July 12, 2005

Two Hearings on DTV Transition [9:17 pm]

Digital Television Transition — Hearing I

Digital Television Transition — Hearing II

According to the Digital Media Wire, there has been an agreement to finalize conversion by 2009. [pdf. See also LATimes' Broadcasters Agree to Go All Digital [pdf]

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Trademark, (Political) Expression and Coca-Cola [7:40 pm]

An interesting tale — with photograph: Coca-Cola Threatens Top Indian Photographer with Lawsuit [via Fark]

Mr. Haksar, a leading international photographer and winner of the 2005 Cannes Silver Lion, has placed a large billboard in one of Chennai’s busiest areas - one of India’s largest cities - with his own “work (which) is solely an expression of creativity.”

The billboard features the ubiquitous red Coca-Cola wall painting, commonly found across India. Directly preceding the Coca-Cola ad, and part of the billboard, is a dry water hand-pump, with empty vessels waiting to be filled up with water - a common scene in India, particularly in Chennai.

On July 11, 2005, the law firm of Daniel & Gladys, who represent Coca-Cola’s Indian subsidiary, sent a letter to Mr. Haksar threatening him with serious legal actions unless the billboard was replaced ‘unconditionally and immediately’. Coca-Cola would seek Indian Rupees 2 million (US$ 45,000) for “incalculable damage to the goodwill and reputation” of Coca-Cola, and also sought an ‘unconditional apology in writing’.

Mr. Haksar said, “I have no intentions of issuing any apology. Because I have not committed anything wrong. If Coke pursues this legal course, my lawyers shall take appropriate counter action.”

Mr. Haksar’s billboard highlights the severe water shortages being experienced by communities that live around Coca-Cola’s bottling plants across India. A community close to Chennai, in Gangaikondan, has already held large protests - protesting against an upcoming Coca-Cola plant. In the neighboring state of Kerala, in the village of Plachimada, Coca-Cola has been unable to open its bottling facility for the last 16 months - because the community will not allow it to.

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NetFlix Gearing up for Internet Distribution? [7:33 pm]

See this Slashdot story: Leaked Screenshots Show Netflix Downloads

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OT: Some Splainin’ To Do [6:53 pm]

(steps out from behind the curtain)

I’ve been trying to pretend it’s not happening, but I just have to face it: I have ended up *waay* too overcommitted this summer, and the blog is suffering for it. I have been telling myself for the last couple of weeks that, once I got project x behind me, I would be able to get back to my weblog routine. Sadly, as I knock one project down, a new one springs up, and I can see that it’s not going to change for a while here.

There’s no question that the Brand X decision, as well as Grokster, took the wind out of my sails — and during a time when I was massively committed to other things. But, as the weeks have progressed, it seems like the summer hasn’t quite played out like I expected, and all the (metaphorical) alligators are distracting me from my (metaphorical) swamp-draining project.

So, the erratic postings and incomplete coverage of topics. Sorry about that, those (few?) of you who have stuck with me to this point. Worse, I’ll be traveling next week, doing things far from network access, so I’ll be ‘way out of touch.

Anyway, I felt I owed an explanation of my poor performance of late. I expect to do better, although I also think that I may need to do some learning from those who’ve developed some interesting strategies to cope with the flood of stuff out there (c.f., the Corante Blink entries). Clearly, I have to do something — I still haven’t even had the time to upgrade to the latest WordPress!!

So — I’m trying, but I’m clearly failing right now. I hope to do better soon — but I’m not sure when “soon” is going to become “now.”

PS - Hey — It’s not been a total loss — had a great time over the weekend of the 4th with my family — whale watching, seeing the USS Constitution and, of course, the fireworks. The whale fluke was a particularly special image — that’s a full frame shot — the luck of being the right place with the right lens….

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Wrinkles In Movie Financing [4:23 pm]

A new investment vehicle, an incentive for the industry to continue to chase the blockbuster film and, most importantly, a new constituency to press for sustaining the current copyright models: Romancing the Hedge Funds

Indeed, the studios face a perennial hurdle: how to get equity money that does not dilute their shares or their control.

Just about two years ago, Isaac Palmer, a young senior vice president at Paramount, came up with a brilliant solution. Studios could offer hedge funds a cut of their internal rate of return. This internal rate of return is not limited to so-called “current production,” or the theatrical releases, on which studios almost always lose money. Rather, the rate subsumes every penny the studio makes from every source—including pay-TV, DVDs, licensing to cable and network television, in-flight entertainment, foreign pre-sales, product placement, and toy licensing. So, even in a bad year, such as 2003, when Paramount released such box-office bombs as Timeline, The Core, Dickie Roberts: Former Child Star, and Paycheck, its internal rate of return was around 15 percent. This return also included the profits from more arcane (and rarely discussed) deal-making, such as copyright lease-back sales to foreign tax shelters. (Palmer himself had structured one such deal that netted Paramount $130 million.) Plus, if the studio has a single big breakout movie, a Titanic or a Spider-Man, the internal rate of return can leap as high as 23 to 28 percent.

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Music Licensing Hearing Statements Posted [2:55 pm]

But I can’t get the RealAudio webcast: “Music Licensing Reform”

Patrick Leahy’s statement

Today we will ask if the same laws that were intended to address player pianos are ready to “go digital.”

It does appear that there are problems with the current licensing system, and I would like to thank the Register of Copyrights, Marybeth Peters, for her hard work — and her patience — in helping to work through these problems. Everyone agrees that the present system is not working as efficiently as it might. Potential licensees are unsure of which licensing rights apply to certain activities, and they may have difficulty in even tracking down the appropriate person from whom to obtain those rights. This means that building a comprehensive online catalog of music available to consumers can be a slow, and ultimately impossible, process.

Just as it may be the case that outdated laws have contributed to this problem, it may well be the case that the market offers a solution, either by forcing the parties to adjust to the new environment or by encouraging the stakeholders to back consensus legislation. After all, it is certainly in the interest of everyone to reach an agreement. As Ms. Peters has noted, making legal copies of musical works available online is essential to combating online piracy.

Testifying:

  • MaryBeth Peters

    The compulsory license governing the reproduction and distribution rights for nondramatic musical works has been in effect for 96 years, but it is now outdated and in need of holistic reform. [...]

    [...] The Copyright Office and interested parties have explored a variety of means by which to remedy the problem. One option focuses on expanding the section 115 compulsory license, using as a model the section 114 compulsory license for sound recordings. Another option focuses on eliminating the section 115 license in favor of a collective licensing structure or free market negotiations. Each option has its unsettled issues and logistical concerns. The solution, however, must protect the rights of copyright owners while at the same time balancing the needs of the users in a digital world.

  • Rob Glaser

    Specifically, there are four concrete measures Congress can take to supercharge the online music industry, dramatically reduce piracy, and substantially enhance songwriters’ and recording artists’ income, as well as music publisher and recording industry revenue:

    1) Replace the dysfunctional Section 115 compulsory mechanical song-by-song license with a simple, comprehensive statutory blanket license that can be administered digitally and triggered on one notice, just like the blanket composition performance rights licenses that are administered by ASCAP and BMI, and just like the blanket sound recording performance rights licenses administered by SoundExchange. [...]

    2) Confirm that songwriters and music publishers’ deserve full-value payment for online services’ use of their creative works, but that the payment due when a composition is streamed is entirely in the form of performance royalties, and the payment due when a composition is distributed as a download is entirely in the form of mechanical royalties. RealNetworks should not be required to pay double publishing royalties for our Rhapsody Internet radio and digital download offerings while our broadcast radio and CD retail competitors pay only one royalty.

    3) End years of confusion and litigation by clarifying that the definition of “interactive service” in Section 114, with regard to sound recording performance rights, ensures that Internet radio programming based on user preferences falls squarely within the statutory license so long as the service complies with the generally applicable programming restrictions for the statutory license and so long as users are not permitted to control how much a particular artist is heard or when a particular song is played.

    4) Equalize sound recording performance royalty standards so that all radio competitors - broadcast, cable, satellite and Internet - pay the same royalty to artists and recording companies.

  • Rick Carnes

    In response to this situation, the songwriter and music publisher community (including SGA, NSAI, The National Music Publishers Association, and the performing rights societies) have put forth a “Uni-license” proposal that we believe best achieves licensing reform while simultaneously providing greater essential marketplace protections for songwriters. Our proposal seeks a reasonable rate of 16 2/3 % of gross Internet subscription service revenues, with a minimum flat dollar fee per as a floor. The songwriters will, in the end, receive roughly half of this percentage-based income, with the publishers sharing in the other half. There can be no public policy justification for giving the creators of the songs–on whose labors the entire music industry depends– anything less than this figure while the record company and service provider ‘middlemen’ take the giant share of the money.

  • Ish Cuebas

    The current Unilicense proposal being suggested by the performing rights organizations, music publishers and songwriters, does not meet our test as it is too narrow in its scope. The NMPA/PRO/Songwriters proposal applies only to “time-based subscription fee” services. While some retailers may choose to offer subscription services, others are considering alternative digital distribution configurations that will not be subscription-based. Some may do both.

    The Copyright Office’s proposal would offer broader blanket licensing for the distribution of phonorecords, but unfortunately, the administrative process resulting from eliminating the compulsory license altogether would likely create more uncertainty,

    and add new levels of complexity, that could actually make things worse instead of better for music retailers.

    These proposals also do not address the new generation of physical products like DualDiscs, that have been embraced by consumers and present an encouraging beacon of hope for the bottom line of “brick-and-mortar” music retailing. This new product is a single disc that includes a CD on one side and an enhanced audio version of that CD, plus video content on the other side.

    The music industry needs a vehicle to attract the consumer by offering an exciting value proposition. NARM believes that this is DualDisc. Under the current system, for example, it could take more than 100 separate licenses to clear one DualDisc, which is hindering a more robust release schedule.

  • Glen Barros

    I am not a lawyer, so I am not going to dwell on the technical details of mechanical licensing. However, I am grateful for the opportunity to share some practical thoughts with you today on how the existing inefficient system of licensing musical compositions is contributing to the contraction of the music industry by preventing companies of all sizes from offering consumers the exciting and competitive products that are necessary if we are to thrive, and maybe even survive, as an industry.

    [...] After launching our SACD lines, we were informed that many music publishers think

    that, simply as a result of the music being technically encoded two times on the disc, they are entitled to get paid twice as much for an SACD release of a song as for a regular CD release, even though they sell at generally the same price point. Our counsel tells me that we shouldn’t have to pay twice — and as a business proposition I know that to be true. It just doesn’t make business sense, however, to invest in promoting a speculative new format while at the same time having to spend time and money arguing with our colleagues in the music publishing community. We’d certainly like to clarify this issue, but there doesn’t seem to be any practical way to resolve the dispute.

    Another example, of lost business opportunity pertains to adding video content to our

    musical offerings. [...]

    First, we should have a more efficient system for administration of mechanical licensing. The Section 115 license is the only compulsory license that it is not a blanket license. [...]

    Second, we should have a system with more royalty rate flexibility. [...]

    Third, we should have a system with more certain application, and less room for disputes, when licensees are considering investment in new technologies. [...]

    Finally, we should consider whether there is anything that should be done to facilitate licensing for uses not currently covered by Section 115. [...]

  • Del Bryant (no text yet)

  • David Israelite (no text yet)

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BBC, Dirac and Patents [2:40 pm]

The BBC seeks escape from patent minefield

Supported by public funds, the BBC is committed to providing free and open access to audio and video media to a wide audience. But even for the largest broadcast media organization in the United Kingdom, breaking the grip of proprietary digital media standards isn’t going to be easy.

Think of any popular multimedia file format and you’re probably thinking of a corporate brand. RealVideo, QuickTime, Windows Media — each name is a trademark, with the inner workings of each format a closely guarded, proprietary formula. Even MP3, a name now virtually synonymous with intellectual property theft, contains intellectual property — in this case, patents held by Fraunhofer-Gesellschaft .

[...] To push past this encumbrance, the BBC took an unorthodox step: It decided to develop its own multimedia codec. Called Dirac, the new format is fully open source, supports high-resolution video, and promises a twofold increase in compression compared with current MPEG standards at the same video quality. The final release is due before the end of the year, but experimental versions are available now. The VideoLAN project, for one, has built preliminary support for Dirac into the latest version of its open source VLC multimedia player, released in late June.

How can the BBC be sure it isn’t just walking into another hidden patent bomb? It can’t. Especially with so much intellectual property at stake.

Related: BBC Open Source launched

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Stupid, Stupid OpEd [2:24 pm]

Given the choice between two positions - (a) convicted hackers should receive the death penalty because of the valuation the market places upon their crimes or (b) the market is perhaps not the best way to measure social consequences, John Tierney elects to go with the lazy answer in Worse Than Death - all hail the market!!

Professor Landsburg, an economist at the University of Rochester, has calculated the relative value to society of executing murderers and hackers. By using studies estimating the deterrent value of capital punishment, he figures that executing one murderer yields at most $100 million in social benefits.

The benefits of executing a hacker would be greater, he argues, because the social costs of hacking are estimated to be so much higher: $50 billion per year. Deterring a mere one-fifth of 1 percent of those crimes - one in 500 hackers - would save society $100 million. And Professor Landsburg believes that a lot more than one in 500 hackers would be deterred by the sight of a colleague on death row.

I see his logic, but I also see practical difficulties. For one thing, many hackers live in places where capital punishment is illegal. For another, most of them are teenage boys, a group that has never been known for fearing death. They’re probably more afraid of going five years without computer games.

So, what should Ken Lay’s penalty be? Richard Scrushy’s? The legislators whose willingness to continue to be misled about the rationales for war that cost us billions of dollars, not to mention the lives lost?

This is what we get when we accept the ideology of the market-place — the value of things is expressed in terms of its price, and those things without a price are of no consequence……

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