DIGITAL MUSIC NEWS

Supreme Court Lets Stand $220K Fine Against Thomas-Rasset

The Supreme Court this week declined to hear Jammie Thomas-Rasset's appeal of a $222,000 fine levied against her by a jury that found her guilty of sharing 24 songs on the peer-to-peer file sharing site Kazaa. Thomas-Rasset's attorneys had petitioned the high court on the grounds that the damages against her were "excessive" and disproportionate to any damage she'd brought to the recording industry. The Recording Industry Association of America lauded the ruling and said in a statement, "We appreciate the court's decision, and are pleased that the legal case is finally over. We've been willing to settle this case from day one and remain willing to do so." "It's an empty victory for the recording industry," Thomas-Rasset told ABC News. "If they want to come after me, they'll find I have no assets." The case began in 2005 when she received a letter accusing her of downloading and sharing copyrighted music; at that time she was given two options: Settle for $5,000 or be sued. But Thomas-Rasset insisted she had never heard of the music downloading site Kazaa cited in the letter, nor the songs the RIAA accused her of sharing. Refusing to settle, Thomas-Rasset became the first person to challenge a file-sharing lawsuit - a decision that eventually resulted in the $222,000 jury verdict against her. Kiwi Camara, the attorney representing Thomas-Rasset, said the fight never was about the money: "It's not fair or legal that an industry can go and pluck a defendant out at random and punish them for file-sharing, an act committed by millions of Americans," she said. [Full story: ABC News]

EU Report: Music Piracy Is "Not A Concern In Digital Era"

Depending on the source, music piracy either is the scourge of the recording business or much ado about absolutely nothing. This week the European Commission got into the debate, stating that not only is music piracy not a problem, but it actually could help industry sales. According to a report issued by the EU's Information Society Unit, "[despite] trespassing of private property rights, there is unlikely to be much harm done [by piracy] on digital music revenues." The two authors of the report, Luis Aguiar and Bertin Martens, go on to say that "digital music piracy should not be viewed as a growing concern for copyright holders in the digital era. In addition, our results indicate that new music consumption channels, such as online streaming, positively affect copyright owners." Using several approaches to analyze the effects of downloading and streaming, they found no evidence of sales displacement. In fact, "our different estimates show relatively stable, positive, and low elasticities of legal purchases with respect to both illegal downloading and legal streaming," they wrote. "All of these results suggest that the vast majority of the music that is consumed illegally by the individuals in our sample would not have been legally purchased if illegal downloading websites were not available to them." [Full story: Digital Trends]

Copyright Chief Tells Congress To Develop "Next Great Act"

Register of Copyrights Maria Pallante told a House congressional subcommittee yesterday (March 20) that many areas of U.S. Copyright need review, if not outright reform. The hearing, in part, was a response to a White House announcement last month that Americans should be able to unlock their mobile phones and use them with any compatible carrier they choose. Previously, the Copyright Office had said that, because of current copyright protections, people who unlock their mobile devices could be subject to criminal or civil penalties. Pallante said any change to copyright laws is likely to come slowly, noting that "a few years of solid drafting and revision is what you're really looking at if you want to do something." One of many elements that could potentially come under scrutiny is the Copyright Act of 1976 which, among other things, allows for fines of up to $150,000 per violation, including sharing a copyright-protected song on a peer-to-peer network. While Pallante was not suggesting that file sharing should be legal, she said there may be instances in which making copies of protected works should be authorized under a concept known as "fair use." "Not every reproduction is a reproduction with a capital R," she observed. [Full story: Wired]

Study: Streaming Services Drive Just 4% Of Global Music Revenues

There's been a lot of talk lately insisting that subscriptions to online streaming services are generating significant revenues for recorded music companies, but a new report issued by industry analyst Mark Mulligan says streaming currently accounts for just 4% of global industry dollars. Furthermore, streaming revenues are just 12% of the broader digital pie, which includes all paid downloads via iTunes, Amazon, and other online stores. Mulligan told Digital Music News (no relation to this publication) that "however much you try to make [streaming] grow, you're not going to make it the majority digital [revenue contributor] in the next five years unless downloads collapse. Now, downloads could collapse, if Apple did something really serious with streaming, but we know that downloads are increasing with all of Apple's expansion. Downloads are getting new customers as well... Apple is getting digital music customers via the iPad, [which] is important, because... when Apple sneezes, the music industry catches a cold." [Full story: Digital Music News]

Biggest Music Fans Set To Spend Much More For Premium Content

According to a new Nielsen study, 40% of U.S. consumers - those classified as "fans" - are responsible for 75% of all music revenue and actually spend between $20 billion and $26 billion on music each year. The study, titled "The Buyer and the Beats: The Music Fan and How to Reach Them," further reveals that this group could spend between $450 million and $2.6 billion more on music each year if compelling content is made commercially available. Interestingly, the study found that the most avid "fans" have downloaded the most tracks for free - approximately 30 digital songs per fan over the course of a year. The study also found that a majority of fans want greater engagement with their favorite musicians and would be willing to pay considerably for that access. They want to know more about what they're like as people, and get a better understanding of the creative process. These Fans are prepared to pay more for exclusive or premium content, autographed products, and special merchandise. Additionally, these consumers would consider paying about $30 for an "online ticket" to view an exclusive live webcast. "We are finding that there's a lot of untapped demand for additional content, which can translate into beneficial and profitable opportunities for artists, labels, and advertisers," Nielsen SVP/Client Development/Analytics David Bakula said. [Full story: All Access]

Pandora CFO Aims To Reduce "Content Costs" To 40% By 2016

Pandora Chief Financial Officer Mike Herring this week predicted the online streaming service can get its content costs (a.k.a. performance royalty fees) down to 40% over the next three years. Speaking at the ROTH Capital Conference in Laguna Niguel, CA on Tuesday, Herring said the company plans to better monetize the mobile listening that accounts for 80% of its total listening hours. (Mobile revenue per hour was $25 last fiscal quarter compared to $53 on the web.) Additionally, Pandora has supported legislation that could reduce its royalty burden by changing how the Copyright Royalty Board sets rates. As reported by Billboard, Herring said the current statutory royalty rates are a barrier to entry because it dissuades companies from entering the free internet radio market but added that Pandora wants that cost barrier to fall. "We're 77% market share of internet radio, up from low 50s when we went public [fewer than] two years ago. That's partly because we're doing a great job serving our consumers and it's partly because it's really hard to play in this space because of the cost structure that's imposed by these rules." Pandora's statutory rates end in 2015, and company execs believe there is no way it can decrease its cost burden without Congressional intervention. The only other option, although it is unlikely, is to grow revenues so successfully that Pandora pays the greater of a per-stream rate or 25% of revenue. [Full story: Billboard]

BPI's Wadsworth: Majority Of U.K. Music Revenues

To Come From Digital This Year

Speaking at the Radio Days Europe 2013 conference in Berlin last week, British Phonographic Industry (BPI) Chairman Tony Wadsworth said more than 50% of all U.K. music revenues will come from digital this year, and insisted that networked devices and digital service integration in the car industry point to a bright future for the industry. "In the U.K. this year we will move into a majority digital music market with more than half of revenues coming from digital," he told the audience. "The ten-year market decline that we have experienced will reverse with the industry continuing to embrace new ways of doing business and new technologies, and we will start to enjoy the commercial rewards that come from giving consumers what they want." Looking back over the past 10 years, Wadsworth said the speed of innovation has been dizzying. "In that decade we have seen the entry of iTunes, Amazon MP3, 7digital, YouTube, Spotify, Deezer, Rdio, Vevo, Xbox Music, Google Play, and more," he said. "[Then there's] the arrival of Facebook, Twitter, smartphones, tablets, widespread consumer broadband, 3G, and now 4G mobile connections. The music industry has embraced all of these changes, which has helped drive impressive growth in digital - not just in revenues but also in the diversity of services in the market. There are now over 70 licensed music services in the U.K., meeting a huge range of consumer needs." [Full story: MusicWeek]

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