If you haven't been following news on technology recently, there has been a public outcry over Sony's use of a controversial anti-piracy technology called XCP that installs spyware on users' computer without their knowledge or consent. In the beginning, Sony had defied public protest insisting that the use of such technology was justified and worse did little to rectify the situation. Finally, with the threats of class action lawsuits and with almost every security firms issuing warnings against viruses exploiting the security flaws in XCP, Sony made the following announcements:
- Sony will recall all its copy-protected CDs from the stores.
- Sony will allow customers who have purchased CD that uses the controversial First 4 Internet copy protection software to exchange for new CDs and MP3s.
The recall of millions of CDs and exchange of CDs are an expensive operations for any company. But, the longer term costs of this debacle are Sony's damaged reputation and litigation costs from angry customers. For customers who actually bought the CDs, they feel that Sony is punishing the people who have actually chosen to buy the product.
I agree with Bob Fahey who wrote an excellent article on the Sony debacle. He said the bigger problem with Sony is that they have not embraced the open-standards by integrating them into their media business model. Fahey wrote:
"The essence of this struggle is that while some elements of Sony understand the need to embrace open standards, coexist with competing systems and give consumers some degree of freedom in terms of how they use the products they have paid for, there are clearly factions at the corporation who don't grasp how crucial that approach is, and wish for a more tightly locked down, proprietary future."
Open-standard and open-source have become prevalent paradigms in today's world. Sony missed the opportunity to compete head-on with Apple iPod perhaps with reasons that they see MP3 as a threat rather than an opportunity for their core business.
Next, Sony's thuggish attitude and draconian protection scheme only serves to alienate itself from its customers. In an age of open information flow and diverse consumer choices, customers can always look for an alternative solution. Again, Fahey articulated this point well:
"However, this may well be the difference between life and death for Sony, because users are no longer happy with the idea of being locked into what they can and can't do with media they've acquired. Sony's competitors understand that, at least to a certain degree. They understand that the music business wasn't damaged by evil pirates sitting around plotting their downfall, it was destroyed by the failure of the music industry to offer a legal, sensible alternative to an entire generation of people who wanted their music on their PCs, streamed over their networks and loaded onto their miniscule flash memory players - and for whom the only route to that desired result ended up being peer to peer networks. They understand, at least partially, that if you lock down what a legitimate user can do with media so tightly that he can't acquire it, watch it, play it or listen to it where he wants and when he wants, he'll become frustrated and may well turn to the pirate version - which carries none of the restrictions that you unfairly impose on your paying customers. They understand that if you treat customers like criminals, you'll turn them into criminals."
I used to be a big fan of Sony products and I didn't mind paying premium prices just for the brand name. These days, however, Sony products have terrible quality and aren't cool anymore. Personally, this whole Sony fiasco left a really sour taste in my mouth. Why would I trust them now especially when I don't have loyalty to their products anymore?
| 11/19/2005 1:48:45 PM (Eastern Standard Time, UTC-05:00) |
 |
|
|
Business |
|
|