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THE online REPORTER
May 28-June 3, 2005 - Issue 446
Published weekly by Rider Research

Entertainment Technology - Online Music & Movie Services - Broadband & Home Networking

BROADBAND BEAT

LEGAL MATTERS

ENABLING TECHNOLOGY

HOME NETWORKING

ENTERTAINMENT PORTALS

LIES, DAMN LIES, & STATISTICS

SHOW TIME

MOBILE MEDIA

ONLINE MUSIC SERVICES

WIMAX WATCH

PRODUCT WATCH

DIGIGRAMS


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Are Telcos Fighting the Last War?

By Charles Hall

The future of the US telcos, and their ability to compete, is the focus as the telecom industry prepares for its upcoming annual SuperComm trade show in Chicago. The phone companies face stiff competition from the cable and satellite TV providers, not only in the broadband and content markets, but increasingly in the telephone service space as well. 

The phone companies, like army generals, may well be preparing to fight the last war.

What follows are some observations and points to ponder: 
- SuperComm looks like it's primarily about VoIP, which, in my opinion, is a zero sum gain or even a negative one for the phone companies. VoIP may be a short-term phenomenon, at least for residential users. Most consumers will eventually use a mobile as their primary phone, not VoIP. Fortunately for the three largest telcos, Verizon, BellSouth and SBC, they dominate the UScell phone market.
- Broadband and broadband-delivered content is where the money is. The cable TV companies are rolling in money from $40 a month broadband subscriptions. The Internet behemoths Yahoo, Google and AOL and probably MSN are already headed in the direction on Internet-delivered video entertainment.
- Serially delivered video, aka TV, will diminish as consumers opt for "content when and where they want it." Big advertisers like GM are reducing their TV ad spending and putting it in the Net, which allows more targeted ads whose results can be measured. For the first time ever, TV advertising will decline two years in a row. It isn't necessary to be a tealeaf reader to see what's happening.
- The big question is how much entertainment video goes to download and how much stays linear. Some folks think it will all go the way of downloading, knocking out broadcast TV and consequently most of the telcos' business models.
- The telcos should become content aggregators, at least as a "back door" to their pay-TV offerings. They should, at the very least, do what Telecom Italia (Rosso Alice) and Deutsche Telekom (Vision) are doing by offering a range of movies, music, sports, news and TV from an entertainment portal. And every set-top box they ship should have DVR and Internet capability. Once they get a DVR, most consumers find that their viewing of "live" (or "linear") TV has gone down by at least half, perhaps more.

There are three places the cable TV companies are vulnerable:
- Set-top boxes (STBs). The cablecos have a very small installed base of DVR- and high-definition-equipped STBs at this point. They are ramping up quickly, however, to defend their installed base against the satellite TV companies.
- Mobile phones. They will become the only phones for many individuals. Those mobile phones of the future will a) connect via Wi-Fi when the consumer is at home, b) via the cellular network when away from home and c) will, of course, have a high-speed Net connection at home and a slower one when away. They might even have a fast Net connection when away if WiMAX comes through as promised
- Internet-delivered entertainment and information videos. The cablecos have to protect their cash cow of TV subscribers just as the telcos are trying to protect their landline residential customer base. And just as the cable TV companies are not going to knock the telcos out of the phone business merely by offering a "me-too" service; so will the telcos have to offer a substantially better video service.

There are two places the cable TV companies are not vulnerable:
- Conventional (the linear type) TV service is a cable TV strength. They know how to slice and dice it better than the telcos - market it, bundle it, price it, package it - what content will sell and what won't and how to make deals.
- Broadband is a strength for the US cable TV companies in several ways. They have the installed base - a 60% to 65% market share - and folks don't want to change their e-mail address or try a new technology if the old one is working. Look at how many people still have a dial-up connection this late in the broadband era. By waiting to bring some marketing muscle to the broadband market and by having an inherently slower product, the telcos have had to resort to lowering their prices to attract subscribers. The cablecos, with a speed and installed base advantage, have been able to maintain higher monthly prices. The cablecos could put a major dent in the telcos' DSL business by lowering rates down to $30 a month or less - something they are unlikely to do, which is fortunate for the telcos.

The speeds the phone companies are talking about for broadband-over-fiber-optic don't appear to be much higher than what the cable TV companies are offering. One niche opportunity for the telcos could be the growing market for "citizen-produced" video content, a market that'll need higher upload speeds.

What If the Phone Companies Could Offer Any Movie, Any TV Show, Ever Made, Anytime, Anywhere?
So, being behind the curve in pay TV and broadband, the telcos should look to the coming trend of Internet-delivered video for an advantage. The cable TV outfits will be shackled by their revenue reliance on conventional pay-TV, unlike the telcos, which have no pay-TV revenue to lose. DVRs, video-on-demand, online music services, podcasting and P2P file sharing are all part of a movement that whets the consumer's appetite for the fulfillment of the "any time, anywhere" promise. 

If the telcos could offer any TV show, any movie, any time, anywhere (keeping in mind that today they have most of the US' cell phone users), then they'd pose a major threat to the cable TV companies. Of course, there are some devilish details that'll have to be dealt with, such as copyright issues, royalty splits and DRM. Also, there is the fact that two of the telcos' pay-TV competitors - DirecTV and Time Warner Cable - are owned by companies - News Corp and Time Warner - that also own major content producers - 20th Century Fox and Warner Bros - of the movies and TV shows the telcos will need access to. No one said it'd be easy. On the other hand, going to market with only a "me-too" pay TV service doesn't sound like a good idea either.   
Back to Headlines 

How Satellite TV Knocked Off Cable TV

The two US satellite TV companies, DirecTV and EchoStar, have taken on the cable TV operators and seized substantial market share. Knowing what they did could be helpful to the telcos in their assault on the cablecos' pay-TV business. Much of their advantage was based on superior technology, some on better content, some on better pricing.

1. Digital-quality video was a vast improvement over the cablecos' analog video.
2. Superior audio. The ambience of outstanding audio is one thing that still attracts consumers to the theaters - and to spending millions on home theater systems that connect TVs to their stereos.
3. More channels, more content.
4. Less expensive, at least initially.
5. Exclusive content. News Corp, for example, was able to land a deal with the NFL that permitted viewers, for an added price, to watch every game, not just those in which the local team was involved.
6. Customer support. EchoStar's Dish Network has won a number of awards for its customer service. DirecTV, especially since News Corp acquired controlling interest, has had good customer care.

What they satcos offer to attract subscribers may or may not be relevant for the current market situation because the cablecos have responded by enhancing their TV service.

However, it's a good place to start for assembling a game plan.   
Back to Headlines 

Podcasting Picks Up Major Support 

By Susan Schrank

Six months ago the term "podcast" would have drawn blank looks from all but the few who were in the know back in the early stages of the trend. Today it's being bandied about by everyone from amateur DJs to politicians, doctors, preachers, major broadcasters and just about anyone else wanting to share thoughts or opinions. 

Podcasts are another piece of the "any time, anywhere" digital media phenomenon that has occurred in a world of always-connected broadband netizens who clamor for more online content, 

whether it comes from P2P networks, blogs, digital music and movie services or news sites. 

Despite the name, podcasts, which are sort of the love child of blogging and Internet radio, aren't limited to being played on an iPod. Anyone who wants to can listen to a podcast on a PC, burn it to CD or transfer it to just about any portable MP3 player. 

The main benefit of podcasts, however, is that they allow people to "time-shift" their listening, similar to a portable DVR that lets folks digitally record TV shows onto a handheld device to take with them while traveling. Since podcasts are audio-only, they're even more portable - listen to them while jogging, driving, pretty much anywhere you can use an iPod.

This week alone, podcasting picked up some pretty big-name supporters, including Apple Computer, whose iPod portable digital music player sparked the craze - and its name - in the first place. 

When Apple CEO Steve Jobs talked up the next version of the iTunes software at the Wall Street Journal's D: All Things Digital conference, the big news was that the application will offer podcast support. iTunes 4.9, which should be out sometime in the next two months, will add podcasts as a menu item and make it easier to subscribe to and download podcasts to an iPod. Users currently have to download third-party software in order to get a podcast onto an iPod.

Regarding the podcast support, Jobs told the crowd at the conference, "I think this will send it into orbit." According to the Journal, Jobs "sees podcasts evolving into an advertising-supported medium similar to radio." 

Podcasts give the general population an outlet to express themselves beyond the blog. Now, instead of having to rant and rave in text (which most bloggers aren't very good at), people can literally speak their minds, sing their songs or tell a story in a format that others can download and take with them wherever they may go. A Web search for "podcast" will return any number of sites that offer these audio blogs as well as podcast aggregation sites designed to make it easier to find those that would be of most interest to the searcher. 

Beyond the amateur sites, however, the corporate world is also realizing the potential business ramifications of podcasts. Companies are starting to see them as an opportunity to expand customer reach and take advantage of the latest Net-based craze. 

BusinessWeek Online posted its first podcast this week. ABC and NBC both announced podcast plans this week as well. ABC is looking to offer podcasts of newscasts and other programming including "Good Morning America" and "Nightline" and NBC is planning to podcast segments from various shows including "Hardball with Chris Matthews," "Today" and NBC Nightly News" among others. Both networks also said they'll create "podcast-only" programs as well. Market research firm JupiterMedia even started a podcasting service featuring conversations with its analysts about key topics relating to the Internet and emerging consumer technologies. 

National Public Radio, Clear Channel, Sirius Satellite Radio, Infinity Broadcasting and a host of other well-known brands have already launched podcasts or are planning to.

And where would an audio service designed for MP3 players be without tons of music? Sure, the major radio corporations have already locked on to podcasting's potential, but it takes more than radio broadcasts to fill an iPod. Independent music community GarageBand.com is looking to fill that gap with its new GarageBand Podcast Studio, which it claims is the world's first Web-based tool to record, mix and publish a podcast. 

Podcast Studio was designed to benefit all segments of the GarageBand community. Artists get an easy way to license and distribute their music to podcasters. Podcasters get a simple point-and-click way to record, mix and publish their wares. Subscribers and listeners get easier access to podcasts for free, without an iPod or special software. 

"We're on the forefront of a wave that will make personal broadcasting a reality and redefine how music is discovered and promoted," said GarageBand CEO Ali Partovi. 

With Podcast Studio, anyone can create a podcast. Users can upload their own recordings and mix them with music from the GarageBand catalog using a point-and-click Playlist Manager. Once a new playlist is published, it becomes available for streaming, download and subscription from GarageBand.com's servers. Hosting is free. GarageBand intends to support the podcasts with advertising as well as offer premium ad-free options in the future. 

In conjunction with the Podcast Studio launch, the site is hyping the first-ever "major artist" track released expressly for podcasting. The tune, "Papion," features long-time GarageBand.com member and American Idol runner-up Bo Bice and his band Sugar Money. 

The Web site has also converted its 40,000 user-created playlists into podcasts and is offering them up via free subscriptions. Additionally, every artist that has music posted on GarageBand now has a free podcast where listeners can receive new songs and other audio messages, concert listings and news posted by the band. GarageBand.com also plans to issue additional podcasts of its own, such as a "track-of-the-day" feed for each musical genre. 

For now, at least, podcasts are free to anyone who wants to download them. It won't take long, however, until folks start wanting to cash in. A number of sites will likely go the ad-supported route, giving away the content in exchange for listening to a 15-second commercial. Others will want to charge subscription fees, figuring that consumers who are short on time would rather pay a few bucks a month than have to sit through an ad before each podcast. 

Micropayment technology vendor BitPass plans to be the first to market with software that will enable Web sites to charge for podcasts - both subscription plans and a la carte downloads. BitPass Unplugged, which will be available in Q4, will allow podcasters ranging from hobbyists to mainstream media to charge for premium podcasts. 

"As podcasters face limited advertising revenue opportunities and significant hosting expenses, BitPass Unplugged makes it possible to charge for podcasts for the first time," said BitPass VP of products Kurt Huang. "With our solution, successful podcasters can look forward to new revenue sources without becoming submerged by the costs of catering to their audiences." 

For folks who want to take advantage of podcasting or just want to learn more about it, author Jeff Mills has released a new e-book called Podcast Secrets Revealed that explains all about publishing and subscribing to podcasts. The e-book discusses the ways that podcasting can help consumers learn more about any number of subjects or share their knowledge on a favorite topic and tells businesses how they can make money from the new phenomenon. The book is available for download at www.podcastsecretsrevealed.com 

Whether just a passing fad or the wave of the future, podcasts are =
wildly popular. According to recent research from the Pew Internet & American Life Project, more than 22 million folks in the US own an iPod or other portable MP3 player and 29% of them have downloaded a podcast. That translates into some six million US adults who've already sampled available podcasts. It will be interesting to see just how that number grows as the ABC, NBC and other major content providers get their podcasts online.   
Back to Headlines 

'We Are In Full Swing of a Media Revolution'

"The information revolution is over...we are in full swing of a media revolution. We are going through this period of a shift from the mass media order to personal media order. We are seeing one industry after another flip from mass to personal and from information to media. This is like the end of the days of the independent PC builders or the little desktop publishers in the late 1980s. Little blogger babies will get hosed by the mainstream," said Paul Saffo, director and Roy Amara Fellow at the Institute for the Future in a ZDNet interview.

Saffo describes media as information that is intimate, ubiquitous and immersive - all around us. PCs, laptops, e-mail and spreadsheets typified the information revolution. Blogs, instant messaging and "wikis" are enabling the personal media revolution, he said. 

ZDNet's Dan Farber interviewed Saffo at the Churchill Club event "The Next Wave of Technology: Iterative or Incendiary."   
Back to Headlines 

FTC: Off With Their Heads

We've been warning that spam, viruses and other such malware would destroy the emerging digital media market. The severity of the problem is demonstrated by the US government's attempt this week to solve the problem by having innocent people's hijacked PCs disconnected from the Internet.

The FTC said this week it would ask some 3,000 ISPs around the globe to disconnect from the Net any of their subscribers whose PCs have been hijacked by spammers. Spammers take control of the PCs of otherwise innocent users so they can hide the true source of spam and avoid bandwidth costs. They turn consumers' PCs into "zombies" that send the spam on command. Zombie networks are estimated to account for 50% to 80% of all spam. The FTC said PCs that are being used to send spam should be disconnected from the Internet until the machines are fixed.

The FTC's recommendation is just that - it does not have the authority to force ISPs to disconnect their subscribers. It recommends that identify their customers' PCs that send out large amounts of e-mail, quarantine them if they are found to be zombies, help them clean their machines and tell them how to keep them safe in the future. 

The FTC request is like one in which those who have a virus are quarantined. The recommendation is a drastic step, but then the spam problem is severe enough to cripple the use of the Net as a vehicle for delivering video entertainment. We have called for some of the bigger organizations to step up and help solve the problem - some of the ones that have profited from the Net's growth, like Intel, Microsoft, Cisco, AOL plus the cable TV and phone companies - or those that will benefit in the future from the digital media industry such as Time Warner and Sony What we didn't have in mind was the government threatening to bounce off the Net any home users whose PC was being used by outside villains to send spam. 

Disconnecting consumers isn't the solution. They use their PCs for shopping, communicating with families and friends, comparing prices, looking up store locations and entertainment. 

Once reconnected, the PC is going to get hijacked again. It's like putting a bandage on cancer. A broadband-connected PC, according to every survey that addresses the topic, has become as much a part of consumers' lives as other appliances. Providing software that makes such malware less likely is what's needed. What is needed is a vaccine for the malware, not the death by isolation the FTC recommended. Disconnecting what could be hundreds of thousands, perhaps millions, of Internet users would cause chaos and set the industry back. However, if the major beneficiaries of the Net can't or won't provide a solution, then disconnecting every hijacked PC is what it'll have to be.    
Back to Headlines 

Harder to Track Users with New BitTorrent Software

The latest version of the BitTorrent software, popular with swappers of movies and TV shows, does not require Web site hosting of centralized files, known as "trackers," according to CNET Trackers, which allow users to collect statistics about a specific file, are easy to find files that antipiracy investigators use to identify individuals who downloaded and shared copyrighted material.     Back to Headlines 

BROADBAND BEAT

Telenor Expands Broadband Base

Norway's Telenor said it would spend about $1 billion to buy high-speed Internet providers in Sweden and Denmark to strengthen the company's existing Nordic operations. The two companies are Bredbandsbolaget, which is number two in the Swedish broadband market with 335,000 subscribers (24% market share), and Cybercity, Denmark's number-three broadband service with 90,000 subscribers (8% market share). 

Telenor executive VP Morten Karlsen Soerby said the acquisitions strengthened the company's broadband business and will enable substantial cost cuts. 

Broadband is the only growth area the world's phone companies have for the wires they have into homes.  
Back to Headlines 

Tiscali Rolling Out LLU in UK

Tiscali UK will use Huawei Technologies' gear to roll out LLU (Local Loop Unbundling) in the UK. Installations have already started as part of Tiscali's initial LLU trial in 27 BT exchanges in London, which should be completed by the end of May. 

Local Loop Unbundling allows third-party broadband competitors to install their own equipment in BT's local exchanges, providing, in theory, better quality of service and newer, faster and more competitive broadband products as well as enabling services such as VoIP and video-on-demand. Connection from the exchange to the residence is still done entirely over BT's infrastructure.

Tiscali says it'll be the first broadband provider to migrate existing customers to the new platform and is expecting to provision completely new customers by the end of July. Subject to successful completion of the trial, the company plans to extend its unbundled network to over 200 exchanges by the end of the year and continue with further rollout in 2006-07 to a target of 600 exchanges nationally.   
Back to Headlines 

US 12th, UK 14th, Canada 5th in Broadband Penetration

As expected, broadband growth continued during 2004 in the developed nations, according to a report from the Organization for Economic Co-operation and Development (OECD), an association of developed countries. It says that growth was fastest in parts of Europe. According to the report, the main highlights of broadband development during 2004 were:

-Broadband subscribers in the OECD nations reached 118 million by the end of 2004, adding 34.1 million subscribers during the year.

-The OECD broadband penetration rate reached 10.2 subscribers per 100 inhabitants in 2004, up from 7.3 subscribers per 100 inhabitants in December 2003.

The US ranks 12th Great Britain was 14th. Canada was 5.th

                                 OECD Broadband subscribers per 100 inhabitants by technology,
                                                                        December 2004
                                         DSL                 Cable             Other                Total

1. Korea                             14.1                    8.5                  2.2                  24.9
2. Netherlands                    11.6                    7.4                  0.0                  19.0
3. Denmark                        11.8                    5.5                  1.6                  18.8
4. Iceland                           17.4                    0.2                  0.7                  18.3
5. Canada                            8.6                    9.1                  0.1                  17.8
6. Switzerland                     10.8                    6.5                 0.0                  17.3
7. Belgium                           9.6                     6.0                0.0                   15.6
8. Japan                             10.4                    2.3                 2.3                   15.0
9. Finland                           11.2                    2.2                 1.6                   15.0
10. Norway                         12.3                    2.0                 0.5                   14.9
11. Sweden                          9.5                     2.6                2.5                   14.5
12. United States                  4.7                     7.2                0.9                   12.8
13. France                            9.9                     0.7                0.0                   10.6
14. United Kingdom               7.1                     3.4                0.0                   10.5
15. Austria                            5.5                     4.7                0.1                   10.2
16. Luxembourg                    8.9                     0.9                 0.0                    9.8
17. Spain                              6.4                    2.0                 0.0                    8.4
18. Germany                         8.1                    0.2                 0.1                    8.4
19. Portugal                          4.0                    4.2                 0.0                     8.2
20. Italy                                7.6                    0.0                 0.5                     8.1
21. Australia                         5.7                    2.0                  0.1                    7.7
22. New Zealand                   4.2                    0.3                   0.3                    4.8
23. Hungary                         2.4                     1.1                  0.1                     3.6
24. Ireland                             2.9                    0.2                  0.3                     3.4
25. Poland                            1.3                     0.8                  0.0                     2.1
26. Czech Republic               1.0                     0.6                  0.0                      1.6
27. Slovak Republic               0.7                     0.2                  0.2                     1.1
28. Mexico                           0.5                     0.2                  0.0                      0.8
29. Turkey                            0.6                     0.1                  0.0                       0.7
30. Greece                           0.4                     0.0                   0.0                     0.4
31. OECD                            6.2                     3.4                  0.6                      10.2
Source: OECD

- Broadband growth has been rapid, with subscriptions increasing 41% =
during 2004.
- Broadband adoption is picking up speed with the fastest growth of 2004 realized during the final quarter of the year (an increase of 11% from the previous quarter).
- Korea leads the OECD in broadband penetration with 24.9 subscribers per 100 inhabitants.
- The Netherlands moved into second place with a penetration rate of 19.0 subscribers per 100 inhabitants, followed closely by Denmark, Iceland and Canada.
- By December 2004, no other OECD country had reached the penetration rate Korea recorded in March 2002 (19.1%). However, at current growth rates, the Netherlands could match Korea's penetration rate by the end of 2005. Korea has the most mature broadband market in the OECD and growth has slowed accordingly.
- DSL is the leading broadband platform in 27 OECD countries. Canada, Portugal and the United States have more cable modem than DSL subscribers. Fiber optic is becoming a significant platform in Japan, with nearly 2.5 million subscribers, or nearly 12% of all broadband connections in Japan.

The breakdown of broadband technologies in 2004 for OECD countries is:
- DSL: 60%
- Cable modem: 33%
- Other technologies: 7%, (eg fiber optics, LAN, satellite and fixed wireless)


            Total broadband subscriptions, percentage of OECD, top 5 countries, 2004
                              2004

United States              31%
Japan                          16%
Korea                           10%
Germany                       6%
France                            6%
Rest of OECD               31%
Source: OECD
Back to Headlines 

LEGAL MATTERS

MPAA's Glickman: China Dragging Heels on Fighting Piracy

The US offers China an open market for its goods, making the States China's biggest customer. Imagine that if 95% of US buyers of Chinese goods didn't pay for them, perhaps stole them from warehouses under the US government's winking eye. China has by-and-large closed its ears to US requests for protection of American intellectual property rights. The MPAA last week warned Chinese officials that US lawmakers are becoming increasingly restless about China's refusal to make fighting piracy a primary objective. MPAA leader Dan Glickman said he delivered the message to heads of various government departments in Beijing during his first visit to China as MPAA CEO.

MPAA members Walt Disney, Warner Brothers, Sony's Columbia Pictures and Viacom's Paramount Pictures say they estimate that about 95% of all DVDs sold in China are pirated, costing the industry $280 million last year. The Wall Street Journal reported that pirated copies of the newest "Star Wars" movie, released only last week in the States, was already on Beijing streets for about 85 cents. "These just came in this morning. The quality is very good, they're not like those pirated copies that are filmed in the cinema," a Beijing vendor told the Journal as he fished a pirated DVD from behind a bush.

"We said the US Congress is becoming increasingly agitated about piracy," Glickman said during an interview with Reuters "We said they need to do something or there would be trade-related problems. There's consequences if they don't get it down."

US lawmakers are caught in a conflict. Many of their constituents benefit from buying low-cost Chinese goods at the likes of Wal-Mart Also, many American technology companies have much of their gear made in China, as do suppliers of everything from running shoes to fishing gear.

The MPAA says it has worked with Chinese law-enforcement agencies to close shops that duplicate pirated DVDs and the stores that sell them. The MPAA, publicly at least, has praised the agencies, although it appears it is the MPAA that has been making the initiatives. As in the US, the MPAA has bypassed the law enforcement agencies and taken copyright offenders to court directly, reportedly winning all 10 of the cases it has brought. It's also preparing to bring another round of such cases.   
Back to Headlines 

Tax Proposed for Portable Music Players

Some members of the UK music industry are calling for a tax on every music player sold in the country, according to MacWorld UK They want to distribute the revenue to music authors and rights holders. Some countries such as Canada and Germany already collect a similar tax on media such as tapes, CDs and DVDs. Canadian legislators, however, recently refused to pass a tax on portable music players. Dutch legislators recently authorized a levy that would add about 180 ($225) to the price of a 60GB portable music player.     Back to Headlines 

Canadian Court Rules Against Labels

A Canadian Federal Court of Appeals last week rejected the record labels' attempt to learn the names and identification data of 29 people accused of unlawfully sharing thousands of music files. 

The court said that privacy rights must supercede copyright claims, at least in "the early stages of this case." It said that "technology must not be allowed to obliterate" intellectual property rights and "the potential for unwarranted intrusion into individual personal lives is now unparalleled." The labels, through the Canadian Recording Industry Association (CRIA), are not expected to stop suing individuals. "If the US experience is any indication, we can expect thousands of suits against individual Canadians in the months ahead," University of Ottawa law professor Michael Geist said. "There is now every reason to think that Canadians will be subjected to a similar legal barrage."

The appeal was based on a 2004 lower court ruling in which the CRIA requested that five ISPs - Bell/Sympatico, Rogers Communications, Shaw Communications, TELUS and Videotron - provide identity data on subscribers the CRIA accused of trading files illegally.

The appeals court, however, was not as adamant about the legality of file swapping as the lower court. Appeals Justice Edgar Sexton wrote, "In my view, conclusions such as these should not have been made in the very preliminary stages of this action. Such hard conclusions at a preliminary stage can be damaging to the parties if a trial takes place and should be avoided."  
Back to Headlines 

Feds Bust BitTorrent Network

The US Departments of Justice and Homeland Security this week announced the first-ever criminal enforcement action against BitTorrent network users. Needless to say, the MPAA and RIAA stood and applauded, along with every TV show producer. BitTorrent has proven especially useful to those who swap very large files, particularly videos. 

Agents of the FBI and US Immigration and Customs Enforcement (ICE) executed 10 search warrants across the United States against leading members of a peer-to-peer network known as Elite Torrents. Federal agents took control of the main server that coordinated all file-sharing activity on the Elite Torrents network. Brad Buckles, executive VP of anti-piracy at the RIAA said it was clear that the federal government is "committed to an aggressive, forward-thinking approach to the online theft of intellectual property." He said the action recognized that "theft is theft, regardless of whether it's done on BitTorrent or by an individual shoplifting from a local record store."  
Back to Headlines 


ENABLING TECHNOLOGY

Enterprise Partners Buys Muze 

Enterprise Partners Venture Capital has acquired Muze Inc, which developed the largest collection of metadata and related databases for music, books, videos and games. Muze, whose customers include eBay, Yahoo/Musicmatch, Borders, RealNetworks, Best Buy and Overstock.com, also provides customized e-commerce platforms. 

The acquisition marks the VC firm's entrance into the world of digital content management. 

With the support of its new parent, the 15-year-old Muze will be able to be more aggressive with its growth strategy to expand the use of the Muze database for the management and retailing of digital content. 

"Over the past 15 years, Muze has painstakingly developed a world-class library of metadata that covers the entire range of entertainment content," said Bill Stensrud, managing director of Enterprise Partners. "As the acquisition of digital media content has exploded and digital collections have expanded, people are facing the headache of organizing and finding what they want. Muze data is the key that unlocks the promise of digital media."

Terms of the deal were not disclosed.   
Back to Headlines 

Coding Technologies Takes Case for aacPlus to Musicians, Music Fans

The aging technology of the MP3 format - universally loved and used for storing music files in a digital format - makes it ripe for a replacement. Now that RealNetworks' RMA compression scheme has ebbed, there appear to be only two main contenders for replacing MP3. One is Microsoft's Windows Media Audio (WMA) format and the other is the industry standard aac format for which Coding Technologies offers enhancements. The enhanced aac is called aacPlus. 

The biggest boost for aac, the genealogical child of MP3, has been Apple's adoption of it as the format of choice for iPod and iTunes. iPods also plays MP3 tracks. In fact, so prevalent is MP3 that most people call all portable music players MP3 players.

As part of its efforts to make aacPlus the dominant format, Coding Technologies decided to go directly to musicians and music fans by employing some retail marketing. It has spearheaded the formation of the Internet Surround Music Project to make multi-channel surround sound widely available as a way of showing aacPlus' superior fidelity over what comes on music CDs and in MP3 files. CDs are stereo only, of course. They do not have surround sound, the audio that's heard on movie DVDs. If a music lover wants surround sound, he has to buy either a DVD Audio disc or a Super Audio CD. The Internet Surround Music Project aims to change that by making it easy for musicians to code their tracks in a surround sound format and then making it available via the Net to the fans. 

The Project's goal is to let music fans hear what they're missing. It'll try to accomplish that by:
1.Provide a way for artists to get their music heard in surround sound - multi-channel - by "publishing" it on the Internet. Project members want to show music lovers what they're missing when they listen to a music CD or to an MP3 track. Delivering it over the Net eliminates the consumer having to buy or use equipment that plays DVD Audio discs or Super Audio CDs.

2.Encourage more artists to produce content in surround sound by running contests where artist submissions are judged and awarded prizes based on quality, originality and popularity. 

The move is part of Coding Technologies' effort to beat out Microsoft's WMA format as the replacement for MP3 with aacPlus. AacPlus is the enhanced version of the aac format, on which MPEG, DVD Forum and 3GPP have already standardized. Coding Technologies' SBR (Spectral Band Replication) and Parametric Stereo technologies are added to aac, creating the aacPlus format, which delivers streaming and downloadable 5.1 multi-channel surround sound audio at 128 Kbps.

As to the current state of the music format market, it's thought that:
1. MP3 still accounts for the majority of music files that currently exist on user PCs - the installed base.
2. Microsoft's WMA, however, may account for the majority of new files that are being put on PCs because: a) Windows Media comes with every PC, b) most software other than Windows Media that consumers use for ripping defaults to WMA and c) WMA is superior to MP3 in both compression and fidelity.
3. There's also the familiarity factor - everyone's heard of MP3 and WMA - who ever heard of aac or aacPlus? That is what Coding Technologies hopes its Internet Surround Music Project can overcome.
4. No discussion of any aspect of the digital music industry is complete without considering Apple's position with its dominant market share in media players and online music services. The Apple iTunes store delivers music only in a DRM-protected version of aac, which helps familiarize all iTunes and iPods users with the acc brand. The iPod does play MP3 files as well as Apple's aac. Like crying in baseball, though, there's no WMA format in Apple's music world.

Some, such as Microsoft CEO Steve Ballmer, have speculated that most of the music on most of the iPods is in the MP3 format. They base their reasoning on their belief that much of the music was downloaded illegally from a P2P network or ripped from a CD. That could be sour grapes, of course. 

The Internet Surround Music Project has already started an Internet forum at www.tuner2.com for artists to publish 5.1-surround music and will run contests to encourage aspiring artists. The ploy is based on the recognition of the dynamic that radio has traditionally driven demand for new music formats by providing broad exposure. It's using the Net, rather than radio, to drive exposure. 

Step one for the project is making artists aware of the opportunity in surround music. The group will appeal to musicians to submit their multi-channel music to contests hosted at Tuner2.com. Artists who register will receive free MPEG aacPlus encoder software from Coding Technologies to encode their content for electronic submission to Tuner2.com. The Internet Surround Music Project will host that content and run the contests on Tuner2.com, delivering the content both on-demand and in aggregated "radio" streams.

"Our goal in creating the Internet Surround Music Project is to increase awareness of the benefits of surround music for both artists and consumers," said David Frerichs, VP and US general manager for Coding Technologies. "By increasing the amount of surround content being created by artists and distributing that content on the Internet using MPEG aacPlus, the demand for surround music will increase, even beyond the PC."

Two PC-based media players currently support aacPlus surround sound - the RealNetworks' RealPlayer 10 and AOL's Winamp. To get the full impact, the PC needs a 5.1 speaker set as well.

Charter Members
Internet Surround Music Project
America Online's Winamp player 
Cakewalk 
Recording artist Richard Devine 
Jazz Mutant 
Minnetonka Software 
Nasseri Music Business Solutions 
Native Instruments 
Steinberg 
Recording artist Amon Tobin 
Tuner2.com 

"Our Winamp audience is on the leading edge of adoption, for both technology and music," said Scott Brown, Director of Media Systems Development for America Online. "With aacPlus and the Internet Surround Music Project, we can now bring that same audience the latest in 5.1 surround music while increasing the reach of artists."

"I hope that this project will open new doors for musicians and artists who are interested in creating music for surround environments. I think the surround sound format is an exciting new way to hear music now. You have so many options, and now have the ability and technology to add multi-dimensional qualities to sound, that make the musical listening experience even more interesting," said recording artist Richard Devine. "This will particularly be interesting for music in the electronic/glitch/techno genre where all the layers and sounds can be manipulated at pinpoint accuracy. The possibilities seem endless, so I feel it is an important to get involved with as many projects that push for support of surround sound music." 

Musicians, engineers and producers have been empowered with a new level of creative surround editing and mixing tools," commented Cakewalk marketing director Carl Jacobson. Cakewalk makes Windows-based music and sound software such as its MediaWorks, which provides an "all-in-one digital media experience for organizing, archiving and sharing" photos, music, video and data on CDs, DVDs and the Internet. "With MPEG aacPlus encoders from Coding Technologies and the launch of the Internet Surround Music Project, these artists are now being given tools they need and the venue they have been looking for to air their surround sound projects online."

Coding Technologies is a spinout of the joint effort of Fraunhofer Institute (creator of MP3), Dolby, AT&T and Sony that developed the aac technology. It positions itself as a developer of audio compression and enhancements for audio compression for the Internet, mobile and broadcast industries. 

What iPod?
A similar market share battle is being waged over music formats in the mobile phone industry. Coding Technologies says it has taken most of the market and will have some 20 million cell phones in use by year-end that have embedded media players capable of playing aacPlus music files. They'll outnumber all the iPods and come from the likes of Nokia, Samsung and LG

When the music format market is seen from the US/PC/Napster viewpoint, =
it looks like Microsoft's WMA format is winning. However, when seen from the Apple/mobile market, aac appears to have the lead. Coding Technologies is counting on the Internet Surround Music Project to raise awareness of aacPlus' superiority at the retail level in the PCmarket.

A Technology Note
Coding Technologies says that its SBR technology enables audio codecs to deliver the same quality at half the bit rate. Its Parametric Stereo enhances the codec efficiency a second time for low-bit-rate stereo signals., near transparent stereo at 32 Kbps, excellent quality stereo at 24 Kbps and great quality for mixed content down to 16 Kbps and below. The company touts that these levels of efficiency "fundamentally enable new applications in the markets of mobile and digital broadcast." That won't matter, of course, if someone else gets their first. Hence the Internet Surround Music Project.

Approximately the same audio fidelity is produced by:
Compression Scheme                          Speed

An MP3 file recorded at                        128 Kbps

An aac file recorded at                           96 Kbps

An aacPlus file recorded at                     32 Kbps

Coding Technology explains aacPlus's audio superiority in terms of recording speed - the faster the recording speed the better:

Consequently, an aacPlus file takes less disk space and, more importantly to mobile phone operators, less bandwidth than an aac or MP3 file. That also means it will download faster over a cell phone network that is inherently much slower than a broadband connection.  
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HOME NETWORKING

Better Networking, Not More Networking, Needed

Parks Associates says the penetration of data networking solutions into US households crossed the line between early adopters and later purchasers sometime between 2003 and 2004. With more than 17 million homes enjoying at least some basic connectivity, it says, the next phases of home networking deployment will center on solutions that deliver enhanced value to connectivity. Amen. Like playing PC-stored music on the stereo or a downloaded film on the TV in the bedroom.    Back to Headlines 

Surprise: DVR Sales Booming

About 9.2 million households subscribe to DVR services, up from 3.6 million in May 2004, according to an estimate from In-Stat The report also says that hardware vendors shipped 11.4 million DVR units during 2004, compared to 4.6 million in 2003. 

North America is currently the largest DVR market, followed by Japan. The two regions combined represent about 88% of the global DVR marketplace. Europe doesn't know what it's missing.    
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Profits Dropping, Speed Increasing for Home Wi-Fi Market

The makers of wireless networking gear for the small office, home office and home market are shipping more but enjoying it less, according to In-Stat The high-tech research firm says that prices have eroded sharply over the past several years, and few vendors are making much money in this market segment at present. It expects unit shipments to increase from about 17.6 million in 2004 to roughly 32.6 million units in 2009.

The company also says there is a transition underway from the 802.11g standard to MIMO-based products. MIMO (Multiple Input, Multiple Output) technology quadruples the speed of 802.11g from its current maximum of 54 Mbps to over 200 Mbps. The MIMO technology that the likes of NetGear, Linksys and Belkin are currently implementing is not compatible with each other's products. However, chipmaker 

Airgo's MIMO could become the basis for the new 802.11n protocol that the industry is trying to establish as the IEEE 802.11n standard. Airgo is first-to-market with 802.11 a/b/g-compliant MIMO chipset, software and reference design solutions.

"In-Stat believes that there will be a gradually shrinking price premium for MIMO/802.11n throughout the forecast period," said In-Stat analyst Sam Lucero. "The benefits of dramatically increased range appear to be resonating with consumers, actually more so than the increased throughput offered, and we believe customers are willing to pay the extra amount for whole-home coverage."

The latest Wi-Fi report from In-Stat found the following:
- 802.11g will remain dominant throughout the forecast period in very cost-optimized equipment.
- MIMO/802.11n will become the primary air standard. Its "universal" air standard is less confusing for consumers and easier to manage for vendors. 
-Shipment volumes for MIMO-based equipment were small in 2004, but at least five vendors have now introduced products, with more expected in 2005.
-In contrast to the enterprise WLAN market, 802.11a/g equipment is not expected to gain traction in the SOHO/consumer WLAN market.   
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iPod As Home Stereo Component

TuneStage is a new $179 device from Belkin that wirelessly connects an iPod with a home theater system using Bluetooth technology. 

Belkin says the device, which enables transmission from up to 33 feet away, will begin shipping in late July. Last December, when Belkin first started talking about the product, it was scheduled to ship in March. 

TuneStage consists of two devices - a Bluetooth connector that connects to the iPod and a base station that connects to the stereo system. For about the same price, of course, consumers could buy a digital media receiver from the likes of NetGear and connect the PC with all its songs to the stereo.   
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ENTERTAINMENT PORTALS

T-Online Top Portal in German-Speaking Europe

T-Online is waving a report from Arbeitsgemeinschaft Online-Forschung e.V. that says it's the portal with the strongest coverage in the German-speaking areas of Europe. The audience measurement survey shows an average 11.4 million unique users every month avail themselves of the content range at the www.t-online.de page. That increases the portal's appeal as an advertising medium. The company says that in the broadband market of the future, T-Online is well positioned with more than 3.5 million DSL customers in Germany and attractive content. The portal's Musicload service, with over 1.2 million registered customers, is the leading provider among the German music download platforms.

Additionally, the video-on-demand service of T-Online's Vision entertainment portal draws numerous broadband users with an extensive range of top Hollywood films. This user group is particularly interesting for advertisers, since those with a DSL connection and the right equipment can use high-impact rich media formats and Internet spots without restriction. Quality content is attractive not only for Internet users, the company says, but for the major brand name articles manufacturers as well. "Nearly 90% of the largest online advertisers already count on T-Online performance," the company said.   
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SHOW TIME

BitTorrent Joins Internet Video Fray

Another Internet-based purveyor of videos will emerge shortly to compete with the likes of Google, Yahoo, AOL, Comcast's The Fan, Telecom Italia's Rosso Alice and Deutsche Telekom's T-Online Vision. Competition is sure to be fierce as the Net becomes the largest distribution vehicle for entertainment, news, sports, information and education videos. BitTorrent, the newest entrant, has been in use for couple of years for swapping movies, TV shows, software and other large files. 

Bram Cohen, developer of BitTorrent and considered something of a boy wonder, will within two weeks launch an advertising-supported version that includes a search engine, according to Wired News BitTorrent has become very popular because of the speed with which large video files can be downloaded. A BitTorrent site last week had the first copy of the new "Star Wars" movie available for download. So great was the demand that it caused a strain on the Net's resources and slowed all Internet traffic. Downloads of the flick took upwards of 40 hours instead of the usual two to three. 

What makes BitTorrent faster than traditional P2P at downloads is that everyone downloading a file over BitTorrent is unknowingly uploading it to other users simultaneously in multiple "torrents" - hence its name. Surprisingly, and unlike other P2P software, the more popular the file, the faster the download is. According to BitTorrent, "each new participant brings not only demand, but also supply. Instead of a vicious cycle, popularity creates a virtuous circle. And because each new participant brings new resources to the distribution, users get limitless scalability for a nearly fixed cost." 

Wikipedia says that with BitTorrent, files are broken into smaller fragments, typically a quarter of a megabyte each. As the fragments get distributed to the peers, they can be reassembled on a requesting machine in a random order. Each peer takes advantage of the best connections to the missing pieces while providing an upload connection to the pieces it already has.

As with other P2P services, BitTorrent users connect directly to each other. However, like first-generation P2P networks such as Napster, BitTorrent requires a central server called tracker. Reportedly the tracker is "agnostic" because it does not know what files are being transferred; it is said to only keep track of connections. Second-generation P2P networks such as Kazaa, eDonkey, Gnutella and Direct Connect do not require a central server. 

Cohen says he's anxious to demonstrate that BitTorrent has lawful uses. What he has in mind is its use for distributing entertainment and information videos that individuals can now produce using relatively powerful - yet inexpensive - gear. The new search feature will catalog and index the thousands of movies, music tracks, software programs and other files for download over the BitTorrent protocol. 

Ashwin Navin, COO of the five-person San Francisco-based outfit, said anyone can now publish their own movies, music or software because BitTorrent all but eliminates expensive bandwidth costs. Google Video's initial approach to videos is based on making bandwidth available to video producers for free. It allows them to upload the video, a one-time event. It would then index and catalog the videos, making them available for download at no charge to the producer. Yahoo's approach with its online video is more traditional in that it does deals with known movie and TV studios rather than start-ups and individuals.

The BitTorrent search engine will take advantage of knowing how popular a particular file is by counting the number of torrents to determine the number of nodes downloading and uploading. That will let the BitTorrent search engine list results based on the torrents. "Web search rates things by relevance," Navin, a former strategist for Yahoo, told Wired News "Our search rates things by relevance and availability."

Most of BitTorrent's revenue so far, according to the publication, has come from donations and sales of T-shirts. The BitTorrent search site will have sponsored links provided through a partnership deal it's done with Ask Jeeves.   
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Libraries Offering Video Rentals

Video rental stores and online video services like Netflix have a competitor as the nation's libraries are loaning out more and more videos, according to the Los Angeles Times story "More Movies Are Stacking Up at Libraries." It says libraries are investing more money in DVDs and videos with some even charging borrowers to cover the costs of buying new releases. The number of videos stocked by libraries nationwide has risen by 56% in five years, according to the National Center for Education Statistics. Blockbuster and Movie Gallery, the nation's two largest video rental chains, told the paper they had not seen any evidence they were losing business to the libraries.    Back to Headlines 

Blinkx Adds UK Sports Videos

Blinkx, which offers a searchable index of Web audio and video content, has signed a deal with In The Box Media to add video content from three UK sporting Web sites to its index. Blinkx will now include highlight videos and other content from ConferenceFootball.tv, PGAPro.tv and Combat.tv.    Back to Headlines 

NarrowstepUpgrades Extreme Sports Internet Video Channel

Extreme sports network www.High.tv is a "TV channel" broadcast over the Net 24 hours a day, seven days a week that anyone, anywhere with a broadband connection can watch. It specializes in showing extreme sports such as break dancing, windsurfing, snowboarding and kite surfing. 

After running for almost two years, High.tv has started using a new "viewer" that its parent company Narrowstep spent 18 months developing. 

High.tv's new features include full VCR controls - fast forward, rewind button and mute button. There is also a "mini mode" that allows viewers to minimize the TV screen so they can continue working while still having the player in one corner of the screen. Other features include displaying the local time, an indicator to measure network performance and a "DVD chapter" view that lets viewers see each part within a program.

Iolo Jones CEO of Narrowstep, the "TV on the Internet" company, said that High.tv is an excellent example of what narrowcasting TV is all about. For the extreme sports fan, he said, the technology is incidental because they just care that they can see their favorite sports anytime, anyplace, anywhere.

Graham Bell, a former Olympic skier said, "I think High.tv is a great concept - to be able to watch my sport and many others when I like and where I like gives me utmost control and freedom of choice. Broadband television offers a whole new medium which is catching on rapidly and will soon become the preferred choice of accessing great content in a high quality format."

The channel is free to view and is paid for by advertisers and sponsors including Sony Ericsson, Philips, Nissan, Nike, Red Bull, Canon, HSBC, KPMG, COI, AOL, Easy jet, Quiksilver and Warner Bros 

High.tv can also be found on the sports broadband pages of ISP partners =
such as AOL UK, Tiscali, Wanadoo, Blueyonder, Comcast and Windows Media in the UK, US, Australia and Canada.

To mark the launch, High.tv will broadcast exclusive highlights from the King of the Caribbean professional windsurfing competition that started this week in Bonaire.  
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LIES, DAMN LIES, AND STATISTICS

Record Mobile Phone Sales in Q1

Sales of mobile phones increased 17% in the first quarter to 180.6 million units, up from 153.7 million in the year-ago quarter, according to Gartner Inc.

The record-breaking quarter saw sales growth in all regions.

"In the mature markets of Western Europe and North America replacement sales ensured a buoyant performance," said Ben Wood, Gartner's research VP for mobile terminals research. "The Asia/Pacific region reflected seasonal trends by virtue of strong sales associated with Chinese New Year and other festivals."

Rapid growth in emerging markets such as Eastern Europe, Middle East and Africa and Latin America also helped spur global sales, he added. 

As for the mobile phone makers, Nokia maintained its leading position and even saw its market share increase, despite poor performance in North America in the quarter. According to Gartner principal analyst for mobile terminals in Asia Pacific Ann Liang, Nokia can thank Asia-Pac, especially Mainland China, for much of its growth. Apparently, "aggressive pricing, significant investments in marketing and its distribution network delivered sales of more than 5.6 million units" in China. 

Motorola also had a good quarter, selling 30.3 million units and keeping roughly the same share of the market. Gartner says that a strengthening brand, largely due to the success of its sleek RAZR V3 phone and improved relationships with network operators contributed to the solid quarter. But the road ahead won't be an easy one. "Motorola must now work hard in 2005 to grow its market share further without sacrificing margins too dramatically, particularly given its commitment to supply ultra low-tier products," Wood said. 

Although still in third place, Samsung eked out a bit more market share in Q1 - 13.3% vs 12.6% a year earlier. It saw particularly strong sales in Western Europe and Russia and gained more traction in other regions due to lower prices on its handsets.

While other manufacturers gained or maintained market share, Siemens felt the brunt of their success, dropping from 8% of the market in 1Q04 to 5.5% in Q1 of this year. According to Gartner, this is the company's lowest market share level since 1999. "The uncertainty about the future of Siemens' business has hurt it as network operators and key channels lose confidence in the company and its products," said Wood. 

Wood added that although consumers are buying more mobile phones, profit margins are being squeezed because "consumers in emerging markets want cheap handsets, and competition in more-developed markets keeps prices low." This will likely lead to trouble for smaller manufacturers, many of whom are already struggling to stay afloat. "We expect some of them to be bought out, and a few will choose to leave the mobile phone market completely," he said. 

Based on the Q1 results, Gartner expects worldwide mobile phone sales for the year to near 750 million units, up 13% over 2004. 

                                                  Worldwide Mobile Terminal Sales to End-Users in 1Q05
                                                                              (Thousands of Units)
                                                       1Q05                               1Q05                         1Q04                     1Q04
Company                                        Sales                       Market Share (%)             Sales            Market Share (%)
Nokia                                              54,943.1                             30.4                       44,259.1                   28.8
Motorola                                          30,293.6                             16.8                       25,111.0                   16.3
Samsung                                         24,099.0                             13.3                       19,362.5                   12.6
LG                                                  11,138.6                               6.2                         8,210.0                     5.3
Siemens                                            9,942.7                              5.5                        12,285.8                    8.0
Sony Ericsson                                    9,900.0                             5.5                          8,638.6                     5.6
Others                                              40,293.0                           22.3                        35,879.9                   23.4
Total                                                  180,610.0                       100.0                      153,746.9                 100.0
Note: This table excludes ODM to OEM shipments.
Source: Gartner Dataquest (May 2005)
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Web Surfers Replacing Couch Potatoes; Internet Chipping Away at TV Ads

The signs are evident that the Net is beginning to take away advertising dollars from TV in increasing numbers, according to a recent Los Angeles Times article. As evidence it cites the commercials for Land Rover, the Army and Staples that run before music videos and TV clips on Yahoo. The report says that General Motors cut commercial orders on some broadcast networks but simultaneously agreed to pay $4 million to sponsor an America Online music service. GM knows what it's getting because it's expanding a campaign that placed Buick spots before AOL's recaps of the hit show "Desperate Housewives." The newspaper also reports that Microsoft's MSN.com recently landed such blue-chip advertisers as American Express, Volvo and Sprite.

"Our business is probably coming more from television, especially broadcast television, than from any other medium," said Wenda Harris Millard, chief sales officer for Yahoo, which did $3 billion in online ads last year. "Brand marketers have finally recognized they cannot ignore the shift in media consumption patterns."

John Hayes, chief marketing officer at American Express, said, Network TV isn't watched by as many consumers as it used to be. The couch potato," he said, "has been replaced by the Web surfer." 

The size of the advertising market broadcast network, cable TV and local TV ads runs about $60 billion a year. Online ad revenue grew 33% to $9.6 billion in the States last year. About the same amount of growth is expected in 2005. As the Net has become more of a standard part of people's everyday life, the paper reports the TV ad market's best days might be behind it after run of more than four decades.   
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Online Sales Boom, Up 23.8%

Online sales grew to $19.8 billion in Q1 and accounted for 2.2% of all US retail sales, according to the US Department of Commerce That's up 23.8% from $16 billion in the year-ago quarter and a 6.4% increase sequentially. Fourth quarters are normally the year's largest.    Back to Headlines 

Internet Sucking Ad Dollars From TV

Ad expert Jack Myers is predicting a decline to $9.03 billion for spending on both broadcast and cable television advertising, reversing his month-ago forecast of a 3.2% increase to $9.37 billion, according to the New York Post Myers predicts in his newsletter that the decline "will represent the first time in history broadcast upfront revenues have failed to increase for two consecutive years." Since the early '90s, broadcast revenues have averaged 6.2% annual growth. More than half the nation's online homes are now equipped with a broadband connection that's suitable for video. Internet advertising, with its targeted market and more measurable results, has boomed.    Back to Headlines 

Online Publishers Increase Paid Subscriptions

The Association of Online Publishers says 63% of its members are now charging for online content, compared with 58% in 2004. There has been a decline, the association said, in one-off purchases and an increase in multi-issue subscriptions.    Back to Headlines 

Net Users Want PSPs

It doesn't have a hard drive and can only play content in a proprietary format, but Sony's PlayStation Portable (PSP) is on a lot of wish lists. 

According to Parks Associates, 49% of US Internet users who plan to buy a portable gaming device want a PSP, while 33% want a handheld from Nintendo - either the Game Boy Advance or Game Boy DS. Nokia's N-Gage game deck still hasn't garnered much interest, with only 4% of those surveyed saying they want one. 

"Sony's aggressive marketing and smart positioning have paid off, with more than 1.3 million units sold in the US in less than two months, with no signs of its sales tapering off," said Parks senior analyst Michael Cai. "Our research further shows that the PSP's sleek, sexy design and support for music and video playback bolster its already strong appeal among gamers older than 18."   
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Consumers Collecting Movie/TV Shows on Their PCs

Digital media is good for makers of hard disks as the number of consumers in the US with large video files stored on their PCs rose from 8% last year to 13% in March 2005, according to a report from market research firm NPD Group The 13% who had a 150MB video file - the average size of a 30-minute TV show - generally had 15 such files on their PCs. 

"What will trouble many, especially in the film and video industry, is that some consumer collections include material that is clearly pirated," said NPD analyst Russ Crupnick. "In March, we noted several dozen full-length theatrical films on computers well before their expected DVD release date, including Ocean's Twelve,' 'Lemony Snicket's A Series of Unfortunate Events,' 'Million Dollar Baby,' 'The Aviator,' 'The Ring Two' and 'Team America World Police.'" NPD plans to launch an ongoing PC survey of 40,000 panelist volunteers called MovieWatch Digital in the Q4, which will monitor consumer interaction with digital video files.   
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MOBILE MEDIA

Orange Launches Mobile TV in UK

Mobile phone users in the UK can finally see if all the hype surrounding mobile TV is accurate, provided that they have a phone that works over the Orange 3G network. 

Orange TV, the first TV-on-mobile service in the UK, is launching with nine channels ranging from news to sports to cartoons and more. The content is streamed over the Orange 3G network and will only work when the phone is within the network's coverage area. 

The service will initially only be available on the Nokia 6680 handset, but Orange promises to add more compatible phones throughout the rest of the year. 

Initial channels for Orange TV include: ITN News, CNN, "Big Brother," "Celebrity Love Island," Comedy Time, Cartoon Network, Toon World, Fashion TV and an extreme sports channel. More channels will be added in the coming weeks. 

"Our customers will be the first in the UK to watch TV on their mobiles, be that CNN or 24-hour coverage of the 'Big Brother' house," said Orange chief marketing officer Alexis Dormandy. "This signals the start of a huge new opportunity for our customers, broadcasters, handset manufacturers and production companies." 

The Orange TV application is free to download. The service itself comes with a subscription fee of 10 per month.    
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FunMail Launches Visual Ringtones 

FunMail is turning ringtones into multimedia applications with the launch of its new VizTones that blend wallpaper, animation and ringtones into rich-media content bundles. 

One example of a VizTone would be a bundling of a real-music ringtone from a favorite song and a wallpaper that's a picture of the artist. For more advanced handsets, there are also Animated VizTones that add a CMX animation or MPEG-4 movie to the mix. 

The company is also rolling out personalized VizTones, where the user can type in a name or other text to accompany the ringtone when a certain person calls. 

Consumers will be able to purchase and download the newfangled ringtones at the upcoming FunTones Universe, a "visual ringer portal" that will offer VizTones and Animated VizTones as well as next-generation video ringers. 

"FunTones Universe will further differentiate FunMail's offering, and cement our position as the pre-eminent North American provider of visual mobile content," said FunMail VP of sales and marketing Andy Baldocchi. "Our market survey data indicates that consumers ages 16 to 24 love the content and the name FunTones Universe, and we are confident we have another winner on our hands."

The portal is expected to launch in late Q2. The content will initially be available for BREW and WAP 2.0 handsets.    
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Napster Sells 100k 'Napstertones'

Napster is bragging that it sold more than 100,000 "Napstertones" in the first two weeks they were available. The digital music firm launched the Napstertone ringtone service in partnership with Dwango Wireless on May 9. 

In addition to real-music ringtones, the Napstertones service also offers artist voice "shoutouts," exclusive Napster Kitty wallpaper and other graphics. 

"Napstertones is off to one of the most successful ringtone debuts ever," boasted chairman and CEO Chris Gorog. And that's with the service only available in the US to Cingular and T-Mobile subscribers. Most other major wireless carriers are expected to start offering Napstertones this summer. 

Napstertones range from $1.99 to $2.99 and can be purchased at www.napstertones.com, www.napster.com or from within the Napster digital music service.

In addition to talking up the new ringtone service, Gorog also downplayed the threat of the new digital music service from Yahoo According to Gorog, "the recent introduction of a new competitor's deep discount music subscription service has had no impact on Napster's growth or retention."  
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Verizon Wireless, Leap Let Users Swap Mobile Photos 

Verizon Wireless has partnered with wireless communications services provider Leap Wireless to let customers who use either company's picture messaging service exchange photos with each other directly from their phones. Camera phone users can swap photos and folks with video-enabled cell phones can wirelessly swap video, picture, text and audio files.

Mobile 365 will provide the interoperability between Verizon Wireless customers and subscribers to Leap's Cricket service. 

"Now that picture messaging has gained mass-market popularity, customers want to be able to swap photos with their friends and family, regardless of which wireless carrier's network they're on," said Leap executive VP and chief marketing officer Al Moschner. "We are pleased to have formed a relationship with Verizon Wireless and Mobile 365 to make inter-carrier picture messaging a reality for our customers, and believe that this service will be popular with our growing multimedia messaging customer base. Inter-carrier messaging for our customers is just one more way that we continue to evolve our Cricket product offerings, and believe that it will be of great value to our customers."

Verizon Wireless VP of wireless
Internet and multimedia Jim Straight believes that "that picture messaging between customers on different wireless networks holds as much promise as inter-carrier text messaging did when it was first introduced a few years ago" and that enabling consumers to share photos with friends on other wireless network will help encourage "the proliferation of wireless picture messaging."    Back to Headlines 

ONLINE MUSIC SERVICES

RazorPop Planning P2P Subscription Service 

RazorPop, a start-up whose peer-to-peer file-sharing software searches all the leading P2P networks and offers simultaneous downloads from multiple networks, is planning to launch a subscription music download service. 

The company plans to offer rights holders - labels, composers, publishers - a percentage of the subscription fees it collects from the service. An independent clearinghouse will sample network downloads and disburse licensing fees accordingly. 

"Five years ago there were no online subscriptions and P2P was the primary conduit for unauthorized music downloads. Today the world is vastly different," said RazorPop CEO Marc Freedman. Despite the growth of legitimate digital music sources, illegal file swapping is still immensely popular. According to Freedman, e-mail and instant messaging are the most popular ways for consumers to share music files, followed by copying files from a friend's portable MP3 player. 

"Yahoo typifies the new world," said Freedman. "It just announced its music subscription plan, while at the same time offering Yahoo Mail and Yahoo Messenger, along with its new Yahoo Music Unlimited with portable player file transfer. The RazorPop P2P Music Subscription benefits both the music industry and consumers. For the industry, P2P is the one channel the major labels haven't licensed yet or monetized." 

Freedman believes that the music industry's decision to fight P2P networks rather than try to use the services to its advantage is "ironic" because there are some 20 million-30 million consumers using P2P networks in the US alone. "At $100 per year per subscriber, P2P represents a virtually instant multibillion-dollar market that can reverse the music industry's sales decline," he said. 

"On the consumer side, people will finally have the freedom to choose the music subscription channel and provider that's right for their lifestyle and consumption. The RazorPop music subscription service will be highly competitive with those from Yahoo, Napster and others. We will deliver over 30 times more music tracks for less than $10 per month."

Because consumers will be paying a subscription fee and a portion of that fee will be distributed to copyright holders based on a sampling of RazorPop downloads, the company believes that the new service will "immunize" its subscribers against lawsuits filed by the music industry. 

However, in case the industry "inadvertently" sues RazorPop subscribers when it files suits targeting non-subscribing P2P users, RazorPop includes so-called "copyright infringement insurance" with the service. The insurance will be capped at $5,000 per subscriber, which is above typical RIAA settlement amounts to date.

Of course, the whole service depends on RazorPop being able to forge license agreements with record labels and other rights holders. The company isn't commenting on the status of its negotiations, but said that "music industry receptivity has been encouraging.

If all goes as planned, the RazorPop service will cost $9.95 a month or $99.95 per year if paid in advance. It will include RazorPop's TrustyFiles software that provides access to most music tracks on all the major P2P services using the Kazaa/FastTrack, Gnutella, Gnutella 2 and BitTorrent networks.   
Back to Headlines 

The Orchard Adds Shanachie Catalog 

The Orchard has acquired exclusive worldwide digital distribution and marketing rights to music from independent record label Shanachie Entertainment The agreement calls for the Orchard to distribute Shanachie's catalog to all of its digital music store/service and wireless carrier partners. 

The digital music distribution service provides indie music to all the major digital music outlets as well as a number of mobile operators. It currently has relationships with more than 100 digital music stores around the globe including iTunes, eMusic, MSN Music, Napster, Real/Rhapsody, and Yahoo/Musicmatch. 

Founded 30 years ago to focus on traditional Irish music, Shanachie has since expanded into other genres. It releases some 50-70 titles a year and boasts a catalog encompassing blues (through its Yazoo imprint), folk, world music, reggae, smooth jazz, Americana, Latin music, rock, funk, jazz, klezmer and other genres.  
Back to Headlines   

Free Song Download Available in Surround Sound 

Digital Theater Systems (DTS) and Peter Gabriel's Real World Records have teamed to bring 5.1-channel surround sound to downloaded music. The record label is promoting its latest record with a free download of one of the tracks using the DTS technology. 

The album, "Moksha," falls into the Indian classical music genre known as raga. Fans of this style of music can download the seven-minute track "Sandhya" by Amjad Ali Khan for free. Just visit http://realworldrecords.com

/amjad, download the song, burn it to CD and play it back in a standard surround sound system with DTS to hear the 5.1-channel mix.

"The CD album release is stereo, but we recorded the album sessions in 5.1 and thought that offering a download of the multi-channel track in DTS would be a compelling promotion," said Real World interactive director York Tillyer. "This music is certainly an interesting alternative to many surround recordings currently available."

DTS develops 5.1-channel surround sound audio technology for movie theaters and home theater systems.

"This is a wonderful way for consumers to own a beautiful piece of music in DTS that they would not otherwise experience in surround sound," said Gerben van Duyl, director of business development, consumers for DTS.   
Back to Headlines 


Musica360 To Offer Only Latin Music Downloads 

Come September fans of Latin music will have a site of their own where they can download songs and albums from independent Latin artists either la carte or as part of a subscription service. 

The new site, Musica360.com, was created by Christopher English, founder and former CEO of upstart hip-hop magazine Hood Grown and former Clear Channel employees Josefina and Jenny Garcia. 

Although all the music available through Musica360 will be licensed, the tracks will be in MP3 format and will therefore not carry any digital rights management protection. Users will be free to play their downloaded music on any PC or portable music player, including the iPod, as well as burn the tracks to CD. 

Specific features include: 
- Individual song downloads for 99 cents each; album downloads for $9.99. 
- The "Mi Musica" subscription service, which uses the Weed file format that lets users play songs three times before paying for them. 
- Ability to play all songs on any digital music player that supports MP3.
- Ability to play all downloaded tracks on Mac, Windows or Linux PC
- Unlimited CD burning of downloaded music for personal use.
- A way to discover music from some of the hottest up-and-coming Latin music artists. 

Musica360 will also feature interviews, sound clips and videos of both major-label and independent Latin artists.  
Back to Headlines 

Loudeye Gets DSL Deal 

Digital music platform Loudeye has inked a deal with Dutch ISP Planet Internet to offer free music bundled with a DSL subscription. 

The agreement calls for Planet Internet offers customers of its ADSL Comfort and ADSL Advanced broadband services promotional credits good for a free year of digital music. Planet Internet is offering the bundle to both new and existing customers. 

Customers can spend the credits in Planet Internet's MusicStream service, which lets them stream or download individual tracks and whole albums. 

"We are delighted to have secured this deal with Loudeye to offer our customers access to digital music as part of an all around subscription package," said Tako in't Veld, broadband content manager for Planet Internet. "We aim to provide the highest value to our ADSL customers and bringing Loudeye on board firmly echoes this promise."   
Back to Headlines 

Karaoke Tracks Available for Download 

Karaoke fans now have an easier way to practice their singing. 

Sound Choice, the world's leading manufacturer of karaoke accompaniment tracks, has made more than 1,500 of its most popular songs available for download from major online digital stores including iTunes, MSN Music, Napster, Virgin Digital, Wal-Mart and FYE Download Zone. 

Since making the music available for download, the company has seen "an increasing rise in the demand for our downloadable music tracks" across the market, according to Sound Choice president Derek Slep. It plans to increase the number of sites offering its catalog for digital download in the near future.   
Back to Headlines 

WIMAX WATCH

We include these articles about WiMAX from our sister company Rethink Research's Wireless Watch for their relevance to the future of digital media. WiMAX technology brings a promise of any time, anywhere broadband.

- Intel, which adopted Wi-Fi as its own child and put it in nearly every laptop PC, has now put its marketing muscle and bankroll behind WiMAX. Exiting Intel CEO Craig Barrett said this week that WiMAX will outperform what he calls the "half-assed" broadband that the telcos (DSL) and cablecos (DOCSIS) offer. He said that WiMAX will be particularly superior for streaming video, something every digital media fan wants.

- WiMAX will prove superior to the mobile industry's third-generation (3G) networks, according to a report out of Europe. WiMAX, the report says, could even attract customers who presently use the telcos' DSL broadband.

- Italy has taken the lead, at least publicly, in using WiMAX to bring broadband service to rural, less affluent regions.   
Back to Headlines 

Intel CEO Says WiMAX Will Be Better Than DSL

Intel continues to talk up WiMAX loudly, and last week the voice was that of outgoing CEO Craig Barrett, who said 802.16 would compete effectively against the "half-assed" speeds of DSL and cable. 

The inadequacy of home-based wired broadband would open major opportunities for WiMAX in the consumer space, he told an interview with news agency Reuters "Most of us who have DSL or cable at home do not have good broadband but kind of half-ass broadband, which doesn't really allow for good streaming video or that kind of stuff," he said.

Barrett claimed that, while cable and DSL rarely deliver speeds faster than 5 Mbps, WiMAX will deliver twice that speed - although most early deployments are focused on consumer rates of 1 Mbps-3 Mbps, keeping the higher rates for business users. Barrett steps down as CEO this month, giving way to Paul Otellini.
Back to Headlines 

WiMAX Will Challenge 3G in Europe

Broadband wireless technologies will make a "dramatic comeback" after the failures of 1999-2000 to have a major impact on the European telecoms market, according to a new report from Research & Markets

WiMAX, rather than 3G, provides the performance necessary to combine =
wireless communications and personal broadband access, claim the authors. The report sees the main advances, which will ensure success this time around, are the shift towards OFDM, enabling non-line of sight and future applications such as broadcasting; the creation of standards; the backing of major vendors; and the fact that the IP Multimedia Subsystem standard for IP-based services can be used to converge cellular broadband wireless and wireline networks.

The report predicts that WiMAX technology will capture a significant share of the broadband wireless market and will attract a large number of subscribers who will use WiMAX in place of DSL or some other wireline broadband service. On the other hand 3G will attract users who are primarily interested in mobility. Most subscribers will use 3G to supplement rather replace a wireline broadband service.   
Back to Headlines 

Italy Gives Green Light to WiMAX

As expected, Italy's Ministry of Communications has given the go-ahead for the launch of WiMAX trials, with the first requests from interested operators expected by the end of May.

A tender for the assigning of frequencies should be announced in six months. Among the first competitors will be Alvarion and Siemens, which is planning an October launch of its product. Although Siemens was previously an OEM of Alvarion's Breeze-MAX gear, the German vendor will now compete independently with its homegrown fixed wireless equipment.

"The government must make available the necessary frequencies and also private companies, telephone operators and public administrations must be ready to invest in this new technology," said Luigi De Vecchis, CEO of Siemens Communications.

According to Italy's Communications Minister, Mario Landolfi, trials will launch soon.

The Ministry will offer trialing operators 100MHz, divided up according to requirements, but only in certain areas of the country, as yet unspecified. Many are expected to be rural since Italy regards WiMAX as a potential way to extend broadband access and improve digital inclusion in its poorer southern regions.

De Vecchis told a recent conference in Italy that the whole country could be equipped with WiMAX, using up to 3,000 base stations, for a cost of less than 300 million over a few years.

However, the head of Alvarion Italy, at the same summit, was more cautious, saying "We will need at least 40% more."  
Back to Headlines 

WiMAX Will Reach 20m Users By 2009

Wireless Watch reports that there'll be a market of 20 million users for WiMAX by 2009, according to a new survey from Strategy Analytics 

The report says business of this scale could be created purely around =
last-mile applications and the current fixed wireless version of the standard, even without the future move to mobile support. 

"Our analysis of provisioning costs, business models and demand leads us to conclude that WiMAX for fixed wireless broadband services alone will generate a modest but healthy market for chips and equipment by 2009," said Strategy Analytics director Chris Taylor. "Major concerns still remain regarding battery life for mobile WiMAX, undefined mobile specifications, and probable competition with 3G and proposed 4G networks. However, these issues will not prevent WiMAX from reaching sustainable volume in fixed applications."   
Back to Headlines 

Who Will Own WiMAX?

We asked Rethink Research co-founder Caroline Gabriel which companies will be the ones to provide wireless broadband service over the coming WiMAX networks. If it's the traditional phone companies, then there won't be any new competitor in the broadband market to reduce costs and bring innovation. It'll be the same duopoly of telcos and cablecos. If there are new entrants, expect broadband speeds to increase, prices to decrease, new services and products to be included and penetration rates accelerate.

According to Gabriel:

"There will be Sprint, which isn't really a telco, but a cellco, and a long-distance operator. Sprint may offer the service to third parties, called MVNOs (Mobile Virtual Network Operator), like Virgin uses for its US cellular service. Wal-Mart then might sell the Sprint WiMAX service, or better still a cable TV operator like Comcast, which needs a mobile network to compete with Verizon, SBC and BellSouth

"There will be new companies formed to deploy and operate WiMAX =
networks such as Clearwire.

"The telcos will actually join the race because they're afraid of missing out, but they'll have to take industry pricing, which will hurt their wireline business.

"Cellular operators will use WiMAX to deliver big files by putting put two radios into phones. They'll then find they have a network so they'll sell capacity. If they don't want to hurt their residential customer base they'll offer it to enterprises and vice versa.

"Intel will make that everywhere there is at least one operator ready to take WIMAX on.

"WISPs will also take it on, Wi-Fi buffs that want it for backhaul and later they'll find that there's a WiMAX chip in every Intel PC, so who needs Wi-Fi

There'll be new cellular operators that are wired operators who'll take =
WiMAX and in 2007 compete with cellcos."

Rethink Research has the details in its industry reports and analysis. For more information, e-mail paperboy@riderresearch.com  
Back to Headlines 

PRODUCT WATCH

Archos Unveils 100GB Portable DVR

Archos has added to its line of portable video player/recorders with the new AV 700 Mobile Digital Video Recorder. 

This latest model features a seven-inch wide screen display like that on any number of other portable DVD players, but goes beyond the rest with its ability to digital record video and audio and play back a variety of file formats. 

The AV 700 is also the first portable video player to support direct video recording onto a 100GB hard drive. Using the new Archos TV Docking Pad, the AV 700 can acquire content directly from a TV, DVD player, VCR, cable box or satellite receiver - without the need for a PC. Consumers can also schedule recordings for the next week or month, similar to the capability found on other DVRs. Once programs are scheduled on the device, the integrated AV 700 Scheduler controls the tuner inside the VCR, cable box or satellite receiver to automatically adjust the channel and record based on the time and duration of the schedule. 

The device encodes and plays back MPEG-4 videos with MP3 stereo sound and lets users transfer home movies onto the device using the USB Host port connected to a camcorder. 


AV 700 Mobile Digital Video Recorder



Additionally, the AV 700 lets users store up to a million JPEG photos and view them several at a time or in slideshow mode. It automatically synchs up with Windows Media Player 10 to play music from Windows-compatible digital music services including MSN Music, Musicmatch, Napster and Wal-Mart as well as from digital movie-on-demand site CinemaNow The device can record up to 300 hours of music and hold up to 55,000 songs with playback in MP3, WAV, WMA or protected WMA formats. 

It also supports game play thanks to its Morphun Gaming Engine. The player comes loaded with several games and users can purchase additional ones from the Archos Web site. 

The AV 700 will be available in June in 40GB and 100GB models. The larger version can record and store up to 400 hours of video - up to 250 full-length movies - in MPEG-4 with DVD-quality video and CD-quality stereo sound. 

According to Archos CEO Henri Crohas, "The AV 700 is designed to allow favorite TV shows and movies to be taken from the living room to the road, providing hundreds of hours of playback on a tremendous seven-inch wide screen display." With availability scheduled for the beginning of summer, the company expects the gizmo to be "the travel companion for families vacationing this summer as well as business travelers who want to take their TV shows, movies or sporting events on the road." 

Archos packages the AV 700 with a TV docking pad, AV cables, remote control, protective case, headphones, USB 2.0 cable, USB host cable adapter and power adapter. It also sells a slew of optional accessories geared at travelers - a back-seat car holder, double headphone kit, travel kits, additional docking pad, USB mini game pad, additional batteries and other add-ons.

The 40GB AV 700 has a suggested price of $600. The 100GB model will retail for $800.    
Back to Headlines 

Samsung's Yepp Nudges Out Apple's iPod shuffle

Apple's iPod shuffle earned high-ratings in PCmag.com's comparison of various flash memory-based portable music players. It was cited for having the best sound quality, the ease of using it with the "slick" iTunes and "a low price, a near-weightless design, and interesting random-load/random-play features." However, PCmag.com rated Samsung's Yepp YP-T5 V as tops because it has a screen - unlike the iPod shuffle, weighs only 1.3 ounces with the battery, "is roughly the size of a lipstick case," has an FM tuner and radio, voice, and line-in recording. Sony's S2 Sports Network Walkman ended up at the ranking's bottom with PCmag.com commenting "We included this review just so you'll know that every flash player is not created equal. Unless you're an ATRAC3 fan who loves messing around with awkward proprietary software, the S2 is one to avoid." Ouch! The report is at: 
http://www.pcmag.com/article2/0,1759,1819092,00.asp   
Back to Headlines 

Thomson Adds Widevine's SmartCard

Thomson is integrating Widevine's Cypher Virtual SmartCard in its IP900 Series Platform set-top boxes in order to assure risk-free delivery of secured content to end users. 

The Thomson IP900 series is an inexpensive, compact set-top box that delivers home entertainment and broadband services over IP networks. It supports interactive applications including broadcast video, video-on-demand, gaming and messaging.  
Back to Headlines 


i3 and Accedo Developing Advanced Set-Top Box

i3 Micro Technology and Accedo Broadband are working together to provide advanced triple-play services on the i3 Mood 300 IP set-top box. 

Accedo will use i3's Mood software development kit (SDK). This will enable it to offer service providers an enhanced portfolio of entertainment and communication applications on the Mood set-top box, extending the range of managed triple-play services beyond that of basic IPTV functionality, including advanced MPEG-4 decoding and PVR functionality. An integrated hard disk allows for convenient and silent personal video recording that is both advanced and secure.  
Back to Headlines 


Nokia Shows Off Portable Web Browser

Nokia is showing a portable Web browser for wireless broadband networks that do not include a phone. The unit will retail for $350. It runs on the open source Linux operating system. Wireless WiMAX broadband networks can provide access speeds comparable to those the cable TV and phone companies provide.    Back to Headlines 

DIGIGRAMS

January 1, 2009: Analog TV 'Drop Dead' Day

Draft legislation is reportedly circulating in Washington, DC, that would set January 1, 2009 as the date when all analog TV broadcasts will cease. Analog TV owners will then need to connect to a digital receiver, an analog-to-digital converter or to a digital cable service to continue receiving broadcasts after the December 31, 2008 deadline. CEA president and CEO Gary Shapiro said his organization has long supported a hard cut-off date for analog broadcasts "to provide certainty to manufacturers, retailers, consumers and all others with a stake in the transition. A hard date will foster innovation and strengthen America's security, while completing the DTV transition in a timely and understandable manner." CEA members who make TVs stand to sell lots of high-priced TVs when such legislation is enacted, of course. TV broadcasters are opposed to the mandate because of the cost to them.    Back to Headlines 

New Sources for File-Sharing Growing

It's like sticking a finger in a hole in the dike and seeing two more start spouting. The number of methods for downloading content without authorization goes far beyond the P2P networks - e-mail and instant messaging, for example, which content owners such as Microsoft and Time Warner's AOL provide. Usenet newsgroups have seen a resurgence as file-swappers are turning to them for file sharing, especially for large video files such as full-length movies, according to Wired News Usenet users take advantage of new commercial, high-bandwidth Usenet services and a new file format called NZB that protects against lost bits of download data. Some 60GB of DVD copies are posted daily. "Though the copyright industries boast significantly improved geekery and monitoring technology, Usenet remains relatively unmonitored," digital music consultant Toby Lewis told Wired News.   Back to Headlines 

AOL Execs Not Keen on IPO

Senior AOL managers told Time Warner CEO Richard Parsons two weeks ago that they didn't need their stock to be publicly traded for use as a "currency" for making acquisitions, according to the Wall Street Journal The paper said that AOL would like to make acquisitions, but its executives don't believe AOL shares would fetch a high market value until it proves that its soon-to-be unveiled portal strategy can be a success. Parsons told the company-owned Fortune magazine last week that he'd consider selling off parts of AOL, which is due to unveil its new portal strategy in the coming weeks. There are two key elements to the new strategy. One is the ability of non-AOL subscribers to gain access to what are now "walled off" products and services. The other is to corral and make available entertainment and information videos in order to compete with Yahoo, Google, the soon-to-launch BitTorreent video search and other entertainment portals.  Back to Headlines 


DualDiscs Getting Popular 

Looks like consumers are hungry enough for bonus material to shell out a few extra bucks and get the DualDisc version of new album releases. DualDisc is the new double-sided disc that has audio content on one side and video on the other. For the past four weeks, the number one album in the States has been available on DualDisc. Top artists including Rob Thomas, Bruce Springsteen, Nine Inch Nails and the Dave Matthews Band are among the first to release new material in DualDisc format. The new products can be played in both CD and DVD players. More than two million of the discs have been sold since making their first appearance late last year. The music industry expects to have more than 200 DualDisc titles on the market this year.    Back to Headlines 


Are 30-Second Commercials Facing Extinction?

Newsweek's "New Ways to Drive Home the Message" article reports that ad agencies are "eying the inexorable advance of technology with trepidation" as DVRs, video-on-demand services and Internet-delivered video services "allow consumers to skip the hallowed 30-second spot like a crack in the sidewalk." It says that the advertising industry has to "adapt to a coming world where consumers enjoy total control and will no longer tolerate tedious commercials that hold them hostage to messages they care nothing about." The article quotes Starcom MediaVest Group VP Tim Hanlon as saying, "The consumer is increasingly in the driver's seat in all forms of media, and TV is no exception. There are still a lot of people in the business that don't accept what is about to happen. That is myopic."   Back to Headlines 


Malone Criticizes TW Failure to Integrate AOL

John Malone, chairman and CEO of Liberty Media, which owns 4% of Time Warner, told the Financial Times he is critical of Time Warner's failure to integrate AOL.   Back to Headlines 

Convention Focuses on Broadband Wireless

Broadband wireless technology will be front and center at the CompTel/ASCENT Fall 2005 Convention & Expo, October 9-12 in Orlando. It'll showcase WiMAX, Wi-Fi, IP-based and proprietary licensed and unlicensed technology and suppliers.    Back to Headlines 
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THE online REPORTER provides weekly reports and strategic analysis about digital consumer technology and the e-commerce activities of the movie and music companies.. It reports on all the power struggles that have been unleashed.
THE online REPORTER focuses on:

  • The Media Giants vs. the Technology Behemoths

  • Copyright, Intellectual Property and Patent Issues

  • The Merging of PCs and Home Entertainment

  • Online Music and Movie Services

  • Peer-to-Peer Networks

  • Digital Media Startups

  • Content Delivery Technology

  • Growth of Broadband

  • Industry Alliances and Schisms

  • Forecasts and Market Research

  • Enabling Technologies

  • Industry Standards and Formats

  • Encryption, Security and Privacy Technologies

  • Wins, Losses and Rain-outs

If ever that overused phrase "paradigm shift" was apt, it's now, about the Digital Media industry. There's not a company in the industry that's not worried about where it'll still be standing after the deluge - and that goes for leaders like AOL Time Warner as well as that feared monolith Microsoft.

Its format is concise and pointed, its style a touch brash and, with any luck, a bit controversial. Its object is to break the stories that give its readers the real inside track. It is pledged to fact and fair comment.

THE   online REPORTER - Intelligence for decision makers.


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