Internet's Impact on Music & Digital Entertainment in 20 yrs

Internet's Impact on Music & Digital Entertainment in 20 yrs How will the Internet impact the distribution of music and digital entertainment in the next twenty years? The future of Internet-based music and digital entertainment distribution is today and will be in the future defined by the legal and regulatory conflicts over Digital Rights Management (DRM).The legal and regulatory conflicts are intensifying between advocates of free use of the Internet for distributing, copying and use of digital music vs.

industry associations including the Recording Industry of America (RIAA) and the National Academy of Recording Arts and Sciences (NARAS). Further fueling the conflict that has escalated into hundreds of lawsuits and the issuance of en masse letter campaigns containing pre-lawsuit instructions from both the RIAA and NARAS to entire universities, the intention of using electronic surveillance to monitor music downloads has become increasingly Orwellian in tone, where traffic in and out of peer-to-peer music sites is now monitored (Banerjee, Faloutsos, Bhuyan, 2008).

All of this legal and regulatory activity many argue isn't actually stopping any activity, merely diverting it to more organized and commercially-based pirates of digital music (Chang, Assane, 2007). In addition all these legal and regulatory efforts of the RIAA and NARAS are making attorneys the real financial winners, with one plaintiff sued by the RIAA remarking his case was managed by an incompetent attorney from an outsourced firm (Ward, 2007).

These factors taken together illustrate that for Internet-based distribution of music and digital media to succeed, these legal and regulatory issues will need to be first addressed. The case of Record Industry vs. Jeffrey Howell Both the RIAA and NARAS argue that music, when digitized is to be bound by copyright law, which means the unauthorized copying, distributing or burning of addition CDs is a violation of copyright law.

This point alone has made the future of Internet music and digital media distribution one that is entirely dependent on DRM-based technologies and workflows that have proven to add significant cost to distribution over time. Peer-to-peer music sharing sites including Napster however are forcing the industry to re-consider the extent to which DRM is scalable as an enforcement method for the long-term.

The case of Jeffrey and Pam Howell, who were sued by seven different music companies all claiming the Howells had violated the copyrights of their songs by placing them in a shareable folder within Napster in 2006, illustrates how Internet-based distribution of music and digital content must have a solid legal and regulatory foundation on which to base future growth first if it is to succeed. In May, 2008 a U.S.

District Court Judge in Arizona ruled in favor of the Howells saying that actual sharing and distribution of the digital songs would have needed to take place in order for there to be an actual copyright infringement. As a result, the Judge rejected the motion by Atlantic Record Company who coordinated the lawsuit with six other corporations against the Howells. In concluding the case Judge Neil Wake specifically said that just making the music available for downloading over the Internet does not in an of itself violate copyrights.

As a result, he ruled the Howells were innocent of copyright infringement. What is so noteworthy about this case is that the group of companies alleged Jeffry Howell violated copyrights by copying music from a CD to his home computer for enjoyment there. If this had been seen as copyright infringement virtually anyone who had copied music from a CD to their home PC or laptop would be guilty of copyright infringement.

The case has been widely written about in blogs and throughout the media and is considered an essential win to place checks and balances on the RIAA and NARAS legal strategies for enforcing compliance. As a result of this case, DRM-based methodologies and process workflows became more adaptable to how music is enjoyed.

The Future of Internet Music & Digital Entertainment Is Heavily Dependent on Digital Rights Management (DRM) At the center of the legal and regulatory storm that will define the future of Internet-based music and digital content distribution is the debate over the use of Digital Rights Management (DRM). DRM refers to a broad collection of technologies music companies use to limit the use of digital media across only verifiable devices and platforms.

DRM surpasses copy protection and includes the definition of rights of the creative media in terms of replay and use. Companies including Apple, the British Broadcasting Company (BBC), Microsoft and Sony all have DRM technologies for protecting their digital assets including operating systems, applications and digital entertainment and music. The use of DRM technologies also implies an ethical approach to their use as well (Rosch, 2007) (Dannenberg, 2006).

The use of DRM surreptitiously downloaded by Sony when anyone attempts to copy their music CDs came to light during a system troubleshooting evaluation completed by an advanced computer user (Bucker, 2006) and quickly escalated into a full analysis of how the Sony Rootkit functioned as a means of monitoring which music a consumer copied and from where. Sony was using DRM technology to monitor their customers' copying activity without telling them first, setting off a PR fiasco the company is still recovering from today.

The violation of trust and the paranoia music companies have is evident in the Rootkit fiasco and its lingering effects on the Sony Music brand (Bucker, 2006). DRM has been used an enforcement and monitoring technology, which has often led to its allegorical references to George Orwell, author of 1984. Certainly there needs to be much greater disclosure and transparency with regard to the use of this technology, and this is just one of the many factors that contribute to the balkanization of music downloaded over the Internet.

Interpretation of Music Downloads' Effects Critical To Future of Industry The RIAA and NARAS, in addition to the members of Congress and the legal community, contend that downloads are in effect software piracy and contract an already challenging economic climate of the music recording industry.

The concentration on college campuses as a fertile ground of peer-to-peer music sharing and the corresponding need for rapid and severe legal action is exemplified in the activities of the RIAA this year and the empirical research completed of file sharing in collegiate environments (Chang, Assane, 2007). There is an abundance of empirical research supporting this economic-driven model of how downloads impact the profitability of the music industry (Oberholzer-Gee, Strumpf, 2007) and (Liebowitz, 2008).

These studies however do not measure a more fundamental aspect of this activity, and that is the accidental promotion of higher levels of piracy, only directed to more efficient illegal market makers, operating out of the bounds of the RIAA and NARAS visibility or control. Offshore download sites proliferate throughout Eastern Europe and Russia, and only rarely do they face prosecution. It's as if the dollars spent to litigate to the consumer level only serve to make the more efficient illegal downloading sites more profitable and pervasive.

Instead of the punitive and often severe legal approach the RIAA and NARAS are taken the approach needs to define a more effective means of compliance and adherence. The downloading of music, legal or not, only serves to make consumers want more of the artist of their preference. Instead of restricting this aspect the RIAA and NARAS needs to potentially see the effects of market development over the erosion of profits. Only by striking a more balanced chord can either of these two organizations hope to attain their aims.

Apple's Digital Media Ecosystem: What Internet Music & Digital Media Will Be Industry-wide in 20 Years One such company who has successfully monetized digital music and been able to navigate through the many issues of Digital Rights Management (DRM) and regulatory compliance is Apple with their entire iTunes market ecosystem. At the last Apple MacWorld held in early 2009 the company announced it would be unlocking its digital content and also stratifying the pricing strategy of all songs.

The move has results in the entire ecosystem that Apple relies on for selling its iPods, iTouch, and iPhone series of devices. Apple has also specifically aligned itself with the NARAS and RIAA requirements to ensure their most profitable business division continues to operate free of legal distractions and costs. As a result, Apple dominates digital content with one of the most scalable business models for downloads ever created for entertainment-oriented content. Apple has also surpassed 3 billion downloaded songs and over one billion video downloads of television shows already.

iTunes is in fact an essential aspect of the company's entire digital content ecosystem. The cornerstone of Apple's planning processes is the continual development of products and services that compliment the product and services ecosystem shown in Figure 1 (Apple Investor Relations, 2009) Figure 1: Apple Product and Services Ecosystem Source: (Apple Investor Relations, 2009) Where Apple has succeeded in creating a unique digital media ecosystem, their competitors have failed.

The announcement as of February, 2009 of Microsoft opening their own digital music store to supplement their Zune series of devices has met with lukewarm industry response. Microsoft has not yet taken a stand on DRM issues nor have the defined their strategies for dealing with the intricacies of RIAA and NARAS as it relates to the content purchased. As a result, consumers vary of the RIAA and NARAS are taking a much more cautious approach to adopting the Microsoft digital music store as a result.

There is a very good chance however that Microsoft will concentrate on an aggressive strategy to eventually attain DRM-free status of their downloads while also appeasing the legal entities that dominate this industry. Their challenges and the series of efforts they will need to make in order for this entire strategy to be successful will be fascinating to watch evolve over the coming years.

Yet these two examples illustrate a fundamental fact about the future of Internet-based distribution of music and digital media, and that is only larger, more vertically oriented corporations will be able to underwrite the significant expenses of supporting such a global digital content ecosystem online.

The Future of Digital Media & Entertainment Distribution over the Internet Video content and its implications on the product and service strategies of Apple, Microsoft, Sony and any additional competitors that attempt to launch businesses in this sector are being planned by each of these companies today. Apple's lead however on DRM for music and video is already formidable.

First from the standpoint of their catalog of digital songs and videos online on iTunes, and second, their product strategy is beginning to entirely reflect the flexibility customers have in playing music and video. There are several.