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GOOGLE MUSIC, LIMEWIRE

Google employees have begun testing Google Music internally, suggesting the long-delayed and much anticipated service is nearly ready to launch, according to music industry sources cited by CNET. But the content deals with the Big Four and the publishers are still not in place. The delays are largely due to the fact that Google is negotiating for cloud music rights and not just the authorization to distribute the songs themselves. The search giant wants to be able to store users' existing music libraries on the company's servers. Labels are in similar discussions with Apple. Labels have never given out licensing rights for digital lockers, so it's not like they can just grab an old template and work off that. They definitely do want Google to join the digital-music fray, however, as the possibility of a large iTunes competitor could mean Apple won't be able to bully music industry executives as easily. Google managers told counterparts at the Big Four last year that they hoped everything would be in place for a launch by late 2010. More recently, Google tentatively planned to demonstrate the service earlier this month at SXSW. Neither ended up happening as Google Music keeps getting pushed back, although technically it still hasn't been officially announced. The nearest event for such a launch is probably the Google I/O 2011, which is taking place on May 10-11… Illegal file-sharing has dramatically decreased since the RIAA successfully lobbied the New York District Court to shut down LimeWire last October, according to NPD Group. Following trhe shuttering, the percentage of Internet users in the U.S. using a P2P service to swap music files fell from 16% to just 9%. NPD estimates that there were about 16 million P2P users downloading music in the U.S. during the fourth quarter of 2010. That's down from 28 million just three years earlier. And the number of tracks that those P2P users are downloading has also fallen, from 35 in the fourth quarter of 2007 to 18 in the fourth quarter of 2010. The research group derived its findings in a January survey of more than 5,500 people. Said NPD’s Russ Crupnick: "LimeWire was so popular for music file trading, and for so long, that its closure has had a powerful and immediate effect on the number of people downloading music files from peer-to-peer services and curtailed the amount being swapped." This somewhat surprising news was contemplated in a piece cleverly headlined “With Limewire Down, Americans Don't Know How to Steal Music,” posted late last week on TheAtlantic.com. But will labels see a corresponding uptick in their latest revenue figures? TorrentFreak, which first picked up on NPD's numbers, doesn't think so. "Why? Well, because music piracy might not have much of an effect on music sales in the first place," Ernesto, TorrentFreak's founder and editor-in-chief, wrote. Added Crupnick: "In the past, we've noted that hard-core peer-to-peer users would quickly move to other websites that offered illegal music file sharing. It will be interesting to see if services like Frostwire and Bittorrent take up the slack left by LimeWire, or if peer-to-peer music downloaders instead move on to other modes of acquiring or listening to music." So far, it doesn't seem like they are. Use of Bittorrent client u-Torrent climbed slightly from 8-12% between the Q3 and Q4 of 2010, as did that of Frostwire, but the gains on those Limewire alternatives are eclipsed by the number of users who seem to have given up on P2P sharing altogether… The RIAA was less successful in extracting retribution from LimeWire, as Judge Kimba Wood of the U.S. District Court for the Southern District of New York flatly rejected the industry's claims that LimeWire should pay up to $150k for each download of some 11,000 songs included in the RIAA lawsuit. In a scathing ruling filed earlier this month, The plaintiffs' position on statutory damages "offends the canon that we should avoid endorsing statutory interpretations that would lead to absurd results," the judge wrote in a 14-page ruling picked up by Computerworld. "If Plaintiffs were able to pursue a statutory damage theory based on the number of direct infringers per work, Defendants' damages could reach into the trillions." An award based on the RIAA calculations would amount to "more money than the entire music industry has made since Edison's invention of the phonograph in 1877," said Wood, the same judge who ordered the P2P service shut down. But Wood's ruling though is likely to be of little comfort to LimeWire, which still faces statutory fines of up to $150,000 per violation. Even the court has said the total could exceed $1 billion.