Supreme Court legalizes downloading music

Published: 04 October, 2011

The United State Supreme Court has refused an appeal that would have made downloading music an infringement of federal copyright law. Take that, Metallica!

The American Society of Composers, Authors and Publishers, or ASCAP, had been attempting to appeal to the Supreme Court an early ruling by an appeals court in New York that said that a downloaded song constituted a public performance of the song under federal copyright law. Attorneys for ASCAP were fighting to reverse that decision in hopes that they’d be able to collect additional royalties off of songs downloaded from the Web.

ASCAP had insisted that digital downloads were on par with public performances, which would thus allow copyright owners to receive compensation for each download. A federal judge and an appeals court had rejected that argument, however, and now the Supreme Court is also refusing to hear it.

According to the appeals court, “Music is neither recited, rendered, nor played when a recording (electronic or otherwise) is simply delivered to a potential listener.” US Solicitor General Donald Verrilli agreed with the appeals ruling and that just because a song was transferred over the Internet did not mean that it was being performed, reports Reuters.

Theodore Olson, a Bush administration-appointed solicitor general representing ASCAP in the matter believes otherwise. He argues that the earlier ruling placed the United States in violation of intellectual property treaties and other international agreements, says Reuters, but the Supreme Court said they wouldn’t bother to go over the appeal and issued no comment.

ASCAP, who has nearly 300,000 members, first lost the case back in September of 2010. In the last year, however, they have taken several routes in hopes of getting additional revenues for their clients that they say lose profits through digital downloads.

In the meantime, ASCAP members do indeed still receive revenue from downloads, just not the additional compensation that the group was hoping to get them. A mechanical royalty is offered to copyright owners through a separate body than that that handles performance royalties, which ASCAP was hoping to have applied to digital downloads.

Universal cuts CD prices to combat poor sales

Years late, Universal cuts CD prices to combat poor sales
By Chris Foresman

Sales of digital downloads have not been enough to make up for the decline of CD sales since its peak in 2000. Universal Music Group plans to soften the fall of CD sales by dropping prices across the board, to a maximum of $10.

The company plans to test lower prices beginning next month and continuing throughout 2010. Nearly all of UMG's CDs will priced between $6 and $10. UMG is hoping that increased volume will make up for the price drop, and the company plans to create more higher-priced "deluxe" versions for more hardcore fans.

"We think [the new pricing program] will really bring new life into the physical format," Universal Music Group Distribution president and CEO Jim Urie told Billboard.

Retailers have been clamoring for lower retails prices, with many believing that $10 is the magic number to spur sales. (I'll admit, I rarely buy a physical CD for more than $10 these days). A recent test from Trans World Entertainment showed that a $9.99 price point doubled CD sales in over 100 of its stores.

Forrester analyst Mark Mulligan thinks labels may have to consider pushing prices as low as $5 to further slow the decline of CD sales. "The CD is a dying music product format, but it has some life left in it because downloads haven't generated the format replacement they were expected to," he wrote. "With all previous music formats the successor format was firmly in the ascendancy by the time its predecessor was in terminal decline."

However, digital downloads won't ever generate format replacement. Music on CDs is already in digital format—if you own the CD already, there's no benefit in "replacing" it with a digital download. Furthermore, it will be hard to justify spending $10 on a compressed digital download over $6 for an actual physical disc that can be ripped into iTunes or any other media software in a matter of minutes, and can be done using lossless encoding (if so desired).

iTunes LP, thought by the record labels to help save the digital album from succumbing to single track downloads, isn't making much of a splash with consumers, either.

Effectively, what UMG is doing—and what other labels will do if they also decide that lowering prices will prop up dying CD sales—is giving consumers the expectation that albums should cost even less than $9.99. Because once consumers become accustomed to getting a whole album in physical form for $6, you'll have a much harder time convincing them to buy downloaded albums for more money later. Lowering prices on CDs will increase sales in the short term—good for labels because CD sales still account for about 65 percent of their revenue—but it will only slow its demise, and slow the uptake of digital as a primary format.