a lot less space than the CD racks currently in place, or in other places with lots of foot traffic--hotel lobbies, malls, university campuses, and so on. I can even imagine a jukebox that not only lets you play songs, but also lets you download them to a flash drive--great for those late-night impulse buys.
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In January, Apple announced that all songs in the iTunes Store would be free from DRM. As part of the announcement, the company said that previous DRM-encumbered purchases would be upgradeable to DRM-free versions, with a higher bitrate as well. This isn't just a point of principle with me--I have a Zune player that automatically adds all the songs in my iTunes library, including AAC files, but which cannot see or play DRM-protected songs.
Today, while doing some shopping for songs I love but don't own (or have only on--gasp--cassette, which I can't digitize because of the way my stereo's set up), I finally got around to upgrading my previous DRM-encumbered purchases. iTunes found three of them, and let me upgrade to DRM-free versions for 30 cents a track. So far so good. Then, I went to buy "Bela Lugosi's Dead" by Bauhaus. iTunes told me I already had it in DRM-encumbered form, and asked me if I'd like to convert to iTunes Plus. Say what? I thought I did that already. But when I actually tried to convert it, iTunes said my conversion process was finished. I looked further, and found there were about 20 songs that iTunes wouldn't let me upgrade. Why not?
Psych! Fooled ya!
I had to do some digging but found the answer in this MacWorld article: these were all free songs I'd received through promotions, mainly when I bought concert tickets through Ticketmaster and for the Monterey Jazz Festival. It's not like these songs were never paid for--presumably the promotional partners paid some fee to Apple, thinking that these free downloads would create positive associations in their own customers' minds. (Ticketmaster can always use more good P.R.) But now I'm stuck--either I pay full price for a new download or accept that they'll never leave my iPod.
I wouldn't have minded so much if Apple hadn't tempted me by offering me the chance to upgrade, only to dash my hopes when I actually tried to complete the process. That's an annoying bug, but the policy itself is the real offender.
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It's been a long wait, but more than a year after Nokia announced its Comes With Music plan--free music downloads built into the price of the phone--the first Comes With Music phone is apparently coming to the U.S. in February.
(Credit:
CBS Interactive)
According to The Nokia Blog, the Nokia 5800 Xpress Music (a.k.a. The Tube) will go on sale at U.S. retailers on Feb. 26 for a suggested price of $399. No carrier partners have been announced, so there's probably little chance of a carrier subsidy reducing the price at launch. CNET reviewed a preview version of the phone back in December and liked it fairly well, but I'm most interested in how the Comes With Music plan will stack up against Apple's iTunes.
According to the information CNET got back in October, when the 5800 was unveiled in the U.K., Comes With Music tracks will be playable on the phone and one PC, and will not expire after the year is up. From the reviews I've seen, it's truly an unlimited downloading service--there's no hidden limit, although Nokia's terms of use would let them cancel your service for "abusive or excessive downloading."
The experience is a little clunkier than iTunes from what I've read in the reviews. The phone comes with a card containing a code; enter that code into the Web-based Nokia Music Store and all prices in the store disappear. Everything has to be sideloaded--there's no direct over-the-air downloading to the phone as you can do with the iPhone--and it's PC only. You can't transfer the songs to any other phone, even another Comes With Music phone, nor can you burn them to a CD without paying extra. Songs are encoded in the Windows Media Audio format (which I've always thought is an excellent audio codec, for all of the other flaws with Microsoft's digital media strategy and products), and of course come with DRM to limit what you can do with them.
Still--everything you download lives on your PC forever. So while $399 is a significant premium over the iPhone, add in the price of a few thousand PC-tethered downloads, and it looks pretty competitive. At the very least, it could be an extremely convenient way to discover music--you can always buy full CD-burnable tracks of the songs you really like, then transfer them to other devices in other formats later on.
Will it make a dent in iPhone sales? Not without a carrier agreement, no.
