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Over at Techdirt, Mike Masnick has a great post talking about my Cato Unbound essay on the future of copyright. He thinks I’m proposing a step in the right direction, but that I don’t go far enough:

I’m still not convinced that the restrictions are necessary even for commercial use. Part of the problem is that the distinction between “personal use” and “commercial use” is extremely blurry. Is my personal blog “personal” or “commercial” if I put Google ads on it? What if I don’t have ads, but use it to get a job or promote my company? Commercial use and personal use are not clear cut.

This is a good opportunity to illustrate the narrowness of what I’m suggesting: yes, if you put up a website with old Golden Girls episodes and you stuck ads alongside them, you’d be opening yourself up to a lawsuit. The non-commercial use exception would only apply in cases such as using a peer-to-peer file sharing program where there was clearly no commercial intent.

However, it’s important to emphasize that this would be an addition to, not a substitute for, fair use. If you used a copyrighted work in a way that would be fair use under current precedents, it would continue to be fair use under the regime I’m suggesting even if it were done for commercial use. The current law on fair use and contributory liability—Sony, Arriba Soft, Grokster, and the rest—would continue to apply. If your use was fair, or if your technology had a “substantial non-infringing use” under Sony, or if you qualified for the DMCA safe harbor, all of those defenses would remain available to you.

There is admittedly some fuzziness in the concept of commercial use, but I think it’s clearly a lot less fuzzy than the four-factor test that currently governs fair use. All I’m suggesting is adding an additional step: first the courts decide if a use is commercial or non-commercial. If non-commercial, that would be the end of the analysis and the defendant would be not guilty. If commercial, the courts would then proceed to consider other defenses, including fair use and the DMCA safe harbor.

Mike’s other substantive criticism is that I don’t go far enough:

if someone else is able to do something commercially valuable with my content, why should that be a problem? If anything, that should be encouraged — and the end result will often be that it makes the original content more valuable. Google uses fair use defenses to protect itself from copyright infringement charges, but it’s ridiculous to think that anyone is even complaining, since Google makes their content easier to find. And Google is most certainly a commercial entity. Having someone else do something commercial with content is a good way to help increase the value of that content, which is likely to flow back to the original creator anyway.

I’m sympathetic to this argument in many cases. He’s clearly right about most of the things Google does. Google News, Google Book Search, and the rest are pretty clearly not harming the market for the copyrighted works they use, and may even be enhancing their value. However, I don’t think this is the case across the board. Consider movie theaters. Mike correctly notes that going to the movies is as much about the experience as it is about the movie itself, which suggests that peer-to-peer file sharing won’t destroy the market for movie tickets. However, in a world with no copyright, I think you’d quickly see a network of digital movie theaters that would dramatically erode Hollywood’s ticket revenues by showing Hollywood movies without sending any ticket revenues back to the studio that made the movie. Revenues wouldn’t drop to zero—it would still be possible to generate some revenue the first few days, before the movie had leaked to the pirate theaters—but I can’t see how the legalization of pirate theaters would work to Hollywood’s benefit.

It’s true that the end result of unauthorized copying will often be to make the original content more valuable. But if that’s the case, then the use is likely to already fall under fair use. The question is what to do in those cases where unauthorized copying does harm the market for the original. I agree with Mike that this is a less common case than is commonly supposed. But it’s not a null set, and when it happens, I think it’s entirely legitimate for copyright law to intervene.

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I haven’t had a chance to interview Tim yet, but I assume he has ceased posting Bea Arthur porn on Usenet (as reported by PJ) because of several major ISPs’ capitulation to the New York Attorney General and agreement to cut off access to Usenet. Declan McCullagh has the most thought-through write-up.

I appeared on the BBC early yesterday morning (BBC-time) to discuss concerns with this. I didn’t know about Tim’s draconian action or I surely would have raised it as an example of the unfortunate fall-out from the preemptive censorship some ISPs have agreed to at the behest of the AG.

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Today I released a press statement about the Federal Communications Commission’s hearing today on early termination fees for customers who cancel their mobile phone, cable or Internet service contracts early. Quickly after the statement was released, I got reasoned response from Ken Werner, a Senior Analyst at Insight Media.

As reasoned as Ken’s response was, however, it just doesn’t make much sense. Ken argues that, ” bundling of phone and wireless services does not enhance competition; it suppresses it.” He goes on to say that “Unbundling of phone and service sales would create a far more varied and vibrant set of offerings.”

But this simply isn’t true. By forcing unbundling—that means banning subsidized phones—we’re taking away consumer choice. Being able to buy a phone outright and then purchase a plan on a month-to-month but if Ken is right and “Google, the Android open platform, the Open Handset Alliance, and (maybe) even Verizon are moving in that direction,” then there is no reason to force a no-contract model on the wireless industry.

The way to true offer a “more varied and vibrant set of offerings” is to allow the market to continue to operate as it is. Because of exceptional hardware like the iPhone, Ken is likely right that Verizon and other carriers will open up to selling plans separately from phones, but consumers should still be able to buy basic phones that are subsidized through long-term phone plan commitments. Banning the latter option decreases choice, rather than expanding it as Ken claims.

It may take times for American business models to shift, but ultimately it will result in more choice than markets like Europe, where choice is limited by contract negotiation. To say that banning contract options will increase the variety of options is simply a contradiction in terms.

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Congrats to Fred Von Lohmann and EFF as well as Joe Gratz and his colleagues at Keker & Van Nest, for their victory in the promo CD copyright case I wrote about last summer:

Like other record labels, UMG distributes free CDs to radio stations and music reviewers in the hopes of drumming up publicity. The CDs come stamped with the label “promotional copy, not for sale.” Based on this notice and the fact that the copies were given away rather than sold, the labels argue that these “promo CDs” remain the property of the labels and are only leased to recipients for their personal use.

California resident Troy Augustino makes a living selling various merchandise, including promo CDs, on eBay. UMG sued him in May for copyright infringement, claiming that it had merely licensed the CDs rather than transferring ownership and that Augustino was therefore committing copyright infringement by reselling them.

The fundamental issue in the case is the First Sale Doctrine, which says that when a copyright holder sells a copy of a CD, the new owner of the CD is entitled to give or sell that copy to someone else without getting the copyright holder’s permission. This is the principle that makes libraries and used book stores possible. It was first articulated by the Supreme Court in 1908 and has since been codified into statute.

Fred describes the ruling:

In its ruling, the district court found that the initial recipients of “promo CDs” own them, notwithstanding “not for resale” labels. The court rejected the notion that these labels create a “license,” concluding that the CDs are gifts. According to the opinion, “UMG gives the Promo CDs to music industry insiders, never to be returned. … Nor does the licensing label require the recipient to provide UMG with any benefit to retain possession.” (The court also found that federal postal laws relating to “unordered merchandise” establish that promo CDs are gifts to their recipients.)

I’m nominally on vacation this week so I won’t have time to read the decision for a while, but it looks like a great ruling.

We did a podcast on the case and its implications, featuring Fred and Randy Picker of the University of Chicago law school, last summer.

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If you’re reading this, you know that access to news and information is changing.

Steve Boriss of The Future of News expands on this theme in a Cato TechKnowledge called “The Future of News: A Golden Age for Free Speech?“

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Don’t miss my Ars interview with Patri Friedman:

An audacious new project aims to create new competition for the world’s sovereign nations. The Seasteading Institute, the brainchild of two Silicon Valley software developers, aims to develop self-sufficient deep-sea platforms that would empower individuals to break free of the cozy cartel of 190-odd world governments and start their own autonomous societies. They envision a future in which any group of people dissatisfied with its current government would be able to start a new one by purchasing some floating platforms—called seasteads—and build a new community in the open ocean.

History is littered with utopian schemes that petered out after an initial burst of enthusiasm, something the Seasteading Institute’s founders readily acknowledge. Indeed, they chronicle these failures in depressing detail on their website. With names like the Freedom Ship, the Aquarius Project, and Laissez-Faire City, most of these projects accomplished little more than receiving a burst of publicity (and in some cases, raising funds that were squandered) before collapsing under the weight of their inflated expectations.

There are many reasons to doubt that the Seasteading Institute will realize its vision of floating cities in the sea; but there are at least two reasons to think that seasteading may prove to be more successful than past efforts to escape the grasp of the world’s governments. First, the project’s planners are pragmatic—at least by the standards of their predecessors—pursuing an incrementalist strategy and focusing primarily on solving short-term engineering problems. Second, they recently announced a half-million dollar pledge from PayPal co-founder Peter Thiel, giving them the resources to begin serious engineering and design work. While there are many obstacles to be overcome before they will have even a functioning prototype—to say nothing of a floating metropolis—their project doesn’t seem as obviously hopeless as most of the efforts that have preceded it.

I go into some detail about the project and the challenges they’re likely to face. In my judgment, the really difficult problems aren’t engineering or (as a lot of people seem to assume) pirates, but the world’s governments. The moment they got big enough to pose a serious threat to governments’ control over their citizens, the US Navy (or some other navy, depending on where it was located) is likely to come up with a pretext to invade and forcibly impose American jurisdiction over them. This might be technically illegal under international law, but international law has never had sufficient teeth to restrain a world power

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Awesome…

One of the cool things I noticed about this is that the guy whose blog post brought this to my attention is an English major. Back in 2001 when I was trying to organize an anti-DMCA organization, I don’t think I found anyone who even knew what DRM was, to say nothing of being excited about the issue, who wasn’t a CS major. This is progress.

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What Tom said:

The Registered Traveler program, you might recall, is a fairly new initiative by which air passengers can pass through expedited security lines by paying a $100-ish yearly fee to one of several private firms that then run regular background checks. If enroll you pass through faster lines, and eventually you may be allowed to do things like keep your shoes on or your laptop in your bag. It’s meant for frequent travelers, and we, the public, are assured that the fees will provide additional lines and personnel — there should be no effect on those who don’t enroll.

This was not our experience. The young woman brought by the TSA employee was allowed to cut in front of us, and was then personally led through the security process like a blind baby kitten. That was irritating, but not a particularly large inconvenience — like I said, the lines weren’t long. But there also wasn’t much of a point to plopping that lady’s patrician ass in front of us and escorting her through — it probably made her feel special, and us less so, but nobody was saved or cost any meaningful amount of time. Still, if this is the system they use during busy periods, it really is going to make air travel worse for everyone who doesn’t pony up $100/year to gain entry into the program.

Now of course there’s nothing wrong with charging more for better service. But I think there’s at least a little something wrong when that service is a government-mandated barrier to travel, and more so when it’s one powered by secret lists and standards about which appeal is nearly or completely impossible. It also seems like a bad idea to give richer — and therefore more influential — passengers a way out of a system that, without some sort of opposing pressure, will inevitably become more and more irritating and inhumane as bureaucrats try to save their jobs by figuring out up ways to prevent plots that no one can anticipate.

It has crossed my mind that the liquid ban probably improves sales at concession stands inside the security perimeter. I’m not quite cynical enough to think that there’s a concessionaire’s lobby that pushed for the liquid ban, although I wouldn’t be shocked to learn some vendors are subtly encouraging TSA not to lift the ban.

But it’s much easier to imagine how a program like RT could be corrupted. The value of RT flows directly from the inconvenience imposed on non-customers, and revenue from the RT program apparently helps hire more TSA agents. So the net effect is to give the TSA both a vested interest in making the inspection process more obnoxious and a cluster of private interests with the same incentives. If the revenues become significant, it’s not hard to imagine a revolving door between mid-level TSA officials and the private company who administer these programs.

And the point about opting out is the most important one, in my view. Our only hope of someday having a sane airport security system is that the system inconveniences a significant number of wealthy, well-connect people. If those wealthy, well connected people are allowed to buy their way out of the system, it will be that much harder to fix things.

Of course, the really rich and influential people are flying on private jets, and not surprisingly, they’ve already arranged to bypass airport security entirely. So we may already be out of luck.

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