My favorite Overheard in New York post No, Seriously -- Let's Hit It By Jenny Old Chinese lady: Ex-see-cus-see me. Old Chinese lady: Ex-see-cus-see me! Gangsta: Man, what are you excusing me about? Fck you! Old Chinese lady: Fck me? Ok, take-a off the pant. Stairway in silence. Old Chinese lady: Ex-see-cus-see me! Gangsta: Sure thing, ma'am. I'm sorry. Chinese kid: And that's why we respect our elders. --Canal St station  ¶ 8:27:00 AM 0 Comments

  Music Industry: Big Market, Big Questions Music Industry: Big Market, Big Questions Despite complaints and panic-induced lawsuits against file sharing services such as Napster by major music labels in the United States, the U.S. and global music markets are flourishing. The global market has grown by 3.4% annually since 1991 and the U.S. music market is the largest in the world, having grown 71% in value since 1991 to U.S. US$13.2 billion in 1998 [4]. More importantly, Napster use appears to be boosting music sales both online and offline. One study, commissioned by Napster and prepared by Peter S. Fader, associate professor of marketing at the Wharton School of the University of Pennsylvania, found that "over 91% of Napster users buy as much or more music than before they used Napster, with 28% purchasing more" [5]. Even so, the major music labels and their mouthpiece the Recording Industry Association of America (RIAA) appear to be frantically searching for a strategy to maintain control and revenues. The industry is being challenged not only by technology innovators such as Napster, Gnutella, and MP3.com, but also by alliances of music artists and supporters such as the Future of Music Coalition. Internet research firm Jupiter Communications suggests that if the music industry were to let players like Napster stand it would drive incremental sales, but if the industry partnered with networked music-sharing technology companies through licensing schemes, the benefit would be exponentially greater. Jupiter also proposes that "a subscription service to an online music community with high-quality digital music, virus protection, and a wide variety of content could eventually be a more successful driver of revenues for recorded music than individual downloads sold through an online store." Of the five biggest music labels, at least Universal and Bertelsmann seem to be paying attention. Bertelsmann announced at the end of October 2000 a legal settlement with Napster in which Bertelsmann's e-commerce group will partner with Napster to create a membership system to allow paid users to download high-quality songs from Bertelsmann Music Group's entire catalogue. Napster CEO Hank Berry suggested membership fees of US$4.95 per month, but neither party has released information regarding a start of service date. Universal may have swung an even sweeter deal with MP3.com. After watching Bertelsmann, Sony Music Entertainment, Time Warner's Music Group and EMI settle in court with MP3.com for approximately US$20 million each, Universal waited and eventually settled out of court with MP3.com for US$53.4 million. As part of the deal Universal also reportedly bought warrants for up to three million MP3.com shares. The big question still remains: Will partnerships such as those engineered by Napster and Bertelsmann or MP3.com and Universal actually generate revenues? A July 2000 essay in the Economist argues that if the music labels can put their songs online in a format that is more organized and more appealing than their illegal competitors can, fans will be willing to pay something for that privilege [6]. Although online sales - both CD and digital downloads - represented only 2.4% of total music sales for 1999, according to one survey 50% of online U.S. youths ages 16-22 report that they will purchase music online in the near future. Online Internet economy publication The Standard reports Jupiter's prediction of download sales in particular to increase through 2004, reaching 25% of total music sales in 2005 [7]. Media Metrix forecasts that in 2005 76 million users will purchase US$5.4 billion of music online, and another US$1 billion will be spent on online music subscriptions. In October 2000 - before their dances with MP3.com and Napster - both Universal Music and BMG announced new online initiatives to capture some of this projected revenue, with BMG charging users per download. Singles are priced from US$1.98 to US$3.49, and albums are going for between US$9.98 and US$14.98. Universal is experimenting with a subscription model offering users unlimited access to more than 20,000 songs. The Universal plan is not offering actual downloads of music, however. Instead, users can listen to streaming song files, which are extremely difficult to record and share at high audio quality. The online music file access strategies as currently conceived by the major labels, including the two joint initiatives with Napster and MP3.com, are likely to fail for three main reasons. First, few music consumers purchase music of only one particular label, so until the major labels create some form of low-priced, comprehensive access from one Web site to all of the songs in their combined catalogs, any consumer response will be tepid at best. Separate subscriptions or memberships to each of the four big labels will not be an attractive option. More importantly, BMG's current per song or per "CD" download model is priced at levels similar to CD costs in a physical store, giving consumers little incentive to move from existing no-cost file sharing services. Second, streaming of music as planned by Universal will not replace the appeal of downloading song files because the ability of consumers to share music appears to be a major motivation behind current use of Napster, MP3.com and similar services. Finally, current industry initiatives appear to make no concessions to music artists' increasing dissatisfaction with recording contract restrictions enforced by major labels and what many artists and supporters consider to be unreasonable percentage takes of sales revenue. Although it is not clear given the popularity of free file sharing services that music consumers feel compelled to pay artists for their music, if paid subscription access becomes the dominant model in the future there may be increased interest among consumers in seeing that artists get a better deal from the labels than in the past. Put differently, if consumers are forced to pay for digitally downloaded music, many probably will demand that artists get a fair deal. In fact, some well-known artists have declared a kind of unilateral divorce from the labels and have pledged to support innovative schemes by entrepreneurs that give artists more control and compensation for their art, and give consumers the flexibility and convenience of digital downloading. To compound RIAA's headaches, researchers at Xerox PARC, Princeton, and Rice University recently claimed to have cracked four digital watermark technologies created by RIAA's Digital Music Initiative (SDMI) encryption scheme. Following this claim, the five major music labels driving the SDMI announced the results of a challenge posed by SDMI in which two of its five copyright protection technologies were apparently thwarted. Critics on all sides are attacking SDMI as a waste of time and resources, and many analysts believe that the effort will die on the vine. In the next section I describe some possibilities for music experience innovation using mobile Internet business models and technologies.  ¶ 4:22:00 PM 0 Comments

  Congress takes a dump on network neutrality - What will the Senate do? My thoughts are that this bill is simply a case of the combined long haul/RBOC's trying to recoup the cost of network buildout...really if you think about it, we are running on the corpses of the Global Crossing, MCI, AT&T, L3 etc's of the world....Every player that leveraged the hell out of their balance sheets to lay out fiber have essentially gone bankrupt or been acquired. There still "dark fiber" that has yet to be lit underground that are static assets for holding companies out there. Google has been slowly acquiring it over the past couple of years and I'm sure Yahoo/MSN has as well. Its a fiber layer's graveyard out there, but it has been for the overall good, since we all know that the content providers have innovated the shit on top of it, so there is certainly cause for some sympathy for the Verizons and Bellsouths of the world. Of course there is the argument that network providers are the "gatekeepers," and by virtue control the quality of services such as VoIP and IPTV, and I am in agreement with this. However, a much better alternative to network neutrality is unbundling of local access which is what is being done in Europe. By unbundling local access and in effect giving the broadband provider the ability to determine speed and service. You no longer have the issue of network providers infringing on the ISPs ability to provide a certain level of quality/speed because the ISP (internet service provider) would rent this line (at a wholesale rate) and determine by itself the type of service it is willing to provide and charge you for. If ISPs wanted to provide advanced services, they themselves would have to install equipment at the local exchange. In my opinion, unbundling is a much better alternative to network neutrality as it fosters investment and only allows serious players to enter the market. But we all know network neutrality not only has implications on the content providers...it has implications on the internet commerce as an engine of growth for the entire economy since it is so integrated into the fabric of modern commerce. It would definitely change the economics of doing business on the internet, not just for the Web 2.0 players such as Google, Yahoo, MSN, and Amazon, but also major brick and mortar guys who do a surprising amoung of business on the web such as Target, Walmart, Fedex, etc etc. Having seen the capex of alot these folks and it clearly would have real economic impact. Any idea what the prospects of the bill is in the Senate? I'd imagine if there is any lobbying effort toward thwarting the bill it would likely be focused there. ---------------------- June 9, 2006 House K.O.'s Net Neutrality By Roy Mark WASHINGTON -- Legislative language to make the controversial concept of network neutrality the law of the land failed in the U.S. House of Representatives late Thursday night. In an amendment to an otherwise widely supported telecom reform act, lawmakers rejected by a vote of 269-152 a measure to require broadband providers such as AT&T and Comcast to treat all Internet traffic in a nondiscriminatory price manner. Under the proposal by Rep. Ed Markey (D-Mass.), the telecom and cable giants that control virtually every broadband connection in the United States would be unable to implement their proposed business models to create a two-tiered Internet based on bandwidth consumption. In a roll call vote, 58 Democrats joined 211 Republicans in turning back the measure. Only 11 Republicans joined the 140 Democrats voting for the amendment. The overall bill, known as the Communications Opportunity, Promotion, and Enhancement Act (COPE, H.R. 5252), would permit national video franchising for Internet Protocol television (IPTV) providers in hopes of spurring competition in the pay television market. Unlike the Markey statutory language approach, under the COPE Act the Federal Communications Commission (FCC) on a case-by-case basis would deal with allegations of network neutrality violations. The legislation would also prohibit the FCC from creating additional network neutrality rules beyond the non-binding principles adopted by the agency last year. "The bill... seeks to strike the right balance between ensuring that the public Internet remains an open, vibrant marketplace and ensuring that Congress does not hand the FCC a blank check to regulate Internet services," House Energy and Commerce Chairman Joe Barton (R-Tex.), author of the bill, said in introducing the legislation. "We do need the FCC to stop the cheats without killing honest creativity. We don't need anybody to be the first Secretary of the Internet." In addition, the legislation mandates Voice over IP ( define) providers make E911 services available to consumers and allows state and local governments the option to provide their own telecommunications, cable or information services. The bill passed on a 321-111 vote, with 215 Republicans and 106 Democrats voting in the affirmative. Both Verizon and AT&T have combined to invest billions of dollars into building fiber optic IP networks capable of delivering a competitive product to cable systems and millions more to lobby Congress to break from the historical treatment of Internet traffic by carriers. Currently, all traffic is prioritized, treated and priced the same from the smallest of Web sites to Internet giants such as Microsoft, Google, Yahoo and Amazon. Under the cable and telco scheme, fees will be imposed for heavy users. "[The] overwhelming vote brings our nation one critical step closer to TV freedom, where consumers enjoy the benefits of real choice and competition for their video service," Walter McCormick, president and CEO of the U.S. Telecom Association, said in a statement. "Consumers win when companies are free to invest and compete head-to-head by offering innovative products at attractive prices." The defeat of the Markey amendment, while not unexpected, still caught technology executives flat-footed. On Wednesday, House and Energy and Commerce Chairman Joe Barton (R-Tex.), author of the COPE Act, said he saw no way the bill could be voted on before Friday. He did nothing during the day Thursday to discourage that notion. But while TechNet, the influential nationwide political network of IT CEOs and senior executives, lunched at the National Press Club and enjoyed afternoon meetings with top White House executives and FCC Chairman Kevin Martin, Barton lined up supporters and the House Republican leadership punched through a surprise Thursday night vote. With TechNet members winging their way home, lawmakers closed the debate on the House side. "Unfortunately, the House voted today to protect the big phone and cable companies at the expense of preserving an open Internet," the It's Our Net Coalition said in a statement. "We are not surprised at the outcome, but we are disappointed that the House has abandoned net neutrality." The issue now moves to the U. S. Senate, where Commerce Committee Chairman Ted Stevens (R-Alaska) has scheduled a third hearing on his own telecom reform package Tuesday morning. Like the House-approved bill, Stevens' proposal showcases national video franchising. It leaves issues of network neutrality to further FCC study. Senators Olympia Snowe, a Maine Republican, and Democrat Byron Dorgan, of North Dakota, plan to push for network neutrality language similar to Markey's to be included in the legislation. "We are confident that the Senate understands and appreciates the importance of net neutrality to the Internet and to the American economy and will take steps to preserve the Internet as a vibrant... open marketplace," It's Our Net stated.  ¶ 2:26:00 PM 0 Comments