EU Continues Probe of HD Video Formats

[Davemcc]

No disrespect intended but this is a remarkably silly comment. How does that differ from Ford being the only "playback device" for gas? See below... Actually my choice of Ford as an example was a poor one. I should have said Mercedes and standard oil. Such an agreement would have limited choices to expensive German cars and the Model T driven boom in Joe Sixpack car ownership would never have happened.

Perhaps this analogy could work if Standard Oil actually had a monopoly on gasoline or if Sony actually had a monopoly on HD content. The fact of the matter is that neither is true. While Standard Oil was dominant in the market, it still had competition and if it had decided to only refuel Fords or Mercedes, their competition would have quickly filled the huge market niche that Standard Oil abandoned. That is the nature of free market competition.

The only true monopoly that I am aware of is Alcoa. The way it maintained that position is by keeping its quality so high and its prices so low that nobody could afford to compete. But even this monopoly was not bad because even the threat of potential future competition prevented Alcoa from raising prices and taking advantage of its monopoly.

Choosing to produce for one or the other is perfectly fine. Agreements (or even discussions) between Sony and content producers to produce for only one or the other is on its face collusion and anti-competitive. Even trying to persuade content producers to keep content exclusive or an internal agreement within Sony divisions could be construed as anti-completive.

"col·lu·sion


noun
Definition:

secret cooperation: secret cooperation between people in order to do something illegal or underhanded

[14th century. Directly or via French< Latin collusion-< collus-, past participle of colludere (see collude)]"

An exclusive agreement is not collusion. First, these agreements are made public, which makes them, well, agreements. Second, they are currently legal. Third, there is nothing underhanded about exclusive agreements. Surely, you don't think that there is something sinister in the fact that Chrysler dealers agree to sell exclusively Chrysler products. Why is sony different? And as far as being anti-competitive, trying to entice providers to use your product exclusively instead of your competitors' is the very nature of competition. The alternative is to convince your providers to buy your competitor's product, which is absurd.

Actually my ford analogy works fine. You could have brewed your own fuel. Or bought a wood burning steam car. Or charged up your electric car. It's just that IF you chose to buy gas you would need to drive a Ford, and only Ford would have survived the shake-out. If you choose to watch most hi-def movies you will have to buy an over-priced Sony. How does eliminating price pressure benefit the consumer? Standards? Remember video disk coexisted with VHS for years precisely because there were no exclusive agreements. Consumers were allowed choices. It was the convenience and rapid price drop of DVD players that picked a winner between the three.

Your Ford analogy fails to allow that Standard Oil did have competition that would have filled the market niche. It also fails to consider that electric cars were perfectly viable in 1910 and did compete actively for market share against the combustion engine. Had Standard Oil decided to only refuel Fords, it is likely that the electric car would have benefited from some of the decades of research and billions of dollars invested in the development of the combustion engine. Had this research and development funding caused the electric car to become the dominant format, Standard Oil would have gone bankrupt. Your simple "what if" analogy fails to consider the resilient nature of competitive market forces.

Sony knows that without exclusive content agreements that the first full featured backward compatible player to reach $100 will win Joe and Jane Sixpack's loyalty. They can't win that race and they know it so they lock up content. The bottom line is that if somebody doesn't get to $100 soon then both formats may well go the way of DVD-Audio. A nearly dead niche product.

BTW I'll probably buy an over-priced Sony at some point but not right now.

First, please acknowledge that Sony owns its content. Once you admit that, you can agree that Sony doesn't have to release content at all if they don't want to. If they do decide to release content, they have the right to determine in which format it is released, even if it is on a proprietary format with 100% DRM that prevents it from being copied or reformatted. If Sony's decisions fail in the marketplace, so be it.

 

[hmurchison]

I'm reading a bunch of mismatched stuff here.

On one hand you have people ranting about the EC wanting to force content from Blu-ray to HD DVD. Patently false...go read their statement. They don't care what format the studios have chosen so long as their reasoning behind the choice doesn't violate anti-competitive statutes as defined by Article 81

https://clarahost.clara.net/online.reckon.co.uk/open.cgi?Article_81

Free market economies do not mean you're "free" to do whatever you want. The Govt's role is to ensure fairness which wholly benefits consumers more than allowing a variety of monopolies to create.

I think the article here by Dave speaks clearly to the issue of when does collusion become anti-competitive and when should the govt step in. He may seek a more egalitarian distribution of HD content but the govt is strictly going to look at if from the perspective of anti-competitive behaviour that has deletrious effect on consumers.

Frankly I have my suspicions that there indeed is collusion going on that may violate the laws.

When HD DVD has more stand alone players an the attachrate per player is significantly higher you have to wonder why a studio that wants to sell its content is avoiding it.

Then you add in cheaper production costs (HD replicators can replicated DVD as well) and cheaper end user hardware it becomes more difficult to justify ignoring the format.

Not only should the EC be looking into this but I'm perplexed at why the DoJ sits still. I find it ridiculous that the DoJ called Microsoft to task for anti-competitive practice because they included a browser in windows yet all signs point to compelling theory that Disney/Fox/MGM/Lionsgate and others are colluding to starve and stave off HD DVD.

If the free market reigned supreme Americans would still be getting their phones and service from Ma Bell and paying out the nose for the priviledge. Monopolies or Oligarchies are generally not good for consumers. The reason why you can buy a HD player for $260 a year after introduction is because there "is" a format war going on. Amazing how competition lowers pricing when done correctly.

 

[Buckeye_Nut]

This whole argument rests on an invalid assumption, i.e. that the consumer has a right to every title in every format. That's absurd. It is the right of technology providers to license their technology to whomever they choose. Likewise, it is the production companies' choice to issue titles in the formats that they have license to. This basic freedom to contract is the foundation of the free market. I'm not saying this is ideal for the consumer, but let's look at how this plays out in the free market.

A tech provider that refuses to license will find that it has little or no product to sell and go bankrupt.

A tech provider that demands exclusive deals with producers may find that few producers accept such terms and be forced to license more freely or go bankrupt.

A producer who accepts an exclusive format demand may find itself with an unpopular format in which it can't sell it's titles.

The consumer votes with his dollars which format or titles he will make an investment in. It is only the consumer that can keep a format or producer afloat. Denying the consumer what he wants can end in bankruptcy.

These are the vagaries of the free market. Nowhere above has the coercive effect of government been required to compel or restrict the format or titles available for release. Each party is free to make good decisions or bad decisions according to their own best guess.

If the government applies its regulatory power in favor of the consumer's perceived need to compel tech providers to give their format to every producer, it eliminates the competitive forces that ultimately benefits the consumer. Example: With two competitive formats, manufacturers must strive to reduce the price of players to not only attract first time users to that format, but to also draw owners of the other format to own both affordably. Example: If a producer signs an exclusive format deal, they must ensure that their product has such inherent value and production quality that consumers will adopt that format. If the production company can't compete at that level, the other format may dominate the market at the expense of the less competitive producer.

This regulatory solution will also guarantee that there will be no winner to the format war because there will be no war. Manufacturers will rest on their current designs and price structures and simply rake in profit without the need to research further. Format providers sit back and take in profit from their current format without regard to how it could be improved to gain a competitive edge. Producers can put out any or schtick and expect that consumers will take it because it can be put out cheaply on any format. Ultimately, consumers get stuck with stale technology at higher prices with lousy content, yet somehow, this seems to be the answer that some people want.

Wow...... you are a beacon of wisdom

I couldnt have stated it any better. Unfortunately, I have a feeling a few wont understand what you just said.

 

[avaserfi]

Wow...... you are a beacon of wisdom

I couldnt have stated it any better. Unfortunately, I have a feeling your wisdom will fly directly over a few heads.

Oddly, for once I actually agree with you. Great post Dave.

 

[hmurchison]

The crux of the issue here isn't one producer delivering content to a single platform. The issue is that you have "many". That is what collusion is, an alliance between a plurality of entitites.

Thus merely not having access to 1 studio out of many would not affect a consumer but when you don't have access to 4 studios the problem is certainly intensified.

Companies are beholden to profit to sustain the company whether they be public or private. Thus in a free market society a company "should" be looking at opportunities to increase revenue/profit. Eyebrows are raised when a company ignores a potential market for little reason. I believe that is why the EC is investigating. Does the cash outlay for supporting both platforms yield a fruitless effort? Warner doesn't seem to think so and not only are they embracing both formats but they've created TotalHD a format that plays both.

I've stopped listening to the radio. Now that Clear Channel owns over %60 of Rock stations. (http://www.spin.com/features/exclusives/2004/01/changing_channel/)

I find the playlists are formulaic and narrow. The smaller stations have been pushed aside do to deregulation.

http://www.businessweek.com/magazine/content/01_40/b3751043.htm

How exactly has this and other "insta-monopoly" good for consumers? Why does this "smell" like the Dixie Chicks were censored from stations by mandate?

Censorship

If we are to truly believe that hardwork and perserverance will improve our chances for success then we must have Governments that seek to keep as level a playing field as possible. When you cannot tell the difference between a Government and Corporation you can kiss your sweet arse goodbye.

 

[Davemcc]

I think the article here by Dave speaks clearly to the issue of when does collusion become anti-competitive

Not at all. If anything, I'm speaking to the issue of when you can legally call an agreement collusion, i.e. illegal and underhanded. I thought I had made it clear that it becomes uncompetitive when the government intervenes.

and when should the govt step in.

I thought I had made it clear that the gov't should not step in.

He may seek a more egalitarian distribution of HD content

If there's anything egalitarian about my position, it is that rights must be protected from gov't. Egalitarianism, as the basis of socialism, has become a catch word for transferring the rights of one party to another. That is to say, the party that invents something has a right to it, while a second party does not. Egalitarianism seeks to "equalize" these rights by transferring the rights of the first party to the second, which is exactly what I'm opposed to.

but the govt is strictly going to look at if from the perspective of anti-competitive behaviour that has deletrious effect on consumers.

Anti-competitive, as in trying to ensure that you are the only one to succeed, as each of the players in the format wars is trying to do.

If the free market reigned supreme Americans would still be getting their phones and service from Ma Bell and paying out the nose for the priviledge.

I don't know if you noticed, but it's cellphones, satellites, braodband and even RF communication that's really made Bell redundant. When Bell invented the telephone, by the way, he certainly was entitled to a monopoly since he was the only one with a telephone. It was up to the free market to either license or develop alternatives to Bell's technology. It most certainly was not appropriate for the gov't to steal the technology and investment made by Bell so that any freeloader could stake a claim on Bell's investment.

Monopolies or Oligarchies are generally not good for consumers.

See my statements above, re: Bell and Alcoa.

The reason why you can buy a HD player for $260 a year after introduction is because there "is" a format war going on. Amazing how competition lowers pricing when done correctly.

I'll type slowly so you can understand. THAT'S WHAT I'M TRYING TO SAY SO KEEP THE GOVERNMENT OUT OF IT.

 

[tomes]

That has absolutely nothing to do with what's happening. In fact....that's coming from waaay out in left field, and I'm surprised more people can't see the obvious..... monopoly you say

On the other hand, the "tomes" post exposes the crux of this issue nicely.


To look at it from a different angle....... what's happening is no more illegal than any single restaurant/stadium/school/ect, etc, etc.... contracting with either coke or pepsi. (not both) If you don't like coke.... buy your drink at a place that serves pepsi.(or order lemonade)

PS....I chose lemonade. Hopefully, how this relates to the above discussion doesn't sail sail right over a few heads.

Thanks Buckeye, I also like your example a lot! I'm sure there are similar examples in many areas.

Am I happy that there are two formats? Of course not, just like most people I wish they would have agreed on a format between themselves and divided up the royalties etc. However, EU never tried to stop that (and in my opinion probably shouldn't). Now we are in a position where we have two formats, and companies WILL take sides as it best suits them. How can they be blamed any more than Coke making an exclusive deal with American (hypothetical, it may be Pepsi that has a deal with them, didn't fly in a while..).

If the EU really wanted to help the consumer, they should have gone after the music and movie industry a long time ago about DRM - THAT is a battle I would have been glad to see..

 

[Davemcc]

Thus in a free market society a company "should" be looking at opportunities to increase revenue/profit.

we must have Governments that seek to keep as level a playing field as possible.

Pick. Which do you want, because you can't have both.

Perhaps it's this dichotomy in your argument that makes you so hard to understand. You seem to be arguing that companies are deliberately foregoing profits by not cooperating with its competitors in an attempt to secure 100% of the market, then calling that uncompetitive. Gaining market share by controlling the dominant format is a perfectly acceptable means of attaining profitability and value for shareholders, even if you don't agree with or understand the principle.

I will not succumb to the liberal/socialist doublespeak where competitive means that all parties are reduced to the lowest common denominator so that they are equal. Competitive, to me, means that each party tries to beat the other by all legal means as Sony is trying to do.

 

[avaserfi]

Competitive, to me, means that each party tries to beat the other by all legal means as Sony is trying to do.

I think that says everything about this situation. Free markets are competitive markets and the EU is stifling that nature.

 

[hmurchison]

Not at all. If anything, I'm speaking to the issue of when you can legally call an agreement collusion, i.e. illegal and underhanded. I thought I had made it clear that it becomes uncompetitive when the government intervenes.

my apologies. I said "Dave" when I should have said "David" the author of the article.

If there's anything egalitarian about my position, it is that rights must be protected from gov't. Egalitarianism, as the basis of socialism, has become a catch word for transferring the rights of one party to another. That is to say, the party that invents something has a right to it, while a second party does not. Egalitarianism seeks to "equalize" these rights by transferring the rights of the first party to the second, which is exactly what I'm opposed to.

I find socialist theory to be far better than democratic theory on paper. In practice though democratic republics with with a strong mercantilist spirit do quite well.

Anti-competitive, as in trying to ensure that you are the only one to succeed, as each of the players in the format wars is trying to do.

No ..I don't think they care if either succeeds but rather they want the victor to have actually earned the victory through legal stategy and execution.

I don't know if you noticed, but it's cellphones, satellites, braodband and even RF communication that's really made Bell redundant. When Bell invented the telephone, by the way, he certainly was entitled to a monopoly since he was the only one with a telephone. It was up to the free market to either license or develop alternatives to Bell's technology. It most certainly was not appropriate for the gov't to steal the technology and investment made by Bell so that any freeloader could stake a claim on Bell's investment.

All a testament to breaking up Ma Bell (in the US) and allowing the companies to innovate and deliver compelling products. Patents and Copyright do not exist solely to feed corporate avarice but to propel society in technology and artistry. Which is why patents and Copyright have time limits.

I'll type slowly so you can understand. THAT'S WHAT I'M TRYING TO SAY SO KEEP THE GOVERNMENT OUT OF IT.

That was completely boorish and unecessary.

 

[Davemcc]

my apologies. I said "Dave" when I should have said "David" the author of the article.


That was completely boorish and unecessary.

Yes, and I apologize. I thought you were responding to my comments and totally misconstruing what I was trying to say for another purpose. I apologize for responding that way regardless of which Dave you were responding to.

 

[hmurchison]

Pick. Which do you want, because you can't have both.

Perhaps it's this dichotomy in your argument that makes you so hard to understand. You seem to be arguing that companies are deliberately foregoing profits by not cooperating with its competitors in an attempt to secure 100% of the market, then calling that uncompetitive. Gaining market share by controlling the dominant format is a perfectly acceptable means of attaining profitability and value for shareholders, even if you don't agree with or understand the principle.

I will not succumb to the liberal/socialist doublespeak where competitive means that all parties are reduced to the lowest common denominator so that they are equal. Competitive, to me, means that each party tries to beat the other by all legal means as Sony is trying to do.

I choose both. Allowing corporations to charge forward in unfettered avarice benefits no one and simply leads to tyranny in some form or another. The US Federal Government is not a democracy it is a Republic with Democratic elections/processes. Yet many functions work like a socialist country.

Clearly most Govts are hybrids of various political structure and theory. That being said in almost every case there must be checks and balances and a definited set of rules.

Let us juxtapose Apple and it's rise to dominance within downloadable music with the HD formats of today.

1. Apple delivers the iPod to rave reviews. Does it "only" play music via Apple's "blessed" AAC format. No...it supports MP3 and other formats.

1.b HD DVD delivers a player that supports MPEG2/AVC/VC-1 and so does Blu-ray.

2. Apple delivers music downloads via iTunes. Tracks can be burned to CD and repurposed. There is no absolute lockin. There are no studio exclusives

2.b Toshiba delivers a player that you must own if you want Universal or Weinstein movies. The BDA delivers players that you must buy if you want Fox/Disney/MGM/Columbia/Lionsgate etc.

In Apple's case they are one company that has delivered a compelling product without relying on exclusivity of content. It's hard to fault then although their success has raised the ire of the EU.

The latter case shows why this battle is not good for computers. Neither format has lit a fire with consumers. Neither has become the iconic "iPod" of the video world. Both are relying on exclusivity to push their product and it's damaging consumer faith.

I'm not for the EU forcing Disney or whoever to support a format they don't want to. What I'm for is an investigation to make sure coerscion is not happening.

Companies can ideed build a better mousetrap and find success even within the parameters set by the local Government.

 

[hmurchison]

Yes, and I apologize. I thought you were responding to my comments and totally misconstruing what I was trying to say for another purpose. I apologize for responding that way regardless of which Dave you were responding to.

Not a problem I put the "" in there to let all know it was all good. I enjoy reading your thoughts.

despite my thoughts about this investigation I tend to find myself a strict contructionist and I sense a bit of conservatism in your posts which I find nothing wrong with.

 

[Davemcc]

I find socialist theory to be far better than democratic theory on paper. In practice though democratic republics with with a strong mercantilist spirit do quite well.

In practice, the level of individual civil liberties and freedom in a society and free market will determine it's success, which is why socialist societies generally fail, with China, North Korea, Vietnam and Cuba as extreme examples of the failure of socialism. Europe did not really prosper until it gave up mercantilism, i.e the concept that wealth is finite and can only be gained by plunder, and moved to a capitalist society, i.e. wealth is created by free and productive individuals acting in their own best interest.

No ..I don't think they care if either succeeds but rather they want the victor to have actually earned the victory through legal stategy and execution.

Really, I would rather they succeed by innovation, competitive pricing and offering consumers a better alternative than their competitors. Again, unless you are arguing that exclusive agreements are illegal collusion or that there is an intent to defraud the consumer out his money, then I think there is no role for any gov't in this marketplace.

All a testament to breaking up Ma Bell (in the US) and allowing the companies to innovate and deliver compelling products. Patents and Copyright do not exist solely to feed corporate avarice but to propel society in technology and artistry. Which is why patents and Copyright have time limits.

Really, Ma Bell was done the moment the first private communications satellite was launched. Besides, it wasn't even patents and copyrights that kept Bell going. It was the land line that Bell invested in to link every home in the nation to its system. Another company could have theoretically run a parallel system of wires if they wanted to make that investment, but not without a significant return in the face of direct competition from Bell's established network. This wasn't done until Cable came along.

 

[Davemcc]

I sense a bit of conservatism in your posts

I think Helen Keller could sense my conservatism.

 

[DavidW]

This discussion thread has been an interesting diversion from the point of what is going on or the economic theory involved.

For some enlightening reading to help understand some the issues, please use the following links:

Neo-classical economics

Perfect competition

Perfect Competition, Summarized from Wikipedia:

Perfect competition requires that the following six parameters be fulfilled. In such a market, prices would normally move instantaneously to economic equilibrium.

Atomicity
An atomistic market is one in which there are a large number of small producers and consumers on a given market, each so small that its actions have no significant impact on others. Firms are price takers, meaning that the market sets the price that they must choose.
Homogeneity
Goods and services are perfect substitutes; that is, there is no product differentiation. (All firms sell an identical product)
Perfect and complete information
All firms and consumers know the prices set by all firms (see perfect information and complete information).
Equal access
All firms have access to production technologies, and resources are perfectly mobile.
Free entry
Any firm may enter or exit the market as it wishes (see barriers to entry).
Individual buyers and sellers act independently
The market is such that there is no scope for groups of buyers and/or sellers to come together with a view to changing the market price (collusion and cartels are not possible under this market structure)

Behavioral assumptions of perfect competition are that:
1. Consumers aim to maximize utility.
2. Producers aim to maximize profits.

Imperfect competition

Market failure

Competition policy

Cartel

Collusion

'People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.'
Adam Smith, The Wealth of Nations, 1776

I hope you all recall who Adam Smith is?

The actions taken by the companies we are discussing do not satisfy the free market competition that various forum members have bandied about without full comprehension of the meaning or requirements to satisfy it. The fact of the matter is that exclusive agreements between format hardware manufacturers and content providers such as the studios do not satisfy many of the requirements of perfect competition. This leads to market failure and imperfect competition.

The most ironic part of this discussion is that it is circling around: no government intervention let the free market operate. But the conditions do not satisfy free market competition; therefore the market is not operating as a free market.

Quite a conundrum, isn’t it?

The market in question is distorted as it currently operates and is not competitive by definition. Limited government intervention to nudge the situation towards properly functioning competition is not a bad thing, as long as it does not go beyond those requirements.

As I said, Sony is an interesting case because they have a conflict of interest, having expanded to owning interests in both hardware sales and software sales. But as the instigator to step away from the DVD Forum and develop Blu-ray while still participating in the forum after Blu-ray was rejected makes their motives a bit dubious.

Blu-ray Group Investigated by DoJ

Sony Controversies

DRM Scandal

Please note the comments by Steve Heckler, Senior Vice President of Sony Pictures:

"The industry will take whatever steps it needs to protect itself and protect its revenue streams...It will not lose that revenue stream, no matter what...Sony is going to take aggressive steps to stop this. We will develop technology that transcends the individual user. We will firewall Napster at source - we will block it at your cable company, we will block it at your phone company, we will block it at your ISP. We will firewall it at your PC...These strategies are being aggressively pursued because there is simply too much at stake."

How much more anticompetitive can you get? Do the other commentators here really want this guy and his mentality unchecked in its legality?

While there are arguments for and against government intervention, the fact of the matter that too little or too much of either Laissez-faire or government intervention are both bad. And that is a shortcoming of human nature, whether a part of private companies or part of the government, people will take advantage of the system to their own benefit.

But at least the interaction of both represents a form of checks and balances.

Companies left to themselves do not always follow the ideals of the free market, and the government often loses its way as champion of the people and is operated by the same imperfect human beings.

Many of the 'Well, what about...?' arguments do entail other possible violations of free market behavior by companies, but limited resources and/or the inability of those in responsible positions to recognize the questionable behavior has lead to these omissions.

But if we are going to have a meaningful discussion about free market economics and competition, lets all make sure we understand the full meaning of the terms first, rather than just say them by rote.

 

[mtrycrafts]

This discussion thread has been an interesting diversion from the point of what is going on or the economic theory involved.
.

Most interesting refresher on economics, thanks

 

[Davemcc]

I hope you all recall who Adam Smith is?

The actions taken by the companies we are discussing do not satisfy the free market competition that various forum members have bandied about without full comprehension of the meaning or requirements to satisfy it. The fact of the matter is that exclusive agreements between format hardware manufacturers and content providers such as the studios do not satisfy many of the requirements of perfect competition. This leads to market failure and imperfect competition.

David,
Perfect Competition, as is defined, is a theoretical construct of ivory tower academia. It cannot exist in the real world. Let's make this clear, by definition, all competition is imperfect. Exclusive agreements do not lead to imperfect competition because all competition is imperfect and the lack of perfect competition does not lead to market failure. I hope that you are not trying to interchange the terms free market and perfect competition, since they are very different concepts. Take note in the Wikipedia entry,

"However, while a free market necessitates that government does not regulate supply, demand, and prices, it also requires the traders themselves do not coerce or mislead each other, so that all trades are morally voluntary.[2] This is not to be confused with a perfect market where individuals have perfect information and there is perfect competition."
http://en.wikipedia.org/wiki/Free_market

The most ironic part of this discussion is that it is circling around: no government intervention let the free market operate. But the conditions do not satisfy free market competition; therefore the market is not operating as a free market.

Quite a conundrum, isn’t it?

Take note of the Wikipedia entry on free trade. I see no part of these exclusive agreements that violate any part of the requirements for free trade. agreements are voluntary, there is no coercion and no intent to defraud. That consumers don't like these agreements and can force lawmakers to criminalize such voluntary agreements would violate the requirements for free trade.

The market in question is distorted as it currently operates and is not competitive by definition. Limited government intervention to nudge the situation towards properly functioning competition is not a bad thing, as long as it does not go beyond those requirements.

Let's be clear again, properly functioning competition is when there is voluntary agreement without coercion or fraud, but most of all, without government intervention. When the government intervenes, it is a controlled market and it is not properly functioning competition. It is allowed competition according to an arbitrary third party standard that limits the aforementioned voluntary agreements.

As I said, Sony is an interesting case because they have a conflict of interest, having expanded to owning interests in both hardware sales and software sales. But as the instigator to step away from the DVD Forum and develop Blu-ray while still participating in the forum after Blu-ray was rejected makes their motives a bit dubious.

How is it that owning hardware and software is a conflict of interest.
http://en.wikipedia.org/wiki/Conflict_of_interest
Sony is a purveyor of goods, both hard and soft, physical and intellectual. There is no inherent conflict in Sony packaging these commodities in any combination of formats they choose.

Further, it only makes sense to me that Sony would keep one foot in the DVD business while looking to the future with Blu-Ray.

Please note the comments by Steve Heckler, Senior Vice President of Sony Pictures:

"The industry will take whatever steps it needs to protect itself and protect its revenue streams...It will not lose that revenue stream, no matter what...Sony is going to take aggressive steps to stop this. We will develop technology that transcends the individual user. We will firewall Napster at source - we will block it at your cable company, we will block it at your phone company, we will block it at your ISP. We will firewall it at your PC...These strategies are being aggressively pursued because there is simply too much at stake."

How much more anticompetitive can you get? Do the other commentators here really want this guy and his mentality unchecked in its legality?

Please tell me you just didn't write this. You are an editor at an online magazine that relies upon intellectual property protection to prevent its content from being used illegally by others. But, in such sweet irony, you are using this protected intellectual property to advocate that Sony cannot protect it's own intellectual property. Napster has been ruled to be illegal and Sony is clearly stating that it will protect itself and its revenue stream from such illegal activity. Until the law is changed, Sony has every right to pursue its legal rights.

While there are arguments for and against government intervention, the fact of the matter that too little or too much of either Laissez-faire or government intervention are both bad. And that is a shortcoming of human nature, whether a part of private companies or part of the government, people will take advantage of the system to their own benefit.

But at least the interaction of both represents a form of checks and balances.

Companies left to themselves do not always follow the ideals of the free market, and the government often loses its way as champion of the people and is operated by the same imperfect human beings.

Many of the 'Well, what about...?' arguments do entail other possible violations of free market behavior by companies, but limited resources and/or the inability of those in responsible positions to recognize the questionable behavior has lead to these omissions.

Thank you for your opinion on the matter, but unless a company operates by fraud, force or coercion, they are not violating the principles of the free market.

But if we are going to have a meaningful discussion about free market economics and competition, lets all make sure we understand the full meaning of the terms first, rather than just say them by rote.

I agree and I hope I have helped clarify some of your terms.

 

[sholling]

This discussion thread has been an interesting diversion from the point of what is going on or the economic theory involved.

Very well thought out and written. Thank you for your input.

 

[krihanek]

Unintended Consequences

The problem with the EU or any govenment regulation that would force a movie to be released in both formats is that less movie titles would be released at all. The studios will decide that the market isn't big enough to benefit from the cost of doing both so all you will get is standard DVD or nothing at all. Only the very largest titles will be released. That's exactly what they do now. You get "Pirates of the ..." but not any low volume titles in high definition. Require them to do both and you will get even fewer titles.