A Copyfighter’s Musings

Hoping to get to Professor Volokh’s latest copyright piece later in the week, and I’ll post on it as soon as I can.  For now, I want to return to the story that just won’t go away: Apple iTunes and the new digital retailers.

It’s one thing when CNet is writing about iTunes every other week. It’s another thing entirely when the NY Times seems to be doing a new Apple story every week.  This marketing bubble has yet to burst.

And then comes word in the LA Times that more companies are trying to get into the business with Apple-like services.

We’ve discussed the potential for success from many different angles. Is Apple’s DRM too strict?  Too lax (see iTunes streaming)?  Can you compete with free?  Some scholars, particularly Professor Fisher, say that the price has to come down much, much further – perhaps to as low as 15 or 20 cents per song. 

Let’s say the DRM’s fine and that this newfound competition drives the price down to 15 cents.  Say the services also start incorporating independent labels and artists (see Apple’s recent discussions, which, I think, are incredibly important.  Again, people aren’t going to want to switch between many different music services. These services have to be fairly comprehensive). 

What else needs to happen?

One angle that I haven’t fully considered is that there simply are not enough broadband subscribers to support these services.  I don’t have a clear sense for whether broadband rollout is getting any better – I know that the prices are still largely unsatisfactory.  As Declan points out, aspects of broadband pricing are a total political mess.  And I still don’t understand why cable is classified differently. Here’s a little bit from this report:

“By contrast, when an entity offers transmission incorporating the ‘capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing,or making available information,’ it does not offer telecommunications. Rather, it offers an ‘information service’ even though it uses telecommunications to do so. We believe that this reading of the statute is most consistent with the 1996 Act’s text, its legislative history, and its procompetitive, deregulatory goals.”

Ugh. I’m still trying to work through what the hell this means.

I saw this Jupiter report on Apple’s growth and price, and I’ve seen some reports on broadband growth.  Anyone have a sense for whether there are enough customers out there?  What sort of numbers would be necessary?  Even this estimate, which used numbers twice Apple’s pace, doesn’t guarantee a profit. And that’s with 1 dollars per song!

So, the scenario of these services failing not because there’s no demand or because they’re not cheap enough but because getting broadband is too difficult – that scenario will make things very tricky.  If these services fail, extremists on both sides are going to seem way more credible.  The wait-and-see approach would be virtually dead. 

Moreover, we might not see DRM regulation. We might see more broadband deregulation that puts the wires in the hands of even fewer companies, if that’s possible. Maybe they’ll offer it cheaper.  But they’ll also probably have concentrated control of the wires and the content.  If that’s the case, the DRM angle matters far less.

Or, maybe it’ll all turn out ok.  Then, I wonder what happens to the movie industry. At what point do all of its claims seem totally ludicrous in light of the music industry’s changes?  If you’re interested in this angle, check out the Intertainer lawsuit.

Filed by Derek Slater at 8:27 pm under General news
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