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.
That seems like approximately forever, and in a world where most universities require dissertations to be filed and electronically searchable around the time of acceptance or graduation, it is forever. Why then would authors want to lock up their own research for such a length of time? Well, actually, many authors don't. But these historians feel they have to because publishers are reluctant to publish the books based on these dissertations if the original material is freely online and searchable.
As I've mentioned repeatedly, it all comes down to tenure decisions. Historian Ph.D.s need these book publications as important components of their tenure cases - in many cases failing to get such a book done can be enough to torpedo someone's case. This hands enormous power to the publishers to control the free circulation of information that was often developed on the public dime. I think public support of historical scholarship is an excellent idea, but part of that bargain ought to be the timely dissemination of the results, not locking them up on some commercial publisher's schedule.
Unfortunately, the people most affected by this - those newly minted Ph.D.s - are in the worst possible position to effect change in the tenure system. That's why it's so disappointing to see AHA pushing for the right to embargo rather than pushing for changes from publishers and universities. Clearly there needs to be cooperation from all three parties in this: publishers need to make it clear and public that they are not pressuring for embargoes; universities need to be clearer about what factors go into a tenure case; and students need the time and care it takes to turn a research dissertation into the polished and professional volume on which they want to be judged.
Among the *coughwaytoomanycough* YouTube channels I subscribe to are The Vlog Brothers. If you've not seen them, they're a bit hard to describe. Hank and John Green do short videos that are part topical, part conversational (they talk to the viewer by talking to each other) and part humorous. Their presentation is deliberately nerdy and overdramatic - a kind of YouTube vaudeville, and I mean that in the nicest possible way.
Recently, they took on the question of "how can we improve the content on, say, YouTube?" Kind of a small challenge, but anyway, worth talking about. One identifiable problem is that YouTube's major revenue model is advertising and you get advertising dollars through having popular videos. That sounds great until you think about it like this: advertisers don't care about viewers; they care about views. Things that get more views get more ad dollars even if the viewers hate what they're seeing. Good-but-unpopular content is left to suffer and eventually stop being made. If this sound like just about every other pop culture format in the Western world, welcome to the 21st century. Pax David Lowery.
Unlike Mr Lowery, the Vlog Brothers would like to take action to change this system and their chosen method is an Internet tip-jar/subscription service called Subbable (which my brain insists on reading as sub-babble). Subbable allows you to do the traditional one-time donation for content it provides, or you can become a subscriber at an amount you decide to pay. Monthly recurring subscriptions are a lot like magazine subscriptions in the physical world: you pay for content from people you generally like, but without specific advance knowledge of what that content will be. I like WIRED and I subscribe to the magazine; how much of any given issue I read is a little hit-or-miss but overall I figure it's worth my dollars.
The Vlog Brothers have a series of high-school/freshman-college level videos they call "Crash Course." The goal is to make these topics entertaining and present it in snappily digested YouTube style without dumbing down the content. They've come to the end of a two-year funding grant from Google and would like to continue making the videos. Even snappy and fun videos about course-worthy material don't get a lot of ad dollars, which is where you come in. You can go to the (currently in beta) site, look at Crash Course, and decide if you want to pay for the content.
The videos are still hosted on YouTube and still searchable there - nothing moves behind a paywall. Instead, the idea is as stated in the title: here is content you might want and if you want more of it, please pay for it. There are likely to be perks and rewards along the way, but generally the idea is that most of the money gets funneled back into making more content.
It's far from clear that something like this is going to be a sustainable model. The Vlog Brothers may be able to make this work because they have a long history and a solid following for their other YouTube content. But what I find interesting about this is that it's possibly another sign of a shift in the culture. For the first decade or so, a lot of time and energy went into trying to force people to pay for stuff, and that failed massively. A few months ago I predicted we were at the start of the next chapter in the story of the digital revolution. Maybe this chapter will also take a decade to tell, but it feels like the Vlog Brothers are heading the right direction. This is a very 2013 thing to do.
In its appeal of a district court finding, Fox network has lost another round in its fight against Dish. Dish was sued because of its "PrimeTime Anytime" and "AutoHop" products, which gave customers control over DVR recording schedules and the ability to skip commercials embedded in network broadcasts. The Ninth held that "[a]lthough Fox established a prima facie case of direct infringement by Dish customers, Dish met its burden of demonstrating that it was likely to succeed on its affirmative defense that its customers' copying was a fair use."
It's a standard question in economics to ask if we have too much or too little of something and if so, why. Stiglitz argues that right now innovations are overprotected. As evidence, he notes that the Myriad decision - invalidating their patents - was key to unlocking important techniques in cancer screening, such as alternative (and affordable) tests for second opinions. Breast cancer is itself a killer, and women are making radically life- and body-changing decisions on the basis of these genetic tests, so having easy access to alternatives is clearly a major value. Stiglitz notes that he filed an expert declaration in the Myriad case arguing why patents are not necessary for drug innovation - in fact they stifle such innovation.
Stiglitz's points are complex and worth reading - I can't do them real justice in a blog post that summarizes a column where he himself summarizes a set of book-length arguments. But let me touch on three important elements of the debate.
There's an argument to be made that health-related intellectual property is special. I've just finished watching a lovely video from the Steinway company on how they make their piano bodies. Many of their techniques are (or were) patented. Our patent system makes no distinction between a process for creating a life-saving drug and a process for laminating boards to give particular sound fidelity. Economically, however, they are very different. Stiglitz argues that generalized increases in health and longevity have led to the economic booms and prosperity we all enjoy. Making a better piano is nice but has a fairly narrow benefit; making people generally more healthy has a much broader impact. In market terms, there's a greater value realized (even though it's much more diffused) and from that one can reason that they ought to be treated differently.
There's also an argument to be made for replacing government monopolies with more direct subsidies such as funded research and prize competitions as promoters of innovation - on efficiency grounds if nothing else. Stiglitz argues that our current structure of IP monopolies lead to "rent-seeking" behaviors that are undesirable from both economic and social points of view. Patent trolls may be some of the worst rent-seekers we've seen in the IP arena. Eliminate (or curtail) these monopolies and you reduce the waste and hindrance that comes from rent-seeking behaviors.
Finally, there's the important idea that there's nothing actually necessary about the system we have today - it's a political construct, not a mathematical necessity. If we're going to be talking about new models for business, we also ought to be talking about new models for IP.
Steam are in a somewhat unusual position here in that they are a major (in some markets dominant) service and platform for gaming. Valve does make some games - probably most famously Portal/Portal 2 but also several shooters like Half-Life and Counterstrike as well as the popular multiplayer Dota. But most of Steam's service and presumably revenue derives from its use as a sales and registration platform for third-party games. You can buy games directly through Steam, you can use game keys bought elsewhere to get a copy of a game off Steam, and you can even register your desktop-resident games with Steam. Steam provides automatic cloud backup for games and saved games, and gives you the ability to access your games from multiple machines - though only one at a time.
Steam has also developed a very light touch with DRM that has made it popular with players. If you are online, the game touches base once at launch with Steam to confirm everything is kosher; if not, it will warn you but generally not prevent you from playing solo.and it strongly encourages people to do the right thing with not spoofing multiple logins, rather than imposing harsh penalties (shades of The Art of Asking).
So in theory, Steam could set up a system that allowed people to transfer their Steam-purchased games from one account to another, effectively creating an online used-games market. In theory, that's a good thing, but practically it might not end up benefiting the people who would like to benefit from it.
Among its other functions Steam is also a massive online gaming store. We've just come through the annual Steam Summer Sale, which is a week-long event featuring dozens of titles offered at steep discounts. (I think I only bought five or six things this time; last year I kind of binged.) These discounts are made possible, in part, because Steam and the publishers do not have to compete with a used market. If you could always find a cheap (used) copy of a title what would be the incentive for the publisher and Steam to put it on sale? Remember these are digital goods - the cost of carrying "inventory" of these games is the cost of keeping a database of valid license keys, which is to say effectively zero.
Right now Steam competes with other online stores such as Green Man Gaming, EA, Origin, and Amazon. Adding a consumer-resale component to that would undoubtedly drive prices down but practically it might mean that fewer copies of games would be available at lower prices. When Steam puts something on sale cheap it does so with a large supply of license keys in hand - pretty much everyone who wants the game cheap can get it. In a used marketplace you'd be limited to the number of cheap copies offered by resellers - first buyers would get things for less money but everyone else would end up paying higher prices.
As TotalBiscuit called it in his commentary today, it is likely to boil down to principles versus practicality. In principle I agree there ought to be a market for used games - I see no reason why First Sale doctrine ought not to be extended to digital goods, provided we take reasonable steps to ensure no illegal copying occurs. But practically I don't see this meeting any existing market need. Steam and other retailers are doing a good job of offering lots of titles at really cheap prices, meeting consumer demand. Practically, I'm also a believer in "if it ain't broke, don't fix it" and I'm wary of situations like what happened with the e-book price fixing settlement where I feel the solution to the problem created an even worse problem.
The Verge has a cute story on how two people - elderly, church-going retirees who gave up musical careers - have come to be the voices most often heard in places like airports, subway stations, and other public transport facilities.
David Segal acknowledges that these trolls have problems: they assert crap patents against people who should never have to deal with them in the first place. They use tactics that can be reprehensible to even downright illegal, and sometimes get slapped with fines by judges for doing so. They keep large chunks of settlement monies for themselves, and often pursue litigate-first-and-only-settle-as-part-of-litigation pressure strategies. Sometimes they appear to be trying to "double dip" by settling over one patent only to turn around and re-litigate over related patents.
But at the same time, they can be reasonable and back down if shown that their patent doesn't apply. They also do research and investigate the validity of patents they are asserting and as Segal points out there are quite reasonable differences over the validity and scope of patents at issue. They do get billions of dollars flowing to inventors who otherwise would have nothing. They are often sought out by companies or other IP holders who have been unsuccessful at monetizing the fruits of lots of hard work, and they help those hard workers get something.
The contradiction can be all the more striking when the same entity - in this IPNav - exhibits both good and bad behaviors. Attempts to ban PAEs or shield against their worst behaviors need to be realistic and handle the bad behaviors without crippling good actors.
Rather than just continuing to beat my "stop issuing crap patents" drum I thought I'd offer an example from my own time at university to illustrate the problem. At Hypothetical U, Professor P conducts research in her lab. Her research is funded by Corporation C, a common occurrence at universities these days. Federal funding only goes so far and companies are often interested in basic research they don't have facilities to conduct themselves. Her research bears fruit and several patents are filed. C, as the research sponsor, gets a free license to these patents. But because H.U and P are socially minded people that license is non-exclusive. Any other company that wants to commercialize this innovation can do so by licensing these patents.
One day, H.U. is made aware that Other Company is making products that appear to infringe these patents. Part of the agreement between C and H.U. is that H.U. has to enforce the patent licensing deal, so H.U. hires lawyers - a PAE in our new parlance - to do just that. H.U. is not in the business of commercializing IP and making products and never should be. But they are in the inventing-new-stuff field and the costs for that need to be covered, which licensing fees help to do.
So as much as I support proposals to knock out abusive trolls, I also think that H.U.'s model is real and valuable and any proposal has to be shaped in such a way that it doesn't knock them out as well.
This contrasts with the current marketplace in which there are still hits and still top of the pops, but the ways you get there are much more wild, wide, and varied. There are placements on cult favorite television shows, there are viral videos, there are Twitter hashtag campaigns, and on and on. Most interestingly, these non-traditional methods have led to the top two pop songs this summer being tunes that were released one and two years ago. This kind of length of time and, frankly, randomness tends to lead traditional marketers to tear their hair out.
But it marks the new reality and major labels are adapting to this - they're flooding social media, recycling old tunes by artists that are suddenly popular, crossing genre boundaries and trying to ride the tiger. Labels have slimmed down - backing and promoting fewer artists - but just maybe they are figuring out there are other ways to manage music beyond the "sell millions on first release or you're gone" model. Hits will still happen, record companies will still look for that million-seller, but just maybe a dozen years after getting blindsided by Napster the ship has begun to turn.
This verdict is far from the end of the story, though. Apple will undoubtedly appeal and there will be a separate trial for damages. I don't suppose that anyone's going to notice Amazon got a big sloppy wet love-kiss from the DOJ settlement.
He mentions the case of Allen v Academic Games League of America which was appealed to and decided by the Ninth Circuit back in 1996. It applies to board games and the issue appears never to have been decided nationally, but the appeal affirmation touches on issues of whether public play is a derivative work or an impermissible public "performance" and concludes that neither doctrine applies.
After getting soundly thrashed on Twitter and Reddit Nintendo appear to have reversed course, which is good but as TB says this is further evidence of just how out-of-touch Nintendo have become. Well, actually he calls them "total dumbasses" but that's his style and it's why I like his videos.
There's another school of thought, though: anything goes. We've seen this in industries like fashion where copying is in the lifeblood of the business. This is sometimes called the "wild west" but it would more accurately correspond to "colonial times." In the bad old days when American was the upstart and the British were the established heavies, Americans stole and copied and stole and copied. Even after the Copyright Act of 1790 and its successors became part of the body of American law, we were happily ripping off European authors to the point where they actively tried to keep their books out of the hands of Americans. The wholesale copying of IP in movies continued for most of the 20th century.
Spin forward to today and America stands in the place Great Britain used to occupy, and the populous, noisy, IP-disrespecting position is occupied by China. Now it's our turn to howl, so it's reasonable to keep pushing the comparison. Unfettered copying gave rise to those titans of Hollywood, industry, and publishing that are now so desperately trying to clamp down on the Chinese, so why should we be going along with it?
In the article, they argue that America's (currently famous) innovative nature derives from its centuries of blithely ignoring IP restrictions. China today is a billion-person marketplace full of knock-offs, awash in copies of American products, copies of American ideas, and even one-for-one copies of American companies. Most of those copies are outperforming their American originals in the Chinese marketplace, which may have something to do with the way that the Chinese government is not just turning a blind eye but is actively promoting the copying-as-business model.
Raustiala and Sprigman call this "indigenous innovation" and argue that although many of these native-Chinese firms began as carbon copies they have since evolved and innovated past their American counterparts. This, they argue, is natural and healthy. It's good for Chinese, who get access to products and services they could not afford in the original. It's good for consumers in general, who benefit from a marketplace in which established companies feel pressure to innovate in order to stay competitive. And it's generally good for underdogs everywhere who are trying to unseat the current dominant players.
Salmon argues that Raustiala and Sprigman "don't go far enough" in that they seem to think drugs IP is special, an area where I definitely agree with Salmon. But this does not address the core issue, which I still see as "what are the appropriate compensation models for the 21st century?"
I don't think the analogy to developing American IP behavior is a perfect one. The idea of infinite perfect digital copies, the evolution of markets toward global, and the massive increases in connectedness make this century significantly different. At the very least, it's incumbent on those who want to argue for the analogy to explain why this new world is enough like that old world that the model still holds.
He points out that people like Lowery are mistakenly comparing "plays" on Pandora - which are a single person listening - to "plays" on broadcast radio that reach many thousands of listeners or "plays" on a subscription station such as XM which also reach many listeners. If Pandora pays a sliver of the amount paid by XM it does so based on streaming to a proportionally smaller sliver of audience. Oh, and by the way, broadcast radio pays nothing per play. So this is not even close to an apples-to-apples comparison even though everyone uses the word "plays" as though they all meant the same thing.
Westergren also points out that while it has sought to get a rate comparable to other forms of radio it feels it has been targeted by organizations specifically trying to get Pandora (and only Pandora) to pay more. Whatever the rate is set, the argument goes, Pandora should pay rates that establish a level playing field among Pandora and other streaming Internet services.
There's also a good bit to read about Westergren's ongoing notion of what Pandora's mission is: founded by artists in order to be for artists. That includes playing and promoting artists who aren't getting exposure elsewhere, and Westergren talks about his commitment to various aspects of this mission. To me, though, this is beside the point: what matters is that Pandora appears to be the target of a singling out, and a deliberate distortion of the situation. That needs to stop, now.
The team at NPR's Planet Money took a look at this question for standard headache remedies (asprin, etc) that are long out of patent protection and found that even though cheap generic versions are often shelved side-by-side with the more expensive brand-name versions, brand names still thrive. These are drugs that are long past, or never had, patent protection, so the question of why sales of non-generics still thrive. The answer isn't easy to figure - it has something to do with convenience, something to do with image, and something to do with lack of information. What it does highlight, though, is that monopolistic practices aren't the only route to success in a competitive marketplace.