Archive for June, 2010

Cisco Announces the Cius, the BlackBerry of Tablets

Cisco announces that it will be launching an Android-based tablet next year named the Cius, aimed squarely at the business market.

Music Publishers Keep Lashing Out At Consumer Groups; Those Who Respect Individuals’ Rights

It appears that music songwriters and publishers don’t yet recognize that going on the attack against groups representing public interests and consumers’ rights is a strategy destined to backfire. They just keep doing it, and it’s really making them look both petty and petulant, with no desire to actually understand these issues. Instead, they just think the world owes them their business model, and anyone looking out for larger interests is, quite literally, “the enemy.” We’ve already covered ASCAP’s (long planned) attack on Creative Commons, EFF and Public Knowledge. These attacks are so distasteful that even many ASCAP supporters are upset about them.

Now, it appears that the National Association of Music Publishers is getting in on the misplaced anger. In a recent speech, its CEO, David Israelite lashed out at these groups, and lumped CEA and CCIA into the bunch. CEA and CCIA, of course, have both been pretty strong supporters of making sure that copyright law is not harming innovation or the economy. These are important issues if you believe that a stronger economy is important for everyone — including musicians and songwriters — but it appears that Israelite and the NAMP take a very narrow, zero-sum view of the world, which is that, if the gov’t isn’t handing over greater and greater protectionist policies, something’s wrong — and anyone who supports looking at the actual evidence should be shouted down as an enemy. It’s not a position that can be supported by logic, so it’s pure emotion:

But there is a growing enemy that does not have respect for copyright at all. And this is a very different enemy.

When the U.S. Government Accountability Office released a study in April on the economic impact of intellectual property piracy, the Electronic Frontier Foundation, Public Knowledge, the Consumer Electronics Assn. and the Computer and Communications Industry Assn. took out a full-page ad in newspapers around Washington, D.C. “Content industry piracy claims are bogus,” the ad read. “For years, claims of huge losses from digital piracy have been used to justify harsh restrictions on innovators and consumers . . . They have harmed our competitiveness, hampered legitimate businesses and impeded innovation.”

Who are these four groups and why would they take out full-page ads to suggest the ridiculous–that theft of intellectual property isn’t really bad? The answer is, this is the new face of our enemy.

Yup. They call these groups “enemies” twice. Very subtle there. What’s really glaring, however, is that Israelite doesn’t even respond to the actual study at all. I mean, you would think that the actual evidence presented by one of the few parts of the government that is widely respected for its objectivity in doing research, would be worth commenting on. Nope. He skips right over the actual evidence and blames these four groups for actually highlighting what the evidence says. And then he claims that they’re “suggesting the ridiculous”? In other words, Israelite has taken such a faith-based position, that when actual evidence is presented that goes against his faith, he doesn’t just shoot the messenger, he shoots anyone who repeats the message. Convincing.

These four groups have an extremist, radical anti-copyright agenda. They all have an economic interest in the theft of our music or paying little to nothing for it. [And] they are intellectually dishonest in how they approach these fights.

Radical extremists, huh? Isn’t that what the Canadian politicians behind the new copyright law, James Moore, just called critics of his bill? Sounds like the talking points on anyone actually interested in consumer rights is making the rounds, and “radical extremists” is the key phrase in trying to tar and feather anyone who suggests consumers have rights.

I have put together a top 10 list of the positions taken by these groups that I will define as their extremist, radical anti-copyright agenda.

Oh, do tell. This is going to be a great list, I’m sure. Please make sure that it’s in Letterman-style countdown format too…

No. 10: They support changing the law to reduce damages for copyright infringement.

That’s radical extremism? Wow. Of course, when the damages for copyright infringement are so far out of line with the actual harm of copyright infringement — such that someone sharing a single album’s worth of music for non-commercial purposes can be fined $2 million — it seems like it’s actually kind of a pretty good question why the damages are so high. Even judges in these cases appear to find the damages results laughable. When the damages are entirely out of line with actual harm, it seems perfectly reasonable to suggest they be brought more in line. How is that radical or extremist?

No. 9: They support the elimination of statutory damages for secondary copyright infringement.

Again, how is it either radical or extremist to suggest that liability for breaking the law should fall on those who actually break the law, rather than some 3rd party with deeper pockets? Personally, it seems a lot more radical to blame one party just because it’s easier and they have more money, rather than those who actually break the law.

No. 8: They favor rolling back copyright extension; in some cases, radically.

Again, I’m at a loss as to how this is either radical or extremist. Actual evidence (again, the stuff Israelite would apparently prefer to avoid at all costs) has shown the net loss to society and culture from copyright extension. Our original copyright law lasted for, at most, 28 years. The entire point of copyright law was supposed to enrich the public domain, but we haven’t had anything enter the public domain in years, and it’s unlikely we’ll see much enter the public domain in our lifetime. That seems radical.

No. 7: They favor the elimination of the songwriter and publisher rights for server, cache and buffer copies.

Again, this is not at all radical. Nor is it about “eliminating” rights. It’s about accurately applying the law so that ridiculous results don’t emerge — such as cases where cache or buffer copies of songs require additional royalties and licenses, when they’re clearly in transit. It was about not outlawing technology based on how long the wire is (i.e., the Cablevision case, where Israelite apparently supported the blatantly ridiculous position that a DVR hosted by Cablevision is illegal, because it hosts cached versions in transit, while the DVR in your home is legal).

No. 6: They oppose efforts to obtain the identities of individuals engaged in massive copyright infringement.

Not quite. They oppose efforts that expose individuals’ privacy without fair and due process. Who knew it was “radical extremism” to insist on privacy rights and due process. These groups have no problem with exposing the identities of those who break the law when there is due process involved. It’s hard to believe that Israelite is really suggesting that music publishers don’t believe in due process or privacy rights.

No. 5: They support extreme versions of orphan works legislation.

Misleading again. Orphan works legislation is a red herring — only brought about because of the ridiculous overreach in copyright law that wiped out the public domain. The sort of overreach that Israelite’s group supported. So now when these groups try to fix one of the massive problems that this overreach created, it’s dubbed “radical extremism.” Yikes.

No. 4: They have filed legal briefs supporting anti-copyright positions of Grokster, Napster, LimeWire, Cablevision, Google, YouTube and Verizon.

Misleading in the extreme. None of those lawsuits involved “anti-copyright” positions, no matter how much the entertainment industry likes to spin these cases that way. The first three — Grokster, Napster and LimeWire — were never “anti-copyright” positions, they were questions about third party liability. Again these are just questions about who it’s fair to blame: the user or the toolmaker. The entertainment industry wants to blame the toolmakers. Common sense says you blame the actual user. Claiming that a debate over properly applying liability is an “anti-copyright” position is deliberately dishonest. The Google/YouTube case is the same story. It’s a case about liability. Not anti-copyright. The Cablevision case we described above. It was about whether or not the industry could veto technology based on the length of a wire. That’s not anti-copyright at all.

Finally, it’s pretty shocking that he includes Verizon in this list. I’m guessing he’s referring to the RIAA’s fight with Verizon way back when. To suggest that Verizon is “anti-copyright” is ridiculous. That was, yet again, a case about due process — which I guess Israelite is admitting he doesn’t believe in. This Verizon case involved the question of whether or not the RIAA could just demand Verizon hand over details of Verizon customers without a court-reviewed subpoena. The issue covered basic due process, which had nothing, whatsoever, to do with copyright.

It’s really stunning how blatantly Israelite is basically admitting that due process is meaningless if you interfere with “his” business model.

No. 3: They oppose graduated-response protection for copyright owners.

Yes, it’s “radical extremism” to support the view held overwhelmingly by consumers that kicking people off the internet is punishment that does not come remotely close to fitting the “crime” of sharing, distributing and promoting music you love for free.

And, again, of course, most of the arguments against graduated-response efforts are due the clearly unconstitutional lack of due process involved: cutting people off the internet based on accusations rather than convictions is pretty radical and extremist. Actually fighting for due process? Not so much.

No. 2: They oppose treaties that support copyright enforcement like the Anti-Counterfeiting Trade Agreement.

Heh. This one is amusing, because he conveniently ignores the serious problems with ACTA. They’re not “opposed” to these treaties just for the hell of it, or because of some “radical extremist anti-copyright” position. They’re opposed to it because it has all sorts of ridiculous language that will do serious harm. But, I guess for Israelite to realize that he’d have to look at the evidence, and he’s less a fan of that than he is of supporting due process.

No. 1: They actually argue that illegal peer-to-peer file-sharing traffic helps the economy and doesn’t hurt songwriters.

I’m actually not aware of any of those four groups actually saying that, but I will say it. What’s hurting songwriters is their inability to adapt to a changing market. The songwriters who are adapting seem to be doing just fine. We write about them all the time, but Israelite won’t read this blog, I’m sure, because it’s filled with “evidence.” Yes, if you don’t adapt to market changes, it can “hurt” your business. But that’s what most of us here in capitalist America think is a good thing. Otherwise we’d all be riding around in horse buggies. So, sure, automobiles “hurt” the horse buggy market. And the printing press “hurt” the monks-writing-books business. But what happened? Much greater opportunities came about as a result, and the smart horse buggy makers who jumped ship to join automobile makers did just fine. We’re seeing successful songwriters adapting all the time. It’s just that they’re doing it without kowtowing to Israelite and NAMP.

I don’t see how any of that represents “radical extremism.” I see plenty of attempts to falsely demonize those who believe in due process, privacy rights, consumer rights, innovation, correctly applying liability and (*gasp*) actual factual evidence. But, that’s not radical extremism. It’s called reality.

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The Lack Of A Billion Dollar Pureplay Open Source Software Company Shows The Market Is Working Properly

A few weeks back, Glyn Moody wrote a column discussing why there were no “billion dollar open source software companies,” in response to a discussion he had with Redhat’s CEO (Redhat is in the $750 million range):

He said that he did think that Red Hat could get to $5 billion in due course, but that this entailed “replacing $50 billion of revenue” currently enjoyed by other computer companies. What he meant was that to attain that $5 billion of revenue Red Hat would have to displace software that currently costs $50 billion. Selling $50 billion-worth of software — even if it only costs $5 billion — is somewhat hard, which is why it will take a while to achieve.

I immediately knew I wanted to write up something about it, as it reminded me of a point I’ve been wanting to discuss for a while. But I got busy with some other things, and in the meantime, a bunch of other folks picked up the ball and ran with it — and each time they did, they added something different to the conversation, which gave me more to think about before writing up this post. Matthew Aslett pointed out that this is leading many companies to adopt hybrid models while Stephen O’grady pointed out that the question was really irrelevant. Katherine Noyes, over at LinuxInsider highlighted many other points that people brought up as a part of the discussion. It’s all a very interesting read, though none really hit on the two key points that Glyn’s original column got me thinking about:

1. There absolutely are billion dollar open-source companies, but they’re not pure play open source companies. But that’s okay, because a “pure play” open source company is like a record label trying to focus on just selling music. You’re in the wrong business — trying to sell infinite goods — so of course the direct profits should be limited.
2. The lack of billion dollar pure play open source software companies is a sign of a working efficient economy. In fact, billion dollar pure play open source companies would be a sign of a market failure.

On that first point, I would argue that tons of companies are, actually, billion dollar open source companies: Google, IBM, Facebook and many others, for example, all rely heavily on open source software and are valued at well over a billion dollars. It’s unlikely that any of the three would be anywhere near what they are today without open source software. It’s just that all of these companies were smart enough not to be in the bad business of selling an infinite good. Instead, they all looked for ways to use an infinite good — for free — to make something scarce massively more valuable. With Google it was user’s attention and all of the information out on the web. With IBM it was services to support enterprise technology. Even Redhat, the company that kicked off this discussion, really makes its money from services and expertise.

Arguing about the profits directly attributable to pure play software sales of open source software is like only counting CD/digital download sales and claiming that’s the “music business.” It’s not. It’s the recording industry.

But the more interesting and more important point is about the lack of billion dollar pure play open source software companies is the fact that this is a sign of a strong, healthy and efficient marketplace. Even if you go all the way back to your Adam Smith, you would know that when you have a company making outsized profits, competitors will enter that market. That’s the nature of a free market, and it tends to lead to efficiency, innovation and (most importantly) consumer surplus.

I’m reminded of various studies on modern societies without intellectual property protections (or with very weak intellectual property protections) that often saw thriving and highly competitive industries in those areas. One area that has been particularly interesting to me lately is looking at various countries that did not have patent coverage for pharmaceuticals, but then were forced into it. If you look at the pharma industry in those countries, you see the same story almost every time. Without patents, the industry is thriving with many, many different firms (sometimes hundreds). Yes, a percentage of these firms are certainly pure “copycat” firms, but the ones at the top are not. However, after patent protection is introduced (often with the claim that it will help investment, help competition and help innovation), the exact opposite occurs. Instead, many, many firms either go out of business or are gobbled up by large multinational conglomerates. The overall profits increase to those conglomerates, but the innovation and social welfare declines.

This is, of course, exactly what Adam Smith saw nearly two and a half centuries ago. If you give companies monopolies, they will take monopoly profits, but those monopoly profits come at the expense of innovation and consumer benefits.

So, giant billion dollar companies in markets — especially markets of infinite goods — suggests a market inefficiency of some sort. The lack of such pure play billion dollar companies is a good thing. It means the market is acting as it should, and being more efficient and creating greater economic benefit to the wider market. And this goes back to a point that Glyn makes in his original column:

I think this is the first time I’ve heard someone as senior as Whitehurst admit something rather profound: that open source solutions save money for customers by doing away with the fat margins for existing computer companies — and thus shrink the overall market. Opponents of open source like to paint this as “value destruction” that takes money “out of the economy” — as if free software went around burning down offices and warehouses.

What they fail to grasp is that the 90% savings do not just vanish like the smoke from those supposed conflagrations. That money is still in the economy, it’s just spent on other items: free software allows people to use their hard-won money for things other than operating systems, office suites and applications. In developing countries, for example, it might mean more funds available for education or health.

And that’s exactly the point. When a market is made more efficient, that actually spreads throughout other areas and helps consumer surplus, economic growth and the rest of the world benefit. Automobiles and airplanes “shrunk” the railroad market, but opened up massive new markets. The end result was a much bigger economy and greater economic opportunity and consumer surplus. Automated telephone dialing “shrunk” the telephone operator business, but opened up massive new efficiencies, leading to advancements like the internet itself. And that created massive economic efficiencies and growth and consumer surplus.

So, just as we shouldn’t worry about the lack of “billion dollar” pure play open source software firms, we should also not fall sway to the complaints of companies who are being disrupted by these models, about how all that money they make is somehow “disappearing” if the government doesn’t come in and protect their business model. What’s actually happening is all that money is being put to more efficient use. Unfortunately, it’s rare to see politicians or business leaders who actually understand this simple, but important fact, and it leads them to propping up legacy businesses, which actually slows down innovation, economic growth and consumer surplus.

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ASCAP Assails Free-Culture, Digital-Rights Groups

The association representing 380,000 composers, songwriters, lyricists and others associated with the music industry has begun a fund-raising campaign to stifle groups that support free culture and digital rights.

The American Society of Composers, Authors and Publishers is urging the membership to donate money to battle the Electronic Frontier Foundation, Public Knowledge and even Creative Commons.

In a letter sent to members this week, ASCAP said those groups and unnamed “technology companies” are “mobilizing to promote ‘Copyleft’ in order to undermine our ‘Copyright.’ ”

The letter continues, saying “the truth is these groups simply do not want to pay for the use of our music. Their mission is to spread the word that our music should be free.”

The fund-raising campaign came a day after Victoria Espinel, the nation’s copyright czar, outlined an intellectual-property enforcement plan that did not include a call to push internet service providers to adopt policies to cut service to repeat copyright scofflaws. Such a policy, referred to as “three strikes” or “graduated response,” was strongly backed by the motion picture and recording industries, and opposed by EFF and Public Knowledge.

Instead, Espinel said the nation’s “intellectual property-enforcement efforts should be focused on stopping those stealing the work of others, not those who are appropriately building upon it.”

The ASCAP, which also distributes royalties, said those groups are “influencing Congress against the interests of music creators. If their views are allowed to gain strength, music creators will find it harder and harder to make a living as traditional media shifts to online and wireless services. We all know what will happen next: the music will dry up, and the ultimate loser will be the music consumer.”

ASCAP did not return messages seeking comment.

ASCAP’s attack on EFF and Public Knowledge are farfetched. Those groups do not suggest music should be free, although they push for the liberalization of copyright law.

But the attack on Creative Commons is more laughable than ASCAP’s stance against EFF and Public Knowledge.

While lobby groups EFF and Public Knowledge advocate for liberal copyright laws, Creative Commons actually creates licenses to protect content creators.

The non-profit has issued various licenses to approximately 350 million pieces of content to writers, musicians, scholars and others. Flickr, for example, is filled with pictures licensed by Creative Commons.

The licenses allow the works in the public domain, with various rules regarding attribution, commercial use and remixing.

The group’s creative director, Eric Steuer, said nobody forces anybody to adopt the Creative Commons credo. “I think it’s false to claim that Creative Commons works to undermine copyright,” he said in a telephone interview. “It’s an opt-in system.”

Following Wednesday’s fund-raising letter from Paul Williams, ASCAP’s president, Steuer said several ASCAP members who also use Creative Commons licenses have donated money to Creative Commons.

Hat Tip: Boing Boing

Photo: labguest/Flickr