Yawns: It is hip to be rich, and dull!

Bill Gates is the new face of “Yawn”, Young and Wealthy but Normal - the growing breed of centi-millionaires and billionaires who attempt to look and live “normal”, but who want to define their lives through charitable activities rather than fancy yachts and fast cars!

Internet Radio, Copyright, Copywrong and $$$

The end of the road for Internet Radio was near. The execution of the Internet radio by SoundExchange, the body that represents copyright owners, was to have been on Sunday.

And Dejavu happened on the way!

Go back about 5 years: In 2002, there was a royalty deadline looming and then a meeting between SoundExchange and small webcasters took place which made possible the creation and adoption of the Small Webcaster Settlement Act. Webcasting was a nascent industry, it needed nurturing, it needed a way to grow. So for independent webcasters with rev of $1.2M or less, a special deal was worked out. Great!

In 2007, we are exactly at the same place, minus the sanity of SoundExchange.

I understand the copyright issues here; they are kind of interesting but I am more fascinated with the business decisions.

The copyright owners, represented by Soundexchange, can do whatever they want with their copyrighted work. That’s the Copyright law. It says that they have to allow the internet webcasters to stream the music at a certain price. Soundexchange is willing to do it but unfortunately it wants to collect $1B first as administrative expense by charging $500/per channel under some ridiculous formula and wants royalty per song to be the same as a cup of Starbucks coffee. Under this formula RealNetwork owes them $200M/yr for “administrative expense”. They tweaked it a bit but the issue still remains.

SoundExchange wants minimum payments; Again for webcasters, its a non-starter. In almost all cases, if royalty rates that have been set are applied, the royalty amount due will be 3-5 times the revenue generated by the webcaster. Currently the webcasters pay ~10% of the revenue and it will go to 300% of the revenue.

This morning, Soundexchange realized that executing the internet radio also means that it will have to shoot itself in the foot. They announced that SoundExchange will not enforce the royalty hike on Monday but will try to work out some reasonable settlement.

This will drag on for a few weeks, some groups will work out a special deal, others will be subject to the new royalty rates, and it will be a huge mess!

Webcasting and internet radio is going to be huge but its not there yet. But I can tell you this with some confidence that the economics of webcasting, especially for small webcasters, is going to be the same as it is right now, for a long time to come.

Webcasters compete with satellite radios pay and about 7.5% as royalties. Webcasters should pay more because they do not have a subscription model but that number needs to be at 10-12%, with no minimum fees per channel. Who came up with channel thing anyway? I know that the comparison with the satellite delivery is not perfect, but its a good starting point as the basis for charging tariffs on internet radio.

If the internet radio is silenced in this country, many non-US broadcasters will try to extend their reach; that’s not copyright enforcement, that’s “copywrong”.

I fully respect and understand the copyrights owned by Soundexchange; I have counseled and litigated copyright cases, but this is not a copyright issue, this is a pricing issue; It is no different than setting the pricing for a widget correctly, so that it not only benefits the distributor, but generates sustainable revenue for the content producer.

And the solution is to follow the $$$ signs and optimize for the long term.

There is a revolution happening, and I want it streamed!

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Yawns: It is hip to be rich, and dull!

Bill Gates is the new face of “Yawn”, Young and Wealthy but Normal - the growing breed of centi-millionaires and billionaires who attempt to look and live “normal”, and who want to define their lives through charitable activities rather than fancy yachts and fast cars!

Postini: Fighting the war against spam

postini logoGoogle acquired Postini for $625 million earlier this week. Postini’s product is a hosted corporate communications solution. It provides central control over all of a company’s exchanges - email, instant message and web based communications. Postini provides communication security solutions to more than 35000 businesses and 10 million users.

Google was already using Postini’s spam filters in its Gmail. Now it has decided to bring the expertise in-house. This is not unusual really. Google has done it before. A while ago, Google bought Urchin. The web analytics product formed the engine of what is Google Analytics, today.

Google has been shoring up its fortress in the web world. In May, Google announced the acquisition of Green Border Technologies, a maker of anti-virus and anti-spyware technology. And now, with its acquisition of Postini, Google wants to add a layer of security on top of its Google Apps business, where lack of security is cited as one of the main reasons for concern in using on-demand software.

Postini is backed by August Capital, Bessemer Venture Partners, Mobius Venture Capital, Pacifica Fund, Summit Partners and Sun Microsystems.

While on the war against spam, what is really needed is a universal server authentication system for all email. Today, spammers are able to send junk email without impunity. While this is a minor (or major) annoyance for users, for web operators, it can be catastrophic. Spammers can send out junk mail from domain addresses that they do not even own (it is very easy to fake domain address). “Denial of Service” attacks can result, bringing down the website whose address was falsely used.

The technology to ping back the server that sent an email, and to verify that it is the same as the purported sender, exists today. Services such as Goggle Gmail and Yahoo mail do use it. However, globally, emails sent to and via other servers has no such protection.

As far as Google’s plans go, the security related acquisitions appear to be more in line with a strategy of building up support products for its main suite of applications. It does not appear that Google has plans of directly entering the security software market. At least not right now.

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