I don't often agree with the Wall Street Journal editorial page, but they seem to have gotten this one 100% right. When you strip away all the glitz of the technology and remove the emotionally laden words such as "theft" and "piracy" the core of the problem is what do you do when the time-honored and respected act of two people sharing information can now include making perfect copies of a creative work?
The Wall Street Journal EDITORIAL BOARD
Copyfight By JASON L. RILEY November 26, 2005; Page A10
It's been six years since the entertainment industry loosed its lawyers on the makers of Internet file-sharing software, and two years since the industry began suing the people who use it. By and large, it's winning these legal battles -- including a court-ordered shutdown of Napster in 2001 and a 9-0 Supreme Court ruling against Grokster in June. But that doesn't mean it's winning the war.
In fact, Americans continue to download music and movies using these so-called "peer-to-peer," or P2P, networks in record numbers. Through its trade association, the Recording Industry Association of America (RIAA), the music industry has sued more than 15,000 people in the past two years alone. Yet over that same period, traffic on file-sharing networks doubled, according to Big Champagne, a media company that measures P2P activity. Halfway through this year, volume had climbed to nearly nine million downloads, a new high and a 20% increase over last year.
Those numbers would seem to validate the findings of a 2004 paper on file-sharing trends by researchers at UC San Diego and UC Riverside. Using empirical data, it concluded that between 2002 and 2004, "P2P activity has not diminished. On the contrary, P2P traffic represents a significant amount of Internet traffic and is likely to continue to grow in the future, RIAA behavior notwithstanding."
The industry has every right to continue this behavior; downloading the new Harry Potter movie or Black Eyed Peas CD tracks without paying for them should satisfy any definition of intellectual-property theft. The more interesting question is whether litigation is the best long-term strategy for combating digital piracy. How viable is a business model based on suing your customers, especially when the lawsuits appear to be having no deterrent effect?
It's too bad, but history shows that the entertainment industry is much more inclined to fight new technologies than embrace them. Songwriters tried to sue the player piano out of existence a century ago. Vaudeville performers sued Guglielmo Marconi for inventing the radio. Disney and Universal sued Sony for making the Betamax VCR. And cable entrepreneurs over the years have been dragged into court by everyone from television broadcasters to the Motion Picture Association of America. If music and movie moguls had their druthers, they would have monopoly control over any device or platform capable of reproducing sound or pictures.
Which is to say that we can expect this litigious war against the Web to continue for now. Content is king, and content providers fear disruptive new technologies that could pose a threat to the existing order. With Grokster, the plaintiffs were hoping the court would overturn its landmark 1984 Betamax decision, which held that VCRs did not violate copyright law because the technology was "capable of substantial noninfringing uses." But rather than addressing this core issue of whether P2P networks meet the Betamax standard, the court chose to focus its ruling on Grokster's business plan. Because the company was actively promoting a product for infringing uses, Grokster was found liable.
"It's a bit disappointing that we didn't get any clarity about the Betamax test here," says Cindy Cohn of the Electronic Frontier Foundation, which represented StreamCast Networks, a Grokster co-defendant and fellow file-sharing software company. "That's the more interesting and harder question that was put to the court. When can you be liable based on what your customers do with the technology?"
Companies may yet come up with more legitimate file-sharing models and better controls, so it's better that the court didn't rule P2P networks illegal as such. But by largely ducking this debate, the Grokster decision only adds legal uncertainty to the technology sector and could undercut innovation and investment in new products. There's a reason companies like Intel and every major Internet service provider sided with Grokster. They are worried about a situation in which lawyers replace engineers on design teams. And smaller companies who want to innovate, but find themselves in some grey area where customers could use their product for copyright infringement, better make sure they have a huge war chest for litigation costs before proceeding.
The lesson music and movie lobbyists take from their Grokster victory is to stay the course. But Tim Lee, a technology and intellectual-property expert at the Show Me Institute in St. Louis, says that suing tech companies and music fans ultimately is a fool's errand. "I don't think they [the entertainment industry executives] fully grasp the size of the challenge they face," he says. "It will be an arms race. P2P networks will improve. The recording industry will find a new way to catch people, and P2P networks will find better ways to avoid getting caught."
The fundamental problem, says Mr. Lee, is that the Internet itself is a peer-to-peer network. If two willing people want to exchange files, you're never going to be able to limit their ability to do so in a nation of 290 million people. Besides, you wouldn't have time to sue them all even if you could catch them.
The copyright laws we live by today were written to go after commercial piracy. They are based on the idea that you can use control of the ability to make copies as a basis on which to remunerate content providers. No one envisioned a time when we would all be in possession of computers that can make copies as freely and easily as we now can.
Moreover, the copyright system is based on moral precepts that most people today accept. But will future generations raised with P2P technologies see piracy differently? "If I were a recording industry executive," says Mr. Lee, "I would be looking very hard at business models that embrace P2P technology, not looking to lawyers to thwart it."
Just when you think this story is played out it get's even weirder. Security guru Bruce Schneier points out in his blog that the major anti-virus vendors (
McAfee, Microsoft) dragged their feet adding the Sony rootkit to their detection and removal schemes. Only Finnish company F-Secure took an aggressive stance. Could there be a conspiracy here?
But wait. It gets even weirder. Now it turns out that Sony, far from respecting copyrights has illegally incorporated others copyright material in the software they distribute.
One of the most interesting presentations at IP.4.IT was given by Jeremy Bailenson of the Virtual Human Interaction Lab at Stanford University. The lab does experiments in how new, rich-media forms of communication will affect how humans interact with one another. They set up various immersive virtual reality situations where two or more people communicate with computer-generated intermediaries, such as avatars. Lest you think this is just the stuff of science fiction, consider that the telephone or a video conference is a primitive form of such communication.
In their experiments, the lab would modify the avatar in various ways to see how it affected the nature of the conversation or the outcome of a negotiation. Some of the more interesting results:
People tend to like other people who have similar body language. In one experiment, a person converse with an avatar who, with a 4 second delay, mimiced their own body motions. Only 5% of the subjects noticed this trick, but all of them were more likely to agree with the other person or accept their proposal.
Similar results were noted when the other avatar's gaze was directed towards the speaker.
The lab built a device that allowed two people to shake hands via the network. By capturing the data stream, the experimenter could play back a person's own handshake. People who believed they were shaking hands with the other person but were really shaking hands with themselves were more likely to like the other person and treat them more softly in a subsequent negotiation.
Shortly before the most recent US Presidential election, a sample of 200 people were shown photographs of Bush and Kerry. They were divided into three groups. The control group saw the original photographs, while the other two groups saw a blend of their own picture with either Bush or Kerry. Proving the hypotheses that people like themselves the best, the non-control groups voted for the candidate that looked the most like the voter.
In a distance-learning system, the teacher was shown a display of the other students in which the picture of any given student faded if the teacher looked at any one student less than the others. This was demonstrated to improve teaching effectiveness.
The subjects were shown their own avatar for 60 seconds in a "virtual mirror." The experimenters made some people taller/shorter or more/less attractive. The people who were made to see themselves as more attractive stood 1 meter closer and talked louder in subsequent meetings. Those who were 1 decimeter taller did twice as well in subsequent negotiations.
Some interesting ways we could make people more effective in a video conference, or even a phone call.
Pulvermedia put on their first IP.4.IT conference at the Rio Hotel in Las Vegas. Subtitled Advanced Applications & Architectures it looked at how real-time communications affects business processes. There was an excellent set of presentations.
The New York Times reported today that Sony is recalling millions of CDs that had the much-maligned DRM that surreptitiously installed a rootkit on the PC of anyone attempting to play the disc.
The home page of Sony BMG Music Entertainment has a boldface link entitled INFORMATION ON XCP CONTENT PROTECTION which "deeply regrets any inconvenience" and offers to replace the offending CDs with ones that do not contain the DRM.
The Sony imbroglio just won't go away. It got mainstream coverage in David Pogue's column in the New York Times and is now the object of class action lawsuit in California. Critic's fears of a malware exploit have already materialized in a new trojan horse. The EFF has released a list of the offending CDs, including:
Trey Anastasio, Shine (Columbia)
Celine Dion, On ne Change Pas (Epic)
Neil Diamond, 12 Songs (Columbia)
Our Lady Peace, Healthy in Paranoid Times (Columbia)
Chris Botti, To Love Again (Columbia)
Van Zant, Get Right with the Man (Columbia)
Switchfoot, Nothing is Sound (Columbia)
The Coral, The Invisible Invasion (Columbia)
Acceptance, Phantoms (Columbia)
Susie Suh, Susie Suh (Epic)
Amerie, Touch (Columbia)
Life of Agony, Broken Valley (Epic)
Horace Silver Quintet, Silver's Blue (Epic Legacy)
Gerry Mulligan, Jeru (Columbia Legacy)
Dexter Gordon, Manhattan Symphonie (Columbia Legacy)
The Bad Plus, Suspicious Activity (Columbia)
The Dead 60s, The Dead 60s (Epic)
Dion, The Essential Dion (Columbia Legacy)
Natasha Bedingfield, Unwritten (Epic)
Sony Music created a major controversy when they put a new digital rights management (DRM) system from First 4 Internet Ltd on some of their recent CDs. This scheme borrows some ideas from the worm and virus writers by using a root kit to cover its tracks. Not only does it prevent copying the CD to a computer's hard drive, but it also takes over several of the Windows APIs to hide any files or registry keys that start with “$sys$”. Apparently its intended not just to make it difficult for customers to "rip" their CDs but also to prevent them from loading their music into iTunes and thus put pressure on Apple to open up their system. It also opens up a huge security hole in Windows that would enable other troublemakers to hide malware on your computer.
Sony succumbed to the pressure and released a patch to remove it. A thorough description can be found at Mark Russinovich's blog.
Until Microsoft sees fit to put the same "you are about to install potentially dangerious software" warning upon CD insertion that they put in their web browser, you should turn off auto-run on your CD driver.
The first speaker was Michael Ruettgers , Chairman of EMC. He talked about how it was important to keep a cool head during times of irrational exuberance. During the recent bubble many of EMC's competitors invested their (at the time) abundant cash in various speculative ventures. EMC did not, and as a result when the bubble burst they had $1B to see them through the difficult times. This allowed them to continue to invest in product developlement and be ready when customers started buying again.
Their budget increases for next year ranged from flat to 8%. An interesting fact was that 65-75% of the budget was for recurring costs just to "keep the lights on," leaving the remainder for new intitiatives. There was a lot of interest in RFID, mobile and wireless applications, security, and business intelligence. Most of them said they rely quite heavily on analysts such as Gartner, but that the best evidence came from case studies and experiences of their peers and business partners.
The most entertaining talk of the day was by David Weinberger on "What Blogging Isn't: And What It Means for Businesses, Media, and Bloggers." Blogging is not:
About individual bloggers
But it is about
David made an interesting observation that blogs are different from real life in that flame wars eventually burn out on their own. He also mentioned a scary article in Forbes that advocated various ways to deal with critical bloggers, including invoking the DMCA to get their hosting service to shut them down.
After lunch, Ray Kurzwell gave his by now familiar speech about how we will all live to be 200 if we can only survive the next decade. He covered a wide range of predictions about computation and health care. The slides are here.
Next, John Landry conducted a panel of four entrepreneurs turned venture capitalist:
Jeffrey Beir, North Bridge Venture Partners
Jeffrey Bussgang, IDG Ventures
Elliot Katzman, Kodiak Venture Partners
Jonathan Seelig, Globespan Capital Partners
A key topic was the trade-off between the excitement of running a company vs. the more distant role of investor or board member. John led off the discussion by asking "How did you like having your soul removed, Eliot?" but as it developed John has done plenty of investing and board seats himself. John recommends Bill Burnham's blog.
The final session, conducted by Liz Altman, consisted of pitches by several new companies: