Music Ally

In the fourth part of our series looking back at the Decade of Digital (read part one on 2000, part two on 2001 and part three on 2002 published earlier this week) we examine 2003: the year that US labels started legal actions against individuals and the year that the iTunes music store launched for the PC.

Sign up for a free two-week trial to Music Ally and get access to all our past reports and bulletins plus a suite of research tools including market data, a deal tracker and an analyst forecast tracker. In the most recent PDF Report you can find a rundown of 2009’s big events plus an extensive timeline detailing the key digital music happenings of the past ten years.

And continue reading after the jump to take a look back at the year 2003, as we reported it at the time.

Now, Music Ally comments:

2003 was the year that the iTunes music store launched for the PC and the year that US record labels started legal action against individual filesharers. Napster (in brand only) turned into a legal music service, made from the ashes of Pressplay which Sony and Universal sold to CD-burning company Roxio.

We were ahead of the curve in predicting that games consoles like the Xbox could become a great platform for selling music – nowadays online gaming platforms, in conjunction with games like Guitar Hero and Rock Band, are helping shift huge quantities of downloads.

The BPI’s Peter Jamieson suggested that by 2008 downloaded music could account for as much as 60% of the singles chart, and his suggestion was at the time perceived as slightly controversial. It’s surprising how quickly the UK singles chart converted to being almost entirely download-based.

Back in 2003 we discussed the BBC’s Creative Archive project, and while the BBC hasn’t quite managed to open up its entire archive of past shows for streaming, there’s little doubt that its current shows are tremendously popular online thanks to the iPlayer.

We were right to be cynical about Coke’s entry into the digital market, as their music download store failed to last the distance. But it’s fun to note that rumours over an Apple tablet aren’t limited to 2009: indeed people were raising the possibility of a tablet Mac as long ago as December 2003.

17 January 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030117/MusicAlly_030117

Lawrence Lessig lost his attempt to have 1998’s 20-year copyright extension rescinded. The “Eldred” case (named after an internet based publisher of copyright literature” failed, allowing Mickey Mouse to remain in corporate hands.

14 February 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030214/MusicAlly_030214

We discover AllofMP3.com: It doesn’t take a genius to suppose that the Beatles and their respective copyright owners haven’t given permission.

14 March 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030314/MusicAlly_030314

Warner sells Madonna’s “American Life” as an unprotected MP3 the day before it hits the radio

28 March 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030328/MusicAlly_030328

We discover Audioscrobbler, later to become Last.fm

25 April 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030425/MusicAlly_030425

EMI announced its boldest move to date to embrace the digital age. Some 140,000 tracks from 3,000 artists will be made available to over 20 digital retailers. This represents 90 per cent of its active catalogue, an impressive statistic given the known resistance of some managers and artists to agree terms on such moves. As ever The Beatles and The Rolling Stones are notable absentees

RealNetworks is buying Listen.com, creator of the Rhapsody music service – but will Real use Rhapsody to improve or compete with its RealOne/ MusicNet service Building upon the under two percent minority stake in Listen that Real previously invested in February of this year, RealNetworks will pay approximately $17.3 million in cash and 4.1 million shares (worth around $35 million) to gain full ownership. Rhapsody had already decided earlier in the year to shift its secure audio provider from Windows to Real.

09 May 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030509/MusicAlly_030509

Can the X-Box become a music machine? For some time we’ve been pushing a vision that video games consoles will become a gateway to online multimedia services. Microsoft has recently opened up the Xbox Live online gaming service – a logical progression would be to plug it into legal music services such as Pressplay (to which Microsoft is a technology supplier). The great attraction to copyright owners of doing this is that an Xbox or Playstation is a reasonably ‘closed shop’ not easily capable of accessing file-trading networks such as KaZaA.

23 May 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030523/MusicAlly_030523

Sony and Universal have decided to bow out of the online subscription service market by selling the Pressplay joint venture to Roxio, the CD burner giant. The service will now be rebranded under the banner of Roxio’s earlier big acquisition of the year, Napster, with the new Napster/ Pressplay not expected to launch until 2004.

Entertainment superbrand Disney is to trial a new technology which makes DVDs playable for 48 hours before ceasing to work altogether. The system uses an adapted version of a substance called Lexan, created by GE Plastics, which turns the disc’s surface from red to black when exposed to the air. The clever part is that instead of degrading slowly over the 48 hour period, it happens almost instantly at the end of the period, making the disc unreadable to DVD players. (Copyright owners can to some extent set the time period themselves, ordering discs that will degrade after just 24 hours if they so desire). Created by the disingenuously-named company Flextech, the product is called EZ-D (the “EZ”, we assume, is a euphemism for “annoying”, given that built-in obsolescence is what Flextech is all about.)

4 July 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030704/MusicAlly_040704

The RIAA’s decision to pursue legal action against individual file sharers has provoked much debate so MusicAlly decided to take the temperature of the UK’s music publishing community. The conclusion was pretty clearcut, with near unanimous support for the RIAA’s actions….But MusicAlly remains wholly unconvinced that such dramatic action will ultimately even prove to be effective as a deterrent. And there certainly has to be a large question mark over the PR benefits of dragging thousands of ordinary music fans through the courts and fining them thousands of dollars, seemingly because it’s just too difficult to pin anything on the intermediaries. There simply have to be better targets than the fans themselves

18 July 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030718/MusicAlly_030718

We reported on Shawn Fanning’s creation of a company later to become Snocap: Napster creator Shawn Fanning is aiming to bounce back with a new p2p-related program. But this time it enables p2p systems to work in a copyright-friendly way. It is believed that the new system, for which Fanning is currently seeking backing, would scan the user’s computer for copyrighted material and take payments which will then be distributed to copyright owners. This works through audio fingerprinting, used by companies like Shazam, to identify the work which is then cross checked against a database managed by Fanning’s firm which will reveal whether the appropriate licences are in place.

1 August 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030801/MusicAlly_030801

Where’s the money coming from? Currently the entire business model is predicated on taking a cut from the revenue from links to online sales partners who Last.fm told MusicAlly include Amazon and German online retail outfit GEMM. But this model may ultimately prove to be Last.fm’s biggest difficulty both from a practical business and rights perspective. With no advertising on the service and a background in unsigned music sites (four of Last.fm’s founders have also worked on insine.net), it’s obvious that the company is not driven by greed. But, the site may ultimately be forced to concentrate much more on the independent sector if the revenues don’t start to add up for the major labels – or for the writers and publishers for that matter.

The owner of the Web’s second-biggest retailer, Buy.com, has launched the first PCbased clone of Apple’s iTunes Music Store, called BuyMusic.com. Launching with the marketing strapline “Music Downloads For The Rest Of Us”, BuyMusic aspires to offer Apple’s pay-per-download business model for the 95% of computer users who own a Windows PC.

Dr Geek: “The BPI’s Peter Jamieson certainly got people talking when he suggested recently that within five years downloaded music could account for as much as 60% of the singles chart.”

29 August 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030829/MusicAlly_030829

Creative Archive: Greg Dyke, director general of the British Broadcasting Corporation (BBC), has thrilled Web users with a promise that the BBC’s archive of programming is to be opened up for free downloading via the internet….Re-negotiating contracts for the new internet service will be a real challenge, and it is likely that just short clips of BBC-commissioned media will be available at first. Full music shows will probably be out of the question, but the Beeb would be foolish not to include its most geek-friendly creations so far – Dr. Who, The Hitchhiker’s Guide To The Galaxy, and Red Dwarf. For these shows, users would probably be glad to pay a small amount, but it’s not yet clear whether the BBC site will even demand proof of having purchased a TV licence before allowing a viewer to download.

26 September 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=030926/MusicAlly_030926

The new MediaMax CD-3 system allows users to make up to three CD copies of the disc for personal use, addressing the complaints of American customers who have found they’re no longer to make home compilations.

10 October 03

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031010/MusicAlly_031010

Grandfather of file-trading Napster has completed its transformation into legal paidfor music service this week, with a limited test launch open to former Pressplay subscribers. The new software is in fact an improved version of Pressplay, offering similar interactive streaming and radio services to its predecessor and bearing no filesharing element as made famous by the original Napster or today’s KaZaA. The pricing model is borrowed from Apple’s iTunes: individual tracks can be downloaded for 99 cents and albums for $9.99. These can be freely burned to CD or moved to Windows Media compatible portable players (Apple’s legendary iPod is not supported); there is also a $9.99 subscription model which enables users to download any number of ‘tethered’ tracks onto their computer but not to move them elsewhere or burn them to CD. What isn’t available, unfortunately, is a true ‘all you can eat’ price band allowing subscribers to pay $20 or more a month in order to burn to CD as many songs as they like.

10 October 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031010/MusicAlly_031010

Emusic has been sold on to Dimensional Associates, a New York equity group which also owns digital distributors The Orchard. At the same time a radical overhaul of the business model is underway which may upset Emusic’s existing users. The Unlimited service will be split into Basic, at $9.99 a month for 40 downloads maximum, and Premium, charged at $50 a month for 300 tracks. Even though most users probably never exceeded these amounts, the appeal of the value proposition will diminish. It’s a shame that such a great service is forced to face up to the still harsh realities of selling digital music, but we can only hope that Emusic gets to live another five years.

A Princeton University student, John Halderman, has published a detailed paper alleging weaknesses in the Suncomm MediaMax CD3 copy protected disc system currently being trialled by BMG. According to Halderman, Windows users can disable the copy-protect mechanism by simply holding down the shift key for a few seconds while inserting the CD into the computer. The MediaMax system works by loading software from the disc which then prevents copying. But if the ‘autorun’ feature that automatically starts programs is disabled then the software is unable to launch and the music can be freely copied.

24 October 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031024/MusicAlly_031024

The Apple iTunes Music Store launched on Thursday 16th October for the Windows operating system, opening itself up to the 90% majority of America’s computing audience. At the iTunes for Windows launch, Apple boss Steve Jobs said that he aimed to sell 100 million songs in the first year of the iTunes Store’s operation. And he’s well on his way – over a million songs were sold in the PC version’s first week, beating the average of around 500,000 per week that Apple had been selling previously, and 1 million copies of the iTunes for PC software have been downloaded so far. Interestingly, Apple has started to stress that its catalogue (soon to reach 400,000) contains only “quality tracks”, with Steve Jobs attempting to cosy up to labels by praising their “editing” skills and criticising the fact that intermediaries (such as CDBaby and The Orchard) allow unsigned bands to get content into the digital music platforms. “We don’t want all that stuff on our site”, said Jobs.

7 November 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031107/MusicAlly_031107

Sony and Bertelsmann have announced that they intend to merge the creative units of their music operations, forming a 50/50 venture called Sony BMG which would cover around 25% of the worldwide music market.

21 November 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031121/MusicAlly_031121

MP3.com, the former independent music site which was sold to Vivendi Universal for $372 million, has been sold again – this time to leading technology news site CNet. But that is apparently all they are buying, because CNet has made clear that it will not be keeping MP3.com’s enormous archive of music, or gaining access to the company’s innovative technology

From January 12th, the 18,000 students living on-campus at Penn State will be able to access Napster; they won’t have to pay directly for Napster as its subscription fee will be rolled into the $160 technology fee they already pay the college. However, they will be required to pay extra each time they want to burn a song to CD or transfer it to a portable player. Some students criticised the deal as an inappropriate use of their IT fee, which would normally go towards things like network costs or computer hardware. http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031121/MusicAlly_031121

5 December 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031205/MusicAlly_031205

Apple to launch tablet PC? The Taiwanese press has been reporting that local electronics manufacturer Quanta is planning to switch production from Apple notebooks to tablet PCs early next year.

19 December 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031219/MusicAlly_031219

The news that Coca Cola is to launch a download service in the UK (see last Bulletin) suggests that the UK online music market is finally coming of age. But just how much do we know about Coke’s intentions and what are their chances of success? It’s easy to see the potential marketing opportunities that could tie in Coke’s Charts sponsorship with the download service but the company’s ambitions for the site seem much more about using the association with music to shift more cans of Coke than creating a viable online music service. Nonetheless, given the Charts sponsorship deal, the relatively undeveloped digital music scene in the UK, and the kind of marketing reach that is likely to result from having the service promoted on Coke cans and bottles, we expect the site to get off to a good start. But ‘access’ to music alone will not be enough to make the service successful in the long run.

Ever wondered what happened to InterTrust? Now we know. The American digital media security firm “hopes to have an interoperable [DRM] between now and six months”, according to a spokesperson from Philips, the company which together with Sony bought InterTrust over a year ago for USD $453 million.

25 million downloads sold on iTunes in total since its launch in April – with between 800,000 and 1.5 million tracks being sold every week since the PC version of iTunes was launched. “So far, we’re the only bright light [the industry has] right now in terms of legal online downloading as an alternative to illegal online downloading”, said Apple boss Steve Jobs.

30 December 2003

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=031230/MusicAlly_031230

The Dutch Supreme Court has upheld an earlier ruling by the Amsterdam Court of Appeal that Kazaa cannot be held liable for the copyright infringing action of its users.

Browse past reports from across the decade

Sign up for a free two-week trial to Music Ally and get access to all our past reports and bulletins plus a suite of research tools including market data, a deal tracker and an analyst forecast tracker. In the most recent PDF Report you can find a rundown of 2009’s big events plus an extensive timeline detailing the key digital music happenings of the

Tags: 2003, apple, Digital music history, digital music timeline, iTunes, Napster, RIAA

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