Copyfutures

APPLE ALLEGES COPYRIGHT VIOLATION, SUPPRESSES SALE OF USED IPOD

Here’s another example of copyright law misuse.  A news article published by Wired reported that Apple Computer alleged a copyright violation and was able to get eBay to remove a U2 special edition iPod from it’s listing.  Although the article reported the iPod was “modified,” the only thing modified was the box the unit came in.  The iPod itself was misleadingly described as “modified” but perhaps the more appropriate term describing the iPod should have been “used.” 

The owner did nothing more than load Negativland albums onto the iPod with audiovisual clips from other artists and corporations, labeled the box “Special Edition U2 vs. Negativland” and added pictures of Negativland to the box. The Negativland albums are included in the auction so that the legitimacy of the music would be the same as if an individual bought an iPod and the Negativland albums, brought them home and personally loaded the albums onto the iPod.

Francis Hwang, the seller, states:

"This unauthorized modification is an artful mashup of the forces or corporate megarock and obscure experimental music, and a provocative symbol of the ongoing struggle between those who would confine culture and those who would free it."

and intended to make a statement about U2’s 1991 copyright battle with Negativland over the unauthorized parody of  “I Still Haven’t Found What I’m Looking For.”

It appears that eBay removed the listing because the seller described the item as “unauthorized” and Apple complained their copyrights were violated.  Needless to say, it has surprised intellectual property attorneys because Negativland did not object to having their sound recordings loaded into the iPod and sold by auction with the accompanying CDs and thus, does not appear to be infringing on the sound recordings.

Because the sound recordings do not appear to be an issue, the only other possible copyright issue is the modified packaging.  Although the seller modified box, it can be argued that he didn’t copy any copyrighted element from the packaging but rather created an unauthorized parody by adding additional labels that either supplemented or covered up the copyrighted elements on the original packaging to make a statement about U2’s battle with Negativland.

Perhaps Fred von Lohmann of the Electronic Frontier Foundation summed it up perfectly with the statement:  “We always have to be careful when people invoke intellectual-property rights in order to stop things that have nothing to do with IP.” 

Perhaps eBay was being too cautious by removing the listing simply because the seller described it as “unauthorized” and Apple made a seemingly baseless copyright complaint.  Perhaps Francis Hwang should ditch the controversial box and delete the word “unauthorized” in the item description.  Would certainly be interesting to see what’s the basis of the next copyright complaint if one surfaces at all.

Companies Offer Legal Alternatives to File-Swapping

An article in the San Jose Mercury News reported about a new P2P company called Mercora.  It is the first internet peer-to-peer broadcast radio company.  The start-up created software which allows users to search other computers for particular songs that they want to hear.   The search engine allows the user to search by title or artist and then tells them where to go in order to hear that song. Then, instead of downloading the song, it is played as a streaming broadcast for the listener.  There is absolutely no downloading of music to hard drives, or burning songs to CDs.   This allows Mercora to comply with copyright law since it is just like a regular radio broadcaster.  Since there are millions of users of P2P networks for music file-swapping, Mercora is hoping to capture some of the market by offering a legal alternative.  The founder, Srivats Sampath, feels his company is filling niche stating that "typical radio is one to many.  Our model is one too few.  In radio, it's very limited genres and selections.  In our model, it's unlimited genres and selection."

Mercora is just starting out and is already doing well by most standards.  It has a music library of almost 10 million songs that can be listened to in CD quality.  The company is also using partnerships in order to increase its business.  It struck a deal last month with Grokster in order to offer free P2P radio for its users.  Grokster Radio will give Mercora the chance to greatly increase its exposure and gain a lot more users.  Better recognition and more users will lead to ways for the company to make money.  The company will allow its base to grow first and it will initially remain free to its users.  The plan is for Mercora to eventually start offering value-added services for which they will charge a small fee.  Grokster Radio will remain free and is also good deal for Grokster, which has been looking for ways to provide licensed music to its users.  Mercora launched its radio station in June and has had steadily increasing growth.  Since the start of the company users have logged over 28 million hours of listening to music.  In November, Mercora had over 450,000 listeners who used their software.  This shows that the legal alternatives to downloading music do have a lot of fans and seem to be here to stay.

A European company also offering a legal alternative to file-swapping is having a good month as well.  Wippit is a U.K. based company which offers a legal download service.  It has secured licenses to distribute music from all the major record companies.  Wippit had already made license agreements with Sony, BMG and EMI earlier this year.  Just this month Wippit struck a deal with the two remaining major labels, Warner and Universal.  This adds over a million songs to Wippit's music library, which can legally be downloaded by customers in Europe.  Universal is limiting its catalogue of songs to only customers in the U.K. and Ireland.  Wippit is a starting company like Mercora which is trying to get a piece of the legitimate music sharing market.  It seems likely that in either America, or in Europe, we can look forward to seeing more companies offering alternatives to illegal file-swapping on P2P networks.

Internet Radio: What does the law say?

Anyone who has ever listened to and recorded Internet radio might be violating Copyright laws without even knowing it.   There is new software available that allows Internet users to record incoming audio streams (basically, Internet radio stations.)   There are thousands of these stations, providing listeners with any kind of music imaginable.   While most people just tune in to listen and enjoy the music, most don't realize how simple it would be to record the music and have it to enjoy permanently.  "With the right software, you can program a PC to connect to a favorite stream and copy it to your hard drive."

The same standard applies to radio broadcasts over the Internet.  "It might be OK to record the Internet broadcast of a favorite opera, so you can listen to it next week. But once the fat lady sings, you're legally obliged to press the delete button."    How can the music industry possibly enforce this law? The difference between recording Internet radio and recording and sharing MP3's is that the former is done in the privacy of your own home, and no one needs to know what or how much music you're recording.

True music collectors would not be interested in most of the radio stations, as the quality of the music is nothing special.  However, there are several stations that are now broadcasting at 160 kilobits per second or higher, which allow for quality similar to MP3 files downloaded off the Internet.  This is where the danger comes in - it seems easy to start collecting and downloading Internet radio music and creating a library, without infringing on any copyrights. 

Steven Marks, the top lawyer for the Recording Industry Association of America has spoken out against this practice.  He stated that "making a music library from captured Internet music streams is just as illegal as downloading pirated MP3 tunes over a file-swapping network."    The 1984 Supreme Court decision regarding the Sony-Betamax case held that while it was legal to record TV shows for viewing at a later time, this did not allow for recording shows to create a permanent library.  "In other words, people who've taped and saved every episode of "Seinfeld" or "Sex and the City" are thieves."

The same standard applies to radio broadcasts over the Internet.  "It might be OK to record the Internet broadcast of a favorite opera, so you can listen to it next week. But once the fat lady sings, you're legally obliged to press the delete button."

The difference between recording Internet radio music and sharing MP3 files is that the former is done in the privacy of one's own home, with no "fingerprint" on the recording to identify the infringer.   In an effort to remedy this problem, music industry executives have began talking to the FCC regarding a "built-in piracy cop" that would not allow permanent recordings of Internet radio.   The music industry is essentially "demanding that the FCC order the high-definition radio broadcasters to add a 'broadcast flag,' an antipiracy system similar to the kind mandated for high-definition television broadcasts."

While this technology would still allow a user to record music during a certain period of time each day, it would prohibit them from making copies of each individual song.  The FCC has not yet approved placing these limits on high-definition radio, but the music industry is pushing hard for "built-in audio anti-copying chips" in all computers. as the practice of recording Internet radio is becoming more and more common.

The ultimate goal of the music industry is to be able to control every recording on every home computer, which seems to many like a violation of their "listening rights."  A recent post on "A Copyfighter's Musings" has commented that "(a)t some point soon, it may be necessary to revisit the wall between audio streaming and downloading."   The post points out the difficulty the music industry will encounter in attempting to put a stop to this "illegal" recording: "given how the sound recording compulsory license for non-interactive steaming services, radio stations can acquire licenses without having to use copy-protection."

Lastly, the blog notes some of the complex issues between social norms and copyright law.  "With Internet radio, a copy is ending up on my computer in some form - whether you call it a stream or a copy, the bits are on my computer. Yet I can only acquire those bits on the condition that I not render them in a permanent state to replay them. " 

Napster update

Napster has been enjoying a second life, as has been commented on this blog previously (see "The New Napster"). In fact, it's been little over a year since Napster officially relaunched. At launch, the service had about 500,000 tracks available for download, today that number is over 1mm. This puts the company's library of music only slightly behind that of Apple's iTunes music store, which passed the 1mm mark back in August (see cdfreaks link ). Napster may be a sentimental favorite when it comes to the world of online music distribution. Their comeback story reminds me a little bit of Atari, a company which has enjoyed a resurgence or two. Both companies were the first to enter into their respective markets, and really created the markets for each. Both now exist in severely dimished roles in those markets, still managing to survive.

Cutting down on Counterfeit by giving software away?

Microsoft is allowing users in the UK of pirated Windows XP to trade in their copies to get legitimate ones.  The program allows up to five copies per user and is going on through the end of the year.  To be eligible, the UK resident must have purchased the computer in the UK prior to November 1 with a preinstalled copy of Windows XP, either home or professional edition. 

So what’s the catch?

In order to trade in a bogus copy for a sanctioned one, Microsoft first requires the user to send in all documentation on the software, including user manuals and warranties; the receipt from the original purchase; and a signed witness statement form explaining how the software was obtained.  This, of course, tells Microsoft who is selling pirated versions of its intellectual property.

Microsoft basically wants information is on who is selling their software illegally and is using the free copies as a bargaining tool.  Microsoft claims that they do not want to prosecute the individual, just go after the source.  They are “evaluating many tactics to educate the software community about piracy, engineer products that address it, and enforce anti-piracy laws and policies.” 

A study by the Business Software Alliance says that 29% of all software installed in the UK in the last year is not legal.  Microsoft clearly has reason to be concerned if close to a third of the market in the UK had illegal software installed within the last year.  But is trading free software for information fair?  What are the penalties for the people they find?  What if the person who sold the computer did not know it was illegal?  It is almost as though Microsoft is taking police power to some degree into their hands by trying to obtain information, and that alone is questionable.

Oh What Damage Piracy Hath Wrought

As I previously mentioned, there is an emerging battle over the next generation DVD technology being offered by Sony and Toshiba. As this article mentions, a number of major movie studios have, for the moment, sided with Toshiba's HD-DVD format. While this is unsurprising, the article sites piracy as a key concern of the movie studios:

Both formats promise increased storage capacity and movie resolution superior enough to get the most out of high-definition TV sets. And both would contain stronger anti-piracy protection, a key factor in the studio's anxiousness to adopt a new format. Now, the software protecting DVD is easily circumvented and DVD piracy is an enormous problem for the industry.

While it is absolutely true that piracy will is an ever-growing concern among all who work in the entertainment media industry, it is remarkable that the industry has had such luck in pushing the idea that they are currently facing "an enormous problem". In fact, there is no evidence that the major movie studios, or Hollywood in general, have seen any significant decline in sales due to Internet piracy yet.

This, of course, does not mean there is no piracy, nor does it mean that piracy isn't illegal. But both the MPAA and the RIAA are waging massive campaigns to spread the message that they are under siege by legions or corrupt and immoral downloaders. The President of the MPAA, Dan Glickman, has said that the information age "threaten to unleash a wave of intellectual piracy that will undermine the very foundations of moviemaking.” (from the MPAA).  Glickman also noted that he is eager "to work with the new Congress to protect against piracy and on other issues important to the movie industry and its hundreds of thousands of workers."

Well of course he is. But that's like saying that the starting quarterback is eager to take a few snaps--eager because he's first in line to do so? Or eager because only the industry heavyweights have any meaningful voice at the legislative table? The MPAA and the RIAA are not the underdogs, despite what their ad campaigns would have us believe. They are not victims--the best they can say is that they are trapped in a complicated copyright system just like content users, but they have the money and the resources to reshape the system as they like. Don't believe the hype. Piracy may prove damaging to the industry someday, but so far Hollywood is having an excellent year and Blockbuster is still doing just fine. They just have better PR than the average P2P user.

Don't fast-forward Total Gym commercials. Trust me.

I know, pound for pound, Chuck Norris would make mince meat out of me if push came to shove. Not that I would ever shove him back...if the Texas Ranger himself pushed me, I'd run away like a little girl. Then again, if a little girl pushed me, I'd still run away like a little girl. I guess when it comes down to it, I'm just a delicate flower waiting to bloom.

But I'm sick of waiting to bloom. I want to bloom now. And what better way to bloom than to get some ripped delts, tri's and bi's with Chuck's Total Gym? Maybe if I trained on it hard enough, I too could deliver death blows with furious kicks to the face.

There's just one problem. I hate the Total Gym. It looks wonky. And I really hate the Total Gym commercials - even the 30 second ones. I can't stand them. I don't know if it's just me, but I don't like the picture of a group of people gawking at Chuck's sweaty body gyrating around on the Total Gym contraption being in my head. So when a Total Gym commercial comes on, I either zone out or flip the channel before I give Chuck a chance to show me why the Total Gym is better than Tony Little's Gazelle.

Not that there's anything wrong with Little's Gazelle. I mean, he can clearly squish my head like a grape. And if he has trained on the Gazelle, he's probably very fleet of foot and could chase me down if I tried to run away.

But that's neither here nor there. The point is, when the Total Gym commercials come on, I zone out. I don't have a TiVo yet, but I can't wait to get one - I'll be fast-forwarding through Total Gym commercials like there's no tomorrow. And I'll finally be free from Chuck and his Total Gym ever being in my head again.

But wait, can life really be that easy?

Not according to the soon-to-be-released CBS report on the effects of fast-forwarding through commercials. This report alleviates the threat marketers feel from digital video recorders like TiVo, instead demonstrating that the fast-forwarding process "may actually enhance a key attribute advertisers and agencies seek with their TV ad campaigns: recall."

Dave Poltrack, executive vice president for research and planning at CBS, stated that people were able to recall 23 percent of the commercials they fast-forwarded through, a recall percentage you can't get when people watch commercials at regular speed. This is bad news for me and my plan to forever ban Chuck from my head; fast-forwarding through his commercials on my TiVo may actually further ingrain his visage in my head than when I would just zone out.

As further discussed on the pvrblog:

CBS is about to release a study showing that DVR users have better retention of commercial messages than people viewing ads at regular speed.

One [reason] is that people using FF are concentrating at 100%, waiting to see the show come back so they can stop, while most folks stuck in 30-second ad jail can let their mind wander or take off to the kitchen for other things.

That's true - I would actually have to pay more attention to the screen while fast-forwarding so as not to go too far and miss any parts of the action packed, hi-octane show Gilmore Girls. So fast-forwarding may actually be helping marketers sell their products. And with TiVo selling out to The Man, its new pop-up ads over the fast-forwarded commercials might become super-embedded into your skull after everything is said and done. Perhaps Valenti's cronies, in their attempt to have the Intellectual Property Act "rammed down our throats at the last minute by a [lame] duck Senate," should back off in light of this new study. After all, taking a "big bite out of fair use by making it illegal to automatically skip commercials" would prevent the higher viewer recall associated with fast-forwarded commercials from being exploited by marketers.

Like Greg Mote commented, all this talk of fast-forwarded commercials being more effective than their slower counterparts reminds me of the Blipverts in the Max Headroom TV show. Blipverts being, of course, advertising in the future:

High-speed commercials condensed into a few seconds that prevent channel changing and embed themselves in viewer's minds. Sometimes they cause the heads of viewers to explode.

Fun fact? The Max Headroom show (original British version) was set to take place in the year 2004. I wonder how long it will take before Chuck's fast-forwarded Total Gym commercials make my head explode...

Spreading the word....

Is it time for the big boys to move over or at least give up some of the control?  For too long the entertainment industry has decided how copyright laws were to be written and enforced because they had the power.  This meant, of course, that they did whatever was in the best interest of the entertainment industry and them alone.  Now that things are spiraling out of control (from their point of view), it is becoming glaringly clear that copyright holders do not all agree with the way the show has been run up until now. 

The biggest danger to the hold the entertainment industry has had on copyright laws is knowledge.  The more the general public becomes aware of how something as (pardon me but...) boring and cryptic as intellectual property laws actually affects their day to day lives, the less likely the Induce Act or any similar variation of it is likely to work.  What has happened with the spreading of P2P like wildfire throughout the country as well as the world, is that everyone is becoming interested in the future of copyright law.  The truth is that a few years ago most people could not have told you what IP stood for if the question had appeared on Who Wants to be a Millionnaire?  Now, people still might not know exactly what IP is but they probably know what Kazaa or Morpheus is.

I think more people getting involved and informed is a great thing.  If something is going to affect us all then we should all have a say.  That is of course what the supporters of the Induce Act are terrified of.  Keep the general public blissfully ignorant and that way they won't know to complain when technology is stunted and only the rich and or famous can make a movie. 

It seems that things among the young population have started to take off.  Students, who are the strereotypical users of P2P software, are beginning to get that their futures are going to be affected by what happens at this pivotal point in time.  Groups are being formed all over the country at different campuses to spread the word about the importance of being involved in this fight.  Free Culture groups is what they are called and they help to educate students by promoting open-source software and openly discussing the dangers of the Induce Act and what will happen if it becomes law. 

The movie Night of the Living Dead is being used as an example of a work that is already in the public domain and therefore freely available to all who wish to use it in any way they wish creatively.  The Creative Commons licensing scheme (mentioned in my previous post) is also being used to license works made by any participants.  The groups in no way advocate stealing from artists.  Their main goal seems to be to spread the word to consumers about what exactly what the proposed legislation entails and just how restrictive it is. 

It is encouraging to see that the younger generation is not sitting by idly while things happen to them.  Instead, they have become proactive and have decided to effect the way the future will turn out.  Free Culture has the support of people who know just how precarious this situation is.  Jessica Litman was a guest speaker at one of their festivals and Lawrence Lessig is the namesake of the group.  The site is worth checking out just to see some of the posts on the blog by members of the groups who attended some of the lectures.

MPAA Gets a "Yellow Light"

CNET reports that a California court has ruled that suits brought against anonymous file swappers must be brought separately when there has not been a sufficient showing of good reason to bundle the suits.

While the ruling seems minor in that it does not prevent the MPAA from bringing suit, or even cause the association to alter its legal arguments, it may prove significant if the MPAA plans to comprehensively prosecute as many individual file sharers as possible.  If such is the case, the real effect of the ruling is to impose a monetary barrier on the prosecutions of file sharers.  Maybe “barrier” is too strong a word; brining suits separately really means more suits, read: “more time, more money”.

Approached in a different way, maybe the ruling should not be considered so much a “monetary speed-bump” as the revocation of a license to steam roll individual civil liberties.  In other words, the decision can be viewed less as imposing limitations on groups like the MPAA and more as the appropriate re-application of procedural safeguards universally applicable in our judicial system.  Or so argues the Electronic Frontier Foundation.

Realistically though, the ruling will have little effect on the campaign of the MPAA if their goals parallel those of the RIAA, who really only use lawsuits as an “educational tool”.  Brining lawsuits against 20 people, instead of twenty groups of people does not change the fact that the RIAA or the MPAA can still point to individuals and say, “look, file sharing has ruined John Doe’s life, it will ruin yours too”.  The fact that John Doe may be a thirteen year old kid only makes their story more admonishing.        

Universal Gets Digi-With-It

Following the recent news of its ground-breaking deal with SnoCap, Universal Music Group is again making headlines in the digital music world by announcing the formation of its first online-only digital record label.  The label, Universal Music Enterprises Digital (or “UMe Digital”), has signed 8 relatively unknown acts to deals by which they will promote, distribute and sell their music solely over the internet through online music stores, such as iTunes, MSN Music Store, Rhapsody, and Napster.  As Derek Slater notes, this announcement represents an illustration of the impact that digital technology is having on the content industries’ cost structures and general business models.  As far as I’m concerned, this is a very positive move for UMG (and the music industry in general), as it is clearly time for them to stop trying to fight the internet as a source for music and begin developing ways to use it to their advantage.

The details of these deals are as follows: [1] the bands will continue to be responsible for financing their own productions costs (no advances from the label); [2] the bands retain ownership of their master recordings while licensing them to Universal for a limited time; [3] the bands will receive an estimated 25% royalty on the retail price of downloads (w/o subtracting the standard industry deductions for CD packaging and promotional giveaways); [4] Universal will promote and market the bands, not only pushing their music to online stores, but also seeking out licensing deals for TV and film; [5] the bands remain free to sell their own physical CDs through services like Amazon; [6] if online sales reach a certain point, Universal has the option to pick up CD distribution to record stores.

For UMG, this is clearly a great move.  The costs are almost zero and the benefits could be very large, not only from the monetary gains directly related to these deals, but also from what they will learn about utilizing the internet as a business tool.  Universal will be collecting a nice chunk of change on each download and the only thing they are really paying for it is marketing and promotion (which is essentially nothing; their online marketing will be minimal – i.e., cheap – and, given Universal’s market leverage, the online stores should take the music w/o much of a protest).  But perhaps more importantly, Universal is developing a way to forego (or at least significantly minimize) many of the initial costs that record labels have traditionally spent on developing new acts.  The way these deals are set-up, UMe Digital can serve almost like a minor league baseball system, developing talent and gauging the demand for new acts at a very low cost, which will allow Universal to avoid the traditionally hefty upfront financial commitments that more-often-than-not result in failure.  And if nothing else, this deal should teach Universal valuable lessons about the online music business and serve as the necessary first step for the record labels' entrance into the digital music world, a move which they should realize by now is inevitable. 

Given the relative obscurity of the acts signed by UMe Digital, this deal may not end up making anyone seriously rich in the near future.  Nevertheless, the move does represent somewhat of a revelation for the music industry. The internet can be a beautiful thing for the music business.  Sure, P2P presents a serious problem for the industry, but that doesn’t mean that the internet and the music industry can’t be friends.  The internet represents an opportunity to market and distribute music in ways that are radically cheaper and more efficient than the methods employed by record labels in the past.  As such, the possibilities for how the music industry can use the internet to its benefit are endless.  However, there is one requirement: they cannot think like they have in the past.  The old models worked well for the old world. There’s nothing wrong with that; aside from the fact that the old world, of course, is now old.  The new world is a digital one; one where spending exorbitant amounts of money to distribute CDs across the country for unproven acts with small demand doesn’t really make much sense. 

As such, I salute UMG for taking another positive step towards embracing the internet as a music business tool, and I encourage them (and the rest of the industry) to continue to do so.