Late last week, we wrote about the ridiculous situation in which MPAA boss Chris Dodd publicly threatened elected officials who take Hollywood money, but who don't pass the laws that the MPAA wants. Of course, most people assume that everyone expects a quid pro quo, but actually stating it out loud and on television is really remarkable, and has resulted in calls for an investigation into Dodd. I'd argue that the focus should really be on the politicians. In fact, the folks over at Free Press are now calling on those in Congress to return campaign donations from Hollywood to show that Congress is not for sale:
"The MPAA is so brazen in its efforts to buy legislation with campaign cash that its leader, himself a former senator, sees nothing wrong with threatening legislators on national TV. We think it's time that Congress showed that its votes are no longer for sale. The first thing Congress must do is give back the MPAA's tainted campaign cash or give it to charity. Congress must make it clear to the world that it won’t be bullied into supporting censorship."
Of course, it's unlikely that anyone in Congress will actually do this, but it certainly would make a pretty loud and clear statement.
"Those who count on quote 'Hollywood' for support need to understand that this industry is watching very carefully who's going to stand up for them when their job is at stake. Don't ask me to write a check for you when you think your job is at risk and then don't pay any attention to me when my job is at stake,"
This certainly follows what many people assumed was happening, and fits with the anonymous comments from studio execs that they will stop contributing to Obama, but to be so blatant about this kind of corruption and money-for-laws politics in the face of an extremely angry public is a really, really, really tone deaf response from Dodd.
It shows, yet again, that he just doesn't get it. People were protesting not just because of the content of these bills, but because of the corrupt process of big industries like Dodd's "buying" politicians and "buying" laws. To then come out and make that threat explicit isn't a way to fix things or win back the public. It's just going to get them more upset, and to recognize just how corrupt this process is. If Dodd, as he said in yesterday's NY Times, really wanted to turn things around and come to a more reasonable result, this is exactly how not to do it. It shows, yet again, a DC-insider's mindset. He used Fox News to try to "send a message" to politicians. But the internet already sent a much louder message... and, even worse for Dodd, he bizarrely sent his message in a way that everyone who's already fed up with this kind of corruption can see it too. It really makes you wonder what he's thinking and how someone so incompetent at this could keep his job.
The MPAA doesn't need a DC insider explicitly demanding the right to buy laws and buy politicians. The MPAA needs a reformer, one who helps guide Hollywood into the opportunities of a new market place. The MPAA needs someone who actually understands the internet, and helps lead the studios forward. That's apparently not Chris Dodd.
Public Knowledge issued a fantastic statement that not only highlights the ridiculousness of Dodd's threats, but also the hypocrisy of the Hollywood studios on this issue:
Public Knowledge welcomes constructive dialog with people from all affected sectors about issues surrounding copyright, the state of the movie industry and related concerns. Cybersecurity experts, Internet engineers, venture capitalists, artists, entrepreneurs, human rights advocates, law professors, consumers and public-interest organizations, among others should be included. They were shut out of the process for these bills.
We suggest that in the meantime, if the MPAA is truly concerned about the jobs of truck drivers and others in the industry, then it can bring its overseas filming back to the U.S. and create more jobs. It could stop holding states hostage for millions of dollars in subsidies that strained state budgets can’t afford while pushing special-interest bills through state legislatures. While that happens, discussions could take place.
I just came across this, which actually happened a month ago: Larry Lessig, who is focused entirely on figuring out ways to stop systematic corruption in Washington DC, interviewing disgraced lobbyist Jack Abramoff, widely considered the perfect example of corruption in DC. The 1.5 hour discussion is an attempt to not just go over Abramoff's history, but to educate how the Congressional system works. It's worth watching in its entirety:
There's certainly a lot of talk about how much of a role money plays in Congress, and how direct some elected officials are in "soliciting bribes" (in Abramoff's words). He actually says that it has become "more subtle" these days than in the past, and that this might be the way that some elected officials "feel better about themselves" in asking people for money in exchange for influence.
One key point that Abramoff makes, is that government is a "tool to wage war." He talks about how Congressional hearings are kangaroo courts designed to just cause problems for people or companies that someone doesn't like. He notes that "even if it goes well," you have to spend a million dollars just to get ready for the hearing. So, setting up a hearing is a way to cause problems for "enemies." Indeed, we've talked about how legacy industries regularly use government as a weapon against competitors and upstarts -- and how troubling it can be when new comers get sucked into the system.
There's a long discussion about the power of staffers on the Hill, rather than the actual elected officials (who "never read the actual bills"). They note that staffers are the real power. Abramoff talks about how he never wanted to hire the actual Congressional Reps, but always focused on hiring staffers. And then he makes a key admission that won't surprise many people. He says that, early on, he focused on hiring people when he had job openings. But, later, he would talk to staffers -- especially chiefs of staff -- and just let them know he had a job opening for them whenever they wanted it. And he would ask them: "When do you want to start?" If they said "two years," he knew that the guy was already working for him, but on the inside. As he says "I really hired him that day," even though he went on for two more years working as a chief-of-staff to someone in Congress.
Abramoff notes that most lobbyists, staffers and elected officials aren't taking it to the criminal level -- like he did. And that the real problems are in what's already legal. He notes that, for himself, he didn't care about what was legal or what wasn't -- he just wanted to "win" at any cost. But he says most others are at least more conscious of staying on the legal side of the line, even if it's "legally" corrupt.
From there, they go into a discussion of Abramoff's own suggestions for reforming the system. That part of the discussion is really interesting, but feels a bit more down in the weeds, as Lessig and Abramoff more or less debate their own personal plans (and their own books) for reforming Congress, campaign finance and lobbying. And, finally, there are audience questions, which are interesting, but don't really delve that deeply into the overall discussion. Either way, definitely worth watching.
We've talked a lot about the political process and how things work in DC to get things like SOPA pretty far along, even as the public seems to be almost universally against it. As you hopefully know by now, Larry Lessig has been focusing his attention on the issue of the deep-seeded corruption in the way our government works today, and his recent book, Republic, Lost focuses deeply on the issue. A few weeks back, Lessig did a fantastic interview on the subject with the Boston Review. In it, he describes how Congress picks up on unpopular legislation for the sake of scaring people (on all sides) into donating to their campaigns:
In the first quarter of this year, what was the number one issue that Congress addressed? In the middle of two wars, a huge unemployment problem, huge budget deficit problem, still issues about health care, still no addressing global warming—what’s the number one issue they addressed? The banks’ swipe-fee controversy. Why do you address the banks’ swipe-fee controversy? There is not one congressman who decided to run for Congress because he thought, "I'm going to deal with the problem of the banks' swipe fees." It's only because if you can dance as a congressman with a little bit of uncertainty of which side you're going to come down on in this controversy, millions of dollars gets showered down upon you because there's $19 billion on the table depending on how this issue is resolved. So there Congress is driving the agenda in part because of the fundraising opportunities the agenda produces.
Indeed, this is part of the reason that some have been suggesting that the supporters of SOPA in Congress really aren't that upset that it's been delayed. Because this just gives them another month to fundraise on the issue.
The really telling line, however, in Lessig's interview, is about how we've turned Congress into 535 "independent contractors," using legislation as a way to arbitrage fundraising, and how there aren't any debates in Congress itself anymore. It's just elected officials making veiled pleas to donors via C-SPAN:
Switch to C-SPAN covering the U.S. Congress and it's a completely different picture. You can't see it, because they don't allow the camera to pan around, but the hall is empty, people coming to speak just to C-SPAN--they're not speaking to each other--all of the activity of negotiation and deliberation is done outside the chamber; there's no deliberation, so you just have to ask, "Why did we create a Congress?" The framers didn't sit down and set up a Congress so they could imagine these 535 independent contractors all arbitraging fundraising opportunities. If that's what the institution is, then let's just shut it down.
And, of course, tied into all of this is the lobbying process. It turns out that the most famous name in lobbying, Jack Abramoff, is out of jail these days and happy to talk to the press. The folks at Planet Money recently talked to him about the ROI on lobbying efforts, and you begin to get a sense of the scale of things. A company has no problem dumping $100,000/month into a lobbying operation if the end result is changing a law that will save them $4 billion. The report talks about a study of a particular lobbying effort that had an ROI of 22,000%. Yeah. That's a big number. But Abramoff's first response when asked about that study was that he was "surprised it's so little." Obviously, that only happens if you win the lobbying fight. If you lose, it's purely a negative ROI. But that also explains why the fights over these bills can get to be so fierce.
Unfortunately, for the tech sector, this actually may mean things are going to get worse. While Congress is aware that the internet world woke up and spoke up over SOPA, they're also salivating over the possibility of turning that into campaign contributions. So expect plenty more legislation targeting the tech sector in the coming years. It's going to be too lucrative to not do that...
Via Larry Lessig we get series of Venn diagrams showing the revolving door between big business and government. When people talk about regulatory capture, this is what they mean. When people talk about corruption and crony capitalism, this is what they mean. If you want a quick visual idea of why so few people trust this government to do the right thing for the people, rather than the big companies, this is why:
Larry Lessig was on the Daily Show Tuesday night, talking about his book Republic, Lost, which is an in-depth look at the realities of Congress today: the fact that they spend 30 to 70% of their time raising money for the next campaign, and how they choose which legislation to pay attention to based on how it will drive campaign contributions. The key point is not -- as some assume -- that money buys results, but that money buys access and attention, and Congress knows this. So it chooses legislation to focus on based on how it will bring out those interested in contributing to campaigns -- not based on what's best for the public. I've got the videos of the interview emebedded below (though thanks to silly Viacom limitations, you can only watch them if you're in the US; if you want to watch them from elsewhere, hire a lobbyist in DC, I guess).
Two high level Congressional staffers who have been instrumental in creating or moving forward both PROTECT IP (PIPA) and SOPA have left their jobs on Capitol Hill and taken jobs with two of the biggest entertainment industry lobbyists, who are working very hard to convince Congress to pass the legislation they just helped write. And people wonder why the American public looks on DC as being corrupt.
Allison Halataei, former deputy chief of staff and parliamentarian to House Judiciary Chairman Lamar Smith (R-Texas), and Lauren Pastarnack, a Republican who has served as a senior aide on the Senate Judiciary Committee, worked on online piracy bills that would push Internet companies like Google, Yahoo and Facebook to shut down websites that offer illegal copies of blockbuster films and chart-topping songs.
Pastarnack went to the MPAA where she'll be "director of government relations" and Halataei to the NMPA (music publishers and songwriters) where she'll be "chief liaison to Capitol Hill." The Politico article linked above notes that this kind of "revolving door" is all too common. It may not be directly corrupt, but to the public it sure feels corrupt. It certainly gives off the appearance of "hey, write us the insane bill that we want, and then we'll reward you with a super cushy high paying job." At the very least, it should raise significant questions about whether or not these two bills were written with the public's interest in mind (I know, I know, don't laugh....) or their future employers'. Technically, neither of them can directly lobby the specific committees where they worked, but they can certainly assist in the process.
“They can provide invaluable insight to people on the outside — even in the consultation mode,” one tech industry lobbyist said, noting that Halataei had been Smith’s secondhand person and knows how the Texas Republican thinks and what would be an effective lobbying strategy.
Additionally, the Senate and House panels work closely together, and both Halataei and Pastarnack have ties to staffers in the chambers they didn’t serve in and aren’t banned from lobbying.
Also, as the Politico article notes, a year from now, you can bet there will still be fights about either this or similar legislation. American politics is a disaster.
The Dutch anti-piracy group BREIN is one of the most aggressive of the anti-piracy groups out there. So there's some amusement in watching as it gets caught up in a scandal that started when it pirated music for an anti-piracy campaign. BREIN had asked musician Melchoir Rietveldt to compose a song for a video that was only to be used at a local film festival. The terms of the deal were strict: the song was only for that one anti-piracy video at that one film festival. However, Rietveldt later discovered that the anti-piracy ad was being used all over the place -- a fact he discovered when he bought a Harry Potter DVD and noticed the video... with his music.
After determining that the music had been used tens of millions of times in such an unauthorized manner, he contacted the local music collection agency, Buma/Stemra, asking them to seek somewhere around $1.3 million owed from BREIN. Buma/Stemra ignored him. Eventually, however, apparently a Buma/Stemra board member, Jochem Gerrits, reached out, and said he could help Rietveldt get paid... but with some questionable conditions. According to TorrentFreak:
In order for the deal to work out the composer had to assign the track in question to the music publishing catalogue of the Gerrits, who owns High Fashion Music. In addition to this, the music boss demanded 33% of all the money set to be recouped as a result of his efforts.
The conversation between Gerrits and the composer’s financial advisor was recorded by Pownews, and during the conversation the financial advisor confronts Gerrits with his unconventional proposal.
“Why do you have to earn money?” he asks, as usually all of the money goes directly to the artists.
“It could be because a lot of people in the industry know that they are in trouble when I get involved,” Gerrits responds, adding that he can bring up the topic immediately in a board meeting next week.
Once again trying to find confirmation for the proposal, the composer’s advisor later asks if the music boss indeed wants one-third of the money.
“Yes, that’s the case, but then [the composer] would make 660,000 euros and now he has nothing,” Gerrits responds calmly.
This is apparently making news across the Netherlands, and Gerrits has resigned. As for BREIN, it's insisting that the whole thing is "a contractual issue" and that it is "not involved."
There's been plenty of talk about AT&T's deep lobbying connections around government, and its ability to put the name of various front groups on letters and op-eds penned by AT&T lobbyists. Most of those are probably legal, if icky and manipulative. But, in some cases, it appears that things may have crossed the line. BroadbandReports has the details on how the Mayor of Tallahassee, John Marks, apparently has been on the AT&T payroll since 1990 as a "lawyer and consultant."
And it's paying off. Marks is now being accused of taking $1.6 million in federal funds, and diverting it to a group called "the Alliance for Digital Equality" (ADE), which claims that it's trying to help get internet access to poor people. Except.... the group is entirely funded by AT&T and: "uses its funds simply to lobby for AT&T, and did little to nothing to actually help the disadvantaged." Mayor Marks, beyond being paid by AT&T, is also a paid member of ADE's board of advisors -- something he apparently didn't think was necessary to disclose when he brought ADE to the City Commission in an effort to have that $1.6 million granted to the group. He also failed to disclose his relationship when he voted in favor of giving the money to ADE.
Both the Florida Commission on Ethics (who knew such a thing existed?!?) and the FBI are now investigating...
Two of Canada's big three telcos have recently appointed former cabinet ministers of the ruling party's government to their respective boards. A few weeks ago, Bell appointed Jim Prentice, who was responsible for telecom policy and regulating companies like Bell while serving as Minister of Industry in 2007-2008. Then, while former cabinet minister Stockwell Day's new "government relations" not-a-lobbying-firm has raised concerns about loopholes in lobbying laws, this past weekend Telus named Day to its board. (How long until Rogers aligns with industry standards and finds an ex-minister of their own?) OpenMedia.ca decried bothappointments as examples of big telecom "cozying up to the government," but journalist Peter Nowak argues it's the system's fault: "Lobbying is so pervasive and deeply integrated" into the system that the only way to deal with it seems to be to "fight fire with fire," as even new wireless carriers have quickly learned -- i.e. don't hate the players, hate the game.
Neither Prentice nor Day will be lobbyists, but it seems obvious that their knowledge of government is being sought for the purposes of lobbying. In the broadband space, Bell has been butting heads with the government and regulators over issues like wholesale usage-based billing. In the wireless space, the next spectrum auction is approaching and incumbents want to avoid a repeat of the last auction, where 40% of the spectrum was reserved for new entrants and the government forced incumbents to offer roaming agreements -- rules ironically set by Bell's new board member, Jim Prentice.
Are these appointments examples of regulatory capture? It might appear that way. It's certainly a case of telcos gearing up for a heavy round of lobbying that's unlikely to favor consumers, but it's hardly a case of blatantrevolvingdoors. Day was not actually responsible for telecom policy, and Prentice was behind rules that angered incumbents. If the government favors incumbents in the next spectrum auction or backs down on wholesale usage-based billing, that would be a different story, but Canadian incumbents are scrambling because they've lost some big battles. This isn't so much a cause for deep concern as it is a challenge to those who favor more competition in Canada to keep pressing the government to follow through on what it's started.