RIAA Provides New Years Cold Wet Slap to Consumers Face

Just days before the Consumer Electronics Show (CES) where legendary musicians and the buzz of new product introductions will showcase how consumers manage and enjoy their digital media “everywhere”, the Washington Post is reporting that the Recording Industry Association of America (RIAA) has a federal case against Jeffrey Howell, an AZ, man who kept a collection of about 2,000 music recordings on his personal computer.  RIAA maintains that it is illegal for someone who has legally purchased a CD to transfer that music into his computer.  

Huh?  It’s illegal to transfer CDs to a computer?  I thought court rulings over the last 20 years have found no violation of copyright law in the use of VCRs and other devices to time-shift TV programs; that is, to make personal copies for the purpose of making portable a legally obtained recording?

Who is RIAA?  It’s an organization that represents the major recording labels in the USA. These labels pay multi-millions of dollars for this representation and since RIAA is based in Washington, DC., they act as an industry lobbyist, literally.  They often urge, cajole or otherwise influence Congress to take their side in the “battle” against “music piracy.”  I’m not sure who would visit, but the RIAA even ran a Holiday Anti-Piracy Campaign message streaming across its web site offering tips on “avoiding pirate products.”

And northwest news the Oregon State Attorney General and the University of Oregon are being assaulted by RIAA’s tactics.  RIAA subpoenaed the University asking it to turn over the names of students that it suspected of making copyrighted material available to file sharers.  Note the keyword here is suspected.  While no one would disagree that it’s appropriate for victims of copyright infringement to pursue statutory remedies, shouldn’t that pursuit be tempered by basic rights of privacy and due process?

Typically RIAA harassment comes in the form of a pre-litigation letter to “suspects” they believe are guilty file sharers. There is even a credit card payment link – p2plawsuits.com where these so called “suspects” that receive the pre-litigation letters can drop off a quick $3000 to stop the RIAA from suing them.  Maybe next up is payroll deduction options?!  Good grief!

But that’s not good enough.  RIAA is now running around with deep- pocket teams of lawyers saying that even making a personal copy on your computer is a violation.  This hard-line position is clear. RIAA wants to roll back time to pre-internet days of vinyl albums.  If you make copies of copyrighted music recordings – even on cassette tape – you’re stealing.  You’re breaking the law and you could be held legally liable for thousands of dollars in damages.

The RIAA’s legal crusade against consumers (its customers) is a text-book example of an old media company clinging to a business model that has collapsed.

UPDATE: The Washington Post left out a couple of facts that are now being reported for the people who need to read all the details.  Turns out the article was misleading in that the RIAA was not only going after Howell for ripping his CD’s, but for also putting those ripped files into a shared Kazaa folder.  I disagree that because he put them in a shared folder its infringement, but its a different claim than the original one of just ripping them to his PC.  It will be interesting to watch…

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Unlimited Download TV Service

Let’s see, I slept for 7 hours; it’s a new day and an announcement of yet another start up in the internet video space.  This seems like a daily ritual. 

The newest is Sync TV, a spin off from consumer electronics company Pioneer, which launched a beta download service.

The audio and video quality of the TV shows is comparable or superior to the same show on DVD.  SyncTV will provide HD programming across some of the different channels and will also have programming available in discreet 5.1 Dolby Digital Plus, giving you the “home theater” experience.  They allow you a great deal of flexibility in how you play back the TV shows you download. You can play back shows on up to five ‘home’ devices which mean PCs/Macs now and other home entertainment devices in the future (read portable players). 

That’s the good news.  The bad news is yet another DRM (Digital Rights Management) technology for the consumer to try and get their head around.  Sync TV is using an open-standard DRM called Marlin.  Yet another group of top electronics manufacturers joining forces to develop a standard for content management and protection.  Marlin is also referred to as “OMArlin” because it supposedly bridges between the Open Mobile Alliance (OMA) DRM v.2.0 and the Marlin DRM standards.  Does anyone care, outside the companies involved?  Not really.  Consumers might agree that content protection is a good idea but, they just want to play their stuff on all their devices. And they want everything to be cheaper, too. 

It’s another set of companies trying to protect what they see as their intellectual property and make money. You could make the claim as the same motive as Microsoft, Apple, RealNetworks and others in the DRM struggle.  The marketing spin tries to convince us that DRM is intended to make it easy for us to buy content and share it, without being encumbered by content protection schemes.   But, adding Marlin to this mix will be yet another failed attempt to create a DRM “standard”.   

What I do find interesting with Sync TV and all the regulatory noise about bundled programming, is the fact that users can subscribe a-la-carte for a variety of programs they want to watch. Each channel costs about $2 each per month, and currently there are four subscription channels available. Showtime is the foundation partner with promise of more.  

The Sync TV launch underscores the two worlds that now exist–the heavily regulated telecoms and broadcasting sectors and the almost entirely unregulated internet channel.  

Where do you think most of the innovation is?

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Kill Internet Radio

A recent decision by the Copyright Royalty Board in Washington, DC to nearly triple the licensing fees for Internet radio sites is irrationally high and will hurt music sites like Pandora. The new royalty rates are more than 4X what satellite radio pays and broadcast radio does not pay these. These new royalties will kill Internet radio.

In response to these new and unfair fees, Pandora formed the SaveNetRadio Coalition, a group that includes listeners, artists, labels and webcasters.

If you want to help you can sign a petition urging your Congressional representative to act to save Internet radio.

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7 Predictions for ’07

 

Looking in the mirror at just what objects did appear closer as the year comes to a close, I suspect a key question on your mind is: What is Mac’s prognostication of digital home and general usage trends next year…?

1. Music is THE Application for Mobile Phones

CD-quality music is going to be on more than half the entry-level cell phones used around the world by year-end. Music will be THE application on cell phones measured by consumer use and revenue-generated by handset makers and wireless service providers. Apple proved people will pay for good-sounding music, including hundreds of their favorite songs, easily accessed by simply pressing a button. And these music cell phones will store hundreds and late in the year thousands of songs, which is plenty for the average music fan.

But what about video or Mobile TV adoption? Mobile TV will continue to develop, but will be challenged to win market acceptance because of the small size of cell phone screens. Battery limitations and the small screens make long-term, non-stop viewing unappealing, not a good user experience. The most likely mobile TV applications will be people checking sports scores and updates; cartoons, videos, standup comedy etc., and/or general news. All these will need to fit in about a 3-to-15 minute time frame, according to most industry experts. Many people won’t watch TV on a cell phone for much longer than that, except for some special, out-of-the-mainstream reasons. Mobile TV’s early adopters are expected to be mass transit commuters, primarily Asian and European adults. Look for those countries to be early adopters.

2. Apple iTunes Remains Dominate

Apple will see their iPod market share erode in ’07 from increased competition thanks to Microsoft (Zune), the increased availability of independent video subscriptions (studio’s, broadcasters, news organizations etc.,), and the MTV URGE marketing juggernaut of VH1, MTV and CMT.

The “Leopard” version of the OS will extend Apple MSS to 8% and the FrontRow: media access embedded in the OS along with iTV is what the digital home needs in an interface device. The OS and device will be hugely successful with Apple retail stores able to promoting a compelling value proposition for consuming video content on your schedule…on any device… any time and keep those “buying eye-balls” on iTunes.

The increase in content sources and video quality of the iPod will drive demand for portable video players and subsequently on demand video content. The standard drive size for an iPod will be 100GB by year end. Flash models will ship with 8GB standard and upper end units with 15GB.

The Apple iPhone (Cell phone) will have few new features, but will become big sellers. It won’t be introduced at MacWorld rather it will be mid-year.

3. IPTV Over-Hyped and HDTV Prices Drop as Demand Increases.

The first sub-$500 27-inch LCD HDTV will hit the market. The dramatic price drops are causing consumers to not only upgrade living room sets, but buy additional units for different rooms in the house.

IPTV adoption and speculation will continue to be rampant and over-hyped. Industry pundits will continue to state that it’s right around the corner and that the deals are ramping the industry. New mega-revenue streams don’t exist. There are opportunities for the industry, including programming for non-traditional platforms, but 2007 will not be the year for broad adoption.

4. Blu-Ray and HD-DVD Sales Stall

With no HD-DVD standard concluded, format wars will continue to confuse the consumer and retail is unable to position the differences. Touted as the second coming of the DVD, it’s starting to look a lot like the second coming of the Laserdisc. The inclusion of 1080p support in Playstation 3 (PS3) won’t matter to consumers because there is very little content available and it’s at a premium price.

Speaking of Sony — they will stumble over backwards compatibility with PS2 games and lack of an interactive strategy. Gamers will become further addicted to Xbox 360 combined with Xbox Live, where points and ratings offer a direct comparison of skills against other Xbox Live members, which leaves PlayStation 3 out in the cold. For the console market, 2006 will be game over at Sony.

5. Generation C (Content) Mind Share

In three years, people born between 1980 and 2000, will outnumber Baby Boomers and Gen-Xers. They will be a consumer sector of tremendous importance to the media & entertainment industry. Not only are they big, but they will be fragmented and difficult to reach. The increasing number of media channels – instant messaging, email, social networks, iPods, mobile phones, Tivo, P2P networks, handhelds, video games, etc., – through which this group communicates and consumes media & entertainment, makes them a very elusive target for us to market to them. The characteristics of this generation – one embracing a pervasively digital world – and the implications for media, entertainment, and advertising is going to drive everyone nutty.

Social networking services will morph into something even less useful, like social shopper with coupons and we’ll see sites provide buying recommendations triggered by your profile data.

6. Microsoft Success

Late-February they issue a Press Release proclaiming that “Windows Vista is the best selling operating system ever.” Consumers will love the Vista Media Center Edition with Xbox 360 connectivity in large scale. Adoption rates of Vista with XP customers will be very slow due to computational and memory requirements.

Frustrated with Apple’s market power, the music industry will move aggressively closer to Microsoft. It won’t matter, as the Zune will be deemed the most underwhelming product Microsoft has ever made. And afraid of Microsoft’s market power, the movie industry will try to cozy up to Washington.

Groove collaboration software will ship in the Office suite for the first time. It won’t matter as more significant desktop apps will move to an Ajax/server-based design like Zoho.

7. MPAA Supports Consumer Content Value Chain (When Pigs Fly!)

We buy a title, not a particular file for a title (so, we buy video once, for all devices)

“Stop, pause, resume, buy, rent, etc.” all work across platforms, devices, and service providers/retailers

Content transcoding is a job for the professionals and the serious hobbyists and the MPEG, H.264, video compression codec’s…whatever, is banned from everyday consumer vernacular

We need to know as much about DRM as we need to know about locks in our bank safety deposit vault

Content (purchased and our own creations) are as safe as credit cards (Meaning we should be angry when someone rips the content that we had to pay for)

I left off the ever important legal prediction…there will be a felony conviction in the U.S. for a crime committed entirely in a virtual world and for the Wiki people, the word “mashup” will be the most overused word in 2007!

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A Spiraling Vortex of Movie Download Ruin

New copyright exemptions went into effect at the end of November, and it’s still illegal to copy a DVD to your iPod for personal use. The proposed exemptions to allow copying commercial DVDs to portable media players were rejected. The new copyright exemptions are in effect for three years and additional information is available at the U.S Copyright Web site.

Consumers can NOT copy DVDs for personal use, but film professors can use software to copy movie clips from the discs for educational use. Huh? And there is an exemption where the blind can now use applications to hack and read copy protected books. This is bizarre. It’s okay to space and time shift your video, yet it’s illegal for protected (e.g. DVD) content under the DMCA rules to be copied to your iPod?!

But, Wal-Mart steps up to save the day and is now offering the general public a chance to buy a DVD…say Lord of the Rings and pay $2-$4 extra for a downloadable copy that can be played on a laptop, portable video device, or both. According to CNN, 40 percent of all DVDs sold in the U.S. are sold at Wal-Mart.

When customers buy “Lord of the Rings”, they can choose to pay $1.97 more to play it on portable devices, $2.97 more to play it on PCs or laptops, or $3.97 more to play it on either portable devices or PCs/laptops. But not in iPods. According to the WalMarts Web site;

The Portable format is optimized for on-the-go viewing using ‘PlayForSure’ portable video players. If played on a PC, the image quality will not be as good as the higher resolution Standard format. These videos are not compatible with Apple iPods. Portable format videos are encoded at a 320 x 240 resolution with an average bit rate of 500 kbps.

Any movie that is downloaded from Wal-Mart will be stored in a user’s Wal-Mart Video Download Manager as well as their Windows Media Library. Users can only have the movie on one computer at a time, but they can re-register the license on any number of computers, meaning it is possible to play it on the computer with the license and then move it to another computer only if you move the license.

I’ve always learned to frame debates or arguments in terms of the average person, not the looney edge-case fringe, but I would argue this is kind of confusing!

This is a spiraling vortex of ruin and doesn’t support the consumer content value chain…We buy a title, not a particular file for a title (so, we buy video once, for all devices!).

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