Once Again, You Don't Compete With Innovative New Services By Being Lame

from the in-case-you-weren't-paying-attention dept

A couple years back we pointed out how the entertainment industry kept trying to "compete" with new (legal and not-so-legal) online services, but always seemed to do so by being incredibly lame. And, you don't compete by being lame. It appears that this message still hasn't quite gotten through to some yet. With the movie industry facing new challenges concerning online distribution and innovative services like Redbox, here are two stories of old school players trying to "compete" but missing out on the part where they make their offering compelling.

The first comes from Josh in CharlotteNC, who points out that Blockbuster is trying to compete with Redbox and its widely available kiosks (and Netflix with its larger library of downloadable movies) by setting up kiosks in its stores where you can download movies. But... you can only download them to proprietary SD cards, and then it can only play on special proprietary hardware that participants in this program need to have. How is that a better experience then, well, anything? If you want a movie that can be downloaded, why not just let people download it at home? Why have people go out to download it?

Then we have a story sent in by Loydster, about how Sony Pictures is offering owners of new Sony/Bravia HDTV's the chance to download and watch the movie Cloudy With a Chance of Meatballs before the DVD release. While that is actually a nice tie-in between Sony's content business and its consumer electronics business, Sony (of course) has to screw it up. That's because the company thinks it can charge $25 to download the movie. The company seems to admit that it's charging this much because it doesn't want to piss off its retail partners (like WalMart), but it's difficult to see why it's worth doing the project at all if the pricing is going to be so ridiculous.

Experimenting with ways to compete is good... but being so obviously lame is not.

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Movie Makers Use 'Fake' Piracy Numbers To Score Distribution Deal

from the well,-good-for-them? dept

The NY Times recently had a blog post noting that the makers of an $850,000 romantic comedy called X's and O's were thrilled that their movie was widely shared on file sharing networks, because the attention it got helped land them a big DVD distribution deal, and potentially a television deal, helped along by the attention received from that file sharing. Of course, there's just one little problem. The FreakBits guys noticed that the number of downloads the movies' creators are citing are almost certainly false. Apparently some sites post fake download numbers as a part of their advertising, and the movie makers used those fake numbers. But... it seemed to get them attention to get more deals, so more power to them. No matter what, it suggests that (once again) obscurity is a much bigger problem than piracy.

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New Study States The Obvious: Kids Download A Lot Of Music

from the this-is-not-going-away dept

Over the past few months, there's been a push among some to suggest that file sharing is really a marginalized behavior, only done by a small group of people -- and that with just a little education (and maybe a few big legal victories, such as the ones against Jammie Thomas and Joel Tenenbaum -- combined with new services like Spotify), perhaps it can be brought "under control." The "evidence" given for this has often been a case study in how to use statistics to delude yourself, often looking at the total percentage of people or internet users who engage in file sharing. But, the fact is that ignores the real issue: which is that kids today (tomorrow's consumers) are file sharing at a very high rate. A new study, sponsored by UK Music (the UK organization that's looking to get ISPs to put in place some sort of blanket licensing plan) has found that over 60% of kids in the UK admit to file sharing, with 83% of those admitting to doing it regularly, and those surveyed claiming to have downloaded an average of 8,100 tracks. Think about that for a second. 8,100 tracks.

While the defenders of the old system want to liken file sharing to a problem like shoplifting, at some point you have to realize it's something entirely different. This isn't a marginal behavior done by "bad kids." This is about as common as can be. Oddly, the BBC tried to spin this report to say that file sharing has dropped, but that "drop" was only 2% and it's within the margin of error of the survey -- meaning there's no actual evidence that it dropped. The study also contradicted that other study we wrote about recently (also in the UK) that claimed that kids were replacing downloading with streaming services. In this survey, 78% said they had no interest in a streaming service, and 89% saying they'd never pay for such a service.

Given the two conflicting studies (both sponsored by biased parties), you have to question the results of both. But, given the fact that kids are more likely to deny file sharing activity these days, rather than admit to it (knowing they could get in trouble for it), you have to wonder if this study even undercounts the actual activity.

Now, once again, let's make a clear point: I'm not saying this is right or legal. I don't think anyone should download music from an artist who does not authorize it. But the fact is that file sharing is not a "small thing" among kids today, and to think that there's some sort of magical method of getting it to go away is wishful thinking. Given that we're seeing more and more artists learn how to embrace file sharing to do better with their own business models, at some point it's time for those fighting against it to recognize -- from the copyright holders' perspective -- that it's better not to fight what consumers want, but to embrace it, combined with a smart business model, and stop worrying.

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Video Game Downloads Harming The Used Video Game Market?

from the well,-that's-a-flip dept

We've had a bunch of articles in the last couple years about video game execs complaining about the used video game market, saying that they deserve a cut of any such sale -- or that the used market should be banned altogether. This, of course, is short-sighted, as studies have shown that a healthy secondary market improves the primary market by adding value to the product (i.e., people may be more willing to buy the new product, knowing they'll be able to resell it later). And, of course, the market has a way of dealing with these things.

So, it's a bit amusing to now see sort of the flip side to that story (sent in by the amusingly named "Just Another Moron in a Hurry") -- with some warning that the rise in direct downloads of video games is threatening the used video game market, and that may be bad for consumers as well. Obviously, those games can't be resold (at least not easily), and thus there isn't a cheap price entry point for consumers, as there is with used packages games. Again, even though this is complaining from the other side, I'm not sure it's really that big of a deal either, as the market again should start to deal with this situation. Being able to offer games direct to consumers should lower video game production costs (no more packaging/shipping/logistics/hard goods/etc.) and, even they don't initially, eventually the prices should reflect that, as well.

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eMusic Also Took Away Right To Download Songs Already Purchased

from the thanks-for-nothing dept

In all the fuss over eMusic's poorly managed plan to sign Sony Music and raise prices at the same time, the company apparently also was able to sneak through another anti-customer move. For years, as an eMusic customer, you were able to go back and access songs you'd previously downloaded. This is, for obvious reasons, a very useful feature -- especially considering the fact that people change computers or lose hard drives and such. However, apparently, along with the price increase, eMusic has quietly dropped this feature as well. It's not clear why they would do this. Perhaps Sony didn't want this, but that doesn't explain why the feature was removed for everyone. It's like eMusic is punishing their loyal customers. The company claims that it will allow people to redownload if there's a technical problem, but the convenience feature is just gone.

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Virgin Does Music Deal With Universal; Everyone Involved Forgets The Past

from the let's-look-back-a-bit dept

There's lots of news coming out today about how UK broadband ISP Virgin has signed a deal with Universal Music to allow unlimited access to Universal Music's catalog (downloads and streams) for a set price. Various execs and politicians are talking it up like it's the greatest thing ever. It's as if they think that people can't remember back just a few months.

That's because it was just a few months ago that Virgin was set to launch a similar offering that included all of the major record labels, but then a few of them got greedy and said they'd only agree to it if Virgin also employed Deep Packet Inspection (DPI) techniques to track the file sharing and cracked down on any sharing of MP3s. Virgin resisted -- after all, just a few months before that, it had insisted that it would never cut subscribers off the internet for file sharing. So... wouldn't you know it... a part of this plan is to cut file sharers off the internet.

So, let's take a look at this "wonderful" and "amazing" new agreement. You get a vastly limited catalog (only Universal Music -- and who the hell knows what label their favorite bands are on these days?). It's not clear how the usage is tracked, but given the earlier reports, we have to wonder if it involves DPI spying on your usage... and Virgin is committed to cracking down on file sharing and even "temporarily" cutting off access to the internet (Virgin claims its okay, because the cutoff is only "temporary"). Perhaps there are some folks out there who will sign up for such a service, but it's difficult to see who. They aren't offering any benefits or additional value.

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Study Says DRM Pushes Users To Illegal Downloads

from the thought-we'd-been-over-this dept

A new study from a Cambridge law professor says that DRM doesn't stop piracy, but rather prompts users to illegally download DRM-free pirated content (via Boing Boing). In short, the study found that users get frustrated by the restrictions put on legally purchased content by DRM and copy-protection technologies. Instead of rolling over and accepting this, they often change their behavior -- choosing to download unrestricted, illegal content in the future. This goes along with what's been pretty clear for a long time. DRM doesn't work at stopping piracy, it makes products less valuable and less attractive to users, and in turn leads them to look elsewhere for unrestricted content and products they can use how they best see fit.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Legal Downloads Increase In Sweden... But For How Long?

from the over-under,-anyone? dept

A few folks have sent in the news that since the implementation of a new antipiracy law in Sweden, legal music downloads are way up... and we already noted that it appears (loosely) that unauthorized file sharing has dropped. This, of course, has supporters of stricter laws insisting that this is "working." However, that seems unlikely. As we've seen, there's been massive demand for encryption technologies. It's no surprise that music sales would increase immediately following the shift, as many users wouldn't have any other source for music in the short term. But, given a chance to route around the new law, it seems likely that many people will do so. At the same time, now would be an excellent time for smart musicians and labels to play up the fact that their music is available to be freely shared, because you can imagine such a move would get a lot more attention than at other times.

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Did Miramax Give Torrent Seeker A Free Movie Ticket?

from the odder-things-have-happened... dept

Really not sure what to make of this one, but people keep submitting it, so might as well put it out there to see what people think: apparently, a girl in NY complained on Twitter that she couldn't find the movie Adventureland online to download as a torrent, and Miramax (which put out the film), Twittered back telling her that she shouldn't download it (and, in a slightly creepy way, included the hashtag #fbi). The girl supposedly wrote back: "Okay I won’t, JUST FOR YOU," at which point, Miramax promised her two free tickets to the movie (though, in the end, she supposedly only got one).

What's odd is that the reactions among submitters has gone to both extremes -- with one group finding it freaky and suggesting that it would piss off fans of the movie -- while others actually found it oddly humanizing and endearing by Miramax (though... pretty much everyone felt that the whole FBI reference could have been left aside). I'm leaning a bit towards the latter option. As I noted when the Wolverine leak happened, studios are never going to be able to stop unauthorized file sharing, but they might as well figure out ways to act cool about it, and leverage it to their best advantage. It's not clear which side of that line Miramax is on right now... but hopefully it closer to acting cool, rather than acting as a creepy stalker.

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Wizards Of The Coast Learning That Pissing Off Geeks Isn't Such A Good Idea...

from the be-careful... dept

If there's one group online that it's useful to avoid pissing off, it's "the geeks." And one thing that plenty of geeks love is Dungeons and Dragons. Yet, D&D publisher, Wizards of the Coast, has fans of the game up in arms over the decision to stop a bunch of online retailers from selling PDF versions of its games and books, while also filing eight lawsuits claiming infringement for unauthorized distribution.... and I have to admit, I can't recall a story ever getting this many submissions from readers here (perhaps there's a bit of overlap in our audiences). In some cases, the demand to retailers to remove these PDFs has caused those who legitimately bought them (but hadn't downloaded them yet) to not be able to get the product they had purchased. On top of this, Wizards is apparently also looking at employing some sort of DRM for any future digital releases, which also has plenty of people angry.

What's amazing to watch is the pushback from the games' biggest fans. They're wondering why Wizards is limiting legitimate sales of its products, and looking to make the overall product worse by limiting it with annoying DRM. As people keep pointing out, piracy is going to happen one way or the other -- but rather than trying to lock stuff down (and, one other aspect of this is requiring all resellers to become "authorized internet resellers"), why not focus on ways to use that content to build bigger and better business models that don't require treating all your fans and customers as criminals?

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So Only When Piracy Gets Really Bad Will Record Labels Change Their Act?

from the just-wondering dept

Google is today launching a free, ad-supported music service in China, with the backing of more than 140 record labels, including the Big 4. The service sounds like exactly the sort of thing that people have been calling for since the Napster days: a search engine linked to a trove of music files, supported by advertising. Google's wanted to add some sort of music search to its Chinese product for some time, as it's been at a significant disadvantage to rivals like Baidu, which have the feature to thank for much of their success. The record labels say this is the first attempt to monetize online music in China, and mirrors moves by some movie studios to compete with piracy there with new products and services, rather than through lawsuits and lobbying. These efforts always give a nod to the rampant piracy going on in China -- acting as if it's a completely different environment than the rest of the world. So is the lesson here that only if piracy, or at least the labels' and studios' perceptions of it, gets "bad enough", will they do something positive, rather than sue people or try to get laws strengthened in their favor? Or is it only because those aren't viable options in China that companies try something different there? The fact that the labels are moving forward with this plan in China, given its reputation as the wild west of copyright infringement, undermine their contention that they can solve the supposed piracy problem with legal or technological means elsewhere. Furthermore, it exposes the reality that what's staring them in the face is a tremendous opportunity, not a problem.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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No Doubt: Buy A Concert Ticket, Download All Our Songs

from the the-music-is-free.... dept

Slowly, but surely, more bands are starting to figure it out: the music is free. Whether they want to believe it or not, the actual music is free, so you might as well get it out there and then focus on selling scarcities. The latest example (which a ton of you have sent in), is the band No Doubt, who is giving away their entire catalog of music as a download, for folks who buy certain concert tickets. Now, obviously, if someone wants, they could go download all that music already, but effectively the band is admitting that the music is free, and the money is in the scarcity of concert tickets: so if you're going to pay for that scarcity, why not make sure that the fan knows all your music?

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Jailtime Seems A Bit Harsh For Online Music Store Owners Who Didn't Get All The Right Licenses

from the why-not-just-make-them-pay-up? dept

Most readers here probably know the story of Allofmp3.com -- a Russian website that signed a licensing deal with a Russian music licensing group ROMS. The site was immensely popular because (a) it sold un-DRM'd files (back before that was common) and (b) sold music incredibly cheaply. The recording industry should have taken this as a lesson in how to create a super popular online music store -- but instead it freaked out, and nearly created an international diplomatic incident in threatening Russia with economic sanctions unless it shut the site down. The problem was that since it had the ROMS license, it was legal in Russia. In fact, Allofmp3.com even tried to pay the record labels some money -- which they refused. The record labels, of course, insisted that the ROMS license wasn't sufficient, but no Russian court ever agreed. Eventually the site was shut down, though it lives on at MP3Sparks. However, it's lost a lot of steam because the site has been blocked from accepting most common forms of payment.

Law Professor Michael Scott points us to the news of what appears to be a similar offering in Italy -- except that, in this case, the operators of the site have been sent to jail. The only news that I can find on this is from the IFPI site -- which is obviously a bit biased, but it does look like the owners of the site did get a license from the Italian Authors' Society (SIAE), which they believed was sufficient. A lower court agreed, but the appeals court has sided with the record labels.

But here's the kicker: the operators of the site have now been sent to jail for criminal copyright infringement. Already I have problems with most criminal copyright infringement cases -- because, by any reasonable standard, copyright is a civil dispute -- it's an issue between two businesses. In this case, it's even more egregious because it seems clear that the site wasn't just some random guy selling MP3s he had no right to, but had clearly tried to obtain the correct licenses. However, these days, when to do just about anything with music you need to get numerous different licenses (Peter Jenner, back at MidemNet, claimed that you needed 33 different permissions to do pretty much anything with music in Europe, though others disagreed), it seems fairly ridiculous to throw someone in jail for not being able to figure out every single party that has to sign off on something -- especially when you were lead to believe that you had what you needed via the Authors' Society.

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IFPI Says 95% of Music Downloads Are Illegal

from the but-then-they-would,-wouldn't-they dept

The IFPI, the international equivalent of the RIAA, has put out new stats claiming that only 5 percent of all music downloads in 2008 were legal. The group estimated that 40 billion tracks were shared illegally last year, or an average of almost 30 songs for every internet user worldwide. The IFPI says it arrived at that estimate by "collating separate studies in 16 countries over a three-year period," so it's not really clear just how accurate it is -- and of course, the higher the figure, the better, as far as the IFPI's efforts to get governments to be their copyright police are concerned. The IFPI says that global music revenues fell by 7% last year, blaming the drop on falling CD sales, which a 25% increase in digital sales couldn't overcome. The IFPI says piracy is the biggest challenge it faces; given the stats, the real challenge seems to be record labels' inability to move past its legacy business model and adapt to consumers' changing desires.

It's hard to give much credence to the IFPI report, given the way it plays with statistics. For instance, in the press release for the report, the IFPI tries to pin the blame on piracy for a downturn in the "local music sectors" of France and Spain. It backs this up by saying that new French and Spanish artists accounted for a smaller percentage of album releases in 2008 than they had before. What about established French and Spanish artists? And does a lack of new local artists have more to do with downloading, or problems with labels in how they do business, and find and promote new talent? Furthermore, when the album is declining in popularity compared to singles, and new artists more likely to take advantage of this by targeting the singles market, is this even a legitimate metric for this purpose? These IFPI stats should be taken with a large grain of salt, and their intended purpose -- to further the group's goal to get governments and ISPs to prop up record labels' outmoded business models -- should be considered.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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New York The Latest To Propose Taxing iTunes Downloads

from the for-no-reason-at-all dept

Earlier this year, some politicians in California, which is struggling with massive budgetary problems, proposed adding a tax to iTunes downloads. Now, Governor David Paterson in New York is proposing the same thing. There's no functional reason for this, other than the fact that the state desperately needs money, and so it's trying to add taxes to just about anything it can find. Of course, back in the old days, the point of a sales tax like that was to contribute to gov't-funded infrastructure (roads and such) that allowed folks to go and buy something. There's no such rationale for taxing internet downloads. It's a blatant money grab and Paterson seems to have no problem admitting that.

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Hollywood Removing Hit Movies From Apple, Netflix

from the stupidity-knows-no-bounds dept

Some days you just wonder if entertainment execs wake up in the morning planning to shoot themselves in their collective foot. The latest display of entertainment exec short-sightedness is that the Hollywood Studios have apparently forced both the Apple iTunes store and Netflix's download store to remove certain movies just as they're getting close to being available for TV. As you probably already know, Hollywood makes a lot of money through a "windowing" system, where they release movies in different formats at different times: theaters, special locations (airplanes, hotels), DVD, cable and finally network TV. Of course, they're working on adding some more tiers to this as well, but apparently they convinced these online download stores that they need to kill certain movies as the timing reaches where the movies can appear on TV.

The studios' myopic reasoning is that TV broadcasters pay a lot of money for those rights, and they don't want to piss them off: "It wouldn't make any business sense to do it any other way," claiming that allowing the videos to be downloaded via these online stores would kill some of its biggest money makers. Of course, this makes no sense. The movies are already released on DVD and the studios don't prevent Blockbuster or Netflix from offering the physical DVD for rent, so why do that with the download version? If people really want to download these movies, they're more likely to just go get them from an unauthorized site, rather than bother to watch the network broadcast version (which, given recent MPAA statements, they'll probably try to prevent you from recording via your DVR anyway). If TV networks have been willing to pay good money for the broadcasting rights all these years while DVDs and unauthorized downloads have been available, are they really suddenly going to stop paying because legal downloads are available? Unlikely.

So what are we left with instead? A bunch of consumers really pissed off at the movie studios yet again. One of these days movie studio execs will discover that business models are much harder to implement when a large percentage of your customers hate you.

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Spore's DRM So Effective It Was The Most Downloaded Game Of The Year

from the nice-work,-EA dept

It never really made sense for EA to be so insistent on having draconian DRM on games. Before the company even launched Spore people made it quite clear the plan would backfire, but EA went forward with it anyway, creating a PR nightmare. And all for what? Turns out (not surprisingly) the DRM didn't do squat to stop unauthorized file sharing. Spore has now been declared the most downloaded video game of the year. And, even though the year's not over, no other game is going to catch up. And, it's worth noting, the game only launched in October, so this is only over a couple of months. In other words, EA's "antipiracy strategy" backfired almost completely. The company got a huge PR blackeye which probably only encouraged more people to download the game via file sharing. Can someone explain, again, why any company thinks DRM works?

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If You Can't Beat Them... Almost Join Them; Warner Offers Cheap Movie Downloads In China

from the but-nowhere-else-of-course dept

Well, at the very least, you have to hand it to Warner Bros. Studios for recognizing that pretending that it didn't have to somehow compete with pirated movies wasn't going to succeed as an overall strategy. The major Hollywood studio has now unveiled plans to offer a variety of movies for download in China priced at a dollar or less. Of course, it's unclear if the movies will have annoying DRM or any other inconvenience as well. Considering that unauthorized movies are already available pretty much anywhere, if Warner makes it difficult or annoying in any way, people are going to just stick with the unauthorized copies that don't create such problems. Still, this is definitely a step in the right direction: realizing that it isn't effective to pretend you can ignore unauthorized copies and still charge high prices.

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Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved'

from the compulsory-mess dept

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

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Another Author Has A Book Leak, And Offers Up The 'Oopsie' Version For Sale

from the another-good-response dept

We recently wrote about how the band, The Dears, responded to its album being leaked online, and compared that with author Stephenie Meyer who decided to punish her fans by stopping work on her series of novels, after a draft was leaked. However, an even better example comes to us from Geoffrey Kidd, who points us to the news that author David Weber accidentally leaked his own latest novel. He had been sending out "snippets" of the work to keep fans interested, but at the beginning of the month accidentally sent out quite a large snippet: the entire work-in-progress quarter-million-word novel. But, rather than complaining and punishing fans, Weber and Baen Books (his publisher, who has long supported offering up content for free as a part of a larger business model) are now selling the "Oopsie" version of the book, while making it clear that this is unedited and probably not the version you want:

For those who want it--and we stress this is an early, un-edited, incomplete version--we will sell the "oopsie" now for $10. We are not asking you to buy this version, we do not recommend you buy this version, but if you gotta have it, come and get it.

What better way to respond to such a leak. They've basically made a joke out of it, in a way that's endearing to fans, and which might actually net them some additional money from fans who actually want to contribute to the cause.

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