I've long been intrigued by AmieStreet.com's approach to music retailing. It's the Skybus of online music: the first buyers get the lowest price (which, in AmieStreet's case, is free). The more people who buy a track, the higher the price goes until it reaches the maximum of 98 cents. This flips traditional retailing, which tries to collect a premium from the most eager buyers, on its head. But it makes sense in music; for every buyer who wants to be ahead of the crowd, there are probably 20 or 30 who want reassurance from their peers or other consumers before parting with their money.

The site's biggest shortcoming to date has been the absence of content from recognizable artists, aside from the occasional post-major-label one (e.g., Dolly Parton). It goes without saying that the major labels don't sell music there -- they typically offer music to retailers at a single wholesale price, and AmieStreet doesn't work that way. Earlier this week, though, the site landed its biggest fish yet: Beggars Group (home of 4AD, Matador and XL, among other labels) and Polyvinyl Recording Co. The deal brings such indie faves as Radiohead's Thom Yorke, Belle and Sebastian and Of Montreal to AmieStreet. Prices for some of the hotter new releases have already hit the maximum, but there are plenty of bargains to be found. As I flipped through the selection, I was struck by how close the prices were for most tracks on the albums I saw. That suggests the site's customers like to buy whole albums, not just one or two tracks. Who says the album is dead, or that most tracks on a record are filler?

*Updated* Silicon Valley Insider is reporting that quarterlife, the video series that jumped from MySpace to NBC, is heading to cable after one disastrous broadcast. The show's fate is a reminder of how tough it is to take programming from the Web to broadcast TV, and how illusory it is to view the Internet as the TV networks' D-league.

You might say the series creators -- Ed Zwick and Marshall Herskovitz, the team behind "thirtysomething" and "My So-Called Life" -- hit for the cycle (to use a different sports cliche). The project started off with a successful pitch to ABC, which ordered a pilot episode but then declined to pick up the series. Then Zwick and Herskovitz decided to carve up the hour-long episodes into create a new pilot and follow-up episodes, which they posted as 8-minute chunks on MySpace and quarterlife.com, a social network built around the show. (Thanks, Kelly!) Less than a week after the segments began running there, Zwick and Herskovitz struck a deal with NBC to air the program there (back in its original, hour-long format). That brings us to today's development, which, now that I think about it, makes the show's path look more like a sine wave than a trip around a baseball diamond.

HBO's announcement Monday that it was putting full-length episodes of "In Treatment" onto a new YouTube channel made me wonder why there were no ads on the network's YouTube pages. I can see why HBO might not want to throw pre-rolls and interstitials into the videos themselves, given that the programs air on TV without commercials (except those for other HBO programs). But what about all that real estate around the video window?

Apple boasted today that it has surpassed Best Buy to become the second-largest music retailer in the U.S.. It trails only Wal-Mart, which, like Best Buy, does most of its sales in a very different market (packaged CDs). That's not a knock on Apple, which chose the part of the music market that actually has a future. Granted, Wal-Mart has an online music store, but it's not in Apple's league in terms of sales or mindshare.

The major record companies have a testy relationship with Apple, so its rise through the ranks of music retailers hardly comes as welcome news. But what should really disturb them is the other data included in the release. Sales at the iTunes Store passed the 4 billion milestone about seven months after they hit 3 billion. Similarly, it took the store about seven months to sell the previous billion tracks. It's safe to assume that the store has more customers now (over 50 million, according to the latest release) than it did seven months ago. That means customers are buying less on average than they used to. And the not-so-pleasant implication is that digital sales have been growing mainly because of new customers coming into the fold, not because the average customer is buying more songs year over year. At some point you run out of new customers, and then what?

Warner Music Group announced today that its head of digital strategy, Alejandro Zubillaga, is stepping down to (as he put it) "get back to my entrepreneurial roots." In other words, he's still mulling his next move. Warner took some grief four years ago when it named music-industry novice Zubillaga -- a former telecom exec in Venezuela and venture capitalist whose firm, Lexa Partners, was part of the group that took Warner private -- to lead the all-important work of developing new digital revenue streams. The appointment had a patina of nepotism, given that Zubillaga's brother-in-law, Edgar Bronfman Jr., led the Warner buyout and became the company's chairman. But his leadership led Warner to make what strikes me as the flagship deal for the entertainment industry going forward: a pioneering agreement with YouTube to share advertising revenue.

Intel has been racking up the press clips in recent weeks for new chip designs aimed at cheap laptops and handheld devices (e.g., the Wall Street Journal today, Business Week last week, Engadget last month). The downsized chips promise to bring desktop computing power (albeit from a couple of desktop generations ago) to a new type of mass-market mobile Internet device -- something like an iPhone at half the price or less. This is another sign of the pieces falling into place for ubiquitous connectivity, that is, people being connected to the Net wherever they go. And when that happens, the Internet will probably change everything again.

Jonathan Lamy, a spokesman for the RIAA, responded to my previous post with a chart showing a sharp decline in the number of infringement notices sent to college campuses that had been piracy hotbeds in 2006-07. Contrary to the highly unscientific sample I cited, these numbers suggest that the RIAA's enforcement efforts have made an impact on campus. Of course, students may have simply gotten better at concealing their file-sharing from The Man, found an alternative source of free music to replace Bit Torrent and Limewire, or put off their downloading until after Spring Break. But here's Jonathan's explanation of the data, followed by the chart (which you can download here) after the jump:

This is a ranking of schools receiving the most DMCA notices a year ago. We think the notices are a pretty good indicator of the extent of piracy on a campus: completely objective -- we are simply crawling the Internet and whatever we find, a notice is sent to the school.  Because of these notices, because of the pre-lawsuit letters, because of the focus of Congress on these issues, many schools taken rigorous steps to discourage students from visiting illegal sites.  Look at the notice reduction column during the past year.  That means that many fewer incidences of piracy found on those campus networks, which used to have the most prolific incidences of piracy. That, I think, is pretty compelling and a different way of looking at the impact of our collective efforts.

I was chatting with someone today about a column that explored whether unauthorized downloading was "theft" when he offered a tidbit of insight into the feeling on college campuses. My source (I'm being vague here to protect his students' anonymity) teaches a college class on new media business models, and he surveys each new group about their media consumption and attitudes. Bear in mind, this is a group of students interested in the media business. So you'd think there would be some degree of sensitivity toward copyrights. Nevertheless, this year's respondents said they download music regularly through file-sharing networks and other unauthorized sources, while buying music from iTunes intermittently (64% said they did so 1-4 times per month, with 5% saying more than 5 times). They were also asked to rate on a scale of 1 to 7 how nervous they were about being punished for illegal downloading, with 1 being "not concerned" and 7 being "extremely concerned." Two-thirds answered with a 1 (43%) or a 2 (24%). Only 4% put down a 5 or 6, and none went all the way to 7.

Given the frequency with which the students admitted to using file-sharing networks, these results can safely be interpreted as a nose-thumb to the RIAA. This isn't too surprising -- reporters have been writing anecdotal pieces for several years questioning the deterrent value of the major record companies' lawsuit campaign against file-sharers. The numbers, after all, aren't on the RIAA's side. Even though thousands have been sued since 2003, the targets represent a tiny fraction of the people downloading illegally. If these students are truly representative of those preparing to enter the media industry -- the ones who should be most aware of the labels' anti-piracy efforts -- you have to wonder what return the RIAA is getting on campus from its investment in attorney fees.

The RIAA logo is courtesy of the Recording Industry Assn. of America.

In 1967 the Who released The Who Sell Out, mocking the notion of artistic integrity by sprinkling fake commercials for household products amid its tracks. It's a fabulous collection of pop-rock gems (as is Petra Haden's a capella version from 2005) that, either through prescience or coincidence, anticipated how eager labels and bands would become to tie their songs to consumer goods. I'll leave to Bob Lefsetz the question of whether musicians hurt themselves by farming out their songs to commercial interests; I tend to be forgiving on that front because, with CD sales melting away, musicians really do need to find new revenue streams.

Which brings me to Donita Sparks, who's taking the licensing business in a whole new direction. As part of the CASH Music initiative she launched with singer-songwriter Kristin Hersh, Sparks is selling the rights to half the revenue she makes from licensing her song "He's Got the Honey" to commercials, TV shows and movies (and given the track's bluesy fuzz-rock feel, it's more likely to wind up in a beer commercial than "Toy Story 3"). Up to 100 investors can buy .5% shares of the sync licensing revenue for $100 each. If she sells all 100 shares, she'll raise $10,000.

"Invoking the metaphor is a shield against thinking," William Patry, the chief copyright counsel for Google, wrote on his blog a couple of years ago. The topic was "technical protection measures," but he's argued that bad metaphors are also behind the entertainment industry's rhetoric that unauthorized downloaders are thieves. I give my own take today on the question of whether infringement should be viewed as a form of theft in a latimes.com column, which you can read here. I'm not completely in sync with Patry on this issue, so you should take my views with more than the usual grain of salt.

Nielsen Online offered its first numbers today from VideoCensus, the online counterpart to its famed TV ratings service, and the results buttressed at least one piece of conventional wisdom about streaming video: people might watch a lot of it, but they don't spend much time doing so. The results square with a report today from comScore and Media Contacts, which found that 80 percent of online video watchers in October tuned in an average of less than 3 minutes per day. The stats aren't particularly encouraging for companies hoping to build advertiser-supported video businesses on the Net.

The Times of London had a remarkable story Tuesday about a UK government proposal to require ISPs to monitor their users' downloads and cut off service to those who repeatedly access pirated movies and movies. This is the entertainment industry's Holy Grail, or at least this year's version of it -- a set-it-and-forget-it approach to combating online piracy.

Just how compelling is free music? SpiralFrog, which offers free downloads with the copyright owners' blessings, went from zero customers in September to more than 1 million unique visitors per month in late January. And in a visit here Friday, board chairman Joe Mohen touted a new milestone: SpiralFrog has signed up than 500,000 registered users. (Registration is required to download content from SpiralFrog.com; otherwise, visitors are limited to reading music news from Billboard, listening to song samples and streaming music videos -- the kind of thing that's available on lots of music sites.)

The rapid growth is important, given that SpiralFrog needs to attract millions of eyeballs to survive off of advertising revenue. But what Mohen couldn't yet say is how long SpiralFrog's registered users tend to stick around. The service is only a few months old, after all. SpiralFrog's main advantage over legal outlets such as iTunes and Rhapsody is that it costs nothing, which matches what tens of millions of consumers want to pay for music online. That's what makes SpiralFrog and other emerging ad-supported music-on-demand services -- such as iMeem and Last.fm -- so promising conceptually. But to hit that magic price point, it imposes trade-offs that the masses may not abide.

RealNetworks just reported that subscribers to its paid music services (Rhapsody and Real's premium Internet radio stations) dropped slighted in the final three months of 2007, from 1.925 million to 1.9 million in the previous quarter. Rival Napster on Wednesday reported a similar drop in the fourth quarter, from about 750,000 to 743,000.

The number of subscribers for both services is still significantly higher than it was a year ago, and Real's revenue from music continued its steady rise -- aided, no doubt, by the price increase that Real imposed in May (from $10 to $13 per month for basic members). Because Real hasn't disclosed how many of its subscribers go for the more expensive Rhapsody products vs. the radio service, it's hard to tell which was more responsible for the decline, if any. Still, with the two leading subscription music services both reporting some degree of slippage, it begs the question whether the demand for this kind of thing has peaked. Real's numbers will certainly grow as it takes over Yahoo's subscriptions, but that's just shifting dollars from one pocket to another. Have subscription services reached the point where it's a zero sum game? Probably not -- no one has promoted a subscription service the way Apple markets iPods and iTunes -- yet the back-to-back reports from Napster and Real suggest that demand is cooling.

*Update* -- Ronda Scott of Real weighed in, saying this was indeed the first time Real has reported a decline in music subscribers. But she also suggested that Rhapsody isn't the one that suffered:

Yes, this is the first quarter that we have reported fewer subscribers quarter on quarter. Of course at the same time revenue is up this quarter, we’ve traded some lower priced subscribers for higher priced subscribers.

*Update 2* -- Ooops. As Ms. Scott pointed out a few minutes later, Real's latest financial release shows a similar dip in music subscribers in the second quarter of 2007, from 1,875,000 to 1,850,000. Mea culpa.

The Wall Street Journal reported today that Google was preparing to add a new feature to its Chinese search site: users would be able download and keep legal versions of the songs they search for, free of charge. If Google wins support from all the major record companies (only Universal Music Group has signed on so far, according to the Journal, and Silicon Valley Insider questioned even UMG's participation), it will have pushed the music industry closer than it's ever been before to a model that depends on advertisers, not consumers, to pay the freight.

Kudos to Los Angelino Andy Baio for putting together a fabulous review of online movie piracy since 2003. It's mainly raw data today; Baio promised to offer some analysis on his blog, Waxy.org, tomorrow. Focusing on a slice of the film industry -- the titles that earned Academy Award nominations for their producers, actors or crew -- Baio examined how many days elapsed between the movie's release and the availability of various bootlegged versions online. Such movies aren't always in demand online; blockbusters seem to draw more attention from the scene than critical favorites (especially period dramas). So if anything, these titles move online more slowly than the average Hollywood film. Which is not to say that they dawdle en route to the darknet. By Baio's calculation, this year's Oscar nominees were bootlegged online only four days, on average, after they were released to theaters. And DVD-quality bootlegs were available online less a week after the official DVD was released to video stores or mailed to Oscar voters.

Television is a woefully underutilized programming resource, and there's no better illustration of that than the Super Bowl. Last night's game on Fox drew the largest audience ever for a Super Bowl, appearing on nearly two-thirds of the TVs that were in use at the time, according to Nielsen. This demand suggests at least four opportunities for reusing the programming online, and yet two of them are being ignored.

I have a typically overlong column on latimes.com today about Yahoo's decision to exit the subscription-music market, but even at some unholy word count it gives short shrift to another announcement out of Yahoo's music group today: its acquisition of FoxyTunes, a company that makes a really clever browser plug-in tied into a site that aggregates music-related material from several leading Web resources.

The main function of the plug-in is to let you control music playback from your browser, whether the music is being played by software such as iTunes or a website such as Pandora. Among many other things, those controls let you sift through and listen to the tracks stored on your computer without having to leave your browser. The plug-in also provides a link to the content-rich entry on FoxyTunes Planet that corresponds to the song playing at the time. For instance, listening to "Antimatter" by Tricky produces a link to this "Antimatter" page,  with links to photos, videos, lyrics and more (free) music.

The acquisition illustrates Yahoo's evolving approach to music, which emphasizes free content and advertising opportunities. By helping to keep people's attention on their browsers, FoxyTunes increases the time users might spend on Yahoo's online properties. And FoxyTunes Planet gives Yahoo another music portal (in addition to music.yahoo.com), which can offer material from additional Yahoo sites and sell more ads. Yahoo's Ian Rogers calls FoxyTunes "deceptively simple," and that's an apt description. Its many capabilities add up to another way for Yahoo to attract a broad range of people into its network of properties and keep them there longer.

Oh and yes -- FoxyTunes lets you insert a signature into blog posts showing what you happened to be listening to at the time. Here's mine.

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Now playing: Lali Puna - Antena Trash
via FoxyTunes