An unbelievable alliance is slated to be announced tomorrow, according to the Wall Street Journal. Mighty rivals Microsoft and Yahoo have reportedly agreed to interconnect their free services. According to the report, the two Internet giants have made an arrangement that allows consumers who use the two companies’ free communications services, including IM and computer-to-computer VoIP, to be able to directly communicate with one another for the first time ever.
The purported deal is remarkable for many reasons. First, it helps repair the fractured nature of the IM market. Frequent IM’ers either have to run multiple IM engines or lose out on instant communications with those on other engines. Secondly, a combined Yahoo-Microsoft could pose a more formidable competitive force to IM giant and pioneer AOL, which still has the lion’s share of the market.
Yet another big angle on the prospective deal: Interconnected Yahoo-Microsoft VoIP services could ratchet up the already high competitive tension in the IP-based voice market, potentially leeching away some amount of traffic from leading free-VoIP provider Skype and possibly laying the foundation for more elaborate joint VoIP offerings later.
Moreover, Microsoft announced today that one part of its settlement deal with RealNetworks involves sharing music over IM. This deal gives Microsoft a much bigger footprint to push forward music in this regard and gives Yahoo a foot in the online music door.
Finally, Microsoft is supposed to be negotiating with AOL over a merger of those two companies’ online portals. A deal of this depth between Microsoft and Yahoo, the portal giant that AOL is now trying to emulate with its free site, seems to suggest that a Microsoft-AOL combination might not occur for a while.
Posted by Cynthia Brumfield at 8:09 PM | Print | Comments (0)Microsoft and RealNetworks have settled their long-standing legal differences in a high-profile agreement that promises to boost Microsoft’s MSN audio capabilities while giving RealNetworks a lift through Microsoft’s market-leading Xbox player and MSN portal. The companies announced today the resolution of their antitrust fights through three agreements they value at $761 million.
The deal includes an agreement to resolve all the companies’ antitrust disputes worldwide; an agreement for a wide-ranging digital music collaboration between Microsoft and Real, including promotional and marketing support of Real’s digital music subscription service, Rhapsody, on MSN properties; and an agreement to offer RealNetworks’ digital games through MSN Games and Xbox Live Arcade for Xbox 36. Under the music and games deal, Microsoft will pay Real $301 million in cash and provide services over the next 18 months to support the development, distribution and promotion of Real’s products.
Microsoft can offset some of the payment through credits it can obtain through the delivery of additional subscribers to Real through MSN. Real will also support MSN Search and both companies will promote use of Windows Media technologies with Rhapsody to Go.
But Real walks away from the pact with $460 million in cash payments that will resolve all damages claims stemming from the company’s 2003 antitrust lawsuit against Microsoft, in which Real accused the Redmond, WA-based software giant of monopolizing how PC makers incorporate media player technologies into PCs.
Hailing the deal as a new chapter in the relationship between the two companies, Bill Gates and Real’s Founder and CEO Rob Glaser took the stage at a live press conference that was also webcast (which was available almost immediately on an archived basis at Real’s website, but not on Microsoft’s corporate website.)
Glaser, who left Microsoft to found Real, said the agreements go beyond a mere settlement of the legal fight. Gates agreed and said “there’s some innovation [too]…we see this as just a beginning.
“Our view is that digital entertainment is just at the beginning..there’s a lot still to be done,” he added. Glaser agreed that the timing is right giving the still early development of digital entertainment. “Digitalization of media is one of these massive twenty year trends and I think we’re 10 years into it,” he said.
Picking up on the two hottest Internet trends, search and community, Microsoft will incorporate full-length songs provided by Real’s Rhapsody music service into MSN search, and will port music capabilities into MSN Messenger so that IM’ers can swap and share music instantly. MSN will also feature a special Rhapsody music section.
The dialog between the two foes began about a year ago when they joined hands on the joint DRM technology known as Harmony, and was surely aided by Microsoft’s difficulties in working out a deal with the record companies in its efforts to jumpstart a subscription music service.
Posted by Cynthia Brumfield at 1:57 PM | Print | Comments (0)
As Cynthia notes, content rights issues remain one of the key stumbling blocks in media’s migration to online distribution. A Newsweek story by Johnnie Roberts cites a few examples of the problems involved and some new models being considered:
Consider the latest idea from the business suite at Warner Music Group, which is rummaging like the rest of the industry for new sources of revenue: when search engines like Google formally launch their new video-search sites, Warner Music wants a cut of the cash the sites would reap from selling ads next to search results. So if you type in “Madonna”—a Warner act—at the Google Video site (now in its test phase), and the results are accompanied by ads, Warner wants a share of those ad dollars as well as payment for any Madonna videos that are streamed or sold, according to a senior Warner insider who wasn’t authorized to speak on the record, adding that the label has approached Google about the idea.
Roberts also discusses the growing friction between record labels and Apple, which “now sells 80 percent of all downloaded songs [with] labels get[ting] 60 to 70 cents of each 99 cent iTunes download.”
…labels have started agitating for a more creative approach to pricing, in which new releases would cost more than 99 cents, oldies as little as 60 cents and recent hits somewhere in between. Jobs disagrees and publicly labeled the industry “greedy” last month, arguing that it’s pushing for price hikes in a still-developing market. Record executives expressed shock, noting his dominance in the MP3-player business. The dispute has gone beyond name-calling. Two major labels, SonyBMG and Warner Music, have refused to license their music for iTunes in Japan. The stakes are much higher in the United States, where the two parties have to negotiate a new license by next year.
Roberts also cites a dust-up, since resolved, between Universal Music and Yahoo:
Early this year [Universal Music CEO Doug] Morris noticed his grandson repeatedly watching a video of 50 Cent, a Universal artist, for free. Morris investigated and discovered his labels were supplying the videos free of charge to promote record sales. Yet Yahoo, AOL and other sites were awash in ad revenue because of the huge audiences the videos helped draw…Morris demanded payments—a fee for each time a Universal Music video was played and a cut of the ad money. Yahoo balked, and Morris pulled Universal’s videos. After weeks of declining traffic, Yahoo capitulated. One Universal Music exec estimates revenue from the new agreement to be worth $10 million or more to the company. Warner Music is now trying to extend the concept to the emerging video-search business.
In her TV Week piece, Daisy Whitney notes that there has been some progress in clearing video rights for short term online distribution of TV programs for promotional purposes, including selected content from UPN, The WB, Bravo and SoapNet available via Google, AOL and Yahoo. But she also points out that its a big step to go beyond these limited applications to broader distribution deals.
When an Internet portal wants to provide video on its site, as AOL has done over the past 18 months, the biggest concern is ensuring the content has been cleared with various guilds for actors, directors and writers and that the music has been cleared too, said Patricia Karpas, VP and general manager for TV ventures at AOL. Those rights are easier to obtain if content is offered promotionally, as The WB’s “Jack & Bobby” was last year on AOL. That’s why networks have used the Internet largely as a promotional venue for shows rather than a revenue generator. “If Google or AOL or Yahoo were to put ‘Everybody Hates Chris’ on for the year and make it available, it would be a totally different story,” Ms. Karpas said. “Then you are looking at Google as almost another window for the content.” In that situation, rights issues get more complicated.
A story in MediaWeek indicates that program rights issues has delayed the launch of online distribution by the UK’s Channel 4:
Channel 4 has been forced to delay the launch of the broadband simulcasting of its main channel, scheduled to start this month, because of conflict over programme rights issues. C4 had been planning to launch its service on broadband—the first broadcaster to screen its content, as seen on TV, via the internet—in October, with future plans for E4 and More4 to follow. However, the broadcaster is understood to have run into a major conflict with production companies over who owns the rights for individual shows. Most of C4’s shows are produced by independent companies, which are keen to exploit the potential benefits of broadband. Andy Barnes, C4’s sales director, said that exploiting broadband content commercially is posing a major headache. “It’s a huge issue,”Posted by Mitch Shapiro at 1:52 PM | Print | Comments (0)
In this excellent TV Week piece, Daisy Whitney describes Google’s effort to cozy up to Hollywood in a second attempt to revive its video gateway plans. The detente follows a falling out between Hollywood and Google early this year when Google launched its video search beta test, prompting some program rights holders to demand that Google move their wares out of the search engine’s reach.
Google has ambitious plans despite its claims of simply serving as a “hosting” company.
For now, Google streams content but possible future models could include subscription, pay-per-view and ad support, which Google could easily leverage, given its advertising clout, said Peter Chane, senior product manager for Google Video. “You could imagine a scenario where you get access to content on Google Video, view it online, download, view it when you are offline, view it on a portable video device, your television,” Mr. Chane said. Google will work to develop software to make that process secure for content owners, he said.
Google needs Hollywood’s goodwill to navigate the obstacle course of rights clearances involved with any TV program or movie.
“We are actively working with rights holders to make sure they are comfortable bringing their content online, and we want to make sure we give them the set of features they are looking for so they bring their content online,” Mr. Chane said. That includes work to develop monetization and secure distribution for online content.Posted by Cynthia Brumfield at 12:12 PM | Print | Comments (0)
Although it’s still too new to generate much in the way of consensus, Verizon’s fiber-based FiOS TV got a pretty good review from a customer in Keller, TX, the site of FiOS’ premiere launch. Someone named Craig J. contacted a local TV station which sought reviewers of the new service. Craig says that “the picture is really the best that I have seen ever, even on non-HD channels” and that the VOD and DVR offerings are up-to-snuff. He also really likes the fact that he can get 30 Mbps/5Mbps high-speed service too.
My favorite part, however: Craig thinks FiOS is distinguishable from cable service because “the starter channel package is really affordable.” (Thanks Engadget.)
Posted by Cynthia Brumfield at 11:57 AM | Print | Comments (1)
I’ve just finished revising my VoIP projections, and have had to up the estimates (once again) based on healthy growth rates reported by the providers and my conversations with some of the leading VoIP players. (Take a look at today’s IP Media Monitor for the full scoop.)
Based on this revised assessment, residential VoIP subscriptions could reach nearly 4 million by year-end 2005, with the lion’s share (about half) going to cable operators and a good chunk (around 44%) going to independent VoIP providers such as Vonage and Skype.
| U.S. VoIP Subscribing Households - 2004 to 2010 | |||
| ( year-end, in mil.) | |||
| Total U.S. Households (HH) | Total VoIP Subscribing HH | Total VoIP HH % Total U.S. HH | |
| 2003 | 110.65 | 0.11 | 0% |
| 2004 | 112.42 | 1.13 | 1% |
| 2005 | 114.21 | 3.97 | 3% |
| 2006 | 116.04 | 8.89 | 8% |
| 2007 | 117.90 | 14.86 | 13% |
| 2008 | 119.78 | 21.25 | 18% |
| 2009 | 121.70 | 27.84 | 23% |
| 2010 | 123.65 | 34.36 | 28% |
| Source: Emerging Media Dynamics, Inc. analysis. | |||
| © 2005. | |||
If trends continue, and that’s a big if given the momentum low-cost Skype has, the independent providers’ market share could slip to around 16% in five years. By yearend 2010, residential VoIP subscriptions could climb to around 34.36 million or around 28% of all homes. But this number could soar even higher if cost-competition spurred by Skype really takes hold.
Posted by Cynthia Brumfield at 10:42 AM | Print | Comments (0)In the wake of Yahoo’s launch of a blog search function, Om Malik has some interesting comments on Yahoo’s move and the state of blog search tools in general:
Technorati, one of the early entrants in the blog search arena has been beaten black and blue by blogosphere’s cognoscenti. Many of their complaints have been fair and justified…Despite all the criticism heaped on them, I have not seen anyone come up with a better solution. Icerocket is not much of an improvement, and neither are offerings from Google. Say what you may about Technorati, but at least it has a usable interface. Today, Yahoo launched its blog search tool, which has managed to confound and confuse.
Though, Yahoo does perform admirably as a blog search engine. It helps you find a lot of results on a specific query, and while they are not as numerous as say technorati, they are “on topic.”
In a post written two days before the Yahoo blog search release, Om says “[t]he big issue [with blog search] is finding relevant and intelligent blog posts on a specific topic, that are based on authority. The authority is not an arbitrary decision of a human community, but a ‘collective effort.’ Noting that “Google tries to do this in its new Reader by restricting ‘google search’ to RSS feeds [, b]ut that’s not the answer,” Om recommends that his readers “take a look at Sphere, a stealth mode start-up that has developed some interesting algorithms to solve this problem.”
Posted by Mitch Shapiro at 10:32 AM | Print | Comments (0)
Blogs We Read
