Sundtempest

Reporting, analysis, and opinions on the latest trends and developments in the music industry.

Posts Tagged ‘Digital Distribution’

The Headache of International Licensing

Arbitrary barriers to accessing hardware media content are nothing new. DVD and video game aficionados are well-aware of region lockouts, which are software or hardware “safeguards” that prevent media outside the player’s region from being enjoyed by the consumer. In short, you can’t play North American PS2 games on a European PS2, and if you plan on importing foreign DVDs to play on your North American player, you’ll likely encounter problems.

Naturally, issues with artificial region compatibility have extended to the Internet. For example, the online radio service Pandora is available in the United States, but not Canada or most other countries on Earth. Likewise with Hulu and even a wide variety of YouTube videos. Of interest to this blog is the inability of some countries, even in Europe, to access the iTunes store.

Why does this happen? The answer is more complex than you might think. In virtually any music industry deal, geography is always a factor; more often than not, this favors the artist (content creator) as it enables them to work with an American entity to market and distribute their music in that territory, and, for example, a Japanese entity for business operations there. Of course, the consumer can sometimes be hurt from this simply because an artist in one country might not necessarily work with any entity in another country, leaving a gaping hole in distribution for that area.

Unfortunately, this isn’t the only issue. While most countries have signed on to international agreements and treaties with regards to intellectual property (such as the Berne Convention), copyright laws and royalty systems for each country can vary wildly. Apple and the contributing labels to the iTunes store might reach an agreement with the United Kingdom, but they must deal with an entirely separate set of entities and laws in, say, Spain.

A new mandate by the European Commission is set to cut through some of these barriers through sheer legal force:

“The two clauses that the EU has struck down are a membership requirement that prevents music authors from moving to another collection society, and territorial restrictions that prevent a collecting society from offering licenses to commercial users outside of their domestic territories. Under the current system, music stores must establish individual storefronts for each individual country due to licensing restrictions, a policy that recently brought Apple and the Big Four labels under fire from the EU due to country-specific song pricing and the lack of EU-wide offerings.”

A collection society, in case you’re unfamiliar, is a government-created or government-endorsed entity with the highly exclusive ability to collect and distribute money on behalf of composers and performers in a given country. In the United States, there are three collection societies, better known as performing rights organizations: ASCAP, BMI and SESAC.

Unfortunately, collection societies in Europe have made international licensing difficult, mainly because of their monopolistic position. Hopefully, the dissolution of two major artificial restrictions will help the situation and push the world a little closer to an internationally-available library of music.

iTunes still not available in some EU countries. Here’s why [Ars Technica]

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Napster Practically Gives Away DRM-Free Music

Since its rebirth through Roxio in 2003, Napster has been trying to recapture its original audience of young adults who want lots of convenient music for a low amount of cash. Though it has generally lagged behind iTunes, Amazon and Rhapsody, a new change to its pricing scheme may very well tip the balance and put Napster back in the spotlight.

For only $5 per month, users can gain access to unlimited streaming music for as long as they have a subscription, the lowest cost of any comparable service. However, what’s more notable is that this subscription tier also comes with five free song downloads a month. As Rick Broida pointed out at cnet, that’s basically getting unlimited, free streaming music with your five single song downloads.

As an independent artist myself, I’ve found that Napster is surprisingly lucrative, relatively speaking. iTunes is by far where I sell the most music through third-parties, eclipsing Napster, the third most popular service for my music, by a factor of at least 12. Still, Napster beats out Rhapsody and eMusic by a long shot and just about matches sales on Amazon.

(A fun little side note: after over a year of streamed plays on last.fm, my royalties from that company haven’t even amounted to 25 cents.)

Napster cuts music plan to $5 a month [Associated Press]

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MySpace Music Attracts Traffic, But Not Cash

Love it or hate it, MySpace has always been a haven for musicians and fans. Plus, while Facebook has eclipsed it in popularity, MySpace is still one of the most heavily-trafficked websites in the world. These facts are perhaps what led to the creation of MySpace Music, essentially just another digital distributor, eight months ago.

As it turns out, the major label partners in the MySpace Music venture are not so happy with its performance, evidently pretty poor in terms of revenue but pretty good in terms of traffic. At a recent board meeting, a cnet source described the discussions as “tense”, with MySpace Music CEO Courtney Holt ultimately admitting the service needs work.

Nate Lanxon of Crave accurately summed up the problems with the venture:

“That kids on MySpace aren’t spending money on downloads shouldn’t surprise anyone. The social network is not the vehicle for sales that record executives believe it should be — a huge user base doesn’t equal a huge customer base.”

His proposed solution to help improve revenue was straightforward enough:

“Fans don’t just want what everyone else can get — they want mountains of special stuff, and stuff they can’t get elsewhere. For MySpace Music to really shine, this is what it needs to be pushing, and it’ll need bands themselves to be advertising it — they’re the best mouths for promotions to be heard from.”

On a side note, this situation provides concrete proof to an argument I’ve put forth against people that suggest artists should give away lots of music to attract fans; just because you have a lot of fans doesn’t mean you’ll have a lot of sales. And yes, I know that you need fans to generate sales, but if you are getting fans (that are most likely not going to result in ‘conversions’) at the expense of sales then that’s just not good.

Labels dissatisfied with MySpace Music performance [cnet]

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How does iTunes Stack Up to 6 Other Digital Music Stores?

iTunes is currently the 600 pound gorilla of the music distribution world. Apple has managed to outsell not only every other digital outlet but all the physical ones as well. However, are they still the best deal around? Is the user experience of iTunes still tops?

Apparently not, according to Ed Bott of ZDNet, who did a side-by-side comparison between iTunes and six other digital music stores: Amazon MP3, Lala, Rhapsody, Zune Marketplace, eMusic and Amie Street. Here’s what he concluded:

“Apple’s monopoly is a tough one to crack, and the company makes it so easy to buy stuff through iTunes (at prices that are higher than most of their competitors) that it’s hard for a competitor to get a toehold. But after looking closely at the competition, I can’t imagine why anyone would buy from the iTunes Music Store when there are so many alternatives that are less expensive and more interesting.”

Bott found that every other service was cheaper than iTunes by anywhere from 4% to 57%. Both a la carte and subscription services were compared. Check out the full article at ZTNet for all the details.

6 music services compared: Who can bust the iTunes monopoly? [ZDNet]

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Newtunes Launches Unsigned, Indie Music Search Engine

If you’re unhappy with the music recommendations of sites like Pandora or Amazon, then Newtunes, a new music search engine, may be just what the doctor ordered. Unlike other services, Newtunes focuses exclusively on independent and unsigned content. While you can’t stream free tracks like Pandora, it’s a great way to discover new artists based on your existing tastes. Plus, Newtunes provides direct preview and purchase links right on the site if you hear something you like.

The search engine allows you to get recommendations based on song or album name, and any unsigned artist can get their music into the database easily. All of my own music is there already, including some fairly obscure releases, so the site seems to have a big pool of content. The criteria which determine similarity are created through a combination of “organic user input” and “algorithmic data”, according to the Newtunes site, implying that, unlike Pandora, everything isn’t determined by a closed staff.

It’s a pretty nifty idea that hasn’t really been done before. last.fm is somewhat similar, but Newtunes appears to have an even stronger database and does away with all the frills. You just go to the home page, type an artist or song, and hit “GO” - easy as that.

NewTunes, A Music Search Engine Specializing In Delivering Unheard And Unsigned Independent Music, Launches [mi2n]

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Where to Buy Music if You Hate DRM

Digital rights management is on the way out, but plenty of music is still locked or restricted in some way. This is especially annoying if you’re actually parting with hard earned cash for it. Luckily, Zack Stern of PC World has written a handy guide outlining where the DRM-free downloads are:

Buy Music Unfettered by Digital Rights Management [PCWorld]

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iTunes Activates Variable Pricing, Wal-Mart and Amazon Follow Suit

After years of steadfast resistance to any sort of widespread pricing changes on iTunes, Apple has finally rolled out their new variable pricing scheme, which puts some tracks at 69 cents and others, typically more popular songs, at $1.29. This isn’t a surprise as Apple announced this months ago. What is a surprise is that the Amazon MP3 store and Wal-Mart’s digital music outlet have both implemented their own price changes in the same vein.

Why the sudden change of heart for these two retailers, and what determines which tracks get a price hike? Hypebot reports that it is primarily Sony BMG which has dictated the price hike for its own catalog, while the other majors have no such control. EMI has willfully maintained a 99-cent price across the board.

Amazon follows Apple to $1.29 [cnet]

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Enter Grooveshark

Today, I discovered a music website called Grooveshark. It’s sort of a juiced-up, mostly-legal P2P service for the Web 2.0 age. The idea is that you can upload music from your own collection to the Grooveshark servers, where you (or anyone else) can then listen to them from any computer or web-enabled device. As more and more users pool their music, the combined catalog grows grows.

There are now millions of songs available on Grooveshark, and by “available” I mean that you can simply go to www.grooveshark.com, type in a song, artist, or album, and listen to the track in full-quality all the way through. The site doesn’t support downloading (with good reason) but does support user-created, sharable playlists, and even has a sort of recommendation system to lead you to new music. It’s like a mashup of Last.fm and Pandora.

Is it legal? So far, it seems like it. The site’s documentation is a little on the blank side (including the expanded features list as well as the FAQ section) but based on the info I’ve been able to glean, it looks like the Grooveshark crew is putting a lot of effort into making their service as clean and legit as possible.

I gotta say, I’m surprised this site flew under my radar; I hadn’t heard of it until earlier today and I’ve already become very interested. Previously, if I friend told me to listen to a particular band or song, I would either go to YouTube or listen to previews on iTunes. Not particularly elegant solutions compared to Grooveshark.

Check out the site and see what you think. Is this going to change the way you listen to or share music?

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Choruss: The Worst Idea Ever

If you’ve been following this blog, you already know that Warner Music Group has made some pretty bad moves for the last few years, even morseo than the other major record labels. However, their newest venture, “Choruss” (dreamt up by consultant Jim Griffin) has to take the cake for the worst yet.

The basic plan is that major labels would “ask” (read: force) universities to pay them a fee, and in return, the labels promise not to sue the universities for copyright infringement. In theory, students can then keep on downloading, guilt-free, and labels get paid.  
In actuality, such a scheme would be highly detrimental to artists, songwriters, and publishers.

Intellectual property lawyer Bennett Lincoff explains why: “Under Choruss’s programme, songwriters and music publishers will not have an enforceable right to receive royalties through Choruss for student file-sharing of recordings that contain their songs … if Choruss relies on covenants not to sue and thereby avoids the obligation to clear mechanical rights, songwriters and music publishers will end up with nothing, or next to nothing from student file-sharing of their songs.”

In other words, rather than create proper licenses for the music within the Choruss program, the people behind the scheme instead want to bypass that and instead simply promise not to sue students and universities. That’s all well and good (for the labels) but artists, songwriters, and publishers essentially depend on proper licenses to earn money from their work under U.S. law. Labels would have a stream of revenue from universities and no legal responsibility to pay that back out to anybody else.

How does this affect non-major artists and songwriters? Students will no doubt assume they simply have the right to download whatever they want - not just major label music - and will continue to do so without fear or guilt. Except, of course, there’s no possible way non-majors could have any hope of compensation from such a program.

Lastly, is this really teaching the right lesson to students? To them, they’re just getting a free pass to download lots of music. I doubt universities will thoroughly explain the legal framework of Choruss, and even if they do, I doubt most students would understand. We’d be telling people that music now has no value and that they can just pirate all they want. I don’t think that’s the message the music industry should be sending.

Choruss’s Covenant: The Promised Land (Maybe) For Record Labels; A Lesser Destination For Everyone Else [ip-watch]

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Latest Digital Music Retailers Deliver Mixed Results

About a year ago, I wrote about digital music retailers Qtrax and Spiralfrog, two websites from an entire batch of (supposedly) next-generation music sites. At the time, they were in pretty bad shape, which seemed rather unsurprising given the glut of music delivery channels out there and continually sagging demand, among other things.

Fourteen months later, it looks like most new digital music websites, including Spiralfrog, are showing underwhelming profitability and an inability to capture market share. Once again, this is entirely expected. Qtrax is still getting those legal agreements, as it’s kind of hard to run an intellectual property-based store without them. Spiralfrog brings nothing new or interesting to the table and still relies on DRM. iMeem has lots of users but isn’t generating much revenue, probably because people can stream full songs on YouTube or a variety of other sites and last.fm does a better job with social music sharing.

On the other hand, newcomer Lala seems to be doing pretty well. The site was founded in June 2006 and was initially centered around CD trading. Lala members paid a small fee to exchange their physical music CDs with other users, and the website took care of the logistics. Recently, the site has mostly changed its model. The site now allows users to stream from a catalog of music, upload their own music to listen to for free from any web-enabled device, and purchase new songs at low prices. While any one of these features would probably be uncompetitive, the combination of them seems to be doing pretty well for Lala.

What music websites have you been visiting lately?

Labels size up Web 2.0 music services [cnet]

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