Major label executive “likens” himself to Sarah Palin

My first favorite quote at Digital Music Forum West came during the opening panel from Ted Mico, Head of Digital at Interscope Geffen A&M. Conferencier Ted Cohen of TAG Strategic was going on about how the labels need to end their litigation of start-ups, when Mico refused to explain Universal Music’s strategy in legal affairs: “I am about as qualified to speak for our legal initiatives as Sarah Palin is qualified to run this country.” Slam dunk, Ted. 

You can follow DMF West via live stream at their website.

Royalty judges put freeze on mechanical rates

The Copyright Royalty Board on Thursday ruled that the royalty rate for mechanical rights will stay at the current 9.1 cents level for another five years. This fee continues to apply to both, permanent downloads and physical product. There has been some speculation the three-judge panel might consider two different rates for digital and physical. By freezing royalty rates the CRB turned down demands from both sides of the aisle. Online retailers and labels had been pushing for lower rates, music publishers supported a 65 percent increase to 15 cents. And Apple threatened to close iTunes if they were to pay more for licenses.

Responses from the parties involved are trickling in. The always alert Jonathan Potter, Executive Director of DiMA, issued a statement, saying: “During this challenging time for the music industry and digital stores and services, we are pleased with the CRB’s decision to keep royalty rates stable for the next five years. Keeping rates where they are will help digital services and retailers continue to innovate and grow for the next several years, which will benefit songwriters, artists, labels and publishers.”

David Israelite, President & CEO of the National Music Publishers’ Association, hailed the decision as a positive development for all songwriters and music publishers. “We are happy that the judges recognize the importance of songwriters and music publishers to the music industry. [This] will bring clarity and order to an environment that for the past decade has been hampered by litigation and uncertainty on all sides.”

“No party got everything it wanted, yet at the end of the day, the certainty provided by this ruling is beneficial,” offered Mitch Bainwol, Chairman & CEO of the RIAA. 

Also, the CRB set the rate for mastertones at 24 cents.

Nokia’s Comes With Music comes with restrictions

After months of preparation Nokia finally showed their cards. At a launch event in London the handset maker unveiled Comes With Music. Surprisingly there were no surprises. From what I learned so far all the major details of this all-you-can-eat dual-download flatrate have been reported in the past weeks. Even the touch screen device 5800 XpressMusic had been expected. 

It will cost users in the UK £130 ($230/€166) to get Comes With Music for one year. For that amount they’ll get a Nokia 5310 XpressMusic which ships with 8GB of memory. Also part of the package are “unlimited” downloads from a catalog provided by all four majors (EMI signed on at the 11th hour) and a number of indies including those represented by The Orchard, IODA, PIAS and Pinnacle as well as Ministry of Sound and the Beggars Group. The database currently holds some two million songs. The price point for CWM is actually quite competitive, considering that it is effectively the cost of an iPod nano. The downer: The files are delivered as DRM-ed WMAs at 192kBit/s. 

There were some concerns recently as to how much money copyright owners will actually get from Comes With Music consumption. That specific questions remains unanswered, but Nokia did announce licensing deals with a number of collection societies: Comes With Music is now equipped with publishing rights from CELAS on behalf of EMI Music Publishing, from GEMA on behalf of Sony/ATV Music Publishing, of SACEM on behalf of Universal Music Publishing and of the MCPS-PRS Alliance. 

“Comes With Music sets a precedent for consumer value and convenience that the rest of the digital entertainment industry is already copying,” Tero Ojanperä, Nokia’s EVP for entertainment and communities, said, referring of course to Sony Ericsson’s PlayNow plus. 

But what exactly do consumers get from CWM? Downloads galore, yes. But unlimited indeed? “There will be monitoring to see if people abuse the service,” explained Graeme Ferguson of Sony BMG. 
“At the time of launch, downloading of the tracks is not restricted unless usage is not considered to be for personal usage or [the] user is using any unsupported applications or connection methods,” said a Nokia statement. “If average usage for all users reached predefined levels Nokia is allowed to restrict number of downloads for individual users.”

Well, well. So Nokia can restrict this “unlimited” offer. What qualifies as over average usage? Nokia won’t say. And they also won’t give us the exact amount they pay the labels for each CWM cell phone sold. On average the pay-out will be a little higher than what UK consumers spend on music in one year. But eventually all parties involved are gambling that CWM users don’t go overboard. I suppose those publishing licenses will include some kind of clause for a minimum royalty per song transaction. If people go berzerk on CWM this clause could cost Nokia and/or the labels. 

Ending their subscription let’s users keep all of their downloads, but if they want to renew they’ll have to buy a new CWM handset. As of now there is no option to pay for an additional yearly (monthly?) plan to keep both, the initial cell phone and the subscription. One has to assume that Nokia couldn’t yet agree on conditions with the labels to provide for that option. I guess they will first want to get some experience on how CWM customers actually use the service before they assess additional pricing options. 

CWM looks like a decent alternative to existing digital music services. Especially a younger demographic should be interested. If you are Napster or Rhapsody you should be scared. All of a sudden your offerings look like a lousy proposition. 
Expect Nokia to enter the U.S. market with Comes With Music next year, Ojanperä said in London.

You can watch hilarious marketing videos of the product launch at the Nokia website.

Bertelsmann keen to keep BMG brand alive after ending Sony JV

The joint venture Sony BMG is history. The world’s second biggest music major will sail under the flag of Sony Music Entertainment Inc. (SMEI) from now on. Having sold their 50 percent stake to Sony Corp. Bertelsmann will stay in the music business, however. The German media powerhouse doesn’t want to abandon its musical roots altogether. After all, one of Bertelsmann’s signature labels, Ariola, just turned 50 with a big shindig in Munich. 

As of now, it is unknown which labels Bertelsmann will retain after the sale to Sony. But they will keep the established BMG brand alive. BMG Rights Management (that’s the new company’s name) will be active throughout Europe. Managing Director Hartwig Masuch, who used to head BMG Publishing in Germany before it was sold to Universal, will focus on artist development, licensing and marketing of BMG’s catalog. The basis for this business will be the master catalog of some 200 artists BMG will adopt from Sony BMG. 

Names in the rumour mill are acts like German rock dinosaurs Scorpions, Italian songwriter god Paolo Conte or 80s star Terence Trent D’Arby (somebody please explain that one to me). BMG Rights Management will be part of Bertelsmann’s Corporate Investments division. Masuch and Co-MD Maximilian Dressendörfer will present details of the new venture in Berlin soon. No, not at Popkomm. Remember: They don’t like each other anymore. BMG picked October 14th for the press conference at Bertelsmann’s Berlin headquarters.

UK ISPs start sending out warning letters

The French have their “Riposte Gradueé”, the British a Memorandum of Understanding. What they don’t have in the Kingdom of Pop is a “three strikes and you’re out” rule which has been thrown around for quite a while now but never really materialized. 

The MoU, struck in July by music trade association BPI, the UK Government and six of the country’s leading ISPs, just calls for warning letters. These will start to reach people as early as tomorrow, Music Week has learned. BSkyB, BT, Tiscali, Virgin Media, Carphone Warehouse and Orange will start their three-month trial to send out notifications to 1000 customers per week.

However, there will be no consequences connected to these warnings. Even the wording of the letters appears to be velvety. This is what a test letter by Virgin Media looked like: 

“We’re writing to you about downloading and sharing of copyrighted files on the internet. That’s because we’ve received a report that copyrighted music has been shared using a computer linked to your Virgin Media Internet account.”

Yep, that’s really intimidating. Just like that pirate in the picture.