Monday, January 14. 2008
Toshiba's HD DVD Payoff
Consumer Warning
High definition televisions, HDTV, have been available in the United States for nearly a decade. Very few consumers purchased those early units but in the last three years there has been an huge increase in the numbers and percentages of US homes with HDTV. However, many consumers still do not watch high definition programming on their HDTV. Many consumers either do not know that they need HD programming to take advantage of their television's features or do not know how to get HD programming. It is a challenging consumer education problem that many companies are trying to solve and/or use to their advantage.
Consider the current situation for HD programming. Broadcast television is now mostly broadcast in digital and a fair amount of that is high definition but most consumers do not know the difference between SD digital broadcasts and HD digital broadcasts. The FCC has not spent nearly enough money trying to help this situation. Cable companies now offer at least a few HD channels along with their digital packages but the quality and selection tend to be poor. Both DirecTV and Dish Network satellite services offer decent high definition packages that seem to be the best offer to get HD services to watch on a daily basis. What about movies though?
For just under two years there has been a format “war” going on to determine how you will get your HD movies. For years DVD has been the standard movie format and before that there was VHS and now there is Blu-ray. You might ask, “Why do we need a new format?”, and I will tell you. Televisions before HDTV were analog units that were mostly square. These analog units had a rough maximum resolution of about 720x480 pixels. This resolution was not really available to anyone though because everyone watched broadcast television which was transmitted at 440x480 pixels. When VHS tapes came out it was also an analog system but only was capable of presenting a 330x480 pixel image. Later DVD was released and finally we had a format that was capable of displaying the full quality of our analog televisions. The content on a DVD is stored digitally at 720x480 pixels and is converted into an analog signal that analog televisions can view. Having the maximum analog TV resolution is the reason that DVD movies look so much better than VHS movies.
Now we have high definition televisions and both the size and maximum resolution have changed. These televisions are no longer square but are wide screen and have a maximum resolution of 1920x1080. Compared to standard definition televisions, HD televisions are capable of showing 6 times as many pixels on the screen. Most people are amazed by how much better a full high definition image is when compared to standard definition. But to get all of this information to these televisions requires a new disk format that can hold at least 6 times as much information as a DVD. This is why we need Blu-ray. Blu-ray disks can hold up to 50 gigabytes of information compared to the 9 gigabytes of information that a DVD can hold: roughly 6 times more on the Blu-ray. Perfect fit right?
Well you would think but it is not that simple. See there were two competing formats, Blu-ray and HD DVD, that wanted to replace DVD and both had a pretty good shot right up until last week. On January 4, 2007 Warner Brothers Entertainment released a statement that they would become a Blu-ray exclusive studio. This move took with it New Line Cinema and HBO which are both part of the Time-Warner corporation. This leaves HD DVD with only Universal and Paramount as backers that are making movies in that format. Now approximately 75% of all Hollywood movie studios are releasing high definition movies exclusively on the Blu-ray format. Also it is being reported that both Universal and Paramount are working to end their contracts with HD DVD and it is expected that those announcements will come as early as February. Effectively the format war has ended and Blu-ray has become the HD Movie standard. All of Hollywood and the consumer electronics industry are ready to move forward with the Blu-ray HD movie standard.
However, we should never under estimate the power of greed in big corporations.
There are only two real backers of HD DVD. These companies are Toshiba and Microsoft and these two companies have spent the last two years battling a PR war against the Blu-ray disk association (BDA). For its part, Microsoft does not care about physical media. Microsoft was using HD DVD to weaken its competitors and nothing more. Microsoft promoted HD DVD in an attempt to weaken the appeal of the Playstation 3 which includes a Blu-ray player and competes directly with Microsoft's Xbox system. Microsoft also promoted HD DVD in order to weaken physical media in general because it competes with download services that are much more lucrative for Microsoft. For its part, Toshiba holds the majority of the hardware patents on HD DVD and had the format become the DVD replacement then Toshiba would have earned billions in patent royalties.
So what should Toshiba do now? The right thing to do would be to release Universal and Paramount from any contract and begin making dual format players to transition the 750,000 HD DVD owners to Blu-ray. But that is not what they are doing now. Toshiba has announced plans to run an advertising campaign and to slash prices on their players. Consumers can now get an entry level HD DVD player for as little as $130 with 7 free movies. That makes an HD DVD player very attractive to unsuspecting consumers that do not know about the studio situation I have described here. This means that Toshiba will probably sell tens of thousands of these players over the next few weeks.
By some estimates these low prices mean that Toshiba will be losing as much as $100 per player! So why would Toshiba do this? Why would Toshiba continue to lose money trying to sell players for a format war that they have already lost? To earn one big payday!
Toshiba knows that it can never win but that does not mean they cannot make a huge amount of money. The longer Toshiba can afford to extend this format war the more bargaining power they have with the Blu-ray Disk Association (BDA). At some point Toshiba will have a discussion with the BDA and Toshiba will agree to sell Blu-ray players. In exchange Toshiba will expect the BDA to give them some cash. The more HD DVD customers that Toshiba has, the larger that payoff will be.
Toshiba does not care about those thousands of users that purchase HD DVD between now and the “HD DVD D-day”. Toshiba's opinion is that those people can still use the players up conversion features for regular DVDs and to watch the existing HD DVD movies that are out there. Furthermore, when those consumers are ready to get a Blu-ray player Toshiba will offer them a combo player that will play those old HD DVD movies and therefore double dip those consumers for a little extra cash.
That is it. Everything that Toshiba does between now and the announced cancellation of HD DVD will be anti-consumer. Toshiba is attempting to build a bargaining chip that will pay off in the next few months from the BDA and in a year or two from their loyal customers. So take our advice and DO NOT buy one of those cheap HD DVD players. If you want a next generation DVD player get yourself a Blu-ray player. Here at DRM Blog we recommend getting the Playstation 3 if you are getting a player now but if you can wait a few months then the Panasonic BD50 looks like a really good machine.
Toshiba, we ask you to do the right thing for consumers and drop this silly format war.
High definition televisions, HDTV, have been available in the United States for nearly a decade. Very few consumers purchased those early units but in the last three years there has been an huge increase in the numbers and percentages of US homes with HDTV. However, many consumers still do not watch high definition programming on their HDTV. Many consumers either do not know that they need HD programming to take advantage of their television's features or do not know how to get HD programming. It is a challenging consumer education problem that many companies are trying to solve and/or use to their advantage.
Consider the current situation for HD programming. Broadcast television is now mostly broadcast in digital and a fair amount of that is high definition but most consumers do not know the difference between SD digital broadcasts and HD digital broadcasts. The FCC has not spent nearly enough money trying to help this situation. Cable companies now offer at least a few HD channels along with their digital packages but the quality and selection tend to be poor. Both DirecTV and Dish Network satellite services offer decent high definition packages that seem to be the best offer to get HD services to watch on a daily basis. What about movies though?
For just under two years there has been a format “war” going on to determine how you will get your HD movies. For years DVD has been the standard movie format and before that there was VHS and now there is Blu-ray. You might ask, “Why do we need a new format?”, and I will tell you. Televisions before HDTV were analog units that were mostly square. These analog units had a rough maximum resolution of about 720x480 pixels. This resolution was not really available to anyone though because everyone watched broadcast television which was transmitted at 440x480 pixels. When VHS tapes came out it was also an analog system but only was capable of presenting a 330x480 pixel image. Later DVD was released and finally we had a format that was capable of displaying the full quality of our analog televisions. The content on a DVD is stored digitally at 720x480 pixels and is converted into an analog signal that analog televisions can view. Having the maximum analog TV resolution is the reason that DVD movies look so much better than VHS movies.
Now we have high definition televisions and both the size and maximum resolution have changed. These televisions are no longer square but are wide screen and have a maximum resolution of 1920x1080. Compared to standard definition televisions, HD televisions are capable of showing 6 times as many pixels on the screen. Most people are amazed by how much better a full high definition image is when compared to standard definition. But to get all of this information to these televisions requires a new disk format that can hold at least 6 times as much information as a DVD. This is why we need Blu-ray. Blu-ray disks can hold up to 50 gigabytes of information compared to the 9 gigabytes of information that a DVD can hold: roughly 6 times more on the Blu-ray. Perfect fit right?
Well you would think but it is not that simple. See there were two competing formats, Blu-ray and HD DVD, that wanted to replace DVD and both had a pretty good shot right up until last week. On January 4, 2007 Warner Brothers Entertainment released a statement that they would become a Blu-ray exclusive studio. This move took with it New Line Cinema and HBO which are both part of the Time-Warner corporation. This leaves HD DVD with only Universal and Paramount as backers that are making movies in that format. Now approximately 75% of all Hollywood movie studios are releasing high definition movies exclusively on the Blu-ray format. Also it is being reported that both Universal and Paramount are working to end their contracts with HD DVD and it is expected that those announcements will come as early as February. Effectively the format war has ended and Blu-ray has become the HD Movie standard. All of Hollywood and the consumer electronics industry are ready to move forward with the Blu-ray HD movie standard.
However, we should never under estimate the power of greed in big corporations.
There are only two real backers of HD DVD. These companies are Toshiba and Microsoft and these two companies have spent the last two years battling a PR war against the Blu-ray disk association (BDA). For its part, Microsoft does not care about physical media. Microsoft was using HD DVD to weaken its competitors and nothing more. Microsoft promoted HD DVD in an attempt to weaken the appeal of the Playstation 3 which includes a Blu-ray player and competes directly with Microsoft's Xbox system. Microsoft also promoted HD DVD in order to weaken physical media in general because it competes with download services that are much more lucrative for Microsoft. For its part, Toshiba holds the majority of the hardware patents on HD DVD and had the format become the DVD replacement then Toshiba would have earned billions in patent royalties.
So what should Toshiba do now? The right thing to do would be to release Universal and Paramount from any contract and begin making dual format players to transition the 750,000 HD DVD owners to Blu-ray. But that is not what they are doing now. Toshiba has announced plans to run an advertising campaign and to slash prices on their players. Consumers can now get an entry level HD DVD player for as little as $130 with 7 free movies. That makes an HD DVD player very attractive to unsuspecting consumers that do not know about the studio situation I have described here. This means that Toshiba will probably sell tens of thousands of these players over the next few weeks.
By some estimates these low prices mean that Toshiba will be losing as much as $100 per player! So why would Toshiba do this? Why would Toshiba continue to lose money trying to sell players for a format war that they have already lost? To earn one big payday!
Toshiba knows that it can never win but that does not mean they cannot make a huge amount of money. The longer Toshiba can afford to extend this format war the more bargaining power they have with the Blu-ray Disk Association (BDA). At some point Toshiba will have a discussion with the BDA and Toshiba will agree to sell Blu-ray players. In exchange Toshiba will expect the BDA to give them some cash. The more HD DVD customers that Toshiba has, the larger that payoff will be.
Toshiba does not care about those thousands of users that purchase HD DVD between now and the “HD DVD D-day”. Toshiba's opinion is that those people can still use the players up conversion features for regular DVDs and to watch the existing HD DVD movies that are out there. Furthermore, when those consumers are ready to get a Blu-ray player Toshiba will offer them a combo player that will play those old HD DVD movies and therefore double dip those consumers for a little extra cash.
That is it. Everything that Toshiba does between now and the announced cancellation of HD DVD will be anti-consumer. Toshiba is attempting to build a bargaining chip that will pay off in the next few months from the BDA and in a year or two from their loyal customers. So take our advice and DO NOT buy one of those cheap HD DVD players. If you want a next generation DVD player get yourself a Blu-ray player. Here at DRM Blog we recommend getting the Playstation 3 if you are getting a player now but if you can wait a few months then the Panasonic BD50 looks like a really good machine.
Toshiba, we ask you to do the right thing for consumers and drop this silly format war.
Tuesday, December 4. 2007
It Has Been A While
It has been quite a while since I posted new original content on the .com side of DRM Blog, and even the .org site has been neglected for months at a time. I must admit that being a voice against DRM turned out to be much more work than I expected, but I think that it has been worth the effort. When I started this site I had much more free time than I do now. Having a full time job, running my own side business, and maintaining a family life all seem to suck the motivation for writing out of me. But here we are, quickly coming up on the three year anniversary of DRM Blog, and it seems appropriate to take a look back at what has happened in that time. Since starting this site lots of things have changed in the DRM world so I thought I would give you my perspective on the state of things.
When I launched this site I was very narrowly focused on the music industry. We tend to focus on the things that bother us the most, and I have always been a huge music lover and music consumer. The idea of paying for music that you could not use in all of your players was something that was unthinkable for me. I grew up in a time when cassette tapes, records, and CDs could be played on any matching device from any manufacturer. You did not have to worry about having to buy your music from the same company that made your player. Even now I wonder how manufacturers thought that could be a good thing for consumers. The only consumer electronics sector that I know of that works this way is the console gaming industry. You can only buy games for your Playstation from Sony and you can only buy games for your Xbox from Microsoft; however, even these industries are under pressure to change their ways. "We want an open, standard platform which is much easier than having five which are not compatible", says Gerhard Florin, director of international publishing for Electronic Art, during an interview with BBC News.
As time moved on I realized that DRM was not just an issue with music and so I began to look at other areas of interest. I considered all of the places where DRM is used and it seemed to me then and still seems to me now that the only places that DRM is really a problem is in consumer purchased media and hardware. The reason for this is that most consumers do not have the time, energy, or technical ability to understand every new piece of technology. The same can be said for many businesses I suppose but there are lots of services for businesses to help them make the right decision about hardware and software. This is why consulting is such a growing industry: it pays to be an expert in something. So after all this time, I think that helping consumers make the right decision should still be the focus of this site.
In music related DRM there have been several small changes and one really big change. The companies that make up the music industry oligopoly have finally started selling digital music without DRM. Yahoo was the first to try special DRM-free music purchases, but these were limited to a handful of singles that were used more as promotion for a new album than an actual attempt to sell consumer-friendly music. Finally, earlier this year, Apple started selling DRM-free tracks from EMI. Each DRM-free track was encoded at a higher bit rate and cost thirty cents more than a DRM-laden track. The straw that seems to have broken the camel's back is the Amazon's MP3 store which sells all of their tracks DRM-free and for as little as $0.89.
As good as things have gotten for music lovers, things seem to have gotten worse for movie lovers. Basically all of the digital video stores are horrible. All of the films are wrapped in DRM that only works with that store's software, and in most cases this software is shoddy and cumbersome. As with most DRM'd music, you never actually own the movie. You have a limited license to use it in the way that the seller wants you to use it. This license can also be revoked at any point along the way and you have to pray that the company you purchased from stays in business. With all of this bad news, there is one brighter spot for movie watchers. If you do not want to buy your movies but would rather rent your movies, then Amazon's Unbox seems to work well. I am not sure how I feel about Amazon Unbox rental program. On one hand it is very convenient to rent a movie without having to go to the store or wait days for it to be delivered from Netflix; on the other hand the prices seem to be really expensive for what you are getting. Most movies are $4 to rent for 24 hours and there is a limit to the number of times you can watch them. If you actually did go rent the physical disc then you could watch it as many times as you wanted.
In the end renting these movies serves a purpose. This actually seems to be one place that DRM is providing a product for consumers that some consumers want. On that note, there is one other place that DRM appears to be a small success: music subscription services. Services such as Yahoo Music Unlimited appear to be doing a small but profitable business. Basically these services allow you to rent music. You pay a monthly or yearly subscription fee and you then have access to all of the music in the service's library. The catch, of course, is that once you stop paying for the service you no longer have access to the service. One major catch with both types of rental services is that they are limited to one device at a time. This means that only one of the five computers in my house can access the service at one time. This limitation makes these services a tough sell with the people in my house.
Finally I want to touch on digital broadcasts and high definition media (HDM). Most people are unaware of the fact that the television industry in the United States is about to undergo a massive change. The process of switching from standard definition analog broadcast television to high definition digital broadcast television has been under way for nearly a decade. However, the majority of televisions in the USA are still analog sets. The FCC and Congress have agreed on the date of February 17, 2009 as the blackout date for all analog broadcasts. After that date people with analog televisions will either need to get a digital tuner or switch to satellite or cable. If you have family members or friends that still get their television through an antenna then please help inform them of the upcoming changes.
Another thing that most people do not know is that DVD is at the end of its life. DVD was designed to provide the best possible image and sound quality for analog televisions but it cannot deliver the quality of image possible on new high definition televisions. There is an ongoing war between three rival groups that want to be the replacement for DVD: movie download services, HD DVD, and Blu-ray disc. All three have advantages and disadvantages that have been discussed all over the internet so I will not discuss them again here; however, they all have nasty DRM in common. Blu-ray appears to offer the most to the consumer but it may also have the worst DRM. I own a PS3 which has a Blu-ray drive and the experience is very fulfilling. I have had zero problems with the DRM on any of the games or movies but I have not tried to make back-ups yet either. This is primarily because I do not have a Blu-ray drive in my computer but the makers of AnyDVD appear to have cracked the DRM on both HD DVD and Blu-ray so making back-ups should not be a problem in the future.
So, that is about it for this post. I have several new articles planned and I hope to keep DRM Blog updated regularly from here on out. If you guys have comments or question please post them and I will try to respond.
Thanks, Jimmy.
When I launched this site I was very narrowly focused on the music industry. We tend to focus on the things that bother us the most, and I have always been a huge music lover and music consumer. The idea of paying for music that you could not use in all of your players was something that was unthinkable for me. I grew up in a time when cassette tapes, records, and CDs could be played on any matching device from any manufacturer. You did not have to worry about having to buy your music from the same company that made your player. Even now I wonder how manufacturers thought that could be a good thing for consumers. The only consumer electronics sector that I know of that works this way is the console gaming industry. You can only buy games for your Playstation from Sony and you can only buy games for your Xbox from Microsoft; however, even these industries are under pressure to change their ways. "We want an open, standard platform which is much easier than having five which are not compatible", says Gerhard Florin, director of international publishing for Electronic Art, during an interview with BBC News.
As time moved on I realized that DRM was not just an issue with music and so I began to look at other areas of interest. I considered all of the places where DRM is used and it seemed to me then and still seems to me now that the only places that DRM is really a problem is in consumer purchased media and hardware. The reason for this is that most consumers do not have the time, energy, or technical ability to understand every new piece of technology. The same can be said for many businesses I suppose but there are lots of services for businesses to help them make the right decision about hardware and software. This is why consulting is such a growing industry: it pays to be an expert in something. So after all this time, I think that helping consumers make the right decision should still be the focus of this site.
In music related DRM there have been several small changes and one really big change. The companies that make up the music industry oligopoly have finally started selling digital music without DRM. Yahoo was the first to try special DRM-free music purchases, but these were limited to a handful of singles that were used more as promotion for a new album than an actual attempt to sell consumer-friendly music. Finally, earlier this year, Apple started selling DRM-free tracks from EMI. Each DRM-free track was encoded at a higher bit rate and cost thirty cents more than a DRM-laden track. The straw that seems to have broken the camel's back is the Amazon's MP3 store which sells all of their tracks DRM-free and for as little as $0.89.
As good as things have gotten for music lovers, things seem to have gotten worse for movie lovers. Basically all of the digital video stores are horrible. All of the films are wrapped in DRM that only works with that store's software, and in most cases this software is shoddy and cumbersome. As with most DRM'd music, you never actually own the movie. You have a limited license to use it in the way that the seller wants you to use it. This license can also be revoked at any point along the way and you have to pray that the company you purchased from stays in business. With all of this bad news, there is one brighter spot for movie watchers. If you do not want to buy your movies but would rather rent your movies, then Amazon's Unbox seems to work well. I am not sure how I feel about Amazon Unbox rental program. On one hand it is very convenient to rent a movie without having to go to the store or wait days for it to be delivered from Netflix; on the other hand the prices seem to be really expensive for what you are getting. Most movies are $4 to rent for 24 hours and there is a limit to the number of times you can watch them. If you actually did go rent the physical disc then you could watch it as many times as you wanted.
In the end renting these movies serves a purpose. This actually seems to be one place that DRM is providing a product for consumers that some consumers want. On that note, there is one other place that DRM appears to be a small success: music subscription services. Services such as Yahoo Music Unlimited appear to be doing a small but profitable business. Basically these services allow you to rent music. You pay a monthly or yearly subscription fee and you then have access to all of the music in the service's library. The catch, of course, is that once you stop paying for the service you no longer have access to the service. One major catch with both types of rental services is that they are limited to one device at a time. This means that only one of the five computers in my house can access the service at one time. This limitation makes these services a tough sell with the people in my house.
Finally I want to touch on digital broadcasts and high definition media (HDM). Most people are unaware of the fact that the television industry in the United States is about to undergo a massive change. The process of switching from standard definition analog broadcast television to high definition digital broadcast television has been under way for nearly a decade. However, the majority of televisions in the USA are still analog sets. The FCC and Congress have agreed on the date of February 17, 2009 as the blackout date for all analog broadcasts. After that date people with analog televisions will either need to get a digital tuner or switch to satellite or cable. If you have family members or friends that still get their television through an antenna then please help inform them of the upcoming changes.
Another thing that most people do not know is that DVD is at the end of its life. DVD was designed to provide the best possible image and sound quality for analog televisions but it cannot deliver the quality of image possible on new high definition televisions. There is an ongoing war between three rival groups that want to be the replacement for DVD: movie download services, HD DVD, and Blu-ray disc. All three have advantages and disadvantages that have been discussed all over the internet so I will not discuss them again here; however, they all have nasty DRM in common. Blu-ray appears to offer the most to the consumer but it may also have the worst DRM. I own a PS3 which has a Blu-ray drive and the experience is very fulfilling. I have had zero problems with the DRM on any of the games or movies but I have not tried to make back-ups yet either. This is primarily because I do not have a Blu-ray drive in my computer but the makers of AnyDVD appear to have cracked the DRM on both HD DVD and Blu-ray so making back-ups should not be a problem in the future.
So, that is about it for this post. I have several new articles planned and I hope to keep DRM Blog updated regularly from here on out. If you guys have comments or question please post them and I will try to respond.
Thanks, Jimmy.
Tuesday, July 25. 2006
Jessica - She's no Morgan, but She'll Have to Do
I've never thought of Jessica Simpson as the poster child for the anti-DRM movement. I'd always hoped someone possessing sardonic wit and individuality would step forward, like Morgan Webb of XPlay fame. But more people know the name Jessica Simpson, and we'll take almost all the help we can get.
After much cajoling, Yahoo Music has convinced Sony to release one digital single without the accompanying digital rights management. Jessica Simpson's "A Public Affair" will sell for $1.99 (compared to the standard price of $0.99). Pro-DRM companies such as Jupiter Research have been quick to dismiss the news as a short-term gimmick that will have little to no effect on the long-term online music market.
I disagree.
As online music distributors (alternatives to iTunes Music Store) get stronger, so too grows their ability to influence the market and thus music labels. Yahoo has expressed their DRM-free preference before. General manager Dave Goldberg spoke at Music 2.0 conference in Los Angeles in February and implored music labels to decrease their demand for and usage of digital rights management, "DRM is not a consumer value proposition, it's a consumer cost. It creates a nice barrier of entry for the tech companies, rather than something that's beneficial to labels, artists or consumers." This sentiment was mirrored with the words of product management director Ian Rogers who wrote on the Yahoo Blog, "Our position is simple: DRM doesn't add value for the artist, label (who are selling DRM-free music every day — the Compact Disc) or consumer, the only people it adds value to are the technology companies who are interested in locking consumers to a particular technology platform."
Obviously Yahoo had the market presence to convince Sony to release "A Public Affair" without DRM. Sony may still be attempting to atone for their DRM rootkit blunder, but both Sony and Yahoo have the diversity and the dollars to take risks that go against the mold.
Yahoo claims that the increased price is based on the song's customizable nature - the ability to select a version with a particular name in the lyrics. However, depending on the results of this social experiment, record labels and distributors alike may discover that there is a market for DRM-free media for which customers would gladly pay extra. We've said before on www.DRMBlog.com that we'd pay even retail CD-level prices just to be able to download and own DRM-free files, especially if we could choose the bit-rate. We're not the only ones who would choose to pay higher prices for convenience, quality, and the confidence of being able to play their files on any device.
I don't expect digital rights management to disappear overnight. However, the market is shaped by the language of public opinion. Music labels and DRM-vendors are fighting a losing war against the public image that digital rights management has made for itself. Customers hate invasions of privacy and technology that makes their purchasing decisions more complicated, which is the only thing that DRM actually accomplishes. The lawsuits initiated by the RIAA have made martyrs of casual downloaders while Sony's rootkit debacle made DRM not just a household word, but a detested one. Each mistake that the recording industry has made over the last couple years has brought more and more negative attention to digital rights management. Each miscalculation had led us to this one experiment conducted by Yahoo and Sony and Jessica Simpson.
The name of Jessica Simpson has never had the ability to part the folds of my wallet, but tonight, I will surrender my dollars to her to support Yahoo, to support Sony, and to support non-DRM alternatives. Join me.
Author — Ginger Cox
After much cajoling, Yahoo Music has convinced Sony to release one digital single without the accompanying digital rights management. Jessica Simpson's "A Public Affair" will sell for $1.99 (compared to the standard price of $0.99). Pro-DRM companies such as Jupiter Research have been quick to dismiss the news as a short-term gimmick that will have little to no effect on the long-term online music market.
I disagree.
As online music distributors (alternatives to iTunes Music Store) get stronger, so too grows their ability to influence the market and thus music labels. Yahoo has expressed their DRM-free preference before. General manager Dave Goldberg spoke at Music 2.0 conference in Los Angeles in February and implored music labels to decrease their demand for and usage of digital rights management, "DRM is not a consumer value proposition, it's a consumer cost. It creates a nice barrier of entry for the tech companies, rather than something that's beneficial to labels, artists or consumers." This sentiment was mirrored with the words of product management director Ian Rogers who wrote on the Yahoo Blog, "Our position is simple: DRM doesn't add value for the artist, label (who are selling DRM-free music every day — the Compact Disc) or consumer, the only people it adds value to are the technology companies who are interested in locking consumers to a particular technology platform."
Obviously Yahoo had the market presence to convince Sony to release "A Public Affair" without DRM. Sony may still be attempting to atone for their DRM rootkit blunder, but both Sony and Yahoo have the diversity and the dollars to take risks that go against the mold.
Yahoo claims that the increased price is based on the song's customizable nature - the ability to select a version with a particular name in the lyrics. However, depending on the results of this social experiment, record labels and distributors alike may discover that there is a market for DRM-free media for which customers would gladly pay extra. We've said before on www.DRMBlog.com that we'd pay even retail CD-level prices just to be able to download and own DRM-free files, especially if we could choose the bit-rate. We're not the only ones who would choose to pay higher prices for convenience, quality, and the confidence of being able to play their files on any device.
I don't expect digital rights management to disappear overnight. However, the market is shaped by the language of public opinion. Music labels and DRM-vendors are fighting a losing war against the public image that digital rights management has made for itself. Customers hate invasions of privacy and technology that makes their purchasing decisions more complicated, which is the only thing that DRM actually accomplishes. The lawsuits initiated by the RIAA have made martyrs of casual downloaders while Sony's rootkit debacle made DRM not just a household word, but a detested one. Each mistake that the recording industry has made over the last couple years has brought more and more negative attention to digital rights management. Each miscalculation had led us to this one experiment conducted by Yahoo and Sony and Jessica Simpson.
The name of Jessica Simpson has never had the ability to part the folds of my wallet, but tonight, I will surrender my dollars to her to support Yahoo, to support Sony, and to support non-DRM alternatives. Join me.
Author — Ginger Cox
Wednesday, June 14. 2006
The DRM Cycle
Unless you're reading DRMBlog for the first time, it's obvious that we support liberal fair use rights; however, we do not condone nor do we support any type of piracy. Content owners should have all of their copyrights held intact. Of equal importance are the rights of the user and their ability to access, back-up, and use material that they have legitimate access to whether those items are purchased, borrowed, or in the public domain. If a user wants a copyrighted piece of material, there should purchase of either a physical copy or a licensed copy of said material at a fair market value. The fair market price should be (but often is not) determined by market forces. If the consumer thinks the price is too high, the consumer should choose not purchase the material and select other material – the consumer should never steal the material. Likewise if the owner thinks the price is too low, the owner can raise the price or pull the material off the market – the owner should never steal the rights of the consumer by putting DRM on the material or license the material with an overly restrictive license agreement. This is how things would work in a better world.
As you might have guessed, the current world doesn't run so smoothly. Content owners are often very restrictive with their licenses and over protective of their perceived rights. Often the content owners are very large corporations. These two things combine and lead many consumers to think that content owners are just greedy corporations that will do anything they can to make a dollar while by taking away the consumer's rights. At the same time there is a thriving black market that offers most of this material for very low costs with almost no restrictions. When a consumer is faced with these two options, many choose the cheaper and easier path of pirated media. In response content owners become more protective and restrictive and the cycle continues with more consumers choosing pirated files instead of their cumbersome and overly expensive DRM'd legitimate counterparts.
Originally content owners began to require DRM as a method to help stop piracy. It has been shown over and over again that professional pirates ignore, bypass or remove DRM of all kinds and have non-DRM versions of the protected material available within days of the release of the official material; often, the pirated version is available before the official material is released. So the only people who are hurt by DRM are the legitimate consumers who are stripped of their fair use rights such as being able to make backup copies. The cycle continues to spin, content owners continue to tighten restrictions, and more consumers turn to pirated material.
Case in Point
Last week in Sweden the police raided the network operations center (NOC) of PRQ Inet (prq.se) and seized all of the servers and networking equipment. PRQ hosted 300 business websites, one of which was the Pirate Bay (thepiratebay.org). The MPAA claims that the Pirate Bay is illegal and has convinced the Swedish police that the PRQ owners and the Pirate Bay owners are one in the same. So instead of confiscating only the servers used for hosting the one targetted website, the Swedish police confiscated everything in the NOC. All of the legitimate businesses that PRQ once hosted are out of luck and have no recourse but to wait for the police to release their servers and their data.
So what was the Pirate Bay doing to warrant disruption of so many businesses? According to a press release from the Motion Picture Association of America (MPAA) the Pirate Bay was “one of the world’s largest and most well known facilitators of online piracy”. The Pirate Bay claims in their own words that they are “the World's Largest Bit Torrent Tracker”, which the MPAA says has enabled the “illegal swapping of millions of illegal copyrighted movies, music, software, and games”. The Pirate Bay does not actually distribute the pirated material but serves as a search engine to others that do host the pirated material. The links to the material were provided as torrent files that when opened by a Bit Torrent client would download the material to the user's computer.
According to the MPAA press release the Pirate Bay is the 312th most popular website in the US. To put this in perspective, Best Buy's website is ranked 256 while Circuit City's website is ranked 369. These stores are the number one and number three largest electronics retailers in the US. So shutting down PRQ's servers to get to the Pirate Bay is considered by most copyright holders to be a huge success. The MPAA held a press conference to herald the shutdown and to praise the Swedish police for their work.
The Pirate Bay claims they are operating within the bounds of Swedish law and have done nothing wrong. They plan to continue to offer their bit torrent search engine service and fight what they consider to be an attack on their “rights”. In fact, less than a week later the Pirate Bay is now back online and is experiencing a sizable new influx of users due to all the free advertising that this event has created. It is uncertain how long they will be able to continue operating, but as of now they are more popular than ever before. The cycle continues.
Message to Content Owners
Restrictive DRM repulses your legitimate consumer base. These are the people that pay for your product and make you money. Everytime you tighten the DRM noose, you are strangling your own lifeblood. Those consumers that pull away from you will either stop using your content altogether or they will run to the pirates for what they want. Instead of starting a public relations battle that you cannot win, you should rethink the unacceptable restrictions you are trying to place on fair use. Stop spurning your customers and sending them into the ever-open arms of pirates.
You should concentrate your efforts on stopping the real threat. The real threat to your business is not file sharers but organized crime and local leaks in your pipeline who actually make a profit from piracy. They sell your own wares cheaper and faster than your outdated infrastructure can. Remove your restrictions, lower your prices, speed up your release schedules, and make your products easier to purchase so that pirated versions don't look so attractive to fans. We applaud your recent hastening of DVD releases of movies and the combination CD/DVD audio releases. It is these sorts of changes that will bring customers back to you while chasing file sharers makes you look weak and grasping.
"The bad news is that you're up against a dedicated foe that is younger and smarter that you are and will be alive when you're dead. You're 55 years old and these kids are 17 and they're just smarter than you. So you're gonna lose that one." - John Perry Barlow (Lyricist for 'The Grateful Dead') (Co-founder the Electronic Frontier Foundation)
Authors - Jimmy Palmer and Ginger Cox
As you might have guessed, the current world doesn't run so smoothly. Content owners are often very restrictive with their licenses and over protective of their perceived rights. Often the content owners are very large corporations. These two things combine and lead many consumers to think that content owners are just greedy corporations that will do anything they can to make a dollar while by taking away the consumer's rights. At the same time there is a thriving black market that offers most of this material for very low costs with almost no restrictions. When a consumer is faced with these two options, many choose the cheaper and easier path of pirated media. In response content owners become more protective and restrictive and the cycle continues with more consumers choosing pirated files instead of their cumbersome and overly expensive DRM'd legitimate counterparts.
Originally content owners began to require DRM as a method to help stop piracy. It has been shown over and over again that professional pirates ignore, bypass or remove DRM of all kinds and have non-DRM versions of the protected material available within days of the release of the official material; often, the pirated version is available before the official material is released. So the only people who are hurt by DRM are the legitimate consumers who are stripped of their fair use rights such as being able to make backup copies. The cycle continues to spin, content owners continue to tighten restrictions, and more consumers turn to pirated material.
Case in Point
Last week in Sweden the police raided the network operations center (NOC) of PRQ Inet (prq.se) and seized all of the servers and networking equipment. PRQ hosted 300 business websites, one of which was the Pirate Bay (thepiratebay.org). The MPAA claims that the Pirate Bay is illegal and has convinced the Swedish police that the PRQ owners and the Pirate Bay owners are one in the same. So instead of confiscating only the servers used for hosting the one targetted website, the Swedish police confiscated everything in the NOC. All of the legitimate businesses that PRQ once hosted are out of luck and have no recourse but to wait for the police to release their servers and their data.
So what was the Pirate Bay doing to warrant disruption of so many businesses? According to a press release from the Motion Picture Association of America (MPAA) the Pirate Bay was “one of the world’s largest and most well known facilitators of online piracy”. The Pirate Bay claims in their own words that they are “the World's Largest Bit Torrent Tracker”, which the MPAA says has enabled the “illegal swapping of millions of illegal copyrighted movies, music, software, and games”. The Pirate Bay does not actually distribute the pirated material but serves as a search engine to others that do host the pirated material. The links to the material were provided as torrent files that when opened by a Bit Torrent client would download the material to the user's computer.
According to the MPAA press release the Pirate Bay is the 312th most popular website in the US. To put this in perspective, Best Buy's website is ranked 256 while Circuit City's website is ranked 369. These stores are the number one and number three largest electronics retailers in the US. So shutting down PRQ's servers to get to the Pirate Bay is considered by most copyright holders to be a huge success. The MPAA held a press conference to herald the shutdown and to praise the Swedish police for their work.
The Pirate Bay claims they are operating within the bounds of Swedish law and have done nothing wrong. They plan to continue to offer their bit torrent search engine service and fight what they consider to be an attack on their “rights”. In fact, less than a week later the Pirate Bay is now back online and is experiencing a sizable new influx of users due to all the free advertising that this event has created. It is uncertain how long they will be able to continue operating, but as of now they are more popular than ever before. The cycle continues.
Message to Content Owners
Restrictive DRM repulses your legitimate consumer base. These are the people that pay for your product and make you money. Everytime you tighten the DRM noose, you are strangling your own lifeblood. Those consumers that pull away from you will either stop using your content altogether or they will run to the pirates for what they want. Instead of starting a public relations battle that you cannot win, you should rethink the unacceptable restrictions you are trying to place on fair use. Stop spurning your customers and sending them into the ever-open arms of pirates.
You should concentrate your efforts on stopping the real threat. The real threat to your business is not file sharers but organized crime and local leaks in your pipeline who actually make a profit from piracy. They sell your own wares cheaper and faster than your outdated infrastructure can. Remove your restrictions, lower your prices, speed up your release schedules, and make your products easier to purchase so that pirated versions don't look so attractive to fans. We applaud your recent hastening of DVD releases of movies and the combination CD/DVD audio releases. It is these sorts of changes that will bring customers back to you while chasing file sharers makes you look weak and grasping.
"The bad news is that you're up against a dedicated foe that is younger and smarter that you are and will be alive when you're dead. You're 55 years old and these kids are 17 and they're just smarter than you. So you're gonna lose that one." - John Perry Barlow (Lyricist for 'The Grateful Dead') (Co-founder the Electronic Frontier Foundation)
Authors - Jimmy Palmer and Ginger Cox
Tuesday, May 23. 2006
HDTV and HDCP and DRM Questions
After our last post concerning HDCP we received some very good questions that I will attempt to answer. I hope that this clarifies some of the unclear issues.
If you are paying for digital HD-cable then yes, you are almost certainly getting HD broadcasts. I do not know how many channels you would get in HD as that will mostly depend on your subscription package. Stations like HBO and ESPN are available in HD almost everywhere. The broadcast version of HDCP is known as the broadcast flag. The broadcast flag was approved by the FCC in 2004 but the implementation was halted by a federal court on the grounds that the action over stepped the FCC charter. As of know the broadcast flag is not scheduled to be implemented; however, several bills have been introduced to congress that would either extend the FCC's power or make the broadcast flag into law. Talked to your congressman lately?
If you have HDMI connections on your television and on your player then you will get true High Definition picture. In theory, any television that has an HDMI port is also HDCP compatible. You should also be getting true digital audio also since both the video and audio run across the HDMI cable. Unlike previous analog connections you do not need a separate fiber-optic cable for digital sound.
Again, in theory, the new HD movies will come with very high quality digital audio tracks that contain up to 8 distinct audio tracks. The audio can also be protected by HDCP and down-sampled. If you are not feeding HDMI into your sound system then you probably are not getting all possible audio quality. Do you need a new HDCP/HDMI sound system? If you want to be guaranteed the best possible sound then your home theater sound system must have HDMI inputs. I think the better question to ask is "Do I have the speakers to play HD audio?". To take advantage of 7.1 surround you need 8 speakers: right front, center front, left front, right side, left side, right rear, left rear, and a sub-woofer. Very few home theaters have enough room to properly take advantage of 6 speakers and even fewer have room for all 8 that 7.1 surround requires. With that said, if you have the room and an HDMI audio system and properly placed speakers and a good sub then the experience can be well worth the effort.
Good News --err-- Good Rumors
I would like to stress that this information is not official; in fact, this information is rumor and conjecture. According to Spiegel Online, a German-language magazine, most major Hollywood studios have made a back-room handshake deal concerning the Image Constraint Token (ICT). ICT is the protection flag used in HDCP. According to this deal the studios would not implement ICT on any movie until at least 2010. The reasoning behind this thought is that Hollywood does not want to loose a large portion of its customer base over a downgraded signal. It turns out that the early adopters of HD televisions are some of the people that buy the most movies and these would be the people most affected by ICT. The second part of the reasoning is that companies like Sony and Microsoft would not be releasing HD products that could not play HD movies.
However, since none of the studios have officially announced this and none of the consumer electronics companies have announced this then I do not believe it. Why would these companies spend hundreds of millions of dollars on a DRM system that they do not intend to use? I am sure that there have been several meetings to discuss this potential problem; however, my guess is that most of the discussion has involved legal liability if the ICT is actually implemented. I can only imagine that there will be several law suits that come about when HDCP DRM is fully utilized.
Author: Jimmy Palmer
I have a 50" HD Plasma and the Digital HD Receiver from Comcast Cable and the receiver is connected to the television through component cables. Am I receiving "real" HD broadcasts?
If you are paying for digital HD-cable then yes, you are almost certainly getting HD broadcasts. I do not know how many channels you would get in HD as that will mostly depend on your subscription package. Stations like HBO and ESPN are available in HD almost everywhere. The broadcast version of HDCP is known as the broadcast flag. The broadcast flag was approved by the FCC in 2004 but the implementation was halted by a federal court on the grounds that the action over stepped the FCC charter. As of know the broadcast flag is not scheduled to be implemented; however, several bills have been introduced to congress that would either extend the FCC's power or make the broadcast flag into law. Talked to your congressman lately?
So if i buy the higher price PS3 and have a HDMI connection then I will have a true High Definition picture even although my television is not HDCP enabled?
I have a Pioneer PDP-1530 High Definition television that I purchased in May 2004. It has HDMI inputs will it play an HDCP protected movie or not?
If you have HDMI connections on your television and on your player then you will get true High Definition picture. In theory, any television that has an HDMI port is also HDCP compatible. You should also be getting true digital audio also since both the video and audio run across the HDMI cable. Unlike previous analog connections you do not need a separate fiber-optic cable for digital sound.
Am I going to have to have an HDCP compliant stereo?
Again, in theory, the new HD movies will come with very high quality digital audio tracks that contain up to 8 distinct audio tracks. The audio can also be protected by HDCP and down-sampled. If you are not feeding HDMI into your sound system then you probably are not getting all possible audio quality. Do you need a new HDCP/HDMI sound system? If you want to be guaranteed the best possible sound then your home theater sound system must have HDMI inputs. I think the better question to ask is "Do I have the speakers to play HD audio?". To take advantage of 7.1 surround you need 8 speakers: right front, center front, left front, right side, left side, right rear, left rear, and a sub-woofer. Very few home theaters have enough room to properly take advantage of 6 speakers and even fewer have room for all 8 that 7.1 surround requires. With that said, if you have the room and an HDMI audio system and properly placed speakers and a good sub then the experience can be well worth the effort.
Good News --err-- Good Rumors
I would like to stress that this information is not official; in fact, this information is rumor and conjecture. According to Spiegel Online, a German-language magazine, most major Hollywood studios have made a back-room handshake deal concerning the Image Constraint Token (ICT). ICT is the protection flag used in HDCP. According to this deal the studios would not implement ICT on any movie until at least 2010. The reasoning behind this thought is that Hollywood does not want to loose a large portion of its customer base over a downgraded signal. It turns out that the early adopters of HD televisions are some of the people that buy the most movies and these would be the people most affected by ICT. The second part of the reasoning is that companies like Sony and Microsoft would not be releasing HD products that could not play HD movies.
However, since none of the studios have officially announced this and none of the consumer electronics companies have announced this then I do not believe it. Why would these companies spend hundreds of millions of dollars on a DRM system that they do not intend to use? I am sure that there have been several meetings to discuss this potential problem; however, my guess is that most of the discussion has involved legal liability if the ICT is actually implemented. I can only imagine that there will be several law suits that come about when HDCP DRM is fully utilized.
Author: Jimmy Palmer
