me*dia*or

It's bad enough for the major record companies that CD sales are plummeting. Now, the 9th Circuit Court of Appeals is threatening to make digital downloads less profitable too.

A three-judge panel sided with F.B.T. Productions Friday in its dispute with Universal Music Group over Eminem's recordings for UMG's Aftermath label, ruling that F.B.T. was entitled to significantly higher royalties for downloadable tracks and albums sold through Apple's iTunes Store. The panel sent the case back to District Court to determine how much UMG will have to pay in damages.

UMG said it would appeal the ruling to the full 9th Circuit, and that the case wouldn't have broader implications because it hinged on the unique provisions of a single contract. Nevertheless, the victory for F.B.T. (if it stands) could embolden other hitmakers to seek higher royalties for digital downloads -- something many artists have demanded but few have obtained.

F.B.T., a team of producers that discovered and wrote songs for Eminem, sued Universal in 2006, accusing the company's Aftermath label of failing to pay sufficient royalties for the titles sold through iTunes. Its attorneys contended that the 99-cent downloads weren't "records sold ... through normal retail channels," which would carry a royalty of 12% to 20%. Instead, they argued that the sales stemmed from licensing deals that Aftermath struck on Eminem's behalf, on which the royalties should have been 50% of the net receipts.

A District Court jury agreed with Universal that iTunes sales were just like CD sales, and the judge awarded Universal more than $2.4 million in legal fees. But the appeals panel held ...

... that the District Court should have granted F.B.T.'s claims without a trial because its contracts with Aftermath put the iTunes "unambiguously" in the licensing category.

For consumers, iTunes is simply the digital equivalent of the CD racks at BestBuy or Amoeba Records. The major labels have treated it that way, too. But Richard Busch, an attorney for F.B.T., said the difference is that there is an incremental cost to each CD that record companies sell to retailers like BestBuy. There are no such costs when labels license a recording to Apple so that it can distribute copies from its servers. The royalties on physical sales were lower than on licensing deals because the costs were higher.

How big a financial blow the ruling could be to UMG is hard to tell. The company struck a deal directly with Eminem a few years after signing with F.B.T., and the two sides disagree over which of Eminem's recordings for Aftermath are covered by the contracts with F.B.T.

The ruling's reach isn't clear, either. Two people familiar with the matter said that, unlike the F.B.T. deals, most artists' contracts with the major labels specify that downloads receive the same royalties as physical sales.

Still, Fred Goldring, a music industry strategist and former music lawyer, said the major record companies have been clinging to contract provisions from the world of physical products that don't make much sense in the digital world. "At some point, it's going to be 90% digital and 10% physical, and that argument goes away," he said.

The major record companies have "done a lot of good for a lot of artists ... getting them to be much bigger than they would ever be on their own," Goldring added. But the change in technology is making it harder for them to dictate terms to artists. Simply put, Goldring said, they're no longer "the gatekeepers between artists and their audience."

-- Jon Healey

Credit: Frederick M. Brown / Getty Images

Healey writes editorials for The Times' Opinion Manufacturing Division.

[Standard disclaimer: Every week Topspin releases updates to its software platform. Each week we code-name the release after a band we love. This week's release is code-named "Son Volt/Toto" and as such this blog post is about a software release code-named the same. It does not mean Son Volt or Toto are working with Topspin, as much as we may wish that to be true. Also, any musical opinions expressed in this release announcement belong to Topspin's Tim Read and should not be taken as official Topspin opinions. Enjoy. -ian]

And once again we release. It’s a habit at this point.

This release is the merger of Son Volt and Toto: Two big releases rolled into one by a common thread. Let’s briefly discuss the music because the app changes this week are worth more time.

SON VOLT is one of the bands that formed in the wake of Uncle Tupelo (and was more heavily based in my old home of St. Louis). Jay Farrar and Tupelo drummer Mike Heidorn. In general, Son Volt provided the country to Wilco’s alt (not that early Wilco didn’t lean heavily in alt-country territory, but by comparison…)

Worth checking out:
Drown
Tear Stained Eye
Caryatid Easy
… if you dig Wilco and never checked out Son Volt – you should.

TOTO is included for historical reference. A long-time resident of the Topspin Guilty Pleasures list, especially from the early warehouse days of 2007 when we discovered a bizarre version of Hold The Line (below)

Why not:
Easily the best version of Hold The Line ever..
A unique take on Africa (skip to 1:50 if you’re not digging the intro)
And for the Arquettes… Rosanna

SHIPPED: TRANSCODER V4 INCLUDING UITS

If you’ve wondered why it’s been somewhat quiet in the last week or two, it’s been due to the preparations necessary to ship version 4 of the Transcoder, aka Son Of Mothra. This is one of the most substantial changes in underlying architecture in a long time, and will allow us our next steps as we scale up the growth of the application. In addition to supporting more formats than any retailer on the planet (MP3, MP3HD, AAC, Apple Lossless, FLAC, MP4, JPG, PNG, etc) our transcoder is faster than ever, fronted by both a cache and Akamai’s Content Delivery Network (so it’s never down), and can support labels who require UITS from their retailers. Does your shopping cart have all that? Existing Topspin users: your transcodes should be faster, more reliable, and won’t appear in your catalog until they’re *complete*. We have seen a few kinks but for the most part it’s been working smoothly since Wednesday. Let us know if you see anything out of order.

AND MORE
With some help from the early adopters, we’ve also made some improvements to the weight based shipping – and more are on the way.

Stay tuned for Uncle Tupelo next week…

Tim Read
Topspin

The RIAA may have given up on lawsuits targeting P2P users, but other companies have stepped into their shoes. There are many ways to detect P2P users and collect evidence of their behaviors for use in lawsuits. The simplest way needs nothing more than a BitTorrent client.

We’ve covered some of the more exotic ways people can be tracked or monitored in the past (including some that don’t work) but the lawsuits, abandoned by the record industry as bad for business, have been adopted by a group of lawyers who don’t let a little hypocrisy stand in their way.

There’s a lot of misinformation about which companies and agencies can do what, and how they do it. People claim industry groups or random companies can search and send out letters at random, whereas the reality is the investigator must be authorized or they could be deemed guilty of copyright infringement themselves.

There’s also a lot of confusion about exactly how evidence is collected, with people sometimes believing that it can only be collected from corporate networks, or that private trackers are safe because investigators can’t share and so would be banned for their ratio. Much of this is untrue and these beliefs can make it easier to collect evidence.

The easiest way of all is to simply collect information from trackers. It’s an easy and quick way to do it, although as was revealed 2 years ago, it’s often quite inaccurate.

The next simplest way, which provides lots of data, is just to join a swarm and monitor. Some people believe that clients doing this will stand out, as modified clients will behave differently. The reality is that clients don’t have to be monitored at all.

Researcher Andrew Norton produced this video explaining how a vanilla µTorrent client can be used to identify and log peers without any modification or abnormal behavior.

The raw data shown in the video – all that’s needed for a lawsuit or allegation under most 3-strikes laws – is nothing more than basic communication data. However, it’s critical to note that this data, while it is evidence of activity, is NOT evidence of infringement in many cases.

We can’t testify that this is the method used by any company – they’re notoriously tight-lipped about their methods – but it’s quite possible that it’s being used and sold on as a very high priced service to customers. Selling simple and not always accurate or effective methods for thousands of dollars a week was revealed to be a key method of MediaDefender. Anyone reading this and intending to hire such companies would be advised to ask for a demonstration of their detection system first-hand.

It should, however, come as yet another wakeup call to those using blocklist-based software. Without any way to identify a client using this method, there’s no way to add its IP to the list. In fact, the public availability of block-list contents means it’s extremely easy to avoid being on them.

On the other hand VPNs, proxies and seedboxes will provide some protection, but the only real solution is to press for the peer-review of anti-P2P companies and their methods, but that doesn’t look like it will come any time soon.

Article from: TorrentFreak.

In SONY BMG Music Entertainment v. Tenenbaum, the US Department of Justice, which intervened in the proceedings below, has filed a notice of appeal.

Notice of Appeal by DOJ



Keywords: lawyer digital copyright law online internet law legal download upload peer to peer p2p file sharing filesharing music movies indie independent label freeculture creative commons pop/rock artists riaa independent mp3 cd favorite songs intellectual property portable music player

Netflix, the biggest player in the online DVD rental business in the United States seems to be threatened by the piracy, since plenty of people cancelled their accounts. Even if they send out DVDs by mail, or they offer movies streamed directly to a wide variety of devices, there will always be customers who decide to cancel their accounts. And just like all self respecting companies, Netflix want to find out why people cancel, and this is the reason why they present leaving customers with an interesting survey.

Despite a direct ‘threat’ from piracy, including many BitTorrent sites, Netflix’s revenue has been growing steadily year after year. In 2006 the company acquired a net income of $49.1 million, which more than doubled to $116 million by 2009. And this growth is not slowing down either. During the second quarter of this year Netflix booked a record-breaking income of $43.5 million.

In the survey, Netflix asks for the reasons why the customer has chosen to leave, the likelihood that he or she will return and what their primary sources for TV-shows and movies will be in the future.

“What will be your primary source for movies and TV episodes after canceling Netflix?” the question reads.

Although this question in itself is nothing out of the ordinary, one of the response options is. “Peer-to-peer / bit torrent sites such as Torrentz.com, Demonoid.com, Tvlinks.com, ThePirateBay.org, etc,” is one of the answers that customers can check (see below).

Apparently Netflix sees BitTorrent sites as direct competition, and it fears that this may cause some customers to leave.

With the launch of Ping this week in the latest update for iTunes, Apple is finally adding social elements to its software. Ping is essentially a social music discovery feature in iTunes. You can friend, follow, or lurk to see what music other people on iTunes—people you know, people you don’t—like, review, or buy.

Ping is very promising if only because of Apple’s reach through iTunes to 160 million music consumers. And it will no doubt get better over time. But at launch, it is riddled with problems which stem from the fact that Apple does not know how to create social software. It is completely out of its element, and it shows.

The biggest problem I have with Ping is that it lives in iTunes. Not only does it live in iTunes, it is isolated there. iTunes is not social. It is not even on the Web. And Ping doesn’t communicate with any other social networks. I can’t see people’s iTunes Pings in Twitter, Facebook, or anywhere else. While Ping does make iTunes itself more social, the problem is that I don’t live in iTunes. It is a store. I go in to buy stuff and get out as fast as I can. I am not sure Ping is going to make me want to hang out there more.

Let’s start with when you sign up. There is no easy way to find people you already know on Ping. Facebook Connect was supposed to solve that, but that feature is disabled until Apple and Facebook work out their differences. So what you are left with now is having to type in people’s names and hope they’ve signed up for Ping, or invite them one at a time through email. Hopefully nobody else has claimed their name. (The fight with name squatters and spammers is already beginning. Earlier today I found a dozen “Steve Jobs” accounts, which have since been cleaned up). There is no mechanism for importing your contacts from Gmail or any other email, or bringing in the people you already follow on Twitter or other social networks.

That leaves you with the option of finding one or two early-adopter friends and clicking through their profiles to see who they follow and add the interesting people. The only people I can find right now are bloggers and tech folks I follow elsewhere for different reasons. I have no idea whether they have any taste in music, but I guess I’ll find out soon. Getting up and running should be easier than this But that is not the deal breaker.

Once you start following a few people, you can see all the songs they “like,” rate, review, or buy. It creates a realtime activity stream which gives you social entry points into the iTunes music store. It also works on the iPhone and iPod Touch.

But don’t be confused about Apple’s social ambitions. Ping is all about driving more sales in iTunes. It is completely separate from your existing iTunes library of songs. You can’t like a song while you are listening to your existing collection. If you’ve bought a song or album, Ping assumes you like it (bad assumption), but none of your actual listening activity appears in your stream.

You can only like songs in the iTunes store. And even doing that isn’t easy. There is a big like button for each album, but if you want to like a song, you need to click the drop-down arrow next to the buy button. Be careful not to hit buy, unless you really like the song.

Once you do like a song, that shows up in your stream with a nice big buy button for all your friends to follow suit. Of course, they can’t listen to the whole song before deciding to buy, only a sample. You can’t share playlists. You can’t really do much other than peddle music to your friends.

Ping is just too commercial. It is not fun. There isn’t even a leaderboard or any visible game mechanics. There is no way to see which of the people you follow are the best music recommenders as measured by subsequent purchases from people who follow them, likes or any other measure.

Ping is a promotional vehicle for iTunes and bands. If you follow a band like U2, it seems like they get a special account which allows them to upload videos (and who knows what else). Why can’t I upload photos or videos to my stream? I can’t even add a random comment or status update without first liking, rating, or buying a song or album.

While I am sure Ping will help drive more sales, and is probably something I will check out whenever I am in iTunes to do something else, it is not as compelling as it could be. The most interesting information in iTunes is what your friends are actually listening to and what they think about the songs they know by heart—the ones in their music library. Simply allowing people to like or promote the songs in their existing collections while they are listening to them in iTunes or on their iPods would make Ping a lot better. Sharing playlists is another no-brainer.

Ping could be so much more than it is: isolated, controlling, and a bit boring.