July 6, 2004

Falling Behind … [6:14 pm]

There’s just too much going on these days. A couple of weblog entries definitely work bookmarking for reading:

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More Than Meets The Eye [5:26 pm]

Siva points to this LATimes article, Rampant Piracy Threatens to Silence Latin Music Industry, citing Mexico’s bootleg CD/DVD business as destroying the opportunities for existing (not to mention new) Latic music acts. Such an outcome, apparently mirroring what’s already happened in smaller Latin American markets, is certainly a tragedy.

But, there is another interpretation of the statistics presented — if the barriers to entry are so low, and the margins for bootleggers are so high, who’s really responsible for this cataclysm? When a record company offers CDs at prices equal to a week’s wage, and pirates can make a profit selling knockoffs that are indistinguishable from the legal copies, we’re facing something more complex than simple piracy. It may be that digital copies have a zero marginal cost of production, but this is competition in CD/DVD sales! And the article suggests that organized crime only controls production and distribution in “some” locations. So, where do the bootlegger’s margins come from?

If the difference is the cost of promotion (rather than a criminally high copyright licensing fees), then effective promotion via P2P might actually benefit this market.

Mexican consumers say record companies could learn a thing or two from pirates, who provide entertainment that’s fast, cheap, reliable and customized. Bootleggers have been known to provide special orders and speedy delivery to rival anything from the studios.

[...] Mexico’s piracy is a gigantic commercial enterprise involving everyone from importers of blank discs and the plastic jewel cases to hold them, to factory workers in clandestine factories and an army of street vendors. This vast underground assembly line last year delivered more than 85 million illegal CDs to eager buyers, according to Amprofon.

The cost of entry is low, just a few hundred dollars for a CD burner and some blanks. And profit margins are fat. Bootleg discs are so cheap to produce that CDs selling on the street for as little as 6 pesos, or about 50 cents, can still fetch a 100% markup.

[...] “I can buy five fakes for the price of one original,” Sanchez said. “It just doesn’t make sense to pay more.”

Some industry veterans agree. Former music industry executive Sarquiz said the labels had been slow to tailor products suited to the tastes and pocketbooks of consumers in the developing world. He said bootleggers had filled that void, doing special orders, compiling greatest-hits collections and more.

“They deliver incredibly good service,” Sarquiz said.

In fact, bootlegging is so ingrained in the culture that many have simply resigned themselves to the fact. El Tri’s Lora lent his name to the industry’s anti-piracy campaign. But he admits that his band does nothing to stop sales of illegal music — even outside its own concerts. He said the group’s one attempt to negotiate sidewalk space for legal vendors ended after bootleggers picketed the gig, accusing El Tri’s members of being corporate sell-outs.

Lora said the band’s main source of income has always come from performing about 250 live shows a year, something that even Mexico’s powerful pirates can’t take away.

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BMG experiments with price discrimination [9:28 am]

BMG to punt cheap, no-frills CDs

From next month record company BMG will introduce cut-price and luxury versions of the same CDs in Germany in an attempt to boost record sales, CEO Maarten Steinkamp told Der Spiegel.

The no-frills version, which Kleinkamp calls “an anti-piracy CD”, will look identical to a home-burn CD, with just the title on the disc. Consumers only have to pay €9.99 for a copy, about half the price of a regular CD, which typically retails for €19.99 or more.

A full-fat version, with cover and lyrics, will cost €12.99, while a luxury version with added value (additional material or DVD video) will go out for €17.99. Kleinkamp hopes consumers are willing to buy a legal copy of a music CD for a reasonable price, rather than burning an illegal copy.

Kleinkamp, who started his career at BMG Netherlands, is one of the few record executives willing to admit that his industry “sat motionless on its backside for too long”.

Copyfight: BMG Sells It Like It Is

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Turning "Cultural Imperialism" On Its Head? [8:28 am]

The NYTimes describes the life of Chinese musicians in New York City as they try to turn the problem on its head: Asian Music, Accompanied by the A Train

As notes from the prelude of “Carmen” pierced the humid air, Mr. Zhang — whose great-great-grandfathers played for Manchu emperors, whose father performed for Communist army generals and who was himself a member of China’s best traditional music orchestra — began another workday, playing for the subway riders of New York.

There are many like Mr. Zhang, established musicians from China who perform daily in the city’s bowels. Convinced that the best music, Western or Asian, is truly borderless and that their own talents are sufficient to make ends meet anywhere, these artists have converged on New York like the philosophers and poets who swarmed to Athens in classical times. They feel not just lured, but pushed; China, in their view, has turned its back on traditional music in favor of the pop dazzle of Britney Spears.

“I want to try my luck in New York,” Mr. Zhang, 42, said, speaking in Mandarin. “In China serious artists like us aren’t as respected as pop singers. That’s not right. Maybe Americans can see the true appeal of Chinese music, and I can make my way to the grand concert halls in New York.”

[...] “I love this stuff, playing the sheng,” Mr. Zhang said. “It’s in my blood. I don’t want to give it up. If traditional Chinese music gets fashionable in America, maybe it will become more popular in China, too.”

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More on MBube [8:18 am]

This story (Furdlog posting: Clearing Copyrights – Not Easy For Anybody) has started to get more attention. It’ll be interesting to see how it develops

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Can’t Find A (Dead Tree) Publisher? So what? [8:08 am]

Professor gives Cisco manual away for free

Computing instructor Matt Basham’s suggestions for improving Cisco Systems’ official training manuals fell on deaf ears for years. But he appears to have the networking giant’s attention now.

Basham, a professor of information technology and IT security at St. Petersburg College in Clearwater, Fla., wrote his own 800-page Cisco networking textbook and last week made it available for download over the Internet free of charge.

More than 2,000 copies were downloaded around the world in the first few days of the book’s online release, according to Lulu.com, an alternative textbook publisher that agreed to distribute it.

[...] Basham’s solution highlights powerful new publishing techniques that promise to shake up the textbook industry, offering cheaper alternatives to cash-strapped students.

[...] Thanks to the Internet and new printing technologies that have reduced costs and improved quality, thousands of authors are publishing their own books and distributing them through virtual publishers that can allow readers to download copies or get their books printed on demand. The new publishing model has made it possible for authors like Basham to develop customized content and offer it to students for a minimal cost.

Slashdot: Professor Creates His Own Cisco Manual

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News Analysis on US v. Councilman [7:55 am]

  • Wired News: Court Creates Snoopers’ Heaven

    In 1998, Bradford C. Councilman was the vice president of Interloc, a company selling rare and out-of-print books that offered book-dealer customers e-mail accounts through its website. Unknown to those customers, Councilman had engineers write and install code on the company network that would copy any e-mail sent to customers from Amazon.com, a competitor in the rare-books field.

    Although Councilman did not prevent customers from receiving their e-mail, he read thousands of copied messages to discover what books customers were seeking and gain a commercial advantage over Amazon. Interloc was later bought by Alibris, which was unaware that Councilman had installed the code on the system.

    Councilman wasn’t caught because customers complained about his actions; a tip about another, unrelated issue led authorities to discover what he had done.

    [...] Everyone knows that e-mail is an insecure form of communication. Like a postcard, unencrypted correspondence sent over the Internet is open to snooping by anyone.

    [...] ISPs scan e-mail for viruses and spam all the time, before delivering the mail to the provider’s customers.

    But there is an expectation that service providers will access communications only with permission from customers, or when they need to do so to maintain their network.

    [...] In contrast, Councilman personally read customers’ messages to undermine his competitors’ business. He did so without customers’ permission and with the knowledge that if his customers found out, his company would likely lose their business.

    [...] And yet the court found him innocent of violating the specific law under which authorities charged him.

  • NYTimes: You’ve Got Mail (and Court Says Others Can Read It)

    But other experts argue that the Boston case will have little practical effect. The outcry, said Stuart Baker, a privacy lawyer with Steptoe & Johnson in Washington, is “much ado about nothing.”

    Mr. Baker pointed out that even under the broadest interpretation of the law, Congress made it easier for prosecutors and lawyers in civil cases to read other people’s e-mail messages than to listen to their phone calls. The wiretap law - which requires prosecutors to prove their need for a wiretap and forbids civil litigants from ever using them - applies to e-mail messages only when they are in transit.

    But in a 1986 law, Congress created a second category, called stored communication, for messages that had been delivered to recipients’ inboxes but not yet read. That law, the Stored Communications Act, grants significant protection to e-mail messages, but does not go as far as the wiretap law: it lets prosecutors have access to stored messages with a search warrant, while imposing stricter requirements on parties in civil suits.

    Interestingly, messages that have been read but remain on the Internet provider’s computer system have very little protection. Prosecutors can typically gain access to an opened e-mail message with a simple subpoena rather than a search warrant. Similarly, lawyers in civil cases, including divorces, can subpoena opened e-mail messages.

    [...] Calling e-mail “stored communication” does not necessarily reduce privacy protections for most e-mail users. While the Councilman ruling would limit the applicability of wiretap laws to e-mail, it appears to apply to a very small number of potential cases. The Theofel decision, by contrast, by defining more e-mail as “stored communications,” is restricting access to e-mail in a wide range of cases in the Ninth Circuit, and could have a far greater effect on privacy if courts in the rest of the country follow that ruling.

    Related: Elizabeth Rader’s Slow News Day? and the NYTimes Letters to the Editor - Saw Your E-Mail. Gotta Run. Signed, Big Brother

The opinion

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