February 2010

Music Inc. Gets Bigger

[Commentary] President Obama has made a welcome break with the Bush administration's disregard for enforcing antitrust law. The Department of Justice and the Federal Trade Commission have become more aggressive about questioning mergers and challenging monopolies and anticompetitive behavior. But antitrust regulation still suffers from an unwillingness to challenge "vertical integration," in which companies, suppliers and customers become intertwined and a few corporations can control all aspects of their industry. Such is the case in the merger of Ticketmaster and Live Nation, which was approved with some limitations by the Justice Department's antitrust division recently. Ideally, the merger should not have been. The Justice Department challenged the "horizontal" consolidation of the companies' overlapping ticketing businesses. But it was weaker when it came to dealing with the perils that arise from the emergence of a company that will operate on every level of its business.

Publishers Win a Bout in E-Book Price Fight

Could book publishers suddenly be in the position of telling Google what to do?

With the impending arrival of digital books on the Apple iPad and feverish negotiations with Amazon.com over e-book prices, publishers have managed to take some control — at least temporarily — of how much consumers pay for their content. Now, as publishers enter discussions with the Web giant Google about its plan to sell digital versions of new books direct to consumers, they have a little more leverage than just a few weeks ago — at least when it comes to determining how Google will pay publishers for those e-books and how much consumers will pay for them.

Google drops Nexus One early cancellation penalty to $150 after federal review

Google said Monday it is lowering a fee it charges Nexus One customers who cancel service for their phones early following a review by the Federal Communications Commission into the charge. The company said it has reduced its "equipment recovery fee" to $150 from $350 for customers who cancel service subscriptions with T-Mobile after 14 days and within 120 days of purchasing the phone. Customers who cancel subscriptions within 14 days aren't charged penalties by Google. The recovery fee provoked a backlash among consumers and public interest groups. Coupled with T-Mobile's $200 own early termination fee on service for the phone, the charge from Google could make returns of the Nexus One handset cost customers as much as $550.

Digital sales poised as game changer

The future of the video game business is playing out very differently on two sides of Los Angeles.

In Westwood, nearly 200 people recently lost their jobs when Pandemic Studios, the maker of Saboteur and other gritty video games, shut its doors. But 12 miles east, at Nexon Corp.'s U.S. division, bustling staffers are upbeat as they prepare to double the size of their workforce. The South Korean publisher best known for its lighthearted game MapleStory saw sales climb 12% in 2009. The difference? Pandemic makes games on discs that come shrink-wrapped in plastic boxes and sell for $60 at stores such as Best Buy and Target. Sales for that kind of video game fell 11% last year. Nexon, however, distributes its video games online free of charge and generates revenue by selling virtual items such as weapons and costumes that players use in the game.

Mobile Data Traffic Expected to Surge

There is a coming tsunami of mobile devices, from tablets to smartphones, that will guzzle data and consume scarce bandwidth. But how much more data will these devices consume?

"When we look at overall mobile forecast, we're seeing some dramatic growth that is taking place," said Doug Webster, senior director of market management for Cisco Systems' service provider group. Webster said the company expects the volume of mobile data traffic to increase 39 times over the next 5 years, largely due to the fact that there will 5 billion devices, from e-readers to tablets and smartphones, connected to mobile networks over that timespan. "We're going from less than a tenth of an exabyte to more than 3.6 exabytes per month," he said. The findings are part of a Cisco report released Tuesday that forecasts mobile data growth between 2009 and 2014.

IPad event shows Apple's focus: mobile devices

Apple's recent unveiling of the iPad was primarily a product announcement aimed at priming the pump for consumers, developers and content owners. But for the notoriously secretive company, the iPad event provided observers with a glimpse of the company's growing ambitions and strategies. By trumpeting its own chipset for the iPad, passing on Adobe Flash software and putting even more emphasis on its iTunes system, Apple appears intent on tightening its command over the user experience and delivering a distinct vision of mobile computing, Internet connectivity and media consumption. But perhaps the most obvious upshot of the latest unveiling was Apple's continued recognition that its future, unlike its origin, is tied to mobile devices. Three years after dropping the word "computer" from its name, Apple's CEO Steve Jobs said the company's annual revenue of $50 billion from iPhones, iPods and MacBook laptops make it the largest maker of mobile devices in the world.

AdMob may win big even as privacy debate rages

AdMob Inc. isn't well known among consumers, but privacy groups, the Federal Trade Commission and mobile businesses all know its name.

The 160-person San Mateo (CA) company is at the center of what could be the next big online opportunity, as well as a raging debate over privacy in the digital age and an escalating war between Google and Apple. The company works with marketers, application developers and publishers to place display advertisements on mobile devices. It's not a huge market today, but most observers expect that consumers will eventually conduct the majority of their online surfing over smart phones, tablets and similar contraptions. It's a promising enough opportunity that Google, which has made a concentrated effort to parlay its Internet dominance into the mobile space, agreed to pay $750 million for the 4-year-old company in November. Apple, with its lucrative iPhone franchise to protect, quickly countered with a $275 million purchase of AdMob rival Quattro Wireless. What's the appeal?

Technology leading to more invasive marketing

Sure, flying cars may not be zooming near the windows of our 40th-floor lofts and robots with aprons aren't cooking our meals, but the future is getting here. Unfortunately, it's starting to look like something between "Minority Report" and "1984" - at least when it comes to marketing. Advertisers and retailers are increasingly using technologies to mine for consumers' demographical information, create super-personalized ads and zero in on people's shopping habits. Proponents say new technologies are getting products that consumers want into their hands faster and eliminating ads that don't speak to them. But privacy advocates are concerned no one's asking people if they want targeted ads or if they agree to be studied as they shop.

China plans online gambling crackdown

China plans to crack down on the online gambling industry, including the banks and websites that support it, the Ministry of Public Security said. The campaign will "concentrate on investigating major and important cases of online gambling, knock out domestic and foreign groups that organize online gambling, and severely punish the criminal elements", the statement said.

Iran's resistance keeps up cat-and-mouse Web game

With their paths through the Internet increasingly blocked by government filters, Nooshin and her fellow Iranian opposition-supporters say their information on planned protests now comes in emails. They say they don't know who sends them.

Internet messages have been circulating about possible rallies on February 11, when Iran marks the 31st anniversary of the Islamic revolution. But the climate in the Islamic Republic is much harder than before last year's post-election protests. Last June, social media sites were hailed in the West as promising opposition supporters an anonymous rallying ground -- especially when they were accessed via proxy servers that could mask participants' actions and whereabouts. For determined Iranians now, they are a high-risk tactic in a strategic game with the authorities, amid reports of mounting Internet disruption. Almost 32 percent of Iranians use the Internet and nearly 59 percent have a cellphone subscription, according to 2008 estimates from the International Telecommunications Union.

Benton

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