| |
|
Thursday, February 22, 2007
|
|
One way to judge the music industry's troubles is to watch
annual sales figures for CDs, which have slumped 25% since 2000. But it's more
revealing to chart how the major record companies' attitudes about new business models online have been shifting.
At first the shifts were almost too small to notice, as when the
labels started making a handful of downloadable songs available for $2.50 or
more. But as the file-sharing phenomenon grew and CD sales slipped, the changes
became more pronounced. The labels started offering the rights to songs on
terms that didn't cripple their online partners. They embraced Apple's iTunes
Music Store, whose anti-piracy technology doesn't actually limit copying. They
cut deals with file-sharing companies for subscription services that let users
share the songs they rented.
Along the way, though, the major labels adamantly refused to do
the kind of deal necessary to replicate what the original Napster,
Kazaa and
eDonkey had provided: they would not accept a flat fee a "blanket"
license that lets Internet service providers sell an all-you-can-eat
sonic buffet, enabling customers to download, burn and swap as much as
they pleased.
The rights would be included in the cost of a high-speed Internet
access line,
so the downloads would seem free while still generating royalties for
artists,
songwriters, labels and publishers.
That reticence may be giving way, too, thanks to the
relentless decline in revenue. Just look at what the head of the
major record companies' global trade group, let slip last month at a
music-industry gathering in France. If Internet service providers "want to come
to us and look for a blanket license for an amount per month," IFPI chief John Kennedy said, "let's
engage in that discussion."
His U.S. counterpart, Mitch Bainwol of the Recording Industry
Assn. of America (RIAA), quickly added that the licenses should be negotiated
voluntarily, not compelled by the government. So that part of the labels'
thinking hasn't changed. Nevertheless, Kennedy's remark reflects a potential
sea change in the way the record companies do business. If the labels follow
through, it could trigger the greatest explosion in innovation since engineers
at the Fraunhofer Institute in Germany developed the MP3
format.
That's a big "if," but two of the four majors have already taken
the first step. In England, a venture called PlayLouder MSP is negotiating
deals with record companies and music publishers for a competitively priced
high-speed Internet access service that will include the right to download
millions of songs, transfer them to portable devices and share them with
friends. The main restriction is that subscribers can't send songs to people
who aren't customers of PlayLouder MSP. In other words, it's a private
electronic playground for music lovers.
The company, which expects to launch its service this year, plans to put a chunk of the monthly service charges
into a royalty pool that would be divided according to popularity--the more
often a song is downloaded, the larger the share of the pool that its copyright
holders will receive. To monitor the network and enforce its borders,
PlayLouder MSP relies on technology that can identify songs as they pass
through the network--and, if necessary, block them. So far, several large
independent labels from the U.S. and the U.K. have agreed to let the company
offer MP3s of all their songs, while two of the majors, Sony BMG and EMI, have
agreed to supply songs wrapped in electronic locks. Those locks won't make much
difference, though; as part of the deal, subscribers will be free to share MP3s
from all of PlayLouder MSP's partners, including Sony BMG and EMI.
11:24:50 AM 
|
|
|
© Copyright 2007 Paul Hardwick.
Last update: 3/4/07; 11:08:42 AM.
|
|
|
