This is a guest post from Michael Robertson, a 12-year veteran of the digital
music business. He is the founder and former CEO of digital music pioneer
MP3.com. He is currently the CEO of music locker company MP3tunes..
Amazon defied the record labels by launching an unlicensed personal cloud music
service. (Disclosure: I’m CEO of competitor MP3tunes.) Music companies
immediately expressed their dissatisfaction and Amazon public stated they would
discuss licenses with labels. Since then considerable speculation has swirled
about regarding licensing discussions Amazon, Google and Apple are having with
the 4 major record labels.
Dominating the discussions is the labels concern that personal cloud services
will exacerbate piracy and erode their business even further. Consequently they
want to impose substantial restrictions on any such service, but each labels
has different concerns and demands. Below are examples of the startling
limitations major labels wish to impose on such services.
Universal Music Group is concerned that users will load pirated songs into
lockers. Average MP3 players house more than a thousand songs and UMG believes
that many were unpaid for. They do not want to see the billions of songs that
came from P2P system laundered (think drug money) in a cloud service and become
legitimate.
To combat this they want only songs with digital receipts to be able to added
to lockers. For some time UMG has been demanding that online music retailers
embed personal information in every song they sell. They call it UITS. iTunes
has been inserting email addresses into every song while other retailers like
Napster are using a unique receipt number. (Techcrunch first wrote about Dirty
MP3s a year ago and how these might be used by future cloud services.)
All songs without a proof of purchase would be assumed to be unauthorized and
not accepted into the system. Songs ripped from CDs would not have unique
identifiers and wouldn’t be loaded. Any song purchased prior to retailers
inserting personal identifiers or from retailers who have yet to personalize
every song would also be excluded. (To date, Amazon’s MP3 store does not put
any unique identifiers in songs despite UMG’s demand that they do so.)
Promotional songs download online would also not work.
Sony Music Group shares UMGs concern about the laundering of songs, but seems
more concerned about locker sharing and downloads and is demanding restrictions
in those areas. Sony believes users will share lockers by visiting each others
houses and syncing in each others music. To combat this Sony wants loading to
happen from only one computer. Each locker owner would have to designate a
single location from which they could upload songs. Users could load music from
either their laptop or desktop or office computer but not all three. Their
belief is that this will prevent friend to friend file sharing.
Downloading is another area of concern for Sony. To prevent lockers from become
Napster like repositories they want to restrict downloading to one emergency
download only. Locker owners would only be able to download their music files a
single time if they claimed they were lost. All future downloads would be
forbidden. This would limit the ability for a locker owner to go to a friends
house, download all their music and then have the friend upload those songs as
their own. This means that syncing to portable players and smart phones would
not be allowed. Neither would download to laptops for offline playback.
Most worrisome to Warner Music Group is that users may setup multiple lockers
and the distribute the extra lockers to friends. Imagine if a locker owner
setup a locker at Apple and Amazon and then gave their less used locker away or
maybe even sold it. What WMG would like to see happen is that a central locker
authority would administer all locker assignments. For awhile they were pushing
Catch Media as the solution. More recently they may have relaxed their demands
in this area and insisted that locker identities be uniquely tied to a valid
credit card or some other such verified identity.
The above list of demands is by no means complete but rather an illustration of
the labels mindset. There are others issues dealing with simultaneous user
access, family accounts, mobile access, local caching, regional restrictions
and more. The one company who had such a personal cloud license is the now
defunct Lala who had to agree to no downloads whatsoever, no mobile stream (web
browser only) and costly per song stream fees.
In addition to usage restrictions, labels are demanding that cloud services pay
them an annual per user fee. Labels will demand a minimum per user fee each
year and not the more business friendly percentage model. Such a flat fee will
mean no free or advertising sponsored service will be possible. For
subscriptions services such as Rhapsody and MOG they demand the HIGHER of: per
user fee, percentage of revenues or per stream fee effectively boxing in
services and insuring they’re never able to turn a profit..
The challenge for cloud services such as Amazon’s is how to appease the record
labels and still have a consumer friendly service that is financially viable.
Even one of the above restrictions renders a cloud service mostly useless.
Combined they would make a locker service utterly worthless, for sure nothing
that a music fan would pay for making it impossible for the company to cover
the demanded per user fees. Amazon has publicly stated that their position is
that a license is not required for a service such as theirs. This issue is
currently being litigated by my company in EMI v MP3tunes where we await the
Judge’s ruling. With the record labels wide reaching demands it’s difficult to
see how Amazon, or any company, could arrive at a workable license for personal
cloud music.
http://feedproxy.google.com/~r/Techcrunch/~3/XrnjqvgRJ4s/
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