Archive for the 'e-commerce' Category

Managing Corporate Risks in an E-Environment

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My colleague Daniel Haeusermann and I just released a new paper entitled “E-Compliance: Towards a Roadmap for Effective Risk Management.” In the article, which is largely based on consulting work we’ve been doing, we argue that the widespread use of digital communication technology on the part of business organizations leads to new types of challenges when it comes to the management of risks at the intersection of law, technology, and the marketplace. In order to effectively manage these challenges and associated risks in diverse areas such as security, privacy, consumer protection, IP, and content governance, we call for an integrated and comprehensive compliance concept in response to the structural and substantive peculiarities of the digital environment in which corporations – both in and outside the dot-com industry – operate today. See also this post. The conclusion section of the paper reads as follows:

Through significant efforts, the legal system has adjusted to the changes in the information and communications technology of daily corporate life—changes at the intersection of the market, technology, and law. Organizations must make adjustments on their part as well in order to deal with the consequences resulting from these changes in the legal system. The observation that led to this essay was that these adjustments represent a greater challenge than the already decreasing entropy surrounding concepts such as “e-commerce law” or “cyberlaw” would suggest. Our initial foray into the concept, characteristics, responsibilities and organizational guiding principles of e-Compliance confirms this observation.

E-Compliance, as discussed in this article, is confronted with the phenomenon of a close interconnection between law and technology, a prominent dynamization of the law, massive internationalization of issues and legal problems, as well as a strong increase in the significance of soft law. These characteristics, which in part may also apply to traditional areas of compliance such as financial market regulation, call in their interplay for the further development of compliance concepts as well as adaptation of the affected aspects of corporate organization. Due to the increasing amalgamation of corporate organizational nexus and ICT, the symbiotic relations between traditional compliance and e-Compliance will be increasingly amplified. The view that e-Compliance represents merely a single risk area among the many of compliance is therefore outdated in our opinion. E-Compliance is actually a multidimensional and multidisciplinary task, although there are certainly areas of law that are particularly affected by digitization (or also which particularly impact digitization) and therefore are of particular importance for the field of e-Compliance.

Thus, in conclusion, the authors do not posit a special “e-Sphere” within or without existing compliance departments. Rather, we argue for an integrated and comprehensive compliance concept that appropriately makes allowance for the structural and substantive peculiarities of e-Compliance as outlined in this essay and stays abreast with the pace of digitization.

Please contact Daniel or me if you have comments.

More on the Controversial OECD Music Report

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Check out the Berkman Center’s website for reactions. It turns out that the entertainment industry still does not like the study. We’ve also made public our comments on the draft OECD report on digital music.

OECD Music Industry Report

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Find here a terrific report by the OECD on the digital music industry (pre-release.) The report includes, inter alia, references to Terry Fisher’s seminal book Promises to Keep as well as to the Berkman Center’s iTunes case study.

The report concludes that online music distribution will grow significantly over the next few years, will force the music industry to reconsider their business models, and will continue to pose regulatory challenges to governments. The study includes a detailed impact analysis of digital music distribution on artists, consumers, the record industry, and new intermediaries.

The OECD underlines the positive potential of digital distribution, both as a new business model and a cultural phenomenon. It’s report further concludes that Internet-based piracy may be reduced, if licensed file-sharing and new forms of superdistribution evolve.

The study, part of the OECD Project on Digital Broadband Content, is the outcome of work involving a wide range of stakeholders, including many governments. It’s among the first roadmaps exploring as to how public policy should be re-evaluated in this space.

The Berkman Center’s Digital Media Team was invited to comment on a draft version of this report. Today, we congratulate the study’s authors to a thorough multi-stakeholder analysis, written in a challenging environment.

Stay tuned.

Update: The OECD report is also featured in the latest edition of The Economist (subscription required.) See also WIRED News with reactions from IFPI.

“Volez ce MP3!”

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Interesting Wired article on a French judge’s critical take on the copyright industry’s battle against file-sharers, copy-fighters, and the like. With great comments from my colleague at OECD, Sacha Wunsch-Vincent: “Now is the time for the content industry, access and technology providers to get out of courts and back to business.”

ECJ on Online Contracts for Car Hire

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The European Court of Justice (ECJ) recently ruled that consumers canceling a rental car previously booked via Internet are not entitled to obtain a refund.

Here’s some background. The EU Distance Selling Directive, pro memoria: applicable to any contract for goods or services involving an EU consumer, regardless of whether the supplier has a physical or virtual presence in the EU, grants consumers a right of withdrawal from any distance contract — a right that cannot be waived by contract. Article 6(1) of the Directive states that consumers have at least seven business days to withdraw from the contract without penalty and without giving any reason. However, the Directive contains an exemption for, inter alia, “contracts for the provision of transport services.”

In the present case, the UK’s Office of Fair Trading brought proceedings before the High Court of Justice against UK online rent-a-car company easyCar. The terms and conditions of the easyCar’s hire contract state that consumers cannot obtain a refund if the contract is cancelled, except in unusual and unforeseeable situations (such as serious illness, war, natural disasters, etc.) The High Court asked the ECJ whether car hire services are “transport services” for the purpose of the exemption contained in the Directive.

According to the ECJ, the Directive’s “transport services” exemption sets forth a sectoral exemption which relates generally to services in the transport sector, i.e. can cover all contracts in this field, since the term “transport” refers not only to the action of moving persons or goods, but also includes making the means of transport available to consumers.
Focusing on the legislative context in which the term is used, the ECJ further held that the European legislator intended to protect consumer interests, but also to protect those of suppliers of certain services to avoid disproportionate consequences arising from the right to withdrawal. Since rental car companies must make arrangements for performance of the agreed service on the date fixed at the time of booking, the ECJ held that rental car companies suffer the same consequences in the event of cancellation as any other supplier of transport services.
Therefore, the ECJ concluded that “’transport services’ includes contracts for the provision of car hire services, so that such contracts cannot be cancelled by consumers without penalty.”

Tonight’s Class (LSTU-E 120)

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I’m co-teaching with John Palfrey a course at Harvard Extension School called Internet & Society: The Technologies and Politics of Control. Tonight, we will be discussing how digitization in tandem with the emergence of electronic communication networks such as the Internet have changed the ways in which we use media. More specifically, we will look at the shift from passive receivers of information to active users and creators. This class will be more of a conversation rather than a lecture.

As my students must have realized by now, I have a bias to think and — worse — talk in abstract concepts (call it the European blind-spot). Tonight, however, I won’t talk much about theoretical frameworks, promised. Rather, I would like to present a couple of examples illustrating the above-mentioned shift from passive receivers to active users and discuss them in an open format. While looking at the examples, please keep the following questions in mind:

  1. What are the opportunities and challenges associated with the shift as illustrated by each example?
  2. What are specific areas of concern or emerging legal/regulatory issues?
  3. Do we need to address these concerns? If yes, what’s the appropriate regulatory approach (social norms, markets, law, technology)?
  4. What are potential effects — also side-effects — of regulatory intervention?

Okay, that being said, here are the examples that we will use in class tonight. Please note that I provide positive examples, nice stories, but — of course — also at least problematic examples, some of which you might find disturbing. (Again, we’ll discuss these examples in class and provide enough context to make sense of these illustrations; however, I want to include the examples here so that our distance students can easily access them.)

(1) Research and Knowledge

  • Wikipedia (1, 2, 3) [update: for a wonderful illustration how wikipedia works, click here. Via Luis Villa]
  • Health information (1, 2)

(2) News Reporting & Journalism

(3) Entertainment

  • Music & video clips [e.g. mash-ups] (1, 2, 3)
  • Fan fiction (1, 2)
  • Online Games (1)

(4) Social & Corporate Criticism

  • Endless love
  • State of the Union (1, 2)
  • Media enterprises (1, 2)
  • VictoriasSecret (1, 2)
  • Other illustrations (1, 2)

(5) Commerce

  • Online Reputation Systems (1, 2)
  • Advertising (1, 2, 3, 4)

We’ll end the class with some big-picture-questions, including:

  1. What are the normative dimensions and criteria to assess the shift from passive receivers to active users?
  2. What are key areas of concern across the examples we’ve discussed?
  3. Applying old laws or need for shift in the legal/regulatory paradigm?
  4. Issues down the road?

The teaching team is looking forward to discussing these and other questions with you tonight.

DRM and Consumer Acceptability

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Our colleagues at the Institute for Information Law (IViR) at the University of Amsterdam released, as part of the INDICARE project, an interesting report on Digital Rights Management and Consumer Acceptability. It seeks to provide an overview of the state of the (European) discussion from a multi-disciplinary perspective, and analyzes social, legal, technical, and economic issues.

The report concludes that surprisingly little is know about consumers’ acceptance level of DRM, and what users’ expectations are regarding the use of digital content. The report, inter alia, calls for a better involvement of the consumer side and a joint dialogue between the market players.

The report will be updated. Three pointers to Berkman reports and papers in this context:

* re section 6.5 of the report on alternative business models, see also “Content and Control: Assessing the Impact of Policy Choices on Potential Online Business Modles in the Music and Film Industries.”

* re section 4.2 on the EU-Copyright Directive, see also “Transposing the Copyright Directive: Legal Protection of Technological Measures in EU-Member States,” and the respective Berkman project website.

* re section 4.4 on interoperability, see John Palfrey, Holding Out for an Interoperable DRM Standard, in Christoph Beat Graber, Carlo Govoni, Michael Girsberger, and Mira Nenova (eds.), Digital Rights Management: The End of Collecting Societies? (Forthcoming, April 2005.)

New Berkman Report on Digital Media Industry

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The Berkman Center’s Digital Media Project team has released an in-depth analysis of the impacts of policy choises on emerging business models in the music and film industries. Here’s the link to the paper and the abstract:

Content and Control: Assessing the Impact of Policy Choices on Potential Online Business Models in the Music and Film Industries

The online environment and new digital technologies threaten the viability of the music and film industries’ traditional business models. The industries have responded by seeking government intervention, among other means, to protect their traditional models as well as by developing new models specifically adapted to the online market. Industry activity and public debate have focused on three key policy areas related to copyright holders’ control of content: technical interference with and potential liability of P2P services; copyright infringers’ civil and criminal liability; and legal reinforcement of digital rights management technologies (DRM).

This paper seeks to support policymakers’ decision making by delineating the potential consequences of policy actions in these areas. To do so, it assesses how such action would impact relevant social values and four business models representative of current and emerging attempts to generate viable revenues from digital media. The authors caution that government intervention is currently premature because it is unlikely to strike an appropriate balance between achieving industry goals while supporting other social values, such as consumer rights, the diversity of available content, and technological innovation.

Special thanks — and congratulations — to Derek Slater and Meg Smith of the Berkman team for their work.

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