Judge Cooper's order may prove the final legal word on TorrentSpy, which shut down in March (citing a U.S. legal climate that was "simply too hostile"). But the case didn't resolve any of the important legal questions raised by the lawsuit, mainly because they never were litigated. Cooper declared the MPAA the victor last year not because the studios had proven their claim, but becauseTorrentSpy destroyed evidence that the studios would have needed to do so. Another case will have to resolve the question of whether it's illegal for a site to assemble and organize links to bootlegged movies and other torrent files -- in other words, to decide how to draw the line between search engines that don't actively promote piracy and ones that do.

In the meantime, the three individuals and company behind TorrentSpy --  Justin Bunnell, Forrest Parker, Wes Parker and Valence Media -- face a punishing financial penalty that could still go up if Cooper orders them to reimburse the studios for their legal fees.

For what it's worth, Cooper's order includes a permanent injunction that applies to TorrentSpy and anyone to whom it transfers its technology. In addition to barring the company from encouraging or helping users to download, upload or stream copyrighted movies without the owner's permission, it also forbids movies from being made available for sharing. Her view that "making available" amounts to an infringement seems consistent with the stance taken by the 9th Circuit, but conflicts with the position taken recently by several other District Court judges in other locales.

Specifically, IODA is supplying labels and artists the technology to plug downloadable music stores into their websites. Unlike some earlier efforts to sell downloads, the stores integrate seamlessly into the sites with other e-commerce efforts (e.g., t-shirt and CD sales). That's important, IODA founder and CEO Kevin Arnold said, because it means consumers will be asked only once to give up their billing information -- a step that prompts many impulsive buyers to change their minds. It should also help that the request will be coming a label or artist the consumer likes, rather than an unfamiliar merchant or middleman.

Speaking at a conference for music retailers in San Francisco Tuesday, Arnold said he didn't think the stores would compete with iTunes and other retailers with broad selections. Instead, it's a way to give music fans more opportunities to buy songs, to push paid downloads into more places on the Net where fans go. That's an important element of the music industry's transition into an era with much tougher competition for the consumer dollars. Plus, many indie labels have a taste associated with their names, a sound or personality that their customers have come to know and appreciate. Unlike a Columbia or a Capitol, indie labels often develop a following of their own. That's all the more reason to add downloadable tracks to the CDs, hoodies and chotchkes for sales on those sites.

On the plus side, Warner Music Group announced a pilot with Digonex Technologies Inc., a company that enables sellers to adjust the price of goods dynamically in response to demand. Indianapolis-based Digonex automatically adjusts prices up or down in an attempt to maximize returns. Unlike AmieStreet.com, which bumps up prices as items grow in popularity, Digonex also tries to boost demand for goods by cutting prices as sales fade. Details of the WMG were scarce, other than that the trial would be for a limited period of time and involve just a portion of Warner's downloadable catalog. No word on which artists, songs, or online retailers would be involved, or the prices charged. One possible model is the deal Digonex announced last October with the ever-adventuresome Nettwerk Music Group and PassAlong Networks, which called for the price of singles to be adjusted weekly between three tiers -- 33, 66 or 99 cents (albums would go for $3.30, $6.60 and $9.90). Digonex used to operate MusicRebellion.com, a site that sold music for as low as 5 cents per track, but that was just a proof of concept, spokesman Chris Pohl said in an e-mail. "We closed  it down because we didn’t want to be competing with our customers for music sales," Pohl wrote.

By contrast, ABKCO is moving the other direction, pulling its collection of vintage (and prized) Rolling Stones albums from eMusic after only one month. David Harrell at Digital Audio Insider has a nice analysis, which notes that eMusic's payments lately have been a little less than what the labels collect per song from iTunes. (Harrell had previously noted that eMusic subscribers responded avidly to the old Stones titles, putting 17 into the eMusic Top 40 after one week.)  EMusic CEO David Pakman has long argued that major labels and artists should use his company to sell items that have been molding in their vaults, because collecting something for those recordings is better than collecting nothing. Evidently, the strong response to the Stones' releases persuaded someone that eMusic was undercutting higher margin outlets, such as iTunes. More likely, though, the lower price was unlocking demand from marginal buyers. As Harrell put it, any sales lost at higher-priced sites "would probably be more than offset by downloads by eMusic subscribers who previously had no interest in paying for Stones downloads."

Finally, Nine Inch Nails offered its latest album, The Slip, online as a free download in advance of its release on vinyl and CD in July. This is a bit of a twist on its last, four-disc outing, Ghosts I-IV; only one quarter of that set was available as a free download, and the freebie was clearly a teaser to encourage people to buy the rest of the package (for $5 to $300, depending on the format and the packaging). This time, folks who care only about the digital files can get the whole shebang in lossless digital formats for free. There may be an upsell opportunity here, but I think the main strategy is simply to grow the audience for NIN. To NIN, giving away a portion of its output and helping fans remix and share its tracks are ways of harnessing Web marketing and economics for long-term gain. And in an environment where consumers have ever-expanding choice, trying to capture new fans with free, first-quality product makes a lot of sense. Besides, the band's not hurting for cash: according to Billboard, it collected $1.6 million from sales and orders of Ghosts I-IV in the first week alone.

Photo of the album cover for The Slip is courtesy of the Nine Inch Nails' website.

But the company's demise wasn't triggered by Hollywood studios or the major record labels, as much as they would have liked to have done so. Instead, StreamCast was felled by one of its own rocks: a lawsuit it filed in January 2006 against file-sharing rival Kazaa and a host of related companies. It proved to be a tactical blunder of the first order. Two of the defendants in that case counter-sued, won and locked StreamCast in a financial death-grip. And here's the delicious irony. StreamCast executives had long grumbled that Kazaa had sabotaged their business just as it was taking off in 2002, enabling Kazaa to dominate the second generation of file-sharing networks (i.e., the one that succeeded the original Napster). That may or may not be true, but there's no doubt that StreamCast's attempt to take revenge against the extended Kazaa family proved its undoing.

To understand the latest chapter in this long-running saga, it helps to know the financial stakes and some of the history. StreamCast's staying power was a tribute to the popularity of file sharing, which explains why advertisers  -- and some venture capital firms -- continued to finance it despite the entertainment industry's lawsuits. At the height of its popularity, CEO Michael Weiss claimed in an interview, it had 24 million unique users. It lost many of them in early 2002, when Morpheus was suddenly cut off from the FastTrack network it shared with Kazaa and Grokster. Still, it continued to generate a healthy amount of revenue, thanks to the number of advertisements it showed users and the payments it collected from companies whose software was bundled with Morpheus (by Download.com's count, the Morpheus software has been downloaded more than 173 million times, enough to generate a mountain of cash from bundling alone).

StreamCast was founded in Nashville as MusicCity Networks, and it garnered little notice until a federal court ordered the original Napster to stop users from downloading copyrighted songs. The company had initially operated an interconnected group of OpenNap servers, an alternative file-sharing network that relied on the original Napster's software. But as Napster's troubles mounted, StreamCast looked for an alternative approach. That led the company to Niklas Zennstrom and Janus Friis, a pair of file-sharing entrepreneurs in the Netherlands. Their company, Consumer Empowerment (later known as Kazaa BV), had developed (with the help of Estonian coders) a fledgling network called FastTrack, along with the Kazaa software to connect to it. According to StreamCast's lawsuit, StreamCast sought to buy the rights to FastTrack, but settled instead for a licensing deal with Zennstrom and Friis. That deal, the lawsuit claims, included a right of first refusal to buy any Kazaa technology or assets put up for sale.

In April 2001, StreamCast released the Morpheus software, enabling users to connect to the nascent FastTrack network. Morpheus and the FastTrack network quickly became the leaders in the race to succeed the newly crippled Napster. StreamCast tried again in June to buy the FastTrack software outright, the company asserts in its lawsuit, only to be rebuffed once more.

That September, two things happened. Company president Weiss, who worked out of southern California, left the company. And Steve Griffin, the Nashville-based founder and CEO, hired EuroCapital Advisors, a Woodland Hills merchant banking company, to help StreamCast find some additional financial partners. In a letter to Griffin dated Sept. 5, 2001, EuroCapital manager Mark Dyne agreed to assist StreamCast with a "strategic transaction" involving Bertelsmann AG (the European media conglomerate that had stunned the music industry by investing in Napster the previous year), Grupo Telefonica (a multinational phone and Internet company), a handful of venture capital firms and Rock the Vote. The letter also pledges Dyne's assistance in lining up other, unnamed investors. Nothing in the correspondence indicates whether Bertelsmann or the other companies named had expressed any interest in financing StreamCast or entering into other types of strategic transactions, such as sponsorships or advertising deals.

Dyne was more than just a deal maker. He was also founder and chairman of Brilliant Digital Entertainment, a software company in Woodland Hills specializing in simulated 3D animations. By the end of 2001, Brilliant Digital would have deals with both StreamCast and Kazaa to bundle its software with their file-sharing programs. Having broad distribution of that software was critical to Brilliant Digital's plans to create a global platform for online advertising using its 3D technology.

Brilliant Digital was also developing a second technology, called Altnet, which was designed to generate revenue for content owners from file-swapping. The idea was conceived jointly with Zennstrom and Friis in October 2001, Brilliant Digital CEO Kevin Bermeister told the Sydney Morning Herald, but the latter "were really besieged by legal issues ... and just wanted to sell the company." The major movie and music companies had sued Consumer Empowerment, StreamCast and Grokster in the U.S. that month, and in November a Dutch judge gave Consumer Empowerment two weeks to stop infringing music copyrights or face hefty daily fines.

Bermeister introduced Zennstrom and Friis to Nicola Hemming, with whom he'd worked on an interactive amusement park in Sydney, Australia, called SegaWorld. (The park flopped and was closed in 2000.) That introduction, he has said, was the extent of his and Brilliant Digital's involvement in the maneuvering that led to the establishment of Sharman Networks, which bought the Kazaa software and a permanent license to use the FastTrack network from Zennstrom and Friis in mid-January 2002. Sharman was incorporated in the Pacific island tax haven of Vanuatu, which enabled it to keep secret the identities of its investors and directors. Within days Sharman had announced itself, relaunched Kazaa's website and began distributing the Kazaa software.

Not long thereafter, Griffin and Dyne called off the arrangement between StreamCast and EuroCapital Advisors. On February 11, 2002, the two companies entered a confidential agreement that released them from the previous deal. A little more than two weeks later (around Feb. 26) Morpheus users were cut off from the FastTrack network. The shut-down seemed mysterious at the time, but Zennstrom offered a simple explanation to CNet's John Borland: StreamCast wasn't paying the royalties it owed for using the FastTrack software, so it didn't get an update that was incompatible with Morpheus. StreamCast hurried out a new version of its software days later, enabling users to connect to the Gnutella file-sharing network. But the setback was decisive. Kazaa went on to dominate the file-sharing universe for about three years, until users drifted off to p2p protocols such as eDonkey and BitTorrent that were more resistant to spoofing and less cluttered with ads. Morpheus remained a perpetual also-ran.

StreamCast lashed back in March 2006. With Weiss having returned serving as CEO, it filed a racketeering lawsuit against nearly two dozen people and companies, including Sharman, Zennstrom, Friis, Bermeister, Dyne and EuroCapital Advisers, accusing them of conducting an elaborate corporate-finance shell game to keep the FastTrack technology out of StreamCast's hands and drive Morpheus' users to Kazaa. The lawsuit alleges that the FastTrack technology was transferred to Skype, the voice-over-Internet-Protocol communications firm that Zennstrom and Friis sold to eBay in 2005 for more than $2.5 billion. (StreamCast amended its lawsuit in May to add eBay as a defendant.)

It's certainly true that many of the lawsuit's targets were intertwined to some degree, and that Dyne's involvement in Brilliant Digital linked him closely to Sharman, Zennstrom and Friis. According to Brilliant Digital's SEC filings and website, Altnet is a joint venture between Brilliant Digital and Joltid, a company established by Zennstrom and Friis. And executives from Sharman and Brilliant Digital have described Altnet -- a technology overlaid on top of a p2p network to promote the authorized distribution of files -- as a fundamental part of Sharman's vision for Kazaa from Day One. Nevertheless, U.S. District Judge Florence-Marie Cooper summarily rejected several of StreamCast's claims, including those against Dyne and EuroCapital, in September 2006, and tossed the rest of the case the following January. The fundamental problem, Cooper ruled, was that FastTrack wasn't the only file-sharing network, so excluding StreamCast from it couldn't constitute an antitrust violation.

Dyne and EuroCapital quickly responded, filing a counter-suit in November 2006. The suit alleges that the confidential agreement signed by Griffin, as well as the initial deal between his company and Dyne's, included provisions barring StreamCast from suing EuroCapital and requiring StreamCast to cover EuroCapital's legal fees if it were sued. It demanded more than $260,000, plus interest, to cover the cost of defending Dyne and EuroCapital against the racketeering claims.

StreamCast evidently agreed to pay almost as soon as the lawsuit arrived on its doorstep, because court records show that the case was dismissed six days after the complaint was filed. In an interview, Dyne declined to go into much detail, citing a confidential settlement agreement. But he reported that StreamCast gave him an IOU, then defaulted on it. He went back to court and obtained a temporary restraining order, and after that he won a second order effectively freezing their assets. He then called the Sheriff's Department to start foreclosing on those assets, but StreamCast short-circuited the process by filing for bankruptcy protection.

In a matter of weeks, Dyne accomplished something the biggest entertainment companies in the world hadn't been able to do in more than six years. But then, he had an insider's advantage.

In a memo dismissing StreamCast's employees, Weiss blamed the shutdown on an unnamed creditor who'd taken control of all the company's bank accounts and other California assets. He ended the memo on a hopeful note, writing, "If the situation changes, or if the creditor agrees to retain employees, I will contact you." But Dyne doesn't seem interested. Although the Morpheus name has some value, he said, "we would never have operated the Morpheus program."

When Apple started selling movies through iTunes in September 2006, only one major studio agreed to participate. That was Disney, on whose board Steve Jobs sits. Studio executives complained about the wholesale discounts Apple sought, and disparaged Apple's approach to copy protection. Among other things, they didn't like the fact that movie buyers could transfer copies of the film to unlimited iPods. Paramount, Lionsgate and MGM eventually provided older movies for Apple to sell, but the pickings remained slim for new releases. With today's announcement, new and older titles from Sony, Universal, Warner Bros., 20th Century Fox, Paramount and Lionsgate are all joining Disney in making new releases available for sale. That leaves MGM, a studio that hasn't been much of a force in new releases, as the largest holdout.

Apple eventually made some concessions to Hollywood on copy protection, although they don't seem significant from the consumer's perspective. And with Disney reporting that iTunes was adding to its profits, there was no reason for the rest of the studios to stay on the sidelines. Not that iTunes is printing currency for Disney; Silicon Alley Insider's Peter Kafka called the studio's revenue from iTunes "a rounding error." That's true at least in part because studios have forced Apple and other downloadable movie outlets to offer flawed a product. By not allowing shoppers to burn movies easily onto discs that can play in conventional DVD players, the studios have made it much more complicated to watch a downloaded movie on TV than it is to watch a disc.

The iTunes movie rental service appeared to have more support from Hollywood when it was announced in January. All of the major studios were on board, and Apple predicted that more than 1,000 titles would be available by the end of February. But the service hasn't lived up to the promise of the announcement. Today, iTunes has less than 450 titles for rent, which is a small fraction of what's available on disc from Blockbuster or Netflix. And like its competition (e.g., CinemaNow and Movielink), Apple is forced to wait 30 days or more after a DVD is released before it can rent that movie to customers.

The studios' rationale for the delay has been that they don't want downloadable rentals to cut into DVD sales. They have applied the same delay to cable's on-demand movie channels, fearing that the instant gratification provided would be more appealing than the permanence of a purchased DVD. On Wednesday, however, Time Warner CEO Jeff Bewkes told financial analysts that Warner Bros. would put downloads, VOD and DVDs in the same release window for most titles. Rather than speculating about losses to DVD sales, Bewkes noted that VOD generates higher profit margins than DVD rentals. The goal, he said, is to move people from renting discs to watching films on demand.

That's the right framework. The longer the people have to wait to for movie to be available in the format they want, the more likely they'll be to lose interest in it (or find another source). In addition, the studios' logic about sales being undermined by VOD seems flawed. The day a DVD goes on sale, the disc is available for rent. The easy availability of a rental alternative suggests that people buy DVDs because they want a permanent copy. Sure, making new releases available through VOD might reduce the number of people who buy DVDs impulsively at the grocery store. But more VOD viewers are likely to come from the ranks of movie renters, because VOD won't satisfy people who genuinely want to own a disc.

In particular, U.S. District Judge Stephen V. Wilson was exploring what filtering requirements to impose on StreamCast that would protect copyright holders without interfering with legitimate uses of the network. He also was considering how much effort StreamCast had to make to convert users of previous, unfiltered versions of Morpheus to the new, court-approved version.

One thing Wilson had decided was that StreamCast, like the original Napster, was liable for its users' infringements. He granted a permanent injunction against StreamCast last October. Co-defendants Grokster and Sharman Networks, which operates Kazaa, had already agreed to settle with the labels, studios and music publishers, with Grokster getting out of the business and Sharman pursuing a licensed, royalty-paying version of Kazaa. Yet Wilson wanted to find a way to let StreamCast keep the Morpheus network going for legitimate, non-infringing uses That's why he appointed a special master, British forensic scientist Andy Johnson-Laird, to evaluate different technologies that might block only unauthorized transfers. Now, Johnson-Laird's work appears to be mooted.

MGM et al. may yet extract some cash and a pound or two of hardware out of StreamCast. But they'll have to wait in line with StreamCast's employees and creditors for the company's assets to be liquidated in Oregon, where the bankruptcy petition was filed. Meanwhile, thousands of people with earlier versions of Morpheus can continue to use them to download whatever they find on the network, legally or not.

There's a really great back-story to the bankruptcy, but it's too long-winded (and inside-baseball-ish) even for this notoriously windy space. I'll write an Opinion Daily column about it for Monday, and will provide a link as soon as it's posted.

Today, a Silicon Valley start-up called Sezmi (formerly known by the more stealthy and Webster's-friendly moniker Building B) goes public with its version of TV 2.0. It may not succeed -- the landscape is littered with the empty offices of firms that tried and failed to compete with the local cable operators -- but its approach shows what's possible.

Sezmi was founded in 2006 by Buno Pati, a serial tech entrepreneur, and Phil Wiser, a former chief technical officer at Sony Corp. and Liquid Audio. Working through telephone companies, ISPs and major retailers, it plans to offer a version of pay TV that's better than cable or satellite, yet with lower monthly fees. Its ability to deliver on those promises is hard to gauge, though; it claims that trials are starting in undisclosed pilot markets, but it hasn't named any of its distributors or content providers, nor has it provided details about price or availability. On the other hand, it has attracted capital from half a dozen funders.

It also has demonstrated a working version of the service, using what appear to be production-ready versions of the equipment customers will have in their homes. That equipment come in two main pieces, Pati and Wiser said: a set-top box with a high-capacity hard drive for storing programs, and a sophisticated indoor antenna for receiving signals from local broadcasters. Together, the box and antenna will gather a full line-up of channels from three sources. Local digital TV channels will come in over the air, in high definition where available. Some programming from cable networks will be delivered over the air, too, using idle bandwidth in local stations' digital channels, and the rest will be sent to the set-top box via broadband. The broadband connection will also be used for selected Internet feeds (e.g., YouTube videos).

At least four other ventures -- Geocast, iBlast, USDTV and Moviebeam -- have tried in vain to use TV broadcasters' extra channel capacity for data or video services, but none offered a full-blown alternative to cable. Of course, competing with cable and satellite can be a fool's errand for a start-up, too. But Sezmi is banking on comparatively low infrastructure costs to enable it to charge less than its competitors, and on its software to deliver a better experience to customers.

The company's underlying assumption is that TV viewing is shifting away from scheduled programming in favor of on-demand viewing. Its set-top box can hold about 1,000 hours of video, whether they be time-shifted broadcasts or programs pushed to subscribers based on their viewing preferences. Its software is designed for a different approach to TV, too, eschewing the typical grid-like program guide in favor of customized lists for each member of the subscriber's household. Those menus can change over the course of the day to reflect the viewer's habits, Wiser saids -- for example, putting talk shows at the top of the list in the morning, dramas at the top at night.

Borrowing a concept from online search, Sezmi's software will make it easy to hop from a show to related programs. Broadcast shows, recordings and online programming are integrated into common menus, blurring the distinctions between live and Memorex, online and off. And programmers can add another navigational option by creating portals within the program guide, steering viewers to their shows or Web-based content. Although Wiser said Sezmi is capable of incorporating any online video site with a well-organized library, subscribers won't have free rein to tap into whatever they can find on the Net. Instead, it plans to limit them to the sites it chooses, starting a first with only a couple. Such a walled garden approach might simplify things for viewers, but it ignores how rich a source the Internet has become for movies, television and user-generated video.

Sezmi's customization extends to advertising, too. Wiser said the company plans to enable marketers to target pitches to viewers according to their profiles, which will be influenced by what they watch through Sezmi. That sort of monitoring and behavioral targeting could strike consumers as unacceptably intrusive, but Wiser said no personally identifiable information will be disclosed to advertisers. "It's all opt-in," he added. Targeted ads command higher fees, generating more revenue for content providers and broadcasters, Pati said.

The company expects to have the over-the-air and broadband capacity needed to reach 100 million households by 2010, Pati said. Its target markets are the tens of millions of families that have been late to the digital TV party -- those who've stuck with analog cable or rabbit ears -- or who move into new homes. Reflecting that focus, a big part of its pitch is simplicity, or how easy its gear is to set up and use. Ultimately, though, its success will hinge on how much people crave the different experience Sezmi's software can deliver. If viewers don't see much of an upgrade in TV 2.0, Sezmi will be left competing on price alone. And when you're challenging an entrenched incumbent with deep pockets, that's not much of an advantage.

Note -- the original version of this post misspelled Buno Pati's first name. Many apologies.

The RIAA has built its lawsuits against file-sharers (which number in the thousands) around the work of MediaSentry, a company that tracks piracy on p2p networks. MediaSentry identifies computers on those networks that are making a large number of songs available for copying, catalogs the songs in their shared folders, then downloads a number of the songs to verify that they are what the file names suggest they are. It also records the computers' Internet addresses. Through the courts and ISPs, the RIAA matches each IP address to a particular Internet access account, then sues the account holders.

Echoing a handful of other judges, Wake held that the RIAA couldn't win its lawsuit against Jeffrey Howell unless it proved that someone actually downloaded a song from his shared folder. But Wake also decided that MediaSentry's downloads could be considered infringements, and that Howell could conceivably be held liable for contributing to those infringements. Patry acknowledged that a couple of other courts felt the same way, but argued that such opinions were "clearly erroneous."

Copyright owners are certainly entitled to use investigators to discover infringement (assuming the investigators use lawful techniques), but having authorized the investigators' conduct they cannot then rely on that authorized conduct to prove a cause of action whose principle requirement is that the conduct be unauthorized.

If courts across the country adopt Wake's view that the RIAA has to provide evidence of unauthorized downloading, along with Patry's reasoning that an RIAA investigator's downloads don't count, the RIAA would be left trying to gather evidence of downloads done by third parties. I don't think that's impossible, but it certainly isn't as easy as having MediaSentry do the downloading itself. The architecture of p2p networks such as BitTorrent and Gnutella is so open, companies such as BigChampagne can identify the songs, movies and other files most popular to file-sharers. Take the monitoring one step further, and an anti-piracy contractor can find out which folders those songs and movies are being downloaded from. That kind of scrutiny is unsettling, but before you cry "Privacy foul," remember that people who connect to p2p networks invite the public to rummage through their shared folders.

UPDATE -- The folks at BayTSP, another anti-piracy firm that specializes in p2p, told me that I underestimated the difficulty in monitoring individual p2p exchanges. In fact, they said, it's not possible for a vendor to catch user X in the act of downloading from user Y. They suggested an alterative: on at least one p2p network, they can detect when the first copy of a particular song or movie appears, record the file's hash, then find copies with the same hash later on other computers. That way, copyright owners could build a circumstantial case for infringement against the person who initially supplied the file and those who wound up with it. One wrinkle: hashes aren't like fingerprints or snowflakes. They are not truly unique identifiers. Still, it's highly unlikely that people ripping the same song from different CDs on different computers will create files with identical hashes.

You could hypothesize that high-def disc players are suffering the same business-cycle doldrums as other consumer goods. More plausible is that conventional DVDs look so good on most high-definition sets (i.e., 42" and smaller), consumers don't see the need to invest in a pricey upgrade. Here's NPD's Ross Rubin's take, from the NPD release:

That standalone Blu-ray players haven’t picked up significantly from HD DVD’s loss shows that few consumers were dissuaded primarily by the ‘format war.' When we surveyed consumers late last year, an overwhelming number of them said they weren’t investing in a new next-generation player because their old DVD player worked well and next-generation players were too expensive. It’s clear from retail sales that those consumer sentiments are still holding true.

Notably, sales of relatively inexpensive "upconverting" disc players that produce simulated high-def pictures from conventional DVDs were 5% higher in Q1 2008 than in Q1 2007, NPD said.

Studios can try to goose Blu-ray sales by loading discs with features that aren't available on DVD. Beyond their advantages in capacity and audio-visual quality, the high-def discs offer far superior navigation and interactivity, including the ability to draw content from the Web. But the biggest factor may be out of Hollywood's control, and that's the price of the hardware. Back when VCRs were still king, sales of DVD players didn't really take off until prices dropped below $200 in 1999, and they weren't a mass-market item until they were available for less than $100. Most Blu-ray players are still priced well north of $300.

UPDATE -- Andy Parsons of Pioneer said his company, which makes premium-priced Blu-ray players, saw "a distinct increase in demand" after HD DVD hit the skids in early January. The implication is that sales would have grown faster if manufacturers hadn't scaled back production in anticipation of the usual post-holiday slow-down. Retailers are "screaming for Blu-ray players, they can't get enough of them," Parsons said. "If you don't have product to ship, obviously the numbers are going to be low."

Parsons also wondered whether consumers bought PS3's to satisfy their demand for Blu-ray players when they couldn't find a set-top version. It's hard to tell what motivated people to buy a PS3, though, so NPD's decision not to include those sales in its Blu-ray statistics is understandable.