The AP reports: Sony Video Chief Admits Strategic Mistakes
Sony missed out on potential sales from MP3 players and other gadgets because it was overly proprietary about music and entertainment content, the head of Sony Corp’s video-game unit acknowledged Thursday.
Ken Kutaragi, president of Sony Computer Entertainment Inc., said he and other Sony employees have been frustrated for years with management’s reluctance to introduce products like Apple Computer Inc.’s iPod, mainly because the Tokyo company had music and movie units that were worried about content rights.
While the content divisions hoped to lock down content in proprietary formats or in DRM, the electronics developers were prevented from developing the kind of products the market demanded. It sounds like the consumer electronics division is unhappy about ceding the first round in the digital music hardware to Apple.
Both people who purchased tracks from the Real download store to play on their iPod may have a problem. News.com reports:
Apple fights RealNetworks’ ‘hacker tactics’: “Apple Computer has quietly updated its iPod software so that songs purchased from RealNetworks’ online music store will no longer play on some of the Mac maker’s popular MP3 players.”
Previously: Real DRM, Hey! You! Get off of my Pod, Real Useless.
The DRM Blog. Should be self-explanatory.
Besides the potential legal threat from Apple, Real may have a bigger problem with Harmony, its DRM transcoding software: the software may not work as advertised. Julio Ojeda-Zapata unsucessfully attempted to use Harmony
It detected both of my loaner iPods (a mini and the just-released full-size model with a mini-like scroll wheel) just fine, but a song purchased on the RealPlayer Music Store wouldn’t sync over to either player. I kept getting a “(clip) not supported by device” error message.
Previously: Hey! You! Get off of my Pod!
Jeevan Jaising: Piracy on file sharing networks: Strategies for recording companies
We find that total music sales and profit of firm is higher, and total piracy (demand on file sharing network) is lower, when the firm sells a downloadable version. We look at the firm’s optimal choice of Digital Rights Management (DRM) protection, and find that revenue decreases with increased protection, and so it is optimal for the firm not to employ any DRM, in the absence of network effects. Listening to music or watching video protected by DRM is cumbersome to users. They have to download license files, there are restrictions on the number of times the file can be copied, and restrictions on the type of devices that can play the file. As a result there is a disutility to the legal consumer, because of which the firm charges lower prices. Loss in revenue due to decreased prices cannot be compensated by the increase in demand, and hence revenue decreases with higher protection. When network effects (NE) is high, and a nominal search cost is above a certain threshold, then non-zero protection becomes optimal. This result is exactly the opposite of what was found in previous research (Conner and Rumelt 1991), where protection was found to be optimal in the absence of NE, and zero protection was optimal if NE is high enough.
DRM subtracts value and is less desirable for the consumer.
Today, Apple released a statement responding to Real’s announcement of Harmony:
We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod(R), and we are investigating the implications of their actions under the DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real’s Harmony technology will cease to work with current and future iPods.
Translated: “The next software update to the iPod will prevent Harmony-DRM’ed files from playing on the iPod.”
Derek Slater: Apple Threatens Real
Along with piracy rhetoric, we now get evil hacker rhetoric. Since when is reverse engineering unethical? Oh right – since the DMCA, which Apple is predictably waving around. Let me remind you that Real was one of the first companies to sue the creator of an interoperating product under the DMCA, so it’s not as if they’re the innocent defenders of innovation here. This could make for a fine DMCA battle royale, with copyright holders caught in between. Or it could fade away – we’ll see.
Ernest Miller: Apple Gets Real Serious About Harmony
As if being a hacker is a bad thing. What do you call those two guys who built a computer in their garage and started a little computer company named after a fruit?
BusinessWeek: For Apple, Harmony Is Off-Key
Apple CEO Steven P. Jobs should clearly and firmly squelch Real’s attempt to infiltrate Apple’s music empire. GartnerG2 analyst Mike McGuire sums it up: “At some point, Apple may decide to license [its iPod technology] to others. But they should do it for good business reasons, not because a rival issues a press release or some beta software.”
In February, TiVo filed with the FCC for broadcast flag certification under the Digital Broadcast Content Protection Rule: Broadcast Flag Certification of TiVo
The MPAA and NFL filed oppositions to TiVo’s certification, arguing that new TiVo features which allow TiVo subscribers to make recorded programs more portable should be subject to more stringent regulation. The Washington Post reports: TiVo’s plans lead to copyright fight
In a white paper, the MPAA argues that TiVoGuard does not prevent widespread indiscriminate redistribution of broadcast content and permits copyright infringing conduct. Additionally, remote access technologies such as TiVoGuard threaten the viability of the Local Broadcasting System. MPAA filing: Legal and Policy Issues Raised by TiVoGuard
The NFL filed a comment opposing the certification of TiVo. The NFL wants to continue to limit the markets to which NFL games may be broadcast and be able to sell the NFL Sunday Ticket at an absurd premium to DirecTV subscribers, but fears that a TiVo video sharing service will harm the market.
Access all the filed comments by search in the FCC Electronic Comment Filing System for Proceeding “04-63”
TiVo’s less commercially successful competitor ReplayTV offered an internet video sharing feature, which was the controversial subject of litigation. However, DNNA, the new owners of ReplayTV, dropped the Internet Video Sharing feature from the latest version of the ReplayTV.
PVRBlog: TiVo: you can only innovate if the NFL and MPAA say so
What is most shocking about the objections is that TiVo ToGo is an already crippled version of something TiVo hackers and users of software PVRs like Windows Media Center and Snapstream have been doing for years now.
Cory Doctorow tells Microsoft why DRM is bad business:
Here’s what I’m here to convince you of:
1. That DRM systems don’t work
2. That DRM systems are bad for society
3. That DRM systems are bad for business
4. That DRM systems are bad for artists
5. That DRM is a bad business-move for MSFT
DRM frustrates the average consumer while failing to prevent outright piracy. DRM precludes innovative uses of technology. Anti-circumvention laws are anticompetitive.
USA Today reports that the online porn industry is moving to adopt new technologies, like DRM, faster than mainstream entertainment and media companies: Online porn often leads high-tech way
Porn’s recent tech tinkering could have sweeping implications for the music and movie industries, which are trying to protect digital content from being stolen and traded. Each day, millions of video clips and photos are filched from for-pay porn sites and traded, forcing the red-light districts of cyberspace to find novel ways to protect digital content.
Derek Slater: Digital Music Forum: What the Industry Players Do and Don’t Get
The Digital Music Forum featured many people who “get it.” It also featured many who clearly do not… There were online music vendors who understand that they must meet many different consumer types and provide a variety of options. While the vendors debated the merits of a la carte v. download subscription services, they made the more general point that they should not try to squeeze people into narrow options.