False Building Reports in NYC

Take these three and mix

1) A few years ago, Mayor Bloomberg instituted the 311 system here in NYC. One call to rule them all. Basically, any problem with any city agency could be routed through that one phone number. Just call 311. It’s a great system. Gotta love Mayor Mike for this one.

2) The falling cranes in NYC have put the Department of Buildings on high alert. Not only do city inspectors make more rounds but complaints are taken more seriously, stop work orders are issued more frequently, and offenses that in the past would be allowed to be corrected while construction was on-going are now being used to shut down sites. Zero tolerance.

3) Neighbors hate construction noise and dirt. NIMBY in NYC is everywhere because the city is so compact and construction is a constant. Talk to anyone on a construction site. They’ll tell you about being yelled at, spit on, or even getting calls to their home numbers. Some people are whacked. The construction guys are just doing their jobs, of course. But NIMBY is NIMBY and NYC has its share of crazies.

The combination of these three is leading to the filling of false building reports. No, I can’t prove it. But it’s obvious. Neighbors call 311 and make some complaint to the DOB. It’s an easy call with 311. The DOB needs to follow up on each and every one of them and maybe will find something in the meantime.

How do I know?

The calls are logged and tracked. Here’s an example for the Related project in my neighborhood.

And some of the complaints are patently false. How can I be sure? Some of the complaints are for after-hours work — the call time is logged on the complaint by the DOB. Just the time I’m walking the dog and the site is quiet and no one is there. It’s a BS complaint, pure and simple, meant to get inspectors to the site. A waste of everyone’s time.

Or you get one of these beauties:

HIGH RISE APT BUILDING IS BEEN ERECTED AND STRUCTURALLY IS DOES NOT LOOK STABLE. PLSE INVESTIGATE

Basically, some person who has never been an engineer or probably even yet mastered the art of Lincoln Logs is calling the DOB to complain how the building doesn’t look stable. To their extremely untrained eye. Nice.

And of course, the DOB has to investigate. Imagine if they didn’t and a crane fell down. So off they must go.

Much like the fire department must answer that fire call.

So what percentage of these call-in complaints are pissed off neighbors? Who knows. I can’t find word one about the DOB or anyone else actually looking into this issue. Filling a false police report is a violation of three different NYC statutes: Penal Code Sections 240.50, 240.55, and 240.60 and could be a felony. Filling a false building report? Nada.

Sure, many callers to the DOB may have legitimate complaints and concerns. After-hours and illegal construction is a serious problem. Even the 76 year old lady can recognize when workers show up at 5am and start hammering away.

But I can’t see why on earth the DOB would take some average person’s engineering opinion. What does an unstable building look like to the average person? It’s like me calling up the hospital after I walk through and saying the cardiac surgeon is doing it wrong. Um, WTF? Would the hospital actually take me seriously and send someone to inspect and observe?

There has to be a penalty for filling a false report. Chronic offenders should be noted. I would bet that more than 50% of the complaints are from just a handful of people calling over and over. These false alarms need to be weeded out. it hurts the integrity of the systems, wastes inspectors time, and endangers lives with the wild goose chases.

It’s a whacked world we live in. end rant.

Bill Gates: Exit Stage Left

Yesterday was Bill’s last full-time day at Microsoft, the company he co-founded over three decades ago.

The BCC has a little snippet on the original Microsoft family.

While Bill’s been often vilified in the computing world as an evil monopolist, his mark on modern society is wide and deep. Windows became the de facto standard worldwide and while there is lots to loath about Windows, as a standard it allowed for the rapid and inexpensive evolution of software.

With all that behind him, Bill now looks to his retirement to philanthropy full-time. So many of the modern moguls live their lives in the “ME” with huge yachts and jumbo planes. Bill and Melinda have made their foundation a central part of their lives for the past eights years. An example not followed nearly enough.

I remember being in Boston at David Churbuck’s apartment. Two kids under age five running around as Dave sat at his home office — a desk where a nightstand would usually sit next to the bed — interviewing Bill by phone for Forbes Magazine. A short but relaxed and jovial conversation. That was 20 years ago. Microsoft was trading for about $0.40 on a split adjusted basis.

$100,000 invested then would be worth about $7 million now.

Bill’s technological legacy is cemented. The Foundation’s legacy is still being written. If it is a quarter as impactful, Bill and Melinda will be able to look back decades hence with a wonderful sense of satisfaction of a live well lived.

Michael Cohl Officially Out

That was fast. Michael Cohl has stepped down.

In exiting, Mr. Cohl is to be paid a lump sum of $4.5 million and serve out the four remaining years of his employment contract as a consultant to the company, according to a filing with the Securities and Exchange Commission. He is then to be bound by a non-compete clause barring him from working in concert promotion for another four years.

Look for Mr. Cohl to not work directly in concert promotion, a low margin business, but most likely be involved in the higer margin marketing deals that dance around its edges.

Calling it: A Guy Named Buzz & Oil

Sometimes there’s nothing better than being right.

A decade ago, in August 1998, the San Francisco Examiner ran this story. Oil was around $12 a barrel then. Today’s its $135 a barrel.

Oil, the black gold of the world economy, is almost insanely cheap - but it won’t be for long, warns a small but growing band of doomsayers.

Based on a controversial theory, they fear world oil demand will begin to exceed supply as early as about 2010.

That might revive sights not seen since the oil crises of the 1970s: traffic jams at gas stations, Saudi Arabian princes buying U.S. skyscrapers, and news stories about inventors whose cars allegedly burn corn oil, wood chips or beets.

“Anybody who wants to drive their motor home up to Alaska better do it now while the supply of oil is cheap,” says veteran oil geologist L.F. “Buzz” Ivanhoe. “It’s not a joke. I hope I’m wrong as hell, but I fear that I’m not.”

Take a look at the pending sale of the Chrysler Building or the stories about alternative fuels. No lines at the gas stations. But two out of three ain’t bad.

The nation should begin preparing for an oil crunch - perhaps by developing oil resources or alternative energy sources - lest a future price surge severely damage the world economy, says Ivanhoe, who coordinates activities at the M. King Hubbert Center for Petroleum Supply Studies at the Colorado School of Mines in Golden, Colo.

If only we had listened. Instead, a decade later, Buzz’s quotes and theory seem prescient. But Buzz doesn’t get to enjoy it. Buzz died in 2003 and never got to see $100 oil.

Tip of the hat to Buzz Ivanhoe.

Cohl To Leave Live Nation

According the the WSJ, the rumors of Michael Cohl’s exit from Live Nation may be coming true.

Only in the wacky world of entertainment can a sub $1 billion market cap company get so much press.

That’s about the same market cap as the business-networking start-up Linked-In which just raised $53 million in cash.

While the real value of all those 360 degree deals won’t truly be known for years, Michael Cohl has earned his spot in promoter lore. The 1989 Rolling Stones Steel Wheels Tour, with all the rights rolled up into one massive bundle, was a pivot point in concert promotion. That he started as a strip club manager just juices up the curriculum vitae that much more.

Assuming the 8 year non-compete gets dropped on the exit, Michael looks to come out a winner. He gets to do his own thing, which he’s been damn good at for a couple of decades. If the 360 deals at Live Nation ever work, he can take the credit. If they don’t, he can point to his exit as the reason why.

And Live Nation loses a maverick not afraid to break the rules.

Higher ticket prices and destination festivals have propped up the concert business. But high gas prices and basic economic morass are eating into the festival business. Even stalwart Bonnaroo saw fewer ticket sales this year.

AEG and Live Nation will need to look elsewhere to try and keep their businesses from eating sand. And they’re both looking East. Way East. But the Middle East is a tough market. Besides the draconian drug laws, there isn’t much infrastructure. Money alone doesn’t make a market. There are a bunch of good reasons you don’t see the top tours go through.

So after LYV, where does Cohl go? Raise some big capital and make a go on his own? Concert promotion is typically a 5% net margin business. Not exactly a sexy bottom line. But the investors Michael Cohn will be talking to soon enough aren’t looking at that. He’s counting on the sex appeal of the industry to hide the margins as well as the promise of the better mouse trap and higher margins from the 360 deals. Will he get the cash? I wouldn’t bet against him.

But first Live Nation needs to cut him loose. Stay tuned.

iTunes Reaches 5 Billion Songs Sold

Which is really quite amazing. But Amazon is making inroads.

The NPD Music Acquisition report…

No surprises in the pie slices

CD sales fell off a cliff

Digital sales up nicely

P2P still strong and growing. The RIAA should take note.

When does digital volume pass CD? Probably not next year but by 2011 the digital download should be a larger market.

5 BILLION songs. Steve Jobs should take a bow.

Talking To The Police

Talking to the Police - Part 1 1-3

Back in January 2007, after a New York Times article, I wrote a quick piece about the four magic words that so many people just don’t use: “I want my lawyer.”

The above video is a must watch. Not because it’s about innocent or guilty but because no good — even for the innocent — can come from speaking to the police in the situations reflected. It’s just one part. Be sure to click through for the other videos.

I took a fantastic Constitutional Law class so many eons ago. The video makes me miss that class.

H.R. 4279 - Intellectual Property Enforcement Division

H.R. 4279 has passed the House. It creates the Intellectual Property Enforcement Division within the Attorney General’s office and has all kinds of seizure clauses. It will cost at least $25 million and will allow the RIAA to offload some of its own misguided dirty work.

What I find fascinating is that most likely, the IPED will go after media piracy. Sure the bill states:

Reducing counterfeit and pirated goods in the domestic and international supply chain

But rather than going after nasty things like counterfeit pharmaceuticals — something that actually endangers our lives, especially when household toiletries like toothpaste are involved — the IPED will focus its new powers where the RIAA and MPAA lobby it to.

Of course, we still have issues with our food supply — there’s yet another salmonella outbreak — but thank goodness Congress is going to make sure someone is checking iPods and laptops at the border to make sure no bootlegged Yanni gets into the country.

New EMI hire: “I neither buy nor hear much new music.”

I thought it was a good thing when Guy Hands and EMI hired Douglas Merrill. It makes sense to get someone who really gets technology involved in the label. But Cory Ondrejka, the new hire under Merrill is making me scratch my head.

First off, he co-founded Linden Labs of Second Life infamy. I hate SL. Call me a luddite, but I’ve railed against SL before and think it will go down in history as one of those, “yeah, it was kinda neat as a beta thing and sure you can see how cool things might have come from those seeds but it never was gonna work.” Like Apple’s Newton.

Anyone with SL credentials is someone who knows how to sell air, fluff. Sure, the marketing wonks have glommed onto it like flies to sugar but the basic CMO needs something to show s/he knows what’s cool and hip in tech these days. In terms of anyone actually getting something more than a PR newswire release out of the dough they’ve spent in SL, I can’t think of any major company who would bother trying to pretend there is a ROI.

Secondly, the guy thinks the iTunes store is too complicated.

Even when I knew I wanted something – Accelerate – I had the problem that I was traveling with my MacBook Air, so buying a CD was useless. I had never setup the iTMS on that computer and you would be amazed at how hard Apple has made that process. It’s like they don’t want to sell me music. Then, once I did remember all the passwords I needed, I couldn’t figure out whether the iTunes download was DRM free

How hard Apple has made the process? Over 3 billion songs sold. Over 100 million consumers. This guy co-founded a virtual world and he can’t figure out how to install iTunes on his computer? For real? It’s one install and if you already have an account, it’s one password. There are grandmothers in Boise who buy music off of iTunes and Cory claims it’s too damn difficult? I smell serious BS.

And finally, the money quote:

“I neither buy nor hear much new music.”

Merrill is smart, a NIN fan, and comes from the premiere tech company of our day. I’m sure he could have found someone who at least has a passion for music. Yeah, Cory was Navy/NSA. I’ve met some of those. One is a brilliant mathematician who had two masters and his PhD from MIT and was at Columbia getting yet another degree in the Mathematics of Finance. Smart guy and I liked him but I wouldn’t hire him for anything music related unless I needed to do some of those underwater tests that make dolphins go crazy. Smart doesn’t mean right for the job.

It’s OK. AC DC is joining The Eagles, Journey, and others by going directly to Wal mart to sell the next album. The actual need for a major record label is diminishing by the day. And EMI has that Citibank debt service to worry about. By the time this guy figures out the music industry is rife with a complex web of inter-tangled legal rights, crazy overhead, and archaic systems, the label system will be dead and buried.

I only hope Cory figures out how to buy music on iTunes by then. It’s only the single largest retailer of music in the world.

P.S. If Cory had worked at World of Warcraft (or Club Penguin, etc), I would have a different opinion of his virtual world experience. I’m not against virtual worlds en masse. WoW is an incredibly successful, rich, and vibrant community that creates billions in free cash flow and wastes millions of hours of time for its subscribers. Not my cup of tea but I can appreciate its success from both the entertainment and business side. The only success I see at Second Life is getting big business marketers to cough up dough for a piddling audience.

Probed By A Pickle

A Burger King tray liner from Amsterdam. Gotta love the onion with his pants down and Mr. Pickle putting on the rubber glove. All those veggie porn magazines on the floor just set the scene.

I guess in Dutch Burger King world onions aren’t all that loved. Here’s one with an onion in a sniper’s cross hair.

There’s a subscriber wall to the full sized version of this disturbing Halloween tray liner but you can still see the tomato getting hacked up by a machete. Or this Red Light District version with pickles in the window.

Next time I go through TSA, appropriate line will be, “I feel like an onion.”

Holy Cr*p! Custom Officers to Search for Piracy?!

I can only hope this is either a joke or gets killed when it reaches the bright light of day. Custom lines are long enough and some guy rummaging through my suitcase is bad but this is just insane.

Those who travel by plane may have to face longer security delays, thanks to a new international copyright treaty secretly proposing an Anti-Counterfeiting Trade Agreement (ACTA) that would allow customs officers to check media players, laptops, storage media and mobile phones for pirated material.  Basically, this ACTA is aimed at seriously targeting the distribution of unlicensed content.

Greed…can be stupid

The New York Times and others are reporting on Apple’s talks with the major record labels in order to expand its ringtone offerings before the next gen hardware and software of iPhone drops in June.

Apple currently charges $.99 to make a ringtone from a track a consumer has already purchased. But the labels want more…

Also under discussion is whether Apple can sell songs from its iTunes store directly to iPhones over the cell-phone broadband network. With the next generation of phone expected to use much faster 3G technology, this is technically feasible. Here too, music labels argue that they should be paid more for an over-the-air download than a standard track bought over the internet, where the wholesale price is about 70 cents.

Why should ringtones purchased over the 3G network — versus built-in wifi — cost a consumer more? Because the labels are greedy. AT&T bears the data cost over the network, not the label. Yet the labels want more money.

There’s an interesting article over at Freakonomics debunking the rising inequality between rich and poor. The bottom line is that economists often look at just income — which for the rich has risen to stratospheric levels — but ignore the cost side. Since costs, thanks to Wal-Mart and China, have dropped for the poor, the inequality is not as large as often stated. Or so argues the article.

The point is a valid one though. Focusing on one side of a problem rarely promises the right solution. The labels have constantly focused on the revenue side. And it’s been an ugly picture. A fast downward slope. The cost savings with digital distribution can be significant.

So why would the labels want more money from a ringtone sold over 3G versus wifi? Because they think they can get it. Pure greed. Or stupidity. Whichever. Are all consumers stupid? Will they gladly pay $3 over 3G versus $2 over wifi?

Some will. The majority will not be that stupid. Not with the incredibly easy sync between the iPhone and iTunes. Rather than driving next generation habits, the higher priced 3G ringtones will just be another slow growth, low revenue missed opportunity.

Guy Hands and EMI are focusing on the cost line. Citibank may have extended milestones by a few months but EMI is still on the hook to come up with 150 million pounds of profit on the label by September. With that kind of short-term pressure, is it any wonder that short-term revenue solutions are the ones most focused on?

Killing Retail: Hollywood Studios Shoot First

At first blush, the news that a whole bunch of major Hollywood Studios will shrink the movie sale window looks like a shot to the proverbial foot. After all, by allowing Apple — and most likely eventually others — to sell movie downloads the same day the DVD becomes available will almost certainly take a nice bite out of DVD retail sales. To be clear: this is about digital sales, not rentals.

This isn’t the first salvo in the ever-changing distribution window world. Back in January 2006, Steven Sodenbergh released the Marc Cuban backed movie “Bubble” to theaters and DVD simultaneously. And later in 2006, Comcast promised to test moving the VOD window to the DVD release date though not much seems to have come of it.

This move is different. This isn’t one small budget movie or a single cable provider but a deal directly with the source: Fox, Disney, Warner, Universal, Sony and Paramount account for the vast majority of all big release films.

The move will certainly hurt already limping DVD retail sales. Wal-Mart, which accounts for about 40% of all DVD sales, will not be happy. Wal-Mart has been putting pressure on the music labels to drop the price of CDs and cut some of the $5 fat (marketing/promotion and label overhead) attached to each CD. The labels, desperate to hang onto every shrinking dollar have resisted.

Now faced with serious competition to its DVD sales, Wal-Mart will only accelerate its move to shrink the retail space it dedicates to DVDs and CDs which account for less than 1% of Wal-Mart revenue anyway.

So, why kill retail sales of DVD?

Perhaps the studios are banking on Blu-Ray now that the format war is over and killing DVD retail in anticipation of next gen sales? Well, NPD is saying that Blu-Ray sales are only limping along with perhaps the possibility of a holiday then 2009 uptick. Not the answer.

Two very simple reasons:

1) For studios, a license is almost always preferable to a sale.

I’ve written before how first-sale doctrine gives purchasers rights when they buy the physical DVD that they do not get with the download license which doesn’t allow re-sale or transfer or much else other than the ability to watch the download on perhaps a few devices.

For me there is worthwhile value in that approximate $1 difference between the cost of the DVD and the cost of the digital download. For most consumers, the immediacy and convenience of the digital download over-rides the almost total loss of legal rights.

For the studios, the digital sale reduces the effective consumer inventory of their product and increases their chances of selling that same product to that same consumer again in a different format. Consumers don’t understand that while they paid $15 for that movie they don’t actually own the movie, just a few narrow rights to watch it.

When MSN recently closed its music store it became just the latest company to screw consumers who had purchased products using that store’s properietary DRM scheme. While Apple is extremely unlikely to ever shut down its FairPlay DRM, these closures nicely highlight the risk and limitations of media licenses.

Now the studios aren’t scheming to screw consumers with a DRM shut-down but they are counting on the limitations of the download sale (ne license) to lead to future sales down the road as consumer upgrade technologies. Given the choice between sale and license, the studios smartly pick license.

2) Retail is going to die anyway.

The studios have watched the record labels get eviserated by the digital transition. Clinging to retail sales and the RIAA led lawsuits, the record labels have helplessly watched revenue plummet off a cliff. The movie studios have the benefit of learning from their dumber cousins’ mistakes.

Rather than watch retail die a slow death, the studios are choosing to shoot it themselves on their terms. More importantly, they are actively giving consumers an alternative which is what they want: immediacy and convenience.

There is also a huge difference between the studios and the labels in the digital world. For the studios, digital download sales (licenses) carry almost the same revenue as the physical product. The discount to the consumer is slight. A $16 DVD versus a $15 download doesn’t kill the top line like a $12 cd versus a $1 song download does.

The studios no longer have to worry about production runs, inventory management, or physical distribution. They get almost the same revenue with lower costs and fewer headaches. They do lose some distribution control but Wal-Mart’s dominance in the past decade has already effectively weakened their once iron-clad grip anyway. In some ways, they are shifting their already lost control from Wal-Mart to Apple.

Since retail is going to die anyway — at least until/if Blu-Ray can get to a large enough installed base to make a difference — it makes sense for the studios to choose when and how it dies. And they aren’t just killing retail but are putting into place a somewhat sensible and consumer-desired alternative: digital download sale.

The choice of Apple is a safe one and I would imagine that others like Amazon’s Unbox will follow closely behind. It’s always a difficult decision to kill off a significant revenue stream but crucial to competing in the online world. Retail’s death won’t be quick but it will certainly be much faster now.

Euthanasia is never easy or pretty but the studios are counting on a Hindu-like reincarnation to drive revenues in the next decade. This pre-emptive move is uncharacteristic for the studios. It shows foresight and the willingness to adapt to changing industry conditions.

A bit of longer-term thinking and vision is rare in media. This move is a significant one, not only in terms of strategic positioning but in the willingness to confront hard choices and actually pull the trigger.

Nicely done.

Green Tech: Thirsty Light

I’ve never had much of a green thumb — except that one summer in Berkeley where I learned a whole lot about hydroponics from some friends I shared a house with. Totally different story.

I’ve killed scores of house plants through the years and in a Darwinian happenstance, the three remaining plants are so hearty not even I can kill them. But they have never looked happy. More like brown droopy victims of some horticultural abu ghraib.

I’m all for low maintenance so all the plants get is water. At regular intervals. I figured, incorrectly of course, that water, sunlight, and soil is all I need.

About a month ago I came across Thirsty Light. It’s a $10 thingie you stick in the plant. A little LED blinks when the soil gets dry. The faster the blink, the dryer the soil. Simple, easy, cheap. I bought three.

I’ve had the Thirsty Lights for about a month now.

Biggest lesson? Plants don’t need water at regular intervals. Sometimes the lights blink twice in a week. Sometimes not for 12 days. I have no idea what the variables are. Sunlight? Temperature in the apartment? Mood? Whatever it is, the Thirsty Light’s sensor tells me when the soil is dry and my plants need a dunking. Even I can follow those instructions.

In the past month, my limping plants have actually come back to life. They are no longer half-dead survivors of my previous diabolical watering scheme (every Wednesday). The “digital plant moisture sensor” has changed their lives for the better.

It’s one of those things that is so simple, so easy, so stupidly perfect one wonders why it wasn’t done before. It may have. I have no idea.

I’m sure different plants need different soil moisture levels and Thirsty Light’s one-size-fits-all moisture sensor probably won’t work that well on some specific types of plants. But for me, for my three survivors, Thirsty Light works great.

/end infomercial

“Nobody knows who they are and they need us”

Jason Flom on Why 360 Deals Are Good for Major Labels

Kid Rock, matchbox twenty, and The Corrs have all benefited from the shepherding of Capital Music Group honcho, Jason Flom. And he’s an Upper West Sider and a nice guy. All that aside, this quote from the above video speaks for itself:

“When we sign a need band we have to get a percentage of the ancillary revenues that we’re really creating. If we’re out there creating a career for these artists, as we really are. Nobody knows who they are and they need us. And then we turn them to stars, now they can sell tickets, merchandise, coffee cups, whatever the hell they want. And we make nothing and since those businesses are robust and ours is in a very difficult state of course in order for us to be able to continue to promote their careers we have to be able to derive revenues from their other sources.”

There’s always that distinct possibility that perhaps a new and different entity/ organization promotes the careers of those up and coming artists, NOT the labels.

The business case: our business is in a bad way so we need some of your money is not really a strong one to make.

What if the artists really don’t need you after all? It’s a huge mistake every label seems to be making; the over-valuation of their roles in the current eco-system.

There’s a huge focus on how to make more money, how to take a piece of those once-ancillary revenues which are now primary, how to stop pirates. There’s not much focus on actually doing and delivering services that artists do actually need.

Exactly what expertise and services does Capital deliver to be so necessary to an artist?

Jason isn’t talking about the super-stars, the U2 or Madonnas cutting massive deals with Artist Nation. He knows Capital has very little to offer them. He’s talking about the artists who want to be U2 and Madonna.

I feel bad for the current crop. They’re getting into a business that shows a lot of bling — see Madonna’s rumored $10 million private gig in Dubai — but won’t for them. At the exact same time, they’re being asked to give up a piece of their other possible revenue to companies that haven’t been able to manage their own core functions very well. These artists are the guinea pigs.

The labels are asking for more and delivering less and still believe that artists need them.

Maybe, just maybe they don’t.

6 million units, $400 million: Grand Theft Auto IV

Variety is predicting big things for Grand Theft Auto IV’s launch on April 29th. Those numbers are estimated for the first week.

Strauss Zelnick must be pleased. It’s looking to be an absolute monster of a launch.

And what’s so interesting besides a video game generating such massive numbers? This:

Music downloads

Following a partnership between Rockstar Games and Amazon.com, players will be able to purchase real world MP3s through GTA IV’s in-game mobile phone^[59]. If the player hears a song they like on the radio, they will be able to ‘mark’ the song by dialling ZIT-555-0100 on Niko’s phone. They will then receive a text message providing the name of the song and the artist. If the user is registered on Rockstar’s ‘Social Club’ website, they will also receive a real world email with a link to an Amazon.com playlist where all of the player’s marked songs will be listed and available to purchase.

Initially, this service will only be available in the US.

More and Geek Lust

These Go To Eleven

More is often better. But not always. Though it does seem like consumers have conditioned themselves to always numerically compare. But eleven isn’t always better than ten.

Digital still cameras, for instance, have been engaged in a megapixel war for years now. A 10 megapixel point and shoot isn’t the same as a 10 MP digital SLR. While both cameras’ sensors capture 10 megapixels, the point and shoot’s sensor is much smaller. The quality of each of those pixels just doesn’t compare to the 1.5x crop factor sensor’s pixels on the SLR. Higher Noise and smaller dynamic range are sacrificed for size as manufacturers shrink and cram all those pixels onto a sensor the size of your thumb nail so the camera can fit in your pocket. A 12 MP point and shoot isn’t better than a 8MP digital SLR. Most likely, it’s worse.

There are times when quality isn’t the issue. I just bought a 1 GB Apple iPod shuffle even though a 2GB model has recently become available for just $20 more. I don’t jog more than a few miles at a time and 150 or so songs is more than plenty. My lungs will give long before the shuffle’s single set list will. Unless I plan on marathoning — which I don’t — the 2GB is unnecessary. In that case, more isn’t better or worse. It’s just more.

I’ve also conditioned myself to only expect real world speed increases from computers with a doubling of processor power. Pretty much everything else, like hard drives, bus and memory speeds, etc, also tend to get upgraded along the same lines. I know a 27% increase on some lab test isn’t going to translate into anything I could actually notice so I hold off until the CPU has at least doubled my current system. More, on paper, doesn’t mean more that I can actually feel.

But there are times I find myself in the more trap. Red made quite a splash with the introduction of its  relatively inexpensive professional high-resolution digital video camera: Red One. Now, along with other camera upgrades, Red is teasing a semi-pro model called Scarlet, with 3K resolution and a somewhat compact body perfect for those not filming a Hollywood feature film.

My current camera, a Sony HD camcorder is quite nice. Quality outdoors is stunningly bright and  that 1920 x 1080 picture looks fairly good even with the limitations of the HDV compression it uses. But I’m guessing that Red’s Scarlet will be a monster with its 2/3″ sized sensor and Redcode raw format.

Thank goodness it’s not slated until next year — and Red has been notorious with delays. And Red’s workflow, thanks to its native format, is somewhat more complex than dumping the HDV files from my Sony to the hard drive and converting with Voltaic then editing with Final Cut Express.

Do I need a 3K camcorder? Not in the least. Is the cost, complexity, and workflow worth it? Probably not. But more — as irrational and foolish as it often is — has been hard-wired. I’ve got geek lust for the Red Scarlet. I can’t help it.

Tibits & Should Apple Buy Ticketmaster?

Piper Jaffray’s semi-annual teen MP3 survey hit the news last week and the results aren’t too surprising. Trend watching is always important but not crucial as the surveys can be misleading. A few quick observations/comments:

1. iPod saturation is almost complete. Teen ownership of an MP3 player has gone from 40% in Spring ‘05 to 87% in Spring ‘08. Hitting that ceiling means Apple is reliant on the iPhone for growth as the replacement cycle will lead to slower sales. It also means that Apple will be looking for alternative product extensions beyond the iPhone,
2. P2P usage is down versus purchase. While the survey shows a minor drop in P2P usage, I find the numbers suspect. The question seems to be phrased as an either/or with the numbers adding to 100%. Is this primary source of music? The possibility the both are used seems to be ignored.
3. Four point rise in paying $0.99/track. This measly 4 point rise from 23% to 27% in three years is positive but still pathetic. The pay-per-track model isn’t gaining traction with teens.
4. Retail is dead. In Spring ‘05, 54% of teens purchased music from retail. Only 25% did in Spring ‘08. As retail falls off a cliff, online download gains 30 percentage points.
5. Download not making up the difference. However, if those 30 points of additional download are allocated to the 61%/39% of P2P versus online store, then it’s only a 12 point pickup for paid download.

It’s becoming clearer that Apple is about to hit a brick wall. Similar to the gain of personal computers in the 1980s and 1990s, the growth of new PC homes fueled massive sales gains. When saturation was about complete, the replacement cycle sales brought a hard reality and the resulting shake-out killed off quite a few names. Apple is butting against virtual total saturation with its iPod line. The next two years will be mainly replacement sales and the stalled economy will elongate the replacement cycle for many consumers. The iPhone will help but will eventually not be able to fill the growth gap.

What should Apple do?

I suggested that Apple considering swallowing Nintendo. An expensive proposition to be sure. But another target may be more fitting for the universe Apple is creating within iTunes. When Ticketmaster is finally split off from IAC, Apple could consider making a run. It’s not as insane as it sounds.

• Apple is already a promoter of sorts with more and more free shows popping up at Apple retail stores. And the concert business will become more focused on smaller acts in smaller venues as the heritage bands that have carried the industry begin to retire for good. These “mini” transactions of $20-$30 fit within the budgets of many teens — most without credit cards — and their collection of iTunes gift cards.
• Live Nation — and its pot of gold heritage acts with massive and unrecoupable advances to Madonna, Jay Z, and U2 — is going to an in-house ticketing system. This leaves TM with AEG and the need to focus on smaller transactions, on smaller acts in the 600-5,000 seat theaters. Apple can be a substantial partner and a huge help to TM in nurturing those acts and facilitating the sale of their music and their live concert tickets.
• Apple and its shiny brand image can polish TM’s tarnished one. The risk exists that TM drags on Apple’s high marks but operating on similar to iTunes store margins, Apple can win back consumer loyalty and love to the loathed TM brand.
• Finally, the iTunes store is a massively complex services system not unlike TM’s. There are differences, especially the limited inventory management that TM must handle but the iTunes interface is a natural for ticket sales, bundling, and of course, promotion. As a one-stop shop for music, a combination iTunes/TicketMaster offering would be well positioned for the future of music when the huge heritage acts are gone.

Douglas Merrill to EMI?

 

Rumor has it that Douglas Merrill will be joining beleaguered EMI.

Who’s Douglas Merrill?

Google engineer. Smart. Geek.

He’s also a Nine Inch Nails fan, which is interesting. So is this.

While Griffin and WMG are hawking the ISP as hostage scenario, it will be interesting to see what Dr. Merrill cooks up with Guy Hands.

Doug Morris’ now famous quote in Wired last November is, “There’s no one in the record industry that’s a technologist.”

Let’s hope he’s finally wrong. Good luck, Doug.

The Biggest Joke: The ISP Music Tax

Jim Griffin is again hawking his ISP music tax and this time it’s Warner Music Group who is buying the blow. Chris Castle makes some excellent points on the legal side but the whole ISP tax deserves more scrutiny.

Basically, the scheme adds a fee onto the monthly ISP fee. Say $5 to your Road Runner bill. In exchange, the consumer gets to use P2P to download all the music he wants. So what’s the problem?

Assume for the moment there are no legal issues — sorry Chris. It’s a huge assumption, not just within the US but globally. Also assume that monopoly issues are also thrust aside. I know, those are massive assumptions that should kill this varmint right now. But I’ll pretend the labels have the muscle to pay off everyone in Washington and the world to take care of legal.

The plan still sucks.

There are still two big jokes here. Huge.

The first is who wants to run it. A record company. Or worse. All of them. From the Portfolio.com article:

“We’re building a [as yet unnamed] company inside Warner that is not intended to be solely owned by Warner,” Griffin says. “We hope all of the rights holders will come in and take ownership with us, and Warner will not control it. Our goal is to create a collective society for the digital age.”

There are plenty of collective rights organizations now. ASCAP, BMI, etc that act on behalf of their members, assume the responsibility of dealing with blanket licenses and dole out money. That a major record label or any sub company or collective it creates could possibly be the trusted third party is seriously funny. I mean hilarious.

Why on earth would artists/rights holders look to the labels for honesty and leadership now?

These are the same companies who have spent the better part of a decade committing corporate suicide through their own greed and stupidity. The same record companies that settled with Napster and brought in lots of cash from suing their own customers with their police arm, the RIAA, and have yet to actually give the artists any money.

It’s going to be a great pitch to the artists/rights holders:

“Sure, we’ve ripped you off in the past, made you sue us to give you the royalties you earned. We blew up our own business and yours in the process while sucking down overhead dollars on private jets and hookers. We sued Napster and college students on your name and haven’t given you a dime from it but trust us. We’re (WMG, UMG, EMI, Sony) and we’re here to act as a collective on your behalf. Trust us.”

Gives me goosebumps. Best. Pitch. Ever.

The second great hilarity is that Jim seems to want this to be compulsory. If it’s not, there’s no way it generates nearly enough revenue. So what’s the solution? Force people to pay. Whether they listen to music or not. Either way, the plan falls apart. Again.

Make this a voluntary payment and even at $100/year this plan won’t get 10 million subscribers. That’s $1 billion in revenue and a far cry from the $10 billion or $20 billion being bandied around.

There’s about 50 million US broadband households. To raise $10 billion, each household would need to be taxed $200 per year in what amounts to a corporate bail-out.

What’s next?

People download pictures too. A $7/month tax to go to a photography collective? The porn industry dealing with dropping revenues? Another $4/month for a porn collective or how about $3 for the software alliance.

What will the ISP bill of the future look like? A litany of taxes that go to collectives? Marx would be thrilled.

There’s no way everyone will get forced to pay. Not in this America. They may just go with the club approach. Indemnify individuals who pay from RIAA suit. Sounds like paying ransom money to me but desperation is the mother of bad ideas. We could see it. Floated like a balloon as the army of K street lobbyists pushes to save an industry that shot itself.

I don’t fault Jim Griffin for taking WMG’s money. Hell, it’s good that WMG is looking at fresh ideas and at least trying. It’s just that this ISP tax won’t work. Forced subscription won’t work.

The worst concept in the world is this: if you can’t get people to buy your product, make them buy your product. Sorry, that’s a lost path. It’s seriously wacky.

Sure, the major record labels drool at not having to even pay for the bandwidth (thanks P2P!) but I shudder to think of what the record labels — the guys who still dared charge artists for “breakage” decades after the switch from fragile LPs to CDs — would do sitting on a mound of cash like that. The same thing Tony would do to the mound of coke.

Yup. I stole that movie still frame. What ya going do bout it ya cockaroach? Tax me?