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by Miles Weston
HDTV Buyer
Jul 25, 2005
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The Grokster vs MGM decision shouldn't
have come as a big surprise to anyone last month even though lots of
us clutched that faint ray of hope the Sony VCR ruling would help shield
the industry. The surprise was the nine-zip decision. Granted, most
of the sitting judges are older than dirt. But anyone in the industry
has to admit we've been saying "no…no" with a smirk
and a wink way too long.
Of course the decision means we're going to have to do without those
great ads. You know -- Apple's "Rip. Mix. Burn" and Microsoft's
"Swap Pictures, Music, Video and More."
The MPAA was smart because they picked two targets they knew they could
eventually defeat - Grokster and StreamCast. The two companies weren't
even subtle. They listed copyrighted music links and offered guidance.
They weren't guilty, they noted, because they only listed the music.
Sure, neither was the old Napster. The problem of trying to piggyback
so much on the earlier Sony ruling is that the Justices gave some strong
indication that "might be" convinced to overturn the ruling
or modify it…significantly. If that happens we will be in deep
trouble.
Everyone knows that if you open the door, even a crack, to the barbarians
they will gather in mass to clean you out of house and home. Lots of
lawyers (see the parallel here?) saw the similarity for a lifetime of
riches in the Grokster decision. They won't care what side of the aisle
they are on because the written comments from the Justices left a lot
of wiggle room and gray areas that are subject to interpretation. Depending
upon the chair you sit in you could interpret "…promoting
its use to infringe copyright…" any way you want.
If you want to imagine what all the government intervention could do
to the professional and consumer video industry, look at the pharmaceutical/healthcare
industry -- it's your benchmark. There are more lawyers than scientists
and there is an ambulance chaser behind every tree. Still their liability
insurance costs are out-of-sight!
But we don't agree with a lot of the doomsayers and lawyers who see
themselves being paid to sit in on product development and marketing
communications meetings. Stressing that you support copyright protection
is easy to do. File transfer and swapping technology that emphasizes
legal content sharing can be clearly and concisely stated. Policing
your p2p sites for illegal copywritten postings isn't that difficult.
A professional approach and common logic don't need a review of ethics
by a lawyer.
Guns Don't Kill People
Suing every grandmother and impoverished kid in sight, MPAA and RIAA
have continuously claimed that their sales and profits are off because
we're all stealing from them. But they show quarter-to-quarter solid
profits.
The two don't go hand-in-hand especially when you see DVD sales and
rentals up significantly and music download purchases tripling. And
we don't understand the benefits of suing your customers. Reminds us
of a t-shirt we saw: "The Beatings Will Continue Until Morale Improves."
On the other hand, suing technology products into submission (or oblivion)
won't work either. Technology doesn't do bad things...people do bad
things.
Digital content is here to stay and file sharing is a way of life --
legal or illegal. Solutions Research Group recently studied people's
attitudes toward file sharing and surprise, and discovered that folks
were pretty evenly divided (Fig 1). Young people felt it should be allowed
as did MP3 player owners.
While most had no problem with paying a reasonable fee for their downloads
there is a growing concern over the security of the personal identification
and payment data that’s provided.
Given that it is globally impossible for the MPAA and RIAA to roll back
P2P exchanges so they can return to the "good old days," we
agree with a recent OECD (Organization for Economic Co-operation and
Development) report which explored the changes and outlined the social,
cultural and economic potential of digital distribution. There are ways
to provide sufficient rights protection and secure payments. It will
take time and effort but it certainly beats suing your own customers
into submission.
Some people will always expect something for nothing. But most people
have no problem with paying what is fair. And when they buy a CD or
DVD they should have a right to make a backup copy, let the kids play
the backup until they ruin it and keep the master on the shelf.
We know the content owners won't agree, but let's say we buy the disc
and make two copies -- one for home and one for the cabin in the mountains.
Or a good movie copy at home and one in the SUV to shut the rugrats
up. Is that illegal? No, think of it as a software license where the
software is on two different systems and can be used as long as both
systems aren't used simultaneously.
Maybe they will have to re-examine their business models and today’s
world in which we live.
So who's going to make the money at the end of the day? Hollywood /content
owners? The creative folks? Hardware folks? Software people? Pipe owners?
Paraphrasing what Dustin Hoffman was told in The Graduate…remember
one word: Middleware!
It's not going to come fast and it isn't going to be easy. Folks across
the spectrum will make money on digital content (except consumers of
course). But the real heroes (and folks who will have a great long-term
revenue stream) in the future will be those who develop the DRM (digital
rights management) and DAM (digital asset management) products that
serve the needs of content owners, content delivery and content user
folks!!
Faith Popcorn, noted futurist, coined the phrase “cocooning”
several years ago, describing the growing desire of people to wrap themselves
in their homes in the evening and be family-focused. People eagerly
adopted the movie purchase and rental model because it was inexpensive,
convenient and fit into their cocoon lifestyle. Sitting at home in your
favorite chair, socks/shoes off, eating greasy popcorn your way with
a soda, beer or other drink is plain relaxing. And you get to start
and stop the movie when you want, going back a few seconds when you
couldn’t hear that last word or two. And you get to view all
of the outtakes, special segments, actor/ director comments you never
see at the theater. Look at the growth of home theaters. It tells you
something!
Or you can get dressed and fight with the kids, drive to the theater,
park and hope no one dings the car, pay $25-$50 to get in (yes all dressed),
bite the bullet for your refreshments and hope some nut isn't there
also bent on making a political statement. Oh yeah, you still have to
drive home with kids screaming in the back and fight with them to go
to bed at a decent time.
There will be two delivery mechanisms for this entertainment -- disc
playback (more on this later) and streaming . While folks on both coasts
of the U.S. and in a few countries around the globe enjoy the benefits
of broadband, it isn't ubiquitous!
According to a new Pew Internet Project report 49% of folks in the U.S.
still have dial-up at home and 40% don't have broadband at work or home.
The numbers are almost as dismal in other industrial countries -- and
the rest of the world? Don't even ask!
Strategic Analytics projects it will be at least 2010 (Fig 2, 3) before
we have "reasonably" widespread high-speed connectivity in
the U.S. The good news is that the competition will be fierce as cable/satellite,
phone, powerline and "new" approaches work to become your
content delivery mechanism.
What we need is a home content management server (HD-based like ADS
Tech's new server drive kit), a write-once/rewritable disc-based library
or combination of the two to watch, view, listen to what we want…when
we want.
Much as video folks worry about "protecting" their assets,
it is audio that will probably set the stage for tomorrow. Sure, folks
still buy CDs, but if music downloads have shown us anything it’s
that even this model is broken. You buy a disc but you really only "want"
2-4 of the songs. The rest are a waste of space, plastic and money.
P2P has become so popular (legal and illegal) because people want choices.
Their choices. Most of the illegal "free" sites make you work
at finding the song you want to download and enjoy (hey…they
don't make money so how do they invest?). But the micro-payment sites
are a snap. Sign up, drop in your payment scheme, do a global search,
pay for the song -- a reasonable fee -- and download your music. BAM!!!
You are entertaining yourself.
Like the song we're playing? Want us to "give" you a copy?
Get serious!
Not every movie will be a download financial success. Not every song
will go platinum. But the vast majority of people will pay -- a reasonable
fee -- for their entertainment if the "industry" quits trying
to beat their customers into submission. But they need to be continually
reminded that digital content has value…it's called education,
not legislation!
Blue Decision Makers
You have got to love the marketing creativity of both sides of the
blue laser "discussion."
BDA (Blue-Ray Disc Association) just announced the results of an independent
study among consumers that clearly showed consumers prefer the Blu-ray
disc (BD) for their content in the future! Even though they can't program
their VCR and don't know the difference between DVD +/-R/RW an "overwhelming"
58% loved BD and only 15% liked HD DVD !
While the PC and CE folks jockey to advance their respective "best
for you" solution; the Gen X, Y, P boys and girls play their games.
Have you looked -- really looked -- at the PlayStation, Xbox and Nintendo
systems?
They have powerful processors, lots of connection possibilities and
the easy ability for you to add "other" options like PVR,
storage, wire/wireless connectivity and…the disc recording/playback
solution of choice!
Consumers won't replace their current DVD drives/recorders and players
any time soon (IDC still says today's technology will be the leader
in 2010 and Jupiter Research reports people aren't interested in adopting
a new disc format).
In fact, Jupiter's research showed that only 21% of the people who bought
their first DVD player did it for video quality reasons. Sure, there
is "interest" (54% of respondents) in the next blue laser
technology…IF it is backward compatible with present DVD players!
Ok, so that won't happen!
But the game consoles are moving into the family/living room because
1) kids are buying them, people of all ages are spending more time playing
games (Fig 4).
They are simply better than lots of the entertainment alternatives being
offered. Add some music/audio capture/download capabilities and send
it around the house…cool. Like the box and want to use it to
capture some high-def show or watch a new movie release? What the heck,
we'll add the component that makes it possible (after all, really good
entertainment centers aren't all-in-one solutions). After all, it's
only an incremental cost.
Without even realizing it, the PCs and CE devices could very quickly
become the accessories to the game console in our wired or wireless
home network. Boy, won't that be humiliating? No wonder Microsoft is
hinting that they may license Xbox software. Come on people, Gates didn't
get rich by being stupid!
The HD and BD PC/CE camps may be spending too much time buying drinks
and dinners in Hollywood and on Broadway. Perhaps they should be focusing
on trips to Tokyo and Redmond…? Granted, spending time with the
folks at EA, BV, Epic, Lyon, Midway, Pandemic and Xtreme may not be
as worth talking about as your time with Tom, Steven, Julie and other
stars at your next cocktail party. But we are talking about the future
of the next generation technology!
Tomorrow's fortunes aren't made by walking down the old, well-worn paths.
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