New Subscription Challenge to Music Downloads
12.05.05
Real Networks will today announce a web version of its Rhapsody subscription music service, along with a campaign to allow any consumer to stream up to 25 songs for free per month over the Internet.
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The Seattle-based company will also unveil a "toolkit" to allow bloggers and website owners to integrate Rhapsody songs and RSS feeds into their sites. Rollingstone.com will be among the first to do so. Comcast, which already offers its high-speed Internet customers a version of Rhapsody, is another partner.
One-time Real nemesis Microsoft Corp. will integrate Rhapsody into Windows Media X in the weeks ahead and plans to integrate Rhapsody into MSN Search, MSN Messenger and MSN Music.
The moves are a bid to dramatically expand Rhapsody's services from a relatively small subscriber base of just over 1.3 million subscribers to a much broader audience. They also mark the growing ascendancy of the web for distributing all types of content -- from streaming video to Gmail.
For the music business, the enhanced service, Rhapsody.com, enhances the appeal of subscription services that allow consumers to rent music rather than buy it outright. The service will be available to most people with web browsers, including Apple and Linux users.
"We think there will always be a role of downloads," said Dan Sheeran, Real's senior vice president of music and video. "But as consumers get all the benefits without the hassles, the jukebox-in-the-sky will become the primary way consumers access music in the home."
Apple's iPods won't run Real's music format, so the new service is an end-run around Apple Chairman Steve Jobs attempt to lock out songs encoded in Real's format. And since Linux runs on many electronics products, the Rhapsody service could be integrated into settop boxes, network-connected digital video recorders and other digital devices.
The service complements the company's Rhapsody To Go service, which allows users to rent downloads that they play on portable devices. Users pay a monthly fee of $9.99 for unlimited downloads instead of paying per song. They must continue to pay their monthly fee and synch their portable device with their computer each month, however, or the songs become unplayable. Rhapsody-to-Go costs $14.99 a month.
Until now, Rhapsody subscribers have had to download software to their computers in order to use the service. The new service means they can access the songs from most computers with web access.
Yahoo! and Napster.com have competitive music subscription service that cost less than Rhapsody.com. Those services, however, require users to download software before consumers can use them.
Real launched an initiative to allow consumers to stream 25 songs a month for free last April that still required consumers to download the Rhapsody software. The company hopes the new web-based service will persuade website owners and bloggers to incorporate Rhapsody songs and technology into their own sites.
Since Real compensates labels for each song consumers stream, the new service is a calculated risk that enough consumers will sign up for Rhapsody.com to justify the potentially hefty fees.
"We've done a lot of modeling, and we're positive this will be an ROI positive investment," Sheeran said.
Real Networks Chairman and CEO Rob Glaser will demonstrate the new service at iHollywood's Digital Living Room conference today in Foster City. Real Networks is a sponsor of the conference.
Monday, December 05, 2005
Friday, December 02, 2005
Lessons of Sony BMG's CD Mess
Labels Need DRM, but DRM Alone Won't Work
11.30.05
Sony BMG's CD copyright protection fiasco illustrates an obvious point and a paradox.
The obvious point: if you're going to use digital rights protection technology to safeguard digital entertainment for consumers, you'd better make sure you work the bugs out first.
The paradox: Sony BMG needs to have a DRM strategy in place, but it is bound to fail.
Before I explain the paradox, a quick review. Sony BMG inserted software onto CDs from artists like Neil Diamond and Celine Dion designed to keep consumers from making more than three copies of the discs or freely trading the music online or with friends. The company (or its subcontractors) also inserted a little piece of spyware that opened them up to virus attacks and legal action from Texas New York Attorney General Eliot Spitzer and practically everyone else. Massive recalls are underway.
Now, you can argue (correctly) that Sony has a right to protect its discs, should have a DRM scheme in place and merely goofed by either overreaching or doing bad quality control.
But the company was bound to fail. Because any copyright scheme for entertainment ever devised has been cracked and the underlying content made available to the masses. DVDs, videotapes, cable and satellite TV, cassettes - all are routinely copied and will continue to be, no matter how many legal eagles or what copyright protection scheme the studios employ. You could almost count in days the time it would take after the release of a copy-protected Sony BMG disc before gleeful hackers broke the code and posted how they did it on the web - along with pirated Sony BMG CDs.
So why do I say Sony BMG needs to have a DRM scheme in place if it is bound to fail? Because DRM schemes and legal strategies protect creators of intellectual property against theft by casual users only if the benefits of paying outweigh the liabilities of stealing.
Take cable. Anybody with a little chutzpah can steal a signal, even though it's encrypted. But most people don't because the perceived benefit of paying $50 a month for unlimited content to watch and record outweighs the hassle and legal liability of ripping it off.
Do some people rip off cable? Sure. But last I heard, the cable companies weren't going out of business and Hollywood was pretty gung-ho about its cable profits.
So if you define DRM as 100 percent security, the cable industry's encryption has failed. But they still make plenty of money. That's the paradox.
The problem for Sony BMG and other record labels is that the benefits of ripping off CDs still outweighs the liabilities of getting caught and the hassles of breaking the DRM or downloading songs from the web. So even if Sony BMG's DRM software is squeaky clean, it wouldn't completely stop the copying problem.
In fairness to Sony BMG, the company was well aware of that fact when it began copy-protecting its CDs. "Our intent was to create an educational speed bumps rather than to create a full stop," a Sony BMG executive said. "We wanted to give consumers the functionality they wanted while helping them understand they shouldn't make hundreds of copies."
For Sony BMG and other labels to stop ordinary people from hacking and copying, they need to lower prices and intensify their efforts to create new products like dual video-audio discs; they need to offer CD buyers exclusive benefits such as discounted concert tickets, free ringtones and downloads, and free access to exclusive websites. Ultimately, the labels will probably have to discard CDs entirely for another business model that persuades consumers to buy rather than steal.
Only then will a failed DRM strategy have a chance of success.
11.30.05
Sony BMG's CD copyright protection fiasco illustrates an obvious point and a paradox.
The obvious point: if you're going to use digital rights protection technology to safeguard digital entertainment for consumers, you'd better make sure you work the bugs out first.
The paradox: Sony BMG needs to have a DRM strategy in place, but it is bound to fail.
Before I explain the paradox, a quick review. Sony BMG inserted software onto CDs from artists like Neil Diamond and Celine Dion designed to keep consumers from making more than three copies of the discs or freely trading the music online or with friends. The company (or its subcontractors) also inserted a little piece of spyware that opened them up to virus attacks and legal action from Texas New York Attorney General Eliot Spitzer and practically everyone else. Massive recalls are underway.
Now, you can argue (correctly) that Sony has a right to protect its discs, should have a DRM scheme in place and merely goofed by either overreaching or doing bad quality control.
But the company was bound to fail. Because any copyright scheme for entertainment ever devised has been cracked and the underlying content made available to the masses. DVDs, videotapes, cable and satellite TV, cassettes - all are routinely copied and will continue to be, no matter how many legal eagles or what copyright protection scheme the studios employ. You could almost count in days the time it would take after the release of a copy-protected Sony BMG disc before gleeful hackers broke the code and posted how they did it on the web - along with pirated Sony BMG CDs.
So why do I say Sony BMG needs to have a DRM scheme in place if it is bound to fail? Because DRM schemes and legal strategies protect creators of intellectual property against theft by casual users only if the benefits of paying outweigh the liabilities of stealing.
Take cable. Anybody with a little chutzpah can steal a signal, even though it's encrypted. But most people don't because the perceived benefit of paying $50 a month for unlimited content to watch and record outweighs the hassle and legal liability of ripping it off.
Do some people rip off cable? Sure. But last I heard, the cable companies weren't going out of business and Hollywood was pretty gung-ho about its cable profits.
So if you define DRM as 100 percent security, the cable industry's encryption has failed. But they still make plenty of money. That's the paradox.
The problem for Sony BMG and other record labels is that the benefits of ripping off CDs still outweighs the liabilities of getting caught and the hassles of breaking the DRM or downloading songs from the web. So even if Sony BMG's DRM software is squeaky clean, it wouldn't completely stop the copying problem.
In fairness to Sony BMG, the company was well aware of that fact when it began copy-protecting its CDs. "Our intent was to create an educational speed bumps rather than to create a full stop," a Sony BMG executive said. "We wanted to give consumers the functionality they wanted while helping them understand they shouldn't make hundreds of copies."
For Sony BMG and other labels to stop ordinary people from hacking and copying, they need to lower prices and intensify their efforts to create new products like dual video-audio discs; they need to offer CD buyers exclusive benefits such as discounted concert tickets, free ringtones and downloads, and free access to exclusive websites. Ultimately, the labels will probably have to discard CDs entirely for another business model that persuades consumers to buy rather than steal.
Only then will a failed DRM strategy have a chance of success.
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