Into Tech

Last year, we noted that the new webcasting royalty rates pushed through by the RIAA appeared designed specifically to kill internet radio. These royalties are different and much higher than things like traditional and satellite radio, despite being much more fragile at this point in their development. As if to prove the point, Pandora, one of the largest and most successful online streaming radio providers is now saying that it’s going to have to shut down if the royalty rates aren’t changed shortly.

This is exactly what the RIAA wants, by the way. Even if services like Pandora introduce people to tons of music (personally, I’ve bought a ton of music I found on Pandora), much of that music is not from an RIAA-member label. The RIAA knew exactly what it was doing in pushing these higher rates: it was killing off alternative routes to promoting non-RIAA music. The RIAA labels have always thrived off a very limited distribution and promotion channel. After all, distribution and promotion are where record labels really make their money. Competing methods of distribution and promotion are threats to be killed off — and the RIAA may have succeeded here (with Congress’ and the courts’ help, of course).

Oh, and don’t think the solution is to only play non-RIAA music. The RIAA’s spinoff, SoundExchange, gets to collect money on non-RIAA music as well. Oh yeah, it gets better too: if SoundExchange can’t find the musicians to pay, it gets to keep the money. That’s why it has a history of not looking very hard for musicians in order to pay them.

Permalink | Comments | Email This Story

The traditional picture of the British family spending its evenings slumped in front of the TV has changed dramatically, according to a new report from the watchdog Ofcom, published today. The box is still on, but the people on the sofa are talking on the phone, texting furiously or surfing the internet - increasingly using a laptop with a mobile broadband connection - while they keep one eye on the screen.

Despite doomsayers who believe the web will eventually kill off TV, viewing has not yet collapsed. The average Briton spent 218 minutes - or over three and a half hours - a day watching television last year, two minutes more than in 2006 but down on 224 minutes in 2002. In comparison, the average internet user spent 24 minutes a day online when at home last year, up from just six minutes in 2002.

But what has changed is that the TV no longer has the viewer’s undivided attention, according to Ofcom’s annual Communications Market report. Three quarters of 20- to 34-year-olds regularly use their mobile when in front of the TV, while more than a third of 25- to 44-year-olds often check the internet at the same time as watching a programme.

Television is finding itself increasingly usurped among the young. While TV remains the “media activity” that British people above the age of 20 say they would miss most, 16- to 19-year-olds say it is a mobile phone they couldn’t live without.

The report shows the UK’s continuing love affair with the mobile. More people send a text every day than access the internet and there are more phones in circulation than there are people in the UK. Nearly 60 billion text messages were sent last year - up 36% on 2006 - and mobile phone users talk on their phone for an average of 10 minutes a day, double the usage recorded in 2002.

The mobile phone and other distractions mean young people are watching fewer TV shows, with 16- to 24-year-olds glued to the set for about 150 minutes a day in 2007, 10 minutes less than five years ago and more than an hour less than the UK average. People over 65, in contrast, spend five hours a day watching TV.

Instead, younger people are spending more of their time online but with download and streaming services such as the BBC’s iPlayer reporting record demand, many are merely choosing to watch their favourite TV programmes when they want by getting content from the web. Nearly a third of all internet users watched video clips and webcasts last year with the number of UK users of YouTube hitting 9 million this April alone - up 50% on a year before.

Throwing off the shackles of the TV schedulers is not just the ambition of people with an internet connection. Almost a quarter of UK households - 6 million - had a digital video recorder by the end of last year, up 53% on 2006. DVRs allow people to store their favourite shows for viewing later. Their success is bad news for advertisers who use commercial television to get in front of a mass audience. Of those with a digital recorder, 88% always skip past the ads, according to Ofcom.

But when they do watch “traditional” television, the taste of 16- to 24-year-olds is remarkably similar to that of those over 65. Both like entertainment and contemporary music shows while 16- to 24-year- olds watch slightly more soap operas and factual programmes than pensioners. The big difference between the age groups, according to the report, is in the area of news and weather programming.

Among pensioners, 14% watch TV news and weather programmes, compared to just 7% of 16- to 24-year-olds.

The Ofcom report shows that online advertising hit £2.8bn last year, up 40%, and eclipsing spending on the traditional terrestrial channels ITV1, Channel 4, S4C and Five for the first time. Given how much more time people spend watching TV than using the internet the figures look incongruous, but the Ofcom report does not take into account the amount of time British consumers spend online at work.

In fact, take-up of residential internet services is slowing as the digital divide between rich and poor becomes ever more obvious. Most households that have a computer are already online with PC penetration running at 72% in the UK and internet penetration close behind at 67%. Broadband take-up - at 58% of UK households - has slowed not least because younger consumers such as students are opting to buy mobile phone “dongles” that give internet access and are often cheaper than a lengthy broadband contract. Over 2 million Britons now use mobile internet services, with sales of dongles nearly doubling between February and June this year to over 130,000 a month.

Why we should turn off our electrical appliances

British households are wasting the annual output of a large power station by failing to switch off their flatscreen televisions, set-top boxes, and internet networks when they are not being used, according to Ofcom’s latest Communications Market report.

The equivalent output of the 1,500MW Didcot B power station in Oxfordshire could be saved each year if every home with a set-top box switched it off at night; that would conserve enough electricity to make 80bn cups of tea.

Consumer electronics account for about a third of home energy use, according to the Energy Saving Trust, but that use is forecast to balloon to 45% by 2020 as more people buy more gadgets.

The rise in average residential energy bills to just over £1,000 a year has made people more energy aware, but only when it comes to buying obviously power-hungry devices such as fridges and freezers, according to Ofcom.

Almost three quarters of Britons, when quizzed by the regulator, classed themselves as caring about the environment, and more than half said they had compared the green credentials of white goods before making a purchase. But only 39% of people think about the environmental impact of a new TV, DVD player or computer.

When they get it home, meanwhile, most people leave their new kit switched on all the time, unnecessarily wasting electricity.

Three quarters of people rarely switch off their set-top box, according to Ofcom, and that figure jumps to 83% for owners of a wireless home network. Plasma screens are particularly power hungry, according to the regulator, with the average set using three times the power of a normal TV when in use, and twice the power when left on standby.

The average satellite set-top box gobbles up four and a half times the power of a flatscreen LCD television in the same state. Even a Freeview box uses twice the power of a flatscreen TV when left on standby.

Almost half the country’s mobile phone users, meanwhile, waste electricity by charging their handsets overnight, when in fact most models only need to be plugged in for about two hours. People aged between 16 to 24 are particularly guilty of this, with 80% doing it at least some of the time.

You may remember back in 2001 that EchoStar, then owners of the DISH Network, tried to buy DirecTV from then owner Hughes (who was owned by GM at the time). However, after the Justice Department said no to the deal over antitrust concerns, it fell apart. However, the rumors going around are that the two companies (now just DISH Network and DirecTV, sans various parent companies) are thinking about trying again. Apparently, they believe that the regulatory and competitive environment that doomed round 1 wouldn’t happen in round 2. And, of course, this time around, they can point to the fact that the two satellite radio systems, XM and Sirius were allowed to merge (even if it took a year and a half).

Permalink | Comments | Email This Story

The fondly remembered actor, James Doohan, or Scotty from Star Trek, was all set to finally reach space this weekend until the rocket his ashes were interred in blew up over the Pacific ocean before reaching the final frontier.

The Falcon 1 was built by SpaceX and was also carrying the ashes of 200 other dead space hopefuls, including astronaut Gordan Cooper, and satellites paid for by NASA and the US Department of Defence.

The rocket was the third to Space X rocket to fail to reach orbit. Elon Musk, founder of Space X and Paypal, commented:

Britain’s broadband boom is stuttering as consumers grapple with rising price and the crumbling housing market. Four of the UK’s big six providers yesterday announced that the past three months saw demand for high-speed internet access down on the previous quarter and down on last year.

With many households looking to rein in spending and able to access the internet at work, the industry believes growth over the summer is likely to be even slower.

Carphone Warehouse’s TalkTalk business is the UK’s third largest ISP. Yesterday it cut its prediction for annual broadband customer growth by 50%, to between 200,000 and 250,000, after saying it signed 44,000 new customers in the three months to the end of June - compared with 126,000 last year, and 109,000 in the first quarter of 2008.

Chief executive Charles Dunstone said: “It is a combination of fewer housing transactions, because buying a house is a key time when people change supplier, and more people buying mobile broadband instead of fixed line access.” The market is also maturing, he said, with more than 60% of UK households having broadband.

Orange, owned by France Telecom, is the UK’s sixth largest ISP. Yesterday it admitted it actually lost 44,000 broadband users in the quarter, more than the 31,000 it lost in the three months to end March, and the 5,000 who defected last year. Orange now has just over a million customers.

Market leader BT, meanwhile, added 103,000 new broadband customers in the three months to end June, down from 150,000 in the previous quarter, and 174,000 last year. It now has 4.5 million broadband users.

Chief executive Ian Livingston said that new technologies it plans to roll out over the next few years would greatly increase download speeds and could push growth - but that is a little way off. BT shares were clobbered yesterday, having their biggest one-day fall since the dotcom bubble burst, as investors saw a dramatic drop in first quarter cashflow and revelations that margins at BT’s closely watched IT services business have gone backwards, and its pension fund has gone into the red.

Livingston, who only took over from Ben Verwaayen at the start of June, tried to reassure the City that despite having a net cash outflow of £734m over the three months to the end of June, several hundred million more than expected, BT is still on track to generate £1.4bn by the end of the year. The fact its pension scheme has gone from a £2bn surplus before tax last year to an £800m deficit this year, meanwhile, is due to inflation affecting the way the fund is valued, he added.

Analysts were unimpressed. “Protestations from the company that the year will turn out OK may not carry much weight in the current environment, and the share price would seem to be reflecting doubts over the sustainability of the dividend,” said Martin Mabbutt at Nomura. “Poor start to the year” was the headline on a post-results note to investors from Citi.

Gloom surrounding BT was deepened by news that profit margins in its IT operation, BT Global Services, were slightly down on last year and will be lower for the year because of currency fluctuations. BT maintains that the unit (40% of group revenues in the first quarter) can make profit margins of 15% within two to three years, and it is cutting costs. But with first quarter margins of 9.5% down from 9.8%, investors remain highly sceptical; shares in BT closed down 23.7p at 173.9p, wiping £1.8bn off the value of the company.

Another broadband provider, BSkyB, said yesterday that it had added 200,000 customers (half already taking its satellite TV) in the past three months, compared with 229,000 in the previous quarter and 259,000 last year.

Sky announced a drop in annual profits to £60m from £724m because of a £616m plunge in its 17.9% stake in ITV, but said it remains on track to increase its 8.98 million pay-TV customers to 10 million by 2010, with a third also taking broadband.

With more than 1.6 million broadband customers, Sky is now at the heels of fourth-placed Tiscali, estimated to have lost customers in the past quarter. The Italian-owned firm is for sale, with Carphone Warehouse and Sky potentially interested. Tiscali and the UK’s second ISP, Virgin Media, report next week.

Dell know how to make PCs admittedly, but in the MP3 player stakes it has fallen well short in recent years.

It canned its original range, which included the Dell DJ Satellite Radio, a while back but sources from within the company claim it’s about to have another go.

The 18-month saga of XM and Sirius trying to merger just keeps getting more and more ridiculous. Yesterday, we pointed to all of the silly hoops the FCC was trying to make the companies go through, that often had absolutely nothing to do with antitrust issues, and today comes the news that the FCC has fined the companies nearly $20 million for technical violations as some sort of precursor to merger approval. What do these technical violations have to do with the antitrust questions the FCC is supposed to be deciding? Absolutely nothing. Instead, it appears that the FCC is simply using its position as the decider over whether or not the merger goes through to get whatever licks in that it can against the two satellite radio companies, knowing that they’ll have to obey quietly. Its like hazing. Because XM and Sirius need the approval of the FCC, it can just do anything it wants to them, such as adding bizarre requirements or even asking them to hand over $20 million.

Permalink | Comments | Email This Story

Well, this is just downright disturbing. Jon Healy has a quick summary of a totally unexpected and unnecessary proposed rulemaking from the Copyright Office that could add additional royalties that webcasters would need to pay (on top of the already onerous webcasting rates). Basically, the Copyright Office had been asked to decide on a totally different question concerning royalties back in 2000. That issue isn’t even in question any more, as the two sides had already worked out their differences, and the Copyright Office didn’t do much to give an official answer on that question anyway.

Instead, it came up with an idea out of the blue that music publishers are entitled to an additional mechanical royalty for non-interactive streams (e.g., webcasts, satellite radio, etc.). As Healy explains, this makes no sense and seems to go against previous agreements on these types of royalties. Mechanical royalties are supposed to be for actual copies of the music. Non-interactive streams are basically the same as radio — which requires performance royalties, but not mechanical royalties.

This reminds me of the column by Rasmus Fleischer we wrote about a little while ago, where he noted how silly copyright law can get with all these different royalty rates that were designed for a different time. The borderlines between radio, streams, downloads, recordings and all other ways of accessing and hearing music are blending together, and trying to match the old rights to the new ways that people interact with music just leads to more problems — such as multiple levels of royalties all being heaped upon the same single action, making it effectively uneconomical to actually do the most natural thing with music: play it online.

Permalink | Comments | Email This Story

Satnav’s are great little devices most of the time, making it easier for everyone young and old to work out how to get from A to B with a minimum of fuss.

At least that’s what we thought. Despite improving substantially over the last few years in terms of clarity of directions and adding features like advanced lane guidance and text-to-speech for reading out road names, it seems as though some people are still getting it wrong.

More news on the home cinema front today as the MPAA (Motion Picture Association of America) announced an innovative new way to prevent illegal downloading of content from affecting sales.

Taking a break from suing the young, the old and the innocent, it has rather belatedly decided to spend some of its time researching the current model and finding ways to work with it rather than against it.

The idea is that high definition movies will be released on cable and satellite television before they’re released on optical disc, no doubt at the cost of a premium channel subscription.