Grokster, which distributes one of the more popular Internet file sharing programs, plans this week to start Grokster Radio, an Internet radio service powered by Mercora. Mercora was formed by Srivats Sampath, who founded McAfee and was at one time the anti-virus company’s president and CEO.

Mercora is a small application, which you download and install on your computer. It scans your hard drive, looks for all sorts of music files – MP3, Ogg Vorbis, WMA – and builds a tiny database. Then you send invites to your pals, inviting them to join your buddy list. Once they join your buddy list, they can listen and control a special playlist that you create for them.

Existing Internet radio stations stream songs and programming over the Web to individual computers. Mercora’s technology also streams music but works more like a file sharing or peer-to-peer program similar to the original Napster because its users can search for songs stored on other computers connected to the Internet.

Mercora users can hear a song streamed directly from the owner’s computer, but they can’t download a digital copy of the song to their own computers.

P2P radio provides a way of sharing songs with a much-reduced opportunity for copyright infringement. Music fans get to play stuff they like to other music fans, and the music industry gets an opportunity to gauge what’s hot and what’s not – without the risk of losing too much income. Artists get paid a royalty, albeit a very small one, Mercora monitors the streamed songs and pays royalty fees to various music publishing and recording rights organizations. The company pays the same rates set by the government for Web radio stations.

Mercora has signed up about 200,000 users since releasing a beta version of its software in June, and those members are sharing about 10 million song tracks. More than 8 million copies of the Grokster program have been installed on computers around the world since it was introduced four years ago and is almost as notorious for its ‘piggybacked spyware’ as it is for its file sharing capabilities. Mercora claims to be spyware and adware free.

Read More:SFGate.com
Press Release [BusinessWire.com]

Related Reading

Grokster Touts ‘Legal Licensed’ P2P Music Share System [the Register]
Grokster Teams With P2P Radio [CNet News]
Can IM Morph into Instant Music? [CNet News]
Grokster Wins Big in 9th Circuit [Corante.com]
Former McAfee CEO Takes on P2P [Wired News]
Pest Encyclopedia-Grokster [PestControl.com]
Beyond Filesharing:P2P Radio Arrives [TechNewsWorld]
MGM vs. Grokster [EFF.org]
Grokster Forum [Zeropaid.com]
P2P Radio Streaming [SourceForge]
Peercast [Peercast.org]
Internet Radio the P2P Way [OpenP2P.com]
Here Comes P2P Radio [Gigaom.com]

Another independent UK download store is due to launch at the end of this month, joining an increasingly long list of alternatives to the mainstream leaders like iTunes, Napster, Woolworths, Tesco and the OD2 powered stores Virgin, MyCokeMusic.com, HMV, Wanadoo, Tiscali and Ministry Of Sound brands.

TuneTribe.com is backed by dance music act Groove Armada’s Tom Findlay and are offering unsigned artists the chance of none exclusive distribution deals and exposure on the site with an 80% cut of revenue. The site are promising no proprietary formats, no restrictions, and no DRM (Digital Rights Management) and artists are able to set their own price per download. TuneTribe are currently looking for artists and labels to sign up.

Despite having a record deal with Sony BMG for Groove Armada, and Ragbull, his own independent label, Findlay said that TuneTribe would give him the freedom to release material, both his own and other artists’, that would not fit the style of either outlet. “Even though I’ve got a deal with Sony BMG and I recognise that there’s a place for those sort of deals, this interested me because there’s a massive slew of incredibly interesting material that never gets picked up,” he said.

More than 30 small labels have signed up in a week, and TuneTribe is also in advanced discussions with the Association of Independent Music, which represents the UK independent record sector.

Related Links

Ebay Of Music Publishing’ Puts Sound Out For Talent [InvestmentsMagazine.com]
UK Music Downloads Up 200% Since June 1st [the Register]
Easymusic to Extend into Paid Music Downloads [NewMediaZero.com]
Official UK Download Chart [BBC Radio 1]

According to reports in Billboard, in a move that sets the stage for the emergence of major-label-sanctioned peer-to-peer services, Universal Music Group has become the first of the top four music companies to ink a licensing deal with Snocap, the new P2P filtering venture from Napster founder Shawn Fanning, several of his old colleagues and backed by angel investor Ron Conway–who also initially funded Napster.

According to the WSJ (via IntesaTrade) UMG has signed a deal to license its catalog of 150,000 songs. It is unclear exactly how a Snocap-powered peer-to-peer service would work, although people close to the deal say that one possibility is that the service would allow users to share a low-quality copy of a licensed song for free, and would grant them access to a higher quality version only after they paid a fee. Snocap could also provide shopping cart and search services.

Snocap is a technology embedded in a P2P network to block sharing of unauthorized works, including unlicensed music and pornography and facilitate commercial transactions. Snocap has been working on ways to identify songs, as they are traded through a file-swapping network, including using a technique called “audio fingerprinting,” which monitors the sonic characteristics of music files.

That fingerprinting tool could be integrated into the file-swapping software itself in several different ways, sources said. When a file is being downloaded, the software could check its “fingerprint” and then compare it against a database Snocap operates, for example. Once an identification is made, the download could be blocked, unless the computer user pays a fee, as if they were downloading a song from iTunes or another digital song store.

BMG -Sony were said to be in talks last month with a new legal P2P venture from Grokster founder Wayne Rosso, tentatively called ‘Mashboxx’ which is also rumoured to be powered by the Snocap back end technology. Major labels have so far resisted all attempts at licencing repetoire for distribution on P2P networks like KaZaa (and in particular its licensed content offshoot AltNet).

Related Reading

Music Rebels Seek to Tame P2P [CNet News]
Napsters Fanning Has Sno-capped Vision [CNet News]
Downloads: The Next Generation [Business Week]
Sony-BMG, Grokster in Talks to Launch New File Sharing Venture [Detroit News]
Hollywood-Suing The Way To Profits [Red Herring]
Music’s Brighter Future [Economist.com] 6pg PDF
The Future of the Music Industry [PBS.org]
P2P Group Seeks Cross-Industry Detente [CNet News]
A&M Records vs. Napster [UCLA Online Institute]

MTV US. launched a new ‘download’ TV show this week, tied in tightly with the network’s website. “Discover & Download’ offers free downloads of showcased bands, each track being a time limited download in Microsoft’s WMA format. My Chemical Romance, the Libertines and the Game are the featured bands this week.

The format sounds alarmingly similar to Fuse TV’s ‘Daily Download’ show, which began back in June this year. The ‘Daily Download’ show replaced its daily music video countdown show and counts down America’s most downloaded tracks from legitimate download platforms.

MTV USA also aired another new show yesterday (Wednesday ). ‘MTV Ultimate Mash-Ups’ was launched in low key fashion and celebrates the art of the ‘mash-up’ ,an underground craze more popular in Europe with major coverage on XFM Radio in London and MTV Europe where the art of unofficial remixing enjoys a higher profile away from the claustrophobic grasp of the US. copyright police.

Related Links

US. TV Show Gives Away Downloads [MusicbizNews24.com]
‘Mash-ups’ Puts M Back In MTV [New York Daily News]
Video C [Video-C.co.uk]
Get Your Bootleg On [Getyourbootlegon.net]
DJs Mash It Up [EOnline.com]
Bootleg Culture [Salon.com]
Smells Like Teen Booty [Guardian Unlimited]

Ho hum. The enterprising guys at Generator a UK based mobile media analyst firm have released a new report, “Digital Music Meets Mobile Music” in which they claim digital music is making CD’s an object of the past.

The European based survey (which you can purchase for an eye watering $3385) says that the digital song download market in Europe will reach 4.5 billion euro ($5.7 billion) by 2009, a figure that would account for about 40% of the total recorded-music market.

Another claim by research firm Faultline thinks it is the only researcher that thinks that online music sales will one day dominate and will reach 30% of the music market in about five years. This is based on the rate of growth of online music and its ease compared to going to visit limited retail environments. Online services already let you burn CDs, keep the music on multiple computers, play it on hi-fi systems and carry it around with you, even swap it with your friends.

Digital-Lifestyles website quite rightly point out that the Generator report differs considerably from last months Jupiter Research report, European Digital Music: Identifying Opportunity, which predicts that digital music revenue will reach 836 million euro from 10.6 million euro at the end of 2003, or 8% of the total market, by 2009.

In the Jupiter report they reveal that while the launch of new online music stores and services has jump started Europe’s digital music market, the CD will remain the bedrock of music sales. To back that claim up another survey back in September by Entertainment Media Research indicates that 55 percent of legal downloaders buy tracks to determine whether they want to buy the CD album. As more consumers search, sample and buy their music in different ways, the harder it will be to anticipate their behavior.

That report said that contrary to opinion that the increasing popularity of music downloading will eventually make CD album and single sales obsolete, people still want to own hard-copy music and 92% of people said that CDs are their preferred music format.

CDs have better sound quality than music downloads, and in most countries have no restrictions on how the user listens to the music. Although Napster and Apple claim downloads in the millions, it’s a drop in the ocean compared to CD sales and peer to peer networks.

Related Reading

Digital Music Meets Mobile Music [Generator-Solutions.com] 14pg PDF
Listeners Set The Rules For Digital Music [TechNewsWorld.com]
Mobile Entertainment [P2PNet.net]
Legal Downloading Is No Threat to CD Sales Says Report [Revolution Magazine]
9 Out Of 10 Cats Prefer CDs To Downloads [The Register]
Euro Music Download Market $5.7 Billion by 2009 [Digital-Lifestyles.info]
CD Sales Rocket In The UK [the Register]
EMI Strikes A Cheerful Note [ThisisMoney.com]
Music Retail, Dying Or Diversifying [Musictank.co.uk]
Music Sales Jump As More Internet Users Download Music [ITWorld.com]

Napster UK have inked a tentative deal with the ailing UK Post Office chain of 16,000 outlets to stock the Napster download vouchers. The download cards debuted in the UK last month in a seperate deal with electrical retailer Dixons who’s brands also include the Currys and PC World chains.

The cards, which will be packaged and sold in a similar style to mobile phone pay-as-you-go top up cards are aimed at the gift market in time for Christmas.
The credit-card sized cards will feature a scratch-off surface that conceals a PIN that music fans can use to activate credits for permanent downloads and subscriptions from the Napster service.

The launch of pre-paid cards in the UK is a major development in the evolution of the online music market, said Napster vice-president and UK general manager Leanne Sharman.

Related Stories

Post Office Seeks Music Therapy [BBC News]
Napsters Latest UK Deal [P2PNet]
Post Office To Sell Digital Music [Media Guardian]
Main Post Offices Could Be Axed [BBC News]
File Sharing Micropayments Slow Progress [MusicbizNews24.com]
Best Buy In Napster Deal [MusicbizNews24.com]

In the light of the exploding market of legal music download services launched in the last year there was a danger of the major label grip on physical distribution being mirrored in the digital world. In the rush for market share however, download service leaders like iTunes, MusicMatch, MSN, Connect, Rhapsody, Napster and the like are looking increasingly to a new breed of ‘distribution brokers’ to bump up content from outside the major label rosters. Giving independent artists and tiny labels ‘shelf space’ along side established artists.

The Orchard offer a distribution service that covers just about every major download service on the globe with the added bonus of an online CD store and retail distribution in the USA. Orchard boasts a catalogue of over 2500 labels and 200,000 tracks. Like the majority of the new breed of online distibutors, distribution deals are on a none exclusive basis. That leaves the artist or label free to establish a wider range of distribution filling any territorial gaps.

The Orchard’s parent company is Dimensional Associates, Inc., the private equity arm of JDS Capital Management, Inc. and also owners of E Music and EMusic Live.

CD Baby have made their name in the USA as the premier outlet for distributing independent and unsigned artists CD releases through their website with distribution now also fast expanding to include a good selection of the major download outlets, an area which was recently expanded from US coverage with a European distribution deal with Loudeye’s OD2. This deal gives further worldwide distribution to CD Baby’s exclusive digital music catalog . CD Baby has sold over one million CDs to customers worldwide, and paid over $8 million dollars in royalties to musicians. 70,000 artists currently sell their CDs through CD Baby who boast an exclusive digital catalogue of over 250,000 songs.

Newer US based companies like Pump Audio, and InGrooves, are following suit with none restrictive contracts and services that also include placement on TV and advertisements.

San Francisco based companies like IRIS Distribution, the IOD Alliance, and Digital Rights Agency, all offer similar deals, allying independent rightsholders labels, publishers, musicians, and songwriters to negotiate licensing agreements with the vast array of digital music outlets, including streaming and download services, negotiating better deals through collective bargaining. Something a small label would be unable to do. All the services use online tracking systems enabling artists to monitor download figures in real time and keep track of due royalty payments. Even traditional publishers like Peer Music, the worlds biggest music publisher offer a outlet for indie labels to jump start their online distribution via the Digital Pressure offshoot.

More Related Links
the Orchard sample contract (PDF)
Pump Audio Artist Info Sheet (PDF)
TuneTribe
Rights Router
KarmaDownload
Artists Without A Label
Audio Lunchbox
Tunes Aside, Web Is Changing The Music Industry [CNet News]
Universal UK To Offer Digital Distribution To Indie Labels [MusicbizNews24.com]
Independent Artists and Record Labels Tap National Audience [MusicbizNews24.com]

Digital Distribution Studies & Research Papers
A Model for a Better Understanding of the Digital Distribution of Music in a Peer-to-Peer Environment11pg PDF [University of Lausanne, Switzerland]
Business Models for Music Distribution after the P2P Revolution 8pg PDF [University of Lausanne, Switzerland]
Proposed Business Models For Digital Music Distribution -Powerpoint Presentation [DCIA]
Future Digital Music Distribution and Production [Random Etc]
Online Music Distribution 21pg PDF [MIT Edu]
Usability Factors in Digital Music Distribution Services…. 128pg PDF thesis [Royal Institute of Technology, Stockholm]
Digital Music Distribution [Shumans.com]

Today sees the agressive entry of the UK’s number one supermarket chain Tescos into the increasingly busy UK music download market. TescoDownloads.com will be offering over 400,000 tracks encoded at 192kbps in Microsofts WMA format at a price of 79p ($1.46) which rivals the price of Apples iTunes and is 20p cheaper than Napster.

Tesco says it is hoping to benefit from the adoption of the DRM protected Windows format because there are more than 70 different players that can be used to store and play back the music, whereas the iTunes service is designed to be used only with the company’s own portable music device, the Apple iPod. Though it also means that owners of the most popular MP3 portable music player will not be able to make use of tracks from the site.

Laura Wade Gery, chief executive of Tesco.com, said yesterday that by offering customers more choice over which portable music players they use, as well as a flat rate fee for tunes, the service will appeal to a far greater audience than iTunes.

“When you buy a DVD you wouldn’t expect the retailer to dictate what player you played it on would you? And yet that is exactly what is happening in this market. Our new service will simply offer the best quality for the lowest price. As the price of portable digital music players falls, customers will demand more choice. That is what we are delivering.”

The service is being powered by a joint service of Cable and Wireless (PDF) tech infastructure and German music provider 24/7 Musicshop in a partnership that was announced back in January.

Related Reading

Tesco Begins Music Download Site [BBC News]
Tesco Jumps On To Digital Downloading Bandwagon [Times Online]
Tesco Aims To Take A Bite Out Of Apples iTunes [the Guardian]
Tesco Opens Digital Music Store [the Register]
Tesco Launches Music Download Business [Reuters]
Tesco Lifts Download Tempo With iTunes Rival [the Telegraph]
Special Reports:Supermarkets [the Guardian]
Tesco Launches Music Site [P2PNet]
Cable & Wireless and 24/7 Musicshop Launch New Digital Download Platform [C&W Press Release]
Audio Codec Quality Shootout [Extreme Tech]
Microsoft Extends MSN Music Sales Into Europe [the Register]

Its been a while (actually the end of July no less) since we last posted here. A long list of disasters befell us around that time. Firstly a database crash and loss of all the sites archives, then a change of web hosts. At that point we were set to return all guns blazing mid August before the first of four hurricanes blew into Florida. The biggest for us was Hurricane Charley which blasted right onto our coastline, rattling the office and leaving a previously unwitnessed (for us Brits !) trail of absolute mayhem and disaster. Eight days without power and running water was only the beginning of a perilous and nervy six weeks as three more malevolent storms blew by in quick succession.

We decided to ‘lay low’ for a couple of months and concentrate on sprucing the site up a little and we’re finally back to publishing on a daily basis this coming Monday, November 8th. So, thanks for your patience !

Adrian (MusicBizNews24.com Editor)

Related Links

Florida Hurricane Relief Fund
Storm 2004 [Palm Beach Post]
Hurricane Ivan & Frances [Weatherstock.com]
Hurricane Headquarters [Sun Sentinel]
Ivan Gallery [Pensacola News Journal]
Hurricane Frances [Miami Herald]
Charley Blog [WeatherBug.com]
Charley [MTHurricane.com]
Sanibel Captiva Forums [BestofSanibelCaptiva.com]

Wraptor, a unit of Free Radical Networks that has developed a new multimedia format and legitimate file-sharing technology called .wrap , said last week that it had signed a four-year agreement with the Vans Warped Tour, to create a compilation CD of unsigned artists that will also be distributed online, in the company’s proprietary .wrap file format.

Slightly different circumstances now, but back in 2000, another new P2P system (the then under seige ‘original’ Napster) had just anounced a $2million deal to sponsor the summer Limp Bizkit tour. Also back then a Napster clone called Wrapster had emerged that enabled files other than mp3 to be shared on the Napster network.

Wraptors proprietary .wrap file format is a free form digital container that encrypts an .MP3 audio file for security and then wraps it with additional content such as lyrics, photos, biographies, discographies, CD labels, tourdates and album artwork. The main difference here is that it offers a flexible DRM protection method.

.wraps are digitally signed for extreme security. Unlike normal encryption/decryption, .wraps store the private key elsewhere, not within the .wrap. .wraps are interpreted data (runtimes), not executable files, making it impossible to store a virus within a .wrap. Additionally these runtimes are digitally signed as well.

So the .wrap seems to be treading on similar ground to the increasingly popular (though still very much niche) Weed files. Here burning and transferring of the audio file is restricted until purchase. Anyone can download a .wrap for free, but they can only view and listen to it a certain number of times before the .wrap expires. After that they’ll still be able to view all the visual content, but only the first 30 seconds of the audio will play until they pay to unwrap.

Weed rewards people who share files and respect artists’ rights. You can play a Weed file three times for free on any PC. After three free plays, you’re asked to pay for the file. You can use any current Windows Media-compatible player software to play the file. The Weed software, which keeps track of your account information, is used to purchase files.

Related Reading

Wraptor FAQs [Wraptor.com]
Weedshare FAQ [Weedshare.com]

The Canadian Recording Industry Association (CRIA) today appealed a court ruling in which a judge ruled that peer-to-peer file sharing was legal in Canada.

Like its American counterparts the RIAA, the Canadian group is trying to sue file-swappers who are trading copyrighted music online. But in March, a court blocked the label’s trade group from obtaining the identities of alleged file traders, saying that trading music over programs like Kazaa did not appear to be illegal.

The Federal Court of Appeal should set a date for arguments in the appeal in several weeks. CRIA said in its appeal that the lower court should have allowed its cases against alleged copyright infringers to go forward, and reiterated its stance that unauthorized file-sharing constitutes copyright infringement.

Full story:CNet News

Related Reading

Canadian Downloaders Less Likely to Buy Music [MusicBizNews24]

Despite entertainment industry attempts to curb online song and movie swapping with lawsuits and education campaigns, more people than ever are using peer-to-peer services.
BigChampagne, which tracks Internet file sharing, says 8.3 million people were online at any one time in June using unauthorized services like Kazaa and eDonkey — up 19% from 6.8 million in June 2003.

The majority of files being traded were music, BigChampagne says. Porn videos and images were the second-biggest category
Since September, the Recording Industry Association of America has filed 3,500 lawsuits against music sharers who uploaded songs to the Internet. It has settled about 600 of them for fines ranging from $2,000 to $15,000.

Phil Leigh, senior analyst at research firm Inside Digital Media, says the findings are the strongest evidence to date that the lawsuits aren’t scaring people away from so-called P2P programs. “Many just don’t think they’ll be caught,” he says. And users have become savvier about adjusting software so they can’t be traced.

After the initial wave of lawsuits, research firms released studies suggesting people were spending less time on the peer-to-peer services. “What people say and what they do are two different things,” says BigChampagne CEO Eric Garland. “People were not willing to be forthright and admit to something that might get them sued. The fact is, peer-to-peer usage is much more widespread than it was a year ago.”

Full story:USA Today

Related Reading

Poll Shows Opposition to Download Suits [MusicBizNews24]
Music Downloads Overtaken by Movies [MusicBizNews24]
RIAA vs. the People [Electronic Frontier Foundation]

We reported on the ‘Napster For PDA’s’ here back at the beginning of June (thanks to the lead from the Register).
Back then it was reported that a small European software company had done what the giants of the consumer electronics industry daren’t do – and put a potential Napster in every pocket.
Simeda, based in Bucharest, has ported Rendezvous to the Pocket PC platform and bundled it with a web server.

The software automatically discovers other devices on a WiFi network and allows people to stream or share music with just a couple of clicks.

Seems things have developed a little further and the new app has been christened Pocketster. Pocketster allows your Pocket PC to be discovered by other Pocket PCs in the area or by any PC running a Zeroconf (a.k.a Rendezvous) discovery stack.

You can also discover other Pocketster users anywhere on your wireless LAN. Pocketster includes a web server (that you can use to publish information) and a music preview utility that allows you to stream music files from nearby Pocketster users. The Pocketster Pro version now includes an iPod module that allows you to transform your iPod into a wireless jukebox and stream music wirelessly directly from your iPod to a nearby computer or another Pocketster user.The module enables you to publish your iPod playlists and have anyone in the area listen to previews or download tracks wirelessly from those playlists.

The pictures included in the documentation on the Pocketster website are particularly explanatory of what it does and how easy it is to transform a DRM enabled device into a free networked music server.

Needless to say the software (which costs around $15) runs an explicit warning on their website, “Warning ! Simeda takes no responsability regarding the legality of the procedure described below. This procedure allows you to broadcast and/or share the music on your iPod. You must check the legislation that applies to you and decide accordingly…..”

A cynical stab at Napster like notoriety no doubt, but certainly an app that wont go un-noticed amongst rabid iPod geeks.

Related Reading

Pocketster Pro and the iPod [Simeda.com]
P2P Without a Network [Tech Central]
iPod Hacks [iPodHacks.com]
iPod Hacks and Help [Method Shop]

Two surveys emerged during the last week both making much light of the fact that movies have apparently over taken music as the most downloaded file of choice.

On Thursday the increasingly paranoid MPAA were drumming up several (sometimes) hysterical headlines in the press.
“Illegal Downloads Are Growing, Hollywood Says” (Information Week),
“Video, Software Downloads Overtake Music” (Biz Report)
“Online Piracy Dogs Movie Industry” (the Guardian)
“Movie Piracy Takes Off Worldwide” (ECommerce Times) and 100′s more.

The Motion Picture Association of America (MPAA) says its worst fears are coming true. People are illegally downloading more movies, and as a result they’re paying to view movies less frequently, according to a ‘worldwide’ study conducted by the MPAA and online research firm OTX.

The ‘World Wide Internet Piracy Study’(PDF), released Thursday, indicates that nearly a quarter of Internet users have downloaded unlicensed copies of films, and that half of those did so for the first time within the past year. It also found that more than one-fourth of downloaders are buying fewer films on DVD and videotape, and 17% say they’re attending fewer theater screenings.

The ‘worldwide’ study was infact data samples taken from eight countries, the U.S., U.K., France, Germany, Japan, Australia, Italy, and Korea. Study participants were screened to be active moviegoers. With the help of OTX sample provider partners GoZing and Ciao, a total of 400 respondents were initially recruited in each country. This sample was augmented in several countries in order to provide a minimum sample of 100 movie downloaders per country.

Not everyone is convinced of the veracity of the findings. Jim Burger, an attorney with the Washington, D.C., law firm Dow Lohnes & Albertson, says the study lacks any empirical evidence.

“It is impossible to tell with any clarity that this is a valid study,” says Burger on Information Week
. “It’s interesting, but as far as I can tell, it may be picked out of the sky.” He says the MPAA is essentially making a connection between users saying they’re downloading more films and the fact that Hollywood saw a 3% drop in box office sales in 2003, when the two things may be unrelated.

Burger says the study’s findings could very well serve a political purpose as Congress considers the Inducing Infringement of Copyright Act of 2004, which would hold technology companies liable for enabling copyright infringements whether or not there is intent to do so.

The MPAA’s findings are backed by a seperate, second report from the Organisation for Economic Cooperation and Development (OECD), which says more movies were illegally downloaded last year than music tracks.The report to be published Monday says that across the OECD’s 30 industrialized member countries, music accounted for 48.6 percent of files shared online, compared with 62.5 percent in 2002, according to excerpts of the report seen by The Associated Press.

The OECD research, which was compiled with help from statistics from Big Champagne, a Los Angeles company that tracks digital downloads, says that illegal movie and TV downloads accounted for more than 34% of downloads over peer-to peer networks such as KaZaA, Limewire and Bearshare. The OECD report does not give separate numbers for pirated downloads and those that do not infringe copyright.

The study, which will be included in a larger technology report later this year, emphasizes that P2P technology should not just be equated with illegal downloading of music and movies. It is, the report said, a powerful technology that allows efficient distribution of legitimate files and data of all types.

“We see the technology as opportunity,” Wunsch-Vincent of the OECD said in ECommerce Times. Music and movie downloads “are only the start of how one could creatively exploit the idea of peer to peer networks.”

South Korea leads the world in the number of people who use broadband connections. Nearly 80% of the country’s residents have high-speed connections at home.

“Within two and a half years, we expect more than 70 per cent of our households will have Internet connections with access speeds of 20 megabits per second, which will allow them to download movies to watch on their high-definition TVs,” Chin Daeje, South Korea’s minister of information and communications said recently.

Its not by accident that countries with a higher reach of broadband access at home have more download activity. So that would make South Korea and Canada the ‘busiest’ file sharing countries in the world. So the OECD study claim that web surfers based in Italy, Belgium, France, Norway, Britain, Finland and Poland also downloaded a higher percentage of movies than those in the United States doesn’t make sense.

Poland has one of the smallest broadband reaches in Europe, the UK , despite government claims for a ‘wired Britain’ trails 20th in the world for broadband reach (only slightly ahead of Italy). The US. broadband reach is climbing towards 50% while in the UK only one in four has access to high speed internet.

Related Reading

Piracy Paranoia [the Fool]
Software Downloads Overtake Music [Yahoo! News]
Film Industry Needs an iMovies [Net Imperative]
Online Film Piracy Set to Rise [BBC News]
Respect Copyrights [RespectCopyrights.org]
Broadband Access in OECD Countries [OECD]
A Guide to Wireless Broadband for Public Sector Procurers UK (PDF) [Dept of Trade and Industry]
DSL Reports USA [DSLReports.com]
Broadband Use in the UK [ADSL Guide]
the Bandwidth Capital of the World [Wired]
US Broadband Dream is Alive in Korea [CNet-May 2003]

The BBC has provided figures from a report published by Baskerville/Informa Media, which forecasts that ringtones will account for 12% of total music sales by 2008. The report suggests that the music industry needs to adopt a more “pragmatic” approach to ringtones than it has taken with other ways of selling digital music and should “rein in ambitions for unrealistically high royalties.”

According to this report, the ringtone market was worth $3 billion in 2003. Of this total, authors’ societies received $148 million in royalty collections, equivalent to year-on-year growth of almost 50%. The report forecasts that the value of ringtone sales in 2008 will be $4.7 billion. Assuming that the value of traditional music sales increase’s at 2% each year, ringtones will account for around 12% of total music sales.

According to the report, although piracy has yet to impact on the ringtones market, it could become a potential threat. “As the revenues in mobile music become more compelling, arguments over revenue shares look set to increase tensions,” said report co-author Steve Mayall, an analyst with Informa Media.

There are also worries that ringtones could become the target of pirates. Numerous websites are offering ringtones from artists without having the necessary licences to do so, said the report. Some countries have established agreements about the collection of royalties but in some there are no procedures in place. “Mobile piracy could decimate this still fragile business,” warned Mr Mayall.

There’s also the emergence of new software like Xingtone . Xingtone (who Seimens have a stake in) sells a $15 software package that allows consumers to transfer songs and other digital content that they already own to their cell phones, completely cutting out the music vendor. With other similar apps on the way too a ‘mobile version of Napster’ is a viable threat.

According to P2P monitor Big Champagne ringtones could be 6% of files traded using P2P software and websites.
Ringtones are delivered across a wide variety of file types, usually manufacturer specific. They include .rng (Nokia ringtone), .kws (Kyocera ringtone), and .emy (Ericsson ringtone). Those file types are not heavily traded, though non-proprietary MIDI files represent about 6% of total P2P traffic. BigChampagne`s Eric Garland said in Digital Music News this week, “MIDI is not ringtone-specific, but our inclination is that most MIDI files are probably ringtones.”

Last year in the UK, royalty bodies the PRS and MCPS recouped 2.5m UK pounds in ringtone revenue and only 0.02m from full downloads (pre-Napster/Connect/iTunes) via their Joint Online Licence scheme.

Related Reading

Music Firms Warned Over Ringtones [BBC News]
Mobile Entertainment Industry and Culture-study (166pg. PDF) [McGain.org]
Ringtonia [Textually.org]
MCPS-PRS Joint Online Licence [PRS/MCPS UK Ringtones Licence]
the Future is Now [MusicTank]
High-end Handsets – a Potential Threat [MusicBizNews24]
Fast Phones are Key to Mobile Growth
[MusicBizNews24]
Ringtones Worth $4 Billion a Year [MusicBizNews24]

On the subject of teenagers, credit cards and file sharing, Canadian music mag Chart Attack said recently, ” as record companies will readily inform you, the majority of illegal downloaders are young teens who, unless they’re spoiled little brats who get their own car for their 16th birthday, have no access to a credit card to access most legal download sites. Is it really a surprise that these young people, who are either not working at all or have some low paying retail job, are not rushing out to pay what they do make on music they can take for free?”

No surprise then that digital music stores are embracing prepaid cards as an alternative payment method for under 18s. Real Rhapsody, Napster and iTunes have all introduced pre-payment cards for sale in mainstream US. outlets like 7-Eleven, Best Buy, Target and Wal-Mart (amongst others).

One major profit drain for download services comes from credit card fees, which can rise above 20-cents per 99-cent download. “With royalties often crossing 70-cents per download, that leaves pennies in profits,” according to Rob Carney, VP of  Marketing for micropayment processor Peppercoin.

So what is holding digital music stores back from embracing a micropayment processing scheme that would reduce their per-transaction burden? According to Carney, “optimizing margins and profitability is just happening” as digital music stores exit their initial setup and customer acquisition phases. Although digital music stores are for the most part not using micropayment technologies currently, Carney told Digital Music News that Peppercoin has had “meaningful conversations with everyone”.

Peppercoin just announced an upcoming version 2.0 payment processing package, which migrates away from a clunky download and separate registration process into something more invisible. The micropayment technology passes along savings by aggregating an individual’s transactions across various merchants to spread out fixed credit card fees. It essentially takes lots of little payments and makes them into larger payments, with every merchant paying a smaller fixed cost fee.

PayPal, Pico Pay and UK based Music Engine are some of the other names currently all making tentative inroads into the micropayment field.

Related Reading

Of Mouse Clicks and Burgers [P2PNet]
PayPal Slashes Micropayment Fees [InternetNews.com]
PayPal Announces New Pricing For Digital Music Companies [PayPal press release]
Whitepaper: Paying for Digital Music with Advertiser-funded Micropayments [Pico-Pay]
PPay: Micropayments for Peer-to-Peer Systems (PDF) [Stanford Univ.]
the Death of Micropayments? [ECommerce Times]
Credit Card Micropayments [Rentzsch.com]
Monetising Anarchy [the Feature]
the Micropayments and the Ad:Tech Conferences in NYC [Digital Deliverence]

Canada’s recording industry hopes a new study will dispel the perception that music downloaders will eventually buy copyrighted music.

The survey, commissioned by the Canadian Recording Industry Association and released by research firm Pollara Inc., indicates that 28 per cent of respondents who reported buying less music over the last 12 months cited the decline was mainly due to “downloading, file-sharing and CD-burning.”

While 52 per cent of non-downloading music consumers said they bought music in the past month, the survey reported, only 35 per cent of downloaders said they had purchased music in the same period.

“This research clearly indicates that music consumers who download are less likely to purchase music than those who don’t download,” comments Brian Robertson, President, Canadian Recording Industry Association (CRIA). “This negates arguments to the contrary that peer-to-peer activity is just sampling and those people go out and buy the music later from a legitimate source.”

The twin villains in the research were CD burners and illegal file-sharing sites like Kazaa. Recent use of CD burners to copy music has grown from 18 per cent in late 2001 to 35 per cent today (measured over the prior 6 months).

Almost half of music consumers who download said that all of the music they burned to CD came from file sharing sites like Kazaa.

Between Fall 2001 and Spring 2004, the number of music consumers admitting to using Kazaa in the past month had climbed from 8 per cent to 26 per cent. Almost half of those who regularly visit the file-sharing sites say they downloaded between 20 and 100 songs in the past month. Taken at face value, this amounts to an average of 180 million tracks per month, according to Pollara estimates.

CRIA reports that the Canadian music industry has experienced retail sales losses in excess of $465 million since 1999 as well as industry layoffs of over 25 per cent throughout the past year. More than 45,000 individuals are directly or indirectly dependent upon the health of the recording industry in Canada, including those in songwriting, recording studios, manufacturing, retailing, broadcasting, music publishing, concert promotion, management and many other primary and support services.

The CRIA’s attempts at mass RIAA style downloader suits and litigation have been blighted all the way in Canadian courts thus far. Canadian heritage minister Helene Chalifour Scherrer was ready to re-write Canada’s copyright laws to enable the Big Five record labels to open Canada and Canadians up to lawsuits.

In March Justice Konrad von Finckenstein ruled that putting music into a computer directory that may, or may, not be shared by someone else online doesn’t constitute copyright infringement under Canadian law. And last month’s Supreme Court online music tariff decision popularly known as the Tariff 22 case culminated nine years of legal wrangling as the Society of Composers, Authors and Publishers of Music in Canada (SOCAN), a leading Canadian music collective, failed in its attempt to pin a new royalty for downloaded music on Canada’s Internet service providers.

The Tariff 22 case dates back to 1995 when SOCAN first applied for a new tariff for downloading online music. After four years of hearings, the Copyright Board of Canada issued a decision in 1999 that largely absolved Internet Service providers from collecting such a tariff.

In a somewhat conflicting survey a Statistics Canada report released today reveals that slightly less than 38% of regular home Net users report downloading music in 2003, “down from a high of 48% in 2001.”

Read more:CRIA News

Related Reading

New Industry Study Shows Downloading and Burning Discourages Music Sales [CRIA News]
File Sharing No Threat to Music Sales [Washington Post]
Balancing Rights of Creators, Users [theStar.com]
Top Court Rules ISPs Not Liable for Royalties [CBC News]
Online File Swapping Legal:Court [CBC News]
The Recording Industry is Trying to Kill the Goose That Lays the Golden Egg [Bricklin.com]
RIAA Facts and Figures [RIAA]
Global Music Sales Fall by 7.6% in 2003 [IFPI]
Record Sales Up, Shows Soundscan, RIAA Playing With Stats? [Magnatune Blog]

Singapore based legal music download service Soundbuzz joined forces with computer audio equipment maker Creative Technology in a joint alliance to relaunch the service today. 250,000 songs are now available at $1.16 each in a format designed for quick downloading into Creative’s digital music players. The audio of choice is actually the Windows Media format.

Soundbuzz, which started in 1999, had pursued the big boys to come on board for four years. Prior to Sony, Warner and Universal saying yes, it had only linked up with EMI and BMG, and smaller, independent labels like Edel and Diva Records. It had a library of only 50,000 songs before the relaunch. (more…)

It can’t be denied that Apple’s iTunes music download store (or iTMS to give it the official acronym) has become something of a media phenomenon, it has also become one of the most over hyped services in living memory. With unadulterated positive press flowing endlessly, iTunes, if you listened to the majority of the mainstream press, can do no wrong.

Thankfully some sense of balance seems to be returning as chinks in Apple’s seemingly impenetrable positive PR armour appear. Randall Stross in todays New York Times article, ‘From a High-Tech System, Low-Fi Music’ rightly points out that far from being the claimed ‘CD quality’ that all legal download stores claim (not just Apple) the paid downloads are are actually heavily compressed versions of the originals. Using a ‘lossy format’ codec and an audio file that is a fraction of the size of the original. Lossy, means lossy, converting the Apple AAC file to lossless Wav does not restore the lost audio.

The Times article goes on. Defending the company’s decision to encode its music at the low end of the bit rate range, an Apple spokesman, Derick Mains, says 128 provides good sound quality, “especially when used in iPods.” “The majority of people,” Mr. Mains said, “have absolutely no idea what a bit rate is.”

“The smaller files are handy for speedy downloads, space-saving for storage and perfectly serviceable for listening through ear buds when riding on the subway. Not what you will want, however, when your desktop computer becomes the home jukebox and wirelessly sends these simulacra to the entertainment center in the living room.” Explains Randall.

Customers are led to believe that they are getting a CD in all respects except the trouble of going to the mall. The iTunes store does not warn about the permanence of its method of compression; once freeze-dried, there is no way to reconstitute the music into CD quality for playing through a good stereo.

The bit rate for iTunes, 128kbps, is so low that when played side by side against the original (the sampling rate for normal CDs is 1,411kbps) the difference is audible not only to audio enthusiasts, but also to mortals with ordinary hearing.

Wes Phillips, contributing editor at Stereophile, says “128 is like an eight-track,” and he describes the combination of iPod and iTunes as “buying a 21st-century device to live in the 1970′s.”

Elsewhere, students at the Berkman Center’s Digitial Media Project (at Harvard Law School) have published a report that considers the legal foundation of iTunes Europe and the interplay of the service with European law. ‘iTunes Europe: A Preliminary Analysis’ examines the implications of the expansion of iTunes on the future of digital media, technology, business strategies, and international law.

The report points out that although Apple is the most popular Internet-based music service, its sales constitute at most 2% of total recording industry sales. At the same time, the record industrys apparent willingness to give up the staggered release dates and price discrimination practices in their sales through Apples iTMS is a striking reflection of the power that an end distributor like Apple has managed to garner in the music business. Apples iTunes Europe launch may very well have marked a change in how power and control are distributed in the music industry.

Read full report: ‘iTunes Europe: A Preliminary Analysis’ (PDF)

Related Reading

Low-Fi iTunes Downloads [P2PNet]
From High Tech Gadget, Small Files But Lower Quality Music [International Herald Tribune]
the Joys of the Celestial Jukebox [Guardian Unlimited]
Audio Data Compression
[Wikipedia]
Perceptual Coding: How Mp3 Compression Works [Sound on Sound]
Audio & Multimedia MPEG-2 AAC [Fraunhofer IIS]
Digital Audio Formats Codec Basics [Global Music Resource]

William W. Fisher III is the Hale and Dorr Professor of Intellectual Property Law and Director of the Berkman Center for Internet and Society at Harvard Law School.

Next month Fisher’s book “Promises to Keep: Technology, Law, and the Future of Entertainment” is published by Stanford University Press and promises to provide the first comprehensive, accessible overview of the conflict surrounding music distribution and the emergence of digital communications networks.

The book looks at how changes in the technology used to make and store audio and video recordings,in the last 15 years, combined with the communication revolution associated with the Internet, have generated an extraordinary array of new ways in which music and movies can be produced and distributed. Both the creators and the consumers of entertainment products stand to benefit enormously from the new systems.

And how we have failed thus far to avail ourselves of these opportunities. Instead, much energy has been devoted to interpreting or changing legal rules in hopes of defending older business models against the threats posed by the new technologies. These efforts to plug the multiplying holes in the legal dikes are failing and the entertainment industry has fallen into crisis.

The provocative book chronicles how we got into this mess and presents three alternative proposals each involving a combination of legal reforms and new business models for how we could get out of it.

One of those is ‘An Alternative Compensation System’, which takes up the whole of chapter 6 and is downloadable as a PDF preview, pre publication (August 9th).

Further Reading

Chapter 1:Promises To Keep:Introduction (PDF)
Alternative Compensation Systems [CrossCommons.org]
A Better Way Forward: Voluntary Collective Licensing of Music File Sharing (PDF) [Electronic Frontier Foundation]
A Full, Fair And Feasible Solution To The Dilemma of Online Music Licensing [Quicktopic.com]
Private Copying, Levies and DRMs against the Background of the EU Copyright Framework [Europa]