Fast Breaking News in Digital Music

Record Label TVT Settles Out of Court with Napster

Separately....

...IBM Announces New Secure Digital Rights Format
...Executive Director of SDMI Calls it Quits

The New York-based independent label announced it has decided to work with Napster in support of the new membership-based business model the company is developing through its strategic alliance with Bertelsmann AG, the German media giant, parent of BMG Music. Under terms of the settlement, TVT will allow the master recordings and musical compositions it owns or controls to be used for file sharing on the new Napster service.

TVT Records said it will allow recordings by its artists -- including Snoop Dogg's Doggy Angels, XTC and Nothingface -- to be used by the file-sharing service. In addition, TVT founder/president Steve Gottlieb has agreed to act as an advisor to Napster to develop a new business model that compensates musicians, songwriters and record labels for their work.

Steve Gottlieb expressed his support of the Napster file sharing model. "There's no real world equivalent -- it is an unparalleled way of experimenting, sampling, tasting, exploring and broadening your musical horizon. And anybody who's in the business of making music . . . has got to support this."

"I am afraid that copyright owner's resistance to finding workable solutions with Internet music providers may result in consumers, artists, and the industry itself ultimately being harmed," Gottlieb said in a statement. "The future Napster offers the opportunity to reach music fans in unprecedented and as yet unimagined ways. It is high time that the industry embraces a service that the public has so emphatically said they want."

German media conglomerate Bertelsmann AG was the first to break ranks with the recording industry last October and settle with Napster. The other music labels suing Napster are Warner Music Group, Sony, Universal and EMI.

Chiariglione Resigns as Executive Director of SDMI

The history of SDMI is very troubled. SDMI's goal was to replace the mp3 standard that Chiariglione himself had helped to develop with a secure format that would stop copying and trading of music on and off line. Various consumer groups and Internet Rights activists immediately lined up against the effort.

Since creating specifications for digital music players two years ago, the SDMI has nothing to show for its effort but broken deadlines and a messy public relations disaster.

Last year, SDMI announced it's members had developed a several technologies that would form the basis for its proposed copyright protection mechanism. SDMI offered $10,000 to any "hacker" who could break the encryption codes. Unfortunately, when they did, the SDMI denied the crack, then later claimed only a partial hack had occurred. And excellent review of the controversy can be found here: The SDMI Hacker's Challenge.

In breaking news, two European computer students have also announced a successful hack of the SDMI copy protection technology. Complete details can be found on the student's website, cleverly named DeSDMI.

The WIZARD believes that all this controversy has tarnished the SDMI and Chiariglione. But in fairness, the SDMI was always an example of a large team trying to build an elephant. Every member, be it the record companies, the electronics manufacturers or the computer manufacturers, had a different agenda and a different approach to the problem. No wonder IBM, working alone, has come closer to developing a true copy protection strategy.

SDMI is now imposing on itself a deadline of June for the "final" selection of its secure technology — a target date that would give consumer electronics technology manufacturers a shot at getting compliant products on the shelves by Christmas.

IBM Announces a Copy Protection Strategy

Oh, and by the way, it is also capable of curbing online music piracy.

The news and technology media quickly jumped on this small notation near the bottom of the press release. Suddenly IBM's big news was that it is prepared to do what the SDMI has failed to accomplish after years of research: prevent multiple generations of copies from flooding the market.

According to IBM, music fans can still download tunes using the services of Napster or Gnutella, and make copies to share with friends. But, the embedded "secret weapon" code will allow music companies to place controls on those copies. Subsequent copies -- copies after the first copy -- will now carry built-in restrictions. For example, IBM's technology could limit second copies to a one-time listen, or maybe a 30-second snippet.

While IBM stopped well short of calling the technology "hacker-proof," they none-the-less believe it will provide the kind of copy control music publishers desire. And, IBM claims it is the most secure copy protection scheme on the market.

Even if Las Vegas gave high odds on the SDMI technology being ready by June, the WIZARD would advise you to bet against the consortium. The "elephant" will never be finished. But the WIZARD does believe that IBM or perhaps the Napster/Bertelsmann joint venture will create a useable strategy that will allow artists and composers/writers to be compensated for their labors. But the TVT move does give consumers hope that access will be simple, easy and inexpensive.