DRM / IP - 2

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.

From Ars Technica:

......the growing backlash against DRM is causing dissension in the pro-DRM ranks. Paul Sweeting's excellent report on the DRS conference records the frustrations of the DRM community at the tactics of the content industry. They apparently feel that an overzealous content industry is abusing DRM; this is a bit like Smith & Wesson complaining that bullets can kill.

When DRM proponents start pointing fingers and attempting to separate the theory (really, the ideology) from the practice, we have to stop and ask: what's going on here? It appears that players in the DRM ecosystem know the tide is turning against them because DRM is punishing the wrong people, namely the folks who are buying DRM-laden content. This is bad for their business, because a DRM backlash could harm DRM peddlers.

We'd agree with Ars T that the backlash is coming....in fact its already started in that now most people see piracy as an acceptable approach in the face of industry actions. But straws in the wind (see our posts here and here for example) from large media companies also indicate they see the onrushing backlash train....

Hold on to your seats, this is going to be bumpy ride - but the endgame is not in doubt. The industry will eventually have to make peace with its own customers, and craft usage rules and prices that dissuade the majority of people from adopting the piracy business model. Banning and Prohibition have never worked in the past and in this networked age it is even less likely to work now.

Seen on Ars Technica

....a few weeks back the SFWA (Science Fiction and Fantasy Writers of America) contacted Scribd, a site that allows users to post documents in the same way that YouTube allows people to post videos. SFWA alleged that numerous works on Scribd violated copyrights of SFWA members and requested that these works be taken down. They were. But it quickly became apparent that the USS 1701-SFWA had a crack in its dilithium crystals.

Stories began to emerge from the blogosphere, and not the sort of Stranger in a Strange Land stuff that the SFWA exists to promote. Nick Senger, an eighth-grade teacher and promoter of teen literacy, found his sci-fi bibliography targeted in the crackdown. "I'm not sure what the SFWA has to gain by requesting that the list be removed," he notes. "That list does nothing but encourage people to buy their books."

Of all the people you would have thought would grok this new media, new world stuff, Sci Fi writers would stand out. Can't wait for the list to be resurrected...a 300+ list of Sci Fi books to read is a global treasure.

This is certainly not the answer to all things......another swallow in the great summer of discontent with IP/DRM content.

..and from Google, but not in the way you would like to imagine. Google is shutting down its DRM'd Google video service. And thus, to quote Ars Technica who put it so well:

See, after Google takes its video store down, its Internet-based DRM system will no longer function. This means that customers who have built video collections with Google Video offerings will find that their purchases no longer work. This is one of the major flaws in any DRM system based on secrets and centralized authorities: when these DRM data warehouses shut down, the DRM stops working, and consumers are left with useless junk.

Furthermore, Google is not refunding the total cost of the videos. To take advantage of the credit Google is offering, you have to spend more money, and furthermore, you have to spend it with a merchant that supports Google Checkout. Meanwhile, the purchases you made are now worthless. To do it right, Google should either provide users with non-DRMed copies of the videos they bought, or they should refund the money entirely. The current option is hardly acceptable, however. Would you buy a TV, a car, a book, or anything if the guy who sold it to you could take it back at any moment so long as he offered you a coupon?

Precisely. And if thats how the Good Guys who do no evil behave, imagine what the rest will be like

(Though I am surprised there is no recourse under law for this - I would think a test case of this would be interesting, in that if there was protective law then the "cost of exit" from DRM would also rise, thus making the producers as well as the consumers very reluctant to use it)