DVDGuy’s Blog @ Digital Digest

This is probably the most difficult week for someone whose “job” is to go hunt for news to write about, a day that I really hate personally. While everyone was enjoying April Fool’s Day, I’m sitting here getting paranoid about which stories are real and which are not. The worst part is that some people fire off AFD news stories a day early, you know, to be clever and stuff (it’s not clever, IT’S CHEATING!). Did isoHunt really hire an anti-piracy tech guy? Did Obama really get caught downloading a pirated MP3 version of Rebecca Black’s Friday? Did the RIAA really try to claim a trillion dollar worth of damages … oh wait, that’s real.

So, disclaimer warning, some of the stories I will summarise in this WNR may very well turn out to be someone’s idea of a joke, so I make no guarantees, and if you quote something as fact and it turns out S0ny didn’t really kidnap geohot’s cat in a bid to try and get him to return from South America, and people point and laugh at you and stuff, it’s not my fault!

So let’s start this week’s news roundup, with increasing trepidation, with some copyright news. While the major music labels are trying to squeeze a trillion or two from LimeWire, it turns out that LimeWire’s demise has had a really positive effect on reducing online music piracy.

NPD reports that music piracy is down, probably for the first time in ages, in the last quarter of 2010, with 12 million less pirates, and fewer songs pirated per person. This shouldn’t really come as a huge surprise, considering the popularity of LimeWire, although also as expected, other downloading methods picked up due to the shut down, and over time, the download rate might creep up again. What I find most interesting though is that, given all of this took place last year, we have no heard a single peep from the RIAA about just how much more money (trillions?) they’ve made thanks to reducing piracy, quite dramatically I might add. Where’s the press releases from Sony, BMG and co about just how effective their anti-piracy measures have been in terms of increasing revenue, because this was the whole point behind the expensive anti-piracy efforts and lobbying, right? If reducing piracy does not increase profits, then why bother reducing piracy? And if piracy does not equal lost sales, then just what is responsible for the decline in revenue in recent years?

The decline of CD revenue has not been filled by the increasing digital revenue

By the RIAA’s own graphs, revenue has decreased, on a per capital basis, to a point lower than any time in the last 40 years, and I don’t actually doubt this figure. It’s based on a per capita basis, and since population has grown, it doesn’t actually mean that music industry revenue is lower than ever. And because it tallies results only based on sales of recordings, it does not take into account live music revenue, which from what I gather, is up. But looking at the graph, sales weren’t exactly hot just before CDs came out, and sales are only bad in comparison now because of the high peak that CDs sales managed in the early 2000’s. CD’s decline does coincide with the growth of the Internet in the last decade, but interestingly, it also coincides with the rise of DVDs. Is there no correlation between people spending more on DVDs and the same people spending less on music? I think most people have finite budgets, so it’s not inconceivable that this limited budget is being spent on other forms of entertainment, like video games (an industry also on the rise for most of the last decade), or not even on entertainment at all due to rising living costs and the poor global economic condition. But instead, all we hear are the billions and billions being “lost” by the music industry due to piracy. Once upon a time, companies realised that peaks and troughs exists in business, and innovation is what helps rejuvenate the cycle. Now, there’s this obsession with revenue, as if revenue has to rise every year, and by a significant percentage, as otherwise, the company or the industry is suddenly “in trouble”. The work force is downsized and/or moved offshore, books are being cooked, all just to avoid the share price decline, a decline (or rise) is largely determined by speculation these days, as opposed to it being an accurate reflection of company value and revenue expectations. And then, of course, they blame the Internet for it all.

Newzbin2 now uses Tor to allow its website to be accessed without a domain name

And so the powers that be, trying to please their corporate buddies, will try more and more things, even if it means screwing up the entire Internet. The US government has hinted at implementing domain name blocking, at the behest of the RIAA and MPAA of course, a move that experts, including those that invented the Internet (working under Al Gore’s leadership), have warned will damage the Internet irrevocably. And you know what, it still won’t stop people who want to download pirated stuff. In response to the imminent threat of domain blocking, Usenet website Newzbin2 is now using Tor to allow its website to be accessed even without a domain name. So even before domain blocking has been launched, it has already been circumvented. Decentralized, encrypted, piracy would be almost impossible to monitor, let alone stop, and that’s the direction we’re headed towards. And when we get there, egged on by an obsessed industry that’s too arrogant to change their business model, what will we do then? When people know for a fact they will never get caught pirating songs or movies, how will the RIAA and MPAA stop them then?

And there’s always the slim hope that the industry might embrace the Internet, and allow innovation to blossom and create new revenue streams. Or they might just sue Amazon for daring to allow people to store their legally purchased MP3s in the cloud. Instead of working with Amazon to create a new distribution method, one which gives consumers more freedom, and also perhaps allows for a new way to make money in the Internet age, the RIAA labels simply voiced their arrogant displeasure at Amazon daring to make things easier for users without gaining their kingly approval first. They argue that Amazon, by allowing people to stream their music from their cloud accounts to their Android devices, that this somehow breaks licensing agreements. But Amazon argues that this is no different than playing your MP3s from an external drive, the only difference being that this external drive is accessible from anyone where there’s an Internet connection. But the fact of the matter is that if people legally purchased their songs, then streaming them to their Android device does not harm the record industry in any fashion, since there’s a million ways to get songs to an Android device. Now, if people are storing pirated songs on their Amazon cloud drive, then the people that do that have broken the law, and I don’t see how Amazon is in any way responsible (because if companies handling data transmission can be found liable, then every Internet and networking based company in the world would be liable for all sorts of piracy, because raw data simply goes through everything. But of course, suing Amazon is easier than suing individuals, just like Viacom suing YouTube is easier than suing the actual users that upload pirated content, so that’s where we’re headed, where another piece of innovation may be stopped in its track (or severely limited) because one industry does not want to change and adapt to the times.

Meanwhile, in Righthaven-land, another week, and another lawsuit, although this one didn’t last for very long. Righthaven this week sued tech website Ars Technica (or at least a writer for them). What for? For using a photo that Righthaven sued Drudge report for. Except this photo wasn’t the original photo. It was black and white for a start. And it also came from Righthaven’t own legal documents, that they’ve submitted to court. Not to mention that fair use would have covered Ars Technica’s use of the photo anyway. And also the fact that Righthaven sued the writer of the article, and not Ars Techinca. Even Righthaven realised that something was not right and pulled the lawsuit only a day later, but it brings up the question, if they can make a mistake like this with a high profile target like Ars Technica, how many other mistakes have they made in their filings? And when you can “accidentally” sue someone, perhaps it shows that these lawsuits are not really worth the paper they’re being filed on.

This week’s anti-DRM message is brought to you by Christofer Sundberg, and Avalance Studios, makers of the Just Cause franchise. And the message is, DRM is stupid and useless. And it is a message that I think is hard to argue against, simply because I’m a pragmatist, and DRM simply does not work at stopping piracy. It works well in annoying legitimate buyers though. And controversially, Sundberg says that making better games will mean more people will buy those games. Having to make a better product to keep your customers? How does that even work, and more importantly, why do you need to do it when you can simply lobby the government to destroy competition and innovation.

Not much happening in 3D/HD this week, but I’m contractually obligated to write something for this section at least once every fortnight, and so I will write something this week.

While doing the weekly Blu-ray/DVD sales analysis, I’ve noticed that so far for 2011, there has only been one week in which Blu-ray and DVD revenue, combined, have produced an overall gain compared to the same time last year. In other words, almost every week of 2011 has been worse, usually to the tunes of at least $20-30 million, compared to the same week a year ago. That’s an alarming decline, and while some of it is down to digital distribution (which is not included in these figures), still, the decline seems too rapid to be just due to downloads.

Piracy? Perhaps that’s a cause, but piracy has always been a problem, not just in the last year. Only one of the weeks did Blu-ray revenue actually drop compared to last year, so the decline is definitely all DVD related (which makes sense, since digital distribution should affect DVD the most, considering most downloads and streams are still SD or relatively low quality HD, that does not compete directly with the quality offered by Blu-ray). I think the economy has a lot to do with it, and also the quality of the releases.

And a warning to those, like me, that buys movies and don’t test them out until you decide to view them, which could be weeks, months or even years after the purchase, you might want to think twice. I purchased the Godfather Blu-ray trilogy pack way back in 2008, and for whatever reason, I never got around to watching it until now. It turns out the second movie’s disc is faulty, a known production glitch, and it only took me two and a half years to discover the problem. Apparently, Paramount may still have a recall program for this disc, so I’ll try my luck and hope that they won’t require explanation as to why I waited so long to watch, what are, some of my favourite movies.

And finally in gaming, lucky Xbox 360 gamers in the US can sign up for a new beta-test with the reward of a free copy of Halo Reach. The testing is apparently for a new disc format that promises to allow the dual-layer game DVD, which is now limited to 6.8GB, to hold a GB more, as well as new anti-piracy measures.

Yet another Xbox 360 Blu-ray rumour surfaces ...

And of course, the old time tested “Blu-ray coming to Xbox 360” rumour came out again. I’ve tried to explain why I think this rumour keeps on getting repeated, having blamed it on PS3 and Blu-ray fanboys who think that Microsoft supporting Blu-ray is the ultimate trophy in the Blu-ray vs HD DVD war, and an admission that Sony was right in delaying the PS3 for a year while they waited to put the Blu-ray drive in. Anyway, it looks like if a Microsoft console is to have Blu-ray, it will have to be the Xbox 720 or whatever it will be called, and if I were a betting man, I would definitely put money on Blu-ray being used for the next-gen Microsoft console.

Speaking of fanboy wars, the news this week was that global PS3 sales finally overtook Xbox 360 sales, which has PS3 fanboys so so excited. “We we we so excited”, so they will all say. Xbox 360 sales are largely non existent in Japan, I think it was outsold by the Sega Genesis last week, and they haven’t been doing too well in Europe either, although the “slim” and Kinect has helped the Xbox 360 do well in 2010 in the UK at least. But in the US, the Xbox 360 continues to dominate.

Anyway, I think that’s all there is this week. Yes, I conveniently ignored one news story I wrote which, if it isn’t clear to you by now, was a very much failed attempt at an April Fools joke. I hate doing these kinds of stories, either you’re too subtle and nobody even notices that it’s fake news, or you’ll have to make it so obvious that you might as well just put “April Fools Joke” in the headline. And even when it’s a good one, when people think it’s true, you have to beg and cry on the phone to the MPAA’s lawyers and explain just why you don’t think you’ve libelled them when you posted that they were forming a partnership with Al Qaeda.

I hate April Fools.

Last week was my birthday, but despite the auspicious occasion, I had to work, and not even on Digital Digest related stuff. I’ve always thought that people should get a week off for their birthdays, or at least a day off. I mean, it only happens once a year anyway, and we celebrate some President’s birthday, one that we didn’t even elect, and here in Australia, the Queen’s birthday, even though the day isn’t actually her birthday at all. Anyway, on a scale of 1 to 10 in terms of the amount of stuff to go through, this week is a solid 7, so let’s get started!

Starting with copyright news, last week, I reported on The Observer editorial regarding movie piracy being very much a problem of of the movie studios’ creation. This week comes a report that the problem is very much to do with pricing, and not legal enforcement.

Pirated movies are sometimes the only real alternative to movie consumption in developing nations, thanks to unrealistic pricing of the legal kind

The report mostly looked at piracy in developing nations, where pricing for movies, music or software is usually many times what it costs someone living in a developed nation, relatively speaking. When buying a movie means you have to fork out a day’s wage, then no wonder piracy is a hit. It becomes the only realistic alternative. The reason for this has to do with the usually lower level of competiti0n in these countries, where there aren’t a Wal-Mart or Amazon or an iTunes everywhere you look. But the main reason is artificial. Movie studios and music labels simply do not want to sell content cheaper in these regions, because they feel that once that step is taken, it will lead to the eventual decline in pricing in the developed regions, where most of their revenue comes from. Region control for DVDs and Blu-ray’s was the movie studios’ way to combat this phenomenon, to allow developing nations to access cheaper content, but to limit the damage cheaper content does to other regions. But this is all based on a theory that content owners, particularly in the digital age, still need the same pricing structures deployed for analogue and physical goods. And while the report looked at developing regions, the same also applies to developed regions, because not every can afford what is being asked of them, and so some of them resort to piracy.

I think this is one area that needs closer examination. The advantage of digital content is that it can be replicated perfectly with ease (compare copying a MP3 file, to say copying a tape recording, especially if you want perfect replication), with very little cost, if any. And for pure digital content, without physical media, there are also other cost savings. And yet, we are still expected to pay as much, if not more, for media-less digital content compared to the physical media version (compare TV episode prices on iTunes, add it up for a whole season, and then compare to the cost the superior DVD or Blu-ray versions, for example). I don’t know what the answer is, but I think it has to involve more people buying content for a lower price, as opposed to getting fewer people to pay higher prices.

At least Paramount seems to be wanting to try something new, as they’ve detailed plans to release the independently produced film, The Tunnel, free via BitTorrent. It’s certainly a “if you can’t beat them, join them” strategy, although this isn’t the first time the film’s producers has tried innovative ways to promote and raise funds for the movie (having previously “sold” frames for the movie, 135,000 of them, for $1 each). Paramount isn’t just giving it all away though, they still have a DVD version of the movie being released at the same time, with hours of bonus content, an alternative ending. I think they’re hoping that the hype created by the BitTorrent release will help to raise awareness of the DVD and promote sales, and I hope they succeed. I don’t think the movie is available to buy on Amazon yet, but when it does, I urge everyone to buy a copy if not to just support a movie studio trying something different, and not associating BitTorrent with piracy. I still don’t think this is the best way to make money off movies in the Internet age, because there’s no money being made by giving it away on BitTorrent, and if the DVD is still regularly priced, then it still doesn’t solve the problem of some people not being able to afford it.

Everyone’s second favourite sue-for-profit law firm (the most popular firm being USCG), Righthaven, is in the news again. But it’s bad news for the outfit trying to make a quick buck by suing those that copy, even if it’s just a small extract, of newspaper articles. They’ve had yet another case being potentially dismissed on fair use grounds. The judge in the case found that suing non-profits for profit, is a no go, especially if the claim is that somehow the non-profit profits from the alleged copyright infringement. Righthaven had another case thrown out also for fair use last year, when they tried to make the case that even partial copying, with attribution to the original publisher, was worthy of a lawsuit (or a couple of thousand dollars in settlement fees). One issue the judge found disturbing was the lack of warning Righthaven (or the copyright owner) gave to the alleged infringer. I thought that the DMCA was created to prevent just this sort of thing, where a cease-and-desist system is created to prevent copyright lawsuits from clogging up the legal system, a scenario very likely due to the Internet and how easy it becomes to create copies of other’s works. Righthaven and others “copyright trolls” bypassing the DMCA, should surely be grounds enough for dismissal. And I never though I would actually defend the use of the DMCA, and for that, it makes me hate Righthaven even more.

The Digital Deluxe edition of Assassin's Creed Brotherhood may contain pirated songs

And everyone’s favourite copyright hypocrite, Ubisoft, has done it again, this time releasing a pirated version of their own product. As you may know, they previously used a NO-CD crack by hacking group Reloaded for the digital version of Rainbow Six Vegas 2, because I guess it was easier to steal other people’s work than to create your own. And now, the Digital Deluxe version of their new game, Assassin’s Creed Brotherhood, contains the soundtrack from the game that was downloaded from private BitTorrent tracker Demonoid. This was apparently discovered because Ubisoft, or perhaps whoever packaged the Digital Deluxe release, did not change the ID3 tags from the pirated soundtrack, and so the username of a popular contributor to Demonoid showed up for the “official” release in the song’s tags. There’s actually no concrete confirmation of this, whether it was Ubisoft or one of the distributors that did this, or even if the songs were derived from the pirated version at all, but I wouldn’t be surprised if all of this were true. Ubisoft have said that they’ve launched an internal investigation into the matter. The most annoying thing was that, if the included tracks were sourced via piracy, they are actually an inferior version of the pirated soundtrack, re-encoded with a lower quality.

In HD and 3D news, Blu-ray has just had its best ever week in terms of market share, breaking the 23% barrier for the first time. It was all thanks to the release of Disney’s classic, Bambi.

The results are slightly misleading because the release was actually a Blu-ray+DVD combo (the DVD only release will be available in April), and that combos like this are only counted as Blu-ray sales, even though with timed exclusives, it means DVD 0wners may have to buy the Blu-ray version as well. Some will say that there aren’t many that are buying the Blu-ray+DVD version just so they can watch the movie on DVD, but I beg to differ. Disney actually produces the same combo set in both Blu-ray and DVD packaging, and they produce the DVD packaging because they want DVD buyers to buy this version (so to these buyers, they are buying the DVD version with the Blu-ray thrown in as an extra, as opposed to the other way around). In fact, in Australia, I’ve bought combos that are packaged in a DVD sized slipcase, but the actual plastic case being the standard Blu-ray size – I can only guess that publishers are doing this because they don’t want DVD owners to be afraid to buy the smaller, different package.

The extended LotR movies are finally on Blu-ray, but is this really the most definitive edition?

The other big news of the week was that the announcement of the Blu-ray version of The Lord of the Rings extended trilogy. Still no firm release date, but despite the pack possibly not being available until 2012, it’s already shot to the top of the sales charts on Amazon. The early details, unfortunately, don’t look great. The movies are still split on two discs each, which if the encodings takes full advantage of the space available, then it’s not such a bad news (although with a 50GB disc, even the longest of the movies can still have an average bitrate of around 25 Mbps – although if they can increase the average audio+video bitrate closer to the Blu-ray maximum, for that extra bit of quality, then I’m all for splitting up the movies on two discs). And despite using two discs, the theatrical versions of the movies does not seem to be included, which is a shame given seamless branching will make this quite an easy thing to do. But the most annoying news is that the extra features still come on DVDs, just like in the theatrical box set. This suggests very little, if any, new Blu-ray exclusive features. It all seems like a fairly lazy release, especially frustrating that it has taken so long to produce the set (which probably has more to do with Warner Bros. trying to milk money out of the theatrical releases, as opposed to the time and effort needed to produce the new extended set). Hopefully I’m wrong and that new details will emerge listing the new Blu-ray exclusive content.

Before I move on to the gaming news, and this news is sort of related, the terrible earthquake crisis in Japan seems likely to affect Blu-ray disc production, not that this is really that important in the grand scheme of things really. I’m sure the Japanese would rather people spend the money they would have otherwise spent on Blu-ray discs towards to relief effort anyway.

And in gaming news, and continuing from the story above, 3DS production seems to be okay, and the US launch should not need to be delayed. 3Ds consoles are produced in China anyway, so production should not have been affected, although Nintendo being a Japanese company, there will still be other types of disruptions.

And a clarification on last week’s story in regards to the PS3 HDD issue – the issue seems only present when one attempts to upgrade the HDD after installing the very first buggy version of the 3.56 firmware. Subsequent versions of the firmware, including 3.56v2 and 3.60, fixed the bug so that people who upgraded their HDDs after installing 3.56v2 and 3.60 did not encounter the same problem. People who had installed the first buggy 3.56 firmware, then upgraded their HDDs, are stuck unless they have the original unmodified PS3 HDD, which they need to put back into the console, install 3.56v2 or 3.60, and then attempt to upgrade their HDD again (which will now work). In any case, it’s obviously Sony’s fault for all of this because the way they silently released 3.56v2 (a “ninja” release, as some have called it), seems to me like an admission of “oops, we f**ked up” if there ever was one. And I’m sure it would be possible for Sony to do something in software to allow people still suffering to fix their PS3s, such as being allowed to roll back to an earlier firmware, or to force the install of 3.60 through. But I suspect they don’t want to do it because it will interfere with their anti-piracy efforts, which was the whole point behind the recent series of firmware updates. Hackers have already said that 3.60 appears to be secure once more, and I doubt Sony wants to reverse the improvement. At the very least, Sony should offer to repair this problem free of charge, even if just for the PR value.

And good PR they need, because according to analyst Michael Pachter, Kinect is outselling Sony’s PlayStation Move by a five to one margin. It’s largely based on the number of Kinect/Move console bundles that have been sold, so it’s not the best way to gauge actual uptake, but this is always difficult because a single PS3 owner can buy 4 Move controllers and this counts as 4 sales, whereas an Xbox 360 owner only ever needs to buy on Kinect accessory (so in fact, it should be natural for Move to outsell Kinect, even if they have the same uptake rate), and so counting bundles may not be such a bad way to do it.

Alright, that’s it for this week. Have a good one.