For quite some time now, we've been following the bizarre effort in Germany to establish "neighboring rights." This was a plan, first floated a few years ago, to force aggregators to pay to link to news sources. This year, that effort has really ramped up. In March, news came out that such a proposal was being written, and the first draft was released in June, horrifying many who actually understand how the internet works. Basically, if you make money (say via some ads on your site) and link to a source with a short excerpt, you would have to pay. This includes those who do so via their own blog or social network site. Quote an article on a Facebook account, which you also use to make some money (say to promote your business) and you may have to pay.

As is described in a recent comment from Mathias Schindler, who has been attending the various hearings on these neighboring rights proposals, this appears to be a misguided effort by publishers, who have failed to adapt, to capture revenue from anyone who incidentally profits from the information they provide:

"The publishers argued that the bank consultant was only able to advise his clients because of the journalistic work in the published article. So that means the publisher deserves a fair share of any money made from that scenario. This was the proposal from the start."

We've seen this kind of thinking for years, and it really represents a fundamental misunderstanding of economics, driven by a variety of false assumptions, including the idea that the only way to determine value or benefits is through monetary transactions. This is obviously crazy when you put things into context. At the very same time that these publishers are demanding payment to link to their content, they and others are paying search engine optimizers to get more links, recognizing that such traffic is important. Basically, implicitly they recognize that traffic, absent money, is valuable, but they're now trying to add money on top of that.

One of the most misunderstood aspects of economics is the allocation of benefits. It's all too common for certain players in a market to assume that they should accrue money for anyone and everyone who benefits from their work. But that is not only impossible, it would actually massively limit growth. Such "externalities" or "spillovers" (depending on which economist you're talking to) have a major impact on economic growth, which often comes back to help the originator of the work, even if they don't directly receive payments for it. The research of the "new growth" economists over the past couple decades have really zeroed in on how externalities from information, such as third party benefits, are the key ingredient in economic growth. Clamp down on that, and you clamp down on the ingredient needed for economic growth.

Of course, if you want to demonstrate the fallacy of the publishers' argument, it's easy: just flip the situation around. If the publishers truly believe that anyone who uses information found in a publication to profit owes them a cut, then what if information leads to a loss? Say that I rely on information in a German publication to make an investment in a company that goes out of business. Should the publisher now repay me for my losses? Taken to the logical extreme, that's exactly what the publishers appear to be arguing. Take it one step further: let's just say that the article I read in a German publication wastes my time and provides no useful information. My time is valuable, and they've now wasted it. By their own logic, should I not be able to send them an invoice for wasting my time?

Somehow, of course, that flip side of the equation never gets discussed. Because this is not about logic. This is about publishers who don't want to adapt looking for protectionism on the upside only, against actual innovators. That the German government appears to be treating such concepts seriously suggests a significant risk for Germany to end up putting a massive chill on innovation and economic growth, by trying to tax the very beneficial externalities of information in a manner designed solely to protect one side of the market for a group of businesses who are trying to stifle competition and innovation. It's a dangerous move by a government who should be encouraging innovation and growth, not stifling it.

People have been smoking tobacco for centuries (if not longer), but the health problems associated with tobacco have only been shifting from correlation to causation over the last decade or so. As usual, technology might be able to help... by improving how tobacco is used -- with various kinds of smokeless delivery mechanisms or with better treatments for addiction/cancer/etc. So the trend of a shrinking population of smokers might slow down or reverse course if there's a breakthrough in tobacco tech someday. But don't hold your breath.

• Smokers in the US could be extinct by 2046 -- not from dying, but because fewer and fewer people are smoking and a simple extrapolation points to about 34 years from now. A Citibank report has a few other linear predictions for the end of smoking: the UK in 2040, France in 2118, Germany in 2280... [url]
• In 2000, Philip Morris commissioned an infamous study in the Czech Republic on the impact of smoking -- which found that the cost "benefits" of smokers' early mortality along with cigarette-tax revenue outweighed the economic drawbacks of the healthcare costs for smokers. Live fast, die young... and help the national debt/deficit. [url]
• The FDA is looking at dissolvable, smokeless tobacco products that look a lot like candy. Chocolate, peanut butter and nicotine -- three great tastes that taste great together. [url]

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

You may remember that almost exactly a decade ago, the news leaked that key Iran-Contra political operative John Poindexter, still working for the US government, had been working with the NSA to create a system called Total Information Awareness or TIA. The news quickly went viral, with people (quite reasonably) worried about the government snooping on their private data. Suddenly everyone was against this program, Poindexter was soon out of a job, and the TIA was officially put on the shelf. Except... that's not quite what happened. As you should be aware by now, the NSA has been Hoovering up pretty much every bit of data it can, sometimes using confusing loopholes or legal changes to make it possible.

As a writeup at the NY Times notes, the NSA is basically doing everything that was promised in the TIA program... but without the basic safeguards that were included with TIA:

What’s missing, however, is a reliable way of keeping track of who sees what, and who watches whom. After T.I.A. was officially shut down in 2003, the N.S.A. adopted many of Mr. Poindexter’s ideas except for two: an application that would “anonymize” data, so that information could be linked to a person only through a court order; and a set of audit logs, which would keep track of whether innocent Americans’ communications were getting caught in a digital net.

And let's not even waste time discussing how the NSA actually had a much cheaper program that actually did have safeguards, because the guy who exposed the world to that almost end up in jail for a few decades.

Of course, the bigger issue here is that in gathering pretty much everything they can, actually making sense of the data is becoming more and more difficult:

The N.S.A. came up with more dead ends than viable leads and put a premium on collecting information rather than making sense of it.

Of course, that doesn't mean people's privacy isn't being violated (something even the NSA itself will admit when forced -- though it still refuses to say how many Americans are having their privacy violated). So the end result is that the NSA is collecting all of this data, violating people's privacy (and, most likely, the 4th Amendment). And, out of that they're turning up very little in the way of useful leads.

That's not exactly a compelling pitch.

But, as the NYT piece notes, even though the NSA built a system more powerful and privacy invading, and less effective (and probably more costly) than the original, much decried, Total Information Awareness program, very few people seem to be raising the alarm or particularly concerned about it. Apparently, the NSA has learned the best secret of all. If you don't actually name the program something creepy and Big Brotherish, and don't have a conspiracy-theory-inspired logo to go with it, you can get away with all sorts of stuff. There. Now don't you feel safer knowing that your tax dollars are funding this kind of thing?

We've talked a bit about how the International Telecommunications Union (ITU) -- a part of the UN -- is getting ready for a big meeting in Dubai in December (the "World Conference on International Telecommunications" -- WCIT), where it will seek to put in place some new internet governance rules. There are significant concerns that the rules being discussed will favor certain governments and fracture the internet, by letting incumbent international telcos both tax internet usage and track all usage (potentially blocking anonymous usage). Part of the problem, of course, is that the ITU has been extraordinarily secretive.

In response to the criticism, the ITU is claiming that it will now be more open, including making the various draft plans publicly accessible. Still, it often looks like they're making empty gestures towards openness, rather than showing any real commitment towards it. Take, for example, the FAQ the ITU released (pdf and embedded below) about the WCIT, in which they say that the public is welcome to come all the way to Dubai... to find out if they'll be allowed in the meeting. Seriously.

CAN MEMBERS OF THE PUBLIC ATTEND WCIT-12?

At the opening of WCIT-12 the Secretary-General of ITU will propose that the public be allowed to be present at the conference venue, in line with the practical arrangements adopted at similar ITU conferences. A formal decision on admitting the public will be taken at a meeting of the heads of delegations on the first day of the conference. This would permit the public to attend plenary sessions and certain committee meetings. Webcasts of plenary sessions are also planned.

Got that? Fly to Dubai, show up, and then wait for them to take a vote on whether or not to let you in. If they decide not to let you in, then, um... well... I guess you can enjoy the world's largest shopping mall while a bunch of bureaucrats who don't understand the internet carve it up and break it apart next door. That's not exactly being "open" to the public, now, is it?

It's no secret that the real strategy of many of the porn companies who have turned into copyright trolls is to use public shame into the game as a way to pressure people into settling. As per usual, these companies almost never follow through on actual lawsuits against people. They do just enough to get ISPs to cough up identifying information and threaten to file the lawsuit. In some cases, the threat of having to fight a lawsuit is enough to make people settle (even if they're innocent). However, often enough, it seems that the companies know that merely the possible embarrassment from publicly claiming someone downloaded porn will make them settle. It seems that one German copyright troll, Urmann and Colleagues (U+C) is skipping the legal middleman, and is just going to start posting information it's collected on people it accuses of infringement directly on its website, hoping this will create incentives to pay up, without the company having to go through any actual legal process. Of course, threatening to expose information about you unless you pay up, sure sounds an awful lot like extortion...

The article also notes that some legal experts believe that this move will violate Germany's (somewhat strict) privacy laws. Either way, U+C claims that it has a list of 150,000 people who it wants to pay up. I actually wonder if a list quite that large actually makes it counterproductive. When you're in the company of so many people, perhaps it's not quite so embarrassing... Of course, given that, perhaps it's not surprising that U+C has indicated elsewhere that it's going to be releasing the info in drips and drabs, and will be targeting those who have the most to lose if it's exposed that they were downloading hardcore porn.

According to comments an Urmann insider made to Wochenblatt, the law firm is planning to target the most vulnerable people first – those with IP addresses registered to churches, police stations and – quite unbelievably – the embassies of Arab countries.

How nice of them.

As the two major party Presidential and Vice Presidential candidates begin the fall election season by doing various bus tours around the country, there's one other effort that's going to be on the campaign trail as well: the open internet. Reddit and Breadpig founder Alexis Ohanian has announced the Open Internet 2012 bus tour, hitting various towns and cities across the country, highlighting the value and importance of the open internet. As we've noted in the past, the importance of openness often falls by the wayside, since "openness" doesn't have its own lobbyists. But that can change. Reddit is helping to pay for gas, but Ohanian has also launched a crowdfunding effort on IndieGoGo to help out as well. Check it out, and in 2012, make sure to vote "Open Internet!"

We don't tend to be too sentimental about these things, but a few weeks back, I realized that we were rapidly approaching the 15th anniversary of the start of Techdirt in its earliest form. On August 23rd, 1997, I sent out the very first "Up To Date" email newsletter, which was roughly modeled on Danny O'Brien's much more clever and much more knowledgeable (and sadly missed) Need to Know newsletter (for what it's worth, Danny discovered my mimicry a few months later, and has always been quite kind about it). The very first newsletter was sent to -- I believe -- three people, and was really an alpha test of the concept. It's obviously quite different from what Techdirt became, but you can also see some inklings. Some of the things in the newsletter were silly (underestimating HTTP as a protocol? Oops!). Some were pretty good predictions (CNET's SNAP portal being a joke, Netscape trying to charge for its browser being a recipe for failure).

Either way, today marks 15 years of doing this in one form or another. One week after this initial test, the newsletter went out to about 100 people -- mostly fellow students at Cornell's business school. A month later we were up to about 1,000 subscribers, and it built from there. By February of the next year the website finally came into existence (and with it, the Techdirt name, which beat out my second choice "bluedot" because a friend told me that sounded boring, while Techdirt sounded edgy). A year after that, the site itself morphed into a blog -- though the word "blog" still didn't exist -- using Slashcode 0.3 (which was a complete mess). And within a few years it was a part of my full time job.

Anyway, I wanted to share the moment, as I figured some of you might get a kick out of seeing that original offering. We're hoping to put together some sort of gathering in the fall to celebrate this anniversary (too much stuff going on to have it coincide with the actual date) and we'll share more info on that as we finalize those plans. Either way, none of the last 15 years happens without you folks being dedicated readers, commenters, submitters, link spreaders, etc. From starting out with a total audience of 3 people to the millions who now read our content every month, it's been quite a ride so far, and I hope to continue going strong for at least another fifteen years.

We've talked about the ridiculous secrecy around the negotiating texts for the Trans Pacific Partnership (TPP) agreement. It makes no sense to have these documents secret and out of the view of the public, but it's what's happening. Because of that, we're forced to deal with very occasional leaks to get a partial view of what's being negotiated in our name without any oversight. ACTA was a somewhat similar situation, but there were more regular leaks there -- and we've heard that the USTR, in particular, has taken great pains to make it much more difficult to leak TPP text without revealing who leaked it.

However, it appears that some are (in some ways, quite literally) upping the ante in trying to pressure people into leaking the text. The folks over at ZeroPaid point us to some group that claims to have raised over $17,000 as a bounty for leaked TPP negotiating texts. They're asking for more pledges, though I have no idea whether or not the effort is legit. ZeroPaid points out that the site appears to be a project of Just Foreign Policy, which seems to at least be a legitimate organization, according to Guidestar. For what it's worth, the site also claims that you won't actually have to pay until the text is leaked, at which point they will ask you to fulfill your pledge.

The group's concerns seem reasonable as well:

The TPP negotiations have taken place under an unprecedented shroud of secrecy, denying all but a very few any input into the terms of the agreement. The chapters that have been leaked are quite disturbing, revealing plans that would threaten public health, the environment, internet freedom, and the general well-being of perhaps billions of people. Here's a little taste of what the agreement would include: foreign investor protections that would help corporations offshore jobs, powers that allow multinational corporations to challenge domestic regulations before international tribunals, a strengthening of patent and intellectual property rules which would, among other things, raise the price of life-saving medicines in third world countries, and the ability for Wall Street to roll back safeguards meant to restore financial stability worldwide.

Will this be incentive enough for someone to leak the text? I'm not so sure. I'd think that someone's basic conscience about having access to such a document should be a better reason, but you never know...

Ah, the whole fight over licensing and royalty rates for internet radio had been quiet for a little while, but has sprung back up thanks to Rep. Jerry Nadler proposing a music royalty bill that would effectively bump up the rates that cable and satellite radio stations have to pay to make them more aligned with the insanely high rates that internet streamers are supposed to pay (rates so high, and set by a group of judges who don't appear to know what the internet is half the time, that no real business can be built off of them). This is in contrast to a different, but similar, attempt by Rep. Jason Chaffetz to basically bring the internet rates back down to the same rates as those other providers.

Of course, this is all somewhat related to the RIAA's ongoing push for a Performance Rights Act, which would force radio stations to pay extra royalties for when they play music. Under existing law, radio stations only pay the composers/songwriters for songs played on the air, due to the recognition that radio airplay is basically a massive advertisement for the musicians and it's silly to have stations pay the copyright holders for advertising their works. In fact, it's doubly crazy when you realize that the history of radio is filled with pretty indisputable evidence that the major music labels find tremendous value in radio play: payola. Payola is all about the labels increasing the airplay, knowing that it leads to all sorts of revenue elsewhere. But the RIAA is so insanely greedy these days that it's been begging for this form of a "bailout" for quite some time -- seeking to get radio stations to pay them for playing the same music that the labels are paying the stations (indirectly, of course, thanks to all the payola settlements) to play!

These proposals don't directly address that issue, but are clearly based on this idea. In fact, Nadler is incredibly upfront that he views taxing internet radio is his way of making up the money that isn't being collected from terrestrial radio:

“The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists," Nadler said in a statement. "The Interim FIRST Act would provide artists with fair compensation for the valuable creations they share with all of us."

In other words, because we can't fund an RIAA bailout off the backs of terrestrial radios (thanks in part to the powerful lobbying of the NAB), we'll instead increase the existing (and already crippling) tax on the useful and innovative services that are trying to help drag the RIAA (kicking and screaming) into the future.

Pandora is, quite reasonably, worried about this turn of events, noting that this new tax would be "astonishingly unfair."

Nadler seems to think that Chaffetz's plan is unfair because it would mean lower royalties from the internet streamers, but that's a gross distortion for a few reasons. First off, it assumes a perfectly static market, which is wrong. Second, it seems to assume that the identical number of services and the identical number of listens will occur. That's not true. As it stands now, the rates are so damaging that Pandora -- the top player in the space -- has made it clear it may never be profitable. Yes, never. Nadler's bill would effectively make sure that no one else in that market would be profitable either. The end result? Many of these services don't exist or never get started. That would actually mean fewer services, fewer listeners and lower royalties.

It's almost as if he has no concept of price elasticity. Lower prices can create higher total income. Also, the idea that any particular Congressional Rep. should be (effectively) determining what the "fair" price is for anything is, well, horrifying.

If these royalties are going to exist, is it really so crazy to think that perhaps (just perhaps) keeping the rates low, to encourage these useful new services to come along and grow, might be a good thing? But, instead, the RIAA and its members are so greedy for the largest payout per music listen, that they're clearly willing to kill off useful legal streaming services like Pandora. In the long run, that's not good (at all) for the record labels and the RIAA, but they've never been particularly good at seeing beyond the price per listen.

Either way, can anyone explain just why the government is bailing out the RIAA in the first place?

We were just discussing how some in law enforcement are overreacting to "threats" on Facebook, and someone in the comments pointed us to the case of Brandon Raub, which we had been unfamiliar with. Raub, a former Marine, posted some of his concerns about the government to his Facebook page, along with some rap lyrics. Raub's views definitely fall into what many consider to be conspiracy theory territory -- claiming 9/11 was an inside job, talking about the Illuminati controlling the world, etc. He also did make vague references to the idea that a "revolution is coming" and that a "civil war" was coming -- and even said that "I'm starting the revolution. I'm done waiting." The only directly "violent" thing he posted -- which gets covered in all of the press about Raub's situation -- is the line: "'Sharpen up my axe; I'm here to sever heads." Of course, what nearly everyone who quotes that line leaves out is that it's a lyric to the rap song Bring Me Down by the group Swollen Members.

Either way, it seems that these statements on his Facebook page resulted in him being detained in a psychiatric ward. A recent hearing ended with a decision that he needs to stay there for another 30 days. While government officials say he wasn't arrested, the video footage of law enforcement officials handcuffing him and pushing him into a police car sure looks like an arrest: It appears that a lot of folks have been speaking out about this -- with reasonable concern over whether or not the government is monitoring (private) Facebook pages, as was the case with Raub's page. Of course, it's more likely that some of his Facebook friends were somewhat concerned and "reported" his page. There's been a lot of talk about Raub's case -- especially in libertarian circles -- and many of them do ignore some of the statements he made that could at least raise some concerns from some people, though the context matters a great deal.

That said, many others are quite reasonably concerned that a few comments involving conspiracy theories and angry rap lyrics can get one carted off by the government to a psychiatric ward for over a month. In an interview from the ward, Raub notes that he'd actually been leaning towards re-enlisting right before all of this happened.

No matter what, the situation raises some serious questions about free speech rights with regards to social networks these days. While I don't have an issue with people investigating the details of a situation if comments could reasonably be interpreted to be a possible warning sign of a threat, it's troubling how these same comments could be taken out of context and mean nothing in terms of an actual threat. The fact that he ends up in a psych ward against his and his family's own best wishes is, at the very least, a big concern.

David Pogue, NY Times columnist and known copyright infringer, has a new post up over at the Scientific American discussing piracy; more specifically, Hollywood's insistence on driving people to piracy with its lack of digital offerings and a distribution system that depends heavily on artificial limitations.

The first issue plaguing Hollywood's thinking? The DVD is dead and no one in control has realized it. The future lies in streaming movies, not plastic discs. It took the recording industry several years to realize the fact that its customers were not nearly as attached to its physical products as it was. Add to that the fact that many people prize convenience over ownership and it's clear that trying to steer people toward purchasing all of their entertainment isn't the way to go.

Netflix's CEO says, “We expect DVD subscribers to decline steadily every quarter, forever.” The latest laptops don't even come with DVD slots. So where are film enthusiasts suppose to rent their flicks? Online, of course.

Streaming movies offers instant gratification: no waiting, no driving—plus great portability: you can watch on gadgets too small for a DVD drive, like phones, tablets and superthin laptops.

The demand is already there and, as the technology catches up, it will only increase. You can take your music anywhere but most DVDs are still relegated to DVD players. Yes, there are workarounds, but when consumers are looking for the least amount of friction, streaming a movie easily trumps burning off a copy or ripping it to the hard drive. If they can't get the films they want in the format they want, they'll either skip it entirely, find a "competing" provider or look for something else readily available through streaming services.

Streaming services or online rentals, if implemented correctly, would give the motion picture industry some steady, if not increasing income well into the future. But it's completely disinterested in implementing these services in a realistic fashion, instead choosing to double-up on artificial scarcity.

For all of the apparent convenience of renting a movie via the Web, there are a surprising number of drawbacks. For example, when you rent the digital version, you often have only 24 hours to finish watching it, which makes no sense. Do these companies really expect us to rent the same movie again tomorrow night if we can't finish it tonight? In the DVD days, a Blockbuster rental was three days. Why should online rentals be any different?

Yeah. Exactly. Why? Why 24 hours? Netflix, your main competition in this arena, will let you keep the DVD(s) all the way up until they actually shut down the DVD service, only this time for real. As for their streaming "rentals?" Whatever's available stays available for repeated viewings all the way up until it's yanked from the lineup, usually by one of you (points accusingly at the Motion Picture Industry).

Speaking of holes in the lineup, when are you (again with the pointing) going to stop doing this sort of thing?

[P]erhaps most important, there's the availability problem. New movies aren't available online until months after they are finished in the theaters, thanks to the “windowing” system—a long-established obligation that makes each movie available, say, first to hotels, then to pay-per-view systems, then to HBO and, only after that, to you for online rental.

Worse, some movies never become available. Star Wars, Raiders of the Lost Ark, Jurassic Park, A Beautiful Mind, Bridget Jones's Diary, Saving Private Ryan, Meet the Fockers, and so on, are not available to rent from the major online distributors.

How's that "plan" working out for you, Hollywood? Keeping those pirates at bay with your sometime/later/still later/possibly never windowing? To be honest, I don't think you really care. Once all the distribution lines have been wrung dry of any cash, it's time to retire back to the boardroom and blame filesharing for any numbers that seem slightly weak. Blame them if you must, but who's screwing who at this point?

Of the 10 most pirated movies of 2011, guess how many of them are available to rent online, as I write this in midsummer 2012? Zero. That's right: Hollywood is actually encouraging the very practice they claim to be fighting (with new laws, for example).

Look, I don't want to tell you how to do your jobs, but sweet something of somewhere, someone needs to be offering a little guidance. You don't offer rentals of movies people actually want. You do offer rentals of movies that everyone's sick of after their multiple appearances in various windows. Other movies you just flat out don't offer at all. And yet, it's piracy that's keeping you from "breaking even." I would assume someone has put a bit a thought into this self-inflicted predicament. Pogue finds something akin to an explanation browsing around Disney's website:

“Unfortunately, it is not possible to release or have all our titles in the market at once.” Oh, okay. So they're not available because they're not available.

"Not possible" being PR code for "not until we're absolutely forced to, but we will fight this every step of the way." But why all the fighting? It didn't work for the recording industry. It won't work for the movie industry. The television industry seems to have weathered the disruption slightly better, but still expends a lot of effort locking up currently running shows and shutting down live streams that would actually GAIN them additional viewers to sell to advertisers.

Pogue has appended a list entitled "5 Ways Hollywood Can Stop Digging Its Own Grave" to his post and they're all common sense (at least to the "layperson"). The largest Hollywood-wielded shovel should have disappeared long ago: the release window. Related: "When it's buyable, it should be rentable."

This is the way things work these days and it's not just something that went into effect over the last 72 hours. If pirates have your stuff several months before you're planning on releasing it to paying customers, how many paying customers do you expect to have left once you deign them worthy of throwing money at your product?

Final word from Pogue:

Listen up, Hollywood: Nobody ever went out of business offering a good product for sale at a reasonable price with an eye toward pleasing the customer. You should try it some time.

Game maker Ubisoft is pretty closely associated with annoying DRM and an insistence that it needs DRM to fight infringement. And yet... the company seems to be recognizing something fundamental as it experiments with "free to play" games that have elements that you can purchase within the game: the percentage of people who pay are the same in both cases.

Yes, you read that right. According to Ubisoft's stats, when they determine how many copies of their DRM'd games are infringing vs. how many people play free to play games without ever paying... they're both right about 95%. From that you could make the argument that the people playing "for free" in either case, just aren't that interested in paying. Thus, cracking down on the infringement isn't likely to make much more money -- and, in fact, may be an expensive waste of time.

Endlessly mounting tuition isn't the only factor turning a college degree into a lifetime of student loan payments. Textbook prices are keeping pace with tuition, both of which are charging far ahead of inflation and wages.

There's no monopoly on the textbook market, but over 80% of it is controlled by the top four publishers (Pearson, Cengage, Wiley and McGraw-Hill). This control gives them enough leverage to maintain a 65% gross margin on their offerings.

The newest faces in the textbook world aren't making anything better. EDMC (Education Management Corporation), which operates several for-profit post-secondary schools (Argosy, The Art Institutes, Brown Mackie College) has its own e-textbook publishing arm, Digital Bookshelf, which handles all of its e-book offerings. As recently as last year, some were hoping the move to digital books would bring these prices down. Instead, digital offerings are arriving locked down, requiring students to purchase access codes which prevent the sharing of books and eliminates the resale market.

Here's what happens when a well-respected instructor attempts to push back against EDMC:

It's a common scenario and most college students appreciate a teacher who's looking for ways to deliver a quality education without requiring them to make unnecessary book purchases. Unfortunately, in the case of Mike Tracy, a highly-regarded animator who'd been teaching at the Art Institute of California-Orange County for the past 11 years, refusing to make students buy an e-book they don't need may have cost him his job.

Tracy posted on his Facebook page that he's "been in a dispute" with the school for several months "over their policy of mandatory e-textbooks in classes where their inclusion seems arbitrary, inappropriate and completely motivated by profit.

This isn't just Tracy's opinion. The post also cites EDMC's own Faculty Federation as being opposed to the strong-arm tactics being deployed:

EDMC continues to insist on e-books only and wants sole discretion over what e-books are used, compromising faculty independence and expertise in choosing best resources for class.

Not only are instructors not allowed to opt-out of this "service," students are forced to pay extra for versions they may not even need.

Art Institute requires students to pay a $50-$75 fee to download a temporary copy of the e-textbook from the Digital Bookshelf. Even if they want to buy a hard copy of the text, they still have to fork over the money for a digital version.

Note that this is a temporary copy, so there's no passing it on to another classmate who might be taking the course in the next semester. This also prevents any sort of resale/trading taking from taking place. One of the slim advantages of purchasing physical copies was the ability to resell the books to help offset the costs of the next set of curriculum. The textbook publishers have turned that into a complete farce by adding minor revisions to their line of books as often as possible, changing a few homework problems or pushing text back and forth to force re-pagination. Many books are outdated before the next year of schooling even starts, turning a $150 investment into a doorstop. Going electronic-only, tied to pass codes and non-refundable fees eliminates any further recoupment for the students.

Beyond the ugliness of these mercenary tactics is the fact that what EDMC is doing is, if not actually illegal, certainly operating in a very gray area. The Higher Education Opportunity Act (passed in 2008) states that textbook publishers must "unbundle" their core educational content from optional add-ons like study guides or homework systems. It could be argued that an electronic version of the same textbook is not an "optional add-on," but one could also certainly argue that the option to buy either/or when it comes to digital and physical books should still be left to the students' or instructors' preference, rather than subjecting students to mandatory, non-refundable fees.

EDMC should be a bit more careful about operating at the fringes of federal law. It's currently being sued by the Department of Justice for illegal recruiting and false claims:

The government's complaint says the company, which offers classes online and at 105 locations in 32 states and Canada, repeatedly made false statements to conceal its practices and receive $11 billion in federal and state financial aid – nearly all of the company's revenue. The complaint alleges that student enrollment was the sole focus of its compensation system, and the company instructed recruiters to use high-pressure sales techniques like playing on an applicant's psychological vulnerabilities and inflating claims of career placement opportunities to enroll students regardless of their qualifications.

Beyond the resale blockage and rent-seeking is the outrageous idea that somehow courses should have mandatory textbooks, thus forcing instructors to teach their classes in whatever direction the curriculum provider steers them, rather than being able to impart knowledge in a way that caters to the instructor and the students.

There's no way that locking your faculty and students into purchasing and utilizing textbooks from a single provider is ever going to work for the benefit of anyone but the company being favored and the administration members who made this exclusive contract a reality. EDMC can have it both ways for the moment, operating both a set of schools and providing its own exclusive conduit for instructional material.

As for Mike Tracy, his students have banded together to get him reinstated. They've also started a petition over at change.org, asking for the Art Institute to amend its textbook policy to put curriculum selection back in the hands of the instructors. It currently has over 3,500 signatures.

When ICANN was in the process of reviewing the application for the new .xxx top-level domain, we were always wary about the idea. We reported that this was nothing but an extortion racket on businesses to force them to buy an expensive and unnecessary TLD for their trademark, for little else but to avoid being associated with porn. That prediction was dead on, as we saw universities rushed to buy up the .xxx versions of their .edu domains.

Then ICANN approved a new plan to allow even more unneeded and unwanted TLDs. Once the bidding process was in motion, we highlighted the sheer number of TLDs that were proposed. While many of these were directly related to certain companies, many were generic TLDs that any website owner might conceivably use. However, just as there are big problems with the .xxx TLD, we will see similar situations here. Companies will be forced to buy up domains in the fear that someone will use their trademarks for potentially nefarious purposes.

All this concern is based not on speculation but on reality, as one game developer Riot Games, the maker of the popular League of Legends game, has learned. Riot Games had recently won a dispute over a a domain squatter that was banking on people mistyping the League of Legends domain. This one was a fairly simple use of one of the current TLDs on the market: .co. The owner of the .co domain had set up the domain to show porn for anyone who mistakenly typed the wrong TLD. This activity is pretty much as old as the internet itself.

While Riot Games was able to win this one, it seems that we're going to be hearing a lot more stories of these kinds of fights once ICANN officially approves the new TLDs and they begin rolling out. The idea that companies are now going to have to keep checking and buying up their domains on all of these variations seems particularly ridiculous. Not only will it be time consuming and a waste of money, but it's unclear that there will be any value at all to these new domains.