Nero burns a new mission

Nerologo The idea of putting kiosks in retailers to burn music or movie discs on demand is one whose time may never come. I've heard a number of pitches for them over the years, almost all of which sounded far more promising than they proved to be in the marketplace. Still, companies keep trying. The latest is Nero, maker of a leading brand of disc-burning software, which expects to be powering movie-burning kiosks in major retailers this summer.

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Giving Warner Music its due

Warner Music Group announced today that its head of digital strategy, Alejandro Zubillaga, is stepping down to (as he put it) "get back to my entrepreneurial roots." In other words, he's still mulling his next move. Warner took some grief four years ago when it named music-industry novice Zubillaga -- a former telecom exec in Venezuela and venture capitalist whose firm, Lexa Partners, was part of the group that took Warner private -- to lead the all-important work of developing new digital revenue streams. The appointment had a patina of nepotism, given that Zubillaga's brother-in-law, Edgar Bronfman Jr., led the Warner buyout and became the company's chairman. But his leadership led Warner to make what strikes me as the flagship deal for the entertainment industry going forward: a pioneering agreement with YouTube to share advertising revenue.

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SpiralFrog: a new medium

Spiralfrog_free_music_downloads_logJust how compelling is free music? SpiralFrog, which offers free downloads with the copyright owners' blessings, went from zero customers in September to more than 1 million unique visitors per month in late January. And in a visit here Friday, board chairman Joe Mohen touted a new milestone: SpiralFrog has signed up than 500,000 registered users. (Registration is required to download content from SpiralFrog.com; otherwise, visitors are limited to reading music news from Billboard, listening to song samples and streaming music videos -- the kind of thing that's available on lots of music sites.)

The rapid growth is important, given that SpiralFrog needs to attract millions of eyeballs to survive off of advertising revenue. But what Mohen couldn't yet say is how long SpiralFrog's registered users tend to stick around. The service is only a few months old, after all. SpiralFrog's main advantage over legal outlets such as iTunes and Rhapsody is that it costs nothing, which matches what tens of millions of consumers want to pay for music online. That's what makes SpiralFrog and other emerging ad-supported music-on-demand services -- such as iMeem and Last.fm -- so promising conceptually. But to hit that magic price point, it imposes trade-offs that the masses may not abide.

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Copy-protecting video streams

Television networks have garnered a lot of attention in the past year for making their programs available for free online, be it through their own sites (e.g., cbs.com and comedycentral.com), joint efforts (hulu.com) or social networks (MySpaceTV). Many of these efforts rely on Adobe's well-nigh ubiquitous Flash format, which works on Macs as well as PCs. One consequence of using Flash is that the streams aren't encrypted, which means they can be recorded and redistributed. That's not necessarily a bad thing for advertiser-supported programming, but not a good thing if people routinely clip out the commercials before passing the video along. Where there is a vulnerability, there will be tech companies trying to exploit it -- and, inevitably, others trying to fend them off with tighter security.

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Apple subtracts one advantage

Tuaw_logo Reader James Lubin of Los Angeles pointed out something I'd overlooked in my post Tuesday about Apple's new movie rental service. One of the differentiators between Apple and other downloadable movie sites is that rented films can be transferred to pocket-sized portable players in addition to laptops. Previously, that was something only DivX-enabled services such as Film Fresh could do with rentals, and until this month, no major studio had approved the use of DivX's DRM on its movies. But Lubin pointed me to a post on The Unofficial Apple Weblog reporting that movies rented from iTunes can be transferred only the latest iPods, i.e., the Touch, the Classic, the iPhone and the redesigned Nano.

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Apple's version of Movielink

Apple_tv_movie_rentals Apple CEO Steve Jobs confirmed this morning its long-rumored entry into the online movie rental business, saying it had deals with all the major Hollywood studios to offer downloadable films for $2.99 (older titles in standard definition) to $4.99 (new releases in high definition). The company's approach is plagued by many of the same studio-imposed problems that have burdened pioneering download sites Movielink and CinemaNow, but it also has a couple of advantages unique to Apple.

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CES: Paramount endorses hard drives

Videogiants_logo_2 Here's an unusual first. Paramount Pictures announced a deal Wednesday to let MusicGiants, an online music store that caters to audiophiles, sell collections of movies loaded onto hard drives. Buyers will be able to transfer the contents of those drives onto personal  computers or, more likely, home media servers. The deal marks the first time Paramount -- and probably any major Hollywood studio -- has let its films be a) delivered on hard drives and b) loaded in bulk onto home servers. MusicGiants will also be able to sell downloadable titles one by one through its new online video store, dubbed VideoGiants, although it doesn't plan to do so until later this year.

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CES: PortoMedia's video kiosks

Portomedia_movie_key_2gb Heard this one before? A tech start-up company plans to install movie-rental kiosks in airports, train stations and convenience stores. This go-around, the would-be entertainment retailer is PortoMedia of Galway, Ireland, whose business plan revolves around tiny, souped-up flash drives. The company is backed by IBM, which is supplying the kiosk technology, and claims to be in late-stage talks with the major Hollywood studios. The kiosk idea has been floated (and sunk) many times, most recently as a way to burn DVDs on demand at video stores and other retailers. What makes PortoMedia a bit different -- in a way that bodes well for its business -- is shorter wait times for customers and lower equipment costs.

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CES: Sony Pictures embraces DivX

Divx_logoSan Diego-based DivX announced this morning that Sony Pictures has agreed to let online video stores and services distribute its movies with DivX's DRM, an alternative to the electronic locks developed by Microsoft, Apple and Intertrust, a company partly owned by (wait for it ... ) Sony.

It's the first major studio landed by DivX, which has been wooing Hollywood for years with little to show for it. But time and recent history may be on DivX's side here. Like the MP3 format for music, which the major record labels shunned for a decade before accepting, DivX's compressed video format has gained wide support among consumer-electronics companies and (ahem) unauthorized sources of movies. The difference -- and this works in Hollywood's favor -- is that DivX's format can be copy-protected with DRM, while MP3 cannot.

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CES: Philips' Rhapsody boombox

Philips_logo Philips has announced that it is integrating RealNetworks' Rhapsody subscription music service into its new Streamium boomboxes. This moves subscription music, which had previously been available on computers and portable players but not much in between, into an important new middle ground of accessibility. And it raises the question: What took so long?

The Streamium line, which features boomboxes and stereos that can connect to a home network, had previously offered little from the Internet other than webcasts and a limited ability to download. With Rhapsody, customers will be able to tap into an online jukebox with 4.5 million tracks, albeit for upward of $10 a month.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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