IP Convergence: Beyond VoIP, Beyond Cost Savings - DRM

Network2 vs. Apple TV

Fri, 23 Mar 2007 18:06:20 +0000

Coincidentally enough as I was reading Jeff Pulver’s Network2 Petition for Declaratory Ruling before the FCC, I received an email from Apple touting its new Apple TV. And it reminded me of the checks and balances that exist between network-based services and hardware-based services.

As Jeff describes it, Network2 “provides a free service intended to facilitate growth of a particular kind of Internet Video: original programming created specifically for Internet distribution that is episodic or continually updated and which meets Network2’s standards for technical quality and production value.”

Apple describes Apple TV as follows – “Now all the hit movies, TV shows, music, and podcasts on iTunes—and your photos, too—can be enjoyed in your living room on your big-screen TV, transferred wirelessly from any Mac or PC in your home.”

While the content may differ between Network2 and Apple TV, aren’t they essentially offering the same service? Aside from the professionalism of the content, the only other difference between the services is Network2 is network-based and Apple TV is hardware-based.

But this distinction is starting to have real consequences that the industry and policy makers need to heed. Why does Jeff have to be so concerned with regulation while Apple seemingly could care less? (Actually, I am a little puzzled as to why Jeff filed this petition. He cites a European Commission initiative to harmonize the treatment of all video services, but I am not sure I see that necessarily as a threat to his service and in any event, I do not see a threat here in the U.S. But I guess this is an effective way to garner some press for Network2.) Note as well each party’s interest in net neutrality. Presumably net neutrality will be a very important issue for Network2. Not so for Apple TV because it does not rely on real-time delivery.

Does Apple have the superior business model? Is Apple’s approach to video distribution better than Jeff’s because it is insulated from regulation and efforts by network operators to increase revenue? Is Jeff’s model better because it is not subject to the demands of powerful content providers and plagued by DRM demands?

For regulators the question to ask is whether their policies unnecessarily distort the competitive market and provide an artificial advantage to Apple TV. For telecommunications carriers, the question to ask is whether their actions (such as seeking to charge premium prices for premium delivery) are encouraging hardware-based solutions to which they have limited competitive responses.

Intellectual Property: The New Interconnection Battle?

Thu, 15 Mar 2007 02:37:57 +0000

As the convergence of media, computers, and telecommunications continues, it is not surprising to see an increase in lawsuits over intellectual property. Today, Viacom sued Google and YouTube for copyright infringement. The other day Vonage was ordered to pay $58 million for infringing various VoIP patents held by Verizon. Before that Cisco sued Apple over the iPhone. Last year Research in Motion (maker of Blackberry) agreed to pay $612 million to settle patent claims made by NTP.

Unfortunately, I think these intellectual property disputes are going to be the new interconnection battles of the converged era. Because IP has succeeded in becoming a universal protocol, and there is no dominant network provider (yet), issues of interconnection are far less contentious in the Internet space. Parties are finding marketplace solutions to their interconnection requirements.

So what do you do if you want to get a leg up on the competition? Well, you claim ownership of a key technology as NTP and Verizon did or you claim ownership of popular content as Viacom is doing. Is there really any difference between Verizon denying Vonage interconnection or Verizon denying Vonage use of a technology critical to its service? The effect is the same – Vonage has to pay Verizon or cease offering service. Similarly with Viacom, they may not be able to block people from accessing YouTube, but they can block the content that makes YouTube a desirable address on the web.   And cable television companies have long been accused of leveraging their ownership of content to the detriment of competitors (even if those competitors are incumbents like Verizon).

In the telecommunications industry, interconnection disputes were historically resolved by regulators. Some would argue this did not work very well and should not be duplicated going forward. In the media industry, intellectual property disputes were historically resolved by the courts.   Some of course argue that the current intellectual property laws are flawed and should be changed.

In the computing industry, an open-source movement has arisen to challenge the historical intellectual property model and on the Internet a “creative commons” has developed to challenge the historical copyright model. In the telecommunications industry, efforts at peering come closest to mirroring the efforts in computing and media to disrupt the dominant model.

With so much at stake, it would be easy to predict the outcome of this (the moneyed interests win), but the Internet has enabled a counter-force to rise up and mount a credible challenge to the status quo. It will be interesting to see how this debate plays out, and I suspect one successful business plan on either side of the debate is going to make a huge difference in the outcome.

Bill Gates says, “Internet to revolutionize TV in 5 years”, Are you Ready?

Thu, 01 Feb 2007 15:31:36 +0000

Video over any network is big news, content is available over the internet, over Xbox live, and over your mobile phone.

The entertainment market is moving to a model where users want to be entertained , right now, over the media they select and with the content they like (TiVo , Apple TV, etc.. )

But are you ready to be exposed to targeted marketing at a unprecedented level?

Please take this poll and let us know your thoughts.

Face the Music

Thu, 01 Feb 2007 02:30:12 +0000

There is an interesting article on BusinessWeek.com about a protest (this English-language article contains a link to the protest in Norwegian) filed by the Norwegian Consumer Ombudsman against Apple alleging that the exclusive link between Apple's iPod and iTunes music store violates Norwegian consumer law by preventing iPod owners from playing songs bought from other online services or listening to iTunes songs on rival MP3 players. The article goes on to state that the Dutch Consumer Ombudsman is making similar claims and that a total of seven European Union member countries are looking into the issue.

Recalling my last entry, I really think the sort of exclusivity practiced by Apple is far more pernicious than the potential harms perceived by net neutrality proponents. Apple of course claims their DRM is necessary to secure their partnership with the record labels, but it appears (subscription required) that the recording industry is starting to take a more enlightened view. Let’s hope that the Europeans force Apple to face the music sooner rather than later.

Walled Gardens

Wed, 24 Jan 2007 15:10:33 +0000

A lot has been said about walled gardens on the Internet, especially in the context of the net neutrality debate. What I find interesting is how net neutrality proponents believe they have a “right” to an open Internet, but accept proprietary equipment connected to the Internet. The irony of someone signing a net neutrality petition while listening to his iPod is not lost on me.

The Internet itself is nothing but “a series of tubes”. It becomes useful only when devices are attached. If those devices are all proprietary with no interoperability then of what value is the Internet? So why all the focus on network discrimination and not discrimination in the devices themselves? I suspect the reason is because the belief that the market for devices is competitive while the market for broadband access is not. But I am not sure that argument holds water. AT&T will tell you that the market for broadband access is competitive as well. A customer can select DSL, cable modem, satellite access (DirecTV offers an Internet service), and soon municipal Wi-Fi. But once the customer makes a choice, the service provider essentially has a monopoly on that customer. Isn’t the same true for devices? A customer can choose from any number of brands of MP3 players, but if they choose an iPod, Apple essentially has a monopoly on that customer because of the proprietary technology and digital rights management. Doesn’t that make iTunes its own walled garden in the Internet?

So while there is this great focus on net neutrality, the same or even greater harm can result from proprietary devices and a lack of interoperability. And according to reports, Microsoft’s Vista is loaded with digital rights management that prevents legitimate use of some music and DVDs. Danny O’Brien of the EFF characterizes Vista as “a race to the bottom” started by Apple. Thankfully, EFF has been on top of these issues for some time, but it is time for policy makers to more broadly consider the issue of digital rights management, net neutrality, and interoperability in a holistic approach.

CRAP on URGE

Fri, 19 May 2006 01:34:49 +0000

You would think that when MTV (a music/video company) decided to give Apple (a computer company) a run for their money in the music selling business that they might enter the market in a truly disruptive way. If I were in their shoes I would have looked at some of the things that tick off iTunes users and brought a better product to market. Instead they went the other route...they saw the success of Apple and mimicked it. Their differentiation? They partnered with Microsoft to do it, and created URGE.

An apples to apple[sic] comparison of the two services:
1) $.99 per song on both services
2) URGE offers a $15/month flat rate plan for unlimited music and video downloads, but you can only play the music on your main computer and up to 2 portable music devices. You can't burn the music to CD and if you stop paying the subscription the access to the music you downloaded is gone. If you want to burn music to CD you have to pay the $.99 per song so that you can keep it.
3) URGE music runs on non-Apple devices, iTunes runs on iPods only
4) URGE DRM license allows you to run on up to two computers, Apple allows five computers.

In my earlier blog post DRM is definitely CRAP I pointed out that the CRAP (Content, Restriction, Annullment and Protection) comes from the DRM in the music I get from the iTunes music store, not the device I choose to play the music on. MTV shouldn't have gone after Apple as a whole, but only their music service. The success of iTunes is, in my opinion, a completely seperate thing from the success of the iPod. Just imagine how much more reach their product would have had if they supported iPod's in addition to all the other portable music players.

But no, they had to load it up with CRAP.

I think what amazes me most is that Jake Ludington thinks that MTV is going to be extremely successful because of their music brand. I don't know about the rest of you, but I stopped watching MTV over 15 years ago when they stopped playing music videos. I asked my teenage kids where they go when they watch videos and they said they go to FUSE on the TV and Launch when they're on the computer.

I think MTV will have to rely more on just their brand, since I'm going to guess that they have to rebuild their brand a bit in order to be associated with music again. It's really too bad they didn't try to create a truly unique service that would do that. Instead they got caught up in Microsoft's enthusiasm to crush their biggest competitor (no, not Google, the old foe).

I hope that some day I will be able to download CRAP-free music, but I guess today is not that day.

Disclosure: 4 out of 5 people in my family have a portable music player, and 3 of 4 players are iPods (odd one out is a PSP).

DRM is definitely CRAP

Mon, 27 Mar 2006 22:51:42 +0000

ZDnet's executive editor, David Berlind, has come up with an appropriate new name for DRM, CRAP, or "Content, Restriction, Annulment and Protection" in this article (or actually the transcript of the video).

On an earlier blog entry, I had a good discussion with one of Global Crossing's security experts, Jim Lippard, on the subject of DRM. As was pointed out, the failure in DRM isn't purely about being able to use content on different devices. The fact that I have an iPod and use iTunes does not mean that none of my content will work on my sons PSP. It's the way I get my music that potentially creates a problem.

If I order a CD from amazon.com and burn it into an mp3 using iTunes, I have no problem using that music on pretty much any player. If I download that same album via iTunes online music store (because I am a the type of guy who wants instant gratification and buys on impulse) I can't play that file on the PSP. So, what David Berlind really meant to say was that I shouldn't throw my iPod away, I should throw the apple store away! Gime me an alternative to the apple store that doesn't sell C.R.A.P., and I just might. In the mean time, the apple DRM is, although no convenient, easy to thwart. All you have to do is burn it to a CD, and then re-burn it to MP3. Oh, I know I'm making the audiophiles cringe, but it works well enough.

It's similar to the failure of digital watermarks to secure content. So if DRM, i mean CRAP, is so easy to defeat, why even bother with it? Or maybe we need something better, like Martin Geddes idea.

Whatever the solution, I hope I can keep my new 30GB iPod, because I love it.

DRM rears it's ugly head

Tue, 14 Mar 2006 01:33:14 +0000

At the IPTV show yesterday, one of the key topics discussed in the morning was digital rights management. Will we ever escape this subject? If you thought that the issues were messy enough in the music space, try media. Any one given show may require obtaining rights from not just the studio that made the show, but certain graphics used in the show, the opening and closing credits, the background music, etc. It's enough to make someone go crazy.

And it might be a really big hurdle for new IP broadcast players to overcome if they want to start up. Sounds like managing rights management might be a real niche for another startup, not to mention DRM technology that easily fits into your systems architecture to help manage the business arrangements associated with obtaining those rights.