Battle Heats Up Among Artists, Labels, & Digital Downloading

Musical artists have banded together to create the Featured Artists’ Coalition in order to demand greater control and ownership over music that’s distributed online and, more importantly, for a larger cut of the revenue pie. While it's easier to determine who gets what when a physical CD is sold through a retailer, things become stickier when you’re looking at individual tune downloads sold through various Websites. It’s like déjà vu with the Hollywood Writer’s Strike, which just took place late last year, and which centred around, among other issues, video content distribution online.

The organization is asking, among other things, that artists always retain ownership of their work, that all agreements are conducted in a “fair manner” (you mean this isn’t the case now?), and that artists must always be informed on how their work will be exploited. Recently, for example, artist Jack White wrote a song for the new James Bond flick, which was then reportedly unbeknownst to him released first in a Coca Cola commercial.

Artists are also asking that copyright be by license, not by assignment, and be limited to 35 years. When it comes to performers that don’t write their own work, these guys are asking that they receive the same rights as the authors themselves.

The artists involved in the Coalition already numbers more than 60, and include some really big name musical artists like Radiohead, The Verve, Craig David, Robbie Williams, and the Kaiser Chiefs.

It was only a matter of time. While we have seen a battle ensue within the music industry ever since digital music downloading has taken over, artists have never really taken a major, unified stand. Music labels have fought it out to create favourable deals with digital downloading companies, and have even taken legal action against illegal, peer-to-peer file sharing sites. But have any of these deals really worked in favour of the artists?

It seems that while everyone involved has slowly begun to warm to the reality that is digital music downloading rather than trying to stop it, another issue has been brewing: payment. A song sells for $0.99 on iTunes versus a full, $20 CD in the store. Who gets what out of this deal? Can we really divide profits from a buck 50 ways in a manner that looks out for the interests of all involved versus a full CD?

It sounds like whatever the current situation is, artists aren’t happy. And while the record labels or digital download sites could easily turn up their noses to the artists and say “too bad”, the reality is that these are the guys actually making the music. Back in the day, artists may have been at the mercy of the guys who could get their music sold, and get their name exposed to the public. It wasn’t so easy to record, create, and sell your own CD: what struggling artist had the means to do that? But today, it’s pretty easy to set up your own digital download Website, or to get your music out to millions with just one click (MySpace, anyone?) So it’ll be interesting to see how this drama unfolds.

Best Buy Buys Napster...Why?

The big news today is that Best Buy in the U.S. has purchased online music download company Napster for a reported US$121 million. Which begs the question: why?

Online music downloading has been an arguably struggling business for years, plagued by illegal, peer-to-peer (P2P) music Websites and customer's (warranted) hatred of silly things like DRM that prevent you from listening to purchased tracks on various devices, or burning them to CD. According to the Financial Times, Napster actually reported a loss of US$16.5 million in the year ending March 31.

Along with the still existent P2P activity and DRM (which is slowly melting away, but could see a resurgence thanks to the Government's Bill C-61), online digital download sites like Napster still have to fight the leader in that realm: iTunes. And with the iPhone added to the iPod family, iTunes will likely continue to be the leader of the pack, likely by an even bigger gap.

I'm trying to fathom why Best Buy would take on the task of competing with iTunes. The only thing I can come up with is that the strategy works in tandem with the retailer's recent move to ramp up its involvement in the mobile phone arena. Best Buy is opening standalone Best Buy Mobile stores that sell mobile phones. As is evidenced by devices like the iPhone, Nokia N95, and Sony Ericsson Walkman phones, music is becoming a huge part of the mobile phone experience. Could Best Buy be working out deals with carriers to link Napster downloading with their services? Or is Best Buy just looking to get back into this side of the business now that companies are offering DRM-free tunes that are more appealing to customers?

On the portable media player side, perhaps this is a way for Best Buy to make money on the sale of devices other than the iPod. Maybe a Napster subscription will be offered as an incentive to the purchase of an MP3 player. Or on the flip side, maybe "deals" on music downloading will be awarded in store on purchases. Who knows.

While there's no official comment on how the takeover might affect the Canadian market, my guess is that Best Buy is just testing the waters for now, and making sure that the company is well equipped to compete should digital music downloading take a significant upsurge in the next few years. While I'm rooting for this to take off, I'm not holding my breath either.

Bell Won't Back Down, Says Traffic Shaping a Must

A few weeks ago, the issue arose of Bell Canada engaging in Internet traffic "shaping" practices. Bell admits to purposely slowing down the Internet connection for heavy users of P2P and similar sites that are doing things like downloading full-length movies, and thus gobbling up a lot of bandwidth. Since then, there has been a flurry of commentary about the topic. Should Bell be able to shape or "throttle" its traffic? Should the use of P2P and torrent sites be considered "abuse" of Bell's unlimited plans?

The Canadian Association of Internet Providers (CAIP), which represents many small ISPs that use Bell's network to offer their services, sent a request to the CRTC for Bell to stop its shaping activities. The CAIP claims that Bell is "in breach of a number of regulated activites", and called the behaviour "anti-competitive interference in the activities of Internet users." Bell's response was a big fat "no". The telecommunications company feels that slowing down P2P and BitTorrent use is necessary in order to improve overall bandwidth performance for all users. Interestingly, when speaking to CBCNews.ca, Primus President Ted Chislett, who agrees with the CAIP, said that he doubts Bell has any congestion issues related to bandwidth at all.

Assuming issues of traffic congestion do exist as a result of heavy bandwidth usage, does Bell have the right to slow things down? After all, these customers pay the same monthly fees that everyone else does; they're just using the services more. The situation can be likened to an unlimited cell phone data plan: some users might send hundreds of e-mails per month, and chat on the phone for hundreds and hundreds of hours, while others might send a couple of e-mails here and there, and chat less frequently. They're both paying the same monthly fee, but what they get out of their packaged plan is up to them.

In fairness, trying to curb illegal activity is a good thing: if someone is using up gross amounts of bandwidth to acquire loads and loads of illegal content, then really, who are they to complain about slow speeds? But it looks as though P2P and BitTorrent sites can, and are, also used for legitimate activities. Take CBC's recent experimental move, for example, to offer the TV show Canada's Next Great Prime Minister as a free download through BitTorrent. The CAIP reports that it took "thousands of fans" on Bell's network upwards of 11 hours to download the program versus the minutes it should have taken. If more and more legitimate content like this CBC show becomes available via BitTorrent and P2P sites, will Bell stop its traffic shaping activity?

Either way, this issue has initiated a well-needed discussion about regulation and control of the Internet, and opened people's eyes to the rapidly growing nature of the Web world as a whole. We have so much bandwidth, and people will only continue to want to use more of it, not less. Should those who are making frequent use of faster speeds, and thus justifying continued progress in this area, be punished for doing so? Or, on the contrary, are heavy bandwidth users just abusing the capabilities of the service, and ruining the experience for everyone else?

Falling CD Sales, P2P Sites Still Plague Music Industry

A new study conducted by The NPD Group confirms that CD sales continue to fall, and peer-to-peer download Websites remain a problem for the music industry's profitability and sustainability. According to the research group, U.S. consumers acquired 6% more music in 2007, but music spending overall was down by 10%, from US$44 per capita to US$40.

Why? Even though the number of Internet users that engage in P2P downloading remained flat at 19%, the number of files each person downloaded went up. What's more, the habit is becoming increasingly popular among the teen and "tween" crowd.

Making the situation even worse, NPD says that approx. one million customers completely stayed away from buying physical CDs in 2007. Almost half (48%) of teenagers said they did not buy one CD throughout the entire year!

Despite the grim outlook, there is a small silver lining. NPD reports that legal music downloads were up 5% when compared to 2006, representing 10% of music sold in 2007, with 29 million U.S. customers having obtained their digital tunes legally. Not surprisingly, Apple's iTunes service led the pack. But what is somewhat surprising is that iTunes was the second most popular spot to obtain music overall, overcome by only Wal-Mart!

If that isn't a clear indication of the direction the market is going, I don't know what is. The world's largest retailer sold the most music, which makes perfect sense. But to say that a digital download service rather than a traditional retailer came in second is an incredible achievement.

Now that the mistake-that-is DRM restrictions is slowly fading to oblivion, we might see interest in legal download sites rise this year. If the industry stops trying to find bundles and wonky subscription rates/plans and just focuses on giving customers tunes they want for a set price (either individually or by album), this would be a good start. Buying music digitally should be just as easy as it is to buy a physical CD. I just want to buy good quality tunes that I can play anywhere I want. No bells, no whistles, and no restrictions.