Yearend Sales Stats

Album Sales Expected to Show 1.6% Rise

The recording industry registered sales of about 667 million albums, an increase of about 1.6 percent, according to year-end data expected to be released today by the market research firm Nielsen SoundScan.

While that snaps a three-year streak of declines, the industry is still confronting a series of problems, including digital piracy, and competition from products like DVD’s and video games. Album sales at one point surged by as much as 8 percent over last year’s pace, but fell victim to a lackluster holiday season.

The data, covering a 52-week period, also show that the industry is beginning to tap the power of the Internet to generate sales, though free music still flows through online file-sharing networks. […]

While the data appear to diminish industry concerns that sales of individual songs online would cannibalize sales of CD’s, it is far from clear whether the industry will be able to develop profitable online business models. The data show that consumers buy individual tracks for about 99 cents much more often than they download full-length albums, which carry a higher price tag.

An End To Studio Recording of Classics?

As The Audible Past points out, a studio recording is a peculiar thing anyway – not so much a performance as a construct. So, there’s a question of whether to bury Caesar or to praise him in this article about the economics of studio CDs vs. live DVDs — Twilight of the CD Gods? A Studio ‘Tristan’ May Be the Last Ever

The mood can be judged from comments in the cafeteria: “Make the most of it,” and “There won’t be many more like this.”

And what is “this”? It’s a gargantuan, million-dollar recording of Wagner’s “Tristan und Isolde,” put together as a now-or-never enterprise for the tenor Plácido Domingo but also as a last, heroic stand from a classical CD industry so crushed by economic pressures that many consider it in terminal decline.

[…] But in truth, this probably represents the end of the line for large-scale studio recordings of familiar operas, which have increasingly been shunted aside by the newer, flashier and – above all – cheaper medium of live DVD, filmed onstage, in performance.

“The public listens with its eyes today,” said Peter Alward, who has just retired as president of EMI Classics after 34 years with the company and who planned this “Tristan” as his parting shot. A giant in the classical recording world, Mr. Alward has watched the business boom and (very nearly) bust, scaling down from a time when EMI made four or five studio operas a year, to now, when there are hardly any.

“So don’t expect any more studio ‘Carmens’ or ‘Toscas,’ ” Mr. Alward said in a rapid machine-gun voice that has called several generations of wayward recording artists to order. “It’s straightforward economics. An average opera might cost $600,000 in the studio, and this one, being large-scale Wagner and involving extra sessions, is nearly double. An average DVD deal these days can be got for $200,000. And that somewhat dictates our course of action.

“I don’t believe there’s any compromise on sound quality. DVD may not be as pristine as studio recording, but with digital technology and new microphone techniques it’s pretty good.”

MInnesota Will Appeal FCC’s Vonage Decision

States battle FCC Internet phone ruling – (see Vonage Wins Appeal, Too FCC on VoIP: Not Quite As “Unanimous” As Describedfor earlier news.)

States fear that more calls travel over the unregulated Net will mean fewer over the heavily taxed regular telephone network–reducing tax revenue that supports crucial public services, such as rural phone expansion and emergency call services. The FCC and VoIP providers counter that a very light regulatory approach is needed to coddle the developing industry.

8th Circuit Heard From on § 512(h)

Slashdot’s RIAA Loses DMCA Subpoena Case Against Charter includes a link to the opinion: In re: Charter Communications, Inc., Subpoena Enforcement Matter – 03-3802

This case concerns whether the Digital Millennium Copyright Act (DMCA), specifically 17 U.S.C. § 512(h), permits copyright owners and their representatives to obtain and serve subpoenas on internet service providers (ISPs) to obtain personal information about an ISP’s subscribers who are alleged to be transmitting copyrighted works via the internet using so-called “peer to peer” or “P2P” file sharing computer programs. The dispute arose when the Recording Industry Association of America (RIAA) requested the clerk of the district court to issue subpoenas under § 512(h) to Charter Communications, Inc. (Charter), 1 in its capacity as an ISP, requiring Charter to turn over the identities of persons believed to be engaging in unlawful copyright infringement. The district court issued the subpoenas and denied Charter’s motion to quash. We reverse.

[…] Based on this analysis of the statute, Charter argues § 512(h) does not allow a copyright owner to request a subpoena for an ISP which merely acts as a conduit for data transferred between two internet users. Charter avers the text and structure of the DMCA require the ISP to be able both to locate and remove the allegedly infringing material before a subpoena can be issued against it. Thus, where Charter acted solely as a conduit for the transmission of material by others (its subscribers using P2P file-sharing software to exchange files stored on their personal computers), Charter contends the subpoena was not properly issued. We agree.

Plus, some interesting dicta:

For purposes of this appeal, we do not address the constitutional arguments presented by Charter, but do note this court has some concern with the subpoena mechanism of § 512(h). We comment without deciding that this provision may unconstitutionally invade the power of the judiciary by creating a statutory framework pursuant to which Congress, via statute, compels a clerk of a court to issue a subpoena, thereby invoking the court’s power. Further, we believe Charter has at least a colorable argument that a judicial subpoena is a court order that must be supported by a case or controversy at the time of its issuance. We emphasize, however, for purposes of this appeal we do not reach these issues and have decided this case on the more narrow statutory grounds.

Note that there is also a quite extensive dissent that merits reading.

See also the Washington Post’s Court Rejects Music Industry Subpoenas [pdf]; Court nixes RIAA subpoenas; EFF: Music Industry Must Respect Privacy of Filesharers

IEEE Spectrum on AACS

DVD Copy Protection: Take 2

With manufacturers about to unveil a new generation of DVD players and discs, moviemakers now see a rare opportunity to get the horse back into the barn and lock the door tight. So, this past July, two entertainment companies joined with six electronics manufacturers and chip makers to announce the creation of the Advanced Access Content System (AACS), the copy protection scheme designed to keep future generations safe from pirated DVDs. The specification was due by year-end 2004, and products incorporating it are slated to appear by year-end 2005.

Backers of the protection method are betting that AACS technology will finally thwart unauthorized copying of DVDs while allowing consumers to distribute movies legitimately over networks within their homes, play them on a variety of devices (standard televisions, portable movie players, and laptop computers), and store them on home media servers. “We wouldn’t be investing our time otherwise,” says Michael Ripley, the chairman of the AACS alliance’s technical working group.

But critics of the technology say it is bound to fail in achieving its most important objective–blocking wholesale pirating of DVDs–and it may irritate consumers if the promised in-home distribution isn’t quickly forthcoming and easy to use. The AACS project “doesn’t make very much sense,” says Seth Schoen, staff technologist at the Electronic Frontier Foundation in San Francisco. “The commercial copyright infringers in Southeast Asia that burn billions of counterfeit discs will not be deterred by this.”

Slashdot: Building the AACS Next-Gen Copy Protection Scheme

DRM & Christmas Presents

Ed Foster’s Steaming About DRM, with a story of what it takes to get a computer game running these days

Once the reader had the eight-year-old’s computer hooked up to the Internet, he once again tried to install the game. “As soon as we sign on, it says this is someone else’s game,” the reader says. “I contact Steam and get an e-mail telling me that the CD key was already assigned to another user. Er….duh! I had told them that in my e-mail to them explaining how the existing Steam account hijacked the install and, at least from the point when the kid started asking questions about ‘accounts,’ I never saw anything telling me that he would never be able to play the game I just bought him if he ever played it on another computer. Steam technical support keeps sending the same auto reply and refuses to address the issue with a human response.”

Code and Architecture

Sat Radio Recording Moves Ahead

A handful of new and soon-to-be-released devices enable music listeners to automatically record tracks from satellite radio broadcasts onto hard drives or portable music players such as the iPod. While the recording industry has publicly decried such activities for terrestrial radio, analysts say it has a financial reason for remaining silent about satellite radio recording.

[…] To discourage recorded songs from being posted on peer-to-peer networks, the company’s TimeTrax software application embeds the serial number of the receiver into the track information, making it easy to trace the source, Frutkin said. “We are not being cowboys telling people to do whatever they want to do” with the tracks they record, Frutkin said.

Frutkin said version 4.0 of the TimeTrax software, which will be available at the end of January, will enable listeners to scan satellite radio channels and record only songs by specific artists. Users will be able to type in “Bruce Springsteen,” see the channels that would most likely play him, and then monitor the stations to record him, according to Frutkin.

[…] According to Sean Butson, media analyst with financial services company Legg Mason, the RIAA has financial motivations for selectively targeting traditional radio. “When songs get played on satellite radio, recording artists get paid more money than when they get played on terrestrial radio,” Butson said. He said satellite radio stations pay 7 percent of revenues to recording artists and copyright holders, whereas radio broadcasters pay less than 1 percent.

[…] The satellite radio universe is much smaller than the potential audience for free digital radio, so the RIAA may be focusing its resources on the biggest fish, according to Gigi Sohn, president of Public Knowledge, a group that advocates openness in digital information distribution.

Larry on Today’s Connection

WBUR/NPR’s The Connection will have Larry Lessig on during its second hour today – Free Culture Future. With links to related shows from NPR.

At the dawn of the internet era, tech-savvy users joined together to create programs than everyday browsers could understand. The open-source movement was born — giving rise to a new philosophy of equal access to information and file-sharing. That’s when the voices of regulation — including everything from Sony Music to Microsoft to Congress — stepped in. Today, our “Innovation That Matters” series continues with Lawrence Lessig, a law professor who brings democracy to the internet by challenging existing copyright laws. In a 21st-century variation of “Steal This Book,” Lessig published his “Free Culture” on the web with a license that allows users to download, sample and edit his text. It’s a move that flies in the face of copyright laws that haven’t yet caught up to the digital world. Pirates and property law on the web.

IP and Outsourcing Design

Companies, Focusing on Brands, Are Outsourcing Some Design Work [pdf]

But outsourcing design has also brought an array of troubling implications. For one thing, critics say, a certain sameness creeps into products when competitors turn to the same specialists for designs.

[…] David Reid, chair of international business at the Rochester Institute of Technology’s College of Business, raises a potentially more worrisome issue. “The question of who owns the intellectual property remains a very muddy one,” he said.

Most manufacturers insist on written guarantees that designers working on their projects will not do similar work for competitors. But the designers counter that they can create low-cost, high-quality products only by building on every bit of expertise they develop.

[…] That kind of expertise is hard to patent, or to own. And even third-party designers concede that intellectual property fights could derail their fledgling industry.

“The intellectual property issue remains the most complicated thing we have to deal with,” said Pat Toole, general manager of I.B.M. Engineering and Technology Services. “If we can all figure it out, farming out design will be a common model in the future. If we can’t, it won’t.”

German Levies on New PCs Set

German court sets copyright levy on new PCs

The District Court of Munich has ordered Fujitsu Siemens Computers (Holding) BV to pay a copyright levy on new PCs.

The landmark decision, announced on Thursday, ends a nearly two-year dispute between the largely Germany-based computer maker and the country’s VG Wort rights society, which has sought compensation for digital copying.

[…] Germany is one of several European countries that, for decades, has been collecting special copyright levies on the sale of analog copying devices, such as blank audio and video cassettes. The levies are intended to compensate rights holders for lost royalties from private copying of music, images and moves.

The country is now poised to become the first on the Continent to impose a copyright levy, similar to a royalty collection, on new PCs.

Slashdot: German Court Sets Copyright Tax on New PCs