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Google Nexus One owners share their likes and gripes

Publié: janvier 14, 2010, 11:44pm CET par Joe Wilcox

By Joe Wilcox, Betanews

Earlier this week, I asked Betanews readers who had purchased Google's so-called "superphone" to offer up early impressions. You responded in comments and by e-mail. Thank-you. I apologize for taking so long getting your responses posted. For anyone with a Nexus One, in most states the return policy is 14 days (30 days here in California). Others' opinions could weigh heavily in your decision to keep the device. Then there are those of you considering plunking down a budget-busting $529 for the unlocked device. Ouch! I did!
I am generally satisfied with the Nexus One -- in part because of how Google has extended Android 2.1 to cloud services. While I find value in the hardware, software and services are where I find the greater reward, and it's why I have switched from the Nokia N900, which also runs on T-Mobile's 3G network.
But not every Nexus One owner is as satisfied as I am, particularly people experiencing 3G connectivity issues (Google officially acknowledged the problem about three hours ago). The Google phone is a data-centric device; the 3G connectivity problems -- even just ongoing reports about them -- will be a deal breaker for many potential buyers. Other folks balk at the price, which is reasonable for an unlocked phone, but many Westerners are used to paying less for subsidized, locked phones. There is a $179 subsidized option in the United States, but it only officially applies to new T-Mobile accounts.
Price initially was a problem for Tony Abad, of Southbury, Conn., who describes himself as a "100 percent Google user -- of email, calendar, tasks, etc." He migrated from the T-Mobile myTouch, which runs Android 1.6:
When I initially got the N1 I toyed with the idea of returning it because it did not seem to be worth the $529 upgrade from the myTouch...However, as I have learned slowly what it can do for me, I think it is worth it. Why? Just the gallery feature alone pays for it. If you are an avid user of Picassa, this thing brings all the pictures you stored in Picassa to your N1 [Nexus One] -- automatically. Wow! The emails -- I do not need to go to the computer, it gets updated on the phone (Hotmail and Gmail). God, you get pampered using this phone!
Bill Menafra, a self-employed consultant living in California's Monterey Bay area, migrated from the T-Mobile DASH to the Nexus One. "This is first and foremost a 'phone' and as such it is the best phone I have ever had, and I have had a few," he says. "This phone has quite simply the best call quality I have had. The people I have phoned have also stated that the sound quality is perfect on their end." Menafra says that there is "poor phone-signal reception area" where he lives "for all carriers. My DASH would only get 1-to-2 bars while the N1 gets 2 to 3."
Las Vegas-based Todd Meyers shares Menafra's enthusiasm:
I fell in love with the phone as soon as I opened the box. I bought it unlocked and chose to use T-Mobile for service. I'm used to using a slow BlackBerry from Sprint as my work phone. The Nexus One is my personal phone. I haven't had any problems with it. I average 10-12 hours of run time with WiFi constantly on...My girlfried has a myTouch 3G, and this runs circles around it. The Nexus [One] is great at multitasking. I just learned how to use the long hold on the home button to jump between applications for when I'm multitasking.
I asked Meyers if he would give up the BlackBerry. "I would love to replace the BlackBerry with the Nexus One, but I need to keep the BlackBerry because of the DirectConnect feature I use for work."
Plenty of Complaints
No smartphone is perfect. Even these N1 enthusiasts have gripes. "I have found the trackball almost useless," says Meyers. "My only complaint is the lack of full integration with google docs," Abad says. I have a spreadsheet -- I can only browse (not edit) a max of 250 rows -- s**t! Maybe an upgrade to Android 2.xx will cure it."
Maybe a browser upgrade would do more for Abad. The delightful N900 has a full Mozilla browser capable of running Google Apps and Adobe Flash (Now why did I give up that Nokia phone).
Abad actually has more complaints. He describes as "irritating, very irritating" switching apps with no obvious way to see if they're closed or still running. He makes an important observation about handsets that allow background applications to run. If not properly closed, they can run wild, sucking down battery life. By comparison, the N900's Maemo 5 operating system makes clear what's running, and apps can be closed by clicking the X in open windows.
Menafra's largest gripe is customer service:
The big problem is the lack of addressing customer concerns by Google. I know the phone is made by HTC and the service (for most people in the USA) is through T-Mobile, but you buy the phone from Google. They designed it, it runs their OS, it interweaves their apps, and it has their name on it etc. I understand they want us to use their forums, but there needs to be some interaction.
No question, Google has had difficulties handling complaints about 3G connection problems on some N1 handsets.
Menafra is among those Google phone owners affected by the problem: "The N1 is a Web-centric device, and this is where the problem is -- at least right now. As all are aware, there are reports of 3G signal issues. I, too, am having these issues, but I believe they will be addressed any time now."
A first-time Betanews commenter simply identified as ATECHUSA expresses the typical problem experienced by some N1 owners: "If I force 3G in the phone settings my 3G is strong and working great. If I use the preferred setting I go back and forth from 3G to EDGE and really notice the slowdown."
Another first-time commenter, Baxter01, is dissatisfied with Nexus One. He posted his comment from the smartphone, which I have left unedited to emphasize some of the problems he experienced:
I have already requested a rma for the n1. Personally I hAte this phone. I am pulling my hair out tryingto type this. This phone is random sometimes the keystrokes accept the space bar, most times it is run on words. That really isn't the issue. The phone is FAST. BUT lags at the most random times.. the screen is beautiful, best thing about the phone. What I am disliking is the absolutely poor integration of os, ui and os. It is terrible. Each appli ation is adhoc (I ga e up onack spaaci g and correcting). N1 is awful.... ok keyboard sensitivity is terrible....... off rant andback
Other commenters had much better experiences. Yet another first-time Betanews commenter, Fletch31, writes:
I absolutely love this device, and anyone who I've shown it to has been impressed by its speed and capabilities. I sold iPhones for AT&T for two years, and they are great phones. The were very trendsetting and inovative, but I love competition in the marketplace and more important for me, I love the Android OS both for what it does and for what its future holds. Pair that with superior hardware -- processor speed, removable battery, expandable memory etc. -- and the Nexus One is the phone for me for the next few years.
So he says now. The next-best thing is usually just days away, and what gadget geek can resist?
Just as Much Praise
Overall, Abad, Menafra and Meyers offer consistent praise about similar features. All described the N1 as "fast." They all also praised the photo and video capabilities, which, as a journalist, I must say were important to me, too. The Nexus One has a 5-megapixel camera with single LED flash and capability to shoot videos in 720 x 480 pixels at 20 or more frames per second.
"The camera's picture quality is excellent, as is the video," says Menafra. "The camera and video are great for a phone," says Meyers, with a little less enthusiasm. For Abad, some of the camera's capabilities are important because of GPS:
The camera is decent and it has a built-in GPS recording placed on the pictures. Garmin sells a GPS camera for $499 and [with] less megapixels. I have a special need for it. Next month, I am going to the Philippines, and I need to measure a plot of land. I figure this is the quickest way to measure it -- I go take a picture with my N1 on each corner of the property and compute the area using the GPS lattitude/longtitude points.
Google Voice and voice dictation features also receive great praise. Android 2.1 supports voice dictation into any text field. Menafra says N1's voice-recognition feature "works almost flawlessly." He adds: "I also truly enjoy the integration of my existing Google Voice account and my Gmail account." Meyers concurs. "I've dictated an entire e-mail faster than I would've been able to type it in. [Voice dictation] works great for quick texting conversations."
Menafra predicts: "Nexus One is probably one of the best phones ever made. Once the 'kinks' are worked out and Google decides to get involved with the users, I'm sure that its popularity will explode." Will he be right?
Copyright Betanews, Inc. 2010
Eight days later, Google acknowledges 3G problems on Nexus One

Publié: janvier 14, 2010, 11:09pm CET par Scott M. Fulton, III

By Scott M. Fulton, III, Betanews

At 2:22 pm Eastern Standard Time today, some eight days after a support thread was first launched by a Google Nexus One user who noticed his phone kept flipping back and forth between 3G and EDGE services, a fellow named Ravi whose job description in his Google profile is listed as "Google Employee, Doofus Maximus" wrote in to assure customers the company was working with its partners to investigate the issue. The problem may affect several hundred Nexus One phones, though evidently -- and thankfully -- not all of them.
"Hey Folks, this is your friendly neighborhood Google Guide here to clear some up some confusion around all these 3G shenanigans!" Ravi's post began. "We (by 'we' I mean Google, although HTC and T-Mobile are both getting reports as well) are getting reports from some users who are having problems maintaining a 3G data connection on their device. We're actively working with our partners to investigate these issues and identify what's going on. Most people don't seem to be running into this issue, but for those of you who are, we understand your concern and appreciate your patience."
The problem for many affected customers, at this point, is whether the 14-day grace period (which at an earlier point was 7-day) for returning phones for refunds, will still be honored if the solution to the problem takes six days more or longer to implement. Ravi went on to say that if the solution is a software fix, it will be implemented over the air automatically, but if it's a hardware problem, the Nexus One warranty would remain in effect.
That warranty promises a 12-month period in the US, and a 24-month period in the EU, for returning the phone for replacement. At 3:09 pm, Ravi returned to respond to these concerns: "With regard to returns, the return period is still in effect and I don't have any more information related to that right now, but I can assure you we'll figure out what's going on and get you a new device if it turns out to be hardware and send out a fix if it's software," he wrote. He then added, "Just keep posting feedback, I promise you guys we're here listening. I completely understand that these kinds of things can be frustrating, but we're doing what we can to keep you updated with what we know."
Nexus One customers have actually not been altogether helpless during this confusing early period. In fact, many are reporting having dealt directly with knowledgeable and even courteous support personnel from HTC, the phone's manufacturer; and in a few cases, the company is sending engineers to customers' homes to test for signal quality, and to see the troubled phones for themselves. Some commenters on T-Mobile's support forum have stated they surprisingly found themselves transferred to HTC personnel, but were pleased with the tone and substance of their response afterwards.
An HTC spokesperson has also been in contact with Betanews, although with not much new to add in recent days. When some customers reported their 3G problems mysteriously disappearing, we asked HTC whether the company is testing an over-the-air update in the field; the spokesperson told us that no such news of trials has yet been confirmed.
As of now, the pattern that appears to restrict the flip-flop problem to a specific firmware version (32.19.00.16U_4.02.02.41) is still holding; no other online reports have been spotted of any other firmware version with similar problems.
Copyright Betanews, Inc. 2010
Texas Instruments networks its calculators

Publié: janvier 14, 2010, 6:00pm CET par Tim Conneally

By Tim Conneally, Betanews

Anyone who has taken a calculus class in the last 20 years is sure to also have a great deal of experience plugging figures into a TI-8X graphic calculator, and I'm sure I'm not alone in feeling a certain pang of geeky nostalgia for the TI-85, a standard-issue tool for high school kids in the 1990's.
Technology has come a long way since the 6 MHz Zilog Z80 processor, but Texas Instruments isn't retiring the popular calculators just yet. Instead, it has moved a significant number of those old devices into the wireless age.
Today, the company announced its TI-Nspire Navigator system, which links a classroom full of graphic calculators together for collaborative teaching, polling, testing, and grading.
Supporting devices from the TI-83 Plus (1999) all the way up to the current TI-Nspire (which offers wireless connectivity of its own), the TI-Navigator system lets students hook their graphic calculators into wireless hubs that communicate with the teacher's PC for lessons and testing.
The program has been piloted by about 3,000 students nationwide and the hardware can be bought through independent instructional dealers.
Since there's a wealth of higher math freeware, TI-Nspire Navigator it may not be the most efficient or versatile way to network a classroom, but you have to admit, it certainly is stretching the life of TI's hardware to an amazing length.
Copyright Betanews, Inc. 2010
Towards a single, reliable system for identity management

Publié: janvier 14, 2010, 5:14pm CET

By Thomas J. Smedinghoff, E-Commerce Times

In this age of phishing, hacking, identity fraud, and other forms of cybercrime, answering two simple questions -- "Who are you?" and "How can you prove it?" -- is fast becoming a critical requirement for all online business activities.
Moreover, solving this "identity management" challenge has become quite complex as the increasing need for cross-organization collaboration, concerns about security, and the problem of user password management suggest that the traditional company-issued username and password approach is no longer adequate. As a consequence, federated identity management, in which a third-party identity provider plays a key role, is rapidly emerging as a preferred approach.
The cross-organizational nature of a federated approach to identity management presents numerous technical and procedural challenges that are the subject of ongoing work by many private and government groups, such as the Kantara Initiative, OpenID Foundation, Information Card Foundation, EURIM, SAFE-BioPharma, Certipath, the General Services Administration, OECD, PRIME -- Privacy and Identity Management for Europe, the Federation for Identity and Cross-Credentialing Systems (FiXs), IdenTrust, and others. Yet structuring a federated approach to identity management also raises many new and complex legal issues that few have yet attempted to completely identify or resolve.
Recognizing the need to comprehensively address the legal issues raised by identity management, the American Bar Association has established a Federated Identity Management Legal Task Force to undertake such a project. Organized in 2009 following discussions with the Liberty Alliance (which has since become part of the Kantara Initiative), the ABA Legal Task Force is reaching out to all stakeholders, public and private, to become involved in this process.
The basic federated identity process
To appreciate the magnitude of the legal issues raised by the deployment and use of federated identity management systems, as well as the challenges of addressing them, it is helpful to begin with a very basic understanding of the process and the roles.
All identity management consists of two fundamental processes: 1) identification -- that is, identifying individuals by assigning attributes to them that are relevant for a given purpose -- e.g., name, age, address, account number, credit history, gender, photo, etc.; and 2) authentication -- i.e., later verifying online that someone claiming to be a previously identified person is, in fact, such person.
The key difference with a federated model is that at least three roles are involved: 1) subjects -- i.e., the persons being identified; 2) the identity provider, the entity that identifies the subjects and makes an assertion regarding their identity to third parties; and 3) the relying parties -- the third parties that rely on those identity assertions for the purpose of granting subjects access to the services or resources they provide. This allows one organization to rely on identity assertions coming from a separate organization.
A familiar offline example of the federated model can be seen when a TSA agent at an airport (a relying party) relies on the identity assertion regarding the name of a subject contained in a driver's license issued by a state (an identity provider) to determine whether to allow the subject into the boarding area.
The same basic approach can also be used in the online environment. For example, a government agency might rely on an identity assertion made by a subject's bank (which has previously identified that subject as part of its customer screening process), in order to allow the subject online access to an account relating to his pension benefits. The subject might simply sign onto the agency Web site using the user ID and password he uses to access his online bank account. After the bank verifies that the individual's user ID and password are still valid, and provides appropriate information regarding the subject's identity, the agency would then grant him access to his account
As long as a trusted protocol exists for sharing the identity data between the bank and the agency, an individual can do business with the government agency using the identity credential issued by his bank. The agency avoids the need to set up its own costly identity proofing and authentication processes, and the individual avoids the need to keep track of two passwords.
That assumes, of course, that the agency trusts the process used by the bank to identify the customer, that the bank can limit to a reasonable level its liability risk should it make a mistake, and that the individual involved trusts both the bank and the government agency to properly use and protect the personal information initially provided to the bank. These concerns, among others, raise some of the key legal problems that the parties must address.
Navigating the legal thicket
The ABA Legal Task Force has undertaken two key projects to address these challenges. The first is to identify the legal issues and risks that must be addressed in a federated identity management system. These legal risks can come from a variety of sources, including statutes and regulations, common law, applicable standards, contractual obligations, and self-imposed obligations. They vary depending on the jurisdictions involved, further complicating the operation of a cross-border identity management system -- but until they are fully known and understood, they cannot be addressed.
Many of the legal issues arise when things go wrong, such as incorrect identification, faulty authentication, or misuse of personal data. A variety of legal principles may be involved in each case.
For example, if an identity provider makes an incorrect online statement to a relying party about the identity of a subject, applicable law might treat issuing that incorrect identity assertion as a breach of a warranty, as a tort of negligent misrepresentation, or as an unfair business practice. The scope of the identity provider's liability for any damages suffered by the relying party (which may grant access to or enter into an unauthorized transaction with an imposter as a result) may well depend on which jurisdiction's law and which legal theories apply.
In other cases, existing laws and regulations impose a variety of obligations on the parties. For example, identity management involves the collection (by an identity provider) and disclosure (to a relying party) of personal information about a subject. Potentially conflicting obligations may arise from the requirements of applicable privacy laws, the needs and wishes of the subject, the assurance level requirements of the identity management system, and the potential uses to which the identity provider and the relying party would like to make of the data.
Building a legal framework
A second key project undertaken by the ABA Legal Task Force will be to consider what legal frameworks might work best for addressing and controlling these legal obligations and risks. This will involve identifying and evaluating structures for contractual relationships among the various roles in an identity system. It will also include analysis of various contractual approaches that define the rights and obligations of each role, recognize the requirements of applicable law, allocate the risks among the roles, and provide an appropriate enforcement mechanism.
It is important to recognize, however, that some statutes and regulations impose requirements that cannot be altered by contract. Obligations imposed by some privacy laws, for example, may fall into this category. In those cases, participants must identify, understand, and comply with those obligations.
At the end of the day, federated identity management requires not only the deployment and use of appropriate technologies, standards, and policies, but also a clear understanding of the applicable laws and legal issues, and legally binding agreements to define and regulate the rights and obligations of the parties.
Thomas J. Smedinghoff is a partner with the law firm of Wildman, Harrold, Allen & Dixon and is co-chair of the American Bar Association Federated Identity Management Legal Task Force.
This story was originally published on E-Commerce Times.
© 2009 ECT News Network. All rights reserved.
© 2009 BetaNews.com. All rights reserved.
Copyright Betanews, Inc. 2010
Now, the great Facebook security giveaway ...literally

Publié: janvier 14, 2010, 4:58pm CET par Carmi Levy

By Carmi Levy, Betanews

Facebook wants to be your new security maven.
Go ahead. Have a good laugh. I certainly did, after I first learned about Facebook's plan to partner with security provider McAfee to boost end-user security on the often-attacked social media platform.
Under the terms of the deal, Facebook's 350 million (and growing) users will get a free six-month subscription to McAfee's Internet Security Suite, after which they'll be eligible for ongoing discounts. The partnership also means McAfee is now Facebook's exclusive consumer security software provider for the next year -- something which will doubtless come in handy whenever a Facebook user's account gets hacked. If this all-too-common event happens to you, you'll be locked out of Facebook entirely until a McAfee tool scans your computer and declares it free of malware.
Is it too catty to say this is too little, too late? Is it also less-than-kind to say Facebook's attempts to boost end-user security would be better focused on finalizing (and sticking with) a privacy policy that doesn't confuse and anger the majority of folks who take the time to learn about it?
When behaviors trump solutions
Is it similarly mean-spirited of me when I conclude this will have as much impact on end-user security as "Don't Drink and Drive" messages have had on the average drunk driver. We can implement all the DUI laws we want, after all, and we can install breathalysers on anything that moves, but we'll still be cleaning up alcohol-fuelled wrecks and putting up roadside memorials to their victims.
No technology in the world will save people from themselves, and that truth is the one thing Facebook doesn't seem to get.
That doesn't mean that Facebook won't try to toss more technology at the malware issue. The geek's solution to a problem, after all, is to always buy another box or install another layer of code. Yet the reality that Facebook currently faces is infinitely too complex for a mere tool, rooted much more in who we are and what we do rather than what we buy. It should be obvious to just about everyone (except somehow, perhaps by virtue of its size, Facebook) that end users refuse to self-educate on best practices for online security. But there's a deeper cause here that may be a little harder for Facebook to swallow because to do so might require the company to admit it's (gasp!) deficient in some way -- that it simply isn't structured to meet the security challenge head-on.
Privacy = security (T | F)
Those deficiencies have played out in stark relief in recent months. After a Canadian public policy group complained about Facebook's porous-as-Swiss-cheese privacy policies, Canadian Privacy Commissioner Jennifer Stoddart launched an investigation. Her findings were released in July 2009. Assistant Commissioner Elizabeth Denham and other officials in her Office, including Colin McKay, Director of Research, Education and Outreach, met with Facebook's leaders, hovering over the shoulders of the company's developers as they supposedly improved their privacy infrastructure. After several months of this, late last year, Facebook rolled out its new global policy.
Declaring this new policy a dud is all too easy, like kicking your younger brother after you've already immobilized him with the big pillow from the sofa. Instead of making it simpler for users to manage the list of individuals and companies and faceless entities that have access to their personal information, Facebook made it simpler for users to realize that everything was open by default. Accounts that had been shut tight became free-flowing spigots of data, some of it confidential. Users suddenly found their formerly "private" data being broadcast to any stranger with the wherewithal to look at their profile page -- or worse, to people who weren't even registered Facebook users. (Or people who weren't even people.) Walls around the world lit up with complaints from users desperately trying to reset their settings before their parents found out about their new tattoos or secret girl/boyfriends.
So what does Facebook's privacy competency have to do with its effectiveness in ensuring a secure environment for its users? Everything, because privacy is little more than a personal application of security. And unfortunately Facebook's track record in privacy isn't stellar. Even with the prodding of a major government agency, Facebook hasn't been able to make privacy work, either to its advantage or that of its users. Yet we're now supposed to trust that the company's newfound friendship with McAfee will make it easy for users to trust that it can keep the baddies at bay.
Um, not so much. First we're fooling ourselves if we think some fancy new Web-integrated security tools will magically fix things. To borrow Sarah Palin's metaphor, it's like putting lipstick on a pig -- and in this case, the pig has a little leakage problem on the other end. From badly designed third-party applications that compromise the security of unaware users to poorly designed administrative interfaces that intimidate even advanced users, the Facebook platform itself is a nightmare of security. Couple that with an organizational culture that has raised inciting mass-scale privacy revolts to a high art, and you have the basis for a perfect storm of security nastiness.
Towards an insecure future
Over the next few weeks, countless Facebook users will gain access to these new features. Emboldened by their newfound security, they'll doubtless continue to click on hinky come-ons and sign away their first-borns' confidential data in exchange for Farmville credits, Mafia Wars weapons, and a lifetime supply of astrology predictions.
Facebook would like us to believe that its deal with McAfee protects us from the countless stranger/malcontents who want to attack us from the outside. The company fails to realize -- or maybe it does and simply won't admit it -- that the real threat comes from the legions of end users who simply won't take the time to learn even the basics of online security.
More ominously, Facebook fails to realize -- or admit -- that its own inadequate organizational structure and technology architecture will continue to put those same legions of ignorant users at risk long after they install their new toys from McAfee and dive into another round of Farmville. It's that false sense of security that scares me most, and provides the first glimpse of the ingredients for an eventual flattening out of the Facebook growth curve.
This version of the article contains corrections suggested by Canada's Privacy Commission office.
Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.
Copyright Betanews, Inc. 2010
Kodak sues Apple and RIM over iPhone and BlackBerry cameras

Publié: janvier 14, 2010, 4:44pm CET par Tim Conneally

By Tim Conneally, Betanews

Today, Eastman Kodak filed a complaint with the US International Trade Commission and a suit in the Western District Court of New York that claims Apple's iPhone and Research in Motion's BlackBerry devices both violate Kodak's digital imaging patents.
Equipped with a fresh legal precedent from the suit it won against Samsung last month, Kodak spokesmen say the company isn't trying to disrupt sales of the iPhone or BlackBerry devices, but rather, it's seeking compensation for use of Kodak's patented technology.
On December 17, Samsung was found to be in violation of Kodak's 1997 patent for color image preview on digital LCD screens.
"We remain open to negotiating a fair and amicable agreement with both Apple and RIM, which has always been our preference and our practice with other licensees," Laura G. Quatela, Chief Intellectual Property Officer, and Vice President, Eastman Kodak Company, said. "We seek to avoid litigation in our licensing programs whenever possible. But when the infringement is persistent, we will act to defend the interests of our shareholders and licensees, and to promote the fair compensation that is the bedrock of innovation."
In October, Finnish Mobile phone leader Nokia sued Apple for not paying for licenses of certain wireless technologies used in the iPhone.
Copyright Betanews, Inc. 2010
On second thought, maybe the RIAA did conspire to fix prices, appeals court finds

Publié: janvier 14, 2010, 12:15am CET par Scott M. Fulton, III

By Scott M. Fulton, III, Betanews

Did the United States' major record labels, as early as 2001, conspire to establish a system for the distribution and sale of digital music that would have seen subscribers paying up to $240 per year for the right to download up to two songs per artist per month, even then at a retail price indexed at the wholesale cost of $0.70 per song, with restrictive and unwanted DRM schemes attached? That was the assertion of a group of former customers of two music services that launched in 2001. Now, a US appeals court has ruled that the dismissal of their case in 2007 was in error, and that the entire recording industry can indeed be brought to court on antitrust charges.
The original case involved two of the music industry's first "legal download" services, created just months after the founding of iTunes. One was called MusicNet, the original music publishing service from RealNetworks, years before it first started Rhapsody. MusicNet was the culmination of a joint agreement between Real and three of the nation's five major music publishers: EMI Group, Warner Music (then part of AOL Time Warner), and Bertelsmann (now Sony Music). The other was Pressplay, formed by the other two publishers: Universal Music Group (formerly MCA) and the original Sony Music Entertainment.
The plaintiffs in a class action suit against the music industry, filed in 2005, alleged that the various partners in these two services conspired to fix the prices of legally downloadable digital music, indexed on their prices when distributed on conventional CDs, and failed to pass on cost reductions to customers when the costs of indexing and serving those files plummeted. What's more, they alleged the industry created an illegal retailing scheme where digital music was only legally obtainable through their services (MusicNet and Pressplay), and any other online music outlet could only become "legal" if they purchased licenses through the publishers first -- at essentially the same prices consumers were paying.
But in the spring of 2007, that class action case was dismissed by New York District Court Judge Loretta Preska, on legal grounds whose technical term isn't some Latin phrase that requires translation into English and a page on Wikipedia. It was dismissed on grounds of futility.
In terms of antitrust, a "futile" case would be one where the alleged conspirers were shown to be engaged in parallel actions, customers were shown to be hurt, but no effort was made to demonstrate that those parallel actions were in concert with one another. Sure, wholesale costs were fixed at $0.70 per song, and certainly everyone who wanted to sell those songs had to buy them from Pressplay or MusicNet first. But that wasn't proof enough that the record labels were acting together, the district court found.
The US Second Circuit Court of Appeals this morning had its own unambiguous word for Judge Preska's conclusion: error.
Specifically, the evidence plaintiffs would need to prove their case could come, the three-judge panel found, from the source itself. In a November 8, 2001 hearing before the House Judiciary Committee, Rep. Chris Cannon (R - Utah) cited a passage, possibly from an analysts' meeting transcript, of a statement from Edgar Bronfman, Jr., then the Executive Vice Chairman of Vivendi (parent company of Universal at the time; today, Bronfman heads Warner Music). In an era when the music industry conducted itself with more of a swagger of invincibility, Bronfman not only presented Pressplay's business model as determined by the industry at large, but displayed pride in its having done so.
The three-judge panel cited a portion of Bronfman's statement cited in Rep. Cannon's testimony; we found a larger excerpt: "PressPlay has what we call an affiliate model, where we determine the price and we offer a percentage of that price to the retailing partner, in this case, either Microsoft or Yahoo or MP3. The reason we have chosen that, frankly, is because we are concerned that the continuing devaluation of music will proceed unabated unless we do something about it. If you allow an AOL or a RealNetworks or a Microsoft or others who have very different business models to use music to promote their own business model, and simply pay the artists and the record companies the minimums, they can advantage themselves on the back of the music industry in a way which continues to devalue music. We don't want to see that happen."
The availability of public evidence of a music industry executive admitting to a motive for the creation of a business model designed to eliminate the possibility of a competitive model's coming into existence, is enough for the three-judge panel to conclude that the plaintiffs in the class action suit could make their case without futility. In fact, the judges went so far as to connect the dots for the plaintiffs, in lieu of the case they never got the chance to make for themselves.
"The complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants," the judges wrote. "The complaint contains the following non-conclusory factual allegations of parallel conduct: First, defendants agreed to launch MusicNet and pressplay, both of which charged unreasonably high prices and contained similar DRMs. Second, none of the defendants dramatically reduced their prices for Internet Music (as compared to CDs), despite the fact that all defendants experienced dramatic cost reductions in producing Internet Music. Third, when defendants began to sell Internet Music through entities they did not own or control, they maintained the same unreasonably high prices and DRMs as MusicNet itself. Fourth, defendants used MFNs ["most-favored nation" trading terms] in their licenses that had the effect of guaranteeing that the licensor who signed the MFN received terms no less favorable than terms offered to other licensors. For example, both EMI and UMG used MFN clauses in their licensing agreements with MusicNet. Fifth, defendants used the MFNs to enforce a wholesale price floor of about 70 cents per song. Sixth, all defendants refuse to do business with eMusic, the #2 Internet Music retailer. Seventh, in or about May 2005, all defendants raised wholesale prices from about $0.65 per song to $0.70 per song. This price increase was enforced by MFNs. More importantly, the following allegations, taken together, place the parallel conduct [citing the US Supreme Court] 'in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.'"
In other words, there's no reason to believe that the defendants, acting on their own individual initiative, could have accomplished all of the above. In fact, one could argue the theory that no single music publisher would have wanted to attempt such a licensing scheme, were all the other publishers not acting in concert with it. Thus the antitrust action against the music industry has effectively been un-dismissed, and remanded back to District Court for further proceedings.
The Appeals Court's decision comes on the very day that Rob Glaser, the Chairman and CEO of RealNetworks and one of the originators of the MusicNow service, resigned his CEO post, though he will remain Chairman.
Copyright Betanews, Inc. 2010