May 15, 2024

Universal Didn't Ignore Digital, Just Did It Wrong

Techies have been chortling all week about comments made by Universal Music CEO Doug Morris to Wired’s Seth Mnookin. Morris, despite being in what is now a technology-based industry, professed extreme ignorance about the digital world. Here’s the money quote:

Morris insists there wasn’t a thing he or anyone else could have done differently. “There’s no one in the record company that’s a technologist,” Morris explains. “That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?”

Personally, I would hire a vet. But to Morris, even that wasn’t an option. “We didn’t know who to hire,” he says, becoming more agitated. “I wouldn’t be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me.” Morris’ almost willful cluelessness is telling. “He wasn’t prepared for a business that was going to be so totally disrupted by technology,” says a longtime industry insider who has worked with Morris. “He just doesn’t have that kind of mind.”

Morris’s explanation isn’t just pathetic, it’s also wrong. The problem wasn’t that the company had no digital strategy. They had a strategy, and they had technologists on the payroll who were supposed to implement it. But their strategy was a bad one, combining impractical copy-protection schemes with locked-down subscription services that would appeal to few if any customers.

The most interesting side of the story is that Universal’s strategy is improving now – they’re selling unencumbered MP3s, for example – even though the same proud technophobe is still in charge.

Why the change?

The best explanation, I think, is a fear that Apple would use its iPod/iTunes technologies to grab control of digital music distribution. If Universal couldn’t quite understand the digital transition, it could at least recognize a threat to its distribution channel. So it responded by competing – that is, trying to give customers what they wanted.

Still, if I were a Universal shareholder I wouldn’t let Morris off the hook. What kind of manager, in an industry facing historic disruption, is uninterested in learning about the source of that disruption? A CEO can’t be an expert on everything. But can’t the guy learn just a little bit about technology?

Online Symposium: Future of Scholarly Communication

Today we’re kicking off an online symposium on The Future of Scholarly Communication, run by the Center for Information Technology Policy at Princeton. An “online symposium” is a kind of short-term group blog, focusing on a specific topic. Panelists (besides me) include Ira Fuchs, Paul DiMaggio, Peter Suber, Stan Katz, and David Robinson. (See the symposium site for more information on the panelists.)

I started the symposium with an “introductory post. Peter Suber has already chimed in, and we’re looking forward to contributions from the other panelists.

We’ll be running more online symposia on various topics in the future, so this might be a good time to bookmark the symposium site, or subscribe to its RSS feed.

Fact check: The New Yorker versus Wikipedia

In July—when The New Yorker ran a long and relatively positive piece about Wikipedia—I argued that the old-media method of laboriously checking each fact was superior to the wiki model, where assertions have to be judged based on their plausibility. I claimed that personal experience as a journalist gave me special insight into such matters, and concluded: “the expensive, arguably old fashioned approach of The New Yorker and other magazines still delivers a level of quality I haven’t found, and do not expect to find, in the world of community-created content.”

Apparently, I was wrong. It turns out that EssJay, one of the Wikipedia users described in The New Yorker article, is not the “tenured professor of religion at a private university” that he claimed he was, and that The New Yorker reported him to be. He’s actually a 24-year-old, sans doctorate, named Ryan Jordan.

Jimmy Wales, who is as close to being in charge of Wikipedia as anybody is, has had an intricate progression of thought on the matter, ably chronicled by Seth Finklestein. His ultimate reaction (or at any rate, his current public stance as of this writing) is on his personal page in Wikipedia

I only learned this morning that EssJay used his false credentials in content disputes… I understood this to be primarily the matter of a pseudonymous identity (something very mild and completely understandable given the personal dangers possible on the Internet) and not a matter of violation of people’s trust.

As Seth points out, this is an odd reaction since it seems simultaneously to forgive EssJay for lying to The New Yorker (“something very mild”) and to hold him much more strongly to account for lying to other Wikipedia users. One could argue that lying to The New Yorker—and by extension to its hundreds of thousands of subscribers—was in the aggregate much worse than lying to the Wikipedians. One could also argue that Mr. Jordan’s appeal to institutional authority, which was as successful as it was dishonest, raises profound questions about the Wikipedia model.

But I won’t make either of those arguments. Instead, I’ll return to the issue that has me putting my foot in my mouth: How can a reader decide what to trust? I predicted you could trust The New Yorker, and as it turns out, you couldn’t.

Philip Tetlock, a long-time student of the human penchant for making predictions, has found (in a book whose text I can’t link to, but which I encourage you to read) that people whose predictions are falsified typically react by making excuses. They typically claim that they are off the hook because the conditions based on which they predicted a certain result were actually not as they seemed at the time of the inaccurate prediction. This defense is available to me: The New Yorker fell short of its own standards, and took EssJay at his word without verifying his identity or even learning his name. He had, as all con men do, a plausible-sounding story, related in this case to a putative fear of professional retribution that in hindsight sits rather uneasily with his claim that he had tenure. If the magazine hadn’t broken its own rules, this wouldn’t have gotten into print.

But that response would be too facile, as Tetlock rightly observes of the general case. Granted that perfect fact checking makes for a trustworthy story; how do you know when the fact checking is perfect and when it is not? You don’t. More generally, predictions are only as good as someone’s ability to figure out whether or not the conditions are right to trigger the predicted outcome.

So what about this case: On the one hand, incidents like this are rare and tend to lead the fact checkers to redouble their meticulousness. On the other, the fact claims in a story that are hardest to check are often for the same reason the likeliest ones to be false. Should you trust the sometimes-imperfect fact checking that actually goes on?

My answer is yes. In the wake of this episode The New Yorker looks very bad (and Wikipedia only moderately so) because people regard an error in The New Yorker to be exceptional in a way the exact same error in Wikipedia is not. This expectations gap tells me that The New Yorker, warts and all, still gives people something they cannot find at Wikipedia: a greater, though conspicuously not total, degree of confidence in what they read.

Sharecropping 2.0? Not Likely

Nick Carr has an interesting post arguing that sites like MySpace and Facebook are essentially high-tech sharecropping, exploiting the labor of the many to enrich the few. He’s wrong, I think, but in an instructive way.

Here’s the core of his argument:

What’s being concentrated, in other words, is not content but the economic value of content. MySpace, Facebook, and many other businesses have realized that they can give away the tools of production but maintain ownership over the resulting products. One of the fundamental economic characteristics of Web 2.0 is the distribution of production into the hands of the many and the concentration of the economic rewards into the hands of the few. It’s a sharecropping system, but the sharecroppers are generally happy because their interest lies in self-expression or socializing, not in making money, and, besides, the economic value of each of their individual contributions is trivial. It’s only by aggregating those contributions on a massive scale – on a web scale – that the business becomes lucrative. To put it a different way, the sharecroppers operate happily in an attention economy while their overseers operate happily in a cash economy. In this view, the attention economy does not operate separately from the cash economy; it’s simply a means of creating cheap inputs for the cash economy.

As Mike at Techdirt observes, it’s a mistake to think of the attention economy and the cash economy as separate. Attention can be converted into cash – that’s what advertising does – and vice versa. Often it’s hard to distinguish attention-seekers from cash-seekers: is that guy eating bugs on Survivor doing it for attention or money?

It’s a mistake, too, to think that MySpace provides nothing of real value to its users. I think of MySpace as a low-end Web hosting service. Most sites, including this blog, pay a hosting company to manage servers, store content, serve out pages, and so on. If all you want is to put up a few pages, full-on hosting service is overkill. What you want instead is a simple system optimized for ease of use, and that’s basically what MySpace provides. Because it provides less than a real hosting service, MySpace can offer a more attractive price point – zero – which has the additional advantage of lowering transaction costs.

The most interesting assumption Carr makes is that MySpace is capturing most of the value created by its users’ contributions. Isn’t it possible that MySpace’s profit is small, compared to the value that its users get from using the site?

Underlying all of this, perhaps, is a common but irrational discomfort with transactions where no cash changes hands. It’s the same discomfort we see in some weak critiques of open-source, which look at a free-market transaction involving copyright licenses and somehow see a telltale tinge of socialism, just because no cash changes hands in the transaction. MySpace makes a deal with its users. Based on the users’ behavior, they seem to like the deal.

YouTube and Copyright

YouTube has been much in the news lately. Around the time it was bought by Google for $1.65 billion, YouTube signed copyright licensing deals with CBS television and two record companies (UMG and Sony BMG). Meanwhile, its smaller rivals Bolt and Grouper were sued by the record industry for infringement.

The copyright deals are interesting. The first question to ask is whether YouTube needed the deals legally – whether it was breaking the law before. There’s no doubt that some of the videos that users upload to YouTube include infringing video and audio content. You might think this makes YouTube an infringer. But the law exempts service providers from liability for material stored on a server at users’ request, as long as certain conditions are met, including a requirement that the service provider take down material promptly on being notified that specific content appears to be infringing. (See section 512(c) of the DMCA.) Whether a site like YouTube qualifies for this exemption will be one of the main issues in the lawsuits against Bolt and Grouper.

It’s easy to see why CBS and the record companies want a deal with YouTube – they get money and greater control over where their content shows up on YouTube. Reading between the lines in the articles, it looks like YouTube will give them fairly direct means of taking down videos that they think infringe their copyrights.

Why would YouTube make a deal? Perhaps they’re worried about the possibility of lawsuits. YouTube hasn’t been sued yet, but the Bolt and Grouper cases might create precedents that put YouTube in jeopardy. YouTube might prefer to make deals now rather than take that risk.

But even if it faces no legal risk, YouTube might want to make these deals anyway. If users feel safer in posting CBS, UMG and Sony BMG content on the site, they’ll post more of that content, and they’ll face fewer frustrating takedowns. The deals might give YouTube users more confidence in using the site, which can only help YouTube.

Finally, we can’t ignore the influence of politics. In recent years, entertainment companies have run to Congress whenever they thought a new product led to more infringement. Congress has typically responded by pressuring the product’s maker to cut licensing deals with the entertainment companies. YouTube is getting in front of this process by making deals now. Again, whether YouTube is actually breaking the law makes little difference, because the dynamic of entertainment company complaints followed by threats to regulate relies not on existing laws but on threats to create new, more restrictive law.

Whether YouTube qualifies for the legal exemption is an interesting question for lawyers to debate. But in today’s copyright policy environment, whether a company is breaking the law is only one piece of the equation.