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8.30.2004
Solveig on Others on Grokster
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I offer yet more analysis of Grokster, in the spirit of angels dancing on the head of a pin, or perhaps impaling themselves on the point.
C.E. Petit Esq. of Urbana, Illinois offers an interesting take on the significance of the procedural stance of the Aimster and Grokster cases in his blawg of August 23. I confess to some curiousity as to what colleagues Jim and Bill make of this.
Tim Wu, posting on sparring partner Larry Lessig's blog, thinks that the Grokster opinion offers "words that could have been penned by Schumpeter." He quotes the court's statement that, "the introduction of new technology is always disruptive to old markets, and particularly to those copyright owners whose works are sold through established distribution mechanisms . . . history has shown that time and market forces often provide equilibrium in balancing interests, whether the new technology be a player piano, a copier, a tape recorder, a video recorder, a personal computer, a karoke [sic] machine, or an MP3 player."
This take on Grokster as offering just another sort of creative destruction bears closer examination. For market forces to respond and offer a balance, there must be some kind of market. And the difficulty of many new technologies is that it makes the ordinary boundaries of markets--contractual, physical lock-ups, statutory, difficult or impossible to enforce. (Come to think of it, several of the examples listed by the court above were "balanced" by statutory revisions, not pure market forces, though interventions like compulsory licensing were pretty ill-conceived).
Creative destruction through competition is one thing, but creative destruction through violating rights is another. The invention and widespread dissemination of a teleportation device would play havoc with laws against theft and assault, but I doubt that an optimal policy response would be to wait to see if the market offered "balance." One balancing force we see out there so far seems to be spoofing and other tricks to mess with the heads of file sharers. The trouble with Grokster as creative destruction is that there doesn't seem to be much that is creative about it. But the market is an amazing thing, certainly, it may yet develop a means of enforcing itself.
posted by Solveig Singleton : 8/30/2004 08:29:36 PM
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8.27.2004
Grokster: Cert-worthy
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The Ninth Circuit's Grokster decision come down just before our Aspen conference, holding that two of the file-sharing networks could not be liable for allegedly contributing to infringement by their users based on their "current activities." I last addressed this issue in a paper in early March, in which I argued that the Ninth Circuit should reverse Judge Wilson's decision. Now that the Aspen haze has lifted, I thought I would offer a couple comments, although I confess I have not had time to keep up on this issue since that time. Fortunately, since the Ninth Circuit largely adopts what it characterizes as Wilson's "well reasoned analysis," my arguments as to why Wilson was wrong apply (or don't apply) with essentially equal force to the Court of Appeals decision.
I believe that the Grokster decision is wrong, and that its failure to impose liability on such P2P systems could have devastating effects on efforts to develop legitimate markets for online content. Hopefully, the importance of this decision will lead the Supreme Court to grant cert and decide for itself whether these systems should be subject to contributory infringement liability (and in the process enlighten us on the standard it adopted twenty years ago in Sony).
Moreover, my paper discusses, there are clear contrasts between the analyses of the Ninth Circuit and District Court in Grokster and the approach of Judge Posner's Aimster opinion, making cert even more likely. Based on my quick reading of the Ninth Circuit decision, three conflicts are worth noting:
Applying the Sony standard The Grokster court held that the mere existence of any non-infringing use triggers the need for plaintiffs to establish actual knowledge under Sony. Posner held that where there are infringing and non-infringing uses, a "balancing of the costs and benefits is necessary."
Relevance of willful blindness Judge Posner held that Aimster could not avoid liability as a contributory infringer on the theory that its encryption software prevented it from having specific information, declaring that "[w]illful blindness is knowledge, in copyright law." The Grokster court rejected the notion that there is a "separate 'blind eye' theory of liability" under vicarious infringement, but does not explain why this does not provide sufficient evidence of knowledge to justify liability for contributory infringement.
Facilitating infringement through product features Judge Posner held that even if there are substantial non-infringing uses, an alleged contributory infringer must show that "it would have been disproportionately costly" to prevent infringement. He cites Aimster's encryption feature. The Grokster court failed to consider this in evaluating whether the systems' design and distribution of software materially contributed to infringement.
As to my overall view of the policy issues, let me make just a few points.
First, P2P technologies offer potential benefits in a variety of contexts, and the technology should not itself be attacked. But these file-sharing businesses are designed primarily to promote infringement on a massive scale, know that this is their dominant use, and arguably have chosen not to incorporate features that could have reduced infringement. File-sharing systems can provide some advantages in free distribution over, say, central servers. But they have an overwhelming disadvantage for commercial distribution. As currently run, these file-sharing systems are designed to enable users to avoid payment. By spawning a huge black market, they undermine the development of legitimate markets for digital content.
Second, contributory infringement is specifically designed to enable copyright holders to efficiently enforce their rights against a relatively small number of facilitators in situations where large numbers makes enforcement actions against direct infringers inefficient or impractical. It's hard to imagine a more striking example than this case - a handful of file-sharing networks service millions and millions of infringing users. Direct infringement actions are necessary to establish key principles and educate users, but are ultimately a "teaspoon solution to an ocean problem" of enforcement.
Moreover, relying on actions against direct infringers raises special concerns here. Many file-sharers contend that they had no idea that they are doing anything wrong. While I am skeptical, it is true that they incur liability simply by using these systems as intended. Many users, especially minors, may naturally think that if file-sharing software is legally available, using it for its intended function must be legal. Thus these systems not only facilitate the efforts of those seeking engage in infringement, they may induce unsuspecting kids to engage in illegal infringement and risk incurring legal sanctions.
Third, as my paper emphasizes, protecting innovation is important. Reasonable people can disagree regarding how best to limit liability for contributory infringement and design appropriate remedies. I believe that a proper balancing of the factors identified in my paper and by Judge Posner would lead to liability for Grokster et al without threatening innovation. In this regard, let me commend to you Solveig Singleton's thoughtful contribution in this space this past Wednesday.
These issues deserve more attention than I can give them now, but I hope to have more time in the future.
posted by Bill Adkinson : 8/27/2004 04:55:42 PM
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8.26.2004
8.25.2004
Grokster Considered
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Today's blog is brought to you by Solveig Singleton, back in the DC policy scene after a hiatus and a new Adjunct Fellow at PFF. I hoped this first blog would be a gem, but the best I can do is to toss a pebble into the pond of perplexity concerning the Grokster case. To recap, the 9th Circuit upheld the lower court's ruling that Grokster would not be liable for secondary copyright infringement.
Crucially, the court found that Grokster, a P2P file-sharing service less centralized than Napster, had no control over its users' illicit copying activity at the critical time necessary to stop them. It also emphasized the potentially non-infringing uses of P2P tech, following the Supreme Court's guidance in the venerable Sony case.
Let's assume for purposes of today's argument that this result won't preserve a healthy market in music. How could a future court do better? More specifically, what test could catch Grokster and not Xerox or iPod?
A partial list of key factors roughly derived from Sony and Judge Posner's opinion in the Aimster case and further developed by PFF colleague Bill in his recent paper might include:
Defendants level of control over the primary copyright violators;
Whether the main uses of the tech are legal or illegal;
The cost of measures that could be taken by the tech's distributor to reduce violations;
The distributor's level of knowledge of particular violations.
Using these factors, Xerox seems easily enough distinguished from P2P services. The main uses of its machines are legal. Its level of control is very low and the cost of changing it high, absent Soviet-style rationing of photocopiers. Xerox's level of ongoing knowledge of actual violations is likely to be low - who would bother telling them? (Kinko's, on the other hand, has a higher level of control and potential knowledge).
iPod is more tricky. Many current users may well be illegally downloading files. While iPod's present level of control is low, some sort of tweak might change that. One might argue that hardware is "just different" - that we could reasonably expect a software distributor to reprogram, but not a hardware distributor to redesign. That doesn't work - stepping outside the copyright context, no one seems to have major complaints with rules limiting the distribution of lock picks, and that's hardware. The hardware/software distinction is hopelessly slippery anyway, as so much hardware these days has a software component.
Maybe a partial answer is that pure software distributed under a license is different - a license creates a continuing relationship between software distributor and downloader that could be the basis of control - contractually if not technologically. Another part of the answer might be that iPod's contribution to illicit copying is not sufficiently material. It's primarily a player, not a collector - of music files. That is, most of its functions if not most of its uses are legal. And, finally, the iPod relationship with iTunes suggests that whatever lack of control they have is not deliberately "turning a blind eye."
None of this gives us a bright-line test. But how can there be one, when the tech is so flexible? Any bright-line test invites software to be written to fall just on the safe side of the line, for controls and centralization to be designed out and for myriad other innocent functions to be built in to preserve the "noninfringing uses" route.
If we are not to be indifferent to continued violations and wish to preserve the freedom to innovate, the best direction for a court would be to look to the mental states of particular defendants - targeting very particular uses of technology, not whole technologies. In a nutshell, it means avoiding "turning a blind eye." But the Grokster court believed that Sony does not permit this, and these inquiries into mental states are always difficult. One hopes the Supremes will grant cert.
posted by Solveig Singleton : 8/25/2004 10:59:52 AM
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8.20.2004
Hiatus
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PFF is about to remove to Aspen for its 10th Aspen Summit. After, I will be on vacation. So entries will be few, except to the extent that other PFFers can be dragooned into participating, until September 8.
posted by James DeLong : 8/20/2004 01:56:40 PM
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Grokster
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The Ninth Circuit just decided the Grokster case, handing the content industries a defeat on every ground.
It ia a complicated situation, and commentary will await further cogitation.
posted by James DeLong : 8/20/2004 01:50:27 PM
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8.19.2004
Spolsky on Software
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The entertaining and literate software columnist Joel Spolksy has a book out, reprinting the best of his articles, and entitled: Joel on Software: And on Diverse and Occasionally Related Matters That Will Prove of Interest to Software Developers, Designers, and Managers, and to Those Who, Whether by Good Fortune or Ill Luck, Work with Them in Some Capacity.
Available on Amazon and other fine book stores everywhere.
posted by James DeLong : 8/19/2004 10:46:22 AM
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Publishing & DRM
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C|NET today has an interesting article on digital rights management in the publishing industry.
Print media have been insulated from the Napsterized world somewhat because a book, magazine, or newspaper is a superior way to deliver print content. Most people prefer it to reading on a screen, and, given the cost of toner, printing something out costs more than the original.
But serpents are entering this Eden, especially in connection with textbooks.
posted by James DeLong : 8/19/2004 09:20:50 AM
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Tangible vs. Intangible Property
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Intellectual Property quotation of the day:
"[A] server without an operating system is a space heater."
-- Jonathan Schwartz, CEO - Sun Microsystems
posted by James DeLong : 8/19/2004 09:11:43 AM
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8.18.2004
California Dreaming
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The Report of the California Performance Review is now available on-line. It contains four volumes and over 1,200 recommendations on 279 different issues, all with a purpose "to reform and revitalize California's state government."
Intellectual property comes up twice, both times in the category "Statewide Operations," and both times in connection with software..
Recommendation SO 06 is "Create a Code Library to Leverage State Intellectual Property Rights." It notes that the software code written by state departments is valuable and should be protected through patent and copyright. Furthermore, the state should make money by licensing the code to others, and should keep a wary eye out to detect and pursue any infringements.
Then there is SO 10, "Explore Open Source Alternatives," which notes that "open source software can be a more cost-effective alternative" and recommends that "Departments should . . . implement open source alternatives where feasible."
In theory, the two recommendations can be reconciled because the term "where feasible" can caulk chasms of inconsistency. But in fact the fine print of SO 10 accepts as truths that open source has lower total cost of ownership than proprietary products, is more secure, and is less vulnerable to attack, which makes the conclusion about its "feasibility" pretty foregone.
Before buying off on it, the California decision makers need to probe more deeply.
To begin, "open source software" is not a meaningful category. There are dozens of different licenses, and they have significantly different consequences. For example, if a state agency adds code to an open source program licensed under the GPL, or adds GPL'ed code to a state-written program, then the state forfeits its IP rights to that code, in apparent contravention to SO 06. The BSD license, in contrast, is more forgiving if code is added to a proprietary program, but attaching it to a newly-written product still cedes any possibility of making money from the effort.
"Open source" is not a meaningful category in another sense: one must distinguish between the open-source operating system Linux and open source applications. IBM, HP, Sun, Dell, and other companies are pro-Linux without favoring open source for applications. Sun keeps hold of Java. IBM makes billions from selling its proprietary aps, and intends to keep it that way. It wants to turn the operating system into a commodity, but not the aps.
In essence, Linux has become a way for tech companies to cooperate on a standard Unix-based operating system and bundle it with hardware, not a new approach to productive enterprise. Thus its use raises standard choices between buying something -- in this case, computer services -- as a bundle (hardware/software/services) and buying it in disaggregated form. In some cases, the bundle, including Linux, may be the best solution, but many factors are in play, and they are all hotly disputed, including questions of total cost of ownership, security, and vulnerability, maintenance over time, guarantees against infringement of others' intellectual property, and compatibility with future innovation as hardware develops.
For more on these issues -- probably more than most people want to know -- consult PFF's paper on The Enigma of Open Source Software (March 2004), plus the material cited in an earlier WebJournal entry.
posted by James DeLong : 8/18/2004 11:22:59 AM
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Pricing of Pet Meds
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In a David Brooks moment this weekend, three fairly-well-to-do professionals in their upper-30s talk around the barbecue grill about how much they are paying (and hence willing to pay) for Rimadyl, an arthritis drug for their aging dogs. The answer to this question is: we were willing to, and do, pay quite a lot. Not only does Rimadyl work wonders for my aging golden retriever, but it has a tasty liver flavor.
With price controls becoming more and more pervasive on human drugs, it is not hard to imagine two phenomena becoming more pervasive in the drug industry. First, drug companies will have to use their pet division medications which have human analog meds to more successfully price discriminate on the basis of willingness to pay. Perversely, the higher willingness to pay will come in the pet arena. Second, research will be shifted from human to animal drugs, at least on the margin, because price controls do not threaten what will be an increasingly robust pet med market. Admittedly, the market is smaller, but I can have some confidence that my next golden retriever (not that this one will ever die, of course, since I'll fly her to the doggie Mayo clinic for care) will be the catalyst to better arthritis drugs, much more so than the innovation-stunting Canadian price control system.
posted by Ray : 8/18/2004 09:29:47 AM
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Technology Liberation Front
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There's a new tech blog in cybertown -- the Technology Liberation Front, created by Adam Thierer of Cato, who will be abetted by Braden Cox (Competitive Enterprise Institute), Sonia Arrison (Pacific Research Institute), Jim Harper (Cato), Wayne Bough (Citizens for a Sound Economy), James Gattuso (Heritage), and others.
Its mission statement is here. Excerpt:
"Do you remember when politicians would run around saying government should keep its "Hands off the Net." It was nice rhetoric while it lasted but, ultimately, it was a hollow promise. Today the government has its hands all over the Internet. It's difficult to name an area where lawmakers and regulators are not currently promulgating or considering rules and regulations for the high-technology and communications sectors.
"This is why this site is needed. We aim to report on, and hopefully help to reverse, this dangerous trend of over-regulation of the Internet, communications, media and high-technology in general. We will not hide our love of liberty on this site and we will take every opportunity to castigate those who call for expanding the reach of government into these fields."
posted by James DeLong : 8/18/2004 08:56:19 AM
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8.17.2004
iPod/RealNetworks Escalation
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Recently, RealNetworks announced its Harmony technology, which allows iPod owners to put downloads from Real on their machines.
Now, according to C|NET, Real is upping the ante, cutting price on downloads to 49 cents each. C|NET also has an interview with Rob Glaser, CEO of RealNetworks.
posted by James DeLong : 8/17/2004 11:49:31 AM
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8.16.2004
WaPo v. MPAA
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Today's Washington Post contains an exchange over copyright between tech columnist Rob Pegoraro and MPAA exec Fritz Attaway, triggered by a recent Pegoraro column on TiVo. Part of the dialogue went:
Attaway: "Rob -- your disdain for copyright is distressing to me, and a bit hypocritical on your part. Whether you call it 'protection' or 'control,' the idea is to protect investment in valuable intellectual property which real, talented people, like yourself, worked hard to create. The Washington Post is copyrighted and that copyright is aggressively protected (or controlled) by your employer. I assume you accept a paycheck from The Post. The people who create music and movies would also like to keep getting paychecks. What is so awful about that?"
Pegoraro: "First, my answer to your question above is 'nothing.' I have no problem with people trying to get paid for their work. But does the right to make a living in a given profession include the right to force other people to contribute to that living? In the case of other industries challenged by technological change -- travel agents, long-distance phone companies and express-delivery services come to mind -- the answer seems to be, 'No.' I have not yet heard a convincing argument as to why the movie and music industries should be different, and why the electronics and computer industries should be forced to work for their benefit."
Whatever one may think of the TiVo issue, and it presents some tough problems, Pegoraro's examples are off. In each case, the Internet provides an alternative to present methods of doing business. TiVo's relation to the broadcast business is not that of alternative, but that of free rider. It depends on the continuation of the current model for delivering services, and on enough patrons not having TiVo to supporting the current model, so that TiVo users can avoid paying a share of the cost of producing content. TiVo may be a great device ( I must admit to finding commercials very tiresome), but it is a parasite on present system, and like any parasite it depends on draining off enough support to prosper but not so much that it kills the host.
As to the status of the Washington Post, Pegoraro commented:
"It's interesting that you cited my own employer as an example, which brings up the other flaw I see in your argument -- the idea that the Internet will make it impossible for people in creative professions to earn a living. The Post's content, along with that of every other newspaper I can think of, is published online without any technological copy controls, and, last I checked, none of us has asked that the government require other industries to implement any such controls for our sake. I'm not saying that everybody else should adopt our model (last I checked, our Web site, although not those of other papers, was still losing money), but I am saying that the market can sort through these problems on its own."
Again, there are problems with the argument. The Post most certainly does use technological copy controls; like most newspapers, it makes current stories available free, but encrypts past one and charges for access. A problem for broadcasters is that they have been forced to transmit in clear, and this cannot be changed without obsoleting million of existing TVs. They cannot protect themselves in the same manner as the WaPo.
In addition, the Post, and other print media, are insulated from the effects of the digital revolution by technology. A physical book or newspaper is a more convenient way to access the content than is online viewing, and the ad-subsidized price is quite reasonable. Printing out articles costs more for toner than buying the newspaper. As the Internet takes over classified advertising, and as printing keeps getting cheaper, the papers may change their views.
In any event, newspapers are fiercely protective of their copyrights, though they may deploy lawyers as much as techies. See the Post's copyright notice, and read the Free Republic case, in which plaintiffs L.A. Times and (ahem) Washington Post objected to having articles posted on a political website where they served as vehicles for comment by readers.
posted by James DeLong : 8/16/2004 12:53:13 PM
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Digital Rights Management
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Page B-1 of today's Wall Street Journal (subscription required) has two interesting pieces.
In the left column, an article on digital media and on how its purveyors are using digital rights management tools to tailor the packages of rights available to consumers.
On the right, an article on innovation at Hewlett-Packard, with particular emphasis on its chief strategist, Shane Robison.
And, as it happens, these two stories will intersect in the flesh next Sunday evening, at the opening session of PFF's 10th Annual Aspen Summit, when Robison and Darcy Antonellis, EVP of Warner Brothers Entertainment, engage in a dialogue over The Future of Content on the Internet.
posted by James DeLong : 8/16/2004 10:14:36 AM
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8.13.2004
An Amateur Take on Induce
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My amateur take on the Induce Act, S. 2560, is that it is not outrageous, but it is a dangerous principle to be playing with. Thus, legislators will want to be careful with it and make sure it is securely circumscribed in where it can range.
Burglary tools can be outlawed, but you don't want that to lead to outlawing hammers, for instance. Intellectual property is crucial to protect and perhaps this is a least cost way of doing it. Nevertheless, Induce is a means about which we should be justifiably wary.
posted by Ray : 8/13/2004 02:15:17 PM
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8.12.2004
More on the Virtues of Enlightened Self-Interest (a.k.a. Greed)
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A contention of the Copyleft, made during the Eldred litigation, for example, is that the long duration of copyright blocks access to creative products. The image conveyed is that wonderful works are moldering in Hollywood vaults because their owners are too lazy to dig them out and exploit them, and that this would not be so if the works were put into the public domain.
However, refurbishing these works and making them available requires time, money, and effort, which means that someone must have an ownership interest so as to be able to invest in the project. Taking the property rights away from the original owner would not change this -- to make the refurbishing and exploitation occur, some entity must have an ownership interest or it cannot afford to take on the task. The Copyleft approach would leave the recovery of these works up to the whims of governments and foundations, and with respect to this see the earlier post quoting economist Walter Williams.
With ownership, wonderful things can happen, as described in a speech given last April by Shane Robison, CTO of HP:
"The problem today is that some of the very best stories and entertainment experiences are still sitting in old vaults wasting away, where none of us can enjoy them.
"That's why we're leveraging technologies we've developed in our labs around imaging, restoration, archiving and metadata tagging, to help bring these historical treasures back out into the light of day.
"HP has recently engaged in deals like the one that we announced with Time, Inc., to digitally restore every image every published in the history of Time magazine, and these are images like Muhammad Ali's Thrilla in Manila, or the Fall of the Wall in Berlin.
"Another partnership is with Getty Images, the world's leading provider of imagery, film and digital services. And our engagement there is to help them manage their assets for over 150 million unique visitors each month.
"Or finally with CBS to restore and make available classic entertainment experiences such as when the Beatles first appeared on the Ed Sullivan Show and really rocked the world for the first time.
" . . . .
"HP and Warner Brothers share a common vision for the future of digital media entertainment, a future where digital technology enhances the quality of entertainment media in both its production and in its distribution.
". . .
"This includes the ability to dynamically scale storage and compute capacity across multiple restoration projects, such as The Wizard of Oz or An American in Paris. Building on Warner Brothers' proprietary software used to restore Singing in the Rain and Robin Hood and Meet Me in St. Louis, and HP's image, color and data management technologies, HP and Warner are committed to preserving and presenting the original creative vision of these classic films in stunning digital age quality.
". . . .
"Warner Brothers told us the story of a famous director who, after seeing his film restored with this method, actually cried about halfway through the film, and to date, the consumer response to these restored films has been simply overwhelming, so together, HP and Warner Brothers intend to make this service scalable and available to the entire industry."
posted by James DeLong : 8/12/2004 01:21:56 PM
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Speaking of Greed
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This site likes sermons on the virtues of property rights and markets. So the next time you read some Copyleft promise of how we need a new model of production of creative products that depends on a combination gift economy and government tax/subsidy scheme, bear in mind today's sermon, from economist, professor, and columnist Walter Williams:
"We don't give second thoughts to the many wonderful things others do for us. Detroit assembly-line workers get up at the crack of dawn to produce the car you enjoy. Farm workers toil in the blazing sun gathering grapes for our wine. Snowplow drivers brave blizzards just so we can have access to our roads.
"Do you think these people make these personal sacrifices because they care about us? My bet is they don't give a hoot. Instead, they along with their bosses do these wonderful things for us because they want more for themselves.
"People in the education and political establishments pretend they are not motivated by such 'callous' motives as greed and profits. These people 'care' about us, but from which areas of our lives do we derive the greatest pleasures and have the fewest complaints, and from which areas do we have the greatest headaches and complaints? We tend to have high satisfaction with goods and services like computers, cell phones, movies, clothing and supermarkets. These are areas where the motivations are greed and profits. Our greatest dissatisfaction is in areas of caring and no profit motive such as public education, postal services and politics. Give me greed and profits, and you can keep the caring."
posted by James DeLong : 8/12/2004 08:36:10 AM
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8.11.2004
Register for Aspen -- Tech & Content Industries
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BTW -- anyone interested in the agreements and conflicts between the tech and content industries on the issues involved in protecting digital property should register for PFF's Aspen Summit forthwith.
The opening session on Sunday, August 22, will be a discussion between Darcy Antonellis (EVP Worldwide Piracy Operations, Warner Brothers Entertainment) and Shane Robison (Chief Strategy & Technology Officer, Hewlett-Packard) over The Future of Content on the Internet. Mediating will be PFF Chairman Jay Keyworth, who was Director of the Office of Science & Technology Policy under President Reagan.
On Monday evening, a working dinner will be held on the topic The Future of P2P, Contributory Infringement, Inducement & Filtering, featuring a diverse collection of participants. I will be Ringmaster.
posted by James DeLong : 8/11/2004 01:45:49 PM
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S. 2560 (The Inducing Infringement of Copyrights Act) and the Tech Industry
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The Computer Systems Policy Project (CSPP), now Executive Directed by former Commerce Department Assistant Sec Bruce Mehlman, is about as close as one can come to an official Voice of Big Tech on policy matters. It is composed of the CEOs of Applied Materials; Dell; EMC; HP; Intel; IBM; Motorola; NCR; and Unisys..
Thus the July 22 CSPP letter on S. 2560 is important. It opposes the bill in its present form, suggesting a number of modifications designed to insure that the proposal would not stifle innovation or smother the tech industry in a fog of legal aggression. But it supports the objective of "confirming that bad actors that intentionally cause others to infringe the rights of others are also liable under the copyright law."
And its list of concerns does not seem to include anything that the content providers who are pushing the bill would not be willing to buy into, or have not already said. For example, the CSPP thinks the bill should state that the Sony decision is not affected by the law. The MPAA Talking Points agree that Sony does and should remain untouched; the difference between the two groups would seem to be over whether this principle should be clarified in the legislation itself or in the legislative history.
There are some minor substantive differences, but nothing that looks unreasonable, and nothing that looks like a deal breaker.
posted by James DeLong : 8/11/2004 01:27:00 PM
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New CBO Paper
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The Congressional Budget Office has just released Copyright Issues in Digital Media (August 2004), a 40-page analysis of current issues.
Based on the summary, it appears to be a sober and useful discussion, very microeconomically oriented, perhaps a touch too much in the tradition of characterizing the interests of copyright owners and consumers as antithetical rather than complementary, and thus requiring balance, to suit my taste. More comments will appear after it has been digested.
posted by James DeLong : 8/11/2004 09:42:57 AM
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8.10.2004
The New Lessig (for a Week)
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TechDaily (subscription required) informs us that Rep. Rick Boucher is serving as guest host on Larry Lessig's Weblog this week. His post yesterday on S. 2560 triggered 101 comments (so far), and today's, on H. R 107, has produced 34.
posted by James DeLong : 8/10/2004 03:32:05 PM
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8.9.2004
Converging Software Models
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The Mozilla Foundation, which supports the popular and much-praised open source browser, has announced that it will give $500 prizes to users who identify and report security vulnerabilities in the software.
It is an interesting development, on several related grounds.
First, it undermines the oft-trumpeted claim that open source software is superior because legions of volunteers will eagerly spend time looking for bugs. Open source software, it turns out, is subject to the iron law of the universe that if you want to convince people to do something, cash is often the most persuasive argument.
Second, the program -- indeed, the very creation of the Mozilla Foundation in July 2003 -- is also a recognition that producing quality software requires significant and continuing investment of resources. (The foundation is funded by $2 million from America Online, by contributions from such other industry players as Red Hat and Sun, and by a personal contribution of $300K from Mitch Kapor, who made a fortune from Lotus 1-2-3.)
Third, it provides an illustration of the principle that open source and proprietary software are alternative business models, not alternative modes of production. Open source software depends on companies that see value in providing software as a platform for additional products or as an add-on to make other products more useful. Proprietary companies sell software directly. Neither approach can claim moral superiority.
And finally, nothing would prevent a proprietary company from offering bounties, and thus enlisting the energies of the programming community at large. As many have pointed out, open source and proprietary software seem to be converging, with each mode borrowing from the other as necessary.
posted by James DeLong : 8/9/2004 03:02:05 PM
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Aspen Summit--Register Now
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The Aspen Summit is only two weeks away! Register now.
Join Michael Powell, Hew Pate, Craig Mundie, Larry Babbio, Bob Kahn, Zoe Baird, John Thompson, Shane Robison, Darcy Antonellis, Jim Crowe, Glenn Britt, Dan Gillmor, James Taranto, Walter Isaacson, David Post, Orson Swindle, Kathleen Abernathy, Ambassador David Gross, Emery Simon, Mark Stahlman, Dale Jorgenson, Robert Sachs, John Windhausen, Steve Largent, Walter McCormick, Mike Gallagher, the Professor and MaryAnne!
posted by Ray : 8/9/2004 01:53:56 PM
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Not So Strange Bedfellows
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Tyler Cowen has an interesting post on the intersection of cultural protectionism and the protection of intellectual property. It seems the French government deplores illegal file swapping. Why would the French government make common cause with American content producers?
[T]hey believe that enforceable copyright is a prerequisite of cultural protection. They cannot keep out American culture if the medium is illegal downloads.
3.16 million songs and one million movies are illegally downloaded in France each day, four times more than are purchased legally (See Variety magazine, July 26 issue, p. 11). It is believed that Hollywood movies are the most popular downloads.
Of course, in order to stem the flood of pirated cultural goods, the French could ease the import quotas that restrict legal distribution of American film and music. Look for this issue to come to the agenda of your favorite international organization soon.
posted by Kent : 8/9/2004 01:29:53 PM
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Pricing Software and Pills
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The Wall Street Journal has an opinion piece by Frank Luby and Frank Bilstein giving software firms pricing advice from drug firms. Both industries face similar problems -- they have high fixed and low marginal costs and hence the pricing strategy is not self-evident. More than that, it's damned tough to figure out how to price in such a market.
The article emphasizes paying attention to the demand-side in setting prices -- what prices meet the customers' needs and expectations best? This means a host of ephemeral factors must be taken into account, in addition to things like perceived "fairness" of the price and a degree of cost certainty for the consumer. They also discuss how habits and expectations form. Large enterprise software consumers are apparently aware of the promiscuous discounting that goes on, and exploit it accordingly. But such practices make it dreadful to be software supplier, needless to say. Just ask the recording industry how unfortunate it is for consumers to begin believing a product is "free."
These pricing conundrums are everywhere in digital industries and the economists have no good answer. As Jim has noted, the economists' marginal cost pricing prescription is useless, if not dangerous here. The economists' more sophisticated suggestions for high fixed, low marginal cost industries -- Ramsay pricing -- either offend consumers' sense of fairness (ask a business airline traveler) or reek of "blackboard economics" that gives the right answer in theory but is useless in practice.
In the end, my feeble take is that pricing in such industries is really, super, mega-hard; that theory provides little guidance; and that regulators, academics and theorists can accomplish only mischief by trying to interfere here.
posted by Ray : 8/9/2004 01:17:28 PM
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