Industry Update
Retailers Charge Sony Music with Unfair Trade Practices
The National Association of Recording Merchandisers (NARM) filed a lawsuit alleging that Sony Corp. of America, illegally forces retailers to direct their customers to competing online stores run by Sony.
Filed in the U.S. District Court for the District of Columbia, the suit charges that Sony uses its music industry clout to force retailers to carry compact discs that, in addition to music, contain hyperlinks and promotional material pointing consumers to retailers either owned or operated by Sony. While NARM said retailers often enhance their web sites with negotiated links to other sites, "we object to not having the option of buying CDs without [Sony's] hyperlinks."
Bertelsmann forms digital rights management company
Bertelsmann is forming a digital rights management company that is being unveiled at the MIDEM conference in Cannes. CEO of the new Digital World Services is Johann Butting, and he predicts that the digital rights management services business will be a $10bn market within seven years.
All Five Major Music Labels Invest in Listen.com
For the first time, all five major record labels have invested in the sameInternet company. Listen.com, the comprehensive directory of downloadable music, announced today that BMG Entertainment, EMI Recorded Music, the Universal Music Group, and Warner Music Group have invested in the company.Sony Music invested in Listen.com last October. Listen.com now has deals with 14 independent labels. 50,000 artists from 400 site only comprehensive directory to legal digital music. With the largest full-time staff of music writers anywhere, Listen.comcurrently has more than 50,000 reviewed and categorised artists in its directory and points to 400 Web sites that host music downloads.
Rights societies in France, US, Italy and Spain to share data
Jean-Loup Tournier, president of SACEM, announced at MIDEM that his society had signed an initial agreement with BMI in the US, SIAE in Italy and Spain's SGAE, under which the parties will increase the integration of their systems and facilitate data sharing. Germany's GEMA has been involved in the talks but has not signed the document. Sources say, however, that GEMA will be closely involved in all matters initiated by the four groups.
Tournier also revealed that SACEM and other European societies - the UK's Performing Rights Society, Holland's BUMA/STEMRA and GEMA - are about to sign a bilateral agreement with BMI on the licensing of public performances of music on the Internet. The deal will allow the signing partners to license the mutual repertoire of the parties. Sources say the initial agreement covers a period of 18 months.
Pizza Hut and CDnow in free custom CD promotion
Pizza Hut and CDnow have teamed up for a free custom CD offer. Consumers ordering a Big New Yorker Pizza at any one of Pizza Hut's 7,100 participating US locations will receive a CD sleeve directing them to an offer for the free custom CD from CDnow. The offer is good until February 20. Users punch in the access code on the CD sleeve and are given a list of 200 tracks from which they can choose six songs for the disc. Most of the tracks are licensed from EMI Music Distribution, but tracks from Sony Nashville and BMG Special Markets are also available.
MP3 Gadget picks up E-mail Too
I2Go's eGo is an "interactive digital audio" device that actually is interactive. One feature that sets it apart from the many MP3 portables is the text-to-speech software that let's you listen to an email. You can even reply to messages by clicking on a button, recording a message, and then saving it in the memory. The next time you sync up the eGo with your email program, it attaches your reply as an MP3 file and downloads any new messages. Another feature that sets the US$269 eGo apart from the competition is its car cassette adapter, which allows you to play MP3s through your car speakers, and its lighter plug-in adapter for external power. The player comes with a 64MB flash card, but you can expand the memory to a 680MB flash card, which would give you about 12 hours of on-the-go music. It's worth noting that the eGo is quite a bit bigger than other MP3 portables -- near the size of a Palm Pilot and roughly twice as thick.
[compiler - Steve Mayall]
THREE COPYRIGHT SOCIETIES TO JOIN FORCES
The boards of ASCAP, Buma*Stemra and the MCPS-PRS Alliance at their meetings in New York, Amsterdam and London recently agreed to create a shared service centre to handle music rights processing in the digital age. The Boards authorised the Societies' Chief Executives and their project teams to begin developing information systems specifications for a joint "back office" for both performing and mechanical rights administration. The move aims to "eliminate duplication in, and improve the accuracy of common databases; reduce costs and improve efficiency; upgrade systems and embrace new technology and provide an infrastructure to process music use in new media, such as the internet."The Netherlands-based new office combines the American ASCAP, the Dutch Buma-Stemra and the British MCPS and PRS. Songwriters in the UK will be familiar with the PRS as the company that dishes the dough from radio play, and the MCPS pays royalties from recorded releases. A press release from the organisation declares: "This project, which has yet to be officially named but which carries the working title of International Music Joint Venture (IMJV), will build on CIS (Common Information System) standards which are being developed and introduced by the global authors' societies' association CISAC. But the IMJV will also be prepared to take the lead as necessary in moving worldwide rights administration standards forward, always taking care to share those developments with the international copyright community."
BUYING A CD OVER THE NET?
International payment card group Visa says it is concerned at the rising number of frauds and disputes relating to goods and services bought over the Internet. Although the Internet accounts for only 1% of Visa's £463bn EU turnover, nearly half of all disputes and frauds in the region relate to Internet transactions. The trend has alarmed many of the big European banks that issue Visa cards and could damage consumer confidence in e-commerce. Visa said some 47% of disputes and frauds were Internet-related. It added that all complaints involved significant processing costs for issuing banks - or conceding the case without investigation. Such costs are unsustainable, given the predicted explosive growth in e-commerce. E-commerce transactions are encrypted, but it is hard to verify that buyers and merchants are who they say they are, which is why Visa is urging a swifter adoption of the Secure Electronic Transaction (SET) protocol and a rapid move towards digital signatures.
AIM ENTERS NET ARENA
UK independent record companies are mulling plans to launch their own Internet sales venture, to exploit the potential of the fast-growing digital music market. The Association of Independent Music (AIM) is in talks with software developers, media groups and ISPs about setting up such a service, though the venture is still "at an early stage of development". AIM chief executive Allison Wenham said the discussions are seen as a useful vehicle to help independent record labels speed their expansion into digital music distribution and keep pace with the multinationals. It has already registered indiemusic.com as the name of a jointly-operated web site, from which consumers could purchase recordings, or seek links to the labels' own sites.
SONY IN ANTI-PIRACY MOVE
IBM and Sony said Thursday they were
teaming up in the race to deliver pirate-proof songs over the Internet and let
consumers play that music on a portable device. The agreement calls for Sony
to make its copyright protection technologies, MagicGate and OpenMG, interoperable
with IBM's Electronic Music Management System (EMMS) for the sale of downloadable
music. The move comes on top of IBM's move earlier this week to enlist RealNetworks,
a pioneer of software to receive audio and video over the Internet, in a bid
to grab a slice of the $40 billion-a-year music industry. Under the partnership
announced recently, Sony would configure its upcoming line of digital devices
to play song files encoded using IBM's Electronic Music Management System (EMMS).
The companies hope the result is a device that allows artists and publishers
to cash in on the potential of digitally distributed music while protecting
their intellectual property rights.
MICROSOFT IN BID FOR NET MUSIC
Microsoft is stepping up efforts
to break into the music business by setting up a new streaming media group.
The new unit, to be headed by Bill Gates lieutenant Jim Allchin, will plug audio
and video technologies into Windows, so that the operating system will play
live music, business meetings, conference calls, and news to listeners. By making
streaming media into a separate division, the world's biggest software company
says it can develop new business models, expand into new areas, and win more
acceptance on the Web. It also puts Allchin in charge of three different Microsoft
divisions. Besides streaming media, he also oversees the consumer Windows division
and the business and enterprise division. Right now, Microsoft is fighting a
two-front war against RealNetworks and MP3. Even though Windows Media Player
is integrated with Windows, it still lags behind RealNetwork's software, which
plays live video and audio. In addition, Microsoft's new compression format,
MS Audio 4.0 has received a lukewarm response from the music industry. Microsoft
hoped that record companies would embrace MS Audio for its copyright protection
technology, but the industry is wary of Microsoft muscling-in on the music distribution
business. Separately, MediaDNA, a small La Jolla, California, company, said
Wednesday that it filed suit against Microsoft, alleging patent infringement
of its copy protection technology. Media DNA refused to comment on its lawsuit,
which was filed last month in Federal Court in San Diego.
Microsoft officials couldn't immediately be reached for comment.
Samsung Introduces Mini-MP3 Player
Samsung Electronics has introduced
two models of its "yepp" portable audio player/recorders, including one that
the company is calling the world's smallest device of its kind. In development
since late 1998, the players play both MP3 and WAV music files, display song
titles, song lengths and lyrics, and allow consumers to download music files
from theInternet or other digital networks for playback on devices the size
of ordinary business cards The players come installed with 24 MB of flash memory;
in response to Samsung youth market surveys, the deluxe version of yepp includes
FM radio, telephone directory and recorder
functions. Responding to concerns from the music industry, Samsung has built
its proprietary SecuMax program into the players, which the company says prevents
users from distributing unauthorised content.
GEO INTERACTIVE LAUNCH WEB ENHANCER
Shares in Geo Interactive Media rose
following the launch of a new product that enables Internet users to view moving
images or listen to music without having to download software. The company
said Emblaze OnDemand "streams media enabling site visitors to experience content
as soon as they enter a website", thus avoiding the need for "plug-ins" which
can take more than half an hour to download to a PC. Emblaze would also
assist web-developers to enhance their websites.
KARAOKE - ONLINE!
Japanese music fans are increasingly using the Internet to download karaoke music to their PCs. The sound quality of Internet karaoke is reported to be very good and most karaoke websites have extensive song selections. Each song costs ¥200 or so to download onto the subscribers PC, with the necessary software distributed by the service provider on a CD-ROM. Sony Communication Network offers an Internet karaoke service, KaraOK, with some 15,000 songs, adding around 80 each month. When the service started in December 1997, it had 2,000 users per month. That figure has now tripled. JVC offers a similar service, targeting young people. The service works on PC online systems such as NiftyServe and offers a catalogue of some 2,000 songs. With the growing number of Internet users, there will likely be more ways for users to enjoy online karaoke.
SUPER AUDIO CD PLAYER FOR AUDIO
May 21 will see Sony release in Japan
its Super Audio CD player and music titles for the new system. The move
could spark a format war similar to the Beta-VHS battle, which saw a technically
superior format beaten by clever marketing and aggressive pricing. Now
Sony and Matsushita look set for a rerun, this time on the audio front.
Sony's Super Audio CD player is priced at around £2,600, so buyers would
need to be dedicated audiophiles. Sony Music Entertainment (Japan) will
start selling 13 Super Audio CD titles priced at £18 with 10 or so to
be added every month. Sony's new player will play conventional CDs.
9 other companies are developing Super Audio CD players of their own.
Matsushita, Toshiba and others are backing the DVD Audio format, claimed to
offer comparable sound quality to Sony's new CD. Some companies, including
Sony, are believed to be developing a player that can handle both formats.
Extending the life of the CD format would mean Sony and Philips continue to
receive patent fees. The need to pay such fees has driven Matsushita and
others to develop DVD-Audio.
WARNERS AGREE WITH MP3!
MP3.com is hosting its second promotion for a new album by Tom Petty; one difference between the current promotion and one it hosted in March is that Petty's record label, Warner Bros. Records, is not shutting it down. The new promotion is a contest that invites Petty fans to record their own cover versions of songs from Petty's latest release, ECHO, encode the songs in the MP3 format, and upload them to MP3.com. Two winning entrants will be selected, one by Tom Petty and the Heartbreakers, and one by the online community at MP3.com, and invited to perform at a Tom Petty and the Heartbreakers concert this summer. In March, MP3.com offered free, downloadable MP3 files of "Free Girl Now," the first single off Petty's new album. Over a two-day period, the song was downloaded well over 150,000 times, before the file was abruptly removed from the site, reportedly at the request of Petty's label. No mention is made of the Publisher. All entrants must be US or Canadian residents & must be artists registered with MP3.com.