Tens Of Thousands Of Students Have Signed Up For Choruss... Even Though No One Knows What It Is?

from the am-I-missing-something? dept

A bunch of folks have sent in the story in The Register about Jim Griffin's appearance at the World Copyright Summit, where he apparently told the crowd that "tens of thousands" of students at universities have agreed to voluntarily pay for Choruss. But, unfortunately, nobody seems to know what it is. Plenty of folks have been asking for an actual description of what it is -- and every time we're not told anything other than that it's "an experiment" that we're not to criticize. So, I'm curious who these tens of thousands of students are, and exactly what they've signed up for. If any of them is willing to share with us the details of what they signed, that would be great.

At one time, we were told that Choruss would be mandatory, but lately, Griffin has suggested that it will be voluntary. A voluntary system is much better, so that's definitely a step in the right direction, if that's true. But there are still plenty of other problems with such a system, many of which I've outlined elsewhere. It still seems like the entire program is based on a negative benefit ("you won't get sued") rather than a positive incentive ("here's a reason to give money in exchange for something you want") and a distortionary effect on the market (i.e., inserting unnecessary bureaucracy into a market, such that artists will actually make less). But, the fact that supposedly tens of thousands of students have agreed to pay for this when no details of what "this" is have been offered seems quite odd.

Separately, I should note that in our last post about Choruss, we solicited questions to be sent to Griffin which he has promised to answer. Due to my own hectic travel schedule, I haven't had time to go through the responses yet and whittle the list down to a more reasonable level, but I'm hoping to do that shortly. Alternatively, Griffin is free to answer questions and discuss these issues in the comments, but to date he has preferred not to do so, which is his right, of course. Still, if you have any additional questions for Griffin, feel free to add them in the comments, and I'll include them in the potential list (which will be narrowed down, so as not to overwhelm Griffin).

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Ask Jim Griffin Questions About Choruss... Along With My Concerns About It

from the ask-away dept

It's no secret that I think Jim Griffin's plan for Choruss -- to set up a licensing system for P2P -- isn't just grossly flawed, but dangerous in many ways. We discussed at length why the very idea of any sort of licensing (i.e., a "tax") on online music is a bad idea. We've also worried about the apparent bait-and-switch nature of the plan -- in that, while it would grant either "covenants not to sue" or (potentially) "licenses" for any file sharing you do, it wouldn't stop the recording industry from still trying to shut down file sharing apps as illegal.

A few months back, I finally met Jim and was still left with many, many questions about the program -- especially because I felt that when anyone tried to pin him down on any particular bad idea that's been associated with the project, he would cut off the discussion by saying, "we're just experimenting -- so just let us get data before you criticize." And this, in fact, is a part of the problem. Rather than discussing the merits of any particular idea, Griffin keeps suggesting that -- despite evidence, history or theories about how various license programs work -- none of that is relevant to discuss until he's got data on his particular experiment. The way the plan is structured is that different (as yet unnamed) universities and colleges will begin testing Choruss this fall -- and each university will set it up how they see fit, in order to get comparative data. Thus, some could make it compulsory. Some could make it voluntary. Some could charge a lot. Some could bundle it with something else. Some could charge a flat fee. Some could charge a per download fee. Some could charge a per listen fee. But, if you try to dig down into the problems with any of these, Griffin has just said, "well, we're just experimenting, and we don't know if it's a good idea or not." Unfortunately, this avoids allowing us to discuss the details of why the concept is troubling, because we're told repeatedly it's just an experiment.

Jim Griffin to answer questions

That said, in an email exchange, Griffin agreed that if we asked folks at Techdirt what questions they had about the program, he would answer them -- and I hope that we can get more detailed answers. Now, to say our email conversation has been without conflict would be incorrect, and there was a bit of a misunderstanding about the timing of us soliciting questions (I had hoped to do it as a part of The Free Summit, which he was scheduled to attend, but for perfectly legitimate reasons, he was unable to attend at the last minute). But Griffin says he wants to answer whatever questions we have, and I'd like to send him some good ones.

My own concerns

To kick it off though, I'm going to share an edited/updated version of the last email I sent Griffin, after he asked again why I was so against Choruss. In pitching Choruss, Griffin likes to tell the story of the founding of SACEM, the very first collective licensing society. He talks about how since restaurants benefited from the music, they should pay for that benefit -- and how that's the basis of every collection society since: any place/service that benefits from music should pay for that benefit. I have serious qualms about that thinking, and here's why:

My worries about Choruss come from a few different angles. I think any sort of collective/group licensing scheme involving such a third party is an economically inefficient, and unnecessary solution, that ends up doing more harm than good. I know you like to tell the story of SACEM. To me, that's a horror story. It's a story of how to create a system that leads to massive wasted resources, inefficiency, a reliance on a bad (but easy) business model, followed quite quickly by regulatory capture that leads to an ever increasing inefficiency. Look at what SACEM has resulted in, and all I see are massive inefficiencies. The idea of adding to that legacy concerns me. If you look at collections societies, over time they just keep trying to increase how much they collect, and will often lean on the government for help in doing so. The story of PRS in the UK is instructive here.

My concern is specifically that we're seeing other business models that are working tremendously well. I know you were unable to stay for my keynote in Nashville, but I went through examples of many different artists (small, medium and big) who were embracing new business models to tremendous success -- none of which relied on any sort of licensing proposal.

So, then, along comes a licensing plan where I need to pay (and, yes, I know this isn't determined yet and experiments will occur) say... $5/month for Choruss. Now suddenly that's $60/year that I'm paying for music (some of which gets siphoned off by the bureaucracy in the middle, even if it's a non-profit, just for administration) that relies on some magic formula to figure out who it goes to. I'm now less inclined to spend additional money directly with my favorite artists, because I've already spent the money via Choruss. My favorite artists get less money (and I'm reliant on your system to make sure that my favorite artists are actually rewarded). My money is spent less efficiently, and now there's a group in the middle who has every incentive in the world (even as a non-profit) to try to get an ever increasing part of the pie.

That just doesn't make sense to me.

You talk about the two issues: collecting a pool of money and distributing it efficiently. What's wrong with letting the market do that? People are giving money, gladly, to the artists who give them a reason to buy. That's your efficient collection and distribution system all in one. Except it doesn't need a middleman like Choruss.

The problem the recording industry faces isn't that there hasn't been an effective licensing system in the middle. It's that they weren't giving people a reason to buy. A licensing scheme isn't a reason to buy. It's a removal of a threat. That's negative value (we won't sue!), not positive value (here's additional scarce value you want to pay for). The artists I highlighted in my presentation were all giving positive reasons to buy. I'm afraid that focusing on a system like yours focuses on that negative reason to buy (you won't get sued!) rather than the positive reason (check out all the benefits I get).

That's my big concern.

That concern is exacerbated by the fact that every time a direct question is asked about how Choruss will work, your response is "it's just an experiment, so we don't know." I recognize that it is an experiment and you don't know all of the answers, but it feels very much like a dodge. I'm sure it's a fine line, because there are many details you don't know about, but you've been so vague about everything that it's hard to know what to think. A bunch of universities have agreed to it, but who are they? Why would they agree to test something without the details being clear? Who's setting up what those details are? In Nashville, you said some would involve all students, but at the SanFran Music Tech event you were saying they'd all be voluntary for the users. It just has this quantum feel to it. Any time anyone tries to get specific and warn about a certain aspect, you can just claim "well, we might not do that."

My biggest concern, frankly, is that putting in this inefficient, unnecessary bureaucracy in the middle, we take away resources from the new, more efficient, business models that are working. Both times I've seen you speak about Choruss, you've claimed that those business models won't necessarily be harmed, because they can still be built on top of Choruss -- but that goes against fundamental economics. If people have less money due to Choruss, they're a lot less likely to buy into these other business models.

Now, I'll be the first to admit that competing between business models is a good thing, but the very foundation upon which any sort of collective licensing system is built is to basically get everyone to opt-in, somehow or another -- and thus is set up to crowd out more efficient business models. Otherwise it just doesn't work. So you have every incentive to get third parties (universities, ISPs) to put in place policies that either force, or heavily incentivize, their students/subscribers to adopt a much more inefficient plan. The incentives are skewed. You and the universities/ISPs benefit -- but users (and musicians) do not.

So, with that, let's kick off some questions that I have as "starter" questions, and let's see what else you guys can come up with in the comments. Also, feel free to let me know which of the starter questions/user submitted questions you like best. Once we have a good bunch, I'll send them to Griffin and when we get his answers, I'll post them here. Some of these starter questions are the same ones I asked earlier this year, but I've added a few as well:

• Why do we even need such a plan when plenty of musicians are showing that they can craft business models on the open market that work?
• How does adding yet another middleman make the music market any more efficient?
• What's wrong with letting the market mechanism handle the collection and distribution of the funds directly between musicians and fans?
• Will the recording industry promise to stop trying to shut down file sharing systems if this program gets adopted?
• Will the recording industry promise to stop pushing for 3 strikes if this program gets adopted?
• How will the program prevent the gaming opportunities, where artists set up scripts to constantly reload/download their songs?
• Why should music be separated out and subsidized while other industries have to come up with their own business models?
• Why should those who don't listen to much music and aren't interested in giving their money to the recording industry be required to participate if their university or ISP decides to make them?
• Why should we have a business model focused on negative value (you don't get sued), rather than positive value (here's something scarce that's worth buying)?
• The history of collections societies shows that they only tend to expand, and try to capture more rents. Why would Choruss be different?
• If Choruss becomes big, won't lots of other industries want in? Movies will want their own version. Then newspapers. And if newspapers are getting their cut, then why not bloggers too? Or blog commenters? Or just any website? The road this leads down is a bad one, where we end up creating massive bureaucracies to subsidize every form of content, rather than focus on business models where those content providers have to provide a reason to buy their particular product. How do you prevent that?

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If You Want To Charge For News, Can You Answer These Questions?

from the please? dept

Want to know why the old school newspapers are failing one after another? Maybe it's because they're spending all their time rewriting the same column over and over again. The latest is David Carr of the NY Times who has written the same column that has been written about fifty times in the past 6 months by others, saying that newspapers should all collude, stop giving away content for free, force Google to pay to link to them, among some other nonsense that makes no economic sense whatsoever.

Steve Yelvington, however, has put up a good list of eight challenges that any newspaper or reporter who wants to charge for news should need to respond to in full. His list is focused on those who want to charge for "local" news, but I think it mostly applies to all news:

1. The painful lessons of experience. You might want to look into the history of attempts by general news sites to get consumers to pay for access. Did you actually think we hadn't thought of it, and tried it? Your ignorance of the field and of history is one of the things that makes the online guys reject everything you say. Do you need a list? The burden of research here is on you; it's your idea, after all. But I can tell you where to start.

2. The problem of scale (volume). It takes scale to make paid content work, and you don't have the volume you think you have. Quit making up wishful percentages based on your totally bogus monthly unique-user count ("well, if we get just 10 percent of our 85 zillion unique users to pay"). If you're going to engage in wishful thinking, base it on the cohort of individuals who visit your website more than three times a week. You will be shocked, and dismayed. I've been saying this for years: How can you get them to pay if you can't even get them to visit frequently when it's free?

3. The problem of scale (breadth). The idea of premium paid content (to generate reader revenue) plus free commodity content (to support an ad model) is alluring, but be honest with yourself. Local sites don't have the breadth of content to simultaneously support a paid premium content model, while maintaining enough free pages to harvest the advertising benefits of the open model.

4. Relative strength of the geotargeted advertising model. Ultimately the idea of paid content goes to war against the idea of ad-supported content. In local markets, the ad model is stronger than in global markets. There is, and always will be, a gross surplus of ad inventory on the Internet, and that drives CPMs into the sand. But actual deliverable geotargeted advertising -- and please understand that I'm talking about a reality that includes the entire sales support system, not theory -- is an entirely different matter. Local advertising sold by local sales forces is a substantial revenue stream, and if you're not tapping into that, it's your own fault.

5. Competition. There are plenty of competitors and would-be competitors just waiting for you to strangle your own website so they can step in and steal your future. The larger the market, the more this is true. In some relatively small, isolated markets you may be able to get away with it. For awhile.

6. Lack of unique content, coupled with a false sense of being unique. When you've had a virtual monopoly for decades, you grow arrogant and develop blind spots about your own weaknesses. From the viewpoint of the consumer, you're not nearly as unique and special as you think. And you've exacerbated this problem with your poor pay scales historically, and more recently your vicious cutting aimed at higher-salary veterans.

7. Support costs. If somebody drops 50 cents into a newsbox and it won't open, they just go away mad. If somebody is paying for access to your website and it won't work, they're going to call and suck up 12 dollars of staff time. You have no idea what you're getting into. Computers are evil, perverse devices aimed at driving humans crazy.

8. Your own staff. Your online staff hates the idea and they'll do everything they can to undermine it. Yeah, you can fire them. Why don't you get a table saw and cut off the fingers of your right hand while you're doing it? I've seen this happen time after time as newspapers consolidate print and online staffs, and the "formerly known as print" people conspire to expel the "formerly known as online" people. The result is a great leap backward. It's self-destructive.

I'd add another important factor to this list: What value are you providing that makes it worth paying you? That's the question I keep asking. Newspaper folks seem to think that their content is magically so valuable that everyone will start paying if they charge. There's no evidence that's true at all. So what value are they adding beyond all the other content out there that makes it worth actually paying for?

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Dumb Sprint 'Security' Questions Make It Easier To Hijack Accounts

from the with-security-like-that... dept

In the last year or so, there's been a disturbing trend of companies to start adding absolutely ridiculous and counterproductive "security" questions on various sites. Most of these do absolutely nothing good in terms of security. In fact, it seems the more ridiculous these features are, the less secure a site actually is. I've been collecting some examples of the more bizarre "security" features I've been seeing lately, with the really ridiculous "security questions" being quite popular. This is when the site gives you a bunch of questions to choose from -- but often those questions are not the sort that have a single answer, or an answer that's easily memorable. For example, I just saw one that asked "What's a place you'd like to visit someday?" Well, there are a few, but I doubt I could remember the one I picked. And what happens if I do visit that place before the next time I need to answer that question?

I was recently discussing this with a colleague who told me that if I wanted to see the most ridiculous example, I should look at Sprint's system, as it had a bunch of security questions where it tried to pull information on you. Before I had a chance to check it out, it looks like the folks over at Consumerist decided to take on Sprint, and discovered not just how ridiculous the questions are but noticed some patterns that make it quite easy to get control of any Sprint user's account.

The way it works is Sprint asks you a series of "security" questions that it thinks only you would know the answer to. Things like "what type of car has been registered at your address?" and "which of the following people has lived at your address?" It sounds like some data collection company probably convinced Sprint to purchase access to their data to set up these questions in the name of "security." The problem is that if you know just a little about certain people, you can easily guess the answers. Even worse, a former Sprint employee notes that, mostly to avoid "accidentally" having two right answers, it's usually quite easy to figure out the actual answers. For example, on the automobile question, the incorrect answers are usually expensive luxury vehicles.

This isn't "security." It's barely security theater. It's a huge security hole. Hopefully with a little attention Sprint gets rid of it and puts something more reasonable in place. I just hope it doesn't involve asking me where I hope to travel some day.

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