The video content we stream to customers is protected with Digital Rights Management (DRM). This is a requirement for any premium subscription video service. The Encrypted Media Extensions allow us to play protected video content in the browser by providing a standardized way for DRM systems to be used with the media element. For example, the specification identifies an encrypted stream format (Common Encryption for the ISO file format, using AES-128 counter mode) and defines how the DRM license challenge/response is handled, both in ways that are independent of any particular DRM. We need to continue to use DRM whether we use a browser plugin or the HTML5 media element, and these extensions make it possible for us to integrate with a variety of DRM systems that may be used by the browser.

In the past two decades, there has been an ongoing struggle between two views of how Internet technology should work. One philosophy has been that the Web needs to be a universal ecosystem that is based on open standards and fully implementable on equal terms by anyone, anywhere, without permission or negotiation. This is the technological tradition that gave us HTML and HTTP in the first place, and epoch-defining innovations like wikis, search engines, blogs, webmail, applications written in JavaScript, repurposable online maps, and a hundred million specific websites that this paragraph is too short to list.

The other view has been represented by corporations that have tried to seize control of the Web with their own proprietary extensions. It has been represented by technologies like Adobe's Flash, Microsoft's Silverlight, and pushes by Apple, phone companies, and others toward highly restrictive new platforms. These technologies are intended to be available from a single source or to require permission for new implementations. Whenever these technologies have become popular, they have inflicted damage on the open ecosystems around them. Websites that depend on Flash or Silverlight typically can't be linked to properly, can't be indexed, can't be translated by machine, can't be accessed by users with disabilities, don't work on all devices, and pose security and privacy risks to their users. Platforms and devices that restrict their users inevitably prevent important innovations and hamper marketplace competition.

The EME proposal suffers from many of these problems because it explicitly abdicates responsibilty on compatibility issues and let web sites require specific proprietary third-party software or even special hardware and particular operating systems (all referred to under the generic name "content decryption modules", or CDMs, and none of them specified by EME). EME's authors keep saying that what CDMs are, and do, and where they come from is totally outside of the scope of EME, and that EME itself can't be thought of as DRM because not all CDMs are DRM systems. Yet if the client can't prove it's running the particular proprietary thing the site demands, and hence doesn't have an approved CDM, it can't render the site's content. Perversely, this is exactly the reverse of the reason that the World Wide Web Consortium exists in the first place. W3C is there to create comprehensible, publicly-implementable standards that will guarantee interoperability, not to facilitate an explosion of new mutually-incompatible software and of sites and services that can only be accessed by particular devices or applications. But EME is a proposal to bring exactly that dysfunctional dynamic into HTML5, even risking a return to the "bad old days, before the Web" of deliberately limited interoperability.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” George S. Canellos, the agency’s acting enforcement chief, said Tuesday in a statement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

• Myron Robinson really likes Netflix, so he got its logo tattooed on his stomach. He didn't even know that he'd get a free year's worth of Netflix, so it's gotta be true love. [url]
• NBA players have a limited time in the spotlight, so they might want to sell some advertising space on their bodies while they can. About 35% of players already have tattoos of some kind, but the NBA doesn't (yet!) have any explicit rules restricting commercial tattoos. [url]
• Hostgator Dotcom (aka Billy Gibby) sold space on his face to a bunch of different companies (some that don't exist anymore), and now he wants to finance his tattoo removal by selling more tattoos on his body. Gibby has 24 tattoos on his face that he wants to remove, but maybe he should try selling some other services that don't involve tattoos...? (He's open to legally changing his name again.) [url]

SEC staff informed us yesterday that they are recommending that the SEC bring a civil action against us for my July 1 billion hour public post, asserting we violated “Reg FD”. This rule is designed to ensure that individual investors have equal access to information as large institutional investors, by prohibiting selective disclosure of material information. The SEC staff believes that I gave you all “material” investor information in my post and that we needed to instead release the June viewing fact “publicly” with an 8-K filing or press release.

“Reg FD was about protecting me from telling Carl Icahn something special, the big investor, that not everyone else got,” Hastings said. “This was me talking to 200,000 Facebook followers; it is letting the small guy in on the information.”

For years, people who write about TV have been wondering just what the tipping point would be, when DVR usage, online streaming, and pirated viewing of TV broadcasts would become so significant that networks would essentially have to invent a new business model. The networks aren't at that point yet, but they're so close that everybody's talking about it with great confidence, as if the Internet hasn't thrown a great fear of the unknown into their souls. There's still far more money to be made in the old model, the sort of money that can still afford to produce big, ambitious shows like Revolution, as opposed to smaller-scale things like reality series and multi-camera sitcoms, than there is to be made under any new model. But the tipping point is almost here.

Is it ever. The news of big things happening with online service providers, especially Netflix, never stops pouring in. Though traditional analysts might recommend Disney start a cold war with Netflix, the companies instead recently entered an exclusive partnership to stream lots of content from Disney, Pixar and Marvel. There's only one part of that sentence I wish I didn't have to type: exclusive. It's a word that pops up all too much in recent news about evolving TV and movie business models.

Netflix has been stockpiling exclusive original content, including a lot of potential hits like the revival of Arrested Development, a new drama starring Kevin Spacey, a murder mystery produced by Eli Roth, a new Ricky Gervais series and more — all on top of deals like the one with Disney. Then there's the infamously closed-off HBO and its hoard of ultra-popular shows that can't be accessed without a full cable package plus an HBO subscription (and which also happen to be among the most pirated shows). HBO recently reached its own exclusive agreement, this time with Universal — to air the studio's films and keep them off of Netflix, along with the rest of the HBO catalogue. For at least ten years.

Paul Tassi has a good grasp on what this move really represents:

I think people are missing the larger idea of what's happening here, and that's HBO becoming the closest thing Netflix has to a direct competitor. The groundwork is already in place with the aforementioned Go service. Add in exclusive access to movies from all those studios, and $15 a month for HBO Go starts looking nearly as appealing as $15 a month for Netflix.

Basically, HBO is betting against cord-cutting, but also trying to compete in the online space, assuming that most people will keep their cable and pay extra for exclusive content plus digital access to that content. I can see that being true for a while (lots of people have both cable and Netflix), but it makes no sense in the long run. Eventually, HBO will be forced to offer some sort of online-only subscription.

But will even that be enough? Here's where we get back to the exclusivity problem. All these exclusive deals are serving to fragment a market that doesn't yet have clearly defined rules for delivery. Exclusivity is a great thing for creators to sell, and a great thing for businesses to leverage, but in this transitional phase for distribution models, it's harming everyone involved by making sure piracy retains its biggest advantage: comprehensive access. Networks have always had exclusive shows, but they all ended up in the same place — your television, delivered through a single antenna. Then later you needed not just an antenna, but a cable, to get everything. Then later you needed to pay more for specific cable channels to get certain shows — and lo and behold, those shows were among the first and most widely pirated.

The knee jerk reaction to piracy's unflagging popularity is to assume that, as the mantra goes, "people just want everything for free." But as the evidence that pirates buy more media has continued to pile up, that idea has been stripped of its credibility.

As some people have been pointing out for years, piracy's real advantage lies elsewhere: convenience, selection and availability. Piracy is currently the fullest realization of the internet's potential as a culture-machine: virtually any movie, any TV series, any song, any obscure documentary or bootlegged live performance, all accessible to anyone. No need to subscribe to multiple different providers; no release windows or geographical barriers. The fact is that no other means of obtaining media has matched piracy in terms of sheer selection and accessibility, so naturally it has never gone away, even though it has many significant flaws like spammy sites and spotty quality control.

I'm not saying everyone should hand everything to Netflix — only that service providers, studios, networks and everyone else involved need to employ a little game theory and figure out how to move the business forward to everyone's benefit. This means partnerships that allow more sharing of content, new infrastructures that make delivery and payment more seamless, and the undeniably challenging elimination of geographical restrictions and other obsolete licensing concerns. As the world moves away from the captive audience and towards a culture of infinite choice, expecting people who want comprehensive access to buy multiple different subscriptions from multiple different companies is tragically foolish. The culture machine has been built; pirates shouldn't be the only ones using it properly.

If you’re a Netflix subscriber and you have kids, you’re about to make those kids happier. Netflix and Disney just inked a new deal, making the former the exclusive American subscription TV service for “first-run live-action and animated feature films from The Walt Disney Studios.”

This marks the first time that a major Hollywood studio decided to side with a digital distribution rather than a traditional TV provider. The deal is also a high-water mark for a company that some were speculating was ripe for takeover as recently as last month.

“The pay TV business as we know it is on really safe grounds until sports distribution changes,” Cryan added. “It’s technically difficult to distribute that stuff online at scale. In addition to that, the business is stacked up so you pay a lot for ESPN and other sports channels not available elsewhere. Until that changes, the core of the pay TV business is on relatively safe ground.”

The delay comes two days after a phalanx of law enforcement organizations objected to the legislation, asking Leahy to "reconsider acting" on it "until a more comprehensive review of its impact on law enforcement investigations is conducted." The groups included the National District Attorneys' Association and the National Sheriffs' Association.

[....] A person participating in Capitol Hill meetings on this topic told CNET that Justice Department officials have been expressing their displeasure about requiring search warrants. The department is on record as opposing such a requirement: James Baker, the associate deputy attorney general, has publicly warned that requiring a warrant to obtain stored e-mail could have an "adverse impact" on criminal investigations.

Since the contract between Disney and Netflix came to an end, you won’t find any Pixar films on the Netflix streaming website. For a while you could watch Toy Story 3 and some other good Pixar titles but alas, those days have come to an end.

On the other hand, you can watch a host of Disney and Pixar knock-offs, as well as some really blatant rip-offs of DreamWorks movies.

To be fair, the movie looks (both graphically and plot-wise) nothing at all like Pixar’s fantasy. Indeed, one suspects it was produced as soon as the first trailers came out.

Disney lost a lawsuit claiming that Good Times Entertainment had been packaging its videos – this time specifically its version of “Aladdin” – to resemble Disney’s own films, and that this caused confusion among consumers. Good Times Entertainment had released its own versions of “Aladdin” and “Beauty and the Beast” among other popular Disney films.

Judge Miriam Goldman Cederbaum ruled against Disney, arguing that a resemblance simply wasn’t enough unless all of Disney’s own packaging was distinctly uniform. In other words, unless each Disney film was packaged in a very specific way and that style was copied by Good Times Entertainment, Disney didn’t have enough proof to build its case.

And while the law may be on its side, there’s something unsettling about all these drafted films. Is it ethical to market your product in a way purposefully designed to confuse consumers?

“If [Disney] spent so much money to create a big to-do, what better time to put [Good Times' Aladdin] out? And it being a public-domain vehicle, there’s nothing wrong with that.”

Or, you can attempt to reshape the cultural norms of future generations by going to the source: kids. At least that's what analyst Todd Juenger suggests in a recent report about children's programming on Netflix. Juenger conducted a focus group with mothers and discovered that they really like Netflix as a source of entertainment for their kids, especially since they can put it on whenever they want—and that kids are growing accustomed this. To hear Juenger talk about it, you'd think this was both surprising and bad (it's neither). His advice to the providers of children's programming? Stop this trend immediately:

His advice for entertainment companies is to be cautious about how much kids programming they make available to the online video streaming provider and in which windows. "We remain firm in our belief Viacom and Walt Disney should limit their content availability on Netflix," Juenger wrote.

...

"Moms are increasingly directing their kids to alternative viewing modes for content control, commercial avoidance and time management," Juenger summarized the findings. "The moms we talked to originally subscribed to Netflix for themselves, but have recognized the dwindling supply of content for adults and are now using the service primarily for their kids…The content selection is perceived to be significantly better for kids than for adults, and the lack of commercials and ability to control the viewing choices are seen as positives.”

According to the analyst, the focus groups described children as device agnostic, "happily watching on TV sets, tablets, computers, even phones, with indifference." The result: “Our concern regarding Viacom and Disney’s kids’ networks has been reinforced,” Juenger said. “Viacom and Disney should do everything in their power to steer viewership toward modes with the best long-term economics, namely traditional TV and emerging forms of TV Everywhere VOD.”

Yes, he's confirmed that the "lack of commercials and ability to control the viewing choices are seen as positives", in case anyone in Hollywood was still clinging to the hope that consumers would grow to hate those things. And yes, kids are "happily watching" on a variety of devices, and we can't have that, can we? Some might respond to the observation of a clear consumer preference in young children by trying to embrace that change early (if anything Hollywood does with technology can be called "early" at this point) but Juenger thinks they're better off trying to hold back the tide, or at least redirect it into their proprietary canals.

The funniest part is that suggesting Disney and Viacom should try to "steer viewership" is appealing to the very power such companies are losing. Big media empires don't get to "steer viewership" the way they used to, and that's exactly why these new distribution methods represent a threat to them. Juenger is suggesting they keep the sinking ship afloat by tying it to... itself. That's not going to work.

If websites must comply with the ADA, all hell will break loose. Could YouTube be obligated to close-caption videos on the site? (This case seems to leave that door open.) Could every website using Flash have to redesign their sites for browsers that read the screen? I'm not creative enough to think of all the implications, but I can assure you that ADA plaintiffs' lawyers will have a long checklist of items worth suing over. Big companies may be able to afford the compliance and litigation costs, but the entry costs for new market participants could easily reach prohibitive levels.

The most crucial ruling is where the court says that a website qualifies as a "place of public accommodation." The court deviated from--and, incredibly, didn't cite to--a nearly unbroken line of precedent rejecting that conclusion. I don't have a complete roster of cases in this area, but cases that came to mind include Noah v. AOL (a Title II case), Access Now v. Southwest Airlines (an 11th Circuit case), Stern v. Sony, Young v. Facebook and Ouellette v. Viacom. The only plaintiff win in this area is the offbeat National Federation of the Blind v. Target case (which this court did cite), where the court held that Target's obligations to comply with the ADA in its offline retail stores extended to its website. Because of its fact-specific nature, the Target ruling really hasn't had much of an impact on Internet litigation over the past 6 years.

Bypassing all of this precedent, the judge instead relies almost exclusively on the heavily-criticized First Circuit Carparts decision from 1994. The NAD made a crafty venue move suing in a court bound by Carparts. Even so, I wonder how this ruling would fare on appeal to the First Circuit (if Netflix goes that route), and I wonder if judges in other circuits will be persuaded by this judge's ruling.

Like any good short-sighted investor, Moffett has urged companies to not upgrade their networks, insiting that caps and overages are the "next generation of communications." The irony of course is those telcos who listened and didn't upgrade their networks are now having their lunch eaten by cable providers on a massive scale, which, if Moffett's firm and client investment interests lean heavily toward cable operators, is something that's working out rather well for him and them.

Less network investment, less competition, higher prices. Great for investors, not so great for you

The UK ruling and indeed other recent ones in Austria, Belgium, Denmark and Finland as well as this one are positive developments that support not only the creative community but also consumers.

The number of sites that offer legitimate creative content continues to increase dramatically. But to fully enable this growing sector to thrive and provide consumers with content when they want it, where they want it and how they want it, it is imperative that the content not be siphoned off and distributed illegally by those seeking to profit from the work and creativity of others.

The court verdict found that The Pirate Bay is predominantly devoted to illegal activities with more than 90% of all content infringing on copyright.

A year into the competition, the Korbell team won the first Progress Prize with an 8.43% improvement. They reported more than 2000 hours of work in order to come up with the final combination of 107 algorithms that gave them this prize. And, they gave us the source code. We looked at the two underlying algorithms with the best performance in the ensemble: Matrix Factorization (which the community generally called SVD, Singular Value Decomposition) and Restricted Boltzmann Machines (RBM). SVD by itself provided a 0.8914 RMSE (root mean squared error), while RBM alone provided a competitive but slightly worse 0.8990 RMSE. A linear blend of these two reduced the error to 0.88. To put these algorithms to use, we had to work to overcome some limitations, for instance that they were built to handle 100 million ratings, instead of the more than 5 billion that we have, and that they were not built to adapt as members added more ratings. But once we overcame those challenges, we put the two algorithms into production, where they are still used as part of our recommendation engine.

We evaluated some of the new methods offline but the additional accuracy gains that we measured did not seem to justify the engineering effort needed to bring them into a production environment.

One of the reasons our focus in the recommendation algorithms has changed is because Netflix as a whole has changed dramatically in the last few years. Netflix launched an instant streaming service in 2007, one year after the Netflix Prize began. Streaming has not only changed the way our members interact with the service, but also the type of data available to use in our algorithms. For DVDs our goal is to help people fill their queue with titles to receive in the mail over the coming days and weeks; selection is distant in time from viewing, people select carefully because exchanging a DVD for another takes more than a day, and we get no feedback during viewing. For streaming members are looking for something great to watch right now; they can sample a few videos before settling on one, they can consume several in one session, and we can observe viewing statistics such as whether a video was watched fully or only partially.

It's a good theory, but only some are prepared to mention the elephant in the room: plenty of people (quite possibly the majority) caught up through unauthorized streams and torrents, just like Matthew Inman. And that brings us to the bigger elephant lurking in the whole house: how much has piracy contributed to the rise of HBO-style television? Would we have complex, high-concept, critically acclaimed shows like Mad Men, Breaking Bad, Boardwalk Empire and Game of Thrones without it? Many people attribute this fundamental shift in the nature of popular television, from episodic towards serialized, to DVDs and legitimate digital sources—but I'd wager that piracy is a much more significant factor.

There are two main reasons. Firstly, the ability to watch any episode any time makes such can't-miss-an-episode shows less of a commitment. This, alone, is the single biggest contributing factor to the popularity of heavily serialized television, and it is impossible to explain it entirely with DVDs and sources like iTunes. Many cable subscribers turn to piracy as a way to catch missed episodes, and that safety net prevents serialized shows from alienating viewers and losing momentum. Secondly, unauthorized sources are especially popular with the fanatics—the people who evangelize "must watch" shows to their friends and coworkers, and who create memes with screencaps to spread on Tumblr and Facebook. That's not to mention the amateur critics and TV bloggers who generate buzz (in fact, there is a bit of a back and forth going on over the ethics of piracy in the critic community).

Of course, as digital offerings get better, more and more of this kind of activity happens through legitimate channels instead of piracy (not like anyone's been saying that all along, or anything). But services like Netflix got to the table once the serial television trend was in full-swing, so they don't account for its inception. Some people fear that television piracy will put at end to such ambitious undertakings in the medium—but they should stop to consider the hand it played in making them possible to begin with.

"it was a party that would actually use the patented technology, not a company that buys up patents in order to simply sue alleged infringers."

USC owns a portfolio of patents for indexing and searching digital video libraries. USC licensed the portfolio exclusively to an operating company, while maintaining the right to use the patented inventions for research and education purposes. Subsequently, the operating company transferred the license to another entity. USC has learned that the current license holder has brought litigation relating to the patents. USC has no say or financial stake in the litigation.

• 6,199,060: "Method and apparatus management of multimedia assets"
• 6,581,071: "Surveying system and method"
• 5,813,014: "Method and apparatus for management of multimedia assets"
• 6,092,080: "Digital library system"
• 6,212,527: "Method and apparatus for cataloguing multimedia data"
• 6,574,638: "Method and apparatus for cataloguing multimedia data using surveying data"
• 6,549,911: "Method and apparatus for cataloguing multimedia data"
• 6,353,831: "Digital library system"

“I publish three newspapers and first started in news when I was news director at WLVA in 1987. I was aware of the sensitive nature of the story and was cautious and responsible,” McDermott told us via email. “The quote I printed is accurate. I cannot speak to whether the Netflix representative was telling me the truth but I asked him to verify what the Netflix users were saying (that it was pulled after her death) and the guy came back and said what he said. I tripled checked to get the quote accurate.

“He said that he had checked with two supervisors and that the ‘main’ one told him why it had been pulled.

“Personally I believe that the kid told me what his supervisors said. I can’t imagine that they were pulled after her death in some bizarre coincidence.

“Also, it is important to note that Netflix is not the bad guy in this. Unless they lie now.”

However, after lengthy talks between WB and Redbox this month, the companies couldn't come to an agreement over the new demands from the studio.

Instead, Redbox has opted to turn to "alternate means" to purchase the films on DVD and Blu-ray it makes available to rent for as low as $1.20 a night through its more than 28,000 kiosks -- and offer them the same day they hit store shelves to buy, according to Redbox senior VP of marketing Gary Cohen.

Under the companies' previous agreement, users could add discs to their queues even before they went on sale. Warner executives apparently believed that policy made it easier for consumers to wait, confident that the discs would arrive eventually.

But now when users search for Warner's "A Very Harold and Kumar Christmas," which goes on sale Feb. 7, the Netflix website simply says the movie is not available. Consumers will have wait until March 6 to add the film to their queues and until April 3 to get it in the mail.