Variable Pricing Lands at Online Music Retailers

You may have heard the news about Apple's iTunes store moving to a variable pricing model, which means no more fixed 99 cents for individual songs across the board. (iTunes previously had different pricing on its DRM-free "iTunes Plus" offerings, but that looks to be all over, as the retailer is removing all the digital locks from its 10 million-song catalog.)

The major labels have long pushed for variable pricing at iTunes, and they finally got it. According to reports, Apple negotiated a with the labels to remove DRM from their tracks in exchange for a tiered pricing plan with "less popular" songs at 69 cents and up to $1.29 for current chartburners. The new scheme kicked off with little fanfare from Apple on April 7. [UPDATE: Check out this article by Glenn Peoples of Billboard about how the price changes are affecting sales ranking.

FMC asked our Twitter pals if this would affect their purchasing habits; here's a handful of the responses:

summervillain: much less difference to me than removing DRM. But sounds like it could benefit the long tail?

bryanvargas: iTunes is already a bad deal. Emusic & Amazon are much better options.

villageworkscan: I think it will devalue MP3s for unknown indie artists. There should be a minimum scale - > don't like? don't buy

Disasterdisastronaut: iTunes is last port of call if I'm really, really desperate - after hypem, napster, ping.fm etc amazon move 1st of many!

AngelaOrtiz: Do people still buy music? :-)

We hope that last tweet was tongue-in-cheek.

This informal, completely unscientific survey indicates that some folks aren't big iTunes customers to begin with. This is interesting, because not long after we asked the question of our tweeps, we caught wind that other digital music retailers — namely, Amazon, Lala, and Rhapsody — are moving to a variable pricing scheme, too.

So we might as well ask again: what do you think of variable pricing for digital downloads, and will it influence your purchases?

Library of Congress: DRM is a problem

Inside the Library of Congress

Last week, the Library of Congress issued a report concerning the problems it is facing as it attempts to digitally preserve creative works. Despite the Library’s noble goals, some archaic provisions of copyright law, digital rights management and the DMCA (Digital Millennium Copyright Act) are standing in the way of its mission to collect and preserve America’s cultural history.

For instance, the Library of Congress has the authority to copy a work three times, but only in the event that the original work is damaged or the original platform on which the work was created has become obsolete. As Nate Anderson of ArsTechnica points out, obsolescence can be difficult to define, as previous-generation devices like record players are still available for commercial purchase. This rule prevents the Library from taking the steps to preserve music now on vinyl discs onto multiple digital formats.

Even more chilling, there are some cases where the current legal structure would lead to a scenario where proper preservation would be impossible.

Say, for example, the Library of Congress was charged with preserving a musical work, but that work was delivered as a digitally "locked" file. The LOC would only be able to copy it to another format – MP3 for example – when the current technology to play back the DRM-ed file became obsolete (which will happen sooner or later). However, it would still be illegal for the LOC to save the file as an MP3 or other format because the DMCA prevents the circumvention of encryption and other protection schemes. In this example, since a) no means to play the song would exist and b) it would be illegal to transcode it into a different format, the music would be lost forever.

The report offered many recommendations to Congress as to how best change the law to "encourage[s] digital preservation of copyrighted works." Removing the muzzle placed upon digital archiving is essential to the mission of the Library of Congress.

An interesting aside: the LOC report was published under a Creative Commons license, so you shouldn't have any legal trouble reproducing that.

New York Times on Copyright and Fair Use in Digital Age

This week, the New York Times is hosting a running debate about copyright, digital rights management, sampling and fair use between Rick Cotton, General Counsel of NBC, and Tim Wu, Professor of Law, Columbia University. This provides some good reading about the complexities and nuances at the intersection of law and technology, from two people with very different opinions.

Monday, Jan 14: Is Copy Protection Needed or Futile?

Tuesday, Jan 15: Should Internet Providers Block Copyrighted Works?

Wednesday, Jan 16: Mixing it Up Over Remixes and Fair Use

Update! While you're in the reading mood, Tim Wu also had an article on Slate a few days ago regarding AT&T making noises about whether the time was right for them to start filtering for copyrighted content at the network level.

The End of DRM?

DRM (or Digital Rights Management) has been a contentious subject practically since the dawn of digital music. Many fans prefer their audio files to be free of locks, so they can enjoy their music across multiple platforms and players. The major labels (and some artists), on the other hand, have been reluctant to liberate their content, for fear of unchecked filesharing.

But it looks like DRM might finally be on the way out. Last week, Sony BMG finalized plans to remove copy protection from the music they sell digitally. Some are predicting the entire catalog will be available at digital retailers within months.

Sony follows EMI and Warner Music Group in forgoing anti-copy coding on MP3s. This represents a major development for the company, which endured the wrath of consumers back in 2005 when it placed a "rootkit" in its CDs that rendered personal computers vulnerable to all kinds of viral nastiness.

And it's not just the biggest labels that are going DRM-free — digital retailers are giving it a go, too. Napster just announced that it will convert its entire downloadable catalog to MP3, which is playable on pretty much every device on the market. It's a good guess that iTunes will soon follow suit.

FMC has always supported artists' right to be paid for their work, whether it ends up as a digital file, a webstream or a vinyl LP. But we also believe that a "licenses, not locks"-approach to digital distribution is the smartest solution to these issues. As music becomes less of a packaged product and more of a “service," interoperability becomes even more key for consumers. In fact, frustration with DRM may have led folks many to the very file-sharing sites that the big labels spend so much time and money combating. We can only hope that dropping DRM will encourage more cross-platform opportunities for the legal purchase and streaming of music. Wouldn't that be better for everyone?

Super-Compressed, DRM-Free MP3s: The Future of Recorded Music?

Here at FMC, we talk a lot about how technology and policy affect music, but not so much about what music actually sounds like in this digital era. Advances in technology now allow artists to create major-label quality recordings in their bedrooms, and the MP3 is quickly becoming the consumer audio standard. What does this mean for musicians, fans and audiophiles?

An article published in the 2007 wrap-up issue of Rolling Stone offers a hint. The piece is about how listener preference for MP3s is affecting how music is recorded, mixed and mastered. Producers (yes, they still exist) are finding themselves pushing the limits of compression for music that's most often heard on tiny computer speakers or cheapo earbuds.

For those who don't know, compression is a production technique by which a song's dynamic peaks are squashed together in order to make the quieter parts as powerful as the loud ones.

We'd love to link to the piece, but it's not available online. Essentially, the it says that MP3 + dynamic compression = compromised sound, something that vinyl connoisseurs have been claiming for years. The story includes a particularly interesting visual: a screenshot of the waveform data from Nirvana's "Smells Like Teen Spirit," next to an Arctic Monkeys cut. The latter looks like it's been dosed with the audio equivalent of performance enhancers. While compression certainly makes tracks "punchier," it can also rob music of its dynamics and lead to the dreaded "ear fatigue."

Mp3s, for their part, lack the complete data profile of a CD, which results in less definition in the highs and lows. This might not matter to the casual listener, but to musicians and engineers who work hard to create a rich and detailed listening experience, it can be frustrating. We're sure the folks at Tape Op have talked and written about this well before RS.

But with CD sales tanking pretty much across the board, the major labels are increasingly relying on MP3s to shore up sagging profits. Several of these companies are reevaluating their position on Digital Rights Management, or DRM — which restricts how a file can be reproduced, shared or transferred. Even holdouts like Sony BMG are flirting with the idea of DRM-free MP3s, for use in a retail "download card" promotion.

It remains to be seen whether or not consumers will become completely conditioned to uber-compressed digital audio. It wouldn't be the first time inferior technology has been adopted in favor of convenience — Microsoft Word, anyone?

Stay tuned for a closer look at this issue with technophile/producer (and rock criticism cornerstone) Sandy Pearlman.

This Week in News: Monday, August 13, 2007

DRM

Study: Consumers Prefer DRM-Free Tracks
A survey conducted by law firm Olswang Entertainment and Media Research of over 300,000 UK music fans reveals that DRM-free music is preferred by consumers, as well as a willingness to pay more for DRM-free tracks.
By Anthony Bruno, Billboard.biz, August 6, 2007

UMG Ramps Up DRM-Free Testing
Universal Music Group, following the lead of EMI, will begin selling thousands of DRM-free tracks on various digital music outlets in a test to see how DRM-free tracks affect sales. Itunes is excluded from UMG test in an effort by UMG to protest Apple’s dominance of the digital marketplace.
By Anthony Bruno, Billboard.biz, August 9, 2007

Webcasting

Webcasting Royalties: Indies vs. Majors
Live365 has found that 55% of the music played on its various channels is from independent labels. These numbers contrast the CD sales, 87% of which are from major labesl. This research indicates the importance of internet radio to independent artists and highlights how independent music could be damaged by the potential collapse of internet radio brought on by the increase in webcasting royalties.
By John Healy, LA Times, July 26, 2007

Music Industry

Starbucks Records: Number One With A Latte
USC Music Industry Professor praises Starbucks for finding a new and successful business model for selling CDs and points to live music as the new music business where the growth potential exists.
By Jerry Del Colliano, Inside Music Media, August 9, 2007

Going postal
New postage rates have increased the price of mailing CDs by 34%. Although reviewers and radio stations may prefer receiving promotional CDs rather than promotional mp3 files, the Digital Audio Insider wonders whether the cost of sending CDs is proportional to the benefits reaped.
Digital Audio Insider, August 6, 2007

Large Webcasters And SoundExchange to Continue Negotiating Soon
Negotiations between large webcasters and SoundExchange over the CRB ruling are tentatively scheduled to resume in two weeks.
By Eliot Van Buskirk, Wired blog, August 8, 2007

Other

Who has to pay if music plays?
Following ASCAP’s lawsuit against a Seattle restaurant owner for failing to pay royalties to play music inside its venue, the Seattle Times asks intellectual property lawyer Matt Geyman to explain the workings of public performance right.
By Kristi Heim, Seattle Times, August 8, 2007

RIAA Lobbying Expenses Cross $650,000 During First Half
According to documents uncovered by the Associated Press, the RIAA has already spent $650,000 during the first half of 2007 on lobbying expenses alone. These documents provide insight on the RIAA’s budget, which focuses on file-sharing lawsuits and piracy among other issues.
By Paul Reskinoff, DigitalMusicNews, August 7, 2007

Friday, July 6, 2007: This Week in News

Webcasting

SoundExchange Minimum Fee Offer Draws More Pushback
SoundExchange offers to cap minimum per-station fees at $2500 ($500 per station). While this would ease the pressure on services like Pandora or Live365 that create hundreds, if not more, personalized stations for listeners, the devil, as always, is in the details. Namely, SoundExchange will only agree to the cap if stations agree to stop their lobbying efforts for the Internet Radio Royalty Act, which would reverse the CRB's ruling for higher royalty fees.
by Paul Resnikoff, DigitalMusicNews, July 5, 2007


Webcasters' Plea Falls on Deaf Ears
Lawmakers met to hear testimony from groups and individuals affected by the impending July 15th increase in internet royalty rates, but concluded that private negotiations would be more effective than government intervention at this point. Everyone agreed, however, that the ongoing question of how artists can be fairly compensated for their work was ultimately not in the hands of SoundExchange and the music industry.
by Olga Kharif, Businessweek, June 29, 2007


Internet radio compromise on the way?
SoundExchange announced that it has offered the Digital Media Assocation (DiMA) a $2500 cap on the new webcasting royalty requirement. However, SoundExchange's only applies until 2008 while the increased rates extend through to 2010.
By Anne Broache, CNET, July 2, 2007

Radio

Terry Meets Band Known for Treadmills Video
The band OK Go recently met with Representative Lee Terry (R-NE) to discuss low-power FM radio. They also thanked Lee, who introduced the Local Community Radio Act on June 21st, for his efforts to keep low-power FM alive.
by Jenny Nowatzke, KETV, June 29, 2007

Traditional Radio to Pay for Play?
The music industry is lobbying Congress to get terrestrial radio to pay the
public performance royalty for sound recording, just like its Web and
satellite siblings
by Olga Kharif, Businessweek, July 5, 2007

New Technology

Widget helps fans, artists sell digital music
A new digital music technology called Mixtape, offered by the company
Goodstorm. can be embedded on blogs and Web sites, making them digital music stories.
Benny Evangelista, San Francisco Gate, July 2, 2007

Public Enemy to Use a Digital Distributor
Hip-hop legends Public Enemy are using TuneCore to digitally distribute
their next album. Says founder Chuck D: "I knew I had a fan base and I
wanted to go directly to them," he said. "What good is a label? All they do
is give you money. And in the area of digital distribution, they can't do
anything better or faster than anyone else."
Robert Levine, New York Times, July 2, 2007

Music Industry

EMI First Major to Sell MP3s Via Individual Sites
A deal between EMI and Snocap now allows music fans to purchase and download DRM-free mp3s directly from individual websites. Currently, the deal only allows for songs to be sold on MySpace pages but is set to expand to more sites in the future. 30 Seconds to Mars, Korn, Dean Martin, MIMs, and Yellowcard are among some artists who will begin selling mp3s on their MySpace pages.
by Antony Bruno, Billboard Biz, June 29, 2007

A change of tune
Some major labels are changing their deals with artists to include not just
music sales but other revenue streams including merchandising, concert
revenue and licensing deals
The Economist (UK), July 5, 2007

Net Neutrality

AT&T Rigs Net Neutrality Study
New studies by Renssalaer Polytechnic Institute and the University of Nevada Reno have reported that "a net-neutral approach requires between 60 and 100 per cent more capacity to maintain the same level of performance." However, the credibility of both studies is questionable, because both were funded by AT&T who has long supported a "tiered Internet."
by Cade Metz, The Register, July 4, 2007

How the FTC Mangled Net Neutrality
Last week's FTC report on Net Neutrality lacked original research on the broadband market and simply reiterated justifications of how discriminatory behavior could benefit broadband providers. Their "wait-and-see" conclusion is ultimately flawed, because the analysis that led them to it contains illogical and, in some cases, irrelevant arguments.
by Art Brodsky, TPM Cafe, June 28, 2007

FMC's press release on FTC report:
http://www.futureofmusic.org/news/PRFTCnetneutralityreport07.cfm

Other

McCain Panders to Right Wing, Drops Call for Media Diversity
In response to the blocked Democrat-backed reinstitution of the Fairness Doctrine, John McCain has introduced the Broadcaster Freedom Act which states that "divergent viewpoints do not have to be offered on the same radio or television show, but can be found simply by channel surfing, reading a newspaper or browsing an Internet blog.
Think Progress, July 5, 2007

Republican Sideshow? The Fairness Doctrine and the Politics of Panic
Matthew Lasar discusses why the Fairness Doctrine has once again become an issue in politics and the events leading up to the proposed Broadcaster Freedom Act, which would kill the Fairness Doctrine once again.
by Matthew Lasar, Lasar's Letter, July 4, 2007

Blur drummer: there's no other way than ditching DRM

DRM has taken its lumps in recent months -- EMI announced it was dumping the anti-copy coding from its tracks and Amazon said it would launch its new music store without DRM laced music. Blur's drummer Dave Rowntree is now getting in on the act saying the record industry should have figured out a decade ago DRM was not the answer to piracy.

"DRM was doomed to fail because the people who it was designed to stop, as in the counterfeiters or the mass file sharers or the people doing it for political reasons could easily bypass it," he said.

"But the people who were caught in the trap of DRM were the ordinary people who wanted to play their CDs on their computer as well as their CD recorder or who wanted to make a tape of it to put on in the car who were doing things that most people regardless of the law would regard as legitimate activities. "


"They have become very much the establishment…by the time that the industry was starting to fight what they saw as the war against file sharing they really weren't in anybody's good books any more, they didn't have the goodwill of the people whose behaviour they were trying to control."

See the full interview from Out-Law.com

Friday, June 8, 2007: This Week in News

DRM

Apple Debuts Unprotected Songs Online
Apple begins selling DRM-free songs from EMI on Itunes; songs downloaded from iTunes will play on other digital music players for the first time.
by May Wong, Associated Press, May 31, 2007

Amazon Store to Sell Music Free of Copy Protection
Amazon.com plans to launch a digital music store later this year. Their MP3-only strategy, says founder and CEO Jeff Bezos, "means all the music that customers buy on Amazon is always DRM-free and plays on any device."
Billboard.biz, May 16, 2007

Webcasting

Online Radio Royalty Fight Reaches New Pitch
Webcasters appeal Copyright Royalty Board ruling in DC Circuit Court and plan to file a motion to stay the March 2007 CRB ruling on new royalty rates. Support in House and Senate is increasing for Internet Radio Equality Act thanks to grassroots campaigning by webcasters.
by Sarah McBride, Wall Street Journal, May 31, 2007

NPR Joins Appeal of Online Music Royalties
NPR teams up with internet broadcasters in an appeal against CRB decision to raise royalty rates.
by Seth Sutel, Associated Press, June 1, 2007

Radio

Women and People of Color Lacking Among Radio Owners
A Free Press study indicates women and minorities are hurt by radio consolidation.
HearUsNow.org, June 5, 2007

Sound of Success: WETA Thrives on Classical Music
After switching from news and talk programming to classical music, WETA, the Arlington public station, sees ratings double and pledge contributions rise.
by Paul Farhi, Washington Post, June 5, 2007

Net Neutrality

Edwards to the FCC: Free Our Spectrum
In letter to FCC Chairman Kevin Martin, Presidential candidate John Edwards urges FCC to use broadband spectrum auction to enhance Internet access in rural and underserved areas.
by Matt Stoller, mydd.com, May 30, 2007

Edwards, Huckabee Support an Open Internet, McCain Waffles
Hillary Clinton and Barack Obama and others announce support for net neutrality following John Edwards' letter to the FCC.
SavetheInternet.com, May 30, 2007

Music Industry

Q & A with Trent Reznor of Nine Inch Nails
Trent Reznor talks frankly about being on a major record label, his frustrations with the industry, and why people steal music.
by Neala Johnson, Herald Sun, May 17, 2007

Alan McGee: Why I'm Giving Up My Label

Alan McGee discusses shutting down his label, Poptones, in a music industry where going independent has more pros than cons.
The Independent, May 11, 2007

Indecency

Court Overturns Flawed FCC Indecency Decisions
The U.S. Court of Appeals decides that the Golden Globes case (remembered as the Bono F-word case) and other cases of indecency were unlawful due to their arbitrary nature. This decision lifts the overly broad restrictions that limited many quality television shows.
by Jonathan Rintels, Center for Creative Voices in Media, June 4, 2007

Amazon deals latest blow to DRM

Amazon dropped a bomb today by announcing it would drop digital rights restrictions on music downloads when it launches an online music store later this year. It's the latest in a series of blows to DRM, and signals a larger shift in the music industry.

For those that don't know, Digital Rights Management is protective coding placed on files to keep them from being pirated. Remember, a couple of years ago all of the big majors took a hard line in support of DRM, but in the last several months that unanimity has frayed. EMI announced it would begin selling music downloads without DRM (albeit at a higher price), while Warner and Universal are currently testing selling music without DRM.

With a major retailer like Amazon going DRM free, it puts a lot of pressure on the other major to follow EMI's lead. Here's an interesting column from the Washington Post about what this all means.

DRM dealt major blow

Another day, another major blow to DRM. EMI and Apple just announced a deal to distribute the label's music via the iTunes web site without DRM. This is a significant move because the major labels had expressed a strong commitment to DRM (although there had been some signs of fraying recently -- see the SNOCAP posting below). There are several basic technological questions that have not been answered, but it appears a sea change is in the works on the DRM front.

iTunes will begin selling the DRM free tracks in May and other music download sites will follow thereafter. The price for the tracks will be $1.29, instead of the usual $.99. The sound you hear may be the other majors scrambling to follow.

A turning point on DRM?

Fans and artists who are less than jazzed by major entertainment companies using DRM technology to lock up digital media have reason to be a little optimistic this month.

At South by Southwest last week, SNOCAP announced it had reached deals with major indies Sub Pop, Dangerbird and New Line to distribute their music via MySpace without DRM. As TechCrunch astutely points out, these labels operate under the umbrella of Warner, one of the nation’s biggest music groups. Last Fall, SNOCAP inked a deal with MySpace to allow artists to sell their music via their MySpace pages without DRM technology.

With the sheer number of people that will buy music through MySpace, this could be a sign that the major labels are losing the DRM war. View the SNOCAP press release. Incidentally, artists can actually get more money for the CD sales by registering for SNOCAP as part of CD Baby Digital Distribution. (Artists get about 3 cents more a track and don't have to pay annual fees, according to Derek Sivers at CD Baby).