A Sad Commentary

by on December 20, 2006 · 12 comments

This new poll from the folks over at 463 Communications and Zogby reveals that an overwhelming majority of Americans (83 percent, to be exact) “believe that a typical 12-year-old knows more about the Internet than their member of Congress.” And there is no difference by party affliation. Republicans (85 percent) and Democrats (86 percent) agreed completely on this point.

How sad, and some days in this town, I’m inclined to agree.

The FCC finally approved a long-overdue reform of anticompetitive video franchise rules by a vote of 3-2 after nearly a year of study. An Order will be issued sometime within six months. Grasping local officials won’t be able to drag out negotiations over franchise agreements with video service providers until the exhausted applicants capitulate to legal blackmail, a process which sometimes takes a year or two. Now, the negotiations will have to be completed within 90 days.

The deregulatory milestone is a victory for consumers, who will benefit from more rapid investment in competitive video offerings by AT&T and Verizon. It will also further reduce the possibility that broader telecom reform legislation will move through the next Congress, meaning fewer options to enact net neutrality regulation or pump up the current unsustainable universal service regime (which could lead to further taxation of Internet traffic).

Continue reading →

Social Sharecropping?

by on December 20, 2006 · 10 comments

You should check out Ed Felten’s excellent rebuttal of Nick Carr’s contention that sites like MySpace are “sharecropping” their users–enticing them to create valuable content which MySpace then profits from. Felten points out that users in fact get considerable value from their MySpace content. His conclusion:

The most interesting assumption Carr makes is that MySpace is capturing most of the value created by its users’ contributions. Isn’t it possible that MySpace’s profit is small, compared to the value that its users get from using the site?

Underlying all of this, perhaps, is a common but irrational discomfort with transactions where no cash changes hands. It’s the same discomfort we see in some weak critiques of open-source, which look at a free-market transaction involving copyright licenses and somehow see a telltale tinge of socialism, just because no cash changes hands in the transaction. MySpace makes a deal with its users. Based on the users’ behavior, they seem to like the deal.

As I’ve written before, markets don’t require money, and many non-market activities are perfectly compatible with a free, capitalistic society.

Mike at Techdirt has more.

Most people are consumers of content, not creators. However, as Web 2.0-style social networking, photo sharing and blogging interactivity increases, more people are and will be producers – and they will want to share their works over the Internet. But as an interesting AP story relates, there’s an imbalance in Internet uploading and downloading – but fortunately there’s no call for net neutrality legislation to address this (at least not yet).

From the article:

The system is a hangover of the old mass media days,” said Paul Saffo, a technology analyst in Palo Alto, Calif. “Some consumers are uploading a tremendous amount of information and that’s the thing the establishment just doesn’t get.”

Cable and phone providers insist they are keeping up with demand, in many cases increasing both upload and download speeds, but they say they haven’t had a huge clamoring for symmetry.

I agree with both of the above views, and I think that the market is responding pretty well to the majority of consumers. Like almost all journalists, Anick Jesdanun, the article’s author, tries to create some sort of conflict or lack of parity – hence the title “Imbalance in Net Speeds Impedes Sharing.” And regarding the state of the marketplace, the author states:

Continue reading →

Free to Choose. Free.

by on December 18, 2006

. . . on IdeaChannel.tv.

I’ve just finished reading Cato’s new paper on predictive data mining as an anti-terrorism strategy, which co-author Jim Harper discussed last week. It is excellent, and I encourage you to read it. I found this part particularly interesting:

The terrorists not only operated in plain sight, they were interconnected. They lived together, shared P.O. boxes and frequent flyer numbers, used the same credit card numbers to make airline travel reservations, and made reservations using common addresses and contact phone numbers. For example, al-Mihdhar and Nawaf al-Hazmi lived together in San Diego. Hamza al-Ghamdi and Mohand al-Shehri rented Box 260 at a Mail Boxes Etc. for a year in Delray Beach, Florida. Hani Hanjour and Majed Moqed rented an apartment together at 486 Union Avenue, Patterson, New Jersey. Atta stayed with Marwan al-Shehhi at the Hamlet Country Club in Delray Beach, Florida. Later, they checked into the Panther Inn in Deerfield Beach together.

Continue reading →

Sohn on Fair Use in the Journal

by on December 18, 2006

Gigi Sohn had a great response to the Wall Street Journal‘s December 1 editorial printed in letters section of Thurday’s Journal:

There are legitimate and legal uses for posting (typically small portions of) copyrighted material, including for public comment and criticism–guaranteed to the public by a limitation on copyright called fair use. For purposes of fair use, someone posting material online does not need an author’s permission; imagine if a movie critic needed to ask a studio’s permission to critique a movie demonstrated by showing a clip. Google’s service indexes hundreds of thousands of pages of book texts, all to provide brief passages of context in response to a searcher’s specific query. Unless a book is in the public domain or otherwise permitted by the publisher, Google Book Search does not provide the entire text of a book online. Using just enough of a book to show the results of a search is a perfect example of fair use.

Your editorial advocates an unacceptable culture of control. Google and YouTube exist despite individual infringers, not because of them. Your version of rigorous copyright enforcement would prevent tech innovators like Google from giving users new ways to create and access content, while providing no new incentives for content innovators to create. Fair uses of home taping didn’t kill music, video recording didn’t kill TV or movies, and Google and YouTube aren’t going to do it either. These are legitimate fair uses of copyrighted works for which our society is better off, not worse.

It’s important that people understand that Google Book Search displays a tiny fraction of a book’s content. Google’s critics seem to be under the impresion that Google Book Search allows you to view entire in-copyright books. If everyone understood that in reality, the software only displays a handful of excerpts, each of which is only a couple of sentences long, I think that almost any reasonable person would recognize that Google’s in the right. It’s only because the publishers have created the misperception that Google is distributing entire books without the permission of publishers that they’ve gotten a sympathetic ear from the likes of the WSJ editorial board.

Relatedly, Sohn’s point that Google and YouTube have succeeded despite the infringing activity of individual users, not because of them, is important. Unlike Grokster, there really is an enormous amount of non-infringing material on YouTube. The service would continue to be widely used if all the infringing material were taken down. There’s certainly room for debate about how much of the burden of policing infringing content should fall to YouTube, but the more important issue is that copyright law should not shut down a fundamentally legitimate service because a minority uses it for illegal purposes.

Via Amanda, MSNBC reports that the FCC is holding onto extremely useful cell phone usage data for fear it will aid terrorists:

Any time a carrier has an outage that affects 900,000 caller minutes–say a 30-minute outage impacting 30,000 customers–it must report it to the Network Outage Reporting System. In the beginning, the reports all were from “wire line” telephone providers and were available to the public. But in 2004, the commission ordered wireless firms to supply outage reports as well. But at the same time, it removed all outage reports from public view and exempted them from the Freedom of Information Act. The FCC took the action at the urging of the Department of Homeland Security, which argued that publication of the reports would “jeopardize our security efforts.”

As Amanda puts it:

It’s unclear how terrorists would use this information; perhaps with an appeal to the same magic force that would let them use an ounce of shampoo in an 8-ounce bottle to take down an airplane. But it sure is clear how this policy benefits the cellular companies.

Relatedly, Bram Cohen quotes a friend who says that information about power grid outages are no longer published for the same reason.

eBay for Black Hats?

by on December 16, 2006 · 10 comments

What do y’all think about this? (courtesy of Slashdot)

Underground hackers are hawking zero-day exploits for Microsoft’s new Windows Vista operating system at $50,000 a pop, according to computer security researchers at Trend Micro.

The Windows Vista exploit–which has not been independently verified–was just one of many zero-days available for sale at an auction-style marketplace infiltrated by the Tokyo-based anti-virus vendor.

In an interview with eWEEK, Trend Micro’s chief technology officer, Raimund Genes, said prices for exploits for unpatched code execution flaws are in the $20,000 to $30,000 range, depending on the popularity of the software and the reliability of the attack code.

This feels kind of bogus to me. I’m sure there are lots of people trading Windows exploits on the Internet, but who would pay $50,000 for such an exploit? And if there were people paying $50,000 for Windows exploits, I would expect them to be extremely nervous about being caught by law enforcement agencies. Which I expect would cause them to shun online auctions, which by their nature involve exposing your activities to a large number of other people.

Continue reading →

Forrester Bashes DRM

by on December 15, 2006

Marketplace had a segment this evening in which Josh Bernoff of Forrester argues that iTunes DRM is hurting the music industry’s bottom line. If they’d called me, I could have told them that a year ago.