Archive for the ‘Tech frustrations’ Category

DECE’s Secrecy – What Are They Hiding?

I wanted to repost Bill Rosenblatt’s commentary from Copyright and Technology’s site. I absolutely agree with Bill and will up the ante somewhat. DECE is hiding something – and I think it’s the fact it is struggling to gain commitment from its Members….Here’s Bill’s piece:

I got an email message last week from the Digital Entertainment Content Ecosystem trumpeting the release of the “finalized” version 1.0 DECE/UltraViolet specs.

Under normal circumstances, I would take the time to read the specs and summarize and comment on them here — as I have done with Marlin, Coral, XrML, DMP IDP, hNews, the RIAA watermark payload spec, and various others over the years. But I can’t do that, because DECE is demanding that anyone who wants to download the specs sign a nondisclosure agreement – which they say is non-negotiable.

Releasing a purported digital media standard under NDA (let alone a non-negotiable one) is unheard-of nowadays. Every recent consortium or standards body in this field makes its specs publicly available; at the outside, they require filling out a form with contact information.

If DECE wants to attract positive early press in the run-up to its planned summer launch, this is exactly the wrong the way to start. It’s hard not to draw a conclusion that DECE is using secrecy of the spec to bolster its security scheme; and if that’s the case, security experts will draw the conclusion that it can’t be much of a security scheme. Even the secrecy of crypto algorithms went out of fashion several years ago, dismissed by experts as “security by obscurity.”

Others will immediately assume that this is a sign of yet another paranoid Hollywood cabal and write it off. DECE has not exactly been lavishly forthcoming with information over the past couple of years anyway. Ars Technica had even used largely positive language in describing DECE, but I wouldn’t expect such relative goodwill to continue.

Fool vs. US Copyright Czar

Create-Connect-Respect.

That was the theme of this year’s World Copyright Summit that happened this past week in Brussels.  Indeed, I am the Fool cannot claim familiarity within these circles, but I can’t contain myself from poking fun at one of the speakers.  Victoria A. Espinel, who reports to President Obama as the US Copyright Czar, made a speech that addressed the question: “Can cloud-based entertainment services help eradicate digital piracy?”  It’s a very provocative question indeed.  But, her follow up interview lacked any inspirational punch.

Keeping in mind I’m jaded and would like to disregard the “Respect” part of the Summit, I pretend below to join the interview with the NY Times and the US Copyright Czar:

NY Times: Do you see cloud services as primarily being legal alternatives to illegal file-sharing networks, or do they present other problems of copyright?

Czar: I hear it asserted that the cloud is going to cause huge increases in piracy; I’ve also heard that the cloud will be the savior. My own view is that the cloud is neutral. It’s not inherently predisposed to be legal or illegal….But you can build a cloud-based service that’s illegal, and you can build a cloud-based service that is legal.

Fool (to Czar): Who talks like that? That’s really not an answer in my book.

Fool (to NY Times) That’s a stupid question.  I don’t think cloud services will impact piracy one single bit. Piracy is never going to go away because people like free stuff that gives them value.  The cloud services are merely places to hold your stuff and then easily access it from your many devices.

NY Times. Are there particular concerns about copyright or privacy that come up in regard to cloud computing?

Czar: Generally it seems to me that the issues coming up are variations of issues that have already come up with the advent of the Internet. The cloud can intensify or accelerate the pace at which we as a government need to address those issues, and which the marketplace needs to address those issues.

Fool (to Czar): Shouldn’t they call you Czarina? Or is a Czar also like a Queen?  Anyways, you use lots of words but actually communicate zip.

Fool (to NY Times):  That’s a mildly better question.  I am an optimist sometimes, and actually see opportunity where others see concerns.  For example, cloud services like iCloud help labels recover some of the dough they’ve lost over the years.  By providing amnesty to pirates, they may just use cloud services to store their stuff and pay annual fees to keep it there.  These fees will be split up with the majority going to the labels.  So finally, labels now can recuperate a tiny bit of what they’ve lost to piracy.

NY Times: As you said, so much of the infringement happens beyond U.S. borders. How are you able to deal with foreign jurisdictions, and what kind of success have we been having in pursuing criminal activity in other countries?

Czar: It’s a big challenge. I would note three things. First, we in United States have a good and strong legal system, although we do think we can make improvements, and we sent recommendations to Congress for improvements….Second, even in countries where there are strong legal systems we need to have better and increased law enforcement by those countries.  The last thing is that we need to protect our own citizens as much as we can.

Fool (to Czar):  Nice structured response, but I kind of stopped listening when you said “I would note…”

Fool (NY Times):  That’s a really good question and damned if I know the answer to either.  Short of having an Internet United Nations that sets and enforces laws, there will always be rogue nations who have more important things to think about (like clean water, corruption or how to secure the next Olympics bid).  With regards to your question about the success in pursuing criminal activity, I’d say close to zero.  Seize one website and a mirror immediately pops up.

Fool from NY Times:  What day is it today?

Pretend Czar:  Today is before tomorrow and after yesterday. I would note that it isn’t really today everywhere because right now is tomorrow as well as yesterday in other places.

Fool (to Czar): What are you talking about?

Fool (to NY Times): It’s Thursday, all day.

Best Buy is Exiting the Entertainment Business

As if I need to continue harping on the fact that entertainment retailers are dying, but get this: Best Buy is exiting the entertainment business.

Best Buy announced their plans to abandon their direct relationship with entertainment and has begun taking actions such as closing its entertainment distribution center in Indiana.  The spin doctors at Best Buy have done a nice job in downplaying this story, because the implications are huge.

What it means

Best Buy is handing over their entertainment business to a third-party provider that will essentially sublease the space in Best Buy stores. Sure, you can still buy CDs, DVDs and BDs.  But, a company called Anderson Merchandisers will run the CD/DVD/BD categories.

BIG news

Here’s why:

  • Best Buy was the only traditional US retailer that was involved in UltraViolet.   Now that Best Buy has ditched entertainment, I see no reason why they would maintain membership.  What’s the point of signing up for membership fees, operational costs and the list of issues that I have spoken of here?  Ultraviolet will lose the only US retailer that has a store presence to explain to customers what UltraViolet is all about.  That will be a big blow.
  • Anderson Merchandisers….They do the same thing for Wal-Mart stores!  Isn’t that rich.  So now Best Buy has not only left the business, but they have given it away to their mortal enemy.
  • With Best Buy out of the picture, the studios and labels have one less player in the mix to cut deals and use as leverage in negotiations with other companies.  I’d hate to be in a sales role for a studio or label.  Just think of the terms that Anderson/Wal-Mart will be able to extract.  That makes my shoulders tense up just thinking about it.
  • Napster and CinemaNow have an uncertain future. These are fairly recent additions and represent Best Buy’s efforts to do something in the digital space.  With Best Buy leaving entertainment, I’m not sure why they would continue running these businesses.
  • Job loss at headquarters.  In addition to the 301 jobs lost at the distribution center, many people will be impacted at HQ.  I bet the total number of people is close to 400. Ouch.  To date, some high profile entertainment leadership has left, and I am sure more are considering.

Trouble ahead

I am very surprised that nobody has talked about the implications.  Best Buy’s move demonstrates that entertainment retailers continue to struggle, while savvy companies downplay the seriousness of it all.  But let the entertainment industry beware: there is no foreseeable calm in these troubled waters.

UltraViolet: Who’s Really Getting Burned?

UltraViolet: Who's Really Getting Burned?

As entertainment continues to gasp for air and content owners watch their revenues plummet, the industry continues to achieve nothing. Think of the Coppertone Girl if she didn’t do anything about the sun’s harmful ultraviolet rays. She’d end up burnt.

Call me a Fool, but I’d like to expose why UltraViolet is hazardous to the health of both the entertainment industry and the consumer. If it continues on its current course then, in the future, I won’t get to watch my movies the way I want to.

The industry appears to be trying to move to a “watch wherever” model. That’s a good thing because that would allow me to get my content on any of my devices like my TV, PS3, i-Pad, mobile phone, etc.

It’s a great theory, but the way things are going this initiative seems destined to fail.

Are the studios waffling?

The studio-centric UltraViolet was started three years ago when the market was different and they felt that a digital standard was required to continue selling content in a world where disc sales were crumbling.

Time has marched on and I now understand the studios are waffling, beginning to disown the very usage model that allows you to “include up to six people you define as your household” and “access all of your shows and movies from any of up to 12 registered UltraViolet devices.”  (Don’t shoot the messenger.  This is straight from uvvu.com).  They are getting cold feet with this fundamental premise because they feel the model is overly generous and too big of a departure from the current model.  They also are concerned that the members of an account would misuse their rights by sharing content too liberally among members and devices in their account.  You tell me what that really means…

To this day, the business costs of how UltraViolet works is ambiguous.  Commitment to the business model is a long way off.  Who pays for marketing? The studios spent millions promoting Blu-ray; why aren’t they ponying up to market UltraViolet?

Warner Brother’s seems to be confirming this waffling.  Its President announced a “Digital Everywhere App” that allows consumers to manage their video content the way they can with music and photos.  Warner expects the App to connect consumers with and enable other retailers like Amazon, Netflix and Apple.

Wait a minute: we know for a fact that Apple will continue on its own course and never join UltraViolet, and Amazon will refuse to sign up because it is busy with its own cloud services plan. Netflix doesn’t even sell or rent movies so to them a digital locker is irrelevant.  Warner’s ruse of playing nice with retailers that will never launch UltraViolet services is just more waffle.

Could I please have some extra syrup, as this is all a little hard to swallow?

The Sun rises in the West?

Device makers will have to create new devices in order to support UltraViolet.  Since this engineering takes people, time and money, they only add functionality if they think it will help to sell more devices.    It’s too risky to start production with changing and ill-defined specifications. It’s not surprising they are standing on the sidelines and waiting before they invest R&D resources until it is a safe bet.

They are tiring of studio waffling.  With each waffle, device makers push back their ability to deliver UltraViolet-ready devices by a minimum of nine months due to production lead times. For devices to hit stores for the 2011 holiday season, they would have needed to start production in February.  That didn’t happen.

Device makers are unclear on the benefits.  They know it will cost more to build the devices, and they know that no one appears to be stepping up to pay for marketing. The upside was selling more devices supporting an open standard, but now they are not so sure.

They were excited at the prospect of a beautiful sunrise with UltraViolet, but it turns out that they are tired of waiting in the dark only to find the forecast is mostly cloudy (with a chance of meatballs).

Are retailers’ heads in the cloud?

Contrary to what others think, I believe that people learn about new stuff by going to stores.  At the moment, these retailers SELL the vast majority of disc-based content.  As I look at UltraViolet, there doesn’t seem to be many disc retailers involved.  Think of the number of visits that Amazon, Wal-Mart and Target have coming through to learn about and buy products.  Where are the other retailers?  Where will consumers go to learn about UltraViolet without retailers?

The concept of interoperability requires multiple retailers in each territory to launch simultaneously.  Recent estimates would see a top DVD retailer paying $10M in fees alone in the first year to operate an UltraViolet service.  The costs seem high, but retailers will get involved if they understand the benefits.  So far, these benefits are obscured and preventing retailers from committing.

I might be wrong, but maybe consumers don’t need stores or online sites to learn about new products.  Some device makers like Samsung with their TV apps, Microsoft with Xbox and Nokia with their handsets, are positioning to go direct to consumers.  Even Warner Brothers is demonstrating that maybe selling their wares directly to consumers is the future.  I have a foolish idea: maybe they can pick up the nearly 1,000 Blockbuster stores that Dish is dumping in order to reach consumers…

The disincentives are clear.  UltraViolet is expecting retailers to expose themselves and use their resources for the marketing and promotion of the UltraViolet brand.  UltraViolet will provide marketing materials (they will throw some bones like messaging and logos) that retailers will have to license. Other than that, they are on their own to market and promote the UltraViolet experience.  Retailers should not, will not, and do not reach into their own pockets to market other company’s brands.

So who’s getting burned?

UltraViolet burns the consumer.

With studios, device makers and retailers in a game of chicken, UltraViolet will rush to get something to market and water down any meaningful consumer offering to the point of being insignificant.

Think about it – should Sony be the last studio standing in UltraViolet, what good does a service do for a consumer that only has their content? It’s likely that, due to the number of companies involved, the offer will end up costing more than stuff that’s available today.  Would you pay more?  With manufacturer lead times, what if there are no devices that support UltraViolet services? If you can’t buy from retailers that you are used to, then what did 70+ companies over the past three years achieve?

My dream of watching content on all my devices seems further off than ever. With UltraViolet burning consumers, entertainment junkies like me will stop buying and keep in the shade.  I’m afraid that the sunset for entertainment is coming all too soon.

Technology rocks better than music

Now here’s a counterpoint to my recent optimism on the music business.  After reading this piece from Digital Music News, I have somewhat returned to my darker opinion that the music industry is going to get worse before it gets better.  I still believe there are innovative models, but the old guard must step down.  Those glory days are done.  Technology now rules.

The content industry has lost its cool, and this is now a major concern for Hollywood as well.  Over the past ten years, technology has become the new rock star, and that’s affecting everything from consumer behavior to Capitol Hill legislation.

Don’t believe me?  Go tell someone at a party that you work at Google, or Apple, and see how they react.  Then tell someone else that you work at Universal Music Group.  Which is the better conversation?

But this is also affecting artists of every strata – all the way from Lady Gaga to the struggling DIY.  Oh, you can say that artists have more access than ever, or sing ‘ding-dong the major labels are dead.’  But so is the recording, and that is forcing smaller artists and labels to adapt however they can.  Songs have to be given away for free, with the hope that revenues will come from advertising, touring, merchandising, or content licensing.  Sure, some artists – like Datarock – are pulling it off, but most aren’t, despite all the rhetoric.

It’s just not that great of a model, but one the technology lobby absolutely loves!  Just recently at Digital Music Forum in New York, Michael Petricone of the Consumer Electronics Association was the one waxing about the revolution – not the content owners.  “There’s more music being made than ever before, there are more people listening to music than ever before, there’s more discovery than ever before,” Petricone said.  “Meanwhile you’ve got independent musicians coming up with innovative business models that allow them to support themselves.”

Of course, a lot of this is true – and tremendously exciting – but it’s just not the full story.  But as long as groups like the CEA can make that the dominant talking point, they can get away with murder.  Because without ripped-off content, the story on devices like the iPod would be totally different.  And the same goes for ISPs, Google, YouTube, and other high-flying technology giants.

There simply needs to be a better middle ground, but unfortunately, major labels are also a major part of this problem.  During a keynote interview at Transmission last month, UMG head of digital Rob Wells was talking about smashing piracy, and winning back countries like Sweden.  But he was also adamantly opposed to collective licensing options, simply because it would erode CD-like revenue streams.  It’s as if everyone wants 1999 to walk back through that door.

And not to pick on Wells; he’s just the latest to say it out loud.   Once upon a time, ISPs expressed some willingness to work with the music industry, but ultimately they got a middle finger back.  And throughout the past decade, the majors have also been guilty of refusing to give ground, and, for that matter, of launching endless attacks on both technology firms and consumers.  And guys like Doug Morris are still calling the shots.

But the major label system is dying, and maybe post-major discussions can be different.  Of course, we still have a huge chapter ahead that features a freaked-out Hollywood, but the hope is that interests can align to better compensate content owners.  Even if that means that creative industries – and their once-shiny rock stars – make less.

Music has gotten…complicated

Who says  life used to be simpler?  I pretty much buy that statement lock, stock and barrel.  I think it’s difficult to refute that life is getting more complicated!

I came across a really cool set of data that illustrates this progression towards complexity in the context of the embattled music business.  In a nutshell,  in 1979 when there were 4 different revenue streams derived from music.  In 2010, that number of revenue streams has ballooned to 14!

On the one hand, it’s utterly intimidating to observe how fragmented the music space has become to  get and enjoy music. It’s no wonder that the seasoned industry execs sound like such old coots when they talk about the glory days! On the other hand, it’s terribly exciting to see that there are so many different ways to participate in the music business.  Call me optimistic, but where there is such massive disruption there is massive opportunity.

So I say bring on the complexity and let the innovators out there make some sense out of it.  Because in the case of music, people will ALWAYS somehow get and enjoy tunes that fit those little moments in this complex world.  And that demand will somehow be met – and profitably.

A world without Woody?

Another re-run, but an altogether great look at the continuing saga of UV.

I recently got a comment on a blog which asked about Keychest and Ultraviolet, and I’m here to tell you I found out some not-so-good news regarding “the future of entertainment.”  In a nutshell, I think the industry may be going down the path of confusing us with choices we will have to make.  While the industry seems to be trying, it is still coming up short.  Here’s what I’ve found out:

Disney and Apple are on their own

Imagine a world without Toy Story, Finding Nemo, Pirates of the Caribbean, The Lion King, Up, Cars, or The Chronicles of Narnia.  The top 10 movies from Disney have grossed an impressive $3.3 billion in US box office.  Despite being in 4th place for box office take so far in 2010, Disney is world famous for its franchises that earn billions of dollars.  No one can argue the staggering impact that this studio has had on merchandising, plush toys and bedroom decorations for little boys and girls across the world.

Continue to imagine a world without a close friend and ally of Disney’s:  Apple.  They continue to capture the world’s Luddites with its stupid-simple devices.  A not-unnoticed factoid with this company is that if you add the market caps of massive brands – take Microsoft ($230 billion), throw in two retailers like Best Buy ($18 billion) and Target ($40 billion) – and you come up with a few billion short of Apple ($292 billion)!  No one can argue the impact that Apple has had on the industries it plays in.

At the moment, UltraViolet, the industry’s leading consortium to create device and content interoperability so that we can enjoy content anywhere, anytime, anyplace, is heading down a path without Disney or Apple.  Disney instead is creating its own ecosystem called Keychest. The principles are the exact same as UltraViolet, only they have created an island.  With Steve Jobs on the Disney board, both Disney and Apple will likely continue to live on their own island and extend invitations to only those that are willing to play by their rules.  As a result, the content that is so popular around the world may not be part of UV, and will therefore limit my choice.  The devices that are so prevalent from Apple, will not work.

But what about choice?!

A deep, complete selection of titles from ALL studios from which I can choose and enjoy on any of my devices – from my living room to my devices in the pocket – is critical for me to join to a service.  UltraViolet has done an admirable job in bringing 60+ companies to the table to discuss how to create an alternative in the marketplace, yet driving a truly revolutionary service offering that will inspire me to buy legitimate sources of content still comes down to a fundamental issue: I want unlimited choice.

So long as there are islands, consumers will learn that their freedom of choice is limited, and they will understand that the evolving promises of both Keychest and UV are deeply flawed.  As consumers lapse into apathy and not participate in either UV or Keychest, the industry will continue its gradual decline.  With home entertainment representing more than 50% of a studio’s revenues, studios will stop making movies.  I don’t know about you, but I don’t want to see that happen.

Savvy

Sleek, Smart, and About the PR/Media World Today

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