Dennis D. McDonald ( consults from Alexandria Virginia. His services include writing & research, proposal development, and project management.

Sony, Apple, and Oranges

By Dennis D. McDonald

Recent events have pointed out how differently these two companies operate.

News reports suggest that Sony is settling lawsuits that arose from its "rootkit" debacle. Others report there are still many copies of the offending software out in the field, waiting to trip up the unwary.

As I've written elsewhere, this experience will probably be used as a case study of how not to react to product liability and public relations crises. The lesson is that even the large corporate entities that many have grown to trust over the years are woefully lacking in their ability to manage new technologies and are failing in attempts to extend traditional business models to the wild-and-woolly environment of the Web.

Inevitably, large companies like Sony, facing marketplace competition, will seek legislative solutions that reduce competition. This will require well orchestrated -- and expensive -- lobbying campaigns around the world at a time when such companies should be spending money on innovation, new business models, and discovery of new artists. The bottom line: dollars spent on developing, deploying, and defending untenable DRM schemes that do nothing to prevent serious piracy will be a drain for large companies for many years to come. And just as we saw the dinosaur airlines set up cheaper and leaner low cost subsidiaries to compete against Southwest, we'll probably be seeing companies like Sony establish leaner low cost subsidiaries to streamline music distribution without DRM encumbrance. The tipping point for such ventures will come when A-list artists insist on jumping ship when contracts are renegotiated.

Apple, on the other hand, continues to be the 800 pound gorilla in online music sales, not because of its DRM scheme, but because it is embracing the new world order.  Whether it can sustain its iPod and iTunes success is an unknown, but if recent events are evidence, Apple and Jobs are going to be with us for a long time. When it was revealed recently that Apple's new version of iTunes included a subsystem that monitored individual listening habits and sent this information back to Apple to generate suggestions for additional purchases, instead of denying the situation, Apple immediately took immediate and public remedial actions.

If truth be told,  I was not terribly surprised by the original Apple "spyware" announcement. I've assumed all along that, any time you have a piece of software that goes out to a remote server to look up track information for CD's you've ripped to your local machine, someone somewhere knows what's on your machine. It's not a stretch to then think that someone might be able to know when you click the on-screen "play" button. That's the price we pay for our universal access to entertainment, and I said as much in the second Podcast Roundtable session I participated in recently. So I don't think everything is sweetness and light with Apple, either. But they sure don't act like Sony.

Note to Steve Jobs: I'm in the market for a high-definition TV. Got anything in the pipeline I should be looking at?



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