The rap group Public Enemy is releasing vocal tracks online and inviting
the public to download them and add music. A new track will be made
available each week. It's a contest and winners get $1,000 and wind up on
the next Public Enemy CD. The band wants some originality and asks that
entries not be limited to traditional rap or hip-hop formats. Give it a go at:

http://www.slamjamz.com/slamnews.php?article=7

__________________________________________________
Marc Freedman
CEO
RazorPop
11620 Audelia Rd., Suite 117, Dallas, TX 75243 USA
Office  214.342.8095
Mobile  214.734.3583
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BOOK
Digital Copyright: Protecting Intellectual Property on the Internet, by
Jessica Litman, Buffalo: Prometheus Books, 225 pages, $25

BUY IT!
http://www.amazon.com/exec/obidos/ASIN/1573928895/thefuture-20



REVIEW
Copywrong
Why the Digital Millennium Copyright Act hurts the public interest

http://reason.com/0107/cr.mg.copywrong.html

By Mike Godwin

There's a war going on over the state of copyright law in this country, but
it's a war whose battles are largely being fought covertly. On the
occasions when the conflicts are made public, they have not been recognized
for what they signify. What has gone mostly unseen and unremarked upon is
the effort by industries who benefit from copyright law to shift the
balance of the law forever in their favor, and away from the public
interest that, according to Article I of the U.S. Constitution, is supposed
to be the beneficiary of copyrights. (The Constitution expressly says that
copyright and patent laws are designed "to promote the Progress of Science
and useful Arts.")

In Digital Copyright, Wayne State University law professor Jessica Litman
has set out to chronicle that war, and her book is as refreshing in its
passion and polemical nature as most law-review articles on the subject are
mind-numbingly tedious. Try to talk to any normal American about how this
country's copyright law has gone off the rails, and you'll likely witness a
new speed record for how quickly his eyes glaze over. That's why, when I
want to communicate the horror of modern copyright law, I use the example
of horror writer Stephen King, who (at least in theory) is a potential
victim of the current state of the law.

Last year, King decided to experiment with online distribution of his
fiction. His first experiment involved a novella called Riding the Bullet,
which Simon & Schuster distributed in formats that could be read only on
Intel-based PCs running the Windows operating system. This troubled King a
bit because he (like me) is a devoted Macintosh user. King told reporters
at the time that as a dedicated and long-term Mac user he was "surprised
and a little unhappy at how hard it is for Mac users to access the story."
Even in its Wintel versions, there were limits on users' access. Someone
reading it through Glassbooks' or Netlibrary's proprietary e-book
technology -- as required by the official downloadable versions -- was
prevented from copying any of the text or from printing it out. Simon &
Schuster explained that it disabled the reader software's printing and
copying functions to prevent piracy.

This odd state of affairs -- a book offered in electronic format that
cannot be easily read on the author's own computer -- gives rise, when
looked at in the context of current copyright law, to an interesting
thought experiment. Suppose a Stephen King fan purchased a copy of the
Wintel-based downloadable story and asked a friend to reverse-engineer a
way of reading the story on his Macintosh computer. That bit of
inventiveness might create a liability for the friend under the Digital
Millennium Copyright Act. Or suppose that a King fan offered King himself a
software tool that might enable the author to sidestep the e-book's
encryption and extract the story for easy readability on the author's own
PowerBook. That too is a violation of the DMCA, according to the reasoning
of recent court decisions construing it.

One of Litman's purposes in Digital Copyright is to communicate precisely
how the DMCA, with its draconian provisions and apparently unanticipated
consequences, came to pass. Another purpose is to spell out the process by
which copyright law is crafted in this country. (It turns out that
Congress, by its own choice, tends to be only peripherally involved in
drafting the law.) And still another is to explain the hugely deleterious
public consequences of the shift in copyright law -- a shift of which the
DMCA is only one part.

The guts of that shift have to do, Litman explains, with a longstanding
disagreement among copyright theorists as to what the underlying rights of
copyright are and ought to be. According to one view, copyright interests
are the product of a kind of bargain between the government and creators --
a bargain that Congress, pursuant to the "copyright clause" of Article I of
the U.S. Constitution, has the right to shape. Under that bargain, Litman
writes, "Authors are given enough control to enable them to exploit their
creations, while not so much that consumers and later authors are unable to
benefit from the protected works."

But exactly what rights remain in the creators' control -- or, as is most
often the case, the publishers' control -- is a matter of some controversy.
The constitutional language itself is no unambiguous guide -- it simply
grants Congress the power "To promote the Progress of Science and useful
Arts, by securing for limited Times to Authors and Inventors the exclusive
Right to their respective Writings and Discoveries." But what does
"exclusive Right" mean? And what does "limited Times" mean? Litman spells
out the controversy: "Some people insist that copyright owners are entitled
to just enough control to provide an economic incentive for their creation,
since the broad purpose of copyright is to promote knowledge by encouraging
authors to create and disseminate their works. Others argue that the only
uses of a work that are properly excluded from the copyright owner's
control are the ones that have no significant economic value."

It is the latter view that has come to dominate the shape of American
copyright law in the course of the last quarter-century, and much of
Litman's book explains how this happened. The fundamental explanation,
according to Litman, is that Congress has essentially delegated the
business of writing copyright law to the copyright industries, which have
used technological advance as a rationale for expanding its protected
interests under the law.

This was not always the case. "The first U.S. copyright statute," she
reminds us, "gave authors exclusive rights to 'print, reprint, publish, or
vend' -- in other words, to control the reproduction and sale of copies."
At its heart, that law concerned commercial copying and commercial
distribution of creative works -- a fairly limited set of
government-created rights that did not address things like performances and
recordings. For a while this was OK for (to take Litman's example)
composers of popular music. Sure, under the then-current copyright law they
had no copyright interests in performances, but performers had to buy the
sheet music, so composers got their revenue indirectly. But technology
changes things: "Once it became possible to record a musical performance on
a piano roll or phonograph record and to make and sell hundreds of those,
or to broadcast performances over the radio, however, composers could be
excluded from the additional proceeds generated by the recording or
broadcast....Thus, each technological advance inspired a dispute about
whether it entitled copyright owners to expanded rights over their works."

That pattern in itself was neither remarkable nor particularly threatening
to the balance of rights then built into copyright law. But at the turn of
the last century, Litman writes, "Congress got into the habit of revising
copyright law by encouraging representatives of the industries affected by
copyright to hash out among themselves what changes needed to be made and
then present Congress with the text of appropriate legislation. By the
1920s, the process was sufficiently entrenched that whenever a member of
Congress came up with a legislative proposal without going through the
cumbersome prelegislative process of multiparty negotiation, the affected
industries united to block the bill." What we have been left with, over the
course of the last century, is industry-written legislation defining the
terms of the copyright bargain -- and the purported beneficiaries of that
bargain, the public, have not been at the negotiating table.

As a result of this legislative pattern, which Litman documents in detail
for each of the major revisions of American copyright law since 1909, the
resulting legislative efforts have "predictable features." They expand
copyright owners' rights, both by extending copyright interests expressly
and by characterizing existing law in ways that have the effect of
extending copyright interests. And they appease other groups that might
otherwise be troubled by these extensions. They do this by crafting special
exceptions -- librarians are appeased by a special copying privilege for
libraries (which requires a legislative definition of "library") and
broadcasters are appeased with a special broadcaster privilege (which
requires a legislative definition of "broadcaster"), and so on. The result
is statutory law that expansively defines copyright holders' rights but is
also riddled with special exceptions and definitions and provisions. As
Litman writes, "The copyright law has gotten longer, more specific, and
harder to understand."

And, perhaps more important, the increasing expansiveness of the copyright
law has led to a shift in the theory behind the law. What began as a
government-created monopoly established in the public interest has
increasingly come to be understood, especially by the copyright industries,
as a kind of natural right. Which means that copyright policy nowadays is
discussed less in terms of where the rights interests should be split
between creators and the public and more in terms of preserving creators'
livelihoods, or their "fundamental" rights to their creations.

Added to this quasi-natural-rights approach to copyright has been anxiety
about the Internet, which has been widely characterized (by yours truly,
among others) as a global network of copying machines. Suddenly the threat
to the copyright holder is not, primarily, competing commercial interests
(although the drumbeat over the threat of commercial infringers never lets
up in the policy arena). Instead, it's ordinary citizens, whose use of new
technology to trade copies of copyrighted works -- such as songs reduced to
MP3 files -- not only makes those works easier for foreign and domestic
commercial infringers to find, copy, and sell, but also may have a
commercial impact all by itself, as Internet users cease buying new CDs and
other copyrighted products. (Whether Internet users have actually quit
buying CDs and the like in significant numbers is a matter of hotly
contested debate.)

This panic led, by a somewhat circuitous path, to the Digital Millennium
Copyright Act, whose provisions lead to anomalous results of the sort that
might affect Stephen King's rights to read his own published works on his
own computer. That path began in the early 1990s, when the incoming Clinton
administration set out to shape policy for the "National Information
Infrastructure," its new name for what had been termed, for a brief period
at the beginning of the decade, "the information superhighway." Content
policy was delegated, ultimately, to a working group on intellectual
property that was chaired by Bruce Lehman, the newly appointed patent
commissioner and a former copyright lawyer for the computer industry. Not
surprisingly, his senior staff included former lobbyists for the copyright
industries. After hearings that included testimony from major
information-industry players, the working group came up with the "Green
Paper" -- a draft report on the state of copyright law that made
recommendations for what it characterized as minor changes and
clarifications in the law. "The minor changes it recommended, however,
appeared to many interested observers to attempt a radical recalibration of
the intellectual property balance," Litman writes.

At the core of that radical shift, Litman explains, was "the assertion that
one reproduces a work every time one reads it into a computer's
random-access memory." In fact, a few cases had held that such an event
qualified as copying for copyright purposes, but the Green Paper treated
this relatively new and controversial doctrine as if it were settled law.
Those cases, transmuted by the Green Paper authors into dogma, may be the
central cause of what Litman terms "the transition from an incentive model
of copyright to a control model."

The Green Paper also set out to regulate transmission of a copyrighted work
(e.g., across a computer network) -- both because such transmission should
be interpreted as a public performance or display (which was already
included in the copyright holders' bundle of exclusive rights) and because,
if it weren't counted as a copy, it would in effect be a "distribution,"
which meant that "first sale doctrine" would end copyright holders'
interests. (The first sale doctrine is what makes it legal for you to sell
your used paperbacks to a friend or to a used-book store without paying the
copyright holder a dime -- it's a policy that all but the copyright
industries regard as a benefit to the public.)

Finally, the Green Paper endorsed the copyright holders' right to use
copy-protection and access-control technology to prevent unlicensed copying
and use of their work. In addition, the paper called for new laws that
would prohibit the circumvention of such technology and that would outlaw
the creation or distribution of tools that could be used to circumvent it.
The Green Paper authors could not make all unlicensed copying illegal --
that would directly contradict the public policy that allows some
unlicensed copying, such as "fair use" copying of copyrighted works for
scholarship, education, or review. (I'm engaging in fair-use copying in
this article by quoting Litman's book without asking her for a license to
do so.) But if they couldn't make it illegal, they could make it (legally)
impossible, at least in the digital sphere.

The Green Paper evolved into a "White Paper," whose characterization of
current law was less disturbing rhetorically but no less radical. Writes
Litman: "Using the tools that good lawyers use when engaged in such tasks,
the White Paper carefully explained that just about every ambiguity one
could imagine, properly understood, should under the best view of current
law be resolved in favor of the copyright holder."

As a result, she writes, "That approach enabled the authors of the White
Paper to come to conclusions that would strike anybody but a copyright
lawyer as extravagant....Since any use of a computer to view, read, reread,
hear, or otherwise experience a work in digital form would require
reproducing that work in a computer's memory, and since the copyright
statute gives the copyright holder exclusive control over reproductions,
everybody would need either to have a statutory privilege or the copyright
holder's permission to view, read, reread, hear, or otherwise experience a
digital work, each time she did so."

Because these seemingly extravagant claims of right energized academics,
librarians, and, perhaps most significantly, communications service
providers (telephone and Internet service providers who might themselves be
held liable for users' infringements under the White Paper's reading of the
law), the reforms recommended in the White Paper stalled in Congress in
1996. But the ever-resourceful Bruce Lehman discovered a workaround by
pitching a version of the White Paper to the World Intellectual Property
Organization (WIPO), which was crafting a new copyright treaty. While most
of the White Paper recommendations were either diluted or not adopted at
all, the anti-circumvention recommendations made it, albeit in much more
moderate form, into the final treaty.

And with the treaty language in hand, Lehman and the copyright interests
were able to come back to Congress and ask for implementing legislation,
lobbying for anti-circumvention language that was far more draconian than
anything demanded by the treaty. The result of this effort was the Digital
Millennium Copyright Act, which became U.S. law in 1998. Although the DMCA
includes many provisions -- notably safe-harbor provisions for service
providers whose services are used by subscribers in infringing ways -- its
most controversial aspects were its anti-circumvention provisions. As
Litman writes: "Lehman argued to Congress that other nations would not act
to prevent piracy of United States works until the U.S. Congress
demonstrated leadership by enacting tough anti-piracy laws, that, for
example, made it illegal to defeat copy protection (or to market devices or
services that do so) for any purpose whatsoever. Representatives of the
motion picture and recording industries backed up the commissioner's
arguments with prophecies of widespread international piracy unless
Congress acted quickly. The world's eyes, they said, were on America."

And Congress did just that -- it passed broad anti-circumvention provisions
with narrow and not-entirely-clear exemptions. (Stephen King arguably has
the right under the DMCA to write his own software to extract the text of
Riding the Bullet for reading on his Mac -- it's just that nobody can sell
or give him a tool that does this for him.) The result was legislation
that, as Litman writes, "is long, internally inconsistent, difficult even
for copyright experts to parse and harder still to explain." Even worse,
the law "seeks for the first time to impose liability on ordinary citizens
for violation of provisions that they have no reason to suspect are part of
the law, and to make noncommercial and noninfringing behavior illegal on
the theory that it will help prevent [copyright] piracy."

Reading Digital Copyright is a little like reading Dante's Inferno -- one
follows the narrative with interest but also horror as things get worse and
worse for the Constitution-created public interest that is supposed to be
embodied in our copyright law. As in the Inferno there is no escape -- the
copyright process has been dominated by the copyright lobby for so long
that it is difficult for Litman (or for this reader) to imagine anyone in
Congress recapturing control of it. But Litman does see, in the very
awfulness of the DMCA, the potential for redemption. Because the DMCA is,
well, a crazy and contradictory set of laws that will increasingly be
applied to individual citizens, one likely outcome is that citizens will
simply opt to ignore it -- to choose noncompliance. Plus, she writes, "The
more burdensome the law makes it to obey its proscriptions, and the more
draconian the penalties for failing, the more distasteful it will be to
enforce." As a result of noncompliance and non-enforcement, the copyright
lobby may be forced to revisit the DMCA and the Copyright Act in general.
"Laws that people don't obey and that governments don't enforce are not
much use to the interests that persuaded Congress to enact them."

Litman ends on the slightly hopeful note: "Even if copyright stakeholders
refuse to give the public a seat at the bargaining table, they may discover
that they need to behave as if they had." One can only hope that, if and
when that turn of events comes about, policymakers are reminded that the
public is the biggest stakeholder.

Mike Godwin (mnemonic@...) is a policy fellow at the Center for
Democracy and Technology and an attorney of counsel to the Washington,
D.C., law firm Cole, Raywid & Braverman.



__________________________________________________
Marc Freedman
CEO
RazorPop
11620 Audelia Rd., Suite 117, Dallas, TX 75243 USA
Office  214.342.8095
Mobile  214.734.3583
Fax     707.221.0616
<mailto:marc@...>
http://razorpop.com

The Next Generation Digital Music Service
Just Raz It! (TM)

Get the latest RazorPop news and job openings.  Send a blank email to
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__________________________________________________

Webnoize
July 17, 2001
technology . delivery

Copy Control for Digital Video Gaining Momentum, But Studios Remain Divided
by Mark Lewis

Two major movie studios and a group of electronics companies have agreed to
use encryption technology to control digital video copying in the coming
world of networked personal video recorders, digital TVs and cable set-top
boxes.

After reaching an agreement in principle six months ago, Sony Corp.'s Sony
Pictures Entertainment and AOL Time Warner's Warner Bros. said they have
formally licensed 56-bit encryption technology that will encrypt video
signals on home networks. In the future, those networks will link digital
set-top boxes or digital televisions with digital video cassette recorders,
hard-drive video recorders and personal computers [see 02.16.01 Sony and
Warner Agree in Principle with 5C Copy-Control Rules].

The technology was developed by Hitachi, Intel, Matsushita Electric
Industrial, Sony Corp. and Toshiba (known collectively as 5C), which plan
to make devices and computer chips in the next year that use their
encryption and device authentication process. The system is supposed to
ensure that all digital video data on a home network remains scrambled and
can't be tapped and redistributed over the Internet.

But the entire movie and electronics industries aren't behind the 5C
project, and it remains to be seen whether Sony and Warner will release
more digital programs to broadcasters and cable operators once the new
security system is in consumer devices.

The 5C technology will be used alongside a separate technology called
High-Bandwidth Digital Content Protection (HDCP) that encrypts the digital
connection to video displays. 5C will also be used with a controversial
key-based encryption system for DVD recorders, IBM microdrives and flash
memory, called Content Protection for Recordable Media (CPRM). CPRM is
developed by the "4C," which includes the 5C's Matsushita, Toshiba and
Intel along with IBM [see 02.13.01 IBM's Recordable Media Copy-Control
Claims In Dispute].

"An ecosystem is coming together," said Seth Greenstein, a McDermott, Will
& Emery attorney who serves as the 5C's policy chairman. By using the
technologies together, "you have a complete home environment to protect
[video] displays and recording, and transfer a copy back and forth among
different digital devices."

"For content providers, the creation of secure entertainment networks is
key to the delivery of high-value, high-resolution motion picture content
into the home," said Warner Bros.' Executive Vice President Chris Cookson
in a statement. "The adoption of the [5C] technology is an important part
of this process."

However, five studios -- Walt Disney Co.'s Walt Disney Pictures, News
Corp.'s Twentieth Century Fox, Metro-Goldwyn-Mayer, Viacom's Paramount
Pictures and Vivendi Universal's Universal Studios -- haven't licensed 5C
partly because they want to use copy control more aggressively than the 5C
will allow.

But Sony, which wants to sell video recorders, and AOL Time Warner, which
wants to offer video on-demand services on its vast cable network, have
broken ranks with their cohorts in accepting the 5C's copy-control rules.

Those rules state that consumers must be able to record free, unscrambled
digital television, regardless of whether it's transmitted over the air or
through cable and satellite networks. Digital programs and movies on paid
channels and cable-only networks can be recorded once, without serial
copying. However, studios can scramble pay-per-view, video on-demand and
subscription on-demand movies so they cannot be recorded.

The Consumer Electronics Association, an industry trade group, has endorsed
5C technology for digital TV. But Thomson Multimedia, the largest
television maker in the U.S., hasn't licensed the technology or made plans
to include it in its digital TVs or DirecTV satellite receivers, including
a model that has a hard-drive video recorder. Thomson is promoting its own
encryption technology, which uses "smart cards" [see 06.07.01 Thomson
Pushing "Smart Cards" for TVs, PVRs and PCs to Prevent Piracy].

"It's good news that some technology is getting the approval stamp of the
studios," said Dave Arland, Thomson's director of governmental and public
relations. But "this is only two of the seven [studios], and we'd have to
see more progress before making product plans."

Some in the computer industry think Sony and Warner's decision could make
consumers less wary of digital TV. The studios' adopting 5C technology
"allows consumers to transparently time-shift free over-the-air TV, and the
rules appear to be reasonable for even premium channels," said James
Burger, a computer industry attorney with Dow, Lohnes & Albertson.

Yet there are other roadblocks facing digital TV, including expensive TV
sets, broadcaster delays and other studios' hard-core approach to copy
control.

Several studios whose parent conglomerates own broadcast networks want to
limit consumer recording of free, high-definition broadcast TV and set up
systems that will erase material cached to a hard drive after a certain
length of time, Arland said.

"I'm not saying rights owners don't have a right to protect content," he
said. "But that doesn't mean you rewrite the rules for time shifting or
building a home library. We're not talking about my mother turning her
library of soap operas into a profit-making venture on EBay," an auction
web site.

The Motion Picture Association of America, the studios' trade group,
declined comment on Warner and Sony's decision to sign 5C licenses.

Greenstein said he is negotiating collectively with the remaining five
studios and is "optimistic that there is a deal to be done with them."

One prior sticking point was that 5C encryption couldn't be used for
broadcast TV because the U.S. Bureau of Exports only allows encryption to
be used on conditional access systems such as cable and satellite. But
since some media conglomerates want to use encryption over broadcast
systems, U.S. authorities would have to lift encryption restrictions.

The 5C told Sony and Warner it will ask the government to suspend those
restrictions, Greenstein said. But it remains to be seen if that will be
enough to win over the other five studios.

Major studios and consumer electronics companies have been working since
1993 to establish a copy-control framework for digital video. The framework
includes the now-hacked Content Scrambling System for DVDs, encryption for
home networks and video watermarking technology [see 05.03.01 After Intense
Patent Dispute, Industry Renews Plans for DVD Anti-Piracy Standard ].

__________________________________________________
Marc Freedman
CEO
RazorPop
11620 Audelia Rd., Suite 117, Dallas, TX 75243 USA
Office  214.342.8095
Mobile  214.734.3583
Fax     707.221.0616
<mailto:marc@...>
http://razorpop.com

The Next Generation Digital Music Service
Just Raz It! (TM)

Get the latest RazorPop news and job openings.  Send a blank email to  
razorpop-subscribe@yahoogroups.com

Proud sponsor of DallasPop - http://dallaspop.com

Automatically update your address book: http://scout.ants.com/
__________________________________________________

__________________________________________________
Marc Freedman
CEO
RazorPop
11620 Audelia Rd., Suite 117, Dallas, TX 75243 USA
Office  214.342.8095
Mobile  214.734.3583
Fax     707.221.0616
<mailto:marc@...>
http://razorpop.com

The Next Generation Digital Music Service
Just Raz It! (TM)

Get the latest RazorPop news and job openings.  Send a blank email to  
razorpop-subscribe@yahoogroups.com

Proud sponsor of DallasPop - http://dallaspop.com

Automatically update your address book: http://scout.ants.com/
__________________________________________________

Yahoo - TECHNOLOGY -- Poll Results: You're Devotees of Music Downloading
http://biz.yahoo.com/bizwk/010706/1hktz72tw8ebvw5b6t96a.html

---

---

Friday July 6, 12:54 pm Eastern Time

BusinessWeek Online
TECHNOLOGY -- Poll Results: You're Devotees of Music Downloading

TECHNOLOGY: Special Report

By Alex Salkever in New York

You buy music, you burn CDs, and you won't pay much for an online music-subscription service. Those are some of the results from the digital-music survey included in our June 21 Special Report on the future of online music. Nearly 500 readers participated. Although we acknowledge that this is an unscientific poll, your answers were enlightening, to say the least. Here's a quick look (full results below).

About 60% of respondents said they purchased from 1 to 5 CDs each month. An additional 5% said they buy from 6 to 10 per month, and 3% more said they buy 10 or more. That means a solid 68% of respondents are regular music consumers, a high number. The majority of you also love to download music. Only 25.6% of respondents said they don't download any songs.

These numbers also jibe well with what we found in terms of CD burning. Most respondents create their own CDs -- 66.8%. That should give record executives pause since it seems to indicate that consumers not only want to download music but they want to package it themselves.

BROKEN MODEL. How much would respondents pay monthly for an online music-subscription service? Not much. About 32.3% -- the hardcore free-music afficianados, no doubt -- said they wouldn't pay anything. Less than 10% would pay more than $10 for the service.

Is the old distribution model centered around radio stations and record stores broken? You bet, according to this poll. Respondents overwhelmingly voiced an opinion that CDs remain overpriced, with 95% saying they should cost $12 or less. At the same time, 76.7% of respondents said they had found new music they liked using the Internet.

Taken together, these two responses tell a compelling story: Downloads from the Web are exerting significant price pressure on traditional CDs, in consumers' eyes, and the Internet is broadening their horizons and building the potential for a bigger music pie and a more efficient way to sell music.

DIGITAL-MUSIC SURVEY RESULTS

How many CDs do you buy each month?
0 32.51 %
1-5 59.19 %
6-10 5.16 %
More than 10 3.14 %

How many songs do you download each month?
0 25.61 %
1-10 36.75 %
11-20 14.48 %
21-30 5.35 %
More than 30 17.82 %

Do you burn your own CDs?
No 33.18 %
Yes 66.82 %

Do you own a portable MP3 player?
No 73.99 %
Yes 26.01 %

How much would you pay monthly for an online music-subscription service?
0 32.29 %
$1 to $5 32.74 %
$6 to $10 25.61 %
$11 to $15 6.24 %
More than $15 3.12 %

How much do you think the average CD album should cost?
$5 to $8 58.37 %
$9 to $12 36.65 %
$12 to $15 2.71 %
More than $15 2.26 %

Have you found new music that you like using the Internet?
No 23.33 %
Yes 76.67 %

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THE INDUSTRY STANDARD MAGAZINE
A Post-Post-Napster Guide
By Ethan Smith
Issue Date: Jul 02 2001

We'd never endorse piracy, of course, but for those who believe in
Americans' God-Given right to free music, some advice.

You've seen the headlines about Napster's imminent shutdown and then
putative resuscitation by an 11th-hour deal with three major labels. It
seemed like a crushing blow: After months of half-hearted compliance with
the filtering system ordered by U.S. District Judge Marilyn Hall Patel,
Napster finally caved. Not that we're taking sides, but there's still
plenty of downloadable music on the Net. For comparison's sake, we searched
each service for certain songs and performers. We chose British rockers
Radiohead since they're the closest thing we have to an official band of
the Net, thanks to the famed Instant Messaging Radiohead Bot. And we picked
Prince because, well, unlike many Internet execs, he's still partying like
it's 1999.

Check out their P2P comparison chart with comments at:

http://www.thestandard.com/article/0,1902,27316,00.html?nl=mg

http://news.webnoize.com/item.rs?eID=20010621&ID=13433

MusicNet Demonstrates Bare-Bones Service
by Mark Lewis


MusicNet demonstrated a bare-bones, on-demand Internet music service
yesterday, showing how major label-backed services are both improving and
forcing usage restrictions on consumers.

The Seattle-based firm -- 40% of which is owned by RealNetworks -- showed
how subscribers paying a monthly fee will be able to search for music by
album, title, genre and decade, then stream or download songs. A counter
keeps track of how many songs a consumer can access per month; that number
and its monthly price will be set by distributors such as America Online,
RealNetworks and Napster, according to David Halprin, MusicNet's director
of product management. Halprin, formerly a RealNetworks product manager who
worked on Real's two consumer digital music applications, RealJukebox and
RealPlayer, demonstrated the service at the Streaming Media West conference
in Long Beach, Calif.

The remaining 60% of MusicNet is owned by AOL Time Warner's Warner Music
Group, EMI Group and Bertelsmann's BMG Entertainment, which are licensing
parts of their catalogs to the venture.

The service uses a built-in software player and will not allow consumers to
burn tracks to blanks CDs or export them to portable devices. The
limitations are largely seen as a way to prevent online music from cutting
into CD sales, but they also stem from the fact that the security systems
to control CD burning and device playback haven't been adequately developed.

The usage restrictions may prevent consumers from sticking with the
service, but Halprin believes they will like the ability to sample new
music for a low price.

"This service, because it's subscription, is a great way to discover new
music. You don't have to put out $15 for new CDs just to get one song,"
Halprin said. "You're not tied to the same songs every month."

Distributors will be able to design their own HTML interfaces for the
service and create specific genre channels if they wish. However, they will
not be able to license MusicNet's music without using MusicNet's secure
delivery platform, developed by RealNetworks. The platform uses Real's
RealAudio format, encryption and licensing software, which checks to make
sure a consumer's subscription is paid before allowing a track to be played.

RealNetworks had promised "limited" peer-to-peer capabilities for the
service. Halprin showed how a subscriber could choose to download a track
from another subscriber if MusicNet's centralized servers are slow, for
example. But subscribers will not be able to view a list of another user's
track library, which Napster popularized as a useful way to discover new
recordings.

Furthermore, users will not be able to take tracks saved on their hard
drive and drag them into a player such as RealJukebox, though Halprin said
that is planned.

MusicNet isn't packaging its service with a recommendation or
personalization engine. But if its distributors demand it, MusicNet may
develop one in-house or partner with another company, Halprin said.
Distributors can add links to CD retailers in their interfaces, but only
after they discuss the proposal with MusicNet.

Halprin declined to say if MusicNet will distribute new releases at the
same time as they are released on CD, or if they will be staggered or
windowed the way first-run movies and home videos are. He also wouldn't
reveal the bit rate at which the tracks will be encoded, indicating only
that they are "near CD quality." Labels typically require online services
to limit Internet fidelity -- another attempt to prevent online music from
cutting into CD sales.

Halprin did not demonstrate MusicNet's software installation or a
subscription sign-up process. Past online music systems, such as UMG's
Bluematter downloadable music system, have required that consumers install
several software components in sequence, then reboot their computers in a
time-consuming process [see 08.01.00 Universal Download System to Debut
This Week]. In general, MusicNet's security should be considerably smoother
than last year's major label download systems, Halprin said.

"We believe we've simplified DRM [digital rights management] so the service
will work for the consumer, and the labels will release more content, which
will make them money," Halprin said.

The MusicNet demonstration system included only 16 to 20 albums, but
RealNetworks has said in the past that the full service will include
thousands of tracks. Major labels have sometimes used their Internet
systems to deliver forgotten B sides and second-tier albums by well-known
artists, but have been getting more aggressive in distributing high-demand
promotional singles prior to album releases.

http://www.newmediamusic.com/articles/NM01060270.html

Booz-Allen Report Anticipates Major Changes And Opportunities for the Music
Industry

Report says major music labels can profit from adopting film industry's
"windowing" strategy

New business models will emerge as risks and rewards are more broadly
shared with digital intermediaries

The advent of digital music, once thought to be the death knell for the
record labels, will actually propel them to higher profits in the future -
but only if they adopt strategies pioneered in the film industry, according
to a new report by Booz-Allen & Hamilton.

Major record labels can remain the central and dominant force in the music
industry, the report notes, by embracing Hollywood's distribution strategy
known as "windowing" - releasing theatrical films to video, pay-per-view,
pay cable and broadcast TV during carefully sequenced time periods. This
approach allows films to reach an expanded audience while limiting
cannibalization on the initial release. In the music industry, the
combination of sequenced releases and digital technologies will create new
revenue streams, increase profits and position the music industry for the
long-term growth experienced by the film studios.

In the wake of MP3 compression technology and Napster's file sharing
software, many predicted the Internet and digital music would lead to the
demise of record labels. However, Booz-Allen believes that the major labels
will continue to dominate the music industry. As digital music becomes a
reality, the record labels' artist and retailer relationships, their
marketing and promotional prowess and their music libraries will maintain
their position as the drivers of this industry.

The Booz-Allen report, Windows Into the Future: How Lessons from Hollywood
Will Shape the Music Industry, suggests that a reconfigured label model
will emerge from the current shifts in the digital music marketplace.
Labels will reduce their role in physical distribution and concentrate on
the new digital channels. At the same time, new intermediaries such as AOL
and pressplay will emerge as key players in the music industry, acting as
the primary point of contact for consumers.

"New technology platforms, such as home video and pay television shook up
the film business, but in the end, they created a much larger pie," said
Ross Honey, a Principal in Booz-Allen's industry-leading Media &
Entertainment Practice. "The film studios fought the VCR tooth and nail
before home video became more than half their business. We expect the same
sort of evolution to occur in music. New distribution channels, innovative
pricing structures and better information about consumer preferences will
create a larger audience and help the entire industry to grow."

A windowing distribution strategy for music would start at the same point
it does today, with a CD release, which would appeal to avid fans and
command a premium retail price. After an initial burst of sales, the first
online window would open, allowing digital music fans to download certain
singles or the entire album for a fee. The next window would include
subscription services, offering access to a selection of music for a
monthly fee. The last step would include record clubs, extending sales to
price-conscious consumers.

"The new intermediaries are going to give music fans a range of attractive
options for listening to and buying digital music," noted Booz-Allen Vice
President Richard Gay. "A more complex business model will emerge, as
intermediaries add significant value in packaging, promoting and
distributing a wide array of music services. As these intermediaries grow,
it is likely they will enter into co-financing and output deals with the
labels, spreading the risks and rewards. In this environment,
intermediaries will claim significantly more of digital revenues than the
typical 25 percent retailers currently retain from physical sales."

The Booz-Allen report noted other potential benefits to record labels from
the digital revolution:


--  Talent development. The labels' talent hunters (the artist and
repertoire, or A&R, staff) may find promising artists on the Internet,
reducing the need to gamble on unknown acts. As a result, A&R could work
with fewer, but stronger acts overall, and focus on nurturing and retaining
those artists.
--  Customer understanding. Labels also will have access to better customer
data from online channels. Today, the labels know relatively little about
their customers -- who is buying what music, in what format, where, and
what are the most effective marketing vehicles to reach these customers.
This customer data will ultimately be a key battleground when labels and
intermediaries negotiate content licenses and create new services.

      "Just as the music industry can learn from the revolution in film
distribution, these broad lessons will apply to other media segments, such
as book publishing, where content digitization heralds a significant change
in accepted business models," concluded Mr. Honey.

http://www.fortune.com/indext.jhtml?channel=print_article.jhtml&doc_id=202774

DIGITAL MUSIC
The Music Men Are Out Of Tune
The big record companies say they want to sell songs online. So why are
their services designed to frustrate consumers?
FORTUNE
Monday, June 11, 2001
By Devin Leonard

Back in the early '80s, a shoestring operation called MTV came up with the
idea of a cable network that would play rock music videos 24 hours a day.
Advertisers yawned. Cable system owners scoffed. Yet as we all know, MTV
turned out to be hugely successful--thanks largely to the big record
companies, which helped the network get off the ground by supplying free
videos.

You may not remember this episode from the dawn of the cable era. But music
industry executives do. And it makes them cringe. The way they see it, they
should have extracted something in return for making MTV possible. Instead
they got nothing.

That explains why today the Big Five record companies are singing the Who's
"Won't Get Fooled Again" as they survey the digital-music scene. A lot of
people think selling music on the Internet is the future of the industry.
Nobody is sure how to make money at it, but the record companies are
determined that if anybody succeeds, it'll be them this time. "We gave
content for free to radio, free to MTV," grumbles Jay Samit, senior vice
president for new media at EMI Recorded Music. "We're not going to do that
again."

Thus, in recent months the Big Five have come out with a bewildering flurry
of alliances and acquisitions linking the music makers to new-media
technology companies. First came the announcement from Bertelsmann that it
was entering into a partnership with Napster. More recently AOL Time Warner
(parent of FORTUNE's publisher) joined forces with EMI and Bertelsmann--and
software developer RealNetworks--to form an Internet music-distribution
company called MusicNet. The service, expected to launch this summer, hopes
to tap into AOL's 29 million subscribers. Then came the news that Sony and
Vivendi Universal had teamed up with Yahoo to give life to their seemingly
dormant online-music venture, Duet. And just a few weeks ago Vivendi
announced that it was also buying MP3.com, the struggling Internet music
pioneer, to provide another potential distribution channel for Duet.

It is impossible to know how all this will play out, but clearly these
initiatives are an attempt by the music industry to keep interlopers away.
Virtually everyone agrees that industry growth in the next several years
will come mainly from online-music sales; according to one study,
online-music revenues could hit $1.5 billion in the U.S. by 2004. Make no
mistake: The big record companies want the lion's share of that money. So
why is it, then, that even as the big boys have been erecting their fence,
someone else has been quietly digging a tunnel under it? This business has
a service that is far closer to reality than any of the recently announced
music ventures by the major labels. What's more, the service is simple to
use, consumer-friendly, and has access to music from all five of the major
labels. Who is it? Are you sitting down? It's MTV.


________________________
Battle of the Band(Width)
   Launch plan What it will offer

MusicNet Available to AOL's 29 million subscribers this summer Subscription
service to AOL Time Warner, EMI, and Bertelsmann music. Strong point:
distribution via AOL.

Duet Marketed toYahoo's 58 million monthly visitors this summer
Subscription service to Vivendi and Sony music. Strong point: Vivendi's
recent purchase of MP3.com.

MTV Fully launched by late May 10,000 digital downloads from the five major
labels. Strong point: pay-per-download.

Napster Paid subscription service to launch this summer Songs by
independent artists--but nothing yet from the major labels, despite deal
with Bertelsmann.

Microsoft MSN Music is up and running A radio-like service where you can
hear songs that are, yes, similar to the ones you request (see ... And Then
There's Microsoft).
________________________


In the modern history of the music industry, there have been three
momentous shifts in the way money is made. The first was the rise of the
long-playing record--and the concomitant decline of the 78-rpm single. As
that change took place, consumers became accustomed to buying more
expensive music compilations rather than singles. The second shift, which
made the business even more profitable, was the introduction of the compact
disk. Although CDs were no more costly to produce than vinyl, music
companies charged substantially more for them, with very happy consequences
for the bottom line. What's more, because it was a new technology, music
lovers had to replace their entire record collections with CDs. As a
result, worldwide music sales rose 40%, to $38.5 billion, over the past
decade.

The third shift, of course, is the one that's going on now--the move from
CDs to online music. First came MP3, a compression technology that made
digital music possible. Then along came Napster, which allowed
teenagers--and the rest of us--to share digitized songs with the entire
world. For free! That unbeatable price made Napster a huge hit with its 80
million registered users. But price, or lack thereof, wasn't the only
attraction. Napster gave users almost unlimited freedom to do what they
wanted with their tunes. Limp Bizkit fans could download "Nooky" onto their
portable MP3 players and take it to Daytona Beach for spring break. Albums?
Who needed them? If you liked only two tracks from Jay-Z's The Dynasty Roc
La Familia, you just downloaded those two songs and left the rest behind.
Indeed, you could use Napster to burn your own CD of favorite tunes.
Millions did just that, creating nothing less than a revolution for music
lovers.

Of course, we all know what happened to Napster. It was a hugely successful
copyright violator, and this past March, a federal court judge ordered it
to remove copyrighted songs from its system. Napster has vowed to launch a
paid service this summer, but to do that, it needs to be able to license
songs from the big labels, and despite its alliance with Bertelsmann, it
still doesn't have any such deals. From the perspective of the music
industry, Napster is no longer a force to be reckoned with.

Yet the forces Napster unleashed have become, if anything, even more
powerful--and no matter how much they'd like to, the record companies
cannot avoid them. For instance, the popularity of sharing major-label
music online--and the fact that this ability has been abruptly taken
away--has made it a potent political issue. Last July, Senate Judiciary
Committee Chairman Orrin Hatch, himself a songwriter, held hearings in
which he pressed the record companies to offer a legal alternative to
Napster. Hovering over the proceedings was an implied threat: If the
companies didn't act, Congress could take matters into its own hands by
forcing the labels to license their songs to any company willing to pay a
licensing fee.

To music executives the thought of compulsory licensing is anathema. After
all, isn't mighty Microsoft talking about getting into the online music
business? If the music industry had to give its songs to anyone who wanted
them, it would lose control of the distribution.

Not surprisingly, by the time Hatch held his second online-music hearing
two months ago, the major labels had their response: They would indeed be
providing a legal alternative to Napster, in the form of two online
services, MusicNet and Duet. The problem is that unlike Napster, the
services have business models designed to help the companies, not their
consumers.

Take, for instance, the way people are expected to pay for the two
services. They both plan to institute subscription fees. That means that
instead of purchasing the occasional album, consumers will write a monthly
check and download a big selection of music in return. For an industry that
has lived and died by hits, the appeal is obvious: It means a steady
revenue stream.

But what's in it for music lovers? The closer you look at the two services,
the more you're apt to conclude: not much. First of all, when you
subscribe, you're not actually buying music but merely renting it. Because
the Big Five are worried that consumers will write one monthly check,
download a year's supply of music, and cancel their subscription, they're
using a technology that will cause the music to vaporize if people stop
subscribing. Industry executives see this plan as completely reasonable:
"It's the same as cable television," insists David Brotherton, a
RealNetworks spokesman. "If you pay your cable television bill, you can
watch The Sopranos. If you don't pay your bill, you can't watch The
Sopranos." But as any consumer knows, a song is not like a TV show. People
want to own their music, to take it places, to listen to their favorites
years from now, to share music with their friends. None of that is possible
with MusicNet or Duet.

And that's not all. Subscribers to the two services will be able to listen
to music only at their PC or laptop--no CD burning or downloading to MP3
players allowed. (Music executives say they hope to be able to offer that
freedom--eventually.) In fact, Duet customers initially won't even be able
to download songs to their hard drives; they'll have access only to
streaming (i.e., radio-like) music.

Then there is the question of selection. At the moment each of the two
services will only be able to offer music owned by the labels in their
respective partnerships: EMI, Bertelsmann, and AOL Time Warner in the case
of MusicNet, and Sony and Vivendi Universal in the case of Duet. But as AOL
CEO Barry Schuler points out, "For music services to work, you have to have
everything." After all, most music fans have no idea that Eminem, for
example, records for Interscope, which is owned by Vivendi. So what will
MusicNet tell his fans who log on and can't find "The Real Slim Shady"?


The executives at the Big Five say that they hope to cross-license one
another's music before the two services launch this summer. But that brings
its own set of headaches. For one thing, many in the industry fear that if
the five majors license their content to MusicNet, AOL Time Warner, which
is MusicNet's primary distributor through America Online, will wind up as
the gatekeeper for music on the Internet. More important, if the Big Five
dance too close, the U.S. Justice Department might decide to launch an
antitrust investigation. That could lead to further cries for compulsory
licensing.

If cross-licensing problems don't stall the launch of the two services,
there is one other big obstacle. The music industry's decision to go the
subscription route has brought it into serious conflict with the National
Music Publishers' Association, whose 800 members control the publishing
rights to most songs in the U.S. The association's licensing affiliate
collects a royalty of 7.5 cents for every track sold on a compact disk.
Edward Murphy, the association's president, says his constituents want a
better deal if their work is sold on a subscription basis. He complains
that the music companies low-balled his members when they introduced the
CD. Now it's payback time. If MusicNet and Duet start up without settling
the issue, litigation is virtually guaranteed. "You could launch the
service," says Steven Marks, senior vice president of business affairs for
the Recording Industry Association of America. "The problem is, you are
launching a service without knowing how much it's going to cost." No wonder
MusicNet and Duet have yet to announce specific launch dates.

So what has MTV been doing while all this wrangling has been going on? Its
first move was to get its hands on the music. A San Jose technology company
called RioPort--in which MTV (and Microsoft) are investors--quietly signed
deals with all the major labels to license and sell their music. RioPort
then made the music available to MTV, a division of Viacom. Why were the
record companies willing to give their music to RioPort and MTV?
Stunningly, they did so in part because they felt it would help keep
Congress at bay. "The MTV deal is just another way to get content out,
because there's this threat of compulsory licensing hanging over the
industry," says Andreas Schmidt, president of Bertelsmann's e-commerce group.

To keep the record companies happy, RioPort has developed a system that
allows its music to be downloaded onto any "secure" portable player--but
prevents it from being transferred to a friend's player. And it has figured
out ways to accept music in a variety of technologies--the record companies
all have their preferred, often incompatible formats--yet make those
different formats almost indistinguishable to the consumer. (So far at
least, Microsoft has refused to do likewise. For obvious reasons Microsoft
would prefer to license songs itself and digitize them all in its Windows
Media format.)

But none of this explains the real advantage MTV has in the online-music
services competition. No, MTV's real brilliance is that it is offering a
service that appears far more likely to appeal to consumers. For instance,
rather than subscriptions, MTV will offer individual downloads ranging in
price from as little as 99 cents a song to as much as $18.98 per album. MTV
figures buyers will want lots of singles to make their own compilations.
"My sense is that people are going to fill their shopping carts and check
out when they've got enough music to have a satisfying listening
experience," says Nicholas Butterworth, president and chief executive of
MTVi, the network's Web division. "Pay-per-downloads are appealing to
consumers because you can cherry-pick albums," agrees P.J. McNealy, a
Gartner Group analyst. "Most people don't necessarily want the whole CD."
That's one of the reasons music fans once flocked to Napster. Now MTV is
giving them the same opportunity.

And unlike music subscriptions, pay-per-downloads are treated exactly like
CD sales by existing copyright laws--hence no problem with the publishers'
association. As a matter of fact, MTV is already selling EMI downloads on
its Websites, which include MTV.com and VH-1.com, as RioPort irons out
11th-hour details with the four other big record companies.

So what do big music-company executives have to say about MTV's plan? They
say pay-per-downloads are a waste of time. It was tried back before the
court put a lid on Napster. "[Pay-per-downloads] were a major flop. They
were a disaster," says Frank Sarfeld, a spokesman for Bertelsmann's
e-commerce group. True, the experience was miserable for consumers. Each
label delivered music in a different format, forcing consumers to set up
multiple players on their computers. And let's not forget that Napster was
giving the same stuff away for free. Even so, the consulting firm PWC
estimates that people bought $8 million in digital albums and $8 million in
digital singles in 2000 from e-tailers like TowerRecords.com.

So imagine if you actually did it right--if you set up a service that was
easy to use, offered music from all five labels, and allowed consumers to
pick and choose the songs they wanted. Sounds a lot like what MTV is trying
to do, doesn't it? Of course, the service, which still needs to be tested,
has to be a technological breeze. But think of what MTV has. Its Websites
already attract six million visitors monthly. Throw in the network's
unparalleled ability to market to the 12- to 24-year-old set, which spends
more per capita on music than any other group, and, well, suddenly it
appears as if the Big Five have a pretty formidable competitor.

It makes you wonder what music executives are smoking. They want to turn
Napster fans into their customers, but they expect them to pay for a
limited selection of music and listen to it only on their PCs. They snub
Microsoft because they are afraid it will take over the distribution market
but then hand the crown jewels to MTV, the most recognizable brand name in
pop music. If you asked U2 fans if they'd go to MTV or Microsoft to get
their music, what answer do you think they'd give?

Here's another thought: What happens in a year if MTV's service is in full
swing and MusicNet and Duet still can't agree to share each other's
catalogs? True, it's way too early to pick winners in this game. But it's
not too early to see who is the odds-on favorite coming out of the gate.

Thank you to everyone who participated!  Here's the results with
comments.  The survey went out to this list as well a few different others
for a relatively broad user base.   Of course with the small survey base
and lack of questions on streaming and a control group one needs to be
careful in drawing conclusions.

Completed surveys: 32

Use Napster: 32%.  About 25% of the online population has used
Napster.  This survey base is 32%, close to the typical online user.

Listen to mp3 files: Regularly 13%, Frequently 25%, No/occasionally
63%.   The survey confirms mp3's strong impact with 38% of respondents
indicating frequent usage,  13%  regularly listen to mp3's, partially or
fully displacing radio and CDs.

Age: 15-24 3%, 25-34 19%, 35-44 44%, 46-54  25%, >55 9%.  Online music and
Napster users run broadly across all age groups with a higher proportion in
the under 25 demo.  Survey respondents are an older group.  While many
don't use mp3s, they indicated that their children did.

MP3 files.  Only counted those with more than 100 files.  16% of ALL
respondents had over 1,000 MP3 files, similar to the percentage regularly
listening to MP3s.  The average mp3 user had 1,272 mp3 files, 51% came from
their own CDs, 45% from Napster.  The highest number of files for an
individual - total 4,600, Napster 2,500, own CD 4,000.

__________________________________________________
Marc Freedman
CEO
RazorPop
11620 Audelia Rd., Suite 117, Dallas, TX 75243 USA
Phone 214.734.3583
Fax 707.221.0616
<mailto:marc@...>
http://razorpop.com

The Next Generation Digital Music Service
Just Raz It!

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__________________________________________________

http://razorpop.com

The Next Generation Digital Music Service
Just Raz It!

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__________________________________________________
Marc Freedman
CEO
RazorPop
11620 Audelia Rd., Suite 117, Dallas, TX 75243 USA
Phone 214.734.3583
Fax 707.221.0616
<mailto:marc@...>
http://razorpop.com

The Next Generation Digital Music Service
Just Raz It!

Get the latest RazorPop news and job openings.  Send a blank email to  
razorpop-subscribe@yahoogroups.com
__________________________________________________