iTunes Europe and the iTunes Case Study

With iTunes Europe now upon us, I figured I’d plug the Berkman Center’s iTunes Case Study once more.  We paid particular attention to how copyright and other relevant laws differ around the world and can impact iTunes and its users.  The case study is a draft green paper, and the Digital Media Project welcomes all comments.

Apple Pricing Rumors … or Reality?

About a month ago, there were rumors that the record labels had forced Apple to increase its iTunes prices.  Steve Jobs and Apple immediately rebutted those claims.  With the launch of iTunes Europe, I wonder if the unnamed source got some basic facts right but missed certain important details.  iTunes Europe pricing is above the 99 cent per song price, with prices of €0.99 (roughly $1.20) and

Sony-fication, Indeed

Ernest points to a couple new items in which Steve Jobs puts on his Hollywood hat and decides that innovation should slow down until DRM can (if ever) catch up.  I saw a related quote from the Mossberg interview on Paidcontent and got a chance to cross-check it today:



“Mr. Mossberg: A lot of music is likely to be available in formats I can’t play on my iPod today.

Mr. Jobs: Like what?

Mr. Mossberg: Like [Microsoft Corp.’s] Windows Media Format. Why should I as a consumer have to have a limitation on my device because you have a religious war with [Microsoft Chairman] Bill Gates? Are you against consumer choice?

Mr. Jobs: No. Right now we’ve got a choice to make ourselves, which is should we spend our energy enhancing the music store and enhancing the iPod in the format that has 70% of the business or should we take some of that energy and stop innovating and go back and try to play Windows Media, which has 30% or less of the market. And we’ve chosen right now to go with the 70% format. We really believe that we can innovate much more if we control that technology. [emphasis added]

Mr. Mossberg: So what if they get to 50%?

Mr. Jobs: Well, then let’s talk again.”


Sounds kinda similar to Sony.  He wants to control the technology, and I don’t think he means that narrowly in the sense of just the iPod – he means the player (and other ancillary) markets.  Yes, Apple may be able to innovate much more, but not everyone else will.

Liebowitz’s Newest File-Sharing Article

Stan Liebowitz has produced yet another article on file-sharing’s impact on record sales.  This time, he approaches the issue first from a theoretical basis, criticizing the argument that sampling via P2P will increase record sales.  He then questions the results of Eric Boorstein as well as Professors Oberholzer and Strumpf, which suggested that file-sharing might not hurt record sales and thus went against Liebowitz’s own analysis.


I do not know enough about the economics here to say whether Liebowitz’s criticisms are right or wrong.  However, as I’ve said before, I generally agree with Liebowitz’s point that the industry’s declining sales along with the economic theoretical basis creates a stronger presumption that file-sharing will (at least in the long run) harm record sales.  The alternative explanations aren’t necessarily wrong, but they have to provide a very strong case to overcome economic theory’s expectations and recent trends in record sales and file-sharing.

Starz and Real to Team Up on Movie Rental Store

PaidContent.org has an exclusive on Starz teaming with Real on a new subscription service, download and streaming movie rental store.  I’ll leave it to you to rehash the ownership v. rentals consumer preference + DRM issue.  Looking at it from a business perspective, I see it as another inch closer to the movie industry getting its act together in the online market.  As I’ve discussed elsewhere, the movie industry has been moving slowly, but recent changes to Movielink and Cinemanow showed some signs that they were willing to start innovating a little.  This is only the very very beginning of what they’ll need to do.  Among other things, the author points out that changing the release window for this market will be important, which I completely agree with.

More on Mobile and Music, and DRM Lock-in

The Guardian (via PaidContent.org) has two interesting articles up.


First, an article on mobile and file-sharing.  The article seems to focus only on the sort of wireless LAN file-sharing that Ernest emphasized last week (and I basically agree with) is not the really big issue with wireless.  To me, it’s that, put together with the opportunities of wireless hotspots and WAN access that matter.  The latter could make it much tougher to identify file-sharers, so that’s the key issue.  It’s possible that once people are routinely file-sharing this way, they’ll be more likely to also take advantage of the possible LAN opportunities.  But it’s also possible that people might first try out the LAN file-sharing, because that’s going to be a lot easier so long as free wireless hotspots are not completely and totally pervasive.  People might get into wireless file-sharing that way and then be more interested in using the wireless hotspots for this purpose.  The causal links can go both ways, I think.


In any case, there are also a couple angles that the author seemed to really not understand here. First, the mobile issues help reveal that it’s not clear how to lock down the system with DRM if “the system” is an environment with ubiquitous computing.  There’s this Open Mobile Alliance, but what does that really mean? Maybe it touches the boundaries of “the system” today – but for how long?


Second, I’m surprised that the article didn’t talk more about how this could improve the legitimate digital music services.  The mobile market gets us closer to the idea of the celestial jukebox.  Increase convenience, you increase the likelihood that people will purchase through legitimate services.  


Another article discusses the proposed Sony-BMG merger.  The author clearly gets that this isn’t just about competition in the music market but in the electronics market as well. Because of the DMCA, owning the content can enable control over important standards and innovation.  The DMCA in this way exacerbates the problems of high market power.  Even if you don’t buy that Sony in particular would have this power, one must still reckon with the fact that the incumbent parties collectively have this power.  Because of the DMCA, incumbents have more power to dictate how innovation proceeds.  And what do you we know about the how the old handles the new? Whether it’s Sony alone or all the majors together (along with associated digital media stores), I think this should worry you.

Protect Anonymity Online and Support CA’s AB 1143

Much attention has been paid to the California “True Name” bill and its potentially anonymity-threatening provisions.  Meanwhile, an important privacy bill will soon be coming before California’s Senate Judiciary Committee, having already passed in the Assembly last summer.  AB 1143 would ensure that Internet users have sufficient notice, time, and information to protect their anonymity in cases where a subpoena for identifying information is sent to an online service.  California law already provides such protection in numerous other instances, such as when subpoenas are sent to financial institutions, telephone companies, even veterinarians, as well as many more.  But no such protections exist on the Internet.  As a result, meritless lawsuits have been filed to reveal identities and then threaten online speakers. 


For more information, please see the EFF’s press release as well as their Doe Anonymity information pages.  Also, visit the EFF’s Action Center to send a letter to the Senate.


(Disclosure: I’m currently an intern for the Samuelson Clinic, which is working with the EFF on this bill.)

WiFi File-Swapping

PaidContent links to this article about file-swapping using PocketPCs and wireless.  They also note that people have developed KaZaA Wireless.  Hm, let’s see – people swapping through simple wireless transfers with people they pass on the street, and people start using open wireless hotspots to do their downloading, and then the whole RIAA lawsuit strategy goes to pants. Very, very interesting.

Another Selling Copies through P2P Venture

This press release was passed around Pho today.  The concept sounds kind of like Wippit.  The main difference seems to be that they won’t have a subscription fee and will only charge for CD burning and moving to portable devices.  Of course, DRM galore.  Both these systems are interesting ideas.  Like Altnet and Weed, the general idea is that consumers will be more likely to buy copies if they can do it in their natural habitat – namely, P2P.  In this way, these systems compete with free without competing with P2P.  Altnet and Weed try to do this by being in the same search listing as free content on KaZaA; Wippit and Qtrax try to get people to migrate to a different P2P client that allows sharing within the closed network.  There might also be some cost savings from this approach in the form of lower storage and maintanence costs, which could get passed on to the consumer in the form of lower prices. 


It will be interesting to see if record companies continue to invest in this area.  To me, it seems like there’s some upside here, particularly in cases like Weedshare where the consumer gets some kickback for forwarding the song to his friends (a la mediAgora).  The notion of going through P2P rather than against it makes some sense, though it would have some important consequences for how the record companies currently use spoofing and other such tools. 

An Easy Way to Kill the Music Rentals Market

Microsoft released a technical beta of its new player, but here’s the real money line from a related Wired article



“With Napster’s subscription model, users would have access to the same number of songs but for a monthly subscription fee of $10. Of course, Napster plans to charge a little more for the portability option — “about the price of a retail CD,” Goldberg said.”


Oh good, because consumers don’t already have enough incentives to avoid renting music.  The prices for subscription services are already substantially above the average yearly spending on music (~$71/person in 2002).  Raising prices further to move to portable devices makes this even more of a boutique market.  I understand why they would want to price discriminate, but that’s not a particularly easy thing to do when they have to compete with P2P.  It seems like they’re going to drive away more consumers than they attract.

Crawford Paper on the Broadcast Flag

Ernest’s link to Susan Crawford’s post Chimps and Copyrights made me remember to point to her new paper available at SSRN: The Biology of the Broadcast Flag.



“We should pay attention to the evolutionary ecosystem of the law as the background medium in which innovation occurs, business models evolve, and social factions grow and prosper. This article argues that preserving the flexibility and evolutionary richness of the code/law background medium (code/law) should be our aim. We need to avoid both codes and laws that unduly freeze innovation, so that code/law can continue to evolve. Competitive DRM systems – self-enforcing private ordering – are a better solution in this context than harmonized code/law.”

The DMCA, Is-Oughts, and Piracy Rhetoric

EFF’s Fred von Lohmann posted recently on the iTunes-iPod tie, as I did two weeks back.  Hopefully you didn’t miss this exchange between Ernest and a commentor at Copyfight.  This post isn’t so much about the particulars of Ernest’s and Brad’s argument, as it is a way of tying together what I see going on there with the bigger picture and a few other posts that sprung to my mind. Queue a somewhat mystified, somewhat angry post:


Why is a world with the DMCA now presumptively right, with all alternatives shouldering the burden of proof?  This is the is-ought fallacy at its worst.  The world has a DMCA, therefore it ought to have a DMCA. 


Even more disturbing, is-ought’s simplistic seduction trumps all other sensibilities that people would typically look to in these arguments. Right or wrong, many people will latch on to “free market” and “competition” as the defense against so many policies. At the very least, people will immediately and seriously consider these powerful concepts.  But here, not so much.  In what other case would people so easily defend government graced control instead of unfettered competition?   As Lessig writes in Free Culture, if copyright’s harm to artists is a “crunchy-lefty story” of “free culture,” then you’re probably the type that should be turned on by a story of “free markets.” But with the DMCA, even those stories don’t always catch on. 


To fit with other sensibilities about how the market works, the story of free markets is twisted into a story about theft.  The DMCA may be “paracopyright,” but it’s led to more of the piracy-talk that copyright already produced. Now it’s theft and “freeloading” just to create a compatible player for iTunes music.


As I said before, I don’t doubt Brad Hutching’s point that the iTunes-iPod tie has some offsetting social welfare benefits.  iTunes prices could be lower and it could have motivated them to invest in the biz in the first place.  In this case, I would argue that that does little to offset the benefits we could derive from a non-DMCA world: more vigorous competition from current parties not having to compete essentially in both markets at once; more vigorous competition from more players in general; innovation and competition not dictated by incumbent players; lower prices from more competition; network effects from the elimination of format fragmentation; and more.


But that in some sense is beside the point (one Ernest made, too), which is that the law would typically deal with this issue in a much more complex, nuanced, and balanced fashion.  We have anti-trust and misuse.  We have patents, copyrights, trade secrets, contract.  And yet the blunt instrument of the DMCA is presumptively so clearly right? Why?


That the answer is essentially “because” implies another cost of the DMCA (which makes me think of some of Frank’s writings).  By altering people’s expectations of how things ought to be, it sets the stage for a very different, very dire digital media environment to come.  By extending the piracy rhetoric, it simplifies the issue.  Buying legally means buying DRM means buying the DMCA means buying into whatever the piracy rhetoric demands.


We don’t have to buy into that.  To quote Lessig quoting the Supreme Court, we need “common sense to revolt.”

Other Napster Notes

1.  Napster exec Chris Gorog says that premium subscribers will be able to move songs to portable devices using the Microsoft Janus DRM at no additional charge.  Real, in all its wisdom, plans to charge more.


2.  Napster launched in the UK with prices much higher than the domestic service.  In anticipation of the launch, OD2 cut its prices in the UK. (via PaidContent.org)

More Copyright v. the University

Follow this great thread from Jason (here, here, and here) and Ed, with comments from Donna here.  They brilliantly critique Penn St.’s banning student use of servers without faculty permission.  While Penn St’s adopting Napster 2.0 was a desperate act, this is just plain stupid.


On the Napster 2.0 front, see the stats in Jason’s first post.  It seems like no one’s using it that much.  Even though 75% say they use the service a few times a week or every day, students stream on average around a mere 5 tracks per day (80,000 tracks per day / 16,500 students).  60% of people say they can’t find the content they want and around 15 percent are pleased with the $.99 price to buy and burn tracks.  I think this lends more credence to my previous criticisms.  This hasn’t solved any problems, while taking money away from more valuable services that lie closer to the university’s mission.


Of course, as the server ban exemplifies, Penn St. has moved away from its academic mission in many ways.  This is becoming all too common in the copyfight.  As Jason writes, “When institutions like Penn State begin to make copyright enforcement more important that academic freedom, education, and self-expression, we should question those decisions and how they relate to the overall mission of higher education.”

Tuesday EFF Meetup in SF

UPDATE: Hm, seems that the event is cancelled.  I’ll try again some other time.


I’ll be at the San Francisco EFF MeetUp on Tuesday, May 18 at the People’s Cafe.  If you can come, do sign-up at eff.meetup.com because if less than five sign-up Meetup.com registers the event as cancelled.  Would love to see you there.

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