May 14, 2006

Reuters Article Asks An Ugly Question [5:51 pm]

Do you own songs bought online? Well, sort of - [pdf]

Those songs you bought online from Apple play just fine, of course, so long you do so on the company’s iTunes digital jukebox software, on an iPod, burn a CD (you can only burn the same “playlist,” or collection of songs, seven times), or stream them wirelessly to your stereo using another Apple gizmo.

But Apple’s FairPlay digital rights management, or DRM, software prevents you from listening to those purchased songs on a music player from Dell Inc., Creative, Sony, or others. The same thing goes for songs you’ve imported to your computer from CDs you already own. [Ed note: well, we know that's not quite accurate!]

[...] To be sure, Apple rivals have their own DRM technology to protect against piracy, such as Sony Corp. and Microsoft Corp., but none have been as successful so far as Apple. The Cupertino, California-based company has a 70-percent market share in the United States for digital music players, and higher than that for music purchased online.

Beyond just having songs you bought from iTunes “trapped” on the iPod and in iTunes, it’s also not a snap to move songs from an iPod - whether you bought them or initially pulled them off a CD - back up to a computer. While it’s possible to do so, Apple doesn’t make it easy, right off the bat, because it’s trying to discourage piracy.

“They do it to lock you in,” Enderle said, noting an example of if you spent $500 on buying songs from iTunes. “You now have a $500 switching cost to pull out of iTunes.”

[...] “The average consumer hasn’t run into the restrictions” that the likes of Apple, Microsoft and Sony have placed on online music purchases, McGuire said. “Certainly there’s some interest in Apple wanting people to return to the iTunes store but these restrictions are really due to the rights holders and the labels.”

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You Knew It Was Coming [5:41 pm]

It was only a matter of time after the Warner-BitTorrent announcement: Adult Film Studio Offers Downloads to DVDs - [pdf]

Starting Monday, Vivid Entertainment says it will sell its adult films through the online movie service CinemaNow, allowing buyers to burn DVDs that will play on any screen, not just a computer.

It’s another first for adult film companies that pioneered the home video market and rushed to the Internet when Hollywood studios still saw it as a threat.

“Leave it to the porn industry once again to take the lead on this stuff,” said Michael Greeson, founder of The Diffusion Group, a consumer electronics think tank in Plano, Texas.

“The rest of Hollywood stands back and watches and lets the pornography industry work out all the bugs,” he said.

[...] On the business side, Hollywood makes more money offering films on DVDs than in theaters. As a result, studios are hesitant to anger large retailers such as Wal-Mart Stores Inc. and Blockbuster by selling DVD-ready downloads directly to consumers.

[...] Vivid says its downloads, which will cost $19.95, do not use CSS. Instead, online retailer CinemaNow is using an alternate, proprietary system that it says will protect the adult movies by preventing the burned DVD from being copied to other discs.

“They built a better mousetrap,” Asher said of CinemaNow.

Maybe so, but I’m sure that the it will be engineered around anyway.

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Renaming Net Neutrality [3:34 pm]

OK - what would you call it?  No Neutral Ground in Net Debate

Last week, Representative Edward J. Markey, Democrat of Massachusetts, introduced the Network Neutrality Act of 2006, a bill backed by Amazon, Microsoft and other Web companies, as well as disparate interests like the Gun Owners of America and the liberal group MoveOn.org. Proposed legislation that could change the nature of how the Internet operates should be getting a lot more attention, Ms. Huffington wrote. And if it did, it would be instantly squashed.

Why hasn’t this happened? It’s all in the name, she wrote. “Now, I understand that ‘Net Neutrality’ is a technical term used to describe the separation of content and network operations, but what political genius decided to run with such a clunky name? The marketing mavens behind the Kerry ‘04 campaign?”

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Surprise! If They Want To, People Will Find A Way [3:21 pm]

I especially like the argument that artists would rather go back to a scheme where they get nothing when a used CD is sold.  Talk about cutting off one’s nose to spite one’s face.  This article demonstrates why it’s time for a complete overhaul of this industry — at least a clearing of the executive suite.  Sharing Still Divisive - [pdf]

Depending on whom you ask, Lala.com — a new website that helps song lovers trade entire compact discs for less than the cost of a single iTunes video download — is either the music industry’s salvation or yet another nail in its coffin.

[...] “This is a nudge-nudge, wink-wink way to get around the law,” said Ted Cohen, senior vice president of digital development at EMI Music. “It makes it easier for people to copy CDs and steal music. Why would the music industry do anything to encourage a company like this?”

Cohen and others like him shudder when they hear Lala’s goal of attracting at least 2.5 million regular users within the company’s first two years.

[...] At a conference last August, the chief executive of the Recording Industry Assn. of America, Mitch Bainwol, told a room full of music retailers that “listeners who make copies of CDs and give them to friends are becoming a greater threat than peer-to-peer networks.” Bainwol added that one reason for the industry’s downturn is that 12% of U.S. households regularly copy CDs for acquaintances who might otherwise buy a new version of the album.

[...] But executives at all the major record companies say they are nowhere near a deal with Lala.com. Privately, some executives say they can’t imagine ever partnering with such a site.

Four decades ago, before courts ruled that selling used recordings was legal, the music industry tried to stop stores from offering pre-owned tapes and records. Today, many music executives believe that trading of CDs decreases the industry’s profits. When someone who really wants Aerosmith’s “Pump” gets it in a trade, the argument goes, the band and its label lose a sale.

[Lala's] Nguyen has an answer to that. He has promised that 20% of the money collected by Lala.com on traded albums — or about 20 cents per disc — will go to artists. The company hopes musicians, who receive not a penny when a music retailer sells a used CD, will hype the site among fans. (Managers of artists, however, point out that when a new album is purchased, many artists get much more than 20 cents.)

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