Wednesday, March 19, 2008

The tech behemoth is negotiating with the music duty to offer unlimited downloads from its iTunes store, the FT reports today. Nokia phone model.

So now we can hypothesis why Apple has clung so tensely to DRM, which has all but disappeared from biggest epithet digital music retail in late months. It remains a vigorous bargaining chip. The tech gigantic is negotiating with the music business to offer numberless downloads from its iTunes store, the FT reports today.

Money would be levied either on Apple’s music players, giving the individual access to iTunes downloads for the lifetime of the device, or for a monthly or annual fee fee, as with Rhapsody, Napster or eMusic. It’s not an unprecedented move. Nokia has invested heavily in an actuarial poser [] for its “Comes With Music” first move - where the phone holder gets full downloads “free” with the phone, and also gets to maintenance them. Nokia is reported as subsidising the program by as much as $80 per phone. The FT suggests Apple is only ready-to-eat to gain $20 per device.

Nokia has only signed Universal Music, the world’s biggest label, while Apple is reportedly infuriating to take away a deal for as much of its iTunes beasts as it can. It isn’t totally at this status whether the chap can conserve the music once the investment is terminated. Napster and Rhapsody’s promise services are really rental models or “radio with predetermined caching”, whereas eMusic, because it sells DRM-free music, has no such restrictions.

Nokia takes the midway ground: selling DRM music, but with the polytechnic restrictions not preventing the phone proprietress keeping the music. The music commerce is withering to see subscription models introduced to erect up for CD sales that are falling off a cliff, and per-unit digital sales that are flattening off, leaving the trade far smaller that it was. But as articulated by IFPI chairman John Kennedy in January, the music proprietorship fears that users would billingsgate the service.

“You can’t have a price image where celebrity on a monthly model of guess $10, [can] go on in January, download six million tracks, and deviate from in February,” Kennedy said. Nor is it unstop how much “iTunes Unlimited” would cost. But we can shot in the dark what the music enterprise has in mind.

The FT cites “an exertion executive” - and we can safely arrogate this executive isn’t Steve Jobs - touting a appraisal in which the sweet spot is $7-8 a month for immeasurable downloads, or a one-off pay of $100 per iPod or iPhone. But for what, exactly? Again, it isn’t clear, but room and board in capacity that the music business is negotiating two kinds of actuarial deals with network operators, consumer electronics manufacturers and institutions. These are: “Legal P2P” - innumerable file-sharing between members on the network, or between members of participating networks. File-sharing is encouraged, with royalties distributed proportionately, based on exchanges.

“Covenant not to sue” - a one-off upfront payment to rights-holders to an institution, network or industrialist that grants a narrow licence, and permits predetermined forms of file-sharing to be “tolerated”. Royalty codification not based on exchanges. Now follow the money. PlayLouder MSP and Omnifone’s MusicStation are examples of the initially nice of deal. Nokia’s Comes With Music and the Apple “iTunes Unlimited” deal reported today topple into the second.

There are veiled distinctions between the two models, but the preceding has two advantages. Since the historic mark a doubt encourages flows of music, it provides an remunerative carrot for the crowd to construct further businesses based on flows of bits. No such spur exists in the CN2S approach, where the rights holder wholly walks off with the depredate up front. If DRM is your concern, you can ruminate which of the two models provides an mercantile impetus for DRM-free music, and which doesn’t. But you should be responsible about the long-term implications of such deals, too.

An ‘iTunes Unlimited’ deal for iPods and the online put by would almost certainly come regulatory scrutiny, as it grants Apple a important retail monopoly on digital music distribution. It may also reputation judiciary challenges from solicitation agencies and the indie sector, who second thoughts being cut out of the loop. But it also ensures there’s no fiscal incentive for DRM to be removed - which many believe a major track back for consumers. Why? Because it appeals to the dinosaur environment at the majors.

While publishers and indies have extended favoured legalising (ie, licensing) P2P, and letting the bits flow, the outstanding labels have feared surrendering control. Apple helps them out hugely here, because it allows the Big Four to smack non-gregarious deals (cutting out publishers and smaller labels) and frustrate licensed P2P obligation models where file-sharing is encouraged. So the CN2S sport appeals to the anti-competitive instincts of the paramount labels and Apple alike, and DRM is the principal factor of that appeal.

via Nokia1

Jason Kiwaluk

Mower & Shoveller,

Ecommerce | Adtech | Innovation | Strategy

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