Losing The Press War

The major labels are like the Bush Administration.  Armed with political capital after a crisis they’ve both proceeded to completely squander it.

The labels had the press on their side.  After all, people were stealing their intellectual property, and newspapers are intellectual property too.  Were they next?

Actually, on some level, the press is ALREADY next.  With so many newspaper sites absolutely free.

Then again, the news industry can see the handwriting on the wall.  And is experimenting with change.  With craigslist.org gaining momentum every day, and it and its sister company eBay eviscerating classified ads, traditional print media is consolidating those ads online and looking for new revenue models.  Will the papers survive?  Interesting question.  Not in the form they presently exist anyway.  Then again, you have the music industry, trying to get people to buy forevermore the CD.  And, at least those news sites that DO charge don’t present the material in an incompatible format, unreadable by Internet Explorer, Safari and Firefox (for that you need mtv.com, incompatible with Macs because they’re crippled by using Windows Media Player with its DRM-encryption by the labels).

ANYWAY, the point is, the labels had the media on their side.  But, by not coming up with a reasonable alternative to P2P, or authorizing it, and SUING traders, they’ve lost all their good will.  When the WALL STREET JOURNAL, the business paper of record, comes down on you, you KNOW you’re in trouble.  And, the L.A. "Times" weighed in two weeks ago and again today.

For those out of the loop, I’m reprinting these articles below.

Yes, in comparison to the vitriol on the Web, these opinions might seem somewhat mild, but they’re equivalent to the mainstream press hammering the fact that we went to war in Iraq based on false evidence, trumped up by the Administration.

Look at Bush’s approval rating.

What do you think the MAJOR LABELS’ approval rating is?



November 26, 2005; Page A10

It’s been six years since the entertainment industry loosed its lawyers on the makers of Internet file-sharing software, and two years since the industry began suing the people who use it. By and large, it’s winning these legal battles — including a court-ordered shutdown of Napster in 2001 and a 9-0 Supreme Court ruling against Grokster in June. But that doesn’t mean it’s winning the war.

In fact, Americans continue to download music and movies using these so-called "peer-to-peer," or P2P, networks in record numbers. Through its trade association, the Recording Industry Association of America (RIAA), the music industry has sued more than 15,000 people in the past two years alone. Yet over that same period, traffic on file-sharing networks doubled, according to Big Champagne, a media company that measures P2P activity. Halfway through this year, volume had climbed to nearly nine million downloads, a new high and a 20% increase over last year.

Those numbers would seem to validate the findings of a 2004 paper on file-sharing trends by researchers at UC San Diego and UC Riverside. Using empirical data, it concluded that between 2002 and 2004, "P2P activity has not diminished. On the contrary, P2P traffic represents a significant amount of Internet traffic and is likely to continue to grow in the future, RIAA behavior notwithstanding."

The industry has every right to continue this behavior; downloading the new Harry Potter movie or Black Eyed Peas CD tracks without paying for them should satisfy any definition of intellectual-property theft. The more interesting question is whether litigation is the best long-term strategy for combating digital piracy. How viable is a business model based on suing your customers, especially when the lawsuits appear to be having no deterrent effect?

It’s too bad, but history shows that the entertainment industry is much more inclined to fight new technologies than embrace them. Songwriters tried to sue the player piano out of existence a century ago. Vaudeville performers sued Guglielmo Marconi for inventing the radio. Disney and Universal sued Sony for making the Betamax VCR. And cable entrepreneurs over the years have been dragged into court by everyone from television broadcasters to the Motion Picture Association of America. If music and movie moguls had their druthers, they would have monopoly control over any device or platform capable of reproducing sound or pictures.

Which is to say that we can expect this litigious war against the Web to continue for now. Content is king, and content providers fear disruptive new technologies that could pose a threat to the existing order. With Grokster, the plaintiffs were hoping the court would overturn its landmark 1984 Betamax decision, which held that VCRs did not violate copyright law because the technology was "capable of substantial noninfringing uses." But rather than addressing this core issue of whether P2P networks meet the Betamax standard, the court chose to focus its ruling on Grokster’s business plan. Because the company was actively promoting a product for infringing uses, Grokster was found liable.

"It’s a bit disappointing that we didn’t get any clarity about the Betamax test here," says Cindy Cohn of the Electronic Frontier Foundation, which represented StreamCast Networks, a Grokster co-defendant and fellow file-sharing software company. "That’s the more interesting and harder question that was put to the court. When can you be liable based on what your customers do with the technology?"

Companies may yet come up with more legitimate file-sharing models and better controls, so it’s better that the court didn’t rule P2P networks illegal as such. But by largely ducking this debate, the Grokster decision only adds legal uncertainty to the technology sector and could undercut innovation and investment in new products. There’s a reason companies like Intel and every major Internet service provider sided with Grokster. They are worried about a situation in which lawyers replace engineers on design teams. And smaller companies who want to innovate, but find themselves in some grey area where customers could use their product for copyright infringement, better make sure they have a huge war chest for litigation costs before proceeding.

The lesson music and movie lobbyists take from their Grokster victory is to stay the course. But Tim Lee, a technology and intellectual-property expert at the Show Me Institute in St. Louis, says that suing tech companies and music fans ultimately is a fool’s errand. "I don’t think they  fully grasp the size of the challenge they face," he says. "It will be an arms race. P2P networks will improve. The recording industry will find a new way to catch people, and P2P networks will find better ways to avoid getting caught."

The fundamental problem, says Mr. Lee, is that the Internet itself is a peer-to-peer network. If two willing people want to exchange files, you’re never going to be able to limit their ability to do so in a nation of 290 million people. Besides, you wouldn’t have time to sue them all even if you could catch them.

The copyright laws we live by today were written to go after commercial piracy. They are based on the idea that you can use control of the ability to make copies as a basis on which to remunerate content providers. No one envisioned a time when we would all be in possession of computers that can make copies as freely and easily as we now can.

Moreover, the copyright system is based on moral precepts that most people today accept. But will future generations raised with P2P technologies see piracy differently? "If I were a recording industry executive," says Mr. Lee, "I would be looking very hard at business models that embrace P2P technology, not looking to lawyers to thwart it."

Los Angeles Times

File under meek

November 11, 2005

CHALK UP ANOTHER HOLLOW victory for the entertainment industry in its crusade against piracy. This week, the major music and movie companies reached a legal settlement with longtime nemesis Grokster Ltd., ending a four-year court battle. But the industry’s quest to choke off the supply of digital bootlegs remains as difficult as ever, and it’s unlikely to succeed until it recognizes how the demand for music and movies has changed.

Grokster’s software lets users tap into one another’s computers over the Internet, enabling them to search through an ocean of digital files and make free copies of whatever they like. Although that sort of sharing isn’t necessarily illegal, much of the activity on Grokster was – in particular, the copying of copyrighted songs, movies and games.

As part of the settlement, Grokster agreed to stop distributing the program and pay $50 million in damages. The company also announced plans to offer a new file-sharing service that does not violate copyright laws. The deal, however, won’t have much affect on the people using Grokster software. Like angry words that can’t be taken back, the software cannot be recalled or shut off.

Meanwhile, users have plenty of other sources for free downloads. It’s true that the ranks of commercial file-sharing companies have been thinning since June, when the Supreme Court ruled that they could be sued for promoting piracy. But plenty of file-sharing networks remain, including noncommercial ones that could prove impossible to stop in court.

As long as there is a powerful demand for free downloads, the entertainment industry cannot hope to curb piracy by shuttering file-sharing companies one by one. Nor has it made much of a dent in online piracy by suing thousands of people on file-sharing networks for allegedly violating copyrights.

Instead, the industry needs to offer the millions of people on file-sharing networks something that’s both legal and more compelling than Grokster. Apple’s iTunes Music Store may have sold more than half a billion downloadable songs in the last year and a half, and RealNetworks may have signed up more than a million people for its subscription music services, but they’re not converting the masses. Doing so will require more choices, and especially ones that look and feel like the most popular sources of free music on the Net.

One emerging alternative is file-sharing companies offering filtered networks that let users sample songs for free, then charge them for tracks they can burn onto CDs or transfer to a portable device. It’s an idea that has promise, but the industry needs to do more than just change the way music is delivered. It has to change what it charges for that music and how it lets customers listen to it.

The enormous number of songs downloaded on file-sharing networks shows that the industry, with its slumping CD sales, isn’t satisfying the demand for music. Cutting down the supply of free file-sharing software isn’t as important as meeting the new generation of demand.

Los Angeles Times

Out of tune

November 28, 2005

SONY BMG, THE WORLD’S second-largest record company, shot itself in the foot so badly this month that it may have wounded the entire music industry. Its disastrous dalliance with invasive anti-piracy technology gives music fans yet another reason to view the major record labels as victimizers, not victims.

With its CD sales slumping and market share dwindling, Sony BMG has been unusually aggressive in its efforts to stop people from getting songs for free. This year it has focused on stopping CDs from being copied, a phenomenon that the Recording Industry Assn. of America recently ranked as the industry’s biggest problem.

It’s a tricky proposition, both technically and culturally. CDs were not designed to prevent copying, and music lovers in the U.S. have grown accustomed to copying music onto their computers, portable devices and recordable CDs. But Sony BMG was dazzled by new anti-piracy technologies that promised to stop computers from making more than a few copies of a CD. The company decided this year to put these technologies on every disc it released.

Unfortunately for Sony BMG – and luckily for everyone else – a computer whiz discovered that this new technology surreptitiously loaded programs onto a PC that hid themselves from view and resisted removal. This approach created an alarming vulnerability that hackers were quick to exploit. Sony BMG and its partner soon offered a program to fix that problem, but the software made it possible for hackers to hijack users’ computers through the Web.

Finally sensing that the technology did more harm than good, the label recalled about 5 million CDs that used the controversial software – more than 50 titles. Anyone who bought one of the affected discs can exchange it for an untainted version.

The recall is costly, but it may be the least of the record company’s worries. The Texas attorney general, the Electronic Frontier Foundation and several private lawyers have filed lawsuits against Sony BMG, arguing that the anti-piracy software violated consumers’ rights or state laws.

Undeterred, Sony BMG continues to put out CDs carrying anti-copying software by another anti-piracy software outfit. According to the Freedom to Tinker blog, putting one of these CDs into a computer installs hard-to-remove software that alerts the company whenever a CD loaded with its technology is played.

This kind of invasiveness is mind-boggling, and what does it accomplish? It doesn’t stop piracy. Anyone who wants to make a few hundred duplicates of a new Sony BMG release can easily find versions online that can be copied without limit.

In fact, Sony BMG’s tactics might have the opposite effect. "Digital rights management" technology can be a boon to consumers, enabling new ways to experience music that are more flexible and personalized than 12 songs sold on a plastic disc. But Sony BMG used the technology to give CD buyers less than they’re accustomed to, effectively treating every customer as a potential lawbreaker.

As a result, many music fans are more resistant to the whole idea of rights management. It’s hard to blame them when its purpose is not so much to manage their rights as to reduce them.

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