Introducing slotMusic

The recording industry is betting on a new physical medium for the distribution and sale of music that debuts next month, but unlike past changes, you probably won’t have to invest in new hardware or players.

It’s called “slotMusic,” and it’s music on fingernail-size microSD memory cards priced similarly to CDs. SanDisk, the four major labels, Best Buy and Wal-Mart think consumers will forgo buying CDs in favor of these cards. That is, those consumers who still buy CDs. After all, albums sold on CD dropped by 19 percent last year, according to Nielsen SoundScan figures.

The drop in CD sales isn’t directly related to rising download purchases. Purchases from online stores like iTunes or Napster still haven’t picked up the slack created by music fans illicitly swapping songs on P2P networks.

But whether consumers still buying CDs will switch to slotMusic microSD memory cards is the big question. Music on the memory cards will be encoded in the MP3 format without DRM and will play back at rates up to 320 kbps. However, audiophiles may end up forgoing the cards in favor of CDs, which can be ripped to their liking.

Chances are you already have something in your electronic toy collection capable of playing slotMusic. Many cell phones are already compatible with microSD cards, as are many multimedia players. Furthermore, a small USB dongle that comes with the microSD cards makes the medium computer-worthy.

Although the slotMusic microSD cards will also contain album liner notes and artwork, plenty of space will be left for consumers to store whatever they want on the cards.

One sticking point may be with environmentalists. While the slotMusic memory cards are about the size of a fingernail, they will be packaged in boxes similar to what’s used to package CDs. It was only a few years after the introduction of CDs when environmentalists complained about the waste of paper products used to package CDs in boxes that were often twice the size of the compact disc. Those complaints led to the current jewel-box packaging the labels have used for the past 20 years.

If all of this talk about micro cards and SanDisk is giving you a case of Déjà vu, you’re not alone. Three years ago SanDisk introduced “Gruvi” – DRM-protected music on micro cards that were priced in the neighborhood of $40 each. Although SanDisk counted The Rolling Stones as one of the first bands available on Gruvi, the concept never caught on with music consumers.

Will slotMusic eventually replace CDs?

Hard to say, but Best Buy and Wal-Mart stores will devote a considerable amount of shelf space to the cards. As to whether the cards will replace CDs – that will probably be answered by consumers.

Rio Caraeff, executive VP of Universal Music Group’s eLabs digital music unit, hopes consumers will switch from CDs to slotMusic, saying, “I think we could certainly hope that would be the case, but I don’t think we are so tied to that.”


A Mechanical Breakthrough

They’re calling it a breakthrough, and when organizations such as the Digital Media Association, the National Music Publishers’ Association, the Recording Industry Association of America, Nashville Songwriters Association International and Songwriters Guild of America actually agree on something, then a breakthrough it is.

This time all groups involved are agreeing on mechanical royalties for music streamers and “limited download” services. It is the first such mechanical royalty agreement, which is why all groups involved are trumpeting that they really can work well with others.

While streaming is pretty self-explanatory, the “limited download” concept refers to music subscription services where the downloads are “tethered” to the service – meaning if the subscription is canceled, the music ceases to play – or to ad-supported services such as Spiral Frog where users watch ads in return for keeping their downloads rockin’.

The agreement calls for fees based on a flexible percentage of revenue, and minimum payments in certain circumstances.
Under the new agreement, limited download and interactive streaming services will generally pay a mechanical royalty of 10.5 percent of revenue, less any amounts owed for performance royalties.

Outside the scope of draft regulations, all groups involved also agreed that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright holders.

All that’s left is for the Copyright Royalty Judges to sign off on the proposal and the new agreement becomes the law of the land.

While all groups involved issued a joint statement, that doesn’t mean the bickering is over, mainly because the agreement does not affect more controversial issues such as Internet radio royalties.

“This historic agreement is the foundation for a new generation of music distribution,” said National Music Publishers’ Association President and CEO David Israelite. “This agreement will ensure that songwriters and music publishers continue to thrive in the digital age. I am grateful for the good faith efforts of everyone involved in the discussions leading to this important announcement.”


The Android Has Landed

T-Mobile, in partnership with Google, introduced the first Android-powered mobile phone on Sept. 23 and tech pundits immediately hailed it as the next iPhone killer.

Developed by Google and the Open Handset Alliance, Android is a mobile phone software platform based on the Linux operating system. If the G1 is any indication, Apple might finally see some serious competition for the same turf iPhone has occupied for the past 15 months.

The G1 has plenty features to love, including a slide-out QWERTY keyboard, a dedicated search button and integrated Google features, like Google Maps and Street View. What’s more, thanks to the unit’s “accelerometers,” if the user turns while using Street View, the view on the screen changes to match the person’s movement.

It’s the handset’s integration of Amazon MP3 that has both music industry and mobile phone industry people talking. So far, Amazon MP3 has placed a distant second to Apple’s iTunes in the online music sweepstakes. But G1 could change that.

With the new Amazon MP3 application developed by Amazon for the G1, users can browse and buy just as easily as if they were sitting in front of their computers. Combine that with Amazon MP3’s no-DRM policy and the G1 / Amazon MP3 combination really looks like a contender for the cell phone championship.

And the price doesn’t hurt G1’s chances either. Arriving in stores Oct. 22, the unit will sell for $179 with a two-year voice and data agreement, compared with $199 for iPhone with an AT&T two-year service agreement.

“Increasingly, connectivity does not just mean a phone call, but rather access to the world’s information,” said Andy Rubin, Google’s senior director of mobile platforms. “With Android, we’ve opened the mobile Web not only for millions of users, but also to mobilize the developer community that understands the next most important platform in the world rests in the palm of our hand.”