The WWW and the Holy Grail

Adolph Ochs in 1896 put his slogan on a newspaper, “All the News That’s Fit to Print”. It still survives. Only just barely.

Sound arrived to movies in the late twenties, the silent-film industry and the Broadway theater industry were both broadsided. They never saw it coming. It was a running joke to them.

Radio was king for years. No one thought it would be overcome – there was a radio in every home throughout America.

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Then television started to gain traction in the late forties. Radio scrambled to adjust to the newer media – TV. Then, TV began to replace the radio in homes. Orders for TV sets were up 400 percent in 1949, many of them sold by the most popular shows of their time, (i.e. Milton Berle). Supply could not keep up with demand. Free television was for decades considered an American right, rabbit ears, ghosts and all.

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Then broadcast TV scrambled to adjust to newer media – cable TV. For a while during the reign of ‘Free TV’, “Pay TV” was a joke.   Americans now pay for 24/7 foreign news networks in their cable and satellite packages, news, weather, sports, movies, etc. That which used to be free on broadcast TV was no longer free.

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Then the hammer dropped for everyone. The Internet dawned, the digital revolution.  The Holy Grail of media. This was a change as great as the invention of electricity and the construction of transcontinental railroad. It was large, transformative and caused massively sweeping changes. No one was prescient enough to gauge even remotely how big this change was upon the whole planet.

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The recording industry became the first to fall in the digital pipeline. They thought by suing Napster in court they could stop their declining bottom line.  Movies and DVD’s became next to fall in.

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And then 2 large social media behemoths came along; Facebook (2004) the more social of the two and Twitter (2006) the most current up-to-the-minute form of news delivered to us not by a news anchor but by a neighbor.  Twitter made CNN, NBC, CBS, ABC, FOX ancient delivery mechanisms of news overnight.  We don’t select publications anymore, we select links.

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An ecosystem of “group journalism” in which consumers with a cell phone eyewitness reporting of the news submitted by ‘US’ rather than actual reporters in the field, changed everything. Witness Captain Sully on the Hudson river. The proliferation of the Internet made every publicly available source of information in the world openly available to everyone. This change in and of itself has altered the landscape for everyone forever. The NYT’s and CNN no longer have a lock on exclusive. Exclusive is old news – we are now the prevailing ‘exclusive’.

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Within all of this history of media, the largest companies, the ones we can name by brand have been caught sleeping by transformative change. From newspapers and magazines to Hollywood, aging media executives resistant to technology became overnight ostriches.  It was easier to take a paycheck, stick their heads in the sand then risk being ‘wrong’ about how future technology could transform their own business. Status quo was ‘safe’ harbor.  A herd of dinosaurs.

The decline and the fall of old media. It was inevitable and unavoidable. Casualties were and are in print, TV and soon cable channels. Yes, even cable TV will be falling (cord cutting: Aereo TV and Otoy). Old media will scramble to adjust just as before, but it will not be enough. The fall of old media is unavoidable.

And for us the consumer, the ‘hippie’ stage (freemium) of the Internet is over.  We will pay for more for media then ever before – not in print but whatever form it comes in. The trees will love us once again. However, the cost for this will be higher than it once was.  What is less talked about are the adjustments that consumers have to make. Paying for media that was free or easy to access is now the norm.

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And still only 65% of the country has broadband Internet access. What Google fiber offers is just a beginning and will become the norm. Google fiber speeds will knock cable TV off its legs.  We wont need coaxial cable – just access to the Internet.  And it won’t have to be coming from the white coaxial cable coming into your home – it will be wireless.   TV channels will be become specific apps downloaded on a phone or tablet.  Bundles will be forgotten. The ‘triple play’ of a phone, cable and the internet that we all familiar with for $ 150.-200 a month will soon be broken down.

Perhaps even the app store will disappear too. The potential disruptiveness of Otoy (http://goo.gl/aQZSl ), as a breakthrough streaming service could, in the near future, could end the need for app stores and computer upgrades.

Advertising will never ever again subsidize any old-media news organizations in the style to which they (and their audiences) have been accustomed.

News organizations used to be able to overcharge and under-deliver in their deals with advertisers; the pizza place and the car dealership had nowhere else to go, and no one knew how many people saw, or acted on, a given ad anyway.  Not anymore. Nielsen, one of the old guards struggles to stay relevant – even if they purport to have new measuring technology. There are at least the 10 other companies who are in the process of eating their lunch.

We are in for years of re-adjustment. Transformation from print and paper to digital – cable TV to Internet TV, YouTube, social apps and the like. Consumer adjustment will take time. But less than you think. Our kids are growing up ignoring cable and television, without radio and traditional print media. The norm:  downloading of apps, mobile phones, tablets and no desktop computers. It’s different and disconcerting for the parents. It’s happened before – it just happened without the Internet. How we used to do things in the seventies, eighties, and nineties is no more – change is good.  Breath in – breath out.

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The End of An Era – Music Companies, ‘cloud’ services and the ISP’s are laughing all the way to the Bank, courtesy of you and me!

Amazon’s Cloud Drive, Google’s BetaMusic, iTunes upcoming ‘cloud’ offering, current subscription based music ‘cloud’ services and music ‘lockers’ ( eMusic, Spotify, Rhapsody, Thumbplay Music, mSpot, MP3Tunes, and others) are all similar in many ways.

There are slight differences in the cost and the amount of storage for free that you get initially. After that, users will find the old fashioned way we now store and playback music might in fact have been the best and most cost efficient after all.

Today, we all have mp3’s or m4p’s (iTunes) stored somewhere on our computers or in an external hard drive or both. We have our iPod and other devices to playback these files. Load up a playlist and take them with you. Soon, the above mentioned services will offer us the ability to ship all or some of our music collection to what effectively is a hard drive outside our house or computer – essentially letting them live ‘over there’ or wherever that service lives, be it Amazon, Google or Apple. Load up a playlist and playback the music just as we do now.

A few things will change however that will drastically alter not how or what we listen to but what it will cost us to listen to what we now playback for free. And the changes are subtle but substantial. And these changes are all designed to generate money, a lot of it, for 3 separate entities; the music cloud service of your choice, the music companies and your local ISP.

What has been an essentially free activity for all of us (creating and playing back music on our device of choice locally), will now very quickly become an expensive one, remotely. The change has been slowly evolving – with the ISP’s like Comcast, Time-Warner and others that supply us leading the way. They have all decided to ‘cap’ and meter our bandwidth usage under various tiered plans. Just like we get our water and electricity usage metered, so will our ‘internet’ usage.

And that’s old news – I’m not telling you anything you have not already heard before. Soon, we will keenly be aware of how much data we will be using monthly. And now, the new music ‘cloud’ offerings will present us with tiered pricing plans to store our music monthly as well. You might have 10 gigs of music (which is NOT a heck of a lot, personally) today that you want to store on Google’s Beta Music Cloud Drive ( they are just being used as one example). For me, I’ve got a ton more than that and I add to that monthly. So initially, I’ll choose a plan for 10 gigs, but I am 100% sure over time, I will eventually double that.

In addition to those charges I want to turn on my ‘cloud’ player and listen to some tunes being played back at my home, through my PC piped into my speakers in the house. Well that used to be free when I loaded up my player locally on my PC. Now with my house being metered, here’s a rough idea of what I could be faced with.

1GB streamed per month = a little more than half an hour of music per day
3GB streamed per month = about 2 hours of music per day
5GB streamed per month = about 3.1 hours of music per day

For music aficionados, that is not a lot of time spent listening to my music. Now mind you, I don’t have to use a cloud service to listen locally – I can continue doing what I do now. But that also means I’ve got to keep a duplicate set of files. And it does not include any bandwidth for any other activities on the Internet during the month I engage in. If you have a iPhone or other device that plays back music, sure you can stream your collection from that same cloud service, but wait, there’s a data cap on your phone too. But wait, there’s more. The new Chrome notebook offers a plan too when you are NOT connected to WiFi – and it’s not cheap:

• Free 100MB per month (what you get with the first two years of ownership under the current plan): 1 hour and 45 minutes of music playback for an entire month
• $10 for an unlimited day pass: listen all day
• $20 for 1GB of data in a given month: a little over half hour of music per day
• $35 for 3GB of data in a given month: nearly two hours of music per day
• $50 for 5GB of data in a given month: a little over three hours of music per day

All of this cost and metering does not include monthly cloud ‘subscription’ costs. Put it all together and you might be looking at some heavy fees every month that you don’t currently pay storing and playing back your music collection locally or playing back on the road through your iPhone, etc.

Now I am a big cloud advocate – there are some big advantages clearly in storing your collection outside of your house. The biggest single advantage I can think of is a disaster – and they DO happen. Replacing a 60gig collection is not only time consuming and expensive but just go and try to remember what was in your collection of say 40,000 songs – good luck! This alone is reason enough to consider storing your collection remotely. Other disadvantages include getting the songs up there to start and you don’t want to move the collection once you are there. Ever try moving 60gigs quickly – there is no quickly. So choose your service very carefully!

While all of these new music services sound great and offer us new and improved ways to listen to our music, I can’t help wondering if one day a few years back the ISP’s and the music industry got together in one big Hotel room and figured this out as a way to get back all of the lost revenue that the ‘Napster’, ‘Kaaza’ and ‘Limewire’ era sucked out of them. Maybe they will get the last laugh after all. Here’s a better one – how would a Netflix for example, replicate a ‘cloud’ locker storage scenario for movies I might purchase? Could it? Just think of THAT cloud storage plan!! Ouch!

The Dirty Little Secret Hollywood Does NOT Want You to Figure Out…until we are all metered to death.

So you think piracy is primarily taking place on BitTorrent, eMule and Gnutella? Think again. There is a whole parallel universe out there with people trading huge amounts of DVDs, TV shows, warez and porn. Five terabytes of new content every single day, to be precise. Welcome to Usenet, the original piracy hotbed. And especially this time of year with the Hollywood screeners out for the Academy members, its especially busy (True Grit showed up just yesterday).

 

 

 

Usenet is a little bit like P2P’s estranged uncle. People started trading files over newsgroups around the time when Napster founder Shawn Fanning attended kindergarden. The face of Usenet has changed dramatically in recent years, though. It has become big business for some. It has been under legal scrutiny, but escaped major lawsuits. Will the next step be Hollywood-friendly commercialization?

 

Usenet has been around since the early eighties as a kind of decentralized publishing and discussion platform. It consists of thousands of newsgroups, most of which are somewhat of a mix between a mailing list and a public bulletin board. Newsgroups can be accessed with specialized newsreader applications or though web gateways. Then simply find a divx newsgroup among the 63,000 or so groups and you are off to the races.

The technical infrastructure of Usenet is a loose worldwide network of servers that exchange messages on a regular basis.  Its not too much different than a public library. In fact, it IS the internets public library.  Users can subscribe to one of these groups and automatically download new messages. Sounds familiar? Exactly: Newsgroups are in many ways similar to RSS feeds. And newsgroups, just like feeds, can be used for much more than just distributing text.

People started to trade dirty pictures over Usenet early on (BBS). Warez has also always been a part of the medium, and some of the first MP3s actually found their way online in newsgroups. Nowadays video makes up for most of Usenet’s traffic. Some news servers clock up to three terabytes of traffic per day.

Usenet provider Giganews.com announced it offers access to nearly three billion messages. The most popular content is still porn, but mainstream entertainment is catching up quickly: Groups like alt.binaries.movies.divx cause up to 15 percent of all non-text Usenet data.

Many universities have simply stopped carrying these binary newsgroups to reduce their traffic bill. Some ISPs have instead opted to meter Usenet-related bandwidth, restricting access to one or two gigabytes per month — not enough for hardcore users. Third-party Usenet providers fill the gap with more generous plans that cost between 10 and 25 dollars per month.  This is one of the reasons why all of us will eventually get ‘metered’ by our ISP (Comcast and some Time-Warner systems are testing the waters with this now).

The Usenet industry has boomed since entertainment companies started to go after file sharers. From 2002 through 2003, a number of BitTorrent services were established, including Suprnova.org, isoHunt, TorrentSpy, and The Pirate Bay. In 2002, the RIAA was filing lawsuits against Kazaa users. As a result of such lawsuits, many universities added file sharing regulations in their school administrative codes (though some students managed to circumvent them during after school hours). With the shut down of eDonkey in 2005, eMule became the dominant client of the eDonkey network. In 2006, police raids took down the Razorback2 eDonkey server and temporarily took down The Pirate Bay. Pro-piracy demonstrations took place in Sweden in response to the Pirate Bay raid. In 2009, the Pirate Bay trial ended in a guilty verdict for the primary founders of the tracker. The decision was appealed, leading to a second guilty verdict in November 2010.  Usenet providers tend to keep no logs about downloaders, and you only need one uploader to facilitate tens of thousands of downloads. Some Usenet providers have been targeting file sharing users with aggressive advertising campaigns on torrent websites and P2P forums that promise encryption and anonymity. The dirty little secret of the industry is that some of these self-proclaimed bad-boys also power the Usenet services of major ISPs.

 

Entertainment companies have been somewhat helpless in their reactions to the Usenet surge. The MPAA has previously sued websites that indexed movies in newsgroups, but has stayed shy of going after Usenet server operators themselves. The reason for this is that most Usenet companies are protected by the safe harbor provisions of the DMCA, and any legal precedence could endanger other piracy cases. Rights holders in other countries have been more aggressive, but haven’t been able to put a dent into Usenet usage either.

Former Usenet provider GUBA has tried to go a different route, revamping its platform to offer paid movie downloads next to user-generated content and a small section of filtered Usenet content.  There also was a large Japanese and Korean audience on Guba — something that doesn’t really translate too well to US-only movie sales.

An argument MIGHT be able to be made for some of the independent titles that never ever see the light of day as to use usenet as a way to get word-of-mouth, but for the most part it never works. Usenet is primarily used by those who know how to use it as a tool to grab software and TV episodes and movies for free. Of course it does come with some dangers. A lot of software uploaded by some people contain malicious viruses and .exe’s. You need to have a well protected PC and a lot of experience with how to look out for these traps. However, one day, this will come to an end once the Comcasts of the world ‘meter’ us all. Its one thing to buy a $10.00 a month account to giganews, quite another to pay $25.00 a month for 5 gigs of downloadable content – especially when the movies are now being uploaded in High Def. One regular movie download now is 700 megs, the High-Def one is more like 3 gigs. This will push more users of this kind of service to the Netflix of the world to ‘stream’ the content for a fee far less than buying 25 gigs from Comcast or another ISP.

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You’ll be able to go to Eagles.com (currently under construction) and get all their songs. They’re going to do it; it’s coming up in about 2 months.

And the music labels thought that the seas of music are calmer these days? Hoping to re-napster themselves and capture licensed music in a bottle this time around, the very core of the labels music is leaking and the ship might never really leave the store. The vast majority of music revenue is generated from its catalog. It sells way more than the current fare released on itunes, etc. ENTER: The copyright monster.

If an artist or author sold a copyright before 1978 (Section 304), they or their heirs can take it back 56 years later. If the artist or author sold the copyright during or after 1978 (Section 203), they can terminate that grant after 35 years. Assuming all the proper paperwork gets done in time, record labels could lose sound recording copyrights they bought in 1978 starting in 2013, 1979 in 2014, and so on. For 1953-and-earlier music, grants can already be terminated.  The Eagles plan to file grant termination notices by the end of the year, according to Law.com.
The record labels have two options for fending off notices of termination, neither of which looks good. The first is to continue to claim that albums are compilations, which doesn’t pass the common-sense test (compilations include songs from different artists), and probably won’t pass legal muster either. The second is to re-record the album in order to create new sound recording copyrights, which would reset the countdown clock at 35 years for copyright grant termination.
But wait, didn’t’ someone just try that? This might sound familiar, because BlueBeat.com employed similar logic in creating new copyrights to Beatles songs — right before it was sued by EMI and a judge barred them from continuing to sell the songs. So the music industry now needs to prepare for a new round of bleeding. And, its not just the Eagles, the same lawyer that represents the Eagles ALSO reps Barbara Streisand, Journey among others. Those three artists alone sell a significant back-catalog of music. Next year, it will all change.