Category: Technology

Groups want CRTC pay-radio ruling nixed
OTTAWA (CP) – The Canadian Radio-television and Telecommunications Commission has approved three subscription radio licences allowing satellite broadcast operators to bring pay-radio services into the country.
Sirius Canada Inc., Canadian Satellite Radio Inc. and CHUM Ltd. were granted the licences for satellite and conventional radio services Tuesday following the CRTC’s June 16 decision to admit pay radio.
The move comes a day after a coalition of media and labour groups called on the federal cabinet to overturn the CRTC’s ruling.
Friends of Canadian Broadcasting and eight other groups said the Liberal government must overturn the ruling if it wants to preserve years of effort to protect and promote Canadian programming that would be threatened by the satellite pay-radio services.
The ruling cleared the way for Canadian Satellite Radio and Sirius to provide pay-radio service – already operating in the United States – to the Canadian market via satellite.
It also gave an all-Canadian entry, made up of CHUM Ltd. (TSX:CHM) and Astral Media Inc. (TSX:ACM.SV.B), permission to deliver pay radio. But that programming would be distributed via a ground-based digital network, rather than by satellite.
The coalition had no objection to the CHUM-Astral project.
“These decisions foster the objectives of the Broadcasting Act and balance the interests of Canadian consumers, the radio industry and the music industry,” CRTC chairman Charles Dalfen said Tuesday in a release.
“These licences will harness new technologies for Canadians and give Canadian talent exposure to listeners across Canada and indeed, North America – both through new Canadian channels and air-play on U.S. channels.”
Canadian Satellite Radio is a partnership between Toronto businessman John Bitove and Washington-based XM Satellite Radio Holdings Inc.
Sirius Canada is a joint venture of the CBC, Standard Radio and U.S.-based Sirius Satellite Radio Inc.
Under the rules laid out by the CRTC, each group must provide at least eight Canadian channels, two of them in French. But they could carry nine foreign channels for every Canadian one they deliver.
The CHUM-Astral team is planning 50 Canadian channels that will be follow standard Canadian-content rules of 35 per cent for popular music and, for French stations, 65 per cent of musical selections in French.
In addition to those conditions, at least 25 per cent of the music on the Canadian channels must be “new Canadian musical selections” and another 25 per cent must be by “emerging Canadian artists,” the CRTC said.
The licensees must also contribute at least five per cent of their gross annual revenues to “initiatives for the development of Canadian talent,” such as FACTOR or MusicAction funds, which helps new artists.
Both Sirius and XM posted net losses last year, although both reported revenues in the hundreds of millions of U.S. dollars.
The new services will provide choice and diversity to Canadian consumers, particularly in rural and remote areas, the CRTC said.

CRTC approves satellite radio
The CRTC on Thursday approved applications for three subscription-based radio services, but imposed strong Canadian content rules.
“These licences will harness new technologies for Canadians and give Canadian talent exposure to listeners across Canada and indeed, North America…through new Canadian channels and airplay on U.S. channels,” said Charles Dalfen, chairperson of the Canadian Radio-Television and Telecommunications Commission.
The commission placed Canadian content rules on two of the services, which include two of the largest U.S. satellite radio companies.
Services from Canadian Satellite Radio and the CBC, partnered with Sirius, must offer:
* At least eight original channels produced in Canada. A maximum of nine foreign channels may be offered for each Canadian channel.
* At least 85% of the musical selections and spoken word programming broadcast on the Canadian channels must be Canadian.
* At least 25% of the Canadian channels must be in the French language.
* At least 25% of the musical selections on the Canadian channels must be new Canadian musical selections.
* A further 25% of the selections must be by emerging Canadian artists.
Canadian Satellite Radio has partnered with Washington-based XM Satellite Radio Holdings Inc., while the CBC and Standard Broadcasting have partnered with New York-based Sirius.
The third pay service, to be run by CHUM and Montreal-based Astral Media, will use land broadcast towers to broadcast their digital service.
That service must comply with current regulations under the Broadcasting Act, including 35% Canadian content and for French channels, a minimum of 65% French music.
The lobby group Friends of Canadian Broadcasting opposes the decision, saying it may appeal to federal cabinet or through the courts.
“Today’s decision creates a pipeline for U.S. radio programs direct to Canada, with little in return for our country,” said group spokesperson, Ian Morrison.
High-quality, cross-country service
Satellite radio offers commercial-free, near CD-quality sound no matter where listeners are in the country. It’s delivered by a network of satellites, and not through the AM or FM band, which have distance and quality limitations.
Listening to satellite radio requires specialized equipment, such as a receiver for your home or car. In the United States, where satellite radio has been in operation for several years, receivers are a dealer option in some cars.
The proposed subscription fees are around $13 per month.
Laura Nenych, with Ryerson University’s communications department, said the niche channels appeal to people who spend a lot of time in their vehicles, such as commuters or salespeople.

Sony BMG tests technology to limit CD burning
NEW YORK (Billboard) – As part of its mounting U.S. rollout of content-enhanced and copy-protected CDs, Sony BMG Music Entertainment is testing technology solutions that bar consumers from making additional copies of burned CD-R discs.
Since March the company has released at least 10 commercial titles — more than 1 million discs in total — featuring technology from U.K. anti-piracy specialist First4Internet that allows consumers to make limited copies of protected discs, but blocks users from making copies of the copies.
The concept is known as “sterile burning.” And in the eyes of Sony BMG executives, the initiative is central to the industry’s efforts to curb casual CD burning.
“The casual piracy, the school yard piracy, is a huge issue for us,” says Thomas Hesse, president of global digital business for Sony BMG. “Two-thirds of all piracy comes from ripping and burning CDs, which is why making the CD a secure format is of the utmost importance.”
Names of specific titles carrying the technology were not disclosed. The effort is not specific to First4Internet. Other Sony BMG partners are expected to begin commercial trials of sterile burning within the next month.
To date, most copy protection and other digital rights management-based solutions that allow for burning have not included secure burning.
Early copy-protected discs as well as all Digital Rights Management (DRM)-protected files sold through online retailers like iTunes, Napster and others offer burning of tracks into unprotected WAV files. Those burned CDs can then be ripped back onto a personal computer minus a DRM wrapper and converted into MP3 files.
Under the new solution, tracks ripped and burned from a copy-protected disc are copied to a blank CD in Microsoft’s Windows Media Audio format. The DRM embedded on the discs bars the burned CD from being copied.
“The secure burning solution is the sensible way forward,” First4Internet CEO Mathew Gilliat-Smith says. “Most consumers accept that making a copy for personal use is really what they want it for. The industry is keen to make sure that is not abused by making copies for other people that would otherwise go buy a CD.”
As with other copy-protected discs, albums featuring XCP (extended copy protection) will allow for three copies to be made.
However, Sony BMG has said it is not locked into the number of copies. The label is looking to offer consumers a fair-use replication of rights enjoyed on existing CDs.
COMPATIBLE FOR ALL?
A key concern with copy-protection efforts remains compatibility.
It is a sticking point at Sony BMG and other labels as they look to increase the number of copy-protected CDs they push into the market.
Among the biggest headaches: Secure burning means that iPod users do not have any means of transferring tracks to their device, because Apple Computer has yet to license its FairPlay DRM for use on copy-protected discs.
As for more basic CD player compatibility issues, Gilliat-Smith says the discs are compliant with Sony Philips CD specifications and should therefore play in all conventional CD players.
The moves with First4Internet are part of a larger copy-protection push by Sony BMG that also includes SunnComm and its MediaMax technology.
To date, SunnComm has been the music giant’s primary partner on commercial releases — including Velvet Revolver’s “Contraband” and Anthony Hamilton’s solo album. In all, more than 5.5 million content-enhanced and protected discs have been shipped featuring SunnComm technology.
First4Internet’s XCP has been used previously on prerelease CDs only. Sony BMG is the first to commercially deploy XCP.
First4Internet’s other clients — which include Universal Music Group, Warner Music Group and EMI — are using XCP for prerelease material.
Sony BMG expects that by year’s end a substantial number of its U.S. releases will employ either MediaMax or XCP. All copy-protected solutions will include such extras as photo galleries, enhanced liner notes and links to other features.

Red tape could kill stores’ CD-burning kiosks
NEW YORK (Billboard) – The concept seems great: Place CD-burning kiosks that can manufacture out-of-stock albums in retail stores and offer customized compilations, too.
But after numerous false starts, retailers, hardware suppliers and the major labels say a quagmire of issues still threatens to overwhelm the initiative.
Even with the momentum of Starbucks leading the way with Hewlett-Packard kiosks, and despite numerous other hardware suppliers flocking to stake a claim in the market, retailers say that in-store CD manufacturing still has one big problem: an unprofitable business model.
Key to the equation are significant hardware costs and stringent content-usage requirements from the majors.
Installing a CD-burning kiosk in a store can run $18,000-$35,000, hardware suppliers and retailers say. The actual cost depends on which hardware supplier is chosen and how many viewing screens or tablets are placed with each machine.
The machines also require software systems to manage in-store CD burning and provide accounting. These systems add thousands of dollars in costs.
Still, at least a dozen hardware suppliers have licensed music for kiosks or are in talks to do so, and more are popping up every day.
While all parties agree costs could decline if CD-burning kiosks are mass produced, other expenses still have to be dealt with to achieve a profitable model.
As it turns out, each major label is licensing music for kiosks with its own set of strings attached.
For example, Universal Music Group wants kiosks to use only special blank CDs sold by General Electric that, depending on who you ask, cost two to five times as much as normal blank CDs.
And EMI Music wants the cover art printed on paper to be installed as the front sleeve of the jewelbox. Another major is said to have limitations on when and how much music can be made available for in-store burning.
“Each content company has its own set of rules, which when explained makes sense. But when you put them all together, it’s a mess” — and an expensive one, Mike Dreese says. The CEO of Brighton, Mass.-based Newbury Comics is a member of the CD-burning task force of the National Assn. of Recording Merchandisers.
A Feb. 24 meeting in New Orleans that brought together merchants, hardware suppliers and labels to discuss CD-burning kiosks was an eye-opener for all, as each camp aired its issues.
Following that meeting, NARM’s task force created a 52-item punch list that could facilitate the CD-burning initiative. It was delivered to the majors April 1 for review. NARM spokeswoman Susan L’Ecuyer declines to comment on the list, which she describes as “preliminary.”
Nevertheless, task force member Ish Cuebas, director of merchandising operations at Trans World Entertainment, says, “I see signs that retail can make this a business, but we need cooperation from the hardware, software and content people.”
Without some compromises, “why waste all this time and money to find out if this is a business?” Dreese asks. He suggests, “Give us one year with no barriers to find out if it’s a business. Then let’s talk about the rules.”
So far, the 6,400-unit Starbucks chain is testing HP kiosks in dozens of stores in Austin, Los Angeles, San Francisco and its company base, Seattle.
Also, Mix & Burn, a unit of New Hope, Minn.-based Navarre, is running tests in about a dozen stores, company executive Bob French reports.
Test sites include two Trans World Entertainment stores; two Best Buy stores; one Borders Books & Music store; one Newbury Comics store; one Electric Fetus outlet; one store in the Musicland Group; one in Bound to Be Read, an independent bookstore in Minneapolis; one in a Nordstrom department store; and two at the U.S. naval base in Norfolk, Va., under the auspices of Eurpac.
John Marmaduke, chairman/CEO/president of Amarillo, Texas-based Hastings Entertainment, is all for testing CD-burning kiosks. But, he says, “we want somebody to prove there is a business model that works. We want to be a fast second but don’t want to be a pioneer. I am real happy to let someone else plow that furrow.”
Meanwhile, Wal-Mart is taking a different route, at least initially. It will allow customers to use their home computers to create their own compilations. Sources suggest that Anderson Merchandisers’ Liquid Digital Media will make those compilations.
The Redwood, Calif.-based company was one of the first to enter into the CD-burning kiosk business back in 1999, along with RedDotNet. But that effort failed because the majors were reluctant to license their music.
Some other hardware suppliers — including MICS (based in Cambridge, Mass.); Digital Kiosk Technologies (Indianapolis); Burn a Song (Los Angeles); VMS (London); Mediaport (Salt Lake City); Starbox (Orlando, Fla.); and Touchstand, a unit of Denver-based Synergy Media Group — say they are either on the verge of placing kiosks in test stores, signing licensing deals with the majors or lining up financing.
While the field is crowded, it is clear that not all the hardware companies are ready to field kiosks with a full array of hoped-for capabilities, merchants say.
One kiosk company’s system cannot handle variable pricing. Another company’s unit so far can only make compilations, but not full albums. Still other companies that can manufacture albums are not ready to handle album cover artwork.
Still to be answered by all hardware suppliers is whether their kiosks will have industrial strength to withstand the wear and tear of the marketplace.
“Some seem ready to go and have their licenses in order, and others are struggling to get either the license and/or technology right, while still others are not even there,” Dreese says. “But how much of it will be rubber that can meet a road somewhere is unclear.”
As for the majors, it “remains to be seen how much creativity the rights holders will allow us to experiment (with) so that we can see what the consumer wants,” Dreese says. “I am afraid that the labels are going to choke the golden goose before they know what kind of egg they have.”
Jordan Katz, co-president of Sony BMG Sales Enterprise, agrees. “Some are overthinking it. It’s a new market, and the egg has just been fertilized. Let’s see what happens when retail puts marketing experience into it and we can learn together and see how it all pans out.” If CD-burning kiosks works, there will be time later to revisit things and make changes, he says.
Dreese acknowledges that some standard-setting is important on the front end. “You can argue about what the standards should be, but their existence gives people something to focus on.”
But Dreese thinks that the standards should be as simple as possible for the first year or two, with minimal sound and artwork requirements.
While the majors would like burned CDs to be as near to red-book quality as possible, retailers also wonder if the labels will allow the kiosk companies to equalize sound levels on customer-made compilations.
NO ONE PRICE FITS ALL
Getting pricing right is also proving to be daunting.
Naturally, pricing is tied to what the labels are charging for their content. It appears that EMI Music and Warner Music Group are applying their iTunes pricing model, with some variations, to the kiosk vendors, meaning they are charging them about 71 cents for most tracks, sources say.
Universal Music & Video Distribution also is charging 71 cents per track, but if a vendor or retailer charges more than 99 cents per track or $9.99 an album, then UMVD gets a 71% wholesale cut, sources say.
But while some think 99 cents should be the main price point for individual tracks to customers, others say there should be variable pricing on a per-track basis. For example, a superstar track would be priced at 99 cents, an established act at 79 cents and developing artists at 59 cents.
Some suggest that classics like Led Zeppelin’s “Stairway to Heaven” or the newest track from Eminem might cost $1.49, with other tracks by those acts costing 99 cents and tracks from older catalog albums running 49 cents.
“Pricing would vary depending on where the album or the artist is in their life cycle,” one distribution executive says. Pricing would also depend on whether a track is going to be burned to a CD or downloaded to a portable device, other executives say.
When all the wholesale pricing models are taken into account for the kiosk, the cost for albums can range from $5.50 to $9.10, sources say. That means the top pricing tier for kiosks is about $3 below the $12.02-$12.07 that the majors charge direct accounts for prepackaged, front-line CDs.
But as things stood when NARM issued its punch list, all of the costs involved were threatening to saddle CD-burning kiosks with pricing equivalent to existing CDs.
If that’s the case, Harper says, “the consumer will not adopt and buy the product, and the kiosk will fail.”

Yahoo Introduces Online Music Service
SAN FRANCISCO – Internet powerhouse Yahoo Inc. is introducing an online music subscription service that will enable consumers to download thousands of songs onto their portable MP3 players for $60 annually, undercutting the prices of the current industry leaders by more than 60 percent.
The Sunnyvale-based company planned to unveil “Yahoo Music Unlimited” Wednesday in a direct challenge to similar subscription services offered by Real Networks Inc. and Napster Inc.
Yahoo is offering unlimited downloads from a library of 1 million songs for $6.99 per month or $60 for an annual subscription. That’s a sharp discount from Los Angeles-based Napster and Seattle-based Real Networks Inc., which both charge $14.95 per month, or just under $180 annually, for similar services.
By encouraging consumers to become song renters instead of song owners, Yahoo, Napster and Real Networks are pursuing a different sales approach from Apple Computer Inc.’s popular iTunes music store.
Under the rental model, consumers must pay a recurring fee and synchronize their portable music players with the subscription service at least once a month to preserve the music. If the subscription expires, the previously downloaded music becomes unplayable.
Renters also can’t transfer downloaded songs to a compact disc without paying an additional fee. Yahoo will charge its subscribers 79 cents to own a song, below the 99 cents-per-song price of Apple’s music store.
Yahoo’s subscription service is compatible only with MP3 players that use Microsoft Corp.’s digital music format. That means the service won’t work with Apple’s iPod, the most popular MP3 player. The list of 10 devices that will work with Yahoo’s service initially include Dell Inc.’s DJ player and Creative Technology Ltd.’s Zen Micro.
“This is all about expanding the market,” said Dave Goldberg, general manager of Yahoo’s music division. “We are convinced this is the way you should be listening to your music.”
Yahoo expects its low-priced subscription service to make money, Goldberg said.
The company already runs one of the Internet’s most profitable businesses, earning $840 million last year on revenue of $3.6 billion. Yahoo ended March with 8.9 million subscribers, most of whom pay for high-speed Internet access, online matchmaking services, or premium e-mail.
Real Networks says more than 1 million people subscribe to its online music services. Napster ended March with 410,000 subscribers.
As part of its recent music expansion efforts, Yahoo last year paid $160 million for Musicmatch Inc., an online digital music jukebox. Yahoo intends to combine Musicmatch with its new service.
Yahoo’s service sets the stage for a likely price war with Real Networks and Napster, predicted digital music industry analyst Phil Leigh. “About the only thing that would prevent a price war at this point is if Yahoo’s software (for downloading songs) performs badly,” said Leigh, who runs a market research firm called Inside Digital Media.
Yahoo’s service also poses a possible problem for Cupertino-based Apple, which so far has refused to sell monthly subscriptions for unlimited access to its iTunes store.
Many record label executives prefer the subscription approach, Leigh said, because consumers are more likely to sample songs from relatively unknown artists, a phenomenon that helps the industry create more moneymaking stars. That means if Yahoo’s push into online subscriptions is successful, the record labels might gain more negotiating leverage to pressure Apple into renting songs instead of simply selling them, Leigh said.

Studios To Release Movies for Playstation Portable
Sony’s PlayStation Portable appears likely to become the dominant movie-watching player in the handheld market, Home Media Retailing reported Thursday. It noted that several studios are planning to issue movies in PSP’s Universal Media Disc format, with Sony Films, not surprisingly, taking the lead. (Sony’s Spider-Man 2 comes bundled with the player.) Apparently, the studios will be aiming at adults as well as kids, with Disney’s Buena Vista Home Entertainment planning to release the R-rated Kill Bill Vol. 1 on April 19 (along with Pirates of the Caribbean: the Curse of the Black Pearl). Sony plans to release Hitch on both DVD and UMD on June 14.

Entertainment groups predict more movies, songs over Internet
WASHINGTON (AP) – The music and film industries will continue to offer digital copies of songs and movies online for a price even if they lose a landmark Supreme Court case focusing on consumers who steal copyrighted material over the Internet, those industries’ chief lobbyists said Monday.
“Consumers want a legal, hassle-free, reasonable-cost way to get their products online,” said Dan Glickman, head of the Motion Picture Association of America. “There’s no question you’ll see a lot more opportunity for people in their homes to enjoy music and movies and other creative material.”
Glickman and Mitch Bainwol, chief executive of the Recording Industry Association of America, met with editors from The Associated Press on the eve of arguments in the upcoming Supreme Court case, Metro-Goldwyn-Mayer Studios vs. Grokster.
Regardless of the case’s outcome, Bainwol predicted a rise among Internet music-subscription services, which permit consumers to listen to more than one million songs for a flat monthly fee.
“Subscriptions will really take off,” Bainwol said.
In the Supreme Court case, entertainment companies want the court to permit them to sue manufacturers of file-sharing software popular among computer users for trading music and movies over the Internet.
Lower U.S. courts have twice ruled that such file-sharing software can be used for “substantial” legal purposes, such as giving away free songs, free software or government documents.
The lower court rulings – effectively shielding the manufacturers of file-sharing software – have compelled entertainment companies to sue thousands of people caught illegally distributing songs and movies over the Internet.
“There’s no question it’s far more efficient and far more sensible to go after the people whose business is built on infringement,” said Cary Sherman, the president of the recording industry association.

Ottawa moves to restrict music sharing with proposed copyright reform
TORONTO (CP) – Those who enjoy swapping music, books and movies online may want to reconsider.
The federal government inched closer Thursday to cracking down on file sharing by announcing several proposed amendments to the Copyright Act. The changes would include implementing elements of two World Intellectual Property Organization (WIPO) treaties and forcing Internet service providers to keep records of those who share high volumes of copyright-protected material such as songs, Hollywood movies and TV shows.
The amendments would “clarify that the unauthorized posting or the peer-to-peer file-sharing of material on the Internet will constitute an infringement of copyright,” say documents released jointly Thursday by Canadian Heritage and Industry Canada.
“It will also be made clear that private copies of sound recordings cannot be uploaded or further distributed.”
The reforms, which will be introduced in the House of Commons later this spring, would give the music industry greater power to stop such behaviour through the courts via lawsuits. Currently, it is not illegal in Canada to upload material to programs like Kazaa and BearShare.
“Clearly, once we get implementation there’ll be no doubt . . . it’ll be illegal to engage in unauthorized file-sharing,” said Graham Henderson, who heads the Canadian Recording Industry Association, which represents the country’s record labels.
Adding Canada’s name to the list of 50 countries already using the WIPO treaties would make it illegal to distribute and trade music online.
It would also become a crime to remove or circumvent copyright protections on CDs.
The amendments also ask that ISPs such as Rogers, Shaw and Bell “play a role in curbing the misuse of their facilities for copyright infringement.”
ISPs would have to notify subscribers when illegal activity is detected via their Internet connection. They would also be required, as is the case in the United States and parts of Europe, to keep a log of such warnings in case of a lawsuit – although a court order would be needed to make the names and addresses known to prosecutors.
In pre-committee meetings the copyright amendments were approved by all political parties.

New ways for indie artists to distribute music at stake in file-sharing case
LOS ANGELES (AP) – Recording industry executive Andy Gershon sees opportunity in the online file-sharing networks that most of his rivals decry as havens for music pirates.
As president of V2 Records, home to such established acts as The White Stripes and Moby, Gershon mines such Internet distribution channels for new fans and revenues.
“The cat is so far out of the bag and so far gone that it’s pointless to keep fighting it,” Gershon said. “I might as well make as many people fans of our music, whether they illegally download it or not.”
A number of mostly independent recording artists and labels have experimented with and embraced the freewheeling digital distribution that the Internet affords. And many worry that a victory by major recording companies in a landmark file-sharing case now before the U.S. Supreme Court could short-circuit the very technologies that they believe are making a more level playing field of the music business.
The U.S. high court is to hear arguments next Tuesday on whether the entertainment industry can hold file-sharing software firms Grokster Inc. and StreamCast Networks, which distributes Morpheus, liable for what computer users do with the technology.
Lower courts have sided with the software makers, which argue their so-called peer-to-peer technology is as legitimate as a videocassette recorder or a copy machine.
Several artists’-rights associations, music publishers and well-known musicians, including Don Henley, Sheryl Crow and the Dixie Chicks, are backing the major recording labels, which accuse Grokster and StreamCast of profiting from a business model that depends on piracy.
From 1999 to 2004, the total value of the U.S. recording industry fell $2.4 billion to $12.1 billion US – a decline the industry blames primarily on file-sharing.
But some artists, including Wilco frontman Jeff Tweedy, see an upside to file-sharing.
“I look at it as a library. I look at it as our version of the radio,” Tweedy said. “It’s a place where basically we can encourage fans to be fans and not feel like they’re being exploited, which is basically what the whole industry is geared to do.”
Tweedy encourages fans to tape Wilco shows and has distributed tracks over the Internet for free months before releasing them on CDs.
He agrees artists should be compensated, but “you try to encourage people to feel more like a patron of the arts instead of a consumer.”
V2 Records taps file-sharing networks and other Internet distribution means by selling songs and offering free promotional materials like music videos. Though results are difficult to quantify, Gershon credits ads on Web sites and song giveaways with raising the profile of The Blood Brothers.
“The CD sales have stayed steady,” said Gershon. “For a band like this, a lot of the steadiness of the sales is based on people being turned on to it online.”
Mitch Bainwol, chairman of the Recording Industry Association of America, says artists and labels can be creative with online distribution and promotion but those decisions should not be left up to listeners.
“If you want to give up your property for free as a way of trying to drive other commercial advantages, that is certainly a strategy one can employ,” Bainwol said. “But it should be the individual (artist’s) choice.”
About 20 independent recording artists, including musician and producer Brian Eno, rockers Heart and rapper-activist Chuck D, filed a legal brief with the high court in support of Grokster and StreamCast. They insist file-sharing and related technologies help expose new audiences to their music – outside established channels of the recording labels.
The artists argue that file-sharing “has the immediate potential to develop into a significantly more prevalent alternative distribution and promotion system.” But a ruling that outlaws or limits it “will block that potential from ever being fully realized,” the brief contends.
Some are concerned about the possibility of requiring file-sharing companies to filter out unauthorized works, a move the major labels consider crucial to legitimizing file-sharing as a distribution system.
“It definitely would greatly reduce the amount of traffic,” said Chip Schutzman, head of online marketing at Sovereign Artists Inc.
Santa Monica-based Sovereign has promoted and sold tracks by Heart using the online Weed file-sharing format, in which listeners can hear a song for free several times before having to buy it. Weed files are distributed to Web sites and across file-sharing networks.
For Sananda Maitreya, who also joined the legal brief, online music distribution gives him the freedom he says he lacked when he was signed with a major label in the 1980s under his former name, Terence Trent D’Arby (news). Back then, Maitreya recalled, committees had to sign off on any music released.
“The Beatles could not have faced that criteria and come up with anything other than the most mediocre, conservative music,” said Maitreya, who now lives in Italy.
Maitreya and the rap group Fine Arts Militia, featuring Chuck D, have released albums through Weed. Representatives of the groups declined to give specific sales figures.
John Beezer, president of Weed-creator Shared Media Licensing Inc. in Seattle, estimates that fewer than 100,000 tracks have been sold in the 18 months since the software went into use. Beezer said more than 7,000 artists have offered their songs through Weed, and the vast majority aren’t signed with recording labels.
But even for unsigned bands, the potential to cheaply target the pool of music fans on file-swapping networks can be tantalizing.
Kevin Martin, vocalist for the 1990s band Candlebox, credits a file-sharing song promotion involving the Yoo-hoo drink brand with generating online interest and some sales for his new LA-based band, Kevin Martin and the Hiawatts.
“We’re not doing 10,000 records a week,” he said, “but to see yourself go from 15 records to 62, it’s pretty exciting.”

Would you pay 5 cents for a song?
An academic at McGill University has a simple plan to stop the plague of unauthorized music downloads on the Internet. But it entails changing the entire music industry as we know it, and Apple Computers, which may have the power to make the change, is listening.
Peering out from under his de rigueur cap, music-industry veteran Sandy Pearlman, a former producer of the Clash and now a visiting scholar at McGill, spoke with a kind of nervous glee while describing his idea at the Canadian Music Week conference in Toronto last week.
Pearlman proposes putting all recorded music on a robust search engine — Google would be an ideal choice, but even iTunes might work — and charging an insignificant fee of, say, five cents a song. In addition, a 1 per cent sales tax would be placed on Internet services and new computers — two industries that many argue have profited enormously from rampant file-sharing, but haven’t had to compensate artists.
The assumption is that if songs cost only 5 cents, people would download exponentially more music. Daniel Levitin, a McGill professor also associated with the project, said that a simple computer program, such as those already in use on Internet retail sites, could track people’s purchases and help them to dig through what would become a massive repository of music on the Web.
The extra windfall for musicians and those who own the publishing rights to the songs could be in the hundreds of millions of dollars, or more, Pearlman said his study predicts.
It may all sound like a pie-in-the-sky idea, academically elegant but impractical. Or is it?
The head of the British recording industry, who also spoke at the conference, made much the same point: music companies need to get used to the idea of selling more music to more people more often, but for less money. It was a notion repeated often during the conference.
Users of file-sharing services made roughly 25 billion unauthorized downloads last year, dwarfing the legitimate music industry, and it’s only getting worse. Some upstart technology companies are trying to figure out ways to profit from file-sharing, but the potential market is limited.
Pearlman added that nothing concrete is in the works with Apple beyond talks, and he has not yet spoken with Google. Still, Apple is listening, and this is the company that has already changed the industry by creating, many believe, the best working model for on-line downloading services.
Pearlman argued that his plan isn’t a revolt against the industry. It’s merely a pricing decision. Apple should simply be charging 5 cents instead of 99 cents a song, he said. This would bring in millions upon millions of more customers. And he believes that the best place to test this would be in Canada, which has laws he regards as being more supportive of artists and accommodating to an initiative such as this.
Yet, Pearlman went further. He said that since this plan puts the onus on a massive Internet presence to distribute all the music in the world, why not have such computer companies as Apple and such major Internet companies as Yahoo simply buy up the world’s four major record labels? Pearlman was careful to add, though, that he doesn’t see his plan killing off demand for CDs.
The recording industry is against Pearlman’s plan. Richard Pfohl, general council for the Canadian Recording Industry Association, refuted Pearlman on numerous points at the conference forum, arguing that the plan would violate every international intellectual property law that Canada has signed in the last 100 years. It would also obliterate musicians’ choices on how their music could be sold by conscripting them into a 5-cents-a-song system. And it would destroy record companies’ incentive to invest in new acts, Pfohl said.
Pearlman said that Pfohl misunderstood the idea. Then again, another record-industry type, casually speaking to Pearlman after the talk, had perhaps the most succinct counter suggestion. Why not charge 10 cents, instead of 5, and double the revenue?