Amazon says it is advertising when it compensates New York-based websites for posting links that refer customers to Amazon.com. New York says it’s soliciting business. The distinction means all the difference in the world for sales taxes, for Amazon, and possibly even print media, television and radio.
Amazon.com sued New York State earlier this month, challenging a newly enacted law that has serious implications for online advertisements. In April, the New York legislature passed a law designed to increase sales tax revenue from Internet sales. The law is known as the “Amazon tax” because of the way it broadens the sales tax law to apply to Amazon’s Associates Program, thereby achieving the necessary legal nexus for New York to force Amazon (and other Internet retailers) to collect and remit taxes on all sales to NY residents.
A little bit of history helps put this law into context. The Supreme Court has held that a state can only impose sales or use tax-collection obligations on an out-of-state retailer if the retailers has a “substantial nexus” with the state (the Quill decision). Nexus occurs from a sufficient physical presence, which can be an office or warehouse, but physical presence can also derive from soliciting a state’s consumers via sales representatives located in the state. However, it can’t be just any sales rep, according to another Supreme Court case — in-state representatives must be “significantly associated with the taxpayer’s ability to establish and maintain a market in the state” (Tyler Pipe). Continue reading →
Inspired by the promotional brochure I recently came across, I’ve taken a look at L-1 Identity Solutions in a Cato TechKnowledge paper. Though it has better options, L-1 and its new acquisition, Digimarc ID Systems, seem likely to continue lobbying for the REAL ID Act. My concluding line may be a little obvious: “A corporate lobbying operation can do as much harm to liberty as any government agency or official.”
Broadband Reports ran an opinion piece by Karl last week discussing the rumors that Comcast will soon adopt a 250GB a month maximum with overage fees for excessive consumption.
As the piece points out, implementing overage fees runs the risk of giving FiOS (and, to a lesser extent, U-Verse) an even bigger edge on cable broadband. AT&T and Verizon, because of their last-mile network architectures, are less susceptible to congestion caused by heavy users than Comcast, with its shared cable network. AT&T and Verizon have gotten by without terminating heavy users or even charging them extra.
Yet right after Karl finishes explaining about how overage fees will change the competitive landscape, he starts ranting about the prospect of “investor pressure constantly forcing caps downward and overage fees upward.”
Competitive pressures make this scenario a remote possibility, especially as content portals serving massive files like Apple TV and Xbox Marketplace gain mainstream appeal. If Comcast wants to deflect criticism from other ISPs over bandwidth limits, any cap must be high enough to ensure very few customers even approach it. Arguably, 250GB a month is enough to satiate even power users, at least for a couple more years.
ISPs are competing fiercely to attract subscribers, so providers regularly make hay out of trivial product differences such as the “ugly cabinets” that AT&T sometimes installs when upgrading a neighborhood’s DSL speeds. Imagine the ads Verizon will run if Comcast starts charging customers for heavy use—“With Comcast, you never know when you’ll be hit with an enormous monthly bill if your kids go on a YouTube frenzy or your computer is overtaken by hackers. Here in FiOS land, rest assured there are no extra fees, no matter how much you download.” It’s not hard to see this message resonating with customers, especially those living in households with multiple Web-savvy residents.
Continue reading →
Over at Ars I take a look at the Bush administration’s latest responses in the ongoing litigation over missing White House emails.
The debate over social networking safety is increasingly tied up with the question of whether (and how) users should be authenticated before they are allowed onto a social networking site, however that term of art is defined. Age verification proposals have been flying for the last two years that would use a variety of approaches to determine the age / identity of users. [I have discussed those proposals in detail here.]
So, when I heard the news that the Catholic church “will set up a Catholic social networking Web site akin to a Catholic Facebook” so that Pope Benedict can text message thousands of young Catholics on their mobile phones during World Youth Day in Sydney, Australia this July, I just couldn’t help but wonder if the Pope and all the site’s users will be required to somehow have their identities or ages verified before they go online?
I’m being entirely serious. If anyone has information on how the site will work and whether the Church plans to use identity screening mechanisms, please let me know. I try to keep tabs on how each social networking site polices their site for underage or inappropriate use. I am personally quite skeptical that most current approaches can work effectively, but I am always willing to learn more about new tools and techniques.
Yesterday – Sunday, May 11, 2008 – was the statutory deadline for state compliance with the REAL ID Act. Not a single state has begun issuing nationally standardized IDs as called for by the law. Nor are they putting driver information into nationally accessible databases.
Matthew Blake of the Washington Independent has a solid recap of the situation.
Luis points to an interesting paper on the fragility of intrinsic motivation in volunteer efforts. Luis explains:
The paper also has some more detailed observations that come out of the experimental work; among them that voluntary cooperation is fragile; group composition matters (i.e., groups with more conditional cooperators will be healthier); and that ‘belief management’ maters- i.e., if people think that they are in a group with more conditional cooperators, that group will be more robust. None of these will come as a huge surprise to anyone who has been involved with volunteer communities, but still interesting to see it experimentally confirmed.
I’ve always suspected that something like this is the case, and that it explains in part why the GPL is so successful, since it uses copyright to force cooperation and penalize defection, and (importantly) makes a clear public statement that that is the case, which serves a signaling function (everyone in the community knows these are the ground rules) and a filtering function (people who aren’t interested in collaborating don’t join as much as they join other groups.)
I think this is the key explanation for the outrage over the MS-Novell deal a couple of years back. By signing on to the GPL, Novell had signaled that it intended to honor the free software community’s principle of reciprocity. Then, it signed an agreement with Microsoft that looked like an attempt to skirt the GPL in a way that gave Novell an unfair advantage over other members of the Linux ecosystem. People who weren’t steeped in the ethos of the free software community saw it as a simple business deal, and objections to it as some kind of knee-jerk reaction to profit-making. They didn’t realize the extent to which the community is made up of “conditional cooperators” whose participation is contingent on everyone else in the community following the rules. When Novell “defected” from the community’s expectations, the rest of the community felt a need to ostracize it to ensure that no one else would be tempted to similarly defect.
Luis also linked to this old post of his which has more interesting citations on intrinsic motivations.
For those of you who monitor the ongoing drama over TV sports contracts, you’ll definitely want to read this new paper by my PFF colleague Barbara Esbin, “State Mandates for Program Carriage Dispute Resolution: Welcome to the Wide World of Regulation.” The key dispute du jour involves efforts by the NFL Network to require cable companies to enter into arbitration if the parties fail to strike program carriage deals. The NFL is pushing states to pass legislation mandating this. But, as Barbara notes, the mandatory arbitration procedures are quite silly:
Although characterized as “arbitration bills,” the legislative proposals go well beyond the question of private dispute resolution. Rather, they effectively require vertically integrated cable operators to carry every sports, news and entertainment programming service at a price set by an arbitrator on the terms and conditions of carriage proposed by the programmer. In contrast to the federal requirement that the programmer demonstrate discrimination and competitive harm, this legislation would permit a programmer to demand arbitration merely if it “believes” it is being treated unfairly.
In other words, what the NFL Network is looking for here is a free ride at the expense of video distributors and their subscribers. The NFL thinks they possess a “must have” network and that every operator must carry it even if the cable operators and their customers don’t want it or at least don’t think it’s worth the price the NFL wants them to pay for it. Barbara addresses what’s so wrong-headed about this thinking:
Continue reading →
In case you haven’t read about it in a newspaper yet, The Heritage Foundation this week released a new paper of mine on the FCC’s new newspaper cross-ownership rule and congressional efforts to “disapprove” the changes. I argue that the 21st century hasn’t been kind to the newspaper. As I’ve pointed out before (here and here) newspapers just aren’t the powerhouse they once were: few citizens today get their first or last news of the day from a bundle of paper tossed in the azaleas by a teenager on a bicycle.
Bottom line: not only are the FCC’s changes justified, but the agency didn’t go nearly far enough.
Here’s the full piece.
Since 2000, the Federal Trade Commission (FTC) has surveyed the marketing and advertising practices of major media sectors (movies, music and video games) in a report entitled Marketing Violent Entertainment to Children. (The reports can be found here). According to the agency, the purpose of these reports is to examine “the structure and operation of each industry’s self-regulatory program, parental familiarity and use of those systems, and whether the industries had marketed violent entertainment products in a manner inconsistent with their own parental advisories.” Toward that end, the agency hires a firm that conducts “secret shopper” surveys to see how well voluntary media rating systems (MPAA, ESRB, RIAA) are being enforced at the point of sale. The research firm recruits a bunch of 13- to 16-year-olds who make an attempt to purchase such media without a parent being present.
Although I’ve always had some questions about these undercover surveys, which I will get to in a moment, the bottom line is: Ratings enforcement has generally been improving over time, and in the case of the ESRB system for games, it has improved dramatically in a very short period of time. For example, the latest survey shows that whereas 90% of kids were able to purchase an “Explicit Lyrics” CD back in 2001, that’s fallen to just over 50% in the latest survey. R-rated cinema admissions have dropped gradually, from almost 50% of kids getting in in 2001, to about 35% today. R-rated DVD sales for teens have falled from 81% in 2001 to 47% today. And the video game industry’s outstanding education and awareness-building efforts have shown the most success, with M-rated video games only being sold to 20% of teens today, down from 85% back in 2000. That’s an impressive turn-around in a very short amount of time.
Continue reading →
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