Digital future on Plug.In agenda

Solon to propose regs to jumpstart biz

The atmosphere was subdued as near-defunct consulting firm Jupiter Media Metrix rolled out its seventh-annual Plug.In digital music festival Monday in Gotham, reflecting the pall that has hung over the sector for the past year.

Tech-savvy Rep. Rick Boucher (D-Va.) opened the scaled-down confab, which runs through today, with a rundown of the measures he thinks government should take to kickstart the languid market for digital music, including streamlining copyright rules and giving users more control of their music.

Boucher, who co-chairs the Congressional Internet Caucus, put many of those ideas into his controversial Music Online Competition Act, unveiled last August.

“We need to help clear away some of the copyright underbrush that is choking off Internet growth and broadband expansion,” Boucher said.

Boucher criticized the labels’ nascent efforts to create copy-protected CDs, saying they will turn off consumers and may violate fair-use laws. He also took shots at the two label-backed efforts at digital music subscriptions, MusicNet and Pressplay, noting the U.S. Dept. of Justice is looking into whether they will bully independent rivals out of the market.

Speaking later in the day, Recording Industry Assn. topper Hilary Rosen defended the industry against many of Boucher’s accusations, arguing that the labels are doing their best to untangle a Gordian knot of competing interests who all want to get their share of any potential online music revenues. She appealed to all facets of the music biz to work together or risk losing those dollars altogether.

Nevertheless, the lawmaker echoed a broader sense of urgency that has begun to filter its way even to the major labels about digital music, as more and more industry players recognize that without decisive and perhaps drastic changes in their business models, the labels will continue to suffer.

Aram Sinnerich, a senior analyst with Jupiter, was far from rosy in his outlook for the music industry, noting the firm has ratcheted down its projections for the size of the online music market by nearly 10% to $5.2 billion in 2007.

Still, the analyst said there are measures the labels can take to capitalize on the demand for music on the Web, as evidenced by the rabid popularity of free sites like Kazaa and Morpheus. Sinnerich advocated a hybrid business model, where music companies offer subscriptions but also services such as digital lockers, which help users organize and access their hard-copy music from anywhere.

“The music business seems to be in crisis,” he said. “Yet music is the most well-loved and even obsessive space for users on the Internet.”

Jupiter itself, long a staple of the evolving online-music space, likely won’t be around to see whether its predictions are on the money. Facing a liquidity crunch, the company recently agreed to sell off substantially all its units — even cutting a deal to unload its events business for just $250,000.

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