Technology

More on Google music search

Jon Healey — Tue, 03 Nov 2009 20:00:00 -0800

After I wrote about Google's new music search feature last week, several readers pointed out that Google already offered searchers an easy way to stream songs: YouTube. Clips from YouTube have been featured prominently among the search results on Google and Yahoo for some time. If Lala, MySpace Music and Google's other partners in the new search feature are going to see much benefit, they'll have to offer a more compelling experience at the top of the search results than YouTube does nearby.

With that in mind, Google is rolling out the first upgrade to music search today: semi-exclusive content. I say "semi" because the content is actually being made available by Lala and MySpace and can be found by going to those sites directly. Anyway, the booty includes new material and free MP3s available for a limited time only. Among the artists contributing MP3s are Phoenix, Tim McGraw and Mos Def; exclusive tracks will be available from Snoop Dogg, Kings of Leon, Lady Gaga and Linkin Park. It's not clear whether this will be a regular feature or just a gimmick to get people to try out the new search feature. But if artists and labels really want to draw people into the experiences provided by services such as Lala and MySpace Music, they'll need to keep the freebies and/or extra features coming. Otherwise, what's to keep Google users from clicking on the links from YouTube in lieu of the ones at the top of the page?

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Does more broadband mean more piracy?

Jon Healey — Tue, 03 Nov 2009 17:20:55 -0800

In the $787-billion economic stimulus package enacted in February, Congress told the Federal Communications Commission to create a plan for extending broadband service to all Americans and increasing broadband speeds. It's an apple-pie, chicken-in-every-pot goal -- at least until people see the price tag. Nevertheless, there are plenty of disagreements over the details of the plan. One is a battle between copyright holders and consumer advocates over what to do about all the content that broadband users download or stream illegally. The former want Internet service providers to use technology to filter out unauthorized content flowing over their networks; the latter argue that filters won't work as advertised and will inflict an unacceptable amount of collateral damage on lawful Internet uses. I sympathize with the copyright holders' concerns about rampant unauthorized copying, but I'm not persuaded that filtering is the solution -- or that this proceeding is the place to have that debate.

Gigi Sohn, president of Public Knowledge, laid out the case against filters ...

... at a commission workshop in September. Among other things, Sohn said:

Copyright filtering will also alter the behavior of data networks on a fundamental level, slowing down traffic, impeding the operation of high-latency applications and compromising the privacy of all Internet users. In so doing, copyright filters will discourage investment in the Internet ecosystem, prevent innovators from developing exciting new applications, dissuade users from fully utilizing their broadband connections and raise the cost of access for consumers -- all the while undermining some of the most important goals of the National Broadband Plan.

Late last week the Motion Picture Assn. of America responded (get the .pdf here) by calling on the FCC to "encourage" ISPs to adopt technological barriers against illegal copying. It also urged the FCC to push Congress to do the same. Blocking the unauthorized bits won't slow down the Net, the MPAA claimed -- on the contrary, it will free up bandwidth for legal uses:

Given that a substantial amount of Internet traffic today is comprised of infringing material, it is apparent that unless checked, the tidal wave of unlawful online content will overwhelm the Internet and degrade the consumer experience. Connections rendered sluggish by the transmission of vast amounts of stolen content will only thwart broadband development and discourage consumer confidence in the Internet experience, directly undermining the Commission’s, Congress’ and the Administration’s goals. Furthermore, ceding half or more of the available bandwidth to thieves will result in huge sums of government and private money being wasted on network expansion. On the other hand, innovative technologies and bandwidth management tools, if permitted and encouraged to develop, can lead to sophisticated new methods that can combat theft, ensure that bandwidth is utilized efficiently, provide a smooth and safe online experience for consumers, and protect the enormous public and private investment in our nation’s broadband networks.

I concede the MPAA's point about the volume of unauthorized content flowing through the Net, but I wonder how ISPs could effectively police encrypted transmissions. I also am troubled by the entertainment industry's enthusiasm for "graduated response" (also known as "three strikes") policies. That's not because it's a bad idea to tell people they've been detected downloading "Astro Boy" and that they need to stop violating the law -- no, that's a great idea. The problem is, it's not possible to know who's sitting at the computer downloading "Bruno." In fact, it may not be possible to know which computer is doing the downloading. The only thing that ISPs may be able to detect with reasonable certainty is whose account is being used for that purpose. Before ISPs impose a penalty, they should have to prove that the customer whose account is targeted really was at fault.

Then there's the question of how the filters would be triggered. How much copyrighted material would be enough to block a transmission? How would fair uses be accommodated? What about uses that copyright holders don't like, but have yet to be found illegal by any court (the Slingbox comes to mind)?

Verizon, AT&T and the major cable operators all have to negotiate with the studios for the programming that powers their pay TV services so that they're motivated to work with Hollywood on the piracy issue. Yet their own engineers have noted how hard it would be to examine all the traffic flowing over their networks, as the studios seem to desire. That may explain why ISPs haven't jumped on the filtering bandwagon despite years of supplication from the entertainment industry. Well, that plus the fear that their customers would rebel if they knew their broadband provider was examining all the bits they were uploading and downloading.

Clearly, these are tough issues. And the better way to resolve them, I think, is to let ISPs and content providers negotiate an approach that's consistent with the FCC's forthcoming Net neutrality rules, rather than shoehorning them into the plan for making broadband services available to more people. Those rules wouldn't stop ISPs from interfering with copyright infringements or other illegal acts, but they would discourage broad-brush approaches that impede legal transmissions alongside unauthorized ones.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Google's bid to save the music industry, one search at a time [UPDATED]

Jon Healey — Wed, 28 Oct 2009 16:01:00 -0700

Google's new "music search feature" -- that's the official name, although some folks have been calling it "OneBox" -- is like a relief pitcher arriving in the middle of a game with his team trailing. It can help expose millions of people to legitimate Internet music outlets, which will help those companies compete with free (and, in many cases, unauthorized) sources of music online. Whether consumers will actually spend more on music than they've been doing, however, is a whole 'nother question.

The rap against Google from label executives and online music companies has been that its search results seem indifferent to legality. For example, searching for a legitimate site often yields sponsored results for unlicensed ones; Googling an MP3 will call up dozens of free download sites and probably some unauthorized lyrics outlets, too. The new music search initiative won't scrub the unlicensed sites from the search results, but at least it tries to steer people to sites that compensate copyright holders. The hope, according to Thomas Hesse, president of Sony Music Entertainment's global digital business, is that music fans will have a significantly better experience on a MySpace or a Lala than they would on an illegitimate site.

No doubt they will. Three of the five music services that Google is working with initially -- Lala, Rhapsody and Pandora -- are far easier to use and are much more entertaining than BitTorrent or LimeWire. I'm not a huge fan of the user interfaces at the two others -- MySpace Music and imeem -- but they're far better tools for sampling music and discovering bands than the illegal downloading sites are. And it's certainly true that with the exception of iTunes, which is notably absent from this initiative, legitimate online music services have been woefully undermarketed and underexposed. So the considerable traffic Google is likely to send their way should be a tremendous boon.

Having said that, I think it's still an open question whether the new search function leads the masses to buy more music. It's likely to lead people to listen to more songs -- Google and its streaming partners will enable searchers to play any given song once, in full and for free, right from the search results page. And if they follow up a sample by diving further into MySpace Music or Lala, they'll certainly discover more artists that they like. But if they're accustomed to acquiring music for free online, it's not clear to me why they wouldn't continue to do so after sampling to their heart's content on MySpace or Lala. Alternatively, they may be happy to stick with the free ad-supported streams on MySpace or imeem, or the 10-cent "web songs" on Lala, instead of plunking down 89 cents or more for an MP3. That's fine only if there's enough volume to make up for the lower margins.

At least Google's pushing people in the right direction, or at least some of the right directions. The search sovereign needs to learn how to work more subscription-music services into the mix, too, for the sake of eMusic, Napster and Microsoft's Zune Pass. And you have to wonder how innovative new services will find a way to get a piece of the traffic that Google's search initiative will generate for its short list of partners. R.J. Pittman, who led Google's efforts to develop the new search function, said the company would consider adding partners to the list, but they'll have to be "online, Web-based, easily accessible and offer some interesting approaches to music discovery." Lots of companies fit that bill, so it will be interesting to see how Google decides who's in and who's out.

Updated at 4:43 p.m.: Now that I've played with it a bit, I see that Google still has some work to do on the new feature. The intelligence it applies to search results -- for example, guessing the right band or song name despite errors in the search -- haven't been integrated into music searches. So if, for example, if you search for "Martha Muffins," Google will guess that you were looking for Martha and the Muffins, and return a bunch of links to the band and its work. But it won't trigger a chance to stream songs from the band via MySpace or Lala. Similarly, if you go looking for "the angels want to wear my red shoes," you won't get the chance to stream the song on the search page. But you will get lots of links to the song on other sites. Searching for the song by its correct title -- "Red Shoes" -- won't help, 'cause the new feature doesn't recognize that as a search for a song. It's similarly befuddled by searches for songs covered by multiple artists, such as "Moon River."

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Seeing how they run from the Pirate Bay

Jon Healey — Tue, 27 Oct 2009 13:22:42 -0700

Just how big is the Pirate Bay among illegal downloaders? A new report by DtecNet, a Beverly Hills-based firm that tracks online piracy, found that transfers via the Bit Torrent protocol -- the most popular file-sharing application -- fell nearly 80% after TPB's Swedish Internet service provider cut off its bandwidth under pressure from the courts there.

Interestingly, other file-sharing applications didn't gain much traffic in the wake of TPB's cutoff, the report said. Instead, users migrated quickly to other BitTorrent "tracker" sites. Four alternative trackers -- OpenBitTorrent, Denis Stalker, tracker.publicbt.com and pow7.com -- "now comprise nearly 70 percent of all BitTorrent traffic," the report states. It adds that the migration was aided by the Pirate Bay, which altered its software to track files through OpenBitTorrent.

The report's bottom line is gloomy for those who believe file-sharing is killing the entertainment industry:

Though such concentration of traffic would appear to present yet another enforcement opportunity, similar to the Pirate Bay shutdown, it will be more difficult as BitTorrent technologists continue to adapt. Torrent sites now point to multiple trackers, so if one is disconnected or overwhelmed by traffic, pirates can still find the files they seek without stopping to find another tracker.

Meanwhile, TPB continues to jump from Internet provider to Internet provider as more courts try (with no lasting success) to keep it offline. And this week, a Dutch court ordered the company's founders and former spokesman Peter Sunde to remove links to content from the Netherlands, an order that Sunde says they can't comply with because they have no such control.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Grooveshark and virtual music collections

Jon Healey — Tue, 27 Oct 2009 07:38:04 -0700

Subscription music services have struggled to persuade consumers to pay for access to unlimited virtual collections of music. But what if the collections were virtual and free?

That's one of the intriguing questions raised by Grooveshark, a streaming music service that offers advertiser-supported music on demand (the ad-free version costs $3 a month). Fresh from its settlement with EMI, the company rolled out a slick new version of its site today, one designed to look and feel something like iTunes (or the much-anticipated Spotify). In addition to a cleaner user interface and more seamless playback, the upgrades include a much easier way to add songs to an online locker without uploading them from your computer -- or paying for them. It's similar to something imeem offers, but I found Grooveshark's version quite a bit easier to use.

You might wonder what's the point in having a personal collection on a site that lets you play any song you wish on demand. For starters, a virtual collection helps manage the huge amount of material available online. Grooveshark relies on users to supply many of the tracks in its library, so it may have multiple versions of a song. Virtual collections also simplify the process of creating playlists. And the fact that it costs nothing to save tracks in an online library encourages people to save tracks they're curious about but not committed to. Sort of like dating. And that's what Grooveshark really is about -- enabling people to sample and discover new artists, then share their discoveries with friends. One shortcoming, though, is that Grooveshark (like imeem) doesn't make it easy to save an entire album to a personal collection. And if you want to save a lot of tracks, you have to upgrade to the paid version.

Still, it's easy to see where these things lead. Throw in a mobile application and you've got a comprehensive service -- one that starts to look like a substitute for a conventional music collection. Why assemble (and pay for) your own stash when you can rely on thousands of other people to share theirs with you? Granted, it's no match today for Napster or Rhapsody, which are more comprehensive (especially when it comes to new releases) and offer an editorial layer (descriptions, bios and the like) that's missing from Grooveshark. And it may never be -- those services keep improving too. Nor does Grooveshark, whose automatic playlisting function is a great alternative to radio, provide much help in the car. But it's free, and that price is hard to beat.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow his intermittent Twitter stream: @jcahealey.

Roku multiplies [UPDATED]

Jon Healey — Tue, 27 Oct 2009 06:07:24 -0700

Roku introduced the first set-top box for streaming Netflix movies to the TV set a year and a half ago, and the little $100 device was an instant hit -- as was Netflix's streaming service. Since then, the company has expanded the box's capabilities a bit, adding support for high-definition video and the ability to stream movies from Amazon.com and baseball games from MLB.TV. But all that appears to be table dressing for what Roku plans to do in the near future.

This morning, the company added two variations on the Roku Digital Video Player (now called the Roku HD) to the mix: an $80 standard-definition box, which is designed for smaller or older screens, and the $130 Roku HD-XR, which adds 802.11n capabilities and a USB port. The latter isn't enabled yet, but it suggests that the player will be able to support movie download services such as Roxio's CinemaNow -- a nice solution for people who want better picture quality than their broadband connections currently support.

I've been playing with an HD-XR on loan from Roku, and like its predecessor it's a breeze to set up -- remarkably so, considering that it's a networked device. The picture quality was very good for Netflix and Amazon, although I was disappointed to find that my 5 mbps broadband connection from AT&T wasn't fast enough to handle either source's high-def streams. The most intriguing thing was the promise of a "Channel Store" where users can go to add more sources of online video. The player's start-up guide gives instructions for using the store, but it's not yet enabled. The company says it will add the store "later this fall" as an automatic update to all its units, but it provided no details about the contents.

Company executives have talked in the past about their ambition to provide a platform for all manner of online video. Unlike some other set-tops, the Roku players support Adobe's Flash video format, which Hulu and many other sources of video online use. Of course, Hulu's owners have been notoriously reluctant to support Internet-on-TV technology for fear of harming the cable TV companies that figure prominently in their business models. But there's intense interest among tech companies in providing a bridge from the Net to the TV, so it's going to happen with or without the networks' support. For example, DivX and Rovi, two software developers with broad partnerships among consumer electronics manufacturers, also are positioning themselves to provide a platform for online video in set-tops and TVs, as are Boxee, Apple and Microsoft.

One other quick point: I fully expect telephone companies to partner with a set-top maker like Roku. Nothing made me want to upgrade to an even higher tier of DSL more than seeing the admonition on screen that I couldn't play the HD version of an Amazon movie. AT&T and Verizon might not be keenly motivated to team with Roku, given that they're trying to sell their own versions of cable TV, but there are hundreds of other smaller telcos that don't have that kind of conflict. That's fertile ground not just for video-on-demand players like Roku and ZillionTV, but also full-blown cable replacements such as Sezmi, which is expected to begin deploying in Los Angeles soon.

Updated, 10:20 p.m. Oct. 28: Roku informed me that a software bug may have prevented me from watching streams in high definition the first time I used the device. As it happens, the company was right -- having left the box on for a while, it now streams in HD (wirelessly, connected to an 802.11g router) without a flinch. And the picture quality is quite good, although my less-than-acute vision makes me a charitable audience when it comes to HD images.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow his intermittent Twitter stream: @jcahealey.

Lala snips some of the ties that bind Web songs

Jon Healey — Fri, 23 Oct 2009 18:39:17 -0700

Lala.com's new deal with Facebook and its rumored partnership with Google could introduce millions of music fans to the "Web song," the cheap but, umm, not universally loved format that Lala pioneered. For the uninitiated, Web songs (which sell for 10 cents each or about a buck for an album's worth), can be played from the Lala site but not downloaded, burned onto CD or otherwise moved. (Lala also sells conventional, full-featured MP3s for 89 cents.) Some might consider 10 cents a fair price for online access to a song; for others, it's a ripoff in comparison to free on-demand services such as iMeem, Grooveshark and the much-anticipated Spotify. The critics' biggest complaint is that people who buy Web songs can't listen to them when they're away from a computer or disconnected from the Net.

Lala may soon fix that problem, however, with a free iPhone app that enables people to play their Web songs on the road. It works even when stuck in an AT&T dead spot (more on that in a bit). The app, which still has to be submitted to and approved by Apple Inc., can also be loaded onto an iPod Touch. I saw a demo this week and it's quite slick. Users can find tracks or albums from Lala's 8-million-song catalog and play them with minimal delay, view their Lala news feeds to see and hear what their friends are listening to, share songs with Facebook friends, and add web songs easily to their Lala lockers. The app also stores up to 200 of songs on the phone -- for now, it's the ones most recently played by that user, but in the future Lala plans to give people more control over how to fill that cache. Those songs can be played even when you're not online or connected to AT&T's network -- such as when you're on a plane.

Being able to play Web songs with an iPhone dramatically improves the value proposition, at least for iPhone users. (Lala Chief Executive Bill Nguyen said the company was "excited" about the BlackBerry platform but doesn't have an app available for iPhone rivals yet.) Of course, some people will still object to the notion of paying for music that comes with a diminished set of rights. But then, 10 cents a track is a steeply diminished price.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

The Hollywood plot to turn DVD renters into buyers [UPDATED]

Jon Healey — Fri, 23 Oct 2009 13:09:30 -0700

My colleague Ben Fritz reported today that some of the major Hollywood studios are mulling a plan to raise revenue by making people wait longer to rent movies. The goal would be to boost sales by creating a short window for home video sales before titles become available for rent. The strategy wouldn't work unless the big video rental businesses cooperated, obviously, so the studios would have to buy them off by letting them buy discs at a deeper discount than they do today.

Ben's a news reporter, so he couldn't state the obvious problem with this idea. It's crazy.

I understand that the trends aren't encouraging for the studios. DVD sales are dropping, and delaying rentals might -- might -- reduce the momentum enjoyed by lower-margin rental services such as Redbox's $1-a-night kiosks and Netflix's monthly subscriptions. But the studios' plan is based on the idea that consumers are more sensitive to delay than they are to price. It's true that most of the demand for home video titles is exhausted quickly. But it's absurd to assume that buying and renting are interchangeable in consumers' minds, and that people who ordinarily might rent a title would buy it if that meant they could have it sooner. Maybe I'd see the world differently if I were on a Hollywood executive pay scale, but $3 to $5 strikes me as a much different price point than $15 to $25. Think about it. How often do people go to Blockbuster looking to rent a particular movie and, after finding all the rental copies taken, decide to buy a copy rather than rent something else?

If Hollywood wants to encourage buying instead of renting, it has to make purchased product significantly more valuable than the rented one. This isn't a particularly easy problem to solve, given that video rental stores have access to the same discs that everyone else has. Some studios have been selling the major rental chains (presumably cheaper) versions of their movie discs stripped of the extra features, but the implication is that the missing features weren't all that compelling to start with -- otherwise, renters would demand them and the rental stores would comply. Nevertheless, the advent of connected disc players opens up a range of possibilities for the studios to provide more content and a better experience to buyers than to renters.

Such an approach would focus on generating consumer demand rather than frustrating it. In an era of expanding entertainment choices and intense competition for consumers' time and money, any move to make it harder for people to get content on the terms they prefer seems self-defeating at best.

Corrected, 1:27 p.m.: The original post said that, "with rare exceptions, there's no differentiation between the copies Blockbuster rents and the ones it sells." In fact, Blockbuster and other video chains have been buying stripped-down versions of DVDs for their rental services, as the corrected post now states.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Photo credit: Justin Sullivan / Getty Images

New adventures in pay walls

Jon Healey — Thu, 22 Oct 2009 18:10:36 -0700

Disconcerting news, Hulu users: Broadcasting and Cable reports that new board member (and News Corp. Deputy Chairman) Chase Carey says Hulu must start charging for at least some of its content. The change could come as soon as next year, he told B&C's Claire Atkinson, although he also said that the pay wall might be limited only to special or advance programming. Said Carey, "Hulu concurs with that, it needs to evolve to have a meaningful subscription model as part of its business." (Hat tip to Gizmodo and TV Week.)

This isn't a huge surprise; my colleagues Dawn Chmielewski and Meg James reported back in May that Hulu was considering tiers of programming -- some free and some paid -- to attract some cable networks that had been reluctant to share content with the site. (They explored the idea further earlier this month, in the wake of Comcast's talks to buy Hulu co-founder NBC Universal.) But it reflects how eager broadcasters are to collect money from distributors to supplement what they take in from advertisers. And if the fees were limited to programming that wasn't otherwise available online, or to features that Hulu hadn't previously offered, then they wouldn't seem inherently unreasonable. That doesn't mean people would pay them, of course -- they have plenty of other ways to be entertained online for free. But at least Hulu could make the case for the fees with a straight face.

Meanwhile, out in Long Island, Newsday -- a tabloid that Cablevision bought last year from the struggling Tribune Co. for $650 million -- announced that it would charge non-subscribers $5 a week to read the paper online. Pricey! But the paper will be free to Cablevision's broadband subscribers too. Given that Cablevision says 75% of the Long Island market subscribes to Newsday or its broadband service, if not both, there aren't many local readers left to alienate. Still, you have to wonder why any company thinks it can increase the price of a product without increasing its value to customers. Oh, wait -- Cablevision is a cable company.... Never mind.

(Full disclosure: Tribune Co. owns the Los Angeles Times.)

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Net neutrality: Let the wild rumpus start

Jon Healey — Thu, 22 Oct 2009 14:58:07 -0700

As expected, the Federal Communications Commission agreed today to propose a set of Net neutrality rules based on the six principles that Chairman Julius Genachowski laid out in a speech last month. (For more background, see the FCC staff's presentation on the proposal.) Those principles would bar broadband providers from blocking customers from the content, applications or services of their choice; preventing them from connecting with the devices of their choice; discriminating unreasonably against any specific content, application or service; and concealing network management techniques in a way that prevents Web users from operating freely. There are at least four notable caveats, In a win for Hollywood, the protections would apply only to legal content and services, and Internet service providers would still be able to block the exchange of infringing material. ISPs would still be able to conduct "reasonable network management," including weeding out spam. The new rules wouldn't trump ISPs' obligations to cooperate with public safety officials. And the commission would permit ISPs to dedicate a portion of their bandwidth to "managed" services, such as pay TV channels or Internet phone calls. What services would qualify and how much bandwidth could be reserved remain to be determined, in what may be the most fiercely debated part of the new rules.

Some of the biggest broadband providers and their allies in Congress question whether the commission should adopt any rules, period -- and whether the FCC even has the authority to do so. For example, AT&T tried to derail the proposed rules in advance of the meeting, and its opposition isn't likely to diminish as the formal rule-making process goes forward. These opponents have found a sympathetic audience in the commission's two Republicans, Robert McDowell and Meredith Attwell Baker, who gave only partial support to the notice of proposed rule-making. McDowell and Baker said they welcomed the chance for a thorough public discourse on how best to maintain an open Internet but doubted that government regulations were the right course. They also questioned whether there is a problem here for the FCC to fix, noting that the commission has found only a handful of incidents of ISPs behaving in an anti-competitive way.

In McDowell's view, having more competition among broadband ISPs is the solution, and that competition is rapidly emerging. But the wireless providers he's counting on can't match the ever-increasing speeds deployed by cable TV operators and wired telephone companies. Given that there is virtually no competition within each market -- not many people have more than one cable provider or more than one local telco to choose from -- a duopoly will continue to reign over truly high-speed Internet services for years to come.

One other point emphasized by McDowell is that Internet users want ISPs to prioritize some bits (e.g., video streams) over others (e.g., e-mail). That gets to the question of what constitutes "reasonable" network management, and McDowell offers a useful way of thinking about this issue: what the commission should be concerned about is management techniques that are anti-competitive, rather than those that simply treat one type of traffic differently than another.

I think the commission should also be concerned about management techniques designed to make content, application or service providers pay more for the ability to reach their customers online. It's worth remembering that Web-based companies started lobbying for Net neutrality rules after executives at broadband companies complained about the bandwidth consumed by online video services. They warned that they would need to spend heavily to increase the capacity of their networks, and said that companies like YouTube (now a part of Google) should bear some of those costs. But YouTube isn't a "free rider" -- it has invested heavily in the servers and bandwidth needed to deliver its bits to its customers' ISPs. The problem for those ISPs is that their customers happen to demand a lot of bits from YouTube and other online content providers. In other words, the issue isn't what YouTube is supplying; it's what broadband customers are demanding. Is it really YouTube's or Netflix's or Sling's fault that ISPs are having trouble keeping their bandwidth promises to their customers?

The effect of these rules may very well be that ISPs look for solutions on the demand side of the equation, not the supply side. That could mean higher monthly fees or surcharges for those who are the heaviest users. And with so little competition among ISPs, it's reasonable to worry about gouging. On the other hand, having ISPs deploy a "fast lane" for content providers willing to pay extra for higher priority could be powerfully anti-competitive. Google can afford to pay extra, but can the start-up that wants to be the next YouTube? Universal Music Group could pay extra, but could an indie band? That's why focusing on the companies supplying bandwidth-intensive apps is more problematic than on the consumers demanding them. It's also why the commission's exploration of the "managed services" issue will be so contentious. These services are the ones that would be allowed into the fast lane, making them the exceptions that could swallow the rule.

Photo: FCC Chairman Julius Genachowski, announcing his Net neutrality principles in September. Credit: Mark Wilson / Getty Images

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

The Internet: a place to pay for music?

Jon Healey — Wed, 21 Oct 2009 18:37:11 -0700

The Internet has been a decidedly mixed blessing for the music industry, encouraging people to listen to more songs and discover more bands but also to buy fewer recordings. One reason is that there's been a disconnect between where people go online to find and hear music, and where they can pay for it.

Two pieces of news today suggested that the industry may soon turn more of that burgeoning consumption into revenue, although neither one is a sure thing. TechCrunch, among others, reported that Google -- the site that millions of music lovers use to find bands and songs online -- is poised to launch a music service. The venture, which is set to be unveiled next week, reportedly will combine Google's search capabilities with streaming and purchasing functions from Lala.com and MySpace's iLike. Meanwhile, Facebook -- the planet's most popular social network -- has chosen Lala to power a new music-gifting service. Starting Thursday, users will be able to send their pals MP3s or Lala "websongs" (streamable songs from an online locker) in addition to the usual array of virtual gifts.

By putting the ability to hear and buy music where the masses spend time online, Google and Facebook could help convert more of the Internet's free music consumption into revenue. In both cases, users won't have to pull out their wallets to generate royalties for labels and artists -- Google would presumably share revenue from the ads it sells around its music service, and Facebook would automatically ding its users' credit cards for the music gifts they send. According to Lala CEO Bill Nguyen, Facebook users already spend $50 million or more annually on such gifts as virtual plants and pictures of birthday cakes, which sell for about $1 apiece. So it's reasonable to assume that they'll spend 10 cents to a $1 sending people songs. (Note to the Beatles: Now's the time to license "Birthday" and "Yesterday" to Lala.) Nguyen is so bullish on Facebook's music gifts that he said it could bring in "an order of magnitude" more revenue for the company. He added, "This may be the most significant thing since the ringtone." (He declined to comment on the Google reports.)

That's hyperbolic, but Facebook certainly is taking a lot of the friction out of buying music for a pal. Not only does it tell users about their friends' birthdays and other significant events, it also makes it easy to search through Lala's catalog of 8 million songs for just the right sentiment. And the 10-cent charge for streamable tracks is practically painless, especially when it's added to the user's tab automatically, Google's advantage, meanwhile, is that it's extremely well positioned to serve music fans and the advertisers who want to reach them.

Still, it remains to be seen whether Google pursues a pure advertiser-supported model, à la MySpace Music and the much-hyped Spotify, or if it is more focused on driving sales through social-based discovery and low prices, à la Lala. As NPD analyst Russ Crupnick pointed out recently, free advertiser-supported services are cannibalizing digital music sales. That's true in part because advertisers won't pay much for banner or display ads on a music service that people use as background music. So if Google goes the unlimited-free-music route, it's an open question whether it would be able to generate enough revenue from advertisers to make its service a net plus for copyright holders.

My guess is that it won't. At a panel discussion today about new music formats at Digital Hollywood in Santa Monica, iLike CEO Ali Partovi spoke highly of Lala's model of one free listen. But he also said it was important to go beyond mere 30-second samples, which has been one of iLike's limitations. Said Partovi, "If you let them listen to the full song, they're more likely to buy."

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Comcast, 1Cast and Boxee

Jon Healey — Wed, 21 Oct 2009 07:23:48 -0700

Two seemingly unrelated announcements this week illustrate the intensifying pressure on cable TV's business model. Comcast announced this week that it would make more cable-TV programming available free through the Internet by the end of the year but only to people who get broadband and cable service from Comcast.

According to PaidContent.org, the additional programming includes fare from HBO, TNT and TBS, which have kept most of their shows off of Hulu and other online TV sites. The move might dissuade a subset of Comcast's customers from dumping cable in favor of free online TV but won't charm the ones who get their broadband from a phone company.

Granted, the masses still prefer to get their TV shows from cable and satellite operators rather than Hulu because they bring it to the TV, not the PC. But the momentum behind free online TV is unmistakable -- there are new devices, such as Netgear's Digital Entertainer Live, that make it easy to bring online video to the big screen in the living room, older devices such as the Roku Video Player with ever-expanding capabilities and services including Hulu and Netflix that are continually expanding their libraries of free content.

So here's the second announcement. 1Cast, a self-styled Hulu for news videos, unveiled a new partnership with Boxee, a program that provides a user interface for online video streams that's optimized for a TV set. The deal adds an important element to Boxee's entertainment-heavy lineup, while giving 1Cast a route to TV screens.

1Cast's approach is novel for an online news aggregator -- it strikes revenue-sharing deals with networks, rather than just monetizing the feeds that are freely available online. CEO Anthony Bontrager said his company gets clips directly from the networks in "near real time" -- typically within minutes of their appearance on air. Visitors to the 1Cast site can browse through thumbnails of the most recently added clips, or they can use the site's search function to gather all the clips related to a given topic. They also can create virtual newscasts on the topics of their choice that are dynamically updated whenever new material arrives. Or they can watch what other users have been watching or saving.

In other words, it's the Internet's remix power brought to bear on the TV news industry. It's not for people who like having someone else decide what the most important developments of the day are or who the most credible speakers might be. Instead, it's for those who want to be their own news directors or tap the collective judgment of the crowd and who like the idea of being able to view multiple perspectives on the same story. 1Cast draws from more than a dozen sources, including CNBC, Fox Business, Bloomberg, the BBC and MarketWatch. It's also expanding into entertainment news -- it just added clips from E! Entertainment and Style. What's in it for them? In addition to the shared revenue -- 1Cast adds post-roll advertising and some interactive overlays to the clips -- Bontrager said networks like the idea of getting their material in front of viewers who might otherwise be wedded to a competitor's channel.

One interesting tidbit about 1Cast's users: The big screen doesn't appear to be as important to them as the mobile one. Bontrager said viewers typically spend 12 to 15 minutes watching 1Cast on a PC, but the average session time on mobile (iPhone or Android phones) is 36 minutes. Sure hope they're not watching while they drive. ...

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

ZillionTV gets a new CEO

Jon Healey — Tue, 20 Oct 2009 18:53:00 -0700

TV-over-the-Internet start-up ZillionTV changed its leadership today, bringing in a new chief executive to take over for Mitch Berman. The new guy is Jack Lawrence, formerly head of North American operations for Hong Kong toy maker Corgi International. Berman is staying on as executive chairman, he said in an interview.

Start-ups frequently change CEOs in mid-stream, often because the person with the original vision isn't the one with the managerial chops to make it happen. Those are two different skills, after all. But the change at Zillion of Sunnyvale, Calif., is sure to raise eyebrows because of extensive recent layoffs that had one former-employee-turned-blogger suggesting that the company was on its last legs. (The blogger, Brandon Wirtz, offered a similarly dismal spin on the news about Lawrence.)

Berman said the switch in roles was his idea. He wanted to hand the reins to Lawrence -- a longtime veteran of the satellite, cable TV and telecommunications industry -- because the "constant running around and raising money" had been taking too great a toll on his quality of life and his company's momentum. Lawrence will take over the fundraising duties, leaving Berman to strike the deals with content providers, advertisers and commercial partners that are crucial to Zillion's survival.

Unfortunately, Zillion isn't disclosing much to reassure people about its prospects, at least not yet. Berman wouldn't say how much money the company had raised (although Multichannel News reported that Zillion had collected more than $18 million by the end of last year), who its distribution partners were, how many titles it had in its library or what content deals it had signed (granted, the company counts five Hollywood studios among its investors). As for the layoffs, Berman said the company has morphed from a technology developer into a media and marketing operation, and so there was no work left for some employees to do.

He said more confidence-building announcements were soon to come. The company launched last month in communities where it doesn't have an ISP partner, offering the service to anyone who agrees to pay the one-time equipment fee of $99. But Berman wouldn't say where those were, nor did he disclose how many customers had signed up. So there are plenty of reasons to remain skeptical about Zillion. Nevertheless, I'm paying attention to the company because I'm intrigued by its business model. Offering a subscription-free twist on online video-on-demand, Zillion says its customers will be able to buy, rent or watch movie and TV programming for free in exchange for viewing personalized commercials. It's not exactly a replacement for cable TV, nor is it a gateway to all the video riches the Web has to offer. And the most innovative aspect of the business model -- free viewing with targeted ads -- still has to be proven before Zillion is likely to get the studios' most compelling content. Yet its user interface is great, and the picture quality it demonstrated this year was impressive. So stay tuned.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

AT&T vs. Google on Net neutrality

Jon Healey — Tue, 20 Oct 2009 18:05:54 -0700

Trying to stoke grass-roots opposition to Net neutrality regulations, AT&T lobbyist Jim Cicconi sent an e-mail to company employees urging them to blast the idea on the Federal Communications Commission's blog. And after reading Cicconi's description, I'm fired up too! According to Cicconi, the FCC wants to hurt AT&T and help ... Google! Of all the nerve!

Of course, that's not exactly what FCC Chairman Julius Genachowski has in mind.

Cicconi's note was published by the Actuarial Outpost blog. Here's my favorite part:

The FCC shouldn't burden an industry that is bringing jobs and investment to the country, but if it is going to regulate the Internet it should do so fairly. The goal of the FCC should be to maintain a level playing field by treating all competitors the same. Any new rules should apply equally to network providers, search engines and other information services providers.

That's a bit like saying that any new equal-opportunity rules should apply not just to employers, but to the people they hire. Or that fair-housing laws need to be extended to renters....

The point here is to provide rules to prevent gatekeepers from emerging online, limiting the applications or services that people can use. The only companies with the power to do that are broadband ISPs, which provide the 21st century equivalent of a dial tone. Google can't stop people from using Yahoo's search engine or Skype's voice-over-IP services. An ISP can. Not that it would do something so brazen (OK, some wireless phone companies have blocked Skype from their data networks), but it might manage its network in a way that gives its partners' customers a better experience than their rivals can.

Another snippet from Cicconi's note:

Network companies have to be able to manage their networks to ensure the most economical and efficient use of bandwidth, and provide affordable broadband services for all users. Network management is essential for consumers to enjoy the benefits of new quality-sensitive applications and services. The FCC rules should not stop the promise of life-changing, cost-saving services such as telemedicine that depend on a managed network.

In other words, Google is trying to kill your grandmother! Larry Page, Sergey Brin and Eric Schmidt: the new death panel. Ahh, we kid because we love. Here's what Genachowski had to say on this topic last month, in his speech outlining his six proposed Net neutrality principles:

I also recognize that there may be benefits to innovation and investment of broadband providers offering managed services in limited circumstances. These services are different than traditional broadband Internet access, and some have argued they should be analyzed under a different framework. I believe such services can supplement -- but must not supplant -- free and open Internet access, and that we must ensure that ample bandwidth exists for all Internet users and innovators. In the rulemaking process I will discuss in a moment, we will carefully consider how to approach the question of managed services in a way that maximizes the innovation and investment necessary for a robust and thriving Internet.

That's cautious bureaucratese for "I don't want to bar managed services, but I don't want to create a loophole that undermines the rule, either."

Here's a final bit from Cicconi's note:

Over the last few weeks an extraordinary number of voices expressed concern over news reports that the Federal Communications Commission (FCC) is poised to regulate the Internet in a manner that would drive up consumer prices, and burden companies like ours while exempting companies like Google.

Drive up consumer prices how? By enabling the commission to stop broadband providers from discriminating against legal applications or content online? Bear in mind that the rules wouldn't stop ISPs from managing their networks to combat congestion. They would simply say the management techniques couldn't pick winners and losers -- they'd have to be content- and application-neutral.

Oh and by the way, Google isn't a broadband ISP (even on April Fool's Day). Should it become one, it would no longer be exempt. But for some reason, Cicconi thinks Google is a compelling villain in this drama. You would think a company that encourages people to use the Internet for just about everything in life would be a powerful ally to a company trying to sell wired and wireless connectivity (and iPhones). But that would clearly be wrong. I guess AT&T won't be bringing out an Android phone any time soon.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

From the Net to the TV screen, with help from Netgear [UPDATED]

Jon Healey — Fri, 16 Oct 2009 05:00:00 -0700

What I want most in life, aside from world peace and Jack Nicholson's Lakers tickets, is an inexpensive gadget that can bring the rich world of online video to my TV set.

Netgear's Digital Entertainer Live (aka the EVA2000) isn't that device. But it comes tantalizingly close -- close enough, perhaps, to satisfy the needs of some avid online video fans. It also brings into focus the technical and design problems that need to be solved before the living room TV can be as friendly to Internet video as the PC in the den.

The company gave a preview of the device at January's Consumer Electronics Show, positioning it as an inexpensive yet versatile link between the Web and the TV screen. By the time it started selling the EVA2000 in mid-September, however, Netgear had pared back its capabilities a bit. The box could still connect directly to YouTube and numerous other online video sites. But to access Hulu, Netflix and a handful of other popular outlets ...

... the box had to rely on a computer running PlayOn, a media-serving program that MediaMall Technologies sells for $40. The change helped keep down the cost of the device, and arguably made it more future-proof -- the PlayOn software will be easier to adapt to new video formats than Netgear's firmware.

Netgear loaned me a Digital Entertainer Live a few weeks ago, and I've found much to like about it. Setting it up was ridiculously easy -- I plugged it in to my home network (using a Netgear Ethernet-over-power-line rather than the optional wireless adapter), hooked it up to my TV with an HDMI cable and turned it on, and it quickly found its way online. Enabling it to play media stored on my PC took more effort, but not much -- I had to tweak the settings on the PC's Windows Media Player to enable sharing.

Software on the box enables it to connect to YouTube and close to 70 other websites that offer video on demand. Most of these offer snack-size clips of comedy, news, sports and niche topics, but a few offer long-form video. For example, there's Crackle, which carries full-length movies and TV shows (usually stuff from the vaults, not new releases). The amount of content is overwhelming; to make it easier to manage, Netgear offers a nifty search engine to round up clips from YouTube, MySpace, Metacafe, Break.com and Blip.TV, among others. The main weakness of the search is that it's not good at finding full-length material.

The box's built-in software also enables you to download movies from CinemaNow for a fee (typically $3 to $4 to rent, $15 to $20 to buy). The box has no room to store movies, though, so you have to plug a thumb drive or a portable hard drive into a USB port in the back of the EVA2000. CinemaNow's progressive download feature worked like a charm for me the first time I tried it, letting me watch the movie about two minutes after I started downloading it. The second time, though, it was foiled by the dreaded prime-time Internet traffic jam; we had to pause the playback several times to let more bits accumulate. The limits imposed by CinemaNow aren't friendly to renters -- you lose access to the file 24 hours after you start playback, which seems criminally short in comparison to the local video store's terms. But that's not Netgear's fault, or even CinemaNow's -- it's the studios' doing.

The PlayOn software was also simple to install and use, although it mysteriously lost its ability to communicate with the EVA2000 a few days into my testing. I later figured out that when I updated my anti-virus software, it cut off the box's ability to talk to the PlayOn server. (File under "It's Always Something"). PlayOn provided a seamless gateway to videos on Hulu, CBS.com and Netflix (provided, of course, that you're a subscriber). Hulu is a virtual mother lode, providing a huge amount of new TV episodes from the broadcast networks and selected cable outlets. (There's a fair amount of material from the vaults, too.) It also did something my Samsung Blu-ray player can't do: It let me browse Netflix's collection and add to my "instant watch" queue without having to visit Netflix's website via my computer.

That's the good news. Now for the shortcomings. The price -- $179, plus $40 for the not-really-optional PlayOn software -- is twice as high as Roku's evolving digital video player. Roku's box is limited to Netflix, Amazon video-on-demand and Major League Baseball streams, but the company promises more capabilities to come.

Updated, Oct. 19, 5:03 p.m.: Netgear tells me that their website had the incorrect price last week. The true MSRP is $149. And EVA2000 owners purchase the PlayOn software for $30, a $10 discount from the normal price.

Second, the picture quality was disappointing for much of the material. This may not be Netgear's fault -- I have a 50-inch wide-screen set, and some online video clips are hard to watch in full-screen mode even on a 20-inch computer monitor. Most videos from Hulu seemed to be in VHS quality -- better in slow-moving passages, worse in action scenes. Those from CBS.com were noticeably worse, and those from Crackle seemed a little better. The only ones that approached DVD quality were the movies downloaded from CinemaNow. I'd hoped to try out some high-definition streams with the EVA2000, but I couldn't find any. Picture quality may be a universal problem in this market, at least until streaming sites use significantly higher bit rates or more efficient compression technology.

Finally, aside from its search engine, the EVA2000's user interface is an uninspiring collection of menus and folders. It's easy to navigate with a basic remote control, but it can take forever to work your way through a site like Hulu to find, say, the season-opening episode of "30 Rock." The box makes so much content available, it demands an interface that uses smarter menus that take advantage of the whole screen. I'm waiting for gesture-sensitive technology such as Hillcrest Labs' Loop pointer to gain wider use -- that was one of the things I liked most about ZillionTV's demo, although a former employee (now blogging at XYHD.tv) has advised against holding one's breath for that company's service to launch.

These issues are serious enough to make me bide my time and wait for someone like Boxee to find a home on a low-priced set-top. Maybe analyst Phil Leigh is right, and hooking a laptop to a big-screen TV will become mainstream. I will confess to gazing longingly at ads for laptops with HDMI outputs. But darn it, I want something for $150 or less that will let me watch videos not just from YouTube or Hulu, but also from ESPN.com, Cartoon Network and any other site that offers something great. Is that too much to ask?

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

The music industry outlook: still grim

Jon Healey — Wed, 07 Oct 2009 17:05:27 -0700

How low can the music industry go? Analysts speaking at Digital Music Forum West in Hollywood this afternoon suggested that there's more pain ahead for the industry -- much more. On the other hand, they said it's not necessarily a bad time for artists, and things couldn't be better for fans.

Here are a few of the data points thrown out by NPD Group's Russ Crupnick, BigChampagne's Eric Garland and Topspin's James Lamberti:

Fewer consumers are buying music, and the ones who do buy are spending less per year, Crupnick said. The number of buyers fell from about 153 million in 2006 to about 132 million in 2008, with per capita spending dropping from $44 a year to $35. And despite the rapid growth of digital downlads, almost two-thirds of music consumers purchase CDs only. About a quarter buy both CDs and downloads, and 10% are download only, Crupnick said.

He then offered an even gloomier statistic. Although the number of people buying downloadable music is growing, the amount they're spending on average is flattening. And the amount spent each year by repeat buyers dropped from $50 in 2007 to $46 in 2009. Why? One factor is the proliferation of free, advertiser-supported music services, which Crupnick said are cannibalizing digital sales.

Garland said that the optimistic assumption underlying the industry's digital strategies proved not to be true -- as buyers have shifted from full albums to singles, the lower prices per unit haven't prompted them to spend more on music. As a result, total U.S. music revenues have fallen over the last decade from more than $14 billion to just above $8 billion, the lowest level since 1991.

Like Crupnick, Garland noted how much more popular free streams are than paid downloads. Chart-topping songs sell a few hundred thousand downloads weekly, which is less than 10% of the number of times those songs are streamed -- and that's just on legal services. And the industry isn't having much success converting those free listeners into paying customers, Garland added.

Lamberti's outlook was more optimistic, but not necessarily about music sales. Topspin is a music marketing firm that specializes in helping artists promote and sell their products online. The Internet presents a tremendous opportunity for artists and labels to identify and serve a band's biggest fans, offering bundles of goods and premium-priced packages with high profit margins. Topspin artists are seeing average revenue of $18 per transaction, he said -- significantly higher than what a digital download or even a full album would command.

But Lamberti also said that it's important for artists to give music away. Not all of it, necessarily, but real MP3s, not 30-second samples or free streams. Those who do have significantly more success converting listeners into paying customers, he said. The right course is to spend time investing in the relationship between artists and fans, so that relationship can be monetized later.

Another essential, Lamberti said, is to cut costs. In dozens of tests, Topspin found that the money spent on marketing had a negative return on the investment. In other words, it was dollars wasted.

Oddly enough, the panelists' comments didn't deflate the mood in the room. Rather, the underlying message was that there are promising paths for artists and labels to take. They just can't rely on the masses to spend a lot of money building their music collections.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

European import 7digital takes on iTunes in the U.S.

Jon Healey — Mon, 05 Oct 2009 22:10:02 -0700

7digital, an online music retailer formed five years ago in Europe, launched its U.S. outlet today -- the latest MP3 store to challenge Apple's iTunes juggernaut. The most obvious difference between the two stores, at least from a consumer's perspective, is 7digital's prices: single tracks for 77 cents, albums for $7.77. That's more than 20% less than Apple typically charges. The songs also are MP3s, unlike Apple's more idiosyncratic AAC format, and are encoded at 320 Kbps -- a higher rate than used by other MP3 stores, presumably delivering better sound quality. (I say "presumably" because the bit rate isn't the only factor influencing how a compressed music file sounds.)

But higher bit rates and lower prices haven't helped other stores break Apple's stranglehold over the market, and they're not likely to be the key to 7digital's success, either. Instead, the company is counting on partnerships with the likes of LastFM and Spotify, Songbird and WinAmp. Its store is also available as an application for certain BlackBerry smartphones, as well as supporting downloadable freebies for non-music brands (e.g., a promotion that Nestle has been doing in England that enables consumers to download one track for every bar of Kit Kat they buy). CEO Ben Drury says 7digital makes it easy for online music companies and software developers to integrate 7digital's store, giving users a click-to-buy option that doesn't shuttle them off to a different website. That's in sharp contrast ...

... to the click-to-buy services offered by Apple or Amazon.com.

Being the e-commerce partner of choice for other digital music companies is a way for 7digital to build an audience without spending heavily on a marketing campaign. "By piggybacking on their reach, we can grab some meaningful market share," Drury said. Of course, the risk in partnering with a streaming service is that users won't be interested in opening their wallets -- they'll slake their thirst for music by listening to free streams. But Drury says the company's experience with Spotify and LastFM in Europe shows that even users of free music-on-demand services will still buy a fair amount of music.

"The price per unit is definitely plummeting," he added. "People will definitely spend less money on a track-by-track basis.... But the volume of consumption will go up."

Seventy-seven cents is an aggressive price, one that wouldn't have covered the labels' royalties in the early days of downloadable music sales. The labels have lowered their wholesale rates somewhat since then, and Drury predicts that there are many more changes to come in the pricing structures of both the labels and the music publishers. Neither of those groups has struck the right balance yet between the royalties for downloadable tracks and the ones for streams, Drury said. Nor are the labels as interested as they used to be in charging a premium for new releases. Instead, he said, they've put more energy into boosting sales at the lower end of the price range, with some offering steep discounts on albums and other bundles of tracks.

7digital is privately held, with the largest share held by HMV Group, Britain's top music retailer. Selling downloadable tracks throughout Western Europe and Scandanavia, it became the first online music store in Europe to offer DRM-free tracks from all four major record labels.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Netgear offers a networked hard drive for the masses, with a caveat

Jon Healey — Mon, 21 Sep 2009 05:31:00 -0700

The tech industry is gradually persuading Americans to set up home networks, but it's had a tougher time selling consumers on the idea of storing all their data on a single device within their homes. The appeal of "network-attached storage" boxes and "home media servers" has largely been confined to the earliest of early adopters, even as the software to centralize and back up data has become increasingly user friendly. Today, Netgear makes a new bid to sell NAS to the masses, offering the $229 Stora. Its features and price are impressive, but I'm not sure Netgear has come up with a compelling new argument for consumers to go this route. That's because Hollywood isn't ready to play along.

The idea behind a NAS is that it makes all of your digital photos, music and documents available to any device in the home that's capable of displaying them. The emergence of networked TV sets and Blu-ray players means that a NAS can serve content into your home entertainment center, not just the computers scattered around your home. Granted, putting all of those files in one place could have disastrous consequences in the event of a disc failure, but it also makes it easier to back up all that data.

The Stora comes with a 1 terabyte drive ...

... with space for a second drive that would serve as an automatically updated back-up copy. Its software makes it easy to gather media files and documents from computers on a home network, as well as to share them with any compatible device on the network (it follows the DLNA standard for recognizing and communicating with consumer electronics). It also acts as a Web server, enabling people to access their files via the Net when they're away from home. Such features may be found on competing products, but Netgear argues that it offers more capabilities for the money.

The company may overcome the ease-of-use problems that have plagued some of its rivals, but the Stora can't serve as a truly comprehensive digital storehouse because it's flummoxed by DRM. That means it can't store authorized copies of Hollywood movies, whether they're downloaded from an online store such as Sonic's CinemaNow or transferred from a DVD or Blu-ray disc. All of those files come encased in DRM. In fact, they come in one of several incompatible flavors of DRM.

Drew Meyer, Netgear's director of marketing for storage products, said the Stora is "not designed to be the portal through which you stream the stuff you buy from the cloud." Instead, he said, "we fully expect people to rip their Blu-ray discs onto the drive." Umm, but Hollywood hasn't enabled disc ripping -- in fact, it's done everything it can to stop it. Witness the lawsuits against RealNetworks and Kaleidescape, two companies that sold products that ripped DVDs into more secure computer files. Meyer may have been stating the obvious -- people who want to create home-video jukeboxes can easily find disc-ripping software online. Yet that's probably a bridge too far for the average consumer. It's just not as easy to load movies onto the Stora as it is to move MP3 files. And until that day comes, the Stora will have a hard time leveraging the increasing penetration of connected TV sets. I mean, it's nice to be able to view one's digital photos on the big screen in the living room, but that's not as compelling as being able to play any movie instantly from your DVD and Blu-ray collection.

Although I'm not sanguine about Hollywood ever allowing DVD ripping, five of the major studios are trying to come up with a standard that could solve the DRM incompatibility problem for downloadable films. They've formed a consortium, the Digital Entertainment Content Ecosystem, with major tech companies and retailers to settle on formats and procedures that could allow the Netgears of the world to build media servers that support DRM-wrapped Hollywood content. Even the DECE's solution wouldn't enable people to rip the discs they already own, however. And I'm not sure how easy it will be for the DECE to talk consumers into buying a new generation of devices just so they can do a better job of protecting Hollywood's products against unauthorized copying.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

A Zillion here, a Zillion there [UPDATED]

Jon Healey — Thu, 17 Sep 2009 06:12:16 -0700

It looks like the public will have to wait a bit longer for ZillionTV, but when it does arrive, it will be available in more places. CEO Mitchell Berman announced this morning that privately held ZillionTV Corp. had added a new element to its Internet-on-TV distribution strategy: In addition to offering its on-demand programming through Internet service providers, Zillion will serve consumers directly. To promote both approaches, Berman said the company is working with consumer electronics manufacturers to embed enabling technology in their Internet-enabled TV sets and set-top boxes (e.g., Blu-ray disc players). These devices won't become available until the second half of next year, however; nor does the company expect to move beyond trial deployments with ISPs this year.

In an interview earlier this week, Berman said ...

... the company's focus remained on striking partnerships with ISPs -- in particular, telephone companies. (Cable operators, whose pay-TV businesses are ZillionTV's main competitors, have been understandably cool to Zillion, although Berman said he continues to try to strike deals with them.) For telcos, Zillion serves two purposes: It gives them a video service they can bundle with their phone services at no extra charge, and it encourages their customers to sign up for higher DSL speeds. But Berman said Zillion wanted to be able to promote its service to everyone in the country, which led to the decision to offer its service directly to the public in areas where it has no ISP partner.

The biggest factor holding back the public launch of the service, Berman said, was the market crash. But he also said it took time to get the service to the point where it was ready for the market. "We really want to make sure we can insure a great, television-quality experience," he said. "Once we do that, then we're close. Second, it is making sure the content is really excellent. We're almost there." To maintain picture quality, Zillion has developed a distributed network of servers to store programming closer to viewers. And on the content front, the company has signed deals with 60 studios and networks, including five of the Hollywood majors (Disney, Fox, Warner, NBC-Universal and Sony) and the Weinstein Co.

Programming, however, remains a potential trouble spot for Zillion. The company plans to charge no subscription fees; instead, its customers will be able to view programs on demand with targeted advertising or by paying for them on an a la carte basis. But the studios and networks have withheld some of their more popular programming -- HBO, for example -- from TV-on-the-Internet services for fear of undermining the revenue generated by cable and satellite subscribers. That's the impetus behind TV Everywhere, Comcast and Time Warner's effort to enable networks to make programs available online only to existing pay-TV subscribers.

Berman said TV Everywhere "affects us in a very big way." Nevertheless, he said, some programmers "are saying `OK, we're going to give this a shot.' Is there going to be cannibalization? Yes. Am I trying to mitigate as much of that as I can? Yes. Do I believe that you will not only survive but prosper in this new world if you give this a chance? Yes." Yet some programmers are staying on the sidelines, waiting for Zillion to show that it can create a growing source of revenue.

Corrected at 9:08 a.m.: The original post stated that ZillionTV was a TV-on-the-Internet service from the privately held start-up Vaenco, A company spokeswoman pointed out that Vaenco's ZillionTV venture is a separate Internet-on-TV project in Canada. There is no relationship, she said, between the U.S. ZillionTV (www.zilliontv.tv) and the Canadian version (www.zilliontv.com).

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

Albums aren't dead yet, at least on EMusic

Jon Healey — Wed, 16 Sep 2009 17:38:19 -0700

Not long after Napster's song-swapping software arrived in 1999, CD sales started what now appears to be an inexorable slide toward zero. It's not just the fact that Napster helped people copy songs free from other Internet users; it freed consumers from having to buy whole albums in order to get the one or two tracks they really wanted. The iTunes Store did the same thing for music buyers.

But is the album dead (for more than just Radiohead, that is)? Today, EMusic -- a subscription service that offers bulk discounts on MP3s -- announced that full-album downloads made up 72% of its sales over the last year. That's up from 69% since 2006. The music industry as a whole is headed the other way, with digital track sales climbing and albums dwindling. Twice as many singles were sold in 2008 than CDs and digital albums (although if you assume the average album had 12 songs, albums still accounted for about 80% of all tracks sold, according to Nielsen SoundScan's numbers). Meanwhile, Apple says the split on iTunes is about 50-50, with half the tracks sold as individual downloads and the other half in albums. So EMusic is clearly doing something better when it comes to moving albums than Apple, despite the absence of liner notes or special packaging.

EMusic suggests, and Billboard's Glenn Peoples agrees, that the site's album-centric layout and editorial content make the difference:

EMusic encourages complete album purchases with editorial features that place albums in context, including career surveys of leading artist's catalogues ("Icons”), examining an artist's peers and influencers ("Six Degrees”), and overviews of genres, labels and favorites ("eMusic Dozens”). Additionally, eMusic's album and artist pages include related artist information from YouTube, Flickr and Wikipedia.

More important, I think, are two other factors. First, EMusic subscribers are avid music fans. They commit to spending $12 or more a month to buy MP3s that, until July, came exclusively from independent labels and artists. (The company added older Sony releases in July, around the same time it announced the latest price hike for new subscribers.) Fans are less likely than casual listeners to be satisfied with one or two tracks from an album -- they want to hear the whole mix. And second, the significant discounts provided at EMusic encourage people to spend more freely. An album on EMusic costs the equivalent of $4 to $5, depending on the user's subscription plan, and that price isn't much of a leap from two 99-cent downloads on iTunes.

I wonder, though, if EMusic's last few price increases will eventually make people much more particular about their downloads. The company is eliminating the generous annual plans that allowed music fiends such as myself to download 65 songs for about $14 a month. Instead, the plans will have lower monthly rations, and per-track prices will average 40 to 50 cents. When you only have 24 tracks, you're much less likely to download a full LP on a whim. EMusic tried to soften the blow of the lower monthly allotments by announcing that some albums would be offered as bundles, enabling people to, for example, use only 12 credits to download all 16 tracks of Sloan's excellent "A sides win" LP. And full-album downloads have actually increased since then as a percentage of EMusic's sales, to 75%. Unfortunately, some labels (cough cough Sony cough cough) are using the bundling tool to charge more for full LPs than they would have been able to without it. For example, six of the nine tracks of Michael Jackson's "Thriller" are available only with a full album download, which costs 12 credits. You can probably guess the six tracks.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.