By Richard Menta 12/30/05
2005 was a watershed year for the future of digital media. It was a year that saw the rise of podcasting and satellite radio. It was the year of the Supreme Court's Grokster decision and the KaZaa trial in Australia. It was the year that Sony placed malware on millions of music CDs, creating one of the loudest uproars on the Internet. It also was the year that witnessed the rise of the independent musician through entities like MySpace.com.
The one constant in all of this is that file sharing continues to thrive, forcing the film and record industries to finally face the realities of the Net and their limited influence on it. This doesn't mean the acrimony between content holder and the consumer won't continue for years. It just means that the continued activities in Congress and the courts to criminalize certain consumer behavior will do little to curb that behavior. The content industries can continue to call file sharing piracy, but the fact is the average consumer does not.
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Which all brings us to this year's Winners and Losers lists. Below are the 2005 Digital Media Winners:
For the third time in a row Apple tops this list and the reason is a simple one. Apple has continued to grow the iPod/iTunes business, both in total volume of units sold and market share. Notes:
Yes, the Motorola phone with iTunes access fizzled, but that was but a minor blip in a stellar year. The question that comes to mind is this... in a few years when 30GB MP3 portables sell for under $50 what will Apple do to stay on this list? We'll have to wait and see.
2. File Sharing
The major record labels sued 16,000 P2P users and file sharing went up. The labels beat Grokster in the US Supreme Court and KaZaa in Australia and file sharing went up. The labels proposed dozens of laws to thwart it and file sharing went up. The labels successfully closed P2P applications and BitTorrent sites. What happened? File sharing went up. According to online analyst Big Champagne, November set yet another record for file sharing with no sign yet of leveling off.
As the closed-source FastTrack network lost users due to its stagnant evolution and the legal woes of its parent Sharman Networks, the open-source Gnutella network dramatically grew its audience of file sharers. What makes this feat notable is that Gnutella was written off by digital music pundits as obsolete in the wake of technology offered by BitTorrent and the eDonkey network. In the end, open-source triumphed as Gnutella's technical limitations were steadily corrected, resurrecting the protocol to a point where it now threatens to pass FastTrack for number two in audience size.
Several million dollars in seed investment followed by preliminary adoption by the movie industry has made Bram Cohen's vision a legitimate member of the content industry clique. For the most utilized protocol on the Net, this means large revenues and no lawsuits for its creator (at least in the immediate future). Also on the winners list are BitTorrent sites not permanently shut down in last year's RIAA campaign, like ThePirateBay, that have since grown exponentially.
In a single year podcasting went from novel Net-casting technique to grass-roots phenomenon. It has become so big, companies from Apple to Yahoo are expending great effort to turn it commercial.
6. Sony PSP
Sony the company is on this year's losers list, but the clear exception to that corporation's missteps is the release of the Play Station Portable (PSP). Selling millions of units in its first few months the PSP not only successfully challenged the Gameboy monopoly, it introduced the best portable media player yet to appear. In our review we noted that the PSP screen offered amazing clarity and in widescreen no less. The fact that the PSP display is significantly superior to Apple's recently introduced video-enabled iPod proves that Sony is indeed capable of bettering Steve Jobs and company. Additionally, Sony sold millions of UMD movies for the PSP, showing it can successfully introduce a new revenue model when it wants
7. Satellite Radio
Both XM and Sirius are growing, growing, growing, particularly 2nd place Sirius with the Howard Stern deal. It also helps that free terrestrial base AM/FM radio continues its campaign of mediocrity.
This year the BBC offered free downloads of all nine Beethoven symphonies, as played by the BBC Philharmonic, to gauge listener's appetite for downloads of classical music. The response was amazing as 700,000 users downloaded at least one symphony. The record industry complained bitterly, claiming it would destroy the sales of Beethoven CDs by other artists. Instead, the giveaway sparked a renewed interest in the classics. There is another reason for supporting the release of this public domain music to the world for free, because it will better it.
Honorable Mention: Slyck.com and P2Pnet.net
Kudos to our fellow digital music sites who deserve special recognition this year for impressive scoops. Slyck earned its merit badge with its coverage of the demise of WinMX. Meanwhile, P2Pnet scored big with its lone coverage of the Patricia Santangelo v. RIAA trial. Both events are major digital news stories of the year and both were ignored by the mainstream press - until the smart and persistent reporting by Tom Mennecke of Slyck and Jon Newton of P2Pnet brought them to the forefront. Even CNET lagged on both stories, which says a lot.
Thank you Jon, Thank you Tom.
Other MP3 stories:
The Digital Media Losers of 2005
The 30GB iPod Video is available on Amazon