There was a somewhat horrifying article in the NY Times recently about some serious drug shortages in the US, especially for certain forms of cancer. There are a few efforts underway to deal with the shortages, but as the article notes, it's pretty ridiculous that there are any shortages at all, since "the number of cancers diagnosed in a year was easy to predict." Of course, the real problem is that in a claimed effort to "protect" people, the FDA has made it almost impossible for competition to exist:

A crucial problem is disconnection between the free market and required government regulation. Prices for many older medicines are low until the drugs are in short supply; then prices soar. But these higher prices do little to encourage more supply, because it can be difficult and expensive to overcome the technical and regulatory hurdles. And if supplies return to normal, prices plunge.

Left out of this paragraph, but equally important, are patents, which clearly hinder such competition as well. We've discussed in the past how the FDA can often get in the way of medical innovation. Even if it means well (and I'm sure it does), putting in place systems that make it too costly to create real competition does the exact opposite of its intended purpose.

A few years ago, we wrote about Tim Quirk's struggle to get Warner Music to actually provide any sort of accounting for the money earned by his band, Too Much Joy. There have been a few similar stories over the years, and what you begin to realize is that it appears the major labels basically don't even track this stuff. They seem to assume most bands just won't recoup, and so they never have to provide any accounting to them at all (and just keep the money for themselves). From what I've heard, if a band is truly successful and keeps bugging the label, eventually they'll put together something approximating an accounting of what's been earned. Who knows how accurate these statements are.

Of course, sometimes these stories go from just wacky to downright insane. Hans Ridder points us to the story of Bill Nelson, of the band Be-Bop Deluxe, and the rather ridiculous situation he went through over the years. The actual story is about a decade old, but got some renewed attention earlier this year when a bunch of blogs reposted it. We just came across it when Ridder sent it in, and wanted to post it here because it really shows how these labels treat some of their artists -- never giving any actual accounting, always slow to reply with any details, always denying that anything's been recouped. The fact that they then started changing their story and claimed they actually gave the money to the wrong people -- then denied that, then again said that was the case later -- is only an added dimension to the insanity.

The story began with Nelson asking EMI repeatedly for an accounting of what had been earned for Be-Bop Deluxe, and either getting no answer at all or (after asking many times over) being told that the band had "not recouped." There was never any evidence presented for this. The label kept reissuing works, and even contacted him to work on some of them. In one case, they told him that if he helped work on a "best of" offering, that would tip the account over, and he'd start receiving royalties. Of course, that never happened. Yet EMI came back again to ask him to work on a box set, and he asked again. And that's when things got bizarre:

Over a period of two years, a very strange story emerged. The first communication the lawyers received from EMI said that they HAD, in fact, been paying royalties...to 'the band.' My response to the lawyers was..., "Ask them which band," as I certainly had not received any royalty payments from the record company. After a long time and further prompting from the lawyers, EMI said that they actually had been making royalty payments to Nick Dew, Ian Parkin and Rob Bryan. The amazing thing about this is that these three people were NOT on any of the Be Bop Deluxe albums except the very first one, 'Axe Victim.' All the other albums were recorded with different musicians, (Charlie Tumahai, Simon Fox and Andy Clarke), under a different contractual set-up. It seemed that the first line-up, who only ever recorded the ONE album, had been receiving royalty payments from EMI for ALL Be Bop recordings, including re-issues... Recordings in which they had taken NO part, either as performers or otherwise. The really damning thing about this is that none of the original members of the band ever spoke up about it and said, "hang on a minute, I'm getting money here for music I didn't even make!" (It would be evident from the royalty statements they received that the payments were for various albums from the Be Bop catalogue, and not just the 'Axe Victim' album.) Record company cock-up aside, what does this say about people you once regarded as your friends?

Anyway, after I had explained to the lawyers, via Richard, that these people had not earned royalties on anything except the band's first album, letters were then sent to EMI requesting an explanation. Again, some months went by before any reply. I seem to remember that there was some muttering about EMI not knowing where to contact me to send royalties, (and me the only member of the original line up to have continued with a professional and public career in music), but, at a later date, they seemed to change their story and said that they hadn't paid the other members after all. Actually, they said, EMI were only obliged to pay a company called 'Be Bop Deluxe Ltd,' which had been set up by Be Bop's manager Mike Dolan and which no longer existed. As the company no longer existed, there was, EMI claimed, no legal requirement for them to pay any royalties generated by the product. (Despite earlier claiming to have paid money to the band's first line-up.)

Whilst trying to decide what to do next, I suggested that the lawyers should ask EMI to at least let me know how much my 'lost' royalty figures would have been. This would help me to decide whether it was worth pursuing EMI further. The legal costs are, of course, prohibitive, very much so for me. A major company like EMI can easily afford to spin things out until any opponent breaks under the financial strain. I, as they well know, can't.

Again, time passed, further reminders were sent to EMI and they finally replied. It seems that they had now gone back to their first story, that they HAD made payments but only to the three other members of the 'Axe Victim' line-up, excluding myself. A circular argument? Since then, further communications have been made between my side and theirs. These communications have always been marked by a painfully slow response from EMI. Spinning it out as long as possible, hoping that it might go away, perhaps? Eventually, an offer came... EMI would pay me any future royalties generated by Be Bop Deluxe product, provided, one suspects, that I didn't cause any more fuss. Basically, they said that they were under no legal obligation to pay me anything at all, (due to the 'Be Bop Deluxe Ltd' company's demise), although they do admit to paying royalties to the wrong members of the band. An administration mistake, apparently. Does that make it OK then?

In the end, his lawyers basically told him there was nothing he could do, except potentially sue the original members of the band, and that going any further with pretty much any strategy would be horrifically expensive. In the meantime, we're still supposed to believe that record labels have the best interests of artists at heart? Why does anyone believe this myth?

We've mentioned some interesting CGI work before, but the field of advanced video processing just continues to be amazing. Big Hollywood budgets won't be necessary if CGI software keeps getting better and better. Here are some cool clips we've seen.

• Fix your shaky home movies with some image stabilization software. A nice benefit from military research to make your kid's first birthday videos watchable without Dramamine. [url]
• Being John Malkovich could be a lot easier than crawling down some dark tunnel. Malkovich, Malkovich, Malkovich.... [url]
• Disney and Carnegie Mellon researchers are working on software to make animated faces look more realistic. And actors will eventually need to be Andy Serkis. [url]
• This HDR video system merges three simultaneous images to obtain some really cool-looking shots. The software that creates these videos lets the director choose some nice lighting effects. [url]
• To discover more tech-related content, check out what's currently floating around the StumbleUpon universe. [url]  

By the way, StumbleUpon can recommend some good Techdirt articles, too.

So the big story of the day seems to be about the Justice Department getting Google to "forfeit" $500 million for having ads in the US for Canadian pharmacies. This isn't a huge surprise. News broke of the investigation a few months ago, when Google mentioned in an SEC filing that it had set aside $500 million to settle this particular matter. The Justice Department, in typical fashion, play up how they're protecting Americans from harm blah, blah, blah.

Here's the thing: I can't figure out how this makes any sense at all. First off, why is Google to blame? As we've discussed repeatedly, the US is pretty clear on its liability laws that liability should be applied to the party actually responsible, not third party platforms. Google accepted ads. That should not make it responsible for the content in those ads, let alone transactions that may occur because of those ads. Even worse, Google clearly made quite an effort to make sure such ads only involved legit drugs:

Google changed its policy on pharmacy ads in February 2010, so that it would only take ads from U.S. pharmacies accredited by the National Association of Boards of Pharmacy, and from online pharmacies in Canada that are accredited by the Canadian International Pharmacy Association.

So, now, as a media property that has advertising, do I need to fear that the Justice Department can force me to forfeit money because one of you clicks on an ad and makes a transaction that the government thinks is illegal? That's insane!

On top of this, it's even more ridiculous, because the US government has almost always turned a blind eye to grey market imports of drugs from Canadian pharmacies, because they know that without such affordable drugs, people will die. Here we have the Justice Department not helping to save lives, but helping to kill people off by making it that much more difficult to get approved drugs from Canada at more reasonable prices. In fact, amusingly, Senator Patrick Leahy is pushing legislation that will expand the ability of Americans to import such drugs (at the same time he's sponsoring the PROTECT IP Act, which wold force such sites off the internet -- he's not particularly consistent, that Senator Leahy).

Let's face facts here. This has absolutely nothing to do with public safety. This is a cynical move by the Obama administration to ensure support from the pharma industry. Early on in his administration, President Obama specifically supported allowing re-importation from Canadian pharmacies. In fact, the White House has repeatedly said that it's completely in favor of allowing such reimportation.

And yet now it takes $500 million from Google not for actually doing that, but for allowing ads to appear that promote a program the administration has officially endorsed? It's hard not to take the cynical view and simply see this as the US government taking from Google in an effort to make the US pharma industry (who hate, hate, hate Canadian imports) happy.

In the meantime, as Ryan Singel points out, Google is getting dinged $500 million here, while Goldman Sachs got dinged $550 million for "melting the economy." I guess Wall Street and pharma have much better lobbyists than Google.

It's getting a bit repetitive to note just how many times copyright troll Righthaven is losing these days, even as it's entertaining to watch. But this latest loss -- its seventh so far -- is even more interesting, because it's a dismissal of a case that Righthaven already thought it had "won." The case involved Righthaven suing a guy named Bill Hyatt... who totally ignored the lawsuit. As can happen in such situations, a court clerk simply entered a default judgment against Hyatt. Righthaven seized upon this opportunity to then ask the court (as it did in each of its lawsuits) for more than just a monetary award: it asked for his domain. We had noted how silly it was for Righthaven to always demand the domains of those it sued, as there's no such remedy in copyright law, but here it thought it could put one over on the court. As we noted back in February, the Media Bloggers Association stepped into the case and filed an amicus brief (via Marc Randazza) questioning Righthaven's claims. And, now, beyond just not getting the domain, the judge has decided to dismiss the whole case for lack of standing, since (once again) the judge has realized that Righthaven doesn't actually hold the copyright it claims to hold. Ah Righthaven. These days, it can't even win a case when the other side doesn't even show up.

There's been a lot of coverage over BART's bizarre decision to shut down mobile phone service in one of its stations to hinder some potential protestors. With the FCC investigating, we've heard a number of folks say that there's no First Amendment violation here because there's "no right to mobile phone service." And while it's true that there's no right to mobile phone service, the law is pretty clear that there is a right to not have the government try to stifle a particular form of speech by shutting down infrastructure, solely targeted at that form of speech.

That is, the key issue isn't whether BART needed to keep its mobile phone service up all the time. If it goes down for maintenance, that's fine. But it can't turn it off if the decision is to try to block a particular type of speech. And that's exactly what BART clearly admitted to doing. Of course, it's not just the First Amendment at issue. There's also telecom law, and it appears BART violated that too.

Telecom lawyer/consumer rights advocate Harold Feld has a long and detailed explanation for why the shut down both violates telecom law and is also just a bad idea in general. It's pretty detailed, pointing out the specific citations in telecom law that were violated and a series of relevant caselaw decisions. There's a lot in there, but here's a key citation that reads like it could apply almost directly to the BART situation:

In Pike v. Southern Bell Tel. &Telegraph Co., 81 So.2d 254 (Ala. 1955), Mr. Connor, in his capacity as Commissioner of Public Safety for the City of Birmingham, ordered Southern Bell to remove the telephone of one Louis Pike, described by Mr. Connor as “a negro” of “questionable character” alleged by Mr. Connor to be a “well-known lottery operator in the city” and to be using his phone for unspecified “illegal purposes.” Reviewing cases from other jurisdictions (including People v. Brophy), the Alabama Supreme Court found that the right of every citizen to use a phone was guaranteed by federal law and could not be deprived without due process.  As the Court observed:

The present tendency and drift towards the Police State gives all free Americans pause.  The unconstitutional and extra-judicial enlargement of coercive governmental power is a frightening and cancerous growth on our body politic.  Once we assumed axiomatic that a citizen was presumed innocent until proved guilty.  The tendency of governments to shift the burden of proof to citizens to prove their innocence is indefensible and intolerable.

We are not able to glean from the bare conclusions set up in the letter of the Commissioner, whether it is claimed that the “illegal” use of the telephone was by the appellant, her husband, or a total stranger.  From aught that was alleged in the plea, except for the conclusion of the Commissioner, no “illegal” use of any type was made of this telephone by any one.

The notice alleged to have been received by the Telephone Company was couched in the terms of a direct order from the Commissioner of Public Safety.  What is the source of Mr. Connor’s authority to issue such an order?  We know of none.  And we hold that none exists.

If we took a contrary view, it would naturally flow and follow that the telephone company would be justified in acting on the notice of any over-zealous law enforcement official who, without evidence, and on mere suspicion, is impressed with the bad character or occupation of a particular telephone subscriber. The letter from Commissioner Connor set up in the plea is no defense.  It is the Telephone Company’s burden to show that the use being made of the telephone did, in fact, justify its removal.

These depredations of a subscriber’s legal right to telephone service constitute a denial of due process guaranteed by the Constitution of 1901, art. 1, § 6.  The gratuitous and arbitrary action of a police official is no justification for an abridgment of this right.  To hold that the Telephone Company is justified in discontinuing service by “order” of a police official would require judicial recognition of a police power which does not exist.  The bald assertion of an executive officer, be he the Attorney General of the United States or a constable of some remote beat, cannot be accepted as a substitute for proof in the judicial process.  No presumption arises as to the sufficiency of evidence based on a law enforcement officer’s conclusions.

Similarly, the BART's possession of “intelligence” that individuals may use their mobile phones to coordinate illegal activity does not confer “police power that does not exist.” BART must still go to the California agency with actual jurisdiction, the CPUC, and obtain a legal order authorizing the shut down of cellular service.

While the entertainment industry thought that getting PROTECT IP approved was going to be a walk in the park, they've been taken somewhat by surprise at the level of resistance to the bill over the last few months. It looks like they're now trying to break out "the big guns." And, by "big guns" we mean out-of-touch millionaire old fogey rockers who have name brand appeal, but little actual knowledge. In this case, it's an op-ed piece by Don Henley in USA Today. Henley has become quite the curmudgeon over the past few years, lashing out at everyone for not giving him more money. A year ago, he was claiming that it's all YouTube's fault:

And Henley reserved particular ire for YouTube, which he described as a "fence" for stolen intellectual property. "YouTube is one of the biggest violators or copyright laws in the world," he said. "A tremendous amount of the content on YouTube is a copyright violation.... I'm not a fan of YouTube at all for their part in aiding and abetting copyright violations."

Given his belief that YouTube is a "rogue" site, his views on PROTECT IP are especially troubling. It appears that Henley really wants to shut down YouTube. Most of the article is a misguided, misleading or simply false attack on both Google and anyone, such as the EFF, who supports basic user rights:

Critics of this pending legislation need to be honest about the company they keep and why they essentially aid and abet these criminal endeavors. The Electronic Frontier Foundation (EFF), a civil liberties group, claims such a bill would "break the Internet," while Google Executive Chairman Eric Schmidt says it sets "a disastrous precedent" for freedom of speech. No one has the freedom to commit or abet crimes on the Internet. Stopping crime on the Internet is not, as EFF says, "censorship." There is no First Amendment right to infringe intellectual property rights.

First of all, no, there is no First Amendment right to infringe, but no one has claimed that there is either. But PROTECT IP goes way, way beyond what Henley describes. He also fails to respond to the "break the Internet" claim, which comes from a group of very well-respected technologists who had a major role in building the internet's core infrastructure. Henley just brushes that off by pretending that Google just wants to keep "accepting untold advertising dollars from illegal online pharmacies."

But the bigger issue is that Henley totally ignores the points that the EFF has raised about the problem of PROTECT IP. He's right that stopping infringement is not censorship, but the bill is extremely broad and goes way beyond stopping infringement. In a weak attempt to do so, it advocates outright censorship with no due process.

In the meantime, if Henley wants to look at "the company anyone keeps," perhaps he should look at his friends who are supporting PROTECT IP. And we should remind Don Henley that not so long ago he was pointing out that piracy isn't a problem, and the real problem was the RIAA and the major record labels. Apparently he's changed his mind.

Oh, and if you'd like to see just how badly Henley is suffering from all this infringement in person, you can buy tickets to an upcoming Eagles concert for $2134 a pop. At least they set aside some "cheap seats" for the kids. The nosebleed seats where you can barely see the stage... those will run you a mere $116. Actually, that's just the list price, and you can't buy a single ticket at that price. You have to buy two. There are some (more expensive) tickets where you can buy just one, but then you have to add in the service fee ($21.65) and a delivery fee ($15). Amusingly, even if you choose to show up and pick up the ticket yourself, you still pay the delivery fee. So the absolute cheapest price you can pay to see Don Henley in concert, in the nosebleed seats will run you... $153.65. Yeah, but all that infringement is killing the music business, huh?

So we just wrote about a truly ridiculous opinion piece by two ex-politicians, John Sununu and Harold Ford Jr., claiming that Netflix somehow didn't pay for its bandwidth. They complained about the supposed "free ride" that Netflix was getting. As one of our commenters pointed out, this is sort of like the "free ride" that Ford Motor Company gets from the highway system.

But Derek Kerton may have had the best idea of all, noting that Sununu and Ford will almost certainly ignore our request that they swap their broadband bills with Netflix. Derek suggests we up the ante, and offer to actually give Sununu and Ford some money if they agree to pay Netflix's broadband bills for the rest of 2011. He's putting up $500 and we at Techdirt will match his offer and put up another $500. So, that's $1,000 for Sununu and Ford Jr. if they're willing to pay Netflix's braodband bill. Hell, we'll give them some time to think it over, and say they only have to pay for the last quarter of the year. If they'll pay Netflix's broadband bills for October, November and December, we'll give them $1,000 ($500 each). Some others in the comments have also offered to chip in as well, so perhaps we can raise the ante a bit more.

So here we go. According to Sununu and Ford Jr., this is "free money" that we're offering them. Will they take it? Will they agree to pay for Netflix and its very cheap "free rider" broadband bill? I'm not holding my breath.

Gatehouse Media -- a smaller newspaper chain who actually had done some fairly innovative online things in the past -- has really become rather crazy when it comes to intellectual property lately. First it sued the NY Times for linking to it, then it threatened a forum site for linking to it with headlines and ledes (which most people consider to be fair use). Now it's going even further. Keyop points us to the news that the lawyers for one Gatehouse paper, the Utica Observer Dispatch have threatened a local satirical blogger with trademark infringement claims for the great sin of mentioning the name of the Utica Observer Dispatch.

We wish to advise you that the name, "The Observer Dispatch," that you are using is the property of GateHouse Media, protected by trademark and past usage rights. Your use of such name constitutes infringement of GateHouse's rights under federal, state and common law. Our proprietary rights in such name include the right to restrict the use of the name. It is important that we exercise our right to protect our name. Its serves as an important and distinctive representation of the origin of our products as well as the goodwill of GateHouse Media.

The blogger, Ray Jadwick, definitely makes fun of the Utica Observer Dispatch on his site, but it certainly doesn't appear to be trademark infringement. Making fun of your paper isn't likely to confuse even a moron in a hurry.

Exactly as we predicted, when the Fox Network hid its TV shows online behind various paywalls and delays, the rate of infringement on those shows shot way up. Eriq Gardner, over at THResq spoke to a Communications VP at Fox to get his response about all those people going to unauthorized means to get their content, and in true "Communications VP" fashion, Scott Grogin deftly ignores the key question and focuses on a secondary claim from the original TorrentFreak article, the suggestion that these delays were about getting people to watch TV live:

The TorrentFreak blog post is a little over the top. The story indicates that we 'took this drastic step in the hope of getting more people to watch shows live and thus make more revenue.' Nothing could be further from the truth.

Authenticating viewers is not about making sure they only watch live...in fact, quite the opposite—we support a 'TV Everywhere' proposition and are working with our distribution partners to benefit our businesses. It's about receiving fair value so we can continue to produce this expensive and high quality programming. We are pursuing a strategy where the 90+ million households who pay to watch our programming via cable/satellite/telco will ultimately receive maximum benefit. They can watch live, via DVR, on VOD, online, or through one of the various tablet apps that allow in-home viewing.

We are actively in negotiations with all cable/satellite/telco providers regarding authentication of their customers. We hope to announce several more agreements before the start of the new television season in mid-September.

The issue of watching "live" or not is really a side matter, and was perhaps a bit of hyperbole from TorrentFreak. What those guys clearly meant was that this is a weak effort by Fox to keep people watching via TV or via a big cable/satellite provider. And, I'm sorry, but this line is pure bull:

We are pursuing a strategy where the 90+ million households who pay to watch our programming via cable/satellite/telco will ultimately receive maximum benefit.

Anyone who claims that to offer maximum benefit to one set of people, you have to take away features from others isn't being particularly honest. To offer maximum benefit, you offer maximum benefit. Could Fox offer new additional features to such subscribers? Sure. That would be interesting and perhaps a good strategy. But taking the content away, when it's so readily available via unauthorized means doesn't help provide maximum benefit to subscribers at all. It drives more people to unauthorized means of access (where Fox gets no money at all), and actually takes away value from those subscribers. That's because one reason why people watch hit shows right away is so they can discuss them with friends. Fox has now made it more difficult to discuss with friends because it's that much harder to watch its shows.

There have been some mixed rulings on whether or not the government needs a warrant and to show probable cause (a la what's left of the 4th Amendment) in order to get mobile phone location info. Courts have ruled in different ways, but the federal courts, for the most part, have been much more agreeable to saying no warrant is needed (state court seem to lean the other way). However, in a bit of a surprise, a federal court went the other way and said a warrant is needed under the 4th Amendment.

The court actually lays out the issue directly, and worries about what it means if the government can just get this info without showing probable cause:

What does this mean for ordinary Americans? That at all times, our physical movements are being monitored and recorded, and once the Government can make a showing of less-than-probable- cause, it may obtain these records of our movements, study the map our lives, and learn the many things we reveal about ourselves through our physical presence.

After going through the relevant (and at times conflicting) laws and case law, the court notes that while general location info may be public, rather than private info, a massive collection of such info seems to go over the line. That's especially true when the government can access multiple records from multiple people:

The cell-site-location records at issue here currently enable the tracking of the vast majority of Americans. Thus, the collection of cell-site-location records effectively enables "mass" or "wholesale" electronic surveillance, and raises greater Fourth Amendment concerns than a single electronically surveilled car trip. This further supports the court's conclusion that cell-phone users maintain a reasonable expectation of privacy in long-term cell-site- location records and that the Government's obtaining these records constitutes a Fourth Amendment search.

The court also dives into the controversy over the third party doctrine, which basically says that once you "give up" information to a third party, you no longer have 4th Amendment protections over it -- and in this case, the government argues that users have given up their location info to mobile operators. The court notes that the third party doctrine does still apply to such info, but that it should not apply to cumulative records, saying that this is an important limitation on the third party doctrine.

This court concludes that cumulative cell-site-location records implicate sufficiently serious protected privacy concerns that an exception to the third-party- disclosure doctrine should apply to them, as it does to content, to prohibit undue governmental intrusion. 7 Consequently, the court concludes that an exception to the third-party-disclosure doctrine applies here because cell-phone users have a reasonable expectation of privacy in cumulative cell-site-location records, despite the fact that those records are collected and stored by a third party.

Finally, and most importantly, the court makes a plain language rejection of the excuses often used by the government to pick away at the 4th Amendment:

The fiction that the vast majority of the American population consents to warrantless government access to the records of a significant share of their movements by "choosing" to carry a cell phone must be rejected. In light of drastic developments in technology, the Fourth Amendment doctrine must evolve to preserve cell-phone user's reasonable expectation of privacy in cumulative cell-site-location records.

It's definitely a compelling and well-reasoned argument from Judge Nicholas Garaufis, and we hope that other courts will follow. However, we fear that he walks such a fine line in distinguishing this ruling from other cases, that it will be way too easy for higher courts to overturn this ruling.

Rick Falkvinge has a nice column pointing out how disruptive innovation works: obsolete middlemen are innovated away. He uses the example of ice men: the folks who would deliver ice to be used in "ice boxes" prior to electricity and the refrigerator becoming common. But, of course, technology made such people obsolete:

There were many personal tragedies in this era as the icemen lost their breadwinning capacity and needed to retrain to get new jobs in a completely new field. The iceman profession had often been tough to begin with, and seeing your industry disintegrate in real-time didn’t make it any easier.

But here are a few things that didn’t happen as the ice distribution industry became obsolete:

No refrigerator owner was sued for making their own cold and ignoring the existing corporate cold distribution chains.

No laws were proposed that would make electricity companies liable in court if the electricity they provided was used in a way that destroyed icemen’s jobs.

Nobody demanded a monthly refrigerator fee from refrigerator owners that would go to the Icemen’s Union.

No lavishly expensive expert panels were held in total consensus about how necessary icemen were for the entire economy.

Rather, the distribution monopoly became obsolete, was ignored, and the economy as a whole benefited by the resulting decentralization.

As he notes, we're now going through the same sort of disruptive innovation today, with many who slavishly rely on copyright as a business model for content distribution coming to terms with their own obsolescence. Yet, rather than be ignored and go away and let the economy benefit as a whole, they're pulling a different sort of trick. They're falsely convincing politicians, the press and even some of the public that rather than representing obsolete distribution mechanisms, they represent the content itself. It's why you hear the recording industry referred to incorrectly as "the music industry."

But the truth is that the main advantage these particular gatekeepers had was in distribution. They controlled the gates to distribution, and knew they could charge huge rents to get through. Copyright was merely the mechanism that built the gates, but the fact that there was a gate at all was a function of technology. Now technology has done away with that, and opened up the playing field wide. So wide that gates are meaningless, and the real focus needs to be on enabling content providers to do amazing things to stand out in the wide open field. But that's got nothing to do with copyright.

Unfortunately, the industry is pretending that it has everything to do with that. What they're really looking for are laws not to build back up the gate of copyright -- but to take us back into history, whereby the walls of limitations are back up and people have to go through the gates. That era is over. But what's truly amazing is that we still think the gatekeepers matter here. They don't. There was no refrigerator fee and we shouldn't have to set up special systems to re-animate the dead corpse of an obsolete distribution model that the recording industry was built around.

Opinions on the emergence of eBooks in the modern era come with all manner of widely varied opinions. We saw J.K. Rowling go from staunchly refusing to offer her works as eBooks to routing around her publisher and offering them directly to her fans. Barry Eisler turned down a huge publishing contract to self-publish his eBooks, even as the Mystery Writers of America were telling Joe Konrath, Eisler's friend, self-publishing meant he wasn't a "real author". And, of course, we have the always prevalent opposed viewpoints of the benefits of carrying your digital library everywhere versus the preference for the look and feel of a physical hardcopy tome.

But one argument I haven't heard before (and I spend a decent amount of time reading and learning about the publishing world, for obvious reasons) is that eBooks are dangerous to the future of young authors because the royalty rates won't support them making a living. That's the argument Graham Swift made in an article in The Telegraph by Nick Collins. Graham is quoted as saying:

“The e-book does seem at the moment to threaten the livelihood of writers, because the way in which writers are paid for their work in the form of e-books is very much up in the air. I think the tendency will be that writers will get even less than they get now for their work and sadly that could mean that some potential writers will see that they can't make a living, they will give up and the world would be poorer for the books they might have written, so in that way it is quite a serious prospect.”

Swift is an award-winning author and, as such, I assume he's as or more informed about the publishing world than I am, but I'm having trouble rectifying his speculation on declining royalty rates for eBooks with how such royalties are handled now. Unfortunately, because there is some variance in how royalties are handled in the publishing world, particularly with fiction, there are some distinctions to be made with how this all works.

First, let's quickly look at royalties offered in a standard publishing contract through a mainstream press. Hardcover royalties are typically between 10% and 15%, with some variance in the contract based on the number of units sold. Paperback royalties are typically between 6% and 9%, usually also with breaking points based on sales. Meanwhile, the standard eBook royalty rates tend to be much higher, anywhere between 25% and 50%. Now, Graham appeared to be speaking of the future decline of eBook royalty rates, but the general trend with established publishers has been for those rates to rise rather than fall, recently.

Now, as everyone is aware, the emergence of eBooks has coincided with a boom in the self-publishing industry. I'm going, for the sake of this argument, to set aside true vanity publishers with awful reputations in the publishing world. Some authors out there will tell you horror stories about operations like Publish America, but they have an equally bad reputation when it comes to both hardcopy books and eBooks. Instead, let's deal with how royalties work for self-publish eBook operations like Lulu and the Amazon Kindle market. As someone who has published on both platforms, I'm very familiar with how royalties work with each.

With Lulu, there is some wiggle room for authors to set their own retail price and, therefore, royalty for physical books. The default settings come to something around 9% for hardcopy books. That same default setting for eBooks? Roughly 55% in royalty for the creator. Creators offering up eBooks on the Kindle Direct Publishing platform can expect their royalties to start at 35% (although there are some options that can bump that royalty to 70%, depending on how much the author wishes to sell their eBook for).

And none of that even takes into account authors who are cutting out the middlemen with eBooks entirely and offering up their works with something like a PayPal account, yielding royalties for eBooks effectively somewhere around 75%. This is a sector of authors that's only going to grow, as we've discussed here before. The beauty of the eBook is that an author no longer has to worry about the single most difficult aspect of getting his or her work to the reader: the physical production of the printed book. With that barrier gone, it seems as though more young writers will find themselves suddenly able to enter the market, not fewer.

So, perhaps Swift knows something I don't, but everything I read seems to indicate that eBooks are going to result in options for higher royalties, not lower. So I have to wonder where this fear comes from?

Jon points us to an amusing photo highlighted by Reddit showing two older women sitting in a bookstore copying down recipes. The Daily What amusingly calls this "illegal downwriting." Just wait until these women discover camera phones.