It is important to note that a lot of Google's competitors in China, including Baidu, Sohu, and Yahoo, have recently been sued by the music industry in China because of their MP3 search engines which often link to illegal copies. Indeed, according to the International Federation of the Phonographic Industry, the record industry's international lobbying group, 99% of all music files distributed in China are pirated (in 2005, by the way, the piracy level in China was 'only' 85%). Baidu's MP3 search engine is responsible for about 7% of the traffic to its service.

While Google has clearly been able to work out deals with the music industry in China, it is currently locked in a number of battles with the music industry in Europe and the United States, and we don't expect that Google will offer a similar service anywhere else in the world anytime soon.

It will be interesting to see if Google manages to steal away users from Baidu thanks to this new offering. If anything, users have shown to be quite resistant when it comes to changing their search habits, and while Google's MP3 catalog is interesting enough by itself, it remains to be seen if it can be competitive against the other MP3 search engines in China.

This week, Fairtilizer has launched the first part of their new distribution platform: an embeddable player which allows indie artists to share their music anywhere on the net from web sites to blogs to social networks.

We told you about Fairitlizer over a year ago, when the company was still in private alpha. The easiest way to describe the site is to say that it combines the discovery aspects of Hype Machine with the distribution model of Tunecore. At the time of our initial writing, the company let artists upload tracks which visitors could browse through to find music they liked. Now Fairtilizer has opened its doors and is launching the next phase of their service: distribution.

Artists can now use one unified interface provided by Fairtilizer to distribute songs to blogs, web sites, social networks, and digital music stores...yes, even iTunes (The digital stores piece is coming soon, the others are available now). The distribution is aided by an embeddable player which can be added to any web site. The player comes in four different sizes and has shuffle and autoplay options as well as the ability to stream a customizable playlist. Once embedded, artists can then easily track analytics like downloads and plays per country.

The Fairtilzer Player:

Additionally, on the Fairtilizer web site itself, each track page comes with customizable URL, artwork, space for description and links (like to artist web sites, stores, and booking contacts, etc.), and a comment board for listeners. Tracks can be set to streaming only or made available for download, and soon artists will be able to mark them for sale, too, if they so desire. The tracks can also be set to public or private.

That private setting is designed to help artists in the initial phases before the launch of a new tune. Traditionally, launching a new track involves three steps: production, promotion, and distribution. With record companies today, leaks can occur in both the production and promotion phases as tracks are sent back and forth between artists, producers, DJs, journalists, and other taste makers who receive a first look before the track becomes publicly available. To combat those leaks, Fairtilizer provides these "private streams" instead. Artists will be able to send the track to specific people just as they did before, but the track will be protected from piracy and leaks.

The Future of Music

Although Fairtilizer will provide tools for artists wishing to sell their music, the focus isn't just on music sales. Instead, it focuses on providing all the tools an artist would need to get their music discovered, downloaded, shared, and distributed.

In the future, says Olivier Rosset, a former music exec and co-founder of Fairtilizer, it won't be about who owns the rights to a recording anymore. Music will instead center around the URL. And at Fairtilizer, they want to be the company that best helps an artist get that URL, that single track, onto the most sites across the internet.

A number of analysts expect Firefox to capture a 20% market share this month and if the downloads for Firefox 3 are any indication, Mozilla might indeed be getting close to this. Here on ReadWriteWeb, more than 50% of our readers already use Firefox.

While quite a few extensions didn't yet work with Firefox 3 when it was released, most developers have made their plugins compatible with Firefox by now.

Microsoft is expected to release the next beta of its Internet Explorer by August 2008, though the time for the final release isn't quite clear yet. Last month, Opera also upgraded its browser to version 9.5, which garnered a number of favorable reviews.

Net Applications has been tracking the uptake of Firefox 3 since yesterday morning, and it is now at around 4.5% -- not bad for its first 24 hours. Firefox on the whole is closing in on 20% market share and is higher among tech savvy crowds (over 50% on this blog, for example). That 4.5% of Firefox web browser users are already using version 3 indicates that about 25% of its user base has upgraded overnight -- that's very impressive.

If you're still on the fence about upgrading, check out the pair of great overviews of FF3 from Lifehacker here and here.

Are you using Firefox 3? Do you plan to upgrade? Let us know in the comments and vote in our poll below.

Warner is hoping for a few things from the DVD. First, to generate additional DVD revenue without much more cash put into production (now "Watchmen" can have an additional "ultimate" edition in witch both releases are edited together). Second, to help launch the movie project into a potential new franchise. "As television advertising becomes less effective because of declining TV viewership, movie studios need to reach a mass audience somehow, and having what amounts to ads sitting on store shelves is seen as a crucial antidote," writes the New York Times.

But it doesn't seem like it will work. If DVD sales are down -- off 3.2% last year, according to Adams Media Research -- why would more DVDs be the answer? Will an additional, direct-to-DVD release of a secondary storyline really help sell more DVDs four months later? Doubtful. Remember, Warner Brothers isn't putting the additional storyline on the "Watchmen" DVD as a value-add for fans, but instead asking people to shell out more money for additional content. It's an advertisement on store shelves, yeah, but one that you have to pay for.

The Reznor Blue Print

Speaking to the New York Times about the potential for a "megamovie" that edits together both "Watchmen" and the direct-to-DVD release, director Zack Snyder says, "The überfans of this property are going to go crazy for that." He's right. The überfans -- what Kevin Kelly might call "true fans" -- will buy anything related to the thing they're fans of. That was the concept behind the March release of the Nine Inch Nails album Ghosts I-IV.

NIN frontman Trent Reznor realized that in order to make money, he needed only to appeal to his true fans, his überfans. He gave the first part of his four part album away for free on the Internet, and then offered higher quality downloads, and "deluxe" physical packages for a price ranging from $5 to $300.

The result was that his true fans ate it up. Reznor pulled in $750,000 in three days from sales of music to his core fan base, and may have picked up a few new true fans along the way via the free downloads.

The movie studios could learn from Reznor's blue print. Clearly $750,000 is not enough to recoup the costs of a $100 million movie, but the movie studios don't have to give anything away for free. What they should do is offer users a low cost, legal alternative to BitTorrent where movies can be had cheaply at high quality and DRM free. Then for the überfans -- fans of the director, writer, actors, or movie itself -- sell additional downloadable content, and offer high priced, physical "deluxe" editions with value added features, as well as all the normal movie merchandising and promotional tie-ins.

Alternatively, maybe simultaneously producing a direct-to-DVD release is a good idea. But make it a direct-to-web release, and use it as a promotional vehicle for the movie. Break it up into small chunks (under 10 minutes each), and put it out on BitTorrent and YouTube in episodic format for free leading up to the full DVD/download release of the main feature. That's akin to what Reznor did by releasing the first part of the Ghosts for free, and asking fans to pay for the rest of the album.

Conclusion

Speaking of a direct-to-web release, in addition to the direct-to-DVD side movie, Warner is planning a series of a dozen 22-26 minute animated "webisodes" that will attempt to create buzz for the film and introduce viewers to its complicated plot (more precisely, they will be semi-animated story boards narrated by an actor). That's a step in the right direction, unfortunately 26 minutes might be too long for the web format -- especially for what amounts to a narrated slide show. That demonstrates that maybe Warner just doesn't yet understand the new medium of Internet video.

According to Snyder, the webisodes will eventually be combined as part of a later DVD release -- which is the type of value-add that those überfans will pay for. But if the goal is to build buzz for a potential franchise, then studios should seriously think about the Reznor distribution blue print. It may not be as profitable in the short term, but could work at scale and help to turn some casual fans into true fans for future releases in the franchise.

The new album, which has ten tracks and clocks in at 43:45, is release under a Creative Commons attribution non-commercial share alike license. The band encourages downloaders to "remix it, share it with your friends, post it on your blog, play it on your podcast, give it to strangers, etc."

This begs two questions: 1. Just how many new albums does NIN have? and 2. Should all artists give away their music for free?

True Fans Theory at Work

What Reznor has done with Nine Inch Nails over the past two months is confirmation of Kevin Kelly's "true fans" theory, on a much larger scale. The theory basically states that any artist can make a living if he or she can cultivate 1,000 "true fans" -- people who will support anything the artist does. The actual number of true fans necessary to make a living will vary depending on the artist and the economics of what he or she produces.

While it is hard to find examples of this in the long tail, we are beginning to see it play out with more and more major label artists. Because Trent Reznor's true fans came through for him for the Ghosts release in March, he was able to release The Slip for free in May. At this point Reznor doesn't have to make money selling albums en masse -- his true fans will still buy the CD and and vinyl copies even though the download is free, they'll still come to his concerts and buy t-shirts and posters.

As we've pointed out in the past, this is also essentially the same theory employed by music startup Sellaband (our coverage), which asks music acts to generate $50,000 from "believers" -- usually in the form of $10 donations from 5,000 true fans. Any band that reaches that goal gets studio time to record a full album and distribution via the site and other retail channels.

However, it is still not clear whether Reznor's success can be duplicated by long tail artists. Clearly, cultivating enough die hard fans to make a living, especially while giving away your core product for free, is not easy. For Reznor it took 20 years and he had the backing of major labels along the way (Reznor's Nothing Records is owned by Interscope, which is in turn owned by Universal Music Group).

"If success for independent artists requires the cultivation of 'true fans' then awareness is paramount," we said in a March post that argued for the positive effect that putting music out for free into viral distribution channels like social networks can have for artists. But for independent artists who don't have major label backing, free might be a Catch-22. Give away tracks to build awareness and cultivate true fans, but try not to cultivate fans who expect everything to be free forever.

It is no surprise that book publishers are trying to find new ways to appeal to readers. We noted in March that offline reading of books is on the decline. Though new forms of book consumption have begun to appear -- such as Amazon's wildly popular Kindle eBook reader -- "free" is an enticing way to get people acclimated to them and a way for publishers to make readers aware of a specific author, title, series, or genre.

Del Ray is taking a page from the music industry by promoting its new Star Wars book via an online giveaway. We wrote a couple of months ago that here is a huge value in awareness for artists and publishers, which is what Del Ray is attempting to build in the Star Wars book brand. The music doppelganger to this marketing ploy is R.E.M. and Pennywise -- both of whom made their new albums available to fans for free a couple of weeks prior to launch, and both of whom saw those albums crack the top 15 on the sales charts. However, like those bands, Star Wars also already has brand recognition, so it will be tough to gauge how many sales actually translate from the online promotion.

"This giveaway is a great way to introduce the legions of Star Wars fans to our books," said Deputy Director of Marketing at the Random House Publishing Group, Christine Cabello in a press release. "We also expect that it will build awareness and excitement for the on-sale date of the final book in the series, Invincible."

Will other book publishers follow suit? Will we ever see a "pay-what-you-want" distribution scheme for books?

That's very much like the advice that Marshall Kirkpatrick gave to Reznor writing on this blog in January after Reznor complained about the download-to-pay ratio the pay-if-you-want Saul Williams album that Reznor produced received late last year. "Times are changing and if you can, it's better to work on innovating along with them than it is to make dragging your feet and suing people your business model," advised Kirkpatrick.

At the time, Reznor wrote that he was "disheartened" that just 28,322 of the 154,449 people who downloaded Williams' album chose to pay the $5 for a higher quality copy. At the same time, though, that's nearly as many as who bought Williams' previous traditional CD release in 2004 (which sold 33,897 copies) and far more who are hearing his music -- which could theoretically translate to increased concert ticket and merchandise sales. Further, because by not dealing with a label the artist is likely taking a much larger cut of the download revenue than they would receive of CD sales revenue, Williams probably made more money on fewer transactions this time around.

Clearly, Reznor was not disheartened enough to forgo trying a similar type of release for his own new album. Ghosts I-IV part I is available as a free download on the NIN site, as well as on BitTorrent. The entire album is available as a $5 download, a $10 double CD, a $75 "deluxe" package with CD, DVD, and Blu-Ray copies, and a $300 "ultra-deluxe" edition that also includes vinyl copies and signed giclee art prints. The $5 download can also be had via Amazon -- where the album has quickly shot up to the #1 spot on the sales charts.

The 9-track free edition of the album is licensed under a Creative Commons license and is free for non-commercial use. "We encourage you to share the music of Ghosts I with your friends, post it on your website, play it on your podcast, use it for video projects, etc." said the band in release notes.

Conclusions

While it is impossible to predict how this release will fare compared with previous traditional NIN releases, that may not be a fair question. The dynamics of the music industry have changed and artists like Reznor and Radiohead are blazing new trails as they attempt to figure out how to best release music under these changing market conditions. If 18.3% of downloaders pay -- as they did for Williams -- then that's probably not a bad number for NIN, who can bet that they'll get far more downloads than Williams (Ghosts is already the most downloaded torrent at The Pirate Bay) and will presumably be pocketing most of the revenue.

What do you think? Is Reznor's release a harbinger of the future of the music industry? Let us know your thoughts on the issue in the comments.

If Apple can't persuade all four majors to license their catalogs for DRM-free paid-for downloads, and even Amazon, seen as the company most likely to rescue the music industry away from the grip of Apple, is only able to do so on a trial basis (with regards to Universal and Sony BMG at least), then what chance does Qtrax have with an almost completely new and unproven model.

To put this into even greater perspective, both SpiralFrog (see last100's review) and We7, two services that have offered ad-supported music downloads for significantly longer, are only able to offer a catalog of around half a million tracks each of a million and a half million tracks, respectively. Why? Because the labels are far from convinced that advertising dollars can ever replace revenue from paid-for downloads or CD sales.

In a followup post today, last100 scored an exclusive interesting Q&A with We7 CEO Steve Purdham. UK-based We7, backed by Peter Gabriel, enables users to download free MP3s that have a short (and targeted) audio advert embedded at the start of each track. The ads then auto-expire after four weeks of listening, allowing users to re-download the same tracks ad-free.

Purdham talks on a range of issues including the company's mission, DRM, resistance by the major labels, new business models and We7's competitors.

On the major labels reluctance to embrace ad-supported music downloads, Purdham says the reason is "simple:"

"They are worried that if they leave the iTunes model, the revenues they get will be diminished. So out of 79p they get, say, 46p and they are worried that ad [supported models] will net a lot less. However, there is a realization that in a world where for every track sold by iTunes... 10 tracks are downloaded illegally with no payment, so the real track revenue is 4.6p. Ad funded models need to show they are additive on the whole or scale to make the total cash available higher than before."

And asked whether Qtrax's service is too good to be true, Purdham comments:

"Well let's just say the reports seem to suggest so, which is a shame as I want to see more ad models appear and then the winners are the ones that execute well. The strange situation with Qtrax, and Spiralfrog last year, do nothing for the cause. There are many big questions that are hanging over Qtrax which needn't have been there but I hope they don't destroy the opportunity for the rest of us."

You can read the rest of the interview over at last100, and don't forget to subscribe to the RSS feed to get the latest digital lifestyle news and analysis.