DRM / IP

From El Reg - Techdirt reports that Bill Gates has joined ex CTO Nathan Myhrvold at Intellectual Ventures, a company we have covered before: Notes El Reg:

TechDirt has uncovered that Bill Gates is named as an inventor on nine patents registered with a company called Searete since he stepped down from day-to-day responsibilities with Microsoft. Gates is also named on a further two Searete patents pre-dating his Microsoft departure.
Gates with the Ballmerbot

Searete is one of a clutch of [shell] companies operated by Myrholvd's Intellectual Ventures (IV). Myhrvold holds 241 named patents in Searete, whose catalogue goes back to November 2005.

........

Not helping Microsoft's case is the fact that Gates isn't the only Softie working with Searete. Senior vice president of Microsoft research Rick Rashid and chief research and strategy officer Craig Mundie - who assumed some of Gates' responsibilities on departure - are also listed on the Searete patents. Searete and IV are also based in Bellevue, Washington - Microsoft's home state.

The patents authored by Gates, Rashid, Mundie, and others cover ways of identifying and monitoring the way people interact with web sites and online systems.

Now IV may say it is not a patent troll but if not its sailing very close to that wind, and it is reported to have some very questionable business practices (like putting bright people in a room to brainstorm and then having its lawyers file patents from the discussions).

Thing I don't get is why should Bill Gates bother - its not as if he needs the money, and being involved wit the potential negative publicity of "assertive patent acquisition" could hurt his otherwise benign emerging reputation as a charitable benefactor. Philanthropism and Patent Predation don't mix easily

I'm a great fan of Mike Masnick's Techdirt, except I do think they have an Achilles heel in their oft voiced views that all content can be free forever sustainably - this post on the recent Google Books Copyright settlement being typical. However, a more sanguine analysis (in my view) was posted by one of the commentators there (Techdirt is one of those great sites where the commentators are often as good as the writers) - its by a commentator called Lost Sailor, here it is in full:

For all the wailing and gnashing of teeth, and even though it's contrary to Mike's ardent desire that such content be "freed," this is not a bad agreement at all. Quite the opposite.

Now, I've only scanned through the actual text of the agreement, but it actually provides for far greater use of scanned books than Google might have been able to do if it just asserted its right of fair use.

First, it pretty much clears up any possible lawsuit by a publisher or author (assuming it's accepted by the court) and also shields the libraries that were participating in the project from any liability. It also provides Google with a competitive advantage now that publishers and authors will be even more encouraged to participate in the project since they know their rights are protected...and they'll get paid something.

Second, it allows for much wider use of digital copies of the books and provides Google with safe harbor. Google is allowed to fully display out-of-print or otherwise commercially available books that are still in copyright and will set up an automated process for making that determination. They can still provide limited display of "snippets" of the content for in-print and commercially available books.

Educational institutions and public libraries will get the rights to display all the books in-branch.

Participating libraries (i.e., those that make their collections available for scanning) have even greater latitude than they would have for using the digital copies they received back from Google.

All in all, while you may not have gotten the knock-down, drag-out fight you wanted to see, Mike, this agreement will get more books on to Google with much greater options for users to read and use the content much sooner. Cooperation between the publishers/authors, libraries, and Google will mean more books will be available for the service (and I'd anticipate a scenario where all newly published books are digitally sent to Google for the project automatically upon publication).

All because Google had the foresight to realize that publishers and authors have rights too, and that if reasonably addressed (and this is really quite a reasonable agreement), new cooperative models can actually be put into practice.

The way out of the current no win, free for all scenario is to hammer out workable copyright rules going forward. I couldn't have put it better, so I didn't - Lost Sailor, whoever you are, consider this a sincere form of flattery

Update - Larry Lessig reckons its a good deal as well:

IMHO, this is a good deal that could be the basis for something really fantastic. The Authors Guild and the American Association of Publishers have settled for terms that will assure greater access to these materials than would have been the case had Google prevailed. Under the agreement, 20% of any work not opting out will be available freely; full access can be purchased for a fee. That secures more access for this class of out-of-print but presumptively-under-copyright works than Google was initially proposing. And as this constitutes up to 75% of the books in the libraries to be scanned, that is hugely important and good. That's good news for Google, and the AAP/Authors Guild, and the public. (My favorable views about the AAP at least are not, of course, reciprocated.)

Nice to know Larry agrees with us

Ars Tech takes to task those scoundrels who would criticise St Lessig , but makes a very interesting point in the process:

....the Progress and Freedom Foundation is stirring dull roots with spring rain, unleashing a fresh attack on Lessig's four-year-old book Free Culture in a paper released Monday by senior fellow Thomas Sydnor. The argument itself is frankly bizarre: Sydnor brands Lessig's views on copyright as a species of "quasi-socialist utopianism," and he peppers his critique with breathless invocations of Soviet dictatorship and Orwellian panopticons. But the piece also provides potent testament to a fissure within the contemporary right, as Lessig's ideas find a friendly audience among some libertarian public intellectuals, leaving the content industry with a shrinking stable of credible defenders.

Its probably wise to avoid anything that has words like "panopticon

Actually, having read most of Lawrence Lessig's stuff, I think he is in the main correct and has done a tremendous job, though the accusation of a certain amount of Utopianism is not entirely unfair, he definitely has a viewpoint - but to Lessig's credit he does tend to examine every issue in great depth. Anyway, that's not the interesting bit - its the fissures referred to that is interesting, as they note at the end of their piece:

....the debates over intellectual property in the digital era are creating a second divide within the free-market camp, between corporate interests and the libertarian intellectuals and pundits who have so often provided the theoretical support for business-friendly policies. If libertarians, as Lessig puts it, "start to defect" from a strong-IP stance, copyright incumbents may be left with only their wholly-owned-subsidiaries as defenders.

This is quite insightful, and it implies a re-alignment of the Politico-Economic plates. And that in itself is interesting. In our workshops on Digital IP issues (one of Broadsight's team, Paul Lancefield, is an expert on IP and Patents) we do go into the history of IP, and one of the lessons from history is that IP typically follows the shifts in society - ie it lags reality. Thus I think this schism - and noting also the waves of DRM receding and the first stirrings of a review of the US Patents system - indicates that we are now possibly seeing the high watermark of the Draconian IP Lobby, and the Turning of the Tide.

However, in all seriousness, this is exactly when one needs to say to the other side, the "Free Societals" that its time to "hold on" - because pendulums tend to overshoot both ways, and I do think some of the proponents of Free IP are not exactly into IP freedom as a humanitarian exercise, but into Free (as in costs nothing) for their own self interest. Just as we are seeing a schism in the defenders of IP, its not clear to me that their opponents are all pursuing the same benign objectives as Mr Lessig.

The "Free IP" lobby do also need to have answers to issues their own viewpoints raise.

We need to consider our past experience - the Tragedy of the Commons is something that plagues humanity still in some arenas (most Green issues are Tragi-common issues), so its not a great idea to increase it.

In addition, abolishing nearly all IP protection will-he nill-he is akin to rescinding large amounts of helpful social capital we have built up, painfully, over the centuries - or in the vernacular, it would be akin to a giant looting spree (no doubt to lock up again into other closed receptacles, a la Google Books) unless managed quite carefully.

Thus I think we need to ask the Lessig activists (by that term I mean the "FreeTards", the more - um - enthusiastic? supporters) to answer the following question - "have you actually thought through the consequences if all created content is forever unprotected?".

And I don't want to see answers couched in psychobabble, Gift economics, New Economics 2.0 and other various politico-economic flavours whether libertarian, or discredited socialist / humanitarian ideals re-treaded. I want to see it discussed in terms of hard headed behavioural economics, in terms of what people really do, not what they say they will do. I want to see it in terms of business models where I can see the money flowing without the "and here a miracle occurs" phase in the flow, or the "3-pot-shuffle-it'll be-alright-on-the-night" assurances. I want to see the game theory that shows me why people will do what we think they will do.

Now, I am well aware that taking this line will make me seem like another capitalist lackey - thats not it, I just want to ensure the pendulum hits a happy medium - ie we design a damped rather than underdamped system. It strikes me that this is an issue that does need airing, rationally, because the future of content will be driven by its own basic economics, and most specifically, the risk and rewards - ie the opportunity cost - of creating it.

I want a future world with great content, and I don't mind paying (a fair price) for it. What I don't want is a world with completely free, Ad sponsored, crap content. I've seen commercial TV, and its not something to be proud of - but nor is just ripping it off and sticking it up on YouTube

(Update - I feel in a way that I treated Mr Lessig himself unfairly in this article - he after all is trying to do some very good things with the Creative Commons etc - which we use on Broadstuff - what I am more concerned about are some of the other interest groups riding on the coat-tails.

In fact, he wrote a short response to these articles over here, and I'd like to quote one of the comments as it adds nuance to my thoughts - from gurdonark:

Having read a number of critiques of Creative Commons and, now, Free Culture, from the left and the right,
I'm amused that what I view as a fundamentally moderate position draws such extreme invective.

One point is simple. There is nothing particularly radical about a voluntary movement by creators to donate work into a Creative Commons through use of liberal licensing within current copyright law. Those who choose not to so license are not affected by any disadvantage, except that arguable disadvantage that people who donate photos and music may depress the market for sellers of the same creative material.

Similarly, the injection of research and otherwise patentable ideas into the public domain is as old as academic research institutions. There is nothing particularly "Lessig" about this practice--all you've done, in collaboration with others, is point out its virtues in an analytical context as a "science commons".

The second point for which you advocate is only slightly more novel--the idea that extensions in protected terms and artificial extensions in what is protectible may, in the long run, be disadvantageous to all. This is a viewpoint not at all inspired by any Soviet, or, indeed, any utopian pastoral anarchy. What is the "payoff" as a rhetoric device in portraying your idea as a particularly "left" dialectic? Similarly, when Creative Commons comes under fire from the "open source" movement for being offering people to utilize licenses in the existing copyright regimes to ensure certain protections, it's hard to see you or CC as pawns of government exploitation of freedom of information.

I do not wish to overthrow all IP laws, as I think they can and do serve a valuable function. I'd like to see them reformed around the edges (e.g., an end to Mickey Mouse copyright term extensions and a different patent examination/re-examination process, as well as relief on fair use clarity). In the main, though, CC licenses is a way to achieve a "velvet revolution" in which a dedicated body of creators, scientists, and audience create a new set of publicly useful ideas in a liberalized version of "permission culture".

I get disappointed when I read extreme takes on your work, because there is a legitimate debate about the
proper boundaries of IP law to be had. I also get disappointed because there is a legitimate cultural movement to create this Creative Commons underway, and distortions advance neither the cause of the proponents nor the cause of the critics. One can argue that creators should not license CC--it's a perfectly reasonable argument to make. But that argument is centered in the real-world of daily life more than in the dream world of 1920s left/right polemic.

I think Mr Lessig's core issue is how to be a moderate revolutionary, a tough gig to pull off - ask Lenin .)

Last year Google pulled the plug on its DRM'd video service (see our post on that here). The lesson for anyone buying DRM's material was clear - at some point, your supplier is going to pull out and you will be up sh*t creek sans digital paddle.

Anyway, looks like Microsoft has now joined the happy club - from Ars Tech.

Customers who have purchased music from Microsoft's now-defunct MSN Music store are now facing a decision they never anticipated making: commit to which computers (and OS) they want to authorize forever, or give up access to the music they paid for. Why? Because Microsoft has decided that it's done supporting the service and will be turning off the MSN Music license servers by the end of this summer.

Microsoft's decision to turn off the MSN Music authorization servers serves as a painful reminder that DRM ultimately severely limits your rights. Companies that control various DRM schemes, as well as the content providers themselves, can yank your ability to play the content which you lawfully purchased (and now, videos) at any moment—no matter what your expectation was when you bought it.

Update - Microsoft defends the decision over here - tough sell....

I was surprised that there was no real legal challenge against Google last year, so clearly there is little protection for customers against DRM unplugging.

That possibly leads to a way to bring about its downfall - lobby to ensure that DRM user companies must keep their customers' media going, or pay for upgrade - ie raise the exit costs to a point that its just not worth risking using DRM.

It looks like your friendly neighbourhood music industry has come up with yet another scam (sorry, scheme) to keep itself in business - a flat monthly tax on ISPs to cover them for all the music you or I may be listening to for free, added to your monthly bill. It is quite an attractive thought for an ISP, as it de-risks them from an increasingly desperate industry, and no doubt a small premium could be added.

However, it has a fundamental flaw in that it penalises all including non music downloaders, and so is probably a non starter for that reason. Also, there is a large amount of moral hazard, as you are guaranteeing revenue to an industry without any sales needing to occur (or any music being published either...) - the game theory after that will not drive the industry in directions that are good for artist or customer.

My other initial reaction was that it will also make every other industry want to do it as well, as number of amusing commentators on slashdot also noted:

This is quite possibly the worst idea the record companies have ever come up with. I would be very surprised if any ISPs ever give in. I can see it now:

Monthly internet bill:
50.00 - connection fee
5.00 - music extortion fee
5.50 - movies extortion fee
8.25 - television extortion fee
3.00 - print media extortion fee
4.00 - software warez extortion fee
2.00 - images possibly out of copyright
4.00 - independent music fee
3.00 - documentaries fee
2.50 - guitar tabs/sheet music
3.00 - song lyrics
2.00 - spambot fee (just in case I'm a node)
7.00 - fee for everyone else wanting my pound of flesh

total: $100 per month, and I think I'm being quite generous

Where will this stop? If the record labels get their fee, I want my fee for everyone that downloaded that one picture from my blog that I told you that you shouldn't save but you did anyways. You can just send me those $.02 per subscriber per month, or I'll take a flat fee of $3,000,000 - thanks.

The other thing that I noted is that the guy who came up with the scheme has been hired to make it happen, ie the industry is hiring people whose message they are comfortable with (To be fair, he has come up with a wide range of thoughts, but the industry knows what it likes it would seem). However, this is not the way forward, the industry should be hiring smart people who understand new media and are interested in thinking through new, workable options.

Like us for example

That there needs to be a way to pay musicians is clear, free is just not sustainable - but I would prefer to see them paid in some way that is linked to usage. I don't think its impossible or impractical to do that either.

PS if you can just send the fee for Broadstuff reading before you go.....

Amazon has now completed deals to sell DRM-free music from Sony-BG, EMI, Warner and Universal. When a player as large as that makes it easy to buy DRM free music, we really are into "injury time" for DRM methinks. It won't be 2008 (interests are still vesting), but by 2009 I'd expect DRM for music to be effectively dead. The battleground then will be video DRM

So how will musicians make money then?

TechCrunch notes that the last bastion defence the Olde Industry may try is to exact an auto-tax on all broadband ISP users (c $5 pm has been mooted). I agree with their analysis, which is that giving the current bunch a guaranteed income will stifle any further creativity - if anything it will militate against it.

Nonetheless, the acceptable long term price of music cannot be $0.00, as that is merely the market price of piracy - not the value of the goods. The result will just be back catalogues and ringtone length snippets, as it will be hard to tempt talent into recording new full-length content online.

Analysis we did a few years back showed that the "average" $10 price of a CD had about $2 (very roughly) of actual added value (the artist's payment and the costs of bringing on an act, recording, publishing etc) and these cost segments need to be recovered if we want to inspire musicians to create well made content.

The rest was to feed the bloated music industry infrastructure and marketing costs, and to pay for physical distribution of CD's, which are all costs that can be lost in an online world.

A question is whether the true value of creativity per unit can still be $1 - $2 in a UGC world - I suspect not, its probably an order of magnitude or so lower now.

Even so, how does one extract $0.1- 0.2 per album equivalent while not handing a guaranteed "do nothing and get paid" payola to the music industry? Plus, any attempt at direct charging can be pirated away today. TechCrunch (and all the others who decry the flat tax) alas have no answer.

Known popular bands are able to sell merchandise and live gig seats to make money, and that is one option - but its hard for "long tail" and new acts to monetise quite so easily with "physical" assets, (and there are only so many band-name T shirts I need) so they will need to make money digitally.

At present I have no good answer either, but I can see 4 options:

(i) A much less intrusive "son of DRM" that marks a piece of media when sold so that some micropayment goes to the creator, the aggregator making money from advertising and offset sales.

(ii) Advertising supported - but this has its own risks in terms of restricting new creative media. Good art and Ads seldom co-exist easily

(iii) Customer gives away personal data to aggregators in exchange for music - at $0.1 - $0.2 per download its probably a viable model now.

(iv) There is a ($5?) "ISP Media" monthly tax , but it is used in conjunction with the marking above in (i) so the money goes directly to the creators of the media that is downloaded.

I like option (iv), but it will be quite hard to do methinks.

(one day...later) Hah - young Mr Orlowsky must've been in the pub l day - he's only just grokked this one...its nice to be first on occasion

Update - Wired notes that watermarking is now rearing its head as the New New DRM, noting:

Watermarking codes are digitally woven into the fabric of a download and do not restrict listeners from making backup copies or sharing music with friends, as does DRM coding.

I didn't originally mention it as a possible approach, as the problem with watermarking is it enables a whole lot of privacy abuses, as it can track every event on any file - if you thought Facebook Beacon was bad, you ain't seen nothin' yet if people were tempted to abuse watermarking.....

Microsoft is betting on watermarking's future, winning a patent for a "stealthy audio watermarking" scheme called El Dorado in September.

....but, as with all other attempts at media encryption restrictions, they do get hacked fairly soon, and Watermarking's problem is its a static encryption, ie once hacked it can't be re-inserted.

From the Washington Post via TechCrunch:

The RIAA has lodged documents in the ongoing case of the Record Industry vs Jeffrey Howell that argues that ripping music from legally purchased CD’s is illegal.

If the Judge rules that the RIAA is right, any person in United States who has ever ripped a legally purchased CD will become a copyright thief and a potential target of the RIAA, and that means just about every iPod owner in the country.

We were discussing this today....the issues are twofold for the RIAA:

(i) They are going to criminalise large portions of the US music loving public...
(ii) ...the law is unenforceable unless there is a concomittant iPod Police capability set up

History tells us that laws the criminalise large swathes of the public and are practically unenforceable are not likely to succeed (cf Prohibition)....so it's probably more a reflection of the RIAA's desperation than anything else.

The case itself may not find in favor of defendant but not rule that CD ripping is illegal. Howell is accused of sharing files via Kazaa, but his sole defense is that he did not share those files and they were for personal use only, hence the RIAA’s disturbing argument.

There is a big difference between this, and asserting that re-recording bought music for own-use is illegal however.

But as TechCrunch notes, the people pushing for the Clampdown are far better organised and funded than the amorphous collection of opponents, and its not clear right now that the US Government is backing its citizens.

The worrying thing is if it does actually get a positive ruling, because this, along with the various attempts at extending copyright and IP law into areas it was never intended to go shows a level of intellectual protectionism that is certainly bad news for new innovators, and probably bad news for the US economy overall - any information economy relies on creation, not ossification.

Omigod.....Its* not over yet....the Photographer's RIAA Appreciation Society (aka PDN) has rushed to the defence of its own (pointer courtesy BoomTown), and alleges that other photographers are Deeply Upset and may Even Sue. Clearly attribution is insufficient, and only cold hard cash will do.

This is actually highlighting a very important issue, as sorting out how copyright and fair usage works in the online medium is going to a major driver - or inhibitor - of the development of media going forward. What is being continually (and conveniently) forgotten by the shutterbugs here is that copyright is not a licence of total control over all distribution, its a balance between incentive to create and allowing others to stand on the shoulders of what has gone before.

Now a lot of the Photomafia has wailed about the ethics of all this (without, I submit, a lot of knowledge of the history of copyright law), but I think we need to turn it around - i.e. how can anyone argue for the ethics of being able to stop significant creative effort via having a veto (automatic takedown) if a marginal work of total commodity value (eg snapshot of something that is available in large measure in the public domain anyway) is used for a non-material proportion of that work.

(Addendum - the strategic issue imho is this - in most cases, these photos are actually of minimal value, as plenty of alternatives exist in the open market and substitution costs are minimal - but this worked when content capture, search and transaction costs were high. However, the broadband 'Net has reduced these costs by 2 orders of magnitude, so the shutterbugs are now trying to protect pricing that is just not sustainable in the new market. To do so they are attempting to (ab)use copyright law to create an artificial barrier. Its just not sustainable I'm afraid, in a world of User Generated Content, Online search and digital media. One could in fact argue that the only reason this picture of Lane Hartwell's had any value was because Richter Scales used it. )

What I would also like to raise is the ethics around whether the images of the subjects of these photos, often snapped without release of their copyright, with minimal artistic input, should actually legally be sold for profit.**

One of the benefits of a digital world is that the original content creator (that's YOU) can find these shutterbugs and take them to task for unauthorised plagiarism of your lifework. One can hardly argue there is parody, transformation or marginal usage in a snapshot, so it ain't Fair Use

It would be interesting to sue the photographers for attempting to sell these works as well without paying you your due. And the legal argument over that would be interesting when applied to that of re-use of he images in, say a further derivative work like a video.

* The Lane Hartwell/Richter Scales Saga, that is

**One could argue that this practice, ethically, is somewhat akin to people who "sit" on url names - the words existed before them, they have just taken the .com and assigned themselves the rights to use the name. The difference is that in the case of photos there is usually an alternative source, so the "monopoly rents" are minimal.

So the other shoe has dropped in the Lane Hartwell / Richter Scales saga (see here for our original post). Lane Hartwell's disputed snapshot has been replaced by one of Kara Swisher, and the video has been reposted. This is exactly what we thought would happen:

Richter Scale...take her photo out, get the guy to send you one of his own, and resend your brilliant video...

As for Lane...what was she thinking - biggest opportunity ever to get her name in lights, and she winds up getting a reputation as a total killjoy to hordes of people across the planet who previously had never heard of her.

Here are some lessons in the 'Net economy, and I think they need to be Noted Well.

(i) You can't stop people building on the media on the 'Net. The takedown impacted YouTube, the piece of media instantly popped up elsewhere

(ii) A piece of media, even if copyrighted, has zero value if the friction of using it is too high and the cost of replacement is very low. If anybody wants to grandstand on component media they need to ensure that it cannot be replaced easily, ie adds significant value to the new work.

(iii) I believe it eventually became clear that Fair Use was correctly applied here, which has interesting implications going forward - ie if you don't want your stuff re-used, don't put it on the 'Net..

(iv) However, it is considered polite to reference sources, even fairly immaterial ones - this was the major hit Richter Scales took.

(v) The Neteconomy game is different - Lane Hartwell's (re)action, though understandable, was very Old Economy - i.e. try and control it, rather than try and use the marketing kudos to buff up her karma in the Netspace. In fact, I think she has hurt herself even more, by now trying to bill Richter Sounds - she has (probably, imho) signalled that she is now someone quite a few companies would not want to work with - too much friction.

(vi) An oldie but goodie - lawyers are a last, not a first resort.

Kindle's DRM latest to be hack'd (from Engadget)

We knew the Kindle's DRM would be cracked the minute we heard about it, and it looks like the first chink in the armor is here courtesy of Igor Skochinsky: he's discovered the algorithm the Kindle uses to turn regular Mobipocket books into Amazon's proprietary .azw format. The hack involves replacing a Mobipocket file's PID with one generated from your Kindle's serial number, and then setting a Kindle-specific flag that allows it to be opened.

Why do they persist with these systems that protect no-one and p*ss off their customers - its as clear as anything that any DRM will be cracked within weeks, if not days.

Makes you wonder about Western Digital's DRM-our-disk-out-the-market play - anybody daft enough to buy one risks losing all their stuff when they end-of-life it and no longer support the product.