French Firms Fear Plan To Give Consumers License To Download

The industry here is anxiously awaiting the fate of proposed legislation that would introduce a blanket license for consumers accessing online content.

Legal download services in France claim such a move could destroy the country's fledgling online music business.

The measure would make it legal for Internet users to download copyrighted material for private use, including music from peer-to-peer networks. Consumers would pay their Internet service provider a monthly license fee, which sources say would be around 6 euros ($7.27). The ISPs would in turn compensate rights owners.

The proposal came as an amendment to the forthcoming Digital Copyright bill, which is due to be debated in Parliament in February. The amendment was added after a December vote in Parliament during a session attended by only 58 of the body's 577 members (billboard.biz, Dec. 22, 2005).

The government subsequently withdrew the bill and in mid-January announced it would introduce a new draft in February. Although the blanket license amendment is not included in the new draft, it still can be reintroduced.

Such a license "would mean the end of VirginMega and all the other French download platforms," VirginMega managing director Laurent Fiscal says. "You can't compare [à la carte] pricing with a levy. These two models cannot exist together."

Online music portal virginmega.fr is a division of Virgin Megastore France, which is part of retail and media company Lagardere Group.

"If by paying six euros you can have either six songs from a legal online store or as many titles as you want on P2P networks, the preference for P2P will be massive," says Denis Olivennes, CEO of France's market-leading music merchant Fnac. "It is hard to see a future for legal downloads—even with subscription models—if there are virtually free legal alternatives."

According to research company GfK, 8 million songs were sold as downloads in France during the first half of 2005. Full-year figures are not yet available, but GfK expects the 2005 total to be 20 million songs with a value of 15 million euros ($18.2 million).

In 2004, GfK says 3.5 million tracks were downloaded, worth 3 million euros ($3.6 million). According to labels body the IFPI, total music sales in 2004 were 16 billion euros ($1.98 billion).

"The French digital music distribution market is still in the structuring phase, [but] its potential is enormous," says Morvan Boury, EMI Music France VP of strategy and development.

GfK says about 20 online music retailers are operating in France, including Apple's market-leading iTunes Music Store, FnacMusic, VirginMega, Universal Music's E-compil and Sony Connect. Several other music services plan to enter the market in 2006.

Fiscal says VirginMega averages 600,000 sales and 2 million unique visitors per month. It claims to offer 750,000 tracks. The company also operates stores for outside brands, including top 40 radio station Europe 2 and music TV channel MCM.

FnacMusic's catalog is smaller, with 550,000 titles. Managing director François Momboisse says the company is working on an unlimited subscription service, although a launch schedule has not yet been set.

Meanwhile, VirginMega, FnacMusic and the French arm of content aggregator Loudeye/OD2 are also working on mobile music services.

Telecommunications giant France Telecom already has music services available to its Wanadoo and Orange subscribers. The services were built by French mobile company Musiwave.

"Mobile is becoming very important for digital sales" in France, Musiwave CEO Nicolas Pelletier says. "Building bridges between mobile and Internet will help grow the overall activity." ••••