Here we'll explore the nexus of legal rulings, Capitol Hill
policy-making, technical standards development, and technological
innovation that creates -- and will recreate -- the networked world as we
know it. Among the topics we'll touch on: intellectual property
conflicts, technical architecture and innovation, the evolution of
copyright, private vs. public interests in Net policy-making, lobbying
and the law, and more.
Disclaimer: the opinions expressed in this weblog are those of the authors and not of their respective institutions.
It's true that a store can usually return unsold copies but stores have still paid costs beyond the per-book price, not least of which is that they can only invest in a certain number of books and if one of them doesn't sell then the store has missed out on potential sales of a different volume. So their incentives remain high and thus it's important to authors that they have a lot of pre-orders in order to convince retail outlets to get on board.
There's also the perennial question of physical versus e-books and as often happens, it comes down to discounts (as we've been discussing for years). Authors get more per e-book copy sold at a given price, but e-book discounts come out of authors' pockets. The complete inability to get reliable data on e-book sales may also hurt, but it's all guesswork right now in the absence of data.
So, e-book sellers, how about publishing these data?
In the piece, Green describes how a particular quote - from a book he wrote seven years ago - is widely attributed to him. In fact, he doesn't remember writing that line but then again he doesn't remember writing a lot of the lines. He talks about being on the set of a movie being made from his book and asking the director why something happens, only to be told "because it's in the (your) book."
But then something surprising happens - a claim is made that the quote in fact does not appear in the book. Curious, Green downloads the illegal torrent of the published work in order to be able to search it. You could write a whole column about how broken that is - the DRM on his own e-book prevents him from searching it - oh, wait, Cory Doctorow has already written that column, many times.
Searching the file, Green comes to realize that he did not in fact write this quote. Further research shows that it was written by a commenter, a fan. Meanwhile, Green's organization has been selling posters using this quote and there are hundreds or thousands of places scattered all over the Internet claiming that this is Green's quote. Probably nothing can be done about those, though the video should serve as an authoritative reference for people who want to argue about it. But something can be done about the appropriation, even though it was inadvertent. In the piece, Green describes how they've gone back and figured out how much likely should be owed to the person who originated it, and how it's been paid. That itself is pretty awesome.
This incident serves as a jumping-off piece for Green to note just how "messed up" our copyright system is, a topic that I'm hoping to hear him go on about at some length through his free online education series, Crash Course. Stay tuned for Crash Course: Intellectual Property.
I've not talked much about the theory of patent "exhaustion" - mostly because I'm not a lawyer and will probably botch it up, but here goes. Patent exhaustion is somewhat similar to first sale doctrine - it holds that once you've sold a patented item you give up your control over that particular item, and also you implicitly grand the purchaser of the patented item a license to use it as they see fit. The IP Law blog article linked here has more details.
This is relevant background to a case that was decided (overturned in fact) at the CAFC this week. Patent-holder Helferich Patent Licensing had appealed a loss lower down regarding patent exhaustion. The question was whether the fact that Helferich had licensed certain patents to phone makers allowed content providers to use patented techniques for displaying Web pages on those mobile devices. The District court had agreed with defendants (mostly big media organizations like the NY Times and CBS) that patent exhaustion not only covered the individual purchasers of the handsets but also the media companies that were providing content to the phone users.
Nintendo has put out a new "Creator's Program" for people who review, comment on, or do "Let's Play" videos using its games on YouTube. The program attempts to restrict 'Tuber's fair use of Nintendo-originated material and give the company large slices of the revenue.
It also includes some perplexing restrictions, such as payments only being in USD and only via PayPal. Why Nintendo can't manage more than that remains a mystery, but that's not really the big deal here. It'll cost you PayPal fees and currency conversion fees, sure.
The big deal is that Nintendo has gone from making aggressive takedown claims to a "thoroughly regressive" (thank you TotalBiscuit) policy on fair use of online media content. By positioning itself as entitled to (a share of) any revenue Nintendo is pushing a stand on ownership that sets it apart from - and I would say far behind - every other major gaming company.
I've noted in the past that there is a wide spectrum of game-related content on YouTube. Dealing with that variety - which includes criticism, game-theory work, comparative explorations along side full-on streams and other less creative forms requires sophistication, not stonewalling and absolutism. Whether or not a video earns money is not the question: the question is whether the use of Nintendo's (or any other company's) copyrighted material in the video meets the Fair Use test.
The company's current approach - which seems to be to pretend there is no such thing - is a terrible idea.
This time (in a case called Teva Pharmaceuticals v Sandoz) the Supreme Court has once again rejected the CAFC's practice of conducting de novo reviews of cases that appear before it. In this case, Teva had its patent upheld as valid by a lower court in its suit against Sandoz. But when the case reached the CAFC the higher court decided to reopen the claims construction argument and reversed, finding the patent invalid.
Except you can't do that. One of the core principles of the hierarchical structure of US courts is that lower courts find on facts and then interpret the law in light of those facts. An appeal against a lower court verdict has to make a claim that the law was incorrectly interpreted or applied, or there has been some kind of procedural error. The Supreme Court has rejected this behavior by the CAFC before and now they've reversed again, reminding the CAFC that they have to play by the same rules as everyone else.
However, as I noted last time this happened, there doesn't seem to be any means to enforce this dictate by the Supreme Court. Sad.
News outlets this week (here on Forbes) are reporting that Toyota is "giving away" its patents on hydrogen-fueled cars.
That's not entirely true - it's making available royalty-free use of a wide swath of its worldwide patent portfolio related to the hydrogen fuel systems for the next five years. That's still a big deal, as there are well over 5,000 patents in there covering everything from the fuel cell itself to how you build systems to refuel them. And that last is the big deal, I think.
Toyota faced a classic monopolist dilemma: being the first mover and having a consistent investment strategy had given them a big IP portfolio. They could easily charge a lot for access to these patents, but to do that there would first have to be demand. Right now the hydrogen car market is smaller than minuscule. Toyota has no doubt calculated that if it wants payback on the millions it has so far invested in developing this IP there needs to be an active market, with competitors making vehicles, making fuel cells, and making refueling systems for the cars Toyota wants to make and sell.
This sort of market is a chicken-and-egg problem: nobody wants to buy a car they can't refuel, but why would someone invest in creating fueling systems if there aren't cars on the road that will use those systems? Hydrogen cars aren't like full-electrics that have been adapted to plug into existing household electrical systems. They require some kind of fueling station that can safely store and transfer the potentially volatile hydrogen. Fuel cells themselves are well-proven and safe system, but they're nohow household items (yet). But if someone - well, everyone - with an innovative bent can get free access to the refueling IP then it's much more likely someone's going to figure out how to jump-start this.
And then Toyota gets to sell those thousands of cars it needs to sell, getting in the end a much smaller piece of a market it now can monopolize but making the marketplace so much bigger.
This story reminds me of a point I haven't thought about for years, which is that we need a more elaborated patent system. Right now we have a one-duration, one-size-fits-nobody patent monopoly. Why can't there be different kinds of patents with different levels of protection, different allowances, and different durations? Creative Commons has shown you can construct interesting and useful copyright notices based on separating out what you want to do with your copyrighted content. I think it should be possible to do something similar with patents, but I'm not smart enough to think through all the details.
Doctorow would also like you to remember he considers DRM "an existential threat to humanity", an eyebrow-raising bit of hyperbole. That said, DRM is far and away the worst thing about digital audiobooks, serving as both a way to lock you out of your own books and a way to maintain Audible's near-total monopoly on the marketplace. DRM also prevents authors from doing things with their own works that they judge to be in their own best interest, such as posting free samples. There are very good reasons to pursue DRM-free business models and to patronize those businesses that follow such models.
Authors are also pissed at Amazon (again) because of its USD 9.99 all-you-can-read Kindle Unlimited program. Authors are seeing much less return from the program, and some are quitting it. The double-edged sword here is that as the glut increases it's harder to get noticed. Without the exposure that Kindle Unlimited provides it may be harder for new authors to get noticed in the clamor and build the fan base that could sustain them. But publishing through Kindle Unlimited means much less income even if authors do get noticed. Furthermore, the "everyone draws from the same pot" model means that everyone who plays the Kindle Unlimited game is competing against everyone else. Rather than more readership increasing the pool of money, more readership just means more votes distributed across the same size pot and as more authors play (or more authors chop up their novels into shorter works) it means an increasing number of competitors for a fixed-size pool.
As John Scalzi once again comments, authors and readers would do well to remember that Amazon is not your friend. It's a business with its own goals and motives and if treating your book as a loss leader to sell more Kindles or more whatever is part of its plan then you're going to eat that loss so Amazon can increase its profits.
The first of the disputes between Apple and Samsung has reached the CAFC. Dubbed "Apple I" because you just know there are going to be more cases appealed up, this is the one where Samsung lost a jury verdict on the order of a billion dollars. The technology at issue is now ancient - four years is forEVER in the world of mobile phones - but if Apple's IP claims are upheld it will strengthen their hand in every other suit still at issue.
I hope I'm not spoiling anything (though you should read the full story) if I tell you that the band didn't make money on this tour. However, they seem to be OK on that account, looking at the tour as an investment. Remember the Doubleclick's advice on being successful included having a solid fan base. What Pomplamoose did on this tour was in part an investment in building that fan base and creating the kind of shows to which people who are already fans would want to bring their friends. From such shared experiences, fan bases grow.
I want to quote a couple paragraphs from their story because it encapsulates so much of what I've been hoping would come to pass:
We’re entering a new era in history: the space between “starving artist” and “rich and famous” is beginning to collapse. YouTube has signed up over a million partners (people who agree to run ads over their videos to make money from their content). The “creative class” is no longer emerging: it’s here, now.
We, the creative class, are finding ways to make a living making music, drawing webcomics, writing articles, coding games, recording podcasts. Most people don’t know our names or faces. We are not on magazine covers at the grocery store. We are not rich, and we are not famous.
We are the mom and pop corner store version of “the dream.” If Lady Gaga is McDonald’s, we’re Betty’s Diner. And we’re open 24/7.
The sneakers, which retail for USD 200-300 a pair, often resell for three times that much and in rare cases ten or twenty times that much. There's a whole mini-industry of people who camp out in lines (and pay people to camp for or with them) in order to get the latest releases at stores like Footlocker on Saturday mornings as soon as the latest models go on sale. And there are secondaries, companies that have come along to track these markets and provide data services to sneakerheads.
The Planet Money researchers, like many sneakerheads, come to believe that Nike promotes this secondary market. Even though the company could theoretically make more money by pricing the shoes higher at retail, they don't. Nike won't comment, of course, but the company does institute policies that create scarcity as well as promoting demand and collectability by doing things like one-off models with popular culture figures like Kanye West. On this blog we've spent years discussing how manufacturers and content owners go to great lengths to control or crush the secondary markets. So why is Nike acting differently?
It comes down to "cool." Nike went through a bad stretch where its name was associated with sweat shop labor and its shoes were disrespected despite having named celebrity endorsements. The secondary market has helped to turn that around. Nowadays Nike is cool again, Nike products are desirable again, and while it might be the case that Nike would make more money on a given Saturday from a few people, it would likely not have developed a devoted following of people willing to buy over a hundred pairs of sneakers, willing to camp outside a store for days leading up to a new release, and willing to tweet, instagram, snapchat, whatsapp, and (if they're old enough) facebook the latest Nike releases.
Money can buy you publicity, but it can't buy you that kind of tastemaking army of social sellers. In the end, despite the secondary market, the vast majority of Nike sneakers are bought to be worn. When Nike is cool, everyone wants to have them on their feet
If Ms Alexander's personal experiences are generally true, then people in Hollywood behave just like the rest of us, torrenting and sharing the good stuff. Unlike regular people, though, Hollywood folk spend a lot of effort maintaining a public facade of "piracy is theft/evil." That facade has two major lies in it: first, that the Cartel's copyright stance is to protect the little guys (gaffers and grips); and second that innovation and technology are always a threat to be extinguished rather than opportunities to be embraced. Long-time readers of this blog know I've been arguing pretty much exactly that for the last decade.
Alexander doesn't let free-riders off the hook, either. Sharing and free exchange are there in part because people who share more, spend more as well. Not treating your customers like criminals is not altruism - it's enlightened self-interest for companies that want to build long-term relationships with people who will be buying their products for years to come.
If you're Amanda Fucking Palmer, you ask for what you need. In this case, that's publicity. Word of mouth. Information to shed light on the darkness cast by the Amazon/Hachette dispute. Palmer sent a mail to her list asking people to help publicize the book and get the word out. People frequent book stores, which can carry the book. People visit Web sites, including amandapalmer.net which currently features all the info you need to get the book in physical and electronic forms.
And for you librarians who are still reading this blog, I suggest your shelves might be enriched with a copy. Just a thought.
First, an update by Rockstar games to their popular Grand Theft Auto: San Andreas release has resulted in a number of songs being removed from the game. These are copies of popular tunes that were originally licensed for the game property and were available in-game either as part of the default soundtrack or as character actions, such as listening to the radio. GTA games are often noted for their excellent soundtracks.
I couldn't find any official word on this change, but the likely reason is that something happened with the licensing and since Rockstar doesn't control the copyrights on these tracks it had no choice but to pull them from the game. That's a shame, and it may also involve a legal issue since consumers are having things they paid for taken away from them. I'm not enough of a lawyer to know if that's legal but probably Rockstar's lawyers have already thought of this and it's covered somewhere in their clickwrap licensing.
Obviously this sucks from an experience point of view, and it raises difficult questions about what it means to buy a game when parts of what you've paid money for can be stripped out at the whim of the company to which you gave your cash, or even some third party. This capability has existed for some time, but this is the first time I'm aware of it having such a blatant impact on such a high-visibility title. TB points out that other changes have also hampered the game experience (though they're not that relevant to Copyfight) and that EU laws are different enough from American laws that at least European consumers should be able to get a refund.
Separately, TB points out yet another instance of a developer (in this case an indie) reacting badly and inappropriately to negative reviews. He calls out the company Digital Homicide for putting out a bogus DMCA takedown notice against game reviewer Jim Sterling. Apparently DH did not like Sterling's bad review of their game and is attempting to use the DMCA to censor criticism. Their claim, made through YouTube's internal system, followed a series of tit-for-tat videos in which DH apparently appropriated Sterling's review video more or less wholesale in order to write its response as a set of insulting subtitles overlaid on Sterling's review vid.
Yeah, some people are idiots. Of course, DH are following in well-trod footsteps here, as it's well documented that major companies spam out hundreds of thousands of (often erroneous) takedown claims. And the problem is exacerbated by YouTube's review system which goes well beyond what the DMCA requires and makes it particularly difficult for a content creator to defend their videos and keep those videos from being removed. YouTube's "guilty until proven innocent" approach is certainly making the problem worse by encouraging aggressive over-claiming. In theory making a false DMCA claim is a felony, but I'm not aware of anyone ever being prosecuted for it. Anyone have an example?
I have had an offer for a third party to write relevant posts for Copyfight, and get paid in the process. I'm curious if anyone reading this has an opinion.
The blog has long had a "sponsor" category for posts, but it's lain dormant. We're tiny and esoteric enough that nobody much cares, and we don't have advertising support. I have a day job that pays well enough I don't need income from blogging but it also means that I have less time to cover the relevant material. I've made some invitations to people to guest-blog but no nibbles.
So the theory would be to have some sponsored stories, mark them clearly as such, and improve the blog's content. I would have editorial control and pick things that appear, so no shovelware. And then, the money. I'm thinking it ought to go to something charitable, and EFF springs to mind as a first choice, but I'd be open to hearing others' thoughts. It likely won't be a substantial amount, but it's good to have a plan.
The case involved three big houses (Cambridge U Press, Oxford U Press, and Sage) that sued Georgia State University over a policy that allowed copied excerpt use in class. When the case was originally decided, the judge used a somewhat novel case-by-case examination of the incidents rather than ruling on the policy as a whole. In its review, the 11th largely upheld that approach, which had led the judge to find for the defendants in all but five instances.
The Circuit did rule that the initial decision applied the Fair Use four-factor test incorrectly. The trial judge gave each of the factors equal weight (wrong) and failed to do a holistic analysis of how the factors balanced. This caused the 11th to overturn the verdict and send the case back down. In summary, it's OK for a trial judge to consider incidents individually, but when doing so, the judge still has to apply the fair use tests in the standard way to each incident.
The one weird trick turns out to be "have an audience" because their Kickstarter drew heavily on the existing fan base. This is not surprising - patronage models are something we've talked about extensively and Kickstarter (and Patreon and their ilk) are fun ways for people to give more money to creative folk they already support.
But beyond that, the Doubleclicks have an extensive guide for everything a Kickstarter requires, including setting goals, describing the project, handling rewards and stretch goals, and so on. There's notes here on how to do the hard math, and paying attention to shipping, and who to ask for advice before launch. Basically, the bottom line is that doing a Kickstarter is a great deal like launching a small business - and all of that has to get done before you get to the business of doing the thing you wanted the Kickstarter money for in the first place. The Doubleclicks' advice will get you a long way through that business.
Generally, people are more likely to pay for something they think they can make more money with. That's supposed to be how markets work and it ought to apply to patents as well. If a patent is good and valid and enforceable then it ought to be worth more. Conversely, if you think you can't make money with a patent you don't buy it, or at least you pay less for it. In this way, the prices people are willing to pay for patent portfolios become an indicator of the likely future revenue to be derived from those patents.
They argue that the number of suits is dropping, the length of suits is increasing (though note that's only those that don't settle not overall length). and that firms focused on making money through IP are laying off staff and seeing reduced stock prices. All of these are potentially good trends, but none of this addresses the true root of the problem - the stream of crap patents issuing from the USPTO and the EPO. Fixing the problem at its source would do a world of good for solving the troll problem.
Pop talks about the music business, then and now, and how he has come to understand and be happy with his place in it. For him, music is a passion and a joy and likely never will be a sensible business proposition. He does suggest that others who want to be in the business get a good entertainment lawyer, though, so they don't have to wait as many decades as he did to see the royalty checks finally come in.
Our friends at the John Marshall Law School in Chicago sent me an announcement for their 6th Annual Symposium that is taking place in a couple weeks. The theme this time is "Art Meets Law: The Intersection of Art and Intellectual Property" and features filmmaker and political critic Michael Moore as a keynote speaker.
The event will take place at the School, 315 S. Plymouth Ct., Chicago, on October 24th. The Symposium will be a day-long event (8:30-4:30) with Mr Moore's keynote scheduled for lunchtime. Contact Christine Kraly (Public Affairs Director) at 312-427-2737 ext. 171 or email@example.com if your'e interested in attending.
As Masnick notes, there's not much new in here. He frames it as Google trying to "appease" Hollywood and notes that the studios have done a shit-poor job at managing how their content ranks in search results. Apparently SEO still stands for Somebody Else Ownsit at the big studios.
Google's proposal to help with this is to include DMCA takedown notices in its rankings - at its crudest form, such a policy would cause sites for which Google gets notices to be lowered in the rankings. Unfortunately, the obvious consequent of this is just to encourage a further barrage of bogus takedown notices. Since the costs are low and the effect significant, Google may be setting up perverse incentives that allow its search results to be distorted by anyone with an active enough legal department.
Compare and contrast with the latest DMCA policies from github, the popular online repository for source code and development projects. Github is creating a policy that encourages discussion and limits effects: it will notify people before takedowns happen, and it will limit blocked material to things that are specifically identified, which is very important in a coding world where people branch, build on top of, and reuse entire source trees. To use a physical analogy, github's policy is like cutting down one or a few trees that specifically need removal, rather than clearcutting whole stands.
The thing that I notice in common between Google's and github's approaches, is that both organizations are working toward more transparency. Each has evolving policies, and each is taking different steps to keep people aware but in general they seem to share the value that knowledge of what's going on is important to all parties. That is something I'd like to see emulated everywhere.
The bad is that there's a limited number of spaces to be had and a limited number of subscriptions that any one person is going to want. You will likely be able to pay for quite a few subscription for the cost of a yearly cable bill but I suspect we'll see rapid consolidation in this market - there should be one place to go to pay for your Big Bang Theory AND your Game of Thrones. The logical next step is for someone (and my money is on Amazon right now) to aggregate these offerings.
The devil, as always, will be in the details - what is in the offering and is it going to be enough that people don't have to buy multi-hundred-dollar cable subscriptions to get the HBO shows they want? And most importantly, when will ESPN follow suit?
The reason has much to do with students' stubbornness and innovation and with the antique models textbook publishers have been using. The answer for both sides may be electronic texts, which can be kept down in price so students may be willing to buy them and for which there is no used market so publishers can keep forcing students to buy new copies every year.
The idea is to eliminate a simplification that is being abused. Form 18 provided a "bare bones" complaint structure in which plaintiffs in patent infringement cases could just state that the defendant was infringing a patent. Under the new rules, the plaintiff will need to describe how the defendant is committing infringement. For a standard patent case this change doesn't affect things much, since most patent cases describe specific acts of infringement. However, patent trolls currently may file massive numbers of suits, each simply claiming that some infringement happened, without providing specific descriptions. The troll is most interested in getting settlements as quickly as possible, so files the most bare-bones and quickest cases possible. If the troll is required to investigate the companies it wants to sue in order to provide a specific description for each suit then the cost of mass suing goes way up and there's less incentive to shotgun lawsuits around.
(Thanks to Greg Aharonian of PATNEWS for the initial pointer.)