Oh, Those Apple Rumors

Reports that Apple is talking to the major labels about a subscription plan or another method where the computer / home electronics company could bundle music with its iPod and iPhone devices might have been off the mark.

On March 18 Financial Times posted an article on its Web site claiming the House That Jobs Built was negotiating with the majors for a deal similar to the one Universal Music Group struck with Nokia where the label provides at least one year of free music to consumers who purchased certain Nokia handsets.

Called "Comes With Music," the blueprint is similar to subscription services offered by Napster and Real Networks. Customers can download all the tunes they want, but upon the subscription’s cancellation, digital rights management technology prevents those tunes from playing any further.

The Financial Times article said one approach Apple was considering was to charge customers a premium for iPods and iPhones and then give those same customers the run of the iTunes Music Store by allowing them to download anything that catches their fancy.

The same article mentioned that one of the disagreements between Apple and the labels was price, reporting that Nokia was offering $80 per player to the labels in exchange for providing free tracks. In comparison, according to Financial Times, Apple was offering the labels the low-ball figure of $20 per device.

Financial Times said Apple did not comment on the purported subscription / free music plans but attributed details to "executives familiar with the negotiations."

But hold the iPhone. Now there are indications that Apple and the labels may not be as close to a deal as previously thought.

According to an article posted on BusinessWeek’s Web site on March 20, reports about discussions between Apple and the labels for an all-you-can-eat music deal were "overblown," according to "people in a position to know."

The same BusinessWeek item says such an iTunes subscription plan had been "kicked around" for "about a year" but did not make it to the "meaningful discussion" stage.

However, the BusinessWeek item does mention several reasons the labels might want an iTunes subscription service.

Of course, the main reason would be money. A subscription service where customers pay about $10 per month for all the downloads they want means the labels have a predictable cash flow. Compare that to the current iTunes business model where customers may buy only a few songs spread over the course of a year, and you can see why the record companies might favor subscription services.

Apple CEO Steve Jobs has dismissed subscription plans in the past, likening such services to renting music as opposed to his iTunes service where customers can play their purchases as often as they like with no threat of discontinuation due to canceled subscriptions.

However, BusinessWeek gave plenty of reasons for Apple to pursue such a service, claiming that iPod sales may have peaked and citing a 5 percent growth in iPod sales in 2007 compared with 50 percent growth the year before. Since Apple’s focus has been on selling iPods and, more recently, iPhones, some type of unlimited music deal could look very attractive to the Cupertino company.

But is Apple currently talking to the labels about such a deal? That depends on which anonymous sources you prefer to believe. And which ones you hope are true.


Suing The RIAA

Hardly a week goes by when the RIAA doesn’t sue somebody somewhere for copyright-infringing activities – activities usually related to peer-to-peer file sharing.

But an Oregon woman once accused of music piracy by the trade organization representing the recording industry’s major labels is now fighting back.

Back in late summer 2005, Tanya Andersen was sued by the RIAA for P2P piracy. However, after U.S. Magistrate Donald Ashmanskas dismissed the lawsuit, Andersen started fighting back.

Andersen originally sued the RIAA earlier this year, claiming the RIAA representatives had threatened to interrogate her teenage daughter if she didn’t settle the organization’s charges out of court. U.S. District Judge Ana Brown dismissed most of her claims but gave Andersen until last week to refile.

And refile she did.

Andersen’s amended complaint seeks class-action status and charges the RIAA and its investigators, specifically MediaSentry, of spying "by unlicensed, unregistered and uncertified private investigators" who "have illegally entered the hard drives of tens of thousands of private American citizens," breaking laws "in virtually every state in the country."

MediaSentry’s relationship with the RIAA has been under scrutiny as of late. The company specializes in aiding content owners in protecting copyrights, but its methods have some questioning whether the company should be defined as a private investigation outfit, which would mean it would have to be licensed under individual states’ P.I. rules & regs.

The lawsuit goes on to accuse the RIAA of filing "sham" lawsuits as an intimidation method meant to publicize its anti-piracy campaign.

News of the impending amended lawsuit had been rumbling in the blogosphere for the last few weeks, with those critical of the RIAA claiming it would force the organization to reveal investigative techniques that, so far, the organization has refused to disclose.

"We’re very pleased that we’ll finally be able to force the RIAA and MediaSentry to give up secret records they have steadfastly refused to disclose in tens of thousands of cases that they’ve filed," said Andersen’s attorney, Lory Lybeck.

Andersen isn’t the only one in Oregon questioning RIAA legal methods. Earlier this year Oregon Attorney General Hardy Myers filed a complaint in federal court to protect the privacy of University of Oregon students the organization had accused of P2P piracy.

Meanwhile, the RIAA dismissed Andersen’s latest filing against it, saying Andersen is merely rehashing old claims.

"It is unfortunate that this case continues to drag on after the court previously deemed all of Ms. Andersen’s claims inadequate," RIAA spokesman Jonathan Lamy said. "We hope to resolve the case in short order."


ZapMedia Zaps Apple

ZapMedia Services has filed a patent infringement lawsuit against Apple Inc., claiming the latter’s iTunes Music Store and iPod music player infringe upon ZapMedia patents.

In announcing the legal action, ZapMedia said that the lawsuit "comes after multiple attempts" by the company "to resolve its concerns" with Apple.

ZapMedia says Apple infringed on two specific patents – No. 7,020,704 and No. 7,343,414. Both patents are titled, "System and method for distributing media assets to user devices via a portal synchronized by said user devices."

ZapMedia applied for the patents in 1999. One patent was granted in March 2006, and another patent was granted March 11, 2008.

Yep, that’s right. One was granted earlier this month, with ZapMedia announcing their lawsuit the very next day.

ZapMedia’s infringement lawsuit against Apple is the latest example of companies suing over business method patents. Business method patents are often filed to protect a new process or method – water purification, for example. However, many business method patents do not actually introduce new technology. Instead, many business patents introduce new methods using existing technology.

ZapMedia’s patents detail a system where music is sold and distributed online from a central server to individual computers and personal music players, describing the iTunes process in general terms.

In announcing the lawsuit, ZapMedia says it met with several tech companies in the 1990s, including Apple, to discuss online music distribution methods. The announcement also mentions ZapMedia is seeking a resolution where Apple pays the company a licensing fee for the use of the patents.

"When someone takes our vision and our intellectual property without a license after several attempts, we have no option but to protect it through every means available to us," said Robert Frohwien, general counsel for ZapMedia.