Sales of Digital Music Triple

6 minutes ago

LONDON - The digital music market has more than tripled in a year, and that has helped offset a continuing decline in sales of CDs and other physical formats.

Spurred by the iPod revolution, digital music sales totaled $790 million in the first half of this year, equivalent to 6 percent of industry sales, the International Federation of the Phonographic Industry estimated in a report Monday.

That compared to $220 million in the same period last year.

Recorded music sales fell 1.9 percent to a retail value of $13.2 billion in the first half of this year, compared with $13.4 billion in the same period last year.

The digital boom, which now exceeds the value of the global singles market, was largely driven by sales in the top five markets — the United States, Britain, Japan, Germany and France, IFPI said in Monday's report. Sales of physical formats fell 6.3 percent by value in the period to $12.4 billion, it said.

That partly reflected pressure on prices: CD sales were down 6.7 percent in value but only by 3.4 percent in unit volume. DVD music video sales fell 3.1 percent in value and 1.6 percent in units.

The United States saw a drop in physical sales of 5.3 percent in value but a strong increase in digital music sales, with single track downloads totaling 159 million in the first half of 2005, nearly three times the figure for the year-previous period.

Apple Computer Inc.'s iTunes online music store accounts for 82 percent of legal downloads in the United States. The company has sold more than 500 million songs online and about 22 million iPod digital music players.

The recording industry has also aggressively pursued computer for alleged trafficking in pirated music online. Since September 2003, it has sued more than 14,800 computer users in the United States alone.

"There is a long way to go — digital and physical piracy remain a big threat to our business in many markets," IFPI Chairman and CEO John Kennedy said.

The report said digital sales helped compensate for a fall in disc sales in Germany, with single track downloads growing to 8.5 million in the first half of 2005 compared with 1 million a year ago. Physical retail sales dropped 7.7 percent in units.

France had the smallest fall in physical sales among the big five markets, down 2.7 percent in value but up 7.5 percent in units. French CD album sales were up 9.5 percent in units and 1.2 percent in value.
Apple Launches New iPhone

POSTED: 9:58 pm PDT September 7, 2005

UPDATED: 1:51 pm PDT September 9, 2005

SAN FRANCISCO -- Apple Computer CEO Steve Jobs brought along plenty of star power as he introduced a music-playing cell phone capable of storing about 100 songs, but a video-phone appearance by Madonna and onstage performance from Kanye West only added to the excitement surrounding the latest iPod product.

The iPhone, made by Motorola and loaded with iTunes software, can store podcasts as well as music. Users can transfer songs to the device from their P-C or Macintosh computers and make calls through Cingular Wireless.

Jobs says it's "an iPod shuffle right on your phone." He noted at a news conference in San Francisco that both the iPhone and iPod shuffle randomly sort music, hold about the same number of songs and have display screens.

Jobs also introduced a pencil-thin iPod Nano, which will replace the iPod Mini. It's one-third the size of the Mini -- "thinner than a number-two pencil" -- and holds one-thousand songs.

The Nano can store music, games, photos and a calendar.

A four-gigabyte Nano will retail for $249, and a two-gigabyte model will sell for $199. Both versions are to be available in stores this weekend.

Downloads for Japan ITunes Hit a Million

By YURI KAGEYAMA, AP Business Writer Mon Aug 8, 1:34 AM ET

TOKYO - In just four days, 1 million songs have been downloaded at Apple's new iTunes Music Store in Japan, the fastest pace for the service's launch in any of the 20 nations it's now available, including the U.S., a senior executive said Monday.

"We're extremely happy with the results," Eddy Cue, Apple Computer Inc. vice president of applications, said in a telephone interview from Cupertino, Calif., where Apple is based. "We think we've got a huge success."

Apple, whose iPod portable music player is a big hit in Japan, started its music download service here last Thursday, and has already become the No. 1 online music store in the country. The American version of the service took a week to sell 1 million song downloads, Cue said.

But he acknowledged more work was needed to sign additional record companies for the Japanese service, which now has 15 Japanese labels.

Apple has not signed a deal with Sony Corp (NYSE:SNE - news).'s music division, which has some of the most popular Japanese singers and bands under its label. Cue refused to comment on how talks with Sony Music Entertainment are going but said he hoped Sony will join soon.

Sony and Apple have become major rivals in pushing competeing music technologies. Sony, which has focused on CD and mini-disk products, initially tried to push a more proprietary digital music format, and has fallen behind Apple and its iPod, which stores music on a hard drive in the more widespread MP3 format.

The popularity of iTunes in Japan has dealt another blow to Sony because it has already surpassed the number of downloads Sony's affliated online music store gets in a month — about 450,000.

By offering its service for lower prices, Apple is undercutting many online music services now available in Japan. Most iTunes songs, which include international and Japanese artists, cost 150 yen, or $1.35, each, and only 10 percent of the songs cost 200 yen ($1.80).

Japanese are accustomed to paying twice that much although the rates are slightly more than the 99 cents charged at iTunes in the U.S.

Although the dual-price system in Japan has set off some speculation that Apple may start charging different prices elsewhere, Cue denied there were any plans to change the rate policy in the U.S.

Both the top song and top album bought at Japan's iTunes are works by Japanese artists, and most of the music being bought is Japanese, Cue said.

The iTunes service accounts for 82 percent of all legally downloaded music in the United States. Apple has sold 21.8 million iPods worldwide since it went on sale in October 2001, and more than 500 million songs through its iTunes Music Store.

"We've had the No. 1 digital music player in Japan. And now we can say we have the No. 1 online music store in Japan," said Cue.

The iTunes music store is now available in 20 nations, including Japan, reaching 85 percent of the global music market, according to Apple.

ITunes Music Phone Set to Launch

By GREG SANDOVAL, AP Technology Writer Tue Aug 30, 9:17 PM ET

SAN FRANCISCO - A long-delayed cell phone from Apple Computer Inc. and Motorola Inc. that can play iTunes music downloads is finally set to debut through Cingular Wireless, a research analyst said.

The new phone will be equipped with software that would allow it to play songs purchased at Apple's iTunes Web site, according to Roger Entner, an analyst for research firm Ovum who said he learned of the plans from an industry executive.

Representatives from Apple, Cingular and Motorola declined to comment, but the three companies are expected to roll out the device at an event here next week. Apple announced Monday that it would host a news conference Sept. 7.

It was unclear whether the new phone will allow users to download music directly over a cellular Internet connection or if they would have to download songs to a computer and then transfer them to the handset.

Just about every major cell phone maker has been working to launch a music phone that could compete with the iPod, Apple's popular digital music player.

Motorola originally planned to unveil the iTunes phone at a trade show back in February but the debut was scrubbed at the last minute with no explanation. Some observers speculated that the event was blocked by Apple's famously secretive management. Others postulated that one or more wireless operators objected to the possibility that such a device would undercut their efforts to sell music to cell users.

Analysts have predicted that music-playing phones could threaten iPod's grip on the market for digital music players.

Although battery life is a major impediment, tech companies have long vied to create an all-in-one product that would encompass all the utility of cell phones, handheld computers, music players, cameras and videogame machines.

The move into cell phones is seen by industry experts as a way for Cupertino, Calif.-based Apple to hedge its bets.

"It's a win for all three companies," Entner said. "Apple gets into the wireless space, Motorola associates itself with a wow brand and Cingular aligns itself with an iconic music-device company."

Aussie Court: Kazaa File-Swapping Illegal

By MIKE CORDER, Associated Press Writer 58 minutes ago

SYDNEY, Australia - A federal court ruled Monday that the popular file-swapping program Kazaa infringes on copyright and gave its purveyors two months to alter the system so its users can no longer engage in music piracy.

Hailed as a victory by the recording industry, the court's decision has implications well beyond the borders of Australia, where Kazaa executives are based, due to the Internet's global nature.

Federal Court Judge Murray Wilcox determined that Kazaa's owners and distributors, led by Sharman Networks Ltd., took no action to rein in illegal activity despite posted warnings on their Web site urging Kazaa users not to swap copyright material.

Wilcox said it had been in the financial interest of Sharman and its partners "to maximize, not minimize, music file-sharing."

He found six of the 10 defendants, including Sharman, its Sydney-based chief executive Nikki Hemming, as well as Altnet, a Sharman software partner, guilty of copyright infringement and ordered them to pay 90 percent of the record industry's costs in the case.

A hearing will be held later to establish damages.

"We will ask the court when it comes to damages to reflect the value of the music these people ripped off," Michael Speck, a spokesman for the Australian recording industry, said of the millions of people who have used Kazaa to swap copyright music.

In a brief statement, Sharman said it would appeal and Kazaa software remained available online, with 800,000 downloads reported last week. Sharman says its software is no different from a tape recorder or photocopier — and that Kazaa could not control copyright infringement by users.

But Wilcox said that Kazaa's distributors actively encouraged users to share files, the vast majority of which were copyright material.

He said that if Kazaa is to continue its owners will have to ensure that new versions of the software filter out unlicensed copyright material, a task the judge said would be extremely difficult.

Wilcox stressed, however, that he was anxious not to damage legitimate file-swapping with his ruling. He said Kazaa needs to be changed to protect copyrighted material "but without unnecessarily intruding on others' freedom of speech and communication."

"It is clear that the judge is concerned not to stop the technology completely but to try and work some middle line," said Kim Weatherall, a lecturer in intellectual property law at Melbourne University.

The case is the latest in a long line of courtroom showdowns between so-called peer-to-peer (P2P) networks and copyright holders led by the music and movie industries.

In June, the

U.S. Supreme Court ruled that Hollywood and the music industry can file piracy lawsuits against technology companies caught encouraging customers to steal music and movies over the Internet.

The London-based International Federation of Phonographic Industries praised Monday's ruling as "a milestone in the fight against Internet piracy worldwide."

"Today's judgment shows that Kazaa — one of the biggest engines of copyright theft and the biggest brand in music piracy worldwide — is illegal," federation chairman John Kennedy said.

But Kazaa has lost significant popularity since its 2002 heyday, due in part to legal pressure and sabotage efforts by the recording industry but also to the emergence of competing technologies.

Other peer-to-peer file-sharing tools and services that similarly do not require a central server, including BitTorrent and eDonkey, have supplanted it as the Internet's most popular.

FastTrack, the network tapped by Kazaa users, accounted for 10 percent of traffic volume in a six-week study begun in June of data swapped using the Internet's top four file-sharing applications. The study was done by CacheLogic.

____

On the Net:

Text of the ruling: http://www.austlii.edu.au/au/cases/cth/federal_ct/2005/1242.html

Kazaa's Web site: http://www.kazaa.com

British Music Retailers Begin Digital War

By JANE WARDELL, AP Business Writer Mon Sep 5, 8:22 AM ET

LONDON - In a clear sign the digital music revolution is here to stay, Britain's major music retailers are going head-to-head for a slice of the burgeoning — and potentially very lucrative — Internet downloading market.

HMV, the biggest specialist music seller in Britain, made a big splash with the launch of its new digital service Monday, employing the band Razorlight to showcase its library of around 1.3 million tracks for consumers to download from the Internet.

But some of its thunder has been stolen by Virgin Megastores, the country's second biggest music chain, which signed up the Dandy Warhols for an ambush launch of its own digital service on Friday.

Both outlets are fighting for a share of a market that, while still small in Britain, is expected to grow exponentially. A year ago, the total number of songs officially downloaded from the Internet in Britain was 500,000 — the same number is now sold every week.

"The industry is moving on. Digital is here and it's here to stay," said Dario Betti, a new media analyst at IT consulting firm Ovum. "HMV and Virgin have been slower to get into the market but they recognize it's important to be there and not be left behind."

The digital download market in Britain has so far been dominated by Apple's iTunes music store, which offers consumers around 1.2 million tracks.

HMV and Virgin are aiming to break Apple's stranglehold by offering services that will work with several digital music players, allowing wider download possibilities and accessibility. Apple's iTunes software works only with the iPod music player.

"How many customers know that in buying an iPod, they're effectively locking oneself into a walled garden?" said John Taylor, HMV's director of e-commerce.

HMV and Virgin are both planning to offer a separate subscription service, where users pay 14.99 pounds ($27.72) a month to download as much music as they want - the catch being that if they stop paying, they lose all their music.

HMV, which has teamed up with Microsoft for its new service, has also stepped up the competition, making a special 39 pence (72 cents) offer for tracks by some new artists. It also plans to sell recordings of gigs and is formulating a film and computer game download service.

The two retailers are banking on further growth in an already booming market.

About 5 percent of Britons currently own a digital music player while legal digital sales account for less than 2 percent of the market. However, analysts expect online music sales to nearly double from 34 million pounds ($63 million) this year to 65 million pounds ($120 million) next, reaching 261 million pounds ($483 million) by 2010.

"We've taken our time to enter this new and exciting market. Our intention is to deliver a quality service that will...rival the best," said Steve Knott, Managing Director of HMV for the U.K.

Virgin founder Richard Branson is pegging his product's success on user-friendliness, compared to the more technical iPod. Like the HMV version, the Virgin product is compatible with the Windows Media Audio standard. Neither is compatible with the iPod.

"We have always felt that a company with music at its core rather than technology could do so much better for music fans," Branson said at the Virgin launch. "It is so user friendly that even I could use it."

Virgin Digital customers will get free music insurance which will provide a back-up service to replace downloaded tracks if their computer's hard drive crashes. It is offering around the same number of tracks as iTunes.

The HMV program features search and download capabilities, music transferring from a portable device onto the program, CD-burning, streaming radio stations, and HMV playlists. HMV plans to add video capabilities soon.

Knott said that while he has not seen the Virgin program, he's not surprised by the rival's interest in the emerging market.

"I think competition is very healthy," he said. "I would've expected Virgin to be in the game...and we'll compete with them in the same ways as we compete on the high street. I welcome the competition."

Knott said that he expected iPod also to upgrade its offering, but added that HMV plans to continue to sell Apple's iPod players in its shops and bank on its flexible pricing to win over customers.

Betti warned there will be a period of flux as each product is improved and upgraded, likening the situation to that of the Betamax-VHS video player wars in the early 1980s — VHS eventually won out, making Betamax obsolete.

"At least back then you could have a Betamax player and a VHS player at home. Having two portables to carry around would defeat the purpose," he said. "My advice to any consumer is make sure you don't get too attached to whatever you buy right now. You might find later on that what you have has been surpassed."