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Signs of a Move Towards Balance? (Part 1 of 2) reported on the mistrial in the Jammie Thomas case, with the court coming to appreciate the overreaching of prosecutions for music sharing, rejecting the RIAA position that simply “making music available” should be punishable as unauthorized distribution, and Judge Davis recommending that Congress reconsider the egregious statutory damage penalties for copyright infringement.

Last week’s other optimistic signal was the continued erosion of DRM-protection as a means of music distribution.¬† Digital Rights Management (DRM), remember, is the technological band-aid that prompted the 1998 Digital Millennium Copyright Act (DMCA), the law that we rail against in B2B as an anticompetitive drain on innovation. We argued in the book that DRM hurts consumers and competitiveness, and we took approving note of some alternative distribution models for music that were coming to market just as we were completing our manuscript, such as the availability of DRM-free music from Amazon.

Two days ago, MySpace joined the DRM-free music distribution party with what may turn out to be the most significant of all the new models: MySpace music. MySpace users can now select from hundreds of thousands of non-DRM tracks to stream to their computers. The service is free to MySpace users, supported by advertising. You must be connected to the net to use the service. If you want a copy to listen to off-line, you’ll have to buy it from Amazon or iTunes.

Actually, I bet people have already using stream recorders to save he tracks for offline use. But in any case, having to be connected to the Internet isn’t a big deal any more. The reality is that MySpace users now have the “universal jukebox”, as we described it in B2B, that Napster presented in 2000 and 2001. The appeal will be just as great, and this time it’s legal. Of course, where MySpace goes, can Facebook be far behind? And who knows what other budding social networks? We’re finally coming to the end of the hallucination that DRM is the key to the Internet content economy. Today it’s free music tracks, but video will follow: it’s only a matter of storage and bandwidth, and the inexorable pace of Moore’s Law. Are you listening, MPAA?

As if on cue, but surely unrelated, Walmart yesterday announced the death of a third large DRM music service and the consequent stranding of consumers. This follows on the heels, as we previously reported, of Microsoft (April 23, 2008, MSN Music RIP) and Yahoo! (July 26, 2008, Yahoo joins the ‚Äústrand our DRM customers‚Äù game). As of October 9, the hapless purchasers of music tracks from Walmart.com Digital Music, will no longer be able to move “their” music to new machines, compliments of Walmart ceasing to support its license server.

So DRM-based music distribution continues to die: consumers don’t want to buy it, providers don’t want to support it, and there are wildly better alternatives emerging. But it’s still the same old story with Congress continuing to not get the message, and continuing to grasp on to DMCA anticircumvention and even starker penalties for copyright infringement. Our solons still live in fear of some 1990’s bogeyman story of entertainment industry imminent collapse that never was true and becomes more transparently a fairy-tale every day.

As we wrote in B2B:

If the content industry moves to better business models and the DRM battles subside, the DMCA’s anticircumvention provisions may continue to be anti-consumer, anti-competitive blots on the digital landscape. Unless repealed from the legal code, they would remain as battlefield relics of a war that was settled by peaceful means—unexploded ordnance that a litigious business could still use in ways unrelated to the law’s original intent.

Let’s give all those Congressman MySpace accounts, so they can learn what a dying system they’re trying to shore up.

This week saw two significant developments in the world of copyright and digital information described in Blown to Bits chapter 6, “Balance Toppled.” They signal that things just might be starting to move back towards balance.

On September 24, Judge Davis set aside the jury’s October 2007 verdict in the Jammie Thomas case.¬† That’s the case discussed in B2B of the Minnesota single mother who who was fined $222,000, $9250 per song, for sharing 24 songs on the Kazaa network, the case that became the recording industry’s “we told you so” for why people accused of file sharing by the RIAA should settle even if they are innocent, because the stakes in losing can be so high.¬† As we described in the book, Thomas’s penalty demonstrates the egregiousness of the statutory damages for copyright infringement when applied to the Internet.

Last June, as I noted in this blog, trial Judge Thomas asked whether he had made a legal error in instructing the jury that simply making music available from a computer counts as unauthorized distribution under copyright law, even if no actual distribution takes place.  (See “Sending a Message”: Revisited.)

Now Judge Davis has decided that this was indeed an error, and has granted Thomas’s motion for a new trial.¬† This is a blow to the RIAA’s lawsuit strategy: Not only does it erase the current scariest example of damages, but it’s another court that has rejected the “making available” theory: to convict someone for music-sharing copyright infringement, they will have to demonstrate that actual distribution took place, not merely that files were available on the accused infringer’s computer.

Perhaps even more notable is Judge Davis’s plea to Congress to reconsider the law about statutory damages.¬† As he writes in his opinion:

“The Court would be remiss if it did not take this opportunity to implore Congress to amend the Copyright Act to address liability and damages in peer to peer network cases…. The defendant is an individual, a consumer. She is not a business. She sought no profit from her acts…..[I]t would be a farce to say that a single mother‚Äôs acts of using Kazaa are the equivalent, for example, to the acts of global financial firms illegally infringing on copyrights in order to profit in the securities market……. [T]he damages awarded in this case are wholly disproportionate to the damages suffered by Plaintiffs.”

Amen.

See Signs of a Move Towards Balance? (Part 2 of 2)

Blown to Bits readers of chapter 4 know that we should stop to think before acting on the information produced by search engines.¬† Yesterday, a Florida stock analyst didn’t stop¬† ‚Äî and United Airlines stock lost 75% of its value, a billion dollars, in 15 minutes.¬† The stock largely recovered, down only 10% by day’s end but investors who sold at the low are stuck; and other airline stocks were affected as well.

Yesterday’s panic was the result the Bloomberg News Wire printing a one-line note about a Florida investment newsletter’s note about an article on the web site of a Florida newspaper reporting that United had filed for bankruptcy.¬† The article, which originally appeared in the Chicago Tribune, was accurate reporting, except that it was from 2002, and it was located in the archive section of the Florida paper’s web site.

It seems that an analyst at Income Securities Advisors did a Google search for “bankruptcy 2008”, which turned up the story, and then passed it on without checking it or, one might suspect, without reading it carefully.¬† In the inevitable finger pointing, one of inevitable finger pointees is Google, with the newspaper asking how a link to a 6-year-old story from their archive got returned from a query indicating “2008”.¬† The article didn’t even appear in yesterday’s newspaper, but, as Google points out in its defense, was listed as one of the “most popular” on the paper’s web site, which the Google search engine took as an indication that the article was, well, popular.

One might imagine a more careful search search engire, one that would double check the actual dates of news article, or even identify their original sources.¬† But more to the point, it wouldn’t hurt to have more careful people, especially those who are being paid to supposedly analyze information, not just uncritically accept and pass along the results coughed up by mysterious computer programs.

According to the president of the securities company, his researcher didn’t verify the story before passing it on because, “we are a reading service,” and since the story appeared in the paper “I don’t think that calls for us to check it out.” (As quoted in the Chicago Tribune.)

That’s an interesting view: it’s OK for¬† professional analysts to do their job by typing in search queries and passing on the results without having to apply any judgment.¬† I bet we could get a computer program to do that.¬† We could call it “Google”.

I wrote last week about Yahoo’s shutdown of its Music Store Server, thereby stranding customers who had bought music controlled by the Music Store’s digital rights management. This week, Yahoo announced that it will compensate stranded customers with coupons for replacing music tacks from Real Network’s Rhapsody, whose music is free of DRM copying restrictions.

It’s good to see Yahoo showing concern for its customers, and even better to see them offering higher-value, i.e. non-DRM, replacements. As recently as February 2007, Warner Music’s CEO was deriding the idea of non-DRM music as “completely without logic or merit.” Now DRM-free is becoming the norm for on-line music, with the growing realization that DRM is bad deal for music, not only for customers but for publishers, and also, as explained in Blown to Bits, for innovation. I expect that we’ll see the same shift in attitudes toward DRM-free video within a couple of years.

Yahoo was wise to quickly make amends to its customers, because there’s a lot more at stake for the IT industry than lost music tracks. The basic phenomenon of Yahoo’s (and earlier, Microsoft’s) announcement about shutting down DRM servers was that of leading high-tech companies offering a product that entailed a long-term commitment to maintaining a customer service, and then abandoning that commitment when the economics went sour.

What does that mean for the industry’s growing emphasis on cloud computing? After all, if you can’t count on Yahoo to keep your music available for five years, how can you count on Microsoft, Google, IBM, and others to keep your company email and documents available for … do you need to have confidence for 10 years? 20? 50? I’d be viewing these server shutdowns nervously if I were a corporate CIO faced with the option of moving to cloud computing. And I’d be thinking hard about them if I were high-tech exec eager to get into the cloud business. After all, maintaining “long term” DRM servers seemed like a great business opportunity in 2004.

Last April (see MSN Music RIP) I blogged about Microsoft’s decision to shut down the license servers for MSN Music at the end of August, thereby stranding customers who had purchased music tracks governed by MSN Music’s Digital Rights Management. As it turned out, Microsoft reconsidered, and now says that the license servers will operate until at least 2011.

Now Yahoo has joined the DRM customer stranding game with its July 23rd announcement that it will shut down the Yahoo Music Store servers at the end of September. The result will be that anyone who purchased Music Store tracks will be unable to move them to new machines after the deadline. As with Microsoft’s (since retracted) announcement, this is another demonstration that customers don’t really own the music they “purchase” under DRM systems. Instead, they remain dependent on the distributor’s willingness to keep the DRM license servers running: something for which the distributor has given no long-term guarantee.

As Blown to Bits argues, DRM is a bad deal for customers and a bad deal for innovation. It’s also a bad deal for the music distributors themselves, since it obligates them to maintain an ongoing technical infrastructure of license servers. It’s encouraging to see the continuted growth of non-DRM alternatives for music distribution. Now if only Congress would figure out what a bill of goods they’ve been sold by DRM pushers.

Readers of Blown to Bits know that when it comes to bits, nothing goes away (koan #6). Information, even information you’ve deleted, can come back to your surprise – and your embarrassment. In the book, we illustrated this at Harvard University’s expense by showing that an outspoken presidential statement on Harvard’s Web site about the scientific abilities of women had quickly been replaced by a more conciliatory version, and yet the original remained accessible to anyone who thought to look in Google’s cache.

The McCain campaigners had similar fun last week at Obama’s expense when they revealed how the Obama Web site’s statement on the plan for ending the war in Iraq was substantially rewritten between June 11 and July 14. For instance, where the earlier version led with “Bring our troops home,” the later version spoke of “A responsible, phased withdrawal.” The McCain camp scolded that this was politics-as-usual flip-flopping; Obama supporters replied that that it was simply elaborating a position and to more details. The tussle is unlikely to sway any votes.

What’s more interesting from a Bits perspective is that the McCain folks discovered the change through a new on-line service called Versionista <http://www.versionista.com/>, which is set up to track just these kinds of changes to web sites. Tell Versionista to monitor a web site, and it will watch it constantly, keeping track of every addition or deletion, and show you side-by-side comparisons of the different versions with the changes highlighted. You can compare Obama’s before and after Iraq plans yourself by following this Versionista link.

We can be sure that Obama and McCain through November – and perhaps all political campaigns from now on – will think twice when they modify their Web sites. That goes for the rest of us as well: anything you place on the Web can now be monitored by an automated agent in the service of a competitor, enemy, or rival, and any change or inconsistency can be thrown back in your face.

There are many more shoes yet to drop in this tale of automated change monitoring. Here‚Äôs something to ponder, relating to subpoenas for email and other documents: Word processors make automated backups as you write. You might type a phrase as you are composing and delete it almost immediately, and yet the original fleeting text might have been caught by a backup. If your documents are subpoenaed, do you have to turn over only the final versions, or the backup drafts as well? You might end up having to answer not only for email messages you sent, but for the unedited drafts of those messages, including the stupid   ill-considered words that you later edited out. The issue hasn‚Äôt yet come up in court, but those drafts fit the legal definition of ‚Äústored documents‚Äù and so in principle should be turned over. We can be sure that the issue will arise before long.

As the book says, bits never go away; they can’t even be replaced.

As we were completing Blown to Bits, the big news on the copyright war front was the Jammie Thomas trial. (See “Sending a Message” in Chapter 6.) This was the first of the thousands of peer-to-peer lawsuits filed by the RIAA to go all the way to a jury trial. Thomas lost and lost big: The jury not only found the Minnesota woman guilty of sharing 24 songs using Kazaa, but they imposed a fine of $220,000: $9250 per song. This was a huge victory for the record companies, because the demonstrated reality of such high stakes for losing in court is a huge incentive for other targets of RIAA lawsuits to settle.

Now the verdict is being called into question. In May, trial court judge Michael Davis issued a ruling saying that he may have made a legal error in instructing the jury.

Here’s the issue: Thomas, and the other P2P lawsuit targets are accused of infringing copyright by illegally distributing music tracks. What they actually did (allegedly), was to place the music tracks on their computers in a way that made them available over the network. Does ‚Äúmaking available‚Äù count as ‚Äúdistribution‚Äù under the copyright law, or does ‚Äúdistribution‚Äù require the files actually be disseminated? This issue has come up before, and different courts have ruled differently on the issue. Judge Davis instructed the Thomas jury that ‚Äúmaking available‚Äù does in fact count as distribution. Now it appears that there is an appeals Court ruling in the 8^th Circuit going other way: ‚Äúdistribution‚Äù requires actual dissemination of material, not just ‚Äúmaking available‚Äù. Since Minnesota is in the 8^th Circuit, that should be a governing precedent in the Thomas case. Davis will hear arguments on the issue in hardings scheduled for July 1.

These gyrations underscore how uncomfortable the legal system becomes when old notions of copyright confront new digital realities and just how much the copyright balance has been toppled by the world of bits.

And things can get even murkier. As Villanova Law Professor Michael Carroll points out (http://carrollogos.blogspot.com/), the RIAA, in arguing for the ‚Äúmaking available‚Äù interpretation of distribution, may want to be careful of what it’s wishing for. US copyright law includes a provision called the first-sale doctrine, which says that once you’ve acquired a copy of something, it’s legal to redistribute it. That’s why used book stores are legal, for example. So if making music tracks available counts as distribution, it ought to be OK under the first-sale doctrine. In that case, the record companies would probably argue that placing music on a P2P network counts as contributory infringement, and the legal merry-go-round rides would continue.

Two dozen leading Internet researchers met last week at a workshop hosted by Google in Mountain View to discuss the growing crisis in network measurement.

The crisis is this: despite the critical importance of the Internet infrastructure, no one really knows how well the Net is working and how well it will hold up under increasing use. The measurement data that would help network researchers analyze network performance isn’t being collected ‚Äî perhaps it can’t be.

As a consumer, you can tell when your cable TV channels are on the fritz, or when your cell phone reception is poor. But when your Web response is sluggish or you can’t connect to a favorite site, you’re pretty much in the dark. It might be that the site you’re trying to connect to is down or overloaded, but it might also be a loose connection in your house, or a problem with your computer’s settings, or a program bug.

It might also be that your Internet service provider is intentionally slowing down your connection for various applications, a practice known as traffic shaping or, more pejoratively, as data discrimination. University network services and some other ISPs often do this to slow down response on peer-to-peer sharing for music or video files. Or an ISP might actively disrupt the flow of packets by injecting spurious reset commands into TCP streams, one of the techniques used in the “Great Firewall of China” to block connections to politically undesirable sites. And not only China. In 2007 rumors circulated around the Net that Comcast was actively interfering with peer-to-peer file-sharing traffic. Comcast denied it, but measurements performed last October by the Associated Press revealed that Comcast was in fact disrupting those connections.

For the average person, there’s almost no information available on which to base informed decisions about the service provided by an ISP. The factors affecting performance and too complex, and the data is simply unavailable.

And the situation isn’t much better for top network experts. Even for the Internet’s core, there are no good public sources of performance data; indeed, measurement data is often kept secret, since it’s considered to be valuable proprietary information by service providers. Researchers simply don’t know, for example, which segments of the Internet are particularly vulnerable to congestion, or what fraction of Internet traffic is due to viruses and spam.

The experts in Mountain View last week, many of whom conduct their own measurement experiments, discussed ways of sharing data and methods for getting better results. They also considered creating tools that non-experts could use to get information on the performance of Internet connections. The Electronic Frontier Foundation provides links to some tools at
http://www.eff.org/testyourisp, but these are limited and hard to use, and the results are difficult to interpret.

There were ideas for improving testing, but privacy is a real quandary: effective testing requires combining measurements from multiple sources. A public database of detailed network performance measurements would be a boon to research, but the same database could be mined for details about who was using the Internet when, and for what. The dilemma is like the privacy tradeoffs for epidemiological studies, between the needs of public-health experts and the desire to preserve privacy of individual medical records.

For such critical infrastructure as the Internet, the ignorance of consumers and experts alike is troubling and potentially dangerous. In the words of K Claffy of the Cooperative Association for Internet Data Analysis (CAIDA):

While the core of the Internet continues its relentless evolution, scientific measurement and modeling of its systemic characteristics has largely stalled. What little measurement is occurring reveals some disturbing realities about the ability of the Internet’s architecture to serve society’s needs and expectations.

On June 4, the Center for Democracy and Technology published The Internet in Transition: A Platform to Keep the Internet Open, Innovative and Free. This 25-page report summarizes CDT’s recommendation on Internet policy for the next Administration and Congress.

Readers of Blown to Bits will find the issues here familiar: preserving free speech while protecting children online; strengthening consumer privacy and restoring protections again government surveillance; using the power of the Internet to promote freedom and democracy on a global scale; protecting innovation by resisting attempts to undercut the Internet’s open architecture; and capitalizing upon the Internet as a force to encourage open government.

In the words of the report:

In recent years, policymakers seem to have forgotten what makes the Internet special. Increasingly, policy proposals treat the Internet as a problem to be solved rather than a valuable resource that must be supported. Debates over objectionable content online, protecting intellectual property, preventing terrorism, or restructuring telecommunications policy seem to have lost sight of the Internet’s history and its architecture.

This version of the report is a first draft. CDT and has launched a web site for readers to comments and suggest additional policy initiatives for incorporation into later versions of the report.

There are many detailed proposals and links to other CDT policy reviews. This is a great reference to Internet policy, and well worth reading and commenting on, regardless of where you stand on the issues.

The site is at http://www.cdt.org/election2008/ and the report itself is available at http://cdt.org/election2008/election2008.pdf.

If you purchase some software, do you have the right to run that software on your computer? Blizzard Entertainment, maker of the popular multiplayer game World of Warcraft, is asking an Arizona judge to rule that you don’t have that right. As Blizzard would have it, running a program ‚Äì even software you’ve bought and paid for ‚Äì is copyright infringement unless it’s done with explicit permission from the software publisher. This legal theory rests on the claim that when the computer moves program code from disk to memory in order to run the program, the bits are being copied, hence the liability for copyright infringement. This is the same interpretation of ‚Äúcopying‚Äù that raised its head in the early 1990’s. As described in Blown to Bits, it would lead to the conclusion that almost any use of a computer is potential copyright infringement if done without explicit permission from the software publisher.

In the Arizona case, Blizzard is suing MDY, Inc., which makes a program called Glider. Glider is a bot that that automates some of the activities in playing World of Warcraft, such as fighting. Fire up Glider and you have a large unfair advantage in your game playing that lets you skip ahead to advanced levels of play. Blizzard’s attitude towards Glider is much the same as the International Olympic Committee’s attitude toward steroids.

Using Glider or other bots is against the rules in WoW and violates the user license agreement for the client software. Accordingly, one of Blizzard’s claims is that MDY is encouraging players to break the license and should therefore be liable for so-called ‚Äútortious interference‚Äù with contracts.

Contract violation may be all well and good, but Blizzard goes further, and claims that WoW players who use bots or break other game rules are infringing copyright when they run the WoW client program on their computers. These players may have bought the program, but in Blizzard’s theory, they don’t actually own the copy of the program they paid for: they’ve merely licensed it for certain use. Any other use (including breaking the WoW rules) is unauthorized. And so, the theory goes, copying the program from disk to memory is unauthorized copying, hence infringement; and MDY is therefore guilty of secondary infringement.

What difference does it make whether this is contract violation or copyright infringement? Plenty, as readers of Blown to Bits know. The penalty for copyright infringement includes mandatory statutory damages of at least $750 per violation. That is, a judge must award at least this amount if infringement is proved. MDY, which has sold over 100,000 copies of Glider, would be facing statutory damagers of at least $75 million.

MDY’s fortunes aside, the real losers of a judgment in Blizzard’s favor would be all all of us who use sofware.¬† We’d find that any violation of software license conditions would be copyright infringement with the consequence risk of liability for mandatory statutory damages.¬† This would be the case even though nothing is being copied ‚Äì unless you count the copying of the program into memory to run it. For example, it’s against the rules in WoW to use bots, and it’s also against the rules to give your player a name that includes a title: name your WoW character ‚ÄúKing Alfred‚Äù and bingo ‚Äì copyright infringement and a $750 fine.

In March, both Blizzard and MDY filed motions for summary judgment. Let’s hope the judge throws Blizzard’s copyright claim on the legal junkheap. The world of bits and the world of copyright law have an uneasy enough relationship without resurrecting this absurd legal theory.