Guest post: Editor's note: Music attorney Chris Castle is all for finding a way to boost the music industry out of its current nosedive. But bundling music charges into ISP bills is not the way to go, he says.
Jim Griffin's idea sounds very much like the Lawrence Lessig-William Fisher "alternative compensation scheme" that has been around for a long time. Griffin's proposal is voluntary, like the version proposed by the Electronic Frontier Foundation, (which advocates for Internet rights).
There are many problems with the system, but here are three:
First, Griffin's plan produces a disaggregated chunk of money that is collected based on headcount, not based on music usage. One way to divide up that money that advocates often raise is based on some kind of sampling of usage (I think I've heard the Electronic Frontier Foundation talk about the sampling method used by the American Society of Composers, Authors and Publishers as a proxy. If you are going to sample peer-to-peer or BitTorrent files, you need to identify tracks. That can be done with fingerprint technology, and there are several companies out there that do that.
However, if you can identify the tracks on P2P systems enough to sample, you can identify the tracks enough to block and filter. So why not give copyright owners that right? The Portfolio.com story seems to say that Warner Music Group intends the system to cover all the world's music, but that must be a typo, for Warner Music obviously can only speak for its masters and the compositions they administer (even that is subject to artist and writer consent in many instances).
If you are going to divide up the disaggregated sum collected the Griffin's system on a method not based on sampling, then what exactly would that be? I call this the "Carl Sagan Scheme" because it promises "billions and billions" of dollars to the creative community. It also ignores what I think will be billions in the transaction costs of implementing the scheme--ISPs won't do this for free, and will want protection from copyright infringement claims of any stripe.
It's also important, for obvious reasons, that the company holding the data be "Swiss." I doubt that the labels would allow one of their number to control it, and a joint ownership scheme would face an inevitable antitrust challenge if the others were involved.
In order to be effective, Griffin's plan would require amending the Copyright Act. A voluntary plan is unlikely to attract a sufficient number of copyright owners. But without all copyright owners, ISPs and their users would still be exposed to claims of copyright infringement. If you think that gaining relief from prosecution is an incentive for ISPs to adopt this complicated plan, then you would, I think, assume that ISPs would want to protect their users from all claims for copyright infringement.
Which leads to the second problem. In order to get that global protection for users requires amending the Copyright Act. Without amending the Copyright Act, you will always have the "lone gunman" problem, or the copyright owner you missed getting permission from. It's tough enough to amend the Copyright Act on things that people agree on, and you'll never get anyone to agree to amend the Copyright Act on things that people are bitterly opposed to, such as Griffin's system.
In addition to these problems, if you go down the route of amending the Copyright Act, which seems to be the only realistic way to accomplish what Griffin desires, there are people who say such an amendment would violate the U.S. government's treaty obligations, such as the Berne Convention, the TRIPS Agreement, and NAFTA.
Also, it's likely the rest of the world may have a problem with Griffin's system, even if it's a voluntary system. A similar system was resoundingly defeated in the French Parliament, and President Nicholas Sarkozy has clearly come out against any such ideas. One reason is that it is hard to put a border on the plan, but this is really a worldwide solution that Griffin seems to be proposing.
We have only been focused on issues affecting artists and songwriters, but ISPs and P2P operators will likely have many other negative reactions to the plan. I can't imagine the Pirate Bay signing up for this.
It's a head scratcher, that's for sure. I'm sure there's a lot more to it than has come out in the exclusive interview.
There must be.
There are a lot of smart people at Warner Music, and I'm sympathetic to their desire to keep an open mind about possible new business models. But this one is old news and has not been well received in the past, so seems unlikely to bear fruit.
Hey techies, don't bother putting money down on whether the Celtics are the future NBA champions. Not when you can place a bet on Steve Jobs.
A gaming company called Bodog is taking wagers on when Apple's iTunes Store will surpass Wal-Mart as the top U.S. music retailer.
CNET News.com reported on Tuesday that research firm NPD Group is predicting that Apple will emerge as the largest U.S. music retailer sometime in 2008. NPD also reported that Apple has recently leapfrogged over Best Buy and Target in music sales.
It should be noted that neither CNET nor I promote gambling--but what's the Bodog line, you ask? Well, for the sake of disseminating information to the gamblers out there who would actually understand:
Yes -240 (5/12) and No +165 (18-11).
Not surprisingly, Bodog is based in Antigua, and executives were reluctant to do phone interviews. Take that however you will.
According to the Bodoglife site, the company also operates a record label (Bodog Music). It has a TV production division that produces reality TV series such as Bodog Fight.
Rules for wagering are as follows: "If it is not officially announced by December 31, 2008, that iTunes has surpassed Wal-Mart as the No. 1 U.S. music retailer," according to the wagering board on Bodog's Web site, "all 'No' wagers will be graded the winner. Max. $50."
MTV, Real, and Verizon Wireless have 'formed Voltron' in an effort to take on the iTunes behemoth.
(Credit: TV Tokyo)With their new joint digital music initiative, MTV Networks, RealNetworks and Verizon Wireless are taking a direct aim at Apple's iTunes powerhouse.
Called Rhapsody America, the yet-to-launch collaboration among the three companies will combine MTV's relatively unsuccessful Urge music store, the Real-owned Rhapsody subscription download service, and Verizon's V Cast mobile media service to create a music store that reaches across the PC, digital music player, and mobile phone platforms.
The new Rhapsody America company is officially a joint venture between MTV Networks and Real Networks, with Verizon Wireless as its exclusive mobile partner. Urge as a brand will cease to exist, with Rhapsody becoming the service of choice for MTV Networks' MTV, VH1, and CMT music brands. Michael Bloom, general manager of MTV's Urge, has been appointed head of the new company, and the company's offices will be located in New York, San Francisco and Seattle.
Urge had been launched as a music store in conjunction with MTV Networks' music brands, but its highly publicized deal with Microsoft had fallen by the wayside as the software company launched its Zune music player and accompanying music store.
Executives from MTV, Real, and Verizon held a joint conference call on Tuesday morning, filled with talk of "alliances" and "joining forces" that evoked superhero Captain Planet or Voltron. "The collaboration of these three companies is like a perfect storm," said Van Toffler, president of MTV Networks' Music/Logo/Films group, who added that they're striving to make Rhapsody America "the best service out there, hands-down."
"The notion of combining with these two marketing behemoths is very, very exciting from our standpoint," said Rob Glaser, chairman and CEO of RealNetworks. "This is a relationship that we spent a long time putting together." RealNetworks, which holds the larger stake in Rhapsody America, has been trying to expand its footprint in the music sales world for some time now through high-profile partnerships.
Few details about the revamped Rhapsody were actually disclosed--pricing, for example, or details regarding finances--but the executives hinted that Rhapsody tie-ins will start to appear as part of the MTV Video Music Awards, which will be broadcast from Las Vegas on September 9.
The executives from all three companies talked up the Verizon deal as crucial to the nature of Rhapsody America. "Our audiences have made it crystal clear that they really want their music accessible wherever they might be," Toffler said. Glaser added that over-the-air downloads through V Cast epitomize Real's goal of a "jukebox in the sky," which he said has been the company's aim since it launched the first RealPlayer in 1995.
More importantly, it's a potential arsenal in the fight to catch up with Apple's iTunes store, the inarguable leader in the digital music sales industry: iTunes offers no mobile download capabilities. John Stratton, Verizon's executive vice president and chief marketing officer, reminded those listening to the conference call that V Cast mobile phones now support 4GB of storage and will support eight by the end of the year--an underhanded nod to the storage capacity of Apple's own iPhone.
The formation of Rhapsody America is the latest move in a music industry trend to prime new strategies for an assault on iTunes. Most recently, Universal Music Group announced that it would not be renewing its contract with Apple's music store and that it would be making portions of its catalog available without digital rights management protection to a number of non-iTunes outlets, one of which is Rhapsody.
Strong holiday sales helped Apple's iTunes push past Amazon and take third place in overall music sales during the first quarter, according to a new report.
A spike in iPod sales over Christmas drove new device owners to iTunes, and helped Apple grab 9.8 percent of the overall music market, according to the report, issued Friday by the NPD Group.
Amazon came in fourth with a 6.7 share, according to NPD's figures. Wal-Mart was tops in the quarter with 15.8 percent and runner-up Best Buy snagged 13.8 percent.
Apple managed to capture a larger slice of the market share even though the music industry is mired in a slump. Russ Crupnick, an NPD senior analyst, said that music sales are down 20 percent for the first half of the year.
(Credit:
NPD Group)
"This is just another sign of a fundamental shift from physical to digital music," said Crupnick, who also credited Apple with helping to spur the shift. "If they didn't have a superior ecosystem, you wouldn't see so many new digital music buyers."
Crupnick said Apple still must prove that it can grow music sales year-round. He noted that iPod owners buy a little more than 20 songs on average and that number hasn't grown much. Apple also could face competition from Wal-Mart and Amazon.
Wal-Mart has already opened a download store and Amazon is expected to launch one later this year.
"Amazon has outstanding credibility with heavy music buyers," Crupnick said. "It's too soon to tell what's going to happen, but Amazon already has the customer relationships. I'm a big believer in pre-existing customer relationships."
The U.K.-based EMI Group continues its campaign to provide its digital music library free of DRM restrictions: it just announced that it has licensed the entire catalog to PassAlong Networks, which operates the StoreBlocks music retail technology used in online stores like F.Y.E. and BreakthruRadio.
The songs will be sold in MP3 format at a 320 kilobit rate--more than typical digital music bitrates of 128 to 192kb, and more than the 256kb premium songs offered by Apple's iTunes Store--but pricing has not yet been determined.
In April, EMI announced in conjunction with Apple that it would be providing its entire digital music catalog with improved sound quality and no digital rights management to the company's iTunes Store. EMI simultaneously announced plans to offer the "naked" catalog to other music sales outlets. The iTunes Store began selling the DRM-free songs late last month, and also in May, Amazon announced plans for DRM-free music downloads with EMI as the first major partner.
Currently, PassAlong Networks has access to almost 3 million songs, about 2 million of which are independent-label tracks in MP3 format. A PassAlong Networks spokesman confirmed to CNET News.com that the company is also exploring similar DRM-free opportunities with other labels.
A side note: The rest of PassAlong Networks' songs are sold in a Windows Media DRM format that is incompatible with Apple computers, and as a result, many PassAlong-powered stores would not load on this reporter's Mac laptop. It's unclear as to whether or not the stores will be opened up to Mac buyers now--we'll update this post when PassAlong representatives e-mail us back with an answer to the question.
UPDATE: A PassAlong representative answered my question on Wednesday morning. The EMI tracks will indeed be Mac-compatible, and a Mac-friendly relaunch of PassAlong stores like F.Y.E. is on track for mid-July.
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