Robert Levine Tells the Rest of the Story December 21, 2011
Posted by Bill Rosenblatt in Book reviews.4 comments
Robert Levine’s excellent debut book, Free Ride: How Digital Parasites Are Destroying the Culture Business, and How the Culture Business Can Fight Back, was released back in October, but with the current firestorm over the Stop Online Piracy Act (SOPA) in Congress, its proper moment is now.
The public side of the SOPA opera is playing out according to a Script that — as Levine documents in this book — has been standard repertoire for years. The Script has a cast of characters, including Good Guys who fight for freedom and justice and consumer rights, and Bad Guys bent on destroying those things. The Bad Guys are the MPAA and RIAA, and sometimes telcos and cable companies; the Good Guys are Google, a few other tech companies, some brave startups, a handful of scrappy Davids (as in vs. Goliath) in Washington, and a coterie of law professors who, being tenured, have little personal use for copyright.
Apart from some ambivalence over Apple, The Script has varied little over the years. It is picked up and performed on a regular basis by tech pundits whose objective in life is to improve their Google search rankings. No one dares deviate from The Script for fear of being ostracized by important content aggregators and purveyors of conventional wisdom, both of which generate more pageviews for them.
The Script has gotten really tiresome. It’s not necessarily wrong; it’s just old, and it’s shallow. It’s gone well past its sell-by date — or metaphorically and olfactorily speaking, its free-to-air window. And thanks to this book, the world can now know that there are other sides to the story, and that it’s OK to talk about them.
If Jaron Lanier’s You Are Not a Gadget from last year is the philosophical tract on which a new movement in favor of content creators’ rights has been founded, then Free Ride provides the factual foundation on which such a movement should be based. And just as Lanier gets cred from being a veteran technologist and inventor of Virtual Reality, Levine is a former editor at Wired (as well as Billboard).
This book looks beneath the so-called copyright wars that play out in public, lets facts about how the media and technology businesses operate speak for themselves (for the most part), and airs out arguments that you don’t see in Wired or on TechCrunch. It is a is a well-constructed piece of business journalism, not a tedious screed in the vein of Mark Helprin’s Digital Barbarism or Clifford Stoll’s Silicon Snake Oil.
Free Ride is about how the technology business is just that — a business – and as such, it behaves the way businesses are supposed to behave if they are to do things like increase their stock prices. Levine adroitly follows the trail of money that powers legislation and advocacy, which in turn affect public opinion as well as laws. As he puts it, “Copyright holders talk about theft while technology companies hide behind the public interest”, yet ”[i]t isn’t out of idealism that Google spends millions of dollars to influence public policy.”
Levine shows that Google is the largest of several technology companies that influence policy by funding organizations like the New America Foundation, Public Knowledge, Creative Commons, and Berkman Centers for Internet and Society at Harvard and Stanford.
Lobbying organizations’ modus operandi is to rally people and organizations around messages that elicit contributions. Messages like “keep the Internet free and open” and “fight censorship” resonate with the public, especially when they align with getting content for free. When a company like Google funds these organizations, the effect is to put a positive PR spin behind activities that benefit those companies — a spin that the likes of the RIAA and MPAA don’t enjoy (to put it mildly). The effect is also to favor issues that benefit tech companies, such as loosening copyright, over other ostensibly pro-consumer areas such as safeguarding online privacy, which don’t benefit tech companies.
Levine also does an excellent job of chronicling the history of the content industry’s attempts to get laws and regulations passed that help clamp down on copyright infringement and the tech industry’s long-held position that any such rules are unacceptable. He says: “…free culture advocates take any chance they get to argue that the media business can adjust to a world in which laws against illegal copying are not enforced. Even if listeners aren’t convinced, the flurry of studies, op-eds, and panel events create an atmosphere of uncertainty that makes it hard to pass laws that would be more effective in tackling piracy.” And: “Although the groups backed by Google have some smart ideas for reforming copyright, they also want to make the current laws impossible to enforce.”
He also provides several chapters’ worth of facts that demonstrate that consumers get the content they pay for. For television, for example, he explores “the business model[s] that brought us Mister Ed” (network TV, paid by advertising), Mad Men (cable TV, paid by consumers), The Bachelor (reality TV, so cheap to produce), and “Charlie Bit My Finger” (YouTube, essentially cost-free), and he suggests that we’re on a slippery slope towards a world where all we get is the latter. He shows that it’s not just about making the world safe for the latest Hollywood blockbuster or teen-pop starlet; it’s about maintaining a model that enables any worthy content creator to recover costs and maybe even make a living.
The larger point of Free Ride is that content has inherent value and that mechanisms must be created or maintained to preserve that value, while the technology industry is destroying that value or diverting it from creators towards itself. Levine lets facts and quotations tumble forth to show this. One of my favorite examples of the latter is a quote from Avner Ronen, CEO of Boxee and thus a poster child for “free riding”: “If [content owners] really don’t want people to access their content for free online, they can fix it very easily—just don’t put the content online. Then they risk piracy.” Levine doesn’t comment on the utter ridiculousness of Ronen’s statement, instead letting it stand on its own.
The book’s corollary is that today’s prevailing attitude of treating content as an industry, while treating technology as an inevitable and untamable force of nature, is neither fair nor balanced. The inevitable, untamable force of nature is creativity, which can be artistic, technological, or both. If you’re going to accuse record labels and movie studios of acting like businesses, you have to accuse big tech companies of doing the same.
Yet Levine is hardly an apologist for the media industry. For example, he agrees that the term of copyright and statutory damages for infringement under U.S. law are way too long and large, and he finds the media industry just as guilty as anyone else of funding “research studies” that produce blatantly biased results. In fact, Levine’s journalistic instincts often get the better of him as he feels compelled to balance every factual assertion that bolsters his point with a counterfactual that softens it; the book ends up being far more balanced than its polemic subtitle suggests.
The final part of Free Ride discusses possible solutions to the problems of copyright. This is where the book falls short — and not just because there aren’t any easy answers. Levine looks to developments outside the United States, particularly in Europe, and sees various things that look like they are worth adopting on this side of the Pond.
While Levine has a fine grasp on copyright litigation and party politics in Europe, he doesn’t show much beyond a view of greener grass on the European lawn when it comes to licensing schemes. His European licensing ambassador appears to have been Jim Griffin, the well-known and respected advocate of blanket licensing. Griffin seems to have extolled all of the benefits of blanket licensing to Levine but left him ignorant of the many shortcomings of copyright and content licensing under such systems in Europe (and elsewhere): inequitable royalty distribution, irrational levy schemes, opaque accounting, inefficiencies, resistance to new business models, cross-border chaos, and more. (This is especially ironic given that Levine now lives in Berlin.)
Thus Levine doesn’t explore European national copyright collecting societies and their relationships to their countries’ copyright policy. He also runs across former French and German culture ministers in his travels, but he fails to notice the additional complexities created by the presence of those culture ministries in the mix. Given that the United States is the only industrialized country in the world that doesn’t have a culture ministry, this may not be surprising, but these would all have been rich veins to explore in order to understand some of the problems in European and international copyright policy, and how they might be solved.
Furthermore, if Levine wanted further hints at where solutions might come from, he might have heeded the advice of William Patry, the prodigious copyright scholar who now works at Google. In his 2009 book, Moral Panics and the Copyright Wars, Patry suggests that “the answer to the machine is in the machine.” In other words, Levine talked to a lot of lawyers, corporate spokespeople, and policy wonks; he might also have talked to more technologists about how things like DRM and filtering work, how they affect user experience and cost, and how they interface with copyright law.
But consider the last few paragraphs quibbles from someone who has been in these arguments for a long time. Free Ride is a hurricane’s worth of fresh air, a book that ought to change the conversation about online content and copyright. For example, a reporter from a respected tech website told me recently that he dare not write any pro-copyright stories for fear of not being picked up by aggregators and of being ostracized by his peers. This form of hive-mind-based self-censorship ought to be an outrage.
Yet the conversation may already be changing; which brings us around to SOPA. A recent Levine-influenced piece in New York magazine said: “There’s a reasonable debate to be had over whether SOPA and its Senate companion, the Protect IP Act, represent needed reforms or Draconian regulatory overreach. … Really, SOPA is just an old-fashioned Washington battle between two entrenched corporate camps: the entertainment companies that don’t want their output ripped off, and the web companies that don’t want to be saddled with increased compliance costs.”
New York magazine isn’t Wired, but such remarks would have been heresy as recently as last year. Descriptions of the SOPA opera as “old-fashioned” and companies like Google as “entrenched” are actual changes in the Script. It’s about time.
Public Library E-Book Lending Must Change to Survive December 4, 2011
Posted by Bill Rosenblatt in DRM, Law, Publishing, Uncategorized.11 comments
A few events over the past few weeks illustrate the downward arc that I have suggested is in store for public libraries in the e-book age. First, Amazon introduced its own e-book “lending library” for members of its $79/year Amazon Prime service, which allows users to “borrow” one e-book at a time, with no due dates. Second, yet another major trade book publisher, Penguin, got into a spat with public libraries over e-book lending. Penguin stopped offering new titles and withheld Kindle access to all titles, out of unspecified security concerns with OverDrive (the service that powers most U.S. e-book library lending) and Amazon. (Penguin subsequently restored access for existing titles, but not for new ones.)
The Penguin incident is only the latest in what will undoubtedly be a long series of squabbles between publishers and libraries over e-book lending. In fact, five of the “Big Six” U.S. trade book publishers are now either limiting their e-book licensing to libraries or not licensing at all — and the sixth (and largest), Random House, is reportedly reconsidering its library e-book licensing policies. Such spats may well lead to a world of off-putting restrictions and confusion for libraries and their patrons.
Libraries have two fundamental problems here: they have less control over the situation than publishers do, and they are about to get some serious competition from the private sector. An article in Publishers Weekly gives an overview of Amazon’s e-book lending feature and its implications for publishers and authors. In a nutshell, the program is currently limited to a few thousand titles that originate either from Amazon itself or from smaller publishers that still sell e-books to Amazon under a wholesale model, as opposed to the “agent” model used by most major trade publishers, which forbids such activity.
But the Publishers Weekly piece only covers the impact of e-book lending on publishers and authors, many of whom are raising a fuss about Amazon’s program. It says nothing about the program’s impact on public libraries. The executive director of the American Library Association (ALA), Keith Fiels, has publicly expressed a lack of concern over the impact of Amazon’s lending program, given its limited range of titles and that it’s part of a subscription program that includes other features such as streaming video and free expedited shipping. The ALA is more concerned about major-publisher moves like Penguin’s.
Indeed, public libraries are experiencing major growth in e-book lending, especially since Amazon joined the e-lending world by opening up its DRM to enable lending and integrating it with OverDrive’s library lending service. Another piece of evidence that library e-lending is expanding is the entry of a Seattle-based startup called BlueFire Productions as the first serious competitor to OverDrive in the public library space.
At bottom, this is about two things: ways to make e-books available legally for free, and the promotional value of free distribution. That’s why libraries should be worried. First, consumers generally don’t care where they get free legal e-books, as long as they are available conveniently and can be read on their favorite devices. Second, what Amazon has started as a limited service that’s only available to an elite tier of customers will surely become more widely available and with more titles, especially with competitors like Barnes & Noble constantly looking for ways to differentiate themselves from the market leader.
Amazon subsidizes the wholesale cost of e-books that it lends to Amazon Prime members. It does this to make its own services and devices more attractive, not to spur sales of those e-books. If and when B&N offers an equivalent feature, it will undoubtedly do the same.
If I were Keith Fiels at the ALA, I would be very, very afraid. The e-book publishing world may be about to split up into the equivalent of the music industry’s major and indie labels: major labels tend to make deals that maximize revenue and limit free promotion, while indies try for maximum promotion in hopes of getting revenue later. When you apply this dichotomy to publishers and e-books, you will see that libraries will inevitably get squeezed out.
The majors will make life increasingly difficult for public libraries through refusal to license or restrictive and confusing licensing terms. Meanwhile, smaller publishers will “lend” their titles through Amazon and other e-book services — and will most likely be happy with the arrangement for the promotional value it gets them. And some indie publishers will give their e-books away outright — through e-book retailers or through sites like Facebook — in hopes of getting exposure for their authors and selling hardcopy titles, just as thousands of indie musicians used to give away MP3s on MySpace. And let’s not forget that e-book prices are often much lower than their hardcopy counterparts to begin with.
Then it will only be a matter of time until some publishing industry equivalent of Michael Robertson (the music industry’s digital provocateur) will create a search engine for finding free e-books from all of these sources in a single convenient place, storing them in an online locker, sharing them with friends, etc.
If you extrapolate from these changes, you can see how public libraries could become virtually irrelevant for e-book readers.
It’s all because publishers get to decide what e-book titles libraries may lend and (to some extent) under what terms. Again, think of this in music terms: radio stations get the right to play whatever music they want under a license granted by law — a so-called statutory license. Online equivalents of radio (e.g., Pandora, iHeartRadio) get similar rights. Library lending of digital music is virtually nonexistent; radio remains the primary promotional channel for record companies. Perhaps it’s time to think more carefully about public libraries in this light for e-books, as I’ll explain.
There is no equivalent of a statutory license for e-books that would allow libraries to lend them without explicit, title-by-title permission from publishers. As I’ve discussed previously, libraries do get rights under Section 108 of the copyright law to lend e-books under certain conditions. But because most publishers only give libraries e-books to lend as DRM-protected files with license terms attached to them, and Section 108 requires libraries to abide by those license terms, libraries can’t exercise those rights. In effect, those rights have no value for libraries.
Libraries simply do not have enough leverage against major publishers and retailers to improve this situation in the private sector. If they are to remain relevant in the e-book age, they are going to need to push for significant legal reforms, which both publishers and retailers will undoubtedly resist.
I previously suggested one option, albeit in a somewhat tongue-in-cheek manner: push for the Copyright Office to define an exemption to the law that criminalizes hacking of DRMs (Section 1201 of the Copyright Act) so that public libraries can legally remove DRM for the purpose of lending e-books if they repackage them with DRM to enforce lending terms. However, this has two disadvantages: exemptions to Section 1201 only last for three years, until the Copyright Office considers a new set of exemptions, and publishers could push for stronger DRMs that are harder to hack.
The “cleanest” solution to this problem would be to enact Digital First Sale, i.e., an extension to Section 109 of the copyright law that lets anyone do whatever they want with digital downloads once they have acquired them legally. (We had a great discussion on this subject at last week’s conference.) Public libraries owe their existence to First Sale (on physical goods) in the first place. But that won’t help for e-books as long as publishers distribute them with DRM and DRM hacking is still illegal; and anyway, as I discussed recently, Digital First Sale isn’t likely to happen anytime soon. Therefore it would be worth libraries’ while to investigate changes to the law that help them lend e-books while leaving Digital First Sale off the table.
One option would be to push for additional rights for libraries under Section 108. At a minimum, Subsection (f)(4) would have to be relaxed so that libraries may lend e-books even if the licenses they come with forbid this activity. This would be tantamount to a statutory license for libraries to lend e-books without explicit permission from publishers.
As a practical matter, this wouldn’t really change the way things are done today. Libraries lend e-books through third parties like OverDrive, which already get e-books from publishers without DRM and package them with DRM — just like music and video retail services. And provisions already exist in Section 108 that hold libraries liable if they make their own unauthorized copies of e-books. OverDrive and its ilk use DRM to enforce one-copy-at-a time lending as well as the lending time limits that are in libraries’ own best interests.
This change in the law would improve the situation for libraries substantially. However, the economics may have to change to make it palatable to publishers. For example, libraries acquire e-books for their collections by paying for them title by title, just as they pay for printed books. Radio stations, on the other hand, typically get free copies of recordings from record labels but pay royalties to the music industry for playing them on the air.
If publishers acknowledge the promotional value of library e-book lending, then they might be willing to accept a statutory license to lend e-books if they can negotiate a per-loan royalty rate in lieu of upfront purchase prices. The Copyright Clearance Center, for example, would be in a good position to manage these payments and royalty disbursements, just as ASCAP, BMI, and SoundExchange do for music.
This type of arrangement would enable libraries to maintain huge collections of e-books (through service providers like OverDrive and BlueFire, which would actually house and distribute the e-books) and thus serve the public well. At the same time, the negotiations would have to resolve questions of how many copies of an e-book a given library could lend out concurrently; one copy per library doesn’t reflect the fact that big libraries acquire multiple copies of popular titles. Is it possible for the numbers to defined so as to be fair to both publishers and libraries? That would be a good question for the Section 108 Study Group, the venue for recommending changes to that section of the copyright law, which used to convene every five years but was disbanded by Congress after its last report in 2008.
A limited form of just such a statutory license-type solution has actually been suggested in the private sector already, in the proposed settlement to publishers’ and authors’ lawsuits against Google. It includes giving public libraries rights to make every book scanned on Google’s behalf — over 12 million titles at last count — available on a single terminal within each library. Libraries would not even have to pay for this. However, this doesn’t allow e-books to be available outside of libraries’ physical confines, it doesn’t allow libraries to acquire multiple copies of e-books they want to make available to more than one patron at a time, and Google can withhold up to 15% of its scanned titles at its discretion.
The Google book settlement is still unresolved, but the terms in it show that publishers may be willing to grant libraries some limited e-book lending rights. Libraries have complained about the “table crumbs” offered to them in the Google book settlement. But unless they take action similar to what I’ve described here, those rights may be the best that public libraries can hope for as the e-book market expands.
Copyright and Technology 2011 Conference Recap December 1, 2011
Posted by Bill Rosenblatt in Events.5 comments
Thanks to all who spoke, moderated, sponsored, publicized, helped out at, and attended Wednesday’s Copyright and Technology conference. Judging by attendance alone, the event was a success with over 25% higher attendance than last year’s event.
I was too busy running around making sure the show went smoothly to pay as much attention to the panels as I would have liked — and given that we had two parallel tracks going for much of the day, it would have been physically impossible anyway. I invite attendees to comment here on their impressions. You can also search Twitter for hashtag #ct2011 to see what attendees thought in real time.
For me, there were a few particularly memorable moments. One was the keynote address by Tom Rubin, Chief Counsel for Intellectual Property Strategy at Microsoft. I invited Tom because of his record of consistent, intelligent advocacy of an approach to copyright in the digital age that balances the need for unimpeded technological innovation with respect for intellectual property.
His talk “Copyright at the Speed of Light: Creative Content and Cloud Computing” did not disappoint. The main takeaway for me was Tom’s expression of the urgent need for global registries of content and rights, to ensure that commerce in legitimate content over the Internet can flow seamlessly across international boundaries. We didn’t have a panel on rights registries (The Future of Music Coalition’s Policy Summit back in October did), but this topic is getting much attention nowadays with the Book Rights Registry contemplated in the Google book settlement, the Global Repertory Database project, the WIPO International Music Registry project, and other efforts.
The other fascinating point for me was the panel on cutting-edge legal issues in the music industry, the last panel on the Law and Policy track. Hillel Parness, a litigator and adjunct professor at Columbia Law School, gave a rapid (in fact head-spinningly fast) tour of court decisions in the past that had to consider copyright issues with online services. These took place long enough ago that their judges’ bases of comparison were brick-and-mortar entities such as libraries and newsstands. Many of these older decisions said, in effect, that the Internet really is different: its scale and speed make it impossible for Internet service providers to examine every bit of content for such things as copyright violations.
Yet more recently, courts have decided cases involving services that do have just that ability (at least to some extent), and the areas of dispute have turned to whether or not the relevant technologies are being applied in ways that suit copyright owners or are effective enough. In other words, it seems as though technology has advanced since, say, the mid-1990s so that the Internet is not so different after all — at least from this legal perspective.
In some cases, a service provider can claim safe harbor (i.e., “I’m not liable”) because it does not implement any controls (or as a reason why it doesn’t implement them); in other cases, a service provider may be potentially liable because of the behavior of the controls it does implement.
When I asked the panelists whether this apparent “chicken and egg” issue sends mixed messages to service providers who are thinking of using, say, watermarking or fingerprinting technology to catch infringers, they said that it depends on how lawyers choose to interpret these decisions. This is another way of saying that the relationships between rights technologies and copyright liability will remain ambiguous for the foreseeable future – thereby keeping lawyers like those panelists (not to mention consultants like myself) very busy for the rest of their careers.
Finally, the panel I moderated on content security challenges in multi-platform distribution revealed some of the Hollywood studios’ thinking on this topic. Ron Wheeler, the head of content protection in Fox’s legal department, confirmed what many of us have thought to be the case: Hollywood has seen what happens when a single downstream entity achieves a market share large enough to dominate the economic terms — that is, Apple in music. And Hollywood is doing all it can to prevent a similar fate for film content by encouraging healthy competition in the video distribution space.
The UltraViolet standard is their way of lessening certain types of advantages that one online retailer can have over another, such as the ability to lock consumers into their systems; the scheme’s emphasis on interoperability potentially benefits consumers as well by giving them more choices of retailers, device types, and even delivery modalities (physical products, downloads, and streaming).
However, Wheeler revealed that the different Hollywood studios have varying degrees of enthusiasm for UltraViolet. The most bullish is Warner Bros., which has released some titles on Blu-ray bundled with UltraViolet “rights tokens” that enable buyers to get their movies as downloads or stream them, through a retailer called Flixster that Warner itself owns. Yet Wheeler said “We don’t expect Flixster to be the next Wal-Mart,” while adding that Fox is supportive of UltraViolet. (The least enthusiastic studio is Disney, which is not a member of UltraViolet at all and apparently is still talking about its “rival” scheme, KeyChest.)
My opening remarks, which set the stage for the conference by teeing up the issues to be discussed, are available on the conference page. Other presentations from the conference, as well as video highlights, will be posted on the conference page as we get them.
European High Court Says No to ISP-Level Copyright Filtering November 28, 2011
Posted by Bill Rosenblatt in Europe, Fingerprinting, Law, Music, Services.add a comment
Last Thursday the European Court of Justice (ECJ) ruled that ISPs cannot be held responsible for filtering traffic on their networks in order to catch copyright infringements. This ruling was the final step in the journey of the litigation between the Belgian music rights collecting society SABAM and the ISP Scarlet, but it is a landmark decision for all of Europe.
This ruling overturned the Belgian Court of First Instance, which four years ago required Scarlet to install filtering technology such as acoustic fingerprinting to monitor Internet traffic and block uploads of copyrighted material to the network. Scarlet appealed this decision to the Brussels Court of Appeals, which sought guidance from the ECJ.
The ECJ’s statement affirmed copyright holders’ rights to seek injunctions from ISPs like Scarlet to prevent copyright infringement, but it said that the Belgian court’s injunction requiring ISP-level copyright filtering went too far. It cited Article 3 of European Union Directive 2004/48, which states that “measures, procedures and remedies [for enforcing intellectual property rights] shall be fair and equitable, shall not be unnecessarily complicated or costly and not impose unreasonable time-limits or unwarranted delays.” The ECJ decided that the mechanism defined in the appeals court’s ruling did not meet these criteria.
The real issues here are the requirement that the ISP bear the cost and complexity of running the filtering technology, and the fact that running it would slow down the network for all ISP users. It’s easy to see how this would not meet the requirements in the above EU Directive.
This decision has direct applicability in the European Union, but its implications could reach further afield. For example, the issue currently being argued between Viacom and Google at the appeals court level in the United States boils down to the same thing: whose bears the cost and responsibilty to police copyrights on the Internet?
Of course, EU law doesn’t apply in the United States. In the Viacom/Google litigation, Google is relying on the “notice and takedown” portion of the Digital Millennium Copyright Act (DMCA), a/k/a section 512 of the US copyright law. This says that if a copyright holder (e.g., Viacom) sees one of its works online without its authorization, it can issue a notice to the network service provider to take the work down, and if it does so, it won’t be liable for infringement. Google’s argument is that it follows section 512 assiduously and therefore should not be liable.
Viacom’s task in this litigation is to convince the court that the DMCA doesn’t go far enough. More specifically, its argument is that the legislative intent behind the DMCA is not served well enough by the notice-and-takedown provisions, that network service providers should be required to take more proactive responsibility for policing copyrights on their services instead of requiring copyright owners to play the Whack-a-Mole game of notice and takedown.
The ECJ’s decsion in SABAM v. Scarlet has no precedential weight in Viacom v. Google. But it may help get the Third Circuit Appeals Court to focus on what Jonathan Zittrain of Harvard Law School has called the “gravamen” (which is legalese for “MacGuffin“) in this case: who should be paying for protecting copyrights.
ReDigi Gets RIAA Nastygram November 15, 2011
Posted by Bill Rosenblatt in Economics, Law, Music, Services, United States.8 comments
Last week the RIAA issued a cease-and-desist letter to a music startup called ReDigi, which has been attempting to create a market for “used” digital music files. It allows users to sell their music files for prices below those of “new” files on iTunes or Amazon, and gives a portion of the proceeds to record labels. (It does not have licenses from the labels to do this.)
I had been paying attention to ReDigi since it had gotten some attention on the tech blogs when it issued a beta release a month ago, and I consulted a couple of copyright law experts about the legality of what they are doing. Based on the results of my research, the RIAA’s actions towards ReDigi were about as surprising to me as an announcement that the sun will rise tomorrow morning.
Who were the “legal experts” that ReDigi claims told it that what it does is within the law? What investors were credulous or rash enough to finance this venture? Or did everyone involved do this just to try to make a point? Regardless of the motivation, ReDigi’s legally embattled state has been a foregone conclusion.
ReDigi purports to implement something called Digital First Sale. The First Sale Doctrine (a/k/a Section 109 of the U.S. copyright law, and known as Exhaustion in most other countries) says that if you obtain a copy of a copyrighted work legally, you can do as you wish with it – keep it, lend it, sell it, give it away, use it to line a birdcage – as long as you obtained it legally and you don’t do anything with it that infringes copyright law, such as make unauthorized copies.
The issue is that this law was designed to apply to physical goods; no one is quite sure about its applicability to piles of bits. The U.S. Copyright Office was asked for an opinion on Digital First Sale a decade ago. The Office stated that Digital First Sale would require a complex technical mechanism that ensured that once you gave your copy of a file to someone else (whether for money or not; whether permanently or not), you had no further access to the file. The technical shorthand for such a mechanism is “forward and delete.” The Office opined that such a mechanism might be feasible at some point in the future but wasn’t then, so it declined to endorse the concept of Digital First Sale.
ReDigi claims to have implemented a robust forward-and-delete mechanism. It uses acoustic fingerprinting from Gracenote to ensure that once a user has sold a file, the same song no longer exists on the user’s PC or iPod. There are ways to hack the system, but that’s somewhat beside the point.
Digital First Sale remains very much unsettled law, even according to copyleft legal scholars, such as Jason Schultz of Berkeley (formerly of the Electronic Frontier Foundation), who would generally like to see Digital First Sale become reality.
Even putting First Sale aside, there’s another legal issue with ReDigi’s model. ReDigi only lets users sell files that they bought on sites such as iTunes and Amazon, in order to ensure that users are only reselling legally-obtained files. (The source of a file can be determined by examining metadata or watermarks.) There’s just one little problem with that: these sites have Terms of Use that expressly forbid resale of purchased digital files. (Here are Amazon’s and iTunes’s.) In other words, users who sell files on ReDigi may or may not be infringing copyrights, but they are certainly running afoul of iTunes or Amazon’s Terms of Use, which are contracts between the retailer and the user.
But wait a minute: if the Terms of Service forbid users from doing something that copyright law allows, which one prevails? Apparently that’s an unsettled question as well, according to both a senior legal authority at the Copyright Office and one of America’s leading copyright litigators. The latter told me “the ink is not dry” on this area of copyright law.
Yet one thing is very clear: Digital First Sale scares the media industry to death. Think about it: if anyone could resell their digital content at any price, then ReDigi would only be the beginning. There would be many competing content-resale marketplaces. People could auction their “used” files on eBay. People could “donate” them to public libraries with virtually no cost or effort – and get a tax deduction for a charitable donation. All perfectly legal. The result of this would be a rapid acceleration of what I have called the race to the bottom: the price of legal content would drop to near its cost of coping and distribution, i.e., virtually nothing. Furthermore, the major copyright owners would lose a lot of control over distribution; for example, Hollywood studios’ release windows would become virtually meaningless.
It’s also evident that the media industry would much rather nip this trend in the bud than endure years of litigation with uncertain outcomes. Even attempting to negotiate a license with a service like ReDigi would imply some comfort with Digital First Sale at a conceptual level, which is something that the media industry would surely want to avoid. Thus the RIAA’s actions against ReDigi come as no surprise.
The RIAA’s “nastygram” points to file copying that must take place in order for ReDigi’s system to work as evidence of copyright infringement, even though, of course, that’s not the real issue here. Other litigation concerning Digital First Sale, such as Vernor v. Autodesk (commercial software), is working its way through the courts. Whatever happens with Digital First Sale, the law will take years to reach clarity — and until then, services like ReDigi will continue to be in limbo.
Incidentally, Digital First Sale is going to be a topic at our Copyright and Technology conference week after next (Wednesday November 30). We will have legal experts on this topic as well as Paul Sweazey of the IEEE 1817 standards initiative, which is another attempt to implement something approximating Digital First Sale. The discounted registration offer I made last week still stands.
C&T 2011 Conference Program Finalized November 8, 2011
Posted by Bill Rosenblatt in Events.add a comment
We have enlisted an impressive roster of speakers for the Copyright and Technology 2011 conference, which will take place in just three weeks (November 30) here in NYC. In the past few weeks, we have added executives from Universal Pictures, Fox, Verimatrix, NDS, and Getty Images, as well as several notable legal experts.
I will be moderating a panel on content security in multi-platform distribution. I’m also particularly excited about our legal panel on Digital First Sale, which will pit Paul Sweazey of the IEEE P1817 Digital Personal Property standards initiative against two legal eagles in a discussion of what it means to “own” digital content. We’ll also hear from a group of panelists who will debate the (harsh?) reality of implementing DRM. And I expect sparks to fly during our panel on the Google Book Settlement, where we will have panelists representing all sides of this ongoing saga.
We’re also doing some marketing testing, so I’m offering a limited-time discount on registration for those of you reading this. Go to the registration page and enter discount code 100GBRJYH to register for $100 (normally $399).
Irdeto Acquires BayTSP October 24, 2011
Posted by Bill Rosenblatt in Fingerprinting, Publishing, Services, Video.2 comments
Irdeto announced on Monday that it is acquiring the antipiracy services company BayTSP. Terms were not disclosed, but this is the culmination of a “strategic alternatives exploration” process that BayTSP had been engaging in for some time.
BayTSP monitors P2P networks, file-sharing services, and other places where unauthorized content might lurk and generates evidence that content owners can use to support legal action against infringers. It uses a range of technologies, including sophisticated network traffic analysis and fingerprinting. It has been one of a shrinking number of providers of such services as the industry has consolidated.
This is a good strategic fit for Irdeto in various ways. First, BayTSP will boost Irdeto’s existing antipiracy services; this will strengthen the company’s competitive positioning particularly against NDS, which is known to have robust antipiracy services to complement its content protection technologies. Second, BayTSP has made some recent forays into e-book antipiracy services, which will complement Irdeto’s own new content protection technology for the e-publishing market.
Yet the consolidation of antipiracy services within a major content protection company has interesting implications for the economics of content protection. Typically, copyright owners pay for antipiracy services such as those of BayTSP, Peer Media, and Attributor, but downstream entities such as network operators, online retailers, and device makers pay for content protection technologies such as conditional access and DRM. At the same time, pay TV operators are starting to launch services in which the content can go beyond the customer’s set top box, possibly onto their tablets, mobile handsets, and PCs. The question is: do pay TV operators believe it’s their responsibility to protect the content beyond the STB?
Irdeto will have to decide the answer to this question. Specifically: will it continue to charge content owners for BayTSP’s antipiracy services, or will it attempt to add to the fees it charges its operator customers? To put it more cynically, have Hollywood studios encouraged Irdeto to acquire BayTSP (as they encouraged Irdeto to buy BD+ Blu-ray content protection technology from Rovi just three months ago) so that they no longer have to pay for it?
Seen in this light, Irdeto’s acquisition of BayTSP becomes part of the company’s overall strategy to offer more comprehensive and higher-grade content protection services to pay TV operators, on the theory that they will pay more to get better protection. This is a risky strategy, but given the growing footprint that Irdeto has in the overall content protection market, it’s a risk that Irdeto can probably afford to take.
The Future of Music: From Blanket Licensing to Registries October 10, 2011
Posted by Bill Rosenblatt in Law, Music, Rights Licensing, Standards.4 comments
The Future of Music Coalition Policy Summit, which took place last week, has been a fixture in Washington, DC for a decade now. For those interested in how copyright has to find its way in the ever-changing world of digital music, this is a wonderful place to spend a couple of days. The FMC Policy Summit is a great event — and an inspiration for our own Copyright and Technology Conference — because it gathers many different types of people and forces them into a single room to get to know one another. As an organization, FMC represents the interests of independent musicians and songwriters, but the subject matter discussed at its Policy Summit should be of interest to anyone contemplating the future of music.
The panels at the FMC Policy Summit cover a range of topics beyond copyright. But last week’s conference had two panels on copyright arcana that were linked implicitly if not explicitly: on the first day, a panel on blanket licensing; on the second, a panel on music copyright registries. Perhaps the most remarkable aspect of these two panels was that digital music expert/ideologue Jim Griffin was on the latter panel, not the former.
Let me take a couple of steps back to explain why this is remarkable.
The treatment of music copyrights most countries is a horrible mess. It is so complex as to be virtually incomprehensible to content creators — the people who need to understand them the most.
If you make a music recording, you have two sets of copyrights: one for the underlying composition (which could be someone else’s if you didn’t write the music), and another for the recorded performance of it. Each of those rights needs to be owned by, granted by law to, or licensed by entities such as record labels, distributors, service providers, and end-users. These rights are handled in various different ways in the United States. Some are implicit copyright rights; some come from so-called statutory licenses that have been added to the copyright law; some result from ad-hoc license agreements; and some come through collecting societies (a/k/a PROs or Performing Rights Organizations) like ASCAP and BMI, which represent only those rights holders who sign up with them.
If you’re already confused, welcome to a very large club.
A few panelists at the FMC Summit — mainly law-professor types who habitually think in terms of concepts and idealism instead of practicalities and the real world — contemplated blowing up the entire system and starting from scratch. Others, such as the new Register of Copyrights, Maria Pallante, settled for “Sure it’s bad here in the US, but it’s worse elsewhere” arguments. Her predecessor, Marybeth Peters, was an advocate of streamlining the entire music licensing process so that content creators can come closer to “one-stop shopping,” as countries such as the UK have attempted.
There are two schools of thought on how to improve a system that, in the words of Gary Greenstein of the law firm Wilson Sonsini (who will also speak at Copyright and Technology 2011), exists primarily to preserve the many jobs that would be eliminated under a more streamlined system. One is to move to a comprehensive system of blanket licensing, i.e. forming entities that represent all music rights holders and license their works under fixed terms. Another is to use technology to measure all usages of copyrighted works and compensate rights holders accordingly.
These two schools of thought are not mutually exclusive. Automated measurement and compensation can work in a blanket or statutory licensing regime if the technology is pervasive and accurate enough. Yet blanket licensing usually works with compensation schemes derived from sampling (e.g., BMI requires radio stations to log the music they play for a couple of weeks each year) or levies (“copyright taxes” collected from makers of consumer electronics or blank recording media). These are blunt-instrument approaches which all but guarantee that “long tail” content creators will not be compensated fairly and that abuses will creep in.
The blunt-instrument school of thought has persisted for quite a while as a lowest common denominator that is at least practicable, even if it has outlived its usefulness. Yet recent developments have proved two important things: first, the blunt-instrument approach has serious limitations in the digital world, given the Byzantine nature of the underlying system; second, better alternatives not only exist but are exposing the inherent inadequacies of the blunt-instrument approach.
The better alternative that has emerged here in the States, according to the views of most FMC Policy Summit attendees, is SoundExchange. SoundExchange came in to being in the early 2000s as the result of laws enacted in the late 90s that established “performance rights in sound recordings”; this meant that online music services had to pay royalties for playing recordings, not just for the underlying compositions. The latter royalties are administered by composers’ collecting societies like ASCAP and BMI. As the result of the new laws, online music services would have to pay performance royalties, though terrestrial broadcast radio would not. (See, I told you this was a confusing mess.)
SoundExchange requires online music services to collect data on the music they play, report the data, and pay royalties accordingly. (Small noncommercial webcasters are exempt from this process and only pay a small flat annual fee.) SoundExchange negotiates royalty rates for various types of digital music services (webcasters, on-demand streaming services, satellite radio, etc.) through periodic rate-setting proceedings before panels of judges in Washington.
FMC Policy Summit attendees — who tend to be musicians, songwriters, or indie label people — see SoundExchange as a beacon of light in the darkness, an organization that gets musicians paid and does it with relative transparency and low overhead, at least compared to older organizations like ASCAP and BMI.
While SoundExchange has shown that automated, data-driven royalty compensation can be done, advocates of blanket licensing have run into a major snag: if you’re going to offer an online music service a blanket license to music, you have to offer it for “all music,” not just some of it, otherwise what you’re offering is not going to be very helpful to the online music service. The problem is that offering a license to “all music” is just plain impossible, at least without an act of Congress like that which produced SoundExchange.
With this insight, naive and idealistic notions such as charging all ISP subscribers a monthly “music tax” that gets (somehow) distributed to rights holders go straight out the window. This is where we finally get back to Jim Griffin: blanket-licensing schemes such as Choruss, the business that Jim Griffin ran for Warner Music Group, are revealed to be the impossibilities they are.
Griffin, a battle-scarred veteran of the early days of digital music, had been an articulate blanket-licensing ideologue for years when WMG CEO Edgar Bronfman asked him to set up a blanket licensing business, which they called Choruss. Choruss failed about a year ago; as I explained at that time, the primary reason for its failure was that it couldn’t get licenses to anywhere near “all music.”
So Griffin has acknowledged the impossibility and moved on. He has turned his attention to an underlying problem that is even more complex and fundamental: the lack of a global registry of all music rights information that would be required to support any kind of comprehensive and fair licensing scheme. At the FMC Policy Summit, Griffin was on a panel on music rights data; he was talking about the International Music Registry (IMR), a project led by the World Intellectual Property Organization (WIPO). Griffin is one of over two dozen people from around the world working on the IMR.
IMR is adopting a federated approach to rights registries that acknowledges and leverages the existences of various “island” registries throughout the world and attempts to build a unifying layer on top of them. (One of these “islands” is the so-called Global Repertoire Database, which is initially focused on Europe.) This approach is analogous to the Digital Object Identifier (DOI) standard that I helped define in the publishing industry in the late 1990s: we wanted a copyright work identifier and registry that could coexist peacefully with various existing standards and registries such as ISBN for books, ISSN for journals, PII for other journals, URL for online resources, and so on. On the other hand, it differs from the Book Rights Registry contemplated in Google’s settlement with book publishers and authors, which would have been a single über-registry for all book content, at least in the United States.
So that’s a long way of explaining what Jim Griffin was doing on the music registry panel instead of the blanket licensing panel at the FMC Policy Summit, and why that’s important. The rights registry problem is the right (no pun intended) one to be working on. If it can be solved, it would get us away from blunt-instrument schemes that encourage systemic abuses and favor big-name artists over the long tail, and it would facilitate content creators actually getting paid according to how much their music is played. It’s a problem that’s worth the monumental effort it will take to solve… if it’s even solvable at all. It will take years to find out one way or another, but it’s worth the journey.
C&T 2011 Conference: Registration Now Open October 4, 2011
Posted by Bill Rosenblatt in Events, Music, Services.add a comment
(Re-running this for those who may have missed it over the Jewish New Year last week.)
Online registration for the Copyright and Technology 2011 conference, November 30 in New York, is now open!
Take a look at the program and you’ll see that we have most of the panels filled out – though a few opportunities remain, particularly for moderators. Please contact me if you are interested.
I am also pleased to announced that the law firm of Frankfurt Kurnit Klein & Selz has become our latest sponsor.
We invite law firms with practices in the digital copyright area — like Frankfurt Kurnit — to sponsor the conference as well. We have an exciting lineup of panels in our legal track. We will attract a high-caliber audience of professionals from media and technology industries who are coming to grips with issues of intellectual property in the digital age. If you are interested in sponsorship materials, please contact me as well.
In other news, the long-expected consolidation of music subscription services has begun with Monday’s announcement that Rhapsody will acquire the assets — mainly the subscriber base — of Napster.
Rhapsody is the first of the on-demand streaming subscription services to have gotten licenses from all of the major labels. They did this back in 2002, when there were five majors and Napster was still trying to recover from being shut down by a federal judge. Napster re-launched the following year… that is to say, the Napster brand was used to re-badge a service originally called Duet, then pressplay, which was a joint venture of two of the majors.
A first wave of subscription services appeared in the mid-2000s. Rhapsody and Napster were survivors of consolidation that took place around 2007, with other players like Virgin Digital disappearing. Now, with the launch of a second wave of subscription services, another cycle of consolidation has been inevitable.
Rhapsody only operates in the US, whereas Napster runs in a few other countries. Rhapsody will retain the Napster brand name outside of the US. Once the deal closes, Rhapsody will have 1.2 million paying subscribers, compared to 2 million for Spotify.
It’s a two-horse race now: Spotify vs. Rhapsody. The value of press hype and the long buildup to its US launch have done wonders for Spotify, which — as many would argue, and notwithstanding its superior mobile client — has considerably less functionality than Rhapsody. As I’ve said before, the consolidation will continue over the coming months.
C&T 2011 Conference: Registration Now Open September 28, 2011
Posted by Bill Rosenblatt in Uncategorized.add a comment
Online registration for the Copyright and Technology 2011 conference, November 30 in New York, is now open!
Take a look at the program and you’ll see that we have most of the panels filled out – though a few opportunities remain, particularly for moderators. Please contact me if you are interested.
I am also pleased to announced that the law firm of Frankfurt Kurnit Klein & Selz has become our latest sponsor.
We invite law firms with practices in the digital copyright area — like Frankfurt Kurnit — to sponsor the conference as well. We have an exciting lineup of panels in our legal track. We will attract a high-caliber audience of professionals from media and technology industries who are coming to grips with issues of intellectual property in the digital age. If you are interested in sponsorship materials, please contact me as well.
On to a different subject: after Facebook’s announcement of integration with several subscription music services, Spotify announced that it is now requiring new subscribers to have Facebook IDs. This has caused a lot of sturm und drang, but it’s yet more evidence that Facebook IDs are becoming the de facto universal ID standard for the Internet.
If you read my article on the music services’ Facebook integration a few days ago, you can see why Spotify might want to do this. What do you think? Here’s a poll:
Bill Rosenblatt
Azita Arvani
Bill Jones
Niels Thorwirth
