The Music Industry Loses A Big One

The "music industry" (also known as the major record labels and publishers) needs revenue. Everywhere they look the income pie is shrinking, and they're desperately trying to staunch the financial bleeding. One way they had hoped that would happen is to have the owners of the so-called "digital music lockers" pay them a license fee when a user uploads their music to the locker (also called "the cloud").

But neither Amazon nor Google went for that proposition, taking the bold step to wait and see what would happen in a test case of EMI (and 14 music publishers) versus MP3tunes.com. MP3tunes is the brainchild of Michael Robertson, the creator of the original thorn in the side of the music business - MP3.com, one of the companies that started the digital revolution in the first place. The site beat Amazon and Google into the music locker business, allowing the user to store all of their songs in their own virtual locker in the cloud so he/she could stream the music to any of their digital music devices at any time and not have to have all of their songs stored on that device.

In a lawsuit that has major industry ramifications, EMI wanted to get paid if any of their songs were loaded onto MP3tunes. What's more, they asked that MP3tunes effectively police their users to determine if any of the songs were stolen, then make them take them down.

In a ruling yesterday (August 23, 2011), Manhattan district judge William Pauley ruled that MP3tunes (and as a result, any other music locker) is not responsible for what their users upload, clearing the way for people to mix songs they have bought with those that have been offered for free on the internet without worry of having to pay a license fee.

The one stipulation in the ruling is that if a copyright holder finds that a user has uploaded pirated content, the locker company must take down those songs if they're notified.

OK, let's look at the winners and losers here.

The Winners
MP3tunes, Amazon, Google Music, any digital music locker - They don't have to pay a license fee to the labels, and they don't have to police their customers.

The user - They can store their music in the cloud without having to worry about being asked to pay a fee for music they can't prove they own.

The Losers
Music Publishers/Record Labels - They lost a potential major income stream.

Songwriters - Likewise.


Artists - They were bound to make something from that income stream, although probably a pittance of the total amount.

We all seem to leap for joy when the middle man takes a beating, but usually that also means that the creators are taking one too. Virtual music lockers threaten to become the next big thing in music and we'll see if that actually comes to pass by the end of the year or so, but that won't mean much for the real people that need the help - the ones that make the music.

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Amazon Is First To The Digital Music Locker - So What?

Today Amazon announced a digital music locker service that enables users to upload and stream their music on multiple devices (PCs, Macs, and Android phones and tablets, and anything on the Android operating system, which eliminates iPhones nor iPads for now). The service is called the "Amazon Cloud Player" and all US Amazon customers start with 5GB free, which they then can then upgrade for $20 a year to 20GB. The twist is that just by buying an MP3 album at Amazon, you will automatically get the extra 20GB for free (which sounds like a great deal).

And the rest of the world breathes a hearty sigh and says, "So What?" This might've been a bigger deal had the announcement come from Apple or even Google, but Amazon, while a leader in books, is a distant second to iTunes in the digital music space with only 15% of the market compared to 70% by iTunes.

The price may be right but you'd be hard-pressed to find a music consumer who couldn't wait for this product. In fact, I'd venture to say that most don't or can't see the advantages to a cloud service for their music. Plus, Amazon pushed full speed ahead with the launch without getting the consent from the labels first, which may be problematic as time goes on.

The idea here is that instead of storing all you music on one desktop, laptop, phone or tablet, you probably want the music on all of those devices. The big pain is having to copy and transfer everything over, and in many cases you just won't have the storage space to do so anyway. A cloud music locker like Amazon's means that you store all of your music on their online servers ("The Cloud") which you can then access from any of your devices, saving you the time of transfer and the storage space.

The downside is that the major labels want to get paid a second time for this privilege, saying that the music that you already bought once doesn't give you the right to stream to any device that you want. Now you can debate that a number of ways, but both Apple and Google (who are rumored to have their own digital music lockers set to debut sometime later in the year) are in discussions with the labels to come to some sort of agreement on this issue. Only time will tell how that will play out.

I guess there's some advantage to being a "first mover" rather than following the crowd when the other companies launch their services, but the fact they haven't done their homework with the labels can end up costing them their advantage. Let's see what the next week, and the label's response, brings.

In the meantime, I'd love to hear your comments on your Amazon Cloud Player experiences.

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You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.