MP3.com Digital Digest: RIAA, iTunes, eMusic, Napster, Hammer, SpiralFrog
Industry argues that ripping is illegal; movie studios align with Apple store; retailer enjoys holiday boom; service ups price; dance site launched; ad-supported site gets funding.
RIAA argues that ripping is illegal
In their long-standing battle against file sharing and online music piracy, the major record labels and their enforcement body, the Recording Industry Association of America (RIAA), have primarily targeted those that share music through file-sharing programs.
But in a recent twist, the RIAA appears to be calling for a heightened standard for piracy, arguing that ripping a CD--the act of saving songs from a legally purchased CD onto one's computer--is illegal as well if those songs are shared.
The tactic stems from an ongoing case in which an Arizona man has fought back after receiving a typical RIAA letter accusing a person of file sharing and demanding a settlement payment and threatening a legal battle. In legal documents in its federal case against Jeffrey Howell, a Scottsdale, Arizona, man who kept a collection of about 2,000 music recordings on his personal computer, the industry maintains that it is illegal for someone who has legally purchased a CD to transfer that music onto his computer.
Whether customers may copy their CDs onto their computers--an act at the very heart of the digital revolution--has a murky legal foundation, the RIAA argues. The industry's own Web site says that making a personal copy of a CD that you bought legitimately may not be a legal right, but it "won't usually raise concerns," as long as you don't give away the music or lend it to anyone.
This isn't the first time the industry has argued that making a personal copy from a legally purchased CD is illegal. At the trial of Jammie Thomas in Minnesota, in which Thomas was ordered to pay $220,000 to the big record companies, Sony BMG's chief of litigation, Jennifer Pariser, testified that "when an individual makes a copy of a song for himself, I suppose we can say he stole a song." Copying a song you bought is "a nice way of saying 'steals just one copy,'" she said.
But the issue certainly remains murky, as several legal rulings over the years have permitted consumers to make personal copies of media for the purpose of making portable a legally obtained recording or watching a video at a later time.
iTunes lands two movie studio deals
The long-rumored arrival of movie rentals on iTunes has reportedly arrived. Variety reported this week that major movie studios Twentieth Century Fox and Disney have signed on for download-to-rent services on iTunes, a service that is expected to improve online movie downloads, which have been slow to see the sort of spikes iTunes has enjoyed with its music sales.
The rental service, which is expected to be announced by Apple chief Steve Jobs at the MacWorld conference in San Francisco on January 14, is expected to charge between $2 and $5 for a 24-hour rental of a movie. Disney is the only major studio with a full catalog within iTunes for now, while Paramount, Lionsgate, and MGM have partial catalog deals, though all of these are download-to-own, not download-to-rent.
The Financial Times reported that studio partners will also start releasing DVDs using Apple's FairPlay digital rights management software. That will make them easier to legally copy and play on computers or iPods, potentially making video a more central part of the iPod experience.
eMusic enjoys banner holiday season
DRM-free digital music subscription service eMusic had its biggest holiday sales season in 2007, with subscribers downloading nearly half a million tracks on Christmas day, the company said this week. That total came as a result of doubling the number of new customer trials from Christmas day the previous year. The company now claims 400,000 paid subscribers, up from the 350,000 subscriptions base it announced in November.
"We had the most explosive December 25 and 26 in eMusic history, doubling our projections and blowing away our numbers," said David Pakman, president and CEO of eMusic. "eMusic has entered a new phase of growth, and as we continue to build and develop the number one site for discovering music and literature, there will be much for our customers to look forward to."
Napsters increases prices
Subscription music service Napster is raising its monthly fees, hoping to improve revenue without pushing customers to rival digital music services. According to an e-mail sent to subscribers, the non-portable subscription rate will jump 30 percent from $10 a month to $13 a month. The price change, its first in four years, takes effect January 30 and is Napster's first major price increase in four years.
The price increase is not without precedent, as rival Rhapsody raised its rates from $10 to $13 in mid-2007. Both developments are a far cry from the $5 monthly rate offered by Yahoo Music when it first launched in 2005. At the time, that move pointed to a price war that would drive down the costs of all subscription fees. Yahoo eventually raised rates to $9 a month.
Current Napster subscribers will be allowed to renew their subscriptions at the old price if they sign up for an additional year of service.
MC Hammer tabs new dance site
Please Hammer, don't hurt 'em. MC Hammer, he of the massive pants, inimitable dance moves, smash hits, and woeful financial problems, has transformed himself into a Silicon Valley entrepreneur, according to the Associated Press. Hammer, whose real name is Stanley Burrell, announced this week his new career as cofounder and chief strategy officer of Menlo Park-based DanceJam.com.
The Web site, scheduled to debut in mid-January, will try to upstage YouTube and become the Internet's hub for sharing and watching dance videos. If the business pans out, DanceJam could help Hammer compensate for losing his fortune when he went bankrupt in 1996 with nearly $14 million in debts.
Drawing upon the popularity of such reality shows as Dancing With the Stars, DanceJam will stage head-to-head competitions where contestants submit videos that will be judged by viewers. The site also will provide demonstrations and information about a wide variety of dances, ranging from the Boogaloo to the Krump.
The company has stockpiled about 100 gigabytes of video to help launch DanceJam. The most watched video in YouTube's two and a half-year history is about dancing. The six-minute clip, a facetious tribute called "Evolution of Dance," includes about 25 seconds alluding to some of the moves that Hammer made famous back when he was still wearing colorful parachute pants as he sang "U Can't Touch This."
SpiralFrog lands funding
Online ad-supported music service Spiralfrog has raised $2 million in funding, allowing the site more time to try to break through the cluster of more popular music services. The money was raised through a private placement of its senior secured notes. The new funding brings the total investment to date for the startup to $13 million as it expands its offerings of free, downloadable tracks.
The New York-based company lets registered users listen to or download songs for free in exchange for watching ads and periodically answering questions, although users can only download songs to one computer and two portable devices and cannot burn them to a CD. The downloads are not compatible with Apple's iPod or Microsoft's Zune.
Universal Music Group, EMI Music Publishing, and more than 20 independent labels have licensed their content to SpiralFrog, sharing in the ad revenue in return.
