I was amused to see this story — Music Industry Embraces an Online Future — talk about how the music industry is getting healthier with online music sales. The story is pretty much a fluff piece about how people are starting to buy music online, but the funniest quote in the article has to be this one:

“The subscription model will be incredibly popular once people understand it and get their heads around it. The difficulty is that it’s so radically different to what people have seen in the past. It’s not like an electronic version of a record store,” said Barney Wragg, vice president of Universal Music International’s new media division, Elabs.

The only people who don’t understand the subscription model are the music executives. All you can drink is a way of life in the US, from cell phones to long distance to Golden Corral. I commented almost two years ago when iTunes started up that they needed to move to a subscription model. Everyone assumed that original Napster service would charge between $5 and $20 per month. Boys and girls, XM offers subscription music service via satellite. Hello? Anyone home in the music industry?

The fact is that the music industry is doing everything it can to avoid the future. Ultimately we’re going to have music on demand services, paid by subscription, that we can carry around on whatever the iPod evolves into. This middle step of selling songs online for 99 cents is probably necessary and thankfully there are enough people willing to pay through the nose for worse service (here’s where you should insert my rant about how $10 per album for music is a rip-off without getting the atoms to go with the bits; for $10 you can own the actual CD and rip it yourself). But everyone understands the subscription model. If the music industry moved quickly, it would have avoided Kazaa and all of the other Gnutella spin-offs. But instead, they continue to move at a glacial pace, sticking a toe at a time in the water while everyone else continues to download music, eroding the possibilities of success in the future.

It pays to read k2.com. Not always, but definitely in this case. Just to refresh your memory, I posted an entry here about a class action suit against the music industry for price fixing called the CD Minimum Advertised Price Antitrust Litigation Settlement, urging you to sign up at their website. I was pessimistic, having seen efforts like this fail before, that any money was actually going to arrive as a result.

Boy, was I wrong. Just a day or two ago a check for $13.86 arrived in the mail, courtesy of the Attorney General of Virginia, Jerry Kilgore. This is what it looks like:

The note attached to the check reads in part:

Dear Virginia Music Purchaser:As Attorney General for the State of Virginia, I am pleased to enclose payment for your claim in the settlement of the Compact Disc Minimum Advertised Price Antitrust Litigation. The lawsuit was brought by the Attorneys General of 43 states and three territories and by counsel for Private Class Plaintiffs on behalf of purchasers of music CDs. In accordance with the terms of the court-approved settlement, payment is being made to music purchasers who filed a valid and timely claim.

Jerry W. Kilgore
Attorney General of Virginia
Well, thanks Jerry!

Well, duh. I wonder how long it took to figure that out. New.COM reports in this article that a report filed with Congress indicates that filtering out copyrighted or illegal content is technologically infeasible in a decentralized network. This isn’t rocket science here. The decentralized peer networks were designed specifically to avoid these copyright issues by not centralizing anything. To filter, the peers would have to communicate with a central server that maintained a database of prohibited content and, of course, none of the peer companies want to do that. Centralizing anything would make them liable for the content running on their “networks”, a decidedly bad idea.

Of course the RIAA points out AudibleMagic as a solution for this problem, but it’s not really. AudibleMagic sits at the ISP level and scans packets that fly by, essentially doing the same sort of content filtering that child protection software does to discover prohibited material. If the ISPs or certain enterprises want to get involved in this sort of filtering, so be it.

But in reality, AudibleMagic’s technology will work for, oh, about 10 minutes. I sure hope no one really invested much money in this company. How long do you figure until the peer networks start using SSL or other forms of TLS connections instead of unprotected ones? That’s the next logical step and then AudibleMagic is out of business. It’s trivial to set up arbitrarily encrypted connections between two end points. The encryption doesn’t even have to be that strong, just strong enough to make sure that companies like AudibleMagic don’t work.

If you really want “funny”, how about supporting connections on port 443? That’s the standard SSL port. Sure, probably a few people run web servers on the same box that they run Kazaa, but most don’t. Supporting port 443 for connections, with a fallback to the regular port will really foul up the works. Sure snooping sounds great until you’re snooping on ports that are also used for banking connections and credit card numbers and the like.

The only sane thing to do here is to end it. Canada has implemented a compulsory license with a tax on MP3 players (considering them recordable media). It’s time for the US to do the same.

The Register reports today that Steve Jobs admits that the iTunes is really a loss leader for Apple in a fascinating article. (Just in case you click through and notice the date, remember that it’s in European format — 07/11/2003 is 7 November, not July 11th.) So even though Apple made a big deal about on-line music purchases being the future of digital music, it turns out that all of the money goes to right back to the recording industry. Apple is at best breaking even, likely even losing money, all in the hopes of selling iPods.

The rest of the article is kind of a fun look at why Apple might be doing this (unclear at best) and a pitch for compulsory licenses (talked about earlier in my blog).