RIAA Cuts Ties To MediaSentry

Probably one of the more surprising news stories during the final weeks of 2008 was the Recording Industry Association of America’s announcement that it would stop suing suspected peer-to-peer music pirates and switch to a strategy focusing on cooperation from Internet service providers.

Now the trade organization has made another high-profile move in its war against music piracy by firing its hired investigators – MediaSentry, a unit of SafeNet Inc.

MediaSentry did much of the heavy lifting in the RIAA’s vendetta against file-sharers, including trolling the various P2P networks in search of illicit, major-label music. In fact, it was this very method of operation that raised legal questions regarding MediaSentry’s official status as an investigator, as well as whether the company was able to prove copyrights were infringed upon.

The legal status centered on the company’s investigative reputation, for many states require companies and individuals conducting investigations to be licensed private investigators. By the end of 2008, Michigan and Massachusetts had already ordered MediaSentry to stop performing unlicensed investigations, and South Carolina, Texas, Florida and New York were considering similar actions, according to Wired.

But not having private investigation licenses issued by states housing suspected music pirates was only part of the controversy surrounding MediaSentry. The company’s core practice on behalf of the RIAA – looking into P2P users’ shared directories, and, if found, downloading major label songs and presenting them as evidence in copyright lawsuits – was targeted by defense lawyers as not absolute proof that infringements had occurred.

Instead, defense lawyers claimed that such practices only proved that suspected pirates had shared music with MediaSentry investigators, according to the Wall Street Journal.

However, the Journal also reports the RIAA decided to drop MediaSentry several months ago, and says the organization did not offer a reason for doing so. Furthermore, WSJ reported that MediaSentry president John Desmond told the paper the company was winding down its evidence-collecting operation and would focus on other Internet projects, such as rating online entertainment sites.

But just because the RIAA has said it will cease suing suspected P2P copyright infringers, and just because it is cutting its ties to MediaSentry, doesn’t mean the organization will turn its back on online music piracy.

During the last few weeks of 2008 several published reports indicated the RIAA would try to work with ISPs, and perhaps adopt a “three strikes” system.

Under such a system, P2P users suspected of swapping copyrighted songs would first receive warnings that, if ignored, could lead to Internet disconnection. How the RIAA might prevent a disconnected P2P user from just signing on with a new provider has not yet been revealed.

Nor, for that matter, whether disconnecting someone without legally proving in a court of law that the person was infringing copyrights would be legal in itself.


Nielsen Explains 2008

The Nielsen Company released 2008 numbers based on its point-of-sale data collection operations by Nielsen SoundScan (music sales), Nielsen BDS (music performance) and Nielsen RingScan (ringtones), providing good and bad news for weary music biz execs working to shepherd their industry through the digital revolution.

Among the good news is the more than 200 million bump in overall music sales, encompassing units sold for albums, singles, music videos and digital track sales, with 2008 representing a 10.5 percent increase, or 1.51 billion sold compared with 2007’s 1.37 billion. This is the fourth consecutive year consumers purchased more than 1 billion music units, with each year since 2005 experiencing an increase over the previous year.

Digital tracks broke the 1 billion benchmark for the first time ever, with 1.07 billion sold in 2008, representing a 27 percent increase over 2007, when music fans purchased 844.2 million track downloads.

Digital album sales reached an all-time high for 2008, with 65.8 million units sold, a 32 percent increase over 2007’s 50 million.

On the gloomy side, overall album sales – albums and track equivalent albums – experienced an 8.5 percent decline from 2007, with 2008 resulting in 535.4 million sold in 2008 compared with 584.9 million sold in 2007. There was also an 8.6 percent decrease in online sales of physical albums, with 2008 figures showing 27.5 million sold compared with 2007’s 30.1 million sold.

In fact, 2008 wasn’t that great a year for album sales. Total album sales – CDs, CS, LP and digital albums – dropped 14 percent with 2008 showing 428.4 million units sold while 2007 resulted in 500.5 million sold.

Nielsen also points out the last week of the year resulted in several new digital track sales records. Digital track sales for the final days of 2008 surpassed 47.7 million, beating 2007’s 42.9 million sold for the last week of that year.

Digital album sales for the last week of 2008 also beat the last week of 2007, with 2.4 million versus 2007’s 1.9 million.
Record company executives will also remember 2008 as the first time a digital song broke the 3 million sales mark in a single year. What’s more, this happened not once but twice during the year, with Leona Lewis’ “Bleeding Love” and Lil’ Wayne’s “Lollipop” generating sales of 3.4 million and 3.2 million respectively.

The ladies continue to dominate the best-selling digital artist slot. In 2008 that honor went to Rihanna with nearly 10 million track sales, compared with Fergie’s 7.5 million track sales in 2007.

Vinyl sales also saw an increase. In fact, more vinyl albums were purchased in 2008 than any other year in the history of Nielsen SoundScan. Music fans purchased 1.88 million LPs in 2008, compared with just less than 1 million in 2007. The previous record for vinyl was established in 2000 when consumers purchased 1.5 million long-playing platters. What’s more, Nielsen SoundScan reports that two out of every three vinyl sales took place at indie record stores.

Speaking of albums, the best selling Internet album of the year honor goes to Metallica, with the band’s latest – Death Magnetic – generating 144,000 units sold via online commerce sites.


iTunes Changes Its Tune

Apple has announced its iTunes Music Store will begin selling some songs for only 69 cents – a 30 cent drop from the standard 99 cents per track. What’s more, the company also said it will begin selling all tracks minus any copy protection.
ITunes is one of the last major online music stores to drop digital rights management. One of iTunes most serious competitors – Amazon MP3 – officially launched one year ago without any DRM.

The announcement was made in San Francisco at MacWorld, by Apple marketing exec Philip Schiller, who also said iTunes is adopting a three-tier pricing strategy – 69 cents, 99 cents and $1.29, depending on which labels the songs come from.

This year’s MacWorld was the first in a decade without Apple CEO Steve Jobs delivering the keynote address, having turned that duty over to Schiller. In an open letter posted on Apple.com, Jobs cited a hormone imbalance that had been “robbing” him of needed body proteins, but also said he is in treatment for the ailment.

“I have given more than my all to Apple for the past 11 years now. I will be the first one to step up and tell our board of directors if aI can no longer continue to fulfill my duties as Apple’s CEO,” Jobs wrote. “I hope the Apple community will support me in my recovery and know that I will always put what is best for Apple first.”