Redigi, the 'used' mp3 dealer, is now sending out invites for its expansion into Europe. While many may question how big the market is for secondhand mp3s, Redigi obviously feels there's more money to made overseas.

In the US, Redigi is operating in the shadow of a lawsuit filed by the RIAA (with EMI/Capitol Records taking the lead). The RIAA wanted the company shut down, but the presiding judge refused to grant the injunction, citing concerns about the right of first sale, as well as a lack of "irreparable harm," as claimed by EMI. However, he did note that EMI's arguments were "compelling," which likely means that sooner or later, the RIAA will get its way. (The outcome of Kirtsaeng vs. Wiley will also have some impact this lawsuit, should it reach its conclusion first.)

Over in Europe, Redigi is relying on a ruling against Oracle (who was taking on UsedSoft, a software reseller), which claimed its software couldn't be resold. "Copyright exhaustion" is the key here -- a concept related to the right of first sale -- meaning the copyright holder's control ends once the sale is made. More importantly, the European court declared that the software could be sold even if Oracle's contract with the end user prohibits resale.

Obviously, this doesn't sit well with many rights holders. As we're all too aware, when we buy a digital good, we're usually exchanging our money for a license, rather than something we can resell or transfer or even move from computer to computer. These licenses allow the control to remain with the copyright holder (or the retailer/distributor) for long after the famous "first sale." As Redigi's CEO points out, if you block the customers' right of first sale, then they have vastly overpaid for these licenses.

[M]ost lawful users of music and books have hundreds of dollars of lawfully obtained things on their computers and right now the value of that is zero dollars.

Whether or not Redigi will be successful in Europe remains to be seen, but its business model is applying pressure to rights holders and their representatives to define more clearly what they feel customers are entitled to when they purchase a license disguised as a digital download.

Oh, and Redigi's CEO mentions books for a reason. The company is hoping to expand its current offerings from mp3s to ebooks... and video games. Rolling up on Amazon and re-triggering the AAA game developers' distaste for the secondhand market means things could get interesting in a hurry.

I must admit to something of a minor fascination in how other sites manage their comments. As we've noted many times, we've personally found that keeping our comments pretty wide open fosters the best sorts of discussions in the long run. Yes, like any sites, there are some users who are annoying, and some who exhibit trollish behavior, but most people can get past that pretty quick. In fact, at times, those people (while frustrating initially) can spur some really interesting conversations. One thing we've never quite understood, however, is the attack on anonymity that so many sites insist upon. As we've seen over and over again, many of our most insightful comments have come from anonymous commenters.

So I was actually surprised a few years ago when TechCrunch moved to switch all of its comments to Facebook comments, claiming that one of the good things about it was that it required you to provide your real name. Apparently that wasn't actually such a good thing for lots and lots of commenters -- as after nearly two years, TechCrunch has dumped Facebook comments and is pleading for commenters to come back.

Our comments are obviously far from perfect, but we've never been at a loss for having spirited discussions on nearly all of our posts. There's just something awesome about the community that likes to really dig into the various stories. That's part of why we've always viewed this site as a discussion site, rather than a "news" or "reporting site." We post stuff with our opinion because we expect people to respond -- good or bad, agree or disagree -- in the comments, and for some sort of discussion to ensue. That doesn't mean that we like to encourage trollish behavior, but we recognize that encouraging a real community has its benefits, and one key aspect to that is keeping the barrier low. Too many other sites seem to think the best way to deal with the messiness of some annoying commenters is to make it more difficult to comment. However, as TechCrunch has discovered, like chemotherapy, it's a solution that can kill off many of the "good" cells along with the "bad."

There are a lot of reasons to be optimistic about the future. Some folks will always predict doom and gloom, but we say, "The Sky Is Rising!" (loud and proud -- and again with sequel The Sky Is Rising 2). The advent of digital information has created an enormous wealth of data, and the amount of this digital awesomeness seems to be growing all the time. Here are just a few more examples of the amazing abundance of media that surrounds us.

• The Internet Archive has updated its Wayback Machine, indexing 5 petabytes of internet goodness, covering the web from 1996 to December 2012. That data is from over 240,000,000,000 URLs, and this virtual backup of the web doesn't even touch sites that have a login or a robot.txt file that blocks the Wayback Machine. [url]
• Sandvine's global internet phenomena report contains a prediction that US internet traffic may rise to over 700,000 exabytes per year by 2019. And if Netflix continues to do well (accounting for about double the amount of traffic as YouTube and crushing Amazon Video, Hulu and HBO Go), a lot of that traffic will be people watching streaming movies and TV shows (legitimately, too, not just using BitTorrent). [url]
• Every minute of the day, more and more data is generated. For example, 571 new websites per minute, 100K+ tweets per minute... gazillions of infographics and bazillions of random factoids. [url]
• Since the beginning of time until 2003, humans generated about 5 billion gigabytes of data... and now we generate that much every 2 days. And that rate is accelerating (but humans are not exclusively generating all that data). [url]

If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post.

There’s a lot going on in the recent Wall Street Journal story about how Hewlett-Packard “missed a chance to back away” from its acquisition of Autonomy – which HP now thinks did a lot of revenue recognition fraud and on which it has taken zillions of dollars of writedowns – but this description of the board’s approval process for the deal is the only thing you really need to know:¹

HP directors and bankers calculated how much revenue Autonomy would have to add over 10 years to justify such a price. Autonomy’s trajectory alone wouldn’t get there. The deal required assuming more revenue growth as a result of the tie-up than HP usually assumed in acquisitions, said people familiar with the matter. But the directors believed they could make the numbers.

Those calculations were done without knowledge of the alleged fraud but who cares? Here is, roughly, HP’s thought process:

• The price that Autonomy demands is X²
• Autonomy’s DCF value is Y₁ based on expected revenue growth but no synergies
• Y₁ < X
• Well but the DCF value is Y₂ with regular-to-aggressive synergies
• Y₂ < X
• Well but … well we could make up another number Y₃
• Y₃ >= X
• LOOKS GOOD.

If you notice that current revenue numbers are made up, then that changes Y₁, but Y₁ isn’t an input into Y₃ – the actual value that HP put on Autonomy – because that number was also just made up. “Synergies” was just a plug to get the equation to balance. The bankers’ math in the board book to approve the deal was just there to be soothing – directors get twitchy³ if they can’t look at a football field slide while approving an acquisition – not to have an impact on the outcome. You can hypothesize that HP would have rejected the deal if it had known Autonomy’s true revenue situation, because then the valuation numbers wouldn’t work, but that is a silly hypothesis because even using fake⁴ revenues the valuation numbers didn’t work and it didn’t reject the deal.

That is too glib – off by a lot is worse than off by a little, and “oh you’re a massive fraud actually” is a great point to make in negotiating down the asking price – but I think it’s the right analysis. As Usha Rodrigues writes, “The die was cast on the Autonomy acquisition when the HP board picked Apotheker, a CEO ‘bent on a high impact acquisition.’” If you have a CEO who really wants to do a deal, and a deal he really wants to do, it’s hard to imagine that some accountant coming to him with some minor boring technical quibble like “all these revenues are fictitious” would cause any more trouble than – well, than some banker coming to him with some minor boring technical quibble like “the price you are paying is more than the discounted cash flow of this asset to you.” Shut up, nerds! We’re doing important CEO business here!

How should this make you feel about the social value of M&A? Sort of same as you always felt? Some deals are good and some are bad, and CEOs tend to like making acquisitions because they are optimists and doing acquisitions makes them feel like big shots, and boards should try to shut down acquisitions that are bad for shareholders, but sometimes they don’t because country clubs etc. Everyone knew that already; this anecdotal confirmation is pleasing but, after all, just anecdotal. I’m sure HP’s current CEO would never do an acquisition that might destroy shareholder value.

How should it make you feel about Dragon Systems? Dragon, you’ll remember, sold itself for stock to a company that turned out to be a giant fraud and whose stock turned out to be worthless; Dragon’s shareholders then went out and sued their ragtag team of junior investment bankers at Goldman for not noticing that the acquiror was a giant fraud. And one of those junior bankers testified that they did a “great job” for Dragon, insofar as “We guided them to a completed transaction.” This got them made fun of a lot, here and elsewhere, but you get the sense Apotheker would approve. Dragon’s, and HP’s, bankers saw themselves as service providers, providing a particular narrow service – roughly, transaction execution – and leaving other services (auditing, fraud detection) to other providers, or no one, as the case may be. It was clear – to the bankers, and HP, though perhaps not to Dragon – who was in charge of the deal, and it sure wasn’t the bankers.

One popular and reasonably promising path to medium-term success as an investment banker is to tell clients what they want to hear. This is good because then clients will find you pleasant to be around; it’s also good because what they want to hear is frequently “oh yeah you should totally do this transaction that involves paying investment banking fees.” So there’s a synergy there. CEOs, after all, tend to (1) want to do stuff, (2) want to do big stuff, and (3) have a high degree of confidence in their ability to make investing decisions. If those decisions are systematically biased toward destroying shareholder value … well, I mean, we just work here, y’know?

Also, the Journal had an article about the flood of stock buybacks analysts expect this year.

Inside HP’s Missed Chance To Avoid a Disastrous Deal [WSJ]

1. Though you should read the rest because it is pretty entertaining? Like this is good:

HP became aware that bloggers and some financial analysts had claimed in the past that Autonomy was aggressive in its accounting. HP asked Autonomy’s [CEO] Mr. Lynch about how his firm recognized revenue, receiving answers and documents that allayed concern, said HP General Counsel John Schultz.

Bloggers! That happened right after the acquisition agreement was signed, as did this: “[HP board chairman Ray] Lane spoke to senior HP executives and found a near-universal view that their CEO wasn’t right for the job.” Imagine being a board chairman and sidling up to like the CFO and saying “hey, everything good with this Apotheker dude?” and the CFO saying “no he’s horrible you have to fire him.” And you’re like, hmm, that’s discouraging. And you check in with the COO and hear the same thing. And then you ask everyone and get “a near-universal view that their CEO wasn’t right for the job.” Never mind the big acquisition you just signed. “Gee, you know that information really would’ve been more useful to me YESTERDAY,” you might find yourself thinking.

2. Which we’ll take as a given: it’s a 50% premium to market price, which “wasn’t unusual for a software deal.”

3. For “twitchy” read “sued.” Imagine that the rest of this footnote discusses the negative effects of Smith v. Van Gorkom on, like, life, and its positive effects on investment banking M&A advisory revenues.

4. This footnote runs the global “allegedly” macro. I have no idea. Lynch remains adamant that there was no monkey business at Autonomy.

Other posts from Dealbreaker:

• Morgan Stanley Finalizes Its Entry In The “Who Said The Worst Things About Its Own Products?” Competition
• Hedge Fund Manager Will Get Chance to Fulfill Dream of Spending Hundreds of Millions of Dollars Badly
• Bank Investors Push For Change Via Strongly Worded Poll Responses

GEMA and MEGA may have the same letters arranged differently, but you have to imagine that the hardline copyright maximalists at GEMA aren't at all pleased by Kim Dotcom's new Mega outfit, even if it's really not all that different than tons of other online cloud storage platforms. Still, it is a bit odd to see that GEMA had Mega's launch video removed from YouTube. There was music in the video, but as Dotcom notes, it was either his own music, or music by musicians who all gave permission to use it. My guess is that it may have more to do with the ongoing dispute between GEMA and YouTube, which means that any video with GEMA content is blocked in Germany. However, Dotcom filed a dispute, and notes that he plans to have his lawyers discuss the matter with GEMA.

Well this is interesting. Kevin Collier over at DailyDot has alerted us to the news that Finland may be on the way to crowdsourcing a new copyright law. Finland has an "Open Ministry" effort that requires the Parliament vote on any citizen-proposed bill that gets 50,000 signatures within a period of six months. It's similar to the US's "We The People" petitions, except rather than getting back (maybe) a bland and useless "response" from the executive branch, the Parliament has to actually vote on the drafted legislation. The group Common Sense in Copyright has put forth a proposal entitled To Make Sense of the Copyright Act, which launched with tremendous fanfare in Finland, such that the proposed bill -- which is still being drafted -- is "by far the best-rated and most-commented" bill on the site. The current draft would push back on copyright law extremes:

The bill's aims are sweeping, and includes reducing criminal penalties for copyright infringement, broadens the definition of fair use, and increases citizens' ability to digitally copy their own material for fair use.

If it reaches the 50,000 vote total, you can expect big content lobbyists to go crazy in protesting how horrible all of this would be. But, it sure would be an interesting case study to see how those in Parliament choose to vote on a bill so widely supported by the public.

It's long been clear to us that, rather than acting as incentives to innovators, or serving an important function by disclosing details about innovation, patents are little more than weapons to be used against innovators. We've highlighted numerous examples over the years, but recently-revealed emails between Steve Jobs and Ed Colligan (who was the CEO of Palm) highlight how Steve Jobs almost certainly illegally used patents as a weapon to threaten Palm away from hiring Apple employees. This all goes back to a DOJ investigation we wrote about years ago, concerning big Silicon Valley tech companies stupidly agreeing not to poach employees from each other. Not only is that an unfair restraint of trade, but as we've noted repeatedly, the free flow of employees between tech companies has been shown fairly conclusively to be a big part of why Silicon Valley companies tend to be so innovative.

While the DOJ settled with the tech companies, workers at those companies filed a civil lawsuit against their employers. Those companies have been trying to keep certain communications sealed and unavailable to the public, but Judge Lucy Koh rejected that request, leading to the public filing of an amazing declaration from Colligan that includes an email exchange between Colligan and Jobs, highlighting how Jobs sought to use patents as a weapon. Jobs told Colligan that if Palm hired more Apple employes, Apple would sue Palm for patent infringement. In the declaration, Colligan first explains how Jobs relayed the threat during a phone call:

In August 2007, I received a call from Steve Jobs, the Chief Executive Officer of Apple. In the months before the call, several employees had moved between the two companies. On the call, Mr. Jobs expressed concern about employees being hired away from Apple by Palm. As a solution, Mr. Jobs proposed an arrangement between Palm and Apple by which neither company would hire the other's employees, including high tech employees. Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple's many patents.

I did not agree to Mr. Jobs's proposal and responded by sending an email on 15 August 24, 2007

The email exchange is worth reading. Colligan makes a case for why it's silly to worry about employees changing companies, noting that every company wants to hire the best employees period, and that there's a big enough market for everyone. He notes, correctly, that the proposed agreement is "not only wrong, it is likely illegal." As he points out: "We can't dictate where someone will work nor should we try. I can't deny people who elect to pursue their livelihood at Palm the right to do so simply because they now work for Apple, and I wouldn't want you to do that to current Palm employees. We can both try to persuade them to stay but, at the end of hte day, it is their choice, and a choice we should respect."

From there he discusses just how dumb the patent threats are, pointing out that suing over patents doesn't help anyone:

Steve, we don't want to hurt Apple. As I said on the phone, Palm is focused on building the best team in the industry, and we know there is a lot of quality talent outside of Apple. On the other hand, this is a small space, and it's inevitable that we will bump into each other. Threatening Palm with a patent lawsuit in response to a decision by one employee to leave Apple is just out of line. A lawsuit would not serve either of our interests, and will not stop employees from migrating between our companies. This is a very exciting time for both of our companies, and the market is certainly big enough for both of us. We should focus on our respective businesses and not create unnecessary distractions.

He follows it up by noting that any such lawsuit would just create a nuclear war situation, since Palm has its own patents, though he clearly notes that the only people this benefits are the lawyers:

That said, I want to be clear that we are not intimidated by your threat. Palm has a very robust portfolio of patents, having been in the handheld and smartphone businesses since the early 90's. in addition, Palm now owns the former Siemens mobile patent portfolio, most recently held by BenQ Corporation. This mobile computing and communications portfolio includes over 1500 patent assets, the majority filed in Europe. If you choose the litigation route, we can respond with our own claims based on these patent assets, but don't think litigation is the answer. We will both just end up paying a lot of lawyers a lot of money.

Entirely true. And then Steve Jobs hits back, first mocking Palm by noting that Apple has a lot more money, so it doesn't mind throwing money away to lawyers on a bogus patent lawsuit as long as it hurts Palm, and then mocking the quality of Palm's patents that it acquired from BenQ:

I'm sure you realize the asymmetry in the financial resources of our respective companies when you say: "We will both just end up paying a lot of lawyers a lot of money."

Just for the record, when Siemens sold their handset business to BenQ they didn't sell them their essential patents but rather just gave them a license. The patents they did sell to BenQ are not that great. We looked at them ourselves when they were for sale. I guess you guys felt differently and bought them. We are not concerned about them at all. My advice is to take a look at our patent portfolio before you make a final decision here.

As Dan O'Connor notes in the Patent Progress blog post above, this is no different than a mob boss protection racket, using the patents to warn Palm not to hire any more Apple employees or (effectively) "someone might get hurt" -- with the patents standing in for the traditional baseball bat.

We've always had our concerns about the ridiculous DMCA "exemptions" process concerning circumvention of digital locks. If you don't know, the DMCA has a strict anti-circumvention rule that says breaking digital locks, such as DRM, is itself a violation of copyright law, even if the purpose of the lock-breaking does not infringe on anyone's copyright. As a sort of "pressure valve" every three years, people can "apply" to the Librarian of Congress for exemptions to that rule. This, of course, is completely ridiculous and backwards. We need to apply, once every three years, to use legally purchased products the way we want to without it being considered illegal? That's crazy. But it's the way things are set up, and it can lead to some bizarre scenarios. As we explained last year when the latest round of exemptions was announced, the Librarian of Congress took away the exemption for unlocking your phone... but provided a 90 day window.

That window ends on Sunday. In other words, unlocking your phone on Saturday: legal. Unlocking your phone on Sunday: you probably just broke the law. As the EFF properly notes, this is not what copyright law is supposed to be about:

"Arguably, locking phone users into one carrier is not at all what the DMCA was meant to do. It's up to the courts to decide."

I don't even think there's anything "arguable" about it. Copyright law has no business being involved in deciding whether or not my phone can be unlocked. It's silly that this is an issue. It's silly that there needed to be an exemption in the first place. And it's silly that this exemption is being taken away. It's for things like this that people lose respect for copyright law.

We just recently wrote about a trio of recent situations -- all involving young hackers probing for information, leading to either criminal charges or threats of criminal charges against them -- that show what happens when people in power don't understand how technology works. They were all cases where the individuals involved may have done things that some would think inconsiderate, but that hardly should rise to the level of "criminal" behavior -- especially with threats of many years in jail. Presenting the flipside to that argument: the editorialists at the Toronto Globe and Mail, who show why those who don't understand technology have no business writing about it. The editorial is headlined When did it become wrong to punish hackers?, which already suggests problem number one. Hacker is a generic term that does not automatically imply malicious attacks, yet the Globe and Mail immediately seems to assume otherwise. That might be news to the US government, which just announced its own National Day for Civic Hacking (despite filing charges against such civic hackers...).

A Montreal school is being widely criticized for expelling a student who hacked into its computer system and helped expose flaws in the system’s security. The student now has been offered jobs by computer security companies, including the one that ran the system he hacked into. In the Internet age, the hacker is celebrated as a hero and the school is pilloried for being an overbearing, defensive holdover from a bygone age. It’s an unfair presumption that needs to be corrected.

That's one version of the story. The hacker is celebrated as a hero because he did something useful: exposed a security flaw that could have been used by someone malicious for nefarious purposes. We generally want to celebrate those who spot danger and warn people away from it. And the school is being pilloried because it expelled this person. Without Ahmed Al-Khabaz's help, the data of students would be at risk. Doesn't it seem somewhat overbearing to blame the messenger? What exactly is "unfair" about the presumption? After pointing out that Al-Khabaz "discovered a serious flaw" the editorial still supports his expulsion, apparently entirely based on the fact that the company, Skytech, felt his probing was an attack:

... Mr. Al-Khabaz then went on and carried out what the company considered to be a “cyber-attack” on the school’s production servers. The company notified the school, and Mr. Al-Khabaz was hauled on the carpet. The company accepted the student’s explanation and noted that he “demonstrated great talent in computer science.” They dropped the matter and offered Mr. Al-Khabaz a job, but Dawson’s administrators felt the student had gone too far and expelled him on the grounds he had violated the college’s code of conduct.

What the company considered a "cyber-attack" could also be described as "checking to see if the flaw was fixed." And, clearly, they didn't think it was a huge problem if they offered him a job, and noted his "great talent." So why does the school still think he went too far?

Dawson’s officials are right: Rules exist for a reason, and students cannot expect to break them without consequence. Why have them, otherwise?

Ahhhhhh. Rules are rules. Rules exist for reasons, but sometimes those reasons are bad. And punishing people for breaking rules in ways that help people seems like sending the exact wrong message. Sometimes rules should be broken, because the rules are wrong.

The editorial then moves on to Aaron Swartz:

Swartz, who had a history of depression, was facing a slew of charges for allegedly downloading publicly funded academic journals from a large database that charged a fee for access. His family and supporters blame overzealous prosecutors for his death; the prosecutors insist – again, quite rightly – that “stealing is stealing.”

Uh, "stealing is stealing" is a tautology, so of course it's right. But what's "wrong" is arguing that what Swartz did was "stealing." He stole nothing. He downloaded papers from MIT's open network, which was set up with a site license from JSTOR allowing open downloading of those journal articles, all of which remained on the site for anyone else to download.

Go ahead, explain what was "stolen"?

In the age of the Internet, the massive downloading for free of music and movies and other copyrighted material has muddied the waters for many people.

It seems to have "muddied the waters" for the editorial writers of the Toronto Globe and Mail who don't seem to realize that neither case had anything to do with the "massive downloading for free of music and movies."

They seem to have forgotten that privacy rights and copyright laws are among the foundations of our economy. These are things that are not to be shoved aside by the absolutism of Internet activism.

Oh really? If privacy rights are the foundation of the economy, then, er, isn't it a good thing that Al-Khabaz alerted officials to a hole that exposed the private info of students. He did nothing to compromise anyone's privacy rights at all. Similarly, Aaron Swartz did not violate any copyright law, and he was not charged with copyright law violations.

So, seriously, how does a huge mainstream publication like the Globe and Mail get away with writing a piece of garbage this ridiculous? It claims things that simply aren't true, completely flips around reality, and then seems to wrap it up in some bizarre "rules are rules" argument, that makes no sense since the rules it says people violated... weren't even violated.

And the Globe and Mail thinks people should pay its meter to access this kind of crap?

You would have to be a deaf and blind person with a penchant for head-burying to have missed the drum beats of a supposed cyber war the American government has been touting over the past year or so. It's a one-sided conversation that has been hyperbolic on a level normally associated with sketch comedy. Terms like "Cyber Pearl Harbor" are thrown around without any sense of historical context. In fact, many are questioning whether the entire production is simply a political game, with no real threat existing at all. Unfortunately, many more Americans have now incorporated this manufactured fear into their psyches. Still, the drum beat continues, with the United States labeling Iran as our chief enemy in this inevitable, or perhaps already occurring, cyber war.

The problem, of course, is that anyone who spends a couple minutes studying what's actually happening realizes that this is a one-sided war, likely started by the West, and our opponent is fighting against our tanks with pea-shooters.

The first shot was probably the release of Stuxnet sometime during or before 2009. Even though no one has officially claimed responsibility everyone knows who was behind it. Stuxnet hit with a bang and did a whole lot of damage to Iran's uranium-enrichment capabilities. The United States followed that up with Flame–the ebola virus of spyware.

What did the Iranians fire back with? A series of massive, on-going and ineffective DDoS attacks on American banks. This is a disproportionate response but not in the way military experts usually mean that phrase. It's the equivalent of someone stealing your car and you throwing an ever-increasing number of eggs at his house in response.

That's what makes all of this seem so monumentally silly. The government is making use of an American public, which is massively ignorant about who and what Iran is and is capable of, to go legislatively nutbars in our own country. Don't ask me why they're doing it, but they are. Perhaps more importantly, we're being told that we need legislation to protect against an incapable enemy in a war that we started. If that makes sense to you, chances are you need psychiatric care.

And even more problematic, and frustrating for me personally, is that our government isn't even putting in the effort to fool me properly. It's one thing to have Colin Powell waving a test tube at Congress and shouting "We're all going to die!", but it's quite another to have folks like Gen. William Shelton talking about potential risks in a potential war that we potentially started with a potential threat that we created by attacking it. That's entirely too much potential and not enough blatant falsehood. If the government wants to bullshit us, they can't go in half way. I need real creative lying, not nonsense reports that they have to subsequently pull because they're...you know...made up.

ProPublica reported yesterday that a widely cited Defense Department study claiming Iran's Intelligence Ministry constitutes "a terror and assassination force 30,000 strong" has been "pulled for revisions." It seems there's no proof whatsoever that the 30,000 number wasn't pulled out of thin air.

See, it's not that I'm siding with the pea-shooters here, it's that I'm more scared of the guys that started this war with their tanks. Particularly when the result is poorly-conceived legislation.

Something strange and potentially awful is happening to Amazon's users in various locations outside the US. Nate Hoffelder at The Digital Reader reports that Amazon's Canadian Kindle customers are being locked out of purchasing ebooks through Amazon's .com domain.

I have received multiple reports (here, here,here) today that Amazon is now refusing to allow their Canadian customers to buy Kindle ebooks from Amazon.com.

Over the past couple days several of those readers have reported that many Kindle titles are showing up on Amazon.com as not being available to Canadian customers even though the same titles will show up on Amazon.ca as being available.

So far as I can tell, the only ebooks still available to Canadian Kindle owners are titles distributed via KDP, seriously limiting their ability to make use of their Kindles.

What seems to be happening is a push by Amazon to move customers from other countries over to their local domains, something that has been reported in Brazil, Japan and France. Other news has filtered in that this is not necessarily Amazon's doing, but is a result of publishers "moving" product to non-US regions where pricing is still advantageous (i.e., not subject to the terms of the settlements reached with the Justice Department in the ebook price-fixing investigation).

No matter who is at fault, it's the users that are getting the shaft. Amazon has only been selling Kindle ebooks to Canadians since late in 2009, but many Canadians have been purchasing ebooks through Amazon's .com domain since 2007. (Its .ca Kindle store has only been around since December of 2012.) Forcing Canadian users to set up a new .ca account means that much of what their .com accounts contain won't transfer over.

First, while Amazon claims that any purchased ebooks will be available* after a Canadian Kindle owner transfers their account that’s not completely true. The ebooks might be transferred, but I’m told that a customer’s purchase history is not transferred and the wish lists are also abandoned. That’s going to make it a lot harder for some readers to keep track of what they own and what they want to buy.

Oh, and that claim about the Kindle content transferring isn’t exactly true. Amazon.ca doesn’t yet support subscriptions, nor does it offer Kindle Serials. That means this Kindle content will be lost in the transfer process along with any back issues that had been saved. What’s more, Amazon.ca doesn’t offer music and video so transferring an account will prevent customers from accessing media they’ve already purchased.

If it's publishers making this push solely to maximize pricing advantages in non-US countries, the prices being quoted by some .ca users don't seem to bear this out. (Others have reported higher prices as well, but it doesn't seem to be anything approaching "regulation-free" price hikes across the board.) However, one site did get a response from a publisher, which indicates the current issues are possibly at least partially their fault.

After speaking to Amazon Kindle support they informed us that this change was not their doing. They said a change like this would have been made by the publisher only. One of the major publishers affected responded back to me saying, “It certainly wasn’t our intentional doing; although it may be a side-effect of our pricing model. I’ll investigate and see what I can do.”

For Canadian users (and customers in Brazil, Japan, France, etc.), it doesn't really matter which party is forcing the migration. The end result is a very possible loss of purchased content and a definite loss of purchase histories, preferences and a number of other small, but essential, perks that are part of a long-term Amazon account. This is going to hit the most loyal customers the hardest -- the last thing Amazon should want to do.

While there are many ways to route around this new issue, the fact remains that migrating a customer's account should keep it intact, especially when there's no perceived benefit for the end user. If this is publishers reshuffling their offerings to take advantage of out-of-US pricing, it's in Amazon's best interest to point this out. If this is Amazon's doing, it needed to have the kinks worked out before pushing it on its customers.

We've talked about the importance of carrying on the work that Aaron Swartz began, and the global efforts at hackathons to do just that. However, a few have started working on very specific proposals to try to carry on some of Aaron's work. Specifically, they're trying to build on the effort over which he was first investigated by the feds: his attempts to free up public domain court documents that are locked up behind PACER's paywall.

For the uninitiated, despite being public domain, court filings are locked up in an incredibly antiquated electronic document system that the federal courts all use called PACER. Anyone can get access to PACER (though using the system, which has never been an example of modernity, takes some figuring out), but it costs $0.10 per page to download any documents. That's what Aaron was trying to "free."

While his initial effort, making use of a "trial" at certain libraries allowing free access to PACER was shut down, his downloads did become the crux of the RECAP project, a browser plugin built a few years ago by some Princeton students, which would automatically upload any document you accessed via PACER to the Internet Archive where they could be viewed for free going forward.

Unfortunately, RECAP itself more or less stagnated after many of those behind it left Princeton. However, following Aaron's death, there have been a couple of interesting developments, driven in large part by a different Aaron, Aaron Greenspan. First, he set up three grants of $5,000 each to update the RECAP extension. It's currently only available in Firefox, but there are grants for expanding it to Chrome and to IE, while also updating the Firefox browser to cover appeals court documents. This would be huge. I tend to use PACER via Chrome, so I've been unable to contribute much to RECAP lately.

But the second part of the plan, also put in place by Greenspan, is what he's calling Operation Asymptote, to try to get lots of people to help out in freeing PACER documents. He's using the one slight exception to the $0.10 per page rule: PACER does not charge you if your total charges add up to less than $15 per calendar quarter. In other words, you can basically download 150 "pages" during a quarter for free. Now, that's not really 150 pages of court documents, since PACER also charges for searches. And, since some court documents can be pretty long, 150 pages can actually go pretty fast. But Greenspan is suggesting that if we can get a lot of people to sign up for PACER (and RECAP) and download a small amount, keeping under the $15 line, then effectively, a large group of people might free large parts of the public domain material in PACER for free (you need to have a valid credit card to sign up, but if you keep under the $15, then you don't get charged).

This is being done in association with Greenspan's PlainSite, a site which tries to make legal information as public as possible (we've linked to them in the past for their research into Intellectual Ventures' shell companies). Part of the goal is to actually pull together the details of cases worked on by "every US Attorney or Assistant US Attorney" during their career. For example, you could look at cases involving Stephen Heymann or those involving Carmen Ortiz. On the Operation Asymptote page, they even have a link that will automatically point you to cases where they're missing documents, so it's one click easy.

I have no idea if enough people will actually participate to make a difference, but after the slight hassle of signing up for a PACER account (and then a chance to witness just how poorly designed PACER is) anyone can help out for free. It seems like a worthwhile goal.

A year ago, we announced our Sky is Rising report, sponsored by CCIA, looking at the state of the global entertainment industry over the last decade -- and seeing that, despite the doom and gloom that we heard from some legacy players, the story actually showed tremendous opportunity. There was massive growth in content being produced, growth in revenue (though often distributed differently than through traditional gatekeepers) and tremendous new opportunities for content creators. It also found that, contrary to the claims that people just wanted content for free, people were spending more on entertainment. All in all, the data showed a much more positive picture than some have been spinning. That said, it did also highlight many of the challenges that content creators faced, with two key ones being important: the massive growth in content meant much more competition for consumers' dollars, while the changing technology and services landscape meant that the specific road map was a lot less clear.

This year, we're back with our second edition of the report, The Sky is Rising Two, once again, kindly sponsored by CCIA. This time around, we focused much more specifically on a few key countries in Europe: Germany, France, the UK, Italy, Russia and Spain. After the first report, we received some very reasonable questions about whether or not the global data reflected the situation across every country, or if one or two places (such as the US) might dominate and distort the picture in other countries. We chose to look at six of the larger economies in Europe individually, to see what we might find, and that's the focus of the second report. Once again, we've got a nice infographic that summarizes many of the findings: What we found this time was that, as expected, there are some big differences within different countries -- with some doing better in certain areas, and some struggling in other areas. But, on the whole, the general picture was the same. The various industries were growing. The amount of content being created was growing. The number of new services enabling new business models and new ways to distribute content were growing massively. It's an exciting time, and the key point is, once again, that there is no "conflict" between tech and content. Rather the two work hand in hand together quite well, with new services enabling all sorts of growth opportunities for artists.

Of course, the same caveats that we saw last year still apply. There is more competition, and the path to success may be less clear. So for individual creators, it may seem like a much greater struggle -- though their overall slate of opportunities continues to increase. Similarly, with new services and new opportunities, there remain challenges for the legacy players (especially if they had gatekeeper roles) to remain relevant. Please check out the full report below:

Also, since the report covered countries where English was not the primary language, we also had the report translated into German, Spanish, French, Italian and Russian. You can find each of those versions at the bottom of the Sky is Rising 2 page.

This probably isn't a huge surprise, but with the launch of Kim Dotcom's new Mega cloud drive system, many in the entertainment industry have assumed that he must be relaunching Megaupload and a way to infringe. However, it seems pretty clear that Mega is quite different and mostly resembles other well known legitimate services, like Google Drive, Dropbox and Amazon's cloud offerings. Still that hasn't stopped some in the "anti-piracy" community from trying to shut down the site already:

Robert King is the lead figure behind StopFileLockers (SFL), an anti-piracy group dedicated to bringing file-hosting services to their knees by strangling their finances. Last year King claimed his group had a hand in disrupting the cash flow to hundreds of sites and actually shutting down dozens more. Now he has a very big scalp on his mind.

King, an Australian and adult industry player, says that StopFileLockers have just begun a “campaign to have the payment processing of all Mega resellers terminated.”

Apparently waiting for actual evidence of infringement, or even specific liability for Mega, is too much to ask. This is silly. While we may have doubts about how Mega is running, shutting it down without even understanding what it's about seems incredibly short-sighted. Plenty of successful legitimate companies have been built out of those who were earlier sued for "infringement." Isn't it worth at least making sure he's breaking the law before insisting he must have done so?

Abuse of the DMCA takedown process to remove material that is awkward or embarrassing for a company is a common enough topic on Techdirt. But here's one with a slight twist. It concerns hardware security modules (HSMs), which manage the cryptographic keys and PINs used to authenticate bank card transactions. These were generally regarded as pretty secure -- until researchers started analyzing them, as Ross Anderson, head of the Security Research Laboratory at Cambridge University, explains:

[HSM's] application programming interfaces (APIs) had become unmanageably complex, and in the early 2000s Mike Bond, Jolyon Clulow and I found that by sending sequences of commands to the machine that its designers hadn't anticipated, it was often possible to break the device spectacularly. This became a thriving field of security research.

Of course, "thriving" here means "we found lots of security holes", which is why those manufacturing HSMs would rather people didn't do much research in this area. Recently, that desire led to the banking equipment manufacturer Thales sending a DMCA takedown notice to John Young, who runs the well-known Cryptome site, demanding that he remove a manual for one of their HSM products. What makes this demand particularly ridiculous is the fact that the manual had been on Cryptome since 2003 without any previous problems and, according to Young, is also widely available on the Internet, including from Thales itself.

But a blog post from Anderson detailing this clumsy attempt to remove something using the blunt instrument of a DMCA takedown notice suddenly brought the company to its senses. A few days after his post appeared, the same person who had sent Young the less-than-friendly takedown notice followed it up with this rather more chummy missive:

Thales is in no way trying to censor information that would benefit banking security research.

The information concerned, as has been noted, has been available since 2003 and is in fact obsolete. It also does not reflect the current Thales payment hardware security module.

So why on earth bother trying to take it down?

It is not unusual for Thales to suggest that out-of-date information is removed from web sites so that it doesn't cause confusion or mislead our customers. This would normally be handled with a polite request to the web site owner; on this occasion, unfortunately, we were over-zealous in initiating a takedown notice.

Well, there's rather a lot of "out-of-date" information on the Internet -- most of it, in fact -- and generally people don't resort to DMCA takedowns to try to remove it; "over-zealous" doesn't even begin to describe the disproportionate nature of the reaction here.

Thales fully appreciates the benefits of openly sharing information relating to our security products and fully supports legitimate academic research in this area. The most up-to-date and accurate information can be obtained directly from Thales.

Let's hope the company remembers that next time somebody posts information about security flaws in its systems.

I therefore wish to withdraw my earlier request for you to remove or disable access to the material in question and apologise for any distress it may have caused.

But as Young points out:

Credit for Thales' recantation goes to incorruptible security critic Ross Anderson who blogged and telephoned Thales to thrash the zealots

Indeed. And it really shouldn't be necessary for professors of computer security to waste their time exposing abusive DMCA takedowns in this way, when they could be more usefully winkling out yet more dangerous flaws in hardware security modules, for example....

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