August 2004

Why again do we need the Inducing Infringement of Copyrights Act (Induce Act)? Apple’s iTunes service sells about 2.5 million songs a week, while Wal-mart sells around 200,000 and Sony 100,000 songs per week. And soon, enter Yahoo – it’s the second most visited site on the net. And enter Microsoft. Its MSN music service and soon to be released Windows Media Player 10 will add serious competition to this developing market. Microsoft will differentiate itself from the more proprietary downloading services of Apple and Sony by touting its interoperability, using the slogan “Plays for Sure.” And college kids are going back to school and finding that they get access to music downloads (compliments of their tuition of course). Music is for sale! Buy it!

And Here’s Why…

by on August 31, 2004

I hate to be the one to break it to you, but your “brilliant” idea to eliminate spam will not work. And before you waste my time with details, please take a moment to run a sanity check by filling out this checklist.

Rudy Giuliani gave a pretty good speech last night, IMHO. But, alas for the GOP, the speech got cold-shouldered from the broadcast networks. Flipping around the bacast dial during the speech, I found Monday night football, a local weather report, and one local broadcast report from the convention floor–but even that didn’t show the speech. Time to take up arms against networks disregard of the body politic? No.

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Earlier this year I read an interesting new book by Harvard Business School professor Debora Spar entitled “Ruling the Waves: Cycles of Discovery, Chaos, and Wealth from the Compass to the Internet.” Spar’s book is important because it can tell us a lot about where cyberspace and the Internet economy might be heading next.

The central thesis of Spar’s book is that there are predictable patterns associated with technological revolutions that can help us understand how rules for future industries might unfold. Importantly, when Spar speaks of rules, she doesn’t necessarily mean government regulation. She includes property rights, contracts, intellectual property, and industry standards as “rules” that are every bit as important in shaping how industries and technologies develop. Spar then examines the history of several important technologies or industries–shipping, the telegraph, radio broadcasting, satellite television, encryption, and online music–to help explain the four phases every industry or technology goes through:

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The Justice Department’s Office of the Solicitor General announced today that it would be seeking Supreme Court review of an case with important ramifications for the future of broadband Internet regulation in America. The decision in question, Brand X Internet Services vs. the Federal Communications Commission, was handed down by the Ninth Circuit Court of Appeals late last year.

In the Brand X case, the Ninth Circuit foolishly decided that high-speed Internet services provided by cable companies could be considered a “telecommunications service” and regulated accordingly. In other words, all the silly damn laws that apply to telcos–including misguided infrastructure sharing rules–could be rolled over onto cable operators. Thus, regulators–including state and local regulators–would be allowed to regulate rates and terms of service for nationwide Internet services under the logic of Brand X.

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Uncreative Destruction

by on August 27, 2004

While running television ads in Washington, D.C. to show what a swell bunch of people they are, the National Association of Broadcasters have been running an aggressive campaign to squeeze out the latest threat to local broadcasters, satellite radio providers XM and Sirius. The problem, it seems, is that XM has been offering its subscribers useful information about local traffic and weather conditions. The local broadcasters view this as a major transgression, and have cried foul to the FCC. Because of previous regulatory barriers inspired by local broadcasters, XM Radio is restricted to national programming. XM’s solution is to provide local forecasts on a national basis. While it may be inefficient to provide listeners in L.A. up-to-date information on traffic jams in Manhattan, it’s the only way around the existing rules. Local broadcasters have petitioned the FCC and have also played the homeland security card in an effort to keep satellite providers out of local markets. Scott Woolley provides a full account at

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I, Spambot

by on August 27, 2004

There’s a very interesting article over at ZDNet about the unintended benefits of the continuing spam wars. The author makes the point that the war between spammers and filter designers has sparked new interest and innovation in the field of AI (artificial intelligence). In order to distinguish between spam and legitimate e-mail, filters must become increasingly “intelligent” as spammers continually find new ways to slip by them. The ongoing adaptation of these machines may one day make them sophisticated enough to pass a Turing test, where a human interviewer blindly interviews two subjects (one human, one computer) and is unable to tell the difference between the two. As the author concludes, “If the evil of spam leads to a renaissance of well-funded research into fundamental knowledge systems–nothing else will do–it could be the final kick we need to create truly intelligent machines.”

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Like my TFL colleague Tim Lee, I’ve been spending some time lately thinking about digital rights management (DRM), trusted computing (TC) and copyright skirmishes. Just so you know right up front, I consider myself to be right smack in the mushy middle of most copyright battles going on out there these days. I’m hopelessly undecided on many of the more controversial issues out there, but I’d like to think I still might have a little something to contribute to the debate.

In particular, I’d like to comment on this very interesting battle over the role DRM should play in the future of copyright. The current debate pits those who generally claim that “DRM is the devil” against those who claim “DRM is our savior.” Just by way of background, DRM is generally defined as a system of content protection that employs various technological tools and capabilities to shield against undesirable use or distribution of digitized works or products. Trusted computing is essentially an extension of DRM, or a new, more robust flavor of it, which focuses on how to make computing platforms and technologies even more tamper-resistant.

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Reuters is reporting that the European Commission is launching an antitrust investigation into a plan by Microsoft Corp. and Time Warner Inc. to acquire joint control of U.S. ContentGuard Holdings, a firm that makes digital rights management (DRM) technologies to help protect copyrighted files from unauthorized use.

This is foolish. Most IP providers today are struggling to win a technological arms race against users who are hell-bent on devising ways around most forms of content protection. My own view of this technological arms race is that it is a good thing overall and that government shouldn’t enter the debate and try to tilt the balance one way or the other. Generally, therefore, I oppose new laws like the DMCA and the Induce Act, but I also oppose laws cutting the other way, like proposals to expand compulsory licensing. When I see an announcement that government is taking steps to limit collaborative efforts by industry to create new DRM techniques or products, I view it as an unnecessary government barrier to the marketplace’s ability to protect intellectual property. (See this intro to the “Copy Fights” book I co-edited with Wayne Crews for additional details).

To elaborate, if two or more content providers want to get together and try to devise new DRM systems to protect their content, power to them. They should have every right and freedom to do so without being subject to government interference (including antitrust which hunts like this latest EU case). On the other hand, if someone out there circumvents their new DRM scheme the day after it hits the market, those companies should not come running to government seeking redress. Let the technological arms race continue I say! I’ll be expanding upon this theme in an upcoming blog entitled Is DRM the Devil?

Against DRM

by on August 26, 2004

An important component of Apple’s iTunes Music Store and competitors from Microsoft, Real, and Sony, is “digital rights management.” Under DRM schemes, music or other content purchased online is encrypted in a way that only authorized devices or programs can read it, and tagged with rules indicating who the rightful owner is and what may be done with it. If it works as advertised, such schemes allow copyright holders complete control over how their content is used, even after that content is sold to consumers. In the case of iTMS, Apple limits how many computers are allowed to have a copy of each song, how many CDs with a given playlist can be burned, and which devices I’m allowed to offload my songs to (at present, only iPods).

Many analysts on both sides of the intellectual property debate blithely assume that DRM works, both from a technological and a business perspective. They assume that DRM can prevent unauthorized copying of protected works, and (more crucially, in my view) that doing so makes business sense. I’m going to argue that both of those propositions are wrong.

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