News archive (9 / 2001)

According to the interim report released by the International Federation of the Phonographic Industry (IFPI) today, the global recorded music sales dropped by five percent during the first half of 2001 from what they were in 2000.

World CD sales fell 4.6 percent while the ever-declining casette sales went down 16.3 percent. Also singles were 14.4 percent lower than the previous year. The decline was steady all over the world except for the United Kingdom (10% growth) and France (8% growth).

The decline is, according to IFPI, the result of slowing economics, illegal CD-burning, and, of course, the availability of pirated music on-line. Consumers also have more and more entertainment products to spend their money on, such as DVDs, video games, mobile phones, and pay-TV, so obviously they have less money to spend on music.

Napster has settled a pending lawsuit with American songwriters and music publishers. With the settlement Napster has agreed to pay songwriters $26 million plus a portion of its future revenues.

U.S. District court Judge Marilyn Patel, the plaintiffs and the National Music Publishers' Association (NMPA) Board of Directors still have approve the agreement, but according to Napster and NMPA representatives, the process should be a mere formality.

Even though Napster still hasn't settled the recording industry's ligitation, Napster CEO Konrad Hilber is confident the service will be back by the end of the year. He also believes that even though there are free music download services available Napster would still succeed as a subscribtion service -- not least because of it's well-known brand name.

Vivendi-acquired MP3.com today announced that it is going to change the rates it pays for its artists -- to lower ones, of course. While participating to MP3.com's "Payback for playback" scheme continues to cost $20 a month, the rates the company pays back are being reduced. In new rates, artist gets half a cent ($0.005) for each downloaded song. End of period. No payments for streaming, etc. So, in other words -- if you want to participate, you better get that 4,000 downloads a month or otherwise you lose money.

You're welcome to join MP3Lizard.com, guys. We don't charge you ,-)

Both, American media giant AOL TimeWarner and UK-based EMI, announced today that they're expecting worse-than-expected results for their current financial years. EMI estimates that its profits will slump 20 percent, blaming the tough world economic. Company also announced that it will lay off 100 workers.

AOL TimeWarner will also miss its earlier revenue projections. Earlier company expected to see growth of 12-15% in revenues and is now expecting 5-7% growth. Company laid off significant amount of employees in January. AOL has also laid off part of Nullsoft's team, subsdiary of AOL that develops super-popular WinAMP.

MediaForce released their latest top 10 charts for month of August, 2001 for most pirated movies. List is based on MediaForce's searches through various P2P networks, such as Gnutella (clients like BearShare and Gnotella) and FastTrack (Kazaa, Morpheus and Grokster), IRC, FTP sites, Web sites and newsgroups.

Once again, movies that are still in movie theatres in U.S., dominated the charts, getting 5 titles in the top 10. Others included movies recently released on DVD or movies that are "all-time-favorites" among pirates, such as Matrix. Also, the #1 spot went for American Pie 1 -- it's rather old movie (in terms of digital piracy), but its sequel obviously boosted its popularity. American Pie 2 didn't quite make it to the top 10, but climbed to 16th anyway.

Top ten pirated movies in August, 2001:

1. American Pie (Universal Pictures)
2. The Fast and the Furious (Universal Pictures)
3. Shrek (Dreamworks SKG)
4. Jurassic Park III (Universal Pictures)
5. The Matrix (Warner Brothers)
6. Planet of the Apes (Twentieth Century Fox)
7. Crouching Tiger, Hidden Dragon (Sony Pictures)
8. Swordfish (Warner Brothers)
9. Traffic (USA Films)
10. Fight Club (Twentieth Century Fox)

RealNetworks has taken a step towards single multimedia player. Real's problem is that it has, according to company, 220 million registered users for its RealPlayer software, but only a handful of users who have actually purchased the full version of the player.

New player, dubbed as RealONE Player, will include all the functionality the commercial versions currently have, and allow new users to use these advanced features 14 days for free. After that, the advanced features will be blocked -- typical shareware trick. Company hopes that by introducing the advanced features to new users, it would get more users to register the software.

Company also announced that it expects its implementation of MusicNet to launch within 60 days -- slightly later than expected earlier -- and that it would cost less than $10/month.

ARTISTdirect has shifted its focus from online music promotion, which it still operates through its websites, to its record label business. To make this shift clearer, company announced that 25 employees from its online division will be fired and that the same amount of new employees will be hired for record label division.

Reason for the shift is clear -- online advertising is in deep recession, while record label business is much safer business.

Napster's request to halt proceedings in its copyright infringement case was denied by U.S. 9th Circuit Court of Appeals yesterday. Napster hoped to move its case from Judge Marilyn Patel's court, but appeals court decided that case cannot be transferred elsewhere. It also said that both parties, Napster and RIAA, shouldn't make any further filings to appeals court without a specific request from the court.

Texas Instruments said today that it has licensed MP3pro technology from Thomson Multimedia (company which owns licensing rights to the format in U.S.) and will add support for the format in its upcoming DSP processors. DSPs are processors that are used in (among others) digital audio devices, such as MP3 players. By adding a support for MP3pro, device manufacturers who use TI's chips, can support MP3pro in their devices as well.

MP3pro, released as a public format in June, has already gained some nice support -- there's already a WinAMP plugin available and Ahead announced in August that its super-popular CD burning software Nero will support MP3pro. MP3pro is developed by Fraunhofer Institute (masterminds behind the original MP3 format) and Swedish company Circuits and Coding Technologies.

RealNetworks and Texas Instruments announced on Monday that they are developing a multimedia chip designed for mobile devices that would include the core of RealNetworks' RealPlayer Mobile player. The player, already used as a separate application in Nokia's 9210 Communicator, is designed for Symbian platform and allows users to watch and listen RealAudio and RealVideo files and streams.

Only competing product currently available is Microsoft's Windows Media Player which is available for PocketPC devices, most notably Compaq's and HP's PDAs. But PDA markets pale in comparision to mobile phone markets -- worldwide, PDA sales are measured in millions and tens of millions, but mobile phone markets are measured in hundreds of millions. Symbian is an operating system based on Psion's EPOC32 operating system and it is supported by all the major mobile phone manufacturers, including Motorola, Ericsson and Nokia.

MusicNet announced Friday that its distribution platform is ready for a roll-out in coming weeks, targeting to launch the system in early October. Rival Pressplay made similiar announcement a week ago stating that it would launch in mid-September (well, it's mid-Sept at the moment and we're still waiting, although WTC/Pentagon attacks have delayed many other things as well).

Both services are major record label backed online music services that aim to target to Napster freaks, offering legal ways to download and stream music from the web. Both services are based on monthly fees that haven't been announced yet. Problem with both services is the fact that they only offer partial selection of music -- Pressplay offers music from its owners, Vivendi Universal and Sony, while MusicNet offers music catalog from its record label owners BMG, AOL TimeWarner and EMI. RealNetworks owns major stake of MusicNet as well.

Group of mostly European technology companies are developing a new standard called IP Datacasting standard. Standard would create an unified method to transfer IP-based data in digital broadcast networks (such as digital cable and aerial tv broadcasting networks). Companies behind the standards group include Deutsche Telekom, NTL (UK's biggest digital cable operator), Nokia (Finnish mobile phone giant) and Philips.

Group estimates that they have a ready standard in late 2002 and first real-life applications in early 2003.

Big retailers have made steps towards stronger positioning on DVD rentals in U.S. Blockbuster recently announced that they will cut the number of VHS movies available for rental and focus more on growing DVD markets instead. Blockbuster will take $450 million charge because of this move.

Also, consumer electronics retailer Best Buy has announced a co-operation with online movie rental company Netflix.com. Best Buy will offer co-branded version of Netflix's monthly rental scheme, where consumer gets unlimited number of rentals for $20/month.

Sonicblue, manufacturer of well-known Rio MP3 players and other consumer electronics, annaounced that it will lay off an additional 90 employees. Company laid off over 200 employees in July in order to cut costs. This time pink slips are handed out because company has ceased its chip manufacturing business and will focus on digital audio and video products.

Because of today's events, we're not updating the site.

Our thoughts are with you.

One of the Liquid Audio's main investors, Steel Partners, has sent a letter to Liquid Audio's board of directors demanding to sell the company. According to the letter, Steel Partners doesn't believe that Liquid Audio is able to compete with major label -backed music services like Pressplay and MusicNet.

Liquid Audio reported over 70 percent decrease in revenues and over 80 percent increase in losses for second quarter in last month. Company develops B2B digital music solutions, but haven't been able to secure major label licenses.

According to Webnoize's study, August marked a new record in file sharing history. Users shared over 3.05 billion files through "alternative" P2P networks in August -- this number is even higher than February's peak, when Napster saw its traffic to peak to 2.79 billion files.

Alternative P2P networks include Gnutella (clients include BearShare and Gnotella), AudioGalaxy, FastTrack (clients include Morpheus, Grokster and Kazaa) and iMesh. Webnoize also predicts that situation, from copyright owners point of view, is going to get from bad to worse, now when students are returning to campuses and to their broadband dorm Net connections.

As expected, just few weeks after five major movie studios announced that they will launch their joint video-on-demand service later in this year, two studios left out from this co-operation announced that they've formed their own joint venture. Disney and News Corp announced that they will launch their VOD service under Movies.com in early 2002.

System will provide two ways to watch movies -- if consumer's cable company has VOD service already and if cable company offers Movies.com, users can access to movies via their existing cable box set. If user doesn't have VOD cable, he can use broadband Net connection to download the movie to his HDD and watch the movie with PC.

Analysts generally see these joint ventures steps to a right direction, but also have raised some concerns -- level of U.S. broadband connections at homes is still too low to support this kind of service. Other important aspect is that by offering VOD services, studios are alienating themselves from retail and rental giants like BlockBuster.

Both the Motion Picture Association of America (MPAA) and Recording Industry Association of America (RIAA) have asked ISPs to remove web pages offering copyrighted material, and the ISPs have, of course, complied. But the views on how to stop people from sharing infringing material on file-swapping servies are quite a bit different.

MPAA has persistantly requested ISPs to disconnect users sharing copyrighted files, but the ISPs view that they can't be held responsible for the content stored on the personal computers of the subscribers. RIAA, on the other hand, has decided to leave ISPs alone and instead wait for other means of disabling peer-to-peer file-sharing networks. Then again, hampering the operation of peer-to-peer networks is just as illegal as copyright infringement.

Now when Vivendi has finalized its acquisition of MP3.com and appointed a new CEO for the company, it's time to take a look what Vivendi is going to use MP3.com for. Most obvious purpose is of course Pressplay service, but MP3.com's new CEO, Robin Richards, revealed some other plans in last week. Company has plans to develop the content management and delivery technology of MP3.com further and use that platform to distribute videos and other multimedia content in addition to digital music.