1. Most Discussed
  2. Gainers & Losers

napster in big trouble-'isps must pay up for music

  1. 'ISPs must pay up for music-swapping'

    REUTERS[ SUNDAY, JANUARY 19, 2003 06:52:19 PM ]

    CANNES: A top music executive said on Saturday that telecommunications companies and internet service providers will be asked to pay up for giving their customers access to free song-swapping sites.

    The music industry is in a tailspin with global sales of CDs expected to fall six per cent in 2003, its fourth consecutive annual decline. A major culprit, industry watchers say, is online piracy.

    Now, the industry wants to hit the problem at its source -- internet service providers.

    "We will hold ISPs more accountable," said Hillary Rosen, chairman and CEO the Recording Industry Association of America, in her keynote speech at the Midem music conference on the French Riviera.

    "Let's face it. They know there's a lot of demand for broadband simply because of the availability (of file-sharing)," Rosen said.

    As broadband access in homes has increased across the Western world, so has the activity on file-sharing services.

    Impossible to enforce

    The RIAA is a powerful trade body that has taken a number of file-swapping services, including the now defunct Napster, to court in an effort to shut them down.

    Rosen suggested one possible scenario for recouping lost sales from online piracy would be to impose a type of fee on ISPs that could be passed on to their customers who frequent these file-swapping services.

    Mario Mariani, senior vice president of media and access at Tiscali, Europe's third largest ISP, dismissed the notion, calling it impossible to enforce.

    "The peer-to-peer sites are impossible to fight. In any given network, peer-to-peer traffic is between 30 and 60 per cent of total traffic. We technically cannot control such traffic," he said.

    Rosen's other suggestions for fighting online piracy were more conciliatory.

    She urged the major music labels, which include Sony Music, Warner Music, EMI, Universal Music and Bertelsmann's BMG, to ease licensing restrictions, develop digital copyright protections for music, and invest more in promoting subscription download services.

    Pressplay and MusicNet, the online services backed by the majors, plus independent legitimate services such as Britain's Wippit.com, sounded somewhat optimistic about their longterm chances to derail free services such as Kazaa and Morpheus.

    But they also acknowledged they cannot compete with the "free" players until the labels clear up the licensing morass that keeps new songs from being distributed online for a fee.

    Legal step

    Officials from Pressplay and MusicNet, which are in their second year in operation, declined to disclose how many customers they have.

    "We haven't really started yet," said Alan McGlade, CEO of MusicNet, when asked about his subscriber base.

    Michael Bebel, CEO of Pressplay, said his customers tally is in the tens of thousands. He added that the firm, backed by Universal and Sony, could expand into Canada in the first half of the year, its second market after the US He didn't have a timeframe for Europe.

    Meanwhile, Kazaa and Morpheus claim tens of millions of registered users who download a wide variety of tracks for free.

    Rosen hailed a recent US court decision which ruled that Kazaa, operated by Australian-based technology firm Sharman Networks, could be tried in America, as an important legal step to halting the activities of file-sharing services.

    "It's clear to me these companies are profiting to the tune of millions and millions of dollars. They must be held accountable," Rosen said.

DISCLAIMER:
Before making any financial decisions based on what you read, always consult an advisor or expert.

The HotCopper website is operated by Report Card Pty Ltd. Any information posted on the website has been prepared without taking into account your objectives, financial situation or needs and as such, you should before acting on the information or advice, consider the appropriateness of the information or advice in relation to your objectives, financial situation or needs. Please be aware that any information posted on this site should not be considered to be financial product advice.

From time to time comments aimed at manipulating other investors may appear on these forums. Posters may post overly optimistic or pessimistic comments on particular stocks, in an attempt to influence other investors. It is not possible for management to moderate all posts so some misleading and inaccurate posts may still appear on these forums. If you do have serious concerns with a post or posts you should report a Terms of Use Violation (TOU) on the link above. Unless specifically stated persons posting on this site are NOT investment advisors and do NOT hold the necessary licence, or have any formal training, to give investment advice.

Top