As revenues from sales of traditional media have plunged, the music business has been looking for alternate ways of making money from its products, including a variety of subscription services, ad-supported streams, and blanket licenses. The focus of these efforts has largely been on how to ensure that revenue gets collected by the industry in general instead of disappearing into the black hole of piracy, but there's a related issue that doesn't receive as much attention: how that money gets distributed once it's collected. In an attempt to highlight this issue, the Future of Music Coalition has released a set of principles for the compensation of musicians. Although the document focuses on money from new distribution models, it reads much more like an effort to rewrite the rules of the entire business.

The most critical aspect of this probably occurs in the statement on "direct payment." Here, the principles say that any transfer of revenues to copyright owners are limited to three years. This would eliminate one of the common business practices, in which record companies would pay for recording, distributing, and promoting music, and then count that as a debt that entitled them to recoup their costs from the artists' share of any profits. Were these principles adopted, the labels would have three years to get their costs back, after which they can write it off. The concept of direct payment is meant to ensure that the labels would never have access to this money in order to take their share past this point.

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In an era when labels have to beg or sue most fans to get them to pay $10 or $15 for a plain old CD, some bands are getting a few to lay out more than $100. During the past few years, a number of bands have released deluxe versions of their new albums, including Radiohead, Nine Inch Nails and U2 (the group just released a high-ticket version of "No Line on the Horizon.")

In the next few months, this trickle will become a flood of albums that will sell for more than $50: an edition of Depeche Mode's "Sounds of the Universe" will include two hardbound books of photos; a set of unreleased Jane's Addiction tracks will come in a wooden box; and a reissue of Pearl Jam's "Ten" will come with an extra CD, a DVD and four vinyl records in a linen-covered, slipcased box with a replica of a demo cassette made by frontman Eddie Vedder.

"It's a human response -- if you're really fanatical about something, you want something physical," says Chris Hufford, who co-manages Radiohead with Bryce Edge. "It gives you an additional level of ownership. And if you're going to get something, you might as well get something good."

High-end packages also give fans the kind of bragging rights that reinforce their sense of being involved with a particular artist.

"Even though some bands are everywhere, you get a sense that you're not connected to them in any meaningful way," says Jeff Anderson, the founder of Artists in Residence, who sold a high-end edition of Nine Inch Nails' "Ghosts I-IV," that sold 2,500 $300 copies in a single weekend. "What I try to do is create a collectible. People don't want to pay a ton of money for something that feels like a repackaged good. They want a new piece, and they want something that signifies their identity as a fan."

And these packages -- as different from old-fashioned boxed sets as CDs are from record albums -- look more like collectibles than mere discs of music. In some cases, the high prices they sell for may even help convince consumers that they're worth buying.

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Korean computer engineers are introducing a new digital music format that has separate controls on the sound volume for each musical instrument, such as guitar, drum, base and voice -- an ideal tool for music lovers of different tastes as well as karaoke fans.

The new format, which has a file extension format of MT9 and a commercial title of Music 2.0, is poised to replace the popular MP3 file format as the de facto standard of the digital music source, its inventors say.

The distinctive feature of MT9 format is that it has a six-channel audio equalizer, with each channel dedicated to voice, chorus, piano, guitar, base and drum. For example, if a user turns off the voice channel, it becomes a karaoke player. Or one can turn off all the instruments and concentrate on the voice of the main singer as if he or she is singing a cappella.

Ham says that the music industry should change its attitude to the market as music is becoming a digital service, rather than a physical product. MT9 is the ideal fit for the next generation of music business because it can be used for multiple services and products, such as iPhones, PCs, mobile phones and karaoke bars, he says.

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The Canadian Recording Industry Association this week quietly filed documents in the Federal Court of Appeal that will likely shock many in the industry.  CRIA, which spent more than 15 years lobbying for the creation of the private copying levy, is now fighting to eliminate the application of the levy on the Apple iPod since it believes that the Copyright Board of Canada's recent decision to allow a proposed tariff on iPods to proceed "broadens the scope of the private copying exception to avoid making illegal file sharers liable for infringement." 

Hearings in the iPod case are not likely to occur until 2008, yet these filings from CRIA will reverberate long after that hearing concludes.  It is not every day that the recording industry acknowledges an argument widely known within legal circles - downloading music in Canada for personal purposes is arguably legal as it is compensated activity covered by the private copying levy.

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All the tracks come from smaller labels but they include indie giants known for favouring loose controls over music - Nettwerk, whose roster includes heavyweights Avril Lavigne, Sarah McLachlan and Barenaked Ladies; and Arts & Crafts, stocked with buzz bands like Broken Social Scene, Feist and Phoenix.

Many of these same labels already offer MP3s on their own websites and through EMusic.com, a subscription-based service whose entire catalogue is free of copy restrictions.

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The group, called Merlin, was launched at the annual MidemNet music industry conference with its backers saying it would become the "fifth major" in the industry.

The launch follows the rapid growth in popularity of sites like YouTube, where fans post video clips carrying their choice of music without permission from copyright holders.

The independent record label sector makes up for 30 percent of the music sold worldwide, with the rest from the four majors -- Vivendi's Universal Music, Sony BMG, EMI Group and Warner Music.

The group said it would aim to rectify the "poor cousin" status of deals previously offered to independent labels and will address the "growing assumption that, for emerging media, only the four majors need to be licensed, with the rest free to air."

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