A Copyfighter’s Musings

About 6 months ago, Gartner’s Mike McGuire and I published a paper called “Consumer Taste Sharing is Driving The Online Music Business and Democratizing Culture.” The paper argued, based on various data, that new taste sharing tools (e.g., playlist sharing, mp3 blogging, private group streaming) can help support the online music distribution business and create important promotional opportunities.  It recommended that rights holders and intermediaries embrace novel sharing tools and predicted that they will play an important role in new services.

Now JupiterResearch has chimed in and apparently reached much the same conclusion:

This also aubstantiates a key trend seen elsewhere, including Gartner’s data — consumers are increasingly “content foragers” (as Mike calls them).  They take a variety of routes to find music and music-related information, often the shortest path at a particular moment.  Sometimes it’s iTunes, sometimes P2P, sometimes it’s a blog, or MySpace, and so on. 

This has important implications not just for recommendation tools, but also for access to and delivery of the music itself. As Mike and I wrote, “What has become critical in the market is being able to create initial demand and then finding as many paths to spread it as quickly as possible. What we are describing is an environment in which the ‘velocity’ with which a new song — or songs from a back catalog —can quickly get from initial distribution (or reintroduction) to the maximum number of paying customers.“

The music industry needs to embrace a fluid music distribution model, allowing individuals to use the acquisition method they want and listen to the music using whatever tools they want.  Cabining them within one particular service won’t cut it.  Whether that takes the form of a VCL model or something else, there would be significant business benefits to trying to accomodate these trends.

Filed by Derek Slater at 12:52 am under General news
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Last month, I pointed out several flaws in the proposed Section 115 Reform Act.  The Act is going to be marked up on Wednesday, and it is far worse than I thought.  Fred’s written up the details – long story short, SIRA could effect subtle but dangerous changes to the scope of copyright holder’s exclusive rights. Take action now to stop this bill in its tracks — music composition licensing needs reform, but the public’s rights shouldn’t be sold out in the process.

Filed by Derek Slater at 12:38 am under General news
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The LA Times reports that “Sharing [Is] Still Divisive,” and this time the tool stirring the fires is LaLa.com, which allows individuals to trade their own CDs with each other.  Someone recently wrote me to say LaLa.com is based on “facilitating piracy.”  It’s sad that any time a novel sharing service comes out, the first instinct is to demonize it rather than find a way to embrace and monetize what music fans so obviously want.

LaLa.com is just like eBay in two senses. First, LaLa.com enables a more efficient market by reducing transaction costs in ways not possible in the offline world.  Second, people already had the ability to sell their CDs via eBay — LaLa just modifies the model.

Don’t get me wrong — some are going to use LaLa.com in illegitimate ways, but many will use it for legitimate purposes. People who bought their CDs — and thus already paid licensors — have
the right to give away their own property in this way.

In today’s world, almost everything facilitates piracy to some extent.  Computers
make copies; the Internet distributes copies. There is P2P, there are
darknets, there are sneakernets, there are campus lans, in 5 years
people may be swapping HD-DVDs worth of music and in the next 15 years maybe
a single keychain memory stick will hold the entire universe of recordings.

Artists will get paid in this world, but they’ll get paid differently and, I would contend, more. 
Lala is certainly part of a larger structure that’s upsetting settled
business models.  That doesn’t mean that it is simply “facilitating
piracy.”  To define it as such is unfair.

Regardless, given the myriad other thoroughly convenient methods people
can unlawfully acquire copyrighted content, excuse me for not worrying
about Lala as a mortal threat.  Downloaders (as opposd to uploaders) on
P2P have little vulnerability.  Swapping CDs filled with mp3s is far easier and costs less than using LaLa.

And for what it’s worth: LaLa is giving 20% of its revenues to artists. 
That’s a better deal than they ever got from used record stores.  What’s more, LaLa is reportedly losing money on every CD trade. 
It’s planning to use CD trading as a loss leader to sell CDs and online downloads — that’s right: LaLa only survives if it helps artists sell more records.

What will it take to embrace sharing and the sales-driver it could be?

Filed by Derek Slater at 1:44 am under General news
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Update, June 6, 2006: Along with the many flaws discussed below, this draft bill of SIRA would do serious damage to fair use – take action now to stop this dangerous proposal!

Yesterday, a House subcommittee held a hearing on proposed reforms to Section 115 of the Copyright Act.  It’s a set of music copyright reforms that are disappointing in all sorts of predictable ways.  IMO, it’s also unlikely to pass in its current form.

For those joining the party late, licensing compositions for online and many other novel uses is an absolute nightmare for reasons described here.  In sum, it is unclear when the section 115 mechanical compulsory license (for distributing recorded copies of compositions) is applicable and over time it has grown wholly unworkable.  More importantly, many services are forced to pay two sets of entities for one particular use of one composition, as publishers through Harry Fox Agency (HFA, the mechanical licensor) and the Performing Rights Organizations claim applicable rights.

One particularly right-thinking approach to this problem was the Register of Copyright’s proposal last year.  It would have guided the market to consolidate reproduction, distribution, and performance in particular entities, probably the current PROs who could offer blanket licenses to all the songs in their catalogs.  Rather than simply solving the licensing issues of the services that brought this issue to the fore — primarily on-demand streaming, which HFA claims requires a license for buffer and server copies — the Register’s proposal would have solved problems for tomorrow’s technologies. After all, in 5 years, interactive streaming may be rather irrelevant.

And thus, in 5 years, Section 115 Reform Act (SIRA) may be irrelevant too.  SIRA does replace the out-dated per-song compulsory license with a blanket license.  But it only extends the section 115 license to cover full downloads, limited subscription service downloads that time out, and on-demand streaming.  It doesn’t clarify what implicates performance or mechanical rights.  Podcasters still will be forced to pay HFA and PROs and face hold-out problems, and so will tomorrow’s novel uses.

SIRA would mean that non-interactive webcasters no longer have to pay for their server and buffer copies (even though interactive webcasters would be forced to).  But SIRA states that any service that enables time-shifting — such as Mercora — still has to pay the compulsory license for these copies. Why should webcasters have to pay extra for helping music fans make a use that, using non-affiliated software, they could make for free?  And why should that payment be related to the ephemeral and server-side copies license?

SIRA minimizes the number of licensors that one would have to go through, by designating one licensing entity (the General Designated Agent) that will by default be able to license all works that are not registered with a licensing entity.  All that means is that HFA, which has been repeatedly criticized for its many inefficiencies, has its place in the value chain secured.  Given their market share, they no doubt will be the GDA, so consolidation of licensing (as under the Register’s proposal) is even more of a pipe dream.

SIRA also requires the DAs to create an electronic searchable database, accessible to the public, that, theoretically, should help people track down licensors and reduce transaction costs. Of course, HFA has been promising to create and improve its licensing system for years, dragging its heels all the way. Given that the language here isn’t particularly strong (allowing for “reasonable confidentiality”), excuse me for not being particularly optimistic.

While it doesn’t solve the root problems facing the music industry and its licensing processes, it will clear the way for current subscription and download services. So why won’t this pass?  Jon Potter, representing music service providers, and the National Music Publishers Association’s David Israelite largely support the Act and used the least confrontational language in any of the many hearings they’ve had. However, RIAA strongly opposes it. 
First, SIRA doesn’t apply to physical and online-offline hybrids. Second, record companies are cut out as pass-through licensors for digital music services (i.e.,
collecting the mechanical monies from Apple or Rhapsody and then
distributing it). In other words, they want to protect the dying physical product revenue stream and they want their position in the online value chain entrenched, just like HFA’s. 

Expect these parties to keep squabbling over how to protect their power as intermediaries. Expect very few beneficial policy changes to occur. Expect disappointment with composition licensing reform.

Filed by Derek Slater at 12:43 am under General news
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Here we go again — tomorrow there will be a hearing on a new effort to reform section 115.  Patry’s blog has the scoop.  Will offer comments of my own after reading the bill.

Update, June 6, 2006: This draft bill of SIRA would do serious damage to fair use – take action now to stop this dangerous proposal!

Filed by Derek Slater at 11:32 am under General news
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Somewhat off-topic, but: ESPN.com announced today Sportscenter Home Video:

Wait – wtf is VHS?

This is a pretty boring way of trying to engage viewers.  Why not help them share their home movies with each other?  Why not host user-produced local sports shows?  It ain’t going to compete with the actual Sportscenter – it’s just going to increase the overall value of ESPN.com and its brand.

Filed by Derek Slater at 9:43 pm under General news
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Interesting conversation going on here and here regarding whether net neutrality regs would get in the way of services that require lots of bandwidth, like high def video.  I don’t mean to weigh in favoring or opposing net neutrality regulation, and I don’t want to rehash the big picture trade-offs at issue here — how enabling the sort of market experimentation by ISPs that Thierer lauds could come at great cost to innovators at the edges of the network. (FWIW: Christopher Yoo and Tim Wu’s recent debate in Legal Affairs lays both sides out nicely.)

Instead, let me briefly suggest how Thierer may be overstating the threat to delivering large files.  Tim Lee rightly points out that there are ways to assist distribution of large files without discriminating in favor of particular service providers’ packets. I don’t think the Akamai-style caching Lee describes is what net neutrality legislation advocates are concerned with, since it doesn’t monkey with the end-to-end principle and thus does not enable the discrimination typically at issue.

Providing more bandwidth to Net users may provide a sufficient — and perhaps superior — solution.  The VP of the Internet2 project stated the following at a House hearing on net neutrality: (found via David Isenberg’s presentation at Berkman)

Filed by Derek Slater at 1:12 am under General news
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Pleased to see Napster’s new free service, I sent my brother a link to Vitalic’s OK Cowboy, since I hadn’t had a chance to play it for him during our last visit.  He wrote back to say that he could still only get 30 second samples.  Being the little brother that I am, I simply took this as evidence that Napster’s service was not yet idiot-proof. I wrote back remarking on the lopsided way that intelligence can be distributed amongst siblings.

But I should have known better.  Contrary to what I said in my last post, not every song in Napster’s catalog is available for full length playback.  My brother quickly ran into another gap in his next search. Now customers will have to check four different attributes on every song: free streaming, available for a la carte purchase, Napster Unlimited accessible, ready To Go. You’ll likely find all possible combinations.

What a nuisance.  Napster’s new free streaming is still a potentially huge announcement, mostly because I think Yahoo and Rhapsody will do it even better in a matter of months.  But even they probably will have these gaps, as they’re a current problem in all subscription services.

Filed by Derek Slater at 2:28 am under General news
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A prediction of mine actually came true for once.  David Card has the full run down – stepping up the competition with Rhapsody, Napster is offering free streaming of its entire catalog.  Every song can be listened to 5 times.  You can access the service through the client software, but you can also use their website with a Flash app that works on Linux and Mac. However, the web streams are of lower quality and every three songs there’s a short advertisement.  Another downside: unlike Rhapsody, Napster has apparently not made its subscription service available via its website. (I’m not sure why this would be, given the flash interface should work just fine for that too – but the site still says “PC Only, Windows XP/2000 ….”)

Napster is also imitating Rhapsody’s linking tools with Napster Links and adding some community features called Narchives. What’s more, they have apparently started an affiliate program where they give you a kickback for placing ads and Napster Links that lead to purchases or subscriptions.

Though Napster’s website is still messy and the Flash interface isn’t great, this could be a pretty big deal.  Allowing full streams radically improves the try-before-you-buy, music discovery experience.  It also will greatly enhance peer recommendations. Want to tell your friends about the great band that’s coming to town?  How about music blogging?  Napster Links can help you to introduce others to music.

But Napster has made a big mistake by not allowing Mac and Linux subscribers – they can’t convert those users from the free streamers to paying customers.

Filed by Derek Slater at 4:03 pm under General news
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In response to the RIAA’s irrational lawsuit campaign against the tens of millions of American P2P users, EFF set up a petition asking Congress to stop the madness and support ways for artists to get paid without fans getting sued. We’re now close to our goal of 100,000 signatures, and, with your help, we hope to surpass it by a longshot and deliver the petition to Congress.

After over 18,000 lawsuits and counting, file sharing has continued to increase rapidly. Meanwhile, music fans, like 12 year-old Brittany LaHara, college student Cassi Hunt, and parent of five Cecilia Gonzalez, are being forced to pay thousands of dollars they do not have to settle RIAA-member lawsuits, and many other innocent individuals are being caught in the crossfire.

But resistance to this shameful crusade is growing. Just this week, many top Canadian musical artists, including Barenaked Ladies and Avril Lavigne, called the lawsuits “destructive and hypocritical,” and a court threw out a lawsuit against 14 year-old Brittany Chan.

It’s time for Congress to join the chorus of opposition and stop kowtowing to the content cartel. Sign the petition, and donate to EFF to support a better way forward.

(Cross posted at Deep Links)

Filed by Derek Slater at 8:24 pm under Big Ideas
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According to DesignTechnica,
Philips has patented a “technology … [that] would prevent users from
changing channels to avoid watching television commercials as well as
prevent viewers from fast-forwarding through recorded advertisements.”

Why would Philips invent such an absurd restriction when it will
never be voluntarily licensed? After all, in a competitive market,
technology companies who adopt Philips’ patented system will be shunned
by customers; no one wants a device that says, “Now improved — blocks
changing channels during commercials!”

Perhaps Philips believes that, at some point in the future,
Hollywood might push for a government mandate forcing technology
companies to incorporate anti-skipping technology. If that happens,
this patent could be the federally-set standard, and tech creators
would have to pay Philips every time they want to sell a new device.

Instead of wasting its time with this anti-user opportunism, Philips
should focus on building technologies that satisfy its customers.

(Cross posted at Deep Links)

Filed by Derek Slater at 9:51 pm under General news
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This weekend, I’ll be speaking at FreeCulture.org‘s National Summit in Swarthmore, PA.  The lineup of speakers also includes Professor Lessig, Alex Curtis from Public Knowledge, Holmes Wilson from Downhill Battle, and many more.  More information here.

Filed by Derek Slater at 8:17 pm under General news
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David Berlind seems to be changing his tune on Sun’s DReaM.  As usual, Cory comes to the rescue, savaging the initiative and explaining why “open” DRM is a sham.  Tim Lee is also on the case.

It’s also worth remembering that there have been plenty of consortia planning to “solve” the interoperability problems caused by DRM, as it if were just a matter of getting enough companies in the same room together.  Thus far, they haven’t come up with much, so why would we expect Sun’s plan to be any different?

Filed by Derek Slater at 6:55 pm under General news
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Tim Lee, who continues to be on a roll over at TLF, writes about how Hollywood’s new Moviebeam service will force consumers to throw out their current, perfectly HD capable devices and buy restricted ones.  Meanwhile, Ed Felten has started a series of posts on the culprit: HDCP (and HDMI).

See also my recent post, “This Is how Hollywood Thanks its Best Customers.”

Filed by Derek Slater at 11:35 am under Big Ideas
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Much has already been written about major movie studios’ recently agreeing to sell downloads on Movielink and CinemaNow with remarkably high price points and ridiculous DRM restrictions. Buyer beware — these services are misleading about how little you’ll get to do with your media.

For instance, CinemaNow’s “How It Works” page says:



“Anywhere”? Read the fine print further down the page:

Movielink lets you burn to DVD, but those DVDs can only be played on a computer, not your home theater system’s DVD player.  And that’s just the tip of the movie store DRM iceberg.

As usual with DRM, the customer is always wrong.

Filed by Derek Slater at 1:39 am under General news
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