October 13, 2003

Donna on the MPAA’s Desire To Extend the DMCA Further [8:31 pm]

In The DMCA Doesn’t Go Nearly Far Enough, Donna points out that the DMCA does not include statutory requirements that consumer electronics companies incorporate DRM, a limitation in the eyes of the MPAA whose push for the broadcast flag is nearing fruition. See her comments and links!

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Today’s Times [1:49 pm]

Since I’m the only one in my group at work on this Columbus Day, I had the NYTimes for company at lunch today. A couple of articles:

  • Shift Key Opens Door to CD and Criticism [pdf] - with a picture of John Halderman

  • Digital Projection of Films Is Coming. Now, Who Pays? [pdf] - a look at the economics of digital movie distribution - with this fascinating bit of analysis:

    Aesthetics aside, the exhibitors say that the cost-benefit analysis comes down too much in favor of the studios, which could save a couple of million dollars on each movie they release if they could send it to theaters as digital files - whether by satellite, or high-speed network lines, or on hard drives - rather than shipping film copies that can cost $1,200 each. At that rate, a 2,000-print domestic release, common for a typical feature film, costs about $2.4 million in duplication costs, according to Screen Digest, a British research firm, which estimated that the movie studios spend a total of $1.36 billion a year to produce and distribute prints worldwide.

    The way the theater owners see it, the costs would not offset any benefits. A typical 35-millimeter projector, they say, costs $30,000 and lasts up to 30 years. But a feature-film-grade digital projector is expected to cost as much as $150,000, at least initially. And because it is a new technology, its effective life is unknown. Beyond the price of the projector would be the cost of the satellite dishes or high-speed transmission lines needed to receive the digital file, as well as an investment in the automated theater management systems to connect and control the entire operation.

    “With the cost savings the studios would enjoy, they could fund the U.S. transition to digital projection in seven years,” said John Fithian, president of the National Association of Theater Owners, the exhibitors’ trade group. “But theater owners could not sell enough extra tickets or raise prices high enough to cover those costs.”

  • Judge Gives Leg Up to Internet Calls [pdf] — speculation while waiting for the Vonage decision. Plus this tidbit:

    The established phone companies, however, are in no hurry to have regulations for Internet telephone service, which they themselves have been using for several years within their own networks. Some, like the AT&T Corporation, convert standard calls into Internet data packets and then send huge amounts of their own traffic on Internet lines in an effort to cut access payments to other carriers. In fact, lawsuits and regulatory disputes have been proliferating over just such practices.

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Amy Harmon On Digital Music Pricing Policies [10:57 am]

NYTimes: What Price Music? [pdf]

No one knows what all the effects will be. But one will certainly be on price; music in the new format will cost at least a little less than it did in the old. The standard charge has become 99 cents a track. Albums that cost between $12 and $18 on CD now sell for about $10 online. The labels have also authorized several services to offer a kind of online lease program for music: subscribers pay a flat $10 a month to listen to as many as half a million tracks as often as they want over the Internet, rather than storing them on a computer or burning them to a CD.

And the next months are expected to bring price wars — in both the usual and a more figurative sense of the term. As musical recordings have increasingly shed their physical form, the record industry and its customers have been at odds over what it all should cost. Music fans complain of high CD prices and copy more music illicitly than they purchase legally, while the record companies rail against the devaluation of their product and take file-sharers to court.

[...] Mike Bebel, Napster’s president, said his researchers did not even bother to test the effect of prices below 75 cents, because they would not be sustainable unless the entire industry embraced a new economic model. In practical terms, record companies would have to slash the wholesale price they charge online retailers (which at present is 70 or 80 cents a track). That would mean accepting a slimmer profit margin for online sales than for CD’s, which they currently seem intent on resisting. Beyond that, although their royalty percentage would be the same, artists would have to accept a much smaller check for each sale. Getting either party to contemplate those changes may be more of a challenge than anyone’s ready to take on.

[...] “Creating a viable online music service is less about acquisition than tapping into what makes music work on a social level,” said Mike McGuire, research director for media at GartnerG2, who has explored Napster and several of the other new services. “Once you get beyond the transaction to that place where it’s kind of magic, I think what you’re doing is ensuring future transactions.”

Another apparently valuable feature is the automated — and sometimes uncannily accurate — recommendations service that many online retailers offer. Todd Armstrong, 41, stopped buying music soon after college. But when MusicMatch came installed on a new computer, he signed up for the $4.95-a-month Internet radio service, which supplied additional suggestions based on the artists he selected. That’s how he discovered the rap artist Nas, among others.

“The real power of it is it has a good idea of what I might want,” he said. Earlier this month, the service added a feature that allows users to buy the songs they’re listening to; since its debut, Mr. Armstrong has bought 20 tracks for 99 cents each.

[...] Some of the services are moving — slowly — to add artists without record deals to their catalogs, which could ultimately signal a shift in power away from the five major labels, which control about 80 percent of the music sold in the United States.

[...] But for the time being, record executives are still seeking to protect the more reliable, more lucrative CD business, which currently accounts for almost all of its revenue. After all, some say, antipiracy, anticopying technology may be available within the year.

If that happens, the industry is likely to back away from the kind of pricing innovations with which it is now experimenting. Already, a strain is evident between record labels that want to restrict what consumers can do with the music they buy and the new on-line retailers, which argue that people won’t use their services if they can’t use it freely.

“This isn’t going to work if people don’t feel like they own the music,” said a senior executive at one of the new services, who declined to be identified because of continuing negotiations with the labels. “Doesn’t someone over there realize that? Why should people pay for it if it’s not more convenient — when they can just get it for free?”

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A New Jurisdiction [10:30 am]

This press release, Music publishers and record companies reach agreement to launch new online music services, leaves me with a question — what does this mean for all the fees collected on Canadian recording media? Etienne?

In a breakthrough agreement signed yesterday by David A. Basskin, President of the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) and Brian Robertson, President of the Canadian Recording Industry Association (CRIA), CMRRA has agreed to issue licenses to Internet music distributors. The agreement establishes the framework for standard terms and conditions under which CMRRA will do business with these important new services, and opens the door to their launch in the Canadian marketplace.

CMRRA will be entering into licensing agreements under this framework with Napster, MusicNet and Puretracks., Puretracks, a Canadian-owned service, will launch on 14 October 2003. MusicNet and Napster are scheduled to debut shortly thereafter with others expected to follow. Each of the services will offer upwards of 250,000 CD-quality songs on both a streaming and a la carte basis with prices starting at 99 cents.

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Tom Tomorrow Nails It! [10:02 am]

Today’s This Modern World at Salon (available tomorrow at WorkingForChange) is an unbelievably nasty look at the Plame Affair — don’t miss it!!

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Fade — Flashback to the 1980s [9:56 am]

This New Scientist article on copyprotection for games gives me a flashback to the 1980s: ‘Subversive’ code could kill off software piracy. In particular, this bit:

Fade exploits the systems for error correction that computers use to cope with CD-ROMs or DVDs that have become scratched. Software protected by Fade contains fragments of “subversive” code designed to seem like scratches. The bogus scratches are arranged on the disc in a subtle pattern that the game’s master program looks for. If it finds them, the game plays as usual.

When someone tries to copy the disc on a PC, however, the error-correcting routines built into the computer attempt to fix the bogus scratches. When the copied disc is played, the master program then cannot find the pattern it is looking for, so it knows the disc is a copy.

Why the flashback? The early incarnations of Lotus 123 had their own variant of this technique. The floppy disk that 123 came on were formatted using a different sector interleave than the default for IBM DOS’ FORMAT program. The disk would copy just fine, but because the interleave was not the same, seek times would be wrong and the installation program would not run. Of course, as computers got faster, the error recovery times fell and the install program wouldn’t work even with legit disks.

This messing around with formats always seems clever at the outset, and ultimately results in legitimate customers suffering. With short lifecycle programs like games this may not be a problem, but other applications have largely abandoned copy protection. And it’s not clear that it’s that great a plan for games either, especially when things like the recent leak and distribution of Half Life’s source code!

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SunnComm From LawMeme [9:46 am]

The two articles on the SunnComm fight are full of good archival links — SunnComm to Sue Halderman Over Critical Academic Report and SunnComm Backs Off on Threat to Sue. More importantly, however, is the closing sentence of the second, wherein Ernest Miller makes the following supposition:

I can’t help but think that the immediate blogging firestorm and public outcry that occurred in response to the proposed lawsuit had something to do with the quick retraction of the threat.

I was out of the country, in the wrong timezone and largely unconnected to the Internet, but I got an e-mail from Donna suggesting to her blogging friends that there was a reason to research and post as much as possible about this as soon as possible. I wasn’t able to do my part then, but I think that Donna’s name should be linked with Ernest’s comment.

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LawMeme on the Roland MT Discussion [9:38 am]

In response to this: Roland Attacks MT-32 Emulator Project with its argument that failure to register means no copyright protection, we get Failure to Register Invalidates Copyright? NOT!!!

Lesson one: even if you think that nastygram you just got is utterly baseless, ask a lawyer! It took me less than five minutes to look up the Cameron case; a real copyright lawyer would have known without having to look. If you’ve been nastygrammed and don’t know where to find a lawyer, ask the EFF for a referral (and send a copy of the ‘gram to Chilling Effects while you’re at it).

Lesson two: FAILURE TO REGISTER COPYRIGHTS DOESN’T RENDER THEM INVALID. Tell your friends. Tell your enemies. Tell your cat and your dog. But please, please, please, don’t let anyone run around with the idea that copyrights just go away if they’re not registered. There are bad legal theories, and then there are ones that are outright dangerous, and this is among the latter. It’s the legal equivalent of a gun loaded with foot-seeking bullets.

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Jay Rosen on Len Apcar at Blogger.Con [9:26 am]

Times Web Editor Goes to Harvard in Search of Something [via Sivacracy]

Jay mentions that Len was asked about the Times archives. his description is great:

There was one almost poignant moment during the question and answer period. Someone stood up and asked will the New York Times open its archive to free linking? (The original url’s expire after seven days for most articles, then you have to pay.) This appeared to catch Apcar off guard. Perhaps he had not fully understood the ethical universe he had traveled to, the Open Source Society, where naturally you link to everyone who enriches your account, building the social capital of the Web a tiny bit at a time. You take pains to make yourself linkable, too– that’s just good citizenship.

What the crowd was really saying, however, cut deeper: Don’t you understand? We want to link to you, mighty New York Times, and give everything you publish more and more Web life. For this, the Rule of Links, is the way of our tribe, said conference host Dave Winer, who wrote the rule. But because of your foolish and short-sighted archive policy, our efforts die after a week. Why, why are you causing all this needless link death?

This wasn’t entirely fair to Apcar, who isn’t a corporate head. He seemed puzzled by it.

Also in re Blogger.con, see Ed Cone’s summary of E. Volokh’s sense of copyright and weblogs: We did this Q&A by email.

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A History of Copyright [9:15 am]

From firstmonday: Copyright and Authors by John Ewing. Statute of Anne, etc. Also some stories of the French experience, as well as details on the interregnum between the passage of the Statue of Anne in 1709 and the Donaldson v. Backett decision of 1744.

Copyright is also neither inherently good nor inherently evil. But even the most casual observer can see that something is wrong with copyright. Today’s copyright laws and traditions are dissonant with modern culture and technology, and the dissonance has become more and more apparent in the past few years. If we want to adapt copyright to our modern world — if we want to protect the good aspects of copyright — we need to do more than repeat slogans about fairness and protecting authors. We need to learn something of copyright’s nature in order to understand how to solve its problems.

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Benny Evangelista Runs Downs the Music Options [9:09 am]

Benny Evangelista’s SFgate story on the return of Napster and the pending Apple Itunes announcement summarizes the state of play in the online music business: Cranking up Napster again: In about-turn, RIAA decides to cash in on brand name, get downloaders to pay [pdf] Includes a discussion of the recent Piper Jaffray online music report, "Stairway to Heaven or Highway to Hell?” — PDF press release; HTML

Three years ago, the Napster online file-sharing program was a grassroots, pop culture phenomenon that gave more than 60 million people around the world a cheaper, easier way to hear music than buying CDs. Many music industry executives, though, saw it as a major threat.

Today, Napster finds itself on the other side. With a new for-pay version set for release later this month, the biggest record companies are rooting for Napster to help save the industry from the online file-sharing revolution that became stronger after the original Napster died.

[...] For its part, Apple Computer Inc. has scheduled a presentation Thursday at San Francisco’s Moscone Center West to announce what Apple experts believe will be the Windows-compatible version of the successful Macintosh-only iTunes Music Store, which has sold more than 10 million downloadable songs since its launch in April.

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Innocent Infringement? [8:31 am]

A New York Times article on the SCO lawsuit introduces the largeer world to Canopy and to a new piece of copyright jargon — innocent infringement: Copyright Lawsuit Is Turnabout for SCO [pdf]

Although neither party would comment on why the Lineo-MontaVista lawsuit had been sealed, legal experts said that it was probably because it might have a direct bearing on the dispute between SCO and I.B.M. One possibility involves a legal defense known as “innocent infringement” in which a copyright violator infringes unknowingly. If it became public knowledge that Lineo admitted guilt but settled for a relatively trivial sum by invoking that argument, it might come back to haunt SCO.

“If there are transcripts and pleadings that have been sealed in which Lineo makes the innocent infringement argument, that’s a defense that I.B.M. and others could use in their lawsuits,” said Jack Russo, an intellectual property lawyer at Russo and Hale in Palo Alto, Calif. “There is not a lot of law in this area and my sense is they are worried that this is something that I.B.M. could run with.”

Slashdot discussion: NY Times Reveals SCO/Canopy Group Hypocrisy

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Hiawatha Bray’s Take on SunnComm [8:12 am]

Hiawatha Bray, a Boston Globe technology columnist who generally never met a corporate hegemony that he didn’t like, tries to find a silver lining in the recent SunnComm nonsense: Missing the point on antipiracy technology [pdf].

His thesis is that the imperfections in the current music DRM technologies are there to help keep honest people honest, rather than achieve a near-perfect lockout.

Here’s a clue. Both SunnComm and the record company BMG, which uses the SunnComm system, told the Globe that Halderman’s discovery wasn’t news to them. Both firms were well aware that their antipiracy system could easily be bypassed. SunnComm president Bill Whitmore said they were angry at Halderman for describing their product as “irreparably flawed.” In reality, said Whitmore, MediaMax does exactly what it was designed to do.

[...] Or maybe the music industry has finally figured it out. Unless consumers are forced to buy computers that will not copy CDs — fat chance — it’s impossible to completely eliminate music piracy. So instead, the industry might be designing systems that seek to gently nudge people toward honesty, rather than dragging them in chains toward the path of righteousness.

Even the music industry’s campaign to sue individuals for file swapping could be part of this approach. It seems that lots of file swappers didn’t even realize that what they were doing was illegal. Well, now they know.

Step two is to give people a way to make a few copies of their favorite tunes, without worrying about breaking the law. That’s where systems like SunnComm’s and Apple’s come in. Both of them let the user make a few legal copies. Most honest people won’t need any more than that. And these products are based on the assumption that most music listeners are honest.

What’s the missing piece of this argument? How about the need for a user-friendly online service that makes the entire catalog available? Without that kind of coverage, there will be demand for a service that affords that kind of access. Will the record companies and artists relinquish that much control? Because, until they do, the motives for file sharing, whatever the technology, will stay in place. See, for example, what Mary Hodder thinks is necessary: The Heavenly Jukebox Cont’d

Related article: The Register’s SunnComm shrinks from DMCA threat

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