Category Archives: Legal

Whether Facebook increases the number of divorces

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You might have seen certain figures bandied about how often Facebook is cited in divorce cases: this story says, “Two-thirds of the lawyers surveyed said that Facebook was the “primary source” of evidence in divorce proceedings.” But is it fair to then say that Facebook is a primary driver of divorce proceedings? Carl Bialik says the numbers are more complicated than many news stories would lead you to believe:

Some lawyers do say that they see Facebook playing a bigger role in divorce these days, that doesn’t mean the site destroys marriages…

“Correlation is not causation,” Thomas Bradbury, professor of psychology at the University of California, Los Angeles, wrote in an email. “Divorce has been around for a long time, long before these sorts of possibilities were present; the newly available information does add a new flavor to relationship maintenance and dissolution, but I don’t think it changes the basic processes that underlie change and deterioration in relationships.”…

These issues are symptoms of a larger issue in divorce research: “It’s very hard to separate out the causes” of divorce, says Andrew Cherlin, a sociologist and divorce researcher at Johns Hopkins University.

“To do this kind of research requires a huge amount of persistence,” said George Levinger, professor of psychology emeritus at the University of Massachusetts.

Part of the reason is that it is hard to pinpoint a single reason or even a set of reasons for any marital split…

Some researchers have asked divorcees why they divorced, and gotten conflicting results from men and women. Others have looked for factors that predict whether couples divorce. “There are many social, cultural, and behavioral predictors of divorce,” W. Bradford Wilcox, director of the National Marriage Project at the University of Virginia, wrote in an email.

Other academics examine couples’ behavior, seeking clues that might predict marital dissolution.

It sounds like this a more complicated methodological issue that still needs to be worked out by researchers: how exactly can one identify the primary cause or causes of divorce? Just because Facebook is mentioned as contributing to a divorce does not mean that it causes the divorce. As you might expect, Facebook itself says this argument is silly:

A spokesperson for Facebook said: “It’s ridiculous to suggest that Facebook leads to divorce. Whether you’re breaking up or just getting together, Facebook is just a way to communicate, like letters, phone calls and emails. Facebook doesn’t cause divorces, people do.”

It is no surprise that lawyers would want to use Facebook data for a divorce case (or other types of cases such as fraud – one example here). Facebook is often fairly public information and people often post on there without thinking about the potential consequences of sharing such information. It would be interesting to hear more about how this data from Facebook is presented in court and the reactions to it from both judges and the participants in the case.

But I wonder if these sorts of figures and ideas about Facebook and divorce have gained notoriety because they may fit some larger narratives about privacy and information sharing on Facebook as well as voyeurism on the Internet. These figures from lawyers could be presented as evidence that people lead dual lives, one in the offline world and another one in the real world. Whether this is actually the case doesn’t matter as much; what does is that the hot company of recent years, Facebook, can be linked to negative behavior.

Strong IP

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Techdirt points to a story illustrating how strong IP enforcement comes around after going around:

We’ve been talking about how ridiculously aggressive Sony has been lately in enforcing its intellectual property rights concerning PS3s, so it seems like there might be a bit of karmic retribution in the fact that a shipment of PS3s has been seized in Europe as part of an ongoing legal fight with LG over patents covering parts of the PS3. I’m always amazed at how frequently companies who push for stronger and stronger enforcement of IP laws never seem to consider the consequences when those laws are directed at their own activities.

There’s been a lot of talk this week about patent reform since the Senate passed a bill 95-5 that would, among other things, move the U.S. to a first-to-file system similar to what most of the rest of world uses.  Some commentators think the proposed statutory reforms wouldn’t amount to much, though others suggest that the FTC’s recent report suggest that administrative reforms may be on the way.

Fair comment

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A mea culpa note: I originally wrote this post about a week ago.  At that time, I thought that SF360 was moderating their comments and not approving mine, for reasons that I implied might have something to do with the policy position of my remarks.  I was wrong — there was an innocuous, technical reason that my comment did not post.  Thanks to SF360’s editor Susan Gerhard for helping me get my comment up, and my most sincere apologies to her and everyone at SF360.  I made a mistake, and I thank Susan for being so gracious in the way that she corrected me.

***

I made a comment recently on a SF360 article titled “What you Need to Know to License Music for Film”.  Here is the relevant bit of the article that I was addressing:

Licensing can be a complicated, frustrating process. Yet, the copyright owners have exclusive rights over the music and using the music in a film will generally not be considered a fair use. Therefore, to avoid litigation a filmmaker must acquire the necessary licenses before including any music in their film. [emphasis added]

As I wrote in my comment, this characterization of fair use is, at best, highly misleading:

George [Rush, who wrote the article] says that “the copyright owners have exclusive rights over the music and using the music in a film will generally not be considered a fair use.”  This is simply not true; there are a lot of uses of music in films — particularly documentary films — that can be considered fair use.  There is a Documentary Filmmakers’ Statement of Best Practices in Fair Use, and there are even companies that issue errors and omissions insurance based on fair use claims.

Before using any music in your film, you should definitely seek legal counsel.  But don’t assume that you *always* have to license music.  Despite the grumblings of music labels, fair use still exists.

George is right that the issues are complicated and that sometimes hiring a professional (like him) to help negotiate various music licenses is the proper way to proceed.  But that’s not always true.

Licensing theater

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Stanford’s Center for Internet and Society pointed me to a comprehensive study by the Social Science Research Council (SSRC) (Wikipedia backgrounder) on the effects of media piracy in emerging markets:

Based on three years of work by some thirty-five researchers, Media Piracy in Emerging Economies tells two overarching stories: one tracing the explosive growth of piracy as digital technologies became cheap and ubiquitous around the world, and another following the growth of industry lobbies that have reshaped laws and law enforcement around copyright protection. The report argues that these efforts have largely failed, and that the problem of piracy is better conceived as a failure of affordable access to media in legal markets.

“The choice,” said Joe Karaganis, director of the project, “isn’t between high piracy and low piracy in most media markets. The choice, rather, is between high-piracy, high-price markets and high-piracy, low price markets. Our work shows that media businesses can survive in both environments, and that developing countries have a strong interest in promoting the latter. This problem has little to do with enforcement and a lot to do with fostering competition.”

I’m looking forward to perusing the report, but there’s a threshold issue that I want to address:  SSRC has released the report itself subject to a “Consumer’s Dilemma” license:

[T]he CD license creates different paths to acquiring the report: first, we have an IP address geolocator that sends visitors from high income countries toward an $8 paywall when they download the report;  all other resolvable IP addresses get free access.  Second, and separately available, a ‘commercial reader’ license that costs $2000.

Why did SSRC set things up this way?  Licensing theater:

Maybe some clarification is in order here. If you are residing in one of the listed high-income countries, want to read the report, but think that $8 is an unreasonable price, you can acquire it for free through other means.  In fact, we have made it exceedingly easy to do so. If you fall under the terms of the commercial reader license but think that $2000 is unreasonable, you have the same options (plus the $8 option).  In both cases, the reader is faced with a dilemma: pay the legal price (roughly mapping ability to pay to a determination about whether the price is fair), acquire it through pirate channels, or don’t bother with it.  In most of the countries we’ve studied in this report, the results of this calculation with respect to DVDs, music, and software are strikingly consistent.  Media goods are highly desired, exorbitantly priced with respect to local incomes, and freely available through pirate channels.   High rates of piracy and tiny legal markets are the result. We’ve written 400+ pages about this dysfunctional form of globalization and its causes.

The resulting consumer dilemma is a ubiquitous experience in medium and low-income countries but one that confronts the American or European reader (or the media company employee conjured up by the commercial reader license) much less frequently and with much less intensity.  The global market is made for those consumers.  It is priced and distributed for them.  They are rarely faced with what they experience as ridiculous pricing for a DVD or book–or seriously disadvantaged by differential pricing.  The Consumer’s Dilemma license is a way of reversing that equation and, in the most minor ways,  requiring an explicit engagement with it.  Among the surreal aspects, that simple choice can subject you to crushing civil and criminal penalties, but you can rest easy knowing that only very rare, arbitrary examples will be made (and none in our case).  Now that’s theater.  Our license has a theatrical side, to be sure, but it also stays true to the experiences  documented in the report.

Well done, SSRC.  Now I’m really curious to read the report…

Update: TechDirt has posted an initial analysis of the report here.

The once (and future?) public domain

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According to SCOTUSblog, the Supreme Court has just agreed to hear a major case about the public domain:

The case involves a two-pronged constitutional challenge to a 1994 law, passed by Congress to implement the global agreement on trade in the so-called “Uruguay Round.”   First, the case tests whether the Copyright Clause gives Congress any authority to take a work out of the public domain — that is, to restore its copyright shield once that has expired.  Second, it tests whether the 1994 law at issue violates the free speech rights of those who, before the law was passed, freely performed or distributed works that had entered the public domain — such as Prokofiev’s Peter and the Wolf….The constitutional issues about the Berne Convention’s Article 18 on restoration were pressed in federal court by a group of orchestra conductors, educators, performers, film archivists, and motion picture distributors.  They contended that they have depended for years on public domain works, but were cut off from those opportunities when Congress restored a seemingly large number of U.S. copyrights for foreign works that never previously had U.S. protection.

SCOTUSblog is hosting a number of the related documents:

For a round-up of additional coverage, see:

  • PaidContent:  “Can You Re-Copyright Works That Fall Into Public Hands? High Court To Rule”
  • Patently-O:  “Copyright: Supreme Court to Hear Constitutional Challenge to Copyright Restoration”
  • Wired: “Supreme Court Deciding Whether Congress May Copyright Public Domain Works”

Stay tuned…

Using a sociological approach in “e-discovery technologies”

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Legal cases can generate a tremendous amount of documents that each side needs to examine. With new searching technology, legal teams can now go through a lot more data for a lot less money. In one example, “Blackstone Discovery of Palo Alto, Calif., helped analyze 1.5 million documents for less than $100,000.” But within this discussion, the writer suggests that these searches can be done in two ways:

E-discovery technologies generally fall into two broad categories that can be described as “linguistic” and “sociological.”

The most basic linguistic approach uses specific search words to find and sort relevant documents. More advanced programs filter documents through a large web of word and phrase definitions. A user who types “dog” will also find documents that mention “man’s best friend” and even the notion of a “walk.”

The sociological approach adds an inferential layer of analysis, mimicking the deductive powers of a human Sherlock Holmes. Engineers and linguists at Cataphora, an information-sifting company based in Silicon Valley, have their software mine documents for the activities and interactions of people — who did what when, and who talks to whom. The software seeks to visualize chains of events. It identifies discussions that might have taken place across e-mail, instant messages and telephone calls…

The Cataphora software can also recognize the sentiment in an e-mail message — whether a person is positive or negative, or what the company calls “loud talking” — unusual emphasis that might give hints that a document is about a stressful situation. The software can also detect subtle changes in the style of an e-mail communication.

A shift in an author’s e-mail style, from breezy to unusually formal, can raise a red flag about illegal activity.

So this second technique gets branded as “sociological” because it is looking for patterns of behavior and interaction. If you wondered how the programmers set up their code in order to this kind of analysis, it sounds like some academics have been working on the problem for almost a decade:

[A computer scientist] bought a copy of the database [of Enron emails] for $10,000 and made it freely available to academic and corporate researchers. Since then, it has become the foundation of a wealth of new science — and its value has endured, since privacy constraints usually keep large collections of e-mail out of reach. “It’s made a massive difference in the research community,” Dr. McCallum said.

The Enron Corpus has led to a better understanding of how language is used and how social networks function, and it has improved efforts to uncover social groups based on e-mail communication.

Any sociologists involved in this project to provide input on what the programs should be looking for in human interactions?

This sort of analysis software could be very handy for sociological research when one has hundreds of documents or sources to look through. Of course, the algorithms might have be changed for specific projects or settings but I wonder if this sort of software might be widely available in a few years. Would this analysis be better than going through one by one through documents in coding software like Atlas.Ti or NVivo?

500 to 1

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I contemplated the effects of technological changes on law jobs several weeks ago when I posted a link to news reports about IBM’s Watson winning Jeopardy.  The New York Times has written what essentially amounts to a follow-up article, and it’s eye opening:

Quantifying the employment impact of these new technologies [that help automate the legal discovery process] is difficult. Mike Lynch, the founder of Autonomy, is convinced that “legal is a sector that will likely employ fewer, not more, people in the U.S. in the future.” He estimated that the shift from manual document discovery to e-discovery would lead to a manpower reduction in which one lawyer would suffice for work that once required 500 and that the newest generation of software, which can detect duplicates and find clusters of important documents on a particular topic, could cut the head count by another 50 percent. [emphasis added]

To be sure, 500:1 may just be the talking point of a businessman who is trying to sell his particular solution. Nonetheless, it seems clear that technology like Mr. Lynch’s is already fundamentally altering the economics of the legal profession.  We probably are headed towards a future with fewer lawyers (at least, ones performing discovery-related tasks).

What are some of the broader economic implications?  The NYTimes piece also quotes from  David H. Autor, an economics professor at the Massachusetts Institute of Technology:

“There is no reason to think that technology creates unemployment,” Professor Autor said. “Over the long run we find things for people to do. The harder question is, does changing technology always lead to better jobs? The answer is no.”

More follow-up: Netflix, sewage, and net neutrality

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I’ve been hosting a discussion here at Legally Sociable that is turning into a long-running net neutrality debate.

To recap so far:

A.  Alan Roth, a USTelecom Senior Exec VP, wrote an article over at the Hill drawing an interesting analogy between the economics of Netflix/ISPs/home Internet users and the economics of sewage customers/municipal sewer lines/”pooled” sewage processing in the D.C. metro area.

B. I replied with a post questioning the applicability of Alan’s sewage analogy because it didn’t seem to correlate to the Netflix facts (i.e., sewage customers paid just their municipalities directly whereas Netflix customers pay both their ISPs and Netflix directly).

C.  Alan defended his application of the analogy and clarified his position, stating that he was using the analogy of sewage to highlight “the issue of equitable cost-sharing among the users of a network” and noting that “whatever you might want to say about who provides how much ‘value’ and to whom, the fact is that the data bits in question here are largely flowing in one direction, just as the sewage [flows] in one direction” toward the analogical, pooled-cost sewage processing station in D.C.

D.  I replied that we were still at an impasse because

All ISPs are providing here is a connection to the wider Internet (to the “regional front doors”). Retail customers then pay Netflix for the rest because Netflix is providing the rest. On what basis do the ISPs challenge Netflix’s contention that it “should pay only to transport its bits to a regional gateway, after which the costs of delivery to the end point would fall on others”? Doesn’t that precisely reflect how retail customers are being billed?

The only justification I can see for your position is if subsidies are involved-in other words, ISPs are somehow lowering their retail customers’ bills for Internet service because they are paid by content providers. If that’s true, however, that is very different situation from the D.C. sewage situation to which you analogize.

E.  Alan has just replied here.  Please follow the link to get the full text; however, most of Mr. Roth’s response gets reproduced below as I respond to each of his points in turn.

Argument:

I sense this will probably be the final round of my exchange with Mr. Roth on this issue, so I want to begin by thanking Alan for engaging with me.  I certainly appreciate his creativity in drawing upon his experience as a member of the Board of Directors of the District of Columbia Water and Sewer Authority to help think about the economics of Internet content delivery.

In short, however, Alan and I do still (strongly) disagree.  I will take his latest points one at a time.

1) A small fraction of Internet users are consuming a huge portion of the available bandwidth on any given evening by downloading and/or streaming Netflix video content. See this article — http://www.wired.com/epicenter/2010/10/netflix-instant-accounts-for-20-percent-of-peak-u-s-bandwith-use/ — for confirmation of that phenomenon.

My analysis: Agreed — lots of people use Netflix, and that generates at lot of Internet traffic.  Alan and I don’t disagree on the facts; we disagree on the conclusions to be drawn.

I look at this situation and note that (a) home Internet users are paying their ISPs for Internet access and (b) home Internet users are (separately) paying Netflix for access.  Separate companies are providing separate services (connection and content, respectively), and they are both being paid directly by the people (home Internet users) who are consuming them.

Under these circumstances, I think it is irrelevant that 20% of Internet traffic is consumed by Netflix.  It could be 100%, and the fact would remain that home Internet users are paying ISPs for the connection and Netflix for the content.

In the real world, of course, Netflix isn’t the whole Internet.  100% of Internet activity is caused by 100% of Internet content providers — blogs, YouTube, Hulu, Skype, Netflix, and innumerable other web sites and services.  But so far as I can see, home Internet users pay 100% of their ISP’s bills for their Internet connections, and they pay 100% of their content providers’ bills for the content they enjoy, either directly (as with credit cards in the case of Netflix) or indirectly (as eyeballs for advertisers on ad-supported websites like Hulu).

If (a) ISPs maintain networks that allow home Internet users to connect to the broader Internet and (b) Netflix pays Internet content delivery networks (CDN’s) to deliver traffic right up to the “regional front doors” (where those ISP’s networks begin and the broader Internet ends) and (c) each bills customers accordingly, the fact that Netflix is 20% of Internet traffic is completely irrelevant.  What is relevant is that Alan thinks ISPs should be able to charge twice — even though Alan never really explains why Netflix should also have to pay the ISPs.

2) Enormous amounts of capital investment on the part of both ISPs and backbone providers are required to deliver that Netflix service reliably, while also providing adequate bandwidth for the other 98% of Internet users who are logged on simultaneously for their own various reasons. And as more and more users begin using their broadband connections for streaming video, satisfactory service will require even more investment. And that doesn’t even begin to take into account the huge sums needed to bring broadband to the (mostly very rural) areas of the country that are currently unserved and that presumably would like to enjoy the same online benefits that we city dwellers have.

My analysis: Alan and I also agree that enormous amounts of capital investments are necessary to run the Internet.  Again, however, home Internet users pay ISPs and Netflix pays CDNs, and the two networks meet at the “regional front doors.”  The fact that a lot of money is spent to make such networks possible doesn’t explain why ISPs should be able to charge Netflix for access to its customers any more than it would explain why Netflix should be able to seek reimbursement from ISPs for Netflix’s own CDN bills.  To my mind, what is “fair” is that each business pays its own costs.

To be sure, the economic arrangement between ISPs and Netflix could be different.  For example, ISPs could buy Netflix’s service (content and delivery to the “regional front door”) on a “wholesale” basis and then “retail” it to their customers.  ISPs could do this either as “included” with their Internet service or on an “a la carte” basis.  (Indeed, this is similar to what happens with a service that goes by the name “cable TV”:  “included” services are called “basic cable” and “a la carte” services are sometimes referred to as “premium channels”.)

While Netflix could follow such a model, that’s clearly not what they do.  Netflix has an innovative business model that competes with cable TV (and also the myriad of services vying for consumers’ entertainment dollars).  And so long as home Internet users are paying both their ISPs and Netflix directly, it seems logical to me each should only bill customers for the specific service each is providing.

Alan’s citation of the high capital costs of building the physical Internet is a true fact but an irrelevant argument.  Whether networks are expensive or not, ISPs are paid by their customers to provide connections to the broader Internet, and Netflix delivers content right to the point where the broader Internet starts.  If ISPs feel like the prices they are charging their customers don’t adequately cover their capital costs, they can change those prices.  But it eludes me why Alan thinks the ISPs somehow deserve money from Netflix.  Justifying that sort of double-dipping seems complex at best and unfair at worst.

(As for expanding service into rural areas, Mr. Roth seems to be implying that urban Internet users should be willing to subsidize rural Internet users.  We can debate that point as a separate policy matter, but it seems hardly related to the issue of whether Netflix should be paying the ISPs.)

3) Creating a sound business case for those enormous capital investments requires that someone pay for them. In my view, requiring 98% of end users to subsidize a small handful of mega-users isn’t the right way to generate those capital funds, especially when price is already one obstacle to greater broadband adoption. (About one-third of people who could access broadband now don’t take it!) Admittedly, some form of usage-based pricing might solve that problem — but based on what I’ve seen from my vantage point here in DC, you can bet that howls of protest from that tiny group of bandwidth hogs will drown out any rational discussion of what’s fair to the other 98%.

My analysis: I think Alan and I both agree that Netflix’s CEO was extremely self-serving when he stated that he didn’t want to see ISPs move to metered, per-GB Internet pricing.  It is understandable that Netflix would love people to be able to get cheap access through ISPs (a service Netflix doesn’t provide) to Netflix’s licensed content (a service Netflix does provide).  If Netflix’s customers don’t have to think about a running meter, so much the better.

But let’s not pretend that ISPs don’t also play this self-serving game.  Alan’s employer, USTelecom, is “the nation’s premier trade association representing broadband service providers, manufacturers and suppliers providing advanced applications and entertainment.”  It is in USTelecom’s members’ interest — the very ISPs we have been discussing — to charge as much as possible for Internet connectivity.  Now, there’s nothing wrong with that.  ISPs do incur “enormous capital investments”, and it only makes sense that they want to be compensated.

I think Alan’s deployment of the “fairness” argument at this juncture, however, is quite telling.  As he admits, ISP’s bills could be fair and avoid cross-user subsidies by following true usage-based pricing.  But we all know that this is not what happens.  Perhaps ISPs don’t offer usage-based pricing because market competition will not allow it (which presumably means the market is working).  Or perhaps ISPs like the current system precisely because it allows them to charge $60+/month (or higher in many markets) to individuals who barely use the Internet (which would imply that ISPs are benefiting from the fact that many home Internet users do not have a choice of ISPs).

But either way, let’s not pretend that ISPs — most of which operate under monopoly or duopoly market conditions — are avoiding usage-based pricing on the mere prospect of “howls of protest.”  If ISPs wanted to offer usage based pricing, they would.  But they apparently don’t.  Given this undeniable fact, it’s hard to see how Alan’s position in favor of the ISPs he represents is any less self-serving than Netflix’s position.

Moreover, any unfairness that exists because “98% of end users…subsidize a small handful of mega-users” is completely on the ISP side of the “regional front door”.  If ISPs want to address a perceived unfairness in pricing among their users, they can try charging more for more use.  But it’s hard to see why Netflix — on the other side of that “regional front door” — should pay money to ISPs just because the ISPs own customers don’t all consume exactly the same amount of bandwidth.

4) It isn’t just me who sees Netflix as conducting this unfair “subsidization” campaign. See this analysis too — http://www.digitalsociety.org/2011/01/netflix-lobbying-for-broadband-consumers-to-subsidize-netflix/.

My analysis: I note at the outset that Alan’s view of “subsidies” cuts both ways — he doesn’t want to “requir[e] 98% of end users to subsidize a small handful of mega-users” (point #3), but he does want “to take into account the huge sums needed to bring broadband to the (mostly very rural) areas of the country that are currently unserved and that presumably would like to enjoy the same online benefits that we city dwellers have” (point #2).

It’s perfectly understandable that Alan wants subsidies that will help USTelecom’s ISP clients and not subsidies that don’t.  But it’s a little much for him to be shocked when Netflix also wants a subsidy.  And whatever rhetorical games ISPs and Netflix are playing, the fact remains that ISPs are in the driver’s seat on Internet connection pricing.  If they think the current arrangement is unfair because “unlimited access” means some people use way more, they can change their pricing structure (see #3, above).  But again, there’s no discernible reason to pull Netflix, a third party, into this issue.

As far as the Digital Society article is concerned, I’ll let my readers look at it for themselves.  From what I can tell, this is the most relevant excerpt:

Netflix and their CDN partners want’s [sic] the government (the FCC in particular) to declare this peering negotiation as a Net Neutrality violation and force broadband providers to give away thousands of Gbps of broadband capacity for free.

I direct readers’ attention to the comment by Jeremy Stench at the bottom of the page, which is more fully explained in his linked blog post over at Packet Life:

If Comcast [an ISP] were charging Level 3 [one of Netflix’s CDN’s] for transit service [i.e., passing data through the Comcast network on the way to some other final destination], this would be business as usual, not even worth commenting on. But this situation is markedly different as Comcast is demanding payment for traffic terminating on its own network. The traffic in question ultimately must traverse Comcast’s infrastructure, regardless of who the immediate peer is. Comcast effectively is charging two parties for a single service: it wants Level 3 to pay for sending data, and its own subscribers to pay for receiving that same data.

In an ideal economy, Comcast should be able to charge what it likes. And Level 3 should be able to decline. And Comcast subscribers should be able to switch to another provider if they want to watch Netflix. Sadly, this is not the situation of Internet access in the US. For millions of residents, Comcast is their only choice for broadband Internet access. Terminating peering with Comcast would mean an inability to deliver Netflix to those millions of potential customers, and Comcast knows it. [emphasis added]

This is well said (and illustrative of the monopoly/duopoly pricing power of many broadband ISPs discussed at #3, above).

5) When Netflix has been paying $600-700 million annually to the US Postal Service to deliver DVDs through the mail, one would think they would see some value to sharing in the costs of building out that expensive broadband infrastructure by agreeing to share in a fair proportion of the costs their own service is imposing. But instead, they seem to want to offload all those costs onto the 98% of consumers who AREN’T using their services, as the same time as they work on getting out of the mail delivery business — thereby saving themselves hundreds of millions of dollars each year.

My analysis: Of all Alan’s points, this seems the flimsiest.  Other than the subsidy issues already discussed above, Alan’s argument reduces to the mere assertion that (a) because Netflix used to pay the USPS a lot of money to mail DVD’s (“$600-700 million annually”), (b) Netflix should have to pay ISPs a lot of money to deliver those movies digitally (rather than the ~$35 million they actually pay to CDN’s like Level3, according to the Digital Society article).

First, this is misleading.  Netflix may only pay $35 million to its CDN’s to deliver content to those “regional front doors”, but Netflix’s 20 million+ customers pay their ISPs hundreds of millions (if not billions) of dollars for Internet service (which, in practice, means a connection to those “regional front doors”).

Second, why a company’s previous cost structure is relevant to its current business model escapes me.  Netflix’s prior, significant expenses in using the postal service to send DVD’s by mail seems as irrelevant as it would be for FedEx to argue that L. L. Bean should pay more to ship its packages than Amazon.com because L. L. Bean was founded in 1912 (when shipping was more difficult and expensive) and Amazon.com was founded in 1994 (when shipping was relatively cheaper).  It’s hard to see the logic in that.

[6] Joel, it seems you and I should be able to agree on the end result we both want — a strong, robust, and high-capacity broadband infrastructure that serves everyone’s needs. But instead of working to figure out how best to get there, we find ourselves arguing about a subsidiary question that reminds me of that famous dialogue from an old Marx Brothers film, where Groucho finds himself negotiating with a beautiful woman over how they might spend the night together:

Groucho: Would you sleep with me for a million dollars?

Pretty lady (laughing): Of course I would!

Groucho: Would you sleep with me for $10?

Pretty lady: Certainly not! What do you take me for?

Groucho: We’ve already established that. Now we’re just haggling over the price.

My analysis: Yes, of course, price is all Alan and I have been arguing about.  It would be disingenuous to suggest otherwise.  Alan argues that Netflix should pay some (unspecified) amount to ISPs in addition to what ISP’s customers pay; I have been arguing that ISPs should not be able to double-dip.

At this point, I will let our respective arguments speak for themselves.

Background reading: BitTorrent

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I’ve linked to a number of bittorrent-related stories over the past couple of weeks.  Terry Hart over at Copyhype recently published an excellent summary of the legal issues surrounding bittorrent:

I sometimes see the phrase “.torrent = .crime” used online in discussions about enforcing copyright online. It is considered by copyright critics as a dig against efforts to enforce the widespread copyright infringement occurring within the bittorrent ecosystem — the idea being that content producers have mistakenly declared torrent technology categorically unlawful….The snappy soundbite, however, glosses over the distinction between a technology and uses of a technology. It also relies on a fundamentally flawed premise: the fact that there are some legitimate uses of a technology does not make all uses of that technology legitimate. And within the general bittorrent ecosystem, there are a lot of illegitimate uses of the technology — so much so that the association between “torrent” and “crime” is not entirely unfair.

Hart’s full analysis is well worth reading.