Posts Tagged ‘RIAA’

Napster Inc. and the music industry came one step closer to ending their long ass war earlier this month. The company announced plans to license music from three of the five major label record companies for its upcoming subscription service.

The new service, due later this summer, is now scheduled to provide music from BMG Entertainment, EMl Recorded Music, and Warner Music Group, whose rosters include such high-profile artists as Christina Aguilera, the Red Hot Chili Peppers, the Beatles, and Madonna.

Napster plans to license the music through MusicNet, the joint venture formed by the three record companies in April in order to make their music available online.

lt seems that while the idea was a good one, the trio of companies couldn’t get the damn thing to work. That being the case, they did what they always do when a new technology threatens their bottom line, they bought it out and infused it into their system (remember the Digital Audio Tape people?).

When the new subscription based service launches, users who pay the monthly fee-an estimated $4.95-will not be able to get music from any of the three companies libraries. The only files available on the service will be the indie labels and anything from other labels that slips through Napster’s filters.

In order to get MusicNet content-which apparently will only be available from MusicNet’s centralized servers, not through Napster’s traditional file-sharing methods users will have to pay an additional monthly fee.

That fee is expected to be around the cost of a single CD, MusicNet CEO Robert Glaser said. MusicNet will provide both streaming and downloadable music, but only in a yet—to-be determined secured format, not as MP3s.

In statements that cast some doubt on MusicNet’s deal with Napster, EMI and Warner both said Tuesday that they would not make their music available to Napster unless they were satisfied with the new system’s copyright protection measures.

But Hank Barry, CEO of Napster, said that he was certain that the record companies would be pleased with the end product, claiming that such concerns “would not be an issue? However precarious, Napster’s deal with MusicNet is exclusive, Barry said.

That means that the two other major label groups, Sony and Universal-who have a competing online-distribution venture called Duet-would have to join MusicNet if they want to provide their music through Napster.

“What we are trying to do is to go from the chaos and the confusion and contentiousness of the way this market’s been, to a market where the consumer experience, and artists and rights-holders get what they want{’ says Glaser. Yeah, and if you buy you probably think Mayor Oberndorf and her cronies on the City Council have our best interests at heart.

Simply put, things aren’t going to get easier anytime soon. With the online music company having sold itself to the French conglomerate Vivendi (parent company to the Universal Music Group) for a whopping $372 million, things are only getting cloudier. It’s another case of “Let’s just buy what we are too inept to create.”

Vivendi now has the online infrastructure it needs to launch Duet with Sony, in direct competition with AOL’s MusicNet.  My, oh my, how things get so complicated so damn quick.

The biggest surprise to me out of all of this is that it was such a surprise to many people. After all, the business does have a long and storied history of snuffing out new technologies that are perceived to be a threat to profits. And when they don’t snuff them out they just throw their vast financial resources at the problem and buy and the thing out.

Audiotapes, DATs, and now MP3s have all been branded “pirating techniques” in the past and now all three are vital parts of the industry. So when Napster hit big late in 2000, they were set on suing to suppress rather than integrate the software.

They trotted the notional “vaporware” in front of an increasingly senile Sen. Orin Hatch and touted bogus deals that were all sound & fury.  All the while crucifying the technology in front of Congress AOLTime Warner, EMI, and BMG formed MusciNet while Sony and Universal tried to launch Duet.

As is par for the course, neither looked very promising. So the next logical step was for the MusicNet deal with Napster and Vivendi’s purchase of, which it quite ironically could have had at half the price if it hadn’t forced the company to spend almost a hundred million dollars in legal fees and court settlements. How does the saying go? lf ya can’t beat ’em, swallow ’em up.

As the dust settles on the online music landscape, there appears to be little left that the big labels haven’t either bought or broken. Napster traffic is plummeting as the court—purchased, er l  mean mandated, filtering systems have made it almost impossible to find the music you are looking for. Among the top-10 music sites, only two don’t belong to the labels themselves.

In retrospect, the labels probably owe Napster a big freakin’ pat on the back for corroborating online music in a rapid and conclusive fashion. lf it had been up to the labels themselves, we’d have had to wait to the end of the decade to be where we are at now.

But let’s not get all cute and cuddly just yet. There will still be some intricate dealings when it comes to multi-artist collaborations, royalty rights to publishers and artists, and the obvious conflict between running a distribution business and a content business. “That’s why record companies can’t own radio stations.” Says David Goldberg, CEO of Launch.

While it finally appears that the proverbial starter’s gun has been fired, these bad boys need to understand that the race is on. Whether they will launch later this summer or not, which seems increasingly less likely, Duet and MusicNet need to understand one thing.

Move fast gentlemen, or in a world where the underground is fine-tuning its file-swapping programs that are harder to pin down than Napster was, you’ll endup like the Jamaican BobsledTeam.

Dead last mon.


We been had.  Hoodwinked.  Led astray.  Run amok.

In the worst judgment since the Supreme Court’s coronation of King George, a federal appellate court has dealt what could be the proverbial “death blow” to Napster, Inc.

The ruling handed down by the Ninth U.S. Circuit Court of Appeals on Monday, February 12th, upheld almost all aspects of an injunction against Napster issued by a lower court last July.

Napster said at the time that U.S. District judge Marilyn Patel’s injunction- which ordered it to remove all copyrighted materials from its service- would force it to shut down while the music industry’s copyright lawsuit against it goes to trial.

The appeals court almost immediately decided to review Patel’s injunction, putting it on hold as they weighed its merits, a process they completed just this past week.

A three judge panel from the appeals court wrote in its decision that Patel “correctly recognized that a preliminary injunction against Napster’s participation in copyright infringement is both warranted and needed.”

They did find, however, that Patel’s injunction was “too broad in scope” and ordered her to immediately write a new, more narrow injunction, which would still force Napster to keep copyrighted material off its service.

Under the new injunction, record labels will have to notify Napster of specific titles that are on its system before the company is required to remove links to it. Under Patel’s injunction Napster would have to “police” it’s own database. The new ruling also suggests that Napster cannot be held accountable for misnamed files, i.e. songs clever users make available under false names (hint, hint).

The bad news is that even with those changes to the injunction, if Napster guru Shawn Fanning cannot come up with a way to remove specific songs, it won’t be able to keep operating once the new injunction is issued. Until that injunction sees the light of day the service is allowed to continue operating as normal.

“We don’t really know what the rules are, what the boundaries are. We don’t have a good sense about what the court wants us to do,” Fanning said. “It’s still not clear what is going to happen.”

Fanning went on to express a concern that many in the industry are already whispering about. “I don ‘t think this will stop the progress we’re making in terms of building the service. I do think that if we are forced to shut down while litigation is being resolved, it will result in a huge number of unhappy people dispersing to other similar sites”.

In other words, start boning up on how to use Limewire.

I know that many of you fall into one of two categories when it comes to the drama surrounding Napster. You either don’t give a flying rat’s ass about the outcome of the legal battle the net company is engaged in or you have been holding your breath for weeks as you wait for the latest news. I don’ t think there are a great many who fall in between those two points on the map.

Well, we’ve got some news for you and frankly it’s looking a bit better for those “meddling kids”. Napster Inc., has formed an alliance with BMG Entertainment (one of the globe’s largest record labels) that will lead to a new copyright-friendly version of the music trading service.

On All-Hallows-Eve, the other labels suing Napster got a big, fat, BOO! from one of their chief allies in litigation as Bertelsmann AG broke ranks, agreeing to become part owner of Napster, dropping its lawsuit in the process.

“Napster has pointed the way for a new direction for music distribution, and we believe it will form the basis of important and exciting new business models for the future of the music industry,” Thomas Middlehoff, Berterlsmann’s chairmen and CEO, said in a written statement.

The entire process took about two months; according to Napster’s reps. At one point the company thought it would announce the deal prior to the Oct 3rd hearing, only to have the deal fall apart until it was resurrected late last month. It all came together just hours before the actual announcement was made.

Bertelsmann agreed to lend Napster the money to finance the new software package, in return for a piece of the company once it is transformed from an all-free music service to one charging a monthly fee of around $4.95. Strangely enough, that’s the same number this guy kicked around in a piece he wrote six months before this story broke.

The new version of Napster, developed with Bertelsmann’s eCommerce group, will be based on a membership model, with royalties paid to labels, artists, songwriters and music publishers. BMG will NOT drop its lawsuit until this model is in and place and running.

Napster didn’t elaborate on how BMG’s catalog will be made available through the service, but Napster CEO Hank Barry emphasized that Napster will continue to allow users to trade music files they created from their own CDs. “Bertelsmann is convinced that we should let Napster be Napster”, he said.

In BMG’s statement, Middlehoff urged the other labels to join with Bertelsmann and Napster in the formation of the new service.

“We have invited other record and publishing companies, artists and other industry members to participate in the development of a secure and membership based service,” he said.

As for the “kid” who started this whole ball rolling a little over a year ago, Napster’s founder Shawn Fanning professed he is “very excited about this partnership” and had a message for Napster users that claimed “If you think it is great so far, just wait.  We are just getting started.”

Fanning, who doffed his trademark baseball cap and jeans in favor of a sleek, double breasted suit, enthusiastically hugged the middle-aged Middlehoff and presented him with a Napster t-shirt.

The man who made all of this possible is Hank Barry, Napster’s CEO. Barry came on board earlier this year when Hummer invested in the beleaguered dot-com company. How exactly did he go about getting the parent company for BMG, home of Christina Aguilera, ‘N Sync and Dave Matthews to get in on this thing?

“I never believed the interests of the consumers and the record companies were all that different,” says Barry, a former copyright lawyer. “The reality is that artists and songwriters have an interest in having their work heard.” he says. “And the members of the Napster community have an interest in listening to it. With those commonalities, I was convinced I could make it work.”

That being said, it was much easier said than done. But, give the man his props because in the end he made it work. What went form an ugly, multi-headed lawsuit that saw record labels  suing for an injunction with one hand, only to find their own parent companies fighting the injunction with their other hand because it adversely affected other parts of their money making apparatus, now looks like it may be coming to a peaceful close.

This deal will inevitably lead to similar deals with the other players in this whole thing. In the end, the consumer will be able to carry on downloading songs to their hearts content, for a reasonable fee, while artists and labels will begin to reap the financial benefits that the world wide web can provide.

Oh, it’s a beautiful day in the neighborhood….