Last Music Domino Falls: Sony Drops DRM

Sony BMG has been the last of the major music labels to insist on the use of Digital Rights Management for sales of its music in digital form. Apparently even Sony now has thrown in the towel, according to Business Week.

Sony is expected to start offering some portions of its catalog in a no-DRM format sometime in the first quarter, probably using Amazon.com's download store. Oddly enough, though music labels earlier insisted on DRM as a way of deterring piracy, DRM arguably accounts for Apple iTune's dominance of the download business, as DRM means songs can be downloaded only to specific devices.

Presumably, the announcement will helpl boost sales of downloaded music, as this projection by Enders Analysis suggests.

What Does Music Model Imply for Communications?

There are all kinds of music business models developing these days, including donations, music as loss leader, music as a "free razor," live performance, pay service, merchandising and so forth. People still consume in the old ways as well. Some people listen to radio, buy CDs or singles. People still go to live performances. But lots of people simply download single songs they like for 99 cents, or do so illegally.

The point is that the music ecosystem is developing lots of business models. My kids insist that 99 cents is the right price for a song, based on what a CD costs, and the number of songs on it. But they don't generally buy many CDs, unless an artist manages to pack so many songs on a collection that the incremental cost of buying the CD is quite low. But the business model behind 99-cent songs is the sale of hardware called iPods.

For Target or Wal-Mart, selective deep-discount sales of audio and video are loss leaders for the business model called "retail." Some acts have tried a donations model, with results being that 15 percent or fewer people actually donate.

Madonna, though, illustrates the shift as well as anybody. She last year signed a historically unusual recording and touring contract with concert promoter Live Nation. No record label: a concert promoter.

Traditionally, companies like Warner Music Group have focused on recorded music, while other firms have arranged tours, managed artists and sold merchandise. But shrinking CD sales have led artists and entertainment companies to consider wide-ranging deals that bring all activities under one roof, helping cross-promotion and boosting profit margins.

She is the first major star to choose an all-in-one agreement with a tour company over a traditional record deal. The point is that all albums, tours, merchandise, websites, DVDs, sponsorship, TV shows and films now are seen as parts of the business model.


"The paradigm in the music business has shifted," she is reported by BBC to have said.

In the old days, a musician would go on tour to promote a new album. The new model is more likely to take the form of albums being released for free or very low cost, to promote higher-priced tickets for live performances and other forms of monetization. In the past, promotions such as concerts were intended to sell records. In the future, records might be merchandising to build a reputation to sell concert tickets, create TV shows and sell merchandise.


It isn't immediately clear how changes in the music business might one day filter over into the video business, or how the basic principles might be applied to the communications business. But there's something to be learned here.


Among the insights is that the value users place on something change over time. What is the value of a car radio for someone who does not commute 60 minutes to two hours a day? What is the value of a car radio for somebody who can use an MP3 or CD player in the vehicle? The point is that the value of different types of music listening, as well as the cost, vary from mode to mode.


The "cost" of listening to the radio is virtually free (the radio came with the car), but maybe unsatisfying and rare. The cost of listening to MP3s is the cost of the content purchased and the player (unless the player came with the car), and might cost a bit more, but get used more, both inside and outside the vehicle.


In other cases the cost of music might be a satellite radio subscription and the cost of the receiving hardware (again, unless the hardware was built into the vehicle), but used only inside the car.

Also, the value of the ecosystem surrounding a product can produce more revenue than the actual tangible product. Let's say you buy a $250 phone (subsidized by the carrier to the tune of $200) and purchase a $5 a month insurance policy on the device, on a $55 recurring monthly plan. Say you never actually lose or break your phone, and you use it for three years.

Say a carrier's gross margin on services is about 30 percent (after paying employees, operating and marketing expenses, but before taxes, depreciation or debt service). Before subtracting the handset subsidy, the gross profit would be $16.50 a month on the service, or $198 a year and $594 over three years. Back out the $200 handset subsidy and one derives $394 as the gross profit on service.

Assume the insurance policy has a 90-percent gross margin, equating to $4.50 a month, $54 a year or $162 over three years. In that case, the $5 insurance revenue stream produces 29 percent of the gross profit, compared to the $55 revenue stream for service.

New business models for music are evolving. The issue is whether new business models for communication also might evolve.

Google Enhances Presentations

I have to admit that I have not tried to use Google Presentations, though I do use Google Docs & Spreadsheets. The reason simply has been that normally, if I am creating a presentation, it is for use at a speaking engagement of some sort, and that means I want to ensure that it runs on the projection system and PC that will be on the dais, and that it can be copied and viewed by attendees later, in a format I think they will use. Microsoft PowerPoint, in other words.

But Google coders have enhanced the Presentation application in ways that immediately made sense to me. Presentations now can be saved in a file format that allows them to be embedded directly into Web sites. Now that is something one cannot really do with a Microsoft Powerpoint.

In fact, there is now a new use case. If I want to create content in that format for Web distribution only, I don't have "native application" issues. I can simply embed the presentation directly onto a blog or other site. Cool.

Has Blu-Ray Won the Format War?

The format war between Blu-ray and HD DVD might be over. Warner Bros. Entertainment had decided to back the Blu-ray standard exclusively, beginning June 1. That means roughly 70 percent of available content will be in that format.

Backdoor Sony music MP3s

Sony's music download service uses the Windows Media Audio (WMA) format, not MP3. So it is interesting to find this bit of advice on the download site about how to take the copy-protected Sony music and transfer it to an iPod, an operation that is the equivalent, after a bit of work on the users' part, to supporting an MP3 format free of digital rights management.

"Attention iPod users:

Our download service provides files in the WMA music format or the WMV video format, which is not supported by Apple Macintosh computers. To use your music with an iPod, simply follow the steps below:

1. Save each downloaded song to your PC
2. Burn a music CD (in CDA file format)
3. Import the music from the CD into iTunes
4. Update your iPod"

If this forecast by Strategy Analytics is correct, most of the action in the music download business, exclusive of phone-specific ringtones, will not be generated by mobile service providers.

SlingPlayer for BlackBerry

And you thought BlackBerry was an enteprise email device! Sling Media has announced that SlingPlayer Mobile software will run on RIM BlackBerry smart phones. Sling Media will release SlingPlayer Mobile for BlackBerry later this year.

SlingPlayer Mobile will be available for a one-time charge of $29.99. If you're thinking about doing this, make sure you have a device with Wi-Fi, such as the Curve. Sure, you might be able to watch using your carrier's data plan. But depending on where you are, and who your carrier is, the results might not be worth bothering with. Even Wi-Fi connections are going to be difficult in hotel and other settings.

If you are tempted to do this in the office, remember that IT is going to figure out pretty quickly that network congestion has gone way up, and why.

Some Progress on Music Front, Unless You are Apple

Warner Music has decided to offer its complete catalog, free of digital rights management, through Amazon's new MP3 store. EMI, Universal, and Warner now offer their catalogs in DRM-free digital formats, leaving Sony BMG the lone major music giant still clinging to the DRM approach. Amazon now claims to offer for than 2.9 million songs in MP3 format from over 33,000 unique labels.

Now, with the move to MP3, the labels that have chosen to open their music have a way to encourage multiple download services to flourish, keeping labels safe from being dominated by any single digital distributor, namely iTunes.

HDTV Slingbox: More Stress on Upstream Bandwidth

Sling Media has announced a new version of its Slingbox Pro set-top box that has its own HD TV tuner and can send out a 1080i HD picture over the network. The Slingbox Pro-HD will be initially aimed at the U.S. market.

So forget about what P2P is doing to the backbone and access networks. Now users will be streaming HDTV from their homes, stressing the entire network at its biggest chokepoint: the upstream. Ouch!

Opera Upgrade

Opera Software has released Opera 9.5 software developer kit for Devices. The release will include a new beta visual effects layer that will give users an emotionally heightened Web experience with fluid transitions, panning, zooming and interactivity.

Opera 9.5 SDK will also include an improved evaluation kit that allow device manufacturers to quickly experience the potential of a product aimed to deliver the latest end-user experiences for Internet browsing, Web applications and Web-based user interfaces.

Vertical Search Salvation?

It appears lots of online publishers think vertical search is one way to survive the Google assault and prop up their walled gardens. It's too early to tell. It won't hurt. Not so clear to me that it helps much.

The ARPU Gap is the Issue

One might quibble with the precise Yankee Group numbers indicated here for voice and data average revenue per user. What remains incontestable is that there is a revenue gap between voice and data services, on either the wired or wireless business segments. So as broadband starts to become the foundation service upon which other applications and revenue streams are built, there is immense work to be done. I suppose everybody knows this, by now.

iTunes Dominates Downloads

Much as Google dominates search and search revenue, Apple's iTunes dominates legal music downloading. Aside from ringtones, it isn't so clear to me how well mobile service providers will do with their own music-selling efforts. Every little bit helps, I suppose. But music doesn not look anything like a "killer app" for mobile service providers.

Carphone Warehouse in Play?

Shares of Carphone Warehouse Group, Europe's largest mobile handset retailer, rose the most in more than five years in London trading on speculation the company may receive a takeover offer, says the Bloomberg news service.

"Rumors about bid interest from Vodafone and Best Buy have been doing the rounds for some time," says Jimmy Yates, a London-based trader at CMC Markets.

What is interesting is the strategy context driving some of the rumored suitors. Best Buy has a small stake in Carphone Warehouse, which operates 2,400 stores across Europe. Best Buy also is collaborating with the U.K. chain to boost sales of mobile products in the U.S. Best Buy stores.

So you might argue that Carphone is simply a way for Best Buy to expand its footprint in its current business.

But keep in mind that Carphone also has 2.5 million Digital Subscriber Line customers. It also has a backbone network. Consider that Best Buy's Geek Squad is in the technology services business.

And recall that Best Buy owns Speakeasy, a provider of business-class broadband access and voice services in the U.S. market. Sure, Best Buy can grow its retail footprint. But by acquiring Carphone Warehouse, Best Buy makes an even bigger bet to become a more-significant provider of broadband access, business voice and mobile services.

For Best Buy, its core business is more than acting as a retail distribution channel. It is a service provider. Owning Carphone Warehouse would only deepen that commitment.

Now consider the possibility that Vodafone might acquire Carphone Warehouse. The idea there is not so much that Vodafone wants to become a mass market electronics retailer. Vodafone, long a dominant wireless service provider, now must also become a multiple-services provider, and broadband-based services provided over wireline networks are part of the vision.

Carphone Warehouse would give Vodafone much more heft, in that area. It might not strike you as significant that wireless and wireline services are converging. It might be a bit more surprising that retailers are moving from simple channel partners into the service provider business.

Google Can Index Test in Images and Video

A patent application lodged by Google in July 2007 but recently made public seeks to patent a method where by robots (computers) can read and understand text in images and video, notes Duncan Riley at TechCrunch. That would be a big step forward in indexing visual media, since there would be no need to manually attach tags to such visual media.

Basically, the patent covers a method whereby any visible text in an image--a street sign, for example--can be automatically indexed. Obviously, as with any of the developing Web-based technologies, there are privacy issues. As someone who has to work with lots of images, and spends lots of time wading through images that a search suggests are appropriate, and aren't, this is really helpful.

Does Music Industry "Get It"?

as someone who arrogantly and wrongly has accused whole industries of "not getting it" at points in the past, I never like to presume I understand executive thinking better than they themselves do.

What sometimes appears as "cluelessness" often has more to do with deliberate timing. and rational calculations about how long to let one revenue model atrophy before heating up a replacement revenue model that will cannibalize the older model.

So let me be charitable. Perhaps U.S. music executives do have a plan for changing their business model and packaging. Perhaps they are executing on that plan even now.

Album sales declined 9.5 percent last year, while digital song sales grew 45 percent, according to Nielsen SoundScan. Physical product sales were down 15 percent, including sales of "singles."

So maybe the issue is simply figuring out better ways to handle digital rights that aren't unfriendly to consumers who have paid for their music, nor damaging to copyright holders. It's a tough problem, to be sure.

And the problems extend far beyond copyright issues. As someone who has made a transition to iPod as my primary music playback system, and as someone whose PC-embedded hard drives need to be replaced once a year or so, the issue of storing and managing the music collection is a serious problem.

The reason, of course, is that each iPod syncs with just one hard drive. Lose that hard drive and one has two options: completely erase the contents of the iPod, or never change the data already on the iPod.

So now I have to take two paths to make sure the music isn't lost: store the copies on an external hard drive that hopefully "never" dies; and then keep the compact disk as well, since the external hard drive will ultimately fail, forcing me to restore or simply forget about the music stored on it.

As a simple music customer, this is a problem. Unless I have physical media backup, the music always is at risk of loss, for mechanical reasons. But keeping those CDs is not ideal, either. And the process of restoring lost music is time-consuming. So music storage "in the cloud" seems promising, at least to me.

OS Shift?

Amazon's top-10 "Most Wished For in Computers & PC Hardware" list includes, in order or popularity:
1. Asus Eee PC 8G
2. Asus Eee 4G
3. Asus EEE 4G
4. HP Pavilion DV6662SE
5. Nokia N810 Portable Internet Tablet
6. Nokia N800 Internet Tablet PC
7. Apple MacBook
8. Apple MacBook Pro
9. HP Pavilion DV6626US
10. Apple MacBook MB062LL

A couple of things strike one about this list. First, the prevalence of Linux-powered machines at the top three spots. Second, the prevalence of smaller form factor, highly portable devices among the top 10. Third, the prevalence of operating systems other than Windows in the top 10. Fourth, the prevalence of devices optimized for Web and Internet use.

On Amazon's "Bestsellers in Computers & PC Hardware" list, five of the top 10 devices use operating systems other than Windows. On Amazon's "Most Gifted" list, six of the top 10 devices use operating systems other than Windows.

Here's the other angle: some people carry smart phones with them when traveling, and leave their PCs behind. Top management and sales personnel are more likely to do so than people who have greater needs for text entry and Web app access. The point is that at least for shorter trips, the smart phone goes, the PC stays.

Almost everybody who owns a smartphone takes it, not a PC, when traveling locally, because email and text communications that otherwise would require a PC still are available.

To the extent that this trend continues, and more-mobile PC style devices also get traction, as the Amazon data tends to indicate, what does it mean? Web. Remote computing and storage. Need for better interfaces.

Small devices almost have to lean more heavily on applications in the cloud rather than local processing and storage. And several of the new devices plow new ground in the form factor/power/price equation, banking on Web apps to reduce price footprint, for example.

Navigation on a small device also is more problematic, so devices get an even-bigger push for new input options. Speech and touch, for example. Finally, taking all notebook PCs and smart phones together, and looking at them as a single market, not separate markets, one can observer that there already is more diversity in operating systems than has been the case in the desktop PC market.

Open Source Trend for 2008

Without proclaiming 2008 the "year of" anything, open source seems to be getting traction in the enterprise computing environment in server farms and on desktops and mobiles. Open source is preparing for additional traction in the consumer mobile markets. Linux has grown its presence in the consumer mobile area, and Google's Android initiative will start to bear fruit sometime after 2008.

Motorola Unveils WiMAX Endpoint

Motorola has announced the latest addition to its portfolio of WiMAX customer premises equipment, the CPEi 100, a single data port, 2.5 GHz “plug-and-play” WiMAX solution designed to sit on a desktop and serve as the interface between a computer and the WiMAX network.

It is expected to be available in 2008 for WiMAX operators who have systems in the 2.5 GHz band.

Motorola’s family of wi4 WiMAX solutions support15 WiMAX contracts and more than 57 WiMAX engagements in 38 countries worldwide, including 44 active trials, the company says.

Eee, gOS Rocket, Linux, Computing in the Cloud

Things are looking up for Linux PCs (even though its share in the OS market still is small) and "computing in the cloud." Good OS, the open source startup that introduced gOS, a Linux operating system with Google and Web applications, on a $199 Wal-Mart PC last November, now says announced that gOS Rocket will be introduced January 7. Think of gOS Rocket as a low-cost Linux-powered notebook that is optimized as a Web device.

Note also that the Asustek Eee PC--also a Linux machine-- was among the top-ten notebook PCs sold by Amazon over the Christmas season, and was ranked at the top of wish lists compiled by Web site CNet. Asustek executives say demand was so strong forthis Christmas season that virtually all available units were bought just about as soon as they were put on the shelves.

“In the two weeks since its launch in the US, the Eee PC has already sold ten thousand sets,” says Sunny Han, ASUS director. Asustek fully expected to finish 2007 by meeting its sales goal of 350,000 units, and is planning for sales in 2008 of three to five million.

Rocket comes with Google Gears, the online-offline synchronization technology from Google that enables offline use of web apps.

gOS Rocket also features gBooth, a browser-based web cam application with special effects, integration with Facebook and other Web services; shortcuts to launch Google Reader, Talk, and Finance on the desktop; an online storage drive powered by Box.net; and Virtual Desktops, an intuitive feature to easily group and move applications across multiple desktop spaces.

At the center of Rocket's new desktop is a gorgeous Google search box, enabling users to perform Google searches directly from the desktop. This new feature launches Google search results in Firefox, the leading, open source web browser. Surrounding the Google search box is an attractive desktop environment comprised of new wallpaper, icons, digital clock, and other new desktop elements.

"Like most of our customers, we absolutely love the gorgeous design and simplified navigation that gOS provides," says Paul Kim, director of marketing for Everex. "With the release of Rocket, the gOS team has once again shown the industry how to make a great looking operating system intuitive and easy to use."

Rocket includes Google Gears to enable offline use of web apps. Google Reader, which allows you to read all your news and blogs in one place, is the only Google application to currently work offline with Google Gears and has been added to the gOS desktop. Launching Firefox will reveal a new custom gOS homepage that prominently features a continually updated list of web apps that work with Google Gears to allow offline access.

Separately, researchers at Informa predict that, by 2012, Linux will ship annually in 128 million mobile phones, or about 8.8 percent of all handsets sold. The report also forecasts a bright outlook for other open source mobile technologies, including Java, WebKit, and others.

According to the report, Linux in 2006 was the second most popular OS for smartphones sold worldwide. During that year it shipped in about 11.7 million handsets, the "vast majority" of which went to customers in Asia. Uptake in Europe and North America during 2007 is forecast to drive overall shipments close to 20 million, or about 17.3 percent of the smartphone market. From there, shipments are expected to nearly quadruple by 2010, reaching 27 percent of all smartphones by 2012.

Blu-ray for Macs?

Apple Inc. is expected soon to announce concrete support for Sony Corp's Blu-ray DVD format as opposed to Toshiba's HD-DVD, according to AppleInsider.

American Technology Research analyst Shaw Wu says his sources say Apple will start shipping Blu-ray-equipped Macintosh computers. At some point, every PC manufacturer shipping DVD drives will have to make similar choices.

Disney, for which Apple chief executive Steve Jobs is a Director, is a firm supporter of Blu-ray, while rival Microsoft Corp. has placed most of its eggs in the HD-DVD basket.

Still, there is "a smaller chance Apple may use a combo Blu-ray/HD-DVD drive to ensure full compatibility and not get involved in the format wars, AppleInsider notes.

U.K. Mobile Market Consolidation

The U.K. mobile market is saturated, analuysts at Ovum essentially have concluded. A bruising retention and acquisition war seems no longer to be producing adequate results, as mobile penetration has reached 118 percent.

Ovum researchers predict a shift to longer contract terms of 18 months as operators try to stabilize customer revenues, replacing the 12-month contracts that have been more typical.

Mobile operators also will shift attention to postpaid rather than prepaid additions, as two quarters of flat or negative prepaid connection growth suggest that market also is saturated.

Mobile operators also will shift focus to revenues (including value-added services) and average revenue per user (ARPU) rather than customer growth, Ovum believes.

And though the U.K. market now is dominated by top-tier operators O2 and Vodafone, more mobile virtual network operator contestants are expected.

Despite being saturated and highly competitive, the U.K. mobile market has avoided the fate of the German, Danish, Dutch and Belgium markets as ARPU and revenue still are relatively high, Ovum says. That's quite a trick!

Search Advertising: Big Growth in 2008

JPMorgan analysts now forecast 31.9 percent growth in search advertising revenues for 2008. Analysts at JPMorgan initially had thought growth would come in at about a 19-percent clip. So they sense acceleration. Me too.

Theater Attendance Also Flat

Lots of legacy businesses are flat to shrinking these days. Theater attendance seems to be one of the "flat" sorts of legacy video businesses.

"Ticket sales at North American movie theaters totaled $9.7 billion, a four percent increase over the previous year, according to Media by Numbers, which tracks box office receipts. More important: attendance was flat, after a narrow increase in 2006 and three previous years of sharp declines.

Some of that sluggishness historically has been attributed to the rise of alternate formats: cable, satellite TV, widescreen TVs, DVD rentals and VCR tape rentals. Add HDTV, larger screen sizes, PC viewing, download-to-TV services and user-generated content and one has a recipe for continued sluggishness at the box office.

No business based on communications, information or entertainment now is immune from the rise of new electronic alternatives.

Terabyte PC Coming

It's just a data point, but note that Asus, the Taiwanese computer maker, is planning on bringing to market a notebook PC with two 500 GByte hard drives from Hitachi Global Storage Technologies.

That's a terabyte. Those of you familiar with enterprise storage, think about it: a terabyte per user. Those of you who have to do your own backups, think about it: losing a significant portion of 1 Tbyte of data if your hard disks crash.

The upside is that such a user can 1,000 hours of video, or more than 350 feature length movies, or 250,000 four-minute songs. The downside? If those files are not backed up someplace, huge collections of audio or video can vanish.

The point is that storage continues to emerge as a function that is becoming harder to manage. It is harder to backup, harder to restore, harder to secure, index and retrieve. Part of the reason is that simply is so much more information to store. This graphic from searchstorage.com simply makes the point that storage and backup requirements grow steadily.

Which makes the argument for storage in the cloud ever more compelling. If one's authorized copies of music, video or other material are stored in the cloud, local hard drives can crash with little threat of losing the content. Not to mention that the files can be used on any number of endpoints (I didn't say downloaded to those endpoints).

4G: It Isn't Really a Technology Issue

As service providers start placing their bets on WiMAX or High Speed Downlink Packet Access (HSDPA) technologies, it is easy to fall into the trap of "technological determinism," the notion that the technology determines adoption or commercial success. Nothing could be further from the truth.

Commercial decisions, not the technology, will be the decisive factor. Business decisions almost always are. One can make a technology either way for WiMAX or HSDPA. But that won't be key. Operational issues, backwards compatibility, installed base, manufacturing volumes and even voice compatibility will turn out to be hugely important.

Some might argue that building a new broadband mobile network with a view to voice performance is nuts. The countervailing argument is that no matter what other "data things" users frequently do, talking will be one of them. And poor voice performance is objectionable in a way that OS instability and Web page unavailability are not. People routinely tolerate lower quality of service for their Web browsers, Internet connections and PC operating systems than they will their voice or video services.

Don't believe that? Watch what happens when movie download services become more prevalent. Every degradation of isochronous service disturbs users more than any non-real-time service. Users are unforgiving of voice or video service hiccups that would not faze them when the hiccups affect a non-real-time data service.

In fact, that's the point: user experience is not degraded by packet loss or some amount of jitter or latency when the application is not real time. User experience is visually or aurally affected in a highly visible way when the application requires predictable, sequenced delivery of the packets. Voice and video, to be specific.

Netflix Download -to-TV Service Coming

Netflix is working with LG Electronics to market a set-top-box=based movie download service for TVs, Business Week reports. The move is not unexpected, but is significant in terms of its timing. Netflix has over the last few years modified its statements about the DVD rental business, moving from a "consumers don't want to mess with downloading" to "we'll do it when it's the right time" stance.

The move now means it is "time." The transition from physical distribution of movie content to electronic download to TVs is underway, Netflix is signaling. The service, which extends the Netflix download service beyond "movies to your PC," is expected to begin service in the fall of 2008.

And though Apple TV has not gotten much traction, Business Week expects Apple to unveil its own download-to-TV service as well.

Netflix has been offerings downloads to PCs for about a year. But just about everybody who thinks about the matter agrees that downloads directly to TV screens is what is needed to really jumpstart the business.

Amazon.com, TiVo and Blockbuster also have decided they no longer can wait to enter the nascent business.

Again, what is important about the Netflix move is the timing, not the move itself. Netflix has concluded that even if revenues from online-to-TV downloading will not eclipse DVD rentals for some time, one tipping point has been reached. Netflix has to get into position now if it wants to maintain leadership in the movie rental business of the future.

By some reckoning, that business already is entering its 3.0 phase, having started with retail store rentals, followed by mail delivery and now starting the download phase.

And it is worth noting that if cable TV "pay per view" or "on demand" efforts had been quite a bit more than a niche, the video rental business and Netflix would not have developed. Cablers will note that studio licensing rules and release windows account for the rise of the independent video and DVD rental business.

That is true. What also is true is that studio profit margins and gross revenues control the availability of product. Once studios decide they can make as much, or more money, by switching to online distribution, they will do it.

In that regard, a recent slowdown in growth rates for DVD sales in retail outlets is another important market indicator. Consumer fascination with DVD purchases might be waning, overall. Legally or illegally, online-delivered content might be a contributing factor.

So legal alternatives such as Netflix will provide should have a shot at success. What remains to be seen is how widespread adoption will be. Consumers are quite fickle about special-purpose electronics devices. If the value is high enough Netflix will not find there is a problem. "No late fees" and "no drive to the store" have proven to have high consumer value.

But Netflix also seems to be pursuing the integration of the decoder circuits into other Internet-connected devices. The decoding software might reside into a TV, a game player or media reader, for example. That would alleviate the "one more box" barrier, as some consumers just don't want another device, with cords and cables, around their entertainment center.

On the other hand, Netflix then encounters the "only available on one model or one brand" problem. Consumers generally don't want to bother with "this flavor of access on this device" issue.

And though on-demand video should in principle provide even more convenience, the problem has been the content release windows, which essentially dictate that by the time an on-demand movie is available, consumers have had lots of other opportunities to view the content.

For the moment, at least, Netflix should continue to have an advantage over cable, satellite or telco on-demand content. The studios aren't going to disrupt the profitable DVD window just because online delivery now is possible.

Providers of broadband access services face a more complex business challenge. Demand for download speeds should get a boost if the download services take off. The issue is how much actual profit might exist. The problem with video is that it offers scant returns on a cents-per-bit basis compared to voice.

Put another way, video necessarily "commoditizes bandwidth." For those of you who are Bellheads, think of it this way. A two-hour movie delivered in widescreen format essentially requires bandqwidth equivalent to a DS-3 with a holding time of two hours(45 Mbps). True, we compress and pre-process now so only 4 Mbps to 6 Mbps is needed.

But the point is that the value of a 4 Mbps to 6 Mbps circuit used continuously for two hours or so is "worth" what a consumer deems a fair price for watching a two-hour video event. Call it $3 to $7, depending on what the content is and when it can be viewed.

All bits are not valued equally. On a cents-per-bit basis, text messages represent the highest return, with voice someplace in the middle and video at the very low end of the revenue continuum.

It might not matter so much whether "streaming" or "downloading" is the delivery technique, though analysts at the Yankee Group so far think streaming will get more volume. Most consumers won't care. But downloading offers more opportunity for managing bandwidth.

$588 Billion in Information Overload Costs?

Interruptions from phone calls, e-mails and instant messages eat up 28 percent of a knowledge worker's work day, resulting in 28 billion hours of lost productivity a year, say analysts at Basex. That might be considered a $588 billion cost, assuming a salary of $21 per hour for knowledge workers. Basex argues that information overload has become a significant problem for companies of all sizes, with some large organizations losing billions of dollars each year in lower productivity and hampered innovation.

That's the sort of argument providers of unified communications and presence solutions will point to as arguments for such solutions. Others, such as Stowe Boyd, disagree with that thesis. Stowe argues people are not drowning in information, but ignoring most of the information, and reacting only when the information flow suggests something actually is important.

It is true that there is a lot more "information" streaming past any person these days. But people are smart. They don't actually pay close attention to most of it. In fact, people just selectively tune out most of it, like they tune out advertising that isn't relevant. Only some information gets a close level of attention. In fact, most of the "overload" is simply ignored.

So how can busy people safely ignore most information, most of the time? The environment, the people one works with and various information sources will signal what is relevant.

Multitasking is an example of this. People in meeting pay partial attention to what is going on while they check email on their mobiles. People remain connected while listening to conference panelists. Mobiles are set on vibrate while in both of those settings. TVs can be on, CDs can be playing while people are responding to instant or text messages and doing their homework.

That isn't to say people are not bombarded by a richness of information. It's just that they adapt by ignoring most of it, pay partial attention to some of it, and focus on just some of it.

Some of the multitasking, such as things people do in cars, is not entirely safe, though!

Newspaper, Long Distance: Same Story

The market value of the American newspaper publishers entering 2008 as independent, publicly traded companies has fallen by $23 billion, or 42 percent, since the end 2004, the year before the wheels started coming off the industry, says Allen Mutter, managing partner at Tapit Partners.

The change is akin to similar changes happening in the global telecom business. Some legacy products are in irreversible decline, be that newspapers, wired access lines used for voice, dial-up Internet access or expensive, high-margin stand-alone long distance.

That doesn't mean people aren't "calling," or "reading" or "communicating." But products built on those activities are assuming new form. Newspapers won't disappear tomorrow.

As long distance prices have been in continual descent for decades, so newspaper readership and revenues will simply drift lower. The issue that must be faced is a transition of the assets to new formats and services.

Newspapers are both media--content creators--and a distribution format. Distribution clearly is changing more than the value of content creation. Voice is both an application and a driver of "access lines" or distribution. In both the newspaper and voice cases, the applications remain important. The distribution is becoming less relevant.

The issue is when a tipping point is reached, and decline becomes a problem executives no longer can manage. Something might be happening in the newspaper area, in that regard. One can fairly safely say the voice tipping point already has been reached, in many respects.

Nearly half the slide in the market capitalization of newspaper stocks came in 2007, when the shares lost a collective $11 billion, or 26 percent, of their value, Mutter notes. Newspapers lost nearly as much value last year as they did in the two prior years put together.

EchoStar, Dish Now Separated

EchoStar has completed the spin-off of its set-top box business into a new a company called EchoStar Holding Corp. The parent company, which now consists primarily of its satellite TV broadcasting business, will change its name to DISH Network Corp., and keep DISH as it stock symbol.

The transaction makes Dish a pure-play video entertainment provider, and arguably a cleaner asset for an acquirer or merger partner. There has been much speculation about an at&t purchase, but that seems unlikely given at&t's recent decisions about its stock buybacks, acceleration of its U-verse deployment and dividend increases.

The earlier proposed merger of Dish with DirecTV didn't pass regulatory muster, in part because the market was defined as "satellite TV" rather than multichannel video entertainment. At some point, as telcos gain more video market share, that argument might not be so compelling, and Dish and DirecTV might be allowed to merge.

Given that the consumer market increasingly is dominated by triple play, dual play and quadruple play providers, and where each of the services markets increasingly are saturated, regulators might take a fresh look at allowing the two satellite providers to merge.

The Dish Networks separation from the the EchoStar set-top manufacturing operations will help.

at&t Naked DSL Available

As part of its obligations as the acquirer of BellSouth, at&t was required to offer naked DSL--DSL sold without the requirement to buy a phone line--before the end of 2007. It appears to have done so, offering $19.95 DSL-only service on December 20.

The service is referred to as DSL Lite, and must be made available for the next 2.5 years. The company probably will not go out of its way to let consumers know it is available, or how to get it. And there are no assurances the product still will be availabe when the 2.5 year period is over.

Given the likely state of broadband access penetration by that point, at&t will have to keep doing so. In a couple of years, about the only way any service provider is going to get a broadband access customer is to take one away from another provider.

In Europe, where stand-alone DSL services are more readily available, penetration ranges as high as 30 percent.

Call Centers, Leaky PBX, Grey Markets

There are lots of reasons entities set up call centers: sell products; answer questions; technical support; fund raising; set up appointments.

Or, in some cases, to create not-quite-legal terminations for international long distance. Sometimes known as "leaky PBX" operations, the motivation for doing so is money. Significant amounts of money.

By some estimates, 30 percent or more of inbound global calls to Indian numbers are terminated outside the carrier-to-carrier settlements regime.

Estimates of traffic that skirts the settlements regime range upwards of 3.5 billion minutes a year or $150 million to $300 milliion a month that otherwise would have been earned by a licensed carrier.

In recent years, global carriers have paid Rs 5.50 in termination charges to an Indian domestic telephone company. In a leaky PBX or "grey market" operation, a service provider launders the traffic, making it look like a local call, avoiding the termination charges. This saves the global carrier about half what it otherwise would have paid. And the local termination network gains revenue because it makes money from the higher volume of traffic it gains.

The most popular grey market routes serve mobile phone traffic in high-cost termination markets. And that's where the call centers come in.

Grey routes often are created by call centers, as VoIP in some markets is legal when it is IP-based endpoint to endpoint. Until the laws change, and as India market mobile penetration climbs, so will the grey market.

"Nothing But Net"

Online ad spending is growing at a faster rate than broadband access, according to PMorgan Internet analyst Imran Khan. In a nutshell, the story is that Internet stocks will do well in 2008.

JPMorgan expects 34 percent earnings growth in 2008 for the Internet stocks it covers versus 8 percent earnings growth for the S&P 500.

From my perspective, the story is that online advertising is going to grow because attention is shifting that way. And advertising follows attention.

A Must-Attend Conference

If you are the sort of person who is very interested in the future of IP applications as they relate to the global telecom business, EComm, to be held in March in San Jose, is going to be a "must-attend" event. Go to the link at the bottom of this post to get the details. Check it out. Register.

Aside from the quality of the program, I am compelled to note that this is a bottoms-up, user-generated event with no corporate sponsorship. It is the community pulling itself together, with Lee Dryburgh doing the heavy lifting. We need your support, in the form of your attendance.

You won't agree with everything you hear. But you will hear from some smart people who spend their time thinking about and building the next generation of communications. Fair and balanced. Policy advocates, telcos, application developers, consultants, solution providers.

Up close and personal. Some of you know I am a huge fan of smaller, intimate meetings where people get to talk to each other a lot. This will be that kind of place. Get there.

Confirmed speakers:

Lee S Dryburgh, SS7 Networks Limited
Martin Geddes, STL
Tony Nadalin, IBM
Phil Wolff, Reef9 Media
Brough Turner, NMS Communications
Sean O Sullivan, mySay
Ken Banks, kiwanja.net
Gary Miner, MIR3, Inc.
Stanley Chia, Vodafone
Thomas Huhn, Solution Media
Michael Codini, VoiceObjects, Inc.
Shidan Gouran, Jazinga Inc.
Blaine Cook, Twitter
Evan 'Rabble' Henshaw-Plath, Yahoo! Brickhouse
Kellan Elliott-McCrea, Yahoo! Inc.
Shai Berger, FōnCloud
Dean Bubley, Disruptive Analysis
Anders Carlius, TerraNet
Johannes Ernst, NetMesh
Michael Roth, British Telecom
Adrian Cockcroft, Netflix
Mark Rolston, Frog Design
Kevin Nethercott, LignUp Corporation
Ken Rehor, VoiceXML Forum
Thomas McCarthy-Howe, The Thomas Howe Company
Brian Capouch, Saint Joseph's College
Matthew S. Hamrick, Homebrew Mobile Phone Club
Stipe Tolj, Kannel Software Foundation
Rocky Nevin, DataSea, Inc.
Piotr Cofta, British Telecom
Norman Lewis, Wireless Grids Corporation
Ram Fish, Trolltech
Blaine Cook, Twitter
Sheldon Renan, Vision (+) Strategy
James Body, Truphone
Jim Van Meggelen, Core Telecom Innovations
Paul Amery, Skype
Tim Panton, Westhawk Ltd
Gabriel Sidhom, Orange-FT Group
Moshe Maeir, The Flat Planet Phone Co.
BJ Fogg, YackPack
Simonie Wilson, Open Methods
Michael Roth, British Telecom
Peter Saint-Andre, XMPP Standards Foundation
Michael Shiloh, OpenMoko
Marc A Smith, Microsoft Research Internet Services Research Center
Boaz Zilberman, Fring
Bob Frankston, Frankston Innovating
Mark Cooper, Consumer Federation of America
Kevin Nethercott, LignUp Corporation
Fabrizio Capobianco, Funambol
Koushik Chatterjee, Embarq
Sam Aparicio, Angel.com
John Waclawsky, Motorola
Michel Bauwens, P2P Foundation
Michael Codini, VoiceObjects, Inc.
Amit Desai, Dial Directions, Inc.
Dawn Nafus, Intel
Nathan Eagle, MIT Design Laboratory
Jeff Bonforte, Yahoo! Inc.

Do People Want Dual Mode, Convergence?

Dean Bubley has a nice list of things that will happen in the wireless market this year. Several caught my eye, one of them being that in our rush for all things "converged," we might be missing something, and taht is that people might be better at managing multiple devices, numbers and identities than we usually give them credit for.

Bubley argues that suppliers and service providers have a hard time creating the "one device that does everything" because, in fact, "people are happy with complexity."

"People like multiplicity," Bubley argues. "They want multiple service providers."

Some people certainly seem not to mind complexity, multiple bills or providers. Others probably prefer to buy in a sort of "best of breed" mode, despite some incremental friction.

I suspect that although lots of people say they like triple play services because it is more convenient using one provider instead of three, the adoption driver really is the discount.

The issue here probably is that many attempts to converge functions, identities and so forth involve some compromises, some effort and some limitations. People might be willing to put up with some amount of complexity or effort to get more choice.

But not much. According to the Reuters news service, half of all malfunctioning products returned to stores by consumers are in full working order, but customers can’t figure out how to operate the devices.

Product complaints and returns are often caused by poor design, but companies frequently dismiss them as “nuisance calls,” Elke den Ouden found in her thesis at the Technical University of Eindhoven in the south of the Netherlands.

The average consumer in the United States will struggle for 20 minutes to get a device working, before giving up, the study found.

Sprint Settles Patent Infringement Suit

...and it doesn't involve Vonage. A subsidiary of Acacia Research Corp. and Sprint Nextel Corp. have settled a lawsuit alleging that Sprint Nextel had infringed on four patents for technology used to display mobile vehicle information on maps. No terms were revealed.

Telecom has been a tough business for a decade. But operations seem to be getting riskier in the service provider business, for reasons that used to be an issue primarily for hardware and software suppliers.

Search Ads Will Drive U.K. Spending Growth

Internet searches will contribute around three-quarters of the growth of U.K. advertising in 2008, according to Group M, a unit of WPP Group, says the Dow Jones news wire.

U.K. advertising will grow by six percent in 2008, and all but 1.5 percent of that will come from search engine ads.

Group M also said the value of the Internet advertising market will come close to that of the television advertising market in 2008.

Newspaper advertising revenue is expected to decline by 2.8 percent in 2008, after a 3.4 percent decline in 2007, Group M forecasts.

Mobile to Lead Japan Online Ad Growth

Online advertising in the Japanese market is lower than in other markets, but growing at a faster rate.

Japan’s leading advertising agency, Dentsu Group, says search spending accounted for 27 percent of Japan’s online ad marketing in 2007, a figure significantly lower than in the United States (40 percent) and the United Kingdom (60 percent), eMarketer notes. By 2010, Dentsu predicts search will reach just 30 percent of Japanese online ad spending.

Dentsu also estimates that Japan’s mobile ad market grew by 42.5 percent in 2007. Mobile advertising is expected to remain the fastest-growing segment through 2010. Dentsu forecasts double-digit growth for the entire Japanese online ad industry to 2011, when growth is expected to slow to 9.6 percent.

54% of U.S. Cable Operators Face Telco Video Competition

Fifty-four percent of the cable systems surveyed by In-Stat say they face a telephone company that already is offering video service in their cable TV service area, In-Stat says. Oddly enough, though rural areas often are considered to be service backwaters, lagging urban and suburban areas in broadband access, for example, rural areas often are places where telcos have moved early to offer entertainment video services.

Historically, rural telcos have been licensed cable operators as well. But some telcos that aren't wired competitors rely on satellite partnerships to get the job done. And there's a scale effect here. It takes a long time for a large telco to upgrade nearly any part of its infrastructure.

Small operators, simply because they are small, can upgrade much faster. Keep in mind that rural operators often have a few hundred to several thousand customers, not millions. The same sort of process works at the level of a country. A small country can upgrade its facilities much faster than a larger country, simply because of the differences in scale.

Solid State Storage is Coming

It appears that the Asustek Eee PC was among the top-ten notebook PCs sold by Amazon over the Christmas season. That might be interesting for several reasons, including the fact that it is a Linux machine or that it uses solid state storage.

Up to this point, solid state storage has been expensive enough, compared to hard disk alternatives, that its use has been limited. The smallest iPods use solid state, but the larger-capacity devices use hard disks, for example.

But Moore's Law continues to operate. Even if solid state costs an order of magnitude more than hard disk storage, costs are declining fast enough that one can predict a point where solid state storage is cheap enough to be useful in a much-wider range of settings, including many that currently rely on hard disk drive storage. And it isn't simply consumer devices where that trend will be important.

So far, the biggest barriers to adopting solid-state drives (SSD) in the data center have been price and capacity. Hard disk drives (HDD) are much less expensive and hold much more information. For example, a server-based HDD costs just $1 to $2 per gigabyte, while SSD costs from $15 to $90 per gigabyte, according to IDC. So far, the cost disparity has been so high that SSD has not been an option, though some would argue it has other advantages.

Alan Niebel, Web-Feet Research Inc. CEO says the average cost of solid state storage per gigabyte is $10 while and hard disk drive storage costs 30 cents for a gigabyte of storage. Many observers say a price point of $1 per gigabyte is the inflection point at which solid state really takes off. And at an expected 50-percent annual price decline, that might happen by 2011. Of course, hard disk drive storage will cost just three to 10 cents a gigabyte at that point.

And prices are falling fast. Right now, the industry trend is a 40 percent to 50 percent drop in SSD pricing per year, according to Samsung.

At that rate, how long can it be before solid state storage starts to become a bigger factor in both enterprise data center, consumer electronics and computing devices, especially mobile devices?

Assume a gigabyte of hard disk storage now costs about one dollar. Assume the highest price for solid state storage is $90 a gigabyte in 2007, and that prices will drop 50 percent a year. By 2010, one then sees solid state storage at about $5 to $6 a gigabyte, competitive enough with hard disk drive storage to be reasonable in some applications where energy costs, extended battery life or light weight are important considerations. Make that data center storage applications, notebook computers and portable gaming or music devices as primary examples.

By 2011, one is down to about $2.50 a gigabyte of storage for solid state media. Of course, hard disk drive costs will decline as well. If hard disk storage costs drop at the same rate, a gigabyte of hard disk storage will cost three cents per gigabyte by about 2011. That's still an order of magnitude difference, but for many applications the cost of solid state storage will no longer be a barrier to use in many consumer device or data center applications.

iPhone Mobile Browsing Tops Windows Mobile

In December, it appears that the iPhone OS was used by twice as many users as Windows Mobile, according to Net Applications data for that month. Considering the vastly greater number of Windows Mobile devices in use, that's something.

Mac OS Gains in December

Though Windows remains the overwhelming leader in operating systems, December browser data shows a surge by Apple, iPod and Linux, says Net Applications.

The Mac OS was in use by 7.3 percent of users, up from 6.8 percent in November. The iPhone nudged up to 0.12 percent, up from .09 percent in November.

Microsoft’s Windows still dominates, with a 91.8 percent share.

Net Applications’ monthly surveys represent data from visitors to some 40,000 websites operated by the firm’s clients.

The Linux operating system also showed strong growth, up better than 10 percent to hit a .63 percent share.

60% Medium Enterprise IP Comms in Korea, China, India and Hong Kong

More than 60 percent of mid-sized companies with 2,500 to 9,999 employees in China, Hong Kong, South Korea and India currently are using managed IP PBX and hosted IP telephony for their voice communications, according to researchers at The Yankee Group.

Although enterprises experienced or expect savings on domestic long distance and international direct dial charges when using IP telephony, they also experienced or expect increased spending premium on network equipment, telephony equipment and network security by up to more than 25 percent, Yankee Group says.

User training seems to be the biggest challenge for enterprises deploying IP telephony and UC is user training issues. By geography, user training is a more pressing challenge for companies in Hong Kong (56 percent) and India
(58 percent). Inability to understand the link between technology and business process challenges Korean companies the most (52 percent).

48% Increase in Local Online Ad Spending This Year

Borrell Associates expects a 48 percent increase in local online ad spending in 2008, bringing spending to $12.6 billion. Local search and online video advertising will drive much of the activity, Borrell says.

Local search advertising will more than double to $5 billion, while locally placed online video will triple to almost $1.3 billion.

A major component of local video advertising will be long-form pieces for home, automotive and health-related categories, the firm argues.

Most yellow pages publishers, cable companies, newspapers, radio stations and TV stations are still pinning their hopes on their traditional sales reps being able sell online ad packages. But local sales entities might have to create separate online-only sales forces to get the job done.

Most sales entities face the same problem: it is tough to grow sales for new lines of business when those new lines represent a small percentage of the overall sales opportunity and might even cannibalize the existing business.

Will Femtocells Change Behavior?

According to iLocus, Nokia has found in its most-recent smart phone survey that 35 percent of packet data was consumed on the move, at-home use was 44 percent and in-office use was 21 percent of total.

Overall usage also increased from 6 megabytes a month to 14 megabytes a month.

What will be interesting is to see what happens when appreciable numbers of mobile users have access to femtocells--local transmitters that allow them to use a standard handset with better signal coverage in an indoors setting.

Aside from greater usage because signal quality is better, one wonders if the exposure to high-quality data bandwidth indoors might somehow lead to sustained and permanent changes in use of packet data outside the femtocell or indoors setting.

The other issue is whether users start to rely on mobile handset access in a setting where PCs also have broadband access. What applications or use modes start to become more attractive, even when there is the possibility of using a PC to conduct the same operations?

Of course, the same sort of questions can be asked of dual-mode devices able to switch to Wi-Fi access indoors.

Sprint LG Rumor Bug Found

Sprint has halted shipping new LG LX260 Rumor units to stores because of a bug that can trigger a complete erasure of the phone's firmware, says Christopher Price at PhoneNews.com.

Sprint has isolated the issue to a specific debugging menu, intended for LG engineers to work on the device during development, says Price. Sprint has not disclosed the specific code, to prevent abuse.

The trigger is timed to function only at start up, so users can avoid the problem by not pressing any buttons on the phone for at least 30 seconds after it has fully powered on, Price notes.

The phone, once triggered, cannot be restored except at the factory. The debugging code even erases the portions of the firmware that would allow a Sprint Store to recover the device (requiring what is known in the industry as a JTAG restore, Price notes.

Thriving Even When a Market "Vanishes"

Every trusim must be qualified. Consider the gradual folding of the "long distance" calling business into a "triple play" or "mobile calling" bundle. One might correctly note that long distance increasingly is a feature of some other product that a customer buys.

Some of us have said over the years that long distance has ceased to be a stand-alone business, pointing to the physical disappearance of firms such as at&t and MCI, which were built around long distance calling. But that general statement must be qualified.

It might be true at a high level that long distance has changed, and cannot support a firm such as the old AT&T. But that doesn't mean every stand-alone long distance business disappears. Calling card revenue still seems to be growing, for example.

And one has to point to Skype, Gizmo, Jajah, Rebtel and others as examples of companies making a living on long distance calling.

In the same way, some observers have argued that VoIP increasingly is becoming something sold as part of a triple play bundle, or as the technology underpinning for analog voice. The salient example is Vonage's stand-alone VoIP service contrasted with cable operator digital voice.

Again though, one must say the general rule does not rule out the continued ability of some entities to grow their "stand alone" businesses, even in the face of the existence of the larger trend.

At the same time, voice calling and voice features and services are emerging as an attribute of experiences for which there is some alternative revenue or business model.

Stand alone VoIP will be difficult, in many cases. It will not be impossible or unprofitable. The cost structure of such businesses will have to be optimized. But even the pedestrian calling card has continued to offer some firms an opportunity even as ubiquitous mobile phone usage has become a dominant trend.

Newspapers Not Dead Yet

But the trend line is clear enough. Newspaper advertising has been declining for decades.

But changes of this sort, where some older ways of doing things are replaced by newer ways, can take quite some time to play out, and will inevitably create new opportunities.

"Long distance," for example, has been in a long rate-per-minute decline, but usage has continued to climb. That meant the strategic task for every AT&T executive for years was simply to moderate the decline to the extent possible and prepare for some new business model.

The difference between long distance calling and newspaper advertising revenue is that newspaper ad volume is not rising, as long distance calling continues to do.

But the newspaper ad market is sizable enough that it still offers opportunity for players such as Yahoo, which has a deal with seven newspaper chains representing 176 daily papers across the country.

Yahoo is sharing content, advertising and technology, initially by newspapers posting their classified jobs ads on Yahoo’s classified jobs site, HotJobs, while newspapers use HotJobs technology to run their own online career ads.

Over time, the intention is to optimize newspaper content for search and indexing on Yahoo.

DTV Campaign Starts

The digital TV transition campaign has begun. With a Feb. 18, 2009 deadline for complete transition to digital over-the-air broadcasting, Comcast has begun advertising around the subject, with a "we'll take care of" message.

Also,$40 government coupons will be available starting Jan. 2, 2008, to defray the cost of decoders that convert over-the-air digital signals back to analog television for display on analog-only TVs.

The decoder boxes are expected to cost between $50 and $70 and will be available at most major electronics retail stores. Starting Jan. 2, the National Telecommunications and Information Administration will begin accepting requests for two $40 coupons per household to be used toward the purchase of the boxes.

To request a coupon, consumers can apply online at http://www.dtv2009.gov. The government also has set up a 24-hour phone line to take requests, 1-888-DTV-2009 (1-888-388-2009).

Outshouts Launches Voice Mashup Service

Outshouts has launched the beta version of its Web service allowing users to create introductions of their favorite audio tracks with their own voice before sending the files to anyone with an email address or mobile phone.

Outshouts can be sent to one person, or a group; marked public or private; or posted as a widget on blogs or social sites like Facebook or Myspace. Recipients do not need to be registered to receive Outshouts and the service is free.

Outshouts supports targeted, personalized micro-casting by making it easy to mash together your own commentary (recorded by phone or computer) on top of your favorite MP3s, and send or posted.

Tracks uploaded from a computer are accessible for sending directly from a mobile phone using an Ineractive Voice Response system.

Knol Could Push Google into Content Creation

Up to this point Google has built its business on helping people find information. In the future, Google also will help people create information. It inexorably will move, in other words, from being a search utility into an information utility. The reason is pretty simple.

What Google does is amass user interactions and attention by giving people powerful search tools. But its monetization scheme is classic media: ad revenues. In some sense, Google "packages" and "distributes" information and content, as does a cable TV operator, magazine or radio or TV broadcaster.

Google also creates its own content, as when it supports Blogger users, for example, or when it pays people for creating compelling content for YouTube. In that role Google is akin to a movie studio, newspaper or record label, in paying for the creation of content.

As some might note, Google has had a mixed record of success in launching new services. It owns YouTube because its homegrown video site wasn't getting traction. GTalk hasn't moved the needle in the instant messaging space. So there is nothing inevitable about the commercial success of Google's Knol effort.

Knol is a new Web service being developed by Google meant to serve as a storehouse of knowledge on the Internet. It apparently will be based on content contributed by various experts on different topics.

Knol will allow people to create Web pages on virtually any topic, and where Wikipedia attempts to create unified entries representing the best information the entire base of users can create, Knol might aim to aggregate various expert opinions on subjects, even if conflicting, rather than a unified view of any subject.

Think of the approach as a library of great books rather than a dictionary.

Google says the Knol project is meant to focus attention on authors who have sufficient expertise on particular topics. Something more akin to a research tool than Google's engine might be, in that sense.

Also, keep in mind that Knol has been described as a project. As sometimes happens, Google might simply decide to go another direction or cancel the project.

The overall impression, though, is that Google is slowly adding content creation to its content-finding mission. Another change is that Google also is a large ad placement entity. In that sense it redefines media in other ways.

It acts as an advertising agency for placement of ads and publishes content as well. So Google is not simply providing search or ad placement. It is contributing to a reshaping of the traditional way media and other parts of the value chain have operated.