PWEI

Or rather the music industry will eat itself…

The BPI has joined forces with iTunes Music Store, Napster, Connect, MusicNet, AOL, Yahoo and RealNetworks (OD2/Louedye are conspicuously absent) to take the MCPS/PRS Alliance to the Copyright Tribunal over suggested publishing rates for online stores which will be 12%, which is nearly double that charge for CDs, though with the proposed 3% discount it would just be 50% higher. Another criticism from the BPI et al is that the MCPS/PRS licenses do not take into account different business models and charge the same fee based on retail price regardless of whether music is sold as part of a broader product mix.

Itís hugely ironic that the BPI and its 300 odd member labels are taking this action when the license fees many of those members demand from online services are at such a level that by Steve Jobs own admittance it is nigh on impossible to make money out of selling a la carte downloads as a stand alone business. And of course the situation is worse in the UK than most, if not all, other markets, to such a degree there have been complaints from consumers and consumer groups about the price of digital music in the UK versus the US and the rest of Europe.

Itís a little unfortunate that the BPI state that the publishers donít have the right to charge a premium for online because they didnít help develop the services – the inference of course being that labels do. The original license structure proposed by MCPS/PRS a few years ago was a ground breaking move at the time, that played a massive role in allowing the UK digital music market to get off the ground. It was pushed through by the MCPS/PRS alliance with no little opposition from some elements of some continental sister organizations.

It’s hugely disappointing that two parts of the same industry are busy washing their dirty laundry in public, and we have the massive irony that many record labels are now making a legal challenge to their own publishing divisions. An echo of when many of the same UK labels were taking legal action against CD-Wow for buying CDs from south east Asian divisions of their own labels.

The bottom line is that license fees from both parties need close scrutiny and online stores and services need to have much more maneuverability so that they can experiment with pricing levels and product mixes until we find out just what the right mix is online. At the moment we donít know and there is a real danger that what are essentially nascent market attributes will become codified and hinder digital musicís ability to truly flourish.

A final sub plot to this, the BPI state that they are taking this action with ďThe UKís leading online music servicesĒ and OD2/Loudeye are of course missingÖ.veiled snub or oversight?