COPYCENSE

A mondo Copycense Clippings enters your “In” box this week. Guest editor Kim Hagedorn and the rest of the Copycense crew provide stories on monetizing user-contributed content; Google losing in Belgium; Big Music’s artful reframe of Steve Jobs’ anti-DRM letter; and a “file sharing” defendant accusing the music industry of collusion.

But first, an study that proves the “file sharing” controversy is over.

Article & Quote of the Week

Felix Oberholzer-Gee and Koleman Strumpf. The Effect of File Sharing on Record Sales: An Empirical Analysis. (.pdf) Journal of Political Economy. February 2007.

With no clear theoretical prediction, the effect of file sharing on sales is an empirical question. Most of what we know about the effects of file sharing is based on surveys. … Rather than relying on surveys, this study is the first to use observations of actual file-sharing behavior of a large population to assess the impact of downloads on sales. … We match audio downloads of users in the United States to a representative set of commercially relevant albums for which we have concurrent weekly sales, resulting in a database of over 10,000 album-weeks. This allows us to directly study the relationship between downloads and sales. … We find that file sharing has had only a limited effect on record sales. After we instrument for downloads, the estimated effect of file sharing on sales is not statistically distinguishable from zero. … On the basis of all specifications presented in this paper, even our least precise results, we can reject the hypothesis that file sharing cost the industry more than 24.1 million albums annually (3 percent of sales and less than one-third of the observed decline in 2002).

So let’s put this quote and paper into a broader societal context. This paper is published in Journal of Political Economy (JPE), one of the world’s oldest and most prestigious peer-reviewed academic journals. JPE is published by the University of Chicago, one of the country’s foremost institutions on economic theory and thought, intellectual home of the late Nobel Prize-winning economist Milton Friedman. One author holds an endowed professorship at the University of Kansas, while the other holds a faculty position at Harvard Business School; both hold academic tenure. The study the authors conducted is the first to use actual music download data, culled from log files on file sharing networks.

In short, this study is an empirical, Federer-like dismissal of a decade-long public relations frame that has contended that online music downloads have irreparably harmed the international music industry.

Its only “fault” is that it is published after a decade worth of court decisions that have accepted Big Music’s “data” and “studies” as gospel. Given the authors’ credentials, their methods, and the prestige of the journal, we are curious about how long it will take before American federal court judges begin citing this study in their opinions dismissing “file sharing” lawsuits by the RIAA. We also are curious about the extent to which this study is the tipping point that begins to stem (or reverse) the recent tide of reflexively pro-industry court decisions. Categories: File Sharing & P2P; Music; Research

CommuniK. Clippings

Sarah McBride. Hollywood Weighs Copyright Protections. WSJ.com. Feb. 16, 2007. Steve Jobs’ manifesto caught attention in circles beyond Big Music; it raised eyebrows in Hollywood, too. Sure, Jobs was talking about DRM and music, but as a member of Disney’s board, he may as well have been discussing the film industry’s need to punch DRM’s ticket.

We hypothesize that two critical factors (neither of which were mentioned in this story) have kept films from being as widely prevalent online as music, at least domestically. First, movie file sizes are massive, even when compressed. Second, America is significantly behind the rest of the world in broadband access and speed. (See Thomas Bleha’s 2005 article in Foreign Affairs, entitled “Down to the Wire.”)

Combined, these factors make film more difficult to widely distribute — not impossible, but more difficult. But the central underlying theme of this story is that downloads equal loss of sales. After reading our Article of the Week, above, no Copycense reader should correlate these issues. Categories: File Sharing, P2P & Downloads; Film.

Scott Kirsner. All the World’s a Stage (That Includes the Internet). The New York Times. Feb. 15, 2007. YouTube, show us the money. Now Web sites like Metacafe and Revver are doling out cash to subscribers who post videos. The amount of money the subscriber receives is based on ad clicks. The person featured in this Times article had been viewed more than 1 million times; his “royalty” was $13,000.

But why does this arrangement (and cash yield) sound eerily familiar to the rapacious recording industry contracts that left dozens of legendary musicians penniless, while label and publishing owners added to the Harvard endowment?

Video sharing sites must understand they’re little more than glorified middlemen. Middlemen remain important, even in today’s digital economy, but no longer so important that they can take the lion’s share of the economic pie. And artists and contributors need to recognize this too, and decide whether to hold out for more money, or just not release your material until a fair price is offered. In today’s environment, good unreleased content may more valuable than good content that you’ve sold for a pittance.

We understand — and encourage — the need for video sharing sites to recoup costs and make a profit. But all the cool technology in the world means zip if there’s nothing on the site that people want to see. We already have that here in the U.S.: it’s called cable. Categories: Broadcasting & Journalism; Business & Commerce; Film; Web & Online.

Site Check

Know Your Copy Rights. Sponsored by the Association of Research Libraries, this resource is designed to help librarians, educators and other professionals use copyrighted works in academic settings. From our vantage point, the unfinished “Message Development” section seems to be the most promising portion of this site. If it “suggests ways the library could frame a message for the stakeholders that it most wants to reach by articulating the personal and institutional motivations that likely influence each audience,” then this resource could become invaluable. Categories: Libraries & Information Centers; Research.

Clippings

• Samantha M. Shapiro. Hip-Hop Outlaw (Industry Version). The New York Times. Feb. 18, 2007. The Times adds background and context to the DJ Drama/Don Cannon mixtape arrest story. Query us this: how does the recording industry gets access to SWAT teams for the purpose of quelling alleged copyright infringement? At a minimum, it seems odd that taxpayer funds and municipal resources would be spent on this purpose. Categories: Cases & Litigation; File Sharing, P2P & Downloads; Music.
• Aofie White. Google Loses Copyright Case in Belgium. Globeandmail.com. Feb. 13, 2007. Will copyright be to Google what antitrust was to IBM and (to a slightly lesser extent) Microsoft? Categories: Broadcasting & Journalism; Cases & Litigation; Infringement; Web & Online.
• David Litterick. MySpace Moves on Copyright. Telegraph.co.uk. Feb. 13, 2007. MySpace is experimenting with technology that will block video clips that are copyrighted in hopes of hinder costly lawsuits. New clips that are being uploaded with be matched against the digital fingerprints housed in a database. Any clips with matching fingerprints will be blocked. They are currently testing the system by blocking Universal Music Group’s unauthorized clips. Categories: Databases; File Sharing & P2P; Multimedia.
• Matthew Herper and Robert Langreth. Biology Goes Open Source. Forbes.com. Feb. 12, 2007. Novartis and Pfizer decide to give away its genetic research. We’re still befuddled how naturally occurring elements of the human body pass the originality and novelty thresholds to warrant patent protection in the first place. Categories: Open Source; Patents.
• SiliconValley.com (via Associated Press). Business Group Criticizes Russia, China on Copyright Piracy. Feb. 12, 2007. We decided long ago to stop using the doublespeak of “piracy” on Copycense, but we this story was worth posting because it gives good insight into how the content industry has begun using the international trade process as the de facto method of passing intellectual property law. K. Matthew Dames addresses this topic in an upcoming article entitled “Trade Agreements as the New Copyright Law,” forthcoming in the March 2007 issue of Online magazine. Categories: International; Law, Legislation & Regulation.
• Jan Norman. Beware Copyright Mistakes. OCRegister.com. Feb. 12, 2007. In a hyperactively litigious copyright environment, even small businesses must closely watch for copyright problems. Even the suggestion of an infringement lawsuit could sink a business. Perhaps copyright and other intellectual property should be a standard part of contemporary MBA programs. Categories: Business & Commerce; Infringement.
• Jon Healey. The Beat(down) Goes On. LATimes.com. Feb. 12, 2007. The end of the MGM v Grokster case is near. U.S. District Court Judge Stephen V. Wilson rejected MGM’s proposal for a permanent injunction against StreamCast because he does not think MGM should have sole control over StreamCast’s software since the software can be used for non-fringing purposes. There are still a few issues that need to be worked out before the case can be closed. Categories: Cases & Litigation; Computers & Technology; Infringement.
• CIS Blog. 3/5: Privacy and Public Policy Challenges of Social Technology. Feb. 12, 2007. Next month, Chris Kelly, chief privacy officer of Facebook, will be discussing the regulatory and public policy landscape domestically and internationally, what the future holds, and the measures Facebook uses to minimize misuse of their site. Categories: Events; Privacy & Security.
• Bag and Baggage. Of Foxes and Henhouses. Feb. 11, 2007. The entertainment industry is excited about Rep. Howard L. Berman stepping into his new position over the House judiciary committee’s panel on the Internet and intellectual property next month. Berman is known for his support of more stringent protection of copyright and limits for digital copying including transferring digital files between devices (i.e. transferring music from a CD to an iPod). Categories: Law & Regulation; Politics.
• ArsTechnica. Data Privacy Bill Requires Breach Disclosure. Feb. 9, 2007. Senators Patrick Leahy and Bernie Sanders proposed a new data privacy and security data bill, Personal Data Privacy and Security Act of 2007 (S.495.IS) to the Senate this week. The bill will require that companies notify customers if their databases have been breached. In addition, they will be required to allow customers the ability to correct their inaccuracies in their data and the company will be required to disclose what data they collect. The bill also proposes an increase in the penalties to those who engage in identity theft in addition to penalties to companies who purposely do not notify customers of a security breach. Finally, new rules requiring stricter security standards for those using data from commercial brokers and government contractors will be established by the U.S. government. Categories: Law & Regulation; Privacy & Security.
• William Patry. Wacka Wacka Hula Hula. Feb. 8, 2007. This is interesting case from Hawaii. A photographer, Reece, sued Island Treasures Art Gallery for copyright infringement. Reece claims that Island Treasures Art Gallery’s stained glass window of a hula dancer is a copy of her photograph.Judge Seabright denied Reece’s preliminary injunction based on lack of originality, saying only the original element of Reece’s photograph was the timing and decision to take the photograph. The other elements of the photograph and stained glass window were “scenes a faire.” Categories: Cases & Litigation; Infringement.
• Sara Kehaulani Goo and Charles Babington. Google Still Searching For Recognition in D.C. WashingtonPost.com. Feb. 7, 2007. The Post has been crushing Google for the better part of the last year over its inability to quickly ramp up its lobbying operations to K Street-level efficiency. And that point of view is rather unfair, given that Google — despite its market cap — really is new to the whole “skin and grin” game. But given issues like the copyright loss in Belgium (see above), the search giant really needs to get its act together in this arena sooner than later. Categories: Law, Legislation & Regulation; Web & Online.
• The Patry Copyright Blog. 2 Live Bankrupt. Feb. 7, 2007. OK, so we had to chuckle a bit when we discovered that Luke Skyywalker, head of the notorious 2 Live Crew, had filed for bankruptcy. But what happens to copyrights within a bankruptcy case can get grisly. Categories: Bundle of Rights; Cases & Litigation.
• Engadget. RIAA Misreads Jobs’ Open Letter on DRM, Thinks He’s Offering to License FairPlay. Feb. 7, 2007. Engadget is one of our favorite sources, but it totally whiffed on this one. The RIAA did not misread Steve Jobs’ letter on DRM; it simply reframed the issue onto a topic that was much more consistent with its traditional “piracy” mantra. Framing and reframing issues is a longstanding, artful technique that RIAA and other Big Content members have mastered. But Engadget should not feel too bad, since bloggers at the Washington Post also missed RIAA’s reframe. Reporting from the nation’s capital — where the frame and reframe is taken to extreme levels on a daily basis — one would think Post writers should know better. For more information on issue and debate framing and how this occurs within the context of copyright media coverage, see K. Matthew Dames’ September 2006 article “Framing the Copyright Debate.” Categories: Broadcasting & Journalism.
• Jared Allen. Country Star Sues Over Rights to keithurban.com. TheCityPaper Online. Feb. 7, 2007. So a painter named Keith Urban is being sued by a country music singer named Keith Urban because the singer says the painter is domain squatting. We’ve seen a lot of domain squatters in our day, and the painter does not seem to be one of them. Unfortunately for the painter, the singer filed his lawsuit in Nashville — the home of country music — and based on the home court advantage of the singer’s choice of forum, the painter likely is going to lose an injunction round. Further, Nashville is in the Sixth Circuit, which William Patry recently noted “is fast becoming the most prolific court of appeals in copyright cases.” Finally, the painter likely doesn’t have the funds to fight the singer’s rather weak lawsuit. Categories: Web & Online; Trademarks.
• Michael Geist. U.S. Movie Piracy Claims Mostly Fiction. TheStar.com. Feb. 5, 2007. See our Article & Quote of the Week, above, for a real analysis of “piracy” claims. (We found the following quote particularly interesting: “In fact, AT&T Labs, which conducted the last major public study on movie piracy in 2003, concluded that 77 per cent of pirated movies actually originate from industry insiders and advance screener copies provided to movie reviewers.”) Unfortunately, lawmakers continue to heavily consider Big Content’s “studies” and “data” when making policy, even to the point of codifying such data gathering into law for the purpose of determining trade and foreign policy. For more information on this phenomenon, see Michael Ryan’s Knowledge Diplomacy, which comprehensively describes how Big Content’s data is the sole source of information that goes into compiling the U.S. Trade Representative’s Special 301 report. Categories: Film; Infringement; International; Research.
• SiliconValley.com. Blackboard Makes Peace Offering to Open Source Community with Patent Pledge. Feb. 1, 2007. Ever since it purchased WebCT, its last significant competitor, Blackboard has been looking to extend its market advantage in several ways — including through threatening patent ligitation. But one thing would stop such activity almost immediately: an antitrust investigation by federal prosecutors. Short of that, a wholesale adoption by universities of open source e-learning systems such as Moodle and Sakai could render similar benefits. Categories: Education; Open Source; Patent; Web & Online.
• Jim Fitzgerald. Teen Accuses Record Companies of Collusion. AP.com. Jan. 31, 2007. Remember Patti Santangelo, the New York City suburban mom who fought back against the RIAA’s “illegal file sharing” allegations? RIAA dropped the lawsuit against her and sued her children instead. One of them, 11-year-old Robert Santangelo, counterclaimed against RIAA, claiming Big Music’s heavy is “conspiring to defraud the courts and making extortionate threats.” Now, normally we’d dismiss this allegation as a the proverbial legal Hail Mary: throw something — anything — against the wall and see if it sticks. But after Judge Lee R. West’s award of attorney’s fees to another defendant mom in a separate RIAA case (see Quote of the Week, Copycense Clippings 1.02), little Robert’s accusations don’t seem that far fetched after all. Categories: Cases & Litigation; File Sharing, P2P & Downloads; Music.
• David Ibison, et al. Norway Declares Apple’s iTunes Illegal. FT.com. Jan. 24, 2007. This information was released before Steve Jobs’ shot across the bow concerning copy restricting technologies. It’s ironic that a democracy would find one of Jobs’ products illegal because of its inability to play well with others. Categories: International; Music; Law, Legislation & Regulation; Tech & Devices.
• Jim Giles. PR’s ‘Pit Bull’ Takes on Open Access. News@Nature. Jan. 24, 2007. So the Association of American Publishers hires an aggressive public relations professional to combat the open access (OA) movement. And (OA) people seem shocked — shocked — at this development? One of the things that continually baffles us is how often proponents open access, libraries, and the cultural commons fail to realize that framing the debate often means everything. And a good public relations official always frames debates to the advantage of his client: just look at how long we all have been talking about “piracy.” Until user group representatives groups realize the power and importance of framing and connecting with the general population so it knows what is at stake, they always will continue to be susceptible to the content industry’s ability to massage the issues to its advantage, both in the press and in the legislature. Categories: Broadcasting & Journalism; Open Access.

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