Music Biz News, WMG seeks demise of SeeqPod

My mind is still on the Music biz these days. Probably because I am feeling depressed about not being at MIDEM in Cannes this year, since it was an amazing time being there last year. There is so much dynamic vitality in the music world from so many points-of-view. There is an abundance of new digital music services and devices and easy access to music of all kinds. Music as a social network means and medium is enjoying exponential growth, i.e. imeem, MyStrands etc. All this makes the massively depressing ’07 music sales stats even more ironic. The numbers cited and the ’08 projections are even more dismal than most pessimists predicted.

The Economist 10 Jan Articles “From Major To Minor” concludes: “Universal and its fellow majors may never earn anything like as much from partnership with device-makers as they did from physical formats. Some among their number, indeed, may not survive.”

The article posits a trifecta of woe for CD sales:
1. Reduced retail floor space due to reduced sales resulting in further reductions
2. Decreasing Label budgets for releasing new records resulting in further diminution of the biz
3. A reduction in capitalization and investment due to poor returns.

This vicious cycle is likely to make 2008 feel like dropping off a cliff to the recorded music industry and bolster competitive efforts by companies such as Live Nation and artists that are going direct.

The article reports the Nielsen SoundScan number of US CD sales dropping 19%. Both The Economist and Digital Music News report that the 2007 sales were just as bleak worldwide:
• Spain: -22%
• Canada: -21%
• France: -17%
• Australia: -14%
• Italy: -12%

NAPSTER REDUX
In an inevitable move, one of the majors, WMG, has gone after the new Napster (by which I mean the old Napster that started the MP3 download craze and was successfully shut down in July 2001), SeeqPod.

Seeqpod is in some ways easier, better, and even more pernicious to the established music industry than Napster. It allows you to search for any music or video by artist or title, play it instantaly, store it onto a playlist and share the playlists.

In its 57 page complaint to the California Central District Court, The Warner Music Group (Warner Brothers, Atlantic, Elecktra and Rhino) does not mince any words. They are going after the Seeqpod Inc. and their “Angel” investors for both direct and contributory infringement for the max $150,000 per instance of which there are 100s of thousands. They plainly articulate how Seeqpod is egregiously enriching itself by growing its user base at the direct expense of the copyright holders.
SeeqPod has attempted to play dumb by claiming that it is only a search engine like Google, albeit specialized for the deep vertical media niches. True, Seeqpod does not store nor serve, nor even maintain an (Old) Napster-like directory. It merely points to extant mp3 files and provide a convenient means to store your searches and play them.

This will be an interesting case since it may also have implications for the Googles of the world who, it could be argued, also enrich themselves by searching for copyrighted work.

The labels measure how much a music service impacts them by how much of a replacement that service is for an untethered, unrestricted CD. Indeed with SeeqPod’s iPhone app and ubiquitous edge network access it is not far off. Sphere: Related Content

UCLA 405.23 Class #3, 23 January 2008

Great class last night. Thanks for your enthusiastic participation!

NEWS TOPICS

Joyce cited a Cynopsis story about the growth in subscription services. Maybe it will finally catch on. It has been slow going for subscription music services like Rhapsody and Napster the past couple of years. Cynopsis also had a brief item about www.last.fm (owned by CBS) going to an Ad supported model with 3.5 million tracks and the support of the 4 majors.

Sylvia discussed a piece in www.arstechnica.com about music licensing starting a debate about what music licenses should cover. Donna was in favor of consumer convenience while Mark emphasized that artists need to get paid more directly without the traditional creative accounting of the Labels referencing the anecdote of Sting going bankrupt by being indebted to the label at one time. Bill, our class legal source mentioned the system of compulsory Vs blanket royalty pools. A subject for another course!

In my own work I am currently working on an Internet Radio service and will be registering with the government sanctioned SOUND EXCHANGE that administers the $.0018 per performance Internet Radio compulsory license fee with lots of restrictions.

I brought up the 700 Mhz Wireless spectrum auction that begins today as a milestone heralding the imminent demise of analog TV and the rise if ubiquitous wireless broadband. An interesting article in Infoworld on this is linked to here:
http://www.infoworld.com/article/08/01/24/How-the-wireless-spectrum-auction-could-change-your-life_1.html?t=sendEmail.jsp

Another great article in Infoworld is the 25 biggest tech flops of all time. Funny how things come around again in different forms.
http://www.infoworld.com/article/08/01/21/03FE-25-tech-failures_1.html?t=sendEmail.jsp

HISTORY OF CONTENT
Mark covered the history of content including the origin and evolution of Radio, TV and Film.

TRENDS
Stuart lectured on Media Tech megatrends and got through changing demographics and psychographics and the global growth in Internet usage to the current estimate of 1 billion people with China and Brazil growing the fastest.

We also did the informal survey on your monthly total ICE bill, Information, Communications and Entertainment discovering that it can easily top $500 per month. This demonstrates that pricing and economics will become increasingly important as there is more competition for a finite pie of discretionary consumer dollars.

MISC.
Fair Use
This comes up frequently and is frequently misunderstood. Its no surprise that are many busy copyright attorneys. So, to both clarify and add to the confusion, here is the actual text from the UNITED STATES CODE COPYRIGHT LAW ON FAIR USE:

§ 107. Limitations on exclusive rights: Fair use⁴⁰
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

Cool Video
Mark sent me this remarkably informative synoptic video about the evolution of Internet tech:
http://youtube.com/watch?v=NLlGopyXT_g

I will be in Chicago or Miami next week.

Our first speaker will be on 13 Feb, the Founder and CEO of FABRIC INTERACTIVE (www.fabricinteractive.com) Erlend Wilhelmsen. A hot shop specializing in social network marketing.
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UCLA 405.23 Class #2, 16 January

Material Covered: CES 2008
Photos at: http://gallery.mac.com/svolkow#100235&bgcolor=black&view=grid

News Items and Issues Discussed
Donna brought up Facebook's controversial BEACON feature which announces behaviors to your network. There was an anecdotes regarding the purchase of a diamond ring which was not longer a surprise to the intended recipient. This raises the whole question of privacy and who much personal/behavorial/clickstream data are users willing to share with each other and advertisers. Bill mentioned that some sites have a policy of keeping data for up to 7 years. A similar controversy erupted when Google revealed that it was "reading" gmails in order to display relevant ads. The outcry blew over in a few months and now Gmail users don't seem to worry about it.

Tivo records almost every click of the remote and it's a good bet that many of our favorite sites including Google, Amazon, YouTube, Rhapsody, Last.fm and Netflix, store extensive user data which is used for ad targeting and personalization. Allegedly the data is held anonymously so advertisers can't see actual IDs.

Stefan defended the newest Apple notebook PC the AIR as excellent for portability. Others thought it might be too stripped down.

Jeff discussed Wal-Mart's shuttering of its download store. Might they have ceded the digital download biz to the likes of Amazon Unbox and iTunes? Rival Target launched a "Digital Partners Program with a DRM free John Legend Album of 19 tracks for $9.99. The experiments will continue no doubt.

The CES presentation stimulated good questions about "Fair Use", compression, HDTV/Digital TV and the viability of IPTV business models which all foreshadow class sessions to come.

Posted by Stuart W. Volkow at 5:59 PM 0 comments

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