Price Flexibility in OMA After All

Anti-Piracy Software Royalties Cut After Complaints [pdf]

A group of technology firms has slashed the royalties they want to charge for essential anti-piracy systems after pressure from mobile phone companies, the group said on Wednesday.

[…] The technology is used in an open standard developed by the mobile phone industry’s Open Mobile Alliance (OMA). The GSM Association of mobile operators complained earlier this month about the initial price of 1 dollar per device and 1 cent per transaction, such as buying a song from an online music store.

The operators’ protests follow similar grumbling by manufacturers of mobile phones and consumer electronics, who told Reuters in late February that a $1 royalty per mobile device was too high a price just to protect digital music and video against illegal copying.

[…] The group of technology companies which own all the essential patents, represented by a U.S. umbrella organization called MPEG LA, now propose to charge just $0.25 per mobile phone subscriber per year, regardless of the number of songs or other digital content that is being purchased in that year.

See earlier I’m Shocked, Shocked That There’s Price Gouging Going On Here!!; MPEG LA press release: MPEG LA Announces OMA DRM Patent License Terms

Today’s RIAA Lawsuit Coverage

  • RIAA Press Release: RIAA Targets New Piracy Epidemic On Special High-Speed Campus Network — including what I would call a rather blatant suggestion that these universities follow Penn State’s path:

    “This next generation of the Internet is an extraordinarily exciting tool for researchers, technologists and many others with valuable legitimate uses,” said Cary Sherman, President, RIAA. “Yet, we cannot let this high-speed network become a zone of lawlessness where the normal rules don’t apply. We have worked very constructively with the university community, improving educational efforts at colleges across the country, expanding partnerships between schools and legal online services and providing a clearinghouse for expertise on technological anti-piracy solutions. We cannot let rampant illegal downloading on Internet2 jeopardize this collaborative work. By taking this initial action, we are putting students and administrators everywhere on notice that there are consequences for unlawful uses of this special network.”

    […] “Without question, the Joint Committee’s efforts to respond to the issue of illegal P2P file sharing on campus networks continue to yield significant dividends,” Sherman said. “In order to maintain the gains we’ve made, we must move quickly to address this new threat emerging from i2hub and similar applications. We know that it’s very difficult for these legal services to gain real traction on college campuses when pirate services with lightning fast downloads are easily available to students with no seeming likelihood of detection or threat of consequences.”

  • Washington Post: Music Industry Targets College File Sharers

    The entertainment industry’s effort to sue music and movie pirates into submission is reaching into the Internet’s next generation with the filing of several hundred lawsuits yesterday against college students using a faster version of the Web called Internet2.

    […] The RIAA would not say how it infiltrated the Internet2 network but said it was alerted to its existence as a song-sharing hub by articles in college newspapers.

    […] Sherman acknowledged that his group found files being traded that did not violate copyright law but said many more files appeared to be illegally obtained.

    “We didn’t see many copies of the Bible or works of Shakespeare,” he said.

Revistiting the Business Model

In Restructuring, Sony BMG Introduces Classical Label

“I don’t buy the reports that the classical record market is collapsing,” Mr. Smellie said. “It’s just a question of recording the right repertory, marketing it convincingly and applying the right discipline. And in my view, getting rid of crossover allows people to be focused.

“Crossover distorts people’s values. You have a record that sells a million copies, and the universe shifts towards finding the next one. That’s not what we want to do.”

Central to Mr. Hetherwick’s plans is exploring the back catalog of the combined label. That trove reaches back to the 1890’s, when Sony’s original predecessor, the Columbia Phonograph Company, and BMG’s ancestor, the American Gramophone Company, were rivals in the nascent record market.

[…] “For the collector, you could have the complete Toscanini always available online,” he said. The Internet, he added, “would be ideal for some of the contemporary-music recordings that Sony has: avant-garde productions from the 1960’s that are important but that we couldn’t afford to remaster, put into a plastic box and sell in stores.”

The Internet is crucial for marketing, too, he said, pointing out that Yo-Yo Ma’s latest disc, “Silk Road Journeys: Beyond the Horizon,” has sold extremely well through iTunes, where it was the No. 4 seller for a time.

“What the Internet offers,” he said, “is a place where nonspecialists can go and listen to samples to see what they like in the privacy of their homes, without being embarrassed.”

Rearranging the Players

So, is it really the case that the record companies are bailing on e-tailing? Or is it the case that they are letting intermediaries (“suckers”) collect their royalties for them, stringing them along? After all, at least Apple has a hardware strategy to back up their loss-leader. What will Baker Capital come up with? Labels, tech owners sell MusicNet to VCs

MusicNet, the digital-music service formed in early 2001 by RealNetworks and a consortium of big music labels, was purchased Tuesday by a private investment group.

The company said that Baker Capital, a New York-based investment group that specializes in communications and Internet companies, acquired full control of MusicNet from its previous owners, who included Time Warner, Bertelsmann, EMI Music and Sony Music Entertainment.

[…] The sale highlights the big music labels’ retreat from selling music directly on the Net, in favor of letting brands such as Apple Computer, Microsoft and Napster serve as online song stores.

See also optimistic words at Private Investment Firm Buys MusicNet Venture