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Getting Music Online

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Volume 1, Issue 2
October 2000
With March Update!

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Getting
Music Online

Websites like Napster.com and MP3.com have turned the music industry on its ear over the past year. Their success has been fuelled by the fact that the recording industry failed to see the significance of mp3 when it first hit the market.

The recording industry has tried to halt the success of these sites with lawsuits for copyright infringements but as any one who has witnessed recent developments knows, you can't stop the power of technology.

The strenghth of mp3 is that it allows the music from CDs or radio to be copied into a digital audio compression format without any perceptible loss in quality. The mp3 file can then be played using any of the various mp3 players on the market.

There are both virtual mp3 players that can be downloaded for free onto your computer and physical players like the Rio, that fits into the palm of your hand and can be purchased on and off line.

If your computer has a CD writer some of the new virtual players also have the capability of taking mp3 files and burning them onto CD. This makes it easy to create CDs from mp3 files.

Because it can be copied so easily without a loss in quality, mp3 has become the format of choice for music lovers trading and downloading music over the Internet.

Individuals like Napster's Shawn Fanning and MP3.com chairman Michael Robertson saw the potential of mp3 music and were able to build successful online businesses in spite of the music industry.

MP3.com was sued by the recording industry earlier this year because of a service offered on its site called My.mp3.com. It allows music lovers the ability to create personal music libraries from CDs that they already own.

By connecting to the MP3.com site and inserting a CD into their computer drive, MP3.com is able to read the contents of the CD and verify that the individual owns that particular CD. Once that is established, they are then able to listen to the CD in digital format from the MP3.com site.

Larry Neumeister of Associated Press reported "MP3.com chief executive Michael Robertson testified that the company went to great lengths to develop software that would require customers to prove they already own CDs before they were permitted to hear their favorite tunes over the Internet."

Judge Jed Rakoff ruled in April that the service infringed on the record companies' copyrights. MP3.com suspended the service May 10.

By August Reuters reported that MP3.com had made out of court settlements with Time Warner Inc.'s Warner Brothers music group, Sony Music Entertainment, BMG, the music unit of Bertelsmann AG and EMI Group Plc. The deal allowed MP3.com to use the companies' music in their My.Mp3.com database. The settlements were reported to have been $20 million each.

Universal Music Group Inc. refused to settle. Sam Costello of IDG reported in late September that after taking MP3.com to court, Universal Music Group Inc. won damages that could eventually cost MP3.com $118 million.

Associated Press reported that MP3.com plans to appeal, and the case is likely to reach the U.S. Supreme Court.

Because MP3.com had made out of court settlements with the other recording companies it was able to resume the MyMP3.com service.

Neumeister quoted Michael Rhodes, MP3.com's lawyer as saying that "despite the settlements, as many as half of the CDs in MP3.com's collection may not be covered by the deals, meaning that a large ruling for Universal could prompt a wave of fresh lawsuits against MP3.com".

Legislation has since been proposed to make the MP3.com service legal. On September 25, representative Rick Boucher (D-VA) announced that he and Representative Richard Burr (R-NC), Ray La Hood (R-IL) and Fred Upton (R-MI) had introduced legislation to reform U.S. copyright laws, which would allow consumers Internet access to music they already owned.

The legislation, the Music Owners' Listening Rights Act of 2000, would allow consumers who have purchased CDs to place them at a location on the Internet and access that music from any location. The legislation would make services like MyMP3.com legal.

In a letter to Congress from the representatives supporting the bill it was quoted as saying that a 'new poll conducted by Luntz research found that 79% of frequent Internet users believe that "copyright laws should not infringe on an individual's access to the music that they have legally purchased."'

In an article by Gary Gentile of the Associated Press, Boucher supported the proposed legislation "the kind of technology developed by MP3.com and made legal by his bill would allow music buyers to listen to their stored songs in their car after satellite Internet access is perfected, in their office or from a friend's computer.

The bill would only apply to music that is sent, or "streamed," not music that is downloaded. Boucher said his bill will not be considered before Congress recesses in several weeks but he will reintroduce it when the next session convenes in January."

In a press release on October 3, the Digital Future Coalition (DFC) announced its support of the legislation. The group consists of forty-two national organizations representing educators, computer and telecommunications industry associations, libraries, artists, software and hardware producers, archivists and scientists.

The press release reported that the "DFC is committed to striking an appropriate balance in law and public policy between protecting intellectual property rights and affording public access to it."

MP3.com is supporting the proposed legislation from its site asking users to join in their Million Email March by emailing elected officials and friends about it.

Napster has also been making headway in its fight against the recording industry. The site provides a service that enables users to swap mp3 music files by accessing each other's hard drives.

On July 28 the site had been granted a reprieve when an appeals court blocked an injunction that would have temporarily shut down the music-swapping service.

Ron Harris of the Associated Press reported on Oct. 2 that three federal appeals judges put the onus on the recording industry to prove why a lower court's injunction against Napster Inc. should be reinstated and the site shut down.

Harris reported that the hearing was part of the continuing legal battle between Napster and the Recording Industry Association of America (RIAA), which alleges that Napster contributes to copyright infringement by allowing millions of users to search for music with its MusicShare directory.

The recording industry considers this case critical in its fight against online piracy. No decision has yet been made in the Napster case.

However, Ben Charny, reported in ZDNET News on October 31, that an out of court deal had been reached with one of the five recording companies that had sued Napster. As a result Napster isn't going to be a free service for much longer. He reported that Napster CEO Hank Barry said that "38 million Napster users will soon have to pay 'monthly dues' of, perhaps, $4.95 to access each other's hard drives... "

The monthly dues are a result of a deal Napster reached with Bertelsmann AG. Charny further reported that " Bertelsmann will own a piece of Napster and will loan money to the company to enact the changes to the file swapping service... It will also make its catalog of songs available to Napster users."

It remains to be seen if the remaining recording companies will follow suit.

Meanwhile there is evidence to indicate that online music sites are not affecting the sales of CDs. In an article in Reuters in late August it was reported that shipments of full length compact discs had reached an all time high in the US during the first half of 2000. RIAA reported that is was up 6 percent from the same time last year.

The trend is the same in Canada. In an article edited by Jonathan Cohen in July for Billboard and BPI Communications Inc it was reported that "Toronto based Solutions Research Group, found that 15% of all Canadian Internet users 12 years of age and older, approximately 1.8 million people, have used Napster at least once to download MP3 files. While the average user downloaded seven MP3 files in the last week, 73% purchased four or more CDs in the past six months."

Musicians seem to have mixed feelings about the online services.

In August ABCNEWS quoted Prince as saying that, services like those offered by Napster are "exciting". ' "There does not seem 2 b anything the old record companies can do about preventing this evolution from happening."

Prince cites Napster as an illustration of "the growing frustration over how much the record companies control what music people get to hear."'

In a special to ABCNEWS Fred Moody raises the point that "record companies should still beware. The real danger to their hegemony comes from the ability of the Internet to connect artists directly with audiences.

Already, bands with niche appeal who cannot get major label contracts because record companies are increasingly prone to sign only bands with potential mass appeal are discovering that they can survive relatively well by showcasing and selling their music over the Internet directly to fans, cutting out the evil middlemen. Control of distribution has always been the weapon companies have used to keep artists in line.... "

Brian Hiatt of Sonicnet reported the Smashing Pumpkins and Hole had taken their music online. He reported that the Pumpkins released what they said was their final album, MACHINA II /friends and enemies of modern music, by pressing 25 vinyl copies of it and encouraging music lovers to distribute it free over the Internet.

Hole had made more than 60 previously unreleased recordings - available for free on their Web site (hole.com).

The band Offspring had originally decided to release its album Conspiracy of One online but a standoff with its label group Sony Music put an end to the decision.

Gil Kaufman and Teri vanHorn of Sonicnet.com reported "Sony Music, which owns the Offspring's label, Columbia, had planned to seek an injunction against the band and a temporary restraining order.

Meanwhile, the Offspring had prepared a breach of contract countersuit." In the end the band decided not to release the album online.

Not all musicians are happy with the online services. Richard B.Simon of Sonicnet reported that on May 3, Metallica drummer Lars Ulrich and attorney Howard King delivered a list of more than 300,000 names of copyright infringers to Napster's.

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Ulrich requested, under the Digital Millennium Copyright Act, that the users, who had been tracked through a third party, be thrown off the Napster system. Napster complied.

Under law, Simon reported, the onus is on the person making the claim to prove that copyright infringement has taken place. Since Metallica decided not to take action against the alleged infringers their accounts were reinstated on Napster. They had to swear under penalty of perjury that they had been mistakenly accused of the charge.

Simon also reported that veteran rapper Dr. Dre had turned in more than 200,000 user names in the weeks before.

The reality to all of this is that MP3.com and Napster are just the tip of the iceberg and if those sites shut down there will be others to take their place.

There are other music sites where mp3 is making its mark. Shoutcast.com offers streaming technology that allows music to be taken from the radio and turned into mp3 files. Users can play music files directly over the Internet without having to download the music first.

There are stations offering different types of music with varied selections to fit your music taste. The site allows station searches on genres.

It is similar to playing music from a radio but with wider selection and in most cases fewer interruptions. The software is used in conjunction with the Winamp audio player, Audion and XMMS.

The technology allows anyone on the Internet to broadcast audio from their PC to listeners across the Internet or any other IP-based network such as a college campus.

Webcasters are covered under legislation passed in October 98. The legislation, created by the Recording Industry Association of America (RIAA), controls the production of multimedia.

The courts and Congress will determine the futures of sites like Napster and MP3.com. It is the fans, however, who ultimately control the power in the online music world and it is they who will orchestrate its finale.

Because there is so much happening in online music this March update has been added.



Napster Update

The ruling was made late on March 5 by Judge Marilyn Hall Patel that Napster must begin blocking access to music files within 72 hours of receiving official notification from the Recording Industry Association of America (RIAA).

Reuters' Sue Zeidler reported March 6 that the RIAA must provide Napster with the title and artist name for each work, an example of an online music file available over Napster which contains the work, and certification that the work is copyrighted.

She quoted Hilary Rosen, president of the RIAA as saying, ``We are gratified the District Court acted so promptly in issuing its injunction requiring Napster to remove infringing works from its system,...We intend to provide the notifications prescribed by the Court expeditiously, and look forward to the end of Napster's infringing activity.''

Erica D. Rowell of ABCNEWS reported on March 2 that Napster had created a way to filter out specific file names that might be clips of pirated songs.

Lawyer David Boies was quoted in the article as having told U.S. District Court Judge Marilyn Patel, "We have had a group of people working night and day on a process to block access to these files,...What we are doing is inserting a step between the uploading and the viewing of the index, that will block out specific file names."

Zeidler reported that Napster had begun blocking users from 2 million music files late Sunday, which included songs by the Beatles and Metallica.

The BBC reported March 2 that Hank Barry, Napster's chief executive, said the company was also continuing work on a subscription-based service, which could be launched in a few months.

The BBC further reported that Bertelsmann is the only one of the five major record companies to have reached a deal with Napster and Napster was working with the company to create a new model for its service.

In an effort to avert an injunction, Napster had offered the five major record companies a $1bn deal to settle the case in late February but it was rejected.

"On February 12 a three-judge panel from the appeals court ruled that Napster could be held liable for copyright infringement and that an injunction, which could essentially shut down Napster, was not only warranted but required," Reuters reported March 1.

It was also reported that the panel had ordered a lower court to modify the injunction requiring the record labels to identify which of their copyrights were infringed on. The judge could have ordered the injunction be implemented as early as March 2.

With the crackdown on Napster, fans have been scrambling to find similar free file swapping sites. Other sites have also closed down as a result of the Recording Industry Association of America (RIAA) requesting the sites remove their services or face similar lawsuits.

For instance as it awaits the Napster ruling, Spinfrenzy.com has closed down with a redirection to one of its partner sites EasyWebGraphics. Another popular file sharing site, cutemx.com now takes you to globalscapeinc.

There is, however, one site that believes its file sharing service is immune from prosecution and is "unstoppable". From the Gnutella news site, it was reported that because it is an anonymous service and isn't centralized like Napster, there isnít much prosecutors can do. It is basically a search engine linking queries to users.

The site reports, "Almost everyone on GnutellaNet shares their stuff. Every client on the GnutellaNet is also a server, so you not only can find stuff, but you can also make things available for the benefit of others.... There are a few things that will prevent Gnutella from being stopped ....First, Gnutella is nothing but a protocol. It's just freely accessible information. There is no company to sue. No one entity is really responsible for Gnutella."

GnutellaNet has been criticized in the past for not being as easy to use as Napster. Gwendolyn Mariano of CNET reported March 1 that although analysts say that "Gnutella is more complex, it offers more file-sharing possibilities, such as movies and Photoshop programs."

Because Gnutella is an open protocol, it has inspired other companies to improve on the technology. Yippee.net reported that LimeWire, for instance, had "the best attempt at 'Napsterising' Gnutella that we've ever seen! LimeWire is about as simple and effective as a Gnutella clone can get."

From its site LimeWire reports that it is compatible with the Gnutella file-sharing protocol and can connect with anyone else running Gnutella compatible software.

It further reports that "Gnutella allows users to speak directly to other Gnutella nodes with no intermediate, or central, authority. Nobody owns the Gnutella Network, and nobody can shut it down or monitor what anyone else is searching for. Any isolated node failure on the Gnutella Network is quickly and automatically worked around."

Another product that has also helped to "Napsterise" Gnutella is BearShare. Built on Gnutella technology, BearShare also provides a simple, easy to use interface.

BearShare 2.0 was released by Free Peers in January and includes numerous enhancements aimed at increasing the number and availability of shared files on the network, and gives users more control over the program.

Toadnode, which also uses the Gnutella protocol, was released in October and the company reports that it plans to have a newer version out in the second quarter of this year.

Another clone is Gnotella, and its latest Version 0.9.8 was released today. Some of the features it offers are multiple searching, improved filtering spam protection, bandwidth monitoring, enhanced statistics, upload throttling, and skinning.

In another twist, Canadian Press reported March 13 that a Canadian company associated with the University of Toronto has created software that will disguise the names of artists and MP3 digital music files. The company Pulse New Media is currently using a simple variation of Pig Latin so that the name of the band Metallica becomes "etallicam".

James Chillcott, the company chief executive officer was reported as saying that the software, which was launced March 10, has had more than 20,000 downloads.

MP3.com Update

Jim Hu of CNET reported in November that MP3.com had reached deals with all five of the major record labels and agreed to pay $53.4 million to end its copyright infringement suit with Seagram's Universal Music Group.

He further reported that although the MP3.com might still be required to work out claims with some smaller labels, future payouts were expected to be minor in comparison to what the company had already paid.

In an effort to jump start online music innovation, Evan Hansen of CNET reported in January that MP3.com said it would make its extensive online music database and streaming technology available for free to developers.

Derrick Oien, vice president of operations, was quoted in the article as saying that the effort was "in the spirit of open-source" .

He further reported that MP3.com was backing a new developer's network, dubbed MP3DN, to create new technology for commercial online music distribution because music companies were frustrated by the progress of the record-industry backed Secure Digital Music Initiative.


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