rise of porn in eBooks

A bestselling book on The Kindle is called "Compromising Positions," and it's about an uptight businessman getting tangled up with a wild woman who introduces him to all sorts of interesting workouts (Sorry, I'm trying to keep this post relatively PG).

Anyway, you won't find the title on the NYT bestsellers list or Publisher's Weekly, but it's a topseller on Kindle. Why? It might have something to do with the fact that the book is available for free and it’s instantly downloadable. The publisher is doing this with hopes that readers will pay for future titles.

This article in Slate brings up many interesting points about the "Compromising Positions" phenomenon -- about the giveaway tactic, about the new genre of romance novel targeting men, etc. -- but what I found most interesting is the move of porn into this relatively new medium:

"Like the Kindle itself, the marriage of porn and e-reader is relatively new; much of this digital erotica has been added to the Kindle library in the last 18 months or so. From a technology standpoint, anyone who's seen Boogie Nights or Middle Men could predict this development. Every time a major new content platform—print, film, cable, VHS, DVD, the Internet, mobile phones—has experienced massive growth, it has either been driven by a porn boom or at least brought the porn industry along for the ride. (The biggest exception is probably radio.)"

This seems to support what my team learned while doing our IS-SI project on DivX. Not only is porn one of the most frequently watched type of content -- the industry has historically been among the first to use and support new technologies. It would be interesting to see what role (if any) adult fiction plays as eReaders become increasingly mainstream.

Which also makes one wonder, what does Netflix have against adult content?

Netflix's New Competition

Following Blockbuster's recent bankruptcy filing, the New York Times published this story about Netflix's changing competition.

More and more subscribers are getting their content through Netflix's streaming services rather than through DVDs delivered via USPS. While the ability to stream content enables Netflix to reach more devices and screens, it reduces the uniqueness of Netflix's service.

There are obviously numerous companies that offer streaming content, including Hulu, Amazon, and YouTube (although their content is of a different variety currently). Production studios are seeking to capture more of the value attached to their content after its initial airing or release, so they are searching for the most lucrative re-broadcast deals.

In the "on demand" era it is difficult to see how a company like Netflix will compete with Hulu, which is a joint venture with many of the original content owners. As the NY Times article notes, the nature of competition is shifting from distribution logistics to which company will pay the most for the rights to content. Perhaps the streaming video world will not be a winner take all market in the same way that DVDs by mail was.

Competing in the Courtroom

As a company using advanced technology that is vital to your business model, how vulnerable can you be if you do not have a defensible patent position?

Before today, I had never heard of Interval Research Corporation.

In 1992, Paul Allen, co-founder of Microsoft, bankrolled this tech incubation lab with 100 million dollars. The goal was to create a "research setting seeking to define the issues, map out the concepts, and create the technology that will be important in the future...[pursuing] basic innovations in a number of early stage technologies and [seeking] to foster industries around them -- sparking opportunity for entrepreneurs and highlighting a new approach to research."

Interval Research was shut down in April 2000, but not before it had secured 300 patents, 4 of which are now owned by Interval Licencing LLC, a vehicle that Paul Allen is now using to sue Apple, Google, Yahoo, Facebook, Netflix, YouTube and others.

One of these patented technologies allows a site to offer suggestions to consumers based on what they are currently viewing, another allows readers of an article to rapidly find related subject articles. The remaining two are related to what is happening peripherally to a user's main activity, such as flashing video images or updated stock quotes, news or ads.

If the patent infringement can be proved, the damages could be vast.

Incidentally, Amazon has been left out of the list of defendants, even though we know that one of Amazon's practices is to offer suggestions to consumers. I wonder if a strategic deal has been made, or if Amazon has a solid defensible position for its technology that does not infringe on Paul Allen's "patents".

So far, it seems that the defense that the sued internet companies are planning is based simply on the fact that Paul waited too long. It will be interesting to see if that will be enough to fend off the lawsuit.

If Paul Allen had sued a long time ago, it may have been harder to prove the monetary potential of the technology, which would affect the dollar value of settlements.

Here's a copy of the lawsuit filed:

http://online.wsj.com/public/resources/documents/intervallicensingcomplaint0827.pdf

According to the Wall Street Journal, NTP, Inc, another licence holding company which successfully sued RIM in 2006 for $612 million dollars, is now suing Apple, Google, HTC, Microsoft and Motorola over infringement of 8 patents related to the delivery of email over wireless networks.

I find it very interesting that an innovative company that struggles to develop technology and make it work in the marketplace can remain so vulnerable if their technology can be proven to infringe on a patent held by someone else, and I am curious as to how executives at the likes of Google and Apple would approach innovation, if they know that "patent trolls" - companies that hold patents but don't do further development work - are waiting in the wings to pounce on their hard earned profit in the form of damages.