According to a Reuters story that ran on Friday, consumer electronics companies are unhappy with the royalties proposed by OMA. Here's a portion of the story:
A handful of technology companies are overcharging for anti-piracy software needed for digital music stores on the Internet, preventing the emergence of open standards, electronics goods makers said on Friday.
Several consumer electronics makers balk at the $1 charge for anti-piracy technology proposed by the Open Mobile Alliance (OMA), they told Reuters. The OMA is a group of handset makers, wireless telecoms operators and other technology companies.
Mobile phone makers and consumer electronics makers said $1 per device is too high a price only to protect music and video against illegal copying. They will not be able to recoup that money through revenues expected from digital entertainment.
"This kind of price is certainly unreasonable. It's not in proportion to the economic value," said one senior executive at a top five mobile phone maker who declined to be named.
He points out that last year alone 684 million mobile phones were sold. If handset makers had put anti-piracy protection software in those phones, the $684 million in royalties would have exceeded total digital music sales on the Web last year.
A senior executive at a global top three consumer electronics maker agreed that "this is too expensive." Consumer electronics companies are keen to make devices interoperable with mobile phones, so consumers can play tracks stored on their phone on their home TV or stereo, or vice versa.
They are reluctant to sound too harsh, however, because the irony is that they desperately need the OMA's anti-piracy technology which is the first open standard that can be used by all electronics goods makers. Other technologies are owned and controlled by individual companies such as Apple for its iTunes Music Store and Microsoft.
This appears to be some "negotiating in public."
There is, of course, a long tradition in the consumer electronics industry of licensing per appliance, an approach that makes calculating the amount due uncomplicated.
That said, it's interesting to note that the royalties are not based on the value of content delivered to the handset, clearly a more complicated affair that would required the involvement of the content distributors and perhaps producers. Still, maybe the handset approach implies that content is still king.
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