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The current shifts against StreamCast

Morpheus_logoA federal judge in Los Angeles broke new legal ground today, and his decision could bury StreamCast Networks. Applying the new standard laid out by the Supreme Court in MGM v Grokster, U.S. District Judge Stephen V. Wilson held that StreamCast was liable for music and movie piracy committed by people using the company's software, including the Morpheus file-sharing program. Under the Grokster standard, a company that actively promotes piracy or bases its business on it can be held liable for its customers' copyright infringements. The standard isn't terribly clear, however, because the ruling laid out a series of factors to consider on both sides of the issue.

All the same, Wilson's ruling wasn't much of a surprise. StreamCast had been one of three main defendants in the Grokster lawsuit, and the other two -- Grokster and Sharman Networks, distributor of the Kazaa file-sharing software -- had already agreed to pay multi-million-dollar settlements to the record companies, music publishers and movie studios in the wake of the Supremes' ruling. So had the companies behind several other leading file-sharing networks, including Bearshare and eDonkey, who weren't targeted by the Grokster lawsuit. StreamCast had tried for months to settle, too, only to have the talks collapse.

Wilson cited numerous statements internal e-mails by current and former StreamCast executives that showed their awareness of users' infringements, their eagerness to insure the supply of copyrighted content on the network, their implementation of features that made it easier to infringe, and their rejection of technology that could have deterred some infringements but also driven away users. "StreamCast's promotional efforts, internal communications, advertising designs and actual advertisements constitute clear expressions of unlawful intent," he wrote, and later added, "Evidence of StreamCast's objective of promoting infringement is overwhelming."

This condemnation, remember, comes from a jurist who ruled in 2003 that StreamCast had *not* violated copyright law because its software was protected by the Supreme Court's 1984 ruling in the Sony Betamax case. Like the manufacturer of a VCR, Wilson reasoned, StreamCast could not monitor or control its users' infringements. His ruling was upheld by the 9th Circuit before the Supreme Court unanimously disagreed and sent the case back to Wilson for reconsideration in light of the new inducement standard.

The StreamCast ruling adds a degree of clarity for other file-sharing companies (most notably LimeWire, the biggest player still in the record companies' cross-hairs), who now have a concrete example of what it means to induce infringement. More significant, though, may be Wilson's denial of StreamCast's request for more time to prove that the entertainment companies misused their copyrights. Every file-sharing company sued by the entertainment industry has offered a similar defense, which goes something like this: the labels and studios abused their copyrights in an attempt to control the market for downloadable music, and consequently are barred by law from collecting damages for any infringements. They base their claims on the fact that the labels and studios have created joint ventures to sell their songs and movies online, but they refuse to offer file-sharing companies the licenses they need to do the same. Wilson wrote that a misuse defense is applicable only when companies extend their copyrights "into ideas or expressions over which they have no legal monopoly." Their copyrights give them a legal monopoly over the reproduction and distribution of their artists' songs, Wilson noted. If the labels and studios colluded to deny licenses to StreamCast, that might violate antitrust law, but it wouldn't be a misuse of their copyrights.

Wilson's reasoning may help the entertainment industry in the long run, but they may not make much difference on the major labels' next legal battle. LimeWire's counterclaims, which are being heard in federal court in New York, are largely based on federal anti-trust statutes and New York state business-practices laws, not copyright law.

CinemaNow burns Universal, in a good way

Logo_cinemanowUniversal and CinemaNow are finally selling a downloadable movie on terms that begin to make sense for consumers. Today, CinemaNow began offering a downloadable version of the, umm, less-than-highbrow Universal street-racing flick "The Fast and the Furious: Tokyo Drift" in a format that can be watched on a TV set with relative ease. Notably, the download became available the same day the DVD version was released. This toe-in-the-water move culminates three slow-moving shifts in online movie distribution: adding permanent downloads (sales) to temporary ones (rentals); enabling movies to be moved from a computer hard drive to a TV set, either via a home network or a homemade DVD; and releasing downloadable versions earlier, so they become available as soon as the DVD comes out.

None of these shifts are complete. Studio executives are still hamstrung by their fear that downloads will cannibalize DVD sales, which have become the industry's profit center. Never mind that selling a downloadable version of the movie can produce margins as big as or bigger than packaged DVDs. There's also a fear of piracy so intense that it leads to irrational precautions.  The biggest breakthrough came in July, when CinemaNow persuaded Universal, Sony, Disney's Buena Vista, MGM and a few indie studios to sell downloadable movies that could be burned onto a DVD and played on conventional disc players. This move was the first effort to bridge the gap between the computer and the TV set in a mass-market way. To meet the studios' demand for security, CinemaNow's disc-burning software uses an anti-piracy technique similar to the ones used on many copy-resistant CD. Naturally, the studios weren't willing to test the technology on new releases; instead, DVD burning was limited to about 100 library titles (that is, movies that had been offered on DVD in previous years, and had few potential sales left). But the test was successful enough, despite some complaints about compatibility with older DVD players, to persuade Universal to take the next leap forward and offer one -- count 'em, 1 -- new release with DVD burning. (Insert appropriate Homer Simpsons sound here.)

Within a few more months, DVD burning should get another boost when the anti-piracy technology used on packaged DVDs becomes available for home burning. Even if more studios take the plunge and offer downloadable new releases that can be burned, however, one more question lingers: when will studios make the price of downloads competitive with the DVDs sold at stores? CinemaNow is offering "Tokyo Drift" for $10, which is a nice discount, considering the absence of special features and packaging. But the other recent, burnable Universal feature that CinemaNow offers, "Inside Man," sells for $20 -- the same price as Wal-Mart. The latter has famously threatened to retaliate against studios that make downloads available for a lower wholesale price than packaged DVDs, and Hollywood executives have been reluctant to alienate their biggest sales outlet for the sake of a nascent and unproven one. Unless the price of downloads drops, they'll remain attractive only to those willing to pay a premium for the "convenience" of spending two hours or longer downloading a film that they have to convert to disc themselves. That may not be a deal-killer, but it certainly doesn't help. The studios have to realize that downloadable movies aren't like downloadable songs. The shift to online music sales offered consumers several tangible benefits, not the least of which being the ability to buy individual tracks in lieu of whole CDs. Except for travelers caught without a DVD player, downloadable movies typically offer less value, not more, than their packaged counterparts -- fewer pixels, less flexibility, no extras in most cases, and less spontaneity (unless you're willing to watch the film on your computer, in which case the show can begin in about half the time it would take to run to Blockbuster and back). At least Universal and CinemaNow have put something on the table that's close enough in value to a DVD to be worth considering. It's obviously meant to be a test; here's hoping the rest of the studios pass it.

Wippit: Good

After all these years of wondering why I never gained admission into the club of the super-rich, I think I finally have the answer: I've always been an early riser. Judging from the Wall Street Journal's story this week about Microsoft and Yahoo's attempts to acquire Facebook, what sets a billion-dollar entrepreneur apart is his willingness to turn down an 8:30 a.m. deal meeting because, well, a man needs his sleep. I've never been so protective of my horizontal hours, and that evidently has been my Achilles heel. Well, that and a dearth of talent.

Sonific_1 Anyway, I bring up Facebook not just because Mark Zuckerberg is mockworthy (in an envy-fueled way) but because I want to talk about a technology trend that could make social-networking sites much more valuable to the entertainment industry. Today, a San Francisco-based startup called Sonific, whose software enables people to add songs to their Facebook pages (or blogs or any other personal site), announced a deal with Wippit, a UK-based online music distributor. The deal will transform Sonific's SongSpots from jukeboxes into mini music stores. A SongSpot is a little piece of software that you can put on your Web site to let visitors play a song you've chosen. The idea is to let people promote artists and tracks they like by giving them more exposure online. With the Wippit deal, SongSpots will be able to sell the song, too, helping the artist in a more tangible way. It's the same thing Napster has enabled with its NapsterLink technology (which I use in the Now Playing section, to your right), only slicker.

Wippit_1 MySpace and Snocap announced a similar deal earlier this month, enabling unsigned bands and their fans to sell music on MySpace pages. My main complaint about that deal is the 45-cents-per-track fee that MySpace and Snocap will reportedly collect, which seems excessive -- high enough, in fact, to deter the sales the deal was supposed to enable. No details were released about the Sonific-Wippit vigorish, but given Wippit's low-price, high-volume strategy, it's likely to be well below 45 cents per track.

The major labels haven't made their catalogs available to Sonific yet, but it would behoove them and the music publishers to get with the program. People are discovering music in many, many different places; why not let them buy songs as soon as the impulse strikes? And as peer-to-peer networks have amply demonstrated, people want to hear tracks before they buy them. That's why the approach embodied by Sonific and Wippit (and MySpace-Snocap) makes so much sense. Let music fans use their Websites to trumpet their love of Mogwai and Devo, then capitalize on the exposure.

Napster and Rhapsody compete for headlines

I am a music glutton, so I have no trouble seeing how insanely great it is to get unlimited access to an online jukebox with millions of songs for $10 a month. And as I said in the last post, this kind of subscription service makes even more sense when you're always connected to the Internet. But most people still seem to share Steve Jobs' don't-rent-when-you-can-buy viewpoint, which obsesses on what happens when you stop subscribing (i.e., you have no music to play) and ignores how much you're entertained in the meantime. That attitude has made subscriptions a tough sell, and consequently they've have been much slower to take off than a la carte offerings like the iTunes Store.
Gfc_napster_logo This week, two subscription services made announcements that are mixed, at best, for the cause of subscription services. First, the potentially bad but not terribly surprising news: Napster said it had hired UBS to help find a buyer. The company has lost millions on its slick, feature-rich subscription service, and has stayed alive by selling more and more shares. But it's not starved for cash yet, and remains healthy enough to field the market's boldest customer-acquisition strategy: a free but lower-fidelity, non-portable version of its service. Here's hoping that Napster finds a way to stick this strategy for a while longer because an advertiser-supported online music service is a compelling proposition for music fans. The catch is, it may not be compelling for advertisers until Napster attracts a larger audience.
The other announcement was from RealNetworks, and it addresses the portability issue. The early versions of Real's Rhapsody service, like Napster and competing offerings, didn't let you move the songs you rent off of a computer. In other words, it didn't work in the car, in the gym, on the train, or any other place frequented by people with white iPod earbuds. That changed in 2004, when a new version of Microsoft's security software -- branded "PlaysForSure" by Redmond -- enabled subscription tracks to be moved to portable devices on a temporary basis. If the user stopped paying the monthly subscription fees, the tracks would stop playing. Naturally, the labels demanded higher royalties for this service, so Rhapsody et al charged a higher price for it (typically, $15 a month, although Yahoo charges about $10). But PlaysForSure didn't live up to its moniker, and the portable services were plagued by glitches. Songs wouldn't transfer, players would freeze, tracks would stop playing inexplicably, software would have to be uninstalled and reinstalled repeatedly -- stuff like that. Critics said it was just too difficult for Microsoft's software to work with so many different services and players.
Rw_header_logo_beta So Real is attempting the kind of hardware-software integration that helped make Apple so dominant in digital music. On Monday, Real said SanDisk is optimizing one of its Sansa portable music players to work with Real's Rhapsody subscription service, using security software from Real instead of Microsoft. That means Real will control the software both on the PC and inside the Sansa, a la Apple's iTunes and iPod. Microsoft is taking a similar approach with its new Zune players, which don't use PlaysForSure, either.
Making portability work the way it's supposed to is important, but I don't think that will persuade the masses to embrace subscription services or abandon iPods. Sony has been controlling both hardware and software for some time, and yet giant Sony's MP3 players can't outsell (comparatively) tiny SanDisk's. I think there are two problems here. One is that people are daunted by the compatibility problems caused by the various flavors of security software. If your downloads are wrapped in Microsoft's DRM, for example, you can't transfer them to an iPod or a Sony MP3 player. The latest announcements about Rhapsody and Zune threaten to exacerbate those problems and increase consumer confusion. That leads rational consumers either to stay on the sidelines or to follow the largest pack, which would be Apple's. And second, even if you get past the compatibility hurdle, you still have to persuade people to shift from collecting music (that is, buying tracks) to experiencing it (buying access to a jukebox).
That, to me, is a marketing issue, and none of the services has been able or willing to market subscriptions the way Apple markets iTunes. But I give Real credit for doing some things with SanDisk that will help make the sale. The players will come filled with rented tracks, which with some luck will be chosen by the tuneful people who write Rhapsody's blog. That's one way to get the point across immediately about the value of subscriptions: look at all the songs you get, and you don't have to pay 99 cents per track! (As long as you pay $15 a month.) More important, IMHO, is that Rhapsody will automatically load new music onto the player based on the subscriber's preferences. This capability could trump one of iTunes' best features, which is to load iPods automatically with an assortment of songs from your collection. Imagine if your collection was unlimited, stretching from the week's new releases in your favorite genres to chestnuts buried deep in the labels' vaults? Doesn't that make you want to ditch the iPod for a Sansa? Now if only the tracks play for sure....

Warner Music, innovation and Zune

Wmg_1 All of the major record labels claim to be the alpha dog when it comes to new technology, but Warner Music Group is clearly a leader in one important arena: parties thrown during mobile-phone trade shows. Granted, I don't get out much, but I give WMG points for wanting to hang out with the cellular geeks. Anyway, at the latest such event (held Sept. 13 during CTIA Wireless I.T. & Entertainment 2006), I asked Alex Zubillaga, WMG's head of digital strategy and biz-dev, when he thought the price of downloads would drop. I've wondered for a long time why the labels haven't really tested the price elasticity of their digital products, given retailers' ability to set prices dynamically online. And as iTunes' phenomenal growth slows -- it took Apple the same amount of time to sell the latest 500 million tracks (seven months) as it did the previous 500 million tracks, despite Apple's expanding presence overseas -- at some point the industry will want to try to attract more customers by cutting prices, right? Isn't that what consumer-products companies do? Zubillaga's response: the digital era is just beginning, and the right way to promote growth is through innovative ways to experience music.

Regardless of how you feel about the labels' pricing strategy -- I'd rather see a low-price, high-volume approach, but then, I buy a lot of music -- I think you have to agree with Zubillaga that the digital era still in its infancy. There's been some great innovation in digital music, from the late lamented Uplister to Rhapsody to Pandora and Last.fm. But we've barely scratched the surface of what's possible, particularly when it comes to introducing music fans to new bands and blending music into other experiences. I was reminded of this when Microsoft finally made its Zune announcement. Putting wireless networking into a portable device opens up a world of opportunities, and those opportunities will expand exponentially once broadband WiFi coverage or similar connectivity becomes ubiquitous. You know the day is coming when you'll be able to connect to the Internet wherever you may be (the mobile phone companies argue that it's already here, but their services are too rich for my blood).

Zune itself is a baby step along that path, and given Microsoft's record with consumer devices, chances are pretty good that it'll trip. The only thing Zune will allow you do to wirelessly, at least initially, is push songs from your player to a friend's player. If he/she accepts, the songs can be played up to three times in the subsequent 72 hours before being locked out. And they can't be unlocked the songs wirelessly; to do that, your pal will have to buy the tracks on a PC. It's not nearly as intriguing as MusicGremlin, which (in theory) enables you to copy songs from any nearby MusicGremlin subscribers who aren't keeping their collection private. But Microsoft wants to get the basics right first, and hope those features will be enough to get the product off the ground. Like I said, I'm skeptical, but I hope Microsoft gets far enough along with Zune to take its networking capabilities to the next level.

Steve Jobs stumbles over the last 100 feet

Itunes_7Oh look -- a new gadget from Apple! It's a ... $300 set-top box. (Groan.) I'll go out on a pretty stout limb today and predict that the combination of Apple's iTV box (see Engadget's pictures here) and its new downloadable film store won't have a fraction of the impact on the movie-distribution business that the iPod and 99-cent downloadable songs had on the music industry. The reason goes beyond Steve Jobs' inability to persuade studios other than Disney (where Jobs is a board member) to accept a significantly lower wholesale price for a download than they charge for a physical product. The main problem here is that Hollywood and movie fans don't seem ready to make the same leap into the virtual world that the music industry made (albeit reluctantly). They're too committed to bits encased in plastic. And Apple doesn't provide a way to convert its downloads into DVDs, at least not yet.

One of the reasons downloadable music took off, I think, is that the shift from CDs to song files improved the user experience in a few notable ways. Song files made it possible to put one's entire music collection onto a computer or carry it around in a pocket. Software like iTunes allowed people to mix and match their favorite songs in customized playlists, rather than listening to music album by album. And stores like Apple's made it possible for people to buy just the one or two songs they knew and liked from an artist in lieu of entire CDs. Those songs then fit seamlessly into the collection of tracks ripped from one's CDs (or downloaded illegally from file-sharing networks). Thus, when people shelled out $300 for an iPod, they were buying something that they couldn't get from CD players, turntables and boomboxes.

Contrast that with the situation in Hollywood, where the shift from DVDs to movie files is yielding few, if any, benefits for viewers. The price for downloadable movies isn't dramatically better than the price for a disc at Wal-Mart, in part because the studios don't want to antagonize retailers who are selling so many DVDs. There's no legal way to put your entire movie collection onto a computer or portable device -- DVDs are encrypted, so they can't be ripped legally the way CDs can. So there's no way to carry all your movies around with you, nor to mix and match your favorite scenes from a variety of flicks into a customized video (not that you'd want to; unlike a CD, a movie isn't a collection of severable pieces of entertainment).

There's also what industry insiders call the "last 100 feet" problem, referring to the gap between the typical home's computer and its living-room TV set. The obvious solution would be to burn the downloaded film onto a DVD, but the major studios insist that such discs be encrypted. (Studio execs say that selling a product without encryption would fuel rampant illegal copying, but I wonder why a pirate would pay $10 to $15 instead of downloading a free, bootlegged version through BitTorrent. Convenience? Reliability?) There's only one kind of encryption that a conventional DVD player can decipher -- called Content Scramble System, or CSS -- and it's yet not available for use on homemade DVDs. With luck it will be available early next year, thanks to a recent agreement between Hollywood studios, tech companies and consumer-electronics manufacturers to create customized blank DVDs that are CSS-ready.

Apple might go the CSS route eventually. Today, though, it showed only one way to get a movie from a Mac or PC to the TV: the new iTV box, which is due early next year. This box will let you beam music and movies securely from a computer to a digital TV set, provided that the TV is equipped with the right kind of digital input (technically, HDMI or DVI with HDCP for those of you who like acronyms). I really like the idea of Apple providing a way to move video securely over a home network -- there are plenty of folks who have tried, but I've yet to find a living-room device that handled encrypted content really well. Still, given how few people have digital TVs with the right kind of digital inputs, I don't see an online movie store succeeding in the near term without the ability to burn DVDs.

Beyond that, the need for a $300 set-top box craters the whole value proposition of downloadable movies. What does the iTV box offer that a DVD player can't do for significantly less money? Yes, you can use it to watch the copy of "Finding Neverland" that you downloaded for $10, but you could find the film on DVD for about the same price and get more content (Apple's not including the bonus DVD features in its downloads). It would be a more compelling device if it could let you watch any movie in your collection, but again, you can't -- they're not on your computer, they're stuck on DVD. So what unique thrill does Apple provide? Watching two-hour movies on an iPod screen smaller than your credit card?

Do broadcasters need more protection?

Wipo_logo The World Intellectual Property Organization is considering a new treaty that would provide copyright-like protection to radio stations, TV broadcasters, cable TV operators and satellite services. These groups, whose transmissions typically consist of programs already protected by copyright, want the power to control the recording and retransmission of their broadcasts. They also want international assurance that if they use technology to enforce those controls, it will be illegal to circumvent them.
The proposal is disturbing for several reasons, foremost among them the absence of a clear rationale. Unlike, say, a film or a book, a broadcast isn't in and of itself a creative act. The creativity is in the program being broadcast. (A DJ might argue with me, but until Apple starts charging 99 cents to read a playlist, I'm sticking to my position.) So why provide a second layer of intellectual property rights? Local broadcasters, cable companies and satellite operators should be able to stop people from stealing their signals or retransmitting them, but theft-of-services laws should be adequate to address those issues. (Read a dissent from the National Assn. of Broadcasters here.) Those companies aren't the ones who should be worried about unauthorized copying. If someone records "Law & Order" off of KNBC and sells bootlegs on the street, the victim isn't KNBC, it's the copyright holders, NBC Universal Television and Wolf Films. Oh sure, proponents of the broadcast flag argue that broadcasters need the ability to protect their suppliers' copyrights, or else the studios won't let them put "high value" content on the air. The main people making that argument, though, are MPAA lobbyists and studio executives. Hmmmmm.
The anti-circumvention provision of the treaty is troubling, too. It's a blanket rule, with no limits on the use of electronic locks. The only assurance it offers for home recording and home networks is this: that viewers who circumvent an electronic lock for a legal purpose, such as time-shifting or recording a program in the public domain, would not infringe the broadcaster's rights. That's a much less useful approach, from the viewer's standpoint, than requiring that any electronic locks on a broadcast allow legal uses. But the more useful approach is likely to be unacceptable to broadcasters, given that the technology used today isn't sophisticated enough to discern the viewer's intentions. When a viewer makes a copy, it's really hard to tell whether it's going to be kept for personal use or sold at the local flea market.
Finally, some WIPO delegates want to extend the treaty to online simulcasts, that is, transmissions that go simultaneously through the air or cable wire and the Internet. At least one group -- the U.S.-based Digital Media Assn. -- wants to include Webcasters as well. Such an expansion would make a bad proposal worse by giving local broadcasters a way to assert exclusive rights internationally.
The WIPO Standing Committee on Copyrights and Related Rights is scheduled to hammer out a final version of the treaty next week in Geneva, and the WIPO General Assembly could take it up a few weeks later. If the treaty is adopted by WIPO, it would still have to be ratified in the U.S. before it could take effect here. That makes Congress the last line of defense.

Back to school with the RIAA

Riaa_logoThe Recording Industry Assn. of America launched two more educational campaigns this week aimed at elementary schools, middle schools and colleges. The group, which represents the four major record companies, is offering study guides and lesson plans to elementary and middle schools, and an instructional DVD to university students. I haven't seen the DVD, so I won't comment about it. All I'll say is that a person's basic sense of right and wrong is well developed by the time high school ends, and this is where the entertainment industry faces its biggest challenge. People who amass music and movie collections from file-sharing networks or copy them wholesale from their friends' collections in lieu of buying are either not seeing or not disturbed by the fundamental wrongness of their actions. And while the intellectual roots for that judgment go very, very deep -- according to this entry on ethics at Torah.org, the centuries-old definition of theft in Jewish law is obtaining anything without the real owner's knowledge or consent -- it's not felt instinctively by many music fans.

So the RIAA is doing the right thing by trying to generate an appreciation for copyrights among young students. You can see some of the material for grade-schoolers here. One goal of the lesson plans is to inject a new word, "songlifting," into the American lexicon, in an apparent bid to equate illegal file-sharing/CD copying with shoplifting. Ummm, aside from the fact that shoplifting is a state-law crime with modest penalties, while copyright infringement is a federal offense (typically civil) with disproportionately large penalties, I can see the similarities. In fairness, the word didn't spring from the mouth of an RIAA lawyer; according to the RIAA, it came from marketing students at the University of Houston. My main quibble is with the tone of the materials, which put more emphasis on instilling fear (spyware! porn! lawsuits!) than breeding respect. Net-savvy kids won't be stopped by the threat of malware, and the prospect of a lawsuit seems too abstract to affect them. Parents are likely to be more receptive on those fronts, but one thing the RIAA lawsuits demonstrate is how little control parents wield over their kids' Web habits.

I know the Motion Picture Assn. of America is mulling a new public-education effort, too. My sense is that both groups need to mount a long-term (think decades, like the anti-smoking campaign) effort to get across a point more basic than the tenets of copyright law. The missing piece here is the sense that music and movies have real value, regardless of whether they're reduced to bits or encased in plastic, and that taking something of value without permission is simply wrong -- particularly when there are many legal ways to obtain the same goods, including some that offer large quantities at low prices. There's always going to be a conflict between music fans' desire to share and the record labels' desire to be paid for every copy. And there are still some notable gaps in the lineup of legal products and services, especially when it comes to movies. But once students are sold on the basic notion that intellectual property has value, I think they'll be much more willing to support legitimate outlets for music and movies online.

MySpace's MP3.com Moment

Myspace_1File this one under helping people help themselves: News Corp.'s MySpace.com has cut a deal with Snocap, the entertainment industry's preferred Shawn Fanning project, to enable bands to sell their music on the site. That part of the story is familiar to anyone with a dot-com memory long enough to remember Michael Robertson's MP3.com, a site where countless unknown bands (and a smattering of former hitmakers) posted tracks and peddled CDs. The estimated 3 million musical acts with MySpace sites have the same fundamental problem as the ones on the original MP3.com did: with no money for marketing, how do they draw an audience? A preference engine would help, but sadly there's no such thing yet at MySpace -- just a way to sort artists by genre and locale, the latter of which often has no relationship to the band's true hometown. The needle-in-a-haystack problem may be even bigger for indie bands on MySpace than on MP3.com because of the former is crowded with major-label artists.
One difference now, however, is the potential for viral sales forces on MySpace. Many of the personal sites on MySpace stream music from the owner's favorite band of the moment. Snocap's technology will let those folks sell their favorite band's music, too. Given how important word of mouth is in building an indie band's audience, this could be a real boon to upstart and niche acts. But there's a problem here, as well: unlike the typical online music store, which keeps 10 cents to 30 cents per track sold, MySpace and Snocap are reportedly demanding a 45-cent cut. So much for selling tracks for a quarter. Here's hoping there's more pricing flexibility than initially reported. Otherwise, indie bands might feel compelled just to give away their songs. That's fine for bands that make their living on the road, but not so swell for those that can't or don't.
It's also interesting to note that MySpace and indie bands have no qualms about selling tunes in the unprotected MP3 format. When, oh when, will the major labels be willing to do the same with their permanent downloads?

Fair and Unfair Uses

Windows_media_drm_2There have been a flurry of stories lately about Microsoft's Windows Media DRM being cracked by developers of a program called FairUse4WM. Here is CNet's take on the arms race between the crackers and Microsoft, which quickly developed a patch to defend its DRM. Don't be fooled by the name of the program, though. This isn't about fair use. People who buy songs from Napster or any other online outlet already have a perfectly good solution for their fair-use needs: they can burn those songs onto an unprotected CD, and away go their compatibility problems. No, what such programs really seek to do is unilaterally change the terms of the deal between music services and consumers by transforming songs that people rent for a low fee into tracks they own. Hey, why pay 99 cents for a song when you can pay almost nothing?

Hmm. Because it's the right thing to do, maybe?

Really, I've had it with people who carp about how unjust subscription music services are because "you're left with nothing" if you stop paying your $10 or $15 a month. This isn't about collecting music, it's about about being entertained by it. Think cable TV or satellite radio. Look forward, not back. The monthly fees buy access to an ever expanding catalog of tunes, hundreds more every week. You're not just buying the ability to play something you know and love; you're paying for the right to hear, on demand, an ongoing supply of songs and artists you haven't yet discovered.

I subscribe to Rhapsody and eMusic myself, and the difference between the two makes clear why cracking the DRM on services such as Rhapsody and Napster isn't fair use. EMusic is a music-collecting service. It offers volume pricing on indie-music MP3s -- 40 tracks for $10 -- not unlimited access to songs. You can't hear songs on demand at eMusic; if you want to play more than a sample, you've got to use one of your 40 downloads to grab the MP3, which you then own. By contrast, you can play anything in Rhapsody's catalog as many times as you please; for an extra $5 per month, you can play the songs on a Microsoft-enabled portable music player wherever you go.

If you're wedded to an iPod, then maybe the value proposition at Rhapsody isn't good enough for you. Steve Jobs doesn't believe in subscription services, at least not yet, and he's locked them out of the iPod through his control over its software. If you pay the $15 a month, then hack the Rhapsody DRM to make the tracks work on your iPod, you may very well be making a fair use of those songs. But will you delete the songs from your iPod and your computer after your subscription expires? Will you honor the deal you made when you signed up for the service?

Billy_bragg_cd_cover One of the few major-label artists with a decent amount of work on eMusic is Billy Bragg. It's not his complete catalog, but it does include an absolutely wonderful greatest-hits collection (40 tracks, a whole month's allotment, but well worth it). Billy's a bit to the left of the American mainstream on many issues, but he's no socialist when it comes to ownership of his tracks and getting paid for his work. I urge you to read his comments about intellectual property, record labels and artists' rights, which ran yesterday in MediaGuardian. The topic is MTV Flux's apparent attempt to take rights for free from unsuspecting musicians in the UK who compete in homemade-video contests. But the underlying theme is that people need to respect the choices that artists make about how they distribute their work. In the past, he says, artists who wanted to get their records into stores (and benefit from the sales) had to sign with record labels. New technology makes it possible to take music directly with the consumer, but that shouldn't come at the expense of getting paid. If anything, it should increase the artist's take. I would add that artists will only see less, not more, when their "fans" hack DRMs to turn rentals into permanent downloads. Can we stop calling that fair? Please?



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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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