MusicTank

PRESS & BLOG REVIEWS:

Music Week 03.12.08 | http://www.musicweek.com/story.asp?sectioncode=1&storycode=1036377&c=1
CMU Daily 03.12.08 | http://www.cmumusicnetwork.co.uk/daily/081203.html

DISCUSSION:
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KEYNOTE:
READ IT HERE! Detica's MusicTank Presentation: http://www.musictank.co.uk/reports/deticas-musictank-presentation

In his keynote presentation to this think tank, Detica's Media Accounts Director, Dan Klein asserted that ISPs have an opportunity to break the cycle of declining revenues offered by digital music and suggested a set of models for future digital music sales in the UK.

OUTLINE SUMMARY:
Reproduced by kind permission of Chris Cooke Cooke, Editor, CMU Daily 13.12.08

BURNHAM SAYS LEGISLATION STILL PLANNED IF VOLUNTARY LABEL/ISP AGREEMENT CAN'T BE REACHED

Culture Minister Andy Burnham said last night he thought the French government's plans to introduce new laws to force internet service providers to cut off persistent file sharers were "wrong" for a first response to the conflict between content owners and net providers. Though he added that the UK should watch how those laws work anyway, and that if no voluntary agreement could be reached between music and net firms in this country, then "we're clear about this, we will legislate".

Burnham was speaking at the final of four MusicTank Think Tank debates on the state the growing digital music market, and on how the technology and creative industries can and should work together to overcome online piracy issues and to generate new revenues from content.

The first and last of those debates looked in particular at the relationship between the record companies and the internet service providers, the war of words between whom, of course, has been quite vocal in the last 18 months. As much previously reported, the music industry think the ISPs should take a proactive role in combating online piracy, by sending warning letters to suspected file sharers and, maybe, cutting off those people who continue to access illegal content despite warnings. The ISPs, as a general rule, aren't so keen on taking on that role.

Nevertheless, when the government first said earlier this year that it would force the ISPs to act through new laws if no voluntary agreement could be reached between the music and net industries, the service providers did start to make some concessions, with a Memorandum Of Understanding signed in July in which the record companies and six ISPs agreed to work together on education and enforcement projects and new music services.

"We recognise that this is an important issue", Burnham continued, "which is why we applied some pressure on the ISPs to participate in this process. And I think we'd all agree that there has been a real change of tone this year as a result of that pressure. Things have moved on considerably. But we, in government, know we need to keep that pressure on. I hope the two industries can find a business solution to this, because I believe that is the best way to approach this issue. But as I say, my message is this: we will legislate if no solutions can be found".

Aside from continuing to provide some pressure on the peripheries of the ongoing talks between the music companies and ISPs regarding that MoU, Burnham added that he saw his role on this issue to be internationally focused. "The international aspect of this is underdeveloped", he told the Think Tank audience, "but we need to be thinking about global solutions to the online piracy issue. We need to look at how these issues are being addressed elsewhere in the EU - including France's legislative approach - and how they are being addressed elsewhere".

"A particular priority should be the US", he continued, "where there has been a lot less consideration of this issue than here. The internet provides a particularly good opportunity for the English language catalogue, and that means a great opportunity for the UK and US creative industries in particular. We, in government, need to ensure that a failure to tackle piracy doesn't stop us from capitalising on those opportunities. Come the New Year I do intend to speak to the new American administration about this".

Concluding, Burnham said: "Some advocate that the internet should be an uncontrolled phenomenon beyond governments. But clearly there needs to some rules - and these might be self-regulatory rules - to protect copyright in the digital age, so our creative industries, an increasingly important industry in the UK, can capitalise on the opportunities the digital world offers".

Away from the digital debate, a sneaky audience member threw in a quick question about that other big issue in the music industry on which the government has been less helpful to date - the proposals to extend the recording copyright from 50 to 95 years. Although the UK government is in theory still attached to the findings of its Gowers Report on copyright, which said there was no justification for an extension, referencing the proposals put forward by the European Union's Internal Market Commissioner Charlie McCreevy, which proposes the extension, Burnham said "this is not a closed debate as far as government is concerned, the debate continues internally and we will respond to the EU proposals in due course". Make of that what you will.

http://www.cmumusicnetwork.co.uk/

ISP MAN PESSIMISTIC ABOUT MOU TALKS

The music industry may need to cash in on Burnham's promise to "apply more pressure" on the ISPs to take on that anti-piracy role. Or at least they will if the representative of the net industry on the MusicTank panel last night is to be believed. Though he's still not convinced that, when push came to shove, the government would dare introduce rules that could lead to tens of thousands of voters losing their internet connections.

Richard Mollet, Public Affairs Director at record label trade body the BPI, said there had been "more movement on this issue than we could have dreamt possible" in the last year, and Simon Persoff , Director of Legal & Regulatory Affairs at mobile/net firm Orange, admitted the ISPs had been forced to shift their position because of government pressure. But the debate that ensued - and especially Persoff's comments - suggested that while the record companies and ISPs have signed that Memorandum Of Understanding, the consensus is mainly on the fact that "something should be done" about online piracy, and not on how it should be done and who should pay for it.

As previously mentioned, the MoU talks about education, enforcement and the creation of new licensed digital music services, probably provided by the ISPs directly. It's the latter where there seems to be disagreement, which is a problem because the ISPs want agreement on the new business models before committing to step up their education and enforcement activities. The ISPs insistence that agreements must be reached in all three areas is partly because of a "what's in it for us" philosophy, ie that to agree to unpopular and possibly costly measures to stop illegal file sharing there needs to be a commercial advantage to be gained in the form of new music-based revenue streams. Though they also argue that education and enforcement will only work if compelling new legit services are also available, and that that is also a reason why the three strands of the MoU debate are inseparable.

"Our discussions with the music industry have been both good and worrying" Persoff said. "My worry is that the music industry seems to still see the enforcement part of the MoU as being the primary objective of all this. My gut feeling is that, despite what they say, the BPI really wants the 'three strike then we cut you off' system, and that's their focus. Our focus is new models. We do want to find a way forward as much as the record companies - illegal P2P users are expensive for us too, because they use excessive amounts of bandwidth in a way that we can't commercialise. And we recognise that music is an important part of the content services we offer our customers, and that there is much potential there. But the record industry's current business models don't offer that potential. For this to work the record companies need to start really reevaluating the way they do business".

Despite all the highfalutin talk of new business models, insiders say that at the heart of the dispute between the ISPs and the record companies are good old fashioned arguments over price and data ownership - ie the wholesale price the labels will offer their music to the ISPs for, and who 'owns' the customer.

In some ways that's a good thing because in theory an agreement could be reached without someone having to develop this mythical dream business model that will make millions from digital music, though whether either side will be willing to move on price and customer access remains to be seen. Burnham may as yet have to turn his attention away from the global dimension and apply more pressure at home. Exactly where the pressure would be applied, especially as the next General Election appears on the horizon, remains to be seen.

http://www.cmumusicnetwork.co.uk/

Full event transcript and podcast to follow

INTRO:  Illegally downloaded any music recently?  Given that nearly two thirds of all internet traffic is made up of P2P activity these days, if you haven't, then most young people you know are.  Since Napster first reared its head in the late nineties, the recorded music business has tried in vain to put the genie back in the bottle.  The result - some pr blunders and an estimated 20:1 illegal/legal download rate.

For music fans it’s been a golden age where hard to find and out of print releases have been readily available alongside the latest hits of the day, but with no way of monetising these streams the record labels have been forced to watch their profits dwindle while the world’s been moving online.

The UK government has taken notice and is overseeing a three-pronged initiative aimed at educating and developing awareness, dealing with the most serious infringers and facilitating legitimate offerings. 

This series will focus on that third prong: effective legitimate alternatives.  Over the course of the four events we will review what people want, where technology is heading, what the most plausible new models are and how they might be licensed.

TOPIC:  'SQUARING THE CIRCLE'

The grand finale of the series cuts to the main issue to surface throughout this discussion strand: does the future of digital music sales lie in licensing proprietary music services or with open systems that somehow utilise P2P?

While open models will no doubt prove the most compelling to music fans (who’ve arguably already made their choice about how they wish to access music), some rights holders are understandably wary about cannibalising sales from their core digital revenue stream – iTunes.  And in moving slowly towards subscription models, their financials are still firmly embedded in à la carte downloads.

With some arguing that for young people, P2P has already cannibalised their potential purchases of downloads, a bit of nervousness about displacing some of the more mature music buyers is surely understandable.  What needs to be done to resolve this dichotomy?

And which ever way it might be resolved, how, practically, might ISP-based music services co-exist in a way that preserves value for music and avoids ISPs being traded against one another in a race to amass a terabyte of music as quickly and cheaply as possible?

SPEAKERS:

SERIES TOPICS: LET'S SELL RECORDED MUSIC!

21 Oct: Part 1-  'HERE WE ARE NOW, ENTERTAIN US'
What music consumers actually want and how this tallies with the status quo and raft of new services in various stages of development or launch.    Outline summary is now available (MusicTank members should log-in to access the full event transcript and podcast).

04 Nov: Part 2 - 'WE HAVE THE TECHNOLOGY, WHAT'S THE SOLUTION?'
The second in a four-part series, this panel will look at what is becoming technically feasible and what might be the best blue-sky model for the UK,  while considering the needs and perspective of ISPs and mobile platforms.  Outline summary is now available (MusicTank members should log-in to access the full event transcript and podcast).

18 Nov: Part 3 - 'COALITION OF THE BILLING'
This session considers what might be the best way to license these new services and whether or not a collective approach is indeed desirable or plausible?

02 Dec: Part 4 - 'SQUARING THE CIRCLE'
The grand finale of the series cuts to the main issue to surface throughout this discussion strand: at the heart of the future of digital music sales, does the future lie in licensing proprietary, closed music services or open systems that somehow utilise P2P?