• Jeff Matthews

Pandora’s Box Evaporates

I once shared a ski lift with a lawyer. I will spare the obvious lawyer-joke, since I am married to an attorney, and go straight to the point: he worked for Nickelodeon, the kid’s TV network, and he was working on protecting Nick’s content from being poached by the emerging digital downloading pirates.

This was at least three years ago, just as the thing that started it all—Napster—was being shut down by lawsuits and an anti-piracy campaign led by none other than Lars Ulrich, drummer and co-founder of death/thrash/hair-metal band Metallica.

Ulrich, who is a terrific drummer even if you don’t happen to like his music (sample lyric: “Taste me you will see/More is all you need/You’re dedicated to/How I’m killing you”), ultimately succeeded in helping shut down Napster.

But he did not succeed in stopping digital downloading. It went, as the Godfather liked to tell his wife the Corleone family was also doing, “legitimate.”

Now, back to my lawyer on the ski lift.

I asked him, very innocently, about what kind of lessons the TV industry had learned from its music counterparts, who had at first ignored Napster and then brought out the lawyers—while dismissing the fact that the digital downloading of music made enormous sense, being both far easier for the customer and far cheaper for the music companies.

He went, to use the technical term, “off.”

How could I say customers wanted digital downloading? Didn’t I know it took too long to download? Didn’t I know there wasn’t enough bandwidth? Didn’t I know the music quality suffered with digitization? Didn’t I know customers like to browse?

And where, he wanted to know, did I get off with the idea that downloading music was cheaper than printing a CD and a CD case, wrapping them in plastic that is harder to open than the President’s nuclear briefcase, shipping them to distribution centers and then to stores, losing some off the back of the truck and others to the sticky fingers of the store clerks, and selling the rest at whatever mark-up was necessary to cover store rents and utilities???

(He didn’t actually say all that—but he did, and I am not making this up, scoff at the notion that downloading music was a cheaper way to go than the brick-and-mortar approach.)

All I can say is, it’s a good thing he was wearing thick ski gloves, or he might have tried to strangle me.

I did not bother explaining to him about my daughters, who loved Napster for its speed, variety, and ease-of-use. Nor about my self, who loved it for the fact that you could find anything you wanted, no matter how obscure—even some stuff never-before-available to anybody, like outtakes from old Beatles recordings.

Nor did I try to tell him that he and Nick-at-Nite and the rest of the video world ought to get ready for the digital shift, in whatever form it would take. He didn’t want to hear about it.

So I thought about that lawyer as I looked at Google Video, the new Beta from the folks who brought you Google Maps and Google Mail and just plain old Google.

Announced last Friday at CES, I expected very little from Google Video, owing to the fact that I had been studying it a couple of weeks ago when doing “The Business Story of the Year”—about the digital downloading phenomenon.

At the time, I was disappointed in the breadth of the Google offerings compared to, say, YouTube.

But now that the site is available, and content from CBS is being offered for downloading at an Apple-like rate, the shift has really begun: legitimate video content is available on the biggest search engine in the world.

Pandora’s box didn’t just open—it evaporated. I wonder what that lawyer is doing these days?

Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

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The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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