MySpace is getting into the music market. And to help set them apart from the pack, they’ve opted for a decentralized approach: anyone can offer their music via MySpace, and pricing is controlled by the artist. Moreover, MySpace has opted to offer the music in MP3 format, unencumbered by DRM.
Joe at TechDirt gets the implications of this exactly right:
while many of these music stores are simply iTunes clones, MySpace is trying something different. It’s going to offer a way for bands to sell music directly to fans from their MySpace pages. Furthermore, the songs aren’t DRM’d so they’re not tied to a particular device, and the band controls the price at which they’re sold. Bands are already building up followings on MySpace, but have lacked a way to turn popularity into commercial success. This store will try to solve this problem. Predictably, there’s already talk of whether MySpace can unseat the dominance of Apple in the digital music space, but that misses the point. It’s the record labels themselves that should feel threatened. Not only has MySpace already given young bands an avenue to reach the masses, without a label to pay for their promotional campaigns, but now it’s giving them more control over their distribution as well. The value added by signing with a label is clearly diminishing, and their fortunes are likely to follow.
The labels’ traditional strengths were in distribution and marketing. Their distribution advantage is effectively gone, at least among the under-40 crowd that mostly listens to music on their iPods. And their promotional advantage is fading as more young people find new music on the Internet rather than traditional broadcast media.
As a result, the labels are largely coasting on inertia. Because they’ve got contracts with the vast majority of popular artists, people are in the habit of looking to them for new music. That, in turn, makes their artists more likely to succeed, which in turn makes the best artists more likely to seek contracts from them. It’s a virtuous cycle that’s allowed them to continue to dominate the music charts even as their distribution and promotional network is rapidly rendered obsolete.
But the momentum won’t continue forever. Sites like MySpace will make it ever easier for bands to find fans without the help of the labels. And once a substantial fraction of rock stars aren’t beholden to the labels, the labels’ remaining advantages will evaporate. At that point, their high overhead and history of hostility toward their customers will come back to haunt them. Consumer are likely to find getting music on MySpace to be cheaper, more convenient, and more interactive. And once bands can reach their fans directly, why bother with the middleman?
The Associated Press reported yesterday on the latest battlefront in the broadcast indecency wars: a CBS documentary on 9/11. The film–which has aired before without controversy–has been criticized by some indecency advocates because of bad language used by firefighters as they struggled at the World Trade Center on 9/11. The American Family Alliance, for example, has readied its members to complain to the FCC and CBS. As a result, some two dozen affiliates have announced they will replace or delay broadcast of the piece.
“This is example #1” of the chilling effect of the FCC indecency rules, said Martin Franks, CBS’ executive vice president. “We don’t think it’s appropriate to sanitize the reality of the hell of Sept. 11,” Franks was quoted as saying. “It shows the incredible stress that these heroes were under. To sanitize it in some way robs it of the horror they faced.”
Well said. The simple fact is that some Americans will not be seeing this documentary because of the threat of FCC-imposed liability. Would the FCC actually find the piece indecent? That’s anybody’s guess. But the mere possibility has been enough to cause some stations–rationally enough, given increased fines–to cut and run.
A better example of the folly–and outrage– of government content controls would be hard to find. However well-intentioned, the FCC’s rules blow a clear, cold wind on speech.
Former Vice President Al Gore had some rather passionate things to say about democracy and the role of media in it during the recent Edinburgh International Television Festival. “Democracy is under attack,” he told the crowd. “Democracy as a system for self-governance is facing more serious challenges now than it has faced for a long time. Democracy is a conversation, and the most important role of the media is to facilitate that conversation of democracy. Now the conversation is more controlled, it is more centralized.”
Apparently, Mr. Gore wants us to believe that democracy is dying and that the blame for it falls on “controlled, centralized” media. I guess such apocalyptic rhetoric helps grab attention for your cause but, in reality, such comments are completely off that off-the-mark and bear no relationship with reality whatsoever.
Continue reading →
I was generally impressed with Tim Wu’s paper on Hayekian analysis of intellectual property, but I did want to note one place where his analysis goes off the rails:
A second example is broadcast spectrum reform, which has been under consideration for about a decade in the United States. The question is whether broadcasting at certain frequencies should be propertized. In other words, the question is whether some firm should own the alienable rights to broadcast between frequencies X and Y. The impact of the government’s decision whether to grant property rights or not will have important decisional consequences. Granting no rights will create decentralized market entry for spectrum-dependent projects or technologies. Any entity willing to make the investment may develop a project that depends on access to spectrum, albeit at the cost of many failed projects. Granting government-specified licenses or property rights, conversely, makes some kind of hierarchical decision structure possible in the first place. That is, we should expect to see greater screening of spectrum-dependent projects or technologies before they are launched.
Which is better is slightly ambigious. For some uses of spectrum there may be good arguments for a hierarchical, centralized authority who decides what the spectrum will be used for, perhaps to ensure public safety. But otherwise, whether we want propertized spectrum depends on whether there is any argument that spectrum-dependent projects be carefully screened. Absent risk the public, the answer must sometimes be no.
This strikes me as rather misguided. As Jerry has explained in this space before, the difference between spectrum and ideas is that spectrum is rivalrous and scarce, whereas ideas are not. Complete decontrol is never an option–somebody has to pick the rules governing how the resource will be consumed, and the only question is who will make the rules.
Continue reading →
Every week, I look at a software patent that’s been in the news. You can see previous installments in the series here. This week’s patent comes courtesy of Techdirt, who reports that Apple has settled a lawsuit with the owner of this patent. Here’s the abstract:
A computer system and method for controlling a media playing device. The system provides a user interface for allowing a user access to media pieces stored in a media database. The interface is also for controlling a media playing device, like a player piano or movie playing video device, that is coupled to the computer to play the accessed or selected piece of media. In one embodiment there is a computer interface that allows a user to display only music that relates to a selected category, like jazz or classical music. Another embodiment allows the user to direct the media playing device to automatically play selected music pieces that are related to a selected music category. Another embodiment allows a user to direct the media playing device to automatically play selected music pieces that are related to the selected music composer or artist.
I think the obviousness of this patent can be readily seen from a selection of the description of the “invention”:
Continue reading →
I just read a fantastic paper by Tim Wu about the implications of Hayek’s insights about decentralized decision making for intellectual property policies. In the standard debate over intellectual property, supporters of stronger protections tout to the ability of IP regimes incentivize creativity, while critics point to the dead-weight losses incurred when the monopolist prices its products above marginal cost.
But Wu argues that this discussion misses an important consideration: in addition to propping up the price of intellectual creations, intellectual property regimes like patent and copyright centralize the decision making processes of creative industries. Take the case of Netflix’s patent on Internet-based video rental. This patent appears to give Netflix the exclusive right to decide who may offer online video rental services, at least those that have interfaces similar to Netflix’s own. That effectively means that anyone who wants to enter the online video rental business (such as Blockbuster) must get a license from Netflix to do so.
In a world of perfect information, that might not be a big problem. Netflix has every incentive to develop the online video rental industry. After all, Netflix wants to maximize its revenues, and a larger, healthier online video rental market means bigger licensing revenues for Netflix. Hence Netflix has every incentive to develop new and better online video rental features, and to license its patent to third parties who have the capability to expand the market. If Netflix were omniscient, giving Netflix a monopoly over online video rental might actually make the market more efficient, as Netflix could reduce wasteful competition.
Continue reading →
Nearly 20 percent of Internet telephone test calls experienced unacceptable call quality over the last 18 months, according to Brix Networks. The company provides a free voice quality testing portal (TestYourVoIP.com) for measuring the quality of broadband Internet phone connections.
Wall Street Journal columnist Lee Gomes interviewed Brix Chief Technology Officer Kaynam Hedayat about the findings:
Why the decline?
With the emergence of sites like YouTube, and music downloads and emails with large attachments, there is just more traffic on the Internet.
Why are phone calls so susceptible to Internet traffic increases?
Voice calls are very real-time-sensitive. If the other person’s voice drops off, you can’t carry on the conversation. It becomes like the old days when you called international over a satellite. The delays were so long that you had to say a sentence, pause a couple of seconds without saying anything, and then wait for a response from the other end.
If Congress enacts net neutrality regulation, network providers could prioritize VoIP services but they would have to do so on a nondiscriminatory basis. That means they’d have to act as a disinterested wholesaler, treating every retail provider of VoIP services, including their own affiliates, equally. Would they do that? Or would it be more profitable to let all VoIP services deteriorate so consumers place a higher value on traditional phone services? You be the judge.
P.S. To those who have extended a warm welcome, thank you.
I’ve got a new article in the Hearland Institute’s IT&T News about the NSA’s spying programs:
An even bigger issue with mass surveillance by software is the way it would transform the principle of judicial oversight. Under current law, law enforcement officials must request a warrant from a judge for each suspect they wish to monitor. The judge examines the evidence for each suspect individually, and grants a warrant only if he or she finds probable cause that the suspect is guilty.
Automated surveillance, however, would involve a computer program monitoring tens of millions of individuals with no judicial oversight at all. Even more troubling, after the software had produced its list of suspects, the judge would be asked to approve human surveillance of the list the software produced, even though many of those on the list are probably innocent.
Constitutional rights depend on bright lines, so judges are not forced to make arbitrary judgment calls about when someone’s rights have been violated. But such bright lines would be extremely difficult to draw once the traditional “probable cause” standard has been abandoned.
This is a recurring pattern I’m noticing a lot in my public policy research. You can also see it the abuse of the “blight” loophole for eminent domain abuse. Because there’s no clear definition of the term, over time the exception has swallowed the rule. As a result, we get monstrosities like these. Secure rights require bright lines. And bright lines are impossible when surveillance decisions are made by computer programs with thousands of lines of code.
Check out this ad I saw earlier today on Freedom to Tinker:
Do the doctrines of contributory and vicarious liability apply to the DMCA’s anti-circumvention provisions? If so, I bet the RIAA and MPAA’s lawyers are drafting up the lawsuit as we speak!
I have to admit that my reaction to the idea of inviting a scholar from the Discovery Institute to participate on TLF was pretty similar to those of the majority of our readers. The Discovery Institute’s intelligent design shop has a well-deserved reputation for peddling pernicious nonsense. See here for an excellent summary by Daniel Dennett of why intelligent design is a cynical shell game (scroll down a bit). More importantly, from my perspective, the intelligent design crowd at Discovery has repeatedly misrepresented and misquoted their opponents, refused to acknowledge errors in their work, made hypocritical charges, and generally presented their case in bad faith. See here, here, here, here, here, here, and here for a few of the many examples.
However, I don’t think we can immediately jump to the conclusion, as some commenters have, that anyone who works for DI should be automatically shut out of public policy fora such as this blog. My former colleagues Adam and Jim, whose judgment I trust on this sort of thing, have known Haney for years. They tell me that he’s a smart and intellectually honest guy with worthwhile things to say about technology policy. He was invited to participate on the basis of their personal knowledge of his work, not because of any particular love for the Discovery Institute.
We at TLF blog as individuals, not as representatives of our respective organizations. You’ll all have the opportunity to get to know Haney and his writing and form your own judgment about his credibility. This blog is read by a lot of smart and technically savvy people. If he plays fast and loose with the facts, I have every confidence that you guys will catch it and call him to task. So will I.
Julian worries that bringing Haney on board will “lend their crackpot ideology some sort of legitimacy by association.” But I think the point has been made: Haney has been put on notice that a large number of our readers don’t like his employer and will view his work with suspicion. Haney will have to work hard to earn your trust. If he succeeds, it will be despite his institutional affiliation, not because of it.
So I say welcome aboard, Mr. Haney. Jim and Adam speak highly of your work, and I’m looking forward to reading more of it.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.