Another Reason For Record Labels' Interest In A Music Tax: To Screw Apple

from the don't-think-it's-not-in-their-minds... dept

Despite early resistance, in the past few years, the record labels have warmed to the idea of a "music tax" put on ISPs. There are numerous reasons why this is a terrible idea, but you can bet there's one big reason why the record labels love it that they won't talk about: it would (they think, incorrectly) harm Apple. The recording industry has been amazingly jealous of Apple's success over the past few years -- even though its own demands for DRM caused much of the problem. It locked Apple in as the dominant provider and gave it tremendous market leverage -- such that no big record label risks rocking the boat and getting thrown out of iTunes.

And, despite the recent agreement to dump DRM and allow some form of variable pricing, the NY Times notes that the big record labels still have a strong hatred for Apple. While the article doesn't discuss it at all, you can bet that a big part of the desire to come up with a music tax/collective license/whatever they want to call it these days to make it sound palatable is that it will harm the iTunes lock on the market. That might be true, but the record labels may find it's more difficult to get rid of Apple than they believe. Apple's real profits are in the iPod, not the music -- so if they can suddenly offer music for "free" via iTunes as well, that would likely help sell more iPods, which would actually increase the use of iTunes as the dominant interface for interacting with the iPod.

Filed Under: itunes, music tax, record labels
Companies: apple, riaa

iTunes Songs Don't Have DRM, But They Contain Your Email Address

from the two-steps-forward-one-step-back dept

Apple got a lot of press last week when it announced that it was going to remove the DRM from songs it sold through the iTunes Music Store. That's a great thing in itself, since it removes the barriers legitimate customers faced in playing back music they purchased on the device of their choice. But details are coming out, and it's not all good news: the songs are watermarked (via Slashdot) with the email address of the iTunes account used to purchase them. This is certainly better than DRM, but it's still not great. The biggest issue is that it links files to a particular consumer -- which will likely lead to the RIAA using the watermarks to attempt to "prove" that people actively shared songs and sue them. It seems inevitable that the label cartel will attempt to use the marks to inflict liability on users if music bearing their email address appears online. Which is great, until a person's iPod gets stolen and the music ripped from it, or a friend grabs music off of somebody's hard drive without their knowledge. The RIAA's legal strategy has been based on flimsy evidence; removing the DRM but adding watermarks simply gives them another way to "prove" people shared music they purchased online, even though the marks won't actually prove anything.

Filed Under: drm, email address, itunes
Companies: apple

Lame: Apple Charging $0.30 Per Song To Ditch DRM

from the do-it-yourself dept

In the initial news about Apple going DRM-free, I saw it reported that Apple would let you convert your existing files to DRM-free. However, what was left out of the reports I saw (though, people in our comments pointed it out) was that Apple wants to charge you $0.30 for the privilege of getting rid of the DRM. Of course, you can just get rid of the DRM yourself if you don't mind going through the conversion process (though, even that's a bit of a pain). Either way, it's pretty lame to charge people to get rid of DRM. Why even offer that as an option? Are people really going to pay more?

Filed Under: cost, drm, itunes
Companies: apple

As Rumored, Apple Gives Record Labels Variable iTunes Pricing In Exchange For Ditching DRM

from the it's-something dept

As was rumored last night by Greg Sandoval at News.com, it appears that Apple has worked out a deal with the major record labels (being confirmed as I type) where they will give up DRM (which is the direction they've been moving towards anyway) in exchange for variable pricing of music -- which they've been salivating over for years. This has been a major source of contention between Apple and the record labels. Steve Jobs has stood firmly by the $0.99/song price, while the record labels specifically wanted to be able to price hit songs at higher prices. The dropping of DRM is nice, but hardly that surprising, given that pretty much every other online download store has been going DRM free. This just puts the final nail in the coffin for music DRM. One nice tidbit: you'll apparently be able to upgrade your older DRM'd purchases to make them DRM free. That's a good (and slightly surprising) move.

As for the pricing, there's now three tiers: $0.69, $0.99 and $1.29. Hit new songs will go for the higher price while older, less popular songs will have their prices drop. The announcement isn't that surprising, but it is definitely a shift. What will be worth watching is how this impacts sales. It really may depend on how the record industry plays this. If (as seems likely) they put too many songs in that high priced level, it's going to lead to backlash. However, if they really embrace that lower price, it could encourage more folks to download music. I also wonder if it will push competing music download stores, such as Amazon.com to lower its prices even further as well.

While this definitely is a shift from the way iTunes has always worked, in the end, it's really not a huge shift. The industry was moving in this direction anyway, and killing off DRM was long overdue. The variable pricing is the type of thing that the big record labels will likely screw up, but in the long run is probably a good thing. The $0.99 per song fee has always been too high, and accepting variable pricing will eventually lead to those prices decreasing (not increasing, as the industry expects).

Filed Under: drm, itunes, variable pricing
Companies: apple

New York The Latest To Propose Taxing iTunes Downloads

from the for-no-reason-at-all dept

Earlier this year, some politicians in California, which is struggling with massive budgetary problems, proposed adding a tax to iTunes downloads. Now, Governor David Paterson in New York is proposing the same thing. There's no functional reason for this, other than the fact that the state desperately needs money, and so it's trying to add taxes to just about anything it can find. Of course, back in the old days, the point of a sales tax like that was to contribute to gov't-funded infrastructure (roads and such) that allowed folks to go and buy something. There's no such rationale for taxing internet downloads. It's a blatant money grab and Paterson seems to have no problem admitting that.

Filed Under: david patterson, downloads, itunes, new york, tax

EFF Blasts Apple For Fraudulent DMCA Takedown Of Wiki Page

from the let's-look-at-the-law dept

It's no secret that Apple is excessively protective of the way some of its systems work. That includes trying to stop any other application, other than iTunes, from controlling an iPod. That's a bit of a pain for those of us who like to use alternative apps, such as Songbird. Because of this, there are plenty of folks who work out ways to reverse engineer Apple's system to make this work. Specifically, they need to understand a file called iTunesDB, which Apple tries to prevent others from writing to with a checksum hash. When Apple first introduced the hash it was reverse engineered within a couple days. Apple just recently changed the hash, meaning that it needs to be reverse engineered again. There's a public wiki where a bunch of folks were collaborating to do just that... but Apple sent a DMCA takedown notice to the site.

The EFF has stepped up to walk through the many, many reasons why there's no DMCA violation on the site, and Apple's takedown notice appears to be fraudulent. Yes, the anti-circumvention provisions of the DMCA do say it's illegal to offer a technology, product, service, device or device to get around DRM, but an open discussion on a wiki is not any of those things. Perhaps more importantly, Apple doesn't own the copyright on iTunesDB. Each iPod makes its own iTunesDB file based on what files they put on their device. The copyright is unlikely to belong to Apple. Next up, reverse engineering is perfectly legal, and the DMCA has a specific exception for reverse engineering. And, finally, the anti-circumvention clause is designed to protect copyright infringement -- but the folks building alternative software programs aren't doing anything for copyright infringement -- they're just trying to make iPods work with their software.

Filed Under: copyright, dmca, ipod, itunes, itunesdb
Companies: apple, eff

Apple Adds HDCP To New Laptops; Piracy Continues, Legit Users Get Annoyed

from the yes,-again dept

It appears that Apple has begun using HDCP copy protection technology on some content it sells through the iTunes Music Store, and implementing it in its latest laptops. HDCP "protects" content as it travels across different types of connections, and is generally implemented in such a way that an HDCP-compliant source won't play content on a non-HDCP compliant connected display. So HDCP-ified content can't be played on a number of older displays, or ones that don't use one of the compatible types of connections.

You know how this thing goes down: movie studios insist on some new magic method to protect their content from piracy, it gets implemented, does nothing to stop piracy (sometimes even helps pirates), and ends up getting in the way for legitimate customers. In this instance, a guy who'd bought a movie from iTunes tried to play it over a projector connected to his Mac via a VGA connection; instead of being able to enjoy the content he'd legitimately purchased in a reasonable way, he was greeted with an error message. So here's a customer who legitimately purchased some content, and is being stopped from enjoying it in a perfectly reasonable, legitimate and legal way. Once again, it's puzzling to see content and technology companies implement these roadblocks to frustrate their paying customers. What's the incentive for this guy to pay to download a movie, rather than download a pirated version that he can watch on his projector? Apparently, it bears repeating for content and device companies: you don't stop piracy by annoying your paying customers.

Filed Under: copy protection, drm, hdcp, itunes
Companies: apple

Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved'

from the compulsory-mess dept

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

Filed Under: compulsory licensing, copyright, downloads, itunes, music, publishers, royalties, songwriters
Companies: apple

Apple Threatened To Close iTunes If Royalties Were Raised?

from the empty-threats dept

According to Fortune, Apple threatened to shut down iTunes if copyright royalties were raised by the Copyright Royalty Board. I tend to share Greg Sandoval's skepticism about the seriousness of this statement. Apple makes most of its money from selling hardware platforms, and iTunes is mostly designed to make those platforms more valuable. While some reports suggest that Apple ekes out a tiny profit on iTunes, others have reported that it's already something of a loss leader for the company, with razor thin margins. You can certainly understand why the company would be upset about the idea of increased royalties, which would shrink those margins even further, but the idea that the company would shut down iTunes, seems like a case of cutting off your nose to spite your face. Even at a small loss, iTunes makes iPods and iPhones much more valuable, and Apple should be able to absorb the hit on the iTunes side via the hardware side. The same is probably not true for other digital media sellers, however.

Filed Under: copyright, itunes, loss leader, royalties
Companies: apple

Norway To Move Forward In Trying To Force Apple To Open Up iTunes

from the this-ought-to-be-interesting dept

What began as a minor squabble over the terms of service that went with iTunes in Norway quickly blew up into a bigger deal, with Norway blasting Apple for locking songs bought via iTunes only to the iPod via FairPlay DRM. While we can understand the frustration that some might have about this, it is still a user's choice to buy from iTunes, knowing that the music won't work with other digital music players. It's why I don't buy music from iTunes, for example. And these days, we're seeing more open competitors hit the market, such as Amazon's MP3 store. Thus, Apples use of DRM hardly seems like a reason for the government to force the company to open up.

However, that's exactly what's happening with Norway, as the government is moving forward with a case against Apple that might force the company to either open up FairPlay or shut down iTunes in Norway. If the latter is the end result, it's difficult to see how anyone actually benefits. If Apple wants to limit its own market, that's Apple's decision. It doesn't make sense for Norway to get involved.

Filed Under: drm, itunes, norway, open
Companies: apple