Category Archives: Business and Economy

A call for a sociological study of (digital) piracy

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John C. Dvorak suggests that we need more (sociological) research on the causes of digital piracy:

Understanding why piracy exists as a phenomenon needs to be better understood, but it should be up to academics, not me and other pundits, to determine the causes. Where is the great sociological study of piracy and the mentality behind it?

Dvorak briefly discusses what he thinks are the three roots of piracy: price, distribution, and marketing. At the end of the piece, he again calls for more research:

The real problem with piracy, again, is sociological. If an entire generation becomes acculturated to the free exchange of content and code, then the industry is doomed or it will have to cut back on its First Class Travel and rethink its models. Moaning and groaning about piracy will not stop it…

I’m not sure what can be done about all this, but it does need careful study, not more columns.

Sounds like it could be an interesting project. One angle would be to see how piracy has developed as a deviant (or not-so-deviant) behavior.

Some thoughts by Joel: Actually, there have been some really good academic studies of digital piracy published recently.  I wrote up some thoughts about the SSRC‘s 400+ page report titled Media Piracy in Emerging Economies in early March, and a few weeks later there was the (much shorter at 18 pages) London School of Economics paper entitled Creative Destruction and Copyright Protection:  Regulatory Responses to File-sharing.  Both are well worth reading (for sociologists, especially the former).

Righthaven’s contract unsealed; sanctions a real possibility

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Joe Mullin at paidContent has just posted a story about Righthaven’s previously sealed contract with Steves Media, parent company of the Las Vegas Review-Journal:

The contract reveals that the controversial copyright-enforcement company and the LV R-J are splitting their net earnings from suing hundreds of bloggers on a 50-50 basis. It also shows that the LV R-J is still largely in control of Righthaven’s litigation strategy—a fact that could end up being ruinous for Righthaven’s campaign of copyright lawsuits.

A link to the judge’s order and the contract is available here.  I’ll update this post when I’ve had time to read and analyze it thoroughly…

Update: After reading through the contract and order to unseal for myself, I think these are the most relevant sections:

Section 3.3

Stephens Media shall have the right to Notify Righthaven…that Righthaven should not take any Infringement Action with respect to a particular putative infringer.…Stephens Media shall only send any Declination Notice on a reasonable basis with the grounds of reasonability being that a particular putative infringer [1] is a charitable organization, [2] is likely without financial resources, [3] is affiliated with Stephens Media directly or indirectly, [4] is a present or likely future valued business relationship of Stephens Media or otherwise would be a Person that, if the subject of an Infringement Action, would result in an adverse result to Stephens Media.

I guess it’s safe to conclude that Stephens Media did not see fit to step in on behalf of the Center for Intercultural Organization (“a charitable organization”), Brian Hill (an autistic blogger who practically defines someone “likely without financial resources”), various newspaper sources (“affiliated with Stephens Media directly or indirectly”), or any of the hundreds of other bloggers (“likely future valued business relationship of Stephens Media”) Righthaven has sued.

Sections 7 and 8

Section 7.1:

Stephens Media shall effect the assignments to Righthaven of copyrights as required by this Agreement…by executing a particularized assignment with respect to each copyright and each consistent with (and in form and substance the same as) the scope of assignment….

Section 7.2:

Despite any such Copyright Assignment, Stephens Media shall retain (and is hereby granted by Righthaven) an exclusive license to Exploit the Stephens Media Assigned Copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to Exploit or participate in the receipt of royalties from the Exploitation of the Stephens Media Assigned Copyrights other than the right to proceeds in association with a Recovery.

Section 8:

Stephens Media shall have the right at any time to terminate, in good faith, any Copyright Assigmnent (the “Assignment Termination”) and enjoy a right of complete reversion to the ownership of any copyright that is the subject of a Copyright Assignment; provided, however, that if Righthaven shall have commenced an action to prosecute an infringer of the Stephens Media Assigned Copyrights, Stephens Media shall be exclusively responsible for effecting termination of such action including, without limitation, all Losses associated with any dismissal with prejudice.

Taken together, these three excerpts seem to affirm that Righthaven is essentially buying the right to bring lawsuits from Stephens Media, which is arguably impermissible under Silvers v. Sony Pictures Entertainment, Inc., 402 F. 3d 881 (9th Cir. 2005).

Section 11

Stephens Media understands and acknowledges that Stephens Media and Righthaven may be liable for an Infringer’s attorneys’ fees as required by Law in connection with an Infringement Action. Stephens Media further understands that a lawsuit brought solely to harass or to coerce a settlement may result in liability for malicious prosecution or abuse of process. If any Claim made by an Infringer in an Infringement Action results in Losses, other than Losses described in Section 8, Righthaven shall be solely liable for such Losses and shall indemnify Stephens Media from and against any such Losses but only if such Losses do not arise out of a misrepresentation by Stephens Media or other breach by Stephens Media of a provision of this Agreement.

I guess we now have incontrovertible evidence that both the newspaper and Righthaven knew “that a lawsuit brought solely to harass or to coerce a settlement may result in liability for malicious prosecution or abuse of process”!  I wouldn’t be surprised if this section gets referenced in a future sanctions order.

Conclusion:  what does Judge Hunt think?

It’s impossible to know, of course, what’s inside Judge Hunt’s mind.  However, his order to unseal the Righthaven contract strongly suggests that he is growing weary of Righthaven’s legal antics:

There is an old adage in the law that, if the facts are on your side, you pound on the facts. If the law is on your side, you pound on the law. If neither the facts nor the law is on your side, you pound on the table. It appears there is a lot of table pounding going on here.

There has been presented absolutely no basis to strike the Request to Unseal, and that motion will be denied. [emphasis added]

No doubt Righthaven is already sorry they filed this case.  The only remaining question is whether their sorrow will be measured in dollars.  And just how many.

When legal copying is illegal (or at least reversible)

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Eugene Volokh has a fascinating post re: how much judicial copying is too much:

Cojocaru v. British Columbia Women’s Hospital & Health Center — decided [14 April 2011] by a 3-judge panel of the B.C. Court of Appeal, the highest court in British Columbia — reverses a trial judge’s decision because,

In the case at bar, the reasons for judgment run to 368 paragraphs (105 pages) in length. The trial judge copied, without so acknowledging, 321 paragraphs almost word-for-word from the respondents’ written closing submissions (with inconsequential changes, such as replacing phrases like “it is submitted” with phrases like “I have concluded”). Forty paragraphs were written in the trial judge’s own words and the remaining seven paragraphs contain a mix of passages copied from the respondents’ written submissions and passages written in the words of the trial judge.

Now some sources have characterized the trial judge’s sin as “plagiarism”….

For his part, Volokh thinks the panel was correct to reverse the trial judge, though not because the copying constituted plagiarism:

[A]s the B.C. Court of Appeal panel majority understood it, [the problem] is that a judge is supposed to “independently and impartially considered the law and the evidence and arrived at his own conclusions on the complex issues before him,” and simply adopting hundreds of paragraphs of a party’s papers casts doubt on that. [emphasis added]

While Volokh acknowledges that judicial copying is sometimes appropriate, he still condemns the trial judge’s copying here, noting that

the judicial system tries to balance judicial engagement and efficiency.

I am not sure what to make of this proposed dichotomy between “judicial engagement” and “judicial efficiency”.  Doubtless, these two concepts can be in opposition along a continuum:  the more one “engages” with a case, the less “efficient” one’s decision-making process might be (and vice versa).

Just because “engagement” and “efficiency” can be in opposition, however, doesn’t necessarily mean that they are.  A judge could be exceedingly inefficient in rendering a decision (e.g., by personally handwriting the entire opinion with her non-dominant hand when both she and her clerk can think and type much faster) and also extremely unengaged (e.g., daydreaming all the while).  The relationship between the two concepts can be quite unclear.

Because of this uncertain logical relationship between “engagement” and “efficiency”, I humbly submit that it makes the most sense to inquire directly into whether the trial judge “engaged” with a case, not to use “copying” as a proxy for “efficiency” as a further proxy for “engagement.”

Indeed, dissenting appellate Justice K. Smith makes just such a direct inquiry here.  Smith turns to the underlying facts of this case to argue that

there are signs in the reasons that the trial judge applied his mind to the issues.

And here is the curious thing:  Justice Smith renders an exhaustive, 106-paragraph analysis of the trial court’s decision in the process of reaching and defending his position.  In stark contrast, majority Justices Levine and Kirkpatrick take merely 22 paragraphs to conclude

that there is no principled basis to deal with these appeals on their merits because the trial judge’s reasons for judgment cannot be considered to represent his reasons, do not meet the functional requirement of public accountability, and do not allow for meaningful appellate review. 

Perhaps I am being too hard on Levine and Kirkpatrick.  Perhaps opinion length is an equally unreliable proxy for engagement.  However, reading through the appellate opinions, I think that dissenter Smith “engages” far more than the majority justices.  His is not the most “efficient” judicial decision, but it does explain its reasoning far more thoroughly (and persuasively) than the majority’s arguably conclusory opinion.

Copying isn’t always bad, as Smith goes to great lengths to explain.  I’d love to hear a robust defense of the opposing position.  Unfortunately, as is so often the case, the anti-copying arguments here come up a little short.

YouTube’s copyright school

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In an apparent bid to prevent one-time copyright infringers from becoming two-timers (or more), YouTube has created a 4 minute and 39 second copyright school on its website, as explained on the official YouTube blog:

Because copyright law can be complicated, education is critical to ensure that our users understand the rules and continue to play by them. That’s why today we’re releasing a new tutorial on copyright and a redesigned copyright help center. We’re also making two changes to our copyright process to be sure that our users understand the rules, and that users who abide by those rules can remain active on the site.

If we receive a copyright notification for one of your videos, you’ll now be required to attend “YouTube Copyright School,” which involves watching a copyright tutorial and passing a quiz to show that you’ve paid attention and understood the content before uploading more content to YouTube.

Ray Dowd over at the Copyright Litigation Blog is not a fan, noting that Google:

  • fails to mention the existence of the public domain;
  • states that “[i]f you are uncertain as to whether a specific use qualifies as a fair use, you should consult a qualified copyright attorney”; and
  • fails to mention the Constitutional purpose of copyright law.

I have to agree with Ray.  The video’s section on fair use (direct link) is particularly egregious.  Unlike the rest of the video, this section adopts the sped-up vocal “style” often adopted at the end of radio commercials to breeze through legal disclaimers (e.g., “Sweepstakes only open to U.S. residents 18 or older…”)  How is this even attempting to educate and inform?

Far from providing a balanced view of copyright law, YouTube’s clear, bottom-line message is this:  Don’t remix or even approach the fair use line.  This is certainly one vision of copyright law, but there are others.  I am reminded of Christina Mulligan’s excellent blog post last June that looked at contemporary copyright law through the lens of Fox’s hit show Glee:

The absence of any mention of copyright law in Glee illustrates a painful tension in American culture. While copyright holders assert that copyright violators are “stealing” their “property,” people everywhere are remixing and recreating artistic works for the very same reasons the Glee kids do — to learn about themselves, to become better musicians, to build relationships with friends, and to pay homage to the artists who came before them. Glee’s protagonists — and the writers who created them — see so little wrong with this behavior that the word ‘copyright’ is never even uttered.

Lawrence Lessig makes the related point that such recreations benefit society, pointing to John Phillip Sousa’s early-twentieth-century fear that recorded music would eventually displace amateur performance entirely.

Google is taking a lot of heat from copyright owners these days, and it’s hard to blame them from trying to stave off any accusations of infringement that might eventually stick to Google itself.  Nevertheless, I don’t think their frenetic, one-sided “educational” video is the best solution.

The large percentage of Americans who use software or pay someone to do their taxes

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Here is a statistic that gives us some idea about how difficult the American public thinks filling out their yearly taxes is:

More than 80% of individuals hire someone or buy software to help file their taxes, though only 64% of filers owe them, according to the Tax Foundation. So millions of filers pay for help to learn that their tax liability is zero.

I recently finished doing these by hand and while it wasn’t terrible, it was time consuming. While the article suggests both individuals and companies spend a lot of time and pay a lot in order to have their taxes done, it sounds like the tax preparers and software companies have plenty of business…

A commercial reminder of the importance of the American lawn

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There is little doubt that Americans pay a lot of attention to their lawns and a green lawn is pretty much a necessity in front of the American single-family home. On the way to work today, I heard two grass seed commercials within the same commercial break and they reinforced this interest in lawns.

First, I heard about Pennington Grass Seed. Pennington claimed their bags included all seed while their competitor Scotts only had half a bag of seed and half of bag of filler. Additionally, their seeds required less water. I was invited to go online and check out the science behind the seeds. Second, I heard from Scotts which didn’t name Pennington but went through their claims: Scotts seed doesn’t need more water (actually, it retains water much better than Pennington’s) and it has a special filler whereas Pennington simply uses paper for filler.

Three things struck me about these two commercials:

1. Both ads referred to the science of grass seeds with both claiming they had the better mix. Are consumers really going to pay much attention to this?

2. It was interesting to hear how the two companies approach each other. Pennington went right at Scotts while Scotts didn’t used Pennington’s name (though it wasn’t hard to figure out who they were talking about). From this, can I infer that Scotts is the market leader and Pennington is looking for some way to gain ground?

3. Referring back to my first point, how much of this just really comes down to price and brand recognition? When I go to the store to buy mulch this weekend, would I buy seed based on the science or the price?

Politicizing copyright use

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Various outlets are reporting that former Florida Governor Charlie Crist issued a YouTube apology to Talking Heads’ singer David Byrne for using the song “Road to Nowhere” without permission as part of Crist’s 2008 senatorial campaign.  Quoting from the ABA Journal:

In a written statement [dated 11 April 2011], Byrne said he had been surprised to learn that such unauthorized use of a song isn’t all that unusual, and said that he was "feeling very manly" about having protested rather than simply let the issue go.

"Other artists may actually have the anger but not want to take the time and risk the legal bills. I am lucky that I can do that," he stated. "Anyway, my hope is that by standing up to this practice maybe it can be made to be a less common option, or better yet an option that is never taken in the future." [emphasis added]

Such explicitly political use of artists’ music certainly has a long history.  Just a few weeks ago, the ABA Journal published an article by L.J. Jackson titled “Musicians Chafe at Politicians’ Misappropriations of Their Work” which demonstrates that

Crist’s legal problems are not unique.

In 1984, Bruce Springsteen made headlines when he objected to President Ronald Reagan’s use of his hit "Born in the U.S.A." as an anthem for his re-election campaign. The rock icon accused Reagan of subverting the true meaning of the song and playing it at rallies without his consent.

Those were the good old days, when an artist’s biggest campaign concern was a candidate using their tunes to pump up the crowd (permitted with a blanket performance license). But times, they are a-changing, and the proliferation of viral videos, YouTube, and Facebook has opened a Pandora’s box of copyright problems for politicians seeking pop-culture cred. [emphasis added]

Jackson doesn’t elaborate on the “blanket performance license” point, but it’s a major one that bears unpacking.  If a politician has the relevant blanket performance licenses from the relevant performance rights organizations (PROs), (s)he is allowed to play recording artists’ music at campaign rallies.  It doesn’t matter if the artist dislikes that particular politician any more than if (s)he dislikes a particular local radio DJ:  the politician (and the DJ) still have permission to play.

I think there are solid policy justifications for allowing such blanket licenses (and thus largely foreclosing artists’ ability to object to particular uses).  Aside from the enormous transaction costs that would be involved with case-by-case negotiation and approval, music clearly lies at the center of mainstream American culture.  Given music’s powerful emotional resonances which often extend well beyond the intent and control of the original artists, allowing artists to withhold public performance of their recorded music by particular non-profits, schools, businesses, or political campaigns seems perverse at best.  In extreme cases, such denials may even be tantamount to private censorship.

Whether you agree with my policy justifications or not, however, the fact remains that blanket performance licenses for live events already exist.  Thus, the question really is this:  why is the Internet any different?  What makes “viral videos, YouTube, and Facebook…a Pandora’s box of copyright problems” where none exist in the physical world of live campaign rallies, sporting events, or trade shows?

I submit that there really is no difference.  The same transaction cost and First Amendment justifications for blanket performance licenses apply with equal weight to Internet media.  To me, any policy difference appears to be simply a historical artifact.

A blogger at Clancco asks:

I wonder what the “free culture” lobbyists have to say about fair use, free culture, and the world is our public domain oyster when it comes to a Republican politician using an artist’s song without the artists permission? We certainly know what Byrne thinks…and it’s not good for Republicans.

I don’t know what “the ‘free culture’ lobbyists” would say, but my response is this:  the political affiliation of the music’s user should not matter one iota.  We can certainly have a policy debate, but that doesn’t mean the debate must (or should) be political.

Continued issues for Walmart in Chicago

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Even with discussions last year suggesting more amity between Walmart and the city of Chicago (and an earlier post here), there are still some issues for the retailer in the city.

1. Over the weekend, activists in Little Village, a neighborhood on Chicago’s west side, said they think Walmart should locate one of their stores in their neighborhood rather than just building on the south side:

At a news conference Sunday afternoon at 26th Street and Kolin, Raul Montes Jr. said people could benefit from having a Wal-Mart more centrally located in the city, vs. the locations on the South Side, which are currently planned.

Montes says Wal-Mart would do well at 26th and Kostner, which has been vacant for years. Montes says he and others in Little Village have sent letters to their alderman over the past few months and have so far, gotten no response.

He says they feel ignored.

2. Last night, Walmart representatives presented plans to residents of Lakeview, a neighborhood on the north side, regarding a proposed smaller version of their store called “Walmart Market.” There was some opposition from the crowd:

About 200 people — many wearing anti-Wal-Mart buttons and stickers — filed into the Wellington Avenue United Church of Christ to hear the proposal.

John Bisio, a Wal-Mart Stores Inc. public affairs senior manager, said that although he recognized the citizens’ concerns, the smaller facility at Broadway and Surf Street would not interfere with the neighborhood’s character…

But many in the audience could be heard snickering at company representatives’ arguments for why the 32,000-square-foot Walmart Market would be good for the North Side neighborhood.

After the presentation, several residents overwhelmingly shouted down the proposal and urged Alderman Tunney to push forth the zoning limitation in City Council.

It is interesting to contrast these two responses to Walmart: one neighborhood wants a store while another is very skeptical and thinks the store is unnecessary and could harm the neighborhood.

But with big box stores wanting to move into cities (Target recently talking about plans to open on State Street as well as recently opening their first store in Manhattan), these discussions will continue to take place.

Lessig keynote at ABA’s Techshow

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Yesterday, Larry Lessig gave the keynote at the American Bar Association’s Techshow 2011, available on YouTube here.  (ABA Journal write-up here.)

I’m watching it right now and will post additional thoughts when I’m done…

Update:  Much of Lessig’s presentation covers the same material he presented before WIPO last November.  However, the last part of his speech (direct link) talks a little bit about why Lessig thinks that IP policy in America is so wrong.  In brief, Lessig argues that special interest content providers have essentially “bought” Congress’ support of draconian enforcement.

Two steps for lower taxes

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With taxes due in less than a week, Derek Thompson over at The Atlantic has some solid advice for “beating the Tax Man at his own game”:

First, be self-employed. Second, be very rich.

Among other reasons that the article notes, “money buys access to the smartest accountants and tax attorneys, who have scoured the labyrinthine tax code for the best nooks and crannies to shelter income.”

It may not be the most efficient allocation of overall resources, but it sure does offer a compelling individual ROI.