Techdirt. Stories filed under "failure"

VOD Service Acetrax Shutting Down, Forcing Customers Through DRM Hoops To Retain Their Purchased Movies

Tim Cushing — Thu, 23 May 2013 08:57:12 PDT

Does DRM stop (or even slow down) piracy? This question's hardly hypothetical. It's been answered with a resounding "no" all over the internet. Of course, it's been argued that DRM was never about piracy prevention, but instead was a vehicle for content owners to control the technology in the hands of the end users. If so, the answer isn't much different. It may provide a sense of control, but those who want to enjoy their purchased content on devices outside the confines of the imposed restrictions will easily find a workaround or two simply by doing a small bit of searching.

Whatever DRM's stated purpose is, there's only one thing it does extremely well: inconvenience paying customers. Acetrax, a video-on-demand service that serves millions of customers across Europe, is closing on June 21st. Unlike other service closures, Acetrax is at least providing a sort of "exit strategy" for purchasers, but it's one filled with busywork and limitations. [h/t to Techdirt reader techflaws for sending this in.]

After [the June 21st shutdown], owners of Windows PCs can download their films. Mac users can forget it, as can anyone hoping to re-download HD films. Even on Windows, it's standard definition only from that point.

Movies that users have previously downloaded will cease to play from that date, so re-downloading films is mandatory if you want to continue to be able to watch them. Re-downloaded films will be tied solely to the machine on which they're first played. Because they use Microsoft's Windows Media Player DRM, the films can't be transferred to any platform that doesn't support the copy-protection technology.

Acetrax has provided a FAQ that details everything purchasers can and can't do with their purchased movies. As stated above, purchased movies are standard def only and are tied to a single device running Windows Media Player. Purchasers will also need to set aside a bit of time to validate their already-purchased movies (and hope they're not rubbing up against a providers' data cap).

From the Acetrax FAQ:

If you're watching on a laptop or PC (not including Mac), movies you've bought in standard definition (SD) are available to download directly from Acetrax.com. Just go to ‘My Movies' and click on the download icon. Once the download is finished, you'll need to have the latest version of Windows Media Player installed in order to watch it. Make sure you have the necessary rights on your computer and at least 2GB of hard-disk drive free on your PC or laptop so you have sufficient space to store the movie. Once the movie has successfully downloaded, you will need to play the movie for at least 5 minutes for us to validate the movie licence on your computer.

This sort of time-killer is only going to make former Acetrax customers more hesitant to purchase digital downloads from online services and, obviously, those who have spent the most money will be wasting the most time re-downloading and re-verifying movies they've previously purchased.

On a more positive note, Acetrax isn't limiting its offer to apologies and DRM to-do lists. Purchasers of HD movies are entitled to refunds, along with customers carrying unused credit on their accounts. (Caveat: refunds limited to those with PayPal or ClickandBuy accounts -- another unnecessary limitation, but at least it's the same as the options allowed for purchasing and renting.)

While Acetrax is handling this shutdown better than others have in the same situation, the decision to lace its offerings with DRM causes the greatest headache for those purchasing the most. If Acetrax had decided to go DRM-free (not likely, considering the amount of major Hollywood films it carried), this shutdown would have been painless for its paying users.

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News Corp. Finally Realizes Locked Up, iPad-Only News Publication Was A Dud, Shuts It Down

Mike Masnick — Mon, 3 Dec 2012 19:59:43 PST

Back in 2010 there was all sorts of buzz around News Corp. investing a ton of money into a "secret" project to launch an iPad-only paywalled publication called "the Daily." Before it even launched, we explained why this was a bad idea that missed the point. We also highlighted Rupert Murdoch/News Corps' long list of failed internet projects -- with the large majority of them flopping because they were about trying to create "broadcast" style properties online, without recognizing that the internet is more of a communications (many-to-many) medium than a broadcast (one-to-many) medium. And, of course, soon after The Daily launched there was evidence that very few people cared.

To be honest, given all the bad press about how few people were reading it, combined with stories of staffers jumping ship soon after it was launched, I had kind of figured that The Daily had already been shut down. However, the latest news is that News Corp. is finally putting it out of its misery and shutting it down, giving most staffers 3 months severance. A few staffers are being folded into the NY Post:

News Corporation also announced that effective immediately, Jesse Angelo, the founding Editor-in-Chief of The Daily and long-time Executive Editor of The New York Post, will assume the role of Publisher of The New York Post. As part of a digital restructuring initiative, the company will cease standalone publication of The Daily iPad app on December 15, 2012, though the brand will live on in other channels. Technology and other assets from The Daily, including some staff, will be folded into The Post.

Mr. Murdoch said: “From its launch, The Daily was a bold experiment in digital publishing and an amazing vehicle for innovation. Unfortunately, our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long-term..."

Apparently the site was losing $30 million a year.

Perhaps this should stand as a response to the people who insist that giving away newspaper content free online was "the original sin" of the industry and they should have focused on paywalls. Paywalls don't help you build up "a large enough audience." The link above quotes a reporter there saying: "It was a really cool, hip product. I think this is nothing more than bad timing." I'd say it was much more of a bad model -- both business model and delivery model -- than "bad timing."

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Surprise! AT&T Admits Defeat, Withdraws T-Mobile Takeover Attempt, Pays $4 Billion Breakup Fee

Mike Masnick — Mon, 19 Dec 2011 18:58:00 PST

This is definitely a surprise, but it looks like AT&T finally read all the writing on the wall, and realized it was unlikely to win its fight with the DOJ and FCC and has officially killed its plan to try to purchase T-Mobile... meaning that it now has to pay the $4 billion breakup fee. While the trend of where this was heading was becoming increasingly obvious over the past few months, it's still pretty shocking on the whole. Getting big mergers like this through had become pretty standard, and AT&T (especially) excelled at the political dealing to make such things work. However, the growing public outcry and concerns over the lack of competition that would result seemed to finally have had a real impact.

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Guy Who Created The TSA Says It's Failed, And It's Time To Dismantle It

Mike Masnick — Wed, 14 Sep 2011 09:18:40 PDT

One of the politicians instrumental in creating the TSA, Rep. John Mica, who wrote the legislation that established the TSA, has apparently decided that the whole thing has been a failure and should be dismantled. He notes that "the whole program has been hijacked by bureaucrats."

“It mushroomed into an army,” Mica said. “It’s gone from a couple-billion-dollar enterprise to close to $9 billion.”

As for keeping the American public safe, Mica says, “They’ve failed to actually detect any threat in 10 years.”

“Everything they have done has been reactive. They take shoes off because of [shoe-bomber] Richard Reid, passengers are patted down because of the diaper bomber, and you can’t pack liquids because the British uncovered a plot using liquids,” Mica said.

“It’s an agency that is always one step out of step,” Mica said.

It cost $1 billion just to train workers, which now number more than 62,000, and “they actually trained more workers than they have on the job,” Mica said.

“The whole thing is a complete fiasco,” Mica said.

There's a lot more at that link. Now, one could (and perhaps should) note that when Mica wrote the legislation, his particular political party was in power, and now it's not. So the cynical voice might say that his words are somewhat politically motivated. And one can (and probably should) ask how it was that Mica didn't expect this kind of result. This is what the government does. It creates agencies that are then "hijacked by bureaucrats." While it's nice to see him realizing this now, it's too bad he didn't see it back then.

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Duke Nukem PR People Publicly Threaten Those Who Give Bad Reviews

Mike Masnick — Thu, 16 Jun 2011 04:14:28 PDT

You may have heard that Duke Nukem Forever finally came out after a decade plus of being vaporware. It's no secret that the original team behind the game was somewhat obsessive-compulsive about not releasing a bad game -- so much so that they never released any game, and kept restarting the project entirely. After 3D Realms finally went under, someone else took control and put together a game... but the initial reviews have been scathing, and suggest that the game should have stayed vaporware.

In response, in a moment of pure PR failure, the PR firm repping the game, the Redner Group, publicly threatened to stop giving preview games to those who gave Duke Nukem Forever a bad review.

"Too many went too far with their reviews... we r reviewing who gets games next time and who doesn't based on today's venom."

That's a huge no-no in the business, because it suggests the whole review business is a tit-for-tat setup, where you only get product if you give good reviews. Jim Redner, the guy behind the tweet removed the tweet, and admitted that he got caught up in the emotion:

It is not my intention to bully anyone. I over reacted. I just voiced an opinion. I have poured my heart into this project and I just want it to succeed.

That's all pretty unfortunate. Of course, this is the nature of the game, if you do this kind of thing. It's also one of the reasons we've tended to stay away from ever dealing with PR people. We don't do product reviews like that, and in part it's because we didn't want to have to deal with this kind of thing. Still, in the end, such a reaction tends to reflect even worse on the game because it calls into question any positive reviews.

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Why Propping Up Old Business Models Is Bad For The Economy And Bad For Innovation

Mike Masnick — Thu, 9 Jun 2011 22:06:00 PDT

Certainly a common enough theme around these parts is the effort of old companies with legacy business models to do everything in their power (often through regulatory capture and other political tricks) to retain their market position by regulating in a specific way. This means regulations that empower legacy firms specifically, or by outlawing and/or limiting disruptive upstarts. All too often, these firms succeed in convincing politicians (and even the press and some portion of the public) that their own potential failures mean the failure of a larger industry as a whole. And yet, that's almost never the case. In fact, the protectionism often does the exact opposite of that, in that it prevents the necessary innovations from flourishing, thereby limiting an industry and, at times, making it uncompetitive with other industries in other countries.

A recent Planet Money episode discussed this in talking to economist Tim Harford about his new book, Adapt, which talks about how important failure is for economic growth and innovation. This should intuitively make sense for many regular Techdirt readers, since we make this point, in a different manner, quite frequently.

In the Planet Money episode, they do a "walking tour of failure in New York," looking at things like the Gutenberg bible, which many credit with kicking off a revolution in printing, but was a giant commercial failure for Johannes Gutenberg, who put up the money for it, but couldn't find the buyers (yes, for the first printed edition of the best selling book of all time). Elsewhere, they talk about the failure of Woolworth, which had been an early retail innovator, being one of the first retailers to realize that putting goods out where customers could see them and touch them, rather than cramming it all behind a counter, was a good idea. But, eventually, others out-innovated Woolworth as well. In many ways, this reminds me of the book Copycats by Oded Shenkar, which we spoke about last year and which had plenty of similar stories.

Some of the discussion also reminded me of our discussion on the series of economic studies that have shown that people changing jobs is often a key indicator of economic growth because it helps the spread of ideas and innovations faster across the economy. While that might not seem to directly impact the question of "failure," Harford mentions the research of economist Randall Morck, who found that (and I'm paraphrasing from Harford's brief summary of Morck's work) in places where there is greater turnover of big companies failing and upstarts taking their place, there is greater economic growth. I have to admit being unaware of Morck's work previously, but now have it on my list to dig in and check it out. I can definitely see a connection here.

Big companies often get stagnant, focusing less on innovation and more on protecting a market. In the Clayton Christensen world of the Innovator's Dilemma, they focus on incremental innovations and market protectionism. And, as Andy Kessler noted in his most recent book, the innovators, who get around those things and unleash value, are often derided as thieves and criminals for undermining established business models. But what comes out of those upstart efforts is, generally, much better for the consumer. And, on top of that, the collapse of those big firms often allows many of the folks, who did have good ideas and knowledge within those firms, to spread out and to join the more innovative upstarts, which will actually implement and execute on those good ideas, rather than be stymied by bosses who don't want to undercut the old business models.

This is why we should always be wary of efforts by politicians to protect jobs, companies, industries and business models. These efforts may come from a reasonable place -- in the belief that it's for the best to "protect" such a large company. But history has shown over and over again the value of creative destruction and disruptive innovation. While it may take down old legacy players, what rises in its place is almost always better for everyone.

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Post Mortem For A Dead Newspaper

Mike Masnick — Fri, 2 Oct 2009 03:42:36 PDT

John Temple, the former editor, president and publisher of the now shuttered Rocky Mountain News, has been running a great blog about issues from the newspaper industry over the past few months. He consistently has been saying stuff that made me wonder why the Rocky Mountain News didn't seem to do the sorts of things he seemed to constantly talk about... and now he's explained why. He recently gave a talk at Google about lessons from the collapse of the Rocky Mountain News in both text and video form. It's long, but well worth watching/reading: You should take in the whole thing, rather than just reading my summary, but he basically goes over the last decade and a half or so of mistakes that the Rocky Mountain News made in terms of trying to figure out the online business. The key takeaways aren't that surprising if you're a regular reader around here. The company kept defining itself as a newspaper company, not a news organization (or, better yet, a community builder). Everything it did was based on how it would impact the paper edition. The focus was not on competing with web properties and services, but on the other major newspaper in town, the Denver Post. Things got so bad that when the Columbine Massacre happened, the newsroom refused to give any news to the web people, because they were afraid that the Denver Post would "steal" it.

It seems like pretty much everything was based on looking backwards, not forward. There was little effort to figure out how to better enable a community, or any recognition that the community of people who read the paper were the organizations true main asset.

The talk is amazingly honest, coming from someone who accepts a share of the blame for what happened, and should be required reading/viewing for anyone in the media business, new or old. The same game is playing out not just in newspapers, but in a number of other businesses as well. Like the Rocky Mountain News, those businesses are looking backwards and defining themselves on the wrong terms, while newer startups don't have such legacy issues to deal with.

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Why The Newspaper Paywall Will Fail

Mike Masnick — Tue, 7 Jul 2009 23:18:26 PDT

It's no secret that we think newspaper paywalls are a massive disaster in waiting. The number of folks actually willing to pay is a lot smaller than many in the newspaper industry think, and the papers' failure to recognize that they need to add more value rather than take it away by locking up their content pretty much guarantees the widespread failure of the plan. But Kevin Kelleher, over at The Big Money has a nice article that sums up exactly why paywalls will fail:

For the sake of argument, let's say that news sites are routinely charging readers in five years. By then, the economy may be substantially healthier than now, and advertisers will be looking for sites with large, loyal readerships to sell their ads on. But that won't include newspapers. They'll be catering to that 10 percent of their online audience willing to subscribe. The rest of the Web will have long stopped linking to--and talking about--their stories. The dollars will flow right past the newspapers' pay walls. And then they'll really be sorry.

And that's assuming 10% are willing to pay, which strikes me as high already. One other quibble with Kelleher's piece: he suggests that newspapers stood a better chance if they started trying to charge in 1994, ignoring the fact that many newspapers have tried to put up paywalls in the intervening years, and nearly all of them (with a very small number of high profile exceptions) have discovered that they don't work. Whether it's 1994, 2009 or 2024, it doesn't really matter. The future of online news is not behind a paywall.

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Out Of The Ashes Of Newspapers...

Mike Masnick — Mon, 16 Mar 2009 15:15:00 PDT

Lots of folks have been writing in asking about the news that the Seattle Post-Intelligencer has finally admitted what many people knew was going to happen for a while: the newspaper is shutting down, while the website will live on with a much smaller staff. Of course, rather than focusing on the "death" of the paper, it's a lot more interesting to look at the opportunities the new site will embrace. The kickoff discussion seems to be full of excitement about a chance to do something different than to simply mimic what everyone has been saying a newspaper needs to be:

We're going to break a lot of rules that newspaper Web sites stick to, and we are looking everywhere for efficiencies.... We don't have reporters, editors or producers--everyone will do and be everything. Everyone will write, edit, take photos and shoot video, produce multimedia and curate the home page.

We definitely need more experiments and flexibility, so it will be worth watching what happens here. I'm not sure it's the best idea to make everyone do everything (splitting jobs up so that there's more streamlined efficiency does have value), but it's great to see that the new folks are at least open to experimenting -- with a focus on delivering more value (finally!) to the reader:

We're going to focus on what readers are telling us they want and on what makes SeattlePI.com essential and unique--within the context of our local news mission, of course. We know what we do best, and we are going to build on the things that we know our readers love, and look to find new ways to inform and entertain them.

Meanwhile, with the Rocky Mountain News shutting down a few weeks back, some of the reporters there have gathered together to try to startup a brand new online-only publication called In Denver Times. They're making an interesting play, however: saying they'll only start it if they get 50,000 people to agree to pay $5/month by April 23rd. That seems like a tall order, given that people aren't really being told what they're getting. The reporters say that plenty of the news will be available for free on their site, but subscribers will get access to bonus materials, such as opinion pieces and special chat rooms. But, for that to work, there needs to be a clear benefit to those, and since they don't yet exist, there may be something of an "empty room" problem.

Either way, it'll be worth watching both experiments play out. They may not be successful (and, if I had to bet, I'd probably bet against both), but it's great to see new experiments and ideas being tested directly out of the ashes of these two newspapers. It makes it pretty clear that the death of a newspaper certainly doesn't mean the death of journalism.

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Should Satellite Radio Ditch The Satellites And Go Online Only?

Mike Masnick — Fri, 13 Feb 2009 12:51:00 PST

In discussing the troubled satellite radio business, we noted that two of the major difficulties faced by the industry were the huge capital costs required to build and maintain the business, combined with the rise of (somewhat unexpected) competition in the form of internet radio and internet downloads combined with portable MP3 players like the iPod. Over at Slate, Farhad Manjoo has a suggestion that would solve both of those issues: Sirius XM should ditch the satellites and become a web only broadcaster. It's an interesting idea, but it seems unlikely (even though they offer online streams currently). Sirius XM still remains so car focused, it still thinks that being in automobiles is a competitive advantage. However, as Manjoo points out, it's actually damaging the company, because it's had to pay large sums to automakers to get the devices installed in cars. Instead, if it went to an internet-only solution, and cut the subscription prices, it could reach a much larger audience, much more easily and cheaply. Build mobile apps, and people can use their phones to listen to content. Add downloadable podcasts of popular shows, and anyone with a portable device can time shift. It's so reasonable that it'll never happen.

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Was Sirius' Bankruptcy Inevitable?

Mike Masnick — Wed, 11 Feb 2009 02:08:54 PST

Back in 1999, when plans for satellite radio were first talked about, I thought it was destined to fail. I had two reasons for why: I didn't think there really was that much demand and having just closely watched the disaster known as Iridium, I was intimately familiar with the massive and business-strangling capital costs associated with running a satellite-based business. It just seemed so capital intensive that any underestimate in terms of demand would kill you. And, in fact, Sirius has a pretty long history of being on the verge of failure.

With the news of Sirius XM preparing for bankruptcy, it's worth revisiting those original thoughts. While I'd love to claim credit for calling this a decade ago -- I think my reasoning turned out to be wrong. I vastly underestimated the number of folks willing to sign up for satellite radio (though, I think I was correct in recognizing that the number of subscribers would need to be massive and that would be difficult to achieve). And, while the capital expenditure costs were large, it seems like they, by themselves, may have been imaginable. What I hadn't fully expected, was the massive expenses the companies (now company) would ring up trying to lock up "talent" to drive subscriber numbers up. Also, I didn't expect ridiculous regulatory restrictions. The 18 months it took federal regulators to approve the merger between XM and Sirius, combined with the ridiculous restrictions that were put on the combined company significantly contributed to satellite radio's troubles. And, finally, additional competition in the form of internet radio and podcasts/portable media really have put pressure on satellite radio -- none of which I foresaw at the time.

While the company is clearly looking to restructure and keep going, you have to wonder if it even makes sense at this point. With those alternatives increasingly becoming popular in the market, it's difficult to see how satellite radio can possibly provide enough excess value to pay for the increased capital costs compared to the competition. Even if the company restructures and comes out of bankruptcy, who's willing to bet it will have to through this whole process again in a few years?

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Airline Threatens To Sue Betting Site For Taking Bets On When It Would Go Out Of Business

Mike Masnick — Tue, 7 Oct 2008 07:01:00 PDT

Apparently, a Scottish airline, Flyglobespan, has threatened to sue an online betting site because it was taking bets on what airline would be the next to go out of business, and had odds on Flyglobespan. The site did stop taking bets, but says it was due to a lack of interest, rather than the threat of a lawsuit. However, it's not clear what law it would be breaking to offer such a bet. You can understand that the company is concerned that potential passengers might think the airline is at risk, but it's not clear that's enough to stop any such bets.

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That Didn't Take Long At All: $89 Million Australian Internet Filters Called A Failure

Mike Masnick — Wed, 20 Feb 2008 04:22:06 PST

Last August the Australian Prime Minister announced plans to spend many millions of dollars to offer free internet filters that parents could use to keep their kids from surfing porn. The filters were cracked by kids in a matter of days. While we noted that this should have made politicians realize what a waste the program was, instead they just said it explained why they needed to spend even more. Reader Stack writes in to let us know that the Australian government has now declared the entire program to be a failure. While the government had predicted that 2.5 million households would make use of the filters, only 144,000 were downloaded or ordered on CD-ROM and only about 29,000 were actually being used -- a wee bit under the targeted amount. Of course, rather than recognize that maybe spending money on filters isn't the best way to deal with this issue, the new government sees this as more evidence to go ahead with its plan to force ISPs to censor the internet instead. How many more millions will get wasted before that program is declared a failure as well?

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Palm Realizes It's Not Apple; Closes Retail Shops

Mike Masnick — Fri, 25 Jan 2008 11:08:00 PST

Over the last decade, plenty of technology hardware companies thought it would make sense to open their own retail shops. Sony, Gateway, Palm and Apple all went down that path. Of that list, only Apple has been able to turn those retail stores into something valuable. Gateway was the first, but its retail effort failed miserably. Sony's retail effort was always based more on the idea that the stores are not there to sell products, but just to display them. Sony has always admitted that the stores were more about brand and product awareness than sales -- but that's partly because it doesn't want to piss off its channel, so it prices everything quite high in its own stores. Apple doesn't have that problem, as it has total control over its distribution channel and retail pricing. Of course, the difference here is that Apple's stores and products are designed so people actually want them.

And then there's Palm. Palm used to always be compared to Apple, back in the day. But, that was back in the day when Apple was a struggling computer company. Since Steve Jobs reinvented Apple as being cool again, those comparisons sort of disappeared. Its own retail strategy was clearly an attempt to copy Apple, but without the cool products (or the cool store design) it never did anything useful for the company. About the only surprise coming out of Palm's decision to shut down its retail stores is that it took this long to decide to pull the plug.

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