Tuesday, August 16, 2005

Off-line for a while

I'll going to be incommunicado for the next couple of weeks. Posting, such as it is, will resume once I'm back the week of 29 August.

Have a great summer!

Saturday, August 13, 2005

From copyfight to copytruce

flag of truce
There is middle ground between the competing principles that I highlighted in King Content vs. the Copyfighters: content owners’ right to sell bits, and consumers’ rights to Fair Use and First Sale. The "Digital Copyright Principles" are a basis for detente between the combatants:
Content owners have the right to monetize their property by selling it. While long admitted by many in the copyfight, this will be hard for some partisans to to concede.

Consumers and secondary content producers have a right to Fair Use of published content, which technology vendors will implement in their DRM solutions.
If there isn't an accomodation, the content industry will fight a long but doomed rear-guard action against a new system of intellectual property. For their part, copyfighters will rage against the machine for years, with little to show for it.

I’m suggesting that Copyfighters:
  • Give up the notion of First Sale as a consumer right, and recognize that licenses are an acceptable way to make money from digital goods
  • Stop demonizing DRM
In return, industry would:
  • Implement Fair Use in DRM. This will require a significant development effort. It will also be hard in legal terms, since Fair Use precendents may be contradictory.
  • Address copyright terms – the current approach of “Don’t let Mickey Die!” is commercially reasonable in the short term, but destructive to itsability to defend the social contract around IPR in the long term.
The goal would be to go from “copyfight” to “copytruce”.

A test of the d├ętente will be whether the two sides can agree on a rewrite of the DMCA. Once that’s done, the two sides should rework the badly broken copyright regime. Some industry players have acknowledged flaws in the software patent regime by taking an “it’s necessary, but we know it’s broken, and here’s how to fix it” approach; the same is needed for copyright.

The lack of a counter-party on the copyfight side makes negotiations tricky; who does industry talk to? It will be up to figures in the community like Larry Lessig and Cory Doctorow to take a lead. Provocations will be inevitable; one can never stop freelancers from taking radical action to scuttle any deal they don’t like. However, the Brits pulled this off with the IRA in Northern Ireland over the last decade or so, so it’s doable.

Doable, but not easy. Intangibles are hard for humans to deal with. There is little precedent, and we may just not be wired with good intuitions about digital goods. Abstract concepts can also generate the worst kind of conflict - take all the bloodletting in the Reformation around such abstractions as predestination vs. justification through works.

The politics are not conducive to a legislative solution. In the US, the White House doesn't much care about the issue, and certainly doesn't care about the players. Let's check of the list: Copyfighters - Lefties; Hollywood - Lefties; Silicon Valley - Lefties. Citizens' access to content is perhaps a more active issue in Europe, but since entertainment regulation is a national prerogative, the Commission may opt not to intervene.

2007 looks like a pivotal year. There will be a new administration in the White House, and key ICT directives will be up for renewal in Europe. Let's lay the groundwork, in terms of legal theory, technology and personal relationships, in the next 18 months.

Thursday, August 11, 2005

Cheap teencare: a man bites dog story

Externalities are usually exemplified by tales of a company forcing citizens to bear some of its costs, for example, a polluter dumping its waste into a river and leaving it to the community to pay for clean-up. In a role reversal, many parents are dumping their teens at the mall rather than bear the burden of looking after the little darlings themselves.

The Christian Scientist Monitor reports [1] that malls are attempting to cut back on rowdy behavior and loitering, which they believe leads to lost sales, by enforcing policies that require teens to be accompanied by parents after certain hours.

From the Monitor: "Mall managers say that packs of teens deter families from choosing the mall as their Friday night outing. Many complain they have become de facto baby sitters. "

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[1] At shopping malls, teens' hanging out is wearing thin, Sara B. Miller, Christian Science Monitor, August 11, 2005, http://search.csmonitor.com/search_content/0811/p01s01-ussc.html

Monday, August 08, 2005

If you don't care what something costs, the price goes up

Frank Michael Russel in today's Merc news round-up notes that the price of crude oil has reached $64. He notes that demand is a huge factor: "Investors are noticing that higher gasoline prices are having little effect on driving habits." Until demand drops - that is, until people start driving less because gas costs more - the price will stay high.

I'm just surprised that this reason hasn't been given more often for the high price of oil. It's not something that sits well with many Americans; cheap gasoline has become a right, not a wind-fall. SUV sales are slowing, but not very quickly. And the Chinese are just beginning to get the driving habit.

I imagine similar price insensitivity has kept prices for cable TV and broadband access high, too - not to mention credit card debt.

Saturday, August 06, 2005

Gownie glibido

LangMaker's wonderful page Neologisms A-Z has an endless supply of this kind of magic:

aalst, aasleagh, abajado, abalemma, abbrevolongation, aberbeeg, abercrave, aberition, abert
confuzzled, cong, conjugete, conlang, conlangorate, conlex, conmoralize, conquesor, constroy
gloopgleep, glottomania, glottopoietics, glug, goable, go-dog-go, goile, golant, goldensprog

The site also offers endless neographies, from CyrDaiLue, which uses Cyrillic script to express the Thai Lue vowel system, to Glaitha-B, which is used by fairies to write Mikiana

It reminds me that the "fine" in Fine Art is derived from the Latin "finis", meaning that it is an end in itself; it has no purpose beyond itself.

Ah yes, in case you were wondering:
  • gownie: A native of a college town who more closely resembles in behaviour and interests one associated with the university, from the word townie and the expression town/gown, with reference to the cultural divide found in college towns separating academia from native life
  • glibido: All talk and no action, coined in the 2001 Washington Post's Style Invitational: blend of libido and glib

Friday, August 05, 2005

King Content vs. the Copyfighters

It is too your problemI’m new to Copyfight, and I found Scott Kleper’s Introduction to Copyfighting a useful primer. Kleper defines the premises of copyfight by stating two complementary principles:
  1. “Copyfighters aren’t saying that information should be free.” I’ll call this Selling Bits, which is shorthand for the right that owners of digital information have to make money selling their products in any way they choose.
  2. “We are saying that as consumers of media (film, television, software, literature, etc.) we have certain rights that we would like to protect, [including] Fair Use [and] First Sale.” I’ll call this Fair & First. (Let’s leave aside the fine distinction that Fair Use is not a right but a defense against claims of infringement, and the fact that First Sale case law is murky at best. )
These two principles are the heart of the matter, not least because they are the paragraphs Cory Doctorow highlights in his endorsement of Kleper’s statement.

The hard question is whether both principles can be satisfied simultaneously for digital media. The very existence of the copyfight suggests that they cannot, since it is a struggle over which right trumps the other.

Incumbent content owners and their technology suppliers (“King Content”, for short) argue that DRM is the only way to make money from content. In order to implement DRM, they do not allow Fair Use (since copying any part allows a bad actor to copy and then infinitely reproduce the whole), and prevent First Use redistribution (since digital redistribution without limit means the value of the first copy is zero) by only licensing their goods, and not selling them. (In the interests of transparency: I used to work for King Content.)

The Copyfighters are inventing new business models that uphold Fair & First, since the existing ones which satisfy this principle don’t work very well. The examples so far are not conclusive. Kleper avers that there’s a wealth of content available under the Creative Commons license (CC); but even if one stipulates that volume of content is significant, that says nothing about profitability. Even CC itself allows producers to specify which uses are not allowed – but without DRM, or an equivalent technology, how are those rights to be enforced? And speaking of the Creative Commons Founders’ Copyright, Tim O’Reilly says “It lets publishers like us free up great books after they've lost profitability,” which implies that being free and being profitable are at odds.

The Tussle

Since both principles can’t be satisfied simultaneously, we have two camps, each advancing the primacy of their preferred choice: King Content vs. the Copyfighters. Each side concedes that both principles are important – but not equally important. King Content attempts to simulate some Fair & First functionality, though not at the expense of monetization; and the Copyfighters advance cases for monetization, though not at the expense of Fair Use and First Sale.

It’s a contest on many levels: insurgents vs. incumbents, paradigm shifters vs. the shiftees, and fragmentation vs. integration. The insurgents exalt the diversity and recombinant vitality of the web, and are betting that a new content consumption paradigm will inevitably follow. The incumbents want to keep making money with the least possible disruption; they support the status quo. Since scarcity is a precondition for value and hence profitability, the incumbents want to control as much of the value chain as possible – they want a closed, integrated end-to-end solution, which disgusts the insurgents.

Have no doubt, this is a political struggle. We’re talking about a shift in technology paradigm, which the Copyfighters want to convert into a shift in legal paradigms. If they succeed, it will lead to a shift in business power structures. This is a scary prospect for King Content – though as the Betamax case shows, the outcome could in fact be very profitable for the incumbents. The Copyfighters have a philosophical fervor that reminds me of the story John Markoff tells of the way the Sixties laid the foundation for the PC revolution in his new book, What the Dormouse Said.

In the court of public opinion, it becomes a question of who bears the burden of proof. Should the Copyfighters demonstrate that, and how, both principles can hold at once, or should King Content prove that they can’t? If both can’t hold, should King Content prove that Selling Bits trumps Fair & First, or do the Copyfighters have to establish the reverse?

Put another way: Is there a problem? Who’s problem is it? And who’s responsible for solving it?

At the moment each side is trumpeting the merits of its preferred principle. While Copyfighters mostly care about threat to Fair & First, their opponents see that as a threat to selling bits, since they can’t imagine of a viable business alternative. Both sides feel threatened – hence the passion.

Political skirmishing is well under way. The Digital Millennium Copyright Act (DMCA) limits one’s ability to obtain Fair Use by hacking content protection, on the basis that Selling Bits comes first.

Digital Rights Management

DRM is the Copyfighter’s Grendel. It is the mechanism King Content has chosen to use to charge for its product, and it is antithetical to Fair & First. The arguments against it fall into distinct (though often conflated) categories. DRM is said to be:
1. Inconvenient
2. Impractical
3. Counter-productive
4. Immoral

One of the most spirited cases against DRM can be found in Cory Doctorow’s talk at Microsoft Research in June 2004. He argues that DRM systems don’t work (= impractical); are bad for artists, for business in general, and for Microsoft in particular (= counter-productive); and are bad for society (= immoral). Doctorow, Kleper et al. always provide entertaining anecdotes, including the obligatory one about not being to tape from a DVD, about how infuriating DRM can be in practice (= inconvenient).

The arguments play different roles. If any of the first three are correct, business logic would dictate that King Content should change his behavior. However, neither people nor companies are logical… Given how entrenched positions have become, it’ll be difficult for industry to concede objections One through Three publicly if they turn out to be true. Hence the copyfight’s need for the fourth objection on moral grounds. Copyfighters have to make the political argument that even if DRM were to be convenient, practicable and productive, it is still to the detriment of society.

King Content cannot avoid the moral – that is, political – fight even if it wanted to, since the industry also needs political change. I don’t have a problem with Hollywood and Co stipulating whatever legal business terms they choose for their products. (Some in the copyfight community might disagree, or mightargue that some terms which are legal today shouldn’t be.) If Content’s offer is inconvenient or impractical, customers will spurn it and turn to the alternatives. If the alternative is legal and viable, and the Copyfighters are working to construct such a world, then let the best solution win. But since we’re dealing with new technologies here, legacy legislation won't always fit. King Content will need new law, as it did with DMCA. The debate then shifts from technical to moral ground, and a negotiation about the greater good. The Grokster case postponed industry’s need for new legislation, but cannot defer it indefinitely.

Denial

Both sides are in denial. While the Copyfighters profess to support the selling of bits, the examples I’ve seen where both of Kleper’s conditions are satisfied are anecdotal at best, though good work is emerging on the related topic of Open Source: see eg Perens on the economics of Open Source, and Steven Weber's book The Success of Open Source. Even if the Copyfighters can demonstrate that media in the new world are Free as in Speech, not Free as in Beer, they will still face indefinite trench warfare with King Content unless they can also show the incumbents a viable alternative to their current models. Right now they’re like the old-timer telling someone looking for directions that “It’s quite simple, really, but I wouldn’t start from here.”

It’s a favorite argument of Copyfighters that Bad Actors aren’t their problem. There will always be hackers, it is said (the Darknet paper is invariably invoked here), but most people are good, honest folk. Good, honest folk deserve Fair & First; tough luck on King Content if someone takes advantage of it to squeeze profits. In fact, the Copyfighters argue that there won’t be a squeeze. The folk who work for King Content, though, have a fiduciary duty to protect their business, and they’re still convinced that Bad Actors will suck out all their profits if Fair & First is applied the way Copyfighters want.

If industry has a failed business model, it’s not only its problem – it’s the Copyfighters’ problem, too. Without it, the rebels will only reach the sunny uplands of digital utopia over the cold dead bodies of today’s incumbents. That would be a long and bloody fight.

King Content, in turn, is suffering from “copyfright”. The industry is working hard to maintain the old model using new technologies, and is using legislation and litigation wherever possible to keep the market within the bounds that it’s comfortable with. There’s a resonance between King Content and King Canute, though with a notable difference: Canute was making the point that the sea cannot be held back, not trying to stop it.

The industry isn’t helped by the fact it’s in a “DRM Winter”, but can’t admit it. Like the AI Winter, great things were promised for DRM, but haven’t been delivered. The problem as stated is simply too hard to solve. In the end, many of the technologies AI researchers developed did come to market, but with little fanfare. Similarly, DRM technology will play a useful commercial role however the fight turns out. However, King Content denies the need for a Plan B; it’s DRM (in all its glory) or bust.

Outcomes

Copyright is a socially negotiated balance between content creators and consumers. “Copyfight” is the latest round in this tussle. At its simplest, there are three possible outcomes:

1. King Content wins
2. The Copyfighters win
3. There’s a negotiated settlement
The rebels are looking for a win, but since they’re the underdogs, they would probably settle for draw. The industry hasn’t thought seriously about what an accommodation might look like; it seems too awful to contemplate. It’s not illogical: for King Content, a draw is as bad as a loss, since it changes industry dynamics – not to mention the unacceptable loss of face if the promised DReaM doesn’t come true. However, a mixed world is the most likely outcome. I’ll explore the shape of a Content/Copyfight coexistence in a subsequent post.

Thursday, August 04, 2005

Faster, cheaper, open-er

A four prong strategy
Today's news that FCC Chairman Kevin Martin is trying to persuade one of the Democrat Commissioners to lift Title II requirements on telcos' broadband offerings provides an opening for setting a precedent that could help ensure that the broadband Internet is open to customer choice.

The Left likes network neutrality. The telcos (eg Verizon) are willing to implement Chairman Powell's Internet Freedoms. The cablecos are less willing to say the least, particularly in the light of the Brand X ruling - but the Chairman needs a vote. A deal could signal Congressional Republicans about the importance of the Internet Freedoms.

It's a necessary, but not sufficient, step to encourage innovation and strengthen the Internet. Since it all costs money, one needs four parallel tracks:

  1. Require "basic" open Internet access, but allow netops to discriminate among content providers for the rest
  2. Subsidize rural broadband build-out
  3. Support integrated rural development strategies in preference to agriculture subsidies.
  4. Hold the line against content regulation on the Internet, but keep an open mind about taxation.

The key issue is to make sure there is fast, affordable, open access for all.

  • Fast: There is no hard-and-fast definition of "broadband". Faster is simply better. At the moment, tens of Mbps seems to be the reasonable limit in urban areas, but that's out of reach for most Americans, even those in metros.
  • Affordable: There's no point having 25 Mbps service if it costs $80/month. Fast broadband in Korea is around $30/month, but that's with a big subsidy. Competition (where you have competition) will push prices down.
  • Open: The consumer Internet flourished as a result of its openness, which is the upshot of the common carriage status of modem calls over POTS. As everybody knows, that's not the case over cable today, and won't be for DSL once the Telecom Act rewrite gets done - unless Congress ensures it.

Remember "Faster, better, cheaper, pick two?" Network operators ("netops", for short: cablecos and telcos, mainly) argue reasonably that building a fast network takes a lot of investment. If service is going to be affordable, they contend, they need a cut of the profits content providers generate over their wires. This goes against "open"; while big players like Sony, Microsoft, Disney etc. may well be able to pay the toll, innovative small outfits won't be able to sustain the overhead.

The mythical "third pipe" isn't in the offing. Wireless broadband will help in rural areas, but will never be a viable competitor to the wireline players. Wireless just doesn't have enough capacity. Every wire owner is essentially their own FCC - they the entire electromagnetic spectrum at their disposal in the wire. Wireless will always have just tiny slivers in comparison. We're stuck with a duopoly in the US, and it will have to be watched carefully.

The four prongs work this way:

First, find a mid-point between "no carriage obligations" (Title I information service) and "common carriage" (Title II telecommunications service) that advances openness while allowing netops to recoup their investments by milking content owners who want premium service. There needs to be (a) a requirement to provide basic Internet access with no strings attached, with (b) the freedom for netops to to offer more, and charge more, for higher quality access. "Basic" will be like basic cable; part of the network's capacity to which the Internet Freedoms will apply.

Second, find a USF-like mechanism to subsidize the build-out of rural broadband while minimizing structurally distorting hand-outs to rural telco monopolies. I'm in favor of a scheme where subsidy is tied to customer preference. Since one has to handle both operating expenses (easy with per-customer payments) and capital expenses (hard), you'll probably end up with a long-term averaging rather than a per-year pay-out.

Third, reorganize funding for rural areas away from agricultural subsidies to large farmers, and towards development assistance to support local entrepreneurs. The broadband loan program is a possible approach, but I hear it's going down in the budget cuts. The Bread for the World Institute outlines the dynamic of rural development in his 2005 Hunger Report.

Fourth, and changing gears away from infrastructure, take a hands-off posture on content regulation. There is going to be increasing pressure to apply broadcast obscenity regulation to new media. The cable industry has successfully averted that requirement on their pipe by arguing that it's not a public asset, but once you add in Hollywood's worries about losing control over their IPR and worries about the security implications of peer-to-peer technologies, the cards are thrown into the air. I think it's premature to think about clamping down on content that flows over the web. However, and this gets us back to $$, I think the whole approach of "don't tax the Internet" is a pipe dream. I'm not advocating special taxes on the net. However, general taxes should probably apply to the net, both as a transport and for content, as it applies to other media. Tax content and traffic - don't regulate it.