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Should the EU raise a “music tax” to be paid by broadband and mobile phone users to compensate music labels (akin to the TV license paid in many European countries)?

Earlier in the month, The Register published an article titled “Big labels are f*cked, and DRM is dead — Peter Jenner” .

Peter Jenner is a music industry old-timer (who was Pink Floyd’s first manager and has also looked after T.Rex and The Clash among others), and is Secretary General of the International Music Managers Forum. His voice is as authoritative as it’s brash.

Jenner says the major music labels “raped their whole business model” to cover profit shortfalls and haven’t got the “got the time or energy” to think about the future of their business.

His analysis of the current situation is accurate:
– “digital music pricing has been a scam where the consumer pays for manufacturing, distribution, and does all the work”;
– “DRM, pay-per-download, and per-device restrictions force users to pay multiple times for a single song”.
(which, taken together, in my view, provide individuals an incentive to seek pirated music)

I also suggest that the RIAA (US), MCPS-PRS (UK) and other national rights bodies are shooting themselves in the foot. By punishing new bona-fide Internet-based business models that promote music with over-bearing the regulations and fees common to traditional media (TV, radio, etc.) they are preventing the emergence of legal alternatives and, in the process, helping the illegal outfits flourish.

Jenner’s recommendation is for EU countries to introduce a blanket broadband license of about €4/month to compensate music companies in exchange of them abandoning DRM and them accepting greater pricing regulation.

There hasn’t been enough debate as this recommendation warrants. The clearest thinking has come from Micheal Arrington of TechCrunch who was highly critical.

I think the idea of a broadband fee is quite sensible.

Competition is unlikely to create an environment without DRM and excessive pricing.
– iTunes controls more than 70% of the music download market and is unlikely to soon loose it’s strangle-hold on the market (over 70% of new US cars have iPod docks and six airlines are now talking about supporting it too).
– Microsoft’s has just introduced a new DRM, instead of the one it already had, for it’s new Zune MP3 player.
– Mobile operators are closed networks where there is no competition for like services.

This tax wouldn’t elimate innovation. Music labels would still compete for a larger share of the broadband license. And, anyway, it is already a tried and tested concept. Many countries (eg, Canada, Holland, Germany) charge a “rights tax” on reproduction media such as blank cassettes and blank CDs. This tax would be no different.

Germany and Sweden have already introduced similar taxes to pay for their public broadcasters.

The danger is that other rights holders would demand a similar tax. Movie studios? Book publishers? Phtographers? In the process they might over-tax individuals to the point of slowing down broadband penetration.

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CBS Corporation’s President and CEO, Leslie Moonves, highlighted his company’s commitment to develop digital revenues during the Q3 earnings call.

“I want to talk about our efforts in the digital space. New media is a huge opportunity that cuts across all of our businesses and affects everything we do as a premier content company. You guys are always asking us when we’re going to start making money here. While it is still too soon to quantify the impact, I can tell you we expect to generate hundreds of millions in digital revenues in ’07. We made a number of very significant moves over the quarter to extend the reach of our television programming online.

In October we partnered with YouTube to begin offering short form video streams that include content from the CBS Television Network, Showtime, and CSTV. Meanwhile as I mentioned earlier, we continue to find new platforms to stream our hit content. We’re already offering many of our shows on Google Video, Apple iTunes, Amazon.com, and AOL. Plus we began offering free next-day streaming of 12 primetime series on Innertube, our own entertainment website. We have streamed more than 2 million episodes of our show so far this season and over 3 million related videos. These numbers continue to grow week over week.

[…]Meanwhile, DVR and Internet streaming are only adding viewers. New technologies and platforms make it easy for people to enjoy both programs that air during these highly competitive time periods. We are already getting paid for this incremental viewing on the Internet, and we expect to get paid for DVR viewing next year. “

tags: TV CBS

eMarketeer released a report showing that global ad spending on social networks is expected to reach $445 million in 2006 and nearly triple to $1,125 billion in 2007. They predict that the US will account for about 80% of the ad spend.

Socnet adspend 06-11-01

In a related article, Google announced that Its 2006 UK revenues are expected to surpass Channel Four’s (*) predicted £800m ($1.5bn) returns.

Since much of the advertising on social networks are contextual text ads like Google’s AdSense (Google owns the ad space on MySpace which eMarketeer estimates to account for 60% of social network ad spend) this all seems to indicate that

1. Social networks are real businesses – some are here to stay;

2. Broadcasters really need to start developing their response to user/viewer migration online.

(*) Channel Four is the UK’s second largest network, with about 9% share of viewers, that airs advertising in the UK (the BBC is paid by though a TV tax).

tags: social networks TV

Two weeks ago The Sun, the biggest selling newspaper in the UK, launched MySun, an interactive service will fell far short of the capturing the potential of social media.

Before I criticize MySun let me congratulate The Sun for this initiative. I can’t understand why other publications are not experimenting with social media. It is becoming apparent that Internet users are expecting much greater participation that, I believe, is the gist behind Web 2.0. Publications need to move away from a pure editorial model.

I think social media is particularly relevant for niche publications, specialist magazines, which have a strong voice (and brand) on topics that are the passion of a select few. Surely, these select few would appreciate being brought together and would have a lot of stories, insights and information to contribute.

Back to MySun. I tried to login before going on holiday but couldn’t because it was down. Today it’s taken me over 15min to register largely due to a very slow email validation process. So far so bad.

Once logged on I didn’t find any of the features that define social networks. I my profile is buried a few clicks away. That means my home page is really not my home page; it’s The Sun’s. “My” page looks essentially like something Yahoo has been offering for a decade: a personalized news page – except that all the news comes from The Sun. The other thing I see on “my” home pages are discussion. Err, these are forums, again, old stuff.

The strangest thing is that I couldn’t see anybody else. I felt all alone. There is no networking here. I don’t know who else is registered. There is no search. A “Take me to” function first gave me a 404 (dead link) and on a second try took me to a Sun’s columnist blog which was very unpersonal.

I couldn’t see any place on “my” home page for my friends. I can’t upload any content though I could blog (to who? who is looking?). The Sun doesn’t even invite me to send scoops or stories the way CNN does with i-report.

So, overall, MySun is a disappointment. It is just a personalized news page, something I have been able to get from Yahoo, Netscape, AOL, Google… hell loads of places, with the enormous disadvantage that all the news I get comes only from The Sun. They have failed to attempt to create a sense of community and shunned any and all content I may have wished to contribute to (and in the process enrich) the newspaper.

Prediction: If MySun is to last, it will need to undergo major changes that embrace social media.

tags: media social networks Sun

The Wall Street Journal (behind their pay wall) reported today on Nielsen/NetRatings figures showing a decline in the number of U.S. visitors at MySpace (4% and Facebook (12%).

The article says it might be due to excessive spam, privacy fears or just a seasonal fluctutation (last September a similar drop was recorded).

I believe all that. It’s too early to call the beginning of the decline of MySpace. But, I think it will come sooner rather than later.

Prediction: Over the next year we will see significant growth in specialist/niche social networks at a cost to the giant social networks. We are going to see birds of a feather flocking together. <=link>

tag: MySpace Facebook

The last 4 months since returning from my first expedition into SecondLife in has seen a flurry of activity in that virtual world with big brands like American Apparel, Starwood Hotels, Reuters, Nissan, IBM, Universal, PA Consulting and artists like Duran Duran and Suzanne Vega creating a in-world presence. This week the first pure SecondLife company, Crayon, announced their launch.

For regular information about SecondLife, I recommend you read Giff’s blog.

tags: virtual worlds SecondLife social networks metaverse

In August I predicted that YouTube would be roasted by Christmas.

So, I read the news that Google acquired YouTube for $1.6b while chewing on some humble pie. .

So what happened? Where did I go wrong?

Since writing that post I felt pretty confident with the news flow and additional comments from informed people like the illustrious (and boisterous) Mark Cuban who said it would be moronic to buy YouTube..

I will stick to my analyses of YouTube’s situation but admit that I failed to see one, rather intricate, way out.

I overlooked the Google Distortion Field. Today Google has a 100 strong legal team who are masters in copyright fights. Tactically, by owning YouTube’s eyeballs they are further consolidating their leadership of the paid link advertisement market. They are protecting their money-making franchise from Microsoft, Yahoo and AOL. They alone could buy YouTube and shoulder the implications.

Furthermore, what really brought a smile to my face was their cunning plan to bring some media companies into the deal. It appears that the morning of the day that YouTube were going to sell to Google, they offered Universal Music Group, Warner Music Group and Sony BMG (and maybe others we don’t know about) the opportunity to invest in YouTube. Wow. In one move YouTube (and Google) rewarded these media companies for not suing them to date with an estimated $50m windfall and reduced their legal liability going forward.

Kudos to Chen and Hurley!

tags: YouTube, Google, video

Last night I was reminded of my conviction that any business model build around mobile is doomed and that advertisers should ignore this medium for the time being.

Last night I was at PaidContent’s successful LDN ContentNext Mixer networking event that had over 350 attendants.

I talked to a number of mobile start-ups everybody I talked was in mobile for some reason). All had good ideas, none where getting traction. Many were desperately trying to find a work around the network operators.

Think about the innovation you’ve seen in the Internet since 1995 (the year Amazon launched and Netscape IPOed). Think of how you use the computer today compared to back then; of all the innovative services that have been launched; about the revolution we have experienced in the way we communicate, share content, find information. To name a few there is: Amazon, Hotmail, online news, eBay, Wikipedia, Yahoo, MySpace, YouTube, Google, Expedia, online banking, Napster, BitTorrent, digg, SecondLife, blogs, email, instant messaging, Skype…

Now think of the innovation you’ve seen in mobiles since 1985 (when mobiles began to be widely available) – and note they had over 10 years head start. Think of how you used your mobile phone then and now : uhh… you probably still use it to make and receive calls and text messages. Okay, to be complete there is a 1% or less sliver of mobile users who are Blackberry users; or who send picture messages, make video calls or watch TV. But, to drive the point home, these services were launched in the last two years or so.

So what happened to all the mobile entrepreneurs? Why haven’t we seen innovation on mobile phones as we say on PCs. The entrepreneurs were snuffed (1). Because they control the network the mobile operators figured they ought to make all the profit from any business using their infrastructure and totally control (own) the user experience (2). I know of three mobile-based start-ups, by friends of mine, all with reasonably good ideas, that fatally partnered with mobile network operators. The exception was – there is always an exception the defines the rule: ringtones.

Mobile network operators were (and are) too greedy. The only entrepreneurial mobile environment is iMode in Japan where DoCoMo charges a lowly 9% commission on sales.

And that’s my point. The only way a mobile-based business can succeed is to avoid, at all peril, the mobile network operators.

Prediction: Until there is widespread WiFi and 3G access to the Internet via mobile phones (in other words, mobile-based business can reach consumers by going around network operators portals) there will be limited opportunities to establish profitable mobile-based businesses. Established companies should steer clear until then.

Observations

(1) The death of innovation in a closed network environment should serve as a warning to US regulators being lobbied by US operators trying to create a two-tiered Internet.

(2) Another, technical reason, is that mobile phones didn’t have a standard operating platform equivalent to Windows and HTML – until the recent arrival of Java enabled phones. However, for years Nokia represented over 60% of the handset market which is big enough a market. So, though the technical conditions for innovation of services on mobile phones was not ideal, it was not unsurmountable.

tags: mobile

Why don’t broadcasters simply tell when the third series of Lost will start again in the UK?

Tonight, at the fifth Beers & Innovator get together, I met with Paul Pod, one of the founders of TIOTI (Tape It Off The Internet). The idea behind TIOTI is to help people find the programs they want to watch.

Boy, do I need that! I just can’t understand why broadcasters don’t let viewers subscribe to an email service to alert hem when they favourite programs will air. Yep, just an email newsletter. Of course, if you want something more complex I could propose SMS alerts, synchronization with my calendar software fan groups, recommendation engines, RSS feeds, etc.. But just a good old simple email newsletter would do.

Annoyingly, I have been forced to become a Radio Times reader to avoid missing the new season of Lost, Desperate Housewives, Arrested Development, Curb Your Enthusiasm and 24. I am very frustrated for having missed the opening episode of Extras and Bremner, Bird and Fortune.

I embraced TIOTI’s proposition as soon as Paul began explaining it to me because it solves my need to find the ongoing episodes of the series I’m hooked on.

TIOTI is far more complicated than my email newsletter idea (it has BitTorrent feeds and more) so broadcasters still have time to react. And, react they must because they run the risk of losing my eyeballs to content that I download into my PC and pump into my plasma screen begging the question ‘can they afford to bleed audience like that?’

tags: TV television user centric

The term Web 2.0 (and, worse, the “2.0” suffix) has gained widespread usage this year. I think it is safe to say that 2.0 is the new .com. But what does it mean?

The term has been used and overused to the point that it vaguely means “something new” as in “AOL is so Web 1.0, MySpace is Web 2.0.”

Tim O’Reilly claims he first coined the term in 2004 and has rather opaquely defined it.

I have been looking for more succinct in response to the queries of my clients and friends. I have now found two answers that satisfy me. [NB: As with anything Internet-related, it has three facets: a creative one, a technical one and a business (strategy) one. Being a fee paying cardholder of the strategist union; I will only speak for my lot.]

I favour two very similar definitions of what Web 2.0 are from a business perspective:

1. A site where user actions increases the value of the service. (I lost the source)

2. Dotcom (Web 1.0) was about ‘taking’. Web 2.0 is about ‘giving’. (thanks Hugh MacLeod)

So, yes, Web 2.0 is something radical. Traditionally companies offered consumers a carefully vetted and edited list of things. Web 1.0 preserved this approach. Web 2.0 let’s the user have more control. Everything you bought was selected by retailers; now you have eBay. All the news you read was vetted by editors; now you have digg. All the programmes you used to watch were picked by channel controllers; now you have YouTube.

Companies should ask themselves how they can open up to consumers. Let them participate. Surely, there is no better way to gain the customer insight than to listen to them. In other words, companies should experiment with being user-centric to the extreme.

tags: web20 user centric