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The distribution of Digital Rights Management Free ("DRM-Free") music has been the subject of much debate, and high hopes over the last few months. Many, including me, believe requiring the inclusion of DRM protections on music downloads hinders online music sales, is built on faulty logic, and ultimately, ends up hurting the music industry.

In February, Apple’s CEO, Steve Jobs, in a detailed essay explained his position and openly called for DRM-FREE music to be made available by the labels. Inspired by his speech, Metue also ran an article on the seeming paradox in the industry; specifically the contradiction between offering 90% of music DRM free (CD’s) and 10% restricted (Online Music).

In early April, two months later, EMI, one of the "Big Four" Record companies, answered Mr. Jobs call and broke ranks to announce that it would allow higher quality DRM-Free songs to be sold side by side with the already encoded songs on iTunes. (EMI, which is currently in the process of going private, has also since announced a similar deal with Amazon for their upcoming music store.)

Now almost June, another two months later after EMI’s announcement, Apple news website MACNN, has run an article citing sources familiar with negotiations, that a launch of EMI’s catalog of DRM Free music is finally ready and imminent. According to the post, the time lapse since the announcement was necessary to encode and host the entire catalog so that it could be launched completely, in its entirety, rather than gradually. The article also states that it was only last week that the contracts were finalize.

Given the significance of DRM Free music to Apple, and its leader’s open position on it, I wouldn’t expect a quiet roll out so I’m betting against something this week. Click to Read More

With the words “Ladies and gentlemen, rock and roll,” so began MTV in August 1981.  Moments later, the video for Video Killed the Radio Star aired.  It was the first music video shown on Music Television (MTV).  Now, more than 25 years later, I wonder, as the song goes, was there a “day the music died”…. can someone tell me, has the internet “Killed the Video Star?”

When MTV first hit the airwaves in 1981 it was revolutionary, edgy…. borderline counter culture… It was the dream alchemy to capture the attention of its twelve to twenty-five year old target audience. 

For its first 6 years, using a format somewhat adapted from Top 40 radio, MTV carried almost exclusively music videos – most a similar kind of somewhat crude, rough around the edges, under-produced material to that which now litter the pages of Internet video networks.  The grainy concert clips, the saucy, crude displays, they were the antithesis of the rest of broadcast TV.  That was part of why they were adored and appreciated: They were new, they were different, and they were bold.

Eventually, as the MTV brand grew and globalized, siblings were brought to the family in the form of new channels and new kinds of programming.  Like an older child, slightly neglected because of the needs of its baby brothers and sisters, the music video moved to a place of less prominence. 

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In a move hinting that Amazon may be interested in offering more than just music at its soon to be launched online music store, Amazon has acquired the nations largest independent audio-book publisher Brilliance Audio.  The terms of the deal weren’t disclosed.

Brilliance, which was founded in the 1980s and is based in Michigan, publishes audio titles from best selling authors ranging from Deeprak Chopra to Ken Follett. Brilliance releases twelve to fifteen audio-books a month in MP3 format on CD or for digital downloads.  Amazon currently offers about 100k audio-book titles, approximately one thousand of which come from Brilliance.

In acquiring Brilliance, Amazon will be in a position to leverage its publishing relationships (as well as its own in- house efforts) to expand the availability of the audio book format to a much larger range of titles. Click to Read More

Oakland, California, based Pandora Media, a free Internet-based radio service is partnering with Sprint Nextel to offer a personalized streaming radio service to Sprint Nextel mobile phone users.  Beginning today, the new service will be available for free for the first 30 days of use; it will then be a $2.99 a month add-on fee to Sprint data plans (which require plans with a cost equal to a minimum payment of another $15 a month.

The Pandora service, which will be offered through a new web interface specifically for mobile customers, will also be available on the Sonos Music System, a wireless home music system gaining rave reviews from gadget freaks around the globe.  (Sonos is kind of like a cross between an iPod and a remote control.  It wirelessly streams your music collection from up to 16 computers or storage devices (including MP3 players) to Sonos receivers which can be placed around your house and connected to speakers or stereos. Each Sonos "Zone" receiver can play music independent of the others).  For Sonos, Pandora will also offer a 30 day trial and a similar subscription fee.

Pandora bills itself as a personalized (or semi-personalized) Internet radio service.  Unlike their competitors, including Last.fm and others, Pandora has created detailed indexes of their available songs based on a range of musical criteria (almost 400 attributes). The call it the Music Genome Project. These criteria are noted for songs you like, as are your listening habits. From the data that provides, Pandora streams to you a play list of music custom tailored for you, the individual listener.

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The future of Clear Channel, which owns over 1,000 radio stations (as well as a substantial outdoor billboard advertising business), is anything but certain.  The company has been negotiating a buyout with private equity companies for months.  On May 3, the company’s board rejected a bid from Bain Capital and Thomas H. Lee Partners that the board stated was only 0.5% above the previous bid.   This week, however, the Wall Street Journal reported (citing people familiar with the deal) shareholders are starting to get behind the deal, even as the board is rejecting it.   

Shareholders Highfields Capital Management (3.2%) and Fidelity Investments (9.7%) are reported to be backing the proposal which has been raised to a price per share of $39.20 and offers current shareholders the opportunity to own up to 30% of the new company.   With the support of Highfields and Fidelity at a shareholders meeting, a deal is much more likely consummated….but even so, regulatory issues will likely delay a final vote until the end of the summer by which time, pricing or market conditions might warrant further adjustments to any proposed offers.

In the meantime, while its future is anything but clear, Clear Channel Communications is busy with operational and sales efforts.  On May 21st, the company announced they will launch an advertising-supported (e.g. no cost to listeners) program that will let radio listeners send text-message song requests from their cell phones and get real-time traffic updates.  Listeners will also be able to participate in contests and polls via text messages.  This new effort will mark a change from a pilot program run in September wherein a $2.99/month service fee gave Cingular customers access to live streaming broadcasts.

This new mobile initiative will be tested with five New York area radio stations.  Anyone with a SMS-enabled cell phone will be able to participate. If successful, Clear Channel has plans to launch similar offerings at as many as 100 other radio stations over the next one to two years.

Going, Going,… Gone … Private?

Earlier today, London news wires starting buzzing with reports that one of the globe’s “Big 4” record companies, UK based EMI Group, had agreed to a buyout from private equity firm Terra Firma for £2.4b ($4.7b) (including debt the deal is reported to be worth £3.2b (approx $6.27b)).

At this stage, the deal has only been approved by EMI’s board of directors which characterized the deal as “fair and reasonable.”  In a statement carried on BBC, EMI’s Chairman, John Gildersleeve justified the deal saying, “Terra Firma’s offer delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company.”

The 265pence-per-share offer from Terra Firma still must be approved by the shareholders.  In the event that the deal doesn’t close, EMI will pay a breakup fee of £24m (approx. $47m)

EMI has been struggling over the past year to adjust to the changing landscape of the music industries, particularly the increase it downloadable music.  In a break from it’s peers, and in an effort to capture more from online sales, EMI recently announced deals  to offer its music without Digital Rights Management on both Amazon’s upcoming music store and at industry leader, iTunes.  On Thursday, EMI announced that it had accrued a 65% drop in pretax profit the past year.

Over the course of the year, EMI has been the subject of several takeover rumors.  Previously rejected a takeover bid from US industry rival Warner Music (though some suggest Warner was again a bidder this time).  EMI also supposedly entertained other offers from at least 3 private equity firms before deeming Terra Firma’s bid the most "attractive.” 

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Confirming a widely reported rumor, web retailing giant Amazon today announced it would be entering the music-download market; and notably it will be doing it without Digital Rights Management (DRM) restrictions attached to the music. 

The removal of DRM technologies is a significant breakthrough for online music retailers.   Earlier this year, Apple’s CEO raised questions of DRM’s benefits in an open letter (more info here and here). And shortly after, announced a deal with EMI to offer music without DRM. 

In a statement Amazon’s CEO Jeff Bezos said “Our MP3 only strategy means that all music that customers buy on Amazon is always DRM-free and plays on any device.”

Absent DRM restrictions all of the songs sold at Amazon will play on any MP3 player; a move that will make a consumers choice of which MP3 player to buy more a factor of price and features rather than the music catalog available to them.

The Amazon music store will be launched later this year. Record label EMI, which was the first label to break ranks with the music industry and offer its music without copyright protections, is the first label to join Amazon.  Warner Music and Vivendi’s Universal Music group are reported to still be experimenting on their own with DRM-Free offers and may or may not participate in DRM-Free marketplaces like Amazon’s.

The launch of Amazon’s service is expected in time for holiday buying – and may well be marketed with promotions to sell MP3 players at that time.  Amazon is saying 12,000 labels representing millions of songs will be available.  At this time, which labels are included has not been disclosed.