BPI Admits It Screwed Up Over Napster... But Why Should We Trust It Now?

from the leaves-that-part-out dept

It seems like it's become the "in thing" in the recording industry these days to "admit" that suing Napster, rather than working out a deal, was a "mistake" ten years ago. Of course, plenty of folks were telling them this at the time, but we were brushed aside as wackos who just wanted free stuff. The latest to make this claim is BPI's Geoff Taylor, who says he "regrets" that the industry didn't move faster to embrace online music. But, of course, Taylor and others still don't get it. They still want ISPs to police users. They still claim that piracy is a legal problem, and they still seem to get the facts wrong. Taylor claims: "There is simply no getting around the fact that billions of illegal free downloads of music every year in the UK mean that significantly less money is coming into the music ecosystem."

Except... that's not true at all. As a recent Harvard study showed, the amount of money going into the "music ecosystem" has grown -- tremendously. The only thing that's dropping is the sale of plastic discs.

In the meantime, considering BPI and others were so incredibly wrong 10 years ago, and they're only willing to admit it now, why is it that they think everyone should trust them now -- and that those of us who were actually right 10 years ago should still be brushed off as wackos who just want stuff for free? Perhaps it's time to start actually listening to those who have been pointing out new ways to embrace what consumers want to do with music in order to make more money. Otherwise, we'll be seeing the same thing in another 10 years, about how BPI's Geoff Taylor (or whoever replaces him) made a mistake trying to shut down The Pirate Bay.

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Yet Another Journalism Professor Gets Nearly Every Fact Wrong In Saying Google Needs To Pay

from the facts?-who-needs-them? dept

With all the journalists declaring that Google needs to pay newspapers, it's amazing how often their arguments are based on simply incorrect statements -- the sort of thing that is the real problem newspapers face. When they make an argument based on entirely incorrect information, no one trust them. For example, reader David Muir points us to Joel Brinkley's article in the San Francisco Chronicle, where he compares the newspaper industry to the recording industry and gets nearly everything wrong. Brinkley is a former NY Times' reporter and a journalism professor at Stanford. This is the sort of person who shouldn't fall prey to getting stories backwards, but he does. First, he claims that Google is using newspapers content "without compensation."

This is wrong. Google is indexing and linking to newspaper content. They're providing a service to those newspapers, by sending them more traffic. If those newspapers don't want that service, it's quite easy to opt-out. The fact that very few do so suggests they do, in fact, value that service, and thus they feel they are getting compensated.

Then, amusingly, he compares the newspaper business to the recording industry, suggesting Google is like what Napster was a decade ago -- and questions where would the recording industry be if it hadn't shut down Napster. Rather than talk to an unbiased party, he goes straight to the RIAA, who of course talks up what a wonderful victory Napster was, and says, without having shut down Napster: "We would be in a world with thousands of pirates."

Um. I hate to break it to both Brinkley and the RIAA... but we're in a world with millions of (what they falsely define as) "pirates." In fact, I'd imagine that the recording industry would actually consider it a real victory if there were only "thousands." But does Brinkley point this out? Does he note that the legal effort to shut down Napster not only failed to stop "piracy," but actually helped advertise it, make it more prevalent, and drive it further underground to sites and communities that were much more difficult to work with?

Of course not. Because why would a super journalist like Brinkley bother with reality in making his case?

Also, it's worth pointing out that the situation with Napster was also entirely different in that it didn't involve the musicians/labels putting the content up themselves, and didn't involve Napster offering up an easy tool for them to remove that content. When it comes to newspapers and Google, both things are true.

This is the sort of stuff anyone familiar with what they were talking about would know. But Brinkley is a journalism expert, so why should he bother to understand what he's talking about before writing an entire column on it?

He then goes on to (falsely) claim that "without newspaper journalism, the nation would have little original journalism left" extrapolating out (incorrectly) the idea that because most journalism originates from newspapers today, it must continue to do so in the future. We're already seeing that's false, as new operations spring up to take over where newspapers are faltering (such as in putting forth bogus opinion pieces comparing Google to Napster).

Then (because he's not done being wrong yet), Brinkley tries (and fails) to respond to the "information wants to be free" line (which he falsely states "information should be free" -- the distinction is important, but Brinkley doesn't bother to even notice) by saying:

Wouldn't that be nice. Wouldn't it be nice if metropolitan newspapers didn't have to pay millions of dollars a year for their reporting staffs? Wouldn't it be nice if Keller's paper didn't have to pay $2 million a year to maintain its Baghdad bureau? Newspapers provide an expensive product. They deserve to be paid for it.

We've debunked this argument probably 50 times in the last year alone, but since Brinkley apparently doesn't do any research, let's debunk it one more time. No one is saying that because information is offered to consumers for free that it means that you don't make money or you don't pay your reporting staff. Brinkley is setting up a bogus strawman (the sort of thing reporters shouldn't do). What they are saying is that they need to come up with better business models (which we've pointed out do exist) that leverage (rather than deny) the basic economics of content, and do so in a way that makes a more valuable product.

Brinkley, of course, never bothers to explain how to make the product any more valuable (hint: it's not by writing columns that are entirely based on incorrect statements) or why people would want to pay for such rubbish. He just insists they "deserve to be paid for it." But if Brinkley's writing is an example of the type of quality found in papers today, is it any wonder people don't find it worth paying for?

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Napster's Next Chapter: Merged Into Best Buy

from the yawn dept

Napster, which now has almost nothing other than its brand to connect it to the revolutionary music sharing service Shawn Fanning launched nearly a decade ago, is about to undergo its latest shift, as Best Buy has bought what remains of Napster for $127 million, representing a hefty premium on the already pretty weak valuation of the company. Ever since Roxio bought Napster -- and renamed itself Napster -- the company has tried to position its music subscription offering as a huge success, but there's been little evidence to back that up. Now selling off to Best Buy for such a low price pretty much confirms that there wasn't much there.

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Collapse of Music DRM Continues; DRM Customers Still Screwed

from the we're-shocked dept

Support for DRM in the recording industry is in freefall. On Tuesday, Napster released a new version of its music store offering 6 million DRM-free tracks. Napster is a relative latecomer to this party, joining Apple, Amazon, and Wal-Mart, all of whom have had at least some DRM-free, major-label music available for about a year. One difference, though, is that Napster is coming out of the chute with support from all four major labels and thousands of smaller labels as well. At this point, any music store that doesn't offer DRM-free tracks is going to look like a real laggard. This story wasn't too surprising given the way things have been going over the last year. But even less surprising is the fact that customers who were foolish enough to purchase DRMed content from previous versions of Napster are stuck with their decision. They don't get to update their content to MP3 format, and while Napster has decided to continue running its "license servers" for now, it's only a matter of time before Napster decides running those servers is more trouble than it's worth and shuts them off, cutting customers off from their music libraries entirely.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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House Approves Bill To Require Universities To Offer Students Music Services

from the mandatory-Napster? dept

Late last year, we wrote about a bill that would put pressure on universities to put in place an official approved music subscription service or risk losing federal financial aid support for students. This is a bizarre piece of legislation, as it effectively props up Napster and RealNetworks by basically requiring universities to sign up for such a service, even if they don't want to. Despite widespread criticism of the bill, the House has now approved it, even leaving out a promised amendment promising that failure to obey wouldn't threaten financial aid. Supporters of the bill claim that it wouldn't actually be used to cut off financial aid, but if that's the case, why include it in this bill at all? It would basically be a requirement without any repercussions for ignoring. At the same time, no one has clearly explained why universities should be required to sign up for a private music subscription offering. What possible public policy reason could there be for such a thing?

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Labels Concede That File-Sharing Isn't So Bad After All

from the a-little-late dept

Imeem, a social networking site that was in the recording industry's crosshairs earlier this year for allowing file-sharing on its network, has pulled off an impressive feat. This summer it settled its lawsuit with Warner Music by promising to give Warner a cut of advertising revenues from the site. Now the Wall Street Journal is reporting that it's signed similar deals with all four major labels, meaning that Imeem is now the first website whose users have the music industry's blessing to share music for free. What's especially striking about this is that for the last decade, the fundamental principle of the labels' business strategy is that sharing music without paying for it is stealing. They drove Napster, AudioGalaxy, Grokster, Kazaa, and other peer-to-peer file-sharing services out of business on that basis. As we pointed out way back in 2000, all this accomplished was to drive file-sharing underground where the recording industry couldn't get a cut of the profits. Had they approached Napster in 2000 the way they approached Imeem this year, they could have been collecting ad revenue from every file-sharing transaction over the last seven years. Instead, they wasted a lot of money on lawsuits, angered a lot of their customers, and ultimately still had to concede that music sharing might be OK as long as they get a cut. The only significant difference between Napster and Imeem is that Imeem only allows you to play music on its website, whereas Napster allowed you to download songs to your hard drive. But this isn't as big of a difference as it might appear at first glance. The Imeem website doesn't provide a "download" button, but there's no DRM involved, and it's quite easy to download music files from Imeem using third-party tools. And because Imeem's site doesn't use DRM, Imeem downloading tools are probably legal under the DMCA. So what we have here is the de facto legalization of Napster-like sites, as long as the record labels get a cut of the advertising revenue. It's an exciting development, albeit one that should have happened seven years ago.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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MPAA Explains Why It's Okay To Tie Federal Funds To Blocking File Sharing

from the because-we-say-so,-dammit dept

While Congress' new bill on education funding may not be as bad as some are making it out to be, it still seems quite questionable that Congress appears to be regulating the idea that universities need to do the kind of marketing and educational campaigns that the recording industry cannot. We've asked supporters of the bill to explain how it could possibly make sense to mandate such things, and the MPAA's top lawyer, Fritz Attaway, has given his answer, claiming that it's because the internet is "used primarily to allow college students to traffic in infringing content," while being subsidized by gov't funds. It would be nice if Attaway or someone else at the MPAA could actually back up the claim that the primary use of the internet by students is infringement. While I wouldn't doubt that it's a popular use, to say that it's the primary use is hard to believe -- unless you count things like visiting Facebook pages, using Google and sending emails as "infringement." At the same time, this doesn't seem to support the reasons for this bill. After all, many kids on college campuses own cars -- and I'd imagine that most of those students break the speed limit frequently enough. Yet, we don't see any bills being proposed in Congress that would prevent financial aid funding unless universities start handing out more speeding tickets and put in place plans to offer public transportation. So why should they do that for copyright infringement?

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Recording Industry Innovating Like It's 1999

from the deja-vu dept

Two developments this week suggest that the recording industry is finally taking baby steps in the direction of a genuinely competitive online music market, but the progress continues to be painfully slow. First, Apple is cutting prices on DRM-free music in an apparent bid to stay competitive with Amazon's launch of a DRM-free music store last month. This is a particularly interesting development because just last year, the talk was about whether Apple would increase prices on iTunes songs. But now it's looking like further price cuts are more likely to be in the cards. Even Amazon's 89 cent price point is still a lot more expensive than eMusic, which charges around 33 cents per song. Meanwhile, Napster has unveiled a new web-based version of its music store that appears to allow people to listen to their music in their web browsers, including non-Windows PCs. The new Napster will also make it easier for you to embed your favorite music YouTube-style on other websites. Those are great new features, but it appears that the service will still require people to use Microsoft's comically-named (and increasingly irrelevant) PlaysForSure platform if they want to listen to their music on a mobile device, which is quite a handicap in an iPod-dominated market.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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Playlist Patented... Everyone Sued... But Did Apple Pay Up?

from the sounds-like-it dept

A bunch of folks have been submitting the latest story on a patent hoarding firm, Premier International Associates, who appears to have absolutely no other business than getting its hands on questionable, overly broad, obvious patents and then suing everyone possible. In this case, the patent is for the basic concept of a playlist, which can be found just about anywhere. So, it should come as little to no surprise that the list of companies sued is quite long, including: Microsoft, Verizon, AT&T, Sprint, Dell, Lenovo, Toshiba, Viacom, Real, Napster, Samsung, LG, Motorola, Nokia, Sandisk, HP, Acer, Gateway and Yahoo (phew!). That's quite a list, though it's not surprising to see that there are a ton of companies offering software that has a concept so basic and so obvious as a playlist.

However, there is one very interesting point here. Apple is missing from the list. As the folks over at Ars Technica figured out, Premier actually had sued Apple about this same patent back in 2005, but at the same time it was filing all these new patent lawsuits it filed to dismiss the Apple suit, suggesting that Apple most likely paid off the company (perhaps giving it the money needed to suddenly sue every other company in the universe. Apple certainly has a history of doing this. When the company was sued on a rather similar obvious patent on a hierarchical menu-based user interfaces held by Creative, it eventually (after spending some time fighting it) decided to simply pay $100 million to be left alone. Of course, all that did was allow Creative to head out and sue plenty of others. Sound familiar? By settling on these questionable patent claims, all Apple is doing is encouraging more lawsuits of this nature for itself, as well as others.

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Bertelsmann Agrees To Pay One More Time To Finally Settle All Of Napster's Mistargeted Lawsuits

from the bad-precedents dept

It never made sense that the various record labels and music publishers sued record label Bertelsmann for the Napster affair. Yes, it's true that Bertelsmann was the only major record label to view Napster as an opportunity rather than a threat. And it's true that Bertelsmann invested quite a bit of money into Napster. But, the other record labels' misguided complaint was with Napster -- not with Bertelsmann. The problem was that after winning the original Napster lawsuit, the other record labels realized that Napster had no money. So they sued Bertelsmann instead, for being the only record label with forward-thinking management to invest in Napster. However, it makes no sense to put any kind of liability on investors in a company. Otherwise, it would make life quite difficult for any investor today -- who could then be sued for the actions of the company he or she invested in. It would greatly increase the liability for retail investors as well as institutional investors. It's for that reason that it would have been nice to see Bertelsmann fight this case and win it.

Unfortunately, before the case had a chance to get anywhere, Universal Music (who was the first to sue Bertelsmann) bought Bertelsmann. Then, rather than sue itself, the company quickly settled that portion of the lawsuit and proceeded to settle the other portions as well, with the final part of the case finally settling late last week. Bertelsmann eventually had to pay out approximately $300 million in all of these "settlements," which is a real shame since all the company did was invest in a service that its executives (who were soon fired) realized could have revolutionized the music business. While these are all settlements, meaning that there's no court precedent, this could still encourage companies to sue investors in companies rather than the companies themselves. Venture capitalists and private equity firms might want to take note.

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