In a case that could have had impact on people who embed video, such as social media users and bloggers, the Seventh Circuit Court of Appeals did not look favorably on some of the strangest bedfellows to grace its doors in quite a while.

For reasons not entirely clear to me the film industry representative trade body, the MPAA (Motion Picture Association of America) chose to hook up a small gay porn website (Flava Works) (you don’t need a link from me to find it !) to pursue a site (myVidster.com) that allowed users to upload  links to unauthorized streaming copies of copyrighted  video works of flava (so to speak).

I don’t think the only example of this type of linking activity the MPAA could find was gay porn, but whatever, their decision allows me to crack a few cheap jokes while I write about what may be an important decision, confirming what is probably common sense logic when you strip away all the noise.

Key take aways from the Appeals Court decision:

1. Merely watching a streaming copy of an infringing video is not copyright infringement .

2. Hosting a link to an infringing video, or even embedding a video (so it appears to be playing on your site when actually the third party host site is playing the video in the frame you have created on your site)  is also not an act of copyright infringement or contribution.

3. Any claim for infringement of public performance right is not against the host of a link or the consumer.

4. A change in the law is required if link enablers and consumers are going to be brought into the liability net  (content owners vs. telcos, Google, Facebook etc. etc…..you know who is winning that one)

myVidster is typical of sites which  are sometimes known as  social video bookmarking sites.  myVidster ‘s business is that it makes ad revenue money off of the traffic to the site.  The MPAA (and many other rights owners) wants to close the likes of them down because by promoting links to infringing content they are helping drive consumption of  this content which is not authorized or monetized by the rights owners.

myVidster works as follows:  A user submits a video. myVidster finds the website where the video is hosted.  It then grabs information on the video and either copies the video or makes a thumbnail.  MyVidster then does something very common – it embeds the video (creates a frame around the video which is actually playing off the site that hosts the video)– instead of a link to the original site — on its own site. When a myVidster visitor clicks on a video that is posted there, the video plays directly on myVidster in the embedd frame but is actually being streamed from the host site which is not controlled by myVidster.

Flava Works found lots of  myVidster pages with embedded Flava Works videos streaming from  third-party  sites. The usual DMCA takedown notices were sent and myVidter said they complied with the notices.  At first instance, myVidster were held to be infringing copyright and not able to avail themselves of the safe harbor provisions of the DMCA.

On appeal myVidster were supported by the likes of master video embedders Google and Facebook who argued through an Amicus Brief  that hosting a video and embedding a video were not the same thing in connection with copyright infringement (clearly a finding that video embedding amounts to a copyright infringement would have had massive effects on both Facebook and Google)

For reasons that are not clear to me when I searched Flava Works on the MPAA website, including their blog I couldn’t find a reference to them or this case.

As well as having had the worst make-up while in Kiss and a terrible recent  mugshot, Cusano now  has 80,000 plus reasons to look miserable.

A recent  case having repercussions for any recipient of royalties who face enforcement of a judgement debt against them, gives me a chance to post pictures of every teenage boy’s hero, Gene Simmons.

Back in the early 80′s, Vinnie Cusano,  was Kiss guitarist on two albums  (Creatures of The Night and Lick It Up)  Wind forward 20 plus years and Cusano lost a 6th circuit appeal this week and Gene Klein (aka Simmons) can now levy Cusano’s royalties to recover $80,000 plus of legal fees and costs awarded to Gene, Kiss and Co when Vinnie lost a royalties claims case against Kiss.

The judgement confirms that royalties are not earnings to the extent that 75% of them could be protected from a judgement levy under California Code of Civil Procedure § 706.050 which provides that 75% of an employee’s disposable earnings can be protected  from a claim of garnishment.

Various jurisdictions have provisions similar in principle to the California legislation intended to protect a portion of a debtor’s salaried income to allow them to live in the face of a judgement levy.  Not only did the Appeals Court find that Cusano had not followed the proper procedure to protect the income it was also confirmed that royalties earned from song writing were not income arising from employment and therefor even if Cusano had complied with the protection procedure, this sort of income was not protectable under this provision.   As Vinnie’s mother probably told him.  ”Vincent, songwriting ?….that isn’t a real job”

Gene not looking happy because apparently he couldn’t levy these two as part of the case

The FTC today floated proposed changes to the COPPA regulations which since 1998 have regulated online collection of data from and marketing to children (aged under 13).

The Children’s Online Privacy Protection Act mandates that website and online service operators obtain verifiable consent from parents before collecting, using or disclosing personal information of children under 13.

Collectors of data that fall afoul of COPPA can incur the wrath of the FTC and that can amount to multi-million dollar fines, injunctions, surrender of data. Anyone collecting data on line HAS to take their obligations in this area very seriously.

Nielsen surveyed usage of tablets in households back in February 2012 and came back with some very kid-centric stats

The proposed new regulations are an attempt to update the 14 year old  (ancient?) rules on protection of kids online privacy and the  collection and use of data from from those child internet users.  As we all know, a year in the history of the internet and all things tech, might as well be a decade in the non-tech universe. A decade-and-a-half back, the internet (or rather the world wide web) was a desktop bound arena largely the preserve of adults, people still read newspapers, watched TV, cellphones were just (and only) that, and computer games required a $50 spend on a disk, a console or PC.  No iTunes store, no Facebook, no iPhone and online marketing was in its infancy.  12 years later  we are way beyond the world wide web, desktop computers are rapidly going away and not giving your 12 year old an iPhone is, I am told by my 12 year old, a form of child abuse.

Main areas of likely change:

- Sites could screen for age to determine age (a recognition that kids know how to get around an age gate and a session cookie in about half a second)

- The Regs now extending to the reality of mobile devices

- Collectors of data will be responsible for the actions of third party users of that data

- Extension of definition of personal data to include IP addresses and cookies which can be used to track users and their data

FTC is collecting comments through September 10, click here. 

 For more info on COPPA compliance click here

A UK website reported back in December that even Santa has been heavily fined for infringements in this area although I suspect the story, like Santa himself, faces certain credibility issues.

Crowd funding  is another of those unique ways our electronic world is connecting people in ways that were never before possible.  Now entrepreneurs,  small scale borrowers  and even scientists looking for help with research can connect with people who may be interested in giving them money in ways that are truly unique and until relatively recently were never before possible.

The bringing together large groups of people connected only by their desires to get involved  in project funding/lending in a small way is a real  innovation in what amounts to  two plus millennia  of money lending and investment history.

While the results, to some degree  are the same as traditional investment, or borrowing in the case of micro lending – the borrower gets money, there are some real key differences.

The motivation to “invest” or lend and the source and quantity of investors is clearly different to the traditional model.

The big difference these new models have over the traditional ones?  The old models didn’t work for many of the recipients of money under these new models.  Whether you want money to make a record or buy a chicken, Goldman Sachs are not going to be calling you back any time soon.

In the crowdfunding model, the money being paid over is of a far lesser amount per investor/lender than the traditional models.  The motivation of the investors/lenders is also usually different. They are normal people, not professionals in the lending and investment business. This isn’t just about the return. They are largely supporting for otherwise than for the love of cold hard rate of return.  Whether it is for the sheer love of the project or to change the world in some small way these are not your typical lenders.

In project funding, the reward is also different from traditional investment, usually there is no ownership in the project or return of cash plus interest (micro lending does return money plus interest).  When it comes to project funding your reward might be through receipt of  some cool incentive gifts in exchange for your support (such as a gig in your living room, a signed LP, or even a reduced price jelly fish tank when the product is launched) but there is a lot more than the rate of return motivating most people active in the crowdfunding space.

One might even view time spent dabbling in crowdfunding sites  as the equivalent of an entertainment activity where one gets to check out some cool stuff, feel like you are engaged in something worthwhile and positive and you might even get something back for your $20.

Check out the science project funding sites Scifund Challenge powered by RocketHub or Opengenius or maybe get involved in micro lending   through Kiva, where your small amount of cash might make a difference in the life of someone far away (and now, with the launch of US based initiatives, increasingly closer) to home.

How meaningful is crowd funding.   Very, to anyone who gets money !  and there are a lot of recipients at this point.

Kickstarter has generated $240mil plus of successful pledged dollars across approximately 50,000 projects.   http://www.kickstarter.com/help/stats.  That has put funding in the hands of a LOT of entrepreneurs in ways never before possible.  Kiva ? Check out their stats here.  $330 mil in loans, 5000 borrowers a week, a pool of almost 800,000 lenders and a default rate of just over 1%.

Kickstarter.com is probably the most well known crowd funder site for business. What works on Kickstarter?  No great surprises as to some of the key factors which contribute to likelihood of success. Many of these factors will also apply in putting together a successful plea for cash in the other related crowd funding environments.

Looking at Kickstarter in particular:

Actual products , often of a gadgety already well developed type do well;slick presentations including video helps; having a strong viral database (Facebook, Twitter etc.) with whom you can comunicate also helps.  Last ,but not least, a leg-up from Kickstarter itself in the form of promotion and prominent placement on the site also plays a role.

The infographic below gives you a good overview of Kickstarter stats.

If you are interested in some real analysis  in this area (as opposed to my ramblings) check out the recent paper from Wharton’s Prof. Mollick – The Dynamics of Crowd Funding: Determinants of Success and Failure.

Also: CNN wrote about 8 different crowd funder sites recently and their article is worth checking out

Let’s get the easy one out the way first:

EA Sports announces they are to open a retail spot (3 or more in the next year). Construction on the first of these head scratching initiatives is taking place at ……(think an iconic retail spot where major brands often plant their  flagship brand defining exercise in losing a huge amount of cash:  5th Ave in NYC? er…no.  Rodeo Drive in Beverly Hills? …er…. no.  Mall of America?  er….no.  Give up?  Why the airport in North Carolina of course (No offense to anyone from North Carolina, which I hear is very nice).  Sheer genius on the part of EA. The death of totally unrelated businesses like record stores, video stores, book stores and in a short minute most physical game retailers, indicate that EA clearly knows something the rest of us don’t. At a time when console game play is an ever shrinking portion of the game-play pie what better way to keep your brand relevant? Brick and mortar? Maybe it is just a retraining spot for EA staff.  They retrain you to work at retail before they fire your ass.

Click here to read an  interview with EA’s Chris Erb (VP of Brand Marketing at EA Sports) in Forbes under the ironic title”Brand Innovator Spotlight”.

Hey guys: Don’t forget one of these in your budget for build  out:

In a less sarcastic and somewhat more useful turn, I direct you New Zoo’s annual survey of the amount of time and how and where people engage with games.

Looking first at New Zoo’s US numbers:

1. 1 in 2 people in the US spend 2 hours a day gaming ! – I know it is stated at the most general of levels and the detail is very nuanced but….almost half of the US population is playing for close to 2 hours a day.

Assuming that game time isn’t part of a new 26 hour day, that time  has to come from a limited number of other activities:  TV time, sleep time and general socializing and non-screen based activities.  I bet a big chunk is from TV time and that trend will only accelerate.  Some of this 2 hours  may be found time because  people can play games on untethered devices as they ride the bus or the subway but much of the time  undoubtedly comes from fundamental shifts in how people allocate time they are not at school or at work.

2. More than 70% of Reported Gaming Activity Does Not Require A Trip To Store To Buy A Disk. That data clearly indicates to me EA are smart and way ahead of the curve. Get back into retail as everyone is heading to the exit.  Pick up leases at expensive places like airport retail, shop fit the heck out of the space and employ and train a bunch of staff to sell disks people don’t want and branded t shirts and chatchkis no one needs.  Visionary indeed.

If you really want to sell discs at airports why not put in vending machines with flat screens running game trailers?  Want to encourage people to download games as they have hours to kill at transit hubs? Rent time on the closed circuit TVs and put posters in light boxes. (I am not suggesting that is an effective method of driving sales or that transit hubs are the place to find your customers but you the way to go is open a store ? Seriously ?

3. People play across a number of platforms We all know people do not just stick to gaming on one device or type of device.  3.8 platforms per player on average tells you that gaming is an activity gaming people engage with in numerous media and on numerous devices (many of them no longer dedicated gaming devices)

The rise of the casual gaming companies, e.g. Rovio and the social network gaming companies such as Zynga mean that the old school giants such as EA cannot respond quickly enough to each and every opportunity.  They are lumbering giants weighed down by overhead and years of history dedicated to something that no longer represents the majority of the market opportunity.

Don’t get me wrong…I am not from the school of record companies were idiots , I am sure may of the  the people at EA are very smart and  talented and understand these trends way better than I do – BUT  masses of theories and history from the areas of economics, business, psychology and numerous other disciplines  speak to why this is so for most established players when disruptive change comes along. What New Zoo is showing us is the speed and extent of that change.

We see similar trends in other markets. Desktop gaming appears stronger outside the US but I bet you can track that to slightly delayed penetration of handheld devices, differences in hardware costs and other regional nuances that will only delay or slightly flavor what are ultimately global trends and basic human behavior patterns.  While taste may be national in many instances we are all human beings and are largely driven by similar needs, wants and desires.

Months back I wrote about how Groupon was bad for many of the businesses all rushing to spend money.  A bunch of people commented that I didn’t know what I was talking about (others agreed with my analysis).

The bodies are starting to float.  Groupon is not much different to junk mail on your doorstep. It is a bad deal for most small businesses. Consumers like stuff for free but so what.  Invest in Groupon?  Not me.

http://techcrunch.com/2011/06/09/groupon-single-worst-decision/

http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/

In this day and age of viral marketing, building connectivity to, and dialogue with, your customers and potential customers, is the mantra being chanted by marketing execs everywhere.

One way to build that connectivity is to run contests/sweepstakes (read below for the difference) to build lists and then market to those lists. Anyone doing that, or thinking of doing that, would do well to read about Rascal Scooters.

Fast getaway? Not fast enough for the FTC

Electric Mobility Corporation dba Rascal Scooters just got hit with a $2mil fine by the FTC for making 2 million unauthorized calls to telephone numbers listed on the National Do Not Call Registry in breach of the Telemarketing Sales Rule. The numbers were collected through sweepstake promotions. It was held that Rascal’s actions did not fall into any of the exceptions that allow a company to make calls to numbers on the National  Do Not Call Registry.

Everyone who is trying to build their marketing database through promotions and other activities should pay attention to this case.

The good news for Rascal?  They only have to pay $100,000 of the fine based on their representations of inability to pay.  If those representations are found to be false, the balance of the fine will become payable.  Apparently, Michael Flowers, owner of Rascal used this shot as evidence that he was so poor that he couldn’t afford a car.

The Telemarketing Sales Rule provides that you may not make an outbound sales or marketing call to a person (any person) located at a telephone number listed in the National Do Not Call Registry unless you fall into an exception category.

Exceptions are:

1. You have a signed written authorization permitting you to call from the person setting out their name and the telephone number; or
2. You have a “pre-existing business relationship” with that person and they have not indicated to you that they do not wish to be called.

The Rascal case held:

• collecting phone numbers through sweepstakes entry forms without very clear wording on what you were going to do with the information collected did not amount to an adequate authorization
• collecting a sweepstake entry was not sufficient, of itself, to amount to a pre-existing business relationship pursuant to which you could make telesales calls to a Do Not Call listed number.

It would have been so easy to show a fat person eating a small child on a Rascal, but instead, in keeping with the theme of this blog, I give you……the arch rascal himself…..his Purple Highness, Prince Rogers Nelson.  It is not known if he purchased his Rascal pursuant to an unsolicited  sales call or if  if he won his Rascal in the sweepstakes.

What is a sweepstake vs. a contest. A sweepstake is a random drawing from all entries. There are no judges for a sweepstake, just an administrator who makes random picks. A contest usually requires you to do something in order to enter, the winning entry is then chosen by the judges based best fit to the task set out for the contest. Sweeps and contests are one of the most common ways people try to build marketing databases.

Applicable Laws - if you are thinking of running a sweepstakes or contest there are a LOT of laws that have to be complied with.  The majority of laws that govern this area are state laws. The law is different in different states. Some states require registrations, some require insurance.  The value of prizes affects your obligations.  There has been a lot of regulation activity and interst recently in the area of offering prizing to events which requires the winner to travel when travel is not part of the prize package. The offices of the States Attorney General are very active in monitoring contests and sweeps to ensure that consumers are not getting ripped off and abused.  There are also Federal laws such as the one involved in this case which also apply.

If you are thinking of running a sweep or contest and do not consult with a lawyer or other person who is VERY involved in this area you are asking for trouble.  There are companies and lawyers who specialize in contesting – don’t just use any lawyer or marketing consultant.

The Supreme Court weighed in on Rascal – read more

Sign up at the Do Not Call Registry here

News and analysis is starting to filter out that Apple  is playing with the criteria by which apps. are scored in the charts (both the free and paid apps charts) in the iTunes app store. This has impact on consumers, developers, media owners and the world of finance.  Most articles I have seen  focus on what the changes are rather than what they mean beyond a number in the chart. Google is also apparently taking similar steps in the Android app. charts.

Apple does not talk about how it compiles the charts in order to prevent people manipulating the chart results.   The news that changes are in play appears to be mainly coming from companies who are building their businesses on marketing and promoting apps (i.e people pushing stuff up the charts), app. developers and observers who have noticed some strange movements for certain apps (such as the Facebook and Pandora apps.) and have received various notification from Apple telling them that previously approved approaches  in app. marketing are no longer approved.

Let’s be clear. All the chart is, is a list of apps sorted by some form of criteria.  Apple sets the criteria and there is no right or wrong way to do it.  Previously it was thought that the charts were done on a pure, number of downloads, basis.  Now, it appears Apple is reacting to companies who have created businesses driving app. download traffic and charging for those services by also factoring in the amount a downloaded app. is actually used once downloaded.  Hence Facebook’s app. racing back up the charts.

By factoring in usage as well as pure installs, Apple is actually making the chart more meaningful in terms of what are the most popular apps in use.   Think about it – as a consumer you don’t care about apps that are installed. You actually care about the apps. that are being used by people. Facebook can flatten out in terms of installs (because everyone has it) and drop down a list of app.s being installed on a daily basis but in terms of usage it has to be one of the most highly used and therefor most useful to me  if I am looking for guidance as to what apps I should install.

Why Does The Store Chart Matter:

• Chart Profile = Cash.   With tens of thousands of apps. now out there, everyone faces the challenge of getting their app. noticed by consumers.  High placement in the chart gets you noticed by end users, reviewers, other developers, potential buyers for your company, Apple (who profile and promote interesting and popular apps) and a host of other people. In short chart prominence = money  often in more ways than simply revenue from direct installs.
• Chart Profile = Simplified Choice.   Customers need some way to navigate the blizzard of choice in what apps. to install.  How do you pick out the prize snowflake in a snowstorm?  The charts are the first, and often the last, stop for most end users trying to figure out what they should install.

Why Store Chart Criteria Matters To Apple:

• People expect charts to be “honest” - Download a highly placed app. that isn’t much good and you soon lose user trust.  Apple wants people having the best experience they can with their products. A device filled with apps. that don’t get used after install doesn’t do anyone any favors. Apple probably doesn’t want it’s reputation tarnished by third party companies such as Flurry (with their Game Acceleration Program) drafting off of its business and people not actually being exposed to what is truly popular/good.
• Apple wants app turnover and paid for installs. Much of the incentive marketing  Apple is putting a stop to gives people in-app credits for other apps when the user responds and downloads an often free app to which an incentive is attached.  The download pushes the promoted app up the chart and the incentive credit keeps the user from engaging with or spending money on fresh apps that Apple earns their 30% on.
• Money was being made  that Apple didn’t have it’s hand in. The third party promoters were charging for their chart placement improvement services and Apple wasn’t getting its hands on that cash.  Further the availability of services not offered by Apple that improved chart prominence is a competitor to Apple’s own drive to monetize advertising and promotions that influence the charts and get Apple paid.   Even with all the success Apple has reported lately there is, still, apparently room in its bank accounts for more cash.

Could An Honest Chart Be Bad For Consumer Choice And Utility?

Consider this.  The ability of small developers to rise from nowhere and have a hit, for creative people to have a great idea and see it pop, is some of what has made the apps. world the vibrant place it has become in a few short years.   As a little guy starting  today how do you fancy your chances against the likes of Zynga, Glu, EA, Tapulous etc. in this now crowded  market. All the big players  can develop, market, coop with Apple and do a million other things the little guy stands little chance of being able to do. If a little guy has little or no ability to get a potential leg up the charts  what  does that do to the market and consumer choice over the long run? Say what you want about there being a way to work your way up the charts, at least it gave some people a way to get noticed and if their apps were any good they got out of the gate and could flourish.  How ironic would it be if this move by Apple  inhibits competition in the app. market place and reduced creativity and competition (and consumer choice) in the long run by favoring the big guys?

There is a good blog entry on this topic from Kim-Mai Cutler here if you are looking for more insight

Anyone that has ever tried to set up a credit card processing account knows how expensive it is to process card payments. Hundreds of dollars to set up the account, purchase the POS hardware, phone lines and then minimum transaction fees and percentages of each charge on top.  No mystery why the credit card companies and banks make billions of dollars.

If you run a small business or are out and about and want to sell stuff this is important for you.  As we all know we are moving to a cashless society and it is becoming more essential for anyone running a small business to take cards.

Whether you run services out of your office such as law and accountancy, are a band selling T shirts and CDs from a folding table at a gig, are an artist running an impromptu exhibition somewhere or are even a high schooler doing door-to-door sales  to raise money for your sports team, Square could be for you.

Sure if you are based in a physical location and are not a heavy user, you  can go with Paypal (a tip of the hat to PayPal, as it too,  a whole decade or so back, was a major disruptive force in itself). If you are doing any sort of volume, you will likely want a dedicated processor, as Paypal’s charges are not the lowest.  If you are running a website you will, for now, still need a shopping engine payment processor/solution (I bet it won’t be long before Square extends its services into that area as well).If you are a member and  want a dedicated payment processor, I have found Costco’s service is pretty hard to beat, but I reckon even it costs close to $800 in the first year when you factor in equipment purchase, minimum charges, etc.

So what does Square add to this mix?

If you have ever investigated what it costs to get set up with credit card processing you understand that unless you are processing a lot of payments it can be cost prohibitive and even if you have volume you will see anywhere between 2.5-4% being paid out to the card processors (never mind charge backs and refunds which really hurt). Processing payments on a casual basis is expensive, or has been, up until now.

Why is Square a game changer in some respects?   A few reasons:

• A truly mobile solution (better hope you are on Verizon as we all know what great service AT&T gives)
• No POS hardware ($400 vs. a $10 dongle (and you are now getting a $10 credit via Apple so it is basically free) )
• No monthly minimum charge (in between your events/transactions it sits in a draw and costs nothing)
• Below or at market costs ( definitely below if you count no per transaction base fee and no monthly minimum)
• The transaction charge at 2.75% is a pretty good one.

Ok, so you need an iPhone  to use it you and you need service but those are criteria that are not a problem for many people at this point.  If I have to drop $400 on hardware I would rather it was an iPhone than a POS unit.

Apple have just given Square a massive boost by featuring them in their store.  I wouldn’t be surprised if this was to buy some exclusivity and to stop them moving over to other platforms such as Android or Blackberry for a while.

In closing I will leave you with the words of that great great poet Huey Lewis….it is finally Hip to be Square.

Official Video from Square

Click here to read more about Square

Oooh look honey....a cloud

There are  a lot of little tidbits of data floating out there right now on the various cloud  based music services that are starting or are about to start.  Amazon surprised many people a few weeks back being the first of the expected major players (Amazon, Apple and Google) to launch such a service.

While these services are currently focused around music, make no mistake, content is content whether it be music, film, books or TV shows and this model will become relevant to all types of media in due course (provided it is the sort of media you want to interact with more than once).

The last decade has seen a shift in the monetization  of content.  The music industry with its small file sizes has been at the bleeding edge of change but no other sector of media is immune from the overall shift in consumer behavior that sees people consuming more content than ever but owning less of it and to the extent they are paying for it, paying in different ways that see revenue to many of the content owners shrinking dramatically.

The content locker service idea  has been around a while.  The concept is that you have content stored somewhere and can access it  anywhere through wired or wireless networks through the numerous devices we all now own.  That concept (even the legally compliant ones) has been perceived to be a threat to revenue by the content owners because it means people only need to have access to a single item of content and can then access it at home, in the car, on the go – where ever. No need to buy more than one copy  of anything EVER. No more replacement of lost or broken discs.

You may ask why that is such an issue because not many people buy more than one copy of most things.That is true, but couple that with the rise and rise of subscription models where you pay a modest monthly fee to access far more content than you could ever own and the result is that the content owners find themselves looking at increasingly small slices of the revenue pie as their reward for making the content off of which everyone else is making a bunch of money.

Why do content owners fight so hard to maintain a world cluttered with physical objects?  Simple…they make more money per item when you go to a store and drop a $20 on the DVD/Bluray doublepack.  Netflix at $8 a month all you can eat just doesn’t cut the mustard revenue wise (watch that bargain change as rights owners strike tougher deals as their Netflix streaming contracts come up for renewal). Never mind the economics of $5 margin on a CD compared to less than a penny of revenue from a stream.

The early versions of the locker services and sites such as Hotfile ran into legal problems because they make/made it possible to access content you didn’t actually own and in many instances copy and distribute copyrighted content without approval  of the owner and/or cause it to be publicly performed without the necessary licenses. It was also easier for the establishment,  with their battalions of lawyers, to take on many of the illegal locker service players,  because in many instances, they were or are clearly operating in breach of copyright laws.

These new services are different to what has come before in a number of key ways.

True Locker Not Filesharing: These services are basically rented server space with limited functionality user interfaces. Steps are being taken to verify ownership of the content and the ability to share with other people (aka fileshare) is limited. Prosecution of services that stored copyrighted works and allowed illegal downloads led to the birth of Napster and their progeny.  Amazon’s locker is very different from a distributed P2P network.

Respectable Companies: The likes of Google, Amazon and Apple are not yahoos located on an island in the Atlantic with servers located in a Napoleonic era fort. They have as many (or more) good lawyers as the rights owners. They have studied laws carefully and are taking the view that what they are doing is legal and to the extent needed is covered by public performance and other licenses which are already in place.

Both Amazon and Google are floating media balloons about how what they are doing is not illegal and doesn’t actually require the cooperation of the rights owners. This ties into the next point.

Gorilla Beatdown: The 800lb gorillas that are the content owners are now being faced down by King Kong sized companies.  As a rights owner how hard will you battle your most important retailer of physical goods and the main competitor to the biggest player in digital content sales?  How about battling with Mr. Jobs whose iTunes store finally saw digital content monetized in a meaningful way and whose hardware business is opening up numerous new ways to consume your content?  If that doesn’t grab you as a media company you could always try doing battle with the unbeaten  Super Estrella star combo of Google/YouTube.

The media companies are stuck between a rock and a hard place and risk losing the marketing and promotional goodwill that may be available from the service providers who will likely launch their services anyway.

So what does the launch of the Amazon service (and then soon to be launch of Google and iTunes services) really mean ? Is the cloud the equivalent of a  tornado touchdown and the sudden end to retail of physical goods? Probably not. This is just more of the same.  The ongoing trend away from ownership and the slow death by a thousand cuts of the retailing of physical formats and even downloads (who needs to own an electronic file?). The cloud ? Less of a tornado and more grey skys and constant drizzle.