September 6, 2007
Apple Offers $100 Credits to iPhone Buyers
Apple is giving a $100 store credit to early adopters of the iPhone in light of the $200 price reduction. The credit applies to the Apple online store or their physical stores, but not the iTunes store. This places early iPhone customers in the position to buy more Apple products to see their credit. This is very convenient for early adopters if they are planning to buy additional Apple equipment, which is, coincidentally, very convenient for Apple. If not, as Steve Jobs said in a heavily publicized USA Today interview, "[W]ell, that's what happens in technology." Yeah. Imagine how the people who bought these things on eBay must feel.
The moral: wait a couple of months before buying and you might get a pleasant surprise, or, buy immediately and wait a couple of months and you might get an unpleasant surprise.
Seattle Man Arrested in P2P-Based Identity Theft Case
CNET has the story on a man up on federal charges for identity theft in conjunction with the use of peer-to-peer networks as a source for identity documents. One Gregory Kopiloff allegedly trolled the Lime Wire peers for documents with sensitive information. Once found these documents were used for information to open credit accounts which in turn were used to purchase items eventually resold. The take was about $70,000 before Kopiloff was caught and charged. Read more here from the Seattle Post-Intelligencer.
Parts of Patriot Act Declared Unconstitutional
A Federal Judge in New York declared parts of the Patriot Act unconstitutional this afternoon. Judge Victor Marrero ordered the FBI to stop sending national security letters to Internet providers demanding customer information because it prohibits recipients from revealing their existence and does not provide judicial oversight. The President is not going to like this one bit.
September 5, 2007
New iPods, New Features, and New iPhone Prices
Apple announced a new line up of iPods and products today. The highlights include a new touchscreen iPod called, appropriately, the iPod Touch. The model sports a screen similar to the iPhone that has the Safari browser and Wi-Fi capability. An 8 GB model sells for $299 and a 16 GB model sells for $399. If anyone wanted an iPhone without the phone part or the hassle of dealing with AT&T, this is for you.
Speaking of the iPhone, the price on the 8GB model fell $200 to $399, with the former $399 4GB model dropped from the catalog. It's been out, what, 2 months? Just imagine what it's like to be stuck with a discontinued phone 2 years into a contract with AT&T. Technology marches on.
Other significant news is the ability to buy songs wirelessly from the iTunes store and the ability to create a ringtone from any song in the store for 99 cents. Microsoft took a lot of heat for the inability of the Zune to accept wireless purchases. They should take even more heat because a competitor, nay, the Death Star of competitors beat them to the punch. Come to think of it, anyone seen any ads for Zune on TV lately? At the same time, the company quietly cut the price of the Zune by $50. That ought to sell 10 or 20 more.
The Apple announcement is viewable in QuickTime video from the Apple web site.
NBC Moves To Amazon
NBC Universal quickly followed up its split from Apple by partnering with Amazon's Unbox service. Videos of The Office and other NBC "hits" are available through the Unbox service. This should give some form of boost to Amazon's efforts. When Unbox was announced it was widely panned as being clunky and user unfriendly. It has since partnered with TiVo which streamlines distribution to some extent. The heavily DRMed offerings however are still consumer unfriendly. Prices for episodes of The Office Season 3 are at $1.99 each, which comes out to about $44 for the season set. The DVD set came out yesterday with 3 hours of deleted scenes at a price of around $30 or so in the big box stores. Go figure which is the better value.
NBC's move effectively cuts out Apple users as Unbox is Windows only. Apple still has the market share, estimated at about 70% or more of video downloads. We'll see if NBC can grow their sales but cutting out the largest distributor of their product. Remember, NBC isn't merely competing with Apple. There are P2P networks out there that offer a potentially better consumer experience, albeit an illegal one. That point obviously hasn't frightened anyone enough to stay away from them.
September 4, 2007
Seventh Circuit Sends Spamhaus Case Back to Trial Court
The Seventh Circuit has sent the Spamhaus case back to the District Court, vacating the damages award and the injunction that ordered Spamhaus to remove plaintiff from its spam list. The facts were that e360 Insight sued Spamhaus for placing e360 on a spammer list. Spamhaus, a non-profit U.K. entity at first appeared in the case and then withdrew thinking that they were beyond the reach of U.S. courts. The District Court then entered a default judgment against Spamhaus to the tune of some $11.7 million dollars and an order to remove e360 from the spammer list it maintains.
Spamhaus filed a Rule 60 motion to vacate the judgment which the District Court denied. The appeal to the Seventh Circuit ensued. That Court upheld the default judgment but struck down both the damage award and the injunction. The $11.7 million dollar amount was based on conclusory statements by e360. Even though e360 won a default judgment, they still had to prove their damages with evidence and not mere allegations.
The injunction was just as problematic. The District Court had to conduct a review of the appropriateness of the remedy under the four part test for when an injunction should issue. The Court articulated this as:
“According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” [quoting eBay Inc. v. MercExchange, L.L.C., 126 S.Ct. 1837 (2006), slip op. at 21.]
The Court stated that the lower court issued the injunction on the basis of the default and not whether it was an appropriate remedy. The Court also touched on potential First Amendment issues in granting an injunction under these circumstances.
The Spamhaus case is notable because the lower court at one time considered ordering the domain registration of Spamhaus to be canceled as part of a contempt of court order. That did not happen. Now the case goes back to the District Court so it can re-evaluate the type and amount of damages. The default judgment stands, however.
The Seventh Circuit slip opinion is here.
NBC and Apple Fight Over Show Download Pricing
Now that the long holiday weekend is essentially over, it's time to catch up on the news. One development last week was NBC Universal deciding not to renew its contract with Apple to distribute television episodes. The current contract runs through December. Apple sold shows at $1.99 per download. NBC wanted to up the price and Apple refused. Now NBC is looking for other outlets where it will get the prices it wants. Good luck with that.
Not that its impossible or anything. There's always the Microsoft outlet with the Zune, although the market there is, ahem, a bit smaller than that of the iPod. Face it, Apple has the largest uniform market and display platform out there which gives them their clout in setting terms. NBC needs to take that into account when seeking partners for its content. If the new per show price is higher (say $4.99 as bandied about in the press) and can't easily wind up on the iPod, what is the consumer incentive to buy?
NBC's decision may find consumers waiting for the DVD which would offer a better show/price ratio. There are plenty of tools out there that can rip DVDs to iPod (DRM notwithstanding). That scenario, however, loses the immediacy of downloading and viewing something that was just broadcast. Of course, NBC might also discover that the sale of a new episode of The Office was driven by convenience as much as price. Without that combination consumers may realize that they don't actually need to buy a program they saw last night.
It's nice to see NBC trying to grow the market away from Apple. Competition in general is always good as it tends to lower prices. This attempt seems to be taking it in the other direction in a setting where the alternatives to iTunes is not that appealing. Consumers will ultimately decide whether NBC can value its product at a higher price than currently available. And if NBC's gambit doesn't work, well that's also part of competition.