Thursday, February 7, 2008

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Report: DoJ Served Major Labels over 'Total Music' Initiative
By Eliot Van Buskirk EmailFebruary 07, 2008 | 9:43:12 AMCategories: Digital Music News

Doj The major labels, eager to wrest control over digital music pricing and distribution from Apple, are considering a project called Total Music that would allow them to charge device manufacturers, cellphone service providers, and other businesses $5 per month for the right to let their customers listen to free music. At this point, Total Music is being championed by Universal Music Group and Sony/BMG, but the other two majors could be interested too.

But there's at least one problem with the plan. When an entire industry colludes to set terms and pricing, the Department of Justice tends to get interested for antitrust reasons.

Apparently, that is what is happening. According to the Music Ally newsletter, the DoJ has served Universal and Sony/BMG with notices to find out more about Total Music, and has also requested information from Warner Music Group and EMI.

Music Ally understands that the US Department of Justice has served notices to both Universal and Sony BMG over the, as yet unlaunched, Total Music initiative. Though it cannot be confirmed at this stage, it seems likely that the DoJ is considering launching an investigation into potential anti-competitive practices. This is the second time that the two majors have come under the scrutiny of the US regulators. Back in 2001 anti-trust investigations were launched into the two majors' online music subscription joint venture Pressplay which ultimately morphed into Napster...

Though the focus of the DoJ is on Universal and SonyBMG as the prime movers behind Total Music, the Department is believed to have requested information from all four majors in the US. Neither Universal nor SonyBMG would confirm or deny the notices.

If the other two majors were to sign on to Total Music, the way would be paved for all sorts of new services that would feel like free from a consumer point of view. However, issues remain:

- The government could disallow Total Music for antitrust reasons, as mentioned above.

- One alternative would be for the government to implement a blanket policy charging ISPs and mobile operators a compulsory fee, which would be paid to labels and other rights holders. However, that would require an abnormally high level of government regulation for this country.

- What about the small labels and self-releasing artists that the internet should be empowering? Will they have a say in all this? And will their share of revenue and promotion within the system be appropriately proportional?

- Such a system could use watermarks or audio fingerprinting to see which files are being exchanged across a network, paying out royalties accordingly. But music data being monitored could pave the way for other types of monitoring, giving net neutrality and privacy advocates more cause for concern.

- Rather than watermarks or audio fingerprinting, the system could rely on sending playcounts from devices back to Total Music, so that rights holders are paid based on how many seconds their music was actually listened to. More privacy issues could surface around that mechanism.

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