Needless to say, for anybody reasonably knowledgeable about the downloading community, the notion that a sea change away from piracy had occurred earlier this year would seem highly implausible.  However, maybe Sweden was an isolated example, and the (likely) spread of such “graduated response” laws would ultimately lead to the first real downturn in file-trading since the heydays of Napster.  Sadly for the Economist and the entertainment industries, new evidence also came out on Friday that demonstrates just how misguided and premature any claims of victory over piracy really are. Enigmax at Torrentfreak cites a new report from Swedish Internet backbone Netnod, that shows there was indeed a very large dip in Internet usage overall in Sweden in April, as much as 30%.  Whether or not that decrease can be ascribed entirely to the change in law regarding downloading cannot be proven, but in any case, the latest figures show that the drop in Internet usage was wholly short-lived.  By the end of October, Swedish Internet traffic was completely back  to pre-April levels, and in fact, may well be even higher.  Has the initial scare over the harsher laws receded to the point that they are now being ignored?  On the other hand, seasonal effects have been noticed in file-sharing before, with decreases in summer months and increases in the fall corresponding with the return of young people to schools and universities, and that could be in play here as well.  In any case, if recording industry executives were about to start celebrating their long wished-for end to mass copyright infringement, they should put the champagne back on ice for the time being.

There’s been the odd rumour here and there that Microsoft is colluding with copyright holders from time to time. One rumour suggested that Longhorn, now known as Vista, would not play unlicensed content. Of course, rumours like that eventually fell apart sometime during the release of the OS. This is what makes the notion that Windows 7 is designed for piracy.

The report comes from Wired via CNN where the author put together 7 reasons to use Windows 7. One of the reasons to switch to Windows 7? Piracy will now be a breeze:

Yarr! We know there are plenty of you out there downloading pirated digital booty, especially in Windows land. But it’s never been convenient to be a pirate compared with being a paying customer. For example, if you’re a legitimate buyer purchasing movies off iTunes, you can easily stream your media to your legitimately purchased Apple TV. If you’re a pirate, you’d have to go through roundabout programs and hardware to re-create the experience.

Windows 7 is an OS practically made for pirates. Want to display your movies, photos or music on your TV? Bam! Windows Media Player will do that out of the box if you have a Wi-Fi enabled TV, or an Xbox. No extra programs to install: Windows Media Player seamlessly communicates with your Wi-Fi device to display your illegal content in all its glory on your fancy HD TV.

And sharing media is easy, too. Want to download all of your brother’s music? Bam! HomeGroup, an easy networking feature included in Windows 7, will make that super easy between computers running the OS. Immediately upon plugging in to your network with Ethernet or Wi-Fi, HomeGroup will ask if you wish to join the group on the network, allowing you to set up easy file sharing in minutes.

It’s more than likely that this reason is a little tongue and cheek, though it’s doubtful groups like the RIAA would be laughing. Still, some Windows supporters in the past have suggested that Microsoft continues to dominate in the OS market, in part, thanks to not actually proving the rumours that there would be a form of trusted computing that would quash all forms of unauthorized content.

It’s unclear how Microsoft would actually handle the label of Windows 7 as being a Piracy Operating System, but content being shared between computers isn’t an entirely new thing for Windows given the shared directory has been part of a Microsoft Operating System for quite some time now – not to mention the whole concept of networking computing.

Regardless, it’s hard not to see the humour in the idea that Windows is “made for pirates”. We can already see the sales being higher than expected already.

Have a tip? Want to contact the author? You can do so by sending a PM via the forums or via e-mail at drew@zeropaid.com.

For the quarter ended March 31, the entertainment conglomerate earned $931 million, or 44 cents a share, up from the $733 million, or 37 cents a share, a year earlier.

During a conference call, chief executive Robert Iger refused to break out a measure of the company’s digital revenue, garnered from its Web sites and sales of movies from Apple’s iTunes.

Iger, however, did offer an update on the number of digital media titles Disney sold through the iTunes store. Thus far, he said, iTunes and Disney have combined to sell around 23.7 million TV episodes and 2 million movies.

As a new round of talks ramp up this month, however, Jobs has opened the door to higher prices — as long as music companies let Apple Inc. sell their songs without technology designed to stop unauthorized copying.

Jobs contends that would “tear down the walls” by allowing consumers to play music they buy at Apple’s iTunes store on any digital music player, not just the company’s iPods.

The iPod/iTunes combination accounts for about 70 percent of all digital music sales and portable media devices, according to market studies. But some industry analysts believe that we’re only at the beginning of the digital media age and that changes are coming that could cut into Apple’s dominance.

For example, nobody is quite sure what the impact will be as DRM (digital rights management) for purchased music fades away. One major record company, EMI, has said it will allow online stores such as the iTunes Store to sell DRM-free downloadable music. Other major labels are expected to follow suit.

Another trend that could change the digital media scene — and Apple’s dominance of it — is new models for subscription music services. So far, subscription services such as Rhapsody and Napster, in which users pay a monthly rental fee for downloading as much music as they want, have not proved popular. However, some claim that subscription service business models are evolving and may yet attract lots of new users.

Peter Gabriel, tech entrepreneur Steve Purdham and finance guru John Taysom have teamed up to create a new technology and music venture site called We7 that will offer ad-supported, DRM-free, MP3 downloads.

Each track will container a 10 second or less advertisement, the proceeds from which will go towards paying “the artists, musicians, actors, filmmakers, comedians and bands.”

“Advertising attached to the music will ensure that artists receive royalties for making their songs available, whilst consumers will receive and share DRM-free music legitimately,” notes a press release on the site.

The ads will apparently be placed on the front of music tracks and albums based on a consumer’s personal demographics such as age, location and gender and can be extended into personal preferences. Luckily though, the ads don’t remain attached to downloaded MP3s forever, for after a period of time users will be able to have an ad-free version of the track.

For those that don’t want to hassle with ads, users will have the option of purchasing ad-free tracks as well.

We7 will most likely be geared towards independent and upcoming artists as I doubt any of the record labels are likely to embrace this new format. They like guaranteed revenue, and aren’t likely to offer content to an unproven venture.

The site sort of hints at this, noting that “Only if enough members of We7’s TasteMaker community feel that a new band or artist deserves to be published will that artist ‘win’ the right to be downloaded thus ensuring the quality of music published.”

Users will be able to become “TasteMakers” and vote on whether or not an artists should be offered for download. But, what’s cool about if they make the proverbial “cut” is that any revenues earned on the sales of ads embedded in their music downloads goes directly to them and not a music label. It’s another chance to support artists and bands whose music you appreciate without lining the pockets of studio execs.

“We7 provides artists – even across the more experimental or minority genres – with the opportunity to build a new source of income from their music. Ad funded downloads are the way to provide free music to the consumer without depriving musicians of their livelihood,” comments Peter Gabriel, musician and co-founder.

But, can it succeed against the 800-pound gorilla in the room that is illegal file-sharing? Will people really hassle with ad-filled content when it could just as easily be acquired without it? Maybe, just maybe, I think it can.

I’m starting to think that the future of digital music downloads really will be this sort of ad-supported business model. Now pirates will always be pirates, and so anything short of free, with no ads or DRM, will ever lure them back to civilization. But, for the vast majority of people out there, the ones who actually fear getting caught using P2P or file-sharing programs and so use iTunes or other music download sites, the potential is enormous.

“In the can’t pay won’t pay digital world where consumers expect ‘free’ content, the idea of WE7 is simple: artists get paid, music fans get free downloads and advertisers get heard. Also under the battle cry of ‘Don’t Steal it – We7 It’, the We7 model removes a key driver of music piracy: cost, ” adds Steve Purdham.

Teenagers and college student kids, the record industry’s “best customers” are the ones who would probably embrace it the most. They have limited financial resources and use computer networks that are usually closely monitored for illegal file-sharing activity. Free tracks for having to listen to a quick “radio-esque” ad wouldn’t be a bad trade off.

For those that are older, and have more financial resources at their disposal, buying tracks will probably be a better option than wasting precious free time listening to ads.

All in all though, at least they’re not afraid to try out new music download models, something the RIAA will never be falsely accused of.

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Perhaps in another bid to assuage European anti-trust concerns, Apple sent out a brief memo to its content partners that starting next month they will be able to offer DRM-free music and music videos.

The memo reads:

Many of you have reached out to iTunes to find out how you can make your songs available higher quality and DRM-free. Starting next month, iTunes will begin offering higher-quality, DRM-free music and DRM-free music videos to all customers.

Now whether or not they will have to charge a 30 cent premium as is the case for EMI’s DRM-free selections isn’t mentioned but, I’m sure they won’t be rolling out the door for the standard 99 cent fare.

Either way, being that iTunes is reported to control some 70% of the digital music download market the news is welcome to say the least as it may spur other music download sites to follow suit and further convince record companies that the future really does lie in DRM-free offerings. Or perhaps it will be the Europeans who continue to force their hand due to objections over the way that Apple’s iTunes DRM locks users in and prevents them from playing content on other portable music player devices.

via [MacRumors]

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Record labels have been supposedly asking Apple to introduce a music subscription service to its iTunes digital music download store in an attempt to increase profits but, Steve Jobs is adamant that “customers don’t seem to be interested in it”.

Apple is gearing up for contract renewal negotiations with the major record labels over the next month and you can be sure that Jobs will be pressured to increase their share of profits.

The record industry has long been frustrated that Apple has reaped most of the profits of the rising digital music market via sales of its popular iPod. To date they have earned only modest royalties from digital music sales because most of the songs on iPods and other portable music devices are alleged to be obtained by illegal downloading.

Now how you can be angered by the fact that a USER is “misusing” an electronic device and expect to be compensated by its manufacturer, especially when in the meantime they are doing you the favor of having your content locked down tight with DRM, is beyond me but, as usual it seems like music labels are bent on killing the proverbial goose that’s laying the golden egg.

Hoping to increase profits to offset decreasing CD sales, many in the music industry hope iTunes will consider offering a subscription-based iTunes so that record companies can make more money from recurring income. Universal and other labels believe a subscription service could be more lucrative for them than iTunes standard 99 cents per track model, because it would increase consumption of music. It would also entitle the labels to a share of monthly payments, in addition to small licensing fees each time their songs are played. But, Jobs, to his credit, says consumers don’t want it.

“Never say never, but customers don’t seem to be interested in it,” Jobs told Reuters in an interview after Apple reported blow-out quarterly results. “The subscription model has failed so far.”

“People want to own their music,” he said.

Exactly. Why on earth would people pay money to never actually own anything? I guess it could be offered, and then those who like the model could then have the option of using it instead but, I think it may prove too difficult to try have to simultaneous iTunes music download systems.

Considering that just about every subscription music service such Napster, RealNetworks’ Rhapsody, and Yahoo’s Y! Music Unlimited have for all intensive purposes failed, I think that Jobs is smart enough to realize that consumers just don’t like it. They want to actually own what they dish out cash for. It’s a pretty crazy concept I know but, considering we already have to rent so many other media offerings like cable TV, internet access, satellite radio, etc, etc, people want to own something for a change if possible.

The battle between Jobs and the music labels is about to begin again, and this time I just hope that he gets some concessions regarding DRM. I guess we’ll just have to wait and see.

By the way, if you get a chance, there’s an interesting profit breakdown for iTunes over at AppleInsider that offers a curious glimpse as to who’s getting what. After all is said and done, it looks like Apple is getting about making about 10 cents per download.

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Based on per-song cost estimates, the ubiquitous iTunes service generates an operating profit of at least 10 percent, and possibly as much as 15 percent, according to PacificCrest’s Andy Hargreaves. The analyst on Monday released a detailed report on the subject, in which he informed Apple investors that the economics of iTunes could soon serve as a boon for the company’s bottom line.

“For each $0.99 song, we estimate that Apple pays $0.70 to major labels, which own over 85 percent of the market, and $0.60 to $0.65 to independent labels, which drives an average price per song of approximately $0.69,” he explained. On top of that, of course, are Apple’s network fees, transaction fees, and general administrative expenses associated with operating the iTunes Store.

Hargreaves calculated the network fees at $0.05 per song, which includes the delivery fee, and the hardware and software to facilitate delivery. “Operating expenses are likely less than $0.05 per song, based on the relatively small number of employees we believe work on iTunes,” he wrote.

How does Apple, which sells music titles for 99 cents each, compete with free music downloads on peer-to-peer networks? Do the two approaches to distributing digital content complement each other? What can the music industry, which aggressively fights p2p downloaders, learn from Apple’s experience?

Those kinds of questions attracted the research attention of Ramon Casadesus-Masanell, a professor at Harvard Business School, and Andres Hervas-Drane, a PhD candidate in Economics at the Universitat Autónoma de Barcelona and a Visiting Fellow at Harvard University. Their working paper, “Peer-to-Peer File Sharing and the Market for Digital Information Goods,” is among the first efforts to study the interactions of two entirely new and radical business models operating in the same market.