iLounge

According to a Jupiter Research survey, almost two-thirds of European music industry executives believe removing digital rights management (DRM) from downloadable music would compel more consumers to buy music online. The study was carried out between December and January, before Apple CEO Steve Jobs’ call for DRM-free music. “The study revealed that about 54% of those executives questioned thought that current DRM systems were too restrictive,” reports BBC News. “Also, 62% believed that dropping DRM and releasing music files that can be enjoyed on any MP3 player would boost the take-up of digital music generally.”

Following Apple CEO Steve Jobs’ open letter on digital rights management (DRM) this week, EMI has reportedly been holding talks with online music resellers about the possibility of selling a large portion of its catalog in unprotected MP3 format. An industry source told Reuters that EMI was seeking large advance payments from online retailers in exchange for the right to sell its music without DRM. “Lack of operability between a proliferating range of devices and hardware and the digital platforms for delivering music is more and more becoming an issue for music consumers and EMI has been engaging with our various partners to find a solution,” an EMI spokeswoman said.

“We agree wholeheartedly with Jobs, since EFF has been making exactly the same points for several years now. As a first step in putting his music store where his mouth is, we urge him to take immediate steps to remove the DRM on the independent label content in the iTunes Store. Why wait for the major record labels?”—Derek Slater, Electronic Frontier Foundation

“[Jobs’ argument to drop DRM] is without logic and merit. We will not abandon DRM.”—Edgar Bronfman Jr., Warner Music CEO

“I don’t expect the record labels to move very quickly in this direction. It would be very hard for the music industry to walk away from all the lawsuits they have filed against individual consumers, some against 15-year-olds, and say digital rights management is not a big deal.”— James McQuivey, Forrester Research

“It’s a bold move on his part. If anything can play on anything, it’s a clear win for the consumer electronics device world, but a potential disaster for the content companies.”—Ted Cohen, managing partner of TAG Strategic and former senior VP for digital distribution for EMI Music

“[Jobs’ letter was] irresponsible, or at the very least naïve. It’s like he’s on top of the mountain making pronouncements, while we’re here on the ground working with the industry to make it happen.”— Jason Reindorp, marketing director for Zune at Microsoft

“We welcome Apple taking this problem seriously, and addressing it at such a high level. It is clear that the record industry has some of the responsibility, but that does not relieve Apple of responsibility. Our concern is, of course, that Apple and iTunes Music Store should be addressing the issue of record companies and DRM themselves if it needs to be addressed. It’s iTunes Music Store that’s providing a service to the consumers and therefore has the responsibility.”—Torgeir Waterhouse, senior adviser to the Norwegian Consumer Council

“The essay ultimately comes across as more of a finger-pointing exercise than anything else, concluding by telling European governments to turn their attention to (European) record companies instead of Apple. The company’s proposal of two equally unpleasant alternatives—Apple DRM or no DRM—makes some rhetorical sense, but obviously doesn’t encompass all of the potential solutions out there, and as neither Apple option will satisfy sabre-rattlers, it won’t stop those trying to force FairPlay licensing upon the company.”—Jeremy Horwitz, iLounge

“Most technologists have always believed this and apparently now Steve Jobs is saying it publicly. He is begging the music industry to give up on all the DRM initiatives while subtly predicting they may spell its doom. He is dead right.”—John C. Dvorak, Marketwatch

“There is a less than 25% chance that the music industry will license music to online stores without any DRM. Record labels have worked hard to protect their product from theft by negotiating DRM requirements, so despite Jobs’ request, DRM free online music services are not likely to be the norm any time soon.”—Gene Munster, Piper Jaffray

“Is it a challenge to the major record labels? An answer to the increasingly hostile European governments (Norway, France, Germany) that are pressuring Apple to “open up” the iTunes Store? A message to the press to clarify Apple’s stance on DRM? A big f***-you to Microsoft? It is all of these things.”—John Gruber, Daring Fireball

“Apple’s offer to license Fairplay to other technology companies is a welcome breakthrough and would be a real victory for fans, artists and labels. There have been many services seeking a license to the Apple DRM. This would enable the interoperability that we have been urging for a very long time.”—RIAA (misunderstanding Jobs’ letter)

“It should not take Apple’s iTunes team more than 2-3 days to implement a solution for not wrapping content with FairPlay when the content owner does not mandate DRM. This could be done in a completely transparent way and would not be confusing to the users. Actions speak louder than words, Steve.”—Jon Lech Johansen (AKA DVD Jon)

“We’re not going to broadly license our content for unprotected digital distribution.”—Anonymous music company executive

“Last time I checked, Apple also sold TV shows, music videos, and films on iTunes Music Store, and they are all protected by FairPlay DRM. Why didn’t Jobs make the same courageous stand against DRM on video? Unfortunately, the answer isn’t very pretty: Apple doesn’t have anywhere near the same clout in the movie and TV business that it has in music, and has only signed film deals with two of the major studios as a result. Taking a stand against DRM for movies would anger the same people he is trying to make deals with.”—Andrew Shebanow, Shebanation

“We’ve been talking about the need for open formats for a very long time.”—Dan Sheeran, senior vice president for digital music at RealNetworks

“I’ve always assumed that DRM was a condition set by the record labels, not by Apple, and that Apple conceded only as a way to get the labels to sell their music through iTunes. Interoperability will drive iPod sales, and also music sales. This is what we at the Canadian Music Creators Coaltions (CMCC) have been pushing, and I’m glad to see Apple make a push for a DRM-free world.”—Steven Page, Barenaked Ladies

“In the near-term, this letter is going to have minimal impact. I fundamentally agree with much of what Jobs said. The record labels drive DRM adoption. DRM is not going away because the record labels aren’t going to let it go away. They are too paranoid about piracy.”—Michael Goodman, Yankee Group

In a rare move, Apple CEO Steve Jobs as written an open letter on Apple’s digital rights management (DRM) system used on the iPod and iTunes. In the letter, Jobs explains why Apple has implemented its FairPlay DRM technology, and explores three alternatives for the future—continue the current DRM scheme, license FairPlay or abolish DRM entirely. Jobs’ letter is in response to mounting pressure from European countries which say Apple is forcing limits on consumers. Jobs says that persuading the major record companies to allow iTunes and other stores to sell music DRM-free is the right move. He says Apple would embrace selling this open music “in a heartbeat.” A portion of the letter is below, but clicking through to read the entire letter is highly recommended.

Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music. [...]

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.

Much of the concern over DRM systems has arisen in European countries.  Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free.  For Europeans, two and a half of the big four music companies are located right in their backyard.  The largest, Universal, is 100% owned by Vivendi, a French company.  EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company.  Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace.  Apple will embrace this wholeheartedly.

Using its clout as the world’s biggest seller of DVDs, Wal-Mart has launched an online movie download store with films from all six major Hollywood studios. The Wal-Mart Video Downloads store currently sells about 3,000 movies and TV shows from Walt Disney, Warner Brothers, Paramount, Sony, 20th Century Fox, Universal, Comedy Central, CW, FX, Logo, MTV and Nickelodeon. The Windows Media-based store only works with Microsoft Windows and videos are not compatible with the iPod. Download prices will be $12.88 to $19.88 on the day of the DVD release. Older movies will start at $7.50, while TV shows will sell for $1.96 an episode. Apple’s iTunes Store, which only offers movies from Walt Disney and Paramount, charges $12.99 for movies when pre-ordered and during the first week of sale, and $14.99 afterward.

Record labels are considering a move towards finally offering unrestricted MP3 music files, according to industry insiders. The New York Times reports that executives of technology companies, in attendance at the annual Midem global trade show for the music industry, are apparently aware of “at least one of the four major record companies [that] could move toward the sale of unrestricted digital files in the MP3 format within months.” Even with solid sales on the iTunes Store and other online music services, it is reported, digital sales of restricted music has seen slow growth. Physical CD sales have likewise continued to take a hit.

Microsoft CEO Steve Ballmer claims that his company’s Zune media player took 20% of the high-end digital audio player market—those devices priced $249 or above—following its debut in November. Ballmer’s estimates compare to those of the NPD Group, which said this month that the Zune accounted for only 2.8% of the total digital audio player market in the five-week period from Nov. 19 to Dec. 23.

“We came into the market, a market in which they are very strong, and we took, I don’t know, but I think most estimates would say we took about 20-25% of the high end of the market,” Ballmer said in a CNBC interview. “We weren’t down at some of the lower price points, but for devices $249 and over we took, you know, let’s say about 20% of the market. So, I feel like we’re in the game, we’re driving our innovation hard and, uh, okay, we’re not the incumbent, he’s the incumbent in this game, but at the end of the day, he’s going to have to keep up an agenda that we’re gonna drive as well.”

Characteristically, Ballmer also laughed at Apple’s iPhone and its premium pricing. “$500 full-subsidized with a plan! I said that is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard which makes it not a very good email machine,” Ballmer said. “Now, it may sell very well or not, I, you know. We have our strategy, we’ve got great Windows Mobile devices in the market today. You can get a Motorola Q phone now for $99, it’s a very capable machine, it’ll do music, it’ll do Internet, it’ll do email, it’ll do instant messaging. So, I kinda look at that and I say, well, I like our strategy. I like it a lot.”

While U.S. album sales continued to decline in 2006, total music sales were up nearly 20 percent thanks to a large increase in digital downloads. Approximately 588.2 million physical albums were sold last year, down 4.9 percent from 2005, according to Nielsen SoundScan. Digital music sales, however, increased by 65 percent over the previous year. Some 582 million tracks were sold, and digital album sales more than doubled, with nearly 33 million sold. Overall music sales—which includes all albums, singles, music videos and digital downloads—increased by more than 19 percent in 2006.

Mogopop has been announced as a new free online service and website that lets users create, publish and download content for iPods. “Mogopop is a free web-based service where members and visitors can create, publish and download multimedia content for iPod,” the company explains. “This content that can incorporate audio, video, pictures, podcasts, text—whatever our members’ minds can imagine, they can create. Mogopop downloads are like mini-Websites for iPod that anyone can enjoy.”

After years of selling digital music with restrictive copy-protection technology, major music labels are beginning to make some songs available as unrestricted MP3 files. “The releases are part of an experiment to gauge demand for tracks that can be played on any digital music player capable of playing MP3s,” reports the Associated Press. “Normally, copy-protected tracks are only playable on certain devices. By selling MP3s, recording companies can ensure they can be played on Apple’s market-leading iPod players without going through Apple’s iTunes Music Store.” The latest unrestricted MP3 tracks come from singer Norah Jones and rock band Relient K, both signed to labels operated by Britain’s EMI Music. Their songs went on sale for 99 cents each this week on Yahoo’s online music service.

Microsoft said today that it expects to sell 1 million Zune media players through the first half of 2007. While that figure pales in comparison to iPod sales, Microsoft claims it would be a good start. “We think that’s actually pretty awesome,” said Bryan Lee, corporate vice president for Microsoft’s entertainment group. Lee said that Microsoft expects to eventually “be the leader” in the category, especially once the company releases more Zune models and starts selling them internationally. According to The NPD Group, the Zune ranked No. 2 among all portable MP3 players in its first week of availability, but has since slipped to No. 5.

Salespeople are not consistently recommending Microsoft’s Zune player, and are overwhelmingly suggesting the iPod to customers, according to Piper Jaffray analyst Gene Munster. “We recently spoke with 40 big-box retailers to gauge which MP3 players salespeople were suggesting for more than $200 (i.e. the 30GB iPod, Zune or others),” Munster wrote in a report today. “We found that store clerks only recommended the Zune 8% of the time, while they recommended the iPod 75% of the time. In fact, some MP3 player salespeople had not even heard of the Zune, despite the fact that they sold it in their store.”

Munster also noted that the Zune has fallen down Amazon’s top-selling MP3 players list. “During the Zune’s launch week (on 11/16) the black model reached the 7th spot on Amazon’s top-selling MP3 players list,” Munster wrote. “But by 11/20 the player fell to the 13th spot, with the brown model at 22nd and the white model at 42nd. By 11/27 the black Zune was ranked 18th. The buzz that Microsoft was able to generate for the Zune’s launch clearly helped the player in its first week, but much of the publicity took the form of Zune/iPod comparisons… Due to the less than favorable reception, we believe the Zune will not materially impact iPod sales in the December 06 quarter.”

Paramount Pictures has sued Load ‘N Go, a small business that loads DVDs onto video-enabled iPods on behalf of customers. The Electronic Frontier Foundation reports: “According to the suit, Load ‘N Go sells both DVDs and iPods and loads the former onto the latter for customers who purchase both. The company then sends the iPod and the original DVDs to the customer. So the customer has purchased every DVD, and Load ‘N Go just saves them the trouble of ripping the DVD. The movie studios’ suit claims that this is illegal, because ripping a DVD (i.e., decrypting it and making a copy) is illegal under the DMCA. The suit also claims that this constitutes copyright infringement.”

Music fans will soon be able to download digital versions of classic songs by the Beatles. David Munns, head of EMI Music’s North American division, said at a web industry conference in San Francisco that the Beatles’ catalog would be available for download “soon.” Munns did not offer specifics such as a timeframe or which online music stores would be selling the Beatles tracks. Following its legal win earlier this year against the Beatles’ Apple Corps, Apple expressed interest in selling the band’s music on the iTunes Store. “We certainly will do everything we can to get them on iTunes,” Eddy Cue, Apple’s vice president of iTunes, said in May. “The Beatles aren’t available in any digital format today but they are going to be one day. We certainly hope that happens on iTunes.”

The Wall Street Journal’s Walt Mossberg and The New York Times’ David Pogue, two of the most well known and widely read tech columnists, both give less than stellar marks to Microsoft’s Zune media player in their reviews of the device today. While both writers give the Zune credit for a handful of features—with Pogue even calling the device “excellent” at one point—they both offer up fairly damaging final reviews.

“This first Zune has too many compromises and missing features to be as good a choice as the iPod for most users,” Mossberg writes. “The hardware feels rushed and incomplete. It is 60% larger and 17% heavier than the comparable iPod. It has much worse battery life for music than the iPod or than Microsoft claims—at least two hours less than the iPod’s, in my tests. Despite the larger screen, many album covers look worse than they do on the iPod. And you can’t share music libraries between computers like you can with iTunes… Overall, the iPod and iTunes are still the champs. Still, I expect the Zune to attract some converts and to get better with time. And this kind of competition from a big company with deep pockets and lots of talent is good for consumers in the long run.”

“Competition is good and all. But what, exactly, is the point of the Zune?” asks Pogue. “It seems like an awful lot of duplication—in a bigger, heavier form with fewer features—just to indulge Microsoft’s ‘we want some o’ that’ envy. Wireless sharing is the one big new idea—and if the public seems to respond, Apple could always add that to the iPod… The Zune 1.0 player is pretty barren, too. It doesn’t have a single standard iPod amenity: no games, alarm clock, stopwatch, world clock, password-protected volume limiter, equalizer, calendar, address book or notes module. Incredibly, you can’t even use the Zune as an external hard drive, as you can with just about every other player on earth.”

In a move that could have a future impact on Apple, Microsoft has agreed to pay Universal Music Group a fee for each Zune media player it sells. “We felt that any business that’s built on the bedrock of music we should share in,” said Doug Morris, chief executive of Universal, owned by French media giant Vivendi. “We were very early in working with Steve on the launch of the iPod and he’s been a very good partner and done a lot for the industry,” Morris said in response to questions about Universal’s relationship with Apple. “We have a current contract with him and at the end of that I’m sure we’ll negotiate.” Apple currently only has revenue-share deals with record companies for music sold on the iTunes Store, and does not offer a portion of iPod sales to any company.

Update: The New York Times reports that Universal is expected to receive more than $1 for each $250 Zune sold, and that the deal “comes after weeks of tense talks and averts a standoff that might have crippled Microsoft’s attempt to compete against the iPod.” According to the Times report, Universal apparently threatened to not sell its music through the online Zune media store unless Microsoft paid a royalty for each Zune sold.

“Microsoft ultimately had plenty of incentive to make a deal with Universal,” reports the newspaper. “Microsoft is laying a huge wager on the Zune. If it had not struck a deal, it would have been left in the position of trying to mount a credible challenge to the iPod without Universal, which accounts for a third of new albums sold in the United States. Microsoft also stands to benefit by cultivating a fan-friendly image with the notion that artists—not just corporations—will share in the Zune’s sales.”

Microsoft has announced plans to sell TV shows and rent movies that can be downloaded onto an Xbox 360 through the company’s Xbox Live online video game service. Beginning Nov. 22, Xbox Live users will be able to choose from select shows distributed by MTV Networks, CBS, Warner Bros. Home Entertainment, Paramount Pictures, Turner Broadcasting System, and Ultimate Fighting Championship. The programming, which will come in standard-definition and some in high-definition, includes shows such as “South Park” and “CSI,” and movies such as “V For Vendetta” and “Superman Returns.” Pricing of the content was not announced, though it is expected to be similar to iTunes Store pricing.

In a move that would no doubt signal the end of its partnership with Apple, Cingular has reportedly teamed up with iTunes rivals Napster, Yahoo Music and eMusic to launch a new music service. The service, which could be announced as early as tomorrow, will work on music-playing cell phones and will eventually offer wireless downloads, according to The Wall Street Journal. “Cingular’s service initially will support transferring music from personal computers to cellphones using a cable. In a first for music-enabled cellphones, users will be able to transfer music acquired from ‘all you can eat’ subscription services like Napster to Go, Yahoo’s Y Music Unlimited or eMusic,” reports the Journal. “They will also be able to transfer songs ripped from CDs or downloaded in the MP3 and Windows Media formats. Next year, Cingular is scheduled to add an over-the-air downloading component that will feature a menu for compatible telephone handsets that takes users to a virtual store, similar to the ones customers already use to buy ringtones.”

Jon Lech Johansen, a hacker also known as “DVD Jon,” says he has cracked Apple’s FairPlay digital music copy-protection technology and plans to license the code to others. The Associated Press reports: “Unlike his previous work, which he usually posts for free, the Norway native plans to capitalize on his efforts through his Redwood Shores-based DoubleTwist Ventures, said the company’s only other employee, managing director Monique Farantzos. An unnamed client will soon use the technology so its copy-protected content will be playable on iPods, she said, declining to give any specifics.”

According to a new study, listening to loud music with earphones on an iPod or similar music player for more than 90 minutes a day will damage your hearing. “The study of 100 doctoral students concluded that people who listened to music at 80 percent of volume capacity, at which point the sound is considered loud, should stick to under 90 minutes a day,” reports Reuters. “The study also found no problems for people who listened to music at 10 percent to 50 percent of maximum volume for extended periods. It found, however, that anyone who listened at 100 percent for more than five minutes faced the risk of hearing loss.”