This is a story of massive infringement upon infringement. Or it's a story about culture and building awesome things from the building blocks others helped put together. Or both -- which really should say something about copyright laws today. It was nearly nine years ago that EMI went completely off the rails in trying to threaten everyone for The Grey Album -- the first truly popular mashup album. Put together by the producer Danger Mouse, The Grey Album used Jay-Z's vocals from The Black Album and mashed them up with music samples entirely from the Beatles The White Album -- and it actually worked.

Jay-Z has since referred to it as "genius" and expressed how honored he was to see it happen. EMI, which controlled the Beatles' rights, felt differently, sending cease-and-desist letters to tons of sites that had the mp3s. In response, folks on the internet planned Grey Tuesday for February 24th, 2004 -- a day of digital civil disobedience, where lots of sites would distribute the mashup album. EMI, still not understanding what it was dealing with, sent off more cease-and-desist letters to any site that had indicated that it would participate. End result? Even more interest in the whole thing.

Of course, since then, Danger Mouse has gone on to be an in-demand guy in the recording industry (among other things, he's one-half of Gnarls Barkley, who of course had a massive hit with the song "Crazy" a few years ago). EMI later admitted that The Grey Album didn't "harm" them at all, but still defended the decision arguing, pointlessly, "it's not a question of damage, it's a question of rights."

Given all that, one has to wonder what EMI thinks of another top industry guy, recording engineer John Stewart (who's worked with Kanye West, Big Boi and John Legend), who has remastered the audio on The Grey Album, arguing that he could do a better job -- and the early reviews seem to agree. As noted in the Forbes article linked above:

Revisiting The Grey Album with an expert ear gave Stewart the ability to pinpoint its audio flaws, and his professional experience gave him the agency to do something about it. Stewart says he first got the idea to remaster The Grey Album on Wednesday, Nov. 21, but it didn’t really click until that Saturday. On Sunday he set out to improve the album’s audio, tinkering with various faders in ProTools until he achieved the desired effect: “I just kind of put the sonics on steroids,” he says.

He then put the whole thing up on SoundCloud and Mediafire, where it's getting plenty of listens and downloads. But, of course, as Slate points out: this is still an "unauthorized" work. And even though there's almost certainly no "harm," has EMI (now owned by Universal) finally understood that it makes sense to let these things go?

Back in 2010 there was all sorts of buzz around News Corp. investing a ton of money into a "secret" project to launch an iPad-only paywalled publication called "the Daily." Before it even launched, we explained why this was a bad idea that missed the point. We also highlighted Rupert Murdoch/News Corps' long list of failed internet projects -- with the large majority of them flopping because they were about trying to create "broadcast" style properties online, without recognizing that the internet is more of a communications (many-to-many) medium than a broadcast (one-to-many) medium. And, of course, soon after The Daily launched there was evidence that very few people cared.

To be honest, given all the bad press about how few people were reading it, combined with stories of staffers jumping ship soon after it was launched, I had kind of figured that The Daily had already been shut down. However, the latest news is that News Corp. is finally putting it out of its misery and shutting it down, giving most staffers 3 months severance. A few staffers are being folded into the NY Post:

News Corporation also announced that effective immediately, Jesse Angelo, the founding Editor-in-Chief of The Daily and long-time Executive Editor of The New York Post, will assume the role of Publisher of The New York Post. As part of a digital restructuring initiative, the company will cease standalone publication of The Daily iPad app on December 15, 2012, though the brand will live on in other channels. Technology and other assets from The Daily, including some staff, will be folded into The Post.

Mr. Murdoch said: “From its launch, The Daily was a bold experiment in digital publishing and an amazing vehicle for innovation. Unfortunately, our experience was that we could not find a large enough audience quickly enough to convince us the business model was sustainable in the long-term..."

Apparently the site was losing $30 million a year.

Perhaps this should stand as a response to the people who insist that giving away newspaper content free online was "the original sin" of the industry and they should have focused on paywalls. Paywalls don't help you build up "a large enough audience." The link above quotes a reporter there saying: "It was a really cool, hip product. I think this is nothing more than bad timing." I'd say it was much more of a bad model -- both business model and delivery model -- than "bad timing."

Math might not be the easiest subject for some students, but there might be different ways of teaching it that could make it more tolerable for kids. The more we learn about how our brains process math problems, the better we can teach ourselves how to tackle math education. There's a lot of concern over how Americans can compete in a global economy if our kids don't have some pretty basic math skills. Maybe some of these findings will help students pick up some much needed math skills.

• Learning how to use an abacus could actually be useful. Japanese students have demonstrated that using a mental image of an abacus (no actual abacus needed) can help them perform some incredibly fast mental calculations. [url]
• American kids don't do well on international math tests, but the bright side is that we're slowly learning what might be the best remedies. Understanding *why* kids don't do well on math tests is an important part of coming up with a solution, but looking at the bad test results is pretty scary.... [url]
• Doing a few algebraic word problems before bedtime might help alleviate some math fears in children. Or they could inspire math-related nightmares that haunt kids like Freddie Krueger. You decide. [url]

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

Popular author Tim Ferriss got some attention recently when his latest book, The 4-Hour Chef, was published by Amazon, with a big push to try to make it a best seller (the first Amazon published book to get such a push, apparently). This scared off Barnes & Noble who refused to sell the book, because, apparently, it's run by childish and petulant execs. Ferriss, who is known for his rather extreme ability to market the hell out of anything, has actually been using this to his own advantage, continually calling out the fact that Barnes & Noble is refusing to carry the book, and using non-standard promotion techniques, including having the book sold via Panera restaurants and... doing a big promotion deal with BitTorrent. To be honest, I found some of the language used to promote that deal a bit misleading, as it appeared some people thought he was distributing the book itself via BitTorrent. Instead, he teamed up with the company to distribute "an exclusive bundle" of extra, related, content. That's still cool, but having watched some of the hype behind it, you could see how some might see it as bait and switch.

However, it appears that my concerns may have been overblown. Late last week, Ferris revealed that not only did the book land on various best seller lists (despite the lack of Barnes & Noble sales), but an astounding number of people who downloaded that extra content bundle on BitTorrent also clicked a "support the artist" button:

For instance, BitTorrent conversion is NUTS. Of 210,000 downloads (of this bundle) earlier this week, more than 85,000 clicked through “Support the Author” to the book’s Amazon page. We all had to triple and quadruple check that to believe it.

Now, of course, not everyone who clicks will buy -- and he admits that as well. But, that's still an extra 85,000 people going to the Amazon page. Some of them are likely to buy.

Even at a 1% conversion after clicking an effective “buy now” link, that translates to 850 books… and BitTorrent is only accelerating. Wow.

But BitTorrent is only for pirates and only hurts authors and artists, right?

After the internet was almost entirely cut off in Syria last week, it came back over the weekend, and people are still puzzling through exactly what happened. The government keeps trying to blame others, such as attacks by those fighting against government forces. However, an analysis by Cloudflare has made it clear that it's almost certain that the government was behind the shut down:

To begin, all connectivity to Syria, not just some regions, has been cut. The exclusive provider of Internet access in Syria is the state-run Syrian Telecommunications Establishment. Their network AS number is AS29386. The following network providers typically provide connectivity from Syria to the rest of the Internet: PCCW and Turk Telekom as the primary providers with Telecom Italia and TATA for additional capacity. When the outage happened, the BGP routes to Syrian IP space were all simultaneously withdrawn from all of Syria's upstream providers. The effect of this is that networks were unable to route traffic to Syrian IP space, effectively cutting the country off the Internet.

Syria has 4 physical cables that connect it to the rest of the Internet. Three are undersea cables that land in the city of Tartous, Syria. The fourth is an over-land cable through Turkey. In order for a whole-country outage, all four of these cables would have had to been cut simultaneously. That is unlikely to have happened.

Furthermore, they note that the shutdown was quite systematic, suggesting "this was done through updates in router configurations, not through a physical failure or cable cut."

Meanwhile, the folks at Renesys look into just how difficult it is to cut a country off from the internet, and whether other countries are at risk of the same sort of thing. Basically, it comes down to how decentralized the internet is in various countries -- and in many countries there isn't much decentralization. As Renesys notes, some countries have just one or two telcos who handle all internet traffic to and from the world. Those countries are easy to cut off. Renesys helpfully provides a map: They then go into more details. Here are the two bullet points on the more at risk countries. If you want to learn about the somewhat more safe countries, click on over and read their full post (which has a much bigger discussion on all of this, which I highly recommend):

• If you have only 1 or 2 companies at your international frontier, we classify your country as being at severe risk of Internet disconnection. Those 61 countries include places like Syria, Tunisia, Algeria, Turkmenistan, Libya, Ethiopia, Uzbekistan, Myanmar, and Yemen.
  

• If you have fewer than 10 service providers at your international frontier, your country is probably exposed to some significant risk of Internet disconnection. Ten providers also seems to be the threshold below which one finds significant additional risks from infrastructure sharing — there may be a single cable, or a single physical-layer provider who actually owns most of the infrastructure on which the various providers offer their services. In this category, we place 72 countries, including Oman, Benin, Botswana, Rwanda, Pakistan, Kyrgyzstan, Uganda, Armenia, and Iran. Disconnection wouldn't be trivial, but it wouldn't be all that difficult. Egypt falls into this category as well; it took the Mubarak government several days to hunt down and kill the last connections, but in the end, the blackout succeeded.

As the internet is increasingly a global phenomenon, this kind of stuff matters a lot.

A few months ago, we wrote about law professor James Grimmelmann's awesome article about how copyright law for media streaming was completely insane from a technological standpoint:

Suppose I could offer you a choice of two technologies for watching TV online. Behind Door Number One sits a free-to-watch service that uses off-the-shelf technology and that buffers just enough of each show to put the live stream on the Internet. Behind Door Number Two lies a subscription service that requires custom-designed hardware and makes dozens of copies of each show. Which sounds easier to build—and to use? More importantly, which is more likely to be legal?

If you went with Door Number One, then you are a sane person, untainted by the depravity of modern copyright law. But you are also wrong. The company behind Door Number One, iCraveTV, was enjoined out of existence a decade ago. The company behind Door Number Two, Aereo, just survived its first round in court and is still going strong.

The issue, of course, is a series of lawsuits that have really only displayed how copyright law written for legacy technologies has no idea how to deal with streaming media. After each one, companies try to figure out how to make a legal service, which seems like a noble goal. However, because of all the ridiculous specifics in rulings where judges contort themselves to come up with a way to fit a ruling into their preconceived notions of what's legal and what's not, the end result is that if you want to design a legal service, you have to set up a truly twisted and confusing setup... like Aereo's.

That issue has come up in the appeal on the district court Aereo decision. The TV networks are trying to convince the appeals court that the lower court was wrong. There was a lot of focus on trying to distinguish Aereo from the same court's ruling in the Cablevision case four years ago, which said that a remote DVR offered by Cablevision was legal. However, apparently there was an interesting exchange in which the judges seemed to realize that Aereo's setup was technologically insane:

The judges also questioned Hosp on why Aereo needed to have all those antennas. "Why not one? Is there a technological reason? Any legitimate business reason?"

Aereo's lawyer, David Hosp, admitted that the reasons were legal. This is the point at which people should realize that this demonstrates one of the many ways that copyright law is broken, because it forces companies to go through all sorts of convoluted technological decisions to deliver the same experience that could be delivered much more easily and efficiently otherwise. Instead, the judges seemed concerned in the other direction, that if the decisions were done for a legal reason it was somehow a sign of ill-intent:

One judge also observed, "You say your model is built around Cablevision. Isn't that like organizing your business affairs to avoid taxes?"

That, of course, is a ridiculous analogy -- and thankfully Hosp responded correctly: following what the court said was legal in earlier cases isn't about "avoiding" anything, it's about following the court's instructions on how to stay legal!

"The plaintiffs say it is a bad thing to follow the law," he said. "I believe the 2nd Circuit got it right in attempting to strike the right balance between public and private performances that lawmakers wanted."

Anyway, it wouldn't be surprising to see the court overturn the district court ruling, no matter how ridiculous a result that would be. It really feels like a lot of these cases are judged based on a judge deciding what he "feels" should be legal, and then trying to work in a justification later.

I've been tossing around a longish blog post about some of the controversy concerning the Internet Radio Fairness Act (IRFA) over the past month or so, but haven't had a chance to put it all down in a blog post. I did, however, wish to pick up on a small thread that got a brief spark of attention from some people who don't seem to understand legal stuff in the slightest. It started with musician David Lowery (you may remember him from past nonsensical rampages) claiming that Section 5 of the bill muzzled free speech and thus violated the First Amendment. This isn't just wrong. It's completely backwards. But the language and history here is a bit complex, so let's dig in a bit.

First off, you have to understand that the amounts that satellite and internet radio pay for a "performance right" for broadcasting songs is not (generally) an individually negotiated rate, but rather is set by the Copyright Royalty Board, using a variety of questionable standards. As we've noted in the past, the CRB is notoriously bad at setting reasonable rates -- and part of that is because part of its very charter is to block disruptive innovation if it has an impact on "generally prevailing industry practices." Thus, it tends to set rates super high. This is exceptionally bad for innovation, competition and for artists in the long run, though I'll get to that in another post. One thing that it more or less ensures is that these industries will be dominated by a very small number of super large players, because no one else will be able to afford the rates -- and this effectively locks in the top guys. That's what's happened, as you have Sirius dominating satellite radio and Pandora dominating internet radio. But the rates are so crazy that it's difficult to impossible for these companies to ever be profitable.

We'll get back to that in a moment. But, now, go ahead and read the full text of the bill if you'd like. For this discussion, jump over to Section 5, entitled "Promotion of a Competitive Marketplace." The section is relatively short.

SEC. 5. PROMOTION OF A COMPETITIVE MARKETPLACE.

(a) Limitation of Antitrust Exemptions-

(1) EPHEMERAL RECORDINGS- Section 112(e)(2) of title 17, United States Code, is amended--

(A) by inserting ‘, on a nonexclusive basis,’ after ‘common agents’; and

(B) by adding at the end the following: ‘Nothing in this paragraph shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).’.

(2) DIGITAL SOUND RECORDING PERFORMANCES- Section 114(e) of title 17, United States Code, is amended by adding at the end the following:

‘(3) Nothing in this subsection shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).

‘(4) In order to obtain the benefits of paragraph (1), a common agent or collective representing copyright owners of sound recordings must make available at no charge through publicly accessible computer access through the Internet the most current available list of sound recording copyright owners represented by the organization and the most current list of sound recordings licensed by the organization.’.

The important thing to understand here is that there's currently an antitrust exemption for SoundExchange, the organization that collects money from internet and satellite radio offerings (and sometimes has difficulty finding artists to pay them). SoundExchange basically needs an antitrust exemption because it is, by definition, a monopoly. What the bill is doing is something simple which is actually beneficial for artists. It's saying that SoundExchange can't use that antitrust exemption to try to stop artists from having the option, if they want to go do direct deals with internet or satellite radio providers. The second part is similar, but not referencing an antitrust exemption. It's just saying that any group that is representing multiple artists can't seek to block other artists from choosing to do a direct deal.

Sirius XM, in particular, has been trying to negotiate direct deals that route around SoundExchange. Now, why would artists ever want to negotiate directly with a Sirius or Pandora when they've already got the Copyright Royalty Board forcing ridiculous high rates on those providers? It's not as if those sites will choose to pay more directly. However, what they can do is offer better service than SoundExchange. That is: they can pay faster, they can provide more data and details, better access to users, etc. And that's what both companies are attempting to do. Also, for artists who actually act as their own label, they can actually make more money because they're cutting out a lot of middlemen who take their cut (it's convoluted, but click that link to see the details).

So, short version: it's certainly not for everyone, but some artists might find it beneficial to go direct. If they choose not to, they can still have SoundExchange collect and distribute their money and that's fine as well.

Now, jump to March of this year... when Sirius sued SoundExchange and A2IM (the RIAA of indie labels) claiming antitrust violations. Sirius argues in its lawsuit that SoundExchange and A2IM conspired and colluded to effectively forbid artists from going direct. Because proving direct collusion is difficult, Sirius' lawsuit is filled with circumstantial evidence, which doesn't prove an antitrust violation, but infers that there might be fire behind the smoke. The goal, there, is to get to discovery to try to suss out some smoking guns of collusion. So, the lawsuit includes various bits of circumstantial evidence, including a number of artists and indie labels that Sirius reached out to who flat out told them that A2IM prevents direct licenses, or that they'd have to first ask A2IM for permission. As part of the circumstantial evidence, Sirius also points to this blog post from A2IM that argues against doing direct licenses.

That lawsuit is still crawling along, so it's unclear if it's going anywhere. Honestly, proving collusion is crazy difficult, and I doubt Sirius will succeed, but some of that circumstantial evidence is eye-opening.

And that leads us to Section 5 of IRFA. As you can read above, what it makes clear is that the existing antitrust exemption cannot be used to "prohibit, interfere with, or impede direct licensing" and similarly that any group acting for some artists could violate antitrust laws by blocking the free will of other artists to negotiate their own deals. In other words, the bill makes it clear that if A2IM or SoundExchange really are colluding to impede artists from choosing to do direct deals, that could be seen as an antitrust violation. This, then, is about protecting artists and indie labels from large organizations like SoundExchange or A2IM, should they try to block those artists and labels from voluntarily doing direct deals.

So you would think that self-declared, if often confused, "defender of artists rights," David Lowery, would like that. But he doesn't for reasons that suggest a serious misreading of the bill or misunderstanding of this background. He points to the language, and then at the text of the Sirius lawsuit, apparently not understanding the nature of circumstantial evidence, and argues that "This is the type of explanatory speech — not conduct — that Sirius XM thinks is illegal and IRFA definitely would outlaw." The only problem with this statement is, well, everything. It's wrong. Nothing in the bill would outlaw that kind of speech. At all. Nor does Sirius' lawsuit claim that such explanatory speech is illegal. Instead, it is arguing that that blog post, along with a host of other circumstantial evidence, is enough to suggest there's a fire somewhere providing all that smoke. Under IRFA, such blog posts would still be perfectly legal, so long as A2IM didn't also use those blog posts to collude and directly hinder copyright holders from doing direct deals.

All that Section 5 of the bill is saying is that the A2IMs and SoundExchanges of the world can't try to hide behind antitrust exemptions to argue that such coercion to block artists from doing direct deals is free from antitrust scrutiny. And, outside of the exemption, they also cannot restrict artists from doing direct deals.

And yet, Lowery (and some of his followers) have taken up the banner claiming that this is a First Amendment violation and that it censors free speech. What he seems to be missing is that the only speech it blocks is speech that is used to collude or to block artists from voluntarily making a deal. Under Lowery's interpretation of the bill, collusion by large companies to force independent artists and labels to do business their way only is legal... because it's free speech to collude..

That's kinda nutty. His argument is, basically: legalize collusion!

A few weeks ago, Lowery gleefully confronted supporters of the bill with this argument at the Future of Music Coalition Conference, which led bill sponsor, Senator Ron Wyden, to hit back and claim that, as one of the strongest defenders of the First Amendment, he'd never support a bill that took away free speech rights. He promised Lowery that he'd review the specific language of the bill, and if there were any interpretations that impacted free speech rights, he'd fix them.

And he followed through with that, asking the Congressional Research Service to look into the matter, which it did. In a note published last week, they make it quite clear that it is extremely unlikely that there would be a First Amendment issue raised by the bill:

... it seems unlikely that, in practice, Section 5 would impinge upon First Amendment rights for a few reasons.

They then go on to detail those reasons -- which can be summed up as, Congress has the right under its authority to regulate interstate commerce, to create antitrust law that blocks collusion (as it applies to interstate commerce). Basically, since antitrust law is Constitutional, so is Section 5:

The antitrust laws are generally considered to comport with the First Amendment, because though the Sherman Act may restrain speech on occasion, the restraint is incidental to Congress's legitimate goal of maintaining a free market. In the case of Section 5, Congress would arguably be creating a similar prohibition, particularly since the bill specifically references the antitrust laws. As noted above, Section 5 would generally prohibit copyright owners acting jointly from taking any action to interfere with direct licensing negotiations. This provision appears to be intended to further the government's interest in preserving the rights of individual copyright owners to negotiate directly with potential licensees without interference from entities like member-based royalty collection organizations. It could be argued that this is similar to Congress's intent to preserve a free market by enacting the antitrust laws. Under Section 5 an individual copyright owner would have the option, as she always has, of negotiating royalty rates individually or collectively, but with an added protection from interference on the part of groups of copyright owners that might seek to prevent her from exercising her individual rights. If the provision is read to prohibit activity and speech similar to, and not broader than those prohibited by the Sherman Act, Section 5 likely would not violate the First Amendment for similar reasons that the antitrust laws do not violate the First Amendment. The restrictions on speech may be interpreted to be incidental to a valid exercise of Congressional authority to regulate interstate commerce.

In other words, exactly what we were saying: unless you're arguing that collusion is legal because it's free speech, the argument that Section 5 violates free speech is quite unlikely.

Because the CRS is quite thorough, it also does work through some scenarios under which the bill might possibly have Free Speech implications. But the only thing it can come up with is that a court would have to somehow interpret Section 5 to restrict speech beyond what's in antitrust laws (i.e., beyond activity designed to restrain trade). Considering how vocal bill supporters have been about this clause not being intended to go beyond the law, it would be somewhat incredible for a court to have that interpretation.

Of course, to make things even more amusing, Lowery himself posted about this CRS destruction of his key argument... and declared victory. Why? Because the CRS report, in its typically even-handed manner, discusses Lowery's scenario, of a blog post potentially violating Section 5, and notes that "though this hypothetical presents a broad interpretation of the language of Section 5, it is not an implausible one." Lowery cuts off the text at that point and declares victory... conveniently leaving out the detailed explanation of why this isn't a First Amendment violation (as explained above).

The confusion, it appears, stems from yet another misreading by Lowery of the CRS report. He interprets the "not implausible" claim to refer to his overall argument that the bill restricts free speech rights. But that is not what it is saying. It is saying that he is right that if a blog post somehow interfered with someone else doing a direct licensing deal -- i.e., restricted interstate trade under existing laws -- then it could violate the Act... but as such would not likely violate the First Amendment. So, the conditions here are that the blog posts themselves would have to actually impede trade, which the CRS report itself notes would require a very broad interpretation of the bill, one that is quite unlikely.

In the end, this appears to be much ado about nothing. The original complaint was a misread, which the CRS report clearly corrects, and Lowery doubles down by then misunderstanding the report itself. Still, from this vantage point, it's been rather amusing to watch a somewhat confused David Lowery thinking that he's "protecting artists," while he's been arguing against a provision in the bill that is actually 100% designed to protect artists against collusion to block them from doing their own deals -- deals which (especially for truly independent artists) could be more lucrative. It would be almost comical, if it weren't that a bunch of artists who haven't understood all this have been parroting Lowery's claims, believing that they're arguing for their own self-interest, when the reality is that they're literally arguing that organizations like SoundExchange and A2IM should be able to collude and block their ability to negotiate favorable deals.

Last week Techdirt wrote about the perverse attitude of the UK recording industry, which seems obsessed with "stamping out piracy" rather than making more money. Here's a story from TorrentFreak that looks to be another example of attacking first and thinking afterwards:

Several UK Internet providers are blocking Pirate Bay's perfectly legal promotion platform for independent artists. The Promo Bay website is currently being blocked by BT, Virgin Media, BE and possibly several other providers. A plausible explanation is that the Promo Bay domain is listed on the same blocklist that's used to enforce the Pirate Bay blockade. However. the domain itself has never linked to infringing material, nor is it hosted on The Pirate Bay's servers.

As that explains, The Promo Bay, which we wrote about back in January, is not offering any unauthorized copies of music, and is hosted independently from The Pirate Bay. So either it's been blocked because its association with The Pirate Bay is enough to goad the UK recording industry into unthinking action, or else it's happened by mistake.

Either way, the fact that a perfectly legal service offering perfectly legal material has been rendered inaccessible without warning and for no discernible reason is a reminder that site blocking is a really poor way to tackle unauthorized downloads, with the likelihood of collateral damage. Far better to offer good legal alternatives - like The Promo Bay.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

As the WCIT (World Conference on International Telecommunications) gets under way in Dubai, the ITU is making its play to regulate the internet, potentially to aid authoritarian governments in censoring or limiting the internet, or to divert money from innovative internet companies to stagnant state telcos out of a claim of "fairness." There's obviously been a lot of talk about it, and the ITU keeps claiming that it's just a neutral body to facilitate discussions, even as increasing evidence suggests it's urging many of the crazier proposals forward itself.

And now it's come out that ITU officials recently held a "secret" meeting to figure out how they were going to avoid getting SOPA'd, having the world rise up in protest as it tries to implement its internet regulatory regime. Following some bizarre and paranoid fantasy about how the anti-ITU, anti-WCIT efforts are really just because an unnamed "lobbying group" didn't like one proposal (the one mentioned above about diverting money from internet companies to telcos), the meeting got down to business: how could they use social media to prevent SOPA- or ACTA-like uprisings from the public:

In response to the anti-WCIT “campaign,” according to the September retreat’s preparatory materials, the ITU reluctantly launched a “counter-campaign,” which the agency believes “has been fairly successful outside the US and somewhat successful even in the US,” where “some of the statements made to denigrate ITU and WCIT are so extreme that they were easy to challenge and rebut.”

Going forward, the ITU focused at its meeting on the possibility of an “intensive anti-ratification campaign in OECD countries, based on the so-called lack of openness of the WCIT process, resulting in a significant number of countries refusing to ratify the new ITRs.” The ITU calls this possibility “the so-called ACTA scenario,” referring to sometimes violent protests against the secret ACTA treaty that took place this year.

To develop the next phase of its “counter-campaign,” the ITU hosted speakers from leading PR and advertising agencies to advise them on the use of social media. For example, Matthias Lufkens, Head of Digital Strategy for global public relations firm Burson-Marsteller, gave a presentation on how his agency helped the World Economic Forum leverage tools such as Facebook, Twitter, and Flickr to fend off “occupy”-style protests that occurred both physically in Davos and on the Internet.

“There is a risk that [the ACTA scenario] will happen, but our communication campaign can mitigate this,” the internal document says.

Of course, the campaign doesn't really appear to be going that well -- especially since so much of it revolves around "deflect[ing] media questions from secrecy, taxes and censorship" to the blandly empty (and absolutely silly) statement that "the revised ITRs have the exciting potential to pave the way for a broadband revolution in the 21st century." I'm sure that sounds catchy on a tweet. The problem, of course, is that folks on the internet don't tend to believe that kind of bureaucrat-speak when they know it's not true. As Downes notes:

Here’s the unvarnished truth, which no PR agency can help the agency talk, tweet, or prevaricate their way around: The commercial Internet emerged and matured entirely since the treaty was last reviewed. It developed in spite of the ITRs, not because of them.

There is a familiar pattern here of ambitious regulators who have no expertise and little experience with the Internet proclaiming themselves its benevolent dictators, only to find the peasants revolting before the coup has even started.

The ITU is no different than the sponsors of ACTA, SOPA, PIPA, and other attempts at regulating the Internet, its content, or its users by governments large and small. Like the media lobbyists who continue to see the successful fight to kill SOPA and PIPA as a proxy war waged solely by Google and other Internet companies, the ITU simply can’t accept the reality that Internet users have become their own best advocates.

Once again, these bureaucrats really have no clue what they're doing.

Piracy as a symptom of distribution problems has a long history. When the "real" thing isn't available or only available at an unrealistic price, people all over the world have resorted to black market goods and file sharing to overcome this obstacle.

Over the weekend, Vlad Dudau of Neowin posted an interesting firsthand account of piracy as the only realistic option, detailing his early computing life as a Romanian citizen and his frequent infringement as a result of the extremely limited software options available in a fledgling, post-Eastern bloc country.

My first PC was a Pentium MMX which had an amazing 166 Mhz processor, 2 GB hard drive and 64 Mb of RAM if I remember right. At this time most of the folks around had 386 and 486 machines running DOS, so the blueish background of Windows 95 was kind of a big deal.

Now here’s the twist: that copy of Windows 95 I used was pirated. It came from a family friend who had it on a few floppy disks. It’s not because my family was cheap or wanted to commit a crime, it was because there simply wasn’t any alternative. Windows wasn’t sold anywhere in the country – at least not legally.
A few years later when Windows 98 came out the same thing happened all over again. The family friend came by with a bunch of disks and installed the OS on our PC.

By the time XP was rolling out, Microsoft had finally taken a real interest in our country, not to mention the fact that the free market was finally in full swing, so there were a lot of legitimate ways to buy the new OS. But here’s the catch: often times it was at least as expensive as the PC itself, so buying it would literally double your costs. Oh and in case you are wondering that would amount to about 3 months worth of salary. To give you a better idea, imagine Windows costing about $2000.

While it's good to see a software company attempt to make inroads into a new market, the positives of offering a legal option are largely negated when you immediately price yourself out of that market. What Microsoft thought was a "fair" price considering its investment in developing the operating system was simply out of reach for a majority of Romanian citizens.

It's not as though Microsoft doesn't recognize the hidden value of pirated software. It allows the company to build a set of potential purchasers ahead of entry into a developing market. As a commenter at Hacker News pointed out, Bill Gates has made some pretty pragmatic statements about the future benefits of presently pirated software.

"Although about 3 million computers get sold every year in China, people don't pay for the software. Someday they will, though," Gates told an audience at the University of Washington. "And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

Vlad Dudau points out that his early piracy led to careers in fields first tentatively explored via purloined floppy disks and file sharing. Adobe's Photoshop is another pirate favorite due to its high price, but in Dudaus's case, Adobe's products simply weren't available for legal purchase.

It is because of piracy that I had access to information that would have otherwise been impossible to find. It is because of piracy that I learned how to use Photoshop, how to edit movies, how to install an operating system.

And here’s the thing, it’s because of piracy that most of us have jobs today. Without all those hours spent learning the software, my friends and I would not have become graphic designers, or game developers, or technology writers. I daresay we would have been much less productive members of society.

If your software is either good enough or ubiquitous enough (and in rare cases, both), early experience with pirated software can lead to paying customers for life. In some cases, the former pirates purchase their own software. In other cases, they end up working for companies that purchase expensive site licenses. For Dudau, it's a bit of both.

I know I’ve said some pretty incriminating things but here’s the catch: none of us pirate anymore. Why? Because we always knew pirating wasn’t right, but we never really had any other choice. But now when we all have jobs, when the content is finally available, and when the companies have changed their business models to give cheap access to students and teaching institutions ($39 Windows anyone?) we all choose to buy our software, music, and movies. Oh and that family friend that always had hacked operating systems for us? Well he’s now a manager at IBM.

Establishing a foothold in a new market can be tough, but if the potential customers are already familiar with the products, it's a little easier. The trick is converting them to paying customers, something that can be aided by lowering prices to an affordable level in the market being entered. No one's interested in paying three month's salary for software, especially considering the alternative can be as low as $0. If you're used to charging $495 for a suite of office software, lowering it $40-50 might seem like you're just giving it away, but it's still $40-50 more than actually giving it away.

Nearly every study on piracy shows that conversion rates go up as prices go down. Holding steady at a price that many consider exorbitant tends to increase the number of unpaid users. As described above, this isn't always a bad thing, or a permanent thing, but as Dudau's story shows, experimenting with price levels in new markets could lead to a noticeable increase in conversions.

We've written a few times lately about judges blasting copyright trolls -- and divorce lawyer-turned-copyright troll John Steele's name seems to show up quite frequently in many of those cases. However, this latest one takes the cake -- found via incredible stories on Fight Copyright Trolls and Ars Technica. The short version is that the judge has thrown out the case -- but that's not the really fun part. Here's the order throwing it out:

The case is dismissed for failure to appear at this hearing, for failure to present a lawful agent, for attempted fraud on the Court by offering up a person who has no authority to act on behalf of the corporation as its corporate representative, and the Court will hear, by motion, a motion for sanctions and fees against this Sunlust entity and everyone affiliated with it, including a motion against Mr. Wasinger for his purposeful failure to appear at this hearing.

How did it reach that point? Well, this involves a bit of background... and then it requires, yes requires that you find time in your day to go read the court transcript (also embedded below) of what happened.

First, the background. If you've been following Steele, you'll remember that he got blasted by judges in his home state of Illinois. Then, he suddenly showed up in Florida (as did many copyright trolling cases). Fight Copyright Trolls did a wonderful bit of investigatory journalism concerning Steele's move to Florida and connection to "Prenda Law Firm." At issue: Steele is not licensed to practice law in Florida, but there were indications that he was doing exactly that. Steele insisted that he was "retiring" to Florida, and not working. After lawyer Graham Syfert (who has been defending many defendants in troll cases) alerted the Florida Bar to Steele's activities, the Bar got Steele to sign a cease and desist affidavit agreeing "not to engage in any activities which constitute unlicensed practice of law...." However, there appeared to be plenty of evidence that Steele was still copyright trolling as a part of Prenda.

Okay, leap forward to yet another copyright trolling lawsuit, supposedly brought by a company called Sunlust. A hearing was to be held on November 27th... with federal judge Mary Scriven, and you have to read it to believe it. Officially, Sunlust's lawyer, Jonathan Torres, appears by phone with permission from the court. But, the judge is perplexed, to say the least, because Torres, who has only just been brought on, has asked to withdraw from the case, as apparently a few other lawyers have as well. Also in the court is a Mark Lutz, appearing as the "representative" of Sunlust. The hearing begins with the judge scolding Lutz for not wearing a jacket and tie to court, and then starts digging into who exactly is the lawyer representing Sunlust.

THE COURT: Well, I'm a little confused. There was a lawyer who moved to withdraw, and there was another lawyer who moved to appear, then he moved to withdraw, so who is on first, I guess?

The judge asks Torres how he came to be associated with the case and is told that he was hired by "the client, Prenda Law," and we go back to the transcript:

THE COURT: The client and Prenda Law or Prenda Law?
MR. TORRES: Prenda Law, Your Honor,
THE COURT: And what is their relation to you?
MR. TORRES: Just co-counsel arrangement, Your Honor.
THE COURT: And what is that arrangement?
MR. TORRES: For me to appear for any local hearings, Your Honor.
THE COURT: Well, I got a letter from someone from the Prenda Law Group saying they were not representing any party in this case and were not involved in the case and had no authority to speak on anyone's behalf in this case, so is Prenda Law principal counsel in the case or not?
MR. TORRES: No, Your Honor.
THE COURT: So what is their relationship again then to you as counsel in this case?
MR. TORRES: Well, Your Honor, I was --

The judge then puts Torres under oath and then quizzes him much more directly about Prenda law and his relationship to Prenda, as well as everyone's relationship to the supposed client, Sunlust. Torres has only spoken to Prenda and believes that Prenda represents Sunlust. He notes that it's a contingency deal... but that he, too, is asking to withdraw from the case after being made aware of "certain issues that were going on in the case" by the defense. The judge explores how much Torres knew about the case, and whether or not the previous lawyer, a Mr. Wasinger, had spoken to him (he hadn't). Wasinger was the lawyer who had asked to be removed from the case already, and wasn't in court, even though the judge had not granted him permission to leave the case (later leading him to file an apology saying he got mixed up). Finally, Torres admits that he had not looked closely at the case docket before asking to appear on Sunlust's behalf.

The judge then reads a letter from Paul Duffy, another Chicago lawyer who helped set up Prenda and claims in the letter to be the sole principal of Prenda who claims to be surprised that Prenda has been asked to appear in this case. He begs off in the letter, as read/summarized by the judge:

As an initial matter, I must respectfully inform the Court I am located in Chicago and my attendance would require air travel and he has had surgery on his eyes and this and that.

Then he says, I also respectfully question how my appearance could benefit the Court, particularly since I am not representing anyone, in italics, in this case and have no authority to speak on anyone's behalf.

It would certainly -- it would clearly be improper for me to make any statement on a pending matter in a jurisdiction in which I am not licensed and on behalf of a client I do not represent. In light of the foregoing, I pray that the Court will excuse my attendance at this hearing.

The judge then returns to Torres to see if he can explain this mess, since Torres claims to have been hired only by Prenda and Prenda claims that it has nothing to do with the case. There's an amusing back and forth in which the judge and Torres try to sort out who's who and what's what. And then the judge notices the improperly dressed Lutz doing something and turns her attention to him, leading to a surprise "reveal."

THE COURT: Mr. Lutz, who is the individual who you just spoke to in the Courtroom with you?
MR. LUTZ: Sorry?
THE COURT: Who is that behind you?
MR. STEELE: Your Honor, my name is John Steele.
THE COURT: Who are you?
MR. STEELE: I'm an attorney, but not involved in this case.
THE COURT: You're an attorney with what law firm?
MR. STEELE: I'm not an attorney with any law firm right now, but I have worked with Mr. Duffy in the past and I am certainly familiar with this litigation just because I've been involved in many different cases like this in the past.
THE COURT: But not this case?
MR. STEELE: Correct.

There's another brief exchange with the judge and Torres and then back to Lutz. Lutz is asked about Prenda as well, and more or less tries to claim he doesn't know that much about them. At this point Syfert (the defense lawyer) jumps in to point out that Lutz was, at one point, employed by Prenda Law and worked for John Steele. You can almost sense the judge rolling her eyes, as she immediately has Lutz sworn in as well. Then there's this lovely exchange:

THE COURT: Mr. Lutz, you're under oath, you have to give truthful answers or you face penalties of perjury. Do you understand that?
MR. LUTZ: Yes.
THE COURT: What is your position with Sunlust?
MR. LUTZ: I'm a representative of them.
THE COURT: What does that mean?
MR. LUTZ: Corporate representative.
THE COURT: What does that mean?
MR. LUTZ: They asked me to appear on various matters throughout the country.
THE COURT: Are you an officer of the company?
MR. LUTZ: I'm not, no.
THE COURT: Are you authorized to bind the company to any legal contracts?
MR. LUTZ: I am not.
THE COURT: Are you salaried?
MR. LUTZ: No, 1099.
THE COURT: So you are a 1099 contracted entity and you just go around and sit in a Court and represent yourself to be the corporate representative of the company?
MR. LUTZ: Yes.
THE COURT: Mr. Torres, did you know this was Mr. Lutz's position, a paid corporate representative?
MR. TORRES: No, Your Honor, I did not.
THE COURT: Who is the president of Sunlust?
MR. LUTZ: I'm unaware.
THE COURT: Who is the vice president?
MR. LUTZ: I'm unaware
THE COURT: Who is the secretary?
MR. LUTZ: I have no idea.
THE COURT: Who owns Sunlust?
MR. LUTZ: I do not know.
THE COURT: Who signs your checks?
MR. LUTZ: I believe somebody in the accounting department.
THE COURT: What is their name?
MR. LUTZ: To be honest with you, I can't read the signature.
THE COURT: Where is the accounting department located?
MR. LUTZ: I'm sorry?
THE COURT: Where is the accounting department located?
MR. LUTZ: I've received checks from California.
THE COURT: How much are you paid monthly to be the corporate representative?
MR. LUTZ: Again, it depends on my appearances, the number of appearances that I do.
THE COURT: How much were you paid last month?
MR. LUTZ: Approximately $1,000.

She then asks about what else he does or if he does this for others as well (yes) and starts asking some more questions about Prenda, and then asks both Lutz and Torres about what other copyright holding companies they're working with. And then goes back to John Steele.

THE COURT: Mr. Steele, who is the principal of Sunlust?
MR. STEELE: I'm sorry, you're asking me, ma'am?
THE COURT: Yes, sir.
MR. STEELE: I wouldn't know.
THE COURT: You don't know who owns Sunlust?
MR. STEELE: That's correct.
THE COURT: You don't know who the president is?
MR. STEELE: I -- the only person that I know that's involved with Sunlust is Sunny Leone.
THE COURT: Sunny Leone?
MR. STEELE: Is one of the people involved with Sunlust. That's the only person I've ever --
THE COURT: What is the name?
MR. STEELE: Sunny Leone.
THE COURT: Spell it.
MR. STEELE: S-O-N-N-Y, Leone --
THE COURT: L-E-O-N?
MR. STEELE: I believe there's an E at the end of that, I'm not certain.
THE COURT: Where's is he located.
MR. STEELE: Well, I believe it's a she, and I believe that the last time I heard, she was in India filming a major motion picture with some studio down there, but I don't keep up with that, I don't represent Sunlust or anybody anymore. I no longer actively practice law.
THE COURT: You're not practicing law?
MR. STEELE: Correct. I do appear occasionally at hearings on an ad hoc basis, but I do not have any current clients.
THE COURT: You still have a bar license in the State of Florida?
MR. STEELE: No, I'm licensed only in the State of Illinois.
I want to make very clear to this Court I'm not purporting in any way to be an attorney licensed in the State of Florida.
THE COURT: Have you ever been licensed in the State of Florida?
MR. STEELE: No.
THE COURT: All right.

End result? First, she tells Lutz to get out of there:

THE COURT: You can sit away from the table, you're not a corporate representative of anybody if you don't have any information about the corporation.
You're not an officer or principal of the corporation. The Court will exclude you as a proper corporate entity for this Defendant.

She then lets Torres off of the case, but also provides "a word to the wise" suggesting he do a bit more research about who he agrees to represent before showing up in court on their behalf, otherwise he runs "a strong risk" of losing his license. She notes that she hopes it's a lesson about "going forward with characters such as the ones that are presented here."

And, as noted at the beginning, she dismisses the case, suggests there was "attempted fraud on the Court" and says that "a motion will also be heard on Mr. Duffy for his lack of candor in relation to his connection with this matter."

The transcript is so wonderful that I really, really, want someone to use it as a script to create a short film out of it. It honestly feels right out of a movie.

Many, many posts and discussions have taken place here at Techdirt about content providers and their love of windowed releases. A point frequently made is that there would likely be a lot less piracy and a lot more purchasing if these 30/60/90 day rental/PPV/premium cable windows were eliminated on new releases. Another frequent target are premium cable providers and their original offerings, which suffer from long delays between original airings and their appearance on retail shelves.

More discussion is on the way! It started with a piece in the Guardian by Frederic Filloux arguing, as many have, that release windows lead to more piracy when it comes to cable TV programs. Megan McArdle responded to that article by arguing that such an argument is totally bogus, and the cable execs are brilliant business folks that many of us only dream of being one day. Then enter Marco Arment, agreeing with McArdle, saying that it's wrong to argue that cable companies are "forcing" people into piracy:

Realistically, nobody’s going to stop you from pirating it, but you can’t argue that you’re justified in pirating it. Admit it: you’re ripping it off, it’s morally questionable at best (and illegal), but you don’t care. You’re pirating a TV show because you don’t want to pay for it or wait for it to become available in the ways you want. You’re not making any kind of statement or participating in a movement — you’re just being cheap and/or impatient. If you don’t have the fortitude to cope with that, then don’t pirate.

If you want to hit cable companies, HBO, etc. where it hurts — if you truly want to send a message that there’s unmet demand they should be addressing — don’t watch their shows. At all. Don’t even pirate them. Don’t blog or tweet or face (?) about how good they are. Just don’t watch them.

That’s a real statement. And if enough people do it, that movement will effect change.

There's a questionable moral argument in there, but the troublesome part is in the second paragraph. Not watching a show doesn't send the message that there's unmet demand. It sends the message there's very little or no demand, which is exactly the wrong message to send if you're trying to motivate HBO, etc. to either speed up its delivery system or offer a la carte service.

Arment expands on this thought process on a followup post, which deals mainly with the "statement" sent by piracy:

Actually, piracy does make a statement — it’s just the wrong statement. If you truly want to pressure content providers to adapt new distribution channels, and you’re not just trying to justify getting everything for free, piracy is hurting your cause.

Most geeks try to justify piracy because the content isn’t available on our terms. We can’t get it in our country, we can’t get it as quickly as we want, it costs more than we want to pay, we can’t get it on the device we want, or we can’t get it in the format we want. Publishers have a distribution problem.

But when publishers see widespread piracy of their content, they don’t see the distribution problem. They think they have a piracy problem.

Ament is right. HBO, et al have a distribution problem. But simply refusing to watch or purchase the content sends two messages, neither of which will result in an overhaul of the distribution system. (The following uses HBO as an example, but it could any major motion picture studio, premium cable service or other distributor. But, HBO is the most pirated.)

1. If viewership falls or purchases drop off, HBO may decide there's no viable market for these programs and simply stop making them. This protects HBO's bottom line, but it does nothing for its future endeavors as it's drawing the wrong conclusions from the data.

2. HBO may simply view the dropoff to be the result of piracy rather than "viewer opt-out" and resort to the actions mentioned by Arment, including pushes for more anti-piracy legislation as well as limiting its exposure through increasingly onerous DRM or windowing.

Because piracy will never be nonexistent, it's impossible to create a control group that includes only potential purchasers of HBO's content. The only course of action left is for HBO is to experiment with faster turnaround and price reductions and see if these "forced pirates" are willing to put their money where their torrent is. To date, HBO has been unwilling to do this, at least in the US. Other premium cable companies have drastically reduced the turnaround of their shows and HBO itself offers a standalone streaming service in northern Europe, both in an effort to combat piracy. As its stands now, HBO's contracts with cable providers are far too lucrative to consider changing up its release strategy by going a la carte or trimming down the wait between debut and retail, at least not on a larger scale.

The problem with price/window experimentation is that altering these two factors in order to convert more pirates into viewers and purchasers will make cable companies extremely unhappy. HBO may find that it does very well with faster/cheaper releases but it won't ease its relationship with its most lucrative customers (at this point): cable companies. They already worry about cord-cutting and it's quite possible that current contracts prohibit HBO from undercutting its core market, which isn't viewers, but cable providers.

What piracy does do, regardless of "morality" or "making a statement" or anything else along those lines, is indicate demand. The content providers know people are watching their offerings, many times without paying. What they have to do is make the determination as to whether that audience is worth pursuing. At this point, many seem to believe it isn't. Very few companies have made any moves to drastically alter the artificial limits of the supply chain in order to capture some of the "un-monetized" market.

As Arment points out, the "half-empty" view of the content glass usually results in legislation and litigation rather than any serious attempts to solve the distribution problem. Pirating because you're "forced" into it simply feeds into these companies' dim view of the online market. But, unless these companies begin experimenting with the distribution process, there's no way to gauge the conversion rate. Doing things the way they've always been done will keep the status quo -- and people will continue to exercise the option to get the content on their own schedule.

So, Arment's right: pirating because of distribution limitations will continue to send the "piracy problem" message to HBO, Showtime, etc. While other companies view pirates as underserved customers, the movie and TV industries seem stuck viewing piracy as only a problem, rather than an opportunity. Trying to hit them in the wallet by refusing to watch or purchase will send the same message (because piracy will continue to be a "thing") -- piracy is hurting sales/viewership -- or worse, that the audience no longer exists.

This screwed up situation can't be solved by asking viewers to sit on their hands and wait patiently for a better distribution system, no more than it can be solved by having every ridiculous delay greeted by visits to The Pirate Bay. But only one of these actions indicates unmet demand. 

The Hollywood Reporter has the somewhat amusing cautionary tale of why you shouldn't use various social media tools to make promises you can't back up. Hip hop/R&B artist Ryan Leslie apparently lost his laptop recently while on tour in Germany. He then went on YouTube and posted a video offering $20,000 if anyone returned the laptop. He noted that the laptop contained music and videos that he wanted back. Another video was posted later with a message that reads: "In the interest of retrieving invaluable intellectual property contained on his laptop and hard drive, Mr. Leslie has increased the reward offer from $20,000 USD to $1,000,000 USD. He also tweeted the same info directly, saying: "I raised the reward for my intellectual property to $1mm." Then the problem. A guy named Armin Augstein found the laptop. And claimed the $1 million. Leslie refused to pay and everyone went to court. Leslie, perhaps quite reasonably, noted that the returned laptop was broken such that the hard drive didn't work, and the content he had hoped to retrieve was not available. According to the judge's account from back in October:

After Augstein returned the laptop and hard drive, Leslie refused to pay the reward because, Leslie alleges, the intellectual property for which he valued the laptop was not present on the hard drive when it was returned. Leslie claims that he and several staff members tried to access the data on the hard drive but were unable to do so. Leslie sent the hard drive to the manufacturer, Avastor, which ultimately deleted the information prior to sending Leslie a replacement. The circumstances of the return of the hard drive and the meaning of Leslie's communications with Avastor are disputed. Augstein claims that Leslie, after he received correspondence from Augstein regarding the collection of the reward, caused the hard drive to be erased.

I can definitely see a reasonable argument that having the laptop returned without being able to retrieve the content shouldn't qualify for the reward (especially since in the initial offer, Leslie specifically called out the value of the "intellectual property" on the laptop as his reason for offering a reward), though the disputed info makes it a bit fuzzy. Leslie also argued that "a reasonable person would not have understood the mention of the reward to be an offer of a unilateral contract, but instead would have understood it to be an advertisement—in essence, an invitation to negotiate." That seems like a much more difficult argument to make, and the judge, Harold Baer, didn't buy it at all:

A reasonable person viewing the video would understand that Leslie was seeking the return of his property and that by returning it, the bargain would be concluded. The increase of the reward from $20,000 to $1,000,000, the value of the property lost (in particular the unreleased album) and the news reports regarding the reward offer would lead a reasonable person to believe that Leslie was making an offer. As such, the video constitutes a valid offer and summary judgment is granted as to that issue. "[I]f a person chooses to make extravagant promises . . . he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them."

I can definitely understand why the offer was considered valid, but given how often he specifically called out the content on the hard drive as being what's valuable, why did the judge consider the "offer" to have been met by Augstein? Because of what Leslie did after getting the laptop back. The issue here, it seems, is that "Leslie was on notice that the information on the hard drive may be relevant to future litigation and, as a result, had an obligation to preserve that information." And the judge is not at all happy with how he handled the situation:

Whether a party must prove that the destroyed evidence is relevant to a claim or defense depends on the level of culpability. "When evidence is destroyed in bad faith (i.e., intentionally or willfully), that fact alone is sufficient to demonstrate relevance. By contrast, when the destruction is negligent, relevance must be proven by the party seeking the sanctions." ... The contents of the hard drive are undoubtedly relevant, regardless of the culpability. The satisfactory performance of the offer of the reward depends on the return of Leslie's intellectual property.

The judge goes on to point out that, while some of the facts are disputed, there isn't much evidence that Leslie or people who worked with him had Avastor try to recover the data (though other testimony suggests they asked data recovery shops and were told that the data could not be recovered). Either way...

Based on the foregoing, and the inescapable fact that the hard drive was destroyed when litigation was all but certain, I find that Leslie and his team were at least negligent in their handling of the hard drive.

That's a no-no.

The jury then took all of this in and came back telling Leslie to pay up the $1 million. Apparently even they were conflicted about the amount, but were left with little choice:

The verdict came about 45 minutes after jurors sent out a note saying they were divided because "we feel the $1 million is too high," and asking if they could compromise on a lower amount.

Leslie's lawyers then sought some time to try to strike a settlement, but Augstein's team said "that ship has sailed" and insisted that the jury be told to continue deliberating toward an all-or-nothing decision.

It seems likely that he'll appeal, but I imagine this story is going to make a fun case study for various lawyers who teach contract law... and for the rest of you, it should be a reminder to be careful what you promise.

We've been talking about the ITU's upcoming World Conference on International Telecommunications (WCIT) for a while now, and it's no longer "upcoming." Earlier today, the week and a half session kicked off in Dubai with plenty of expected controversy. The US, the EU and now Australia have all come out strongly against the ITU's efforts to undermine the existing internet setup to favor authoritarian countries or state-controlled (or formerly state-controlled) telcos who want money for internet things they had nothing to do with. The BBC article above has a pretty good rundown of some of the scarier proposals being pitched behind closed doors at WCIT. Having the US, EU and Australia against these things is good, but the ITU works on a one-vote-per-country system, and plenty of other countries see this as a way to exert more control over the internet, in part to divert funds from elsewhere into their own coffers.

Hamadoun Toure, secretary-general of the ITU, keeps trying to claim that this is all about increasing internet access, but that's difficult to square with reality:

"The brutal truth is that the internet remains largely [the] rich world's privilege, " said Dr Hamadoun Toure, secretary-general of the UN's International Telecommunications Union, ahead of the meeting.

"ITU wants to change that."

Of course, internet access has already been spreading to the far corners of the planet without any "help" from the ITU. Over two billion people are already online, representing about a third of the planet. And, yes, spreading that access further is a good goal, but the ITU is not the player to do it. The reason that the internet has been so successful and has already spread as far as it has, as fast as it has, is that it hasn't been controlled by a bureaucratic government body in which only other governments could vote. Instead, it was built as an open interoperable system that anyone could help build out. It was built in a bottom up manner, mainly by engineers, not bureaucrats. Changing that now makes very little sense.

Besides, does anyone really think that a process that requires the companies who successfully innovated to funnel money to corrupt governments and/or corrupt state-controlled telcos is going to magically lead to greater investment in internet growth? If so, I've got a prince in Nigeria with 53 $ Million US waiting in a bank all for you.

Neelie Kroes, the VP of the EU Commission and in charge of the EU's Digital Agenda tweeted simply:

The internet works, it doesn't need to be regulated by ITR treaty. If it ain't broke, don't fix it.

And that's the thing. The internet works just fine. The only reason to "fix" it, is to "break" it in exactly the way the ITU wants, which is to favor a few players who have done nothing innovative to actually deserve it.