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Archives for 2005

Measure It, and They Will Come

April 11, 2005 by

The technology for measuring TV and radio audiences is about to change in important ways, according to a long and interesting article, in yesterday’s New York Times Magazine, by Jon Gertner. This will have implications for websites, online media, and public life as well.

Standard audience-measurement technology, as used in the past by Nielsen and Arbitron, paid a few consumers to keep diaries of which TV and radio stations they watched and listened to, and when. Newer technology, such as Nielsen’s “people meters”, actually connect to TVs and measure when they are on and which channel they are tuned to; family members are asked to press buttons saying when they start and stop watching. People meter results were surprisingly different than diary results, perhaps because people wrote in their diaries the shows they planned to watch, or the shows they liked, or the shows they thought others would want them to be watching, rather than the shows they really did watch.

The hot new thing in audience measurement involves putting quiet watermarks (i.e., distinctive audio markers) in the background of shows that are broadcast, and then paying consumers to wear beeper-like devices that record the watermarks they hear. A key advantage of this technology, from the audience monitor’s viewpoint, is that it records what the person hears whereever they go. For example, current Nielsen ratings for TV only measure what people see on their own television at home. Anything seen or heard in a public place, or on the Internet, doesn’t factor into the ratings. That is going to change.

Another use of the new technology puts a distinctive watermark in each advertisement, and then record which ads people hear. When this happens – and it seems inevitable that it will – advertisers will be willing to pay more for audio ads in public places and on the Net, because they’ll be able to measure the effect of those ads. Audio ads will no longer be coupled to radio and TV stations, but will be deliverable by anybody who has people nearby. This will mean, inevitably, that we’ll hear more audio ads in public places and on the Net. That’ll be annoying.

Worse yet, by measuring what people actually hear, the technologies will strengthen advertisers’ incentives to deliver ads in ways that defeat the standard measures we use to skip or avoid them. No longer will advertisers measure attempts to deliver audio ads; now they’ll measure success in delivering sound waves to our ears. So we’ll hear more and more audio ads in captive-audience situations like elevators, taxicabs, and doctors’ waiting rooms. Won’t that be nice?

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Congressional Hearings on Music Interoperability

April 7, 2005 by

Yesterday a House subcommittee on “Courts, the Internet and Intellectual Property” held hearings on interoperability of music formats. (The National Journal Tech Daily has a good story, unfortunately behind a paywall.) Witnesses spoke unanimously against any government action in this area. According to the NJTD story,

[Subcommittee chair Rep. Lamar] Smith and other lawmakers who attended the hearing agreed with the panelists. The exception was Rep. Howard Berman of California, the subcommittee’s top Democrat, whose district encompasses Hollywood. He suggested that the confusing proliferation of non-compatible copy-protection technologies could be impeding the development of a legal digital-music marketplace.

What’s going on here? Rep. Smith’s opening statement gives some clues about the true purpose of the hearing.

Legitimate questions have been raised regarding the impact of digital interoperability on consumers. In the physical world, consumers didn’t expect that music audio cassettes were interoperable with CD players. Consumers switching from music cassettes to CDs bought the same music for $10 to $20 per CD that they already owned. Consumers accepted this since they felt they were getting something new with more value – a digital format that made every reproduction sound as good as the first playback.

Music is quickly becoming an online business with no connection to the physical world except for the Internet connection. Even that connection is increasingly becoming wireless. Some of the same interoperability issues that occur in the physical world are now appearing here. Consumers who want to switch from one digital music service to another must often purchase new music files and, sometimes, new music players.

For example, music purchased from the iTunes Music Store will only work on Apple’s iPod music player. Music purchased from Real cannot be accessed on the iPod. Last year, both companies became involved in a dispute over Real’s attempt to offer software called Harmony that would have allowed legal copies of music purchased from Real’s online music store to be playable on Apple’s iPod music player. Apple objected to this effort, calling it “hacker like” and invoking the DMCA. Apple blocked Real’s software from working a short time afterwards.

This interoperability issue is of concern to me since consumers who bought legal copies of music from Real could not play them on an iPod. I suppose this is a good thing for Apple, but perhaps not for consumers. Apple was invited to testify today, but that they chose not to appear. Generally speaking, companies with 75% market share of any business, in this case the digital download market, need to step up to the plate when it comes to testifying on policy issues that impact their industry. Failure to do so is a mistake.

As a result of disputes like the one between Apple and Real, some have suggested that efforts to boost digital music interoperability should be encouraged by regulation or legislation. Others have urged Congress to leave the issue to the marketplace and let consumers decide what it best for them.

The hearing is clearly meant to send a “we’re watching you” message to Apple and others, urging them not to block interoperability.

Of course, if full interoperability is really the goal, we already have a solution that is hugely popular. It’s called MP3. More likely, what the subcommittee really wants to see is a kind of pseudo-interoperability that allows products from a limited set of companies to work together, while excluding everyone else. It’s hard to see how this could happen without a further reduction in competition, amounting to a cartelization of the market for digital music services.

The right public policy in this area is to foster robust competition among digital music services of all kinds. A good start would be to remove existing barriers to competition, for example by repealing or narrowing the DMCA, and to ensure that the record companies don’t act as a cartel in negotiating with music services.

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Inducing Confusion

April 6, 2005 by

Alex, and others reporting on the Supreme Court arguments in the Grokster case, noticed that the justices seemed awfully interested in active inducement theories. Speculation has begun about what this might mean.

News.com is running a piece by John Borland, connecting the court discussion to last year’s ill-fated Induce Act. The Induce Act, which was killed by a unanimous chorus of criticism from the technology world, would have created a broad new category of liability for companies that failed to do enough (by vaguely defined standards) to prevent copyright infringement.

(The news.com piece has a terrible headline: Court mulls P2P ‘pushers’. This fails to convey the article’s content, and it drops the loaded word “pushers”, which appears nowhere in the article. The headline writer seems to acknowledge that the word doesn’t fit, by putting it in scare-quotes, which only highlights the fact that nobody is being quoted. Don’t blame John Borland; the headline was probably written by his editor. This isn’t the first time we’ve seen a misleading headline from news.com.)

There’s a big difference between the Induce Act and the kind of narrow active inducement standard that was suggested to the court. Indeed, the main advocate to the court of an active inducement standard was IEEE-USA, which testified against the Induce Act. Here, as always, the details matter. A decision by the court to adopt an active inducement standard could be very good news, or very bad news, depending on the specifics of what the court says.

The worst case, in some respects, is probably the one Fred von Lohmann mentions in the article, in which the court endorses the general idea of an inducement standard, but doesn’t fill in the details. If that happens, we’ll be stuck with years and years of litigation to figure out what the court meant. Regardless, it seems likely that after the court announces its decision, Congress will consider Induce Act II.

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ICANN Cut Secret Domain Deal

April 5, 2005 by

According to Michael Froomkin at ICANNWatch, evidence has come to light that ICANN secretly cut a deal with IATA, an airline industry association, to create a new “.travel” domain and give control of it to a front organization controlled by IATA. If true, this is a serious breach of ICANN’s own rules and undermines ICANN’s legitimacy. As Michael says, this is a story that deserves more attention that it is likely to get.

ICANN, depending on whom you ask, is either a technical coordination agency for Internet naming, or the closest thing we have to a government for the Net. One of ICANN’s jobs is to decide whether and how to create new Top-Level Domains (TLDs). TLDs, such as “.com”, “.edu”, and “.uk” are the roots of the Internet’s name space. Whether ICANN is a standards body or a government, it is supposed to follow certain principles of fairness and transparency, as set down in its own bylaws. Apparently it has broken those rules in this case, and has done so in order to grant an unfair advantage in the TLD award process to a particular group.

In a normal organization, revelations like this might cause the members to revolt and elect new leadership. But ICANN doesn’t seem to have membership in the normal sense of the term, and it doesn’t seem to have a legitimate democratic process for picking its leaders. What we’ll get instead, if we get anything, is grumbling, and determination to keep ICANN from expanding its power further.

Revelations like this have to undermine ICANN’s already fragile legitimacy. People will ask why ICANN is in charge; and there’s not really a good answer. We can recount the history of how ICANN got its current position; but it’s hard to justify ICANN’s power as anything other than an accident of that history. My sense is that ICANN keeps its power mostly because nobody knows what would replace ICANN if it were deposed. That’s no way to run an Internet.

UPDATE (April 6): Edward Hasbrouck, who appears to deserve credit for uncovering much of this story, offers more details and background.

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Grokster: The Case is Submitted

March 31, 2005 by

Greetings Freedom to Tinker readers! I’m Alex Halderman, one of Ed Felten’s grad students at Princeton. I’d like to thank Ed for the opportunity to be a regular contributor to this site.

On Tuesday I had the privilege of attending the MGM v. Grokster oral arguments along with several students from Ed’s Information Technology and the Law seminar. The class spent weeks discussing the Grokster case, and our field trip to Washington afforded a rare opportunity to witness the legal process in person instead of just on paper. We camped overnight outside the court to secure seats for what proved to be a fascinating argument. Some of the students have posted commentaries [1, 2, 3] and photographs [1,2,3,4], of which this is my favorite.

It was difficult to tell what the Justices were thinking, since their questions deeply probed the arguments from both sides of the case, but I was left with the impression that they are leaning towards a revision or reinterpretation of secondary liability law. None of their questions directly addressed Grokster’s argument that the matter should be deferred to Congress, and Justice Scalia emphasized that the case certainly wouldn’t hinge on stare decisis. In contrast, what a new liability test might look like was a recurring theme.

MGM argued that businesses centered on infringement should not be seen as engaged in “substantially unrelated areas of commerce” as required by the Betamax test. Several Justices questioned whether this reading would make it too easy for copyright holders to intimidate creators of new technologies. Justice Breyer wondered whether the creators of the iPod, the VCR, or the Guttenberg press would have feared liability under such a test, Justice Scalia asked whether new technologies would need to be given a decade or more to prove their non-infringing uses before such a standard could be applied, and Justice Souter worried about the fate of lone innovators without access to expensive legal guidance (the “guy in his garage”). Clearly, Grokster’s council and amici have done a commendable job explaining these issues to the Court, and I’m relived to say that the worst-case outcomes, such as a complete replacement of the bright line protections for innovation afforded by the Betamax test, no longer seem likely.

On the other hand, some of the Justices were no more receptive to Grokster’s interpretation of the Betamax defense, under which products “merely capable of substantial non-infringing use” would not be subject to liability. Justice Ginsberg called this an overly simplistic reading of Sony and pointed out that the decision continues for 13 pages of nuanced discussion after the phrase cited by Grokster. She also emphasized differences between Grokster’s product and the Betamax: the primary use of the Betamax was found to be non-infringing, but the district court in the present case established that at least 90% of Grokster’s traffic infringed.

What most surprised me was that several Justices repeatedly asked about a standard barely mentioned in the main briefs from either side: a so-called “active inducement” test. Inducement is a concept borrowed from patent law under which parties can be held liable for encouraging others to misappropriate protected intellectual property. Tests based on active inducement were discussed in the U.S. Government’s amicus brief (filed in support of MGM) and in the IEEE’s amicus brief (filed in support of neither party). The Induce Act, debated in Congress last summer, would have created a test based on an inducement theory, but it was widely criticized for giving copyright holders too much control over new technologies and making it too easy for them to bring frivolous lawsuits. IEEE, which opposed the Induce Act, says its model of an inducement test would require a much higher standard of proof involving evidence that parites committed overt acts of encouragement, not merely that they failed to do all they could to prevent illegal copying.

Several questions about inducement came from Justice O’Connor, who cast the deciding vote in the Betamax case. She asked MGM’s lawyer whether inducement was a way to resolve the case. Along with Justice Scalia, she seemed skeptical of Grokster’s attempt to separate out its past actions that could be seen as inducing infringement. Those acts do apply to the current case, Scalia insisted, because they were what developed Grokster’s current clientele. Scalia also wondered whether an active inducement standard would go far enough. Couldn’t a successor build a product identical to Grokster, he asked, but escape liability by being careful not to induce? Both MGM’s counsel, Donald Verrilli, and Paul Clement, speaking for the Government, responded that inducement would not be a sufficient remedy. Creators of future file sharing products would be careful not to leave a paper trail documenting their inducement, Verrilli warned.

Despite these objections, I think it is plausible that the Court will craft a narrow active inducement test resembling the IEEE proposal. This is likely for several reasons. Such a test would be neutral with respect to technology, thus creating a precedent applicable to much more than peer-to-peer file sharing. It would be responsive to the worries of technologists by clearly defining how innovators would need to act to avoid liability, yet it would also allow the courts to hold Grokster accountable because of its past encouragement of infringement. Inducement would function as a parallel category of liability complementing Sony, so the Court could leave the celebrated Betamax test intact. With both rules in place, defendants would need to demonstrate substantial non-infringing uses of their products and refrain from overtly encouraging infringement. Perhaps the most attractive feature of an inducement test is that both the Government, which sided with the content industry, and the pro-technology IEEE support it in some form. This is the closest thing to a compromise that we have seen in the case. Neither Grokster nor MGM would be wholly satisfied with a narrow inducement test, but it could potentially cure the most imminent harms cited by the copyright owners while causing minimal collateral damage to innovation.

Now the waiting begins. We’ll find out what the Justices were really thinking in a few months when the Court issues its decision.

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