There were many other clever things about it, such as a very slick integration of music news. But the killer feature, one that made it unique, was that you could also drop songs you liked into a little box, and keep permanently. This was genuine P2P file sharing. There were no strings attached – no DRM, no expiry, no locker (your stash was your hard drive) and no additional fees for this feature.

And it was all legal.

The truly remarkable thing was that it wasn’t some UI designer’s fantasy, a mock-up created in his bedroom, but a real service backed by one of Britain’s biggest ISPs. This was the original Virgin Media Music Unlimited. Virgin had invested millions in it, with dedicated servers installed around the UK to bring this world-beating British innovation to the masses.

And then, weeks before it was due to go live, two of the suppliers in the music industry got cold feet, obliging Virgin Media to put the project permanently on hold. As with News International’s Project Alesia, the original VMMU was a great glimpse of the future from the vantage point of the present. It’s a future that will certainly come, but currently it seems a long, long way away.

Last night Facebook unveiled shared music streaming, so friends can listen to the same stream and comment on it. But that’s it. The deep music integration that Virgin Media valued is still missing.

As is something else rather important.

There is no new money is coming into this system.

The potential income available to Facebook remains the same as before, but it’s now divvied up between one more tier of suppliers, who, in turn, divvy it up between lots more people. Analyst Mark Mulligan writes today that “Facebook has made itself into a cable company for music services”, which is quite astute; it’s a platform, of sorts. But if business means creating value, and value creation means getting people to open their wallets for something new, then this really isn’t a “business” at all. It’s a pretend one.
Engineering works

This week Rory Sutherland, in his ever-excellent Wiki Man column in the Speccie, laments that the media is obsessed with communications technology at the expense of highlighting engineering innovation in the physical world.

“Steve Jobs has sometimes been described as the 21st Century’s answer to Edison, but perhaps we need a 21st Century answer to Brunel,” he writes.

He’s right – and it’s actually a lot worse than he thinks. For years I’ve been lamenting the lack of engineering values on the web itself – which many moons ago I described as “a bunch of presentation-layer people attempting to solve infrastructure-type problems”. The result today is the Shoreditch “tech scene”, in which nontrepreneurs stroll between endless “meetups”, avoiding the nasty particulars of creating value, being original, or ever solving a technical problem.

A step in the right direction would be Brunel-type thinking for how to make digital networks better, because half of the internet we need is still missing. It hasn’t been written. The net currently lacks the convenience of many aspects of every day life – and the half that’s missing are payment platforms, credit systems and deep supply side reform of businesses around these. These in turn address lots of deep problems, such as risk and liability and pricing, and allow people to create something with a lot of consumer convenience.

But what Rory really identifies, I think, is more than just sociological, a case of the wrong people being employed across Shoreditch and beyond. What he highlights is a desperate lack of optimism and ambition across capital investment, entrepreneurship and engineering. To make VMMU work required enormous challenges to be met. And a lot of cojones by almost everyone involved, from music suppliers (labels and publishers), the service provider MSP, and the retailer Virgin, who had to worry about liabilities and was ultimately unable to overcome them.

That ambition seems to be absent.

And in its absence, we still have to coo and gasp about how marvellous it is to have music streaming from a widget on a social network. ®

Levine’s book is a story of the digital copyright wars.

“I tried to write in an analytical way about something people get very emotional about. I don’t really believe the entertainment industry is good and the technology industry is bad; I just don’t see it as a morality issue. Businesses are in business to make money,” Levine says.

The book details the calamitous decisions made by the music business, particularly in its suing of end users for infringement. “In a few years,” he writes, “the major labels managed to destroy the cultural cachet they had spent decades building.”

The book also follows in detail Google’s “war on copyright” and the academics and activists who benefit from it. It comprehensively demolishes the arguments put by Lawrence Lessig, who helped create the cyberlaw industry. This is a book with masses of solid, meticulously researched detail.

I caught up with Levine in Berlin.

Q: What do you see as the culture industries’ biggest mistakes? You focus a lot on music …

Levine: The music industry made a lot of mistakes. They could have launched an iTunes store. And suing individuals was a mistake. I don’t think there’s anything wrong with companies suing companies: Napster, or Grokster for example. But suing people created publicity so bad that it made it very hard to get a legislative solution. It was a complete disaster.

But you have to remember that there’s a lot of things that aren’t legally or financially practical for an incumbent to do. You have a game theory-type problem: the establishment player has a lot to lose and has to play by the rules. A startup doesn’t have to.

People say they should have worked with Napster. But the labels would have been trading quarters for dimes, and they didn’t even know those dimes would be worth 10 cents. It assumes Napster would have worked out as a business.

I also think labels should have cut CD prices faster. But did you know Universal Music cut CD prices 25 per cent in 2002, and sold 13 per cent more CDs. You lose money that way; we’ve seen that again and again. We’ve seen iTunes raise the price of the best-selling songs from 99 cents to £1.20 and make more money. People aren’t price-sensitive as much as they’re convenience-sensitive. They want it when they want it.

The record companies should have done something like Hulu. I gather there were antitrust issues. Hulu does a good job, and it also helps TV companies control things a little bit. Hulu also makes money. The labels together could have done something pretty well.

Q: And DRM?

Levine: A lot of people say DRM was huge problem. But when EMI eliminated it, it didn’t create a huge boost in sales. People hate DRM in that it won’t let them do what they want, but very few people are against it on principle. I haven’t seen any evidence that people care. Sales don’t respond to DRM policy.

People want something easy to use and iTunes is easy to use. Convenience is what iTunes delivers.

Q: Your argument is really to get money flowing to the creators online.

Levine: We’ve had a market for IP for at least 300 years. I think it works pretty well. If you compare the cultural output of countries with a market for IP and those without, it’s clear that a market gives you better IP on an economic level, and possibly on a cultural level too.

If you look at West Germany, they produced Herzog, Fassbinder, Can, Neu! and Krautrock. In East Germany they produced, well, maybe some good TV shows, but not ones they could export.

Or if you look at Nigeria and Brazil, they’re countries that in the 1960s and 1970s had great pop music that changed the world. In Brazil, you had Tropicalia, Gilberto Gil and Os Mutantes; people still buy those records today. in Nigeria, you had Fela Kuti, who is still as iconic as he ever was. This generated money sent back to Brazil and Nigeria. Now people are still making the music but not a lot of money is going back. And those countries could use the money. The culture business is one that generates jobs that are pretty good, and doesn’t create a lot of pollution, compared to BP.

If the culture business disappears, then culture is not going to disappear. I use the example of The Beatles without George Martin: they would have continued to be great songwriters, and we’d have the songs, but they wouldn’t have made great albums.

You can’t have an economy without a market. You can’t have a market without property rights, and you can’t have property rights without a means of enforcing those rights. Copyright has some aspects of property, and one of these is you can’t sell something if somebody else is giving it away.

Q: There’s a whole chapter on Google, which if people aren’t familiar with it, might come as a bit of a shock.

Levine: There’s a popular narrative and that says Google is cool – and it’s a very coherent story. There are even parts of it that are true. What I wanted to do in the book is a factual counter-narrative so people can compare them side by side.

The music industry certainly lobbies for things that aren’t good for the public. But at least you know the RIAA is a lobby. And the BPI. They’re not boy scouts, but they’re forthright about what they’re doing.

Google is not forthright. They give money to the EFF, Public Knowledge, and to all these other groups, but they’re not very honest about what they’re doing. You can say term extension is a consumer issue, but the way Public Knowledge talks, you’d think cable TV for less money is a constitutional right. It’s not. You have no right to watch World Cup soccer. That’s crazy.

Some of this is really the fault of journalists. Public Knowledge declares its income on its website but journalists don’t pick up on it. So it is described as a “consumer rights group” when “consumer rights group funded by technology companies” or “group that lobbies for consumer rights and technology companies” would be more accurate.

Now if you look at the academics – I write about Professor Lessig but it could be William Patry or Tim Wu – a lot of their work is really shoddy. Wu writes about the movie business, but he doesn’t understand how films take in money. Lessig also gets a lot of details wrong. Now, either he’s not smart enough to get these details right, or he’s being deceptive. I would say he’s smart enough.

He writes about how Disney couldn’t make its classic animated movies today because of copyright law. But there’s no evidence for that. Walt Disney licensed stories to make films. He licensed the story for Bambi, he licensed the story for Dumbo, he licensed the story for 101 Dalmatians, and many others. That process is exactly the same as it is today. The Brothers Grimm stories would have been in the public domain even under today’s copyright term – which I think is way too long, by the way.

Lessig also says how copyright has expanded to cover characters. But that came from judicial decisions, not statute. That wasn’t the result of lobbying. You can say the courts interpreted it wrongly – but it’s nonsense to say it was lobbying. It’s unbelievable to me he’s considered a serious academic.

Q: Sousa is another example Lessig likes to use. Sousa complained about “infernal machines”, phonographs, and refused to be recorded. But he changed his mind, which Lessig never tells us …

Levine: Sousa was the Metallica of his day. His songs were being recorded and he was not being compensated. He objected. Like Metallica he phrased his objection in a very poor way – but musicians aren’t lawyers. Sousa said, “I don’t like the technology, I prefer people to sing songs from songbooks.” He was getting paid for songbooks, of course. But once Sousa was being paid for his records, you can see his attitude turn around.

Lessig, who is supposed to be such a scholar, gets it wrong – it’s appalling. Harvard and Stanford should be ashamed of themselves. It’s not serious academic work. It’s not worthy of a Harvard professor.

Americans also tend to assume the whole world is under United States law. But you’re talking about a specific Anglo American tradition. I grew up under it and I like it. But there are other countries in the world, the French in particular, who have a very different tradition of copyright. That includes strong moral rights for authors.

Lessig will write these books of his about copyright but never once mention these other traditions – I think that’s wrong. You can make a case that in the continental tradition, you have a right NOT to be remixed. Should that be there? I don’t think so, personally. But the idea you don’t mention moral rights in a book about copyright is dishonest.

Q: But the academics don’t need corporate sponsorship to say what they say. Wouldn’t they say it anyway? They’re fully signed up to the belief system.

Levine: I think Lessig is sincere about his desire to make the world a better place, and he wants to reduce corruption in Washington. But he has made some compromises that make it hard to take him seriously. He’s not the guy to do that.

I will say he was tremendously courteous in answering some aggressive questions. I don’t have a bad thing to say about him personally.

Q: You spend a chapter on blanket licenses in the book. And the reaction from creative industry people who have liked the book has been mostly critical of this idea. Doesn’t a blanket jar with your advocacy of markets?

Levine: The ideal is we have a market. People will pay for Spotify or downloads or new services, but if we can’t get that a blanket is an option.

When you signed up to an ISP you could choose if you wanted the music add-on. The government creates a situation where you can get such a deal. With your ISP you’d tick a box: “Yes, I want $5 for all the music I want.” If you don’t tick a box, then you’ll get check at random and there’ll be a substantial penalty. Not $500,000, but say $500 – like a speeding ticket.

Q: I really liked this idea for a while, but eventually I couldn’t get around some problems. It’s a tax that penalises people who doesn’t do online music, and it undersells the value of the music. And everyone else will want a piece.

It also sets the limit for the amount of money the market is worth.

Levine: I wouldn’t call it a tax: it’s not a tax. A tax is imposed. It’s a levy. When Jim Griffin launched his Choruss plan everyone called it a music tax and said you have to pay for music. Well, guess what – you already have to pay for music. Jim wasn’t trying to get people to pay for something they’re not doing. If you want to listen to music in a restaurant, you’re already paying. You always have to pay for music. It’s just that it is a levy, it is part of the bill, and the collecting society makes it easy.

Levine: I wouldn’t call it a tax: it’s not a tax. A tax is imposed. It’s a levy. When Jim Griffin launched his Choruss plan everyone called it a music tax and said you have to pay for music. Well, guess what – you already have to pay for music. Jim wasn’t trying to get people to pay for something they’re not doing. If you want to listen to music in a restaurant, you’re already paying. You always have to pay for music. It’s just that it is a levy, it is part of the bill, and the collecting society makes it easy.

‘A blanket licence is terrible for everybody compared to an ideal world. But you have to compare it to what’s happening now’

You’d have to do it so it added up. By mobile device not by ISP for example. So you could get a little more that way. You could create add-ons. You could offer people the right to upload their own stuff. Or play it in their living room stereo as well as on their computer. I don’t think £7 or £8 a month for all-you-can-eat music is so terrible.

Q: Not exactly a market solution is it?

Levine: A blanket licence is terrible for everybody compared to an ideal world. But you have to compare it to what’s happening now.

When YouTube goes to the culture industry and says, “We have all your video: do you want to get something, or nothing?”, are they not in effect setting a price? Some of this is already happening. It’s really bad, but it’s happening. You can’t turn the clock back. It might be an idea to think about it before a blanket is imposed.

To fix things, you need to do two things. You need to make illegal commerce harder, but your success is going to be based on legal commerce: don’t choose one or the other. You need to make Rapidshare a pain in the ass to get to and inconvenient, and also make something like UltraViolet as easy to use as possible. ®

Robert Levine’s Free Ride blog is here.

Jim Griffin’s bold plan to take P2P file sharing out of the black economy, and into the one that deals with green folding stuff, flopped because it couldn’t explain to songwriters how they’d get paid.

That’s president of the Songwriters Guild of America Rick Carnes’s view of Choruss‘ demise and he says it’s why the songwriters didn’t back the plan. Similar blanket licence proposals have been made by the Electronic Frontier Foundation, and others; but for Carnes these are little more than a rhetorical fig-leaf.

“The EFF doesn’t have a plan, they barely have a theory,” he says on the MusicTechPolicy blog.

Could a similar plan to take P2P legal work? Well, in 2007, the Canadian songwriters proposed a similar blanket licence – creating a “right to remuneration for music file sharing” – one backed by a tax. In their scheme, both end-users and songwriters who don’t like the terms could opt out.

It’s hard to find any other organisation that backs such a proposal, because few volunteers would be found – and the small amount they pay would not compensate for the possible destruction of other online businesses, such as Amazon, iTunes and Spotify. Nor would overseas artists take kindly to a unilateral step.

Nevertheless, it’s won tentative support from US songwriters.

“The SGA will continue to support the initiative as long as there is an opt-out included. Without the opt-out we cannot support them without more discussion about the details of the system. One of the things we tell songwriters is never sign a contract without understanding all the details. We adopt that same attitude in supporting legislation,” says Carnes.

Paul Sanders whose company came within a whisker of launching the first legal P2P service with Virgin last year, says Choruss fell down on the issue of liabilities. A legal P2P offering can’t hope to get every licensee in the world signed up – every owner of master recordings, every publisher and every song writer.

So there will be an exposure to infringement litigation. That’s fair enough if you’re a network owner – an ISP – or a service provider; you can reasonably claim good intentions. Instead, Choruss revived the old client/server model of Napster, this time with a revived AudioGalaxy.

“Once they went to the client model they became potentially liable, in my opinion. You can deal with what you can’t see in a free flowing network much more easily when your software does not actually hold an infringing copy in managed storage,” he told us.

You can read the Carnes interview at MusicTechPolicy.

“The technology was sort of there. That software was there, and it was good – I wouldn’t do it that differently now. The basic model was just as appropriate then as it is now.”

– Chris Castle.

Read more at The Register

The Lords this week discussed new compensation for copyright holders this week – including a voluntary ‘Hail Mary fine’ payable by file sharers, instead of suspension – but nobody noticed.

It was late on Wednesday night, and the Lords were six hours into their fourth session this month discussing the Digital Economy bill. Lord Lucas moved Amendment 156, giving an infringer a choice:

[It] requires the payment of an additional fee by the subscriber for the maintenance of unrestricted internet access, which is to be remitted to a licensing body established under the Copyright, Designs and Patents Act 1988.

Lucas said he anticipated a more progressive licensing regime, similar to the performance right on compositions, which is non-exclusive:

"No one stops a person performing, but if they do perform, they have to pay a fee… Given the fact that someone is having a technical obligation imposed on them, it seems that they might choose to pay a fee to such an agency, which would go to relevant copyright holders. Terminating, suspending or limiting someone’s internet access just does someone harm."

Read more at The Register…

Opening Comments for the In The City P2P Panel, Manchester, on Sunday 18 October:

Although Rik [Falkvinge]‘s in front of us in flesh and blood, he wouldn’t exist – the Pirate Party wouldn’t exist – without enforcement policies being the primary goal of the music business. The programme bills this as “two sides of a debate”, but as a journalist I get incredibly suspicious when I hear there are just two sides, because usually there are two, three or four more we don’t hear about. Let’s put this into context.

The Pirate Party exists because of a political vacuum. Politicians don’t do politics anymore. Compare them to Lenin and Thatcher, for example, who had ambitious programmes of what society should look like, that cut across social, economic and personal ideas of their time. If you look at what a politician does now, it’s focus groups.

So into this political vacuum you’ll have lots of fringe, single issue groups. The Pirate Party is the first and most successful.

Now Rik specifically evoked some Enlightenment values in his presentation – [individual rights against the church and state]. But I see this as a very conservative and reactionary movement in two quite specific ways. First it’s a techno-utopian movement that’s all about replacing politics. It presents itself as a political party, but it isn’t in politics at all. Politics is about people sitting down and working something out, a consensus.

It’s also reactionary in another way.

Because ever since the invention of machines that copy culture, we’ve had this political and social settlement called copyright. Contrary to what Rik says, all those technologies have flourished and each and every technology has made artists more autonomous and better off. What’s Rik’s saying is quite simple. He’s saying here’s a copying machine – and I agree, it’s just a bigger copying machine than the others – for the first time in three or four hundred years this copying machine will make artists less autonomous and worse off. Now I think that’s a reactionary and discriminatory point of view.
So this is a techno utopian view is a very deterministic view of history – get out of the way. That’s a rejection of politics. I’ll give you another example of techno utopianism, and this is a common mistake people make – and we all know it’s wrong as soon as you think about it.

Is that an accumulation of information transforms itself into power. This is one of the great myths of our time – information isn’t knowledge, knowledge isn’t wisdom. Gathering up a load of information doesn’t make you successful. This is a fantasy nerds have in particular.

Finally I have a view that makes me incredibly popular with the music business – which is that any technology that can copy should be legal. The business has caused all kinds of problems by fighting it. Person to person file sharing, things like near field communications – where we can share music by shaking hands. These should all be brought to market – but they should be on the market for the enrichment of artists themselves, and people who invest in music.

So to summarise – we’ll get lots of single issue groups in the next few years. It’s deeply reactionary point of view, it’s quite discriminatory – but it’s the results of the music business’ lack of courage and innovation. Thanks.

It’s actually not so different from the potted history of every media company that rises to popularity on the back of a new medium – take radio, for example – then sells out at the top of the market. Only in the case of Web 2.0, companies go from “pre-revenue” to “post-revenue” without any revenue in between. That’s where you need a bigger idiot.

It’s cute to read arguments today that depend so much on historical inevitability – or else rely on natural, or physical “laws” – laws which turn out to be dodgy metaphors that only exist in the author’s head. When we look at history, we learn something quite different, which is that all media companies reach a settlement with creators, eventually. The two are mutually symbiotic: copyright is a social agreement created in response to technological innovation, and technology needs copyright material, or else it’s bunch of empty pipes, or at best a low-value telephone network.

Occasionally, history throws up odd wrinkles, such as the absence of a performance rights deal on sound recordings on US radio, but these are very rare exceptions. In the absence of a viable business, the hope of New Media startups has been to find a wrinkle they can drive a bus (or a business) through. The original Napster hoped to change the law, and when that failed, it tried to reach a settlement with the record industry.

…Read more at The Register

Choruss won’t ultimately be in the retail or service business, Griffin told us in Washington DC today – but it may provide an “umbrella” for managed service companies such as Playlouder MSP, the technology partner for the suspended Virgin Unlimited music service. “We’re not in the business of distribution,” he said. Griffin was also on a panel at the biennial World Copyright Summit, organised by CISAC, the global organisation for collective rights management societies.

Griffin says this year’s phase of Choruss is designed to experiment with pricing. Different colleges will get different pricing schemes.

“The plan is to use next school year to run tests and experiments,” he said. Only after the scheme has been running will an assessment be possible – but Griffin told Summit delegates that, “We’ve had students tell us it’s worth $20 a month – to share what they want to share.”

The fact that such large numbers have volunteered to pay for a P2P service defies the conventional music industry wisdom that the only way to compete with the pirates is with free offerings. It also shows how much Choruss has evolved since it first broke the surface last April, when talk was of opting students in automatically, in return for a “coventant not to sue”.

Many of El Reg’s criticisms from last year have been taken on board it seems. So instead of being herded like sheep into a compulsory scheme, Choruss envisages voluntary, paying customers.

No tax

“Here’s a market some have written off, and said they’re not willing to pay. People have voted with their own money: The student representatives allocated their own money to pay for music. They don’t want to pay for Music the Product, but Music the Service,” said Griffin.

The most significant aspect of a voluntary, pay-for service is that it spikes the argument that licensing networks need involve is a “music tax”. Griffin said the project should be regarded as an experiment to help gauge pricing.

“As an industry, we don’t do much testing, or experimenting, and learn at what price point someone would choose to participate in this system.

Phase Two of Choruss involves rolling out legal P2P to ISPs across the land.

“We can [soon] approach ISPs with metrics in hand, not speculation.”

“We’re not arriving to Hoover information off the student networks, that would violate their privacy. We need to ensure academic self-administration is respected.”

It’s hard to classify Choruss, and Griffin declined our invitation to stick a label on it. It’s a clearing house, of sorts. But Griffin’s sponsor Warner Music plans to spin it out with joint ownership by stakeholders – something that would need to cross antitrust hurdles.

Playlouder MSP boss Paul Sanders said attitudes had moved forward radically in the last 18 months.

“The rights holding community is now willing to engage with the ISP community. Only two years ago, we’d approach a major label and explain the unlimited model. They’d go, ‘fine but our wholesale price is 55p per track.’ No one’s ever going to start to have a sensible commecial conversation if that’s the premise.”

He predicted the debate would become more sophisticated as paid-for services were better understood.

“ISPs want a proper, professionally managed service that they can hold accountable for it. That’s not the same as a free-for-all. They want the grey area content [eg, mashups, live recordings, and bootlegs], but in a managed environment. A lot of these questions recede as the managed and invested-in services emerge.”

Griffin had one interesting observation that was a side-effect of the Net Neutrality fuss.

“How dare you [ISPs] speed some packets up, slow some down, but claim you didn’t know what was in them. They no longer deserve the Safe Harbour exemption. To claim otherwise would be blind ignorance. ”

“Let’s toss it out.”

Now that will drive the freetards completely nuts.

Entitled “The Long Tail of P2P”, the study by Will Page of performing rights society PRS For Music and Eric Garland of P2P research outfit Big Champagne will be aired at The Great Escape music convention tomorrow. It’s a follow-up to Page’s study last year which helped debunk the myth of the “Long Tail”. Page examined song purchases at a large online digital retail store, which showed that out of an inventory of 13 million songs, 10 million had never been downloaded, even once. It suggested that the idea proposed by WiReD magazine editor Chris Anderson, who in 2004 urged that the future of business was digital retailers carrying larger inventories of slow-selling items was a Utopian fantasy.

The P2P networks are harder to quantify, but apparently show a similar pattern, where most of the action – and profit – is in the ‘head’. Each Top 100 CD on on PirateBay averaged 58,000 downloads a week, for example. Lady GaGa’s The Fame was downloaded 388,000 times in a week from PirateBay alone. Like its predecessor, the new study also finds that downloads follow a log-normal, rather a Pareto (or “power curve”) distribution as Anderson envisaged. The WiReD man had guessed the shape of the internet – and picked the wrong shape.

Read more at The Register.