Copyfight

New E-Book DRM Commits Piracy to ?Stop? Piracy

Posted by Alan Wexelblat — Wed, 19 Jun 2013 09:34:53 -0500

We're all familiar with those who claim to be fighting illegal copying doing illegal things in the name of their fight. Going back at least as far as the Sony rootkit up to the present day when Prenda apparently placed porn onto torrents itself we know that people who claim they're fighting copying often do wrong.

Now comes SiDi, a technology that claims to be fighting copying but in fact is creating illegal works. Here's the deal: an e-book with SiDi (and please help me resist making jokes about inSiDious here) has been subtly changed. Words are replaced with equivalents, creating a kind of "watermark" for the e-book that renders it different from the original. If that watermarked version later finds its way out into the wild you know what the original source was. So far so good - in fact, Margaret Thatcher once used a similar technique to figure out who in her cabinet was leaking memos to the press.

However, unlike Ms. Thatcher, SiDi doesn't own the works it's distorting. In fact, what it is doing is creating a derivative work, and passing that derivative off as the original. Now it may not make a huge difference if you read a work where the author's word "unhealthy" is replaced by SiDi's "not healthy" but the law clearly gives the copyright holder the power to determine what changes are and are not permissible. Changes, even minor ones, can create a derivative work. And if you create an unauthorized derivative work, then you've committed a copyright violation.

Worse, if you create a derivative work and pass it off as the work of the original author, you've committed a fraud. What may seem to you or me to be a trivial change may in fact upset an author who has gone to significant trouble to shape the wording of, say, a particular character's dialog. That dialog helps the reader build a mental picture of the character, and the wording of the story sets the pace and flow - all of which we expect the author to control. If you've never watched an author and a copyeditor fight over seemingly trivial wording changes then this may not strike you as a big deal but I have, and trust me it matters. Authors care about the fine details of their craft and having some piece of software go in and arbitrarily change those fine details is a violation of both the spirit and the letter of almost every publishing contract I've seen.

In her column, Susan Lulgjuraj asks the question of whether we've gotten to the point where e-book copying is so widespread that we need yet another form of DRM to combat it. That presumes that this form of DRM will be any more effective than all the other forms, which is to say not at all. And it misses the most crucial question, which is why are we even contemplating something this stupid?

(Image above of Bến Tre - bonus points to anyone who can guess the relationship of that image to this story, without searching first.)

Two Things About Past Stories

Posted by Alan Wexelblat — Tue, 18 Jun 2013 13:42:13 -0500

I found a couple of pieces online related to past posts, and thought they were worth sharing.

First, I continue to noodle around the idea that the vast majority of creative people aren't making (enough) money and that's been true for a very long time. Then up pops an item from NPR's Planet Money blog that shows how the 1% in performing entertainment are hoovering up an ever-increasing share of the concert dollar.

Pitched as a piece about income inequality, it takes off from a talk by Princeton economist Alan Krueger in which he argues that “The music industry is a microcosm of what is happening in the U.S. economy at large." More depressingly, it appears that the technology that ought to be democratizing and spreading wealth is instead contributing to this distortion. That, and simple luck.

Technology plays its part by spreading the most popular (and most produced and most solidly funded) material the most widely. You're simply more likely to be exposed to the already popular stuff because money buys the tech that gets it out there. As it always has, I think.

Luck comes in because of network effects. People will (despite their protestations to the contrary) tend to gravitate to things that appear popular. If you have the good fortune to get early downloads, early thumbs-up, and appear to break from the pack first you are going to gather more attention, more downloads, more likes and the spiral is going to build. Technology factors into that by making the entire system of downloading and rating more visible, which drives more herd behavior and so on.

Second, you may recall that last month I noted that the fashion industry tends to build on copying, and does so successfully. A friend linked (for other reasons) a long post by comedian Patton Oswalt in which the first topic is "Thievery."

Like in fashion there's no IP protection for comedy. You can't copyright a joke, and it's certainly true that many performers use each others' material. Sometimes that's conscious, sometimes it's accidental. The public may even hear about or know people who make a living writing comedy material for well-known humorists like David Letterman or Jon Stewart. However, this has led to what Oswalt identifies as a massive public misperception - that all comedians "steal" and that "nobody" writes their own material.

In fact, the majority of working comedians write, or try to write, their own humor. A comedian's value is a combination of the material and the delivery. Some people are good writers but lousy performers; some people can really hold an audience, but produce poor original material. But as in any other career the people who are bad at one thing either get better at it or they get out of the business. Maybe they hire writers, or pay for stage coaching, but either way the goal is for them to produce more and better original acts.

Along the way, though, they have to deal with the people Oswalt identifies as the thieves. People who scoop up another comedian's jokes wholesale, sometimes even to the point of copying entire segments of someone else's act and then passing it off as their own. Without the ability (or money) to protect their work, comedians often have no choice but to wait until the thieves flame out. If you're stealing someone else's material to help you move up eventually you're going to reach a level where you're expected to produce. If you don't have original material then you can't produce, and you flame out, much like any other person who has cheated their way through life.

It's an interesting way to think about illegal (or at least unwanted) copying: can we create situations in other areas where unwanted copying isn't policed by restrictive technologies (DRM) or by restrictive laws (CISPA/TPP), but contains within itself the seeds of its own demise?

MSFT to Region-Lock Xbox One on Launch

Posted by Alan Wexelblat — Fri, 14 Jun 2013 12:43:59 -0500

Microsoft seems to be all about the DRM with its latest entry into the consumer market. It is now confirmed (here reddit dissects the official Xbox Twitter feed) that only 21 countries will be able to use the console on launch. Notably this "region coding" splits up the EU - most countries are in but some are out - and it also excludes Poland, the development home of The Witcher game series, a title Microsoft touted in its E3 launch presentation. Yes, that's right, the developers of this Xbox launch title will not be able to play the game they developed. I generally find it wise to assume that Microsoft are not stupid, but whatever their plan is, it's eluding me here. Sony was quick to announce that its competitive product, the PS4, would not be region-locked.

Myriad Genetics, One Opinion

Posted by Alan Wexelblat — Fri, 14 Jun 2013 09:14:35 -0500

Probably the most surprising thing to me was that SCOTUS managed to craft a single unified opinion in Association for Molecular Pathology v. Myriad Genetics, Inc. Given the complexities at issue and the previous rulings from the Court, I expected another split decision. It's even odder that they issued a unanimous ruling that both sides see as a victory (though that may be lemonade-from-lemons for Myriad). My sense is that they did so by a combination of punting the hard issues - no method claims were adjudicated - and unfortunately through a lack of understanding of the science.

See for example Mark Stern's posting on Slate, where he looks at Scalia's concurrence as an admission that he doesn't understand the science and therefore the judges with whom he is concurring likewise don't get it, but aren't as forthright in saying so. The decision does go into some biology but the points raise by Myriad and the Association are fairly esoteric for someone not versed in at least college-level molecular biology.

Steven Salzberg, a med/sci writer for Forbes, argues that in fact SCOTUS got the science wrong. He lists three major errors contributing to the wrong science that underlies the key element of this decision: the supposedly bright line between DNA (not patentable) and cDNA (patentable). This leads to a tough question: even if it got the science wrong, did SCOTUS get this decision "right"?

By "right" I refer to the idea that the decision could reflect a legal and social sense of what is the right thing to do with patents in biology. For example, Art Caplan has a short opinion piece up stating bluntly that "natural DNA" never should have been judged patentable. Allowing Myriad to hold patents on these specific genes led to a tight monopoly market where no one could bring out a competitive (and one hopes lower-priced) testing product. This exemplified the monopolistic and constricted outcome feared by people who argued that natural biology should not be patent-protected.

This sounds to me like the Court has finally come around to Breyer's view in which the validity of an intellectual property protection law or interpretation has to be done in light of its outcomes. When you make a regime that allows one company to monopolize all possible methods of testing you've done something wrong. When you create a way for multiple companies each to protect their competitive ways of testing you've done something right.

Now if they could only manage to ground that in good science.

Analyzing Netflix's Economics Misses Netflix's Long Game

Posted by Alan Wexelblat — Thu, 13 Jun 2013 12:50:08 -0500

Trying to guess Netflix's content economics seems to be a popular pastime this year; however, as Felix Salmon describes, these analyses are missing the forest for the trees. The latest entry in this game is a nicely written in-depth piece by Matthew Ball for Ivey Business Review.

Ball looks at the cost of Netflix producing original content, and in particular what do those costs pay back in terms of building Netflix's subscriber base. This is a natural follow-up to Netflix's recent restart of Arrested Development. The show built up a following while it was on Fox but those who still want more now go to Netflix to get it. Ball goes deep dive, calculating things like Netflix's cost-per-minute and then comparing the value of paying Netflix solely for a specific piece of content you want (like Arrested Development) versus paying for other kinds of specific desired content such as a first-run movie.

These are great numbers, but I think they fundamentally miss what's going on, as Felix Salmon analyzes in his blog post today. I don't think anyone calculates the cost-per-minute of an entertainment offer, even subconsciously. The question is really can I get what I want there, and how much am I paying for what I want? Sure, some of the ongoing wave of cord-cutting is due to people not wanting to pay for big packages in order to get the specific content they're interested in. But that's big-view stuff, not the numbers that Ball is analyzing.

Salmon makes three points I think are worth keeping in mind. One is that original content is not just there to draw new subscribers - it's also a way to keep current subscribers. Netflix suffers from tremendous subscriber churn and the cost of acquiring subscribers has to be high.

Two is that Netflix is essentially bent over a barrel by the Cartel right now. If they appear to be making more money, then the broadcasters just hike the license fees to siphon off that revenue. Ball notes that Netflix had to pay fees of over USD 1.3 billion (yes, billion-with-a-b) in just the first quarter of this year. And I'm sure those fees are going to go up. No matter how expensive it may be to produce original content Netflix can be sure that it alone has control over that expense and isn't going to turn around and find its costs have doubled next quarter because of someone's external decision.

Third and finally, Salmon argues that Netflix isn't playing a quarter-to-quarter or even year-long game. Here's the money quote:

[Netflix wants] to become HBO faster than HBO can become Netflix

Exactly. HBO, with its disastrous response to demand for Game of Thrones, showed how badly it misunderstands new media models. Netflix isn't exactly an agile start-up, but they have the potential to beat HBO at this game if the cable giant sits back and continues to do nothing. With a library of high-quality original (again, licensing-free) content on hand, Netflix will be in a much stronger position to keep customers engaged and paying those all-important subscription fees.

Oh, Yeah, DOJ is Still Suing Apple over E-Books

Posted by Alan Wexelblat — Wed, 12 Jun 2013 10:44:46 -0500

Back in February, Macmillan threw in the towel and settled with the DOJ over accusations of collusion in e-book pricing. Macmillan was the last publisher trying to defend its practices but it wasn't the last defendant. That honor goes to Apple, which was accused in the suit of being in collusion with the publishers. Apple has not settled and is now defending itself in court.

Of course, Apple claims that it was not in collusion and is calling various publishers' representatives to testify about that. Unfortunately for DOJ it sounds like their own witnesses - also from the publishing houses - are making Apple's case by agreeing that there was contention between Apple and the publishers over how e-books would be priced. It seems clear that everyone was out to destroy Amazon's 9.99 price barrier, but I'm not enough of a lawyer to know if that agreement alone will be sufficient to sustain the government's contention.

Anyone who is surprised that Amazon "acted like a bully" toward publishers please raise your hand. You're new here, aren't you?

As Shara Tibken noted, the publishers are going to argue that they went to Apple more or less out of necessity. Amazon, in its turn, is going to claim that it was forced to do this or that by the big bad publishers and you know what? The whole lot of them remind me entirely too much of misbehaving kindergartners. I have absolutely no sympathy for any of the parties in this mess.

Why CNN Makes Lots of Money Despite Sucking

Posted by Alan Wexelblat — Tue, 11 Jun 2013 12:19:25 -0500

This isn't really a core Copyfight story but it's too good to pass up: Fuzz Hogan for Zocalo explaining why CNN can't tell good stories, yet has rising profits year over year. We've been hammering at the idea that old business models are disintegrating and media giants need to evolve to survive and guess what? CNN has done just that. It's set up a system that gets it a nice chunk of change by producing crap, but crap that gets used and reused and paid for. Good stories are nice but if they don't bring in the money they won't happen.

Microsoft Turns Xbox One into DRM Nanny

Posted by Alan Wexelblat — Fri, 07 Jun 2013 12:44:44 -0500

There's a great big glob of information officially released by MSFT about its next-gen console, dubbed Xbox One. The nanny features are extensive, particularly for gaming. Your console has to be able to verify legitimacy with home base at least daily or you get locked out of all your games. If you sign into your Xbox Live account from any other console it checks once per hour. So no rooting, no hacked games, and no games that aren't MSFT-approved. The definition of what's "approved" changes whenever MSFT decides it should and if it doesn't like what you're doing, it'll remotely brick your hardware for gaming. And gods help you if Microsoft's authentication servers happen to hiccup when your box phones home to authenticate.

NFB Settles with Free Library of Phila

Posted by Alan Wexelblat — Wed, 05 Jun 2013 09:31:42 -0500

In response to my entry asking for librarians' help in saving blind readers' rights, a Copyfight reader sent me a pointer to this story on the National Federation for the Blind's site. The issue arose because the Free Library was providing patrons with e-books on the Nook reader, which is inaccessible to blind readers. Dear librarians, (locked down) e-readers are a bad idea. Please don't do that.

The White House vs Patent Trolls - So What?

Posted by Alan Wexelblat — Tue, 04 Jun 2013 14:44:46 -0500

Kevin Drum's short piece for Mother Jones on Obama's proposal to deal with patent trolls says exactly what I would have said: nice ideas, unlikely to have any real impact, and still failing to deal with the core issue, which is Congress's utter failure to respond to a series of bad court decisions over the past 20+ years. Those decisions, and a variety of problems at the USPTO, have led to what Timothy B Lee called "a patent hangover". Both men hammer on the point that every post-grant reform proposal suffers from an inability to distinguish harmful trolls from legitimate patent users and until we stem the flow of bad patents we're only applying band-aids.

Solutions to Patent Trolling in Existing Laws

Posted by Alan Wexelblat — Tue, 04 Jun 2013 08:48:40 -0500

Under the dramatic headline "How To Make War on Patent Trolls" Tim Wu has an article in The New Yorker advocating remedies for patent trolling. Wu outlines the well-known problems of NPEs trolling and advocates some solutions that I haven't seen tried yet. Like all novel legal theories we won't know whether they hold up until they're tested in court, but I have doubts.

Wu suggests the use of consumer-protection laws, specifically targeting unfair or deceptive practices. The definition of "unfair" varies wildly since all states and the Feds have such laws. Wu notes also that some NPEs have misrepresented "...the strength of their patents, the extent of other settlements, and their actual willingness to litigate." I'm not sure what it means to misrepresent the "strength" of a patent - presumably Wu is referring to the scope of valid claims or the applicability of the claims to the supposed infringement. Certainly deliberate misrepresentation should be treated as fraud, but I'm not sure how hard it would be to prove deliberate misrepresentation.

Settlements and willingness to litigate, though, are clearly outside the bounds of these laws. I recommend the Planet Money podcast from last week on the patent being asserted against podcasting in which Zoe Chase gives a good view of the "game" played around all civil legal actions. Knowing whether or not someone else will carry through on a threat to sue is a standard feature of this sort of brinksmanship everywhere, not just patents.

Wu then suggests using unfair-competition laws against NPEs who aggregate patents. The idea that assembling a patent portfolio might be a Sherman Act violation when that portfolio is used to stop people from operating a business is certainly a novel theory. I know even less about antitrust law than I do about IP law, but I'm inherently dubious. On the other hand, the RICO laws have been used in ways far beyond their original targets so perhaps the courts will see fit to extend the scope of the Sherman or Clayton Acts in this way.

Wu also suggests that the FTC get into the act, through its power to manage competition and prevent monopolies. Section 5, which Wu points to, seems to target unfair or deceptive practices. This is interesting in that it might be a way to rule out an entire style of business practices. As we've discussed in the past, the use of patents for offensive versus defensive purposes is a matter of the owner's choice; however, the FTC has the power to rule that certain offensive uses of patents are sufficiently anticompetitive as to be illegal. I would be very interested to see the FTC hold hearings on this and air some expert opinions. Right now they're gathering comments and who knows what will follow. That said, any move by the Feds to change how patents are able to be used would almost certainly be challenged in the courts in cases that would drag on for years.

Unfortunately, although Wu notes that patents have been issued with "extreme leniency" (which is quite some understatement) he doesn't advocate for the kinds of changes necessary to prevent patent offal in the first place. Whether or not you like Wu's suggested remedies they are just that - remedies. Far better to fix the problem than clean up the mess afterward.

The place where I agree with Wu most strongly is where he argues that the reasons arrayed against these arguments are not reasons for inaction. Instead they call for proceeding with caution. Patent practices - both issuance and use - are in severe need of reform to keep up with new business practices and changing technology.

Broadcasters Sue-alike Aereo-alike

Posted by Alan Wexelblat — Fri, 31 May 2013 15:50:37 -0500

According to the LegalTimes blog, broadcasters have filed more copyright infringement suits against FilmOn.com Inc, another start-up in the broadcast-tv-over-Internet game. Broadcasters have already won injunctions against FilmOn's so-called "Aereokiller" in western states and are now trying to make their case elsewhere.

Tobias Buckell Has a Giant Reality Check for You

Posted by Alan Wexelblat — Wed, 29 May 2013 14:36:56 -0500

Here's the big thought: being an author (or really almost any creative type) does not pay well. Musicians may complain about the few pennies they get for having their stuff streamed online, but those pennies are more than the vast majority of musicians will make. One guy (or maybe a few guys) can make a hundred grand publishing e-books, but the vast majority get nothing. In traditional print they don't even get publication; online they can get published but nobody reads them. Sometimes getting noticed requires torrenting your own works so they get out there.

The sad truth is that this has been the case for pretty much all of human history. Creative types of all sorts have been shunned, kicked out of town at dusk, hired, fired, or even killed at patrons' whims, thrown in gaol for offending the rulership with their latest portrait or play - the list goes on and on. The view that Kennedy expressed - which later led President Johnson to create the National Endowment for the Arts - is a nice idea but a historical anomaly.

We are also living in another historical anomaly, one in which those who make businesses allowing people to self-promote, whether by e-books or other means, are doing their darndest to ignore and get their customers to ignore, this historical fact. Now comes Tobias Buckell with a piece titled "Survivorship bias".

Buckell is, by most accounts, doing pretty well. He's making money by publishing his stuff, both through traditional and new-media means. He's been nominated for a fistfull of awards, which means his stuff gets reviewed, and appears in places like New York Times bestseller lists, one of the traditional measures of publishing success. He is, by some metrics, an "average" selling author; however, as he shows pretty clearly there's a huge difference here between "average" (the summed midpoint) and "median" (the most likely point). In fact, the median sucks, which means that e-publishing sucks for the vast majority of people.

What survivorship bias says is that our impressions will be skewed by unusual tales, which obscure the general reality. We read about one author who is making that 100k and we don't realize how unusual he is. For every Konrath there are hundreds of thousands of other e-book authors who are working hard and not getting enough money to pay the rent and keep the lights on. Again, that's just normal history but Buckell is concerned that because we're in this other historical anomaly, those people are getting doubly victimized.

If you're not selling well in e-book now, the tale goes, it must be your fault, somehow. You didn't try hard enough. You didn't use the right publisher or the right advertising medium or the right pricing model. You didn't land in the top 100 so your experience doesn't have meaning, when in fact it's the other way around. Those top 100-selling authors are the anomalies. They're doing well and that's great. But that doesn't make them more meaningful or relevant examples than an average 100 e-book author, or a median-100 e-book author.

Buckell does have one important point that I think deserves to be thought about harder: he says he's playing the long game and I think that's required here. There are a few true overnight sensations, but when you dig deeper you find that a lot of people who have suddenly broken out did so after years of hard work and building up to that breakout moment. So if you're a creative type, good on you. Do the hard work, try to be successful now but if you're not don't take it as a personal flaw - take it as confirmation that you need to play a longer game.

Cable Is Still Dying, Or So They Say

Posted by Alan Wexelblat — Wed, 29 May 2013 12:38:26 -0500

It's been a while since I've seen another of the "Internet streaming is killing cable" stories that were popular last year. Today's entry comes from Chris Rancourt on Pando Daily and is based on the premise that streaming video has already killed cable. Yeah, maybe.

In fact, Rancourt's body text is more circumspect than his lede, saying "...we might be heading into a world where streaming killed the cable star". Yeah, maybe. It's true that online subs cost less, and it's true that Netflix's latest numbers look good, though profits remain elusive. The kicker is still original content which right now is looking good for Netflix and causing other streaming sites to jump in with both feet. That doesn't automatically spell demise for cable, though, which still holds important trump cards like exclusive live sporting content and first point of access for traditional broadcast channels.

Rancourt thinks we'll see major shifts in digital entertainment in the next few years. I disagree - I think we're going to see several years of tentative experimentation as companies hunt for profitable models and advertisers try to figure out how to deal with the extreme audience fragmentation that online streaming brings. It's always possible someone will come along with a game-changing plan, but my bet is that the next few years look more like a muddle than a major shift.

Yes, Virginia, There Is Copyright In Space

Posted by Alan Wexelblat — Tue, 28 May 2013 12:37:51 -0500

And it's even weirder than you think. In a nice blog piece last week The Economist looked at the legal tangles around ISS Station Commander Chris Hadfield's recording and subsequent broadcast via YouTube of an updated rendition of "Space Oddity." Fortunately for now, all these tangles remain theoretical because Hadfield and his collaborators took care beforehand to secure all the necessary rights. Still, it points out that even today copyrights and licenses are defined by national boundaries and treaties, both of which the ISS and the Internet pretty blithely ignore.