College campuses were once a prime spawning ground for new digital music services.
Those days appear to be over.
Closing the book on the role of campuses as digital music laboratories is the recent demise of Ruckus -- an ad-supported music download service that was available for free to students at 200 universities through direct content deals, as well as to anyone else with a .edu e-mail account. The closing came after Universal Music Group and Sony Music Entertainment dissolved their Total Music joint venture, which acquired Ruckus last year.
Ruckus joins a list of several other once-promising services, including Napster and Cdigix, that suffered an early death after attempting to offer college students a low-cost, legal alternative to peer-to-peer (P2P) file-sharing networks. The abrupt closing of Ruckus in early February has left university officials scratching their heads over where to turn next.
Compounding the problem is the U.S. Higher Education Opportunity Act, enacted in August. It requires universities to offer students who use their networks alternatives to popular P2P offerings, along with other measures like implementing technology to block unauthorized distribution of copyrighted works.
But the law doesn't state which measures would be considered appropriate as an alternative. The U.S. Department of Education is currently defining what that means, but the process could take months.
According to the Campus Computing Project (CCP), which studies the use of information technology at U.S. universities, most schools offering students a licensed music service were using Ruckus. Former Ruckus officials say students from more than 1,000 universities were registered in its system.
What's left? The leading remaining alternative is the Choruss initiative, led by industry consultant Jim Griffin and backed by Warner Music Group. Choruss aims to collect a monthly per-student fee from participating universities in return for allowing students to use any P2P network. Universities would have to implement some kind of technology to track which songs are downloaded and how often, so that a nonprofit entity could then distribute the fees to rights holders, much as collecting societies like ASCAP do.
But Choruss isn't yet a fully baked deal. Details like pricing have yet to be resolved, and unconfirmed reports late last year said that only three of the major labels are onboard, with Universal as the sole holdout.
The biggest barrier is cost. The current per-student monthly figure being kicked around is somewhere less than $5, which the university would either have to pay or pass along to students in the form of an activity fee or other line item. But as the fate of past college-focused services has shown, universities and students are reluctant to pony up.
The challenge with any model like that is finding someone to pay for it, a former Ruckus executive said. Universities are also challenged by the current economy, and even historically it's been tough to get them to pay for any kind of online service. I don't know anything that's changed that will make it easier for Choruss.
DOING THE MATH
If the licensing fees needed for Choruss to monetize P2P traffic total less than what universities are already paying to block it, that may change. According to a CCP study, private U.S. universities spend an average of more than $100,000 annually on software designed to block P2P activity on their networks and another $150,000 on hardware and staff salaries for these efforts. Public universities spend less -- about $25,000 for software and $64,000 for hardware and other fees.
For larger colleges like Ohio State University, which has more than 53,000 students, even a monthly $1 Choruss fee per student would quickly exceed these figures if they were required to collect from all students without an opt-in feature. And that's not counting the cost of the technology needed to monitor which songs were downloaded.
Critics of college-focused music plans like CCP director Kenneth Green say it makes more sense to use existing commercial solutions like Hulu or iTunes than to develop customized solutions.
Whatever the answer, the music industry has to come up with something to offer universities soon. Barely 25 percent of public four-year colleges offer any alternatives to P2P services, according to Green's research.
With Ruckus gone and Choruss not yet available, that leaves a huge void to fill.
(Editing by Sheri Linden at Reuters)