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GCRox99,
That is how they should be doing it if they are strictly adhering to the terms of the agreement. But as I said to Fly, perhaps they are not. In which case, WHY NOT?
They don't need to itemize out Royalty from other expenses (it could be grouped in with other expenses), but since Licensing Revenue is a separate item, then that should represent ALL Licensing Revenue if the agreement says they are entitled to ALL licensing revenue.
It is one of those cases where I hope they are just reporting 40% of the revenue, as it means gross revenue for both groups is much more. But as a MediaMax shareholder, it would worry me that I cannot rely on the wording of an agreement filed with the SEC.
With either option, their take per CD averages either 1 cent or 2.5 cents. I cannot see where 4 cents comes from.
Fly, I don't know what actually takes place. But if they did that, it would not be in accordance with the agreement. The agreement states clearly that MediaMax Tech is entitled to ALL licensing revenue. Their accounts must show that to comply with the agreement. However, perhaps they are not reporting in conformance with the agreement. That raises additional questions...
Cgi, unfortunately this is one occasion that I actually hope I am wrong. But the actual agreement seems clear. The statement in the quarterly filings that MediaMax gets 40% of licensing revenue is at odds with the wording of the agreement, but is correct if one takes it to just represent the "net effect" of what happens. But for accounting you don't report the net effect of a series of transactions, but each individual transaction.
That is what I posted too. That is the Royalty MediaMax pays to SunnComm. It is equal to sixty percent (60%) of any and all gross licensing revenue earned by MediaMax Tech.
That should be pretty clear. The licensing revenue goes to MediaMax Tech and they pay a Royalty equal to 60% of that amount.
Because they pay a Royalty equal to 60% of licensing revenue doesn't mean they show only 40% of Licensing Revenue in their accounts. They are two separate things. Licensing Revenue is income and the Royalty is an expense.
Just assume for a moment that there was no Royalty payment to SunnComm, but that Bill Whitmore is entitled to 10% commission on Licensing Revenue received. You would not show Licensing Revenue as 90% of what was actually received, but would show the full amount received with Bill's commission as an expense under marketing expenses.
Stingray
Sorry Neil, but you are incorrect! Please read the agreement ,you will find MMXT gets 40% of the licencing revenue while Sunncomm gets 60%.
Actually Stingray, you are incorrect. That is not the agreement. What you posted is from the SEC quarterly and annual filing, which, IMO is a misstatement of the agreement.
This is the actual agreement and this is what is said....
SunnComm hereby grants to Licensee an exclusive, non-transferable right and license throughout the Territory to distribute, market, advertise and sublicense the SunnComm Products throughout the Territory during the Term. Licensee is further granted an assignment of all revenues derived from the following:
a. that certain Copy Protection Agreement dated May 30, 2003, by and between SunnComm, as Licensor, and BMG Music, as Licensee, and
b. that certain Technology License Agreement dated December 2, 2003, by and between SunnComm, as licensor and Sonopress, L.L.C., as Licensee,
and
c. that certain Software Licensing Agreement dated January 12, 2004, by and between SunnComm, as Licensor and Immediatek, Inc. as Licensee.
Further on it states....
6. ROYALTY. Licensee shall pay a royalty to SunnComm equal to sixty percent (60%) of any and all gross licensing revenue earned by Licensee with respect to the SunnComm Products until Licensee exceeds Three Million Six Hundred Thousand Dollars ($3,600,000) in annual gross licensing revenue.
http://www.sec.gov/Archives/edgar/data/1057024/000119983504000070/marketing_agreement.txt
The above two sections are clearly stating that MediaMax receives ALL licensing revenue and must then pays a royalty equal to 60% of that amount. MediaMax Tech receives the Licensing Revenue and then they pay a Royalty. They are two separate items. That cannot happen off the books, otherwise how could the accounts be audited properly. Such transactions must be transparent.
Furthermore, my calculation of 2.5 cents per CD was not based on my interpretation of the revenue distribution, but on your interpretation, that MediaMax Tech's revenue represented only 40% of the total licensing revenue. If it were based on my take, then the combined take would only be 1 cent per CD.
This is what I wrote:
If we are to accept that MediaMax Tech reports just 40% of revenue (which I find difficult to accept based on what was told to our club on two occasions), then $99.4K for 10M CDs is 1 cent per CD to MediaMax Tech, and only 2.5 cents gross (SunnComm and MediaMax Tech together). 2.5 cents is a long way from the minimum of 4 cents we are told we are getting.
With respect to your later comment to Fly:
I do not think the 10 mil, figure can be used as the revenue producing basis until we know how many promos how many 2 disc , dual disk etc.It would not suprise me if the actual REVENUE producing CDs manufactured were in the 7 to 8 miilion range!
You will find that according to SunnComm's own PRs, all 10 million this year (and 20 million to date) are revenue producing.
This is from their own PR:
Customer support issues related to the release of nearly 20 million CDs containing MediaMax are occurring at a rate of less than two-tenths of one percent (.002).
skipped a bit
Both SunnComm and MediaMax Technology earn license fees every time MediaMax is pressed onto a CD.
http://uk.biz.yahoo.com/050728/290/fodvf.html
That is pretty clear. All 10 million earn license fees and the calculation shows that the average take (assuming MMXT reports just 40%) is just 2.5 cents.
Licensing Revenue recognition is as stated. It occurs in the period that the CD is manufactured. That means every CD manufactured up until 6/30 is included. The reason that MediaMax files late in August (when many other companies file in late July) is because they must wait on the manufacturing reports to see what revenue is to be included.
The figure of $99.4K in revenue for Year to 6/30 is hugely disappointing and raises some questions. There were about 10 million CDs released to 6/30/05 (20 million, less 10 million in 04). In 2004 there were 10 million CDs released, and approxiamtely 9 million went through MediaMax (1M before the agreement).
So the 10 million CDs for first half 2005 gave us just $99.4K in revenue and 9 million CDs in 2004 gave $106K in revenue. That means MediaMax Tech is getting less per CD than in 2004. What's more, the excuse for the low rate per CD in 2004 was because we were giving away a huge amount of freebies. What's the excuse now?
If we are to accept that MediaMax Tech reports just 40% of revenue (which I find difficult to accept based on what was told to our club on two occasions), then $99.4K for 10M CDs is 1 cent per CD to MediaMax Tech, and only 2.5 cents gross (SunnComm and MediaMax Tech together). 2.5 cents is a long way from the minimum of 4 cents we are told we are getting.
And lets not have any talk of some special licensing revenue flowing exclusively to SunnComm that is not visible or calculable from the MediaMax figures. The marketing agreement is filed with the SEC and is available for all to see. If that marketing agreement does not reflect the true state of affairs, then MediaMax Tech shareholders would have a right to claim they are being misled.
NARM keynote address by Mitch Bainwol, Chairman & CEO, RIAA
http://www.narm.com/2005Convention/Bainwol.pdf
Although his presentation goes into detail on the piracy threat, he has just one slide addressing Copy Protected CDs. That is page 65 on the presentation PDF. This is what is on that page:
Copy Protected CDs
- Includes copy protection, secure burning capability
- Capable for use with both Windows media and
iTunes
- Proven in Europe past two years, significant US
rollout 2005 (Sony BMG)
- Technology evolving to address consumer
expectations
Proven in Europe past two years seems an endorsement of Macrovision's product that was stated here not to be working. Mentioning significant US rollout by Sony/BMG is good for us, but F4I in there too.
Howdy
Just this past weekend you know about the EXTREMELY POSITIVE FEEDBACK from and within the industry.
The trade group that works with and represents the ENTIRE INDUSTRY distributed a CD with MediaMax version 5.
Could you point to the extremely positive feedback we received?
On what basis did NARM distribute the MediaMax CD? Did we or BMG ask them to distribute it? Did NARM make any specific comment regarding MediaMax and why they distributed the CD?
I have attended enough trade shows to know that freebies given away mean nothing. They will usually hand out anything that registered attendees ask them to hand out. Now if they actually have made some statement endorsing Mediamax over and above the competition, that would be significant IMO.
I am really disappointed by the responses some people have made today to the post on Musicrypt.
Musicrypt Inc., (TSX VENTURE:MCT - News; OTCBB:MCYPF - News), the industry's leading digital music distribution company, today announced that it has reached agreement with Canada's largest independent distributor. Koch Entertainment will exclusively use Musicrypt's Digital Media Distribution System (DMDS) to securely deliver music to radio and other destinations.
Amx, as an example you said this....
Corey, This guys worried about music delivered to radio stations? Maybe he bought SCMI by mistake?
Perhaps you may not have read the most recent PR from SCMI?
MediaMax Technology Corp. (OTC BB:MMXT.OB - News) seller of MediaMax(TM), America's most accepted and best-selling content protection and enhancement technology for audio CDs, has expanded its mission statement to include the delivery of a unified technology capable of protecting audio and video entertainment content across all file formats and distribution models currently used in the marketplace.
That puts musicrypt right up against us as a competitor.
However, even though many might see that PR as positive, again I see it somewhat differently. Look back at the earliest PRs from SunnComm and even their previously filed SEC docs and you will see that SunnComm's mission statement (although it was not called that) already included distribution via physical media and the net and included protection of music, movies, software and games.
However, I have noticed that the company is very quick to limit its 'scope' when it suits them. Rather than accept we are running a distant 2nd to Macrovision in Music protection (450M v 20M), we reduce the scope to the US only and pretend that the rest of the world doesn't count. Then we can issue great PRs saying how we are first in this and first in that.
Whenever someone points out a weakness in our technology, we are told that is not our arena and not to worry. This happened to me when I pointed out we had no solution to address P2P. I don't have time to locate the post, but one of the comments was that P2P was not an area we were interested in. As if anything that diminished the value of our protection should not be of interest to us. The same with Musicrypt. If they can deliver to radio stations without needing physical media then that should concern us as it erodes the market for Studiomax.
Lets stop putting our heads in the sand. Every type of content distributed by every medium is our concern. Customers want unified solutions. If a competitor establishes a hold on a particular distribution medium then that competitor becomes a threat to us in 2 ways.
1. It can reduce our market for physical media (more music distributed via the net means less than otherwise on CD).
2. The competitor can work on a solution that competes with MediaMax and then offer our customers a solution that covers multiple distribution methods.
The analyst contact that I posted on a month or so ago made that very point in relation to Macrovision and EMI. Although EMI saw CDS-300 and MediaMax as similar in capabilities, the deciding factor was Macrovision being able to combine CDS-300 with Hawkeye (their P2P solution) that made the combined solution the most attractive offering.
While on EMI, I noticed a post a day or so back from one of the faithful proclaiming that EMI was a long time customer of Macrovision and that was why they decided to go with Macrovision. Didn't another of the faithful tell us some time ago that EMI wouldn't even talk to Macrovision because they had lied to them about something?
The news we are getting from the analyst is that EMI are doing a full roll-out using Macrovision's CDS-300 for commercial CDs in Europe and the US, later to be followed by the rest of the world, which are either not protected currently or on CDS-200. He has been told that they will continually evaluate all technologies, but that there is no current intention to use MediaMax.
This is different to what is been stated here, so I will hold judgement until I can see an EMI CD with MediaMax on it.
threebabiesbusy
Could the company actually put measures in place to have these two companies pps trade realatively the same and at a low pps for reasons of ensuring that the merge does go thru
You are putting the cart before the horse.
Once the company announced their intention to merge at a 1:1 ratio, the shareprices should have had a negligible difference.
The fact that they haven't suggests certain things.
The market still does not believe the merger is a certainty. If they believed it to be 100% certain, they would always buy the lower priced. But anything less than 100% certainty, means they must attach a risk premium to the price of each share based on their assessments of what the effect on the respective company would be if the merger didn't go through. For example, they have to assess whether MMXT would be abandoned should there be no merger, with SunnCom deciding to bring back "marketing" under its control, like prior to the agreement coming into effect. Alternatively, they may decide that SCMI is such a liability because of its history that MMXT will simply buy the technology from them (but not buy the company) and the employees will just shift across to MMXT. Or they might continue as they are as two separate companies. So, believing that the merger is not 100% certain, investors will decide the likelyhood of each of the above and the many other outcomes that are possible. Depending on their assessments, they will favor one of the companies above the other. The fact that the divergence is so large, indicates to me that the market is far from certain that the merger will go through.
Another factor that may come into play is the liquidity of both stocks. MMXT seems mostly held by "insiders" (which includes SunnComm), so there is less liquidity in that stock. However, I think the uncertainty of the merger is the main factor for the difference.
There is no reason that the company needs to manipulate the prices to ensure the merger goes through as you were asking. After announcing the terms of the merger, it is not their fault (other than any action that adds to the uncertainty) that the prices still diverge. In fact to try and manipulate the prices would be a very dangerous, if not illegal. It would allow speculators who have wisened up to what is happening to make money through shorting or arbitrage. For example, if they thought the company was deliberately lowering the price of MMXT to bring it closer to SCMI, then they would start shorting MMXT in a big way, knowing the company's actions will make this easy money for them.
zstevek, I know you probably have considered this already, but just in case you haven't, did you try the CD on a clean PC or could the PC already have the MediaMax software on it from a previous release?
Alramos comment about getting the skips from a PC that already has MediaMax on it (and you heard clicks too) might suggest that it is the MediaMax s/w that is adding the clicks when someone tries to rip the audio using a ripper (instead of using the allowed download).
Sony BMG reaches licensing deal with iMesh
Published: July 9, 2005, 5:24 PM PDT
Music giant Sony BMG has reached a licensing agreement with file-swapping service iMesh, one of the first such tie-ups since a U.S. Supreme Court decision clamping down on online copyright infringement.
The deal, confirmed on Friday by an iMesh representative, followed a high court ruling that unauthorized networks such as Grokster could be held liable for the copyright infringement of their users. Analysts said that decision added momentum to the move toward networks sanctioned by media companies.
Once one of the most popular of post-Napster song-swapping networks, iMesh, formed in 1999, was sued by the record labels in 2003 for copyright infringement and settled for $4.1 million.
The New York-based service said just after the June 27 Supreme Court ruling in favor of entertainment companies and against rival file-swapping network Grokster that it would roll out a music industry-"sanctioned" song-swapping service.
The privately held company also hired former Sony Music President Robert Summer as executive chairman to handle negotiations with the music industry.
Sony BMG, one of the big four music labels, is a joint venture between Sony and Bertelsmann.
Music trade publication Billboard reported on Friday that iMesh was also close to signing a deal with Universal Music Group in the next week to 10 days. A representative for iMesh had no immediate comment on the report.
Other peer-to-peer services have been formed to satisfy the entertainment industry's demand to be compensated for songs like Mashboxx, headed by former Grokster President Wayne Rosso, which has also reached a licensing deal with Sony BMG.
Rosso said he was near deals with the other major labels and that the ruling had unleashed intense interest from investors. "Everybody wants a piece of me," said Rosso.
Mashboxx works with Snocap, a venture headed by Napster founder Shawn Fanning, which identifies songs by their digital "fingerprint" and determines if they are copyrighted.
The iMesh service also uses a centrally managed rights clearinghouse so music companies and publishers can claim compensation for songs being traded.
Record labels in 2001 managed to close down Napster, the first song-swapping service, and then went on to challenge its successors like Grokster and Streamcast Networks in the courts.
Napster has since changed owners and transformed itself into a commercial online music service.
http://news.com.com/Sony+BMG+reaches+licensing+deal+with+iMesh/2100-1027_3-5781196.html?tag=nefd.top
Alj, I've checked out some of you statements on Macrovision.
Did they or did they not spend $150 million in buying two companies to catch up with SunnComm on the CD side, or, if the definition is preferred, to lay hands on the very best intellectual property on the CD side?
Seems not. They spent just $35.25M according to this article. I would guess that SunnComm has expended close to that amount getting to where it is today. If taken over 600M shares (400 SCMI, 200 MMXT) amounts to under 6 cents a share.
http://siliconvalley.internet.com/news/article.php/1495261
What was the outcome? Not one, but two, embarrassing blunders.
If copy protecting 450M CDs is a blunder, then SunnComm badly needs some blunders urgently.
Maybe we should think of comparing that figure with the current market capitalisation of SunnComm?
The real figure (not your figure) is on a par if you take SunnComm's market cap from a few months ago.
I think I read somewhere that it can take about 5 - 6 weeks for the manufacturing figures to come through. So assuming the merger audit will be to June 30th, I would think mid August the earliest to expect it. Just check the regular MMXT filings. They are about 7 weeks after quarter end.
They recognize revenue for Mediamax in the month that the CD is manufactured, so they must wait to see June manufacturing data to calculate June revenue.
Found it too. 3 1/2 years old...
http://mcdevzone.com/blog/index.php?m=20020121
If the wording is wrong as I suspect, then it should be just a trivial matter to correct. Seems to me that they just need to change those two clauses in 1.03 from Seller to Buyer and its done.
Better to have these minor errors discovered now, then have complications arising after the merger is complete.
SunnComm or MediaMax Tech ?
I am agreement with GCRox99 on this one. I think that 8K filing is in error (unless they do want it called SunnComm International).
The Definitive Merger PR is clear. The resulting entity is to be named MediaMax Technology Corporation. But unfortunately the PR is not the merger document that is to be agreed upon.
The combined organization will be named MediaMax Technology Corporation with the stock symbol (OTCBB:MMXT).
But the 8K filing seems to have a few errors relating to the allocation of the name (I may be wrong, but legalize can't be that abstruse that it means the opposite to what it seems to say in plain English).
The definitions of Buyer, Sub and Seller are clear from the preamble...
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 11, 2005, by and among MediaMax Technology Corporation, Inc., a Nevada corporation ("Buyer"), MMXT Sub, Inc., a Nevada corporation and a direct, wholly-owned subsidiary of Buyer ("Sub"), and SunnComm International, Inc., a Nevada corporation ("Seller").
The first mention of "Surviving Corporation" is in Section 1.01.
Section 1.01 Effective Time of the Merger. Subject to the provisions of this Agreement, articles of merger in such form as shall be required by the relevant provisions of the Nevada Revised Statutes ("NRS") (the "Articles of Merger") shall be duly prepared, executed and acknowledged by the Surviving Corporation (as defined in Section 1.03)......
"Surviving Corporation" is to be defined in Section 1.03.
Section 1.03 Effects of the Merger. At the Effective Time (i) the separate existence of Sub shall cease and Sub shall be merged with and into Seller (Sub and Seller are sometimes referred to below as the "Constituent Corporations" and Seller is sometimes referred to herein as the "Surviving Corporation"), (ii) the Articles of Incorporation of Sub immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation, except that the name of the corporation set forth therein shall be changed to the name of Seller, and (iii) the Bylaws of the Sub as in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation, except that the name of the corporation set forth therein shall be changed to the name of Seller.
That section is defining the "Surviving Corporation" as a merger of Sub into Seller, and will use the Articles and Bylaws of Sub, but with the corporation name changed to that of Seller (SunnComm). The legal entity that survives ("Surviving Company") is Seller (SunnComm) with Sub (MMXT Sub) ceasing to exist.
"Sub" (MMXT Sub) is a new corporation that will be set up purely for the purpose of facilitating this merger (I don't see it yet listed in the Nevada Corporations register). Its Articles of Incorporation and Bylaws will obviously have its Corporation Name defined as "MMXT Sub". What 1.03 above should be saying is that these Articles and Bylaws will become the Articles and Bylaws of the "Surviving Corporation" except that the Corporation Name stated therin will be changed to that of Buyer (MediaMax Technology Corporation). Instead it said Seller (SunnComm International)
The statement that Seller is sometimes referred to herein as the "Surviving Corporation". relates to the fact that after the merger between Sub and Seller, only one of those two corporations will remain. It states that Sub will cease to exist, so the "Surviving Corporation" will be Seller (SunnComm). But just because the surviving corporation is SunnComm, that doesn't mean it can't be renamed MediaMax Technology Corporation (which the agreement errs in doing). I would guess the reason the "Surviving Corporation" is the original legal entity SunnComm is so that they don't have issues over trademark ownerships, patent ownership, existing contractual agreements etc.
t d j
Sony/BMG is looking to stop casual copying. Why would they pay for that technology on CDs and leave a gapping hole of downloaded songs that can be copied? They are moving toward securing all of their property.
Correct me if I'm wrong, but iTunes is DRM protected by Fairplay so they can't copy songs downloaded from iTunes other than to their iPod. The spat Sony/BMG has with Apple is Apple won't make Fairplay available as an alternative DRM on CDs (alternative to Windows Media).
Interestinginfo2,
I am really not in a position to compare. I haven't had the opportunity to see Mediamax V5 nor CDS-300 V8. And even if I did, I would not be able to judge them on important criteria such as hackability, since I wouldn't have a clue where to start.
However, the specs of each product can be read on the respective websites and to be honest, there doesn't seem much difference. I think they must all be close in capabilities if EMI, Sony and BMG each have chosen a different solution (at least predominantly one solution for the moment). If MediaMax was 50% ahead (whatever that means) as Mario said, then is should be a no brainer for the labels, yet they each have opted for a different product. I would think that each product has some weaknesses and strengths compared to the others. Also the labels have different priorities, so the labels will chose the best match of strengths to their priorities.
We see this as potentially a 5 or 6 bagger if we hold BMG and they roll out worldwide exclusively us, and we get about 50% of one other major. Our one big issue is royalty per CD and we are not convinced that we are getting 4 cents. We still only come up with 3 cents assuming MediaMax Tech's revenue is just 40% of all licensing revenue ($106K for MediaMax is $265K for both, divided by 9M CDs is just 3 cents). This is low volume royalty, so will that remain at 3 cents for higher volume. We also have contradictory information on whether the $106K is just the 40% or combined revenue.
Leaving that aside, this is a speculative investment for our club and we are willing to lose all. We have allocated 10% of our investments to spec stocks. We have not considered Macrovision as we do not think CD revenue would have much impact on their gross revenues even if they won a significant share of the market. So they are not in the speculative category.
Amx8559. No need to apologize, no offence was taken.
I have just taken the time to read the SunnGramm sent out yesterday and that seems to be saying the same thing that the researcher said. If you re-read my note, this line from the SunnGramm is, to me, saying exactly the same thing, but with a lot fewer words than I used (but then it was written by a journalist).
Refering to the MediaMax and CDS solutions, it says:
The two pieces of software that co-operate with Windows Media DRM don’t work at all with Apple’s Fairplay and so Apple owners may find they can’t play the CDs at all or if they can, they are not protected, in the same way raw MP3 files are not protected on iTunes.
That is basically my post condensed into one sentence and that was sent out yesterday by Peter in a SunnGramm
Merlyn,
I agree with that post somewhat. However, you are not right in saying either force Apple to embrace DRM or create another distribution outlet where DRM encoding is mandatory.
As far as I know Apple fully embrace DRM. They use Fairplay, which is their equivalent to Windows Media DRM and I understand tracks downloaded from iTunes Music Store are controlled by Fairplay. The issue the labels have is Apple not allowing Fairplay as a DRM alternative on copy protected disks. That forces the labels to either prevent those CDs running on a MAC to hinder piracy (EMI solution) which antagonizes the consumers or allow those CDs to play on a MAC enabling piracy (BMG solution). All the labels want is for Apple to allow them to use the same Fairplay DRM on CDs that Apple itself uses on iTunes.
The labels could withhold their music from the iTunes store either permanently or for the first few weeks of release to force Apple's hand. But that also risks the labels losing revenue through that outlet medium, so its a doubled edged sword. And that loss may not be recouped in CD sales, as it might drive the users to the P2P sites.
The biggest weapon against Apple is as you say the threat from alternative MP3 players, especially cell phones. If the other players are able to import tracks from the CD using Windows Media say, but not iPod users, or if iPod users have to go through some set of gymnastics to get those tracks, then I think Apple will lose their edge and risk losing their commanding position in that market.
Researchers and analysts make statements based on their assessments on the information available. Companies never fully open up to what their true intentions are so these guys must make judgements as best they can.
This guy expressed an opinion and I am grateful for his contribution.
Perhaps you might revisit my first post that contained some feedback from this guy:
http://www.investorshub.com/boards/read_msg.asp?message_id=6606501
That was full of "He thinks" too and most of that has actually turned out to be true based on some of the articles that appeared in the last few days.
His explanation of why BMG are holding back on V5 for some releases is quite plausible. Has anyone else come up with something more believable.
I do look forward to you in future replying in a like manner to every post on this board that expresses an opinion ("I think, he thinks, IMO etc.).
117ny302bxv howdy - spot on.
yellowdog, let me make an educated guess. SunnComm & BMG / Sony expected Apple / iPod compliance prior to the Foo's release, thus anticipated MM5. BMG / Sony elected to use MM3 knowing that THIS VERSION they could issue a work around for those requesting it
Our club researcher managed to get a call in with the industry researcher today and was able to get some insight on some of the issues I raised with him. Our club guy gave me a quick call earlier this afternoon and this is how I understood what he told me. I had asked him to ask about Apple compatibility and BMG's decision to not use MediaMax V5 on high volume releases.
He wasn't aware of the V5 release decision, but his take is that it relates to Apple compatibility and the 'shift key'. He thinks MediaMax V5 is like CDS300 in that the 'shift key fix', added with V5, requires some sort of disguising of the normal CD audio, making the CD unplayable in a Mac.
This is no different to a Windows PC, because the normal CD audio also cannot be played there either. You can only play the Windows Media files that are generated on the fly (or were on the disk in the earlier releases). The way around this was for Apple to allow Apple Fairplay files to be generated on the fly and these could be played on the Mac, just like the Windows Media files could be played on a PC. When Apple held back on allowing this to happen, that plan was put in jeopardy.
He believes BMG are paranoid about playability after some earlier bad experiences with Midbar, the company that was bought out by Macrovision. This is why (HE THINKS) BMG are holding back going with V5 on the "high profile" releases. EMI on the other hand are more willing to trade off playability for a more rigid security.
He was asked about his previous comment that MediaMax had no technical advantage over CDS300 and yet CDS300 was incompatible with MACs, but MediaMax was compatible. The answer was much the same. He said CDS300 will be compatible with MACs when Apple changes its policy. He does not think MediaMax V5 is compatible with MACs either, without the Apple agreement. He thought that the earlier version of MediaMax was only compatible with MACs because they simply appeared to a MAC as a standard CD. They didn't offer any protection on a MAC and the users could rip and play the CD to their hearts content (the normal CD audio bit). He thought this a gaping hole in the security and didn't see that making MediaMax technically superior. He said something about a version of Windows Media was available for a MAC and maybe that would allow the WM files on the CD to be played (accessing the extras etc), but he thought MAC users would be contemptious of anything to do with Windows Media, so that would offer them little.
So in his opinion, MediaMax (pre V5) allows playability on a MAC but gives no protection there and CDS protects against ripping on a MAC but will only be playable when Apple allows.
This is a post on CDFREAKS from an Austrian
Velvet Revolver - Contraband is also CDS 200, Miles Davis isn't listened..
http://club.cdfreaks.com/showthread.php?t=108843
Joe R
Macrovisions claim of 144 mil cds has been around for a number of years. I recall Kenco making that claim, and posting some article in support of the assertion more than 2 years ago. The CDs were released outside the US, and were the old Macrovision protection which had playability issues. If I recall the various posts correctly, a number of suits were filed against them for the CDs.
Actually Macrovision are claiming 450M CDs in their press releases. My statement about EMI using 145M CDs is incorrect. That should have read 127M. And according to the article, that is coming from the label....
The labels say such technical glitches are a thing of the past. EMI has distributed more than 127 million copy-protected discs in 48 countries with few customer complaints.
http://www.siliconvalley.com/mld/siliconvalley/11898486.htm
As I said yesterday, we can stick our heads in the sand and pretend it is all lies, or we can just be realistic about it.
As far as I know, there is no independent body counting how many CDs are protected by which technology. Macrovision, like SunnComm and F4I, would base their statements on figures from manufacturing. We either assume they are upfront or they are lying.
What verification is there that SunnComm produced 10M CDs in 2004? I have seen fairly recent statements from BMG saying they copy protected 5M CDs in the US, so that would be part verification of half of SunnComm's count. But I have seen nothing that verifies the rest. But I see no reason to dispute SunnComm's figure. All I am saying is that you have to take both companies statements at face value, because there is no means available to anyone outside the companies themselves (perhaps apart from the auditors) to verify whether the claims are true or not.
Bleuduece, I searched google and found this article. I don't know if that's Kenco's source. I'm not sure how credible this article is. Possible finding a European site equivalent to Amazon and reading comments from purchasers of the CDs would indicate which technology is used. I don't know any.
Update, June 21, 2004. Velvet Revolver's new release Contraband, which topped U.S. album sales charts this week, contains anti-copying software from SunnComm that is substantially similar to the earlier version of the technology described in this report. I have performed a preliminary inspection of the new system, and like its predecessor, it appears to provide only minimal protection against copying. It can be bypassed by holding the shift key every time the disc is inserted, turning off autorun before using the CD for the first time, or manually disabling the driver software as described below. I believe most of the information in this report is also applicable to the new release.
Note: The E.U. release of this album contains Macrovision CDS-200 copy prevention technology, not the SunnComm CD3 system described in this paper. The Japanese release does not appear to contain any copy protection.
http://www.cs.princeton.edu/~jhalderm/cd3/
Burners' Bummer
By Anjali Athavaley, Washington Post Staff Writer
Sun Jun 19, 1:00 AM ET
Ben Freedland did two things that his fellow college students have been doing routinely for the past several years: First, he bought a new music CD by campus fave the Dave Matthews Band, then he tried to upload it onto his Apple iPod.
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But something was wrong. When Freedland, 20, first inserted the "Stand Up" disc into his laptop in preparation for transferring it to his iPod, "it took over my computer," he said.
The screen went blank, then a copyright agreement popped up. The music wasn't going anywhere. Freedland could play the CD on his laptop, but he couldn't transfer it, and he couldn't copy it to share the mellow grooves with friends or family.
Freedland deemed the CD "worthless."
The Duke University student had had his first run-in with a technology that record companies are using to limit the number of times users can burn, or make extra copies of, CDs. The new content-protected disc, which is not yet compatible with the iPod, is the recording industry's latest strategy to curb the illegal spread of music. This time, the crackdown is on the CD purchased at your local music shop -- the last bastion consumers held in freely sharing legally bought music.
It's one thing for record companies to file suit against people who share music files illegally on the Internet, or to pursue criminal charges against those who make pirated copies of CDs and sell them on street corners. But this is different. Generations have grown up with the notion that if you buy an album at the store, the songs are yours to show off to your friends.
In the 1970s and '80s, people made mix tapes without thinking twice. The tapes were an expression of personality. "A good compilation tape, like breaking up, is hard to do," Nick Hornby wrote in "High Fidelity," a novel in which mix tapes served as the very definition of identity and the currency of relationships.
With the death of the cassette tape, that same mentality transferred to the mix CD. It became a birthday gift, a wedding compilation, a way to say "sorry" or "I love you." In college dorms, students started exchanging CD albums so that a hardcore Nirvana fan could try a little Garth Brooks without having to pay for the whole CD.
But the technology got too good. Copies of CDs sound just as clear as the originals -- unlike cassette tapes, which always had some level of hiss. And with the rise of the Internet and online file-sharing, suddenly it became possible to share with several thousand "friends" at a time.
Such behavior is being blamed by the industry for a dramatic drop in sales of CDs and other forms of recorded music. Over the past five years, shipments of music to retailers have dropped by 21 percent, according to the Recording Industry Association of America.
"There is no question that piracy -- in its various, ugly forms -- is the primary reason for that decline," said Mitch Bainwol, chairman and chief executive officer of the association, in a written statement. "In the face of such devastating and ongoing harm, it is appropriate that record companies find ways to facilitate the continued investment in new art."
So in a move that risks alienating a dwindling customer base, the major record labels are tightening up restrictions on CDs.
A growing number of newly released CDs are equipped with software that limits users from burning copies more than three times. On CDs released by record company Sony BMG Music Entertainment, individual songs can be used in compilations only three times.
Rival EMI Music will test CDs with a similar technology this summer, releasing three to six titles with a three-time burn limit on each album. (No, you can't make copies of burned CDs -- the content protection won't allow it.) In addition, consumers can copy an individual song up to seven times. Both EMI Music and Sony BMG use technology that prevents the songs from working on peer-to-peer networks such as Kazaa, which contain songs in MP3 format.
This juncture in technology is a tricky proposition for music lovers, who often say they support artists' rights to combat piracy. Yet, when it comes to individual use, they assert ownership of their CDs with an almost parental pride.
Steve Coleman, 43, said he prefers to buy his music at local CD stores rather than download songs online. Sporting a black T-shirt, a Harley-Davidson cap and long blond hair in a ponytail, he looks like the epitome of the old-school music junkie. One recent afternoon he flipped through the racks at Melody Record Shop on Connecticut Avenue NW, searching for New Order's latest release.
In his high school days, Coleman made mix tapes of his favorite rock and dance tunes for his friends, and other kids would invite him to parties to play his Led Zeppelin and Donna Summer records. Today he's a deejay, and he gives burned CD mixes to potential clients who want to know his musical tastes.
"I paid for it," Coleman said. "I should be able to do what I want with it, as long as I'm not breaking the law by giving it away to all my friends en masse, which is ridiculous."
But CD loyalists are divided on that issue. Greg Shadley, who works in the campus ministry office at Georgetown University, takes two buses and a train to get to his job every day. His iPod and his jumbo headphones accompany him every step of the way, he said.
Shadley, 49, even listens to his playlists at work. He prefers classical music, but he also rocks out to bands like the Grateful Dead and the Doors. He hates downloading music off the Internet unless it's absolutely necessary.
The content-protection technology would not keep him from buying an album, Shadley said, because he doesn't like to share music out of respect for the artists, who stand to lose royalties every time someone copies a tune instead of paying for it. Shadley used to work at a Tower Records downtown and hated watching kids buy the latest pop CD to lend to all their friends.
A newer generation of music lover views things somewhat differently. Around the George Washington University campus, students said they understand the record industry's reasons for combating music piracy. But they also acknowledged that it wouldn't stop them from sharing CDs with their friends or downloading free music.
Emily Mannie teaches a spinning class and likes to sample music online before deciding if it's worthy enough for her music mixes. She says she respects artists' rights and understands why the recording industry is setting boundaries. But she still downloads illegally because, well, it's free. The average college student pocketbook isn't very full of money.
"It's like speeding," said Mannie, a 28-year-old graduate student. "I know I shouldn't speed, but I have to get there."
If she comes across an artist she finds appealing, she's willing to invest in a CD. For example, when the rock band the Killers first got big, she wanted to hear more than just the hit single "Mr. Brightside" before buying the album. If she hadn't listened to the songs online, she doesn't know if she would have been willing to go to a record store to buy the CD.
Getting a taste of the music online and buying the album seem to go hand in hand. Consumers who spend the most money on music usually buy a mix of digital music and CDs, according to the NPD Group, a market research firm.
"Everyone likes to think this is a zero-sum game, and that's not necessarily going to be the case," said Russ Crupnick, president of NPD's music and movies division.
For their part, record companies say content protection won't hurt sales. The technology is meant to target music pirates who burn more than a reasonable amount of purchased CDs.
The CDs that have content protection say so in a label on the disc. If consumers try to get around it, they should know that their actions are illegal, said Thomas Hesse, president of global digital business for Sony BMG.
"If you go over a speed bump, you know you went over a speed bump," Hesse said. "They know that when they do so, it might be dangerous and it is illegal."
Those bumps don't seem to slow down some music lovers who just won't quit until they have the song they want. According to Yankee Group, the crackdown on peer-to-peer networks isn't effectively cutting into music file sharing.
In some ways the iPod, with its vast storehouse of music files, has become the mix tape of the digital age. It is a soundtrack to everyday life. Whether it's riding on the rail or walking to work in the summer heat, people are constantly moving to a rhythm.
The recording industry knows it must keep up with the beat. The new CDs are not compatible with the iPod. Both Sony and EMI are in talks with Apple to try to solve the problem.
As technological advances empower consumers, the free flow of music continues to spill over the boundaries set by the recording industry. Last week, Freedland, the Duke University student, downloaded free tracks from the new Dave Matthews Band CD from a peer-to-peer network. They are now on his iPod, ready for listening.
"It seemed like an entitlement," Freedland said. "I purchased the music, and I should be able to do what I want with it. Now I can."
http://news.yahoo.com/news?tmpl=story&u=/washpost/20050619/tc_washpost/burners__bummer
Interesting perspective
Yet a cynic's view of these developments would suggest that the record companies have another reason to adopt CD copy protection technology. By imposing an encryption-based copy protection scheme on a previously unprotected digital media format, CDs will become subject to DMCA 1201, the anticircumvention provision of the Digital Millennium Copyright Act in the US, and a similar provision in the European Union Copyright Directive (EUCD) that an increasing number of European countries are adopting.
In other words, these laws will act as legal backstops to the copy protection technologies in cases where they fail to prevent illicit copying. Furthermore, it will be possible to prosecute consumers under these laws if they break or circumvent the copy protection, regardless of whether they use the resulting copies for purposes that would be considered fair use in the US. (The overlap between EUCD anticircumvention provisions and private copying laws in most European Union countries has yet to be sorted out in court.)
Major Labels Push Copy Protected CDs in US Market
June 16, 2005
By Bill Rosenblatt
Two major music companies are proceeding with plans to introduce copy-protected CDs into the US market in volume. It is believed, though not verified, that EMI has chosen technology from Macrovision. SonyBMG is working with both SunnComm and the British firm First4Internet, with which the record company began experimenting late last year.
This development, which the majors have been promising (or threatening?) for the last year or so, comes on the heels of backlash against CD copy protection in Europe. Consumers have complained about compatibility of the discs with certain types of CD players, and advocacy groups have brought lawsuits against record labels in two countries where copyright laws allow consumers to make private copies of legally obtained material.
Public statements from record company executives have suggested that they intend to use this type of technology -- which (among other things) limits the number of "burns" that users can make from CDs -- to thwart casual copying while acknowledging that they do little to prevent determined, large-scale piracy. And SunnComm has suffered from revelations of easy workarounds to its technology, although the company claims to have plugged those holes in its latest version.
Yet a cynic's view of these developments would suggest that the record companies have another reason to adopt CD copy protection technology. By imposing an encryption-based copy protection scheme on a previously unprotected digital media format, CDs will become subject to DMCA 1201, the anticircumvention provision of the Digital Millennium Copyright Act in the US, and a similar provision in the European Union Copyright Directive (EUCD) that an increasing number of European countries are adopting.
In other words, these laws will act as legal backstops to the copy protection technologies in cases where they fail to prevent illicit copying. Furthermore, it will be possible to prosecute consumers under these laws if they break or circumvent the copy protection, regardless of whether they use the resulting copies for purposes that would be considered fair use in the US. (The overlap between EUCD anticircumvention provisions and private copying laws in most European Union countries has yet to be sorted out in court.)
Record companies intend to provide bonus content along with copy-protected CDs to help justify the fact that they are being offered at the same price point as unprotected CDs. We would be interested to know if the record companies plan on keeping up the production of extra content to match the pace of their copy-protected CD releases. And if so, we wonder whether they have made any effort to calculate the cost of producing all that content and compare it to the true anti-piracy benefits of this dubious technology.
http://www.drmwatch.com/drmtech/article.php/3513301
"First4Internet has indeed crashed and burned. Period"
The articles of late are clearly saying that Sony is going ahead with F4I. Why bury our heads in the sand? If they were dead, we would be reading that Sony are dropping them not rolling out disks with them.
The same with Macrovision. It was only a few months ago that someone was saying on this board that EMI would not even look at Macrovision because Macrovision was supposed to have lied to them about Microsoft (I'm not sure what the lie was). Yet we now read that EMI have issued 145m CDs using Macrovision without any significant problems and are about to roll more out in the US and UK, where they hadn't done before.
I don't know one CD that has Macrovision on it, yet does that mean the 145M from EMI and 300M from others have been on obscure astists too?
Perhaps the F4I releases were in the UK, where both F4I and EMI are based, and the rollout being talked about is their first in the USA.
SunnComm seem to be well placed and liked by BMG, but lets not bury our heads in the sand and think the others just have useless technology that bombs PCs. The analyst who reported to our club some weeks ago did not think MediaMax had any technical advantage over CDS300, but actually was lacking as an overall protection if you compared MediaMax to the combination of CDS-300 and Hawkeye.
First4Internet has indeed crashed and burned. Period
Your evidence of this?
amx, I have just checked their website and looking at a batch of PRs they released in early 2003 seems to show that they did support secure burning back then and also supported a second session with Windows Media. It is Windows Media that control downloads to a PC and on to other devices. Also, features like BIOs etc are just files encoded on Windows Media. WM files can be the tracks of the CDs in Windows Media format, but also can be videos, web pages, web links etc. Nothing special there.
Here is a link to their PR page.
http://www.xcp-aurora.com/press_related.aspx
amx
I doubt very much if F4I are working with SunnComm on anything. If they were in partnership, we wouldn't have Mario going around making unfounded allegations that their technology blows computers up. At least I think that comment was attributed to Mario, my apologies to him if it wasn't.
I don't know what was on their web site months ago, but if it offers features now that it didn't have then, that doesn't mean that they only developed them since then. They could have been working on the features for years and only made them available a few months ago.
I also wouldn't pay much attention to web sites. This is a very competitive industry and they may not want to be too specific about what they are doing. Compared to other industries, there are also only a few customers (4 large labels and some independents make up 90%), so a website isn't necessary as a marketing tool. One sales rep can easily cover the significant customer base on a one to one basis.
MADMMAX / 117ny302bxv howdy
I don't really see the point of all this "show me the evidence" demands. Is the suggestion that because these other companies don't maintain a list on their websites of copy protected CDs, that claims of 2M First4Internet CDs and 450M Macrovision CDs are fabrications?
I really think this board needs a dose of reality. We have been basing our understanding of competitive products on statements made by people on this board who make ridiculous claims that the other products are "blowing up" computers or simply don't work. Yet these same people make other statements in connection with SunnComm that have proved false. The fact of the matter is that the scorecard seems to be 450M+ Macrovision, maybe 15M SunnComm and 2M First4Internet. I don't know where K2Audio fits in. Lets hope we quickly overtake Macrovision to become the leader, but we do no favors by pretending they don't count because they haven't sold in the US yet. I'll take revenues in any currency, thank you.
Being factual is not bashing, but I've noticed that when some factual statements are posted here that may not be what we want to hear, the first thing that happens is the poster is attacked as bashing, or being too negative.
We obviously have a good product. We know because BMG uses us and continues to use us. Macrovision must have a good product too, otherwise they wouldn't have protected 450M CDs, of which 145M seems to have been with EMI. Sony obviously thinks First4Internet has something to offer. Which is best? I don't know. Maybe each of the labels have different needs and each has picked the product that meets those needs best. If that is the case, then our challenge is to improve in those areas our competitors seem best in and try and win the other labels.
That would be nice
Sting - is your guestimate of 4M CDs the total released by those artists or the total you think have MediaMax. The dualdisk issue makes it difficult to estimate Mediamax from purely billboard figures.
I don't get your drift? Why the personal attack and what's with the Macrovision?
You said "By the way the 15 million discs you speak of is rapidly turning into a monthly figure.." SunnComm announced 2 million for April and hasn't yet announced May. But your statement indicates you know what it is. I am asking you to share if you know it. If you don't, that's OK. No need to get personal.
"By the way the 15 million discs you speak of is rapidly turning into a monthly figure.."
So have you got May's figures? What are they?
Why do you say "with mediamax's extensive success'and rollout by bmg who will get the lionshare"
There are probably still less that 15M MediaMax CDs out to date. No one seems to mention the extensive successful rollout of the competition, as it seems to leave us for dead.
All of this happened when MediaMax was available to EMI and had been tested extensively by EMI 2 to 3 years ago.
EMI has distributed more than 127 million copy-protected discs in 48 countries with few customer complaints.
I notice few PRs from Macrovision touting their extensive rollout, yet we have hundreds of PRs for just a measly 15M CDs.
MADMMAX, I don't think they would retrofit the shift key fix into V3 because of the risk that it might cause problems. All versions go through extensive testing before they are released by SunnComm and by the labels. Once satisfied, no further changes are made to a version except to fix any bugs that are discovered after release. A big change like adding the shift key fix would render prior testing obsolete and require a further extensive period of testing to ensure there are no problems. It would be easier to just go with V5 which has already gone through its test period.
I think Apple will be the ultimate losers by their intransigence.
Did you read that article the other day about Microsoft. I can't find it now, but it was posted on this board. Microsoft have struck a deal with the labels, whereby if someone subscribes to Microsoft's upcoming music subscription service and at the same time has purchased or does purchase tracks on iTunes in Apple's proprietary format, then Microsoft will allow them to download those same tracks in WM format for free. They can do this with the consent of the labels, because the labels are the content owner and Apple is just a transport medium. Although this might seem that Microsoft is providing a service and getting nothing for it, it does mean that those users who purchase tracks through iTunes are not locked in to playing them just on a Mac or iPod. It will make it easier for them to migrate to other MP3 Players and still be able to play tracks that they have already purchased through iTunes. This is a smart move by Microsoft.