developing DH tools

Transferred illusions : digital technology and the forms of print / Marilyn Deegan and Kathryn Sutherland. 2009

This paper discusses the conflicts and clashing behavioral norms experienced by Digital Natives (born 1978-1994) and Boomers, especially in the workplace. Like other scholarly works, it discusses how Boomers may regard Natives’  having of texting during meetings as ineffective, rude and even unethical. Telephone interview with Boomer CIOs and CTOs repeatedly doubt the efficiency and focus of texting colleagues and  those who IM in meetings. “We’re encouraging ADD” is how one executive puts it.

ComScore. “Press Release: For Radiohead Fans, Does “Free” + “Download” = “Freeload”?” 5 November 2007.

This press release details a study of the online sales of Radiohead's "In Rainbows," an album the band released via a pay-what-you-want download model. The statistics obtained demonstrate clearly the presence of a "freeloader market," in which 60-62% of people will download an album for free when confronted with a pay-what-you-want option. The article offers a few different perspectives. Some experts are impressed that 40% of consumers are willing to pay "real money" for something they could get for free. Others question whether this model could be viable for less-established artists. Edward Hunter, a comScore analyst, states that this unique effort is important in that it eliminated a loss of profits due to illegal downloading.

Though these statistics are important, they are more interesting when confronted with data from (countless) other sources, which report that Radiohead's experiment was a likely success. Many different sources report that the profits made by Radiohead on In Rainbows were comparable to what they would have made under normal record-company distribution. Though those opinions and statistics can be found readily, the data regarding freeloaders is more unique to this article, which seems to expose the downside of pay-what-you-want models.

Barboza, David. "Google and Music Labels bet on Downloads in China." The New York Times. 5 April 2009.

This article addresses one of the most recent experiments in new profit models based on digital music: Google's free music search engine in China. Very recently, several of the biggest international record labels partnered with Google and a Chinese company (top100.com) to offer a free music-download service. Because online piracy of music is particularly rampant in China, the success of this model could have lasting implications on policies in the US. The New York Times article offers both critical and supportive opinions on the initiative. Notably, Google will have to struggle to contain the music-downloading to China, employing "legal and technical hurdles."

The partnership of Google with major international music labels represents a new way for record companies to remain profitable without trying to stop free music downloads. This unlimited-download service is supported not through subscription, but by advertisements. Although it is difficult to anticipate the success of such a model, the adoption of this idea certainly reflects a major change in the way that the entertainment industry is approaching its consumers. The willingness of labels (even on this controlled scale) to abandon control over music distribution to this degree is a symptom of their desperation, certainly. However, it is likely also a necessary move towards a new kind of support for music development.

The movie industry has very little choice but to adapt its current business model due to the invent of new technologies. The video rental sector has experienced significant remodeling due to digitization. In reference to video-on-demand the author states, "not since the introduction of the videocassette recorder has a disruptive technology so threatened the very heart of Hollywood." Blockbuster and Hollywood see these innovations as a threat to their rental revenues. The article focuses on how the Internet will affect the value chain of the motion picture industry. The author cites broadband Internet connection, digital file compression, streaming media, and encryption as the new technologies that have made these new online and VOD capabilities possible. He continues first by explaining how digital cable network and VOD systems work and then breaks down the logistics of the movie industry's production and distribution models.

The article goes on to describe how the industry will change from digitization. In production, digitally produced movies will cost less by eliminating the need for expensive film stocks. Computers can be used to edit and assemble digital movies rather than "splicing together the actual film stock." In distribution, digital projection systems will be installed in theater and online streaming videos will become the popular channel for distribution and duplication costs will be nearly obsolete. As for the middlemen, film manufacturers, processors, and duplicators will be reduced and distributors and video rental stores may be eliminated. Movie theaters will also be affected because VOD systems will entice viewers to stay at home. Theaters will be force to add "valuable social experience" and show only movies they know will be profitable. As of now video rental stores aren't afraid of VOD, but the author suggests down the road they may have to "partner with a firm that owns distribution technologies but lacks customer base.

These hypotheses have sufficient data to support them and may be realistic adaptions to the industry. Although not in current practice, it is important to think about the future of the industry. My paper will examine how many of these sectors have changed and how they will continue to evolve.

This is an entry from Charles Nesson’s blog.  Nesson is a law professor at Harvard University, and he is defending a man named Joel Tenenbaum who was sued for file sharing.  Nesson and Tenenbaum filed a countersuit against the RIAA, because the amount Tenenbaum would have to pay for damages would be over $1 million, which they believe to be unconstitutional.  In the entry, Nesson criticizes the fact that in 1976, lawyers and lobbyists created laws for the future of digital media, and that we must still abide by those today.  He is fighting not only the RIAA, but also the court system that is exerting power on behalf of the RIAA.  Nesson believes that claiming high damages is abusing the law.  He instructs us to, “Observe that the disproportion between actual damage caused by joel to the copyright holder and the damage mandated by the legislature to be given the copyright holder is in inverse proportion to the lobbying power of the copyright industry in the legislature compared to the lobbying power of joel and the teenagers like him who are meant to be frightened by the punitive damages being imposed.” 
    Nesson believes that people should legally be able to share music non-commercially, and that the public domain should consist of anything one can get for free on the Internet.  He thinks that the RIAA is trying to “manipulate the public mind to equate file sharing with theft.”
    I agree with Nesson on most of his points, and his ideas are probably the most important source to my paper.  The laws relating to copyrighted digital files need to be changed, and lobbyists should not be involved.  Right now, I believe that the RIAA is using the courts as its hitmen.  The courts are intimidating teenagers and carrying out every one of the RIAA’s orders.  This needs to be stopped, and fair practices need to be implemented; not the ones that rich copyright lobbyists push for.  The people being sued need a voice, and Charles Nesson has bravely taken that role.  The RIAA should not be using the courts to carry out an intimidation tactic, and the argument can be made that these cases should be tried in criminal, and not civil court. 
    Nesson believes that file sharing is not theft, which is his most debatable opinion.  From the RIAA’s perspective, their music is being stolen.  Are they guilty of manipulating us to believe this?  Or are Internet discourse and a desire for free media guilty of making us believe that it isn’t theft?  Both sides must be taken into account.
    Even if file sharing is considered theft, though, the damages being claimed are way too high.  This part of the law is definitely unconstitutional, and the laws need to be changed to accommodate today’s technology.  I am rooting for Nesson’s success.

Deloitte's Media Predictions: TMT Trends 2008 lays out what their analysts have found to be some of the most important trends and implications for media, specifically with regards to technology, for the year 2008 and beyond. The report contains three sections that are important to the realm of the future of new media.

First, the report tackles the potentially slowing growth of online advertising. It makes two important claims. People tend to find online advertising more intrusive and pay less attention to it than print or television ads. This could be because internet use is typically more active, and advertising can hinder this active process. The second problem is the trend for privacy and against personal tracking. The use of tracking and targeted ads is the single biggest advantage for online advertising. If enough major companies and consumer groups come out against the practice, this could create a major dent in the online advertising industry.

The second area the report explores is the impact of internet television on traditional television. The report makes the claim that internet television will be supplemental to traditional television, however this may be untrue. Although the report states that the major usage of internet video is for short form clips such as YouTube videos, network rebroadcasts have been growing so fast that the advertising revenue from Hulu.com, a studio joint venture to rebroadcast full television shows, will outpace the advertising revenue from YouTube. This shows the trend of people to begin to accept watching television online as a viable alternative to traditional television. The report does make one interesting suggestion that producers could take advantage of differing levels of quality to create a price discrimination scheme that could help add additional revenue.

The last area naturally follows the previous two. It addresses the difficulties in monetizing new media ventures. The traditional form of television media followed the crass simplification of  "Butts in Seats." That is the main goal was to have as many viewers as possible to watch the advertising, and pay rates were based on this number of viewers. Now, many forms of new media are attracting the viewers, but the viewers are not contributing to revenue. These viewers are costly to maintain and it creates a poor business model. The traditional methods will need to be changed to fit the new media world.

            In "Who's Afraid of Digital Downloads," an early article about residuals for new media, attorney Brooke A. Wharton argues from the talent perspective about the problems that arise over redefining residual agreements based on new technology. Shee bases his case on the history of the current home video residual agreement. Namely that when the first deal was struck between Magnetic Video, a Betamax producer, and 20^th Century Fox the agreement was that Magnetic Video would pay a 20% royalty fee for the licensing of their library. This deal was followed by many of the studios. In negotiating the talent contracts, 80% of the gross revenue was set aside and the 20% was split up among the studios and guilds. Wharton argues that this was fair when the manufacturing costs of one video were as high as $40. However, now that costs have come down to around $3, it is inappropriate for the studios to set aside such a large margin of the sales figures.

            It is to this argument that Wharton adds the arguments for new media. She states that the production and distribution costs for new media delivery is close to zero and that the higher rates of television should apply rather than home video. She then backs off to say that this is going to be a major debate and refrains from emphatically defending the talent's position. She ends by saying that this fight is not just a fight for digital download residuals, but for the compensation and pay of talent in the new digital age. This question is of utmost importance and could set the landscape for digital media and distribution for years to come.

Chapter 5 of Barabar Klinger's Beyond the Multiplex: Cinema, New Technologies, and the Home is titled "To Infinity and Beyond." In this chapter she explores the internet and its future for video content. She decides to focus her attention on made-for online shorts, both originals and parodies. Her argument is that the internet has created both a platform and a renewed market for short form content. She cites the popularity of early 2000's website AtomFilms.com and many popular short parodies such as "George Lucas in Love." Her attention is focused mainly on the artistic and cultural implications, rather than the economic implications. She seems excited about the future and the ability for filmmaking to be available to almost everyone in our society. Very inexpensive tools can be used to create successful short form entertainment, and the internet allows for full and unabated distribution.

One topic that she mentions briefly, but glosses over is of extreme value. The potential market for short form branded entertainment otherwise called advertainment. This powerful tool is simply entertainment content that is developed specifically to showcase or introduce a brand sponsored product. In one sense this goes back to the origins of television with sponsored shows. There have been a few very successful advertising campaigns that have used this new medium. BMW produced a series of films entitled The Hire in which they got famous directors and actors to produce shorts that included driving scenes. The films were pure entertainment, they did not tell anyone where and when to buy a BMW nor was there a distinct product they were selling. They were, however, showcasing the car and entitled BMW films presents. In this vein other shorts such as Dove's Evolution was a powerful two minute short showcasing the illusion of "model" beauty. This film was more educational but still with the purpose that people would choose to watch the short. These successful examples showcase a powerful new market that has yet to be adequately tapped. These shorts can be provided to mobile phones, sites such as YouTube, and any other short form marketplace. This should be the new trend in advertising and can have a large impact on the future of new media.

            The Summary of the Tentative 2008 WGA Theatrical and Television Basic Agreement is the end result of major negotiations between the American Motion Pictures and Television Producers (AMPTP) and the Writers Guild of America (WGA) following a WGA. As is evidenced by the focus of the document, the major negotiations occurred surrounding points of new media. There are many other details changed within the Memorandum of Agreement, however, focusing on the official summary it is clear that new media was the most important. The rules for new media fall into two categories: original product developed for new media and the redistribution of media through new media platforms.

            The first part of this agreement deals with original products developed for new media. First, the agreement establishes the guild's jurisdiction over this sphere if the project is developed by an established writer, the project is a derivative of an existing covered film or show, or if the budget is large enough. In this sense the guild has won the jurisdiction argument and has established itself as creating the minimum contract necessary for these projects. The agreement also explains the compensation schedules and exhibition windows before residuals begin.

            The second part of the agreement deals with the reuse of existing media in new media platforms such as the internet or mobile phones. This part of the agreement sets up some interesting implications. First, it differentiates between, electronic rental, sell through, and streaming. This is an important distinction that will largely effect how the future of internet distribution will work. It defines rental as viewer pay for limited access, sell through as viewer pay for unlimited access, and lastly ad-supported streaming in which the viewer does not pay for access to the television show or film. Important terms under the new agreement make rental and download rates higher than the physical media equivalents of home video, but the ad supported streaming, although higher then home video is less than ad supported television.

            The other major implication within the agreement is that it allows for promotional "clips" to be shown without residuals of up to 5 minutes. This is currently being used for programs such as Saturday Night Live where the clip is all that is necessary and may mean that short subject shows will get a lot of attention and reuse online.

In their paper, Does Peer-to-Peer Harm Copyright Owners: Protecting and Distributing Digital Products, Anne Duchene and Patrick Waelbroeck create an economic model of peer-to-peer content sharing versus traditional distribution with specific respect to online music sharing. Although the paper was written about music in 2003, it can be thought about with respect to film and television today.

            The model makes a few major assumptions to reach its conclusions. First, the original work provides more utility than the copy. This can easily be supported in today's terms that the original versions are of higher quality and can provide additional features such as DVD extras. The second assumption is that content producers will spend a large amount of money marketing and distributing under the traditional methods, but these costs will be 0 for peer-to-peer distribution. This assumption decidedly focuses on small independent produced content and ignores studio produced content. Along with this assumption is that there is a cost to downloading copies both in the opportunity cost of finding the copy and second in the copyright protection both technically and legally. This assumption does seem to hold true to real world issues.

            The findings of their model is that as copyright protection is increased, not only is consumer surplus decreased through decreased utility for copiers but also for buyers in terms of higher prices passed on to implement the higher protection standards, but also that higher copyright protection favors the large studio productions that have the ability to overcome the capital thresholds for marketing and distributing through traditional media. This could easily apply to film and television new media as well. As the studios block access to files through DRM, they are increasing production costs and favoring themselves over low capital producers who cannot afford to implement these strategies.

This has interesting implications over the future of new media in terms of concentration versus fragmentation of the media industry. It appears that if left unfettered, the online channel allows for a fragmentation of content producers. This is evidenced by YouTube, Funny or Die, and other small yet popular independent online content producers. However, if the studios are able to enforce higher levels of copyright protection, for example winning the Viacom v YouTube case, this could further concentrate power in the studios. In this example, the higher costs of copyright protection would lower YouTube or other smaller sites abilities to operate profitably. If these sites that support user generated content are hampered, it will allow sites such as Hulu.com to dominate and favor studio produced content over user produced content.

            In his article, "Watch Now: Netflix, Streaming Movies and Networked Film Publics," Chuck Tryon uses Netflix's new "Watch Now" feature to represent the new methods of Hollywood film delivery to the viewer. "Networked film publics" is the most interesting idea of the article and is presented in the title, but it is only briefly touched upon. The idea that it stimulates, however, is of an online community dedicated to the communal watching and discussing of film and television. Instead of a group of friends gathering in a theatre or a home to watch films and discuss them, the internet would connect random people from anywhere in the world based on like interests and watching these films could be a collective experience.

            Tryon mentions that for the time being the main way of watching these streaming films and shows is on the computer, and that this individual method of consuming content will change the type of content consumed. However, this claim only takes into account the intermediate stages of the new forms of digital delivery. Already Netflix has partnered with Microsoft's Xbox to deliver films on demand to televisions.

            Overall the claim that new methods of watching and interacting with content because of its distribution form is very interesting to the topic at hand. The power of groups to spread and distribute content may give power to the independent producers and new media producers while taking away from the gatekeeping abilities the studios have enjoyed. It is understandable in this context why the studios are concerned about new media distribution as an "experimental" technology that needs to be protected from exorbitant residual payments. However, the studios need to look at this as a new opportunity. They can have the ability to create fan groups and internet showings of films. They can price discriminate by charging different prices for the movie if it has extra features packaged with it. They can run discussion boards in which they can have very targeted advertising. There are many new opportunities to look for in this new delivery method.

This article considers the implications of the Supreme Court's Grokster II ruling, which considered four internet file sharing technologies that were previously found by district courts to have been liable for copyright infringement. The technologies considered are Napster, Grokster, Morpheus and Aimster. The article outlines a Grokster II test used to identify infringing file sharing programs. The test relies heavily on whether the producer of the technology advertised intent to distribute copyrighted material. The four factors used to determine liability outlined by the author are whether: (1) defendants made express statements of intent to induce copyright infringement, (2) defendants advertised that they intended to replace a known source of infringement, (3) defendant attempted to filter or reduce infringing use and (4) defendants' business models used as evidence bolstering defendants unlawful intent. The author points to the fact that these factors, while universal in their use in determining the liability in the four aforementioned technologies, were used to produce inconsistent judgments regarding contributory infringement by the producers of the respective technologies. The concept of unpredictability in digital media copyright law stems from these inconsistencies in Grokster II.

The piece of this article that will be most useful for my paper is the section that follows where the author tests the four factors from Grokster II on three new technologies. The technologies discussed here include TiVo ToGo, MyTunes Redux and Limewire. Each technology produces ambiguous judgments using this four factor test since TiVo ToGo can not be assumed to have an underlying infringing use, and MyTunes Redux and Limewire do not operate for profit and it is also ambiguous whether any of these products advertisements can be shown to induce users to infringe copyright. This will serve as evidence in my paper that the current system by which courts evaluate potential copyright infringers is not effective for many technologies currently available that bear striking similarities upon which action has been taken. I suspect that in the future many new technologies will arise whose purpose is, in fact, to replace those that have been shut down by the recording industry-precisely one of the reasons Grokster, itself was found guilty. These developments suggest, as does evidence in my other sources, that the recording industry and the courts will have to work more closely with users of peer to peer file sharing networks and internet service providers to either devise new methods of preventing illegal file sharing or establish a new system by which digital music is made available.

This article explores the relationship between creativity and the community at large. The authors use as their example of a creative industry the fashion industry, and shows the ways that creativity should not be considered only as a matter of individual creativity. Instead, it should involve a "conversation" between individuals and larger communities of people and traditions. In this way, fashion takes many of its stylistic elements from the past. The article gives examples of taking elements from the Polynesian islands, urban street corners, stock-car races, and bowling alleys, and then transforming them into new trends. The evolution of fashion is described, beginning with haute couture in Paris, Milan, and New York that was the fountainhead of new styles, to the introduction of women in the work world, which resulted in a waning of the cultural appeal of high fashion. Then, celebrities and movie stars took the place of elite fashion shows, making fashion a more year-round passion than before. Lastly, the article recognizes the problem of "originality," and denotes the lineage of high fashion. It states that fashion shows the ways in which creativity involves building upon the past and sharing inspiration. Because of this, creativity requires freedom, in the authors opinion. The most innovative work comes from the artful recombination of existing work.

            This article is important for my topic because it examines the issue at large from a less monetary way of looking at things. The article does not discuss whether or not the designers will be hurt financially, but argues that in order for the creativity of designers to flourish, they must have the freedom to borrow inspiration from the community, others, and the past.

This book provides a layout and description of the options available to multimedia copyright owners for the protection of their works from unauthorized use. The utility and potential weakness of various antipiracy techniques and applications are discussed, including adult image filtering, encryption, watermarking, fingerprinting, and authentication among others. The book also provides discussion of various issues of interest to copyright owners regarding the parameters and limitations of applying Digital Rights Management techniques within intellectual property law.

In reference to my project, the plaintiff and defendant in the Viacom v. YouTube case represent two sides of an ongoing tug-of-war over legal rights to make use of copyrighted content. These two opposing sides are copyright owners and fair use claimants. The book addresses this topic.--"Although copyright literally means 'right to copy,' the term isnow used to cover a number of exclusive rights granted to the authors for the protection of their work...There are, however, limitations on these rights as established in several sections of the 1976 Copyright Act. One important limitation, the doctrine of 'fair use,' has been the subject of a major discussion oncontent protection" (6)

Furht, Borko, and Darko Kirovski. Multimedia Security Handbook (Internet and Communications). Boca Raton: CRC Press, 2005

Intellectual property is taking on new forms in the digital media market. Consumers are exploring their creative license through the use of multimedia service providers in unprecidented ways. This surge of consumer digital media use is also bringing to a head new conflicts between intellectual property rights Creative Commons, and Digital Rights Management. This book explores this phenomenon and the various ways in which major digital media service providers are being effected by this rapidly changing market environment. Overviews of the business performance, legal goings on, and multimedia services of such industry icons as Google, Inc., Metro-Goldwyn-Mayer, Sony BMG, Napster and more are discussed.

In reference to my project, the book looks at precident intellectual property cases and gives insights into how the concepts within the 1976 Copyright Act are applicable to the cases. The author also notes that Google has aside $200 million in escrow to deal with inevitable litigation, lists the various number of litigations involving YouTube, and notes that these cases will set important precedents for future review of copyright law as it pertains to Internet videos (253).

Rimmer, Matthew. Digital Copyright and the Consumer Revolution: Hands Off My Ipod. Massachusetts: Edward Elgar Publishing, Inc., 2007

This book provides a layout and description of the options available to multimedia copyright owners for the protection of their works from unauthorized use.  The utility and potential weakness of various antipiracy techniques and applications are discussed, including adult image filtering, encryption, watermarking, fingerprinting, and authentication among others.  The book also provides discussion of various issues of interest to copyright owners regarding the parameters and limitations of applying Digital Rights Management techniques within intellectual property law.

In reference to my project, the plaintiff and defendant in the Viacom v. YouTube case represent two sides of an ongoing tug-of-war over legal rights to make use of copyrighted content.  These two opposing sides are copyright owners and fair use claimants.  The book addresses this topic.--"Although copyright literally means 'right to copy,' the term isnow used to cover a number of exclusive rights granted to the authors for the protection of their work...There are, however, limitations on these rights as established in several sections of the 1976 Copyright Act.  One important limitation, the doctrine of 'fair use,' has been the subject of a major discussion oncontent protection" (6)

Furht, Borko, and Darko Kirovski. Multimedia Security Handbook (Internet and Communications). Boca Raton: CRC Press, 2005

This book goes over the trends in multimedia that are pushing multimedia services into unprecidented technological formats. There is an in-depth analysis of the multimedia security technologies applied to digital data as prevention of copyright abuse or violation. These various copyright protection techniques inlude digital watermarking, steganography, fingerprinting and data hiding among others.

For the purpose of my project, the book discusses how the ease of communication of digital data is making it a globally accessible commodity. This is why positive internet video sharing service and televisions industry partnerships are being fostered. There is a growing demographic of interenet file-sharing service users who can be reached with multimedia entertainment. The future of these internet hosting / television industry busines partnerships is being forged out of the new technologies in digital data sharing.

Also of interest for my project is that the book also addresses the matter at the root of the uneasiness and friction between multimedia industries like the television companies and the internet video-sharing environment in general. That problem is arising from the polarized interests of intellectual rights owners and interntet end-users seeking free access to information.--"...The development of digital technologies permitting transmission of digital data over the internet has raised questions about how these rights apply in the new environment.  How can digital intellectual property be made publicly available while guaranteeing ownership of the intellectual rights by the rights-holder and free access to information by the user?" (3).

• Lu,Chun-Shien. Multimedia Security: Steganography and Digital Watermarking Techniques for Protection of Intellectual Property. Hersey: Idea Group Inc., 2005

In the chapter titled “The Jukebox Contested” from the book Digital Music Wars: Ownership and Control of the Celestial Jukebox, Patrick Burkart and Tom McCourt discuss the effects of illegal file-sharing on the recording industry and how the recording industry has responded. This chapter begins by discussing the demise of Napster and how it has opened the door for services like Freenet, Gnutela and FastTrack and then gets into how the recording industry has responded. The authors talk about how the RIAA targeted random file-sharers and even sued a sixty-six-year-old woman who allegedly had thousands of rap songs on her computer. This created a lot of ill will towards the recording industry and has alienated some fans. It was also found that this practice had very little effect on curbing illegal downloading.

Burkart and McCourt talk about how peer to peer file-sharing has actually hurt the recording industry and note that the recording industry totaled 40 billion dollars in 2000 compared with 32 billion dollars in 2002. They point out how some companies see file-sharing as inevitable despite trying to fight it and are “hedging their bets” by incorporating it into their business plans. BMG partnered with Grokster to distribute their licensed music while also suing Grokster as part of the MGM v. Grokster suit. This is similar to the Betamax case where companies originally fought the innovation of home recording devices but eventually used them as part of their business model to make money. At present time, record companies are trying to find ways use the internet and file-sharing to make money realizing that the days of CD’s only being available in record stores are gone. Since the Grokster decision, file-sharing is still very common so it begs the question of if the courts have done as much as they can to stop file-sharing and if it is now up to the record companies to figure out how to use it to their benefit.

The thesis of this article is that for the major recording labels to stay atop the music industry, they will have to embrace both technological and creative risks.

They will need to find ways to reach more users via the internet. Until recently, recording companies have viewed the internet as the enemy rather than an opportunity. They have gone with the strategy of litigating the fans that use peer to peer networks instead of finding a sustainable business model that will put their content online. As a result, sales decreased by a fifth between 1999 and 2003.

More recently, however, the recording industry has made inroads to accepting that the internet and digital technology will shape the music industry’s future. Apple’s iTunes service proved to music executives that the legal download market is viable. With this realization, recording companies are trying to figure out how to change their business model to take advantage of the internet.

Another problem which is just as important as piracy is the recording companies’ inability to develop new artists into strong sustainable brand names. The emphasis on one hit wonders is also to blame for the decline in CD sales. In fact, an internal report at one of the major recording studios found that between 2/3 and ¾ of the decline in CD sales was unrelated to online piracy. By embracing the internet, which bypasses more conservative retailers, the recording companies could gain the confidence to support new, innovative music.

Additionally, when an online business model unfolds, higher quality artists will be more profitable. Currently people buy single tracks much more often than whole albums. However, it is in the recording studios interest for users to spend 12$ on a whole album from one artist than to buy 2 songs from 6 different artists.

Importance to Thesis:

This article is important to my thesis in that it helps highlight the strategic mistakes that recording companies are repeating in response to peer-to-peer networks.  Music companies are exaggerating the threat of P2P networks, just as movie studios exaggerated the threat of the VCR.  In fact, the majority of the recent decline in CD sales is due to factors other than online piracy.  In addition, recording companies ignored the new markets that they could reach through online distribution, just as movie studios neglected to see that the VCR would expand their viewer base.  This article thus helps draw two parallels between the VCR and P2P networks, and allows me to apply historical lessons to the current situation facing recording companies.  

This article explains the current dominance that Apple exerts on our digital music experience and how it could potentially become the epicenter of media consumption. Currently, it is impossible to download, organize and listen to music without iTunes. Furthermore, iTunes has created a “network effect” whereby its immense popularity spurs demand for other artists and advertisers to be on iTunes as well. iTunes is thus cemented as the face of our interaction with digital music. This same relationship could soon exist with video media if Apple gets access to Disney’s large library of movies and TV shows. One analyst forecasts that the iPod will become a “Tivo and a music player that you can take anywhere.”

This scenario, however, may be further down the road. Hollywood still opposes distributing copyrighted material over the internet. Additionally, being the epicenter of digital media consumption is not “itself a business right now.” In the future, Apple may find a way to turn this large audience into advertising revenue, and thus a legitimate profitable business.

Importance to Thesis:

This article is relevant to my third argument, which is that Apple represents the way media companies should react and adapt to changing technologies.  Apple, through its iTunes and iPod, took advantage of the changing methods of media consumption.  By anticipating that consumers would need both a device to play their music, and an interface that makes dealing with a large library manageable, Apple made itself the name brand associated with digital music.  The dominant position both iTunes and the iPod enjoy is a testament to this foresight.  Furthermore, the position Apple is putting itself in with regards to video media is a repetition of Apple’s ability to see how peer-to-peer technology has changed the competitive landscape for media consumption.  In contrast to media companies who fight to save the status quo, Apple has placed itself where a business does not even exist, but when it does, Apple stands to benefit enormously. 

In this case, a number of different record companies came together to sue Napster. Their claim was that Napster’s peer-to-peer file sharing service was liable for “contributory and vicarious” copyright infringement. The district court ruled in favor of the recording studios and issued a preliminary injunction against Napster. Napster had to police its servers and remove all copyright infringing material. The district court monitored Napster’s progress and after three months, determined that Napster was not satisfactorily complying with the injunction. Then, the district court required Napster to shut off its peer-to-peer servers until it met certain conditions.

The recording companies argued that Napster should have to search for and block all files that infringed on copyrighted material. They transferred responsibility for locating infringing files to Napster. However, Napster argued that this modification to the injunction was vague with respect to how Napster should monitor its servers.

The court ruled with the district court and affirmed the decision to shut Napster down unless it could abide by the modified injunction.

Importance to Thesis:

This case is important to my thesis because it helps develop my second argument, which is that recording companies today are making the same strategic mistakes that movie studios made in response to the VCR.  The first mistake they are repeating is that they are acting as an industry, not as individual companies.  It is evident from the fact that five separate lawsuits were consolidated into this case that all the recording companies decided to deal with the peer-to-peer threat the same way; namely, litigiously.  The second mistake they are repeating is focusing narrow mindedly on the current perceived threat without considering how this new technology may change the competitive landscape.  By modifying the injunction such that Napster must police itself, the recording studios purposefully made it impossible for Napster to comply, which led to its eventual closure.  This indicates that the recording studios strategy was to eradicate peer-to-peer networks entirely.