Has anybody noticed that the story going around that Warner Music will not let Nokia offer its content on the new Nokia Music Store, appears to be fraught with contradictions.
Nokia already owns Loudeye, and its Music Store is based on the systems that it bought with that acquisition, which we know has watertight contracts for the use of Warner Music on online music stores. The system is entirely DRM protected, using Microsoft Windows Media DRM and its new upgrade PlayReady.
So the idea that Warner is worried about piracy is more of a tit-for tat than any genuine concern that the Nokia Music Store purchased music will become pirated. It’s as if Warner is saying that it has found a handful of Warner music on the Nokia Mosh social networking site, so it’s holding Nokia to ransom until it gets it off.
Mosh is a social network like any other, so it is prone to members uploading content that is copyrighted, and like all of the other UGC and Social networking sites Mosh uses many of the same tools for identifying copyright materials ‘ in this case audio fingerprinting from Audible Magic. The problem with that technology is that it requires the content owner to take a copy of their content, create a fingerprint and make that fingerprint available to the social network, in order for it to recognize that copyright infringement is taking place.
It will take a while until content owners work through the 5 million tracks that a service like Nokia Music Store is likely to end up with, and create fingerprints for all of them.
So for the time being Warner Music says it is withholding content from the Nokia Music Store in the run up to its launch later this week. Depending upon the exact wording of the contracts that Loudeye signed with Warner Music, when it was part of Time Warner back in 2000 (prior to Edgar Bronfman Junior and investors acquiring the company in 2003) Nokia could opt to make available the tracks that it already has access to (most of the back catalog) since this is such a flimsy excuse for trying to undermine yet another great source of online revenue for Warner, or it can play ball and haggle over the process of protecting copyright better still on Mosh.
Nokia would then be limited to songs from Universal Music Group, Sony BMG and EMI, which is a pretty strong line-up. But given that Warner is the label that is the leader in online digital music with 15% of its total revenues coming online, it is stupidity itself to deny it a piece of music sales on the Nokia 100 million plus devices which are shipped each quarter for very long and we would expect compromise pretty rapidly on this, or Warner will be left behind on digital online music sales.
What Warner is doing is a knee jerk process of cutting off its nose to spite its face, which comes from years of being under the cosh at the hands of file-sharing services which have popularized piracy.
Meanwhile, RealNetworks, another company targeting the mobile music space, had results which show that the company is beginning to return to the technology fold, whereas it previously moved further away each quarter from being a technology play, as more of its revenue came from online services ‘ its Rhapsody music service and its online gaming service. Music was up 24% and games were up 28% but total revenue was up 55% as technology rose 377% over the same quarter last year.
CEO Rob Glaser said, ‘On the strategic side, we formed deep alliances with Viacom’s MTV Networks and Verizon Wireless, which we believe will drive our Rhapsody music business forward very significantly.” That service will go head to head with Nokia’s Music Store, but is limited at present to the US.
Technology Products and Solutions grew largely because of the acquisition of WiderThan during the fourth quarter of 2006
Net income for the third quarter of 2007 was $4.3 million, compared to $42.2 million in 2006 but then again that included payments for Real’s antitrust settlement with Microsoft and RealNetworks now has $590 million in cash. It said it expects revenue above $152 million next quarter.