More darkly, many in the media industry are blaming President Barack Obama for the loss, accusing him of a stab in the back for siding publicly with Silicon Valley after Hollywood had raised millions for his campaigns. One time SOPA and PIPA supporters in Congress who went wobbly in the face of public pressure are also coming in for scorn.

Most of the problems the media companies have had over SOPA and PIPA, however, have been self-inflicted.

The origins of SOPA and PIPA can be traced back to Hollywood’s abiding frustrations with the operation of Digital Millennium Copyright Act, in particular the operation of the Section 512 safe harbors. Copyright owners have for years, in lawsuit after lawsuit after lawsuit, tried to get courts to impose liability on online service providers in cases where infringement has seemed both flagrant and widely acknowledged. And for years, courts have largely refused, reading the language of the statute to require specific notification of specific instances of infringement — not merely generalized knowledge that it is occurring — before OSPs are obligated to respond by removing the infringing material.

Though nominally aimed at off-shore web sites beyond the jurisdiction of the DMCA or U.S. courts, the design of SOPA and PIPA seemed pretty clearly aimed at laying the statutory groundwork for imposing liability on Internet intermediaries by a non-DMCA mechanism.

Under SOPA, for instance, a website can be deemed a “foreign infringing site” subject to court-ordered cut off by U.S.-based payment processors and other intermediaries if:

[T]he owner or operator of such Internet site is committing or facilitating the commission of criminal violations [involving illegal copyright infringement, counterfeiting, or theft of trade secrets] and the Internet site would . . . [therefore] be subject to seizure in the United States . . . if such site were a domestic Internet site.

Missing from that definition is any requirement of actual or constructive knowledge of particular instances of infringement as court’s have, repeatedly, insisted the DMCA requires before liability can be imposed.

Elsewhere in SOPA, a website can be deemed to be “dedicated to the theft of U.S. property” if

[The site operator] is taking, or has taken, deliberate actions to avoid confirming a high probability of the use of the . . . site to carry out acts that constitute [copyright infringement or the circumvention of copyright protection systems].

As David Sohn of the Center for Democracy & Technology has pointed out, that seems pretty much like “a backdoor way of imposing a monitoring obligation on any website that allows users to post content,” precisely what Section 512 of the DMCA expressly says online service providers are not required to do. “If any website sets itself up in a way that does not actively log or monitor user behavior, a rights holder can always allege that the site is “avoiding confirming” the use of the site for infringement.”

Both SOPA and PIPA also include provisions offering U.S.-based OSPs broad immunity from court ordered enforcement actions under the laws if they voluntarily block access to web sites where they have “credible evidence” that a site is engaging in infringement. In effect, the bills would invite service providers to acknowledge liability for monitoring web sites that they do not actually have under the DMCA.

Supporters of SOPA and PIPA, of course, dispute that anything in their language would affect the DMCA safe harbors. On the well-respected Copyrhype blog, for instance, Terry Hart argues the laws merely create new remedies for infringement that is already illegal under the DMCA, not new standards of copyright liability. But I think that misapprehends the game being played here. (It also skates over the second-order effects of the bills, such as their possible impact on free speech, but that’s a topic for another day.)

The whole point of SOPA and PIPA is to create a new statutory framework under which litigation or enforcement actions could be brought against web hosting services but which would implicate intermediaries. The goal is to create a distinct body of case law in which the obligations and incentives of Internet intermediaries are analyzed under a different standard from the growing line of DMCA cases that have broken badly for copyright owners. That obviously isn’t going to happen by bringing more DMCA cases. You need a new law.

The prize at stake is leverage, not liability per se (or enforcement tools as such). The Hollywood studios and other content owners are after a new source of leverage they can use to force Internet intermediaries to deal, on terms more favorable to the media companies than is possible under the DMCA. The goal is to get intermediaries on the hook for something — almost anything — so they will have to bargain their way off.

The DMCA took nearly a decade of negotiation and hearings to become law. With PIPA and SOPA, the studios and their supporters in Congress tried to slip through what amounted to a parallel DMCA essentially sight-unseen.

The bills were carefully drafted to be referred only to the Judiciary committee of each chamber for consideration, despite dealing with highly technical issues like DNS blocking that would normally fall under the jurisdiction of other panels, like the Commerce committees. Members of the Judiciary committees and their staffs generally have little expertise in technical and commercial matters and were less likely to grasp the true scope of what the bills would do or to raise objections. Many members also have long-standing ties to copyright interests, which are a major source of campaign cash for a committee that otherwise generally doesn’t deal with issues that attract corporate lobbying.

Sure enough, PIPA sailed through the Senate Judiciary Committee with nary a hearing or an amendment. It likely would have sailed through the full Senate as well with a comparable level of scrutiny but for a hold placed on it by Sen. Ron Wyden, a Democrat from Oregon who, not coincidentally does not sit on the Judiciary Committee.

A similar strategy was planned for SOPA in the House. It was moved directly from to markup by the Judiciary Committee without hearings and with almost no outside input. Once again, however, opposition came from outside Judiciary, in this case from Rep. Darrell Issa (R-CA), who was able to run enough interference to slow the process down. The markup became an epic showdown that forced provisions of the bill into the open. The rest, of course, is Blackout Day history and a new political alignment around the bills on Capitol Hill.

In the end, the studios paid a price for their own cheekiness. There are legitimate issues surrounding pirate websites that evade the reach of current U.S. law by locating their servers overseas. A bill aimed  at addressing those issues directly, such as by cutting of the money supply to those sites, would not have needed to be hustled through Congress under cover of darkness. It could have withstood open scrutiny. But PIPA and SOPA were not that bill.

Instead, they were an ill-conceived effort to rewrite major elements of the DMCA through the back door because the courts were blocking the front door. Once the scope of that ambition became clear, the furtiveness of the supporters’ methods only served to poison the well for any sort of constructive negotiations with those who would be impacted by the bills’ provisions.

Well played, Hollywood.

There were also, again as best I could tell, serious ideological and societal implications that flowed from that enforcement strategy. Insofar as DNS blocking in the U.S. would encourage the adoption of alternative systems for resolving IP addresses, which were not subject to U.S. jurisdiction but which more importantly did not interoperate with DNS, it would promote the growth of island networks cut
off from each other and the rest of the world, threatening the universality of IP protocols that gives the World Wide Web its potent historical power. While that threat may seem theoretical or even far-fetched at this point, foundational decisions about the governance of networks can have profound and very long-term economic and societal consequences, as the historian Paul Starr demonstrated in The Creation of the Media, and should not be made lightly.

The fact that you can type a URL into a browser nearly anywhere in the world and get to the same information is precisely why the Internet is important. The fact that it is prevented from happening in some important corners of the world, like China, only underscores the potency and value of that universality, and why it should not be trifled with where it still exists.

From that perspective, compromising the long-term integrity of the universal DNS system to try to protect a single, parochial economic interest seems like a pretty lopsided trade.

With the removal of the DNS-blocking provisions from the bills last week, however, much of that danger was eliminated. What’s left is basically a  commercial dispute between contending industries, content companies and technology companies.

That doesn’t make SOPA and Protect-IP good bills. From a simple balancing-of-interests perspective they are poorly designed, weighing far too heavily on a potentially broad swath of Internet intermediaries to advance the relatively narrow economic interests of the media companies, and would create incentives that could lead to unintended consequences. Worth fighting over to be sure, but they’re the sort of problems that are at least in principle amenable to being fixed through the ordinary legislative process.

As the principal sponsor of Protect-IP, Sen. Patrick Leahy pointed out, reasonably enough, on Tuesday, “That is what debate on legislation is intended to do, to fine-tune the bill to confront the problem of stealing while protecting against unintended consequences.”

That, in fact, is precisely what is now happening. The day-long blackout by several leading web sites has raised consumer awareness of the interests and issues at stake, leading to public pressure on legislators, many of whom are now abandoning their previous support for the bills, at least in their current forms. What’s likely to happen now is a more careful balancing of interests and extensive revisions to the bills. That’s as it should be.

What ought not get lost amid the blackout, however, is the important change in the nature of the dispute. This is now less a question of the long-term governance of networks and more an ordinary commercial dispute between powerful economic interests. Someone had to keep the lights on to note the distinction.

And with that, the copyright industries’ biggest prize was lost.

The last-minute reversals are a triumph not just for the professional engineers who had raised the alarm about the dangers of tampering with the universal DNS protocol, but for the grassroots activists who raised the fuss that got the politicians’ attention. The Administration’s statement, after all, came in response to a public petition posted on the White House blog and promoted on Reddit and other social media platforms.

They are also a major blow to MPAA head Chris Dodd, a former Democratic U.S. Senator who was hired in large part to get some serious anti-piracy action out of Capitol Hill and the Obama Administration. No doubt Dodd was behind the strategy to ram SOPA and PROTECT-IP through Congress quickly, with as little debate as possible and before anyone had time to organize opposition — a strategy that is now in tatters.

As for what happens now, don’t expect the issue — or the legislation — to go away entirely. Both Leahy (D-VE) and Smith (R-TX) made it clear they intend to forget ahead with their bills, now shorn of their DNS provisions. Leahy said he was preparing a “manager’s amendment” to PROTECT-IP, “to be considered during the floor debate,” in which he will propose that “the positive and negative effects of this [DNS] provision be studied before implemented” [sic], so that the Senate can “focus on the other important provisions in this bill.” Floor debate on PROTECT-IP is tentatively scheduled for Jan. 24.

Smith is also preparing a “manager’s amendment” (his second) to try to salvage SOPA, although the Republican leadership in the House has apparently decided to hold off bringing anything to the floor until a broader consensus is reached.

The White House statement made it pretty clear that the Administration remains open to stepped-up anti-piracy enforcement legislation so long as it doesn’t involve DNS blocking. Even without that provision, however, SOPA and PROTECT-IP could be problematic for a lot of Internet intermediaries, and could still raise free-speech issues. The bills still contain provisions requiring payment processors, social networks and others to cut off web sites that “engage in or facilitate” piracy, a potentially very broad category that could sweep up many legitimate sites with de minimus infringing material along with the rogues. They also effectively would impress payment processors into the service of copyright enforcement, a duty for which they are ill-suited and unprepared.

Moreover, Smith and Leahy have been embarrassed, and they will both be gunning for a pelt to put on their wall. Expect the battle to continue.

Ryan had been targeted by activists at Reddit largely because of his high profile. They launched “Operation Pull Ryan” last month and endorsed his Democratic challenger, Rob Zerban, in an effort to deny Ryan reelection in 2012 over his “support” for SOPA. Zerban, in fact, was quick to praise Reddit in a post on the site Monday calling Ryan’s seeming change of heart, “an extraordinary victory” that will “send shock waves…throughout the establishment in Washington today.”

As I argued in a post here last week, galvanizing opposition to SOPA among interest groups is one thing, but it’s not the same thing as changing votes on Capitol Hill. So on that score, Ryan’s announcement today was a major victory.

Yet there’s probably less to Ryan’s apparent flip-flop than meets the eye. For starters, his “support” for SOPA was never exactly ironclad. Insofar as he was ever a “yay” vote on SOPA, he was following the lead of the Republican chairman of the Judiciary Committee, Rep. Lamar Smith (TX) and the GOP leadership in the House, which has generally backed Smith on the bill. In itself, then, Ryan’s support for SOPA was no great surprise and probably quite a bit less than a matter of principle. Moreover. his new position opposing SOPA “in its current form,” is not-so firm as to preclude another change of heart should the bill be changed from its current form even slightly.

Still, it’s not nothing. Quite apart from SOPA, Ryan is facing an unexpectedly tough reelection bid in 2012. His southeastern Wisconsin district went for Barack Obama in 2008 and has elected Democrats in the past. GOP-friendly redistricting has shored-up Ryan’s position somewhat, but his favorability ratings have fallen lately from their previous levels, largely due to his controversial proposals for overhauling Social Security, Medicare and Medicaid. His opponent, meanwhile, has proved to be an energetic and effective campaigner.

Given the other issues at stake, SOPA is unlikely to play a decisive role in the outcome of the campaign. Yet, facing a difficult reelection, Ryan put his finger in the wind and it came back “no” on SOPA. That’s how change happens in politics.

The “rebranding,” as the marketing folks say, comes as the show is in fact experiencing something of an identity crisis, underscored last month by word that Microsoft would no longer send its CEO to keynote the confab after this year and would significantly scale back its participation in the show. To longtime show-goers, Microsoft’s decision to drop out is no great loss. Neither Steve Ballmer, nor Bill Gates before him, had said anything worth hearing at Microsoft’s traditional night-before keynote in years. And much of what they did talk about often turned out to be vaporware (Spot watch, anyone?).

Still, the pullout brought a rash of negative stories in the press about the show, most of which also pointed out the number of other larger technology companies, notably Apple and Amazon, that also eschew CES in favor of their own or other events when unveiling important new gadgets. By all accounts, CES, whatever you want to call it, is losing its mojo.

While it’s true that fewer companies hold their big announcement for CES anymore, that’s largely a function of the relentless new technology news cycle. Technology, for whatever reason, attracts hordes of bloggers and scribblers with nothing better to do than scour the tea leaves of Taiwanese parts manufacturers to try to divine when and from where the next tablet based on the Ice Cream Sandwich or Gingerbread build of Android is coming and then trumpet it to the world. There’s nothing CEA can do about that so it probably shouldn’t waste time worrying about it. Moreover, trade shows serve many functions beyond being a forum for new product announcements, all of which will go on with or without Microsoft.

If there’s a danger to CES it lies not in how many product announcements it hosts but in the tectonic shifts underway in electronics retailing. Vendors still write orders from retailers at CES, but that sort of B2B commerce is no longer restricted to trade shows. It happens year-round. Brick and mortar retailers, meanwhile, the foot soldiers of trade fairs since Medieval merchants and producers began gathering to do business regularly in Frankfurt and other market towns, continue to lose market share to online sellers — particularly in electronics — who have never embraced the Medieval tradition.

If CES fades away it will be from lack of buyers, not from lack of product announcements.