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 case you've forgotten, the system works like this: Elsevier controls the publication of major journals. Academics submit (and often pay a fee for the privilege) to these journals, where other academics give Elsevier their free labor as editors and reviewers. Having gotten all this for free, Elsevier then turns around and charges universities exorbitant sums for subscriptions to these journals, all the while prohibiting the people doing the actual research work from "publishing" their work elsewhere, which includes posting it on Web sites.
Academia.edu is positioned as a proponent of "open access to academic literature" and does not mince words in its frustration, calling Elsevier's move "...upping the ante in its opposition to academics sharing their own papers online." It is, to say the least, petty and dickish. Elsevier has the legal right to antagonize the people who provide the fuel for its engines, but I cannot for the life of me figure out what they think they will gain by doing so.
And because it has been about 10 months let me repeat my mantra: Hey, academics! You handed Elsevier the whip that it is now using to flog you. Clean up your own tenure-track house and this problem will solve itself.
Contributory Cybersquatting Not Viable in Trademark
Or so seems to say the 9th Circuit in Petronas v. GoDaddy.com. Petronas sued GoDaddy for its role in registering and helping maintain two domain names that included the string "petronas" and that directed people to porn sites. Petronas alleged that the registrar contributed to the infringement on trademark that these domains created. I've read the cited statute and it doesn't seem to provide any cause of action for contributory parties, so I'm inclined to agree with the court here. But other courts may decide otherwise or this may get appealed and the 9th has a terrible track record when their decisions are subject to SCOTUS review.
Into this breach are moving several companies and a reader pointed me to one of them, called Stageit. The company acts as intermediary, helping small-scale performers publicize, sell virtual tickets for, and stream live performances to fans. Artists set their performance times and durations as well as viewing prices. Stageit further inserts itself into the exchange by having payments be in its own virtual currency and by putting out a virtual tip jar so people watching can tip the performers. It's an interesting re-creation of an old ritual; I'm old enough to remember putting dollar bills into snifters on pianos and milk crates set out by artists playing in bars where I drank.
Finally, Stageit provides the streaming platform (ETA: a comment from Evan Lowenstein, Stageit CEO, tells me this statement is incorrect and they do not use DRM) using its own DRM in an attempt to ensure that audiences don't record the broadcast. Artists get paid (eventually - Stageit takes a 10-day float) on an inverse sliding scale with Stageit taking 37% of the smallest earners (USD 25-50) down to 17% if your show brings in 50k or more. That, too, seems chintzy, as we generally think the better-earning artists would be able to higher fees.
It's also counter-intuitive to me, as Stageit must have nearly the same fixed costs for each show and their main variable cost has to be the bandwidth demands of casting larger shows. Why they're charging the more costly shows less is not spelled out on their site but I'd hazard a guess that it's a deliberate attempt to shape their customer base. They probably want to attract fewer shows that earn greater revenue rather than a larger number that each bring in less, possibly even to the point where a tiny show doesn't cover their costs in putting it on. Shades of shortening the long tail.
Interesting review in the New Yorker this week, covering Professor Anita Elberse's book Blockbusters. I have not read the book itself, but the review describes Elberse as a long-tail skeptic. In particular, the question is whether the long tail, as popularized by Chris Anderson, will supplant the blockbuster/swing-for-the-fences model of success in businesses such as books and movies. Elberse argues that although Net-based models enable more choices, "the vast majority of the revenue remains in the head" - that is, the big-name mega-million hits that characterized books, movies, records, etc for most of the last century. If anyone reads the book and has an opinion please let us know.
In the linked column, Lee seems to be surprised that academia is opposed to legislation that would weaken patent protection. This puts them in the company of aggressively misbehaving patent trolls, patent attorneys, and major patent holders in tech, biopharma and elsewhere. If Lee had just been reading Copyfight then this would not have surprised him as I've argued multiples times in the past that you cannot in the abstract differentiate the behavior of a research university and a patent troll.
In addition, Lee might do well to consider that if a patent "reform" proposal garners this broad a spectrum of opposition then perhaps it's not really a "reform" at all and could perhaps do with some further thinking-through. Lee seems to think that the very idea that universities make money off their patents is bad, a "tax on innovation." Perhaps that's so, but isn't that the entire point of patenting? The patent bargain is an exchange - disclose information in return for monopoly power, including the power to collect fees for use of the disclosed information.
Lee, like so many before him, is missing the point. You cannot from the outside differentiate a person driving to church from a person driving to commit a crime. Trying to outlaw driving because some people drive to commit crimes is entirely the wrong way to go about it. If we want to stop patent trolling (which I agree is a worthwhile goal) then we need to do so by means that differentiates the legitimate and intended use from illegitimate and unintended abuse.
And because it's been months, I'll just restate my two preferred starting points: limit functional claiming, and strengthen prior art requirements. Both would go a long way to removing the overbroad crap patents that are the favorite tools of the trolls.
Under that catchy title, PBS Digital's "The Idea Channel" poses the question - what makes pop music popular, and how should all this stuff be priced anyway. In a fast-paced ten minutes they focus on the role of radio, with its implicit payola and surprising reach, in making a musical act popular. A popular act's songs may appear in movies/commercials/etc but first they gotta get there and becoming "pop" is a black art at best.
I'm sure by now most of my readers have seen or at least heard of the advertisement by toymaker Goldieblox which used a parody of the Beastie Boys' "Girls". I can't link you to the original video because Goldieblox have taken it down, replacing it with one that uses different music. Their blog entry claims this is out of respect for Adam Yauch (MCA)'s last wishes that his music not be used for advertising.
That's noble but I smell marketing B.S. Goldieblox appear to have overplayed their hand here - though they got a lot of publicity they also generated a fair bit of controversy and ill-will. As the company is looking for additional financing that whiff of scandal is dangerous as it may scare off risk-averse investors.
That's amusing, but this is Copyfight so let's look at the legal issues involved. I like the summary Andy Baio posted yesterday, trying to put together what a layperson might understand about fair use and what it tells us about the misinformation that's swirling around. As Baio points out, fair use isn't even reliably well-defined in law; instead, it's a subjective judgment made in a courtroom based on a number of factors. Usually four factors are involved:
The purpose and character of the use
The nature of the work
The amount and substantiality of the portion used in relation to the work as a whole
The effect of the use on the market or potential market for the original work
This best standing precedent on fair use is Campbell vs Acuff-Rose Music, sometimes called "the 2 Live Crew case" because it concerned a song called "Pretty Woman" by them that was accused of infringing on Roy Orbison's classic "Oh Pretty Woman". In deciding that case unanimously, Justice Souter wrote that “the use of a copyrighted work to advertise a product, even in a parody, will be entitled to less indulgence”. Thus even though SCOTUS applied the conventional four-part test of fair use, it ruled that an advertisement doesn't have the latitude that other works do, within the four-part test.
Salmon calls this the "cult of disruption" and fairly sneers at it, saying that Goldieblox appears to be "...daring the Beasties to rise to the bait and enjoin the fight" for the start-up's marketing plans. He calls Goldieblox "an entitled and well-lawyered Silicon Valley startup" and this is where I think he's got it right and the real problems arise. Goldieblox might well have won on the merits should this have gone to court, and I strongly agree with Baio when he calls for clearer directions, "helping draw the lines for what artists can or can't do." But I don't think Goldieblox ever cared about that. Merits or not, getting dragged into court would've been a serious hindrance to the company's marketing, financing, and growth plans and so they needed to avoid that.
The graph normalizes everything to 2012 dollars, which is great, but doesn't include best-fit trend lines, which is a shame. My eyeball estimate is that things overall got about 30% worse in the decade 1999-2010 but may have stabilized since then. It will be interesting to see what perennial complainers like Dave Lowery have to say about these data. Digital Music is certainly quick to argue that "...publishers of recorded media may lose for piracy, whereas artists may gain from piracy."
As I've said so many times before, I'm unconvinced and would like to see more. Yes, that's what my intuition says, but data should trump intuition.
Eight years on, Google has won summary judgment in its defense of Google Books. The judge in the case, Denny Chin, appears to have wholly accepted arguments made by Google and several amici that the function Google Books serve is sufficiently transformative that it is not a derivative work, and that provision of the contents (or parts of contents) of books digitally does not infringe on the rights of the books' authors. This decision will be appealed, I expect, but in general it clears the way for Google to expand its efforts to digitize and index more books.
I am of two minds about this. On the one hand, I think that digital scholarship is invaluable, and that the use of digitized text snippets to support scholarship is a new activity that deserves to be considered part of fair use. Copyright has created vast deserts of knowledge and mountains of orphaned works, which hurts everyone. On the other hand, I'm reluctant to hand the power over solving this problem to one commercial entity, which is showing itself increasingly hostile to the general good.
We've talked about how Amazon being a monopsony is a bad thing for e-books. Although many people write and (self)publish e-books, being forced to do so through Amazon's platform puts them at the mercy of Amazon's business purposes. Those business goals might or might not line up with what readers and writers want. Likewise, there are probably hundreds of millions of people who post videos to YouTube, but for them to reach their audience they have to go along with whatever policies Google chooses to put in place.
I don't think anyone ever claimed YouTube comments were a good system, but it seems to be pretty universally understood that the wholesale replacement of a bad system with another bad system has made things even worse. This is going to hurt a number of people who are trying to use YouTube channels for their businesses, and outside of boosting Google's ad revenue and maybe injecting some life into their flailing social network experiment I don't see what value it brings.
Sometimes being on press release lists gets me interesting things, as in this notice that just arrived to tell me that WikiLeaks has published the entire text of the sort-of-secret Trans-Pacific Partnership treaty. This TPP has been lurking below the waves like some fantasy-novel kraken, waiting to snare the unwary. The lengths to which the negotiating governments have gone to keep anyone from knowing what's in this treaty, or discussing/debating the wisdom of it, should give everyone pause. The treaty is massive, but I'm assuming that if you're going to read any of it, you might want to read the 95 page chapter on intellectual property.
That link should take you directly to Wikileaks. If that gets blocked or suppressed someone let me know where the mirror sites are and I'll link to them.
I've only skimmed the text so far and it's marked up so it's hard to be sure exactly what the final text will be when the Obama administration tries to ram this... err, excuse me "fast track" this through Congress. But it appears that the trade industry lobbyists who have had insider access to this all along have gotten a great deal of what they wanted. There are new restrictions on how patents are handled, including on drugs; new definitions for copyrightable materials; and more.
Of course, the biggest part of this is about enforcement and it appears that TPP will set up a new system of judgments (courts? tribunals?) to which signatory nations will be expected to adhere. It also appears that these enforcement procedures will allow secret evidence in direct contravention of current US legal standards.
And as many people have suspected, it appears that the Cartel are using TPP to try and establish the sorts of surveillance and enforcement regimes that they tried with SOPA/PIPA and for which they got smacked down hard.
Former U.S. Supreme Court Justice Louis Brandeis is credited with saying that "sunlight is the best disinfectant." One can only hope that exposing the extremely nasty workings of this secret protocol will allow us to clean up the mess.
For those not familiar with Iwinski, he is both the CEO of the game developer CD Projekt Red, and a long-time outspoken opponent of DRM in gaming. Projekt Red is probably best-known for creating the Witcher series of games. The original was a decent success in Europe; Witcher 2 was a multi-million seller both in the US and in the EU countries, and Projekt Red has already announced that the upcoming Witcher 3 title will ship with no publisher DRM. Game distributors such as Steam may add their standard DRM as that's out of the game publisher's control.
In the interview Iwinski accuses game publishers of creating a DRM "smokescreen" because they know it doesn't work but keep using it anyway, usually to the detriment of gamers. The beneficiaries of this smokescreen are said to be bosses and investors who want to see their stock prices go up, even if it pisses off the customers.
The two questions at hand, then, are "what about piracy" and "does the DRM actually work". The Witcher games have definitely been extensively illegally copied, but Iwinski believes this would happen anyway. The lack of DRM on Witcher 3, he predicts, will not result in any more illegal copying of the game. The correctness of this statement is hard to evaluate, since we don't have a controlled experiment to try. It's certainly true that Iwinski and Projekt Red are generating immense goodwill on the part of gamers - as well as raking in a lot of free publicity - with this stance. As a gamer myself I'm planning on buying this title but to be honest I'm planning to buy it because I played and enjoyed Witcher 2.
Therein lies the rub - taking a stance against DRM is only interesting if you're producing a product people like, care about, or want for whatever reason. If the game was terrible, nobody would bother to buy it or pirate it.
But on the other hand, bad DRM can definitely bog down a product, which seemed to be true of the latest Sim City. It got poor reviews, had heavy-handed DRM, and did poorly in the marketplace. So which factor contributed more? I doubt we can say, except to note that there is a relationship and it's not a simple one.
Speaking of the recent SIm CIty and its DRM, TotalBiscuit takes issue with Iwinski's assertion that all DRM is always a failure. Lately some games such as Sim City and Diablo 3 have used an "always online" requirement as part of their DRM strategy. These sorts of implementations are much harder to crack and that, TB asserts, is the point. DRM isn't deployed as a strategy to stop piracy, but rather as a delaying tactic. The theory is that if it takes long enough for a crack to appear then impatient gamers will give up waiting and buy the product. These people, who get called "casual pirates" sometime, have enough money that they can spend the USD 60 or whatever for a full-price top of the line title, but would rather not.
The hardcore pirates are just going to create the cracks or wait for them to come out; the casual pirates can be DRMed into becoming paying customers. At least, that's one approach. Or you could do something like Valve has done and just make it fantastically easy to get the game, put things on sale early and often, and use positive enticements - treat piracy as a service problem. I know which model I'd rather see win.
In order to get here, we first had Apple convince a jury that Samsung had infringed Apple patents. The jury returned a billion-dollar damages verdict, from which Judge Koh slashed nearly half, ruling that the jury had improperly figured the damages.
Now the two sides will present their cases to another jury, which will render a decision that will immediately be appealed. I mean, c'mon. You know it, I know it, Judge Koh knows it, and so do the lawyers involved, who have got to be laughing their asses off over the champagne-and-caviar meals that this case is buying them. In theory the jury will be deciding how much Apple is owed and how that award is based on the infringing products. In reality, this battle is a proxy for fights yet to come as both sides will be eager to prove IP points about their current product lines.
The latest update from 99% Invisible is out, and at the start they report on their Kickstarter progress. As I mentioned last time, their stretch goal was "provide healthcare for employees" - like we expect businesses to do - and apparently that goal got blown away. Interestingly, Roman Mars reports that many of the supporters upped their pledge in response to this goal. Obviously (public) radio listeners and Kickstarter backers are an atypical slice of the general population, but I think it bodes well if people buy into the idea that supporting new businesses means supporting all the things a new business needs to do. They are currently working on building out a larger base of supporters, as they have lined up a challenge goal whereby getting 10,000 backers at any level will get them a specific donation from a sponsor.
what’s the argument which says that Amazon has proved itself to be a mortal, existential threat to the publishing industry?
The picture he paints is one of Amazon as an agent of change, making it vastly easier for people to buy and read books. This ought to be good for publishers who, after all, should be wanting people to buy and read more books.
Salmon theorizes that the two biggest factors are Amazon's price aggressiveness and publishers' inherently conservative nature. Both are true, but I think he's missing several key pieces of his story.
For one thing, he notes that Amazon was taking losses on its aggressive price discounting of e-books, but fails to note that publishers only made profit on the retail prices for e-books, not the wholesale. You can argue about whether an e-book should cost sufficiently less to make than a physical book that a discounted price is in order, but it's still true that when Amazon cut its price the publishers took a hit that was out of their control.
Salmon further asserts that, "It’s not like Amazon has disintermediated publishers" - but in fact that's exactly what is happening. There's a massive explosion of self-publishing in the e-book world, driven in large part by programs such as Amazon's CreateSpace. These programs completely take publishers out of the loop, allowing any author to reach their audience not exactly directly but through the Amazon infrastructure, including the site and Kindle devices. If that's not disintermediation, I don't know what is.
Salmon may be looking at the wrong thing, perhaps comparing the dollars. Certainly big-name professional publishing is likely to be much more profitable than self-publishing for the vast majority of authors. But in terms of number of authors published and in terms of number of books produced, self-published e-books are racing past their physical counterparts.
Money aside, I think the biggest threat that Amazon poses to publishers is loss of control. As publishers lose control over pricing, over the selection of the next big thing, over schedules and distribution, etc. they find their existence threatened. If they're not in control of these things, what's the point of having a publisher anyway?
Well, we know that self-publishing is really hard work but that's not something immediately obvious and of course Amazon and others try to make it seem easy. If you can't see any value in publishing through a traditional publisher then you almost certainly can't see any reason to give that publisher a cut of your earnings. And if that idea gets firmly enough entrenched, those publishers are gone. So, yeah, Amazon's bad for publishers (too).
One of the questions I get asked when I talk about new business models is "What about listener support?" It's been the public radio and TV (NPR, PBS) mantra for decades and it seems pretty straightforward: hold a pledge drive, raise cash, use that cash to make more art, science, radio, documentary, entertainment, etc.goodness that we want.
Kickstarters are cool, and I'm really jazzed that one of my favorite earphone-fillers is going to be coming out more often, but we started with the notion of business model. So it was interesting to me to see that - as of this writing - the current stretch goal for the Kickstarter is "provide health-care premiums for the staff." Because if you're going to run a business you have to think about your people as well as your product and if you believe in listener funding a business then you might think this was a very smart move.
But it's also a risky one - people want to pay for creative product. I want the radio show, or CD, or concert or game or whatever it is that I'm backing with my dollars to be delivered to me. Healthcare, and other so-called overhead expenses of running a business, aren't directly translated into product delivered to me. But if we're serious about promoting new business models, then we need to start getting serious about what it really takes to run a business via these models.
This brings us to a paper (abstract here on SSRN) with the title "Fair Use, Girl Talk, and Digital Sampling" by W. Michael Schuster II. The paper purports to show that sales of the songs sampled by Girl Talk increased in the year after the album's release when compared to sales the year before. That's an important argument if true, as it would lend support to the thesis that sampling brings attention, which brings sales and therefore copyright regimes should be relaxed to allow more sampling.
Much as I'd like to see support for that hypothesis, I don't think this paper provides it. As Stewart Baker (another Girl Talk fan) blogged, "Schuster achieves his results by playing with the sample, dropping nine songs from a sample of about 200 because they completely wreck his argument".
Schuster argues that he is justified in dropping these songs from the data set because they were hits before Girl Talk used them and we know that hit songs tend to have (often steep) declines in sales after their popularity peak is gone. That's likely true, and Schuster is far from the first author to clean up a data set for publication. However, when your cleaning involves removing only those data points that end up refuting your conclusion the work becomes suspect.
We need more scholarship in this area, and not to draw strong conclusions from any single study.
Who Knew There Was An Institute of Scrap Recycling Industries?
And more relevantly to this blog, who knew that the Institute of Scrap Recycling Industries had a position on unlocking devices? I knew neither until I got a press release this morning from Mark Carpenter at ISRI. The release states that the organization - which includes a large number of electronics refurbishers as well as component recyclers - believes that allowing consumers to unlock their devices is an important step to keeping more electronics out of landfill. As a result their organization will join in the lobbying to get changes to US copyright laws that currently prohibit or restrict unlocking electronic devices. My opinion is that as we move toward an "Internet of things" this is going to become an increasingly important fight.
The next time some wise-guy tries to tell you how easy self-publishing is, just refer them to this here blog entry by Ursula Vernon, who has apparently spent far too many hours hassling with the idiotic mechanics of self-publishing files, formats, and software.
He discusses how publishers and content producers have a general truce, often through channels that help get agreements to use game footage and even early access keys. Why Wild Games Studio chose to break the truce and go after TB's critical video is still unclear. What is clear is he's having none of it, as he lays in to Wild Games for this incident and recounts several other rounds of shady behavior. The spat has also spilled onto the Steam forums, where the CEO of Wild Games has posted claims that "TotalBiscuit has no right to make revenues with our license" - claims that TB refutes in his video.
Details of the particular spat aside, the core question persists: is YouTube's notice-and-takedown system working, or is it being used to silence unwanted criticism? As I blogged last week, the details of any notification system is where the devil resides. It's clear that notification systems need to be designed with safeguards, as TB describes how he is able to rely on external assistance that's not available to smaller-scale critics. YouTube doesn't seem to be doing a lot itself to provide more active safeguards, and that's a potentially bigger problem.
Oh, and I have to mention that TB is donating any ad revenue generated from this video to the EFF.
I think the answer is "probably yes, but people will read it the way they want."
Specifically, EFF Deeplinks blog posted about piracydata.org. The item, written by Maira Sutton and Parker Higgins, gives us the "see, tolja so" point of view. Headlined "Movie Watchers Can't Get What They Want" it pushes the idea that a significant cause of people downloading/watching movie content through illegal means is because they don't have access to legal means of getting these movies.
In the past I've written sympathetically about this point of view: when people appear at your (virtual) door waving cash and saying "take our money, please" it's not generally a good business practice to turn them away. Not only do you lose that immediate cash, but you build an expectation in peoples' minds that they won't be able to buy things honestly so their only alternatives are illegal ones.
So Jerry Brito, Eli Dourado, and Matt Sherman have created a site that mashes up TorrentFreak data on BitTorrent activity with a service that checks for availability of content on legitimate streaming services. The result is a weekly chart with convenient checks and x's for Streaming, digital rental, and digital purchase. So far the chart has a lot of red marks, as popular films are not appearing on streaming services pretty much at all, and sporadically on the other two options. This leads Sutton and Higgins to finger-wag at Hollywood, and I have some sympathy for that. Rapid release of popular features on streaming services would likely capture some of this revenue stream.
But... and there's always a but, that's not the whole picture. For example, the latest data (ending Oct 14, 2013) is captioned, "only 46% of the most-pirated movies have been available legally in some digital form." That use of 'only' is interesting, because I could write a sentence using the same data that says, "Nearly half the most-pirated movies are available in some digital form." I suspect that is exactly how the Cartel would spin these data.
Furthermore, that spin exposes a salient fact: there's not just one revenue stream here. If people are pirating movies they could get in some digital form then it's worth asking why. Maybe it's because they've been conditioned to believe that they won't be able to get it legally so they don't bother to look. Maybe it's because they would rather stream than purchase. Maybe if a streaming option was available it would not capture the audience that is getting the movie over Bittorrent but instead would cannibalize the audience that is now purchasing digital copies.
Bottom line, the data on this chart are too weak and vague to tell us anything meaningful. Attempting to draw strong conclusions from it as the EFF seem to want to do is a mistake.
The policy statement asserts that "CC licenses are a patch, not a fix, for the problems of the copyright system" in part because only a tiny fraction of copyrighted works use the licenses. CC argues that no matter what, licensing can only go so far and what's really needed is "...to reform copyright law to strengthen users’ rights and expand the public domain."
Vollmer's post describes the origin of the policy statement in comments and questions from CC affiliates who wanted guidance on the organization's policies. And he notes that it is something of a change of course for CC itself, which has not previously been heavily involved in opposing moves to copyright maximalism.
It seems timely to remind readers that Creative Commons is a non-profit that operates because of the contributions people make to it. That constrains their ability to lobby or engage in political action in favor of any particular reform agenda and reminds us that if we want to see this work done it's incumbent on us to make our legislators and representatives aware of our views.
I got a PR notice that the French fashion/design house Louis Vuitton is in the process of doing a deal with Taobao, one of the largest open marketplace sites in China, to handle the appearance of counterfeit items. I can't read the original, but commenters have compared Taobao to both Amazon (with its individual sellers' marketplaces) and eBay. It's a very large marketplace, where small dealers find customers, and people sell and re-sell individually.
Such a large distributed environment makes IP policing a potential mess. Few entities have the resources to enforce trademarks and copyrights against tens of thousands of individuals, and unless you're as batshit crazy as the Cartel you don't want to engage in mass lawsuits. What Louis Vuitton seem to be heading toward looks more sane, though with caveats: a notice-and-takedown procedure. L.V. will no doubt be responsible for searching and scanning the postings and delivering notices to Taobao to take down sales listings. Taobao will in turn have to be responsible for telling users what has happened and may also be responsible for policing users (accounts) that get a bad reputation.
This is definitely a better approach than wholesale lawsuits but the devil of any such system is in the details. What right of appeal do individuals have? What safeguards are there against malicious use of the system - imagine rival sellers who abuse the notifications to hamper competitors. What sort of auditing will be conducted to ensure that Vuitton are taking proper care with sending notices? We've seen a multitude of abuses of such systems in the US and I imagine the same bad behaviors will be repeated here.
That said, the most interesting question to me is whether this sort of agreement represents a sea change in how the Chinese marketplace is regarded and treated. As I noted in the earlier post, there's a theory that marketplaces evolve. America has evolved from IP upstart to IP corporatist; China is widely regarded as having been an upstart but if the theory is right then at some point it, too, will begin to evolve. I guess we'll see.
Mike Schroeder at Aereo sent me another blurb. Usually he's announcing a new city they're marketing to, or another platform app - Android was added just this week. This time it appears that Judge Gorton issued a ruling in Hearst Stations v Aereo denying the Hearst empire's request to shut Aereo down while the trial ground on. A preliminary injunction would have been granted if the judge felt that Hearst was sufficiently likely to win at trial or if failing to do so would have caused a significant or irreparable harm. Aereo is far from in the clear, but they can continue to do business for now.
Among the latest tech proposals for content tracing is "forensic watermarking". This idea, which I discussed with SiDi, allows a production company to introduce subtle changes into media. These changes form a "fingerprint" - an identifying signature that lets someone with the right viewing technology tell the origin of a copy, since the watermark is carried from copy to copy.
Watermarking is not precisely DRM, in that it doesn't attempt to prevent the act of copying, but it is forensic in that it allows someone examining a copy to determine where the copy is generated from. Like DRM, watermarking can also be broken and removed, creating clean copies. This results in an increasing arms race where technologists attempt to embed harder-to-find and harder-to-remove watermarks, and other people work to crack these marks.
To the general end-user, a watermark has generally been harmless. Since it doesn't block action, you tend not to notice it. That may be changing. In the Register's deep dive on high-definition 4k watermarking it appears like the new standard will be used to block playing of content that doesn't have watermarks, or could even block playing of content that doesn't have a device-specific watermark. This would enable locking a specific copy of media to a specific player, possibly even preventing sharing within a household or across devices inside a consumer house.
In the next version, I hear there will be straps for your chair and comfortable eyelid-management capabilities.
The piece is mostly historical, tracing the rise of broadcast television and the birth of cable. For the most part, the blame is placed on the weird deal that first caused broadcast channels to be free over cable and later led cable and broadcasters to deals in which channel bundles were sold. They do note that there's still controversy over an issue I highlighted in January: what are the actual economics behind cable bundles? It's still clear someone is subsidizing someone, but it's hard to figure out which direction the arrow is pointing. There's a helpful chart on their site graphing out the cost-per-subscriber that cable companies pay to media companies, but that just tells you ESPN costs a lot more than Animal Planet, not whether your fat cable bill involves one subsidizing the other.
Those of us who are over 30 (or a certain age) remember wrangling the rabbit ears and how it was the younger generation who had cable and the older that stuck with broadcast. Now it seems like that process may be repeating itself, leading to the question asked by a youth from the podcast that inspired this post's title.
The Court might also be stepping into the patent troll dispute as it agreed to hear Highmark Inc. v. Allcare Health Management Systems, which questions whether attorney fee awards can be used to deter patent trolling. The other fee case (Octane Fitness v. Icon Health & Fitness Inc.) looks to be less headline-grabbing, but still important as it addresses issues of attorney fee awards in cases where a patent defense has been mounted.
The bill that FOMC and similar groups are supporting is Mel Watt’s "Free Market Royalty Act". Over on the other side, the National Association of Broadcasters is backing a competitive "Local Radio Freedom Act" (ain't it great how everyone gets to define freedom?) which they claim has a whole raft of sponsors. The NAB bill would prohibit the establishment of performance rights in over-the-air broadcasts. I'm sure you're all shocked to learn that broadcasters would like to continue getting their free ride.
Honestly I don't expect either bill to move anywhere, particularly in the current dysfunctional Congress. This is posturing - necessary but fruitless. What I expect to happen is more of what we're starting to see where big labels take big broadcasters by the collar and say "pay up or lose our music." Clear Channel appears to have gotten this kind of come-to-Jesus talk and decided to fork out some money. It can't take long for the Cartel to follow up with anyone and everyone else whom they figure they can squeeze for money.
This sort of solution only works well for that tiny fraction of musical artists who are represented by very big labels. Small labels and indie artists are going to get left out in the cold because they have no representation at these negotiations. And digital broadcasters are still going to find themselves having to fork out monies that their over-the-air competitors do not. The establishment of a clear set of legal performance rights would create a much more level playing field than a scattershot set of 1:1 corporate negotiations. But it ain't gonna happen.
Ferrel and Yoches seem to think that precedents of contributory infringement set against music-sharing services could be used against intermediary services that host 3D instruction files. I'm less certain, though perhaps the instruction files can be covered under copyright. The thesis that someone who creates an instruction file for making a copy of a protected object is aiding infringement might or might not stand up. Courts have long distinguished bomb making instructions from bomb-making.
Then there's the practical questions. Ferrel and Yoches admit that suing individual infringers is impractical. Even the Cartel, with its vast resources, could not make a reasonable go of mass-suits against consumers. Any IP holder less willing to lose vast sums is going to have a hell of a time taking action against people who do the actual printing, regardless of how secure their IP is. Many individual music copiers were sued because they (re)shared. I suspect that the vast majority of people who print objects are going to be making one-off personal copies. Finding these people is a non-starter.
Where I agree most with Ferrel and Yoches is where they note that inventors can "innovate rather than protect." This is how fashion works and that model might be usable for many objects that can be 3D printed at home.
His charts are based on data from the American Bookseller's Association which shows a small but steady growth in membership over the years 2009-2012 both in number of companies represented and in locations these businesses occupy. He then hypothesizes that much of the pre-Recession collapse of independent bookstores was due to the proliferation and growth of chain stores. Now that these chains are themselves collapsing, space may be opening up for indies to grow again.
Physical stores still can do a wide variety of things that Amazon cannot, obviously including physical presence like author signings, but also providing expert advice and superior scanning/browsing. Chain stores could do these things and offered economies of scale that independents often could not match. Amazon almost certainly beats lots of indies on prices on many titles, and has an unmatched breadth of offering. This is particularly true for small and self-published authors who simply lack the distribution machinery to get their volumes into indie stores - if they have a printed version at all, which most do not.
Independent bookstores are not sitting still, that's for sure. Many are offering print-on-demand option, and some will even sell you e-readers, though I regard that as a suicidal move. Bookstores are also well-positioned to be community hubs - what Ray Oldenburg meant by "third places".
Jonathan Zittrain put up an interesting blog post today giving a checkpoint in ongoing efforts to combat link rot. This is becoming a particular problem for legal scholars as Zittrain and his coauthors (Kendra Albert and Lawrence Lessig, abstract here on SSRN) found that half of all links written into Supreme Court opinions have rotted in the sense of "no longer work" and it is impossible to trace how many of the still-working links have changed content since the opinion was written. Although link rot of this kind is unlikely to change the meaning or impact of these rulings, it makes future interpretation difficult and more obscure.
Zittrain notes that the effort to combat rot is uniting "about thirty law libraries" using the base engine pioneered by the Internet Archive with help from Web technologies companies such as Instapaper and CloudFlare. It will be interesting to see what they end up archiving, as it's based on a voluntary contribution model. Publishers, authors, and journalists submit material for "permanent" archiving, which makes the sample entirely self-selected, but that may be enough.
I confess I don't know or follow trademark law at all closely so I was interested to read this promotional piece sent to me by Leading-Edge Law Group: a list of (their) seven big highlights in the past year of trademark law. It's an interesting area but a lot of what they list here look like lower-court decisions that might or might not stand up in higher court rulings. Stay tuned.
The latest round of game consoles are intended to be full home-entertainment systems, including playing disks, hooking to streaming services, etc. This means they tend to come with strong DRM and anything played off the console tends to be covered by HDCP. This effectively excludes most recording devices, as the console manufacturers don't want their machines used to make copies of DVDs and such.
Benkler and his co-authors used a set of tools to code content from various Web sites, news sources, and social media over a 17 month period. Their tools did the initial text and link analysis, which they then supplemented with human review and personal interviews. From this analysis they argue that - in effect - the long-claimed effects of decentralized and networked democracy worked. They track how small-scale media worked to shape and coalesce the story (narrative) that then entered the mass consciousness.
As David Post notes in his blog entry on the report titled "What the Hell Happened?" for people not intimately involved in the networked media discussion for the year or two before the bills went down, it felt like a sudden tidal wave. Literally in the space of a couple days the bill went from having massive support from the political elite to being a piece of toxic waste politicians couldn't disavow fast enough. It looked like a quick event from the mainstream media perspective, but what Benkler et al show is that the opposite is true. The conversation started and evolved and grew through broad participation (including thoughtful academics like Post). It was these highlights that the mainstream media seem to have picked up on, missing the broader and deeper picture.
Under the startlingly mis-named "How I Failed", Tim O'Reilly looks back at how the company has been built and where things could have been better. Don't get me wrong - I believe failure is a necessity as is understanding and learning from our failures. But this essay is about so much more, including impassioned and valuable arguments about the harm that DRM does. As he says, "[L]ocking books up in proprietary file formats is a path toward a digital dark age."
At first Paulk just told people to watch the video but then he decided he could help people more if he put together plans that were simple enough for anyone to follow and sell them for about ten bucks, just enough to cover his costs. As a result people have taken his plans and iterated on them, leading to there being hundreds of "Paulk" benches.
He's planning to do his own "version 2" and he has hundreds of photos that other carpenters and woodworkers have sent him of themselves with their own workbenches. It's a great little story of how sharing and resharing can grow an idea.
The new sharing program is aimed at family members, and likely dorm-room buddies and other friends who often share things naturally. The idea is that a person will have a legitimate Steam-bought game installed, his family or buddies will see it, and they'll want to play too. Steam allows the sharing of accounts, so everyone can play serially but since you're logged in as one person things like achievements and saved games are also shared - that's less desirable.
Family sharing adds the ability for people each with their own Steam accounts to be able to play each others' games. I give you access, you log in, and as long as I'm not using my Steam account your account gets to use my games. You get your own saves and achievements.
It's still serial gaming, though, because as soon as I get online you have to give up the game. According to reports in the gaming blogs, Steam is taking a clever turn here. Instead of instantly disconnecting you when I log in, you're given a warning and time to save your game. Or, y'know, you could buy your own copy right then and there - Steam offers you the enticement, along with any relevant promotions and discounts for the title.
In a very clever move, Steam will allow you to keep all your progress once you've bought a copy - save games, achievements, character progression, etc. Because Steam controls the way the game is installed on your device it can be careful to avoid stepping on your saved information.
This may not seem like a lot to non-gamers, but as a gamer let me tell you it's definitely a big deal. Part of the reason we play games is because of the built-in rewards, whether it's unlocking a hidden area, making our character more powerful, getting a kick-ass weapon to use, etc. All these things are lost if we pirate the game. In the past, you made a choice of "money" or "effort" to get your game; Steam has added the twist of "you expend a lot of effort... and oh by the way you have to start all over." It's rewarding good behavior (buying legit copies) rather than punishing bad behavior.
Of course no reward system is perfect. People will still illegally copy games. But that doesn't make this a bad idea. On the contrary I think we should be applauding Steam for thinking up new models to get people in the habit of sharing legally.
I'm not even sure "copyist" is a valid word - it means the people (usually in non-Western/non-European countries) who make their living doing as-realistic-as-possible knock-offs of famous branded Western/European goods and art. Sometimes these people are called "imitators" but that doesn't capture the essence of what these people do, which is attempt to produce something that is indistinguishable to the untrained eye from an authentic (see the debate between Kaminska and Salmon) creative item.
Over at Hyperallergic earlier this month Hrag Vartanian reported on an interesting project with copyists . The effort, created by Zhenhan Hao, involved asking Chinese copyists of art, fashion, and other materials, to create something that expressed their own abilities, but using the styles and techniques they employ in their imitative work. Vartanian interviewed Hao about the project. Hao talks about the concept of "imitative creativity" and how he sees it relating to the culture and particularly the educational system in China.
It's a fascinating perspective and insight into something that mainstream media tends to ignore or dismiss out of hand.
If you've been in the Copyright Wars long enough, you may remember the analog hole - the idea that you could extract the bits from a DRM-locked item when they were rendered out for display and then recapture those bits in a DRM-free format.
Purgathofer's homebrew analog hole-maker targeted Amazon's Kindle, but the concept applies to pretty much any e-reader. The issue is not with the Kindle per se, but with what Purgathofer correctly describes as "a “dramatic loss of rights for the book owner." Yep, e-books still suck, just in case you had any illusions to the contrary.
Apple is likely to appeal against both the order and the underlying conviction but in the meantime it's forbidden to enter into agreements with the big five publishers that includes pricing limitations and has to submit to two years of evaluation by an external compliance officer. Judge Cote rejected the DOJ's request for more intrusive measures, including retail-level oversight on the Apple App Store.
Felix Salmon's column for Sept 3 is about "price discrimination". That's the thing most people hate where the guy sitting next to you on the plane paid a lot less for his ticket. As Salmon says, "If you know that your friends and neighbors are getting exactly the same product that you are, but are paying a different price for it, then someone is going to feel ripped off." Where this gets interesting is in how he applies the price discrimination discussion to paywalls - they are a form of price discrimination and we're going to see a lot more of it as more content business moves online.
The core question revolves around what happens when there is no obviously distinguishable difference between an original and a reproduction: will the value of originals collapse? Kaminska argues that they will. Salmon's counterpoint is that improvements in reproduction technology in the past have not caused collapses, so why should this one? In addition, he notes that even without technology there are many clever forgers operating today, whose works cannot be distinguished from originals by non-experts. These copies are not valued as highly as the originals, nor does their existence cause the value of the original to go down.
Why? Salmon ascribes the value of the originals to "[t]he invisible aura of authenticity" and gives examples of how people value authentic items, even when the copy is indistinguishable. He further believes that art may well move into a mode more like the music industry has adopted, where the (unique) quality of experience has become the thing promoted, and the (easily duplicated) art object becomes secondary.
Kaminska's response is to argue that in a world of perfect copies authenticity cannot be determined - you might be able to carbon-date a Van Gogh, but pixels don't have that ability. To the extent that art becomes digital/digitized it loses many of the markers available now for establishing authenticity. She further denies that art is like music in that although there are lots of performative art works, a significant aspect of art is the presentation, which includes selection and curation of shows, galleries, etc.
There's a lot more to the argument and I encourage you to read the originals. My personal feeling at the moment is that it will not be either/or, it will be both/and. But what do I know.
The recent bill passed New Zealand is getting a lot of coverage. I recommend you check out the ZDNet article, if only to watch Florian Mueller (of FOSSPatents) debating the trolls in the comments section. Pass the popcorn.
What he, and everyone else I've read, seems to be missing is that the bill doesn't actually define software. Here, read the bill yourself and see. For example right there in Part 2 is a discussion of software and "developing a clear and definitive distinction between embedded and other types of software is not a simple matter". No shit, Sherlock.
Unfortunately, with the law failing to define "computer program" the result is at best nonsensical. If the law prohibits patenting a thing where the novel or inventive part of the thing is the computer program then what are we supposed to make of any sort of machine (toaster, washing, automotive) that contains one or more programmed computers with new methods for browning bread, cleaning clothes, or detecting engine faults? I point again to adafruit's Bitcoin Mining Device and ask whether or not that would be patentable under this NZ law.
I also agree with Mueller when he comments that if patent lawyers don't want to argue this point (whether the invention lies solely in it being a computer program) they can simply draft the patent claims to specify that the program has some other effect such as toasting bread, detecting engine faults, mining Bitcoins, and that these are the invention.
Where I disagree with Mueller (and most other commenters) is that this is a bad thing. One of the biggest problems with software patents today is overbroad claiming. A patent that is issued on embedding non-text media in a text stream is claimed to cover all possible ways of embedding; a patent that discloses a server component for some process is claimed to cover all possible servers used in that process. If we could force software patents to be narrowed down to claiming a specific method for what they do, and thus allow people to invent new algorithms and techniques to achieve the same ends without infringing - that would be a worthwhile law.
With that tag line, Kevin Spacey stakes out his view of how television has been good and how it can get better. His James MacTaggart Memorial Lecture is well worth watching for an insider's view of how creative people in television can and should behave. As someone who has made the transition from the Old Vic to traditional television and movies and now to a major online-only dramatic series he's seen a lot and is very articulate in putting it together. And I can't resist quoting this line: "We (meaning himself and Netflix) have learned the lesson the music industry didn't learn - give people what they want, when they want it, in the form they want it in at a reasonable price and they'll more likely pay for it rather than steal it."
He notes that this suit is not generally unusual - institutions sue over patents fairly often - but has the unusual feature that BU is going after distributors. Typically, one sues manufacturers who are accused of violating patents, and sometimes one sues retailers in order to force a halt to distribution of allegedly infringing products. This suit may be unusual in targeting distributors, who are often middlemen between manufacturers and the actual retailers.
My guess is that BU is targeting these distributors as part of a legal strategy. If the distributors want to be removed from the suit they might choose to do so by going before the judge and explaining that they (no longer) distribute the allegedly infringing product. If the manufacturer can't find distibutors they may be pressured to come to a settlement quickly since the lack of distributors can have the same effect as a court-issued injunction, but much more quickly.
A Copyfight reader sent me a pointer to a new film called Fire in the Blood that is about the global AIDS epidemic and the use of patent systems to control the drugs used to treat the disease. I've watched the preview and it's pretty clear that the film has a strong advocacy point of view, and makes some pretty impressive claims about malice and conspiracies. Anyone seen this yet and have an opinion?
To the great surprise of just about everyone in the gaming industry, Electronic Arts (EA) announced something it's calling the "Great Game Guarantee". If you buy a digitally downloaded game through EA's online store "Origin" then you may be able to return that game after a limited amount of use. At present that appears to be 24 hours after you open the game or up to seven days if you never played it.
This is on the one hand a small step - we still need a true marketplace for honestly resellable used games. EA's program is so far only available on a limited number of titles in certain countries, though the country list appears to be growing. And the time period is really oriented around returns rather than resale - if you bought something by mistake, or you opened up the game and said "Hey, this isn't the kind of game I thought it was" then you can potentially return it. There's no way (unless you're some kind of sleepless fanatic) to play through an entire game in 24 hours just so you can return it.
The most surprising thing is that this move is being made first by EA, who are currently not very popular with desktop/core gamers due to some past behaviors. Reputation aside, EA are not known as risk-takers and being first in any marketplace with a new strategy always carries a certain risk. The question of 'why would EA do this' is the subject of a lot of current speculation.
My personal opinion is that they've seen they're losing ground. Origin ranks well below Valve's Steam service and may even be trailing non-game-company services such as Amazon's digital downloads and Green Man Gaming. EA needed to do something to break out of the pack and this move is likely to get them some notice. Whether it leads to a shift in customer buying is less certain. Valve could easily choose to copy this program or even improve on it (one hopes). The fact that a big name has taken this move first means lesser companies may have both more room and more impetus to try out returnable or maybe even resaleable game policies, which we sorely need.
YouTube has tried to correct some of the excesses; for example, modifying its own ContentID scanning software. But since most of the fights over these things happen out of sight and are settled out of court there's precious little caselaw to support the notion that you can use copyrighted materials in ways that accord with fair use principles - and post videos of that fair use without being stifled.
This story will no doubt take some time to wend its way through, because Lessig and the EFF are out to make a point. Ultimately, though, the reach of any decision is only going to be a region-locked posting. Even though the lecture in question was delivered in South Korea, the petition for judgment rests on US law. Countries that do not recognize scholarly and other exceptions to copyright doctrine might still block the video. Even so, getting a good court case on the books would be a big help.
(I feel compelled to remind readers that the EFF is a non-profit organization and their work is made possible by people and organizations who donate. I do, and if you think this is worthwhile, you can check out their donation page yourself.)
There's a very good chance that manufacturing is about to be hit by a wave of disruption - including illegal copying - similar to what hit the digital music business when Napster burst into mass consciousness.
Back in February, VentureBeat predicted that soon any 3D object in the world could be scanned, converted into an instruction file, and rendered on a 3D printer, "meaning that anyone will be able to own just about anything, almost for free."
What we do about that is going to be anyone's guess. Congress can't even update laws to keep up with changing cellphone technology - there's no hope that the law will be able to keep up with a whole new emerging technology. That will almost certainly lead to a hodgepodge of judicial rulings and cases that drag on for years. Unfortunately, the people most likely to be hurt in the upheaval are not large entities that make physical objects in bulk - they'll lose a few sales but mostly won't care. The people who will be most hurt will be small manufacturers and artists - the people who depend on one-off sales and production of rare objects to make a living such as N-E-R-V-O-U-S whose ammonite "interphase earrings" are pictured above.
I don't have any good answers, but the sense that the little guy is going to get socked by this really rubs my "artists should get paid" sensibilities the wrong way.
Today at 2:40 AM Groklaw went dark. Not because of DDOS, or because of any of the host of actions that individuals or corporations have threatened over time. Groklaw went dark for the same reason that Lavabit and Silent Circle have shut down - staying in business under the present pervasive spy state is impossible.
In a way, this is sort of odd. We are no less private, no more spied upon, than we were before Edward Snowden made us aware. But knowledge cannot be un-known and sights cannot be un-seen. Pamela Jones (PJ) writes in her farewell essay about the similarities in feeling of violation of having someone burgle her apartment and someone rifle through her email. Read it.
I found Groklaw during its extensive coverage of the SCO ownership-of-Unix debacle and have read there often. We will miss the voice and insight Groklaw brought.
No, really, I can't make this stuff up. E-books are so convenient! people cry. We can take lots of them on a trip. Sure thing, folks. Just make sure the actual e-book owner (which is the publisher or the tablet maker or the OS maker or frankly anyone but you) doesn't detect where you are. Because DRM follies.
Back in June I wrote about SiDi - a DRM watermarking technology that I believe commits copyright violations and perpetrates fraud by producing altered versions (derivative works - illegal under copyright law) and then passing those off as the author's original work (fraud - illegal under marketing and consumer protection laws).
Today Boingboing has an update on the story detailing how various entities such as BREIN (which passes itself off as an anti-piracy group) are working with e-book sellers to record all customer activity, and presumably send the Stasi to your door (or your ISP's door) if they don't like what they see.
The ALA invited me to give a talk but I thought, nah, with the Apple collusion verdict this is kind of old hat now. Maybe, maybe not. E-books still suck, people, and DRM is a big reason why.
Rosen's piece is a follow-up to an item she wrote last year based on research by Paul Heald, a law professor at the University of Illinois. Heald - using software that data-mined Amazon's offerings - compiled statistics that sorted the availability of books by year of publication. You can see the results summarized in two graphs of the article.
It's a truism that more books are being published now than ever before, but in general that's part of an accelerating upward trend. Therefore, you ought to see a relatively steady upward rise in titles available by year. In fact, what you see is a virtual desert with, for example, twice as many books copyright 1850 being on offer as those with copyright 1950. Heald also attempted to control for some of the biases in his sample as well as for the fact that older titles are often present in multiple editions.
The inescapable conclusion is that works still under copyright are vastly underrepresented in the sample. Because someone holds the copyright that someone can decide at their sole whim whether or not to make a title available. Most often, it's "not". As a result, copyright and the profit motives that are associated with it have acted to make millions of titles disappear, creating this hole in our collective knowledge.
In the final graph, Heald attempts to adjust for the relative effects of increasing number of books published per decade, again normalized. The result is painfully dramatic - books under copyright that are more than a few years old might as well not exist. Anyone who wants to argue that copyright, and particularly the ongoing extension of copyright term limits, is a benefit needs to explain how that benefit is going to accrue to copyright holders who use copyright like a 7-Eleven safe: things go in and not even the employees can open it.
I started watching tested.com's segment on their Comicon robot just because it's inherently cool. I found that the video is laced with Copyfight goodness, as the builders talk about the value of Arduino, open-source, and how they liberally copied and improved on ideas from other special effects shops, puppeteers, and robot labs.
Libraries often pay five or more times the retail price for their e-books, and have to accept ridiculous limitations on what they can do with the books they've rented (not bought, don't be fooled). The rental agreements specify things like how often a library can lend an e-book, or a time limit after which the rental agreement ends and the library no longer has any rights to the e-book.
Can you imagine libraries accepting similar sorts of rental agreements on their physical collections? Why do libraries put up with this sh*t from publishers? Well, e-books are popular for one thing. The readers are in high demand and patrons seem to like the convenience factors that e-books bring. For another, libraries are increasingly positioning themselves as one-stop information centers for patrons. Internet connections and job search assistance have joined more traditional author days and reading clubs at many libraries. You can't be all things informational and skip e-books entirely.
But that doesn't necessarily mean buying into the big publishers' licensing terms. In an update for Morning Edition just a few days ago, Lynn Neary noted that some libraries are trying a variety of solutions. Some are just flat-out not buying the expensive and highly restricted best-sellers. Some are skipping the DRM-encumbered offerings entirely in favor of less restrictive titles that are often acquired directly from independent publishers or authors. Librarians can act as signposts, pointing people toward titles that don't have big marketing budgets behind them, but that will appeal to many readers' tastes.
And the big teaser? Libraries, if pushed hard enough, may just get into the publishing business themselves. I hope the Big 5 publishers take notice. This conflict is not good for anyone, least of all the readers.
Today brings another court case decision related to that same series of football games: Electronic Arts' "Madden NFL" series. In this case, the legendary football player Jim Brown sued EA over the use of Brown's likeness within the Madden NFL games. Brown sued under what's known as the "Lanham Act", a section of 15 U.S.C. that governs trademarks and likenesses. Essentially, Brown needed to show that EA's use of his likeness within its games.
Unfortunately for him, a panel of the 9th Circuit has just affirmed a district court decision asserting that EA has not violated the Lanham Act. Fortunately for everyone else, the Court used a test called "the Rogers test" that tries to balance the First Amendment rights to free expression with individuals' rights. As part of this, the Court recognized games as a protected form of artistic expression and found that those expressive rights trumped Brown's individual likeness rights.
Nazer notes that the opposite results come from the different bases under which the suits were brought and thus the different balancing tests the panel applied. Even so, it seems logical to consolidate the two cases and request an en banc rehearing. We need a clear set of guidelines on the use of realistic likenesses across all forms of expression - it makes no sense to treat games differently from movies in this respect.
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.
This isn't a core Copyfight story but I continue to be interested in business models.
Start with the classic economic understanding that most tickets to most live events are underpriced. Those of you, like me, who balk at paying 100 dollars and up for a concert probably think I've lost my mind, but bear with me. Theories of supply, demand, and markets say that if something is sold too cheaply someone will realize that and take advantage by buying at the lower price then turning around and re-selling the item at the higher price. In the live music business these people are called "scalpers". Depending on the jurisdiction and even the venue/concert rules scalping may be more or less legal. Sites like Stubhub don't make a big deal about this, but buried in their ToS is this language:
You agree to comply with all applicable local, state, federal and international laws, statutes and regulations regarding use of the Site and Services and the listing, selling, buying, and use of tickets and related passes. This includes, but is not limited to, laws pertaining to pricing your tickets.
That said, the trend nationally has been toward loosening laws on ticket reselling, even as scalpers have developed sophisticated strategies including automated bots and banks of humans to sweep up desirable tickets as soon as they appear. In economic terms, acts that price their tickets below "market" or below the most they could get, are leaving money on the table and the scalpers are picking that money up.
The problem with this isn't just economic, it's also cultural. Musical acts in particular thrive on having a wide and varied fan base, often grown by word of mouth and the connections that develop at live shows. If your friend tells you there's this great singer you have got to see, but your only way of getting in to hear her is to drop $250 for some scalped ticket you may be reluctant to do that. The artist loses out twice - once in that they aren't getting the extra money for that ticket and again when they lose the chance to attract a new fan.
NPR's Planet Money team spent some time with Kid Rock over his war on the scalpers. Kid Rock sings music designed to appeal to a blue-collar audience - exactly the kind of fan that would be shut out by tickets priced at whatever the market could bear. Yes, there are fans who will pay lots more for a Kid Rock show, but Kid Rock can't afford to cater just to them. Doing that would contradict the messages of his music, and frankly it offends his artistic sensibilities. As he says, he's in this business to make a lot of money but not to squeeze every possible dime out of every fan. So what to do?
In response to this situation, Kid Rock has deployed a variety of strategies. One is simply economic: he's flooding the supply side of the market. He'll do more shows and do shows in bigger venues in order to ensure that the supply of tickets is larger. That itself ought to drive down some prices but even then there are more and less desirable seats. The front seats always sell for more. Well, OK, if you pay for it, you ought to be the one picking it up. Using electronic ticketing, artists like Kid Rock (*) and their host venues can require people to show picture IDs and produce the credit cards used to secure the tickets. This effectively removes many of the routes ticket resellers use.
They can also deploy the same electronic tools that scalpers are using, but in reverse. Tickets for concerts can be priced more dynamically, somewhat like the way airline seats are priced. If certain nights aren't selling, the prices can be dropped. Shows in places or on nights that are likely to sell out can be pre-priced higher, but if sales are lagging the prices can be adjusted downward.
I think there are valuable lessons here. Live performance is a key part of many creative artists' business plans. Those performances need to bring in money AND grow the fan bases. They need to be sustainable AND meet the artists' aesthetics. Somewhere in the intersection of economics and culture lie answers and maybe Kid Rock has found one.
(*) I recently went to a show headlined by How To Destroy Angels, Trent Reznor's project/band with his wife. They offered seats to the NiN fan club using very similar terms. Our group had to enter together, show ID's, and couldn't use the "Will Call" facility at the club, in exchange for which we got the tickets at a discount off the general price.
This isn't particularly new - Lowery has been after Pandora for a while. The commenters on his blog have already taken him to task for a couple obfuscations - one being that he's obscuring the role of BMI in these low rates and another being that he's complaining about low rates paid to songwriters, while failing to mention that Pandora is also paying other royalties such as to the music's publishers. Lowery gets some of those revenues, and he doesn't appear to be angry at BMI for its role in setting up the royalty structures.
Unfortunately, this ranting back and forth is that Lowery has a valid challenge in his post: why isn't Pandora evolving its business model? (I asked a similar question last November.) Lowery compares Pandora's subscription-focused revenue model with few advertisements with the funding Sirius XM is trying to raise by selling much more advertising time as well as having mandatory subscription fees. Lowery doesn't note (but should have) that Sirius has taken significant steps to start business partnerships with companies like auto makers.
Regardless of the details, it's still a significant and fair critique that Pandora is choosing to work on trying to get rate structure changes while it does not appear to be evolving its business model or branching out its revenue sources. Regardless of how much money you think ought to go to Lowery and others, it's crucial for the survival of online streaming services that we see innovative and diligent work on creating profitable new business models.
Joseph G. Hadzima has an interesting advice column up on Forbes' site this week advising business leaders on how to value patents. Hadzima is a professory at MIT and among his jobs has been working with various start-ups spun out of MIT to determine just what valuation they should be placing on their intellectual property. These valuations matter when start-ups seek rounds of funding, or when companies are considering partnership or buy-out offers. For example, Google has been in the news several times in the past few years buying up patent portfolios to protect its businesses in areas such as mobile computing. Patent holders approached to sell or license their holdings want a way to value them, and of course buyers want to know what to pay.
We're seeing more emphasis placed on the patents that remain when companies collapse - some of the worst practices by this year's trolls are based around patents left after companies failed to commercialize on new ideas. Other IP is left over when an established company such as Polariod goes out of business.
Hadzima's idea is to evaluate both individual patents, and the total portfolio, particularly relative to the portfolios of likely competitors. He also touches on one of my favorite whipping topics, stating directly:
Frequent citations of prior art are an indicator that it is a good patent.
Yes, quite. Hadzima also has some advice that I wish more established patent-holders would follow: license generously, and wisely. He gives the example of Stanford University's handling of a basic gene-splicing patent: use of the patent required only a small up-front fee and further money only if a product based on the patent was successfully brought to market. By keeping entry costs low, Stanford was able to encourage widespread use. Rather than penalizing attempts to innovate, or people who incorporated ideas into standard practice, the license terms focused on sharing profits from new inventions.
My informal impression is that most patent-holders behave sensibly; it's just that some have become so egregiously trollish that they're blackening the entire idea. It's nice to read about a sensible success story for once.
(Readers should keep in mind that Samuels is an actual lawyer, whereas I am not. I happen to think I'm right but arguing against authority is always opening oneself to the "you're an idiot" response.)
To begin with, the areas of agreement: we agree that the Supreme Court wanted CAFC to reconsider Ultramercial's patent in light of the ruling in Mayo. We agree that patents ought not to apply to mere abstractions. We agree that patents should cover specific implementations, not general classes of procedures. And we agree that in light of all the above, the '545 patent was improperly issued.
But there the agreement ends. I, for example, would have rejected the '545 patent on the grounds that it cites zero non-patent prior art. This shows that the authors and the examiner did not review the relevant and extensive technical literature. Failing to do adequate prior art review should be a priori sufficient for total rejection. Samuels would have the patent invalidated on 101 abstractness grounds.
The problem with using 101 invalidation on any computer-related patent is that we don't have a good definition of "abstract." In computers, I can simulate any machine in software and likewise I can reduce any software to hardware. Take for example the latest cool machine announced by adafruit: a Bitcoin Miner device. Bitcoins have always been described as (and by) mathematical abstractions. They're numbers, one of the most abstract things we know. Creating (mining) them is done by running complex equations, which we also think of as abstract. But wait, what's that picture (copied above)? It's a piece of hardware - a machine - the least abstract thing in the patent world.
For Samuels to say that the Ultramercial patent is too abstract requires her to explain how it would still be abstract if I could buy a machine from adafruit that did what the patent describes. Sorry, it's not that easy.
Second, Samuels seems to think that the Supreme Court's rulings in Mayo and Myriad should make it obvious that CAFC got it wrong this time. Well, no. It's not that easy. As I wrote over a year ago, it appears that SCOTUS mixed up 101 and 103 reasoning in its Mayo decision. Perhaps Samuels can address the question of how Breyer's opinion successfully separates the two sections of the law, or how the opinion provides clear guidance on application of the "natural law" unpatentability principles. But she hasn't done so as far as i can tell. It's not that easy.
And I'm really sorry she mentions Myriad at all. As I blogged at the time, the commentary consensus is that SCOTUS got some basic science in that decision wrong. If they got the science wrong then what do we make of the opinions on which that flawed reasoning rests? Furthermore, the opinion is nominally unanimous, but in fact the raft of concurrences makes it clear that no more than two Justices could agree on any of the major principles.
Therefore, for Samuels to say that it was in any way obvious how CAFC should rule in Ultramercial is just grossly oversimplifying matters. I'm quite sure that the Federal Circuit judges could clearly articulate how they thought they were following the SCOTUS rulings which, so far as this non-lawyer/engineer/scientist/blogger can tell are not providing anything at all like clear and obvious guidance.
Oh, and one more thing Samuels and I agree on: SCOTUS is going to have to rule on Ultramercial directly. Whether they can manage to make things better by doing so is another area where we probably disagree.
About a week after its bizarre attempt to make the Xbox One as gamer-hostile as possible and in the face of a slew of criticism from all sides Microsoft has publicly climbed down from the ledge and said it now sees reason. In a news post on the Xbox.com site, the company announced a reversal of its previous policies requiring always-on Internet and doing away with its obstacles to used games - at least, used games with discs. Since gaming discs are going the way of the dodo that's not a huge change. The status of region-locking is less clear - the posting says you can "take your Xbox One anywhere you want" but the region lock was based on the company's hosted service Xbox Live not offering certain titles in certain countries. That appears still to be in place, in which case EU regulators may want to have a word with Redmond. Again.
Now comes SiDi, a technology that claims to be fighting copying but in fact is creating illegal works. Here's the deal: an e-book with SiDi (and please help me resist making jokes about inSiDious here) has been subtly changed. Words are replaced with equivalents, creating a kind of "watermark" for the e-book that renders it different from the original. If that watermarked version later finds its way out into the wild you know what the original source was. So far so good - in fact, Margaret Thatcher once used a similar technique to figure out who in her cabinet was leaking memos to the press.
However, unlike Ms. Thatcher, SiDi doesn't own the works it's distorting. In fact, what it is doing is creating a derivative work, and passing that derivative off as the original. Now it may not make a huge difference if you read a work where the author's word "unhealthy" is replaced by SiDi's "not healthy" but the law clearly gives the copyright holder the power to determine what changes are and are not permissible. Changes, even minor ones, can create a derivative work. And if you create an unauthorized derivative work, then you've committed a copyright violation.
Worse, if you create a derivative work and pass it off as the work of the original author, you've committed a fraud. What may seem to you or me to be a trivial change may in fact upset an author who has gone to significant trouble to shape the wording of, say, a particular character's dialog. That dialog helps the reader build a mental picture of the character, and the wording of the story sets the pace and flow - all of which we expect the author to control. If you've never watched an author and a copyeditor fight over seemingly trivial wording changes then this may not strike you as a big deal but I have, and trust me it matters. Authors care about the fine details of their craft and having some piece of software go in and arbitrarily change those fine details is a violation of both the spirit and the letter of almost every publishing contract I've seen.
In her column, Susan Lulgjuraj asks the question of whether we've gotten to the point where e-book copying is so widespread that we need yet another form of DRM to combat it. That presumes that this form of DRM will be any more effective than all the other forms, which is to say not at all. And it misses the most crucial question, which is why are we even contemplating something this stupid?
(Image above of Bến Tre - bonus points to anyone who can guess the relationship of that image to this story, without searching first.)
Pitched as a piece about income inequality, it takes off from a talk by Princeton economist Alan Krueger in which he argues that “The music industry is a microcosm of what is happening in the U.S. economy at large." More depressingly, it appears that the technology that ought to be democratizing and spreading wealth is instead contributing to this distortion. That, and simple luck.
Technology plays its part by spreading the most popular (and most produced and most solidly funded) material the most widely. You're simply more likely to be exposed to the already popular stuff because money buys the tech that gets it out there. As it always has, I think.
Luck comes in because of network effects. People will (despite their protestations to the contrary) tend to gravitate to things that appear popular. If you have the good fortune to get early downloads, early thumbs-up, and appear to break from the pack first you are going to gather more attention, more downloads, more likes and the spiral is going to build. Technology factors into that by making the entire system of downloading and rating more visible, which drives more herd behavior and so on.
Like in fashion there's no IP protection for comedy. You can't copyright a joke, and it's certainly true that many performers use each others' material. Sometimes that's conscious, sometimes it's accidental. The public may even hear about or know people who make a living writing comedy material for well-known humorists like David Letterman or Jon Stewart. However, this has led to what Oswalt identifies as a massive public misperception - that all comedians "steal" and that "nobody" writes their own material.
In fact, the majority of working comedians write, or try to write, their own humor. A comedian's value is a combination of the material and the delivery. Some people are good writers but lousy performers; some people can really hold an audience, but produce poor original material. But as in any other career the people who are bad at one thing either get better at it or they get out of the business. Maybe they hire writers, or pay for stage coaching, but either way the goal is for them to produce more and better original acts.
Along the way, though, they have to deal with the people Oswalt identifies as the thieves. People who scoop up another comedian's jokes wholesale, sometimes even to the point of copying entire segments of someone else's act and then passing it off as their own. Without the ability (or money) to protect their work, comedians often have no choice but to wait until the thieves flame out. If you're stealing someone else's material to help you move up eventually you're going to reach a level where you're expected to produce. If you don't have original material then you can't produce, and you flame out, much like any other person who has cheated their way through life.
It's an interesting way to think about illegal (or at least unwanted) copying: can we create situations in other areas where unwanted copying isn't policed by restrictive technologies (DRM) or by restrictive laws (CISPA/TPP), but contains within itself the seeds of its own demise?
Microsoft seems to be all about the DRM with its latest entry into the consumer market. It is now confirmed (here reddit dissects the official Xbox Twitter feed) that only 21 countries will be able to use the console on launch. Notably this "region coding" splits up the EU - most countries are in but some are out - and it also excludes Poland, the development home of The Witcher game series, a title Microsoft touted in its E3 launch presentation. Yes, that's right, the developers of this Xbox launch title will not be able to play the game they developed. I generally find it wise to assume that Microsoft are not stupid, but whatever their plan is, it's eluding me here. Sony was quick to announce that its competitive product, the PS4, would not be region-locked.
Probably the most surprising thing to me was that SCOTUS managed to craft a single unified opinion in Association for Molecular Pathology v. Myriad Genetics, Inc. Given the complexities at issue and the previous rulings from the Court, I expected another split decision. It's even odder that they issued a unanimous ruling that both sides see as a victory (though that may be lemonade-from-lemons for Myriad). My sense is that they did so by a combination of punting the hard issues - no method claims were adjudicated - and unfortunately through a lack of understanding of the science.
By "right" I refer to the idea that the decision could reflect a legal and social sense of what is the right thing to do with patents in biology. For example, Art Caplan has a short opinion piece up stating bluntly that "natural DNA" never should have been judged patentable. Allowing Myriad to hold patents on these specific genes led to a tight monopoly market where no one could bring out a competitive (and one hopes lower-priced) testing product. This exemplified the monopolistic and constricted outcome feared by people who argued that natural biology should not be patent-protected.
This sounds to me like the Court has finally come around to Breyer's view in which the validity of an intellectual property protection law or interpretation has to be done in light of its outcomes. When you make a regime that allows one company to monopolize all possible methods of testing you've done something wrong. When you create a way for multiple companies each to protect their competitive ways of testing you've done something right.
Now if they could only manage to ground that in good science.
Ball looks at the cost of Netflix producing original content, and in particular what do those costs pay back in terms of building Netflix's subscriber base. This is a natural follow-up to Netflix's recent restart of Arrested Development. The show built up a following while it was on Fox but those who still want more now go to Netflix to get it. Ball goes deep dive, calculating things like Netflix's cost-per-minute and then comparing the value of paying Netflix solely for a specific piece of content you want (like Arrested Development) versus paying for other kinds of specific desired content such as a first-run movie.
These are great numbers, but I think they fundamentally miss what's going on, as Felix Salmon analyzes in his blog post today. I don't think anyone calculates the cost-per-minute of an entertainment offer, even subconsciously. The question is really can I get what I want there, and how much am I paying for what I want? Sure, some of the ongoing wave of cord-cutting is due to people not wanting to pay for big packages in order to get the specific content they're interested in. But that's big-view stuff, not the numbers that Ball is analyzing.
Salmon makes three points I think are worth keeping in mind. One is that original content is not just there to draw new subscribers - it's also a way to keep current subscribers. Netflix suffers from tremendous subscriber churn and the cost of acquiring subscribers has to be high.
Two is that Netflix is essentially bent over a barrel by the Cartel right now. If they appear to be making more money, then the broadcasters just hike the license fees to siphon off that revenue. Ball notes that Netflix had to pay fees of over USD 1.3 billion (yes, billion-with-a-b) in just the first quarter of this year. And I'm sure those fees are going to go up. No matter how expensive it may be to produce original content Netflix can be sure that it alone has control over that expense and isn't going to turn around and find its costs have doubled next quarter because of someone's external decision.
Third and finally, Salmon argues that Netflix isn't playing a quarter-to-quarter or even year-long game. Here's the money quote:
[Netflix wants] to become HBO faster than HBO can become Netflix
Exactly. HBO, with its disastrous response to demand for Game of Thrones, showed how badly it misunderstands new media models. Netflix isn't exactly an agile start-up, but they have the potential to beat HBO at this game if the cable giant sits back and continues to do nothing. With a library of high-quality original (again, licensing-free) content on hand, Netflix will be in a much stronger position to keep customers engaged and paying those all-important subscription fees.
Of course, Apple claims that it was not in collusion and is calling various publishers' representatives to testify about that. Unfortunately for DOJ it sounds like their own witnesses - also from the publishing houses - are making Apple's case by agreeing that there was contention between Apple and the publishers over how e-books would be priced. It seems clear that everyone was out to destroy Amazon's 9.99 price barrier, but I'm not enough of a lawyer to know if that agreement alone will be sufficient to sustain the government's contention.
As Shara Tibken noted, the publishers are going to argue that they went to Apple more or less out of necessity. Amazon, in its turn, is going to claim that it was forced to do this or that by the big bad publishers and you know what? The whole lot of them remind me entirely too much of misbehaving kindergartners. I have absolutely no sympathy for any of the parties in this mess.
This isn't really a core Copyfight story but it's too good to pass up: Fuzz Hogan for Zocalo explaining why CNN can't tell good stories, yet has rising profits year over year. We've been hammering at the idea that old business models are disintegrating and media giants need to evolve to survive and guess what? CNN has done just that. It's set up a system that gets it a nice chunk of change by producing crap, but crap that gets used and reused and paid for. Good stories are nice but if they don't bring in the money they won't happen.
There's a great big glob of information officially released by MSFT about its next-gen console, dubbed Xbox One. The nanny features are extensive, particularly for gaming. Your console has to be able to verify legitimacy with home base at least daily or you get locked out of all your games. If you sign into your Xbox Live account from any other console it checks once per hour. So no rooting, no hacked games, and no games that aren't MSFT-approved. The definition of what's "approved" changes whenever MSFT decides it should and if it doesn't like what you're doing, it'll remotely brick your hardware for gaming. And gods help you if Microsoft's authentication servers happen to hiccup when your box phones home to authenticate.
Wu suggests the use of consumer-protection laws, specifically targeting unfair or deceptive practices. The definition of "unfair" varies wildly since all states and the Feds have such laws. Wu notes also that some NPEs have misrepresented "...the strength of their patents, the extent of other settlements, and their actual willingness to litigate." I'm not sure what it means to misrepresent the "strength" of a patent - presumably Wu is referring to the scope of valid claims or the applicability of the claims to the supposed infringement. Certainly deliberate misrepresentation should be treated as fraud, but I'm not sure how hard it would be to prove deliberate misrepresentation.
Settlements and willingness to litigate, though, are clearly outside the bounds of these laws. I recommend the Planet Money podcast from last week on the patent being asserted against podcasting in which Zoe Chase gives a good view of the "game" played around all civil legal actions. Knowing whether or not someone else will carry through on a threat to sue is a standard feature of this sort of brinksmanship everywhere, not just patents.
Wu then suggests using unfair-competition laws against NPEs who aggregate patents. The idea that assembling a patent portfolio might be a Sherman Act violation when that portfolio is used to stop people from operating a business is certainly a novel theory. I know even less about antitrust law than I do about IP law, but I'm inherently dubious. On the other hand, the RICO laws have been used in ways far beyond their original targets so perhaps the courts will see fit to extend the scope of the Sherman or Clayton Acts in this way.
Wu also suggests that the FTC get into the act, through its power to manage competition and prevent monopolies. Section 5, which Wu points to, seems to target unfair or deceptive practices. This is interesting in that it might be a way to rule out an entire style of business practices. As we've discussed in the past, the use of patents for offensive versus defensive purposes is a matter of the owner's choice; however, the FTC has the power to rule that certain offensive uses of patents are sufficiently anticompetitive as to be illegal. I would be very interested to see the FTC hold hearings on this and air some expert opinions. Right now they're gathering comments and who knows what will follow. That said, any move by the Feds to change how patents are able to be used would almost certainly be challenged in the courts in cases that would drag on for years.
Unfortunately, although Wu notes that patents have been issued with "extreme leniency" (which is quite some understatement) he doesn't advocate for the kinds of changes necessary to prevent patent offal in the first place. Whether or not you like Wu's suggested remedies they are just that - remedies. Far better to fix the problem than clean up the mess afterward.
The place where I agree with Wu most strongly is where he argues that the reasons arrayed against these arguments are not reasons for inaction. Instead they call for proceeding with caution. Patent practices - both issuance and use - are in severe need of reform to keep up with new business practices and changing technology.
The sad truth is that this has been the case for pretty much all of human history. Creative types of all sorts have been shunned, kicked out of town at dusk, hired, fired, or even killed at patrons' whims, thrown in gaol for offending the rulership with their latest portrait or play - the list goes on and on. The view that Kennedy expressed - which later led President Johnson to create the National Endowment for the Arts - is a nice idea but a historical anomaly.
Buckell is, by most accounts, doing pretty well. He's making money by publishing his stuff, both through traditional and new-media means. He's been nominated for a fistfull of awards, which means his stuff gets reviewed, and appears in places like New York Times bestseller lists, one of the traditional measures of publishing success. He is, by some metrics, an "average" selling author; however, as he shows pretty clearly there's a huge difference here between "average" (the summed midpoint) and "median" (the most likely point). In fact, the median sucks, which means that e-publishing sucks for the vast majority of people.
What survivorship bias says is that our impressions will be skewed by unusual tales, which obscure the general reality. We read about one author who is making that 100k and we don't realize how unusual he is. For every Konrath there are hundreds of thousands of other e-book authors who are working hard and not getting enough money to pay the rent and keep the lights on. Again, that's just normal history but Buckell is concerned that because we're in this other historical anomaly, those people are getting doubly victimized.
If you're not selling well in e-book now, the tale goes, it must be your fault, somehow. You didn't try hard enough. You didn't use the right publisher or the right advertising medium or the right pricing model. You didn't land in the top 100 so your experience doesn't have meaning, when in fact it's the other way around. Those top 100-selling authors are the anomalies. They're doing well and that's great. But that doesn't make them more meaningful or relevant examples than an average 100 e-book author, or a median-100 e-book author.
Buckell does have one important point that I think deserves to be thought about harder: he says he's playing the long game and I think that's required here. There are a few true overnight sensations, but when you dig deeper you find that a lot of people who have suddenly broken out did so after years of hard work and building up to that breakout moment. So if you're a creative type, good on you. Do the hard work, try to be successful now but if you're not don't take it as a personal flaw - take it as confirmation that you need to play a longer game.
In fact, Rancourt's body text is more circumspect than his lede, saying "...we might be heading into a world where streaming killed the cable star". Yeah, maybe. It's true that online subs cost less, and it's true that Netflix's latest numbers look good, though profits remain elusive. The kicker is still original content which right now is looking good for Netflix and causing other streaming sites to jump in with both feet. That doesn't automatically spell demise for cable, though, which still holds important trump cards like exclusive live sporting content and first point of access for traditional broadcast channels.
Rancourt thinks we'll see major shifts in digital entertainment in the next few years. I disagree - I think we're going to see several years of tentative experimentation as companies hunt for profitable models and advertisers try to figure out how to deal with the extreme audience fragmentation that online streaming brings. It's always possible someone will come along with a game-changing plan, but my bet is that the next few years look more like a muddle than a major shift.
The core idea of this treaty is that people who can't read print or access printed books would be allowed to get some kinds of access for things like education, employment, and so on. The US is actually pretty good about this but for some reason (*cough*money*cough*) the Administration is going about poisoning this treaty so it can't benefit people outside the country but will enrich the MPAA.
Here's the money quote:
[The treaty now says, i]f a book is commercially available in an accessible format, it can't be provided by a library to a person with a disability. This is equivalent to walking into a public library and finding padlocks on all the books with a note that says: "If you want to read it, buy it."
That's not right and it's something I don't think librarians should be silent about. Librarians here in the US have generally been pretty awesome about helping people get access to information - despite frequent official machinations to the contrary - and I'm willing to bet you care about the same principles outside our country's borders. In particular I'm hoping you share my belief that it's wrong for our administration to be forcing lockdowns on libraries in the name of corporate profits.
Amazon Strikes Another Deal That Is Good for Amazon
While I'm waiting for the dust to settle and clarifications to be clarified I suggest you read John Scalzi's "Instant Thoughts" blog post on Amazon's new "Kindle Worlds". Scalzi points out what immediately occurred to me, which is that this is a very good deal for Amazon and probably not such a good deal for other participants. It's also nice that he notes the public domain as an alternative.
Rather than panic, though, she (following the lead of Michael Weinberg, who works for Public Knowledge) advises lawyers to "look to the past before trying to sue the disrupting technology out of existence." Noting that the scorched-earth plan didn't work so well for the Cartel as it tried to stop digital music, Weinberg suggests "...companies would be better off taking a lesson from history and seeking ways to profit from 3-D printing."
How novel! How refreshing! How totally sane. I don't think anyone doubts that 3D printers represent major disruption in both manufacturing and IP law. But disruption doesn't mean disaster, especially if people take the time to plan and prepare. And that includes IP lawyers.
People may recall that when the Whitehouse.gov petition on unlocking got enough signatures to require a response, the Administration said "yes, we support that but we can't do anything about it because the Librarian is part of the Legislative branch, so sorry." And in fact, that appears to be the Librarian's position as well, as the posting quotes Congressional testimony from the Librarian saying, for example, that the office is “a unique part of the Legislative Branch of the government.”
the Library of Congress is “an executive Department,” and the Librarian himself is “subject to plenary oversight by the President.”
ORLY? Why would they want to argue that? Because, as the cell-phone case shows, the Librarian has been vested with authority to execute - that is, carry out the enforcement of - copyright legislation. This is done via the Librarian appointing the Registrar of Copyrights and the judges of the Copyright Royalty Board. And the Administration wants that to continue because this provides them a convenient arm's-length distance from the mess that enforcing those laws is creating.
It's pretty well understood by Constitutional scholars that such appointment powers should reside only with the Executive. Congress can advise and consent, including blocking appointments over which it has advisory power, but the Legislative branch under our government cannot take the initiative to appoint those people who will execute the laws, nor those who sit in judgment over them. Congress hears nominations for judicial offices on the basis of Executive-branch desires to appoint, and that includes judges of copyright.
As noted above, this case is still only at the petition stage, but there's hope that if SCOTUS takes it, the Court will unravel this knot by making a clear decision. Once they do that it will be clear that the Administration has the power to enforce copyright laws and they will no longer be able to weasel out of public demand for changes in how enforcement is done. New legislation to fix the underlying laws is still welcome, but this case could create a bright line that will force Obama to choose between the public and his Cartel funders. Sadly, I have a suspicion he'll end up on the wrong side of that line again.
I don't plan to write much about this because I know the named defendants and many of the John Does personally but I wanted to point out how Masnick's column illustrates something important: If you are involved in an IP-related legal action, get a lawyer who knows that part of the business. Monsarrat's lawyer-partner Mark Ishman apparently does not, which results in a serious, and epic-level funny takedown from lawyer Dan Booth. Booth and his firm Booth Sweet LLP (not LLC as printed) have been involved in fighting the Prenda nonsense and thus know a thing or two about copyright laws and their abuses.
A significant chunk of the takedown involves Booth schooling Ishman, who is no doubt a fine lawyer in his own area but appears not to know jack squat about copyright law. If you've got IP litigation on your mind, make sure you've got IP-savvy counsel, too.
The basic idea is that if someone makes a video of themselves playing a Nintendo game and uploads it to YouTube any ads shown with that video will be of Nintendo's choosing and revenue from it will flow to Nintendo. Ads may appear beside the videos or actually be inserted before and after the video when people go to play it.
The problem here is that "Let's Play" style videos are a pervasive form of information and sharing throughout the industry. I did a quick YouTube search for "let's play" for this blog post and got back over 9.1 million hits. People create these videos to show off their skills, to highlight interesting things they've seen such as game "easter eggs", to provide guides or walk-throughs, or just to share a bit of fun with friends. There are a few professional or semi-professional games writers who use this style of video to promote themselves or their channels, but they are a tiny minority of that nine million.
Nintendo has positioned its action as a gentler approach; rather than trying to ban content related to Nintendo games, they just want to make money off it by changing the video that an individual uploaded. Yeah, um, guys that's not a whole lot better. It also comes across as cheap and lazy - rather than creating content for YouTube that fans and players would want to watch, Nintendo is just taking over other peoples' content.
Museums are somewhat infamous for trying to stop people taking pictures of famous paintings on display. Some museums forbid flash photography with the argument that thousands of flashes would inevitably damage works that are often carefully hung with special lighting and protective surfaces. But, really, stopping me taking a snap of a modern steel sculpture? What's going on there?
The very bigness of the deal may be compelling a change. Back in the day it was just one guy with a camera in hand; now it's everyone with every cellphone and point-and-shoot. Trying to police all of them is both taxing on limited museum resources and ultimately futile anyway. So, according to Miranda, museums are loosening their policies and trying to become part of the social media conversations themselves, publishing Tumblrs and having their own Instagrams.
Enter copyright. Museums often restrict their open-access photography to their permanent collections, over which they tend to have complete control. But loaned and traveling exhibits, which can be the biggest draws, often come with copyright restrictions and photos published online - even if non-commercially - can be considered infringing derivative works. To combat this, museums need to work directly on these rights issues with the holders; for example, they can negotiate exemptions that permit non-commercial reproduction while agreeing to help rights-holders track down people who are trying to make money off the photos.
Miranda's column doesn't discuss one area that I think is crucial: public education. Given that we are constantly bombarded by messages in movies, on TV, on DVDs, etc that all reproduction is bad, I believe it's an important part of this mission to help people understand what is and is not allowed. Might we even say, "teach about fair use"?
The story starts with how the T shirt's hue is copied (or inspired by) predictions of trending influences, and elements like colors that are associated with those influences, and goes into a discussion about how the entire fashion industry lives around a copying and imitation model. This is, from a conventional protectionist-thought school, heresy. IP protection exists, protectionists would say, in order to encourage innovation. IP protection gives innovators time to reap benefits of their work. Without such protection, what is the incentive to create?
Well, in fashion, it appears that not only is there incentive to copy - everyone wants to get on the popular trends - there's incentive to differentiate. You want to be identified with a look, or group, or crowd, but not be an identical Mao-suited clone. So innovation begins as variations on a theme, and grows into whole new trends, all without the benefit of much IP protection.
It's an interesting story and challenges us to remember that most of what we consider today to be great works - from the plays of Shakespeare to the sculptures of Michaelangelo - were created in eras when intellectual property protection was unknown or much weaker. Remembering that, we have to wonder whether IP protection truly serves to promote innovation, or simply to promote profit on innovation. Both are important, but they're not the same thing and that's worth keeping in mind.
The 'yes' side was written by Martin Goetz, himself an inventor and entrepreneur. So far as anyone can tell, Goetz holds the first-ever software patent. The 'no' side was written by Brian J. Love, an IP law professor from Santa Clara University School of Law. So far as I can tell, Professor Love does not actually litigate or make patent applications, so this is sort of a mismatch of real-world practitioner versus theorist. I guess it won't surprise many readers that I consider the real-world practitioner to have the stronger arguments.
In particular, Goetz makes the singular point that "software and hardware are interchangeable" and that it's an implementation decision which bits of an invention go in software versus which bits go in hardware. This remains the key point I have yet to see anti-software patent people argue clearly against.
Goetz is, I think, one-sided in claiming purely that patents are effective protection for innovations. Here Love is on more solid ground as we have ample real-world examples of patents (software and otherwise) being used to stifle innovation and that the rapid pace of technological innovation is not suited for the more leisurely and extended protection that patents offer. Goetz might, I think, agree in principle but as a pragmatist he points out that there are no other means available. Both men agree that the system is flawed and needs fixing.
There are two proposals starting the crawl toward daylight, both of which could reshape our interactions with certain digital media and devices. Unfortunately, while one would move us forward, one would be a giant step back. Let's look at both.
We now have a supposedly independent standards body, which ought to be acting in the best interest of the net community and the Web itself, acting to promote useless and harmful solutions to problems nobody but big content companies wants "solved". As the EFF pointed out in its petition to W3C, the purpose of the consortium is to promote openness, not standardize controls on people's content, nor promote a playing field for DRM plug-ins.
The bill (PDF copy here posted by EFF) would implement a couple of common-sense measures as exemptions built into the law, rather than requiring repeated requests for exemptions. First, the law would be changed to say that if you're doing something legal then it's still legal even if you have to get around DRM to do it. In essence, it narrows the bill's definition of what constitutes "circumvention" so that people who want to do things we agree ought to be legal (such as jailbreaking a cell phone) can do that. In fact, phone unlocking is called out specifically in the bill's new list of exempt activities.
In addition, the bill would specifically allow people to make and sell devices (programs) that circumvent digital locks for legal purposes. The canonical example of this, of course, is the program that lets you unlock your e-book so it can be accessed by an audio reader. Vision-impaired book readers rejoice! Reading a book via a device that converts it to audio has always been legal for printed books, but DRM locks stopped that on e-books. Under this bill, the purpose of the circumvention would be a key factor - you still won't be able to break DRM in order to make illegal copies.
Finally, the bill sets up a time clock and requires reporting on Section 1201's "effectiveness." One of the facts noticed when the whole cell phone kerfuffle blew up is that the DMCA itself predates cell phones. It's possible that the bill requires further revision as technology progresses so gathering further data seems like an excellent plan.
There has been a lot written already about last week's Court of Appeals for the Federal Circuit "decision" in CLS Bank v. Alice Corporation and I'm sure there's more to come as people dig into the details of the full house of opinions.
First a bit of background for those new to this game: CAFC is supposed to be the highest court in the land when it comes to patent matters. It's true that their decisions can be appealed to SCOTUS - and lots of commenters are hoping SCOTUS takes this one if only to restore some illusion of sanity - but mostly their decisions stand. Frankly, the Supreme Courts' rulings in recent patent cases don't give me any reason to believe they'd be any help here.
As the highest patent court, CAFC ought to be bringing clarity to the situation, setting out good guidelines that people can follow to know if their inventions are patentable and how to draw up valid patent claims. Whether you are pro- or anti-software patents, you want to know what the rules of the game are. This decision is like the CAFC is playing Calvinball with different rules depending on which judge you read.
We got no more than five judges of 10 agreeing on anything. Those who claim this is a victory for one side or the other are smoking something. The CAFC itself seems to have been desperate to come up with something to say en banc so they said it but who the heck knows what it will apply to. I'm sure we'll see endless interpretations and re-interpretations as lower courts struggle through this.
Some commentators have blamed the problem on there being only 10 judges and the fact that judicial nominees are being held up, including for CAFC. It's possible that if more judges had been available we might have emerged with a true majority opinion, but I tend to doubt it. The problem I see is rooted in the laws themselves, with which the judges continue to struggle. As I noted back in the Mayo decision discussion, judges seem to confuse 35 U.S.C. 101 and 35 U.S.C. 103. These two sections of the code try to specify what is patentable, but don't set out criteria anyone seems able to understand or follow. And computers just make it worse.
The 101 criteria is supposed to bar things that are 'abstract'. Back in the day when there was a nice distinction between "ideas" and "machines" this made sense. If someone had an idea they couldn't patent that; when they built a machine that operated based on their idea, the machine was the thing they went to patent. Then along came computers and pretty much everything became both abstract (programs, code, algorithms) and non-abstract (programs, code, machines) at more or less the same time. Trying to determine how 101 applies to computer programs, systems, machines, and operations is what leads to messes like this.
If I had my way I'd wave my magic wand and repeal 101 entirely. It feels like 102 and 103 are sufficient to give us guidance and I can't imagine that simplifying the laws would lead to worse outcomes than we have today. This might not make happy those people who want to ban software patents and think 101 is required for that, but I don't think we're making progress in that direction and certainly we're not making coherent progress in any direction.
On the surface CopyTele looks like a typical NPE, asserting a couple of encryption-related patents against Skype, which Microsoft owns. CopyTele, as a small company, doesn't have the resources to sue a larger company which can afford to pay lawyers to keep patent claims tied up for years before any trial. This is a common technique big companies use to fend off smaller claimants - just run the smaller companies out of money and the problem goes away.
CopyTele is no white knight - they're overtly out to make money - but at the moment they're the only way that the little guy has of getting anything for their work. Like a lot of companies, CopyTele was not very good at making and marketing products. Having a good and novel idea - good enough to get a couple patents at least - is not the same as being able to thrive in business. CEOs make bad decisions, recessions happen, investors get cold feet - the list of reasons for a company with a good idea to fail goes on and on.
So what else are they to do? Closing up shop and vanishing is certainly going to happen, but that leaves the question of what to do with the company's good ideas. If they can - through the NPE - make some money off them, should that automatically be disallowed? I tend to think not. If we assume that the patents are good and validly granted then they represent the embodiment of innovation and hard work. For another company to make use of that innovation and hard work CopyTele ought to be able to get some form of compensation, such as by sale or license. Which brings us back around to the patent monetization entity.
A long time ago I made an analogy between patents and cars. Certainly people use cars to commit crimes. Cars are responsible for a lot of deaths. People use cars in all kinds of irresponsible ways (hang up the damned phone and drive!). But none of that causes us to want to abolish cars. Likewise, I do not think that the abuses of some NPEs are a reason we ought to abolish patents, software or otherwise. But surely some sort of (possibly stringent) regulation is required.
I name this test in honor of Greg Aharonian of PATNEWS who has been raging about the crap coming out of the USPTO for longer than I've been blogging. The test is simple: if it fails at its most basic function, it's not suitable material for patent discussion.
In an email sent out today Greg has pointed out that the PTO's database of its own patents fails this test. The patent database is both accessible to the public and used by examiners. As I noted last time, one reason we might point to for bad patents being issued by the PTO is that examiners do not have adequate tools to do their jobs properly.
This query asks for patents where (at least one of) the inventors are in the country of Panama. Go ahead, give it a try. I'll wait.
Right, so if you're like Greg and me you'll notice that the PTO's database fails to perform even this simple query properly. Some of the answers appear to be because of substring matching (bad implementation of the search algorithm); others appear to be because of incorrect data in the patent records themselves (bad quality control). Regardless of the cause, it's clear that this tool fails here, which leads one to wonder how badly it fails on other queries. If patent examiners aren't finding relevant prior art maybe we ought to give them the right (tested) tools and (quality supervised) data to make that possible, eh?
This has been well-covered elsewhere. I just wanted to point out - thanks to Ken White at Popehat - that the Judge clearly understood how Prenda were taking advantage of the horrible state of copyright law in the US. "[Prenda] discovered the nexus of antiquated copyright laws, paralyzing social stigma, and unaffordable defense costs [...] So now, copyright laws originally designed to compensate starving artists allow, starving attorneys in this electronic-media era to plunder the citizenry."
The suit seeks a declaratory judgment that Aereo does not infringe CBS's copyrights, which is what the 2nd Circuit said. The suit is filed in New York in part because that's where the original suit was tried and because part of Aereo's complaint is that by threatening to sue everywhere, CBS is both "venue shopping" and trying to evade the ruling against it in the original court. In general courts look poorly on those kinds of legal shenanigans so they may well get their declaratory judgment, but I don't think that's going to stop CBS.
The list of news topics about laws and problems grows week by week: computer intrusion laws being overbroad, DMCA exemptions not being granted for everyday activity with technologies, patent trolling, maximalist copyrighting - all ultimately come down to the laws' failure to keep pace with the rapid evolution of technology and online social/commerce activities. A pair of recent news stories makes it look like Congress might actually be gearing up to do something.
However, a review such as this is almost certain to include public hearings, which provides an opportunity for organizations concerned about how badly the Obama administration has handled these issues to get their grievances heard, and garner some publicity. It's one thing to careen from crisis (CISPA) to crisis (TPP) and another to be able to present a coherent view of what a modernized IP regime should look like. Hearings are the place to do that.
Over on the patent side, Senator Charles Schumer announced his intention to file a bill addressing patent trolling. His idea is to expand the realm in which defendants can ask for PTO review of patents before trial. That's not particularly novel, and again fails to address the problem of bad patent issuance, but it is a step in the right direction. PTO review is often directed by courts or requested after courts have invalidated some or all of a patent's claims. Clogging up the PTO with more reviews isn't going to help, but if this works right the number of reviews will remain about the same and companies (and the public) will be spared the time and expense of some IP-related litigation.
The site got knocked offline by a barrage of spam comments. Thanks to Hylton and the Corante staff for cleaning up the mess and getting us moving again. There are two entries now published that were from May 3rd and I'll work on clearing the backlog tomorrow and the rest of this week.
It's important to remember that despite its meteoric rise in the past few years, self-publishing is not (yet?) a true alternative to major publishing houses. It's a complement. Publishers are often focused on 'name' authors, and blockbuster publications that can get placed on visible list like the NY Times Bestsellers and can bring in large dollars. That shuts out a lot of smaller-audience and specialty publications that can do quite well in the self-published marketplace. So, yay self-publishing, particularly since that avenue tends to be DRM-free from the word go.
But we have not yet seen any other big publisher follow in Macmillan/Tor's footsteps and that's just ridiculous. Look, guys, DRM isn't helping you, it isn't securing you any sales, and it is locking you in and your customers out. Cut that out.
First, the patent office (examiner) should be finding this prior art. Why that's not happening is complex, but a first approximation would be that the examiner isn't well enough trained, doesn't have enough time to examine each application thoroughly, and doesn't have enough or adequate tools at hand. All three of these causes have been discussed on various boards and blogs frequented by examiners. The solutions are pretty obvious, and any attempt at patent reform that doesn't discuss examiner training, production quotas, and available search tools is defective from the start.
Second, the patent applicant is supposed to conduct an adequate prior art review themselves and should be liable for submitting patent applications without such reviews. In fact, the way the law is set up rewards deliberate blindness. Since you have to disclose any prior art you know about, it's safer not to know about any prior art. The result is a raft of idiotic submissions made with completely inadequate prior art information. We know this to be the case because a reasonably competent person with access to Google, Medlib, or the Science Citation Index can often find something not disclosed on the patent application.
This problem is less straightforward to fix. Increasing penalties for bad prior art disclosures only reinforces the willful ignorance problem. I've suggested before that any application with zero non-patent prior art citations should be rejected out of hand by the USPTO. That would cut out a large chunk of the obvious crap but doesn't encourage the positive behavior we all want, which is inventors doing good thorough searches before applications. My social-software nerd brain thinks we ought to let the USPTO develop some kind of reputation system, and allow applicants with good reputations to get priority examinations, but it would take a fair bit of work to design a fair reputation system that was resistant to gaming by people both outside and inside the Patent Office.
On release day, Greenheart not only put up legitimate copies but a "cracked" version on a popular torrent site. Unfortunately for those who took the torrented free version over the for-pay legal version, the crack disguised a hidden logic bomb. Those who played the cracked version found that their in-game studios constantly went bankrupt due to piracy. People complained about it on various gaming boards and got a large round of "no duh" and other kinds of head-slaps.
This was, of course, a not particularly subtle jibe at those whose taking of free copies of games is harming independent developers. Indies often have to front a good deal of their own money to develop a title and if it doesn't sell they take the loss. Indies also tend to have fewer and lower-cost titles on offer, meaning their revenue streams can be hurt much more by lack of sales - whether that's due to bad reviews, bad gaming experiences, or illegal copying.
Unfortunately, the experiment suffered from being highly atypical. Most indie games are released through third-party services such as Steam or Green Man Gaming and this one was only available to Windows 8 users via Microsoft's service, or to people who knew about the game and went directly to Greenheart's own Web site. This severely limited the possibility of legally acquiring the game and so the comparisons of absolute numbers of legal downloads versus pirated are probably not representative.
A friend pointed me to an alarmed posting in the British Journal of Photography. The column, by Olivier Laurent, outlines the potential highly negative impacts particularly for photographers of a new copyright framework that is wending its way through the British legal approval process.
The original goal of the framework is laudable: find a way for people to be able to make use of orphaned works - those items presumed to be under copyright but whose owners cannot be located. As copyright terms continue to be extended more and more work exists in this weird limbo state - someone has the rights, but may not even know it or be interested in defending those rights reuse of these works wouldn't harm anyone, but is still forbidden by the default copyright regime.
Unfortunately, it appears from Laurent's summary that this initial intention has been implemented in a particularly dangerous way for photographers and this has led to a large group of people and organizations concerned with photography - everyone from the Thomson Reuters news agency, the massive Getty and Corbis image archives on down - to try and stop this framework from becoming law.
The issue seems to be that the framework does not contain strong enough requirements on someone who wants to determine if a photograph is orphaned. In particular, it appears that an absence of photographic file metadata may be taken as indicating an image is not copyrighted. Even if the text of, say, a blog post using an image contains copyright/ownership information, image searches often present the pictures in a context-free way so you don't see that annotation. To make matters worse, many popular sites that allow photographic uploading deliberately strip out metadata as part of the upload process (Twitter and Facebook to name just a couple).
Given that we cannot rely on metadata being present, even if the photographer put it there and wants it to remain, it seems like a poor idea to base a decision on orphan status on these metadata. Unfortunately, few alternatives exist. There are registration services and even apps springing up, but nothing with the sort of wide acceptance that would be needed for efficient copyright holder search.
Who, sadly, deserves it. This is sad because I used to like Lanier. Back in the ancient days, when rocks were soft, I did a little work in virtual reality. I respect the pioneering work that Lanier did in that field. Sadly, he seems to have turned into a cranky old damned-kids-get-off-my-lawn type these days, trading on his past good work to sell books about the impending collapse of things he cares about, and peddle nonsense in major magazines.
Lanier's piece is an excerpt for his latest crank manifesto and it's just astonishingly full of wrong. People who are knowledgeable in one field are not automatically knowledgeable in others - as I so often prove. Here (and apparently in the book this column is excerpted from) Lanier shows that he really doesn't understand economics. In order to understand just how badly Lanier gets it wrong let me point you to this that's-not-actually-true.-at-all. dept column from Mike Masnick at Techdirt.
It's long, but a worthwhile read as Masnick goes point by point over several of Lanier's key economic mistakes and shows why these mistakes lead him to be totally wrong about things like digital music. This reminds me of David Lowery, who at least has serious music cred but who also takes a nearly entirely wrong approach to understanding the future evolution of digital music.
Where Masnick scores his best point - and where Lanier does so much worse than Lowery - is where Lanier appears to want to rewrite history (Masnick calls him out for "lying") and that's really a shame. People may not be able to be expert in every field, but good smart people ought to know better than this.
Quick reminder: fair use is not an absolute doctrine. Rather, it's a series of tests and criteria applied to a reuse that might be copyright infringing to determine whether infringement applies. Different courts have used different sets of criteria or weighed them differently, and interpretations have shifted over time. For example, recently it has been much harder to get fair use protection for parody and other humorous forms of commentary.
In this case, the question was whether Judge Batts's criteria that a reused work must somehow be "transformative" was an acceptable fair use test. Her ruling was generally acknowledged to be somewhat novel and raised concern particularly in the art world where reuse of images is common. It was particularly troubling as the case at hand concerned work by artist Richard Prince, who created new works of art based on photographs from a book. Prince's works were found infringing at trial level based on this new criteria, but his conviction is now overturned.
Using Aereo's odd business model as a jumping-off points, Salmon looks at the reality that what we currently think of as "broadcast" television channels are currently getting more revenue from retransmission fees paid by cable companies than from direct advertising (though he doesn't provide data, which would be nice - anyone got those numbers?). If that's really true then these companies could potentially just shut down broadcasting which would kill Aereo without having to win court battles. Doing so would also give them more leverage with the cable companies.
If broadcasters aren't going to use that spectrum, who will? Salmon believes that the spectrum will be auctioned off and bought mostly by cell and wireless data providers. This would, he says, "create more value." I'm not sure for whom this value would be created, though, and I should point out that as long as high-speed Net penetration in the US remains as crappy as it is (not universal, non-competitive, and stupidly expensive) then the idea of just handwaving away broadcast looks remarkably parochial. Sure, if you live in NYC like Salmon does (or near Boston as I do) then the loss of broadcast isn't something you'd notice. Drive an hour or two away from those major metro hubs, though and you bet there are a lot of people who would be well and truly pissed off if broadcast suddenly vanished.
I got a press release from Aereo today indicating that they are going to launch in Boston in mid-May. Significantly, this is outside the Second Circuit, where Aereo recently won its appeal. If I was a betting man I would bet that this will be an invitation for the broadcasters to file a new round of lawsuits in hopes of finding a friendlier ruling and creating a variance in opinions that could pressure the Supreme Court to revisit the 2nd's decision.
I haven't yet read Judge Stanton's opinion this time around, but the fact that it was only 24 pages indicates that he found what the TV lawyers call an "open and shut" case. Had there been complexities or nuances the Judge likely would have issued a lengthier ruling so his reasoning could be reviewed by the higher courts to which Viacom is sure to appeal. Sadly, Viacom has already stated their intention to re-appeal this. We can only hope that the 2nd Circuit will slap them down again and maybe finally they'll decide it's better to spend their money on developing better business models than on massive lawyer fees.
Vernon recounts her own experiences as a self-published author, as an author who has worked with publishers, and as a comic artist. Although she resists drawing bigger conclusions I think her primary thought - there is on one true right way - jibes with what we've explored in this blog. We find ourselves still in the infant stages of both these kinds of publication and it's a mistake to draw too many definitives out of the air just yet.
Vernon's other point I noted is that fans are having a disproportionate effect here. We've noted how fans of some artists - most famously Amanda Palmer - have made the artist's efforts successful well beyond expectations, but what Vernon is talking about is how fans of a genre or artform can shape or stifle debate and particularly criticism. That's a serious problem, not just for the people being criticized or shut down but for our ability to judge, compare, and improve these infant forms.
Take out the word 'software' and I'd be in complete agreement. Bad software patents have gotten a lot of attention lately but rules for reforming patent examination and issuance need to be universal. You can't just single out bad software patenting practices and ignore errors if they are happening in hardware, biotech, etc. The EFF do focus on a problem that is endemic to software patents - overbroad claiming. In most other fields of patent arts it's necessary for the invention to be narrowly described and for the patent only to protect the specific claims. For example, if I patent a medicine to cure headaches I am given protection only on the specific medicine I disclose in the patent, not on the entire field of headache cures.
The post also renews EFF's earlier calls for source-code submission, with which I sympathize but I think will make more trouble than it solves. For example, what language(s) will be accepted? And how will you prove that two source code submissions are or are not equivalent? I haven't looked lately but I think proof of program equivalence is an NP-hard problem to solve. Really, though, you don't care about the code. You care about the algorithm the code implements, and we have some pretty well-understood ways to describe algorithms without reducing them to specific code forms. Yes, it may take a certain level of skill to understand non-textual algorithmic representations but we ought to expect the examiners of software patent applications to be able to read those, just as we expect other examiners to be able to read mathematical equations, or chemical reaction formulae.
Patent "Monetization" Entities... Which is to Say, Trolls
A study report out of UC Hastings College of the Law reports that "patent monetization entities" - called "trolls" in the headline - filed 56% of patent lawsuits last year, more than double the percentage of five years ago. Hear that, Apple? You get cracking now! On a more serious note, the study also looked at public notification systems and determined that they are woefully inadequate. People and companies are not able to find out when patents are being asserted in lawsuits, which deprives them of the chance to avoid infringement.
Unfortunately, bad as they are, they appear to be at least surface-level legitimate, though Mullin has some fascinating background about just exactly who these guys are that have been hired to carry out the collection part of the plan. This brings me back to the point I keep harping on, which is that we created this mess ourselves and we're not going to fix it until we take serious steps to reform the patent-issuing process itself. Radical things, like hiring more (and more qualified examiners), permitting summary rejections of trash that is clearly intended just to clog up the system and drag everything out, establishing compulsory licensing regimes, and preventing Congress from filching the fees that the USPTO extracts and that ought to be used to fund most of these improvements. Crazy stuff, I know.
It's possible that Books on Board will find new financing to handle its debt problems and remain in business somehow, but I'm not hopeful. Until we break the DRM lock-ins and hardware dependencies that are endemic to the ebook business right now there's just not a lot of breathing room for people who aren't making hardware onto which the books can be locked.
(thanks to Doug Pardee for the pointer to the decision PDF)
Sullivan's ruling appears to rest on his belief that Redigi in fact creates new copies of the digital files, despite its efforts to avoid doing so. Creating a new file would of course be an infringement and thus would not invoke the first-sale rights. The Reuters story indicates that Sullivan's ruling takes this into account - specifically Kirtsaeng - but the question still remains. If Redigi can attack the core conclusion of making a copy, they may still be able to operate under first-sale doctrine.
Unfortunately, Redigi does not have big-name deep-pockets backers like Aereo so if they are going to continue this fight it's going to be an expensive proposition. At press time they weren't revealing their next move, but honestly they're going to be on the hook for big bucks no matter what since Capitol is sure to press for large damage sums at this point.
Somewhat to my surprise, Mike Schroeder of Aereo wrote to me today to let me know that they had won a round at the Second Circuit. Specifically, the Circuit ruled that there was no evidence that the Cartel was likely to prevail at trial which would support a preliminary injunction.
This means things move forward on two fronts: without an injunction that would shut it down, Aereo is free to go on building its business. However, as Stelter points out in that Times story, the next step is almost certainly for the studios and networks that wanted the injunction to go to trial. Just because two of the Second Circuit's judges didn't feel an injunction was warranted is no guarantee of a win at trial and even if Aereo wins there it will almost certainly land back at the Second as the Cartel will appeal a loss again. As I noted last year, this case appears to be bringing the nutcases out of the woodwork, but I don't think the Cartel is being particularly nutty here. They're just trying to use their deep pockets and shark teams of lawyers to wear down Aereo and its backers.
I'm pretty sure I'm indebted to Warren Ellis for this pointer: The Private Eye comic. It's a story-based comic by Marcos Martin (Daredevil, Spiderman, art) and Brian K. Vaughan (Saga, Ex Machina, writing) that is being put out in DRM-free, pay-what-you-think-it's-worth style. You can preview on the site, or direct download the unencumbered files. The creators are quite honest with a simple pitch: you pay us to make this comic and we'll make more. There's no charity or fancy rewards. This makes it much more like NoiseTrade, except for visual artistry. It's refreshing to see more people trying out these new models and I wish Martin and Vaughan well. If their creative style appeals to you (and I think many Warren Ellis fans will see the connections) then click the big blue "Buy Now" link at the bottom.
The only thing I'd like is a little more clarity in pricing. It would be nice to see a suggested price, or average price paid information (a la Humble Bundle). This series could go up to 10 issues, at 32 pages per which is a pretty hefty output but it's not clear whether you're paying now for the premier issue or subscribing for the whole series. Obviously people are free to choose the option that they like, but guidelines and suggestions would help me, I think.
David Post, writing at Volokh Conspiracy on the Kirtsaeng decision, is worth quoting entirely: The Court – in a utterly brilliant opinion by Justice Breyer, a minor classic of the “here are all the reasons why my arguments are better than yours” school of opinion-writing — rejected Wiley’s argument and refused to impose the geographical restriction Wiley sought.
Thayer wasn't happy about being asked to work for free, and posted the editor's request along with some heated response, highlighting his career as a professional journalist not to mention his need to pay bills, feed his children and so on. In general, Thayer noted, "[I] am not in the habit of giving my services for free..."
Thayer's public scolding brought a number of responses, two of which I want to visit, and to draw parallels with other things here and elsewhere. First up, Cord Jefferson wrote a piece for Gawker, which brings up an important point: who's really paying?
When people work for free, particularly in businesses like writing, they are often able to do so because they have other resources they can draw on. A "day job" or friends and family can provide the financial resources necessary for someone who isn't able to get paid at writing to pursue that vocation. Crucially, external financial resources may enable someone to tolerate the zero- or low-wage situations that interns and freelancers find themselves in and that then lead them to the higher-paying or even salaried opportunities. Jefferson points out (I think correctly) that this unacknowledged dependence on outside resources leads to a self-selection process whereby people who have access to those resources (coarsely, to a rich family) get those opportunities whereas those who come from lower economic status are denied them. People in lower economic status are much more often non-white or single working parents - which is to say, women. Since they do not have the resource cushion to survive on the "work for prestige" rungs of the ladder they are thereby denied the opportunity that more well-off (and more often white male) people have. Thus the "work for free" regime acts to perpetuate racial and gender inequalities.
So far so good. Unfortunately the last two paragraphs of Jefferson's essay go off the rails as he chooses to misinterpret and attack Amanda Palmer and her TED talk. First of all, calling Palmer "wealthy" is almost certainly factually incorrect. But more importantly, Jefferson claims that Palmer's talk is promoting the ideas "...that artists should be willing to work for free." Say what? Certainly that's not how I or most other respondents I've read heard that talk, which seemed to me to be encouraging people to ask for things, including money.
Leaving aside the last two paragraphs, I also want to highlight the response from Ta-Nehisi Coates who happens to be Black and has the singular point of view of writing regularly for The Atlantic. Coates' reply column was titled 'Lucrative Work-for-Free Opportunity' and told his own story of receiving a similar offer to the one that offended Thayer. Coates was solicited by Matt Yglesias to write for The Atlantic in exchange for the greater exposure rather than for a by-the-word payment rate. Like Thayer, Coates was an established writer at the time and also like Thayer he was a struggling professional with bills to pay.
Coates took the offer, negotiating his ability to commit to what Yglesias wanted with his own need to publish his own things. He highlights the fact that this is common practice in the industry, but also calls Thayer's tactics (such as publishing private emails with names attached) into question. Yes, Coates says, it would be nice if the industry could provide more living-wage positions to alleviate the kinds of disadvantaged situations that Jefferson talks about. But it's also true that right now The Atlantic is employing more journalists than ever before.
Which leads to the point of this long-winded think piece: it's a continuation of our discussion of what it means to be an author in the 21st-century media environment. We've been conditioned to think of a "successful" artist as one who sells a million records or has a million followers/fans/readers/whatever. But if you price your offerings right (as Felix Salmon argues and I agree) then you don't need the superstar/megahit/blockbuster model to be successful. Palmer's Kickstarter gets mentioned for its dollar amount a lot - Jefferson highlights its dollar totals - but few people seem to notice that there weren't that many people backing it. A few tens of thousands. That's a highly replicable model - at least much more replicable than the blockbuster/megahit model.
The challenge is that making this model replicable requires new ways of business. As Palmer and others have said, this model works best if you are an extrovert. If you are comfortable asking for money, asking for crash space on tour, asking for a loaner piano to practice on, asking for a stage prop to be delivered, then you can move faster and get more done - at the 'cost' of intensive fan service. Not every author or artist is comfortable doing that, but that's OK. It's not a flaw in the model, it's a business opportunity.
Filling this need means we'll see the emergence of a new class of intermediaries. Just as many successful authors today have "web goblins" (as I think Neil Gaiman calls his Webmistress) or other staff who maintain their online presences, other artists are going to need social media intermediaries to handle that fan service. This is no different from the need authors have for traditional literary agents or performers have for tour managers. Performing is a business; people in business hire out the parts they can't handle themselves. Some of those hired people are called things like 'accountant' and some are going to be called 'twitter wrangler'. Shy performers (writers, artists) will have more need of these people than extroverts but that's not a fatal blow. Sometimes shy performers will have to get by doing things they're not good at because they can't afford to hire people, just like musicians starting out today often have to book their own shows.
Or maybe these artists will learn to ask, and somewhere within their few thousand fans will be someone who knows a club owner and can book a gig. That fan may even do it for free because, after all, there is something to be said for prestige.
(I am indebted for many of the ideas in this post to a fine group of savvy friends, many of them writers in their own regard. In no particular order thanks to JC Chatelain, Fred Barrett, David Weinberger, John Sundman, and Joe Mahoney. You should buy their books.)
Thanks to my friends at Owner's Rights Initiative I just got word that the Supreme Court decision in Kirtsaeng v Wiley has been issued, and the decision has gone 6-3 to Kirtsaeng, reversing the Second Circuit.
Publisher's Weekly confirms - as of this writing there hasn't been a statement yet from Wiley, nor have I had time to read the decision and dissents or concurrences. I'm sure there'll be more to say later. But for now all libraries, individual sellers, used bookstores, and the rest of us can breathe a sigh of relief.
ETA: decision is here. I'm still reading it, but the first thing that strikes me is it's a fairly odd alliance of Justices. How often will we see Kagan and Alito filing a (concurring in this case) opinion together?
Natco's manufacturing is protected under an Indian national compulsory licensing scheme that follows the guidelines set out under TRIPS, a WTO-governed international trade agreement. Bayer has said that it will continue to fight against Natco and other country-local producers who are targeting lower-income buyers and in the process disrupting big-pharma international monopolies.
As I've made clear in the past, my sympathies in these cases are divided. Development and testing of drugs is a socially valuable but intensely expensive undertaking. Until and unless governments are willing to shoulder the entire burden of this process we must rely on commercial companies to do it. These companies need to be compensated for their costs of research and development and they need to make profits to stay in business. It's not enough just to make money on some drugs - if companies only have incentives to produce certain kinds of drugs then treatments for important conditions will lag. The sad state of anti-malaria treatments versus, say, expensive first-world mental health medications demonstrates this clearly.
However, the reason these medicines are so socially valuable is that they are often life-saving. They may be the only thing standing between millions of people and significant suffering or even death. Companies that are granted special rights such as manufacturing monopolies (patents) need to be willing to give up something in exchange - likely that means giving up some of their possible profits in order to ensure that life-saving medicines are more affordable.
More elaborately the answer is "No. You don't get compensated for sales of used physical books; why do you think e-books ought to be different?" Well, for one thing a used electronic item doesn't degrade in the way that a physical item does. There's something nice about buying a pristine copy of a book and every used-book marketplace I know of requires sellers to state the condition of the book because a sufficiently degraded physical book can be unpleasant or impossible to use.
In theory, if there are pristine copies of e-books out there it will destroy the marketplace for new copies. Except there are already vast stocks of pristine physical books around. Ever heard of overstock? Or check those condition listing for physical books. I bet you can find descriptors like "unopened" or "still in shrink-wrap" or "pristine" or "like new". It's true that not every copy is like that, but it's simply false to assume that every used book is lower quality.
Scalzi and Waldman wail on at length about how authors need to get paid, a philosophical foundation I share. But the used book was sold, and the author did earn her or his money on that sale. That, as I said last time, is the entire point of first-sale doctrine. If authors or publishers feel that used sales are taking some amount away from first sales then the proper response is to increase the price on first sales to compensate. Teeth-gnashing and trying to shut down entire commercial marketplaces is a sorely misplaced sentiment.
And speaking of misplaced, I think Scalzi and Waldman would do well to watch Amanda Palmer's discussion of the art of asking. Rather than spending their time and energy trying to figure out how to force people to pay, authors need to learn how to connect with people and in so doing encourage them to help the authors.
(Sorry for the week-long hiatus. An unexpected change in job situation sort of threw me off track.)
Salmon comes in for a mention in the talk, but his reason for posting it is because he wants to talk about the same things that Palmer talked about: how do you convince (not force!) people to pay for what you can offer? This is the flip side of his first column about how to package your product so that it diffuses out to the appropriate audiences. The payment side requires that people - as Palmer describes - overcome a certain shame in asking, and develop a level of trust in themselves, in their audiences (fans, readers) and in the relationships that can be built. Salmon points out that the publishing business has been frankly awful at this, though he shares Palmer's sense that Twitter may create a fundamental change there.
Salmon talks at length about the various models most in use today and argues that there are no sharp necessary distinctions between such things as paywalls and tip jars. In particular, as an economist or a businessperson you might want to try to compute the relative merits or likely payoffs of different models but that's likely an impossible task. What you need to do (like every business) is try to match up your supply and demand curves and make them meet at a point you can live with.
How long you live with it, though, is another problem entirely. Salmon points out that high (or pricey) paywalls may generate more short-term revenue and look better to the current bottom line, which is great if you're trying to pump up your stock price or make yourself look like an attractive buyout target. But they may be killing you long-term as your current readers die off or move on and your paywall not only shields you from those who want to rip off your content, it also makes you invisible to new people who are searching.
This matters because you're probably not talking about reaching audiences of millions or even hundreds of thousands. Palmer's fan base is probably in the tens of thousands and that's probably about the right size, for her. Salmon notes that the Internet "...enabled smallish numbers of people to pay modest amounts of money..." and that can add up to a sustainable model. This is, I think, the answer to the question I started gnawing on in January: how many people can be counted on to sustain a writer?
The answer is "probably not a lot, but that's OK" because if a few tens of thousands of people can be enough then there's a lot more subscriber base to go around. I'm trying my own little personal experiment in this area, seeing how many Kickstarters I feel comfortable backing. Right now I think my appetite is something like 1 or 2 a month at probably $20 or $25 each. We'll see how it goes.
Well it turns out that both Congress and the EFF have decided to take up the issue. CNET's Declan McCullagh provides a brief history and overview. (I have to wonder if he'll be allowed to continue reporting on this once CBS figures out that DMCA exemptions and changes to the law are not in their corporate interest. But I digress...)
Congress, in the personage of Senator Ron Wyden (D - Oregon), introduced a bill intended to fix some of the DMCA's problems. At the same time the EFF, startup incubator Y Combinator, the Mozilla foundation, and Reddit got together to launch FixTheDMCA.org, which is specifically focusing on repealing section 1201 of the bill - that being the anti-circumvention provisions.
As McCullagh points out, past attempts to modify 1201 have raised the full ire of the Cartel, which may be why Wyden's proposal is much more modest. Modest or not, I suspect we're going to see a lot of FUD raised around Wyden's bill.
It seems that most of the parties in this case also don't like that answer, and for good and sensible reasons. I was particularly taken by Bowman's lawyer's argument that a finding for Monsanto would elevate patent rights over personal property rights. This is a powerful point and highlights some of the great contradictions we've built up in our current maximalist system. I wonder how my libertarian friends see this, as many of them are highly respectful of property rights, but also feel that government should not interfere in business market practices. Does the trump card of personal property rights in this case mean that Monsanto's business model must fall?
And if it does fall, what does that mean for the patent system in general? I can see no rational basis to distinguish a biological machine from a physical one and grant patent protection only to produces of the latter, just because of the composition of the machine. Our notion of what makes a "natural" object in the world versus an engineered object may also have to change as we learn more about "horizontal" DNA transfer (see here in Biology Online and here in a story about how blood-sucking insects may be part of a process of horizontal transfer in humans). So it's not a good solution to say "well, just don't allow patenting of biological machines".
It also seems clear from the summary that SCOTUS understands that the patent system's "exhaustion doctrine" isn't sufficient here, either. I suspect we're going to see this question come up again, soon, as we're not far from a world in which 3D printers can print out all their own parts, after which assembling the parts into another 3D printer that can self-replicate won't be far behind.
Unfortunately, the administration can't single-handedly order this done. As the response points out the decision still lies with the Librarian of Congress, though other agencies such as the FCC are sure to get involved. FCC Chairman Julius Genachowski has also chimed in his agreement with the administration on this issue.
So, what does the Librarian have to say? Um, nothing. To be fair, the brief response acknowledges that the White House has weighed in. Not that they're going to do anything about it, but at least they acknowledged.
It will be interesting to see who moves next in this little Mexican stand-off. As of now the rule is still in place - if you bought a new phone after January of this year you can't legally jailbreak it.
Pretty much ever since she put her Kickstarter in motion a bit under a year ago one lingering question has been whether this sort of thing is unique to Palmer, or whether there's something reproducible in this experience. Although it's not framed as such, what I hear Palmer saying in her talk is "Here is how I did this and here's what you can try, too."
It's not about the details (which is good and right for a TED talk) - it's about the philosophy. Although the talk is titled "The art of asking" and Palmer talks extensively about her experiences asking, the secret sauce for me is in her discussion of trust. You could equally well title the talk "The art of trusting" as she talks about the degrees and kinds of trust she has in her fans and how that affects what she does with her music.
In particular, she says she never tried to "make" people pay for the music; she asked people to pay and as she says,
When you connect with them, people want to help you
Connecting isn't easy, particularly if one is not a naturally outgoing or gregarious person. Neither is trusting. But both are skills that can be practiced and if anyone is going to replicate the AFP model, they're going to do it using huge elements of connection and trust.
I'm trying to remember how long ago it was that Cory Doctorow wrote, "Giving my stuff away is selling the hell out of it" or words to that effect. (Actually, I don't have to remember because the Internet remembers it for me.) The notion that giving people something for free would entice them to pay more is as old as coinage, I believe.
For a long time the notion of giving your stuff away was buried from mainstream sight. Buried first under the glare of celebrity/blockbuster/mega-hit productions in which corporations made stars of people and shows and books and things for which people paid ever-increasing prices. Then it got re-buried under an avalanche of FUD about piracy and sharing.
But of late the notion of free is making an important comeback. In gaming, there's an entire genre of "free to play games" in which you get the game for free and pay for things you want related to the game: cosmetic items, power-ups, unlocks of special features, more capabilities, etc. Authors and musicians and other creators have recognized the power of giving their things away to connect with audiences, build loyal fan bases, and maybe put up a tip jar so people can pay if they think it's worthwhile.
This week, under the title "How to get people excited about education", Felix Salmon posted about what I would call the economics of some of these freedom-driven models. In particular, he talks about the spectrum of education experience that ranges from massive open online courses (MOOCs) to individualized, in-class direct education. His argument is these are complementary, not competitive products. Giving away your lectures via YouTube isn't going to cut into your enrollment, he argues. It's going to build your brand and name and value and while it filters out those who don't have the drive or money or time to sit through intense graduate-level education courses, it's also going to select for the people who do have those things, and bring them to you.
He points out that the same model of increasing yields as you increase costs can be made to work in other areas - his second example is about the Metropolitan Opera and he concludes that,
...the more you give such things away, the more demand there is for the very expensive live product
Yes, exactly. Salmon calls these different offerings "diffusion lines" as in different ways you get ideas and content out to people. And he argues that this kind of thinking can be the basis for what I would see as a broadly economically sustainable set of marketing and business models.
ETA: I am editing this article to correct errors of fact. As always, any mistakes here are my own fault.
In a word, they're socializing the cost. The price PeerJ charges you is, in effect, a fee to submit. There's no guarantee that your article will be published, only that by paying the $99 fee you'll get it reviewed.
ETA: Peter Binfield, the publisher of PeerJ and Jayson Hoyt, the CEO, have written comments you can read below kindly letting me know that I've misunderstood the model. There is indeed a $99 up-front option, but it's not required. If you choose not to pay that and do get published you pay a $129 cost.
This compares with a PLOS publication like PLOS1 that might not take your article for review but if it does so it pays the cost at that time for you and only on publication do you pay your $1350.
Well, a little math will show you that if they publish 1 out of every 14 submitted articles then PeerJ has a better revenue model. The publication rate for submitted articles at most high-quality journals is probably less than that. Many journals don't publicize these rates (presumably to avoid discouraging potential authors) but a rate of 1 in 20 or 1 in 25 would not surprise me. In fact, one of the things that makes certain journals so prestigious is that they are hard to get into. Often an author will find that a very good paper isn't published not because of anything to do with the paper but just because the journal only has resources (pages, editors, reviewers) to handle a fixed number of submissions. A common academic strategy is to submit a potential publication first to the best-possible venue for it and if it's not accepted there then turn around and re-submit it to other places.
ETA: Binfield wrote in his comment that they "...expect to end up accepting ~70% of all submissions". That's a fantastically high rate and assumes a level of quality in submitted papers that was not present when I was doing academic peer reviewing. It will be interesting to see what the numbers end up being.
The review-reject-resubmit cycle can lead to long delays for publication, which in turn relates to another pointer art sent: a notice in Nature's blog about the White House's incremental move toward open access. The new policy is that "taxpayer-funded research should be made free to read after a year’s delay" which seems like a lot on the face of it but is still shorter than the often multi-year delays involved with pay-subscription journals.
Once upon a time Dave Barry wrote a great column about how corporations in general used the phrase "for your convenience" to mean "we're doing whatever the hell we please but we want you not to hate us for it." Companies make changes that people hate but slap the "for your convenience" label on it on the theory that people are stupid and easily duped. His edge case example was something like a supermarket announcing "For your convenience we've filled the parking lot with rabid weasels. Have a nice day."
Where David Kravets wrote "online copyright scofflaws" you should read "anyone who happens to have the misfortune to be assigned responsibility for an IP address that the Cartel thinks is doing something wrong." Because, remember, that's what we're about here - taking IP addresses and smacking people for things we claim were done at those addresses. The Cartel can't even be bothered to remember its own history, which involves claiming that mysterious "Someone Else" used RIAA-owned IP addresses to pirate content.
Where David Kravets wrote "backed by the President Barack Obama administration" you should read "pushed by the Cartel flunkies who have entirely captured the DOJ and the US Copyright office in the last four years." I doubt Obama gives a rat's ass about this stuff, but you can bet that the people at DOJ who are eyeing juicy jobs at major studios and labels after their tenures in Washington are done.
Where David Kravets wrote "To be sure, the deal is not as draconian as it could have been" you should read "Somehow the ISPs managed not to cave entirely to the Cartel's demand that people associated with IP addresses it doesn't like be tarred, feathered, and dragged through the public square, as if piling on ever-more-draconian measures would somehow eradicate hundreds of years of people sharing creatively."
OK, I give up. I can't even maintain a sufficient level of outrage to make this entry funny. It's pathetic, it's sad, and it's hopeless. No one elected the Cartel to enforce laws and I certainly didn't pay my ISP hundreds of dollars/year to filter my content. I eagerly await the inevitable day when DOJ is forced to degrade its own network because, hey, people are using DOJ IP addresses to torrent movies, too.
If you read my lengthy yard-sale post earlier this month, I discussed how the new consoles coming out - Microsoft are apparently debuting theirs at E3 - have been rumored to have functionality that would hamper the playing of used games. Sony, despite having been granted a recent patent in this area, appear not to be doing that. The money quote is: "[gamers] purchase physical form, they want to use it everywhere, right? So that's my expectation."
Instead, what appears to be happening is a more gentle approach, whereby Sony are planning to roll out a variety of services such as streaming, cloud-based game libraries, and so on. These services should get people used to the idea that a console game isn't just a cartridge and if the services are priced to be competitive with existing game stores such as Steam, the gamer will get used to frequent sales and when they want cheap games they'll buy from these services.
I think this is good news for gamers, good news for first-sale rights, and good for the marketplace. Now to see what Microsoft's answer is.
Why TV Ad Revenue Goes Up and Internet Ad Revenue Goes Down
This is pretty far off the nominal Copyfight beat but I could not resist pointing to Felix Salmon's column on "Content economics." It's a very good look at why Net advertising is not the same as/does not replace TV advertising and why broadcast TV can keep raising its prices even as its viewership shrinks. Hint: it's all about the fragmentation.
Flaherty's issue appears to be that there are patents covering aspects of 3D printing and therefore companies are not inventing things de novo without constraint. This is hardly a shock - every business of the last couple centuries has been born into a world where patents existed and some of those patents were even relevant to the new field of business. Indeed, the point of a patent is that you've introduced some innovation or improvement, often by improving upon existing related processes. Much of homebrew 3D printing is innovating and improving on the areas of 2D printing and process manufacturing that have existed for decades. To find that there are relevant patents is far less surprising than it would be if there were no patents.
Furthermore, although the last few years have seen a surge of companies, models, and innovations in 3D printing, the ideas and technologies go back quite a ways. Again, older technologies are often covered by patents, upon which new inventors improve. The specific 10 patents that Flaherty highlights seem pretty normal to me, despite how much he wants to hype things up for this story.
What do you do in such an environment? Well, you do what businesses have always done - you deal with the existing intellectual property. You can license it, innovate around it, show that your machine or process doesn't infringe the specific claims of the patent, file a patent on your improvement that cites the existing patent as recognized prior art, and so on. Bringing 3D printing to every home that wants one is a laudable goal but it's no more likely to be "stymied" by patenting than any other home-use machine, though Flaherty seems fond of hyperbolic descriptives like "fortresses of patents".
In fact, Flaherty seems to hyperventilate over companies doing exactly what I describe. He notes that patent #5,387,380 is held by MIT, which licensed it to a company that... hold your breath, it's scary! ... innovated on it and filed its own patents on its innovations. By the way, MIT doesn't sign exclusive licensing agreements - anyone else who wants to go license that patent from MIT and innovate on it is free to do so. He also seems unhappy that the current crop of 3D-printing companies like 3D Systems and Makerbot are themselves applying for patents.
This is just silly FUD. Patents in 3D printing aren't special - they have all the same strengths and weaknesses as patenting in other industries. It's just that home 3D printing is hot right now and sexy and ... well, that sells more ad space.
As I and others noted back then academic publishing is a gigantic scam in which free labor (peer reviewing) is used to filter works submitted for free by people (researchers) who got other people (usually taxpayers, corporations or endowments) to pay for the research in the first place. All this free and paid-for-by-others stuff is then turned into extremely expensive dead trees by publishers like Elsevier who charge so much that even very rich institutions like Harvard are saying "enough" and refusing to pay more.
Around that time, Tim O'Reilly put his money behind people who included Peter Binfield, the managing editor of PLOS ONE with the goal of changing the game entirely. The result, known as PeerJ, has been hard at work and this week published its first articles, with a pricing model that - to use a much-abused term these days - is majorly disruptive.
PeerJ promises to combine revolutionary low pricing levels (like, USD 99) with high-speed turn-around, addressing two of the worst problems in academic publishing. PLOS ONE has a great pricing model compared to traditional publishers, but PeerJ blows even PLOS ONE out of the water on pricing. Taylor also reports that PeerJ's user experience is first-class, something that ought to attract academics who are still leery of working with non-traditional publishers.
And yet... and yet, I cannot help re-asking the question that I think forms the heart of this problem: what about tenure? Is there any evidence that, five years on, non-traditional journal publications have the weight and impact that traditional journals do? Because Taylor's subhead is about "the moving-prestige-to-open-access dept" and last time I looked open access wasn't granting tenure, and when you submit a grant proposal to DARPA or NIH or your favorite funding source, they still require you to submit a publications list and they still care where you publish.
Yes, PeerJ is bringing revolutionary and much-needed pricing change. But until someone can show me the professors who got tenured publishing in PeerJ or PLOS ONE, there's still going to be a long distance between publication and prestige.
While we wait for a decision on Kirtsaeng a couple of interesting news items have crossed my radar and I wanted to write about them together, as they both relate to the marketplace for used electronic goods, and the non-trivial relationship of those goods to piracy. This is a bit of a long walk but I promise it all ties together.
The first item is the reporting around Amazon's recent patent announcement. This isn't an actual service that Amazon is providing, or has even stated that it's going to provide. Instead, it's a patent they were awarded at the end of January that purports to cover a marketplace for digital objects. Putting this out to the news wires is clearly them floating a trial balloon.
The patent (#8,364,595) involves creation of a "personal data store" for the digital objects. While you own the object you get to download or stream it up to a certain number of times controlled by DRM or policy. Since there's already a mechanism in place to limit your access, it's pretty easy to say "OK, I'm done with this object and no longer want it." At that point, your remaining number of accesses gets set to zero, and you can dispose of the object by selling it to Amazon (or whoever licenses the patent) for some amount. The used-object vendor can then either apply some more DRM/policy to give the next owner some more downloads or streams, or just keep the original counter going. Presumably when you buy a used digital object there would have to be some disclosure that your use of it was limited.
His objection is that Amazon would be making money off the used e-book, but he wouldn't. I find this baffling. To my knowledge, Scalzi doesn't object to used bookstores for physical books. I suspect he's also purchased a used CD or LP in his day, as well. As far as I know, in those cases no additional money is flowing to the original author. This, after all, is the whole point of first-sale doctrine, which is at the heart of the Kirtsaeng case. I confess I can't see any significant difference between the e-book and physical book situations. In fact, it's quite possible to buy used physical books right now through Amazon. It just so happens that Amazon has things set up so it's a front for third-party sellers, but it gets money on every sale and in principle nothing stops them being originating sellers. So what's the big deal here?
Other people have a different attitude toward used digital goods, and piracy. Take, for example, games. Right now we're at an odd place in the console gaming industry in that all the popular consoles are using old-generation hardware. New machines are on the way: Microsoft and Sony have both shown previews and talked about their upcoming devices. Both look fairly similar from a hardware perspective, but there's a potentially huge split coming in how the next generation of consoles treats used games.
For a while now there have been rumors to the effect that the next Xbox will try to block users from loading used games whereas the Sony console will allow it, or vice versa. Naturally, this is upsetting to places like GameStop that make a great deal of money from reselling used games. In a speech to the Goldman Sachs Technology and Internet Conference, GameStop's CFO Rob Lloyd showed his company's research that indicated a solid majority of consumers were opposed to having used games blocked and wouldn't want to buy a console which did that. His research also claims that most used games are older titles, with the clear implication that the used market isn't cutting into new-game sales, since the volume of game releases often means that all but the biggest-selling titles are cleared from store shelves within 60 days.
In fact, the makers have taken the unusual step of talking directly to people who have illegal copies of the game, asking for feedback, mentions in tweets, and upvotes on Steam's Greenlight, which is kind of Survivor for indie games. If this works out, then some people who pirated the game will like it and buy a copy. Some people will talk about it on Twitter and elsewhere, which is free publicity. And some will upvote it, which means more people see it on Steam and buy it because it's cheap there.
And that brings me back around to the console/used games issue. Steam, like Amazon and unlike GameStop or Walmart, doesn't have shelves to empty. Games stay there virtually forever. So long as the maker still exists to provide more license keys, Steam can sell additional copies. Steam has established itself as a place where older games are available at steep discounts. This begs the question of why would you buy a used game when you can expect to get it new from Steam (or Green Man Gaming or similar site)? It's entirely possible that the ubiquity - the effectively infinite shelf-life - of downloadable games will do more to kill the used-game market than anything Sony or Microsoft do.
And that, at last, brings me back around to the "I hate reselling" attitude that John Scalzi expressed above. Because here's the thing: if you can make a game for a console that blocks used games or you can make a game for a console that allows used games, from which you don't profit, which would you do? Well, if you think you'd lose sales to used games then you might want to go with the locked-down platform, just as Scalzi would have you go to piracy before resale. Except you may lose more original game sales because people might not buy that locked-down platform in the first place, as GameStop is arguing.
But if you believe that your game will always be available (e.g. through Steam) to people who want it then you can afford to wait for the less-popular console to gain market share. And of course there's a knock-on effect in that if people see more good games being released only for the locked-down platform they may just swallow hard and buy that platform anyway.
The big deal, then, is that it's not as simple as "Amazon reselling used stuff = bad". It's that we're witnessing a rapid evolution of marketplaces and business models with lots of players jockeying for position, all of which makes me hope even more fervently that SCOTUS doesn't "drop the banhammer" as we gamer geeks say.
Salmon notes that the tip jar and accompanying text give the impression that the blogger needs the tip revenue to support her hard work. However, a slightly deeper look reveals that not only does she have another "day job" that provides income, she heavily uses affiliate links both on her blog and on social media like Twitter. Her actual income from these links isn't known, of course, but given her popularity and standard conversion rates it's possible to generate estimates. Given that these estimates appear relatively large, it's a fair question to ask whether the tip jar on her blog is actually necessary, in the sense of "I will not have money if you don't leave a tip here."
That's a very different situation from the musicians of NoiseTrade, or even Amanda Palmer's famous Kickstarter. In those cases it's clear that the funding provided by the sponsoring individuals is all there is. It's a level of transparency that may be necessary for this kind of model to work. Palmer's problems with her Kickstarter included complaints about its size - to which she provided a breakdown of how the funds were to be used. It's natural for people to think "hey, you have $VERYLARGEAMOUNT, why do you need it?" and it may be incumbent on those who are asking for public donations to include a publicity/transparency plan in their campaigns.
This is more or less the core question posed by music download site NoiseTrade. The site provides hosting and tools for music creators who are willing to give their stuff away, along with a fan-settable slider. This slider, labeled "Tip", gives the downloader the option of paying 1-25 dollars for what's on offer. There are also usually free listening samples so you know what you're getting before downloading.
This is similar to the set-up that many independent artists have on their own Web sites, and the tradition of setting out a tip jar on the piano, or an open guitar case with a few symbolic bills or coins in it is as old as anyone can remember. (I'd be curious to know if this tradition is world-wide. I've seen it in North America and Europe, but not elsewhere.)
In addition to hooking into this old traditional social practice, NoiseTrade provides artists with tools to build "meaningful connections" to their fans. NoiseTrade allows artists to create "widgets" that can be embedded on personal sites and in a variety of social media (Facebook and MySpace are still popular with many artists). NoiseTrade handles the downloading bandwidth and associated technology lifting in exchange for its services. Artists need to have a PayPal account, which NoiseTrade uses as the transfer destination for tipped funds. This means that artists end up collecting less up front due to the service fees but as with any service it means they have more time to focus on their work.
The question, as yet unanswered, is whether this sort of service to facilitate a more intimate connection is worth it. Clearly artists are taking risks - NoiseTrade music is DRM-free and nobody is required to tip for what the artists choose to put up. On the plus side, artists need fans, and need to get noticed. The site promotes artists (via targeted mailings, Facebook, blog posts, and featured sessions) and as with so many creative endeavors it's clear that the biggest problem facing most performing musicians today is getting noticed.
I've signed up for NoiseTrade's email newsletter and we'll see how it works out.
It's possible, then, that Apple or Amazon won't come to dominate the ebook-to-reader "last mile" the way many of us had feared. But that mostly depends on relying on the good graces and forgiveness of these companies, which I'm not inclined to rely on that any more than I'm inclined to rely on DOJ's prosecutorial discretion. I would say that Macmillan's capitulation brings us to the end of Chapter 1 in the mass-market e-book story, but there are going to be more chapters written, and probably soon.
Dear Gamers Workshop, Welcome To Social Media Hell
As I mentioned yesterday, GW has acquired a whole new set of un-friends. Today they hit the bigtime, with a front-page linked article on io9, a very popular site for SF/F/gaming/movie genre fans. Apparently they're also getting thrashed on Twitter. Dear GW, back down now. Apologize. You need to stem this tide. Every minute you let this go on your name becomes more mud. If this goes on for a week it'll take you a year to wash the stink off. The entire Northeastern US is sitting at home under a blizzard and has nothing to do all weekend except talk about how shitty you have been to one of our friends.
This is all over my blogroll today: Games Workshop is coming down absurdly, wrongly, overreachingly hard on a small author over its fantasy of having a trademark on the phrase "Space Marines" that prevents others from using that phrase.
The most direct victim at this time is author M.C.A. Hogarth. Hogarth reports on a disheartening, but all-too-familiar, situation in which the big company pulls out the big lawyer guns and picks on the small (mostly self-published) individual who doesn't have the money to fight protracted legal struggles. One of the people who has responded is John Scalzi whose blog entry at "Whatever" points out that not only is this "weak sauce" on GW's part, the story may turn out very differently if they ever try to pull this crap on ",,,an actual publisher, with actual lawyers. That should be fun."
Doctorow's post (correctly, I think) also lays some of the blame on Amazon. They had no need to take down Hogarth's e-books. That was a craven corporate decision, and a disappointment. Say what you like about Google, but their efforts with their Transparency Report are setting a standard that other corporations including Amazon could do well to emulate.
So what happens next? Well, readers might want to let Games Workshop know how they feel about this. You can reach them by physical mail in the UK. at Games Workshop, Willow Road
Lenton, Nottingham, NG7 2WS - or if you're more digitally inclined I believe they read and comment pretty regularly on their Facebook page (https://www.facebook.com/gamesworkshopofficial)
Greenfield compares Netflix's numbers with some sample numbers from HBO (since Netflix says it wants to be "the HBO of Internet TV") and the results look surprisingly good even at that price-tag. Given their stated goal of having five shows at this size and price, Greenfield estimates that the shows would need to drive an additional 10% growth in subscriptions in order to break even, assuming that Netflix doesn't change its basic $8/mo subscription price and includes these series in that price. HBO's shows cost considerably more to produce and don't drive that much more revenue, making Netflix's P/L projections easier to hit.
If there's a problem in Netflix's future, it's probably not home-grown content but the content it has to get from other producers, which is getting increasingly expensive. As those costs have gone up, Netflix's margins (and possible profits) have gone down. Making its own exclusive content helps stabilize that drain and provides a differentiator - if you like these shows and can't get them anywhere else... well, there you go.
My personal opinion is that Netflix is going to have to raise subscription rates. I foresee them inching toward a $9.99 price over the next two years. If they break $10 though I'd be surprised. I also expect them to explore some pay-more extras like the bonus things you get on most DVDs. Interviews, backstage stuff, even possibly early access are all things they can price out and play with that won't hurt their main subscription base.
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
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).
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.
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.
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.
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.
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.
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.
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.)
In this case, what didn't happen in e-book pricing. Those of you who read Jon Sargent's (Macmillan) year-end letter will know that the people opposed to settling with the DOJ have pointed out that there would be nothing to stop a precipitous plunge in e-book prices. Except somehow that didn't happen in 2012.
It's possible, of course, that Amazon is just biding its time until all the publishers are settled, but that seems unlikely. Amazon doesn't discuss its pricing strategies in public, but it has shown it has extremely fine-grained control over what prices it offers on its millions of catalog items. It is fully capable of discounting some e-books while maintaining price floors on others. Instead, Streitfeld hypothesizes, the sustained higher price may be due to another things-that-didn't-happen: e-books have not displaced physical books, at least not to the degree predicted.
The causes cited for this are the usual ones, plus frankly there may be some buying fatigue among e-book consumers. People who bought new e-books or bought e-books for the first time seemed to be stocking up a large selection and it's possible they're taking time out to digest what they've already bought before making more purchases. It will be very interesting to see what the numbers look like next month once analysts have had a chance to digest the purchasing data from this Christmas season.
The other, more interesting to me, possibility is that we're starting to understand the shape of the niche that e-books will occupy in the sales ecosystem. As Streitfeld says, the demise of retail book outlets may itself be hurting e-book sales, particularly among the majority of purchasers who are either new to e-books or who still buy both e-books and physical books. These buyers may like the idea of browsing, holding things in their hands, etc - the physical aspects of book-shopping. That they then went home and bought e-books was bad news for the retailer, but if in fact that first step is important to the e-buying process then the lack of a physical presence may spell trouble for e-book sales and for converting physical-book readers into e-book readers.
In addition, e-books are generally tied to a physical product - their reader. You can discount a book if you're selling a reader at a good margin. But if the market for readers is saturating and you're having to discount readers then you may not be able to sustain losses on e-books. Likewise if you depend on sales of a reader in order to push e-book sales then the fortunes of the two will tend to rise and fall together.
So yes I expect e-books to get cheaper in 2013, but not by much. For prices to drop significantly publishers will need to retool their businesses to be able to pass on the cost savings of digital production to end readers, and to do so in a way that doesn't destroy their physical-book pipelines in the process.
Post says (and I agree wholeheartedly) that the authors of this report are wrong on historical ground, and wrong on the merits. He notes that there's literature and scholarship on this question and in general there's Constitutional scholarship that shows what the framers intended was that the Constitution embodied a grant of rights from the people (as represented in the Convention) to the government. There's nothing to support a "natural rights" argument that I know of.
And, as I've said repeatedly in the past year, it's pretty clear that what Post calls the "utilitarian" analysis is also failing badly - IP as we currently practice it is inhibiting creation, not promoting it. The economic justifications made for the continual expansion of protectionist regimes are purely for the benefit of large corporations. Individual creators are trotted out regularly as excuses but when it comes to writing the checks the Cartel are nowhere to be found.
The survey also repeats conclusions we've come to in the past decades of the copyright wars. Lack of any publicly streamable alternative such as Netflix or Hulu led to HBO's "Game of Thrones" doubling its US viewing numbers through illegal copies. This is the same lesson that's been on offer since early Napster days.
There's also a continuing correlation between delayed release and illegal copies. Australia, where people are supposed to wait an arbitrary extra week more than the rest of the world for things, tends to score highest in the illegal viewing numbers. Well, duh. If the Cartel haven't yet figured out that worldwide simultaneous release is good for business and delayed releases are bad I'm afraid I can't help them.
The story lists several major court and police actions taken against sites such as The Pirate Bay, Megaupload, Newzbin2, and Surfthechannel - all of which were taken offline in whole or in part the past year. Shockingly, taking down big-name linking or torrent sites doesn't actually reduce the flow. This is the same lesson that should have been learned when Napster was first shut down. I used to refer to it as "smashing mercury with a hammer." It's visually satisfying and absolutely ineffective at reducing the amount of mercury.
Perhaps a slightly new lesson is that most of the top copied titles are behind paywalls. That would indicate that paywalls themselves don't reduce piracy, but leaves open the question of how the owners of the shows should create revenue. Just because something costs money isn't an excuse for illegally copying it, but it does indicate that there is a consumer marketplace that's going untapped.
Of course, the Cartel's response is not creative thinking on how to market to those consumers - it's a repeated effort to pass draconian laws. I think I'm safe in predicting that those won't be any more effective in 2013 than they were in 2012.
Meanwhile, in a minor fit of sanity, both sides have separately agreed to withdraw requests that judges block sales of each others' products. Lawsuits will continue until the sun goes nova and grows cold, one expects.
Three items from the backlog and I'll put them all in here under the same heading. It's clear that 2012 saw lots of streaming services but little differentiation and not nearly enough cash-flow. Companies that survive through 2013 will be those that can separate themselves from the pack and convince customers they've got something worth paying for.
What Netflix can do is not just pick a potential original-series winner via its algorithms, but it can price the offering according to individual wants and tastes. It can bundle the series with peoples' existing subscriptions, it can offer a higher-cost tier that includes original content, and it can offer a pay-as-you-watch model for people who are unsure that they will indeed love the new content. This is the true advantage of an Internet-based company over a traditional cable-channel company and it's where I expect them to win big.
Speaking of data, Tim Westergren of Pandora showed up on TechCrunch last month to tout his company's ability to use data to help artists. Carefully avoiding the sticky financial questions that have dogged the service in the last couple years, Westergren concentrated on the potential of a direct connection between musicians and their listeners. A connection facilitated by Pandora, of course. If I read between the lines of what Westergren is saying, it appears that he and his company are making a play for the independent artists. A big-name, label-backed act isn't going to see much (if any) revenue add from Pandora. So why would someone let their music be streamed on the service? Because it means discovery, because it means being connected to the people who want to listen to your music, and because it means learning enough about those people that you can adjust what you do to reach them and make more money from them. Whether it's something as simple as picking the right people to show CD sales discount ads to or as tricky as figuring out which cities you want to hit with your limited tour budget, data is going to be your friend. If Pandora has the data then artists may find the whole deal profitable enough to participate in.
As with many such sites I've long been able to follow artists, favorite things, and so on. Recently they added Facebook-like dashboard and "who likes who" features. Despite my initial skepticism I've found the features really useful. Like Facebook, SoundCloud now gives you a Dashboard on login that shows you things your favorite artists have uploaded. But you also get to see things they favorited on the site. This isn't technologically new, and certainly other social media sites such as Twitter let you favorite things. It took me a while to think about this and try to understand why it works better here than there.
What I think makes it work is the specialized nature of the community. On Facebook I have over 350 "friends" and they have a wildly varied set of interests. My personal interest in those 3500 things is small or none for many of them. So if a FB friend likes something its information value to me is low. On SoundCloud not only do I have a much smaller set of people I follow, each of them is a working artist with an active interest in hearing and using new music. What interests them is likely to be fresh and interesting to me as well. That's not guaranteed, but my experience in the past month is that it has a better than 50% hit rate, which is way higher than any other social-media site I've used.
SoundCloud is also linking to the rest of the world, but to my eyes that's not going to provide unique value - it's just a convenience. What's making SoundCloud a site I return to over and over again is the active participation of engaged people with high levels of knowledge and similar interests to my own. How that turns into revenue for SoundCloud and the participating artists is still to be seen, though.
Following Canada's lead, it appears that the UK is set to introduce a number of important private exceptions to copyright restrictions that will help regular private users, users with various disabilities, educators, and so on. Michael Geist has the whole list in his blog. The overall idea seems to be a recognition that activities people do for certain reasons, such as individual back-up, classroom teaching, etc. are not inherently violations of the commercial marketplace's enforceable copyright restrictions. These exceptions don't touch on commerce; instead, they appear to add a hefty amount of sanity to recognizing that peoples' everyday activities are not theft.
Instagram Isn't Owning, Just Granting Itself License
An astute reader pointed out that I had misinterpreted the new Instagram Terms of Service. As they've hastily tried to clarify, they don't claim "ownership" of your pictures, they just (and here I'm quoting the ToS) require you to: "grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service..." Got that? It's a subtle distinction - owning versus getting to use however they want - apparently too subtle for me. And remember, still no way to opt out except closing your Instagram account.
He also notes that they're the last one standing in the DOJ suit over e-book price fixing. Penguin and Random House have agreed to the DOJ's terms, presumably so there won't be an impediment to the merger, leaving only one party to emerge from the court-ordered mediation process. If nothing changes, then trial is scheduled for June of next year.
It's sad that Sargent doesn't see the writing on the wall. He notes that they were sued by the DOJ, 33 individual states, a class action group, and the European Union. It's possible that all of those entities are wrong and Sargent is right. But I wouldn't bet on it. That's a lot of attorneys and attorneys-general who all saw the evidence and thought it was case-worthy. Maybe Sargent and his lawyers are smarter than everyone else on the planet, but I wouldn't bet on that either.
It's sad that Sargent can't see that the moves Macmillan have made precisely miss the mark. He's happy that his company have negotiated new agreements that "...allow 10 percent discounting on individual books priced at $13.99 and above..." Uh, whoop de do? We've had ample evidence in recent months that there's a lot of market to be made in lower-priced e-books. If Macmillan can't make money with its current cost structure on lower-priced books then maybe the right thing to do is change that structure, not forbid discounting. Macmillan's new agreements are still too restrictive, despite his claims that "[a]ll the new contracts are compliant with the government’s requests in their complaint."
It's also sad that the government's settlement offer is so awful and they won't budge. They believe they have a winning hand (particularly now that everyone else has settled) so there's little incentive to budge, but the fact remains that the DOJ is pretty much handing Amazon the e-book world on a plate. That's unnecessary, and will result in a monopsonistic environment. The DOJ could have been much smarter about this, though given its track record with, say, financial institutions it's doubtful anyone inside there knows how to craft any sort of settlement. But I digress.
The saddest part of Sargent's missive is that he doesn't yet have good data on the effect of going DRM-free. The most revolutionary and potentially freeing move in e-books in 2012 is likely to be swamped by the effects of the suit and trial to come.
Look, the America Invests Act (AIA) is an interesting piece of legislation with some good ideas behind it. Like any bill that makes its way into law, those good ideas are sort of diluted and distorted from their original form in order to make the compromises necessary to get a deal done. Fine. Good. That's how these things work.
But in this case, it's not a matter of compromise so much as it is an uncompromising unwillingness to put his own house in order that's affecting Director Kappos. Early in December he gave a speech in which he touted certain provisions of the AIA, particularly what's called "post-grant review", as a solution to the current patent-litigation mess. In this review people who aren't involved in the original patent are allowed to challenge a patent once it's issued. This is similar to what I discussed as already happening in my previous patent-system post but it has the advantage that you don't have to go through a whole trial in order to make a challenge happen.
That's good, but it's still too late. And Lee is spot-on in his response to Kappos when he says that the speech "...ducks the central question in the software patent debate: do patents, in fact, provide a net incentive for innovation in the software industry?"
Indeed, and Kappos's focus on post-grant review is itself a tacit admission that the USPTO is giving out patents that it shouldn't. Obviously, if it issued better patents in the first place there would be no (or at least much less) need for post-grant review. If we're going to have any hope of hacking ourselves out of the current weeds we absolutely must push the solutions upstream to the application and review stages. How about that, Mr. Kappos?
Tobias Buckell, At Length, on His Kickstarter Experience
It seems wrong to write so few words in response to a 5,000 word heartfelt experience report, but really I have not much to add except, "Go read this!" Buckell is what we used to call a mid-list author and his Kickstarter story is really important to understanding how someone who has some fans but isn't A Very Big Name can use a lot of hard work and new (self)publishing models to change their career. (h/t John Scalzi's "Whatever" blog for the original pointer)
The short answer may be "yes". Commentary in a recent issue of Greg Aharonian's PATNEWS email newsletter (not on the Web, sorry) highlighted several points that lead one to think we may have brought this on ourselves, at least to some extent.
As I noted a couple weeks ago, there's a significant advantage to doing your patent litigation through a non-producing entity (NPE) in that the NPE is effectively immune from competitor counter-suits. Since they make nothing, they violate no patents themselves. In addition, you can (and here I use the term advisedly) 'rig' the NPE to be little more than a shell, with few or no assets that could be taken in the case of adverse judgment. This is similar to the shell game that corporations (and individuals) often play, separating out assets that could be seized from any legal liabilities - just now it's being applied to patent lawsuits.
In addition, PATNEWS reports, there was a rule change in how one can file a patent suit. In particular, new rules limit the number of defendants that can be named. In one way that's good, because it prevents suit-happy patent holders from sweeping huge brushes around, hoping to catch someone who would rather settle than fight. But in practice what it has meant is that instead of one suit with 10 defendants, NPEs now file ten separate lawsuits. The result is an apparent inflation in the absolute number of lawsuits, but that's something of an illusion.
It's not wholly illusory in that the ten separate suits are a larger burden on the court system - this is why courts often try to consolidate cases where possible - but it does mean that there may not be so large a rise particularly if you compare "number of patent lawsuit defendants" on a year-over-year basis.
Another commenter pointed out that reversals (at appellate level) of district court rulings has risen to nearly 50%. A reversal can come in many forms - sometimes a case is reversed and ended, but more often a reversal means it's going to be appealed further or be remanded back down to the lower level for a new trial. As the number of reversals goes up, the overall count of cases goes up. And of course a retrial may itself result in an appeal, and so on and so on.
Reversal on appeal also complicates matters. Generally speaking it's the trial court's job to find on matters of fact. On appeal, each side more or less has to accept the facts as presented at trial but argues that the law was inappropriately applied or that there was some other procedural error. In effect the arguments on appeal of a standard case tend to be totally different. However, in patent cases, the appeals court can sometimes rule a patent or patent claim invalid. This can force a whole new trial as the losing side now has to make its case with lesser (or at least different) facts available. The result, again, is an apparent increase in the number of patent trials.
None of this is to say that there aren't too many NPEs nor horrid abuses of the court system (as there are horrid abuses of the patent system). But it does point out that people bemoaning the current patent litigation system may need to examine things a little more closely. And because I like being right, I claim this sort of analysis lends weight to my assertion that trying to fix the patent system problems at the court level is too late. We must make fixes upstream, at the application, review, and granting stages.
I realize that's an appealing and perhaps even common-sense notion and they even quote a graph with the word "Causality" on it, but that is not in fact what is going on and it's not even what the original graph ought to be claiming.
What happened, near as I can make out, is that an outfit called Next Big Media did some data analysis. They looked at some public numbers, such as hits on an artist's Wikipedia page, publicly released iTunes sales, and so on. Then, to their credit, they did some actual statistical analysis. In particular, they did what's called a Granger causality test, which attempts to show that one variable has enough predictive value in its time series to be assigned causative agency in another variable.
Causative agency is much stronger than the usual notion of prediction and it's a tricky thing to pin down. You can, for example, see that in certain months there's a large rise in the number of people wearing overcoats. The calendar date is therefore a good predictor of overcoat use, but it's not a causative factor.
Using a Granger test is good in that it avoids the most simplistic "correlation = causation" failure. However, as Wikipedia and other sources will tell you, Granger Causality is not necessarily true causality. For one thing, it's a test that works only when you have two variables, not three (or more). For another, it's known to fail when there's a (so-called hidden) variable that also follows the same time series. In this case, we can call that variable "popularity". What this study is telling you is that if you can tell when someone is getting popular then you can predict they're going to sell more music.
This, ladies and gentlemen, is not particularly enlightening. We know this, and we further know that public resources such as Facebook pages, Google searches, and Wikipedia article activity are reasonable measures of popularity, particularly when you measure what's popular within the limited subset of the population that is online and connected. Unsurprisingly, this is also the subset of the population that is most likely to buy from iTunes rather than Wal*Mart or other physical music retailer.
There are other methodological flaws in the study - for example, they seem not to be taking into account things like "has just released a new album" or "has appeared on The Simpsons" or "is touring my country" or any of a zillion other factors that may cause jumps in social media popularity, and likewise jumps in sales. I could go on, but you get the gist.
I realize that news outlets have to fill a certain number of (even virtual) column inches, but really when the best thing you can conclude is "artists should make sure their Wikipedia pages are updated and maybe get on Twitter too" - that's pretty lame.
If you aren't familiar with gaming and YouTube, let me give you a bit of background. People who game love to make videos. They make response videos, they make trash-talk videos, they make commentaries. There are also millions of helpful videos - everything from "see this cool mod for this game" to "here's a walkthrough of that tricky bit in Act 2." One of the best ways to judge the vibrancy of a game is to search for it on YouTube. A game with a lot of fans will have a lot of vids and those vids will have recent responses and active comment threads. So when a gaming company steps in and starts hacking away at the fan video activity around their games, it's a big deal.
The picture is complicated by the fact that many fans make money on these videos. There are gaming channels and people who are paid to do walkthroughs, to publish guides for third parties, to live-stream competitive gaming matches, etc. Some of the people who do make money at this have complex agreements with the games they cover, but most of the smaller players do not. So when Sega issues DMCA orders against vidders the result can be the suspension of an entire channel or YouTube user, cutting off legitimate sources of income, not to mention running roughshod over fair use. The professional game-caster known as "Total Biscuit" noted that Sega has even targeted videos of people talking about the game, with no Sega material shown.
In this case, Sega's actions have been oddly specific, targeting pretty much everything related to some very old content. The theory is that they're going to put out a new installment in the franchise and want to control what items come up in searches. I can't express my level of disgust at a corporation using the DMCA to sabotage someone else's Google-juice.
Guy Kawasaki, a man with more than a few books to his name, did a piece on Minnesota Public Radio on self publishing. He lists five benefits and three drawbacks, all of which we've touched on to some degree. In his Google+ posting highlighting the show he called attention to the extensive comment (currently first on the list) left by a woman who has used self-publishing to turn around completely her experiences as a romance-novel author. It's a good reminder that you can't easily lump together all the different segments of publishing and get a unified picture. Romance is not textbooks is not reference books is not SF/F, and so on.
Well, sure, they retracted the memo as soon as someone in the Cartel noticed it and picked up the phone to complain, but hey at least there are people inside the party thinking innovatively about... wait? What's that you say? They fired his ass?
No, really, I can't make this stuff up. I suppose this is some bizarre marketroid's idea of how to prevent you from ever taking your business elsewhere. Not only will we not sell rent you new e-books if your card has expired, we'll just glue shut the pages of ones you thought you already owned. Insert Cartoon Evil Villain Laugh here.
As Consumerist (and following up Techdirt) point out, it's not the e-book per se that is at fault here. It's the DRM. The DRM lock is what is preventing this legitimate user from reading her legally purchased e-books. The fact that she will now have to become a DRM criminal too is a shame.
However, saying "it's the DRM" is sort of like blaming the car that blew through the stoplight and rammed into you, as thought the car had no driver. The DRM exists because companies put it there, and it's configured to enforce paranoid and crippling restrictions because someone - a person, or group of persons - decided it should be so. "Paranoid" and "stupid" are not properties of software; they're attitudes of people, who choose to use, encode and configure the software. This is not a fight about technology, it's a fight about social and business policies. And one of the most effective ways to change business policies is to take your business elsewhere.
B&N has clearly shown that once you give them the slightest chance, they'll do everything they can to lock you in. So take your money elsewhere, people.
Some of you may recall that I work in finance. So I was kind of surprised to read last month that a patent spat has broken out in the options trading world. As Joe Mullin notes, the trading world has not been super-saturated with patents. This particular dispute is over patents on ways of matching trades using not just the order data themselves, but also including market data (quotes).
The current round is actually a continuation of a long-running battle and will have a big impact in terms of who gets to offer what information, and what trading instruments, to investors. This is a big deal since the crash in the US markets happened a few years ago. Although prices that are in the public eye (such as Apple's stock price, or the much-overhyped Dow Jones) have regained their values, what's missing from the picture is volume. A lot of money has left the markets - trillions of dollars by most estimates - and much of the exchanges' business is based on volume. The result is that competition for flow is at an all-time high and entities that can establish themselves as a sole place to trade something desirable will be in a much securer position.
This will tend to lead companies in the direction of IP struggles; however, the financial sector has had a pretty long stream of negative press. Getting involved in more patent disputes is only going to make more bad headlines and scare away more investors. As a result, I think things will stay largely tamped down and we won't see the financial sector erupt into the sort of all-out patent wars that high tech is getting known for.
The story is a little short on detail, and references the Village People legal case I mentioned a few months ago. The big difference I see is that authors - particularly those who write novels that end up on bestseller lists - usually work through agents. These agents often handle all publication rights for the author, even though they don't hold the original copyrights, nor are they assigned the rights. They negotiate the contracts, though, and if those contracts are going to be broken or amended through the Termination Rights process then these literary agents are likely to be involved again. And as Jeff John Roberts notes in his column, it's not clear how widespread the knowledge of the law's provisions are, or who actually understands them. They're not really as straightforward as one would like, since they require advance notice and have a window in which they can be exercised.
Last month, Steven Levy had an extensive piece in WIRED with the title "The Patent Problem." Levy is a long-time tech journalist who's probably best known for his in-depth books on tech and culture, starting with his Hackers up through last year's paean to Google called In the Plex.
To my knowledge, Levy hasn't written much about patents or IP before, but he brings his exhaustive attention to bear in this article. It's long, and I won't try to summarize it - you should read the original. Levy doesn't fall into the trap of assuming there is a single problem with patents, despite the article's title, that would be amenable to a single solution. He touches on several things including the changes to what can be patented (so-called process patents), the fact that companies are deliberately abusing and overwhelming the USPTO with crap, and particularly the proliferation of entities that view patents as weapons or money-making machines. All of these factors have combined to create a potentially very profitable business model around what are called (politely) "non-patenting entities". These companies make no product, but have a business around owning patents and suing people who are claimed to infringe them.
The less-polite name for these NPEs is 'patent trolls' and trolling is a major focus of Levy's article. He notes that NPE-originated litigation is increasing rapidly, that courts have often favored existing patents with a presumption of validity, and that NPEs can engage in a variety of asymmetric warfare. Since the NPE makes no product it can't be counter-sued. The best that a defendant can muster would be a challenge to the patent's validity or scope.
Levy deploys a reasonable set of statistics to back up his proposition, though I would have liked to see more. He does admit that it's hard to distinguish a troll from a legitimate NPE that is protecting the interests of companies who license their portfolios. Certain trolls have grabbed a lot of headline attention, but that just makes them bad examples, not necessarily a valid majority or trend. That said, I think the key point of the article can be soundbit:
Instead of promoting innovation, patents are used as a weapon to stop it.
This difference goes back again to the language in the Constitution that allowed Congress to establish patents in the first place. I've been reading more in Copyright Unbalanced and one of the points that the authors in that book make repeatedly is that there is nothing natural or required about patents. We've had them for so long it's not surprising that people think they're a necessity, but in fact they were invented for the US as part of its founding documents not because anyone felt that individuals or corporations needed to enrich themselves, but because it was felt that having government-granted monopolies of this sort would lead to a better society.
What Levy is saying, I think, is that present practices around patents are directly attacking that feeling, which is still widely shared today. Unfortunately he has no more solutions to the problem than others who have pointed it out before. I continue to believe that focusing on the courts side of things is the wrong way to go. By the time a patent winds up in court it's too late to do much but apply another band-aid. What's needed is reform at the application and issuance stages. Not to put too fine a point on it: if you keep the crap out of the system, then the system ought to work better.
Shortly after SOPA went down for the count early in 2012 there was a spate of analysis over what the post-SOPA world would look like. I don't think that we yet have a good idea of the shape of that world which means there's an opportunity to go out and make it happen ourselves. To do that we need to forge cross-ideological alliances and this book may show where common ground can start.
While I (and about a quarter-million other sane people who signed Jimmy Wales' petition) am naturally pleased that he won't be forcibly extradited, this does not solve the central problem. A foreign national was prosecuted in the US for allegedly breaking US law despite never having been in the US, nor having any of his computer equipment in the US. The US Immigration and Customs Enforcement agency has become the Cartel's INTERPOL, and vast amounts of resources were wasted on a guy charged with linking to other online material. Neither ICE nor the Cartel is known for having a sense of proportionality and there's nothing in this resolution to stop them repeating this behavior.
He directs a shot specifically at Pandora, which I noted last time was trying to improve its image of being too stingy with payments, and Spotify. He gives specific numbers showing that the total payments by these services that end up in the musicians' pockets amounts to pennies - and not that many pennies either. But his major complaint isn't with the services named - it's with the model of streaming music as a business.
As Krukowski lays it out, the streaming companies aren't making profits either, so it's not like they're ripping off consumers and artists and pocketing the wads of cash. Instead, he notes, they're just businesses in the business of being businesses. They grow their companies' values, in ways wholly divorced from the music business.
On the one hand, I'm sympathetic to this. It's got to be frustrating for someone to try to make a living having no idea how to price and distribute what they make so that they can have a real income. Krukowski links to where you can get all of his bands' music streamed for free anyway. The difference between free and the services' pennies isn't that big a deal, clearly.
On the other hand, you could just as easily accuse Apple, Amazon, or Wal*Mart of being "divorced from music" even though they all sell a crapton of it. That's not a reason to dismiss the contribution each of these giant retailers makes to selling music. Rather, it's a reason go to back and say "If big retailers can make money on, and pass substantial revenue to artists on, music why can't the streaming services?"
It's clear we haven't gotten the model right yet, but it's still very early days. I'm not willing to give it up before it's been really tried.
Called Copyright Unbalanced, the book attempts to capture current thinking from conservative and libertarian writers on how current US copyright law has gone awry and what might be done to fix it. Solutions include fighting against "crony capitalism", rolling back criminal penalties and forfeiture in copyright cases, and returning to a more originalist vision of copyright, in which the monopoly is given to serve a public good, not to enrich corporations or individuals.
It seems to me that - as happened with the opposition to SOPA - the current utter disaster that is our copyright system is a place where major elements of both left- and right-wing social/political thinkers can come to useful agreement. Liberals aren't uniformly opposed to big government, but tend to favor open intellectual exchanges, which current copyright regimes are crippling. Conservatives oppose government's continual expansion of its powers and certainly the repeated extensions of copyright's scope and reach fit that description. And libertarians often seek rational bases for restraining governments' powers; in my opinion the current management of copyright has strayed so far from its Constitutional intentions as to be irrational. Thus I think we need to cooperate on finding ways to reign things in.
However, as Jerry Brito comments in the linked entry above, this need is likely going to fall into the same generational gap as opposition to SOPA did. The older, established parts of both Republican and Democratic parties are beholden to the entertainment industry for dollars and are locked into old-model ways of thinking. The younger and more dynamic parts of the parties (e.g. techno-libertarians and Internet/social media liberal-progressives) will find themselves fighting the party elders on this issue. And as I mentioned in the entry earlier this month I am sadly lacking in hope that the second Obama term will be any better in this regard than his first, no matter how much he used the younger parts of the Democratic base to get re-elected.
Issa isn't known for being quiet - tech folk admired him when he took a stand against his own party and committee chairman to oppose SOPA. He's also pissed off more than a few people by making some outrageous statements on subjects such as the ATF's failures, the attack on the US consulate in Libya, denying climate change, and other topics. So maybe this is just him grabbing more headlines and blowing more hot air. Or maybe he really can pressure the new Judiciary Chairman to produce something useful.
I confess I'm not holding my breath. But I'm old and cynical about anything useful coming out of Congress these days.
Independent e-book publisher Fictionwise is ceasing operations. They blame the demise on backing the wrong technological (format) horse. Fortunately for Fictionwise's readers, their accounts won't go away entirely. Fictionwise has arranged to transfer readers to B&N's Nook Library infrastructure. As one of my friends pointed out, though, this FAQ is conspicuously silent on the question of DRM, which Nook has and Fictionwise did not.
NPD continues to produce shill material for the Cartel, pushing its anti-sharing and anti-customer messaging. Last time I pointed to how they were drawing wrong conclusions from their data; this time Geist points out they can't even do basic math. And of course getting math wrong means you get your message wrong, in this case hilariously the opposite of what they're paid to shill.
The root of the issue is that NPD are trying to show that using P2P systems (presumably to share music) causes one to spend less on music, measured by spending on CDs, downloads, music service subscriptions, and so on. But aside from getting simple addition wrong (by double-counting a subtotal) what Geist points out is that NPD's own data show that P2P users spend roughly 50% more, particularly if you don't accept NPD's dubious assertion that spending on merchandise and concert tickets doesn't really count - because somehow being a fan who downloads music is separable from being a fan who buys tickets and merch.
Yeah, right. When you all get back from fairytale land, let me know. Meantime I continue to be disappointed by any serious journalist who publishes anything NPD produces, except for mockery purposes.
I thought this was interesting in light of Weinstein's call for severe penalties on IP abusers. The UK (both in its High Court and later the Court of Appeal) case of Apple v Samsung has not gone well for Apple, which was ordered to post public notices online that Samsung did not infringe as Apple had alleged in its suits.
Apple, in Foresman's words, "thumbed its nose" at this order and inserted language that made it appear the UK decision was out of line with other court rulings. In response the Court of Appeal published a final order that tightened up the language Apple is required to use, as well as requiring that Apple pay Samsung's legal fees "on an indemnity basis" which apparently means more money than would otherwise have been paid.
It's not clear to me whether the Court of Appeal in the UK can find Apple in contempt and assess further penalties, but clearly they are in no mood to tolerate further mucking around.
In his blog post today he takes on the current high levels of patent and copyright legal activity, the ills of which have been amply documented. He focuses on what he sees as "extortion" in which the threats of patent lawsuits and copyright infringement (DMCA takedown) notices are used to harass, suppress, and otherwise impede actual work and innocent people, as I noted again last month.
In response, Weinstein suggests putting in place fairly draconian penalties for abusers that would raise the cost of misuse of the system, including large fines and other unspecified penalties. Weinstein suggests that some unspecified "courts or other designated third parties" would make determinations as to what penalties and when to invoke them.
As sympathetic as I am to the core idea - abuse of the copyright and patent system ought not to be free and easy - I am concerned that adding more costly litigation and other processes to the mix will not solve anything. Severe penalties ought to serve as a deterrent, but in practice they do not. For example, Apple is facing the possibility of a patent-related injunction that would block sales of major product lines. This does not deter Apple; instead, it just means that more court cases will be dragged out for more years. I imagine that the lawyers involved will be enriched, but probably nobody else. Lest anyone think the Apple case is unique, I remind you that in August, the Lexmark case popped up again. That case has been going on for eight years now, and there is no end in sight.
Protracted litigation is always bad for those without money, which is to say exactly the small-scale entrepreneurs and individual creative types who are suffering the most from the current copyright and patent insanity. A related notion, loser pays, has been proposed and is used on a small-scale basis. It, too, seems not terribly effective but perhaps that's because it needs to be tested at a larger scale. Other solutions, including compulsory licensing and patent invalidation, could also play a part in restoring sanity.
Nobody wants right holders to be stripped entirely of their ability to defend their limited monopolies. Some level of balance needs to be re-established, making abuse costlier without ruining the entire value of a copyright or patent. I just don't think nukes are going to help.
In a completely un-shocking move, Judge Koh has agreed to hear motions and arguments on the question of whether the foreman in the well-publicized Apple/Samsung trial improperly influenced jury deliberations. Unless I'm mis-remembering, about 48 hours after the verdict was returned SCOTUSblog said this would happen. The guy may even have lied during voir dire which might be grounds for a whole new trial, not just nullification of the verdict.
Geist says that the Court's decision rested on the notion that the patent claims themselves were not sufficient descriptive to permit a skilled person to replicate the invention that is supposedly disclosed. Patent critics have for many years railed against badly written patent claims and the fact that examiners, particularly in the US, seem willing to let patents go with badly drafted claims. Here we have a clear situation of a high Court rejecting that kind of sloppy (inadequate) patent claims construction.
I don't think that the Canadian decision will affect Pfizer's patents in other countries (e.g. the US) but practically once a generic version of a drug is manufactured it's impossible to stop its trans-national shipment. Gods help us we'll probably see an uptick in spam emails for "generic Viagra" now.
As Lyons notes, this time Apple lost a round, and the winner VirnetX is asking for major injunctions on sales of Apple products that were found to infringe. The injunction is way more important than the penalty, which amounts to slightly more than the bar tab at your typical corporate board meeting. Given that, Apple will have no choice but to appeal and the mess will drag on.
What made this article interesting to me was Lyons's "What's the Point?" section. He doesn't mince words, calling Apple's strategy "despicable" and asserting that Apple is "us[ing] the legal system as a kind of marketing tool, a way to smear [its] opponents". Apple, he notes, is doing everything in its power - particularly through this barrage of lawsuits - to give itself a public images as a pinnacle of original innovation from which all lesser mortals must copy. Prima facie evidence is its unwillingness to cooperate with a UK judge's order that Apple publicly correct the record after losing a case against Samsung.
I think that makes a lot of sense and provides an answer to the question of why Apple would embark on this crazy campaign in the first place. It's sad and shameful. Fortunately, as Android's market-share numbers continue to climb it's clear that the strategy isn't working. So please, Apple, can we stop now?
As I noted in that September blog piece Ralph Oman, a former Register of Copyrights, had filed a bizarre amicus brief in the case, which asserted that
...when the law is ambiguous or silent on the issue at bar, the courts should let those who want to market new technologies carry the burden of persuasion that a new exception to the broad rights enacted by Congress should be established.
In English, this means that anything not expressly permitted should be forbidden (by copyright law at least) and as Post puts it, bluntly, "That is flat-out wrong."
The brief, authored by Post and signed by 34 law professors, argues that Oman is not just incorrect, but is trying to turn the entire principle of law on its head. Congress must, the brief states, balance competing needs but where it has not definitively spoken there is no justification for a court to make a restrictive and one-sided ruling such as Oman advocates that would shut down whole new sectors of industry just because they lack governmental pre-approval.
Post (and the brief) appear to be advocating for a strong form of what I've called the Breyer Test (after Golan) in that he too believes the authorial monopoly is there not so authors can profit but because allowing authors to profit increases "...the creation and the availability of creative works to the public." Now if we could just get Congress to write that into copyright law things might get a whole lot better.
Scalzi points out that the Humble Bundle had two salient effects that are hard to replicate. One is that it represented a very large number of units sold in a short period of time. This may happen when an author releases a new e-book but Scalzi's book in the bundle was not his newest volume; it was an older title that had already sold well. So getting a big burst of sales on an old title was a new phenomenon. Two, the bundle allowed him to sell the first volume of a series to a large number of readers. People who buy the first volume of a series are likely to pick up subsequent volumes and Scalzi reasons that he may get substantial uptick in sales of the rest of the series, for which he'll be paid the normal amount.
Most notably to my eyes is his calculation that people buying this e-book were not the people who would normally buy his books, as his weekly e-book sales didn't take a dip while the Bundle was on offer. This is very strong evidence that the readership for e-books is nowhere near tapped out, and that pricing is a significant factor in bringing more of that readership on-board. This is something that successful indie authors (see for example Joe Konrath) have been claiming for a while. But big publishers have been uniformly resistant to lower- and flexible-pricing models on the theory it would cost them sales. Time to look again, oh agency-price-raising-lovers.
About the time of Scalzi's post, Cory Doctorow tagged an open letter to e-book publishers on the current marketplace mess. The post, from Joanna Cabot of TeleRead, pleads with e-book retailers to treat their customers "...like a real person, and given the trust to use my purchased content sensibly, and with some allowance for real life."
The issue at its heart, is the DRM-encumbered misbehavior of e-book retailers such as Amazon and behind that the paranoia of e-book publishers. As Ms Cabot says, publishers "need to get over this idea of the ‘lost sale.’" If you listen to e-book publishers you'd think that all their customers were thieves just waiting for the opportunity to steal e-books. (I'm reminded here of Amanda Palmer's comment on how music execs view fans.) What Scalzi's numbers show is that Cabot is on the right track - given a chance to set a slider to zero and get e-books for free, people instead chose to pay something for the prospect of value. DRM-free value, I should repeat.
Where I disagree with Cabot is in the conclusion that if e-book publishers don't get a clue then readers will take their dollars elsewhere. When agency pricing was introduced and prices jumped 30% overnight there was not a commensurate fall in e-book buying. Sure, people bitched, but they still paid up. That's why I think that experiments like Scalzi's are so relevant - we need data to show that there's a bigger marketplace waiting to be captured and that it's in the publishers' interests to go after it. A good first step would be following Macmillan into the DRM-free lands, but that's only a first step.
It's generally hard these days to be a Safe Harbor defender. The key provision of the DMCA that permits high-volume sites to operate more or less freely - without pre-approval - requires that they also be willing to respond to take-down notices. And this is where the trouble begins: takedown notices get seriously abused; people file takedown notices for material they don't even own the rights to. The DMCA provides no sanction or penalties that might curtail this abuse; someone can spam DMCA notices like they would spam Viagra ads and nobody is likely to stop them.
The facts appear simple: some years ago, a blogger at Edublogs published copyrighted content. According to WPMU.org, another site hosted by ServerBeach, the offending material consisted of 279 words and was published in a 2007 blog entry.
Pearson, the educational technology company, owns rights to that material and sent a DMCA notice earlier this month to have it taken down. The notice passed through to Edublogs administrators who, as the BBC noted, used a simple Wordpress feature to make sure the entry containing the disputed material was only visible internally. This, however, did not satisfy ServerBeach, which took upon itself the role of "three strikes arbiter" and less than a day later shut down 1.45 million edublogs. That's all million-and-a-half blogs, all entries, blacked out.
Think you might be overreacting just a WEE bit there, ServerBeach? The hosting company claims it had no choice but to black out the entire site since it couldn't selectively block a single blog or page. Now, aside from being complete technical nonsense, it's also legal nonsense. Technically speaking, any ISP can selectively block traffic to or from any URL it is the host for. It may not be a trivial switch to throw, but the capability exists; claiming it doesn't exist is just stupid. And really, it's not ServerBeach's job to be a copyright cop. That's the whole point of the DMCA - ISPs get Safe Harbor by acting as neutral third parties. The copyright dispute exists between Pearson and whoever is determined to be responsible for the publication of the material, which might be the article's author, the blog owner, or Edublogs, in some combination. If the owner (Pearson) wasn't satisfied with the action taken to remove the material from public view, it should say so.
The story got a round of attention in both the tech and mainstream press, but to my understanding ServerBeach continues to defend its position and actions. Which, if I was Edublogs, would be prima facie evidence that a new ISP is needed, and pronto.
(Thanks to Copyfight reader Ross Hudgens of WPMU.org for bringing this story promptly to my attention; it's been languishing in my queue for almost two weeks now.)
Earlier this week I was invited to listen in on the inaugural press conference for a new lobbying organization calling itself the Owners' Rights Initiative.
The group, composed primarily of resellers (e.g. overstock.com), retailers (e.g. Powell's Books), and lenders (e.g. American Library Association), has formed in response to the threat to their (and our) livelihoods posed by the growing restrictions on First Sale doctrine. Notably, the group is trying to draw attention to the Kirtsaeng case that is about to be argued before the Supreme Court. Members of the coalition (such as the ALA) have filed amici briefs in the case
However, the group believes that no matter which way SCOTUS rules in this case, the action is next going to move to Congress, as the losing side will want to get legislation turning things back in their favor. Thus the group is going to focus on "advocacy" which I hear as "lobbying Congress".
The press conference featured half a dozen spokespeople for major members of the initiative, each giving a short statement of support and then taking questions from the call-in audience, most of whom appeared to be members of the press (and people like me, who fake it well). Generally the poitns made were things that Copyfight readers will be familiar with: Kirtsaeng is a case that could significantly curtail First Sale rights for people in the US by taking those rights away from products manufactured overseas. Aside from being an invitation to every manufacturer to shift their production outside the US, this would be a tremendous burden on reselling and lending institutions such as eBay, Overstock, and libraries of all sizes. In my talk to the New England Library Association I spent a bit of time trying to educate those mostly smaller-scale librarians about the dangers of this case. I found it interesting to note that the Seattle library system estimates that over 50% of its collection of printed materials (including English- and foreign-language volumes) was printed abroad. That's probably not an unrealistic yardstick, so just try to imagine that half your local library's lendable materials vanish off the shelves overnight. Yeah, that's a big problem.
ORI also seems to be focused a bit much (too much, in my view) on physical materials. The gentleman from Overstock noted with alarm that Kirtsaeng would lead to manufacturers segmenting their products by region or country and that this would mean you couldn't buy certain non-US goods in the US. Hunh, I thought to myself, isn't that what region encoding already does for DVDs? What, I wanted to know, was the big deal about that? Unfortunately, I think I mis-phrased the question to him as he kind of flubbed the answer.
I was also slightly disappointed by repeated references in the panel to "clever lawyering" as being responsible for the current situation. I've read the Second Circuit's decision and it seems a reasonable application of the law as written. If you don't like the law as written, blame Congress not the lawyers. Congress, whom the ORI hopes will fix this mess, is also full of clever lawyers. So less blame and more comprehension next time, please.
I should also note that ORI isn't alone in taking this approach. I've been getting pings from YouveBeenOwned (whose site appears to be slashdotted as I write this). This offshoot of the liberal Internet activism group Demand Progress went live in June of this year with a campaign against Kirstaeng and other things like TPP - the Trans-Pacific Partnership - that also threaten consumer rights in the US. If they can ever keep their Web site going they appear to be planning a public demonstration in DC on Monday, the day before SCOTUS hears arguments in Kirtsaeng.
In CLS Bank v. Alice Corp the Court will have to decide the relationship between the implementation of a process in a computer (program) and the abstractness of that process. In Ultramercial v. Hulu the issue again is whether taking a process that is abstract and putting it into a computer program somehow makes it non-abstract.
In both cases the EFF is arguing that encoding an abstract process into a computer program doesn't automatically make it non-abstract. This sounds good on the face of it, but it has two major problems - neither of which is really the EFF's fault. Problem one is the question of what is "abstract." The common-sense notion of abstract is a fine one, but in order to rule on a matter of law what's needed is either a definition in the law (missing) or a definition in a precedential court case (missing and/or confused). In order for the Federal Circuit to be able to make reasonable sense of these cases, we're going to need a workable, legally binding agreement as to what "abstract" means in the sense of patents on processes.
The second problem is one I referred to when I criticized the EFF's patent-reform efforts this past summer: focusing on software is misguided. I continue to believe that a fundamental principle underlying all of computer science is that anything that can be done in a program (software) can be done in a machine (hardware). Therefore, the critique of these cases cannot be simply that "turning them into a program does not make them non-abstract." You must logically also say that "turning them into a machine does not make them non-abstract."
And if you say that creating a machine that follows a process is not patentable then you have a serious problem that loops back around to our first point: how is this not making something non-abstract? Isn't a machine the Platonic ideal of a non-abstract thing? And how are we to differentiate one set of steps (process) taken by a machine from another set of steps taken by a different machine in such a way that we could say one machine was performing an abstract idea and one was not?
It's this sort of reasoning that leads people like Greg Aharonian (of PATNEWS) to argue that the entire notion of abstract is undefinable - he would say "nonsense" - and thus should be removed from the laws entirely. Unfortunately, the CAFC can't rewrite the law and Congress is extremely unlikely to do so, which means we may be stuck trying to untangle this knot for some time to come. Paging Alexander the Great!
I've been going on about e-book evils a good bit lately, but they do have undeniable appeal. As someone remarked to me privately, you can torrent down today more e-books than you could read in the remainder of your lifetime, no matter how old you are, and carry them around on a piece of hardware smaller than your thumb. Try doing that with physical books. Touche'.
Joel Johnson, it seems, would like at least for vendors of goods like e-books (that you don't actually own) to be required to tell you that you're not actually "buying" the thing when you click that button that says "buy." That seems a thin solace for the mess we're currently in, but at least one can hope that giving it some more attention will lead to more ideas. Maybe, as Gizmodo suggests in the image it put with Johnson's story, every iPad and Kindle should come with a big "OPP" label.
I wanted to take a separate blog entry to talk about HathiTrust. This is related to the previous entry about Google Books, in that the actual case in question was not a suit against Google itself, but was instead the case known as Authors Guild v. HathiTrust.
HathiTrust is the online resource formed by several libraries to hold the digital editions of books created from Google's scanning. HathiTrust uses these scanned book copies in several ways, including allowing searches against them and providing the electronic sources to vision-impaired users who can't access the printed copies. HathiTrust does not pay anyone for rights to do this and the question that Judge Baer ruled on was really the question of whether or not what HathiTrust is doing is fair use. Of course, this has significant implications for Google, which also makes scanned digital text copies searchable and readable, but Google was not formally a defendant in this case.
The case (PDF link) is a little complicated because the Court had to deal with other matters such as whether a state university enjoyed 11th Amendment immunity and what scope of possible copyright violations could be the subject of the suit. GSU has tried to self-police via a "Fair Use" policy that requires professors who want to make electronic elements available to justify their use of the copyrighted material on fair use grounds. The court generally upheld that approach, though it did put limits on what percentage of a book could be offered fairly by the library. In addition, the judge appears to have given the publishers an "out" in that if they were themselves to offer a reasonably priced excerpting service online that might preempt what libraries are now doing. However, in the absence of such things (or a reversal on appeal) this one is marked as a win for libraries that want to do a limited form of e-lending in support of research and class materials.
The third case that Kolowich notes as related came last year. In Association for Information Media and Equipment v University of California (PDF link) a U.S. District Court Judge appeared to buy UC's argument that a library streaming video off a secure server to authorized users, not the general public, was fair-use equivalent to showing that same video in a classroom. Since UC had an agreement that permitted showing the DVDs in an educational context, the judge reasoned that it didn't matter whether the students were sitting in the same physical classroom or in distributed virtual classrooms - the use of the stream was still part of the educational agreement and thus permitted.
As Kolowich notes, the suit was actually dismissed on technical grounds and so there isn't a standing ruling on the fair use issues, and there are certainly many more fair use practices that HathiTrust are going to have to navigate. But still, it's looking like a winning year for the Trust and other library/educational users.
Of course, that may change with Kirtsaeng about which more tomorrow.
This suit has been going on forEVER (at least seven years) and I'm at least technically party to a possible settlement as an author so I haven't had much to say about it, but this month there have been two major developments that are worth tracking. Plus I'm hopeful my new librarian readers are paying attention because this one matters to you guys, too.
To review: Google announced in 2004 a major initiative to scan a lot of books. There was a considerable debate about which ones it could scan - things out of copyright are obviously fair game but that's a vanishingly small sample of the literature. Most controversial were plans to scan so-called "orphan" works: out-of-print items still under copyright but whose copyright owners could not be located. Also controversial were Google's plans to be the exclusive repository of the scanned material, in effect building a digital wall around what might be thought of as public-domain material.
Major organizations objected, publishers objected, attorneys general had significant questions, and as usual it all dragged out in court. There have been some attempts to engineer a comprehensive settlement, none of which have held on. The most recent one was last year, and that got thrown out as vastly unfair and likely to give Google a ridiculous monopoly and would have instituted whole new powers for Google, such as the ability to sell copies of these scanned books.
Fast forward to this month, when Google managed to split its enemies, or close one front in the war, depending on how you look at it. They settled with the big five publishing houses. Since this part of the suit isn't public - it's corporations agreeing on things - the precise terms aren't required to be shown publicly. Most notably as a private agreement it lets Google and the publishers get around the requirement for a judge's approval and avoid getting torpedoed again for selling things they don't have rights to sell... oh, wait, was that my out-loud voice?
Some details have appeared in news stories, and the Association of American Publishers put out a press release: Google agrees that publishers may require that their books and journals be removed from the archive. Publishers who do leave their materials in the archive get a digital copy for their own use (avoiding the costs of digitization themselves) and can use that copy for whatever they want, including presumably selling it. Likewise, Google gets rights to sell the material in its "Play" store, giving publishers some of that revenue, and is allowed to make 20% of the digital edition readable on-line.
Not mentioned is what efforts (if any) will be made to determine that either Google or the publisher has digital sale rights to these publications. Recent decades' contracts have usually assigned digital edition rights to publishers, but that leaves a great deal of material from the last century that is both under copyright and for which no digital reproduction rights were ever negotiated. Just because something is out of print doesn't mean it's out of copyright, a fact that both Google and the publishers seem all too happy to gloss over.
The second win for Google this month came against its remaining opponent, the Author's Guild, which has been pushing a class-action case on behalf of author-members as well as other authors such as those who wrote those out-of-print-but-not-out-of-copyright books. In a ruling earlier this month, Google's practice of scanning these out-of-print books for inclusion in its search archive was found to be a form of fair use. In specific, libraries that had given Google copies of books to be scanned were held not to be in violation of the copyrights on those books.
Interestingly, the decision by Judge Harold Baer is based on a full fair-use analysis. Baer reasoned that inclusion of the works in a searchable archive was sufficiently "transformative" and that inclusion of the resulting digital copies in the Hathitrust Digital Library did not impair the market for digital editions of the books produced by the publishers. (I'll have more to say about Hathitrust in the next blog entry.)
This is Happening Right Now: Amazon DRM-nukes a Customer
This link is going viral in the spaces I inhabit right now. Short form: an innocent woman has her account closed and her (paid-for) collection of Kindle e-books nuked with no warning and no explanation by Amazon UK. This is, as the blurb says, DRM gone insane. I did tell you that e-books suck, right? As I write, the link has appeared on popular blogs including our friends at Boingboing and people are starting to post copies of the WTF letters they've written to Amazon. I anticipate we'll see an apology and retraction by tomorrow AM, which will be great for the individual woman but still leave all the rest of you e-book readers hanging by the same thread.
Whether you read the book or the V.C. posts, I also recommend you read McArdle's response in The Daily Beast. In her column she takes issue with the core argument that experiences with low-IP industries are comparable to, or can serve as any guide for, high-IP industries. Her key point is that in the low-IP industries, copies are generally inferior in quality whereas in digital industries copies are perfect. Also, digital copies are far easier to mass-produce than copies of physical objects like clothes.
Sadly, while I agree with her major theses, I think she then goes off the deep end. For example, she believes that a low-IP model would "impl[y] the end of drug discovery." That's just grossly overstated, and ignores several things. One is the option of using much-cheaper small-scale discovery steps, which I discussed back in 2011. It's possible that a low-IP model won't ensure drug-company profits on a multi-billion-dollar pipeline that produces one blockbuster drug every few years, but why should that business model be sacred?
Second, it ignores the "Advil effect." Briefly put, the effect is this: Advil was only patent-protected against generics for two years, and that was over 20 years ago. Despite that, brand-name Advil still controls over 50% of the market for ibuprofen. That is at least prima facie evidence that lifelong patent exclusivity isn't required for a drug to be successful across decades.
Her discussion of the music business is even worse, being at best anecdotal and in places outright insulting. For example, she bemoans the (implied if IP protection is weakened) death of blockbuster-producing major label acts. Excuse me if I don't cry a river over the removal of corporate manufactured acts from the airwaves, hopefully clearing the way for some of the hundreds of thousands of hard-working non-major-label musicians to get airplay. McArdle's phrase "low-productivity artisinal profit model" almost made me snarf. Imagine the reaction of, say, Amanda Palmer to being told she is "low-productivity".
Again, McArdle enshrines the current business models as sacrosanct. Palmer may sell 1/10th the number of units of someone who gets pushed to the front racks at Wal-Mart, but so what? If those front racks disappeared entirely would we be any worse off? There's no quality difference I can discern in the disc I got from Ms. Palmer through Kickstarter compared to the disc produced by a major-label factory. And if I'm getting a quality product and am a satisfied customer/fan, isn't that the point? I don't require a Big Corporate Seal of Imprimatur in order to hear good music and I see no reason why intellectual property regimes should privilege BCSI over AFP who, it should be noted, offered the entire album as a digital download with no DRM for $1.
By the end McArdle softens her critique somewhat. She admits that her points are "not necessarily arguments against looser IP". Well, yeah. That's sort of a shame, as I think there are some core things to be said about reproduction fidelity and relative cost in response to Raustiala and Sprigman. Maybe once I've dug myself out of this backlog I will return to the topic, if I have anything new to say.
First, the good folk at TechCrunch pointed me to their (glowing) review of the new Boxee TV. This product, as the story illustrates, is aimed squarely at the new generation of cord-cuttters. People who want their television a la carte, in the cloud, and available on any device. Record multiple channels at one time? Sure. Unlimited storage? Sure. Have the latest from streaming providers like Netflix? Sure.
If the damned thing didn't cost so much I'd order one for myself today. The per-month price tag is hefty and would significantly cut into the savings I'm enjoying from cancelling my cable TV. But prices always come down and I can wait.
What's most interesting to me, looking at this from a business perspective. is that I don't see Boxee offering anything that the major cable providers could not have offered. The only reason they can't (didn't) is that they are still locked into that tie-down, cord-from-the-wall, one-device (ours) etc model. It's all about control for them.
Which brings me to the second item: a notice that the FCC is finally going to allow cable companies to scramble basic channels, although they're going to have to bend over backward to accommodate for a couple years. These basic channels are the ones that are usually broadcast over the air - free, you may recall - that cable companies first howled about being forced to carry, and then tried desperately to control. Scrambling the signals is just one more sign that the cable companies remain mired in the 1990s, clawing for every single bit of control they can get. Heaven forbid someone should see television channels for free! I have no words.
Chris Welch's story is deliciously ironic, opening with the sentence
The days of plugging a TV into the wall and getting cable are coming to an end.
You got that right, Chris, and sooner than people think.
Let's start with the facts: the patent (#8,286,236 in case you want to look it up) is for a copy-blocking system (DRM) for (some) files used by (some) 3D printers. It will no more "prevent 3-D printer piracy" (by which they mean the use of a 3D printer to create an object that might have IP protections) than any other DRM system has prevented copying. Which is to say, not at all.
The article is full of misstatements such as "you can’t generally copyright objects (exceptions include sculptures and architecture). That’s because copyright applies to creative works but not to 'useful articles.'" Like, say, books? Useful objects, those books. Also, copyrighted. So the article misunderstands what DRM does, misunderstands basic intellectual property concepts, and generally is sub-par.
That aside, what of the patent? The patent works like every other DRM system - you load a file into a DRM-encumbered machine, which checks that "an authorization code" (in the words of the patent) is available allowing you to load this file on this machine to produce some object. That's not a horribly stupid way of stopping people stealing your shape files and making unauthorized use of them - again, just like every other DRM system in existence. But it has jack-all nothing to do with the reproduction of IP-protected objects.
I could just run that file on a machine that doesn't bother to check for the code, or that has a simple resistor soldered in place to ensure that it thinks it has the code for every file. Or I could just take a copy of the file with the DRM stripped out and use that. Or I could make my own file that produces the object in question. Or, or or. I'm sure anyone with more than five minutes to think about it could vastly expand that list of ways this patent is irrelevant to any real problem.
The patent itself has significant problems. Greg Aharonian (of PATNEWS) sent out a mailing earlier this week in which he cited a major government publication that anticipates this patent by five years, as well as several easily-found patents that involve uncited prior art. Just search the US Patent database for patents containing the words "print" (or "printing") and "rights management." I'm sure you'll find the same patents Greg found. Technically, those patents talk about 2D printers, but the problems and solutions they discuss are nearly concept-for-concept identical with this one.
There remain significant problems with how to handle intellectual property protections in a world where anyone can duplicate objects more or less the way we can photocopy book pages. But this patent and article aren't contributing to the discussion.
A Copyfight reader responded to yesterday's story about Bowman v Monsanto to say that he believes SCOTUS will reverse in this case. The reason is that unlike Circuit courts, which can disagree with each other on a matter that SCOTUS must then settle, the Court of Appeals for the Federal Circuit (CAFC) is the binding decision body for patent matters. Its decisions have precedential weight; therefore, if SCOTUS simply wanted to affirm that CAFC was right in this case there was no reason to grant cert. Since they took the case, ipso facto, one is led to believe they intend to reverse. That may still not happen since only 4 Justices' votes are needed to grant cert and 5 votes are needed for a majority, but it's the way this reader is betting.
In another case that is potentially hugely important but flying mostly under everyone's radar, SCOTUS has agreed to hear one 74-year-old farmer's challenge to the biggest of the big in agribiz. Like the other stealth IP case this term (Kirtsaeng) part of the question at issue here is what constitutes "exhaustion", though in this case it's a patent that is being fought over. As usual let's start at the beginning.
Monsanto makes (among many other things) a patent-protected line of soybean seeds generally known by the phrase "Roundup Ready". These seeds are genetically modified to be resistant to Monsanto's popular Roundup herbicide, allowing farmers to plant and spray without fear that they'll kill off their own crops as they exterminate weeds. This combination has been very popular - so much so that over 90% of the commercially planted soybean crop (in the US) is Roundup Ready. But plants are not like other products in that they're self-replicating. A patented seed produces a plant that in turn produces... well, seeds, and the modification Monsanto made is passed down through generations so the seeds are also resistant. Allowing the re-use of those seeds would give farmers the ability to benefit repeatedly from Monsanto's patented innovation without paying (again) for it.
Monsanto therefore requires farmers who want to plant its seeds to sign an agreement saying they won't re-plant the seeds but instead will buy new seeds from Monsanto each planting. Bowman, the farmer in this case, realized that because Roundup Ready-derived seeds were so common he could just buy some local generic soybean seeds and be pretty sure the majority of them would contain the herbicide-resistant mutation. Of course, this is also much cheaper. So he did that, and Monsanto accused him of violating its patent; Bowman counter-argued that his use of the generic seeds was fair because of patenting's exhaustion doctrine.
The exhaustion doctrine says (more or less) that you can only sell a patented product once. As Timothy Lee notes in the linked story above, SCOTUS has already said that exhaustion applies in the case where you use a patented product inside something you sell - in the case of a patented chip sold on its own and then re-sold as part of an OEM computer. Bowman reasoned that since he had not violated his license - he replanted generic seeds, not the ones grown by the plants he signed for - then exhaustion would apply and the generic soybean seeds would be OK.
As Bloomberg notes, this is a potential bombshell for the genetic-seed industry. If they are forced to play by the rules that chipmakers and others have to play by then they'll have to change their entire business models. Given the degree to which Monsanto dominates the business you can see why they'd be reluctant to do that. Conversely, it seems contrary to ordinary sense to say that the simple act of planting a seed may be a patent violation. Dan Charles noted for NPR earlier this week that the trial judge was troubled by the basic issue: is the reach of gene patenting so long that a single company should be allowed to encumber an entire generic market?
I'm frankly baffled by why SCOTUS agreed to hear this case rather than letting the CAFC decision stand. And given the way that the Court's recent Mayo decision sowed (sorry, I couldn't resist that one either) confusion rather than giving clarity I'm afraid that a decision here will similarly muddy the waters further.
Part of Posner's theoretical framework is a critique, often based on economics, of patent and copyright protection. This is the substance of his September 30th column - a cost-benefit test for patent protection. Sadly he picks pharmaceuticals as his poster child, which shows off the bat just how bare a simple means test is for judging patent suitability, As I've argued in the past, the drugs marketplace involves special considerations that weigh against a needs-blind market analysis.
Posner's main point is that the software industry is presently overprotected by patents because software is cheap to make. This seems a little odd on the face of it - presumably if I run a large software development project that goes for many years and has huge cost overruns (i.e. any government software procurement) then that is more worthy of patent protection than a mobile app that's written over the course of a few months by a talented three-person team. This is the sort of argument economists make which tend to leave the rest of us scratching our heads in puzzlement. I understand that it accords with a theory that says "things that are more expensive to make need more protection" but when the theory leads to (dare I use this word) patently absurd results isn't it time to re-examine the theory?
Posner also that software patenting suffers from "a shortage of patent examiners with the requisite technical skills" - true, but also probably true for many other fields of cutting-edge technical innovation. Are there really more and better-skilled microbiology examiners? Or carbon-fiber materials processing examiners? I have no data, but tend to doubt it. There are indeed problems with software patenting, as I've written about before but these ain't it.
His discussion of copyright protection seems better. He notes that fair use is getting short shrift (but see my upcoming piece) and that copyright terms are too long. Most of all, he notes that copyright violation action requires showing of some willful infringement whereas you can infringe a patent you've never heard of, simply by going about your normal business. That alone is a significant impediment to software business and could stand some public discussion. Creation of only token penalties for accidental infringement is right up there with mandatory licensing on my "how to improve patenting" wish-list.
Sadly, Posner doesn't take any specific stand on the reforms he thinks are needed, just calling for Congress and the courts to devote "serious attention" to the problem. Right after they get done devoting "serious attention" to the budget deficit, one presumes. And prays.
Sometimes the lede is just so perfect I can't improve on it. Therefore: The Pirate Bay has made an important change to its infrastructure. The world’s most famous BitTorrent site has switched its entire operation to the cloud. From now on The Pirate Bay will serve its users from several cloud hosting providers scattered around the world. The move will cut costs, ensure better uptime, and make the site virtually invulnerable to police raids — all while keeping user data secure. (h/t +Rob Malda for the original pointer)
In the past we've talked about the reach of copyright; for example, to facial tattoos. We haven't (largely due to my own ignorance) talked much about how far trademarks can go.
In the general public there's only a vague awareness of trademarks, usually because of famous cases. Xerox-the-company saw their tradmarked name become used as a generic term for photocopying, for example. And lately it's become fashionable to call all portable digital music players "iPods", which I'm sure Apple's trademark people don't care for.
The column's author, Michael Dorf, seems to be taking both sides in the case. On the one hand, he agrees that the 2nd correctly applied the Lanham act in granting the trademark; on the other, he expresses concern that this is part of a larger trend toward overbroad IP protectionism. Generally I agree with that sentiment but in this case I think Dorf is overreaching.
His point is that he agrees with the District court, which originally ruled that trademark was not appropriate because trademarks don't protect functional element. The reasoning that in fashion, "...color is usually a vital element of the aesthetic appeal of a product, which is at the core of its function" seems excessively tortured to me. The logical consequent of that would seem to be that if your function is aesthetics (which is to say, fashion, show, entertainment, etc) then you lose all ability to trademark your distinctive visual elements. And that's going too far for me.
Yeah, that had my eyebrows going up, too. However, Reid isn't writing this stuff from an outsider perspective. In past lives he's been an entrepreneur and had a hand in the founding of listen.com which eventually led to Rhapsody - an online music service that is still operating (albeit in different form) today. Reid has also gotten some notice for his TED talk titled "The $8 Billion iPod" In this talk Reid lambastes the Cartel for its massively out of proportion sense of its own self-worth.
If anyone has read the book (or listened to the audio, read by John Hodgman, which is getting good reviews) please drop a comment and tell us what you thought of it.
Raustiala and Sprigman are co-authors of a new book, The Knockoff Economy: How Imitation Sparks Innovation. Here's the teaser blurb:
Conventional wisdom holds that copying kills creativity, and that laws that protect against copies are essential to innovation–and economic success. But are copyrights and patents always necessary? In The Knockoff Economy, Kal Raustiala and Christopher Sprigman provocatively argue that creativity can not only survive in the face of copying, but can thrive.
Needless to say that's right up our alley. I'm not sure how much of this I'll be able to report on, so get it from the source if you can.
I've been trying to write this story for a while and stuff keeps popping up. I'm going to focus on three related posts, all of which illuminate different corners of the current (problematic) business model for online streaming music. The core questions are: who gets paid for this and how sustainable is it.
Here "broken" means "can't ever possibly make money." The model advertises free-to-listen streams for US consumers (good for us) while the company has to pay server and bandwidth costs as well as those high US royalty rates (bad for them, and ultimately bad for people who like Spotify). Sandoval's story notes that Spotify is still a private company and thus not required to publish numbers, but it has agreed that the numbers posted by PrivCo are generally correct.
Spotify's strategy appears to be to absorb the losses (covered by venture financing) while it builds market share and audience size, then find a way to make money off that large audience. One way to do that is through subscription fees and you can see that the #2 comment on Sandoval's story (at least when I wrote this) is someone asking Spotify to raise subscription fees. In other words, there are real people out there who are really willing to open up their wallets and pay for a service they love. Shocking, innit?
Currently it appears that services are converging around a number like $10/month in fees, with a wide array of discounts and premium/freemium models being tested. I think, given the cacophony (you see what I did there?) of subscription models still being tested it's premature to write off Spotify or any other service just yet.
In order to survive, streaming services need not just to satisfy the Cartel with its royalty structures, but they also need to keep artists happy. For some time there has been muttering that streaming services aren't returning (enough) money to the artists and some artists have chosen to keep their latest hits off the streaming services. Two articles address this point head on: First, AP reports that the RDIO service will be paying artists $10 per new subscriber. Rdio is definitely playing catch-up in this business against the bigger names like Spotify and is hoping that artists will sign on to the program, create pages on the Rdio service that fans will find, and then lead the fans through the sign-up, for which artists will get direct revenue. Adding subscribers is a significant cost for these services and some kinds of affiliate-style programs make sense.
However, this doesn't address the deeper question of how stream revenue flows to artists. Pandora's take on this question hit their blog earlier this week. Stacking up real (if lesser-known) names, and actual revenue numbers, Pandora founder Tim Westergren shows how much money is flowing from the streaming service to artists.
In addition, he's not shy about pointing the finger directly at the RIAA and blaming them for artists not getting more money. As we've seen, the RIAA isn't shy about setting high fees for streaming music, and isn't shy about keeping those fees for itself. Westergren's points include the claim (sadly using awful marketing studies to back himself up) that streaming services have contributed to the decline of music piracy while the supposed anti-piracy RIAA continues to hoard the revenue that's being generated.
There's a lot more to say about this business and its models for survival, but this is a good set of places to start.
Our friends at the Future of Music Coalition (FOMC) sent out a reminder that their annual Summit is happening next month (November 13th). This will be their 11th annual conference and this year it's free to attend. In addition it'll be streamed live online for free.
In this case the villain is Microsoft, but you can find hundreds of similar instancse going back to the earliest days of the DMCA, and the story is always the same: $player sends thousands of takedown notices for material in which it claims copyright. The recipient takes down the material and may or may not notify $targets that their stuff is no longer visible. If $target is a big entity with lawyers and money it can usually get its stuff back online, quickly. If $target is you or me, we are (as my kids like to say) ood-scray.
In this case Microsoft clearly went bananas, targeting its own search engine Bing along with other things. But the specifics aren't the point here - the point is that the automated spewing of these notices is now routine and widespread practices and there are no requirements that $player emit only reasonable notices, or are there any penalties for failing to do so. I still think that the DMCA Safe Harbor idea is a sound one, but it clearly needs additional regulatory strength to curb abuses and stop companies controlling online speech.
Free speech (in the US, First Amendment) claims are somewhat tangential to Copyfight interests, but it's still important to understand how courts interpret things. First of all, you don't have First Amendment rights with regard to private interests, such as the corporations that make up the Copyright Cartel. Against a government you may, and lots of people assert that the government can't restrict speech. Entities that are publicly funded, such as libraries or public parks, usually have to follow the same restrictions as governments themselves.
In fact, courts have held that governments may restrict speech, but only under certain conditions. Among the most important of those are that the restriction must be viewpoint-neutral; that is, they can't restrict some speech and allow other speech based on the point of view expressed, though there are exceptions even here, for things like sedition and credible threats. And a government entity that wishes to restrict speech must tailor its restrictions as narrowly as possible, in order to serve (what the court recognizes as) legitimate interests such as maintaining public safety.
Cory Doctorow's announcement that he is direct-selling the (professionally done) audiobook version of his recent Pirate Cinema reminds us that one of the big problems with mainstream online retail outlets (*cough*Amazon*cough*iTunes*cough*Audible*cough*) is that they all refuse to carry DRM-free titles. Even though the publisher (in this case Random House Audio) is perfectly willing to make the high-quality title and wants it sold, the retailers are blocking it. Get a freaking clue, already, guys.
Unless you're superhuman or very young and medical science advances faster than I think it will, at some point in your life you're going to lose some or all of your sight. I'm 50 and for the last decade I've been noticing significant degradation in my vision. I do that "old guy" thing of pushing my glasses up and holding small print really close to my nose so I can make it out. The fine control muscles in and around my eyes have lost a lot of their strength and flexibility with age.
The good news is that there are an ever-increasing number of devices and software to help with this; the bad news is that DRM screws up almost all of them. This is detailed in heartbreaking depth by Rupert Goodwins on ZDNet in the third part of his essay series. (The essay links you back to parts 1 and 2.) Goodwins particularly calls down a plague upon the house of Adobe but notes many others share blame. And he describes how he, like so many people who are generally law-abiding but want access to their paid-for content, is reduced to petty crime simply because he loves to read.
I will be speaking at two events in the near future.
October 15th I'll be part of the New England Library Association's annual conference, a three-day affair that will be in Sturbridge MA this year. I've been invited to talk on the topic of e-books and libraries and I've tentatively titled my spiel "Why E-Books Suck (unless your name is Amazon)".
Arisia will once again be MLK weekend in January (18-21) and there will be a couple of panels on intellectual property. Topics and panelists aren't final yet - I'll update once I know for sure. I know that a couple of my co-panelists from previous years are planning to return this year and we're hoping to have some discussions focused on IP and creative folk (e.g. authors and artists).
Enter now Ralph Oman, who was previously Register of Copyrights. Mr Oman has now filed an amicus brief in the Aero case, in which he argues that he is batshit insane. No, wait, that's what techdirt is saying; what Oman is saying is that all new technologies should have to go get Congressional approval in order to exist. Upsetting an existing business model is not allowed, unless Congress first says it's allowed. Or so Oman appears to be arguing:
Indisputably, Congress drafted the Copyright Act to prevent the creative efforts of authors from being usurped by new technologies. That core principle is at the heart of the Copyright Act. Congressional intent would be undercut by any decision that would sanction the use of technologies which could be used indirectly to undermine its goals.
I just... I don't even... what the ever-loving grace have you been smoking, mate? (h/t Boingboing for the original pointer)
In a direct blow to Amazon, Wal-Mart has announced that it will stop carrying all models of the Kindle e-book reader. Significantly, the chains (Wal-Mart and Sam's Club) are still going to carry iPads and Nooks, making clear that this is not a move about e-book readers so much as it is a move against Amazon and the inroads Amazon is making against retail marketers everywhere. To be honest, I wouldn't be surprised if they also dropped Nook though its impact on their bottom line is minuscule when compared to Amazon's.
Back in May I noted that Target was going to drop Kindles from its retail shelves; I'm just surprised that it took Wal-Mart this long to follow suit. It's pretty clear that any retailer that maintains a physical store presence is going to be forced to take some kind of stand with respect to Amazon. And I expect that the majority are going to line up against them. Amazon hasn't done anything to win friends in the retail space and has cut into pretty much every brick-and-mortar retailer's turf in some way or another.
E-books are particularly tricky here in that they're always going to be bought on-line; you just won't go to a store in order to buy an e-book in today's environment. (*) However, Amazon presents e-books as part of its buying ecosystem and many aspects of that system compete directly with Wal-Mart's merchandise lines. Thus e-books are a competitive hook that retailers need to be careful about.
(*) As a brief aside, if I was running a retail book business I would be trying to get people into my stores to buy e-books. Set up an author talk, get people to bring their readers, and get a code for a discounted e-book. Arrange with the publishers to get a few points back on any sale where someone enters one of the codes. Heck, I'd even sell them readers at the event, with a free card to my store's book-purchasing club/loyalty program. But I digress.
As Jones tells it, theft is rife among magicians. They copy each others' tricks and sometimes outright 'steal' a performance piece. In this case a magician performing as Gerard Bakardy appeared to have stolen - in the sense of copied and performed in an altered form - one of Teller's signature tricks. The signature trick was the subject of a 1983 copyright registration that Teller made, in an effort to protect not the trick itself, but the performance art wrapped around the trick. Teller willingly reveals that he has used at least three different methods to do the trick in dispute - but the method is not what the audience cares about. The audience cares about a performance, and Teller is asserting that his performance (of the trick) is a unique artistic creation, as worthy of legal protection as any other act of artistry.
According to Jones, Teller has in the past relied on professional courtesy when confronted with other magicians who have lifted his tricks, rather than legal protections. In this case, however, Bakardy was not just performing the trick, but offering to sell its secrets to anyone who would meet his price. Also, Bakardy was unwilling to extend professional courtesy. When Teller contacted him, the story goes that Bakardy asked for more money and favors than Teller was willing to pay.
Intellectual property protection for something like the performance of a trick is a difficult thing - to begin with most performers don't have the money to pursue a court case against someone who has lifted the trick and even if they do the case itself will be public which may end up revealing secrets the magician would rather didn't get into wide circulation. As a result legal protections such as Teller's copyright may not be worth the paper they're printed on. Nevertheless, Teller sued... and Bakardy vanished. No one has even been able to serve him with proper notice of the lawsuit, though Teller got permission to serve notice by email (which has gone unanswered).
Whether Teller's copyright protection will stand up in court is a mystery yet to be revealed.
To begin with, you should know that Phipps is himself a strong proponent of open source development (his column is called "Open Sources", for example) and a recent opponent of software patents in part because they interfere with open-source development. So when he says there might be something good in the legislation we already have around software patenting my eyebrows tend to go up.
According to Phipps, the working paper titled "Software Patents and the Return of Functional Claiming" from Lemley (SSRN link here) will propose that the problem with software patents is what lawyers tend to call "claim construction." That is, the problem is not with what's being patented (software) but with the things to which the patent is supposed to grant a monopoly. Badly constructed (overbroad) claims attempt to protect not the (software) machine, nor the steps (algorithm) it performs but the result of executing those steps on that machine - the goal.
Lemley's argument (and I haven't read the paper yet, so take this for what it's worth) is that the USPTO is not correctly applying the already existing Patent Act of 1952 and if in fact the Office would do that, then it would reject these patents with overbroad claims, or at least force patent applicants to redraw their claims more narrowly. That wouldn't immediately solve everything, not least of which are the ongoing problems with disgracefully shoddy lack of prior art inclusion in software patents and the pervasive confusion over sections 101 vs 103 of the law. But it would be a huge step forward.
One final caveat to keep in mind here: Lemley's thesis is in a "working paper". That means it hasn't yet been subjected to the kinds of critical review that more formal publication might require. I suspect we'll see people who believe that Lemley is misinterpreting the 1952 Act. Still, it's a blessing to have fresh ideas for improving the situation, particularly ideas that don't require radical reforms or rafts of new legislation.
Observant e-book buyers have mailed to let me know that some of the effects of the e-book price-fixing settlement are starting to be seen. When you buy e-books now in some online stores (notably Amazon) you can see text stating that the book's price is "set by the publisher" or "sold by $publishername." Other e-books, from companies that signed the settlement, are starting to come down in price as well. If you see something interesting in this space do drop me a note.
Over at Boingboing, Cory Doctorow has a long paean of admiration for David Byrne's new book "How Music Works." Like me, Doctorow is a fan of Byrne's thinking as much as his music. The review describes the book's breadth and depth and positively glows with admiration for the insights Byrne has accumulated over his career, with respect to such issues as how physical spaces and production formats can have gigantic impacts on the artistry that gets produced.
I confess that I had not planned to read this book soon, having added it to my holiday wishlist. Perhaps I'll have to revise that plan.
WIRED offers up an amusing Wargames-themed info-graphic mapping the current patent war between Apple and various proxies for Google (Motorola and Samsung primarily). Click on a country to get a pithy summary of what each player has going in the current situation, but realize that the main event has yet to start. And when it does we are all going to be sadder and sorrier.
To understand why this is A Big Deal, let me back up a couple steps. First, everyone agrees that piracy in gaming is a huge problem. Game publishers hate having their titles pirated - it's bad on all platforms but apparently worst on PCs. Pirated titles mean people just don't pay for games and people who didn't pay end up consuming resources such as server space and bandwidth that is supposed to be paid for by those game sales. Honest players also hate game pirates - who likes feeling like the other guy got away with something when you were an honest customer? In addition, online gaming can be hurt by people who pirate games because some who play by the rules end up competing with (and usually losing to) people who have pirated/cracked games and can use that to cheat.
Unfortunately, gaming companies - particularly big names such as Blizzard and Ubisoft - have responded to piracy threats by introducing more and more restrictions on what their customers can do, usually in the form of DRM. Big-publisher games today often feature what's called "always on" DRM, meaning that your game must constantly authenticate itself with the company's servers. It's not enough just to type in a CD key or other one-time validation anymore. And players hate this. Boy oh boy do they hate it. But even when they hate it, games with always-on DRM can still be big successes. Blizzard's recent Diablo 3 title has made millions even though it requires a constant live connection to a server even if the player is operating solo. No server, no game, even though you think you bought and own that copy of Diablo 3. Blizzard is no doubt crying all the way to the bank.
So when a big-name publisher - in this case Ubisoft - backs away from always-on DRM, it's huge news. And in the course of getting raked over the coals by RPS that's what Ubisoft appears to have done. The interview is full of phrases like "we listened to feedback" and attempts to cast the decision in the best possible light. At the same time, Ubisoft is refusing to release any of the numbers on which it based past decisions, including numbers on title piracy and the supposed anti-piracy effectiveness of always-on DRM.
To be fair, Ubisoft is far from the only company that won't give out numbers in this discussion. And they are not going as far as Macmillan did - Ubisoft games will still require traditional one-time activations and use activation-based DRM, which can limit the number of machines on which you can play a given game. But as RPS say, this is pretty much exactly what (honest) players have been asking for since the whole issue blew up: we don't mind buying the game and are willing to jump through a limited number of hoops to show we're honest. But don't make it overly onerous, because all that does is make honest players long for the easy 'out' that piracy offers.
If you've been with us a very long time, you'll remember this case from back in 2004. Lexmark made printers and ink cartridges and in order to stop people using 3rd-party replacement cartridges they jiggered up a UI that read information from a chip in the (their) ink cartridge. Static Control figured out what signals the printer wanted to get and made its own chipped cartridges that could be used. Lexmark sued, initially under a novel DMCA theory that tried to prevent SC or anyone else from reverse-engineering the printer-cartridge interface. They lost.
Professor Grimmelman shows how the root of these problems is a case commonly called Cablevision, after the company known by that name. In the decision, a specific way of giving customers copies of programs was ruled legal. Unfortunately, the method used to store and supply those copies is what computer geeks like to call "pessimal" - the worst possible way to do something. In this case "worst" means most expensive and least efficient use of resources when looked at from a server/storage/recording/transmission technical point of view. However, a company that is technologically pessimal but legal stays in business where ones that have used more efficient architectures or technical solutions have been found to be in violation of copyright law and precedent, which Grimmelman repeatedly refers to as "demonstrably insane".
In his closing section "The road not taken" Grimmelman makes a plea for us all to get along, and for courts to concern themselves less with legal arcana and more with the function and purpose of the law in the first place, including issues such as fair use that never even got into the Cablevision discussion. Maybe I'm just too jaded, but after two decades of the Copyright Wars I have no hope that sanity will suddenly descend on US copyright regimes.
To be clear, I want to talk about documentary films, often released by major studios. "Real" real life, not reality TV or other obviously scripted stuff. A documentary film that claims to portray events from the real world may soon carry a 'writer' credit, begging the question "who wrote reality?"
According to Tom Roston's piece for the NY Times last week, the idea of a documentary writer is being pushed by the Writer's Guild, a union for writers of film and television. The Guild's actions appear to be worrying some makers of documentaries, who are concerned that the appearance of a writer credit may cause viewers to be concerned about whether this is an actual documentary or the fake kind of 'reality' show that has become so popular in the past couple decades. When you're using a documentary to call attention to an important current, social, or historical issue that can matter a great deal.
On the other hand, life doesn't just manage itself for your camera's convenience. There are creative decisions made, editing done, and often voice-over or narration added. The writers of these latter have long received credit, even on documentaries. But even in the absence of such narration, the Guild wants there to be a writer credit on any film it registers and thus gives its protection/enforcement to. As Roston's piece notes, television documentaries have more often had writer credits. And then there's online, and who's going to get credit there...
I remain committed to the idea that businesses should be able to profit from what they do, including pharmaceutical companies. Bringing a new drug to market is still a multi-million (maybe billion) dollar endeavor - beyond the scope of most charities and even many governments. But we're not talking about hobby items here - medicines developed this way are potentially life-saving and, when full-priced, are often beyond the means of millions of patients who need them to live. This gap has to be bridged, somehow, and drug companies have successfully used IP monopolies (primarily patents) to shut down efforts to bridge it.
All of which brings us back to the central dilemma: companies will need patents (or similar legal mechanisms) to protect their innovations against unauthorized copying, but at the same time they'll have to figure out what to charge. And it looks like Congress may be getting in on the act early this year, as Congresscritters have already written to one manufacturer asking that the medicine be priced "sustainably". Maybe that's the right solution - let companies know that legislators are watching over their shoulders and encourage them to consider how they can recoup costs and make profits over a longer time period, selling more cheaply.
(Full disclosure: Ms. Bosky is a long-time personal friend and like other journalist/bloggers gets paid to write columns for places like About. I don't think she makes money per click but I'm sure her employers are happy when her writings prove popular.)
Julie Hilden has a nice primer up on Justia's IP Law blog on how fair use cases can be reasoned. Using the case of Monge v Maya, in which a panel of the 9th Circuit just overturned a previous decision, Hilden traces the classic four-factor test that is intended to guide courts in determining if a use of copyrighted works is fair. In this case - concerning stolen wedding photos - Hilden walks through how two of the three judges found the factors to weigh against Maya. The fact that the decision was not unanimous, though, shows that these factors are broad and general enough to be subject to different interpretations and weighting and I would expect Maya to ask for an en banc re-hearing.
This is interesting, as previously the lower court had found there was no protection due to the drawings not having the use commonly associated with such drawings. Architectural plans are both expressive and functional - they're intended to allow the construction of buildings, for example, and provide enough detailed information for such functional uses. But in this case the drawings didn't contain enough detail to be used that way. So the question at hand was whether the expressive/artist elements of the drawings were sufficient to merit protection.
This has obvious implications beyond architecture, as many professions produce documents that are intended for functional uses and may also qualify for copyright protection as expressive works. The software industry, for example, produces great quantities of such documents.
David Byrne has been a force in music and on musicians since Talking Heads first broke into the national spotlight decades ago. His collaborations with Eno are often cited as some of the most influential of their time, and he's still rocking out, appearing recently on-stage with Amanda Palmer.
When sourcing Copyfight stories I'm almost always using US or Commonwealth sources (particularly Canadian and UK). That's largely due to my own language deficiencies and the result is a particular set of views on topics.
In this 25-minute segment, Fault Lines' Sebastian Walker focuses on the movie industry, home entertainment, and the copying of movies in particular. The content is not likely to be novel to most readers of this blog and if you're interested in diving more into this let me re-recommend Decherney's book on the topic.
Walker goes into some depth on US legislation aimed at controlling the Internet, particularly SOPA/PIPA and the Web site blackout that appears to have been a key factor in turning back those particular bills. Clay Shirky gives good soundbite, as usual. And then, maybe because it's a source that isn't beholden to US-centric interests, Walker goes on to point out the great hypocrisies of Obama and Hilary Clinton, who utter wonderful worlds about Internet freedom when it's an Arab dictatorship shutting its own people down, but then go right back to supporting restrictive legislation and secret copyright-distorting treaties like ACTA at home.
The emperor has some pretty translucent skivvies on, and US media aren't saying anything about it. I like living in the future, though, where we don't have to depend solely on these media.
Ferguson, best known for his series "Everything is a Remix" and his work on copyright policy in the US, puts the basic idea in front of the TED audience. Unfortunately, although his examples are interesting, the talk is a bit disjointed as he jumps from the notion that creativity is external, not internal, to the ongoing smartphone patent wars, with a very fleeting touch on the notion that the current intellectual "property" regime is hampering creativity. I suppose that's the challenge of trying to cover something this complex in under 10 minutes.
According to Dan Rowinski in the latest ReadWriteWeb/Mobile posting, the reason why Apple has embarked on a world-wide patent war is because they're losing the marketing war, badly. Specifically, it appears that the Apple share of the smartphone market has dropped to just under 17% while Android devices (across all makers) accounts for just over 68%. Samsung, the latest Apple target, accounts for 44% of Android devices. If you can't beat 'em, sue 'em - where have we heard this before?
A new update notice from Google's "Inside Search." is getting notice in the copyfight community. The notice describes a new change in Google's ranking algorithms that will cause pages with "valid copyright removal notices" to appear lower in the rankings. It's an interesting step, and given that it's based on validated notices it's certainly better than basing anything on filed notices. Still, the notice-and-takedown process is far from perfect, particularly for people who want to contest notices, and I hope Google keeps a close eye on how this one plays out.
Amazon has a high-profile role in the crowdfunding space due to it being the main payment hub for Kickstarter projects. Similarly, it had been processing payments for unglue.it, and their withdrawal has forced the site to "suspend all active ungluing campaigns" while it looks for a new payments processor. The Oral Literature project is apparently already through the payments processing stage and will continue, which is good since Amazon is apparently forcing unglue to "void all pending authorizations".
No reason for the decision has been made public but one can speculate. In particular, it's probably not too far-fetched to wonder if Amazon didn't want to be associated with a project that's likely (further) to piss off book publishers, whose relationships with Amazon are testy at best.
Today's Insertcoin column by Paul Tassi over on Forbes talks about a brewing struggle between two heavyweights in the gaming world: Electronic Arts (EA) and Zynga. EA has been in the gaming business forever and has slowly grown into a giant powerhouse by producing its own popular titles and by acquiring popular titles that already existed and often the gaming companies that produced them. Zynga by contrast is a relative newcomer, born in the age of mobile- and browser-based games, and rising to financial success along with Facebook, where it provides gaming to Facebook's millions. By contrast, EA is a much more traditional gaming publisher, placing its titles in retail stores, on download services like Steam, and only recently moving into mobile gaming.
Zynga has been dogged for years by claims that it has stolen (used, borrowed, copied) intellectual property from other games, both in terms of concept/topic and in specific terms such as characters, art style, and so on. People have accused Zynga not of being a game 'developer' but of being a game 'cloner'. But mostly the smaller players haven't had the resources to take their claims all the way; now, finally, someone with very deep pockets (EA and its Maxis studio) are going to court to try and prove it.
Tassi's column is mostly a set of side-by-side images, one taken from a game by a non-Zynga publisher and one from a game put out by Zynga that is accused of being a clone of the original. In an earlier column, Tassi showed side-by-side images of Zynga's recent "The Ville" with EA's "The Sims Social." EA has a lot of time and money invested in its Sims franchise and Sims Social is apparently quite profitable for them. To have that investment threatened by a Zynga clone is not something EA felt it could tolerate.
It will be interesting to watch as this case develops: game IP can include visual design elements, creative process elements such as gamer interactions or component behaviors, and arrangements of elements. These can be covered by trademarks, patents, and copyrights depending on the particular element to be protected. Tassi quotes David Marsh of game maker Nimblebit, which also felt that Zynga had ripped off one of their products:
[W]e were taken aback by [...] how thoroughly Zynga had copied the mechanics of our game, right down to small trivial details that had no effect on the functionality of the game, but got caught up in Zynga’s blanket duplication process.
If EA feels that Zynga has similarly blanket-copied The Sims Social then this could be a very large and wide-reaching suit indeed.
Research Project on Growing Book Challenges in the US
In this case a "book challenge" is an attempt to have a book or other reading material removed from publicly accessible spaces, usually library shelves or school curricula. The good folk at the Comic Book Legal Defense Fund sent out a press release calling attention to a project by the Missourian titled "Unfit to Read?" The project notes that some challenges have been successful and that both the number and success rate of challenges appears to be on the rise; it then examines reasons for these trends, with some examples and supporting graphics.
TorrentFreak reports on leaked MPAA internal memos that highlight the problems the Cartel is having with trying to buffalo the UK's law enforcement into joining its private army, where the US DOJ is already captive - namely, people think it's not right. In fact, so many sane people, even in the media, think it's not right that the MPAA can't get any favorable coverage. Boo hoo.
And when you can't do that, then you need "third parties" (as the memo calls them) who will deliver your message for you, while not appearing to be you. We have a different name for that: lying, or more politely "astroturfing." Basically you recruit some patsies (Boingboing calls them "sock puppets") , feed them your prepared scripts, and have them trick journalists or other citizens into believing that anyone at all, beyond possibly the criminally insane, thinks it's a good idea to ruin this guy's life.
In case you are concerned that TorrentFreak might be engaged in its own misrepresentation, there's a Scribd embed in the story. The document appears to have no seal or other identifying mark on it, so you'll have to judge for yourself whether it's real. Or you could ask the MPAA whether they're employing the same tactics here that they used to try and manufacture support for SOPA. Maybe it's coincidence... yeah, that's it.
On his personal blog, Lauren Weinstein catalogs the history of this current #NBCfail. His focus is on the Streisand Effect but I was taken by the NBC network attitude that American audiences are "too stupid". We're too stupid to install TORbutton, too stupid to watch sporting events without editing and commentary, and too stupid to figure out and get away from the ongoing scam that is pay-one-price-for-shit-you-don't-want cable subscriptions. Yeah, right. I'm reminded of Amanda Palmer's observation that the entire big-label music industry is built on the premise that people have to be tricked into parting with their cash. Can you imagine if television was built, instead, on the idea that there are millions of passionate fans out there who will pay money to get what they want, when they want it, how they want it? That would be cool.
Nick Bilton blogs for the NY Times about Craigslist. It's generally a familiar story: the old established business protects itself by legal threats, unexpected API changes, and generally working to lock out competitors and innovators who want to build on and improve the basic service.
The difference here is that we're not talking about the typical Big Cartel Corporation; instead, this is Craigslist. Many of us have mental images of Craigslist as being small, local, homey. In fact that's how it started, but in the intervening years it has grown into a multi-million dollar business. Once in a while it hits the news, as happened when it was forced to shutter its adult services sections after charges arose that the ads there were thinly veiled covers for prostitution and human trafficking.
But despite these blips, the service has generally retained a genial and positive public image. Bilton argues that part of why Craigslist - which has generally grown old, creaky, and ripe for disruption - hasn't been surpassed is the large surplus of goodwill and beneficent image it maintains. People, even those whose attempts at building new services on Craigslist have been shuttered, don't seem willing to make a big deal of it nor attack the service publicly.
This can only go on so long before people notice and start losing their goodwill - remember when everyone thought Google really wasn't evil? As Fred said, Craigslist (which didn't comment for this story) is in the wrong here and needs to live up to its reputation, not down to its legal bottom line.
Suddenly, it seems, stories about the end of cable television are everywhere. Today's entry from ReadWriteWeb asks how we will watch television in the future. That's actually an interesting question, since I don't expect cable TV to die and vanish overnight. There will be a transition period, which I expect to last most of this decade. Cord-cutting for an individual or household is sudden (we just dropped our cable subscription today, for example) but national trends are slower. There's still time for cable and network execs to realize that people will watch television, but it needs to be served Internet-style, which means much more on demand, much more a la carte, and much better integrated into other digital offerings such as Web sites, social media, and new offerings that are only now in the incubator stages. I will probably not blog a lot more of these general high-level stories but readers with items of specific interest should feel free to keep sending them to me.
Yes, Virginia, TV execs do know where their audiences are - in the US, online, and they don't want you. Unless, of course, you want to fork over $100/month for their massive packages of crap. But seeing the Olympics on your computer? Not this time.
Heidi Moore (for the Guardian) has a nice summary of the #NBCfail that has rolled through the social media sphere since the games opened. You see, there's a theory that you can watch (some of) the Olympics online. But not in the US. NBC has exclusive rights and they don't want to show it to you. Unless, see above, big package, big bucks, big bullshit. The Olympic site itself is no better, using its IP-detection banhammer to tell you to go suck up to NBC if you live in the US. I did try this weekend - I wanted to see some of the live action and compare how the streams performed. Yeah, right.
I mean, really. It's not enough that they fail on time-delay issues, and missing out on broadcasting events. It's a gross ignorance of the size and potential of the 21st-century audience. According to Moore's article, some two million people spent their time reading the #NBCfail hashtag stream. And that number doesn't count people like me who tried and just gave it up in disgust. If NBC are too stupid to capture and profit off two million potential viewers then I have no sympathy for them. As Moore says:
Most Americans would recognize that NBC needs to make money on the Olympics. It is not at all clear, on the other hand, that NBC needs to make money by forbidding millions of people from watching the Olympics.
The creation of artificial scarcity is one of the oldest tactics of monopolists. And, as we saw in the music business and the newspaper business it's all about service to old entrenched models of bureaucracy. NBC thinks it can stop people cutting the cord by creating artificial situations; instead what it creates is animosity and an environment where people openly share advice on how to circumvent blockages. If that doesn't sound like history repeating itself then you haven't paid attention to the last two decades.
Of course, when the US says this sort of thing, they're inevitably thinking of things like the actions by dictators-we-no-longer-support in other parts of the world to sever their countries from the Net in order to further hide repression. I'm sure that the infringements of ACTA and its devil-spawned ilk don't register as human rights abuses. The Netizen project minces no words in this regard, calling out ACTA and the TPP among others and pointing out that Netizens in the US are as divided as the international community when it comes to the hard details of what exactly is meant by freedom and human rights online.
The page describes several ongoing efforts, including competing visions of what a Declaration of Internet Freedoms or Bill of Internet Rights might look like. Messy stuff, but that is, as they say, "...why we are so heavy on the public participation aspect." Maybe the US government could take some notice of that, too.
If you were still in doubt about how we got into the current Copyright Wars mess after reading Drew Wilson's research on file sharing then perhaps the work done by Professor Michael Carrier (Rutgers Law) will help.
Carrier's conclusion isn't likely to surprise anyone who has been reading this blog for a while, but it's worth quoting here:
The Napster decision reduced innovation and [...] led to a venture capital “wasteland.” The article also explains why the record labels reacted so sluggishly to the distribution of digital music. It points to retailers, lawyers, bonuses, and (consistent with the “Innovator’s Dilemma”) an emphasis on the short term and preservation of existing business models.
In painful detail the article describes how the Cartel's scorched-earth litigation strategy managed to bleed or destroy every company that tried to create a legal venture in digital music. As a result, illegal ventures flourished to fill the void. By refusing everything that came along, up to and including full control and a blank check, the Cartel built a legal Maginot Line around which content freely flowed. And in typical Cartel-style behavior, the established music industry threatened, blackmailed, and extorted everything it set its sights on.
I wonder if David Lowery and the others who bemoan the current environment are paying attention. The Cartel may not be directly to blame for any individual's decision to get 11,000 illegal copies of songs, but they certainly are to blame for creating an environment in which nobody (before Apple) could make it routine and easy to acquire those tracks legally. Sadly I don't see any respite coming in the Cartel's self-destructive policies.
(h/t Boingboing and Torrentfreak for the original pointers.)
Nature, the highly respected journal, that is. If you are interested in a quick peek behind the scenes at how editors for big publications balance and swing with the authors trying to get published, I recommend Friday's blog post from Action Potential, one of the blogs at nature.com. It talks about how two similar papers came to be published separately despite similarities while a third paper, also similar, did not get published (there).
I last wrote about this brewing storm in April, when it looked like outrage at astronomical bills university libraries have to pay might finally cause some changes. Instead, it appears that the British have made a bold first move. The notion is simple:
[R]esearch papers that describe work paid for by the British taxpayer will be free online for universities, companies and individuals to use for any purpose, wherever they are in the world.
That may not seem like a lot, but it's a huge deal and if other countries follow suit it could be an even bigger effect. It's not cheap - the government is estimating that UKP 50 million/year will need to be paid out of existing budgets to fund this publication. Of course, that compares favorably to the current UKP 200 million+ that research libraries are paying, but it's not that easy to shuffle money from one pot - the library funding generally coming from things like University budgets and endowments - to the other. Money that scientists have to pay to publish their own work (including servers, bandwidth, staff, support, etc) is money that then isn't available to spend on lab costs, grad students, conference travel, and the other essential components of actually doing the research in the first place.
The final details of the model are not yet nailed down and will probably be fought over at length. Journals and their publishers will of course want to retain control and the free labor system that they now have. Academics will (dear gods, FINALLY) have to re-think how publication and tenure are so tightly bound. The Guardian article describes two competing models, dubbed "gold" and "green", for how research can be opened up. The gold model favors publishers, generally; the green model favors the free and open advocates. It also seems like the new online/open journals such as PLoS aren't being heard here, which is something of a shame.
But still, there's a lot of time to work out how it's going to work, and as Professor Adam Tickell, of Birmingham University is quoted, the UK only produces about 6% of the world's research publications. That means at very best we've still got 94% to go.
These shenanigans remind me of the crap that went on last year with ebooks - publishers and retailers taking out their contract spats on the reading public. Nobody wins in these kinds of disputes, and aggravated customers have all the more reason to get rid of their high-and-mostly-useless cable bills.
The case is called CLS Bank v. Alice Corporation and the PDF of the decision is here: http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1301.pdf. The case specifically focuses on the question of what in the realm of computer hardware, software, process, etc is patent-eligible. The Court ruled that the system - a computerized trading platform - was patent-eligible, specifically under 35 U.S.C. 101 (this is sometimes called "101 eligible"). In this decision, the CAFC reversed the lower court, which had found that the system was ineligible.
In the majority opinion the Court took some pains to point out areas where decisions such as Mayo seem to have muddled different eligibility criteria, and tried to set the record straight. It also took some not-so-subtle swipes at the SCOTUS opinion and previous dicta from the high court. For example:
The abstractness of the "abstract ideas" test to patent eligibility has become a serious problem, leading to great uncertainty and to the devaluing of inventions of practical utility and economic potential.
For those who are coming late to this game, what this is saying is "Hey, SCOTUS, you gave us this test called 'abstract idea' but no guidance on what it means or how to apply it and which patent eligibility criteria it's supposed to affect". The CAFC complains at length that attempts to clarify this matter have not actually added any clarity:
It can, thus, be appreciated that a claim that is drawn to a specific way of doing something with a computer is likely to be patent eligible whereas a claim to nothing more than the idea of doing that thing on a computer may not. But even with that appreciation, great uncertainty remains, and the core of that uncertainty is the meaning of the 'abstract ideas' exception.
CAFC isn't always the final word on patent decisions, though it often is. If this case is taken up a level then the high court might finally use it as an opportunity to clarify what their 'abstract idea' test means. Or, by refusing cert and letting the decision stand, the Court could be implicitly saying that CAFC are right and that computer system implementations like Alice Corp's are indeed 101 eligible. That's not as definitive as a real ruling but at least it's something.
(Thanks to Greg Aharonian of Internet Patent News Service and PATNEWS for pointing me to this decision and the key parargraphs.)
Back in the old days, when P-A was just two people, they ran for a year on donations but as the enterprise grew so did its need for (paid) services such as bandwidth/hosting, and professional staff that have families to support. This is an intersection of two threads that I've talked about in this blog: the need for artists to get paid, and the ongoing change in relationship between digital media audiences and advertisements. I wish them well and look forward to seeing how this comes out.
As I've mentioned in my posts on "Safe Harbor" it's crucial for the DMCA's application that a safe harbor claim be made on the basis of provider neutrality. If Verizon wants to give up its claim that it is a neutral provider, then it suddenly becomes liable for every bit of infringing content that flows over its pipes. Dear Verizon, have you gone batshit insane?
Not only would that lead to a renewed flood of lawsuits and complications, but it would raise a whole host of issues of whether or not Verizon is claiming some kind of ownership over the content that it provides. People who feel that Verizon is trying to claim some kind of ownership of their content may themselves be moved to sue. This is very dangerous ground to tread and I suggest that Verizon might want to read the position paper that Google recently had prepared on the editorial role of search result-provision.
The parallels are surface-obvious, but functionally subtle and vitally important. Google is in fact editing the Web to produce an organized set of results. Google chooses what sites to crawl, which to index, and how to organize the results for display. However, much as they might mislead you otherwise, Google isn't the Web. There's lots of stuff on the Web that isn't in Google (or any other search engine). Conversely an ISP like Verizon shouldn't care what is or isn't in the Internet. If I type a URL then either that resolves or it doesn't. There doesn't need to be any editorial judgment involved, and trying to pretend to edit the Internet is just daft.
Boingboing pointed me to this story on Billboard about how the band Def Leppard are still sticking it to 'the Man'. In this case the "Man" is their (uncooperative, theiving, Cartel-member) conglomerate Universal Music Group.
The members of Def Leppard assert that UMG is screwing them over compensation for digital downloads - details aren't given. Since UMG won't cooperate, but controls the band's back catalog, the band has first of all given the label a flat "no" to anything the label wants to do with Leppard's music. UMG may own the rights, but the band's contract apparently requires their approval and they're just flat-out refusing to give it.
What makes it more amusing is that Leppard then took it one step further, by going back into the studio and singing themselves "into a certain throat shape" in order to produce "forgeries" of their own back catalog. These forgeries then serve as a digital substitute for the back catalog that UMG holds, but which is now rendered worthless.
According to the Billboard story the two re-recorded albums tracks have sold about 26,000 copies so far which isn't a lot but my guess is that all the profits from those sales are going to the band, making it far more profitable for them than whatever pittance UMG wanted to dole out.
(ETA: commenter Phil S noted that the forgeries so far are just two tracks, not entire albums. That's less cool in that most of Leppard's back catalog remains unavailable by legal digitized means, but cooler for them in that they have 26,000 sales of just two tracks. Even if the others sell at the lower 5,000 downloads/track rate they could see significant income from the work.)
A: I've refused to buy retail CDs since the Cartel went after Napster, long ago. I buy used CDs, sometimes. Often I buy new CDs from artists via their Web sites or at their shows. I buy through iTunes a fair bit, and rarely from other stores like Amazon or Beatport. Almost all the music I buy is stuff I found via some kind of free sample. I found Beats Antique because someone remixed them, which led me to finding a (probably illegal) video someone had posted on YouTube. That's two transgressions already, but the end result was that I went to their show and bought all the CDs they could sell me at the venue. This is how I thought it might work, which is why Emily White's story surprised me.
A: Sadly, no. I'm a terrible book reader these days. Decherney's publisher was kind enough to send me a review copy and that still took me a while to get through. I'm always willing to look at a book or a related product but I can't promise I'll blog about it. I don't hesitate to say something if I think what I've seen isn't that good but I try not to go out of my way to stomp on peoples' toes.
Q: Speaking of Legitmix, do you think they're going to fail?
A: Not exactly. I just don't expect them to be revolutionary. I expect that some people will use it, and lord knows most DJs and producers can use more income. If Legitmix makes them a few bucks then that's all to the good. I'm just doubtful that it's a scalable business model. Stuff will continue to be released as it is now, and also companies like Legitmix will have things to offer.
A: The problem is crap patents. Attacking the problem once the patent has issued is always going to be a second-best solution. So let's focus on removing the crap first.
First and foremost, stop stealing their money. Congress uses PTO fees for all kinds of things that have nothing to do with patenting or the office.
Second, do things that will lead to reduced pendency but without directly rewarding examiners for doing more exams. People do what they're rewarded for - if you just incent examiners to clear the backlog then they'll do that and cut quality corners along the way. Instead, use that PTO money for more staff and training. Give examiners access to all the public searching tools ever: Medline, Science Citation Index, Physical Review Letters, and of course the major search engines. If those tools cost money, pay for them.
Third, allow examiners to make summary rejections and make it mandatory that any patent application which cites no non-patent prior art be rejected before any examination. There is nothing so new under the sun that it hasn't at least been hinted at in the literature somewhere. When I noted that some of the patents Apple was asserting were "strong" that was in part due to looking at how much of the published literature they covered. Nothing slows down patent review more than the applicant making the examiner do all the prior art searching. In my more bitter days I also want to see applicants who clog the system with junk applications subject to fees for filing frivolous patents the way people who abuse the court system can be fined for bringing frivolous lawsuits.
Fourth, do something to bring clarity to the law and cases around patentability. Maybe it requires appointing a special court - we have those for national security matters and for tax litigation, why not for patents? Or maybe a court is the wrong model and we'd do better with an independent board of arbitration. Whatever the system is, it would need to be as independent as possible from the PTO and from whatever political party is in power.
(So, there you are. I probably won't do this often, but the last month or so of stories has brought more questions than usual. Thank you.)
However, I don't care much about enterprise software. What I do care about is gaming. And this is a freaking nuclear bombshell for the gaming industry if it holds up. Right now we're in the death throes of the boxed-sale model for gaming. Services like Steam, Origin, and Amazon have shifted people's purchasing habits away from physical media and toward downloaded games. Never you mind things like the App Store (iPhone) and Play Store (Android) which are selling millions of download-only programs. Even stodgy old desktop and console gamers like me
are doing the vast majority of their purchasing online these days. Always-on, high-speed bandwidth has made it the norm for people to download even very large big-name titles.
This reminds me of Redigi here in the US, which is trying to legitimize resales of iTunes purchases. In both cases the claim is that the company can deploy technology to ensure that only one digital copy ever exists. You buy a tune or game as normal, but when you want to resell it, the item is removed from your computer disk/account. You can't access it again, and when it's repurchased that purchaser gets, in effect, your copy. Just as with physical media, the original seller may not see more revenue but the practice is legal under first sale.
As a practical matter I expect that if this ruling stands the online game sellers will adapt to it. You'll probably have to pay a service fee to transfer your purchases back, and you can imagine situations in which people get a discount in exchange for giving up resale rights. Smart retailers will likely copy the practices of places like GameStop (US, physical) and Greenman where you get more in store credits for returned games than you can get in cash. There are a lot of business opportunities that can be opened up here - it's exciting.
As a related aside I wanted to note that the American Library Association has just filed its amicus brief (PDF link) in Kirtsaeng. As I mentioned before, the ALA position is that this case threatens to tear apart the entire practice of library donations and lending if it is upheld. Clearly the US should not go on to destroy crucial first sale rights and the Europeans should be celebrating their new freedoms. Happy 4th of July, guys.
Another story I've been sitting on for a bit, though much less detailed than yesterday's, may affect many more people. The television business is dying. Or so said Henry Blodget, CEO of Business Insider. If you know that name you might be remembering that Blodget got himself perma-banned from the securities industry for civil fraud in 2003. He also writes for other publications like Slate and Newsweek, mostly doing what he did in the securities business: predicting.
In June he predicted that the television business was on the verge of collapse. In particular, Blodget argues that the television industry is following the same fatal mistakes that the newspaper business made in the past decade, confusing increases in things like viewer numbers for a sustainable revenue model. In particular, Blodget zeroes in on the way that digitization (both Web and digital cable/DVR) have changed our relationship with advertisements, which are the major source of television revenue. No shock to anyone who's paying attention: we don't watch ads.
The problem isn't limited to broadcast channels, which are generally free to receive and almost wholly supported by ad revenue - cable channels that depend on subscription revenue are also likely in trouble as people start ditching their cable lines the way they have been ditching their landline phones. This isn't an immediate problem, but if you project out ten years into the future I agree with Blodget - there's not much reason for people to keep their cable subscriptions. Shows come over the Web, particularly because that enables people to watch on whatever screen happens to be in front of them, be it television set, desktop PC, or tablet. New competitors (iTunes, Amazon, Netflix, Hulu) are taking aim at the money that Blodget notes is currently being "wasted" on cable subscriptions. These new competitors will also give us more on-demand options, and cater more to our schedules.
I "watched" the ACA decision via Twitter and the SCOTUSblog live stream. Those sources had it right. I didn't need a talking head on a screen to tell me what was going on, and I sure don't need to pay thousands of dollars a year for 500 channels I never watch.
Coda: One reason I hadn't posted this story yet was that I was waiting for someone to refute Blodget's numbers, to show where his reasoning was wrong. Instead, I got a notification that HBO has decided it doesn't want Web subscribers' money. Really, HBO? Your response to a campaign of people who are trying to give you money is "no, go away, we don't want your cash." If Blodget is right, and I believe he is, then the television business will have nobody to blame but themselves when their fire sales and funerals roll around.
I've been sitting on this post trying to formulate it at reasonable rather than essay length - I hope readers will forgive me if I go on some. I'm also uncomfortable calling out the EFF for wrongheadedness. I know they're smart people who are trying their best. Usually I support them, but this time I think they're substantially wrong. If you're not familiar with their latest "Want to Abolish Software Patents" effort you can read the discussions and proposals at the project's new site.
I think the campaign to abolish software patents fails on three grounds:
Theoretical: I don't see how you can abolish software patents without also abolishing hardware patents.
Business: I don't see how you can abolish software patents without finding an alternative for people who need legal protection for key information/IP assets.
Message/messenger: abolishing software patents is like trying to abolish cars because some companies make unsafe cars and lots of people use cars to kill/maim other people.
I will agree that the current state of the patent system, and particularly the way large tech companies are abusing it, is a national disgrace. If getting publicly slapped down by Judge Posner doesn't serve as a wake-up call then maybe a few more resounding smacks are needed. But bad behavior isn't the same thing as a bad technology. Let me take first my list above and then talk about Defend Innovation's proposals.
First, if you're not familiar with the Church-Turing thesis then let me summarize: anything you can compute (algorithm, software) can be embedded in a machine (hardware). If you are opposed to software patents then you must explain why I can patent a machine that executes precisely the same algorithm as the software I can't patent. I work in high-frequency trading, a business in which there is an ongoing debate about whether things like programmable arrays are better than general-purpose machines due to speed and other factors. But nobody debates that the FPGA (hardware) and the C code (software) are following the same procedure. You could theoretically oppose patenting hardware AND software, but not split the two. At least, not if you understand a core concept of computer science.
Second, stripping patent protection away without giving inventors some other means of protecting their inventions leaves software innovators at a severe disadvantage compared to hardware innovators, and compared to large companies. Once you know something is possible it's often easy to deduce how to do it, so why should you pay the clever fellow in the first place? There are alternatives to abolishing patent protections; for example, we've talked about trying to restrict patents to defensive-only uses. And we've talked about patent pools. I still believe that the monopoly grant given by a patent should be subject to more restrictions. But you can't just hand-wave them away and not talk about the consequences.
Third, it seems to me that an effort to abolish software patents is a classic baby-with-the-bathwater fallacy. Patenting in the US is in an abominable state. Prior art is a joke, patent searching is ridiculously hamstrung, the USPTO regularly has its resources stolen by Congress, and on and on. Never mind the layers of confusion added to ambiguous law by equally unclear court decisions. But nothing in the current brokenness convinces me that the system is so irretrievably flawed as to require abolishing. We didn't abolish cars after the Ford Pinto, nor should we have.
That said, let's turn to the specific proposals EFF is putting forward...
1. Patent terms of five years. Why? Computer innovations take just as long to bring to market and make mass consumable as anything else. You can look at everything from icons on a computer screen to the latest swipe gestures on mobile devices and trace their roots back 20 or even 30 years. It may seem like the pace of innovation in software is particularly rapid, but it's not.
2. Allow defendants to recoup fees & costs. That's not unreasonable. There are safeguards elsewhere in the legal system to help people recover from frivolous lawsuits. This would need to be coupled with procedures for summary dismissal with prejudice, too.
3. Require running code. This has intuitive appeal in that there used to be a requirement for embodiment of an invention. Embodiment in software isn't per se a stupid idea but it's missing the point. The language of the proposal complains about patents being "confusing." Maybe so, but how are software patent claims any more confusing/less clear than any other claims? And again, why impose an additional embodiment requirement solely on software patents? If you think embodiment is a good requirement for patent grant then it should be a requirement for all patents. And, really, trying to match up lines of code (in what language?) to patent claims is just dumb. Is my javadoc sufficient? It's woven from procedure headers, not lines of code. If I submit the output of the compiler instead is that somehow less valid because it doesn't have lines of code that match patent claims? Come on, EFF, you are better software engineers than this.
4. Allow innocent infringement. Again, not an entirely stupid idea if applied to all patents. I just see no reason to single out software. However, it compounds the willful ignorance of prior art problem. Currently on my patent application I'm required to disclose any prior art of which I'm aware, which creates an incentive for me NOT to know about other inventions. This leads to absurd versions of "I'm sorry, Congressman, I cannot recall what I was doing in that laboratory with that young lady on that date." Innocent infringement doesn't solve anything - it just moves the scope of culpability from the disclosure section of the patent to the courtroom.
5. Improve notices and timeliness. Also generally good ideas that miss the point. As the current most-upvoted comment on the page today says, it doesn't matter how up to date records are so long as there are anticircumvention laws on the books that prevent you from decompiling or doing other things that would permit you to know if a chunk of code is in fact infringing.
6. Limit damages. A favorite whipping-boy of everyone from anti-malpractice Republicans onward: juries give out too much money for trivial offenses. True. And? What this really requires is more Posners and their ilk who will knock down the foolishness of plaintiffs and their lawyers. I'm not generally in favor of arbitrarily legislated malpractice caps and I can't see any reason why patent liability judgments should be treated differently (see a theme here?).
7. Congress should study the issue. Uh, yeah. I'm not even going to touch that one. Except, seriously, if you're going to talk about abolishing patents then I think it's incumbent on you to describe what you want to replace them with. My personal opinion remains that we should encode into patent law something like the Breyer test, which would permit violations of the patent's monopoly grant if it could be shown that the patent was not serving its Constitutionally created purpose.
I have a bunch of other ideas on how one might go about fixing the current patent mess but since this post is epic long already and is supposed to be about how badly the EFF's latest scheme fails, I'll leave it here.
Jeff Price of Tunecore - a business based on helping individual artists release and sell digital music - notes that Lowery is ignoring how badly musicians had it, before. Price also disagrees with just about every factual number in Lowery's post, pointing out that while it's true that labels are making less money, more money is flowing to the artists. Sale for sale that's clearly true - what's less true is what the overall picture of the industry is now versus in the big-label era. There just aren't good independent data available for an apples-to-apples comparison.
Unfortunately, much of the response to Lowery has been of the "quit whining" variety. While I sort of sympathize with the idea that it's important not to shed too many tears for old dead businesses it's also important not to lose sight of the fact that what Lowery was "whining" about was the self-confessed theft of thousands of song copies, many of which could easily be paid for via a few clicks on iTunes or Bandcamp or the artists' Web sites. Jonathan Coulton is noted as responding about how great it is that so much more cool stuff is now available free. I agree, that's an awesome thing but it has to be the artists' choice.
I love free tracks. My disk is full of freebies I've gotten from performers I love. But it's also full of tracks I bought from them. That's the choice I get: pay for what they sell, or don't. Their choice is to sell, give away, or use some combination/new model. Again, I feel this is an important point that is getting ignored because of how Lowery constructed his response.
As several of the respondents note, simply being a musician is no guarantee of making even one thin dime. If you price your stuff wrong, or nobody likes your stuff, or whatever the factors are, then you're not going to make a living. Maybe you have to bust your hump for years until one day dawn breaks and money appears. Nobody owes you money because you're making the art you love. But I don't think that's really what Lowery was trying to say.