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AOL-Microsoft Settlement Fallout

Steve Lohr has interesting analysis in the NY Times:

    The future involves using the Internet to deliver commercial program content, mainly movies and music, to consumers who are equipped with a growing array of digital devices to receive it, from personal computers to digital televisions to smart cellphones. And the two companies must do so in a way that is convenient for users and profitable for media companies, while keeping digital piracy to a manageable minimum.

    Both Bill Gates, the chairman of Microsoft, and Richard D. Parsons, his counterpart at AOL Time Warner, spoke last Thursday about how their collaboration could accelerate the adoption of digital media for the Internet while maintaining copyright protection.

    The central technology in pursuit of that goal is the software for handling and protecting digital media. And last week’s pact included a long-term, nonexclusive license agreement allowing AOL Time Warner to use Microsoft’s Windows Media software for distributing and playing back digital media.

    The media player is the crucial piece in the puzzle. It resides on the user’s computer or other device and opens a portal to what the industry calls rich media – movies, music, video – delivered over the Internet, just as the browser is a portal for viewing Web pages. The media player takes on additional importance because it seems to be the likely vehicle for some of the vital technology in the emerging field of digital rights management – a fancy name for piracy protection.

Is the media player competition like the browser wars that spawned the Netscape suit against Microsoft in the first place?

    the nature of the market for media software is different. For a browser maker, the crucial relationship – and channel of distribution – was with the PC makers, who were beholden to Microsoft because of its Windows monopoly. In digital media software, by contrast, the crucial relationship is with the owners of the content, the big media conglomerates, who have plenty of independent power and are not beholden to Microsoft.

    Significantly, the long-term licensing deal included in the cooperation pact last week between Microsoft and AOL Time Warner was not exclusive. AOL Time Warner has been working with Real Networks for some time and will continue to do so.

    ….most major media companies are expected to deliver their movies and music formatted for both the Real Networks and Microsoft media players. For example, Movielink is a movie service set up last November by five Hollywood studios, including Warner Brothers. It charges $3 to $5 for movies sent over the Internet, and uses both Real Networks and Microsoft technology.

    ….It seems doubtful that either the major media companies or the consumer electronics makers would allow themselves to become overly dependent on Microsoft technology.

    Another difference is that the market for digital media seems to be far less centered on the PC than the browser market was in the late 1990’s. The number of cellphones that can receive music and video clips is growing quickly, though mainly in Europe and Asia so far. Cellphone makers have resisted Microsoft’s effort to persuade them to incorporate its software.Fear of piracy has made media companies reluctant to offer their products on the Internet or adjust their business models for lower-cost Internet distribution.

    “If the media folks could put copy protection in your ears and eyeballs, they would,” said David Farber, a computer scientist at the University of Pennsylvania and a former chief technologist at the Federal Communications Commission. “They don’t trust software.”

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About Eric Olsen

Career media professional and serial entrepreneur Eric Olsen flung himself into the paranormal world in 2012, creating the America's Most Haunted brand and co-authoring the award-winning America's Most Haunted book, published by Berkley/Penguin in Sept, 2014. Olsen is co-host of the nationally syndicated broadcast and Internet radio talk show After Hours AM; his entertaining and informative America's Most Haunted website and social media outlets are must-reads: [email protected], Facebook.com/amhaunted, Pinterest America's Most Haunted. Olsen is also guitarist/singer for popular and wildly eclectic Cleveland cover band The Props.

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