Disrupt my TV, please

At Time’s Techland Blog, Ben Bajarin writes:

Why We Want TV to Be Disrupted So Badly.

I was at the Consumer Electronics Show where [Tivo and ReplayTV] debuted, and their booths were as packed as any on the show floor. Both offered such a simple premise: pause, rewind and fast forward live TV. In my opinion, these two companies paved the way for the disruption we will eventually see. Why? Because they showed us how much better our TV experience could be, and how crappy the technology was that our current television providers provided us with.
I remember having discussions with executives at both TiVo and ReplayTV during their startup years. In particular, I remember a conversation with Anthony Wood, one of the founders of ReplayTV and the now founder and CEO of Roku. I asked Anthony why the current TV providers didn’t think of this first. His answer, plain and simple, was “because they are not technology companies.” So profoundly true. And the fact that they are not technology companies is the simple reason so many of us in the tech industry want TV to be disrupted. We know the technology and the experience can be so much better.

No. The reason that the existing TV companies weren’t thinking about innovating the TV experience is not because they are not technology companies (which they are), but simply because they don’t have to. The market to deliver television and broadband is not competitive. The major cable providers don’t compete with each other in the same market. Whether any particular household subscribes to television service through Comcast or Time Warner or Cablevision depends not on that household’s choice to pick one cable provider over another, but by the local monopoly franchise granted to a cable provider.
Cable companies are not competing with each other to win market share at the consumer level, but are competing with each other to win market share at the municipal level. They compete for the franchise right. So there’s no need to push forward with technology to make the viewing experience better — only to be generally competitive with other cable providers in other markets so as to prevent an overwhelming groundswell of desire to change.
If the cable companies competed directly for the same customers, the quality of the product and experience would be far more customer friendly.
In most regions, consumers have few other options for internet or television service than their local cable monopoly. DSL internet service from the phone company is no longer competitive with the speeds that cable modems can offer. Satellite television service requires installing a satellite dish and service can be disrupted by bad weather.
In New York City, Verizon is supposed to provide competitive broadband/video fiber optic service to all households by June 30, 2014, but many areas of the city still lack the access to the competitive fiber optic network. NYC Public Advocate (and mayoral candidate) Bill Diblasio notes Verizon is not yet serving many areas of New York with Fios. Outside of the Fios service area, Google is wiring cities with fiber optics, and an impressively ambitious internet and TV service, but its rollout is limited to Kansas City (and then coming to Provo, UT and Austin, TX.) Otherwise, no cable company has to deal with a truly competitive service provider. Arms-length competition, where providers simply need relative parity to each other, doesn’t force providers to innovate in the same way that they would with direct competition.
And since Tivo and ReplayTV launched more than a decade ago, the DVR market has become less innovative and competitive. In more than seven years since Tivo introduced its first HD device (the Series 3), the Tivo software interface still is not fully updated to HD — a substantial amount of the user interface in the latest Premiere DVRs has been carried over directly from the decade-old Series 2 design. In fact, for sharing recorded content around the house, many cable company solutions are better than Tivo.
ReplayTV was forced out of business through litigation over its automatic commercial skipping feature. Cable providers are competing successfully with Tivo not by offering DVR that is functionally competitive with Tivo’s offering, but by offering DVR service that works well enough for most viewers, is easier to install, and is a single fee with the cable bill.
If cable providers had to compete with each other for customers, the quality of the television viewing experience would be orders opt magnitude better than it is today. But fortunately, we are on the cusp of a period of rapid, transformative innovation in the television space.
Innovation is coming not because the cable television market is becoming any more competitive, but despite the best efforts of the cable companies to prevent consumer-friendly change.
Most broadband connections (largely through cable companies) are fast enough to stream HD-quality video reliably. Devices to stream internet content to an actual television are inexpensive and work reasonably well. Netflix, Amazon, iTunes, Hulu, HBO GO, ESPN, MLB, the NBA and the NHL all stream high-quality content to Roku and/or Apple TV that make it possible to replace cable television with on-demand access to a vast library of quality content and/or live sports. And although some cable providers do not authenticate their users for HBO GO access on Roku or AppleTV devices, the increasing quality and availability of streaming content is forcing cable companies to actually compete not just with one competitive cable box provider, but with the wealth of video programming on the entire internet. And so, to be competitive and keep customers spending on video programming, rather than just treating the cable company as a broadband provider, the cable companies have to offer the ability to time-shift or place-shift content, whether by video streaming to tablets, access to on-demand programming, or network-based DVRs.
The oft-maligned bundling of cable channels actually providers more value, at least in terms of the breadth of programming available, compared with ala carte internet video.
So, the problem isn’t that cable providers aren’t technology companies — that assertion is preposterous considering that cable providers are also the primary provider of home broadband in the US. The reason that the television industry is ripe for disruption is because the consumer market is non-competitive.

Transparency May Be Required

Apple’s Developer Site was hacked. All Things D reports; Apple Developer Center Was Hacked; Site Remains Down While Company Overhauls Security
In their notification, Apple notes that they are letting developers know about this attack “in the spirit of transparency.”
Without knowing more information about what information was obtained through the data breach incident, there are a number of scenarios where state laws would require that Apple notify its users that their personal information may have been accessed by an unauthorized third party.
In the US, each of the fifty states (as well as DC and Puerto Rico) has its own data breach notification law. Compliance is based not on the state in which an entity that stores personal information actually resides or stores that information, but, because we consider privacy to be a personal right, it is based on the home state of the person whose data is being stored.
Most states define personal information to include:

An individual’s first name or first initial and last name plus one or more of the following data elements: (i) Social Security number, (ii) driver’s license number or state- issued ID card number, (iii) account number, credit card number or debit card number combined with any security code, access code, PIN or password needed to access an account and generally applies to computerized data that includes personal information. Personal Information shall not include publicly available information that is lawfully made available to the general public from federal, state or local government records, or widely distributed media. In addition, Personal Information shall not include publicly available information that is lawfully made available to the general public from federal, state, or local government records.

But, some states have a broader definition of personal information than this. Some states require that the state is notified in case of a data breach that affects a certain number of residents. Some states offer a safe harbor from notification if personal information is encrypted and not access in an unencrypted format.
BakerHostetler has a straightforward and comprehensive summaries of data breach notification laws Data Breach Charts. With each of the states having a different requirement, Apple’s notice to its developers wasn’t solely in the spirit of transparency, but also in the spirit of legal compliance.
A security researcher claims to have accessed secure Apple data after filing a bug report to encourage Apple to fix the hole that he found. iMore reports Security researcher claims to have reported bugs shortly before Apple took down its developer portal. Whether or not the data was leaked by a white hat hacker instead of a black hat hacker, that doesn’t affect the fact that personal data was delivered to a third party, which requires the company storing the personal data to report it to the individuals, and depending on the number of people affected, also to certain states.
Last week, the House Energy & Commerce Committee Subcommittee on Commerce, Manufacturing, and Trade held hearings on whether a federal data breach notification statute is necessary. Subcommittee Explores State of Data Breaches in United States
Earlier this month, the California Attorney General released her report on data breaches affecting California residents in 2012, when 2.5 million Californians had personal information put at risk through an electronic data breach, but more than half of those citizens’ would have been protected if the companies storing their personal data better encrypted the data.

API Madness

This week, the inter webs went all aflutter when Michael Sippey of Twitter announced the Changes coming in Version 1.1 of the Twitter API.
In general, Twitter is seeking to more tightly control the user experience and discourage active development of third-party client applications. Yet it seems like so much of the success of Twitter comes from the origin in lack of control. It was simple and the users built most of the conventions that Twitter relies on.
For a service like Twitter that is so simple and basic, will attempting to make it into something different end up killing it off? Will App.net or something else be the Facebook to Twitter’s Friendster or Myspace?
Even though much of the use of Twitter is on its own website, it seems like the most active users, and the reason that the service became successful comes form client software, all of which came from third-parties. Twitter’s official clients were originally written independently by Loren Brichter as Tweetie and then acquired (and then apparently left for dead.)
As Twitter is trying to build itself into a business, it’s also changing to dictate how the service is used, rather than building on the conventions that have evolved.
Web communities tend to take on their own unique and individual character and personality. Some, like Metafilter or Reddit are largely supportive and collaborative. Others, like 4chan or Funnyjunk take on personalities that are more anarchic or antagonistic. The communities that tend to have stronger community values are the ones who tend to have stronger moderation enforcing community norms, whether that is individual moderators like at Metafilter or the community norms that Twitter’s users established. In particular, the @username convention and the #hashtag convention both came from use, not from Twitter.
Image uploads were supported by third-party clients long before Twitter launched it’s own image hosting service.
And while if hoping to extend the Twitter service and sell it to advertisers, it makes more sense for it to be a website rather than a service that works across different software. But it seems more likely to alienate the user and developer ecosystem that Twitter enables. And because Twitter as it is today provides tremendous value to the users and developers, trying to recapture some of the value from the users and developers, rather than sell those users’ attention to advertisers seems like the better way to capture value, because it will encourage the users to use the site more.
By carefully and narrowly designating what the Twitter service is, rather than listening to what the most active users want, is Twitter going to be driving its most active users and third-party developers away from its service?
The most-active Twitter users seems to interact with the service mainly through Tweetdeck*, Tweetbot, or the rapidly stagnating Twitter apps rather than the website.
*Yes, Twitter own Tweetdeck, but it seems to be a vastly different experience than the Twitter website.
Developer Rules of the Road,
Terms of Service and Display Guidelines, which will become display rules.
Marco.org, Interpreting some of Twitter’s API changes: “I sure as hell wouldn’t build a business on Twitter, and I don’t think I’ll even build any nontrivial features on it anymore.”

Doubling Down

Here’s an example of how overly aggressive tactics blow up in one’s face. And then taking that explosion and doubling down aggressively.
Matthew Inman writes and publishes The Oatmeal, one of the funniest comics on the web. Users at Funnyjunk.com reposted many of Inman’s comics. So Inman asked his readers how he should respond and then had some dialogue with the proprietor and denizens of Funnyjunk.
Then last week, Inman received a demand letter from Funnyjunk: FunnyJunk is threatening to file a federal lawsuit against me unless I pay $20,000 in damages. Alleging that The Oatmeal violated made false accusations of willful copyright infringement and infringed on Funnyjunk’s rights under the Lanham Act, Funnyjunk’s attorney demanded $20,000.
Inman’s attorney replied, as did Inman, who used IndieGoGo to ask his readers to raise the $20,000 and donate it to the National Wildlife Foundation and the American Cancer Society (as well as send a crude cartoon to the owners of Funnyjunk.)
After Inman raised more than $100,000, Funnyjunk’s attorney Charles Carreon went full Rakofsky to personally sue not only Inman, but also IndieGoGo, the National Wildlife Foundation and the American Cancer Society. The Oatmeal v. FunnyJunk, Part IV: Charles Carreon Sues Everybody: “On Friday, June 15, 2012, attorney Charles Carreon passed from mundane short-term internet notoriety into a sort of legal cartoon-supervillainy.”
Wow.

Compare/Contrast

On Thursday morning, the House Judiciary Committee will have a full committee markup of the latest version of H.R. 3261 the Stop Online Piracy Act. Here’s some initial analysis from Mike Masnick at Techdirt Lamar Smith Proposes New Version Of SOPA, With Just A Few Changes.
Today, comedian Louis C.K. released his latest standup special, filmed earlier this year at the Beacon Theater in New York, NY as a simple $5 direct download. No DRM, payment simply through Paypal. He’s aware of the risk of piracy and believes that simply offering a product that’s inexpensive and simple enough that it’s a better customer experience.
I hosted a podcast discussion that I’ll be posting later this week — one of the topics we discussed was the fact that a torrent download offers the best viewing experience for any way of watching television programming. (None of the glitches of streaming, none of the commercials of broadcast and none of the interminably long menus of DVDs and Blu-Rays.) Probably the only other one that compares is iTunes (which has the disadvantage of being the most expensive way to watch lots of television.)
Is the best way to compete with casual infringements simply to offer the best experience?

The New Digital Divide

Susan Crawford in the New York Times on The New Digital Divide:

“While we still talk about “the” Internet, we increasingly have two separate access marketplaces: high-speed wired and second-class wireless. High-speed access is a superhighway for those who can afford it, while racial minorities and poorer and rural Americans must make do with a bike path…
“Over the last 10 years, we have deregulated high-speed Internet access in the hope that competition among providers would protect consumers. The result? We now have neither a functioning competitive market for high-speed wired Internet access nor government oversight.”

The market for dial-up internet access was competitive. The market for broadband access isn’t. And without competition, incumbents can simply charge a prevailing rate. There’s no incentive for competition, because it’s not like a homeowner can simply switch from Time Warner to Comcast without moving to a new house that is in a Comcast service area. Competition spurs innovation and reduces rent-taking. A market needs either tight regulation or stiff competition. Home broadband providers are shielded form both.

Termination Station

Larry Rohter, The New York Times, Record Industry Braces for Artists’ Battles Over Song Rights: “Since their release in 1978, hit albums like Bruce Springsteen’s “Darkness on the Edge of Town,” Billy Joel’s “52nd Street,” the Doobie Brothers’ “Minute by Minute,” Kenny Rogers’s “Gambler” and Funkadelic’s “One Nation Under a Groove” have generated tens of millions of dollars for record companies. But thanks to a little-noted provision in United States copyright law, those artists — and thousands more — now have the right to reclaim ownership of their recordings, potentially leaving the labels out in the cold.”
Here’s the relevant section of the Copyright Act:
§ 203. Termination of transfers and licenses granted by the author

(a) Conditions for Termination. — In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:

    (1) In the case of a grant executed by one author, termination of the grant may be effected by that author or, if the author is dead, by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author’s termination interest. In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it; if any of such authors is dead, the termination interest of any such author may be exercised as a unit by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author’s interest.
    (2) Where an author is dead, his or her termination interest is owned, and may be exercised, as follows:

      (A) The widow or widower owns the author’s entire termination interest unless there are any surviving children or grandchildren of the author, in which case the widow or widower owns one-half of the author’s interest.
      (B) The author’s surviving children, and the surviving children of any dead child of the author, own the author’s entire termination interest unless there is a widow or widower, in which case the ownership of one-half of the author’s interest is divided among them.
      (C) The rights of the author’s children and grandchildren are in all cases divided among them and exercised on a per stirpes basis according to the number of such author’s children represented; the share of the children of a dead child in a termination interest can be exercised only by the action of a majority of them.
      (D) In the event that the author’s widow or widower, children, and grandchildren are not living, the author’s executor, administrator, personal representative, or trustee shall own the author’s entire termination interest.

    (3) Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.
    (4) The termination shall be effected by serving an advance notice in writing, signed by the number and proportion of owners of termination interests required under clauses (1) and (2) of this subsection, or by their duly authorized agents, upon the grantee or the grantee’s successor in title.

      (A) The notice shall state the effective date of the termination, which shall fall within the five-year period specified by clause (3) of this subsection, and the notice shall be served not less than two or more than ten years before that date. A copy of the notice shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect.
      (B) The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation.

    (5) Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.

(b) Effect of Termination. — Upon the effective date of termination, all rights under this title that were covered by the terminated grants revert to the author, authors, and other persons owning termination interests under clauses (1) and (2) of subsection (a), including those owners who did not join in signing the notice of termination under clause (4) of subsection (a), but with the following limitations:

    (1) A derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant.
    (2) The future rights that will revert upon termination of the grant become vested on the date the notice of termination has been served as provided by clause (4) of subsection (a). The rights vest in the author, authors, and other persons named in, and in the proportionate shares provided by, clauses (1) and (2) of subsection (a).
    (3) Subject to the provisions of clause (4) of this subsection, a further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is signed by the same number and proportion of the owners, in whom the right has vested under clause (2) of this subsection, as are required to terminate the grant under clauses (1) and (2) of subsection (a). Such further grant or agreement is effective with respect to all of the persons in whom the right it covers has vested under clause (2) of this subsection, including those who did not join in signing it. If any person dies after rights under a terminated grant have vested in him or her, that person’s legal representatives, legatees, or heirs at law represent him or her for purposes of this clause.
    (4) A further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is made after the effective date of the termination. As an exception, however, an agreement for such a further grant may be made between the persons provided by clause (3) of this subsection and the original grantee or such grantee’s successor in title, after the notice of termination has been served as provided by clause (4) of subsection (a).
    (5) Termination of a grant under this section affects only those rights covered by the grants that arise under this title, and in no way affects rights arising under any other Federal, State, or foreign laws.
    (6) Unless and until termination is effected under this section, the grant, if it does not provide otherwise, continues in effect for the term of copyright provided by this title.

Were these in fact works for hire? Did the labels ever treat their artists like employees? If the artists are independent contractors, besides the named artists, who of the producers, executives and session musicians count as co-authors of the work?
This could prove to be very interesting… or not.
Update (8/17). The Times today ran a story about a copyright termination lawsuit on the front page of the arts section: A Village Person Tests the Copyright Law “Victor Willis, the original lead singer of the group, filed papers this year to regain control in 2013 over his share of “Y.M.C.A.,” whose lyrics he wrote, under a copyright provision that returns ownership of creative works to recording artists and songwriters after 35 years. His claim to “Y.M.C.A.” and 32 other Village People compositions, however, is being contested by two companies that administer publishing rights to the songs.”
The complaint: Scorpio Music v Willis

National Library Policy

Should the US have a national library policy? In The Atlantic, David Rothman argues for the development of a national digital library: Why We Can’t Afford Not to Create a Well-Stocked National Digital Library System, “Old-fashioned literacy, in fact, rather than e-book standards, should be the foremost argument for a national digital library system–as a way to expand the number and variety of books for average Americans, especially students. Without basic skills, young people will not be fit for many demanding blue-collar jobs, much less for Ph.D.-level work, and economic growth will suffer.”
At the very least, some kind of library lending standard that will allow libraries to standardize on a format for storage and inter-library loans as well as allowing device manufacturers to have a standard to display could be excellent for readers.

Peering into the Pipes

Cecilia Kang, The Washington Post: Level 3 Communications calls Comcast fees for Netflix feeds unfair: “An online networking company that carries video feeds for Netflix has accused Comcast of demanding unfair fees to provide that video to home subscribers, raising questions about the cable giant’s power to control consumers’ access to the Internet.”
Brian Stelter, New York Times, Media Decoder: Netflix Partner Says Comcast Fee ‘Threatens’ Open Internet: “Those issues cut to the heart of Comcast%u2019s imminent acquisition of NBC Universal, which is in the final stages of review by the F.C.C. and the Justice Department. The F.C.C. is considering attaching a condition to the merger that would aim to keep Comcast%u2019s Internet network open to competitors, according to public filings this month.”
Jessica E. Vascellaro, Wall Street Journal, Internet Giants Spar Over Fees: “The dispute fans the flames of the so-called net neutrality debate over how to handle Internet traffic. Federal regulators, who have yet to adopt rules that require Internet service providers to treat similar types of traffic equally, are set to decide this week whether to vote soon on proposed new guidelines. Consumers are caught in the middle. Comcast argued that Level 3 wants to pass the costs to Comcast and its customers. If Level 3 bears the costs, they will eventually fall to users of services like Netflix, according to a person familiar with Level 3’s thinking.”
Without knowing the specific details of the peering agreements between Comcast and Level 3, it’s difficult to say whether this is simply a business dispute over who pays for more bandwidth between Comcast and Level 3 or if it is in fact about charging a competitor more money to send video streaming service into Comcast’s network.
If this is about blocking or impeding Comcast subscribers’ access to the Netflix streaming service, while making it easy to access Comcast’s or NBC’s competitive services for broadband, that’s a prime example of why, in the absence of a truly competitive broadband internet access market, network neutrality regulations are important. If a customer who lives in Comcast’s service area wants to get broadband and also subscribe to Netflix, they may not have any other choice but to use Comcast’s internet service for that access.
Susan Crawford, Bad Timing: Comcast, Netflix, NN, Cable Modems, and NBCU: “The takeaway from today:  No market forces are constraining Comcast – or any of the other major cable distributors, none of which compete with each other.  How will consumers and innovation be protected from their machinations?  The FCC is currently facing two defining moments in US telecommunications policy, and it’s unclear what the Commission is going to do in either case.  Will the FCC act to relabel high-speed Internet transmission services, reversing the radical Bush-era deregulatory turn? Will the FCC block the Comcast/NBCU merger?  Can we expect that anything will happen (at all) to ensure that local monopoly control over communications transport isn’t leveraged into adjacent markets for devices and content?”
Kyle VanHemert, Gizmodo, Comcast Is Bullying Netflix Partners Into Paying a Toll to Deliver Streaming Video: “This is presumably the first volley in what will be a long battle between companies like Netflix and broadband providers, nearly all of whom have their own video on demand services to peddle. And this type of thing is precisely the reason that net neutrality—ensuring that internet providers don’t discriminate in how they deliver their content—has been and will continue to be such a big deal going forward. When service providers strong arm comparatively little guys like Netflix (and the partners upon whom Netflix relies, like Level 3) into paying higher fees, that turbulence eventually shakes down to the customer, either in the form of higher prices or interrupted service.”