Score one for common sense. A California Superior Court judge ruled this week that Kaleidescape Inc. did not breach its contract with the DVD Copy Control Association when it manufactured and sold a high-tech system that let consumers copy the DVDs they owned onto a home video jukebox.

I'm not a lawyer, and I'm not going to do my usual legalistic pantomime on this one. As a principle, I accept that contracts are binding when properly done. On the other hand, you have to wonder whose interests were served by this litigation. Kaleidescape sells extremely high-end gear -- at the time of the lawsuit, the entry-level system cost $27,000. Its systems are closed networks with military-grade security, so even if a Kaleidescape owner should rip a copy of a movie he/she rented from Netflix (because, having spent $27,000 on a state-of-the-art video jukebox, the person isn't likely to drop $15 for a copy of "Little Miss Sunshine"?!?), those bits will never leave the building. By contrast, a pirate equipped with a $900 Dell can easily transform an encrypted DVD into an unencrypted file, then burn multiple copies of the movie for friends and offer it online to downloaders around the globe.

So clearly, this case wasn't about protecting Hollywood against bootleggers. Instead, it seemed to be about stopping Kaleidescape from doing something nifty and compelling that other consumer-electronics companies were either too timid or not clever enough to do. Unlike more conventional jukeboxes that rely on a multi-DVD changer, Kaleidescape hard-drive-based system enables better ways to search through movie collections, put bookmarks in films, create customized playlists and video mixes, and view films in multiple rooms. So while its products are hardly mainstream, Kaleidescape's approach is as logical an application of the technology as an iPod or Picasa.

The DVD CCA is likely to appeal the ruling, but a better response would be to clear the way for people to copy DVDs legally onto home servers. That's something the DVD CCA has been discussion for more than a year, but approval has been delayed by a fight over whether new DVD players should include technology to detect and block bootlegged films. Perhaps those talks will have a new sense of urgency now.

The logo pictured above is Kaleidescape's.

The Motion Picture Assn. of America came down hard today on the distributor of the torture-infused horror film "Captivity" -- not because the trade group has anything against sadistic popcorn flicks, but because it draws the line at sadistic marketing campaigns. The original promo for "Captivity" was a set of pictures showing the movie's female starlet being menaced by a gloved hand; bloodied; tortured in some weird, emergency-room kind of way; and then left for dead. The tableau was extreme, even by today's standards, and when distributor After Dark Films submitted it for approval, the MPAA rejected it. Nevertheless, according to the Hollywood Reporter, the pictures wound up on 30 billboards in Los Angeles and 1,400 taxis in New York City earlier this month. The head of the studio told the Reporter that it was an accident, but the MPAA was unmoved -- in part because it took days for After Dark to have the offending promos taken down. The penalty: After Dark has to obtain the MPAA's approval not just for the content of any ads for the film, but also for their location (a first). And the ratings board won't consider the film until May 1 at the earliest, putting the film's May 18 release date in jeopardy. Ouch. If the board doesn't like what it sees, After Dark may not have time to make the cuts needed to avoid an NC-17 rating (a mark of box-office death, historically). Nor is releasing an unrated horror film a viable option, given how few theaters will carry such films.

This is a dramatic (pardon the pun) illustration of industry self-regulation. Some free-market purists might complain that it amounts to the major studios, who control the MPAA, trying to hamper an independent competitor. To me, though, it reflects the sensitivity of a Washington-based organization to the hot buttons on Capitol Hill. Lawmakers may wring their hands about how violent and graphic movies have become, but what really puts them in a regulatory mood is when adult-themed content spills into the world of Impressionable Children. The studios and broadcasters are particularly nervous these days about an impending report by the Federal Communications Commission that is expected to prod Congress to regulate violent TV programming, ostensibly because kids can't help but see and be damaged by it. You can argue -- as the Times' editorial board has done -- that the best defense against that kind of programming is for parents to keep their kids away from it, but that's a much harder argument to make when outdoor advertising near malls and thoroughfares is involved. That's why the MPAA requires filmmakers who want their movie to be rated -- which virtually all of them do, mainly because most multiplexes demand it -- to submit their advertising to the trade group and maintain a patina of decency. Outside the darkened theater, that is.

Incidentally, the star of "Captivity" is Elisha Cuthbert, who rose to fame on Fox's "24," the most torture-happy show on television. That's quite a streak -- "24," "House of Wax," "The Quiet," "Captivity".... Good thing she's on board to do a cartoon about animals, it'll help balance her clip reel.

YouTube's vast user base has turned it into an encyclopedic electronic library of music videos, ranging from glossy MTV fare to grainy live clips shot with a cellphone camera. And now, the music-blogging site MOG is stepping into the role of YouTube's librarian.

Today, nine-month-old MOG comes out of beta with a new and vastly improved version of its site. One of these enhancements is something called MOG TV, a personalizable channel of music videos culled from YouTube. Users can tell MOG TV to show it videos from artists within their own and/or their friends' collections, or have the programming reflect other MOG users' tastes. The software then plucks videos from YouTube that comply with the user's preferences.

YouTube makes this possible by allowing its inventory to be embedded into other folks' websites. The risk for Google, YouTube's parent, is that companies like MOG will create a better way to navigate that inventory, siphoning off users and the advertising revenue that chases them. That could be happening here; MOG TV promises a better lean-back experience than YouTube, although the latter makes it easier to surf through a single artist's repetoire. Whether any of this works for artists and copyright holders is a whole 'nother question, and the answer to that one depends in part on the religious issue of whether free music videos are promotional or cannibalistic. Such major record companies as Warner and Universal have made their peace with YouTube, but it's not clear what happens to those arrangements when YouTube's videos -- and not the surrounding advertisements -- get imported by sites like MOG.

My overall impression of MOG, though, is that it is promotional. It's been a playground for music geeks, enabling people with huge sonic appetites to indulge themselves in other people's enthusiasms. The new version makes MOG much more friendly to the average listener, someone who's more likely to read a concert review than write one. The changes, which include much better ways to sort through users' posts, music samples and videos, make MOG a more inviting place to discover music and people who love it.

Such tools, to me, are a critical ingredient in the future digital-music landscape. As music transforms from a product into a service and the industry sells access to catalogs instead of copies of songs, one of the main challenges for consumers will be sorting through giant stacks of content to find the things they like. It's as if the produce stand on the corner were to be replaced by a supermarket that carried almost every food in creation. MOG's software uses a fairly common technique, called collaborative filtering, to steer people to bands and songs they might like. In essence, it compares your music-consuming behavior against other users' collections, finds those with overlapping tastes, then recommends back to you things that aren't in your collection but other members of the group have. What makes MOG a powerful tool, at least in theory, is that it can look at the music you've collected on your computer and what you've been playing, both on your PC and your iPod. That's a better approach than, say, a site that bases recommendations on what you've bought or searched for.

Whether MOG emerges as a great music-discovery vehicle depends on how well its software performs and how many people become MOGgers. There's a powerful network effect here, just as with YouTube. My guess is that it's still missing one piece -- enabling users to hear the songs and artists that get recommended to them. The site allows users to add MP3s to their blog posts, which readers can stream (not download). But it asks people to upload songs only if they have the right to do so, and they seem to be complying. As a result, users' profile pages and MOG's recommendations are populated mainly with 30-second samples. On the other hand, MOG probably can't make a vast quantity of music available on demand without charging something, given the royalties involved. And 30-second samples, combined with the occasional full-length song or video and blog post, may be enough to prod someone to obtain a single or album elsewhere -- ideally, where they can pay for it.

Thursday, Verizon plans to unveil its first stab at TV programming -- well, the first since Tele-TV, an ill-fated TV programming and delivery venture that two of Verizon's predecessors, Bell Atlantic and NYNEX, launched in the mid-1990s. This time the product is a channel that Verizon plans to offer through FiOS TV, its fiber-optic alternative to cable, to customers in the Washington, D.C. area. It will be devoted to local topics, including news, sports, traffic and high-definition videos shot by "citizen video journalists" (dubbed VJ's -- how original). The sports programming alone (which includes some Georgetown and George Mason University games and Major League Baseball but not, apparently, the Redskins) could generate a substantial audience for the channel, depending on which games Verizon can obtain the rights to carry. Not many details are available yet, but it sounds as if Verizon is falling into the trap of using advanced technology to deliver something based on yesterday's programming model. Instead of a linear channel, a la local broadcasters, why not make the material available on demand? Let users put up windows showing news, traffic and weather simultaneously, and let them pick which segments to watch in the order they want to watch them. FiOS doesn't have to be just an alternative to cable; it can create a whole new value proposition for viewers. And the easiest place for Verizon to start is with programming it owns.

BMI, one of the three major performing rights organizations in the U.S., announced today that consumers appear to have regained their senses about ringtones. The group estimated that U.S. ringtone revenue will drop to $550 million in 2007, down $50 million from 2006. "The ringtone market matured in 2006.... The novelty phase has ended," BMI new-media exec Richard Conlon said. In addition to the novelty wearing off, a growing number of phones and software programs are letting users create and load their own tones.

Happily for songwriters and music publishers (more than 300,000 of whom BMI represents), as well as record companies, the fading ringtone fad could be offset by irrational exuberance over ringback tones -- music that callers hear in lieu of a ringer when they dial your cellphone. BMI estimated that $65 million worth of ringback tones will be sold this year. But how long is that fad going to last? As BMI's Conlon suggested, the next big growth area for mobile music probably lies in streaming media.

A Bear Sterns analyst's report on Google caused a stir early this month by estimating that its YouTube subsidiary made $15 million in all of 2006. One reason for the comparatively paltry sales was YouTube's reluctance to sell ads next to videos with uncertain provenance -- the company had to be sure the clip wasn't violating copyrights before it was monetized. Meanwhile, the entertainment industry was pressing YouTube, other user-generated content sites and file-sharing networks to police themselves, rather than forcing copyright holders to identify and complain about specific files.

These overlapping needs have created a powerful demand for software that recognizes files as they're uploaded onto user-generated sites or swapped on file-sharing networks. Not surprisingly, the tech industry has responded. The Motion Picture Association -- the global version of the MPAA -- is in the final stages of studying video-recognition technologies supplied by 11 firms and a university. Here's the list: MPA content recognition participants. Included are a couple of usual suspects -- Audible Magic, whose customers include the iMesh file-sharing network, and Gracenote -- as well as such globally flavored upstarts as Advestigo, which was founded by a pair of French researchers, and Vobile, whose founders are Chinese engineers. The basic approach is to assemble a database of unique identifiers for movies, TV shows, music videos and other forms of content, then compare files against this database as they're transmitted online. Within a couple of weeks, the MPA is expected to give several of those technologies an informal seal of approval.

At that point, look for more user-generated sites and file-sharing networks (e.g., StreamCast's Morpheus) to plug in content-recognition technologies and start experimenting with a variety of ways to sell advertising. According to executives at Advestigo and inside Hollywood, the rationale for identifying files has changed dramatically in the past year or so. The major studios used to view video "fingerprinting" techniques as a way to block copyrighted materially from being shared online. Now they see them as the key to building advertiser-supported business models -- they enable content owners to find out who their online audience is, as well as monitoring how ads flow to those viewers. Much work remains to be done to complete the infrastructure -- for example, studios and content-recognition firms have to build their databases of unique identifiers. But when the MPA's report comes out, it could be the online equivalent of a gun going off in the race to port TV's business model to the Web.

Today's dog-bites-man news: the Journal's Walt Mossberg got an exclusive pre-release look at the latest Apple device, and he loved it. The box in question is the Apple TV, which is designed to bridge the gap between your PC (or Mac) and your television set. Mossberg focused on the sort of questions that someone new to digital media would focus on. Is it easy to set up? (Yes.) Is it easy to use? (Yes.) Is the picture quality good? (Yes.)

To me, though, there's no reason to buy a "media extender," particularly not one as expensive as the Apple TV, unless it can do one thing: enable me to watch on my TV (and hear on my stereo) things that I can get only on my PC today, and that I'd rather experience in my living room. Those things include photos; home movies; downloaded songs and videos; and music, video clips and TV shows streamed from Web sites. Mossberg and co-writer Katherine Boehret didn't answer this question directly, but provided some clues. They note that the Apple TV can handle some of the digital photos scattered around your home network (although it's not clear whether you can plug a digital camera or memory card into the thing and show off your latest pics). They didn't address the home-movie issue, but Apple's website says the box is limited to particular flavors of MPEG-4 and H.264, which means most people would have to convert their videos to these formats to make them work. They gave the Apple TV high marks for the way it handled music and video stored on a home computer (with an important caveat, which I'll address later). But they conceded that the box cannot display content from YouTube, MySpace, NBC.com, Comedy Central's Motherload or any other Web site with audio or video streams, although they speculated that the software will eventually be updated to accomplish this feat.

The inability to handle streamed content makes the Apple TV a non-starter in my book, particularly at that price. Besides, I don't have digital TV. But there's another issue that Mossberg and Boehret mentioned in passing that is a real problem for the device, as well as seemingly every other one of its ilk. The content that is most clearly trapped on the PC is the stuff protected by electronic locks, a.k.a. digital rights management (DRM) technology. Some of it is Hollywood movies, for which there is an easy substitute at the local movie rental store. But some of it is content rented through Web-based audio or video subscription services, such as Vongo or Rhapsody. Just about every subscription service on the Net today (along with most of the legal download sites) uses Microsoft's DRM, which the Apple TV cannot handle. That's not because Microsoft won't make it available, but because Apple uses only its own DRM, which powers the market-leading iTunes Store. As a result, people who buy an Apple TV can't use it for content rented online or bought at any store other than Apple's. One ugly result is that someone who wants to watch, say, a missed episode of "24" can't use the Apple TV to watch it for free through MySpace. Instead, if they want to use their shiny new device to watch it in their living room, they'll have to plunk down $1.99 to buy it from the iTunes Store.

IMHO, the ultimate solution here is a media adapter that a) can handle material streamed from the Net; b) recognizes every digital media format in wide use by consumer-electronics and computer makers; and c) uses standard scrambling technology that the studios and music companies embrace, such as DTCP over IP. That way, the DRM used on downloaded content shouldn't matter, as long as the computer storing the content could connect securely to the media adapter. Yes, it would be a better world without DRM, but then we wouldn't have subscription services, downloadable movies, etc. etc. If Apple took this approach, its engineering and design skills would probably still trump anyone else in the market. Instead, it seems intent on promoting iTunes and the iTunes Store as the software platform for digital music and movies.

One other question that Mossberg and Boehret didn't answer, and I've never been able to persuade Apple to answer, either: will Hollywood movies and other high-definition content bought from the iTunes Store be viewable in HD on older HDTVs, or will the high-def output be limited to the HDMI connection? A geeky question, I know, but one that matters to millions of potential buyers whose HDTVs have only component video inputs.

I saw all or part of 43 bands at South by Southwest last week, but the most intriguing part of the trip might have been a Q&A by Pete Townshend, the only original member of the Who currently standing. In addition to dispensing career advice and telling anecdotes, Townshend announced something he called The Method. Details were sketchy, but what it boils down to is Web-based software that creates highly personalized songs -- the program generates music by processing the data people provide about themselves. There's likely to be a fee associated with it (the flyer on our seats talked about the service being available to "subscribers"). On the plus side, Townshend said that the individuals who "sit" for the Method software will hold 1/3 of the copyright to the ensuing music. Townshend has been thinking about doing this since the "Lifehouse" days -- the rock opera that was largely shelved in favor of "Who's Next." The whole thing is scheduled to launch with a press conference and webcast April 25, but there's a MySpace site on this topic already.

As for the music, my week was typified by what happened late Friday night. I was amid a giant sea of humanity at Stubbs for The Good, the Bad and the Queen, arguably the biggest act playing that evening, and I wasn't exactly transported into groove heaven. So after four or five turgid tracks I ran down the street to join a sparse crowd of 20 or so fans at Parish II, where Tullycraft was about halfway through its set of head-bobbing twee-pop gold. The Tullys delivered on the promise of live music (albeit in a no-animals-harmed-in-the-making-of-this-indie-pop-record kind of way) much better than TGTB&TQ did -- more than just raising the volume, they breathed life into the songs on their records. With that in mind, I'd say my other favorite shows were by, in no particular order: Peter, Bjorn and John (who rocked surprisingly hard); hypnotic +/-; the ever-reliable Sloan (who always rock like it's 1975); the astounding Kid Koala; Fujiya & Miyagi; The Cinematics; Sparklehorse; The Broken West; Amy Winehouse; The Rapture; Youth Group; Thomas Dolby (playing a number of hits, but sadly nothing from "The Flat Earth"); Dallas Crane; Great Northern and The Blakes. My main regrets: watching Razorlight made me miss half of the WinterKids' set, and going to see a disappointing Parisian two-piece instead of trying to get into Field Music, a not-so-obscure British three-piece. Then again, I wound up rawking out to the Blakes, so the story ended well.

For the Rashomon effect, check out blog posts from my two companions on the trip: Dan Hontz and Bill Goodykoontz. The did a much better job keeping track of our food and beer intake. And yes, that movie is a bit older than we are. But the next time I go to SxSW, I'm taking my AARP card.

Maybe I'm beating a dead horse, but I wrote another piece about how digital rights management technology can be used to give consumers more, not less, than they had before. It's today's Opinion Daily column at latimes.com, and you can read it here. The example I cite is a company called Slacker, which re-imagines radio for the always-on generation. I haven't had the chance to play with Slacker's service yet -- I spent the last week at South by Southwest, seeing more bands in four days than I'd seen in the previous decade (read three versions of the highlights: here, courtesy of my pal Bill Goodykoontz; here, from my pal Dan Hontz; or here, from me) -- but the demos that CEO Dennis Mudd provided at the festival were pretty compelling. At any rate, the main thing that interested me was how the company used DRM to create a new value proposition, not the product itself.

The Slacker team includes alumni from several pioneering digital-music companies, including MusicMatch (Mudd's last company, which made one of the first jukebox programs for PCs) Rio (the first MP3 player) and XM satellite radio. And as an aside, Slacker's launch could have two impacts on XM. First, it shows how much technology has changed the radio market since the FCC set the rules for satellite radio in 1997, giving regulators another reason to approve the proposed XM and Sirius merger. Contrary to what critics say, the combination hardly creates a monopoly; as Slacker's emergence shows, the radio market is getting more competitive every day. Second, the license deals that Slacker negotiated include the ability to offer a portable player that lets users save tracks they hear on Slacker's radio stations. Those tracks can be then be played on-demand and mixed with the user's personal MP3s, but not moved off the device. That's just what XM does with its Inno, a player so loathed by the major record companies that they sued over it. That case is still pending. So why is Slacker's player acceptable to the majors (two of the four have announced deals with Slacker, and the others are expected to follow) and the Inno isn't? My guess is that it was easier for Slacker, as a start-up with no users, to carve out a new royalty niche -- somewhere between the rate for basic webcasting and the one for a fully on-demand, portable service such as Napster-to-go -- than it has been for XM, which has millions of users. The fact that Slacker (and Sirius) were able to strike deals, though, suggests that XM will ultimately be able to do the same and make the labels' lawsuit go away.

From Mark Cuban's lips to Sumner Redstone's ears.... Upping the ante at the negotiating table, Viacom sued YouTube and Google today for upwards of $1 billion in damages. Although you may remember Viacom's outside counsel -- Donald Verrilli Jr. of Jenner & Block -- from MGM v Grokster, this case raises several really interesting issues not found in the peer-to-peer cases, in addition to one that came up in the original Napster case.

YouTube's approach to copyrighted material has been the same as Google's -- if (and only if) a copyright owner complains that one of his/her clips was posted without permission, YouTube will remove that specific clip. That's what the Digital Millennium Copyright Act of 1998 requires Web hosting companies to do in order to be shielded from lawsuits. It's also consistent with the 9th Circuit Court of Appeals' first ruling in the Napster case, which said it was the record companies' job, not Napster's, to look for and identify  infringements on the network. Viacom sued YouTube in a different circuit -- it was filed in New York, in the 2nd Circuit -- and argued that several YouTube features make it impossible for copyright holders to detect all the infringements enabled by the site. Viacom demanded that YouTube use technology to prevent or remove infringing posts, effectively making YouTube police itself on behalf of copyright owners.

More important, Viacom argues that YouTube doesn't qualify for the DMCA's "safe harbor" for Web hosting companies. YouTube duplicates and displays works on a site it controls and monetizes, the lawsuit contends, while a Web hosting firm leaves such activities and control to its customers. If Viacom prevails in court on this point, that's bad news for every user-generated content site -- particularly the ones that syndicate their content elsewhere online. Paging Dr. MySpace....

Intriguingly, some of the things Viacom complains about are the kinds of features that legitimate users demand from a site like YouTube. For example, YouTube lets people post videos that can be seen only by the users ("friends") they select. That's a great approach for letting far-flung relatives watch home videos, but it's also a fine way to keep Viacom's lawyers from spotting "Mission: Impossible" clips. Similarly, the embedding function helps filmmakers tap the viral energy of the Web to gain exposure for their short works and promotional pieces. But it also helps spread an infringing work far and wide.

The ideal outcome here is for Viacom to strike a licensing deal with YouTube that turns the former's clips into incremental revenue. I suspect that Viacom feels the same way; the problem is figuring out how to define the clips' worth. By serving as a virtual VCR for "The Daily Show," "South Park" and other Viacom titles, does YouTube reduce the amount of revenue those shows generate? There's some evidence that the effect is just the opposite -- that online exposure increases viewership on TV. How about YouTube's effect on Viacom's websites and their advertising revenue? Does it draw eyeballs away from comedycentral.com, et al, or does it expose Viacom clips to a complementary -- and much larger -- collection of viewers?

Hey, if questions like these were easy to answer, we'd be seeing more licensing deals and fewer lawsuits.

I'll be headed down to the music festival at South by Southwest next week -- as a fanboy, not a reporter -- and probably won't lengthen this blog while I'm there. Still, the pending trip to Texas' capital gives me an excuse to bash Verizon Wireless for clinging to a service strategy that should have died in the 1980s.

Given that my wardrobe is likely to land me on the wrong side of the velvet ropes, I decided to create a ringtone that would certify me as one of the 10,000 coolest people in Austin. So I flipped through my collection of warping vinyl until I found "Texas Fever," an EP by the great Scottish band Orange Juice. Soon, I had ripped and truncated the song "The Day I Went Down to Texas," focusing on the portion that waxes rhapsodic about drinking and riding Cadillacs in the Lone Star state.

Then I tried to load this most perfect of ringtones onto my LG VX8100, a phone ostensibly built for playing music. As it turns out, it could play the snippet -- just not as a ringtone. Verizon had done its best to force subscribers to buy ringtones from a limited selection of partners, rather than creating and loading them on their own. My rational response was to comb the Web for a work-around, and there may be one from bitpim.org. We'll see what happens when my new data cable arrives (from a store not affiliated with Verizon).

Regardless of how that works out, though, I'm counting the months until my Verizon Wireless contract expires. I don't mind the contract -- it's an acceptable exchange for getting a free phone. But I do mind being trapped in a walled garden, with so many features of my phone being disabled (including much of its Bluetooth capability). By trying to extract all of my business, Verizon will wind up with none of it. It's a lesson the entertainment industry needs to bear in mind as it tries to build businesses around products derived from items they're already selling. Better to offer things consumers can't make themselves than try to deny them the ones they can.

Anyone intrigued by the legal dilemma facing Google and its YouTube subsidiary (as in, the potential for massive copyright-infringement judgments) should read this post from Mark Cuban's blog. In it, Cuban explains why Magnolia Pictures, the movie studio he co-owns, sent subpoenas to Google to find the names of the YouTube users who had posted clips from Magnolia movies. Not to pretend to be a lawyer here, but the heart of YouTube's defense is that it qualifies for the safe harbor that the 1998 Digital Millennium Act provides for Web hosting companies. Read Cuban's blog and you'll see how an irritated copyright holder might attack that defense. (For his part, Cuban says he has no plans to sue the folks who posted the clips -- but he didn't say anything about not suing Google.) And after you've finished that, check out Henry Blodget's argument for why the YouTube purchase should still be considered a good move by Google -- an argument that ignores Google's newfound copyright liabilities. To read the NY Times story that apparently sent Blodget's blood boiling, click here -- he didn't bother to provide the link, but I will 'cause I know how badly the other Times needs the traffic.

The TechDirt community frequently gets into a lather over DRM, with the site's writers and numerous readers contending that such technologies don't add value and don't enable new business models. My own belief is that DRM is like most other technologies in that it's capable of good and bad uses; the former category includes enabling online music and video jukeboxes (the so-called "rental" model, which I think is a misnomer), while the latter category includes just about everything else we've seen so far.

Anyway, part of the problem for DRM has been technological: software like Microsoft's widely used "PlaysForSure" DRM is designed to bind content to devices, rather than to customers. Ideally, the DRM on, say, a movie would let buyers move it freely within their personal domain of devices, raising its ugly head only when they tried to send a copy to someone else's PC or portable. Apple's FairPlay DRM takes this kind of personal domain-based approach, but it only works on Apple gear. The Marlin DRM developed by Intertrust, Panasonic, Philips, Samsung and Sony is designed to be interoperable, but it's hard to find anyone actually using it.

Recently, Microsoft unveiled its own domain-based system, called PlayReady. The software represents a notable break from three longtime Microsoft practices: it runs on competitors' operating systems, not just Windows; it works with competitors' formats, not just Windows Media; and it will be able to interoperate with other DRMs. Wow. It won't be released until later this year, but Microsoft has already lined up several leading mobile-phone companies, including Verizon Wireless and AT&T. Assuming it works as billed, the software will let someone who buys a song on their mobile phone move it seamlessly to all the other devices they use, provided that those devices have the PlayReady software. The caveats: the devices have to be registered electronically to that user, and the copyright holder gets to limit the total number of devices customers may register.

It remains to be seen whether Microsoft can do all of this, but it has already demonstrated the DRM working with AAC and MPEG4 files on a smartphone running the market-leading Symbian operating system. It also has shown off support for superdistribution -- that is, the ability to beam a file from one user to another with the DRM intact, enabling people to buy content from each other without having to download it again. That's an intriguing capability, even though lack of a single standard for phones and mobile networks in the U.S. could curtail the use of superdistribution on cellphones here. It will be interesting to see what Verizon Wireless and AT&T do with PlayReady; with luck, the domain-based DRM won't simply be an excuse for them to charge more for downloadable songs.

The FCC has all but concluded its investigation of payola, with four leading radio chains agreeing to pay $12.5 million to make the commission go away. Read the LA Times' story by Jim Puzzanghera here. They also have agreed to submit themselves to greater oversight by the feds, with new limits on the gifts they receive from labels and promoters. And in a separate deal with the American Association of Independent Music, they pledged to give equal access to indie-music promoters and to reserve about 8,400 half-hour segments of airtime for indie artists.

The action may put an end to the most brazen pay-for-play deals, and that would be a very good thing. But it may not have much impact on radio playlists. For starters, the four chains in question -- Clear Channel, CBS Radio, Entercom and Citadel -- own and operate more than 1,650 radio stations across the country, so the 4,200 hours will be spread pretty thin (although many of those stations are talk radio outlets not affected by the deal). That hardly seems enough to build an audience for indie artists. Second, even if radio stations give equal treatment to promoters for all kinds of labels, the indies will never be on the same footing as the majors. Record stations gravitate naturally to major-label artists because they come with their own marketing budgets to help their songs become hits. A well-hyped new record is much more likely to get airtime than a disc with no advance buzz, no matter how great the Pitchfork Media review is. Similarly, radio stations tend to play the heck out of artists who've agreed to perform at the shows the stations sponsor. If you were trying to sell tickets for a concert, who would you rather have on your bill: Korn or Bikeride?

I don't mean to sound cynical about this. Who knows, the promises of access for indie-label promoters might result in more gifted but overlooked artists winning mass audiences (although TV/film exposure and sheer genius are doing some of that already). Nevertheless, I think indie labels are better off focusing on emerging music platforms that aren't so influenced by the majors' marketing muscle. These include online subscription services and satellite channels. The most promising has been Web radio, where the programming is far more diverse than it is over the air. (Unfortunately, online stations face a steep increase in royalty payments, so some of that diversity may soon be lost in a wave of consolidation.) As indie label exec Peter Gordon told the Chicago Tribune, more than a third of the music heard on these emerging platforms comes from indie artists -- a far, far greater percentage than what's played by local stations. It seems the indies would be better off focusing on those fast-growing platforms than fighting for the occasional half-hour of airtime.

The image comes from the cover of "Payola," a 1988 novel by Gerry Cagle, a journalist and former radio programmer.

An overlooked ruling by a trio of arbiters last week has cast a pall over Web radio. According to Kurt Hanson's Radio and Internet Newsletter, the copyright royalty board set rates at $0.0011 cents per listener per song this year, rising to $0.0019 in 2010. (It also retroactively set the rates at $0.0008 cents for 2006.) That's up from $0.00076 cents for large commercial stations and $0.0002 for non-commercial ones, a rate that was in effect from 1998 to 2005.

The rate poses severe problems for a number of groups. The board apparently had two main rationales for more than doubling the rate by 2010: there had been no increases since 1998, and advertising sales were burgeoning online. But the result is stunning for non-commercial stations that do not sell ads, particularly ones such as KCRW whose previous royalties were paid by the Corporation for Public Broadcasting. A spokesman for SoundExchange (the collection agency for labels and performers) argued that a song is worth what a song is worth, regardless of who's playing it online. But that ignores the realities of the radio world. Commercial stations use music to build profits. Non-commercial stations use music to attract the subscribers needed to break even. If the rate remains the same, that's akin to saying that public stations shouldn't play music online.

Not that commercial webcasters will like the increase. Hanson argues that even the 2006 rate is too rich for most online stations, given how few ads they sell. The smallest webcasters -- those who stream fewer than about 160,000 hours of music a month -- face a flat annual fee of $500 per channel, which isn't too bad (assuming they're not offering multiple stations). But for those above the cut-off, the new rate means a shift from paying a percentage of their revenue (about 12%) to a per-song fee. That's going to hurt, particularly if Hanson's calculations are correct. Finally, the pain will even be felt by advertising-rich over-the-air broadcasters who simulcast online. Online ad sales are growing, but some analysts say they're coming at the expense of over-the-air ads.

Attorney David Oxenford, who has represented some webcasting firms, offers a good analysis of the ruling here.  The question facing the music industry and performing artists, who split the receipts from webcasters, is whether they would be better off if the higher royalties lead to greater consolidation among online broadcasters. Maybe they would be; it's easy to argue that too many broadcasters (online and off) have gotten away with paying too little for music. And shuttering many online stations that weren't generating much revenue could promote subscription services such as Rhapsody and Napster, turning the latter into a richer source of royalties. On the other hand, the music industry has watched over-the-air broadcasters consolidate, leading to even narrower playlists. Does the industry really want to see the same thing happen online?

The cable TV and consumer-electronics industries are battling again, this time over home-networking technologies. Intel Corp. and four giant consumer-electronics manufacturers -- Sony, Matsushita (Panasonic's parent), Toshiba and Hitachi -- complained to the FCC last month that cable TV operators were refusing to approve a content-protection technology they developed, DTCP-IP. The technology has been widely adopted by manufacturers and inter-industry groups, including the Digital Living Network Alliance (a group developing interoperability standards for entertainment-oriented home networks). The problem isn't DTCP-IP's ability to deter piracy; instead, it's the cable industry's insistence on preserving the cable "ecosystem" in a connected home.

At issue is the ability of products to work on a home network with digital-cable-ready TV sets and related devices. The FCC's "plug and play" rules from 2003 required TV sets, digital video recorders and other devices linked together in the home to meet certain anti-piracy requirements. The rules also let CableLabs, the cable industry's research arm, decide which technologies met those requirements, with the FCC resolving any disputes. As a result, a digital-cable-ready TV or TiVo will have to put electronic locks on cable programming before piping it from, say, the living room to the bedroom.

The cable industry argued for the anti-piracy provisions ostensibly to satisfy Hollywood and other content providers. And true enough, the studios have pushed home-entertainment and high-tech gear makers to provide piracy-resistant connections between their products, rather than just enabling them to connect. But here's the disconnect: while Hollywood has endorsed DTCP-IP (which stands for Digital Transmission Content Protection over Internet Protocol), CableLabs has said it's not good enough. As consumer-electronics and high-tech manufacturers coalesce around standards such as those from the Digital Living Network Alliance, they're building products that rely on DTCP-IP for secure input and output. That puts them at odds with CableLabs, which has approved DRM-based approaches from Microsoft and RealNetworks.

The issue is technical and, well, geeky, but the fundamental issue here is similar to that faced by the telephone industry in the 1950s and 1960s. Innovation in phones skyrocketed after the FCC allowed manufacturers other than Ma Bell to make them, provided that the new products didn't harm the network. Innovation in cable TV has been hamstrung, too, by the cable operators' control over equipment; just ask someone who switched from a cable operator's DVR to a TiVo (or -- shudder -- vice versa). CableLabs argues that technologies such as DTCP-IP must insure that all programming supplied by a cable operator -- including local broadcasters and public-access channels -- is given special treatment on a home network. That includes such considerations as picture quality and closed-caption information. But copy-protection technology should be judged solely on its ability to recognize and preserve the rules that content providers place on their programs. Those are objective measurements. Otherwise, CableLabs can favor technologies used by the cable industry's traditional vendors and exclude those used by their competitors.

The goal for everyone here -- cable operators, programmers and gear-makers -- should be to get more devices connected to the network. That not only will promote innovation in cable, which has been notoriously slow on that front, but also will increase cable's value to its customers. For its own good, cable should embrace DTCP-IP and take advantage of the home-networking momentum being generated by the DLNA.

The Internet has been buzzing for a couple of months about BackupHDDVD and related efforts to pick the electronic locks on high-definition discs, but the reaction from Hollywood has been muted. That's because studio executives saw it coming (although perhaps not so soon after HD DVD and Blu-ray discs hit the market), and they don't think their copy-protection strategy has been defeated. At least not yet. I wrote a column about this for latimes.com today, and you can read it here.