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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

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April 18, 2005

What the Cartel Thinks

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Posted by Alan Wexelblat

Couple of stories on CNET today purporting to tell us what the Cartel thinks. The first, a brief bit by Renai LeMay makes Vint Cerf sound like he's smoking crack. "Hollywood interested in BitTorrent," says the headline. Ah, yeah, that'd be like "Piranhas interested in meat in water," right?

No, actually, Cerf appears to have spoken to "at least two interested movie producers." This is immediately recognizable as a reporter blowing it out of proportion, since no two producers speak for any studio, let alone Hollywood. Studio execs aren't producers; studio execs are hard-nosed accounting types with little or no interest in the creative aspects making movies except insofar as that improves their bottom lines. And their response to new technologies is, as we've seen, to open a can of legal whup-ass rather than sit down and rationally discuss options. So if Cerf is indeed chatting up a few producers, more power to him. But that's got zero to do with what that arm of the Cartel is interested in.

John Borland turns in a longer and more thoughtful piece on Steve Jobs vs. the music moguls. Borland indicates that the music arm of the Cartel are frustrated by Jobs' intransigence on price and are trying to wrest back control over what they see as "their" industry from this upstart geek. This fits known patterns of behavior both for the Cartel and for Jobs (shades of Disney v. Pixar - another seemingly sweet deal that left Jobs' team in control and the other side scrambling for new avenues after being essentially shut out). So if the players stay true to form Borland is likely right.

Borland paints a picture of Jobs' intransigence on issues such as formats, DRM, and variations in price to fit the Cartel's model of what's hot. The fact that iTunes continues to dominate (70% market share according to Borland) just might be a clue that he's onto something.

The supposed savior for the music business is mobile, where people are apparently willing to pay $2.50 for a poor quality snippet of a song they can get in whole for $.99 elsewhere. That does seem like stupid behavior on the face of it, but if it's what people will pay then you can bet the Cartel will go after it. The Cartel are better aligned with the mobile networks, which are designed to move content and promote airtime minutes, while Apple continues to remain pretty squarely in the hardware sales business.

One possible monkey wrench in the works would be if Apple moved more strongly in the direction of streaming to iPods. Podcasting is one obvious example of streams, but there's no inherent reason why content now streaming over the Web couldn't also be streamed to iPods. In fact, my favorite Web streaming site (di.fm) already offers "DI for MP3 Players." It would be a simple move for Apple to sign up DI, or work through a few redistributors like Shoutcast to give iPod users access to a huge variety of streams. One can easily imagine such a move giving Cary Sherman more headaches.

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