In the 1997 film Men in Black Agent K (Tommy Lee Jones) presciently forecast today’s digital media conundrum when he inspected a tiny playback device sourced from aliens: “Guess I’ll have to buy The White Album again.” Any iTunes owners who try to play a download on a non-Apple MP3 player discovers that they need to buy the same song for each device — Rhapsody, Zune, or mobile phone. The conventional wisdom has been to blame Apple for taking a proprietary approach to the iPod-iTunes bundle, a melody taken up by several European countries in court. This week Apple’s Steve Jobs said “au contraire” to the overseas regulators. In a long statement titled Thoughts on Music, Jobs contends that Apple is not to blame. Instead, he points the finger at music publishers and their insistence on digital rights management (DRM) to protect their catalog of assets. He points out that most iPods are full and that only 3% of the songs found on them were purchased through iTunes Music Store — the implication being that DRM does not prevent unauthorized distribution, and that lack of DRM on CDs creates an unequal playing field for companies selling songs online. He wants people to stop bashing Apple and concentrate their energy on persuading music labels to change their policies. In addition to troublesome DRM schemes, we see other critical issues for international music hounds. Take a look at online stores in other countries and you�ll find great music such as Rosso’s song “Hitogoroshi” — not available outside Japan even though it is covered by DJs posting in the U.S. But try to buy on those sites — or try buying American folk music on a U.S. site from overseas — and you’ll find the sites can’t license to you because of geographic restrictions. Stores such as Apple’s must ink distribution agreements and report royalties on a country-by-country basis, effectively limiting online purchases. Although copyright laws got some modernization in the U.S. Digital Millennium Copyright Act in 1998 and the EU Copyright Directive in 2001, no updates have been made to regulations and business norms associated with music recording. For instance, writer/publisher mechanical royalties, recording-artist mechanical royalties, and so forth (click here if you’re interested to learn more). The business strategies for globalization traditionally employed by music publishers arose in the 1700s, and have evolved slowly since then. The recording business “solved” its globalization challenges in the 1920s. Today, foreign agents and sub-publishers still manage the licensing and collect the fees in each country. In the software business, this would be equivalent to Microsoft and Oracle still operating without in-country subsidiaries. For this reason, labels dole out distribution rights separately for each country, putting up legal, administrative, financial, and technical hurdles that are daunting to a company like Apple, and out of sight for newer digital distributors such as last.fm and riffin.com. What does this mean for Steve Jobs? It means there’s no such thing as global distribution rights for recorded music, and solving the DRM problem will still leave the online music retailers shackled with antique regulatory restrictions. Each country has its own tangle of parties fighting for a piece of the pie. The business logic to solve this is conceivable, but not practicable, even for companies with resources like Apple’s. It’s up to the labels (and yes, they could use a nudge from regulators). So depending on what country he transports into, Agent K will not only have to buy The White Album (again), he’ll also need the right kind of credit card, and an IP address that proves he is really in that country.
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