Google has traditionally charged into other business areas with all the subtlety of a bull in a china shop. This isn’t always a bad thing: there are plenty of cosy industries that are ripe for a shake-up, and advertising is one of the cosiest. But there’s one area that’s been strictly taboo.

Google has always linked to other people’s stuff, and stayed out of retailing bits itself. Over time it’s blurred that line, without ever really crossing it. This was a line that Microsoft never really crossed either, although Windows Marketplaces were announced, then came and went phut, as regularly as Service Packs.

Now we can confirm that Google is gearing up for a Music Store – CNet’s Greg Sandoval hears this could be upon us as soon as the autumn, it may decide this high-minded distinction is no longer one worth preserving. The rumours strongly suggest Google will be integrating music into search – no surprise, there – but there’s plenty of speculation that it will go the final step, and retail the music directly.
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The Beggars Group office in a suburban street in Wandsworth doesn’t look much like a media corporation. There’s no chocolate ice sculpture in reception, and no giant video screens or inspirational slogans. It does look a lot like you’d expect a real independent record company to look, though: behind the receptionist’s desk is the kitchen sink. Boxes of records are strewn everywhere. Chairman and founder Martin Mills sits in the cramped, buzzing open-plan office, along with everyone else.

And there’s something else unusual. Here’s a group of record companies that are doing well, both critically and commercially, which think the internet has helped them to this success, and can’t wait for the future to get here.

Beggars’ four labels XL, Rough Trade, 4AD and US stalwart Matador Records scooped up a fifth of the Times Top 100 records of the decade. The company recently scored the first indie number one for twenty years (Vampire Weekend), looks to have the critics choice for 2010 sewn up (Gil Scott Heron), and with The Xx has a band whose music suddenly seems ubiquitous, sprouting from every trailer and advert, as well as the BBC’s Election coverage.

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Music House — HQ for a number of the UK music industry’s trade groups — was in a lock-down situation this lunchtime as an Open Rights Group Flash Mob descended, protesting against the Digital Economy Bill.

As many as seven protesters could be seen outside the Berners Street offices, according to staff who phoned us from beneath their desks. This is slightly down on the nine who had pledged their support on Facebook.

Twitter was a hive of activity, too. We’d counted two Tweets on the protest in an hour. Photographic evidence below suggests that after an hour, the number had swelled to almost double figures.

In a simultaneous gesture, over at the BPI’s HQ, three protesters handed in a “disconnection notice” to chief executive Geoff Taylor, who apparently wasn’t in.

Music House, the focus of the main protest, is home to the PRS For Music performing rights society, the Music Publishers Association, the Musicians Union, the Music Managers Forum, the British Academy of Composers Songwriters and Authors, and umbrella trade group UK Music.

The ORG’s FlashMob was trailed as a “Stop Disconnection April Fools Flashmob” with the question “Are we being made fools of?”

But with a turnout of less than a dozen, that’s a question that answers itself, really.
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A study for the international chamber of commerce reckons 2.7 million jobs have been lost since 2004 in Europe because of unlicensed internet downloads, and warns economic losses could treble to €32bn by 2015. The report is backed by trade unions, including the TUC.

The work was led by Patrice Geffon, an economist at Paris Dauphine University, for consultants Tera. It uses the WIPO definition of creative industries, including software, databases and printing as core jobs, and support and consultancy for example as non core jobs. It’s likely to strengthen calls for legal measures to deter downloaders, since picking up unlicensed music, movies and software is currently largely pain and risk free.

“Stemming the rising tide of digital piracy should be at the top of the agenda of policy makers,” the authors conclude.

But it’s not going to be without controversy. Debate over such studies focuses on the net substitution effect – the degree to which a digital download substitutes for a genuine purchase, minus any positive effect of spending on a legitimate good which might not otherwise have taken place. This ratio varies significantly across various types of goods.

For digital music, most academic studies put the figure at 1:10: for every ten CD downloads, the consumer typically forgoes one legitimate purchase. This is significantly lower than the 1:1 ratio some music industry figures insist upon. But still it’s a net negative effect.
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Two weeks ago a US market research company caused a panic in the music business when it reported sales of MP3s had declined. DRM has all but disappeared from digital music, while music catalogs and retailer choice have grown… and yet the volume of digital song sales fell. Ironically, it’s the major labels’ darling Spotify that’s bearing the sharp end of the backlash.

Two thirds of people don’t download unlicensed music at all, it’s a minority pursuit. But that “honest” mid-market is not only losing the habit of buying CDs, it hasn’t acquired the habit of buying digital songs either. NPD found that between 2007 and 2009, about 24 million Americans stopped paying for music in any form.
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“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

An answer to the music industry’s woes slipped into the IFPI Annual Report last week, but its significance went unnoticed. Before I get to it, though, here’s a poser.

“We screw the struggling artist, and pay the suit,” Nick Carr mused recently. Carr was examining a contradiction: information has never been less free, it’s never had as much as much value attached to it. Once you add up your Sky Sub, mobile broadband bill, and the many other information services, we pay a fortune for information, most of which is entertainment. He continued:

“It’s a strange world we live in. We begrudge the folks who actually create the stuff we enjoy reading, listening to, and watching a few pennies for their labour, and yet at the very same time we casually throw hundreds of hard-earned bucks at the saps who run the stupid networks through which the stuff is delivered,” he wrote.

elsewhere and you’ll find people saying they make a point of principle not to pay for entertainment digitally, because entertainment companies are wicked. The principle is that two wrongs make a right, which makes withholding the payment justified. Maybe even morally superior to paying.

But as Nick points out, we all actually pay a fortune to suits – they’re just different suits. They’re suits at large telcos, advertising middlemen (eg, BT) and service companies. The answer seems simple.

If you’re a copyright business, then to appease the copyright militants, you must pretend that you’re not. You must say you’re in plumbing, or infrastructure. Or anything, actually. For the world’s biggest record company, Vivendi, this will be a case of returning to one’s roots. Universal’s parent Vivendi began life as Paris’s first monopoly water supplier – it only changed its name from CGE and spun off the water and sewage businesses in 2000. And look, we can mention sewage and The X Factor in the same sentence without berating the obvious.

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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…

Pelted from all sides by amendments, the Digital Economy Bill continues to plough its way through Parliament. This week, the Lords lined up to have their say, but since there are so many (300) Amendments, they’ll be at it again on Monday.

Of course, out of the ten subject areas, the one labelled ‘online copyright infringement’ has attracted the most attention from their Lordships. Lord Mandelson made a number of modifications acknowledging these concerns this week – including some substantial changes to the processes. It’s the procedure rather than the principle that is vexing the Lords.

Nobody – not even those who support the Bill – is entirely happy with the procedures. Yet there is no great grassroots outpouring of opposition. While 500,000 people may have paid 79p in one week to register a protest vote for the Christmas Number One single, fewer than 500 have signed up to the Open Rights Group’s “Message to Mandelson” campaign – and some of those are supportive. We spotted one ‘Go Mandy’ from a major record label staffer and another urging his Lordship to bash the ‘freetards’.

Read more at The Register

Exclusive Record label trade association the BPI wants sweeping changes to UK online copyright practice in 11th hour amendments to the Digital Britain bill.

The amendments would grant copyright holders injunctions against websites and service providers similar to the US DMCA act – but with no ’safe harbour’ provision to verify whether the claim is merited, according to documents seen by The Register.

The BPI amendments would introduce an entirely new Section 97B of the 1988 Copyright Design and Patent Act, and would be granted when an ISP had refused to take down infringing material. The Secretary of State would have the ability to review and amend the provision "by allowing the injunctive relief available to the Court to evolve and to keep pace with technology".

As it stands in draft form, the Digital Britain bill would compel rightsholders to identify and notify infringers, in a "graduated" response, ultimately ending in temporary suspension of Internet access. The revised Section 97B, if passed, would dramatically switch the burden from rights holder to publisher.

Read more at The Register…