Now is the time of year that record company executives around the globe are likely to be mopping the sweat from their collective brows.
With fingers crossed, they hope record releases from their biggest guns will help to boost flagging revenues over Christmas and revive an industry in seemingly terminal decline.
Music label bosses waste no time laying the blame for a downturn in music sales -- the culprit, as always, is the Internet. Illegal downloading is the Achilles' heel of the recording industry, and the term "file sharing" is anathema to the music-label fat cats staring plummeting profits squarely in the face.
But a new service which has just begun testing ahead of a proposed launch in the new year aims to provide a stepping stone between file sharers and the music industry. Instead of being a pay-per-download service or music portal, Playlouder MSP is being touted as a "music service provider" -- a one-stop shop that not only provides users with their broadband connection, but also allows them to download as much music as they want legally. And all for a price to compete with big rivals such as British Telecom (BT) and AOL.
The concept is simple: subscribers receive a high-speed Internet connection and everything else associated with a normal ISP. And like normal Internet users, they will be allowed to use file-sharing programs such as Kazaa or Gnutella. But instead of sharing with users anywhere on the Internet, subscribers will remain within a gated community, only able to share with approved users -- and therefore only sharing licensed tracks from the labels signed up to the scheme. And in return for licensing their entire catalogues for downloading among the Playlouder peer group, record labels will receive a slice of the subscription fee.
"A lot of people were wondering why no one had found a way to collaborate between record companies and Internet service providers," says Playlouder MSP director Paul Hitchman. "The answer's simple: ISPs don't want to share their revenue. We're putting our necks on the line by effectively cutting those revenues.
"We share our margin with the music companies directly. We're trying to cut through the antagonistic relationship between music companies and Internet firms."
With recognizable, but credible, names such as Dizzee Rascal, White Stripes and Stereophonics already signed up, and with respected underground labels such as Ninja Tune on board, Playlouder MSP is hoping to appeal to dedicated music fans as well as cautious individuals looking to avoid legal action down the line.
Of course, part of the gamble relies on the slow but steady demolition of the myth of "free" file sharing. Those users who are downloading and swapping tracks are still paying for their Internet connection -- and, in most cases, paying handsomely, even if the victims of file sharing never see those profits. That's where Playlouder MSP hopes to change the landscape. A deal to gain direct access to the fabled "local loop" cuts out rental costs from BT, allowing them to keep broadband speeds high, prices low and, crucially, allowing record companies to gain profit from an otherwise illegitimate revenue source.
Labels backing the new initiative are hoping this method of top-slicing revenues could be the way forward.
"We are committed to working with the most innovative new media companies," says Martin Mills, the chairman of Beggars Group.
"PlayLouder MSP finally offers record companies a way to monetize file-sharing and represents a potential solution for the record industry," he says.
If it is to succeed, though, Playlouder will have to fight hard. It will need to bring major labels on board to give subscribers a wide enough range of tracks to trade, and compete with a burgeoning range of music services. It could be joining the market at exactly the kind of watershed moment which could prove make or break.
"This is the pregnant moment in digital music," says Josh Bernoff, a principal analyst at Forrester Reearch. "Lawsuits are creating doubt among users of free services, while the variety and usability of legitimate digital music services make them a real, usable alternative."
The industry standard for online music is rapidly becoming Apple's iTunes download shop -- currently vaunting the fact that it has sold more than 10 million tracks in the four months since it launched its service in America. It's an impressive figure -- and one that is increasing quickly with the recent launch of iTunes for PC, a move which expands the technology beyond the niche market of Macintosh users and potentially into every Internet-enabled household in the US.
But nobody wants to let Apple steal a march in the market, and rivals are clamoring to throw their hats into the ring. Dotmusic, which was bought last month by Yahoo from BT could be the latest contender to don its spandex pants and jump on stage, with industry watchers speculating about a wide-ranging link-up with AOL and Real Networks. Thanks to the fact it currently holds licensing deals with five major labels, Dotmusic has not yet lost all of its rock star luster, even though it is something of an Internet hot potato, changing hands three times in the past three years.
And recently the trumpets have sounded for the much-vaunted relaunch of Napster, which resurrects the infamous file-sharing application in the form of an Apple-like download store. But still it must compete with the illegal traders on difficult ground.
Those skeptical of the record industry's position believe file-sharing is the scapegoat for waning sales and overpricing. This is the same set of issues raised decades ago by audio tape recording, they argue, simply magnified by the power of the Internet.
"Labels are in trouble, and it's not from file-sharing," Bernoff says. "To tap into US$2 billion in new revenues, they must let people find, copy and pay for music on their own terms."
Some figures inside the download industry go even further.
"Protecting copyright is really just a smokescreen to hide the real challenge confronting the entertainment industry," says Alan Morris, the executive vice president of Kazaa-owner Sharman Networks -- and the man whose picture is most likely to be used as a dartboard by frustrated record company bosses around the globe. His own product, he claims, is under fire because it is about "moving beyond an outdated economic model that is being rejected by the marketplace for which we have a well-conceived upgrade path."
The truth, as always, is likely to be somewhere in the middle of these two contrary positions. One thing, though, is certain -- file sharing is unlikely to disappear.
The current uneasy truce between record companies and download operators is one born not of action, but reaction. It's a complicated process with labels, licensing companies, digital facilitators, portals and service providers all competing for their slice of music's profitable pie. And all the while file sharers are able to continue with only the fear of a needle-in-a-haystack legal action over their heads.
"Peer to peer is such a powerful technology," says Paul Hitchman. "E-mail was the killer application of narrowband, and downloading is the driving force behind broadband. It's just not going to go away."
In the long run, services like Playlouder may or may not prove to be the answer the music industry is looking for. Consumers may eventually switch to download shops or other, unexplored, methods of purchase. But in an industry populated by closed minds and stuck playing an eternal game of catch-up, at least someone is trying to make a much-derided technology work legally.
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