Companies that offer downloadable movies and music online without licenses from the copyright holders typically wind up answering lawsuits from the Hollywood studios and the major labels. So it was odd to see a news release announcing the impending launch of Zookz, a site that offers unlimited music or movie downloads for about $10 a month, or both for $18. That's a bit like waving a red cape in front of a couple of bulls, isn't it? But Zookz believes it's in the clear, legally, thanks to the World Trade Organization. It's a far-fetched argument, but you've got to give Zookz credit for nerve.
The main differences between Zookz and most online outlets for bootlegged goods are that it's not a file-sharing network and that the content isn't free. Instead, it's just insanely cheap. The company's impossibly low prices reflect the fact that it doesn't pay for most of its inventory or share revenues with copyright holders. All the proceeds go to Zookz, its 10-person staff in St. Johns, Antigua, and (through taxes) the Antiguan government.
How can it get away with this, you ask? I'm not sure it can, but here's its argument....
The major record companies' retreat from DRM took another step today, when Universal Music Group and Virgin Media, a leading broadband provider in the U.K., announced what amounted to a DRM-free, all-you-can-eat subscription music service. Although it's still vaporware and confined to the U.K., the new service strikes me as a big deal, with some equally large caveats.
Unlike Napster or Rhapsody, which essentially provide access to an unlimited library of music for a monthly fee, the Virgin Media service will let people acquire an unlimited amount of music. (The service is due later this year, the companies said; Virgin is still trying to round up licenses from other labels and music publishers.) An offer like that could completely trump today's subscription offerings, which have struggled to win acceptance among mainstream consumers. It's simple to explain and requires no change in music fans' approach to collecting tunes. But this brings us to caveat No. 1, which is pricing. There was no indication from the companies today what they planned to charge for the service, but it's likely to be considerably more than what Nokia collects for its DRM-based "Comes With Music" phones (where the downloads are nailed to the user's phone and/or PC). My back-of-the-envelope calculation was that "Comes With Music" carries an $8 to $16 monthly premium for two years' worth of unlimited downloads from all four major record companies. I know there's some argument that music fans aren't hugely sensitive to prices, but I have trouble believing they'll tolerate ISP rates that are 40% or 50% higher so they can download tracks guilt-free.
Vuze -- the company that's trying to sell licensed, high-def videos to users of the BitTorrent file-sharing software -- has spent much of the past two years trying to persuade Hollywood that its users are customers, not thieves. So far, however, the major studios have entrusted little to Vuze beyond movie trailers and other promotional videos. Now Vuze is trying to prod Hollywood with some eye-opening data about its clientele's buying habits and purchasing power: in addition to being copyright infringers, they spend a lot of money on movies and movie-watching gear. Said Vuze CEO Gilles BianRosa, "Those users are actually Hollywood's best customers."
Yes, that's a self-serving comment. But BianRosa's assertion is supported by a survey by media consulting firm Frank N. Magid Associates of about 1,300 Internet users between the ages of 18 and 44, nearly 700 of whom use Vuze. The survey, which Vuze released late Tuesday, included the following insights about the members of the company's audience:
The Digital Watermarking Alliance, a group that encourages content owners to embed unique identifiers in media as a way to combat piracy and promote new distribution models online, released a study this morning on the prevalence of illegal downloading and the motives behind it. (Download the .pdf here.) Done by market research firm Interpret, it used an online survey to gauge how many U.S. residents were downloading media legally and illegally. Then it did what amounted to a push poll of 996 downloaders (again, both legal and illegal) ages 13 to 49, exploring their behavior in more detail and measuring their reaction to watermarking technology. Not surprisingly, given who was paying for it, the survey found that embedding watermarks (called "digital serial numbers" in the survey) could deter people from sharing content online. In particular, a third of the downloaders said they definitely or probably wouldn't use file-sharing services to obtain content if watermarks were deployed, and half said the same thing about uploading.
I take some of the findings with a grain of salt, such as the assertion that using watermarks would lead illegal downloaders to buy more content from legitimate sources. Watermarks may very well drive some people away from file sharing, but they won't stop them from going to sites that stream free songs or bootlegged movies. As the survey points out, multiple factors influence how people choose to acquire content. Nevertheless, the study provided a number of intriguing insights, including the following:
Now this is truly "PlaysforSure." Subscription music service Napster has come up with a far cheaper alternative to its $15-a-month plan, which allowed people to download an unlimited number of DRM-wrapped songs that worked only on devices equipped with Microsoft's "Certified for Windows Vista" technology (better known as PlaysforSure, although that was a misnomer). Starting today, consumers can sign up to hear unlimited songs on demand from Napster's online jukebox for $5 a month. The price also includes five MP3s, so the streams are effectively free (or even better, considering that new hits often sell for $1.29 each at iTunes or Amazon). There are no "tethered downloads" and no fears about paying for songs that might not work on your favorite player.
This is close to a breakthrough offer. Microsoft tried something similar when it altered its $15-a-month Zune Pass service in November, throwing in 10 MP3s to go along with unlimited streams and tethered downloads. But $15 is far more than the average consumers spends on recorded music each month, and the tethered downloads work only on a Zune. Napster's new price is so low, it could change the way people evaluate a subscription-music service. Instead of wondering whether it's worth paying a monthly fee for something with no residual value (i.e., the tethered downloads and the online jukebox), would-be subscribers simply have to decide whether it's worth buying five MP3s a month from Napster in exchange for access to that jukebox. To make the decision simpler, the company offers three-, six- and 12-month plans (for $15, $30 and $60, respectively) that give subscribers more flexibility over when they use their MP3 credits.
I'm willing to pay for access to a fully stocked online jukebox; that's why I've been subscribing to Rhapsody for lo these many years. But most people aren't. (See below for the numbers.) That's why Napster and its music-industry partners have to come up with a dramatically different value proposition if they're going to attract a mass following. The new Napster offer is far more compelling than the old one, but there are still some non-trivial problems....
Given my obsession with DRM, I feel compelled to report every tidbit of news I come across about Hollywood's interoperable DRM initiative, the Digital Entertainment Content Ecosystem. Unfortunately, after attending a panel discussion at Digital Hollywood involving five participants in DECE's planning sessions, all I can report is that the group is closing in on a new name.
Mitch Signer, the Sony Pictures technology chief who doubles as the DECE president, said representatives of the roughly 40 member companies meet monthly and have weekly conference calls. But it has yet to publish any specifications for "DECE-compliant" products, services or content, or say when those might be available. Singer and Mark Coblitz, atop strategic planner for Comcast (and an active participant in the DECE discussions) flatly declined to give a date for, well, anything.
The group's goal is to make legitimate sources of content online more attractive to consumers than free, illegal ones by eliminating the worst features of the electronic locks used to limit copying. The underlying assumption is that some kind of lock, or DRM technology, is necessary to deter piracy, despite ample evidence that DRM on movie downloads and discs hasn't eliminated or, arguably, even reduced movie bootlegging. Regardless, it's certainly true that the major studios won't ...
Stung by the backlash from the copy-protection scheme it had for Spore, Maxis today announced it would not have the same system for its upcoming game, The Sims 3.
Instead of SecuROM, a program that required online authentication to prevent pirated copies from being played, Maxis said it would revert back to the disc-based copy protection it used for The Sims 2. As a result, the anti-piracy measures for The Sims 3, due out June 2, will require users to enter a serial code to play the disc. That means players can use that disc to play the game on any machine as long as they have the code.
Here's what Rod Humble, head of the studio owned by Electronic Arts, said:
We feel like this is a good, time-proven solution that makes it easy for you to play the game without DRM methods that feel overly invasive or leave you concerned about authorization server access in the distant future.
Players last fall rebelled against the SecuROM digital rights management system in Spore, which restricted to three the number of computers on which players could install the game. They punished the company by giving the game low marks in reviews on Amazon.com, driving down the average rating for the game. Two weeks after the game was released, Maxis loosened the locks and raised the limit to five computers.
It'd be cool to inhabit the mind of a present-day 16-year-old. Or terrifying. Either way, you'd probably get a stark sense of what, if anything, the new generation of media consumers thinks about copyright. If you're a kid with an Internet connection and unlimited access to a world of instant content -- movies, TV, music, words, images and everything else -- how much do you really understand the fuzzy and complicated rules about what you're allowed to download, remix and republish?
Even adults can't agree on the answers to those questions -- including some who are paid experts in copyright law. Earlier this week at SXSW, Jason Schultz of Berkeley's Samuelson Law, Technology & Public Policy Clinic ran an entire session on the nuances of so-called fair use. Schultz played a series of online video clips containing repurposed material. After each one, he had a pair of intellectual property attorneys debate whether the filmmaker was an outlaw pirate or an artist engaged in protected creative expression.
In the corporate corner was Ben Sheffner, an entertainment industry attorney whose client roster has included 20th Century Fox and NBC-Universal, and who worked on John McCain's campaign. And in the creative freedom corner was Julie Ahrens of Stanford Law's Fair Use Project. (The lawyers were arguing standard positions, not their personal opinions.)
After the arguments, Schultz took a vote to see where the 100-or-so-person audience stood on whether the video was fair use. Here's a thumbnail of the panel:
Video No. 1: Synchronized Presidential Debating from 236.com
Sheffner: "CNN or some of the other copyright owners that may have supplied this footage spend millions and millions of dollars on their news-gathering operations. They send huge trucks with lots of equipment and lots of technicians around the country and take these pictures. They need to recoup those costs. When people want to remix or reuse or rebroadcast that footage, they think someone should have to pay for it."
Also: "What I found out during the campaign is that a lot of the motivation from news organizations making copyright claims is not really even about the money, it's that ...
After having competed throughout the infancy of the downloadable movie market, Movielink (now Blockbuster OnDemand) and CinemaNow (now part of Sonic Solutions) are finally joining forces, kinda sorta. The alliance announced today (and reported by my colleague Dawn Chmielewski yesterday) will let Blockbuster deliver downloadable movies to far more portable devices, set-top boxes and TV sets. That's because CinemaNow has been busily striking deals to embed its software in consumer electronics and mobile devices. The CinemaNow platform also takes a less straitjacketed approach to DRM, enabling customers to view movies on multiple devices. Sonic, in return, gets the nontrivial benefit of the Blockbuster brand, plus some of the exclusive content Blockbuster has (e.g., movies from Independent Film Channel). The result should be a more able competitor to the online movie rental services offered by Amazon and Apple -- but not to Netflix, despite numerous news accounts to the contrary.
That's because Netflix's offering is a different breed of cat. Subscribers to Netflix's standard movies-by-mail service can, for no additional fee, watch an unlimited number of movies and TV shows that are streamed to them online. The no-incremental-cost approach is incredibly appealing, especially for avid movie watchers. IMHO, the Netflix business model (new movies by mail, older titles by stream, all for one monthly fee) will hold a significant advantage as long as the streaming or downloading option isn't the preferred route to watching a movie at home. And I think DVDs will remain the preferred route until streamed or downloaded flicks look as good and are as easy to use as movies on discs.
The main trade-off with the Netflix service is that the movies aren't new releases -- the studios make titles available for Netflix's streaming service in the same "window" used for cable TV's premium movie channels. That means they're weeks, and sometimes months, older than the ones newly available on DVD and in video-on-demand services (including Blockbuster OnDemand and CinemaNow). The subscription movie window is temporary, too, meaning that titles drop out as they get older. The result is that Netflix offers a much smaller library of streamable movies and TV shows than it makes available by mail. Another shortcoming for Netflix is the shortage of set-top boxes and TV sets that support its service, especially when compared to CinemaNow. But plenty of box and TV makers are looking to support for the Netflix streams to their devices, so that gap could soon start to close.
LAS VEGAS -- Despite all the buzz at last week's Consumer Electronics Show about the connected home, some companies still believe the average consumer isn't ready for a world of DLNA, UPnP and MoCA. Just typing those acronyms makes me think they're right. Anyway, there were a couple of sneakerware-based offerings that caught my eye, one of which was from disk-drive-manufacturer Seagate.
Seagate has been pitching its FreeAgent external hard drives to consumers in sort of an eat-your-vegetables way, arguing that they need to back up their photos, music and other digital media in case their PCs fail. How ... compelling. To sweeten the deal, it plans to offer a $129 docking station next month called the FreeAgent Theater that will let users display the contents of their external (or USB) drives on their big-screen TVs. I saw a demo of the device at CES and was impressed by how easy it was to find media stored on a drive, play it and do simple productions, such as digital-photo slideshows with music. One caveat: The picture quality varied with the source material, with high-definition files looking very good on the big screen, the lower-resolution files less so....
Depending on the model, your device features either a hard drive or flash drive that allows you to read and write files to it just like an external drive.
After having competed throughout the infancy of the downloadable movie market, Movielink (now Blockbuster OnDemand) and CinemaNow (now part of Sonic Solutions) are finally 
That's because Netflix's offering is a different breed of cat. Subscribers to Netflix's standard movies-by-mail service can, for no additional fee, watch an unlimited number of movies and TV shows that are streamed to them online. The no-incremental-cost approach is incredibly appealing, especially for avid movie watchers. IMHO, the Netflix business model (new movies by mail, older titles by stream, all for one monthly fee) will hold a significant advantage as long as the streaming or downloading option isn't the preferred route to watching a movie at home. And I think DVDs will remain the preferred route until streamed or downloaded flicks look as good and are as easy to use as movies on discs. 
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