David Robinson, guest blogging at Freedom to Tinker, points out this fascinating preview at Engadget of Zune, Microsoft’s answer to the iPod/iTunes juggernaut. Engadget predicts that Microsoft will “buy out” iTunes switchers, scanning the user’s iTunes library and buying the users those same songs encoded in Zune’s DRM format.
Like Robinson, I hadn’t thought of this possibility. The recording industry almost certainly gave Microsoft a steep discount on song-repurchases. It’s conceivable they even let Microsoft do this for close to nothing, simply to undercut Apple’s market power and (consequently) its negotiating position vis-a-vis the labels. If a substantial fraction of music listeners are using Microsoft’s Zune service, that gives the labels a credible threat to walk away from the bargaining table if Apple plays hardball next time contract renewals come around.
As Robinson said, some of us in the anti-DMCA choir probably underestimated the potential of markets to undercut the monopoly created by the DMCA. The development arguably undermines the argument I made last year that the labels are giving away the store to Apple. However, I don’t think development eliminates the concerns over the DMCA by any means. The barriers to entry into the music business remain extraordinarily high. To do what Microsoft is doing here, you not only have to build an MP3 player and develop jukebox software, but you also have to sign deals with all the major labels. Even if we assume the labels are giving Microsoft the music for free, it’s unlikely that very many other companies have the resources to replicate Microsoft’s feat. A company that wanted to develop a portable music player without also building an online music store and negotiating with the labels is still out of luck.
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EFF has filed an amicus brief in the Perfect 10 v. Google appeal to the Ninth Circuit. The case focuses on whether an image search engine can be held liable for displaying thumbnails of copyrighted images that were posted on third-party web sites without permission of the copyright holder. Judge Matz’s decision appears to be in tension with the Kelly v. Arriba Soft decision, which found that search engine thumbnails are a fair use. Here’s EFF’s argument:
Copyright law grants to rightsholders a limited set of statutorily defined exclusive rights, supplemented by narrowly drawn, judge-made principles of secondary liability. That set of rights plainly reaches the infringing activities of websites that amass and post unauthorized copies of Perfect 10’s photographs. Unsatisfied with the remedies afforded by copyright law against these infringers, Perfect 10 and its supporting amici urge this Court to expand the reach of copyright law to the four corners of the digital universe, ensnaring everyone from the individual web surfer who comes across a Perfect 10 image online, to search engines like Google that index these images alongside billions of others on the Web. Like the District Court below, this Court should reject this effort to hold the whole world liable for the infringing acts of a few.
As I wrote back in February, Judge Matz’s fair use analysis is deeply flawed:
Google Image Search doesn’t give any particular preference to web sites that serve up AdSense ads. And AdSense serves up ads regardless of what search engine brought the user to the site. If Google cancelled Google Image Search altogether, there’s little reason to think AdSense would suffer financially–users would likely find the same pages using other search engines… Google Image Search and AdSense are unrelated products. It makes no sense to consider them as a single product for the purposes of fair use analysis. That should be obvious to anyone with substantial experience using the web. It seems like a reasonable assumption that Judge Matz isn’t the most Internet-savvy guy around.
Wired has a story about Tesla Motors, a company that’s been getting a lot of buzz lately, and is likely to get even more press when its cars launch next year. They’re launching an electric sports car. Whereas most electric cars in the past have been “punishment cars” focused on efficiency and cost at the expense of range and performance, Tesla has gone in the opposite direction, targeting wealthy buyers and focusing on building an electric car that can compete with hgih-end sports car. It can apparently do 0-60 MPH in about 4 seconds.
Their plan is to build the sports car first, and then if that’s successful they’ll branch out and make lower-cost, family-oriented vehicles. They seem to believe that Detroit has largely focused on squeezing an electric motor into a gas-powered car, and that you can squeeze considerable efficiency out of an electric car if you design it from the ground up to run off of batteries. Given the incredible improvements in laptop battery life over the last decade, it seems like this might very well be true.
I’m not convinced that they can make the things competitive with traditional gas-powered cars, though. I see three problems, all related to fundamental properties of gasoline as opposed to batteries. First gasoline has phenomenally high energy density. That is, a kilogram of gasoline contains far more energy than an equivalent weight of even the best batteries. As a result, a lot more space in your electric car has to be taken up by batteries than the volume of the gas tank in an ordinary internal combustion engine car. You can see the batteries in their diagram of the Roadster: they run the width of the car and appear to take up as much room as a row of seats.
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On May 8, 1998, Paramount Pictures released a summer blockbuster in which a comet was discovered on a collision course with Earth. A team of astronauts is dispatched to destroy the comet with nuclear weapons before it hits Earth. After some setbacks, the astronauts do save the planet from total destruction, but they lose their lives in the effort.
On July 1, 1998, Touchstone Pictures released a summer blockbuster in which an asteroid was discovered on a collision course with Earth. A team of oil drillers is dispatched to destroy the asteroid with a nuclear weapon before it hits Earth. After some setbacks, the drillers do save the planet from destruction, but one of them loses his life in the effort.
The first film,
Deep Impact cost $75 million to make and brought in $349 million worldwide. The second, Armageddon cost $140 million to make and brought in $553 million.
One of the assumptions behind the pro-platform rights argument I laid out last week was that increasing the rewards for platform creation lead firms to engage in socially-beneficial R&D spending. The hope is that increasing the returns to platform-creation will stimulate new R&D spending, which will in turn lead to innovations that expand the size of the economic pie. And, we hope, the pie should grow enough to offset the social costs of platform rights that I’ve laid out in previous posts.
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It’s a small step to be sure, but I still think it’s pretty exciting that Sony BMG has allowed Yahoo! Music to release a Jessica Simpson song sans digital rights management. Yahoo’s Dave Goldberg has been a rare voice of sanity on DRM over the last few months, and it looks like his persistence may be paying off. Or maybe music execs have been reading my column from last November arguing that they’re handing control over their industry to Steve Jobs.
It remains to be seen if this is just a one-off publicity stunt or the start of a wider trend. But as Apple continues to twist the screws on the labels and as it becomes ever more obvious that FairPlay isn’t stopping a single person from downloading the music they want form illicit file-sharing sites, even music industry executives may come to realize the increasingly obvious point that DRM benefits Apple and Microsoft, not them.
Here at the Technology Liberation Front, we’ve just undergone a review and reshuffling of our topic categories. Several under-utilized categories were removed or consolidated. In addition, we’ve added several new ones:
Broadband and Neutrality Regulation
Julian points out an analysis by Orin Kerr of Judge Walker’s ruling that the EFF lawsuit against AT&T can go forward despite the government’s attempts to have it dismissed on national security grounds:
It’s a very long opinion, but here’s the gist of it: Judge Walker rejected DOJ’s argument that the suit had to be dismissed outright under the state secrets privilege. Walker ruled that enough of the various programs had been acknowledged by the government and AT&T that the existence of the programs wasn’t a state secret. I assume an appeal will be coming soon, but in the meantime the case will be set to go on to the discovery stage. Notably, the state secrets privilege will continue to play a key role at that stage: the gist of Walker’s opinion is that he’ll scrutinize each discovery request for privilege rather than dismiss the case outright at the beginning.
Kerr also notes this comment from the judge: “AT&T cannot seriously contend that a reasonable entity in its position could have believed that the alleged domestic dragnet was legal.” It’s in a parenthetical “note,” and so it’s just dicta, but that’s still a PR victory for EFF.
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 software patent is held by Telephia, a provider of “performance measurement information to the mobile industry.” They have sued a competitor, M:Metrics, for violating multiple patents, including patent #6,754,470, “System and method for measuring wireless device and network usage and performance metrics.”
The patent is rather vague, but Telephia seems to effectively be claiming the very concept of collecting information from mobile devices. Here’s the first claim:
A mobile wireless device comprising: electronic memory encoded with, data gathering software which gathers information pertaining to device usage from actual use of the mobile wireless device by a user, the gathered information including event data and association of respective events with respective location information indicative of device location during the occurrences of such respective events; and data transfer software which provides the gathered information for transmission.
That describes almost any conceivable onboard system for monitoring mobile device usage. Somehow, I don’t think Telephia was the first to think of digitally collecting information about mobile device usage. And I don’t think that filing this patent ought to give Telephia a monopoly in such data-gathering activities.
I’ll conclude by quoting Mike Masnick’s write-up of the patent from last month.
Both firms are fairly well known in the wireless space for providing data on mobile data usage. However, the idea that one of them should own patents on the idea of measuring such things seems ridiculous. Measuring data usage on computing devices is quite common–and the idea that just because something moves to a mobile device it’s unique enough to deserve patent protection is silly and has little to do with promoting innovation. It’s not as if collecting mobile data usage metrics wouldn’t have happened without patents. It’s an obvious step for the market that has always thrived on data usage metrics. However, even more importantly, these are two research firms. Shouldn’t they be competing on the quality of their data–not who has a patent on the research method?
DSO.com has an in-depth look at a dispute I first mentioned last week between Green Hills and Express Logic over whether Green Hills can reverse-engineer Express Logic’s API in order to build compatible products. I’m pleased to see that Jason Schultz’s take on the subject is about the same as mine:
On June 12 Express Logic accused Green Hills Software, Santa Barbara, Calif., a licensed reseller of Express Logic’s software, of illegally copying its ThreadX API. The API is a piece of the RTOS that defines the interface between the OS and the programs a customer will build on top of it.
Express Logic also claims that Green Hills then used the illegal copy to create an API in its micro-velOSity RTOS. Green Hills has publicly denied all of Express Logic’s charges. The dispute will be adjudicated by a professional arbitrator .
“What’s at stake here,” says Jason Schultz , a staff attorney at the Electronic Frontier Foundation (EFF) in San Francisco , “is a long-time tradition of computer programming–the tradition of interoperability.”
Express Logic’s position strikes me as rather weak:
“If it turns out we’re wrong and that you can, in fact, copy an API without infringing on a copyholder’s copyright, then that opens the door to a lot of other things,” says John Carbone, vice president of marketing at Express Logic, San Diego, Calif . “For example, what other portions of the source code can you copy? Data structures? The comments? The functions? The user manual? That’s dangerous–it’s a slippery slope. Basically, [such a ruling] would make everybody’s API open source. The API would no longer be a distinguishing factor.”
Well yeah, you don’t
want a product’s API to be its “distinguishing factor,” any more than you would want railroads to run their trains on different-guage rails. The courts don’t seem to have had any difficulty drawing the relevant distinctions between a program’s interfaces and its source code. There’s little reason to think this case is different.
This week I’ve been discussing the merits of platform monopolies. We’ve established that there’s a plausible case for granting such a monopoly, but that because of network externalities, there are also good reason to be skeptical of such monopolies. There remains the question of how to balance these two factors.
So now I’d like to make the case that the benefits of platform rights are greatly overestimated by the advocates of such rights. My argument comes in two parts. First, the negotiations required by a platform monopoly produces substantial deadweight losses: both because negotatiting permissions costs money, and (more importantly) because there will be socially-beneficial technologies that will never be developed because the necessary rights cannot be negotiated. And second, those profits that can be expected to reach the property owner don’t necessarily cause firms to direct their resources in ways that are economically beneficial.
Today I’ll focus on the first objection, which might be called the “demand side” objection.
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