June, 2009

Cablevision case puts kibosh on collection society claims

supreme-courtThe Supreme Court’s denial of cert. in the Cablevision remote-DVR case has launched countless column inches of commentary and analysis already, much of it focused on the problems it poses for the Hollywood studios and TV networks worried about its impact on ad-skipping (see here, here and here). But the studios and networks aren’t the only losers in the case.

By letting the Second Circuit’s opinion stand, at least for now, the court has dealt a serious set back to the designs of the performance rights societies like ASCAP and BMI to bring cloud recording and playback within the scope of public performances subject to performance royalties.

According to the plaintiffs in the Cablevision case, the playback of programs stored in MSO’s head-end servers constituted a performance of the work by Cablevision that was not authorized by its basic distribution agreements with program provided and thus needed to be separately licensed.

The Second Circuit disagreed, however, finding that as a legal matter the customer “performed” the work since the copy used for playback was accessible only to that customer.:

In sum, we find that the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons “capable of receiving” it, to determine whether that transmission is made “to the public.” Because each RS-DVR playback transmission is made to a single subscriber using a  single unique copy produced by that subscriber, we conclude that such transmissions are not performances “to the public,” and therefore do not infringe any exclusive right of public performance. We base this decision on the application of undisputed facts; thus, Cablevision is entitled to summary judgment on this point.

 In other words, according to the Second Circuit, there is indeed such a thing as a non-infringing private performance of a work transmitted over the Internet. Assuming the reasoning applies to musical works as well, the ruling is going to make it much harder for ASCAP and BMI to compel providers of online music lockers and other types of user-directed cloud storage facilities to take out licenses and pay royalties on transmissions.

(Although not directly on point, it probably doesn’t help ASCAP’s efforts to license mobile-phone ring tones, either). — TMW

I linked the news today, oh boy

newspapersI’m assuming a judge and scholar as smart as Richard Posner of the Seventh Circuit Court of Appeals doesn’t really believe copyright law should be extended to cover the paraphrasing of news reports without the permission of the copyright owner, as he seemed to suggest in a recent blog post (h/t TechCrunch). Instead, I’ll assume he simply meant to be provocative.

Posner’s subject was the parlous condition of the newspaper business in this twilight of the print era. After surveying the declines in hardcopy readership and ad revenue, and the baleful effects of cuts in the ranks of professional journalist (I feel your pain), he comes to this conclusion:

Imagine if the New York Times migrated entirely to the World Wide Web. Could it support, out of advertising and subscriber revenues, as large a news-gathering apparatus as it does today? This seems unlikely, because it is much easier to create a web site and free ride on other sites than to create a print newspaper and free ride on other print newspapers, in part because of the lag in print publication; what is staler than last week’s news. Expanding copyright law to bar online access to copyrighted materials without the copyright holder’s consent, or to bar linking to or paraphrasing copyrighted materials without the copyright holder’s consent, might be necessary to keep free riding on content financed by online newspapers from so impairing the incentive to create costly news-gathering operations that news services like Reuters and the Associated Press would become the only professional, nongovernmental sources of news and opinion.

Others have already discussed the obvious First Amendment problems with this suggestion (the reason I think Posner is not really serious), as well as Posner’s  misdiagnosisof all that ails the newspaper business (he doesn’t even mention the impact of Craigslist, which has nothing to do with free-riding on copyrighted content). I would raise another objection: his assumption that news-gathering must necessarily be financed by newspapers. Read More »

An uneasy alliance on TV Everywhere

I have a guest post up this weekend over at GigaOm where I discuss some of the potential technical and anti-trust problems with Time Warner  CEO Jeff Bewkes’ concept for TV Everywhere, particularly the amount of cooperation and information sharing among nominally competing service providers necessary to make the system work.

But there are other potential problems that could also scuttle the industry’s best-laid plans. Like the imperfectly aligned interests of programmers and service providers.

It’s striking, although perhaps not surprising, that much of the impetus for the plan is coming from programmers. The idea was first articulated by Time Warner CEO Jeff Bewkes, who coined the term TV Everywhere (at the time Time Warner still owned Time Warner Cable but was in the process of spinning it off). But other programmers have been quick to jump on board. Read More »

Nothing to ad

Got a business plan for a digital media application and looking for funding? Better take out that part about, “and they we sell ads against it” and come up with Plan B.

According to a panel of venture capitalists at the Digital Media Conference in Washington, DC, Thursday, ad-supported is not a viable online business model.

gupta“We’re really looking for consumer-pay models,” said Arun Gupta of Columbia Capital. “We would really shy away from any digital media idea that is ad-supported at this point. Ad-supported can be part of it, especially if you already have some traction building value in other ways. But ad-supported is the gravy, it can’t be the meat.”

Ditto Kuk Yi, managing director of Best Buy Capital, the electronics chain’s VC arm.

“You need pretty massive scale to make ad-supported work,” according to Yi. “If you have a viable business that is not based on selling ads it’s pretty easy to layer the ad piece on top of that. But it’s very hard to build a busine ss that requires the ad piece to be there.”

Kuk-YiBest Buy Capital invested in an early-stage games compan, Yi said, that creates paid games that get embedded on social networks and mobile platforms. Another company in its portfolio is generating revenue of $1.5 million a month selling virtual goods online.

“Ads may eventually be  part of both of those but that can’t be the whole business,” he said.

Grotech Ventures general partner Don Rainey offered a somewhat sarcastic dissent.

Rainey“You can do ad-supported if you have 2o or 30 million visitors a month,” he said. “The trick is getting to 20 or 30 million visitors.”

Rainey added that, unlike years past, VCs in the digital media space these days are looking for ideas “that are actually good ideas, and can scale and become big ideas.”

Ahh, for the good old days. — TMW

Creation and the Internet

Last week saw two interesting developments in the ongoing debate over effects of file-sharing and what to do about it. On Thursday, a federal jury in Minneapolis ordered Jammie Thomas-Rasset to pay $1.92 million to Universal Music Group and other record labels after finding she had downloaded 24 songs illegally. That works out to a staggering $80,000 per song.

thomas-rassetEven Sony BMG’s lead lawyer in the case, Wade Leak, admitted to being “shocked” by the size of the verdict.

On Friday, two Harvard Business School economists, Felix Oberholzer-Gee and Koleman Strumpf, released a working-paper version of a new study (PDF), which found that, pace the media companies, the conclusion that rampant file-sharing and other types of digital piracy will reduce incentives to produce new music and movies ultimately harming the public, has no empirical foundation.

In fact, the data point in precisely the opposite direction. The researchers found that the number of new albums released each year soared from 35,500 in 2000, to nearly 80,000 in 2007 (including 25,000 digital-only albums), despite a decrease in gross revenue from CD sales over that same period. Similarly, the number of feature films produced worldwide each year rose from 3,807 in 2003 to 4,989 in 2007.

The increase in film production held true even in countries where film piracy is rampant, such as South Korea (80 to 124), India (877 to 1164) and China (140 to 402). Feature film production in the U.S. over the same period rose from 450 films in 2003 to 590 in 2007.

What does one development have to do with the other, apart from their coincidental timing? Read More »

Copyright behind closed doors

ustr-logoPublic Knowledge and the Electronic Frontier Foundation announced earlier this week that they are “reluctantly” dropping their lawsuit against the U.S. Trade Representative, which sought information on the Anti-Counterfeiting Trade Agreement (ACTA) being secretly negotiated by the U.S. and a dozen other countries. The public-interest groups made the decision to withdraw the litigation after the Obama Administration informed the court that it intends to defend the Bush Administration’s claims of national security in refusing to turn over documents on the treaty.

“Federal judges have very little discretion to overrule Executive Branch decisions to classify information on ‘national security’ grounds,” EFF said in a press release. “Rather than pursuing a lawsuit with little chance of forcing the disclosure of key ACTA documents, EFF and Public Knowledge will devote their efforts to advocating for consumer representation on the U.S. Industry Trade Advisory Committee on IP, the creation of a civil society trade advisory committee, and greater government transparency about what ACTA means for citizens.”

Good luck with that.

Apart from giving the lie to Barack Obama’s increasingly doubtful promise to run an open and transparent administration, the continued secrecy around ACTA is of a piece with what seems to be a growing trend among rich countries to turn the debate on global IP issues into a private conversation among themselves, even to the point of undermining the global institution rich countries originally created to deal with global IP issues: the World Intellectual Property Organization. Read More »

Down on strikes

french-flagThe copyright industries had high hopes for France’s three-strikes law. At the World Copyright Summit in Washington last week, speakers had nothing but praise for the government of President Nicolas Sarkozy, who championed the law and railroaded it through the legislature. And they were crushed when, on the second day of the conference, the French Constitutional Council threw out the new law’s critical third-strike–government-ordered banishment from the Internet for those caught repeatedly downloading copyrighted content illegally–on grounds that the extra-judicial  procedure the law created was a violation of  free speech, the presumption of innocence and due process.


Now, however, things have gotten even worse for the content companies. In a bit of a face-saving move, the French government on Friday stripped out the portion of the law invalidated by the Constitutional Council, sent the rest to Sarkozy for signature and published it in the official record, allowing it to take effect this week. Read More »

Burying The Lede

I was curious about what was happening in Iran this morning in the wake of this weekend’s massive protests over the disputed election results. So I logged on and went to NYTimes.com. The lead story carried a Tehran dateline, the byline of two Times reporters, and news that, for the most part, was several hours old (although it appeared to have been fairly recently re-topped).

iran-electionThe off-lead, below a photo, was a “news analysis” piece by Times executive editor Bill Keller and another reporter, also datelined Tehran and pushing a conclusion about the election’s outcome–that incumbent president Mahmoud Ahmadinejad had emerged with a stronger hand than before–that, while perhaps reasonable on Saturday was by early Monday clearly worth a second thought.

I’ve spent 20 years writing for daily, weekly and monthly publications (albeit not as a foregin correspondent), and the last few years writing for the Web, so I know something about what it takes to turn a fact-checked and edited story around. And within those constraints, the Times reporters and editors were doing a fairly decent job keeping up with the fast-moving events. But overall, NYTimes.com was blowing it, and for the worst possible reasons. Read More »

Permission to innovate

As someone who makes his living (such as it is) as a writer, I can certainly sympathize with those who seek to extend and protect the sanctity of copyright. But like your relatives, the family resemblance can sometimes make you cringe.

One such occasion was attending the World Copyright Summit in Washington, DC this week.

milos-formanThe summit was organized by the International Confederation of Societies of Authors and Composers (CISAC), a coalition of royalty collection societies from around the world, including ASCAP, BMI and SESAC in the U.S. It’s a community that sees itself as under siege these days from hordes of “thieves” and “pirates” and from callow, ungrateful young people who have “no respect” for “the value of intellectual property.”

Director Milos Forman went so far as to accuse “our opponents,” as he phrased it (otherwise known as the audience), of promoting a “communist ideology” with respect to intellectual property.

 “Karl Marx was very clear,” Forman said. “To everyone, everything according to his needs. Now, we all need a little entertainment from time to time, so why shouldn’t I just take it?” Read More »

Three-strikes strikes out

Well you can forget about that pontential showdown between Paris and Brussels over France’s three-strikes law. The French Constitutional Council on Wednesday struck down the provision allowing the government to order people cut off from the Internet for repeatedly downloading copyrighted material illegally, before the law could even be challenged in the European Court of Justice.

french-flag1According to the Council’s ruling, Internet access “is an element of freedom of speech and the right to consume,” and only a judge has the power to order someone cut off. The full text of the ruling is available here (French).

Under the law as passed, a new government agency would have the power to cut people off without first seeking a court order if they ignored at least two prior written warnings that they were infringing copyrights. Read More »

Vive la France?

french-flagAs often as the Pirate Party of Sweden was condemned at the World Copyright Summit Tuesday, speakers heaped praise on the French government for passing the Creation and Internet law implementing a system of “graduated response” (i.e. “three-strikes”) to policing illegal file-sharing.

“I strongly believe that if we’re going to be successful in this fast-paced digital age, a solid partnership between the copyright community and the Internet Service Providers is crucial,” Sen. Orrin Hatch (R-Utah) said in a morning keynote. “Many countries have begun to take action by working closely with ISPs to curb online piracy. For example, France has adopted a three strikes law, which calls for ISPs to suspend a subscriber’s service if they are accused three times of pirating copyrighted material. Across the globe, from Japan to the UK, from Australia to Brazil, there have been engaging discussions within the industry on how best to proceed on this front.” Read More »

Pirates Ho!

In voting across the 27-nation European Union Sunday, the Pirate Party of Sweden claimed a single seat in the 785-member European Parliament, a body of dubious authority and popular indifference. But it just about took over the World Copyright Summit in Washington, DC Tuesday, a gathering of 500 or so lawyers, legislators and regulators from around the world organized by the International Confederation of Societies of Authors and Composers (CISAC).

robert-wexlerIn a forceful–at times even angry–luncheon keynote, Rep. Robert Wexler (D-Fla.), a member of the House Judiciary Committee, warned that the Pirate Party’s “victory” was the harbinger of a lost generation of voters that has grown up comfortable with the idea of “copyright theft.”

“We know in that in this country that if you vote Democratic in your first election you’re very likely to continue voting Democratic throughout your life,” he said. “It was the generation of young Republicans who voted for Ronald Reagan in 1980 that was so helpful to the GOP for many years after. The generation of young people who cast their first vote for Barack Obama will, hopefully, be helpful to the Democrats for years to come.” Read More »

Court in Pirate Bay case not biased, court in Pirate Bay case says

The judge who convicted  The Pirate BayFour, Tomas Norstrom, was not biased, as defendants charged in their appeal, according to the Stockholm District Court on which he sits. In a filing with the Svea Court of Appeal, which is hearing the case, the chief judge of the district court argued that Norstrom’s membership in several organizations that take pro-copyright stands was merely for educational purposes, to help keep abreast of copyright legislation, and not an indication of bias.

The chief judge, Lena Berke, also rejected charges that Norstrom had been hand-picked for the case, rather than presiding as a result of random selection, as is the norm.

“This we strongly reject,” Justice Berke told reporters at the District Court. “The selection was made in adherence with the District Court’s rules of procedure.”

Morning read: Jolly Roger flies in Europe, Copyright Summit in US

Hoist the Jolly Roger maties, the Pirate Party has claimed at least one of Sweden’s 20 seats in the European Parliament (and possibly two) as a result of thisweekend’s voting across the 27-nation bloc. The party, which ran on a platform of legalizing file-sharing and rolling back government surveillance powers, garnered 7.1% of the vote, putting it ahead of several more-established parties.

pirate-partyTurnout in Sweden was 43.8%, slightly ahead of the 37.1% turnout in the 2004 election, despite predictions of record low turnout heading into the weekend. TorrentFreak does the mathandestimates about 200,000 Swedes voted Pirate this time around, a nearly five-fold increase over the 35,000 votes the party garnered in the 2006 national election. The party saw a surge in membership in the wake of the conviction in April of four of the founders of The Pirate Bay, one of the largest BitTorrent tracker sites.

Apart from the immediate implications of the Pirate Party victory, the election results in general are likely to lead to some hand-wringing in EU capitals. Governing parties in about a dozen EU countries suffered defeats in the election, most notably in Britain, where Labour claimed only 16% of the vote, its lowest total in decades.

In general, small, even fringe, parties did well across the EU, including the Whites-only British National Party and far-right parties in the Netherlands, Hungary and Austria. The  anti-Europe British Independence Party also scored gains. Across the bloc, right-leaning parties scored significant gains while center-left parties were generally pummelled.

Back home, the 2nd World Copyright Summit is scheduled to open in Washington, DC on Tuesday. The two-day conference is sponsored by the International Confederation of Societies of Authors and Composers (CISAC), and will feature some 500 delegates from 55 countries.

The Pirate Party victory is sure to be a topic of discussion. The full agenda is here.

And oh, yeah, Apple Worldwide Developers Conference  blah, blah, blah, new iPhone, blah, blah, blah, Steve Jobs is risen, blah, blah, blah, and he is separating the righteous from the the wicked, and the righteous shall have their apps approved and the wicked shall be cast into the Palm of eternal darkness blah, blah, blah.