Hi Ian,

Thanks for writing an excellent article. I may have unique insight into this issue, so decided to send in this post.

From 2001 through 2003, my company, Rainbow Partners Inc., exclusively represented Gracenote in Japan, and closed license deals with all of the significant consumer electronics manufacturers in this market, including Sony. Licensees that we closed included nearly all of the leading companies in automotive, home a/v, portable a/v, and software in Japan.

Currently, we exclusively license Macrovision's AMG solutions in Asia for the consumer electronics industry. We compete directly with our former partners in the media recognition market.

In your article, there are several things that things I would like to comment on:

1. "When you search for music in Apple's iTunes client, the results are largely based on data from Gracenote."

This statement may be a bit misleading.

While Gracenote is the source for for simple metadata about music that is ripped from CDs within the the iTunes client, there are many others sources of metadata that you use within iTunes. For example, iTunes Music Store licenses the AMG database globally for use within its store. It also uses metadata supplied from labels, and some data that is created by iTMS staff, and users.

Furthermore, if you happen to have brought your digital music files into iTunes from another source such as illegal P2P download, or legal services such as eMusic, or ripped via other applications, the metadata source in many cases is AMG, freedb, Musicbrainz, Microsoft, the music labels, or others, as well as Gracenote.

Finally, many people edit the data in iTunes and create it themselves to correct issues with standardization, or missing key fields such as dates or genres.

So in iTunes, when you search for music in the iTunes Music Store, you are not using Gracenote, and when you search for music in your own collection, you use a combination of data from many sources that may or may not include Gracenote.

2. "...the open source Musicbrainz project, AMG Lasso, and a database that Microsoft employs -- I doubt these products have the breadth of Gracenote's holdings."

I am curious as to what it is that causes you to doubt the breadth of these products.

Microsoft's media recognition solution used in Windows Media Player includes AMG, user submitted data, and other data sources. This system powers 10s if not 100s of millions of users globally. It certainly is the equal in many respects to other solutions.

Our own solution, AMG LASSO, powers some of the most popular applications and devices globally including the PS3. We just announced today that Korea's leading portable media player company, Reigncom, has switched to AMG LASSO exclusively and globally. There are many other LASSO licensees, and the number is quickly growing.

freedb is used by many, many open source and commercial products globally, including widely used products.

Additionally, AMG data is used to enable most of the world's largest digital entertainment stores. iTunes, eMusic, Napster, Rhapsody, Amazon, and many, many more use AMG data to power their stores. The data is also used to enable portals and search engines such as Google, Yahoo!, and many others.

AMG is arguably the most ubiquitous entertainment data solution in the world.

3. "... Apple could "easily" create its own database or switch to one of the Gracenote alternatives, that's a stretch. If it were easy, cheap, and made sense, Apple would have made a switch long ago."

Until the very recent past, there was no other significant commercial alternative to Gracenote. Microsoft only makes its service available to its own systems. AMG's LASSO is only a few years old, and its first major customer was the PS3 which launched in November of 2006, a year and half ago. Freedb is GPL'd and is not a realistic alternative for many major CE manufacturers and software developers because of the lack of commercial support.

When Apple launched iTunes, it effectively had one choice. Recently it has several choices.

The facts that there were no realistic alternatives to Gracenote until recently, and that other companies such as iriver and others are making the switch recently, indicate that it may be easier for Apple to do similarly.

4. "Make no mistake: The Gracenote purchase does give Sony leverage over Apple that it did not have before."

IMHO, (and if I understand your arguments correctly) the leverage you mention is minor, if not insignificant in the bigger picture. The truly worrisome issue here is whether or not Sony will use its ability via Gracenote to monitor Apple iTunes and other competitor's devices and applications, and use this information to their advantage. Any media recognition service has this ability, but is not a significant concern if the supplier is independent. By becoming a part of Sony, this will become a concern for competitors in the industry. Certainly, an argument could be made that Sony supplies many hardware and software components to its competitors including Apple, however, none of these components give the insight into what consumers are actually doing with the product throughout its life cycle as does a media recognition service. I am sure that "Chinese Walls" will be erected to maintain confidentiality, but when push comes to shove, prudence may lead many Sony competitors to utilize alternative and "safer" solutions that are considered less risky.

It certainly will be interesting to see how this all turns out.

Looking forward to further discussion.

Sincerely,

Kevin