The US Federal Trade Commission is this afternoon expected to give approval to the planned merger of Sony and BMG after the European Commission gave its unconditional blessing to the deal yesterday evening.

European Union antitrust regulators said they approved the merger of Sony and Bertelsmann AG’s music units because there was insufficient evidence the deal would harm consumers, but warned they would keep a close watch on any further consolidation in the industry.

The European Commission approved the 50-50 joint venture between Sony Music and BMG late Monday without conditions. The deal will reduce the number of music “majors” from five to four.

Related Reading

EC Approves Sony-BMG Music Merger [CNN.com]
Sony BMG Merger Gets the Nod [the Register]
EU to Keep `Close Watch’ on Music Business With Sony-BMG Merger [Bloomberg]
Sony and BMG Merger Backed by EU [BBC News]
Sony BMG Merger Gets the Green Light [MusicbizNews24]
BMG-Sony Merger Case Continues
[MusicbizNews24.com]
European Indie Labels Nervous at Proposed Sony BMG Merger [MusicbizNews24]

Apples popular iTunes download store reached the 100 million download target late Sunday in the US when Kevin Britten of Hays, Kansas downloaded the DJ Dangermouse remix of UK electronica act, Zero 7′s downbeat ‘Somersault’.

Apple launched its 100 million song promotion on July 1st and offered just over 5 million songs for download in in July, a rate of just over 2.5 million songs each week.

Back in October 2003 Apple CEO Steve Jobs had predicted the 100 million download landmark to be reached by the (then with only US availability) music service by its April year anniversary. By the second week in March this year Jobs admitted the figure was nearer half that figure.

There was an ironic twist to todays iTunes 100 million download headlines. DJ Dangermouse was in the news back in February for a different reason when his album ‘the Grey Album’ remixed the vocals from Jay-Z’s ‘The Black Album’ and music sampled from the Beatles’ ‘White Album’ caused widespread panic amongst the music industry, in particular copyright owners EMI who issued cease and desist notices to websites hosting the ‘banned music’. The resulting ‘Grey Tuesday’ protest saw an estimated 1 million tracks downloaded in a day.

Elsewhere in other iTunes news the Times newspaper reported that Apple is on the verge of agreeing a deal with independent record labels (or more precisely the Association of Independent Music the organisation that represents the labels interests) that will allow its iTunes music service to sell their tracks, citing sources close to the talks, the newspaper said a pact could be announced on Tuesday, ending a feud that has kept independent labels off iTunes since its launch in the UK, France and Germany last month.

The new deal is expected to ease the concerns of independent record labels that they would be locked into long-term contracts at fixed prices.

The percentage cut that they receive from songs sold over iTunes is also expected to be closer to the rates received by multinational record companies such as EMI and Sony Music. The royalty that Apple pays record companies from sales of songs over iTunes is a closely guarded secret, but is understood to range between 45 per cent and 60 per cent of the retail price.

Related Reading

Apple iTunes Music Store Hits 100 Million Song Mark [Mac News Network]
iTunes Tops 100M Downloads Mark [BBC News]

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]

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]

A US. company is jumping into the whirlpool over downloading music with its own way to get customers to pay: stations where they can mix and burn their own custom CDs.

St.Paul, Minnesota based Mix & Burn Inc has developed a laptop-size, touch-screen kiosk called a “Music Tablet” where consumers can download from a catalog of more than 200,000 songs spread among 200 music genres.

The kiosks, which are sold to retailers, will appear in two area stores in coming weeks. At $10 for the first seven songs and $1 per song after that, it’s not as cheap as free, but it is legal. And the service addresses a fundamental problem with how the music industry sells its product: People don’t like paying $15 for a 10-song album when they want only two of the tracks. An album can be created at a Mix & Burn station in about four minutes.

Mix & Burn expects to be testing the Music Tablet in further retail environments that include music specialty, mass merchandise, college universities, military bases, coffee shops and an assortment of other new channels for music retailing by this summer.

Back in May this year Minneapolis based Navarre Corporation acquired a 45 per cent share of Mix & Burn.

Eric Paulson, CEO of Navarre Corporation, stated, “We are excited about Mix & Burns development of The Music Tablet solution. Navarre hopes that this technology, together with our network of high level contacts at both the major labels and national retailers, will provide Mix & Burn with the ingredients for a successful launch. We hope that this new consumer experience will provide retailers a new and exciting breakthrough for in-store music purchasing. He added, “Our relationships with major record labels and independent labels helped them get licenses.

Navarre Corporation is a leading distributor of propriety and non-propriety home entertainment PC software, music and DVD.

The success of iTunes has persuaded the music industry to grant licenses to other legal download services. In March, Starbucks added kiosk-style listening and burning stations to its menu at some stores, selling albums for $6.99 for five tracks and $1 for each additional song.

Last month EMusic introduced a digital download service Emusic Live at Maxwells venue in New Jersey, enabling live music fans to download high-quality CDs of the performance they just saw in as few as 10 minutes after the last song has been played by loading performances directly onto their digital music player or USB pen drive via a state-of-the art kiosk.

Read more:Star Tribune

Related Reading

Instant Live Concerts [Instant Live]
In Store Music Discovery Kiosks [Savage Beast]
Product Solution Centre [Kiosk Magazine]
eMusiclive USB Keychain Drives Provide Concert-goers Legal Bootlegs [Audioholics.com]
Memorystick Adds Musical Dimension to Japanese Multimedia Kiosks [MemoryStick.com]
HMV, OD2 Sued Over Download Patent [ZD Net]
HMV Adopts Liquid Audio for In-Store Digital Music Kiosks [StreamingMedia.com- Sept. 2000]

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]