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Changes to business digitisation brings

  • Apple Avoids French Courts Opening FairPlay DRM

    VirginMega, a joint venture between Virgin France and local media company Lagardère, has failed in its legal attempt to get Apple to license it DRM technology.

    VirginMega claims that Apple’s refusal to license its FairPlay technology – the Digital Rights Management (DRM) system that allows songs from the iTunes store to be played only on iPods – is hampering the expansion of its digital music download market. The retailers complaint was ruled to be short on convincing evidence, according to the French Competition Council.

    The problem, as VirginMega sees it, is that as its own online music service uses Microsoft’s audio files format (WMA) and is protected by Microsoft’s DRM technology, it isn’t supported by Apple’s iPod digital audio player. Since Apple won’t build WMA compatibility into the iPod, and as the iPod is the number one digital audio player worldwide, VirginMega is obviously miffed. Virgin wants Apple to licence FairPlay so it can incorporate the technology into the tracks it sells, thus making them iPod-compatible. The lack of compatibility between rival music services and players will certainly put VirginMega at a ‘disadvantage’, so it’ll have to look elsewhere to improve its sales to WMA-compatible devices.

    Clearly Apple isn’t keen to share. Some feel that Apple may have shot itself in the foot here, as wider content support for FairPlay could help to drive the sale of iPods. By establishing AAC and the FairPlay DRM as a standards, more iPods would be sold and other standards, like WMA, would possibly be left by the wayside. Conversely if other music sites started using FairPlay, Apple would lose the relationship with the music purchaser.

  • FCC Rules VoIP Outside State Regulations

    The US Federal Communications Commission (FCC) has ruled that US states are now barred from imposing telecommunications regulations on Internet phone providers, treating Voice Over IP(VoIP) calls no differently than any other application on the Internet.

    The significance of the ruling is that US states cannot subject VoIP providers to their rules – the difference between a draconian and very light regulatory environment for the carriers. However, FCC Chairman Michael Powell and two of the four FCC commissioners suggested that states still have a role to play – namely to protect consumer interests.

    Of course, Internet phone service providers were pleased with the decision. Vonage, for example, had postponed plans to expand into several rural areas while it awaited the FCC action. It can now ramp up those plans again and expects to announce it has entered those new markets in the next two to three months, according to a company representative.

    The ruling will come as very bad news to the four regional Bell operating companies, which had a near-monopoly lock on local phone services until Internet phone providers came onto the scene. In a statement, BellSouth Vice President Jonathan Banks urged the FCC to “create a similar regime for all IP-enabled networks and services.” He describes the FCC’s decision as a “critical step towards encouraging the deployment” of such services nationwide.

    Cable providers, such as Time Warner Cable, most of which now sell VoIP plans, fear that they’ll be left out of the ruling because their services run over privately owned and operated networks, not the public Internet. “In a perfect world, it would be great in just one proceeding to deal with all the issues, but we can’t do that here,” said FCC Commissioner Kathleen Abernathy. “It would be a mistake to be on sidelines and try and deal with these other regulatory framework issues.”

    However, a tougher FCC ruling would have hurt projections that VoIP services will expand from the 1 million homes foreseen at year’s end to about 10 million by the end of the decade. As traditional phone carriers see more local calls flow over the Internet rather than their own more expensive networks, they have been adding their own VoIP-based services to lure business customers away from those companies that specialise in Internet phone technology.

    On a slightly different note, Communications Commission Chairman Michael Powell said on Tuesday he planned to stay at the agency, possibly through 2007 when his term expires, now that President Bush has been re-elected. Powell, the son of Secretary of State Colin Powell, became a commissioner in 1997 and was elevated to chairman in 2001 by Bush. “It’s been one of my great privileges to serve under his leadership and right now that’s what I plan to continue to do,” Powell told reporters. “I’m happy where I am for the moment”, although he also stated that he plans to stay “no later than 2007.”

    US FCC

  • Novell wins $536m settlement from Microsoft

    Novell, Inc. (Nasdaq: NOVL) a leading provider of information solutions for enterprises, has announced an agreement with Microsoft to settle its claim that Microsoft’s unfair business practices harmed the sales of its NetWare computer operating system in exchange for $536 million in cash. Back in the ’90’s Novell was the prominent networking company. Novell also announced that by the end of this week it will file an antitrust suit against Microsoft in the United States District Court in Utah seeking unspecified damages in connection with alleged harm to the company’s WordPerfect application software business in the mid-1990s.

    Novell believes that its NetWare business was damaged by unfair business practices that gave Microsoft’s Windows a stranglehold on the operating system market. “We are pleased that we have been able to resolve a portion of our pending legal issues with Microsoft,” said Joseph A. LaSala, Jr., Novell’s senior vice president and general counsel. “This is a significant settlement, particularly since we were able to achieve our objectives without filing expensive litigation. While we have agreed to withdraw from the EU case, we think our involvement there has been useful, as it has assisted the European proceedings and facilitated a favourable settlement with Microsoft. With the EU case now on appeal, we are comfortable with our decision to withdraw from the proceeding. There is simply not much left for us to do.”

    The deal has resolved the NetWare matter between the two companies, but they remain at odds over WordPerfect. Novell acquired WordPerfect for $855 million in 1994 with the intention to launch an office productivity suite to compete with Microsoft’s Office. The effort failed, and, two years later, Novell sold WordPerfect to the Canadian software firm Corel for $186 million. Novell says that WordPerfect was victimised by Microsoft’s unfair business practices.

    The suit is based in part on facts proved by the United States Government in its successful antitrust case against Microsoft. In that suit, Microsoft was found to have unlawfully maintained a monopoly in the market for personal computer operating systems by eliminating competition in related markets.

    “We regret that we cannot make a similar announcement regarding our antitrust claims associated with the WordPerfect business. We have had extensive discussions with Microsoft to resolve our differences, but despite our best efforts, we were unable to agree on acceptable terms. We intend to pursue our claims aggressively toward a goal of recovering fair and considerable value for the harm caused to Novell’s business,” LaSala concluded.

    Having been out of the news headline for a long time, Novell are making the most of their current time in the spotlight. With the headlines they are getting currently, they have synchronized the release of their new Office software, called Novell Linux Desktop (NLD), which runs on SuSE Linux. Initially focused to business users it is charged on the basis of a price-per-seat at $50. Using broadband connections, this could, in time be offered to home users.
    Novell

  • London Media Summit: McKinsey’s Five Key Media Trends

    Piracy, technology, brand concentration, fighting for advertising dollars and a new consumer relationship are to be the hallmarks of commercial success in the international media markets in the near term, according to international consulting group McKinsey & Co.

    Michael J Wolf, McKinsey’s Director and Global Leader – Media & Entertainment practice, outlined these challenges at Friday’s the London Media Summit 2004 organised by the London Business School in association with CNN and Deloitte. 

    In a knockabout, amusing presentation, Wolf emphasised that few media groups were generating profits currently and that a new tough approach was required to rebuild shareholder value.  Although the tipping point – when TV channel income from advertising fell below 50% – was some way off, five key trends were emerging within media groups’ strategies to counter ad revenue decline.

    Number one was a marked rise in aggressive competition for advertiser’s dollars. Audience fragmentation and the advertiser’s trend to ‘up’ their mix of below-the-line media spend have left agencies sharing a smaller cake with what’s left flowing to low risk, conservative programme slots. Next was a move from simply owning the content or the means of delivery to owning the audience and the opportunities that give rise to direct merchandising and long term revenues. 

    Technology was the third new and major influence – from the ability of viewers to skip ads with TiVos, to the enhanced ability to connect interactively with audiences, as evidenced by the 100m registered users of Everquest in China. Wolf used the now tired sounding expression ‘lean back or lean forward’ technologies by way of illustrating the diversity of ways now being employed to engage with viewers.

    He then moved onto IP and the risks of piracy before concluding with his fifth trend; brand concentration.  Wolf said more funds would go into developing the best top brands at the expenses of lesser ones. That development would include enhancing the quality of the output and cited HBO as a prime example of where quality led to profitability.                


    :SP: Clearly McKinsey clients are primarily the current Media Majors, the huge organisations that currently control the output and access to the media, not the fast moving, smaller media companies that some feel are coming up to out manoeuvre and potentially bite them. We’re somewhat confused by his view of brand remaining important when anyone who has lived with a PVR for any period of time knows full well that viewers couldn’t care less where the content comes from. These comments also don’t take into account the thinking around the Long Tail. As to the final point on raising quality – we heartily applaud any thing that brings higher quality to the viewer.

    London Media Summit 2005

  • Movie Studios to Sue File Sharers

    The major Hollywood studios have vowed to sue people who illegally download movies from the Internet. In a similar move, to the way the Recording Industry Association of America (RIAA) is using lawsuits to fight online piracy (they have filed more than 6,000 lawsuits against file sharers since September 2003), the Motion Picture Association of America (MPAA) announced that the major Hollywood motion picture studios would be filing hundreds of lawsuits against individuals using peer-to-peer (P2P) file-sharing software to share films online.

    Rather than embracing P2P technology by looking for new ways to generate revenue, such a lowering the cost of movie rentals and DVDs, Hollywood is intent on further imposing its iron fist on movie fans. However, help is at hand. In connection with the music industry lawsuits, the Electronic Frontier Foundation (EFF) has intervened in court to defend the privacy and due process rights of the individuals being sued, although it’s not yet clear whether the MPAA lawsuits will make similar actions necessary. Hollywood is pinning its hopes on federal legislation that would target file-sharing technology. If passed, the so-called Induce Act would close the legitimate-copying loophole and empower the MPAA to sue P2P file-sharing services such as Kazaa, Grokster and Morpheus.

    The MPAA announcement comes on the heels of a recent study by the University of California, Riverside, and San Diego Supercomputer Center that shows that the music industry lawsuits have had no effect on the popularity of file sharing among US users, estimated at over 20 million. Movie studios can’t exactly argue that file sharing is about to put them out of business, as DVD sales grew 33 per cent last year and box-office receipts have never been stronger.

    “These lawsuits are misguided,” said Electronic Frontier Foundation (EFF) Staff Attorney Wendy Seltzer, who has been involved in the music industry suits. “The music industry experience shows that the lawsuits don’t reduce the amount of file sharing. And it’s certainly not good PR to sue movie fans for non-commercial sharing when the studios are rolling in record profits.”

    “In the end, what protects the studios from piracy is the what attracts people to buy or rent movies in the first place – a good product at a good price point,” said EFF Legal Director Cindy Cohn. “As long as you can rent a movie on DVD for $2, movie file sharing is not likely to take a major bite out of studio revenues.” www.mpaa.org

  • First Jailed Spammer Gets 9 Years

    Thirty-year-old Jeremy Jaynes, a US citizen settled in North Carolina, has been sentenced to nine years in prison for sending junk e-mails with fraudulent and untraceable routing information. His 28-year-old sister, Jessica DeGroot, has also been ordered to pay a fine of $7,500 for buying domain names to use for spamming, although a third defendant, Richard Rutkowski, was acquitted of similar charges. Formal sentencing has been set for February next year.

    Prosecutors said Jaynes and DeGroot took advantage of the Internet and America Online (AOL) members to sell bogus products and services, such as a ‘FedEx refund processor,’ which they claimed would allow people to earn $75 an hour working from home. According to evidence, Jaynes received 10,000 credit card orders, each for $39.95, for the ‘processor’ during one month alone. They were convicted under a Virginia state law that limits the number of e-mails mass marketers can send, and like the federal CAN-SPAM Act, forbids them from using fake e-mail addresses. Each was found guilty on three felony charges.

    David Oblon, Jaynes’s attorney, was shocked at the severity of the sentence. ‘Nine years is absolutely outrageous when you look at what we do to people convicted of crimes like robbery and rape,’ he said. It’s been suggested that this ‘excessive punishment’ was because it was the first time the law had been prosecuted. However, during the trial, Jaynes was said to have accumulated a fortune of some $24 million by selling via spam.

    The ‘harsh’ sentence shows the US is serious about spam, a nuisance to millions of users worldwide. But it’s also a major problem for large and small businesses because the thousands of unwanted e-mails can create havoc on company e-mail servers. Some surveys have even suggested that spam represents as much as three quarters of all e-mail traffic, despite laws in several countries seeking to curb unsolicited e-mails. Spam is believed to cost billions of dollars to businesses in software aimed at blocking the messages.

  • Nokia’s First NFC Product – Why it’s Important

    Nokia NFC shellNokia has lifted the lid on the world’s first NFC (Near Field Communication) equipped mobile phone by adding the special NFC clip-on shell to their 3220, a tri-band camera phone that is available in two versions (Euro/Asia & America). With its build-in NFC shell, the phone is the latest step in the development of innovative products for mobile communications.

    NFC is essentially a contactless technology that allows for short-range two-way wireless connectivity using a tag and a reader. Developed jointly by Philips, Sony and Nokia, it is based on short-range (10 cm, 3.9”) radio frequency (RF) technology, an NFC-enabled mobile device lets you access services or operate your mobile device by placing it near a tag or share information by bringing two devices close  to each other. When you’re near a tag, your mobile phone reads the tags content by emitting a short-range radio signal that powers up the tag’s microchip, allowing you to execute an action, such as opening a Web page, calling a number, or sending an SMS. The opportunities for the Media business, in particular advertising are immediately obvious. People passing posters, wanting to find out more information are able to directly request it there and then, at the point of impulse. It could them be immediately delivered by bringing up a Web page of info or received via email for later consumption. Vivendi Universal has also trialed selling tickets to films, simply by placing the phone on a NFC spot on a film poster. Similarly, by communicating with an enabled device such as a TV, the mobile device can send a picture to it  It is currently unclear to us how much bandwidth will be offered by NFC, but we would assume it will be low, being more along the lines of ZigBee than Bluetooth. If this is the case, transferring a 1Mpx image will be a slow and painful process.

    NFC is different from other contactless or RFID technologies in that it has a very short operating distance and also allows two devices to interconnect. The effective distance of an NFC solution depends on the tag design and the reader, but is only a few centimetres in Nokia’s solution.

    The potential benefits of the technology include improved usability, easier access to services and content via physical objects, convenient sharing of digital items between devices by bringing them next to each other – such as swapping electronic business cards with clients – and local payment and ticketing capabilities. This has already been trialed in the Frankfurt transport system.

    “Touch-based interactions will improve the consumer experience of existing services and create new opportunities for users to benefit from their phones. This technology has the potential to significantly improve the way operators provide and users discover and activate different mobile services,” said Gerhard Romen, Head of Market Development at Nokia Ventures Organisation. ‘By introducing the new Nokia NFC shell, Nokia clearly demonstrates strong commitment to offer users an intuitive wireless experience.” Samsung Electronics has also mentioned that it intends to manufacture NFC phones.


    Tech Background to NFC – NFC technology evolved from a combination of contactless identification (RFID) and interconnection technologies. NFC operates in the 13.56MHz frequency range, over a distance of typically a few centimetres. NFC technology is standardised in ISO 18092, ISO 21481, ECMA (340, 352 and 356) and ETSI TS 102 190. NFC is also compatible with the broadly-established contactless smart card infrastructure based on ISO 14443 A, which is supported by Philips’ MIFARE technology and Sony’s FeliCa card.

    Nokia 3220

  • Opera browser is about to get even faster

    Oslo-based Opera Software, best known for its Opera Web browser, has announced that it plans to integrate SlipStream Data’s Web and e-mail acceleration technology into the next release of its desktop Web browser. Set to integrate into Opera 7.60, Opera claims that it will enable users up to six times faster browsing on dial-up and wireless connections, a particularly neat feature for those with limited bandwidth.

    SlipStream Data’s Web Accelerator technology only accelerates certain text and graphics on Web pages, so it won’t speed up everything you do on the Internet. However, both companies claim that with Web Accelerator you will notice a significantly faster experience when you visit Web sites, send and receive e-mail, and perform other Web-based activities. To achieve this speed up, proprietary lossless compression is applied to text, HTML, XML, JavaScript and style sheets. Proprietary image compression is applied to GIF and JPEG images, as well as to Flash content.

    SlipStream also accelerates e-mail traffic (POP3 and SMTP) using lossless compression, but does not speed up file downloads (over FTP or file sharing programs), streaming audio/video and HTTPS (secure Web sites). If you have a slow Internet connection (such as a dial-up or wireless connection) with a bandwidth of less than 300Kbit/s, you should experience a significant degree of acceleration using SlipStream, boldly claims the company.

    However, SlipStream Web Accelerator does not increase the speed of file downloads such as music files, or streaming video or audio media. Opera 7.60 is set to usher in more innovative browsing features – something we’ve come to expect from its developers. The public release of v7.60 is planned for the end of 2004.

    SlipStream is currently supported by over 900 ISPs worldwide, according to the company, with its popularity due to that way that it allows service providers to offer a faster and more flexible way of rolling out value-added services. SlipStream SE (Secure Enterprise) further optimises bandwidth and improves the performance of Web-based applications, accelerating secure access to e-mails, FTP and other critical business data.

    “SlipStream is the dominant acceleration solution provider for ISPs in North America, South America, and Europe,” says Jon S. von Tetzchner, CEO, Opera Software. “Their innovation and reputation for service, makes them an ideal partner. We are eager to work together to deliver an improved experience in installation, operation, and support to enterprises and users wanting more Web speed and performance.”

    “As Opera is known as the fastest browser on earth, the decision to consider the browser for this integration was simple,” says Ron Neumann, President, SlipStream Data. “Our goal is to offer a superior accelerated browsing experience on any platform and Opera’s multiplatform support helps achieve this. This integration gives ISPs increased support and speed for their users, and will also significantly increase the productivity of mobile workers. Such a partnership helps us continue to expand and embed our technology into new markets.”

    As well as its speed, another key factor in Opera’s success that the browser is cross-platform and modular, and currently available for Windows, Linux, Mac OS, Symbian OS, Windows Mobile, BREW, QNX, TRON, FreeBSD, Solaris and Mediahighway platforms.

  • Yahoo Hires Former ABC TV Exec

    What better person to appoint to head your media and entertainment division than a Hollywood executive with shows like ‘The Sopranos’, ‘Lost’, ‘Desperate Housewives’, ‘Wife Swap’ and ‘Boston Legal’ under his belt? Prior to this, he served as co-chairman of the division with responsibility for all creative, programming and business areas of the division, which encompassed Touchstone Television and ABC Entertainment.

    The man in question is former ABC Entertainment Television chairman Lloyd Braum, and he will oversee Yahoo’s movies, TV, entertainment, music, games, finance, news and weather, sports, health and kids businesses. He will also do the negotiating with Hollywood to release exclusive content on Yahoo, as well as developing original new content within the company. It has been reported that he was fired from his ABC post in April following disagreements over the direction and management of the network, which had fallen to fourth place in the ratings.

    His main task will be to convince movie, TV and music companies to distribute more content exclusively on Yahoo. His impressive pre-ABC resume reads like he is tailor-made to do some convincing – chairman of Disney’s Buena Vista Television Productions, president of Brillstein-Grey Entertainment, and partner at the law firm of Silverberg, Katz, Thompson & Braun.

    Yahoo already took the Hollywood route a few years ago when it appointed former Warner Bros. chairman Terry Semel as its CEO in 2001. In recent months, the company has signed several deals to provide related Web content for popular television shows such as NBC’s “The Apprentice” and CBS’ “Survivor”.

    It’s all about getting exclusive content. In September, Yahoo announced that it would produce, host and sell advertising for the official Web site of reality TV show, “The Apprentice,” in which contestants battle to win a job working for real-estate mogul Donald Trump.

  • VoD, NVoD & DVR All to Grow In Europe – Yankee

    Combined Annual VoD and NVoD revenue will increase fivefold to Euro 2.2 Billion by 2008, while DVR service penetration will also increase to 20% of Western European Digital TV Homes by 2008, says Yankee Group.

    Video on demand (VoD) and digital video recording (DVR) are phrases that service providers are getting very used to – because that is where their business is heading, and both will “coexist as complementary options for digital TV customers,” says Jonathan Doran, Yankee Group Broadband & Media Europe senior analyst, in yesterday’s news release.

    Yankee predicts that Video-on-demand (VoD) and its variants will account for an increasing proportion of digital TV revenue in Western Europe, with products like FastWeb and arrivo accounting for a growing proportion of European pay-TV revenue in the next 3 to 5 years.

    Two reports, On-Demand TV, Part 1: VoD Will Grow Europe’s Pay-TV Markets, but Not Much, and On-Demand TV, Part 2: Operators Must Move Fast to Add DVR to Their Digital Proposition, mention some challenges that VoD must face. Cable operators, for example, will have to fork out for digital upgrade costs and provision of customer-premises equipment, while satellite operators won’t be able to provide true VoD services if they don’t have a return path. Furthermore, while services such as Sky+ and PILOTIME are showing strong initial appeal among early adopters, high subscription fees will deter many users.

    But most importantly, Yankee says platform operators will have to recognise that VoD represents an enhancement of the digital TV value proposition rather than a core application, so that although VoD will become an intrinsic part of digital TV, it will only account for a modest share of overall service revenue.

    Operator-provided DVR service faces numerous challenges, Yankee warns, like competition from standalone retail DVR and DVD-R units. However, as equipment prices continue to fall and platform operators increase their marketing push, consumer adoption of DVR service is increasing. “DVR services will be more widely and frequently used by digital TV subscribers than regular VoD offerings that are limited to the less ubiquitous cable and broadband platforms,” says Jonathan Doran.

    It’s still more theoretical than practical at the moment, so many cable operators will have to play it safe and offer both VoD and DVR until a demand pattern is established.