Leading US digital music distribution services are being hampered in launching services in Europe – leaving the territory wide open for local players in the space.
Apple Europe vice president Pascal Cagni this week warned that the launch of the iTunes Music Store in Europe may be delayed for "a few months", while the company works to ensure that the service will be "perfect". He cited Europe's sometimes-conflicting music-business bureaucracy and its recalcitrance in arranging digital music licences as cause of the delay.
Yesterday Roxio/Napster CEO Chris Gorog offered a similar warning to impatient music fans. Citing "red tape and licensing negotiation snags", he told Reuters: "We intend to launch before the end of summer. I am ever-hopeful it will happen, but it has been very challenging to get the rights together."
Napster had indicated its intent to launch in the UK around August/September, but has so far been unable to secure the licences it needs to launch the service. "It's a bit frustrating", he explained. Napster faces similar problems in continental Europe, and is arranging permissions to launch in Japan – the world's second-largest music buying market, after the US.
Europe's Byzantine music-licence system is holding the market back. The European Commission (EC) released a report on Monday in which it urged the music industry and its disparate collection of died-in-the-wool rights bodies to create a pan-European music download licence.
On this topic, Gorog told Reuters: "The EC has managed to put together a currency system for all of Western Europe. I would think extending the same powers of cooperation would be very well received by all online music providers."
Speaking to Macworld in January, Universal Music's Larry Kenswil hinted at a potential underlying motive for the level of cooperation Apple and Roxio may be seeing from Europe's labels. Observing that the market is ready to open for business, he stressed that this was for all operators, "Why should the American services make all the money?" he asked rhetorically.
Long-established in Europe, Peter Gabriel's OD2 service, which acts as a warehouse for European companies who want to sell music online has been benefiting from the hype surrounding digital music services, shifting one million tracks in the first three months of this year – a ten-fold increase in sales, year-on-year.
Operators working to enter the European market should note that it took OD2 three years to secure the licensing it needed.
Meanwhile, European entrepreneurs are exploiting the market opportunity inherent here, as essentially honest consumers stare across the Atlantic, anxious to share the US music downloading experience.
Europe's music fans want elegant legal services they can use today, in preference to file-sharing networks.
New services launching to service the UK market – designed to profit from the delay – include: Wippit; War Child Music and Trackitdown. These vie with larger portal-based services such as Tiscali and MyCokeMusic, which work with OD2 to supply music online.
All the action has a sting in its tail, as the litigious music industry prepares to take one of its own to task in a San Francisco court – ironically, for file sharing.
The labels want Bertelsmann AG to stump up $17 billion, alleging that $90 million investments the company made in Napster in 2000 kept the then peer-to-peer service operating for eight months longer than it would otherwise have done. They believe the industry lost $17 billion as a result.
The legal counsel for the litigants Carey Ramos shared the industry's rationale for the case: "Napster created the piracy we've seen in the last four years that continues unabated worldwide."
However, some music industry insiders, technologists and the public reject such assertions, saying that music piracy evolved precisely because the music industry acted slowly in bringing legal digital-music distribution services to market, depriving essentially honest consumers of a legal way to buy songs online.
Anxious to reduce the scale of piracy, music industry associations across Europe have this month launched a program of intimidation and litigation against European music downloaders that echoes the strategy of the RIAA.
However, the launch of major music-download services that provide a legal and compelling alternative to theft for Europe's consumers is an essential element to the RIAA strategy.