A New DVD Format Fight

Heavyweights Are Choosing Sides in Battle Over Next DVD Format [pdf] – a subtle story with a host of conflicting interests. With IP at the center, but also the issue of what might happen if either (a) the Chinese decide to play hardball with technology restrictions and (b) what the PC business might bring to the picture. This should be a really interesting fight — on many levels. (Slashdot discussion: Tech Titans Prepare to Battle Over Next DVD Format)

The new discs and their players will not be widely available until at least 2005, but already the world’s largest electronics, computer and entertainment companies are embroiled in a multibillion-dollar fight over whose technology will become an industry standard.

[…] Beyond the technical details like tracking speed and tilt is a serious tussle over how to divide – and protect – the billions of dollars in royalties from the licensing of this technology and the content sold on the discs. Also at stake is an effort by electronics makers to prevent emerging Chinese rivals and well-established Silicon Valley computer makers from making significant inroads into the home entertainment business.

“This is a very intense conflict over intellectual property,” said Warren N. Lieberfarb, a driving force behind the development of the original DVD format. It has the added overlay, he said, “of the Japanese, Korean and European consumer electronics industries fearing China’s aggressively emerging consumer electronics industry as well as the PC industry.”

[…] Sony and its allies dismiss claims that their technology is too expensive, saying that the cost per disc will naturally fall as production takes off. They also say their rewriteable discs are what consumers really want because they can be used not only to play movies but also to record high-definition digital television programming, now available selectively in the United States and offered on a limited basis in Japan starting this month.

[…] Copyright infringement is another worry. After the rapid spread of illegally copied DVDs, Hollywood is pushing both technical groups to come up with new security measures to protect their movies. Neither group has developed a prototype that satisfies the movie industry – a major impediment to a commercial launch.

“We are very much focused on both picture quality and content protection,” said Peter Murphy, senior executive vice president and chief strategic officer at the Walt Disney Company, which has about one-fourth of the home video market. “The consumer electronics manufacturers can come up with the technical standards for the next-generation discs, but unless we also agree on the content protection standards, many of the studios may choose to wait before releasing content in the new format.”

Also lurking nearby are giants like Microsoft, I.B.M. and Intel, which are eager to work their way into family rooms by promoting their technology for use in set-top boxes, DVD players and digital video recorders with hard disk drives. American computer makers, adept at producing hardware on thin margins by building sophisticated global supply chains, could also develop competing products, turning television into just another function of the home computer.

A Look at What’s Coming in 2004

Media and Technology in 2004 (Slashdot discussion: NYT: 14 Media & Technology Convergence Trends)

The convergence of media and technology, long predicted but not yet fulfilled, is at last showing signs of happening – with high-speed Internet access making much of it possible. With more American households going to broadband, faster Internet connections are changing the movie, music, telephone, computer and cable businesses.

The following entry is one of the topics raised in this article. Others include:

  • With CD Sales Slipping, the DVD Steps In — and let’s think about what that means in terms of copy protection, DeCSS and other access controls — plus the laws to enforce these technological locks.

    The industry is hardly settled on how best to entice customers with DVD’s. In addition to stand-alone packages, 50 Cent and the rocker Tom Petty have released DVD sets with bonus audio discs. Many more artists, from Metallica to Alicia Keys, have offered bonus DVD’s with their traditional CD albums.

    Even the packaging is still in flux. The hip-hop duo OutKast, for instance, issued their recent DVD collection, “The Videos,” in both the jewel boxes used for CD’s and the clamshell case used for movie DVD’s.

    Label executives hope to find clues in these numbers on how to drive DVD sales in the new year.

    “Because of the plethora of releases this year, there’s certainly a lot of data which we’re in the middle of combing over now to make some decisions about what we’re going to be doing,” Mr. Katz said.

  • Personal Video Recorders: Executives Plan Now to Deal With Popularity

    Personal video recorders, which can easily skip over television commercials, may not yet be in most American homes, but they are certainly on the minds of advertising executives.

    […] “The challenges presented by TiVo are obvious,” Mr. [David ] Ernst [of Media Initiative North America] said. “Yet there are also opportunities to develop new types of advertising not constrained by time.”

    Those include product placements within a show and interactive versions of television programs that encourage viewers to visit a Web site for more information. Initiative Media is developing advertiser-produced informational programs that could be viewed free using cable’s video-on-demand technology.

    […] Commercial-skipping is a problem for the nation’s broadcasters as well as for advertisers. A network suffers if viewers routinely skip over its promotions for programs. And if consumers record a show for later viewing, broadcasters lose the lead-in effect that helps draw viewers from popular shows to shows that follow in the lineup.

More on the MPAA’s "Education" Programs

Or propaganda — you decide. And, if that doesn’t work, there are other strategies to threaten infringers with: Studios Fight Piracy With Education

The studios say they will continue their effort to educate people on the effects that piracy has on moviegoers by threatening the fundamental economics of a popular form of entertainment. They are taking their message to grade school classrooms where volunteers teach lesson plans about the costs of illegal file sharing. Industry-sponsored advertisements are playing at movie theaters. The ads profile behind-the-scenes working people – set designers, costume makers and the like – to show that downloading hurts more than superrich entertainers.

[…] [S]ome film executives say that without drastic measures, illegal file sharing is unlikely to stop, particularly in foreign countries, like China, where pirated copies of movies are often titles more popular than the legally available fare. Ultimately, movie executives may be forced to take a cue from their music industry counterparts who caused a stir when they started suing illegal downloaders. Only when consumers find themselves or their children facing prison, some movie executives say, will they get the message that sharing movies is a crime. [emphasis added]

USAToday on the eMusic Biz

It’s all about using digital music downloads to sell something else — [Via Scripting News] 2004 may see ‘bit of a gold rush’ for digital tunes

Seattle-based Loudeye (LOUD) recently teamed with Microsoft (MSFT) to take advantage of the trend. The crosstown partners are offering companies a way to instantly erect their own music-download services by accessing Loudeye’s music archive using Microsoft software.

Loudeye CEO Jeff Cavins says the partnership could spur the rise of upward of 100 new digital music offerings worldwide in 2004. “It’s highly conceivable you’re about to see a bit of a gold rush around digital music,” Cavins says.

[…] Now Loudeye, which has 80 employees and annual sales of about $13 million, has begun packaging its music archive with Microsoft’s Windows Media software and is helping companies dream up ways to use downloads to promote other products and services. “This really is a tool to drive cross-merchandising,” Cavins says.

NPR’s Morning Edition

Today’s Morning Edition had a piece on CD copy protection, with Prof Ed Felten and Alex Halderman as well as the head of SunnComm, Peter Jacobs.

Music Copy Protection (Javascript audio link on the NPR page)

Record labels have spent years trying to install technology on compact discs to prevent them from being illegally copied. But the vast majority of CDs are still easily burned. NPR’s Rick Karr reports on the technology that keeps hackers and the recording industry at odds.

Jacobs floats the interesting theory that copy protection as absolute protection will never work, but tying adherence to copy protection to other benefits (ticket discounts, lyrics, etc.) will. Ed Felten points out that it only takes one hacker to get music files onto the P2P networks.

And, most surprisingly, there’s a theory raised by Prof. Doug Lichtman (U of Chicago) that there are those who hack on the basis of purely political/moral arguments, suggesting that copying should be completely legal.

Why Am I Not Surprised

Apparently, the US Congress continues its tradition of exempting itself from legislative restrictions: We Hate Spam, Congress Says (Except Ours)

Even as Congress was unanimously approving a law aimed at reducing the flow of junk e-mail, members were sending out hundreds of thousands of unsolicited messages to constituents.

The spasm of activity is aimed at attracting voluntary subscribers to the lawmakers’ e-mail lists, which would not be subject to House rules that normally impose a 90-day blackout before an election for taxpayer-supported Congressional mass communications.

Slashdot discussion: Congress Loves Spam — If It’s From Congress

From the NYTimes Least Liked Music of the Year Column

Tasteful Imitations and Sagging Follow-Ups

Jon Pareles, Neil Strauss, Ben Ratliff and Kelefa Sanneh listened to a lot of bad pop music in 2003; herewith, their least fond recollections.

[…] STRAUSS My biggest letdown was watching the recording industry deal with downloaders. I just think it’s terrible p.r. I don’t see any fewer people on Kazaa. The only thing it’s encouraged people to do is to take their downloaded files and not share them. But they’re all still there trying to get music.

PARELES The recording industry keeps trying to build a wall in the ocean. They keep trying to shut down the Internet. And they think they can do it by suing 12-year-olds, when what they need is a great subscription service.

A Look at eMusic From Wharton

Via News.Com: Online music’s winners and losers. An odd litte piece, frankly, that seems to ignore the current economics of emusic retail, which is a loss leader for everyone. Wharton’s proposition that streaming is the answer seems to miss the technological alienation angle — are you really ready to rely on a company to be 24/7 available, not to mention not to mixup your playlist? And what if your hardwired DRM device fails?

Provocative, at least……..

To some extent, all the models could fly. Larry Kenswil, president of eLabs, the media and technology division of Universal Music Group, suggests that music, like movies, should be able to thrive in a wide variety of channels: “People can watch a movie (at a theater), or on video, or on a pay-per-view channel. They have a dozen ways.”

Some experts, though, are betting that the ranks of the online music vendors will thin out because technology, consumer preferences and costs will conspire to create a dominant business model. Wharton marketing professor Peter S. Fader says all the signs point to the eventual emergence of streaming as that model.

For the moment, though, the models based on selling tracks and albums will predominate because that is how most people have learned to obtain music online, Fader notes. Perhaps more important, downloaded music is portable. It can be burned to a CD for listening in the car. It can be put on an MP3 player for listening while jogging or flying. But, in the end, downloading is burdensome, Fader suggests. “Obtaining the songs is a nuisance. It’s a pain to download them, to organize them, to back them up.”

And when you come down to it, Fader adds, people really don’t care much about having physical ownership of their music. What they really care about is having access to the music they like, when and where they want it.

At least they don’t purely push this Wharton-based theory. We get an opposing view from Steve Jobs himself:

Not everyone, however, agrees. Apple’s Steve Jobs recently told Rolling Stone magazine that music ownership is an ingrained habit, one that will always prevail: “People don’t want to buy their music as a subscription. They bought 45s, then they bought LPs, they bought cassettes, they bought 8-tracks, then they bought CDs. They’re going to want to buy downloads.” Jobs, of course, is the mind behind iTunes and so could be somewhat partisan. But he may have a point because even with music it is important to remember that people–especially Americans–like to own things.

Then there’s the community notion (see the following FurdLog entry):

The better approach, one that will most likely have to be part of a successful business model, is to create a sense of community among buyers or subscribers–not unlike the sense of community the original Napster as well as Kazaa and Morpheus have created among their users, [Gartner’s Mike] McGuire says.

The New York Times’ Underrated and Overrated Ideas

An interesting line up: Judging 2003’s Ideas: The Most Overrated and Underrated

From Underrated:

Curatorial Culture

In all the hype over Apple Computer’s online music store, one fascinating new feature included in the latest version was strangely overlooked: the celebrity playlist. The digital age version of the venerable mix tape, playlists have been a central selling point of the MP3 music revolution, since creating a brand-new mix of your favorite tunes is now as easy as dragging files into a folder on your desktop. Apple’s new Celebrity Playlist area in its store features collections of music assembled — with liner notes — by famous musicians: Sting, Ben Folds, Wynton Marsalis and many others.

What’s potentially revolutionary here is the ability to buy a compilation of music handpicked by another individual, as opposed to the official compilations released by record labels. No doubt Apple will soon offer a feature that enables ordinary music fans to create public playlists engineered around every imaginable theme (the post-breakup collection, the happy Nick Drake songs, the underappreciated recordings of Miles Davis) and then sell those compilations via the online store. Historically, the world of commercial music has been divided between musicians and listeners, but there’s long been a mostly unrewarded group in the middle: people with great taste in music — the ones who made that brilliant mix for you in college that you’re still listening to. They’re curators not creators, brilliant at assembling new combinations of songs rather than generating them from scratch.

Steven Johnson, author of the forthcoming “Mind Wide Open: Your Brain and the Neuroscience of Everyday Life.”