The New Yorker has announced a new anonymous document sharing system called Strongbox, that will allow people to anonymously and securely submit documents to reporters from the New Yorker. Other publications have tried to set up something like this -- often inspired by Wikileaks -- but for the most part, they've been full of security holes, sometimes big and serious ones. What may be more interesting than the fact that this system is being set up is the story behind it. It's based on DeadDrop, an open source system that was put together by Aaron Swartz and Kevin Poulsen.

Poulsen has the backstory of DeadDrop here, which is well worth reading. Basically, he and Aaron worked on this project on and off for quite some time, and it was only just completed a few weeks before Aaron's death. The full story is worth reading, though here's a snippet:

I wondered about this young tech-startup founder who put his energy into the debate over corporate-friendly copyright term extensions. That, and his co-creation of an anonymity project called Tor2Web, is what I had in mind when I approached him with the secure-submission notion. He agreed to do it with the understanding that the code would be open-source—licensed to allow anyone to use it freely—when we launched the system.

He started coding immediately, while I set out to get the necessary servers and bandwidth at Conde Nast. The security model required that the system be under the company’s physical control, but with its own, segregated infrastructure. Requisitioning was involved. Executives had questions. Lawyers had more questions.

Poulsen also notes that there were questions raised about the code after Aaron's death, but those were eventually sorted out:

By December, 2012, Aaron’s code was stable, and a squishy launch date had been set. Then, on January 11th, he killed himself. In the immediate aftermath, it was hard to think of anything but the loss and pain of his death. A launch, like so many things, was secondary. His suicide also raised new questions: Who owned the code now? (Answer: he willed all his intellectual property to Sean Palmer, who gives the project his blessing.) Would his closest friends and his family approve of the launch proceeding? (His friend and executor, Alec Resnick, reports that they do.) The New Yorker, which has a long history of strong investigative work, emerged as the right first home for the system.

Of course, Poulsen leaves out his own history here as well. As (perhaps?) many of you know, Poulsen was a somewhat infamous hacker back in the day who eventually (after avoiding law enforcement for quite some time) went to prison for some of his hacks. Since then, he's become one of my favorite journalists, writing for SecurityFocus and then Wired (and writing a wonderful book, Kingpin about some more recent hackers). While Poulsen and Swartz met long before Swartz was indicted -- and Swartz and Poulsen were indicted for very different types of activities -- having the two of them work together on a project like this is really quite fascinating.

The unfortunate part of all of this, of course, is that DeadDrop is basically Aaron's "final project." Given how much he accomplished prior to that in his short life, it's just one more thing to add to a very long list of incredible accomplishments, but yet another reminder of how much potential was wiped away by his suicide.

We've discussed GEMA's antagonistic attitude towards, well, pretty much everyone other than itself. In addition to turning the German YouTube experience into a farcical collection of "Sorry" faces and demanding fees for music it doesn't even control, GEMA has also been in the news due to its rollout of a "streamlined" fee structure that threatens the existence Germany's underground club scene with unsustainable licensing rates.

Luis Manuel Garcia at Resident Advisor has put together a very thorough and excellently written rundown of the recent events, covering GEMA's attempts to "streamline" its licensing fee structure (and its adverse effects) and explaining some of the organization's idiosyncrasies. (This is a very nice word for GEMA's thuggish tactics that go beyond villainy to cartoonish supervillainy.) There are a few differences between GEMA and other performance rights organizations (BMI, ASCAP, PRS, etc.). Much of this has been covered here before at Techdirt, so I'll give you some of the high/low points of GEMA's services, with some added details from Garcia.

Rather than being limited to "public performance rights," GEMA handles "collective rights management" for its 64,000 German members and 2,000,000 worldwide members. GEMA still collects licensing fees from businesses but its power goes much, much further than ASCAP's or BMI's.

GEMA decides how to distribute your work... and at what price.

This means that music-makers don't sign over ownership of their music upon joining GEMA, they sign over their usage rights—the right to legally manage and collect licensing fees for playback, reproduction and broadcast of their music. This is a convenient arrangement when you're a small-time musician who doesn't have the time or money to manage your catalogue; but these management decisions are taken out of your hands. If you want to grant a free license to a charity event or offer a reduced fee for a career-advancing event, you'll find that decision isn't yours to make.

All music is assumed to be under GEMA's control unless the artist can prove otherwise.

Unlike ASCAP, BMI, PRS, etc., GEMA isn't opt-in. And it's pretty tough to opt out. GEMA tends to "play it safe" by claiming music it doesn't own.

Like other PROs, GEMA distributes licensing fees to top-selling artists.

This distribution scheme is unlikely to change in the hands of GEMA. Its so-called "full members" (members who have achieved over €30,000 in GEMA revenue over a five-year period) are the only members allowed to vote on issues or hold controlling positions. Any artist not within this elite group has to watch his or her fees being redistributed to already wealthy artists while being prevented from attempting to effect any change in the prevailing structure.

GEMA assumes (like other PROs) that every venue plays only music from top-selling artists.

For underground music venues that mainly feature non-mainstream and independent artists—like many dance music clubs—this means that a portion of the fees collected for these events will likely find their way into the bank accounts of mainstream artists and advertising jingle writers, whose music was never played during the event, while some artists will never see a single cent for their music, however popular it may be.

GEMA splits music into three categories which affect rates collected and royalties paid and arbitrarily decides for the artists what category their music falls under.

It classifies music into three categories: entertainment [Unterhaltungsmusik], serious music [Ernste Musik] and functional music [Funktionsmusik]. It then subjects these categories to different fee rates, membership requirements and weighting in the points system they use to calculate royalties. Unsurprisingly, U-Musik gets the worst of this arrangement, having the highest membership requirements, the highest fee rates and the lowest values for royalty calculations

Unlike other PROS, GEMA is a "for-profit" organization that enjoys a government-granted monopoly and legal powers.

Making all of this worse is the fact that GEMA is a private interest "for-profit" organization, unlike most PROs which operate under a "non-profit" status. GEMA also operates as a monopoly, a problem made worse by the German government's decision to grant it legal power to "protect" the rights of its members.

How GEMA went from bad to worse

For years, the German government seemed to have no problem with GEMA's tactics and monopolistic operation. In fact, its only complaint was directed at GEMA's complex fee structure. GEMA responded to this by streamlining its rates with a clear eye on maximizing income. It was required to negotiate these changes with club owners and other affected parties, but its monopoly position basically turned the discussion into GEMA stating, "Here are your new fees," and walking away from the table.

Negotiations broke down sometime in late 2011, however, and an attempt to initiate legal arbitration failed as well. GEMA therefore decided to go ahead without the negotiations or arbitration and published a new tariff structure in the Bundesanzeiger (Federal Gazette) in April 2012, which effectively made the new tariffs legally-binding.

Now, the venues being hit hardest were nightclubs, especially underground clubs that catered to non-mainstream crowds and played non-mainstream music. GEMA's "streamlined" fee structure was built from the sort of opportunistic math that could only come from a self-interested monopoly. Any concessions to reality were thrown out the window in search of higher fees.

GEMA's opportunistic math

First, GEMA killed off yearly flat rates and replaced them with "per-event" charges. Supposedly, this was to "balance" fees between large and small venue owners. GEMA even claimed this would reduce fees for 60% of its "customers." But once it applied its GEMA-friendly calculations, everyone was guaranteed to see an increase in licensing costs.

GEMA calibrated the new rate for dance clubs (Tarif M-V) with the goal of charging approximately 10% of the gross income for a music event. Of course, they don't trust organizers to self-report their revenues accurately, so they estimate the gross income based on venue size and price of entry, and then charge 10% of that.

This estimation is based on three assumptions: 1) the capacity of a venue is one person per square-meter, measured wall-to-wall (i.e. beyond the dance floor and ignoring solid objects like furniture); 2) the event is full to capacity; 3) everyone is paying full price for entry.

This sort of mathematical assumption would ruin any normal business. Fortunately for GEMA, it's a government-ordained monopoly which exists solely to extract fees. The more it extracts, the healthier it is. Under the old flat-rate structure, a 500 square meter club would have paid around €7,800 annually. Under GEMA's new plan, this leapt to over €78,000.

When club owners complained about this exorbitant rate hike, GEMA responded (belatedly) with a nominal attempt at "fairness."

In answer to complaints about these distorted results, GEMA later introduced the Angemessenheitsregel (appropriateness rule), which allows promoters to apply for a partial refund if GEMA fees are well over 10% of actual gross income or if the venue's capacity is well under GEMA's one person / m2 ratio.

In other words, club owner would still need to pay up front and hope GEMA would cut them a (partial) refund check sometime in the next several months. Seeing as GEMA doesn't trust club owners to honestly self-report revenues (hence the lousy fee structure), it wouldn't be surprising if it decided these refund requests were dishonest as well, and rejected a majority of them.

This rate hike hit underground clubs hardest, but GEMA wasn't done punishing them yet. GEMA also levied a rate hike based on the length of the event, jacking the rate up by 50% once the event passed 5 hours and adding another 50% hike every two hours after that. This led to astronomical charges for clubs that routinely ran 10-hour-plus events or operated around the clock. As more outrage poured in, GEMA dialed this back to a 25% increase every two hours after the 8-hour mark -- not as bad, but still unaffordable.

GEMA tacks fees on hardware and data

Obviously, GEMA felt it still wasn't making enough money from these events, so it decided to start double-dipping by cramming its hands into the DJs' pockets.

[I]n late November GEMA announced another tariff, VR-Ö, which became known as the "laptop surcharge." It applied to all music performances that use blank media such as CDs, tapes, USB sticks and hard-drives. This already existed in the past as an automatic 30% surcharge on the entirety of GEMA music licensing fees if any of the DJs used mp3s or burned CDs. Now, the surcharge would no longer be a percentage of the fees, but would instead be calculated at 0.13€ for every mp3 file on the DJ's computer. Every song over five minutes costs an extra 20% per minute. Performers and promoters all over Germany were not pleased, especially since the rate appears to charge all files on a DJ's performing device, regardless of how many songs they actually play.

The backlash

All of this led to protests against GEMA and its club-killing license fees. A petition managed to gather enough signatures to get the government's attention. The German government looked into GEMA's fee structure and its opportunistic club revenue calculations. GEMA reentered negotiations with artists' representation and rolled back its fee structure to its pre-"streamlined" levels. It also adjusted its "laptop surcharge" to a flat rate of 50 euros per 500 songs, making this more affordable for DJs, if not actually any less presumptuous and stupid. (RA says some Germans feel this is nothing more than an opportunity for GEMA to jack the rates later on its newly collected list of registered DJs.) There's also been a call for German legislators to craft policies to regulate GEMA's actions.

The outcome of this controversy has been a little better than expected, considering GEMA's horrible track record. Still, as is evidenced by GEMA's ongoing battle with Google/YouTube, the rights organization still has a long way to go before it will be considered anything other than predatory and overbearing. German artists should at least be given the chance to opt out without having to jump through GEMA's hoops.

And all rights organizations should start making an honest effort to track actual usage, rather than simply throwing more money at those artists who already have plenty. It's 2013 and the technology exists to make this possible. PROs (and GEMA) are simply being willfully obtuse by pretending they can't do anything better than cut checks while eyeballing the latest Billboard chart.

TorrentFreak has discovered that the Center for Copyright Information (CCI), better known as the company running the whole "six strikes" scheme in the US, somehow had its company status revoked last year for reasons unknown. However, this could have serious consequences:

“If entity’s status is revoked then articles of incorporation / organization shall be void and all powers conferred upon such entity are declared inoperative, and, in the case of a foreign entity, the certificate of foreign registration shall be revoked and all powers conferred hereunder shall be inoperative,” the DCRA explains.

It also may face penalties and fines. It appears that this may have just been a paperwork screwup, which does happen, but given the organization's overall mission, you would think that they would have been a lot more careful dotting their i's and crossing their t's.

In lean times like these, it's getting tougher to get funding for science and technology research, especially for innovative but high-risk ideas. It's no surprise that both the government and the private sector seem to feel more comfortable investing their money in more conservative "sure thing" efforts these days. While the scientific funding system is far from perfect, some of the attempts to "fix" it are making it even worse. Here are just a few (good and bad) examples.

• Canada's scientific research and development agency, the National Research Council, has announced that it will now only conduct research that has "social or economic gain." Apparently, the President of the NRC actually said, "Scientific discovery is not valuable unless it has commercial value." Unfortunately, that's one giant leap backwards for mankind. [url]
• U.S. House of Representatives chair Lamar Smith (R-TX) is proposing to replace the National Science Foundation's peer review process with a new set of funding criteria chosen by Congress. Smith's "High Quality Research Act" would require the NSF to judge grants based on three criteria -- that the research will: advance national health, prosperity, welfare, and security; solve problems that are important to society at large; and not duplicate other research projects being funded by the government. [url]
• On a more positive note, the Thiel Foundation's Breakout Labs is aiming to change the way early-stage science is funded. Their grants of up to $350,000 over 1-2 years will enable startups to chase some risky ideas with groundbreaking potential, returning a small percentage of any commercial success back to Breakout Labs to help fund the future ventures. [url]

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

Last week, in writing about the silly backlash to Zach Braff's successful Kickstarter project, we noted that he claimed he had the data that showed his success did not take away from other Kickstarter projects, but rather it appeared that Braff brought a lot of new people to Kickstarter, many of whom went on to fund other projects. But still, the ridiculous arguments persisted that somehow famous people using Kickstarter take away money from upstarts. It's as if these people don't understand what a non-zero sum game is. They assume, incorrectly, that if one (famous) person is succeeding, it means one (non-famous) person is not. Perhaps the worst example of this was a piece by Reginald Nelson at TheWrap which ridiculously attacks Kickstarter's founders, arguing that these moves harm "the creative class."

To (hopefully) put an end to such ridiculousness, Kickstarter itself has shared the analytics and data that Braff was talking about concerning the impact of his project (as well as the Veronica Mars project, which is the other big one that some people have complained about):

The Veronica Mars and Zach Braff projects have brought tens of thousands of new people to Kickstarter. 63% of those people had never backed a project before. Thousands of them have since gone on to back other projects, with more than $400,000 pledged to 2,200 projects so far. Nearly 40% of that has gone to other film projects.

We’ve seen this happen before. Last year we wrote a post called Blockbuster Effects that detailed the same phenomenon in the Games and Comics categories. Two big projects brought tons of new people to Kickstarter who went on to back more than 1,000 other projects in the following weeks, pledging more than $1 million. Projects bring new backers to other projects. That supports our mission too.

I'd hope this puts to rest the ridiculous claims, but somehow, I doubt it will (and the comments on the Kickstarter blog post suggest people will still complain anyway).

I guess I can't say for sure how I would react to a negative review (besides reading some Techdirt comments directed at me), but I'd like to think that I have thick enough skin not to make a complete ass out of myself. That's why it always surprises me to see companies that should know better poop their pants over what customers (or non-customers) say on sites like Yelp and Reddit. Whether it's suing customers or issuing DMCA notices, I simply fail to see the logic in pissing off even more people with that kind of behavior. If someone posted a negative review of one of my books for instance, even petulantly, I'd prefer to look at it as an opportunity to both learn from the negative review and appreciate the fact that someone out there cared enough to write something about it at all.

Or, if you're Amy's Baking Company, you can write off all the complaints as coming from "haters" and then make a complete ass of yourself on your company's Facebook page. That restaurant has an interesting history of poor service, garnering poor reviews on Yelp, and even cursing at customers and tossing them out of their establishment for complaining. The woman who runs the place (you'll never guess what her name is) appears to have the business sense of a drunken chimpanzee. In one of the all-time worst decisions of anything ever, they decided to bring in Gordon Ramsay's show Kitchen Nightmares for the stated purpose of proving to their customers that their food is crazy good and the haters are all idiots. Those that have watched the show in the past can probably already hear the freight train of doom headed Amy's way.

On Friday night's episode of Kitchen Nightmares, shouty chef Gordon Ramsay quit for the first time ever in the show's 82-episode history. Amy and Samy Bouzaglo — owners of Amy's Baking Company in Scottsdale, Arizona — blamed everyone for their troubles, including "haters" and "bloggers," but not themselves. The owners did not give service staff tips (pocketing the money instead) and admitted to having fired over 100 employees. Said Ramsay: "After about 100 Kitchen Nightmares, I met two owners I could not help, it is because they are incapable of listening."

I'm not normally one for reality shows, but go watch this. Seriously. The level of crazy in Amy and her husband Samy is as epic as it is entertaining. Right off the bat, Amy breathlessly rails against "haters" and "bloggers" who are apparently to blame for her serving variously under-prepared and over-prepared food, wait times that are measured in hours for customers, and food combinations that would make even an amatuer cook blow their brains out in dismay. Still, the whole point of the show is to help failing restaurants turn things around, right? So obviously things went poorly on the show, the public reacted, and Amy and Samy learned their lesson and got their shitake mushrooms together.

Of course they didn't. Instead, their Facebook page went at times all-caps nuclear, with some of the greatest combinations of religiosity, anger, and cursing I've ever witnessed. Some treasures of highlights for you to enjoy.

"We will not bend to the will of these haters and sinners."

"I AM NOT STUPID ALL OF YOU ARE. YOU JUST DO NOT KNOW GOOD FOOD. IT IS NOT UNCOMMON TO RESELL THINGS WALMART DOES NOT MAKE THEIR ELECTRONICS OR TOYS SO LAY OFF!!!!"

"I am keeping note of all names here. We will be pursuing action against you legaly, and against reddit and yelp, for this plot you have come together on. you are all just punks."

"WE ARE NOT FREAKING OUT. WE DO NOT CARE ABOUT A "WITCH HUNT" I AM NOT A WITCH. I AM GODS CHILD. PISS OFF ALL OF YOU. FUCK REDDITS, FUCK YELP AND FUCK ALL OF YOU. BRING IT. WE WILL FIGHT BACK."

Now, it should be noted that Amy and Samy have since claimed that someone hacked their Facebook page. Reading the above posts, which have since been deleted, you may be inclined to think that level of crazy is obviously the work of troublemakers. To that I suggest again watching the episode. Either someone is doing an immensely accurate impression of these two, or it was them and they aren't enjoying the blowback that comes with pissing off everyone.

So, what's the lesson that should be learned here? Is it that you shouldn't treat your customers like garbage? Is it that you shouldn't lash out about poor reviews online, regardless of whether you agree with them or not? Is it that you shouldn't seek out Gordon Ramsay as a way to vindicate yourself? Or is that reacting to bad press from all the above by blowing an o-ring on your company Facebook page and then crying hack only makes you look petty?

None of the above. The lesson here is that you shouldn't go to Amy's Baking Company, because if the food doesn't kill you, I think there's at least a chance Amy will.

I'm not sure where vice president Joe Biden is getting his information, but he seems rather confident that a tax can be levied against "violent media." He may want to check with the Supreme Court, which has ruled against regulating violent video games and found taxing certain varieties of speech differently to be a violation of the First Amendment.

Possibly Biden just got carried away with the jovial spirit of censorship pervading the post-Sandy Hook political climate. Or maybe he was just in an overly-agreeable mood and started making affirmative statements without considering what he was saying.

Or maybe he was just "playing to the crowd," which was entirely comprised of reps for various religious/community groups.

Those present for the Monday evening meeting included Franklin Graham, son of the evangelist Billy Graham and CEO of the Billy Graham Evangelistic Association, and Barrett Duke, the vice president of the Ethics & Religious Liberty Commission, the Southern Baptist Convention’s public policy arm.

The meeting also included Bruce Reed, Biden’s chief of staff, and Melissa Rogers, the director of the White House Office of Faith-Based and Neighborhood Partnerships, according to people who attended.

This is not to say that all members (or even all representatives) of religious communities are censorious or prone to pushing their subjective morality on others. There are several exceptions. Franklin Graham, however, isn't one of the exceptions.

Graham, two people in the meeting said, told Biden the government should consider taxing media companies that broadcast violent images and produce violent video games.

He floated the idea that media and entertainment that portray violence should be subject to a special tax, with the proceeds going to help victims and their families," said Rabbi Julie Schonfeld, the executive vice president of the Rabbinical Assembly.

Let's stop here for a moment and take a look at this proposal, possibly in the way that might befit a nation's Vice President.

First off, the idea is bad and Graham should feel bad. As was mentioned above, applying additional tax to certain forms of speech is a clear violation of free speech rights. The government would be applying this tax to whatever it arbitrarily deemed "violent" enough to qualify for the "sin tax." (This is really what this amounts to -- a tax on certain speech and, indirectly, certain consumer behavior.)

Secondly, the direct flow of tax revenue from "violent media" to "victims and their families" makes an implicit connection between the two principals. This links the two in the government's eyes and in the public's eyes. This also handily allows the government to dodge the fact that there is very little, if any, explicit connection between "violent media" and violence. In essence, this presumes guilt on violent media creators and punishes them for exceeding some arbitrarily acceptable "violence" threshold.

Then there's perhaps the most troubling aspect: who decides what amount of violence is non-taxable and where does that line get crossed? If it's a PG-13 film, does it go untaxed? Does any M-rated game immediately have the tax applied? Will game developers and filmmakers explore other paths, like explicit sexuality, simply because violence gets taxed and sex doesn't? Or will they, more likely, adapt to the new chilling effect and produce stunted, sanitized output?

There are other questions to consider as well. With the consumers footing the bill for violent movies and games, will this price hike affect purchases by attaching some sort of stigma to the products themselves? Would the government label these items with something like: "2% of this purchase goes to victims of violence," thus making consumers feel complicit in violent criminal activity simply by purchasing the media?

[Bonus: will the MPAA be involved? It is one of Biden's buddies and its rating system is built on one of the most bizarrely abitrary set of 'standards' in the entertainment industry.]

These are just a few aspects that should be considered before anyone even brings the subject up, much less offers Vice Presidential-backing for the idea. But Biden seems almost charmingly naive in his response:

Biden told Graham that there was “no restriction on the ability to do that, there’s no legal reason why they couldn’t” tax violent images, Clark added.

I'm guessing at this point someone has gotten word to Biden that there's actually at least one legal reason the government can't tax "violent images," because there has been no further word from either proponent of this terrible idea.

Graham’s representatives did not respond to requests for comment. Biden’s office also did not respond to requests to comment about the meeting.

Maybe Biden felt this conversation would never leave the room and therefore felt comfortable making ridiculous claims. He certainly appears to have tried to chill a little free speech himself.

Five people who attended the 2½-hour meeting told POLITICO that Biden made a specific plea to those present to keep his words off the record from reporters.

“He basically just said in general that these stakeholder meetings that if you put words into the vice president’s mouth it sometimes comes out wrong and gets misquoted,” said Shantha Alonso, the director of the poverty program at the National Council of Churches.

Well, that's a nice out to have. I guess we'll see if the "I was misquoted/comment was off the record" excuse gets run up the flagpole sometime soon. If it doesn't, we might be safe in assuming that, no matter what conclusions the CDC reaches in its study of violence and violent media, Biden and like-minded supporters will be moving forward with their reinterpretations of the First Amendment.

(h/t to Techdirt reader Colin for sending this our way. Not sure which Colin it is as multiple Colins come up in the search, but he knows who he is and can certainly take credit for the tip in the comment section.)

We keep hearing the MPAA and others talk about how much Hollywood is suffering from piracy and how they can't fund new movies and how they're having to lay people off. And then there's this, suggesting something else may be going on:

Consider: the top 20 companies in the United States ranked by market capitalization include no media companies. But according to figures assembled for The New York Times by Equilar, which compiles data on executive compensation, media companies employ seven of the top 20 highest paid chief executives.

The names are familiar and the numbers are large: Leslie Moonves of CBS ($60,253,647), David M. Zaslav of Discovery Communications ($49,932,867), Robert A. Iger of Walt Disney ($37,103,208), Philippe P. Dauman of Viacom ($33,396,104), Jeffrey L. Bewkes of Time Warner ($25,670,263), Brian L. Roberts of Comcast ($25,087,379), and Rupert Murdoch of News Corporation ($22,418,292).

Basically, the study showed that media companies might not be as big as companies in other industries, but they pay their execs way more. Basically, the top execs in the media business make much more than comparable execs in other industries, even if the companies those execs work for are doing much better:

The data indicates that average pay of the 10 highest paid chief executives for media companies was about $30 million, more than the captains of technology or finance and other industries, who average $6 million to $14 million less.

A few years ago, a friend who worked in the movie industry told me that the industry changed completely when the top executives started thinking that they were the stars. Suddenly, the focus shifted from making good entertainment to making sure they were the highest paid people around, and making sure that everyone knew it. I thought it was just a random comment at the time, but the data suggests that there's at least something to the idea that media execs have way outsized salaries.

Either way, though, it does seem somewhat ridiculous to see any of the folks on the list above complaining that their business is in trouble when they're pulling down salaries like that.

There's a lot of buzz about Sen. John McCain's proposed Television Consumer Freedom Act (pdf and embedded below), a bill designed to encourage cable companies to unbundle the TV stations they offer, and force the networks to do the same. It also takes away the weak bargaining chip that some networks have attempted to play against Aereo, in which they threaten to pull their broadcasts from the open air, by making them sacrifice broadcast licenses in order to do so.

Everyone on the consumer side agrees that they'd like to have à la carte choices from cable companies, but beyond that there's no shortage of debate as to how effective the bill is likely to be and whether the end result would actually be any better for those consumers. The television market is badly distorted at all levels by monopoly interests and those whiffs of not-quite-collusion by groups of companies with a shared interest in maintaining the status quo, but is this bill capable of overcoming that? And is the practice of bundling really at the heart of the problem, or just a good public face for the deeper issues?

This is hardly the first attempt to stop the practice at either the network or cable provider level. Some courts have already found bundling by cable providers to be legal and not anticompetitive; meanwhile Cablevision is currently pursuing an antitrust suit against Viacom for the network's bundling of stations that it sells to providers. Most of the details of the latter are under seal, but one notable point is Viacom's claim that it already offers channels individually, they just cost way more. If that's true of all Viacom's content, then it wouldn't be affected by McCain's bill anyway, which still permits bundling as long as there is an à la carte option.

And even if it's not true, it just underlines the core problem of this approach: the bill doesn't give networks any reason to make individual channels affordable or desirable. They either already offer an expensive à la carte menu that nobody orders from, or they could easily do so. Moreover, it's not as though the justification for bundling offered by the networks is completely falsified: they can spend more money on niche channels and programs by subsidizing them with the revenue from more broadly popular fare. Of course, it's not as though that justification isn't exaggerated and twisted to suit their needs either, nor is it true that the same fundamental idea couldn't exist without bundling. Networks get more value from niche programs than just transmission fees: they care about audience reach, brand-building, competing with other forms of content, accumulating accolades for prestige shows and even, believe it or not, making good television. There's no reason their businesses could not be structured to continue subsidizing niche programming with popular programming in a slightly less direct manner.

So the final solution, as always, needs to be found in the market — and that's already happening. Basically every single noticeable trend in media consumption habits, not just in television but in music and publishing and every format, points towards a more à la carte world. It's not news that the networks and cable providers have dragged their heels on this in the hope of milking their incumbent position a bit longer, nor is it news that they are privately a lot more freaked out by the cord-cutting movement than their public statements admit. Ultimately, it will be consumers making choices that force these companies to either adapt or perish.

But for that to happen, innovators do need to be able to actually give the consumers those choices. If the market has become so badly distorted that innovators are being locked out, then legal action and new laws are needed. And that's why the aspect of the bill that is likely to be the most effective (not to mention the most interesting) is the way it all seems to come back to Aereo.

The fight that Aereo started sits at the core of almost everything in the bill. Network owners don't like Aereo because they don't want to lose their retransmission fees from cable providers. Cable providers don't like Aereo because they don't want to lose the appeal of the major networks which, despite the ascendence of cable channels, still sit at the core of their service bundles — and because, generally, they don't want cord-cutters to have more options. McCain's bill basically says: Aereo or no Aereo, consumers need choices, and they're going to get them, whether you like it or not.

Is it a worthwhile step? Yes — or, at least, it's hard to see how it could do any harm, even if it does prove ineffectual. Is it the best approach? No. It almost feels like a bet on Aereo's failure. If Aereo were permitted to innovate, rather than being forced to jump through endless technological hoops and still spend more time in court than in the workshop or the boardroom, then the market would already be giving consumers what they want and pushing the networks and cable providers to become more competitive. If there is to be legal reform, it shouldn't be another layer of conditions and caveats on broadcast licenses and the retransmission fee structure that attempts to force the hand of the networks and cable companies, it should be a clarification (and probably a relaxation) of the rules, removing the legal and regulatory uncertainty that holds disruptive startups back. Television doesn't need a Consumer Freedom Act — consumers already have lots of freedom, they just don't have many choices in how they exercise it. The heart of McCain's bill is in the right place, but a Television Innovator Freedom Act is what we really need.

The saga concerning the DOJ scooping up phone records of Associated Press has continued to expand. The DOJ sent a quick and rather disingenuous letter in response to the AP's complaint. In it, the DOJ -- contrary to its own history of abusive practices concerning reporter phone records -- insists that it was incredibly careful to only seek key information involving classified information that "can risk lives and cause grave harm to the security of all Americans."

The AP quickly hit back by calling bullshit on the DOJ's claims of a "narrowly" focused subpoena:

The scope of the subpoena was overbroad under the law, given that it involved seizing records from a broad range of telephones across AP’s newsgathering operation. More than 100 journalists work in the locations served by those telephones. How can we consider this inquiry to be narrowly drawn?

Furthermore, the AP claims that while the DOJ says that only some records were obtained, the original notification it received indicated a very broad swath of phone records.

However, the real question that's beginning to come out is whether or not this was really such a serious issue that the DOJ needed to sweep in and grab a bunch of phone records, likely revealing protected journalistic sources. We've discussed in the past how the Obama administration has been the most aggressive in history in going after whistleblowers and anyone who leaks to the press -- and, because of that, many are rightly wondering if that's what's driving the DOJ here. As more details come out, there is a very strong indication that the investigation had absolutely nothing to do with security at all.

A few years ago, we wrote about how Daniel Ellsberg (one of the most famous whistleblower/leakers of all time) speculated that President Obama's unprecedented attacks on whistleblowers were really out of embarrassment about questionable things his administration was doing being revealed. That may be the case with this particular leak and investigation as well. The AP has pointed out repeatedly that the report they published -- concerning the thwarting of another underwear bomber -- had been held back, but they only published it after the government had said there was no more threat:

We held that story until the government assured us that the national security concerns had passed. Indeed, the White House was preparing to publicly announce that the bomb plot had been foiled.

But the issue appears to go deeper than that. Eric Holder made some extreme claims about the leak to defend the collection of the phone records:

This was a very serious leak. A very, very serious leak. I’ve been a prosecutor since 1976, and I have to say that this is among, if not the most serious, it is within the top two or three most serious leaks I’ve ever seen. It put the American people at risk. And that is not hyperbole. It put the American people at risk.

However, as emptywheel points out in the link above, John Brennan, now head of the CIA, apparently was the one who revealed to the press the fact that the bomber was a US agent and that there was no real risk to anyone. During his appointment hearings, when questioned about leaking that info to the press, Brennan explained:

I think what you're referring to, Senator, is when I had a teleconference with some individuals, former government officials from previous administrations who were going to be out on talk shows on the night that a IED was intercepted.

And so I discussed with them some of the aspects of that, because I was going on the news network shows the following day, I wanted to make sure they understood the nature of the threat and what it was and what it wasn't.

And so what I said, at the time, because I said I couldn't talk about any operational details, and this was shortly after the anniversary of the Bin Laden takedown, I said there was never a threat to the American public as we had said so publicly, because we had inside control of the plot and the device was never a threat to the American public.

When asked more specifically about this, Brennan again insisted that there was no threat because the US was in control. As emptywheel asks, if this particular leak of information -- which it seems Brennan did directly -- was really so much of a threat that "put people at risk," then why would Brennan be appointed and approved to head the CIA?

So, now we have a situation where the AP reported on information which it's pretty clear the government told them was no security risk. That resulted in the eventual "outing" that the guy who had the bomb was a US controlled agent, which is apparently why the US government was upset. But that outing seems to have come not from these reporters, but from the now head of the CIA directly to members of the press. And yet it's the reporters that are being aggressively investigated, while Brennan gets the job at the top of the CIA?

Once again, this points to an administration cracking down on leaks not because of any real risk or threat, but out of embarrassment.