Thoughts on Capitol v. Thomas

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Record labels have filed over 20,000 lawsuits related to file sharing since 2003, and the first one to go to trial received a verdict yesterday in Minnesota. The jury found defendant Jammie Thomas guilty and ordered her to pay the six record companies that sued her $9,250 for each of the 24 songs they decided to focus on.

It doesn’t take a rocket surgeon to realize that this is an extremely unfavorable outcome.

  1. The record labels will take this victory as “a validation of its “sue our fans” strategy, rather than realizing it’s finally time to try a different model.” (Techdirt)
  2. This case will have absolutely no effect on file sharing. “According to BigChampagne, an online measuring service, the number of peer-to-peer users unlawfully trading goods has nearly tripled since 2003, when the RIAA began legal onslaught targeting individuals.” (Wired)
  3. The record industry needs to stop fighting the inevitable. “Eventually, unless governments are willing to take drastic measures to protect the industry (such as a mandatory music tax), economic theory will win out and the price of music will fall towards zero.” (TechCrunch)

The case has potentially set a number of legal precedents favoring the record industry, such as “making available”, described by Declan McCullagh in his excellent analysis:

Jury Instruction 15 is more important. It says that the RIAA doesn’t need to offer any evidence that rapacious Kazaa users actually downloaded songs from Thomas’ computer. All they need to do is claim that Thomas left the songs in a publicly accessible directory where they could have been downloaded. Big difference.

Wired has more:

In proving liability, the industry did not have to demonstrate that the defendant’s computer had a file-sharing program installed at the time that they inspected her hard drive. And the RIAA did not have to show that the defendant was at the keyboard when RIAA investigators accessed Thomas’ share folder.

Also, the judge in the case ruled that jurors may find copyright infringement liability against somebody solely for sharing files on the internet. The RIAA did not have to prove that others downloaded the files. That was a big bone of contention that U.S. District Judge Michael Davis settled in favor of the industry.

That’s just wrong. Is it illegal to leave a music CD out in the open? Of course not, but anyone could come along and steal it or copy it. How is leaving music files out in the open any different? Copying media for personal use is considered Fair Use (though the RIAA is doing everything they can to change that). As I understand it, combining your Fair Use rights with an open Wi-Fi connection (the default setting on virtually all wireless routers) would then make you liable for copyright infringement, if the precedent set by this case holds.

I’m not sure the precedent will be upheld, however. Last December the judge in UMG v. Lindor ruled that the record labels would have to show that Lindor actually shared the files. Demonstrating that she made the files available for download was not enough. Actually, I’m not sure why that earlier decision was not used in this case against Thomas.

Another problem is the fine amount. I think $9,250 per song very clearly conflicts with the Eighth Amendment, which states: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” The songs in question are available in the marketplace for less than $1. Furthermore, wholesale pricing has been confirmed by record label executives as being close to 70 cents per track. From that perspective, the fine levied against Thomas is almost surely excessive.

These lawsuits are very clearly about money, not about protecting artists. I look forward to the day when record labels as we currently know them cease to exist. It’s only a matter of time.

There is a ton of commentary on this story at Techmeme. That’s how I found Michael Geist’s post, in which he explains the Canadian context. Definitely worth a read.

Radiohead shows us the music industry of the future

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What if you could set the price for an album you wanted to purchase? Wouldn’t it be great to have the ability to spend $5 to check out a new band, and $25 for a band you absolutely love? It might happen sooner than you think, with Radiohead leading the charge:

As expected, Radiohead has gone an unusual route for distribution of its seventh studio album, “In Rainbows.” The set will be available for digital download from the band’s Web site beginning Oct. 10, but with a twist — fans can name their own price for the purchase. “It’s up to you,” reads a disclaimer on the checkout screen.

Make no mistake, this is a big deal. Radiohead is obviously a very successful band with a huge fan base which allows them to experiment like this, but dammit someone has to. It might as well be Radiohead. I’ve written about making the music free before, and I’m glad to now see some action.

Techdirt notes that there is more to the story, in that Radiohead is also offering a “discbox” for $80 USD that contains the album on CD and vinyl, along with an additional CD with seven tracks, plus photos, artwork, and lyrics.

In this case, Radiohead isn’t really selling the “music.” After all, you can get that for free. They’re selling the full collection of stuff that comes with the music. Funny how it’s the musicians, and not the record labels, who seem to realize that adding value and getting people to pay for it is a business model that beats suing fans.

This is really cool. Music fans everywhere should be extremely happy about this giant leap forward! There’s more great stuff on the story at Boing Boing.

Read: Billboard

Stop the madness – abolish DRM!

Post ImageHas DRM (digital rights management) ever accomplished anything positive? I find it really hard to believe that DRM has increased sales of music, movies, or any other protected content. In fact, I’d bet it has had the exact opposite effect. Just mentioning the acronym brings nothing but negative thoughts to mind.

I think it’s only a matter of time until DRM is gone. Steve Jobs doesn’t want DRM. EMI is willing to forget about DRM. And yesterday, thousands of online citizens proclaimed in a unified voice that they do not want DRM either. The writing is on the wall. The only question now is when DRM will disappear.

I can’t say it any better than Cory Doctorow:

AACS took years to develop, and it has been broken in weeks. The developers spent billions, the hackers spent pennies.

Instead of spending billions on technologies that attack paying customers, the studios should be confronting that reality and figuring out how to make a living in a world where copying will get easier and easier. They’re like blacksmiths meeting to figure out how to protect the horseshoe racket by sabotaging railroads.

The railroad is coming. The tracks have been laid right through the studio gates. It’s time to get out of the horseshoe business.

In the past, movie studios and record labels had to worry about content and distribution, but no longer. It’s clear now that distribution doesn’t need a helping hand. The sooner the studios and labels figure that out and stop wasting money on it, the better it’ll be for all of us.

Read: BoingBoing

Steve Jobs leads the charge against DRM!

Post ImageI never thought it would be Jobs, but in an open letter titled “Thoughts on Music”, the Apple head honcho seems to support getting rid of DRM altogether. Just over a week ago I mentioned that music should be free – no need for DRM if it is! Here’s what Mr. Jobs has to say:

The third alternative is to abolish DRMs entirely. Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Bring it on! I am so glad he has written this letter. If nothing else, it will simply increase the pressure on the labels to give in and realize that DRM is a stupid way to sell music.

When I read about this letter today, I had the same thought as Jason Calacanis did: Somewhere Cory Doctorow is smiling! Indeed it sounds like he is…kinda:

Well, this is pretty excellent news! Now, let’s see if Steve means it.

I hope he does. The way I see it, there’s only a few people that will be hurt by abolishing DRM – the product teams at Microsoft, Apple, and other companies who have put a lot of time and effort into creating the DRM technologies. No one likes to see their hard work end up being ignored. Though I suppose, if they truly like music, they’ll benefit from having no DRM too.

Read: Apple.com

MusicGiants

Post ImageI have always had two questions in the back of my mind about purchasing music online. First, how do the record labels/music stores decide what quality to encode an audio track at for sale? And secondly, how can they charge similar prices for CD’s and online music, the latter of which is generally much lower quality than a CD? Well I still don’t know the answers to those questions, but I discovered via Om Malik a new service called MusicGiants that sells high quality music:

Musicgiants, a high-def digital music download service is all set to launch on Wednesday. Billed as a download service for audiophiles, the 15-person company will offer songs that are uncompressed and are encoded using windows media technology at 1100 kbps. In comparison, Apple’s iTunes and others like Real’s Rhapsody offer music at a compression rate which is a tad lower than the CD-quality, mostly to keep the file sizes down. Musicgiants’ business model is predicated on widespread deployment of broadband and speeds which can handle the big-phat downloads. So far, the service works only on Windows PCs.

The songs cost $1.29 a download, and you have to pay $50 a year membership fee. The Nevada-based company claims its sound quality is seven times that of other download services.

I generally rip CD’s into WMA at very high quality, though not as high as MusicGiants – I guess I am a “sorta-audiophile”. I can’t really tell the difference when I play music on my computer, but I definitely can on my Zen with good earphones. MusicGiants looks like a very interesting concept, but I am not sure how well it will fly. Most people seem to be pretty happy purchasing from iTunes and others at a lower quality bitrate.

Oh and if you’re in Canada, don’t get too exicted, you currently have to live in the US to use the service.

Read: MusicGiants

Bronfman on Apple and Music

Post ImageWarner Music Group CEO Edgar Bronfman Jr. has publicly responded to the comments made by Apple’s CEO Steve Jobs last week. Jobs called the record labels “greedy” and pledged to keep iTunes prices at 99 cents. Mr. Bronfman made it clear he disagrees:

He called Apple’s across-the-board $0.99-per-song charge unfair.

“There’s no content that I know of that does not have variable pricing,” said Mr. Bronfman at the Goldman Sachs Communacopia investor conference. “Not all songs are created equal—not all time periods are created equal. We want, and will insist upon having, variable pricing.”

I actually agree with Mr. Bronfman on that point; I think there should be variable pricing. What I don’t think he’d agree with is a maximum price, and no minimum price. Just as some songs are worth more than 99 cents, some are worth less and so consumers shouldn’t have to pay a premium for them. I also don’t think any song should cost more than $2.49 – if you have a CD with only one good song, that’s a fair price I’d say. Most consumers don’t want to buy an entire album, just the songs they like – a model that the record industry is clearly not used to. I like to have an entire album, and the record labels prefer me to purchase an entire album, so I think if variable pricing actually comes to pass, there should be big discounts for users who purchase an entire album.

I disagree with Mr. Bronfman on the following point though:

“We are selling our songs through iPod, but we don’t have a share of iPod’s revenue,” he said. “We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only.

“We have to keep thinking how we are going to monetize our product for our shareholders,” added Mr. Bronfman. “We are the arms supplier in the device wars between Samsung, Sony, Apple, and others.”

Um, no. The record labels sell their songs through iTunes, not through the iPod. There’s no way they should get a cut of iPod sales. And to say they are the arms supplier? Hardly! People don’t buy an iPod over a Sony player because of the music. Wake up and smell the coffee Edgar!

Read: Red Herring

Yahoo destroys the RIAA, iTunes, Napster

All I can say is, thank you Yahoo. Your new $5/month Music Unlimited subscription service will be the end of the RIAA, as Mark Cuban reports:

The RIAA can no longer claim that students who are downloading music are costing them thousands of dollars each. They cant claim much of anything actually. In essence, Yahoo just turned possession of a controlled music substance into a misdemeanor. Payable by a $5 per month fine.

The Music Unlimited site looks nice, but sports this little warning on the right side:

If you’re an iPod user with a Windows-based PC, you can transfer music you already own to an Apple iPod using the Yahoo! Music Engine. Unfortunately, iPods are not currently compatible with the Yahoo! Music Unlimited subscription service.

Maybe the beginning of the end for iTunes too, though speculation of an iTunes subscription service has become more common lately. Even Hilary Rosen, yes the former head of the RIAA, who blogs at Huffington Post is calling for Apple to open up the iPod. With music that cheap available from Yahoo using Microsoft’s technology, it doesn’t look so good for Apple.

Yes, it’s interesting to note (or not) that Yahoo is using Microsoft’s DRM technology. Russell Beattie at Yahoo expressed concern about that, but Scoble replied “we only win if you do.” So true! Yahoo, Napster, and basically everyone except iTunes is using the Microsoft technology. I don’t see how iTunes and iPod can remain on top.

Speaking of Napster, things are not looking so good for them following the launch of Yahoo’s new service either, as techdirt explains:

Napster made a big deal earlier this year in advertising how much “cheaper” they were than Apple (though, many questioned the math). Of course, when you pitch yourself as the “low cost” alternative, you have to have a plan in place for the time when (not if) someone else comes in with lower prices. It appears that Napster’s plan is not to plan at all.

Pretty amazing if you ask me. With the launch of a single service, Yahoo has caused problems for three major players in the music space. And made things look very promising for Microsoft indeed.

Read: Yahoo! Music Unlimited

The extinction of the CD

When’s the last time you played music with from a CD? I don’t remember the last time, to be honest. I play music from my computer almost 24/7, and when I’m out and about, I’ve either had my iPod or my Zen Touch. The concept of a disc that only holds 20 songs seems so foreign to me now! And even if I have used a CD more recently than I can remember (perhaps in a friend’s car), I know for certain the last time I bought a CD for myself was eons ago. Any music I have bought recently has been purchased online.

I don’t think I am alone. There’s probably tons of other people who also never buy CDs anymore. Digital is the way to go, and so we are, but there are many problems that still exist. Mark Cuban has written an excellent piece on the topic, and offers advice on what the music industry needs to do:

MP3 players are changing peoples listening habits. We don’t carry folders filled with CDs anymore. We carry our library in our MP3 players. We don’t listen to CDs. We listen to playlists that we adjust all the time. We don’t burn CDs anymore, it’s too time consuming. We copy all our music to our MP3 players so it’s all available at our fingertips.

All of our music in a single device. Available to us wherever we are, for whenever we want it. Music how we want it, when we want it. Easy and breezy. That’s how we want to consume music.

That’s not how we are being sold music.

Makes you wonder what will happen to outlets like HMV, who sell hardly anything besides CDs. Why haven’t they done anything to move into the digital space yet? Or even WalMart or other retailers for that matter. What’s taking so long?

Read: Blog Maverick

Toyota launching record label

Toyota, yes the car company, is apparently launching a record label in conjunction with its Scion line of cars. The announcement was made at the SXSW conference:

“We’re not making a profit from this,” Jeri Yoshizu, sales promotion manager of Scion said. “We are enabling unsigned artists to get their feet up.” She added the program is not for consumers, but to promote underground artists.

Makes me wonder just how bad the state of the music industry when you get companies launching their own record labels. Toyota isn’t the first, I am sure you have seen Hear Music at Starbucks. Even though they claim they are not making a profit directly, there must be some money in it. I don’t imagine that launching such a venture comes cheap.

Read: Brand Noise