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Rory Cellan-Jones

Sky and Universal v iTunes and file-sharers

  • Rory Cellan-Jones
  • 22 Jul 08, 16:45 GMT

I spent half an hour this morning in the rather impressive office of a CEO. It was different from the usual set-up - there was a guitar in one corner, a keyboard in another, and the office's owner told me that Amy Winehouse had been sitting where I was just a while back, belting out a few songs for him.

Amy WinehouseThe office belonged to Lucian Grainge, the chairman and chief executive of Universal Music Group International. Also present was Mike Darcey, chief operating officer of BskyB, who confessed that his own office on Sky's charmless industrial estate in Osterley was rather less impressive.

Still, it's Mr Darcy whose company is the real powerhouse in the deal that the satellite broadcaster has just signed with Universal to launch a new music service. For years, record industry moguls have been telling Internet Service Providers (and don't forget Sky is now one of Britain's fastest growing ISPs) that they can have a lucrative stake in the music business - and presumably get to meet the likes of Amy Winehouse - if they only do something to crack down on illegal file-sharing.

Now Sky has won the reward - access to Universal's huge catalaogue - without apparently paying the price. Its joint venture with the music label is being touted by the two firms as "a world first" - a susbscription service with all-you-can-eat streaming plus a set number of DRM-free downloads. But Mr Darcey was being very coy about whether Sky would return Universal's favour by sending its broadband customers letters warning them of the error of their file-sharing ways - as Virgin Media has done. They were "talking to governement and the music industry about the way forward" was all he would say.

Still, it's clear that this, like many other new music services, has two targets - the file-sharers and iTunes. BskyB reckons it can succeed in denting Apple's dominance where so many others have failed. As Mike Darcey points out, his company is in one in three UK households, through its TV business, and has plenty of experience in running subscription services. What's more it's got far more marketing muscle than any of the existing music subscription services - so Sky's nine million customers can expect to be bombarded with offers.

But there are big questions yet to be answered. We don't know what price Universal/Sky customers will be asked to pay for their music, and we are still not clear exactly when the service will launch. By the time it's here, Nokia's "Comes With Music" (in which Universal is also a partner) may well have launched, offering another eye-catching way of getting hold of music legally without iTunes.

As for the file-sharers, the argument that all they've just been waiting for a nice new legal service to come along is wearing a bit thin. The digital music business seems now to have achieved some sort of equilibirum. Many of its customers - especially the younger ones - have fallen into a pattern of getting most of their music by file-sharing, while buying the odd track from iTunes. Disturbing that equilibrium is going to be tough - but BskyB and Universal have a better chance than most.

Comments

  • Comment number 1.

    As for the file-sharers, the argument that all they've just been waiting for a nice new legal service to come along is wearing a bit thin.

    Not really. In fuller terms the argument has always been that people have been waiting for a legal service that:
    - Doesn't cost as much or more than a physical CD,
    - Doesn't lock you to a particular platform or player,
    - Doesn't risk losing your music collection if the supplier dies (or simply changes their mind)
    - Doesn't put you through more hassle than filesharing,
    - Doesn't take away your right to sell on your property when you've finished with it.

    It remains to be seen whether this will be such a service, but it's nice to see the music industry their first baby steps towards not treating their customers as assets rather than as adversaries.

  • Comment number 2.

    Ahem. 'taking their first baby steps', of course.

  • Comment number 3.

    Once again Sky is allowed to run its empire untrammelled.

    If this was any other company setting up this service on top of the empire it already has then the Government would be intervening like a flash.

    Oh I forget, Sky is owned by News Corp.

    Silly me, thinking the Government would intervene.

  • Comment number 4.

    In fuller terms the argument has always been that people have been waiting for a legal service that:
    - Doesn't cost as much or more than a physical CD,
    - Doesn't lock you to a particular platform or player,
    - Doesn't risk losing your music collection if the supplier dies (or simply changes their mind)
    - Doesn't put you through more hassle than filesharing,
    - Doesn't take away your right to sell on your property when you've finished with it.

    All true, and a choice of bitrates would be nice as well

  • Comment number 5.

    A desperate bid from Sky who's previously desperate bid to compete with BT and Virgin Media by purchasing and running its own internet service is flopping like a giant pancake in a heat wave.

    Like most of Sky's projects, I fully expect this to flop, just like Sky's Go!Vision on the PSP.

    People complain about BT all the time (and are warranted to do so, they are an aweful company) but Sky's track record is quite a bit worse than BT.

    Give it 6 months and the prices will be stupidly sky high (pun intended) and the download speeds will be aweful.

    Not to mention: if Sky Broadband goes completly belly up, this service will roll with it.

    I think the fact that its Sky will be reason enough for quite a large amount of potential customers NOT to use this service. Universal would have been wiser to have gone with a broadband company with less of a reputation.

  • Comment number 6.

    The only software that synchronises with an iPod (officially) is iTunes. The number one MP3 Player in the world is the iPod.

    People will still use iTunes. Apple make a healthy profit selling iPods, much more than sellling tracks on the music store.

    This might succeed, but if it does I think it'll only ebb away at iTunes' competitors, I don't think Apple will lose much sleep over this. Besides, the App Store (part of iTunes Music Store) is bringing in a tidy profit for them right now.

  • Comment number 7.

    "BskyB reckons it can succeed in denting Apple's dominance where so many others have failed. As Mike Darcey points out, his company is in one in three UK households, through its TV business, and has plenty of experience in running subscription services"
    Well yes, Sky may have one in three households but in my house and I am sure I am not the only one, the sky subscription is not without its flaws and problems. There have often been problems with our box and also on occasion, with the service provided and when the problem was finally solved, it was usually after too many phone calls and sky finally admitting to there being a problem. I myself don't want that so-called service when it comes to music and I certainly don't want to pay a free for streaming music and no doubt a surprisingly small "set" of DRM free music.
    One of the reasons why we still have sky is because the competition is quite poor when it comes to the channels available whereas this is not the case in the music download market. I would be very surprised if this does 'dent' apple's stake in the market. I however, will not be using sky as iTunes is extremely easy and relatively hassle free.

  • Comment number 8.

    The on-going low bit rate and therefore low quality sound for music downloads will inevitably be perpetuated with the BskyB / Universal collaboration.

    There is no good technical reason why CD quality music downloads cannot be streamed by BskyB / Universal, but the commercial prerogative of offering a 'competitive product' to iTunes (et al) will, I am sure, prevail.

    Am I alone in believing that the music industry is going to the dogs, to a large extent, due to the low quality music offered through MP3 downloads; and no CD quality alternatives from the major labels?

    Streaming into the home and storing music on a server, or PC allows the larger 16 bit CD quality files to be stored with ease. When will the buying public wake up to the fact that they are being short changed?

  • Comment number 9.

    When all these tie-ups that get announced, I cabn't help wondering what happens when you want music from a particular artist who isn't signed to (in this case) Universal. Are you expected to enter into a different tie up with whoever Sony are in bed with?

    I actually don't mind paying for music, it's just the amount charged that gets my goat, and #4 has highlighted a good range of issues that need addressing.

    The industry needs to understand that the good old days are over and come up with other ways to make money. The sooner it learns that you can't put the file sharing genie back in the bottle the better.

    Otherwise, people will just carry on using P2P or cheap Russian sites and they won't get a bean.

  • Comment number 10.

    File-sharing is legal. Some people breach copyright by exchanging files that they don't have permission to share but that doesn't make file-sharing per se illegal.

    There are already several good services that allow you to stream music (last.fm, pandora, calabash, etc.), this seems simply to be a new competitor in the market.

    And their idea of competitive seems a little warped - why limit customers to a fixed number of downloads when they can already make unlimited purchases through online stores? Assuming, of course, that Universal *wants* to sell their music and have made it available through other online outlets as well...

  • Comment number 11.

    One day the recording industry will realise, like some bands are, that the days of album sales are dead.

    Give away your recordings, in order to promote your much higher profit making tours. A percentage of that money then goes to promoting new artists and producing new recordings.

  • Comment number 12.

    I don't know what the complaints about Sky Broadband are for Post #5, but I've found it to be Sky's singularly best service they've ever had.

    The other services, Recording from mobile, Sky Anytime on the PC etc, are all a convoluted mess, with websites that never let you login correctly and are always broken... but the broadband service itself is a great success overall, and is vitally important for Sky's IPTV future. I doubt that it'll "flop".

    However, this idea is fatally floored. It just won't have any traction and will quietly vanish in a year or two's time. Apple are the unstoppable juggernaut who will only be stopped once a company can agree a deal with record labels to give us cheaper music, that reflect the lower overheads, and give us a true choice of encoding types, bit-rates, etc.

    The sale of music itself is going to die eventually, replaced by tour revenue... Unfortunately the music industry has always had this arrogant way of ignoring consumer demand... and the bands are realising this by giving away free music in newspapers, and signing deals with concert promoters.

  • Comment number 13.

    To me its obvious why people still dont like legal digital downloads:

    Imagine a world where CDs only played on Sony or Apple CD players, and depending on what shop you buy it from, the quality was good or bad. You couldnt lend they to anyone, sell them on when you are bored of them and at anytime the company that sold you the CD goes bust or stops selling CDs and then the CD stops playing. And to make matters worse, even though this media has far more restrictions that what was before, we are asked to pay more for it!

    Thats why I dont get many albums via digital download yet. Make it like the experience of real CDs and Im interested as long as it no more expensive than a CD.




  • Comment number 14.

    Why is it that after all these years people still don't understand how iTunes works.

    a) iTunes works on any PC or Mac anywhere in the world
    b) You can import music from any CD or any mp3 file from another music provider as an mp3, AAC or wav file.
    c) tracks bought from the iTunes store are (nearly) always in an encrypted AAC format, but by burning these tracks to CD you can import them back as mp3 and play on any player you like (not just an iPod).
    d) you can up the bit rate for any imported track right up to CD quality, if that is what you want.

    iTunes is successful because it's simple, beautifully designed, completely integrated and very flexible in the way you organise music.

    There are restrictions to the music you buy in the Store, but how many devices does anyone actually need, and anyway, if for some reason you want to play your music on a thousand players, the restrictions are easily overcome.

    Universal has been butting heads with Apple for years, but all they succeed in doing is restrict their own market potential.

  • Comment number 15.

    newstevie:

    Indeed you can 'up' the bit rate for imported files by re-encoding, but they won't sound any better than they did originally! (In fact probably worse!)

    The best bet is to rip from source (CD) and choose your preferred bit-rate at the initial stage.

    A high proportion of users listening on MP3 players or mobile devices don't require the high-fidelity and larger file sizes of higher-bitrate or uncompressed sources. Although there's no reason why the Music stores can't offer a niche high-bitrate service for true audiophiles.

 

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