August 2013

Sirius Is Sued Over Music Royalties for Pre-1972 Recordings

The entity that collects performance royalties from digital music services—and distributes them to performers and record labels—sued satellite-radio giant Sirius XM for allegedly refusing to pay for recordings made prior to 1972.

The suit, filed in U.S. District Court for the District of Columbia, spotlights a quirk in copyright law: There is little explicit protection for so-called legacy artists, because sound recordings weren't brought within the scope of federal copyright protection until 1972. Older recordings are protected under a patchwork of state laws. Because of that, Sirius has never paid to use these songs, even though such oldies account for an estimated 10% to 15% of the satellite-radio company's total airplay, according to SoundExchange. Sirius sets aside the revenue generated by these pre-1972 spins before it calculates the royalties it owes rights holders—a percentage, set by the government, of the subscription fees its customers pay and some other revenue streams.

Mobile Fourth Wave: The Evolution of the Next Trillion Dollars

[Commentary] The global mobile market will reach $1.65 trillion in revenue this year. Over the next decade, that revenue number will more than double.

If we segment the sources of this revenue, there will be a drastic shift over the course of the next 10 years. During the last decade, voice accounted for over 55 percent of the total revenue, data access 17 percent, and the over-the-top and digital services a mere three percent. Over the next decade, we expect mobile digital services to be the leading revenue-generating category for the industry, with approximately 30 percent of the total revenue. Voice will represent less than 21 percent.

So, what is the mobile fourth wave, and who are the dominant players today? The fourth wave is not a single entity or a functional block like voice, messaging or data access, but is made up of dozens of new application areas, some of which have not even been dreamt up yet. As such, this portfolio of services requires a different skill set for both development and monetization. Another key difference in the competitive landscape is that the biggest competitors for these services (depending on the region) might not be another operator but the Internet players who are well funded, nimble and very ambitious.

Smart phone searches by police should raise alarm

[Commentary] The more we hear about President Obama's attitude toward privacy, the less we like. The latest eyebrow-raiser is the Administration's argument that the Fourth Amendment allows warrantless cell phone searches.

The Administration asked the Supreme Court to resolve the issue, arguing that a cell phone is no different from any other object a suspect might be carrying, such as a notebook, calendar or address book. Hogwash. Technological advances in the years ahead will only make it easier for police and the government to access information that Americans reasonably expect to be private. If the courts swing the door wide to that access based on existing law, which never envisioned this technology, it will be up to Congress and the states to restore privacy rights. It doesn't look like the president's going to help.

How the NSA leaks could affect the US cloud computing industry

A recent report from the Information Technology and Innovation Foundation estimates that the United States’ multibillion-dollar US cloud computing industry stands to lose anywhere from $22 to $35 billion over the next three years because of the National Security Agency revelations.

“If European cloud customers cannot trust the United States government, then maybe they won’t trust US cloud providers either,” said European Commissioner for Digital Affairs Neelie Kroes in an interview with the Guardian in July. “If I am right, there are multibillion-euro consequences for American companies. If I were an American cloud provider, I would be quite frustrated with my government right now." Industry shifts since the NSA leaks in early June support Mr. Kroes’ argument.

Aereo Wins Send Networks on Hunt to Stop Streaming TV

Broadcasters stymied by court losses in New York are turning to judges in California and Massachusetts in their campaign to shut down the Aereo.

A federal court in Los Angeles granted Fox’s motion to close a similar service run by FilmOn.TV Networks. and lawyers are set to argue before the U.S. Court of Appeals in Pasadena, California, over that decision. A victory by Fox would create a split between federal appeals courts in California and New York, which could propel the case to the nation’s highest court.

FCC: 'Engaged' In Trying to End CBS/TWC Retransmission Fight

An Federal Communications Commission spokesman suggested that the FCC is now actively working with both CBS and Time Warner Cable to help them resolve their retrans dispute.

FCC Acting Chairwoman Mignon Clyburn said two weeks ago that she was ready to consider "appropriate action" if the dispute continues. At the time, she said the FCC was continuing to monitor the situation. But in a new statement, an FCC spokesman said that the FCC is "engaged at the highest levels with the respective parties and working to bring the impasse to an end for consumers and viewers in the affected markets." "We urge all parties to resolve this matter as quickly as possible so consumers can access the programming they rely on and are paying for," the spokesman added. According to a source, one of the parties must file a complaint -- neither had at press time -- before the FCC can weigh in on whether either side is violating FCC rules mandating good faith negotiations, which is the regulatory muscle the FCC can flex under its current rules.

NAB: FCC Should Extend Political File Requirement To All Stations

The National Association of Broadcasters, which has taken the Federal Communications Commission to court over its online political file posting requirement, now tells the FCC that it should hold off on the organization's petition to reconsider the requirement until after it had extended the requirement, as planned, to all TV stations starting July 1, 2014.

The NAB said it still believes that "the FCC lacks statutory authority to require online political files [big stations or small] and that the Order's asymmetric, broadcast-only public and political file requirements are arbitrary and capricious," but said it thought the FCC needed to see how the requirement applied to smaller stations with fewer resources so it can get a better idea of its impact.

DTV Antenna Sales Rise in CBS Blackout Markets

The ongoing dispute between CBS and Time Warner Cable customers predictably has turned into a quick sales opportunity for some consumer electronics stores that hawk digital over-the-air antennas in the blackout markets. “[P]urchases of HD antennas and related products are up double digits compared to prior weeks in Dallas, New York and Los Angeles,” a Radio Shack spokeswoman said. Those markets represent the bulk of the 3.2 million TWC who are affected by the standoff.

Facebook and Google Try Self Help

It turns out you need lots and lots of cement when building Internet super-highways. Now web heavyweights like Google and Facebook want to mix their own.

That threatens to eat into the profits of large Internet construction companies such as Intel and Cisco Systems. Smartly, the latter aren't just going to let the market drive off without them. Google and Facebook buy so much tech equipment that it makes sense for them to design their own. This enables them to save money and run their websites more efficiently. Both design their own servers, for instance, of which Google has over a million worldwide, IDC estimates. Besides servers, Facebook designs much of its own storage hardware while Google also designs its own network switches, says IDC. Now both these firms are pursuing projects that could help them sidestep Intel and Cisco, two hardware manufacturers that dominate their respective markets, making gross profit margins of roughly 60% in the process.

Why don’t Facebook and Google just embrace that they’re monetizing the third world?

[Commentary] You’d be hard pressed to find many fooled that Internet.org is anything but a Trojan horse for some big tech companies to access new customers.

We get how this works: First world firms go into third world nations under the banner of humanitarianism when the real point is to get their products to new sources of revenue. Been happening for years. But Mark Zuckerberg worked to spin it the other way. “Everything Facebook has done has been about giving all people around the world the power to connect,” he wrote. “There are huge barriers in developing countries to connecting and joining the knowledge economy. Internet.org brings together a global partnership that will work to overcome these challenges, including making internet access available to those who cannot currently afford it.” He even kicked off the press barrage with the faux-intellectual question “Is connectivity a human right?” But what if Zuckerberg had just said, “Facebook has partnered with Ericsson, MediaTek, Nokia, Opera, Qualcomm and Samsung to bring Internet access to the third world. There are 5 billion people without the Internet and we believe that these new markets will be critical to our growth and bottom line. If successful, all of you that bought stock during our IPO will finally get your money back. As an added benefit, more people will get the Internet. And yeah ‘knowledge economy’ is a pretty preposterous buzzphrase.” Straight honesty (maybe lose the last part).

We know none of these companies would embark on this partnership if it wasn’t better for business. So let’s call a spade a spade and move on.

Benton

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