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.
In this case, congratulations go to Ms. Karyn Temple-Claggett, who has left her illustrious work as destroyer of "pretty much any innovative technology that comes along" (to quote Techdirt) including LimeWire and XM radio and become the number 2 official at the US Copyright Office. Guess we won't have to worry about things like being allowed to jailbreak our smartphones after all.
An acquaintance who's trying to shift from "having a day job" to "making a real living as a musician" sent me a link to Cashmusic. This is a new non-profit organization that bills itself as building "open source tools for musicians". The artists still need to do a fair bit of heavy lifting, but as a non-profit they may be well positioned to help get funding streams for creative types flowing. They did a Kickstarter to get some funding and today they announced their open beta. I'm not a music-maker but if you are and have a chance to try them out please write in with your experiences.
NMA - in their typical style - make light of the silliness of the situation. Most of their videos are news parodies that poke fun, but their clip also points out that the online gambling industry provided over 4000 jobs, a significant figure for two poor and tiny nations, and that most of those jobs have been lost since US regulators cut off access.
According to the story in AdAge, the idea will be to have people subscribe to channels of content produced by people or studios with a proven ability to develop a following. In other words, bundles, which strikes me as a very bad plan, and sort of the opposite of taking advantage of YouTube's digital delivery capabilities.
My own experience with YouTube channels is that I subscribe to many but watch content selectively. For example, I am something of a Felicia Day fanboi and followed her The Guild series. Her channel also includes Wil Wheaton's Tabletop, which I liked and several other things like Sword and Laser that I never watch. If you said "Hey, pay a few bucks to watch The Guild" I'd pay. If I have to pay more bucks and get all those things I'm not watching for money I don't want to pay then I have to stop and think. Of course, it's possible they'll price it so cheaply that I won't care, but given that YouTube has the ability to atomize and organize content in nearly infinite ways, why push everything into a bundle?
Then there's the other question of how many bundles can I afford to buy? The more of them there are and the more expensive they become then the fewer I'm going to be able to purchase. Maybe, as I mentioned early this month, I'm in the minority here. Maybe people will just happily pay for this bundle and that bundle and the other bundle and not think anything of it. It just seems a shame that YouTube isn't doing something more creative, given that it is not tied into any legacy business plans yet.
(h/t Xeni Jardin at Boingboing for the original pointer
In a case with remarkable parallels to the recently settled "shopping cart" patent case a friend in the game-development world pointed me to a campaign being waged against app developers by an NPE called Uniloc.
See for example this page by the developer of the app called "X-Plane", a flight simulator. So far there hasn't been a lot of reporting on this - the Wikipedia page on Uniloc is actually a good summary as of this writing. The basic issue is that if you want to make an Android-licensed app then there are certain procedures Google advises you to follow for verifying that the person running the app does indeed have a valid license for it. Uniloc claims that the procedure is covered by its patents and has spammed out a bunch of lawsuits, including against popular games such as Bejeweled and Minecraft.
As in the Soverain shopping cart situation, there are companies that have decided it's cheaper to license the patent than fight. The patent (6,857,067) itself is a fairly old item and I can't remember what the state of the art was back in when it was filed. However, the patent cites no non-patent prior art, which is a big red flag since it means that almost any trade, industry, professional or academic publication might be fair game for invalidating the patent. At least two of the smaller players who are being sued have vowed to fight back, so perhaps someone will take this one down, too.
The story starts with online gambling, which the island nations of Antigua and Barbuda (among others) have and want gamers to play. The US has a Puritan streak about a mile wide and has blocked its citizens from accessing these offshore casinos. The small nations then went to the WTO, complained of restraint of trade, and won. WTO cases normally come with a judgement intended to even the economic scales. For example, if China loses a WTO case to the US then the US may be allowed to slap an import tariff on something from China. Or vice versa.
Well, Antigua and Barbuda don't have a lot in the way of import/export business in durable goods, but they do have a nice fat Internet pipe and fancy servers. Since the WTO has allowed the small-state winners here to get USD 21 million per year, the two countries have floated the idea of setting up some kind of "copyright haven" to get their money's worth.
Nobody quite knows what this might look like - the story reports ideas of cheap subscription services that provide copyrighted content, but Antigua and Barbuda haven't stated anything official. The theory goes that by providing (expensive) copyrighted content cheaply and remunerating smaller payments back to the rights holders, the islands would in effect be collecting their WTO-sanctioned "impairments" while the US continues to (illegally) embargo the islands' lucrative online casinos. Of course the Cartel and its sock puppets in the administration are screaming bloody murder but Antigua and Barbuda just keep calmly pointing out that they did win their case at the WTO and they are only acting to collect what's due to them.
An eye for an eye, anyone? I can't wait to see this made into a Verbinsky/Depp blockbuster.
This debacle was nicely covered by Derek Khanna in The Atlantic yesterday. Khanna points out that we never actually passed a law that said it should be illegal to do this. Rather, the DMCA - a law passed before smartphones even existed - criminalizes all kinds of activity like this. It's possible for the Librarian of Congress to create exemptions to the law but it's certainly not required, and it didn't happen in this case because the Librarian decided to let an exemption lapse.
My guess is that it'll be reinstated, because this sort of thing is ludicrous and it's going to generate a lot of negative publicity. However, I think Khanna is also spot-on when he points out that we ought never to be in the position of having to depend on prosecutorial discretion not to come down as hard as the letter of the law allows (resquiat in pacem Mr Swartz).
While I'm on the topic of laws that need reform, I highly recommend some of the recent blog posts by Orin Kerr at Volokh Conspiracy on the Computer Fraud and Abuse Act and its needed changes. See also some of the responses he's drawn such as this lengthy piece by Jamie Boyle. The CFAA is sort of outside the scope of Copyfight so I'm unlikely to link directly to more of the extensive discussion on this topic except when - as here - the questions raised in the Swartz case are directly relevant to our core topics.
I've been interested for the past few months in the ongoing debates about TV pricing in the age of streaming services (Netflix, Hulu, Amazon, etc). Most of what I've been reading has argued in favor of a la carte pricing. That is, ditch the fat (expensive) bundle of cable channels you don't watch in favor of paying for what you want. If you're a history buff, get one set of things; if you like animal shows there are channels for that. Cooking, kids, nature, sports, etc - the cable content menu could be served like the YouTube content menu, more or less.
Well, maybe not, argues Skip Sauer in The Sports Economist. In particular, he notes that sports programming is a (the?) major driver of live television. Really, there's nothing else going out live that people care about in any significant numbers. This is true across broadcast, cable, and satellite. The problem is that the cost of sports programming is going up. Blame players or owners (or both) as you please but as salaries go up, so too do ticket prices and the costs to sports broadcasters.
If sports costs a lot more than everything else, then, the question is who is subsidizing what. If the (high) price of sports broadcasting is bundled in with the (lower) price of other broadcasting then it's not inherently clear whether the very large audiences for the sports content are paying more money than they otherwise might, and thus subsidizing the non-sports channels or whether those who don't care about sports but buy the cable bundles with sports in them are subsidizing the sports.
If you were to break the package apart, two things might happen. One is that the lower viewership for non-sports content might render the content uneconomical to produce. Two is that the high price of sports content might be considered too high and people would not want to pay that much for less content, causing a drop-off in viewership. Neither of these is in the interests of the content producers, so regardless of which scenario you think is likely it's easy to see why the content producers as well as the content providers would be in favor of bundling.
Sauer also points to a 2006 publication by GMU professor Thomas Hazlett (direct PDF link here) that argues consumer choice is respected in bundle/tier pricing and that a significant segment of consumers will opt for bundles when given the choice. The paper is lengthy (40 pages) and makes some assumptions I would contest. Also, I think the consumer climate has changed in the past 5-6 years with the rise of high-speed networking and mobile devices so its conclusions ought to be re-checked. However, it's still a solid piece of research and ought to give pause to a reflexive assumption that a la carte is always going to be better.
My guess is that we're going to continue to see a bifurcated world. Smaller-scale, less attractive content will continue to do well by pricing itself directly to its audience (see for example Pledgemusic) or using sponsorship-type models. Bigger and mass-market content, though, may continue to thrive in tiered/bundled pricing models, which will struggle to find their place and connect with their audiences in the 'Net world.
A meme circulating in the free-culture lists I read is suggesting that the latest round of punitive measures taken by Verizon and other ISPs (sometimes called 'six strikes' - more info here on Boingboing and reference to Torrentfreak) is actually aimed at choking off free wifi.
Given A and B above, it's striking to note that Verizon has confirmed its plan to apply "six strikes" to businesses, not just individuals. So if six random customers sitting in a Starbucks are accused of downloading a copyrighted item, suddenly the Starbucks wifi may stop working, or may stop working so well? That would be ... um, terribly unfortunate so very sorry but we have this POLICY you see. And, again according to the theory, if businesses can no longer provide free wifi, presumably people will pay (more) to the big ISPs to get things like personal roving data plans, individual dongles, and so on.
(It's been a long time since I got to use the "Rumor and Gossip" category tag on this blog, so a quick reminder: if what you're forwarding me is a rumor that's OK, but please identify it as such.)
I know a few smaller-scoped writers who have quit CNET or decided not to go there since this bomb first dropped, but Sandoval has major juice. He's been a well-respect, often-printed, and very public byline at CNET for years, often writing about intellectual property issues. Ironically, his resignation came over an IP-related story.
In case you missed it, there was a big Consumer Electronics show recently. As they do, lots of news outlets went there, reported a ton, and sifted among the offerings to come up with their top N things. It's a traditional way to write a show-wrapup story. Most people don't pay attention to such things. You could throw a virtual dart at Google News or any other aggregator on show closing day and hit one "Top N of $show" headline at least.
But someone at CNET's parent company, CBS, didn't like what they saw in CNET's list. CNET had already reviewed the Dish Hopper DVR in pretty positive terms - a device that allows users to skip commercials while watching DVR-captured content on a variety of home computing devices. CNET was reportedly going to make Hopper+Sling it's Best in Show until the bosses upstairs said "THOU SHALT NOT!"
To compound this idiocy, it appears that CBS actually stuck its political nose into the CNET newsroom and forbade CNET from any further reviews of Dish products, let alone giving them awards. So much for journalistic honesty and independence. And really you can now kiss any chance you had of CNET's review sinking into obscurity. It's been linked to a thousand times more since CBS's move than before, I'm sure.
The effect on CNET's staff has to be utterly demoralizing. Say what you like about some journalists, but I think you'll find the vast majority are honest folk trying to do good work and they are among the strongest believers in independent voices and at least the honest attempt at unbiased reporting. I can't imagine why any journalist who's looking for work right now would be looking at CNET, though I can understand why those who have to take home a regular paycheck to keep food on the table might stay there. I imagine Sandoval has bills to pay, too, and I hope he finds a better place from which to do that.
I'll be offline for Arisia from tomorrow through Monday. Don't burn down the house while I'm gone. There won't be any IP panels at the convention this year; their popularity has always been low. I'll be busy nonetheless.
If you're there and see me please stop me and say hi. If I don't already know you please let me know you read the blog; I like to meet readers. If not, I'll be back to writing here next week.
On his Whatever blog, John Scalzi put up the big-picture numbers for sales of his Redshirts novel. The entry includes breakdown by delivery format, to coincide with the end of the hardback and start of the softcover print lifetimes. Scalzi also delves into reasons why his particular book did very well (nearly 50% of its sales) in e-book format, and the value to him of working through major publishers.
Yesterday, in a posted preview of his talk for O'Reilly's TOC conference, Cory Doctorow looks at the question of why writers get so little. The answers, as you might expect from Cory, revolve around markets, business structures, piracy, and the complex web of incentives that are created by laws and traditions. It's not entirely accurate to say authors get paid poorly because they've always been paid poorly but it's also not entirely wrong - there has likely always been more material looking to get published than there have been spaces for publications by professional imprints.
In an era of (potentially) oversupply, the problem faced by the 99% of writers is breaking through. Getting noticed. Everyone knows about JK Rowling or Stephen King or Neil Gaiman now, but we don't know about the next Rowling, King, or Gaiman. Somewhere out there today are writers whose work could be as popular and game-changing, but that writer can't get noticed, can't get their first novel published, can't get out of the mid-racks, can't whatever it is that breaks a writer through to prominence. Or to the point where they reach their ideal audience, even if that audience isn't mega-millions best-seller sized.
Except now there sort of is. It's called the Internet, and self-publishing, and social media. It's a model whereby creative types can go through multiple channels to reach potential readers, build their audience, and start to make some money. In this model, two things are true that aren't true in other models. First, illegal copying doesn't hurt, it helps, and second regulation that tightens controls on the Internet and its freeform communities are harmful.
So far this is all pretty familiar ground, but this column is just a teaser for Doctorow's keynote. I expect he'll expand significantly on these themes next month.
At Naked Capitalism: Aaron Swartz's Politics by Matt Stoller introduces us to a broader view of Swartz's life work.
At the New York Times: Noam Cohen's "A Data Crusader, a Defendant and Now, a Cause" highlights the welcome news that MIT's new president has appointed the well-respected Hal Abelson to lead its own investigation into the 'tute's involvement and (one hopes) related policies.
It's certainly their motto. A musician acquaintance pointed me to this site, which is attempting to be musicians' platform of choice for promotion and production of sponsored content. The site has many similarities to Kickstarter and other crowdfunding efforts, but appears to be focused on a specific narrow slice of the business model: getting music and related content produced.
The site works with artists to construct projects around a specific deliverable such as an EP, an album, or a concert film. Backers can sign up at various levels, and there are rewards associated with pledge levels. Unlike Kickstarter projects don't appear to have "stretch" goals. Basically you (the fan) are pre-buying a deliverable you want, whether it's a digital download, a signed personalized vinyl, or whatever. If the project gets its funding then then your credit card is charged and the pre-purchased items are produced and delivered. The site also supports artists' pre-order campaigns where the material to be produced is already known and fans can just order the things they want, for delivery when done. This is similar to pre-order sales done by other content producers including books and games.
Also unlike Kickstarter, PledgeMusic has a way for artists to designate a percentage of funds raised to charities they select, and fans are encouraged to search the site by charity name as well. The linkage of performing artists and notable charities is venerable - I signed up for my first Amnesty International membership at a table outside an REM show *mumble*quitealotreally*mumble* years ago - but this is the first site I've seen that lets artists select and promote their charitable work. It's not just big-name charities either; scanning the site I also saw artists giving money to local things like a battered-women's shelter in their home cities.
The site's focus on musical artists is interesting. One of the things they offer is a team with expertise in these kinds of projects - it feels like more hand-holding for the musicians than you get with something like Kickstarter. There's also a music-oriented philosophy about the site, with discussion of "backstage" access for fans, and a philosophy that appears to come from founder Benji Rogers' own experience as an independent musician.
As I've written this blog I've tried to push the notion that creativity is a shared, situated, interconnected experience. The Western ideal of a lone genius in an isolated state suddenly having a light bulb moment when the creative product springs fully formed from their brow is just wrong. Creators are embedded in cultures, have seen, heard, been told past stories and respond to them even as they use them.
The first PBS Off Book episode of 2013 takes on this notion full force. Called "The Art of Creative Coding" it examines at high speed a few of the prominent points in a phenomenon that is part commercial enterprise, part open-source development, part art movement, part inspirational mass volunteerism. The notion that ties these together is that openness, sharing, and exchange are not accidents - they're fundamental primitives of the language. Take those away and the entire thing ceases to exist.
Or, maybe not. Let's dig into this a little bit. Forgive me if this gets a bit detailed. First of all, the measure of "did well" seems to be "had a large increase percentage-wise in stock price". In a year in which the S&P 500 (a benchmark index against which other things tend to be measured) rose 13%, media companies rose a reported 16-43%. That is a good set of numbers. Picking two popular tech companies, Apple and Google I find that Apple (despite hitting a 6-month low mid-2012) is up about 43% and Google is up about 15%. Sound familiar?
Furthermore I see Apple is trading around $525/share and Google is trading around $733/share today. In case you've forgotten basic math - which it appears the Times has - a 15% rise in a $730 stock is a LOT more than a 15% rise in a $58/share stock (which is where Viacom appears to be today). Yes, percentage rises matter and yes performance compared to the S&P is an interesting number, but let's be realistic here.
It's worth digging into what, exactly, is powering this rise in the old-media companys' stock prices and it's two things. One is that they're using their cash to buy back stock and pay dividends. Tech companies - even the fantastically profitable ones - still tend not to do that. This makes the old-media company stock more valuable to investors, particular in times of sluggish markets. For those not into financial wonkery, it may be surprising to hear that the markets these days are extremely sluggish, with price volatility at all-time lows and trillions of dollars that used to be invested in the market having moved elsewhere.
So, a lower-priced stock that pays dividends is more attractive to investors than a higher-priced one that does not pay dividends. Not exactly earth-shaking news. More importantly, it tells us exactly nothing about the prospects for the future of these businesses, nor the media models they represent.
Still, it's worth peeling back the covers still a little further, which you can do with an awfully titled article in the Atlantic, Derek Thompson's "How the TV Business Got Rich Off the Thing That Was Going to the Kill It: The Internet". A lot of it is a rehash of the Times story, but I encourage you to scroll down to the graph titled "How Does the Cable Industry Make Its Money?"
The answer: selling Internet. Most people get their IP connections from a cable company, and some cable companies scored big content deals with Internet companies this past year that further increased their bottom lines. Other companies (*cough*NewsCorp*cough*) did internal reorganizations to wall off big money-losing parts of their business. The result is a situation in which non-old-media revenue is propping up old-media companies. The broadband you're buying from that cable company comes with a hefty mark-up, and is likely a protected near-monopoly. Only a tiny fraction of the country has any choice in where to get Internet service.
All that fat-margin IP revenue serves to mask the fact that the television and cable-channel business is a dying enterprise. Both Thompson and Carr (Times) are careful to hedge their stories in the final 'grafs but I'll say it flat-out: old media companies will change or become walking dead in 2013-2014 and buried soon thereafter.
Most interestingly, though, he notes that many of Sullivan's readers "...pay $20 a day on coffee and lunch; it’s not a lot." That stopped me to think, as I don't spend that kind of money per day and it did seem like a fair bit to me. However, perhaps this means my perspective is too parochial. Perhaps there are people who don't think anything of spending $20/day eating out and for whom $20/year would similarly be below the threshold of concern, even if they had to pay it to get access to a dozen or so writers' contents that they wanted.
It's been received wisdom for some time that there are significant price-points in selling certain objects. You can get people to respond in highly non-linear ways by varying the price of something in a linear fashion. And maybe $20/year is that kind of a price-point. It's certainly true that people used to subscribe to many paper magazines that cost more or less $20/year. And some of us had comic-book or other habits that we were comfortable with as long as it didn't seem "too expensive."
So maybe I'm just an old cheapskate here and it's no big deal. What do you guys think?
A colleague of mine posted a link to this set of Flikr images by user b_carruthers. The set is called "Similarities" and shows pairs of images that are visually similar - some on purpose and some by accident. It's a good reminder that our laws about creative originality rarely line up with how actual artists actually create.
According to data from Nielsen SoundScan, reported in Billboard online, the week ending Dec 30 saw a record number of digital songs sold, about 55,740,000. This is a huge rise on the comparable week of the previous year, which saw 46.4 million songs sold. No doubt many of those songs were given as gifts over Christmas, but some also surely represent purchases by people who wanted digital music and didn't find it in their unwrapped gifts. This past year's rise is also significant in that it's continuing an upward trend from past years. The music sales business was in decline for much of the past decade, and only recently turned things around.
Titlow attempts to look at why digital music is growing, touching on the familiar themes of ease of use. Interestingly, he reports that "Sweden saw a 25% drop in illegal filesharing after the public launch of Spotify." This is more or less the trend I expected we'd see.
What neither Titlow nor Billboard address, though, is what the flow of money back to artists looks like. It's one thing to say that digital music sales are improving recording companies' bottom lines and a wholly other thing to say that digital music sales are helping creative types make a better living.
Last week I noted that so-called deep journalism isn't something that we know how to do well in the 21st century. Investigative reporting - the most common type of deep journalism - requires investments of time (months or years) and resources that are hard to sustain without a regular paycheck. Deep journalism also produces results that aren't easily amenable to summary, nor to the quick-hit forms favored by many social media such as news aggregators, Twitter, etc.
For example, Sullivan is intending to construct his site so that links to it don't ever hit the paywall. Bloggers and aggregators can feel confident pointing their readers over, which is an important step. This makes the paywall portion of their site extremely easy to circumvent - and that's by design. By analogy both NPR and the Times are listed as news entities who take no extraordinary effort to prevent people getting their content for free but instead depend on a combination of big contributors (or advertisers) and people being willing to pay for value.
Gillmor identifies what I see as the biggest problem with this philosophy - no matter how honest or willing any person is, they only have so much cash available. I can easily identify a dozen people whose content I find worthwhile to read pretty much whenever they produce it. However, if I had to pay $20 per year per writer I'd quickly find myself unable to continue. My guess is that this model will work OK for a few people but isn't going to scale.
+Brian Fitzpatrick posted to his Google+ stream a link to the first report I know of that's using Google's now-downloadable transparency report data. The report by French law professor Cedric Manara does the most simple of analyses: what top-level domain (tld) is the most popular target for takedown notices. Unfortunately he's only counting notices and then calling those "copyright infringement" - here in the US we're well aware that a takedown notice has only the most passing of relationships to actual infringement.
The specific case he discusses involves a shell entity that had its law firm send around "pay up or else" letters accusing IT service providers of violating patents by doing normal business things - in this case scanning a document and mailing a PDF. The troll claimed to have a patent on this process, a ludicrous claim in the first place, and then wanted to enforce the patent against people using equipment, rather than against the manufacturers whose equipment was claimed to be in violation of the patent. But wait, it gets worse.
The protagonist of Mullin's story - Steven Vicinanza- decides to fight back and wins in court - yay! Except that as I blogged about a couple weeks ago, this NPE had rigged the game. The court victory just absolved one company - it didn't touch the patents and claims. Those toxic assets have apparently been distributed to "a network of at least eight different shell companies" that Mullin documents. Each of them is now spreading demand letters, blanketing something like 2/3 of the USA. And, like bullies everywhere, these trolls are targeting the small, poor, and presumably weakest defendants.
According to Mullins (quoting research by Professor Colleen Chien of Santa Clara University) this practice of suing users rather than makers is increasingly popular, presumably because they can be bullied into paying up more easily. Shades of the Copyright Cartel going after individual song downloaders!
As I noted last month, the legal landscape is vastly slanted in favor of this kind of activity. NPEs are immune to counter-suit, they can mass-mail demand letters to collect from the weak and the scared, and the cost of fighting them to the point of invalidating their bullshit patents would be much higher than the costs of paying their extortion demands. Yes, the patents are bullshit - ars links to them and you can go read them for yourself. Vicinanza apparently spent $5000 on a prior art search that was good enough to make the trolls run and hide, which leads me back to my tired refrain of "can we please get the USPTO to stop issuing crap patents."
You can read Mullin's story to follow the shenanigans that are still going on. It's pretty clear that the people involved are doing everything they legally can to hide their tracks, erase past identities that have gotten tainted, and make as many fast bucks as possible. It's bad behavior and bad news all the way through, so if you ever wondered why there's bad blood around patent trolls now you know. Certainly not all NPEs behave this way, and there remain good and valid reasons to use NPEs but that's going to get buried under the heaps of rubbish kicked up by abusers like this.
(Thanks to an anonymous Copyfight reader for the initial tip.)
