People have always tended to hate "terms of service" (TOS) and "end user license agreements" (EULAs) for their software. No one reads the things. A few years back, we wrote about a software company that attempted to prove that no one read the terms of service, by embedding a promise to pay $1,000 to the first person who read the terms and claimed the money. It took four months and over 3,000 downloads before anyone claimed the money.
For some reason, however, the terms and conditions associated with Apple's iTunes service have taken things to an entirely new level, to the point where it appears the iTunes terms have become a cultural icon entirely separate from iTunes. CNN recently asked some lawyers to go through the 56-page document to pick out the bits and pieces you should actually be aware of, but probably aren't. But that's nothing.
I have to admit that I'm sort of fascinated with the level to which the iTunes terms have become such a cultural phenomenon, and am curious to see how far it will go. Will we see plays or movies based on it? How about a musical version?
We've already discussed the pointlessness of arguing over whether or not iTunes new Music Match service "legalizes" infringement. It does not. No one cared about the files on anyone's hard drive, so this doesn't make one whit of difference. Besides, my hard drive has tons of music that wasn't purchased on iTunes, but was ripped (legally) from CDs I own. How can anyone tell the difference? On top of that, if for some reason, someone actually did care about the files on a hard drive, the fact that there were copies from the "iCloud" wouldn't "legitimize" the files at all.
And yet... it's kinda funny to see the varying reactions to all of this, especially from the copyright holders themselves. On the one hand, we have a Forbes story highlighting how the IFPI loves the new service:
IFPI’s chief executive, Frances Moore, told me via email that iTunes Match was “good news for music consumers and for the legitimate digital music business. It is the latest example of music companies embracing new technology, licensing new services that respect copyright and responding to the new ways consumers want to access and enjoy music.”
Brisbane-based intellectual property lawyer Ken Philp said iTunes Match provided a means for people to "launder" pirated music, as it would substitute a pirated track on a person's hard drive for a legitimate version accessed from the cloud.
Mr Philip, who is retained to defend the intellectual property rights of Jimi Hendrix's collections in Australia, said iTunes Match had the potential to legitimise pirated collections and encourage more piracy.
That makes little sense. As we've already pointed out there's no real legal benefit to moving your songs to the iCloud. Of course, it's not too hard to figure out the real backstory here. Apple paid out about $150 million upfront to the major labels -- the companies represented by the IFPI. So of course the IFPI is happy about it. Folks like Mr. Philp, however, didn't get any cash, so of course he's upset. But, it's not like he was going to get random cash from some new source anyway, so it's not clear what he's complaining about.
As an interesting contrast, that Forbes article above quotes former Pirate Bay spokesperson Peter Sunde pointing out how silly Music Match is:
Peter Sunde, co-founder of file-sharing site The Pirate Bay says iTunes Match marks a big step towards consumers losing control of their media. The problem isn’t the $25, it’s that it doesn’t make sense to pay Apple, with its closed-source system, to gain access to music you’ve downloaded. More crucial than that, he says, is what that could mean for the future of sharing music.
Sunde cites Spotify as an example. The music-streaming service does let you share music links with your friends, but they must have a Spotify account to hear them. People who use Spotify have already stopped sharing and keeping their songs, he says. “In the end if people are dependent enough on the services, there will be no more copies [on local drives].”
Sunde later warns that relying on Apple may backfire for people, if it suddenly decides to "remove" tracks it believes don't belong there.
On the whole, I tend to agree with Sunde on this. First of all, I don't see how this legitimizes "piracy" at all -- as explained above. I also don't see it as being all that compelling. Almost all of the features Apple offers I already have set up through alternative means. And I'm not clear why I should pay Apple $25/year to gain access to the music I already paid for.
Apple continues to make the iPhone/iPad app platform as obsessively controlled as possible. The latest are reports that Apple is starting to block other apps that sell content within their apps -- i.e., no more Kindle purchases on your iPad. The story is that Apple now wants all such purchases to go through Apple's cash register, so it gets a cut. Of course, that just seems like another opportunity for folks to seek out alternative solutions, such as via web apps, which Apple can't block. This seems like the sort of move that could backfire on Apple. It's no secret that the company likes to control such things, and to force everything through its own gateway and payment systems (where it gets to take a cut), but if it keeps doing things like that it's going to piss off an awful lot of potentially useful partners.
If someone calls you up, claiming to be from Apple and telling you that you've won $10,000 for downloading the 10 billionth app in the iTunes App Store, you'd probably think it was a scam too. That's certainly what Gail Davis in the UK thought when it happened to her -- except that it actually turned out to be real. All I can say is kudos to Ms. Davis for recognizing just how unlikely the story was... and for then taking the second call and realizing it was actually true.
Shocklee points us to a story claiming that a group of teenagers in the UK uploaded some of their own songs to iTunes, then used a bunch of stolen credit cards to download the songs thousands of times, and then collected approximately $773,000 in royalties. The article notes that this would be "an easy enough crime to commit," but something in the reporting on this story doesn't make much sense at all.
First off, something appears to be way off in the numbers. The reports claim that the teens downloaded their own songs approximately 6,000 times over the course of a year and a half. Yet, they claim they made $773,000 (£500,000) in royalties? I know that Apple now allows slightly higher prices on some songs, but they're not that high. The math doesn't add up at all. iTunes songs in the UK cost £0.79 per song, so 6,000 songs would mean £4,740 spent in total. Take Apple's (approximated) 30% cut, and you're left with £3,318 -- a far cry from £500,000. Even if you assume these songs got the "premium" pricing of £0.99, we're still orders of magnitude off (hat tips to Dave W & Stephen for UK iTunes pricing info). I've gone through the news reports -- and a whole variety of press reports and blogs all report the story exactly the same way: 6,000 total downloads (2,000 by this one guy, Lamar Johnson, who pled guilty to the crime) but not one report that I've found which seems to question the math.
I guess it's entirely possible that buying a bunch of songs yourself would boost the songs onto some lists, that would drive additional "real" sales, but if that were the case, that would be a much more interesting story -- and you would think that the press would point that out. We've certainly heard claims of "real" music releases where labels have dumped money into getting people to "buy" thousands of copies of songs to try to push a song into a hit list but none of the news on this story suggests that's the case.
Separately, despite the claim of the original article that this is a crime, I fail to see how that's the case at all. It's clearly an attempt to launder money via iTunes, but there seem to be multiple serious problems with it. First, as soon as the stolen cards are discovered and the false charges are made clear, it has to be incredibly easy to track down the likely suspect: whoever uploaded the music. On top of that, given iTunes' 30% or so cut, it seems like a somewhat costly way to launder money... in a way that is incredibly traceable, so the money isn't even that well laundered.
Derek Sivers recently had a wonderful post over at the Music Think Tank blog about the day Steve Jobs "dissed" him in a keynote speech. The full story is absolutely worth reading (Sivers, as always, is a wonderful story teller), but the short version is that a bunch of folks who represented independent musicians were invited to Apple soon after the original iTunes store launched (with mainly major label music). They weren't told they were meeting with Steve Jobs, but he showed up, telling them that the plan was to get "every piece of music ever recorded" into the iTunes store. Apple folks then showed everyone in the room how to upload tracks, and Sivers seemed disappointed that he wouldn't be able to just use the tracks they already had available, but would have to re-rip and re-enter data:
Then they showed the Apple software we’d all have to use to send them each album. It required us to put the audio CD into a Mac CD-Rom drive, type in all of the album info, song titles and bio, then click [encode] for it to rip, and [upload] when done.
I raised my hand and asked if it was required that we use their software. They said yes.
I asked again, saying we had over 100,000 albums, already ripped as lossless WAV files, with all of the info carefully entered by the artist themselves, ready to send to their servers with their exact specifications. They said sorry - you need to use this software - there is no other way.
Ugh. That means we have to pull each one of those CDs off of the shelf again, stick it in a Mac, then cut-and-paste every song title into that Mac software. But so be it. If that’s what Apple needs, OK.
After the meeting, Sivers wrote up the notes he took from the meeting and posted them to his blog... only to get angry messages from people at Apple about how the meeting was confidential (something Sivers claims he was never told). Either way, they got the contract from Apple, signed it immediately, and got to work. In realizing they had to rip and upload 100,000 CDs all over again, and that it was going to be costly, they asked CDBaby musicians to pay $40 to get their songs onto iTunes. Because of the iTunes activity, all the other major music services also asked for all of CDBaby's music as well -- Rhapsody, Yahoo Music, Napster and eMusic. Apparently 5,000 musicians paid the $40 and CDBaby started ripping all those CDs.
They ripped and ripped and ripped... and at some point realized that Apple had never returned the contract. Months went by. Sivers contacted Apple... and nothing. Finally, five months later, Steve Jobs did a keynote where he announced that iTunes was doubling the number of tracks available, from 200,000 to 400,000... and in the middle, he made a crack about how they were trying to be selective, focusing on quality, rather than quantity, and specifically noting that anyone could just pay $40 to have music uploaded to competing sites, but that Apple only wanted the best. Sivers realized: "Whoa! Wow. Steve Jobs just dissed me hard! I'm the only one charging $40. That was me he's referring to." You can see the clip below:
Sivers took this to mean that, despite Jobs' original statements about wanting all songs in iTunes, this meant he no longer wanted independent music. Following the speech, he sent around a note telling everyone he was refunding the $40 fees, giving back the $200,000 -- much of which had been spent.
The very next day? CDBaby received the signed contract from Apple with details about how to upload their 500,000 tracks.
The WSJ is reporting that Apple is getting set to announce that the Beatles' music is finally available on iTunes, something that tons of online music stores have been trying to offer for years and years without any luck. Given that Steve Jobs allegedly named his company "Apple" after the Beatles' "Apple Corp." -- it's been a particular goal of Jobs to get their music into his store (even with the legal fights that have been had over the name). Either way, while I'm sure Steve Jobs will make this out to be the most amazing thing since the invention of electrical power, it's kind of worth pointing out that the Beatles' music has been widely available online for years via file sharing options. Putting this in perspective, all this is really doing is giving people a chance to pay money for music they've probably already been getting for free. Suddenly, it doesn't seem like such a big deal, and makes you wonder what the hell took so long.
It's really incredible to watch music industry folks shoot themselves in the foot over and over again with a simple inability to understand that promotions can lead to more sales, and that you don't need to get paid for every promotional effort. We've seen some in the industry gleefully admit that they'd rather have $1 today than $100 tomorrow. But this sort of thinking seems to pervade so much of the music industry at times that it's really quite stunning.
The latest comes from rumors that Apple was going to double song sample lengths in iTunes from 30-seconds to 60-seconds. There's apparently plenty of good reasons for this, as research has shown that 60-second samples lead to more purchases.
And yet, despite the rumors, you'll notice that Steve Jobs did not announce the expected doubling of samples. Why? Apparently Apple had the approval of all four of the major record labels... but he forgot to go groveling and beg for permission from the other side of the coin: the music publishers. Apparently, various music publishers read the rumors of the doubling and were quite upset that Apple hadn't asked for their permission, and even started lawyering up to sue, in case Apple announced such a plan without first getting permission from various music publishers.
And people say we're exaggerating when we show just how ridiculous music licensing is. This isn't about copyright or revenue or anything. This is just childish foot-stomping by a group that demands that everyone ask permission before helping them make more money. Stunning.
For well over a decade, the major record labels have done everything possible to fight the concept of personal music lockers. This never made much sense to me, as these lockers were designed to give people who actually had purchased music more ways to listen to that music. That is, it made the label's music more valuable. You would, normally, think that this is a good thing that the labels would encourage. But, these are the major record labels we're talking about here. All they seemed concerned with is making sure that any time you get more value out of music, that you pay more. They claim, with somewhat dubious legal logic, that streaming music that someone has legally purchased still requires a separate license. That is, if you use a music locker to store MP3 files that you actually paid for from an authorized source like iTunes or Amazon, and then put them into a music locker and stream them, the labels want to get paid again.
Michael Robertson, who runs just such a music locker company, MP3Tunes, notes that Apple appears to be quietly enabling this feature without making a big deal of it, perhaps because of ongoing negotiations with music labels over the widely rumored "iTunes-in-the-cloud" service. The newly enabled offering isn't iTunes-in-the-clouds, but does allow some basic music streaming functionality for users who have music files stored on an iDisk account. This seems perfectly reasonable, of course. It's your music, and your storage locker -- why shouldn't you be able to stream it without involving the record label?
The labels, particularly Universal Music, apparently disagree:
One company sure to be miffed at this new capability is Universal Music Group (UMG) the world's largest music company. They have told net companies who have inquired about offering personal cloud music services that backing up and downloading music files is OK with limitations, but streaming music files requires entering into a license and paying a per stream fee. Apple's service allows unlimited sharing (no username or password required) and now background streaming - all without a license from the record labels.
As Robertson notes, this is Apple "testing the limits" of what they can do before the labels freak out (expect that shortly). However, the question really is how far will Apple go to fight this issue with the labels. In the past, Apple has seemed perfectly willing to cave to certain aspects of record label demands in an attempt to harm Apple's own competitors -- and I could see the same thing happening here as well. Even if Apple doesn't want to pay per-stream fees to the labels for previously purchased music, it might realize that it's still better situated than competitors. Unfortunately, Apple doesn't have much of a reason to fight for consumer rights in this scenario, even if it's testing the boundaries quietly.
I've been a pretty harsh critic of Lala over the years. The company was long on hype and short on substance with its ever changing business model. First it was a CD swapping service. Then it was a free streaming music service. Then it was an iTunes-in-the-cloud. Still, the final product was decent, and with a bit of work could take on Spotify in the market. When Apple swooped in and bought Lala late last year, many people got excited over the possibility of Apple creating its own streaming music service that really could be seamless.
Instead, it looks like Apple bought Lala to shut it down. Just five months or so after purchasing it, Apple has announced that Lala will be closing at the end of May, pissing off lots of users. Now, it's entirely possible (or even likely) that Apple is timing the shutdown with a launch of a totally new streaming iTunes-in-the-cloud type service, but it does seem weird to buy a company and shut it down so quickly, and raises questions of whether or not the purchase was really about building out Apple's offerings, or about shutting down a nascent competitor just before Apple launched its own version. Also, if the plan is to launch its own version, why "shut down" Lala? Why not just transfer them over to the new service?
In the meantime, Spotify still hasn't launched in the US, but you would think that now might be a good time to step in and sign up disgruntled Lala listeners -- before Apple really enters the market...
