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Continuing the weblog, with occasional discussion and outbreaks of bitter argument, about news relating to the deconstruction of the music business: with side forays, to steal polygon's description, into "intellectual property, freedom of expression, electronic media, corporate control, and evolving technology." This quarter we have a major news story, the introduction of Sen. Hollings' proposed Consumer Broadband and Digital Television Promotion Act (CBDTPA), formerly known as the SSSCA. Dicussion on that proposal is in Agora item 13 ( item:agora41,13 ). This item is linked between the Spring Agora conference and the Music conference. All previous versions of this item can be found in the music2 and music3 conferences.
165 responses total.
You didn't steal polygon's description. Haven't you been paying attention to anything Russ (or polygon, for that matter) has said? You can't steal intellectual property. ;} (Just finding that particular word choice ironic, is all...)
I've taken a week or so off from this, and items have piled up a bit... To start this quarter, we have two pieces of Genuine Napster News. They might be close to the last pieces of Genuine Napster News, too. http://www.wired.com/news/mp3/0,1285,51301,00.html "Dead Napster Gets Deader" The Ninth Circuit Court of Appeals has upheld the injunction of trial court judge Marilyn Patel which demands perfection from Napster in barring the exchange of copyrighted material through its (old) free service. So Old Free Napster remains shutdown, probably forever. At some level this ruling was not terribly relevant, because Napster had never resumed operating. Nowhere have I found a legal explanation for what appears to be a reversal by the Ninth Circuit. Judge Patel originally ordered Napster to stop all infringements through its service in summer 2000, and at that time the Ninth Circuit overruled her with an order laying out what Napster could reasonably be expected to do, and what the obligations of the copyright holders were. A year later, Judge Patel came out with an order which sounds to me just like the summer 2000 order, and this time the appeals court upheld it. Beats me. In the second Napster story, which I have temporarily lost the citation for, Napster announced that its plans to launch its for-pay service are now on a long-term hold: one story said nine months, one story said indefinitely. Napster's executive said the problem is their inability to negotiate license arrangements with all five major labels. ----- Wired and Cnet also cover a stunning reversal against the copyright industry in the Kazaa case. A Dutch appeals court ruled that the Kazaa company could not be held responsible for the copyright infringements of its users when they swap files. The ruling comes a little late for the Kazaa operation, which sold all of its assets to a mysterious Australian buyer earlier this year. http://www.wired.com/news/mp3/0,1285,51380,00.html http://news.com.com/2100-1023-870396.html
Two stories on the proposed new royalties for Internet radio broadcasts, and the expectation that they will wipe out the independent webcasters and hand complete control of this function to the major labels: http://www.siliconvalley.com/mld/siliconvalley/news/local/2922047.htm "Proposed royalty rates could bankrupt Webcasters" http://salon.com/tech/feature/2002/03/26/web_radio/index.html "Web radio's last stand" The Salon story interviews a web radio operator who says that under the new Digital Millenium Copyright Act rules, his royalty payments will go from $1000 per year to about $1000 per day. "We just want to be treated as over-the-air broadcasters are treated," he says. To recapitulate for those who came in late: The DMCA created a new "digital performance right" for web streaming operations -- this royalty is only to be paid by Internet radio operations, not by "conventional" broadcasters. And the Copyright office proposal would set this rate so high that only the largest corporations could afford it -- probably just the major record companies, who would be paying themselves. The result is that by law, we are strangling what should be a tool for cultural diversity.
Yup.
<dies>
From slashdot: CBDTPA Finds A Champion In the House: Wired is reporting that House member Adam Schiff of Burbank is seeking a co-sponsor for his House version of Hollings' CBDTPA. http://www.wired.com/news/politics/0,1283,51400,00.html http://slashdot.org/yro/02/03/28/2137253.shtml?tid=103
oops, i'm replicating an earlier entry in the other "stupid government behaviour" item.
Re #3: Will this apply to regular radio stations that simulcast online, too? In other words, will they be double-billed? I remember a while back an organization that represents TV stations tried to get a bill considered that would have banned anyone from streaming more than 30 minutes of continuous video over the Internet. It was promptly heavily opposed by their own constituancy -- many small TV stations were just starting to benefit from simulcasting on the Internet, which gave them a bigger audience than they could get otherwise.
IIRC, radio stations which broadcast over the air get a 50% break on the new digital performance rights royalties for their Internet simulcasts.
I thought the record companies (CD companies?) liked to have radio stations broadcasting their music because it resulted in more sales. And that they would even pay them to do so.
Okay. Record companies aren't really worried about theft of property
through services like Napster or internet radio; they're quite good at bean
counting and even the most elementary statistical analysis shows that, like
radio play, Napster had a noticeably positive effect on record sales. What's
happening here is that record companies want to OWN the Napster business.
By regulating it and making it difficult, if not impossible, to get into the
business, they create an industry where they can be the only players.
The intellectual property argument is for political spin control.
The old online journal NewMediaMusic had one of their best pieces
on this subject, maybe about a year ago. Unfortunately I did not save
a copy and their site is now gone.
In the record company business model which is now rapidly breaking,
the record company would work like the dickens to get free temporary
copies delivered to customers over the radio, with the expectation
that this would motivate purchases of tangible, permanent copies.
(The effort to get those temporary copies out onto the radio waves
has become so expensive that industry execs cite it as a major
reason that major-label releases have to sell 500,000 copies to
break even now.)
Now, map that old business model to the Internet world.
The delivery of the free radio samples:
ship digital bits to user's computer.
The delivery of the paid-for copy:
ship digital bits to user's computer.
The difference between the marketing function (free radio) and the
sales function has vanished. Uh-oh... thus we come to
the SSSCA-type proposals to cripple all computers to create
artificial distinctions between groups of bits, and restrict
the manipulation and processing of those bits accordingly:
essentially, to outlaw the general purpose, Turing-machine computer.
While writing resp:12 I had a wisp of another idea. The major labels say they have to spend an obscene, and rising, amount of money promoting their releases to radio. Why should this be so? Well, in the last couple of years we have had the rise of the Clear Channel radio "pigopoly." But more generally: the major labels are having to spend more to try and get Release X to stand out from the pack, because there are so many releases. There is, in short, an oversupply of music. Market theory tells us that some things are supposed to happen in response to an oversupply: prices are to decline until the less efficient producers are forced out of the market. One wonders when the market forces start to kick in. Articles published in the wake of the music industry sales reports for 2001 said the decline in sales would probably lead to a decline in prices, but we have not seen it yet.
That's not going to happen. Follow the money. There's way too much
money at stake in computing.
Re #9: In the case of the dual-casting station which currently pays $1000 a year to BMI and ASCAP, instead of paying $1000 a day for the compulsory webcasting license they would only have to pay $500 a day. That's only 180 times what they pay now. Whatta bargain... You can bet that there will not be any webcasting by student radio stations if this is not radically scaled back. Non-profits will be pretty much removed from the market too.
I've come across some mention of a lower rate for non-profit organizations, but I can't remember all the details.
re #15 Why Russ it sounds like you are calling for goverment regulation of the record companies? I think the genuis of the market knew everything, could it be that life is more conplicated than that?
Here's a story from about ten weeks ago about the DataPlay discs: http://news.com.com/2100-1023-864058.html "Small discs to feature big artists" DataPlay discs are "about the size of a quarter and can hold 5 to 11 hours of music, or three to five albums." (Those are really, really long albums...) Leading independent label Zomba, home to Britney & N'Sync, has signed a deal to start using the format for new releases, joining major companies Universal, EMI and BMG. The hope of the recording industry is that they can convince consumers to switch to DataPlay discs, which include digital rights management, so the unprotected CD can be withdrawn from market. "Blank discs will cost between $5 and $12." (*coff, coff*)
i've put this item off until i could thoroughly divulge into it and i must admit it all seemed confusing and inevitable what with tv and the entertainment industry being how it is already. but until i read *this* article: http://www.wired.com/news/print/0,1294,51274,00.html i wasn't nearly as angry. maybe they should should control the english language so that every word i'm typing here comes with a fee. (#11 was very well put by jazz)
Wired News is now reporting that Senator Leahy, chairman of the Senate Judiciary committee (which for some reason has jurisdiction over the SSSCA / CBDTPA) is opposed to the measure and has stated his intention to prevent it from reaching a vote this year. http://www.wired.com/news/politics/0,1283,51425,00.html However, the bill (or one like it) is still proceeding in the House and if Leahy's opposition should falter or fail the bill is still a danger. It's still important to contact your elected representatives to let them know that you're strongly opposed to this legislation.
Tsk, mcnally's resp:20 belongs in the Agora item on the CBDTPA, not in the Agora/Music "napster" item. :) But it's mildly encouraging news anyway.
there's a CBDTPA item?!
Yes, spring Agora, item 13, is discussing the CBDTPA. ( item:agora41,13 ) I can usually find enough about the music industry and other copyright topics to keep this one busy.
it's all closely related though -- hard to talk about one without fondling the other just a bit...
Fondling bits is expressly forbidden by the CBDTPA.
The DataPlay maneuver will proabably go over about as well as consumer
copy-protected DAT; the industry really had to learn that it isn't quite
smart enough to predict the format consumers will choose, and if they were,
their meddling with rights management will delay it's entry to past the
critical few months where the format would have been chosen, anyways.
That's kind of a salvation to Napster users; hacker kids, like 'em
or hate 'em, are always going to be smarter about subverting data security
than professionals are about instituting it. Instituting is by nature a
harder job, and professionals are often more in business than obsessed.
The DataPlay people have a website at http://www.dataplay.com. You can buy clothes and bags with their logo imprinted, and there is a promise that blank media and recording/playback machines will soon be available. Some of the promotional material on their web site actively touts the DataPlay resistance to file sharing, so I don't think this site was intended to market to end users. :) One of the aspects they are happiest about is that DataPlay discs can be given away or sold with content "locked up" so the holder of the disc cannot get it unless additional payment is made.
How long d'ya think that'll take to reverse engineer?
so if my friend comes over and i play a cd for him, and he likes it and i let him borrow it for a while, am i in trouble?
Re #17: Record companies don't seem to be part of a free market. Sales of CDs have been falling for months now and the price has oddly remained the same. The "unseen hand" doesn't seem to be doing its job. Re #26: That sounds like the DIVX "pay for play" model. You'll note that DIVX was extremely unsuccessful.
Unless the DataPlay discs have some sort of per-disk uniquification (using a long enough key), I don't think it will last very long. There's already an active market in subverting satellite TV encryption systems, which are apparently based on a shared symmetric key.
In the Napster legal case: Judge Patel has given Napster *TEN MONTHS* for the discovery procedure, in which Napster gets to look in the record companies' paperwork for evidence that they were abusing their copyrights. This was reported by the L.A.Times. This drags the Napster case out into January 2003, at least. http://www.calendarlive.com/top/1,1419,L-LATimes-Music-X!ArticleDetail-5461 3,00.html (warning, URL is wrapped) ----- http://news.com.com/2100-1023-872765.html "Small Webcasters Campaign for Survival" This is a good article from Cnet, with some numbers. Quote: > Negotiations over the actual rates for the new royalties proved > bitter, ultimately winding up in front of the U.S. Copyright Office's > arbitration panel. Record labels proposed a per-song rate that > was about 100 times what the big Webcasters' trade association -- > led by companies such as America Online, MTV and RealNetworks -- > said was feasible. The arbitration panel's proposed rates > split that difference. ... > The fees, once passed, will add a large new expense to Webcasters' > bottom line. To date, they've only had to pay the same songwriters' > fees that regular radio stations pay -- about 4 percent of their > revenues. The rates are so unmanageable that everyone outside of the record business agrees it kills all independent webcasting. Some large companies are joining the effort to change the rules. Arbitron, the ratings firm, wrote to Congress: > ...a Webcaster that reached as many people as a big radio station > in New York would have to pay more than $30 million a year in > royalties alone. That would make it almost impossible to survive, > Arbitron said. Small webcasters and their fans are organizing to lobby Congress to revise the rules, since they have no standing at this point in the Copyright Office procedures.
The dead tree edition of USA Today has an overview story about home copying in their business section today. Little new, but a few interesting snippets: "The public is almost evenly divided on whether Internet users have the right to swap music from CDs online, according to a CNN/USA TODAY/ Gallup poll: 43% say it should be legal, 46% say illegal, with 11% undecided." "((CD)) Sales this year are worse. Total units are down another 12% vs. the first three months of 2001." (KRJ adds: Total units were down 10% in 2001, but a big chunk of that represented the industry's decision to wind down CD single production, which is why the dollar value only went down 6% or so. If that 12% decline for 2002 to date is mostly album sales, then the companies are getting walloped much worse than last year.) Band manager Miles Copeland says banks are turning down music companies for loans. Pam Horowitz, president of NARM (music retailing trade group) says: "Do we still have a competitively priced product?... DVD sales have exploded, and it's a product where the price has come down while the price of CDs has gone up. If our only response as an industry is to stop copying of CDs, we may be missing a consumer message." A few other people in the article mention the usual argument that consumers are buying less music because most of what the companies are flogging right now is crap. (A big point of support for that position came from a similar article in the Miami Herald about a week ago, which reported again that rock concert attendance is also down. A falloff in the business of live music indicates that the public's attention is shifting away from music.)
Good column today by Jon Carroll on the morality of the proposed restrictions. It's at http://www.sfgate.com/columnists/carroll/ - click on "04/11/2002 Jolly new threat to our freedoms" Direct access at http://www.sfgate.com/cgi-bin/article.cgi? file=/chronicle/archive/2002/04/11/DD240137.DTL
April 6 Billboard, browsed at Borders, has a big lead story: "Losses Mount for Music Industry Digital Services": which seems to be mostly about Pressplay and Musicnet. Apparently the losses are mounting to a point where the parent corporations are getting concerned. I wasn't willing to spend $7 to take it home with me, and Billboard does not put the juicy business news on the web site. I forgot to note if there was any clue as to the number of paying customers for the official services.
I've forgotten again-- these are the for-pay sites?
"Music-for-rent" would be a more accurate description. :) ----- A Washington Post writer gets a beta-test version of actual DataPlay hardware and pre-recorded music disc. The reviewer thinks the technology might have some potential for replacing flash memory in digital cameras, "but I can't figure out why anybody would want to buy music this way. The CD works just fine as is." http://www.washingtonpost.com/wp-dyn/articles/A42176-2002Apr13.html
Interestingly enough, I think equalizing forces may be at work here. I seem to have no problem getting big hits from the KaZaA et al community. But every now and then, there is a song that millions of users don't seem to be fond of and don't have online to share. I was looking for Jazzie Redd's "I Am A Dope Fiend," which was a little hip-hop tune back in the early 1990's (perhaps 1990-1991) and was remade in 2000. Apparently, I will need to order the single or the CD/album it comes from to get it. Ironically, might that mean that hard-to-find music might actually get more real sales?
Very nice overview article from the Chicago Tribune on the consolidation in the radio business, and spillover effects into the record industry and Internet radio. http://www.chicagotribune.com/news/showcase/chi-0204140469apr14.story?coll= chi-n ews-hed "Rocking radio's world" Quotes: > Since 1996, Arbitron surveys show that the > average time spent listening to radio by consumers > 12 and older has dropped 9 percent. In the > last two years, listenership has dropped more than > 7 percent, Arbitron says. The young > especially are tuning out: Teen-age listeners are > down 11 percent, and people between the ages > of 18 and 24 have declined 10 percent. ... > Playlists at stations across the country > continue to shrink, with only about 20 songs a week > played with any regularity, most from the best-funded > major labels. Many commercial stations say > they play only records approved by their audience > through extensive market-testing, but this > practice has led to a numbing sameness of programming, > with many of the same records played > in the same formats from Miami to Seattle. In one week > recently, the 40 biggest modern-rock > stations in the country opened a total of 16 > slots for new records, and the 45 biggest top-40 > stations added a total of 20. That means that > even though more than 30,000 CDs are released > annually, the vast majority of the songs played > at these stations is the same week after week, a > pool of a few dozen artists who are also seen > extensively on video networks such as MTV and > VH1. The quotes from the Clear Channel execs, about how they are only there to serve the public, are particularly nauseating. The article also reports that (KRJ paraphrasing) the RIAA is starting to wake up to the idea that destroying the fledgling Web radio business would be a bad move, in terms of choking off promotional opportunities for record companies.
Meanwhile the New York Times has an article this week about the band Wilco ( http://www.nytimes.com/2002/04/21/arts/music/21PARE.html ) and their new album, Yankee Hotel Foxtrot. Deemed unsuitable by Reprise, a part of the Time-Warner-AOL media megacorp, the album was rejected. The band, unhappy with their label support anyway and unwilling to be forced into the alt-country niche in which Reprise had successfully promoted their 1996 album "Being There" fought for and obtained control over the recordings.. They shopped the completed album around and eventually placed it with Nonesuch, another part of the Time-Warner-AOL media megacorp.. Go figure.
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