The Game Changer: The RIAA Owns the Sandbox

In a landmark trial, a Minnesota woman had the guts to stand up against the RIAA, and lost. The NY Times is reporting that she has been slammed with a $222,000 fine (odd number right?) for 24 songs she made available on Kazaa.

Am I frustrated about the outcome of this trial? Of course. Do I think the RIAA is a crock? Absolutely. But what really “grinds my gears” is the definition of stealing that was used. I posted a story on my twitter page yesterday from Ars Technica, that noted Jennifer Pariser, the head of litigation for Sony BMG’s testimony where she defined song stealing as:

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." Making "a copy" of a purchased song is just "a nice way of saying 'steals just one copy'," she said.

The operative phrase in that quote is ‘makes a copy of a song, FOR HIMSELF”. A large amount of my frustration comes from the notion that people are expected to “rent” songs that they pay for. As the content owner, I expect to freely do what I want with my music – the three screen philosophy - I want a cd for the car, burned version for iTunes, and a file on my iPod. I paid for it, its mine, “stealing” from yourself is possibly the most ludicrous philosophy I have ever heard. What Pariser is saying is that the record label owns the album you just purchased; they are just nice enough to let you pay to “borrow” it for a while.

What’s worse, the odds seemed stacked against the defendant as the Times article points out - the judge set up the record labels for a slam dunk by saying they -

“…did not have to prove that songs on Ms. Thomas’s computer had actually been transmitted to others online. Rather, the act of making them available could be viewed as infringement.”

I am in no way defending her use of Kazaa, as she was most likely stealing music off of the P2P network, but isn’t it the legal system’s job to prove, not just assume? Its crazy I know….

Because of this trial, and the many settlements that have come before it, the RIAA has essentially become the big guy on the playground who used to shake kids down for lunch money, or a better spot in the 4 Square line. I hope that next time someone stands up to these bullies the RIAA, the fight is fair. The association is just delaying the inevitable anyway… eventually, all music will be free.

Point/CounterPoint

Point: A Day Late and a Dollar Short

After shafting 270,000 of his most loyal customers and sending his stock prices plummeting a whopping $7.60 – Steve Jobs makes a lame attempt to stop the slide by offering to compensate iPhone users with a lousy $100. Imagine, you stood on line all night to grasp the coveted iPhone, only to have your entire being taken over by gremlins and spending every waking moment demonstrating your new phone to everyone you meet. If you have been carrying an iPhone for any period of time, you kow what I am talking about. You might as well have three-headed triplets in a grocery store for how much time and energy you’ve spent selling Mr. Job’s newest gizmo to every idiot that happens to see you use it.

Forget the business meeting. Forget the groceries, forget everything. For the privilege of spending half your life selling Mr. Job’s product for him – you get to pay him a whopping $500 and deal with less-than-stellar service. So he starts to feel a little bad that he is now selling the iPhone at a steep discount to all those ripe prospects you’ve helped him win over, so he magnanimously offers to throw you $100. So now you are just out $200 more than those guys who didn’t wait on line and spend their summer vacations giving live demos on the beach.

Where’s the outrage on behalf of those loyal early-adopters? If you think about it, they are the ones that built our great technology industry. I respect their courage and panache in this “me-too” world that waits to find out what’s cool. In fact, the early adopters ARE the “pioneers of cool”.

Mr. Jobs’ basic problem is that he forgot that he isn’t particularly cool, his products are a little cool, but it’s his devoted customers that are WAY cool.

I think someone might be a little big for his ibritches.

-Alison Moore

Counter-Point: I want to be THAT guy

I suppose it is a bit unorthodox to prove (or attempt to prove) your Managing Director wrong, but what the heck - what’s one more ding in your yearly review right?

First of all, you’ve gotta pay to play the game.

No gadget buff will disagree, being an early adopter is expensive, and many find it a point of pride to make an investment in the latest technology. This is why I, for one, am amazed at the amount of backlash caused by this price cut (That means you Matt Lauer!). While, yes, it did come fairly quickly, no one can argue that a price drop wasn’t on the horizon. Early adopters should know better than anyone that there is probably no market with a faster price drop and turn-over rate than the cell phone industry. As CrunchGear put it,

“Take a look at the RAZR. When it first came out, you paid $500 for it and now they give them away with a Big Gulps at 7-Eleven.”

And the same goes for the iPhone. There is no way the device could stay at $600 forever.

Second, exclusivity is key.

Admit it, being THAT guy (or gal) is kind of fun. I hate to say it “feeds the ego”, but in a way it does. You become part of the club, in this case, possibly the most exclusive one to date, the iPhone club. You knew the service would stink, you knew you would have to wait in line, but still, you put up the $600 or more (if you broke your old cell phone contract) to buy the “Jesus Phone”.

Some buyers may be upset because their “exclusive” group is going to get a whole lot bigger.

Third, “pioneers of cool” are product evangelists.

True early adopters welcome the opportunity to provide off-the-cuff product reviews wherever they go, that’s part of the reason why they pay exorbant prices for newly released tech. They then become the authority to their circle of friends, and get satisfaction knowing they “spread the gospel of Jobs” throughout their network.

So, to the upset early iPhone customers, I say, ”Stop Whining!” Now everyone’s invited to the party – deal with it. You still have one more iPhone than this guy.

Oh, and one more thing….

“If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon.” -- Steve Jobs from his iPhone open letter

…pretty much says it all, doesn’t it?

-Andrew Soucy

The Game Changer: My Prayers Have Been Answered

Today, Apple released the second most anticipated product of 2007, the Phoneless iPhone iPod Touch, the device I have really been waiting for. Full touchy iPhone-esque screen, thin-as-nano size and WiFi (yeah WiFi!) for YouTube, surfing the web and iTunes Mobile this thing is amazing. Now, you can have all your songs, video, movies – even contacts and email, all on one device without the pricy phone bill for sub-par service.

And the best part? It’s not too cost prohibitive at $299 for 8 gb and $399 for 16 gb respectively (always worth the extra $100 for twice the storage).

Talk about a game changer. The iPod Touch makes those lusting over an iPhone able to obtain the same looks and most of the great functionality at a fraction of the cost. I’m sure people won’t miss the dropped calls.

Oh yeah, and the house that Steve built also dropped some new mini’s and shuffles on us, as well as an “iPod Classic”, which is basically the same iPod in new skin and more storage. An odd move in my opinion, but to each their own. Check out Gizmodo’s full run-down here.

So consider me in line, on board, or whatever. I’m just left with one question….26” Vizio or iPod Touch? Decisions, decisions.

The Game Changer: The iPhone Cometh

Today is the day.

The day 6 months in the making, the day one small device, saves the world.

Ok, so a bit dramatic, but seriously, - this is a really big deal…right? Sure, other phones have come and gone, toting all new features, music, email, etc – but none have done it like this; and certainly none have done it with this much hype.

Now that the phone has been handed to a select few “chosen ones”, there are several preliminary reviews surfacing, possibly the best came in the form of David Pogue’s iPhone video-blog (sorry Walt). In one scene, he is attacked by an angry mob of coworkers, eager to get their hands on the device. Pogue proceeds to leap up on to the side of a cubicle where he begins preaching on the phone’s shortcomings – mainly complaining about the AT&T network, and EDGE Internet service. A few at a time, they begin to leave, until one man is left. He leans over an asks,

“Does it have an Apple logo?”

Pogue replies, “Yeah, see? Its right on the back.”

“Cool.”

Gotta love brand equity. This short exchange sums up the reason for probably 90% of the hype surrounding this thing, its made by Apple and, as the video so poignantly displays, regardless of flaws, the Apple fan-boy will still buy it. The Wall Street Journal’s breakingveiws.com column warns,

“…an iPhone may yet appear in every pocket now housing an iPod or phone. But if it merely becomes a rich hipster accessory, Apple’s stock would have a long way to fall.”

And that is my exact prediction. To me, the iPhone will become like a Ferrari; coveted by all, but owned by few. Think about it, an unsubsidized phone, with no choice of network at $499 and $599 price points, that doesn’t work with family plans and most certainly will not work with corporate plans because it won’t run the important apps hardcore business users need. The only demographic left IS the rich hipster.

I will use myself as an example. I am far from a rich hipster (though I am probably just as much of a music snob) but love Apple products, and though I don’t currently own a Mac (ask me again in a year or so), my household, like many others, does have 6 iPods. There is one apple sticker on my IBM laptop, and another on my Fender Stratocaster and spend more on iTunes than is deemed healthy by the FDA. I am a huge advocate for what the company does .

I want an iPhone as much as anyone, but the deal just doesn’t seem to work in my favor. I would have to break my Verizon contract, pony up the $600 for the phone (because why get a 4gig when you can have 2x the space for only $100 more) sign a new contract, which would be significantly higher than my Verizon family plan bill, plus data, plus WiFi costs (most aren’t free, right Starbucks?). Oh yeah, and don’t forget, the network is AT&T, meaning I would burn through minutes like crazy, as it seems like everyone in Boston has Verizon.

So, Game Changing? You bet. Revolutionary? Absolutely. But there is something in me that thinks the limits on this device make it not quite ready for prime time. We shall see.

Good luck to everyone braving the malls at 6 p.m., especially this guy.

.

The Game Changer: A Pirate’s Life for Disney

I am resisting the urge to comment on the goings on
at Ford these past few days as I promised I wouldn’t do a car post for a while (about time for my own Auto Biz blog I think). Check out the stories here and here if you are interested.

Some big news from Google-Tube this week, it seems Disney could be making some bank off more pirates than the ones played by Jonny Depp and Co.YouTube has struck a deal with Time Warner Inc. and Walt Disney Co. to being testing their video fingerprint technology, in an effort to prevent further lawsuits, like the $1billion in damages Viacom wanted because of reposts of popular MTV and Comedy Central shows on the site. The video ID technology recognizes copyrighted content that is uploaded to YouTube, giving the media giants two options; they can either remove the site, or opt-in to a revenue share program via advertising dollars.

Making money off piracy you say? Unheard of.

But, a fantastic idea, especially for Disney. Imagine the PR fall out the house that Mickey built would endure for suing a 13 year old uploading The Lion King or quality Disney Channel re-runs like Boy Meets World (what ever happened to Topanga anyway?).

As the guys over at CrunchGear said, “everybody wins” and I agree. Kudos to YouTube for figuring out a way to leave the lawyers at home, and actually monetize illegally posted content.

Best Tech Products...Ever

In the spirit of keeping things light this morning, I won't blog about the endless Imus scandal...

Instead, take a peak at PC World's just released "50 Best Tech Products of All Time". In a world where Tetris outranks MS Excel, see if you agree with the rankings!

One Bad Apple

Steve Jobs is many things: master showman, spinmeister, cheerleader, visionary, God of Silicon Valley, and icon not simply of the computer industry, but of the media and entertainment arena as well. He’s also a master manipulator and his DRM Manifesto “Thoughts on Music” issued today on the Apple site was vintage Jobs: it was eloquent, convincing and just slightly salesy. Curiously timed, the underpinnings of his open letter posting are pretty simple -- the best defense is a strong offense. Jobs takes a jab at the Norwegian Consumer Council and the Dutch Consumer Ombudsman, last week the latter joined the June 2006 complaint filed by the former against Apple, alleging that Apple is violating Norwegian consumer law through its exclusive link between Apple's iPod and iTunes music store because Norwegian iPod owners are prevented from playing songs bought from competing online services or listening to iTunes songs on rival MP3 players.

In his Tuesday posting, Jobs said Apple can't risk opening up the iTunes store to other portable players as long as DRM technology remains in place. This does not sound like a man who is concerned that wannabe rival players like Microsoft’s Zune or those from SanDisk (whose stock was pummeled last week due to thinning of its flash memory margins). But, let’s be real – this is the posting of a man with a silver tongue (keyboard?) who is trying to deflect the heat of Apple’s proprietary position in online music. Many of his critics fully believe that DRM could work just fine if Jobs and Apple would cooperate. Teflon Steve got nicked a few weeks back when the options backdating flu bit a few folks in Cupertino. Let's see if the Goodship Apple starts to take on some more water after this latest issue heats up.

Brand 2.0

Landor Associates came out with its annual “breakaway brands” study this week. The results will be published in the Sept. 18^th issue of FORTUNE. This study identifies the ten brands with the greatest percentage gains in brand health and business value as a result of superb brand strategy and execution over a three-year period, 2002-2005. The top ten finishers might really surprise you. iPod, eBay and Best Buy were included in this group with iPod showing the greatest gain during that period. Not exactly a shocker there - most 12 year olds would probably have guessed that. But take a look at some of the other top ten finishers. Number four was Robitussin. Robitussin? Six was Kohl’s department stores (a favorite of the geriatric set, but I am not sure how hip this chain really is). Seventh was French’s, the condiment maker, which is a category killer for sure and apparently, a great brand and getting better. So maybe boring is good. Boring is healthy and valuable too. My personal fave is number three – Converse. I’m partial to this company because I grew up wearing Chuckie T’s (before and after they became retro hip about fifteen years ago), as well as the high-top leather models favored by Dr. J and Larry Bird during the 80s. No doubt Converse’s return the rare air of hot brands has been aided by the deep pockets of its parent Nike, cool apparel and a “design your own” personalization feature for clothes and shoes on their site. Nice goin Cons!