Sony licenses music for song-swapping CenterSpan
LOS ANGELES, Feb 28 (Reuters) - CenterSpanCommunications Corp. on Thursday said itstruck a deal to distribute Sony Music Entertainment's music on itspeer-to-peer service, marking the first time a major record label haslicensed its content to a file-sharing company.
CenterSpan agreed to pay Sony Music, a unit of Sony Corp. , about $2 million in cash plus 283,556 shares and awarrant to buy 189,037 additional shares of its common stock at anexercise price at $8.11 per share, according to a filing with theSecurities and Exchange Commission.
CenterSpan's stock on Thursday closed up almost 41 cents at $8.75 onNasdaq.
Internet content distributor CenterSpan bought controversialNapster-like audio and video Web site Scour.com in 2000 after Scourdeclared bankruptcy in the wake of a copyright infringementlawsuit.
CenterSpan in April 2001 launched a free trial of a new secureservice known as C-Star CDN, including the underlying peer-to-peertechnology of Scour that allows users to trade encrypted filesauthorized for copying by copyright holders.
The agreement lets CenterSpan provide music from Sony MusicEntertainment artists to online service providers seeking to offertheir subscribers streaming and downloadable music.
A CenterSpan spokesman said the company is also talking with othermajor recording labels, movie studios as well as online subscriptionservices, such as Pressplay.
"This deal continues the experimental phase the music industry isgoing through as it tries to figure which digital distribution
model is going to work," said PJ McNealy, analyst with GartnerG2.
Napster, a once-popular peer-to-peer service that was also idled dueto a copyright lawsuit, has signed a conditional licensing deal withMusicNet, a major label-backed subscription service.
When the deal between MusicNet and Napster was announced, several ofthe big labels involved in the venture said they would not licensetheir music to Napster unless they were satisfied it had created asecure service that compensates artists fairly.
Analysts expect Napster's deal will be abandoned because Napster iscurrently negotiating settlement and future licensing termsindividually with each label involved in the copyright infringementlawsuit who are the partners in the MusicNet venture.
Portland, Oregon-based CenterSpan on Thursday also reported afourth-quarter net loss from continuing operations of $6.4 million or73 cents per share, compared with a net loss of $2.2 million or 35cents per share.
Music biz in a funk
NEW YORK (Variety) - The total number of units shipped by themajor record labels sank by more than 10% in 2001 -- a decline theindustry blamed in part on the ballooning growth of Internet piracy,but which others claim may also reflect more fundamental troubles inthe business.
The five majors, which together represent nearly 90% of all musicsold in the U.S., shipped 969 million units last year (net of returns),including CDs, cassettes, LPs and DVD music videos, according to datacompiled by the Recording Industry Assn. of America. That's down from1.08 billion in 2000.
The downturn was not as pronounced on a dollar-value basis, asmore-expensive CD-format shipments continued to account for a largerpart of the mix. Music product worth $13.7 billion shipped to stores,down 4.1% from the year before.
The shipment numbers provided by the RIAA are not the same as actualsales at retail, which include the effect of independent-label stockand exclude record club sales. They also diverge because offluctuations in retailers' inventories. Retail sales in the U.S. fellnearly 3% in 2001, according to data released earlier this year bySoundScan.
The industry said a large part of its woes in 2001 are attributableto the Sept. 11 effect and the dismal economic backdrop, which haspounded consumer goods makers of all stripes. But the RIAA saved thebulk of its ire for cyberpirates, whom they claim are siphoning off theindustry's growth prospects.
"When 23% of surveyed music consumers say they are not buying moremusic because they are downloading or copying their music for free, wecannot ignore the impact on the marketplace," RIAA president HilaryRosen said, citing a study commissioned by the trade group.
But the industry has also been broadly criticized for relying on abusiness model that is fast becoming outdated and for choosing to fightonline music fans rather than find an effective way to sell tothem.
The record biz's two main stabs at a legal alternative to the freefile-swapping world, Pressplay and MusicNet, went online nearly twoyears after the rise of Napster, and have taken heat for therestrictions they place on copying and transporting music files.
"They have begun to wake up, but it probably would have helped ifthey had done that 18 months ago," said James Glicker, CEO ofindependent music Netco FullAudio, which has developed its own digitaldistribution platform. "The technology radically changed the businessmodel, and some of the things they're facing are very difficult tocorrect. On the other hand, they could have been a lot more aggressivein providing alternatives."
One of the most intractable problems for the industry, according toboth Glicker and the RIAA, is the proliferation of CD-burningtechnology.
The industry-sponsored study found that more than half of people whodownload free music from the Net also copy it onto a burned CD or MP3player, and that ownership of CD-burning hardware has tripled over thelast three years to 40% of music consumers surveyed.
Free music has proliferated on the Net over the past year, as thedemise of Napster's free service has given way to several moreefficient and harder-to-stop successors. The RIAA has suits pendingagainst the most popular of these, including Morpheus, Kazaa andGrokster, but it's unclear as yet how effective their enforcementefforts will be.
By the RIAA's numbers, CDs continued to grow as a percentage of thetotal shipment mix, even though the numbers sold declined 6.4% overall(2.3% in dollar terms). CDs represented 91% of units sent to retailers,compared with 87% in 2000.
DVD music video shipments surged along with the larger DVD market asthe format continues to be embraced by consumers. Shipments of thatformat leapt nearly 140% in both unit and dollar terms.
Meanwhile, shipments of LPs held steady at just over 2 million, andmusic cassettes continued their steady decline into oblivion, withshipments slumping by 40% from the year before.
Internet music piracy pact gets into swing
GENEVA, Feb 21 (Reuters) - A ground-breaking internationalpact to protect musicians and the multi-billion dollar recordingindustry from Internet piracy will finally go into force in May, aUnited Nations agency announced on Thursday.
Over five years after the treaty was signed, the needed number ofratifications for it to take effect was achieved on February 20 whenHonduras became the 30th country formally to join, the WorldIntellectual Property Organisation (WIPO) said.
The treaty -- the WIPO Phonograms and Performances Treaty (WPPT) --bars the unauthorised exploitation of recorded or live performances onthe World Wide Web.
It formally takes effect on May 20.
Together with a sister pact on protecting the copyright of authorsand publishers, due to come into force in March, the new treaty willbring "international copyright law into line with the digital age,"WIPO said in a statement.
The IFPI, the record industry association, welcomed the news, sayingthat the treaty would "benefit all record companies globally --independent and major record labels, in developing and developedcountries."
"It strengthens our industry's protection from piracy on theInternet and it provides the foundation needed for the music industryin every country to introduce new online delivery services," itadded.
There are no consensus figures for the cost to the music industry ofInternet piracy. But the International Intellectual Property Alliance(IIPA), a U.S. pressure group, calculated that U.S. industry lost $2billion in 2001, up from $1.8 billion the year before, from copyrightpiracy of music and records.
Under both treaties, countries guarantee the rights of "creators,performers and recording producers to control and/or be compensated forthe various ways in which their work is used or enjoyed by others,"WIPO said.
It noted that the music business pact would also give recordingartists and record companies the right to use technology to prevent theunlicensed reproduction of their work on the Internet.
The United States was among the first states to ratify the pact,which only has the force of law in those countries that have adoptedit.
Ratification in the European Union is taking longer because thebloc's 15 members all have to bring their domestic legislation intoline. But this process is expected to be completed by the end of theyear.
"Of course we want all countries covered, but this is an importantpolitical statement," said Jorgen Blomqvist, director of WIPO'scopyright law division.
US appeals court reinstates digital recording suit
NEW YORK, Feb 21 (Reuters) -Rhythm and blues artists whorecorded albums dating back to the 1950s won a court battle on Thursdaywhen an appeals court reinstated a copyright suit against major recordcompanies over digitized works sold on the Internet or downloaded fromWeb sites.
The Second Circuit Court of Appeals vacated a lower court rulingthat had thrown out the case filed by members of The Chambers Brothers,The Coasters, The Original Drifters and The Main Ingredient.
Defendants in the suit, filed in Manhattan federal court, are AOLTime Warner Inc, Sony Corp of America, a unit of Sony Corp, BMGEntertainment, a unit of Bertelsmann AG, and Universal Music Group andMP3.Com, which are owned by Vivendi Universal.
The appeals court ruled the district judge had improperly consideredcertain materials when he dismissed the suit. It sent the matter backto the district judge for further consideration.
The lower court had dismissed the case after finding the plaintiffs'recording contracts effectively transferred their rights in digitalversions of their recordings to the record companies and thus barredtheir federal copyright infringement claims.
The artists had recorded music for labels owned by the defendantsfrom the 1950s through the mid 1990s. Under the contracts, theplaintiffs assigned ownership rights, including copyrights, to therecord companies in exchange for royalties from the sale of theirrecords.
However, they said that the "digital revolution" changed the waymusic is recorded, distributed and sold.
They argued that when the original analog master recordings, whichserved as the basis for the production of vinyl records and cassettetapes, were remastered digitally and placed on CDs, they becamesusceptible to rapid reproduction by computer as digital audio files.Once the files were placed on the Internet, they could be downloaded toa computer or simply broadcast over the Internet in a process called"streaming."
The recording artists alleged that their contracts did not grant therecord companies the right to sell or authorize others to selldigitized versions of their pre-1996 performances on the Internet or to"digitally download" or "stream" their works.
The plaintiffs argued that unauthorized "clones" of their digitalrecordings are competing with sales of recordings in the vinyl,cassette and CD formats, thereby reducing their royalty stream.
U.S. to rule on royalty rates for online broadcasts
WASHINGTON (Reuters) - A U.S. government panel will announceon Wednesday how much Internet broadcasters should pay musicians andrecording companies for use of their songs, setting the ground rulesfor the growing "Webcasting" industry.
The decision will have an impact for years to come, say thoseinvolved in the negotiations, as more consumers tune in toInternet-based broadcasts from online music providers and existingradio stations over the next few years.
At issue is the royalty rate that Webcasters pay record companiesand musicians whose songs they play. Only fractions of a penny apart,the two competing proposals could mean a difference of millions ofdollars in payments, negotiators said.
Unlike the music industry's much-publicized battles with Napster andother online song-swapping services, neither side is disputing the factthat money is owed for millions of broadcasts dating back to 1998. Theissue is how much.
"Webcasters have built a business based on artists' work," said AnnChaitovitz, national director of sound recordings for the AmericanFederation of Television and Recording Artists.
"We want to pay and we want to pay fairly for their works,"countered Kenneth Steinthal, a partner with Weil, Gotschal and Mangeswho represents Webcasters. "But that doesn't give them the right tocharge whatever they want to."
GOVERNMENT STEPS IN
Radio stations and other broadcasters are exempt from payingroyalties to performers, but the exemption does not apply to digitalbroadcasts.
The Copyright Office stepped in last summer and conducted hearingsthrough the fall after the two sides were unable to reach an agreementon their own.
Record companies and musicians want four-tenths of a penny perlistener per song, while Webcasters have proposed payingfifteen-hundredths of a penny for each hour logged by a listener,roughly one-thirtieth the copyright owners' proposal.
Recording companies say the higher rate reflects the market value oftheir material.
"Our request is based on deals that we've done in the market withother Webcasters who aren't part of the arbitration," said Steve Marks,a lawyer with the Recording Industry Association of America.
Marks said the RIAA has signed agreements with 25 differentWebcasters, including Internet portal Yahoo Inc
Webcasters say their lower rate reflects the rate radio stations payto songwriters, an amount Steinthal said totals between $300 millionand $400 million each year.
"The Webcasters' case was significantly more tied to facts andreasoned analysis, and I think we made that case in the arbitration,"said Jonathan Potter, executive director of the Digital MusicAssociation, which represents Webcasters.
Webcasters who agreed to the higher rates did so to curry favor withthe labels or for other unrelated reasons, Potter and Steinthalsaid.
In December, recording companies and established broadcasters likeClear Channel Communications Inc. reached an agreement on the rate thatcommercial radio stations should pay for online broadcasts of theirexisting programs.
But the Copyright Office rejected the settlement after the two sidesrefused to disclose the terms of their deal due to fears that it wouldinfluence the outcome of other matters before the panel, such as therate online-only broadcasters should pay.
The panel's decision, due late Wednesday, must be approved by theLibrarian of Congress in May before it takes effect. The rate willapply for Internet broadcasts made between 1998 and the end of 2002, atwhich point the two sides must try again to reach an agreement.
Whatever the outcome, both sides agreed it will not be the end ofthe issue.
"We can anticipate that one or both sides are certain to appeal thisdecision, because everybody wants it to be always a little better,"Potter said.
MusicMatch touts subscribers as Web music stallsSEATTLE,Feb 20 (Reuters) -Music software maker MusicMatch Inc. said onWednesday it had 100,000 paying subscribers for its custom Internetradio service, but forecast onerous license terms from major recordlabels meant it would be a long time before it could offer songs fordownload.
Privately held MusicMatch makes a "jukebox" program for recordingand playing music on a personal computer, competing with industryheavyweights like RealNetworks Inc. ,Microsoft Corp. and AOL Time Warner Inc. .
Last May, it launched Radio MX, a subscription service that letsusers listen to custom Internet radio stations built around personalpreferences and groupings of similar artists for a monthly fee.
The service now, which charges $5 a month or $40 a year, claimed100,000 users, making it one of the largest Web music subscriptionservices, MusicMatch Chief Executive Dennis Mudd said in aninterview.
That figure showed Radio MX was more attractive than new fee-baseddownload services recently launched by the major record labels.
Those services -- MusicNet and Pressplay -- are hoping to tap thebig appetite for downloaded music demonstrated by song-swap serviceNapster, which was shut down last July after the music industrysuccessfully sued for copyright piracy.
MusicNet is backed by the Bertelsmann AG , EMIGroup Plc and AOL Time Warner music labels, and usesRealNetworks technology. Pressplay involves Sony Corp. and Vivendi Universal and runs on Microsofttechnology.
Subscriber data for those offerings, which launched late last year,are unavailable, but analysts believe they have so far seen a tepidreception from music fans, who complain many artists are unavailableand decry restrictions on moving the songs to portable players andrecording them on CDs.
"We think this really does serve as an indication that MusicNet andPressplay are going about this the wrong way," Mudd said.
For a subscription service to be successful, Mudd said, "You needall the content from all the artists across the labels, it needs to beall you can eat and you need an easy way to find playlists and musicthat you want."
San Diego-based MusicMatch hoped to offer downloads at some point,but said current licensing terms by the labels were too restrictive andcostly to make such a service viable.
"We're in the same meetings that everyone else is, trying to obtaineconomic and compelling licenses from the labels. But that's going tobe a long way off," Mudd said. "I don't want to offer consumerssomething that's not compelling."
MusicMatch, which competes against software like Real's RealOneplayer, Microsoft's Windows Media Player and AOL's Winamp, had some 25million registered users and 13 million active users of its freeplayer, Mudd said.
It had sold about 1 million copies of its $20 premium software, Muddsaid. Apart from being available over the Internet, MusicMatch isbundled with PCs from Dell, Hewlett-Packard and Gateway, and also comeswith many portable digital music players.
Elton John airs his thoughts on the today's music biz
LONDON - "Rocket Man" Elton John rued on Wednesday the thrust forinstant success among undistinguished and indistinguishable modernpre-fabricated pop bands.
"It is like packets of cereal. There are too many of them, and toomany of them are just average and mediocre," he told BBC television inan interview filmed during his current tour in the United States.
"It is just fodder. It doesn't sound. It has no distinguishingmarks. A lot of it you can't tell one from the other. There is too muchof it, just too much of it," the high-spending flamboyant rock legendlamented.
The 54-year-old singer and composer, born Reginald Kenneth Dwightwho was knighted in 1998, harked back to the old days when he burstonto the music scene in league with songwriter Bernie Taupin more than30 years ago.
"I would ban every single video being made -- by a new band anyway.I would just get them on the road...playing second on the bill topeople. That is how I started out," he said.
John, who petulantly announced he was quitting the music scene lastyear but is still going strong, regretted the emphasis put on immediateprofits by the record companies.
"Nowadays, they think more about their quarterly earnings and thereis no longevity. There is no thinking 'we want this artist to be aroundin seven to 12 years time'," he said.
"It is kind of heartbreaking because you see most of the emphasisplaced on instant success.
"It is kind of disgusting really. It is about time some of theseyoung acts were nurtured and given the time. There certainly is thetalent out there. There is as much talent out there now as there waswhen I was getting going," he added.
The tubby soccer fanatic said he had enjoyed his three decades atthe top and remained young at heart, but that realistically his careerwas now in its sunset phase.
"In a way it is a relief. It is like 'it is over Elton. You have had31 years where you had a record in the America top 40 every year'. Thatcan't realistically happen any more," he added.
EMI revamps labels, streamlines structure
LONDON, Feb 7 (Reuters) -EMI, one of the world's top musiccompanies, pushed on with yet more restructuring on Thursday when itrejigged its labels under two global brands -- Virgin and Capitol --and streamlined its international management.
British-based EMI Group, whose stars include Lenny Kravitz and JanetJackson, said it was scrapping the "EMI" name as a label and combiningback-office operations of all its imprints as part of plans to cutcosts and improve creativity.
The moves come two days after EMI issued its second profit warningin six months and a week after dropping pop singer Mariah Carey fromits roster in an effort to save money.
Music groups have been under pressure to slash costs and restructureafter one of the industry's worst years on record when a a dearth ofmajor hits, rampant piracy and an economic downturn hammered albumsales.
In its latest restructuring, EMI said the EMI brand would now onlybe used at a corporate level. The group said it was also scrappingduplication in its management, leaving just one managing director foreach country, where in many cases there had been two as a result ofbuying Virgin Records.
"This change in structure clarifies the roles of our creative recordlabels and focuses them on the key activities that will make adifference in signing, developing and marketing great talent," EMI'snew head of recorded music Alain Levy said in a statement.
Levy has been trawling through the sprawling music group forpossible cost savings and restructuruing, and is due to deliver thefindings of a strategic review next month.
Never mind the rock band, feel the gold medal
SOLDIER HOLLOW, Utah Feb 10 (Reuters) - Maybe there are somethings better than being a rock star.
During Sunday's news conference after Finland's Samppa Lajunen wonthe Olympic gold medal in the Nordic combined he was asked just a fewtoo many questions about his rock band.
"Forget the band. Hey, I just won a gold medal!" Lajunen told areporter after she asked how many musicians were in the band. The replyprompted laughter among the media.
Lajunen, 22, who sports dyed blue locks, plays guitar withVieraileva Tahti, or Guest Star. Other band members include team mateAntti Kuisma and members of the Finnish ski jumping team. In Octoberthe biggest record company in Finland released Guest Star's hit single,"The Lightest Man in Finland."
But even if winning a gold medal is a dream of a lifetime Lajunen isstill excited about his music career. "I hope after this winter I havemore time to play music. Maybe we can record something new," hesaid.
Asked how winning the gold would affect his performance in theupcoming sprint and team events, the Finn, more relaxed, said: "I'm notgoing to stress any more."
Michael Jackson wants a Children's Day
LOS ANGELES Jan 31 (Reuters) Pop star Michael Jackson thinkschildren are so cool that the world should set aside an annual holidayto celebrate them.
"There's a Mother's Day and there's a Father's Day, but there's noChildren's Day," he said in the upcoming cover story of Vibe magazine."It would mean a lot. It really would. World peace. I hope that ournext generation will get to see a peaceful world, not the way thingsare going now."
Jackson, 43, who has two children of his own, paid amultimillion-dollar settlement in early 1994 to resolve an accusationof child molestation. He often surrounds himself with tykes, and busesin terminally ill children to play at his sprawling Neverland Valleyranch north of Los Angeles.
PBS gets the blues
BERLIN (Variety) - Top directors Martin Scorsese, Wim Wendersand Mike Figgis are joining forces with PBS to shoot six films aboutthe blues.
The projects will examine the nature and emotional impact of bluesmusic and explain how it evolved from folk music into a world language.Also on board to shoot episodes are directors Marc Levin ("Slam"),Richard Pearce ("A Family Thing") and Charles Burnett ("TheWedding").
Scorsese is set to do the first picture in the series, "From Mali toMississippi," which traces the beginnings of the blues in Africa andits journey to the New World with original compositions fromcontemporary artists such as Ali Farka Toure, Salif Keita and HabibKoite.
Figgis takes a look at the blues' influence on British music of the1960s with artists including Eric Clapton, Tom Jones and the RollingStones.
Wenders' "Devil Got My Woman" looks at religious and secularelements in the music with profiles of Skip James, Blind Willie Johnsonand J.B. Lenoir. Wenders won acclaim for his 1999 Afro-Cubandocumentary "Buena Vista Social Club."
Levin's installment, "Godfathers and Sons," follows Public Enemyfrontman Chuck D and Chicago blues label scion Marshall Chess as theybring together hip-hop musicians and blues veterans for their jointlyproduced album.
Using documentary film material, Burnett highlights the blues'conflicting spiritual and carnal dimensions in "Warming by the Devil'sFire," the semi-fictional tale of a boy in 1955 Vicksburg, Miss. -- thedirector's hometown.
Memphis is the focus in Pearce's "Moaning at Midnight," whichshowcases the city that produced Howlin' Wolf, Otis Redding, B.B. Kingand Elvis Presley. The picture offers never-before-seen footage of Wolfand Redding.
Mars is all a Blur
LONDON Jan 31 (Reuters) Fans of British pop band Blur always thoughttheir music was out of this world. Now it really will be. A musicalsequence recorded by the mega-selling foursome will herald the arrivalof a British space probe on Mars. The track will be beamed back toEarth when the probe, Beagle 2, lands on the Red Planet in December2003.
It is part of the European Space Agency's Mars Express mission tofind proof of life on Mars. "It is partly based on a mathematicalsequence with a few extra notes added," is how Professor ColinPillinger, the lead scientist working on the British-led space project,described the ethereal recording. "Most (probes) just send back acouple of digits in computer sequence. We thought, why not go the wholehog and send back something that will give us maximum media coverage?"Pillinger said.
Blur, who have enjoyed a string of number one hits including"Parklife" and "Country House" and have sold 10 million albumsworldwide, have been involved with the space mission since 1998.
Rare Sinatra "Soliloquy"
LONDON Jan 31 A disc jockey from a remote Scottish islandradio station said he would play an 11-minute Frank Sinatra recordingthat had never been heard in public before. Sinatra sang the version of"Soliloquy," from the musical "Carousel," during a performance he gaveat an Atlantic City casino on his birthday in 1988, said Isles FM discjockey Rodney Collins.
"Hundreds of recordings have come to light since Sinatra's death,"Collins, a self-proclaimed expert on Ol' Blue Eyes, told Reuters. "Whatmakes this one special is that it is of such high quality." He saidAmerican fans of the late crooner had sent the recording to him at thecommunity radio station where he works on the island of Lewis in theOuter Hebrides. The tape was likely made as a private recording to bepassed out among friends who attended the show, which also featuredperformances by the late Sammy Davis Jr and Buddy Greco, he said.