Bronfman tells Germans to intensify copyright protection

A couple of days ago Edgar Bronfman jr. gave U.S. analysts an update on how the ongoing desaster on Wall Street will affect his Warner Music Group. As of now, he said, they’re not feeling the pain yet. But the stock will be hurt anyway, regardless of Warner’s performance. 

Said it, and got on a plane to Germany. During the annual, invitation-only media dinner in Hamburg (the HQ of Warner’s central European operations) Bronfman reminded German lawmakers of the necessity to reform copyright laws. In front of an audience of some 400 high-level executives he called upon Chancellor Angela Merkel to increase the level of protection for creators. Bronfman highlighted the French model of “graduated response” (aka “three strike and you’re out”) towards illegal filesharers as standard-setting. 

According to a report by MusikWoche Bronfman also downplayed the continuing recession in the recorded music market. “This desease isn’t lethal. The digital revolution comes with chances of healing.” The number of new revenue models keeps growing, the Warner CEO said. And the U.S. company wouldn’t pass on any good business opportunity.

slotMusic is doomed

 I am certainly not the only one with serious doubts regarding the market opportunities (or rather lack thereof) of SanDisk’s slotMusic cards. Commentators increasingly think it is a bad idea to try to revive the physical market – at least with something that isn’t easy. As in: doesn’t make music consumption easier. These flash chips might be a good idea for SanDisk to book some revenue by licensing the technology to the major labels. What slotMusic does for the consumer is beyond me, though. 

However, the most convincing naysayer yet again is Bob Lefsetz who gives the format a thumbs down. 

“Do you even know if you have a micro-SD slot in your phone?  And, if you do, what are you going to do with the card inside when you buy an album?  Talk about easy to lose…  Let’s go even worse…  Can you remove the back off your phone?  On the BlackBerries I’ve had it’s nigh near impossible.  As for the tiny card, you’ve got to raise a door, insert it just so, close the door, put the back back on…  FOR EACH AND EVERY ALBUM?”

Preach it, Bob.

More insight on music and games

Recently I pointed you at a feature story on the relationship between music and games that I had written for German trade weekly MusikWoche. An updated and slightly edited version of that article was now published by German rights society GEMA. It is of course still written in German, but I hope you’ll get a chance to read it and let me know what you think. 

GEMA: “Musikgames werden zum Standbein für Urheber”

Online radio will continue to exist thanks to agreement on royalty rates

In what seemed like a never-ending story the parties involved in the negotiations to find adequate royalty rates for interactive streaming and limited downloads finally came to an agreement which should ensure the survival of services like Pandora. The Digital Media Association (DiMA), the RIAA, the Music Publishers’ Association (NMPA), the Nashville Songwriters (NSAI) and the Songwriters Guild (SGA) proposed a solution that would require music services to pay mechanical royalties for the use of copyrighted music in interactive streams and limited downloads. This also includes subscriptions and ad-supported models. The default rate will be 10.5% of revenue, less any amounts owed for performance royalties. More details below (excerpt of the DiMA press release): 

• The agreement proposes mechanical royalty rates that cover both limited downloads and interactive streaming, including when offered by subscription and ad-supported services. 
• The percentage rate structure in the agreement provides much-needed flexibility for new business models. 
• The agreement permits the use without payment of certain kinds of promotional streams, in the interest of encouraging paid uses of musical compositions.
• The agreement confirms that the mechanical licenses issued under its provisions will include all reproduction and distribution rights necessary to provide the licensed limited downloads or interactive streams.
• Outside the scope of the draft regulations, the parties confirmed that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners.

Amazon MP3 on gPhone/Android: Where is MySpace Music?

The gPhone is finally here. T-Mobile will start selling the G1 for $179 plus a 2-year-contract come October 22nd. From a music perspective this would only be slightly newsworthy if it weren’t for the built-in Amazon MP3 app. This will allow G1 users to access Amazon’s download store to buy single tracks and albums. Sounds a lot like buying music over an iPhone using the iTunes WiFi Store. This is no competition to Nokia’s “Comes With Music” or a mobile music subscription like Omnifone’s MusicStation. The Amazon downloads might of course be quite a bit cheaper than over at iTunes. However, one has to keep in mind that there will be transaction costs involved – covered by data plans (that you pay on top of voice plans) which currently come at $25 (limited messaging) or $35 per month (unlimited). This adds up to $600 and $840 for the duration of the T-Mobile contract. 

Looks like a decent set-up, but nothing revolutionary. I am missing the connection to MySpace Music. This thing should be able to easily access music.myspace.com and stream all the content from that service. If you like what you hear you should find a tab/link that leads you to Amazon MP3 to buy there.

Would you like a little sM with your groceries?

Yesterday SanDisk introduced its new slotMusic cards that will bring prerecorded flash chips to the checkout ailes of a Wal-Mart or Best Buy near you. EVERYBODY jumped on that story. 

What am I missing here? Is this really the second coming of packaged media? Will people who stopped buying CDs suddenly turn to slotMusic albums? According to SanDisk the projected target group for this format includes people not tech-savvy enough to download music or people too busy to have time for selecting downloads for their mobile devices. Like working mothers with fancy cell phones. 

To get some outside perspective on this I asked my wife, a working mother of two. She owns an iPod and a cell phone with a card slot. Would you buy a slotMusic album of one of your favorite artists if you saw it while  checking out at Wal-Mart? Answer: “No. Why would I? Are we going back in time now? I can get the songs I like on iTunes, can’t I?” 

Okay, maybe she is too tech-savvy for this product. So … who’s going to buy those sM cards? People who don’t download. Will they figure out how to put that thing in their cell phone/MP3 player? Chances are they will. Are they going to carry their tunes with them on multiple sM cards? Unlikely. Doesn’t that beat the purpose of mobile storage for music? First we dreaded the clutter of tapes in our cars, then the CDs. Now technology allows us to store and listen to our music on phones and digital players. Why should we go back to buying physical units? Units that most likely contain a selection of music we would never cherry pick like that. Digital is killing the album. Like it or not. People don’t want to be told which songs to buy. If they buy at all. 

What’s in it for the labels? They seem to hope for additional sales. sM cards won’t be placed in the CD ailes but closer to phones, MP3 players and the chewing gum at the register. This is not an attempt at replacing CDs. And it shouldn’t be. The manufacturing costs for a microSD card exceed those of CDs by far. Assuming the retail price for sM cards will be between $7 and $15 the labels will yield a lousy margin compared to what they make on CD sales.