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1. Comment - CES Trend #9: Will CE vendors start steering clear of DRM?

   (Jan 1, 2008 - 5:12 PM)

   DRM does help prevent pirating - particularly with laws such as the DMCA which have severe legal punishments for pirating copyrighted works.
   
   A problem is that so many countries have a blind eye to pirating. For example, for years Chinese pirated more than 99 percent of the content they had.
   
   Another problem is that children are far more likely to pirate than buy. This attitude has permeated to young adults as well - such as college kids.
   
   If there is no DRM, there is no reason to not pirate. Once a person has one pirated work, they are less likely to buy it. For example, if one watched a pirated movie, why buy it? You already know the plot. People tend to watch movies only once. As another example, if one already has a pirated son, why would one buy the non-pirated version?
   
   It is a universal problem for copyrighted content. How does one stop pirating particularly when it is so common place.
   
   The problem of pirating will kill the music industry in that eventually, artists will make little income from their music. The days of the millionaire music artist will soon be gone. If the big four music companies die, then there is no big money for marketing new artists, and thus no new big music artists. Music will deteriorate to only being a hobby.
   
   The movie industry is more complicated in that it may take hundreds of people to make a single movie. Thus pirating a single movie may hurt hundreds of people, not just one music artist.
   
   What is interesting about movies, however, is that if DVDs and Hi-def content do not sell well because of pirating, then they can at least refuse DVD releases and return back to showing movies only in theaters or eventually on television or cable. If this happens, then there will be fewer content in the future for us all.
   
   In regard to formats, .WMA is not a standard format - it is Microsoft's illegal monopoly created format. The monopoly is the only reason .WMA is commonly used format. .MP3 is a common format - but it is not free of patent rights. There are many companies who own the patents to .MP3 thus companies that don't license these patents are getting sued. .MP4 is a world-wide standard format. It has very reasonable licensing terms for its patents. Apple is only using a world-wide standard format. The only reason .WMA is still existing is because of Microsoft's monopoly. If Europe or (unlikely given the lack of backbone) the U.S. forces Microsoft to stop using .WMA as a format it its operating systems, then .WMA would die.
   
   DRM affects both legitimate and pirate users. Legitimate users have to buy more hardware to play all formats. But then this is only a matter of cost then. Poor people need not apply. Pirate users are being sued for big bucks. The fear of lawsuits will eventually reduce pirating. Not all pirating since many countries don't care about copyright and allow their people to pirate with impunity. For example, all you have to do is walk on the streets of Spain and Italy to see pirated movies on DVD on sale.

2. Comment - CES Trend #9: Will CE vendors start steering clear of DRM?

   (Jan 1, 2008 - 4:47 PM)

   With regard to Blue-Ray versus HD DVD, I highly doubt that the CH-DVD format will help anything.
   
   You have to convince the movie producers for the utility of using High Definition of any particular format. Each has chosen one camp or the other - or none at all (e.g. Fox studios pulled off all their movies from high definition when it was found that hackers broke the encryption). CH-DVD will further fracture the market.
   
   It costs producers a lot to make a high definition disk of either format. Therefore, choosing to come out with movies in both formats will cost even more. Three formats would be highly unlikely.
   
   Since there is so little market presence for high definition hardware, there is little incentive for both consumers and producers to provide movies for hi-def format.
   
   One of the biggest problems is cost. Hi-def movies cost a lot more than DVDs. Hi-def players cost at ton more than DVD players - which can cost as little as $30. This is more than the vast majority of consumers will pay.
   
   What spurred the VHS format were cheap players - such as from Panasonic - compared to Beta. This isn't happening with either Blue-Ray or HD-DVD because both formats are expensive. Yet if there was a price war, both formats can also be inexpensive - so it is a tie - and consumers are still stuck with high hi-def content costs and so will still shun the format.
   
   Until producers are willing to sell hi-def content - such as old movies - for $5 - just like low priced DVD movies, then consumers will continue to stay away. It is too high a price for admission. Consumers are highly used to cheap DVD prices - especially for used DVDs and old movies.
   
   The best hardware makers can do to ameliorate the problem of having two different but equivalent hi-def formats is to create players which can play both formats. Then consumers don't have to make a choice when it comes to their hi-def content investment.
   
   The absolute best solution is for one camp or the other to give in. I doubt we will see this since it involves giving up a lot of patent income with each format. Of course, if they agree to split the patent income and cross-license the patent, then perhaps there is hope.
   
   In either solution, there is no room for CH-DVD. Why would national entities such as Sony and Phillips want to cede royalty payments for their patents to the Chinese. Bah. In won't happen.