Last year, there were early reports that ISP Virgin Media in the UK would become a copyright cop for the entertainment industry and start kicking file sharers offline if they were accused of infringement. While Virgin later denied this, the company did send letters threatening to kick users offline anyway. And, now, reports are coming out that Virgin Media is starting to use controversial deep packet inspection technology to spy on users to see if they're sharing any copyrighted works. As the article notes: "It's the equivalent of the Royal Mail opening every parcel to see if there's a CD inside, and making a note if there isn't a receipt in there too."

While this is just a test, and the information is being aggregated in a supposedly anonymous way just to judge the extent of the problem, there are a bunch of issues with such claims. First, there is no such thing as an anonomyzed dataset. Second, there are some pretty serious privacy questions raised by this. In the US, the use of Deep Packet Inspection for looking at what users do has been frowned upon, but in the UK it's been deemed not so bad by the legal system (however, the wider EU doesn't agree with the UK on this position). No matter how you look at it, it does seem quite extreme for your ISP to carefully look at everything you do online. In the end, of course, this will only serve to drive up the demand for encryption technology.Permalink | Comments | Email This Story

A few weeks ago, some publishing industry veterans announced plans to start a new daily newspaper in Detroit, a city that has seen its daily newspapers significantly scale back the production of the paper product. This resulted in some reasonable confusion over how the plan could possibly make sense. There was little indication of a plan to do anything different to try to offer a better product. Instead, it looked like just an attempt to jump in with a product not particularly different than the ones that had already stumbled in the same market -- but without the brand recognition or built up loyalty. So, it should come as little surprise that the new paper appears to have folded after just a single week of operation, though the publishers insist it's just a temporary "bump" due to (merely) a lack of advertising, distribution or timely printing operations. Seems like there are some kinks to work out.Permalink | Comments | Email This Story

Slowly, but surely, we're seeing some regional newspapers try out a paywall. We've already seen Newsday, on Long Island, put up a paywall, but it's more about reducing churn than actually getting people to pay (and early reports are that not many are paying). Now, as a bunch of readers sent in, Johnston Press, in the UK has announced a paywall as well, asking £5 for three months of access (which certainly beats Newsday's ridiculous $5/week plan. I'm glad that some newspapers are actually trying this out, as it was getting a bit tiresome hearing them all threaten to do so without any actual action. Now we can actually see what happens. Of course, my opinion on the matter has been clear. I think it will be a lot more difficult to get people to pay than these publishers believe, and it will be a lot more expensive to manage than they believe. Also, the writers for the papers behind paywalls might not like the fact that no one knows who they are any more. At the same time, it will only serve to open up the competitive market for others to come in at a better price point (i.e., "free") and scoop up a significant percentage of the advertisers who are seeking to reach a larger audience.Permalink | Comments | Email This Story

A few folks have sent over some version of the story that the Kindle is outselling every other product on Amazon. Of course, that's somewhat meaningless, as the folks at Gizmodo smartly point out. Because you can only get the Kindle via Amazon, and that makes the number completely different than other products:

When Amazon tells you that the Kindle is the highest-selling product on Amazon, you're supposed to think of it as you'd think of anything else: as a strong, reliable metric in gauging how well a product is doing in general. The thing is, there is no "in general" for the Kindle. There is only Amazon. Anyone who wants a Kindle and doesn't normally shop at Amazon has to make an exception. Anyone who wants a Kindle and doesn't normally shop online has to make an exception. The Kindle didn't outsell the iPod Touch--not even close.
Permalink | Comments | Email This Story

There have been a bunch of stories lately about how pictures that people put up on Facebook are coming back to haunt them in unexpected ways. First, we have the case of Adam Bauer, a University of Wisconsin-La Crosse student who had been careful about who he friended, but chose to accept a friend request from an unknown user, because "she was a good-looking girl." Turns out that the "good-looking girl" was actually the La Crosse police, who ticketed him for underage drinking because of a photo on Facebook of Bauer holding a drink. This reminds me of a case we wrote about six years ago, involving a woman who posted some naked photos of herself at some locations around Lincoln, Nebraska -- leading the police to charge her with violating local no-nudity laws.

The other story that a bunch of folks have submitted was the case of a woman who who lost her disability insurance benefits because of photos on Facebook. She was on sick-leave due to a diagnosis of depression. Yet, somehow the insurance company got access to her Facebook photos that showed her out having fun -- at a birthday party, on vacation and the beach and at a Chippendale's show. Now it's entirely possible that there was insurance fraud going on. Or, it's also possible that someone who had been diagnosed with depression was trying to put her life back together. It's a bit difficult to think that an insurance agent looking at photos online is better at diagnosing the situation than a trained doctor.

In both of these cases, the issue is that photos might not tell the whole story. Making major decisions based just on some photos uploaded to social networks seems fraught with potential problems. I could certainly see using them as part of a larger investigation, but it doesn't seem like that was the case in either situation. But, in the meantime, it's a reminder that your privacy is increasingly disappearing -- and you may be surprised about decisions that others make about you based on what you assumed was perfectly innocent activities.Permalink | Comments | Email This Story

While more and more courts seem to be understanding that eBay shouldn't be responsible for what users are selling on its site, it appears that French courts are a bit confused. Last year, a French court fined eBay $63 million because counterfeit LVMH products were being sold on the site. Of course, eBay has no way of knowing what's legit and what's not, but the French court didn't seem to care. A similar case, also involving LVMH, but concerning Google ads, was also ruled in LVMH's favor, but it was appealed to the European Court of Justice, and a judge there has already indicated that it makes little sense to blame the company. But that isn't stopping the French courts. eBay has now been fined yet again, because of a French ban on selling even legally purchased brands of LVMH perfumes if you're not an authorized distributor. eBay is appealing the ruling, saying that banning the resale of legally purchased goods doesn't make sense and harms consumers. However, a much bigger question is why eBay should be liable at all. It's not eBay doing the selling, but users on the site.Permalink | Comments | Email This Story

Musician Dan Bull seems to be carving out a nice space for himself responding to UK efforts to make copyright law more ridiculous that it already is, by voicing his opposition in song. A few months back, we wrote about his awesome open letter to Lily Allen (full disclosure: I get a brief mention) and now he's informed us that he's back again with an open letter (in song) to Peter Mandelson, called Dear Mandy:



I wonder if someone rich and famous has to buy Mandelson dinner before he'll actually listen to it.Permalink | Comments | Email This Story

We've discussed in the past how the UK's Premier League's fear of the internet has been a case study in what not to do online. But it seems that the Premier League bosses still want to push forward with plans to make it more difficult and more annoying for fans to actually watch matches. Jeff T alerts us to an opinion piece in The Guardian from the CEO of the Premier League, Richard Scudamore, in support of Lord Mandelson's Digital Economy Bill for kicking accused (not convicted) file sharers off the internet. It's the usual rant against "piracy" without much basis or knowledge:

Without the safe passage of the bill -- requiring ISPs to take firm measures against unauthorised filesharers who are currently streaming and downloading with virtual impunity -- the marker that this is theft isn't even set down, educating consumers cannot begin in earnest, businesses cannot begin to develop new models because the market won't be functioning properly and, most importantly of all, the current levels of investment that create jobs as well as talent will be lost. And that is when the real cost of digital theft would become apparent.

And yet, even as he writes those words, the creative industries that he insists are dying have been growing. How? Because the business models have been adapting just fine -- even without additional artificial barriers to competition or the ability to kick people off the internet. And, in the case of the Premier League, Scudamore seems to be leaving out an awful lot of important facts, such as how incredibly limited an online offering the Premier League has put forth, which is a large part of the reason why lots of people stream it illegally. He also tosses out some totally made up "facts" such as "the UK leads the world in illegal downloads of TV programmes, with up to 25% of all online TV piracy taking place here." Well, perhaps it's not totally made up since he uses the magic words "up to." But if there is a problem with file sharing of TV shows in the UK, it's likely (as Jeff noted in his submission) because the "creative industries" that Scudamore insists are so important still delay the release of popular shows in the UK and demand that online streaming sites like Hulu not work outside the US.

Piracy is not the problem. Piracy is only showing folks like Scudamore that they're doing a terrible job in meeting demand. He doesn't need people kicked off the internet to adjust his business model. Lots of others are already doing so.Permalink | Comments | Email This Story

Yet again, despite all the secrecy and bogus claims of "national security," the details behind what's being proposed in ACTA have leaked, and they don't look good at all. It's basically an attempt to force the worst of the DMCA on much of the rest of the world, with a few carefully chosen modifications. While there are lots of issues, it's worth noting the most basic of all, found in the first paragraph that contains the "general obligations" of participating countries. As Michael Geist details:

These focus on "effective enforcement procedures" with expeditious remedies that deter further infringement. The wording is similar to TRIPs Article 41, however, the EU notes that unlike the international treaty provisions, there is no statement that procedures shall be fair, equitable, and/or proportionate. In other words, it seeks to remove some of the balance in the earlier treaties.

This is the sort of thing that you really have to watch out for in these types of agreements. The lobbyists for the entertainment industry are amazingly good at carefully selecting or omitting words that, to the casual observer, don't seem all that important. However, in the long-term, they can change the entire thrust of an agreement. By leaving out the requirement that enforcement be "fair, equitable and/or proportionate," it makes it much easier for the industry to push for more and more draconian enforcement measures under a typical game of leapfrog or "ratcheting," where they focus on getting one country that's agreed to ACTA to impose something draconian, and then insisting that everyone else has to follow through in the name of "harmonization." Be aware of these sorts of tricks as the Hollywood lawyers will waste little time in leaping forward with claims that these rules really aren't any different than what's already in place. Of course, if that were actually the case, they wouldn't be arguing so hard for these new rules. They know how to work the system.

The second paragraph is also a bit troubling, as it would require a contributory infringement setup, or an "inducement standard." The industry has been pushing for this for a while, and while it failed to get the INDUCE Act passed in the US, it effectively got close with the troubled ruling in the Grokster case, written by a Justice who clearly admittd to not understanding basic technology. The problem with any sort of inducement standard should be obvious (though, it seems like it's not to maximalists): you are creating a liability for someone based on the actions of others. That should always be seen as a bad idea. However, the entertainment industry loves it, because they would rather fight legal battles against a small number of file sharing services and sites, rather than the users of those service and sites.

Even worse, by "harmonizing" these sorts of things via international treaty, we are left in the same troubled position we are on other similar treaties like Berne and TRIPS, whereby countries are locked into very specific rules on how intellectual property must work, and are unable to make serious and meaningful changes, based on their own knowledge of what works best to encourage and promote progress. Having a very small body of folks, heavily influenced by industry lobbyists, decide exactly what copyright laws must be does not allow for experimentation and actual knowledge of how these sorts of changes impact creative output. They're designed to hide the damage done by bad copyright law, rather than figure out a way to fix it.Permalink | Comments | Email This Story

The economy still isn't doing so great, and that impacts everyone -- even lawyers. So what are they to do in weak times? Eric Goldman points out that in the past, they'd become bankruptcy lawyers, but this time around, it looks like some are realizing a more lucrative strategy is to get involved in patent trolling -- though they prefer to call it "IP monetization." This is, of course, just a continuation of the whole ridiculous focus on squeezing cash from unused or ignored patents, following the publication of the book Rembrandts in the Attic, which kicked off this effort.

From an economic standpoint, this activity is a pure dead weight loss on economic activity. There is nothing good that comes from it. You basically have companies that have ignored a patent they got for whatever reason, suddenly rediscovering it and using it to go after totally unrelated companies who actually innovated and brought products to market (almost always with no knowledge whatsoever of the questionable patent in the first place). And suddenly the actual innovators have to pay up to a company that did absolutely nothing with the invention.Permalink | Comments | Email This Story

We recently wrote about how filmmaker Rhett Reese was somewhat misguided in lashing out at fans over their claims on Twitter that they had downloaded his movie Zombieland. Of course, both of the fans that he lashed out at noted they had seen the film in the theaters (one of them multiple times) and the download was a repeat viewing -- and they still planned to buy the DVD, since they loved the film so much. Still, the Twitter message from Reese that got the most attention was the claim that all this downloading would greatly impact the likelihood of a sequel. A few days later, Reese decided to further elaborate his stance on "piracy" and it is a bit more nuanced -- he admits that his messages were fueled more by emotion than by rational thought, though he is still upset about people downloading his films and is worried about where it "inevitably leads."

From this, Captain Kibble alerts us to an accurately described "rant" at ScreenRants.com about how this is "indisputable" evidence that piracy harms movies. The basis of that claim? Reese's heat of the moment claim that this could impact the making of a sequel. According to the ScreenRants folks, this suggests it's a fact that movie piracy is harming movies. Of course, there's no actual evidence that there is any decreased interest in making a Zombieland sequel. In fact, since the highest grossing movies almost always correlate to the most shared movies online, it seems that being a top pirated movie also likely has extremely high correlation with movies that get sequels.

Could file sharing be harming movies? Yes, it's possible. But there is scant evidence that it's a huge or serious threat that can't be dealt with through better and smarter business models. As we've seen with smart filmmakers who embrace file sharing as a way to gain more fans and "converts," it can actually help them make more money by building up more people who want to support the filmmaker.

That said, the latter half of the ScreenRants rant actually does make a few good suggestions, noting that part of the issue is Hollywood's slothlike pace in offering movie fans what they want in terms of online services and video on demand. One of these days, the movie industry will figure this stuff out, and the answer isn't freaking out and complaining about "piracy," but finally putting in place the business models that we've seen are working already.Permalink | Comments | Email This Story

We've been absolutely stunned by the Italian attempt to prosecute Google execs over a YouTube video. If you don't recall the story, apparently some schoolboys taunted a disabled boy by throwing a tissue box at him. They filmed the entire ordeal and posted it to YouTube. Because of the video, the kids in the video were actually held liable for the taunting. It actually helped bring those kids to justice. Meanwhile, Google took down the video as soon as they were alerted to it by the authorities (within a couple hours of finding out about it). But Italian prosecutors insist not only that Google should have blocked the video entirely, but the fact that they left it up means that its execs are guilty of criminal violations and deserve jailtime.

In pressing the case forward, prosecutors are claiming that Google must have known about the nature of the video because there were comments on the YouTube video expressing disgust over the video. It's as if they believe that Google execs read all the comments posted to YouTube and use those to pick and choose which videos should stay up and which should be taken down.

In the meantime, I'm still wondering why Italian prosecutors are not trying to push the tissue manufacturer in jail as well, as I would argue that those who made the package of tissues thrown at the boy are at least as, if not more, responsible for the actions of those kids as Google.Permalink | Comments | Email This Story

Well, here we go again. Reports are coming out of India about new draconian copyright law changes that were apparently decided on between the government and the recording industry with little to no input from everyone else the new laws would impact. Among the concerns? The new law would significantly strip fair use (fair dealing in India) rights, to the extent that they are effectively useless. This seems to happen over and over again in different countries. The recording industry and copyright maximalists of course will all claim that it's in an effort to "harmonize" the rules between countries, but harmonization is a codeword for a big game of leapfrog, whereby the industry pushes for more draconian laws in one country, and then demands that other countries need to "harmonize." Of course, somewhere along the way, they also convince one or more of those countries to make their "harmonized" law even more draconian than others, and suddenly everyone else has to "harmonize" again, leaving open the opportunity to ratchet the laws up even more.Permalink | Comments | Email This Story

A bunch of folks have sent in the story of a nameless pub owner in the UK who has supposedly been fined £8,000 in a lawsuit brought by a copyright holder over unauthorized downloads that were done over free WiFi that the pub offered. Of course, there is a lot of missing information here, so I'm not quite sure how much to believe of this story without further evidence. The name of the pub is not given. The information was provided by a WiFi hotspot provider, The Cloud, which claims that the specific pub owner has not given permission to publicize the case. Yet, if it was a lawsuit, you would think that there would be some court records detailing this. It appears that the laws regarding safe harbors for copyright infringement are not nearly as clear as they are in the US. Under the DMCA it seems that any hotspot owner would have safe harbor protections against such a lawsuit, and it seems odd that a court would fine the pub owner when it was clearly a user of the access point that did the file sharing.Permalink | Comments | Email This Story

TiVo has been spending a lot of effort suing others for patent infringement, but apparently not very much on actually improving their own services and giving customers a reason to buy them over the competition. So while it may be winning some of its patent lawsuits, it hasn't helped much for the business, which is rapidly bleeding customers and losing marketshare. TiVo basically created this market and owned it for years -- but then got complacent. Now, since it can't compete, it's gone to a litigation strategy. Perhaps it should have focused more on providing value and competing rather than suing.Permalink | Comments | Email This Story

Back in August, we noted that a Dutch court, at the urging of anti-piracy group BREIN (which has a history of questionable tactics), had ordered Mininova to remove all infringing links from its index. Even though the court admitted that Mininova itself was not infringing, it was told to remove any torrents that linked to infringing material. Since there's simply no way to know whether the torrents link to infringing material, and tests of some filtering solutions proved to not do a very good job, the site has decided to remove all torrents other than those specifically approved by the site. End result? The entertainment industry may have wac'd another mole, as Mininova users simply scatter to other providers. But the industry hasn't done anything to get people more interested in buying. How many more moles get wac'd before anyone figures this out?Permalink | Comments | Email This Story

We gently knocked Wil Wheaton recently for saying some things that we thought were a bit wrongheaded in terms of dealing with people copying his work -- while noting that for the most part he absolutely seemed to "get" where things were heading and had a long history of embracing that. Whatever you think of that minor blip, it looks like he's definitely got the right idea when it comes to new business models. Reader Avengingwatcher alerts us to a recent blog post by Wheaton where he's inspired by the fact that people can just "get excited and make things" if they have an idea, rather than having to go through the old gatekeeper model that so many were stuck in for so long. Specifically, he talks about print-on-demand solutions that take much of the upfront risk out of creating just about anything -- since you no longer need to pay for massive production at the beginning, and can just see what people want and order:

This is incredibly inspiring to me, and I hope that it's just as inspiring to indie artists everywhere. Why not take a creative risk and see if it works out? Unlike the old days, when we had to purchase a lot of stock ahead of time and hope we could sell it, we can just Get Excited and Make Things, knowing that the very worst that can happen is that nobody likes that thing we made as much as we thought they would.

Much of this is inspired by some experiments some friends are doing and discussing -- and one of the links he puts forth tries to tackle the "but this only works if you're big and famous" fallacy that we've debunked in the past.

I have to admit that 2009 has really become the year of creators embracing cool, working business models. These days, we get probably five to ten submissions per day of more artists embracing these sorts of business models that we talk about. We used to write about many of these, but it's reached the stage where we really only pick and choose to write about really interesting or unique ones, even as we see that many of these are working wonders. But the key point is the one that Wheaton hinges his post on, which is that more and more people aren't worrying any more, but they've decided to


Get Excited and Make Things

Is there any better motto for what's happening these days?Permalink | Comments | Email This Story

When we talk about intellectual property issues, many maximalists on both the copyright and patent side of things have this inherent sense that "copying" is "bad." Not just "bad," it's downright immoral. You hear words like "freeloading," "parasites," "pirates," "thieves," "copycats," etc. Yet, time and time again, when we look at industries or societies where there is less (or no) intellectual property protection, we notice something interesting: while there is definitely a lot of copying going on, it hasn't proven bad for overall innovation, and at times it's been shown to be very good for overall innovation. When we've talked about things like the chemical industry in Switzerland in the late 19th century (which was not covered by patents), there were certainly many chemical companies who focused on copying -- but there were also many who were quite innovative, and the overall impact to the economy was very strong.

The same is true if we look at the fashion industry, which does not have copyrights. It thrives without copyright protection in part because of all that copying. The copying serves a few very useful functions: first, it helps "perfect" the offering, as each "copyist" may improve on it a bit. Second, it helps diffuse the new idea throughout society, by offering it up in many places and ways that the originator was unable to. Third, it offers an element of price differentiation (the wealthy want the original/official version and pay more for it, others want the cheaper knockoffs). Fourth, it actually helps to validate the original idea (if there's a knockoff, the original must be cool). Finally, it stimulates additional brand new creativity from the original creator, who must realize that he or she cannot rest on any laurels, and needs to get to work on the next great design.

Copying serves an important function in getting new concepts out there.

And, now some researchers have started to look into it, and actually have built a model that shows society is likely better off when copying is the norm. Aaron deOliveira alerts us to the research on this, which tries to model societies with creators and innovators, and finds that society is served best when 30% of the population is involved in creating new goods, while 70% is focused on copying. Now, you can read through the full research and quibble with the methodology, but the basic premise is sound, and has been borne out in real life, in situations where copying was widely allowed. Hopefully there will be more research done in this arena, to see if this sort of modeling can be refined a bit more to take more factors into account. But, for now, this is a good place to start, and a reminder to those who seem to think that "copying" is somehow bad, that it serves a valuable part in the overall ecosystem of building and distributing innovative offerings.Permalink | Comments | Email This Story

Reader mick alerts us to the story of a small eight-person startup that makes a popular app for backing up your iPod music, which had been called "iPodRip" until Steve Jobs and Apple's lawyers got involved, demanding the company cease using the name and hand over its domain. It's even told the guy that even if he rebrands his app, he can't even say that it's the app "formerly known as" iPodRip. While lawyers told him he could successfully fight Apple on this, the guy gave in and is in the process of changing the name to iRip. Someone involved with the company actually sent Steve Jobs an email about the whole situation, and got the response:

"Change your apps name. Not that big of a deal."

Pleasant. Of course, at this point it seems worth pointing out that years long battle Jobs fought with the Beatles' Apple Corp. over the "Apple" name. Would Jobs have been okay if John, Paul, Ringo and George had simply told him "Change your company name. Not that big of a deal"? Now, yes, it is true that a company needs to enforce its trademark, lest it become generic, but in this case it certainly seems like the name was descriptive in a way that certainly didn't imply endorsement from Apple. But, of course, when you've got lawyers who can bully on your behalf, the details apparently aren't that important.Permalink | Comments | Email This Story

Remember ACS:Law? The shakedown organization that appears to have taken over where Davenport Lyons left off (including using some of the identical documents), and who has "partnered" with DigiProtect, the company that gleefully admits that it purposely puts files on file sharing networks just to collect the IP addresses of anyone who downloads, is asking for the identifying info on 30,000 UK users. To put that in perspective, in the years long campaign by the RIAA to sue people for file sharing, they apparently requested info on about 35,000 IP addresses. Of course, when spreading such a big net, it's no surprise that tons of innocent people get caught in it. But that's really of little concern, since no real lawsuits have been filed. They're just hoping a bunch of people feel that it's easier to pay up. It's not about stopping piracy or getting people to buy -- it's about shaking people down for as much money as possible.Permalink | Comments | Email This Story

We were just talking about how pretty much any government database will get abused by government employees eventually. But it's not just on the accessing or revealing of data that this can happen. How about the collection of data as well? Jabberwocky alerts us to the news that police in the UK have supposedly been arresting innocent people just to add them to the UK's DNA database. The report looking into this, sarcastically titled "Nothing to hide, nothing to fear?" finds that nearly one in five of the DNA records in the database are from innocent people. And part of that is an "arrest first, ask questions later" policy towards collecting DNA:

The commission had received evidence from a former police superintendent that it was now the norm to arrest offenders for everything possible. "It is apparently understood by serving police officers that one of the reasons, if not the reason, for the change in practice is so that the DNA of the offender can be obtained," said Montgomery, adding that it would be a matter of very great concern if this was now a widespread practice.

Oh yeah, to make matters worse: "there is very little concrete evidence on the importance of the DNA match in leading to a conviction and whether the suspect would have been identified by other means anyway." Don't you feel safer now?Permalink | Comments | Email This Story

It seems pretty bizarre that companies and industry organizations would be against helping those with reading disabilities or vision impairment -- but that's exactly what you get in the discussion over creating some loopholes in copyright law to make it easier to reformat content to help those who would have difficulties reading it otherwise. Their concern, of course, is anything that can be seen as weakening copyright law. As we've noted in the past, there's never really been any weakening of copyright law... ever. The only exception I can think of is when the US officially established that government documents could not be covered by copyright. But every other change has only strengthened it -- so perhaps it's no surprise that the usual suspects, including the MPAA and the RIAA are upset about this, claiming that this WIPO treaty on this subject would "begin to dismantle the existing global treaty structure of copyright law, through the adoption of an international instrument at odds with existing, longstanding and well-settled norms."

Now, that's funny, because you could pretty much say that ACTA is doing the same thing... and yet these same groups are strongly in favor of ACTA, which would also be at odds with existing, longstanding and well-settled norms." Funny how their view changes completely when discussing treaties that would beef up copyright law vs. those that would create important and useful loopholes in it.Permalink | Comments | Email This Story

With newspapers struggling with declining sales and subscriptions, it seems that a few of the major newspaper chains have realized that when they have a newspaper with something of real value to a lot more people than usual, perhaps it makes sense to bump up the prices. Both Tribune Co. and E.W. Scripps are planning to raise the newsstand price of Thursday's paper, treating it like a standard Sunday paper, recognizing that many people want the paper just for the ad circulars that detail "Black Friday" sales. In some ways, it's yet another point of evidence that ads (relevant ones) represent content -- in this case, content that a lot of people are apparently willing to pay for.Permalink | Comments | Email This Story

It's been somewhat amusing over the last day or so to see a bunch of our usual critics all submit the same exact story with some sort of triumphant "I told you so!!!!!" (usually in less friendly language). It's a report that music sales are up in Sweden following the strict anti-piracy law that went into effect earlier this year. The claim is that this is proof that the RIAA/MPAA/IFPI/BPI/etc strategies work. To them, this is clear, irrefutable evidence that draconian measures to crack down on unauthorized file sharing really does make people buy. That would be quite interesting if true, but our friends employed by these companies might want to wait a bit before breaking out the champagne over a dead cat bounce.

First, there are some who are questioning the actual numbers. So far, the only numbers have come directly from the IFPI, who hasn't provided much in the way of detail (and have a long history of publishing questionable, fact-challenged numbers). In fact, the very lack of detail would likely indicate that there are extenuating circumstances here. And, when we're talking about Sweden, it has to also be noted that services like Spotify (which dragged the labels kicking and screaming into the modern world) were just launched at the very end of last year. So, it could be that it was one of these more modern services that helped convince people to buy music rather than any crackdown. But, of course, the bigger question is whether or not any boost is sustainable. It was reported that there was a drop in file sharing after the Swedish IPRED law went into effect (though, again, many argue that the "drop" was simply because more people started using encryption and those who measure file sharing traffic had no way to deal with it, so pretended they all stopped). Yet, it didn't take long for the traffic numbers to bounce back up.

And that's the issue. If your entire business model is based on whacking people with a stick and telling them what they can't do, you may get brief moments of compliance, but at the first chance they get to go back to a more consumer-friendly system, they will. So while our friends in the entertainment industry will likely misread this situation into believing that its strategy of pissing off pretty much everyone makes business sense, let's wait and see how this works out in the next year or so. Dead cat bounces can fool lots of folks, but there are very few industries that succeed by basing their future on such things.Permalink | Comments | Email This Story

I guess it's natural to lash out at technologies and companies that undermine a business model built up on artificial barriers and scarcity, but it won't do much good in terms of actually adapting. But it's kind of amusing when it's done at the same time that someone is embracing those new technologies as they undermine other business models at the same time. Taylor Davidson points us to a photographer bashing the idea that microstock sites like iStockPhoto help "create new markets." It's actually been really depressing to see so many photographers react so poorly to new technologies, and this case is no exception. In the ranting post, he compares microstock sites to pollution in China and drug dealing. All the rant really screams out is "I'm so set in my ways that I can't compete or adapt my business model."

However, the really amusing part is highlighted by an anonymous commenter on the site who mocks the photographer for whining about how microstock sites are undercutting his old business model at the same time that he's advertising his own books and services online, rather than advertising in newspapers and phone books. As the commenter notes:

If everyone is supposed to stop posting their photos and selling to istock, how about photographers stop using the Web and advertise in phone books and newspapers so those jobs aren't lost? And maybe you can go back to using film instead of digital so that film manufacturers aren't put out of business? Sounds like to me you're all for taking advantage of technology except when others doing it hurts your bottom line.

And that's really a key point. Technology changes markets, and the more you look, the more you realize that it almost always enlarges the overall market for those who take advantage of it. Yes, there's more competition in the photographer market, and the model for stock photography has changed. But the nice thing about the microstock market is that it has opened new markets. A lot more people can and do buy stock photos than did in the past. If I can't find a decent Creative Commons/public domain photo for presentations, I'll go in search of one I can license from a microstock photo site in a second, because it'll just cost $1 or so. So I actually end up spending a fair amount on stock photos in the course of a regular year. Compare that to the situation seven years ago when we were working on a revamp of our corporate website. We went in search of a photo to use, and the licensing deals we saw wanted about $1,000 for just one year of usage. That meant we spent nothing, because that just doesn't make sense.

So, yes, the economics are changing, but if you're smart, you can take advantage of it. It may mean moving beyond just the stock photo market, or using such photographs (or even giving away works for free) to build up reputation for freelance or custom assignments. Most photographers I know never made much money from stock photos anyway, finding much more value in commissioned work. And recently, I've been hearing of success stories from some really good photographers who have used their existing work, given away for free, as strong advertising to get more (and more lucrative) commissions.

In the end, it really comes down to how you deal with it. Do you whine and stomp your feet and compare the new world to pollution? Or do you figure out how to adapt? Economic progress doesn't care in the slightest how much you liked how things used to be.Permalink | Comments | Email This Story

The folks in Hollywood have been working overtime lately trying to convince the world that piracy is harming the industry, even as the industry is having its best year ever in terms of both money made and the number of movies released. It's an uphill slog, so lobbyists, lawyers and execs from the various studios have resorted to what can only be described as "making stuff up." But, like the poor corn farmers that NBC Universal lawyers think are being hurt by movie piracy, most of these claims don't pass the laugh test.

But, of course, the story goes even deeper than that. As we've noted before, despite claims to the contrary, "piracy" is almost always an indicator of unmet consumer demand and a failure on the part of the industry to meet that demand. Matt Mason's book from last year made this quite clear, and now the EFF's Fred von Lohmann has done a great job detailing how any "problems" that Hollywood might face from "piracy" are problems of its own making. He points to the attempts by the major studios to block Redbox and delay movie rentals.

It's the same thing we've seen over and over again. You don't win customers by taking rights away from them. You win customers by adding more value. But that seems to be total anathema to Hollywood. Instead, it seems to think that the only way to run a business is to take away or disable rights and features from users, and then charge them to re-enable them. It's not difficult to see why this is not just a recipe for failure, but one that will only drive more people to piracy, after the industry blocks them from getting what it seems perfectly reasonable to expect -- and what the technology clearly allows.Permalink | Comments | Email This Story

Once again, Danny Sullivan is ripping to shreds the arguments being made by newspaper execs who are talking about how Google is a "parasite" on their content, despite sending tons of traffic. In this episode, Danny looks at the silly claim that visitors from Google are worthless, by comparing the situation to a regular shopfront and how they handle browsers vs. requiring a fee to get inside in the first place. He also goes on to look at how the Wall Street Journal (to which he is a subscriber) tries to monetize him online, and the only clear conclusion is that if News Corp. execs think that traffic from Google is worthless, it's only because they're making it worthless by doing an incredibly poor job capitalizing on all that free traffic.Permalink | Comments | Email This Story

Earlier this year, I wrote a post questioning whether the "inefficiency" found in multitasking was a bug or a feature. It was in response to studies pointing out that people who multitask tend to be less efficient at specific tasks. Folks like Nick Carr like to hold up things like that as examples of how modern technology makes us dumber, but more and more people are questioning that concept. While this is from a few months ago, Kevin Donovan points us an excellent piece by economist Tyler Cowen that challenges the concept that internet multitasking is a problem. In it, he makes a key point:

Multitasking is not a distraction from our main activity, it is our main activity.

That's a nicer way of saying what we said a few months ago. The "inefficiencies" from multitasking aren't a bug. They're a feature. Cowen goes on to explain it using the analogy of a long distance relationship compared to a stable marriage:

A long-distance relationship is, in emotional terms, a bit like culture in the time of Cervantes or Mozart. The costs of travel and access were high, at least compared to modern times. When you did arrive, the performance was often very exciting and indeed monumental. Sadly, the rest of the time you didn't have that much culture at all. Even books were expensive and hard to get. Compared to what is possible in modern life, you couldn't be as happy overall but your peak experiences could be extremely memorable, just as in the long-distance relationship.

Now let's consider how living together and marriage differ from a long-distance relationship. When you share a home, the costs of seeing each other are very low. Your partner is usually right there. Most days include no grand events, but you have lots of regular and predictable interactions, along with a kind of grittiness or even ugliness rarely seen in a long-distance relationship. There are dirty dishes in the sink, hedges to be trimmed, maybe diapers to be changed.

If you are happily married, or even somewhat happily married, your internal life will be very rich. You will take all those small events and, in your mind and in the mind of your spouse, weave them together in the form of a deeply satisfying narrative, dirty diapers and all. It won't always look glorious on the outside, but the internal experience of such a marriage is better than what's normally possible in a long-distance relationship.

The same logic applies to culture. The Internet and other technologies mean that our favorite creators, or at least their creations, are literally part of our daily lives. It is no longer a long-distance relationship. It is no longer hard to get books and other written material. Pictures, music, and video appear on command. Culture is there all the time, and you can receive more of it, pretty much whenever you want.

In short, our relationship to culture has become more like marriage in the sense that it now enters our lives in an established flow, creating a better and more regular daily state of mind. True, culture has in some ways become uglier, or at least it would appear so to the outside observer. But when it comes to how we actually live and feel, contemporary culture is more satisfying and contributes to the happiness of far more people. That is why the public devours new technologies that offer extreme and immediate access to information.

Many critics of contemporary life want our culture to remain like a long-distance relationship at a time when most of us are growing into something more mature. We assemble culture for ourselves, creating and committing ourselves to a fascinating brocade. Very often the paper-and-ink book is less central to this new endeavor; it's just another cultural bit we consume along with many others. But we are better off for this change, a change that is filling our daily lives with beauty, suspense, and learning.

The full piece is much longer, but beautifully written and quite convincing.Permalink | Comments | Email This Story

The world of startups can be a fast moving place, with lots of money thrown around quite rapidly at times. In such a world, it's no surprise to hear stories of pure outright fraud mixed in with all of the real stories of actual startups. They seem to come along every year or so -- and usually involve companies raising a ton of VC money and simply making up financial results, which the VCs never seem to check. Last year, it was Entellium who raised $50 million while totally making up revenue numbers. We wondered, at the time, how its investors never got around to actually auditing the company they gave so much money to. However, it really is par for the course for many investors to simply trust the management.

The latest such case, as revealed by TechCrunch, appears to be Canopy Financial, a high flying startup that had raised $65 million, but apparently made up a bunch of its revenue, potentially even forging audit statements from KPMG. Amazingly, the company's CEO is claiming he had no idea this was happening, which is either untrue or an incredibly damning statement on what sort of CEO he is. Once again, though, you have to ask what the investors were doing, and how they handed over such large sums without ever doing any serious due diligence.

These sorts of scams are pretty depressing for all those legitimate startups out there, who work hard to build real businesses, and sometimes even lose out on being able to raise money from these same VCs who were totally snookered by the scammers (though, honestly, would you want those same folks to invest in you really considering their ability to get taken in such a scam?). There's a lot of good things that happen in Silicon Valley... and a lot of money thrown around. Unfortunately, when that happens, it's inevitable that some bad characters jump into the game as well and just cook the books.Permalink | Comments | Email This Story

We were just talking about how the justice system in Spain seems at least somewhat more reasonable on the subject of file sharing, and here's yet another example. A court has overturned injunctions on two file sharing sites and fined the anti-piracy group that brought charges against them in the first place for "acting in bad faith." The case was dismissed because the court realized (yet again) that linking to infringing material is not infringing itself. But, the "bad faith" part involved the anti-piracy group, SGAE, tricking the operator of the sites into believing that two SGAE employees were representatives of the court and had the right to search his home and confiscate computer hard drives. We've seen such things allowed elsewhere, so it's nice that the Spanish courts are letting private anti-piracy groups know that they are not law enforcement.Permalink | Comments | Email This Story