Before I go home…..

Speck on P2P

CNet News: Piracy investigator lauds Australia case

An Australian case in which three men pleaded guilty to online music piracy has “exploded many of the myths” related to copyright infringement, asserts the head of an investigation firm.

Some such “myths” include the view that online copyright infringement is an expression of free speech and that copyright misappropriation is good for the music business, said Michael Speck, head of Music Industry Piracy Investigations.

“Increasingly, courts here and around the world are seeing criminal offenses driven by Internet technologies as no different to other criminal acts,” Speck said.

[…] However, Speck lashed out at three Australian universities–Sydney University, Melbourne University and the University of Tasmania–currently involved in legal action over the music industry’s attempts to gain access to records of network usage. The legal action may lead to charges of copyright breaches against staff or students at those institutions.

“We hold no hope that this case will be settled by negotiation,” he said. “Those three universities have resisted providing any assistance at all, while the rest of the university population has moved on.”

Guess it’s not a mainstream perspective, yet. Note that Mr. Speck has been covered here before: 2003 May 14

First RIAA Suits Filed

CNet News: RIAA sues 261 file swappers

The Recording Industry Association of America said it has filed 261 lawsuits against alleged file swappers Monday, charging the computer users with “egregious” copyright infringement potentially worth millions of dollars.

[…] The RIAA said that’s the point it’s underlining with the unprecedented legal action. From the rise of Napster until today, tens of millions of people have started trading songs, movies and software online through services such as Kazaa with little thought for the legality of their actions. Even as the threat of Monday’s lawsuits loomed, more than 2.8 million copies of the Kazaa software were downloaded last week, according to, a software aggregation site operated by CNET publisher CNET Networks.

Indeed, a recent study by the Pew Internet and American Life Project found that 67 percent of people downloading music said they did not care whether the music was copyrighted or not.

The slew of suits will put a serious price tag on those actions for the first time. Under copyright law, violators can be held liable for up to $150,000 per violation–a measure that could result in stunningly high damage figures for some of the defendants in this round of suits. According to the RIAA, most of the people sued Monday were sharing 1,000 songs or more on the file-swapping networks.

Few of the suits are likely to go to trial, however. In the RIAA’s previous round of copyright suits, filed against four university students in April, each defendant quickly settled, agreeing to pay damages of between $12,000 and $17,000. Many of today’s defendants are also likely to settle.

Sherman said “a handful” of defendants had already agreed to preliminary settlement agreements, averaging payments of about $3,000 apiece.

It’s still about the students!

Yet another recycling of the NPD Groups’s foolish misinterpretation of the decline in downloads from April to June: Digital Downloads Decline [pdf]

As the industry takes such steps, it might find encouragement in recent data from the research firm NPD Group, which shows that the number of households downloading music fell to 10.4 million in June, from 14.5 million in April — a 28 percent drop.

More on Sony’s Efforts to Combat Schizophenia

Over the past year, the question has been whether Sony would decide it’s an entertainment company (and tie up their consumer electronics businesses in copyright/DRM constraints) or an consumer electronics company (and force the entertainment division to sit still and take it). Apparently, it’s neither – it’s a convergence company – and they’re trying to tell that to the European market: Sony Is Selling Convergence, but Will Europe Buy It? [pdf]

Indeed, Sony is making its sales pitch at a time when its efforts at “convergence” — that elusive marriage of technology with the flash and dazzle of show business — are not proceeding that smoothly. Both the highly unpredictable entertainment business, particularly its music division, and its consumer electronics operations are struggling. In its most recent quarter, Sony reported a 69 percent drop in pretax profits and a 7 percent decline in sales compared with the year-ago period.

[…] Some of these ventures are routine exercises in recycling material from one medium to another — for example, putting pictures and sounds from “Charlie’s Angels: Full Throttle” on cellular phones made by Sony Ericsson, a joint venture of Sony and Ericsson, the Swedish mobile phone maker.

Other projects are more ambitious. Sony’s music, film and electronics divisions are jointly developing an online delivery system for songs that will rival Apple Computer’s service, iTunes Music Store. The chief executive of Sony Music, Andrew Lack, said the service, known as Sony Music Box, would be an important test of the supposed benefits of convergence.

Mr. Lack, here to promote Sony Music, confessed frustration that Apple’s chief executive, Steven P. Jobs, had seized the initiative in addressing the proliferation of illegally downloaded music. Sony, he said, should have set the pace, given its interest in protecting copyrights and its history of accessible audio devices like the Walkman.

Using piracy claims to justify media consolidation?!

NYTimes: Entertainment Industry Faces Problems Mergers Won’t Solve [pdf]

Often obscured by the fanfare around the media megadeals is the gloomy backdrop: the slowing or negligible growth in the demand for movie tickets, recorded music, books, TV programming and even cable television service in the giant United States market. But mergers have helped companies expand profits by lowering costs.

Several disparate events last week, from Universal Music’s unrelated decision to cut its wholesale CD prices to the surprising opposition in Congress to the latest deregulation of the television industry, suggest that some driving forces behind the acquisitions over the last decade may be up for reconsideration. They also suggest that mergers may not be the solution to the industry’s problems.

One prominent explanation for the downturn in the music business, piracy, is an unintended consequence of what has been a source of the entertainment industry’s perennial hopes, technology. Media companies have relied on new technology to resell their old libraries, whether music on CD’s, or films and TV shows on DVD.

New technology can cut two ways, said Ray Katz, an analyst at Bear, Stearns. A boom in sales of DVD’s has increased revenue and profit of every Hollywood studio, but many in Hollywood are already worried that, with faster Internet connections, online file-sharing might undercut DVD sales in the way the music industry is experiencing.

AOL Time Warner and Bertelsmann, which reported poor results from its music division last week, say they are hoping to respond to piracy’s assault on their profits by forming a joint venture of their music divisions, Warner Music and BMG, if they can agree on the terms. They may also hope that antitrust regulators have blocked previous attempts to combine two of the five major music companies but might be more sympathetic to their current duress.

Mary Hodder on AP’s DRM

Mary’s comments on the Associated Press’ description of how they’re going to increase revenues through online DRM: DRM at AP

I’m not sure Curley understands that on the web, he’s not selling content, but instead is selling the service with the content as the bonus. News providers on the web provide value by organizing and editorializing the aggregation of a lot of information and articles, and that’s what we, as news consumers will pay a premium price for, to get good quick information. But per article, the information is not a paying proposition except for the news outlets that repurpose and pay for it now, because they sell ads. The content definitely doesn’t need DRM restricting it’s use.

The mi2n roundup

New issue of firstmonday

Andrew Odlyzko has some more on the economics of broadband and the parallels with the nineteenth century railroads; The many paradoxes of broadband. From the abstract:

A careful examination shows that broadband is full of puzzles and paradoxes, which suggests caution before taking any drastic action. As one simple example, the basic meaning of broadband is almost universally misunderstood, since by the official definition, we all have broadband courtesy of the postal system. Also, broadband penetration, while generally regarded as disappointingly slow, is actually extremely fast by most standards, faster than cell phone diffusion at a comparable stage. Furthermore, many of the policies proposed for advancing broadband are likely to have perverse effects. There are many opportunities for narrowband services that are not being exploited, some of which might speed up broadband adoption.

There are interesting dynamics to the financial and technological scenes that suggest broadband access may arrive sooner than generally expected. It may also arrive through unexpected channels. On the other hand, fiber-to-the-home, widely regarded as the Holy Grail of residential broadband, might never become widespread. In any case, there is likely to be considerable turmoil in the telecom industry over the next few years. Robust growth in demand is likely to be combined with a restructuring of the industry.

More entertaining is to read this from the conclusions:

[L]et me suggest three other methods for stimulating broadband, one intriguing but totally impractical, one very practical but incremental, and one speculative.

The impractical method for stimulating broadband adoption is to make music free on the Internet. Currently, music file sharing appears to be one of the main drivers behind the spread of broadband. (It is certainly among the main generators of traffic.) Instead of using the law to choke file swapping, perhaps we should encourage the telecom industry to buy off the music studios, as was suggested in [50]. Total recorded music sales in the U.S. come to a grand total of about US$15 billion per year, while telecom spending is over 20 times higher. Moreover, of that US$15 billion, only about half goes to the studios. Thus in the abstract, it might be a wise investment for the phone companies to buy out the studios. This is of course wildly impractical for business and legal reasons, but it would quickly stimulate demand for broadband. (It would also demonstrate that the content tail should not be wagging the telecom dog, as it too often does in political, legal, and business discussions.) A slightly more practical method would be for the government to enact a compulsory licensing scheme that would have a similar effect. However, given all the concerns about fairness and consensus, it is doubtful the government could come up with an acceptable scheme fast enough to do much good.

A more practical method for stimulating broadband is to encourage migration of voice calls to cell phones. With their bread-and-butter business declining rapidly, the ILECs would then have to utilize the competitive advantage of wired links by promoting broadband connectivity. This migration could be speeded up by forcing the ILECs to spin off their wireless subsidiaries, to prevent cross-subsidization and encourage competition. The cellular operations are operated almost as separate businesses, so there would be little of the problem of unclear boundaries that bedevil other proposals, such as that of separating the ILECs into basic connectivity and service providers. Making more spectrum available for cellular would also promote the move of voice telephony to radio channels.

Finally, the third technique for stimulating broadband is to encourage innovative new wireless technologies. This could include both conventional and Ultra Wide Band, and both licensed and unlicensed approaches. It would require making substantial additional spectrum available for wireless. The advantages of wireless include not only the potential of lower costs, but also the prospects of having multiple local carriers providing “first mile” connectivity.