New online music store could cut digital piracy

A new internet music service launched by Apple Computer offers a consumer-friendly method of downloading songs for a modest 99 cents each. If the service catches on among users, it could supply the music industry with an effective model for squelching the popularity of illegal song-swapping online—while giving schools and colleges one less legal headache to worry about.

The venture—announced just days after the music industry saw mixed results from two high-profile lawsuits involving online piracy—draws from all five major recording labels in offering more than 200,000 songs, including some from big-name artists who previously had shunned online distribution.

Unlike its competitors, Apple’ iTunes Music Store—announced April 28—has virtually no copy protection, a major concession to consumer demand.

Apple lets customers keep songs indefinitely, share them on as many as three Macintosh computers, and transfer them to any number of iPod portable music players. No subscriptions are necessary, and buyers can burn unlimited copies of the songs onto CDs.

“There’s no legal alternative that’s worth beans,” Apple chief executive Steve Jobs told analysts and reporters.

Apple charges no additional fees but does incorporate some minor restrictions: Playlists can be stored on no more than three Macs, and once a user burns 10 copies of a playlist onto CDs, he or she must “modify” the list before copying again. That can be as simple as shuffling the order of the songs.

“It’s a fresh start in the whole online music scene,” said Hilary Rosen, CEO of the Recording Industry Association of America (RIAA).

The Cupertino, Calif.-based company, which angered the recording industry with its “Rip. Mix. Burn” ad campaign two years ago, has instead won the industry’s cooperation with its new service.

Jobs has intensely courted music industry executives, who have been leery of digital music downloads and have aggressively used lawsuits and lobbying to stem the illegal copying and distribution of copyrighted works.

In contrast, Music Store already includes music by Bob Dylan, U2, Eminem, Sheryl Crow, Sting, and other artists previously wary about music downloads. Eventually, millions of songs will be for sale on the site, predicted Doug Morris, the chairman and CEO of Universal Music Group.

Morris called it “a defining moment in the music business.”

Until now, most music found online lacked the blessing of the major labels: BMG, EMI, Sony Music Entertainment, Universal, and Warner. Millions of internet users—many of them students—are downloading free copies of songs through file-sharing services such as Kazaa and Morpheus, services the recording industry has sued in an effort to stem what it deems revenue-robbing piracy.

Although the music industry last year was successful in shutting down Napster, the first and most notorious of these file-sharing services, a new breed of services that are less centralized—and thus harder to control—has emerged in its place.

Three days before the iTunes Music Store was unveiled, the entertainment industry received a blow from a federal judge in Los Angeles who ruled that two companies behind these next-generation services for sharing music and movies online are not to blame for any illegal copying done by users.

The decision, if it survives appeal, essentially absolves Grokster Ltd. and StreamCast Networks Inc. of liability. Grokster distributes file-sharing software by that name, and StreamCast distributes Morpheus.

Earlier in April, the RIAA had expanded the scope of its fight against illegal file sharing by suing four college students who allegedly offered more than 1 million recordings online, demanding damages of $150,000 per song (see “Students sued for alleged digital copyright violations,”

The music industry is urging schools and corporations to crack down on the illegal downloading of songs over their networks, and some legal experts say it’s only a matter of time before schools themselves might be the target of lawsuits if they fail to prevent such file-swapping by students.

On April 24—the day before the StreamCast ruling—a federal judge in Washington, D.C., made it easier for music companies to identify and track users of popular file-sharing programs. U.S. District Judge John D. Bates ordered internet service provider ISP Verizon Communications Inc. to turn over the names of two of its subscribers suspected of illegally offering free music for downloading.

Bates, who ruled against Verizon in January in the same case, determined that First Amendment protections concerning anonymous expression do not conflict with the 1998 Digital Millennium Copyright Act. The law permits music companies to force internet providers to turn over the names of suspected music pirates upon subpoena from any U.S. District Court clerk’s office, without a judge’s signature required.

Supporters of Apple’s Music Store initiative hope the service ultimately will render these court battles irrelevant—although industry analysts note that Apple enters a market that has yet to establish much traction. Other providers of online music to paid subscribers have drawn only about 650,000 users, analysts estimate.

By allowing people to do pretty much as they please with their digital copies, however, Apple and the music industry are acknowledging that—owing to digital technology—online file-swapping can’t be eradicated completely.

Even Rosen, who led the fight against Napster and its free online music-swapping successors, called Apple’s new service “cool, cutting edge.”

“It’s not stealing anymore. It’s good karma,” said Jobs, asserting that other industry-backed services’ subscription-based models treat music fans as “criminals” with extra fees and restrictions.

Initially, Music Store works only on Macintosh computers with Mac OS X or higher, but by year’s end, Apple plans to make it compatible with devices using the nearly ubiquitous Microsoft Windows platform. The service then could have mass appeal.

Although the service is limited to Macs, which make up less than 3 percent of the entire desktop computing market, the segment is big enough to let the music industry test a new business model, said Phil Leigh, an analyst at the research firm Raymond James & Associates.

“I think it’ll change the world a little bit,” Leigh said. “It’ll be the first legitimate online music service that will have major brand recognition, and it’s focused on portability and ease of use.”


iTunes Music Store

Recording Industry Association of America

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