January 2007

Apple Pays Up

by on January 30, 2007

Apple has declined to appeal its loss in last year’s Apple v. Does decision. Instead, Apple has complied with the court’s order to pay the winners nearly $700,000 in legal expenses. As I put it in Ars:

Apple had asked the courts to compel two Mac rumor sites, Apple Insider and O’Grady’s PowerPage, to disclose the names of their sources for a series of stories on an an unreleased Apple audio device. In its lawsuit, Apple argued that amateur websites are not eligible for the legal protections afforded to professional journalists under the First Amendment and California’s shield law. But the court rejected this argument, ruling that “We can think of no workable test or principle that would distinguish ‘legitimate’ from ‘illegitimate’ news,” and that the defendants’ sites appear “conceptually indistinguishable from publishing a newspaper, and we see no theoretical basis for treating it differently.”

In an email interview with MacNN, EFF staff attorney Kurt Opsahl wrote that like their print counterparts, online journalists “must be able to promise confidentiality in order to maintain the free flow of information. Without legal protection, informants will refuse to talk to reporters, diminishing the power of the open press that is the cornerstone of a free society.”

The court awarded the defendants more than twice their actual legal expenses in order to deter companies like Apple from harrassing journalists with lawsuits. Not only does the decision set an important precedent regarding freedom of the press online, but the financial award will also enhance EFF’s ability to defend free speech online.

The idea that the Democrats are the party of free speech and the great protectors of our nation’s First Amendment heritage has always been a bit of a myth. In reality, when you study battles over freedom of speech and expression throughout American history you quickly come to realize that there are plenty of people in both parties would like to serve as the den mothers of the American citizenry. That being said, it is generally true that there have been a few more voices in the Democratic party willing to stand in opposition to governmental attempts to regulate speech in the past.

But I’m starting to wonder where even that handful of First Amendment champions has gone. Sadly, examples of Democrats selling out the First Amendment are becoming so common that I’ve decided to start a new series to highlight recent examples of Dems actually leading the charge for increased government regulation of speech and expression. I want to stress that I’m not trying to pick on Democrats here, rather, I’m just trying to point out that–unless there is a sea change in their approach to these issues by Democrats in coming months and years–both parties now appear to be singing out of the same pro-regulatory hymnal. This constitutes an ominous threat to the future of free expression.

Today, as part of this new series, I’ll be focusing on the Democratic-led efforts to revive the hideously misnamed “Fairness Doctrine.”

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Brian Emmett, a self-described space buff (who has even attended space camp) won a trip to space in an Oracle competition, but he won’t be able to take the ride. That’s because the government counts contest winnings as income, and the tax on the ride would be about $25,000–a huge chuck of money that the average person (including Emmett) cannot afford to pay.

In an interview with CNN, Emmett said, “There was definitely a period of mourning. I was totally crestfallen. Everything you had hoped for as a kid sort of evaporates in front of you.”

This is a sad story that should be recalled not only in the lead-up to tax season. We should be asking what precisely the government planned to do with that $25,000. Social security is broken, the health care system is a mess, and the education system is failing miserably. It’s time for citizens to demand that government become less wasteful and more accountable.

Is Sam Brownback the answer for limited government types in the Republican party? He bills himself as a “full-scale Ronald Reagan conservative,” which implies a leave-us-alone attitude. Doing research at the FCC’s site today, I came across a press release (PDF) announcing the formation of something called The Task Force on “Media and Childhood Obesity: Today and Tomorrow.” Co-sponsor of the “task force” is Brownback.

The Task Force will produce a report that will recommend “voluntary” steps advertisers and broadcaster will be able to take to protect children from getting fat. Again, these suggestions will be completely voluntary, but the FCC just wanted to make sure to remind you on its obesity website that it has adopted children’s TV rules including “the requirement that television broadcasters, cable operators, and satellite providers protect children from excessive and inappropriate commercial messages,” and they can do so again.

Republican Commissioner Deborah Taylor Tate is “elated” about the task force, but shows her conservative principles, saying (PDF), “Government cannot and should not be responsible for solving every societal problem; however, this affects not only our nation’s health but our budget as well.” Right.

“Given the saturation of media in our children’s lives, we need to understand how media impacts their health and behavior,” said Brownback. “Because parents have no control of how much media saturates their children’s lives, nor how it impacts their health,” he didn’t say, but he might as well have.

Chris Anderson points out another thriving sector of the music industry:

Music as a digital product enjoys near-zero costs of production and distribution–classic abundance economics. When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out.

Meanwhile, the one thing that you can’t digitize and distribute with full fidelity is a live show. That’s scarcity economics. No wonder the average price for a ticket was $61 last year, up 8%–in an era when digital products are commodities, there’s a premium on experience. No surprise that bands are increasingly giving away their recorded music as marketing for their concerts, which offer something no MP3 can match.

Live performance is the fastest growing part of the music industry (up 16% in 2006 to a record $3.6 billion in North America) and with services such as SonicLiving (brilliantly described as a “digital-to-analog lifestyle converter”) and TourFilter that notify you when some band in your library is coming to town, that’s only going to grow more.

So there’s big money in live shows (92% of the Rolling Stones’ revenues comes from performance, not recorded music). Sadly for the labels, they don’t get any of it. No wonder they’re so against free music. It only helps the bands (and consumers)!

When discussing the economics of copyright, it needs to be constantly kept in mind that the interests of artists and the companies that distribute their content are not always aligned. The distributor only benefits from the revenues generated by the product being sold. The artist, however, also receives publicity benefits from wide distribution of his product. It makes perfect sense, then, that many bands especially up-and-coming ones put a higher priority on getting their music to as many fans as possible than they do to maximizing revenue in the short term. Being less concerned about piracy is one aspect of this phenomenon. But even in a world with no piracy, many bands would find it in their interest to give a lot of their music away for free in order to build their fan base.

Using MP3s Responsibly

by on January 29, 2007 · 2 comments

As the recording industry flirts with releasing music in MP3 format, Ed Felten points out that the labels have become a victim of their own twisted rhetoric about DRM technology:

Of course the industry won’t sell music “with no copying restrictions” or “unrestricted”. The mother of all copying restrictions–copyright law–will still apply and will still restrict what people can do with the music files. I can understand leaving out a qualifier in the headline, where space is short. But in a 500-word article, surely a few words could have been spared for this basic point.

Why did the Times (and many commentators) mistake MP3 for “unrestricted”? Because the industry has created a conventional wisdom that (1) MP3 = lawless copying, (2) copyright is a dead letter unless backed by DRM, and (3) DRM successfully reduces copying. If you believe these things, then the fact that copyright still applies to MP3s is not even worth mentioning.

The industry will find these views particularly inconvenient when it is ready to sell MP3s. Having long argued that customers can’t be trusted with MP3s, the industry will have to ask the same customers to use MP3s responsibly. Having argued that DRM is necessary to its business–to the point of asking Congress for DRM mandates–it will now have to ask artists and investors to accept DRM-free sales.

The phrase “using DRM responsibly” calls to mind an analogy to “drinking responsibly.” In particular, most drivers would find it intolerably paternalistic for their cars to be fitted with breathalyzers that prevented the car from being started up if the driver was intoxicated. Only a minority of drivers drive drunk, and so it’s unreasonable to impose the inconveniences of a breathalyzer system on everyone.

Given that driving drunk is a much more serious crime than sharing a copyrighted song, why should consumers be any less angry that they’re being subjected to a similarly intrusive scheme with respect to the music they purchase. The vast majority of people who buy music online have no intention of engaging in mass piracy, yet each and every one of them is subjected to the indignities of DRM restrictions.

All Ur Code Base r Belong to Us

by on January 29, 2007

Ryan Paul at Ars has a fantastic illustrated timeline of the Microsoft/Novell deal and the subsequent flamewar among tech companies. Here’s his conclusion:

Now that the steady stream of accusations has died down, the implications of the deal are beginning to become more apparent. Although Ballmer validated the critics’ concerns with unsubstantiated patent infringement claims, the claims themselves haven’t negatively affected Linux adoption. Microsoft has been making baseless claims about Linux since 2004, and it seems apparent at this point that few outside of the Linux community really take those claims seriously. It is ironic that the Linux community itself raised the profile of Ballmer’s patent infringement assertion and perpetuated its relevance with such a vehement response. Regardless of the motivations behind Ballmer’s actions, the most detrimental consequence of the entire deal and subsequent fallout is the fragmentation that has resulted from the prevailing divisive attitude that it has engendered in members of the Linux community.

The success of the Linux operating system is largely predicated on the collaboration of the Linux development community, and this petty squabbling impedes that collaboration. What the corporate executives of these companies have declared, with stentorian vehemence, is that they are all abundantly willing to abandon collaboration and take advantage of each other whenever it is convenient.

You should check out the rest of it for the pictures, if nothing else.

Telcos are Not Suicidal

by on January 27, 2007 · 12 comments

I’ve finished reading Bill Herman’s paper. It’s got a lot of interesting material in it, so I’ll be discussing it in several posts over the next few days.

Having finished the paper, I remain convinced that Herman hasn’t given much thought to the details of how the discriminatory pricing regime he envisions would actually work. He seems to imagine that AT&T can simply send Google a bill for ten million dollars and Google will whip out its checkbook and pay it. This, it seems to me, is highly improbable. To see why, let’s look at the other end of the market—the millions of tiny websites like this one that are only frequented by a few hundred people every day.

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Music Industry Booming

by on January 26, 2007 · 30 comments

Via Mike, here’s an L.A. Times article on the thriving music industry. No, not the one represented by the RIAA, the other one:

While the U.S. recording industry continues to slide under pressure from illegal downloaders and file-sharers, the other side of the music world–businesses catering to those who create the music–has nearly doubled over the last decade to become a $7.5-billion industry. The key difference in their contrasting fortunes is a simple physical reality: You can’t download a tuba. But new technology has also been a boon: Digital home recording has played a large role in the industry’s growth and helped a new generation of hobbyist music-makers move out of the garage and onto the Internet.

As I’ve argued before, I think people overestimate the role of piracy in the long-term decline of the music industry. The fundamental problem is that their core competence–pressing and shipping little plastic disks around the country–is becoming increasingly obsolete. It’s true that piracy is accelerating their decline, but the decline would happen regardless, as musicians increasingly discover they don’t need to ship plastic disks around the country in order to get music to their fans.

But I think this illustrates the silliness of the thesis that the music industry is dying, from two perspectives. First, there’s the article’s main point that only some segments of the music industry are hurting, and those gains are largely being made up elsewhere. This suggests that there’s little reason for the average musician to be fearful–as music becomes more popular, there there will continue to be plenty of opportunities for teaching music lessons, giving live performances, etc.

But more fundamentally, I think this is a pretty powerful counter to the notion that musicians need to be paid to ensure we continue to have good music. The vast majority of the people purchasing musical instruments never intend to make a living at it. Many others hope they’ll be able to make a living at it, but realize full well that their odds are long. Yet millions of people still spend billions of dollars training to become better musicians. It’s awfully hard to see how strong copyright protection could explain this. More likely, most people make music because they enjoy making music. And they’ll continue doing so regardless of how copyright law is changed.

Thinking about Bill Herman’s argument that network discrimination threatens freedom of speech, and his broader point that broadband ISPs can use their control over the “last mile” to force Internet users to do or not do certain things (mostly, give them more money), it occurs to me that Hayek’s discussion of coercion in chapter 9 of The Constitution of Liberty has some relevance:

Coercion occurs when one man’s actions are made to serve another man’s will, not for his own but for the other’s purpose. It is not that the coerced does not choose at all; if that were the case, we should not speak of his “acting.” If my hand is guided by physical force to trace my signature or my finger pressed against the trigger of a gun, I have not acted. Such violence, which makes my body someone else’s tool, is of course, as bad as coercion proper and must be prevented for the same reason. Coercion implies, however, that I still choose but that my mind is made someone else’s tool, because the alternatives before me have been so manipulated that the conduct that the coercer wants me to choose becomes for me the least painful one.

Now, I should say at the outset that Hayek would not have regarded an ISP trying to manipulate its customers as coercion, as he was thinking about cases where a coercer was able to exert broad control over peoples’ lives through threats of violence. But I think that what Herman claims AT&T will do to Internet users is analogous (albeit much less severe) to Hayek’s description of how states can coerce their citizens.

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