The American/British poet TS Eliot said in his most famous poem “The Love Song of J Alfred Prufrock,” “I am Lazarus, come from the dead, Come back to tell you all, I shall tell you all.” Like a Lazarus, Kazaa.com is being resurrected as a legal digital music service in the States by Altnet in a joint venture with Australia-based Sharman Networks, which owns Kazaa.com.
For $19.98 a month the new Kazaa offers unlimited and legal downloads from a library that starts on day one with more than 1 million tracks. None of the tracks can be played, however, if the subscriber stops paying or if the company stops offering the service or if the labels do not renew their agreements to supply tracks. Kazaa became the largest-ever online music piracy site after the labels closed the original Napster.
The question now is whether consumers will pay $19.98 a month to subscribe to a pay-me-now, pay-me-forever download music service. Because the tracks are downloaded, the subscriber could, unlike a streaming subscription service, play them when not connected to the Internet. It’s not clear, however, that playing tracks when not online is allowed under the terms of the license.
Altnet says the new Kazaa is aimed at the millions who still use illegal online piracy to get free tracks. Ironically it was the prior Kazaa that led those millions to believe they could and should be able to get music for free.
Altnet spokesman Michael Speck told us, “I think we are building a model that will outflank the illegal operators and overtake what passes for legitimate competition. I believe that the market is maturing and whoever finds a way of effectively marketing against the pirates will fundamentally change the market.”
The company says it has over 10,000 subscribers in the US with high renewal rates. It said they found out about the service from online and offline marketing efforts that included a search strategy. “Suffice to say we are committed to the long term,” Speck said.
The labels brought Sharman, Altnet and Kazaa.com down in an Australian courtroom. The verdict cost them millions in penalties and the ability to continue to operate as an ad-based online piracy site.
Altnet and its owner, Kevin Bermeister, were also involved in Kazaa.com and the lawsuit against Sharman. Bermeister owns most or all of Brilliant Digital Entertainment (BDE), which owns all or at least control of Altnet. At one point, Niklas Zennstrom and Janus Friis owned or had options to own some of Altnet.
Speck was the labels’ main witness against the Sharman/Altnet/Kazaa crowd. He was the head of the Australian labels’ Music Industry Piracy Investigation (MIPI). He obtained approval for the unexpected raids on the offices of Sharman and Brilliant Digital and some of their executives. But he now works for Brilliant Digital.
Brilliant Digital has technology called Global File Registry (GFR), which content companies and Internet service providers can use to deter copyright-infringing content from spreading across social networks and search engines. It automatically gives the would-be pirate the opportunity to obtain the legitimate version of the content being searched for. Altnet intends to use GFR to notify potential copyright infringers about the opportunity to obtain legitimate content from Kazaa.com. Zennstrom and Friss, who made a sizable payment to the labels in the Kazaa suit, were the creators and owners of the original Kazaa, headquartered in Holland.
They developed and operated Kazaa.com until they sold the Web site to Sharman. The two then created the Skype VoIP service before selling it for $2.6 billion to eBay in a daylight heist. They also created the now-failed Joost.com, which by its own admission has failed as an online video service. It blamed its failure on competition.
Bermeister said that Altnet has had a long-standing and exclusive deal with Sharman, which still owns the Kazaa name. The company has been developing the software and negotiating with the labels for two and a half years, he said. The software includes a storefront, authentication software and its own BDE-brand media player for PCs. For non-PCs, he said, Windows Media Player 10 will be the player. The company is targeting the 90% of the market that’s still not paying for digital tracks, Bermeister said. The goal, he said, “is to bring the non-payers into the fold.”
The company intends to go after broadband service providers and cell phone operators to resell the service, he said. After a long absence from the music-loving public’s mind, it’s not clear that Kazaa can be resurrected anymore than Roxio and now Best Buy have been able to bring Sean Fanning’s creature Napster back to market dominance.
The new Kazaa.com is a $19.98-per-month subscription service that’ll provide, initially at least, only US consumers with unlimited music and ringtones. Paying members can download as many songs as their computers can hold as long as the subscriber keeps paying the monthly fee. The music stops when a subscriber stops paying.
Users have to keep paying $19.98 a month forever to hear the tracks they’ve downloaded. When the subscription expires or is cancelled, any tracks that were downloaded will no longer be playable or “otherwise accessible.”
Users are prohibited from downloading tracks to, or playing tracks on, a portable or mobile device. There goes the cell phone and the laptop. However, Bermeister said tracks can be copied to a portable device that has Windows Media Player installed. There goes iPods and iPhones, far and away the most popular portable devices for playing music.
No Internet connection? No songs! Users must log into their account from the PC they want to use to play the tracks. Bermeister said, however, that the subscriber only has to log on once every 30 days to play tracks.
Users can log in from and play files on up to only three different PCs.
The tracks require Windows Media Player 10 or a later version for playback. DRM is used to protect the tracks, as would be expected at the labels’ insistence. Altnet formerly used Microsoft’s DRM and it’s expected that the new Kazaa.com does also.
Users are prohibited from copying any of the full tracks to a CD or any other permanent storage media. The service cannot be used on Macs or Linux PCs. Unless Altnet can get some major cellcos to market the service, it’s hard to see how it can succeed.
Few of the young – both students and those just starting a career – are likely to sign up. Most of them use Limewire or similar online piracy sites to get tracks or they copy tracks from a friend’s library.
Many of the more mature, more affluent crowd are prospects. But will they commit to $20 a month for the rest of their lives when they already have large collections of what they like and, as Steve Jobs maintains, want to own their music, not rent it?
As part of the Australian legal settlement, the labels agreed to provide Sharman with legal content but the conditions were so nebulous that it seemed they would never have to deliver on that promise. However, Altnet says Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI, the four majors, plus a number of independent labels, have provided content to Altnet in the States under both the Altnet and Kazaa brands.
A cynic might say the labels are so desperate these days they’ll get into bed with anyone, even their once-hated enemy who nearly brought them to their knees.
Altnet CEO Bermeister said that when Kazaa launched on July 20 it had more than one million tracks covering music across all genres and generations right up to today’s “Top 100.” He described the online store as “a fresh and exciting music platform.” He’s confident, he said, that Kazaa, despite its nasty past, can beat out the competition, both the pirates and the other legal music sites and services. “We have every confidence that our marketing and affinity with our customers will have us punching well above our weight in the market,” Bermeister said. He promised more details in a future announcement.
It’s not clear, however, that anyone other than Apple, with its millions of intensely adored iPods and iPhones, can sell music online profitably. So far, at least, the music-subscription business has flopped.