DIGITAL MUSIC NEWS

Capitol Records Sues ReDigi For Copyright Infringement As widely predicted in this publication and elsewhere, Cambridge-based online music start-up ReDigi was sued last week for copyright infringement. EMI Music's Capitol Records has filed a copyright infringement suit in New York federal court claiming the company, which was established in October as a marketplace for "used" digital music files, actually is nothing more than "a clearinghouse for copyright infringement and a business model built on widespread, unauthorized copying of sound recordings." Specifically, the suit alleges that ReDigi is infringing copyright because it makes copies of digital files as part of its process of uploading songs from a seller's computer and transferring them to a buyer's. "While ReDigi touts its service as the equivalent of a used record store, that analogy is inapplicable: used record stores do not make copies to fill their shelves," the complaint says.  ReDigi counters that the "first sale doctrine" allows its users to sell or give away a legally purchased CD or book, and says it can prove that each MP3 was bought from a legitimate source. Sellers also install a ReDigi program on their computer that removes any copies of a song from the seller's computer. [Full story: New York Times Chicago Tribune] EMI Joins Other Major Labels, Files Lawsuit Against Grooveshark

EMI Music last week filed a lawsuit in New York State Supreme Court claiming 

digital music service Grooveshark has paid no royalties since entering into a licensing agreement three years ago. In its complaint, EMI said Grooveshark acknowledges that it owes royalties, but has neither paid anything nor provided any accounting statements despite continued requests from the record label to do so. The complaint also refers to alleged written and oral estimates by Grooveshark that it owes at least $150,000, although EMI said it believes the actual sum "greatly exceeds" that amount. Grooveshark spokeswoman Kristin Harris said in a statement that "this is a contract dispute that we expect to resolve." The EMI suit was filed less than a month after the other three major record companies - Universal Music Group, Sony Corp., and Warner Music Group - filed a federal copyright lawsuit accusing Grooveshark of pirating thousands of songs. Those three labels are seeking damages of $150,000 per song [the maximum allowed by law], which works out to about $17.1 billion total. [Full story: Digital Trends]

Triton Digital: Pandora Passes 1 Million Active Sessions Mark   Attention radio: objects in your rear-view mirror are closer than they appear ... and that includes Pandora. Triton Digital last week reported that Pandora became the first Internet audio service to crack the one-million mark, with 1,045,551 measured "Active Sessions." Of course, that figure is a far cry from the millions of listeners who tune to AM/FM radio simultaneously, but considering that Pandora is a company and radio is an industry, the digital music service clearly is a competitive factor that isn't going to go away any time soon. In fact, Pandora's "Session Starts" figure - which some analysts say is comparable to traditional cume or reach - is considerably larger, at 416 million for the month of November. With approximately 68% of Internet radio market share and over 125 million registered users, Pandora also boasts an average 18 hours of listening per user per month. That's a figure easily eclipsed by AM/FM, but Pandora's updated metrics indicate the online service now is available on over 450 connected devices, including many automotive music systems. And the car radio arguably is "the last frontier" ... one of the few places where radio still drives a bulk of its loyal audience. [Full story: Radio-Info Venture Beat]

Pandora vs. SoundExchange: Royalty Fee Battle Is Coming...In 2015   Even as Pandora enters 2012 driven by tremendous growth [see story, above], the company still is having difficulty turning a profit because of the steep performance rights fees it is forced to pay to record labels and artists. While the company did post minuscule Q3 net of $638,000, co-founder Tim Westergren says those fees won't be open to negotiation until 2015 and, until that time, Pandora will just have to go along to get along. "We're fans of paying royalties," he says. "We think performers should be compensated. But ... last year we paid over half of our gross revenues in royalties just for performance fees... This massive uneven structure doesn't make sense, and needs to be fixed." The "uneven structure" to which he refers is the 7.5 to 8.0% of gross revenue that satellite radio pays, while terrestrial radio is completely exempt from paying any performance fees at all. Of course, the recorded music industry sees things differently, and the notion of lowering fees received from streaming services is whatFast Company calls a "nonstarter." "There's no way we'd want [the rates] to come down," observes Michael Huppe, president of SoundExchange, which collects and distributes performance fees to rights holders. "Pandora would not exist if it weren't for the recordings that are provided to them through this process. If you remove the sound recordings from [their] mix, the value proposition of Pandora drops off substantially." [Full story: Fast Company]

Spotify To Cut "Unlimited Free Listening" To 10 Hours A Month   When Spotify hit American soil last July the company handed out unlimited free listening as part of a special introductory offer to lure new users. But the fine print in the company's Terms of Service also specified that the promotion would only last for six months, which means that in just a few days the free lunch ends. According to The Business Insider, the music service this week revealed it is planning to limit just how much music one can stream for free, reducing the "unlimited playback" to only 10 hours of free playback per month - and users will also only allowed to play individual tracks five times per month. Of course, this is all part of a planned move to induce users to pay for ad-free playback, with the ability to stream as much music as they want from their computers. As of late November, Spotify had more than 2.5 million paying members in the U.S., so the risk of losing a few hundred thousand who don't want to pay the minimum $4.99 monthly subscription is a highly calculated one. Still, for casual listeners who just want to listen to background music, there's a strong chance they'll opt for other ad-supported but free services like Pandora and Grooveshark [which has business issues of its own - see above]. [Full story: ZD Net]

Ford Adds iHeartRadio To "Internet-Connected" Car Ford Motor Co. yesterday [Jan. 10] demonstrated its Internet-connected car at the Consumer Electronics Show in Las Vegas, and announced the availability of Clear Channel's iHeartRadio through the vehicle's "Sync applink." "Clear Channel's strategy is to be wherever our listeners want us to be, no matter the device, with the programming and services they expect," commented Clear Channel Digital President Brian Lakamp. "Our relationship with Ford is an important piece of that strategy. Ford drivers will be able to create their own custom stations, tune in to the leading radio stations from 150 cities, and stay connected to their favorite on-air personalities." To which Sync Product Manager Julius Marchwicki added, "Smartphones now account for half of all new mobile phones and people increasingly expect to take control of when and where they listen to their media. With the AppLink-enabled version of iHeartRadio, Ford drivers can listen to their favorite stations even if they aren't local, get recommendations, and share what they listen to through Facebook." [Full story: All Access]

Al Bell Presents American Soul Music ... And American Soul TV If you're into classic and contemporary Soul, R&B, Blues, Gospel, Jazz, Hip-Hop Soul, Rap Soul, and Neo-Soul, we invite you to listen to Al Bell Presents American Soul Music. Former Stax Records owner and Motown Records Group President Al Bell personally has programmed this awesome radio station online, presenting your favorites from the 1960s and '70s [and some '80s], a lot of the best new music that's being released today, and some real gems you haven't heard in a long, long time. Come to www.AlBellPresents.Com  and hear it for yourself! And now...join us for Al Bell Presents American Soul TV here.