November 2006 Archives

Links of Interest

Steve Gordon, The Register: Zune means zilch for artists: "Although this pattern of not paying artists for digital music sales is dreadful, the chances of artists seeing anything from the royalty placed on Zune is even worse. There is nothing in the standard recording agreement that says the labels must share income derived from licensing digital devices."

David Weinberger: The safe harbor theory of media literacy - and two discussions about the Net and teaching: "I came away realizing why media literacy programs often bother me. Frequently, the idea even is that we have to teach our children how to recognize the Internet sites that are as reliable and safe as what they'll find in a library. That's a useful skill, but the overall picture is wrong."

William Patry: A Novelty Claim: "On November 17th, in Conwest Resources, Inc. v. Playtime Novelties, 2006 WL 3346226 (N.D. Cal.), Judge Saundra Brown Armstrong denied a motion for a preliminary injunction in a case which should immediately make its way into copyright casebooks. Plaintiff is in the business of producing adult entertainment, including what it claimed to be 12 copyrightable 'sculptures' of male genitalia sold as 'novelty items.' A dispute arose with a licensee, whom plaintiff asserted had distributed copies after termination of the license."

NY Times: To Web Fans, Peter Jackson Is the One True Director. Wingnut Films, Peter Jackson's company, is in a legal dispute with New Line over accounting of royalties and revenues from the "Lord of the Rings." The film rights to "The Hobbit" revert from New Line to Tolkein Enterprises next year, and New Line is highly motivated to begin production before then.

New World Notes: Judge Richard Posner comes to Second Life

Tomorrow in NYC: State of Play/Terra Nova Symposium on virtual worlds: "This is a very small event that picks up on the mission of Terra Nova: it is going to engage in the serious study of virtual worlds by getting researchers to inquire into the nature of research into these worlds."

AskMefi: Who is the anti-Lawrence Lessig in relation to US copyright?

Tiny firm wins 'Chewy Vuiton' suit, but still feels a bite: "The fact that the real Vuitton name, marks and dress are strong and recognizable makes it unlikely that a parody -- particularly one involving a pet chew toy and bed -- will be confused with the real product."

Internet access and monopoly power

FTC Commission Jon Leibowitz briefly touched on the competition law aspects of network neutrality and last-mile access in a speech at the FTC “Protecting Consumers in the Next Tech-ade” Hearing earlier this month: The Changing Internet: Hips Don’t Lie

Some of the most important issues regarding Net Neutrality involve transparency and disclosure. Will carriers block, slow, or interfere with applications or services? If so, will consumers be told all of this before they sign up? To my mind, failure to disclose these limitations would be “unfair or deceptive” in violation of the FTC Act.

Net Neutrality also invokes complicated competition issues. The last mile of the Internet is its least competitive. Nearly all homes in the US – upwards of 98 percent – that receive broadband get it either from their cable or telephone company. Up until now, the relative neutrality of the Internet has meant that competition and innovation elsewhere in cyberspace has not been affected by the market power of the telephone and cable companies. But if these companies are able to discriminate, treating some bits better than others, there is a danger that their market power in the last mile can interfere with the growth, character, and development of the Internet.

To be sure, there is another side to the debate. The ability of providers to charge more for time sensitive applications and content that takes up more broadband may encourage them to make necessary investments. That’s a goal that all of us should support.

Taking a step back from the framework of competition law or even telecommunications law, Susan Crawford is thinking about the big picture of communications policy: Searching for a principle "At the moment, federal telecommunications policy seems to have no coherent set of goals. We have complex and separate regulatory structures covering telephony (wired and wireless), broadcasting, cable television and satellites. Although there is no express delegation by Congress to the FCC to regulate the internet, the FCC sometimes imposes heavy-handed rules (E911 and CALEA for VoIP) and sometimes claims that its chief goal is to be deregulatory."

Brooklyn Law School professors Tony Sebok and Sam Murumba, Findlaw: Should the Law Regulate Whether and When Corporations Use Locality-Based Food Designations Such as "Brooklyn Style Pizza"?: "In the case of Domino's 'Brooklyn Style Pizza,' we think that the lesson is particularly clear: Local flavor or authenticity should not be manufactured along with a homogenized, national product. Even if consumers are not fooled--they know, in the end, they are just getting a Domino's pizza--Brooklyn and the dignity of its local culture have been cheapened as a result."

Slice NY tried Domino's Brooklyn Style Pizza so we don't have to. As did The Brooklyn Paper (with a direct comparison to Front Street Pizza in Dumbo) and The New York Times (compared to Totonno’s in Coney Island.)

(via Concurring Opinions)

Programming Note

It has come to my attention that this blog and Internet Explorer for Windows don't get along. The individual post pages (with comments) will only display about the first 250 words of an entry. On the front page, however, the text does not get cut off.

Use Firefox or Safari if you have the overwhelming desire to post comments-- particularly if you have a quick and easy fix for this problem.

I just finished reading Play Money, Julian Dibbell's book about his experiment in earning a living by selling virtual goods in Ultima Online. Not only does the book get into the details of the nature of the virtual economy, it is a fascinating read about the blurring of lines between play and work and the challenges of turning a hobby into a career. And while there are plenty of people who play MMORPGs simply as games, there are others whose online life is very serious. They watch the market indicators and exchange rates of the in-game economy with the same diligence as traders on Wall Street. Issues like bot farming are treated with the same seriousness that the WSJ covers corporate news. Gamers have spent time and/or money to acquire virtual assets which have value based on scarcity. Virtual Worlds demonstrate basic economic principle-- on both the micro and macro levels. Players are concerned with not only the price of goods, but also issues of money supply and inflation.

Yet to some extent, all scarcity within virtual worlds is artificial. With digital goods, once an object is created, it can be cloned at little to no marginal cost. It's the same reason why piracy of digital files is easier than of analog media. But, in order to make the game worth playing and keep the virtual economies from collapsing, the game universe needs to enforce the principles of scarcity.

Without some kind of regime to enforce the scarcity of intagible property, then intangible and intellectual property becomes essentially valueless to the creator. At least, that's one of the ways to frame the justifications for intellectual property laws here in the "real world." Copyrights and patents secure the economic interest in a work for authors/publishers and inventors. Because the law states that copyrights have value-- and there is a significant public interest in recognizing that value-- copyrights and patents are valuable intangible assets.

Virtual worlds are entirely based on intangible assets and are governed mainly by private contracts. The terms of use agreements of the services act as the constitutions of those virtual worlds.

In Second Life, Copybot-- a recently developed software program-- allows users of that program to clone any object. Creators of Second Life objects that are for sale object, because it ends the artificial scarcity that makes those objects valuable. You bought a virtual shirt from the virtual American Apparel store? Copybot could give you an entire wardrobe of counterfeit virtual shirts that are indistinguishable from the legitimate shirt.

While Second Life denizens could use US Copyright law to go after the infringing copies, that could be prohibitively expensive

Linden Labs intends to develop a way to identify assets and perhaps copy-protect them. But until that system is in place, Linden Labs will penalize infringers by exile: Use of CopyBot and Similar Tools a ToS Violation

Second Life needs features to provide more information about assets and the results of copying them. Unfortunately, these are not yet in place. Until they are, the use of CopyBot or any other external application to make unauthorized duplicates within Second Life will be treated as a violation of Section 4.2 of the Second Life Terms of Service and may result in your account(s) being banned from Second Life. If you feel that someone has used CopyBot to make an infringing copy of your content, please file an abuse report. Note that this is completely separate from any copyright infringement claim you may wish to pursue via the DMCA.

Daniel Terdiman, 'Second Life' faces threat to its virtual economy: "Second Life is an open-ended, 3D, digital virtual world in which members can create nearly anything they can imagine, and in which anyone owns the intellectual property rights to what they create. As a result, there are hundreds of businesses selling clothing, vehicles, furniture and the like, all for Linden dollars. A complex and stable economy has sprung up around such commerce."

Wagner James Au, New World Notes: Copying a Controversy

The fallout, of course, continues. And in its way of being a parallel, alternate world history of the Internet, Second Life has finally reached a place that’s more or less on a par with the Net as it is now, where arguments over digital rights management and file trading still rage. On the larger Internet, those debates generally pit larger corporations against their consumers, the RIAA and the MPAA versus, well, everyone else. But in a world where everyone by definition can, with a few clicks, become a content-creating entrepreneur, the debate has become egalitarian, pitting creator against creator, each with their own personal view of what constitutes theft and fair use, and the degree of faith they place in having their IP rights kept sacrosanct in Second Life.

Cory Doctorow, BoingBoing: Second Life struggles with copying

As a practical matter, it's just not feasible to control copying in an environment like Second Life, which means that SL entrepreneurs are going to need businesses that don't collapse when copying takes place. But there are much gnarlier problems here -- for example, in real life, questions of copyright infringement are adjudicated on the basis of law passed by elected lawmakers, while in Second Life, these questions are adjudicated by a company based on its non-negotiable terms of service. You can fire law-makers who make bad copyright, but you can't fire companies that make bad terms of service. You can take your business elsewhere, but if all your "assets" live in a proprietary virtual world, you have to go away empty handed, without any of your "copyrighted works."

Martin Schwimmer, The Trademark Blog: CopyBot Terrorizing Residents Of SecondLife, Caught On Video

However, to the extent that [Second Life] wishes to continue to be the host to an exchange, it will find that successful exchanges must offer security not only to buyers but to sellers. If copyrightable material is going to be bought and sold on Second Life, then I'm not sure that the real world copyright regime is fast enough to solve problems like CopyBot. I think that SecondLife is going to have to get into the copyright enforcement business.

Denise Howell, Lawgarithms: In Second Life, those on ‘Candid Copybot’ aren’t smiling

In the real world, economies thrive in part because copying technologies exist — in other words, because those technologies themselves are economic engines. Deciding that such technologies are bad per se and must be squelched or hobbled isn't good policy in the real world, and I'm not sure why Second Life, which is in the enviable position of creating in-world copyright policies from scratch, should adopt a different approach.

Unlike some other MMORPGs that had cracked down on the sale of virtual goods for real money, Linden Labs encourages the market in virtual goods and currency exchange between its own Linden dollars and US dollars. So in terms of macroeconomic policy, allowing rampant copying of in-game items may be bad policy. Because in the game, the copyrighted works are not necessarily cultural and artistic items as protected by copyright in the real world, but instead are stand-ins for scarce physical goods. Second Life could be a veritable utopia, where goods spring forth without effort, but that would change the fundamental nature of the Linden economy and at the very least lead to rampant inflation, if not a complete devaluation of the Linden dollar. And it would prove disastrous to Second Life landowners and merchants who have invested time and money in the universe.


Denise Howell and Co's This Week in Law is very good and highly recommended. Episode 2 features Denise Howell, Cathy Kirkman, and Ernie Svenson with guest Michael Arrington.

The overall concept is very similar to the plan I had but never worked on for the IPtelligentsia podcast (to make it a panel discussion type podcast with people smarter than me), except that it's good. Add this to another of the good blog-related ideas that I've had early but never managed to execute before someone else.