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File swapping MSPs - the future of digital music?

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If PlayLouder MSP is successful, it isn't difficult to see how it might snowball. As other labels want a piece of the action, and more legitimate content is made available, then the attractiveness of iTunes, Napster and the illegal P2P services diminishes. But Sanders acknowledges that a big marketing push will be needed to persuade the public that an MSP is no ordinary ISP.

The Future of ISPs, too?

It's isn't just the labels who'll be watching PlayLouder's progress. ISPs, Sanders points out, are a major part of the music distribution chain.

In the United States, the FCC has sounded the death knell for the independent ISP. Earlier this month, the regulator ruled that the local Bell monopolies will no longer be obliged to share their lines when current contracts with ISPs expire. All networks fear becoming commoditized, dumb bit pipes, so the MSP route looks like a way to add value.

"It now looks as if VoIP isn't going to be handled by the ISPs, but by Vonage, Skype and Google – so that's one opportunity gone. So what's left for the ISPs is frankly, content".

"We're a next generation broadband provider: we add value. If you're an ISP, you can't maintain any longer that you're an agnostic carrier of data."

As for a compulsory, "blanket" approach, Sanders not surprisingly would rather wait and see.

"I don’t think a mandated solution would necessarily find the right balance between the long term interests of both parties, which are actually very closely aligned. Just because there's a bit of short to medium-term friction, that doesn't mean there isn't ultimately a coincidence of interests in the longer term."

"If you took the issue to a copyright panel now, the rate would probably be set too low. It would be set to compensate the music companies, instead of how a market would set it as some fair expression of the value of the music. And there's a very big difference between compensation for revenue leakage, and some expression of the value potential in online music."

Looking to the future, Sanders sounds as excited as we are by personal area networking: the personal streaming and sharing made possible by a "BluePod" or "AirPod" - an iPod with wireless radio and network device discovery built-in. He notes that Cambridge Silicon have a combined Bluetooth and WiFi chip that's 8mm² and costs $8.

"That's cheap enough to embed in a CD. Isn't that fantastic?"

Indeed it is, and it's hard to see the rights holders gaining revenue from wireless personal exchanges any other way than through a blanket license. But that's a discussion for the future.

So a lot of people will be watching PlayLouder MSP's progress with great interest. One thing's for sure: by comparison, it suddenly makes Napster, Rhapsody and iTunes seem really, really lousy value for money. And that's a great way to attract a market. ®

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