Last week was an interesting week for Gamestop. As a ton of you sent in, the company decided to require all stores to open up all PC copies of Deus Ex: Human Revolution and discard an included coupon for a free version of the game via the OnLive streaming platform. OnLive and Square Enix had announced the promotion to help both companies, but apparently Gamestop was jealous to be cut out of the mix. Below is an image of the order that GameSpy, who broke that story, received: From there the story got more bizarre. Gamestop didn't even seem to realize how bad this looked at first, insisting that it just didn't want to help advertise "a competitor." Soon after all of this came out, Gamestop ordered its stores to remove the game from its shelves entirely as part of a "recall" in agreement with Square Enix. The likely implication: Gamestop and Square Enix worked out a deal to offer versions of the game without the coupon, meaning Gamestop employees won't have to destroy the coupons.

However, the real story in all of this should be just how much free publicity Gamestop just gave OnLive in its hamfisted attempt to pretend the company didn't exist. And, of course, now it means that anyone wishing to buy the PC version of the game is probably (assuming that no coupons will be available) better off buying it from someone other than Gamestop. I've defended Gamestop's used game sales practices for years, but I'm amazed the company thought any of this was a good idea.

About a month ago, the folks at Planet Money did a nice podcast on the economics of Groupon. There's no doubt that there's a bit of a "coupon" bubble going on these days, with tons of companies crowding into the space, and (as the Podcast notes) a bunch of ex-Wall St. types jumping into the space with talk of creating derivatives on coupons/deals. At the same time, plenty of people have mocked Groupon and insisted that its model isn't sustainable and others can easily come in and kill Groupon. In fact, some of the Wall St. guys who stayed on Wall St. are saying that Groupon's value shouldn't be that high because anyone with a phone can copy them.

Lots of people are discussing Felix Salmon's excellent analysis of the economics of Groupon, which is really more about the fact that Groupon has dominated the space because it executes well. That is, it's not about the idea, it's about the execution. The fact that it has remained dominant despite so many copycats shows that just copying isn't enough. This doesn't mean that Groupon will always be the best at executing (in fact, I doubt it will be). But it's not so simple as just coming in and copying.

This is an issue that comes up all the time when we talk about business and intellectual property. People who haven't built up businesses like this assume that all you need is the idea -- and if an idea can be copied, then the company can't succeed. But that ignores just how important the execution element is. Salmon talks about how hard Groupon works to make sure its advertisers are happy with the results, to a level beyond most of its competitors. However, I think there's another element of Groupon's execution that hasn't received nearly enough attention: how enjoyable it makes the whole thing for consumers.

Groupon employs a bunch of writers who work hard to make sure all of the deals are compelling, enjoyable and fun. It always amazes me how much people underestimate the value of the quality of the writing in Groupon's offers. However, where it really struck me was a few months back, when I was researching some newer competitors to Groupon -- in particular, newspapers that were offering deals directly to compete with Groupon. In theory, newspapers should be able to absolutely destroy Groupon. If you're just standing on the mountain looking down, and seeing who has the advantages here, it's clearly the newspapers. Newspapers already rely on local advertising and deals, and have established long-term relationships in the market. On top of that, newspapers employ a ton of (mostly) high quality writers as well, so they should be able to create similarly compelling content.

And yet, when I was looking at various newspaper Groupon clones, what struck me was how boring and dull their offers were. Even if the deals themselves were comparable (and they often weren't), they just weren't that interesting or compelling to read. And that's because the newspapers -- like the Wall St. analyst above -- are engaging in cargo cult copying, where they think that all that matters is copying the superficial idea -- while missing the secret sauce that goes into the less obvious execution.

As a final aside, the quality of Groupon's content highlights another key point that we've raised many times before: how "infinite goods" like content make scarce goods more valuable. In this case, the "content" created by Groupon's writers (and, yes, this is also an example of how advertising is content) is valuable. But no one's selling the "content." What Groupon is doing is using that good content to make the scarcity of the deals more valuable, making more people willing to buy them.

In the end, I will admit that I have my doubts about the overall sustainability of Groupon itself, but it's not because "the idea" is easily copyable. I'm just not convinced that Groupon can continue to execute as well, and some aspects of what it's offering have some elements of a fad written all over them. But claiming that the company is overvalued because the "idea" is too easy makes little sense.

While I'm still not as convinced as some that Groupon really is a sustainable long-term business, it is an interesting one to watch. And, with any massively successful business, it's no surprise that lawsuits -- especially of the class action type -- follow. The latest is that Groupon is being sued for having its deals expire too soon under the Credit Card Accountability Responsibility and Disclosure Act of 2009. That act does include a provision that gift cards cannot expire for at least five years. So it seems that the basis of this class action is to claim that the deals offered by Groupon are the equivalent of a "gift card," rather than a standard coupon, which can expire in much shorter time frames.

This seems like a pretty big stretch. It's not hard to see that Groupon is much closer to offering a coupon for sale, rather than a gift card. Furthermore, if we just look at the reasoning behind this provision in the law, again, that suggests this lawsuit is frivolous. The idea behind the five year expiry on gift cards is that it's often not entirely clear when those cards expire (they're often not marked) and since they work differently than a coupon (i.e., stored value of some kind, rather than a discount on a particular item) people often hold onto them for much longer. In this case, the expiration date of what's being sold is clearly stated, so comparing it to the situations with gift cards is misguided. The whole thing just seems like yet another attempt by class action lawyers to cash in at the expense of a successful company.

I remember over a decade ago, talking with lots of folks in Silicon Valley about the idea of doing mobile coupons -- with the typical example being "imagine as you walked by a Starbucks, if it could pop up a coupon on your phone." Hell, all the way back in 2004, we were talking about this idea as being talked about for "ages." The problem was not with the basic idea. People were just waiting for the infrastructure to catch up: for GPS to become common in phones, for smartphones to hit the market, for mobile broadband to be available, etc. So it seems pretty ridiculous that, in 2005, some folks from Where Inc., applied for a patent on the concept, which has now been granted, and seems ridiculously broad (Patent number 7,848,765). The challenge was never about how to do this. That was obvious to all sorts of people. The issue was just waiting for the infrastructure to catch up. It's ridiculous that such an idea that was widely discussed way before this patent was applied for is now locked up via a patent.

We'd been covering the Coupons.com DMCA legal saga for a few years now, and we thought it had ended back in November, when Coupons.com dropped its case against John Stottlemire. If you don't recall, Stottlemire was sued because he'd realized that if you deleted a few files on your hard drive, you could reprint coupons issued via Coupons.com's software. The company claimed this was a DMCA anti-circumvention violation -- though it seemed odd to claim that simply telling people to delete some files eliminated any sort of copy protection. Also there were significant questions as to whether or not what Coupons.com was doing was actually copy protection. Stottlemire was doing a pretty good job (as an individual) fighting back, and the company finally dropped the case.

But... apparently after Stottlemire bragged that he "kicked [Coupons.com's] ass," the company tried to reopen the case, claiming that Stottlemire had breached the non-disclosure agreement on the settlement and claiming that they need to reopen the case to "set the record straight." It's difficult to see how claiming you "kicked their ass" breaches any disclosure agreements, since it's hardly giving away much of anything. And, it appears, a judge has agreed, denying the request to reopen the case. The judge did say that Stottlemire's statement was a breach, but hardly an egregious one, and certainly not a big enough deal to reopen the case.

I remember a decade or so ago stories of online coupon offerings where companies would use a single coupon code, and not realize that people would share it with tons of others. However, those types of promotions went away after companies started using unique codes for promotions to make sure people couldn't share them too widely. Apparently, however, the folks who work for marketing at Carl's Jr. were unaware of how news of deals spread online. They offered up a promotion at a basketball game, where certain attendees were texted a code to download a coupon for a free burger. However, all attendees were given the same code... which was quickly leaked online and Carl's Jr. was forced to cancel the promotion after a lot more people than expected started to show up with the coupon. It's hard to believe that no one involved in the promotion had any idea that this would happen.

We've been covering the DMCA lawsuit filed by Coupons.com against a guy, John Stottlemire, who figured out that if you delete a few files on your hard drive you could make extra copies of the coupon. Coupons.com tried to greatly stretch the DMCA to claim that this was circumventing copy protection -- but simply telling people to delete files on a hard drive hardly seems to be an circumvention tool. Plus, there were some legal issues over whether or not what Coupons.com was doing was really "copy protection." In many cases, Coupons.com's arguments seemed to contradict itself, though Stottlemire (who defended himself) was quick to point that out to the court.

It looks like Coupons.com recognized that this lawsuit was going to end badly, and has now agreed to dismiss the case. This is a big win for Stottlemire, though it's unfortunate that there was no legal ruling on this attempt to stretch the meaning of the DMCA's anti-circumvention clause. It will, undoubtedly, come up again in the future in other lawsuits.

As you probably have heard, the US will be shutting down analog TV broadcasts early next year, as the conversion to digital is complete. For most TV watchers, this won't matter one bit. For anyone who watches TV via cable or satellite TV, the change means nothing. It only impacts those who watch TV-over-the-air and who don't have a digitally-enabled TV or conversion box. So, as part of the effort to move the transition along smoothly, the gov't is handing out coupons to individuals that can be used to pay for a converter box.

Except, apparently, if you happen to live in prison.

Prison officials are getting quite worried that prisons that use over-the-air TV signals for their televisions won't be able to afford the converters, because the gov't won't give them the coupons. As South Carolina Corrections Department Director Jon Ozmint notes:

"We asked them for the coupons and they said they're only available for households. I said, 'We're the big house.' But they didn't buy it."

Now, many might point out that this shouldn't be a big deal, as perhaps the gov't shouldn't be using taxpayer money to subsidize the TV watching habits of prisoners, but the prison officials are claiming that most people don't understand just how important television is in keeping the peace within prisons. The article includes some quotes from folks that suggest that television is a pretty important part of the prison experience in encouraging good behavior and keeping the prisoners connected to the outside world. Who would have ever thought that the conversion from analog to digital TV might lead to prison riots?

We recently noted the somewhat mixed ruling in the Coupons.com lawsuit over whether or not it's a DMCA violation to merely tell people to delete some files from their hard drive. The ruling noted that Coupons.com was trying to make a rather questionable argument. It's a bit technical, and it required multiple readings to really understand what's going on here, but effectively, Coupons.com is trying to invoke the DMCA's anti-circumvention clause to punish a programmer who figured out how to get around the limits enforced by Coupons.com's software, which lets users use a coupon a limited number of times. The real issue in this case is whether the software is about preventing uses or copies. If it's uses, then it's not covered by the DMCA. If it's copies, then it is. The court noted that it certainly seems like the software is focused on uses rather than copies, as there's no actual part of the software that blocks you from accessing the coupons as much as you want. It just blocks you from using them.

The programmer, John Stottlemire, who is being sued in this case, writes in to let us know that Coupons.com has just described its system in a misleading way in order to convince the court that its software really is copy protection rather than use protection, claiming: "The features block an individual computer's access to a particular coupon offer altogether if that computer does not have the proper registry keys in place." In other words, there is copy protection that blocks access if the registry keys are missing.

That claim may sound a lot like copy protection, but that's not actually how their system works. Coupons.com doesn't block access to its coupons based on a registry key -- because if you don't have a registry key, Coupons.com simply issues you new one. And that's not how copy protection usually works; that's how usage protection works. If the system worked the way it was described to the court, then first-time users, who would not have the proper registry keys, should not be able to use Coupons.com because they would be blocked from accessing coupons. But Coupons.com doesn't do that to new users -- all users without registry keys are simply given new keys (and not blocked whatsoever).

Basically, Coupons.com appears to be pretending that its software doesn't work without a certain registry key in order to convince the judge that its software actually qualifies under the DMCA as copy protection. But, if it were copy protection, then Stottlemire's programs (or written instructions) for how to defeat the software by deleting the registry key wouldn't work. All Stottlemire's method of "circumvention" would do is trigger the copy protection to deny access. So, either Coupons.com is lying to the judge, or Stottlemire's program and instructions couldn't have done what they claim it did (in which case he wouldn't have broken the law). So... basically, it sounds like Coupons.com is either lying or they have no case. And, if they're lying, they don't have much of a case either.

John Stottlemire, who is being sued by Coupons.com in a case we've been covering, writes in himself to let us know that the court has ruled on various motions to dismiss (warning: pdf). If you don't recall, Coupons.com offers online coupons using some software. The software is designed to limit how many copies of a coupon each person can print, but Stottlemire figured out ways to easily get around that limit and both built a tool to do so, as well as explained how to do it manually -- at which point Coupons.com sued him for a DMCA violation, claiming he circumvented their anti-copying mechanism. The specifics of the case are pretty confusing, but basically Coupons.com is trying to stretch the DMCA beyond what it was intended for. The ruling dismisses some of Coupons.com's claims, while allows others to go forward.

It's not a complete win, but the court did deny Coupons.com's attempt to blur the line between "rights-control" and "access-control" which is a good thing. However, on the issue of whether or not just explaining how to circumvent the copy protection by deleting some files is a DMCA violation, the court is allowing that issue to move forward at trial. So while this is a good partial win, we'll still have to wait and see what happens in the next stages of this case to determine whether or not Coupons.com can expand the DMCA.