A couple of days ago Techdirt wrote about how Murong Xuecun, a well-known user of the Chinese microblog Sina Weibo with over a million followers, had his account closed down suddenly. Murong has now written a fine article about the background to what happened: he points out that the deletion of his account looks to be part of a larger clampdown on the use of microblogging services by well-known figures who are critical of the Chinese government. The problem for the latter is that these services are becoming a real channel for free expression and less-than-perfectly-censored information: Individuals are silenced on daily basis, and the pool of sensitive words grows by the hour: Liu Xiaobo, Gao Xingjian, Ai Weiwei, Wei Jingsheng, Liao Yiwu, Ma Jian, Mo Zhixu, Xiao Shu … The list goes on. It now includes me, as well as two more scholars who have since been silenced: Wu Wei and Wu Zuolai, whose accounts were deleted on the morning of 13 May. Lurking in the shadows, the "relevant organs" carry out such work as part of their daily routine, and expect people to remain silent. They have perhaps failed to foresee that in the age of Weibo, their actions could trigger such a severe backlash. To this, they responded with more censorship. Given the problems that even China is having with controlling such services, it's no surprise that other nations are getting nervous. Here's a story from the BBC about what Saudi Arabia is doing in an attempt to counter the threat from Twitter: The head of Saudi Arabia's religious police has warned citizens against using Twitter, which is rising in popularity among Saudis. Sheikh Abdul Latif Abdul Aziz al-Sheikh said anyone using social media sites -- and especially Twitter -- "has lost this world and his afterlife". The Saudi authorities are evidently grappling with exactly the same issues as the Chinese government: Many Saudis have seized on Twitter as the most immediate and effective way to open little windows into a traditionally opaque society. Recent protests in the Eastern Province have been tweeted and images of human rights activists on trial have been uploaded directly from courtrooms, challenging many taboos. The situation in Saudi Arabia is complicated by the fact that the well-known Saudi Prince Alwaleed bin Talal bought a $300 million stake in Twitter back in 2011. That doubtlessly explains in part the following comments he made recently using his own Twitter account, quoted in an article from CNN: Dear Saudi Telecommunication Authority, social media is a tool for the people to make the government hear their voices. Just thinking of blocking them is a losing war, and a way to put more pressure on the citizens As Twitter continues to gain market share -- already standing at a massive 51% of all Internet users in Saudi Arabia according to the CNN piece -- it will be interesting to see whose view prevails there: that of the religious police or a secular prince. Follow me @glynmoody on Twitter or identi.ca, and on Google+ Permalink | Comments | Email This Story
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We should have know that once the press started picking up on the ridiculous moral panic over Google Glass that Congress would be quick to follow. In a move that smacks of traditional political grandstanding, a group of Congressional Representatives have sent a letter to Google raising a bunch of questions about the supposed "privacy concerns" of Google Glass. I'm wondering if next they'll summon a representative of the seeing public to discuss the privacy concerns of your own two eyes. First, they jump to the go-to point that any anti-Google privacy activist goes to: the data collection from open WiFi. What no one ever seems willing to discuss is the fact that this is the nature of open WiFi. Anyone can see any of the unencrypted data traveling over that access point. Why that gets blamed on Google makes no sense. They also worry about privacy of non-users, which is definitely a point that others have raised. But, how is this privacy issue different than one of basic sight. Google Glass sees what a user sees. If they can see you doing something you don't want exposed, they can reveal that as well. How is that a privacy issue specific to Google Glass? There are a number of other odd questions, including whether or not Google considered the privacy implications of the NY Times' Google Glass app. Huh? First off, if there were privacy implications, shouldn't they be the NY Times' concern on that issue? And second, can anyone explain why possible privacy issue could be in play here? It's a news app on a tiny screen. So what? When regular cameras first came on the scene, there were similar scare stories and people worried about the privacy impact of still photo cameras. We pretty quickly learned how to cope and adapt to that. Why do people think we can't learn and cope with Google Glass?Permalink | Comments | Email This Story
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You may recall that Prenda had (not surprisingly) gone crazy overboard with subpoenas in its attempt to intimidate some anti-copyright troll bloggers and their commenters. The EFF stepped in and asked a court to quash the subpoena, which the court has now done, in large part because Prenda never even bothered to respond. As of this date, no responsive memorandum has been filed. LRCiv 7.2(i) provides in part “if the opposing party does not serve and file the required answering memorandum, ...such noncompliance may be deemed a consent to the denial or granting of the motion and the Court may dispose of the motion summarily.” Pursuant to this rule, the Court deems Plaintiff's failure to serve and file the required answering memorandum a consent to the granting of Defendant-Movant's Motion to Quash the Subpoena to Wild West Domains Seeking Identity Information. I guess Prenda's a bit busy. Or someone there realized this subpoena had zero chance of actually going forward. Either way, the subpoena is dead.Permalink | Comments | Email This Story
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In this year's Special 301 report, the United States Trade Representative listed Ukraine as a "Priority Foreign Country" (aka PFC), triggering a 30 day countdown to initiate an investigation under Section 301 of the Trade Act to determine trade sanctions. 19 USC 2412(2)(A). This is only the second time that the U.S. has threatened a WTO-member country with sanctions as a PFC. And thus it is an appropriate time to ask what restrictions the World Trade Organization places on the operation of the Special 301 program. As described more fully below, any sanction of Ukraine, including removal of General System of Preferences (GSP) benefits, would likely violate WTO rules. Indeed, the listing of Ukraine as a PFC, and the more general operation of "watch lists" threatening sanctions for intellectual property matters, could be challenged under the WTO even prior to any sanction actually going into effect. Special 301 is a Unilateral Adjudication of Foreign Countries for IP Matters both Covered and not Covered Under any Trade Agreement Special 301 is an offshoot of the more general "Section 301" program which authorizes the USTR to unilaterally sanction foreign countries for a domestic law which either "violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement" or which does not itself violate any agreement but nevertheless "is unreasonable or discriminatory and burdens or restricts United States commerce." 19 USC § 2411. One ground for finding an "unreasonable" policy subject to trade sanction includes the denial of "fair and equitable . . . provision of adequate and effective protection of intellectual property rights notwithstanding the fact that the foreign country may be in compliance with the specific obligations of the Agreement on Trade-Related Aspects of Intellectual Property Rights." 19 USC 2411(d)(3)(VB)(ii). Possible sanctions can include the suspension of "benefits of trade agreement concessions," "duties or other import restrictions," or the suspension of General System of Preferences (GSP) benefits. 19 USC 2411(c). Special 301 is integrated into the Section 301 sanctioning process through a public adjudication and notification mechanism. Under Special 301, the USTR is required to annually publish in the Federal Register a list of countries that deny "adequate and effective protection of intellectual property" or "deny fair and equitable market access for U.S. firms that rely on intellectual property," and then designate among those countries the subset of worst actors to be designated "priority foreign countries."  19 U.S.C. § 2242. USTR holds an annual hearing and publishes an annual report containing two levels of "Watch Lists" below the "Priority Foreign Country" designation. As described by USTR in the 2013 report: Placement of a trading partner on the Priority Watch List or Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons relying on IPR. Countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the problem areas. Designation as a "Priority Foreign Country" is a statutory criteria that triggers a 30-day countdown during which targeted countries must "(enter) into good faith negotiations" or "(make) significant progress in bilateral or multilateral negotiations" or face an investigation under the Section 301 process for determining unilateral sanctions. Priority foreign country determinations are reserved for countries "that have the most onerous or egregious acts, policies, or practices," that "have the greatest adverse impact (actual or potential) on the relevant United States products," and for which "there is a factual basis for the denial of fair and equitable market access as a result." This framework for unilaterally sanctioning foreign countries for intellectual property matters pre-dates the World Trade Organization's rules. Indeed, it was the lack of binding international trade adjudication, such as that created under the WTO, that was the primary justification for Congress's enactment of the 301 unilateral adjudication in the 1980s. [See 301 Historical Primer]. There has always been a serious question as to how the statutory program could continue after the WTO, and there has been one adjudication of the more general 301 program explained below. One of the noticeable trends in Special 301 in the Post-WTO 1994 period is the steep drop off in listings of countries as a "Priority Foreign Country," most directly threatening trade sanctions. Only three countries were designated as PFCs after 1994: China in 1996, Paraguay in 1998, and Ukraine in 2001-05. Of these, only Paraguay was a member of the WTO in the year it was listed as a PFC. Ukraine was not a WTO member when it was initially listed, but now it is. Using 301 to Adjudicate TRIPS Violations Would Violate the WTO Dispute Settlement Understanding and U.S. Law On their face, the 301 complaints against Ukraine do not appear to raise challenges to Ukraine's implementation of the WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The 2013 Special 301 Report describes three grounds for Ukraine's PFC listing: [T]he specific grounds for the U.S. Trade Representative’s designation of Ukraine as a PFC are: (1) the unfair, nontransparent administration of the system for collecting societies, which are responsible for collecting and distributing royalties to U.S. and other rights holders; (2) widespread (and admitted) use of illegal software by Ukrainian government agencies; and (3) failure to implement an effective means to combat the widespread online infringement of copyright and related rights in Ukraine, including the lack of transparent and predictable provisions on intermediary liability and liability for third parties that facilitate piracy, limitations on such liability for Internet Service Providers (ISPs), and enforcement of takedown notices for infringing online content. None of these grounds explicitly refer to complaints under TRIPS. Unilateral adjudication of TRIPS violations is prohibited by Article 23 of the Dispute Settlement Understanding, explaining under the title "Strengthening of the Multilateral System": 1. When Members seek the redress of a violation of obligations or other nullification or impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements, they shall have recourse to, and abide by, the rules and procedures of this Understanding. 2. In such cases, Members shall: (a) not make a determination to the effect that a violation has occurred, that benefits have been nullified or impaired or that the attainment of any objective of the covered agreements has been impeded, except through recourse to dispute settlement in accordance with the rules and procedures of this Understanding, and shall make any such determination consistent with the findings contained in the panel or Appellate Body report adopted by the DSB or an arbitration award rendered under this Understanding The import of this language is fairly clear. The Dispute Settlement Understanding (DSU) procedures, and only those procedures, can be used for findings that lead to the "suspension of concessions or other obligations" under GATT. After the WTO accords went into effect, the U.S. did not dismantle the Section 301 or Special 301 programs, which became the subject of a trade dispute in the WTO in United States – Sections 301-310. In that case, a WTO panel held that Section 301 sanctions were only still legal under the DSU because of a "Statement of Administrative Action" pledging to "base any section 301 determination" on "panel or Appellate Body findings adopted by the DSB" and only sanction countries with "authority from the DSB to retaliate." The panel decision went further, discussing in a key package that the U.S. also could not threaten to sanction countries in ways that, if actually implemented, would likewise threaten the WTO: Members faced with a threat of unilateral action, especially when it emanates from an economically powerful Member, may in effect be forced to give in to the demands imposed by the Member exerting the threat... To put it differently, merely carrying a big stick is, in many cases, as effective a means to having one's way as actually using the stick. The threat alone of conduct prohibited by the WTO would enable the Member concerned to exert undue leverage on other Members.  It would disrupt the very stability and equilibrium which multilateral dispute resolution was meant to foster and consequently establish, namely equal protection of both large and small, powerful and less powerful Members through the consistent application of a set of rules and procedures. After this ruling, the USTR has been relatively carefully not to use Special 301 to explicitly threaten other countries with trade sanctions for alleged violations of TRIPS. It more commonly describes Special 301 as being a component of the evaluation of whether it will grant other countries GSP benefits, which it asserts unilateral authority to determine the criteria for. And the criteria listed in the 301 reports most commonly refers to the lack of domestic policies that are "TRIPS-plus" -- i.e. go be beyond those required by the TRIPS agreement. But, as explained below, the developed countries do NOT have unilateral authority to determine GSP benefit criteria. Under the reasoning of the Sections 301-310 panel, any country on the various Special 301 Watch Lists would likely have standing to challenge the Special 301 program as threatening denial of GSP benefits for criteria that violate the WTO accords. TRIPS-Plus standards may be challenged as not being "non-discriminatory" and "non-reciprocal" criteria tailored to "respond positively to the development, financial and trade needs of developing countries." The U.S. legal authority for denying GSP benefits based on intellectual property policies is contained in 19 USC 2462(c), requiring consideration of the "the extent to which such country is providing adequate and effective protection of intellectual property rights." The 2013 Special 301 report signals that it intends to evoke this criteria with respect to Ukraine, stating: When Ukraine was designated a PFC in the past, it failed to address the grounds for its designation during the following investigation. As a result, Ukraine lost its eligibility for benefits under the Generalized System of Preferences (GSP). Once Ukraine addressed the issues that led to its designation as a PFC, its eligibility for GSP benefits was reinstated. Thus, the central question under the WTO accords may be: may the U.S. suspend GSP benefits from a country as a sanction for not adopting TRIPS-plus policies? Current law under the WTO Appellate Body provides a strong argument that the U.S. cannot maintain such policies. The starting point for the trade law analysis is the WTO's requirement of Most Favored Nation (MFN) treatment for all members, contained in Article I:1 of the General Agreement on Tariffs and Trade 1994 (GATT). The MFN principle requires any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country be accorded immediately and unconditionally to the like product originating in or destined for territories of all other contracting parties By withdrawing trade benefits from one country (e.g. Ukraine), but not from other WTO-members, the U.S. GSP program facially authorizes conduct that violates MFN treatment. The conduct must, therefore, be authorized by an exemption to MFN. GSP programs are authorized by the exception to MFN known as the GSP "Enabling Clause." The two key provisions in this clause for our purposes are located in Paragraphs 2 and 3. Paragraph 2 (footnote 3) of the Clause states that GSP programs are authorized only in so far as their criteria are "generalized, non-reciprocal and non discriminatory." Paragraph 3 of the Clause adds the additional requirement that GSP criteria "be designed and, if necessary, modified, to respond positively to the development, financial and trade needs of developing countries." The use of TRIPS-plus criteria to deny GSP benefits does not appear to meet either standard. The WTO Appellate Body (the highest court in the WTO and the authority on matters of WTO interpretation) was tasked with interpreting the GSP enabling clause requirements in the case of EC -- Preferential Tariffs. The matter involved a challenge by India of the EC's program to award additional GSP benefits to countries that participated in a special drug eradication program. The Appellate Body held that GSP programs could have criteria that result in different benefits being afforded to different developing countries, but that such differential treatment must itself be based on criteria that meet the Paragraph 3 requirement of responding "positively to the development, financial and trade needs of developing countries." The Appellate Body explained: In granting such differential tariff treatment, [ ] preference-granting countries are required, by virtue of the term “nondiscriminatory”, to ensure that identical treatment is available to all similarly-situated GSP beneficiaries, that is, to all GSP beneficiaries that have the “development, financial and trade needs” to which the treatment in question is intended to respond. The Appellate Body continued: [T]he expectation that developed countries will “respond positively” to the “needs of developing countries” suggests that a sufficient nexus should exist between, on the one hand, the preferential treatment provided under the respective measure authorized by paragraph 2, and, on the other hand, the likelihood of alleviating the relevant “development, financial [or] trade need”. In the context of a GSP scheme, the particular need at issue must, by its nature, be such that it can be effectively addressed through tariff preferences. Therefore, only if a preference-granting country acts in the “positive” manner suggested, in “respon[se]” to a widely-recognized “development, financial [or] trade need”, can such action satisfy the requirements of paragraph 3(c). Under this standard, TRIPS-plus criteria may be challenged for being insufficiently related to the needs of developing countries and rather tailored to meet U.S. intellectual property industry export needs. The U.S. is not free to define any "needs" it chooses as GSP criteria for developing countries. The Appellate Body admonished that "a 'need' cannot be characterized as one of the specified "needs of developing countries" in the sense of paragraph 3(c) based merely on an assertion to that effect by, for instance, a preference-granting country or a beneficiary country." Such need, the Appellate Body held, must be assessed according to an "objective," "[b]road-based recognition of a particular need," such as those "set out in the WTO Agreement or in multilateral instruments adopted by international organizations." Here, the U.S. is on the horns of a dilemma. For the criteria to be sufficiently "broad based," the WTO Appellate Body suggests that they need to be incorporated into a broad multilateral agreement like TRIPS. But the U.S. cannot unilaterally adjudicate TRIPS disputes. The specific issues that the U.S. raises -- the administration of collecting societies, rules on the government use of copyrighted software, and intermediary liability and "enforcement of takedown notices for infringing online content" -- are not subject to broad-based international standards. None are explicitly recognized duties under TRIPS. There are very general standards in the WIPO Internet Treaties on copyright in the digital environment, but only a small number of controversial international agreements -- in the form of bilateral trade agreements with the U.S. -- contain standards on intermediary and third party liability and the enforcement of takedown notices for online infringement. The U.S. would like these to be areas of broad-based agreement, but thus far they are not. Ukraine may also argue that using removals of GSP benefits as a sanction for disfavored policies and practices is not a "positive" use of GSP benefits. The Appellate body explained that the GSP Enabling Clause "mandates that the response provided to the needs of developing countries be 'positive,'" which it defined as "consisting in or characterized by constructive action or attitudes." It continued: This suggests that the response of a preference-granting country must be taken with a view to improving the development, financial or trade situation of a beneficiary country, based on the particular need at issue. It is difficult to explain the use of PFC listings under Special 301 as "positive" in this respect. The PFC listing is rather clearly designed as a threat to withdraw benefits as a punitive sanction for acting against U.S. interests, not as an enticement or reward for responding to its own development needs. As one commenter noted: "The EC rewards "good" behavior with extra preferences; the U.S. penalizes "bad" behavior by taking away preferences." Whether the WTO allows the latter use of GSP criteria as a sanction is yet to be decided by the Appellate Body. Conclusion The implications of the two lines of cases discussed above suggest that Ukraine has strong arguments for challenging its PFC listing, and any subsequent denial of GSP benefits, in the WTO. In addition, using the discussion of the prohibition of "threats alone" from the Section 301-310 case, other countries on the various watch lists could challenge Special 301 as implicitly threatening GSP benefit withdrawal for criteria that do not meet the WTO’s standards. Doing so and succeeding would relieve the world of a much hated vestige of the Pre-WTO "aggressive unilateralism" in U.S. trade policy. Sean Flynn is a professor and associate director of the Program on Information Justice and Intellectual Property (PIJIP) at American University Washington College of Law. Cross posted from infojustice. Permalink | Comments | Email This Story
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Back in March, we noted that while a district court had ordered the US to hand over the evidence it was planning to use against Kim Dotcom, an appeals court had overturned that ruling, and said that the evidence wasn't needed for the extradition fight. Dotcom immediately appealed to New Zealand's Supreme Court, who has now said that it will review that ruling as well, so this case will continue to drag on for some time.Permalink | Comments | Email This Story
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The existing system of going to a school, listening to lectures and getting a degree after you've passed some tests might not be the way education will operate in the near future. Massive open online courses (MOOCs) promise to teach a wide array of subjects, and there are plenty of students willing to try out these online classes instead of sleeping through another boring lecture at 8am. Obviously, not all the kinks have been worked out yet, and there will undoubtedly be online degrees that aren't worth the paper they may (or may not) be printed on. Still, there are some interesting developments in the field of education, and here are just a few. Sebastian Thrun is optimistic about creating an online class that will confer a master's degree in computer science. All the class material will be online for free, but the actual degree will cost a few thousand bucks still (via Georgia Tech). [url] The traditional education system might be in for some disruption as more online education startups attract students and pull tuition dollars away from bricks and mortar institutions. If professors don't like their student reviews now, it's going to get a bit worse when online classes are rated instantly by students.... [url] Professor Sugata Mitra has demonstrated that kids don't necessarily need a teacher -- if you just set up an internet-connected computer in the middle of a village in India, you'll be surprised by what the kids learn all by themselves. And now, Mitra has $1 million from a TED prize to further his research into self-organized learning. [url] Don't have time to attend a class? You might not need to with the University of Wisconsin's upcoming program to grant bachelor degrees based on existing experience. You still have to take some tests and demonstrate your skills, but the school of hard knocks might be good enough in some cases? [url] If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.Permalink | Comments | Email This Story
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The universe has a sense of humor. I'm convinced of it. See, as someone who believes that humor is a wonderful way to deal with otherwise disheartening topics, I'm amazed at how often the world around me will give me something to laugh at when I'm feeling blue. Take the world's current climate on the topic of religion, for instance. It'd be very easy to get down in the dumps over the Westboro Baptist Church, religious fundementalists engaging in acts of terror, and the never-ending saga known as the Middle East "peace" process. None of those things are laughing matters. But then, reading the forlorn expression on my face, the universe sends me another story from the Church of Scientology. The Tom-Cruise-iest religion on the planet took a break from their attempt to destroy free speech to celebrate the grand-mega opening of their new ironically named Ideal Organization in Portland by producing the worst photoshopped picture this side of the Iranian military. The crowd was around 450-750 people. But the church claims it was more like 2,500, and it Photoshopped in the proof. Except the proof is about as convincing as your thetan's origin story. In reality, there were no people in the right-hand side of the photo. There was actually a line of rented trees set up to block the view of people not so friendly to Scientology (see the photo below), as well as police blocking off a four-block radius for the event. And it's not just that the picture was doctored, it's that it was done quite poorly. They added people right on top of the trees in the altered section. Tony Ortega has the two photos that demonstrate this. First was the "official" photo from the Church which is clearly photoshopped. What was an attempt to make turnout of the "event" look bigger than it was resulted in, at best, Scientology looking silly yet again for their combination of secretiveness and lying about their own events. Or, at worst, it suggests that Scientology turns human beings into a kind of hybrid tree-people, in which case we're all going to be subject to an aphid plague that may undo all of humanity. Ahhhh! So a word of friendly advice to my Scientologist friends: brainwashed graphic designers are a better asset than brainwashed Tom Cruises. For ever and ever. Amen. Permalink | Comments | Email This Story
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With copyright reform back on the table, there are bound to be more and more discussions and various ideas suggested. But here's one that we hope is a no brainer for everyone. Carl Malamud, who has worked on making more public information available to the public than anyone else (and, yes, it's crazy that he needs to do this), has famously highlighted many cases of governments locking up key information that the public ought to have, including official copies of laws, judicial rulings and the standards that are referenced by various laws. So he has now proposed -- with the support of a bunch of big thinkers in this arena -- a simple proposal for one specific type of copyright reform: The Edicts of Government Amendment. The idea is simple: To promote access to justice, equal protection, innovation in the legal marketplace, and to codify long-standing public policy, the Copyright Act of the United States, 17 U.S.C., should be amended as follows: “Edicts of government, such as judicial opinions, administrative rulings, legislative enactments, public ordinances, and similar official legal documents are not copyrightable for reasons of public policy. This applies to such works whether they are Federal, State, or local as well as to those of foreign governments.” This language comes directly from Section 206.01, Compendium of Office Practices II, U.S. Copyright Office (1984). It reflects clear and established Supreme Court precedent on the matter in cases such as Wheaton v. Peters, 33 U.S. (8 Pet.) 591 (1834) and Banks v. Manchester, 128 U.S. 244 (1888). The law belongs to the people, who should be free to read, know, and speak the laws by which they choose to govern themselves. Such a basic concept, I'm wondering if there's anyone who will present a counter argument for why this shouldn't be done today.Permalink | Comments | Email This Story
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You may recall that soon after Viacom sued YouTube, the Premier League football association (which is notorious for aggressively seeking to enforce its copyrights) sued as well, and sought to turn its case into a class action lawsuit for basically anyone who might have had their copyright-covered works uploaded to YouTube. The court has now eloquently smacked that attempt down, pointing out that the issues for different individuals and organizations would be totally different, making it inappropriate to lump them all together. Forty five years ago Judge Lumbard of the United States Court of Appeals for this circuit called a case a "Frankenstein monster posing as a class action." ... The description fits the class aspects of this case. The putative class consists every person and entity in the world who own infringed copyrighted works, who have or will register them with U.S. Copyright Office as required, whose works fall into either two categories: they were subject of infringement which was blocked by YouTube after notice, but suffered additional infringement through subsequent uploads (the "repeat infringement class"), or are musical compositions which defendants tracked, monetized or identified and allowed to be used without proper authorization (the "music publisher class"). Plaintiffs assert that there are "at least thousands of class members" the Repeat Infringement Class, and "hundreds" in the Music Publisher Class... It then goes on to point out that YouTube is just the platform, and just because infringing content is uploaded to YouTube, it doesn't automatically make YouTube liable. It notes that "YouTube does not generate infringing material." And, given that, the situations of various potential class members is quite different. Then there's a strong point related to all of this: because there are all sorts of different issues related to copyright, "copyright claims are poor candidates for class-action treatment." Specifically, there would need to be specific evidence relating to each individual infringement, and that makes it silly to do this as a class action. Here to make resolutions which advance the litigation will require the court to determine, for each copyrighted work claimed to have been infringed, whether a copyright holder gave notices containing sufficient information to permit the service provider to identify and locate the infringing material so that it could be taken down. That requires individualized evidence. Further, the analysis required to determine "fair use," and other defenses, is necessarily specific to the individual case. The court points out that the benefit of a class action is that there's "an issue that is central to the validity of each of the claims in one stroke" but that's clearly not true with mass copyright claims. Given all that, the class certification (for both classes) was denied.Permalink | Comments | Email This Story
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The big telcos (AT&T and Verizon) have been trying to move more and more to wireless networks over wired networks, in large part because they've realized that, for whatever reason, the FCC more or less gave them pretty free reign to completely ignore net neutrality concepts on their wireless networks. So it really shouldn't come as much of a surprise to see that AT&T has responded to the latest Google Hangouts app, which replaces the standard Google Talk app, by blocking video while on a cellular connection on Android phones (oddly, it works on iPhones). As you may recall, AT&T actually got into trouble for doing the same thing with FaceTime on the iPhone. AT&T's statement about this, as given to The Verge, parses its words very carefully, as if they think everyone is a complete moron: All AT&T Mobility customers can use any video chat app over cellular that is not pre-loaded on their device, but which they download from the Internet. For video chat apps that come pre-loaded on devices, we offer all OS and device makers the ability for those apps to work over cellular for our customers who are on Mobile Share, Tiered and soon Unlimited plan customers who have LTE devices. It's up to each OS and device makers to enable their systems to allow pre-loaded video chat apps to work over cellular for our customers on those plans. The whole focus on "pre-loaded" apps was how AT&T tried to tapdance around net neutrality questions last year with Facetime. And it's completely made up and bogus. Basically, they're saying if you want to do video, you have to ask permission. That's a broken system. It goes against what makes the internet good and useful: the fact that you can innovate without permission. A mobile carrier -- one who may see video chat apps as competition, for example -- being able to act as a gatekeeper to block the usefulness of such apps is a dangerous situation for those who believe in promoting innovation. We shouldn't stand for an internet where one company gets to pick what you're allowed to do. And, just to cut this of before anyone brings up a really silly argument to defend AT&T: yes, bandwidth on mobile broadband networks is somewhat more limited (though not as limited as they would have you believe). But, these networks, for the most part, have all done away with unlimited accounts anyway. So if people use up all their broadband quota on video calls, that should be their own decision. AT&T has already made pricing decisions that limit bandwidth to consumers, so further limiting their choice in apps makes no sense on top of that.Permalink | Comments | Email This Story
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Well, this is rather unexpected. After sheriff's deputies seized cell phones containing footage of David Silva's death at the hands of nine law enforcement officers, the assumption was that Kern County Sheriff Donny Youngblood's promise of a full investigation would result in little more than some officious noises being made and declarations that the recordings were "inconclusive" or "unrecoverable." That this is the most common assumption shows how far the trustworthiness of law enforcement has fallen. This precipitous drop in trust is almost inversely proportionate to the increase in recordings captured by members of the public. Law enforcement has long been in control of the cameras and this power shift has resulted in some very ugly behavior. The expected mode is cover up and obfuscate, abusing the power that comes with the position. The unsurprising part of the David Silva beating is this: when one of the phones confiscated by law enforcement (one without a warrant, the other after an illegal nine-hour detention) was inspected at the Sheriff's office, Sheriff Youngblood discovered the footage had been deleted. The surprising part is that Youngblood decided to call in the FBI to head up a parallel investigation into the death of David Silva. Even better, he had the phones flown out to the FBI's Sacramento office for analysis. This is a rather unprecedented move. The general response from local law enforcement to situations like these is to close ranks and make vague promises and statements about "justice" and "truth." Instead, Youngblood opted to turn the investigation over to a more neutral party (and one with better tech tools). The fact that this story has attracted national interest probably pushed Youngblood to consider other options. There's little chance the Sheriff's department would be able to control the narrative (or contain the fallout) at this point and with potentially damning footage being deleted by a law enforcement officer, there's no chance for redemption without making the investigation more neutral. This isn't to say the FBI isn't capable of covering up misbehavior, but in this instance, it really doesn't have much of a stake in the outcome. If the footage shows what eyewitnesses have described, there shouldn't be too much of a question as to where the guilt lies. The deputies named by the department have been put on paid administrative leave pending the outcome of the investigation, and Sheriff Youngblood has stated that these officers have been receiving death threats and negative email. This, too, is an expected outcome. The court of public opinion creates a lot of judge/jury hybrids. Naming the officers involved is a small but significant step towards a transparent investigation. Hopefully, the FBI's involvement will continue in this fashion, rather than take a turn towards the opaque.Permalink | Comments | Email This Story
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For years, we've been critics of red light cameras, which have been shown time and time again to actually increase accidents rather than decrease them -- which you would think should be the goal. Of course, we all know that's not really the goal. The goal has always been revenue generation for cities. If they actually wanted to increase safety there's a very simple way to do it: you increase the timing of yellow lights (and for the places, like where I live, that don't have an interval between when one direction turns red and the other turns green, you add that brief interval where all directions are red). Do that, and you increase safety and decrease accidents. And it's incredibly easy and cheap to do. But, of course, various governments hate that idea, because it would decrease the massive revenue from red light camera fines. That's why over and over and over again, we see that various governments are caught redhanded lowering the time for yellow lights. Make no mistake about it: this increases the danger, and puts many more people at risk. Stupidly, it probably also could end up costing the city more in terms of having to respond to more accidents and deal with more injuries. But, boy, I'm sure it pumps up the revenue on red light camera violations. The latest example of this comes via Darby Keene, who points out that the Florida Department of Transportation quietly tweaked its own standards for yellow light intervals in 2011, allowing them to be shorter without breaking the law (after many cities have been caught violating official standards). And, of course, various cities quickly did lower the interval timing. Yes, revenue at the expense of public safety. Research has shown that reducing the time of a yellow light by a mere half a second can double the number of red light camera citations -- and in some cases, the changes to FDOT's regulations meant cities reduced the length of a yellow light by an entire second. Smell that? It's the smell of revenue for cities, intermingled with wrecked cars and destroyed lives! Even worse: while FDOT is claiming that it changed its regulations to clean up some wording, and not because of potential revenue, the report from WTSP, also found emails from FDOT engineers telling local government officials to lower their yellow light intervals to the absolute minimums allowed. That is, they weren't even saying it was just an option, they were being told to decrease the timing to make the intersection less safe, but more profitable. And, while FDOT defended the whole thing claiming that they changed the policies to "match federal guidelines," the report explains that federal guidelines actually recommend longer yellow light times, just as we discussed above. A USDOT/Federal Highway Administration (FHA) report said cities should not use speed limit in the yellow interval equation because it results "in more red light violations and higher crash rates." And if drivers' average speeds cannot be calculated, it's recommended engineers use the "speed limit plus 10 mph" variable to producing more conservative, and safer, yellow intervals. Another report stresses the importance of using 85th percentile speed to calculate yellow intervals, while slide 28 on this report indicates when yellow light times are lengthened, severe crashes drop.   USDOT also recommends an extra half-second of yellow time at intersections with lots of trucks or elderly drivers to allow them to react safely. And despite the fact that Greater Tampa Bay is home to five of the nation's 12 oldest counties (by median age), it's also home to some of the shortest yellow lights. Don't you feel safer now?Permalink | Comments | Email This Story
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You may recall Judge Beryl Howell, the former RIAA lobbyist who helped author the DMCA, and also went against a very large number of other judges dealing with copyright trolling lawsuits by ruling that it was perfectly fine to lump over 1,000 John Doe defendants into a single lawsuit and then get discovery on them for the purpose of shaking them down for payment. While so many other courts have ruled that such lumping together is an abuse of the legal system in misjoining unrelated parties, Howell not only stuck to her guns, but then proceeded to blame ISPs for copyright trolls, suggesting that if they just did more to crack down on infringing, trolls wouldn't be a problem. What you may not remember is that the key case in which Howell did this happens to be a case involving... you guessed it... AF Holdings and its "law firm" Prenda Law. Oh, and the "copyright assignment" that AF Holdings is using for this case was one of those supposedly signed by... Alan Cooper. While Judge Howell may be well served to pay attention to Judge Otis Wright in California and his actual investigation into Prenda/AF Holdings/Alan Cooper, the case is out of her hands for now, as the various ISPs who have the info in this particular case have appealed Howell's ruling and the EFF, ACLU, Public Citizen and Public Knowledge have stepped in as well with additional arguments in an amicus brief. Both briefs are well worth reading, though you might be surprised that the amicus brief is probably the more reserved of the two. The ISPs who took part include: Bright House, Cox, Verizon, AT&T and Comcast -- with most of them (Verizon and Comcast being the exceptions) not even providing service in the jurisdiction of the district court: Washington DC. Comcast joining in is interesting, given that they own NBC, but we'll leave that aside for now. To put it mildly, the ISPs think the appeals court should put an end to these kinds of cases, noting that a majority of other courts have refused to allow joinder on so many defendants, and have blocked the discovery process. It points out, of course, that these cases are almost never taken to court, but are usually just used to reveal names and then offer settlement demands. Specifically, they feel that Howell made a pretty big legal mistake, in that a showing of "good cause" is required for discovery, and Howell ignored that. The district court’s conclusion that rules governing personal jurisdiction and venue provide no impediment to pre-Rule 26 discovery of the ISPs is legal error. A showing of “good cause,” which is required for discovery ostensibly intended to identify defendants, requires an evaluation of whether the information sought from the ISPs would be used to name and serve defendants in the forum. See, e.g., Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 352-53 & n.17 (1978) (where “the purpose of a discovery request is to gather information for use in proceedings other than the pending suit, discovery properly is denied”). The Copyright Act and the District of Columbia’s long-arm statute limit the court’s reach to defendants who reside in the district. And the uncontroverted evidence before the district court showed that few, if any, of the targeted Internet subscribers reside in the District of Columbia—as publicly available geolocation software used by Plaintiff’s counsel in other cases confirms. The district court’s decision to defer any consideration of personal jurisdiction or venue until after the subscribers’ personal information had been disclosed to Plaintiff requires reversal. The court’s decision to permit discovery of the ISPs before deciding whether the 1,000-plus “Does” are misjoined provides an additional basis for reversal. Plaintiff, by routinely declining to name and serve defendants after obtaining the subscribers’ personal information, virtually ensures that Rule 20’s requirements for joinder will go unaddressed if not evaluated at the outset. And as a growing majority of courts have concluded, deferring a ruling on joinder deprives the courts of filing fees and encourages a proliferation of improperly coercive lawsuits. Given the groundswell of published opinions that disagree with the lower court and have severed or dismissed non-resident “Does” or all Does except for “Doe No. 1,” deferring a ruling on joinder in a suit that seeks nationwide subscriber information also encourages forum shopping—as the record here shows persuasively. The ISPs also, quite reasonably, point out that if mass joinder and discovery is allowed in this case, the trolls will descend on the DC Circuit courts in a mass forum shopping situation: The record reflects that Plaintiff’s counsel’s cases have migrated across the country, with the venues selected, not by the locus of the parties or situs of harm, but based on counsel’s perceptions of which forum is most likely to authorize the greatest discovery, at the lowest cost, with the least judicial oversight. The specter of intra-district, judge-specific shopping in Plaintiff’s counsel’s cases further underscores the problem with the lower court’s approach. The ISPs raised below Plaintiff’s counsel’s practice of filing complaints and dismissing them vel non based on the judicial assignment—only to re-file in another court. When presented with the same facts, Judge Wilkins quoted with approval Judge Huvelle’s finding: “Plaintiff’s actions a[re] akin to ‘judge shopping.’… This Court could not agree more.” ... The ISPs respectfully submit that the district courts in this Circuit should not be the destination for 1,000-plus Doe cases that are brought primarily to compile mailing lists—not to adjudicate actual cases or controversies. The ISPs also go through, in detail, the accusations against Team Prenda, and the claims of Alan Cooper. As it notes: AF Holdings and its counsel owe a duty of candor to the Court, and a duty of fairness to appellants.... The serious issues concerning attorney misconduct and potentially forged documents were not identified for the court below; they necessarily affect the “good cause” analysis and provide an alternative basis for reversal to address the evidence now being considered in the pending disciplinary proceedings in the Central District of California. The EFF/ACLU/PK/PC filing is more focused on the specific errors in Howell's ruling, concerning the "good faith" standard for discovery and the mass joinder of over 1,000 people. They also point out the jurisdiction problems of the defendants who are clearly outside the jurisdiction of a DC court -- and the fact that these cases rarely end up in actual lawsuits means that the question of proper venue will not be "cured" later. Finally, the brief argues that Howell ignored key First Amendment issues concerning revealing anonymous internet users, and the higher standard for them to be revealed. This argument wasn't made by the ISPs, so we'll focus on that one here. It points to the key Dendrite standard we've discussed many times before concerning the revealing of anonymous users. This does not mean that you cannot identify those accused of copyright infringement, but rather that you can't go on a random fishing expedition to get names, as many copyright trolls have done. Specifically, in a series of cases beginning with Dendrite Int’l, Inc. v. Doe No. 3, 775 A.2d 756, 760-61, 342 N.J. Super. 134 (App. Div. 2001), courts have adopted a balancing standard to assess requests for early discovery to identify anonymous online speakers that protects the right to speak anonymously while at the same time ensuring that plaintiffs who have valid claims are able to pursue them. Without such a standard, abusive plaintiffs could too easily use extrajudicial means against defendants from whom they could not, in the end, obtain judicial redress. See Levy, Litigating Civil Subpoenas to Identify Anonymous Internet Speakers, 37 Litigation No. 3 (Spring 2011). The use of BitTorrent to select and share movies is expressive and, therefore, protected by the First Amendment. Call of the Wild Movie, 770 F. Supp. 2d at 350 (“[F]ile-sharers are engaged in expressive activity, on some level, when they share files on BitTorrent, and their First Amendment rights must be considered before the Court allows the plaintiffs to override the putative defendants’ anonymity.”). Although the expressive aspect of the conduct alleged here – the posting of copyrighted movies to BitTorrent – is somewhat minimal, that does not mean that discovery to identify the anonymous user without adequate initial evidence that individual Doe Defendants committed the alleged infringement. The weakness of AF Holdings’ assertions of personal jurisdiction and proper joinder means that First Amendment concerns weigh more strongly here in favor of quashing the subpoenas. Certainly it was not appropriate for the district court to ignore the question altogether. It will be interesting not only to see how the appeals court deals with it... but also Prenda's argument, since they seem to be getting more and more wacky lately.Permalink | Comments | Email This Story
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You may have heard about a fair bit about Attorney General Eric Holder testifying before the House Judiciary Committee on Wednesday morning. He was -- quite reasonably -- raked over the coals by members of both parties for the incredible decision to obtain phone records from AP reporters, under very questionable circumstances. There was one other odd tidbit that might be worth discussing around here as well. Suddenly, in the middle of all the questions about the Associated Press, Rep. Mel Watt -- who, during the SOPA markup famously declared that he didn't understand the technology, or why tech people were concerned, but also that he didn't care and wanted to pass SOPA without bothering to understand -- started asking questions about copyright and "enforcement." Yes, Mel Watt is the ranking member on the IP subcommittee (scary enough in its own right), but it seemed completely off topic. Most of the coverage on Watt's questioning has focused on the fact that he did most of his questioning with his two-year-old grandson on his lap, who interrupts the questioning at one point. But the questions were ridiculous, as were the answers, and deserve some scrutiny. First, despite it being soundly rejected when SOPA went down in flames, Watt asks Holder if Congress should make online streaming of infringing material a felony, rather than the misdemeanor that it currently is. There are all sorts of problems with this idea, as we've discussed in the past, but Holder embraced the idea wholeheartedly, saying that the Justice Department would love to have "another tool," ignoring just how widely the DOJ has abused existing tools to shut down legitimate companies and websites. And then Watt directly asks about a connection to terrorism: Watt: Are there increasing indications of links between this problem and terrorism? Have you found any of those links and would you describe them for the committee? Holder: Yes, that's a very good question. It's something that's very worrisome. As we saw organized crime get into a variety of other businesses in order to support their efforts, we're now seeing terrorist groups getting into the theft of intellectual property. Again, to generate money to support what they're trying to do for their terrorist means. So we have to broaden our enforcement efforts, broaden the investigative efforts that we take, to examine what are the precise reasons why people are engaging in this kind of intellectual property thievery. And to consider whether or not there's a terrorist connection to it. This is a relatively new phenomenon, but one we have to be aware of. Watt then asks about things that Congress can do to help, and Holder says he's "particularly concerned" about this problem, and he asks for "enhanced penalties" for "intellectual property theft." That all sounds very interesting. And it might be, if there were any truth to it at all. Unfortunately, there's not. We've yet to see a single piece of evidence supporting the idea that terrorists are involved in infringement. The claim has been around for years, and we've asked for evidence for years, and none has ever been provided. Because it doesn't exist. Researcher Joe Karaganis looked into the issue a few years ago and found that there were some very vague reports of organized crime being involved in counterfeit CDs/DVDs in the 80s and 90s. But that was small and short-lived -- in large part because online infringement basically made that business obsolete: Arguing that piracy is integral to such networks [organized crime and terrorism] means ignoring the dramatic changes in the technology and organizational structure of the pirate market over the past decade. By necessity, evidentiary standards become very loose. Decades-old stories are recycled as proof of contemporary terrorist connections, anecdotes stand in as evidence of wider systemic linkages, and the threshold for what counts as organized crime is set very low. The RAND study, which reprises and builds on earlier IFPI and Interpol reporting, is constructed almost entirely around such practices. Prominent stories about IRA involvement in movie piracy and Hezbollah involvement in DVD and software piracy date, respectively, to the 1980s and 1990s. Street vendor networks in Mexico City--a subject we treat at length in the Mexico chapter--are mischaracterized as criminal gangs connected with the drug trade. Piracy in Russia is attributed to criminal mafias rather than to the chronically porous boundary between licit and illicit enterprise. The Pakistani criminal gang D-Company, far from "forging a clear pirate monopoly" in Bollywood, in RAND's words, plays a small and diminishing part in Indian DVD piracy--its smuggling networks dwarfed by local production. The US record isn't more convincing in this regard. Jeffrey McIllwain examined the Department of Justice’s IP-related prosecutions between 2000 and 2004 and found that only 49 out of the 105 cases alleged that the defendant operated within larger, organized networks. Nearly all of these were "warez" distribution groups for pirated software--hacker communities that are explicitly and often fiercely non-commercial in orientation. McIllwain found "no overt references to professional organized crime groups" in any of the DOJ's criminal charges (McIllwain 2005:27). If organized crime is a serious problem in these contexts, it should not be difficult to produce a stronger evidentiary record. In other words, Rep. Mel Watt, a well known supporter of Hollywood's position on copyright, tossed a bogus softball FUD talking point to Eric Holder in the middle of an important hearing about a very different subject, and Holder proceeded to make claims to Congress that have been made for decades without a single bit of evidence to support it. Holder has plenty of other serious issues to deal with these days, but it makes me incredibly uncomfortable to see our Attorney General appear to be spreading known scare stories that have been proven bogus from decades ago as if they're new, despite a single bit of evidence concerning any modern connection to terrorism.Permalink | Comments | Email This Story
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Once the UK recording industry realized that UK courts would order ISPs to block websites it didn't like, it appears that the industry, led by BPI and PPL began putting together a list of over two dozen sites that they're asking to have blocked by all UK ISPs, even though many of the sites on the list have never been tried in a court of law or convicted of copyright infringement. Included on the list, for example, is Grooveshark, who has been sued, but has not yet been found to violate copyright laws. It may very well be true that there is infringement on many, if not all of those sites. But, generally speaking, there's this thing called due process that allows a site to defend itself before being censored from an entire country. Just because a site has some infringing content does not mean that the entire site should be blocked -- or you'd have absolutely no user generated content sites online, because the liability would be too high. The UK courts started down this slippery slope by allowing sites to be blocked, and now the record labels are just going to keep piling the list higher and higher.Permalink | Comments | Email This Story
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Although New Zealand's decision not to allow patents for programs "as such" was welcome, other moves there have been more problematic. For example, after it became clear that the New Zealand intelligence service, the Government Communications Security Bureau (GCSB), illegally wiretapped and spied on Kim Dotcom, the New Zealand government announced that it would change the law so as to make it legal in the future to snoop on New Zealanders as well as on foreigners. Judging by a major new bill that has been unveiled, that was just the start of a thoroughgoing plan to put in place the capability to spy on every New Zealander's Internet activity at any moment. Here's an excellent analysis of what the bill proposes, from Thomas Beagle, co-founder of the New Zealand digital rights organization Tech Liberty: The TICS [Telecommunications (Interception Capability and Security)] Bill is a replacement for the Telecommunications (Interception Capability) Act 2004. This law forced communications providers (ISPs, telcos, data networks, etc) to provide "lawful intercept" capabilities so that the Police, SIS and GCSB could access communications once they had a suitable warrant. The new bill expands and clarifies these requirements. However, the addition of the word "security" is the key to what has changed. The new bill now gives the GCSB sweeping powers of oversight and control over the design, deployment and operation of all data and telecommunications networks run by network providers in New Zealand. The stated reasons are to both protect New Zealand's infrastructure and to ensure that surveillance agencies can spy on traffic when required. As part of this, the GCSB will have the power to stop network providers from reselling overseas services that do not provide these capabilities. As Beagle goes on to explain, this will have a number of implications, including a requirement to build backdoors into all telecoms networks: From the Bill: A network operator must ensure that every public telecommunications network that the operator owns, controls, or operates, and every telecommunications service that the operator provides in New Zealand, has full interception capability. Note that the surveillance agencies still need to have a legally issued warrant (under the Search & Surveillance Act, NZ SIS Act, or GCSB Act) to actually intercept any communications and there are obligations to avoid capturing communications that are not covered by the warrant. Here's one way that could dramatically impact Internet users in New Zealand: It then goes on to give the Minister the power to ban the resale of an off-shore telecommunications service in New Zealand if it does not provide interception capabilities. This could stop the resale of foreign-hosted VPNs, instant message services, email, etc. Another clause could have major implications for Megaupload: Network operators must decrypt the intercepted communications if they have provided the encryption, but there is no obligation to do so if the encryption is provided by others. What does this mean for providers such as Mega (file locker) or LastPass (password storage) who have a business model based on the fact that they supply a cloud product that uses encryption but have deliberately designed it so that they can not decrypt the files themselves? This gives users the assurance that they can trust them with their data. Will the government close them down unless they provide a backdoor into the system? One deeply troubling aspect is the following: There is also a provision that allows the courts to receive classified information in a court case in the absence of the defendant or the defendant's lawyer. This applies to information that might reveal details of the interception methods used by the surveillance agency or is about particular operations in relation to any of the functions of the surveillance agency, or is provided as secret information from the surveillance agencies of another country. It can also be used if that disclosure would prejudice security of NZ, prejudice the maintenance of law, or endanger the safety of any person. As Beagle notes: particularly offensive to civil liberties are the provisions for convicting people based on secret evidence. How can you defend yourself fairly when you can't even find out the evidence presented against you? He concludes with an important point: One must ask where the justification for this expansion of power is coming from. Has New Zealand already been materially affected by attacks on our communications infrastructure? It seems clear that while the GCSB may not be that competent at exercising the powers they already have, they have done a fine job of convincing the government that they can handle a lot more. That's a question that needs to be put to the governments of other countries, like the US and UK, that are also seeking to extend massively their ability to spy on their own citizens. What evidence do they have that such extreme, liberty-threatening powers are actually necessary, and will make the public safer, rather than simply being a convenient way for governments to identify whistleblowers who expose their incompetence and corruption, say, or to spy on those who dare to oppose them? Follow me @glynmoody on Twitter or identi.ca, and on Google+ Permalink | Comments | Email This Story
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The New Yorker has announced a new anonymous document sharing system called Strongbox, that will allow people to anonymously and securely submit documents to reporters from the New Yorker. Other publications have tried to set up something like this -- often inspired by Wikileaks -- but for the most part, they've been full of security holes, sometimes big and serious ones. What may be more interesting than the fact that this system is being set up is the story behind it. It's based on DeadDrop, an open source system that was put together by Aaron Swartz and Kevin Poulsen. Poulsen has the backstory of DeadDrop here, which is well worth reading. Basically, he and Aaron worked on this project on and off for quite some time, and it was only just completed a few weeks before Aaron's death. The full story is worth reading, though here's a snippet: I wondered about this young tech-startup founder who put his energy into the debate over corporate-friendly copyright term extensions. That, and his co-creation of an anonymity project called Tor2Web, is what I had in mind when I approached him with the secure-submission notion. He agreed to do it with the understanding that the code would be open-source—licensed to allow anyone to use it freely—when we launched the system. He started coding immediately, while I set out to get the necessary servers and bandwidth at Conde Nast. The security model required that the system be under the company’s physical control, but with its own, segregated infrastructure. Requisitioning was involved. Executives had questions. Lawyers had more questions. Poulsen also notes that there were questions raised about the code after Aaron's death, but those were eventually sorted out: By December, 2012, Aaron’s code was stable, and a squishy launch date had been set. Then, on January 11th, he killed himself. In the immediate aftermath, it was hard to think of anything but the loss and pain of his death. A launch, like so many things, was secondary. His suicide also raised new questions: Who owned the code now? (Answer: he willed all his intellectual property to Sean Palmer, who gives the project his blessing.) Would his closest friends and his family approve of the launch proceeding? (His friend and executor, Alec Resnick, reports that they do.) The New Yorker, which has a long history of strong investigative work, emerged as the right first home for the system. Of course, Poulsen leaves out his own history here as well. As (perhaps?) many of you know, Poulsen was a somewhat infamous hacker back in the day who eventually (after avoiding law enforcement for quite some time) went to prison for some of his hacks. Since then, he's become one of my favorite journalists, writing for SecurityFocus and then Wired (and writing a wonderful book, Kingpin about some more recent hackers). While Poulsen and Swartz met long before Swartz was indicted -- and Swartz and Poulsen were indicted for very different types of activities -- having the two of them work together on a project like this is really quite fascinating. The unfortunate part of all of this, of course, is that DeadDrop is basically Aaron's "final project." Given how much he accomplished prior to that in his short life, it's just one more thing to add to a very long list of incredible accomplishments, but yet another reminder of how much potential was wiped away by his suicide. Permalink | Comments | Email This Story
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We've discussed GEMA's antagonistic attitude towards, well, pretty much everyone other than itself. In addition to turning the German YouTube experience into a farcical collection of "Sorry" faces and demanding fees for music it doesn't even control, GEMA has also been in the news due to its rollout of a "streamlined" fee structure that threatens the existence Germany's underground club scene with unsustainable licensing rates. Luis Manuel Garcia at Resident Advisor has put together a very thorough and excellently written rundown of the recent events, covering GEMA's attempts to "streamline" its licensing fee structure (and its adverse effects) and explaining some of the organization's idiosyncrasies. (This is a very nice word for GEMA's thuggish tactics that go beyond villainy to cartoonish supervillainy.) There are a few differences between GEMA and other performance rights organizations (BMI, ASCAP, PRS, etc.). Much of this has been covered here before at Techdirt, so I'll give you some of the high/low points of GEMA's services, with some added details from Garcia. Rather than being limited to "public performance rights," GEMA handles "collective rights management" for its 64,000 German members and 2,000,000 worldwide members. GEMA still collects licensing fees from businesses but its power goes much, much further than ASCAP's or BMI's. GEMA decides how to distribute your work... and at what price. This means that music-makers don't sign over ownership of their music upon joining GEMA, they sign over their usage rights—the right to legally manage and collect licensing fees for playback, reproduction and broadcast of their music. This is a convenient arrangement when you're a small-time musician who doesn't have the time or money to manage your catalogue; but these management decisions are taken out of your hands. If you want to grant a free license to a charity event or offer a reduced fee for a career-advancing event, you'll find that decision isn't yours to make. All music is assumed to be under GEMA's control unless the artist can prove otherwise. Unlike ASCAP, BMI, PRS, etc., GEMA isn't opt-in. And it's pretty tough to opt out. GEMA tends to "play it safe" by claiming music it doesn't own. Like other PROs, GEMA distributes licensing fees to top-selling artists. This distribution scheme is unlikely to change in the hands of GEMA. Its so-called "full members" (members who have achieved over €30,000 in GEMA revenue over a five-year period) are the only members allowed to vote on issues or hold controlling positions. Any artist not within this elite group has to watch his or her fees being redistributed to already wealthy artists while being prevented from attempting to effect any change in the prevailing structure. GEMA assumes (like other PROs) that every venue plays only music from top-selling artists. For underground music venues that mainly feature non-mainstream and independent artists—like many dance music clubs—this means that a portion of the fees collected for these events will likely find their way into the bank accounts of mainstream artists and advertising jingle writers, whose music was never played during the event, while some artists will never see a single cent for their music, however popular it may be. GEMA splits music into three categories which affect rates collected and royalties paid and arbitrarily decides for the artists what category their music falls under. It classifies music into three categories: entertainment [Unterhaltungsmusik], serious music [Ernste Musik] and functional music [Funktionsmusik]. It then subjects these categories to different fee rates, membership requirements and weighting in the points system they use to calculate royalties. Unsurprisingly, U-Musik gets the worst of this arrangement, having the highest membership requirements, the highest fee rates and the lowest values for royalty calculations Unlike other PROS, GEMA is a "for-profit" organization that enjoys a government-granted monopoly and legal powers. Making all of this worse is the fact that GEMA is a private interest "for-profit" organization, unlike most PROs which operate under a "non-profit" status. GEMA also operates as a monopoly, a problem made worse by the German government's decision to grant it legal power to "protect" the rights of its members. How GEMA went from bad to worse For years, the German government seemed to have no problem with GEMA's tactics and monopolistic operation. In fact, its only complaint was directed at GEMA's complex fee structure. GEMA responded to this by streamlining its rates with a clear eye on maximizing income. It was required to negotiate these changes with club owners and other affected parties, but its monopoly position basically turned the discussion into GEMA stating, "Here are your new fees," and walking away from the table. Negotiations broke down sometime in late 2011, however, and an attempt to initiate legal arbitration failed as well. GEMA therefore decided to go ahead without the negotiations or arbitration and published a new tariff structure in the Bundesanzeiger (Federal Gazette) in April 2012, which effectively made the new tariffs legally-binding. Now, the venues being hit hardest were nightclubs, especially underground clubs that catered to non-mainstream crowds and played non-mainstream music. GEMA's "streamlined" fee structure was built from the sort of opportunistic math that could only come from a self-interested monopoly. Any concessions to reality were thrown out the window in search of higher fees. GEMA's opportunistic math First, GEMA killed off yearly flat rates and replaced them with "per-event" charges. Supposedly, this was to "balance" fees between large and small venue owners. GEMA even claimed this would reduce fees for 60% of its "customers." But once it applied its GEMA-friendly calculations, everyone was guaranteed to see an increase in licensing costs. GEMA calibrated the new rate for dance clubs (Tarif M-V) with the goal of charging approximately 10% of the gross income for a music event. Of course, they don't trust organizers to self-report their revenues accurately, so they estimate the gross income based on venue size and price of entry, and then charge 10% of that. This estimation is based on three assumptions: 1) the capacity of a venue is one person per square-meter, measured wall-to-wall (i.e. beyond the dance floor and ignoring solid objects like furniture); 2) the event is full to capacity; 3) everyone is paying full price for entry. This sort of mathematical assumption would ruin any normal business. Fortunately for GEMA, it's a government-ordained monopoly which exists solely to extract fees. The more it extracts, the healthier it is. Under the old flat-rate structure, a 500 square meter club would have paid around €7,800 annually. Under GEMA's new plan, this leapt to over €78,000. When club owners complained about this exorbitant rate hike, GEMA responded (belatedly) with a nominal attempt at "fairness." In answer to complaints about these distorted results, GEMA later introduced the Angemessenheitsregel (appropriateness rule), which allows promoters to apply for a partial refund if GEMA fees are well over 10% of actual gross income or if the venue's capacity is well under GEMA's one person / m2 ratio. In other words, club owner would still need to pay up front and hope GEMA would cut them a (partial) refund check sometime in the next several months. Seeing as GEMA doesn't trust club owners to honestly self-report revenues (hence the lousy fee structure), it wouldn't be surprising if it decided these refund requests were dishonest as well, and rejected a majority of them. This rate hike hit underground clubs hardest, but GEMA wasn't done punishing them yet. GEMA also levied a rate hike based on the length of the event, jacking the rate up by 50% once the event passed 5 hours and adding another 50% hike every two hours after that. This led to astronomical charges for clubs that routinely ran 10-hour-plus events or operated around the clock. As more outrage poured in, GEMA dialed this back to a 25% increase every two hours after the 8-hour mark -- not as bad, but still unaffordable. GEMA tacks fees on hardware and data Obviously, GEMA felt it still wasn't making enough money from these events, so it decided to start double-dipping by cramming its hands into the DJs' pockets. [I]n late November GEMA announced another tariff, VR-Ö, which became known as the "laptop surcharge." It applied to all music performances that use blank media such as CDs, tapes, USB sticks and hard-drives. This already existed in the past as an automatic 30% surcharge on the entirety of GEMA music licensing fees if any of the DJs used mp3s or burned CDs. Now, the surcharge would no longer be a percentage of the fees, but would instead be calculated at 0.13€ for every mp3 file on the DJ's computer. Every song over five minutes costs an extra 20% per minute. Performers and promoters all over Germany were not pleased, especially since the rate appears to charge all files on a DJ's performing device, regardless of how many songs they actually play. The backlash All of this led to protests against GEMA and its club-killing license fees. A petition managed to gather enough signatures to get the government's attention. The German government looked into GEMA's fee structure and its opportunistic club revenue calculations. GEMA reentered negotiations with artists' representation and rolled back its fee structure to its pre-"streamlined" levels. It also adjusted its "laptop surcharge" to a flat rate of 50 euros per 500 songs, making this more affordable for DJs, if not actually any less presumptuous and stupid. (RA says some Germans feel this is nothing more than an opportunity for GEMA to jack the rates later on its newly collected list of registered DJs.) There's also been a call for German legislators to craft policies to regulate GEMA's actions. The outcome of this controversy has been a little better than expected, considering GEMA's horrible track record. Still, as is evidenced by GEMA's ongoing battle with Google/YouTube, the rights organization still has a long way to go before it will be considered anything other than predatory and overbearing. German artists should at least be given the chance to opt out without having to jump through GEMA's hoops. And all rights organizations should start making an honest effort to track actual usage, rather than simply throwing more money at those artists who already have plenty. It's 2013 and the technology exists to make this possible. PROs (and GEMA) are simply being willfully obtuse by pretending they can't do anything better than cut checks while eyeballing the latest Billboard chart. Permalink | Comments | Email This Story
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TorrentFreak has discovered that the Center for Copyright Information (CCI), better known as the company running the whole "six strikes" scheme in the US, somehow had its company status revoked last year for reasons unknown. However, this could have serious consequences: “If entity’s status is revoked then articles of incorporation / organization shall be void and all powers conferred upon such entity are declared inoperative, and, in the case of a foreign entity, the certificate of foreign registration shall be revoked and all powers conferred hereunder shall be inoperative,” the DCRA explains. It also may face penalties and fines. It appears that this may have just been a paperwork screwup, which does happen, but given the organization's overall mission, you would think that they would have been a lot more careful dotting their i's and crossing their t's.Permalink | Comments | Email This Story
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In lean times like these, it's getting tougher to get funding for science and technology research, especially for innovative but high-risk ideas. It's no surprise that both the government and the private sector seem to feel more comfortable investing their money in more conservative "sure thing" efforts these days. While the scientific funding system is far from perfect, some of the attempts to "fix" it are making it even worse. Here are just a few (good and bad) examples. Canada's scientific research and development agency, the National Research Council, has announced that it will now only conduct research that has "social or economic gain." Apparently, the President of the NRC actually said, "Scientific discovery is not valuable unless it has commercial value." Unfortunately, that's one giant leap backwards for mankind. [url] U.S. House of Representatives chair Lamar Smith (R-TX) is proposing to replace the National Science Foundation's peer review process with a new set of funding criteria chosen by Congress. Smith's "High Quality Research Act" would require the NSF to judge grants based on three criteria -- that the research will: advance national health, prosperity, welfare, and security; solve problems that are important to society at large; and not duplicate other research projects being funded by the government. [url] On a more positive note, the Thiel Foundation's Breakout Labs is aiming to change the way early-stage science is funded. Their grants of up to $350,000 over 1-2 years will enable startups to chase some risky ideas with groundbreaking potential, returning a small percentage of any commercial success back to Breakout Labs to help fund the future ventures. [url] If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.Permalink | Comments | Email This Story
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Last week, in writing about the silly backlash to Zach Braff's successful Kickstarter project, we noted that he claimed he had the data that showed his success did not take away from other Kickstarter projects, but rather it appeared that Braff brought a lot of new people to Kickstarter, many of whom went on to fund other projects. But still, the ridiculous arguments persisted that somehow famous people using Kickstarter take away money from upstarts. It's as if these people don't understand what a non-zero sum game is. They assume, incorrectly, that if one (famous) person is succeeding, it means one (non-famous) person is not. Perhaps the worst example of this was a piece by Reginald Nelson at TheWrap which ridiculously attacks Kickstarter's founders, arguing that these moves harm "the creative class." To (hopefully) put an end to such ridiculousness, Kickstarter itself has shared the analytics and data that Braff was talking about concerning the impact of his project (as well as the Veronica Mars project, which is the other big one that some people have complained about): The Veronica Mars and Zach Braff projects have brought tens of thousands of new people to Kickstarter. 63% of those people had never backed a project before. Thousands of them have since gone on to back other projects, with more than $400,000 pledged to 2,200 projects so far. Nearly 40% of that has gone to other film projects. We’ve seen this happen before. Last year we wrote a post called Blockbuster Effects that detailed the same phenomenon in the Games and Comics categories. Two big projects brought tons of new people to Kickstarter who went on to back more than 1,000 other projects in the following weeks, pledging more than $1 million. Projects bring new backers to other projects. That supports our mission too. I'd hope this puts to rest the ridiculous claims, but somehow, I doubt it will (and the comments on the Kickstarter blog post suggest people will still complain anyway).Permalink | Comments | Email This Story
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I guess I can't say for sure how I would react to a negative review (besides reading some Techdirt comments directed at me), but I'd like to think that I have thick enough skin not to make a complete ass out of myself. That's why it always surprises me to see companies that should know better poop their pants over what customers (or non-customers) say on sites like Yelp and Reddit. Whether it's suing customers or issuing DMCA notices, I simply fail to see the logic in pissing off even more people with that kind of behavior. If someone posted a negative review of one of my books for instance, even petulantly, I'd prefer to look at it as an opportunity to both learn from the negative review and appreciate the fact that someone out there cared enough to write something about it at all. Or, if you're Amy's Baking Company, you can write off all the complaints as coming from "haters" and then make a complete ass of yourself on your company's Facebook page. That restaurant has an interesting history of poor service, garnering poor reviews on Yelp, and even cursing at customers and tossing them out of their establishment for complaining. The woman who runs the place (you'll never guess what her name is) appears to have the business sense of a drunken chimpanzee. In one of the all-time worst decisions of anything ever, they decided to bring in Gordon Ramsay's show Kitchen Nightmares for the stated purpose of proving to their customers that their food is crazy good and the haters are all idiots. Those that have watched the show in the past can probably already hear the freight train of doom headed Amy's way. On Friday night's episode of Kitchen Nightmares, shouty chef Gordon Ramsay quit for the first time ever in the show's 82-episode history. Amy and Samy Bouzaglo — owners of Amy's Baking Company in Scottsdale, Arizona — blamed everyone for their troubles, including "haters" and "bloggers," but not themselves. The owners did not give service staff tips (pocketing the money instead) and admitted to having fired over 100 employees. Said Ramsay: "After about 100 Kitchen Nightmares, I met two owners I could not help, it is because they are incapable of listening." I'm not normally one for reality shows, but go watch this. Seriously. The level of crazy in Amy and her husband Samy is as epic as it is entertaining. Right off the bat, Amy breathlessly rails against "haters" and "bloggers" who are apparently to blame for her serving variously under-prepared and over-prepared food, wait times that are measured in hours for customers, and food combinations that would make even an amatuer cook blow their brains out in dismay. Still, the whole point of the show is to help failing restaurants turn things around, right? So obviously things went poorly on the show, the public reacted, and Amy and Samy learned their lesson and got their shitake mushrooms together. Of course they didn't. Instead, their Facebook page went at times all-caps nuclear, with some of the greatest combinations of religiosity, anger, and cursing I've ever witnessed. Some treasures of highlights for you to enjoy. "We will not bend to the will of these haters and sinners." "I AM NOT STUPID ALL OF YOU ARE. YOU JUST DO NOT KNOW GOOD FOOD. IT IS NOT UNCOMMON TO RESELL THINGS WALMART DOES NOT MAKE THEIR ELECTRONICS OR TOYS SO LAY OFF!!!!" "I am keeping note of all names here. We will be pursuing action against you legaly, and against reddit and yelp, for this plot you have come together on. you are all just punks." "WE ARE NOT FREAKING OUT. WE DO NOT CARE ABOUT A "WITCH HUNT" I AM NOT A WITCH. I AM GODS CHILD. PISS OFF ALL OF YOU. FUCK REDDITS, FUCK YELP AND FUCK ALL OF YOU. BRING IT. WE WILL FIGHT BACK." Now, it should be noted that Amy and Samy have since claimed that someone hacked their Facebook page. Reading the above posts, which have since been deleted, you may be inclined to think that level of crazy is obviously the work of troublemakers. To that I suggest again watching the episode. Either someone is doing an immensely accurate impression of these two, or it was them and they aren't enjoying the blowback that comes with pissing off everyone. So, what's the lesson that should be learned here? Is it that you shouldn't treat your customers like garbage? Is it that you shouldn't lash out about poor reviews online, regardless of whether you agree with them or not? Is it that you shouldn't seek out Gordon Ramsay as a way to vindicate yourself? Or is that reacting to bad press from all the above by blowing an o-ring on your company Facebook page and then crying hack only makes you look petty? None of the above. The lesson here is that you shouldn't go to Amy's Baking Company, because if the food doesn't kill you, I think there's at least a chance Amy will.Permalink | Comments | Email This Story
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I'm not sure where vice president Joe Biden is getting his information, but he seems rather confident that a tax can be levied against "violent media." He may want to check with the Supreme Court, which has ruled against regulating violent video games and found taxing certain varieties of speech differently to be a violation of the First Amendment. Possibly Biden just got carried away with the jovial spirit of censorship pervading the post-Sandy Hook political climate. Or maybe he was just in an overly-agreeable mood and started making affirmative statements without considering what he was saying. Or maybe he was just "playing to the crowd," which was entirely comprised of reps for various religious/community groups. Those present for the Monday evening meeting included Franklin Graham, son of the evangelist Billy Graham and CEO of the Billy Graham Evangelistic Association, and Barrett Duke, the vice president of the Ethics & Religious Liberty Commission, the Southern Baptist Convention’s public policy arm. The meeting also included Bruce Reed, Biden’s chief of staff, and Melissa Rogers, the director of the White House Office of Faith-Based and Neighborhood Partnerships, according to people who attended. This is not to say that all members (or even all representatives) of religious communities are censorious or prone to pushing their subjective morality on others. There are several exceptions. Franklin Graham, however, isn't one of the exceptions. Graham, two people in the meeting said, told Biden the government should consider taxing media companies that broadcast violent images and produce violent video games. He floated the idea that media and entertainment that portray violence should be subject to a special tax, with the proceeds going to help victims and their families," said Rabbi Julie Schonfeld, the executive vice president of the Rabbinical Assembly. Let's stop here for a moment and take a look at this proposal, possibly in the way that might befit a nation's Vice President. First off, the idea is bad and Graham should feel bad. As was mentioned above, applying additional tax to certain forms of speech is a clear violation of free speech rights. The government would be applying this tax to whatever it arbitrarily deemed "violent" enough to qualify for the "sin tax." (This is really what this amounts to -- a tax on certain speech and, indirectly, certain consumer behavior.) Secondly, the direct flow of tax revenue from "violent media" to "victims and their families" makes an implicit connection between the two principals. This links the two in the government's eyes and in the public's eyes. This also handily allows the government to dodge the fact that there is very little, if any, explicit connection between "violent media" and violence. In essence, this presumes guilt on violent media creators and punishes them for exceeding some arbitrarily acceptable "violence" threshold. Then there's perhaps the most troubling aspect: who decides what amount of violence is non-taxable and where does that line get crossed? If it's a PG-13 film, does it go untaxed? Does any M-rated game immediately have the tax applied? Will game developers and filmmakers explore other paths, like explicit sexuality, simply because violence gets taxed and sex doesn't? Or will they, more likely, adapt to the new chilling effect and produce stunted, sanitized output? There are other questions to consider as well. With the consumers footing the bill for violent movies and games, will this price hike affect purchases by attaching some sort of stigma to the products themselves? Would the government label these items with something like: "2% of this purchase goes to victims of violence," thus making consumers feel complicit in violent criminal activity simply by purchasing the media? [Bonus: will the MPAA be involved? It is one of Biden's buddies and its rating system is built on one of the most bizarrely abitrary set of 'standards' in the entertainment industry.] These are just a few aspects that should be considered before anyone even brings the subject up, much less offers Vice Presidential-backing for the idea. But Biden seems almost charmingly naive in his response: Biden told Graham that there was “no restriction on the ability to do that, there’s no legal reason why they couldn’t” tax violent images, Clark added. I'm guessing at this point someone has gotten word to Biden that there's actually at least one legal reason the government can't tax "violent images," because there has been no further word from either proponent of this terrible idea. Graham’s representatives did not respond to requests for comment. Biden’s office also did not respond to requests to comment about the meeting. Maybe Biden felt this conversation would never leave the room and therefore felt comfortable making ridiculous claims. He certainly appears to have tried to chill a little free speech himself. Five people who attended the 2½-hour meeting told POLITICO that Biden made a specific plea to those present to keep his words off the record from reporters. “He basically just said in general that these stakeholder meetings that if you put words into the vice president’s mouth it sometimes comes out wrong and gets misquoted,” said Shantha Alonso, the director of the poverty program at the National Council of Churches. Well, that's a nice out to have. I guess we'll see if the "I was misquoted/comment was off the record" excuse gets run up the flagpole sometime soon. If it doesn't, we might be safe in assuming that, no matter what conclusions the CDC reaches in its study of violence and violent media, Biden and like-minded supporters will be moving forward with their reinterpretations of the First Amendment. (h/t to Techdirt reader Colin for sending this our way. Not sure which Colin it is as multiple Colins come up in the search, but he knows who he is and can certainly take credit for the tip in the comment section.) Permalink | Comments | Email This Story
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We keep hearing the MPAA and others talk about how much Hollywood is suffering from piracy and how they can't fund new movies and how they're having to lay people off. And then there's this, suggesting something else may be going on: Consider: the top 20 companies in the United States ranked by market capitalization include no media companies. But according to figures assembled for The New York Times by Equilar, which compiles data on executive compensation, media companies employ seven of the top 20 highest paid chief executives. The names are familiar and the numbers are large: Leslie Moonves of CBS ($60,253,647), David M. Zaslav of Discovery Communications ($49,932,867), Robert A. Iger of Walt Disney ($37,103,208), Philippe P. Dauman of Viacom ($33,396,104), Jeffrey L. Bewkes of Time Warner ($25,670,263), Brian L. Roberts of Comcast ($25,087,379), and Rupert Murdoch of News Corporation ($22,418,292). Basically, the study showed that media companies might not be as big as companies in other industries, but they pay their execs way more. Basically, the top execs in the media business make much more than comparable execs in other industries, even if the companies those execs work for are doing much better: The data indicates that average pay of the 10 highest paid chief executives for media companies was about $30 million, more than the captains of technology or finance and other industries, who average $6 million to $14 million less. A few years ago, a friend who worked in the movie industry told me that the industry changed completely when the top executives started thinking that they were the stars. Suddenly, the focus shifted from making good entertainment to making sure they were the highest paid people around, and making sure that everyone knew it. I thought it was just a random comment at the time, but the data suggests that there's at least something to the idea that media execs have way outsized salaries. Either way, though, it does seem somewhat ridiculous to see any of the folks on the list above complaining that their business is in trouble when they're pulling down salaries like that.Permalink | Comments | Email This Story
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There's a lot of buzz about Sen. John McCain's proposed Television Consumer Freedom Act (pdf and embedded below), a bill designed to encourage cable companies to unbundle the TV stations they offer, and force the networks to do the same. It also takes away the weak bargaining chip that some networks have attempted to play against Aereo, in which they threaten to pull their broadcasts from the open air, by making them sacrifice broadcast licenses in order to do so. Everyone on the consumer side agrees that they'd like to have à la carte choices from cable companies, but beyond that there's no shortage of debate as to how effective the bill is likely to be and whether the end result would actually be any better for those consumers. The television market is badly distorted at all levels by monopoly interests and those whiffs of not-quite-collusion by groups of companies with a shared interest in maintaining the status quo, but is this bill capable of overcoming that? And is the practice of bundling really at the heart of the problem, or just a good public face for the deeper issues? This is hardly the first attempt to stop the practice at either the network or cable provider level. Some courts have already found bundling by cable providers to be legal and not anticompetitive; meanwhile Cablevision is currently pursuing an antitrust suit against Viacom for the network's bundling of stations that it sells to providers. Most of the details of the latter are under seal, but one notable point is Viacom's claim that it already offers channels individually, they just cost way more. If that's true of all Viacom's content, then it wouldn't be affected by McCain's bill anyway, which still permits bundling as long as there is an à la carte option. And even if it's not true, it just underlines the core problem of this approach: the bill doesn't give networks any reason to make individual channels affordable or desirable. They either already offer an expensive à la carte menu that nobody orders from, or they could easily do so. Moreover, it's not as though the justification for bundling offered by the networks is completely falsified: they can spend more money on niche channels and programs by subsidizing them with the revenue from more broadly popular fare. Of course, it's not as though that justification isn't exaggerated and twisted to suit their needs either, nor is it true that the same fundamental idea couldn't exist without bundling. Networks get more value from niche programs than just transmission fees: they care about audience reach, brand-building, competing with other forms of content, accumulating accolades for prestige shows and even, believe it or not, making good television. There's no reason their businesses could not be structured to continue subsidizing niche programming with popular programming in a slightly less direct manner. So the final solution, as always, needs to be found in the market — and that's already happening. Basically every single noticeable trend in media consumption habits, not just in television but in music and publishing and every format, points towards a more à la carte world. It's not news that the networks and cable providers have dragged their heels on this in the hope of milking their incumbent position a bit longer, nor is it news that they are privately a lot more freaked out by the cord-cutting movement than their public statements admit. Ultimately, it will be consumers making choices that force these companies to either adapt or perish. But for that to happen, innovators do need to be able to actually give the consumers those choices. If the market has become so badly distorted that innovators are being locked out, then legal action and new laws are needed. And that's why the aspect of the bill that is likely to be the most effective (not to mention the most interesting) is the way it all seems to come back to Aereo. The fight that Aereo started sits at the core of almost everything in the bill. Network owners don't like Aereo because they don't want to lose their retransmission fees from cable providers. Cable providers don't like Aereo because they don't want to lose the appeal of the major networks which, despite the ascendence of cable channels, still sit at the core of their service bundles — and because, generally, they don't want cord-cutters to have more options. McCain's bill basically says: Aereo or no Aereo, consumers need choices, and they're going to get them, whether you like it or not. Is it a worthwhile step? Yes — or, at least, it's hard to see how it could do any harm, even if it does prove ineffectual. Is it the best approach? No. It almost feels like a bet on Aereo's failure. If Aereo were permitted to innovate, rather than being forced to jump through endless technological hoops and still spend more time in court than in the workshop or the boardroom, then the market would already be giving consumers what they want and pushing the networks and cable providers to become more competitive. If there is to be legal reform, it shouldn't be another layer of conditions and caveats on broadcast licenses and the retransmission fee structure that attempts to force the hand of the networks and cable companies, it should be a clarification (and probably a relaxation) of the rules, removing the legal and regulatory uncertainty that holds disruptive startups back. Television doesn't need a Consumer Freedom Act — consumers already have lots of freedom, they just don't have many choices in how they exercise it. The heart of McCain's bill is in the right place, but a Television Innovator Freedom Act is what we really need. Permalink | Comments | Email This Story
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