Will no-DRM mean more lawsuits?

After my most recent post on the RIAA and CD copying, I don’t want anyone to get the idea that I’m on an anti-record industry rant, but I have to wonder at all of the rainbows-and-kittens commentary on Sony’s reported move to offer non-DRM tracks. According to BusinessWeek, the label is going to start offering mp3 files with no digital-rights management restrictions, beginning with a Justin Timberlake promotion.

Will this be a noteworthy step, if it actually happens? Sure it will. Sony is one of the few remaining holdouts on offering non-DRM tracks. But before everyone gets all warm and fuzzy about the giant record labels, I’d just like to point out that they are still suing people for downloading and sharing music, and there are plenty more similar suits on the books. Does Sony’s move mean that the industry has suddenly turned over a new leaf, like Scrooge did in A Christmas Carol? Unlikely.

I would imagine the major labels are somewhat chastened by the fact that CD sales were down by 20 per cent or so this Christmas compared to the previous one, and down about 10 per cent for the year (or perhaps even more than that). But that doesn’t mean they are going to start hosting Limewire parties or joining the Electronic Frontier Foundation. In fact, I’m afraid it could actually lead to more lawsuits rather than fewer.

At least with DRM controls, the labels could convince themselves that their job was done, and let technology carry the bag. Now, the industry will have to confront the fact that all of the non-DRM tracks it releases into the wild will be untraceable and completely shareable. Will that convince them that they need to find new business models, or at least modify the existing ones? Perhaps. Or it might make them even more likely to launch a lawsuit.

Sony’s Grouper buy — research?

I could have written a post about Google CEO Eric Schmidt joining the Apple board of directors (GooglePod, here we come) or about Universal Music trying out an ad-supported music service (all crapped up with DRM of course), but instead of climbing the Techmeme mountain I wanted to point to an interesting post from PBS columnist Robert X. Cringely about the recent Sony purchase of online video-sharing site Grouper.

Cringely’s view of the reasoning behind the deal is a variation on my theory, which is that Sony is basically desperate. They know that the movie game is changing somehow, and that these changes could possibly make things bad for movie studios, but they don’t really know much apart from that. The New York Times says big stars don’t even help sell movies any more. Should they release movies for download? Should they try fake “viral” campaigns like Snakes on a Plane? Or should they hire a guy to drop Mentos into a Coke?

Cringely’s take is that the Grouper buy represents Sony’s attempt at a kind of market research — a window onto the Internet, to see what gets popular and how, so that they can try to figure out how the heck to rejig their giant Hollywood machine. As the columnist points out, it is becoming increasingly possible for performers such as Frank Caliendo to emerge, become popular and potentially make a decent living without ever having touched the traditional media industry in any normal way. If I were Sony I would be doing a little research too.

Is YouTube worth $2-billion now?

So Sony Pictures has gone and bought Grouper, the online video site, for $65-million (U.S.). Okay — hands up, anyone who has heard of and/or used Grouper, apart from reading about it at TechCrunch or Mashable or some other Web 2.0 site. Pretty much what I figured. Although it is a half-decent looking service from what I can tell, it is one of half a dozen video-sharing solutions out there, and is unremarkable other than the fact that it requires you to download a standalone Windows app (a negative in my view) and it has a peer-to-peer aspect to it (Note: In the comments below, Sean says the download is only required if you want to share videos privately).

According to the math that TechCrunch came up with on a per-user basis, using ComScore data, Sony appears to be paying $70 to $120 per unique visitor (and that’s visitor, not user), compared with other recent deals for iFilm and Atom/Shockwave at about $15 to $20 a unique visitor. The one caveat, of course — as with anything that involves traffic metrics — is that ComScore’s half a million uniques is dramatically lower than the company’s own estimate of 8 million. If you use Grouper’s figure, the per-unique is about $8.

Doing some quick math, TechCrunch comes up with a figure of $2-billion for YouTube, which will make co-founder Chad Hurley happy, since the highest we’ve seen so far is $1-billion, a figure that more or less came out of thin air (using ComScore’s traffic from June and the multiple of $15 to $20 per unique, YouTube would be worth about $300-million). Does that make any sense? Maybe to a desperate movie studio or entertainment conglomerate it would (which Om points out Sony most certainly is), but that remains to be seen.

As for what Sony has in mind for Grouper, the talk is about pay-for-downloads and so on, which in typical Sony fashion will no doubt be low-quality and all crapped up with DRM. Davis Freeberg congratulates Grouper for pulling one over on Sony, while Duncan Riley says it’s just a matter of time before Sony render Grouper “so unworkable, unusable and undesirable that it will die an inglorious death.”

Rafat at PaidContent says the site has a solid management team, and maybe Sony deserves some credit for realizing when they need help, while Cynthia at IPDemocracy says it’s about speed to market. Rafat and Cynthia are very kind 🙂

Is DRM all or nothing? (updated)

Doc Searls has gotten pretty lathered up over a post made by Lloyd Shepherd, deputy director of digital publishing for the Guardian in the UK (a great paper with a great website). Why? Because Lloyd made the mistake of writing about digital rights management, or DRM, without saying that it is a great evil that must be sent back to Hell where it belongs.

In fact, he says that it seems obvious that we will wind up having some kind of DRM, and therefore we should start talking about what kind to have and what makes one kind better than another, an argument also made by Chris Anderson of Wired and the Long Tail. This is anathema to Doc, however, who calls Lloyd’s post “the most depressing thing I’ve read in some time.”

Do we have to have some kind of DRM? I would argue that Lloyd is probably right — the big media companies aren’t going to let their music and books and movies and cartoons and TV shows and whatever else simply float out onto the Internet scot-free, no matter how much we might like them to. So should we let Google develop a DRM scheme that works and is as non-restrictive as possible, or should we let Sony do it with their rootkits?

David Smith says we haven’t had the debate over whether we need DRM or not, but that implies there’s a debate to be had. I’m not sure there is. Debate over which kind, yes. Debate over whether to have DRM or not, I don’t think so. In this, I would agree not only with Lloyd but with Shelley of Burningbird, whose post makes a lot of sense — and has some interesting comments attached as well.

Hey Sony — wake up

Here’s a column I posted at globeandmail.com about Sony’s DRM rootkit fiasco:

“For a company that has so much great technology behind it, including a number of firsts like the compact disc and the portable music player, Sony Corp. often seems to behave more like a dinosaur — and a slow-moving, club-footed dinosaur at that. A case in point is the company’s recent ham-handed attempt to protect some of its music CDs by installing anti-copying software on its customers’ computers. A simple thing, you might think. Plenty of other companies do it. Sony, however, has managed to turn what should have been a non-event into a public-relations disaster, one that has helped to cement its reputation as the technology giant with the best technology and the worst execution.

The company has said that it will stop using the “rootkit”-style copy-protection software — first discovered and publicized by Mark Russinovich on his blog — but the damage has already been done. Not only does Sony look stupid as well as sneaky, but a list of the artists whose CDs have been “protected” by the company’s technology has been published far and wide. Is anyone going to rush out and buy those particular discs, or are they going to stay as far away from them as possible? If I were an artist with Sony Music (such as Canada’s Our Lady Peace), I would consider asking the company to compensate me for the effects of its reverse PR.

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