It’s April 15, so hopefully nobody’s waiting in long lines at the post office (though we think you should be using the Internet to file electronically). Unfortunately, it’s only April but already it has been a taxing year for online commerce.

We’ve seen six tax-related categories of bills that have been introduced in state legislatures this year: (1) Privacy-invading purchase reporting laws; (2) Bounty hunter bills; (3) affiliate advertising as a nexus for requiring sales tax collection; (4) imposing hotel taxes on online travel companies; (5) expanding Internet sales taxes based on inadequate simplification; and (6) new taxes on digital downloads.

Colorado law turns online companies into the purchasing police (and snitch)

Colorado passed HB 1193 earlier this year (it takes effect in May), and in an effort to get consumers to pay the use tax on Internet purchases it requires out-of-state companies to share purchasing data with the state Dept of Revenue.

Out-of-state retailers must track and report the purchases of Coloradans and: (a) file an annual statement with purchase data for each purchaser to the Department of Revenue; (b) send buyers a summary statement of all their purchases so they know how much use tax to pay (like a 1099 form we receive on investments, only would it be called “Form 1984”?); and (c) on every invoice and receipt, notify Colorado purchasers of their need to file a sales and use tax return with the state; Colorado’s Department of Revenue will now know all the vendors where residents made online or catalog purchases from remote sellers. This would include sensitive items of a particular kind of merchandise — sex items, specialty books, items that reveal political views, etc.

Declan McCullagh wrote a good article on this yesterday. California has an almost identical bill pending (AB 2078). So does Tennessee (HB 1947). Continue reading →

My colleague Barbara Esbin, Director of PFF’s Center for Communications and Competition Policy, was recently asked to participate in a conference call to discuss the D.C. Circuit’s recent decision in Comcast v. FCC and its impact on the FCC’s Open Internet (“Net neutrality”) rulemaking proceeding. Yesterday, over at the PFF Blog, she published her working notes and shows exactly what the FCC is up against as it embarks on its radical plan to reclassify the Internet as a crusty old “Title II” common carrier service. Esbin argues:

To impose Title II regulations on the Internet, the FCC would need to establish a rational evidentiary and sound legal basis to bring Internet service providers under its Title II authority through an act of regulatory “reclassification.”

To accomplish this procedurally, the FCC will have to:

  1. Adopt either a Notice of Inquiry or Notice of Proposed Rule Making proposing that the FCC reverse four of its own prior orders directly on point, one of which has been upheld by the U.S. Supreme Court in NCTA v. Brand X, so that it could declare Internet services to be “telecommunications services.”
  2. Receive public comment on its proposal creating a record that on balance supports its proposed reclassification.
  3. Adopt either a Declaratory Ruling or a Report and Order providing a reasoned factual and legal basis for changing the classification and regulatory treatment for Internet services.

Continue reading →

As I’ve mentioned here previously, PFF has been rolling out a new series of essays examining proposals that would have the government play a greater role in sustaining struggling media enterprises, “saving journalism,” or promoting more “public interest” content. We’re releasing these as we get ready to submit a big filing in the FCC’s “Future of Media” proceeding (deadline is May 7th).  Here’s a podcast Berin Szoka and I did providing an overview of the series and what the FCC is doing.

In the first installment of the series, Berin and I critiqued an old idea that’s suddenly gained new currency: taxing media devices or distribution systems to fund media content. In the second installment, I took a hard look at proposals to impose fees on broadcast spectrum licenses and channeling the proceeds to a “public square channel” or some other type of public media or “public interest” content.

In our latest essay, “The Wrong Way to Reinvent Media, Part 3: Media Vouchers,” Berin and I consider whether it is possible to steer citizens toward so-called “hard news” and get them to financially support it through the use of “news vouchers” or “public interest vouchers”?  We argue that using the tax code to “nudge” people to support media — while less problematic than direct subsidies for the press — will likely raise serious issues regarding eligibility and be prone to political meddling.  Moreover, it’s unlikely the scheme will actually encourage people to direct more resources to hard news but instead just become a method of subsidizing other content they already consume.

I’ve attached the entire essay down below.

Continue reading →

According to the Reporters Committee for Freedom of the Press' First Amendment Handbook, twelve states forbid the recording of private conversations without the consent of all parties. Maryland is one of them.

And now a guy who was recording his own antics on a motorcycle is facing a felony charge because he continued recording during a traffic stop. David Rittgers has more on the Cato@Liberty blog.

Laws that ban all surreptitious recording to get at wrongful recording are overbroad and damaging. Laws that prevent the recording of police officers are particularly wrongheaded. Maryland needs some technology liberation.

Oh yeah, that was me. And a lot of others. Well, we were wrong. The mobile app store market (Apple, Android, etc) is brimming with a bonanza of micro-business opportunities for producers and consumers alike. I am consistently amazing by the range of offerings available today, the vast majority of which remain free of charge. But what is more impressive is the growing array of applications and games available for mere pennies. Sure, some are more than a buck — but not that much more. I was just looking through the 40+ apps that I’ve got on my Droid right now (not really sure how many I’ve downloaded overall since I’ve deleted a lot) and I would guess that I paid for at least 25% of them–many after being “upsold” by first trying the free versions and then buying. Yes, I know there continues to be a debate about what counts as a “micropayment,” but the fact that so many more people are paying just a couple of bucks or less for content in these mobile app stores suggests that its only going to easier for people to pay even smaller sums for content in coming years.

What got me thinking about all this was slide #75 in Mary Meeker’s latest slideshow about Internet trends. The Morgan Stanley web guru notes that users are more willing to pay for content on mobile devices than they are on desktop computers for a number of reasons, but the first of which she listed was: “Easy-to-Use/Secure Payment Systems — embedded systems like carrier billing and iTunes allow real-time payment.”  The important point here is that the combination of these slick, well-organized online app stores + secure, super-easy billing systems have combined to overcome the so-called”mental transaction cost problem,” at least to some extent. We’re not nearly as reluctant today to surf away when something says “$0.99” on our screen. Increasingly, we’re hitting the “Buy” button.

Continue reading →

Sorry for another job board posting, but wanted to see if anyone had any leads for this open position at the Progress & Freedom Foundation. We’re looking to hire a new Vice President of Development & Outreach to help us craft a public policy agenda for the organization and find support for it going forward.

The complete job description can be found online here or down below the fold. Interested candidates should contact me directly.

Continue reading →

Late last week, I did a Cato podcast on the D.C. Circuit’s decision finding that Congress hasn’t given the FCC authority to regulate Internet access.

Adam says it’s good and I should post it. I say it’s alright and OK, Adam, I will.

One final point: I don’t like the white space that appears when a blog post with a right-justified picture or object in it but not very much text, so this sentence is to fill that space. (I do crack me up!)

In the most recent episode of the Surprisingly Free Conversations podcast, I interview Evgeny Morozov, Yahoo! Fellow at the Institute for the Study of Diplomacy at Georgetown University and contributing editor for Foreign Policy. We discuss the limits of social networks in promoting democracy. The discussion also turns to Morozov’s experience as a promoter of online freedom in Eastern Europe and cybersecurity.

Do check out the interview, and consider subscribing to the show on iTunes. Past guests have included James Grimmelman on online harassment and the Google Books case, Michael Geist on ACTA, and Tom Hazlett on spectrum reform.

MP3 File: Morozov on democracy, the limits of social networks, and cybersecurity

Friday, April 16: I’ll be moderating a PFF Capitol Hill briefing on Super-Sizing the FTC & What It Means for the Internet, Media & Advertising. My panel of FTC veterans and observers will discuss the growing powers of the Federal Trade Commission (FTC). As I’ve mentioned here and here, financial reform legislation passed by the House and now pending in the Senate would give the FTC sweeping new powers to regulate not just Wall Street, but also unfair or deceptive trade practices across the economy. This could reshape regulation in a wide range of areas, such as privacy, cybersecurity, child safety, child nutrition, etc. The FTC has also asserted expanded authority to regulate “unfair” competition in its lawsuit against Intel. Register here for this 12-2 pm briefing in the Capitol Visitor Center!

Thursday, April 15: I’ll be participating in Capitol Hill briefing on Google’s proposed acquisition of AdMob, a leading in-app mobile ad network, which the FTC appears poised to challenge. (RSVP here.) Geoff Manne has probably done the best job debunking arguments against the deal but, sadly, couldn’t make the panel. ITIF’s Dan Castro will moderate a panel including (besides myself):

  • Simon Buckingham, who’s expressed concerns about the deal on his Appitalism blog and accused Google of leveraging Google’s desktop search dominance into the high-end mobile market”;
  • Lillie Coney of the Electronic Privacy Information Center (EPIC), which never passes up an opportunity to denounce Google on privacy grounds;
  • Jonathan Kanter, Cadwalader, Wickersham & Taft LLP, who represented TradeComet.com in their antitrust suit against Google and has also represented Microsoft in the past; and
  • Glenn Manishin – Duane Morriss LLP, an antitrust lawyer who’s represented Google.

Tuesday, April 27: We just announced another PFF Briefing: Cable, Broadcast & the First Amendment: Will the Supreme Court End Must-Carry?, 10:00-11:45 a.m at Hogan & Hartson LLP (555 13th Street NW, Washington, DC). Continue reading →

Good to see so many media industry executives expressing skepticism about the idea of government subsidies for the press. Danny Glover brought to my attention this new survey by the Pew Research Center’s Project for Excellence in Journalism in association with the American Society of News Editors (ASNE) and the Radio Television Digital News Association (RTDNA). It revealed that, “Fully 75% of all news executives surveyed—and 88% of newspaper executives—said they had ‘serious reservations,’ or the highest level of concern, about direct subsidies from the government.” A smaller percentage (only 46%) had serious reservations about tax credits for news organizations, then again, only 13% said they “would welcome such funding” and just 6% said they were “enthusiastic” about it.

This is encouraging news as many government officials at the FCC, FTC, and in Congress are currently considering whether government should steps to prop up failing media entities or promote certainly types of content. Berin Szoka and I have been working on a series of essays about the wrong ways to go about reinventing media [see Part 1, Part 2] and plan several more installments leading up to a big filing in the FCC’s “Future of Media” proceeding (the deadline is May 7th).

Here’s a chart from the Pew survey illustrating funding alternatives and the percentage who had “serious reservations” about each option: