Oct 23

Andy Oram

Andy Oram

Music industry association recommends flat-rate file sharing

Wednesday: a comment by patrick dax indicates that the music industry is not considering the radical change suggested by the original commentary behind this blog. In particular, the spokesperson in the German article cited by the comment explicitly rejects the idea of distributing music for a lump sum. What the industry group actually wants to do is tantalizingly left unsaid, but the article mentions existing models that are deemed unsuccessful. This leaves me with the impression that industry association is considering some important new initiative and is deliberately raising hopes.

I just heard from two contacts in Denmark that their branch of the International Federation of Phonogram and Videogram Producers (IFPI) (the equivalent of America's RIAA and MPAA) has seriously proposed allowing unrestricted downloads of music over peer-to-peer networks, in exchange for a modest monthly fee to be charged to all ISP users.

This is a significant crack in the armor of the industry copyright zealots, and it's strange that I can't find an English-language announcement anywhere. My contacts say that the suggested monthly fee is 100 kroner, or approximately 16 Euros.

Of course, European governments have been calling for DRM-free music for some time. And Steve Jobs shook up the digital rights/restrictions industry back in February when he explicitly endorsed DRM-free distribution (and began to follow up in April with DRM-free songs from EMI). But the Danish IFPI represents the content producers themselves. When they start to buy in to the concept of unrestricted, all-you-can-eat downloading, the end of the debate is in sight.

Incidentally, the stances taken against DRM by governments seem based on promoting competition (letting other companies offer devices compatible with the iPod), a goal obviously driven also with an eye to reducing the hold of a U.S. product on European markets. The governments probably aren't motivated by any principled defense of freedom. You can see the same contrast in yesterday's agreement between Microsoft and the EU to end an anti-trust lawsuit. The result meets the EU's goals of promoting competition, because Microsoft has to show its code and protocols to competing companies. But it can still charge royalties, thus ruling out the use of the protocols by free software. An agreement in defense of freedom would have required Microsoft to publish its protocols openly or to adopt open standards.

In a context where law allows industry to control technology, decisions still come from industry leaders rather than from the public. For instance, I'm a traditional kind of music listener who doesn't download tracks, and buys a lot of CDs. But if my ISP starts charging me the equivalent of 16 Euros a month whether or not I downloaded music, then to hell with it--I'll quit buying CDs and get all my music online.

Another awkward aspect of this solution is that it's hard to fit a licensing model to different types of technological access. Charging money per ISP connection may work where the average household has its own ISP account, but what about people who take advantage of free Wifi access or shared a pooled connection?

The admission that the pay-per-unit model doesn't work for online music is valuable, even if it comes from one small corner of the economically advanced world and is encumbered with logistical concerns.

Noon: More detail from a contact in Denmark (still no official announcement or media report in English!):

  • The IFPI has not mentioned the license in emails or on their homepage.
  • The license was suggested by the executive manager of the ISPI, Jesper Bay, in an interview titled "Pay fixed price for unlimited digital music." But the next day, he called for watermarking music files to prevent piracy.
  • The license was backed by IFPI chairman Jens Otto Paludan who says a model license will be available in 2008, and compares the music license to TV channels--or access to water!
Links to news media and others in Danish:


tags: open source  | comments: 17   | Sphere It

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Comments: 17

  Kenny Love [10.23.07 06:02 AM]

Now, this is at the point in a wrestling match when the impending subdued party (or "subdu-ee" if you're from Lansing, Michigan) begins to utter the phrase, "u-u-n-n-c-c-l-l-e."

Well, it won't be long now until "streaming," i.e., Rhapsody and the like, become the industry norm and standard, or vice versa, with music, at least in part, becoming a "service" entity, much in the vein of cable television, with a subscription payable, monthly, annually, or otherwise.

Actually, I must credit my long-time friend Clyde Toval, president of Eartastic Records , for making me see the particular end result being that of a subscription model.

Clyde has been "dead-on" on a number of points regarding the future of the industry, prompting me to refer to him as a modern day "see-er" who needs to have his ideas explored and, pardon the pun, entertained by the media.

  Kenny Love [10.23.07 06:12 AM]

P. S. Addendum

"Another awkward aspect of this solution is that it's hard to fit a licensing model to different types of technological access."

Well, at least, this gets us farther down the proverbial road than what we've seen in recent months, even halfway the distance, I'd say, with only a few remaining licensing rate "kinks" to work out.

  nojhan [10.23.07 08:00 AM]

This debate has been quite active last year in France, during debates around a law project for the "internet market". The idea was called the "global license". The article was finally not retained in the final law.

But eventually, the "Neuf" ISP signed an agreement with "Universal Music" to allow unlimited music download for a fee comprised in the subscription...

  lemon obrien [10.23.07 08:45 AM]

we've already done this, and better. you'll be able to change the price; and you get paid when data from your computer distributes data.

don't try to download anything; we were testing and doing marketing all last summer...finished a nice prototype; and well...

building for the future.

  Gerd Leonhard [10.23.07 09:06 AM]

It's about time this gets going. I have written about the flat rate for music for 3-4 years now, see www.musiclikewater.com, and my book The Future of Music.. good to see that it's getting real now ;)

  Paul Sanders [10.23.07 09:38 AM]

We've been patiently going through the process of licensing our start-up ISP for music in the UK for the last few years.

Neuf Cegetel in France has only Universal Music Group's catalogue and is a standard Windows Media DRM service - it won't play on your iPod. Universal are the only major label who won't talk to Playlouder about licensing. Oh, and Neuf is owned by Universal's parent company Vivendi.

There is no technological solution for keeping music away from people who won't pay - better to make sure that there are ways for people who value music to get it in a way that suits them. I think the access method point is a red herring too - a pragmatic approach would capture enough value from easily managed points like home broadband to make wifi surfers commercially irrelevant.

  Thomas Lord [10.23.07 09:56 AM]

Those freaking idiots. They are lost in their own abstractions.

They want to impose a media tax on all IP packets? Oh, really? So, I hook grandma up for VOIP but we have pay tribute to Metalica? I don't know that I speak the same language as the brains behind this idea so maybe someone can help translate: "Yeah, right."

Basically, they've taken a decade to change their mind and say "You know, maybe the original Napster was a good idea after all, at least so long as we own it and every human is required by law to subscribe."

Esoteric theories of competition aren't that important here: the businesses people are talking about protecting have clearly self destructed:

There isn't a serious young artist left in the world who plans to rely on the legacy record labels to publish and promote. There are many who will take a good deal if offered one but none whose career plans hinge on what the big record execs decide. They are done. The studio system is over. They're going to strangle themselves in a pointless fight over their rapidly-falling-in-value catalogs. My grandchildren will enjoy those catalogs after their bought up and made public domain at the bankruptcy actions. The leaders in this industry have spent so much timing pissing into the wind over copyright issues that they've lost the ability to create the product their supposed to be selling.


  orcmid [10.23.07 01:35 PM]

Regarding the Microsoft agreement with the EU, the reports I've seen suggest that *non-commercial* open-source products are excused from the paid-license requirement.

I am not sure what kind of open-source license is appropriate, since creating a commercial derivative work would trigger the requirement.

Sounds a little sticky, though I think the intention is clear. Hmm, I must ask around about this.

  my music blog [10.23.07 09:49 PM]

well. we really have to wait if it would pass the consumer's standards as well as the results of the debate between the geniuses of their own field. I just hope that whatever happens,music lovers won't suffer with the outcome.

  Andy Wong [10.23.07 11:24 PM]

Glad that music industries has come to terms of cable TV which charge subscription fee for contents. P2P just provides a free "cable network" to music publishers. In last ten years, we had video on demand, now we will have music on demand on a "free" infrastructure for everyone, including music publishers.

  Antti Vanhanen [10.24.07 12:55 AM]

I see several problems in a flat-fee model.

First, what is the incentive for record companies to do any further promotion or artist discovery if their returns are fixed? Can they grow the size of the market?

Second, if we are talking about a subscription model, the DRM will make the music unportable to most devices. It's great that it's unlimited, but not if it cannot be transferred freely.

Third, the logistics problems alluded to previously.

Obviously, this isn't the final solution. But it's good to see progress being made in the mindset of people involved.

  patrick dax [10.24.07 07:48 AM]

I've just talked to jesper bay from the danish ifpi on the phone - he said, that he proposed subscription services for danmark - which by now are not available there - so the proposals of the danish ifpi have nothing to do with a flat rate for filesharing.
I've written an article on the subject for the technology channel of the austrian public broadcasting corporation: http://futurezone.orf.at/it/stories/231002/ (in german)

  Andy Wong [10.24.07 05:25 PM]

To Antti:
Not really difficult to solve these problems if the music industries can be braver to come to agreement of profit sharing models out of flat fee to consumers. For example, music charts and downloads can found two important factors for distributing profit. So they will be encouraged to product more and better and do marketing job better.

  Thomas Lord [10.24.07 10:20 PM]

It's good to know that Brenda and Stacy are in such strong agreement. That really tells you... um... something.


  Jesper Bay [10.25.07 05:07 AM]

The original story by Andy Oram is not correct.
IFPI Denmark has not at any point been in touch with Radar/Oreilly or Andy Oram. And - as is evident if you study the links which is placed at the end of the story (and you understand Danish)- neither the chairman of IFPI Denmark, Jens-Otto Paludan (who is also the MD of Universal Music Denmark), nor I - have at any point suggested that:

a) IFPI Denmark has plans to form a digital platform.
b) IFPI Denmark has plans to support a p2p service.

The story above seems to be extremely loosely based on an interview in Danish financial paper B√òRSEN (www.borsen.dk) at the end of August which was subsequently followed up by other media including Danish national TV news. In the original article I stated that the recording industry is supportive of, and try to facilitate, subscription models based on streaming technology and a monthly flat fee - potentially with an add-on download possibility (at an extra cost).

This point of view is also expressed in IFPI Denmark's annual report released in August, and is - of course - not new. It can, for instance, also be found in the Digital Music Report published by IFPI in January (www.ifpi.org).

We have specifically pointed out that such services should NOT be IFPI run. On the contrary we expect several commercially run companies such as telco's, ISP's and others to launch such services shortly. Indeed, some already have - such as "3", Nokia and others.

Danish IFPI and our 35+ member record companies - majors as well as indies - want to accommodate consumers' wishes to enjoy music in new and exciting ways. We see subscription models as one of these ways, and consequently support these strongly alongside other models such as a la carte download sales, services paid for by advertising etc. We also believe that such models will contribute to limit internet piracy.

All of this could of course have been verified by Radar/Oreilly had Andy Oram bothered to contact IFPI Denmark. Which by the way - just to correct another mistake in Andy Oram's story - represents record companies in Denmark, not video distributors.

Jesper Bay, IFPI Denmark

  Bill Hesse [01.25.08 08:17 PM]

I use flat-rate unlimited music in the United States by subscribing to Napster, and I am
annoyed that I will not have a flat-rate
choice available to me when I move to Denmark.

Napster and Rhapsody are rolling out their
services to other countries, but only to the
big ones so far.

  Bill Hesse [01.25.08 08:19 PM]

I use flat-rate unlimited music in the United States by subscribing to Napster, and I am
annoyed that I will not have a flat-rate
choice available to me when I move to Denmark.

Napster and Rhapsody are rolling out their
services to other countries, but only to the
big ones so far.

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