Here's a value proposition for you: a subscription music service that lets you download 88 MP3s a month for a little less than $3. And you thought eMusic was a good deal.... The catch is, you have to be in China to subscribe. And in China, music fans aren't used to paying anything for MP3s.
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One week after notifying customers that it would soon stop supporting the DRM-wrapped songs they had purchased, Yahoo has offered to make whole anyone concerned about a loss of tunage. That's quite a concession, yet it's not a huge surprise -- shortly after Microsoft made a similar decision to shut down MSN Music's DRM servers, it reversed course and said it would keep the servers plugged in for at least three more years. Could it be that two of the world's most powerful Internet companies actually listen to the EFF?
Here are the details, according to the Associated Press: customers who bought downloadable tracks from Yahoo's defunct music service can obtain coupons that they can redeem for replacement MP3 files at Rhapsody, the RealNetworks-MTV joint venture that took over Yahoo's subscription music service. If a coupon doesn't cut it for you, Yahoo may be willing to cough up an actual refund.
My previous post on this issue has provoked an often hilarious exchange between DRM critics and advocates, one of whom dismembers my arguments in unusually vivid terms. Not that it takes a surgeon's skill to do so, but it's still pretty entertaining.
UPDATE: Carrie Davis at Yahoo provided these nuggets of detail: if you're looking for a coupon or a refund, contact Yahoo's Customer Care department. There's no need for proof of purchase. The offer expires at the end of the year. By the way, coupons can be redeemed for any track at Rhapsody, not just the ones the customer purchased from Yahoo. Sounds like a chance to trade in all those disappointing Jimmy Eat World tracks for some Deastro!
DivX announced another ally today: the downloadable movie site CinemaNow. On some unspecified date in the future, the latter will offer customers the option of downloading movies in the DivX format (using the DivX DRM) instead of CinemaNow's usual Windows Media files. DivX's codec is impressive, but the main improvement the deal offers consumers is an easier way to play the movies they rent or buy on their TV set. The DivX DRM enables people to play the files on every DivX-certified device in their personal domains. For most people, that would be a DVD player. And unlike other DRM approaches in the market, DivX enables rented movies to be burned onto disc, not just download-to-own files. In other words, it's a practical living-room solution for online movie rental sites.
Apple, Netflix and Amazon.com have a different strategy for delivering rented movies to TV sets: they stream the flicks to specialized set-top devices (such as the Apple TV, Roku's Netflix box and Sony's back-of-the-TV Bravia Internet Video Link). DivX plays in that arena, too, with its DivX Connected boxes (currently available only from D-Link). The D-Link set-top is a solid entry into the field, although it suffers from the same limitations as everybody else's "media extenders": it's compatible with only a portion of the vast online universe of video. The challenge for DivX and CinemaNow will be to persuade more studios to embrace the DivX format and DRM; so far, the only announced taker in Hollywood is Sony Pictures. They'll need a much more comprehensive lineup than that to make the DivX option a meaningful addition to CinemaNow's service.
Yahoo alerted customers of its erstwhile downloadable music store that it would no longer provide support after Sept. 30 (download the cheerful e-mail here). The upshot: starting Oct. 1, said customers won't be able to revive frozen tracks or move working ones onto new hard drives or computers, because Yahoo won't be providing any more keys to the songs' DRM wrappers. But hey, they can always buy MP3 versions from Yahoo's new partner Rhapsody!
Yahoo is cutting off support at an unusually speedy pace for a company that's not going out of business. Consumer backlash prompted Microsoft to extend support for tracks bought from the defunct MSN Music store by at least three years. And Sony, which closed its Connect music store in March, will continue to support those tracks until the end of the year. Perhaps Yahoo will feel a similar blast of heat and maintain its DRM servers for a while longer. Or maybe it sold so few tracks that no one will care.
I've already said that my outrage needle isn't really moved by decisions such as Yahoo's. Plenty of online music sellers crashed and burned before the major labels stopped demanding that 99-cent downloads be
warped wrapped in DRM. Consumers should be used to this routine by now. Beyond that, buyers should have been backing up their purchases onto DRM-free CDs to protect their data. If they hadn't been doing so, the email from Yahoo Music should provide enough incentive to do it now. Yes, they may lose some fidelity in the translation from DRM'ed file to CD to MP3, depending on the bit rates involved. But that's a small price to pay for extended life in an era of accelerated obsolescence.
It's also worth saying that Yahoo Music's last two top executives, Dave Goldberg (now a VC) and Ian Rogers (now at Topspin Media) were both strong advocates of a DRM-free approach to music. That's why it would be ironic for consumers to be ticked off at Yahoo, which didn't have either the leverage to change the labels' policy or the patience to wait on the sidelines (a la Amazon.com). Nevertheless, consumers are most likely to direct their ire at the company that sold them the soon-to-be irreparable goods, not at the wholesaler responsible for the defect.
If you had the chance to watch a movie on cable or satellite TV before it came out on DVD, what sort of trade-offs would you be willing to make? Would you pay more to watch it than a DVD rental or even a movie ticket? Would you accept having to watch the movie in one sitting, with no breaks for phone calls or snacks? Would you lose interest if you couldn't record the movie to watch again later?
These are the sorts of questions the market typically answers, but that's not how it necessarily works in the entertainment industry. This week, seven consumer advocacy groups urged the FCC not to let the studios conduct the experiment they proposed in early video-on-demand releases. The reason: the MPAA wants to deploy an anti-piracy technique that, in the advocacy groups' opinion, would give the studios too much control over the technology used in homes.
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Two announcements today about downloadable movies illustrate Hollywood's one-step-forward, one-step back approach to this market. Jaman, an online video-on-demand service that specializes in indie fare, announced a licensing deal with Paramount that gives the site its first major-studio content. It's a nice pick-up for Jaman, which distributes moves in part through a secure file-sharing network -- the kind of technique that was once a non-starter with Hollywood. But unlike the other films offered by Jaman, Paramount's titles won't be available in high definition. The restriction reflects the widespread aversion in Hollywood to sending high-def movie files to PCs -- you won't find high-def titles at Movielink, CinemaNow or Amazon's Unbox, either. Nor will the films be available to rent on Jaman as soon as they reach the local video store; instead, they'll have to wait several weeks for the video-on-demand window.
The studios have been willing to provide high-def downloads to a handful of specialized living-room devices, such as the XBox 360 game console, the Apple TV, the Vudu box and now the Sony PS3. (Kudos to my colleagues Dawn Chmielewski and Alex Pham for breaking that story months ago.) On the plus side, the PS3 download service uses the Marlin DRM developed in part by Sony and Intertrust Technologies (a company that counts Sony as a major investor). Marlin, which is designed to interoperate with other DRMs, can grant playback rights to a set of personal devices. Initially, Sony will use it to let people move downloaded films and TV shows from their PS3s to their PSPs. What it won't do, though, is let people move the programs they rent or buy to their laptops or desktop PCs -- at least not right away. That's a galling omission, particularly for download-to-own titles. Marlin DRM licenses can be updated remotely, so if Sony changes its mind and allows movies to be transferred onto computers, the new flexibility can be applied retroactively to movies already purchased. But even if Sony does relax the restrictions, high-def titles probably won't be allowed outside the PS3-PSP-TV world. That begs the question of why anyone would buy a title when the only way to preserve the bits is to tie up scarce space on the PlayStation's hard drive.
Sony's CEO, Sir Howard Stringer, has made interoperability and connectivity a priority for the company. In fact, he pledged last month that 90% of Sony's product categories would include devices with networking capability within three years. It will be interesting to see how Sony meshes that goal with its high-definition evangelizing and its studio's reservations about the PC.
Nifty "Trust" illustration courtesy of the Intertrust website.
It's been an article of faith for the entertainment industry that unauthorized copying = lost sales. The MPAA seems to be the market leader on this front, citing mind-boggling estimates of the billions of dollars in revenue siphoned off by piracy. This week, Futuresource Consulting Ltd., a UK research firm, released a study that purports to confirm the conventional wisdom, at least in part. According to the study, about a third of those interviewed said they had made copies of pre-recorded DVDs in the previous six months. That's up from about a quarter in 2007. Had they not been able to make those copies, a high percentage of those surveyed -- 77% in the U.S., 63% in the U.K. -- would have bought at least a few of them. Strong stuff, but not surprisingly, there are some notable caveats.
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The first casualty of this decade's digital music revolution has been music sales, as consumer switched from CDs to 99 cent singles or free downloads. But some industry executives see a chance to reverse the trend and sell music in significantly larger bundles -- more songs, in fact, than the average consumer buys in a year. That's the home-run swing promised by initiatives such as Nokia's Comes with Music, which signed up its third major record company today, Warner Music Group. Universal Music Group, an early advocate of this kind of thing, and Sony BMG were already on board, with EMI still in licensing talks.
The Comes with Music proposition is simple: buy a specially designated Nokia phone, get an unlimited number of seemingly free song downloads for one year. That's seemingly free, not actually free, because the price of the phone will include a hidden sum that Nokia will split with the labels and music publishers.
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Knowledge Ecology International, a group that seeks to reduce the control wielded by patent and copyright holders, recently posted a list of suggestions that the RIAA purportedly sent to the U.S. Trade Representative for what to include in the proposed Anti-Counterfeiting Trade Agreement. Ars Technica's Nate Anderson took up the issue today, accusing the record companies of trying to disembowel the safe harbor provisions of the DMCA. I checked the legitimacy of the Knowledge Ecology post with Neil Turkewitz, the RIAA's point man on such things, and he said it looked accurate. Not surprisingly, however, he offered a somewhat different take than Ars. Yet he acknowledged that some aspects of the RIAA's proposal for ACTA go beyond U.S. law on the enforcement of copyrights online.
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Today, Rhapsody (a joint venture between RealNetworks and Viacom's MTV Networks) launches another initiative aimed at selling its subscription music service. My colleague Michelle Quinn has the details here , such as Rhapsody's answer to the new Napster MP3 store, but I wanted to drill down on a couple of elements from the announcement.
To me, the MP3 store is the least interesting feature. Yes, it has more DRM-free tracks than the iTunes store, but so does Napster's. More intriguing are the partnerships aimed at introducing more people to Rhapsody's vast celestial jukebox, the core feature of its subscription service. These deals, especially the one with iLike, may mark the first time Rhapsody or any other subscription-music service has been effectively marketed. (When it comes to selling digital music products and services, Apple has been in a league of its own.) Sometime in July, iLike's 28 million users will be able to play for free just about any song mentioned on its network of sites, not just 30-second samples or the handful of full-length tracks posted by selected artists. The same capability will be rolled out gradually through Yahoo and MTV Networks' online properties, such as CMT.com and VH1.com.
There is, however, a non-trivial caveat.
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