Category Archives: Business and Economy

Righthaven losing that rocky mountain high

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I noted yesterday that copyright troll Righthaven hasn’t filed any new lawsuits in the past two months, but I was suspicious that it was all over.  After reading Wired’s coverage today, however, I think Righthaven’s end is near:

The new chief executive of MediaNews Group, publisher of the Denver Post and 50 other newspapers, said it was “a dumb idea” for the nation’s second-largest newspaper chain to sign up with copyright troll Righthaven.…

“The issues about copyright are real,” [John] Paton told Wired.com in a telephone interview. “But the idea that you would hire someone on an — essentially — success fee to run around and sue people at will who may or may not have infringed as a way of protecting yourself … does not reflect how news is created and disseminated in the modern world.”

I stand corrected.  Barring a court-ordered miracle, it seems only a matter of time before Righthaven closes up shop.

Mr. Google, take down this content

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Google’s default response to possible copyright infringement on YouTube is surprisingly mechanical and far from perfect.  Consider TMZ’s recent report on the hapless Justin Bieber and his ubiquitous YouTube music videos:

Justin Bieber has been victimized by a brand new cyber-enemy … an enemy who found a way to get every single one of JB’s official music videos REMOVED from YouTube….YouTube has a yank first, ask questions later policy when a copyright claim is made — so they simply pulled the videos off the site … until the dispute is resolved.

Of course, there are myriad problems with such a system, as Ernesto over TorrentFreak elaborates:

YouTube describes its Content-ID anti-piracy filter as a state-of-the-art technology, but those who look closely can see that in some cases it creates a huge mess. The system invites swindlers to claim copyright on other people’s videos and make money off them through ads. It automatically assigns thousands of videos to people who don’t hold the copyrights, and its take-down process appears to be hugely biased towards copyright holders.…

Content-ID allows rightsholders to upload the videos and music they own to a central ‘fingerprint’ database. YouTube will then scan their site for full or partial matches, and if there is a hit the copyright holder can automatically take it down, or decide to put their ads on it.

Although the above sounds like a fair and honest solution, not everything Content-ID does goes to plan.…One of the problems appears to be that people with bad intentions can claim copyright on videos they have nothing to do with, and even run ads on them. In the YouTube support forums there are hundreds of posts about this phenomenon…[although] most of the “misattribution” problems seem to be the result of screwups and technical limitations.

As Ernesto notes in passing, there is supposed to be an opportunity to counter a takedown request under the Digital Millennium Copyright Act (DMCA).  Unfortunately, Google’s Content-ID system doesn’t work this way, as Patrick McKay of FairUseYouTube.org elaborates:

Instead of requiring copyright owners to file a formal DMCA notice in response to a Content ID dispute, thus allowing users to invoke the DMCA counter-notice process, YouTube allows copyright owners to somehow “confirm” their copyright claim through the Convent ID system and re-impose whatever blocks were originally in place through Content ID. In this case, a message will appear on the user’s “View Copyright Info” page for that video saying, “All content owners have reviewed your video and confirmed their claims to some or all of its content.” After this, as far as I can tell, there is absolutely no way for the user to file a dispute and get their video restored.

Certainly, Google is under no legal obligation to provide video distribution services to anyone who asks for them no matter how contentious the content’s ownership.  At the end of the day, Google is a business, and dealing with the minutia of these copyright ownership disputes is expensive.  It’s obvious why Google wants to bow out of the fight as early (and cheaply) as possible.

Nonetheless, it is extremely troubling that Google is silencing some users’ speech without allowing them to defend (at their own risk and expense) legal rights provided under the DMCA.

No new lawsuits for Righthaven

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David Kravets over at Wired notes today that Righthaven appears to be on “life support” since it hasn’t filed any new lawsuits in a while:

With [a bunch of sanctions and adverse fee awards] now on appeal, the litigation factory’s machinery is grinding to a halt. A review of court records shows Righthaven has not filed a new lawsuit in two months, after a flurry of about 275 lawsuits since its launch at the beginning of last year. A court filing indicates there have already been layoffs (.pdf) at Righthaven’s Las Vegas headquarters, and even some already-filed lawsuits are falling by the wayside because Righthaven isn’t serving the defendants with the paperwork.

I think Wired may be a bit premature in its prediction of Righthaven’s demise.  Litigation factories have a tendency to rise again and again from the ashes.  Still, it’s nice to hear that no new bloggers are being hassled by Righthaven, at least at present.

What’s good for Amazon.com may not be good for California (or America)

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Even though I just used this phrase (“What good for [company X] is good for America”] when looking at the impact of AT&T on American history, I agree that the deal Amazon is trying to offer California, jobs for no sales tax, is a bit strange:

Amazon has spent more than $5 million loading up their More Jobs Not Taxes campaign for a referendum that would repeal the legislation that started charging them taxes. Meanwhile, the latest turn in the political fight has been that Amazon offered to create 7,000 jobs if the state postpones enforcing its sales tax on the company until 2014.
Here’s why that offer is a big deal. It transforms a debate that is fundamentally about a value — fairness — into a numbers game. The next step will be that Amazon’s political operatives will plant the seed that the bill will kill jobs, probably a nice round number like 7,000 of them. According to our calculations, the politicos will say, California is killing the exact number of jobs that Amazon offered to add! Taxes are bad!
I don’t mean to pick on Amazon here. Every company is after as many tax advantages as they can get. Walmart, for example, which pushed the effort to get the Amazon sales tax bill passed, skirts some online sales taxes, too. And every company has realized that it is good politics to say that taxes kill jobs, whether they have real evidence for it or not…
Now, by transforming tax fights into skirmishes over how many jobs this or that tax will “kill,” every single tax becomes something that hurts America. The narrow (and self-serving) interests of every tax-fighting corporation become part of our national project. And the battlefield becomes the competing spreadsheets of political opponents who say that one plan or another will create more jobs, when it’s pretty obvious that no one knows precisely how that whole mechanism works.

Some observations:

1. Perhaps taxes are supposed to be about fairness – but corporations and municipalities have been playing this tax break game for years. Why wouldn’t Amazon think that it has enough clout to pull this off? Many communities and governmental bodies have been more than willing to give in to others.

2. The math is interesting: no sales tax = 7,000 jobs. I haven’t seen many details about this: does the value of these jobs equal the sales tax revenue that would be lost without Amazon? Couldn’t California hold out for more jobs or make this information public to try to worsen Amazon’s hand?

3. It is interesting that this battle about sales tax revenue between California and Amazon is getting attention; a number of states have already gone through this. Granted, California is bigger so perhaps this is about more money than elsewhere. But, additionally, California was home to some of the biggest property-tax revolts in the United States several decades ago, meaning that homeowners, and not just corporations, are interested in paying fewer taxes.

Netflix’s distribution problems

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Netflix has had a lot of bad press in the last few months.  First, they decided to split their online-only streaming service from their mailed disc service, substantially increasing their customer’s prices.  Second, word came that they are losing their Starz distribution agreement, which will severely curtail the availability of (genuinely) recent movies on their streaming service.

Now, here comes a potential supply shock on the physical distribution side:

The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances….

Missing the $5.5 billion payment due on Sept. 30, intended to finance retirees’ future health care, won’t cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.

To be sure, a long-term interruption in mail service would be an economic catastrophe extending well beyond Netflix.  Nonetheless, viewing this problem from Netflix’s perspective shows just how dependent even web-savvy companies are on physical infrastructure and distribution systems.  There will be a lot of collateral damage if businesses can no longer count on a robust and dependable USPS.

A brief history of the rise of AT&T

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The young might only think of AT&T as one of the major cell phone carriers. But this ignores AT&T’s long and important history that includes many innovations and cycles the company has gone through:

But AT&T didn’t just conquer the 20th-century via clever marketing, mergers, and strategic deals with the government. In an era profoundly distrustful of corporations, it justified its expansion as a bid to offer “universal service” to the country. “One policy, one system, universal service,” became AT&T’s motto. Rather than breaking up the system, the government would regulate it as a “natural monopoly.”…

For the next 50 years, AT&T would consistently repeat the same cycle to avoid being broken up by the government—innovate, acquire, strategically retreat, then move forward again with a redefined mission. When the public reacted badly to the network’s attempt to take over broadcast radio, AT&T backed off in exchange for a monopoly on wireline service between radio stations. When the government again raised the spectre of a breakup after the Second World War, AT&T agreed to get out of the computer software business, leasing innovations like the Unix operating system to universities for a nominal fee.

Interesting. The research and development arm of this company produced a number of important technological breakthroughs that helped the United States rise to the top of the world heap in the mid 1950s. The company may be once again on the verge of a monopoly but it is hard to refute, to paraphrase a well-known saying, that “what has been good for AT&T has been good for America.”

Shopping Harvard students flock to “Sociology 109: Leadership and Organizations”

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Harvard has a tradition that students can spent the early days of the semester “shopping” among classes before settling on what they will take throughout the semester. A sociology class, Sociology 109: Leadership and Organization, was apparently quite popular during this shopping period:

Peter Chen ’13 had shopped the perennially popular Sociology 109: “Leadership and Organizations” last fall, so he expected the course to be somewhat crowded when he visited it again Wednesday on the first day of shopping period.

But when he arrived at the start of the class, student shoppers were already overflowing out the door, blocking Chen’s entrance into the lecture hall.

“I tried to push in a little bit and funnel into the room,” said Chen, who was forced to stand outside the lecture hall for about 10 minutes before wiggling his way into a newly empty chair.

Another Sociology 109 shopper, Stephanie L. Grayson ’14, said she showed up a full 20 minutes early to ensure a seat in the class, which she suspected would be crowded because it was taught by popular sociology lecturer David L. Ager. The course—which will be lotteried down to 80 students by the end of shopping period—drew about 180 shoppers, according to Ager.

What I am interested in is this: why is this particular class so popular? The article hints at a few reasons that certain classes are overflowing in the shopping period: they fulfill certain general education requirements or, as indicated regarding Sociology 109, has a popular lecturer. These are not unusual reasons.

But looking at the title of the course, I wonder if another factor is at work: this sociology class has direct implications for business. The professor has “a Ph.D. in Organizational Behavior, a joint degree granted by Harvard Business School and the Graduate School of Arts and Sciences at Harvard University.” Additionally, he has worked with both businesses and governments:

Ager has consulted and taught for several large multinational firms from different industries including finance, high-technology, hospitality, consumer products, bio-technology, bio-energy, telecommunications, and wholesale distribution. In addition, he has advised large, family controlled businesses around the world. His list of clients includes companies such as Mars, Inc., Rockefeller & Co., Inc., Caterpillar, and Morgan Stanley. His consulting activities include leadership development, strategic planning, talent management, change management, M&A, team building and succession planning.

Prior to coming to Harvard, Ager worked as an adviser to Cabinet Ministers in the Fisheries and Oceans and the Employment and Immigration portfolios of the Canadian government. He also served as a member of the finance organization at Nortel and as the Director of the Mexico Research Initiative at the Ivey School of Business, University of Western Ontario.

While students might have difficulty seeing how sociology classes directly relate to business settings, this class seems uniquely positioned to attract business majors, entrepreneurial types, and others who might otherwise think sociology is impractical.

Or perhaps there is a growing demand among sociology students for organizational theory. It does seem to be growing within sociology itself.

The morality of termination rights

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Raustiala and Sprigman over at the New York Times Freakonomics blog take on the morality of copyright termination rights, “an obscure provision of U.S. copyright law…[that] allows songwriters and musicians to…take back from the record labels many thousands of songs they licensed 35 years ago”:

In general, if you decide to sell or perpetually license a piece of property, you can’t later take it back, no matter how much you might want to. So If I sell my house and two years later the city decides to build a lovely public park in my neighborhood, the value of my former house may rise substantially. But no one contends that I can take the house back, or that I’m due a bonus payment from the lucky buyer.  A deal is a deal.

So why the exception for copyright owners?

I have to start somewhere, so it might as well be here:  it’s disingenuous to invoke a home-sy (literally) analogy, show that it fails, and use that failure to “prove” your point.  Raustiala and Sprigman note that “in general,” residential homes are sold outright.  So what?  Equally “in general,” commercial property leases for retail outlets (e.g., stores in shopping center developments) explicitly vary rent payments based on sales (i.e., higher store sales this month/year = higher rent).  Both systems are unobjectionable, assuming one simple fact:  the parties know what kind of deal they are making at the time they make it.

Thus, Raustiala and Sprigman’s analysis falls apart right off the bat.  Termination rights are not a recent phenomenon that nobody knew anything about until a year ago.  Unlike, say, Congress’ decision to re-copyright works that had already fallen into the public domain, termination rights have clearly been a part of U.S. copyright law since 1976.  They may have been “an obscure provision” to the general public reading the Freakonomics blog, but they certainly weren’t obscure to artists and labels.  Raustiala and Sprigman’s characterization is like calling the infield fly rule “obscure”–and then implying that a bunch of MLB players should be out because they didn’t know it existed or how it worked.

They go on:

Think for a moment about the economic effect of the termination provision on the behavior of parties to copyright transactions. Because buyers can expect, on average, to make lower profits when the law contains the termination provision, they will offer less in the initial transaction. Thus, sellers will be more willing to accept less, because they know that if a work later proves valuable, they can terminate and demand some additional payment. So the most likely effect of the termination provision is to force deal prices down across the board….Put differently, the termination provision is a regressive tax.  And in that light, the “fairness” justification for the termination provision is less than overwhelming.

Even assuming this is true, the record labels’ supposed “offer [of] less in the initial transaction” has already happened–35 years ago.  Changing the rules at this point to favor the labels over artists would also seem to invoke its own set of fairness issues.  To put it mildly.

Housing, IP, and Disney

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A New York Times article from last week reports on the convergence of housing, intellectual property, and the Walt Disney Corporation in a recently built suburban home near Salt Lake City:

The sherbet-colored structure sits at the intersection of Meadowside Drive and Herriman Rose Boulevard here, but you don’t need directions to find it. Just look for the swarm of helium-filled balloons that the developer tied to the chimney of a house that has a gabled roof, scalloped siding and a garden hose neatly coiled next to the porch — all details taken from “Up,” the 2009 hit about an old man and his flying abode.

Developer Blair Bangerter duplicated Pixar’s Up house with as much fidelity as physical reality would allow.  And he got permission to do this from Disney!  As the article notes, getting such permission from Disney is highly unusual:

This is a company that once forced a Florida day care center to remove an unauthorized Minnie Mouse mural. More recently, Disney told a stonemason that carving Winnie the Pooh into a child’s gravestone would violate its copyright [though it later “reversed its ruling on that Winnie the Pooh tombstone after the news media reported the rejection”].

So how is a homebuilder in this Salt Lake City suburb getting away with selling a near-identical copy of the floating house in the Disney-Pixar film “Up”?

Although Disney declined to comment for the story, the article suggests several reasons:

  • The developer is the son of a former Utah governor.
  • The developer was able to convince Up‘s director, Pete Docter, to “personally intervened on behalf of the project.”
  • Disney “is trying to evaluate with more care the hundreds of requests it receives a month from people wanting to use its characters and imagery.”

Taking these suggested reasons at face value, it sounds like Mr. Bangerter obtained permission primarily because (a) he was well-connected and (b) Disney sensed a PR opportunity.  There are at least two ways of interpreting this:

  1. Bangerter and Disney saw a market opportunity and bargained to create value.  Most homes in the subdivision are priced around $300,000; the Up home is listed at $400,000.  Disney is often seen as an IP bully; it now looks a bit nicer.  Thus, a deal between Bangerter and Disney created almost $100k in new economic value for the developer and (possible) new goodwill towards Disney.
  2. IP is being used here to create an unnecessary monopoly rent to benefit the already well-connected.  It’s hard to see how Disney would suffer any economic loss if everyone were free to build Up houses–Disney is in the business of selling media and related merchandise, but generally not houses.  However, since everyone is presumably not free to build Up houses, Bangerter and Disney had to spend time and money hammering out an agreement.  As a result of their agreement, Bangerter (apparently) gets ~$100k more for the Up house than he gets for comparable houses in the subdivision, and Disney successfully pacifies a politically powerful developer.

Especially insofar as Disney only considers such deals with well-connected developers like Bangerter, the IP issues quickly blur into fairness issues.

C. Wright Mills influences movie about white-collar cubicles

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A new movie about white-collar cubicle workers is influenced by the work of sociologist C. Wright Mills:

In his 1951 book “White Collar,” the sociologist C. Wright Mills acknowledged the powerlessness of the white-collar worker while also understanding his importance within a larger context: “Yet it is to this white-collar world that one must look for much that is characteristic of twentieth-century existence … They carry, in a most revealing way, many of those psychological themes that characterize our epoch, and, in one way or another, every general theory of the main drift has had to take account of them.”…

Mills’s thinking was a major inspiration for the filmmaker Zaheed Mawani, who documents the resigned reality of the cubicle-coralled white-collar worker in his new film “Three Walls” (you can watch a clip here). Mawani’s film brings to the screen what numerous long-term studies have shown: that a lack of autonomy over one’s daily tasks leads to boredom (at best), utter despair and even increased mortality rates. Yet, time and again, proposed solutions ignore these deeper issues and focus instead (see last month’s column) on the furniture.

Mawani has used the cubicle to explore larger issues in the world of work. As he and I both discovered, passions run high around the most seemingly banal piece of furniture: it has its arch defenders, its resigned occupiers and its rigorously vocal critics. Mawani was interested in examining what the cubicle has come to represent, as he explained in an e-mail to me, “in terms of the shifting nature of white collar work: the lack of job security, increase in temporary workers, our detachment to work (the fact that we no longer stay in the same job for more than a few years and the ramifications of no longer having that employee-employer bond). It’s also about our relationship to technology, the lack of physicality in work.”

Is there really much more to say about the cubicle, a piece of office furniture that has received much criticism over the years? For many, the cubicle has come to represent a temporary space where workers are simply replaceable cogs in corporate machines that tend to benefit some wealthy owner somewhere else.

This discussion reminds me of the design firm IDEO which has been featured in a number of places for creating a different type of workplace: no walls, open desks, lots of toys, lots of collaborative space, and a lot of interaction between workers of different backgrounds in order to take advantage of everyone’s ideas. For an example of how they operate, I’ve had students watch this old ABC Nightline clip about how the company went about designing a new grocery cart. This sort of office seems to appeal to a younger generation and IDEO argues that it is much more effective. (Humorously, here is IDEO’s attempt to build “Dilbert’s Ultimate Cubicle.”)

The idea that office furniture can reveal deep-seated cultural themes is intriguing. I’m afraid to ask what someone might be able to see if they had time to observe my office…