Radio: Doug Knopper, Co-Founder and Co-CEO of Freewheel.tv

By: itvt.com

In this recorded episode of [itvt]’s talk radio show, “The TV of Tomorrow Show with Tracy Swedlow,” Doug Knopper, co-founder and co-CEO of Freewheel.tv, a provider of solutions for managing broadband video ad inventory, provides an overview of his company and the space in which it operates.

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FCC’s Wireless Investigation Vague

By Rebecca Henely

While the Federal Communication Commission’s recent month-long investigation has the ultimate aim of building a framework for wireless innovation and investment, the FCC said it has no predictions for how that framework will look.

“That’s what’s exciting about this,” says Matthew Nodine, FCC spokesperson.

In the FCC’s Notice of Inquiry into wireless innovation and investment, all involved in the wireless industry from mobile companies to consumers are encouraged to report to the FCC on how the commission can best promote and encourage industry growth and creativity.

“It’s looking at everything from spectrum to networks, devices, applications and business models,” Nodine says. “It’s a wide-ranging request of information.”

In the official NOI, FCC chairman Julius Genachowski states the wireless industry is set to have a prime role improving the U.S. economy and job market, and this inquiry is expected to help the FCC help the wireless industry. However, he warned the industry has had successes and failures, and the FCC wants to encourage the successes. “In short, at times the Commission has gotten it right, and at times it has gotten it wrong. The purpose of initiating today’s inquiry is to make sure that we get it right as we move into the brave new world of wireless broadband,” Genachwoski states.

Yet Nodine says that means the commission’s framework will be determined solely by the information it receives. It has no early predictions or preconceived ideas about what will or will not work and what steps will be taken. “We are seeking input,” he says.

The importance of the NOI was affirmed by all members of the commission. Commissioner Michael J. Copps states the NOI helps, “lay the groundwork for sound public policy-making.”

Other members of the commission, while overall positive, expressed caution. Commissioner Robert M. McDowell states he wished the comment period had been longer than 30 days. “I am concerned that we may shortchange both inquiries [the NOI and the National Broadband Plan for Our Future] by not allowing adequate time for meaningful input on the challenging legal and economic questions raised here,” he says.

Commissioner Meredith Baker also warned of implementing policies that could disrupt innovation or hinder new ideas. She states any decisions based on this notice should allow for capital investment and innovation to grow for consumers. “We stand on the verge of the next generation of wireless broadband products and the government should proceed with great caution so as to ensure the best outcome for consumers.”

Nodine says no wireless companies in particular have been asked to participate, although he expects companies and consumers who follow the industry to provide the FCC with information.

Margaret Boles, director of media relations for AT&T, states the company would file comments later this month.

T-Mobile USA released a statement to DigitalMediaBuzz.com that states, “T-Mobile welcomes the opportunity to discuss its focus on bringing innovative products and services to U.S. consumers. Innovation has long been at the heart of the highly competitive wireless industry.”

The FCC states in a press release it would be looking for information on how wireless services could create real-life applications for industries. Some possibilities cited in the press release included health care, energy, innovation and public safety.

Commissioner Copps named some specific examples of industries in the NOI: “improvements in health care through telemedicine and patient monitoring devices; energy conservation through ‘smart grids;’ education by bringing classrooms to eager learners wherever they may be; and public safety by enhancing the capabilities of our first responders.”

“Wireless innovation is a very strong driver in today’s economy,” Nodine says, adding that consumers and companies can send comments via the FCC’s electronic comment filing system. Comments should be sent to GN Docket No. 09-157 and GN Docket 09-51. The deadline to comment is Sept. 30, with the deadline for comments replying to others is Oct. 15.

Jumping the Shark: Pirate Bay and Spotify Circle U.S. Waters

By Sherry Londo-Thomas

European exports Pirate Bay and Spotify have gained momentum to move into U.S. markets, but the open style file-sharing philosophies of both might cause friction with the courts and companies alike. Have all the rumors of their infiltration jumped the shark?

Sweden-based Pirate Bay touts its company as being “the world’s largest BitTorrent tracker.” BitTorrent is the standard that’s used all over the world for transferring high-quality files over the Internet. Pirate Bay houses a directory of audio, video, television programming, as well as film. Download your favorite with a click of an icon, and keep your credit card in your pocket. Although this sounds good for the consumer, not so for the many entertainers that make a living from royalties.

Pirate Bay has a lot of opposition from Swedish officials wishing to uphold copyright laws. Frederik Neij, Gottfrid Svartholm Warg, Carl Lundstrom and Peter Sunde, founders of Pirate Bay, were found guilty in a Swedish court of violating copyright laws. The court ordered them to pay $4.5 million dollars, $17.5 million short of what companies were asking, and each were sentenced to a year in jail.

Sony Warner Bros, Music Entertainment, EMI and Columbia Pictures are among the companies that were awarded the judgment. Good luck seeing that money — Rickard Falkvinge, head Pirate, is vehement about the judgement. “This wasn’t a criminal trial, it was a political trial. It is just gross beyond description that you can jail four people for providing infrastructure. There is a lot of anger in Sweden right now. File sharing is an institution here and while I can’t encourage people to break copyright law, I’m not following it and I don’t agree with it. Today’s events make file sharing a hot political issue and we’re going to take this to the European Parliament.”

Pirate Bay’s ship may sink before making it to U.S. shores. On Thursday, Sept. 10, according to Wired.com, Pirate Bay’s stock was delisted from the Swedish Stock Exchange. This drastic move was taken due to a purchase deal that sunk because of Hans Pandeya, head of Global Gaming Factory X, the purported buyer, who never had the $8.5 million to buy Pirate Bay. It appears as though, according to Wired, Pandeya’s intent was to manipulate the penny stock.

If Pirate Bay had any dreams of docking on U.S. shores, the company now will have a much harder time. Copyright laws in the United States are strict, and Pirate Bay probably wouldn’t make it out of the water.

Spotify is another European company of streaming music. Unlike Pirate Bay, it doesn’t seem to be fraught with legal battles. Last week, Apple approved them as an iPhone app, but only for markets in Europe. Spotify offers its members streaming music from the Swedish company’s directory of millions of songs. Unlike Pirate Bay, this company charges a monthly fee for premiere members to use iPhone app.

Spotify’s founder is thrilled to have a partnership with Apple: “We’re not surprised but we’re thrilled,” Spotify’s founder, Daniel Ek says in an interview with the BBC. “We had a great dialogue with Apple from day one.” They expect to establish a presence in the United States by year’s end.

Spotify has garnered favor from Apple, but don’t count Rhapsody out. Just recently, Apple has approved Rhapsody’s app for the iPhone. Rhapsody has a similar app and may become the first to have a subscription-based music application in America.

The Holy Grail of Wireless Connectivity

By Barbara Gengler

Mobile operators are predicting great things from a new technology that could mean big differences in the way people run their smart phones or laptops, both at home and on the go.

The new network, 4G (short for the fourth generation of cellular wireless), promises to deliver 100 Mbps to roaming mobile devices globally and around 1 Gbps to a stationary device. Today’s networks, known as 3G, provide for download speeds of 14.4 Mbps and upload speeds of 5.8 Mbps.

There are two major systems in the US that are currently testing services on 4G technology. WiMAX, which is backed by Clearwire; and Long Term Evolution, which is backed by Verizon Wireless.

Long Term Evolution (LTE), is a 4G network technology that will offer high rates, high reliability and long range communications. LTE, which is being developed by industry trade group, the Third Generation Partnership Project (3GPP), is scheduled to be launched commercially in 2010 by Verizon Wireless and AT&T Wireless. T-Mobile and Alltel have said they will roll out 4G capabilities based on LTE and the European Commission announced it will invest in researching the deployment of LTE.

Verizon Wireless says it has already proven the new technology has significant speed advantages over the older 3G networks and that the LTE service could be as much as 100 times faster than its 3G predecessor. “Advanced LTE-based wireless networks will support incredible new applications that businesses and consumers can only access today through high-speed wireline networks,” says Debra Lewis, a Verizon Wireless spokeswoman. “In addition to simply faster e-mail and internet access and better-quality video services, wireless users will be able to take applications they are accustomed to using at home or in the office into the mobile world; roaming on other global LTE networks will provide portability to take those applications virtually answer on the planet.” She also points out LTE offers the possibility of providing coverage in some rural areas not currently served by wireless broadband. “Most importantly, a wide-area wireless LTE network will be able to connect a full range of consumer electronics devices and machines to each other, the holy grail of true wireless interconnectivity,” she says.

Verizon Wireless plans on launching its LTE 4G network in up to 30 markets in 2010, covering 100 million people and a growth plan that anticipates nationwide coverage in 2013.

On Aug. 14, Verizon Wireless said it completed calls in Boston and Seattle and each now have 10 LTE 4G cell sites up and running on the 700 MHz spectrum. Technology partners included Alcatel-Lucent, LG, Samsung Electronics, Starent Networks and Nokia Siemens Networks and Ericsson.

Mobile Music Experience Stunted

By Moria Byrne

If the world is in the middle of a mobile phone industry boom, America is the financial late bloomer. A Forrester Report estimated that only 60 percent of Americans who responded to a survey weren’t interested in loading music to their cell phones. Americans find it more convenient and cheaper to load music to their MP3 player or their iPod.

There are many cell phone carriers that promote their phones as MP3 compatible but the process isn’t any different than using a portable digital music player. The user still has to download the application to the PC before buying and loading the music. The music is then transferred to the cell phone. Only difference is that the user now pays a data fee to the cell phone company to save music on their phone and memory card and the digital music service to purchase the music.

Free service is popular for obvious reasons. Users can save money by downloading free music onto their computer and then transferring the music onto their cell phones. Unfortunately, only certain service networks carry free music services, Pandora and Slacker being the most popular. They would prefer that you use their music service or a music service partner. AT&T, Vodaphone, VerizonWireless, Nokia, and T-Mobile all offer their own music on the go services. Users must pay a monthly fee for these services on top of your data plan fee. AT&T has an exclusive agreement with iPhone.

Pandora provides free digital streaming music to users. On average, there are more than 30,000 iPhone users on Pandora daily. User functions include a search engine (artists, videos, songs, albums and lyrics), list of favorite songs and preferred stations. Fifty percent of Slacker Radio users are mobile phone listeners. Slacker gives users an incentive to switch to mobile listening: members who opt for both a digital and PC plan at renewal time receive a Blackberry Curve.

“We’re trying to find the intersection of a phone a million people will want to buy and a carrier that will use free service,” says Tim Westergren, Founder of Pandora.

There are other reasons users are reluctant to switch from an MP3 portable player to mobile phone music —bandwidth. Limited bandwidth is causing uproar among MP3-compatible users. By downloading music to their cell phones, users take up memory space on their cell phone. Also, users may want to download music from a free site and save it on their service provider’s playlist.

Music service providers are claiming that a great deal has changed in the past 12 to 18 months. Before cell phone users had to download music on a case-by-case basis. They had limited choices in bandwidth and handsets. Now, smart phones provider customers with a larger user interface. Yet, not all MP3 players are equal even in the realm of the broader user interface. The appearance of smart phones hasn’t helped users with MP3-compatible cell phones. Typical non-smart phone MP3 users have a memory of up to 120 MB whereas smart phone users have up to 3GB. MP3-compatible users are finding that downloading digital music is eating up their bandwidth. They need an additional memory card to download music. That is if their carrier allows the music service application. Otherwise, users have to download music onto their PC first and then transfer the music to their cell phones.

“You get a stale user experience (by using multiple platforms) and it’s somewhat challenging. You’re always in search-and-retrieve mode,” says Jonathan Sasse, senior vice president of Slacker.

Yet, most music service companies aren’t focused on getting networks to troubleshoot MP3-compatible problems. Instead, they are interested in expanding the market of available smart phones to bring down the price and increase the number of smart phone users. “We’re headed toward small phone markets and networks that are robust,” Westergren says.

Pureplay Agreement Impacts Webcasters

By Moria Byrne

Pureplay webcasters recently signed an agreement to share revenue with the radio industry.

The agreement, Webcaster Settlement Act of 2009, covers any “pureplay” webcasters, or webcasters that agree on revenue sharing for most services and stricter reporting requirements, in exchange for a discount on per stream rates.

Webcasters AccuRadio, Digitally Imported Inc and Radio IO recently reached a royalty agreement with SoundExchange. The agreement is valid until 2015. Any other webcaster can also apply for the same contract as long as it is within 60 days of the signing the Settlement Act.

Webcasters are opting to work with SoundExchange rather than pay the Copyright Royalty Board rates established in 2002. The CRB rates would have bankrupted small webcasting companies. Instead, the webcasters pay artists and royalty holders a minimum percentage of all their U.S. revenues (up to 25 percent) and a higher annual minimum royalty.

“It’s not representative of the market value but the agreement will serve,” says Michael Huppe, executive vice president and general accounting of SoundExchange.

The webcasters disagreed. Due to the struggling economy, low advertising sales and the revenue rate that they will pay artists and royalty holders, webcasters are deeply concerned about the future of their businesses. Kurt Hanson of AccuRadio explains that if it costs around 1.5 cents per listener per hour, they need 3 cents an hour in advertising. If advertising sales continue to sink, they won’t be able to reach this goal. The company will end up spending 50 percent of its revenue on royalties. Also, webcasters are concerned that standard AM/FM radio, or as webcasters call it, “terrestrial radio,” and music-only programming provided on cable and satellite TV (MusicChoice and Urge) are paying far less than they are for pay performance royalties.

“We were repeatedly hobbled by different things: the new rates and an unfair playing field,” says Mike Roe, founder and director of programming and creative strategy of Radio IO.

SoundExchange claims that it’s impossible to place Internet radio and music-only programming in the same category. The music is performed in a different capacity. Also, SoundExchange claims that artists and rights holders agreed: terrestrial radio stations shouldn’t pay what their competitors at satellite and Internet radio pay. The two parties have been in disagreement many times before.

The agreement process was far from smooth. The negotiations between SoundExchange and AccuRadio, Digitally Imported, Inc., and Radio IO lasted two years. The webcasters blamed the biased pecking order for the delay in their case. Several major webcasters reached agreements first: SiriusXM, College Broadcasters Inc. and National Religious Broadcasters Music License Committee. All three webcasters complained that the musicians and royalty holders held up the negotiation process. CEO of AccuRadio Kurt Hanson and Digitally Imported Executive Vice President Gary Dobek agreed that major record labels don’t make much money off Internet radio. Slow negotiations do not equate to lost money for them. Roe also felt that the webcasters spoke in a common voice during the negotiations whereas SoundExchange seemed to represent labels, individuals and multi-national conglomerates. He wasn’t sure how it was possible to meet so many different groups’ needs under one agreement. He was convinced it was the diversity of goals and needs of the royalty holders and artists that held up the negotiations for three years.

“This is a critical aspect of their [webcasters'] business. It’s not unreasonable for them to pay attention to something that drives their business,” SoundExchange’s Huppe says.

Huppe points out that SoundExchange is a non profit and clocks in a lot of hours for little compensation. They are here to “wear the white hat” and ease the negotiation process. He also argues that many of the artists aren’t headliners like Madonna but smaller musicians who want to be paid their work.

“It’s in everyone’s best interest to focus on business. It’s much better for us to help with reporting and getting webcasters the maximum revenue and rather view this as a partnership in growing businesses than adversaries in a rate settings,” Huppe says.

AccuRadio’s Hanson felt his hands were tied in negotiations. The legal proceedings had already stretched into three years. The process had become expensive for AccuRadio to fund. This was part of the reason that the agreement includes two royalty periods, the original contract of 2009-2012 and the renewal agreement of 2012-2014. In retrospect, he wished that they’d been able to hire an economist to look at their budget and determine a better rate agreement. “They [other webcasters] set a line in the sand to shoot for, however, you can’t go on with negotiations forever,” Hanson says.

Yet, webcasters seemed worried about how they will manage to pay the new rates and make a profit. For a small webcasting company, the percentage of revenue is 12 percent of the first $250,000. If a company can’t make twice as much in advertising as it pays per streaming rate, it will barely make a profit.

“Everyone is concerned about making the percentage [of revenue in profit that the webcasters keep] work within the context of real business,” says Mike Roe, founder and director of programming and creative strategy of Radio IO.

Digitally Imported’s Dobek was grateful to have been given an alternative to the CRB rate. Originally, no copyright law was applied to the music streaming on the Internet waves. Webcasters simply purchased a general government license, called a statutory license which sets the rates and terms for the performance of sound recordings. The rate was applicable for most businesses.