News is just starting to spread about this case but two people have been charged with uploading a couple of Ryan Adams songs onto a fan website, a month before the album they are from was to be released. The two, Robert Thomas and Jared Bowser, were indicted for violating provisions of the 2005 Family Entertainment and Copyright Act (FECA) which explicitly outlaws any kind of "pre-release" piracy (i.e. posting yet-unreleased songs before an album's release date). If convicted, the two could face up to 11 years in prison (though we're guessing the actual likelihood of that happening is pretty slim).

We reported last month how the music industry was taking greater steps to curb pre-release piracy but we assumed they were mostly targeting pirates who upload entire albums to "warehouse" spaces online (torrent sites, Usenet forums, etc.).

The fact that these songs appeared on a Ryan Adams fan-site makes it a more interesting – and perturbing – case; fans of many, many artists constantly share new music by those artists as a way to generate interest/hype. What seems especially galling about this prosecution is the fact that we're talking about individuals songs being uploaded rather than an album. we know from the industry point of view, there's not a big difference but we'd counter that labels send out advance songs to radio stations all the time: they want songs floated out there to tease the audience but they'd all balk at a radio station playing the entire album advance.

The obvious question is whether or not local/federal investigators are going to start going after all the MP3 blogs, fan sites, etc. out there that, on occasion, leak new music out there. There will still be many cases where permission will be granted by certain labels, but we wonder if there's a general consensus amongst record labels that ANY form of pre-release leaks should be prosecuted. Not a great look for the labels but the paranoia around piracy has seemingly only been getting worse. (Source: Reuters)

Out of the world of digital music law enforcement ... we're surprised to hear this but for the first time, prosecutors have secured guilty pleas from people accused of leaking albums online before the release date. The phenom has been going around for years so we're not sure why it took so long until now to prosecute any over it but in any case ... Operation Fastlink was set up to catch "pre-release pirates," many of whom belong to organized groups of who basically score props points for being the first to secure an album and rip it to go online. Three of the four who plead guilty this week were part of APC (Apocalypse Crew) and there was one more from another group, Chromance (CHR). MSNBC explains how these groups work:

"As leading members of the prerelease music groups, the defendants sought to acquire digital copies of songs and albums before their commercial release in the U.S. The supply of prerelease music often was provided by music industry insiders -- such as radio DJs, employees of music magazine publishers, workers at CD-manufacturing plants and retailers who frequently receive advance copies of music.Once a group prepared a stolen work for distribution, the material was distributed in minutes to secure computer servers throughout the world. From there, within a matter of hours, the pirated works are distributed globally, filtering down to peer-to-peer and other public file-sharing networks accessible to anyone with Internet access and potentially appearing for sale throughout the world.

What we want to know - and what's not in the story - is how Operation Fastlink managed to track these folks down, especially since they were all located in different cities. What's the cyber-sleuthing story? (Source: Billboard)

In the ever-increasing world of digital downloads, much has been made over how well songs sell; as we reported last week, Apple just racked up its one billionth download via its iTunes site. However, though this speaks volumes to the health of the music single, it's left the conventional album in a less secure place, even digitally speaking. When given the choice, people overwhelmingly seem to prefer buying individual songs rather than complete albums, this according to industry analyst Eric Garland of BigChampagne. As a result, the profit margin that used to be created by album sales is now drying up and the music industry is scrambling.

As a result, Garland thinks that concerns over piracy is "a red herring," and even though pirated downloads outnumber iTunes downloads by over a 30 to 1 margin (which is pretty mindblowing if you ask us), ultimately, what the industry needs to learn to do is find ways to sell "bundled" musical content that goes beyond just 16 songs for $10.

For example, Emusic.com sells an option where people can pay a set fee in exchange for a set number of downloads; other sites are offering bonuses like extra tracks, liner notes, and other incentives for people to purchase bundled content rather than just single songs. The basic lesson here? Changing consumer patterns require changing industry strategies. (Source: Digital Music News)

Folks have been counting it down for a few weeks now but it finally happened: Apple's iTunes logged in its one billionth download. The figure staggers the mind, especially when you consider that it took less than 3 years to happen. I don't think I could count to a billion in three years time.

The mark was passed around 8:30pm (California time) and while the name of the song purchaser has yet to be released, he or she has a nice package waiting: a 20-inch Mac, 10 60GB iPods (what will they do with 10 iPods? Hellooooo eBay!) and $10,000 in iTunes credit ... which presumably can go to filling those 10 iPods.

Just to note, Apple sold its first million songs inside of 5 days (damn!) and hit half a billion last January (2005). Basically, they moved over 500,000,000 songs in a little over a year. Crazy. (Source: MacNN)

The rumor mill has stopped spinning and here's the deal with Amazon.com's entry into the digital music world: the NY Times is reporting that not only will Amazon debut a music subscription service (based either monthly or yearly) but they'll also be selling their own portable music player to go with it (aPod?). Amazon has reportedly spent a good deal of time looking at the spectacular failure of Windows-based players to gain any foothold against the Apple/iPod juggernaut and presumably, they've come up with with a device that is easy to use and stylish. Since of course, when you think "Amazon," you think "stylish." We'll come back to this in a second.

As we reported on the other week, Amazon does have some distinct advantages as a digital music service: they already sell a ton of CDs and as the TimesSaul Hansell note:

"The company, in fact, is looking to leverage its role as a major vendor of CD's as it moves into digital music. It has discussed with music labels the possibility of offering discounts to subscribers of its music service on CD purchases."

So here's our armchair analysis ... In theory, empire lasts forever. At some point, you just have to think that iTunes will gain a real competitor. Maybe it will be Amazon, maybe it will be the soon-to-arrive Urge service through MTV, who knows? Likewise, the iPod can't run the MP3 player market forever (can it)? Yet there's been consecutive waves of competitors trying to devise the perfect iPod killer and so far, they've ended up the ones that have been killed.

Amazon might actually have a distinct edge in selling digital music for all the reasons laid out but the player is something else entirely. The iPod continues to dominate that market because they are a well-crafted, practical device but there's also the cache that has since come with rocking an Ipod. Apple, as a company, seemed well suited to integrate that blend of style and function but Amazon.com doesn't that the same factors going for it. We think the player might crash and burn something ugly unless it turns out to be a total winner (beautiful, simple to use, easy to support). (Source: NY Times)

Maybe this is some minor, technical/legal language issue but it's still worth noting: with all the brouhaha over musical copyright, file-sharing, pirating, etc. etc., one commonplace understanding throughout all this has been that it's been legal for people to rip CDs for their own use (back-up, stored on an MP3 player, etc.). In fact, attorney Don Verrilli, speaking on behalf of entertainment industry, said the following to the Supreme Court last year:

""The record companies, my clients, have said, for some time now, and it's been on their website for some time now, that it's perfectly lawful to take a CD that you've purchased, upload it onto your computer, put it onto your iPod."

That was then. This is now: there's been a filing by the recording industry that now challenges – or at least, puts into question – whether CD ripping is fair use or not. The wording says,

""Nor does the fact that permission to make a copy in particular circumstances is often or even routinely granted, necessarily establish that the copying is a fair use when the copyright owner withholds that authorization."

The wording is vague: it doesn't establish a firm policy one way or another but it does seem to open the door for a future challenge on the issue of "fair use" in terms of CD ripping.

The question, as others have raised, is, even if the industry decided to declare that burning a CD for personal use is outside of fair use, what would be the repercussions? At the very least, the debacle Sony BMG created with its DRM (Digital Rights Management) software experiment last year will likely see life again with other labels. (Woo hah, won't that be fun). Look, we think this is the industry hedging their bets, rattling the gate a bit, but we honestly can't see them trying to take this to the conclusion where ripping a CD will be made illegal: enforcement would be insane. (Source: EFF via boingboing)

The Orchard, "a leading distributor and marketer of independent music" is introducing an interesting new program to help reissue obscure vinyl-only releases into a digital format. What's notable about this new service, called "Digital Wax" is not a new idea per se: mastering a digital song/album off of a vinyl source has been around for years. However, The Orchard has invested in what sounds like the mother-of-all audiophile set-ups, the kind of equipment that makes a Bang and Olufsen system look like Fisher-Price. We don't mean to poke fun here, but the description of the system sounds like audio-tech porn:

"A modified Simon Yorke S7 turntable fitted with a Kondo IO-j cartridge feeds the esoteric, rare, expensive and exquisite Kondo M1000 preamplifier, via a Kondo KSL SFz step-up transformer. This signal is in turn converted via an audiophile A-D 2 channel converter, and archived in DSL. All wiring is Kondo age-annealed 99.9999% pure silver wire, and all components are isolated by Vibraplane active isolation platforms."

And it makes a great cup of espresso too!

Several labels have already joined forces with The Orchard, including Lookout!, In the Red, SST and Delicious Vinyl. Music from the Digital Wax program will be released to all the major music download sites though it's unclear of The Orchard also plans to release the same songs on a physical media format like a CD. (Source: Coolfer.com)

According to Newsweek, Amazon.com has plans of launching a digital music soundfile service but of a slightly different model than what we've seen from Napster, eMusic, iTunes, etc. How it works is this: buy a CD from Amazon.com and they will also receive the same CD in a digital file format that they can then move onto an MP3 player or their computer. Basically, buy the physical media, get the digital media for free. (The article also mentions plans where those buying a DVD can watch the movie online).

Actually, maybe they should push it the other way around (bear with us here): buy the sound files, get the physical CD for free. After all, most people can already get sound files to go with their CDs – it's called burning the CD and people do it all the time (what, you think people actually buy 1,000 songs to fill up their iPod Nanos? Please.). Sure, Amazon.com is making it easier but it's not like they've reinvented the wheel here. Whereas, if they sold the digital files and gave people the option to get the physical CD to go with it, seems to us they might have takers but if they don't, still they have the physical CDs to sell to those who don't want the digital files. And just to point out the other flaw: this applies to album purchases and not songs and right now, the dominant digital music retail model is around songs.

This all said, it is, at the very least, an interesting new model and god knows, the field of competitors could use something new in its midst. (Source: MSNBC)

As it turns out, the intense industry paranoia around illegal downloading might just all in their head. A new poll jointly conducted by Rolling Stone Magazine and the Associated Press suggests that far less people participate in illegal filesharing than the paranoia would suggest: 80% of respondents said that downloading without permission is "stealing," while 92% say they've never downloaded anything illegal before anyway.

However, everyone knows that CD sales are down, so what's going on? It helps to know that 75% of respondents also thought CDs cost too much while 58% complained that the quality of music is getting worse. We don't put a lot of stock in the second stat: people ALWAYS think music is getting worse. But the complaint of the high cost of CDs just be compared with the 71% of people who thought $1/download was a fair price, if not bargain. However, only 15% of people, total, said they used an online music site. None of this spells a very positive outlook for the music industry except that it may push the call for lowered CD prices alongside more investment in downloading. (Source: MSNBC)

Speaking of downloading, the NY Times has their own article that examines how the popularity of DLing songs is threatening to put a dent in the sales of "Greatest Hits" compilations. The thinking here is, "why should I spend $10 to buy The Eagles Greatest Hits if I can just buy the one or two songs I really, really want for $1/piece?" It's an interesting line of thought; not one that many probably considered before but it does make sense: everyone has been noting how downloading has really made the album seem more obsolete than ever and there's no reason why Greatest Hits comps wouldn't be affected by this trend too.

Writer Jeff Leeds suggests that this part of a larger tend of change that's been happening for over 20+ years:

"As recording formats have evolved over the decades, the industry has profited from the marketing of previously released music — as fans replaced their vinyl LP collections with compact discs of the same albums, for example. Since the older classics are comparatively inexpensive to reproduce and market, they typically carry higher profit margins than music from new acts. But the migration of music from shiny plastic discs to online services has disrupted the industry's cycle of replacement, and record labels are only beginning to see the effects."

Leeds then looks at some of the strategies music labels have pursued to protect their catalog sales yet still maintain consumer interest. For example, Rhino has created "Hi-Five" EPs that have five songs from a particular artist but only sells for $3.96 on iTunes. Others have opted to only sell albums online and not songs (AC/DC for example). Like many of these digital trend tracking articles, Leeds doesn't draw any firm conclusions; rather he looks at all sides of the debate, one that seems far from being settled just yet. This said, there are some great factoids to consider here. For example, iTunes has sold 275,000 downloads of Survivor's "Eye of the Tiger" and apparently, Vanilla Ice's "Ice Ice Baby" is making a comeback thanks to digital sites too. (See, there is a dark side to all this). (Source: NY Times)

London's Guardian newspaper tackles an important, though often overlooked, question with digital download purchases: just what the heck are you paying for? They look at the issue from a technological and fidelity point of view, comparing different download sites and the quality of the sound you're getting with each purchase. They compare three sites: iTunes, Napster and Bleep.com (the latter being a label run site rather than a general music site). iTunes encodes using a proprietary formula at 128 kbps (kiloBITS per second), Napster uses the Windows Media Audio system which encodes at 192 kbps and Bleep clocks in at a (relatively) whopping 320. However, what does a CD contain? 175 kiloBYTES per second, which is 11 times more information than iTunes and still four times more data than Bleep.

Efficiency is the reason behind encoding; the smaller the file, the more data you can move and store. As anyone who's ever tried to fill an MP3 player realizes, if you encode at a smaller bitrate, you can pack a lot more songs and most people seem more than willing to trade quality for quantity. After all, can anyone really tell the difference?

Bleep's Tom Panton suggests that for most people, listening to a song over cheap headphones, 128 vs. 192 vs. 320 won't really come across in any discernable way:

"For something like Arctic Monkeys, where people are downloading it via iTunes at 128 and playing it on their iPod through tinny white headphones, then it's probably not going to make a huge amount of difference. But it will if they burn those files to CD and play them through their home system."

Likewise, the article notes that DJs who want to spin MP3s in a club will want the higher quality file in most cases. However, for the average consumer, convenience seemingly trumps quality. This comes from Rob Wells of Universal UK:

"In the short to medium term, I'd say that the majority of consumers aren't really that fussed. Quality is quite far down their list.

Do you care about the sound quality? Can you even tell?

(Source: Guardian)

I was predicting that at some point, a forward thinking record label would get off their ass and start an MP3 blog. It only makes sense: there's a lot of interest (duh) in MP3 blogs and podcasts and a record label would seem uniquely poised to benefit from plugging their own catalog. Looks like someone finally stepped up: Vice Recordings (subsidiary of the notoriously hipster fave magazine, Vice) has started "Up Your Jaxxy" which they claim is "(perhaps) the world's first record label MP3 blog. (We actually would be surprised if that were true but hell, if someone else was first, they weren't making enough noise about it).

Up Your Jaxxy will be post new songs every two weeks to which we reply: every two weeks? Uh, I know the label doesn't have that deep of a back catalog but dudes, c'mon. 13 year olds on MySpace can do better than that, step your blog game up! In any case, their first entry is Bloc Party's "Two More Years," the MSTTRKRFT remix.

Glad to see Vice Recordings in the mix, now will someone tap Universal on the shoulder and drop a hint? (Source: Coolfer.com)

---

(Image of Vice Recordings © vice-recordings.com)

After pundits have been suggesting for years now that music labels need to switch up their basic business models for a digital age, someone's listened. Warner Music is floating out a new label that is no longer in the business of selling CDs. There's no name for it yet, but this will be an "e-label," that will make its money by selling "clusters" of songs at a time on the internet. The thinking behind this was explained to NME by Warner chairman Edgar Bronfman Jr.:

"At this new label, an artist can develop in a supportive, lower-risk environment. An artist is not required to have enough material for an album, only just enough to excite our ears."

We admit, this is an intriguing model though obviously, one that carries a certain amount of risk with it. The biggest we can think of is flooding the market with too many clusters – marketing them might present a challenge since record stores at least provide a visible placement that can help promote an album. They'll have to find an effective way of marketing these clusters online or through some kind of filtering mechanism.

What's also intriguing about this is the argument that many have made that the album is dead and really, what people want is to create their own custom playlists based on mixing and matching different singles. The cluster idea would seem to be one step closer to that ideal, though it does feel like a weird middle ground if what we'll see is a bunch of EPs being released online rather than full CDs. (Source: NME)

First, there was The Grey Album, the now infamous mash-up project that slathered Jay-Z lyrics from The Black Album over beats derived solely from The Beatles' White Album. Whether you thought the album was great or wack (we cast our vote with "great"), it also helped spark off a phenom in mash-ups which should have burnt out a year ago but still seems to be going strong.

Case in point: West Sounds, a mash-up project that brings together Kanye West's lyrics from College Dropout and instrumentals built off of the Beach Boys' seminal Pet Sounds. Did you ever, for example, want to hear what West's "All Falls Down" would sound like over a beat created from "Don't Talk (Put Your Head On My Shoulder)"? Well, now you can. (Actually, this blend isn't half-bad).

To be honest, we were all ready to hate on this...and truly, it is not what you'd call an "essential" project but it turned out to be a lot more listenable than we initially would have predicted (though is it us or is not every song remixed using the Boys?) (Source: Different Kitchen)

---

(CD image © Kanyewestsounds.com)

Ironically, we learned about this through our daily news crawl vs. picking it up, on-site, but you can now exchange unused frequent flier mileage (and similar promotional "points") for downloads here at MSN. This is part of a new wave of services designed to increase the flexability of things like mileage points which are becoming  de facto currency in many ways (see the opening scene in Wedding Crashers for example).

We're curious (read, just a eensy-weensy skeptical) if this kind of convert-your-points systems will ultimately prove successful; it really depends on how wide a range of products and services you can end up cashing in on. On the other hand, if you're cheap (like us), bartering does seem preferable to shelling out hard cash. (Source: Digital Music News)

File this under "boring but important": The South Korean music industry authorities are going after MP3 bloggers in that country. As far as we know, this is the first concerted, organized effort to go after blogs that distribute music files illegally. America's industry watchdog, RIAA, has yet to initiate its own action though their position has been very clear on the matter: distributing unlicensed music, through any medium, is illegal.

MP3 bloggers have largely avoided problems by simply being too small a force to merit serious attention but as awareness around them grows and more files are circulated, we could see the same enforcement trends materialize as did with P2P networks, mixtape DJs, etc. In other words, as long as they stayed small, there was no issue, but once they became huge phenomenons, where hundreds or thousands of songs were being circulated, RIAA stepped in.

It will also be interesting to see where the expanding phenom of podcasts fit in with this. After all, many podcasts include unlicensed music as well and their popularity is expanding quickly.
(Source: Digital Music News)

Ok, so this isn't going to exactly stun anyone but Burst Media confirms that, surprise surprise, the under-24 crowd likes the Internet for their exposure to music. In a story from  Digital Music News, Burst has determined that 39.1% of those under 24 use the internet as the first place they listen to music with another 9.3% "will soon prioritize the net over other outlets" (presumably radio, tv, etc.).

It will be interesting to see 1) where satellite radio will fit into this mix as it expands coverage and eats away at terrestial radio's base and 2) how traditional music media companies will respond to these shifts in terms of where they apply their advertising dollars and marketing resources. Of course, a large part of that 39.1% is spent with downloading music illegally (though oddly, Burst doesn't have a percentage for that) which has lead, "one executive to simply write off the younger demographic." Is that a sign of frustration? Or conceding defeat?