Replies to post #39822 on e.Digital Corporation (fka EDIG)

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Reprogramming radio and TV habits


By Scott Kirsner, 6/30/2003

im Logan wants to break into your car. And your living room. In order for Logan's company, Gotuit Media, to be successful, he'll have to get his technology into your car and living room, and change the way you listen to the radio and watch TV.



It's rare for a small tech start-up to harbor such ambitious aims. Even rarer is that Gotuit has found backing from the likes of Motorola, Highland Capital Partners, and the Kraft Group, which owns the Patriots.

Gotuit is really three separate companies under one roof, in Andover's Brickstone Square office complex.

Gotuit Media has 18 employees, and is working with cable TV providers to index some of their programming. The idea behind indexing: Instead of watching a full three-hour football game from start to finish, you might pay a small fee to access a DVD-like, sliced-and-diced version of the game.

Logan shows a demo in the company's reception area, which is decorated to resemble a plush living room. We're watching a Pats/Dolphins game from last October. On the screen is a menu. We can choose to watch just the highlights, or the ''best hits,'' or the top plays by Tom Brady, or even a 20-minute, Reader's Digest condensed version of the game.

The same technology, which relies on both smart software and human employees to index a show, can be applied to a news broadcast. Don't bother with the sports highlights, if all you care about is the weather.

Cable operators ''have spent $60 billion building their digital networks, and now they're wondering how they will monetize that,'' says Dan Nova, an investor at Highland Capital in Lexington. Gotuit's service could be a way for them to make sure their subscribers stick with digital cable, and buy lots of video-on-demand programming each month, enhanced with the Gotuit indexing.

The second associated company is called Gotuit Audio. While Gotuit Media pulled in $6 million of funding late last year, and raised $2 million in 2000, Gotuit Audio is operating on a small seed round of only about $1 million, raised in March. Later this year, Gotuit Audio hopes to launch a TiVo-style recording system for your car.

Just as TiVo digital recorders enable consumers to pause live television, skip ads, and easily store shows for later viewing, Gotuit Audio's product, marketed as ''The Radio That Remembers,'' will allow you to do the same with Howard Stern and 50 Cent.

''You may be someone who loves [talk show host Don] Imus, and you want to listen to some of his show when you drive to work, and the rest of it when you drive home,'' Logan says. ''Or you're a big NPR listener, but you want to skip over the story about water buffalo so you can hear about rebuilding Iraq.''

Users could even program their Gotuit system, a small box mounted behind the dash or in the trunk, to record late-night talk shows while the car was parked in the garage.

''It'll keep processing audio overnight,'' says Mike Green, Gotuit Audio's vice president of manufacturing, ''but it'll know if you're parked at the airport for six days that it needs to throttle down, so it doesn't drain your battery.''

Other neat features: You'd be able to store favorite songs on the system, and you'd be able to use a small, inexpensive USB drive about half the size of a pack of gum to transfer songs or radio shows between your car and your home computer.

Logan expects the system to cost about $299. Initially, the technology would be an add-on to your current stereo system, but eventually he hopes to license his technology to companies like Kenwood or Blaupunkt for use in their products.

Company number three is called Pause Technology. Pause is a company set up as the repository for what could prove a very important patent, issued to Jim Logan and a partner in 1995. The patent is for a ''Time Delayed Digital Video System Using Concurrent Recording and Playback.'' Logan believes that TiVo, among other manufacturers, is infringing on this patent, which was filed in 1992.

After TiVo refused to license the patent from Logan and Pause, the company sued TiVo in US District Court in Boston. The case could go to trial next year, and it could have a major impact on anyone who is building -- or intends to build -- a TiVo-like device for storing digital video while also watching a show.

Launching two innovative products and pushing ahead with a major court case will challenge Logan and his team. But wait, as they say in the infomercials, there's more.

This summer, Gotuit Media will have to prove that its video-indexing product works within cable providers' existing technology infrastructure. The company will have to convince cable operators to invest in one more thing, on top of that $60 billion they've already spent.

Then the company will have to hope that the Gotuit index will prompt consumers to either buy more ideo-on-demand programming, or that couch potatoes will find it so useful that they're willing to pay an additional monthly fee for it.

Gotuit Audio will need to ''prove that they can manufacture [the product] at the cost they think,'' says Nova. ''They'll have to prove that it's easy to install, and do some early tests with consumers to make sure that they would be interested in purchasing the product.'' On top of that, there's competition from other technologies trying to make their way into your dashboard, from MP3 music players to satellite radio.

Gotuit Audio will also have to put together another round of funding before it can launch its product, a chore Logan is only now starting. And many venture firms -- Highland is an anomaly here -- shy away from investing in technologies, like Gotuit's, that target consumers rather than businesses.

Before launching Gotuit, Logan was founder and chairman of MicroTouch Systems, a Methuen company that went public in 1992 and became the world's largest manufacturer of touch-screens for ATMs before being sold to 3M. (After leaving MicroTouch, Logan was hit with charges of insider trading; he settled with the SEC without admitting any wrongdoing, and paid more than $580,000 in penalties and returned profits.)

Logan knows that even if the products he's introducing do happen to connect with consumers, Gotuit will need a few years to have a real impact.

''With the touch-screen business, I learned that markets grow at a natural rate,'' he says. ''You can't have grandiose expectations, and you can't promise [your investors] to be a billion-dollar company next year.''

That's the new old tech wisdom: Thinking big while growing slowly isn't a crime.


Scott Kirsner is a contributing editor at Fast Company. He can be reached at [e-mail].

This story ran on page C1 of the Boston Globe on 6/30/2003.

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Aimster shutdown upheld

Decision may affect rulings on other services

By Hiawatha Bray, Globe Staff, 7/1/2003

A federal appeals court in Chicago yesterday upheld an injunction that shut down the file-sharing service Aimster to stop its users from illegally swapping copyrighted music recordings.



The decision may call into question another recent federal court ruling, which allowed continued distribution of two other file-swapping programs, Grokster and Morpheus. In that case, a judge in Los Angeles said Grokster and Morpheus were not legally responsible when users of the programs swapped files illegally.

Cary Sherman, president of the Recording Industry Association of America, hailed yesterday's ruling.

'We're delighted by this decision which makes clear . . . that companies cannot profit from copyright infringement,' Sherman said.

Yet Johnny Deep, who founded Aimster and has since renamed it Madster, also celebrated the ruling.

'It's a stunning victory for us,' Deep said. Deep said that although the court left the injunction in place, the court's opinion, written by Judge Richard Posner, laid out a series of tests that the file-sharing service would have to meet in order to resume business. Deep said that his company could easily meet those tests and would therefore prevail at trial.

Posner wrote that the service could continue if it could prove that people used the software for legitimate purposes, such as trading non-copyrighted music files.

Also yesterday, the Electronic Frontier Foundation, an Internet civil liberties organization, launched a grass-roots lobbying campaign to block a plan by the RIAA to sue thousands of individuals engaged in illegal file-swapping.Under the plan announced last week, RIAA investigators will subpoena Internet service providers to get the names of users who swap large amounts of copyrighted music. These people will then be subject to civil or criminal penalties for copyright infringement.

EFF is trying to persuade Congress to modify federal copyright law to make file-swapping legal under a new system for collecting music royalties that ensures that music producers are compensated for their work.

EFF senior staff attorney Fred von Lohmann proposed 'compulsory licensing,' which would require music companies to allow Internet users to swap and listen to whatever tunes they pleased. In exchange, Internet companies and makers of related technologies such as MP3 players and CD-ROM recorders would pay a special fee to compensate musicians and composers. The fee would be paid by consumers through price increases, and the money collected in escrow accounts, to be divided in accordance with a prescribed formula. For instance, artists whose tunes are downloaded more frequently would get a larger share of the money.

Mitch Glazier, the RIAA's senior vice president for government relations said a compulsory licensing plan would require some sort of federal regulatory body to set the fees and make sure the money is distributed fairly. In effect, said Glazier, 'the EFF is advocating having the government regulate the Internet.' Glazier prefers the RIAA approach -- aggressive pursuit of file-swappers modeled on the cable TV industry's prosecution of those who sell illegal set-top boxes.

'If you look at the case of cable signal theft and satellite signal theft,' said Glazier, 'you can see that it does work.'

Hiawatha Bray can be reached at [e-mail].

This story ran on page D2 of the Boston Globe on 7/1/2003.