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Music industry: 'We'll make you pay for downloads'

Record labels are at last ready to consider using the Net to deliver content. The question is--how to make money off it?

With the film and music industries at last ready to consider the idea of using the Internet to deliver content, the question is--how to make money off it?

The need for new business models was expressed by many speakers at this week's Westminster Media Forum on intellectual property in London, though no consensus was reached on just what that model would be.

The record labels are arguably more ready than their movie-making counterparts to accept downloading as a broadcast medium, if only because music files are smaller than video and therefore more suitable for even today's broadband speeds. But they've made their share of mistakes--especially in taking so long to accept new technologies.

Andy Heath, managing director of 4AD, said at the conference: "If the record labels had embraced the original Napster, we may not be here...but they didn't and we are."

Given the current situation, Heath added: "It's incumbent on the music industry to allow customers to download (songs) but to find a way to make money from it."

Legal online sales are seen to be growing rapidly, with PricewaterhouseCoopers predicting they'll make up 11 percent of the global market by 2008.

As for how music will be sold in the future, Heath and other speakers agreed the practice of paying for content at the "point of delivery" will likely go away, with music delivered on-demand to a number of devices, including mobile phones.

Yinka Adegoke, deputy editor of New Media Age, proposed a new model whereby "funds from music (sales) could be put into one pot that's shared by telecoms, ISPs and music makers".

Anthony Lilly, managing director of Magic Lantern Productions, stressed the need for content developers to create business models "where we add value" and thus give consumers an incentive to pay.

Digital rights management (DRM) systems are expected to be the technology that will facilitate for-pay online content, as they allow content owners to control the use of their music or video and make sure copyrights are not infringed.

Stephen Gale, CTO of BT Rich Media, said the benefits of online content delivery with DRM include the increased amount of content available particularly in niche areas, increased control over content and close one-to-one relationships between the publisher and the consumer.

Yet several speakers shot down the idea that these systems were the be-all-end-all solution for online content.

Fran Nevrkla, executive chairman at Phonographic Performance, said: "Good DRM is not the answer because as soon as you develop (a system) some smart aleck" works around it.

Andy Cox, open-source developer at Red Hat, added: "DRM will always be buggy and will always be compromised."

Piracy, of course, is the thorn in the side of digital content businesses. Content publishers and creators at the forum stressed the need to temper the "policeman mentality" displayed by the music industry thus far and look for fair solutions amenable to all parties.

Magic Lantern's Lilly said content producers need "to appeal to people's self-interest" instead of slapping them for violating copyright laws.

4AD's Heath added the best way to change copyright law would be to find something that respects consumers and that they will comply with voluntarily.

BT's Gale pointed out the need for new content types as well as business models for online delivery to take off, saying that "if we clamp down too much (with copyright laws) we could stamp out the industry before it's started."

Sylvia Carr of reported from London.