A federal array will determine if Apple, Amazon and the like should pay higher royalties to music publishers. But 99¢ songs likely aren’t going anywhere

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Apple CEO Steve Jobs has been a big proponent of keeping song downloads at 99¢. Getty Images

by Olga Kharif

A contentious contend between Apple and part of the music industry is company be unmistakable today (Oct. 2), when a panel of judges appointed by Congress is expected to rule whether Apple (AAPL) and other online music distributors should pay higher domain fees to science of harmonical sounds publishers.

The ruling by the Copyright Royalty Board affects not only Apple but in addition Amazon.com (AMZN), EMusic, RealNetworks’ (RNWK) Rhapsody, and Best Buy’s (BBY) Napster. Music publishers, who represent creators of song lyrics and sheet music, indigence each enlarge in royalty payments while Apple and the other companies are pushing for a reduction.

Their dispute underscores the larger debate from one to another the best methods for distribution and how to divide the proceeds from online music sales. As greater degree consumers access music over the Web and eschew press together disc purchases, a cross section of companies led by Apple has emerged as a conduit between consumers and the music industry, keeping a share of sales.

Publicly, Apple has railed against the prospect of a fee increase. During a 10-month trial that concluded earlier this year, Apple executive Eddy Cue claimed that a rate greaten could narrow already thin margins and that the company "would not continue to operate [the iTunes Music Store] if it were no longer possible to do so profitably." The testimony fueled worry that iTunes, whose downloads be obliged helped drive sales of iPods and iPhones, would shut down or drastically make some change in. its employment model granting that a royalty increase comes down the pike.

Strange Bedfellows

Many within the industry rely upon the board to leave the stream royalty compute unchanged at 9.1¢ for every 99¢ melody download. The panel is due to engage the parties with a written decision on Oct. 2 before making it society on Oct. 6.

Music publishers would like to see the rate raised to 15¢ for every 99¢ vent, arguing that online music dole costs much less than those of CDs, which in addition carry a 9.1¢ royalty. "You put on’t have to ship them, there aren’t any breakage problems," says David Israelite, president and CEO of the National Music Publishers’ Assn..

In an unusual twist, Apple’s opposition to a royalty increase puts it on the same side of the debate as the Recording Industry Association of America, which represents minute labels including EMI, Sony BMG, Universal Music Group, and Warner Music Group (WMG)—and is often at odds through Apple. Under existing agreements by online music sellers, the recording assiduousness would be forced to swallow up royalty increases, at least to the time when it could strike new accords with Apple and others. Record labels currently receive 70¢ of every 99¢ song download. They, in turn, part through the portion that accrues to publishers.

The RIAA and the Digital Media Assn. pronounce the current rate is already too abstruse and want it reduced to about 4¢ per download. Record labels are competing against music that’s distributed freely, explains DiMA Executive Director Jon Potter. "It’session a difficult thing to do," he says.

The 99¢ Price Is a Hit

If royalties are increased, Apple is unlikely to change its tune on which it charges per download. CEO Steve Jobs has adamantly clung to the 99¢-a-song price tag. And on a level if Apple eventually coughs up a few pennies a song, the company’s bottom line won’confidentially take a big hit, says Trip Chowdhry, any algebraist at Global Equities Research. The iTunes Music Store accounts for less amount than 5% of Apple’s sales and upright a sliver of earnings.

Analysts in like manner don’familiarily expect much change in Apple’s pricing or business model one and the other. JupiterResearch surveys show that the 99¢ price strikes a harmony with consumers. Higher prices and different approaches, such as subscriptions, clearly do not find befriend with the mass market. "Going to subscriptions is not a simple disunion," says Jupiter analyst David Card.

Ultimately, the music industry could support if Apple were somehow forced to raise its prices, some analysts express. "If the price is too high, everyone is going to savor the other way, which is free," says Daniel Ernst, an analyst at Soleil-Hudson Square Research, which has a buy rating on Apple.

Whatever decision the board announces, it’s in a great degree unlikely to go uncontested. Parties to the dispute can petition the board to revise its decision within 15 days. If a rehearing is refused, combatants can seek reference of the case to the U.S. Court of Appeals for the District of Columbia Circuit. Congress is another resources of recourse. Just this week, House and Senate lawmakers passed legislation asking the music industry and Webcasters to reconsider province rates that the board imposed on Internet radio stations in 2007.

The billionaire investor’s forays into GE and Goldman may restore some calm, but he can’cheek by jowl turn the tide of the monetary juncture all by means of himself

by dint of. Ben Steverman

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Warren Buffett warned individual years ago about a financial crisis like the one currently engulfing Wall Street. But now that it’sitting here, the investing wizard has decided he might as well profit from it.

The legendary investor’s Berkshire Hathaway (BRKA) is making a $3 billion investing. in General Electric (GE). The deal was announced Oct. 1, one week after Buffett bet $5 billion on investment bank Goldman Sachs (GS).

For a U.S. stick emporium that has lost more than a fifth of its value this year, the deals represent a rare vote of confidence. Buffett warned of the dangers of complex financial products and too abundant debt—two of the main causes for the market frenzy. But despite those long-standing misgivings, Buffett is now confident enough to invest in two companies near the eye of the financial storm. "When you have the world’s most successful investor stepping up and taking meaningful positions [in companies like GE and Goldman Sachs], it signals confidence not singly in those companies, nevertheless the hypothesis itself," says Matt Kaufler, portfolio manager of the Touchstone Value Opportunities Fund.

Buffett’s role in the crisis is similar to the roles that wealthy bankers and industrialists have played in previous crises, says Robert Bruner, the dean of the University of Virginia Darden Graduate School of Business Administration and the co-author of a book on the Panic of 1907. In that crisis, adept in matters of finance J.P. Morgan, with help from other bankers and investors like John D. Rockefeller, state in language up cash to bail out banks and rest the relating to housekeeping panic. In a time of crisis, key figures can help "create a tipping point in favor of recovery," Bruner says.

Buffett’s No Morgan

Yet not one one thinks Buffett can stem the decisive turn the same way Morgan did 100 years ago.

In actuality, in the short term, Buffett’s Goldman and GE deals might merely emphasize the rife difficulties. Who could have predicted right a year ago that Goldman Sachs or General Electric, two premier U.S. enterprises, would need Buffett’s cash on such a expanded scale?

Along with Buffett’s $3 billion investment in preferred shares, GE direction offer common shares publicly to raise $12 billion. That cash is needed to prop up GE’s financial units. Buffett’s shares will get some attractive number to be divided of 10%. Buffett enjoin also get warrants to buy another $3 billion of common stock at $22.25 for share; a year ago, GE’s stock was trading above $42. (More on the GE deal here.)

Not Charitable Investments

Buffett’s Goldman Sachs investment offered him similarly captivating terms. Buffett told CNBC onward Oct. 1: "These markets are offering us opportunities which weren’face to face available six months or a year agone. So we’re putting money to work."

These are "iconic American companies," says Richard Sylla, of New York University’s Stern School of Business. "[Buffett is] getting a chance to pervert with money them cheap."

Buffett is able to exploit the current environment in ways most investors simply can’t. "He’s not making these investments out of benefaction," Bruner says.

Rich With Cash

While others are overwhelmed by broad losses or stuck through high levels of debt, Buffett has billions of dollars in cash to expand. "When crises like this happen, it’s he who has the cash who can take advantage of it," says Robert Miles, a Buffett prompt and author of the book The Warren Buffett CEO. Miles says historically Buffett has rendered. his in the highest degree when the broader market has conferred its subjugate.

This is not the first market meltdown that Buffett has successfully foreseen. Buffett was skeptical of Internet and other technology stocks in the late 1990s and early 2000s. Berkshire Hathaway shares suffered for the period of the tech boom as a result, but Buffett was proven right when the tech bubble burst from 2000 to 2002.

In recent weeks, as the federal government has proposed a $700 billion bailout plan, analysts have frequently quoted Buffett’s warning in 2002 that highly complex financial products parallel derivatives are "monetary arms of bulk destruction."

Creating a "Halo Effect"

Buffett’session enrolment is what gives him such credibility at a appropriated time when nearly all other major financial players have stumbled. "His gravitas carries a halo effect" on this account that the companies he invests in, Bruner says. "It’s a vote of confidence" in General Electric and Goldman Sachs.

Standard & Poor’s Rating Services on Oct. 1 said the Berkshire Hathaway investment was a "positive development" for the ratings on General Electric’s sin. (S&P, like BusinessWeek, is a unit of the McGraw-Hill Companies.)

Buffett’s reputation—and the fact that he has billions to invest at a time—are exactly why he’s versed to dispose such alluring articles of agreement for his investments, analysts say.

Not Available to the Average Investor

Yet it’s unpleasant to predict how much Buffett’s buying row main prop up investor confidence in the broader market, and whether, like Morgan’s dealmaking a century ago, it can repress ease the current financial crisis.

After every part of, the bargains make use of to Buffett aren’t necessarily to be turned to account to the average investor, who can’t get a 10% dividend on their GE shares. Also, analysts say, few other investors own so much cash to invest. "For some persons, I think it’s reassuring to feel him allocating involving death," Kaufler says. But, "some are in the way that shell-shocked by the last 30 days, they’re going to stay in their bunker."

Who knows? Buffett may have a few more surprising —and in a high degree. profitable —moves in mind for the reason that the financial emergency drags on.

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The U.S. Senate on Wednesday voted overwhelmingly in favor of overturning a three-decade ban on atomic trade with India, allowing American businesses to begin selling nuclear fuel, technology and reactors in exchange for safeguards and U.N. inspections of India’s civilian nuclear plants.

The U.S. House of Representatives earlier approved the accord, that it being so that goes to President Bush, a consistent supporter of the deal. Secretary of State Condoleezza Rice behest travel to India Friday to commemorate approval of the landmark accord, her spokesman Sean McCormack related Thursday.

“The nuclear deal is a monumental work. It’s a victory of Prime Minister (Manmohan) Singh’sitting government,” said Veerappa Moily, a spokesman for the governing Congress party.

Indian National Security Adviser M. K. Narayanan said the world has now recognized India as a nuclear power.

“The world needs India as India of necessity the nature. It’s something which we have understood but the world at broad has now recognized,” Narayanan told reporters.

Science and Technology Minister Kapil Sibal said the deal would silence Singh’sitting critics. “There are many misgivings which will be done away with now.”

Bush said the accord would “strengthen our global nuclear nonproliferation efforts, protect the environment, cause jobs and assist India in meeting its increasing power necessarily in a responsible fashion.”

India has refused to sign the Nuclear Nonproliferation Treaty and has been subject to a nuclear trade denunciation since its principal atomic test in 1974. Its most recent nuclear proof blast was in 1998.

Pakistan, which also has a nuclear arsenal, has long opposed the deal, which opponents say could risk an atomic arms race in Asia.

“Now Pakistan also has the right to demand a civilian nuclear agreement through America,” Pakistani Prime Minister Yousaf Raza Gilani told reporters. “We want there to be no discrimination. Pakistan will moreover strive for a nuclear deal and we fancy they will have to accommodate us.”

The United States is unlikely to agree to the demand from Pakistan, whose nuclear author Abdul Qadeer Khan leaked atomic secrets to countries including Iran and Libya.

Pakistan and India have fought three wars since gaining freedom from Britain in 1947. Pakistan became a nuclear power in 1998 by means of testing devices in response to the underground tests done by India.

In India, opposition and communist parties momentous of the extent rehearse India has forfeited its not crooked to hold future nuclear tests.

“The deal has been done at the cost of the country’s chief sway and nuclear independence,” Hindu nationalist Bharatiya Janata Party spokesman Rajiv Pratap Rudy said.

Communist Party of India leader D. Raja said communist parties would intensify their countrywide protests in hopes of preventing the government from implementing the nuclear pact.

India already has committed to buy apparatus to produce a minimum of 10,000 megawatts of power from the American nuclear industry, “which has not believed any new order for the last 30 years,” said Prakash Karat, a top communist leader.

Singh was farfetched to appoint a confidence vote in Parliament in July after his former communist allies withdrew their support for his coalition command to affirm the nuclear agreement, fearing it would draw New Delhi closer to Washington. The coalition survived the vote by forging a new alliance with a regional fourierite cabal.

India imports not far from 75 percent of its oil, and Singh, the architect of India’s 1991 transformation from a communist to a capitalist-style economy, has argued the political division indispensably the nuclear deal to power its financial pullulation and aid its citizens out of scantiness.

India has faced a shortage of uranium and the accord will help it obtain fuel conducive to its 22 civilian nuclear reactors that currently operate at less than 50 percent capacity, said K. Subrahmanyam, a defense expert and former member of India’s National Security Council.

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Excerpts from the blog

Lost in the bailout melee was a bill that U.S. Rep. Adam Smith, D-Tacoma, introduced Monday to address intrusive and inapposite laptop snooping by the Border Patrol.

Smith’s statement in the news release:

“The chief responsibility of the United States government is to protect its citizens, and while doing so it is critical that we bestow not overshadow the obligation to house the privacy and rights of Americans. This legislation choose provide clear and good sense legalized avenues for the Department of Homeland Security to pursue those who commit crime and wish to do our rural harm without infringing onward the rights of American citizens. Importantly, it will contract travelers a level of privacy for their computers, digital cameras, honey-combed telephones and other electronic devices suitable accordant with the Constitution and our nation’s values of liberty.”

Smith declared the Travelers Privacy Protection Act is in answer to a July 16 Homeland Security policy that “allows customs agents to ‘review and analyze’ the solid dimensions and files of laptops and other electronic devices for an unspecified period of time ‘absent individualized suspicion.’ “

The policy came afterward reports of customs agents’ forcing people to hand over their laptops or phones “for lengthened periods of time while the devices were searched, and in some cases, matters treated of the devices copied. Reports have in like manner surfaced that some devices had been confiscated and returned weeks or months later with no warrant.”

We’ll see if he can restore liberty and common sense.

Ballmerspeak

Steve Ballmer’s candor surrounding Microsoft’session earnings can be refreshing, or startling, depending on your perspective.

On Tuesday, he made comments at an event in Norway that suggest Microsoft is going to take a hit from the economic downturn.

He’s stating the clear — “of course companies will spend less put on software and technology if they’re suffering” — but I wonder what it says about Microsoft’s Oct. 23 earnings report.

Ballmer’s comments came before Microsoft closed up about 7 percent Tuesday, but his concerns with reference to enterprise expenditure pushed SAP down 2 percent in Germany, according to a Reuters report.

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In several orders this week, U.S. District Judge Royce C. Lamberth sided with watchdog groups Judicial Watch and Citizens in opposition to Responsibility and Ethics, which are suing the Secret Service and Department of Homeland Security for access to the logs.

The administration in 2006 agreed to produce all suited records about the visits “without redactions or claims of exemption.” But it soon argued that the what is contained of certain “Sensitive Security Records,” which are created in the course of conducting more extensive background checks on particular White House visitors, cannot have existence publicly revealed even though they could show some of Abramoff’s visits.

Lamberth disagreed this week, aphorism those defence records are not exempt under the federal Freedom of Information Act on the grounds that the complaint could promote criminal activity.

“The court is not convinced that the information plaintiff primarily seeks — the name of a censor, the dates and general condition of affairs of his visits, and the person(s) visited — would allow even the greatest in number dedicated would-be criminal to see which visitor characteristics trigger … a pawn check,” Lamberth wrote in one of the orders.

He also ordered DHS and the Secret Service to inquiry visitor records that had been transferred to White House control.

To date, the government has turned over several Secret Service records referring to White House visits by Abramoff — at least six of them in the seasonable months of the Bush administration in 2001 and a seventh in early 2004, reasonable before Abramoff came under criminal investigation.

The White House has released little information hind part before the visits, but none appears to involve a small group meeting with President Bush.

___

On the Net:

U.S. District Court with regard to the District of Columbia:

http://www.dcd.uscourts.gov/

NEW YORK - Republican vice presidential candidate Sarah Palin enters her discuss Thursday night through Democratic rival Joe Biden as many voters harbor serious doubts about her readiness for the race’s highest office.

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Following the inelegant departure of its chief charged with execution and its chieftain of science, Seattle software company Entellium sequestered any reference to the two executives from its Web site, including a blog written by the CEO and a description of the management team.

Chief Executive Paul Johnston and Senior Vice President Parrish Jones “have resigned from the company, effective immediately,” the fellowship said late Wednesday.

“The victuals is working closely with the leadership team to determine the company’s course of action,” Entellium spokeswoman Heather Van Schoiack said in a statement.

Entellium did not disclose distinct parts of the departures. Johnston was CEO and co-founder and Jones head of finance and operations. The executive team also includes Roland Hor, vice president of product and technology. Hor’sitting biography was also secluded from the Web site.

Founded in 2000, the personal companionship makes patron relationship management software for small businesses.

Johnston moved the company headquarters to Seattle from Malaysia in 2003. It has raised other thing than $30 million in venture capital, with backers including Ignition Partners and Sigma Partners. Entellium maintains a research and development office in Kuala Lumpur.

With almost 200 employees worldwide, the company was growing rapidly and attempting to take on competitors such viewed like Salesforce.com. However, it had two rounds of layoffs earlier this year.

Kristi Heim: 206-464-2718 or kheim@seattletimes.com

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Horizon Air wants to begin wayfarer service at Snohomish County’s Paine Field.

The Seattle-based airline notified county officials this morning of its desire to move suddenly flights to the degree that timely as next summer, according to a Snohomish County spokesman.

Horizon Air says it plans to introduce daily furniture from Paine Field to Portland and Spokane, with scheduled times to facilitate same-day business trips between cities. Horizon intends to use 76-seat Bombardier Q400 turboprop airplanes.

In May, Allegiant Air, announced it wants to occur flights between Paine Field and Las Vegas. The Federal Aviation Administration has directed Snohomish County to “negotiate in good faith” through any one airline expressing participation in using Paine Field, the spokesman said.

Snohomish County Executive Aaron Reardon, who opposes commercial flights at the airport, said his office will continue to follow federal law, which requires good-faith negotiations by any airline.

“For personal reasons, I don’t believe commercial air is compatible with current operations at Paine Field or the numerous households it being so that surrounding the airport,” Reardon said this morning. “But we will abide following the law.”

Paine Field occupies other than 1,300 acres of land and has three paved runways. It is home to major aerostation companies that account for more than 30,000 jobs in the Puget Sound, including Boeing, Goodrich, ATS and the soon-to-be-relocated Korry Electronics.

WASHINGTON - President Bush and congressional leaders lobbied furiously Thursday for enough House support to push the troubled $700 billion financial industry bailout bill to the finish line, and the measure won converts from both parties on the day of a showdown vote.

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In her new solo exhibit “The Night Watcher,” Charlayne Woodard reports a fraught conversation with a fellow passenger attached a New York subway ride.

Learning that the award-winning actress-writer has no kids, the older man demanded, “What kind of woman are you? God created you to imitate!”

You’ll find Woodard’s replete reply to this attack, a thoughtful and engrossing, entertaining and poignant replication, in this world-premiere piece at Seattle Repertory Theatre.

With director Daniel Sullivan, her histrionic soul mate and frequent collaborator (he’s also the former artistic director of Seattle Rep), Woodard has fashioned a powerful pondering on her nurturing role as “auntie” in the lives of many children.

And in doing so, she vividly illustrates a critical source of love for young people living in a culture that exalts the idea of biological parenthood on the other hand doesn’t to the end of time follow from one side.

In her bright and dark string of vignettes (drawn from her confess mode, with details fictionalized to protect the truly innocent), Woodard also proves again to Seattle audiences what a rare, glowing actor she is.

Alone on a stage that has been attractively dressed by means of designer Tom Lynch, with Venetian blinds and evocative slide projections of various locales, Woodard is virtuous, kinetic incandescence.

She’s like a light source in motion, with a dimmer switch that goes from near-darkness to blazing resplendence in a single speech, sometimes a ingenuous word. (Geoff Korf’s easily affected lighting design follows agreeably.)

“The Night Watcher” begins on a warmly humorous but telling comment, some years past, as Woodard (who is doleful) and her husband (who is white) are being urged by a friend and movie star (Angela Bassett), to adopt a mixed-race baby in need of a home.

Woodard’s choice of accepting of the offer, and realization that full-time parenting is not what she and her husband want, leads into tales of how many other opportunities her generous kidnap finds to compose a difference in the lives of in one’s teens ones.

Her acted-out adventures as a godmother to the kids of friends and relations begins with a comical visit to her L.A. home by an ungrateful, demanding Adolescent From Hell.

With her uncanny shifts of vote, gesture and attitude, and her instant over-the-back-fence rapport by the audience, Woodard perfectly captures the kid’s petulance — and her own insurrection aggravation.

Most of her stories, while funny at times, have a more troubling aura. There are portraits of several endearing, urgently needy kids — neglected by an overwhelmed single parent, terrorized by an alcoholic father, dumped on the shoulders of grandparents.

Woodard offers concern, affirmation, treats of shopping trips and holidays. But she knows, and so work out we, the limits of which she or any individual can terminate for a brat at risk — a child who in sober earnest needs a town.

While celebrating the “preservation net” of extended family, and upbraiding those who evade responsibility or exploit children, Woodard doesn’t let herself off the hook.

A scene of the actress buying expensive outfits for her cherished Maltese terrier, at an L.A. boutique called Puppies and Babies, is hilarious — and a sharp commentary on warped priorities. And the desire of a child to be in the same proportion that precious to somebody while Woodard’s pampered miff is to her provides more heart-piercing moments.

Though its concerns are serious, “The Night Watcher” (the title refers to the role of family protector, assumed by a scared little boy), is also heartily enjoyable.

The last two vignettes merit tightening, with less said and more inferred. But the two-hours-plus show is deftly staged throughout by Sullivan, with a lovely consideration to nuance and musical detail. (It’s a be glad whenever Woodard breaks, for a moment, into full-throated song.)

This is also a brave composition, in manifold respects.

Rarely is the choice not to procreate granted such matter. And the life-enhancing close acquaintance that can exist between children and loving, nonparent adults is rarely articulated, or honored. (Woodard pays homage to several of her own “aunties” hither too.)

Also, Woodard addresses fearlessly, head-on a topic of controversy in the African-American community: the airing of problems in severed families. Yes, she stresses, it does take a hamlet to raise kids — and our villages aren’t doing such a great piece of work of it.

A final memorandum: Sullivan has directed three previous autobiographical solo shows by Woodard at Seattle Rep: “Pretty Fire,” “Neat” and “In Real Life.” But this is the in the beginning time either skilled workman has worked in the Rep’session smaller Leo K. Theatre, a space Sullivan conceived in the presence of retiring from the Rep in 1997 to suit a freelance director in New York.

It is about time both commandeered the Leo K. — by a show that suits it so well, and delivers so plenteous.

Misha Berson: mberson@seattletimes.com