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Kazaa Loses Court Case, But Will Appeal

ZDNet Australia: The music industry is claiming a win against Kazaa with the decision of Australian judge Justice Murray Wilcox. It's not an absolute win -- Wilcox threw out a number of charges and respondents -- but Kazaa has two months to makes some changes so it can remain in operation. According to ZDNet Australia, the judge ruled Kazaa had to include "non-optional keyword filter technology" in current versions of the software received by new users, in future versions of the software and exert "maximum pressure" on existing users to upgrade to a new version containing the technology, or that the Altnet search software -- called TopSearch -- is restricted to providing lists of non copyright-infringing works.
OK, the filters are a good idea, but how would they work? Will there be a central body that has digital fingerprints of copyrighted song and each file is compared against them? Record labels will claim that puts the onus on them to prevent copyright infringement -- at least, that's what publishing houses claim about Google's statement it would allow them to opt-out of having their books scanned. There are filter technologies but the general consensus is that people will find a way around them, although the more steps there are the less people who will bother. Still, maybe the record labels will finally allow their files onto p2p programs...after all, the real reason their sales are going down is because they don't offer the public what it wants. (from The Mind Trap)

Warner Music Group To Form Digital Label

Mercury News: Warner Music Group has announced plans to form a digital label, tentatively named Cordless, which will release songs exclusively for download over the internet or to mobile phones. It's a belated adaption to the decline of the album... not necessarily the CD, I think. As the article points out most albums have no more than three hit tracks, with the rest being regarded as "filler" by all but the die-hard fans and are simply there to justify the album price. With the advent of individual downloads people are less willing to pay for an album when they just want a single song. This affects the way the new label will do business....
"An artist is not required to have enough material for an album, only just enough to excite our ears,'' Bronfman said in his speech. "Rather than releasing an album every couple of years, every few months the label will release 'clusters' -- three or more songs -- by an artist.''
It will see a wider range of music too: "Warner's e-label will be headed by noted music figure Jac Holtzman, a technophile who pushed early adoption of the compact disc, the LaserDisc and now can be spotted in Warner's New York offices with a flash drive dangling from his neck. Since his e-label starts with modest production budgets of about $30,000, rather than millions, Holtzman is free to sign more eclectic acts, like Devo bassist Jerry Casale's new group, Jihad Jerry and the Evildoers." (via Ringtonia)
Related stories:
Apple & Record Labels Square Off
Can Cell Phones Save the Music Business?
Universal Music Group Gets A PhoneOf Its Own

HMV and Virgin Launch Rival Download Services in UK

BrandRepublic: Finally, some good homegrown competition in the UK digital music market, though not sure if this will have any major effect: UK's biggest record stores, HMV and Virgin, are launch their own download services in the next few days.
HMV Digital goes live on Monday September 5; however, rival Virgin is attempting to steal a march on HMV by launching its Virgin Digital service on Friday.
Virgin: includes a digital music store, music club subscription service, streaming radio and management tools for MP3 players..it is working with MusicNet.
HMV: HMV Digital has cost £10m to develop and is the result of a collaboration with Microsoft and MusicNet as well. Full details of HMV's plans are here: "HMV's big noise"

Rival of Apple, Armed With Fresh Patent, May Seek IPod Royalties

LATimes: (reg. req.) If this happens, it will be a sad commentary on the state of affairs of the digital music industry, unable to compete with iPod. Creative Technology said it had been awarded a patent for technology used in the iPod - which means the rival manufacturer of digital music players might hit Apple up for hefty royalty payments on every iPod sold.
Creative's patent, awarded Aug. 5, covers the interface that lets users scroll through screens and choose which songs to play, said Craig McHugh, president of Creative Labs, the U.S. unit of Creative, which is based in Singapore. "We're openly looking at all of our alternatives," McHugh said. "A patent protects your intellectual property, and we'd be very open to discussing with other companies who would like to use our user interface in their products or future products."

Shazam's Tech Assets Gets Bought Out, By BMI

Release: Two music recognition deals in a day: One of my favorite startups in the space, Shazam Entertainment, is being bought out (at least its technology)...it has been sold to BMI, the performing rights and music publishing royalties company. Shazam is a mobile music recognition company based in London, and entered the U.S. market a year ago.
Terms of the deal were not disclosed...BMI will get all the technology and patents, and will use those to form a new company called Landmark Digital Services, which will be tracking music royalty payments using Shazam's recognition technology. Over the next 12 months, performance information from this new technology will be combined with BMI's current radio airplay measurement system.
Shazam's technology, called BlueArrows, uses pattern recognition to identify performances from any source containing audio, and can detect the source in as little as one to two seconds, says the company.
Shazam will continue to pursue business activities aimed at the mobile consumer use of the BlueArrow technology, under a worldwide exclusive license to be provided by Landmark.
The company had a lot of momentum going for it, but was having trouble capitalizing on that momentum, as technology and business models kept morphing at warp speed over the last few years. So all in all, probably the best thing for the company going forward...
Our previous coverage on Shazam and music recognition, here and here

Gracenote Buys Philips' Audio Fingerprinting Technology

SiliconValley: Audio recognition company Gracenote has bought out Philips Electronics' audio fingerprinting technology, that will allow it to launch mobile and online music recognition services, something it has been working on for some years now (in association with Philips too).
Terms of the deal were not disclosed. Philips, however, has taken an equity position in Gracenote.
Gracenote is the company behind the CDDB -- the original online database of music CDs. The sophisticated technology identifies songs within five seconds of starting to play -- matching audio waves against a database of recorded audio. It's used by Snocap to check legal sharing status and can be used to return data about songs on multiple devices.
Gracenote's Mobile MusicID program already allows some users in other countries to order CDs or ringtone based on matching music via cell phones.
As part of the deal, Gracenote will gain early access to research on new audio and video technologies under development in Philips Research Labs.
Related:
-- Philips and Gracenote Launch Music Recognition Service for Mobiles
-- Gracenote: The House That Music Fans Built
-- Gracenote Raises $13 Million
-- NTT's New Music Recognition System

Microsoft's Music DRM Gets Setback

Inquirer: The Inquirer posits that with the Rio MP3 player leaving the market left "Creative Technology with its Zen players as the major flagship for Windows based players"...and this "makes it more likely that the mobile phone industry's DRM 1.0 standard will therefore emerge as the true rival to Apple's Fairplay DRM (as used by iTunes)." I'm sure Microsoft has some plans to deal with this...

Apple iPod Phone To Be Released Sep 7? With Cingular?

Apple is touting a big announcement at a 10 a.m. (PDT) press conference next Wednesday (Sep 7) at the San Francisco's Moscone Center. NYT suggests in a story that it is the much-expected Apple-Motorola iTunes phone.
Roger Entner, a telecoms analyst with Ovum, said he had been told by an industry executive that the new phone, to be made by Motorola, would be marketed by Cingular Wireless. The software will allow people to transfer songs from a PC to the mobile phone, then listen to the songs, presumably through headphones.
WSJ also says the same thing, quoting sources. Cingular is expected to make the phone available in time for the holidays.
Also, Apple may introduce a line of iPods intended to replace its hugely popular iPod mini line...

New Music Service Knows What You Like

PCWorld: A new online music discovery service called Pandora has been launched...Pandora Media, formerly known as Savage Beast Technologies, based its new service on the Music Genome Project, the company's close to six-year study of the 300,000 songs of more than 10,000 artists undertaken by 30 musician analysts
The first 10 hours of Pandora are free. After that, subscriptions costs $3 per month or $36 per year. Subscribers can set up a maximum of 100 online radio stations tuned to their preferences and further tailor the selections by giving a thumbs up or down to each song played.

Music Price Elasticity Debate

SharkJumping: Sean Ryan dissects it very well: despite what the labels argue, "the studies show that when you measure behavior across a longer period of time, everyone is better off with lower prices for music downloads, with $.50 being actually the magic number, especially for a business which has NO hard cost of goods outside of artist royalties, which are almost never on a fixed basis so they will decrease with the price. "

Q&A: IODA's Kevin Arnold

RedHerring: NoisePop's Kevin Arnold brings indie music into the digital age via the Independent Online Distribution Association.

>MTV To Launch "Urge" Music Service in 2006

That's according to a story in the latest edition of AdAge..MTV is finally close to launching (well, next year) its as-yet-vaporware online music service...The planned name the is Urge, and the service will also have a My Space-like online community, as well as subscription and a la carte downloading services, according to the story.
In July, MTV parent company Viacom applied for the trademark
Urge to be used as a brand name for an online community, news and chats, as well as downloading and streaming of digital audio, video, graphics and peer-to-peer networking. Viacom registered as trademarks the names "Phyle" and "Playcast," too.
Keep in mind that MTV has been considering an online music service in some form for the last 3-4 years, and at various times over that period, the "imminent launch" news has been leaked out...so I'll see it when I believe it. Meanwhile, MTV Overdrive had great coverage of the VMAs last night...after the live ceremony on TV, it has archived the whole show to be watched on demand online...and tons of extras. It has learned its Live8 lessons well..

Apple & Record Labels Square Off

NY Times (reg required): It's well known that many record labels aren't happy with the 'one price fits all' approach to digital music sales taken by iTunes, and there is speculation that when the contracts come up for renewal early next year some labels may not renew them unless Apple changes its pricing strategy. Of course, Apple controls 75-80% of the digital download market, so it will be a gamble whether that situation will see people changing where they buy their music or simply not buying from labels that aren't available at the iTunes store.
iTunes Japan launched without songs from two major labels -- Sony BMG Music Entertainment and Warner Music Group -- but that didn't stop it outpacing the monthly sales of its competitors within the first few days of launching the service.
Some record lables (Universal Music Group and EMI Group were mentioned in the article) recognize that they will probably lose a pricing battle with Apple and are instead "counting the months until the major wireless phone carriers enter the business of selling songs to mobile phone customers. <strong>Since there are many more mobile phones in use than there are iPods, the industry thinking goes, the arrival of a broad mobile music market will erode the leverage Mr. Jobs now holds</strong>".
The problem with that thinking is that it's a dead-set certainty that the record labels are going to want a higher proportion of the profits from song sales than Apple. iTunes reportedly makes about 4c from from every 99c song download, while the lowest percentage for mobile content in the west is currently the 14% taken by o2 UK...most are a lot higher, although whether that can be sustained is another matter. The upshot is that the price of mobile music will have to be significantly higher than the iTunes store just for the record companies to get the same amount of money for each song. Of course, that's what the record labels want...but there's a general consensus that it's not what the consumer wants.
The article also mentions another sore point for music execs is "the fact that Apple generates much more money selling iPod players than it does as a digital music retailer, leading to complaints that Mr. Jobs is profiting more from tracks downloaded to fill the 21 million iPods sold so far than are the labels that produced the recordings", <strong>which is a fairly silly complaint to have, kind of like saying that Nokia is profiting more from mobile content than all the mobile content companies</strong>, so therefore the price of mobile content should go up. Besides which, the same argument will apply to the mobile phone industry, so a change of device isn't going to help anything...
And in closing, a great quote from Gartner:
"As I recall, three years ago these guys were wandering around with their hands out looking for someone to save them," said Mike McGuire, an analyst at Gartner G2. "It'd be rather silly to try to destabilize him because iTunes is one of the few bright spots in the industry right now. He's got something that's working."
<strong>Related stories:</strong>
--Movie-Quote Ringtones Talk Of The Town
--Can Cell Phones Save the Music Business?
--Ministry of Sound & Sony BMG Sign To i-Mode Service

Music Royalty Talks Hit Impasse

WSJ: Negotiations between music copyright holders and online music services have broken down over the issue of how much to pay copyright holders for streamed music. The impasse means copyright holders, such as songwriters and composers, will continue to miss out on royalties for online subscription music services such as Napster and Rhapsody.
Copyright holders signed a series of agreements with some individual companies in 2001 allowing those companies to use their music for subscription services pending a royalty agreement. No deal was struck with representatives of copyright holders such as the National Music Publishers' Association and the American Society of Composers, Authors and Publishers.

Pearl Jam goes digital for live bootleg series

Billboard: Pearl Jam will on September 1 launch its own digital download store via its official Web site...Hours after their completion, full concerts from the group's fall tour will be available for $9.99 as 192K MP3s, which are nearly 50% higher than the standard bit rate.
As with past incarnations of the bootlegs, which were initially available only on CD, the material will be mixed on the fly by longtime Pearl Jam engineer Brett Eliason. Eliason's company, Basecamp Productions, also developed the software to power the download store.

Network Live's First Multi-Platform Effort With Bon Jovi

HollywoodReporter: We missed this one earlier last week: Network Live, the AOL-XM-AEG joint venture headed by Kevin Wall, has announced its first multi-platform effort: On Sep.19, Bon Jovi's will perform his new album, "Have a Nice Day" at the AEG's brand new venue at the Nokia Theatre Times Square in New York, and the audience could choose to enjoy the program on AOL.com, via XM or by attending one of the high-definition and 5.1 surround sound simulcasts being held at more than 100 Regal, United Artists, Edwards, and Georgia Theatre Co. movie screens in 50 U.S. markets.
Related:
-- Network Live: AOL-AEG-XM's Joint Venture: Our Full Coverage

Can Cell Phones Save the Music Business?

Business 2.0: [by James Pearce] : Will mobile music save the music industry or will they find some way to stop it? The article makes the case that ringtones are becoming the new singles market..."Looking to build buzz around hip-hop artist Cassidy, Sony BMG shunned CD singles and MTV sneak previews. Instead, the label chose a track called "I'm a Hustla" from Cassidy’s new album and turned it into a 25-second sample that could be downloaded as a ringtone...
The $2.49 song clip, known as a mastertone, was an instant hit. In four months it was downloaded half a million times. By the time the album finally debuted in June -- at No. 5 on the Billboard chart -- the ringtone had gone platinum. "The ringtone market is the singles market of our time," says Thomas Hesse, president of Sony BMG's global digital-music division."
Of course, the record industry's euphoria is based on the assumption that ringtone prices will stay as high as they are now and that they will be able to charge even more for full-track songs on mobiles.
Mind you, there is evidence in the article of realism. "We think that, for some people, the phone will eventually replace the MP3 player," says Thomas Ryan, a senior VP at EMI. That comment is a lot more sensible than the idea that mobiles will destroy the MP3 player market, although I think the biggest mobile music market will be in people who wouldn't buy an MP3 player anyway.
And I liked this comment...
"As soon as full song downloads take off in a few years, mastertone prices will likely drop. Thomas Dolby Robertson, a former pop star who founded Retro Ringtones, thinks the clips will eventually be free. "We're sort of like drug dealers, using ringtones to get people hooked on digital music," Robertson says. (via Ringtonia)
Related stories:
--Mobile Operators Switch Sponsorship To Music
--Ringtones — And Their Theft — On The Rise
--Be An Online Ringtone DJ

Mobile Operators Switch Sponsorship To Music

Dow Jones: [by James Pearce] Mobile companies are switching their sponsorship from sports events to music festivals in the belief that it offers a better window into the youth market and a better way to differentiate themselves.
"There's more bang for your buck in the music arena. Because there is more opportunity to offer relevant products and services, there is more opportunity to drive revenue," said Paul Samuels, head of sponsorship at O2...O2's Samuels said sponsoring live music events enables it to target the key 16-34 year old audience but more generally, music offers sponsors access to a much broader spectrum of people than sports sponsorship".
"Virgin Mobile's Kydd explained that music is key to driving data usage amongst mobile phone users as it provides them with an obvious way to personalize their phone through ringtones, real-tones and other music content..."Music is the most personal thing you can play with on a phone. It also ties in with a consumer's desires. The impulse to buy the latest phone is the same as buying the latest music," Kydd said." Or buying the latest shirt of your team...I can see that music would appeal to a broader range of people, and possibly a younger demographic, but I think sports offers at least as much mobile content to sell as music...then again, are sports-based ringtones classified as music or sports? Or both?
Of course, one of the things about music festivals is that they tend to be counter-culture, so sponsors have to do a lot more than cover a place with their logo.
"You have to be smart. You can't just turn up and exploit the relationship between the fan and the band. The more-savvy music customer will accept corporate involvement as long as they benefit from it," said Julian Diment, head of commercial & brand partnerships at Orange.
Finally, the article quotes Vodafone Group's David Wheldon, global director of brand and customer experience, as saying that major sporting events give international awareness which is difficult to achieve with music.
"Wheldon said global sporting events provide a "gigantic global platform" for creating value, whereas music is more effective at the local level. He said Vodafone sponsors festivals in Holland and Portugal where it wants to promote its brand, but overall, looks for marketing opportunities which translate across borders."
I've noticed mobile companies sponsoring a lot of music festivals, but had assumed it was more to demonstrate how big they were in the hyped world of mobile music than as general advertising.
Related stories:
--Top 10 Ringtone Downloads At Glastonbury Festival
--Mobiles & Music Festivals — A Perfect Fit
--Orange Expands Mobile Music Services, Promotes At Music Festivals

Lower Prices for Music Subscription Services Key to Adoption

Parks: Portable music subscription services will have to drop below $10 per month to attract a significant number of MP3 player owners, according to Parks Associates new report. 41% of MP3 player owners in the U.S. are not willing to spend more than $10 per month for a music service subscription. With comparable service costs presented in local currencies, 62% in the U.K. cap their interest at this amount, with 49% in France, 52% in Germany, and 56% in China expressing similar price inhibitions. Furthermore, on average, one-third of the MP3 player owners across these five nations believe these music services should be free.
Given these findings, the entry of low-cost services such as Yahoo Music could reshape the marketplace, says the report. Currently in the U.S., portable music subscriptions from companies including Napster or Rhapsody cost $14.95 per month.