AllThingsD » labels

Google Music's Artist Hub Asks Artists to Bring the Wheel and Inflate It, Too

Ben Patterson — Wed, 23 Nov 2011 19:34:25 +0000

When Google Music launched last week, much of the attention focused on the “Artist Hub” feature that allows unsigned bands to create a profile and sell music direct to fans.

Okay … And?

This is a nice “+” in Google terms, but it’s not earthshaking. There are three players here — the artist, the middleman and Google.

The artist now has a chance to sell direct to fans on Google Music and keep 70 percent of retail. This would be unprecedented only if Amazon MP3 didn’t already offer this via their CreateSpace entity, and if TuneCore and about a dozen other services didn’t offer this already, via their own platforms for iTunes and other digital music retailers. All cost $25 or more upfront, which means an artist needs to sell between 37-75 songs at 99 cents retail to recoup — except for Amazon, which is free.

It’s important to distinguish here between signed and unsigned artists. Nothing about Google Music’s launch voids existing signed recording contracts. Lady Gaga or Adele can’t void their recording contracts and sell direct via Google Music; neither can your favorite indie band that has its own (indie) label deal, like Barsuk.

Lots of folks are going on about major label payouts ($0.08-$0.14 per download, vs. $0.70 direct from retailers), as if all artists will benefit. But signed artists have no out — on iTunes, Amazon or Google.

So what about the “unsigned”? They fall into two categories — the “unencumbered,” like NIN and Pomplamoose, who have demand, options and the ability to use their music as they choose. The other group are the “unsupported.” It doesn’t matter who I name, you won’t have heard of them. This artist has no presence, no support, no marketing and no financial backing. They can use the music however they choose, too, but they don’t have demand. The Artist Hub is another place they can spend 15 or 20 minutes and $25 online hoping to sell to fans.

So let’s say an “unsigned” DIY artist wants to generate revenue on the top six digital retailers. Here’s what they’d have to spend to get their stuff there:

iTunes, Amazon, Spotify: $50 via TuneCore
YouTube: No distributor offers this on a flat-fee basis, so let’s guesstimate this will cost $25 a year, based on average $1 RPM and 30,000 video views
Deezer (What? Never heard of them? Huuuge in France); CD Baby: $59 plus nine percent (it’s a given you’re gonna need a barcode)
Google Music: The aforementioned $25

Total: $159. Honestly, not that much money if you’re a professional artist. And if an artist isn’t recouping that in sales each year, then he is a hobbyist.

As Seinfeld said, “nothing wrong with that.” It’s just not a business. And if it’s not a business, why spend hours researching and debating distribution options to save a couple dollars? Spend that time making the music you love.

All artists need teams; all teams cost money. Today, there are just a lot more ways to manage that money: In the form of assigning copyrights via a traditional “deal,” by paying agency consulting fees, by hiring employees and by offering a distribution percentage.

One or many of those options can arise, and it is tricky to determine the most cost-effective one. Here’s a quick guide to determine whether a DIY distribution service is cost-effective for a music professional:

Do you or someone you know closely have a personal relationship with editors at the major digital retailers? Do you want to talk to them weekly?

If yes, then DIY distribution is for you.
If no, then consider the costs of hiring a sales team and employees, or of spending weeks of your life on marketing and promotion, compared to the relative advantages of a distribution percentage or label deal. Distributors and labels can leverage their catalog bulk in an artist’s favor when releasing new music.

So, what about the labels, the middlemen that sit between artists and retailers? Will Google Music’s Artist Hub impact them? No.

The middleman has already secured the rights, encoded the assets and prepped the metadata of millions of songs — these deals exist. Even if you are using TuneCore and are free and clear, it’s probably more economical to wait for them to offer delivery to Google Music, then pay again.
The middleman already incurs the customer support costs, the accounting costs and the marketing costs. Most artists want or need marketing and hands-on support. The Artist Hub will not likely provide that, certainly not in promoting, and artists will look to outside agencies, labels and distributors that offer access.
The middleman, presumably, represents that the rights are cleared and clean — no messy copyright claims to be filed against the retailer by aggrieved parties.
Artists could do this work themselves. But is an artist’s time best spent managing dozens of digital retail platforms, or making and performing music?

But let’s be clear: Google Music and the Artist Hub is a good move for Google. It helps them:

Build up Google+ using consumers and bands to build trust and engagement.
Build up Google checkout and card gateway. If you’ve paid $25 to Google to sign up, now maybe you’ll buy something from them. And they’re already used to paying out tons of small cash increments via AdSense — not an accounting hassle for them to assume.
Challenge their newest direct competitor — Amazon’s own entertainment marketplace, available online — on Kindle Fire, and presumably on next year’s locked-down, Android-powered smartphone.

Most important, Google Music is awesome for Android.

Ben Patterson is the founder and President of DashGo, Inc., www.dashgo.com, a digital content distribution and marketing engine for labels, podcasters and artists.

Spotify Signs On EMI for U.S. Launch. At Least One More to Go…

Peter Kafka — Thu, 17 Feb 2011 19:52:02 +0000

It’s getting closer: Spotify has finalized a U.S. distribution deal with EMI Music, multiple sources tell me.

Both EMI and Spotify declined to comment.

Coupled with last month’s Sony deal, Spotify now has the approval from two of the four major music labels for an American launch. But that still doesn’t guarantee you’ll see the streaming music subscription service in America anytime soon.

In order to make a credible offer to U.S. users, Spotify will need to at least get Universal Music Group, the world’s biggest label, on board, and it’s not there yet.

It would also be nice if Spotify could land Warner Music Group, which now seems more doable than in the past, given Warner CEO Edgar Bronfman’s increasingly positive comments about the company.

If and/or when Spotify does come to the U.S., it will also have to contend with new rules from Apple, which will require a 30 percent cut of any subscriptions the service sells through Apple’s iTunes platform. That tariff is going to be a significant problem for many of Spotify’s peers, who are working on slim margins to begin with; I don’t know how Spotify plans to address this one.

Pandora's Music Fees Are Huge! And Not That Bad.

Peter Kafka — Sat, 12 Feb 2011 12:00:51 +0000

After Pandora filed to go public Friday, some people were taken aback to learn the company was spending half of its revenues on “content acquisition”–the royalties it pays the owners of all the music the service streams.

They shouldn’t be.

Pandora has always been up front about the fact that royalties are its biggest expense. And that those fees increase in lockstep with the music service’s popularity.

But while spending half of every dollar it brings in on royalties is a burden, it could be worse. A lot worse.

Prior to the summer of 2009, when Pandora and other Web services negotiated a new royalty deal, Pandora’s music bill was more than 100 percent of its revenues.

Check out this table from Pandora’s S-1, which breaks out each line item in its P&L as a percent of revenue. Notice how brutal the first two quarters of 2009 were. And see how much more tolerable (or at least less awful) they became after July 2009, when Pandora got its new rates (click image to enlarge):

See? Now 50 percent doesn’t look that bad.

And while Pandora’s music fees are hefty, the system that generates those bills is really one of the company’s strengths.

That’s because unlike other music services, from Apple’s iTunes to Spotify, Pandora doesn’t have to negotiate with individual labels and publishers to use their stuff.

Instead, it takes advantage of a U.S. law that created a “compulsory license” for Internet radio. That allows anyone to stream any recorded music they want, as long as they’re willing to pay for it. And as long as they’re functioning as a “Webcaster” and not an on-demand “interactive service.”

The advantages of using the compulsory license are huge. It means Pandora never had to ask the big labels for permission to use their stuff, or pay out giant advances or equity stakes to get a deal done.

While the licenses do come with restrictions–that’s why Pandora doesn’t let listeners request individual songs, and limits the number of times users can skip a song per hour, etc.- they haven’t dissuaded some 80 million people from using the service.

Those licenses don’t exist outside of the U.S., which is one reason Web radio services are such a rarity everywhere else, and why Pandora may struggle with international expansion.

And the fees that Pandora does pay will escalate each year until 2015, when it has to negotiate a new royalty agreement with the music industry.

It’s always possible that the rates will get significantly worse for Webcasters then, and that Pandora ends up in the shape it was in prior to the summer of 2009.

But for the next four years, at least, Pandora thinks it can work with the music bills its users are generating. Now we’ll see if investors agree.

Spotify Clears Its Throat for a U.S. Launch in "Coming Months"

Peter Kafka — Tue, 08 Feb 2011 17:35:07 +0000

Spotify can’t come to the U.S. until it nails down more deals with the major labels. But here’s another indicator of the music service’s confidence in an American debut sometime…soonish.

It’s a note to the European company’s select group of freeloading American users, letting them know they’re going to have to start paying sooner or later. And it says Spotify is “looking forward” to a U.S. launch in ‘the coming months.”

From: Spotify
Date: February 8, 2011
To: xxx
Subject: Spotify Payment Problem- ACTION REQUIRED!

Hello from Spotify!

You are one of only a few people who has access to a Spotify promotional test account in the USA, and we hope you’re enjoying listening to Spotify through our Premium or Unlimited service.

We are really looking forward to launching the service in full in the USA over the coming months, and hope that you will continue to use the service and be one of our key advocates.

We need to make some small system changes to our payment system for our USA launch, and so in order to make the transition for you as smooth as possible, we have credited your Spotify account with 1 month worth of FREE Spotify Premium/ Unlimited!

In return for this, we ask that you please do the following:

• Visit our website https://www.spotify.com/account/subscription/change-payment/
• Login with your username and password.
• Select a payment method (Card or Paypal) and click ‘Change’
• Click ‘I Accept/ Continue’ to accept the new product in US Dollars
• Provide us with your payment details once more, so that after your FREE
month has expired you will be able to keep listening to music through Spotify.

Your next bill is due to us on ’14/02/12′, so please provide us with your payment details before then, otherwise you will revert back to Spotify Free and if you have Premium you will lose access to Spotify on your mobile. On this date, you will then be billed in Dollars!

Thanks for your help, and please feel free to reply to us directly if you have any
questions!

Obviously this note isn’t anything like a confirmed launch date. In order to do that, Spotify needs U.S. deals with the big music labels, and so far only has Sony signed on.

Industry sources keep telling me a deal with EMI is this close, but they’ve been saying that for weeks now. Which doesn’t mean that it won’t happen. Just that it hasn’t yet.

And no matter what happens with EMI, Spotify can’t go anywhere unless it has Universal Music Group, the world’s largest label, on board. Again, lots of people tell me they’re confident a deal will get done soon, but…

In any case, the note does point out one of the reasons so many plugged-in Americans you know are raving about Spotify, even though the service doesn’t formally exist here–Spotify has quite cleverly been handing out free test accounts to lots and lots of people who might rave about it.

That includes VIPs and their families, all sorts of music industry people and media people, including yours truly.

And if you’re getting Spotify in the U.S., you are indeed getting a really, really good service: Free, unlimited music, anywhere you want it, whenever you want it, without ads.

Which is not what Spotify’s “real” users actually get. The ones who use the free service have a cap on the number of hours they can listen for free, can only listen on their PCs and will encounter a smattering of advertising. To get the real deal–mobile, no ads, no limits–they’ll need to cough up the equivalent of about $13.50 a month.

So far, about a million people are doing just that, people familiar with the company tell me. But how many will go for it if, or when, it gets to the U.S.?

Is Jason Kilar Trying to Get Fired?

Peter Kafka — Thu, 03 Feb 2011 21:05:02 +0000

Is Hulu’s CEO trying to get pushed out the door?

That’s the question of the day for the TV and Web video world, prompted by a blog post Jason Kilar published last night.

It’s a lengthy read about the TV business and where it’s headed, and most people I’ve talked to today think it’s smart and well-written.

Some of them also believe Kilar wrote it so that his bosses–executives at News Corp.’s Fox, Disney’s ABC, and Comcast’s NBCU–will give him the hook.

That’s because a lot of what Kilar wrote challenges the TV networks’ existing business model: He argues that there are too many ads, and that consumers want to be able to watch their shows on demand, not on a linear schedule. And, crucially, he argues that the cable network bundle is on its way out.

In other words, change or become the music labels: “History has shown that incumbents tend to fight trends that challenge established ways and, in the process, lose focus on what matters most: customers.”

And all of that makes perfect sense. Except for the part where he says it in public, while working for a company owned by three TV networks.

Kilar’s post began making waves immediately last night, and the Financial Times’ Matthew Garrahan was able to quickly find several network executives who are agog at the post.

Most tellingly, he got a Disney rep to officially distance the company from Kilar’s post, stating that his views (published on the official Hulu blog) were “personal and clearly not shared by anyone at Walt Disney.”

In fact, his views are almost certainly shared by some Disney executives, and others at Hulu backers News Corp.’s Fox and Comcast’s NBCU. (News Corp. also owns this Web site.) It’s just that they have no intention of changing their business anytime soon. Especially now that they’ve gotten cable providers to start paying them for content they used to give away, via “retransmission” fees.

“80, 90 percent of what he says is right,” says an executive at one of Hulu’s network owners. “But why print that? Does he think we’re going to say, ‘Oh, thank you! You’re right! We’d never thought of that! Let’s give away retrans!’? I can’t see what he thinks will happen.”

So here’s one possibility: Kilar knows he can’t win. And his post is supposed to be his “Jerry Maguire moment”, as Garrahan puts it–a fireworks display you put on because you don’t want to work at your current job anymore.

The other possibility: Kilar genuinely thinks he can win.

Up until now the former Amazon executive has done a marvelous job of building a site everyone was convinced would fail, and then sustaining–and expanding–a joint venture everyone thought would collapse.

Kilar has pulled some of that off with brinkmanship. As last week’s well-reported Wall Street Journal piece notes, Kilar threatened to quit last fall, when he was trying to get the networks to agree to cut their monthly price for Hulu Plus. He didn’t get the 50 percent cut he’d been pushing for, but he still managed to get the networks to agree to cut the price by 20 percent, to $8.

Also note that Kilar’s post quite clearly argues that the path he’s pushing for will be better for the networks in the end: “We believe content owners are in a strong position to make higher returns from TV content distribution in the future than they have historically.”

But if Kilar thought his arguments would carry more force in public, he may well have miscalculated. This could all blow over with time, but for now, at least, he has some very bummed backers.

“Here’s the irony. Jason is probably best to lead Hulu. But he is also too righteous/robot to do it ‘the wrong way’ or a way he won’t agree with,” says an industry executive.

Another reports that network executives are “crazy, angry” over the post. “I’d be stunned if Jason was still there in 60 days.”

I’ve asked Kilar for additional comment. I don’t expect to get it.

One Down: Spotify Signs Sony to U.S. Deal

Peter Kafka — Thu, 20 Jan 2011 00:18:03 +0000

This doesn’t get them into the States, but it gets them a lot closer: Music service Spotify has finally signed with Sony for a U.S. distribution deal. Multiple sources tell me the deal, which has been very close since last fall, is now closed.

I’m told the terms call for a U.S. service that more or less mirrors the one Spotify offers in Europe: A certain number of hours per month of free streaming music, with the ability to pay for an ad-free version, or a more popular one that lets users listen on mobile devices like Apple’s iPhone.

Both Spotify and Sony declined to comment.

The deal doesn’t mean a U.S. launch is imminent for the service, which has been trying to make the leap from Europe for a couple of years, and which missed a self-imposed deadline to make it over in 2010. In order to make a credible offer to U.S. customers, it will need at least two of the three other big music labels to sign on.

And practically, at least one of those labels has to be Vivendi’s Universal Music Group, the world’s biggest music label. So Spotify will need to hammer out a deal with UMG and either Warner Music Group or EMI before we can start talking about a U.S. launch date.

The New York Post reported last week that Spotify was close to a Sony deal.

What’s taking Spotify so long to land in the U.S.? Depends on whom you ask.

Some industry sources tell me the big music labels are genuinely worried that Spotify’s free streaming service will increase the decline of CD sales, which have been dropping for a decade, but still make up the majority of the labels’ revenue.

Others have a more cynical take, though it’s not mutually exclusive: The labels, which have already licensed Spotify in Europe, simply want more cash from the company before they do an American deal. There is also muttering that the labels don’t want to upset Apple, which sells tunes on a track-by-track basis via its iTunes store and dominates the market for digital music.

It’s also unclear how close Spotify is to more label deals. Executives at the service have long been hopeful that getting one deal done would convince the other labels to join up. On the other hand, you could argue that it gives the holdouts that much more leverage.

And in any case, even if Spotify signed two more labels tomorrow, it would still take the company some time to cross the Atlantic, as it prepares a marketing campaign, etc.

It might also be nice for the company to have a new slug of cash on hand, something it would have if it goes through with fundraising talks it has been holding recently.

Spotify CEO Daniel Ek talked to me about some of these issues, in a general and noncommittal way, at our D: Dive Into Mobile conference last month. You can see an abbreviated version of our chat below, or you can watch the whole thing here.

[ See post to watch video ]

Game Off! Viacom Dumps Rock Band on Investment Group

Peter Kafka — Thu, 23 Dec 2010 20:23:04 +0000

Remember when music video games like Guitar Hero and Rock Band were red-hot? That was a couple of years ago. Now Rock Band owner Viacom is getting out of the business.

The cable programming giant has sold its Harmonix unit, which published the game, to investment fund Columbus Nova LLC. It hasn’t disclosed a price, and if it’s not material it won’t have to. And my guess is that it won’t: Viacom bought the games business for $175 million in 2006, when the games were on the upswing, and if I had to bet, I’d say it will end up selling it for less.

Let’s take a minute here to point out something obvious, but which we always seem to forget–media consumption trends move very, very fast. You only have to go back two years to find Warner Music Group’s Edgar Bronfman Jr. demanding that the music labels get their fair share of the “enormous opportunity” the games were creating.

And just a year ago, (some) people were convinced that a special Beatles version of Rock Band was going to be a very, very big deal.

Now gamers are on to something new: Microsoft’s Kinect, for instance, seems to be selling very well this month. But I wouldn’t bet on it staying hot a couple of years from now.

Amazon Can't Dent iTunes

Ethan Smith and Geoffrey A. Fowler — Fri, 17 Dec 2010 23:31:00 +0000

On the day Apple Inc. rolled out the Beatles’ catalog on its iTunes Store, Amazon.com Inc. fired back with a digital exclusive of its own: The latest album from rap-rocker Kid Rock–whose music still isn’t available on iTunes–for just $3.99.

Such steep discounts are a cornerstone of Amazon’s strategy to gain traction in a market in which iTunes remains the dominant player. At the same time, a debate has arisen among music labels about whether such discounts risk undermining the value of their products.

Read the rest of this post on the original site

Here's Your iTunes in the Cloud, for Your iPhone–But From mSpot, Not Apple

Peter Kafka — Wed, 15 Dec 2010 14:00:48 +0000

At this point it seems pretty safe to say that we’re not getting any “iTunes in the cloud” music service from Apple in 2010. But you can get a version of that concept, on your iPhone, today, for free.

Apple has approved developer mSpot‘s music app, which does what Apple hasn’t done yet but may well do at some point: It takes your music from your PC, moves it to a server and lets you pull down tunes to your iPhone whenever you want.

Or at least in the immediate future. Given that mSpot has yet to reach any licensing deals with music labels or publishers, I’m not sure how long the service can keep going. But we can get back to that in a minute.

First the details: MSpot lets you synch up to two gigabytes of music from your hard drive to its servers, and then stream it via another PC’s browser, or download it to your phone via 3G.

Because mSpot compresses your files, those two gigs will translate into a lot more music on your phone (at a much lower fidelity) than they do on your computer. But if you want more storage you can get another 40 gigs for $3.99 a month.

This is roughly the same idea that both Apple and Google have discussed with the music industry for much of 2010, but neither of those two heavyweights has the licenses it needs to launch. How can mSpot pull it off?

Good question. The answer is that mSpot CEO Daren Tsui argues that he doesn’t need a license, for a variety of reasons.

I’ll spare you the technical details, but common sense supports his position–why shouldn’t you be able to move your music from one machine to another? And the law, via the Digital Millennium Copyright Act, may be on his side as well.

But so far the big labels have argued that the big guys do need licenses to offer cloud services (short version–they say that moving music to the cloud and back constitutes a new use). And Tsui has in fact been trying to get an agreement with the labels for much of this year.

He’s already had this service running on Google’s Android platform since late June without a legal problem, so that can give him some confidence that the labels won’t take him to court. But that’s not a guarantee.

For starters, the labels are already suing Michael Robertson’s MP3tunes, which uses a similar concept. And it’s not uncommon for the labels to negotiate with music start-ups, then move on to lawsuits if things hit an impasse.

And if Tsui does strike a deal, that means he needs to start paying the labels. How’s he going to do that and keep offering the service for free? By offering new paid options and cutting the music guys in on a piece of that revenue, he says.

So we’ll see! Note that Spotify, which has a lot of buzz, 700,000 paying users and some deep-pocketed investors, has yet to get its music service licensed in the U.S.

And mSpot is a much smaller fry. The Android app has a million downloads so far and some 500,000 registered users. And the 6-year-old company raised $2.3 million in 2005, and that’s it. But Tsui says mSpot is profitable on revenue from other media services it sells.

Here’s hoping he gets to spend that money building cool stuff, not hiring lawyers.

Spotify CEO Daniel Ek Live at D: Dive Into Mobile

Tricia Duryee — Tue, 07 Dec 2010 17:12:05 +0000

Spotify’s Daniel Ek, who heads up the most talked about streaming music service in Europe, continues to promise a U.S. launch this year.

But the company has been unable to strike deals with U.S. music labels, which fear popularity of the service could cut back on sales of CDs and digital downloads. In Europe, the popular service offers unlimited tracks for free, or users can subscribe for an ad-free version.

With three weeks left in the year, will the Swedish entrepreneur keep his promise? Stay tuned as Ek takes the stage with MediaMemo’s own Peter Kafka at D: Dive Into Mobile.

10:06 am: Peter takes the stage to welcome Daniel Ek.

10:08 am: Peter: Spotify is the most awesome music service that you can’t get in the U.S. It’s Dec. 7; can you get it in the U.S.?

Daniel: No, you can’t. There are more complexities. We have to do deals with music labels, etc. It’s hard, he says. “It’s a business problem and a product problem at the same time.”

10:09 am: Daniel is still eluding the question.

10:09 am: We are definitely going to do the U.S., you’ll see. I’m here today.

Peter: You can’t commit to launching in the U.S.?

Daniel: I can’t commit to a specific date.

10:10 am: With no news on a launch date, Peter asks Daniel how it works.

Daniel: You download it to your PC, and it’s also supported on a host of mobile phones. The general idea is that you can access music for free, with adverts, or if you pay, you can take it with you. The limit is 20 hours of music a month.

10:11 am: Daniel: There’s not that many ads; the fee is 10 euros. It will be $10 in the U.S. (Whenever it comes, I suppose.)

10:11 am: Peter: This sounds like a lot of products–Rhapsody, Napster, Thumbplay, etc. What’s different?

Daniel: The concept isn’t different, but more people now are consuming more music than ever. You aren’t just a punk rocker, but you may also be listening to old-school blues, etc. Music has to adapt to a consumption model.

10:13 am: Peter: Do we no longer value music because of Napster 10 years ago?

Daniel: Yes, that’s part of it, but people also want to have access to everything on every device. In the past year, we’ve seen the adoption of smartphones. Pandora has been very successful because of smartphones. People are consuming a lot more of it.

10:14 am: Peter: It’s all free, so this is a problem for the producers who aren’t getting money from anyone.

Daniel: That’s a problem, but we’ll figure out ways to provide value that people are willing to pay for.

Peter: How many subscribers do you have in Europe?

Daniel: 750,000 paying customers, who pay about 10 euros a month.

Peter: Okay, that’s up from half-a-million earlier this year.

10:15 am: Daniel: What’s unique about Spotify and why we are growing so fast…

How fast? Peter asks.

Daniel: We launched on mobile in September 2009, so it’s been about a year.

The value is convenience and accessibility and packaging it in a good way (i.e., some of the stickiness comes from users creating lists and building their libraries).

10:17 am: Daniel: Another thing helping our growth is social networks, he says. They have a huge impact on people sharing content. It’s getting to become the primary way of how I find out what’s going on.

10:18 am:( It’s demo time! For all of those who have special access, or have hacked it, you know what this looks like already.)

10:18 am: Daniel is showing off his playlists, some of which come from Spotify and some from tracks he already owns. He’s showing this offline (because he doesn’t want to incur roaming fees), so he can’t demonstrate how you’d search for new music.

10:20 am: Peter: Are people comfortable with renting songs now, and listening to music in the cloud?

Daniel: This is something the industry needs to work on to make it 100 percent reliable, but it lets people have access anywhere.

10:21 am: Daniel says he wants to provide music to users “super fast.” But he sure is dragging his feet when it comes to providing it to U.S. consumers…ho hum….

10:22 am: Peter: People are still buying CDs.

Daniel: People are always asking me why. Is it because they want to own it? I don’t think so.

10:23 am: Daniel: Everyone expects things for free on the Web, but Apple is showing that people are willing to pay for apps.

10:24 am: Peter: I hear about how Apple might be working behind the scenes, telling music labels not to work with Spotify. Have you heard that?

Daniel: I read the news, so I’ve heard about it. I don’t actually try to focus on what Apple is doing, or what others are doing. I am, first and foremost, a user.

10:26 am: Daniel: China has 400 million Internet users, and one of the top things they do on the Internet is music. For me, it strikes me as odd, the value of the entire music business is $15 billion.

Peter: It used to be $40 billion. What’s the holdup with the labels?

Daniel: It just takes time. There are a bunch of companies that say they want to do it this year. But at the end of the day, you can only do so much that’s in your control. We believe in our model.

Peter: Which is to give music away for free. Would you change your model here?

Daniel: We would not just launch a subscription service here. Right now you can pretty much access any music for free. YouTube is one of the biggest sources in the world.

10:30 am: Peter: Are you raising money now in order to pay more to get the music deals done?

Daniel: No, but I wouldn’t rule it out in the future, though.

10:31 am: What’s it like to work with Sean Parker, who was from Napster and Facebook.

Daniel: I just saw “The Social Network.” I’m not sure if it’s true, but I really liked it. Sean wrote me this really long email about all the flaws in Spotify. He’s so great at product, so for me, this is someone who has been thinking about the product since the beginning of Napster.

10:32 am: Peter: Any audience questions? Jokingly, he asks, “How about from Rob Glaser (former CEO of RealNetworks)?”

10:33 am: Next question from Glaser! He asks about the music label deals he signed in Europe.

Daniel: It’s a really interesting time. If this is going to be the next big thing, that’s why they are taking their time. Is it going to be a la carte, or subscription?

10:35 am: Peter: Google has been talking about music, and Facebook is thinking about it. Would you link up?

Daniel: We are a developer on both Facebook and Android.

Peter: I mean deep core integration.

Daniel: We would never do any exclusive deals. We want to get music to become like water. We think it’s the most social object in the world. If music could flow freely on the Web, it would surpass the popularity of photos. People are paying by looking at ads, buying tracks or subscribing.

10:37 am: Last question from the audience, about Nokia-bundled music with smartphones through a service called Comes With Music. “Do you think those kinds of integrations can work?”

Daniel: I do. Our whole strategy is around the platform. I don’t know how well the integration worked with the phones, but it wasn’t playing nicely with the Web, or with the iPhone. Like the Kindle. It works on the Kindle, but you can also read books on the iPad. Whether people pay for the device and it’s bundled in, or whether it’s part of a TV package, it doesn’t matter.

10:39 am: That’s it folks–thanks for tuning in!

Spotify's Daniel Ek: We'll Launch in the U.S., Just Not Sure When

Arik Hesseldahl — Tue, 07 Dec 2010 17:11:53 +0000

Spotify, the U.K.-based music-streaming site will eventually launch the service in the U.S., its CEO Daniel Ek said in an interview at D:Dive Into Mobile, but he wouldn’t commit to a specific date. That’s a step back from a previous promise to launch the service in the U.S. in 2010.

Asked specifically about a prior commitment to launch Spotify in the U.S. before the end of the year, Ek blamed the complexities of working with U.S. recording labels. “It’s a business problem and a product problem at the same time.”

He said he remains hopeful about launching in the U.S. “We are definitely going to do the U.S., you’ll see. I’m here today….I can’t commit to a specific date.”

Ek said Spotify has about 750,000 customers in Europe who pay an average of 10 euros per month.

Asked if Spotify is raising money in order to perhaps put more on the table in negotiations with music labels, Ek said the company is not raising money right now. “But we won’t rule it out.”

Going, Going: LimeWire Shutters Online Store, Too

Peter Kafka — Thu, 02 Dec 2010 18:38:05 +0000

LimeWire, the high-profile file-sharing company, more or less shut down in October, following a federal court ruling. But there are bits and pieces of the company still up and running.

Not for much longer, it seems. The company is also closing its online music store at the end of the year. And I’m told that it has essentially abandoned efforts to launch a new, legal music service that it had spent much of the past year building.

A sign on the Web retailer’s homepage tells customers that it’s no longer accepting new payments, and the company has told vendors via email that the store will shutter on Dec. 31. (You can see a copy of the note at the bottom of this post.)

LimeWire hasn’t responded to my request for comment. And it’s not clear why the company is closing up the shop, because in this case, LimeWire shouldn’t be dealing with any legal issues. LimeWire operated the store the same way that Apple’s iTunes does–it took product that music labels (not the big ones, but small independents) wanted to sell and delivered it to customers.

Meanwhile, people familiar with the company tell me that it has also stopped pursuing plans to launch a new, legal music service that had been building throughout 2010.

As recently as October, the company had been talking up the prospects of the new service, and had invited me to see a preview of it even after the court ruling that shuttered its illegal file-sharing service. But LimeWire later rescinded the invitation, and said that its lawyers had advised it not to discuss the new service.

My hunch is that LimeWire is stripping down all of its remaining assets in advance of January court proceedings. Those are going to determine how much the company owes the major music labels that successfully sued it for copyright violations.

LimeWire had already laid off at least 30 percent of its workforce following the October court ruling.

Don't Count on Music Subscriptions or Streaming From Apple Tomorrow

Peter Kafka — Mon, 15 Nov 2010 18:20:56 +0000

What’s Apple planning at its iTunes announcement tomorrow? Good question!

But I’ll be very surprised if it is music related–like a new music subscription service, or even one that lets you stream music you already own to multiple devices.

(UPDATE: The Wall Street Journal says that Apple has finally signed the Beatles to an iTunes deal to be announced “soon”. Which makes tomorrow’s announcement a much easier guess.)

It’s easy to understand why Apple might head in that direction: Generally, because it seems inevitable and because Google has been talking about doing something similar. And specifically, because Apple has that shiny new North Carolina data center to play with.

But the music industry sources I’ve talked to so far today don’t know of any new deals between Apple and the big music labels. So that would rule out a new subscription service, which would definitely require a new rights deal.

And that also makes it very unlikely that Apple does the next best thing: Letting users upload their iTunes catalog to the cloud, and letting them access it anywhere they want.

Does Apple have to get a special deal with the labels in order to do that? Not necessarily. Some start-ups are offering similar services, without a deal (though one of them, MP3tunes, is getting sued).

And you can make a common-sense argument that simply storing someone’s data, then letting them access it again, shouldn’t require a deal. But the labels argue that it does.

So unless Apple wants to make them go ballistic–and freak out the movie and TV studios, the folks that Steve Jobs really wants to court–it’s hard to see Apple announcing a service without signed paperwork.

Okay. So what are they announcing? Again–got me. Hoping to find out before tomorrow, but if not I’ll be watching at 10 am Eastern like the rest of you.

Apple's Song Remains the Same, But Could Get Longer

Peter Kafka — Wed, 03 Nov 2010 10:09:51 +0000

Apple appears ready for an extended play: It’s about to offer 90-second samples of songs for sale at its iTunes store, up from the industry-standard 30 seconds. Apple has been trying to offer the feature for months, and CNET says the company may still be negotiating with labels and publishers for the rights. But if the move helps sell more music, there’s no reason for the industry not to embrace it: Digital song sales have been stagnating.

LimeWire Laid Off 30 Percent Of Staff Following Shutdown

Peter Kafka — Mon, 01 Nov 2010 17:22:00 +0000

Not a surprise: Following a court injunction that turned off its primary file-sharing service, LimeWire laid off a third of its staff last week.

A bit of a surprise: The company insists that it can keep its remaining employees working on a new music service.

LimeWire confirms that in the wake of last week’s shutdown, it let go of 29 of its 100-person workforce. Here’s CEO George Searle’s statement:

Following the court-ordered injunction, we reduced our work force to extend our runway for bringing our new music service to market. Letting go of colleagues is never easy. If we could have brought about another solution, we would have.

I don’t know whether LimeWire’s new service, which the company has been referring to internally as “Grapevine,” will also be based on peer-to-peer technology or not; I should have more on that later. But I do know that the service won’t have any hope of working unless it can get the big music labels to sign on.

That’s theoretically possible, because LimeWire and owner Mark Gorton have talked with the labels about that sort of thing before. But they’ve talked for a very long time, and have never reached a pact in the past.

For now, at least, the labels appear to be set on extracting a very large chunk of Gorton’s hide, via the damages phase in their federal court case. That’s supposed to kick off in January.

LimeWire Gives Up the Ghost, Shuts Down P2P File-Sharing Client

Peter Kafka — Tue, 26 Oct 2010 19:57:57 +0000

Last spring, music file-sharing service LimeWire suffered a crushing blow in federal court. This is the net result: The company is shutting down its core software–though it insists it’s not doing that exactly. It’s the victory the big music labels have been seeking for some time.

The company says it will comply with a court injunction to turn off “the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality” of its software, which remains one of the most popular methods of finding free–and illegal–music on the Web.

That means the company will stop offering downloads of its software, which you could still get on its site as of late Tuesday afternoon. And it also means that the company will disable the software that’s already been downloaded, according to people familiar with LimeWire’s plans.

I don’t know if LimeWire intends to cripple its client via a “kill switch” or some other method, but as of 20 minutes ago it hadn’t gone into effect–I was able to locate and download a version of the Clash’s “I Fought the Law” within a minute of booting up LimeWire’s software. (UPDATE for the technically minded, via a person familiar with the company’s plans: “They’ve taken down the relay severs on the Gnutella network which the Limewire client uses to figure out which other p2p clients have what info on them.” This should render existing clients effectively useless as anything other than a media player within the next nine hours, I’m told.)

LimeWire‘s client has been downloaded “hundreds of millions” of times, and is still responsible for the “vast majority” of usage on the Gnutella trading network, says Eric Garland, who runs the BigChampagne media tracking service. The company’s moves won’t affect other open source clients that run on the same Gnutella network, like FrostWire.

Meanwhile, LimeWire’s parent company, Lime Group, is prepping a new music service that it says will be legal, and should be due out in a month.

But the utility of that service depends on the participation of the big music labels, and at least for now the labels are still trying to extract a big piece of Lime Group’s hide. Court hearings in the damages phase of Lime Group’s hire are scheduled to resume in January. And this statement by industry trade group RIAA makes it clear that the labels aren’t feeling conciliatory:

“For the better part of the last decade, Limewire and Gorton have violated the law. The court has now signed an injunction that will start to unwind the massive piracy machine that Limewire and Gorton used to enrich themselves immensely. In January, the court will conduct a trial to determine the appropriate level of damages necessary to compensate the record companies for the billions and billions of illegal downloads that occurred through the Limewire system.”

Today’s announcement comes after Lime and the labels spent weeks trying to negotiate an out-of-court settlement; Federal District Court judge Kimba Wood actually handed down the injunction in August.

Here’s LimeWire CEO George Searle’s description of events, via blog post:

As of today, we are required to stop distribution and support of LimeWire’s P2P file-sharing service as a result of a court-ordered injunction.

Naturally, we’re disappointed with this turn of events. We are extremely proud of our pioneering history and have, for years, worked hard to bridge the gap between technology and content rights holders. However, at this time, we have no option but to cease further distribution and support of our software.

It’s a sad occasion for our team, and for you–the hundreds of millions of people who have used LimeWire to discover new things.

While we have enabled open sharing and discovery for the past decade, LimeWire is mostly the product of the people who used it. You made LimeWire. Thank you for letting us being part of that. Your support and enthusiasm has fueled everything that we do.

During this challenging time, we are excited about the future. The injunction applies only to the LimeWire product. Our company remains open for business.

We remain deeply committed to working with the music industry and making the act of loving music more fulfilling for everyone – including artists, songwriters, publishers, labels, and of course music fans.Our team of technologists and music enthusiasts are creating a completely new music service that puts you back at the center of your digital music experience.

We’ll be sharing more details about our new service and look forward to bringing it to you in the future.

And here’s a LimeWire PR rep’s description of what’s going on:

As a result of a court ordered injunction, we are required to disable “the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality” of LimeWire’s P2P file-sharing software.

Please note LimeWire’s official statement on this legal development is as follows:

“While this is not our ideal path, we hope to work with the music industry in moving forward. We look forward to embracing necessary changes and collaborating with the entire music industry in the future.” – LimeWire Spokesperson.

An important point of clarification, LimeWire is not “shutting down”, in specific regarding our software, we are compelled to use our best efforts cease support and distribution of the file-sharing software, along with increased filtering. And, that is what we are doing.

A Video Guaranteed to Not Stop Music Pirates

Peter Kafka — Wed, 20 Oct 2010 19:44:37 +0000

The music piracy horse left the barn about 10 years ago. But if the music labels really wanted to try to get it back, they wouldn’t be releasing videos like this one, from indie label Victory Records (safe for work if your colleagues and employer are cool with multiple f-bombs):

For the record, I like Gilbert Gottfried quite a bit, and he’s justly famous for his post-9/11 rendition of the Aristocrats. But hard to imagine that he resonates with Victory’s constituency, who listen to bands named Ringworm and Voodoo Glow Skulls.

(Via Brian Morrissey and AdWeek.)

Index, Union Square Like SoundCloud's Web-Based Tune

Peter Kafka — Fri, 15 Oct 2010 16:25:17 +0000

Here’s another bet on Web-based music: SoundCloud, a start-up that makes it easy to share streaming music, is about to land a funding round from high-profile investors.

Sources tell me that Index Ventures and Union Square Ventures are leading a “significant” new round for the Berlin-based company. I don’t have a dollar amount, but I’m told that VCs were competing fiercely to get into the three-year-old company, which raised a $3.3 million round from Doughty Hanson Technology Ventures in 2009. The round hasn’t closed yet.

Online music has been a black hole for investors for a very long time. So what’s the attraction here?

In large part, it’s because SoundCloud isn’t dependent on deals with the major music labels. It’s designed to let professional and amateur musicians share their own music with each other and the public, via cloud-based files that the company hosts.

Once the tunes are on SoundCloud’s servers, the service makes it easy to move the stuff around the Web, via its own widget and an API that’s showing up on lots of interesting sites, apps, services and devices, including Facebook and Apple’s iPad. You can load SoundCloud files into Spotify, the streaming music company that Index has also invested in.

The service uses the freemium model, offering most of its capabilities for free, and charging up to $700 a year for more storage and extra features.

You can also use SoundCloud to share music you didn’t create and don’t own–and a “private sharing” option makes it easy to do so discretely. That could leave the service open, theoretically, to copyright claims, a la YouTube.

But so far the company has signed up a million users without attracting the ire of the big labels. And recent court decisions in the Veoh/Universal Music and Google/Viacom cases seem to give user-uploaded services like SoundCloud a lot of legal leeway, at least in the U.S.

I’m told that the company also plans on using Audible Magic’s “fingerprinting” technology, which will make it easier for copyright owners to pull content off the service.

SoundCloud, Index and Union Square all declined to comment.

Here’s an example of SoundCloud at work–a 43-minute (!) mix that Beck has posted to his Web site, which we can also embed here:

Melted Lemons by planned_obsolescence

SoundCloud: The Tour from SoundCloud on Vimeo.

Sony Raises the Curtain on Ariama, Its Classical iTunes

Peter Kafka — Tue, 05 Oct 2010 04:02:18 +0000

Want your classical music on your iPhone, now? Sony Music is thinking about you: The label has opened up Ariama, its all-classical online store.

This is the iTunes-meets-classical project I told you about in July. Sony owns the shop, but sells music from most of the big labels.

Who needs an all-classical iTunes? Both labels and music fans, apparently: Conventional online stores don’t feature much classical music, for obvious reasons. And while the crummy sound quality of most online music doesn’t seem to bother most people, it’s a real problem for classical connoisseurs.

So Sony gives classical a room of its own, and promises that it will sound good, too, because its downloads come in two different formats.

There’s a 320-kilobits-per-second version that Sony promises will produce “near–CD quality audio” (the more kilobits, the better the sound; Apple upgraded its catalog to 256 kbps in 2009).

And there’s also a “lossless” version (FLAC, for those who care about this stuff) that’s supposed to be even denser and better. In my brief self-guided tour through the store on Monday, I found that the lossless stuff generally sold at a premium of about $2 per album.

Hate digital music players, period? That’s okay. Sony will sell you CDs, too. In fact, that’s the only way you’ll get music from Universal Music, the world’s biggest label–for whatever reason, it has licensed only discs, not downloads, to Ariama. (You can get Universal’s stuff in download form from rival classical store Passionato.com.)

Tough for me to assess the quality and selection here, given that I know next to nothing about classical. But last time I wrote about this, you guys contributed plenty of insightful commentary on the topic. So take a look, and tell us what you think.

Download Me, Amadeus! Sony Set to Open a Classical iTunes

Peter Kafka — Thu, 15 Jul 2010 11:30:12 +0000

What’s holding you back from buying classical music downloads? Is it because they’re too hard to find on iTunes? Or is it because the tracks don’t sound that good?

Sony Music thinks it has an answer: It plans to open its own online store dedicated to classical music, and perhaps jazz as well. Sources tell me that Sony (SNE) is prepping a specialty store that features high fidelity, “lossless” downloads, and is on track to bring in the other big labels–Universal Music Group, Warner Music Group (WMG) and EMI–for a launch this fall. No comment from Sony.

I don’t believe Sony has formally signed on the other labels yet, but the industry sources I’ve talked to seem confident that all of the majors will be on board, via non-exclusive deals, sooner than later.

That makes sense: This one doesn’t require any label to rethink a business model, and the stakes are fairly low. The labels don’t sell much classical or jazz online, so if they can get any kind of boost here, it’s all gravy.

Do a genre-specific store and higher-quality audio matter? For most digital music, the answer has been a resounding “no”: People seem quite content to listen to severely compressed files on lousy speakers and headphones.

And people–perhaps those very same people!–manage to easily find the newest Kesha single at Apple’s (AAPL) iTunes.

But I’m out of my depth here: My classical collection consists of a couple random Mozarts, some Beethoven and maybe a Handel. I’m not sure, because I never play them. For those of you who do: Is Sony’s upcoming project appealing? Let me know in the comments below.

What Are You Doing With Your Smartphone? Not Paying for Music.

Peter Kafka — Tue, 08 Jun 2010 19:40:27 +0000

The music industry’s next big hope is pinned to your iPhone, or maybe your Android handset: A crop of companies, with various amounts of buy-in from the big music labels, think you’ll pay a monthly fee to listen to music on your smartphone.

But that’s going to require a big change in customer behavior. New numbers from Nielsen (via Digital Music News) show that fewer than half of Apple (AAPL) iPhone and Google (GOOG) Android users streaming music to their handsets, and just a third of them are buying songs over the air. And those numbers shrink considerably if you talk about smartphone users in general (click on chart below to enlarge).

The Nielsen numbers don’t say how many smartphone users listen to their own music–that is, music they’ve moved onto phones via PCs and laptops. Presumably that’s a large number. But rdio, MOG, Spotify, Rhapsody, et al won’t work if people are using their phones to listen to their own collections; they need people to pay up for an unlimited collection. That may be a tough sell.

Veoh CEO Dmitry Shapiro Resurfaces at…MySpace Music

Peter Kafka — Mon, 07 Jun 2010 17:39:56 +0000

Dmitry Shapiro, last seen mourning the end of Veoh, has a new gig: Today is his first day as chief technology officer at MySpace Music.

It’s not a huge shock to see former start-up CEOs join big companies after the demise of their own. But this move is a bit more surprising: It means Shapiro will be working for one of the companies that helped put him out of work.

That’s because MySpace Music is a joint venture between News Corp. (NWS) and the big music labels, including Universal Music Group. And Shapiro, among others, has pointed to Universal’s copyright-infringement lawsuit against Veoh as one the primary reasons for the video site’s downfall.

But apparently, Shapiro doesn’t mind working for Universal now. In any case, he’ll be reporting to MySpace execs Courtney Holt, Mike Jones and Jason Hirschhorn, not Doug Morris. And you could argue that it makes sense for MySpace Music to have a tech guy on board who has intimate knowledge of the big music labels, warts and all.

Plus, MySpace Music needs help from wherever it can find it. The site still boasts some 30 million unique users. And as other free music sites melt away, it is one of the only places to get legal streams without paying for them. But two years after launch, it’s still a mess to navigate, and I don’t know anyone who uses it on a regular basis. Maybe Shapiro can help.

Veoh, meanwhile, never actually went away. Something called Qlipso purchased the site, which had raised some $70 million, for less than $10 million in March.

Apple Pulls the Plug on Lala, Replaces It With…Nada

Peter Kafka — Tue, 01 Jun 2010 10:30:29 +0000

Remember a month ago? When Apple announced that it would shutter Lala and everyone assumed that it was going to replace the streaming music service it bought in December with a streaming music service of its own?

Now Lala’s gone. Apple shut it down last night sometime after 2 am Eastern. And there’s nothing in its place. Just this message:

Free streaming music hasn’t completely left the Web: You can still get it at MySpace Music and in various forms at sites like GrooveShark and HypeMachine.

But the big music labels, which own a piece of MySpace Music, aren’t happy with this arrangement. And the other services are in a legal gray area–they’re not fully licensed, but the labels aren’t trying to sue them out of business, yet.

Meanwhile Spotify, which delights European music lovers with its free service, has yet to get permission to operate in the U.S. If it does, it’s almost certain to cut back on gratis tunes in favor of a subscription offering.

So what about a cloud-based model, whereby you access music you own from anywhere you can get a Web connection? Apple (AAPL) seems interested in the idea, and so does Google (GOOG). But I have a hunch we’re not going to see anything like this soon.

Still, maybe Steve Jobs has a surprise up his sleeve. Perhaps he’ll tip his hand tonight, when the Apple CEO sits down for an interview with Walt Mossberg and Kara Swisher at D8. We’ll have live coverage beginning around 6 pm Pacific.

Apple to Debut iTunes.com, Mac Pro and MacBook Air Refreshes at WWDC?

John Paczkowski — Fri, 28 May 2010 13:15:05 +0000

The big news coming out of Apple’s Worldwide Developers Conference 2010 in early June will almost certainly be a next-generation iPhone, a device with specs much like those leaked earlier this spring. But there may be a few other announcements as well. The next version of the Mac OS X, perhaps. And beyond that, some news about the Mac and iTunes.

In an inspired bit of entrail reading this morning, Kaufman Bros. analyst Shaw Wu says Apple (AAPL) may have a libretto of big WWDC announcements. “Other announcements we are picking up that could potentially be made are iTunes.com, a web-based version of its iTunes client, and new Mac refreshes with faster processors and graphics, namely the Mac Pro and MacBook Air, which were last refreshed in March and June 2009, respectively,” he wrote in a note to clients this morning.

An interesting bit of speculation. Certainly, it’s conceivable that the Mac Pro and MacBook Air get updated. As Wu notes, it has been quite a while since the last one. But iTunes.com, the online music service Apple is believed to be building on its Lala.com acquisition? That might be a bit of a stretch, as my colleague Peter Kafka reported in late April.

“Sources tell me that in the past few weeks, Apple has started signaling to the labels that it’s interested in a Web-based version of iTunes, its dominant music retail platform,” Kafka wrote on April 30. “But those conversations are preliminary at best. So if you’re expecting to hear about an ‘iTunes.com’ offering in the near future–like during Apple’s June 7 developer conference–you’re likely to be disappointed.”

PREVIOUSLY:

Gaming WWDC: A New iPhone–But Not on Verizon

The Chapter And Verse on E-Bookstores

Geoffrey A. Fowler — Thu, 27 May 2010 01:14:49 +0000

As books go digital, much of the focus has been on which gadgets offer the best approximation of old-fashioned paper and ink on a screen. But there’s another choice that’s just as important for readers to weigh before they make the leap to e-books: which e-bookstore to frequent.

Reading devices like the iPad, Kindle and Nook will come and go, but you’ll likely want your e-book collection to stick around. Yet unlike music, commercial e-books from the leading online stores come with restrictions that complicate your ability to move your collection from one device to the next. It’s as if old-fashioned books were designed to fit on one particular style of bookshelves. What happens when you remodel?

[ See post to watch video ]

Much of this problem stems from the publishing industry, which has demanded that e-bookstores embed digital rights management software in most best sellers to keep them from being stolen and swapped, free, online. The music labels once asked the same from digital-music retailers, but eventually agreed to open up.

The e-bookstores share in the blame. Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Barnes & Noble Inc. (BKS) and Sony Corp. (SNE) all want you to buy their own gadgets and to continue buying e-books from their stores. For example, purchases from Apple’s new iBooks store can be read only on Apple’s own iPad (and soon the iPhone). Even though Apple said it would support an industry standard format called ePub for iBooks, in practice your iBooks purchases remain locked on Apple’s virtual bookshelf. (So I hope iBooks customers like Apple’s light-brown wood paneling.)

Browsing Amazon.com on the Kindle

Many of the biggest e-book providers fall short of putting readers fully in charge of their own digital-book collections, but they have begun to unveil their own solutions for moving your e-books around.

Amazon, which jump-started the shift to e-books with its Kindle, lets customers read its e-books through apps on at least six kinds of devices. Amazon custom-built the free apps for gadgets that include the iPhone, iPad, BlackBerry, PC, Mac and (later this summer) devices running Google’s (GOOG) Android software. If a device has an Internet connection, the apps automatically load Amazon e-book purchases from the company’s website, saving you the fuss of keeping track of files and transferring them between gadgets with cables. In many ways, this is more convenient than the way we manage our digital-music collections by manually adding and deleting files from iPods through a computer.

Amazon’s apps are slick and work on many of the most popular devices today, but Amazon buyers should know that they’re likely stuck using the retailer’s software forever. While Amazon says it plans to keep making apps for more devices, the list of potential devices for reading grows longer every day. Moreover, Amazon sells its e-books in a proprietary format, so there’s no way to open those files on another device without an Amazon app or without resorting to cumbersome (and potentially illegal) third-party conversion software.

The Nook with Barnes & Noble store

Barnes & Noble, too, adopted an Internet-connected app approach, providing a seamless way to shift its e-books between the Nook, PC, Mac, BlackBerry, iPhone, WindowsMobile for the HTC HD2 and soon iPad. Barnes & Noble has been integrating its e-bookstore into niche e-reading devices, like those by Plastic Logic, Irex and Pandigital. It also, uniquely, offers you the chance to “loan” some e-book purchases to a friend for 14 days. But its bookstore requires a somewhat annoying step: Each time you download a book to a new device, you must enter your name and the credit-card number that was used to buy the book in order to unfasten the digital lock on the book.

Beyond the apps, Sony, Barnes & Noble and Apple and a few smaller e-bookstores all promised they’d put their weight behind the industry standard format ePub, which is the e-book version of music’s Mp3 and can be read by almost every reading device (except the Kindle). That sounds great in theory, but in practice, the ePub files either can’t be transferred or doing so is cumbersome.

The problem is each company adds digital rights management software to an ePub book. A copy of “Moby Dick” I bought from iBooks delivered just blank pages when I opened it on the Nook. A Barnes & Noble e-book produced an error message in Sony’s PC ePub reading software. Barnes & Noble says its books will be compatible with devices like the Sony Reader after a software upgrade.

An iPad showing Apple’s iBooks store.

There were two notable exceptions: Purchases from Sony’s e-bookstore and a Borders Group (BGP)-backed store called Kobo could open on the Nook and other ePub-reading devices if I used a free program from Adobe (ADBE) called Digital Editions to transfer it. That’s a nice insurance policy but the process is far more complicated than it should be.

There may yet be a third way. Google, which plans to launch an e-bookstore later this year, says customers will be able to access its books through apps on popular devices and through a Web browser on any device—including a phone or computer. Google’s argument is that we shouldn’t lock ourselves into one bookstore if it is going to offer titles that are dependent on special apps or devices. Google’s existing free out-of-copyright books service works under this same general premise, but it isn’t yet ready for prime time. It requires you to always be online to read a book and its pages aren’t well formatted for reading on small screens or mobile devices. Google executives say they will fix both issues when the commercial service launches.

For now, the e-bookstore choice comes down to which compromises readers are willing to accept. Anybody who just wants a simple way to carry digital books around might be happy with an app-based approach. But readers intent on building an e-library may want to either invest in an ePub-based collection, or hold off until the industry figures out a better solution.

Walter S. Mossberg will return June 10.

Write to Geoffrey A. Fowler at geoffrey.fowler@wsj.com