Friday, March 30, 2007

Extension Sought

GoogleWatch reports that Google has filed for an extension to reply to Viacom's copyright infringement lawsuit. This means that Google's response is due sometime before May 2. GoogleWatch says the extension was needed because Google has yet to retain counsel.
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Anonymous Anonymous said...

Does today's news about EMI releasing DRM free music/video on iTunes have any ramifications on Viacom/YT lawsuit (direct or indirect?)... Or is the EMI/Apple deal just a vote of confidence that content producers should focus less on artifical ways to protect their IP and more on monetizing it using new technologies and distribution?

1:29 PM  
Blogger Nick said...

The short answer is probably no, the EMI/Apple deal will not have much of an effect on Viacom/YouTube.

Remember, BMG invested a bunch of money in Napster, only to be sued by other record labels for doing so. BMG recently settled, partly b/c it was bought by Universal, which was suing Napster in the first place, and it was awkward for Universal to be essentially suing itself.


So, the fact that EMI is releasing non-DRM music via iTunes has no real effect on other companies that think DRM is the only way to do business online.

That being said, that EMI sees DRM as bad business both legitimizes the non-DRM business model and gives EMI a competitive advantage. Since EMI has decided to go this route, it weakens the argument that non-DRM can't succeed and that adopting non-DRM will kill the music business. If that were really true, EMI wouldn't be doing it. Also, that EMI has dropped DRM makes it a more attractive label for potential purchasers, possibly attracting more purchases of its music in turn (though that EMI's DRM-free music costs $1.29 is an interesting move given Apple's determination in keeping songs at $.99).

For Viacom/YouTube, the effect of this EMI/Apple deal is not significant. With video, I think maintaining good relationships with advertisers is a significant factor for content creators (at least big ones like Viacom). They want to control the advertising environment, beyond simply getting a cut of ad revenue, because it is the major advertisers that are primarily paying to produce all this content. Advertisers want assurances both in terms of eyeballs and what their ads are being associated with (ie. the right shows being targeted to the right demographics). These factors are noticeably absent with music.

The economics and business models behind video and music are different enough that a deal like EMI's shouldn't have much crossover impact. However, it does signify a growing belief in content as promotional material in getting users to spend money in other channels.

This last point is relevant to Viacom/YouTube, but as a copyright owner, with all the rights that attach to that status, Viacom is still free to call the shots regarding its content and to assert more control over its videos, even if hypothetically they were the only company that did not want its videos being promoted for free.

5:38 PM  
Blogger Nick said...

Btw, anon, I like your characterization of DRM as an artificial way to protect IP. That's exactly right. DRM is a means to artificially create scarcity in a digital environment where real scarcity is absent. When people talk about outdated business models, I hope they are referring to business models based on scarcity b/c making money off non-scarce goods is something businesses need to learn how to do to remain successful.

I recently read Knowledge and the Wealth of Nations by David Warsh and Origin of Wealth by Eric Beinhocker. Both do a great job looking at the history of economics since Adam Smith and the pin factory to point out the kinds of fictions economists assume about the world and human behavior in order to show how these assumptions start to break down in an info-economy and with non-scarce goods. These books are highly recommended and are written well enough to be accessible to those w/ weak economics backgrounds (like myself).

5:45 PM  
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1:36 AM  

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