Friday, February 26, 2010

Ten billion reasons why the recording industry is stupid

Ten billion is a big number.

It's a one, followed by ten zeros or 10^10.

To get a better idea of that number here's an example of just how big it is.

If you took the name of a music recording and wrote it on a piece of regular copier paper then placed it on the floor -- it would be about 0.01mm high.

If you did that 10 billion times, and stacked all those pieces of paper on top of each other, you'd end up with a stack that was 100km tall.

The top part of the stack would reach the Karman line, the boundary where the earth's atmosphere ends and space begins.

So yes, 10 billion is a big, big number.

But what is so significant about the number 10 billion that I felt it necessary to provide such an elaborate example of its magnitude?

Well Apple has announced that iTunes has sold its 10 billionth song by way of download over the internet.

I bet the recording industry is kicking itself now -- or at least it would be kicking itself if it hadn't shot itself in the foot so many times that the tattered appendage must have been amputated years ago.

For years, the recording industry rallied against music downloads. It decried the level of piracy associated with illegal downloads but did nothing to sate the demands of an market that no longer needed or wanted the inconvenience and "all or nothing" option that was the CD album.

While the recording industry was doing this, Apple created the iTunes store and effectively took control of the now very lucrative legal music download market.

Instead of providing this service themselves, and reaping the bountiful profits, the music industry was so busy treating its customers like criminals and trying to unload CDs on a public that wanted downloads that they allowed Apple to create a market dominance.

Now the record labels are forced to pay Apple a commission on all those tracks sold through iTunes and that commission comes right out of the labels' bottom line.

The fact that the recording and movie industries still prefer to treat customers as criminals rather than valuable assets shows that they have learned nothing from this awful miscalculation.

Accusing your customers of crimes and unleasing your war-dog lawyers on them does not produce healthy profits and positive branding.

What builds healthy profits is creating a product that people want and delivering it to them in a format that they prefer -- at a price everyone thinks is fair.

Apple know this.

However, the labels and studios still have a long, long way to go before that penny drops.

In the meantime, still not willing to adapt to changing markets and technologies, both the recording and movie industries are now placing their hopes on being able to lobby governments into giving them even more legal protection by way of the ACTA agreement currently under construction.

Unfortunately for these myopic marketers, even tougher copyright laws won't help their slow spiral into oblivion. Unless they wake up and take advantage of the new opportunities that are presenting themselves they'll all be out of jobs within a decade as the internet empowers artists to deal directly with their fans.

Don't hold your breath -- it seems that the labels are incapable of learning a damned thing from the way Apple has leveraged iTunes into a money-spinner.

iTunes second 10 billion will come up much faster than the first one... where will the recording industry be then?

Friday, February 19, 2010

YouTube today, gone tomorrow?

Over ten years ago, I recall watching online streaming video on my computer screen.

An area barely larger than a postage stamp contained a highly pixelated, low frame-rate moving image and sound.

It was kind of like the re-invention of the movies all over again.

Despite the poor quality, the frequent buffering and the very limited content available, video was on the Net -- whether we needed it or not.

Back in those days, Real was king and their RealPlayer was "the" streaming media software to have on your PC if you wanted to enjoy live audio or video.

Over the years that followed, things improved significantly.

Dial-up gave way to broadband, Microsoft took over from Real as the dominant player in the streaming software market and then something ground-breaking happened...

Five years ago, YouTube was born.

Unlike other streaming video options, YouTube's video clips loaded relatively quickly and although they initially suffered the same pixelation and buffering as those early postage-stamp videos of years gone-by, things were quickly improved.

Even better, YouTube didn't care if you had the right version of Windows Media Player, the right codec or other tech-stuff. It used Adobe's Flash player and that was already ubiquitous so just about anyone could watch streaming video without getting all involved in installing new software and tweaking system settings.

Although it started relatively slowly, the YouTube community quickly grew and today it's "the" place to watch video and upload your own contributions.

Despite its tremendous popularity however, even Google hasn't been able to spin a dollar's profit from the enterprise since they purchased it a few years back and there are no guarantees that they ever will.

Far from being just a dumping ground for music vids and tedious home-movies, YouTube has rapidly become an incredibly useful source of relevant and up-to-the-minute information.

When a news story breaks almost anywhere in the world, a YouTube search will almost certainly find you some of the latest broadcast reports, uploaded either by the broadcasters themselves or by some keen third party.

I also find YouTube incredibly useful for hunting down all manner of other types of information. If you'd normally search Wikipedia or Google for something, try a YouTube search as well and you may be surprised with just how much relevant material you find.

However, more important than the technology is the insight that YouTube gives us into the composition and attitudes of the "average" Net user these days.

Back in the days of postage-stamp video streaming, just about the only content available was of a technical or news-related flavour. This wasn't entertainment, just information.

Today however, as YouTube celebrates its fifth birthday, we can see that things have taken a decidedly different turn when it comes to the content that's available and that which is most viewed.

Just what are the most popular YouTube videos ever uploaded?

Are they documentaries? Informative pieces? Technical commentaries? Scientific reports?

No.

I'm afraid (and this is surely a very sad indictment on the average IQ of the Net audience in the 21st century)...

1. Charlie bit my finger - again !

2. Evolution of Dance

3. Miley Cyrus - 7 Things - Official Music Video

Or maybe it's simply an endorsement that the internet has become as wonderful as television.

Hmmm...

Perhaps the most interesting question is to ask "where next for online video?"

If Google can't work out a way to spin a dime from YouTube, will they continue to pour good money after bad by providing the service at all?

Will video become the predominant format for information and entertainment online? Just a decade ago, I doubt anyone would have believed that we'd be seeing as much video now as we do -- could the growth continue to eclipse all other content formats?

Or will the confusing conundrum surrounding copyright effectively scuttle services such as YouTube. Indeed, even a cursory inspection of YouTube's content will show that despite automated software designed to prevent copyright infringement, an astonishingly high percentage of YouTube's content infringes someone's copyright -- either by unauthorised uploading of TV content or the unauthorised use of music tracks.

YouTube is old enough to go to primary school -- but will it still be around when it comes time to go to high-school?

Friday, February 12, 2010

Security? Sometimes it's just an illusion

Today was not a good day in the world of banking and electronic transactions.

Here in New Zealand, we lead the world in our uptake of EFTPOS as a way of making payment for goods and services. Indeed, when I visited the USA a few years back, I was gobsmacked at just how far ahead we were.

While our retailers were all providing electronic card-swiping and PIN numbers as a way of delivering instant electronic payment, the Americans were still hauling out their zip-zap and asking for a signature -- positively archaic!

However, none of this super-smart electronic payment stuff would be worth a bean if it weren't secure.

Imagine if people could intercept your transaction and use the data contained in it to fraudulently perform other, unauthorised transactions involving your money in your bank account.

Ah, but that could never happen right? After all, these EFTPOS terminals have some pretty wicked security stuff that encrypts the data and makes such things impossible. What's more, the new cards even have a super-secure chip built into them that must surely make them invulnerable to fraud...

Right?

Well apparently it's not impossible, at least if you use your card in Europe.

According to this story, researchers have been able to demonstrate just how simple it can be to thwart all this alleged security.

Scary stuff indeed!

By installing a bit of extra equipment and some software between an EFTPOS/Credit-card terminal and the bank's computer, fraudsters could effectively collect quite significant sums of money from unwitting customers -- and it gets worse (if you're one of those customers).

In the normal kind of credit-card fraud, where a card's details are cloned or simply taken an used online, the card-holder is indemnified against loss. In such cases it's the merchant who is left carrying the cost of fraudulent transactions because no PIN was used to verify that the card was being used by the authorised holder.

With this new kind of exploit, the legitimate cardholder is actually entering a valid PIN so, from the bank's perspective, it *is* an authorised transaction, therefore it's the customer's liability -- just as if you'd had cash stolen from your wallet.

Clearly the banks need to go back and have a think about this situation and exactly how secure their electronic payment systems really are.

It's not known if the same vulnerabilities and customer-liabilities exist on NZ's EFTPOS network but it might just be worth contacting your bank to find out.

If this proves anything, its simply that anything done by man can be undone by another man, especially if he's after your money.

Remember, there's no such thing as absolute security, the best you can hope for is that the systems you rely on are 'secure enough'.

Friday, February 5, 2010

A change of tack for copyright bullies?

Across the ditch in Oz, the Movie studios have been dealt a nasty blow.

They lost an attempted prosecution against one of the country's largest ISPs, iiNet who, they alleged, was complicit in the illegal downloading of material from various P2P networks.

By not actioning complaints made by the movie studios that would have seen customers disconnected merely on the basis of an accusation, iiNet was itself breaking the law -- according to the copyright holders.

Well clearly an Australian court felt otherwise and told the movie studios that it wasn't the ISPs job to act like a copyright cop, nor was it their job to disconnect customers at the whim of a copyright holder, unless that copyright holder wants to obtain a court ruling.

Of course the movie studios aren't about to run away with their tail between their legs, they're going to appeal the judgment, however word on the street is that they're also reconsidering their strategy in the wake of the court's decision.

A number of commentators and people in the ISP industry have suggested that, having found ISPs to be too hard to bully, Australian copyright holders may opt to follow the path pioneered by their US peers -- and that is to simply sue end-users.

While a large ISP like iiNet has the financial resource and tenacity to stand up to big corporate music and movie publishers, most individuals will capitulate and be forced to pay a penalty dictated by those publishers -- rather than find themselves in court.

In deed, this "copyright bullying" has become rampant in the USA, with most accused simply paying a few thousand dollars to avoid what could be an enormous court-determined settlement that may reach into the hundreds of thousands of dollars.

Of course if you do illegally download copyrighted material then you get what you deserve either way but what about those who are falsely accused?

What about the nice family of four who have an unsecured wireless router in the living room which, unknown to them, has been hijacked by some evil little sod parked outside who is illegally sucking down gigabytes of box-office movies?

When the copyright bullies come a knocking and demanding large fists-full of money, what can that family of four actually do?

They could refuse to pay up and take the issue to court but, even if they do prevail, the costs and stress involved could still be enormous.

When the NZ government finally makes its mind up on the legislation that is to replace the ill-conceived and ill-fated Section 92A of our Copyright Act, they need to make certain that innocent folks are protected from big corporations who throw allegations around like water -- in the full knowledge that some folks will just pay up to avoid the heartache.

In the event that an allegation of copyright infringement is found to be false, the plaintiff should automatically be hit with a stiff financial penalty for wasting the court's time and unnecessarily inconveniencing their victim.

Without this protection, it would be easy to see the copyright bullies opting to pick on the weak and those least able to defend themselves -- because that's what bullies do.

Copyright infringement is a crime -- bullying should be too.