The debate is still raging whether Bitcoin is a brilliant idea that will revolutionize business and society, a high-tech money laundering scheme, or just a fad that will soon pass into history. But in a fascinating post, Jon Matonis points to a problem that doesn't really seem to have been considered before:

Key disclosure laws may become the most important government tool in asset seizures and the war on money laundering. When charged with a criminal offense, that refers to the ability of the government to demand that you surrender your private encryption keys that decrypt your data. If your data is currency such as access control to various amounts of bitcoin on the block chain, then you have surrendered your financial transaction history and potentially the value itself.

That's no mere theoretical issue in countries like Australia, South Africa and the UK that already have such key disclosure laws.

Matonis reviews the limited US case law here, and concludes:

To say the cryptocurrency bitcoin is disruptive would be an understatement. Bitcoin not only disrupts payments and monetary sovereignty, it also disrupts the legal enforcement of anti-money laundering laws, asset seizure, and capital controls. It is very likely that a key disclosure case will make it to the U.S. Supreme Court where it is far from certain that the Fifth Amendment privilege, as it relates to a refusal to decrypt bitcoin assets, will be universally upheld.

Perhaps that's something to bear in mind if you're currently using Bitcoin in the belief that they'll never be able to force you to reveal your assets and transaction history.

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Kevin Clark, a musician who has done some neat things that we've written about in the past, has been working on a cool series of events in NYC recently, called RUCKUS NYC, trying to bring together a variety of artists who are using the web to their advantage. Of course, it's not just a gathering, but a concert as well. He's also running a Kickstarter campaign, seeking support for the event, which looks quite cool. That campaign ends soon if you'd like to help out and support it.

Art matters. And it’s hard. So we’re bringing a bunch of amazing people together to talk about how they make their art, get it online, and build a career.

We’re artists ourselves. And the changing digital tools, the power (or not) of the old system, and the pressures of the economy are all big, scary issues for us. We’re building RUCKUS NYC to help each other find a way forward.

We've been seeing more and more stories of artists looking forward, rather than backwards. Of looking at opportunities, rather than looking for a place to point the blame finger in a changing market place. It's nice to see positive events like this one springing up.

Baseball fans have been fascinated with player statistics for a really, really long time. Sabermetrics changed a few things about baseball in recent years, so it's about time other sports started looking into more rigorous data analysis, too. Fantasy team managers and actual professional coaches are both looking for diamond-in-the-rough players, and more player statistics are being collected and analyzed to find them. Here are just a few interesting developments in the field of performance analysis.

• Looking at the stats for 452 NBA players, there are far more than the five traditional positions in basketball -- try 13 different kinds of players. The 'Paint Protector' position gets more fouls than shots and collects rebounds like crazy. The 'Scoring Rebounder' might be a more highly-paid player, though. [url]
• The NBA wants to provide more engaging statistics to its fans, so it's turned to enterprise software solutions -- SAP HANA. Will re-purposed business analytics software be able to appeal to millions of fans? [url]
• The PageRank algorithm can be applied to soccer players, based on how many passes a player receives from his teammates, to help analyze how players fit into a team and quantify the overall strength of a team. Obviously, this algorithm has several limitations, but soccer isn't as statistic-friendly as other sports, so data analysis strategies for soccer are not as well developed. [url]

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

In the past, we've covered the rather despicable actions of Entrepreneur Magazine, acting as a trademark bully and going after real entrepreneurs for using the word "entrepreneur" in various ways. It seems counter to the magazine's mission of celebrating entrepreneurs to sue others making use of the word. Unfortunately, Entrepreneur Magazine has actually been somewhat successful in many of these lawsuits. Scott Smith, who has been in a decade-and-a-half-long tussle with Entrepreneur Magazine, has recently added a new legal effort to the long history between them: he's suing Entrepreneur Magazine for supposed "fraud" on the trademark office. Among the claims Smith is making:

• April 1999: EMI filed sworn documents with the PTO claiming that it was currently using the Entrepreneur Expo name, even though EMI ceased doing so several years earlier.
• February 2006: EMI submitted a staged photo to deceive the PTO into believing that EMI was still using the name Entrepreneur Expo. The photo was staged by tricking EMI's then editor to pose in front of a low-budget sign that read, "Welcome to Entrepreneur Expo."
• December 2003 and August 2006: EMI tried to cover up its fraudulent activities by filing new Entrepreneur Expo trademark applications, but eventually abandoned those efforts.
• November 2006: EMI submitted the same marketing piece it had previously submitted in May 1999, to deceive the PTO into believing that EMI was still using its "small business expo" trademark. But Scott discovered that EMI goofed-up by leaving its old address – for an office EMI had moved out of by at least February 2000 – exposed.
• November 2010: EMI submitted sworn documents claiming that it was currently using the Entrepreneur Expo name. EMI deceived the PTO by slapping an Entrepreneur EXPO logo onto its Facebook page for its 2011 Growth Conference.
• May 2011: EMI deliberately failed to renew its "small business expo" trademark to escape Scott's fraud claims and avoid judgment.

A few points on this: Smith is filing his lawsuit pro se (i.e., by himself, without a lawyer), which is quite frequently a big warning sign for a lawsuit that may be pretty weak (though that's not always the case). Also, in the 14 years or so that Smith and Entrepreneur Magazine have been going through legal disputes, Smith's track record is not good. Entrepreneur Magazine basically keeps winning, over and over again.

That said, beyond the ongoing oddness of Entrepreneur Magazine suing an entrepreneur, it's difficult to see how "entrepreneur expo" isn't a generic term. Doing a quick Google search turns up a ton of examples of the phrase "entrepreneur expo," with most of them not appearing to be associated with Entrepreneur Magazine at all. Smith also claims that the magazine itself has not been using the mark.

Given the history here, it seems like Smith has a pretty big hill to climb to convince a court of this one, but even if that's the case, the whole thing just looks bad for Entrepreneur Magazine. There certainly is a lot of focus on trademarks these days, but that doesn't mean it's a good idea to go after actual entrepreneurs.

As Time Warner Cable continues to lose subscribers and its CEO and others remain in denial over it, it is perhaps time for those in charge to take deep look at themselves. The reason many people end up cutting the cord is that they are tired of the level of disservice they receive for the massive price they pay. You can do web searches for various cable and satellite companies and you can see story after horror story of people's experiences trying to get television or have their current subscription serviced. This is a serious problem and it never seems to get better.

So it really shouldn't be a surprise to learn even celebrities can't get decent service out of TWC. Many of you probably heard the news about the tweet that Sir Patrick Stewart sent after trying to set up cable in his home.

All I wanted to do was set up a new account with @TWCable_NYC but 36hrs later I've lost the will to live.

That is quite the statement. You can even see some of the sympathetic tweets of some of his followers over at Twitter. TWC, for its part, responded to the New York Post with this statement:

There’s no doubt we have a lot of fans at the company, of the actor and ‘Star Trek’ in general. But the truth is, any customer that reaches out to us . . . we’re going to offer them help the exact same way.

That really isn't all that encouraging. If even Captain Jean-Luc Picard, the man who defeated the Borg, loses the will to live when faced with TWC's customer service, how does it think its everyday customers feel? Could this be part of the reason so many jump ship to either become cord cutters or subscribe to satellite, as was the case with Patrick Stewart?

It is time for TWC and other television services to really reflect on what they are actually doing to attract new customers. As the rising generation becomes a generation of cord-cutters and cord-nevers, they will have a tough time at keeping their place in people's homes if they do not change.

Jamie Love has provided the testimony he gave at a USTR hearing concerning Mexico and Canada's entrance into the TPP (Trans Pacific Partnership) agreement. As you hopefully recall, the agreement is being negotiated in secret... unless you happen to be a high level lobbyist. Then you get widespread access, which Love calls out:

The contempt for the public is all the more clear when USTR carries out an extensive system of briefing corporate interests on the nature of the proposals it makes in the negotiations, and openly embraces a double standard for access that can best be understood by the public when looking at the amount of money that various parties dump into political campaigns, in part to obtain this type of preferred access. According to USTR, the Advisory board for intellectual property rights is chaired by Richard Kjeldgaard, the Deputy Vice President, International Intellectual Property, PhRMA. That pretty much sums up how this process is perceived. The fact that the Obama Administration cares more about PhRMA than the public as regards access to information is a great disappointment.

But the really insane part about all of this was that it was asking for hearings from people who don't know what's in the text, because they can't see the text because the USTR refuses to release the text. That resulted in some awkward exchanges:

In Eric Schwartz of IIPA's testimony, he claims that the 3-step test applies to all exceptions, including those like the quotation or news of the day exceptions, which are mandatory. When State asks him a question about the TPP text, Scwartz says he has only seen the leaked text. Exchange illustrates the ackward nature of asking for comments on a secret text.

But, much more ridiculous is that the USTR took the farce, and then bizarrely claimed that this hearing, in which people who can't see the text were asked to talk about it, shows how transparent they're being about this process:

“USTR is committed to transparency in trade negotiations,” said Ambassador Kirk. “Today’s hearing is a good example of our engagement with interested stakeholders and members of the public. As the TPP negotiations progress, we will continue to ensure that all interested parties have an opportunity to express their views.”

How many times does it need to be said? That's not transparency. Inviting a bunch of people who can't see the text to comment on what might be in the text might be considered some weird form of "hearing from the public" but transparency is not about hearing from the public -- it's about showing the public what you're doing. It's about information flowing in the other direction which appears to be something that Ron Kirk and the USTR do not understand. At what point will a reporter interviewing Kirk, or perhaps an elected official, ask the basic question of how keeping something secret is transparent? Or ask him if he can explain the difference between hearing from people and being transparent. Because they're very, very different. And it seems immensely troubling that a massive trade agreement that will have far reaching implications is being negotiated in complete secrecy (unless you're a big industry player, of course) by someone who doesn't even understand what transparency means.

Tim K alerts us to an interesting story at Wired concerning how Kickstarter handles DMCA takedown notices. The answer: not well. It seems to take DMCA notices at face value... and then immediately make the project disappear. It does not put up a notice that the project was taken down due to a DMCA notice. It does not alert backers of the project. It does not make it easy for the project owner to alert the backers of the project, or to accelerate the counternotice process. This is unfortunate.

While the story mentions that Kickstarter has disappeared at least 5 projects due to DMCA takedowns, the one it focuses on is a very recent one -- a project by a new design company called Vinted Bags, makers of interesting vintage-style leather goods (the same business my grandfather was in -- though, when he did it, the products weren't "vintage"). Vinted had put up a Kickstarter project that blew past its target, and seemed to get plenty of attention. And then, just hours before it was funded, it disappeared, replaced with a page that says: "Sorry, this project is no longer available."

This is the same Kickstarter who also claims:

Projects are not closed or taken down, they remain on site for reference and transparency.

For the same reasons, projects cannot be deleted, even if they were canceled or unsuccessful.

Except, apparently, if someone files a hugely questionable DMCA takedown... The Vinted team provides some troubling background info on its own site. First, it notes that two Vinted designers did an unpaid internship with a bag company, where they worked and learned for a few months, considering the founder of that company to be a mentor. Months later, after that internship had ended, they founded Vinted. They worked on that for a while, and it was only once the Kickstarter project took off and got attention that suddenly the legal threat showed up:

Then we received a letter from a law firm; a cease and desist letter from the mentor with threats to sue. We were very surprised. It consisted accusations of infringement from the mentor. He laid claims to a number of our designs such as our website utilizing a top navigation bar, our photo of the designer operating a sewing machine, etc.

Note that there are no accusations concerning the products themselves. While Vinted doesn't name the guy, the Wired article names Spencer Nikosey, who runs Killspencer. Looking over their products, there doesn't seem to be any copying there. While there are a few similar bags, they are pretty standard and Vinted's are distinguished by their use of leather patches. In terms of website design, there are some similarities, but nothing that should come close to meeting the qualifications to be copyrighted (remember, copyright covers the actual expression, not the idea). Ditto a photo of the designer operating a sewing machine, which is obviously not infringing. Even if the ideas are similar, that's not infringement.

And yet... Kickstarter took the project down. Again, I'm having trouble understanding why it would do so. You might be able to make an argument that if Spencer Nikosey had claimed that the products themselves were infringing, Kickstarter should take it down -- but even then, there should be a clear notification from Kickstarter to its users about what happened, as well as a notice on the site (a la YouTube) highlighting why the project no longer existed.

But, in this case, even that doesn't apply, because there is no infringement in the product. Instead, the concerns appear to be about web design and how the company is presenting itself. But Kickstarter doesn't host Vinted's website. And if there was concern about certain images, at most, Kickstarter should just remove the image in question, rather than the entire project. The whole thing seems quite crazy and a case where Kickstarter both could have and should have stood up for itself, for Vinted and for its users, and told Nikosey "too bad." Instead it pulled the project.

Vinted has filed a counternotice, and Kickstarter passed it on to Nikosey. If Kickstarter is following the DMCA counternotice process, it should put Vinted's project back online on September 27th -- unless Nikosey goes to court and files a lawsuit against Vinted, seeking an injunction barring the return of the campaign. Of course, Kickstarter could also realize that the original takedown appeared questionable and put the campaign back. What's not clear, however, is how that would work. There were just a few hours left in the campaign before the plug was pulled. Would they put it back with a few more hours? A few extra days? Or would they just charge those who bid? Hopefully they can put it back, and didn't just delete the whole thing.

Looking over the details, it's difficult to see this as anything other than yet another in a long line of unfortunate examples of companies or individuals using the DMCA to stifle competition, rather than for any sort of legitimate purpose. That Kickstarter is complicit in this process is unfortunate, because it need not be. There are better ways to handle such situations and it's a shame Kickstarter has chosen not to do so.

RobW points us to an opinion piece over at The Guardian, by David Leigh, who argues that there should be a £2 tax on every broadband connection sent to newspapers in order to prop them up for their own failures to adapt to a changing market place. He tosses out the usual tropes about how only newspapers can do real investigative reporting (what, like hacking voicemails the way Rupert Murdoch's journalists did?). Of course this is a complete myth. First of all, most newspapers do very little investigative reporting -- and UK papers are also somewhat famous for their ability to stretch the truth at times. Is this really something we want to reward?

The idea is hardly original. It's been suggested for years and seems to pop up in random places at random times. While it may be more reasonable than taxing Google to fund newspapers, it's still a horrifically bad idea. Leigh tries to work out how this would work, arguing that the sum would be divvied up among UK newspapers based on their web traffic. Of course, how you measure web traffic suddenly becomes very, very important. Leigh seems to assume this is easy, and that any such system wouldn't be gamed -- which it would. On top of that, he fails to recognize that the second you base such a huge sum of potential money on purely one metric, news sites would optimize solely on that metric, even if they're not "gaming" the system. So, expect plenty of attempts at sensationalistic stories and the like, rather than the thoughtful investigative reporting he thinks they're going to get.

And how do you define who gets access to the money in the first place? Leigh thinks he has that worked out too... but he does not:

There would be no insuperable problems in defining "news providers". The starting point would be to designate those organisations already classed by the state as zero-rated newspapers under the 1994 VAT legislation : "Newspapers … issued at least once a week in a continuous series under the same title … [which] contain information about current events of local, national or international interest. Publications which do not contain a substantial amount of news are not newspapers."

Other original news providers could subsequently apply to the independent levy board for admission to the scheme, case-by-case. But there would have to be a reasonable size threshold for admission, perhaps set at 100,000 monthly users, and also some rules to exclude content aggregators.

Ok, so that starts out by favoring the very companies who have done the least to adapt to changing times and ignores upstarts who have worked hard to build audiences and business models that work. And then you have to "apply" to get access in a long bureaucratic process where a small group of people (probably pulled from newspapers) gets to pick and choose? That's not how you build innovative companies with innovative business models. And, really, why the ban on "content aggregators"? There is this ongoing argument among old school newspaper people who seem to think that "aggregators" are the enemy -- despite the fact that they send original news sites more traffic and more users, and many aggregators expand into original content production themselves as well. Either way, lots of news sites would start applying, just because there's a ton of cash sitting there, and they'd all just start trying to optimize for the metric to get in.

But, of course, the real problem with all of this is the idea that it ever makes sense to tax a new technology to prop up those who failed to innovate, failed to adapt and couldn't compete. If they can't do it, let them fail. Contrary to Leigh's rather myopic view of the world, others will come in to fill the need, and they'll do so with innovative business models that don't require a tax. Really, Leigh's piece is best summed up by the first comment, from user "romandavid" who noted:

"A £2-a-month levy on automobiles could save our horse and cart business."

Exactly. If this got approved, every other disrupted industry would seek the same thing. Record labels? Movie studios? You bet. Travel agents? Absolutely. Really, what industry wouldn't want to add their own "tax" to the internet to try to pretend that we still lived in the 1980s? Thankfully, nearly all of the comments on the article seem to be taking the same general stance, that Leigh's idea is completely ridiculous and self-serving, without any reason or merit.

Apple is notoriously aggressive when it comes to going after others for supposedly violating its trademarks -- often taking it to extreme levels. So it seems noteworthy, as many of you sent in, that the Swiss Railway Service (SBB) is claiming that Apple's clock app in iOS 6 happens to infringe on a clock design they hold the rights to. On the left is Apple's app. On the right, is SBB's iconic version. While the article above quoted someone from SBB saying that he's "happy" that Apple used the design, that doesn't mean that they're okay with it. They're not:

SBB is the sole owner of the trademark and copyright of the railway clock. The railway company will now get in touch with Apple. The aim is a legal, as well as a financial solution. It is not right that one [Apple] simply copies the design.

Apple has a bit of a history of playing fast and loose with the artwork it uses. Remember the story of the iPad background image? And there are plenty of reasons to suggest that Apple should be able to do this. But, considering how aggressive it is in enforcing its own trademarks, you'd think that it would be a lot more careful before doing things like this. Of course, you have to also wonder... if Apple weren't so aggressive with its own trademarks, would SBB be so insistent on a "legal" and "financial" solution?

We've been seeing more and more judges reacting negatively to copyright trolls. What's interesting is that they seem to be getting more aggressive in their statements against the trolls, and it seems clear that fewer judges are falling for their antics. The latest is from Judge Harold Baer in the Southern District of New York, who you could say is not impressed by some copyright trolling cases that have ended up in his court, coming from Media Products and Patrick Collins. He had allowed for expedited discovery, which is what copyright trolls want, but it seems quite clear that Baer regrets that decision and now seeks to reverse it. Expedited discovery basically gives the trolls what they want: it lets them subpoena ISPs to find out contact info of users based on the IP addresses they've collected. From that point on, they have no intention of ever proceeding with the actual lawsuit. They just want to start pressuring people into "settling."

Judge Baer clearly understands what's going on here. He notes early on the very serious potential problem of IP addresses not being particularly good identifiers of who has done the actual infringement:

Particularly troubling for courts is the high probability of misidentified Doe defendants (who may be the bill-payer for the IP address but not the actual infringer) settling a case for fear of the disclosure of the allegations against them or of the high costs of litigation.

He notes that he's not ready to "wade into" the question of whether or not joinder is appropriate, especially in cases where all of the IP addresses are part of the same BitTorrent swarm, but he is clearly worried about a different kind of "swarm":

Ironically, there are swarms on both sides, for copyright locusts have descended on the federal courts, exacting low-cost settlements from embarrassed John Does and then moving on to the next District

Yes, Judge Baer seems familiar with the M.O. of these trolls, and how they've effectively been "run out of" other districts after judges realized what they were up to. In fact, he quotes a ruling in the Central District of California approvingly:

... the federal courts are not flexible enough to be shaped into "cogs in a plaintiffs copyright-enforcement business model. The Court will not idly watch what is essentially an extortion scheme, for a case that [Plaintiffs have] no intention of bringing to trial."

He also worries that the plaintiffs have already pressured defendants into settling, noting "that some Doe defendants have already been voluntarily dismissed at this early stage in the litigation." For that reason, he's decided that joining all the cases together at this stage is inappropriate, and has (like many other courts) severed and dismissed all but one Doe.

He then goes back to talk about his overall concerns with how copyright trolling is a troubling development, and quotes a bunch of other cases from other district courts around the country:

The Plaintiffs' tactic, if left unchecked, could turn copyright protection on its head. Congress intended to incentivize the creation of useful arts by providing a statutory right and a means of enforcement that would reward authors for their labors, hardly the Plaintiffs' strategy here.... In the BitTorrent pornography cases, settlements are for notoriously low amounts relative to the possible statutory damages, but high relative to the low value of the work and minimal costs of mass litigation. Cases are almost never prosecuted beyond sending demand letters and threatening phone calls. Severing the Doe defendants does not destroy the incentive to prosecute infringers who use peer-to-peer protocols; it merely restores the balance that Congress intended, not to mention that it ensures that courts receive the filing fees that Plaintiffs otherwise avoid.

And one final point, since he already allowed for discovery, he wants the plaintiffs to destroy the info, and if he finds out that they pursue those people anyway, it sounds like there may be trouble:

Plaintiffs shall not contact any Doe defendant who does not remain in this or a subsequently-filed case, and any pending settlement not with John Doe 1 in each named case shall immediately cease. If after 14 days Plaintiffs have not reinstituted cases against the remaining Doe defendants, Plaintiffs shall destroy whatever personal information they presently have for those defendants and shall not use the information for any purpose. Ifany Doe defendant no longer named in a case is contacted following entry ofthis Order, I encourage them to contact the Court.

Elsewhere, he orders the plaintiffs to pass along this order to all the ISPs they've subpoenaed, and to have them distribute it to all the people in question, so (hopefully) they understand to contact the court if the plaintiffs violate the order and continue to go after them.

One really good thing here: Judge Baer clearly spent time looking into these cases, and seeing just how common they are and what's happening in them. Above, we've already noted that he cited a few such cases -- but in a footnote that takes up about half the page, he goes on to name a whole bunch of them, noting that "this is but a sample" and pointing out:

It is difficult to even imagine the extraordinary amount of time federal judges have spent on these cases.

Hopefully other judges are beginning to recognize the same thing. It seems clear that more and more judges are putting these cases into the proper context, understanding what's really happening and how the copyright trolls are abusing the court system as a part of a business model, rather than for any legitimate legal reason.

Last December, we wrote about a report put out by the Swiss executive branch noting that, based on their research, it appeared that unauthorized file sharing was not a big deal, showing that consumers were still spending just as much on entertainment, and that much of it was going directly to artists, rather than to middlemen. In other words, it was a market shift, not a big law enforcement problem. At the time, we wondered if Switzerland had just bought itself a place on the USTR's "Special 301 list" that the administration uses each year to shame countries that Hollywood doesn't like.

That list doesn't come out for a bit, but there's another, similar list, put out by the Congressional International Anti-Piracy Caucus (yeah) that has added Switzerland to its "bad countries" list along with China, Russia and Ukraine. Italy also joined Switzerland as a "first-timer" on the list -- despite rulings that required ISPs to block access to various file sharing sites. The issue in Italy? I'd guess that a story we had earlier this year has something to do with it. After some political fighting, the government there basically decided to just stop regulating copyright issues online. There's also an upcoming fight about new copyright proposals coming in Italy, and this seems like a preemptive strike for some of Hollywood's favorite Congressional Reps and Senators to pressure Italy into approving bad laws that Hollywood likes.

Meanwhile, both Spain and Canada -- who passed legislation very much at the behest of American interests -- were removed from the evil part of the list and switched to "in transition." The message is not particularly subtle: do not, at any cost, question Hollywood's planned copyright laws, or the US government will shame you as a haven for pirates, no matter how bogus that claim really is. Hopefully governments in Switzerland and Italy resist such obvious lobbying on behalf of special interests and pay attention to reality in those markets.

Since the January raid of Megaupload, not a month seems to go by in which another massive error in procedures isn't revealed concerning how US and New Zealand law enforcement handled the whole process. And each time, the mistakes seem to get bigger and bigger. They had the wrong warrants. They mishandled evidence. They mishandled the extradition request. And today comes the big news. New Zealand's Prime Minister, John Key, revealed that the Government Communications Security Bureau (GCSB), the equivalent of the NSA in New Zealand, illegally intercepted communications regarding individuals in the Megaupload case and provided those details to law enforcement. Like the NSA, the GCSB is in charge of monitoring electric communications, but is not allowed to use those tools domestically, only on foreign communications. Key has now ordered an investigation.

Mr Key says the Crown has filed a memorandum in the High Court in the Megaupload case advising the Court and affected parties that the GCSB had acted unlawfully while assisting the Police to locate certain individuals subject to arrest warrants issued in the case. The Bureau had acquired communications in some instances without statutory authority.

After being informed about the matter by the Director of the GCSB on September 17, the Prime Minister referred the Bureau’s actions to the Inspector-General, Hon Paul Neazor. The Inspector-General is an independent statutory officer with the power to enquire into any matter related to a government intelligence agency’s compliance with the law.

Once again, like pretty much all of these "mishaps," this seems to suggest a rather cavalier attitude towards actually following proper procedures under the law to go after Dotcom and Megaupload. Throughout this whole process, it really does appear that law enforcement, under pressure from Hollywood, believed that Dotcom was such a criminal mastermind that they could skirt the law in all sorts of ways to try to shut him down. And each time these mishaps come to light, it just raises more and more questions about whether or not law enforcement really had any legitimate evidence or reasons to do what they did.

David Byrne, who has definitely been one of the more enlightened musicians for quite some time (using Creative Commons all the way back in 2004? Yup) when it comes to understanding both technology and new business models, recently sat down for an interview with Cory Doctorow about how the music business works today (which must have been really fun to watch given the two participants). The whole article is interesting, but one part in particular caught my attention:

As an artist, Byrne said that he has had his own problems with digital rights management. Following the Sony/BMG rootkit scandal—which saw thousands of CDs recalled after the built-in DRM software rendered computers vulnerable to viruses and malware—he asked his label to make sure there was no DRM software on an upcoming release. They were less than obliging.

“I’ve run up against this a couple of times,” Byrne said. “I was in the process of negotiating a record contract at the time, and I went in to the subsidiary of Warner Brothers and said, ‘I’m adding a clause into my contract that you’ll never put DRM on my record.’ And they said ‘Oh, oh, oh…’ The record was done, and the negotiation went on for a year. The record just sat on the shelf. It was very frustrating for me.”

Byrne, of course, has embraced direct to fan efforts a lot lately, and if I remember correctly, was the very first publicly announced musician to use TopSpin's direct-to-fan tools. Some will, of course, argue that he should have just dropped working with major labels, but especially at that time there were distribution advantages to signing a deal. But the fact that they would sit around and argue over DRM -- even right as the whole mess with the rootkit was happening -- shows the kind of thinking that major labels have gone through with DRM.

The BBC reports on the success of ebook sales in the UK, which are up by 188% compared to last year. This is great news for authors and e-commerce. Ebook reading devices have become increasingly easy to use and the online shops for ebooks are getting far more user-friendly by the day. Although I’m not fully converted myself yet (still unsure about the digital right management controls and the unnecessary high prices), about half the books I read are ebooks and most other documents I read are on tablets and computers. The non-believers are slowly but surely being proven wrong and the market is speaking for itself.

The piece by the BBC, which praises the market developments for consumers and authors alike, includes an odd quote, which seems more like pro-copyright lobby-speak and out of place in the article:

"The huge increase in digital sales shows how rapidly readers and publishers are embracing e-book reading," said Richard Mollet, the trade body's chief executive (Publishers Association, ed.). "Whether books are enjoyed physically or electronically, publishers will continue to invest in exciting authors and titles. They can do this because of the stability provided by the UK's robust and flexible copyright framework. This is why The PA is at the forefront of calls to government to ensure that copyright is not eroded and that creators' rights are protected and supported online."

It is surprising in several ways that Mr. Mollet mentions the copyright framework. First, if this is true under today's system, why is his association actively pushing for stricter, less flexible copyright laws? Second, why is the current copyright framework more suitable for book authors and not musicians and movie producers, whose lobbyists are standing in line to complain about the current system? And why does the journalist bother to mention this in the quote at all, when the whole article is a praise of the market adapting to consumer needs?

Let's face it, the copyright system, robust or useless, hardly comes into the equation concerning the recent success of the ebooks market. Ebooks are among the easiest things to pirate. In fact, it is very easy to download zipped files containing thousands of digitized books. Ebook publishers are thus effectively—and successfully—competing with an abundant free supply of their goods.

Fortunately for books publishers, they have had several valuable case studies from which they could learn, namely the decade-long failed attempts of the music and movie industries to cope with the advent of the internet. After wasting gazillions on litigation and lobbying, these industries came to understand that the user does actually spend money on media when it is made easy.

In short, success of content business models depends on the user experience you offer your customers, not more or less strict copyright regulation. It also seems very hypocritical for content lobbyists to praise the copyright system when the market is doing well, and blame the same system when the market is not performing to their wishes.