November 17, 2006

Universal Sues MySpace for Copyright Infringement

Everybody fretted about Universal Music suing YouTube for copyright infringement given the threats lobbed in that direction by Chairman Doug Morris. But Universal cut a deal with YouTube and that settled that.

The other company that got under Morris’ skin was MySpace. Following talks that apparently broke down yesterday, Universal filed suit this afternoon accusing the social networking giant of copyright infringement of music by Universal artists that is included in the site’s user-generated videos.

The two companies had apparently been in talks up through yesterday but those talks fell apart. Perhaps not so coincidentally, News Corp. also announced yesterday that Fox Interactive Media CEO Ross Levinsohn, who oversees MySpace, is leaving the company.

MySpace issued a statement calling the suit “meritless” because there are procedures for copyright holders to request that their content be removed from the site, namely the take-down provisions in the Digital Millennium Copyright Act.

Universal, however, is taking a hard line.

“Businesses that seek to trade off on our content, and the hard work of our artists and songwriters, shouldn’t be free to do so without permission and without fairly compensating the content creators,” Universal Music said in a statement.

Despite fears that this litigation may spur about the health and growth of video sharing on the Internet, Universal’s lawsuit is probably a good thing. With two giants duking it out in the federal courts, the likelihood is good that some kind of legal precedent will be set. Maybe video file sharing sites (and other video-enabled Internet businesses) can finally get definitive legal ground rules, whatever they may be, providing a higher degree of certainty so that the industry can move forward.

The issue, of course, is one of timing. The wheels of justice move achingly, maddeningly slow and this suit could go on for years, reaching all the way up, perhaps, to the Supreme Court. But the law is going to have to become clear to both Internet companies and content creators and then maybe we can all end this chatter about whether YouTube will get sunk by infringement lawsuits.

Posted by Cynthia Brumfield at 5:33 PM|Print |Comments(0)

MPAA Sues to Stop Loading of DVDs onto iPods

EFF has flagged a lawsuit filed by the MPAA against a small New York company called Load-N-Go Video. Load-N-Go sells both DVDs and iPods, and offers its customers a service which copies the purchased DVDs onto the iPods. Load-N-Go then ships both the pre-loaded iPod and the physical DVDs to customers.

The MPAA’s member studios have sued Load-N-Go for violating their copyrights and for violating the Digital Millenium Copyright Act. What’s interesting here is that the MPAA seems to be arguing than any attempt to bypass its CSS encryption technology, which is, in fact, not permitted by the DMCA, is illegal, even if Load-N-Go or consumers, for that matter, merely wish to copy content for personal uses, which is legal under the copyright law’s “fair use” doctrine.

In essence, the MPAA’s theory in this case is that if consumers purchase DVDs, they cannot copy those DVDs onto any other device, period (assuming, of course, the DVDs are encrypted). An extension of this theory is that consumers must pay an additional fee (say, via iTunes or some other outlet) if they want to watch the same movie on a mobile device.

If consumers could bypass the studios’ security technology embedded in a DVD to copy the contents onto a mobile device, say, for watching films on road trips, those consumers would be in violation of the law, the DMCA. If they purchased the same film from iTunes and downloaded the movie onto their iPods, they wouldn’t be in violation of the law.

This DMCA “loophole” seems to allow the MPAA to invoke one law in order to limit what is fairly common legal activity — the copying of copyrighted material for personal use. As EFF’s Fred Von Lohmann notes “this lawsuit is just the latest example of the entertainment industry taking aim not at ‘pirates,’ but at the legitimate fair use rights of music and movie fans.”

Posted by Cynthia Brumfield at 10:52 AM|Print |Comments(0)

Levinsohn Replaces Levinsohn at Fox Interactive

Ross Levinsohn, President of Fox Interactive Media since it was formed last year when News Corp. hit the Web 2.0 world running, is being replaced by Peter Levinsohn, most recently President of Digital Media in the Fox Entertainment Group. Supposedly R. Levinsohn is leaving because he’s an entrepreneur and P. Levinsohn is coming on board because he’s an operations guy.

Om has word that R. Levinsohn really is an entrepreneur and is planning to start a new online media aggregation company. As he also points out, it seems that major media companies these days are pushing out the new media guys in favor of the old media guys (to wit, AOL’s dismissal of Jon Miller in favor of Randy Falco).

it seems to me that the old media companies are putting old media guys in charge of their new media empires, a move as risky as skating on a lake. You just don’t know where the ice is thin!

Posted by Cynthia Brumfield at 10:00 AM|Print |Comments(0)

Private Equity Firms Complicate Media Ownership

Radio, TV and billboard giant Clear Channel Communications announced yesterday one of the largest, if not the largest, buyout in the media and entertainment industry’s history. Private equity firms Thomas H. Lee Partners and Bain Capital Partners agreed to buy the traditional media conglomerate in a deal valued at $26.7 billion - $18.7 billion in cash plus $8.0 billion in debt assumption.

The New York Times’ Andrew Ross Sorkin and Peter Edmonston have this piece today about whether the mega-deal, and the general trend of private equity firms purchasing traditional media companies, raises any red flags in terms of media ownership issues.

Although Sorkin and Edmonston don’t go into this level of detail, the big concern is whether these private equity firms, which are buying the old media companies as investments not for growth but for the cash they throw off, can be considered as holding “cognizable interests” in the broadcasting companies they buy under the FCC’s ownership rule. These rules limit just how many broadcast stations any “cognizable” owner may have in a given market.

As it turns out, Thomas H. Lee Partners is part of the consortium that bought Spanish-language broadcasting company Univision for $12 billion and Bain, Thomas H. Lee and another private equity firm, the Blackstone Group are investors in Cumulus Media Partners, which bought the radio broadcasting business of Susquehanna Pfaltzgraff in May for $1.2 billion.

So, Thomas H. Lee, at least, will probably end up with ownership interests in TV and radio broadcast stations that bump up against, if not exceed, the FCC ownership caps in some markets. But, is this a problem?

Private equity buyouts of broadcast stations (and newspapers, for that matter, which are covered in the Commission’s cross-ownership rules) are such new phenomenon that no one really knows. In 1999, the FCC modified its rules regarding equity or debt owners of media properties so that a “cognizable” ownership interest is recognized when the equity or debt owners can exert “significant influence” over the media companies’ operations.

Thomas H. Lee, Bain, Blackstone and other private equity owners are likely to say they plan to remain hands-off in terms of the companies’ operations, and therefore, their ownership interests shouldn’t apply to the local market limits. These firms, after all, are looking to extract whatever cash they can out of declining growth media businesses and don’t aim to reinvent the wheel.

One possible problem: when the FCC revamped its ownership attribution rules, its main concern was to ferret out cognizable ownership interests particularly as they applied to program suppliers. Thomas H. Lee Partners and Bain are part of a private investor group that controls Warner Music, and Warner Music is a big supplier to Clear Channel Communications.

Posted by Cynthia Brumfield at 8:57 AM|Print |Comments(0)

November 16, 2006

Time Warner v. Valleywag: Good v. Bad Ouster

I’m struck today by the contrast between two corporate ousters and how one signifies class and the other signifies crass. The first: as the whole world knows by now, AOL’s CEO Jon Miller was pushed out by Time Warner’s top management in favor of an NBC veteran with expertise in ad sales, Randy Falco. It’s sad for Miller, who had an impossible job bailing out a sinking ship these past four years, because he apparently liked his job and would have preferred to stay.

But, Time Warner issued the obligatory “we wish him well” statements. Chairman Dick Parsons had this to say about Miller

We thank Jon Miller for his four years of farsighted leadership during a difficult time at AOL. We wish him well as he moves into the next phase of his career.

I’m sure Miller might not see it this way, but venerable Time Warner was honorable in its public (and probably private) treatment of him, particularly in contrast with how brash upstart Gawker Media’s CEO Nick Denton treated the fired editor of Gawker’s Valleywag, Nick Douglas.

Douglas was ousted by Denton in a surprise move that had the blogosphere buzzing earlier this week — young Douglas’ snarky style and high-profile perch had obviously attracted some fans. But that’s beside the point.

The point is that Denton went out of his way to, well, um, trash Douglas in a staff memo that found its way to The New York Times’ DealBook blog. Not only did poor Douglas not get anything remotely resembling a “wish you well” from Denton, Denton put in writing that he thought Douglas “settles in too closely with the subjects,” had “an elevated sense of one’s own importance,” and displayed a “repeated misunderstanding of the purpose of our sites.”

Denton’s memo gets worse too. While Gawker may have had good reasons to replace Douglas as Valleywag’s editor, did Denton have to go out of his way to trash the guy — in writing, no less — among company staff? That is just mean-spirited, particularly given that Douglas is fresh out of college and was probably cocky, particularly given the high-exposure, juicy job he had been handed with no life experience to guide him.

Can you imagine Dick Parsons circulating a comparable memo to Time Warner staff about Jon Miller? There’s probably no love lost between Time Warner’s senior management team and Miller, but there’s no way that Parsons, or any other seasoned and reasonable executive, would harm an employee in such a shameful way, particularly an employee who had just been fired.

So take heart, Jon Miller. It could have been worse. At least Time Warner wishes you well.

Posted by Cynthia Brumfield at 2:23 PM|Print |Comments(0)

The End of Murdoch's Dance with Malone?

Two of the smartest and toughest negotiating moguls in the media world are about to part ways, according to Business Week’s Steven Rosenbush. Liberty Media Chairman John Malone and News Corp. Chairman Rupert Murdoch have been entwined for years through a series of complex business deals that gave Malone 19% voting control of News Corp. and therefore, in effect, control over Murdoch and his business plans.

These two giants were like-minded allies for many years, but the power Malone has had over News Corp. has turned the alliance of kindred spirits into an uneasy pairing. The solution, or so it seems, is that Malone will trade his voting stake in News Corp. for News Corp.’s 38% stake in DBS provider DirecTV. Murdoch’s also going to fork over some cash — Malone’s News Corp. stake is worth about $16 billion, while 38% of DirecTV is worth only about $7.4 billion.

I can’t see this deal generating a financial benefit for either company. News Corp. is paying off Malone to get out of the company’s hair while Malone is getting what Murdoch himself referred to as a “turd bird.”

At first blush, it looks News Corp. is getting the short end of the stick. But, Malone’s going to be stuck with an asset, DirecTV, that can only expect to shrivel and die over time — unless, of course, Liberty Media is willing to add terrestrial broadband capability to the satellite-delivered video service via the construction of WiMax networks, an idea that Murdoch briefly considered. Rosenbush quotes IDT Chairman Howard Jonas, a friend of both moguls, as saying that Malone also might want DirecTV to round out his global portfolio.

Liberty Media is already the top cable operator outside the U.S., but currently has no U.S. video distribution business, a void that the DBS provider could fill.

“Liberty already is the largest operator of cable systems outside the U.S. By getting control of DirecTV, he would become the only truly global distributor of media,” Jonas said. That would give him a unique role in an increasingly global media market.

But, nothing is a done deal, yet. Both moguls are terrifically complex and tough negotiators and time will tell just how the final pact shakes out.

Posted by Cynthia Brumfield at 9:50 AM|Print |Comments(0)

Nielsen to Release VOD Ratings Data

Cable’s VOD doesn’t get the respect it deserves, according to some advertisers and operators, because there’s no good way to measure viewership. TV ratings company Nielsen Media Research plans to rectify that, in part at least. Nielsen is announcing today that it will produce ratings data for on-demand programs offered by cable operators.

The ratings service (which I can imagine will be beset by glitches galore given the vast numbers of on-demand choices) will be limited to on-demand content produced by national broadcast and cable networks. Nielsen doesn’t yet have permission to access data related to any other on-demand offerings offered in relatively idiosyncratic form by individual cable companies, and, indeed, individual cable systems.

Right now the industry is fond of its own on-demand tracking service offered by Rentrak, but the Rentrak data are controlled by the cable companies themselves and therefore not viewed as objective by the advertising community. And for most on-demand options, advertising is the sole means of generating revenue for the content suppliers.

Surprisingly, cable’s VOD is gaining steam as an ad vehicle. CBS, which used to charge for its on-demand options, switched to ad-supported VOD.

“It’s probably not the greatest shock in the world that people like things for free, and they’re pretty used to the bargain they’ve had with broadcast television for years, i.e., watch a few ads and you get great programming for free,” said Martin D. Franks, executive vice president for planning, policy and government relations at the CBS Corporation. “That seems to be translating over to the V.O.D. and online worlds.”

Posted by Cynthia Brumfield at 9:10 AM|Print |Comments(0)

Sling Media, Orb Land Deals with 3 Group

European mobile wireless company 3 Group (or as it’s more popularly and awkwardly called, “3”) has agreed to offer Sling Media’s place-shifting service as part of its mobile service, starting December 1. Two of 3’s new handsets, part of the company’s “X Series” (or as they are more popularly and awkwardly called “X”) advanced broadband services, will come equipped with Sling’s application, which enables users with a Sling Box device to watch their home video services and remotely control their PVRs.

This deal is a first for Sling, which created quite a stir last year when it unveiled the Sling Box, which basically untethers home video service, making it viewable from anywhere in the world. Sling took that concept to another level when it introduced its software that allows viewers to use the functionality on hand-held devices.

As part of its X Series, 3 has also added another pioneer place-shifting service to its menu of advanced mobile broadband options. The company announced a deal with Orb Networks. Orb’s Mycasting allows customers to stream their home music, videos, photos, and TV on their X -Series mobile devices.

While the inclusion of the place-shifting services is news because 3’s deals with Sling and Orb are the first to legitimize and commercialize the idea of accessing home-based content with no geographic restrictions, 3 also unveiled at its X-Services launch a raft of other innovations.

First, 3 will allow users to make Skype calls over the new handsets. 3 has also struck deals with Microsoft and Yahoo to enable its text-messaging services to interoperate with Windows Live Messenger and Yahoo! messenger. Yahoo! and Google also have pacts with the carrier to support full Internet searching on the X-Service handsets. Finally, 3 has a deal with eBay to support shopping and bidding on the devices. (A webcast announcing all these deals is available here.)

3, a unit of Hong Kong-based Hutchison Whampoa Ltd., has spent billions building wireless, 3G broadband networks in Italy, Australia, Austria, Sweden, Denmark, Hong Kong, Israel and Ireland, which collectively reach 175 million users. Unlike traditional carriers, 3 is selling its package of voice, text and broadband services for a flat monthly rate (no pricing yet on the X-Service options.)

Posted by Cynthia Brumfield at 8:29 AM|Print |Comments(0)

November 15, 2006

Japan to Study Net Neutrality

The distinctly American idea of net neutrality is catching on in Japan. The Japanese government has set up a panel to study the idea, and whether some form of net neutrality requirements should be adopted.

The Ministry of Internal Affairs and Communications is seeking feedback from Google, Yahoo Japan, Apple and phone and cable operators companies, with the goal of preparing a final report by July 2007. Few other governments around the world have floated the notion of network neutrality — the issue only recently cropped up in Canada.

Posted by Cynthia Brumfield at 5:02 PM|Print |Comments(0)

DailyMotion: The YouTube of Europe?

Business Week.com’s Dan Carlin has this piece today about DailyMotion, a French video sharing site that has designs to become the YouTube of Europe. DailyMotion predates YouTube and also captures a bigger market share in France — the site focuses on local content and has features, such as direct uploading from webcams, that YouTube doesn’t offer yet.

DailyMotion has also found a clever way to gain exposure as well as access to copyrighted content. It has a deal with top French TV station TF1 under which DailyMotion has created a special user-generated video site called Wat TV. Starting November 17, TF1 will play the best clips from Wat.TV each day and DailyMotion gains the rights to TF1 clips.

Despite the rise of country/language specific video sharing sites, DailyMotion, which is available in six European languages (note that if you access the site from the U.S., the default language is English) hopes to expand across Europe.

But Bejbaum [CEO Benjamin Bejbaum) is betting Daily Motion can do just that, despite the emergence of rivals such as Germany’s MyVideo or Israel’s Metacafe, which has raised $20 million from Benchmark Capital and Accel Partners. The Daily Motion site is now available in six European languages, and the company is opening an office in Berlin later this year. “Our strategy is totally international,” Bejbaum says. “We are closer to French content, but I want to see content from every country.”

One nasty little caveat to Carlin’s relatively glowing piece. Someone named Nob posted the following comment on the article:

The vast majority of Daily Motion’s content is stolen. They have every episode of The Simpsons ever and new episodes of Lost and Prison Break in their entirety. Pure Piracy. These guys are 15 minutes away from a crippling lawsuit.

I took a look at it does appear that DailyMotion offers many full episodes of “The Simpsons,” as well as “South Park.”

Posted by Cynthia Brumfield at 9:27 AM|Print |Comments(0)

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