End of RIAA Litigation for Online File-Sharing?

"The recording industry plans to lay down its litigation offensive against music pirates in favor of a more PR-friendly, if not more effective, strategy. Instead of suing thousands of people for stealing tunes via the Internet, it will rely on the cooperation of Internet-service providers"

Article from the Wall Street Journal.

Chinese Firms Face the Music on Downloads

Wall Street Journal reports:
A Chinese court has agreed to consider copyright-infringement cases against two China-based Internet heavyweights that offer illicit music downloading, potentially pening Chinese companies to hefty damage claims they have previously dodged.

The music-industry lawsuits claim $9 million in damages against Baidu.com Inc., and $7.5 million against Sogou, the music-delivery service operated by Sohu.com Inc.

Napster Caves; Drops DRM

The Wall Street Journal reports that Napster -- the company once synonymous with illegal on-line file sharing -- has dropped its software which limits the way users can listen to music.

Napster offered a subscription streaming service, which prevented subscribers from downloading a permanent copy of a sound recording to their hard-drive. With the termination of its digital rights management (DRM) program, it appears that Napster will now be an on-line music distributor modeled after traditional brick-and-mortar record stores (e.g., iTunes). In other words, users will be able to purchase their music and take it to-go, available on a whim.

Does this signal the death of subscription-based model of on-line content distribution? OTCS never believed this model would work - users, OTCS believes, prefer paying a la carte, rather than a monthly subscription fee.

Universal Joins Forces With Social Networking Site

The Wall Street Journal reports that Universal Music has joined forces with social networking service Imeem, Inc. The licensing agreement will allow Imeem's 19 million users to listen to, and embed, Universal music & videos for free on their personal pages. On Universal's end, it will receive a penny-rate payment each time a user listens to one of its songs in addition to sharing advertising revenue associate with a given song. The deal thus promises to provide labels "a revenue stream they've never seen before".

With this deal, Universal joins the other major label groups and marks the first of its kind to cover all four majors. Notably, Universal has a rough-history in such deals - it sued MySpace.com last year for copyright infringement, alleging that the site didn't do enough to prevent users from posting copyrighted materials without authorization.

Music On Your Mobile

Universal Music group entered into an agreement with Nokia Corp., the worlds largest mobile-phone maker by sales, to offer UNLIMITED music downloads for a year on phones carrying the "Ovi" platform, which allows users to buy music. (The core of the service is based on Nokia's prior acquisition of Loudeye for $60 mil.) Dubbed "Comes With Music", users -- who will get a 1 year free subscription and access to Universal's repertoire of artists -- can also transfer music to their computers, though making multiple copies in violation of Copyright protections is limited (DRM).

The service is sure to compete with Apple iTunes/iPhone, and is part of Nokia's continuing expansion into providing on-line services over its telephones.

The real question is whether mobile is truly the direction music is heading? Yes, the iPhone is cool - having your music and phone handy for on-the-go people is a seeming "must". But is it THE ANSWER? Or, just one path of many?

Madge Moves On; Makes Money

My, oh my! Madge!

As the WSJ reports this morning, Madonna is leaving her record label, Warner Bros. Records, for...the concert promoter Live Nation? Yes, the very same Live Nation that clogs your in-box with Concert Updates, but that you don't unsubscribe from on the off-chance you can catch a gem, has now put on the record-label hat.

While I advocate challenges to the existing record-label model, I am curious how Live Nation will successfully be able to sell new Madonna albums. T-shirts - $25. Limited Edition Poster - $40. New Madonna CD - $50. Will people take the bait?

WSJ notes that:

It isn't clear when her first album for Live Nation would be delivered, nor is it clear how the promoter would distribute and promote the album, since the company has limited infrastructure to do so....People briefed on the deal speculated that Live Nation would enter a licensing arrangement with one or more traditional labels to release her albums.

No, it isn't clear.

Also, how much of a shock to the industry is this really? Madge is Madge, but how many other acts out there would (a) be able to afford lawyers to negotiate this kind of deal, (b) even be considered for this kind of deal, and/or (c) opt to venture into "virgin" territory? We all know that the real money for artists is in touring, and that big artists don't even really need labels if they have the built in fan-base. (Radiohead itself just released its new album exclusively on its website. See also Jeff Leeds, "In Radiohead Price Plan, Some See a Movement", New York Times (10/11/07 - Music) ("Radiohead is in a position that can’t easily be replicated — it completed its long-term recording contract with the music giant EMI while retaining a big audience of obsessive fans")).

But still - how plausible is this for the little...or even the medium...guy?

So mazel tov Madge, on a job well-done. But whether others will follow this Oregon Trail...I doubt it.