Run with the Law

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How to Save Journalism?

Dec 10

Posted by GregSJ in Copyright, Google, Internet, Journalism

Yesterday I attended the IP and the Internet conference put on by the Intellectual Property Law section of the California Bar.  While there were many good presentations at the conference, perhaps the one that sparked the most discussion was Bruce Brown’s presentation “Using IP to Preserve Journalism in the Online World”.

One of the main themes of the discussion was on changing the law to protect hot news misappropriation.  As the discussion progressed it became clear to me that the focus was on protecting the business model by changing the law rather than trying to see how the business model could adjust to the technology and potentially regain profitability without changing the law.  In my opinion, changing the law should always be a last resort which is only attempted after all other business models have failed.

During the conversation I conceived a business plan which I believe has potential to increase online revenue for newspapers.  I would like to see the journalism industry try this and other ideas before lobbying to change any laws.

My plan:

Assuming search engines derive value from linking to “hot news” newspaper stories, publications will be able to incentive licensing by editing their robots.txt files according to a hot news standard.

For example, if the Chicago Tribune writes a story on hot news and marks it as un-indexable in the robots.txt file for 6 hours (at the end of which it is no longer hot news and the Tribune edits the robots.txt file to allow for indexing.)  Since search engines derive revenue from directing users to hot news (rather than users browsing directly to newspaper sites) search engines ought to be willing to pay for a license to index the content.  If the stories have commercial value this should be a win-win.

An obvious problem is that hot news travels extremely quickly online and the Boston Herald could easily undercut the Tribune’s leverage by quickly writing a similar article and not forbidding indexing.  Thus the Herald would receive most of the traffic that would have gone to the Tribune from the search engine and the search engines would continue to be a source to find hot news.

There are two potential solutions to this problem. If a highly desirable paper attempts this model and is able to license, than it will be against other newspapers financial interests to not use the same model (especially since we already know the current model isn’t working).  Conversely if search engines are unwilling to license to index so long as one paper does not implement this method then newspapers would need to collaborate to implement this business plan.  Such collaboration may or may not require an anti-trust exemption.

Either way I believe this model shows promise for generating more revenue for newspapers without rewriting IP law.

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Streaming won’t stop downloading because streaming is downloading

Dec 8

Posted by GregSJ in Copyright, Internet, Music

There has been a lot of news recently (for example see the articles at techdirt & the washington post) about a few studies suggesting that streaming has potential to stop illegal downloading of content online.   While the concept of legal streaming replacing illegal downloading is nice, it is naive to think that it is the answer to the record industry’s woes.  Streaming can’t stop downloading because streaming is downloading.

A basic understanding of how the internet works will demonstrate that this is true.  For anything online to be seen or heard a copy must be sent to the end users computer (or cell phone, ipod, tv, etc.).  Typically streaming works by sending the data sequentially such that the end user can begin to view or hear the content without waiting for the entire file to be sent.  This means that all a user needs to do to “download” a stream is ensure that the sequential parts of the file are saved rather than being thrown away automatically by your browser.  Don’t just take my word for it, Cory Doctorow of the Guardian agrees:

And of course, some streaming software throws away the bits after it finishes downloading them, rather than storing them on the hard-drive.
It’s this last part that has the technologically naive excited. They assume that because a downloading client can be designed in such a way that it doesn’t save the file, no “copy” is being made. They assume that this is the technical equivalent of “showing” someone a movie instead of “giving them a copy” of it.
But the reason some download clients discards the bits is because the programmer chose not to save them. Designing a competing client that doesn’t throw away the bits – one that “makes a copy” – is trivial.

And of course, some streaming software throws away the bits after it finishes downloading them, rather than storing them on the hard-drive.

It’s this last part that has the technologically naive excited. They assume that because a downloading client can be designed in such a way that it doesn’t save the file, no “copy” is being made. They assume that this is the technical equivalent of “showing” someone a movie instead of “giving them a copy” of it.

But the reason some download clients discards the bits is because the programmer chose not to save them. Designing a competing client that doesn’t throw away the bits – one that “makes a copy” – is trivial.

The point is that as much as streaming eliminates the demand for downloading, it actually makes it easier for downloading to occur.  Perhaps the decline in “downloading” is because people have discovered the ease of saving their streams and don’t need to “download” any more (there are a number of commercial products available for this purpose which I will not link to in fear of inducing copyright infringement).

The real surprising thing to me is that the record industry hasn’t already figured this out. For one it ignores the concept of music collection which Doctorow does a wonderful job of pointing out:

First of all, while streaming music from Last.fm is a great way to listen to music you haven’t discovered yet, there’s no reason to believe that people will lose the urge to collect music.

Indeed, the record industry seems to have forgotten the lesson of 70 years’ worth of radio: people who hear songs they like often go on to acquire those songs for their personal collections. It’s amazing to hear record industry executives deny that this will be the case, especially given that this was the dominant sales strategy for their industry for most of a century. Collecting is easier than it has ever been: you can store more music in less space and organise it more readily than ever before.

Second, cable companies have already figured this out and are trying to lock down your tv so that you can not record the digital cable that streams there. Google (or bing) Selectable Output Control (SOC) and see what comes up.

The end result? I believe streaming will lead to one of two things: more drm (which hasn’t worked so far) or realization that a drm free subscription downloadable system  may be a viable business plan for the record industry moving forward. It won’t make as much money as it did, but it is more than nothing and digital distribution is extremely cheap.

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Jason Mraz is Pro Bootlegging

Oct 15

Posted by GregSJ in Copyright, Internet, Music

Friday night Amy and I went to the Jason Mraz show at the Greek Theatre.  My favorite part of the show was when he played a Led Zeppelin/ZZ Top-esque version of Norm Greenbaum’s Spirit in the Sky.

After the show, I ran a quick iTunes search for the song.  Unfortunately and unsurprisingly I came up with nothing.  So instead of giving up I turned to the “dark side” of the internet.  To my surprise/delight I found that not only was a version available for download, but Jason Mraz has given explicit permission for fans to record live shows.

Jason Mraz allows audio taping at almost every live performance. We feel that each show is unique and want to offer our fans the opportunity to recreate the live experience through the audio reproduction of our shows. At all taping authorized performances, tapers can tape from any ticketed seating location in the venue. Also, for many of these performances tapers are able to purchase tickets for a specially designated taper section, normally located immediately behind the soundboard… From time to time we may record some of our shows for a live album or DVD, and we may not allow taping at those shows or we may notify you that we are going to commercially release our tapes from the show at which time we will ask you to withdraw all of your tapes from that show(s) from further trading.

How refreshing!  An artist who actually understands that fan recordings of live shows are not competition for recorded studio albums.

An interesting copyright tidbit at the end of his taping policy

No waiver of any copyright or trademark right is intended.

Since copyright only exists after fixation it is arguable whether any artist has any copyright claim against bootleggers.  However since Jason Mraz has authorized fan fixation he may have a copyright claim in every live show.  In other words explicitly authorizing taping of the show may give Jason Mraz a copyright claim for live performances he otherwise would not have had.

Coming Tomorrow Part II: Is Jason Mraz inducing copyright infringement?

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EMI Grooveshark Update

Oct 14

Posted by GregSJ in Copyright, Infringement, Internet, Music

Some of you may remember the EMI v. Grooveshark from my earlier post EMI sues Grooveshark, but what about the songwriters? Big news today is that Grooveshark and EMI have come to a licensing agreement thereby ending the lawsuit

Quick thoughts: Should EMI face sanctions for filing an infringement lawsuit merely as a means of furthering it’s licensing negotiations? Or should it be rewarded for keeping the lawsuit out of court and settling?

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Should Actors Be Paid for Unauthorized Youtube Uploads?

Sep 16

Posted by GregSJ in Contract, Copyright, Internet, Trademark


(This video appears to be authorized but is still awesome despite not being particularly relevant)

Rebecca Tushnet’s 43(b)log alerted me to an interesting copyright/trademark issue.  Apparently actors’ unions are requesting that advertising agencies either pay them for unauthorized YouTube uploads or send DMCA take down requests. The Joint Policy Committee on Broadcast Talent Relations has released a position that there are no fees associated with unauthorized uploads and advertising agencies are under no legal obligation to send take down notices.

Rebecca’s post notes that the law on whether actor’s individual rights are preempted by federal copyright law is currently split.  While I agree with Rebecca that this is a great topic for someone to right a law review note on, I don’t currently have the time.

Instead, I would argue that this should be covered by contract.  First, in this day and age (wow writing that makes me feel old) everyone should expect anything they do on video to be widely available on YouTube or elsewhere online.  Second, given that advertising agencies (and their clients) generally want their commercials to be viewed by as many people as possible, they have no incentive to issue take down notices for unauthorized uploads.  Since this should have been a foreseeable issue by the sides during contract negotiations, I would argue that the language of the contract should control.  If the contracts call for payment of fees for authorized YouTube uploads then it seems to me the advertising agencies are impliedly authorizing the uploads by their failure to police the copyright.

The implied authorization is equivalent to contributory infringement case. Contributory infringement liability requires knowledge and material contribution.  While the advertising agencies are the copyright holders they are also contributory infringing their own copyright.  Given the union’s demands for take down notices and/or fees the advertising agencies clearly have knowledge of the contributory infringement.  They also are materially contributing by failing to take action and benefiting from the infringement.  Since it appears the advertising agencies would be liable in a contributory infringement suit, I believe they have impliedly authorized the uploads in question.

Given that actors have typically waived all copyright claims to the works in question, the unions should pursue a breach of contract claim for the fees (which is presumably what they would prefer over take down notices anyways).

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Amazon, California, and Law Firm Jobs

Jun 24

Posted by GregSJ in Internet

california-bankrupt copyIt appears California and I have the same big stress factor right now: lack of money and fear of lack of future money. Mine stems from mounting law school debt and the current economy’s hit on law firm recruiting. California’s stems from years of over spending and a decline in tax revenue.

In one of its many attempts to avoid potential bankruptcy California is considering AB 178. According to Assemblymember Nancy Skinner (D – Berkeley)

This legislation will close the current loophole in California tax law which has allowed out-of-state companies to avoid collecting California sales and use tax

One other justification for the bill is to “level the playing field for California’s brick and mortar businesses” who must collect taxes. The bill is intended to change the definition of retailer for the purpose of sales tax revenue to include a

retailer engaging in business in this state” a retailer entering into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link or an Internet Web site or otherwise, to the retailer

As I understand it, this means that all retailers who use an affiliate program to “generate sales” will have to collect sales tax to all residents of the state. The bill’s authors assume this will raise lots of money for the state in new sales tax revenue.

AmazonAfilliateUnfortunately for the state, internet retailers disagree.  Amazon and other retailers are lobbying against the bill.  Furthermore many retailers, including Amazon, have threatened to sever all ties with California affiliates if the law passes. However given the backlash from internet retailers it appears to mean that many affiliate programs will shut down their relations with affiliates in the state. Thus the state may receive little extra sales tax revenue. Additionally it appears state residents will lose income as they are barred from these affiliate programs (potentially resulting in a net loss for the state as it will lose the income tax it would have received on that income.)

California and I are currently stuck in the same poor position:  taking steps to increase our income and potentially hurting it. (Before law school I was getting paid poorly but wasn’t in debt.  After law school I will be in debt and fear that if the economy doesn’t improve will still be being paid poorly.)

In law firm economic news a recent  survey by Hildebrandt International shows that while the economy appears to be improving for law firms more partner layoffs are planned.  Not great news in my search for the suddenly elusive post law school job.  Thankfully I still have a year to find it.  Here is hoping both California and I find a solid source of income.

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Where Blogging and Branding Clash

Jun 23

Posted by GregSJ in Blogging, Fair Use, Infringement, Internet, Trademark

EverydayFoodieYesterday my girlfriend alerted me to a post over at one of the food blogs she follows.  The blogger had received a cease and desist letter from a major brand alleging trademark infringement. After receiving legal advice the blogger has decided to abide the cease and desist letter despite a relatively strong legal position.

The post goes on to complain about the cease and desist tactic.  However I believe her response is one of the very reasons this tactic continues to be used where it shouldn’t be.  Instead of asking the brand to justify its position the blogger has acceded to their outrageous demands.  The attorney who sent the demand can report beak that he successfully defended the brand without mention the potentially devastating brand tarnishment that occurred by treating  a popular food blogger as a criminal.

We the people are stuck in a legal catch-22.  We continue to receive cease and desist letters and take down notices which border on ridiculous.  However fighting them can put oneself in an untenable position.  Having to fight a legal war against a large corporation with significant legal resources.  As a result the cease and desist letters and take down notices become more frequent as attorneys can cite their high success rate.

Until someone fights back and can get a judge to award a major penalty for sending unwarranted cease and desist letter corporate attorneys can continue to  blindly send out unjustifiable take down notices and claim victory.  The sad truth is that no one is winning.  The brands that the attorneys represent lose major PR and brand loyalty every time one of these letters is sent to someone it shouldn’t have been.

There is hope though!  United States District Judge Jeremy Fogel, denied a motion to dismiss in a lawsuit filed by Stephanie Lenz against Universal Music alleging misrepresentation pursuant to a DMCA take down notice. Fogel also held that copyright owners must consider fair use before sending take down notices.

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Email to an Artist re: Jamie Thomas and KaZaA

Jun 19

Posted by GregSJ in Copyright, Infringement, Internet, Music, RIAA, Statutory Damages

trueAnthemscreenshot(As regular readers already know, I work part time for trueAnthem an online music distribution and viral marketing company.  Below is an email from one of trueAnthem’s artists and my response.)

Greg what is your stance on the RIAA suing people that do downloads on KAZAA and like services…. as I was logging in to yahoo saw this article featured … Yahoo Jamie Thomas Verdict

Suing individual consumers while sound legally is a stupid business strategy.  However it is not surprising given the old business model.   The people in charge of the RIAA and music labels got to their positions because of their knowledge of the music industry, contracts, distribution, and marketing.  As a result it is not surprising that they failed to understand the technology available and how to profit off of it.

From their standpoint the technology was something to fear.  Take a look at the recent writers’ and actors’ strikes and you will see how everybody is fighting over what the revenue distribution should be for digital downloads.  Because people don’t know what the digital pay model will look like they are afraid to create deals (they have no idea whether they are getting a good deal or a bad one.)  The alternative is to license content on a revenue share model rather than a royalty rate.  This would leave music labels and movie studios in the positions they have put their talent for years: relying on someone else’s honest accounting.  Given the rumors of bad accounting in the movie and music business it is not surprising that the revenue sharing model is not one that the studio executives jumped on quickly.

catch22Personally I believe the RIAA and record labels should have made licensing of catalogs extremely easy early on and thus allowed lots of different distribution models to be tested.  Had they done this, market theory suggests that the good ones would have succeeded and everyone would be in a better position than they are today. (Again I think studio executives expertise is partly to blame. As I said earlier their expertise was not technology.  As these models succeeded they would be replaced by executives who were both experts in technology and the music industry.  Thus even if they had been smart enough to have done this they would have been signing their own pink slips.  Considering this Catch-22 it is not surprising that they did not embrace the technology.)

Another reason why they did not adopt digital distribution early on was the fear of piracy.  The theory behind most early RIAA and studio attempts at digital distribution revolved around DRM (trying to assure that the music was not copied and distributed for free.)  One of the problems with this focus is that it mainly restricts legitimate uses by your customers while doing little to restrict those who are going to pirate music.  Video game companies are currently dealing with this as well and are beginning to realize that they will never be able to keep everyone from getting the game for free. Instead they are focusing on creating incentives to buy the game rather than get it for free (back to value added services.)

Had the music industry recognized this from the start I believe they could have discovered they were profiting despite the piracy.  A working paper by some people at Harvard Business school argues that they are still profiting despite piracy (and their own missteps.)  Ars Technica has written a good summary of the paper.

I think that some of this should have been obvious in the sense that the music industry has been profiting despite free distribution for a long time.  Radios have been playing music for free since the early 1900s.  Despite this free distribution, music labels have profited.  In fact I would argue that without this free distribution they would have profited much less because they would have had no easy vehicle to get people to listen to the music.  Very few people are going to buy music from a band they have never heard.

Getting back to KaZaA, I think that even with the reduced digital distribution market available it was not hurting music sales as much as record labels believe (I have an old post about other possible reasons for decline in music sales.)  I believe a majority of people are using the internet to discover the music people discovered on the radio in the past.  While some people will inevitably “steal” music they otherwise would have purchased, lots will buy music they otherwise would never have discovered.  I think the biggest thing digital distribution has done is create larger markets for niche bands.  In the past labels where limited in signing and distributing bands that catered to smaller niche markets because of the distribution costs.  The internet reduces this problem by aggregating people with similar music tastes (such that they can find bands that fit their niche more easily) and reducing the cost of distribution (less of a financial barrier to distribute the music in the first place.)

happy-gilmore-cheque-checkAs far as the Jamie Thomas $1.9 million dollar verdict I think it hurts the record labels as much if not more than it helps them.  From what I have read Jamie Thomas was the perfect person for them to go to trial against (other than her being a mom.)  While I believe the evidence linking a user to specific uploads is tenuous at best, the evidence against Jamie Thomas was strong: she did not have a wireless router, she replaced her hard drive after being notified of her infringement, she used her only internet username, she regularly locked her computer, she was caught lying numerous times…  She clearly deserved to lose the lawsuit.

That being said the RIAA is never going to see the $1.9 million dollars and all it does is make them look like even bigger bad guys because of the large amount of the award.  Nobody objectively thinks that $1.9 million is a fair penalty for her.  If the RIAA were smart it would settle with her today for $5-10k and announce how given the circumstances of a single mother of two they would rather not see the money then be at all responsible for financially ruining the family.  Then they need to bring up the artists whose songs she “stole” and give them each their share of the settlement.

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EMI sues Grooveshark, but what about the songwriters?

Jun 18

Posted by GregSJ in Copyright, Infringement, Internet, Music

groovesharkToday’s big IP headline not involving the Jamie Thomas trial is that EMI has sued Grooveshark. Grooveshark is an interactive online streaming music service.  Grooveshark’s motto is “play any song in the world for free.”

The focus is on how Grooveshark was in the midst of negotiations with EMI when EMI sued. While the articles I have seen correctly point out that this is not an usual negotiation ploy by labels (see Universal/Myspace and Imeem/Warner) none have mentioned the royalty rates Grooveshark must pay to songwriters and music publishers as an interactive music service.

My question isn’t why EMI is suing Grooveshark, but why hasn’t someone else done it already. The latest agreement approved by the copyright royalty board bases the rates on the licenses with record labels. Given that their is apparently no agreement with any of the major record labels, I find it unlikely the songwriters and music publishers were getting paid.

I imagine songwriters and music publishers are used to this as the 2006 agreement is still under appeal (and thus it is unlikely they have seen any money.)  Still given the amount of fighting over this latest agreement and the late payment provisions it seems like some litigious songwriter or music publisher would have wanted to set a precedent.

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Entertainment Industry Value Added Services

Jun 17

Posted by GregSJ in Copyright, Intellectual Property, Internet, Movies

(Note from the blogger: this post is less legal in nature and more my reflection on a business solution to the legal problem of copyright infringement in the entertainment industry and in particular movies)

PiracyWarningWhile much of the focus in the entertainment world seems to be on minimizing pirating of content there has been little focus on what the entertainment industry can do to make pirated content less appealing than legal content. This is something that every industry other than the entertainment industry has had to deal with for years.

Let me explain. People can buy electronics anywhere. This has become even more apparent as the number of electronics stores online increases exponentially. As a result local brick and mortar stores have had to compete with infinite competitors when they used to have to deal with only a handful (or perhaps even none). As a result stores have had to refocus their efforts to retain customers or risk going out of business. Since most of these stores cannot compete with the prices of online electronics stores, they have instead focused on adding value by offering good customer service and expertise. The largest examples of this are Best Buy and Circuit City. Best Buy has a reputation of having good customer service, advertises its expertise, and provides a geek squad to aid consumers who need additional help. These are all services online stores have difficulty offering. Thus while Best Buy cannot compete with online prices (as evidenced by their unwillingness to offer their price match guarantee to online prices), they continue to attract customers. Conversely Circuit City had built up a reputation of poor customer service. Thus it was unable to retain as many customers as Best Buy and has gone out of business.

MBMarriotPerhaps a simpler example is hotels. This past weekend I paid $90 to stay at the Marriot rather than $55 to stay at a cheap nearby motel. Why? Because Marriott provides services I value above and beyond a place to sleep. Marriott has a reputation for great customer services, clean rooms, and fancy hotels whereas I suspected the $55 hotel might not maintain the same level of cleanliness or service.

How does this relate to the entertainment industry? The entertainment industry has held a monopoly on content for a long time. As a result consumers had a choice between the entertainment industry’s offering or nothing. Now however there is a plethora of cheap or free content available to the consumers as well as pirate content. As a result the entertainment industries is seeing a reduction in profits. In response to this reduction the industries has fought to limit/eliminate the pirated content. While nobody should argue that the industries should not try to prevent piracy. The fact is that entertainment piracy is a reality in the world today. Thus the entertainment industry should focus on how it can provide value added service like Best Buy and Marriott which entice consumers to pay more for something. Marriott and Best Buy continue to succeed despite lower priced alternative, and I believe the entertainment industry can do the same thing.

UpMonday evening I saw my first 3-D movie, Up. While watching animated movies is usually something I relegate to my Netflix list rather than paying $10+ dollars in a movie theater, I was curious to see the 3-D technology up close and in person. I was impressed. In my opinion the movie was good not great, but the subtleties of depth on the screen were incredible. Some of the people in our group felt that the movie did not have much 3-D and were disappointed with the lack of a large difference. I on the other hand felt that the depth of the movie was fantastic and part of the beauty of the 3-D was that it was so realistic and well done that it wasn’t in your face.

The point of all this is that 3-D movies are something I will likely pay to see in a theater again. Recently my movie going experience has dropped to a handful of movies a year with the rest relegated to my wonderfully cheap Netflix account. However by adding something above and beyond what I can get at home for cheap (or free if I wanted to download a pirated version), the studies have enticed me to go to the theater and spend more money. By adding a feature (3-D) studios have enticed me to pay more for something that I can get for less just as other industries have and do. I believe the entertainment industry can flourish despite piracy by providing value added services unavailable with pirated content.

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