47 new of 183 responses total.
Many news sites have been reporting that mp3.com is settling licensing deals with various labels in the wake of their court loss to the RIAA. inside.com attempts to analyze the financial situation, and they conclude that after mp3.com settles with the songwriters and all the labels, that there is no way for them to come up with a profitable business model for the my.mp3.com streaming service, even if they charge an annual subscription fee of $10 to their users. ..
Um... I don't get where the price of a CD is 'breathtakingly' high.. $12? You can't afford $12?? I see 16 year old kids driving around in Lexus' and BMW's with cellphones and pagers, $150 sneakers, designer clothes, and they don't want to pay $12 for a CD... gimmme a break people.. geez, an LP was like $8-$10 25 years ago.. figure in inflation and all and I don't see where CDs are overpriced.. you pay over a buck nowdays for a bottle of sugerwater 'cause it has the name Pepsi or Coke on it.. how much does that cost them to make?
(great music business item . . thanks)
re #138: $12? When was the last time you bought a CD?
re #140: a couple of weeks ago. I used the $12 figure because that was what someone else mentioned. Okay, let's change it to what I normally pay for a new release. $12.99? You can't pay $12.99 for a CD?
Finally, a force which can undermine the march of MP3s! It turns out the darn things are under patents, and the patent holder is now starting to collect royalties from download sites, web radio sites and software companies using the MP3 format. Holy GIF file, Batman! :) A group of open-source types are working on a replacement royalty-free version called Vorbis. http://news.cnet.com/news/0-1005-200-2091466.html
Re 138. I don't have a Lexus or BMW or anything approaching it, indeed, I didn't have a car at all until I was married and benefited from pooling incomes. My shoes cost a small fraction of $150 and have to last a long time; I don't buy designer clothes and neither does my wife. A huge chunk of our income goes to paying off student loans, and will for years. I'm glad you're feeling wealthy, but I am not. Yes, twelve bucks, or I guess sixteen bucks or twenty-five bucks, is a breathtaking price to pay for a piece of plastic that costs probably $1.50 to manufacture and distribute. (Out of the remaining money, what does the artist get -- a few cents per CD? Funny thing!) That's why I haven't bought any new CDs for myself in years. I used to buy CDs occasionally at concerts (where typically the artist DOES get more than a trivial share of the money), but I don't get out to many concerts any more. I suppose you should be happy I'm not fooling around with Napster and MP3's either. But you probably think I'm guilty of piracy for listening to the radio but tuning out the commercials. Feh.
5.7 cents/song for mechanical reproduction. probably another 5 cents or so to the songwritter.
Re 143. Oops, sorry about the terrible formatting.
re #142: Nearly everything's under patent these days -- it's getting to be prohibitively difficult to write a useful free software application that's not encumbered. I wonder, though, what makes the patent holders think they have the rights to control the works produced using their invention. If their patents are valid they probably have the right to control who makes software or hardware that encodes or decodes MP3s, but how is a site infringing on their patent merely by storing a stream of bytes conforming to the MP3 format?
Why would I think someone guilty of piracy for listening to the radio? Radio stations generally comply with the copyright laws (unless you're listening to a pirate station). And you should realize I'm speaking in general terms. There are a lot of people out there that CAN afford CDs, but will still download the songs for free instead of buying them. I'm also sure there area lot of musicians that are glad to hear that people are doing them a big favor in there struggles with the record companies by not buying any of their CDs. I know if I was only getting a small return on each copy I'd want to sell as few as possible
That's an interesting aproach to economics.
Re 147. No, you don't get it, do you? I'm not doing anyone a big favor. I'm simply not interested in CDs at the current much-too-high prices. Think back to economics, if you ever studied it. This is a concept called "elasticity of demand". If you raise the price too high, many people will choose not to buy. If you lower the price, demand will increase. A product for which the demand is inelastic will sell the same number of units almost regardless of the price. The example often given is salt. The price of table salt could triple without affecting the quantity sold very much. When demand for a product is elastic, then the number of units sold will rise rapidly with declines in price. Quite likely, the total amount of money spent on the product will increase because the higher sales volume more than makes up for the lower number of units sold. The demand for CDs is, I would argue, highly elastic. Certainly my own personal demand for CDs is elastic. If CDs were in the range of $3 to $5, I would probably be buying them frequently. With CDs in the $12 to $25 range, the quantity I purchase is simply zero. The fact that these high prices are maintained by to monopolistic advantage is all the more reason to refrain from taking part in this market. At a concert, when I used to attend concerts, I would make an exception. The fact that the artist got more of the money helped reconcile me to what was still an extraordinarily high price. That consideration simply does not apply to CDs in stores. I'm sorry you have so much trouble with this simple concept.
And I'm sorry you are having so much trouble with the simple concept that I am not speaking specifically about you. Yes, there are other people in the world, ya know.
Thing is, he's not alone. There are a couple of CDs I'd really like to have, but I can't pay the price for them right now. Were the price to drop to $5, I'd get them.
I'd buy a lot more CDs if they were $5 each. I've seen some new releases go for $8-10 (Tracy Bonham, Tara MacLean). Why not price other new releases in that range?
yeah no doubt.
http://www.inside.com/story/Story_Cached/0,2770,6643_0,00.html "Hatch Warns Labels, Don't Make Me Come Over There And Spank You" This was the most entertaining report on this week's hearings at the Senate Judiciary Committee. The Detroit News ran an editorial cartoon depicting a elderly Senator asking: "So how will Napster affect the sale of 8-track tapes?" But in all the reports I've seen, committee chairman Orrin Hatch showed a good grasp of both the technical and social issues. Hatch brings an interesting perspective to this conflict, since he is a songwriter in the Christian music business. (I had not known that.) Hatch criticized the music industry for trying to use copyright as an absolute control over the use of their music. He pushed for an expansive view of fair use to cover casual sharing of recordings. When Hilary Rosen of the RIAA objected to Hatch's views on fair use, Hatch pointedly remarked that Congress determined what copyright was. Hatch threatened to push for a mechanical compulsory licensing system, for online music, similar to that for songwriting, if the music industry does no reach "fair and reasonable" licensing agreements with the online companies. Hatch also complained that the inclination of the 4 major companies to only deal with online entities which they control tended to freeze out independent music companies and could become an antitrust issue. Senator Dianne Feinstein of California took the music industry position in criticizing the Napster representative.
Feature story in the New York Times: http://www.nytimes.com/library/tech/00/07/biztech/articles/20tune.html "Unknown Musicians Finding Payoffs Through the Internet Jukebox" This was a front-page feature in the National print edition writing up some of the musicians who have made a little money, or even a lot of money, from MP3 downloads. "The Internet's emerging role as an equal opportunity jukebox is providing new ways to make a modest income from a relatively small base of fans." The earnings star appears to be "Ernesto Cortazar, a 60-year-old Mexican composer for films who has mainly performed in piano bars and who has earned more than $100,000 from his online efforts."
For the record: the story is published everywhere, you should have no trouble finding it. Judge Marilyn Patel granted the immediate injunction sought by the RIAA against Napster. Napster is to shut down the operations which enable file trading by midnight Friday, Pacific time.
Two opposing pundit views on the aftermath of the Napster injunction: The Washington Post says that the precedent of the Napster injunction is a powerful tool which leaves the RIAA and copyright holders in the driver's seat on the distribution of intellectual property on the web. In particular, the Post author thinks even small-time operators of Gnutella directories will be sued. http://washingtonpost.com/wp-dyn/articles/A56246-2000Jul27.html Salon says that the RIAA has won the battle but lost the war. Napster the company was an entity which the record labels could have made deals with; Napster the phenomenon, as represented by the 20 million users eager to exchange free music, isn't going anywhere, and now it will be much less controllable. http://www.salon.com/tech/col/rose/2000/07/27/napster_shutdown/index.html
It's hard to disagree with either of those two points, except to note that the value of the Napster injunction "precedent" isn't set in stone - it will change once the RIAA/Napster suit is decided..
Most people will have heard this by now (at least if the news coverage I encountered was typical) but the appeals court has issued an order staying the Wednesday injunction which ordered Napster to shut down by the end of the day. To put it more plainly, it appears Napster will be allowed to operate while the trial is conducted (unless the appeals court's ruling is itself reversed.)
I heard an NPR interview on this.. I don't remember the name of the interviewee, but the gist of the interview is that this technology basically cannot be stopped-- users will go elsewhere if Napster is shut down, or they won't care much. Either way, try as they might, the RIAA can't keep a lid on all of this issue, and it would be better if they worked it the way other media have been treated, i.e., how the film industry turned to video to actually *increase* their profits, and how cable companies have worked to make legitimate subscription a real value. Basically, the RIAA just needs to get their paws into this and turn it to their own ends.
Interesting article at:
http://www.latimes.com/news/state/updates/lat_needle000801.htm
Apparently the music and video industires aren't the only ones terrified
about what unauthorized digital distribution is going to do to their
industry. The latest front in the raging intellectual property war is
(wait for it..): needlepoint
Apparently, overly frugal needlepoint fans are exchanging patterns with
one another [don't they know how dangerous it is to share needle(points)?]
The article reads almost, but not quite, like an Onion parody story on
the Napster issue [Onion Quotient, or OQ, of 85%] complete with quotes like:
"I'm promoting the designers," said Shawna Dooley, a 25-year-old
housewife from Alberta, Canada. "We're just sampling the
patterns. If you like one pattern, you're going to be more
likely to go out and buy a pattern by that artist next time..."
and
..paying $6 for an entire pattern book is outrageous, said Carole
Nutter, particularly if a person wants just one or two of the
dozen designs listed... "It's like the CD. There's one song you
want, but you still have to buy the whole thing," said Nutter,
54, who lives in Bellgrave, Mont., a town of 3,000. "Why can't
[the industry] let us pay for what we want, not what they want
to sell us?"
and
..designer Leavitt-Imblum has ordered her attorney to start
collecting evidence so she can sue those who exchange copies of
her patterns, people whom she describes as the "scourge of all
that is decent and right."
I finally had time to go back and read Courtney Love's music-industry
diatribe (mentioned in #99, 100, 132..) and I actually found it pretty
lucid and thought-provoking. Sure, she's a bit full of herself, but
I think this is several times in a row now that I've enjoyed reading her
opinions on music-industry issues, even if I haven't necessarily agreed
with all of them -- if nothing else, she's not afraid to be blunt..
The speech in question can be found at:
http://www.salon.com/tech/feature/2000/06/14/love/index.html
Could anyone with greater insight into music industry finances comment
on the numbers she spins for her financial hypothetical?
Napster is the cover story on the August 14 Business Week magazine. The material is on the web at http://www.businessweek.com
More articles, pointed to by the news section of mp3.com: Motley Fool has an essay on why the copyright system is doomed: http://biz.yahoo.com/mf/000814/hill_000814.html Quote: "More restrictive laws ((on copying)) can't substitute for the consent of the governed. King George tried that when the American colonies started grumbling. In the 1920s our own government tried it with prohibition..." ----- Another story reports on Hewlett Packard releasing a new line of CD-RW drives, bundled with software for creating audio CDs and professional-looking printed graphics for the box. HP acknowledges that Napster users are driving the CD-RW sales. "Market analysts figure that consumer demand could be as high as 30 to 35 million for CD-RW drives this year." HP reckons that 70-80% of the users are making audio CDs.
Many net news sources cover the brief Napster filed on Friday with the appeals court. This is where the RIAA seeks to reinstate the injunction shutting down Napster, while the company seeks a permanent stay. It's not clear to me that Napster is going to make any headway with calling the judge "naive." It's also not clear to me that they will many any headway with their argument that since it is impossible for them to distinguish between legal and illegal file trading, therefore they must be allowed to operate. ---------- http://www.upside.com/News/39a1a15c0.html mp3board.com is being sued for linking to illicit MP3 sites. mp3board has now sued AOL and Time Warner; mp3board argues that AOL, and Time Warner if the marriage comes off, should indemnify mp3board if any of mp3board's activities with Gnutella are found to be infringing copyrights. They argue that since Gnutella was developed by the staff of an AOL division, that the prospective company AOL-Time- Warner should not be able to collect damages for the use of a product they developed.
Heh.. It's been astonishing to see the about-face AOL has done on MP3 issues since their prospective merger with Time Warner was announced.
Speaking of AOL's about-face: http://www.inside.com has a piece today
on how the author of Gnutella has disappeared and seems not too happy
to have sold Winamp to AOL.
-----
News item:
http://www.inside.com/story/Story_Cached/0,2770,8823_9_12_1,00.html
MP3.com, in the copyright case over My.MP3.Com, was able to reach
settlements with all but one of the major labels. Universal held out
and so the trial now moves into a stage to determine damages.
Universal does not budge: they want billions. They want MP3.com
destroyed (KRJ interpretation) From the inside.com story:
"According to its filings, Universal is not only trying to get
even with MP3.com, but it is also seeking 'deterrence' --
that is, to send a shrill message to Napster, Scour and the like.
In one brief, Universal asks Judge Jed Rakoff to 'give notice
to other prospective Internet billionaires that violation of the
law is not an acceptable business strategy.'"
The article goes on to outline possible MP3.com legal defense
strategies.
News item: http://www.wired.com/news/culture/0,1284,38525,00.html "17 out of 50 US colleges and universities polled have banned students from using Napster's song-swap service on their campuses, said a report released on Wednesday by research firm Gartner Group Inc. ... "'I would not want to be the university president who neglected to update the school policy regarding music downloads this year,' said Robert Labatt, principal analyst for Gartner's e-Business Services group. 'Long legal battles can be costly, and one school could easily be singled out to set legal precedent this year.'" Napster's next court date in the Court of Appeals is the week of October 2.
Continuing from resp:167 :: Wired, and most other media, report that the court has found that mp3.com's infringements of the Universal Music copyrights was "willful," and it set damages at $25,000 per CD copied into the MyMp3.Com service. Wired guesstimates the total bill at around $118 million, which is not enough to put mp3.com out of business. mp3.com plans to continue challenges to some of the Universal copyrights.
www.inside.com says that the number of CDs which were infringed is not determined. mp3.com says 4700 which yields the $118 million figure; Universal claims 10,000 which puts the damages closer to $250,000,000. In general the www.inside.com piece is much more pessimistic about mp3.com's survival.
mp3.com's stock will tank bigtime tomorrow they wont survive on their own, will need to get bought out
(( FW note: I've linked in the two lengthy Napster items from
the Agora conference, now that Summer's Agora is winding down.
I intend to keep most of the news updates on the legal war
in this item. ))
Lengthy interview with Napster's lead attorney David Boies, in which he lays out Napster's four main legal arguments: http://www.wired.com/wired/archive/8.10/boies.html
http://www.upside.com runs an interesting rumor that two unnamed ISPs are interested in buying Napster. The idea is that the Napster server would only be available to customers of the purchasing ISP. With Napster incorporated as "bait" into a profitable company, there would be some money to try to cut a deal with the record industry. No such sale can happen unless a deal can be cut with the record industry, and the RIAA seems awfully determined not to make any deals.
Interesting. And it would be doubly interesting to see how much damage a "cover charge" like that would do to the size of Napster's user base.
Also in the same Wired mentioned in #173 a pretty good article by John Perry Barlow on I.P. and Napster. It makes the same points basicaly he made in a ground breaking article on IP in Wired in 1994 that have been addressed here, but still makes for a good read. The URL of the earlier article is http://www.wired.com/wired/archive/2.03/economy.ideas.html
Interesting "is not / is too" accusations are flying between Salon Magazine (www.salon.com) and Leonardo Chiariglione, head of the industry-sponsored Secure Digital Music Initiative (SDMI) Salon, citing anonymous SDMI insiders, claims that *all* of the watermarking, encryption, and other security technologies proposed as possible standards by the SDMI have already been cracked in record time since the SDMI began their "Hack SDMI" challenge (which invites would-be hackers to try for $10,000 by breaking SDMI's security schemes.) Chiariglione, quoted in [Inside] magazine (www.inside.com) claims that nobody knows the results of the contest yet and that none of the 450 submissions have been properly examined to see whether they're successful cracks or not.
We haven't opened this can of worms for a while. I don't know what to think about the deal between BMG and Napster, but one element of it, which proposes that Napster charge its users $5 a month, seems like it would badly damage Napster by driving away lots of its users, and thus thinning the available song selection. mp3.com's streaming service "my.mp3.com" may be in even worse shape. mp3.com got reamed in the courts for thinking they could save users the trouble of uploading their mp3 files to the "storage locker" service. The revamped service will only allow free access to 25 CDs; if you want to "store" more than that, it'll be $50 per year, thank you. Oh, and major-label products only, please, because those are the only companies mp3.com has hundreds of millions of dollars in licensing deals with. I dunno, I think paying $50 per year to stream CDs that you are supposed to already own is a non-starter, but then I'm used to dragging a box of CDs and a portable player around with me.
It gets worse than that.. I order to prevent people from borrowing a copy of a CD to prove that they own it, the my.mp3.com service will apparently now require listeners to insert the CDs at random intervals to prove they still have them. If you have to keep the CD media handy so you can prove you're not a thief whenever you want to listen to something, what exactly is the benefit of the storage locker concept? Lower fidelity? High bandwidth usage? Limited selection? I probably never would have gone for the original service in a big way but I think MP3.com got reamed while trying to do the right thing -- all they were trying to do was provide a digital repository for content to which people already had access, even making good-faith efforts to ensure they weren't delivering music to people who didn't already have a copy..
Not purely an mp3 item, but an mp3.com news pointer leads to it. http://www.theregister.co.uk/content/2/15620.html discusses a "stealth plan" to put a copyright protection system into all new hard disks starting summer 2001. Yes, this makes backups and large disk farms difficult to impossible to operate. "But for home users, the party's over. CRPM paves the way for CPRM-compliant audio CDs, and the free exchange of digital recordings will be limited to non-CPRM media...."
I'm extremely skeptical about the overblown claims being made in the CPRM stories (CPRM = Copy Protection for Removable Media..) It seems unlikely to me that the system can do all that its critics claim it will do and if indeed it does those things it seems pretty unlikely that it will be a widely adopted and successful technological format.
Pete Townshend on Napster: http://www.petetownshend.com/press_release_diary_display.cfm?id=3961 and if I typoed that, see www.mp3.com/news and dig down. He seems tired of the old business model -- note his carping about BMI -- and willing to see what's coming.
I'm not sure if I like this proposal, but there is an interesting article on a way to make free distribution of content profitable here: http://interocity.com/jukebox/jukebox2.html
You have several choices: