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CopyBot Roils SecondLife Economy

November 17, 2006 by

Here’s one from the It-Was-Only-a-Matter-of-Time file. Somebody in SecondLife, a popular multiplayer virtual world, created a gadget called the CopyBot, which can make a perfect copy of any object in the SecondLife world. (Here’s a Reuters story.) This raises some interesting technical issues, but I want to focus today on how it effects SecondLife’s economy.

If you’re not familiar with virtual worlds, you might think the word “economy” is a stretch. But really it’s not. SecondLife has about 1.5 million residents. Residents are given a sophisticated toolset they can use to design complex objects, specifying the objects’ shape, appearance, and behavior. Objects can be sold for a currency called Linden Dollars. Linden Dollars are real money – they can be traded for U.S. dollars on currency exchange markets. Quite a few people make their living in SecondLife, running businesses that make Linden-Dollar profits, which are then cashed in for U.S. dollars. Most days, the SecondLife economy sees transactions worth a total of between $500,000 and $1,000,000 (real U.S. dollars). This is clearly a real economy.

To understand the possible impact of CopyBot, imagine such a thing existed in real life. Point this CopyGadget at any real-world object, push a button, and you get a perfect copy of that object. Want a new Lambourghini sportscar? Just find one in a parking lot and copy it. Like the lime sorbet at the local ice cream parlor? Buy a cup, take it home, and fill your freezer with copies. When you get down to the last cup in the freezer, just copy it again. You get the idea.

Needless to say, this would cause Big Trouble in the real-world economy. Lambourghini would have trouble selling cars. There would be no waiting at the ice cream parlor, even on the hottest summer night. Could these businesses survive? Could any business that provided goods survive?

A SecondLife business that designs and sells virtual objects faces the same challenge. If you design an object in SecondLife, the system lets you make copies of the object, but if you mark the object as uncopyable, the system won’t let other users copy it. So if you design a cool virtual widget, you can “manufacture” copies to sell to people, but your customers can’t re-copy the widgets they buy. Only you can make widgets, so people have to come to you to buy them. Like Lambourghinis and sorbet, manufactured virtual objects couldn’t easily be copied – until the CopyBot came along.

It’s too early to predict all of the impacts this will have. All we can say for sure is that it will be fascinating to watch. Already the story has several interesting facets, which I’ll write more about next week.

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New Congress, Same Old Issues

November 16, 2006 by

With control of the House and Senate about to switch parties, everybody is wondering how the new management will affect their pet policy issues. Cameron Wilson has a nice forecast for tech policy issues such as competitiveness, globalization, privacy, DRM, and e-voting.

Most of these don’t break down as partisan issues – differences are larger within each party than between the two parties. So the shift in control won’t necessarily lead to any big change. But there are two factors that may shake things up.

The first factor is the acceleration of change that happens in any organization when new leadership comes in. The new boss wants to show that he differs from the old boss, especially if the old boss was fired. And the new boss gets a short grace period in which to be bold. If a policy or practice was stale and needed to be changed but the institutional ice floes were just stuck, new management may loosen them.

The second factor has to do with the individuals who will run the various committees. If you’re not a government geek, you may not realize how much the agenda on particular issues is set by House and Senate committees, and particularly by the committee chairs. For example, any e-voting legislation must pass through the House Administration Committee, so the chair of that committee can effectively block such legislation. As long as Bob Ney was chair of the committee, e-voting reform was stymied – that’s why the Holt e-voting bill could have more than half of the House members as co-sponsors without even reaching a vote. But Mr. Ney’s Abramoff problem and the change in party control will put Juanita Millender-McDonald in charge of the committee. Suddenly Ms. Millender-McDonald’s opinion on e-voting has gotten much more important.

The bottom line is that on most tech issues we don’t know what will happen. On some issues, such as the broad telecom/media/Internet reform discussion, the situation is at least as cloudy as before. Let the battles begin.

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Microsoft to Pay Per-Processor License on Zune

November 14, 2006 by

Last week Universal Music Group (UMG), one of the major record companies, announced a deal with Microsoft, under which UMG would receive a royalty for every Zune music player Microsoft sells. (Zune is Microsoft’s new iPod competitor.)

This may be a first. Apple doesn’t pay a per-iPod fee to record companies; instead it pays a royalty for every song it sells at its iTunes Music Store. UM hailed the Zune deal as a breakthrough. Here’s Doug Morris, UMG’s CEO (quoted by Engadget): “We felt that any business that’s built on the bedrock of music we should share in.” The clear subtext is that UMG wanted a fee for the pirated UMG music that would inevitably end up on some Zunes.

There’s less here than meets the eye, I think. Microsoft needed to license UMG music to sell to Zune users. Microsoft could have paid UMG a per-song fee like Apple does. Instead, UMG presumably lowered the per-song fee in exchange for adding a per-Zune fee. Microsoft, in a weak bargaining position, had little choice but to go along. If there’s a precedent here, it’s that new entrants in the music player market may have to accept unwanted terms from record companies.

There’s an interesting echo here from Microsoft’s antitrust history. Once upon a time, Microsoft insisted that PC makers pay it a royalty for every PC they sold, whether or not that PC came with Windows. This was called a per-processor license. PC makers, in a weak bargaining position, went along. Microsoft said this was only fair, claiming that most non-Windows PCs ended up with pirated copies of Windows.

Eventually the government forced Microsoft to abandon this practice, because of its anticompetitive effect on other operating system vendors – users would be less likely to buy alternative operating systems if they were already paying for Windows.

To be sure, the parallel between the UMG and Windows per-processor licenses has its limits. For one thing, UMG doesn’t have nearly the lock on the recorded music market that Microsoft had on the OS market, so anticompetitive tactics are less available to UMG than they were to Microsoft. Also, the UMG license is partial, reducing per-song costs a bit in exchange for a relatively small per-processor royalty, where the Microsoft license was total, eliminating per-copy costs of Windows on covered PCs in exchange for a hefty per-processor royalty. Both factors make the UMG deal less of a market-restrictor than the Windows deals were.

My guess is that the UMG/Zune deal is not the start of a trend but just a concession extracted from one company that needed UMG more than UMG needed it.

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Post-Election Review

November 9, 2006 by

How did e-voting technologies hold up in Tuesday’s election? It’s too early to tell for sure, but it looks as if there weren’t any major disasters.

We saw the usual list of crashing, misbehaving, and non-functional machines. Some of these are just routine glitches or procedural problems. If somebody forgets to deliver power cords to the polling place, that’s just an isolated mistake. If a machine just won’t turn on in the morning, that’s probably just a maintenance issue.

But other kinds of “glitches” can indicate deeper problems. Experienced engineers know that certain behaviors, especially complex ones that are supposed to be impossible, are clues that something has gone badly wrong in the system’s internals. If the inside of your fridge is at room temperature, you probably have a simple problem. If the liquids in your fridge are boiling, you have an Engineering Issue.

The most alarming error report I saw from Tuesday’s election came from Avi Rubin, a respected computer scientist and e-voting expert who is a precinct worker in Maryland, where they use the Diebold AccuVote-TS, the same machine my colleagues and I recently studied. Here is Avi’s story:

So, while we were watching the last handful of voters cast their ballots … one of the chief judges came up to me and said that there was a “situation”. I was called over where a voter was explaining to one of the judges what had happened, and he repeated his story to me. The voter had made his selections and pressed the “cast ballot” button on the machine. The machine spit out his smartcard, as it is supposed to do, but his summary screen remained, and it did not appear that his vote had been cast. So, he pushed the smartcard back in, and it came out saying that he had already voted. But, he was still in the screen that showed he was in the process of voting. The voter then pressed the “cast ballot” again, and an error message appeared on the screen that said that he needs to call a judge for assistance. The voter was very patient, but was clearly taking this very seriously, as one would expect. After discussing the details about what happened with him very carefully, I believed that there was a glitch with his machine, and that it was in an unexpected state after it spit out the smartcard.

This is supposed to be impossible. Having examined a similar version of Diebold’s software, I know that when the Cast Vote button is pressed, the system is supposed to (1) invalidate the smartcard, then (2) record the vote, then (3) kill the voting screens, then (4) eject the smartcard. This voter saw Steps 1 and 4 happen, but not Step 3. (We don’t know whether Step 2, recording the vote, happened.) At least one voting screen was still there, and that screen was active: something happened when the Cast Vote button on that screen was pressed, but it wasn’t the something that would normally happen.

It’s hard to see how this can happen, absent a subtle, serious bug in this part of Diebold’s software. And by “this part” I mean the part that carries out the four-step procedure that includes recording the vote. Could this bug have affected vote recording for other voters? What other problems could it have caused? We don’t know. We could probably tell, given access to a Maryland voting machine.

Another thing we don’t know is how many times this bug showed up in Maryland on Tuesday. It’s hard to believe that the problem didn’t happen elsewhere too. If it were going to happen only once, what are the odds that that one occurrence would be in a precinct with an evoting-savvy computer scientist blogger election judge? Pretty slim.

Fortunately, Avi was there and was able to recognize the relevance of this particular machine misbehavior. How many other poll workers, not being experts in computer science, saw a similar problem and just shrugged it off as a routine glitch?

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Unattended Voting Machines Already Showing Up

November 4, 2006 by

I was going about my business this morning when I was surprised to see some unattended electronic voting machines that had already been delivered to a polling place in advance of Tuesday’s election. I wasn’t looking for voting machines in this location, not knowing that it served as a polling place, but the machines were pretty hard to miss. They were Sequoia AVC Advantage machines, the most common model in New Jersey. I don’t know how long they had been sitting unprotected.

Here’s a photo, taken this morning, of me with one of the machines.

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