Intellectual Property
In defense of (Napster) collusion
Music consumers will benefit if Bertelsmann can convince the major record labels to conspire.
So much for collusion.
Despite longtime complaints that major record labels work together behind the scenes to protect their marketplace monopoly, you could practically hear jaws dropping Tuesday morning as music business executives heard about Bertelsmann’s historic deal with Napster. That’s because they found out about it the same way everyone else did, including the Recording Industry Association of America: on the news wires.
The fact that Bertelsmann, owner of BMG Music (i.e. Dave Matthews, Christina Aguilera, etc.), would strike a deal with Napster at the same time the music giant was part of an aggressive industry lawsuit to shut the music file-swapping company down for copyright infringement, must have especially stunned and angered some major label chiefs.
Is that any way for a “cartel” to operate? “Cartel” is a favorite tag among online conspiracy theorists for the major record companies. But a cartel working in tight unison would never mix up its signals this badly — particularly on such a sensitive and high-profile topic as Napster.
And would a cartel feature the kind of public sniping that came from Thomas Middelhoff, chairman and chief executive of Bertelsmann, at the triumphant press conference announcing the Napster alliance? “This is a call for the industry to wake up,” said Middlehoff. “It is not enough to fight file-sharing in the courtroom.”
Middelhoff sounded like he’d been recruited into Napster’s army of attorneys. (Even more intriguingly — no one from BMG distribution, which deals with brick-and-mortar retail on a daily basis, was part of the press conference. At a time when BMG is busy lining up retailer support for crucial fourth-quarter releases, the Napster announcement, which maps out a future in which consumers may bypass retailers completely, does not make life easy for the distribution team.)
It should also be noted that Bertelsmann’s surprising move came just months after Universal Music Group also shunned the major label pack strategy when it refused to settle a copyright infringement case against MP3.com. Instead, Universal saw the case to trial. For a cartel with just five members, it seems the major labels have a tough time sticking together.
The irony is that for the pending subscription models to work, like the one BMG and Napster hope to launch in which users will pay a monthly fee, the major labels will have to team up and work in unison. In other words, they will need to find a way to (legally) collude.
Although details remain murky, the proposed BMG/Napster deal would create a new music-trading entity: Call it “Napster II.” Users would pay a monthly fee and have access to BMG’s catalog. And thanks to new technology, Napster II would be able to detail downloads and make sure labels and artists were paid accordingly. Once Napster II is up and running, BMG would back out of the industry lawsuit, and then be left with options to buy Napster equity.
BMG is urging the other major labels to come aboard, and that’s where the problems begin. First of all, by grabbing an equity stake, BMG lowers the incentive for competitors like Sony and Warner Music Group to offer up their catalogs to Napster II. While those labels would be compensated for Napster II traffic, BMG would be the one turning a big profit if the new service really took off. Traditionally, labels have not been eager to help make their competitors rich.
At the same time BMG lines up with Napster, the other major labels are working on subscription models of their own. (And for now that’s what Napster II appears to be: BMG’s answer to a subscription model — albeit one that comes with a killer brand already attached.) So in theory, consumers may soon be faced with separate major-label subscription plans. Each would be looking for a monthly fee from users, and each would feature only a proprietary music catalog.
In other words, for Madonna music files, users would have to subscribe to the Warner plan; for Limp Bizkit, users would have to subscribe to the Universal plan; and so on. (Sony and Universal have announced plans for a joint subscription service, but it would still offer just two of the five major-label catalogs.)
So not only in a post-Napster world would users suddenly have to pay for access to online music, but the library they’d be choosing from would be greatly restricted, drawn along major-label catalog lines.
“The problem is if you turn on a service and offer just a portion of the music,” explains Nitsan Hargile, senior Internet analyst for Kaufman Brothers. “That’s not a realistic expectation by any means because music is the same for us, we don’t know or care if it’s BMG or Sony. We just expect all the music to be offered.”
Which brings us back to collusion. From a user’s perspective, if monthly subscription fees become a necessary evil, the best solution would be for one centralized online outlet (Napster II?) to legally offer all the major label catalogs. That way, consumers wouldn’t have to jump from service to service looking for their favorite acts. But in order for that to happen, all the major labels would have to come together and work out licensing deals and tackle the thorny issue of pricing.
But considering that the Federal Trade Commission just finished investigating record labels for setting artificially high CD prices through their minimum advertised pricing policy, the question for now is this: Will record companies want to open themselves up to price-fixing complaints again?
Eric Boehlert, a former senior writer for Salon, is the author of "Lapdogs: How the Press Rolled Over for Bush." More Eric Boehlert.
Where does the anti-SOPA movement go next?
Challenging the kings of copyright requires a new vision of the public domain
(Credit: Salon) The last few weeks have witnessed a remarkable convergence of conflicts over copyright: the arrest of Megaupload mastermind “Kim Dotcom” in New Zealand, an unprecedented show of unity among Internet giants such as Wikipedia and Google to fight anti-piracy legislation in Congress, and similar protests in Poland against new copyright measures. In a world wracked by recession, war and revolution, a topic oft-dismissed by journalists as “arcane” — copyright — has surged to the top of the political agenda.
Continue Reading CloseAlex Sayf Cummings is assistant professor of History at Georgia State University. His book on music piracy and intellectual property law is forthcoming from Oxford University Press, and he is a co-editor of the blog Tropics of Meta. More Alex Sayf Cummings.
Does culture really want to be free?
Are new media companies "digital parasites"? The author of "Free Ride" tells Salon piracy is killing art
(Credit: l i g h t p o e t via Shutterstock) Over the last few weeks, Salon has been looking at the destruction of the creative class by the Internet, the recession and a transforming economy. A new book, “Free Ride,” by the journalist Robert Levine, intersects with some of these concerns. Subtitled “How Digital Parasites Are Destroying the Culture Business and How the Culture Business Can Fight Back,” Levine’s book looks at how publishing, the music industry, newspapers and other industries drank the dot.com Kool-Aid, effectively killing themselves off. He’s particularly interested in copyright, the U.S. government’s role in unleashing the Internet and the impact of digital piracy.
Continue Reading CloseScott Timberg is a former Los Angeles Times arts and culture writer who has also contributed to the New York Times, GQ and other publications. He is the co-editor of the book "The Misread City: New Literary Los Angeles." He blogs at scott-timberg.blogspot.com/. More Scott Timberg.
Are your genes somebody else’s property?
A federal court ruled on Friday that companies could hold patents for human genes. Here's what the fuss is about
Can companies make you pay to look at your own genes? A federal appeals court ruling on Friday found that they could.
To be more specific, the court ruled that human genes, when isolated from their natural genetic housing (the chromosome), can be patented. The decision has been welcomed warmly by the biotech industry, which can now claim dominion over bits and pieces of our genetic blueprints. However, the ruling has been panned by critics who say it’s unethical and counterproductive to label human genes as intellectual property.
Continue Reading CloseWhy patent lawsuits and hot tubs don’t mix
A tale of interface design, monopoly control in the spa world, and lots and lots of bubbles
Have you ever stared blankly at the control panel of a hot tub, baffled by even the simplest of tasks — such as how to turn on the jets, or adjust the temperature, or even just turn the damn thing off? Perhaps you blamed your inability to comprehend on your state of impairment — a not uncommon malady unfortunately associated with hot tubs.
I’ll bet you never blamed monopoly control of hot tub electronic control systems or abusive intellecutal property law litigation!
I sure didn’t (and believe me, I have been baffled by many a hot tub), and as my readers know, I’ll blame monopoly control and out-of-control intellectual property laws for almost any sin, at the drop of, uh, a bathing suit.
Continue Reading Close
Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard.
Music industry wants even more control
Not satisfied with our current Draconian rules, the copyright cartel aims for absolute power
In the surely-you’re-joking category, here comes the music industry to say it needs even tougher copyright rules. Sorry, no joke.
As CNET’s Declan McCullagh reports from a conference in Aspen, Colo., Cary Sherman, president of the Recording Industry Association of America, complained about “loopholes” in the current copyright system. But what he calls loopholes are among the few parts of the law that remotely temper the absolute control that the RIAA and its allies, mainly in the movie business, want copyright holders to have over everything digital.
Continue Reading CloseA longtime participant in the tech and media worlds, Dan Gillmor is director of the Knight Center for Digital Media Entrepreneurship at Arizona State University's Walter Cronkite School of Journalism & Mass Communication. Follow Dan on Twitter: @dangillmor. More about Dan here. More Dan Gillmor.
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