The legitimate paid download market has not succeeded in fighting off illegal alternatives. Nor does it show any signs of doing so anytime soon. Hence the shift of focus towards free legal alternatives such as MySpace and Comes With Music (and before anyone tells me not to call CWM ‘free’, even Car Phone Warehouse stated it was ‘free’, and for that matter ‘unlimited’, on a TV ad this week).

Perhaps the Beatles going digital is all that's left that’s interesting to write about the paid download sector now that the interesting stuff is happening elsewhere and that DRM-free is taking ludicrously long. Whatever the reasons, if iTunes can eventually boast that it is ‘the place to download the Beatles legally online’ it draws further, unwelcome distance between itself and the more youth focused alternatives. Sure, you could argue that this would represent smart segmentation of the online audience. But it’s not in anyone’s interests that kids only download for free, no one’s interests except for those of the kids of course.

And don't forget to join the 'Music as Free' debate at Music Industry Blog

The 17-years-in-the-making album drops on November 23 -- probably -- as a Best Buy exclusive, and Dr Pepper has 23 flavors. (Not counting prune.) You can hear "Chinese Democracy" early at MySpace.

Music Mistakes, Myths and Misconceptions. Part 1: File Sharing

Music Mistakes, Myths and Misconceptions. Part 2: Ad Supported

Music Mistakes, Myths and Misconceptions. Part 3: Subsidized

That's a sweet deal, but will likely appeal primarily to the same digital music aficionado customers who've always had a spot in their hearts for subscription services. Those high-spending, digitally active music fans represent about 15% of the US online adult and teen population -- around 26 million adults and 3 million teens. About 2-3 million people subscribe currently.

I asked Microsoft if it considered just cutting the price of the service, and execs said, sure, but that wouldn't get over the "rental" hump. I also wondered if the model can be profitable. On-demand music subscriptions can be, if customer acquisition costs are managed, but 99-cent singles are only barely profitable at scale. Microsoft answered that the music biz is all about scraping out a few points of margin from multiple revenue streams. Okay, but subscriptions, niche though they are, are one of the few places where there might be a decent margin for the service and the rights holder. And Microsoft still hasn't done much about advertising revenues.

Microsoft's TV campaign features artists like Common, Afrika Bambaataa, and Kings of Leon and is focused on national cable with a few primetime network spots. Its theme is turning your PC into a music discovery machine, and is a move towards Microsoft's new positioning around "Zune-powered experiences" across multiple "tuners." That is, not just MP3 players, but PCs, phones, Xbox, etc.

UPDATED: Sony BMG is onboard

Note: my colleague Ian Fogg points out that I inferred in my previous post that SourceForge are a developer when they in fact a developer platform.

Under newly revised French law the US companies can be tried in the France as their applications have not implemented filtering mechanisms to block out copyrighted material.

A couple of arguments are being leveled at the SPPF. The first that these applications aren’t designed for copyright infringement. It’s not the fault of the developers that they are being used as such. This argument of course has been since the original Napster trial. I’m sorry, but it just doesn’t wash. However much there is legitimate usage, the vast majority of usage is not legitimate. All the developers need to do is support their claims off innocence by embedding filtering mechanisms into their apps. If they counter claim that this would restrict the liberty of their users, then they can’t any longer argue that they don’t support illegitimate usage of their technology.

Another argument being aired is that the music industry should stop being so hung up on trying to get paid online, indeed one story eve referred to "the Music Industry's obsession with copyright”. That’s like saying "the car industry's obsession with cars". Copyright is the oxygen of the music industry. Without it there is no industry. Sure there may be cases for changing some industry practices but copyright remains the essence of making money from music.

Music cannot just be ‘for free’ anymore than cars or houses can ‘just be for free’. If people aren’t paid they don’t make the product. Sure music will still exist, but you’ll swap nicely programmed download stores and well stocked high street stores for buskers and millions upon millions of artist pages, all clamouring for your attention. Perhaps that sounds appealing? The problem is, most of them would sound a fraction as good as they would if they’d been able to give up their day jobs and been given proper equipment, studio time, mentoring and artist development support. And even those that would still manage to sound ok, would struggle to find their way to your PC or mobile screen as they wouldn’t have any marketing support to help them get there.

I’ll close with an account of how we first ended up with music copyright collection, which says as much to today’s ‘music should be free’ argument as it did then, 150 years ago:

“In 1847, the composer Ernest Bourget visited the Paris Concert Café Ambassadeurs in the company of his colleague Victor Parizot. At the time, Bourget was a popular composer of chansons and chansonnettes comiques. Among other pieces, the orchestra played the music of Bourget. When the waiter presented the composer with the bill for the sugared water that he and his colleague had consumed as the fashionable luxury drink of the period, Bourget refused to pay claiming that the orchestra had repeatedly played his music - without paying anything: and so [took the] sugared water in return for playing his piece. The dispute between the composer and the owner was brought before the court. On 8th September 1847, the Tribunal de Commerce de la Seine prohibited the owner from playing works of the composer without his consent. The exclusive right of the author to public performances that had been anchored in the French law of 1791 was thus put into practice for the first time. And on 26th April 1849 the Cour d'Appel de Paris sentenced the owner of Ambassadeurs to pay compensation - i.e. in this case royalties - to Bourget.”

Under newly revised French law the US companies can be tried in the France as their applications have not implemented filtering mechanisms to block out copyrighted material.

A couple of arguments are being leveled at the SPPF. The first that these applications aren’t designed for copyright infringement. "It’s not the fault of the developers that they are being used as such". This argument of course has been used since the original Napster trial. I’m sorry, but it just doesn’t wash. However much there is legitimate usage, the vast majority of usage is not legitimate. All the developers need to do is support their claims off innocence by embedding filtering mechanisms into their apps. If they counter claim that this would restrict the liberty of their users, then they can’t any longer argue that they don’t support illegitimate usage of their technology.

Another argument being aired is that the music industry should stop being so hung up on trying to get paid online, indeed one story even referred to "the Music Industry's obsession with copyright”. That’s like saying "the car industry's obsession with cars". Copyright is the oxygen of the music industry. Without it there is no industry. Sure there may be cases for changing some industry practices but copyright remains the essence of making money from music.

Music cannot just be ‘for free’ anymore than cars or houses can ‘just be for free’. If people aren’t paid they don’t make the product. Sure music will still exist, but you’ll swap nicely programmed download stores and well stocked high street stores for buskers and millions upon millions of artist pages, all clamouring for your attention. Perhaps that sounds appealing? The problem is, most of them would sound a fraction as good as they would if they’d been able to give up their day jobs and been given proper equipment, studio time, mentoring and artist development support. And even those that would still manage to sound ok, would struggle to find their way to your PC or mobile screen as they wouldn’t have any marketing support to help them get there.

I’ll close with an account of how we first ended up with music copyright collection, which says as much to today’s ‘music should be free’ argument as it did then, 150 years ago:

“In 1847, the composer Ernest Bourget visited the Paris Concert Café Ambassadeurs in the company of his colleague Victor Parizot. At the time, Bourget was a popular composer of chansons and chansonnettes comiques. Among other pieces, the orchestra played the music of Bourget. When the waiter presented the composer with the bill for the sugared water that he and his colleague had consumed as the fashionable luxury drink of the period, Bourget refused to pay claiming that the orchestra had repeatedly played his music - without paying anything: and so [took the] sugared water in return for playing his piece. The dispute between the composer and the owner was brought before the court. On 8th September 1847, the Tribunal de Commerce de la Seine prohibited the owner from playing works of the composer without his consent. The exclusive right of the author to public performances that had been anchored in the French law of 1791 was thus put into practice for the first time. And on 26th April 1849 the Cour d'Appel de Paris sentenced the owner of Ambassadeurs to pay compensation - i.e. in this case royalties - to Bourget.”

I'm skeptical of Microsoft's ability to steal away users from MySpace and Facebook -- and Microsoft execs told me that's not the core objective. Rather, they hope to integrate social network features into other established activities. Microsoft's strength is its Hotmail and Messenger customer base, so this makes sense, but MSN feels absent. And though it's the original platform company, in this consumer-facing roll out Microsoft isn't emphasizing APIs and mash-up capabilities

More important, I'd like to see more two-way syndication. Users should be able to get their Hotmail & Messenger updates within Facebook if they want to. Microsoft doesn't lack that vision, but this wave is more about the reverse direction, and of course, the two big social networks are noteworthy by their absence.

All the portals are feeling the threats to their previously dominant online media business model from Google and from the social networks. Neither Microsoft, AOL, nor Yahoo has successfully answered these threats, and each wants to tap into the potential of real social marketing (not selling cheap banners on MySpace) and a so-far completely unrealized universal communications hub.

Ironically, the portals with their big sales forces, army of developers, and relationships with advertisers and agencies, are in a better position to figure out what the future of social marketing will look like than the social networks are. But MySpace in particular is working on fixing that, even if Facebook threw the bigger dice first with Beacon (they'll get it right, eventually). As for communications hubs, they've always held promise, but there's never been a perceived need for them on the consumer side. Meanwhile, the social networks are rapidly becoming the hubs for a variety of social computing activities, if not e-mail replacements.

Stay tuned, the report's almost done.

Other folks' takes:

Joe Wilcox at Microsoft Watch
Mary Jo Foley at All About Microsoft
Kara Swisher at Boomtown