November 2005 Archives

Senate to get techy next year

Internet News reports that the Senate Commerce Committee will hold a number of hearings on internet and communications issues early next year: Senate Sets Ambitious Tech Schedule: "Signaling its intent to focus on Internet and telecom issues next year, the U.S. Senate Commerce Committee plans to hold 14 hearings on a wide variety of technology topics between January and March."

I'll try to cover these as much as possible. Maybe it's time to consider finding a sponsorship to underwrite complete coverage…

Committe on Commerce, Science & Transportation upcoming hearings:

  • 1/19 - Decency
  • 1/19 - Internet Pornography
  • 1/24 - Video Content
  • 1/31 - Broadcast and Audio Flag
  • 2/7 - Net Neutrality
  • 2/14 - State and Local Issues and Municipal Networks
  • 3/2 - Wireless issues/spectrum reform
  • 3/14 - Voice over Internet Protocol (VoIP)
  • 3/14 - Wall Street's Perspective on Telecommunications

Previously: Fair Use in the Internet Age, Broadcast Flag and the Analog Hole, Protecting Copyright and Innovation in a Post-Grokster World.

Libel Suits Against Bloggers

The Media Law Resource Center has a list of lawsuits brought against bloggers for libel (and related claims.)

Ten Rules for Web Startups

Blogger founder and current Odeo CEO Evan Williams suggests Ten Rules for Web Startups.

Privacy Law and Internet Policy Fellowship

I probably should try to keep the number of applicants down to increase my chances, but since chances are I won't get selected anyway, here it is: Ron Plesser Fellowship:

The law firm of DLA Piper Rudnick Gray Cary has established a public interest fellowship at the Center for Democracy and Technology (‘CDT’) in honor of Ron Plesser, a senior partner at the firm who died suddenly last fall. Ron was a leader in the fields of e-commerce, freedom of information, and privacy law who began his career as a public interest lawyer. Over the course of his legal career, Ron helped frame the still-evolving legal standards for information policy in the digital era. In order to encourage new lawyers to follow in his path, the first fellowship will be awarded in 2006 to a recent law school graduate to practice in the areas of privacy law and Internet policy at CDT for two years under the direction of the organization’s senior attorneys.

Variety's Slanguage

Dealing with Hollywood? Variety's Slanguage Dictionary can demystify the industry lingo and make it possible to translate its articles into English.

Update: If have to go to a film set, The Artful Writer has a primer on Set Lingo For Writers (and lawyers.)

In the Wall St. Journal, columnist Jason Fry examines The Ringtone Riddle-- why the $2.49 price point may work for ring tones but not for full tracks. A short snippet of a song may command a premium over a complete track, because users usually buy only one ringtone over the life of a phone, in order to have a distinctive personal style on a phone, but tie the value of a single track in with the value of an album. Fry believes that the $2.49 digital download is doomed to fail:

My bet is the labels won't be able to get away with it for downloads over cellphones, either. The labels and wireless carriers seem to be basing their hopes of commanding $2.50 for cellphone song downloads on two things: customers' willingness to pay a premium for instant gratification and the idea that since people with cellphones vastly outnumber people with MP3 players, the cellphone will become the default device for listening to digital music as phone capabilities improve and more and more people dip a toe into digital music.

WSJ Technology columnist Walt Mossberg thinks that Sprint's $2.49 download price is "a lethal combination of two industries many consumers believe typically charge too much." I discussed the $2.50 price point last week: Digital Music, Mobile Phones and Price, and noted some evidence pointing to high price elasticity for digital song downloads.

Earlier this week, the NY Times ran an interesting article discussing the increasing number of subscription services that are available for the entertainment-hungry consumer: How to Tame an Inflated Entertainment Budget:

The game industry is trying to push prices higher for the hottest games, to as much as $60, but even at that price, on a dollar-to-minutes-of-enjoyment basis, video games may be one of the best values, about 12.5 cents a minute for the easily bored, or fractions of a penny for those who can play "Half Life" their whole life.

Among the worst?

Live opera works out to about 37 cents a minute, for a middling seat in the New York Metropolitan Opera house to hear "Aida," compared with 7 cents a minute for "Harry Potter and the Goblet of Fire" at a Loews Cineplex.

But a Gwen Stefani concert, in again, middling seats, is about $1.25 a minute and that's with a serving of Black Eyed Peas thrown in.

With the variety of entertainment options available, copyright owners have to be very careful with deciding how to set prices. Digital delivery may create new services, but those services are competing for limited free time and entertainment budgets with existing media, so these prices are not set in a vacuum.

When Apple debuted the iTunes video store, although there are no established competitors selling music videos or television episodes, there are an immense number of television shows available on DVD. If Lost sells for $49 for a 24 episode season on DVD, who would buy episodes online for $5? The standard price point for television on DVD falls in the range of $30-$40 for a full 22 episode season of a half-hour program and between $40-$60 for a full season of an hour-long program (with The Sopranos commanding a premium over the typical market price.) So buying 24 $1.99 episodes of Lost is competitive with the cost of the DVD box set (trading immediate acquisition for extra features and greater video quality.)

Although time-shifting television is even more popular with digital video recorders than with VCRs, medium shifting video onto the computer remains relatively rare. Few computer users have video content ready to sync onto a video-capable iPod or other media player.

2006 will be the year where video starts to get portable.

CBS made a deal with Comcast to offer $0.99/episode on-demand access to its most popular programs (including "The Amazing Race") on digital cable. NBC made a deal with DirecTV. Time Warner plans to make its archive of television programming available online for free on an ad-supported basis. None of these services figure into the portable media ecosystem. These are services tethered to a computer or television. But networks are experimenting with using the web as a delivery device to find audiences for new shows. CBS is offering streaming episodes of "Threshold." The Sci-Fi is streaming an episode of the new Battlestar Galactica series.

Marc Cuban, however, thinks that new technology will lead to a Golden Age of Television: " People want content, where and when they want it." Digital delivry methods have the opportunity to fill all types of demand.

TiVo announced that it will enable users to medium shift recorded programming onto video iPods and PlayStation Portables: TiVo to Transfer Shows to iPods, Sony PSP: "'This is another thing we can do to add value for our subscribers,' said Jim Denney, TiVo's vice president of product marketing. 'We've seen reasonable demand and interest from people to bring their videos with them.'" Transferring video from a TiVo to an iPod will be a slow process, since it requires converting from the MPEG2 format to the MPEG4 format-- converting video from one format to another requires considerable computer processing time. This is one reason why medium-shifting video is not yet popular.

Variety reports that copyright owners are unhappy with TiVo allowing users to medium shift programming: Peeved over TiVo : "Several TV and studio execs told Daily Variety that they were considering legal action against the company, whose main product has huge brand awareness but is increasingly being pushed aside by no-name DVRs offered by cable and satellite companies." The copyright maximalist position suggested here seems to be that one time shift is tolerated under Sony, but that a time-shift and a medium-shift exceed the bounds of fair personal use.

Joe Gratz considers whether a service that bundles a video iPod with DVD movies and medium shifts those movies to the iPod is liable for copyright infringement: TVMyPod. While it is certainly within the real of fair use to make copies for personal use on a device, is it fair use for a company to provide such a service? Unlike MP3.com, TVmyPod requires customers to buy the DVD at the time of purchasing its services.

BitTorrent deals with the MPAA

BoingBoing's Xeni Jardin has the scoop on the MPAA and BitTorrent deal. BitTorrent's Bram Cohen announced a deal with the MPAA to remove links to infringing content from the search engine at BitTorrent.com: MPAA, Bram Cohen announcement today in Hollywood (UPDATED). Perhaps this is one step closer to using the BitTorrent protocol in conjunction with a legitimate online distribution service.

Jennifer M. Urban and Laura Quilter, Efficient Process or “Chilling Effects”: Takedown Notices Under Section 512 of the Digital Millennium Copyright Act.

The study found that a substantial number of takedown notices were flawed:

  • Thirty percent of notices demanded takedown for claims that presented an obvious question for a court (a clear fair use argument, complaints about uncopyrightable material, and the like);
  • Notices to traditional ISP’s included a substantial number of demands to remove files from peer-to-peer networks (which are not actually covered under the takedown statute, and which an OSP can only honor by terminating the target’s Internet access entirely); and
  • One out of 11 included significant statutory flaws that render the notice unusable (for example, failing to adequately identify infringing material).
  • Update: C.E. Petit takes a closer look, noting that this summary "completely ignores the problem of overlapping data," and that the study itself may suffer "dataset bias." Scrivener's Error: More Statistics

    MTA defends F Line trademark

    NY1 reports that the MTA won an injunction against F Line Bagels, a subway-themed bagel store in Carroll Gardens: MTA Forces Brooklyn Bagel Shop To Cover Up Subway-Themed Signs: "A judge has sided with the MTA and ordered the owners of F Line Bagels in Carroll Gardens to cover up the subway logos on its signs. However, lawyers for the MTA say that's not good enough. They want the signs completely removed and the owners to pay them $5,000 in licensing fees."

    Previously: MTAtm

    Studying P2P Studies

    Rufus Pollock evaluates 5 empirical studies of P2P file sharing and its effect on music purchasing: P2P, Online File-Sharing, and the Music Industry: "The basic result is that online illegal file-sharing does have a negative impact on traditional sales. The size of this effect is debated, and ranges from 0 to 100% of the sales decline in recent years, but a figure of between 20 and 40% would be a reasonable consensus value (i.e. that file-sharing accounted for 20-40% of the decline in sales not a 20-40% decline in sales)."

    Fair Use, Films and the First Amendment

    The LA Times reports on the importance of fair use in allowing documentary filmmakers to engage in protected speech: Copyright isn't the last word: "The documentary 'Enron: The Smartest Guys in the Room,' Alex Gibney's chronicle of the excesses and collapse of the giant energy company, could not have been made without the use of some unlicensed copyrighted material. Neither could 'Outfoxed: Rupert Murdoch's War on Journalism,' Robert Greenwald's exposé of Fox News, which was packed with damning footage the network would never have cleared."

    This Documentary Filmmakers’ Statement of Best Practices in Fair Use was developed by the Association of Independent Video and Filmmakers, Independent Feature Project, International Documentary Association, National Alliance for Media Arts and Culture, and Women in Film and Video (Washington, D.C., chapter), in consultation with the Center for Social Media in the School of Communication at American University and the Program on Intellectual Property and the Public Interest in the Washington College of Law at American University:

    This Statement of Best Practices in Fair Use is necessary because documentary fi lmmakers have found themselves, over the last decade, increasingly constrained by demands to clear rights for copyrighted material. Creators in other disciplines do not face such demands to the same extent, and documentarians in earlier eras experienced them less often and less intensely. Today, however, documentarians believe that their ability to communicate effectively is being restricted by an overly rigid approach to copyright compliance, and that the public suffers as a result. The knowledge and perspectives that documentarians can provide are compromised by their need to select only the material that copyright holders approve and make available at reasonable prices.

    The statement puts forth four categories of uses that are most likely to generate a fair use of a copyrighted work:

    1. Employing copyrighted material as the object of social, political, or cultural critique
    2. Quoting copyrighted works of popular culture to illustrate an argument or point
    3. Capturing copyrighted media content in the process of filming something else
    4. Using copyrighted material in a historical sequence

    Among the Tin Foil Hat Crowd

    A study at MIT measured the effectiveness of alumninum foil helmets in blocking radio waves and suggests an unlikely rationale for at least one allocation of spectrum by the FCC: On the Effectiveness of Aluminium Foil Helmets: An Empirical Study:

    Among a fringe community of paranoids, aluminum helmets serve as the protective measure of choice against invasive radio signals. We investigate the efficacy of three aluminum helmet designs on a sample group of four individuals. Using a $250,000 network analyser, we find that although on average all helmets attenuate invasive radio frequencies in either directions (either emanating from an outside source, or emanating from the cranium of the subject), certain frequencies are in fact greatly amplified. These amplified frequencies coincide with radio bands reserved for government use according to the Federal Communication Commission (FCC). Statistical evidence suggests the use of helmets may in fact enhance the government's invasive abilities. We speculate that the government may in fact have started the helmet craze for this reason

    Unlikely? yes. Plausible?

    Google Print at the Public Library

    Paul Frankenstein live blogged the NYPL debate on Google Print (mentioned here last week): Live From The Public (Library): "Speaking tonight will be Allan Adler, Association of American Publishers; Chris Anderson, Wired Magazine; David Drummond, Google; Paul LeClerc & David Ferriero, The New York Public Library; Lawrence Lessig, Stanford Law School; and Nick Taylor, The Authors Guild."

    Google Print is now officially called Google Book Search.

    Wex

    Wex: "Wex is an ambitious effort to construct a collaboratively-created, public-access law dictionary and encyclopedia. It is sponsored and hosted by the Legal Information Institute at the Cornell Law School."

    Interesting.

    Fair Use in the Internet Age

    The House Committee on Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection held hearings today on Fair Use: its Effects on Consumers and Industry.

    • Mr. Peter Jaszi
      Professor
      Washington College of Law
      American University

    • Mr. Gary Shapiro
      President & Chief Executive Officer
      Consumer Electronics Association
      Arlington, VA

    • Ms. Prudence S. Adler
      Associate Executive Director
      Federal Relations and Information Policy
      Association of Research Libraries
      Washington, DC,
      On behalf of: The Library Copyright Alliance

    • Mr. Jonathan Band PLLC
      Washington, DC,
      On behalf of: NetCoalition

    • Ms. Gigi B. Sohn
      President & Founder
      Public Knowledge
      Washington, DC

    • Mr. James V. DeLong
      Senior Fellow & Director
      IPCentral.Info Progress & Freedom Foundation
      Washington, DC

    • Mr. Frederic Hirsch
      Senior Vice President, Intellectual Property Enforcement
      Entertainment Software Association
      Washington, DC

    • Mr. Paul Aiken
      Executive Director
      Authors Guild, Inc.
      New York, NY

    An archived webcast and witness and member statements are available here.

    Much of the hearing focused on discussing the merits of HR 1201, The Digital Media Consumers' Rights Act of 2005. HR 1201 would create a fair use exemption to the DMCA prohibition on circumventing digital rights protections schemes (aka DRM). In addition, the bill would authorize the FTC to require manufacturers and retailers to label copy protected CD's.

    Most of the witnesses who addressed the panel spoke in favor of this bill and in defense of the fair use right. Jaszi discussed the tradition of fair use within the Copyright Act and noted a number of policy arguments in favor of the fair use rights, particularly the fact that fair use prevents copyright from overwhelming the First Amendment. As the reach of copyright law is constantly expanding to provide more restrictions on uses than ever before, fair use matters.

    Shapiro started off discussing how fair use ensures innovation. Without fair use, there would be no VCR, tape recorder, Tivo, or iPod. The information technology industry relies on fair use-- fair use is all that protects inventors from an over-protected world. Because every use of digital content requires making a copy, fair use is especially important and needs to be strengthened. Americans should be able to use their property in any way they choose that does not harm others.

    Band also noted that all actions in the digital world require making copies, including viewing web sites and replying to emails. Search engines depend on fair use in order to exist. Each major search engine copies a large portion of the world wide web every month under and opt-out scheme of implied consent. Kelly v. Arriba Soft found that search engine indexing is fair use and limiting this use would hurt the way we find information on the internet.

    Adler discussed the relevance of fair use to the mission of libraries. Fair use works well because it is flexible, dynamic and inherently ambiguous. In addition to fair use by library patrons, librarians rely on fair use to create print and electronic reserves and to digitize print works. But when acquiring databases and electronic resources for collections, libraries license, rather than acquire like print material. License agreements are more restrictive than the scope of rights under fair use. Once technological controls are built-in to software, it is impossible for libraries to negotiate exceptions in license agreements.

    Adler concluded by stressing the importance of libraries, who, rather tan publishers, archive copies for future uses. Fair use is an important safeguard on our nation's interest in cultural information.

    Sohn discussed how fair use rights are slowly being chipped away. Although consumers expect to use content when, how and where they want, the content industries have managed to restrict these uses in the name of preventing piracy. Under the current anti-circumvention law, it is illegal for an individual to copy songs from a copy-protected CD for personal use, shifting video from a DVD to view on an iPod, or removing malicious DRM "rootkit" software from a computer. Sohn asked the representatives to "reject the notion that your constituents are pirates and theives. They do purchase digital products when those digital products are avilable on the market." In addition, she encouraged the representatives to reform the DMCA so that it permits circumvention solely for lawful purposes and clarify and strengthen the DMCA triennial review process.

    Public Knowledge thinks that DRM is fine, so long as it is marketplace driven, not driven by legislation. FairPlay works in the marketplace, while Sony's didn't. The government should not mandate technological protection measures. DeLong agreed with applying a marketplace test to technology. But then, DeLong thinks a marketplace will sort out all problems with the copyright economy.

    DeLong testified, "We don't talk about the need to balance the interests of automobile manufacturesr and drivers. We assume that we can establish rules promoting markets and allowing the market to sort itself out." Fair uses usually exist when the transaction cost of getting permission is out of proportion to all value to the user and detriment to the creator.
    The internet is taking transaction costs out of the system.

    DeLong credited DRM with creating marketplace solutions to things that used to have a cost. On the other hand, DRM imposes a cost on performing actions that the law has traditionally considered to be fair uses-- uses either so important to the free spread of ideas or so trivial that the law is not concerned with imposing a cost. These are actions that have no monetary value, yet are to be part of a marketplace? Fair use and free use are not necessarily the same.

    Aiken and Hirsch, not surprisingly, spoke against strengthening the scope of fair use.

    In both his opening statement and questioning of the witnesses, Stearns focused on seeking a technological solution for the "fair use problem." He thinks that technology should be able to come up with a magic bullet that would absolve Congress of its role in having to make difficult decisions about what activities should be encouraged and which activities prohibited. Stearns asked, "Why not make this the copyright equivalent of a race to the moon? Why shouldn't we be able to technologically limit the number of copies?"

    Impressionistic transcripts of the most interesting questions asked by the subcommittee follow in the extended entry.

    Working for the Clampdown

    At Coolfer, Damian Kulash (of OK Go) presents the musician's case against DRM: The DRM Hullabaloo

    DRM just flat out sucks. Its most obvious problem is that it doesn’t work. No matter how sophisticated the particular software, it only takes one person to break it, once, and the music that was ‘protected’ by the DRM is free to roam the vast expanses of the P2P networks. It’s the most ridiculous house-of-cards model imaginable: one single breech and the whole system implodes. As if to underscore the superlative absurdity of their goal, the lightbulb-heads also managed to cook up software that is comically easy to break. Way to go, guys.

    Beyond the guaranteed functional failure, DRM is bad for everyone involved.

    At Slate, Adam Penenberg notes that the only winner in DRM is the companies locking-in consumers to certain DRM schemes: Digital Rights Mismanagement: How Apple, Microsoft, and Sony cash in on piracy prevention

    Companies like Apple claim that digital rights management—"digital restrictions management" to critics—is a tool to dampen the threat of piracy, which the record industry claims has cost it billions in revenues. But DRM also locks consumers into using their technologies over those of competitors. The term "FairPlay" is a classic example of technological doublespeak. Since Apple sells about 80 percent of legal music downloads in the United States, FairPlay effectively stunts competition and consumer choice.

    Sony BMG's use of spyware/DRM on new CD releases is a security and PR problem. Ed Felten and Alex Halderman discuss the security problems at Freedom to Tinker. Coolfer discusses the PR problem. BoingBoing has a summary timeline that shows how quickly information and bad publicity spread on the internets.

    Robot Lawyer

    It sounds like a rejected SNL character, but Engadget reports: Law firm set to offer “robot” lawyers: "South African law firm Buys Inc. plans to introduce a trio of ‘robot’ lawyers next year designed to offer online legal advice to customers."

    Indecency

    In the Washington Post today, an article about the FCC and indecency reglations: Delays, Low Fines Weaken FCC Attack on Indecency: "The agency's role as broadcast nanny has come under greater scrutiny in recent months as consumers and lawmakers grow concerned about the increasingly coarse content of radio and television -- last year, the FCC received more than 1 million complaints about programs. Broadcasters say the FCC's content guidelines are too tough and arbitrarily applied while some lawmakers, viewers and interest groups blame the agency for being too lax."

    Reuters reports that the Senate Commerce Committee will hold hearings on broadcast indecency later this month: US Senate panel to examine decency issues November 29: "The U.S. Senate Commerce Committee said on Tuesday it plans later this month to discuss indecent content aired on television to determine how to proceed on potential legislation to limit such material."

    This week's episode of Family Guy, "PTV" was a hilarious satire of and attack on the FCC indecency regulations. In a crackdown, classic TV shows, like the Dick Van Dyke show are edited to meet heightened levels of scrutiny; After Peter starts his own television station, the Commission arrives to crack down on indecency in real life. This description obviously doesn't do justice to the show, which included a musical number about the "Freakin' FCC."

    Guilty until proven innocent

    On Poilitech last week, James Reid posted a story about the excessive scurity at a movie screening: How the MPAA killed the movie theater experience: a first-hand report: "the line was moving slowly because they were asking customers to raise their arms so that they could be electronically frisked with a metal detector, and
    women's purses were being searched by uniformed security guards. Try to remember that this is Toronto, Canada we're talking about here, not New York, Tel Aviv or London."

    I have had this same experience going to see pre-release films in New York. The concern has nothing to do with security as it does with paranoia. I can understand confiscating cell phones for the purposes of enhancing the movie going experience, but to take camera phones because someone might take a blurry picture or video of the screen? That's really going to serve as a substitute for going to see the movie in a theater? Who is going to watch a pirated version of a movie recorded on cameraphone?

    Marc Cuban's HDNet is trying a new model that may take away a significant amount of the market for pirated DVDs-- releasing the film in theaters and on DVD at the same time: The Movies today are better than ever!: "Our first movie, Enron - The Smartest Guys in the Room, premiered in theaters and on HDNet Movies the very same day. Enron went on to not only get great reviews, but also become one of the highest grossing documentaries of all time."

    Digital Music, Mobile Phones and Pricing

    In the NY Times, David Pogue reviews Sprint's new mobile music download service. Unlike the disappointing Motorola ROKR iTunes phones, Sprint's new offerings enable users to download songs directly to their phones over the air. Also, in contrast to iTunes, the pricing seems designed by committee to allow every possible intermediary to get a piece of the pie.

    At Last, Phone Some Tunes to Yourself

    Unless they've just spent four years in a sensory-deprivation tank, surely Sprint's executives know that the iTunes Music Store and its rivals have solidly established the sweet spot of customer acceptance at $1 a song. What makes Sprint think it can charge two and a half times as much and still make people happy?

    Well, that $2.50 per track offers something that iTunes doesn't-- right? Better sound quality? Nope. The mobile downloads are about one-fourth the quality of iTunes downloads. At least Sprint allows buyers to download a version to their PC in Windows Media format, which is incompatible with iTunes or on an iPod (and may be Mac-compatible around the time that, oh, hell freezes over.)

    The PC copy arrives in a far higher-fidelity format (WMA, 128 kilobits per second) than the songs you get on your phone, which have been heavily compressed to conserve memory-card space. (To be precise, the phone songs are in AAC+ format, at a toe-curlingly low 32 kilobits per second.)

    As a final shock, you can't use your downloaded songs as ring tones. If you love a certain Beyoncé track, you'll have to pay $2.50 for the ring tone, and another $2.50 for the whole song. The average music fan is to be forgiven for concluding that the whole enterprise reeks of greed.

    It makes sense that the mobile phone and the music player should come together-- after all, they are both portable computers designed to reproduce sound. The first notable effort, Motorola's ROKR with Apple iTunes software is an anemic entry. Slate's Paul Boutin examines: Off Their ROKR: Why Motorola's new iTunes phone is a flop. "The iTunes phone is a case study in form failing function. On paper, it's a reasonable combo device. The price is OK—$250 plus a service plan from Cingular. The sound quality is the best I've ever heard on a cell phone. But for a gadget meant to break new ground, the ROKR sags behind the curve."

    Unfortunately, there are too many entrenched interests that need to be placated in order to get into this market. Phone manufacturers can sell products only at the whim of mobile network operators, who control access to subsidized phone deals. Mobile operators want a piece of the transaction-- they don't want their customers to move data on and off their phones any way but through the mobile network, on a pay-per-byte basis.

    The music phone also faces competition from Apple-- who has a good thing for its bottom line with iPod sales. Apple does not want to cede the iTunes market to the phone-- because licensing software to hardware manufacturers is a significantly less profitable business than selling hardware. Hence, the 100-song limit keeps the ROKR from competing with any of the iPods. The phone manufacturers do not want to have to pay Apple a licensing fee for each handset.

    Wired magazine's Frank Rose explains in detail: Battle for the Soul of the MP3 Phone: "Consumers want an iPod phone that will play any song, anytime, anywhere. Just four little problems: the cell carriers, the record labels, the handset makers, and Apple itself. The inside story of why the ROKR went wrong.* (*And what it will take to make a truly rocking music phone.)"

    The same considerations that kept the ROKR from, well, rocking, are the same considerations that has Sprint selling songs for $2.50 per track. If that especially-inflated price point is at all successful, the Big 4 will be using that as leverage in their negotiations with Apple over renewing the iTunes Music Store licenses that expire in April.

    As legitimate digital downloads are becoming a larger part of the music market-- 6% of record industry sales according to IFPI, labels are trying to figure out how to maximize the value of this market. One way is to introduce variable pricing for digital downloads-- both more and less than the $0.99 price point. Back in August, the NY Times reported on the negotiations between the labels (who want variable pricing) and Apple (who wants to continue simple pricing): Apple, Digital Music's Angel, Earns Record Industry's Scorn. Rolling Store also reported: Apple, Labels Feud Mounts: "Apple's iTunes contracts with the labels expire next spring, and, at this point, neither side is budging from its demands"

    It is important to remember that the legit services are competing not only with each other at the $0.99 (and higher) price points, but with P2P at $0/track. The higher the prices for legitimate services are, the more effort a listener may exert to download for free. For most people, the opportunity cost of pirating a track is worth more than $0.99.

    SharkJumping discusses price elasticity: Music Label Unhappiness with ITunes - a Price Elasticity Debate: "digital download purchases are utterly price elastic when measured over a period of time across a large group of consumers - that means that demand for the product is closely related to the price - increasing the price will actually drive down revenue since fewer people purchase the product, while decreasing the price actually increases the overall revenue since many more people purchase the product, more than making up for the lower price per unit. "

    Barry Ritholtz: Music Industry Attempts Price Increases (or Hari Kari, Part II)
    if the labels manage to crank up ITMS prices, expect those pricey legal downloads to plummet in volume. That's just basic economics -- if a free alternative exists, and consumers already think your product is overpriced, than you are in for a heap of trouble if you try to raise your selling price point.

    Chris Anderson: Could the labels actually be right? "There's plenty to like about variable pricing. For starters, it's almost always the most efficient way to maximize markets of disparate goods and customers." "The reason is simple Long Tail math: there's a lot more music in the Tail than there is in the Head, and labels are generally more willing to experiment with discount pricing outside of the top 1,000 than they are with their hits. Those niches represents most of the music available today, measured by number of titles, and because they're only modest sellers individually they're less likely to create channel conflict with CD retailers, who tend to only stock the hits." "Imagine, for starters, that Apple introduces a three-tiered band of pricing: $1.49, $.99 and $.79 (that would no doubt soon expand to include $.49, but below that the transaction costs of credit card processing and the like start to loom large). Tiered pricing--gold, silver, bronze--is still pretty simple for consumers to understand, yet it introduces a valuable new dimension of demand creation."

    Prices are not set in a vaccuum. Any legit music service is ompeting with $0/track prices on P2P. But why do people buy from a legit service? Not just for the psychological satisfaction of rewarding copyright owners, but because P2P has an opportunity cost, too. Only if someone's time is worthless does P2P provide a better value than iTunes. Searching for a track on a P2P network is time-consuming and can produce results of varying quality.

    Interestingly, Apple already uses variable pricing in the iTunes store. Labels have some price flexibility and can set the price of albums so that the average price of a track on an album will be higher or lower than $0.99/track.

    iTunes Japan already has variable pricing for individual tracks. Looking to see what's popular in Japan, some songs on the the Japanese Top 100 chart cost ¥150 ($1.32) while others cost ¥200 ($1.77).

    Google Print and Fair Use

    Google Print is the topic that may single-handedly keep the copyright-related blog world in business for the next few years.

    Last week, Google added the full text of 10,000 public domain books into the Google Print database. The NY Times reports: Google Adds LIbrary Texts to Search Database: "The additions, from the university libraries at Michigan, Harvard and Stanford and from the New York Public Library, represent the first large group of material to be made available electronically from those libraries, which along with Oxford University contracted with Google last year to let the company scan and make searchable the contents of much or all of their collections."

    On Google's corporate blog, Adam Mathes writes: Preserving public domain books: "The world's libraries are a tremendous source of knowledge, much of which has never been available online. One of our goals for Google Print is to change that, and today we've taken an exciting step toward meeting it: making available a number of public domain books that were never subject to copyright or whose copyright has expired."

    The following day, Amazon.com announced a program that will sell online access to "any page, section or chapter of a book." These commercial programs will convert the full-text databases used for searching into a way to offer access to full text works as well as a way compensate rightsholders-- like iTunes. Again, from the NY Times: Want 'War and Peace' Online? How About 20 Pages at a Time?: "The idea is to do for books what Apple has done for music, allowing readers to buy and download parts of individual books for their own use through their computers rather than trek to a store or receive them by mail. Consumers could purchase a single recipe from a cookbook, for example, or a chapter on rebuilding a car engine from a repair manual."

    This week, the debate even spilled over into my favorite football-related column, Gregg Easterbrook's Tuesday Morning Quarterback, where Easterbrook writes:

    Copyright law gives authors and performers the exclusive right to make or authorize copies of their works; the exclusive right to make or authorize copies is, at heart, what a copyright represents.…

    [Google] says it will not scan books whose authors send a letter of objection. But if you want to use a copyrighted work, the legal onus is on you to get permission, not on the copyright holder to lodge a protest. Google's position is like saying that if you do not want your house broken in to, it is your responsibility to send a notification to thieves. In this analogy, Google is the thief -- just like in the real world! Remember when Google maintained it would never be the next Microsoft? It's not; Microsoft obeys the law. Remember when Google was going to be a corporate good-guy? Google is fast becoming the next Enron; maybe this is the kind of thing that happens when your founders decide they need an entire Boeing 767 to themselves. Contrast Google's corporate kleptomania to Amazon's decision to offer online books only if authors grant permission. As we enter the digital age, it becomes ever-more important society resists the idea that unaccountable corporations have an unlimited right to seize whatever exists in electronic form. And Google, now that you have declared it is fine to copy intellectual property without permission, surely you won't object if anyone steals your proprietary software and corporate data?

    In order to understand the legal implications of the Google Print case, we have to look at what Google is doing-- scanning books into an electronic database for the purpose of indexing.

    In Kelly v. Arriba Soft, The 9th Circuit ruled that creating thumbnails of images in a search engine is fair use.

    The search engine at issue in this case is unconventional in
    that it displays the results of a user’s query as “thumbnail”
    images. When a user wants to search the internet for informa-
    tion on a certain topic, he or she types a search term into a
    search engine, which then produces a list of web sites that
    contain information relating to the search term. Normally, the
    list of results is in text format. The Arriba search engine, how-
    ever, produces its list of results as small pictures.
    To provide this service, Arriba developed a computer pro-
    gram that “crawls” the web looking for images to index. This
    crawler downloads full-sized copies of the images onto Arri-
    ba’s server. The program then uses these copies to generate
    smaller, lower-resolution thumbnails of the images. Once the
    thumbnails are created, the program deletes the full-sized
    originals from the server. Although a user could copy these
    thumbnails to his computer or disk, he cannot increase the
    resolution of the thumbnail; any enlargement would result in
    a loss of clarity of the image.

    The Google Print service provides essentially the same service as the Arriba Soft image search engine, except that it searches print books instead of digital images.

    We must determine if Arri- ba’s use of the images merely superseded the object of the originals or instead added a further purpose or different charac- ter…Although Arriba made exact replications of Kelly’s images, the thumbnails were much smaller, lower-resolution images that served an entirely different function than Kelly’s original images.

    The court ruled that create a search engine index is a transformative use that does not supersede the purpose of the original work. The character of a copy used in a search engine index is different than the character of a copy used to read. The search engine use helps to find the book. The intrinsic purposes of the use are different.

    The court found that creating a complete copy is necessary to create a service that adds value to the images:

    It was necessary for Arriba to copy the entire image to allow users to recognize the image and decide whether to pursue more information about the image or the originating web site. If Arriba only copied part of the image, it would be more difficult to identify it, thereby reducing the usefulness of the visual search engine

    Google's book scans are used only for the purpose of creating a full-text index for searching and not for offering text to users. Google is not distributing copies of copyrighted books without permission. For books submitted to the index by publishers, Google provides acess to a couple of pages (with permission of the copyright owner.) For books scanned in under the partnership with university libraries, Google provides access to ~30 word excerpts that contain the user's search term. Google's Screenshots page explains this well.

    In UMG Recordings v. MP3.com, the court found that a digital locker service, which created medium-shifted full copies of recorded music, was an infringing use. The defendant's service not only created but distributed complete copies. Like the Arriba Soft thumbnail images, these copies were at a lower resolution/fidelity than the original works. Unlike the Arriba Soft thumbnails, these copies were used to supplant the original use of the works-- for listening.

    The key difference between Google and Arriba Soft is that Arriba searches images already on the web in digital form. Google is digitizing the books made available only in print, possibly superseding the market for electronic versions of those same books. Images placed on the web may be thought to be made available with an implied consent to be indexed.

    Google Print does not provide access to the complete work and its full copies are used to add value by creating an index, rather than to merely replace the traditional use.

    If Google, like Amazon, was providing access to a complete copyrighted work, Google would clearly need permission.

    The authors and publishers complaint is based on the fact that Google is copying the entire book without permission in order to create this index. And this question shows why this case is important. Does Copyright law regulate the act of copying or the act of distribution? If making a copy of a complete work in order to create a searchable index, then Google's entire business is threatened. In indexing the web, Google creates complete copies of web pages, unless the web publisher explicitly opts out using the robots.txt protocol. In addition, Google not only creates, but also distributes medium-shifted cache copies of .PDF and .DOC files.

    If Copyright law is concerned with regulating the act of copying, then Google may be in trouble, but then so might culture. As a matter of public policy, copyright law might be better served by regulating distribution rather than regulating copying per se. If it is impossible to search the entire web, we lose this wonderful resource. As a matter of public policy, prohibiting intermediate copying will harm public access to information. Just because Google would have the ability to disseminate infringing copies might not mean that it should be prohibited from using infringing copies.

    The NY Public Library will hold a live panel discussion, The Battle Over Books: Authors & Publishers Take on the Google Print Library Project, with Allan Adler (Association of American Publishers), Chris Anderson (Wired Magazine), David Drummond (Google), Paul LeClerc & David Ferriero (The New York Public Library), Lawrence Lessig (Stanford Law School), and Nick Taylor (The Authors Guild.) I will liveblog this, if possible.

    Pat Schroeder and Bob Barr wrote an op-ed piece in the Washington Times stressing the rights of authors: Reining in Google: "Not only is Google trying to rewrite copyright law, it is also crushing creativity. "

    In Forbes, Nick Schultz defends Google: Don't Fear Google: "The way the current copyright law works, I can take a book out from any library, read it and write a review of it for publication on the Web site I edit or in the pages of Forbes.com or anywhere else. This “fair use” of material involves no copyright violation. Readers benefit from learning a bit about the book, authors and publishers benefit from increased exposure. "

    Copyright treatise author Raymond Nimmer thinks that the Google project is very different from the Arriba Soft case and that Google's use is not fair use, based mainly on the fact that it is a commercial enterprise: Google Lawsuit Begins; Fair Use On the one hand, this large company desires to make a massive number of copies of other persons’ property for its own profit. On the other hand, the authors and publishers that own the property rights have been given exclusive rights to copy or distribute copies of their works as part of a statutory scheme that intends to provide authors with incentive to create new works."

    Another treatise author, William Patry, prefers to apply a market substitute test for fair use: Google Revisited: "So in the Google project, why should we care if there are server copies? The purposes for the copies in connection with the Print Library project is to give people access to knowledge about the existence of the book as well as a tiny amount of text. That is of great help to researchers and hopefully to authors and publishers of the books too. It in no way harms copyright owners unless the project becomes something else, namely a full-text service which then is a market substitute."

    I tend to think that this is the core analysis of fair use-- if the use is a market substitute for the original work, it is probably not a fair use.

    Jason Schultz was quoted in a segment on NPR's California Report on Google Lawsuits over Images, Books

    In Salon.com, Farhad Manjoo has an excellent piece that summarizes the implications of these cases: Throwing Google at the book: "A year later, Google's grand plan to digitize the world's books still seems as fantastical as it did when it was first proposed. Earlier this year, the company started scanning books at libraries, and on Nov. 3 launched an elegant beta version of its book search engine -- but the project faces an uncertain future."

    On a tangentially related note, Eric Goldman discusses a different search engine indexing case: Newborn v. Yahoo: "In this case, a web publisher sued Google and Yahoo for contributory copyright and contributory trademark infringement based (apparently) on their indexing the publisher's press releases. I say "apparently" because the plaintiff was unable to articulate a legal complaint or a statement of facts that the judge could understand. Because of the defects in the complaint, the judge granted a motion to dismiss with prejudice, ending the case before it started."

    More links and commentary follow in the extended entry.

    Blawg Review #31

    Welcome to Blawg Review #31, the weekly guide to the best posts in the legal blog world. This week, Blawg Review will fall in love, geek out, go online, get some useful advice and maybe even engage in some light treason.

    Previously on Blawg Review

    Howell-o-ween!
    Blawg Review went Underground
    Blawg Review fought the man!
    Blawg Review sold out!
    …and now, stay tuned for this week's exciting all-new episode of Blawg Review!

    Act I: The Alito Nomination

    The big story around the blawgs this week was obviously the nomination of Judge Samuel Alito to replace Sandra Day O'Connor on the Supreme Court. For an example of how useful legal blogs can be, look no further than these posts.

    First Amendment, Copyright and Internet Law

      Laura Quilter looks at Alito's record on copyright, the First Amendment and Cyberlaw, finding that "while Alito appears to be careful and thoughtful about copyright, the picture that emerges from looking broadly at his consumer rights and interests decisions is not a good one. Alito appears to be quite concerned with enforcing the letter of contracts and working through the nuances of textual interpretation."

      Ronald K.L. Collins and David L. Hudson Jr., from the First Amendment Center, look at Alito's record on the First Amendment (surprise, surprise) and find Judge Alito fairly strong on free expression.They find Alito "(1) quite protective of several categories of expression, including religious and commercial expression; (2) far less protective of First Amendment claims raised by prisoners; (3) guardedly protective of First Amendment rights in defamation cases, and (4) generally concerned about prior restraints on expression."

      At New World Man, Matt Barr looks at Alito's First Amendment jurisprudence in two posts: one on free exercise/establishment of religion and the other on free speech "These opinions were written by someone not appearing to be disposed to defer to government when it encroaches on the free speech rights of its constituents."

      William Patry looked at Alito's decisions in Southco, Inc. v. Kanebridge Corp.Judge Alito and Copyright, calling them "thoughtful looks at basic questions of originality."

    Business Law

      At Concurring Opinions, Dave Hoffman wonders if Alito would be a Business Friendly Justice?and delves further into Judge Alito's record on Securities Law.

      Larry E. Ribstein of Ideoblog asks Is Alito Pro-Business? Alito has displayed a marked tendency to enforce contracts as written, specifically including choice of law/forum and arbitration provisions that are intended to mitigate litigation costs. He's also obviously aware of the problems that can be caused by lax proof standards and open-ended liability.

      ACS Blog offers a quick look into Alito on Business

    Criminal Law and Criminal Procedure

    International Law

    Other Important Issues and Miscellany

    The Alito hearings are set to begin on Jan. 9

    Act II: The Judiciary and Procedure

    Meanwhile, in other courts…

    SCOTUSblog's Lyle Denniston reports about Chief Justice Roberts' service on the D.C. Circuit: Roberts: a judge on two courts. Michael Froomkin and Steve Vladeck discuss Circuit Justice Roberts's Eleven-and-a-Half-Day-Gap: "Did Chief Justice Roberts accidentally create grounds for reopening (and even rearguing) Banner v. United States?"

    Chris Cohen reports the interesting case of a Mormon Utah Judge Married to 3 Sisters: "A 14 month investigation of Judge Walter K. Steed of Hilldale, Utah has determined that Steed violated the Utah law against bigamy by marrying three sisters."

    Act III: Internet and IP

    Since these subjects are the usual focus of this blog, here are a few links that won't cannibalize the rest of my source material for the week.

    Raymond Nimmer looks at Google Print: Google lawsuit begins; fair use.

    William Patry Two Fair Use Cases: "The first involved Jeff Koons appropriating yet again another photographer's work. The second involved use of very small excerpts from a classical musical performance by a nonprofit satellite program about the arts. The results in the cases are the opposite of what one would expect from this introduction."

    Eric Goldman discusses a Search Engine Indexing Case--Newborn v. Yahoo: "We got a new case on search engine liability for indexing content. The importance of the topic makes the case blog-worthy, even though this particular case gives very little insight into the legal propriety of search engine indexing."

    Laura Quilter is ruminating on … rumination? information? tinkering? imagination?: "For some time (years, literally) I’ve been pondering the perfect phrase to capture ‘information rights’ — the natural right people have to create, invent, tinker, think, imagine, ponder, access information, etc. The First Amendment conceptual toolkit doesn’t really measure up: we have First Amendment concepts for speaking and the corollary, listening. But these concepts don’t fully capture the rights which are restricted by intellectual property laws, government Secrets Acts, and the like."

    The Patent Prospector: Coffee Beer: "Nestec, a subsidiary of Swiss-based Nestlé, has filed patents (WIPO application) in every major market worldwide for 'coffee beer.'"

    Here are two reports from last week's P2P Litigation Summit in Chicago: Derek Slater podcasted his reactions: First Thoughts and Take Two. Ray Beckerman posted a text report on the p2p litigation summit.

    Cardozo Law Prof and first-rate blogger Susan Crawford was nominated to the ICANN board and should be a positive impact on internet governance.

    At Legislating IP, I discussed new proposed bills to authorize the FCC to implement the Broadcast Flag and plug the Analog Hole.

    Act IV: Useful Advice and Practice Tips

    The vast majority of posts suggested by the smart Blawg Review contributors could be grouped very generally under this heading.

    Interviews and First Impressions

    Litigation and Trials

    The Business of the Practice of Law

    Organizing Information

    The Ivory Tower

    Miscellany

    Act V: Issue to Watch: National Security Letters, Torture and Executive Power

    Law profs Wendy Seltzer, Daniel Solove and Orin Kerr all posted about the rising use of National Security Letters (NSLs) last week. NSLs are secret subpoenas the government can use to collect information on communications and transaction information. with no requirement of probable cause. These can be used without judicial authorization. The FBI simply issues the letter and gets the information. Oh, and there's a gag order that prevents the institution receiving the letter from disclosing this fact.

    Opinio Juris discuses Executive Deference and the CIA's "Black Sites": ""it is useful to keep in mind that such deference, even in issues relating to foreign affairs and national security, is not always a good thing."

    Finally, Fafblog (The World's Only Source for Fafblog) has its own unique take on the use of torture: We Are All Torturers Now: "It's time to combine the good old-fashioned tradition of American volunteerism with the brand new traditions of forced sleep deprivation and genital electrocution."

    Act. VI: The Next Blogger Book Deal?

    One of my favorite blogs about lawyerly life, Opinionistas, gets a writeup in the Sunday Times (City Section): Blogging the Firm. One example post begins: Lottery "My department has chosen an associate sacrifice. I've seen it happen before, apparently the phenomenon isn't uncommon. The ritual begins with the senior and midlevel associates furtively selecting a member of the newest batch of fledgling first years, still rosy-cheeked and ravenous for their initial paychecks. It could be anyone, from great schools, sporting a glowing transcript and resume, a fresh arrival who has absolutely no clue what it feels like to be openly despised by her peers."

    O seems to be following the Blachman method of transitioning from law to literature: 1. Write a clever anonymous blog. 2. Get publicity in the NY Times. 3. Book deal! Hey, I'd buy her book.

    Credits

    That's all for this week's edition of Blawg Review. To learn about upcoming hosts and how to submit posts, visit the Blawg Review web site.

    Next week on Blawg Review…

    …Blawg Review visits Jag Central, the world's first weblog devoted to military justice and military law issues.
    Howard Bashman blogs events before they occur (cut to: Bashman leaving 3rd Circuit courthouse in a De Lorean)
    …A3G has the dirt on the next (if necessary) potential Supreme Court nominee-- a nominee who will skew younger. With juries and so forth.

    How not to pitch Blawg Review

    I'm reading through some of the submissions to this week's Blawg Review, which should be up sometime around midnight, but one stood out to me as the perfect example of what to avoid when submitting a link to Blawg Review (or a similar blog event, like Carnival of the NHL).

    Here is the email submission, stripped of identifying information:

    From: name(at)firm.com Subject: Blawg Review #31 Date: November 4, 2005 2:13:07 PM EST To: post(at)blawgreview.com

    http://www.domain.com/blog/permalink.php?post=###

    Please visit our weblog, www.domain.com® for legal news.

    Firstname Lastname
    name@firm.com

    This email, including its contents and attachments, if any, is a confidential communication and is not to be delivered to, or read by, any person other than the addressee. This communication is protected by the attorney-client and attorney work-product privileges, must not be disclosed to any other party, and must be treated in a confidential manner. Federal Rules of Civil Procedure, Rule 26(b)(3), Federal Rules of Evidence, Rule 501, California Code of Civil Procedure sections 2018.010, et seq. and California Evidence Code sections 950, et seq.

    This transmission is not intended to waive the attorney/client privilege or any other privilege. If the reader of this message or any attachments is not the intended recipient, or the employee or agent of the intended recipient, you are notified that reading, disseminating, distributing or copying this communication is strictly prohibited. If you have received this communication in error, please either delete it or immediately notify the sender by telephone, who will retract it at no cost to you.

    Email transmission is not guaranteed as error-free. The sender therefore does not accept liability for any errors or omissions in the contents of this message that arise out of email transmission. If verification is required, please request a hard copy version. Although we routinely scan for viruses, addressees should check this email and any attachments for viruses. We make no representation concerning the absence of viruses in this email or its attachments, if any. Please see our disclaimer. to ensure compliance with International, United States and its States' laws, and for the protection of our clients, we may monitor and read email and attachments sent to and from our servers. Thank you for your cooperation.



    Firm Name
    Street Address
    City, US #####-#### USA
    Telephone: ###-###-####
    Facsimile: ###-###-####
    www.firm.com

    When pitching a post idea, please include a post title or a couple of sentences describing what the post is about. In general, keep the boilerplate in your signature to one short paragraph or less.

    The Blawg Review Submission Guidelines provide a good model of how to submit a post.

    There are some interesting posts that were submitted this week...

    Entertainment Law for Indie Bands

    Indie Night School, an occassional educational series for independent musicians, offers a podcast of its session on Entertainment law, with panelists Richard Grabel and Ken Anderson.

    Fun with DRM

    Barry Ritzholtz bought a My Morning Jacket CD and was dismayed to find that it contained a DRM program that prevented him from shifting it onto his iPod with his Windows computer. He looked a little further and found that the DRM is merely a way to annoy music fans who use iTunes and iPod: The Big Picture: DRM Crippled CD: A bizarre tale in 4 parts: "This DRM is not at all about making the CD immune to piracy. Instead, its part of a pissing contest between Sony and Apple:  Variety writes that 'the new copy protection scheme — which makes it difficult to rip CDs and listen to them with an iPod — is designed to put pressure on Apple to open the iPod to other music services, rather than making it dependent on the iTunes Music Store for downloads.'"

    The band's record label (Dave Matthews' ATO imprint) isn't happy with the decision of its distributor (Sony BMG) to implement DRM. Information Regarding Our Artists' Music, Copy-Protected CDs and your iPod: "We at ATO Records are aware of the problems being experienced by certain fans due to the copy-protection of our distributor. Neither we nor our artists ever gave permission for the use of this technology, nor is it our distributor's opinion that they need our permission. Wherever it is our decision, we will forego use of copy-protection, just as we have in the past."

    The label and fans have a reason to be unhappy. J. Alex Halderman describes how the DRM software Sony uses adopts some of the nefarious practices of spyware: CD DRM Makes Computers Less Secure

    When XCP2 installs its anti-copying program, it also installs a second component which serves to hide the existence of the software. Normally, programs and data aren’t supposed to be invisible, particularly to system administrators; they may be superficially hidden, but administrators need to be able to see what is installed and running in order to keep the computer secure. What kind of software would want to hide from system administrators? Viruses, spyware, and rootkits (malicious programs that surreptitiously hand over control of the computer to a remote intruder). Rootkits in particular are known for their stealthiness, and they sometimes go to great lengths to conceal their presence